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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2002
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THE COOPER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware 1-8597 94-2657368
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588
(Address of principal executive offices)
(925) 460-3600
(Registrant's telephone number, including area code)
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ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
(1) Audited Financial Statements for the Eye Care Division of
Biocompatibles International, plc., the registration of which was
reported as an Item 2 on Form 8-K filed with the SEC on March 13, 2002:
o Profit and loss account for the year ended 31 December 2001
o Balance sheet at 31 December 2001
o Consolidated cash flow for the year ended 31 December 2001
(2) Consent of Independent Accountants.
(b) Pro forma financial information.
(1) Unaudited pro forma consolidated condensed statement of income for The
Cooper Companies, Inc. for the year ended October 31, 2001.
(2) Unaudited pro forma consolidated condensed statement of income for The
Cooper Companies, Inc. for the three months ended January 31, 2002.
(3) Unaudited pro forma consolidated condensed balance sheet for
The Cooper Companies, Inc. at January 31, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE COOPER COMPANIES, INC.
By /s/ Stephen C. Whiteford
------------------------
Stephen C. Whiteford
Vice President and
Corporate Controller
(Principal Accounting Officer)
Dated: April 29, 2002
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 33-50016, 33-11298, 333-22417, 333-25051,
333-27639, 333-40431, 333-80795, 333-48152 and 333-34206) and in the
Registration Statements on Form S-8 (Nos. 333-10997, 33-27938, 33-36325,
33-36326, 333-58839 and 333-67954) of The Cooper Companies, Inc. of our report
dated April 23, 2002 relating to the financial statements of the Eyecare
Division of Biocompatibles International plc, which appears in the Current
Report on Form 8-K of The Cooper Companies, Inc. dated 13 March 2002.
PricewaterhouseCoopers
West London, England
23 April 2002
Eye Care Division of Biocompatibles International plc
Combined financial statements
for the year ended 31 December 2001
Eye Care Division of Biocompatibles International plc
Combined financial statements
for the year ended 31 December 2001
Pages
Statement of Directors' Responsibilities 1
Independent auditors' report 2
Profit and loss account 3
Balance sheet 4
Consolidated cash flow statement 5
Notes to the combined financial statements 6 - 24
Eye Care Division of Biocompatibles International plc
Statement of directors' responsibilities of the Division
The directors confirm that suitable accounting policies have been used and
applied consistently and reasonable and prudent judgements and estimates have
been made in the preparation of the Combined financial statements for the year
ended 31 December 2001. The directors also confirm that applicable accounting
standards have been followed.
The directors are responsible for keeping proper accounting records, for taking
reasonable steps to safeguard the assets of the Division, and to prevent and
detect fraud and other irregularities. As the Division is not a separate legal
entity these accounts are not statutory accounts as defined in the UK Companies
Act Legislation. Details of the preparation of these accounts are shown in note
1 of the Combined financial statements.
For the avoidance of doubt references to the Directors of the Division include
the Directors of the principal subsidiaries and senior managers generally
identified as Officers of the Division. The Directors and Officers of the
Division through out the period were as follows:
Name Role
---- ----
Crispin Simon Group Chief Executive
Swag Mukerji Group Finance Director
Stuart Maconochie Eye Care Executive Chairperson
Graham Mullis Eye Care Managing Director
Nick Williams Eye Care Finance Director
By order of the Board
Swag Mukerji
Finance Director
Biocompatibles International plc
23 April 2002
Eye Care Division of Biocompatibles International plc
Independent auditors' report to The Cooper Companies, Inc
In our opinion, the accompanying combined balance sheet and the combined profit
and loss account, cash flow statement, statement of total recognized gains and
losses, reconciliation of shareholder's funds and the accompanying notes
present fairly, in all material respects, the financial position of the Eye
Care Division of Biocompatibles International plc (the "Division") at 31
December 2001, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United Kingdom.
Respective responsibilities of directors and auditors
These financial statements are the responsibility of the Division's management;
our responsibility is to express an opinion on these financial statements based
on our audits.
Basis of audit opinion
We conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers
Chartered Accountants, West London
23 April 2002
Eye Care Division of Biocompatibles International plc
Profit and loss account for the year ended 31 December 2001
2001
Notes 'L' '000
Turnover 2 49,857
Cost of sales (27,080)
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Gross profit 22,777
Operating expenses 3 (23,073)
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Operating loss (296)
Interest receivable and other income 440
Interest payable and similar charges 6 (1,447)
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Loss before taxation 4 (1,303)
Taxation 7 (358)
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Retained loss for the year (1,661)
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Statement of total recognised gains and losses
2001
'L' '000
Loss for the financial year (1,661)
Currency translation differences on foreign currency
net Investments (531)
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Total recognised losses relating to the year (2,192)
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All of the Division's activities arise from continuing operations.
There is no difference between the loss on ordinary activities before taxation
and the retained loss for the period stated above and their historical cost
equivalents.
Movements in reserves are set out in note 16.
The accompanying notes form an integral part of these Combined Financial
Statements
Eye Care Division of Biocompatibles International plc
Balance sheet at 31 December 2001
2001
Note 'L' '000
Fixed assets
Tangible assets 8 13,923
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Current assets
Stock 9 9,951
Debtors 10 13,065
Cash at bank and in hand 5,862
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28,878
Creditors - amounts falling due within one year 11 (38,671)
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Net current liabilities (9,793)
Total assets less current liabilities 4,130
Creditors - amounts falling due after more than one 12 (7,766)
year
Provisions for liabilities and charges 13 (210)
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Net liabilities (3,846)
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Capital and reserves
Called up share capital 15 776
Additional paid-in capital 16 50,741
Profit and Loss account 16 (55,363)
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Shareholders' funds 17 (3,846)
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Equity interests 17 (11,037)
Non-equity interests 17 7,191
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The accompanying notes form an integral part of these Combined Financial
Statements
The Combined Financial Statements on pages 3 to 24 were approved by the Board of
Directors of Biocompatibles International plc on 23 April 2002 and were signed
on its behalf by:
Swag Mukerji
Finance Director
Biocompatibles International plc
Eye Care Division of Biocompatibles International plc
Consolidated cash flow statement
for the year ended 31 December 2001
2001
Note 'L' '000
Net cash inflow from operating activities 18 8,335
Returns on investments and servicing of finance
Interest received 76
Interest paid (535)
Finance lease interest paid (46)
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Net cash out-flow from returns on investments and
servicing of finance (505)
Taxation
Tax paid (222)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,602)
Sale of tangible fixed assets 59
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Net cash out-flow from capital expenditure (1,543)
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Net cash in-flow before financing 6,065
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Financing
Repayment of principals on loans (849)
Capital element of finance leases repayments (235)
New loans 8,301
Repayment of loans to the Biocompatibles group (11,056)
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Net cash out-flow from financing (3,839)
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Increase in cash in the period 20 2,226
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The accompanying notes form an integral part of these Combined Financial
Statements
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001
1 Principal accounting policies
The financial statements have been prepared under the historical cost
convention and in accordance with applicable Accounting Standards in the
United Kingdom. Accounting principles generally accepted in the United
Kingdom differ in certain significant respects from accounting principles
generally accepted in the United States. A narrative discussion of the
significant differences between UK GAAP and US GAAP applicable to the
Division is included in Note 27 to the Combined financial statements.
The Combined financial statements have been reported in British Pounds
Sterling.
A summary of the more important accounting policies, which have been
applied consistently is set out below.
Basis of Accounting and Consolidation
The combined financial statements have been prepared using Biocompatibles
International plc's Group accounting policies for the presentation of the
assets and liabilities and results of operations related to the Division's
business which are all under the common control of Biocompatibles
International plc.
The Division's profit and loss account and balance sheet include the
financial statements of the following companies (country of incorporation
is shown in brackets) made up to 31 December 2001:
Hydron Limited (UK)
Hydron Investments Limited (UK)
Hydron Pty Limited (Australia)
Hydron SA (France)
Hydron Limited (Hong Kong)
Hydron Srl (Italy)
Hydron Optical B.V. (Netherlands)
Hydron S.A (Pty) Limited (South Africa)
Vision Hydron S.A. (Spain)
Vision Hydron Produtos Opticos, LDA (Portugal)
Biocompatibles Eye Care, Inc (US)
Biocompatibles Canada, Inc (Canada)
The Combined financial statements include allocations of certain
Biocompatibles International plc corporate and other expenses. These
include insurance services and audit fees (allocated on an invoice basis),
IT costs recharged to the parent company (allocated on a headcount basis),
directors salaries (paid by the parent on the Divisions behalf) and
employee benefits (allocated on a headcount basis) recharged by the parent.
Management believes the methods used to allocate these costs are
reasonable. The financial information contained herein may not necessarily
reflect the combined financial position, results of operations, and cash
flows of the Division in the future or what they would have been if the
company had been a separate entity during the year ended 31 December 2001.
Goods supplied by Biocompatibles Eyecare Inc to the UK market have, during
the year, been sold to Hydron Limited via another UK company,
Biocompatibles Limited, which has remained part of the Biocompatibles
group. Accordingly the exchange loss recognised in Biocompatibles Limited
on the purchase of contact lenses from Biocompatibles Eyecare Inc, which
were then sold to Hydron Limited, has been included in the results of the
Division.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
The Division has been operating as a business unit of Biocompatibles
International plc and, as such, has been dependent on Biocompatibles
International plc for cash management, credit and financial resources on an
as needed basis to fund operations. This is not representative of a stand
alone basis.
In the opinion of management the Divisions existing cash balances combined
with cash generated from operations will be sufficient to meet the
Divisions short-term annual financing requirements. The Cooper Companies
Inc has confirmed that it will continue to provide support for at least 12
months from the date of this report.
The combined financial statements of the Division, include the accounts of
the Division after elimination of all material inter-division accounts and
transactions within the combined Division.
Turnover
Turnover, which excludes value added tax and is reflected net of allowance
for returns, represents the invoiced value of goods supplied and excludes
sales between companies in the Division.
Research and Development Expenditure
Research and development expenditure is charged to the profit and loss
account as it is incurred.
Pension Costs
Most of the Division's employees are members of a defined benefit scheme.
Pension costs are accounted for on the basis of charging the expected cost
of providing pensions over the period during which the Company benefits
from the employees' services. The effects of variation from the regular
cost are spread over the expected average remaining service lives of the
members of the scheme.
The Division also makes some contributions to defined contribution schemes
on behalf of its employee's. These are charged to the profit and loss
account as incurred.
Foreign Currencies
Transactions in foreign currencies are recorded at the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are re-translated at the rate of exchange
ruling at the balance sheet date. All differences are taken to the profit
and loss account.
Assets and liabilities are translated at the rate of exchange ruling at the
balance sheet date. Trading results are converted at the average rate of
exchange for the year. The exchange differences, arising when the opening
net assets/liabilities and the retained profits/losses for the year of
overseas entities are translated to Sterling, are taken directly to
reserves.
Finance and Operating Leases
Costs in respect of operating leases are charged on a straight line basis
over the lease term. Leasing agreements which transfer to the Division
substantially all the benefits and risks of ownership of an asset are
treated as if the asset had been purchased outright. The assets are
included in fixed assets and the capital element of the leasing commitments
are shown as obligations under finance leases. The lease rentals are
treated as consisting of capital and interest elements. The capital element
is applied to reduce the outstanding obligations and the interest element
is charged against profit so as to give a constant periodic rate of charge
on the remaining balance outstanding at each accounting period. Assets held
under finance leases are depreciated over the shorter of the lease terms
and the useful lives of equivalent owned assets.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
Tangible fixed assets
The cost of fixed assets is their purchase cost, together with any
incidental costs of acquisition.
Depreciation is calculated to write off the cost of tangible fixed assets,
less their estimated residual values, on a straight line basis over their
expected useful economic lives.
The principal asset lives used are:
Plant and machinery 8 years
Fixtures and fittings 10 years
Computer equipment 5 years
Leasehold improvements over the shorter of the period of the lease or the expected
useful economic lives of the assets
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost is
determined on a first in first out basis. For manufactured products, cost
includes all direct expenditure and production overheads based on the
normal level of activity. Where necessary, provision is made for obsolete,
slow moving and substandard stocks.
Deferred taxation
Provision is made for deferred taxation, using the liability method, on all
material timing differences to the extent that it is probable that a
liability will crystallise.
Share-based compensation plans
Certain employees of the Division take part in certain share-based
compensation plans operated by the Ultimate parent company Biocompatibles
International Plc. These plans include the Executive Share Option Scheme
1992 and 1995 and the Sharesave Save As You Earn schemes. Generally,
options over shares issued under these schemes are issued to employees with
exercise prices equal to the market value of the underlying shares at the
time of grant, are fixed plans and result in no compensation charge to
either the Ultimate parent company or the Division.
Impact of new accounting standards
In 2000 the U.K. Accounting Standards Board ("ASB") issued Financial
Reporting Standard ("FRS") 17 "Retirement Benefits", FRS 18 "Accounting
Policies" and FRS 19 "Deferred Tax".
FRS 17 introduces radical changes to the way companies account for defined
benefit pension schemes. The FRS approaches pension cost accounting from a
balance sheet perspective, requiring pension scheme assets to be measured
at market value, pension scheme liabilities to be measured using an
actuarial valuation method and discounted using a corporate bond rate and
the resulting pension scheme surplus or deficit to be recognised
immediately on the company balance sheet. Actuarial gains and losses are to
be recognised immediately in the statement of recognised gains and losses.
The cost of benefit improvements are to be charged to the profit and loss
account as soon as they vest. The Division is not required to adopt the FRS
fully until the year ending 31 December 2003 although additional disclosure
has been provided in note 14, as required.
FRS 19 introduces a form of full provision method of accounting for
deferred tax. It requires tax to be provided on timing differences that
have originated but not reversed by the balance sheet date, but only where
the company has an obligation to pay more tax in the future as a result of
the reversal of those timing differences. The Division is currently
determining the impact of the standard, which it is required to adopt for
the year ending 31 December 2002.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
2 Turnover - segmental information
The geographical analysis of turnover:
2001
Geographical area (turnover by destination) 'L' '000
United Kingdom and Europe 29,868
USA 12,315
Rest of the World 7,674
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49,857
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3 Operating Expenses
2001
'L' '000
Selling, marketing and distribution costs 15,925
Research and development 1,487
General and Administrative 5,661
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23,073
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4 Loss before taxation
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2001
'L' '000
Loss before taxation is stated after charging:
Depreciation of fixed assets 2,493
Auditors remuneration:
- Audit fees 117
- Non audit services 65
Research and development 1,487
Operating leases:
Land and buildings 1,028
Other 249
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Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
5 Employee Information
The average weekly number of persons (including executive directors)
employed by the Division during the year, all of whom were engaged in the
principal activity of the Division, was:
2001
Number
Selling, marketing and distribution 230
Research and development 18
General and administrative 93
Manufacturing and production 587
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928
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2001
Staff Costs: 'L' '000
Wages and Salaries 18,574
Social Security costs 2,145
Other pension costs 605
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21,324
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6 Interest Payable and similar charges
2001
'L' '000
Bank loans 625
Finance lease interest 46
Interest paid to other entities in the Biocompatibles
group (see note 12) 776
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1,447
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7 Tax on Loss on Ordinary Activities
2001
'L' '000
United Kingdom corporation tax at 30% -
Adjustment in respect of prior periods 33
Overseas taxation including deferred taxation 325
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Charge for the year 358
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Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
8 Tangible Fixed Assets
Land and Leasehold Plant and Fixtures and Work In
Buildings Improvements Machinery Fittings progress Total
'L' '000 'L' '000 'L' '000 'L' '000 'L' '000 'L' '000
Cost or valuation
At 1 January 2001 3,602 1,871 15,555 3,518 1,843 26,389
Transfer from WIP 520 885 227 (1,632) 0
Additions 235 337 605 146 1,323
Disposals - - (161) (69) - (230)
Currency revaluation - (7) (53) (57) - (117)
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At 31 December 2001 4,357 2,201 16,831 3,765 211 27,365
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Depreciation
At 1 January 2001 769 887 7,258 2,328 - 11,242
Charge for the year 263 89 1,706 435 - 2,493
Disposals - - (140) (67) - (207)
Currency revaluation - (4) (37) (45) - (86)
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At 31 December 2001 1,032 972 8,787 2,651 - 13,442
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Net book value at
31 December 2001 3,325 1,229 8,044 1,114 211 13,923
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The net book value of tangible fixed assets includes amounts in respect of
assets held under finance leases totalling (pound)412,000. The depreciation
charged on these assets during the year was (pound)187,000.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
9 Stocks
2001
'L' '000
Raw materials and consumables 1,563
Work in progress 934
Finished goods 7,454
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9,951
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10 Debtors
2001
'L' '000
Trade debtors 11,342
Other prepayments, debtors and accrued income 1,527
Amounts owed by other entities in the Biocompatibles group 196
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13,065
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11 Creditors: amounts falling due within one year
2001
'L' '000
Bank loans 2,110
Bank overdrafts 3,722
Obligations under finance leases 235
Trade creditors 2,342
Amounts due to other entities in the Biocompatibles group
(see note 12) 25,761
Other taxes and social security 1,222
Other creditors, accruals and deferred income 3,279
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38,671
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Other taxes and social security includes 'L'190k which relates to
overseas corporate taxation.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
12 Creditors: amounts falling due after more than one year
2001
'L' '000
Bank loans 5,104
Obligations under finance leases 139
Amounts due to other entities in the Biocompatibles group 2,523
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7,766
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Bank Loans and Overdrafts repayable as follows: 2001
'L' '000
In one year or less 5,832
Between two and five years 5,104
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10,936
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The net finance lease obligations to which the Division is committed are
repayable as follows:
2001
'L' '000
Less than one year 235
Two to five years 139
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374
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The interest rate on the UK bank borrowings is based on UK LIBOR+1.5% and
is fixed for periods of up to 12 months. The UK bank loans are secured by
fixed and floating charges over the assets of Hydron Limited.
The finance leases carry an average interest rate of 11% over an average
period of 4 years. The interest rate on the US $ loan is Prime +1% and the
loan is secured over the assets of Eye Care Inc.
There is no material difference between the value of the financial
liabilities and their fair values at the balance sheet date.
During the period there were several intercompany trading accounts and loan
accounts that were interest bearing.
Biocompatibles Eyecare Canada had a balance as at 31 December 2001 of
'L'2.5m due to Biocompatibles International plc, bearing interest at a
rate of 7.98% per annum.
Biocompatibles Eyecare Inc had a trading balance as at 31 December 2001 of
'L'17.2m due to Biocompatibles International plc, which is non-interest
bearing.
Hydron Limited has several trading balances and loans due to Biocompatibles
International plc. This includes a 'L'6.8m loan denominated in Euros,
interest bearing at 7.98%.
All balances with Biocompatibles International Plc will be settled as a
result of the disposal transaction (see note 24).
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
13 Provisions for Liabilities and Charges
2001
'L' '000
At 1 January 2001 180
Movement during year 30
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At 31 December 2001 210
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Provisions include amounts for continuing obligations under warranty
schemes.
Deferred Taxation
The potential deferred tax asset, none of which is recognised in the
financial statements, is as follows:-
2001
'L' '000
Tax effect of timing differences because of:
Accelerated capital allowances (137)
Losses 1,331
Other timing differences 119
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1,313
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Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
14 Pension Obligations
SSAP 24 disclosures
The Division operates a pension scheme for UK employees providing benefits
based on final pensionable salary. The assets of the scheme are held
separately from those of the Division. The majority of the assets are held
in an insurance policy invested in a with-profits fund with the Equitable
Life Assurance Society. The pension costs are determined by an independent
qualified actuary and are charged to the profit and loss account so as to
spread the cost of pensions over employees' working lives with the
Division.
The most recent formal valuation of the plan was carried out as at 31
December 1999 and the projected unit method was used. The plan assets were
valued by discounting to the valuation date the expected income from those
assets. The main assumptions used to determine the pension costs were rates
of investment returns of 8.5% p.a. pre retirement and 7.0% post retirement,
pensionable earnings increases of 7.0% p.a., pension increases of 3.5% p.a.
As at 1 January 2000, the value of the assets of the plan (taking the value
of the insurance policies as that available had all members retired on the
valuation date) was 'L'3.061m and this represented 119% of the value of
the benefits that had accrued to members after allowing for expected future
increases in earnings.
An actuarial review was carried out as at 1 July 2001 on the same basis as
above and indicated that the funding level had decreased to 91%. The
deficit has been spread over the estimated remaining service lives of the
employees.
The amounts charged for the year in respect of the defined benefit plan was
'L'248,000. The Division also provides occupational pensions on a
defined contribution basis for employees in both the UK and certain
overseas subsidiaries, for which the pension charge for the year was
'L'357,000.
Additional disclosures required under the transitional arrangements of FRS
17
A full actuarial valuation was carried out as at 31 December 1999 and
updated to 31 December 2001 by a qualified independent actuary.
Value of scheme Long term rate
assets at 31 of return
December 2001 expected at 31
December 2001
'L' '000 %
With profit funds with Equitable life * 2,436 5.7
Cash 105 5.7
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2,541
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* Note that this is an estimate of the surrender value of the pension
scheme based on the scheme assets discounted by 10%.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
14 Pension Obligations (continued)
The following amounts as at 31 December 2001 were measured in accordance
with the requirements of FRS 17:
31 December 2001
'L' '000
Total market value of assets 2,541
Present value of plan liabilities (3,098)
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Deficit in the scheme (557)
---------------------------------------------------------------------------
If the above amounts had been recognised in the financial statements, the
Company's net assets and profit and loss reserve at 31 December 2001 would
be as follows:
31 December 2001
'L' '000
Net liabilities excluding pension liability (3,846)
Pension liability (557)
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Net liabilities including pension liability (4,403)
---------------------------------------------------------------------------
Profit and loss account excluding pension liability (55,363)
Pension deficit (557)
---------------------------------------------------------------------------
Profit and loss account including pension deficit (55,920)
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Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
15 Share Capital
The equity included in the following note relates to that of Hydron
Limited, Biocompatibles Eyecare Inc and Biocompatibles Eyecare Canada.
Entity 2001 2001
Number 'L' '000
Allotted, called up and fully paid
Ordinary Shares of 1p each Hydron Limited 2,392,347 24
"C" Ordinary Shares of 1p each Hydron Limited 274,320 3
Cumulative 7% Preference Shares of 10p each Hydron Limited 7,475,000 748
US Common stock of US$1 each Biocompatibles Eyecare Inc 900 1
Canada Common stock of C$1 each Biocompatibles Eyecare Canada 100 -
------------------------------------------------ ---------------------------------------------------------------
Total 776
------------------------------------------------ ---------------------------------------------------------------
The "C" ordinary shares are entitled to participate in dividends or
distributions pari passu with the other Ordinary shares. Subject to the
payment of and dividend due on the Preference Shares, "C" Ordinary shares
are also entitled to participate pari passu with the other Ordinary shares
in a minimum dividend (the "Minimum Dividend") of 10 percent of the net
profits (calculated in accordance with the Articles) of the Company in
respect of any financial year of the Company commencing on or after 30 May
2000. No dividend however, including the Minimum Dividend, shall be paid
unless and until all Preference shares shall have been redeemed in full
(plus all accruals or arrears of dividend or interest).
On a return of capital "C" Ordinary shares rank pari passu with the other
Ordinary shares in respect of any balance available for distribution after
payment of the amount paid up on the Preference shares (plus any accruals
or arrears of dividend). "C" Ordinary shares carry no right to vote at
general meetings.
The Preference shares are redeemable at the amount paid in six annual
amounts from 31 December 1999 or earlier in the event of a re-financing,
sale or flotation of the Company and at any earlier time at the option of
the Company. On acquisition by Biocompatibles International plc at 9 March
2000 the preference shares were purchased cum-dividend and any further
rights to dividends were then waived.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
16 Reserves
Additional Profit and Loss Total
paid-in share account
capital
'L' '000 'L' '000 'L' '000
Loss for the year - (1,661) (1,661)
Opening balance 50,741 (53,702) (2,961)
--------------------------------------------------------------------------------------------------------
Closing balance 50,741 (55,363) (4,622)
--------------------------------------------------------------------------------------------------------
Additional paid-in share capital is made up as follows:
'L' '000
Share premium in Hydron Limted 8,023
Additional paid-in share capital in Biocompatibles Eyecare Inc 42,718
--------------------------------------------------------------------------------
Total 50,741
--------------------------------------------------------------------------------
17 Reconciliation of Shareholders' Funds
2001
'L' '000
Loss for the year (1,661)
Other recognised gains and losses relating to the year (net) (531)
Capital contributions from parent company 21,216
------------------------------------------------------------------------------------------------------------
Net addition to shareholders' funds 19,024
Opening shareholders' funds (22,870)
-------------------------------------------------------------------------------------------------------------
Closing shareholders' funds (3,846)
-------------------------------------------------------------------------------------------------------------
Shareholders' funds allocated to non-equity: -
Non-equity share capital comprised of cumulative 7% preference shares 7,191
-------------------------------------------------------------------------------------------------------------
Closing non-equity interest 7,191
-------------------------------------------------------------------------------------------------------------
Shareholders' funds allocated to equity:
Difference between total shareholders' funds and amount allocated to non-equity interests (11,037)
-------------------------------------------------------------------------------------------------------------
Made up as follows:
Equity shares (including premium) 44,326
Profit and Loss Account (55,363)
-------------------------------------------------------------------------------------------------------------
Closing equity interest (11,037)
-------------------------------------------------------------------------------------------------------------
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
18 Reconciliation of Operating Loss to Operating Cash Flow
2001
'L' '000
Operating loss (296)
Depreciation on tangible fixed assets 2,493
Loss on disposal of tangible fixed assets (26)
Increase in stocks (1,989)
Increase in trade debtors (467)
Decrease in other debtors and prepayments 644
Increase in trade creditors 411
Increase in other creditors and accruals 228
Increase in amounts due to other entities in the Biocompatibles Group 7,437
Exchange movement on operating assets (100)
-------------------------------------------------------------------------------------
Net cash inflow from operating activities 8,335
-------------------------------------------------------------------------------------------
19 Reconciliation of Net Cash Flow to Movement in Net Debt
2001
'L' '000
Increase in Cash in the Period 2,226
Cash flow from decrease in debt (7,218)
--------------------------------------------------------------------------------------
Change in net funds resulting from cash flows (4,992)
Cash flows from decrease in finance leases (26)
Exchange differences 407
--------------------------------------------------------------------------------------
Movement in Net Debt (4,611)
--------------------------------------------------------------------------------------
Net debt at 1 January 2001 (838)
--------------------------------------------------------------------------------------
Net debt at 31 December 2001 (5,449)
--------------------------------------------------------------------------------------
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
20 Analysis of Net Debt
At 1 January Cash Flow Other Non Cash Exchange At 31 December
2001 Changes Movement 2001
'L' '000 'L' '000 'L' '000 'L' '000 'L' '000
Cash at bank and 948 4,952 - (38) 5,862
in hand
Overdrafts (996) (2,726) - - (3,722)
--------------------------------------------------------------------------------------------------------------
(48) 2,226 - (38) 2,140
--------------------------------------------------------------------------------------------------------------
Debt due after
one year (207) (2,013) - 111 (2,109)
Debt due within
one year - (5,438) - 334 (5,104)
--------------------------------------------------------------------------------------------------------------
(207) (7,451) - 445 (7,213)
--------------------------------------------------------------------------------------------------------------
Finance leases (583) 233 (26) - (376)
--------------------------------------------------------------------------------------------------------------
Total (838) (4,992) (26) 407 (5,449)
--------------------------------------------------------------------------------------------------------------
21 Capital Commitments
2001
'L' '000
Capital expenditure contracted but not provided for in the financial 23
statements
-----------------------------------------------------------------------------------------
22 Contingent Liabilities
2001
'L' '000
Amount of guarantees in respect of trading activities:
HM Customs & Excise 150
Amounts of guarantees in respect of bank overdrafts 189
----------------------------------------------------------------------------------------------
The HMCE guarantees relate to amounts guaranteed by the bank in respect of
VAT and duty incurred on the shipment of goods inward.
The bank overdraft guarantees are in respect of the overdrafts of the
overseas subsidiaries of Hydron Limited guaranteed by its UK bank.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
23 Financial Commitments
At 31 December 2001 the Division had annual commitments under
non-cancellable operating leases as follows:
Land and
buildings Other
2001 2001
'L' '000 'L' '000
Expiring within one year 26 77
Expiring between two and five years inclusive 455 151
Expiring after five years 552 -
--------------------------------------------------------------------------------
1,033 228
--------------------------------------------------------------------------------
24 Subsequent events
In January 2002, an agreement was signed (subject to shareholders'
approval) to dispose of the Division to The Cooper Companies, Inc. The sale
was completed on 28 February 2002.
All balances with Biocompatibles International Plc will be settled as a
result of the disposal transaction (see note 12).
25 Related party transactions
The Division has taken advantage of the exemption provided by FRS 8 not to
make disclosures concerning transactions with other companies in the
Biocompatibles Group except as disclosed below.
Royalties payable by the Division to Biocompatibles International plc which
will not be payable following the completion of the sale (see note 24) but
are included in the Combined financial statements totalled 'L'387,000
during the year.
The following transactions were entered into during this period with
Coopervision Limited ("Coopervision"), a wholly owned subsidiary of The
Cooper Companies Inc, and are included within the financial statements.
Sales of partly-made contact lenses to Coopervision for 'L'467,000 at a
total gross profit of 'L'401,000. Purchases of partly-made contact
lenses from Coopervision for 'L'121,000. Royalty payments made to
Coopervision Limited of 'L'905,370, in relation to manufacturing
processes.
As at 31 December 2001 the Division owed 'L'117,500 to Coopervision
Limited and was owed 'L'120,614 by Coopervision Limited. The amounts
are included in trade creditors and trade debtors respectively.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
26 Ultimate and immediate parent companies
At 31 December 2001 and until 28 February 2002 the directors regarded
Biocompatibles International plc as the immediate and ultimate parent
company of all companies within the Division. Copies of the Biocompatibles
International plc accounts are available from Biocompatibles International
plc, Chapman House, Farnham Business Park, Weydon Lane, Farnham, Surrey GU9
8QL.
From 1 March 2002 the directors of Hydron Limited regard Aspect Vision
Holdings, a subsidiary of Coopervision Limited, as the immediate parent and
The Cooper Companies Inc as the ultimate parent. The directors of
Biocompatibles Eyecare Inc. and Biocompatibles Canada Inc regard The Cooper
Companies Inc as both the immediate and ultimate parent. Copies of The
Cooper Companies Inc accounts are available from The Cooper Companies Inc,
21062 Bake Parkway, Suite 200, Lake Forest, CA 92630, USA.
27 Summary of significant differences between UK GAAP and US GAAP
Overview
The Combined Financial Statements have been prepared and presented in
accordance with accounting principles and standards generally accepted in
the United Kingdom ("UK GAAP"). Such standards differ in certain material
aspects from the accounting principles generally accepted in the United
States of America ("US GAAP").
Set forth below is a summary of the significant differences between UK GAAP
and US GAAP as they relate to the measurement of profit and loss and
shareholders' funds of the Division. Given the inherent differences between
UK GAAP and US GAAP the financial information presented under UK GAAP is
not presented fairly in all material respects under US GAAP. The Company
has not quantified these differences, nor undertaken a reconciliation of UK
GAAP to US GAAP financial statements. Further, no attempt has been made to
identify all future differences between UK GAAP and US GAAP as the result
of prescribed changes in accounting standards. Regulatory bodies that
promulgate UK GAAP and US GAAP have significant projects ongoing that could
affect future comparisons such as this one. Finally, no attempt has been
made to identify all future differences between UK GAAP and US GAAP that
may affect the financial statements as a result of transactions or events
that may occur in the future.
Deferred taxation
Under UK GAAP the Company provides for deferred taxation using the
liability method on all material timing differences to the extent that it
is considered probable that the liabilities will crystallise in the
foreseeable future. As discussed in Note 1 this will change with the
application of FRS 19 "Deferred Tax" which the Division has not adopted
early in these accounts.
Under US GAAP deferred taxes should be provided for the tax effect of all
temporary differences between the tax and book bases of assets and
liabilities. All available evidence, both positive and negative, including
the probability of future taxable income as well as tax planning strategies
should be considered in determining the realisability of deferred tax
assets. A valuation allowance with respect to deferred tax assets is
recorded to the extent that it is more likely than not that all, or a
portion, of the deferred tax assets will not be realised.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
Cash flows
Under UK GAAP cash flow represents increases or decreases in "cash", which
is comprised of cash in hand and deposits repayable on demand, less
overdrafts. Cash flows are presented in the following categories: (i)
operating activities; (ii) returns on investments and servicing of finance;
(iii) taxation; (iv) capital expenditure; and financial investment; (v)
acquisitions and disposals; (vi) management of liquid resources; (vii)
equity dividends and (viii) financing activities.
Under US GAAP cash flow represents increases or decreases in "cash and cash
equivalents", which include short term highly liquid investments with
remaining maturities of less than 90 days when acquired and exclude
overdrafts. Cash flows are reported in only three categories: (i) operating
activities; (ii) investing activities and (iii) financing activities.
Accordingly, cash flows arising from taxation returns on investments and
servicing of finance would be included as cash flows from operating
activities under US GAAP. Cash flows arising from capital expenditure and
financial investment are classified as cash flows from investing activities
under US GAAP. Cash flows arising from management of liquid resources under
UK GAAP are classified as either investing activities (where the deposit
has a period to maturity in excess of three months) or as movements in cash
and cash equivalents (where the deposit has less than three months to
maturity) under US GAAP. The payment of dividends and debt issue costs
would be included under financing activities. Movements in bank overdrafts
are classified as a financing activity.
Capitalised Interest
Under UK GAAP interest costs may be, but are not required to be,
capitalised on specific or general borrowings to finance the construction
of individual qualifying assets. Under US GAAP interest on debt capital
must be capitalised to the date the facilities are available and ready for
use on assets constructed or otherwise produced for a company's own use if
material. The amount to be capitalised is an allocation of the interest
cost incurred during the period required to complete the asset. The
interest rate for capitalisation purposes is based on the rates of the
company's outstanding borrowings. If the company associates a specific new
borrowing with the asset, it may apply the rate on that borrowing to the
appropriate portion of the expenditures for the asset. A weighted average
of the rates on other borrowings is to be applied to expenditures not
covered by specific new borrowings.
Where interest is capitalised for US GAAP purposes and not for UK GAAP
purposes the resulting impact would be to decrease interest expense and
increase total assets in the period of capitalisation and higher
depreciation charges from the point at which depreciation of the related
asset commences.
Pensions
Under UK GAAP, the cost of providing pension benefits under defined benefit
pension schemes is expensed over the averaged expected service lives of
eligible employees in accordance with the provisions of Statement of
Standard Accounting Practice 24 (SSAP 24). SSAP 24 aims to produce an
estimate of cost based on long-term actuarial assumptions. Variations from
the regular pension cost arising from, for example, experience deficiencies
or surpluses, are charged or credited to the profit and loss account over
the expected average remaining service lives of current employees in the
schemes. The effect of the introduction of Financial Reporting Standard
("FRS") 17 "Retirement Benefits" is discussed in Note 1.
Eye Care Division of Biocompatibles International plc
Notes to the Combined Financial Statements
for the year ended 31 December 2001 (continued)
Under US GAAP, the annual pension cost for such schemes comprises the
estimated cost of benefits accruing in the period as determined in
accordance with SFAS 87, which requires readjustment of the significant
actuarial assumptions annually to reflect current market and economic
conditions. U.S. GAAP requires that the projected benefit obligations be
matched against the fair value of the schemes' assets and that adjustments
be made to reflect any unrecognised obligations or assets in determining
the pension cost or credit for the period. In addition, the amortisation
procedure under U.S. GAAP applies a corridor approach for recognising gains
and losses in the determination of periodic expense. The corridor approach
shields actuarial gains and losses falling within a defined corridor from
required amortisation. The corridor is defined as the greater of 10 per
cent of the market-related asset value or 10 percent of the projected
benefit obligation as of the beginning of the year.
Goodwill
Under UK GAAP and prior to the introduction of Financial Reporting Standard
(FRS 10) "Goodwill and Intangible Assets", companies were allowed to
write-off goodwill resulting from a purchase acquisition immediately
against reserves, thus avoiding amortization of the goodwill. FRS 10
requires Goodwill to be recorded and amortized over the lesser of its
estimated economic useful life or 20 years. Under the transition provisions
of FRS 10 however, companies were not required to reinstate previously
written-off goodwill. In 1993 the division wrote-off directly to reserves
'L'14,915k of goodwill associated with the acquisition of Hydron
Investments Limited and its subsidiaries by Hydron Limited. None of this
goodwill was reinstated upon the Division's adoption of FRS 10. Under US
GAAP, goodwill resulting from a business purchase acquisition is required
to be recorded on the acquiring company's balance sheet and amortized over
the lesser of the goodwill's estimated useful economic life or 40 years.
The impact of adjusting this difference would result in increasing total
and net assets related to the goodwill element, coupled with increased
amortization expense related to the respective goodwill element.
Under UK GAAP, goodwill associated with a business purchase acquisition is
recorded at the parent company consolidation level only and UK companies
are not required to "push-down" goodwill to the related company stand-alone
financial statements. Accordingly, goodwill of approximately 'L'26,992
associated with Biocompatibles plc's acquisition of Hydron Limited and its
subsidiaries in 2000 has not been reflected in these combined financial
statements. In addition, goodwill amortization expense associated with this
goodwill has not been reflected in the Combined Financial statements.
Under SEC reporting requirements, goodwill and related amortization
associated with a parent company's acquisition of a company or group of
companies is required to be reflected in the stand-alone financial
statements of that company or group of companies. The impact of adjusting
this difference would result in increasing total and net assets related to
the goodwill element, coupled with increased amortization expense related
to the respective goodwill element.
Redeemable Preference Shares
Under UK GAAP, preference shares are reported within shareholders' funds.
Shareholders' funds are then further analysed between equity and non-equity
interests. Under US GAAP, redeemable preference shares are not classified
in equity but normally in a mezzanine category between shareholders' equity
and liabilities.
On February 28, 2002, The Cooper Companies, Inc. ("Cooper" or "TCC"), completed
its acquisition of the contact lens business of Biocompatibles International
plc. ("Biocompatibles"), comprised of its wholly owned subsidiaries Hydron
Limited ("Hydron"), Biocompatibles Eyecare Inc. ("BE Inc.") and Biocompatibles
Canada Inc. ("BE Canada") and are herein collectively referred to as "BE Inc."
Pursuant to an International Share Sale Agreement (the "Sale Agreement") dated
15 January 2002, among Biocompatibles, Cooper and Cooper's wholly owned
subsidiary Aspect Vision Holdings Limited ("AVH"), Biocompatibles sold all of
the outstanding shares of Hydron to AVH and all of the outstanding shares of BE
Inc. and BE Canada to Cooper.
The aggregate consideration paid for the shares and to repay outstanding
indebtedness of the acquired business was 'L'68 million (about $97 million)
plus transaction costs. The purchase price was determined through arm's length
negotiations. Cooper paid 'L'24 million of such amount in cash at closing,
which funds were obtained from its existing line of credit, and it and AVH
issued promissory notes in an aggregate principal amount of 'L'44 million to
Biocompatibles, maturing on 15 November 2002 and bearing interest at 5% per
annum. The notes are secured by the shares of BE Inc, the production facility of
BE Inc. in Norfolk, Virginia, and BE Inc.'s inventory and receivables. The AVH
note is also secured by the shares of Hydron. The notes may be prepaid at the
option of Cooper and AVH without penalty at any time. Cooper is currently
negotiating an expanded bank credit facility, which it expects to complete in
early May, part of the proceeds of which will be used to repay the notes. An
Arrangement and Administration Agreement dated 28 February 2002 among
Biocompatibles, Cooper and AVH (the "Administration Agreement") provides for
certain payments to Biocompatibles by Cooper if payment of the principal amount
of the notes, together with accrued interest, is not made by May 15, 2002, until
such time as such payment is made.
The following unaudited pro forma consolidated condensed financial statements
have been prepared to illustrate the effect of the acquisition of BE Inc., and
include unaudited pro forma consolidated condensed statements of income for the
year ended October 31, 2001 and three months ended January 31, 2002, and an
unaudited pro forma consolidated condensed balance sheet as of January 31, 2002.
The unaudited pro forma financial statements are based on the historical
consolidated financial statements of the Company, prepared in accordance with
accounting principles generally accepted in the United States of America, as
well as the historical combined financial statements of BE Inc. as of and for
the year ended December 31, 2001, prepared in accordance with accounting
principles generally accepted in the United Kingdom. The unaudited pro forma
consolidated condensed financial statements reflect a preliminary allocation
of the purchase price. Management is in the process of obtaining valuations of
the individual assets acquired. Accordingly, the actual purchase price
allocation may differ significantly from the preliminary allocation used herein.
The unaudited pro forma consolidated condensed balance sheet as of January 31,
2002 assumes that the acquisition was consummated on January 31, 2002, and the
unaudited pro forma consolidated condensed statements of income for the year
ended October 31, 2001 and the three months ended January 31, 2002 each assume
that the acquisition was consummated as of November 1, 2000.
The pro forma consolidated condensed financial information is presented for
illustrative purposes only and does not purport to present the actual financial
position or results of operations of the Company had the acquisition of BE Inc.
actually occurred on the dates specified, nor is it necessarily indicative of
the results of operations that may be achieved in the future.
The following unaudited pro forma consolidated condensed statements of income
for the year ended October 31, 2001 and the three months ended January 31, 2002
have been prepared to reflect the acquisition of BE Inc. as if it had occurred
on November 1, 2000. The acquisition has been accounted for under the purchase
method of accounting.
The unaudited pro forma consolidated condensed statements of income do not
purport to be indicative of the results that actually would have occurred if the
acquisition had occurred on the date indicated or indicative of results, which
may be obtained in the future. The unaudited pro forma consolidated condensed
statements of income should be read in conjunction with the historical
consolidated financial statements and accompanying notes of the Eye Care
Division of Biocompatibles International plc and the Company. The unaudited pro
forma consolidated condensed financial statements reflect a preliminary
allocation of the purchase price. Management is in the process of obtaining
valuations of the individual assets acquired. Accordingly, the actual purchase
price allocation may differ significantly from the preliminary allocation used
herein.
The historical consolidated condensed statement of income information presented
has been translated from amounts denominated in British pounds sterling to U.S.
dollars, using an average exchange rate for the year ended December 31, 2001 of
1.442. In addition, certain reclassification adjustments have been made from the
presentation in the audited financial statements to conform to TCC's
presentation under accounting standards generally accepted in the United States
of America.
The following is a summary of adjustments reflected in the unaudited pro forma
consolidated condensed statements of income:
(a) Represents an elimination of royalty income/expense for
royalties paid to TCC from BE Inc. The offset is included in
cost of products sold
(b) Adjustment to reflect the change in depreciation expense
resulting from the write down of property, plant and
equipment used in the manufacturing process, depreciated on a
straight-line basis over an average useful life of 8 years.
(c) Adjustment to reflect the annual amortization amount for the
excess of the purchase price over the fair value of the net
assets acquired (Goodwill) amortized over a 40-year life. We
adopted Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets" ("SFAS 142") in the
first quarter of fiscal 2002. In accordance with the
requirements of SFAS 142, goodwill was not amortized in the
quarter ended January 31, 2002. Initial allocations are
subject to change.
(d) Adjustment to reflect increase in interest expense at an
average of the LIBOR rate for the year plus 200 basis points,
on 'L'74 million ('L'68 million for the purchase
price and 'L'6 million for acquisition costs) or about
$107 million. A change of 1/8 percent in the interest rate
would result in a change in interest expense and net income
of $140,000 and $91,000, before and after tax, respectively.
(e) Adjustment for the tax related additional interest deduction
in the U.S. tax rate of 35%, and there is no tax benefit on
the intangible amortization deduction.
THE COOPER COMPANIES, INC.
Unaudited Pro Forma Consolidated Condensed Statement of Income
(In thousands, except per share figures)
Year Ended October 31, 2001
-----------------------------------------------------
Historical Pro forma
-----------
TCC BE Inc. Adjustments Pro forma
--- ------- ----------- ---------
Net sales of products $234,572 $71,894 $(1,272)(a) $305,194
Cost of products sold 81,204 39,049 (2,700)(a)(b) 117,553
-------- ------- ------- --------
Gross profit 153,368 32,845 1,428 187,641
Selling, general and administrative expense 89,770 31,127 - 120,897
Research and development expense 3,658 2,144 - 5,802
Amortization of intangibles 5,182 - 1,755 (c) 6,937
-------- ------- ------- --------
Income from operations 54,758 (426) (327) 54,005
-------- ------- ------- --------
Interest expense 3,738 2,087 7,190 (d) 13,015
Other income, net 1,108 634 - 1,742
-------- ------- ------- --------
Income (loss) from continuing operations before income taxes 52,128 (1,879) (7,517) 42,732
(Benefit of) provision for income taxes 14,992 (2,301)(e) 13,207
-------- ------- ------- -------
Income (loss) from continuing operations $ 37,136 $(2,395) $(5,216) $ 29,525
======== ======= ======= ========
Earnings per share:
Basic $ 2.50 $ 1.99
======== ========
Diluted $ 2.44 $ 1.94
======== ========
Number of shares used to compute
Earnings per share
Basic 14,837 14,837
======== ========
Diluted 15,246 15,246
======== ========
THE COOPER COMPANIES, INC.
Unaudited Pro Forma Consolidated Condensed Statement of Income
(In thousands, except per share figures)
Three Months Ended January 31, 2002
-----------------------------------------------------
Historical Pro forma
----------------------
TCC BE Inc. Adjustments Pro forma
--- ------- ----------- ---------
Net sales of products $58,112 $18,959 $ (318)(a) $76,753
Cost of products sold 20,625 9,102 (674)(a)(b) 29,053
------- ------- ------ -------
Gross profit 37,487 9,857 356 47,700
Selling, general and administrative expense 23,215 7,204 - 30,419
Research and development expense 857 520 - 1,377
Amortization of intangibles 308 (c)
------- ------- ------ -------
Income from operations 13,107 2,133 - 15,596
------- ------- ------ -------
Interest expense 893 520 1,097 (d) 2,510
Other income, net 1,036 158 - 1,194
------- ------- ------ -------
Income (loss) from continuing operations before income taxes 13,250 1,771 (741) 14,280
(Benefit of) provision for income taxes 3,845 129 (331)(e) 3,643
------- ------- ------ -------
Income (loss) from continuing operations $ 9,405 $ 1,642 $ (410) $10,637
======= ======= ====== =======
Earnings per share:
Basic $ 0.62 $ 0.70
======= =======
Diluted $ 0.61 $ 0.68
======= =======
Number of shares used to compute
Earnings per share
Basic 15,220 15,220
======== =======
Diluted 15,538 15,538
======== =======
The following unaudited pro forma consolidated condensed balance sheet has been
prepared to reflect the acquisition of BE Inc. as if it occurred on January 31,
2002. The acquisition has been accounted for under the purchase method of
accounting.
The historical consolidated condensed balance sheet as of January 31, 2002 has
been translated from amounts denominated in British pounds sterling to U.S.
dollars using an exchange rate of 1.4109, which is the spot exchange rate on
January 31, 2002. In addition, certain reclassification adjustments have been
made from the historical presentation UK GAAP presentation to conform to TCC's
presentation under accounting standards generally accepted in the United States
of America.
The following is a summary of the pro forma adjustments reflected in the
unaudited pro forma consolidated condensed balance sheet
(a) Represents the estimated purchase price adjustment to meet required
net asset values per the contract.
(b) Represents estimated write down of plant, property and equipment,
based on Management's preliminary assessment of value.
(c) To reflect the excess of acquisition cost over the fair value of net
assets acquired (goodwill).
Purchase Price 95,941
Allocated to:
Historical book value (5,427)
Intercompany account (see (e)) 39,629
Repayment of debt (see (d)) 10,341
Write down property plant &
equipment (see (b)) (11,179)
Purchase price adjustment (see (a)) 6,604
Acquisition costs (see (d)) (12,698)
-------
Total allocation 27,270
------
Goodwill 68,671
(d) Represents repayment of Biocompatible International plc debt with cash
from purchase price, per instructions. Total paid $10.3 million
('L'7.3 million) with $8.5 million short-term debt and $1.8 million
long-term debt
(e) Represents accrued acquisition costs including estimated costs of
integrating the BE Inc. operations into CooperVision, which consist
mainly of employee severance and plant shutdown costs.
(f) Represents BE Inc. intercompany payable to Biocompatibles International
plc included in the historical book value that were repaid with cash
from the purchase price, per instruction from Biocompatibles
International plc
(g) Represents the funding for the acquisition from our revolving credit
agreement, also includes the 'L'44 million note, which will be
repaid using our revolving credit agreement.
(h) Represents the elimination of the purchased equity of BE Inc.
THE COOPER COMPANIES, INC.
Unaudited Pro Forma Consolidated Condensed Balance Sheet
(In thousands)
January 31, 2002
---------------------------------------------------------
Historical Pro forma
--------------------
TCC BE Inc. Adjustments Pro forma
--- ------- ----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 4,867 $ 8,271 $ - $ 13,138
Trade receivable, net 56,016 16,002 - 72,018
Marketable securities 5,006 - - 5,006
Inventories 54,176 14,040 - 68,216
Deferred tax assets 17,689 - - 17,689
Other current assets 11,227 2,154 6,604 (a) 19,985
-------- -------- -------- --------
Total current assets 148,981 40,467 6,604 196,052
-------- -------- -------- --------
Property, plant and equipment at cost 90,239 38,609 (11,179)(b) 117,669
Less accumulated depreciation and amortization 25,720 18,965 - 44,685
-------- -------- -------- --------
64,519 19,644 (11,179) 72,984
-------- -------- -------- --------
Goodwill, net 130,112 - 68,671 (c) 198,783
Other intangibles, net 13,690 - 13,690
Deferred tax assets 28,830 - 28,830
Other assets 3,808 - - 3,808
-------- -------- -------- --------
$389,940 $ 60,111 $ 64,096 $514,147
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 27,103 $ 8,560 $ (8,465)(d) $ 27,198
Accounts payable 10,537 3,304 - 13,841
Accrued acquisition costs 16,605 - 12,698 (e) 29,303
Other current liabilities 25,058 6,352 - 31,410
Accrued income taxes 8,162 - - 8,162
Intercompany account - 39,629 (39,629)(f) -
-------- -------- -------- --------
Total current liabilities 87,465 57,845 (35,396) 109,914
-------- -------- -------- --------
Long-term debt 36,813 7,397 94,065 (g)(d) 138,275
Other noncurrent liabilities 2,978 296 - 3,274
-------- -------- -------- --------
Total liabilities 127,256 65,538 58,669 251,463
-------- -------- -------- --------
Stockholders' equity
Common stock 1,589 1,095 (1,095)(h) 1,589
Additional paid-in capital 278,835 71,590 (71,590)(h) 278,835
Other comprehensive income (5,915) - - (5,915)
Accumulated deficit (1,468) (78,112) 78,112 (h) (1,468)
Other (156) - - (156)
Treasury stock (10,201) - - (10,201)
-------- -------- -------- --------
Stockholders' equity 262,684 (5,427) 5,427 262,684
-------- -------- -------- --------
$389,940 $ 60,111 $ 64,096 $ 514,147
======== ======== ======== ========
STATEMENT OF DIFFERENCES
The British pound sterling sign shall be expressed as.................'L'