Delaware
|
94-2657368
|
(State or other jurisdiction of incorporation)
|
(I.R.S. Employer Identification No.)
|
6140 Stoneridge Mall Road, Suite 590
Pleasanton, California
|
94588
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.10 par value, and
associated rights
|
|
New York Stock Exchange
|
Document
|
|
Part of Form 10-K
|
Portions of the Proxy Statement for the Annual Meeting
of Stockholders scheduled to be held in March 2019
|
|
Part III
|
PART I
|
|
Page
|
Item 1.
|
Business
|
|
Item 1A.
|
Risk Factors
|
|
Item 1B.
|
Unresolved Staff Comments
|
|
Item 2.
|
Properties
|
|
Item 3.
|
Legal Proceedings
|
|
Item 4.
|
Mine Safety Disclosures
|
|
PART II
|
|
|
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Item 6.
|
Selected Financial Data
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 7A.
|
Quantitative and Qualitative Disclosure about Market Risk
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Item 9.
|
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
|
|
Item 9A.
|
Controls and Procedures
|
|
Item 9B.
|
Other Information
|
|
PART III
|
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
|
Item 11.
|
Executive Compensation
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
PART IV
|
|
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Item 16.
|
Form 10-K Summary
|
•
|
Adverse changes in the global or regional general business, political and economic conditions, including the impact of continuing uncertainty and instability of certain countries that could adversely affect our global markets, and the potential adverse economic impact and related uncertainty caused by these items, including but not limited to, the United Kingdom’s election to withdraw from the European Union and escalating global trade barriers including additional tariffs.
|
•
|
Foreign currency exchange rate and interest rate fluctuations including the risk of fluctuations in the value of foreign currencies or interest rates that would decrease our revenues and earnings.
|
•
|
Changes in tax laws or their interpretation and changes in statutory tax rates, including but not limited to, the U.S., the United Kingdom and other countries with proposed changes to tax laws, some of which may affect our taxation of earnings recognized in foreign jurisdictions and/or negatively impact our effective tax rate.
|
•
|
Our existing indebtedness and associated interest expense, most of which is variable and impacted by rate increases, which could adversely affect our financial health or limit our ability to borrow additional funds.
|
•
|
Acquisition-related adverse effects including the failure to successfully obtain the anticipated revenues, margins and earnings benefits of acquisitions, integration delays or costs and the requirement to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period, required regulatory approvals for an acquisition not being obtained or being delayed or subject to conditions that are not anticipated, adverse impacts of changes to accounting controls and reporting procedures, contingent liabilities or indemnification obligations, increased leverage and lack of access to available financing (including financing for the acquisition or refinancing of debt owed by us on a timely basis and on reasonable terms).
|
•
|
Compliance costs and potential liability in connection with U.S. and foreign laws and health care regulations pertaining to privacy and security of third- party information, such as HIPAA in the U.S. and the General Data Protection Regulation requirements which took effect in Europe on May 25, 2018, including but not limited to those resulting from data security breaches.
|
•
|
A major disruption in the operations of our manufacturing, accounting and financial reporting, research and development, distribution facilities or raw material supply chain due to integration of acquisitions, natural disasters or other causes.
|
•
|
A major disruption in the operations of our manufacturing, accounting and financial reporting, research and development or distribution facilities due to technological problems, including any related to our information systems maintenance, enhancements or new system deployments, integrations or upgrades.
|
•
|
Disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses.
|
•
|
New U.S. and foreign government laws and regulations, and changes in existing laws, regulations and enforcement guidance, which affect areas of our operations including, but not limited to, those affecting the health care industry, including the contact lens industry specifically and the medical device or pharmaceutical industries generally.
|
•
|
Legal costs, insurance expenses, settlement costs and the risk of an adverse decision, prohibitive injunction or settlement related to product liability, patent infringement or other litigation.
|
•
|
Limitations on sales following product introductions due to poor market acceptance.
|
•
|
New competitors, product innovations or technologies, including but not limited to, technological advances by competitors, new products and patents attained by competitors, and competitors' expansion through acquisitions.
|
•
|
Reduced sales, loss of customers and costs and expenses related to product recalls and warning letters.
|
•
|
Failure to receive, or delays in receiving, U.S. or foreign regulatory approvals for products.
|
•
|
Failure of our customers and end users to obtain adequate coverage and reimbursement from third-party payors for our products and services.
|
•
|
The requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill and idle manufacturing facilities and equipment.
|
•
|
The success of our research and development activities and other start-up projects.
|
•
|
Dilution to earnings per share from acquisitions or issuing stock.
|
•
|
Impact and costs incurred from changes in accounting standards and policies.
|
•
|
Environmental risks, including increasing environmental legislation and the broader impacts of climate change.
|
•
|
Other events described in our Securities and Exchange Commission filings, including the “Business” and “Risk Factors” sections in this Annual Report on Form 10-K for the fiscal year ended
October 31, 2018
, as such Risk Factors may be updated in quarterly filings.
|
•
|
Spherical lenses including lenses that correct near- and farsightedness uncomplicated by more complex visual defects.
|
•
|
Toric and multifocal lenses including lenses that, in addition to correcting near- and farsightedness, address more complex visual defects such as astigmatism and presbyopia by adding optical properties of cylinder and axis, which correct for irregularities in the shape of the cornea.
|
•
|
Producing high, medium and low volumes of lenses made with a variety of materials for a broader range of market niches: single-use, two-week, monthly and quarterly disposable sphere, toric and multifocal lenses and custom toric lenses for patients with a high degree of astigmatism.
|
•
|
Offering a wide range of lens parameters, leading to a higher rate of successful fitting for practitioners and better visual acuity for patients.
|
•
|
Patient visits are for annual checkups, cancer screening, menstrual disorders, vaginitis (inflammation of vaginal tissue), treatment of abnormal Pap smears, osteoporosis (reduction in bone mass) and the management of menopause, pregnancy and reproductive management.
|
•
|
We believe that approximately one-third of the office visits to ob/gyns are patients seeking diagnosis and treatment for the symptoms of abnormal uterine bleeding.
|
•
|
A high proportion of office visits are for contraceptive management.
|
•
|
Ob/gyns traditionally provide the initial evaluation for women and their partners who seek infertility assistance. Ovulatory drugs and intrauterine insemination (IUI) are common treatments in these cases.
|
•
|
IVF is performed by reproductive endocrinologists, a subgroup of ob/gyns, along with partner embryologists.
|
•
|
Osteoporosis and incontinence have become frequent diagnoses as the female population ages. Early identification and treatment of these conditions will both improve women's health and help reduce overall costs of treatment.
|
•
|
Sterilization is a frequently performed procedure.
|
•
|
Hysterectomy is one of the most commonly performed surgical procedures.
|
•
|
Hysteroscopy is commonly used in the evaluation of abnormal uterine bleeding.
|
•
|
The trend to move hospital-based procedures to an office or clinical setting is continuing as a method to reduce cost to the health care system without compromising clinical outcomes.
|
•
|
Increased awareness of improved IVF outcomes with preimplantation genetic screening will continue.
|
•
|
failure to successfully obtain the anticipated revenues, margins and earnings benefits;
|
•
|
difficulties in, and expenses related to, the integration of the operations, technologies, products and personnel of the acquired company and establishment of appropriate accounting controls and reporting procedures and other regulatory compliance procedures, including but not limited to third party compliance and due diligence;
|
•
|
increased leverage and the risk of lack of access to available financing, including financing for the acquisition or refinancing of debt owed by us on a timely basis and on reasonable terms;
|
•
|
risks of entering markets in which we have no or limited prior experience;
|
•
|
potential loss of employees;
|
•
|
an inability to identify and consummate future acquisitions on favorable terms or at all;
|
•
|
diversion of management's attention away from other business concerns;
|
•
|
expenses of any undisclosed or potential liabilities, contingent liabilities or indemnification obligations of the acquired company;
|
•
|
expenses, including restructuring expenses, to shut-down our own locations or terminate our employees;
|
•
|
application of and compliance with new and unfamiliar regulatory frameworks such as pharmaceutical regulation applicable to our PARAGARD IUD;
|
•
|
Failure to successfully obtain or maintain reimbursements under the third party payor plans, including but not limited to governmental programs, due to complex reporting and payment obligations;
|
•
|
a dilution of earnings per share; and
|
•
|
risks inherent in accounting allocations and the risk that we are required to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period.
|
•
|
acceptance of our products by eye care and health care practitioners;
|
•
|
the cost competitiveness of our products;
|
•
|
consumer reluctance to try and use a new product;
|
•
|
regulatory and legislative requirements;
|
•
|
adequate coverage and reimbursement by third party payors;
|
•
|
the earlier release of competitive products, such as new silicone hydrogel products, into the market by our competitors; and
|
•
|
the emergence of newer and more competitive products.
|
•
|
we may have difficulty enforcing intellectual property rights in some foreign countries;
|
•
|
we may have difficulty gaining market share in countries such as Japan and China because of regulatory restrictions and customer preferences;
|
•
|
we may find it difficult to grow in emerging markets such as China, India, Russia, Brazil and other developing nations due to, among other things, customer acceptance, undeveloped and/or unfamiliar distribution channels, regulatory restrictions and changes, and business knowledge of these new markets;
|
•
|
tax rates in some foreign countries may exceed those of the United States, and foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including the tariffs recently enacted and proposed by the U.S. government on various imports from China and by the Chinese government on certain U.S. goods, the scope and duration of which remain uncertain;
|
•
|
we may find it difficult to comply with a variety of United States and foreign legal, compliance and regulatory requirements such as the Foreign Corrupt Practices Act, the Dodd-Frank Act, the U.K. Bribery Act and international data security and privacy laws;
|
•
|
we may find it difficult to manage a large organization spread throughout various countries;
|
•
|
fluctuations in currency exchange rates could adversely affect our results;
|
•
|
foreign customers may have longer payment cycles than customers in the United States;
|
•
|
failure to comply with United States Department of Commerce and other nations' import-export controls may result in fines and/or penalties;
|
•
|
general economic and political conditions in the countries where we operate may have an adverse effect on our operations in those countries or not be favorable to our growth strategy;
|
•
|
foreign governments may adopt regulations or take other actions that would have a direct or indirect adverse impact on our business and market opportunities, including but not limited to increased enforcement of potentially conflicting and ambiguous anti-bribery laws;
|
•
|
we may have difficulty enforcing agreements and collecting receivables through some foreign legal systems; and
|
•
|
we may be subject to unforeseen economic or political events in certain countries that may have an impact on our customers' ability or preferences to buy our products.
|
•
|
increase our vulnerability to general adverse economic and industry conditions;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development efforts and other general corporate purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
place us at a competitive disadvantage compared to our competitors that have less debt;
|
•
|
result in greater interest rate risk and volatility;
|
•
|
limit our ability to borrow additional funds; and
|
•
|
make it more difficult for us to satisfy our obligations with respect to our debt, including our obligation to repay our credit facilities under certain circumstances, or refinance our indebtedness on favorable terms or at all.
|
•
|
be expensive and time consuming to prosecute or defend;
|
•
|
result in a finding that we do not have certain intellectual property rights or that such rights lack sufficient scope or strength;
|
•
|
divert management's attention and resources; or
|
•
|
require us to license our intellectual property.
|
•
|
be expensive and time consuming to defend;
|
•
|
cause us to cease making, licensing or selling products that incorporate the challenged intellectual property;
|
•
|
require us to redesign or re-engineer our products, if feasible;
|
•
|
divert management's attention and resources; or
|
•
|
require us to enter into royalty or licensing agreements in order to obtain the right to use a necessary product, component or process.
|
•
|
Establishment of the Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
|
•
|
Reporting and disclosure requirements on medical device and pharmaceutical manufacturers for certain payments or other “transfers of value” made to physicians and physicians family members, certain healthcare facilities, and any ownership and investment interests held by physicians and physician family members, and any payments or other “transfers of value” to such owners. Manufacturers are required to submit reports to the Centers for Medicare & Medicaid Services (CMS) by the 90
th
day of each calendar year;
|
•
|
Absent new legislation, a 2.3 percent excise tax, currently suspended, will be reinstated as of January 1, 2020, on any entity that manufactures or imports medical devices offered for sale in the United States, with limited exceptions, which exceptions include all contact lenses;
|
•
|
Payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain health care services through bundled payment models;
|
•
|
Creation of the Independent Payment Advisory Board which has authority to recommend certain changes to reduce Medicare spending and those recommendations could have the effect of law even if Congress doesn't act on the recommendations;
|
•
|
Establishment of a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending; and
|
•
|
An increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively.
|
•
|
strengthen the rules on placing devices on the market and reinforce surveillance once they are available;
|
•
|
establish explicit provisions on manufacturers' responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;
|
•
|
improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;
|
•
|
set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and
|
•
|
strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.
|
Location
|
Approximate
Square Feet
|
|
Operations
|
|
AMERICAS
|
|
|
|
|
United States:
|
|
|
|
|
California
|
103,990
|
|
|
Executive offices; CooperVision research & development and administrative offices
|
New York
|
427,331
|
|
|
CooperVision marketing, distribution and administrative offices; CooperSurgical manufacturing
|
Connecticut
|
265,437
|
|
|
CooperSurgical manufacturing, marketing, distribution, research & development and administrative offices
|
Texas
|
36,113
|
|
|
CooperSurgical manufacturing
|
Puerto Rico
|
509,284
|
|
|
CooperVision manufacturing and distribution
|
Costa Rica
|
164,946
|
|
|
CooperVision and CooperSurgical manufacturing and office
|
Brazil
|
16,576
|
|
|
CooperVision marketing and distribution
|
Canada
|
21,055
|
|
|
CooperVision and CooperSurgical office
|
Other Americas
|
198,991
|
|
|
CooperVision marketing and distribution; CooperSurgical manufacturing and marketing
|
|
|
|
|
|
EMEA
|
|
|
|
|
United Kingdom
|
792,529
|
|
|
CooperVision manufacturing, marketing, distribution, research & development and administrative offices; CooperSurgical marketing
|
Hungary
|
333,470
|
|
|
CooperVision manufacturing and marketing
|
Belgium
|
256,478
|
|
|
CooperVision distribution
|
Spain
|
180,058
|
|
|
CooperVision distribution and administrative offices; CooperSurgical marketing
|
Denmark
|
94,585
|
|
|
CooperSurgical manufacturing, marketing, administrative, research and development offices
|
Other EMEA
|
167,124
|
|
|
CooperVision and CooperSurgical marketing and distribution
|
|
|
|
|
|
ASIA PACIFIC
|
|
|
|
|
Japan
|
98,015
|
|
|
CooperVision marketing, distribution and administrative offices; CooperSurgical marketing
|
Australia
|
43,416
|
|
|
CooperVision manufacturing, marketing, distribution and administrative offices; CooperSurgical marketing
|
Other Asia Pacific
|
74,473
|
|
|
CooperVision and CooperSurgical marketing and distribution
|
|
October 2013
|
|
October 2014
|
|
October 2015
|
|
October 2016
|
|
October 2017
|
|
October 2018
|
||||||||||||
The Cooper Companies, Inc.
|
$
|
100.00
|
|
|
$
|
126.90
|
|
|
$
|
118.01
|
|
|
$
|
136.41
|
|
|
$
|
186.22
|
|
|
$
|
200.26
|
|
S&P 500
|
$
|
100.00
|
|
|
$
|
117.27
|
|
|
$
|
123.37
|
|
|
$
|
128.93
|
|
|
$
|
159.40
|
|
|
$
|
171.11
|
|
S&P Health Care Equipment
|
$
|
100.00
|
|
|
$
|
124.58
|
|
|
$
|
135.85
|
|
|
$
|
153.67
|
|
|
$
|
192.06
|
|
|
$
|
225.13
|
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Approximate
Dollar Value of Shares
that May Yet Be
Purchased Under
Publicly Announced
Plans or Programs
|
||||||
8/1/18 – 8/31/18
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
563,500,000
|
|
9/1/18 – 9/30/18
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
563,500,000
|
|
10/1/18 – 10/31/18
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
563,500,000
|
|
Total
|
|
—
|
|
|
|
|
—
|
|
|
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(1)
(A)
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
(B)
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A)
(C)
|
Equity compensation plans
approved by shareholders
(2)
|
1,692,007
|
|
$160.31
|
|
1,572,390
|
Equity compensation plans not
approved by shareholders
|
—
|
|
—
|
|
—
|
Total
|
1,692,007
|
|
$160.31
|
|
1,572,390
|
Years Ended October 31,
(In millions, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Consolidated Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,532.8
|
|
|
$
|
2,139.0
|
|
|
$
|
1,966.8
|
|
|
$
|
1,797.1
|
|
|
$
|
1,717.8
|
|
Gross profit
|
$
|
1,632.3
|
|
|
$
|
1,365.8
|
|
|
$
|
1,173.1
|
|
|
$
|
1,070.3
|
|
|
$
|
1,091.6
|
|
Income before income taxes
|
$
|
331.9
|
|
|
$
|
394.0
|
|
|
$
|
295.6
|
|
|
$
|
215.5
|
|
|
$
|
296.5
|
|
Net income attributable to
Cooper stockholders
|
$
|
139.9
|
|
|
$
|
372.9
|
|
|
$
|
273.9
|
|
|
$
|
203.5
|
|
|
$
|
269.9
|
|
Diluted earnings per share attributable to Cooper stockholders
|
$
|
2.81
|
|
|
$
|
7.52
|
|
|
$
|
5.59
|
|
|
$
|
4.14
|
|
|
$
|
5.51
|
|
Number of shares used to compute diluted earnings per share
|
49.7
|
|
|
49.6
|
|
|
49.0
|
|
|
49.2
|
|
|
49.0
|
|
|||||
Dividends paid per share
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
Consolidated Financial Position
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
$
|
1,090.9
|
|
|
$
|
953.2
|
|
|
$
|
937.1
|
|
|
$
|
844.0
|
|
|
$
|
791.6
|
|
Property, plant and equipment, net
|
976.0
|
|
|
910.1
|
|
|
877.7
|
|
|
967.1
|
|
|
937.3
|
|
|||||
Goodwill
|
2,392.1
|
|
|
2,354.8
|
|
|
2,164.7
|
|
|
2,197.1
|
|
|
2,220.9
|
|
|||||
Other intangible assets, net
|
1,521.3
|
|
|
504.7
|
|
|
441.1
|
|
|
411.1
|
|
|
453.6
|
|
|||||
Deferred tax assets and other assets
|
132.5
|
|
|
135.9
|
|
|
58.0
|
|
|
43.2
|
|
|
54.9
|
|
|||||
|
$
|
6,112.8
|
|
|
$
|
4,858.7
|
|
|
$
|
4,478.6
|
|
|
$
|
4,462.5
|
|
|
$
|
4,458.3
|
|
Short-term debt
|
$
|
37.1
|
|
|
$
|
23.4
|
|
|
$
|
226.3
|
|
|
$
|
243.8
|
|
|
$
|
101.5
|
|
Other current liabilities
|
499.4
|
|
|
372.7
|
|
|
316.9
|
|
|
331.7
|
|
|
340.7
|
|
|||||
Long-term debt
|
1,985.7
|
|
|
1,149.3
|
|
|
1,107.4
|
|
|
1,105.4
|
|
|
1,280.8
|
|
|||||
Long-term tax payable
|
141.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other liabilities
|
141.3
|
|
|
137.5
|
|
|
132.1
|
|
|
111.8
|
|
|
146.9
|
|
|||||
Total liabilities
|
2,805.0
|
|
|
1,682.9
|
|
|
1,782.7
|
|
|
1,792.7
|
|
|
1,869.9
|
|
|||||
Stockholders' equity
|
3,307.8
|
|
|
3,175.8
|
|
|
2,695.9
|
|
|
2,669.8
|
|
|
2,588.4
|
|
|||||
|
$
|
6,112.8
|
|
|
$
|
4,858.7
|
|
|
$
|
4,478.6
|
|
|
$
|
4,462.5
|
|
|
$
|
4,458.3
|
|
•
|
Blueyes on January 4, 2018 - a long-standing distribution partner, which has a leading position in the distribution of contact lenses to the optical and pharmacy sector in Israel
|
•
|
Paragon Vision Sciences on December 1, 2017 - a leading provider of ortho-k specialty contact lenses and oxygen permeable rigid contact lens materials
|
•
|
Procornea on August 3, 2017 - a Netherlands based manufacturer of specialty contact lenses, which expanded CooperVision's access to myopia (nearsightedness) management markets with new products
|
•
|
Grand Vista LLC on June 30, 2017 - a distributor in Russia of soft contact lenses
|
•
|
LifeGlobal Group on April 3, 2018 - a privately held company that specializes primarily in IVF media. LifeGlobal’s product categories include media products, IVF laboratory air filtration products and dishware. This acquisition fits CooperSurgical product portfolio and strengthens our fertility media offerings
|
•
|
PARAGARD on November 1, 2017 - CooperSurgical acquired the assets of the PARAGARD IUD business from Teva for $1.1 billion. PARAGARD broadens and strengthens CooperSurgical's current women's health product portfolio and it is the only non-hormonal, long lasting, reversible contraceptive option approved by the FDA and available in the United States. IUDs represent a large and growing segment of the contraceptive market and this acquisition allows CooperSurgical to accelerate growth providing opportunities for operational synergies.
|
•
|
Gross margin remained at
64%
of net sales compared with
64%
in fiscal 2017
|
•
|
Operating income decreased
6%
to
$403.1 million
from
$429.1 million
, primarily due to an increase in amortization expenses as a result of acquisitions and a non-recurring impairment charge
|
•
|
Interest expense increased to
$82.7 million
from
$33.4 million
due to higher debt balance in connection with acquisitions and higher interest rates
|
•
|
Diluted earnings per share decreased
63%
to
$2.81
from
$7.52
due to U.S. tax reform charges, an increase in amortization expense and a non-recurring impairment charge
|
•
|
Operating cash flow
$668.9 million
increased
12.7%
from
$593.6 million
|
Years Ended October 31,
|
2018
|
|
2017
|
|
2018 vs. 2017 % Change in Absolute Values
|
|||
Net sales
|
100
|
%
|
|
100
|
%
|
|
18
|
%
|
Cost of sales
|
36
|
%
|
|
36
|
%
|
|
16
|
%
|
Gross profit
|
64
|
%
|
|
64
|
%
|
|
20
|
%
|
Selling, general and administrative expense
|
38
|
%
|
|
37
|
%
|
|
22
|
%
|
Research and development expense
|
3
|
%
|
|
3
|
%
|
|
23
|
%
|
Amortization of intangibles
|
6
|
%
|
|
3
|
%
|
|
114
|
%
|
Impairment of intangibles
|
1
|
%
|
|
—
|
|
|
—
|
|
Operating income
|
16
|
%
|
|
20
|
%
|
|
(6
|
)%
|
($ in millions)
|
2018
|
|
2017
|
|
Increase
|
|
2018 vs 2017 % Change
|
|||||||
CooperVision
|
$
|
1,882.0
|
|
|
$
|
1,674.1
|
|
|
$
|
207.9
|
|
|
12
|
%
|
CooperSurgical
|
650.8
|
|
|
464.9
|
|
|
185.9
|
|
|
40
|
%
|
|||
Net Sales
|
$
|
2,532.8
|
|
|
$
|
2,139.0
|
|
|
$
|
393.8
|
|
|
18
|
%
|
•
|
Spherical lenses including lenses that correct near- and farsightedness uncomplicated by more complex visual defects.
|
•
|
Toric and multifocal lenses including lenses that, in addition to correcting near- and farsightedness, address more complex visual defects such as astigmatism and presbyopia by adding optical properties of cylinder and axis, which correct for irregularities in the shape of the cornea.
|
($ in millions)
|
2018
|
|
2017
|
|
2018 vs. 2017 % Change
|
|||||
Toric
|
$
|
591.4
|
|
|
$
|
526.8
|
|
|
12
|
%
|
Multifocal
|
196.6
|
|
|
177.2
|
|
|
11
|
%
|
||
Single-use spheres
|
520.1
|
|
|
438.3
|
|
|
19
|
%
|
||
Non single-use sphere, other
|
573.9
|
|
|
531.8
|
|
|
8
|
%
|
||
|
$
|
1,882.0
|
|
|
$
|
1,674.1
|
|
|
12
|
%
|
•
|
Toric and multifocal lenses grew primarily through the success of Biofinity, clariti and MyDay
|
•
|
Single-use sphere lenses growth was primarily attributed to clariti and MyDay lenses
|
•
|
Non single-use spheres grew primarily on sales of Biofinity
|
•
|
Increased sales of silicone hydrogel products were partially offset by lower sales of older hydrogel products. Total silicone hydrogel products grew 19% in fiscal 2018, representing 69% of net sales compared to 65% in the prior fiscal year
|
•
|
"Other" products primarily include lens care which represent 2% of net sales in fiscal 2018 compared to 3% in prior fiscal year
|
•
|
Foreign exchange rates positively increased sales by $43.9 million in fiscal 2018, primarily attributable to the Euro and British Pound
|
•
|
Sales growth was driven primarily by increases in the volume of lenses sold. Average realized prices by product did not materially influence sales growth
|
($ in millions)
|
2018
|
|
2017
|
|
2018 vs. 2017 % Change
|
|||||
Americas
|
$
|
722.9
|
|
|
$
|
675.4
|
|
|
7
|
%
|
EMEA
|
744.3
|
|
|
651.2
|
|
|
14
|
%
|
||
Asia Pacific
|
414.8
|
|
|
347.5
|
|
|
19
|
%
|
||
|
$
|
1,882.0
|
|
|
$
|
1,674.1
|
|
|
12
|
%
|
Year Ended October 31,
($ in millions)
|
|
2018
|
|
2017
|
|
2018 vs. 2017 % Change
|
|||||
Office and surgical procedures
|
|
$
|
400.4
|
|
|
$
|
214.7
|
|
|
86
|
%
|
Fertility
|
|
250.4
|
|
|
250.2
|
|
|
—
|
%
|
||
|
|
$
|
650.8
|
|
|
$
|
464.9
|
|
|
40
|
%
|
•
|
CooperSurgical’s net sales growth was primarily due to incremental revenues from the acquisition of PARAGARD IUD, which is categorized in office and surgical products
|
•
|
Fertility net sales remained relatively flat in fiscal 2018 compared to the prior year primarily due to increased sales of IVF equipment and consumables and incremental revenue from LifeGlobal, offset by reduction of revenue from genetic testing primarily from the exit of NIPT and carrier screening product lines in the third quarter of fiscal 2018
|
•
|
Office and surgical products increased compared to prior year periods due to continued growth in surgical products and recently acquired products, primarily PARAGARD
|
•
|
Unit growth and product mix positively impacted sales growth
|
•
|
Gross margin increased to
64%
of net sales compared with
60%
in fiscal 2016
|
•
|
Operating income increased
32%
to
$429.1 million
from
$324.1 million
|
•
|
Interest expense increased to
$33.4 million
from
$26.2 million
|
•
|
Diluted earnings per share increased
35%
to
$7.52
from
$5.59
|
•
|
Operating cash flow increased
16%
to $
593.6 million
from $
509.6 million
|
Years Ended October 31,
|
2017
|
|
2016
|
|
2017 vs. 2016 % Change in Absolute Values
|
|||
Net sales
|
100
|
%
|
|
100
|
%
|
|
9
|
%
|
Cost of sales
|
36
|
%
|
|
40
|
%
|
|
(3
|
)%
|
Gross profit
|
64
|
%
|
|
60
|
%
|
|
16
|
%
|
Selling, general and administrative expense
|
37
|
%
|
|
37
|
%
|
|
11
|
%
|
Research and development expense
|
3
|
%
|
|
3
|
%
|
|
6
|
%
|
Amortization of intangibles
|
3
|
%
|
|
3
|
%
|
|
13
|
%
|
Operating income
|
20
|
%
|
|
16
|
%
|
|
32
|
%
|
($ in millions)
|
2017
|
|
2016
|
|
Increase
|
|
2017 vs 2016 % Change
|
|||||||
CooperVision
|
$
|
1,674.1
|
|
|
$
|
1,577.2
|
|
|
$
|
96.8
|
|
|
6
|
%
|
CooperSurgical
|
464.9
|
|
|
389.6
|
|
|
75.4
|
|
|
19
|
%
|
|||
Net Sales
|
$
|
2,139.0
|
|
|
$
|
1,966.8
|
|
|
$
|
172.2
|
|
|
9
|
%
|
($ in millions)
|
2017
|
|
% Net Sales
|
|
2016
|
|
%Net sales
|
|
2017 vs. 2016 % Change
|
|||||||
Toric
|
$
|
526.8
|
|
|
31
|
%
|
|
$
|
480.2
|
|
|
30
|
%
|
|
10
|
%
|
Multifocal
|
177.2
|
|
|
11
|
%
|
|
169.8
|
|
|
11
|
%
|
|
4
|
%
|
||
Single-use spheres
|
438.3
|
|
|
26
|
%
|
|
403.1
|
|
|
26
|
%
|
|
9
|
%
|
||
Non single-use sphere, other
|
531.8
|
|
|
32
|
%
|
|
524.1
|
|
|
33
|
%
|
|
1
|
%
|
||
|
$
|
1,674.1
|
|
|
100
|
%
|
|
$
|
1,577.2
|
|
|
100
|
%
|
|
6
|
%
|
($ in millions)
|
2017
|
|
2016
|
|
2017 vs. 2016 % Change
|
|||||
Americas
|
$
|
675.4
|
|
|
$
|
650.7
|
|
|
4
|
%
|
EMEA
|
651.2
|
|
|
612.3
|
|
|
6
|
%
|
||
Asia Pacific
|
347.5
|
|
|
314.2
|
|
|
11
|
%
|
||
|
$
|
1,674.1
|
|
|
$
|
1,577.2
|
|
|
6
|
%
|
Year Ended October 31,
($ in millions)
|
|
2017
|
|
% Net
Sales |
|
2016
|
|
% Net
Sales |
|
2017 vs. 2016 % Change
|
|||||||
Fertility
|
|
$
|
250.2
|
|
|
54
|
%
|
|
$
|
175.8
|
|
|
45
|
%
|
|
42
|
%
|
Office and surgical procedures
|
|
214.7
|
|
|
46
|
%
|
|
213.8
|
|
|
55
|
%
|
|
—
|
%
|
||
|
|
$
|
464.9
|
|
|
100
|
%
|
|
$
|
389.6
|
|
|
100
|
%
|
|
19
|
%
|
Gross Margin
|
2018
|
|
2017
|
|
2016
|
|||
CooperVision
|
66
|
%
|
|
65
|
%
|
|
59
|
%
|
CooperSurgical
|
61
|
%
|
|
60
|
%
|
|
62
|
%
|
Consolidated
|
64
|
%
|
|
64
|
%
|
|
60
|
%
|
•
|
an increase in sales of higher margin products including Biofinity;
|
•
|
the favorable impact to revenue from exchange rate fluctuations, primarily attributable to the Euro and British Pound; and
|
•
|
was offset by $10.1 million of primarily product transition and integration costs in fiscal 2018.
|
•
|
an increase in sales of higher margin products including Biofinity;
|
•
|
the favorable currency impact to CooperVision's cost of sales primarily led by the weakening of the British pound compared to the United States dollar; and
|
•
|
was offset by $10.9 million of primarily incremental costs associated with the impact of Hurricane Maria on our Puerto Rico manufacturing facility, $5.7 million of product write off costs related to the product transition from Avaira sphere to Avaira Vitality, and $0.6 million of facility start up in fiscal 2017. Fiscal 2016 gross margin was also negatively impacted by higher restructuring and integrations costs.
|
•
|
$49.3 million of inventory step-up relating to the PARAGARD and LifeGlobal acquisitions; and
|
•
|
$16.2 million of primarily integration and acquisition costs.
|
($ in millions)
|
2018
|
|
% Net
Sales
|
|
2018 vs. 2017
% Change
|
|
2017
|
|
% Net
Sales
|
|
2017 vs. 2016
% Change
|
|
2016
|
|
% Net
Sales |
|||||||||||
CooperVision
|
$
|
657.2
|
|
|
35
|
%
|
|
13
|
%
|
|
$
|
583.5
|
|
|
35
|
%
|
|
9
|
%
|
|
$
|
535.3
|
|
|
34
|
%
|
CooperSurgical
|
259.3
|
|
|
40
|
%
|
|
55
|
%
|
|
167.8
|
|
|
36
|
%
|
|
19
|
%
|
|
141.6
|
|
|
36
|
%
|
|||
Corporate
|
56.8
|
|
|
—
|
|
|
19
|
%
|
|
47.8
|
|
|
—
|
|
|
4
|
%
|
|
45.9
|
|
|
—
|
|
|||
|
$
|
973.3
|
|
|
38
|
%
|
|
22
|
%
|
|
$
|
799.1
|
|
|
37
|
%
|
|
11
|
%
|
|
$
|
722.8
|
|
|
37
|
%
|
($ in millions)
|
2018
|
|
% Net
Sales
|
|
2018 vs. 2017 % Change
|
|
2017
|
|
% Net
Sales
|
|
2017 vs. 2016 % Change
|
|
2016
|
|
% Net
Sales |
|||||||||||
CooperVision
|
$
|
54.3
|
|
|
3
|
%
|
|
15
|
%
|
|
$
|
47.3
|
|
|
3
|
%
|
|
1
|
%
|
|
$
|
46.9
|
|
|
3
|
%
|
CooperSurgical
|
30.5
|
|
|
5
|
%
|
|
40
|
%
|
|
21.9
|
|
|
5
|
%
|
|
18
|
%
|
|
18.5
|
|
|
5
|
%
|
|||
|
$
|
84.8
|
|
|
3
|
%
|
|
23
|
%
|
|
$
|
69.2
|
|
|
3
|
%
|
|
6
|
%
|
|
$
|
65.4
|
|
|
3
|
%
|
($ in millions)
|
2018
|
|
% Net
Sales
|
|
2018 vs. 2017 % Change
|
|
2017
|
|
% Net
Sales
|
|
2017 vs. 2016 % Change
|
|
2016
|
|
% Net
Sales |
|||||||||||
CooperVision
|
$
|
43.6
|
|
|
2
|
%
|
|
19
|
%
|
|
$
|
36.7
|
|
|
2
|
%
|
|
(9
|
)%
|
|
$
|
40.1
|
|
|
3
|
%
|
CooperSurgical
|
103.1
|
|
|
16
|
%
|
|
224
|
%
|
|
31.7
|
|
|
7
|
%
|
|
54
|
%
|
|
20.7
|
|
|
5
|
%
|
|||
|
$
|
146.7
|
|
|
6
|
%
|
|
114
|
%
|
|
$
|
68.4
|
|
|
3
|
%
|
|
13
|
%
|
|
$
|
60.8
|
|
|
3
|
%
|
($ in millions)
|
2018
|
|
% Net
Sales
|
|
2018 vs. 2017
% Change
|
|
2017
|
|
% Net
Sales
|
|
2017 vs. 2016
% Change
|
|
2016
|
|
% Net
Sales |
|||||||||||
CooperVision
|
$
|
479.8
|
|
|
25
|
%
|
|
15
|
%
|
|
$
|
418.4
|
|
|
25
|
%
|
|
35
|
%
|
|
$
|
309.8
|
|
|
20
|
%
|
CooperSurgical
|
(19.9
|
)
|
|
(3
|
)%
|
|
(134
|
)%
|
|
58.5
|
|
|
13
|
%
|
|
(3
|
)%
|
|
60.2
|
|
|
15
|
%
|
|||
Corporate
|
(56.8
|
)
|
|
—
|
|
|
(19
|
)%
|
|
(47.8
|
)
|
|
—
|
|
|
(4
|
)%
|
|
(45.9
|
)
|
|
—
|
|
|||
|
$
|
403.1
|
|
|
16
|
%
|
|
(6
|
)%
|
|
$
|
429.1
|
|
|
20
|
%
|
|
32
|
%
|
|
$
|
324.1
|
|
|
16
|
%
|
($ in millions)
|
2018
|
|
% Net
Sales
|
|
2018 vs. 2017 % Change
|
|
2017
|
|
% Net
Sales
|
|
2017 vs. 2016 % Change
|
|
2016
|
|
% Net
Sales |
|||||||||||
Interest expense
|
$
|
82.7
|
|
|
3
|
%
|
|
147
|
%
|
|
$
|
33.4
|
|
|
2
|
%
|
|
28
|
%
|
|
$
|
26.2
|
|
|
1
|
%
|
Years Ended October 31,
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign exchange loss
|
$
|
3.4
|
|
|
$
|
1.4
|
|
|
$
|
1.6
|
|
Other (income) expense, net
|
(14.9
|
)
|
|
0.3
|
|
|
0.7
|
|
|||
|
$
|
(11.5
|
)
|
|
$
|
1.7
|
|
|
$
|
2.3
|
|
•
|
Operating cash flow
$668.9 million
up from
$593.6 million
in fiscal 2017
|
•
|
Expenditures for purchases of property, plant and equipment
$193.6 million
up from
$127.2 million
in fiscal 2017
|
•
|
Cash payments for acquisitions and others,
$1,323.9 million
compared to
$254.1 million
in fiscal 2017
|
•
|
Total debt, net of debt issuance cost at
$2.02 billion
at the end of fiscal 2018 compared to
$1.17 billion
at the end of fiscal 2017
|
Years Ended October 31,
($ in millions)
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
77.7
|
|
|
$
|
88.8
|
|
Total assets
|
$
|
6,112.8
|
|
|
$
|
4,858.7
|
|
Working capital
|
$
|
554.4
|
|
|
$
|
557.1
|
|
Total debt
|
$
|
2,022.8
|
|
|
$
|
1,172.7
|
|
Stockholders’ equity
|
$
|
3,307.8
|
|
|
$
|
3,175.8
|
|
Ratio of debt to equity
|
0.61:1
|
|
|
0.37:1
|
|
||
Debt as a percentage of total capitalization
|
38
|
%
|
|
27
|
%
|
Payments Due by Period
(In millions)
|
Total
|
|
2019
|
|
2020
& 2021
|
|
2022
& 2023
|
|
2024
& Beyond
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
$
|
1,989.2
|
|
|
$
|
—
|
|
|
$
|
564.2
|
|
|
$
|
1,425.0
|
|
|
$
|
—
|
|
Interest payments
|
228.0
|
|
|
62.0
|
|
|
116.0
|
|
|
50.0
|
|
|
—
|
|
|||||
Operating leases
|
304.2
|
|
|
37.5
|
|
|
60.6
|
|
|
46.4
|
|
|
159.7
|
|
|||||
Transition tax on unremitted foreign earnings and profits
(1)
|
153.8
|
|
|
12.3
|
|
|
24.6
|
|
|
24.6
|
|
|
92.3
|
|
|||||
Total contractual obligations
|
2,675.2
|
|
|
111.8
|
|
|
765.4
|
|
|
1,546.0
|
|
|
252.0
|
|
|||||
Commercial commitments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stand-by letters of credit
|
4.7
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
2,679.9
|
|
|
$
|
116.5
|
|
|
$
|
765.4
|
|
|
$
|
1,546.0
|
|
|
$
|
252.0
|
|
•
|
Revenue recognition - We recognize product net sales, net of discounts, returns and rebates in accordance with related accounting standards and SEC Staff Accounting Bulletins. As required by these standards, we recognize revenue when it is realized or realizable and earned, based on terms of sale with the customer, where persuasive evidence of an agreement exists, delivery has occurred, the seller's price is fixed and determinable and collectability is reasonably assured. For contact lenses as well CooperSurgical's office and surgical products, fertility and diagnostic products and services, this occurs when title and risk of ownership transfers to our customers, and/or when services are rendered. We believe our revenue recognition policies are appropriate in all circumstances, and that our policies are reflective of our customer arrangements. We record, based on historical statistics, estimated reductions to revenue for customer incentive programs offered including cash discounts, promotional and advertising allowances, volume discounts, contractual pricing allowances, chargebacks, rebates and specifically established customer product return programs. We record taxes collected from customers on a net basis, as these taxes are not included in net sales.
|
•
|
Valuation of goodwill - We evaluate our goodwill balances and test them for impairment annually during the fiscal third quarter and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist in accordance with related accounting standards. We performed our annual impairment test in our fiscal third quarter of
2018
, and our analysis indicated that we had
no
impairment of goodwill. We performed our annual impairment test in our fiscal third quarter of
2017
and concluded that we had
no
impairment of goodwill in that year.
|
•
|
Business combinations - We routinely consummate business combinations. Results of operations for acquired companies are included in our consolidated results of operations from the date of acquisition. We recognize separately from goodwill, the identifiable assets acquired, including acquired in-process research and development, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date fair values as defined by accounting standards related to fair value measurements. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Direct acquisition costs are expensed as incurred.
|
•
|
Income taxes - We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
|
October 31,
(In millions)
|
2018
|
|
2017
|
||||
Short-term debt
|
$
|
37.1
|
|
|
$
|
23.4
|
|
Long-term debt
|
1,989.2
|
|
|
1,153.2
|
|
||
Less: unamortized debt issuance cost
|
(3.5
|
)
|
|
(3.9
|
)
|
||
Total
|
$
|
2,022.8
|
|
|
$
|
1,172.7
|
|
Expected Maturity Date Fiscal Year
($ in millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Fair
Value
|
||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable interest rate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
564.2
|
|
|
$
|
—
|
|
|
$
|
1,425.0
|
|
|
$
|
—
|
|
|
$
|
1,989.2
|
|
|
$1,989.2
|
Average interest rate
|
—
|
|
|
—
|
|
|
3.5
|
%
|
|
—
|
|
|
3.5
|
%
|
|
—
|
|
|
|
|
|
Years Ended October 31,
(In millions, except for earnings per share) |
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
2,532.8
|
|
|
$
|
2,139.0
|
|
|
$
|
1,966.8
|
|
Cost of sales
|
900.5
|
|
|
773.2
|
|
|
793.7
|
|
|||
Gross profit
|
1,632.3
|
|
|
1,365.8
|
|
|
1,173.1
|
|
|||
Selling, general and administrative expense
|
973.3
|
|
|
799.1
|
|
|
722.8
|
|
|||
Research and development expense
|
84.8
|
|
|
69.2
|
|
|
65.4
|
|
|||
Amortization of intangibles
|
146.7
|
|
|
68.4
|
|
|
60.8
|
|
|||
Impairment of intangibles
|
24.4
|
|
|
—
|
|
|
—
|
|
|||
Operating income
|
403.1
|
|
|
429.1
|
|
|
324.1
|
|
|||
Interest expense
|
82.7
|
|
|
33.4
|
|
|
26.2
|
|
|||
Other (income) expense, net
|
(11.5
|
)
|
|
1.7
|
|
|
2.3
|
|
|||
Income before income taxes
|
331.9
|
|
|
394.0
|
|
|
295.6
|
|
|||
Provision for income taxes
|
192.0
|
|
|
21.1
|
|
|
20.7
|
|
|||
Net income
|
139.9
|
|
|
372.9
|
|
|
274.9
|
|
|||
Less: net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1.0
|
|
|||
Net income attributable to Cooper stockholders
|
$
|
139.9
|
|
|
$
|
372.9
|
|
|
$
|
273.9
|
|
Earnings per share - basic
|
$
|
2.85
|
|
|
$
|
7.63
|
|
|
$
|
5.65
|
|
Earnings per share - diluted
|
$
|
2.81
|
|
|
$
|
7.52
|
|
|
$
|
5.59
|
|
Number of shares used to compute earnings per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
49.1
|
|
|
48.9
|
|
|
48.5
|
|
|||
Diluted
|
49.7
|
|
|
49.6
|
|
|
49.0
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
139.9
|
|
|
$
|
372.9
|
|
|
$
|
274.9
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(58.5
|
)
|
|
107.7
|
|
|
(289.6
|
)
|
|||
Change in minimum pension liability, net of tax provision (benefit) of $3.1, $4.2 and $(5.3), respectively
|
7.9
|
|
|
6.6
|
|
|
(8.4
|
)
|
|||
Other comprehensive (loss) income
|
(50.6
|
)
|
|
114.3
|
|
|
(298.0
|
)
|
|||
Comprehensive income (loss)
|
89.3
|
|
|
487.2
|
|
|
(23.1
|
)
|
|||
Less: comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
0.9
|
|
|||
Comprehensive income (loss) attributable to Cooper stockholders
|
$
|
89.3
|
|
|
$
|
487.2
|
|
|
$
|
(24.0
|
)
|
October 31,
(In millions) |
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
77.7
|
|
|
$
|
88.8
|
|
Trade accounts receivable, net of allowance for doubtful accounts of $19.0 at October 31, 2018 and $10.8 at October 31, 2017
|
374.7
|
|
|
316.6
|
|
||
Inventories
|
468.8
|
|
|
454.1
|
|
||
Prepaid expense and other current assets
|
169.7
|
|
|
93.7
|
|
||
Total current assets
|
1,090.9
|
|
|
953.2
|
|
||
Property, plant and equipment, at cost
|
1,930.3
|
|
|
1,757.5
|
|
||
Less: accumulated depreciation and amortization
|
954.3
|
|
|
847.4
|
|
||
|
976.0
|
|
|
910.1
|
|
||
Goodwill
|
2,392.1
|
|
|
2,354.8
|
|
||
Other intangibles, net
|
1,521.3
|
|
|
504.7
|
|
||
Deferred tax assets
|
58.4
|
|
|
60.3
|
|
||
Other assets
|
74.1
|
|
|
75.6
|
|
||
|
$
|
6,112.8
|
|
|
$
|
4,858.7
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
37.1
|
|
|
$
|
23.4
|
|
Accounts payable
|
146.4
|
|
|
142.1
|
|
||
Employee compensation and benefits
|
94.0
|
|
|
84.1
|
|
||
Other current liabilities
|
259.0
|
|
|
146.5
|
|
||
Total current liabilities
|
536.5
|
|
|
396.1
|
|
||
Long-term debt
|
1,985.7
|
|
|
1,149.3
|
|
||
Deferred tax liabilities
|
31.0
|
|
|
38.8
|
|
||
Long-term tax payable
|
141.5
|
|
|
—
|
|
||
Accrued pension liability and other
|
110.3
|
|
|
98.7
|
|
||
Total liabilities
|
2,805.0
|
|
|
1,682.9
|
|
||
Commitments and contingencies (see Note 11)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, 10 cents par value, shares authorized: 1.0; zero shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, 10 cents par value, shares authorized: 120.0; issued 52.8 at October 31, 2018 and 52.4 at October 31, 2017
|
5.3
|
|
|
5.2
|
|
||
Additional paid-in capital
|
1,572.1
|
|
|
1,526.7
|
|
||
Accumulated other comprehensive loss
|
(430.7
|
)
|
|
(375.3
|
)
|
||
Retained earnings
|
2,576.0
|
|
|
2,434.2
|
|
||
Treasury stock at cost: 3.6 shares at October 31, 2018 and 3.6 shares at October 31, 2017
|
(415.1
|
)
|
|
(415.1
|
)
|
||
Total Cooper stockholders' equity
|
3,307.6
|
|
|
3,175.7
|
|
||
Noncontrolling interests
|
0.2
|
|
|
0.1
|
|
||
Stockholders’ equity
|
3,307.8
|
|
|
3,175.8
|
|
||
|
$
|
6,112.8
|
|
|
$
|
4,858.7
|
|
|
|
Common Shares
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained Earnings
|
|
Treasury Stock
|
|
Noncontrolling Interests
|
|
Total
Stockholders' Equity |
||||||||||||||||||||||
(In millions)
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance at October 31, 2015
|
48.3
|
|
|
$
|
4.8
|
|
|
3.3
|
|
|
$
|
0.3
|
|
|
$
|
1,434.7
|
|
|
$
|
(191.6
|
)
|
|
$
|
1,775.3
|
|
|
$
|
(360.1
|
)
|
|
$
|
6.4
|
|
|
$
|
2,669.8
|
|
Net income attributable to Cooper stockholders
|
—
|
|
|
—
|
|
|
—
|
|
—
|
—
|
|
|
—
|
|
|
—
|
|
|
273.9
|
|
|
—
|
|
|
—
|
|
|
273.9
|
|
||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(298.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(298.0
|
)
|
||||||||
Issuance of common stock for stock plans
|
0.5
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
||||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.9
|
|
||||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.9
|
|
||||||||
Purchase of shares from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
(2.2
|
)
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
||||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
(2.0
|
)
|
||||||||
Balance at October 31, 2016
|
48.8
|
|
|
$
|
4.9
|
|
|
3.3
|
|
|
$
|
0.3
|
|
|
$
|
1,494.0
|
|
|
$
|
(489.6
|
)
|
|
$
|
2,046.3
|
|
|
$
|
(360.1
|
)
|
|
$
|
0.1
|
|
|
$
|
2,695.9
|
|
Net income attributable to Cooper stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
372.9
|
|
|
—
|
|
|
—
|
|
|
372.9
|
|
||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114.3
|
|
||||||||
Issuance of common stock for stock plans
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
||||||||
Treasury stock repurchase
|
(0.3
|
)
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(55.0
|
)
|
|
—
|
|
|
(55.0
|
)
|
||||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38.2
|
|
||||||||
ASU 2016-09 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
17.9
|
|
|
—
|
|
|
—
|
|
|
17.7
|
|
||||||||
Balance at October 31, 2017
|
48.8
|
|
|
$
|
4.9
|
|
|
3.6
|
|
|
$
|
0.3
|
|
|
$
|
1,526.7
|
|
|
$
|
(375.3
|
)
|
|
$
|
2,434.2
|
|
|
$
|
(415.1
|
)
|
|
$
|
0.1
|
|
|
$
|
3,175.8
|
|
Net income attributable to Cooper stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139.9
|
|
|
—
|
|
|
—
|
|
|
139.9
|
|
||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.6
|
)
|
||||||||
Issuance of common stock for stock plans
|
0.4
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.7
|
|
||||||||
ASU 2018-02 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
|
4.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||||||
Balance at October 31, 2018
|
49.2
|
|
|
$
|
5.0
|
|
|
3.6
|
|
|
$
|
0.3
|
|
|
$
|
1,572.1
|
|
|
$
|
(430.7
|
)
|
|
$
|
2,576.0
|
|
|
$
|
(415.1
|
)
|
|
$
|
0.2
|
|
|
$
|
3,307.8
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
|||||||
Net income
|
$
|
139.9
|
|
|
$
|
372.9
|
|
|
$
|
274.9
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization expense
|
275.1
|
|
|
188.4
|
|
|
198.3
|
|
||||
Impairment of intangibles
|
24.4
|
|
|
—
|
|
|
—
|
|
||||
Share-based compensation expense
|
43.2
|
|
|
37.2
|
|
|
29.9
|
|
||||
Inventory step-up release
|
50.5
|
|
|
—
|
|
|
—
|
|
||||
Loss on disposal of property, plant and equipment
|
5.1
|
|
|
6.1
|
|
|
30.6
|
|
||||
Deferred income taxes
|
2.9
|
|
|
(7.1
|
)
|
|
(10.7
|
)
|
||||
Excess tax benefit from share-based compensation awards
(1)
|
—
|
|
|
—
|
|
|
(19.8
|
)
|
||||
Provision for doubtful accounts
|
8.2
|
|
|
2.3
|
|
|
2.6
|
|
||||
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
(59.5
|
)
|
|
(25.1
|
)
|
|
1.6
|
|
||||
Inventories
|
(5.0
|
)
|
|
(30.9
|
)
|
|
12.2
|
|
||||
Other assets
|
(64.9
|
)
|
|
(13.8
|
)
|
|
(5.2
|
)
|
||||
Accounts payable
|
2.9
|
|
|
25.0
|
|
|
(10.5
|
)
|
||||
Accrued liabilities
|
81.2
|
|
|
18.9
|
|
|
9.1
|
|
||||
Accrued income taxes
|
4.4
|
|
|
9.9
|
|
|
(8.9
|
)
|
||||
Other long-term liabilities
|
160.5
|
|
|
9.8
|
|
|
5.5
|
|
||||
Cash provided by operating activities
|
668.9
|
|
|
593.6
|
|
|
509.6
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|||||||
Purchases of property, plant and equipment
|
(193.6
|
)
|
|
(127.2
|
)
|
—
|
|
(152.6
|
)
|
|||
Acquisitions of assets and businesses, net of cash acquired, and other
|
(1,323.9
|
)
|
|
(254.1
|
)
|
—
|
|
(266.1
|
)
|
|||
Cash used in investing activities
|
(1,517.5
|
)
|
|
(381.3
|
)
|
|
(418.7
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|||||||
Proceeds from long-term debt
|
2,748.1
|
|
|
1,413.8
|
|
|
1,577.3
|
|
||||
Repayments of long-term debt
|
(1,912.1
|
)
|
|
(1,364.6
|
)
|
|
(1,460.4
|
)
|
||||
Net proceeds (repayments of) from short-term debt
|
13.6
|
|
|
(211.7
|
)
|
|
(131.9
|
)
|
||||
Repurchase of common stock
|
—
|
|
|
(55.0
|
)
|
|
—
|
|
||||
Proceeds related to share-based compensation awards
|
22.3
|
|
|
10.7
|
|
—
|
|
20.4
|
|
|||
Payments related to share-based compensation awards
|
(20.5
|
)
|
|
(16.0
|
)
|
|
(13.2
|
)
|
||||
Excess tax benefit from share-based compensation awards
(1)
|
—
|
|
|
—
|
|
|
19.8
|
|
||||
Purchase of Origio shares from noncontrolling interests
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
||||
Dividends on common stock
|
(2.9
|
)
|
|
(2.9
|
)
|
|
(2.9
|
)
|
||||
Debt issuance costs
|
(3.9
|
)
|
|
—
|
|
|
(12.6
|
)
|
||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Payment of contingent consideration
|
(0.2
|
)
|
|
(4.3
|
)
|
|
(0.5
|
)
|
||||
Proceeds from construction allowance
|
—
|
|
|
2.1
|
|
|
5.5
|
|
||||
Cash provided by (used in) financing activities
|
844.4
|
|
|
(227.9
|
)
|
|
(1.4
|
)
|
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(4.4
|
)
|
|
3.6
|
|
|
(5.1
|
)
|
||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(8.6
|
)
|
|
(12.0
|
)
|
|
84.4
|
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
88.8
|
|
|
100.8
|
|
|
16.4
|
|
||||
Cash, cash equivalents and restricted cash at end of year
|
80.2
|
|
|
88.8
|
|
|
100.8
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
||||
Cash paid for:
|
|
|
|
|
|
|
|
|
||||
Interest, net of amounts capitalized
|
$
|
82.1
|
|
|
$
|
31.3
|
|
|
$
|
23.7
|
|
|
Income taxes
|
$
|
18.8
|
|
|
$
|
15.6
|
|
|
$
|
29.4
|
|
|
Reconciliation of cash flow information:
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
$
|
77.7
|
|
|
$
|
88.8
|
|
|
$
|
100.8
|
|
|
Restricted cash included in other current assets
(2)
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total cash, cash equivalents, and restricted cash
|
$
|
80.2
|
|
|
$
|
88.8
|
|
|
$
|
100.8
|
|
•
|
CooperVision primarily develops, manufactures and markets a broad range of soft contact lenses for the worldwide vision correction market.
|
•
|
CooperSurgical primarily develops, manufactures, markets medical devices and procedures solutions, and provides services to improve health care delivery to women, babies and families.
|
•
|
Revenue recognition - We recognize product net sales, net of discounts, returns and rebates in accordance with related accounting standards and SEC Staff Accounting Bulletins. As required by these standards, we recognize revenue when it is realized or realizable and earned, based on terms of sale with the customer, where persuasive evidence of an agreement exists, delivery has occurred, the seller's price is fixed and determinable and collectability is reasonably assured. For contact lenses as well as CooperSurgical's office and surgical products, fertility and diagnostic products and services, this occurs when title and risk of ownership transfers to our customers, and/or when services are rendered. We believe our revenue recognition policies are appropriate in all circumstances, and that our policies are reflective of our customer arrangements. We record, based on historical statistics, estimated reductions to revenue for customer incentive programs offered including cash discounts, promotional and advertising allowances, volume discounts, contractual pricing allowances, chargebacks, rebates and specifically established customer product return programs. We record taxes collected from customers on a net basis, as these taxes are not included in net sales.
|
•
|
Net realizable value of inventory - In assessing the value of inventories, we make estimates and judgments regarding aging of inventories and other relevant issues potentially affecting the saleable condition of products and estimated prices at which those products will sell. On an ongoing basis, we review the carrying value of our inventory, measuring number of months on hand and other indications of saleability. We reduce the value of inventory if there are indications that the carrying value is greater than net realizable value, resulting in a new, lower-cost basis for that inventory. Subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. While estimates are involved, historically, obsolescence has not been a significant factor due to long product dating and lengthy product life cycles.
|
•
|
Valuation of goodwill - We evaluate our goodwill balances and test them for impairment annually during the fiscal third quarter and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist in accordance with related accounting standards. We performed our annual impairment test in our fiscal third quarter of
2018
, and our analysis indicated that we had
no
impairment of goodwill. We performed our annual impairment test in our fiscal third quarter of
2017
and concluded that we had
no
impairment of goodwill in that year.
|
•
|
Business combinations - We routinely consummate business combinations. Results of operations for acquired companies are included in our consolidated results of operations from the date of acquisition. We recognize separately from goodwill, the identifiable assets acquired, including acquired in-process research and development, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date fair values as defined by accounting standards related to fair value measurements. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Direct acquisition costs are expensed as incurred.
|
•
|
Income taxes - We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
|
•
|
Share-Based Compensation - We grant various share-based compensation awards, including stock options, performance unit shares, restricted stock and restricted stock units. Under fair value recognition provisions, share-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating Cooper's stock price volatility, employee exercise behaviors and related employee forfeiture rates.
|
October 31,
(In millions) |
2018
|
|
2017
|
||||
Raw materials
|
$
|
112.5
|
|
|
$
|
107.0
|
|
Work-in-process
|
12.6
|
|
|
13.3
|
|
||
Finished goods
|
343.7
|
|
|
333.8
|
|
||
|
$
|
468.8
|
|
|
$
|
454.1
|
|
October 31,
(In millions) |
2018
|
|
2017
|
||||
Land and improvements
|
$
|
18.3
|
|
|
$
|
17.7
|
|
Buildings and improvements
|
305.0
|
|
|
279.2
|
|
||
Machinery and equipment
|
1,420.7
|
|
|
1,270.5
|
|
||
Construction in progress
|
186.3
|
|
|
190.1
|
|
||
Property, plant and equipment, at cost
|
$
|
1,930.3
|
|
|
$
|
1,757.5
|
|
Less: Accumulated depreciation
|
954.3
|
|
|
847.4
|
|
||
|
$
|
976.0
|
|
|
$
|
910.1
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Technology
|
$
|
—
|
|
|
$
|
71.7
|
|
|
$
|
32.9
|
|
Customer relationships
|
23.5
|
|
|
43.1
|
|
|
47.3
|
|
|||
Trademarks
|
100.0
|
|
|
7.1
|
|
|
13.7
|
|
|||
Composite intangible asset
|
1,061.9
|
|
|
—
|
|
|
—
|
|
|||
Other
|
4.2
|
|
|
—
|
|
|
0.1
|
|
|||
Total identifiable intangible assets
|
$
|
1,189.6
|
|
|
$
|
121.9
|
|
|
$
|
94.0
|
|
Goodwill
|
70.6
|
|
|
123.1
|
|
|
164.7
|
|
|||
Net tangible assets (liabilities)
|
59.6
|
|
|
(4.8
|
)
|
|
(0.9
|
)
|
|||
Total purchase price
|
$
|
1,319.8
|
|
|
$
|
240.2
|
|
|
$
|
257.8
|
|
(In millions)
|
Relative Fair Value
|
||
Composite intangible asset
(1)
|
$
|
1,061.9
|
|
Assembled workforce intangible asset
(2)
|
1.2
|
|
|
Property, plant and equipment
|
2.0
|
|
|
Inventory
(3)
|
47.3
|
|
|
Other assets
|
9.4
|
|
|
Total assets acquired
|
$
|
1,121.8
|
|
Less: liabilities assumed
|
16.4
|
|
|
Total Purchase Price
|
$
|
1,105.4
|
|
(In millions)
|
CooperVision
|
|
CooperSurgical
|
|
Total
|
||||||
Balance as of October 31, 2016
|
$
|
1,646.4
|
|
|
$
|
518.3
|
|
|
$
|
2,164.7
|
|
Net additions during the year ended October 31, 2017
|
28.6
|
|
|
94.4
|
|
|
123.0
|
|
|||
Translation
|
60.7
|
|
|
6.4
|
|
|
67.1
|
|
|||
Balance as of October 31, 2017
|
$
|
1,735.7
|
|
|
$
|
619.1
|
|
|
$
|
2,354.8
|
|
Net additions during the year ended October 31, 2018
|
36.8
|
|
|
34.4
|
|
|
71.2
|
|
|||
Translation
|
(29.6
|
)
|
|
(4.3
|
)
|
|
(33.9
|
)
|
|||
Balance as of October 31, 2018
|
$
|
1,742.9
|
|
|
$
|
649.2
|
|
|
$
|
2,392.1
|
|
|
As of October 31, 2018
|
|
As of October 31, 2017
|
|
|
||||||||||||
(In millions)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
& Translation
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
& Translation
|
|
Weighted Average Amortization Period (In years)
|
||||||||
Trademarks
|
$
|
139.2
|
|
|
$
|
16.9
|
|
|
$
|
44.5
|
|
|
$
|
10.3
|
|
|
14
|
Composite intangible asset
|
1,061.9
|
|
|
70.8
|
|
|
—
|
|
|
—
|
|
|
15
|
||||
Technology
|
395.0
|
|
|
190.7
|
|
|
428.8
|
|
|
173.2
|
|
|
11
|
||||
Customer relationships
|
350.0
|
|
|
168.6
|
|
|
335.5
|
|
|
145.3
|
|
|
13
|
||||
License and distribution rights and other
|
74.9
|
|
|
52.7
|
|
|
69.2
|
|
|
44.5
|
|
|
9
|
||||
|
2,021.0
|
|
|
$
|
499.7
|
|
|
878.0
|
|
|
$
|
373.3
|
|
|
14
|
||
Less accumulated amortization and translation
|
499.7
|
|
|
|
|
373.3
|
|
|
|
|
|
||||||
Other intangible assets, net
|
$
|
1,521.3
|
|
|
|
|
$
|
504.7
|
|
|
|
|
|
Fiscal years:
|
(In millions)
|
||
2019
|
$
|
143.0
|
|
2020
|
133.3
|
|
|
2021
|
132.0
|
|
|
2022
|
130.1
|
|
|
Thereafter
|
974.0
|
|
|
Total remaining amortization for intangible assets
|
$
|
1,512.4
|
|
October 31,
(In millions) |
2018
|
|
2017
|
||||
Overdraft and other credit facilities
|
$
|
37.1
|
|
|
$
|
23.4
|
|
Short-term Debt
|
$
|
37.1
|
|
|
$
|
23.4
|
|
|
|
|
|
||||
Credit Agreement
|
$
|
439.0
|
|
|
$
|
323.0
|
|
Term loans
|
1,550.0
|
|
|
830.0
|
|
||
Other
|
0.2
|
|
|
0.2
|
|
||
Less: unamortized debt issuance cost
|
(3.5
|
)
|
|
(3.9
|
)
|
||
Long-term Debt
|
$
|
1,985.7
|
|
|
$
|
1,149.3
|
|
|
|
|
|
||||
Total Debt
|
$
|
2,022.8
|
|
|
$
|
1,172.7
|
|
Year
(In millions) |
|
||
2019
|
$
|
—
|
|
2020
|
$
|
—
|
|
2021
|
$
|
564.2
|
|
2022
|
$
|
—
|
|
2023
|
$
|
1,425.0
|
|
Thereafter
|
$
|
—
|
|
•
|
Interest Coverage Ratio, as defined, to be at least
3.00
to
1.00
at all times.
|
•
|
Total Leverage Ratio, as defined, to be no higher than
3.75
to
1.00
.
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
(122.8
|
)
|
|
$
|
7.8
|
|
|
$
|
31.5
|
|
Foreign
|
454.7
|
|
|
386.2
|
|
|
264.1
|
|
|||
|
$
|
331.9
|
|
|
$
|
394.0
|
|
|
$
|
295.6
|
|
Income tax provision
|
$
|
192.0
|
|
|
$
|
21.1
|
|
|
$
|
20.7
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
165.6
|
|
|
$
|
6.9
|
|
|
$
|
14.6
|
|
State
|
0.5
|
|
|
1.8
|
|
|
1.3
|
|
|||
Foreign
|
23.0
|
|
|
19.5
|
|
|
15.5
|
|
|||
|
189.1
|
|
|
28.2
|
|
|
31.4
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
16.1
|
|
|
(3.9
|
)
|
|
(3.9
|
)
|
|||
State
|
1.0
|
|
|
1.4
|
|
|
(0.7
|
)
|
|||
Foreign
|
(14.2
|
)
|
|
(4.6
|
)
|
|
(6.1
|
)
|
|||
|
2.9
|
|
|
(7.1
|
)
|
|
(10.7
|
)
|
|||
Income tax provision
|
$
|
192.0
|
|
|
$
|
21.1
|
|
|
$
|
20.7
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Computed expected provision for taxes
|
$
|
77.5
|
|
|
$
|
137.9
|
|
|
$
|
103.5
|
|
(Decrease) increase in taxes resulting from:
|
|
|
|
|
|
||||||
Income earned outside the U.S. subject to different tax rates
|
(97.5
|
)
|
|
(114.6
|
)
|
|
(81.2
|
)
|
|||
State taxes, net of federal income tax benefit
|
(4.9
|
)
|
|
3.9
|
|
|
1.2
|
|
|||
Research and development credit
|
(0.7
|
)
|
|
(0.7
|
)
|
|
(1.2
|
)
|
|||
U.S. tax reform
|
214.6
|
|
|
—
|
|
|
—
|
|
|||
Incentive stock option compensation and non-deductible employee compensation
|
(11.1
|
)
|
|
(12.9
|
)
|
|
0.5
|
|
|||
Tax accrual adjustment
|
10.1
|
|
|
5.0
|
|
|
(5.0
|
)
|
|||
Other, net
|
4.0
|
|
|
2.5
|
|
|
2.9
|
|
|||
Actual provision for income taxes
|
$
|
192.0
|
|
|
$
|
21.1
|
|
|
$
|
20.7
|
|
|
|
|
|
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Accounts receivable, principally due to allowances for doubtful accounts
|
$
|
4.0
|
|
|
$
|
5.4
|
|
Inventories
|
3.8
|
|
|
6.1
|
|
||
Litigation settlements
|
0.2
|
|
|
0.8
|
|
||
Accrued liabilities, reserves and compensation accruals
|
38.8
|
|
|
50.4
|
|
||
Foreign deferred tax assets
(1)
|
51.8
|
|
|
65.0
|
|
||
Restricted stock and stock option expenses
|
25.6
|
|
|
39.7
|
|
||
Net operating loss carryforwards
|
6.7
|
|
|
3.7
|
|
||
Intangible assets
|
3.1
|
|
|
—
|
|
||
Research and experimental expenses - Section 59(e)
|
2.5
|
|
|
5.1
|
|
||
Tax credit carryforwards
|
1.3
|
|
|
8.7
|
|
||
Total gross deferred tax assets
|
137.8
|
|
|
184.9
|
|
||
Less valuation allowance
|
(39.1
|
)
|
|
(59.1
|
)
|
||
Deferred tax assets
|
98.7
|
|
|
125.8
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Tax deductible goodwill
|
(22.4
|
)
|
|
(32.4
|
)
|
||
Plant and equipment
|
(8.2
|
)
|
|
(4.8
|
)
|
||
Deferred tax on foreign earnings
|
(8.9
|
)
|
|
—
|
|
||
Transaction costs
|
(0.5
|
)
|
|
(1.1
|
)
|
||
Foreign deferred tax liabilities
(1)
|
(31.3
|
)
|
|
(40.1
|
)
|
||
Other intangible assets
|
—
|
|
|
(25.9
|
)
|
||
Total gross deferred tax liabilities
|
(71.3
|
)
|
|
(104.3
|
)
|
||
Net deferred tax assets
|
$
|
27.4
|
|
|
$
|
21.5
|
|
Years Ended October 31,
|
|
|
|
||||||||
(In millions, except for earnings per share)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income attributable to Cooper stockholders
|
$
|
139.9
|
|
|
$
|
372.9
|
|
|
$
|
273.9
|
|
Basic:
|
|
|
|
|
|
||||||
Weighted average common shares
|
49.1
|
|
|
48.9
|
|
|
48.5
|
|
|||
Basic earnings per share attributable to Cooper stockholders
|
$
|
2.85
|
|
|
$
|
7.63
|
|
|
$
|
5.65
|
|
Diluted:
|
|
|
|
|
|
||||||
Weighted average common shares
|
49.1
|
|
|
48.9
|
|
|
48.5
|
|
|||
Effect of dilutive stock options
|
0.6
|
|
|
0.7
|
|
|
0.5
|
|
|||
Diluted weighted average common shares
|
49.7
|
|
|
49.6
|
|
|
49.0
|
|
|||
Diluted earnings per share attributable to Cooper stockholders
|
$
|
2.81
|
|
|
$
|
7.52
|
|
|
$
|
5.59
|
|
Years Ended October 31,
|
|
|
|
||||||
(In thousands, except exercise prices)
|
2018
|
|
2017
|
|
2016
|
||||
Stock option shares excluded
|
257
|
|
|
90
|
|
|
392
|
|
|
Range of exercise prices
|
$226.30-$230.09
|
|
|
$
|
175.31
|
|
|
$131.60-$162.69
|
|
Restricted stock units excluded
|
21
|
|
|
3
|
|
|
2
|
|
(In millions)
|
Foreign Currency Translation Adjustment
|
|
Minimum Pension Liability
|
|
Total
|
||||||
Balance at October 31, 2015
|
$
|
(171.8
|
)
|
|
$
|
(19.8
|
)
|
|
$
|
(191.6
|
)
|
Gross change in value for the period
|
(289.6
|
)
|
|
(13.7
|
)
|
|
(303.3
|
)
|
|||
Tax effect for the period
|
—
|
|
|
5.3
|
|
|
5.3
|
|
|||
Balance at October 31, 2016
|
$
|
(461.4
|
)
|
|
$
|
(28.2
|
)
|
|
$
|
(489.6
|
)
|
Gross change in value for the period
|
$
|
107.7
|
|
|
$
|
10.8
|
|
|
$
|
118.5
|
|
Tax effect for the period
|
—
|
|
|
(4.2
|
)
|
|
(4.2
|
)
|
|||
Balance at October 31, 2017
|
$
|
(353.7
|
)
|
|
$
|
(21.6
|
)
|
|
$
|
(375.3
|
)
|
Gross change in value for the period
|
$
|
(58.5
|
)
|
|
$
|
11.0
|
|
|
$
|
(47.5
|
)
|
Tax effect for the period
|
—
|
|
|
(3.1
|
)
|
|
(3.1
|
)
|
|||
ASU 2018-02 adoption
(1)
|
—
|
|
|
(4.8
|
)
|
|
(4.8
|
)
|
|||
Balance at October 31, 2018
|
$
|
(412.2
|
)
|
|
$
|
(18.5
|
)
|
|
$
|
(430.7
|
)
|
(1)
|
Represents reclassification to retained earnings from adoption of ASU 2018-02. See Note 1. Accounting Policies for additional information.
|
October 31,
|
|
|
|
||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Selling, general and administrative expense
|
$
|
37.6
|
|
|
$
|
33.1
|
|
|
$
|
26.2
|
|
Cost of sales
|
3.6
|
|
|
2.8
|
|
|
2.6
|
|
|||
Research and development expense
|
2.0
|
|
|
1.3
|
|
|
1.1
|
|
|||
Total compensation expense
|
$
|
43.2
|
|
|
$
|
37.2
|
|
|
$
|
29.9
|
|
Related income tax benefit
|
$
|
8.8
|
|
|
$
|
11.4
|
|
|
$
|
9.0
|
|
Years Ended October 31,
|
2018
|
|
2017
|
|
2016
|
|||
Expected life
|
5.4 years
|
|
|
5.5 years
|
|
|
4.8 - 5.5 years
|
|
Expected volatility
|
23.0
|
%
|
|
24.5%
|
|
|
27.6% - 27.7%
|
|
Risk-free interest rate
|
2.0
|
%
|
|
1.2
|
%
|
|
1.3% - 1.5%
|
|
Dividend yield
|
0.03
|
%
|
|
0.03
|
%
|
|
0.04
|
%
|
|
Number of
Shares |
|
Weighted-
Average Exercise Price Per Share |
|
Weighted-
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Outstanding at October 31, 2017
|
1,064,466
|
|
|
$
|
129.33
|
|
|
|
|
|
||
Granted
|
256,639
|
|
|
$
|
229.49
|
|
|
|
|
|
||
Exercised
|
234,107
|
|
|
$
|
95.26
|
|
|
|
|
|
||
Forfeited or expired
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Outstanding at October 31, 2018
|
1,086,998
|
|
|
$
|
160.31
|
|
|
7.17
|
|
|
||
Vested and expected to vest at October 31, 2018
|
1,055,266
|
|
|
$
|
159.19
|
|
|
7.13
|
|
$
|
104,596,614
|
|
Vested and exercisable at October 31, 2018
|
379,113
|
|
|
$
|
127.11
|
|
|
5.71
|
|
$
|
49,741,332
|
|
|
Number of
Shares |
|
Weighted-
Average Grant Date Fair Value Per Share |
|||
Non-vested RSUs at October 31, 2017
|
533,852
|
|
|
$
|
149.93
|
|
Granted
|
162,121
|
|
|
$
|
230.06
|
|
Vested and issued
|
184,121
|
|
|
$
|
139.07
|
|
Forfeited or expired
|
24,538
|
|
|
$
|
169.71
|
|
Non-vested RSUs at October 31, 2018
|
487,314
|
|
|
$
|
179.70
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Change in benefit obligation
|
|
|
|
|
|
||||||
Benefit obligation, beginning of year
|
$
|
151.7
|
|
|
$
|
138.9
|
|
|
$
|
117.3
|
|
Service cost
|
10.7
|
|
|
10.2
|
|
|
8.9
|
|
|||
Interest cost
|
5.0
|
|
|
4.4
|
|
|
4.3
|
|
|||
Benefits paid
|
(3.7
|
)
|
|
(2.6
|
)
|
|
(2.3
|
)
|
|||
Actuarial (gain) loss
|
(16.6
|
)
|
|
0.8
|
|
|
10.7
|
|
|||
Benefit obligation, end of year
|
$
|
147.1
|
|
|
$
|
151.7
|
|
|
$
|
138.9
|
|
Change in plan assets
|
|
|
|
|
|
||||||
Fair value of plan assets, beginning of year
|
$
|
112.8
|
|
|
$
|
89.2
|
|
|
$
|
79.5
|
|
Actual return on plan assets
|
1.9
|
|
|
16.2
|
|
|
2.0
|
|
|||
Employer contributions
|
10.0
|
|
|
10.0
|
|
|
10.0
|
|
|||
Benefits paid
|
(3.7
|
)
|
|
(2.6
|
)
|
|
(2.3
|
)
|
|||
Fair value of plan assets, end of year
|
$
|
121.0
|
|
|
$
|
112.8
|
|
|
$
|
89.2
|
|
Funded status at end of year
|
$
|
(26.1
|
)
|
|
$
|
(38.9
|
)
|
|
$
|
(49.7
|
)
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Amounts recognized in the statement of financial position consist of:
|
|
|
|
|
|
||||||
Noncurrent asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liability
|
—
|
|
|
—
|
|
|
—
|
|
|||
Noncurrent liabilities
|
(26.1
|
)
|
|
(38.9
|
)
|
|
(49.7
|
)
|
|||
Net amount recognized at year end
|
$
|
(26.1
|
)
|
|
$
|
(38.9
|
)
|
|
$
|
(49.7
|
)
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Amounts recognized in accumulated other comprehensive income consist of:
|
|
|
|
|
|
||||||
Prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
24.0
|
|
|
34.9
|
|
|
45.8
|
|
|||
Accumulated other comprehensive income
|
$
|
24.0
|
|
|
$
|
34.9
|
|
|
$
|
45.8
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Information for pension plans with projected benefit obligation in excess of plan assets
|
|
|
|
|
|
||||||
Projected benefit obligation
|
$
|
147.1
|
|
|
$
|
151.7
|
|
|
$
|
138.9
|
|
Fair value of plan assets
|
$
|
121.0
|
|
|
$
|
112.8
|
|
|
$
|
89.2
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Information for pension plans with accumulated benefit obligation in excess of plan assets
|
|
|
|
|
|
||||||
Accumulated benefit obligation
|
$
|
130.5
|
|
|
$
|
133.3
|
|
|
$
|
121.2
|
|
Fair value of plan assets
|
$
|
121.0
|
|
|
$
|
112.8
|
|
|
$
|
89.2
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Reconciliation of accrued pension cost
|
|
|
|
|
|
||||||
Accrued pension cost at prior fiscal year end
|
$
|
4.0
|
|
|
$
|
4.0
|
|
|
$
|
5.7
|
|
Net periodic benefit cost
|
8.2
|
|
|
10.0
|
|
|
8.3
|
|
|||
Contributions made during the year
|
(10.0
|
)
|
|
(10.0
|
)
|
|
(10.0
|
)
|
|||
Accrued pension cost at fiscal year end
|
$
|
2.2
|
|
|
$
|
4.0
|
|
|
$
|
4.0
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic benefit cost and other amounts recognized in
the fiscal year
|
|
|
|
|
|
||||||
Net periodic benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
10.7
|
|
|
$
|
10.2
|
|
|
$
|
8.9
|
|
Interest cost
|
5.0
|
|
|
4.4
|
|
|
4.3
|
|
|||
Expected return on plan assets
|
(9.2
|
)
|
|
(7.3
|
)
|
|
(6.6
|
)
|
|||
Recognized actuarial loss
|
1.7
|
|
|
2.7
|
|
|
1.7
|
|
|||
Net periodic pension cost
|
$
|
8.2
|
|
|
$
|
10.0
|
|
|
$
|
8.3
|
|
Years Ended October 31,
(In millions) |
2018
|
|
2017
|
|
2016
|
||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income
|
|
|
|
|
|
|
|
|
|||
Net (gain) loss
|
(9.3
|
)
|
|
(8.1
|
)
|
|
15.4
|
|
|||
Amortizations of net (gain)
|
(1.7
|
)
|
|
(2.7
|
)
|
|
(1.7
|
)
|
|||
Total recognized in other comprehensive (income)
|
$
|
(11.0
|
)
|
|
$
|
(10.8
|
)
|
|
$
|
13.7
|
|
Total recognized in net periodic benefit cost and other comprehensive (income)
|
$
|
(2.8
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
22.0
|
|
Years Ended October 31,
|
2018
|
|
2017
|
|
2016
|
|||
Weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligation at year end:
|
|
|
|
|
|
|||
Discount rate for determining net periodic pension cost:
|
|
|
|
|
|
|||
Projected Benefit Obligation
|
3.75
|
%
|
|
3.74
|
%
|
|
4.25
|
%
|
Service Cost
|
3.85
|
%
|
|
3.90
|
%
|
|
4.42
|
%
|
Interest Cost
|
3.39
|
%
|
|
3.23
|
%
|
|
3.70
|
%
|
Discount rate for determining benefit obligations at year end
|
4.42
|
%
|
|
3.75
|
%
|
|
3.74
|
%
|
Rate of compensation increase for determining expense
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Rate of compensation increase for determining benefit obligations at year end
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Expected rate of return on plan assets for determining net periodic pension cost
|
8.00
|
%
|
|
8.00
|
%
|
|
8.00
|
%
|
Expected rate of return on plan assets at year end
|
8.00
|
%
|
|
8.00
|
%
|
|
8.00
|
%
|
Measurement date for determining assets and benefit obligations at year end
|
10/31/2018
|
|
|
10/31/2017
|
|
|
10/31/2016
|
|
Years Ended October 31,
|
2018
|
|
2017
|
|
2016
|
|||
Asset category
|
|
|
|
|
|
|||
Cash and cash equivalents
|
2.1
|
%
|
|
0.9
|
%
|
|
4.9
|
%
|
Corporate common stock
|
14.5
|
%
|
|
12.2
|
%
|
|
8.9
|
%
|
Equity mutual funds
|
47.4
|
%
|
|
49.9
|
%
|
|
47.2
|
%
|
Real estate funds
|
2.7
|
%
|
|
2.9
|
%
|
|
4.3
|
%
|
Bond mutual funds
|
33.3
|
%
|
|
34.1
|
%
|
|
34.7
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
(In millions)
|
Total
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Asset category
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
2.5
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate common stock
|
17.6
|
|
|
17.6
|
|
|
—
|
|
|
—
|
|
||||
Equity mutual funds
|
57.3
|
|
|
57.3
|
|
|
—
|
|
|
—
|
|
||||
Real estate funds
|
3.3
|
|
|
3.3
|
|
|
—
|
|
|
—
|
|
||||
Bond mutual funds
|
40.3
|
|
|
40.3
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
121.0
|
|
|
$
|
121.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Years
(In millions) |
|
||
2019
|
$
|
3.7
|
|
2020
|
$
|
4.2
|
|
2021
|
$
|
4.7
|
|
2022
|
$
|
5.3
|
|
2023
|
$
|
6.0
|
|
2024-2028
|
$
|
40.0
|
|
(In millions)
|
|
||
2019
|
$
|
37.5
|
|
2020
|
32.5
|
|
|
2021
|
28.1
|
|
|
2022
|
24.4
|
|
|
2023
|
22.0
|
|
|
2024 and thereafter
|
159.7
|
|
|
|
$
|
304.2
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
CooperVision net sales by category:
|
|
|
|
|
|
||||||
Toric lens
|
$
|
591.4
|
|
|
$
|
526.8
|
|
|
$
|
480.2
|
|
Multifocal lens
|
196.6
|
|
|
177.2
|
|
|
169.8
|
|
|||
Single-use sphere lens
|
520.1
|
|
|
438.3
|
|
|
403.1
|
|
|||
Non single-use sphere and other
|
573.9
|
|
|
531.8
|
|
|
524.1
|
|
|||
Total CooperVision net sales
|
1,882.0
|
|
|
1,674.1
|
|
|
1,577.2
|
|
|||
CooperSurgical net sales
|
650.8
|
|
|
464.9
|
|
|
389.6
|
|
|||
Total net sales
|
$
|
2,532.8
|
|
|
$
|
2,139.0
|
|
|
$
|
1,966.8
|
|
(In millions)
|
CooperVision
|
|
CooperSurgical
|
|
Corporate
|
|
Consolidated
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,882.0
|
|
|
$
|
650.8
|
|
|
$
|
—
|
|
|
$
|
2,532.8
|
|
Operating income (loss)
|
$
|
479.8
|
|
|
$
|
(19.9
|
)
|
|
$
|
(56.8
|
)
|
|
$
|
403.1
|
|
Interest expense
|
|
|
|
|
|
|
82.7
|
|
|||||||
Other (income), net
|
|
|
|
|
|
|
(11.5
|
)
|
|||||||
Income before income taxes
|
|
|
|
|
|
|
$
|
331.9
|
|
||||||
Identifiable assets
|
$
|
3,746.0
|
|
|
$
|
2,201.7
|
|
|
$
|
165.1
|
|
|
$
|
6,112.8
|
|
Depreciation expense
|
$
|
120.1
|
|
|
$
|
8.1
|
|
|
$
|
0.2
|
|
|
$
|
128.4
|
|
Amortization expense
|
$
|
43.6
|
|
|
$
|
103.1
|
|
|
$
|
—
|
|
|
$
|
146.7
|
|
Capital expenditures
|
$
|
178.4
|
|
|
$
|
15.1
|
|
|
$
|
0.1
|
|
|
$
|
193.6
|
|
2017
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,674.1
|
|
|
$
|
464.9
|
|
|
$
|
—
|
|
|
$
|
2,139.0
|
|
Operating income (loss)
|
$
|
418.4
|
|
|
$
|
58.5
|
|
|
$
|
(47.8
|
)
|
|
$
|
429.1
|
|
Interest expense
|
|
|
|
|
|
|
33.4
|
|
|||||||
Other expense, net
|
|
|
|
|
|
|
1.7
|
|
|||||||
Income before income taxes
|
|
|
|
|
|
|
$
|
394.0
|
|
||||||
Identifiable assets
|
$
|
3,562.6
|
|
|
$
|
1,107.5
|
|
|
$
|
188.6
|
|
|
$
|
4,858.7
|
|
Depreciation expense
|
$
|
115.0
|
|
|
$
|
4.7
|
|
|
$
|
0.3
|
|
|
$
|
120.0
|
|
Amortization expense
|
$
|
36.7
|
|
|
$
|
31.7
|
|
|
$
|
—
|
|
|
$
|
68.4
|
|
Capital expenditures
|
$
|
108.2
|
|
|
$
|
18.9
|
|
|
$
|
0.1
|
|
|
$
|
127.2
|
|
2016
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
$
|
1,577.2
|
|
|
$
|
389.6
|
|
|
$
|
—
|
|
|
$
|
1,966.8
|
|
Operating income (loss)
|
$
|
309.8
|
|
|
$
|
60.2
|
|
|
$
|
(45.9
|
)
|
|
$
|
324.1
|
|
Interest expense
|
|
|
|
|
|
|
26.2
|
|
|||||||
Other expense, net
|
|
|
|
|
|
|
2.3
|
|
|||||||
Income before income taxes
|
|
|
|
|
|
|
$
|
295.6
|
|
||||||
Identifiable assets
|
$
|
3,382.4
|
|
|
$
|
907.1
|
|
|
$
|
189.1
|
|
|
$
|
4,478.6
|
|
Depreciation expense
|
$
|
131.3
|
|
|
$
|
5.9
|
|
|
$
|
0.3
|
|
|
$
|
137.5
|
|
Amortization expense
|
$
|
40.1
|
|
|
$
|
20.7
|
|
|
$
|
—
|
|
|
$
|
60.8
|
|
Capital expenditures
|
$
|
142.8
|
|
|
$
|
9.8
|
|
|
$
|
—
|
|
|
$
|
152.6
|
|
(In millions)
|
United
States |
|
Europe
|
|
Rest of
World, Other Eliminations & Corporate |
|
Consolidated
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Sales to unaffiliated customers
|
$
|
1,162.2
|
|
|
$
|
846.5
|
|
|
$
|
524.1
|
|
|
$
|
2,532.8
|
|
Sales between geographic areas
|
274.3
|
|
|
407.1
|
|
|
(681.4
|
)
|
|
—
|
|
||||
Net sales
|
$
|
1,436.5
|
|
|
$
|
1,253.6
|
|
|
$
|
(157.3
|
)
|
|
$
|
2,532.8
|
|
Operating income (loss)
|
$
|
(39.3
|
)
|
|
$
|
(16.8
|
)
|
|
$
|
459.2
|
|
|
$
|
403.1
|
|
Long-lived assets
|
$
|
516.7
|
|
|
$
|
340.7
|
|
|
$
|
118.6
|
|
|
$
|
976.0
|
|
2017
|
|
|
|
|
|
|
|
||||||||
Sales to unaffiliated customers
|
$
|
931.1
|
|
|
$
|
746.2
|
|
|
$
|
461.7
|
|
|
$
|
2,139.0
|
|
Sales between geographic areas
|
255.7
|
|
|
440.5
|
|
|
(696.2
|
)
|
|
—
|
|
||||
Net sales
|
$
|
1,186.8
|
|
|
$
|
1,186.7
|
|
|
$
|
(234.5
|
)
|
|
$
|
2,139.0
|
|
Operating income
|
$
|
37.8
|
|
|
$
|
1.6
|
|
|
$
|
389.7
|
|
|
$
|
429.1
|
|
Long-lived assets
|
$
|
472.8
|
|
|
$
|
352.3
|
|
|
$
|
85.0
|
|
|
$
|
910.1
|
|
2016
|
|
|
|
|
|
|
|
||||||||
Sales to unaffiliated customers
|
$
|
886.5
|
|
|
$
|
681.1
|
|
|
$
|
399.2
|
|
|
$
|
1,966.8
|
|
Sales between geographic areas
|
254.7
|
|
|
464.1
|
|
|
(718.8
|
)
|
|
—
|
|
||||
Net sales
|
$
|
1,141.2
|
|
|
$
|
1,145.2
|
|
|
$
|
(319.6
|
)
|
|
$
|
1,966.8
|
|
Operating income
|
$
|
77.7
|
|
|
$
|
6.0
|
|
|
$
|
240.4
|
|
|
$
|
324.1
|
|
Long-lived assets
|
$
|
464.1
|
|
|
$
|
334.4
|
|
|
$
|
79.2
|
|
|
$
|
877.7
|
|
(In millions, except for earnings per share)
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
590.0
|
|
|
$
|
631.3
|
|
|
$
|
660.0
|
|
|
$
|
651.5
|
|
Gross profit
|
$
|
370.9
|
|
|
$
|
404.5
|
|
|
$
|
426.8
|
|
|
$
|
430.0
|
|
Income before income taxes
|
$
|
74.8
|
|
|
$
|
54.0
|
|
|
$
|
90.4
|
|
|
$
|
112.7
|
|
Net (loss) income attributable to Cooper stockholders
|
$
|
(122.5
|
)
|
|
$
|
60.9
|
|
|
$
|
100.8
|
|
|
$
|
100.6
|
|
Earnings (loss) per share attributable to Cooper stockholders - basic
|
$
|
(2.50
|
)
|
|
$
|
1.24
|
|
|
$
|
2.05
|
|
|
$
|
2.05
|
|
Earnings (loss) per share attributable to Cooper stockholders - diluted
|
$
|
(2.50
|
)
|
|
$
|
1.23
|
|
|
$
|
2.03
|
|
|
$
|
2.02
|
|
2017
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
499.1
|
|
|
$
|
522.4
|
|
|
$
|
556.0
|
|
|
$
|
561.5
|
|
Gross profit
|
$
|
312.4
|
|
|
$
|
343.9
|
|
|
$
|
356.2
|
|
|
$
|
353.4
|
|
Income before income taxes
|
$
|
80.1
|
|
|
$
|
109.5
|
|
|
$
|
107.7
|
|
|
$
|
96.6
|
|
Net income attributable to Cooper stockholders
|
$
|
75.8
|
|
|
$
|
104.9
|
|
|
$
|
103.6
|
|
|
$
|
88.6
|
|
Earnings per share attributable to Cooper stockholders - basic
|
$
|
1.55
|
|
|
$
|
2.14
|
|
|
$
|
2.12
|
|
|
$
|
1.82
|
|
Earnings per share attributable to Cooper stockholders - diluted
|
$
|
1.53
|
|
|
$
|
2.12
|
|
|
$
|
2.09
|
|
|
$
|
1.78
|
|
(In millions)
|
Balance
Beginning of Year |
|
Additions
Charged to Costs and Expenses |
|
(Deductions)
Recoveries/ Other (1) |
|
Balance
at End of Year |
||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
||||||||
Year Ended October 31, 2018
|
$
|
10.8
|
|
|
$
|
11.5
|
|
|
$
|
(3.3
|
)
|
|
$
|
19.0
|
|
Year Ended October 31, 2017
|
$
|
8.5
|
|
|
$
|
2.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
10.8
|
|
Year Ended October 31, 2016
|
$
|
6.0
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
8.5
|
|
(In millions)
|
Balance
Beginning of Year |
|
Additions
|
|
Reductions/ Charges
(2)
|
|
Balance
at End of Year |
||||||||
Income tax valuation allowance:
|
|
|
|
|
|
|
|
||||||||
Year Ended October 31, 2018
|
$
|
59.1
|
|
|
$
|
2.8
|
|
|
$
|
(22.8
|
)
|
|
$
|
39.1
|
|
Year Ended October 31, 2017
|
$
|
13.3
|
|
|
$
|
45.9
|
|
|
$
|
(0.1
|
)
|
|
$
|
59.1
|
|
Year Ended October 31, 2016
|
$
|
13.4
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
13.3
|
|
(2)
|
Reductions includes
$16.5 million
of valuation allowance from prior years as a result of the sale of investment in research and development credits.
|
Exhibit Number
|
Description of Document
|
2.1
|
|
3.1
|
|
3.2
|
|
10.1
(P)
#
|
Severance Agreement entered into as of August 21, 1989, and amended August 15, 2008, by and between Robert S. Weiss and the Company, incorporated by reference to Exhibit 10.28 to Amendment No. 1 to the Company's Annual Report on Form 10‑K for the fiscal year ended October 31, 1992
|
10.2#
|
|
10.3#
|
|
10.4#
|
|
10.5#
|
|
10.6#
|
|
10.7#
|
|
10.8#
|
|
10.9#
|
|
10.10#
|
|
10.11#
|
Exhibit Number
|
Description of Document
|
10.25
|
|
10.26
|
|
10.27
|
|
10.28#
|
|
10.29#
|
|
10.30#
|
|
11
(b)
|
|
21
|
|
23
|
|
24
|
Power of Attorney (included on signature page hereto)
|
31.1
|
|
31.2
|
|
32.1*
|
|
32.2*
|
|
101
|
The following materials from the Company's Annual Report on Form 10-K for the year ended October 31, 2018, formatted in Extensible Business Reporting Language (XBRL); (i) Consolidated Statements of Income for the years ended October 31, 2018, 2017 and 2016, (ii) Consolidated Statements of Comprehensive Income for the years ended October 31, 2018, 2017 and 2016, (iii) Consolidated Balance Sheets at October 31, 2018 and 2017, (iv) Consolidated Statements of Stockholders' Equity for the years ended October 31, 2018, 2017 and 2016, (v) Consolidated Statements of Cash Flows for the years ended October 31, 2018, 2017 and 2016, (vi) related notes to consolidated financial statements and (vii) Schedule II Valuation and Qualifying Accounts
|
(a)
|
The agreement received confidential treatment from the Securities and Exchange Commission with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Commission.
|
(b)
|
The information required in this exhibit is provided in See Note 6. Earnings Per Share of the Consolidated Financial Statements for additional information.
|
#
|
Indicates management contract or compensatory plan.
|
Signature
|
|
Capacity
|
|
Date
|
/s/
ALBERT G. WHITE, III
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
December 21, 2018
|
(Albert G. White, III)
|
|
|
|
|
/s/ A. THOMAS BENDER
|
|
Chairman of the Board
|
|
December 21, 2018
|
(A. Thomas Bender)
|
|
|
|
|
/s/ ALLAN E. RUBENSTEIN, M.D.
|
|
Vice Chairman of the Board and Lead Director
|
|
December 21, 2018
|
(Allan E. Rubenstein)
|
|
|
|
|
/s/ BRIAN G. ANDREWS
|
|
Senior Vice President, Chief Financial Officer & Treasurer
|
|
December 21, 2018
|
(Brian G. Andrews)
|
|
(Principal Financial Officer)
|
|
|
/s/ AGOSTINO RICUPATI
|
|
Chief Accounting Officer & Senior Vice President, Finance & Tax
|
|
December 21, 2018
|
(Agostino Ricupati)
|
|
(Principal Accounting Officer)
|
|
|
/s/ COLLEEN E. JAY
|
|
Director
|
|
December 21, 2018
|
(Colleen E. Jay)
|
|
|
|
|
/s/ MICHAEL H. KALKSTEIN
|
|
Director
|
|
December 21, 2018
|
(Michael H. Kalkstein)
|
|
|
|
|
/s/ WILLIAM A. KOZY
|
|
Director
|
|
December 21, 2018
|
(William A. Kozy)
|
|
|
|
|
/s/ JODY S. LINDELL
|
|
Director
|
|
December 21, 2018
|
(Jody S. Lindell)
|
|
|
|
|
/s/ GARY S. PETERSMEYER
|
|
Director
|
|
December 21, 2018
|
(Gary S. Petersmeyer)
|
|
|
|
|
/s/ ROBERT S. WEISS
|
|
Director
|
|
December 21, 2018
|
(Robert S. Weiss)
|
|
|
|
|
/s/ STANLEY ZINBERG, M.D.
|
|
Director
|
|
December 21, 2018
|
(Stanley Zinberg)
|
|
|
|
|
BOARD OF DIRECTORS
A. Thomas Bender
Chairman of the Board
Allan E. Rubenstein, M.D.
Vice Chairman and Lead Director,
Chairman of the Board, CalAsia
Pharmaceuticals, Inc.
Colleen E. Jay
Director
Michael H. Kalkstein
Of Counsel, Palo Alto Office, Dechert LLP
William A. Kozy
Director
Jody S. Lindell
President and Chief Executive Officer,
S.G. Management, Inc.
Gary S. Petersmeyer
Director
Robert S. Weiss
Director
Albert G. White, III
President & Chief Executive Officer
Stanley Zinberg, M.D.
Director
COMMITTEES OF THE BOARD
Audit Committee
Jody S. Lindell (Chairman)
Michael H. Kalkstein
William A. Kozy
Gary Petersmeyer
Corporate Governance and Nominating Committee
Allan E. Rubenstein, M.D. (Chairman)
Michael H. Kalkstein
William A. Kozy
Stanley Zinberg, M.D.
Colleen E. Jay
Organization and Compensation Committee
Michael H. Kalkstein (Chairman)
Colleen E. Jay
Jody S. Lindell
Gary S. Petersmeyer
|
|
EXECUTIVE OFFICERS
Albert G. White, III
President and Chief Executive Officer
Randal L. Golden
Vice President, Secretary and
General Counsel
Agostino Ricupati
Senior Vice President Finance and Tax, and Chief Accounting Officer
Brian G. Andrews
Senior Vice President, Chief Financial Officer & Treasurer
Robert D. Auerbach, M.D
President of CooperSurgical, Inc.
Daniel G. McBride, Esq.
Executive Vice President and Chief Operating Officer; President of CooperVision, Inc.
PRINCIPAL SUBSIDIARIES
CooperVision, Inc.
6150 Stoneridge Mall Road
Suite 370
Pleasanton, CA 94588
925-621-2450
www.coopervision.com
CooperSurgical, Inc.
75 Corporate Drive
Trumbull, CT 06611
203-601-5200
www.coopersurgical.com
CORPORATE OFFICES
The Cooper Companies, Inc.
6140 Stoneridge Mall Road
Suite 590
Pleasanton, CA 94588
925-460-3600
www.coopercos.com
|
|
INVESTOR INFORMATION
Recent news releases, the annual report on Securities and Exchange Commission Form 10-K, information about the Company's corporate governance program, recent investor presentations, replays of quarterly conference calls and historical stock quotes are available on our Web site at www.coopercos.com.
INVESTOR RELATIONS CONTACT
Kim Duncan
Vice President of Investor Relations & Administration
6140 Stoneridge Mall Road
Suite 590
Pleasanton, CA 94588
Voice: 925-460-3663
Fax: 925-460-3648
E-mail: ir@cooperco.com
ANNUAL MEETING
The Cooper Companies will hold its Annual Stockholders' Meeting in March 2019.
TRANSFER AGENT
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
800-937-5449
TRADEMARKS
The Cooper Companies, Inc., its subsidiaries or affiliates own, license or distribute the registered trademarks, common law trademarks and trade names referenced in this report.
INDEPENDENT AUDITORS
KPMG LLP
STOCK EXCHANGE LISTING
The New York Stock Exchange
Ticker Symbol “COO”
|
Title:
|
Vice President & General Counsel
|
Date: December 21, 2018
|
|
|
|
/s/ Albert G. White III
|
|
|
Albert G. White III
|
|
|
President and Chief Executive Officer
|
|
Date: December 21, 2018
|
|
|
|
/s/ Brian G. Andrews
|
|
|
Brian G. Andrews
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
•
|
the Annual Report on Form 10-K of The Cooper Companies, Inc. (the "Company") for the fiscal year ended October 31, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: December 21, 2018
|
/s/ Albert G. White III
|
|
Albert G. White III
|
|
President and Chief Executive Officer
|
•
|
the Annual Report on Form 10-K of The Cooper Companies, Inc. (the "Company") for the fiscal year ended October 31, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: December 21, 2018
|
/s/ Brian G. Andrews
|
|
Brian G. Andrews
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|