THE COOPER COMPANIES, INC. Note numbers refer to "Notes to Consolidated Financial Statements" in Item 8. Financial Statements and Supplementary Data. RESULTS OF OPERATIONS In this section, we discuss the results of our operations for fiscal 2020 compared with fiscal 2019. We discuss our cash flows and current financial condition under "Capital Resources and Liquidity." For a discussion related to fiscal 2019 compared with fiscal 2018, please refer to Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the Year EndedOctober 31, 2019 , which was filed with theUnited States Securities and Exchange Commission (SEC) onDecember 20, 2019 , and is available on theSEC's website at www.sec.gov and our Investor Relations website at investor.coopercos.com.
Within the tables presented, percentages are calculated based on the underlying whole-dollar amounts and, therefore, may not recalculate exactly from the rounded numbers used for disclosure purposes.
Non-GAAP Financial Measures
The succeeding sections of Management's Discussion and Analysis (MD&A) may include certain financial measures that are not defined by accounting principles generally accepted inthe United States of America (GAAP). These measures, which are referred to as non-GAAP measures, are listed below: • Free Cash Flow - Free cash flow is calculated as net cash provided by operating activities less capital expenditures.
• Constant currency - Constant currency is defined as excluding the effect
of foreign currency fluctuations.
For a discussion of these measures and the reasons management believes they are useful to investors, refer to "Summary of Non-GAAP Financial Measures" below. To the extent applicable, this MD&A includes reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. The presentation of these non-GAAP financial measures is not intended to be a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and may be different from non-GAAP financial measures used by other companies, and therefore, may not be comparable among companies.
COVID-19 Considerations
TheWorld Health Organization categorized the Coronavirus disease 2019 (COVID-19) as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. This has had, and we believe will continue to have, an adverse effect on our sales, operating results and cash flows. 58 --------------------------------------------------------------------------------THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
We have taken an active role in addressing the ongoing pandemic's impact on our
employees, suppliers, distribution channels, operations and customers, including
taking precautionary measures, such as implementing contingency plans, and
making operational adjustments as necessary. We have taken measures to help
ensure the safety of our personnel in all our facilities, and we have endeavored
and continue to follow recommended actions of government and health authorities
to protect our employees worldwide.
As of the date of this filing, we have not experienced any significant
disruption at our manufacturing facilities. We have had no significant
disruption in our access to necessary raw materials and other supplies or with
our distribution network; however, we have experienced higher unabsorbed fixed
overhead costs, labor inefficiencies, higher cost of production and higher
freight charges as a result of the COVID-19 pandemic. As a result, we instituted
an inventory control project to reduce buildup of excess inventory. Our
manufacturing and distribution operations have responded to the impacts related
to the COVID-19 pandemic, and we have been able to continue to supply our
products around the world without interruption. In the future, we may decide or
need to implement additional precautionary measures or operational adjustments
as we deem prudent to meet consumer demand or to help further ensure employee
safety. We believe that the actions we are taking have enabled us to keep our
employees safe and our supply chain intact and will help us emerge from this
global pandemic operationally sound and well positioned for long-term growth.
The extent to which the global COVID-19 pandemic and related economic
disruptions impact our business, results of operations, cash flow and financial
condition will depend on future developments. At this time, future developments
are highly uncertain, difficult to predict and largely outside of our control.
These include, but are not limited to, the spread, duration and severity of the
pandemic outbreak and any subsequent waves of additional outbreaks, actions
taken by governments to contain the pandemic, address its impact or respond to
the reduction in global and local economic activity, and how quickly and to what
extent normal economic and operating conditions can resume. We will continue to
closely monitor the developments relating to the COVID-19 pandemic and the
responses from governments and private sector participants and their respective
impact on our Company and on our customers, suppliers, vendors and business
partners.
For more information on the risks associated with the COVID-19 pandemic, refer
to Part I, Item 1A, "Risk Factors" herein.
Outlook
Overall, we remain optimistic about the long-term prospects for the worldwide
contact lens and general health care markets. However, the impact, risks and
uncertainty relating to the global COVID-19 pandemic and related economic
disruptions, as further described in the "COVID-19 Considerations" section above
and in the "Risk Factors" section in Part I, Item 1A of this filing, have
adversely affected our sales, cash flow and current performance and are likely
to further adversely affect our future sales, cash flow and performance.
Additionally, other events affecting the economy as a whole, including but not
limited to the uncertainty and instability of global markets driven by foreign
currency volatility, changes in tax legislation, debt concerns, the uncertainty
during and after the transition period following the United Kingdom's withdrawal
from the EU, changes to existing regulations and new regulations, global trade
barriers including additional tariffs and the trend of consolidations within the
health care industry could impact our current performance and continue to
represent a risk to our future performance.
CooperVision - We compete in the worldwide contact lens market with our
spherical, toric, multifocal, toric multifocal and myopia management contact
lenses offered in a variety of materials including using silicone hydrogel
Aquaform® technology, PC Technology™ and ActivControl™ technology. We believe
that there will be lower contact lens wearer dropout rates as technology
improves and enhances the
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
wearing experience through a combination of improved designs and materials and
the growth of preferred modalities such as single-use and monthly wearing
options. CooperVision also competes in the myopia management and specialty eye
care markets with products such as ortho-k and scleral lenses. In November 2019 ,
CooperVision received United States Food and Drug Administration (FDA) approval
for its MiSight® 1 day lens, which is the first and only FDA-approved product
indicated to slow the progression of myopia in children with treatment initiated
between the ages of 8-12 and became available in the United States during fiscal
2020. CooperVision is focused on greater worldwide market penetration using
recently introduced products, and we continue to expand our presence in existing
and emerging markets, including through acquisitions.
On August 7, 2020 , CooperVision completed the acquisition of a privately-held
U.S contact lens manufacturer focusing on ortho-k lenses. This acquisition
expands CooperVision's specialty eye care portfolio and its leadership in
addressing the increasing severity and prevalence of myopia.
On December 28, 2018 , CooperVision completed the acquisition of a privately-held
scleral lens company, which expands CooperVision's specialty and scleral lens
portfolio.
Our ability to compete successfully with a full range of silicone hydrogel
products is an important factor to achieving our desired future levels of sales
growth and profitability. CooperVision manufactures and markets a wide variety
of silicone hydrogel contact lenses. Our single-use silicone hydrogel product
franchises, clariti® and MyDay®, remain a focus as we expect increasing demand
for these products as well as future single-use products as the global contact
lens market continues to shift to this modality. Outside of single-use, the
Biofinity® and Avaira Vitality® product families comprise our focus in the FRP,
or frequent replacement product, market which encompasses the 2-week and monthly
modalities. Included in this segment are unique products such as Biofinity
Energys®, which helps individuals with digital eye fatigue.
CooperSurgical - Our CooperSurgical business competes in the general health care
market with a commitment to advancing the health of women, babies and families
through its diversified portfolio of products and services focusing on women's
health and fertility. CooperSurgical has established its market presence and
distribution system by developing products and acquiring companies, products and
services that complement its business model.
CooperSurgical acquired a privately-held distributor of IVF medical devices and
systems on December 13, 2019 .
On December 31, 2018 , CooperSurgical acquired a privately-held U.S. medical
device company that develops mechanical surgical solutions for skin closure.
Capital Resources - At October 31, 2020 , we had $115.9 million in unrestricted
cash, primarily held outside the United States , and $754.6 million available
under our 2020 Revolving Credit Facility. Debt outstanding at October 31, 2020
primarily consisted of:
• $850.0 million term loan entered into on April 1, 2020 •
on
•
See Note 5. Debt of the Consolidated Financial Statements for additional information.
Transition from LIBOR
The
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
Rate (LIBOR), announced in July 2017 that it will no longer persuade or require
banks to submit rates for LIBOR after 2021. Further, in March 2020 , the
Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on
Financial Reporting. This guidance provides optional expedients and exceptions
for applying GAAP to contracts, hedging relationships, and other transactions
affected by reference rate reform if certain criteria are met. The Company has
material contracts that are indexed to LIBOR and is continuing to monitor this
activity and evaluate the related risk. We are continuing to evaluate the scope
of impacted contracts and the potential impact. We are also monitoring the
developments regarding alternative rates and may amend certain contracts to
accommodate those rates if the contract does not already specify a replacement
rate. While the notional value of agreements potentially indexed to LIBOR is
material, we are not yet able to reasonably estimate the expected impact.
We believe that current cash, cash equivalents and future cash flow from
operating activities will be sufficient to meet our anticipated cash needs,
including working capital needs, capital expenditures and contractual
obligations for at least 12 months from the issuance date of the financial
statements included in this annual report. To the extent additional funds are
necessary to meet our liquidity needs such as that for acquisitions, share
repurchases, cash dividends or other activities as we execute our business
strategy, we anticipate that additional funds will be obtained through the
incurrence of additional indebtedness, additional equity financings or a
combination of these potential sources of funds; however, such financing may not
be available on favorable terms, or at all.
61
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
2020 Compared with 2019
[[Image Removed: netsalesa19.jpg]]
Highlights: 2020 vs. 2019
• Gross margin decreased to 63% of net sales compared with 66% in fiscal 2019,
primarily due to the negative impact of the COVID-19 pandemic on net sales
and cost of sales
• Operating income decreased 43% to
• Interest expense decreased to
average debt balances and lower interest rates
• Diluted earnings per share decreased 48% to
• Operating cash flow decreased 32% to
Selected Statistical Information - Percentage of
2020 vs. 2019
% Change in
Absolute
Years Ended October 31, 2020 2019 Values
Net sales 100 % 100 % (8 )%
Cost of sales 37 % 34 % - %
Gross profit 63 % 66 % (13 )%
Selling, general and administrative expense 41 % 38 % - %
Research and development expense 4 % 3 % 8 %
Amortization of intangibles 6 % 5 % (6 )%
Gain on sale of an intangible - % 1 % - %
Operating income 13 % 21 % (43 )%
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
CooperVision Net Sales The contact lens market has two major product categories: • 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.
CooperVision Net Sales by Category [[Image Removed: chart-f4f4f04c1a2f5cd0a99.jpg]][[Image Removed: chart-e416116a79dc5672818.jpg]] ($ in millions) 2020 2019 2020 vs. 2019 % Change Toric$ 598.2 $ 620.0 (4 )% Multifocal 197.0 202.9 (3 )% Single-use spheres 529.0 568.2 (7 )% Non single-use sphere, other 518.8 581.8 (11 )%$ 1,843.0 $ 1,972.9 (7 )%
In the fiscal year ended
fiscal 2020 declined by 7%, compared to fiscal 2019. Customers have either
slowed down purchases or delayed orders due to a desire to reduce
inventories, reduced contact lens wear driven by limited social
interaction and lack of patient access on account of certain office
closures and reduced access as offices reopen. We started experiencing
downward pressure on net sales when markets started closing during our
second quarter of fiscal 2020 as social restrictions were put in place and
the offices of health care providers were closed
• CooperVision's net sales declined across product categories and all our
markets, however the net sales decline was partially offset by higher
sales of MyDay, MiSight and Biofinity Energys
• "Other" products primarily include lens care which represented
approximately 2% of net sales in fiscal 2020 and 2019
63
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
• Total silicone hydrogel products decreased by 4%, representing 74% of netsales in the fiscal 2020 compared to 72% in fiscal 2019
• Foreign exchange rates negatively impacted sales by approximately
million, compared to a negative impact of
fiscal 2020, net sales decreased 6% in constant currency over the prior
year
• Sales reduction was primarily driven by a decrease in the volume of lenses
sold. Average realized prices by product did not materially influence
sales
• We expect to continue seeing downward pressure on net sales ifthe COVID-19 pandemic continues, optical retailers and healthcare centers
continue to restrict access, and social distancing measures continue.
CooperVision Net Sales by Geography CooperVision competes in the worldwide soft contact lens market and services in three primary regions: theAmericas , EMEA (Europe ,Middle East andAfrica ) andAsia Pacific . ($ in millions) 2020 2019 2020 vs. 2019 % Change Americas$ 720.3 $ 763.8 (6 )% EMEA 690.1 746.5 (8 )% Asia Pacific 432.6 462.6 (6 )%$ 1,843.0 $ 1,972.9 (7 )% CooperVision's regional reduction in net sales was primarily attributable to disruption from the COVID-19 pandemic. We expect to continue seeing downward pressure on net sales if the COVID-19 pandemic continues, optical retailers and healthcare centers continue to restrict access, and social distancing measures continue. Refer to CooperVision Net Sales by Category above for further discussion. CooperSurgical Net Sales by Category CooperSurgical supplies the family health care market with a diversified portfolio of products and services. Our office and surgical offerings include products that facilitate surgical and non-surgical procedures that are commonly performed primarily by OB/GYN in hospitals, surgical centers, fertility clinics and medical offices. Fertility offerings include highly specialized products and services that target the IVF process, including diagnostics testing with a goal to make fertility treatment safer, more efficient and convenient. 64 -------------------------------------------------------------------------------- THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The chart below shows the percentage of net sales of office and surgical products and fertility.
[[Image Removed: chart-b22670bf5d87522a99a.jpg]][[Image Removed: chart-ef6d0475012b5581a00.jpg]] ($ in millions) 2020 2019 2020 vs 2019 % Change Office and surgical products$ 358.8 $ 422.4 (15 )% Fertility 229.1 258.1 (11 )%$ 587.9 $ 680.5 (14 )%
In the fiscal year ended
decline in net sales during fiscal 2020. We experienced downward pressure
on revenue when major markets started closing as social restrictions were
put in place and the offices of certain health care providers were closed.
In response to the COVID-19 pandemic, as a precautionary measure, certain
health care facilities and medical offices were closed or restricted
access and surgeries and elective medical procedures and exams have been
deferred or canceled. Further, there has been a significant reduction in
physician office visits, and healthcare centers have postponed or canceled
capital purchases
• Office and surgical products decreased compared to the prior year mainly
due to reduction in PARAGARD IUD sales. Further, there has been a
reduction in revenue from other surgical products such as Uterine
Manipulators and Closure products, partially offset by an increase in
revenue from Incisive Surgical and Endosee products
• Fertility net sales declined compared to the prior year mainly due to
reduction in revenue from IVF consumables and equipment
• Foreign exchange rates negatively impacted sales by approximately
million, compared to a negative impact of
In fiscal 2020, net sales decreased 13% in constant currency over the
prior year
• We expect to continue seeing downward pressure on net sales ifthe COVID-19 pandemic continues, hospitals and healthcare centers continue
to restrict access, and social distancing measures continue.
65
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
Gross Margin
Consolidated Gross Margin decreased in fiscal 2020 to 63% compared to 66% of
fiscal 2019 due to:
• Decreased revenue due to negative impact of COVID-19 pandemic
• Increased cost of sales which included
related to the COVID-19 pandemic and other manufacturing related costs
• Fiscal 2019 included
integration and manufacturing related costs.
Selling, General and Administrative Expense (SGA)
% Net % Net 2020 vs. 2019
($ in millions) 2020 Sales 2019 Sales % Change
CooperVision $ 682.3 37 % $ 682.4 35 % - %
CooperSurgical 261.0 44 % 266.2 39 % (2 )%
Corporate 49.2 - 47.6 - 3 %
$ 992.5 41 % $ 996.2 38 % - %
SGA expense remained relatively flat in fiscal 2020 compared with fiscal 2019.
As a percentage of sales, SGA increased in fiscal 2020 compared to fiscal 2019,
due to salaries and benefits, selling, advertising and marketing activities, and
fixed General and Administrative (G&A) costs.
CooperVision's SGA remained relatively flat in fiscal 2020 compared to fiscal
2019 primarily due to advertising and marketing activities, including MiSight
and increase in G&A costs, partially, offset by lower travel expenses.
CooperVision's SGA in fiscal 2020 included $6.5 million primarily related to
acquisition and integration activities. CooperVision's SGA in fiscal 2019
included $7.1 million of acquisition costs, integration costs and costs related
to new product launches.
The decrease in CooperSurgical's SGA in fiscal 2020 compared to fiscal 2019 was
primarily due to lower selling and distribution expenses due to lower sales and
savings from lower travel expenses, partially offset by an increase in G&A
costs. CooperSurgical's SGA in fiscal 2020, included $19.8 million , primarily
related to integration expenses and MDR costs. CooperSurgical's SGA in fiscal
2019 included $19.6 million of acquisition and integration expenses of acquired
companies, as well as MDR costs.
Corporate SGA increased in fiscal 2020 compared to fiscal 2019 primarily due to
higher share-based compensation expense.
Research and Development Expense (R&D)
% Net % Net 2020 vs. 2019
($ in millions) 2020 Sales 2019 Sales % Change
CooperVision $ 54.1 3 % $ 55.5 3 % (2 )%
CooperSurgical 39.2 7 % 31.2 5 % 25 %
$ 93.3 4 % $ 86.7 3 % 8 %
• CooperVision's R&D decreased in fiscal 2020 compared to fiscal 2019 mainly
due to timing of clinical studies. As a percentage of sales, R&D expense
remained flat. CooperVision's R&D activities are primarily focused on the
development of contact lenses, manufacturing technology and process
enhancements
• The increase in CooperSurgical's R&D in fiscal 2020 compared to fiscal
2019 was primarily due to increased investment activities in developing
new products and services and upgrades of existing products.
CooperSurgical has not paused research programs during the COVID-19
66
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
pandemic and has maintained its spend on innovations and increased its spend on key regulatory investment areas to support our long-term objectives. As a percentage of sales, R&D expense increased due to increased investment in developing new products coupled with a decline in sales. • CooperSurgical's R&D activities include diagnostics, IVF product
development and the design and upgrade of surgical procedure devices.
Amortization Expense
% Net % Net 2020 vs. 2019
($ in millions) 2020 Sales 2019 Sales % Change
CooperVision $ 32.4 2 % $ 40.9 2 % (21 )%
CooperSurgical 104.8 18 % 104.9 15 % - %
$ 137.2 6 % $ 145.8 5 % (6 )%
CooperVision amortization expense decreased in fiscal 2020 compared to fiscal 2019 due to certain intangible assets becoming fully amortized. CooperSurgical's amortization expense remained relatively flat.
Gain on Sale of an Intangible Asset
In the second quarter of fiscal 2019, CooperSurgical sold an exclusive distribution right to distribute Filshie Clip System inthe United States for$21.0 million and recognized a gain of$19.0 million . Operating Income % Net % Net 2020 vs. 2019 ($ in millions) 2020 Sales 2019 Sales % Change CooperVision$ 375.7 20 %$ 506.4 26 % (26 )% CooperSurgical (14.7 ) (3 )% 87.9 13 % (117 )% Corporate (49.2 ) - (47.6 ) - (3 )%$ 311.8 13 %$ 546.7 21 % (43 )%
The operating income for fiscal 2020 was primarily impacted by the COVID-19 pandemic which resulted from a decrease to our net sales and additional expenses due to the COVID-19 pandemic related costs as discussed above.
CooperVision operating income decreased as a percentage of net sales and in absolute dollars in fiscal 2020 compared to fiscal 2019 primarily due to a decrease in net sales partially offset by a decrease in operating expenses and a decrease in amortization expenses.
CooperSurgical operating income decreased as a percentage of net sales and in absolute dollars in fiscal 2020 compared to fiscal 2019 primarily due to a decrease in net sales and higher R&D expenses to support growth partially offset by a decrease in SGA. In the second quarter of fiscal 2019, CooperSurgical sold an exclusive distribution right to distribute Filshie Clip System in theU.S. for$21.0 million and recognized a gain of$19.0 million .
Corporate operating loss increased in fiscal 2020 compared to fiscal 2019, primarily due to higher stock-based compensation expense.
67
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
On a consolidated basis, operating income decreased in absolute dollars and as a
percentage of net sales primarily due to the negative impact of the COVID-19
pandemic, as discussed above.
Interest Expense
% Net % Net 2020 vs. 2019
($ in millions) 2020 Sales 2019 Sales % Change
Interest expense $ 36.8 2 % $ 68.0 3 % (46 )%
Interest expense decreased as a percentage of net sales and in absolute dollars
during fiscal 2020 primarily due to lower interest rates and lower average debt
balances compared to the prior year, partially offset by the write-off of debt
issuance costs.
Other Expense (Income), Net
($ in millions) 2020 2019
Foreign exchange loss $ 1.2 $ 2.2
Other expense (income), net 7.3 (0.9 )
$ 8.5 $ 1.3
Foreign exchange loss primarily resulted from the revaluation and settlement of
foreign currency-denominated balances.
Other expense (income) increased in fiscal 2020, primarily due to
non-consolidated subsidiary investments losses and advances during the year.
Provision for Income Taxes
The Company's effective tax rate (ETR) was 10.6% and 2.3% for fiscal 2020 and
fiscal 2019, respectively. The ETR in fiscal 2020 increased in comparison to
fiscal 2019 primarily due to foreign earnings subject to US tax, partially
offset by a shift in the geographic mix of income.
The ETR for both fiscal 2020 and fiscal 2019 was less than the US federal
statutory tax rate primarily due to foreign earnings in jurisdictions with lower
tax rates, a step-up of the US tax-deductible basis of intellectual property
rights from intra-entity sales and excess tax benefits from share-based
compensation. This was partially offset by foreign earnings subject to US tax.
The jurisdictions with lower tax rates with the most significant tax impact
include Barbados , Puerto Rico and the United Kingdom . See Note 6. Income Taxes
of the Consolidated Financial Statements for additional information.
Share-Based Compensation Plans
We grant various share-based compensation awards, including stock options,
performance shares and restricted stock units. The share-based compensation and
related income tax benefit recognized in the Consolidated Financial Statements
in fiscal 2020 was $38.6 and $4.8 , respectively, compared to $36.3 million and
$5.1 million , respectively, in fiscal 2019. As of October 31, 2020 , there was
$82.5 million of total unrecognized share-based compensation cost related to
non-vested awards. See Note 9. Stock Plans of the Consolidated Financial
Statements for additional information.
We estimate the fair value of each stock option award on the date of grant using
the Black-Scholes valuation model, which requires management to make estimates
regarding expected option life, stock price volatility and other assumptions.
The use of different assumptions could lead to a different estimate of fair
value. The expected life of the stock option is based on the observed and
expected time to post-vesting forfeiture and/or exercise. Groups of employees
that have similar historical exercise behavior are
68
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
considered separately for valuation purposes. If our assumption for the expected
life increased by one year, the fair value of an individual option granted in
fiscal 2020 would have increased by approximately $8.08 . To determine the stock
price volatility, management considers implied volatility from publicly-traded
options on the Company's stock at the date of grant, historical volatility and
other factors. If our assumption for stock price volatility increased by one
percentage point, the fair value of an individual option granted in fiscal 2020
would have increased by approximately $2.37 .
Retirement Income Plan Soft Freeze
OnJune 18, 2019 the Board of Directors of the Company approved a soft freeze of the Plan effectiveAugust 1, 2019 . The Plan was closed to employees hired on or afterAugust 1, 2019 , including former participants or employees rehired on or afterAugust 1, 2019 and employees hired in connection with a stock or asset acquisition, merger or other similar transaction on or afterAugust 1, 2019 . Existing employees already covered by the Plan, continue to accrue their benefits. There is no material impact on the Company's results of operations, financial position and cash flows for the fiscal 2020 and 2019.
Employee Stock Purchase Plan
OnMarch 18, 2019 , the Company received stockholder approval for the Employee Stock Purchase Plan (ESPP). The first offering period began onNovember 4, 2019 and offerings are generally made on a quarterly basis. The purpose of the ESPP is to provide eligible employees of the Company with the opportunity to acquire shares of common stock at 85% of the market price on the last business day of each offering period by means of accumulated payroll deductions. Payroll deductions will be limited to 15% of the employee's eligible compensation, not to exceed$21.3 thousand in any one calendar year. The ESPP initially authorized the issuance of 1,000,000 shares of common stock. These shares will be made available from shares of common stock reacquired by the Company asTreasury Stock. During fiscal year endedOctober 31, 2020 , we issued 11,641 shares to our employees under the ESPP. AtOctober 31, 2020 , the number of shares remaining available for future issuance under the ESPP is 988,359 shares. Total ESPP Share-based compensation recognized during the fiscal year endedOctober 31, 2020 was$0.7 million . 69 --------------------------------------------------------------------------------THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
CAPITAL RESOURCES AND LIQUIDITY
2020 Highlights
• Operating cash flow of $486.6 million compared to $713.2 million in fiscal
2019
• Expenditures for purchases of property, plant and equipment of
up from
• Cash payments for acquisitions and others of
million in fiscal 2019
• Total debt, net of debt issuance cost, at
2020 compared to
• Cash provided by operations of
of
58% compared to the prior year period
Comparative Statistics Years EndedOctober 31 , ($ in millions) 2020 2019 Cash and cash equivalents$115.9 $89.0 Total assets$6,737.5 $6,274.5 Working capital$269.8 $52.8 Total debt$1,793.2 $1,826.3 Stockholders' equity$3,824.8 $3,628.6 Ratio of debt to equity 0.47:1 0.50:1
Debt as a percentage of total capitalization 32 % 33 %
Working Capital The increase in working capital atOctober 31, 2020 from the end of fiscal 2019 was primarily due to: • decrease in short-term debt of$154.4 million primarily due to repayment
of the outstanding balance of the 2019 Term Loan at maturity net of the
amount of borrowings received under the new 2020 Term Loan Agreement,
entered into on October 16, 2020 (see below)
• increase in inventories of $63.5 million due to lower sales from the
impact of the COVID-19 pandemic and higher manufacturing costs
• increase in cash and cash equivalents of
• decrease in other current liabilities of
timing of payments and a reduction in fiscal 2020 customer rebate accruals
due to the decrease in sales resulting from the COVID-19 pandemic• increase in prepaid expense and other current assets of$20.3 million , partially offset by;
• increase in accounts payable of
• increase in employee compensation and benefits of
• recognition of current operating lease liabilities of
adoption of ASC 842, Leases.
AtOctober 31, 2020 , our inventory months on hand were 6.6 compared to 6.4 atOctober 31, 2019 . The$63.5 million increase in inventories was primarily due to lower sales from the impact of the COVID-19 pandemic and higher manufacturing costs. 70 --------------------------------------------------------------------------------THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our days sales outstanding (DSO) was 60 days at October 31, 2020 compared to 56
days at October 31, 2019 . The increase in DSO from October 31, 2019 to October
31, 2020 was primarily due to timing of collections.
Operating Cash Flow
Cash provided by operating activities decreased by$226.6 million from$713.2 million in fiscal 2019 to$486.6 million in fiscal 2020. This decrease in cash flow provided by operating activities primarily consists of: • decrease in net income of$228.3 million from a net income of$466.7
million in fiscal 2019 to
from a decrease in our net sales and additional expenses due to the
COVID-19 pandemic;
•
primarily due to the refund of the prepayment made to the U.K. Tax
Authorities in the prior year period and capitalized cloud computing
costs;
•
due to reduction in indirect value-added tax, chargebacks and customer
rebate accruals as a result of the decrease in sales;
•
lower sales;
•
right-of-use asset due to impact from adoption of ASC 842, Leases;
•
offset by;
•
due to timing of collections;
• increase of $32.5 million in non-cash lease expense due to impact from
adoption of ASC 842, Leases;
• increase of $20.0 million driven by net changes in long term tax
liabilities and defined benefit plan;
•
due to timing of payments;
• decrease of
representing the sale by CooperSurgical of the Filshie Clip exclusive
distribution right recognized in prior year period;
• increase of
plant and equipment; and
•
Investing Cash Flow
Cash used in investing activities increased by
• decrease of
2020 compared to the prior year period.
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
Financing Cash Flow
Cash provided by financing activities decreased by
•
to funds received from the 2020 Credit Agreement (as defined below)
partially offset by;
•
related to termination of 2019 Term Loan Agreement (as defined below),
2017 Term Loan Agreement (as defined below) and the 2016 Credit Agreement
(as defined below); and
•
due to movements in short term loans.
OnApril 1, 2020 , the Company entered into a Revolving Credit and Term Loan Agreement (the 2020 Credit Agreement), among the Company andKeyBank National Association , as administrative agent. The 2020 Credit Agreement provides for (a) a multicurrency revolving credit facility (the 2020 Revolving Credit Facility) in an aggregate principal amount of$1.29 billion and (b) a term loan facility (the 2020 Term Loan Facility) in an aggregate principal amount of$850.0 million , each of which, unless terminated earlier, mature onApril 1, 2025 . In addition, the Company has the ability from time to time to request an increase to the size of the revolving credit facility or establish one or more new term loans under the term loan facility in an aggregate amount up to$1.605 billion , subject to the discretionary participation of the lenders. OnApril 1, 2020 , in connection with the Company's entry into the 2020 Credit Agreement, the Company terminated the senior unsecured term loan agreement entered into onNovember 1, 2017 in connection with PARAGARD (the 2017 Term Loan Agreement) and the Revolving Credit and Term Loan Agreement entered into onMarch 1, 2016 (the 2016 Credit Agreement). In connection with the termination, all borrowings outstanding under the 2017 Term Loan Agreement and the 2016 Credit Agreement were repaid. At maturity, onSeptember 25, 2020 , outstanding amounts under the 2019 Term Loan Agreement (including the Second Amendment to the 2018 Term Loan Agreement) were fully repaid using borrowings under the 2020 Revolving Credit Facility. OnOctober 16, 2020 , the Company entered into a 364-day,$350.0 million , term loan agreement (the 2020 Term Loan Agreement) by and among the Company, the lenders party thereto and The Bank of Nova Scotia, as administrative agent which matures onOctober 15, 2021 .
The following is a summary of the maximum commitments and the net amounts
available to us under different credit facilities as of
Facility Outstanding Outstanding Letters Total Amount Maturity Date
(In millions) Limit Borrowings of Credit Available
2020 Revolving Credit
Facility $ 1,290.0 $ 534.0 $ 1.4 $ 754.6 April 1, 2025
2020 Term Loan Facility 850.0 850.0 n/a - April 1, 2025
2020 Term Loan 350.0 350.0 n/a - October 15, 2021
Total $ 2,490 $ 1,734 $ 1.4 $ 754.6
The 2020 Credit Agreement and the 2019 Term Loan Agreement contain customary
restrictive covenants, as well as financial covenants that require the Company
to maintain a certain Total Leverage Ratio and
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
Interest Coverage Ratio. As defined, in the 2020 Credit Agreement and the 2019
Term Loan Agreement, we are required to maintain an Interest Coverage Ratio of
at least 3.00 to 1.00, and a Total Leverage Ratio of no higher than 3.75 to
1.00. At October 31, 2020 , we were in compliance with the Interest Coverage
Ratio at 21.19 to 1.00 and the Total Leverage Ratio at 2.15 to 1.00. The
Company, after considering the potential impacts of the COVID-19 pandemic,
expects to remain in compliance with its financial maintenance covenant and meet
its debt service obligations for at least the twelve months following the date
of issuance of these financial statements.
See Note 5. Debt of the Consolidated Financial Statements for additional information.
Considering recent market conditions and the ongoing COVID-19 pandemic crisis, we have re-evaluated our operating cash flows and cash requirements and continue to believe that current cash, cash equivalents, future cash flow from operating activities and cash available under our 2020 Credit Agreement will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the Consolidated Financial Statements included in this quarterly report. To the extent additional funds are necessary to meet our liquidity needs such as that for acquisitions, share repurchases, cash dividends or other activities as we execute our business strategy, we anticipate that additional funds will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all. Share Repurchases InDecember 2011 , the Company's Board of Directors authorized the 2012 Share Repurchase Program and through subsequent amendments, the most recent inMarch 2017 , the total repurchase authorization was increased from$500.0 million to$1.0 billion of the Company's common stock. The program has no expiration date and may be discontinued at any time. Purchases under the 2012 Share Repurchase Program are subject to a review of the circumstances in place at the time and may be made from time to time as permitted by securities laws and other legal requirements. The Company's share repurchases during the fiscal year endedOctober 31, 2020 and 2019 as follows: Years EndedOctober 31 , ($ in millions) 2020 2019 Number of shares 160,850 536,972 Average repurchase price per share$ 296.9 $ 292.7
Total costs of shares repurchased (in millions)
AtOctober 31, 2020 ,$359.7 million remained authorized for repurchase under the program. Dividends In fiscal 2020 and 2019, the Company paid a semiannual dividend of3 cents per share:$1.5 million or3 cents per share onFebruary 10, 2020 to stockholders of record onJanuary 23, 2020 ;$1.5 million or3 cents onAugust 7, 2020 to stockholders of record onJuly 23, 2020 ;$1.5 million or3 cents per share onFebruary 8, 2019 to stockholders of record onJanuary 22, 2019 ;$1.5 million or3 cents per share onAugust 7, 2019 to stockholders of record onJuly 23, 2019 .
OFF BALANCE SHEET ARRANGEMENTS
None.
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
As ofOctober 31, 2020 , we had the following contractual obligations and commercial commitments: Payments Due by Period 2022 2024 2026 (In millions) Total 2021 & 2023 & 2025 & Beyond Contractual obligations: Long-term debt$ 1,384.2 $ - $ -$ 1,384.2 $ - Interest payments 120.5 27.3 47.8 37.2 8.2 Operating leases 325.3 40.7 68.9 57.3 158.4 Transition tax on unremitted foreign earnings and profits (1) 124.0 11.8 23.6 51.7 36.9 Purchase obligation (2) 90.3 70.1 16.8 3.4 - Defined benefit plan (3) 135.8 10.0 22.9 26.6 76.3
Total contractual obligations 2,180.1 159.9 180.0
1,560.4 279.8 Commercial commitments: Stand-by letters of credit 4.5 4.5 - - - Total$ 2,184.6 $ 164.4 $ 180.0 $ 1,560.4 $ 279.8 (1) As ofOctober 31, 2020 , we had$124.0 million of income tax liabilities related to the one-time transition tax that resulted from the enactment of the 2017 Act, which is payable in six annual installments. The installment for 2021 is classified as a current income tax payable on our consolidated balance sheet. We are unable to reliably estimate the timing of future payments related to uncertain tax positions; therefore, about$58.5 million of our long-term income taxes payable have been excluded from the table above. However, other long-term liabilities, included in our consolidated balance sheet, include a reserve for a portion of these uncertain tax positions. See Note 6. Income Taxes of the Consolidated Financial Statements for additional information. (2) Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding and includes obligations for inventory, capital expenditures and other operating expense commitments.
(3) The expected future benefit payments for pension plans through 2030 are disclosed in Note 10. Employee Benefits of the Consolidated Financial Statements.
Inflation and Changing Prices
Inflation has had no appreciable effect on our operations in the last three fiscal years. Summary of Non-GAAP Financial Measures
The non-GAAP financial measures that may be included in this MD&A and the
reasons management believes they are useful to investors are described below.
These measures should be considered supplemental in nature and are not intended
to be a substitute for the related financial information prepared in accordance
with GAAP. In addition, these measures may not be the same as similarly named
measures presented by other companies.
Free cash flow is defined as cash provided by operating activities less capital
expenditures. Management believes free cash flow is useful for investors as an
additional measure of liquidity because it represents
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
cash that is available to grow the business, make strategic acquisitions, repay
debt, buyback common stock or fund the dividend. We use free cash flow
internally to understand, manage, make operating decisions and evaluate our
business. In addition, we use free cash flow to help plan and forecast future
periods.
Constant currency is defined as excluding the effect of foreign currency rate
fluctuations. In order to assist with the assessment of how our underlying
businesses performed, we compare the percentage change in net sales from one
period to another, excluding the effect of foreign currency fluctuations. To
present this information, current period revenue for entities reporting in
currencies other than the United States dollar are converted into United States
dollars at the average foreign exchange rates for the corresponding period in
the prior year.
Accounting Pronouncements Information regarding new accounting pronouncements is included in Note 1. Accounting Policies of the Consolidated Financial Statements.
Estimates and Critical Accounting Policies
Management estimates and judgments are an integral part of financial statements prepared in accordance with GAAP. We believe that the critical accounting policies described in this section address the more significant estimates required of management when preparing the Consolidated Financial Statements in accordance with GAAP. We consider an accounting estimate critical if changes in the estimate may have a material impact on our financial condition or results of operations. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods. TheWorld Health Organization categorized the Coronavirus disease 2019 (COVID-19) as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. This has had, and we believe will continue to have, an adverse effect on our sales, operating results and cash flows. The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions impacted by uncertainty surrounding the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact our accounting estimates will depend on future developments including, but not limited to, the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks; the actions taken by theU.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments described above on our customers and suppliers; and how 75 --------------------------------------------------------------------------------THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to:
• allowance for doubtful accounts and credit losses
• carrying value of inventory
• carrying value of goodwill and other long-lived assets
There was not a material impact to the above estimates in our Consolidated Financial Statements for fiscal 2020 as a result of the COVID-19 pandemic. We continually monitor and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. Our future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material changes to the estimates and material impacts to our Consolidated Financial Statements in future reporting periods. Our critical accounting policies include: • Revenue recognition - We recognize revenue from product sales when
obligations under the terms of a contract with the customer are satisfied;
generally, this occurs with the transfer of control of the goods to
customers and/or when services are rendered. Our payment terms are
typically between 30 to 120 days. Provisions for certain rebates, salesincentives, volume discounts, contractual pricing allowances and product
returns are accounted for as variable consideration and recorded as a
reduction in sales.
Product discounts, including certain rebates, sales incentives, and volume
discounts are granted based on terms of the arrangement with direct distribution
customers and at times the indirect end consumer. We evaluate contractual terms,
historical experience, and perform internal analysis to estimate total product
discounts at the time revenue is recognized. Our PARAGARD program is subject to
Medicaid rebates, which are estimated at the time of sale based upon the
difference between current retail pricing and contractual Medicaid pricing and
an estimate of the number of units that will be sold to Medicaid patients, which
is informed by historical trends of claim history.
Sales returns are estimated and recorded based on historical sales return data.
Promotional programs, such as cooperative advertising arrangements, are recorded
in the same period as related sales. Reasonably likely changes to assumptions
used to calculate the accruals for rebates, sales incentives, volume discounts,
contractual pricing allowances and product returns are not anticipated to have a
material effect on the financial statements. We currently disclose the impact of
changes to assumptions in the quarterly or annual filing in which there is a
material financial statement impact.
• Valuation of goodwill - We evaluate goodwill 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. We
account for goodwill, evaluate and test goodwill balances for impairment
in accordance with related accounting standards. We performed an annual
impairment assessment in our third quarter of fiscal 2020 and 2019, and
our analysis indicated that we had no impairment of goodwill in our
reporting units. We test goodwill impairment in accordance with ASU
2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the
Test for Goodwill Impairment. We perform a qualitative assessment to test
each reporting unit's goodwill for impairment. Qualitative factorsconsidered in this assessment include industry and market considerations,
overall financial performance and other relevant events and factors
affecting each reporting unit. Based on our qualitative assessment, if we
determine that the fair value of a reporting unit is more likely than not
to be less than its carrying amount, the fair value of a reporting unit
will be compared with its carrying amount and an impairment charge will be
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
recognized for the amount that the carrying value exceeds the fair value of the
reporting unit. A reporting unit is the level of reporting at which goodwill is
tested for impairment.
Goodwill impairment analysis and measurement is a process that requires
significant judgment. If our common stock price trades below book value per
share, there are changes in market conditions or a future downturn in our
business, or a future goodwill impairment test indicates an impairment of our
goodwill, we may have to recognize a non-cash impairment of goodwill that could
be material and could adversely affect our results of operations in the period
recognized and also adversely affect our total assets and stockholders' equity.
• Leases - We consider an arrangement a lease if the arrangement transfers
the right to control the use of an identified asset in exchange for
consideration. We have operating leases, but do not have material
financing leases. Lease right-of-use assets represent the right to use an
underlying asset for the lease term, and lease liabilities represent the
obligation to make payments arising from the lease agreement. These assets
and liabilities are recognized at the commencement of the lease based upon
the present value of the future minimum lease payments over the lease
term. The lease term reflects the noncancelable period of the lease
together with periods covered by an option to extend or terminate the
lease when it is reasonably certain that we will exercise such option.
Changes in the lease term assumption could impact the right-of-use assets
and lease liabilities recognized on the balance sheet. As our leases
typically do not contain a readily determinable implicit rate, we
determine the present value of the lease liability using our incremental
borrowing rate at the lease commencement date based on the lease term on a
collateralized basis.
• 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, over 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.
As part of the process of preparing our Consolidated Financial Statements, we
must estimate our income tax expense for each of the jurisdictions in which we
operate. This process requires significant management judgments and involves
estimating our current tax exposures in each jurisdiction including the impact,
if any, of additional taxes resulting from tax examinations as well as judging
the recoverability of deferred tax assets. To the extent recovery of deferred
tax assets is not likely based on our estimation of future taxable income in
each jurisdiction, a valuation allowance is established. Tax exposures can
involve complex issues and may require an extended period to resolve. Frequent
changes in tax laws in each jurisdiction complicate future estimates. To
determine the tax rate, we use the full-year income and the related income tax
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THE COOPER COMPANIES, INC. AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
Operations
expense in each jurisdiction. We update the estimated effective tax rate for the effect of significant unusual items as they are identified. Changes in the geographic mix or estimated level of annual pre-tax income can affect the overall effective tax rate, and such changes could be material.
We file income tax returns in all jurisdictions in which we operate. We record a liability for uncertain tax positions taken or expected to be taken in income tax returns that we have determined are not more-likely-than-not realizable. Our financial statements reflect expected future tax consequences of such positions presuming the taxing authorities' full knowledge of the position and all relevant facts. These tax reserves have been established based on management's assessment as to the potential exposure attributable to our uncertain tax positions as well as interest and penalties attributable to these uncertain tax positions. All tax reserves are analyzed quarterly and adjustments are made as events occur that result in changes in judgment. Trademarks Aquaform®, Avaira®, Avaira Vitality®, Biofinity®, Biofinity Energys®, MyDay®, MiSight®, ActivControl® and Proclear® are registered trademarks ofThe Cooper Companies, Inc. , its affiliates and/or subsidiaries. PC Technology™ and FIPS™ are trademarks ofThe Cooper Companies, Inc. , its affiliates and/or subsidiaries. The clariti® mark is a registered trademark ofThe Cooper Companies, Inc. , its affiliates and/or subsidiaries worldwide except inthe United States where the use of clariti® is licensed. PARAGARD® is a registered trademark ofCooperSurgical, Inc. 78 --------------------------------------------------------------------------------THE COOPER COMPANIES, INC. AND SUBSIDIARIES
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