ITEM 14.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K                                      

(a)

1.

Financial statements. The following consolidated financial statements of Forest Laboratories, Inc. and Subsidiaries included in the Annual Report are incorporated by reference herein in Item 8:

Report of Independent Certified Public Accountants

Consolidated balance sheets -
March 31, 2001 and 2000

Consolidated statements of income -
years ended March 31, 2001, 2000 and 1999

Consolidated statements of comprehensive income -
years ended March 31, 2001, 2000 and 1999

Consolidated statements of shareholders' equity -
years ended March 31, 2001, 2000 and 1999

Consolidated statements of cash flows -
years ended March 31, 2001, 2000 and 1999

Notes to consolidated financial statements

2.

Financial statement schedules. The following consolidated financial statement schedules of Forest Laboratories, Inc. and Subsidiaries are included herein:

Report of Independent Certified Public Accountants  

   S-1

Schedule II

Valuation and qualifying accounts

   S-2

All other schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.

(b)

Forest filed a report on Form 8-K on January 4, 2001 to report a two-for-one stock split, effected in the form of a 100% stock dividend.

 3.

Exhibits:

(3)(a)

Articles of Incorporation of Forest, as amended. Incorporated by reference from the Current Report on Form 8-K dated March 9, 1981 filed by Forest, from Registration Statement on Form S-1 (Registration No. 2-97792) filed by Forest on May 16, 1985, from Forest's definitive proxy statement filed pursuant to Regulation 14A with respect to Forest's 1987, 1988 and 1993 Annual Meetings of Shareholders and from the Current Report on Form 8-K dated March 15, 1988.

(3)(b)

By-laws of Forest. Incorporated by reference to Forest's Current Report on Form
8-K dated October 11,1994.

(10)

Material Contracts

 10.1

Benefit Continuation Agreement dated as of December 1, 1989 between Forest and Howard Solomon. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1990 (the "1990 l0-K").

 10.2

Benefit Continuation Agreement dated as of May 27, 1990 between Forest and Kenneth E. Goodman. Incorporated by reference to the 1990 10-K.

 10.3

Benefit Continuation Agreement dated as of April 1, 1995 between Forest and Phillip M. Satow. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1995 (the "1995 10-K").

 10.4

Split Dollar Life Insurance Agreement dated March 29, 1994 between Forest and Howard Solomon. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1994 (the "1994 10-K").

 10.6

Split Dollar Life Insurance Agreement dated March 29, 1994 between Forest and Kenneth E. Goodman. Incorporated by reference to the 1994 10-K.

 10.7

Employment Agreement dated as of September 30, 1994 by and between Forest and Howard Solomon. Incorporated by reference to 1995 10-K.

 10.8

Employment Agreement dated as of September 30, 1994 by and between Forest and Kenneth E. Goodman. Incorporated by reference to the 1995 10-K.

 10.9

Employment Agreement dated as of October 24, 1995 by and between Forest and Dr. Lawrence S. Olanoff. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (the "1996 10-K").

 10.10

Employment Agreement dated June 24, 1998 between Forest and Elaine Hochberg. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the "1998 10-K").

 10.11

Employment Agreement dated June 21, 1999 between Forest and John E. Eggers. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1999 (the "1999 10-K").

 10.12

Employment Agreement dated January 16, 1995 between Forest and Mary Prehn. Incorporated by reference to the 1998 10-K.

 10.13

Employment Agreement dated November 22, 2000 between Forest and Charles E. Triano.

 10.14

License Agreement dated September 11, 1995 between Biovail Corporation International and Forest. Incorporated by reference to Exhibit No. (C)(2) to Schedule 14D-1 of Forest dated September 18, 1995.

 10.15

License and Supply Agreement dated October 3, 1995 between Forest Laboratories (Ireland) Limited and H. Lundbeck A/S. Incorporated by reference to the 1999 10-K.

 13

Portions of the Registrant's Annual Report to Stockholders.

 22

List of Subsidiaries. Incorporated by reference to Exhibit 22 to the 1988 10-K.

 23

Consent of BDO Seidman, LLP.

FOREST LABORATORIES, INC.
By:   /s/Howard Solomon       
     Howard Solomon,
     Chairman of the Board,
     Chief Executive Officer
     and Director

PRINCIPAL EXECUTIVE
OFFICERS:

  /s/ Howard Solomon    
      Howard Solomon

Chairman of the
Board, Chief
Executive Officer
and Director

June 28, 2001

  /s/ Kenneth E. Goodman    
      Kenneth E. Goodman

President, Chief
Operating Officer
and Director

June 28, 2001

PRINCIPLE FINANCIAL
AND ACCOUNTING OFFICER:

  /s/ John E. Eggers    
      John E. Eggers

Vice President -
Finance and Chief
Financial Officer

June 28, 2001

DIRECTORS:

  /s/ Phillip M. Satow    
      Phillip M. Satow

Director

June 28, 2001

  /s/ George S. Cohan    
      George S. Cohan

Director

June 28, 2001

  /s/ William J. Candee, III    
      William J. Candee, III

Director

June 28, 2001

  /s/ Dan L. Goldwasser    
      Dan L. Goldwasser

Director

June 28, 2001

  /s/ Lester B. Salans    
      Lester B. Salans

Director

June 28, 2001

SCHEDULE II

FOREST LABORATORIES, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Column A

Column B

Column C

 Column D

Column E

Description

Balance
at beginning
of period

Additions

 Deductions

Balance
at end
of period

Year ended March 31, 2001:

  Allowance for doubtful accounts

$ 7,936,000

$ 3,623,000

$    436,000

 (i)

$11,123,000

  Allowance for cash discounts

6,078,000

34,555,000

31,968,000

 (ii)

8,665,000

  Inventory reserve

14,001,000

2,145,000

3,197,000

 (i)

12,949,000

Year ended March 31, 2000:

  Allowance for doubtful accounts

$10,314,000

$ 3,830,000

$ 6,208,000

 (i)

$ 7,936,000

  Allowance for cash discounts

6,380,000

22,996,000

23,298,000

 (ii)

6,078,000

  Inventory reserve

13,911,000

8,273,000

8,183,000

 (i)

14,001,000

Year ended March 31, 1999:

  Allowance for doubtful accounts

$ 9,817,000

$ 1,750,000

$ 1,253,000

 (i)

$10,314,000

  Allowance for cash discounts

5,878,000

14,903,000

14,401,000

 (ii)

6,380,000

  Inventory reserve

11,131,000

7,706,000

4,926,000

 (i)

13,911,000

(i)  Represents actual amounts written off.

(ii) Represents cash discounts given.

EMPLOYMENT AGREEMENT

AGREEMENT by and between FOREST LABORATORIES, INC. Company, a Delaware corporation (the "Company") and Charles E. Triano (the "Executive"), dated as of the 22nd day of the eleventh month of 2000.

The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 1. 

Certain Definitions:

(a) 

The "Effective Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment.

(b) 

The "Change of Control Period" shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

 2. 

Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean:

(a) 

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) 

Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) 

Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Consolidation"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing such Business Combination; or

(d) 

Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 3. 

Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the "Employment Period").

 4. 

Terms of Employment.

(a) 

Position and Duties.

(i) 

During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties, and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 35 miles from such location.

(ii) 

During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive thereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executives responsibilities to the Company.

(b) 

Compensation.

(i) 

Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term, "affiliated companies" shall include any company controlled by, controlling or under common control with the Company.

(ii) 

Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the highest aggregate amount awarded to the Executive under all annual bonus, incentive and other similar plans of the Company with respect to any of the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

(iii) 

Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices and policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(iv) 

Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(v) 

Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as is effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(vi) 

Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(vii) 

Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(viii) 

Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

 5. 

Termination of Employment.

(a) 

Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.

(b) 

Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

(i) 

the willful and continues failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties, or

(ii) 

the willful engaging by the Executive in illegal conduct or gross misconduct which is naturally and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful, unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

(c) 

Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

(i) 

the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii) 

any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(iii) 

the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

(iv) 

any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or

(v) 

any failure by the Company to comply with and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement.

(d) 

Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder.

(e) 

Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

 6. 

Obligations of the Company upon Termination.

(a) 

Good Reason: Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

(i) 

the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

A. 

the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (i) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest of earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations); and

B. 

the amount equal to the product of (1) three and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; and

C. 

an amount equal to the excess of (a) the actuarial equivalent of the benefit under the Company's qualified defined benefit retirement plan (the "Retirement Plan") (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Company's Retirement Plan immediately prior to the Effective Date), and any excess or supplemental retirement plan in which the Executive participates (together, the "SERP") which the Executive would receive if the Executive's employment continued for three years after the Date of Termination assuming for this purpose that all accrued benefits are fully vested, and, assuming that the Executive's compensation in each of the three years is that required by Section 4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Date of Termination.

(ii) 

for three years after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes re-employed with another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period;

(iii) 

the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion; and

(iv) 

to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits").

(b) 

Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's estate and/or the Executive's beneficiaries as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries.

(c) 

Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families.

(d) 

Cause: Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment of provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

 7. 

Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 8. 

Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

 9. 

Certain Reductions of Payments.

(a) 

Anything in this Agreement to the contrary not-withstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a "Payment") would be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. For purposes of this Section 9 present value shall be determined in accordance with Section 280G(d)(4) of the Code.

(b) 

All determinations required to be made under this Section 9 shall be made by BDO Seidman (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the the Company shall elect which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 9 and shall notify the Executive promptly of such election. Within five business days thereafter, the Company shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement.

(c) 

As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which will have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Executive which the Executive shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive to the Company (or if paid by the Executive to the Company shall be returned to the Executive) if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.

 10. 

Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement), After termination of the Executive's employment with the Company, the Executive shall not, without prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

 11. 

Successors.

(a) 

This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assigned by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representative.

(b) 

This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c) 

The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to al or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as herein before defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 12. 

Miscellaneous.

(a) 

This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) 

All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Charles E. Triano
110 Leroy Avenue
Darien, Connecticut 06820

If to the Company:

Forest Laboratories, Inc.
Attention: Kenneth E. Goodman
909 Third Avenue
New York, New York 10022

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by addressee.

(c) 

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

i. 

The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

ii. 

The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

iii. 

The Executive and the Company acknowledge that, except as

may otherwise be provided under any written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section i(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

For the Employee:

 /s/ Charles E. Triano    

    Charles E. Triano

FOREST LABORATORIES, INC.

By:

 /s/ Kenneth E. Goodman    

    Kenneth E. Goodman

    President and Chief Operating Officer

High

Low

April-June 1999

28.625

20.625

July-September 1999

27

20.875

October-December 1999

30.875

21.0625

January-March 2000

43.625

28.6875

April-June 2000

51.625

37.375

July-September 2000

60.3438

40

October-December 2000

70.6563

53.9375

January-March 2001

72.12

55.6563

March 31, (In thousands)

         2001

        2000

      1999

      1998

      1997

Financial Position:

Current Assets

$   884,149

$  676,472

$527,061

$396,774

$377,533

Current Liabilities

223,618

242,329

154,660

155,016

91,447

Net Current Assets

660,531

434,143

372,401

241,758

286,086

Total Assets

1,446,930

1,128,881

899,797

769,450

718,184

Total Shareholders' Equity

1,222,114

884,690

743,512

614,161

626,399

Years Ended March 31, (In thousands,

except per share data)

         2001

        2000

      1999

      1998

      1997

Summary of Operations:

Net Sales

$1,174,527

$872,822

$546,266

$427,086

$280,745

Other Revenue

30,647

26,479

77,722

47,618

28,316

Costs and Expenses

906,447

741,854

513,185

419,932

348,060

Income (Loss) Before Income Taxes (Benefit)

298,727

157,447

110,803

54,772

(    38,999

)

Income Taxes (Benefit)

83,631

44,759

33,630

18,075

(    15,458

)

Net Income (Loss)

215,096

112,688

77,173

36,697

(    23,541

)

Net Income (Loss) Per Share:

  Basic

$1.23

$0.67

$0.47

$0.23

($0.14

)

  Diluted

$1.18

$0.64

$0.45

$0.22

($0.14

)

Weighted Average Number of

  Common and Common

  Equivalent Shares

  Outstanding (Note A):

    Basic

174,528

167,566

162,890

161,812

172,036

    Diluted

182,984

175,890

171,912

166,850

172,036

               MARCH 31,             

          2001 

         2000 

Assets

Current assets:

    Cash (including cash equivalent investments of
        $378,955 in 2001 and $299,673 in 2000)

$   379,549 

$   302,600 

    Marketable securities

25,724 

35,019 

    Accounts receivable, less allowance for doubtful
        accounts of $11,123 in 2001 and $7,936 in 2000

115,591 

91,809 

    Inventories, net

263,957 

177,798 

    Deferred income taxes

64,357 

49,568 

    Refundable income taxes

25,024 

11,321 

    Other current assets

         9,947 

         8,357 

        Total current assets

     884,149 

     676,472 

Marketable securities

     100,451 

       17,619 

Property, plant and equipment:

    Land and buildings

109,547 

93,362 

    Machinery and equipment

71,671 

59,607 

    Vehicles and other

       11,235 

         9,567 

192,453 

162,536 

    Less accumulated depreciation

       55,544 

       45,520 

     136,909 

     117,016 

Other assets:

    Excess of cost of investment in subsidiaries over
        net assets acquired, less accumulated amortization
        of $9,994 in 2001 and $9,368 in 2000

14,965 

15,591 

    License agreements, product rights and other
        intangible assets, net

274,587 

262,676 

    Deferred income taxes

11,210 

19,435 

    Other

       24,659 

       20,072 

     325,421 

      317,774 

$1,446,930 

$1,128,881 

======== 

======== 

               MARCH 31,             

          2001 

         2000 

Liabilities and Shareholders' Equity

Current liabilities:

    Accounts payable

$     41,921 

$     71,976 

    Accrued expenses

139,138 

125,762 

    Income taxes payable

       42,559 

       44,591 

       Total current liabilities

      223,618 

      242,329 

Deferred income taxes

         1,198 

         1,862 

Commitments and contingencies

Shareholders' equity:

    Series A junior participating preferred stock,
        $1.00 par; shares authorized 1,000;
        no shares issued or outstanding

    Common stock $.10 par; shares authorized
        500,000; issued 212,052 shares in 2001 and
        204,728 shares in 2000

21,205 

20,473 

    Capital in excess of par

546,649 

417,081 

    Retained earnings

960,118 

745,022 

    Accumulated other comprehensive loss

(        19,573)

(        14,312)

1,508,399 

1,168,264 

    Less common stock in treasury, at cost
        (35,451 shares in 2001 and 35,406 shares in 2000)

     286,285 

     283,574 

  1,222,114 

     884,690 

$1,446,930 

$1,128,881 

======== 

======== 

        YEARS ENDED MARCH 31,        

          2001 

       2000 

       1999 

Net sales

$1,174,527 

$872,822 

$546,266 

Other income

       30,647 

    26,479 

     77,722 

  1,205,174 

  899,301 

  623,988 

Costs and expenses:

    Cost of sales

284,079 

215,651 

136,477 

    Selling, general and administrative

516,662 

455,911 

325,067 

    Research and development

     105,706 

    70,292 

     51,641 

     906,447 

  741,854 

  513,185 

Income before income tax expense

298,727 

157,447 

110,803 

Income tax expense

       83,631 

    44,759 

    33,630 

Net income

$   215,096 

$112,688 

$  77,173 

======== 

======= 

======= 

Earnings per common and common

    equivalent share:

    Basic

$1.23 

$0.67 

$0.47 

==== 

==== 

==== 

    Diluted

$1.18 

$0.64 

$0.45 

==== 

==== 

==== 

Weighted average number of common

    and common equivalent shares outstanding:

    Basic

174,528 

167,566 

162,890 

====== 

====== 

====== 

    Diluted

182,984 

175,890 

171,912 

====== 

====== 

====== 

       YEARS ENDED MARCH 31,      

       2001 

       2000 

     1999 

Net income

$215,096 

$112,688 

$77,173 

Other comprehensive loss, net of tax:

    Foreign currency translation losses

(      6,620)

(      6,770)

(    2,682)

    Unrealized gains (losses) on securities:

        Unrealized holding gain (loss) arising

        during the period (available-for-sale)

      1,359 

(         367)

         37 

Other comprehensive loss

(      5,261)

(      7,137)

(    2,645)

Comprehensive income

$209,835 

$105,551 

$74,528 

======= 

======= 

====== 

   Common stock    

    Capital in
    excess of

Retained

  Accumulated   other   comprehensive

    Treasury stock    

Shares

Amount

     par     

earnings

            loss         

Shares

Amount

Balance, April 1, 1998

196,108

$19,611

$324,976

$555,161

($  4,530)

35,302

$281,056

Shares issued upon exercise of stock

  options and warrants

5,600

560

33,447

Treasury stock acquired from employees

  upon exercise of stock options

64

1,426

Tax benefit related to stock options

  exercised by employees

22,242

Other comprehensive loss

(    2,645)

Net income

   77,173

Balance, March 31, 1999

201,708

20,171

380,665

632,334

(    7,175)

35,366

282,482

Shares issued upon exercise of stock

  options and warrants

3,020

302

20,085

Treasury stock acquired from employees

  upon exercise of stock options

40

1,092

Tax benefit related to stock options

  exercised by employees

16,331

Other comprehensive loss

(    7,137)

Net income

 112,688

Balance, March 31, 2000

204,728

20,473

417,081

745,022

(  14,312)

35,406

283,574

Shares issued upon exercise of stock

  options and warrants

7,324

732

51,879

Treasury stock acquired from employees

  upon exercise of stock options

45

2,711

Tax benefit related to stock options

  exercised by employees

77,689

Other comprehensive loss

(    5,261)

Net income

   215,096

Balance, March 31, 2001

212,052

$21,205

$546,649

$960,118

($19,573)

35,451

$286,285

======

=====

======

======

===== 

=====

======

     YEARS ENDED MARCH 31,     

       2001 

       2000 

      1999 

Cash flows from operating activities:

  Net income

$215,096 

$112,688 

$  77,173 

  Adjustments to reconcile net income to

    net cash provided by operating activities:

        Depreciation

10,623 

8,231 

7,309 

        Amortization

32,663 

32,413 

13,955 

        Deferred income tax expense (benefit)

(     9,512)

(      8,837)

4,834 

        Foreign currency translation gain

(          55)

(      1,202)

(      1,560)

        Tax benefit realized from the exercise

           of stock options by employees

79,973 

23,681 

16,796 

        Net change in operating assets and liabilities:

           Decrease (increase) in:

                Accounts receivable, net

(    23,782)

(      9,815)

(    15,403)

                Inventories, net

(    86,159)

(    45,123)

(    49,957)

                Refundable income taxes

(    13,703)

1,090 

(      2,979)

                Other current assets

(      1,590)

(      2,183)

2,332 

           Increase (decrease) in:

                Accounts payable

(    30,055)

5,303 

36,264 

                Accrued expenses

13,376 

62,948 

(    33,311)

                Income taxes payable

(      2,032)

19,418 

(      3,309)

            Increase in other assets

(      4,587)

(      2,387)

(      5,783)

                   Net cash provided by operating activities

  180,256 

  196,225 

    46,361 

Cash flows from investing activities:

   Purchase of property, plant and equipment, net

(    30,872)

(    35,322)

(    17,166)

   Purchase of marketable securities:

        Available-for-sale

(  113,672)

(    15,997)

(    56,538)

   Redemption of marketable securities:

        Available-for-sale

40,136 

41,354 

58,490 

   Purchase of license agreements, product

        rights and other intangible assets

(    44,030)

(  100,231)

(    12,000)

                   Net cash used in investing activities

(  148,438)

(  110,196)

(    27,214)

Cash flows from financing activities:

   Net proceeds from common stock options

       exercised by employees under stock option plans

    49,900 

       19,296 

    32,581 

Effect of exchange rate changes on cash

(      4,769)

(      3,693)

(         413)

Increase in cash and cash equivalents

76,949 

101,632 

51,315 

Cash and cash equivalents, beginning of year

   302,600 

  200,968 

  149,653 

Cash and cash equivalents, end of year

$379,549 

$302,600 

$200,968 

======= 

======= 

======= 

    YEARS ENDED MARCH 31,    

     2001 

    2000 

    1999 

Supplemental disclosures of cash flow

    information:

Cash paid during the year for:

    Income taxes

$29,212 

$9,910 

$18,340 

====== 

===== 

====== 

(In thousands)

     2001

     2000

     1999

Basic

174,528

167,566

162,890

Effect of assumed conversion

  of employee stock options

  and warrants

    8,456

    8,324

    9,022

Diluted

182,984

175,890

171,912

======

======

======

(In thousands)

                  2001                  

               2000                  

                1999                 

 Long-lived

 Long-lived

 Long-lived

    Net sales

        assets

 Net sales

        assets

 Net sales

        assets

United States

$1,138,156

$365,619

$836,191

$365,206

$509,222

$276,113

Ireland

6,003

82,090

5,475

46,577

4,076

39,997

United Kingdom

       30,368

      4,253

    31,156

      4,045

    32,968

      4,191

$1,174,527

$451,962

$872,822

$415,828

$546,266

$320,301

========

=======

=======

=======

=======

=======

March 31, (In thousands)

       2001

       2000

Raw materials

$135,844

$  35,976

Work in process

11,709

12,766

Finished goods

  116,404

   129,056

$263,957

$177,798

=======

=======

 Gross

 Gross

 unrealized

 unrealized

 Market

(In thousands)

      Cost

        gains

       losses

      value

2001

Available-for-sale:

State and local obligations

$123,446

$729

$124,175

Held-to-maturity:

Foreign government obligations

      2,000

      6

      2,006

$125,446

$735

$126,181

=======

====

=======

2000

Available-for-sale:

State and local obligations

$51,268

($630)

$50,638

Held-to-maturity:

Foreign government obligations

    2,000

$33

    2,033

$53,268

$33

($630)

$52,671

======

===

==== 

======

Amortized

Fair

(In thousands)

         cost

      value

Available-for-sale:

Less than one year

$  25,665

$  25,724

One to two years

    97,781

    98,451

  123,446

  124,175

Held-to-maturity