The Cooper Companies Reports Third Quarter Results
The Cooper Companies Reports Third Quarter Results
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The Cooper Companies Reports Third
Quarter Results Business Wire August 29, 2001 9:03am Business Editors and Health/Medical Writers LAKE FOREST, Calif.--(BUSINESS WIRE)--Aug. 29, 2001-- Revenue Grows 18 Percent EPS from Ongoing Operations 67 Cents vs. 56 Cents Worldwide CooperVision Revenue up 15 Percent, 17 Percent in Constant Currency The Cooper Companies, Inc. (NYSE:COO) today reported results for its third fiscal quarter ended July 31, 2001. -- Revenue $60 million, 18 percent above third quarter 2000. -- EPS from ongoing operations 67 cents versus 56 cents in third quarter 2000, (after adjusting for 3 cents of nonrecurring credits), up 20 percent; trailing twelve months $2.31. -- Cash flow per share (pretax income from continuing operations plus depreciation and amortization) $1.04, up 13 percent from 92 cents in third quarter 2000; trailing twelve-months $3.94. Commenting on these results, Chief Executive Officer A. Thomas Bender, said, \""Despite the economic slowdown, we had another strong quarter. Through nine months, Cooper is on track to deliver the results we have previously projected for fiscal 2001. I estimate that we will end the fiscal year from 15 to 18 percent ahead in revenue with earnings per share in the $2.40 to $2.43 range. CooperVision revenue should be between $48 and $49 million in the fourth quarter with CooperSurgical coming in between $16 and $17 million. \""For 2002, we expect revenue of about $265 to $275 million, and earnings to exceed $3.00 per share, including an improvement of about 20 cents per share because, as a result of a new accounting principle, we will not amortize goodwill after 2001. Cash flow per share should be in the range of $4.50 to $4.70. \""I anticipate that CooperVision (CVI), our contact lens business, will grow this year\'s worldwide core revenue 15 to 18 percent over fiscal 2000. Over the next several years, I anticipate that total CVI revenue will grow in the mid-teens range driven by successful new product introductions, continued strong specialty lens sales in the U.S. and strong international performance, especially in Europe and Japan.
Business Unit P&L Highlights ($\'s in millions) Three Months Ended July 31,
Revenue Operating Income
% % %Revenue %Revenue
2001 2000 Inc. 2001(a) 2000 Inc. 2001 2000
CVI $45.0 $39.3 15% $13.2 $13.3 -1% 29% 34% CSI 15.0 11.6 28% 2.6 1.6 67% 17% 13% Subtotal 60.0 50.9 18% 15.8 14.9 6% 26% 29% HQ Expense - - - (1.8) (1.9) - - - TOTAL $60.0 $50.9 18% $14.0 $13.0 7% 23% 26% Nine Months Ended July 31,
Revenue Operating Income
% % %Revenue %Revenue
2001 2000 Inc. 2001(a) 2000 Inc. 2001 2000
CVI $123.8 $109.5 13% $35.6 $33.1 7% 29% 30% CSI 41.1 32.6 26% 6.7 4.7 45% 16% 14% Sub- total 164.9 142.1 16% 42.3 37.8 12% 26% 27% HQ Expense - - - (5.0) (5.1) - - - TOTAL $164.9 $142.1 16% $37.3 $32.7 14% 23% 23% *T (a) Net of $1 million of nonrecurring charges in the third quarter and $1.7 million for the nine-month period. Nonrecurring Charges During the third quarter, CVI incurred startup costs for a new information system and charges to flatten the organization. In addition, CSI recorded charges for the shutdown of a facility and the relocation of another. These one time charges totaled approximately $1 million, about $500 thousand in each business. Two recently acquired businesses, CL-Tinters and MedAmicus, were about 2 cents dilutive to earnings per share during the third quarter. These acquisitions are expected to be accretive by the end of their first 12 months of operations.
Third Quarter Operating Highlights CooperVision COOPERVISION REVENUE ANALYSIS ($\'s in millions) Segment Third % Total % Change from Nine % Total % Change from
Quarter Third Quarter Months Nine Months
2001 2000 2001 2000
U.S. $28.1 63% 10% $77.4 63% 10% O.U.S. 16.3 36% 24% 44.7 36% 27% Core Business 44.4 99% 15% 122.1 99% 15% OEM .6 1% 2% 1.7 1% -55% Total $45.0 100% 15% $123.8 100% 13% *T CVI\'s worldwide core contact lens business -- all revenue except lower margin OEM sales to other contact lens manufacturers -- grew 15 percent during the quarter, 17 percent in constant currency, and is up 15 percent year to date, 18 percent in constant currency, about 3 times the estimated world market growth. In the U.S., CVI\'s contact lens business grew 10 percent during the third quarter and 10 percent through July. Outside the U.S., revenue grew 29 percent and 34 percent in constant currency, for the same periods. Worldwide revenue for CVI\'s toric contact lenses, which correct astigmatism, increased 8 percent during the quarter and 13 percent year to date. Torics represent almost 50 percent of CVI\'s worldwide revenue. The largest segment of this market, disposable-planned replacement (DPR) toric lenses, grew 12 percent over last year\'s third quarter, and is ahead 21 percent year to date. CVI\'s worldwide sales of all DPR products grew 17 percent during the quarter and are 21 percent ahead year over year. DPR spheres and torics together now account for about 80 percent of CVI\'s worldwide business. During the quarter, U.S. revenue for these products grew 12 percent and is ahead 15 percent year to date. CVI\'s new line of disposable opaque contact lenses that change or enhance the appearance of the color of the eye continues to show good market acceptance in the United States and Europe. Rohto Pharmaceuticals, CVI\'s partner in Japan, introduced CVI\'s quarterly planned replacement line of spherical and toric lenses in July. In June, Rohto submitted clinical data for CVI\'s line of two-week disposable spherical, toric and aspheric lenses to regulatory authorities. They expect to market these products in the second half of calendar 2002. European revenue growth in the third quarter, excluding OEM business, remained robust -- 29 percent ahead of last year and 35 percent over the first nine months of fiscal 2000 in constant currency. New Multifocal Lens
CVI continues on track to introduce Frequency® Multifocal, its
high performance monthly planned replacement multifocal lens with a
limited roll out in the United States in the fourth fiscal quarter of
2001 and a full launch in mid 2002. Independent Market Research Data
Appendix 1 below summarizes second calendar quarter 2001
independent market research for the contact lens market compared with
CVI\'s second calendar quarter and year to date year performance.
Commenting on these results, Bender said, \""Both manufacturers\'
CVI revenue continues to grow significantly faster than the market. Cost of Sales CVI\'s gross margin for the quarter was 66 percent compared with 68 percent in the second quarter of this year. This decline was primarily due to two one-time events: opaque lens revenue generated temporarily lower margins, as they still reflect CL-Tinters\' higher pre-acquisition cost, and a delay in shipping higher margin conventional toric lenses at the end of the quarter due to the implementation of a new information system. Also contributing to the decline was a higher percentage of lower margin sales to distributors during the quarter. Gross margin for the fourth quarter is expected to return to second quarter 2001 levels. CooperSurgical Third quarter revenue at CooperSurgical (CSI), the Company\'s women\'s healthcare medical device business, increased 28 percent to $15 million and is up 26 percent year to date. CSI\'s organic growth from existing products was 15 percent in the third quarter of 2001 and is 11 percent year to date. CSI expects revenue of $57 to 58 million in fiscal 2001. Operating margins, excluding the one-time charges, improved 3 percentage points above the prior year\'s quarter to 21 percent, and are 19 percent for the year to date. In June, CSI completed a supply agreement with Welch Allyn, Inc. to provide private label devices and disposable women\'s healthcare products. Welch Allyn will market CSI products primarily to family and general practitioners and in selected markets outside the United States, both areas where CSI has only a small presence today. Yesterday, Cooper completed the previously announced purchase of Medscand Medical AB, a Swedish corporation, and Medscand (USA), Inc. an affiliated company. Medscand develops, manufactures and markets specimen collection products used to detect cervical cancer. The purchase price was $12 million for Medscand, whose products had revenue of about $7 million in 2000. Cooper expects that the acquisition will be accretive to earnings per share within 12 months. Medscand markets its products to clinicians, clinics, hospitals, laboratories and test manufacturers throughout the world. An industry standard for over 15 years, the patented Cytobrush® Pap smear sampler and Pap-Perfect® spatula are included with test kits supplied by Cytyc Corporation (Nasdaq:CYTC) for their ThinPrep® Pap Test?. Medscand also supplies a new proprietary sampler to Digene Corporation (Nasdaq:DIGE) for their Hybrid Capture® II HPV Test (HC2). As both of these technologies have increasing market acceptance, Medscand anticipates strong growth from the products it supplies to support them. About 85 percent of Medscand\'s revenue is generated in the United States. Lower Tax Rate During the quarter, the Company\'s effective tax rate (ETR) (income tax divided by pretax income) was 22 percent as we recorded a credit to state income taxes of about $1 million and reduced the ETR from operating results to 31 percent. Going forward, Cooper expects that the ETR will be approximately 31 percent in the fourth quarter of fiscal 2001 and 30 percent for fiscal 2002. Line of Credit
During the quarter, Cooper extended its line of credit with Earnings per Share Unless otherwise identified, all per share amounts mentioned in this report refer to diluted per share amounts from continuing operations. Reported earnings per share in the third quarter of 2000 were 59 cents including nonrecurring credits of 3 cents per share. Conference Call The Cooper Companies will hold a conference call to discuss its third quarter results today at 1:30 p.m. Pacific Daylight Time. To access the live call, dial 1-800-289-0436. A replay will be available at 1-888-203-1112 approximately one hour after the call ends and remain available for five days. The access code for both calls is 451151. This call will also be broadcast live on The Cooper Companies\' Web site, www.coopercos.com and at www.bestcalls.com and www.streetevents.com. Forward-Looking Statements
Some of the information included in this news release contains
Events, among others, that could cause actual results and future
actions 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 facilities, new
competitors or technologies, the impact of an undetected virus on our
computer systems, acquisition integration delays or costs, foreign
currency exchange exposure, investments in research and development
and other start-up projects, dilution to earnings per share from
acquisitions or issuing stock, regulatory issues, significant
environmental cleanup costs above those already accrued, litigation
costs including any related settlements, cost of business
divestitures, the requirement to provide for a significant liability
or to write off a significant asset, changes in accounting principles
or estimates, and other factors described in our Securities and
Exchange Commission filings, including the The Cooper Companies, Inc. and its subsidiaries develop, manufacture and market specialty healthcare products. Corporate offices are located in Lake Forest and Pleasanton, Calif. A toll free interactive telephone system at 1-800-334-1986 provides stock quotes, recent press releases and financial data. The Cooper Companies\' World Wide Web address is www.coopercos.com. CooperVision, Inc., markets a broad range of contact lenses for the vision care market. Headquartered in Lake Forest, Calif., it manufactures in Huntington Beach, Calif., Rochester, N.Y., Hamble, England and Toronto. Its Web address is www.coopervision.com. CooperSurgical, Inc., with operations in Shelton, Conn., Hollywood, Fla., Malmo, Sweden, Montreal and Berlin, markets diagnostic products, surgical instruments and accessories for the gynecological market. Its Web address is www.coopersurgical.com.
Note to Editors: Pap-Perfect® is a trademark of Medscand.
Cytyc® and ThinPrep® are registered trademarks and ThinPrep® Pap
Test? is a trademark of Cytyc Corporation. Hybrid Capture® is a
trademark of Digene Corporation. Frequency® is a trademark of The
Cooper Companies, Inc. and its affiliates. Appendix 1 2nd Quarter Calendar 2001 and Calendar Year to Date Cooper Vision U.S. vs. U.S. Market Indicators Product Category % Change % Change % Change % Change % Change CVI U.S. CVI U.S. U.S. Total New Revenue Market Contact Contact Contact
Share Lens Lens Lens
2ND QUARTER 2001 Manufact- Pract- Pract-
urers itioner itioner Revenue Visits Visits All Contact Lenses +12 +1 -2 -5 -5 All Toric Lenses +8 +1 +5 +1 +2 DPR Toric Lenses +13 -1 +14 N/A- N/A DPR Spherical Lenses +21 +1 -4 N/A N/A All DPR Lenses +16 +1 Flat N/A N/A 6 MONTHS 2001 All Contact Lenses +11 +1 -1 +1 +6 All Toric Lenses +8 +1 +4 +10 +14 DPR Toric Lenses +13 -1 +17 N/A N/A DPR Spherical Lenses +24 +1 -2 N/A N/A All DPR Lenses +17 +2 +1 N/A N/A THE COOPER COMPANIES, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Income (In thousands, except for per share amounts) (Unaudited) Three Months Ended Nine Months Ended
July 31, July 31,
2001 2000 2001 2000 Net sales $ 59,961 $ 50,908 $164,887 $142,081 Cost of sales 22,336 17,408 58,839 49,465 Gross profit 37,625 33,500 106,048 92,616 Selling, general and administrative expense 21,112 18,717 62,050 54,801 Research and development expense 1,055 703 2,836 2,027 Amortization of intangibles 1,457 1,031 3,866 3,122 Operating income 14,001 13,049 37,296 32,666 Interest expense 914 1,164 2,814 3,813 Settlement of dispute - 653 - 653 Other income, net 131 13 908 473 Income before income taxes and cumulative effect of change in accounting principle 13,218 11,245 35,390 28,673 Provision for income taxes 2,857 2,584 10,010 8,422 Income before cumulative effect of change in accounting principle 10,361 8,661 25,380 20,251 Cumulative effect of change in accounting principle - - - (432) Net income $ 10,361 $ 8,661 $ 25,380 $ 19,819
Diluted earnings per share: effect of change in accounting principle $ 0.67 $ 0.59 $ 1.68 $ 1.40 Cumulative effect of change in accounting principle - - - (0.03) Earnings per share $ 0.67 $ 0.59 $ 1.68 $ 1.37 Number of shares used to compute earnings per share 15,384 14,596 15,128 14,471
Memo: from continued operations plus depreciation and amortization) per diluted share $ 1.04 $ 0.92 $ 2.86 $ 2.42 Components of diluted earnings per share from continuing operations: From ongoing operations $ 0.67 $ 0.56 $ 1.68 $ 1.37 Tax credits 0.07 0.08 0.07 0.08 Other one-time events, net (0.07) (0.05) (0.07) (0.05) Earnings per share from continuing operations $ 0.67 $ 0.59 $ 1.68 $ 1.40 THE COOPER COMPANIES, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In thousands) (Unaudited)
July 31, October 31,
2001 2000
ASSETS Current assets:
Cash and cash equivalents $ 11,268 $ 14,608
Trade receivables, net 43,053 33,058
Marketable securities 4,840 --
Inventories 47,574 38,219
Deferred tax assets 17,784 17,800
Other current assets 8,941 9,000
Total current assets 133,460 112,685
Property, plant and equipment, net 56,635 47,933 Intangibles, net 135,644 110,854 Deferred tax asset 36,492 42,979 Other assets 2,410 8,114
$364,641 $322,565
LIABILITIES AND STOCKHOLDERS\' EQUITY Current liabilities: Short-term debt $ 9,435 $ 8,094 Other current liabilities 57,409 57,181
Total current liabilities 66,844 65,275
Long-term debt 45,594 40,257 Other liabilities 12,913 18,595
Total liabilities 125,351 124,127
Stockholders\' equity 239,290 198,438
$364,641 $322,565
*T --30--EZ/np* KT/np JP/np FLB/np CONTACT: The Cooper Companies, Inc. Norris Battin, 888/822-2660 Fax: 949/597-0662 ir@coopercompanies.com
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