================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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): December 2, 1997 ---------- THE COOPER COMPANIES, INC. (Exact name of registrant as specified in its charter) ---------- Delaware 1-8597 94-2657368 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588 (Address of principal executive offices) (510) 460-3600 (Registrant's telephone number, including area code) ================================================================================ ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements. (1) Audited Financial Statements for Contact Lens Technologies Limited for the year ended 31 March 1997. (2) Audited Financial Statements for New Focus Health Care Limited for the Year ended 31 March 1997. (3) Audited Financial Statements for Contact Lens Technologies Limited for the period 1 April 1997 to 31 October 1997. (4) Audited Financial Statements for New Focus Health Care Limited for the period 1 April 1997 to 31 October 1997. (5) Unaudited Financial Statements for Contact Lens Technologies Limited for the period 1 April 1996 to 31 October 1996. (6) Unaudited Financial Statements for New Focus Health Care Limited for the period 1 April 1996 to 31 October 1996. (b) Pro forma financial information. (1) Unaudited pro forma financial information for The Cooper Companies, Inc. for the year ended October 31, 1997. 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/ Stephen C. Whiteford _________________________________ Stephen C. Whiteford Vice President and Corporate Controller (Principal Accounting Officer) Dated: February 13, 1998 CONTACT LENS TECHNOLOGIES LIMITED REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 DIRECTORS A D Galley I R Bussey G Fryling SECRETARY I R Bussey COMPANY NUMBER 02908056 REGISTERED OFFICE Unit 2, Southpoint, Hamble, Southampton, Hampshire, S03 5RF
CONTENTS PAGES - ---------------------------------------------------------------------------------------------------- ----- Directors' Report................................................................................... 1 Auditors' Report.................................................................................... 2 Profit and Loss Account............................................................................. 3 Cash Flow Statement................................................................................. 4 Balance Sheet....................................................................................... 5 Notes to the Financial Statements................................................................... 6-13 CONTACT LENS TECHNOLOGIES LIMITED DIRECTORS' REPORT The directors present their report and the financial statements for the year ended 31 March 1997. PRINCIPAL ACTIVITIES The company's principal activity continues to be that of contact lens technology, manufacture of machinery and wholesaling of contact lenses. On 3 December 1997 Coopervision Inc., took over Contact Lens Technologies Limited. DIRECTORS The directors who served during the year and their beneficial interests in the company's issued ordinary share capital were: In addition I R Bussey and G Fryling were appointed directors of the company on 2 December 1997. DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to -- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent; -- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. AUDITORS The existing auditors, Leonard Gold Chartered Accountants, will be replaced by KPMG in accordance with section 388 of the Companies Act 1985. This report was approved by the board on 10 February 1998 in accordance with the provisions of Part VII of the Companies Act 1985, as amended, relating to small companies. Signed by order of the board of directors. /s/ I R BUSSEY - ----------------- I R Bussey SECRETARY 10 FEBRUARY 1998 1
NUMBER OF SHARES -------------------- 1997 1996 ---- ---- G H Galley (Resigned 02-12-97) 400 400 A D Galley 350 350 B Bevis (Resigned 02-12-97) 200 200 INDEPENDENT AUDITOR'S REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDERS CONTACT LENS TECHNOLOGIES LIMITED We have audited the financial statements of Contact Lens Technologies Limited. These financial statements are the responsibility of Contact Lens Technologies Limited's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United Kingdom, which are substantially consistent with those of the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Contact Lens Technologies Limited at 31 March 1997 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended 31 March 1997, in conformity with generally accepted accounting principles in the United Kingdom. Generally accepted accounting principles in the United Kingdom vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally accepted accepted accounting principles in the United States would have affected results of operations for each of the years in the three year period ended 31 March 1997 and shareholders' equity as at 31 March 1997 and 1996, to the extent summarised in note 19 to the financial statements. /s/ LEONARD GOLD - --------------------- LEONARD GOLD CHARTERED ACCOUNTANTS Registered Auditors 24 Landport Terrace Portsmouth Hampshire PO1 2RG 10 FEBRUARY 1998 2 CONTACT LENS TECHNOLOGIES LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 1997 The results in the profit and loss account relate to continuing operations. There were no recognised gains or losses other than those included in the profit and loss account. The notes on pages 6 to 13 form part of these financial statements. 3
NOTES 1997 1996 1995 ----- --------- -------- ---- 'L' 'L' 'L' TURNOVER................................................................. 1,251,124 415,777 -- COST OF SALES............................................................ (930,357) (314,781) -- --------- -------- --------- GROSS PROFIT............................................................. 320,767 100,996 -- ADMINISTRATIVE EXPENSES.................................................. (306,671) (148,821) -- --------- -------- --------- 14,096 (47,825) -- OTHER OPERATING INCOME................................................... 3 347,245 186,206 -- --------- -------- --------- OPERATING PROFIT......................................................... 361,341 138,381 -- PROFIT ON SALE OF FIXED ASSETS........................................... 16,475 -- -- --------- -------- --------- PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST............................ 377,816 138,381 -- INTEREST PAYABLE......................................................... (67,266) (13,345) -- --------- -------- --------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............................ 310,550 125,036 -- TAX ON PROFIT ON ORDINARY ACTIVITIES..................................... 4 (110,477) (35,750) -- --------- -------- --------- RETAINED PROFIT FOR THE YEAR............................................. 11 'L'200,073 'L'89,286 'L' -- ========= ======== ========== CONTACT LENS TECHNOLOGIES LIMITED BALANCE SHEET AS AT 31 MARCH 1997 Approved by the board of directors on 10 February, 1998 and signed on its behalf. These accounts are prepared in accordance with the provisions of Part VII of the Companies Act 1985, as amended, relating to small companies. /S/ A D GALLEY ..................................... A D Galley Director /S/ I R BUSSEY ..................................... I R Bussey Director The notes on pages 6 to 13 form part of these financial statements. 4
NOTES 1997 1996 ----- -------- -------- 'L' 'L' FIXED ASSETS Tangible assets................................................................... 5 909,743 860,769 -------- -------- CURRENT ASSETS Stocks............................................................................ 6 237,298 44,223 Debtors........................................................................... 7 386,516 283,593 Cash at bank...................................................................... 2,114 -- -------- -------- 625,928 327,816 CREDITORS: Amounts falling due within one year.......................................... 8 (943,447) (747,091) -------- -------- Net current liabilities........................................................... (317,519) (419,275) -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES............................................. 592,224 441,494 CREDITORS: Amounts falling due after more than one year................................. 8 (301,865) (325,458) PROVISION FOR LIABILITIES AND CHARGES Deferred taxation............................................................ 9 -- (25,750) -------- -------- NET ASSETS........................................................................ 'L'290,359 'L'90,286 ========= ======== CAPITAL AND RESERVES Called up share capital..................................................... 10 1,000 1,000 Profit and loss account...................................................... 11 289,359 89,286 -------- -------- Shareholders' Funds............................................................... 12 'L'290,359 'L'90,286 ========= ======== CONTACT LENS TECHNOLOGIES LIMITED CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 The notes on pages 6 to 13 form part of these financial statements. 5
NOTE 1997 1996 1995 ---- ---- ---- ---- 'L' 'L' 'L' 'L' 'L' 'L' NET CASH INFLOW FROM OPERATIONS ACTIVITIES....................... 16 372,193 42,575 209,481 RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest paid............... (72,822) (4,366) -- TAXATION Corporation tax paid............. (9,822) -- -- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS Payments to acquire tangible fixed assets................... (193,679) (884,612) (209,481) Receipts from sale of tangible fixed assets................... 62,000 221,446 -- --------- -------- --------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE...................... (131,679) (663,166) (209,481) FINANCING Issue of ordinary share capital.......................... -- 600 -- Bank loan advance.................. -- 365,000 -- Bank loan repayments............... (29,093) (3,042) -- --------- --------- -------- NET CASH (OUTFLOW)/INFLOW FROM FINANCING........................ (29,093) 362,558 -- -------- -------- -------- INCREASE/(DECREASE) IN CASH........ 17 'L'128,777 'L'(262,399) 'L' -- ========== =========== ======== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 1. ACCOUNTING POLICIES BASIS OF PREPARATION OF ACCOUNTS The financial statements are prepared under the historical cost convention and incorporate the results of the principal activity which is described in the directors' report and which is continuing. TURNOVER Turnover comprises the invoiced value of goods and services supplied by the company, net of Value Added Tax and trade discounts. TANGIBLE FIXED ASSETS AND DEPRECIATION Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: The freehold property is maintained as a matter of company policy, by a continual repair programme, such that the residual value of the property is at least equal to its book value. STOCKS Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow moving items. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads. FOREIGN CURRENCIES Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Translation in foreign currencies are translated into sterling at the rate ruling on the date of the transaction. Exchange differences are taken into account in arriving at the operating result. DEFERRED TAXATION Provision is made for taxation deferred as a result of material timing differences between the incidence of income and expenditure for taxation and accounts purposes using the liability method, only to the extent that, in the opinion of the directors, there is a reasonable probability that a liability or asset will crystallise in the near future. 6
Improvements to property................................... 20% per annum straight line Plant and equipment........................................ 15% per annum straight line Purpose built equipment.................................... 15% per annum straight line Fixtures and fittings...................................... 15% per annum straight line Computer equipment......................................... 33% per annum straight line CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 2. OPERATING PROFIT The operating profit is stated after charging: 3. OTHER OPERATING INCOME
1997 1996 1995 ------ ------ ------ 'L' 'L' 'L' Depreciation of tangible fixed assets -- owned by the company.............. 99,180 11,878 -- Directors' emoluments -- remuneration...................................... 35,000 15,000 -- Equipment hire............................................................. -- 12,796 -- Auditors' remuneration..................................................... 2,040 2,405 -- ====== ====== ====== 4. TAXATION
1997 1996 1995 -------- -------- -------- 'L' 'L' 'L' Rent received...................................................... 52,000 13,000 -- Hire of equipment.................................................. 120,000 18,206 -- Technology licence................................................. 100,000 150,000 -- Optical Sciences Inc. settlement................................... 65,195 -- -- Commission received................................................ 10,051 -- -- -------- -------- -------- 'L'347,245 'L'181,206 'L' -- ======== ======== ======== 7
1997 1996 1995 -------- -------- -------- 'L' 'L' 'L' UK current year taxation UK corporation tax at 33%.......................................... 116,000 10,000 -- (1996 -- 25%)................................................. -- Deferred........................................................... (25,750) 25,750 -- -------- -------- -------- 90,250 35,750 -- Prior years Corporation Tax.................................................... 20,227 -- -- -------- -------- -------- 'L'110,477 'L'35,750 'L' -- ======== ========= ======== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 5. TANGIBLE FIXED ASSETS
FREEHOLD IMPROVEMENTS PLANT AND PROPERTY TO PROPERTY EQUIPMENT --------------- ------------ -------------- 'L' 'L' 'L' COST At 1 April 1996...................................................... 365,000 5,000 42,539 --------------- ------------- -------------- DEPRECIATION At 1 April 1996...................................................... -- 249 4,753 Charge for year...................................................... -- 996 6,384 --------------- ------------- -------------- -- 1,245 11,137 --------------- ------------- -------------- NET BOOK VALUES At 31 March 1996..................................................... 'L'365,000 'L'4,751 'L'37,786 At 31 March 1997..................................................... 'L'365,000 'L'3,755 'L'31,402 ================ ============= ============== 8
PURPOSE FIXTURES BUILT AND COMPUTER EQUIPMENT FITTINGS EQUIPMENT TOTALS --------------- ------------- ------------- -------------- 'L' 'L' 'L' 'L' COST At 1 April 1996........................................ 457,288 -- 2,820 872,677 Additions.............................................. 185,297 5,051 3,331 193,679 Disposals.............................................. (45,525) -- -- (45,525) --------------- ------------- ------------- --------------- 597,060 5,051 6,151 1,020,801 --------------- ------------- ------------- --------------- DEPRECIATION At 1 April 1996........................................ 6,492 -- 384 11,878 Charge for year........................................ 89,640 420 1,740 99,180 --------------- ------------- ------------- -------------- 96,132 420 2,124 111,058 --------------- ------------- ------------- -------------- NET BOOK VALUES At 31 March 1996....................................... 'L'450,796 -- 'L'2,436 'L'860,769 At 31 March 1997....................................... 'L'500,928 'L'4,631 'L'4,027 'L'909,743 =============== ============== ============ ============== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 6. STOCKS 1997 1996 --------------- -------------- 'L' 'L' Contact lenses............................. 223,008 35,067 Packing and labels......................... 14,290 9,156 --------------- -------------- 'L'237,298 'L' 44,223 =============== =============== 7. DEBTORS 1997 1996 ---- ---- 'L' 'L' Due within one year: Value added tax...................... -- 153,541 Trade debtors........................ 309,895 127,652 Other debtors........................ 76,621 2,400 ---------- ---------- 'L'386,516 'L'283,593 ========== ========== There were no amounts falling due after more than one year. 8. CREDITORS The bank loan is repayable by equal monthly instalments over 10 years commencing February 1995 with 'L'149,735 being due after five years. Of the creditors 'L'468,601 are secured. 9
AMOUNTS FALLING AMOUNTS FALLING DUE WITHIN DUE AFTER MORE ONE YEAR THAN ONE YEAR ---------------------------------- ----------------------------- 1997 1996 1997 1996 --------------- --------------- -------------- ------------ 'L' 'L' 'L' 'L' Bank loans and overdraft (secured).......... 166,736 298,899 301,865 325,458 Corporation tax............................. 136,405 10,000 -- -- Director's current account.................. 73 148,857 -- -- Trade creditors............................. 9,471 107,745 -- -- Accruals.................................... 139,601 27,937 -- -- Other taxes and social security............. 42,703 950 -- -- Other creditors............................. -- 70,000 -- -- Due to related company...................... 448,458 82,703 -- -- --------------- --------------- --------------- ----------- 'L'943,447 'L'747,091 'L'301,865 'L'325,458 =============== =============== =============== ============ CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 9. DEFERRED TAXATION 10. CALLED UP SHARE CAPITAL
PROVIDED FOR NOT PROVIDED FOR 1997 1996 1997 1996 --------------- -------------- -------------- -------------- 'L' 'L' 'L' 'L' Depreciation of fixed assets............................ 43,000 31,000 -- -- Accrued royalties and interest.......................... (43,000) (5,250) -- -- --------------- -------------- -------------- -------------- 'L' -- 'L'25,750 'L' -- 'L' -- =============== ============== ============== =============== 11. PROFIT AND LOSS ACCOUNT
1997 1996 ----------------- ----------------- Authorised Ordinary shares of 'L'1 each......................................... 'L'5,000,000 'L'5,000,000 ----------------- ----------------- Ordinary shares of 'L'1 each......................................... 'L' 1,000 'L' 1,000 ================= ================= 12. RECONCILIATION AND MOVEMENT IN SHAREHOLDERS FUNDS
1997 1996 ----------------- ----------------- 'L' 'L' Balance at 1 April 1996............................................... 89,286 -- Retained profit for the year.......................................... 200,073 89,286 ----------------- ----------------- Balance at 31 March 1997.............................................. 'L'289,359 'L' 89,286 ================= ================= 10
1997 1996 ----------------- ----------------- 'L' 'L' Profit for the year........................................................ 200,073 89,286 New shares issued during the year.......................................... -- 998 ----------------- ----------------- New additions during the year.............................................. 200,073 90,284 Shareholders funds at 1 April 1996......................................... 90,286 2 ----------------- ----------------- Shareholders funds at 31 March 1997........................................ 'L' 290,359 'L' 90,286 ================= ================== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 13. RELATED PARTY TRANSACTIONS During the year the company acquired 'L'1,001,473 (1996: 'L'233,601) of contact lenses from Aspect Vision Care Limited. It also received rent of 'L'52,000 (1996: 'L'13,000) and equipment rentals of 'L'120,000 (1996: 'L'18,206). Aspect Vision Care Limited is controlled by common directors, G H and A D Galley, and of which B Bevis is also a director. 14. CONTROLLING PARTY The directors as disclosed in the directors' report are the controlling party by virtue of their 95% holding in the equity share capital of the company on 31 March 1997. 15. POST BALANCE SHEET EVENTS The financial statements take into consideration events occurring between 31 March 1997 and the date of their approval by the board of directors. 16. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 17. ANALYSIS OF CHANGES IN NET DEBT
1997 1996 1995 ---------------- ---------------- --------------- 'L' 'L' 'L' Operating profit................................. 361,341 138,381 -- Depreciation charges............................. 99,180 11,878 -- Increase in stocks............................... (193,075) (44,223) -- Increase in debtors.............................. (102,923) (283,192) -- Increase in creditors............................ 207,670 219,731 209,481 ---------------- ---------------- --------------- Net cash inflow from operating activities........ 'L' 372,193 'L' 42,575 'L'209,481 ================ ================ ================ 11
AT CASH OTHER AT CASH OTHER AT 31.3.95 FLOWS CHARGES 31.3.96 FLOWS CHARGES 31.3.97 ----------- ----------- ------------ ------------ ------------ ----------- ------------ 'L' 'L' 'L' 'L' 'L' 'L' 'L' Cash in hand and at bank -- -- -- -- 2,114 -- 2,114 Bank overdraft -- (262,399) -- (262,399) 126,663 -- (135,736) ----------- ----------- ------------ ------------ ------------ ----------- ------------ -- (262,399) -- (262,399) 128,777 -- (133,622) Bank loans -- 3,042 (365,000) (361,958) 29,093 -- (332,865) ----------- ----------- ------------ ------------ ------------ ----------- ------------ TOTAL 'L' -- 'L'(259,357) 'L'(365,000) 'L'(624,357) 'L'157,870 'L' -- 'L' (466,487) =========== ============ ============ =========== ============ =========== ============ CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 18. RECONCILIATION OF NET CASH FLOWS TO MOVEMENT IN NET DEBT 19a. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable in the United Kingdom (UK GAAP), which differ in cerain significant respects from those applicable in the United States (US GAAP). The following are the main differences which are relevant to the Company's financial statements. CAPITALISATION OF INTEREST Interest incurred as part of the cost of contructing fixed assets is capitalised and amortised over the life of the asset under UK GAAP. In accordance with common UK practice, the company does not capitalise such interest in its financial statements. FREEHOLD PROPERTY DEPRECIATION Under certain circumstances UK GAAP does not require freehold properties to be depreciated. US GAAP requires that freehold properties must be depreciated over their useful economic lives. DEFERRED TAXATION Under UK GAAP deferred taxes are accounted for to the extent that it is considered probable that a liability or asset will crystallise in the foreseeable future. Under US GAAP, deferred taxes are accounted for on all timing differences and a valuation allowance is established in respect of those deferred tax assets where it is more likely than not that some portion will remain unrealised. 12
1997 1996 1995 ------------------- ------------------ ------------------ 'L' 'L' 'L' 'L' 'L' 'L' Increase/(decrease) in cash in the period..................... 128,777 (262,399) -- Cash outflow from repayment of bank loans..................... 29,093 3,042 -- ---------- --------- ------- 157,870 (259,357) -- New bank loan..................... -- (365,000) -- ---------- --------- ------- Movement in net debt in the year....................... 157,870 (624,357) -- Net debt at 1 April 1996.......... (624,357) -- -- ---------- --------- ------- Net debt at 31 March 1997......... 'L'(466,487) 'L'(624,357) 'L'-- =========== =========== ======== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 b. ADJUSTMENT TO UK PROFITS AND SHAREHOLDERS EQUITY FOR US GAAP Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP.
31 MARCH, 31 MARCH 31 MARCH 1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Profit after taxation under UK GAAP................... 200,073 89,286 -- US GAAP adjustments: Capitalisation of interest....................... -- 13,345 -- Depreciation on interest capitalised............. (2,002) -- -- Freehold property depreciation................... (9,125) (1,521) -- Tax effect on the foregoing adjustments.......... 661 (4,404) -- Deferred tax..................................... (3,047) (2,759) -- ----------- --------- --------- Profit after tax under US GAAP........................ 'L'186,560 'L'93,947 'L'-- =========== ========= ========= C. BASIS OF PREPARATION OF CASH FLOW STATEMENT The company's cash flow statement is prepared in accordance with UK Financial Reporting Standard No 1 (Revised) 'Cash Flow Statements' (FRS 1-Revised), the objectives and principles of which are similar to those set out in Statement of Financial Accounting Standards 95, 'Statement of Cash Flows' (SFAS 95) under US GAAP. The principal differences between FRS 1 (Revised) and SFAS 95 relate to classification. Under FRS 1 (Revised), the company presents its cash flows for (a) operating activities; (b) returns on investment and servicing of finance; (c) taxation; (d) capital expenditure and financial investment; and (e) financing activities. SFAS 95 requires only three categories of cash flow activity (a) operating; (b) investing; and (c) financing. Cash flows from taxation and returns on investment and servicing of finance under FRS 1 (Revised) would be included as operating activities under SFAS 95. Under FRS 1 (Revised) cash includes only cash in hand plus deposits repayable on demand, less overdrafts repayable on demand. Under SFAS 95 cash and cash equivalents include all highly liquid short term investments with original maturities of three months or less. 13
31 MARCH 31 MARCH 1997 1996 ---- ---- 'L' 'L' Shareholders' equity under UK GAAP.................... 290,359 90,286 US GAAP adjustments: Capitalisation of interest....................... 13,345 13,345 Depreciation on interest capitalised............. (2,002) -- Freehold property depreciation................... (10,646) (1,521) Tax effect on the foregoing adjustments.......... (3,743) (4,404) Deferred tax..................................... (5,806) (2,759) ---------- --------- Shareholders' equity under US GAAP.................... 'L'281,507 'L'94,947 ========== ========= NEW FOCUS HEALTH CARE LIMITED REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 DIRECTORS A D Galley I R Bussey G Fryling SECRETARY I R Bussey COMPANY NUMBER 01847802 REGISTERED OFFICE Unit 2, South Point, Hamble, Southampton, Hampshire, S031 4RF
CONTENTS Pages - -------- ----- Directors' Report 1-2 Auditors' Report 3 Consolidated Profit and Loss Account 4 Consolidated Balance Sheet 5 Company Balance Sheet 6 Consolidated Cashflow Statement 7 Notes to the Financial Statements 8-21 NEW FOCUS HEALTH CARE LIMITED DIRECTORS' REPORT - -------------------------------------------------------------------------------- The directors present their report and the financial statements for the year ended 31 March 1997. PRINCIPAL ACTIVITIES AND BUSINESS REVIEW The group's principal activities and those of its trading subsidiaries continues to be those of manufacturers and wholesalers of contact lenses. The directors are satisfied with the results of the group for the year and expect further growth and increasing profits in the coming year. The performance of the three trading subsidiaries, Aspect Vision Care Limited, Aspect Speciality Limited and Aspect Vision Italia SRL is also considered satisfactory with all three operating profitably during the year. Aspect Speciality Limited has since the year end transferred its trade to Aspect Vision Care Limited and ceased trading. On 3 December 1997 CooperVision Inc. took over New Focus Health Care Limited. RESULTS AND DIVIDENDS The consolidated profit for the year, after taxation and minority interest, amounted to 'L'2,120,139. The directors recommend that no dividend be paid and that the balance be carried forward. FIXED ASSETS The movement in fixed assets during the year are set out in notes 10 and 11 to the financial statements. In addition the Aspect Vision Care Limited purchased a freehold property for 'L'783,350 on 2 June 1997. DIRECTORS The directors who served during the year and their beneficial interests in the company's issued ordinary share capital were: In addition I R Bussey and G Fryling were appointed directors of the company on 2 December 1997. DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. 1
Number of Shares ------------------------ 1997 1996 ------- -------- G H Galley (resigned 2 December 1997) 241,303 241,303 W T Brooker (resigned 2 December 1997) 241,303 241,303 A D Galley 241,302 241,302 NEW FOCUS HEALTH CARE LIMITED DIRECTORS' REPORT (CONTINUED) - -------------------------------------------------------------------------------- The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. EMPLOYEES The group is committed to communication with employees throughout the group by its system of keeping employees informed of developments and progress through briefings by management and widely distributed news and information bulletins. The group's aim is to meet the obligations of the code of good practice on the employment of disabled people. Full and fair consideration is given to disabled applicants for employment and training, and career development is encouraged on the basis of their aptitude and abilities. POLICY ON PAYMENT OF CREDITORS It is group policy not to follow a particular code but, in respect of all of its suppliers to settle the terms of payment when agreeing each transaction; to ensure that suppliers are made aware of the terms of payment; and to abide by those terms. TAXATION STATUS OF THE COMPANY The company is a close company within the provisions of Section 414, Income and Corporation Taxes Act 1988. AUDITORS The auditors, Leonard Gold Chartered Accountants, will be proposed for reappointment in accordance with section 385 of the Companies Act 1985. Signed by order of the board of directors, /s/ I R BUSSEY - ----------------- I R BUSSEY SECRETARY 10 FEBRUARY 1998 2 INDEPENDENT AUDITOR'S REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDERS NEW FOCUS HEALTH CARE LIMITED - -------------------------------------------------------------------------------- We have audited the financial statements of New Focus Health Care Limited and subsidiaries. These consolidated financial statements are the responsibility of New Focus Health Care Limited's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United Kingdom, which are substantially consistent with those of the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of New Focus Health Care Limited at 31 March 1997 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended 31 March 1997, in conformity with generally accepted accounting principles in the United Kingdom. Generally accepted accounting principles in the United Kingdom vary in certain significant respects from generally accepted accounting principles in the United States. Application of generally accepted accounting principles in the United States would have affected results of operations for each of the years in the three year period ended 31 March 1997 and shareholders' equity as at 31 March 1997 and 1996, to the extent summarised in note 29 to the consolidated financial statements. /s/ LEONARD GOLD Leonard Gold Chartered Accountants Registered Auditors 24 Landport Terrace Portsmouth Hampshire P01 2RG 10 FEBRUARY 1998 3 NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- The results in the profit and loss account relate to continuing operations. There were no recognised gains or losses other than those included in the profit and loss account. The notes on pages 8 to 21 form part of these financial statements. 4
Notes 1997 1996 1995 ----- -------- -------- -------- 'L' 'L' 'L' TURNOVER 2 16,929,483 10,533,835 6,257,844 COST OF SALES (7,525,409) (5,910,462) (3,384,325) ---------- ---------- --------- GROSS PROFIT 9,404,074 4,623,373 2,873,519 DISTRIBUTION COSTS (689,844) (561,201) (332,617) ADMINISTRATIVE EXPENSES (5,667,807) (4,301,036) (2,183,442) ---------- ---------- ---------- 3,046,423 (238,864) 357,460 OTHER OPERATING INCOME 4 154,378 99,636 35,382 --------- --------- --------- OPERATING PROFIT/(LOSS) 3,200,801 (139,228) 392,842 EXCEPTIONAL ITEM 7 2,176,229 755,733 - INTEREST RECEIVABLE 994 8,270 1,835 INTEREST PAYABLE 5 (428,092) (307,572) (109,700) ---------- ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 4,949,932 317,203 284,977 TAX ON PROFIT ON ORDINARY ACTIVITIES 8 (1,703,398) (182,841) (97,024) --------- ----------- --------- PROFIT FOR THE FINANCIAL YEAR 3,246,534 134,362 187,953 MINORITY INTEREST (1,126,395) (165,065) (42,094) --------- ----------- --------- RETAINED PROFIT/(LOSS) FOR THE YEAR 17 'L'2,120,139 'L'(30,703) 'L'145,859 ============ ============ =========== NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 1997 - -------------------------------------------------------------------------------- APPROVED BY THE BOARD ON 10 FEBRUARY 1998 /s/ A D GALLEY _________________________________ A D GALLEY -- DIRECTOR /s/ I R BUSSEY __________________________________ I R BUSSEY -- DIRECTOR The notes on pages 8 to 21 form part of these financial statements. 5
Notes 1997 1996 ----- --------- --------- 'L' 'L' FIXED ASSETS Tangible Assets 10 4,043,222 1,693,840 ---------- ---------- CURRENT ASSETS Stocks 12 3,701,011 1,546,883 Debtors 13 6,415,593 3,713,260 Cash at Bank and In Hand 476,584 173,798 ---------- ---------- 10,593,188 5,433,941 CREDITORS: Amounts falling due within one year 14 (9,177,340) (5,327,241) ---------- ---------- NET CURRENT ASSETS 1,415,848 106,700 ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 5,459,070 1,800,540 CREDITORS: Amounts falling due after more than one year 14 (1,456,018) (994,987) ---------- ---------- NET ASSETS 'L'4,003,052 'L'805,553 ============ ========== CAPITAL AND RESERVES Called up Share Capital 15 7,239 7,239 Share Premium Account 16 317,761 317,761 Profit and Loss Account 17 2,350,851 230,712 ---------- ---------- Shareholders' Funds 18 2,675,851 555,712 Minority Interest 1,327,201 249,841 ---------- ---------- 'L'4,003,052 'L'805,553 ============ =========== NEW FOCUS HEALTH CARE LIMITED COMPANY BALANCE SHEET AS AT 31 MARCH 1997 - -------------------------------------------------------------------------------- APPROVED BY THE BOARD ON 10 FEBRUARY 1998 /s/ A D GALLEY __________________________________ A D GALLEY -- DIRECTOR /s/ I R BUSSEY __________________________________ I R BUSSEY -- DIRECTOR The notes on pages 8 to 21 form part of these financial statements. 6
Notes 1997 1996 ----- ----------------- --------- 'L' 'L' FIXED ASSETS Investments 11 1,118,556 1,118,556 ------------ ------------ CURRENT ASSETS Debtors 13 284,059 286,176 CREDITORS: Amounts falling due within one year 14 (1,450) (41,710) ------------ ------------ NET CURRENT ASSETS 282,609 244,466 ------------ ------------ NET ASSETS 'L'1,401,165 'L'1,363,022 ============ ============ CAPITAL AND RESERVES Called up Share Capital 15 7,239 7,239 Share Premium 16 317,761 317,761 Profit and Loss Account 17 1,076,165 1,038,022 ------------ ------------ Shareholders' Funds 18 'L'1,401,165 'L'1,363,022 ============ ============ NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- The notes on pages 8 to 21 form part of these financial statements. 7
Notes 1997 1996 1995 ----- ---- ----- ---- 'L' 'L' 'L' 'L' 'L' 'L' NET CASH INFLOW FROM OPERATING ACTIVITIES 26 2,481,228 1,469,815 490,159 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Received 994 8,270 1,835 Interest Paid (202,969) (165,787) (88,817) Interest Element of Finance Lease Rental Payments (73,489) (29,794) (20,883) ----------- ---------- --------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (275,464) (187,311) (107,865) TAXATION Corporation Tax Paid (107,864) (98,987) (5,108) ACT Received 412 - - ----------- ---------- --------- TAX PAID (107,452) (98,987) (5,108) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payment/(Receipts) to Acquire Minority Interest (49,035) 74,093 - Payments to acquire Tangible Fixed Assets (2,438,726) (803,165) (657,541) Receipts from Sales of Tangible Fixed Assets 37,318 71,390 14,750 Purchase of Subsidiary Fixed Assets - (36,976) - ----------- ---------- --------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (2,450,443) (694,658) (642,791) FINANCING Bank Loan Advance 665,000 - 500,000 Bank Loan Repayment (116,495) (76,786) (10,180) Finance Lease and Hire Purchase Repayment (345,621) (187,499) (158,908) ----------- ---------- --------- NET CASH INFLOW/(OUTFLOW) FROM FINANCING 202,884 (264,285) 330,912 ---------- ---------- --------- (DECREASE)/INCREASE IN CASH 27 'L'(149,247) 'L'224,574 'L'65,307 ========== ========== ========= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 1. ACCOUNTING POLICIES BASIS OF PREPARATION OF ACCOUNTS The financial statements are prepared in accordance with applicable accounting standards, and incorporate the results of the principal activities which are described in the directors' report and which are continuing. There have been no changes in accounting policies during the year. CONSOLIDATION The consolidated financial statements include the results of New Focus Health Care Limited and its subsidiary undertakings drawn up to 31 March 1997. No profit and loss account for the company has been presented for New Focus Health Care Limited as permitted by Section 230 of the Companies Act 4985. TURNOVER Turnover comprises the invoiced value of goods and services sold exclusive of Value Added Tax. TANGIBLE FIXED ASSETS AND DEPRECIATION Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: Short Leasehold Properties - over the term of the lease Plant, Equipment and Fittings - 3-7 years Motor Vehicles - 4 years The freehold property is maintained as a matter of company policy, by a continual repair programme, such that the residual value of the property is at least equal to its book value. Goodwill on Consolidation The excess of the cost of acquisition over the fair value of the underlying net assets is written off to profit and loss account in the year in which it arises. Stocks Stocks are valued at the lower of cost, based on normal levels of activity, and net realisable value, (inclusive of a proportion of appropriate overheads). 8 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 1. ACCOUNTING POLICIES (CONTINUED) DEFERRED TAXATION Provision is made for taxation deferred as a result of material timing differences between the incidence of income and expenditure for taxation and accounts purposes using the liability method, only to the extent that, in the opinion of the directors, there is a reasonable probability that a liability or asset will crystallise in the near future. RESEARCH AND DEVELOPMENT Expenditure on research and development is written off against profits in the period in which it is incurred. FOREIGN CURRENCIES Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transactions. Exchange differences are taken into account in arriving at the operating results. The profit and loss accounts of overseas operations are translated into sterling at the average rate. The balance sheet of the overseas operation is translated into sterling at the closing rate. Exchange differences arising from the translation of the results of overseas operations are recorded in the profit and loss account. LEASING AND HIRE PURCHASE Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets and depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. Rentals paid under operating teases are charged to the profit and loss account as incurred. PENSION SCHEME The group operates group personal pension schemes for the benefit of the employees, and the pension charge represents the amounts payable by the group to the schemes in respect of the year. 2. TURNOVER BY GEOGRAPHICAL REGION 9
1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' United Kingdom 9,066,178 6,080,426 3,837,984 Europe 5,979,053 3,708,049 2,238,520 Rest of the World 1,884,252 745,360 181,340 ------------- ------------- ------------ 'L'16,929,483 'L'10,533,835 'L'6,257,844 ============= ============= ============ NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 3. OPERATING PROFIT The operating profit/(loss) is stated after charging: 4. OTHER OPERATING INCOME
1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Goodwill written off 210,965 658,741 -- Depreciation of tangible fixed assets - owned by the company 405,359 200,217 103,181 - under hire purchase and finance lease contracts 255,134 131,551 75,579 - Loss/(Profit) on disposal of fixed assets 3,427 (14,730) (3,985) Hire of Equipment 59,400 50,569 31,309 Other Operating Lease Rentals 142,687 156,218 99,052 Auditors' remuneration 39,679 41,389 13,682 ======= ======= ======= 5. INTEREST PAYABLE
1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Sale of Business 6,800 2,109 -- Commission 144,703 81,390 35,382 Postage and Freight 2,875 -- -- Royalties -- 16,000 -- Sundry Receipts -- 137 -- ---------- --------- --------- 'L'154,378 'L'99,636 'L'35,382 ========== ========= ========= 10
1997 1996 1995 ---- ---- ----- 'L' 'L' 'L' On Bank Loans, Overdrafts and Other Loans - - repayable within five years, by instalments (8,922) 3,447 - - - repayable within five years, not by instalments 301,130 218,721 74,655 - - repayable wholly or partly in more than five years 66,256 56,705 14,162 - - on hire purchase and finance lease charges 69,628 28,699 20,883 ---------- ---------- ---------- 'L'428,092 'L'307,572 'L'109,700 ========== ========== ========== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 6. STAFF COSTS Of the above directors' remuneration 'L'182,120 (1996: 'L'186,086 and 1995: 'L'80,076) was paid by a subsidiary undertaking.
1997 1996 1995 ---- ---- ----- 'L' 'L' 'L' The average weekly number of employees, including directors, during the year was: Manufacturing 344 199 98 Sales 73 54 41 Directors 5 5 5 --------- --------- --------- 422 258 144 ========= ========= ========= STAFF COSTS (FOR THE ABOVE PERSONS): Directors' Remuneration 194,120 198,086 140,076 Directors' Benefits in Kind 28,415 29,141 22,416 Directors' Social Security Costs 19,830 19,023 14,288 Directors' Pension Contributions 16,229 13,044 8,441 Other Wages and Salaries (including social security costs) 6,797,548 3,927,409 1,857,282 Other Pension Costs 107,344 68,347 32,998 ------------ ------------- ------------- 'L'7,163,486 'L'4,255,050 'L'2,075,501 ============ ============= ============
1997 1996 1995 ---- ---- ----- 'L' 'L' 'L' Directors' Emoluments Aggregate Emoluments 222,099 227,227 162,492 Company Pension Contributions to Money Purchase Schemes 16,229 13,044 8,441 ---------- ---------- ---------- 'L'238,328 'L'240,271 'L'170,933 ========== ========== ========== 11
Number Number Number ------ ------ ------ Number of Directors who are members of a Money Purchase Scheme 3 3 1 ====== ====== ====== 1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Emoluments of Highest Paid Director - - Aggregate Emoluments 81,639 79,429 70,943 - - Company Pension Contributions to Money Purchase Scheme 6,120 7,434 -- ====== ====== ====== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 7. EXCEPTIONAL ITEMS 8. TAXATION
1997 1996 1995 ---- ---- ----- Settlement of Trade Dispute 'L'2,125,406 'L'755,733 'L' - ============ ========== ========== 9. PROFIT ATTRIBUTABLE TO THE MEMBERS OF THE PARENT COMPANY The profit dealt with in the accounts of the parent company amounted to 'L'38,143 (1996: 'L'311,048 profit and 1995: 'L'71,298 loss). 10. TANGIBLE FIXED ASSETS - GROUP
1997 1996 1995 ---- ---- ----- 'L' 'L' 'L' UK CURRENT YEAR TAXATION UK CORPORATION TAX AT 33% 1,900,800 534,266 97,000 DEFERRED (201,000) (353,000) -- ---------- ---------- --------- 1,699,800 181,266 97,000 PRIOR YEARS Corporation Tax 3,598 1,575 24 ---------- ---------- --------- 'L'1,703,398 'L'182,841 'L'97,024 ============ ========== ========= The net book value of tangible fixed assets include an amount of 'L'820,618 (1996:'L'471,331) in respect of assets held under finance leases and hire purchase contracts. Depreciation charged on these assets during the period amounted to'L'255,134 (1996: 'L'131,551). At the balance sheet date the group had capital commitments amounting to 'L'264,733 (1996: 'L'505,934) in respect of contracts approved by the board and contracted for. 12
Short Plant, Freehold Leasehold Equipment Motor Property Property & Fittings Vehicles Totals -------- -------- ---------- -------- ------ 'L' 'L' 'L' 'L' 'L' COST At 1 April 1996 -- 309,761 2,121,391 341,431 2,772,583 Additions 950,000 317,450 1,766,180 19,990 3,053,620 Disposals -- -- (547,865) (36,375) (584,240) ---------- ---------- ---------- ---------- ---------- 950,000 627,211 3,339,706 325,046 5,241,963 ---------- ---------- ---------- ---------- ---------- DEPRECIATION At 1 April 1996 -- 55,341 907,183 116,219 1,078,743 Charge for Year -- 80,519 493,783 86,197 660,493 Disposals -- -- (522,197) (18,298) (540,495) ---------- ---------- ---------- ---------- ---------- -- 135,854 878,769 184,118 1,198,741 ---------- ---------- ---------- ---------- ---------- NET BOOK VALUES At 31 March 1997 'L'950,000 'L'491,357 'L'2,460,937 'L'140,928 'L'4,043,222 At 31 March 1996 -- 'L'254,420 'L'1,214,208 'L'225,212 'L'1,693,840 ========== ========== ============ ========== ============ NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 10. TANGIBLE FIXED ASSETS - GROUP (CONTINUED) Included within fixed assets are fully depreciated assets with cost as follows:- 11. INVESTMENTS - COMPANY Investments in Subsidiary Undertakings:
1997 1996 ---- ---- 'L' 'L' Plant, Equipment and Fittings 89,623 562,687 Motor Vehicles 35,000 - ---------- --------- 'L'124,623 'L'562,687 ========== =========
1997 1996 ---- ---- 'L' 'L' Cost at 1 April 1997 1,118,556 1,118,556 Provisions as at 1 April 1996 - (577,735) ------------ ------------ 1,118,556 540,821 Movement on Provisions - 577,735 ------------ ------------ Cost at 31 March 1997 'L'1,118,556 'L'1,118,556 ============ ============ 12. STOCKS - GROUP
Country of Country of Name Holding % Incorporation Registration - ---- --------- ------------- ------------ Aspect Vision Care Limited - Contact lens manufacture and distribution 65.8% England Great Britain Aspect Vision Italia SRL - Contact lens distribution 70% Italy Italy Aspect Speciality Limited - Contact lens distribution 75.5% England Great Britain Focus Solutions Limited - Dormant 100% England Great Britain Aspect Contact Lenses Limited - Dormant 100% England Great Britain Averlan Company Limited - Dormant 100% England Great Britain 13
1997 1996 ---- ---- 'L' 'L' Lenses 2,836,727 1,223,734 Materials 256,771 96,333 Packaging and Labels 164,576 99,037 Moulds 353,058 80,978 Work in Progress 86,879 46,801 Plant Stock 3,000 - ------------ ------------ 'L'3,701,011 'L'1,546,883 ============ ============ NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 13. DEBTORS - GROUP There were no amounts falling due after more than one year. DEBTORS - COMPANY
1997 1996 ---- ---- 'L' 'L' Trade Debtors 3,502,689 2,473,120 Amounts due from Related Company 448,458 82,703 Prepayments 180,515 318,576 Other Debtors 1,729,931 273,436 Deferred Taxation (Note 19} 554,000 353,000 ------------ ------------ 'L'6,415,593 'L'3,500,835 ============ ============ There were no amounts falling due after more than one year. 14. CREDITORS - GROUP
1997 1996 ---- ----- 'L' 'L' Due within one year: Dividend Receivable - 286,176 Amounts Due from Group Undertakings 284,059 - ---------- ---------- 'L'284,059 'L'286,176 ========== ========== 14
Amounts falling Amounts falling due within due after more one year than one year ------------ --------------- 1997 1996 1997 1996 ---- ---- ---- ---- 'L' 'L' 'L' 'L' Bank Loan and Overdraft 917,510 423,625 797,527 290,874 Net obligations Under Finance Leases & Hire Purchase Contracts 275,079 197,512 289,546 97,840 Corporation Tax 2,330,800 534,266 -- -- Directors' Loan and Current Accounts 75,442 88,397 -- -- Factoring Creditor 755,617 398,065 -- -- Trade Creditors 1,743,644 1,815,831 -- -- Accruals 2,296,903 1,393,593 -- -- Other Taxes & Social Security 431,822 190,224 -- -- Other Creditors 205,523 128,376 368,945 170,300 Patent Holders Loan -- -- -- 435,973 Pension Loan 145,000 157,352 -- -- --------- --------- --------- --------- 'L'9,177,340 'L'5,327,241 'L'1,456,018 'L'994,987 ============ ============ ============ ========== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 14. CREDITORS - GROUP (CONTINUED) The bank loan, overdrafts and directors' loan are secured by fixed and floating charges over the assets of the company. The factoring account is secured by a floating charge over the company's sales ledger. The finance leases and hire purchase contracts are all repayable within five years and are secured on the assets concerned. Bank loan repayments totalling 'L'381,284 are due after five years. The bank loans of 'L'639,905 and 'L'321,634 are repayable by instalments of 'L'8,130.64 and 'L'10,180 respectively to achieve repayment by September 2006 and February 2000. Of the creditors 'L'3,035,279 (1996: 'L'1,407,916) are secured. CREDITORS - COMPANY There were no amounts falling due after more than one year. 15. CALLED UP SHARE CAPITAL
Amounts falling due within one year -------- 1997 1996 ---- ---- 'L' 'L' Accruals and Deferred Income 1,450 2,668 Amounts Due to Group Companies - 39,042 -------- --------- 'L'1,450 'L'41,710 ======== ========== 16. SHARE PREMIUM ACCOUNT There was no movement in the share premium account during the year. 15
1997 1996 ---- ---- Issued Issued and Fully and Fully Authorised Paid Authorised Paid ---------- ----- ---------- ---- 'L' 'L' 'L' 'L' Ordinary Shares of 'L'0.01 500,000 7,239 500,000 7,239 Convertible Redeemable Preferred Ordinary Shares of 'L'0.01 900,000 -- 900,000 -- Preferred Ordinary Shares of 'L'0.01 1,600,000 -- 1,600,000 -- --------- --------- --------- --------- 'L'3,000,000 'L'7,239 'L'3,000,000 'L'7,239 ============ ======== ============ ======== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 17. PROFIT AND LOSS ACCOUNT 18. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS There was no movement in the shareholders' funds during the year except for the profit as set out in note 17. 19. DEFERRED TAX - GROUP
Group Company ----- ------- 'L' 'L' Balance at 1 April 1996 230,712 1,038,022 Retained Profit For The Year 2,120,139 38,143 ------------ ------------- Balance at 31 March 1997 'L'2,350,851 'L'1,076,165 ============ ============= 20. OPERATING LEASES - GROUP At 31 March 1997 the group had the following commitments under non-cancellable operating leases as follows:-
Unprovided Provided ---------- -------- 1997 1996 1997 1996 ---- ---- ---- ---- 'L' 'L' 'L' 'L' Accelerated Capital Allowance - 27,000 50,000 3,000 Finance Lease Payments - 35,000 54,000 - Short Term Timing Difference - - (658,000) (356,000) ------- ---------- ----------- ----------- 'L' - 'L'62,000 'L'(554,000) 'L'(353,000) ======= ========== =========== ============ 21. CONTROLLING PARTY The directors of the company, as disclosed in the Directors' Report, are the controlling party of New Focus Health Care Limited by virtue of their 100% holding in the equity share capital of the company on 31 March 1997. 16
1997 1996 ---- ---- Land and Building Other Land and Building Other ----------------- ----- ----------------- ----- 'L' 'L' 'L' 'L' Expiry Date: Within one year 43,500 53,015 6,000 - Between two and five years 40,800 200,879 135,500 83,058 After more than five years 30,000 - 30,000 - ====== ======= ======= ======= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 22. RELATED PARTY TRANSACTIONS - GROUP The group had the following transactions with Contact Lens Technologies Limited, a company of which G H Galley, A D Galley and B Bevis (directors of Aspect Vision Care Limited) are directors. In addition the company's directors own the patent rights along with B Bevis, I Atkinson and A Morland to the company's manufacturing process. Royalties of lOp per finished lens and 7p per finished mould are charged by the patent holders for their rights. 23. CONTINGENT LIABILITIES - GROUP Guarantees for deferred duty totalling 'L'60,000 have been given to H M Customs & Excise. CONTINGENT LIABILITIES - COMPANY The company has provided unlimited guarantees in respect of bank borrowings of certain subsidiary undertakings. At 31 March 1997 this liability amounted to 'L'1,375,624 (1996: 'L'615,245). 24. PENSION COMMITMENTS - GROUP The group administers group personal pension schemes for its employees. The assets of the schemes are held separately from those of the group in independently administered funds. 25. POST BALANCE SHEET EVENTS The financial statements take into consideration events occurring between 31 March 1997 and the date of their approval by the board of directors. A subsidiary undertaking purchased the freehold of the Thermo King premises in Hamble for 'L'783,350 on 2 June 1997. 17
1997 1996 ---- ---- 'L' 'L' Sale of Contact Lenses 1,001,473 233,601 Rent of Property 52,000 13,000 Rent of Equipment 120,000 18,206 ========= ======= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 26. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 27. ANALYSIS OF CHANGES IN NET DEBT
1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Operating Profit/(Loss) 3,200,801 (139,228) 392,842 Depreciation Charge 660,493 331,768 178,760 Loss/(Profit) on Disposal of Tangible Fixed Assets 3,427 (14,730) (3,985) Exceptional Item - Settlement of Trade Dispute 2,176,229 755,733 -- (Increase)/Decrease in Stocks (2,151,128) 127,585 (792,477) Increase in Debtors (2,501,745) (1,411,818) (232,803) Increase in Creditors 1,093,151 1,820,505 947,822 ------------ ----------- ---------- NET CASH INFLOW FROM OPERATING ACTIVITIES 'L'2,481,228 'L'1,469,815 'L'490,159 ============ ============ ========== 18
At Cash Other At Cash Other At Cash 1.4.94 Flows Changes 31.3.95 Flows Changes 31.3.96 Flows ------ ----- -------- ------- ----- ------- ------- ----- 'L' 'L' 'L' 'L' 'L' 'L' 'L' 'L' Cash in Hand and at Bank 87 1,227 - 1,314 172,484 - 173,798 302,786 Bank Overdraft (417,635) 64,080 - (353,555) 52,090 - (301,465) (452,033) ---------- ---------- ---------- 65,307 224,574 (149,247) Bank Loans - 10,180 (500,000) (489,820) 76,786 - (413,034) 116,495 Hire Purchase and Finance Lease (28,950) 158,908 (480,590) (350,632) 187,499 (132,219) (295,352) 345,621 ----------- ---------- ----------- ------------- ---------- ----------- ----------- ---------- TOTAL 'L'(446,498) 'L'234,395 'L'(980,590) 'L'(1,192,693) 'L'488,859 'L'(132,219) 'L'(836,053) 'L'312,869 =========== ========== =========== ============= ========== =========== =========== ========== Other At Changes 31.3.97 ------- ------- 'L' 'L' Cash in Hand and at Bank - 476,564 Bank Overdraft - (753,498) Bank Loans (665,000) (961,539) Hire Purchase and Finance Lease (614,894) (564,625) ------------- ------------- TOTAL 'L'(1,279,894) 'L'(1,803,078) ============= ============= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 28. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (NOTE 27) 19
1997 1996 1995 ------------ ------------ ------------ 'L' 'L' 'L' 'L' 'L' 'L' (Decrease) Increase in cash in the Period (149,247) 224,574 65,307 Cash Outflow from Repayment of Bank Loans 116,495 76,786 10,180 Cash Outflow from Repayment of Hire Purchase and Finance Leases 345,621 187,499 158,908 -------- ------- ------- 312,869 488,859 234,395 New Bank Loan (65,000) -- (500,000) New Hire Purchase and Finance Leases (614,894) (132,219) (480,590) ----------- --------- ---------- (1,279,894) (132,219) (980,590) ------------- ----------- ------------- Movement in Net Debt in the Year (967,025) 356,640 (746,195) Net Debt at 1 April 1996 (836,053) (1,192,693) (446,498) ------------- ----------- ------------- Net Debt at 31 March 1997 'L' (1,803,078) 'L'(836,053) 'L'(1,192,693) ============= =========== ============= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- 29A. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The Group's financial statements are prepared in accordance with generally accepted accounting principles applicable in the United Kingdom (UK GAAP), which differ in certain significant respects from those applicable in the United States (US GAAP). The following are the main differences which are relevant to the Company's financial statements. Goodwill Under US GAAP goodwill arising on acquisitions accounted for under the purchase method is capitalised and amortized over its estimated useful life. Goodwill is amortized using the straight line method over periods up to 40 years. Under UK GAAP goodwill, the excess cost of acquisition over the fair value of the underlying net assets, may be written off to the profit and loss account in the year in which it arises. DEFERRED TAXATION Under UK GAAP deferred taxes are accounted for to the extent that it is considered probable that a liability or asset will crystallise in the foreseeable future. Under US GAAP, deferred taxes are accounted for on all timing differences and a valuation allowance is established in respect of those deferred tax assets where it is more likely than not that some portion will remain unrealised. b. ADJUSTMENT TO UK PROFITS AND SHAREHOLDERS EQUITY FOR US GAAP Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP: 20
31 March 31 March 31 March 1997 1996 1995 ---- ---- ---- 'L' 'L' 'L' Profit/(Loss) after taxation under UK GAAP 2,120,139 (30,703) 145,859 US GAAP adjustments: Capitalisation of goodwill 210,965 658,741 -- Amortisation of goodwill (65,874) (34,922) -- Deferred tax 35,000 (101,000) (11,000) Minority Interest on the foregoing adjustments (61,491) (178,629) 3,758 ------------ ---------- ---------- Profit after tax under US GAAP 'L'2,238,739 'L'313,487 'L'138,617 ============ ========== ========== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1997 - -------------------------------------------------------------------------------- Approximate cumulative effect on shareholders' equity of significant differences between UK GAAP and US GAAP: c. BASIS OF PREPARATION OF CASH FLOW STATEMENT The group's statement of cash flows is prepared in accordance with UK Financial Reporting Standard No 1 (Revised) "Cash Flow Statements" (FRS 1-Revised), the objectives and principles of which are similar to those set out in Statement of Financial Accounting Standards 95, "Statement of Cash Flows" (SFAS 95) under US GAAP. The principal differences between FRS 1 (Revised) and SFAS 95 relate to classification. Under FRS 1 (Revised), the company presents its cash flows for (a) operating activities; (b) returns on investment and servicing of finance; (c) taxation; (d) capital expenditure and financial investment; and (e) financing activities. SFAS 95 requires only three categories of cash flow activity (a) operating; (b) investing; and (c) financing. Cash flows from taxation and returns on investment and servicing of finance under FRS 1 (Revised) would be included as operating activities under SFAS 95. Under FRS 1 (Revised) cash includes only cash in hand plus deposits repayable on demand, less overdrafts repayable on demand. Under SFAS 95 cash and cash equivalents include all highly liquid short term investments with original maturities of three months or less. In addition, under SFAS 95 changes in minority interests would be presented as a cash flow from operating activities. 21
31 March 31 March 1997 1996 ---- ---- 'L' 'L' Shareholders' equity under UK GAAP 2,675,851 555,712 US GAAP adjustments: Capitalisation of goodwill 869,706 658,741 Amortisation of goodwill (100,796) (34,922) Deferred tax (10,000) (45,000) Minority Interest on the foregoing adjustments (259,254) (197,763) ------------ ---------- Shareholders' equity under US GAAP 'L'3,175,507 'L'936,768 ============ ========== REPORT OF THE DIRECTORS AND FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 FOR CONTACT LENS TECHNOLOGIES LIMITED CONTACT LENS TECHNOLOGIES LIMITED INDEX TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 PAGE ---- Company Information..................................................... 1 Report of the Directors................................................. 2 Report of the Auditors.................................................. 3 Profit and Loss Account................................................. 4 Balance Sheet........................................................... 5 Cash Flow Statement..................................................... 6 Notes to the Financial Statements....................................... 7 CONTACT LENS TECHNOLOGIES LIMITED COMPANY INFORMATION FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 DIRECTORS: A Galley G Fryling I R Bussey SECRETARY: I R Bussey REGISTERED OFFICE: Unit 2 South Point Hamble Southhampton Hampshire SO31 4RF REGISTERED NUMBER: 02908056 (England and Wales) AUDITORS: Leonard Gold Chartered Accountants Registered Auditors 24 Landport Terrace Portsmouth Hampshire PO1 2RG Page 1 CONTACT LENS TECHNOLOGIES LIMITED REPORT OF THE DIRECTORS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 The directors present their report with the financial statements of the company for the period 1 April 1997 to 31 October 1997. PRINCIPAL ACTIVITY The principal activity, of the company in the period under review was that of contact lens technology, manufacture of machinery and wholesaling of contact lenses. On 3 December 1997 Coopervision Inc took over the company. DIRECTORS The directors during the period under review were: G H Galley (Resigned 2.12.97) A Galley B Bevis (Resigned 2.12.97) In addition G Fryling and I R Bussey were appointed directors on 2 December 1997. The beneficial interests of the directors holding office on 31 October 1997 in the issued share capital of the company were as follows: STATEMENT OF DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial period which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to - select suitable accounting policies and then apply them consistently: - make judgments and estimates that are reasonable and prudent: - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. AUDITORS The existing auditors, Leonard Gold Chartered Accountants, will be replaced by KPMG in accordance with Section 388 of the Companies Act 1985. This report has been prepared in accordance with the special provisions of Part VII of the Companies Act 1985, as amended, relating to small companies. ON BEHALF OF THE BOARD: /s/ I R BUSSEY - ------------------- I R Bussey SECRETARY Dated: 10 February 1998 Page 2
31.10.97 1.4.97 Ordinary I shares G H Galley 400 400 A Galley 350 350 B Bevis 200 200 CONTACT LENS TECHNOLOGIES LIMITED REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF CONTACT LENS TECHNOLOGIES LIMITED We have audited the financial statements on pages four to thirteen which have been prepared under the historical cost convention and the accounting policies set out on page seven. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As described on page two the company's directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the fianancial statements. OPINION In our opinion the financial statements give a true and fair view of the state of the company's affairs as at 31 October 1997 and of its profit for the period then ended and have been properly prepared in accordance with the Companies Act 1985, as amended. /s/ LEONARD GOLD - --------------------- Leonard Gold Chartered Accountants Registered Auditors 24 Landport Terrace Portsmouth Hampshire PO1 2RG Dated: 10 FEBRUARY 1998 Page 3 CONTACT LENS TECHNOLOGIES LIMITED PROFIT AND LOSS ACCOUNT FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 CONTINUING OPERATIONS None of the company's activities were acquired or discontinued during the current period or previous year. TOTAL RECOGNISED GAINS AND LOSSES The company has no recognised gains or losses other than the profits for the current period or previous year. Page 4
PERIOD 1.4.97 TO YEAR ENDED 31.10.97 31.3.97 ------------ ------------ 'L' 'L' Notes TURNOVER.............................. 2 2,727,904 1,251,124 Cost of sales......................... 1,966,748 930,357 ---------- ---------- GROSS PROFIT.......................... 761,156 320,767 Administrative expenses............... 462,257 290,196 ---------- ---------- 298,899 30,571 Other operating income................ 281,346 347,245 ---------- ---------- OPERATING PROFIT...................... 3 580,245 377,816 Interest payable and similar charges..................... 40,110 67,266 ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION..................... 540,135 310,550 Tax on profit on ordinary activities.......................... 4 172,282 110,477 ---------- ---------- PROFIT FOR THE FINANCIAL PERIOD AFTER TAXATION........................ 367,853 200,073 Retained profit brought forward....... 289,359 89,286 ---------- ---------- RETAINED PROFIT CARRIED FORWARD....... 'L'657,212 'L'289,359 ========== ========== CONTACT LENS TECHNOLOGIES LIMITED BALANCE SHEET 31 OCTOBER 1997 These financial statements have been prepared in accordance with the special provisions of Part VII of the Companies Act 1985, as amended, relating to small companies. ON BEHALF OF THE BOARD: /s/ A GALLEY - ------------------------- A Galley - DIRECTOR /s/ I R BUSSEY - ------------------------- I R BUSSEY - DIRECTOR Approved by the Board on 10 February 1998 Page 5
31.10.97 31.3.97 -------------- --------------- Notes 'L' 'L' 'L' 'L' FIXED ASSETS: Tangible assets................... 5 853,475 909,743 CURRENT ASSETS: Stocks............................ 6 295,597 237,298 Debtors........................... 7 1,665,124 386,516 Cash at bank...................... -- 2,114 ---------- -------- 1,960,721 625,928 CREDITORS: Amounts falling due within one year............. 8 (1,876,860) (943,447) ---------- -------- NET CURRENT ASSETS/(LIABILITIES): 83,861 (317,519) ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES..................... 937,336 592,224 CREDITORS: Amounts falling due after more than one year.... 9 (279,124) (301,865) ---------- ---------- 'L'658,212 'L'290,359 ========== ========== CAPITAL AND RESERVES: Called up share capital.......... 14 1,000 1,000 Profit and loss account.......... 657,212 289,359 ---------- ---------- Shareholders' funds 16 'L'658,212 'L'290,359 ========== =========== CONTACT LENS TECHNOLOGIES LIMITED CASH FLOW STATEMENT FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 Page 6
PERIOD 1.4.97 TO YEAR ENDED 31.10.97 31.3.97 --------------- --------------- NOTES 'L' 'L' 'L' 'L' Net cash inflow from operating activities.................. 18 49,175 372,193 Returns on investment and servicing of finance Interest paid.............................................. (27,646) (72,822) Taxation Corporation tax paid....................................... (9,822) Capital expenditure and financial investments -- Payments to acquire tangible fixed assets.................. (1,746) (193,679) Receipts from sale of tangible fixed assets................ -- 62,000 -------- --------- Net cash outflow from capital expenditure.................. (1,746) (131,679) Financing Bank loan repayments....................................... (20,725) (29,093) -------- --------- Net cash outflow from financing............................ (20,725) (29,093) -------- --------- (Decrease)/increase in cash................................ 19 'L'(942) 'L'128,777 ======== ========== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 1. ACCOUNTING POLICIES ACCOUNTING CONVENTION The financial statements have been prepared under the historical cost convention. TURNOVER Turnover represents net invoiced sales of goods, excluding value added tax. TANGIBLE FIXED ASSETS Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. The freehold property is maintained as a matter of company policy, by a continual repair programme, such that the residual value of the property is at least equal to its book value. STOCKS Stock is valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. DEFERRED TAXATION Provision is made at current rates for taxation deferred in respect of all material timing differences except to the extent that, in the opinion of the directors, there is reasonable probability that the liability will not arise in the foreseeable future. OPERATING LEASES Rentals paid under operating leases are charged to the profit and loss account as incurred. ROYALTIES The company pays royalties to certain patent holders on a contractually agreed basis. Royalties are charged to the profit and loss account on an accruals basis in line with those contracts. 2. TURNOVER The turnover and profit before taxation are attributable to the one principal activity of the company. Page 7
Improvement to property............................. -20% on cost Plant and equipment................................. -15% on cost Purpose built equipment............................. -15% on cost Computer equipment.................................. -33% on cost Fixtures and fittings............................... -15% on cost CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 3. OPERATING PROFIT The operating profit is stated after charging/(crediting): 4. TAXATION The tax charge on the profit on ordinary activities for the period was as follows:
PERIOD 1.4.97 TO YEAR ENDED 31.10.97 31.3.97 'L' 'L' Depreciation-owned assets........................................................ 58,014 99,180 Profit on disposal of fixed assets............................................... -- (16,475) Auditors' remuneration........................................................... 5,788 2,040 Operating lease -- plant and machinery........................................... 31,819 54,548 -------- ---------- Directors' emoluments and other benefits etc..................................... 20,417 35,000 ======== =========== UK Corporation Tax has been charged at 31% (Year ended 31 March, 1997 -- 33%). Page 8
PERIOD 1.4.97 TO YEAR ENDED 31.10.97 31.3.97 'L' 'L' UK Corporation tax.............................................................. 243,000 116,000 Under provision re prior years.................................................. -- 30,227 Deferred taxation............................................................... (70,718) (25,750) -------- ---------- 172,282 110,477 ========= =========== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 5. TANGIBLE FIXED ASSETS
FREEHOLD IMPROVEMENTS PLANT AND PROPERTY TO PROPERTY EQUIPMENT -------- ------------ --------- `L' `L' `L' COST: At 1 April 1997 365,000 5,000 42,539 -------- ------ --------- At 31 October 1997 365,000 5,000 42,539 -------- ------ --------- DEPRECIATION: At 1 April 1997 -- 1,245 11,137 Charge for period -- 394 3,724 -------- ------ --------- At 31 October 1997 -- 1,539 14,861 -------- ------ --------- NET BOOK VALUE: At 31 October 1997 365,000 3,461 27,678 ======== ====== ======== At 31 March 1997 365,000 3,755 31,402 ========= ======== ========== Page 9
PURPOSE FIXTURES BUILT AND COMPUTER EQUIPMENT FITTINGS EQUIPMENT TOTALS --------- -------- --------- ------- `L' `L' `L' `L' COST: At 1 April 1997 597,060 5,051 6,151 1,020,801 Additions -- -- 1,746 1,746 --------- -------- --------- --------- At 31 October 1997 597,060 5,051 7,897 1,022,547 --------- -------- --------- --------- DEPRECIATION: At 1 April 1997 96,132 420 2,124 111,058 Charge for period 52,255 441 1,300 58,014 --------- -------- --------- --------- At 31 October 1997 148,387 861 3,424 169,072 --------- -------- --------- --------- NET BOOK VALUE: At 31 October 1997 448,673 4,190 4,473 853,475 ======== ======== ========= ========= At 31 March 1997 500,928 4,631 4,027 909,743 ========= ======== ========= ========= CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 6. STOCKS 7. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31.10.97 31.3.97 -------- ------- 'L' 'L' Contact lenses 273,048 223,008 Packaging and labels 22,549 14,290 -------- ------- 295,597 237,298 ======== ======= The company made the following loans to a director during the period:
31.10.97 31.3.97 --------- ------- 'L' 'L' Trade debtors 1,506,291 309,895 Other debtors 60,907 76,621 Prepayments and accrued income 9,091 -- Directors' current accounts 18,117 -- Deferred tax (note 13) 70,718 -- --------- ------- 1,665,124 386,516 ========= ======== The loan has been repaid since the period end. 8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
HIGHEST BALANCE BALANCE DURING AT THE 31.10.97 PERIOD --------- --------- G H Galley 'L'18,117 'L'18,117 ========= ========= 9. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
31.10.97 31.3.97 ---------- -------- 'L' 'L' Bank loans and overdrafts (see note 10) 167,580 166,736 Trade creditors 26,729 9,471 Accruals 400,596 139,601 Due to related company 901,086 448,458 Directors' current accounts -- 73 Social security and other taxes 1,464 42,703 Corporation tax 379,405 136,405 ---------- -------- 1,876,860 943,447 ========== ======== Page 10
31.10.97 31.3.97 --------- --------- 'L' 'L' Bank loans (see note 10) 279,124 301,865 ========= ======== CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 10. LOANS AND OVERDRAFTS An analysis of the maturity of loans and overdrafts is given below: 11. OBLIGATIONS UNDER LEASING AGREEMENTS The following payments are committed to be paid within one year:
31.10.97 31.3.97 --------- --------- 'L' 'L' Amounts falling due within one year or on demand: Bank overdrafts 134,564 135,736 Bank loans 33,016 31,000 --------- --------- 167,580 166,736 ========= ========= Amounts falling due between one and two years: Bank loans 35,016 33,016 ========= ========= Amounts falling due between two and five years: Bank loans 117,048 118,048 ========= ======== Amounts falling due in more than five years: Repayable by instalments Bank loans 127,060 150,801 ========= ======== 12. SECURED DEBTS The following secured debts are included within creditors:
OPERATING LEASES 31.10.97 31.3.97 --------- --------- 'L' 'L' Expiring: Between one and five years 54,548 54,548 ========= ======== Page 11
31.10.97 31.3.97 --------- --------- 'L' 'L' Bank overdrafts 134,564 135,736 Bank loans 312,140 332,865 --------- --------- 446,704 468,601 ========= ========= CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 13. DEFERRED TAXATION Deferred taxation for which provision has been made in the financial statements and the amounts for which no provision has been made, are as follows: 14. CALLED UP SHARE CAPITAL
PROVIDED NOT PROVIDED 31.10.97 31.3.97 31.10.97 31.3.97 --------- -------- --------- ------- 'L' 'L' 'L' 'L' Depreciation of fixed assets 51,365 41,490 -- 5,454 Less: Accrued interest and royalties (122,083) (41,490) -- -- ---------- --------- --------- ------- (70,718) -- -- 5,454 ========== ========= ========= ======= 15. RELATED PARTY DISCLOSURES During the period the company acquired 'L'1,909,565 (year ended 31 March 1997: 'L'1,001,473) of contact lenses from Aspect Vision Care Limited. It also received rent of 'L'30,333 (year ended 31 March 1997: 'L'52,000) and equipment rentals of 'L'70,000 (year ended 31 March 1997: 'L'120,000). Aspect Vision Care Limited is controlled by common directors, G H Galley and A D Galley, and of which B Bavis is also a director. 16. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
AUTHORISED: NOMINAL NUMBER: CLASS: VALUE: 31.10.97 31.3.97 - ----------- -------- ------- ------- -------- 5,000,000 Ordinary 1 5,000,000 5,000,000 ========= ========= Allotted, issued and fully paid: NOMINAL NUMBER: CLASS: VALUE: 31.10.97 31.3.97 - ----------- -------- ------- -------- ------- 'L' 'L' 1,000 Ordinary 1 1,000 1,000 ======= ===== 17. CONTROLLING PARTY The directors as disclosed in the directors' report are the controlling party by virtue of their 95% holding in the equity share capital of the company as at 31 October 1997. Page 12
31.10.97 31.3.97 --------- --------- 'L' 'L' Profit for the financial period 367,853 200,073 --------- --------- NET ADDITION TO SHAREHOLDERS' FUNDS 367,853 200,073 Opening shareholders' funds 290,359 90,286 --------- --------- CLOSING SHAREHOLDERS' FUNDS 658,212 290,359 ========= ========= Equity interests 658,212 290,359 ========= ========= CONTACT LENS TECHNOLOGIES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 APRIL 1997 TO 31 OCTOBER 1997 18. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 19. ANALYSIS OF CHANGES IN NET DEBT
PERIOD 1.4.97 TO YEAR ENDED 31.10.97 31.3.97 ------------ ---------- 'L' 'L' Operating Profit 580,245 377,816 Depreciation Charges 58,014 99,180 Profit on Disposal of Fixed Assets -- (16,475) Increase in Stocks (58,299) (193,075) Increase in Debtors (1,207,890) (102,923) Increase in Creditors 677,105 207,670 ------------ ---------- NET CASH INFLOW FROM OPERATING ACTIVITIES 'L'49,175 'L'372,193 ============ ========== 20. RECONCILIATION OF NET CASH FLOWS TO MOVEMENT IN NET DEBT
AT CASH AT CASH AT 31.3.96 FLOWS 31.3.97 FLOWS 31.10.97 ----------- ---------- ----------- --------- ----------- 'L' 'L' 'L' 'L' 'L' Cash in Hand and at Bank -- 2,114 2,114 (2,114) -- Bank Overdraft (262,399) 126,663 (135,736) 1,172 (134,564) ---------- -------- 128,777 (942) Bank Loans (361,958) 29,093 (332,865) 20,725 (312,140) ----------- ---------- ----------- --------- ----------- TOTAL 'L'(624,357) 'L'157,870 'L'(466,487) 'L'19,783 'L'(446,704) =========== ========== =========== ========= =========== Page 13
PERIOD 1.4.97 YEAR ENDED TO 31.10.97 31.3.97 ------------- ---------- 'L' 'L' 'L' 'L' (Decrease)/Increase in Cash in the Period (942) 128,777 Cash Outflow from Repayment of Bank Loans 20,725 29,093 ----------- ----------- Movement in Net Debt in the Period 19,783 157,870 Net Debt at 1 April 1997 (466,487) (624,357) ----------- ---------- Net Debt at 31 October 1997 'L'(446,704) 'L'(466,487) =========== ========== Contact Lens Technologies Limited Selected Notes for Period Ended 31 October 1997 21. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - (UNAUDITED) The significant differences between UK GAAP and US GAAP are explained in Note 19 to the Company's financial report for the year ended 31 March 1997 included elsewhere in this Form 8-K filing. Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP. 7 months ended 31 October 1997 --------------- 'L' Profit/(Loss) after taxation under UK GAAP 367,853 US GAAP adjustments: Capitalisation of Interest 0 Depreciation on Interest Capitalised -1,168 Freehold Property Depreciation -5,323 Tax effect on the foregoing adjustments 589 Deferred tax 5,806 ------- Profit/(Loss) after taxation under US GAAP 367,757 ======= Approximate cumulative effect on shareholders equity of significant differences between UK GAAP and US GAAP 31 October 1997 --------------- 'L' Shareholders' equity under UK GAAP 658,212 US GAAP adjustments: Capitalisation of Interest 13,345 Depreciation on Interest Capitalised -3,170 Freehold Property Depreciation -15,969 Tax effect on the foregoing adjustments -3,154 Deferred tax ------- Shareholders Equity under US GAAP 649,264 ======= NEW FOCUS HEALTH CARE LIMITED REPORTS AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 DIRECTORS A D Galley I R Bussey G Fryling SECRETARY I R Bussey COMPANY NUMBER 01847802 REGISTERED OFFICE Unit 2, South Point, Ramble, Southampton, Hampshire, SO31 4RF CONTENTS Pages Directors Report 1 - 2 Auditors' Report 3 Consolidated Profit and Loss Account 4 Consolidated Balance Sheet 5 Company Balance Sheet 6 Consolidated Cashflow Statement 7 Notes to the Financial Statements 8 - 19 NEW FOCUS HEALTH CARE LIMITED DIRECTORS' REPORT The directors present their report and the financial statements for the period ended 31 October 1997. PRINCIPAL ACTIVITIES AND BUSINESS REVIEW The group's principal activities and those of its trading subsidiaries continues to be those of manufacturers and wholesalers of contact lenses. The directors are satisfied with the results of the group for the period and expect further growth and increasing profits in the coming year. The performance of the trading subsidiaries, Aspect Vision Care Limited and Aspect Vision Italia SRL is also considered satisfactory with both operating profitably during the period. Aspect Speciality Limited ceased trading on 31 May 1997 and transferred its trade to Aspect Vision Care Limited. On 3 December 1997 CooperVision Inc. took over New Focus Health care Limited. RESULTS AND DIVIDENDS The consolidated profit for the year, after taxation and minority interest, amounted to 'L'350,226. The directors recommend that no dividend be paid and that the balance be carried forward. FIXED ASSETS The movement in fixed assets during the period are set out in notes 10 to 12 to the financial statements. In particular Aspect Vision Care Limited purchased a freehold property for 'L'789,090 on 2 June 1997. DIRECTORS The directors who served during the period and their beneficial interests in the company's issued ordinary share capital were: Number Of Shares ---------------- 31 October 1997 31 March 1997 --------------- ------------- G H Galley (Resigned 02.12.97) 221,303 241,303 W T Brooker (Resigned 02.12.97) 241,303 241,303 A D Galley 261,302 241,302 In addition I R Bussey and G Fryling were appointed directors on 2 December 1997. DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing those financial statements, the directors are required to - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. 1 NEW FOCUS HEALTH CARE LIMITED DIRECTORS' REPORT (CONTINUED) The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. EMPLOYEES The group is committed to communication with employees throughout the group by its system of keeping employees informed of developments and progress through briefings by management and widely distributed news and information bulletins. The group's aim is to meet the obligations of the code of good practice on the employment of disabled people. Full and fair consideration is given to disabled applicants for employment and training, and career development is encouraged on the basis of their aptitude and abilities. POLICY ON PAYMENT OF CREDITORS It is group policy not to follow a particular code but, in respect of all of its suppliers to settle the terms of payment when agreeing each transaction; to ensure that suppliers are made aware of the terms of payment; and to abide by those terms. TAXATION STATUS OF THE COMPANY The company is a close company within the provisions of Section 414, Income and Corporation Taxes Act 1988. AUDITORS The existing auditors, Leonard Gold Chartered Accountants, will be replaced by KPMG in accordance with section 388 of the Companies Act 1985. Signed by order of the board of directors, /s/ I R Bussey - ------------------------------------- I R BUSSEY SECRETARY 10 FEBRUARY 1998 2 REPORT OF THE AUDITORS TO THE MEMBERS OF NEW FOCUS HEALTH CARE LIMITED We have audited the financial statements on pages 4 to 20 which have been prepared under the historical cost convention, and the accounting policies set out on pages 8 and 9 Respective Responsibilities of Directors and Auditors: As described on pages 1 and 2 the company's directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and report our opinion to you. Basis of Opinion: We conducted our audit in accordance with Auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements, It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed, We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion: In our opinion the financial statements give a true and fair view of the state of affairs of the company and group at 31 October 1997 and of the profit of the group for the period then ended and have been properly prepared in accordance with the provisions of the Companies Act 1985. /s/ Leonard Gold - ------------------------------------- LEONARD GOLD CHARTERED ACCOUNTANTS Registered Auditor 24 Landport Terrace Portsmouth Hampshire PO1 2RG 10 FEBRUARY 1998 3 NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31 OCTOBER 1997 The results in the profit and loss account relate to continuing operations. There were no recognised gains or losses other than those included in the profit and loss account. The notes on pages 8 to 20 form part of these financial statements, 4
7 months ended 12 months ended Notes 31 October 1997 31 March 1997 ----- --------------- --------------- 'L' 'L' TURNOVER 2 13,023,482 16,929,483 COST OF SALES (7,627,213) (7,525,409) ---------- ----------- GROSS PROFIT 5,396,269 9,404,074 DISTRIBUTION COSTS (418,255) (689,844) ADMINISTRATIVE EXPENSES (3,754,666) (5,667,807) ---------- ----------- 1,223,348 3,046,423 OPHER OPERATING INCOME 4 171,242 154,378 OPERATING PROFIT 1,394,590 3,200,801 EXCEPTIONAL ITEM 7 (170,000) 2,176,229 INTEREST RECEIVABLE 590 994 INTEREST PAYABLE 5 (367,337) (428,092) ---------- ----------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 857,843 4,949,932 TAX ON PROFIT ON ORDINARY ACTIVITIES 8 (342,000) (1,703,398) ---------- ----------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 515,843 3,246,534 MINORITY INTEREST - EQUITY INTEREST (165,617) (1,126,395) ---------- ----------- RETAINED PROFIT FOR THE PERIOD 18 'L'350,226 'L'2,120,139 ========== =========== NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 1997 31 October 31 March Notes 1997 1997 ----- ---- ---- 'L' 'L' FIXED ASSETS Intangible Assets 10 107,982 - Tangible Assets 11 6,326,837 4,043,222 ------------ ------------ 6,434,819 4,043,222 ------------ ------------ CURRENT ASSETS Stocks 13 3,938,066 3,701,011 Debtors 14 6,247,261 6,415,593 Cash at Bank and In Hand 121,644 476,584 ------------ ------------ 10,306,971 10,593,188 CREDITORS Amounts falling due within one year 15 (9,887,554) (9,177,340) ------------ ------------ NET CURRENT ASSETS 419,417 1,415,848 ------------ ------------ TOTAL ASSETS LESS CURRENT LIABILITIES 6,854,236 5,459,070 CREDITORS Amounts falling due after more than one year 15 (2,353,635) (1,456,018) ------------ ------------ NET ASSETS 'L'4,500,601 'L'4,003,052 ============ ============ CAPITAL AND RESERVES Called up Share Capital 16 7,239 7,239 Share Premium Account 17 317,761 317,761 Profit and Loss Account 18 2,701,077 2,350,851 ------------ ------------ Shareholders' Funds - Equity Interest 19 3,026,077 2,675,851 Minority Interest - Equity Interest 1,474,524 1,327,201 ------------ ------------ 'L'4,500,601 'L'4003,052 ============ ============ APPROVED BY THE BOARD ON 10 FEBRUARY 1998 /s/ I R Bussey - -------------------------------- I R BUSSEY - DIRECTOR /s/ A D Galley - -------------------------------- A D GALLEY - DIRECTOR The notes on pages 8 to 20 form part of these financial statements, 5 NEW FOCUS HEALTH CARE LIMITED COMPANY BALANCE SHEET AS AT 31 OCTOBER 1997 31 October 31 March Notes 1997 1997 ----- ---- ---- 'L' 'L' FIXED ASSETS Investments 12 1,118,556 1,118,556 ----------- ----------- CURRENT ASSETS Debtors 14 306,958 284,059 CREDITORS Amounts falling due within one year 15 (2,000) (1,450) ----------- ----------- NET CURRENT ASSETS 304,958 282,609 ----------- ----------- NET ASSETS 'L'1,423,514 'L'1,401,165 =========== =========== CAPITAL AND RESERVES Called up Share Capital 16 7,239 7,239 Share Premium 17 317,761 317,761 Profit and Loss Account 18 1,098,514 1,076,165 ----------- ----------- Shareholders' Funds - Equity Interest 19 'L'1,423,514 'L'1,401,165 =========== =========== APPROVED BY THE BOARD ON 10 FEBRUARY 1998 /s/ I R Bussey - -------------------------------- I R BUSSEY - DIRECTOR /s/ A D Galley - -------------------------------- A D GALLEY - DIRECTOR The notes on pages 8 to 20 form part of these financial statements. 6 NEW FOCUS HEALTH CARE LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 OCTOBER 1997 The notes on pages 8 to 20 form part of these financial statements. 7
7 months ended 12 months ended Notes 31 October 1997 31 March 1997 ----- -------------------- --------------------- 'L' 'L' 'L' 'L' NET CASH INFLOW FROM OPERATING ACTIVITIES 27 2,008,782 2,481,228 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Received 590 994 Interest Paid (225,235) (202,969) Interest Element of Finance Lease Rental Payments (61,857) (73,489) ----------- --------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (286,502) (275,464) TAXATION Corporation Tax Paid (317,369) (107,864) ACT Received - 412 ----------- --------- TAX PAID (317,369) (107,452) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payment to Acquire Minority Interest (18,294) (49,035) Payment to Acquire Intangible Fixed Assets (311,706) - Payments to Acquire Tangible Fixed Assets (2,230,228) (2,438,726) Receipts from Sales of Tangible Fixed Assets 398,906 37,318 ----------- --------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (2,161,322) (2,450,443) FINANCING Bank Loan Advance 630,000 665,000 Bank Loan Repayment (119,225) (116,495) Finance Lease and Hire Purchase Repayment (325,877) (345,621) ----------- --------- NET CASH INFLOW FROM FINANCING 184,898 202,884 ------- -------- DECREASE IN CASH 28 'L'(571,513) 'L'(149,247) ======= ======== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 1. ACCOUNTING POLICIES Basis Of Preparation Of Accounts The financial statements are prepared in accordance with applicable accounting standards, and incorporate the results of the principal activities which are described in the directors' report and which are continuing. There have been no changes in accounting policies during the period Consolidation The consolidated financial statements include the results of New Focus Health Care Limited and its subsidiary undertakings drawn up to 31 October 1997. No profit and loss account for the company has been presented for New Focus Health Care Limited as permitted by Section 230 of the Companies Act 1985. Turnover Turnover comprises the invoiced value of goods and services sold exclusive of Value Added Tax. Tangible Fixed Assets And Depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: Property Improvements - 10 years Short Leasehold Properties - over the term of the lease Plant, Equipment and Fittings - 3-7 years Motor Vehicles - 4 years The freehold property is maintained as a matter of company policy, by a continual repair programme, such that the residual value of the property is at least equal to its book value. Goodwill on Consolidation The excess of the cost of acquisition over the fair value of the underlying net assets is written off to profit and loss account in the year in which it arises. However, in the case of the further acquisition of shares in Aspect Speciality Limited, the purchased goodwill has been capitalised and is to be amortised over 10 years, which is, in the directors' opinion, its useful economic life. Stocks Stocks are valued at the lower of cost, based on normal levels of activity, and net realisable value, (inclusive of a proportion of appropriate overheads). 8 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 1. ACCOUNTING POLICIES (CONTINUED) Royalties The group pays royalties to certain patent holders on a contractually agreed basis. Royalties are charged to the profit and loss account on an accrual basis in line with these contracts. Deferred Taxation Provision is made for taxation deferred as a result of material timing differences between the incidence of income and expenditure for taxation and accounts purposes using the liability method, only to the extent that, in the opinion of the directors, there is a reasonable probability that a liability or asset will crystallise in the near future. Research And Development Expenditure on research and development is written off against profits in the period in which it is incurred. Foreign Currencies Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transactions. Exchange differences are taken into account in arriving at the operating results. The profit and loss accounts of overseas operations are translated into sterling at the average rate. The balance sheet of the overseas operation is translated into sterling at the closing rate. Exchange differences arising from the translation of the results of overseas operations are recorded in the profit and loss account. Leasing And Hire Purchase Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets and depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. Rentals paid under operating leases are charged to the profit and loss account as incurred. Pension Scheme The group operates group personal pension schemes for the benefit of the employees, and the pension charge represents the amounts payable by the group to the schemes in respect of the period. 9 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 2. TURNOVER BY GEOGRAPHICAL REGION 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' United Kingdom 6,863,871 9,066,178 Europe 4,306,489 5,979,053 Rest of the World 1,853,122 1,884,252 ------------- ------------- 'L'13,023,482 'L'16,929,483 ============= ============= 3. OPERATING PROFIT The operating profit is stated after charging: 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Goodwill written off 200,000 210,965 Amortisation of goodwill 3,724 - Depreciation of tangible fixed assets - owned by the company 317,631 405,359 - under hire purchase and finance lease contracts 226,506 255,134 - (Profit)/Loss on disposal of fixed assets (41,710) 3,427 Hire of Equipment 18,863 59,400 Other Operating Lease Rentals 66,995 142,687 Auditors' remuneration 19,345 39,679 ======= ======= 4. OTHER OPERATING INCOME 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Sale of Business 10,029 6,800 Commission 160,855 144,703 Postage and Freight 358 2,875 --------- --------- 'L'171,242 'L'154,378 ========= ========= 10 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 5. INTEREST PAYABLE 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' On Bank Loans, Overdrafts and Other Loans - repayable within five years, by instalments 11,320 (8,922) - repayable within five years, not by instalments 211,709 301,130 - repayable wholly or partly in more than five years 82,451 66,256 - on hire purchase and finance lease charges 61,857 69,628 --------- --------- 'L'367,337 'L'428,092 ========= ========= 6. STAFF COSTS 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' The average weekly number of employees, including directors, during the period was: Manufacturing 486 344 Sales 69 75 Directors 3 3 --- --- 558 422 === === Staff Costs (for the above persons): Directors' Remuneration 114,333 194,120 Directors' Benefits in Kind 18,500 28,415 Directors' Social Security Costs 11,483 19,830 Directors' Pension Contributions 8,013 16,229 Other Wages and Salaries (including social security costs) 5,642,353 6,797,548 Other Pension Costs 99,618 107,344 ----------- ----------- 'L'5,894,300 'L'7,163,486 =========== =========== Of the above directors' remuneration 'L'107,333 (year ended 31 March 1997: 'L'182,120) was paid by a subsidiary undertaking. 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Directors' Emoluments Aggregate Emoluments 132,833 222,535 Company Pension Contributions to Money Purchase Schemes 8,013 16,229 --------- --------- 'L'140,846 'L'238,764 ========= ========= 11 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 6. STAFF COSTS (CONTINUED) Number Number Number of Directors who are members of a Money Purchase Scheme 2 3 === === 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Emoluments of Highest Paid Director - Aggregate Emoluments 45,946 81,639 - Company Pension Contributions to Money Purchase Scheme 4,046 6,120 ====== ====== 7. EXCEPTIONAL ITEMS 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Branch Closure Costs (170,000) - Settlement of Trade Dispute - 2,176,229 ---------- ----------- 'L'(170,000) 'L'2,176,229 ========== =========== 8. TAXATION 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' UK Current Year Taxation UK Corporation Tax at 31% (year ended 31 March 1997: 33%) 446,000 1,900,800 Deferred (104,000) (201,000) --------- ----------- 342,000 1,699,800 Prior Years Corporation Tax - 3,598 --------- ----------- 'L'342,000 'L'1,703,398 ========= =========== 9. PROFIT ATTRIBUTABLE TO THE MEMBERS OF THE PARENT COMPANY The profit dealt with in the accounts of the parent company for the 7 month period amounted to'L'22,349 (Year ended 31 March 1997:'L'38,143). 12 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 10. INTANGIBLE FIXED ASSETS - GROUP Goodwill -------- 'L' COST Additions 111,706 --------- AMORTISATION Charge for Period 3,724 --------- NET BOOK VALUES At 31 March 1997 - At 31 October 1997 'L'107,982 ========= 11. TANGIBLE FIXED ASSETS - GROUP The net book value of tangible fixed assets include an amount of 'L'1,457,974 (31 March 1997: 'L'820,618) in respect of assets held under finance leases and hire purchase contracts. Depreciation charged on these assets during the period amounted to 'L'226,506 (31 March 1997: 'L'255,134). At the balance sheet date the group had capital commitments amounting to 'L'405,892 (31 March 1997: 'L'264,733) in respect of contracts approved by the board and contracted for. 13
Short Plant, Freehold Property Leasehold Equipment Motor Property Improvements Property & Fittings Vehicles Totals -------- ------------ -------- ---------- -------- ------ 'L' 'L' 'L' 'L' 'L' 'L' COST At 1 April 1997 950,000 575,864 51,347 3,339,706 325,046 5,241,963 Additions 789,090 174,914 - 2,018,097 202,847 3,184,948 Disposals - - - (362,613) (134,750) (497,363) ----------- --------- -------- ----------- --------- ----------- At 31 October 1997 'L'1,739,090 'L'750,778 'L'51,347 'L'4,995,190 'L'393,143 'L'7,929,548 ----------- --------- -------- ----------- --------- ----------- DEPRECIATION At 1 April 1997 - 110,927 24,927 878,769 184,118 1,198,741 Charge for Period - 38,847 13,551 439,170 52,569 544,137 Disposals - - - (31,830) (108,337) (140,167) ----------- --------- -------- ----------- --------- ----------- At 31 October 1997 - 149,774 38,478 1,286,109 128,350 1,602,711 ----------- --------- -------- ----------- --------- ----------- NET BOOK VALUES At 31 March 1997 'L'950,000 'L'464,937 'L'26,420 'L'2,460,937 'L'140,928 'L'4,043,222 At 31 October 1997 'L'1,739,090 'L'601,004 'L'12,869 'L'3,709,081 'L'264,793 'L'6,326,837 =========== ========== ========= ============ ========== ============ NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 11. TANGIBLE FIXED ASSETS (CONTINUED) - GROUP Included within fixed assets are fully depreciated assets with cost as follows:- 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Plant, Equipment and Fittings 118,492 89,623 Motor Vehicles - 35,000 --------- --------- 'L'118,492 'L'124,623 ========= ========= 12. INVESTMENTS - COMPANY Investments in Subsidiary Undertakings: 31 October 1997 31 March 1997 --------------- ------------- Cost at 1 April 1997 and 31 October 1997 'L'1,118,556 'L'1,118,556 =========== =========== All of the above holdings are in ordinary shares. 13. STOCKS - GROUP 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Lenses 2,480,064 2,836,727 Materials 306,078 256,771 Packaging and Labels 200,278 164,576 Moulds 443,404 353,058 Work in Progress 507,575 86,879 Plant Stock 667 3,000 ----------- ----------- 'L'3,938,066 'L'3,701,011 =========== =========== 14
Country of Country of Name Holding % Incorporation Registration ---- --------- ------------- ------------ Aspect Vision Care Limited - Contact lens manufacture and distribution 65.8% England Great Britain Aspect Vision Italia SRL - Contact lens distribution 70% Italy Italy Aspect Speciality Limited - Dormant 89.75% England Great Britain Focus Solutions Limited - Dormant 100% England Great Britain Aspect Contact Lenses Limited - Dormant 100% England Great Britain Averlan Company Limited - Dormant 100% England Great Britain NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 14. DEBTORS - GROUP 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Trade Debtors 3,934,685 3,502,689 Amounts due from Related Company 901,086 448,458 Prepayments 338,698 180,515 Other Debtors 243,356 1,729,931 Deferred Taxation (Note 20) 658,000 554,000 Directors' Loan Account 171,436 - ----------- ----------- 'L'6,247,261 'L'6,415,593 =========== =========== There were no amounts falling due after more than one year. The group made the following loan to a director during the period:- Balance at Highest Balance 31.10.97 During the Period -------- ----------------- G H Galley 'L'171,436 'L'171,436 ========= ========= The loan has been repaid since the period end. DEBTORS - COMPANY 31 October 1997 31 March 1997 --------------- ------------- Due within one year: Amounts Due from Group Undertakings 'L'306,958 'L'284,059 ========= ========= There were no amounts falling due after more than one year. 15. CREDITORS - GROUP 15
Amounts falling Amounts falling due within due after more one year than one year -------- ------------- 31 October 31 March 31 October 31 March 1997 1997 1997 1997 ---- ---- ---- ---- 'L' 'L' 'L' 'L' Bank Loan and Overdraft 1,151,064 917,510 1,291,320 797,527 Net Obligations Under Finance Leases & Hire Purchase Contracts 468,853 275,079 724,615 289,546 Corporation Tax 2,459,431 2,330,800 - - Directors' Loan and Current Accounts 686,981 75,442 - - Factoring Creditor 827,510 755,617 - - Trade Creditors 1,051,022 1,743,644 - - Accruals 2,197,820 2,296,903 - - Other Taxes & Social Security 258,428 431,822 - - Other Creditors 641,445 205,523 337,700 368,945 Pension Loan 145,000 145,000 - - ----------- ----------- ----------- ----------- 'L'9,887,554 'L'9,177,340 'L'2,353,635 'L'1,456,018 =========== =========== =========== =========== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 15. CREDITORS (CONTINUED) - GROUP The bank loan, overdrafts, directors' loan and pension loan are secured by fixed and floating charges over the assets of the company concerned. The factoring account is secured by a floating charge over the sales ledger of the company concerned. The finance leases and hire purchase contracts are all repayable within five years and are secured on the assets concerned. Bank loan repayments totalling 'L'624,085 are due after five years. The bank loans of 'L'609,781, 'L'599,509 and 'L'263,023 are repayable by monthly instalments of 'L'8,130.64, 'L'7,622.75 and 'L'10,180 respectively to achieve repayment by September 2006, June 2007 and February 2000. Of the creditors 'L'4,665,788 (31 March 1997: 'L'3,255,721) are secured. CREDITORS - COMPANY Amounts falling due within one year -------- 31 October 31 March 1997 1997 ---- ---- Accruals and Deferred Income 'L'2,000 'L'1,450 ======== ======== There were no amounts falling due after more than one year. 16. CALLED UP SHARE CAPITAL 17. SHARE PREMIUM ACCOUNT There was no movement in the share premium account during the period. 16
31 October 1997 31 March 1997 --------------- ------------- Issued Issued and Fully and Fully Authorised Paid Authorised Paid ---------- ---- --------- ---- 'L' 'L' 'L' 'L' Ordinary Shares of 'L'0.01 500,000 7,239 500,000 7,239 Convertible Redeemable Preferred Ordinary Shares of 'L'0.01 900,000 - 900,000 - Preferred Ordinary Shares of 'L'0.01 1,600,000 - 1,600,000 - ----------- ------- ----------- ------- 'L'3,000,000 'L'7,239 'L'3,000,000 'L'7,239 =========== ======= =========== ======= NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 18. PROFIT AND LOSS ACCOUNT Group Company ----- ------- 'L' 'L' Balance at 1 April 1997 2,350,851 1,076,165 Retained Profit For The Period 350,226 22,349 ----------- ----------- Balance at 31 October 1997 'L'2,701,077 'L'1,098,514 =========== =========== 19. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS There was no movement in the shareholders' funds during the period except for the profit as set out in note 18. 20. DEFERRED TAX - GROUP 21. OPERATING LEASES - GROUP At 31 October 1997 the group had the following commitments under non-cancellable operating leases as follows:- 31 October 1997 31 March 1997 ----------------- ----------------- Land and Building Land and Building ----------------- ----------------- 'L' 'L' Expiry Date: Within one year 84,300 43,500 Between two and five years - 40,800 After more than five years 30,000 30,000 ====== ====== 22. CONTROLLING PARTY The directors of the Company, as disclosed in the Directors' Report, are the controlling party of New Focus Health Care Limited by virtue of their 100% holding in the equity share capital of the company at 31 October 1997. On 3 December 1997 the company was taken over by CooperVision Inc., a company registered and incorporated in the United States of America. 17
Unprovided Provided ---------- -------- 31 October 31 March 31 October 31 March 1997 1997 1997 1997 ---- ---- ---- ---- 'L' 'L' 'L' 'L' Accelerated Capital Allowance - - 84,000 50,000 Finance Lease Payments - - 52,000 54,000 Short Term Timing Difference - - (794,000) (658,000) ---- ---- ---------- ---------- 'L' - 'L' - 'L'(658,000) 'L'(554,000) ==== ==== =========== ========== NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 23. RELATED PARTY TRANSACTIONS - GROUP The group had the following transactions with Contact Lens Technologies Limited, a company of which G H Galley, A D Galley and B Bevis (directors of Aspect Vision Care Limited) were directors during the period. 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' Sale of Contact Lenses 1,933,425 1,001,473 Rent of Property 30,333 52,000 Rent of Equipment 70,000 120,000 ========= ========= In addition the company's directors own the patent rights along with B Bevis, I Atkinson and A Morland to the company's manufacturing process. Royalties of lOp per finished lens and 7p per finished mould are charged by the patent holders for their rights. 24. CONTINGENT LIABILITIES - GROUP Guarantees for deferred duty totalling 'L'60,000 (31 March 1997 'L'60,000) have been given to H M Customs & Excise. The group had outstanding forward foreign exchange contracts amounting to 'L'1,153,657 (31 March 1997: 'L'Nil). CONTINGENT LIABILITIES - COMPANY The company has provided unlimited guarantees in respect of bank borrowings of certain subsidiary undertakings. At 31 October 1997 this liability amounted to 'L'1,997,958 (31 March 1997: 'L'1,375,624). 25. PENSION COMMITMENTS - GROUP The group administers group personal pension schemes for its employees. The assets of the schemes are held separately from those of the group in independently administered funds. 26. POST BALANCE SHEET EVENTS The financial statements take into consideration events occurring between 31 October 1997 and the date of their approval by the board of directors. 18 NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 27. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- --------------- 'L' 'L' Operating Profit 1,394,590 3,200,801 Depreciation Charge 747,861 660,493 (Profit)/Loss on Disposal of Tangible Fixed Assets (41,710) 3,427 Exceptional Item (170,000) 2,176,229 Increase in Stocks (237,056) (2,151,128) Increase in Debtors 272,332 (2,501,745) Increase in Creditors 42,765 1,093,151 ----------- ----------- NET CASH INFLOW FROM OPERATING ACTIVITIES 'L'2,008,782 'L'2,481,228 =========== =========== 28. ANALYSIS OF CHANGES IN NET DEBT 19
At Cash Other At Cash Other At 1.4.96 Flows Changes 31.3.97 Flows Changes 31.10.97 ------ ----- ------- ------- ----- ------- -------- 'L' 'L' 'L' 'L' 'L' 'L' 'L' Cash in Hand and at Bank 173,798 302,786 - 476,584 (354,940) - 121,644 Bank Overdraft (301,465) (452,033) - (753,498) (216,573) - (970,071) --------- ---------- (149,247) (571,513) Bank Loans (413,034) 116,495 (665,000) (961,539) 119,226 (630,000) (1,472,313) Hire Purchase and Finance Lease (295,352) 345,621 (614,894) (564,625) 325,877 (954,720) (1,193,468) ---------- --------- ------------ ----------- ---------- ------------ ------------ TOTAL 'L'(836,053) 'L'312,869 'L'(1,279,894) 'L'(1,803,078) 'L'(126,410) 'L'(1,584,720) 'L'(3,514,208) ========== ========= ============ ============ ========== ============ ============ NEW FOCUS HEALTH CARE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 OCTOBER 1997 29. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (NOTE 27) 20
7 months ended 12 months ended 31 October 1997 31 March 1997 --------------- ------------- 'L' 'L' 'L' 'L' Decrease in Cash in the Period (571,513) (149,247) Cash Outflow from Repayment of Bank Loans 119,226 116,495 Cash Outflow from Repayment of Hire Purchase and Finance Leases 325,877 345,621 -------- -------- (126,410) 312,869 New Bank Loan (630,000) (665,000) New Hire Purchase and Finance Leases (954,720) (614,894) -------- -------- (1,584,720) (1,279,894) ------------ ------------- Movement in Net Debt in the Period (1,711,130) (967,025) Net Debt at 1 April 1997 (1,803,078) (836,053) ------------ ------------- Net Debt at 31 October 1997 'L'(3,514,208) 'L'(1,803,078) ============ ============= New Focus Health Care Limited Selected Notes for Consolidated Accounts Period Ended 31 October 1997 30. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - (UNAUDITED) The significant differences between UK GAAP and US GAAP are explained in Note 29 to the Company's financial report for the year ended 31 March 1997 included elsewhere in this Form 8-K filing. Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP. Approximate cumulative effect on shareholders equity of significant differences between UK GAAP and US GAAP
7 months ended 31 October 1997 --------------- 'L' Profit/(Loss) after taxation under UK GAAP 350,226 US GAAP adjustments: Capitalisation of Goodwill 200,000 Amortisation of Goodwill -57,399 Deferred tax 10,000 Minority Interest on the foregoing adjustments -52,178 ------- Profit/(Loss) after taxation under US GAAP 450,649 =======
31 October 1997 --------------- 'L' Shareholders' equity under UK GAAP 3,026,077 US GAAP adjustments: Capitalisation of Goodwill 1,069,706 Amortisation of Goodwill -158,195 Deferred tax 0 Minority Interest on the foregoing adjustments -311,432 --------- Shareholders Equity under US GAAP 3,626,156 ========= Interim Financial Statements (Unaudited) Contact Lens Technologies Limited Profit and Loss Account for the 7 months Ended 31 October 1996 - -------------------------------------------------------------------------------- The results in the profit and loss account relate to continuing operations. There were no recognised gains or losses other than those included in the profit and loss account. 1
7 months Ended 31 October 1996 'L' Turnover 786,667 Cost of Sales -392,754 -------- Gross Profit 393,913 Distribution Costs 0 Administrative Expenses -228,313 -------- 165,600 Other Operating Income 0 -------- Operating Profit 165,600 Exceptional Item 0 Interest Recievable 0 Interest Payable 0 -------- Profit on Ordinary Activites Before Taxation 165,600 Tax on Profit on Ordinary Activites -64,445 -------- Profit for the Financial Period 101,155 Minority Interest 0 -------- Retained Profit for the Period 101,155 ======== Balance Sheet as at 31 October 1996 2
31 October 1996 'L' Fixed Assets Intangible Assets 0 Tangible Assets 932,174 Investments 0 -------- 932,174 Current Assets Stocks 103,894 Debtors 350,079 Cash at Bank and in hand 26,500 -------- 480,473 Creditors Amounts falling due within one year -917,041 -------- Net Current Assets -436,567 -------- Total Assets less Current Liabilities 495,607 Creditors: Amounts falling due after more than one year -304,167 -------- Net Assets 191,440 ======== Capital and Reserves Called up Share Capital 1,000 Share Premium Account 0 Profit and Loss Account 190,440 -------- Shareholders Funds 191,440 Minority Interest 0 -------- 191,440 ======== Cash Flow Statement for the 7 months Ended 31 October 1996 3
7 months Ended 31 October 1996 'L' NET CASH INFLOW FROM OPERATING ACTIVITIES 443,212 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Received 0 Interest Paid 0 interest Element of Finance Lease Rental Payments --------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 0 --------- TAXATION Corporation Tax Paid (9,822) ACT Received --------- TAX PAID (9,822) --------- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payment to Acquire Minority Interest 0 Payment to Acquire Intangible Fixed Assets 0 Payment to Acquire Tangible Fixed Assets (189,520) Receipts from Sales of Tangible Fixed Asssets 62,000 --------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (127,520) --------- FINANCING Bank Loan Advance 0 Bank Loan Repayment (16,971) Finance Lease and Hire Purchase Repayment 0 --------- NET CASH INFLOW FROM FINANCING (16,971) --------- INCREASE/(DECREASE) IN CASH 288,899 ========= Notes to the Interim Financial Statements for 7 months to 31 October 1996 Note 1. Basis of preparation of interim financial statements The accompanying financial statements, which are unaudited, are prepared in accordance with generally accepted accounting principles in the United Kingdom (UK GAAP), which differs in certain significant respects from those applicable in the United States (US GAAP). (See Note 2.) The results for the partial period reported herein are not necessarily indicative of the results to be expected for future periods. In the opinion of the Directors, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position, results of operations and cash flows for the period presented. The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included elsewhere in this Form 8-K filing. Note 2. Adjustments to UK Profits and Shareholders Equity for US GAAP The significant differences between UK GAAP and US GAAP are explained in Note 19 to the Company's financial report for the year ended 31 March 1997 included elsewhere in this Form 8-K filing. Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP. Approximate cumulative effect on shareholders equity of significant differences between UK GAAP and US GAAP
7 months Ended 31 October 1996 'L' Profit/(Loss) after taxation under UK GAAP 101,155 US GAAP adjustments: Capitalisation of Interest 0 Depreciation on Interest Capitalised -1,168 Freehold Property Depreciation -5,323 Tax effect on the foregoing adjustments 385 Deferred tax -1,777 ------- Profit/(Loss) after taxation under US GAAP 93,272 ======= 4
31 October 1996 'L' Shareholders' equity under UK GAAP 191,440 US GAAP adjustments: Capitalisation of Interest 13,345 Depreciation on Interest Capitalised -1,168 Freehold Property Depreciation -6,844 Tax effect on the foregoing adjustments -4,018 Deferred tax -4,536 ------- Shareholders Equity under US GAAP 188,219 ======= Basis of Preparation of Cash Flow Statement The company's cash flow statement is prepared in accordance with UK Financial Reporting Standard No. 1 (Revised) "Cash Flow Statements" (FRS 1 - Revised), the objectives and principles of which are similar to those set out in Statement of Financial Accounting Standards 95, "Statement of Cash Flows" (SFAS 95) under US GAAP. The principle differences between FRS 1 (Revised) and SFAS 95 relate to classification. Under FRS 1 (Revised), the Company presents its cash flows for (a) operating activities; (b) returns on investment and servicing of finance;(c) taxation;(d) capital expenditure and financial investment; and (e) financing activities. SFAS 95 requires only three categories of cash flow activity (a) operating; (b) investing; and (c) financing. Cash Flows from taxation and returns on investment and servicing of finance under FRS 1 (Revised) would be included as operating activities under SFAS 95. Under FRS 1 (Revised) cash includes only cash in hand plus deposits repayable on demand, less overdrafts repayable on demand. Under SFAS 95 cash and cash equivalents include all highly liquid short term investments with original maturities of three months or less.
7 months Ended 31 October 1996 'L' Note 3. Reconciliation of Operating Profit to the Net Cash Inflow from Operating Activities Operating Profit 165,600 Depreciation Charge 57,855 (Profit)/Loss on Disposal of Tangible Assets (1,740) Exceptional Item 0 (Increase)/Decrease in Stocks (59,671) (Increase)/Decrease in Debtors (66,486) Increase/(Decrease) in Creditors 347,655 ------- NET CASH INFLOW FROM OPERATING ACTIVITIES 443,212 ======= 5
31 October 1996 'L' Note 4. Stocks Contact Lenses 86,389 Packaging and Labels 17,505 ------- Total 103,894 ------- Interim Financial Statements (Unaudited) New Focus Health Care Limited Consolidated Profit and Loss Account for the 7 months Ended 31 October 1996 - -------------------------------------------------------------------------------- The results in the profit and loss account relate to continuing operations. There were no recognised gains or losses other than those included in the profit and loss account. 1
7 months Ended 31 October 1996 'L' Turnover 9,936,389 Cost of Sales -5,025,751 ---------- Gross Profit 4,910,639 Distribution Costs -290,112 Administrative Expenses -2,619,430 ---------- 2,001,096 Other Operating Income 0 ---------- Operating Profit 2,001,096 Exceptional Item 1,269,333 Interest Recievable 935 Interest Payable -198,472 ---------- Profit on Ordinary Activites Before Taxation 3,072,893 Tax on Profit on Ordinary Activities -991,550 ---------- Profit for the Financial Period 2,081,343 Minority Interest -710,987 ---------- Retained Profit for the Period 1,370,356 ========== Consolidated Balance Sheet as at 31 October 1996 2
31 October 1996 'L' Fixed Assets Intangible Assets 9,237 Tangible Assets 3,640,718 Investments 0 ---------- 3,649,955 Current Assets Stocks 2,898,876 Debtors 6,064,175 Cash at Bank and in hand 11,408 ---------- 8,974,459 Creditors Amounts falling due within one year -8,315,964 ---------- Net Current Assets 658,495 ---------- Total Assets less Current Liabilities 4,308,450 Creditors: Amounts falling due after more than one year -1,557,557 ---------- Net Assets 2,750,894 ========== Capital and Reserves Called up Share Capital 7,239 Share Premium Account 317,761 Profit and Loss Account 1,465,066 ---------- Shareholders Funds 1,790,066 Minority Interest 960,828 ---------- 2,750,894 ========== Consolidated Cash Flow Statement for the 7 months Ended 31 October 1996 3
7 months Ended 31 October 1996 'L' NET CASH INFLOW FROM OPERATING ACTIVITIES 904,139 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Received 484 Interset Paid (35,614) ---------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (35,130) ---------- TAX PAID 0 ---------- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payment to Acquire Tangible Fixed Assets (1,802,224) ---------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (1,802,224) ---------- FINANCING Bank Loan Advance 665,000 Bank Loan Repayment (42,785) Finance Lease and Hire Purchase Repayment (224,014) ---------- NET CASH INFLOW FROM FINANCING 398,201 ---------- INCREASE/(DECREASE) IN CASH (535,014) ========== Notes to the Interim Financial Statements for 7 months to 31 October 1996 Note 1. Basis of preparation of interim financial statements The accompanying financial statements, which are unaudited, are prepared in accordance with generally accepted accounting principles in the United Kingdom (UK GAAP), which differs in certain significant respects from those applicable in the United States (US GAAP). (See Note 2.) The results for the partial period reported herein are not necessarily indicative of the results to be expected for future periods. In the opinion of the Directors, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position, results of operations and cash flows for the period presented. The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included elsewhere in this Form 8-K filing. Note 2. Adjustments to UK Profits and Sharehodlers Equity for US GAAP The significant differences between UK GAAP and US GAAP are explained in Note 29 to the Company's financial report for the year ended 31 March 1997 included elsewhere in this Form 8-K filing. Approximate effect on profit after taxation of significant differences between UK GAAP and US GAAP. Approximate cumulative effect on shareholders equity of significant differences between UK GAAP and US GAAP
7 months Ended 31 October 1996 'L' Profit/(Loss) after taxation under UK GAAP 1,370,356 US GAAP adjustments: Capitalisation of Goodwill 0 Amortisation of Goodwill -38,427 Deferred tax 20,417 Minority Interest on the foregoing adjustments -6,152 --------- Profit/(Loss) after taxation under US GAAP 1,346,194 ========= 4
31 October 1996 'L' Shareholders' equity under UK GAAP 1,790,066 US GAAP adjustments: Capitalisation of Goodwill 658,741 Amortisation of Goodwill -73,349 Deferred tax -24,583 Minority Interest on the foregoing adjustments -191,572 --------- Shareholders Equity under US GAAP 2,159,303 ========= Basis of Preparation of Cash Flow Statement The group's cash flow statement is prepared in accordance with UK Financial Reporting Standard No.1 (Revised) "Cash Flow Statements" (FRS 1 - Revised), the objectives and principles of which are similar to those set out in Statement of Financial Accounting Standards 95, "Statement of Cash Flows" (SFAS 95) under US GAAP. The principle differences between FRS 1(Revised) and SFAS 95 relate to classification. Under FRS 1(Revised), the Group presents its cash flows for (a) operating activities; (b) returns on investment and servicing of finance; (c) taxation; (d) capital expenditure and financial investment; and (e) financing activities. SFAS 95 requires only three categories of cash flow activity (a) operating; (b) investing; and (c) financing. Cash flows from taxation and returns on investment and servicing of finance under FRS 1 (Revised) would be included as operating activities under SFAS 95. Under FRS 1 (Revised) cash includes only cash in hand plus deposits repayable on demand, less overdrafts repayable on demand. Under SFAS 95 cash and cash equivalents include all highly liquid short term investments with original maturities of three months or less. In addition, under SFAS 95 changes in minority interests would be presented as a cash flow from operating activities.
7 months Ended 31 October 1996 'L' Note 3. Reconciliation of Operating Profit to the Net Cash Inflow from Operating Activities Operating Profit 2,001,096 Depreciation Charge 422,000 (Profit)/Loss on Disposal of Tangible Assets 15,050 Excetional Item 1,269,333 (Increase)/Decrease in Stocks (1,351,993) (Increase)/Decrease in Debtors (2,350,915) Increase/(Decrease) in Creditors 899,568 ---------- NET CASH INFLOW FROM OPERATING ACTIVITIES 904,139 ========== 5
31 October 1996 'L' Note 4. Stocks Lenses 2,182,401 Materials 275,480 Packaging & Labels 134,132 Moulds 271,343 Work in Progress 35,520 --------- Total 2,898,876 ========= THE COOPER COMPANIES, INC. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS In December 1997, The Cooper Companies, Inc., a Delaware corporation (the "Company"), through its wholly owned subsidiary, Aspect Vision Holdings Limited, an English company ("AVH"), acquired all of the outstanding capital stock of the following privately held English companies: New Focus Health Care Limited ("NFHC"), Contact Lens Technologies Limited ("CLT") and Aspect Vision Care Limited ("AVC"). The Company also acquired a majority of the outstanding capital stock of Aspect Vision Italia S.R.L., a privately held Italian company ("AVI"), and intends to purchase the remainder of AVI's stock pursuant to certain put and call option arrangements, at prices to be agreed upon by the parties. NFHC consolidated financial reports include AVC and AVI. NFHC, AVC, AVI and CLT are herein collectively referred to as "Aspect." Aspect was a privately-held manufacturer of high quality contact lenses sold primarily in the United Kingdom and other European countries. The Company paid approximately 'L'30 million, or $51.0 million at the date of the closing in cash ('L'12 million) and 8% five-year notes ('L'18 million), and will pay an additional amount after approximately 3 years based on performance of Aspect over that period. The minimum amount of the additional payment will accrete to 'L'5 million after approximately 3 years, and there is no maximum limit. The cash payment was partially financed under the Company's $50 million revolving credit agreement and cash then on hand. The acquisition will be accounted for under the purchase method. Aspect will operate under its current name and management as a part of CooperVision, Inc., the Company's contact lens business. The following unaudited pro forma consolidated condensed financial statements have been prepared to illustrate the effect of the acquisition of Aspect, and include an unaudited pro forma consolidated condensed statement of income for the year ended October 31, 1997, and an unaudited pro forma consolidated condensed balance sheet as of October 31, 1997. The unaudited pro forma financial statements are based on the historical consolidated financial statements of the Company, NFHC and CLT, prepared in accordance with United States generally accepted accounting principles. The unaudited pro forma consolidated condensed financial statements reflect a preliminary allocation of the purchase price. Management is in the process of obtaining valuations of the individual assets acquired. Accordingly, the actual purchase price allocation may differ significantly from the preliminary allocation used herein. The unaudited pro forma consolidated condensed balance sheet as of October 31, 1997 assumes that the acquisition was consummated on October 31, 1997, and the unaudited pro forma consolidated condensed statement of income for the year ended October 31, 1997 assumes that the acquisition had been consummated as of November 1, 1996. THE COOPER COMPANIES, INC. Unaudited Pro Forma Consolidated Condensed Statement of Income (In thousands, except per share figures) The unaudited pro forma consolidated condensed statement of income has been prepared to reflect the acquisition of Aspect as if it had occurred on November 1, 1996. The acquisition has been accounted for under the purchase method of accounting. The unaudited pro forma consolidated condensed statement of income excludes any potential benefits that might result from the acquisition due to synergies that may be derived. The unaudited pro forma consolidated condensed statement of income does not purport to be indicative of the results that actually would have occurred if the acquisition had occurred on the date indicated or indicative of results which may be obtained in the future. The unaudited pro forma consolidated condensed statement of income should be read in conjunction with the historical consolidated financial statements and accompanying notes for Aspect and the Company. The unaudited pro forma consolidated condensed financial statements reflect a preliminary allocation of the purchase price. Management is in the process of obtaining valuations of the individual assets acquired. Accordingly, the actual purchase price allocation may differ significantly from the preliminary allocation used herein. The following is a summary of adjustments reflected in the unaudited pro forma consolidated condensed statements of income: (a) Adjustment to reflect the annual amortization amount of the excess of the purchase price over the historical cost basis of the net assets acquired, subject to allocation, over an estimated 40-year life. (b) Adjustment to reflect interest expense amounts at an annual rate of 8%, on the debt to the prior owners ($2.2 million) and additional borrowings for the acquisition ($1.1 million). (c) Adjustment for the tax savings related to the additional interest deduction at the U.K. tax rate of 33%, and also tax savings on the intangible amortization deduction in the U.S. at 5%.
Year Ended October 31, 1997 Historical ---------- Pro forma TCC Aspect Adjustments Pro forma --- ------ ----------- --------- Net sales of products $ 88,769 $38,002 $ - $126,771 Net service revenue 52,704 - - 52,704 -------- ------- ------- -------- Net operating revenue 141,473 38,002 - 179,475 -------- ------- ------- -------- Cost of products sold 27,325 20,685 - 48,010 Cost of services provided 46,538 - - 46,538 Selling, general and administrative expense 38,337 12,700 - 51,037 Research and development expense 1,739 - - 1,739 Amortization of intangibles 1,745 139 1,202 (a) 3,086 -------- ------- ------- -------- Income from operations 25,789 4,478 (1,202) 29,065 -------- ------- ------- -------- Interest expense 4,214 1,153 3,693 (b) 9,060 Other (loss) income, net 209 1,562 - 1,771 -------- ------- ------- -------- Income from continuing operations before income taxes 21,784 4,887 (4,895) 21,776 (Benefit of) provision for income taxes (26,606) 2,034 (1,278) (c) (25,850) -------- ------- ------- -------- Income from continuing operations $ 48,390 $ 2,853 $(3,617) $ 47,626 ======== ======= ======= ======== Earnings per share from continuing operations $ 3.70 $ 3.63 ======== ======== Number of shares used to compute earnings per share 13,071 13,109 ======== ======== THE COOPER COMPANIES, INC. Unaudited Pro Forma Consolidated Condensed Balance Sheet (In thousands) The unaudited pro forma consolidated condensed balance sheet has been prepared to reflect the acquisition of Aspect as if it occurred on October 31, 1997. The acquisition has been accounted for under the purchase method of accounting. The following is a summary of the pro forma adjustments reflected in the unaudited pro forma consolidated condensed balance sheet: (a) Represents the cash used from cash and cash equivalents on hand paid on the acquisition date. (b) Includes the excess of purchase price over historical cost basis of net assets acquired, subject to allocation, of $48.1 million arising from the acquisition of Aspect. (c) Represents the notes payable to the prior owners ($27.9 million), and additional borrowings for the acquisition and related acquisition costs ($900 thousand). (d) Represents the discounted minimum future payments to the prior owners of Aspect. (e) Represents the elimination of the purchased equity of Aspect, plus $1.5 million in capital stock and additional paid-in capital for 38 thousand shares of the Company's stock issued at approximately a fair market value of $39.25 per share as part of the cost of the acquisition. STATEMENT OF DIFFERENCES ------------------------ The British pound sterling sign shall be expressed as................. 'L'
October 31, 1997 ---------------------------------------------- Historical -------------------- Pro forma TCC Aspect Adjustments Pro forma --- ------ ----------- --------- ASSETS Current assets: Cash and cash equivalents $ 18,249 $ 204 $(7,534)(a) $ 10,919 Trade and patient accounts receivable, net 27,469 9,109 - 36,578 Inventories 15,096 7,089 - 22,185 Other current assets 5,021 2,628 - 7,649 -------- ------- ------- -------- Total current assets 65,835 19,030 (7,534) 77,331 -------- ------- ------- -------- Property, plant and equipment at cost 56,578 14,988 - 71,566 Less accumulated depreciation and amortization 17,055 2,967 - 20,022 -------- ------- ------- -------- 39,523 12,021 - 51,544 -------- ------- ------- -------- Goodwill and other intangibles, net 36,698 181 48,076 (b) 84,955 Deferred tax and other assets 33,242 - - 33,242 -------- ------- ------- -------- $ 75,298 $31,232 $40,542 $247,072 ======== ======= ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 438 $ 5,530 $ - $ 5,968 Accounts payable 7,907 1,805 - 9,712 Other current liabilities 16,138 6,099 - 22,237 Accrued income taxes 9,134 4,752 - 13,886 -------- ------- ------- -------- Total current liabilities 33,617 18,186 - 51,803 -------- ------- ------- -------- Long-term debt 9,125 4,408 41,357 (c) 54,890 Other noncurrent liabilities 21,023 - 6,336 (d) 27,359 (d) -------- ------- ------- -------- Total liabilities 63,765 22,594 47,693 134,052 -------- ------- ------- -------- Stockholders' equity Common stock 1,480 12 (8)(e) 1,484 Additional paid-in capital 249,213 534 949 (e) 250,696 Other equity (731) - - (731) Accumulated deficit (138,429) 8,092 (8,092)(e) (138,429) -------- ------- ------- -------- Stockholders' equity 111,533 8,638 (7,151) 113,020 -------- ------- ------- -------- $175,298 $31,232 $40,542 $247,072 ======== ======= ======= ========