<PAGE>
================================================================================
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): August 26, 1999
THE COOPER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<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)
(925) 460-3600
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS.
On August 26, 1999, The Cooper Companies, Inc. (the "Company") issued a press
release announcing its third quarter fiscal year 1999 financial results and that
it had declared a quarterly cash dividend on its common stock of 2 cents per
share, payable on October 5, 1999 to stockholders of record on September 15,
1999. This release is filed as an exhibit hereto and is incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
99.1 Press Release dated August 26, 1999 of The Cooper Companies, Inc.
</TABLE>
<PAGE>
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: August 27, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------- -------------
<S> <C> <C>
99.1 Press Release dated August 26, 1999 of The Cooper
Companies, Inc.
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as ........................... 'TM'
The registered trademark symbol shall be expressed as ................ 'r'
<PAGE>
[LETTERHEAD OF THE COOPER COMPANIES]
CONTACT:
NORRIS BATTIN
[email protected]
FOR IMMEDIATE RELEASE
THE COOPER COMPANIES REPORTS THIRD QUARTER 1999 RESULTS
EARNINGS PER SHARE UP 59%
COOPERVISION NOW U.S. TORIC MARKET LEADER
IRVINE, Calif., August 26, 1999 -- The Cooper Companies, Inc. (NYSE/PCX: COO)
today reported results for its third fiscal quarter ended July 31, 1999.
Earnings per share from continuing operations increased 59% to 46 cents versus
a comparable fully taxed pro forma 29 cents for the quarter a year earlier.
Revenue of $43.4 million, was 9% ahead of the third quarter of 1998. Operating
income grew 16% to $10.9 million.
Cash flow per share from continuing operations (pretax income plus depreciation
and amortization) was 81 cents, up 42% versus the third quarter of 1998, and
$1.90 per share for the nine months of fiscal 1999, up 23%. The third quarter's
effective tax rate was 32%.
THIRD QUARTER HIGHLIGHTS
CooperVision (CVI) Revenue and Market Share
"CVI's worldwide core contact lens business - all revenue except our lower
margin OEM sales to other contact lens manufacturers - continues to outpace the
global contact lens market," said A. Thomas Bender, Cooper's chief executive
officer and CVI president.
"For both the third quarter and the nine months of this fiscal year, our core
revenue grew 15%, well ahead of the estimated 5% global market growth. Our U.S.
revenue, about two-thirds of our worldwide contact lens business, grew a healthy
22% during the quarter."
<PAGE>
"OEM sales of $1.7 million in the quarter were down 36% year to year," Bender
added, "and I expect that they will continue to decline going forward. This will
improve gross margins."
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
COOPERVISION REVENUE ANALYSIS
- --------------------------------------------------------------------------------------------------
Segment Third Quarter % Total % Change from Nine % Total % Change from
1999 Third Quarter Months Nine Months
1998 1999 of 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. $22.5 63% 22% $59.1 60% 16%
International 11.7 32% 3% 32.5 33% 12%
----- --- ---- ----
Core Business 34.2 95% 15% 91.6 93% 15%
OEM 1.7 5% -36% 6.8 7% 15%
----- --- ---- ----
Total $35.9 100% 11% $98.4 100% 15%
===== ==== ===== ====
- --------------------------------------------------------------------------------------------------
</TABLE>
CVI's core product sales in the U.S. grew 22% in the third quarter and 16%
through nine months in a market that grew an estimated 1% during the first half
of the calendar year as indicated by the contact lens industry market research
audit for the second calendar quarter. CVI believes that through nine months, it
gained one market share point in the U.S. to 8 percent. International core
revenue--sales in countries outside the United States plus exports from the
U.S.--grew 3% during the quarter and 12% over the nine-month period a year ago.
"We believe," said Bender, "that CVI leads all manufacturers of toric contact
lenses in the U.S. with over 27% of the total toric market. CVI's total U.S.
toric lens business grew 24% both in the third quarter and for the nine months,
more than three times the calendar six-months toric market growth reported in
the latest market audit."
Toric lenses account for most of the growth in today's U.S. contact lens market.
The disposable-planned replacement segment continues to be its fastest growing
category, up about 16% through the first six months of 1999. During the third
quarter, CVI's disposable-planned replacement toric products grew 38% in the
U.S. as Preference Toric, CVI's premium toric brand, and Frequency 55 Toric,
positioned at a lower price point, both showed strong results. Year to date,
this business has grown 39% and CVI believes that it leads this sub-market with
about 35% of the revenue generated. Toric lenses accounted for about 18% of all
U.S. contact lens revenue in the six-month period versus 17% at the same time
last year.
U.S. sales of all disposable-planned replacement lenses--torics and spheres
together--grew about 8% and are up about 4% through the first six calendar
months, according to the latest market research audit. Sales of all of CVI's
disposable-planned replacement lenses in the U.S.-- including its new Frequency
55 spherical lens--grew 43% over last year's third quarter. This sharply exceeds
their 26% year-to-year growth in the second fiscal quarter and is 36% ahead for
the nine months.
<PAGE>
CVI's revenue from disposable-planned replacement lenses and toric lenses--the
two fastest growing segments of the U.S. contact lens business--now represents
86% of its U.S. business versus 82% in the previous quarter.
"CVI's new product pipeline for the U.S. looks extremely promising," said
Bender. "We expect to launch the Frequency Aspheric lens, a lens with an optical
design that can enhance visual clarity in selected patients, and our new cast
molded toric product before the end of this calendar year. In addition, clinical
trials continue on a high performance planned replacement bifocal which, if
successful, could be on the market during 2000."
In CVI's international markets, Canada and Italy performed well in the third
quarter, and the rollout of new products continued in Europe. These include
CVI's line of toric lenses, the Frequency Aspheric lens and Frequency 55 UV,
which contains an ultra violet light blocking agent. In Japan, CVI's partner,
Rohto Pharmaceuticals, Inc., launched CVI spherical and toric lenses under the
Rohto i.Q trade name. With the exception of the United Kingdom where business is
sluggish, CVI believes that it is gaining market share in each of the world's
top ten contact lens markets.
CooperVision Margins
CVI's gross margin in the third quarter was 67%, up from 65% in the second
quarter and 60% at the end of fiscal 1998. CVI expects that unit manufacturing
costs for both toric and spherical lenses will continue to decline and trend
even lower during the fourth fiscal quarter. Gross margins improved as the sales
mix shifted toward higher margin toric lenses and away from lower margin OEM
sales while cost reductions continue at CVI's U.K. manufacturing facility. Over
the past nine months, the cost per lens manufactured in the U.K. declined 23% as
unit volume grew 27%.
CooperSurgical (CSI)
At Cooper's women's healthcare business, CooperSurgical, third quarter revenue
grew 4% and is up 5% year to date. During the third quarter, CSI gross margins
improved to 56% from 55% last year and operating income, without the heavy new
product introduction expenses in last year's third quarter, recovered to 17% of
revenue.
In July, CSI announced that it had agreed with 3M (NYSE: MMM) and Matria
Healthcare Inc. (NASDAQ: MATR) to co-market its FemExam pH and Amines Test Card
in the United States, and that the American Medical Association had awarded the
FemExam Card an additional third party reimbursement code. The FemExam Card is
an accurate, convenient point of care diagnostic test used to help determine if
a vaginal infection is bacterial or fungal. In early August, CSI and BioStar,
Inc., a Thermo Electron Corporation (NYSE: TMO) subsidiary, agreed to co-market
three additional in-office tests for vaginitis. All four tests are being
developed under CSI's licensing agreement with Litmus Concepts, Inc., an
emerging in vitro diagnostic company. In the United States, vaginitis accounts
for 13 million physician office visits and about 10 million clinic visits.
<PAGE>
BUSINESS UNIT P&L HIGHLIGHTS ($'S IN MILLIONS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Three Months Ended July 31, 1999
- ---------------------------------------------------------------------------------------------------
Revenue Operating Income
- ---------------------------------------------------------------------------------------------------
% % % Revenue % Revenue
1999 1998 Inc. 1999 1998 Inc. 1999 1998
---- ---- --- ---- ---- --- ---- ----
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CVI $35.9 $32.5 11% $11.4 $10.7 6% 32% 33%
CSI 7.5 7.2 4% 1.3 .3 387% 17% 4%
----- ----- ----- -----
Subtotal 43.4 39.7 9% 12.7 11.0 15% 29% 28%
HQ Expense - - (1.8) (1.6) 13%
----- ----- ----- -----
- ---------------------------------------------------------------------------------------------------
TOTAL $43.4 $39.7 9% $10.9 $ 9.4 16% 25% 24%
===== ===== ===== =====
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Nine Months Ended July 31, 1999
- ---------------------------------------------------------------------------------------------------
Revenue Operating Income
- ---------------------------------------------------------------------------------------------------
% % % Revenue % Revenue
1999 1998 Inc. 1999 1998 Inc. 1999 1998
---- ---- --- ---- ---- --- ---- ----
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CVI $ 98.4 $ 85.8 15% $27.9 $26.2 6% 28% 31%
CSI 21.7 20.7 5% 3.0 1.9 63% 14% 9%
----- ----- ----- -----
Subtotal 120.1 106.5 13% 30.9 28.1 10% 26% 26%
HQ Expense - - (4.5) (5.0) (10%)
----- ----- ----- -----
- ---------------------------------------------------------------------------------------------------
TOTAL $120.1 $106.5 13% $26.4 $23.1 14% 22% 22%
===== ===== ===== =====
- ---------------------------------------------------------------------------------------------------
</TABLE>
GLOBAL TAX PLAN
In the fourth quarter of fiscal 1998, Cooper recorded a large tax benefit,
reflecting the remaining anticipated value of its $184 million of NOLs. As a
result, Cooper now reports earnings as if it were a taxpayer with no NOLs.
Cooper has implemented a global tax plan to minimize both the taxes reported in
its income statement and the cash taxes paid when it fully uses the benefits of
the NOLs. Based on a preliminary assessment, Cooper expects to reduce its
effective tax rate to approximately 30% over the next several years compared
with 33% estimated for fiscal 1999. This plan could possibly extend the cash
flow benefits of the NOLs through 2003, assuming no acquisitions or stock
issuances. During this period, Cooper expects to pay cash taxes of approximately
10% of pretax profits.
EARNINGS PER SHARE
All earnings per share figures in this report are diluted per share amounts.
<PAGE>
DIVIDEND
Consistent with its plan to pay annual dividends of 8 cents per share, the
Company today declared a quarterly dividend of 2 cents per share, payable on
October 5, 1999 to stockholders of record on September 15, 1999.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995 including statements about
Cooper's capital resources, anticipated revenue growth, operating results and
market conditions. Since the outcome of forward-looking statements is uncertain,
risky and, indeed, may not occur, investors should not rely on them to predict
the future.
To identify forward-looking statements, look for words like "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates" or "anticipates", and similar words or phrases. Discussions
of strategy, plans or intentions often contain forward-looking statements. These
necessarily depend on assumptions, data or methods that may be incorrect or
imprecise.
Events, among others, that could cause actual results and future actions to
differ materially from those described by or contemplated in the forward-looking
statements include but are not limited to major changes in business conditions
and the economy, loss of key senior management, major disruptions in the
operations of Cooper's manufacturing facilities, new competitors or
technologies, significant disruptions caused by third parties failing to address
the year 2000 issue or by unforeseen delays in completing our year 2000
compliance program.
Additional events include acquisition integration costs, foreign currency
exchange exposure including the potential impact of the Euro, investments in
research and development and other start-up projects, dilution to earnings per
share from acquisitions or issuing stock, regulatory issues, significant
environmental clean-up costs above those already accrued, litigation costs,
costs of business divestitures, and other factors described in Cooper's
Securities and Exchange Commission filings, including the "Business" section in
our Annual Report on Form 10-K for the year ended October 31, 1998.
Cooper cautions investors not to rely unduly on forward-looking statements. They
reflect our analysis only on their stated date or the date of this press
release.
The Cooper Companies, Inc. and its subsidiaries develop, manufacture and market
specialty healthcare products. CooperVision, Inc., headquartered in Irvine,
Calif., with manufacturing facilities in Huntington Beach, Calif., Rochester,
N.Y., Toronto, Canada and Hamble, England, markets a broad range of contact
lenses for the vision care market. CooperSurgical, Inc., headquartered in
Shelton, Conn., markets diagnostic products, surgical instruments and
accessories for the gynecological market. Corporate offices are located in
Irvine and Pleasanton, Calif. A toll free interactive telephone system at
1-800-334-1986 provides stock quotes, recent press releases and financial data.
Cooper's Internet address is www.coopercos.com.
<PAGE>
NOTE: CONSISTENCY IN REPORTING COOPER'S COMPARATIVE EARNINGS PER SHARE DATA
In fiscal 1998, Cooper declared its mental health services business, Hospital
Group of America, a discontinued operation. It also accounted for the remaining
tax benefits that it expects from its existing net operating loss carryforwards
and will, going forward, provide for income taxes rather than receive tax
benefits. To avoid confusion, comparisons of Cooper's results from fiscal 1998
to fiscal 1999 and comparisons versus published estimates must be reported on a
consistent basis. The table below shows diluted earnings per share from
continuing operations on both a pretax and pro forma after-tax basis for the
second quarter of fiscal 1999, the third quarter of fiscal 1999 and against the
consensus analysts' estimates published by First Call Corporation on August 17,
1999, and the third quarter of fiscal 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
THE COOPER COMPANIES, INC.
EPS COMPARISONS
FROM CONTINUING OPERATIONS
- ------------------------------------------------------------------------------------------
2Q 1999 3Q 1999 3Q 1998
- ------------------------------------------------------------------------------------------
Reporting Basis Actual Actual Analysts' Consensus Variance Actual
--------------- ------ ------ ------------------- -------- ------
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pre-tax $.56 $.68 $.68 -- $.48
- ------------------------------------------------------------------------------------------
After-tax $.38 $.46 $.45 $.01 $.29*(1)
- ------------------------------------------------------------------------------------------
*Pro forma
</TABLE>
(1) For 1998, we calculated pro forma after-tax income by taxing income from
continuing operations at 40% as if Cooper could not benefit from its net
operating loss carry forwards. 1999 actual figures do not require this
adjustment.
Frequency 55'r', Preference'r' and Cerveillance'r' are registered trademarks of
The Cooper Companies, Inc. FemExam'r' pH and Amines TestCard System'TM' is a
registered trademark of Litmus Concepts, Inc.
[FINANCIAL STATEMENTS FOLLOW]
<PAGE>
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(In thousands, except per share figures)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 43,404 $ 39,709 $ 120,106 $ 106,543
Cost of sales 15,116 14,873 43,706 39,177
--------- --------- --------- ---------
Gross profit 28,288 24,836 76,400 67,366
Selling, general and administrative expense 16,041 13,960 45,812 40,218
Research and development expense 398 512 1,301 1,511
Amortization of intangibles 954 932 2,866 2,544
--------- --------- --------- ---------
Operating income 10,895 9,432 26,421 23,093
--------- --------- --------- ---------
Settlements of disputes, net -- 200 -- 200
Interest expense 1,322 1,532 4,933 4,454
Other income (loss), net 54 (271) 125 757
--------- --------- --------- ---------
Income from continuing operations before
income taxes 9,627 7,429 21,613 19,196
Provision for (benefit of) income taxes 3,081 (910) 7,132 (1,864)
--------- --------- --------- ---------
Income from continuing operations 6,546 8,339 14,481 21,060
Discontinued operations:
Net income (loss) -- 1,835 129 3,590
Gain on disposal -- -- 2,970 --
--------- --------- --------- ---------
-- 1,835 3,099 3,590
--------- --------- --------- ---------
Net income $ 6,546 $ 10,174 $ 17,580 $ 24,650
========= ========= ========= =========
Diluted earnings per share:
Continuing operations $ 0.46 $ 0.54 $ 1.01 $ 1.37
Discontinued operations -- 0.12 0.22 0.23
--------- --------- --------- ---------
Earnings per share $ 0.46 $ 0.66 $ 1.23 $ 1.60
========= ========= ========= =========
Number of shares used to compute
earnings per share: 14,194 15,342 14,318 15,378
========= ========= ========= =========
Memo diluted per share data from
continuing operations:
Income before income taxes $ 0.68 $ 0.48 $ 1.51 $ 1.25
========= ========= ========= =========
Net income (1998 is pro forma) $ 0.46 $ 0.29(1) $ 1.01 $ 0.75(1)
========= ========= ========= =========
Cash flow(2) $ 0.81 $ 0.57 $ 1.90 $ 1.54
========= ========= ========= =========
</TABLE>
(1) Income from continuing operations has been tax effected at 40% as if the
Company could not benefit from its net operating loss carry forwards. The
40% tax rate was applied to the 1998 periods' income from continuing
operations before income taxes to arrive at pro forma net income. No
adjustments to 1999 figures were required.
(2) Defined as pretax income from continuing operations plus depreciation and
amortization.
<PAGE>
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 31, October 31,
1999 1998
--------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,726 $ 7,333
Trade receivables, net 26,572 24,426
Inventories 34,953 30,349
Deferred tax asset 15,094 15,057
Net assets of discontinued operations -- 29,206
Other current assets 8,269 9,706
-------- --------
Total current assets 96,614 116,077
-------- --------
Property, plant and equipment, net 38,469 34,234
Intangibles, net 81,527 84,308
Deferred tax asset 57,224 52,754
Other assets 8,135 8,668
-------- --------
$281,969 $296,041
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 5,517 $ 11,570
Other current liabilities 41,084 35,131
-------- --------
Total current liabilities 46,601 46,701
-------- --------
Long-term debt 56,496 78,677
Other liabilities 22,709 25,410
-------- --------
Total liabilities 125,806 150,788
-------- --------
Stockholders' equity 156,163 145,253
-------- --------
$281,969 $296,041
======== ========
</TABLE>
