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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 12, 1996
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THE COOPER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-8597 94-2657368
(State or other jurisdiction (Commission File Number) IRS Employer Identification No.)
of incorporation)
</TABLE>
6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588
(Address of principal executive offices)
(510) 460-3600
(Registrant's telephone number, including area code)
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ITEM 5. Other Events.
On December 12, 1996, The Cooper Companies, Inc. (the "Company") issued a press
release announcing its fourth quarter and fiscal year 1996 financial results.
This release is filed as an exhibit hereto and is incorporated by reference
herein.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
No. Description
- ------- ------------
99.1 Press Release dated December 12, 1996 of The Cooper Companies, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE COOPER COMPANIES, INC.
By /s/ Stephen C. Whiteford
--------------------------------
Stephen C. Whiteford
Vice President and
Corporate Controller
(Principal Accounting Officer)
Dated: December 12, 1996
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EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------
99.1 Press Release dated December 12, 1996 of The Cooper
Companies, Inc.
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as ....................'tm'
The registered trademark symbol shall be expressed as ..........'r'
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[LETTERHEAD OF THE COOPER COMPANIES]
CONTACT:
Norris Battin
The Cooper Companies, Inc.
714-597-4700 or 714-673-4299 or
500-346-6580
FOR IMMEDIATE RELEASE
THE COOPER COMPANIES, INC. FOURTH QUARTER AND FISCAL 1996 RESULTS
EXCEED PREVIOUS ESTIMATES
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1996 Net Income $1.41 per Share Including Tax Benefits versus
One Cent per Share in 1995
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Fourth Quarter Revenue Grows 26%; Operating Income Up 116%
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IRVINE, Calif., December 12, 1996 -- The Cooper Companies, Inc., (NYSE/PSE:COO)
today reported results for the 1996 fourth quarter and fiscal year.
For the three months ended October 31, 1996, the Company reported net income of
$8.5 million, or 72 cents per share, compared with a net loss of $3.6 million,
or a loss of 31 cents per share, in the fourth quarter of 1995. The fourth
quarter of 1995 included a charge of $5 million, or 44 cents per share,
primarily reflecting the settlement of a dispute with the physicians' group
formerly staffing the Hampton Hospital of Hospital Group of America (HGA), the
Company's psychiatric services business. Fourth quarter 1996 net income includes
a deferred tax benefit of $4.1 million, or 35 cents per share.
Income from operations in the fourth quarter of 1996 was $5.6 million, more than
double the $2.6 million in last year's fourth quarter.
For fiscal 1996, the Company reported net income of $16.6 million, or $1.41 per
share, compared with $115 thousand, or one cent per share, in 1995. Full year
1996 results, in addition to the fourth
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quarter's deferred tax benefit, include $615 thousand for reversal of tax
accruals no longer required. Nonrecurring items in fiscal 1995 included the
amounts noted above for settlements of disputes, $1.5 million in restructuring
costs, an additional credit of $1.5 million regarding settlement of disputes
earlier in the year and approximately $1 million for the favorable impact of
certain nonoperational adjustments, primarily for corporate collections and
reserves. Excluding these items, the Company's 1996 net income would have been
$11.8 million, or $1.00 per share, versus $4.1 million, or 36 cents per share,
in 1995.
Income from operations in 1996 rose 110% to $16.8 million from $8.0 million in
1995.
Fourth quarter revenue was $31.2 million, up 26% compared with the fourth
quarter of 1995. Strong gains came from CooperVision, the contact lens business,
up 18%, and CooperSurgical, the gynecological business, up 52% including the
beneficial effect of the Unimar acquisition in April 1996. Revenue at HGA grew
26% over last year's fourth quarter with good performance at all three of its
hospitals, especially Hampton Hospital, where operations improved significantly
following the settlement with the physicians' group.
Cooper's total revenue for fiscal 1996 was $109.1 million, up 12%.
CooperVision's sales grew 15% and CooperSurgical's sales grew 34%. HGA's revenue
grew 3% compared to 1995, and 6% when revenue from a hospital contract that
expired in May 1995 is eliminated from the comparison.
A. Thomas Bender, President and Chief Executive Officer, said, "I am very
pleased that the results generated by our specialty products businesses,
CooperVision and CooperSurgical, were outstanding. We are gaining share in the
contact lens market segments we compete in and executing our consolidation
strategy in women's healthcare. At HGA, Hampton Hospital has shown steady
improvement in revenue and operating income since the medical staff transition,
and we continue to expand day treatment and outpatient programs at all three
hospitals.
"With these continued strong operating results, we are, as I announced in
October, estimating fiscal 1997 earnings per share in the range of $1.55 to
$1.65, including a deferred tax benefit of
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approximately 15 cents per share. Revenue is expected to increase about 15%, and
operating income should grow more than 30%. Our 1997 goals also include
acquiring businesses and forming relationships that complement our product
strategies, create profits, and thereby accelerate the use of our net operating
loss carryforward."
During fiscal 1996, Bender noted, stockholders' equity turned positive and the
Company amended its $11 million of HGA debt, reducing the interest rate by two
percentage points effective November 1, 1996. The interest rate on
CooperVision's $8 million line of credit was also recently reduced by one
percentage point. Together, these changes could result in an annual savings of
more than 2 cents per share in interest expense.
"Our recently completed headquarters' consolidation efforts," Bender added,
"will save us nearly $2 million a year going forward including the effect of
reduced insurance rates."
Business Unit Performance
REVENUE BY BUSINESS UNIT
(Dollars In Millions)
<TABLE>
<CAPTION>
3 Months ended October 31, Years ended October 31,
1996 1995 % Growth 1996 1995 % Growth
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
CooperVision $13.7 $11.6 18% $ 48.9 $42.5 15%
CooperSurgical 5.1 3.3 52% 17.2 12.8 34%
HGA 12.4 9.9 26% 43.0 41.8 3%
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$31.2 $24.8 26% $109.1 $97.1 12%
===== ===== ====== =====
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CooperVision
CooperVision's sales grew 18% to $13.7 million in the fourth quarter and 15% to
$48.9 million for the full year. Sales of CooperVision's line of toric contact
lenses to correct astigmatism, which comprises about 50% of its total sales,
grew more than 35%. CooperVision recently announced that, for the second time in
two years, it was doubling the capacity of its Scottsville, New York,
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facility where its popular line of Preference'r' Toric lenses are manufactured.
1996 sales outside of North America, while still relatively small, grew 56%.
While the total patient base of contact lens wearers in North America continues
to show little growth, the patient base for toric lenses is growing about 5% to
10% per year, reflecting its previously underserved nature. The Company
estimates that the size of the toric contact lens market in the United States is
approximately $150 million at the manufacturers' level. About $50 million to $60
million of this market is "conventional" toric contact lenses, a declining,
lower profit segment. CooperVision competes in the two fast growing, more
profitable toric lens segments, "planned replacement" toric lenses and "custom"
toric lenses. Together, the value of these market segments is $90 million to
$100 million.
The estimated $60 to $65 million "planned replacement" toric segment, so called
because patients replace their lenses monthly or quarterly based on comfort and
clinical success, grew about 50% last year. CooperVision more than doubled its
planned replacement business during 1996, achieving the number two market share
position, while growing more than twice as fast as the market segment. Cooper's
planned replacement Preference'r' Toric lenses are manufactured from deposit
resistant material that can offer patients additional convenience by eliminating
an extra step in lens cleaning. Also, lens practitioners can fit patients more
easily with PreferenceAE Toric lenses than with competing brands because of the
wide range of lens parameters that CooperVision can provide with its proprietary
manufacturing process.
In the estimated $30 to $35 million "custom" toric market where lenses are
manufactured-to-order for difficult to fit patients, CooperVision's share--about
50%-- continues to grow.
CooperVision's rapid growth in sales of higher margin toric lenses, together
with ongoing manufacturing efficiencies, resulted in improved gross margins
during the year.
With its unique manufacturing process, CooperVision can also provide specialty
contact lenses for patients who are so severely near- or farsighted that most
manufacturers cannot economically supply them with lenses. This is a small, but,
from the practitioner's point of view, important group of patients for
CooperVision to service. This segment plus the toric lens segment comprises
approximately 70% of CooperVision's business.
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Regarding the upcoming year, Bender, who is also President of CooperVision,
said, "We expect double-digit growth to continue in our contact lens business as
we grow our share of the toric market and enter into relationships with
potential Asian and European partners. In fact, we are nearing completion of a
strategic marketing alliance with a Japanese partner which should be announced
shortly and expect European affiliations by the second quarter of fiscal 1997.
In addition, we plan to add three new specialty lenses to our product line
during the year."
CooperSurgical
CooperSurgical's sales during the fourth quarter were $5.1 million, up 52% over
the comparable period last year, and up 34% to $17.2 million for the year. The
gynecology product line grew about 50% during 1996, due primarily to sales of
the Unimar'r' and Blairden RUMI'tm' products acquired in April 1996 and June
1995, respectively, and continued growth in its LEEP line of disposable surgical
instruments. CooperSurgical's sales mix continues to shift toward its gynecology
product line, which now accounts for approximately 90% of its sales. For the
year, CooperSurgical generated operating income of $1.7 million compared with a
loss of $425 thousand for 1995.
Nicholas J. Pichotta, President of CooperSurgical, said, "Our solid growth in
1996 has further strengthened our franchise in the women's healthcare segment.
We plan to continue to advance our leadership position through the acquisition
of well established, quality product offerings, strategic alliances with
technology development companies and internally developed new products.
During 1996, we purchased Unimar and introduced six internally developed
products. The recent clearance by the Food and Drug Administration of the
KOH'tm' Colpotomizer will further expand the use of The RUMI Systemo. In 1997 we
plan to expand our specialized gynecological sales organization as we complete
acquisitions and launch new products. We believe that CooperSurgical is well
positioned for continued growth in women's healthcare."
Hospital Group of America
Hospital Group of America (HGA), the Company's psychiatric services business,
reported fourth quarter revenue of $12.4 million compared with $9.9 million in
the fourth quarter of 1995, a gain of 26%. For the year, revenue grew 3% to $43
million, but is up 6% when revenue from a hospital
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contract which expired in May of 1995 is eliminated from the comparison. In each
of the three quarters of 1996 following the transition of the physicians' group
at Hampton Hospital, HGA's revenue showed improving growth rates compared with
the comparable quarters in 1995. As shown in the table below of selected
statistical information for HGA, increased patient visits to outpatient and day
treatment programs have helped offset pressure on revenue resulting from
declining average length of stay, with inpatient admissions growing
substantially during the fourth quarter.
HGA is scheduled to open a residential treatment center in Kouts, Indiana, in
March 1997, to support its nearby Hartgrove Hospital. The new center is a
subacute facility for intermediate-term care that provides stepped-down,
cost-effective treatment for adolescent patients.
HOSPITAL GROUP OF AMERICA
SELECTED STATISTICAL INFORMATION
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<CAPTION>
3 Months Ended October 31, 12 Months Ended October 31,
1996 1995 % Change 1996 1995 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Licensed inpatient beds 269 269 -- 269 269 --
Inpatient admissions 1,506 1,074 40% 5,353 4,782 12%
Total inpatient days 17,639 14,318 23% 63,918 62,558 2%
Average length of stay (days) 11.4 13.1 -13% 11.9 12.9 -8%
Total outpatient visits 10,129 7,064 43% 44,605 27,561 62%
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Tax Benefits
In the fourth quarter of fiscal 1996, the Company recognized an income tax
benefit of $4.1 million, or 35 cents per share, from reducing the valuation
allowance that, as prescribed by generally accepted accounting principles
(GAAP), had been established to offset its net deferred tax assets. These assets
consist primarily of the tax benefit of approximately $234 million of net
operating loss carryforwards. Among other criteria, GAAP requires a strong
earnings history to recognize all or part of this benefit. Recent earnings have
met this criterion, so in fiscal 1996 the allowance was reduced, resulting in an
increase to earnings of $4.1 million, or 35 cents per share, during the year.
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Assuming continued earnings growth in 1997, we plan to reduce further the
valuation allowance and realize additional tax benefits.
Forward-Looking Statements
This press release contains projections and other forward-looking statements of
the Company's results and prospects. Actual results could differ materially from
these projections. Additional information concerning factors that could cause
material differences can be found in the Company's periodic filings with the
Securities and Exchange Commission. These are available publicly and on request
from the Company's investor relations department.
The Cooper Companies, Inc. and its subsidiaries develop, manufacture and market
specialty healthcare products and provide psychiatric services. CooperVision,
Inc., headquartered in Irvine, Calif., with additional manufacturing facilities
in Huntington Beach, Calif., Rochester, N. Y., and Ontario and Quebec, Canada,
markets a broad range of contact lenses for the vision care market.
CooperSurgical, Inc., headquartered in Shelton, Conn., markets diagnostic and
surgical instruments and accessories for the gynecological market. Hospital
Group of America, Inc. provides psychiatric services through hospitals and
satellite locations in New Jersey, Delaware and Illinois.
NOTE: An interactive telephone system that provides stock quotes, recent press
releases and financial data about the Company may be reached toll free at
1-800-334-1986. Press releases and selected financial data are also available on
the worldwide web at businesswire.com and researchmag.com.
FINANCIALS FOLLOW
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(In thousands, except per share figures)
(Unaudited)
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<CAPTION>
Three Months Ended Years Ended
October 31, October 31,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales of products $ 18,779 $ 14,973 $ 66,118 $ 55,296
Net service revenue 12,457 9,864 43,013 41,794
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Net operating revenue 31,236 24,837 109,131 97,090
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Cost of products sold 5,659 4,610 19,911 17,549
Cost of services provided 11,071 9,977 40,235 40,454
Selling, general and administrative
expense 8,090 5,551 29,717 25,826
Research and development expense 289 407 1,176 2,914
Costs associated with restructuring
operations -- 1,480 -- 1,480
Amortization of intangibles 532 226 1,249 859
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Income from operations 5,595 2,586 16,843 8,008
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Provision for (benefit of) settlements
of disputes -- 5,031 (223) 3,532
Interest expense 1,347 1,269 5,312 4,741
Other income, net 177 53 361 495
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Income (loss) before income taxes 4,425 (3,661) 12,115 230
Provision for (benefit of) income taxes (4,048) (76) (4,488) 115
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Net income (loss) $ 8,473 $ (3,585) $ 16,603 $ 115
========= ========= ========= =========
Earnings (loss) per share $ 0.72 $ (0.31) $ 1.41 $ 0.01
========= ========= ========= =========
Average number of common
shares used to compute
earnings (loss) per share 11,820 11,535 11,761 11,576
========= ========= ========= =========
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
October 31, October 31,
1996 1995
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ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,837 $ 11,207
Trade receivables, net 21,650 17,717
Inventories 10,363 9,570
Deferred tax asset 953 --
Other current assets 2,692 2,734
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Total current assets 42,495 41,228
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Property, plant and equipment, net 34,674 34,062
Intangibles, net 21,468 14,933
Deferred tax asset 3,195
Other assets 1,077 1,769
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$ 102,909 $ 91,992
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt $ 844 $ 2,288
Notes payable -- 1,025
Other current liabilities 32,464 36,300
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Total current liabilities 33,308 39,613
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Long-term debt 47,920 43,490
Other liabilities 6,351 10,638
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Total liabilities 87,579 93,741
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Common stock, $.10 par value 1,167 1,158
Additional paid-in capital 184,300 183,840
Translation adjustments (326) (333)
Accumulated deficit (169,811) (186,414)
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Total stockholders' equity (deficit) 15,330 (1,749)
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$ 102,909 $ 91,992
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