The Cooper Companies, Inc.
Dec 3, 2015

The Cooper Companies Announces Fourth Quarter and Full Year 2015 Results

PLEASANTON, Calif., Dec. 3, 2015 (GLOBE NEWSWIRE) -- The Cooper Companies, Inc. (NYSE:COO) today announced financial results for the fiscal fourth quarter and full year ended October 31, 2015.

Commenting on the results, Robert S. Weiss, Cooper's president and chief executive officer said, "I am pleased to report record revenue and record non-GAAP EPS for the year. We accomplished this through market share gains across our geographies, success with the Biofinity® family of products and a continued push into 1 Day silicone hydrogel with clariti® and MyDay®. As we enter fiscal 2016, we remain encouraged by our business trends and believe we are well positioned for sustained growth going forward."

Fourth Quarter GAAP Operating Highlights

Fourth Quarter CooperVision (CVI) GAAP Operating Highlights

        Constant Currency
  (In millions) % of CVI Revenue %chg %chg
  4Q15 4Q15 y/y y/y
Toric  $ 110.4 30% 0% 8%
Multifocal  39.1 10% -1% 7%
Single-use sphere  94.1 25% 2% 12%
Non single-use sphere, other  129.8 35% -9% -2%
Total  $ 373.4 100% -3% 5%
        Constant Currency
   (In millions)  % of CVI Revenue %chg %chg
   4Q15  4Q15 y/y y/y
Americas  $ 155.9 42% 2% 4%
EMEA  148.2 40% -9% 3%
Asia Pacific  69.3 18% 0% 13%
Total  $ 373.4 100% -3% 5%

Fourth Quarter CooperSurgical (CSI) GAAP Operating Highlights

        Pro forma
  (In millions) % of CSI Revenue %chg %chg
  4Q15 4Q15 y/y y/y
Office and surgical procedures  $ 52.2 63% -5% -5%
Fertility  30.0 37% 9% 3%
Total  $ 82.2 100% -1% -2%

Fiscal Year 2015 GAAP Operating Highlights

Fiscal Year 2016 Guidance

The Company initiated its fiscal year 2016 guidance. Guidance for reported results is based on recent foreign exchange rates. Non-GAAP earnings per share excludes amortization of existing other intangible assets of approximately $50.6 million or $0.78 per share for the full fiscal year and $12.9 million or $0.20 per share for the first fiscal quarter of 2016, and other costs including integration expenses which we would not have otherwise incurred as part of our continuing operations. Details are summarized as follows:

Other

Reconciliation of GAAP to Non-GAAP Results

To supplement our financial results and guidance 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 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 integration activities, severance and restructuring costs; costs associated with the start-up of new manufacturing facilities; as well as certain legal costs described below. 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. We believe it is useful for investors to understand the effects of these items on our consolidated operating results. Our non-GAAP financial measures include the following adjustments, along with the related income tax effects and changes in income attributable to noncontrolling interests:

Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting acquisition-related, integration and restructuring charges and expenses. We are not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share due to the unknown effect, timing and potential significance of such charges and expenses. Management does not consider the excluded items as part of our continuing operations.

We also report revenue growth using the non-GAAP financial measure of pro forma which includes 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 the United States dollar are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year. To report pro forma revenue growth including Sauflon and Reprogenetics, we include revenue for the comparison period when we did not own them of $4.8 million in our fiscal fourth quarter of 2014 for Reprogenetics, and $140.4 million in the fiscal nine month period ended July 31, 2014 for Sauflon.

We define the non-GAAP measure of free cash flow as cash provided by operating activities less capital expenditures. We believe free cash flow is useful for investors as an additional measure of liquidity because it represents cash flows that are available for repayment of debt, repurchases of our common stock or to fund our strategic initiatives.   Management uses free cash flow internally to understand, manage, make operating decisions and evaluate our business. In addition, we use free cash flow to help plan and forecast future periods.

We also provide the metric of adjusted free cash flow that we believe represents our operations ability to generate cash by adjusting cash flow from operations for capital expenditures that are part of our ongoing operations and for acquisition related and integration costs and the legal settlement discussed above that are not part of our ongoing operations. We believe adjusted free cash flow is useful to investors as an additional measure of performance because it reports elements of our operating activities and excludes cash flow elements that we do not consider to be related to our ability to generate cash. As discussed above, we incur significant acquisition related and integration costs primarily related to the acquisition of Sauflon that will diminish over time; and the JJVC legal settlement is not part of our ongoing operations; and we believe it is useful to investors to understand the effects of these costs on our adjusted free cash flow.   

 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended October 31,
  2015     2015 2014     2014
  GAAP Adjustment   Non-GAAP GAAP Adjustment   Non-GAAP
                 
Cost of sales  $ 202,227  $(37,866)  A   $ 164,361  $ 188,445  $ (16,097)  A   $ 172,348
Selling, general and administrative expense  $ 179,643  $(13,621)  B   $ 166,022  $ 208,021  $ (38,828)  B   $ 169,193
Research and development expense  $ 18,360  $ (2,383)  C   $ 15,977  $ 18,181  $ (648)  C   $ 17,533
Amortization of intangibles  $ 13,053  $(13,053)  D   $ --   $ 13,976  $ (13,976)  D   $ -- 
(Benefit from) provision for income taxes  $ (588)  $ 5,063  E   $ 4,475  $ 3,618  $ 5,533  E   $ 9,151
Diluted earnings per share attributable to Cooper stockholders  $ 0.75  $ 1.25    $ 2.00  $ 0.63  $ 1.32    $ 1.95
 
A Our fiscal 2015 GAAP cost of sales includes $34.8 million of charges primarily for product and equipment rationalization and related severance costs, arising from the acquisition of Sauflon, and $2.9 million of facility start-up costs in CooperVision; and $0.2 million of severance costs in our CooperSurgical fertility business. Our fiscal 2014 GAAP cost of sales included $16.1 million of charges primarily for product and equipment rationalization, arising from the acquisition of Sauflon. 
                 
B Our fiscal 2015 GAAP selling, general and administrative expense includes $13.0 million in costs primarily for CooperVision's integration and restructuring activities related to the acquisition of Sauflon and acquisition and severance costs in our CooperSurgical fertility business. Our fiscal 2015 GAAP selling, general and administrative expense also includes $0.6 million for the litigation settlement and legal costs, described above. Our fiscal 2014 GAAP selling, general and administrative expense included $38.8 million of acquisition, integration and restructuring costs. 
                 
C Our fiscal 2015 GAAP research and development expense includes $2.4 million for equipment rationalization and related integration and restructuring activities. Our fiscal 2014 GAAP research and development expense included $0.6 million of severance costs related to integration and restructuring activities.
                 
D Amortization expense was $13.1 million and $14.0 million for the fiscal 2015 and 2014 periods, respectively.
 
E These amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments.
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
(In thousands, except per share amounts)
(Unaudited)
   
  Twelve Months Ended October 31,
  2015     2015 2014     2014
  GAAP Adjustment   Non-GAAP GAAP Adjustment   Non-GAAP
                 
Cost of sales  $ 726,798  $(70,330)  A   $ 656,468  $ 626,206  $ (16,524)  A   $ 609,682
Selling, general and administrative expense  $ 712,543  $(51,489)  B   $ 661,054  $ 683,115  $ (44,524)  B   $ 638,591
Research and development expense  $ 69,589  $ (4,600)  C   $ 64,989  $ 66,259  $ (649)  C   $ 65,610
Amortization of intangibles  $ 51,459  $(51,459)  D   $ --   $ 35,710  $ (35,710)  D   $ -- 
Provision for income taxes  $ 10,341  $ 15,505  E   $ 25,846  $ 24,705  $ 11,043  E   $ 35,748
Diluted earnings per share attributable to Cooper stockholders  $ 4.14  $ 3.30    $ 7.44  $ 5.51  $ 1.78    $ 7.29
 
A Our Fiscal 2015 GAAP cost of sales includes $61.6 million of charges primarily for product and equipment rationalization and related severance costs, arising from the acquisition of Sauflon, and $8.0 million of facility start-up costs in CooperVision; and $0.7 million of severance costs in our CooperSurgical fertility business. Our fiscal 2014 GAAP cost of sales also included $16.5 million of charges primarily for product and equipment rationalization, arising from the acquisition of Sauflon.
 
B Our fiscal 2015 GAAP selling, general and administrative expense includes $31.7 million in costs primarily for CooperVision's integration and restructuring activities related to the acquisition of Sauflon and acquisition and severance costs in our CooperSurgical fertility business. Our fiscal 2015 GAAP selling, general and administrative expense also includes $19.8 million for the litigation settlement and legal costs, described above. Our fiscal 2014 GAAP selling, general and administrative expense included $44.5 million for CooperVision's integration and restructuring activities related to the acquisition of Sauflon and acquisition and severance costs in our CooperSurgical fertility business. 
                 
C Our fiscal 2015 GAAP research and development expense includes $4.6 million for equipment rationalization and related integration and restructuring activities. Our fiscal 2014 GAAP research and development expense included $0.6 million of severance costs related to integration and restructuring activities.
                 
D Amortization expense was $51.5 million and $35.7 million for fiscal 2015 and 2014, respectively.
 
E These amounts represent the increases in the provision for income taxes that arises from the impact of the above adjustments.
 
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results to Non-GAAP Results
Free Cash Flow and Adjusted Free Cash Flow
(In thousands)
(Unaudited)
  Three Months
Ended October 31,
Twelve Months
Ended October 31,
  2015 2015
 
Cash flow from operations  $ 104,521  $ 390,970
Capital expenditures  (58,310)  (243,023)
Free cash flow  $ 46,211  $ 147,947
Items not included in adjusted free cash flow:    
Integration costs and other  14,719  51,459
Litigation settlement  --   17,000
Adjusted Free cash flow  $ 60,930  $ 216,406
 

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 2015 financial results and current corporate developments. The live dial-in number for the call is 855-643-4430 (U.S.) / 707-294-1332 (International). The participant passcode for the call is "Cooper". A recording of the call will be available beginning at 8:00 PM ET on December 3, 2015 through December 10, 2015. To hear this recording, dial 855-859-2056 (U.S.) / 404-537-3406 (International) and enter code 266737 (Cooper). A simultaneous webcast of the call will be available through the "Investor Relations" section of The Cooper Companies' website at http://investor.coopercos.com and a transcript of the call will be archived on this site for a minimum of 12 months.

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 10,000 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 2016 Guidance and all statements regarding acquisitions including the acquired companies' financial position, market position, product development and business strategy, expected cost synergies, expected timing and benefits of the transaction, difficulties in integrating entities or operations, as well as estimates of our and the acquired entities' future expenses, sales and earnings per share are forward looking. In addition, 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, including the impact of continuing uncertainty and instability of certain 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 foreign currencies 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, including any related to our information systems maintenance, enhancements, or new system deployments and integrations, integration of acquisitions, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; new U.S. and foreign government laws and regulations, and changes in existing tax laws, regulations and enforcement guidance, which affect the contact lens industry, specifically, or the medical device and the healthcare industries generally; 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, prohibitive injunction or settlement related to product liability, patent infringement or other litigation; changes in tax laws or their interpretation and changes in statutory tax rates; 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; 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; 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 the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2014 as well as in our forthcoming Annual Report on Form 10-K for the fiscal year ended October 31, 2015, 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,
  2015 2014
     
ASSETS
     
Current assets:    
Cash and cash equivalents  $ 16,426  $ 25,222
Trade receivables, net 282,918 276,280
Inventories 419,692 381,474
Deferred tax assets 41,731 40,224
Other current assets 81,051 68,417
Total current assets 841,818 791,617
Property, plant and equipment, net 967,097 937,325
Goodwill 2,197,077 2,220,921
Other intangibles, net 411,090 453,605
Deferred tax assets 9,127 15,732
Other assets 34,401 39,140
   $ 4,460,610  $ 4,458,340
 
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Short-term debt  $ 240,443  $ 101,518
Other current liabilities 324,979 340,664
Total current liabilities 565,422 442,182
Long-term debt 1,109,514 1,280,833
Deferred tax liabilities 31,016 69,525
Other liabilities 80,754 77,360
Total liabilities 1,786,706 1,869,900
Total Cooper stockholders' equity 2,667,509 2,569,878
Noncontrolling interests 6,395 18,562
Stockholders' equity 2,673,904 2,588,440
   $ 4,460,610  $ 4,458,340
 
 
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,
  2015 2014 2015 2014
Net sales   $ 455,536  $ 467,997  $ 1,797,060  $ 1,717,776
Cost of sales 202,227 188,445 726,798 626,206
Gross profit 253,309 279,552 1,070,262 1,091,570
Selling, general and administrative expense 179,643 208,021 712,543 683,115
Research and development expense 18,360 18,181 69,589 66,259
Amortization of intangibles 13,053 13,976 51,459 35,710
Operating income 42,253 39,374 236,671 306,486
Interest expense 4,780 3,251 18,103 7,965
Other expense, net 1,046 1,248 3,083 1,987
Income before income taxes 36,427 34,875 215,485 296,534
(Benefit from)/Provision for income taxes (588) 3,618 10,341 24,705
Net income 37,015 31,257 205,144 271,829
Less: Income attributable to noncontrolling interests 336 470 1,621 1,973
Net income attributable to Cooper stockholders  $ 36,679  $ 30,787  $ 203,523  $ 269,856
         
Diluted earnings per share attributable to Cooper stockholders  $ 0.75  $ 0.63  $ 4.14  $ 5.51
         
Number of shares used to compute earnings per share attributable to Cooper stockholders 49,177 49,126 49,179 48,960

Soft Contact Lens Revenue Update

Worldwide Manufacturers' Soft Contact Lens Revenue
(U.S. dollars in millions; constant currency; unaudited)
     
  Calendar 3Q15 Trailing Twelve Months 2015
    Market CVI   Market CVI
  Market Change Change Market Change Change
Sales by Modality            
Single-use  $ 870 14% 21%  $ 3,175 10% 16%
Other  1,055 3% 4%  4,090 0% 5%
WW Soft Contact Lenses  $ 1,925 8% 9%  $ 7,265 4% 8%
             
             
Sales by Geography            
Americas   $ 845 11% 6%  $ 3,135 5% 8%
EMEA  540 4% 10%  2,080 5% 9%
Asia Pacific   540 6% 12%  2,050 2% 8%
WW Soft Contact Lenses  $ 1,925 8% 9%  $ 7,265 4% 8%
 
Source: Management estimates and independent market research

COO-E

CONTACT: Kim Duncan

         Vice President, Investor Relations

         ir@cooperco.com

         925-460-3663

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Source: The Cooper Companies, Inc.

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