The Cooper Companies, Inc.
Dec 4, 2014

The Cooper Companies Announces Fourth Quarter and Full Year 2014 Results

PLEASANTON, Calif., Dec. 4, 2014 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal fourth quarter and full year ended October 31, 2014.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I am pleased to report record revenue this year at both our business units and record non-GAAP EPS. We accomplished this through continued market share gains across all geographies and the acquisition of Sauflon Pharmaceuticals. Our business fundamentals remain strong and we expect fiscal 2015 to be a year of strong operational performance."

Fourth Quarter GAAP Operating Highlights

Fourth Quarter CooperVision (CVI) GAAP Operating Highlights

        Pro forma*
  (In millions) % of CVI Revenue %chg %chg
  4Q14 4Q14 y/y y/y
Toric  $ 110.9 29% 13% 12%
Multifocal  40.1 10% 26% 20%
Single-use sphere  93.6 24% 32% 11%
Non single-use sphere, other  140.8 37% 12% 2%
Total  $ 385.4 100% 18% 9%
         
        Pro forma*
   (In millions)  % of CVI Revenue %chg %chg
   4Q14  4Q14 y/y y/y
Americas  $ 152.9 40% 8% 5%
EMEA  163.0 42% 43% 13%
Asia Pacific  69.5 18% -2% 7%
Total  $ 385.4 100% 18% 9%

*Constant currency including Sauflon in both periods (unaudited for fiscal 4Q13) and excluding Aime.

Fourth Quarter CooperSurgical (CSI) GAAP Operating Highlights

        Constant Currency
  (In millions) % of CSI Revenue %chg %chg
  4Q14 4Q14 y/y y/y
Office and surgical procedures  $ 55.0 67% -1% -1%
Fertility  27.6 33% -5% -1%
Total  $ 82.6 100% -3% -1%

Fiscal Year 2014 GAAP Operating Highlights

Other

Fiscal Year 2015 Guidance

The Company updated its fiscal year 2015 guidance. Guidance assumes constant currency as of December 3, 2014, and is summarized as follows:

  FY15 Guidance FY15 Guidance
  Old New*
Revenues (In millions)    
Total $2,000 - $2,060 $1,900 - $1,960
CVI $1,675 - $1,715 $1,575 - $1,620
CSI $325 - $345 $325 - $340
EPS    
Non-GAAP $8.20 - $8.60 $7.30 - $7.70

*Guidance reduced solely to reflect moves in currency from September 4, 2014 (date of last guidance), offset by a slight increase reflecting operational improvements.

Reconciliation of Non-GAAP Results to GAAP Results

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures indicated in the tables below that we believe are helpful in understanding our results. The non-GAAP measures exclude costs which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. These include costs related to acquisitions and the related integration activities, divestitures, severance and related restructuring costs, and proceeds related to a business interruption claim. 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 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. Our non-GAAP financial measures include the following adjustments, along with the related income tax effects and changes in income attributable to noncontrolling interests:

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 $6.6 million and $25.8 million of net sales in our fiscal fourth quarter of 2013 and fiscal year 2013, respectively. To report pro forma revenue growth including Sauflon, we included $41.4 million and $158.6 million of net sales in our fiscal fourth quarter of 2013 and fiscal year 2013, respectively, for periods when we did not own Sauflon.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended October 31,
  2014     2014 2013     2013
  GAAP Adjustment   Non-GAAP GAAP Adjustment   Non-GAAP
                 
Net sales  $ 467,997  $ --     $ 467,997  $ 411,852  $ --     $ 411,852
Cost of sales  188,445  (16,097)  A   172,348  147,994  --     147,994
Gross profit  279,552      295,649  263,858      263,858
Selling, general and administrative expense  208,021  (38,828)  B   169,193  157,247  --     157,247
Research and development expense  18,181  (648)  C   17,533  15,819  --     15,819
Amortization of intangibles  13,976  (13,976)  D   --   7,687  (7,687)  D   -- 
Loss on divestiture of Aime  --   --     --   21,062  (21,062)  G   -- 
Operating income  39,374      108,923  62,043      90,792
Interest expense  3,251  --     3,251  1,900  --     1,900
Other expense (income), net  1,248  (1,067)  E   181  (949)  --     (949)
Income before income taxes  34,875      105,491  61,092      89,841
Provision for income taxes  3,618  5,533  F   9,151  3,779  6,504  F   10,283
Net income  31,257      96,340  57,313      79,558
Income (loss) attributable to noncontrolling interests  470  75  D   545  (83)  85  D   2
Net income attributable to Cooper stockholders  $ 30,787      $ 95,795  $ 57,396      $ 79,556
                 
Diluted earnings per share attributable to Cooper stockholders  $ 0.63  $ 1.32    $ 1.95  $ 1.15  $ 0.45    $ 1.60
                 
Number of shares used to compute earnings per share attributable to Cooper stockholders  49,126      49,126  49,723      49,723
                 
 
 
A Our GAAP cost of sales includes a $16.1 million of charges primarily for product rationalization arising from the acquisition of Sauflon. The charge for product rationalization is based on our review of products, materials and manufacturing processes of Sauflon.
                 
B Our GAAP selling, general and administrative expense (SGA) includes $38.8 million in costs for CooperVision's acquisition of Sauflon and the related integration and restructuring activities, severance costs in our CooperSurgical fertility business along with other acquisition costs as presented in the table below.
                 
(In thousands) CooperVision CooperSurgical   Headquarters Total      
Restructuring and related costs  $ 19,727  $ 236    $ --   $ 19,963      
Acquisition and integration costs  17,404  599    862  18,865      
   $ 37,131  $ 835    $ 862  $ 38,828      
                 
                 
C Our GAAP research and development expense includes $0.6 million of severance costs related to integration and restructuring activities.
                 
D We estimate amortization expense for existing other intangible assets, including those related to the recently acquired Sauflon, will be $52.2 million for FY 2015 with $13.7 million in our fiscal first quarter and about $12.8 million in each of our fiscal second, third and fourth quarters. The adjustment to exclude amortization expense results in an adjustment to increase income attributable to noncontrolling interests.
                 
E This amount represents the loss on foreign exchange forward contracts that relate to the acquisition of Sauflon.
                 
F These amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments.
                 
G This amount represents the loss on the divestiture of Aime recorded in our fiscal fourth quarter of 2013.
 
 
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
(Unaudited)
 
  Year Ended October 31,
  2014     2014 2013     2013
  GAAP Adjustment   Non-GAAP GAAP Adjustment   Non-GAAP
                 
Net sales  $ 1,717,776  $ --     $ 1,717,776  $ 1,587,725  $ --     $ 1,587,725
Cost of sales  626,206  (16,524)  A   609,682  560,917  --     560,917
Gross profit  1,091,570      1,108,094  1,026,808  --     1,026,808
Selling, general and administrative expense  683,115  (44,524)  B   638,591  610,735  (626)  B   610,109
Research and development expense  66,259  (649)  C   65,610  58,827  --     58,827
Amortization of intangibles  35,710  (35,710)  D   --   30,239  (30,239)  D   -- 
Loss on divestiture of Aime  --   --     --   21,062  (21,062)  G   -- 
Operating income  306,486      403,893  305,945      357,872
Interest expense  7,965  --     7,965  9,168  --     9,168
Gain on insurance proceeds  --   --     --   14,084  (14,084)  H   -- 
Other expense (income), net  1,987  (1,067)  E   920  (1,410)  --     (1,410)
Income before income taxes  296,534      395,008  312,271      350,114
Provision for income taxes  24,705  11,043  F   35,748  15,365  15,299  F   30,664
Net income  271,829      359,260  296,906      319,450
Income attributable to noncontrolling interests  1,973  282  D   2,255  755  323  D   1,078
Net income attributable to Cooper stockholders  $ 269,856      $ 357,005  $ 296,151      $ 318,372
                 
Diluted earnings per share attributable to Cooper stockholders  $ 5.51  $ 1.78    $ 7.29  $ 5.96  $ 0.45    $ 6.41
                 
                 
Number of shares used to compute earnings per share attributable to Cooper stockholders  48,960      48,960  49,685      49,685
                 
 
                 
A Our GAAP cost of sales includes a $16.5 million of charges primarily for product rationalization arising from the acquisition of Sauflon. The charge for product rationalization is based on our review of products, materials and manufacturing processes of Sauflon.
                 
B Our GAAP selling, general and administrative expense (SGA) includes $44.5 million in costs for CooperVision's acquisition of Sauflon and the related integration and restructuring activities, severance costs in our CooperSurgical fertility business along with other acquisition costs as presented in the table below.
                 
(In thousands) CooperVision CooperSurgical   Headquarters Total      
Restructuring and related costs  $ 19,727  $ 430    $ --   $ 20,157      
Acquisition and integration costs  22,609  896    862  24,367      
   $ 42,336  $ 1,326    $ 862  $ 44,524      
                 
In fiscal 2013, our GAAP SGA included $0.6 million of costs related to the acquisition of Origio.
                 
C Our GAAP research and development expense includes $0.6 million of severance costs related to integration and restructuring activities.
                 
D We estimate amortization expense for our existing other intangible assets, including those related to the recently acquired Sauflon, will be $52.2 million for FY 2015 with $13.7 million in our fiscal first quarter and about $12.8 million in each of our fiscal second, third and fourth quarters. The adjustment to exclude amortization expense results in an adjustment to increase income attributable to noncontrolling interests.
                 
E This amount represents the loss on foreign exchange forward contracts that relate to the acquisition of Sauflon.
                 
F These amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments.
                 
G This amount represents the loss on the divestiture of Aime recorded in our fiscal fourth quarter of 2013.
                 
H In fiscal 2013, our GAAP results included $14.1 million in business interruption insurance proceeds.
 

Conference Call and Webcast

The Company will host a conference call today at 5:00 PM ET to discuss its fiscal fourth quarter and full year 2014 financial results and current corporate developments. The dial-in number in the United States is 1-877-415-3183 and outside the United States is +1-857-244-7326. The passcode is "Cooper". There will be a replay available approximately two hours after the call ends until Thursday, December 11, 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 80168074. 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 9,000 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. 

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 fluctuations in the value of the yen, pound 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, including the Sauflon acquisition, 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, required regulatory approvals for an acquisition not being obtained or being delayed or subject to conditions that are not anticipated, adverse impacts of changes to accounting controls and reporting procedures, contingent liabilities or indemnification obligations, increased leverage and lack of access to available financing (including financing for the acquisition or refinancing of debt owed by us on a timely basis and on reasonable terms); 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; compliance costs and potential liability in connection with U.S. and foreign healthcare regulations, including product recalls, warning letters, 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; 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; 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 our research and development activities and other start-up projects; dilution to earnings per share from the Sauflon acquisition or other 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 our Annual Report on Form 10-K for the fiscal year ended October 31, 2014, 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,
  2014 2013
     
ASSETS
     
Current assets:    
Cash and cash equivalents $25,222 $77,393
Trade receivables, net 276,280 229,537
Inventories 381,474 338,917
Deferred tax assets 40,224 41,179
Other current assets 68,417 60,215
Total current assets 791,617 747,241
Property, plant and equipment, net 937,325 739,867
Goodwill 2,220,921 1,387,611
Other intangibles, net 453,605 198,769
Deferred tax assets 15,732 16,279
Other assets 39,140 47,494
  $4,458,340 $3,137,261
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Short-term debt $101,518 $42,987
Other current liabilities 340,664 278,266
Total current liabilities 442,182 321,253
Long-term debt 1,280,833 301,670
Deferred tax liabilities 69,525 24,883
Other liabilities 77,360 65,961
Total liabilities 1,869,900 713,767
Total Cooper stockholders' equity 2,569,878 2,404,535
Noncontrolling interests 18,562 18,959
Stockholders' equity 2,588,440 2,423,494
  $4,458,340 $3,137,261
 
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Year Ended
  October 31, October 31,
  2014 2013 2014 2013
Net sales $467,997 $411,852 $1,717,776 $1,587,725
Cost of sales 188,445 147,994 626,206 560,917
Gross profit 279,552 263,858 1,091,570 1,026,808
Selling, general and administrative expense 208,021 157,247 683,115 610,735
Research and development expense 18,181 15,819 66,259 58,827
Amortization of intangibles 13,976 7,687 35,710 30,239
Loss on divestiture of Aime -- 21,062 -- 21,062
Operating income 39,374 62,043 306,486 305,945
Interest expense 3,251 1,900 7,965 9,168
Gain on insurance proceeds -- -- -- 14,084
Other expense (income), net 1,248 (949) 1,987 (1,410)
Income before income taxes 34,875 61,092 296,534 312,271
Provision for income taxes 3,618 3,779 24,705 15,365
Net income 31,257 57,313 271,829 296,906
Income (loss) attributable to noncontrolling interests 470 (83) 1,973 755
Net income attributable to Cooper stockholders $30,787 $57,396 $269,856 $296,151
         
Diluted earnings per share attributable to Cooper stockholders $0.63 $1.15 $5.51 $5.96
         
Number of shares used to compute earnings per share attributable to Cooper stockholders 49,126 49,723 48,960 49,685
         
         

Soft Contact Lens Revenue Update

Worldwide Manufacturers' Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
     
  Calendar 3Q14 Trailing Twelve Months 2014
    Market CVI   Market CVI
  Market Change Change Market Change Change
Sales by Modality            
Single-use  $ 820 6% 12%  $ 3,120 9% 16%
Other  1,085 0% 6%  4,330 2% 6%
WW Soft Contact Lenses  $ 1,905 2% 8%  $ 7,450 5% 9%
             
             
Sales by Geography            
Americas  $ 765 2% 7%  $ 3,005 5% 6%
EMEA  570 4% 7%  2,200 4% 10%
Asia Pacific  570 2% 11%  2,245 6% 13%
WW Soft Contact Lenses  $ 1,905 2% 8%  $ 7,450 5% 9%
             
Source: Management estimates and independent market research
             

COO-E

CONTACT: Kim Duncan

         Vice President, Investor Relations

         ir@cooperco.com

         925-460-3663

The Cooper Companies, Inc. Logo

Source: The Cooper Companies, Inc.

News Provided by Acquire Media