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8-K - FORM 8-K - COOPER COMPANIES, INC.d8k.htm

Exhibit 99.1

 

LOGO   LOGO
  6140 Stoneridge Mall Road

CONTACTS:

Albert G. White, III

VP, Investor Relations, Treasurer & Chief Strategic Officer

 

Kim Duncan

Director, Investor Relations

ir@cooperco.com

 

Suite 590

Pleasanton, CA 94588

925-460-3663

www.coopercos.com

THE COOPER COMPANIES ANNOUNCES THIRD QUARTER 2011 RESULTS

PLEASANTON, Calif., August 31, 2011 — The Cooper Companies, Inc. (NYSE: COO) today announced financial results for the fiscal third quarter ended July 31, 2011.

 

   

Revenue increased 19% year-over-year to $351.4 million. CooperVision (CVI) revenue up 20% to $298.3 million and CooperSurgical (CSI) revenue up 14% to $53.1 million.

 

   

GAAP earnings per share (EPS) 78 cents, down 8 cents from last year’s third quarter.

 

   

Non-GAAP EPS $1.15, up 24 cents from last year’s third quarter. See “Reconciliation of Non-GAAP EPS to GAAP EPS” below.

 

   

Free cash flow $68.3 million. Total debt decreased $108.0 million to $445.2 million.

Commenting on the results, Robert S. Weiss, Cooper’s president and chief executive officer said, “I am pleased to report another strong quarter for the Company. We gained market share within CVI, posted solid margins in CVI and CSI, generated strong EPS, delivered improving free cash flow and significantly paid down debt. We are very encouraged by our business trends and believe we are well positioned to deliver strong operating results for the remainder of fiscal 2011.”

Third Quarter GAAP Operating Highlights

 

   

Revenue $351.4 million, 19% above third quarter 2010, 12% in constant currency.

 

   

Gross margin 58% compared with 60% in last year’s third quarter. The decrease was the result of a $14.2 million reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira® Toric contact lenses. Excluding this reserve, gross margin in the third quarter 2011 would have been 62%.

 

   

Operating margin 13% compared with 17% in last year’s third quarter. The decrease was the result of the aforementioned Avaira Toric voluntary recall and the reversal of a $6.1 million one-time gain on settlement of a preexisting relationship related to the acquisition of certain assets from Asahikasei


 

Aime. Excluding this reserve and the reversal of the one-time gain on settlement, operating margin in the third quarter 2011 would have been 19%.

 

   

Depreciation and amortization expense $25.4 million.

 

   

Interest expense $3.2 million compared with $8.7 million in last year’s third quarter. Interest expense decreased as a result of lower interest rates and lower average debt.

 

   

Cash provided by operations $87.4 million and capital expenditures $19.1 million resulted in free cash flow of $68.3 million.

 

   

Total debt decreased $108.0 million to $445.2 million.

Third Quarter CooperVision (CVI) GAAP Operating Highlights

 

   

Revenue $298.3 million, up 20% from last year’s third quarter, 11% in constant currency.

 

   

Revenue by category:

 

     (In millions)
3Q11
     % of CVI Revenue
3Q11
    %chg
y/y
    Constant  Currency
%chg

y/y
 

Toric

   $ 88.7         30     17     9

Multifocal

     19.7         6     7     1

Single-use sphere

     64.6         22     21     9

Non single-use sphere, other

     125.3         42     24     16
  

 

 

    

 

 

     

Total

   $ 298.3         100     20     11
  

 

 

    

 

 

     

 

   

Revenue by geography:

 

     (In millions)
3Q11
     % of CVI Revenue
3Q11
    %chg
y/y
    Constant  Currency
%chg

y/y
 

Americas

   $ 119.9         40     7     6

EMEA

     112.4         38     25     11

Asia Pacific

     66.0         22     40     24
  

 

 

    

 

 

     

Total

   $ 298.3         100     20     11
  

 

 

    

 

 

     

 

   

Selected revenue by material:

 

     (In millions)
3Q11
     % of CVI Revenue
3Q11
    %chg
y/y
    Constant  Currency
%chg

y/y
 

Proclear®

   $ 80.7         27     14     5

Silicone hydrogel

   $ 91.9         31     56     47

 

   

Gross margin 56% compared with 58% in last year’s third quarter. The decrease was a result of a reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. Excluding this reserve, gross margin in the third quarter 2011 would have been 61%.


Third Quarter CooperSurgical (CSI) GAAP Operating Highlights

 

   

Revenue $53.1 million, up 14% from last year’s third quarter, up 12% excluding acquisitions.

 

   

Revenue by category:

 

     (In millions)
3Q11
     % of CSI Revenue
3Q11
    %chg
y/y
 

Office, other

   $ 28.9         54     5

Surgical procedures

     20.4         39     29

Fertility

     3.8         7     12
  

 

 

    

 

 

   

Total

   $ 53.1         100     14
  

 

 

    

 

 

   

 

   

Gross margin 65% compared with 66% in last year’s third quarter.

2011 Guidance

The Company amends its full-year fiscal 2011 guidance and provides fiscal fourth quarter guidance. Guidance is summarized as follows:

 

     FY11 Guidance    FY11 Guidance    F4Q11 Guidance
     Old    New    New

Revenues (In millions)

        

Total

   $1,280 - $1,300    $1,320 - $1,335    $350 - $365

CVI

   $1,080 - $1,095    $1,117 - $1,127    $300 - $310

CSI

   $200 - $205    $203 - $208    $50 - $55

EPS

        

GAAP

   $3.90 - $4.05    $3.67 - $3.72    $1.21 - $1.26

Non-GAAP*

   $4.00 - $4.15    $4.20 - $4.25    $1.19 - $1.24

Free Cash Flow (In millions)

   $190 - $210    $200 - $220    $46 - $66

 

* Excludes the impact of the 2009 CVI manufacturing restructuring plan, items related to acquisitions, costs related to the redemption of our senior notes and the reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. See “Reconciliation of Non-GAAP EPS to GAAP EPS” below.


Reconciliation of Non-GAAP EPS to GAAP EPS

To supplement our financial results and guidance presented on a GAAP basis, we use non-GAAP measures that we believe are helpful in understanding our results. The non-GAAP measures exclude inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses, costs related to acquisitions, including the reversal of the one-time gain on settlement of a preexisting relationship related to the acquisition of certain assets from Asahikasei Aime, restructuring costs and the redemption cost associated with the extinguishment of our senior notes on February 15, 2011. We exclude these items because we do not consider them reflective of our ongoing operating performance. Our non-GAAP financial results and guidance are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements and guidance prepared in accordance with GAAP. Management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning and forecasting for future periods.

Non-GAAP net income and diluted EPS for the fiscal third quarter of 2011 excludes $18.1 million or 37 cents per share related to the aforementioned reserve for inventory and return provisions and the reversal of the one-time gain on settlement of a preexisting relationship. Fiscal 2011 guidance excludes these costs along with costs related to the 2009 CooperVision manufacturing restructuring plan, items related to acquisitions and costs related to the redemption of our senior notes.

In the fiscal third quarter of 2011, we recognized a $14.2 million reserve for inventory and return provisions related to the August 19, 2011 voluntary recall of certain lots of Avaira Toric contact lenses. In the fiscal second quarter, we recognized a $16.5 million loss related to the redemption of the senior notes. The restructuring costs, primarily severance and costs associated with assets related to the closure of the Norfolk manufacturing plant, are recorded primarily in cost of sales. We completed the restructuring plan in the fiscal first quarter of 2011 and recognized total pre-tax restructuring charges under this plan of $23.1 million. We recognized $1.9 million in fiscal 2011, $16.1 million in fiscal 2010 and $5.1 million in fiscal 2009. In our fiscal third quarter we separately reported the reversal of the one-time gain on settlement of a preexisting relationship, initially reported in the fiscal first quarter, related to the acquisition of certain assets from Asahikasei Aime of $6.1 million in operating income. Also in our fiscal first quarter 2011, acquisition costs of $0.2 million, principally legal and other due diligence costs, were primarily recorded in selling, general and administrative expense. We believe it is useful for investors to understand the effects of these restructuring costs and acquisition items on our total operating results.

We also report revenue growth using the non-GAAP financial measure of constant currency revenue. Management presents and refers to constant currency information so that revenue results may be evaluated excluding the effect of foreign currency rate fluctuations. To present this information, current period revenue for entities reporting in currencies other than United States dollars are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year.


     Three Months Ended July 31,  
     2011 GAAP      Adjustments      2011 Non-GAAP  

Operating income

   $ 45,887       $ 20,261       $ 66,148   

Income before income taxes

   $ 43,056       $ 20,261       $ 63,317   

Provision for income taxes

   $ 4,919       $ 2,191       $ 7,110   

Net income

   $ 38,137       $ 18,070       $ 56,207   

Diluted EPS

   $ 0.78       $ 0.37       $ 1.15   
     Fiscal 2011 EPS Guidance  
     2011 GAAP      Adjustments      2011 Non-GAAP  

Diluted EPS

   $ 3.67 - $3.72       $ 0.53       $ 4.20 - $4.25   

Conference Call and Webcast

The Company will host a conference call today at 5:00 p.m. ET to discuss its third quarter 2011 financial results. The dial in number in the United States is +1-800-901-5231 and outside the United States is +1-617-786-2961. The passcode is 55243181. There will be a replay available approximately two hours after the call ends until Wednesday, September 7, 2011. The replay number in the United States is +1-888-286-8010 and outside the United States is +1-617-801-6888. The replay passcode is 48840701. This call will be broadcast live on our website at www.coopercos.com and at www.streetevents.com. A transcript will be available on our website following the conference call.

About The Cooper Companies

The Cooper Companies, Inc. (“Cooper”) is a global medical device company publicly traded on the NYSE Euronext (NYSE:COO). Cooper is dedicated to serving the needs of the healthcare professional, improving the quality of life for its employees and customers and providing market leading products. Cooper’s commitment to health and wellness is reflected through its corporate culture and global initiatives to promote healthy life choices for its employees. Cooper operates through two business units, CooperVision and CooperSurgical. CooperVision brings a refreshing perspective on vision care with a commitment to crafting quality lenses for contact lens wearers and providing focused practitioner support. CooperSurgical focuses on supplying women’s health clinicians with market leading products and treatment options to improve the delivery of healthcare to women. Both companies provide superior product range and quality, along with friendly customer service and a drive to continually innovate. Cooper and CooperVision are headquartered in Pleasanton, CA, and CooperSurgical is headquartered in Trumbull, CT.


Forward-Looking Statements

This news release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Statements relating to guidance, plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, including all statements regarding anticipated growth in our revenue, expected results of operations and integration of any acquisition are forward-looking. To identify these statements look for words like “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates” or “anticipates” and similar words or phrases. Forward-looking statements necessarily depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties.

Among the factors that could cause our actual results and future actions to differ materially from those described in forward-looking statements are: adverse changes in the global or regional general business, political and economic conditions due to the current global economic downturn, including the impact of continuing uncertainty and instability of United States and international credit markets that may adversely affect the Company’s or its customers’ ability to meet future liquidity needs; costs and expenses related to the recall of a product, including those associated with the limited recall of the Avaira Toric contact lenses; limitations on sales following new product introductions due to poor market acceptance; new competitors, product innovations or technologies; a major disruption in the operations of our manufacturing, research and development or distribution facilities due to technological problems, natural disasters or other causes; disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses; the impact of acquisitions or divestitures on revenues, earnings or margins; losses arising from future litigation, including the risk of adverse decisions or settlements related to litigation, or product recalls; interest rate and foreign currency exchange rate fluctuations; the requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill; changes in United States and foreign government regulations of the retail optical industry and of the healthcare industry generally; changes in tax laws or their interpretation and changes in effective tax rates; dilution to earnings per share from acquisitions or issuing stock and other events described in our Securities and Exchange Commission filings, including the “Business” and “Risk Factors” sections in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2010, as such Risk Factors may be updated in quarterly filings.

We caution investors that forward-looking statements reflect our analysis only on their stated date. We disclaim any intent to update them except as required by law.


THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(In thousands)

(Unaudited)

 

     July 31,      October 31,  
     2011      2010  
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 7,872       $ 3,573   

Trade receivables, net

     218,416         197,490   

Inventories

     243,370         227,902   

Deferred tax assets

     33,061         28,828   

Other current assets

     40,917         33,547   
  

 

 

    

 

 

 

Total current assets

     543,636         491,340   
  

 

 

    

 

 

 

Property, plant and equipment, net

     601,094         593,887   

Goodwill

     1,270,300         1,261,976   

Other intangibles, net

     125,840         114,177   

Deferred tax assets

     27,208         23,072   

Other assets

     47,256         40,566   
  

 

 

    

 

 

 
   $ 2,615,334       $ 2,525,018   
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current liabilities:

     

Short-term debt

   $ 38,735       $ 19,159   

Other current liabilities

     198,958         180,361   
  

 

 

    

 

 

 

Total current liabilities

     237,693         199,520   
  

 

 

    

 

 

 

Long-term debt

     406,485         591,977   

Other liabilities

     64,514         46,543   

Deferred tax liabilities

     18,964         20,202   
  

 

 

    

 

 

 

Total liabilities

     727,656         858,242   
  

 

 

    

 

 

 

Stockholders’ equity

     1,887,678         1,666,776   
  

 

 

    

 

 

 
   $ 2,615,334       $ 2,525,018   
  

 

 

    

 

 

 


THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Income

(In thousands, except earnings per share amounts)

(Unaudited)

 

     Three Months Ended      Nine Months Ended  
     July 31,      July 31,  
     2011      2010      2011     2010  

Net sales

   $ 351,396       $ 295,635       $ 969,926      $ 845,165   

Cost of sales

     148,594         119,649         388,755        355,923   
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     202,802         175,986         581,171        489,242   

Selling, general and administrative expense

     133,617         111,265         373,453        323,183   

Research and development expense

     11,725         8,588         31,843        24,788   

Restructuring costs

     —           14         —          424   

Settlement of preexisting relationship

     6,080         —           —          —     

Amortization of intangibles

     5,493         4,723         14,940        13,439   
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

     45,887         51,396         160,935        127,408   

Interest expense

     3,217         8,729         14,436        28,684   

Loss on extinguishment of debt

     —           —           16,487        —     

Litigation settlement charge

     —           —           —          27,000   

Other income (expense), net

     386         985         (128     (1,174
  

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     43,056         43,652         129,884        70,550   

Provision for income taxes

     4,919         3,925         11,092        5,945   
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 38,137       $ 39,727       $ 118,792      $ 64,605   
  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted earnings per share

   $ 0.78       $ 0.86       $ 2.46      $ 1.40   
  

 

 

    

 

 

    

 

 

   

 

 

 

Number of shares used to compute earnings per share

     49,009         46,402         48,362        46,232   
  

 

 

    

 

 

    

 

 

   

 

 

 


Soft Contact Lens Revenue Update

Worldwide Market vs. CooperVision (Constant Currency)

The data below is extracted from a compilation of industry participants’ revenue by the Contact Lens Institute (CLI), an independent market research firm. This data is compiled using gross product sales at foreign exchange rates set by CLI. It therefore excludes items such as discounts, rebates, currency hedges and freight reimbursements.

Worldwide Manufacturers’ Soft Contact Lens Revenue

(U.S. dollars in millions; constant currency; unaudited)

 

     Calendar 2Q11     Trailing Twelve Months  
     Market      Market
Change
    CVI
Change
    Market      Market
Change
    CVI
Change
 

Sales by Category

              

Spheres

   $ 1,324         3     10   $ 5,182         4     8

Torics

     323         8     10     1,249         9     14

Multifocal

     82         5     1     314         10     (1 %) 
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,729         4     9   $ 6,745         5     9
  

 

 

        

 

 

      

Sales by Modality

              

Single Use

   $ 650         8     12   $ 2,473         8     10

Other

     1,079         2     9     4,272         3     8
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,729         4     9   $ 6,745         5     9
  

 

 

        

 

 

      

Sales by Material

              

Hydrogel

   $ 993         (0 %)      (2 %)    $ 3,948         (2 %)      (4 %) 

Silicone Hydrogel

     736         11     47     2,797         16     60
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,729         4     9   $ 6,745         5     9
  

 

 

        

 

 

      

Sales by Geography

              

Americas

   $ 662         6     7   $ 2,562         6     9

EMEA

     506         4     12     1,961         7     10

Asia Pacific

     561         2     10     2,222         2     5
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,729         4     9   $ 6,745         5     9
  

 

 

        

 

 

      

United States

   $ 570         7     8   $ 2,189         6     10

International

     1,159         3     10     4,556         4     8
  

 

 

        

 

 

      

WW Soft Contact Lenses

   $ 1,729         4     9   $ 6,745         5     9
  

 

 

        

 

 

      

COO-E

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