The Cooper Companies Announces Fourth Quarter and Full Year 2008 Results
The Cooper Companies Announces Fourth Quarter and Full Year 2008 Results
-- Fourth quarter 2008 revenue increased 6% year-over-year to
-- Fourth quarter 2008
-- Fourth quarter 2008 GAAP earnings per share (EPS)
-- Fourth quarter cash flow from operations
to
-- Fiscal 2009 revenue guidance of
Commenting on the results,
Fourth Quarter Operating Highlights
-- Revenue
-- Gross margin 60% compared with 46% in last year's fourth
quarter (or 61% in last year's fourth quarter excluding
costs considered unrelated to core operating performance
as shown below in "Unaudited Reconciliation and Explanation
of Non-GAAP to GAAP Operating Results").
-- Operating margin 18% compared with negative 2% in last year's
fourth quarter (or unchanged from last year's fourth quarter
excluding costs considered unrelated to core operating
performance).
-- Depreciation and amortization expense
Fourth Quarter CVI Operating Highlights
-- Revenue
-- Revenue by segment:
Constant
(In % of CVI Currency
thousands) Revenue %chg %chg
4Q08 4Q08 y/y y/y
-------- -------- ------ --------
Specialty
Toric $ 71,903 32% n/c 2%
Multifocal 14,617 6% 20% 21%
Cosmetic 3,556 2% -10% -5%
-------- --------
Total specialty 90,076 40% 3% 4%
Single-use sphere 44,675 20% 37% 32%
Non single-use sphere,
other 89,334 40% -3% -1%
-------- --------
Total $224,085 100% 6% 6%
======== ========
-- Revenue by geography:
Constant
(In % of CVI Currency
thousands) Revenue %chg %chg
4Q08 4Q08 y/y y/y
-------- -------- ------ --------
Americas $ 99,565 44% 1% 2%
Europe 82,940 37% 3% 7%
Asia-Pacific 41,580 19% 25% 19%
-------- --------
Total $224,085 100% 6% 6%
======== ========
-- Revenue by product Constant
(In % of CVI Currency
thousands) Revenue %chg %chg
4Q08 4Q08 y/y y/y
-------- -------- ------ --------
Proclear $ 61,749 28% 18% 21%
Biofinity $ 14,623 7% 195% 200%
Avaira $3,712 2% n/a n/a
-- Gross margin 61% compared with 44% in the fourth quarter of
2007 (or unchanged from last year's fourth quarter excluding
costs considered unrelated to core operating performance).
-- Operating margin 20% compared with negative 3% in the fourth
quarter of 2007 (or unchanged from last year's fourth quarter
excluding costs considered unrelated to core operating
performance).
Fourth Quarter CSI Operating Highlights
-- Revenue$44.7 million , up 7% from last year's fourth quarter, all of which was organic growth. -- Sales of products marketed directly to hospitals grew 18% year-over-year to$13.4 million in the fourth quarter and represent 30% of CSI's total revenue. -- Gross margin 59%, up from 58% in the fourth quarter of 2007 (or unchanged from last year's fourth quarter excluding costs considered unrelated to core operating performance). -- Operating margin 22%, up from 21% in the fourth quarter of 2007 (or 19% in last year's fourth quarter excluding costs considered unrelated to core operating performance).
Fiscal Year 2008 Operating Highlights
-- Record revenue$1,063.2 million , up 12% from fiscal 2007, 8% in constant currency. -- CVI revenue$894.8 million , up 12% from fiscal 2007, and CSI revenue$168.4 million , up 9% from fiscal 2007. -- GAAP EPS$1.43 vs. loss of25 cents in fiscal 2007. Non-GAAP EPS of$2.26 vs.$2.12 in fiscal 2007. -- Depreciation and amortization expense$82.2 million .
2009 Guidance
The Company is targeting fiscal 2009 revenue in the range of
Conference Call and Webcast
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About The
CooperSurgical develops, manufactures and markets medical devices, diagnostic products and surgical instruments and accessories used primarily by gynecologists and obstetricians. Its major manufacturing and distribution facilities are in Trumbull, CT, and
The information on Cooper's Web sites and its interactive telephone system are not part of this news release.
Forward-Looking Statements
This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Statements relating to plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, including all statements regarding anticipated growth in our revenue, planned product launches and expected results of operations and integration of any acquisition are forward-looking. To identify these statements look for words like "believes," "expects," "may," "will," "should," "could," "seeks," "intends," "plans," "estimates" or "anticipates" and similar words or phrases. Forward-looking statements necessarily depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties.
Among the factors that could cause our actual results and future actions to differ materially from those described in forward-looking statements are: adverse changes in global or regional general business, political and economic conditions due to the current global economic downturn, including the impact of continuing uncertainty and instability of U.S. and international credit markets that may adversely affect the Company's or its customers' ability to meet future liquidity needs; the requirement to provide for a significant liability or to write off a significant asset, including impaired goodwill as a result of recent declines in the price of the Company's common stock or other events; failures to launch, or significant delays in introducing new products, or limitations on sales following introduction due to poor market acceptance or manufacturing constraints (including failures to develop and implement improvements to manufacturing processes for new products); failures to receive or delays in receiving U.S. or foreign regulatory approvals for products; new competitors, product innovations or technologies; a major disruption in the operations of our manufacturing, research and development or distribution facilities due to technological problems, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; the impact of acquisitions or divestitures on revenues, earnings or margins; losses arising for pending or future litigation or product recalls; interest rate and foreign currency exchange rate fluctuations; changes in U.S. and foreign government regulation of the retail optical industry and of the healthcare industry generally; changes in tax laws or their interpretation and changes in effective tax rates; changes in the Company's expected utilization of recognized net operating loss carryforwards and other events described in our
We caution investors that forward-looking statements reflect our analysis only on their stated date. We disclaim any intent to update them except as required by law.
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
-------------------------------------
(In thousands)
(Unaudited)
October 31, October 31,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,944 $ 3,226
Trade receivables, net 159,158 164,493
Inventories 283,454 267,914
Deferred tax asset 26,337 23,395
Other current assets 55,139 58,494
------------ ------------
Total current assets 526,032 517,522
------------ ------------
Property, plant and equipment,
net 602,654 604,530
Goodwill 1,251,699 1,289,584
Other intangibles, net 130,587 145,833
Deferred tax asset 25,645 20,015
Other assets 50,999 18,685
------------ ------------
$ 2,587,616 $ 2,596,169
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 43,013 $ 46,514
Other current liabilities 212,394 239,966
------------ ------------
Total current liabilities 255,407 286,480
------------ ------------
Long-term debt 861,781 830,116
Other liabilities 38,156 9,408
Deferred tax liabilities 15,196 10,678
------------ ------------
Total liabilities 1,170,540 1,136,682
------------ ------------
Stockholders' equity 1,417,076 1,459,487
------------ ------------
$ 2,587,616 $ 2,596,169
============ ============
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
-----------------------------------------------
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
October 31, October 31,
------------------------ ------------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 268,809 $ 253,824 $1,063,176 $ 950,641
Cost of sales 106,765 136,584 453,146 431,110
---------- ---------- ---------- ----------
Gross profit 162,044 117,240 610,030 519,531
Selling,
general and
administrative
expense 101,255 104,973 429,304 407,951
Research and
development
expense 9,190 9,277 35,468 39,858
Restructuring
costs -- 2,896 1,521 9,674
Amortization
of intangibles 4,097 4,191 16,774 16,194
---------- ---------- ---------- ----------
Operating
income (loss) 47,502 (4,097) 126,963 45,854
Interest
expense 12,342 10,888 50,784 42,683
Other (loss)
income, net (1,902) (3,839) 28 (2,499)
---------- ---------- ---------- ----------
Income (loss)
before income
taxes 33,258 (18,824) 76,207 672
Provision for
income taxes 3,779 5,370 10,731 11,864
---------- ---------- ---------- ----------
Net income
(loss) 29,479 (24,194) 65,476 (11,192)
Add interest
charge
applicable to
convertible
debt, net of
tax -- -- 1,394 --
---------- ---------- ---------- ----------
Income
(loss) for
calculating
earnings
per share $ 29,479 $ (24,194) $ 66,870 $ (11,192)
========== ========== ========== ==========
Diluted
earnings
(loss) per
share $ 0.65 $ (0.54) $ 1.43 $ (0.25)
========== ========== ========== ==========
Number of
shares used to
compute
earnings per
share 45,102 44,835 46,844 44,707
========== ========== ========== ==========
Unaudited Reconciliation and Explanation of Non-GAAP to GAAP
------------------------------------------------------------
Operating Results (In thousands, except per share amounts)
----------------------------------------------------------
Listed below are the items included in net income that management
excludes in computing non-GAAP financial measures as described below
the table.
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Earnings to GAAP Net Income
------------------------------------------------------
Three Months Ended Year Ended
October 31, October 31,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
GAAP net income (loss) $ 29,479 $(24,194) $ 65,476 $(11,192)
Non-GAAP adjustments:
Production start-up
and restructuring
costs in cost
of sales -- 37,017 27,063 70,670
Distribution center
rationalization
and restructuring
costs in SGA -- 1,465 1,938 14,186
Intellectual property
litigation expenses
in SGA -- 4,727 3,364 10,325
Production start-up
costs in SGA -- 2,436 3,556 6,857
Acquired in-process
R&D -- -- -- 7,254
Other restructuring
costs in operating
expenses -- 2,893 2,535 8,868
Write-off of deferred
financing costs -- -- 2,955 882
Income tax effect -- 233 (2,514) (8,858)
-------- -------- -------- --------
-- 48,771 38,897 110,184
-------- -------- -------- --------
Non-GAAP net income $ 29,479 $ 24,577 $104,373 $ 98,992
======== ======== ======== ========
Add interest charge
applicable to
convertible debt -- 523 1,394 2,092
-------- -------- -------- --------
Income for calculating
diluted earnings
per share $ 29,479 $ 25,100 $105,767 $101,084
======== ======== ======== ========
Diluted earnings
per share $ 0.65 $ 0.53 $ 2.26 $ 2.12
======== ======== ======== ========
Number of shares used
to compute earnings
per share 45,102 47,666 46,844 47,582
======== ======== ======== ========
Explanation of Non-GAAP Measures
In addition to results in accordance with GAAP, Cooper management also considers non-GAAP operating results as important supplemental financial measures in evaluating its core operating results and in making operating decisions. While management did not report non-GAAP operating results for the fiscal fourth quarter in 2008, it has referred to prior reported non-GAAP operating results in this release for comparative purposes.
Non-GAAP operating results and guidance exclude from GAAP operating items that management does not consider part of core operating performance. Management has used these non-GAAP operating results to compare actual operating results to its business plans, calculate debt compliance covenants, allocate resources and evaluate potential acquisitions. Management believes that presenting these non-GAAP operating results allows investors, as well as management, to evaluate operating results from one period to another on a comparable basis.
Specific items that Cooper excludes from its GAAP results when evaluating core operational performance are:
-- Acquisition and restructuring expenses consisting of
- Restructuring and integration expenses related primarily to
the integration of Ocular Sciences, Inc. (Ocular) into
CooperVision, Inc. , which were charged to cost of sales and
operating expense. They consisted of costs to integrate
duplicate facilities, streamline manufacturing and distribution
practices and integrate sales, marketing and administrative
functions.
- Manufacturing and distribution rationalization and start-up
costs. They consisted of costs to:
* Develop new manufacturing technologies, specifically
silicone hydrogel manufacturing.
* Restructure manufacturing locations and platforms.
* Eliminate duplicate distribution locations (products are
stored and shipped from several locations while central
warehouses are completed).
We adjusted for these costs because once the specific
integration activities have been completed and new technology
and manufacturing techniques have been applied, the costs are
eliminated.
- Acquired in-process R&D charges. These charges are subject to
a formal appraisal process that may take up to twelve months
to complete following a transaction. Management adjusts for
these expenses because they are not known when evaluating
forecasted performance of the acquired business.
-- Expenses associated with certain intellectual property litigation
Cooper had filed suits claiming patent infringement against a
competitor to protect its intellectual property and sought a
declaratory judgment that a CVI product does not infringe any
valid and enforceable claims of the competitors' patents. These
cases have not historically been part of Cooper's normal
operations. As previously announced, the intellectual property
suits with this competitor have now been settled.
None of the items listed occurred in the fiscal fourth quarter 2008 and not all the items listed occurred in the fiscal fourth quarter of 2007. Specific amounts for the items in the fiscal fourth quarter of 2007 are set forth in the table above. For fiscal 2008, the Company no longer excludes share-based compensation expense in its non-GAAP operating results as share-based compensation is now comparable over a three-year period.
Operating results adjusted for these items should not be considered alternatives to any performance measures derived in accordance with GAAP. We present them because we consider their disclosure an important supplemental measure of performance. In evaluating Cooper's non-GAAP operating results and guidance, investors are cautioned that in future periods Cooper expects to incur expenses similar to those for which adjustments are made in the presentation of non-GAAP operating results. Presentation of non-GAAP operating results and guidance should not be construed as an indication that future results will be unaffected by similar items or nonrecurring or unusual charges.
Cooper's non-GAAP operating results have limitations as an analytical tool, including that they do not reflect the cost of:
-- The Ocular integration, and the integration and restructuring
of other acquisitions.
-- New manufacturing technologies, specifically silicone hydrogel
manufacturing, and the phase out of product lines and
manufacturing platforms that are being eliminated.
-- Intellectual property litigation, which we expect to be
significant but are difficult to forecast.
In addition, non-GAAP operating results may not be useful when comparing Cooper to other companies that may calculate these measures differently. Moreover, the impact of many of the items excluded (particularly litigation and restructuring) on guidance is difficult to quantify because of significant uncertainty in timing and the range of possible outcomes. These items could be material.
Cooper compensates for these limitations by relying primarily on GAAP operating results and supplementing these with non-GAAP operating results.
Soft Contact Lens Revenue Update: Third Calendar Quarter 2008 CVI Revenue in Constant Currency vs. the Worldwide Market in Constant Currency
The data below is extracted from a compilation of industry participants' revenue by the
CooperVision vs. Worldwide Manufacturers' Soft Lens Revenue (U.S. dollars in millions; constant currency; unaudited) CYQ3 2008 CYQ3 Cooper % 2008 % Vision Change Market Change --------- ----- --------- ----- Single-Use Spherical Lenses $ 48 35% $ 509 11% Spherical Lenses (ex single-use) 94 5% 594 2% --------- --------- Total Spheres 142 14% 1,103 6% --------- --------- Torics 78 5% 265 10% Cosmetic 3 3% 69 -- Multifocal 15 23% 52 14% --------- --------- Specialty Lenses 96 7% 386 9% --------- --------- Soft Contact Lenses $ 238 11% $ 1,489 7% ========= ========= Total Silicone Hydrogel $ 17 301% $ 473 25% Americas Region $ 102 9% $ 592 7% European Region 93 12% 456 8% Asia Pacific Region 43 16% 441 5% --------- --------- Worldwide Soft Contact Lenses $ 238 11% $ 1,489 7% ========= ========= United States $ 87 8% $ 515 8% International 151 13% 974 6% --------- --------- Worldwide Soft Contact Lenses $ 238 11% $ 1,489 7% ========= =========
Based upon
CONTACT:
ir@coopercompanies.com
www.coopercos.com