UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 5, 2013

 

 

THE COOPER COMPANIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		1-8597		94-2657368
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588

(Address of principal executive offices)

(925) 460-3600

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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ITEM 2.02.

Results of Operations and Financial Condition.

On September 5, 2013, The Cooper Companies, Inc. issued a press release reporting results for its fiscal third quarter ended July 31, 2013. A copy of this release is attached and incorporated by reference.

Internet addresses in the release are for information purposes only and are not intended to be hyperlinks to other The Cooper Companies, Inc. information.

 

ITEM 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit		Description
99.1		Press Release dated September 5, 2013, of The Cooper Companies, Inc.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: September 5, 2013

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EXHIBIT INDEX

 

Exhibit		Description
99.1		Press Release dated September 5, 2013, of The Cooper Companies, Inc.

Exhibit 99.1

 

NEWS RELEASE
CONTACT: Kim Duncan Senior Director, Investor Relations ir@cooperco.com		6140 Stoneridge Mall Road Suite 590 Pleasanton, CA 94588 925-460-3663 www.coopercos.com

THE COOPER COMPANIES ANNOUNCES THIRD QUARTER 2013 RESULTS

PLEASANTON, Calif., September 5, 2013 — The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal third quarter ended July 31, 2013.

 

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Revenue increased 9% year-over-year to $412.0 million. CooperVision (CVI) revenue up 5% to $330.5 million, up 9% in constant currency, and CooperSurgical (CSI) revenue up 27% to $81.5 million.

 

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GAAP earnings per share (EPS) $1.79, up 43 cents or 32% from last year’s third quarter.

 

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Non-GAAP EPS $1.74, up 29 cents or 20% from last year’s third quarter. See “Reconciliation of Non-GAAP EPS to GAAP EPS” below.

 

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Third quarter free cash flow $64.5 million.

Commenting on the results, Robert S. Weiss, Cooper’s president and chief executive officer said, “I am pleased to report another strong quarter for the Company. We continued to gain market share within CVI, CSI posted solid revenue growth driven by fertility, and we generated strong EPS and significant free cash flow. We remain encouraged by our business trends and believe we are well positioned to deliver strong operating results to finish our fiscal year.”

Third Quarter GAAP Operating Highlights

 

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Revenue $412.0 million, up 9% from last year’s third quarter, 12% in constant currency.

 

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Gross margin 65% compared with 63% in last year’s third quarter. The increase was primarily the result of a lower royalty payment on silicone hydrogel lens sales, product mix and increased manufacturing efficiencies, partially offset by lower revenue due to currency, primarily the Yen.

 

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Operating margin 23% compared with 20% in last year’s third quarter. The increase was the result of higher gross margins.

 

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Depreciation $23.4 million, up 7% from last year’s third quarter. Amortization $7.7 million, up 31% from last year’s third quarter, primarily related to intangible assets from the acquisition of Origio in July 2012.

 

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Total debt decreased $76.9 million in the quarter to $243.6 million. Interest expense $2.3 million down 2% from last year’s third quarter.

 

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Cash provided by operations $103.1 million and capital expenditures $38.6 million resulted in free cash flow $64.5 million.

Third Quarter CooperVision GAAP Operating Highlights

 

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Revenue $330.5 million, up 5% from last year’s third quarter, 9% in constant currency.

 

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Revenue by category:

 

		(In millions) 3Q13				% of CVI Revenue 3Q13				%chg y/y				Constant Currency %chg y/y
Toric		$	101.5				31	%			7	%			8	%
Multifocal			33.1				10	%			33	%			32	%
Single-use sphere			70.7				21	%			-1	%			9	%
Non single-use sphere, other			125.2				38	%			2	%			4	%
Total		$	330.5				100	%			5	%			9	%

 

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Revenue by geography:

 

		(In millions) 3Q13				% of CVI Revenue 3Q13				%chg y/y				Constant Currency %chg y/y
Americas		$	143.0				43	%			9	%			9	%
EMEA			118.4				36	%			11	%			8	%
Asia Pacific			69.1				21	%			-9	%			8	%
Total		$	330.5				100	%			5	%			9	%

 

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Selected revenue by material:

 

		(In millions) 3Q13				% of CVI Revenue 3Q13				%chg y/y				Constant Currency %chg y/y
Silicone hydrogel		$	143.0				43	%			21	%			22	%
Proclear®		$	86.0				26	%			9	%			11	%

 

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Gross margin 65% compared with 63% in last year’s third quarter. The increase was primarily the result of a lower royalty payment on silicone hydrogel lens sales, product mix and increased manufacturing efficiencies, partially offset by lower revenue due to currency, primarily the Yen.

 

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Third Quarter CooperSurgical GAAP Operating Highlights

 

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Revenue $81.5 million, up 27% from last year’s third quarter, driven by the acquisition of Origio in July 2012.

 

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Revenue by category:

 

		(In millions) 3Q13				% of CSI Revenue 3Q13				%chg y/y
Office and surgical procedures		$	54.0				66	%			0	%
Fertility			27.5				34	%			180	%
Total		$	81.5				100	%			27	%

 

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Gross margin 64% compared with 67% in last year’s third quarter. The decrease was primarily the result of lower margins associated with the acquisition of Origio.

2013 Guidance

The Company revises its full year fiscal 2013 guidance. Guidance is summarized as follows:

 

		FY13 Guidance Old		FY13 Guidance New		4Q13 Guidance New
Revenues (In millions)
Total		$1,575 - $1,605		$1,586 - $1,601		$410 - $425
CVI		$1,260 - $1,280		$1,271 - $1,281		$330 - $340
CSI		$315 - $325		$315 - $320		$80 - $85
EPS
GAAP		$6.42 - $6.52		$6.57 - $6.62		$1.76 - $1.81
Non-GAAP		$6.15 - $6.25		$6.23 - $6.28		$1.76 - $1.81
Free Cash Flow (In millions)		$170 - $200		$180 - $210		$19 - $49

Guidance assumes constant currency at the date of issuance and excludes the financial impact for the proposed sale of Aime announced on May 31, 2013.

Reconciliation of Non-GAAP EPS to GAAP EPS

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude insurance proceeds related to a business interruption claim and costs related to acquisitions. Our non-GAAP financial results and guidance are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements and guidance prepared in accordance with GAAP. Management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning and forecasting for future periods.

In the fiscal first quarter of 2013, our non-GAAP results exclude $0.6 million of costs related to the acquisition of Origio recorded in selling, general and administrative expense and $14.1 million in business interruption insurance proceeds. Our fiscal third quarter of 2013 non-GAAP results include $2.5 million for income tax benefits arising from the projected fiscal year effective tax rate.

 

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We also report revenue growth using the non-GAAP financial measure of constant currency revenue. Management presents and refers to constant currency information so that revenue results may be evaluated excluding the effect of foreign currency rate fluctuations. To present this information, current period revenue for entities reporting in currencies other than United States dollars are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year.

 

		Three Months Ended July 31,												Nine Months Ended July 31,
		2013 GAAP				Adjustments				2013 Non-GAAP				2013 GAAP				Adjustments				2013 Non-GAAP
Operating income		$	93,608			$	—			$	93,608			$	243,902			$	625			$	244,527
Income before income taxes		$	91,264			$	—			$	91,264			$	251,179			$	(13,458	)		$	237,721
Provision for income taxes		$	2,072			$	2,482			$	4,554			$	11,585			$	3,522			$	15,107
Net income attributable to Cooper stockholders		$	88,951			$	(2,482	)		$	86,469			$	238,754			$	(16,979	)		$	221,775
Diluted EPS attributable to Cooper stockholders		$	1.79			$	(0.05	)		$	1.74			$	4.81			$	(0.34	)		$	4.47
		Fiscal 2013 EPS Guidance
		2013 GAAP				Adjustments				2013 Non-GAAP
Diluted EPS			$6.57 - $6.62				($0.34)				$6.23 - $6.28

Conference Call and Webcast

The Company will host a conference call today at 5:00 PM ET to discuss its fiscal third quarter 2013 financial results and current corporate developments. The dial in number in the United States is +1-800-901-5213 and outside the United States is +1-617-786-2962. The passcode is 29370561. There will be a replay available approximately two hours after the call ends until Thursday, September 12, 2013. The replay number in the United States is +1-888-286-8010 and outside the United States is +1-617-801-6888. The replay passcode is 23413821. This call will also be broadcast live at http://investor.coopercos.com and a transcript will be available following the conference call.

About The Cooper Companies

The Cooper Companies, Inc. (“Cooper”) is a global medical device company publicly traded on the NYSE Euronext (NYSE:COO). Cooper is dedicated to being A Quality of Life Company™ with a focus on delivering shareholder value. Cooper operates through two business units, CooperVision and CooperSurgical. CooperVision brings a refreshing perspective on vision care with a commitment to crafting a wide range of high-quality products for contact lens wearers and providing focused practitioner support. CooperSurgical focuses on supplying women’s health clinicians with market-leading products and treatment options to improve the delivery of healthcare to women. Headquartered in Pleasanton, CA, Cooper has over 8,000 employees with products sold in over 100 countries. For more information, please visit www.coopercos.com.

Forward-Looking Statements

This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Statements relating to guidance, plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, including

 

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our 2013 Guidance and all statements regarding anticipated growth in our revenue, 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 the 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 certain European Union countries that could adversely affect our global markets; foreign currency exchange rate and interest rate fluctuations including the risk of further declines in the value of the yen and the euro that would decrease our revenues and earnings; acquisition integration delays or costs or the requirement to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period; 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; legal costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent or other litigation; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; the impact of acquisitions or divestitures on revenues, earnings or margins; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; changes in United States and foreign government regulations of the retail optical industry and of the healthcare industry generally; changes in tax laws or their interpretation and changes in effective tax rates; dilution to earnings per share from acquisitions or issuing stock and other events described in our Securities and Exchange Commission filings, including the “Business” and “Risk Factors” sections in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2012, as such Risk Factors may be updated in quarterly filings.

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.

 

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THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(In thousands)

(Unaudited)

 

		July 31, 2013				October 31, 2012
ASSETS
Current assets:
Cash and cash equivalents		$	25,482			$	12,840
Trade receivables, net			247,296				234,297
Inventories			339,908				320,199
Deferred tax assets			40,008				39,417
Other current assets			53,313				51,107
Total current assets			706,007				657,860
Property, plant and equipment, net			654,100				640,255
Goodwill			1,378,679				1,370,247
Other intangibles, net			203,398				214,783
Deferred tax assets			17,021				14,434
Other assets			47,703				43,805
		$	3,006,908			$	2,941,384
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt		$	28,338			$	25,284
Other current liabilities			220,948				237,268
Total current liabilities			249,286				262,552
Long-term debt			215,291				348,422
Deferred tax liabilities			23,298				30,971
Other liabilities			81,391				86,281
Total liabilities			569,266				728,226
Total Cooper stockholders’ equity			2,415,522				2,192,751
Noncontrolling interests			22,120				20,407
Stockholders’ equity			2,437,642				2,213,158
		$	3,006,908			$	2,941,384

 

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THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except earnings per share amounts)

(Unaudited)

 

		Three Months Ended July 31,								Nine Months Ended July 31,
		2013				2012				2013				2012
Net sales		$	411,993			$	378,186			$	1,175,873			$	1,048,835
Cost of sales			143,719				138,089				412,923				377,589
Gross profit			268,274				240,097				762,950				671,246
Selling, general and administrative expense			152,141				143,830				453,487				412,540
Research and development expense			14,865				13,156				43,008				37,611
Amortization of intangibles			7,660				5,861				22,553				16,677
Operating income			93,608				77,250				243,902				204,418
Interest expense			2,258				2,315				7,268				9,049
Gain on insurance proceeds			—				—				14,084				—
Loss on extinguishment of debt			—				1,404				—				1,404
Other (expense) income, net			(86	)			(2,144	)			461				(1,152	)
Income before income taxes			91,264				71,387				251,179				192,813
Provision for income taxes			2,072				4,433				11,585				16,315
Net income			89,192				66,954				239,594				176,498
Less: income attributable to noncontrolling interests			241				79				840				79
Net income attributable to Cooper stockholders		$	88,951			$	66,875			$	238,754			$	176,419
Diluted earnings per share attributable to Cooper stockholders		$	1.79			$	1.36			$	4.81			$	3.60
Number of shares used to compute earnings per share attributable to Cooper stockholders			49,754				49,302				49,623				49,069

 

 

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Soft Contact Lens Revenue Update

Worldwide Manufacturers’ Soft Contact Lens Revenue

(U.S. dollars in millions; constant currency; unaudited)

 

		Calendar 2Q13												Trailing Twelve Months 2013
		Market				Market Change				CVI Change				Market				Market Change				CVI Change
Sales by Modality
Single-use		$	770				9	%			15	%		$	2,920				9	%			17	%
Other			1,100				2	%			8	%			4,330				1	%			9	%
WW Soft Contact Lenses		$	1,870				4	%			10	%		$	7,250				4	%			11	%
Sales by Geography
Americas		$	740				4	%			11	%		$	2,850				5	%			11	%
EMEA			540				4	%			8	%			2,050				3	%			8	%
Asia Pacific			590				5	%			10	%			2,350				4	%			15	%
WW Soft Contact Lenses		$	1,870				4	%			10	%		$	7,250				4	%			11	%

Source: Management estimates and independent market research

COO-E

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