Note numbers refer to "Notes to Consolidated Condensed Financial Statements" in
Item 1. Unaudited Financial Statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act
of 1995. These include statements relating to plans, prospects, goals,
strategies, future actions, events or performance and other statements which are
other than statements of historical fact, including all statements regarding the
expected impact of the ongoing COVID-19 pandemic on our business; and statements
regarding acquisitions including the acquired companies' financial position,
market position, product development and business strategy, expected cost
synergies, expected timing and benefits of the transaction, difficulties in
integrating entities or operations, as well as estimates of our and the acquired
entities' future expenses, sales and earnings per share are forward-looking. In
addition, all statements regarding anticipated growth in our net sales,
anticipated effects of any product recalls, anticipated market conditions,
planned product launches and expected results of operations and integration of
any acquisition are forward-looking. To identify these statements, look for
words like "believes," "outlook," "probable," "expects," "may," "will,"
"should," "could," "seeks," "intends," "plans," "estimates" or "anticipates" and
similar words or phrases. Forward-looking statements necessarily depend on
assumptions, data or methods that may be incorrect or imprecise and are subject
to risks and uncertainties. Among the factors that could cause our actual
results and future actions to differ materially from those described in
forward-looking statements are:
•The effects of the ongoing COVID-19 pandemic and related economic disruptions
and new governmental regulations on our business, results of operations, cash
flow and financial condition, including but not limited to the potential impact
on our sales, operations and supply chain.
•Adverse changes in the global or regional general business, political and
economic conditions, including the impact of continuing uncertainty and
instability of certain countries, that could adversely affect our global
markets, and the potential adverse economic impact and related uncertainty
caused by these items, including but not limited to, the ongoing COVID-19
pandemic, and escalating global trade barriers, including additional tariffs, by
countries such as China.
•Adverse changes in global political and economic conditions, and related
uncertainty caused by the United Kingdom's withdrawal from the European Union
(EU) and its potential impact on, among other things, the movement of goods and
materials in our supply chain, additional regulatory approvals and requirements,
and increased tariffs and duties.
•Changes in tax laws or their interpretation, changes in statutory tax rates,
and adverse outcomes in tax disputes including but not limited to, the U.S., the
United Kingdom and other countries may affect our taxation of earnings
recognized in foreign jurisdictions, result in unexpected tax liabilities,
and/or negatively impact our effective tax rate.
•Foreign currency exchange rate and interest rate fluctuations including the
risk of fluctuations in the value of foreign currencies or interest rates that
would decrease our net sales and earnings.
•Our existing and future variable rate indebtedness and associated interest
expense is impacted by rate increases, which could adversely affect our
financial health or limit our ability to borrow additional funds.
•Acquisition-related adverse effects including the failure to successfully
obtain the anticipated net sales, margins and earnings benefits of acquisitions,
integration delays or costs and the requirement to record significant
adjustments to the preliminary fair value of assets acquired and liabilities
assumed within the measurement period, required regulatory approvals for an
acquisition not being obtained or being delayed or subject to conditions that
are not anticipated, adverse impacts of changes to accounting controls and
reporting procedures, contingent liabilities or indemnification obligations,
increased leverage and lack of access to available financing (including
financing for the acquisition or refinancing of debt owed by us on a timely
basis and on reasonable terms).
•Compliance costs and potential liability in connection with U.S. and foreign
laws and health care regulations pertaining to privacy and security of personal
information, such as HIPAA and the California Consumer Privacy
                                       20
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
Act (CCPA) in the U.S. and the General Data Protection Regulation requirements
in Europe, including but not limited to those resulting from data security
breaches.
•A major disruption in the operations of our manufacturing, accounting and
financial reporting, research and development, distribution facilities or raw
material supply chain due to the ongoing COVID-19 pandemic, integration of
acquisitions, man-made or natural disasters, cybersecurity incidents or other
causes.
•A major disruption in the operations of our manufacturing, accounting and
financial reporting, research and development or distribution facilities due to
technological problems, including any related to our information systems
maintenance, enhancements or new system deployments, integrations or upgrades.
•Market consolidation of large customers globally through mergers or
acquisitions resulting in a larger proportion or concentration of our business
being derived from fewer customers.
•Disruptions in supplies of raw materials, particularly components used to
manufacture our silicone hydrogel lenses.
•New U.S. and foreign government laws and regulations, and changes in existing
laws, regulations and enforcement guidance, which affect areas of our operations
including, but not limited to, those affecting the health care industry,
including the contact lens industry specifically and the medical device or
pharmaceutical industries generally, including but not limited to the EU Medical
Devices Regulation, and the EU In Vitro Diagnostic Medical Devices Regulation.
•Legal costs, insurance expenses, settlement costs and the risk of an adverse
decision, prohibitive injunction or settlement related to product liability,
patent infringement or other litigation.
•Limitations on sales following product introductions due to poor market
acceptance.
•New competitors, product innovations or technologies, including but not limited
to, technological advances by competitors, new products and patents attained by
competitors, and competitors' expansion through acquisitions.
•Reduced sales, loss of customers and costs and expenses related to product
recalls and warning letters.
•Failure to receive, or delays in receiving, regulatory approvals for products.
•Failure of our customers and end users to obtain adequate coverage and
reimbursement from third-party payors for our products and services.
•The requirement to provide for a significant liability or to write off, or
accelerate depreciation on, a significant asset, including goodwill, other
intangible assets and idle manufacturing facilities and equipment.
•The success of our research and development activities and other start-up
projects.
•Dilution to earnings per share from acquisitions or issuing stock.
•Impact and costs incurred from changes in accounting standards and policies.
•Environmental risks, including increasing environmental legislation and the
broader impacts of climate change.
•Other events described in our Securities and Exchange Commission filings,
including the "Business" and "Risk Factors" sections in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2020, as such Risk Factors may
be updated in quarterly filings including updates made in this filing.
We caution investors that forward-looking statements reflect our analysis only
on their stated date. We disclaim any intent to update them except as required
by law.


                                       21

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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

Results of Operations



In this section, we discuss the results of our operations for the first quarter
of fiscal 2021 ended January 31, 2021 and compare them with the same period of
fiscal 2020. We discuss our cash flows and current financial condition under
"Capital Resources and Liquidity." 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 in the United States (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



The World 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.

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,
                                       22
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

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 II, Item 1A, "Risk Factors" herein.


                     [[Image Removed: coo-20210131_g1.jpg]]
First Quarter Highlights
•Gross profit of $450.7 million, up 6% from $426.5 million in the prior year
period
•Operating income of $133.4 million, up 20% from $111.1 million in the prior
year period
•Diluted earnings per share of $42.31, up 2225% from $1.82 per share in the
prior year period, primarily due to income tax benefit related to intra-group
transfer of intellectual property. Refer to Note 6. Income Taxes for further
information
•Cash provided by operations of $147.7 million, compared to $129.7 million in
the prior year period
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 II, 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
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 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
                                       23
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
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.
CooperVision acquired the following entity during the three months ended January
31, 2021:
•A privately-held medical device company on January 19, 2021
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 the following entity during the three months ended
January 31, 2021:
•A privately-held in vitro fertilization (IVF) cryo-storage software solutions
company on December 31, 2020
CooperSurgical acquired the following entity during the three months ended
January 31, 2020:
•A privately-held distributor of IVF medical devices and systems on December 13,
2019

Capital Resources - At January 31, 2021, we had $119.1 million in unrestricted
cash, primarily held outside the United States, and $724.6 million available
under our 2020 Credit Agreement. The $850.0 million term loan entered into on
April 1, 2020, and the $350.0 million term loan entered into on October 16,
2020, remain outstanding as of January 31, 2021.
See Note 5. Debt of the Consolidated Condensed Financial Statements for
additional information.

Transition from LIBOR



The United Kingdom's Financial Conduct Authority, which regulates the London
Interbank Offered 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.

                                       24
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

Selected Statistical Information - Percentage of Net Sales


                                                          Percentage of Net Sales                   2021 vs 2020 % Change
Periods Ended January 31,                              2021                      2020                in Absolute Values
Net sales                                                     100  %                  100  %                          5  %
Cost of sales                                                  34  %                   34  %                          5  %
Gross profit                                                   66  %                   66  %                          6  %
Selling, general and administrative expense                    38  %                   40  %                          1  %
Research and development expense                                3  %                    3  %                         (4) %
Amortization of intangibles                                     5  %                    5  %                         (1) %

Operating income                                               20  %                   17  %                         20  %


Net Sales Growth by Business Unit
Periods Ended January 31,
($ in millions)                 2021         2020        Increase    2021 vs 2020 % Change
CooperVision                  $ 507.0      $ 485.2      $    21.8                      4  %
CooperSurgical                  173.5        161.0           12.5                      8  %
Net sales                     $ 680.5      $ 646.2      $    34.3                      5  %


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; and
•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: coo-20210131_g2.jpg]][[Image Removed: coo-20210131_g3.jpg]]


                                       25
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
       Three Months Ended January 31,
       ($ in millions)                       2021            2020        2021 vs 2020 % Change
       Toric                               $ 162.3         $ 155.1                         5  %
       Multifocal                             57.7            51.8                        11  %
       Single-use spheres                    146.0           138.1                         6  %
       Non single-use sphere, other          141.0           140.2                         1  %
                                           $ 507.0         $ 485.2                         4  %


In the three months ended January 31, 2021:
•Toric and multifocal lenses grew primarily through the success of Biofinity and
MyDay.
•Single-use sphere lenses growth was primarily attributed to MyDay lenses.
•"Other" products primarily include lens care which represented approximately 2%
of net sales in the first quarter of both fiscal 2021 and 2020.
•Total silicone hydrogel products increased by 9%, representing 77% of net sales
in the three months ended January 31, 2021 compared to 73% in the three months
ended January 31, 2020, partially offset by declines in legacy hydrogel
products.
•Foreign exchange rates positively impacted sales by approximately $14.8 million
in the first quarter of fiscal 2021 and had a negative impact of $2.1 million in
the prior year period. In the first quarter of fiscal 2021, net sales increased
1% in constant currency over the prior year period.
•Sales growth was primarily driven by an increase in the volume of lenses sold.
Average realized prices by product did not materially influence sales.
•We expect to continue seeing downward pressure and volatility in certain
markets related to net sales if the COVID-19 pandemic continues, as 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: the Americas, EMEA (Europe, Middle East and Africa) and
Asia Pacific.
Three Months Ended January 31,
($ in millions)                       2021         2020        2021 vs 2020 % Change
Americas                            $ 200.4      $ 189.4                         6  %
EMEA                                  188.8        187.0                         1  %
Asia Pacific                          117.8        108.8                         8  %
                                    $ 507.0      $ 485.2                         4  %



CooperVision's growth in net sales across all regions was primarily attributable
to market gains of silicone hydrogel contact lenses and favorable foreign
currency impacts, partially offset by declines in legacy hydrogel products.
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 obstetricians and gynecologists 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.
                                       26
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. 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: coo-20210131_g4.jpg]][[Image Removed: coo-20210131_g5.jpg]]

Three Months Ended January 31,


       ($ in millions)                       2021         2020        2021

vs 2020 % Change


       Office and surgical products        $ 103.5      $  98.5                         5  %
       Fertility                              70.0         62.5                        12  %
                                           $ 173.5      $ 161.0                         8  %



In the three months ended January 31, 2021:
•Office and surgical products increased compared to the prior year period mainly
due to an increase in PARAGARD® sales compared to the prior year period.
Further, there was an increase from other surgical products such as Uterine
Manipulators, Point-of-Care products and INSORB® surgical stapler. This was
partially offset by a reduction in revenue from Surgical Retractors and Closure
products.
•Fertility net sales increased compared to the prior year period mainly due to
an increase in revenue from IVF consumables, preimplantation genetic testing and
acquired product Embryo Options.
•Foreign exchange rates positively impacted sales by approximately $1.0 million
in the first quarter of fiscal 2021, compared to a negative impact of $0.7
million in the prior year period. In the first quarter of fiscal 2021, net sales
increased 7% in constant currency over the prior year period.
•We expect to continue seeing downward pressure and volatility in certain
markets related to net sales if the COVID-19 pandemic continues, as hospitals
and healthcare centers continue to restrict access, and social distancing
measures continue.

Gross Margin

Consolidated gross margin remained relatively flat at 66% in both the first quarter of fiscal 2021 and fiscal 2020.


                                       27
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
Selling, General and Administrative Expense (SGA)
Three Months Ended January 31,
($ in millions)                                 2021           % Net Sales           2020           % Net Sales        2021 vs 2020 % Change
CooperVision                                 $  179.1                 35  %       $  172.4                 36  %                         4  %
CooperSurgical                                   70.6                 41  %           72.4                 45  %                        (3) %
Corporate                                        11.5                  -              13.5                  -                          (15) %
                                             $  261.2                 38  %       $  258.3                 40  %                         1  %



CooperVision's SGA increased in the first quarter of fiscal 2021 compared to
fiscal 2020 due to increases in distribution costs, general and administrative
costs and advertising and marketing activities primarily related to MiSight,
partially offset by lower travel expenses due to the COVID-19 pandemic.
CooperVision's SGA in the first quarter of fiscal 2021 included $1.8 million of
costs primarily related to acquisition and integration activities.
CooperVision's SGA in the first quarter of fiscal 2020 included $0.7 million of
costs primarily related to integration activities.
The decrease in CooperSurgical's SGA in the first quarter of fiscal 2021
compared to fiscal 2020 was primarily due to lower advertising & marketing costs
and lower travel expenses due to the COVID-19 pandemic, partially offset by an
increase in general and administrative costs. CooperSurgical's SGA in the first
quarter of fiscal 2021 included $1.8 million of acquisition and integration
expenses. CooperSurgical's SGA in the first quarter of fiscal 2020 included $6.1
million of integration expenses and European Medical Devices Regulation costs.
Corporate SGA decreased in the first quarter of fiscal 2021 compared to fiscal
2020 primarily due to savings from lower travel expenses due to the COVID-19
pandemic and timing of corporate projects.
Research and Development Expense (R&D)
Three Months Ended January 31,                                                                                            2021 vs 2020 %
($ in millions)                                 2021           % Net Sales           2020           % Net Sales               Change
CooperVision                                 $   14.1                  3  %       $   13.1                  3  %                       8  %
CooperSurgical                                    7.3                  4  %            9.1                  6  %                     (21) %
                                             $   21.4                  3  %       $   22.2                  3  %                      (4) %


In the three months ended January 31, 2021:
•CooperVision's R&D expense increased in the three months ended January 31, 2021
compared to fiscal 2020, mainly due to MiSight and timing of R&D projects. As a
percentage of sales, CooperVision's R&D expense remained relatively flat.
CooperVision's R&D activities are primarily focused on the development of
contact lenses, manufacturing technology and process enhancements.
•CooperSurgical's R&D expense decreased in the three months ended January 31,
2021 compared to fiscal 2020, mainly due to timing of R&D projects and changes
in headcount. CooperSurgical has not paused research programs during the
COVID-19 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, CooperSurgical's R&D expense remained relatively flat.
CooperSurgical's R&D activities include diagnostics, IVF product development and
the design and upgrade of surgical procedure devices.
Amortization Expense
Three Months Ended January 31,                                                                                        2021 vs 2020 %
($ in millions)                             2021           % Net Sales           2020           % Net Sales               Change
CooperVision                             $    8.4                  2  %       $    8.7                  2  %                      (3) %
CooperSurgical                               26.3                 15  %           26.2                 16  %                       -  %
                                         $   34.7                  5  %       $   34.9                  5  %                      (1) %

CooperVision's and CooperSurgical's amortization expense remained relatively flat in the first quarter of fiscal 2021 compared to fiscal 2020.


                                       28
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
Operating Income
Three Months Ended January 31,                                                                                        2021 vs 2020 %
($ in millions)                             2021           % Net Sales           2020           % Net Sales               Change
CooperVision                             $  127.5                 25  %       $  122.9                 25  %                       4  %
CooperSurgical                               17.5                 10  %            1.7                  1  %                     918  %
Corporate                                   (11.6)                 -             (13.5)                 -                         15  %
                                         $  133.4                 20  %       $  111.1                 17  %                      20  %


CooperVision's operating income remained relatively flat as a percentage of net sales and in absolute dollars in the three months ended January 31, 2021 compared to the prior year period.



CooperSurgical's operating income increased as a percentage of net sales and in
absolute dollars in the first quarter of fiscal 2021 compared to the prior year
period primarily due to an increase in net sales and a decrease in SGA and lower
R&D expenses.

Corporate operating loss decreased in the three months ended January 31, 2021
compared to the prior year period, primarily due to lower professional fees and
travel expenses as a result of the COVID-19 pandemic.

On a consolidated basis, operating income increased in absolute dollars and as a
percentage of net sales primarily due to the increase in consolidated net sales.
Interest Expense
Three Months Ended January 31,                                                                                2021 vs 2020 %
($ in millions)                     2021           % Net Sales           2020           % Net Sales               Change
Interest expense                 $    6.4                  1  %       $   11.6                  2  %                     (45) %


Interest expense decreased as a percentage of net sales and in absolute dollars
during the three months ended January 31, 2021 primarily due to lower interest
rates and lower average debt balances compared to the prior year period.
Other (Income) Expense, Net
Three Months Ended January 31,
($ in millions)                       2021        2020
Investment gain                     $ (11.5)     $   -
Foreign exchange (gain) loss           (0.1)       1.4
Other (income) expense, net            (0.9)       0.7
                                    $ (12.5)     $ 2.1


On January 19, 2021, CooperVision acquired all of the remaining equity interests
of a privately-held medical device company that develops spectacle lenses for
myopia management. The fair value remeasurement of our previous equity
investment immediately before the acquisition resulted in a gain of $11.5
million.
Foreign exchange (gain) loss primarily resulted from the revaluation and
settlement of foreign currency-denominated balances.
Other income increased in the three months ended January 31, 2021, primarily due
to an increase in defined benefit plan related income during the period.
(Benefit) Provision for Income Taxes

Our effective tax rates for the three months ended January 31, 2021 and January
31, 2020 were (1,406.3)% and 7.1%, respectively. The decrease was primarily due
to an intra-group transfer of intellectual property during the three months
ended January 31, 2021, as discussed below. Our effective tax rate for the three
months ended January 31, 2021 was lower than the U.S. federal statutory tax rate
primarily due to the intra-group transfer. Our effective tax rates for the three
months
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
ended January 31, 2021 and January 31, 2020 were otherwise lower than the U.S.
federal statutory tax rate primarily due to earnings in foreign jurisdictions
with lower tax rates and excess tax benefits from share-based compensation.

In November 2020, we completed an intra-group transfer of certain intellectual
property and related assets to a UK subsidiary as part of a group restructuring
to establish headquarters operations in the UK. Income before income taxes
resulting from this transfer is eliminated upon consolidation. The transfer
resulted in a step-up of the UK tax-deductible basis in the intellectual
property and goodwill, creating a temporary difference between the book basis
and the tax basis of these assets. As a result, we recognized a deferred tax
asset of $1,987.9 million, with a corresponding income tax benefit, during the
three months ended January 31, 2021.
Share-Based Compensation Plans
We have several share-based compensation plans that are described in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2020. The compensation
expense and related income tax benefit recognized in our Consolidated Statements
of Income and Comprehensive Income for share-based awards were as follows:
Three Months Ended January 31,
($ in millions)                                      2021        2020

Selling, general and administrative expense $ 9.1 $ 8.7 Cost of sales

                                         1.1         1.0
Research and development expense                      0.6         0.6
Total share-based compensation expense             $ 10.8      $ 10.3
Related income tax benefit                         $  1.2      $  1.4



Capital Resources and Liquidity
First Quarter Highlights
•Operating cash flow of $147.7 million compared to $129.7 million in the prior
year period
•Expenditures for purchases of property, plant and equipment of $55.9 million
compared to $69.0 million in the prior year period
•Cash payments for acquisitions and others of $79.8 million compared to $9.4
million in the prior year period
•Cash provided by operations of $147.7 million offset by capital expenditures of
$55.9 million resulted in positive free cash flow of $91.8 million, up 51%
compared to the prior year period
Comparative Statistics
($ in millions)                                     January 31, 2021      October 31, 2020
Cash and cash equivalents                          $         119.1       $         115.9
Total assets                                       $       8,921.9       $       6,737.5
Working capital                                    $         336.3       $         269.8
Total debt                                         $       1,814.6       $       1,793.2
Stockholders' equity                               $       5,989.9       $       3,824.8
Ratio of debt to equity                                        0.30:1                0.47:1
Debt as a percentage of total capitalization                    23  %       

32 %




Working Capital
The increase in working capital at January 31, 2021 from the end of fiscal 2020
was primarily due to:
•decrease in accounts payable of $38.6 million due to timing of payments;
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
•increase in trade accounts receivable of $25.8 million primarily due to timing
of collections and higher sales;
•decrease in employee compensation and benefits of $9.0 million;
•decrease in short-term debt of $8.6 million due to payment of overdraft and
other credit facilities; and
•increase in cash and cash equivalents of $3.2 million, partially offset by:
•increase in other current liabilities of $11.6 million; and
•decrease in prepaid expense and other current assets of $5.9 million.

At January 31, 2021, our inventory months on hand was 7.4 compared to 6.6 at
October 31, 2020. Inventory remained relatively flat.
Our days sales outstanding (DSO) were relatively consistent at 61 days at
January 31, 2021, compared to 60 days at October 31, 2020.
Operating Cash Flow
Cash provided by operating activities increased by $18.0 million from $129.7
million in the first quarter of fiscal 2020 to $147.7 million in the first
quarter of fiscal 2021. This increase in cash flow provided by operating
activities primarily consists of:
•increase in net income of $2,010.6 million from a net income of $90.5 million
in the first quarter of fiscal 2020 to $2,101.1 million in the first quarter of
fiscal 2021;
•increase of $4.9 million in net changes in depreciation and amortization, from
$70.6 million during the first quarter of fiscal 2020 to $75.5 million during
the first quarter of fiscal 2021;
•increase of $0.7 million in net cash outflow from changes in operating capital,
from $50.6 million outflow in the first quarter of fiscal 2020 to $49.9 million
outflow in the first quarter of fiscal 2021, partially offset by:
•decrease of $1,978.8 million in the net changes in deferred income taxes. Refer
to Note 6. Income Taxes for further information; and

•decrease from other non-cash items of $19.4 million, from $21.7 million during
the first quarter of fiscal 2020 to $2.3 million during the first quarter of
fiscal 2021, primarily due to an investment gain of $11.5 million. Refer to Note
2. Acquisitions for further information.
The increase in net income of $2,010.6 million was primarily due to:
•recognized income tax benefit of $1,987.9 million. Refer to Note 6. Income
Taxes for further information;
•increase of $22.3 million in operating income from $111.1 in the first quarter
of fiscal 2020 to $133.4 million in the first quarter of fiscal 2021 primarily
due to the increase in consolidated net sales and decrease in certain costs; and
•an investment gain of $11.5 million. Refer to Note 2. Acquisitions for further
information.

The $0.7 million increase in the net cash flow from changes in operating capital
compared to the prior year period is primarily due to:
•$36.3 million increase in the net changes in accrued liabilities and other
primarily due to impact from adoption of ASC 842, Leases in prior year period
and higher customer rebate accruals in current period as a result of higher
sales;
•$19.0 million increase in the net changes in inventories;
•$14.5 million increase in the net changes in income tax payable, partially
offset by:
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
•$44.6 million decrease in the net changes in trade and other receivables
primarily due to timing of collections and higher sales; and
•$22.6 million decrease in the net changes in accounts payable primarily due to
timing of payments.
Investing Cash Flow

Cash used in investing activities increased by $57.3 million to $135.7 million
in the first quarter of fiscal 2021 from $78.4 million in the first quarter of
fiscal 2020 due to:

•$72.1 million increase in payments made for acquisitions in the first quarter of fiscal 2021 compared to the prior year period, partially offset by:



•$13.1 million decrease in capital expenditures.
Financing Cash Flow
Cash flows from financing activities decreased by $49.6 million to $13.6 million
cash outflow in the first quarter of fiscal 2021 compared to $63.2 million
outflow in the first quarter of fiscal 2020, primarily due to:
•$39.9 million decrease in repayments of long-term debt, primarily due to
repayments of funds from the 2020 Credit Agreement in first three months of
fiscal 2021 compared to repayment of funds from the 2016 Credit Agreement in the
prior year period;
•$19.0 million increase in proceeds from long-term debt, primarily due to funds
received from the 2020 Credit Agreement; and
•$12.0 million decrease in net repayments from short-term debt, primarily due to
movements in short term loans.
On April 1, 2020, the Company entered into a Revolving Credit and Term Loan
Agreement (the 2020 Credit Agreement), among the Company and KeyBank 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 on April 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.

On October 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 on October 15, 2021.

The following is a summary of the maximum commitments and the net amounts available to us under different credit facilities as of January 31, 2021:


                                       Facility Limit            Outstanding             Outstanding            Total Amount              Maturity Date
(In millions)                                                    Borrowings           Letters of Credit           Available
2020 Revolving Credit Facility       $       1,290.0          $        564.0          $           1.4          $      724.6                     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          $        1,764          $           1.4          $      724.6



The 2020 Credit Agreement contains customary restrictive covenants, as well as
financial covenants that require us to maintain a certain Total Leverage Ratio
and Interest Coverage Ratio. As defined, in the 2020 Credit 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 January 31, 2021, we
were in compliance with the Interest Coverage Ratio at 25.53 to 1.00 and the
Total Leverage Ratio at 2.10 to 1.00. The Company, after considering the
potential impacts of the COVID-19 pandemic, expects to remain
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations
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 Condensed 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 Condensed 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 Repurchase
In December 2011, our Board of Directors authorized the 2012 Share Repurchase
Program and through subsequent amendments, the most recent in March 2017, the
total repurchase authorization was increased from $500.0 million to $1.0 billion
of the Company's common stock. This 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.
At January 31, 2021, $334.8 million remained authorized for repurchase under the
program.
The Company's share repurchases during the three months ended January 31, 2021
were as follows:
            Periods Ended January 31,                             2021
            Number of shares                                     69,622
            Average repurchase price per share                 $ 356.61
            Total costs of shares repurchased (in millions)    $   24.8


There were no share repurchases under the program during the three months ended
January 31, 2020.
Dividends
We paid a semiannual dividend of approximately $1.5 million or 3 cents per
share, on February 9, 2021, to stockholders of record on January 22, 2021.

Summary of Non-GAAP Financial Measures



The non-GAAP financial measures that may be included in Management's Discussion
and Analysis 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 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.
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES
      Item 2. Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

Estimates and Critical Accounting Policies



Information regarding estimates and critical accounting policies is included in
Management's Discussion and Analysis on Form 10-K for the fiscal year ended
October 31, 2020. There have been no material changes in our policies from those
previously discussed in our Form 10-K for the fiscal year October 31, 2020.
Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 1.
General of the Consolidated Condensed Financial Statements of this Quarterly
Report on Form 10-Q.
Trademarks
ActivControl®, Aquaform®, Avaira Vitality®, Biofinity®, Biofinity Energys®,
MyDay® and MiSight® are registered trademarks of The Cooper Companies, Inc., its
affiliates and/or subsidiaries. PC Technology™ is a trademark of The Cooper
Companies, Inc., its affiliates and/or subsidiaries. The clariti® mark is a
registered trademark of The Cooper Companies, Inc., its affiliates and/or
subsidiaries worldwide except in the United States where the use of clariti® is
licensed. INSORB® and PARAGARD® are registered trademarks of CooperSurgical,
Inc.
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                  THE COOPER COMPANIES, INC. AND SUBSIDIARIES

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