Cooper Companies Announces Second Quarter Results; Pretax EPS 52 Cents Versus 40 Cents; Revenue Up 54% As All Units Set Records; Medical Device Revenue Climbs 82%.IRVINE, Calif.--(BW HealthWire)--May 27, 1998--The Cooper Companies, Inc. (NYSE/PCX: COO) today reported results for its second fiscal quarter ended April 30, 1998. Revenue of $51.8 million was 54% above the second quarter of 1997. Income from operations was $9.6 million, up 53%. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 55 cents compared favorably with the 44 cents reported in the second quarter of 1997. Before net tax benefits of 3 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , diluted earnings per share was 52 cents compared with 40 cents before 4 cents per share in net tax benefits in 1997's second quarter. Commenting on operating results, A. Thomas Bender, president and chief executive officer, said, "With record revenue in each business unit, we exceeded consensus earnings expectations in the second quarter. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings for 1998's second quarter alone exceeded those for the first six months of 1997. "Our medical device businesses -- CooperVision (CVI CVI C (Language) Virtual Instrument CVI Clinical and Vaccine Immunology (journal) CVI Chronic Venous Insufficiency CVI Coastal Vulnerability Index CVI Canaan Valley Institute ) in contact lenses contact lenses contact npl → verres mpl de contact contact lenses contact npl → Kontaktlinsen pl contact lenses npl and CooperSurgical (CSI CSI Crime Scene Investigator CSI CompuServe, Inc. CSI Commodity Systems, Inc. CSI Commodity Systems Inc. (Boca Raton, FL) CSI Crime Scene Investigation (CBS TV show) CSI Christian Schools International ) in women's healthcare -- continued to generate strong results. While HGA's top line growth was on target, the TEFRA TEFRA (Tax Equity and Fiscal Responsibility Act of 1983) The law requiring federal income tax withholding on payments of dividend and interest to accounts without a certified tax identification number on file. See: W-9. caps for Medicare initiated in November continued to pressure its operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . This was more than offset by the 70% operating income growth in medical devices, and the Company's total operating income grew 53%. "During the past ninety days, we completed a number of key activities that are important to Cooper's future," Bender added. "CVI and CSI each launched three new products, positioning their businesses for continued rapid growth in their respective markets. In addition, I'm optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the significant progress we made toward developing a plan to exit our psychiatric business in a way that will maximize value for our shareholders." -0-
Business Unit Results
P&L OPERATING HIGHLIGHTS BY BUSINESS UNIT
($'s in millions)
Quarter Ended April 30,
Revenue Operating Income
%Revenue %Revenue
1998 1997 % Inc. 1998 1997 %Inc. 1998 1997
CVI $30.4 $14.9 105% $9.5 $5.6 70% 31% 37%
CSI 7.1 5.8 22% 0.8 0.5 72% 12% 8%
Medical 37.5 20.7 82% 10.3 6.1 71% 28% 29%
Devices
HGA 14.3 13.0 10% 1.2 1.6 (29)% 8% 12%
Business
Units 51.8 33.7 54% 11.5 7.7 49% 22% 23%
HQ Expense n/a n/a (1.9) (1.4) 35% n/a n/a
TOTAL $51.8 $33.7 54% $9.6 $6.3 53% 19% 19%
-0-
Six Months Ended April 30,
Revenue Operating Income
%Revenue %Revenue
1998 1997 %Inc. 1998 1997 %Inc. 1998 1997
CVI $53.3 $27.1 97% $15.5 $10.0 55% 29% 37%
CSI 13.5 10.5 28% 1.6 0.9 78% 12% 9%
Medical
Devices 66.8 37.6 77% 17.1 10.9 57% 26% 29%
HGA 27.8 24.4 14% 1.8 2.2 (18)% 7% 9%
Business
Units 94.6 62.0 52% 18.9 13.1 44% 20% 21%
HQ
Expense n/a n/a (3.4) (2.7) 24% n/a n/a
TOTAL $94.6 $62.0 52% $15.5 $10.4 49% 16% 17%
CooperVision During the second quarter, CVI posted record sales that more than doubled sales in the comparable period in 1997. Year to date, CVI revenue has grown 97%. Excluding Aspect Vision Care, the British contact lens contact lens, thin plastic lens worn between the eye and eyelid that may be used instead of eyeglasses. Actors, models, and others wear them for appearance, and athletes use them for safety and convenience. company acquired in December 1997, CVI revenue grew 46% in the second quarter and 42% year to date. "Aspect's revenue is meeting our expectations, growing more than 30% since Cooper acquired it," said Bender. "In the second quarter, Aspect's contribution to earnings more than offset the dilution in the first quarter and is expected to be accretive from here on out." Because of the addition of Aspect's lower margin spherical spher·i·cal adj. Having the shape of or approximating a sphere; globular. products, CooperVision's gross margin declined to 67% from 77% in last year's second quarter and to 66% from 77% for the year to date. "Aspect," Bender explained, "gives CooperVision the ability to compete effectively in the large and growing worldwide disposable-planned replacement segment of the market where margins have traditionally been lower. With the Aspect Vision acquisition, we have achieved greatly accelerated operating income growth -- 70% in the second quarter -- albeit with lower operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . "Investors should also understand that in our core toric tor·ic adj. Of, relating to, or shaped like a torus or part of a torus. lens business, gross margins are not currently under pressure and remain high, about 80%, and that by combining CooperVision North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Aspect Vision, we expect operating margins to improve as our disposable lens product unit volume increases." Sales of toric lenses to correct astigmatism astigmatism (əstĭg`mətĭz'əm), type of faulty vision caused by a nonuniform curvature in the refractive surfaces—usually the cornea, less frequently the lens—of the eye. now account for nearly 40% of CVI's worldwide business and more than 50% of its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. business. During the second quarter, toric sales in North America grew 49% over the comparable 1997 quarter and have increased 43% year to date: twice the rate of growth of the toric lens segment itself as measured by independent market research. The toric market, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. this same data, is the fastest growing segment of the North American market, growing over twice as fast as the spherical lens spherical lens n. Abbr. sph A lens in which all refracting surfaces are spherical. segment, and now accounts for about 20% of the total. Preference Toric continues to exceed expectations, with second quarter and year-to-date revenue growing 98% and 90% respectively over the 1997 periods. The Company believes that Preference Toric is the fastest growing brand in the worldwide contact lens market and expects that calendar 1998 sales will approach $30 million. In May, CVI introduced two new toric products: Hydrasoft Toric Options, a custom planned replacement toric lens for astigmatic a·stig·ma·tism n. A visual defect in which the unequal curvature of one or more refractive surfaces of the eye, usually the cornea, prevents light rays from focusing clearly at one point on the retina, resulting in blurred vision. patients who have complex correction requirements, and Frequency 55 Toric, a planned replacement lens designed for replacement at two-week or monthly intervals. Frequency 55 Toric is positioned to compete directly with the leading product in the lower priced segment of the toric market. In Europe, Aspect plans to begin marketing CVI's current line of toric products during the third quarter, and before the end of the calendar year will introduce a molded, disposable toric lens designed for two-week replacement. This lens will be manufactured using Aspect's patented UltraSync system, a technique that yields superior lens edges for maximum patient comfort and improved reproducibility. In North America, sales of CVI's brands of disposable-planned replacement spherical lenses grew 117% in the second quarter and 88% year to date, and now account for about 20% of its business there. Worldwide, including Aspect's brands, sales of CVI disposable-planned replacement spheres now account for more than one-third of CVI's business. In February, CVI introduced its Frequency 55 disposable-planned replacement sphere in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . In North America, disposable-planned replacement spherical lenses make up the largest contact lens market segment commanding, according to Company estimates, more than half of the $1.2 billion total. Together, sales of toric and planned replacement spherical lenses in North America grew 63% in the second quarter and 52% year to date. These sales comprise about 70% of CVI's North American revenue. Worldwide, CVI's Toric and disposable-planned replacement sphere lines now comprise more than three-fourths of its business. Commenting on the recent evolution of CVI's product mix Bender said, "I'm convinced that the future growth in the worldwide contact lens market will come from the toric and disposable-planned replacement sphere segments. We continue to gain share rapidly in both these market segments. Through new product and business development activities over the past two years, CooperVision is now the fastest growing major contact lens company in the world." CooperSurgical CSI's sales grew 22% over last year's second quarter to a record level as sales from internally developed new products and from the acquisitions of Unimar and Marlow Surgical Technologies continued strong. Revenue in women's healthcare products grew 27%. At this month's meeting of the American College of Obstetricians and Gynecologists The American College of Obstetricians and Gynecologists (ACOG) is a professional association of medical doctors specializing in obstetrics and gynecology in the United States. It has a membership of over 49,000[1] and represents 90 percent of U.S. , CSI continued to execute its strategy to consolidate, integrate and build critical mass in the women's healthcare market by introducing two significant new product lines: -- The 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 cervix /cer·vix/ (ser´viks) pl. cer´vices [L.] 1. neck. 2. the front portion of the neck. 3. cervix uteri. . The Cerveillance Scope is a fully integrated compact colposcope colposcope /col·po·scope/ (kol´pah-skop) vaginoscope; a speculum for examining the vagina and cervix using a magnifying lens. col·po·scope n. , an optical device used to examine the vagina vagina: see reproductive system. vagina Genital canal in females. Together with the cavity of the uterus, it forms the birth canal. In most virgins, its external opening is partially closed by a thin fold of tissue (hymen), which has various forms, and the cervix. It improves image capture, enhancement and analysis allowing measurement of lesion LESION, contracts. In the civil law this term is used to signify the injury suffered, in consequence of inequality of situation, by one who does not receive a full equivalent for what he gives in a commutative contract. 2. size and documentation of cervical changes over time. -- The FemExam pH and Amines amines (  mēnz´),n.pl organic compounds that contain nitrogen. TestCard, the first of four novel, patented diagnostic tests comprising the FemExam Vaginal vag·i·nal adj. 1. Of or relating to the vagina. 2. Relating to or resembling a sheath. vaginal pertaining to the vagina, the tunica vaginalis testis, or to any sheath. Fluid TestCard System that CSI recently licensed. These tests, designed for use primarily in the physician's office, rapidly and economically screen and diagnose common vaginal infections such as bacterial vaginosis Bacterial Vaginosis Definition Bacterial vaginosis (BV) is a type of vaginal infection in which the normal balance of bacteria in the vagina is disrupted, allowing the overgrowth of harmful anaerobic bacteria at the expense of protective bacteria. , yeast and trichomonasis. They are designed to replace current testing practices that are difficult, costly and inconvenient in·con·ven·ient adj. Not convenient, especially: a. Not accessible; hard to reach. b. Not suited to one's comfort, purpose, or needs: inconvenient to have no phone in the kitchen. to perform. The potential U.S. market for vaginitis vaginitis Inflammation of the vagina. The chief symptom is a whitish or yellowish vaginal discharge. Treatment depends on the cause: appropriate drugs for sexually transmitted diseases (often from Gardnerella bacteria or trichomonads) or yeast infections; estrogen cream for tests is estimated by industry sources at 125 million tests annually. CSI anticipates that over the next three to five years, these tests will add between $30 million and $50 million in revenue. CSI is currently in discussion with pharmaceutical companies who market products to treat vaginosis vag·i·no·sis n. A disease of the vagina, especially one caused by bacteria of the genus Gardnerella. vaginosis and expects to select a co-marketing partner shortly. "These are the first of many new products expected from our FemExam and Cerveillance programs," said Bender. "Marketing these products successfully will help CooperSurgical double its sales over the next two years and then grow in excess of 20% per year." -0-
Hospital Group of America
HOSPITAL GROUP OF AMERICA
SELECTED STATISTICAL INFORMATION
Three months ended Six months ended
April 30(1) April 30(1)
1998 1998 1997 %Change 1998 1997 % Change
Licensed inpatient
beds 319 319 -- 319 319 --
Inpatient
admissions 1,861 1,641 13% 3,594 3,095 16%
Total inpatient
days 22,711 18,832 21% 44,230 35,277 25%
Average length
of stay (days) 11.5 11.3 2% 11.6 11.3 3%
Total outpatient
visits 16,879 13,458 25% 31,405 25,567 23%
(1) Data is for HGA owned hospitals only
HGA HGA High-Gain Antenna HGA Handweavers Guild of America HGA Hammel Green and Abrahamson HGA Hercules Graphics Adapter HGA Homogentisic Acid HGA Honor Guard Academy HGA Holy Guardian Angels (Reading, PA catholic church) revenue also reached a record, growing 10% over last year's second quarter with a 13% increase in inpatient admissions and a 25% rise in outpatient visits compared with last year's second quarter. Year to date, revenue has grown 14% with admissions up 16%, outpatient visits up 23% and length of stay moderately above the six-month period last year. Operating Income, however, declined 29% compared with last year's second quarter and 18% year to date as increased Medicare inpatient volume met with reduced reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. under the Tax Equity and Financial Responsibility Act of 1982 (TEFRA), which lowered the cap on the TEFRA target amount for a Medicare discharge. Management believes that in the next six months, HGA's margins will return to double-digit levels as its business mix shifts toward its higher margin product lines of residential care and psychiatric program management. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this release that are not based on historical fact may be "forward-looking statements" as defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. They include words like "may", "will", "expect", "estimate", "anticipate", "continue" or similar terms and reflect the Company's current analysis of existing trends. Actual results could differ materially from those indicated due to: major changes in business conditions and the economy, loss of key senior management, major disruptions in the operations of the Company's manufacturing facilities or hospitals, new competitors or technologies, significant disruptions caused by the failure of third parties to address the Year 2000 issue, acquisition integration costs, foreign currency exchange exposure, investments in research and development and other start-up projects, dilution to earnings per share from stock issuance or acquisitions, regulatory issues, changes in reimbursement rates and payor mix, environmental clean-up costs more than those already accrued, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. costs, costs of business divestitures, and items listed in the Company's SEC reports, including the section entitled "Business" in its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 Huntington Beach, city (1990 pop. 181,519), Orange co., S Calif., on the Pacific coast, across from Santa Catalina Island, in an oil-producing area; inc. 1909. It manufactures aerospace vehicles, aircraft parts, optical instruments, and heat transfer equipment. , 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 A surgical instrument is a specially designed tool or device for performing specific actions of carrying out desired effects during a surgery or operation, such as modifying biological tissue, or to provide access or viewing it. , equipment and accessories for the gynecological gynecological /gy·ne·co·log·i·cal/ (-kah-loj´i-k'l) gynecologic. 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 800/334-1986 provides stock quotes, recent press releases and financial data. The Company's Internet address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. is www.coopercos.com. Trademarks Cerveillance System, Cerveillance Scope, FemExam pH and Amines TestCard, FemExam Vaginal Fluid TestCard, Hydrasoft Toric Options, Preference, Preference Toric, Frequency 55, Frequency 55 Toric and UltraSync are trademarks of The Cooper Companies, Inc., its subsidiaries or affiliates. -0-
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(In thousands, except per share figures)
(Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
1998 1997 1998 1997
Net sales of products $37,450 $20,630 $66,834 $37,657
Net service revenue 14,314 13,033 27,768 24,382
Net operating revenue 51,764 33,663 94,602 62,039
Cost of products sold 13,027 6,104 24,304 11,135
Cost of services provided 13,127 11,373 25,844 22,055
Selling, general and
administrative expense 14,544 9,094 26,258 17,040
Research and development
expense 543 414 999 738
Amortization of
intangibles 939 404 1,702 692
Income from operations 9,584 6,274 15,495 10,379
Interest expense 1,858 1,255 3,008 2,484
Other income (expense),
net 277 (77) 1,072 (57)
Income before income taxes 8,003 4,942 13,559 7,838
(Benefit of) income taxes (480) (431) (917) (845)
Net income $8,483 $5,373 $14,476 $8,683
Earnings per share:
Basic $ 0.57 $ 0.45(a) $ 0.98 $0.74(a)
Diluted $ 0.55 $ 0.44(a) $ 0.94 $0.72(a)
Number of shares used to
compute earnings per share:
Basic 14,872 11,924(a) 14,840 11,798(a)
Diluted 15,443 12,243(a) 15,398 12,082(a)
Memo diluted earnings per
share data:
Income before income taxes $ 0.52 $0.40 $0.88 $0.65
(a) 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.
-0-
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
April 30, October 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 1,456 $ 18,249
Trade receivables, net 40,807 27,469
Inventories 28,212 15,096
Other current assets 12,620 7,755
Total current assets 83,095 68,569
Property, plant and
equipment, net 57,703 39,523
Intangibles, net 90,276 36,698
Other assets 35,967 30,508
$267,041 $175,298
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $6,296 $447
Other current liabilities 39,220 33,170
Total current liabilities 45,516 33,617
Long-term debt 68,428 9,125
Other liabilities 25,415 21,023
Total liabilities 139,359 63,765
Stockholders' equity 127,682 111,533
$267,041 $175,298
CONTACT: The Cooper Companies Inc., Irvine Norris Battin, 800/341-2030 E-mail: nbattin@usa.net |
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