The Cooper Companies Reports First Quarter 2006 Results
The Cooper Companies Reports First Quarter 2006 Results
First Quarter Highlights
-- Revenue $205.7 million, 45% above the first quarter of 2005 in
constant currency, 39% as reported.
-- Reported EPS before nonrecurring items 49 cents; excluding
stock option expense 58 cents. Nonrecurring items include
nonrecurring acquisition and restructuring costs and the
write-off of deferred financing costs associated with amending
the syndicated bank credit facility.
EPS fell below December's first quarter guidance range of 63
cents to 65 cents primarily because of stock option expenses
for directors and employees (9 cents versus previously estimated
charge of 3 cents), audit cost overruns for 2005 (2 cents),
foreign exchange losses (2 cents) and timing of sales expenses,
promotional activities and research and development expenses
ahead of new product launches.
-- Cash flow (pretax income from continuing operations plus stock
option expenses, depreciation and amortization before nonrecurring
items) per share 95 cents, up from 89 cents in the first quarter
of 2005; trailing twelve months $4.60.
Change in Accounting for Stock Options
The Company has adopted the new accounting requirements for expensing stock options in accordance with Statement of Financial Accounting Standards No.123 (revised 2004), "Share-Based Payment" (SFAS 123R) using the modified prospective method. Therefore, prior periods have not been restated and are not comparable. These new accounting requirements reduced first quarter results by $4.9 million or 9 cents per share. Guidance for fiscal 2006 includes 25 cents for stock option expense, 10 cents more than previous guidance because ten year historical vesting data and higher volatility assumptions were used. The first quarter stock option expense will be greater than subsequent quarters because the 2006 directors' annual options are amortized over four months.
Revenue and Earnings Per Share Guidance
Cooper has updated revenue and EPS guidance for fiscal 2006 effective today to include first quarter actual results, the refinement of the impact of stock option expense and management's current manufacturing capacity expectations for the remainder of fiscal 2006 and 2007.
Revenue and EPS guidance, excluding nonrecurring acquisition and restructuring expenses, for the second quarter of fiscal 2006 and for fiscal 2006 and 2007 assuming no major changes in foreign currency exchange rates versus the first quarter are:
-- For fiscal 2006 Cooper now expects revenue of $908 million to
$936 million and EPS of $3.15 to $3.35 ($3.40 to $3.60 excluding
stock option expense). Previous 2006 revenue guidance was $933
million to $946 million and EPS of $3.34 to $3.44 ($3.49 to $3.59
excluding stock option expense).
-- CooperVision (CVI), the Company's contact lens business, expects
fiscal 2006 revenue of $785 million to $810 million, an organic
constant currency growth rate of 9% to 12% versus the prior year.
Previous revenue guidance for CVI was $810 million to $820
million.
-- CooperSurgical (CSI), the Company's women's healthcare medical
device business, expects fiscal 2006 revenue of $123 million to
$126 million, the same as previous guidance.
-- For the second quarter of fiscal 2006, Cooper expects revenue of
$215 million to $227 million -- $185 million to $195 million for
CVI and $30 million to $32 million for CSI -- with EPS before
nonrecurring acquisition and restructuring expenses of 67 cents
to 77 cents (73 cents to 83 cents excluding stock option expense).
-- For fiscal 2007, Cooper's expects revenue of $998 million to $1050
million. Previous guidance was $1045 million to $1060 million. CVI
guidance is $863 million to $910 million, an organic constant
currency growth of 10% to 12% over 2006. CSI guidance remains
unchanged at $135 million to $140 million.
2007 EPS guidance is $3.55 to $3.95 ($3.90 to $4.30 excluding
stock option expense) compared to previous EPS guidance of $4.04
to $4.14 ($4.19 to $4.29 excluding stock option expense).
-- EPS guidance for 2006 and 2007 assumes a tax rate of 10% to 15%.
Reported P&L Highlights ($'s in millions)
-----------------------------------------
---------------------------------------------------------------------
Three Months Ended January 31,
---------------------------------------------------------------------
Revenue Operating Income
% %
% % Revenue Revenue
2006 2005 Inc. 2006 2005 Inc. 2006 2005
---------------------------------------------------------------------
CVI $175.6 $121.1 45% $ 38.8(a) $ 30.0(a) 29% 22% 25%
CSI 30.1 26.5 14% 5.3 3.5 50% 18% 13%
------ ------ ------ ------
Subtotal 205.7 147.6 39% 44.1 33.5 31% 21% 23%
Corporate
Expense -- -- -- (8.6) (3.8) -- -- --
------ ------ ------ ------
--------------------------------------------------------------------
TOTAL $205.7 $147.6 39% $ 35.5 $ 29.7 20% 17% 20%
====== ====== ====== ======
Excluding
stock
option
expense $ 40.4 $ 29.7 36% 20% 20%
====== ======
---------------------------------------------------------------------
(a) Before nonrecurring charges for merger related accounting and
restructuring of $1.8 million and $3.1 million, in fiscal 2006
and 2005, respectively.
First Quarter Fiscal 2006 Revenue and Expense Summary
Cooper's first quarter revenue of $205.7 million was 45% above last year's first quarter in constant currency, 39% as reported.
Gross margin, before nonrecurring acquisition and restructuring costs, was 63%, one percent below last year's first quarter as unfavorable currency adjustments flow through the cost of goods sold. Including nonrecurring acquisition and restructuring costs, gross margin was also 63% compared with 62% in the prior year's quarter.
Selling, general and administrative expense (SG&A), including $4.8 million for stock option expense, grew 40% and was 41% of revenue, the same as in last year's first quarter. SG&A before stock option expense was 39% of sales.
Corporate expenses increased to $8.6 million, or 123% over the first quarter of 2005. These include $3.4 million of stock option expenses, increased costs to comply with corporate governance requirements and support a larger company, an audit cost overrun of $1.3 million for the fiscal 2005 financial and controls audits and continuing costs to maintain Cooper's global trading arrangement.
First quarter fiscal 2006 research and development expense was $5.9 million, more than double the first quarter of 2005, which included only one month of R&D costs from the acquisition. CVI's activities include programs to develop two-week disposable and continuous wear silicone hydrogel lenses, a disposable multifocal toric lens and a daily wear lens incorporating the Proclear® lens material.
Operating income before nonrecurring acquisition and restructuring costs grew 20%, 36% excluding the effect of stock option expense, and was 17% of revenue, 20% excluding the effect of stock option expense, versus 20% in last year's first quarter. With nonrecurring acquisition and restructuring costs included, operating income was 16% of revenue.
Interest expense grew 131% over the first quarter of 2005 as a result of debt incurred associated with the Ocular acquisition. Other expenses of $5.2 million include $800 thousand of foreign exchange losses and a $4.1 million write-off of deferred financing costs associated with amending the syndicated bank credit agreement in December 2005.
The effective tax rate (ETR) for the quarter (provision for taxes divided by income before taxes) was 11%, 12% excluding nonrecurring items, compared with 21% for the first quarter of 2005.
Compared with the first quarter of 2005, the number of shares used to calculate diluted earnings per share increased 21% to 47.6 million shares, primarily due to the shares issued in the Ocular transaction.
First Quarter Fiscal 2006 Business Unit Operating Summaries
($'s in millions)
-----------------------------------------------------------
---------------------------------------------------------------------
CooperVision
---------------------------------------------------------------------
2006 2006 % Change vs.
Nonrecurring Before 2005 before
acquisition nonrecurring nonrecurring
and acquisition and acquisition and
2006 restructuring restructuring restructuring
Reported expenses expenses % Revenue expenses
---------------------------------------------------------------------
Net
sales $175.6 $ -- $175.6 100% 45%
Cost of
sales 63.8 (0.5) 63.3 36% 54%
------ ------ ------
Gross
profit 111.8 0.5 112.3 64% 41%
SG&A 65.2 -- 65.2 37% 40%
R&D and
amortization 8.3 -- 8.3 5% 149%
Restructuring
costs 1.3 (1.3) -- -- --
------ ------ ------
Total
operating
expense 74.8 (1.3) 73.5 42% 47%
------ ------ ------
---------------------------------------------------------------------
Operating
income $ 37.0 $ 1.8 $ 38.8 22% 29%
====== ====== ======
---------------------------------------------------------------------
---------------------------------------------------------------------
CooperSurgical
---------------------------------------------------------------------
2006 %
Reported Revenue % Change vs. 2005
---------------------------------------------------------------------
Net sales $ 30.1 100% 14%
Cost of sales 12.8 43% 8%
------
Gross profit 17.3 57% 18%
SG&A 10.7 36% 7%
R&D and amortization 1.3 3% 22%
Total operating expense 12.0 39% 8%
------
---------------------------------------------------------------------
Operating income $ 5.3 18% 50%
======
---------------------------------------------------------------------
Balance Sheet and Cash Flow Highlights
-- At the end of the first quarter, Cooper's days sales outstanding
(DSO) increased to 68 days from 65 days a year ago. Cooper
expects future DSO in the upper 60's to low 70's.
-- Inventory months on hand was 7.8 months at the end of the quarter,
versus 6.8 months at last year's first quarter, in line with
company expectations, as inventory is built to support new product
launches.
-- Capital expenditures were $46 million in the quarter, primarily
to expand manufacturing capacity and to continue the rollout of
new information systems in selected locations.
"Our objective is to move aggressively to develop manufacturing
capacity for our new silicone hydrogel lenses and to expand and/or
convert capacity to the Gen II manufacturing platform for both
single-use and our two-week and monthly PC technology-based high
volume products," said Robert S. Weiss, executive vice president
and chief operating officer. "Our ongoing conversion to Gen II is
key to achieving the substantial manufacturing savings we've
projected from the Ocular acquisition," he noted.
Cooper expects capital expenditures in fiscal 2006 of about $150
million to $160 million, about 70% for expanded manufacturing
capacity, about 20% for Gen II conversion and about 10% for
information technology.
Cooper expects to exit fiscal 2006 with the manufacturing capacity
to sell $40 million in silicone hydrogel lenses during fiscal
2007, more than five times the anticipated fiscal 2006 capacity,
and to continue to increase silicone hydrogel capacity during
fiscal 2007. Adequate manufacturing capacity to meet anticipated
demand for existing single-use lenses and Biomedics XC is expected
to be in place over the next twelve months.
-- Depreciation and amortization was $14.2 million for the quarter.
Amended Credit Agreement
During the first quarter Cooper amended its $750 million credit facility. This reduced the cost of borrowing by approximately $2 million annually. As a result, Cooper wrote off $4.1 million of deferred costs related to the previous facility in the first quarter.
CooperVision Business Details
2005 Worldwide Contact Lens Market Revenue Highlights
-----------------------------------------------------
---------------------------------------------------------------------
Calendar 2005 Trends In Manufacturers Worldwide Shipments
of Soft Contact Lenses
---------------------------------------------------------------------
% Reported
Market Market Growth % CVI
Segment % Market % CVI Revenue (12 mos. 2005) Soft Lens Growth(a)
---------------------------------------------------------------------
Single-use 29 10 +13 +35
---------------------------------------------------------------------
Sphere 46 50 +9 (3)
---------------------------------------------------------------------
Toric 15 33 +15 +13
---------------------------------------------------------------------
Multifocal 3 5 +19 +48
---------------------------------------------------------------------
Cosmetic 7 2 (3) --
---------------------------------------------------------------------
Total 100 100 +10 +7
---------------------------------------------------------------------
All
disposable 95 87 +14 +13
---------------------------------------------------------------------
(a) Organic growth for 2005. See table below: CVI Selected Revenue
Data for Major Product and Geographic Categories.
According to independent market research data, the worldwide soft contact lens market grew 10% in calendar 2005 to $4.6 billion -- 8% in constant currency. The soft contact lens market in United States grew about 8% to $1.6 billion, while revenue in countries outside the United States grew about 11% to $3 billion.
Toric lenses, the largest specialty product category, grew approximately 15% to about $685 million, while the daily disposable segment grew about 13% to approximately $1.3 billion. Multifocal lenses grew 19% to $143 million.
The Americas region, approximately $1.8 billion or 40% of the world market, grew approximately 9%. Japan and the Pacific Rim countries, approximately $1.5 billion or 31% of the world market, grew approximately 17%. Europe, about $1.3 billion or 29% of the market, grew about 5%.
CVI believes that it is the world's third leading contact lens supplier with a worldwide market share of 17%. CVI now accounts for over 37% of worldwide toric lens revenues.
Silicone Hydrogel Market Update
According to independent market research data, worldwide silicone hydrogel lens revenue grew 95% during 2005 to $662 million, about 14% of the soft contact lens market. The market share for silicone hydrogel lenses stabilized at 16% of soft contact lens revenue in both the third and fourth quarters of calendar 2005.
About two-thirds of the silicone hydrogel revenue is generated in the United States. During calendar 2005, silicone hydrogel lenses accounted for 26% of soft contact lens revenue in the U.S.; 27% in the third quarter and 28% in the fourth quarter.
According to Health Product Research estimates, silicone hydrogel lenses accounted for 27% of total patient visits to contact lens practitioners in the United States during the fourth quarter of calendar 2005 compared with 25% in the third quarter. Silicone hydrogel lenses accounted for 34% of new patient visits in the third quarter and 35% of new visits in the fourth quarter.
CooperVision Worldwide Reported Revenue Highlights for the First Quarter Fiscal 2006
-- CVI's worldwide revenue of $175.6 million grew 45% over last
year's first quarter -- 52% in constant currency.
-- CVI's core product lines -- specialty lenses (toric, cosmetic,
multifocal, and PC Technology and silicone hydrogel spherical
lenses) plus single-use lenses -- grew 44% in the first quarter
and accounted for 63% of its soft lens business.
-- Sales of toric lenses, which correct astigmatism, increased 32%
in the first quarter and accounted for 34% of CVI's soft contact
lens revenue. All disposable toric products grew 33% in the
quarter and now represent about 80% of CVI's worldwide toric
sales.
-- Single-use lenses had sales of about $20.7 million during the
quarter, up 256% for the same period in 2005.
-- In the Americas region, which accounts for 48% of CVI's contact
lens business, revenue grew 37% -- 36% in constant currency.
-- European lens revenue, about 36% of CVI's contact lens business,
grew 31% -- 44% in constant currency.
-- Asia-Pacific revenue grew to $28.3 million from $12.8 million,
and now represents 16% of CVI's contact lens business.
CooperVision First Quarter Fiscal 2005 Organic Constant Currency Growth Revenue Comparison
On January 6, 2005, Cooper acquired Ocular, and results from the acquired Ocular business are part of Cooper's consolidated financial reporting from that date. To show CVI's organic constant currency growth, we include in the table below Ocular's revenue when Cooper did not own Ocular of $51.6 million for November 1, 2004 through January 5, 2005 with CVI's reported revenue of $121.1 million for the prior year's period.
---------------------------------------------------------------------
CVI Selected Revenue Data for Major Product and Geographic Categories
---------------------------------------------------------------------
%
% CVI Change
Revenue 1Q06 vs.
1Q06 1Q05
---------------------------------------------------------------------
Total worldwide soft contact lenses 100 +6
---------------------------------------------------------------------
Total specialty lenses 50 +10
---------------------------------------------------------------------
US specialty 61 +5
---------------------------------------------------------------------
Outside the US (OUS) specialty 44 +14
---------------------------------------------------------------------
Total disposable lenses (1 day, 2 week,
1 month wear) 88 +8
---------------------------------------------------------------------
US disposable 84 +6
---------------------------------------------------------------------
OUS disposable 90 +9
---------------------------------------------------------------------
Total spherical lenses (ex single-use) 47 (2)
---------------------------------------------------------------------
US spherical 48 (1)
---------------------------------------------------------------------
OUS spherical 46 (2)
---------------------------------------------------------------------
Disposable spherical lenses (93% of
spherical revenue) 55 +4
---------------------------------------------------------------------
US disposable spherical 45 +3
---------------------------------------------------------------------
OUS disposable spherical 61 +5
---------------------------------------------------------------------
Total single-use spherical lenses 13 +23
---------------------------------------------------------------------
Total toric lenses 34 +9
---------------------------------------------------------------------
US toric 45 +4
---------------------------------------------------------------------
OUS toric 27 +15
---------------------------------------------------------------------
Disposable toric lenses (80% of toric
revenue) 27 +13
---------------------------------------------------------------------
US disposable toric 32 +7
---------------------------------------------------------------------
Multifocal lenses 5 +56
---------------------------------------------------------------------
Proclear(r) lenses 17 +21
---------------------------------------------------------------------
US Proclear(r) 17 +15
---------------------------------------------------------------------
OUS Proclear(r) 16 +26
---------------------------------------------------------------------
Americas region 45 +3
---------------------------------------------------------------------
European region 38 +8
---------------------------------------------------------------------
Asia-Pacific region 17 +11
---------------------------------------------------------------------
CooperVision Strategies
While posting an 8% revenue gain worldwide during fiscal 2005, CVI lost market share in the two-week spherical lens market in the United States. New product introductions during calendar 2006 are aimed at growing revenue and regaining market share momentum. Recent new product introductions were:
-- In December 2005, CVI launched Biofinity a second generation
monthly silicone hydrogel spherical lens in Europe and plans to
introduce it in the United States in the second half of calendar
2006.
-- In January, CVI introduced Biomedics XC, a two-week aspheric lens
featuring PC Technology. This product is positioned against first
generation two-week disposable silicone hydrogel spheres as a
superior product with overall patient comfort preference in daily
wear. It will soon be available as a house brand for customers in
the optical chain market, who have been unable to offer a CVI two-
week sphere until now, and enables practitioners to offer a new
two-week contact lens that is different from silicone hydrogel
products.
-- In January, an improved Biomedics® single-use spherical lens was
launched worldwide.
These products accounted for about $1 million in revenue in the first quarter of fiscal 2006.
The schedule for the introduction of CVI new products for the remainder of calendar 2006 and for 2007 and 2008 is as follows:
---------------------------------------------------------------------
Introduction Date Product Description Market Comments
(calendar year)
---------------------------------------------------------------------
1H06 Second base curve of United Allows more
Proclear(r) toric States patients to wear
then the Proclear(r)
worldwide toric lens
---------------------------------------------------------------------
Single-use toric Japan First single-use
toric in Japan
with wide range
of parameters
---------------------------------------------------------------------
2H06 Silicone Hydrogel United Second
sphere States generation
monthly product
---------------------------------------------------------------------
Biomedics(r) United Disposable two-
Multifocal EP States week product
(Emerging Presbyope)
---------------------------------------------------------------------
Proclear(r) disposable United First disposable
toric multifocal States product in its
class
---------------------------------------------------------------------
Single-use sphere with United Premium
PC technology States single-use lens
enhances wearer
comfort
---------------------------------------------------------------------
Proclear(r) disposable United Expands
toric XR States parameters of
Proclear(r) toric
---------------------------------------------------------------------
2007 Single-use sphere with Europe Premium
PC technology single-use lens
enhances wearer
comfort
---------------------------------------------------------------------
Silicone Hydrogel United CVI's third
sphere plus PC States generation
technology silicone
hydrogel using
PC technology
---------------------------------------------------------------------
Single-use multifocal United First premium
with PC technology States single-use
multifocal
---------------------------------------------------------------------
Biomedics XC(tm) Asia Favorable
two-week disposable Pacific clinical profile
sphere with Europe versus
PC technology competitive
silicone
hydrogels
---------------------------------------------------------------------
Silicone Hydrogel Toric United CVI's third
States generation
Europe silicone
hydrogel using
PC technology
---------------------------------------------------------------------
2008 Single-use sphere with Japan Premium
PC technology single-use lens
enhances wearer
comfort
---------------------------------------------------------------------
CVI First Quarter Expenses
CVI's gross margin before nonrecurring acquisition and restructuring costs was 64% of revenue in the first quarter of fiscal 2006 compared to 66% in last year's first quarter. Gross margin with nonrecurring acquisition and restructuring costs included was also 64%, approximately the same as the first quarter of 2005. The impact of foreign exchange, sales product mix and manufacturing inefficiencies associated with the ramp up of new products is expected to cause gross margins to be lower in the first half of the year compared with the second half.
CooperVision's SG&A expense grew 40% during the quarter compared with revenue growth of 45%. Expense growth reflects CVI's investment in selling programs associated with new products in advance of product launches. SG&A expenses in the second half of the year as a percent of revenue are expected to decline reflecting the impact of anticipated revenue associated with new product introductions.
Research and development expense was $5.2 million in the first quarter of fiscal 2006, 1.5 times greater than last year's first quarter and is expected to be between $18 million and $20 million for fiscal 2006.
CooperSurgical Business Details
During the first quarter, revenue at CSI, Cooper's women's healthcare medical device business, grew 14% to $30.1 million compared with $26.5 million in the first quarter of fiscal 2005.
CSI's organic revenue grew approximately 6% over last year's first quarter.
CSI's operating margin was 18% for the quarter, up from 13% in the first quarter of 2005, reflecting operating efficiencies derived from 2005 restructuring activities.
In November 2005, CSI acquired NeoSurg Technologies, Inc. (NeoSurg), a manufacturer of reusable and disposable trocar access systems used in laparoscopic surgery, and Inlet Medical, Inc. (Inlet), a manufacturer of trocar closure systems and pelvic floor reconstruction procedure kits. These purchases advance CSI's expansion within the hospital segment of women's healthcare.
Inlet revenue was approximately $2.7 million in the first quarter, and the Company expects to launch its NeoSurg products in the second half of fiscal 2006.
Earnings Per Share
All per share amounts in this news release refer to diluted per share amounts.
Non-GAAP Financial Measures (In millions, except per share amounts)
In this news release, we report Cooper's "cash flow per share" for the first quarter of fiscal 2006 and 2005 as 95 cents and 89 cents, respectively, and our cash flow per share for the twelve months ended January 31, 2006 as $4.60.
Although "cash flow per share" is a non-GAAP financial measure, we disclose it because we believe it is a more appropriate measure of Cooper's liquidity and financial strength, particularly when calculated consistently over time. In Cooper's case, cash flow per share is more informative than the more common non-GAAP measure of liquidity called "earnings before interest, taxes, depreciation and amortization" (EBITDA) because, unlike most companies, Cooper does not expect to pay federal income taxes for several years because it has significant net operating loss carryforwards. Cooper has a significant competitive advantage, as most companies expend a large portion of their pretax profits on taxes. Readers should understand this and judge our financial strength accordingly.
To calculate "cash flow per share," we add back charges for income taxes, stock options, depreciation, amortization and nonrecurring items (nonrecurring acquisition and restructuring expenses and the write-off of deferred financing costs associated with amending the syndicated bank credit facility) to income for calculating earnings per share, less interest on convertible debt, and then divide the result by the average number of shares used to calculate diluted earnings per share. In the table below, we reconcile earnings per share (the closest GAAP measure) to "cash flow per share" for all periods reported using the same diluted per share figures.
Twelve
Twelve Months Months
Ended Ended
Q1 2006 Q1 2005 12/31/2005 1/31/2006
Income for calculating earnings
per share $ 18.5 $ 18.2 $ 93.8
Add:
Income taxes 2.2 4.6 16.7
Stock options 4.9 -- --
Depreciation 10.4 6.6 36.9
Amortization 3.7 1.6 11.7
Nonrecurring acquisition and
restructuring expenses 1.8 4.7 52.0
Write-off of deferred financing
costs 4.1 -- --
Less: Interest charge applicable
to convertible debt, net of tax 0.5 0.5 2.1
------ ------ ------
"Cash flow" $ 45.1 $ 35.2 $209.0
====== ====== ======
Earnings per share $ 0.39 $ 0.46 $ 2.04
====== ====== ======
Cash flow per share $ 0.95 $ 0.89 $ 4.54 $ 4.60
====== ====== ====== ======
Number of shares used to compute
diluted earnings per share 47.6 39.5 46.0
In this news release, we report for the first quarter of fiscal 2006, "earnings per share before nonrecurring items" as 49 cents and "earnings per share before nonrecurring items and stock option expense" as 58 cents.
Although "earnings per share before nonrecurring items" is a non-GAAP financial measure, we disclose it because we believe it is an appropriate measure to promote comparability of Cooper's results, particularly when calculated consistently over time. In the schedule below, we reconcile earnings per share (the closest GAAP measure) to "earnings per share before nonrecurring items," for all periods reported using the same diluted per share figures. We add back nonrecurring items, adjusted for the impact of the nonrecurring items on the effective tax rate, to reported earnings per share.
Q1 2006
Earnings per share, as reported $0.39
Nonrecurring items, net of tax 0.10
-----
Earnings per share before nonrecurring items $0.49
=====
Stock option expense, net of tax 0.09
-----
Earnings per share before nonrecurring items and stock
option expense $0.58
=====
Number of shares used to compute diluted earnings per share 47.6
=====
Conference Call
The Cooper Companies will hold a conference call to discuss its first quarter results today at 2pm Pacific Standard Time. To access the live call, dial 1-888-396-2369. A replay will be available at 888-286-8010 approximately one hour after the call ends and remain available for five days. The passcode is 42774109. Callers outside the United States should dial 617-847-8710, passcode 49928841.This call will also be broadcast live on The Cooper Companies' Web site, www.coopercos.com and at www.streetevents.com.
Forward-Looking Statements
This news release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. These include certain statements about the integration of the Ocular business, our capital resources, performance and results of operations. In addition, all statements regarding anticipated growth in our revenue, anticipated market conditions, planned product launches and results of operations 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. Discussions of strategy, plans or intentions often contain forward-looking statements. Forward-looking statements necessarily depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. These include the risk that acquired businesses will not be integrated successfully into CVI and CSI, including the risk that the Company may not continue to realize anticipated benefits from its cost-cutting measures and inherent in accounting assumptions made in the acquisitions; the risks that CVI's new products will be delayed or not occur at all, or that sales will be limited following introduction due to manufacturing constraints; risks related to implementation of information technology systems covering the Company's businesses and any delays in such implementation or other events which could result in management having to report a significant deficiency or material weakness in the effectiveness of the Company's internal control over financial reporting in its 2006 annual report on Form 10-K; and risks with respect to the ultimate validity and enforceability of the Company's patent applications and patents and the possible infringement of the intellectual property of others.
Events, among others, that could cause our actual results and future actions of the Company to differ materially from those described in forward-looking statements include major changes in business conditions, a major disruption in the operations of our manufacturing or distribution facilities, new competitors or technologies, significant delays in new product introductions, the impact of an undetected virus on our computer systems, acquisition integration delays or costs, increases in interest rates, foreign currency exchange exposure, investments in research and development and other start-up projects, variations in stock option expenses caused by stock price movement or other assumptions inherent in accounting for stock options, dilution to earnings per share from acquisitions or issuing stock, worldwide regulatory issues, including product recalls and the effect of healthcare reform legislation, cost of complying with corporate governance requirements, changes in tax laws or their interpretation, changes in geographic profit mix effecting tax rates, significant environmental cleanup costs above those already accrued, litigation costs including any related settlements or judgments, the adverse effects on patients, practitioners and product distribution of natural disasters, cost of business divestitures, the requirement to provide for a significant liability or to write off a significant asset, including impaired goodwill, changes in accounting principles or estimates and other events described in our Securities and Exchange Commission filings, including the "Business" and "Risk Factors" section in Cooper's Annual Report on Form 10-K for the fiscal year ended October 31, 2005. 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.
Corporate Information
The Cooper Companies, Inc. manufactures and markets specialty healthcare products through its CooperVision and CooperSurgical units. Corporate offices are in Lake Forest and Pleasanton, Calif. The World Wide Web address is www.coopercos.com. A toll free interactive telephone system at 1-800-334-1986 provides stock quotes, recent press releases and financial data.
CooperVision manufactures and markets contact lenses and ophthalmic surgery products. Headquartered in Lake Forest, Calif., it manufactures in Albuquerque, N.M., Juana Diaz, Puerto Rico, Norfolk, Va., Rochester, N.Y., Adelaide, Australia, Hamble and Hampshire England, Ligny-en-Barrios, France, Madrid, Spain and Toronto. Its Web address is www.coopervision.com.
CooperSurgical manufactures and markets diagnostic products, surgical instruments and accessories to the women's healthcare market. With headquarters and manufacturing facilities in Trumbull, Conn., it also manufactures in Pasadena, Calif., North Normandy, Ill., Fort Atkinson, Wis., Montreal and Berlin. Its Web address is www.coopersurgical.com.
Proclear® and Biomedics®, are registered trademarks and Biomedics XC and Biofinity are trademarks of The Cooper Companies, Inc. and its subsidiaries or affiliates.
FINANCIAL STATEMENTS FOLLOW
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
-------------------------------------------
(In thousands, except earnings per share amounts)
(Unaudited)
Three Months Ended
January 31,
-------------------
2006 2005
-------- --------
Net sales $205,739 $147,550
Cost of sales 76,578 55,432
-------- --------
Gross profit 129,161 92,118
Selling, general and administrative expense 84,446 60,395
Research and development expense 5,932 2,830
Restructuring costs 1,340 666
Amortization of intangibles 3,729 1,610
-------- --------
Operating income 33,714 26,617
Interest expense 8,428 3,648
Other loss, net 5,163 614
-------- --------
Income before income taxes 20,123 22,355
Provision for income taxes 2,169 4,646
-------- --------
Net income 17,954 17,709
Add interest charge applicable to
convertible debt, net of tax 522 524
-------- --------
Income for calculating diluted earnings per
share $ 18,476 $ 18,233
======== ========
Diluted earnings per share $ 0.39 $ 0.46
======== ========
Number of shares used to compute earnings
per share 47,614 39,479
======== ========
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
-------------------------------------
(In thousands)
(Unaudited)
January 31, October 31,
2006 2005
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 24,597 $ 30,826
Trade receivables, net 155,001 152,610
Inventories 198,480 185,693
Deferred tax asset 21,147 23,449
Other current assets 50,118 51,136
---------- ----------
Total current assets 449,343 443,714
---------- ----------
Property, plant and equipment, net 414,113 379,785
Goodwill 1,209,834 1,169,049
Other intangibles, net 161,096 151,413
Deferred tax asset 20,699 19,716
Other assets 13,173 16,153
---------- ----------
$2,268,258 $2,179,830
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 38,537 $ 72,260
Other current liabilities 186,398 185,362
---------- ----------
Total current liabilities 224,935 257,622
---------- ----------
Long-term debt 727,234 632,652
Deferred tax liabilities 7,819 9,118
Accrued pension liability and other 7,606 7,213
---------- ----------
Total liabilities 967,594 906,605
---------- ----------
Stockholders' equity 1,300,664 1,273,225
---------- ----------
$2,268,258 $2,179,830
========== ==========
CONTACT: The Cooper Companies, Inc.
Norris Battin
(888) 822-2660
Fax: (949) 597-0662
ir@coopercompanies.com