The Cooper Companies, Inc.
Dec 8, 2011

The Cooper Companies Announces Record Fourth Quarter and Full Year 2011 Results

PLEASANTON, Calif., Dec. 8, 2011 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced record financial results for the fiscal fourth quarter and full year ended October 31, 2011.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I am pleased to report record financial results for fiscal 2011 including record revenues at both our business units.  We are proud of our many accomplishments including CooperVision's global launch of Biofinity® Multifocal and its launch of Biofinity® Sphere into Japan. We continued to gain market share, post solid margins, and significantly strengthen our balance sheet.  While we experienced challenges such as the voluntary recall of limited lots of our Avaira® product family, we remain encouraged by our business trends and believe we are well positioned to deliver strong operating results in fiscal 2012."

Fourth Quarter Operating Highlights

Fourth Quarter CooperVision (CVI) Operating Highlights

        Constant Currency
  (In millions) % of CVI Revenue %chg %chg
  4Q11 4Q11 y/y y/y
Toric  $ 89.8 29% 15% 12%
Multifocal  20.4 7% 12% 10%
Single-use sphere  67.1 22% 19% 12%
Non single-use sphere, other  126.7 42% 15% 11%
Total  $ 304.0 100% 15% 11%
        Constant Currency
   (In millions)  % of CVI Revenue %chg %chg
   4Q11  4Q11 y/y y/y
Americas  $ 136.3 45% 10% 10%
EMEA  98.2 32% 8% 4%
Asia Pacific  69.5 23% 44% 29%
Total  $ 304.0 100% 15% 11%
        Constant Currency
   (In millions)  % of CVI Revenue %chg %chg
   4Q11  4Q11 y/y y/y
         
Proclear®  $ 79.5 26% 9% 6%
Silicone hydrogel  $ 102.7 34% 41% 39%

Fourth Quarter CooperSurgical (CSI) Operating Highlights

  (In millions) % of CSI Revenue %chg
  4Q11 4Q11 y/y
Office, other  $ 32.3 57% 8%
Surgical procedures  20.7 36% 24%
Fertility  3.9 7% 10%
Total  $ 56.9 100% 14%

Fiscal Year 2011 Operating Highlights

2012 Guidance

The Company initiated its full-year 2012 guidance. Guidance is summarized as follows:

  FY12 Guidance
Revenues (In millions)  
  Total $1,385-$1,440
  CVI $1,170-$1,210
  CSI $215-$230
EPS  
  GAAP $4.80-$5.00
  Non-GAAP $4.80-$5.00
Free Cash Flow (In millions) $200-$230

Recent Developments with the U.S. Food and Drug Administration (FDA)

The Cooper Companies Management Changes

As previously announced on July 15, 2011, Eugene J. Midlock will retire from the position of senior vice president and chief financial officer on December 16, 2011. Greg W. Matz, currently Cooper's vice president of finance, has been named vice president and chief financial officer succeeding Mr. Midlock effective December 17, 2011.  Mr. Matz joined Cooper as vice president and chief financial officer of CooperVision in May 2010 and was elected to his current role in July 2011.  From 1999 to 2010, he served in a variety of senior management roles at Agilent Technologies, including vice president and controller of the wireless business unit, vice president and director of internal audit and assistant corporate controller. Prior to Agilent, Mr. Matz worked at Hewlett Packard (1984-1999) in a variety of financial and marketing roles.  Mr. Matz began his career at KPMG in San Francisco (1981-1984).

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 inventory and return provisions related to the recall of certain lots of Avaira® Toric and Avaira® Sphere contact lenses, a one-time charge to settle the Rembrandt patent lawsuit, costs related to acquisitions, restructuring costs and the redemption cost associated with the extinguishment of our senior notes on February 15, 2011. We exclude these items because we do not consider them reflective of our ongoing operating performance. 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 fourth quarter of 2011, our non-GAAP results excluded a total of $16.2 million including $6.2 million of additional reserves related to the recall of certain lots of Avaira Toric and Avaira Sphere contact lenses, including a $1.1 million returns provision on revenue, a $4.9 million reserve for inventory, a $0.2 million reserve for related selling, general and administrative expenses; and a $10 million one-time charge related to the settlement of the Rembrandt Vision Technologies, L.P. patent lawsuit against CooperVision filed on April 28, 2011. In the fiscal third quarter of 2011, our non-GAAP results excluded a $14.2 million reserve for inventory and return provisions related to the Avaira recall; and we separately reported the reversal of the one-time gain on settlement of a preexisting relationship, initially reported in the fiscal first quarter, related to the acquisition of certain assets from Asahikasei Aime of $6.1 million in operating income. In the fiscal second quarter of 2011, our non-GAAP results excluded a $16.5 million loss related to the redemption of the senior notes. In the fiscal first quarter of 2011, we excluded $1.9 million in restructuring costs, primarily severance and costs associated with assets related to the closure of the Norfolk manufacturing plant which were principally reflected in cost of sales. We completed the restructuring plan in the fiscal first quarter of 2011 and recognized total pre-tax restructuring charges under this plan of $23.1 million: $1.9 million in fiscal 2011, $16.1 million in fiscal 2010 and $5.1 million in fiscal 2009. In the fiscal first quarter of 2011 our non-GAAP results excluded acquisition costs of $0.2 million, principally legal and other due diligence costs, primarily recorded in selling, general and administrative expense. We believe it is useful for investors to understand the effects of these reserves, restructuring costs and acquisition items on our fiscal 2011 operating results. 

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 October 31, Twelve Months Ended October 31,
  2011 GAAP  Adjustments  2011 Non-GAAP 2011 GAAP  Adjustments  2011 Non-GAAP
             
Gross profit  $ 223,633  $ 6,014  $ 229,647  $ 804,804  $ 22,056  $ 826,860
Operating income  $ 66,621  $ 16,167  $ 82,788  $ 227,556  $ 32,454  $ 260,010
Income before income taxes  $ 62,880  $ 16,167  $ 79,047  $ 192,764  $ 48,941  $ 241,705
Provision for income taxes  $ 6,242  $ 895  $ 7,137  $ 17,334  $ 6,997  $ 24,331
Net income  $ 56,638  $ 15,272  $ 71,910  $ 175,430  $ 41,944  $ 217,374
             
Diluted EPS  $ 1.15  $ 0.31  $ 1.46  $ 3.63  $ 0.87  $ 4.50

Conference Call and Webcast  

The Company will host a conference call today at 5:00 p.m. ET to discuss its fiscal fourth quarter and full year 2011 financial results. The dial in number in the United States is +1-866-362-4820 and outside the United States is +1-617-597-5345. The passcode is 15486569. There will be a replay available approximately two hours after the call ends until Thursday, December 15, 2011. 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 13031696. This call will be broadcast live on our website at www.coopercos.com and at www.streetevents.com. A transcript will be available on our website 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 serving the needs of the healthcare professional, improving the quality of life for its employees and customers and providing market leading products. Cooper's commitment to health and wellness is reflected through its corporate culture and global initiatives to promote healthy life choices for its employees. Cooper operates through two business units, CooperVision and CooperSurgical. CooperVision brings a refreshing perspective on vision care with a commitment to crafting quality lenses 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. Both companies provide superior product range and quality, along with friendly customer service and a drive to continually innovate. Cooper and CooperVision are headquartered in Pleasanton, CA, and CooperSurgical is headquartered in Trumbull, CT.

The Cooper Companies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10403

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 2012 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 United States and international credit markets that may adversely affect the Company's or its customers' ability to meet future liquidity needs; reduced sales, loss of customers, and costs and expenses related to the recall of certain lots of Avaira Toric and Avaira Sphere contact lenses and any additional adverse impact if this recall is expanded in the future; 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 protection; 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; interest rate and foreign currency exchange rate fluctuations; 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, 2010 as well as in our forthcoming Annual Report on Form 10-K for the fiscal year ended October 31, 2011, 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. 

THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
     
   October 31, October 31,
  2011 2010
     
ASSETS
     
Current assets:    
 Cash and cash equivalents $5,175 $3,573
 Trade receivables, net 214,779 197,490
 Inventories 253,584 227,902
 Deferred tax assets 33,684 28,828
 Other current assets 33,125 33,547
 Total current assets 540,347 491,340
Property, plant and equipment, net 609,205 593,887
Goodwill 1,276,567 1,261,976
Other intangibles, net 128,341 114,177
Deferred tax assets 21,828 23,072
Other assets 48,230 40,566
  $2,624,518 $2,525,018
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
 Short-term debt $52,979 $19,159
 Other current liabilities 214,227 180,361
 Total current liabilities 267,206 199,520
Long-term debt 327,453 591,977
Other liabilities 72,244 46,543
Deferred tax liabilities 20,127 20,202
 Total liabilities 687,030 858,242
Stockholders' equity 1,937,488 1,666,776
  $2,624,518 $2,525,018
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(In thousands, except earnings per share amounts)
(Unaudited)
         
   Three Months Ended  Year Ended
   October 31,   October 31,
  2011 2010 2011 2010
Net sales  $360,908 $313,352 $1,330,835 $1,158,517
Cost of sales 137,275 125,871 526,031 481,794
Gross profit 223,633 187,481 804,804 676,723
Selling, general and administrative expense 139,685 109,874 513,138 433,057
Research and development expense 11,738 10,486 43,581 35,274
Restructuring costs -- -- -- 424
Amortization of intangibles 5,589 4,617 20,529 18,056
Operating income 66,621 62,504 227,556 189,912
Interest expense 2,906 7,984 17,342 36,668
Loss on extinguishment of debt -- -- 16,487 --
Litigation settlement charges -- 750 -- 27,750
Other (expense) income, net (835) 106 (963) (1,068)
Income before income taxes 62,880 53,876 192,764 124,426
Provision for income taxes 6,242 5,678 17,334 11,623
Net income $56,638 $48,198 $175,430 $112,803
         
Diluted earnings per share $1.15 $1.03 $3.63 $2.43
         
Number of shares used to compute earnings per share 49,184 46,827 48,309 46,505

Soft Contact Lens Revenue Update

Worldwide Market vs. CooperVision (Constant Currency)

The data below is extracted from a compilation of industry participants' revenue by the Contact Lens Institute (CLI), an independent market research firm. This data is compiled using gross product sales at foreign exchange rates set by CLI. It therefore excludes items such as discounts, rebates, currency hedges and freight reimbursements.

Worldwide Manufacturers' Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
     
  Calendar 3Q11 Trailing Twelve Months 2011
    Market CVI   Market CVI
  Market Change Change Market Change Change
Sales by Category            
 Spheres  $ 1,342 1% 5%  $ 5,201 3% 7%
 Torics  341 7% 7%  1,273 8% 11%
 Multifocal  82 6% 4%  319 8% 0%
 WW Soft Contact Lenses  $ 1,765 3% 5%  $ 6,793 4% 8%
             
Sales by Modality            
 Single Use  $ 675 8% 9%  $ 2,524 8% 10%
 Other  1,090 (0%) 4%  4,269 2% 7%
 WW Soft Contact Lenses  $ 1,765 3% 5%  $ 6,793 4% 8%
             
Sales by Material            
 Hydrogel  $ 1,004  (1%)  (5%)  $ 3,934  (1%)  (4%)
 Silicone Hydrogel  761 9% 37%  2,859 13% 47%
 WW Soft Contact Lenses  $ 1,765 3% 5%  $ 6,793 4% 8%
             
Sales by Geography            
 Americas   $ 673 2% 4%  $ 2,579 5% 7%
 EMEA  504 2% 5%  1,972 5% 8%
 Asia Pacific   588 4% 11%  2,242 2% 8%
 WW Soft Contact Lenses  $ 1,765 3% 5%  $ 6,793 4% 8%
             
 United States  $ 579 3% 4%  $ 2,206 5% 8%
 International  1,186 3% 6%  4,587 4% 7%
 WW Soft Contact Lenses  $ 1,765 3% 5%  $ 6,793 4% 8%

COO-E

CONTACT: Kim Duncan

         Director, Investor Relations

         ir@cooperco.com

         925-460-3663

         www.coopercos.com

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Source: The Cooper Companies, Inc.

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