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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997 COMMISSION FILE NO. 1-8597
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THE COOPER COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-2657368
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
6140 STONERIDGE MALL ROAD, SUITE 590 94588
PLEASANTON, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
510-460-3600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.10 Par Value, and New York Stock Exchange
associated Rights Pacific Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1997: Common Stock, $.10 Par Value--$589,841,619.
Number of shares outstanding of the registrant's common stock, as of
December 31, 1997: 14,799,705.
DOCUMENTS INCORPORATED BY REFERENCE:
DOCUMENT PART OF FORM 10-K
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Portions of the Annual Report to Stockholders for the Parts I and II
fiscal year ended October 31, 1997
Portions of the Proxy Statement for the Annual Meeting of Part III
Stockholders to be held April 2, 1998
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PART I
ITEM 1. BUSINESS.
INTRODUCTION
The Cooper Companies, Inc. ('TCC' or the 'Company'), through its primary
subsidiaries, CooperVision, Inc. ('CVI'), CooperSurgical ('CSI'), Inc. and
Hospital Group of America, Inc. ('HGA'), develops, manufactures and markets
healthcare products, including a range of contact lenses, diagnostic and
surgical instruments and equipment, and provides healthcare services through the
ownership and operation of psychiatric facilities. TCC is a Delaware
corporation, which was organized on March 4, 1980.
FORWARD-LOOKING STATEMENTS
Statements in this report that are not based on historical fact may be
'forward-looking statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of forward-looking terminology such as 'may,' 'will,' 'expect,'
'estimate,' 'anticipate,' 'continue' or similar terms. Actual results could
differ materially from those contained in the forward-looking statements.
Factors that could cause or contribute to such differences include: major
changes in business conditions and the economy in general, loss of key members
of senior management, any prolonged disruption in the operations of the
Company's manufacturing facilities or hospitals, inroads by new competitors or
technologies, cost to integrate acquisitions, potential foreign exchange
exposure, decisions to invest in research and development and other start-up
projects, dilution to earnings per share associated with acquisitions or stock
issuances, regulatory issues, unexpected changes in reimbursement rates and
payor mix, environmental clean-up costs above those already accrued, litigation
and decisions to divest businesses. Future results are also dependent on each of
the Company's business units meeting specific objectives.
GENERAL DESCRIPTION AND DEVELOPMENT OF BUSINESSES
The information required for these items is contained under the caption
'Business Operations' in the Company's 1997 Annual Report to Stockholders, which
is incorporated herein by reference and is included as Exhibit 13 to this Form
10-K.
RESEARCH AND DEVELOPMENT
During the fiscal years ended October 31, 1997, 1996 and 1995, expenditures
for Company-sponsored research and development were $1.7 million, $1.2 million
and $2.9 million, respectively. During fiscal 1997, CooperVision incurred
approximately 54% and CooperSurgical incurred approximately 46% of total
research and development expenditures. No customer-sponsored research and
development has been conducted.
The Company employs 15 people in its research and development and
manufacturing engineering departments. Outside specialists in lens designs
formulation science, polymer chemistry, microbiology and biochemistry support
product development and clinical research for CooperVision products. Research
and development for CooperSurgical is conducted in-house and by outside surgical
specialists, including members of CooperSurgical's surgical advisory board.
GOVERNMENT REGULATION
Healthcare Products. The U.S. Food and Drug Administration ('FDA') and
other federal agencies as well as foreign ministries of health regulate the
development, testing, production and marketing of the Company's healthcare
products. The Federal Food, Drug and Cosmetic Act and other statutes and
regulations govern the testing, manufacturing, labeling, storage, advertising
and promotion of such products. Noncompliance with applicable regulations can
result in fines, product recall or seizure, suspension of production and
criminal prosecution.
1
The Company is currently developing and marketing medical devices, which
are subject to different levels of FDA regulation depending upon the
classification of the device. Class III devices, such as flexible and extended
wear contact lenses, require extensive premarket testing and approval
procedures, while Class I and II devices are subject to substantially lower
levels of regulation.
A multi-step procedure must be completed before a new contact lens can be
sold commercially. Data must be compiled on the chemistry and toxicology of the
lens, its microbiological profile and the proposed manufacturing process. All
data generated must be submitted to the FDA in support of an application for an
Investigational Device Exemption. Once granted, clinical trials may be initiated
subject to the review and approval of an Institutional Review Board and, where a
lens is determined to be a significant risk device, the FDA. When clinical
trials are completed, a Premarket Approval Application must be submitted and
approved by the FDA before commercialization.
The Company, in connection with some of its new surgical products, can
submit premarket notification to the FDA under an expedited procedure known as a
510(k) application, which is available for any product that can be demonstrated
to be substantially equivalent to a device marketed prior to May 28, 1976. If
the new product is not substantially equivalent to a pre-existing device or if
the FDA rejected a claim of substantial equivalence, approval to market would
require extensive preclinical and clinical testing that would incur additional
costs and substantially delay product marketing.
FDA and state regulations also require the Company to adhere to applicable
'good manufacturing practices' ('GMP'), which mandate detailed quality assurance
and record keeping procedures, and the Company is subject to unscheduled
periodic regulatory inspections. The Company believes it is in substantial
compliance with GMP regulations.
The Company also is subject to foreign regulatory authorities governing
human clinical trials and medical device sales that vary widely from country to
country. Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities of foreign countries must be obtained before
products may be marketed in those countries. The approval process varies from
country to country, and the time required may be longer or shorter than required
for FDA approval.
These regulatory procedures require considerable resources and usually
result in a substantial time lag between the development of a new product and
its marketing. There can be no assurance that all necessary approvals will be
obtained, or obtained in a timely manner. Furthermore, product approvals may be
withdrawn if compliance with regulatory standards is not maintained or if
problems occur after marketing has begun.
Healthcare Services. The healthcare services industry is subject to
substantial federal, state and local regulation that controls the use of its
properties and reimbursement for services provided. Licensing, certification and
other applicable governmental regulations vary from jurisdiction to jurisdiction
and are revised periodically.
The Company's facilities must comply with the licensing requirements of
federal, state and local health agencies and with the requirements of municipal
building codes, health codes and local fire department codes. In granting and
renewing a facility's license, a state health agency considers, among other
things, the condition of the physical buildings and equipment, the
qualifications of the administrative personnel and professional staff, the
quality of professional and other services and the continuing compliance of the
facility with applicable laws and regulations.
The states in which the Company operates hospital facilities have
certificate of need statutes providing, generally, that before construction of
new healthcare facilities, the addition of new beds or the introduction of a new
service, a state agency must determine that a need exists for those facilities,
beds or services. A certificate of need is generally issued for a specific
maximum amount of expenditures or number of beds or types of services to be
provided, and the holder is generally required to implement the approved project
within a specific time period. Often several applicants compete for a single
certificate of need.
All of HGA's facilities are certified or approved as providers under one or
more of the Medicaid or Medicare programs. In order to receive Medicare
reimbursement, each facility must meet the conditions of the United States
Department of Health and Human Services relating to the type of facility, its
equipment, its personnel and its standards of patient care.
2
The Social Security Act contains a number of provisions designed to ensure
that services rendered to Medicare and Medicaid patients are medically necessary
and meet professionally recognized standards. Those provisions include a
requirement that admissions of Medicare and Medicaid patients to healthcare
facilities must be reviewed in a timely manner to determine the medical
necessity of the admissions. In addition, the Peer Review Improvement Act of
1982 provides that a healthcare facility may be required by the federal
government to reimburse the government for the cost of Medicare-paid services
determined by a peer review organization to have been medically unnecessary.
Various state and federal laws regulate the relationships between providers
of healthcare services and physicians. Among these laws are the Medicare and
Medicaid Anti-Fraud and Abuse Amendments (the 'Amendments') to the Social
Security Act, which prohibit individuals or entities participating in the
Medicare or Medicaid programs from knowingly and willfully offering, paying,
soliciting or receiving 'remuneration' (which includes anything of value) in
order to induce referrals for items or services reimbursed under those programs.
Sanctions for violating the Amendments include criminal penalties and civil
sanctions, including fines and possible exclusion from the Medicare and Medicaid
programs. In addition, Section 1877 of the Social Security Act was amended,
effective January 1, 1995, to significantly broaden the prohibitions against
physicians making referrals under Medicare and Medicaid programs to providers
with which the physicians have financial arrangements. Many states have adopted,
or are considering, similar legislative proposals, some of which (including
statutes in effect in New Jersey and Illinois) extend beyond the Medicare and
Medicaid programs to all healthcare services.
In addition, specific laws exist that regulate certain aspects of HGA's
business, such as the commitment of patients to psychiatric hospitals and
disclosure of information regarding patients being treated for chemical
dependency. Many states have adopted a 'patient's bill of rights' which mandates
standards for dealing with issues such as use of the least restrictive
treatment, patient confidentiality, patient access to telephones, mail, legal
counsel and requiring the patient to be treated with dignity.
Patient and Third-Party Payments. HGA receives payment for its psychiatric
services either from patients, from their health insurers or through the
Medicare, Medicaid and Civilian Health and Medical Program of Uniformed Services
('CHAMPUS') governmental programs. Medicare is a federal program, which entitles
persons 65 and over to a lifetime benefit of up to 190 days as an inpatient in
an acute psychiatric facility. Persons defined as disabled, regardless of age,
also receive this benefit. Medicaid is a joint federal and state program
available to persons with limited financial resources. CHAMPUS is a federal
program that provides health insurance for active and retired military personnel
and their dependents.
While other programs may exist or be adopted in different jurisdictions,
the following four categories reflect the primary methods by which HGA's
facilities receive payment for services:
(a) Standard reimbursement, consisting of payment by patients and
their health insurers, is based on a facility's schedule of rates and is
not subject to negotiation with insurance companies, competitive bidding or
governmental limitation.
(b) Negotiated rate reimbursement is at prices established in advance
by negotiation or competitive bidding for contracts with insurers and other
payors such as managed care companies, health maintenance organizations
('HMO'), preferred provider organizations ('PPO') and similar organizations
that can provide a reasonable number of referrals.
(c) Cost-based reimbursement is predicated on the allowable cost of
services, plus, in certain cases, an incentive payment where costs fall
below a target rate. It is used by Medicare, Medicaid and certain Blue
Cross insurance programs to provide reimbursement.
(d) CHAMPUS reimbursement is at either (1) regionally set rates, (2) a
national rate adjusted upward periodically on the basis of the Medicare
Market Basket Index or (3) a fixed discount rate per day at certain
facilities where CHAMPUS contracts with a benefit administration group.
The Medicare, Medicaid and CHAMPUS programs are subject to statutory and
regulatory changes and interpretations, utilization reviews and governmental
funding restrictions, all of which may materially increase or decrease program
payments and the cost of providing services, as well as the timing of payments
to the facilities.
3
Limits on Reimbursement. Changes in government reimbursement programs have
resulted in limitations on increases in, and in some cases in reduced levels of,
reimbursement for healthcare services, and additional changes are anticipated.
Such changes are likely to result in further limitations on reimbursement
levels. In addition, private payors, including managed care payors, increasingly
are demanding discounted fee structures. Inpatient hospital utilization, average
lengths of stay and occupancy rates continue to be negatively affected by
payor-required preadmission authorization and utilization review and by payor
pressure to maximize outpatient and alternative healthcare delivery services for
less acutely ill patients. In addition, efforts to impose reduced allowances,
greater discounts and more stringent cost controls by government and other
payors are expected to continue. Although the Company cannot predict how these
changes will effect its operations as the number of patients covered by managed
care payors increases, significant limits on the scope of services reimbursed
and on reimbursement rates and fees could have an adverse affect on HGA's
business and earnings.
Healthcare Reform. In recent years, an increasing number of legislative
initiatives have been introduced or proposed in Congress and in state
legislatures that would cause major changes in the healthcare system, either
nationally or at the state level. Among these proposals are price controls on
hospitals, insurance market reforms to increase the availability of group health
insurance to small businesses, requirements that all businesses offer health
insurance coverage to their employees and the creation of a government health
insurance plan or plans that would cover all citizens. There continue to be
efforts at the federal level to introduce various insurance market reforms,
expanded fraud and abuse and anti-referral legislation and further reductions in
Medicare and Medicaid reimbursement. A broad range of both similar and more
comprehensive healthcare reform initiatives is likely to be considered at the
state level. It is uncertain which, if any, of these or other proposals will be
adopted. The Company cannot predict how these reforms or their proposed
enactment will affect its businesses.
RAW MATERIALS
In general, raw materials required by CooperVision consist of various
polymers and packaging materials. Alternative sources of all of these materials
are available. Raw materials used by CooperSurgical or its suppliers are
generally available from more than one source. However, because some products
require specialized manufacturing procedures, CooperSurgical could experience
inventory shortages if required to secure an alternative manufacturer on short
notice.
MARKETING AND DISTRIBUTION
Healthcare Products. In the United States and Canada, CooperVision markets
its products through its field sales representatives, who call on
ophthalmologists, optometrists, opticians and optical chains. In the United
States, field sales representatives also call on distributors.
CooperSurgical's products are marketed worldwide by a network of sales
representatives and distributors, and additionally, in the United States through
telemarketing, direct mail advertising and a direct mail catalog.
Healthcare Services. HGA's marketing concept aims to position each
psychiatric facility as the provider of the highest quality mental health
services in its marketplace. HGA employs a combination of general advertising,
toll-free 'help lines,' community education programs and facility-based
continuing education programs to underscore the facility's value as a mental
health resource center. HGA's marketing emphasizes discrete programs for select
illnesses or disorders because it believes that marketing with program
differentiation will be valuable to a referral source seeking treatment for
specific disorders. Referral sources include psychiatrists, other physicians,
psychologists, social workers, school guidance counselors, police, courts,
clergy, care-provider organizations and former patients.
PATENTS, TRADEMARKS AND LICENSING AGREEMENTS
TCC owns or licenses a variety of domestic and foreign patents which, in
total, are material to its businesses. Unexpired terms of TCC's United States
patents range from less than one year to a maximum of seventeen years.
4
As indicated in the Company's 1997 Annual Report to Stockholders,
incorporated by reference in this Item 1, the names of certain of TCC's products
are protected by trademark registrations in the United States Patent and
Trademark Office and, in some instances, in foreign trademark offices as well.
Applications are pending for additional trademark registrations. TCC considers
these trademarks to be valuable because of their contribution to the market
identification of its various products. The Company's policy is to aggressively
enforce and defend its patents and other proprietary technology.
DEPENDENCE ON CUSTOMERS
No material portion of any of TCC's businesses is dependent on any one
customer or any one affiliated group of customers. However, Medicaid and
Medicare generated approximately 29% and 32% of HGA's fiscal 1997 net patient
revenue, respectively.
GOVERNMENT CONTRACTS
No material portion of TCC's business is subject to renegotiations of
profits or termination of contracts or subcontracts at the election of the
United States government.
COMPETITION
Each of TCC's businesses operates in a highly competitive environment.
Competition in the healthcare industry revolves around the search for
technological and therapeutic innovations in the prevention, diagnosis and
treatment of illness or disease. TCC competes primarily on the basis of product
quality, program differentiation, technological benefit, service and
reliability, as perceived by medical professionals.
Healthcare Products. Many companies develop and manufacture contact lenses.
CooperVision competes primarily on the basis of product quality, service and
reputation among medical professionals and by its participation in specialty
niche markets. It sponsors clinical studies to generate information to medically
improve its lenses. Major competitors have greater financial resources and
larger research and development and sales forces than CooperVision. Furthermore,
many of these competitors offer a greater range of contact lenses and a variety
of other eyecare products, including lens care products and ophthalmic
pharmaceuticals, which may give them a competitive advantage in marketing their
lenses to high volume contract accounts.
In the surgical segment, competitive factors include technological and
scientific advances, product quality, price and effective communication of
product information to physicians and hospitals. CooperSurgical believes that it
benefits, in part, from the technological advantages of certain of its products
and from the ongoing development of new medical procedures, that creates a
market for equipment and instruments specifically tailored for these new
procedures. CooperSurgical competes by focusing on distinct niche markets and
supplying those markets with equipment, instruments and disposable products that
are high in quality and that, with respect to certain procedures, enable a
medical practitioner to obtain from one source all of the equipment, instruments
and disposable products required to perform such procedures. As CooperSurgical
develops products for new medical procedures, it offers to train medical
professionals to perform them. CooperSurgical competes with a number of
manufacturers in each of its niche markets, including larger manufacturers with
greater financial and personnel resources who sell a substantially larger number
of product lines.
Healthcare Services. In most geographic areas where HGA operates, other
psychiatric facilities provide services comparable to those offered by HGA. Some
of those are owned by governmental organizations, not-for-profit organizations
or investor-owned companies that have substantially greater resources than HGA
and, in some cases, tax-exempt status. Psychiatric facilities frequently draw
patients from areas outside their immediate locale; therefore, HGA's psychiatric
facilities compete with both local and distant facilities. HGA's psychiatric
facilities also compete with psychiatric units in acute care hospitals. HGA's
strategy is to develop high quality programs designed to target specific
disorders and to retain a highly qualified professional staff.
5
BACKLOG
TCC does not consider backlog to be a material factor in its businesses.
SEASONALITY
HGA's occupancy rates decline during the summer months when school is not
in session and during the year-end holiday season. CVI's contact lens sales in
the first fiscal quarter are generally lower than subsequent quarters due to
fewer patient visits during the holiday season.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Federal, state and local provisions that regulate the discharge of
materials into the environment, or otherwise relate to the protection of the
environment, do not currently have a material effect upon TCC's capital
expenditures, earnings or competitive position.
WORKING CAPITAL
TCC's businesses have not required any material working capital
arrangements in the past five years.
FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS, GEOGRAPHIC AREAS, FOREIGN
OPERATIONS AND EXPORT SALES
The information required for this item is included in Note 14 'Business
Segment Information' of Notes to Consolidated Financial Statements of the
Company included in the Company's 1997 Annual Report which is incorporated
herein by reference.
EMPLOYEES
On October 31, 1997, TCC and its subsidiaries employed approximately 1,400
persons. In addition, licensed physicians, some of whom are not employees, have
been admitted to the medical staff of the individual HGA facilities. TCC
believes that its relations with its employees are good.
6
ITEM 2. PROPERTIES.
The following are TCC's principal facilities as of October 31, 1997:
APPROXIMATE OWNED
FLOOR AREA OR LEASE
LOCATION OPERATIONS (SQ. FT.) LEASED EXPIRATION
- -------------------------------- ----------------------------------- ----------- -------- -----------
United States
Pleasanton, CA Executive Offices 13,700 Leased Sept. 2000
Chicago, IL Psychiatric Hospital 67,800 Owned N/A
New Castle, DE Psychiatric Hospital 45,000 Owned N/A
Mt. Holly, NJ Learning Facility 22,000 Leased Aug. 1998
Rancocas, NJ Psychiatric Hospital 65,000 Owned N/A
Kouts, IN Residential Treatment Center 21,000 Owned N/A
Irvine, CA Executive Offices, CVI Offices,
distribution and customer service 17,500 Leased Jan. 2000
Huntington Beach, CA CVI manufacturing & technical
offices 20,600 Leased March 2002
Fairport, NY CVI administrative offices &
marketing 15,300 Leased April 2002
Scottsville, NY CVI manufacturing, distribution and
warehouse facilities 49,500 Owned N/A
Shelton, CT CSI manufacturing, research and
development, marketing,
distribution and warehouse
facilities 35,000 Leased Dec. 2002
Canada
Markham, Ont. CVI Offices, manufacturing,
distribution and warehouse
facilities 21,000 Leased Feb. 2000
The Company believes its properties are suitable and adequate for its
businesses.
ITEM 3. LEGAL PROCEEDINGS.
The information required for this item is contained under the caption
'Pending Litigation' in Footnote 11 in the Company's 1997 Annual Report to
Stockholders, which is incorporated herein by reference and is included as
Exhibit 13 to this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of fiscal 1997 to a
vote of the Company's security holders.
7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required for this item is contained under the caption
'Quarterly Common Stock Price Range' in the Company's 1997 Annual Report to
Stockholders, which is incorporated herein by reference and is included as
Exhibit 13 to this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required for this item is contained under the caption 'Five
Year Financial Highlights' in the Company's 1997 Annual Report to Stockholders,
which is incorporated herein by reference and is included as Exhibit 13 to this
Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required for this item is contained under the caption
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' in the Company's 1997 Annual Report to Stockholders, which is
incorporated herein by reference and is included as Exhibit 13 to this Form
10-K.
ITEM 8. FINANCIAL STATEMENTS.
The information required for this item is included under the captions
'Consolidated Balance Sheets,' 'Consolidated Statements of Income,'
'Consolidated Statements of Cash Flows,' 'Notes to Consolidated Financial
Statements' and 'Independent Auditors' Report' in the Company's 1997 Annual
Report to Stockholders, which is incorporated herein by reference and is
included as Exhibit 13 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information contained under the heading 'Election of Directors' and
'Executive Officers of the Company' in the Company's Proxy Statement for the
Annual Meeting of Stockholders scheduled to be held on April 2, 1998 (the '1998
Proxy Statement') is incorporated herein by reference with respect to each of
the Company's directors and the executive officers who are not also directors of
the Company.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the subheadings 'Executive Compensation'
and 'Compensation of Directors' of the 'Election of Directors' section of the
1998 Proxy Statement is incorporated herein by reference with respect to the
Company's chief executive officer and the four other most highly compensated
executive officers of the Company and the directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the subheadings 'Securities Held by
Management' and 'Principal Securityholders' of the 'Election of Directors'
section of the 1998 Proxy Statement is incorporated herein by reference with
respect to certain beneficial owners, the directors and management.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required for this item is contained in Note 13
'Relationships and Transactions Between the Company and CooperLife Sciences,
Inc.' in the Company's 1997 Annual Report to Stockholders, which is incorporated
herein by reference and is included as Exhibit 13 to this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
1. Description of the Business.
The general description of the business and general development are
contained in the Company's 1997 Annual Report to Stockholders, which is
incorporated herein by reference and is included as Exhibit 13 to this
Form 10-K.
2. Financial Statements of the Company.
The Consolidated Financial Statements and the Notes thereto and the
Independent Auditors' Report on the foregoing are contained in the
Company's 1997 Annual Report to Stockholders, which is incorporated
herein by reference and is included as Exhibit 13 to this Form 10-K.
3. Accountants' Consent and Report on Schedule.
4. Financial Statement Schedule of the Company.
SCHEDULE
NUMBER DESCRIPTION
------------ -----------
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are not applicable and,
therefore, have been omitted.
9
ACCOUNTANTS' CONSENT AND REPORT ON SCHEDULE
The Board of Directors
THE COOPER COMPANIES, INC.
The audits of the consolidated financial statements of The Cooper
Companies, Inc. and subsidiaries referred to in our report dated December 10,
1997, which is incorporated herein by reference, included the related financial
statement schedule for each of the years in the three-year period ended October
31, 1997 as listed in Item 14 of the Annual Report on Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We consent to incorporation by reference in the Registration Statement Nos.
33-50016, 33-11298, 333-22417, 333-25051 and 333-27639 on Form S-3 and
Registration Statement Nos. 333-10997, 33-27938, 33-36325 and 33-36326 on Form
S-8 of The Cooper Companies, Inc. of our reports dated December 10, 1997,
relating to the consolidated balance sheets of The Cooper Companies, Inc. and
subsidiaries as of October 31, 1997 and 1996 and the related consolidated
statements of income and cash flows for each of the years in the three-year
period ended October 31, 1997, and related schedule, which reports appear in or
are incorporated by reference in the October 31, 1997 Annual Report on Form 10-K
of The Cooper Companies, Inc.
KPMG PEAT MARWICK LLP
San Francisco, California
January 26, 1998
10
SCHEDULE II
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED OCTOBER 31, 1997
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS/ BALANCE
BEGINNING COSTS AND RECOVERIES/ AT END
OF YEAR EXPENSES OTHER (1) OF YEAR
---------- ---------- ----------- -------
(IN THOUSANDS)
Allowance for doubtful accounts:
Year ended October 31, 1997................................. $1,969 $2,336 $(1,959) $2,346
---------- ---------- ----------- -------
---------- ---------- ----------- -------
Year ended October 31, 1996................................. $2,241 $1,849 $(2,121) $1,969
---------- ---------- ----------- -------
---------- ---------- ----------- -------
Year ended October 31, 1995................................. $2,647 $2,300 $(2,706) $2,241
---------- ---------- ----------- -------
---------- ---------- ----------- -------
- -----------
(1) Principally uncollectible accounts written off, net of accounts recovered
that were previously written off.
11
3. EXHIBITS.
EXHIBIT
NUMBER PAGE
- ------ ----
3.1 -- Restated Certificate of Incorporation, as partially amended, incorporated by reference to Exhibit
4(a) to the Company's Registration Statement on Form S-3 (No. 33-17330) and Exhibits 19(a) and
19(c) to the Company's Quarterly Report on Form 10-Q for the Fiscal Quarter ended April 30,
1988..............................................................................................
3.2 -- Certificate of Amendment of Restated Certificate of Incorporation dated September 21, 1995
incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995................................................................
3.3 -- Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2 to the Company's Report on
Form 8-A dated January 18, 1994...................................................................
4.1 -- Certificate of Elimination of Series A Junior Participating Preferred Stock of The Cooper
Companies, Inc. filed with the Delaware Secretary of State on October 30, 1997....................
4.2 -- Rights Agreement, dated as of October 29, 1997, between the Company and American Stock Transfer &
Trust Company, incorporated by reference to Exhibit 4.0 to the Company's Current Report on Form
8-K dated October 29, 1997........................................................................
4.3 -- Certificate of Designations of Series A Junior Participating Preferred Stock of The Cooper
Companies, Inc., incorporated by reference to Exhibit 4.0 of the Company's Current Report on Form
8-K dated October 29, 1997........................................................................
10.1 -- 1988 Long Term Incentive Plan, Amended and Restated as of January 16, 1995, incorporated by
reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1994..................................................................................
10.2 -- Amendment No. 1 to 1988 Long Term Incentive Plan, as Amended and Restated, dated October 10,
1996, incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1996............................................................
10.3 -- Amendment No. 2 to 1988 Long Term Incentive Plan, as Amended and Restated, dated November 12,
1997..............................................................................................
10.4 -- 1998 Long-Term Incentive Plan....................................................................
10.5 -- Severance Agreement entered into as of June 10, 1991, by and between CooperVision, Inc. and A.
Thomas Bender, incorporated by reference to Exhibit 10.26 to Amendment No. 1 to the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1992.............................
10.6 -- Letter dated March 25, 1994, to A. Thomas Bender from the Chairman of the Compensation Committee
of the Company's Board of Directors, incorporated by reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1994.............................
10.7 -- Severance Agreement entered into as of April 26, 1990, by and between Nicholas J. Pichotta and
the Company incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K
for fiscal year ended October 31, 1995............................................................
10.8 -- Letter Agreement dated November 1, 1992, by and between Nicholas J. Pichotta and the Company
incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995................................................................
10.9 -- Employment Agreement entered into as of May 27, 1992, by and between Mark R. Russell and Hospital
Group of America, Inc., incorporated by reference to Exhibit 10.20 to Form 10-K-A dated February
27, 1995..........................................................................................
10.10 -- Letter Agreement dated April 15, 1996, by and between Mark R. Russell and Hospital Group of
America, Inc., incorporated by reference to Exhibit 10.11 to the Company's Annual report on Form
10-K for the fiscal year ended October 31, 1996...................................................
10.11 -- Letter Agreement dated April 14, 1997, by and between Mark R. Russell and Hospital Group of
America, Inc. ....................................................................................
10.12 -- Severance Agreement entered into as of August 21, 1989, by and between Robert S. Weiss and the
Company, incorporated by reference to Exhibit 10.28 to Amendment No. 1 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1992....................................
12
EXHIBIT
NUMBER PAGE
- ------ ----
10.13 -- 1996 Long Term Incentive Plan for Non-Employee Directors of The Cooper Companies, Inc.,
incorporated by reference to the Company's Proxy Statement for its 1996 Annual Meeting of
Stockholders......................................................................................
10.14 -- Amendment No. 1 to 1996 Long Term Incentive Plan for Non-Employee Directors of The Cooper
Companies, Inc., dated October 10, 1996, incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996...................
10.15 -- Amendment No. 2 to 1996 Long Term Incentive Plan for Non-Employee Directors of The Cooper
Companies, Inc., dated October 29, 1997...........................................................
10.16 -- Agreement dated as of September 28, 1993, among Medical Engineering Corporation, Bristol-Myers
Squibb Company and the Company, incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated October 1, 1993..........................................................
11 -- Calculation of Earnings per share................................................................
13 -- 1997 Annual Report to Stockholders. The following portions of such report are incorporated by
reference in this document and are deemed 'filed.' Business Operations and Financial Information
which includes: Five Year Financial Highlights, Management's Discussion and Analysis of Financial
Condition and Results of Operations, the Consolidated Financial Statements and the Notes thereto,
and the Independent Auditors' Report..............................................................
21 -- Subsidiaries.....................................................................................
27 -- Financial Data Schedule..........................................................................
(b) REPORTS ON FORM 8-K.
August 27, 1997 -- Item 5. Other Events.
September 3, 1997 -- Item 5. Other Events.
September 18, 1997 -- Item 5. Other Events.
October 29, 1997 -- Item 5. Other Events.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on January , 1998.
THE COOPER COMPANIES, INC.
By: /s/ A. THOMAS BENDER
...................................
A. THOMAS BENDER
PRESIDENT, CHIEF EXECUTIVE
OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the dates set forth opposite their
respective names.
SIGNATURE CAPACITY DATE
- ------------------------------------------ -------------------------------------------- -------------------
/s/ ALLAN E. RUBENSTEIN Chairman of the Board of Directors January , 1998
.........................................
(ALLAN E. RUBENSTEIN)
/s/ A. THOMAS BENDER President, Chief Executive Officer and January , 1998
......................................... Director
(A. THOMAS BENDER)
/s/ ROBERT S. WEISS Executive Vice President, Treasurer, Chief January , 1998
......................................... Financial Officer and Director
(ROBERT S. WEISS)
/s/ STEPHEN C. WHITEFORD Vice President and Corporate Controller January , 1998
.........................................
(STEPHEN C. WHITEFORD)
/s/ MICHAEL H. KALKSTEIN Director January , 1998
.........................................
(MICHAEL H. KALKSTEIN)
/s/ MOSES MARX Director January , 1998
.........................................
(MOSES MARX)
/s/ DONALD PRESS Director January , 1998
.........................................
(DONALD PRESS)
/s/ STEVEN ROSENBERG Director January , 1998
.........................................
(STEVEN ROSENBERG)
/s/ STANLEY ZINBERG Director January , 1998
.........................................
(STANLEY ZINBERG)
14
EXHIBIT INDEX
Location of
Exhibit in
Exhibit Sequential
Number Description of Document Number System
------- ----------------------- -------------
3.1 - Restated Certificate of Incorporation, as partially amended,
incorporated by reference to Exhibit 4(a) to the Company's Registration
Statement on Form S-3 (No. 33-17330) and Exhibits 19(a) and 19(c) to the
Company's Quarterly Report on Form 10-Q for the Fiscal Quarter ended
April 30, 1988.
3.2 - Certificate of Amendment of Restated Certificate of Incorporation dated
September 21, 1995 incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended October
31, 1995.
3.3 - Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2
to the Company's Report on Form 8-A dated January 18, 1994.
4.1 - Certificate of Elimination of Series A Junior Participating Preferred
Stock of The Cooper Companies, Inc. filed with the Delaware Secretary of
State on October 30, 1997.
4.2 - Rights Agreement, dated as of October 29, 1997, between the Company and
American Stock Transfer & Trust Company, incorporated by reference to
Exhibit 4.0 to the Company's Current Report on Form 8-K dated October
29, 1997.
4.3 - Certificate of Designations of Series A Junior Participating Preferred
Stock of The Cooper Companies, Inc., incorporated by reference to
Exhibit 4.0 of the Company's Current Report on Form 8-K dated October
29, 1997.
10.1 - 1988 Long Term Incentive Plan, Amended and Restated as of January 16,
1995, incorporated by reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1994.
10.2 - Amendment No. 1 to 1988 Long Term Incentive Plan, as Amended and
Restated, dated October 10, 1996, incorporated by reference to Exhibit
10.2 to the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1996.
10.3 - Amendment No. 2 to 1988 Long Term Incentive Plan, as Amended and
Restated, dated November 12, 1997.
10.4 - 1998 Long-Term Incentive Plan.
Location of
Exhibit in
Exhibit Sequential
Number Description of Document Number System
------- ----------------------- -------------
10.5 - Severance Agreement entered into as of June 10, 1991, by and between
CooperVision, Inc. and A. Thomas Bender, incorporated by reference to
Exhibit 10.26 to Amendment No. 1 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1992.
10.6 - Letter dated March 25, 1994, to A. Thomas Bender from the Chairman of
the Compensation Committee of the Company's Board of Directors,
incorporated by reference to Exhibit 10.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1994.
10.7 - Severance Agreement entered into as of April 26, 1990, by and between
Nicholas J. Pichotta and the Company incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form 10-K for fiscal year
ended October 31, 1995.
10.8 - Letter Agreement dated November 1, 1992, by and between Nicholas J.
Pichotta and the Company incorporated by reference to Exhibit 10.9 to
the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1995.
10.9 - Employment Agreement entered into as of May 27, 1992, by and between
Mark R. Russell and Hospital Group of America, Inc., incorporated by
reference to Exhibit 10.20 to Form 10-K-A dated February 27, 1995.
10.10 - Letter Agreement dated April 15, 1996, by and between Mark R. Russell
and Hospital Group of America, Inc., incorporated by reference to
Exhibit 10.11 to the Company's Annual report on Form 10-K for the fiscal
year ended October 31, 1996.
10.11 - Letter Agreement dated April 14, 1997, by and between Mark R. Russell
and Hospital Group of America, Inc.
10.12 - Severance Agreement entered into as of August 21, 1989, by and between
Robert S. Weiss and the Company, incorporated by reference to Exhibit
10.28 to Amendment No. 1 to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1992.
Location of
Exhibit in
Exhibit Sequential
Number Description of Document Number System
------- ----------------------- -------------
10.13 - 1996 Long Term Incentive Plan for Non-Employee Directors of The Cooper
Companies, Inc., incorporated by reference to the Company's Proxy
Statement for its 1996 Annual Meeting of Stockholders.
10.14 - Amendment No. 1 to 1996 Long Term Incentive Plan for Non-Employee
Directors of The Cooper Companies, Inc., dated October 10, 1996,
incorporated by reference to Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1996.
10.15 - Amendment No. 2 to 1996 Long Term Incentive Plan for Non-Employee
Directors of The Cooper Companies, Inc., dated October 29, 1997.
10.16 - Agreement dated as of September 28, 1993, among Medical Engineering
Corporation, Bristol-Myers Squibb Company and the Company, incorporated
by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
dated October 1, 1993.
11 - Calculation of Earnings per share.
13 - 1997 Annual Report to Stockholders. The following portions of such
report are incorporated by reference in this document and are deemed
"filed." Business Operations and Financial Information which includes:
Five Year Financial Highlights, Management's Discussion and Analysis of
Financial Condition and Results of Operations, the Consolidated
Financial Statements and the Notes thereto, and the Independent
Auditors' Report.
21 - Subsidiaries.
27 - Financial Data Schedule.
(b) Reports on Form 8-K.
August 27, 1997 -- Item 5. Other Events.
September 03, 1997 -- Item 5. Other Events.
September 18, 1997 -- Item 5. Other Events.
October 29, 1997 -- Item 5. Other Events.
STATEMENT OF DIFFERENCES
The British pound sterling sign shall be expressed as ....... 'L'