UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 2011
THE COOPER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 1-8597 | 94-2657368 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588
(Address of principal executive offices)
(925) 460-3600
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. Results of Operations and Financial Condition.
On August 31, 2011, The Cooper Companies, Inc. issued a press release reporting results for its fiscal third quarter ended July 31, 2011. A copy of this release is attached and incorporated by reference.
Internet addresses in the release are for information purposes only and are not intended to be hyperlinks to other The Cooper Companies, Inc. information.
ITEM 9.01. Financial Statements and Exhibits.
(d) | Exhibits. |
Exhibit | Description | |
99.1 | Press Release dated August 31, 2011, of The Cooper Companies, Inc. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE COOPER COMPANIES, INC. | ||
By |
/s/ Rodney E. Folden | |
Rodney E. Folden | ||
Vice President and Corporate Controller | ||
(Principal Accounting Officer) |
Dated: August 31, 2011
EXHIBIT INDEX
Exhibit | Description | |
99.1 | Press Release dated August 31, 2011, of The Cooper Companies, Inc. |
Exhibit 99.1
6140 Stoneridge Mall Road | ||
CONTACTS: Albert G. White, III VP, Investor Relations, Treasurer & Chief Strategic Officer
Kim Duncan Director, Investor Relations ir@cooperco.com |
Suite 590 Pleasanton, CA 94588 925-460-3663 www.coopercos.com |
THE COOPER COMPANIES ANNOUNCES THIRD QUARTER 2011 RESULTS
PLEASANTON, Calif., August 31, 2011 The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal third quarter ended July 31, 2011.
| Revenue increased 19% year-over-year to $351.4 million. CooperVision (CVI) revenue up 20% to $298.3 million and CooperSurgical (CSI) revenue up 14% to $53.1 million. |
| GAAP earnings per share (EPS) 78 cents, down 8 cents from last years third quarter. |
| Non-GAAP EPS $1.15, up 24 cents from last years third quarter. See Reconciliation of Non-GAAP EPS to GAAP EPS below. |
| Free cash flow $68.3 million. Total debt decreased $108.0 million to $445.2 million. |
Commenting on the results, Robert S. Weiss, Coopers president and chief executive officer said, I am pleased to report another strong quarter for the Company. We gained market share within CVI, posted solid margins in CVI and CSI, generated strong EPS, delivered improving free cash flow and significantly paid down debt. We are very encouraged by our business trends and believe we are well positioned to deliver strong operating results for the remainder of fiscal 2011.
Third Quarter GAAP Operating Highlights
| Revenue $351.4 million, 19% above third quarter 2010, 12% in constant currency. |
| Gross margin 58% compared with 60% in last years third quarter. The decrease was the result of a $14.2 million reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira® Toric contact lenses. Excluding this reserve, gross margin in the third quarter 2011 would have been 62%. |
| Operating margin 13% compared with 17% in last years third quarter. The decrease was the result of the aforementioned Avaira Toric voluntary recall and the reversal of a $6.1 million one-time gain on settlement of a preexisting relationship related to the acquisition of certain assets from Asahikasei |
Aime. Excluding this reserve and the reversal of the one-time gain on settlement, operating margin in the third quarter 2011 would have been 19%. |
| Depreciation and amortization expense $25.4 million. |
| Interest expense $3.2 million compared with $8.7 million in last years third quarter. Interest expense decreased as a result of lower interest rates and lower average debt. |
| Cash provided by operations $87.4 million and capital expenditures $19.1 million resulted in free cash flow of $68.3 million. |
| Total debt decreased $108.0 million to $445.2 million. |
Third Quarter CooperVision (CVI) GAAP Operating Highlights
| Revenue $298.3 million, up 20% from last years third quarter, 11% in constant currency. |
| Revenue by category: |
(In millions) 3Q11 |
% of CVI Revenue 3Q11 |
%chg y/y |
Constant
Currency %chg y/y |
|||||||||||||
Toric |
$ | 88.7 | 30 | % | 17 | % | 9 | % | ||||||||
Multifocal |
19.7 | 6 | % | 7 | % | 1 | % | |||||||||
Single-use sphere |
64.6 | 22 | % | 21 | % | 9 | % | |||||||||
Non single-use sphere, other |
125.3 | 42 | % | 24 | % | 16 | % | |||||||||
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Total |
$ | 298.3 | 100 | % | 20 | % | 11 | % | ||||||||
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| Revenue by geography: |
(In millions) 3Q11 |
% of CVI Revenue 3Q11 |
%chg y/y |
Constant
Currency %chg y/y |
|||||||||||||
Americas |
$ | 119.9 | 40 | % | 7 | % | 6 | % | ||||||||
EMEA |
112.4 | 38 | % | 25 | % | 11 | % | |||||||||
Asia Pacific |
66.0 | 22 | % | 40 | % | 24 | % | |||||||||
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Total |
$ | 298.3 | 100 | % | 20 | % | 11 | % | ||||||||
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| Selected revenue by material: |
(In millions) 3Q11 |
% of CVI Revenue 3Q11 |
%chg y/y |
Constant
Currency %chg y/y |
|||||||||||||
Proclear® |
$ | 80.7 | 27 | % | 14 | % | 5 | % | ||||||||
Silicone hydrogel |
$ | 91.9 | 31 | % | 56 | % | 47 | % |
| Gross margin 56% compared with 58% in last years third quarter. The decrease was a result of a reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. Excluding this reserve, gross margin in the third quarter 2011 would have been 61%. |
Third Quarter CooperSurgical (CSI) GAAP Operating Highlights
| Revenue $53.1 million, up 14% from last years third quarter, up 12% excluding acquisitions. |
| Revenue by category: |
(In millions) 3Q11 |
% of CSI Revenue 3Q11 |
%chg y/y |
||||||||||
Office, other |
$ | 28.9 | 54 | % | 5 | % | ||||||
Surgical procedures |
20.4 | 39 | % | 29 | % | |||||||
Fertility |
3.8 | 7 | % | 12 | % | |||||||
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Total |
$ | 53.1 | 100 | % | 14 | % | ||||||
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| Gross margin 65% compared with 66% in last years third quarter. |
2011 Guidance
The Company amends its full-year fiscal 2011 guidance and provides fiscal fourth quarter guidance. Guidance is summarized as follows:
FY11 Guidance | FY11 Guidance | F4Q11 Guidance | ||||
Old | New | New | ||||
Revenues (In millions) |
||||||
Total |
$1,280 - $1,300 | $1,320 - $1,335 | $350 - $365 | |||
CVI |
$1,080 - $1,095 | $1,117 - $1,127 | $300 - $310 | |||
CSI |
$200 - $205 | $203 - $208 | $50 - $55 | |||
EPS |
||||||
GAAP |
$3.90 - $4.05 | $3.67 - $3.72 | $1.21 - $1.26 | |||
Non-GAAP* |
$4.00 - $4.15 | $4.20 - $4.25 | $1.19 - $1.24 | |||
Free Cash Flow (In millions) |
$190 - $210 | $200 - $220 | $46 - $66 |
* | Excludes the impact of the 2009 CVI manufacturing restructuring plan, items related to acquisitions, costs related to the redemption of our senior notes and the reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. See Reconciliation of Non-GAAP EPS to GAAP EPS below. |
Reconciliation of Non-GAAP EPS to GAAP EPS
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 inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses, costs related to acquisitions, including the reversal of the one-time gain on settlement of a preexisting relationship related to the acquisition of certain assets from Asahikasei Aime, 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.
Non-GAAP net income and diluted EPS for the fiscal third quarter of 2011 excludes $18.1 million or 37 cents per share related to the aforementioned reserve for inventory and return provisions and the reversal of the one-time gain on settlement of a preexisting relationship. Fiscal 2011 guidance excludes these costs along with costs related to the 2009 CooperVision manufacturing restructuring plan, items related to acquisitions and costs related to the redemption of our senior notes.
In the fiscal third quarter of 2011, we recognized a $14.2 million reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. In the fiscal second quarter, we recognized a $16.5 million loss related to the redemption of the senior notes. The restructuring costs, primarily severance and costs associated with assets related to the closure of the Norfolk manufacturing plant, are recorded primarily 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. We recognized $1.9 million in fiscal 2011, $16.1 million in fiscal 2010 and $5.1 million in fiscal 2009. In our fiscal third quarter 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. Also in our fiscal first quarter 2011, acquisition costs of $0.2 million, principally legal and other due diligence costs, were primarily recorded in selling, general and administrative expense. We believe it is useful for investors to understand the effects of these restructuring costs and acquisition items on our total 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 July 31, | ||||||||||||
2011 GAAP | Adjustments | 2011 Non-GAAP | ||||||||||
Operating income |
$ | 45,887 | $ | 20,261 | $ | 66,148 | ||||||
Income before income taxes |
$ | 43,056 | $ | 20,261 | $ | 63,317 | ||||||
Provision for income taxes |
$ | 4,919 | $ | 2,191 | $ | 7,110 | ||||||
Net income |
$ | 38,137 | $ | 18,070 | $ | 56,207 | ||||||
Diluted EPS |
$ | 0.78 | $ | 0.37 | $ | 1.15 | ||||||
Fiscal 2011 EPS Guidance | ||||||||||||
2011 GAAP | Adjustments | 2011 Non-GAAP | ||||||||||
Diluted EPS |
$ | 3.67 - $3.72 | $ | 0.53 | $ | 4.20 - $4.25 |
Conference Call and Webcast
The Company will host a conference call today at 5:00 p.m. ET to discuss its third quarter 2011 financial results. The dial in number in the United States is +1-800-901-5231 and outside the United States is +1-617-786-2961. The passcode is 55243181. There will be a replay available approximately two hours after the call ends until Wednesday, September 7, 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 48840701. 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. Coopers 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 womens 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.
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 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 Companys or its customers ability to meet future liquidity needs; costs and expenses related to the recall of a product, including those associated with the limited recall of the Avaira Toric contact lenses; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; 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; the impact of acquisitions or divestitures on revenues, earnings or margins; losses arising from future litigation, including the risk of adverse decisions or settlements related to litigation, or product recalls; 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 Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2010, 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)
July 31, | October 31, | |||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 7,872 | $ | 3,573 | ||||
Trade receivables, net |
218,416 | 197,490 | ||||||
Inventories |
243,370 | 227,902 | ||||||
Deferred tax assets |
33,061 | 28,828 | ||||||
Other current assets |
40,917 | 33,547 | ||||||
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Total current assets |
543,636 | 491,340 | ||||||
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Property, plant and equipment, net |
601,094 | 593,887 | ||||||
Goodwill |
1,270,300 | 1,261,976 | ||||||
Other intangibles, net |
125,840 | 114,177 | ||||||
Deferred tax assets |
27,208 | 23,072 | ||||||
Other assets |
47,256 | 40,566 | ||||||
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$ | 2,615,334 | $ | 2,525,018 | |||||
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LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
Current liabilities: |
||||||||
Short-term debt |
$ | 38,735 | $ | 19,159 | ||||
Other current liabilities |
198,958 | 180,361 | ||||||
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Total current liabilities |
237,693 | 199,520 | ||||||
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Long-term debt |
406,485 | 591,977 | ||||||
Other liabilities |
64,514 | 46,543 | ||||||
Deferred tax liabilities |
18,964 | 20,202 | ||||||
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Total liabilities |
727,656 | 858,242 | ||||||
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Stockholders equity |
1,887,678 | 1,666,776 | ||||||
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$ | 2,615,334 | $ | 2,525,018 | |||||
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(In thousands, except earnings per share amounts)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 351,396 | $ | 295,635 | $ | 969,926 | $ | 845,165 | ||||||||
Cost of sales |
148,594 | 119,649 | 388,755 | 355,923 | ||||||||||||
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Gross profit |
202,802 | 175,986 | 581,171 | 489,242 | ||||||||||||
Selling, general and administrative expense |
133,617 | 111,265 | 373,453 | 323,183 | ||||||||||||
Research and development expense |
11,725 | 8,588 | 31,843 | 24,788 | ||||||||||||
Restructuring costs |
| 14 | | 424 | ||||||||||||
Settlement of preexisting relationship |
6,080 | | | | ||||||||||||
Amortization of intangibles |
5,493 | 4,723 | 14,940 | 13,439 | ||||||||||||
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Operating income |
45,887 | 51,396 | 160,935 | 127,408 | ||||||||||||
Interest expense |
3,217 | 8,729 | 14,436 | 28,684 | ||||||||||||
Loss on extinguishment of debt |
| | 16,487 | | ||||||||||||
Litigation settlement charge |
| | | 27,000 | ||||||||||||
Other income (expense), net |
386 | 985 | (128 | ) | (1,174 | ) | ||||||||||
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Income before income taxes |
43,056 | 43,652 | 129,884 | 70,550 | ||||||||||||
Provision for income taxes |
4,919 | 3,925 | 11,092 | 5,945 | ||||||||||||
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Net income |
$ | 38,137 | $ | 39,727 | $ | 118,792 | $ | 64,605 | ||||||||
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Diluted earnings per share |
$ | 0.78 | $ | 0.86 | $ | 2.46 | $ | 1.40 | ||||||||
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Number of shares used to compute earnings per share |
49,009 | 46,402 | 48,362 | 46,232 | ||||||||||||
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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 2Q11 | Trailing Twelve Months | |||||||||||||||||||||||
Market | Market Change |
CVI Change |
Market | Market Change |
CVI Change |
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Sales by Category |
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Spheres |
$ | 1,324 | 3 | % | 10 | % | $ | 5,182 | 4 | % | 8 | % | ||||||||||||
Torics |
323 | 8 | % | 10 | % | 1,249 | 9 | % | 14 | % | ||||||||||||||
Multifocal |
82 | 5 | % | 1 | % | 314 | 10 | % | (1 | %) | ||||||||||||||
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WW Soft Contact Lenses |
$ | 1,729 | 4 | % | 9 | % | $ | 6,745 | 5 | % | 9 | % | ||||||||||||
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Sales by Modality |
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Single Use |
$ | 650 | 8 | % | 12 | % | $ | 2,473 | 8 | % | 10 | % | ||||||||||||
Other |
1,079 | 2 | % | 9 | % | 4,272 | 3 | % | 8 | % | ||||||||||||||
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WW Soft Contact Lenses |
$ | 1,729 | 4 | % | 9 | % | $ | 6,745 | 5 | % | 9 | % | ||||||||||||
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Sales by Material |
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Hydrogel |
$ | 993 | (0 | %) | (2 | %) | $ | 3,948 | (2 | %) | (4 | %) | ||||||||||||
Silicone Hydrogel |
736 | 11 | % | 47 | % | 2,797 | 16 | % | 60 | % | ||||||||||||||
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WW Soft Contact Lenses |
$ | 1,729 | 4 | % | 9 | % | $ | 6,745 | 5 | % | 9 | % | ||||||||||||
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Sales by Geography |
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Americas |
$ | 662 | 6 | % | 7 | % | $ | 2,562 | 6 | % | 9 | % | ||||||||||||
EMEA |
506 | 4 | % | 12 | % | 1,961 | 7 | % | 10 | % | ||||||||||||||
Asia Pacific |
561 | 2 | % | 10 | % | 2,222 | 2 | % | 5 | % | ||||||||||||||
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WW Soft Contact Lenses |
$ | 1,729 | 4 | % | 9 | % | $ | 6,745 | 5 | % | 9 | % | ||||||||||||
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United States |
$ | 570 | 7 | % | 8 | % | $ | 2,189 | 6 | % | 10 | % | ||||||||||||
International |
1,159 | 3 | % | 10 | % | 4,556 | 4 | % | 8 | % | ||||||||||||||
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WW Soft Contact Lenses |
$ | 1,729 | 4 | % | 9 | % | $ | 6,745 | 5 | % | 9 | % | ||||||||||||
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COO-E
# # #