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): June 5, 2014
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)) |
| ITEM 2.02. | Results of Operations and Financial Condition. |
On June 5, 2014, The Cooper Companies, Inc. issued a press release reporting results for its fiscal second quarter ended April 30, 2014. 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 June 5, 2014, of The Cooper Companies, Inc. | |
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.
| THE COOPER COMPANIES, INC. | ||
| By: | /s/ Tina Maloney | |
| Tina Maloney | ||
| Corporate Controller | ||
| (Principal Accounting Officer) | ||
Dated: June 5, 2014
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated June 5, 2014, of The Cooper Companies, Inc. | |
Exhibit 99.1
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| 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 SECOND QUARTER 2014 RESULTS
PLEASANTON, Calif., June 5, 2014 — The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal second quarter ended April 30, 2014.
| • | Revenue increased 7% year-over-year to $412.3 million, up 9% in constant currency and excluding the divestiture of Aime. CooperVision (CVI) revenue up 7% to $331.1 million, up 9% in constant currency and excluding the divestiture of Aime. CooperSurgical (CSI) revenue up 9% to $81.2 million. |
| • | GAAP earnings per share (EPS) $1.62, up 10 cents or 7% from last year’s second quarter. |
| • | Non-GAAP EPS $1.64, up 14 cents or 9% from last year’s second quarter. See “Reconciliation of Non-GAAP EPS to GAAP EPS” below. |
Commenting on the results, Robert S. Weiss, Cooper’s president and chief executive officer said, “I am proud to report another strong quarter for the Company. We continued gaining market share within CVI driven by our silicone hydrogel family of products, especially Biofinity® and MyDayTM. CSI also posted solid revenue growth driven by its fertility business. As we move into the second half of the year, we remain positive on our markets and our ability to continue taking market share.”
Second Quarter GAAP Operating Highlights
| • | Revenue $412.3 million, up 7% from last year’s second quarter, 9% excluding currency and the divestiture of Aime (CVI’s rigid gas permeable contact lens and solutions business in Japan, sold effective October 31, 2013). |
| • | Gross margin 65% compared with 66% in last year’s second quarter. Gross margin was down year-over-year primarily due to planned costs associated with MyDayTM. |
| • | Operating margin 22% compared with 21% in last year’s second quarter. The increase was the result of leveraging operating expenses. |
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| • | Depreciation $24.3 million, up 4% from last year’s second quarter. Amortization $7.5 million, down 1% from last year’s second quarter. |
| • | Total debt decreased $10.3 million in the quarter to $335.4 million. Interest expense $1.6 million compared with $2.4 million in last year’s second quarter. |
| • | Cash provided by operations $126.3 million and capital expenditures $61.2 million resulted in free cash flow $65.1 million. |
Second Quarter CooperVision GAAP Operating Highlights
| • | Revenue $331.1 million, up 7% from last year’s second quarter, 9% in constant currency and excluding the divestiture of Aime. |
| • | Revenue by category: |
| (In millions) 2Q14 |
% of CVI Revenue 2Q14 |
%chg y/y |
Constant Currency %chg y/y |
|||||||||||||
| Toric |
$ | 104.8 | 32 | % | 8 | % | 8 | % | ||||||||
| Multifocal |
35.5 | 11 | % | 20 | % | 19 | % | |||||||||
| Single-use sphere |
71.7 | 22 | % | 12 | % | 15 | % | |||||||||
| Non single-use sphere, other |
119.1 | 35 | % | — | % | — | % | |||||||||
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| Total |
$ | 331.1 | 100 | % | 7 | % | 7 | % | ||||||||
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Excluding the impact of the divestiture of Aime, “Non single-use sphere, other” would have grown 5% year over year and 5% year over year in constant currency.
| • | Revenue by geography: |
| (In millions) 2Q14 |
% of CVI Revenue 2Q14 |
%chg y/y |
Constant Currency %chg y/y |
|||||||||||||
| Americas |
$ | 142.1 | 43 | % | 4 | % | 5 | % | ||||||||
| EMEA |
119.2 | 36 | % | 14 | % | 9 | % | |||||||||
| Asia Pacific |
69.8 | 21 | % | 3 | % | 9 | % | |||||||||
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| Total |
$ | 331.1 | 100 | % | 7 | % | 7 | % | ||||||||
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Excluding the impact of the divestiture of Aime, Asia Pacific would have grown 12% year over year and 20% year over year in constant currency.
| • | Selected revenue by material: |
| (In millions) 2Q14 |
% of CVI Revenue 2Q14 |
%chg y/y |
Constant Currency %chg y/y |
|||||||||||||
| Silicone hydrogel |
$ | 161.0 | 49 | % | 21 | % | 20 | % | ||||||||
| Proclear® |
$ | 83.6 | 25 | % | 8 | % | 8 | % | ||||||||
| • | Gross margin 65% compared with 67% in last year’s second quarter. Gross margin was down year-over-year primarily due to planned costs associated with MyDayTM. |
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Second Quarter CooperSurgical GAAP Operating Highlights
| • | Revenue $81.2 million, up 9% from last year’s second quarter. |
| • | Revenue by category: |
| (In millions) 2Q14 |
% of CSI Revenue 2Q14 |
%chg y/y |
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| Office and surgical procedures |
$ | 51.7 | 64 | % | 4 | % | ||||||
| Fertility |
29.5 | 36 | % | 17 | % | |||||||
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| Total |
$ | 81.2 | 100 | % | 9 | % | ||||||
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| • | Gross margin 65% compared with 65% in last year’s second quarter. |
2014 Guidance
The Company revises its full year fiscal 2014 guidance. Guidance is summarized as follows:
| FY14 Guidance Old |
FY14 Guidance New | |||
| Revenues (In millions) |
||||
| Total |
$1,685 - $1,725 | $1,685 - $1,725 | ||
| CVI |
$1,365 - $1,395 | $1,365 - $1,395 | ||
| CSI |
$320 - $330 | $320 - $330 | ||
| EPS |
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| GAAP |
$6.75 - $7.00 | $6.78 - $7.00 | ||
| Non-GAAP |
$6.75 - $7.00 | $6.80 - $7.00 |
Guidance assumes constant currency as of June 5, 2014.
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 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 second quarter of 2014, our non-GAAP results exclude $1.0 million of acquisition related costs recorded in selling, general and administrative expense.
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. To report revenue growth excluding the October 31, 2013 divestiture of Aime, we excluded fiscal second quarter of 2013 revenue of $5.9 million.
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| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||||||||||
| 2014 GAAP | Adjustments | 2014 Non-GAAP | 2014 GAAP | Adjustments | 2014 Non-GAAP | |||||||||||||||||||
| Operating income |
$ | 88,924 | $ | 986 | $ | 89,910 | $ | 170,547 | $ | 986 | $ | 171,533 | ||||||||||||
| Income before income taxes |
$ | 87,821 | $ | 986 | $ | 88,807 | $ | 167,276 | $ | 986 | $ | 168,262 | ||||||||||||
| Provision for income taxes |
$ | 8,185 | $ | 74 | $ | 8,259 | $ | 15,375 | $ | 75 | $ | 15,450 | ||||||||||||
| Net income attributable to Cooper stockholders |
$ | 79,160 | $ | 912 | $ | 80,072 | $ | 151,003 | $ | 912 | $ | 151,915 | ||||||||||||
| Diluted EPS attributable to Cooper stockholders |
$ | 1.62 | $ | 0.02 | $ | 1.64 | $ | 3.09 | $ | 0.02 | $ | 3.11 | ||||||||||||
| Fiscal 2014 EPS Guidance | ||||||||||||||||||||||||
| 2014 GAAP | Adjustments | 2014 Non-GAAP | ||||||||||||||||||||||
| Diluted EPS |
$6.78 - $7.00 | $ | 0.02 | $6.80 - $7.00 | ||||||||||||||||||||
Conference Call and Webcast
The Company will host a conference call today at 5:00 PM ET to discuss its fiscal second quarter 2014 financial results and current corporate developments. The dial-in number in the United States is 1-866-318-8615 and outside the United States is +1-617-399-5134. The passcode is 75018075. There will be a replay available approximately two hours after the call ends until Thursday, June 12, 2014. 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 11078119. 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 developing 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 approximately 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 our 2014 Guidance and all statements regarding anticipated growth in our revenue, anticipated effects of any product recalls, anticipated market conditions, 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.
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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 euro that would decrease our revenues and earnings; acquisition-related adverse effects including the failure to successfully obtain the anticipated revenues, margins and earnings benefits of acquisitions, integration delays or costs and 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; limitations on sales following product introductions due to poor market acceptance; new competitors, product innovations or technologies; reduced sales, loss of customers, and costs and expenses related to recalls; new U.S. and foreign government laws and regulations, and changes in existing laws, regulations and enforcement guidance, which affect the medical device industry and the healthcare industry generally; failure to receive, or delays in receiving, U.S. or foreign regulatory approvals for products; failure to obtain adequate coverage and reimbursement from third party payors for our products; compliance costs and potential liability in connection with U.S. and foreign healthcare regulations, including product recalls, and potential losses resulting from sales of counterfeit and other infringing products; legal costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection or other litigation; changes in tax laws or their interpretation and changes in statutory tax rates; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; the success of the Company’s research and development activities and other start-up projects; dilution to earnings per share from acquisitions or issuing stock; changes in accounting principles or estimates; environmental risks 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, 2013, 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)
| April 30, 2014 |
October 31, 2013 |
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| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 82,659 | $ | 77,393 | ||||
| Trade receivables, net |
239,769 | 229,537 | ||||||
| Inventories |
345,816 | 338,917 | ||||||
| Deferred tax assets |
37,257 | 41,179 | ||||||
| Other current assets |
59,179 | 60,215 | ||||||
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| Total current assets |
764,680 | 747,241 | ||||||
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| Property, plant and equipment, net |
817,442 | 739,867 | ||||||
| Goodwill |
1,393,912 | 1,387,611 | ||||||
| Other intangibles, net |
184,998 | 198,769 | ||||||
| Deferred tax assets |
15,738 | 16,279 | ||||||
| Other assets |
45,212 | 47,494 | ||||||
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| $ | 3,221,982 | $ | 3,137,261 | |||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Short-term debt |
$ | 33,916 | $ | 42,987 | ||||
| Other current liabilities |
230,750 | 278,266 | ||||||
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| Total current liabilities |
264,666 | 321,253 | ||||||
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| Long-term debt |
301,508 | 301,670 | ||||||
| Deferred tax liabilities |
25,372 | 24,883 | ||||||
| Other liabilities |
68,356 | 65,961 | ||||||
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| Total liabilities |
659,902 | 713,767 | ||||||
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| Total Cooper stockholders’ equity |
2,543,351 | 2,404,535 | ||||||
| Noncontrolling interests |
18,729 | 18,959 | ||||||
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| Stockholders’ equity |
2,562,080 | 2,423,494 | ||||||
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| $ | 3,221,982 | $ | 3,137,261 | |||||
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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 April 30, |
Six Months Ended April 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales |
$ | 412,317 | $ | 384,041 | $ | 817,297 | $ | 763,880 | ||||||||
| Cost of sales |
143,818 | 129,862 | 285,869 | 269,203 | ||||||||||||
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| Gross profit |
268,499 | 254,179 | 531,428 | 494,677 | ||||||||||||
| Selling, general and administrative expense |
155,804 | 150,693 | 313,892 | 301,346 | ||||||||||||
| Research and development expense |
16,295 | 14,490 | 32,007 | 28,143 | ||||||||||||
| Amortization of intangibles |
7,476 | 7,523 | 14,982 | 14,895 | ||||||||||||
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| Operating income |
88,924 | 81,473 | 170,547 | 150,293 | ||||||||||||
| Interest expense |
1,558 | 2,444 | 3,214 | 5,010 | ||||||||||||
| Gain on insurance proceeds |
— | — | — | 14,084 | ||||||||||||
| Other income (expense), net |
455 | (89 | ) | (57 | ) | 549 | ||||||||||
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| Income before income taxes |
87,821 | 78,940 | 167,276 | 159,916 | ||||||||||||
| Provision for income taxes |
8,185 | 3,473 | 15,375 | 9,515 | ||||||||||||
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| Net income |
79,636 | 75,467 | 151,901 | 150,401 | ||||||||||||
| Less: income attributable to noncontrolling interests |
476 | 331 | 898 | 598 | ||||||||||||
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| Net income attributable to Cooper stockholders |
$ | 79,160 | $ | 75,136 | $ | 151,003 | $ | 149,803 | ||||||||
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| Diluted earnings per share attributable to Cooper stockholders |
$ | 1.62 | $ | 1.52 | $ | 3.09 | $ | 3.02 | ||||||||
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| Number of shares used to compute earnings per share attributable to Cooper stockholders |
48,754 | 49,478 | 48,883 | 49,555 | ||||||||||||
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Soft Contact Lens Revenue Update
Worldwide Manufacturers’ Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
| Calendar 1Q14 | Trailing Twelve Months 2014 | |||||||||||||||||||||||
| Market | Market Change |
CVI Change |
Market | Market Change |
CVI Change |
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| Sales by Modality |
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| Single-use |
$ | 795 | 16 | % | 23 | % | $ | 3,055 | 12 | % | 20 | % | ||||||||||||
| Other |
1,120 | 3 | % | 5 | % | 4,300 | 2 | % | 8 | % | ||||||||||||||
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| WW Soft Contact Lenses |
$ | 1,915 | 8 | % | 9 | % | $ | 7,355 | 6 | % | 11 | % | ||||||||||||
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| Sales by Geography |
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| Americas |
$ | 785 | 5 | % | — | % | $ | 2,940 | 6 | % | 9 | % | ||||||||||||
| EMEA |
530 | 3 | % | 12 | % | 2,165 | 4 | % | 10 | % | ||||||||||||||
| Asia Pacific |
600 | 18 | % | 29 | % | 2,250 | 9 | % | 16 | % | ||||||||||||||
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| WW Soft Contact Lenses |
$ | 1,915 | 8 | % | 9 | % | $ | 7,355 | 6 | % | 11 | % | ||||||||||||
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Source: Management estimates and independent market research
COO-E
# # #
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