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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 1998
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)
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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 February 25, 1998, The Cooper Companies, Inc. (the "Company") issued a press
release announcing its first quarter fiscal year 1998 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 February 25, 1998 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
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Stephen C. Whiteford
Vice President and
Corporate Controller
(Principal Accounting Officer)
Dated: February 25, 1998
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EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------
99.1 Press Release dated February 25, 1998 of The Cooper
Companies, Inc.
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[COOPER COMPANIES LETTERHEAD]
NEWS RELEASE The Cooper Companies, Inc.
10 Faraday
Irvine, CA 92618
(714) 597-4700
(888) 822-2660
(714) 597-0662-Fax
CONTACT:
Norris Battin
The Cooper Companies, Inc.
(714) 597-4700 or (888) 822-2660
(714) 673-4299 (Home)
E-mail: [email protected]
FOR IMMEDIATE RELEASE
- ---------------------
COOPER COMPANIES ANNOUNCES FIRST QUARTER RESULTS
------------------------------------------------
Earnings Per Share Before Net Tax Benefit Up 50% to 36 Cents on 51% Revenue Gain
CooperVision and CooperSurgical Expand Product Lines
- --------------------------------------------------------------------------------
IRVINE, Calif., February 25, 1998 -- The Cooper Companies, Inc.
(NYSE/PCX: COO) today reported results for its first fiscal quarter ended
January 31, 1998.
Revenue, at $42.8 million, was 51% above the first quarter of 1997.
Income from operations was $5.9 million, up 44%. Diluted earnings per share were
39 cents compared with 28 cents in the first quarter of 1997. Before net tax
benefits of 3 cents per share, diluted earnings per share increased 50% to 36
cents from 24 cents before 4 cents per share in net tax benefits in 1997's first
quarter. Per share amounts for 1997 have been restated to reflect the required
adoption in the first quarter of fiscal 1998 of Statement of Financial
Accounting Standards No. 128, "Earnings per Share."
Commenting on operating results, A. Thomas Bender, president and chief
executive officer, said, "The first quarter's results showed strong revenue
performance in all three of our businesses with CooperVision's 87% increase
reflecting our acquisition of Aspect Vision and continued strong growth in our
U. S. planned replacement contact lens business. HGA's revenue growth exceeded
expectations, despite lower Medicare reimbursement rates that hurt margins. I'm
also pleased with the new product development at CooperVision and
CooperSurgical. The addition of several new products will further accelerate our
performance during the year and in the future.
"Although we had exceptional operating income growth of 44%, it did not
match our 51% revenue growth for two principal reasons. First, the level of
lower margin Aspect Vision sales in CooperVision's overall sales mix was
somewhat greater than expected. Second, HGA felt the impact of government
mandated Medicare rate reductions under the Tax Equity and Financial
Responsibility Act of 1982 (TEFRA) and Hampton Hospital, HGA's main source of
Medicare revenue, had greater than anticipated Medicare volume. Going forward,
we
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expect HGA's operating income to grow in line with revenue as management
increases the efficiency of medical service integration during psychiatric
hospitalization and our higher margin management services business begins to
gain a larger share of HGA's total revenue."
Business Unit Results
P&L OPERATING HIGHLIGHTS BY BUSINESS UNIT
Quarter Ended January 31,
($'s in millions)
Revenue Operating Income
- --------------------------------- -------------------------------------------
% % %Revenue %Revenue
1998 1997 Inc. 1998 1997 Inc. 1998 1997
---- ---- ---- ---- ---- ---- ---- ----
CVI $22.9 $12.2 87% $5.9 $4.4 35% 26% 36%
CSI 6.5 4.8 36% 0.8 0.4 85% 12% 9%
HGA 13.4 11.4 19% 0.7 0.6 11% 5% 5%
----- ----- ---- ----
Subtotal 42.8 28.4 51% 7.4 5.4 36% 17% 19%
----- ----- ---- ----
HQ expense (1.5) (1.3) n/a
---- ----
TOTAL $42.8 $28.4 51% $5.9 $4.1 44% 14% 14%
===== ===== ==== ====
CooperVision
CVI sales grew 87% over the first quarter of 1997 and include $6.1
million from Aspect Vision, the British contact lens manufacturer that the
Company acquired last December. Without Aspect, CVI sales grew 37%. Aspect's
earnings were not accretive during the first quarter but are expected to add to
earnings during the remainder of the year.
CVI's planned replacement/disposable lenses, including Aspect's
products, now represent 52% of its total lens business and grew more than 50%
during the quarter on a worldwide basis. Planned replacement is the fastest
growing segment of the worldwide contact lens market.
CVI introduced two new products in the United States at the end of the
quarter:
Alliance Toric, a high quality, custom manufactured, deposit resistant
lens
Frequency 55, CVI's first entry into the semimonthly/monthly planned
replacement spherical lens segment, the largest segment of the
domestic contact lens market. Frequency 55 was developed by Aspect
Vision and represents an improvement in patient comfort due to its
superior edge design.
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Later this spring CVI plans to introduce the Frequency 55 toric line of
frequent replacement lenses designed for semimonthly or monthly disposability.
CVI believes that it will be the first company to achieve national distribution
with this modality.
CVI also announced that it has received ISO 9001 and CE mark approval
for its manufacturing facilities ahead of the June 1998 deadline required for
sales of its products in Common Market countries.
CooperSurgical
CooperSurgical sales grew 36% over last year's first quarter as sales
from internally developed new products and from the acquisitions of Unimar and
Marlow Surgical Technologies continued strong.
Recently, CSI has made significant progress with its new product
portfolio announcing:
Clearance from the U. S. Food and Drug Administration to market its
Cerveillance Scope, the first in a planned series of products using
digital imaging and proprietary software to provide enhanced
visualization and documentation in examinations of the cervix. The
Cerveillance Scope is a fully integrated compact colposcope, an
optical device used to examine the vagina and the cervix. It refines
image capture, enhancement and analysis allowing measurement of lesion
size and documentation of cervical changes over time.
An agreement to purchase for $10 million a 10% equity position in
Litmus Concepts, Inc. (LCI) and the exclusive North American license
rights for the women's healthcare professional market to four novel,
patented diagnostic tests that comprise the FemExam(R) Vaginal Fluid
TestCard(TM) System. These tests, designed for use primarily in the
physician's office, rapidly and economically screen and diagnose
common vaginal infections such as bacterial vaginosis, yeast and
trichomonasis. They are designed to replace current testing practices
that are difficult, costly and inconvenient to perform. The potential
U. S. market for vaginitis tests is estimated at 125 million annually.
CSI expects that, over the next three to five years, these products
will add a cumulative total of between $30 and $50 million to its
revenue.
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In addition, CSI has recently introduced two new products that further
its strategy to consolidate, integrate and build critical mass in the women's
healthcare market:
Hyskon (32% dextran 70), a clear, viscous solution currently used to
distend the uterus during diagnostic and surgical procedures, was
acquired for cash and added to the CSI product line. CSI expects
Hyskon to add approximately $1.5 million to CSI's annual revenue and
be accretive to earnings in its first twelve months. Hyskon can be
used safely at low pressures for longer periods of time and with
greater visual clarity than competitive media can.
The CooperSurgical Infrared Coagulator, a device that creates infrared
energy for contact coagulation of condylomas, received FDA clearance.
Infrared coagulation is a simple, safe, rapid and exact technique that
causes no scaring. It can be used on an outpatient basis without
special training of physicians or nurses. CSI expects this device to
add approximately $3.0 to $5 million in cumulative revenue over the
next three to five years.
These new CSI products will be featured at the meeting of the American
College of Obstetricians and Gynecologists in May.
Hospital Group of America
HOSPITAL GROUP OF AMERICA
SELECTED STATISTICAL INFORMATION
Three months ended January 31,(1)
1998 1997 % Chg
---- ---- -----
Licensed inpatient beds 319(2) 269 19%
Inpatient admissions 1,733 1,454 19%
Total inpatient days 21,519 16,445 31%
Average length of stay 11.7 11.2 4%
(days)
Total outpatient visits 14,526 12,109 20%
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(1) Data is for HGA owned hospitals only
(2) The Midwest Center for Youth and Families opened in April 1997
adding 50 beds
HGA revenue grew 19% over last year's first quarter reflecting a 19%
increase in inpatient admissions, a 20% rise in outpatient visits and a
stabilized length of stay compared with last year's first quarter. Operating
income growth, however, was held to 11% compared with last year's first quarter
as greater than anticipated incremental Medicare inpatient volume met with
reduced reimbursement under TEFRA, which established a cap on the TEFRA target
amount per Medicare discharge. Hampton Hospital, which receives the majority of
HGA's Medicare reimbursement, felt the greatest impact from these lower rates
during the quarter.
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HGA's Management Service Division now has eight agreements to manage
psychiatric programs in acute care hospitals around the country. Recently,
agreements were signed with the Orange County Community Hospital in California
and with two hospitals in the Columbia HCA system in the Chicago area.
Forward-Looking Statements
Statements in this press release that are not based on historical fact
may be "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements use forward-looking terminology
such as "may", "will", "expect", "estimate", "anticipate", "continue" or similar
terms.
Actual results could differ materially from those contained in the
forward-looking statements due to: major changes in business conditions and the
economy in general, loss of key members of senior management, prolonged
disruption in the operations of the Company's manufacturing facilities or
hospitals, inroads by new competitors or technologies, costs to integrate
acquisitions, potential foreign exchange exposure, decisions to invest in
research and development and other start-up projects, dilution to earnings per
share associated with acquisitions or stock issuances, regulatory issues,
unexpected changes in reimbursement rates and payor mix, environmental clean-up
costs above those already accrued, litigation, decisions to divest businesses
and factors listed from time to time in the Company's SEC reports, including the
section entitled "Business" in the Company's Annual Report on Form 10-K for the
year ended October 31, 1997.
The Cooper Companies, Inc. and its subsidiaries develop, manufacture and
market specialty healthcare products and services. Corporate offices are located
in Irvine and Pleasanton, Calif. CooperVision, Inc., headquartered in Irvine,
Calif., with manufacturing facilities in Huntington Beach, Calif., Rochester,
N.Y., Toronto, Canada and Southampton, England, markets a broad range of contact
lenses for the vision care market. CooperSurgical, Inc., headquartered in
Shelton, Conn., markets diagnostic and surgical instruments, equipment and
accessories for the gynecological market. Hospital Group of America, Inc.
provides psychiatric services through facilities in Delaware, Illinois, Indiana
and New Jersey and satellite locations.
NOTE: A toll free interactive telephone system at 1-800-334-1986
provides stock quotes, recent press releases and financial data. The Company's
website address is www.coopercos.com.
Alliance, Frequency, Hyskon, RUMI, Cerveillance System and Cerveillance
Scope are trademarks of The Cooper Companies, Inc., its subsidiaries or
affiliates.
[FINANCIALS FOLLOW]
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(In thousands, except per share figures)
(Unaudited)
Three Months Ended
January 31,
------------------------
1998 1997
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Net sales of products $ 29,384 $ 17,027
Net service revenue 13,454 11,349
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Net operating revenue 42,838 28,376
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Cost of products sold 11,277 5,031
Cost of services provided 12,770 10,682
Selling, general and administrative expense 11,661 7,946
Research and development expense 456 324
Amortization of intangibles 763 288
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Income from operations 5,911 4,105
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Interest expense 1,150 1,229
Other income, net 795 20
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Income before income taxes 5,556 2,896
(Benefit of) income taxes (437) (414)
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Net income $ 5,993 $ 3,310
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Earnings per share:
Basic $ 0.40 $ 0.28*
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Diluted $ 0.39 $ 0.28*
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Number of shares used to compute earnings
per share:
Basic 14,808 11,676*
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Diluted 15,354 11,920*
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Memo diluted earnings per share data:
Income before income taxes $ 0.36 $ 0.24
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* Restated to reflect per share amounts in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share," adopted by the
Company in the first quarter of fiscal 1998.
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
January 31, October 31,
1998 1997
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ASSETS
Current assets:
Cash and cash equivalents $ 8,757 $ 18,249
Trade receivables, net 38,084 27,469
Inventories 26,200 15,096
Other current assets 10,140 7,755
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Total current assets 83,181 68,569
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Property, plant and equipment, net 52,726 39,523
Intangibles, net 85,543 36,698
Other assets 30,165 30,508
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$ 251,615 $ 175,298
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 3,831 $ 447
Other current liabilities 39,526 33,170
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Total current liabilities 43,357 33,617
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Long-term debt 64,837 9,125
Other liabilities 24,641 21,023
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Total liabilities 132,835 63,765
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Stockholders' equity 118,780 111,533
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$ 251,615 $ 175,298
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