UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 31, ~~2022~~2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-8597

The Cooper Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware			94-2657368
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

6101 Bollinger Canyon Road, Suite 500,

San Ramon, California 94583

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (925) 460-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $.10 par value

COO

The New York Stock Exchange

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

On February ~~25, 2022,~~ ~~49,301,550~~24, 2023, 49,455,664 shares of Common Stock, $0.10 par value, were outstanding.

INDEX


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements

	Consolidated Condensed Statements of Income and Comprehensive Income	3

	Consolidated Condensed Balance Sheets	4

	Consolidated Condensed Statements of Stockholders' Equity	5

	Consolidated Condensed Statements of Cash Flows	6

	Notes to Consolidated Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2416

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	4026

Item 4.	Controls and Procedures	4026

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4227

Item 1A.	Risk Factors	4227

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4427

Item 3.	Defaults Upon Senior Securities	4527

Item 4.	Mine Safety Disclosures	4527

Item 5.	Other Information	4527

Item 6.	Exhibits	4628

~~Signature~~Signatures		4729

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Income and Comprehensive Income

Three Months Ended January 31,

(In millions, except for earnings per share)

(Unaudited)


		2022		2021			2023		2022
Net sales	Net sales	$	787.2	$	680.5	Net sales	$	858.5	$	787.2
Cost of sales	Cost of sales	268.8		229.8		Cost of sales	300.0		268.8
Gross profit	Gross profit	518.4		450.7		Gross profit	558.5		518.4
Selling, general and administrative expense	Selling, general and administrative expense	319.1		261.2		Selling, general and administrative expense	330.9		319.1
Research and development expense	Research and development expense	26.2		21.4		Research and development expense	31.6		26.2
Amortization of intangibles	Amortization of intangibles	42.3		34.7		Amortization of intangibles	46.5		42.3

Operating income	Operating income	130.8		133.4		Operating income	149.5		130.8
Interest expense	Interest expense	6.6		6.4		Interest expense	26.1		6.6

Other expense (income), net		2.3		(12.5)
Other expense, net						Other expense, net	1.3		2.3
Income before income taxes	Income before income taxes	121.9		139.5		Income before income taxes	122.1		121.9
Provision for income taxes (Note 6)	Provision for income taxes (Note 6)	26.6		(1,961.6)		Provision for income taxes (Note 6)	37.5		26.6
Net income	Net income	$	95.3	$	2,101.1	Net income	$	84.6	$	95.3

Earnings per share (Note 7):	Earnings per share (Note 7):					Earnings per share (Note 7):
Basic	Basic	$	1.93	$	42.77	Basic	$	1.71	$	1.93
Diluted	Diluted	$	1.91	$	42.31	Diluted	$	1.70	$	1.91
Number of shares used to compute earnings per share:	Number of shares used to compute earnings per share:					Number of shares used to compute earnings per share:
Basic	Basic	49.4		49.1		Basic	49.4		49.4
Diluted	Diluted	49.9		49.7		Diluted	49.7		49.9
Other comprehensive income, net of tax:	Other comprehensive income, net of tax:					Other comprehensive income, net of tax:
Cash flow hedges	Cash flow hedges	$	13.3	$	4.5	Cash flow hedges	$	(21.0)	$	13.3
Foreign currency translation adjustment	Foreign currency translation adjustment	(49.2)		86.2		Foreign currency translation adjustment	84.0		(49.2)

Comprehensive income	Comprehensive income	$	59.4	$	2,191.8	Comprehensive income	$	147.6	$	59.4

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(In millions, unaudited)


		January 31, 2022		October 31, 2021			January 31, 2023		October 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	280.7	$	95.9	Cash and cash equivalents	$	118.2	$	138.2
Trade accounts receivable, net of allowance for credit losses of $11.3 at January 31, 2022 and $9.2 at October 31, 2021		525.9		515.3
Trade accounts receivable, net of allowance for credit losses of $24.7 at January 31, 2023, and $20.7 at October 31, 2022						Trade accounts receivable, net of allowance for credit losses of $24.7 at January 31, 2023, and $20.7 at October 31, 2022	581.8		557.8
Inventories (Note 3)	Inventories (Note 3)	588.1		585.6		Inventories (Note 3)	659.1		628.7
Prepaid expense and other current assets	Prepaid expense and other current assets	196.6		179.3		Prepaid expense and other current assets	218.4		208.9
Assets held-for-sale (Note 2)		106.8		89.2

Total current assets	Total current assets	1,698.1		1,465.3		Total current assets	1,577.5		1,533.6
Property, plant and equipment, at cost		2,695.6		2,655.7
Less: accumulated depreciation and amortization		1,334.1		1,308.1
		1,361.5		1,347.6
Operating lease right-of-use assets		268.0		257.0
Goodwill (Note 4)		3,835.7		2,574.0
Property, plant and equipment, net						Property, plant and equipment, net	1,464.0		1,432.9
Goodwill						Goodwill	3,672.3		3,609.7
Other intangibles, net (Note 4)	Other intangibles, net (Note 4)	1,842.0		1,271.5		Other intangibles, net (Note 4)	1,863.4		1,885.1
Deferred tax assets	Deferred tax assets	2,488.2		2,546.6		Deferred tax assets	2,415.1		2,443.1
Other assets	Other assets	169.0		144.2		Other assets	568.8		587.9
Total assets	Total assets	$	11,662.5	$	9,606.2	Total assets	$	11,561.1	$	11,492.3
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Short-term debt (Note 5)	Short-term debt (Note 5)	$	912.0	$	82.9	Short-term debt (Note 5)	$	68.1	$	412.6
Accounts payable	Accounts payable	149.0		161.4		Accounts payable	224.1		248.8
Employee compensation and benefits	Employee compensation and benefits	122.2		148.7		Employee compensation and benefits	167.2		152.1
Operating lease liabilities		36.7		35.7
Deferred revenue						Deferred revenue	106.4		93.6
Other current liabilities	Other current liabilities	425.5		301.7		Other current liabilities	350.0		373.1
Liabilities held-for-sale (Note 2)		19.0		1.7

Total current liabilities	Total current liabilities	1,664.4		732.1		Total current liabilities	915.8		1,280.2
Long-term debt (Note 5)	Long-term debt (Note 5)	2,346.5		1,396.1		Long-term debt (Note 5)	2,627.3		2,350.8
Deferred tax liabilities	Deferred tax liabilities	100.6		24.1		Deferred tax liabilities	144.3		149.9
Long-term tax payable	Long-term tax payable	138.0		139.6		Long-term tax payable	112.4		113.2
Operating lease liabilities		241.0		231.7
Deferred revenue						Deferred revenue	195.1		198.3
Accrued pension liability and other	Accrued pension liability and other	245.9		140.6		Accrued pension liability and other	230.5		225.2
Total liabilities	Total liabilities	$	4,736.4	$	2,664.2	Total liabilities	$	4,225.4	$	4,317.6
Contingencies (Note 12)		0		0
Contingencies (Note 10)						Contingencies (Note 10)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $10 cents par value, 1.0 shares authorized, zero shares issued or outstanding	Preferred stock, $10 cents par value, 1.0 shares authorized, zero shares issued or outstanding	—		—		Preferred stock, $10 cents par value, 1.0 shares authorized, zero shares issued or outstanding	—		—
Common stock, $10 cents par value, 120.0 shares authorized, 53.8 issued and 49.2 outstanding at January 31, 2022 and 53.7 issued and 49.3 outstanding at October 31, 2021		5.4		5.4
Common stock, $10 cents par value, 120.0 shares authorized, 53.9 issued and 49.4 outstanding at January 31, 2023, and 53.8 issued and 49.3 outstanding at October 31, 2022						Common stock, $10 cents par value, 120.0 shares authorized, 53.9 issued and 49.4 outstanding at January 31, 2023, and 53.8 issued and 49.3 outstanding at October 31, 2022	5.4		5.4
Additional paid-in capital	Additional paid-in capital	1,719.2		1,715.2		Additional paid-in capital	1,779.2		1,765.5
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(377.2)		(341.3)		Accumulated other comprehensive loss	(403.8)		(466.8)
Retained earnings	Retained earnings	6,295.9		6,202.1		Retained earnings	6,668.0		6,584.9
Treasury stock at cost: 4.6 shares at January 31, 2022 and 4.4 shares at October 31, 2021		(717.4)		(639.6)
Treasury stock at cost: 4.5 shares at January 31, 2023, and 4.5 shares at October 31, 2022						Treasury stock at cost: 4.5 shares at January 31, 2023, and 4.5 shares at October 31, 2022	(713.3)		(714.5)
Total Cooper stockholders’ equity	Total Cooper stockholders’ equity	6,925.9		6,941.8		Total Cooper stockholders’ equity	7,335.5		7,174.5
Noncontrolling interests	Noncontrolling interests	0.2		0.2		Noncontrolling interests	0.2		0.2
Stockholders’ equity (Note 9)	Stockholders’ equity (Note 9)	6,926.1		6,942.0		Stockholders’ equity (Note 9)	7,335.7		7,174.7
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	11,662.5	$	9,606.2	Total liabilities and stockholders’ equity	$	11,561.1	$	11,492.3

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Stockholders' Equity

(In millions, unaudited)

Common Shares Treasury Stock Additional Paid-In Capital Accumulated
Other
Comprehensive
Income (Loss) Retained Earnings Treasury Stock Noncontrolling Interests Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance at November 1, 2020 49.1 $ 4.9 4.3 $ 0.4 $ 1,646.8 $ (472.0) $ 3,261.8 $ (617.3) $ 0.2 $ 3,824.8
Net income — — — — — — 2,101.1 — — 2,101.1
Other comprehensive income, net of tax — — — — — 90.7 — — — 90.7
Issuance of common stock for stock plans, net 0.1 — — — (11.0) — — — — (11.0)
Issuance of common stock for employee stock purchase plan — — — — 0.8 — — 0.6 — 1.4
Dividends on common stock ($0.03 per share) — — — — — — (1.5) — — (1.5)
Share-based compensation expense — — — — 10.6 — — — — 10.6
Treasury stock repurchase (0.1) — 0.1 — — — — (24.8) — (24.8)
ASU 2016-13 adoption — — — — — — (1.4) — — (1.4)
Balance at January 31, 2021 49.1 $ 4.9 4.4 $ 0.4 $ 1,647.2 $ (381.3) $ 5,360.0 $ (641.5) $ 0.2 $ 5,989.9


	Common Shares			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at November 1, 2021	49.3	$	5.0	4.4	$	0.4	$	1,715.2	$	(341.3)	$	6,202.1	$	(639.6)	$	0.2	$	6,942.0
Net income	—	—		—	—		—		—		95.3		—		—		95.3
Other comprehensive income, net of tax	—	—		—	—		—		(35.9)		—		—		—		(35.9)
Issuance of common stock for stock plans, net and employee stock purchase plan	0.1	—		—	—		(8.8)		—		—		0.7		—		(8.1)
Dividends on common stock ($0.03 per share)	—	—		—	—		—		—		(1.5)		—		—		(1.5)
Share-based compensation expense	—	—		—	—		12.8		—		—		—		—		12.8
Stock repurchase	(0.2)	—		0.2	—		—		—		—		(78.5)		—		(78.5)
Balance at January 31, 2022	49.2	$	5.0	4.6	$	0.4	$	1,719.2	$	(377.2)	$	6,295.9	$	(717.4)	$	0.2	$	6,926.1

Balance at November 1, 2021 49.3 $ 5.0 4.4 $ 0.4 $ 1,715.2 $ (341.3) $ 6,202.1 $ (639.6) $ 0.2 $ 6,942.0
Net income — — — — — — 95.3 — — 95.3
Other comprehensive income, net of tax — — — — — (35.9) — — — (35.9)
Issuance of common stock for stock plans, net 0.1 — — — (10.0) — — — — (10.0)
Issuance of common stock for employee stock purchase plan — — — — 1.2 — — 0.7 — 1.9
Dividends on common stock ($0.03 per share) — — — — — — (1.5) — — (1.5)
Share-based compensation expense — — — — 12.8 — — — — 12.8
Treasury stock repurchase (0.2) — 0.2 — — — — (78.5) — (78.5)
Balance at January 31, 2022 49.2 $ 5.0 4.6 $ 0.4 $ 1,719.2 $ (377.2) $ 6,295.9 $ (717.4) $ 0.2 $ 6,926.1




Balance at November 1, 2022	49.3	$	5.0	4.5	$	0.4	$	1,765.5	$	(466.8)	$	6,584.9	$	(714.5)	$	0.2	$	7,174.7
Net income	—	—		—	—		—		—		84.6		—		—		84.6
Other comprehensive income, net of tax	—	—		—	—		—		63.0		—		—		—		63.0
Issuance of common stock for stock plans, net and employee stock purchase plan	0.1	—		—	—		(2.5)		—		—		1.2		—		(1.3)
Dividends on common stock ($0.03 per share)	—	—		—	—		—		—		(1.5)		—		—		(1.5)
Share-based compensation expense	—	—		—	—		16.2		—		—		—		—		16.2
Balance at January 31, 2023	49.4	$	5.0	4.5	$	0.4	$	1,779.2	$	(403.8)	$	6,668.0	$	(713.3)	$	0.2	$	7,335.7

The accompanying notes are an integral part of these Consolidated Condensed Financial ~~Statements.~~

Statements
.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

Three Months Ended January 31,

(In millions, unaudited)
2022 2021
Cash flows from operating activities:
Net income $ 95.3 $ 2,101.1
Depreciation and amortization 82.0 75.5
Decrease (Increase) in operating capital 6.2 (49.9)
Deferred income taxes 14.7 (1,981.3)
Other non-cash items (32.2) 2.3
Net cash provided by operating activities 166.0 147.7
Cash flows from investing activities:
Purchases of property, plant and equipment (57.1) (55.9)
Acquisitions of businesses and assets, net of cash acquired, and other (1,612.2) (79.8)
Net cash used in investing activities (1,669.3) (135.7)
Cash flows from financing activities:
Proceeds from long-term debt 1,503.0 253.0
Repayments of long-term debt (548.6) (223.2)
Net proceeds (repayments) from short-term debt 830.4 (8.8)
Net payments related to share-based compensation awards (10.8) (11.0)
Repurchase of common stock (78.5) (24.8)
Issuance of common stock for employee stock purchase plan 1.6 1.2
Debt issuance costs (3.5) —
Net cash provided by (used in) financing activities 1,693.6 (13.6)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (3.7) 4.5
Net increase in cash, cash equivalents, restricted cash and cash held for sale 186.6 2.9
Cash, cash equivalents, restricted cash and cash held for sale at beginning of period 96.6 116.8
Cash, cash equivalents, restricted cash and cash held for sale at end of period $ 283.2 $ 119.7
Reconciliation of cash flow information:
Cash and cash equivalents $ 280.7 $ 119.1
Restricted cash included in other current assets 2.2 0.6
Cash held for sale 0.3 —
Total cash, cash equivalents, restricted cash and cash held for sale $ 283.2 $ 119.7


	2023		2022
Cash flows from operating activities:
Net income	$	84.6	$	95.3
Depreciation and amortization	89.7		82.0

Change in fair value of contingent consideration	(31.8)		—
Net changes in operating capital	(28.0)		6.2

Other non-cash items	52.1		(17.5)
Net cash provided by operating activities	166.6		166.0
Cash flows from investing activities:
Purchases of property, plant and equipment	(83.0)		(57.1)
Acquisitions of businesses and assets, net of cash acquired, and other	(30.3)		(1,612.2)

Net cash used in investing activities	(113.3)		(1,669.3)
Cash flows from financing activities:
Proceeds from long-term debt, net of issuance costs	702.0		1,499.5
Repayments of long-term debt	(426.3)		(548.6)
Net (repayments of) proceeds from short-term debt	(351.7)		830.4
Net payments related to share-based compensation awards	(3.4)		(10.8)

Repurchase of common stock	—		(78.5)
Issuance of common stock for employee stock purchase plan	1.8		1.6

Net cash (used in) provided by financing activities	(77.6)		1,693.6
Effect of exchange rate changes on cash, cash equivalents and restricted cash	4.2		(3.7)
Net (decrease) increase in cash, cash equivalents, restricted cash, and cash held for sale	(20.1)		186.6
Cash, cash equivalents, restricted cash, and cash held for sale at beginning of period	138.6		96.6
Cash, cash equivalents, restricted cash, and cash held for sale at end of period	$	118.5	$	283.2
Reconciliation of cash flow information:
Cash and cash equivalents	$	118.2	$	280.7
Restricted cash included in other current assets	0.3		2.2
Cash held for sale	—		0.3
Total cash, cash equivalents, restricted cash, and cash held for sale	$	118.5	$	283.2

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 1. General

The accompanying Consolidated Condensed Financial Statements of ~~the~~The Cooper Companies, Inc. and its subsidiaries ~~(the Company)~~ have been prepared in accordance with generally accepted accounting principles in the United States ~~("GAAP")~~(GAAP) for interim financial information and with the requirements of Regulation S-X, Rule 10-01 for financial statements required to be filed as a part of this Quarterly Report on Form 10-Q. Unless the context requires otherwise, terms "the Company", "we", "us", and "our" are used to refer collectively to ~~the~~The Cooper Companies, Inc. and its subsidiaries.

The accompanying Consolidated Condensed Financial Statements and related notes are unaudited and should be read in conjunction with the audited Consolidated Financial Statements of the ~~Cooper Companies, Inc. and its subsidiaries (the Company)~~Company and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, ~~2021.~~2022. The Consolidated Condensed Financial Statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair presentation of the results for the interim periods presented. ~~Readers should not assume that the results reported here either indicate or guarantee future performance.~~

Accounting Policies

There have ~~bee~~nbeen no material ch~~anges~~changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2021.~~2022.

Estimates

The World Health Organization categorized the Coronavirus disease 2019 (COVID-19) as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners & retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. These factors have had, and in the future may continue to have, an adverse effect on our sales, operating results and cash flows.

The preparation of Consolidated Condensed Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions reasonably available to the Company and the uncertain future impacts of the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact our business and financial results will depend on future developments including, but not limited to, the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks, including the emergence and spread of variants of the COVID-19 virus; the actions taken by the U.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments described above on our customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to:

•~~allowance for doubtful accounts and credit losses~~

•~~the carrying value of inventory~~

•~~the carrying value of goodwill and other long-lived assets~~

~~There was not a material impact to the above estimates in the Company’s Consolidated Condensed Financial Statements for the three months ended January 31, 2022.~~estimates. The Company continually monitors and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. ~~The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material~~

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

~~changes to the estimates and material impacts to the Company’s Consolidated Condensed Financial Statements in future reporting periods.~~

Accounting Pronouncements Recently Adopted

In ~~December 2019,~~November 2021, the ~~Financial Accounting Standards Board (FASB)~~FASB issued ASU ~~2019-12,~~2021-10, ~~Income Taxes~~Government Assistance (Topic ~~740)~~832): ~~Simplifying the Accounting for Income Taxes~~Disclosures by Business Entities about Government Assistance. This ~~guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax~~update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.model by analogy. This standard is effective for fiscal years ~~and interim periods within those fiscal years~~ beginning after December 15, ~~2020.~~2021 and should be applied either prospectively or retrospectively. Early adoption is permitted. The Company adopted this guidance prospectively on November 1, ~~2021,~~2022, and it did not have ana material impact on the Consolidated Condensed Financial Statements.

~~In August 2020, the FASB issued ASU 2020-06,~~ ~~Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)~~. This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted this guidance on November 1, 2021, and it did not have an impact on the Consolidated Condensed Financial Statements.

~~In October 2021, the FASB issued ASU 2021-08,~~ ~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606,~~ ~~Revenue from Contracts with Customers~~. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022 and should be applied prospectively to business combinations occurring on or after the effective date of the standard. Early adoption is permitted, including adoption in an interim period. The Company early adopted this guidance on November 1, 2021 and has applied the guidance to the business combinations entered into during fiscal 2022. ~~Refer to~~ ~~Note 2. Acquisitions and Assets Held for Sale for further information.~~

Accounting Pronouncements Issued But Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ~~The guidance generally can be applied from March 12, 2020 through~~In December ~~31, 2022. The Company is currently assessing the impacts of the practical expedients provided in Topic 848 and which, if any, the Company will adopt.~~

~~In November 2021,~~2022, the FASB issued ASU ~~2021-10,~~2022-06, ~~Government Assistance~~Reference Rate Reform (Topic ~~832)~~848): ~~Disclosures by Business Entities about Government Assistance~~Deferral of the Sunset Date of Topic 848. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for fiscal years beginning afterASU 2022-06 defers the sunset date of Topic 848 from December ~~15, 2021 and should be applied either prospectively or retrospectively. Early adoption is permitted.~~31, 2022 to December 31, 2024. Effective February 1, 2023, the Company transitioned its credit agreements from LIBOR to the Secured Overnight Financing Rate ("SOFR"). The Company ~~is currently evaluating~~plans to adopt the ~~impact~~guidance prospectively in the second quarter of ~~ASU 2021-10~~fiscal 2023 and does not expect it to have a material impact on the ~~Consolidated Condensed Financial Statements.~~Company's financial position.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company's Consolidated Condensed Financial Statements.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

Note 2. Acquisitions and ~~Assets Held for Sale~~

The following is a summary of the allocation of the total purchase consideration for business and asset acquisitions that the Company completed during the three months ended January 31, 2022 and fiscal 2021:

(In millions) January 31, 2022 October 31, 2021
Technology $ 1.8 $ 178.6
In-Process Research & Development (IPR&D) — 20.0
Customer relationships 472.0 7.5
Trademarks 142.0 1.3
Other — 0.6
Total identifiable intangible assets $ 615.8 $ 208.0
Goodwill 1,288.2 91.6
Net tangible liabilities (238.3) (10.8)
Fair value of contingent consideration — (39.1)
Total closing purchase price $ 1,665.7 $ 249.7
Joint Venture

All acquisitions were funded by cash generated from operations or facility borrowings.

For business acquisitions, the Company recorded tangible and intangible assets acquired and liabilities assumed at their fair values as of the applicable date of acquisition. For asset acquisitions, the Company recorded tangible and intangible assets acquired and liabilities assumed at their estimated and relative fair values as of the applicable date of acquisition.

~~The Company believes these acquisitions strengthen CooperSurgical's and CooperVision's businesses through the addition of new distributors or complementary products and services.~~

~~Fiscal Year 2022~~

~~Generate Life Sciences~~®

On ~~December 17, 2021, CooperSurgical~~November 1, 2022, CooperVision completed the acquisition of ~~100%~~a privately-held U.S.-based company that provides a broad portfolio of ~~the equity interests in Generate Life Sciences (Generate), a privately held leading provider~~technologically advanced contact lens products, including scleral and hybrid lenses. The purchase price of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue), and paid an aggregate consideration of approximately $1.666 billion in cash, reflecting working capital and other adjustments. The cash consideration was funded through a combination of $1.5 billion in proceeds from the ~~issuance of a senior unsecured term loan and available cash on hand.~~

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

~~The Company has accounted for the~~ acquisition ~~of Generate as a business combination, in accordance with ASC Topic 805,~~ ~~Business Combinations. The following table summarizes the provisional fair values of~~was $33.0 million. Based upon preliminary valuations, assets acquired primarily comprised of $12.6 million of customer relationship related intangibles, $7.6 million of technology, and ~~liabilities assumed as~~$13.1 million of ~~the acquisition date:~~


~~(In millions)~~
~~Current assets:~~
~~Cash and cash equivalents~~	$	~~58.6~~
~~Trade accounts receivable, net~~	~~23.3~~
~~Inventories~~	~~4.0~~
~~Prepaid expense and other current assets~~	~~29.9~~
~~Total current assets~~	~~115.8~~
~~Property, plant and equipment~~	~~25.1~~
~~Operating lease right-of-use assets~~	~~21.4~~
~~Goodwill~~	~~1,292.6~~
~~Customer relationships~~	~~472.0~~
~~Trademarks~~	~~142.0~~
~~Deferred tax assets~~	~~15.8~~
~~Other assets~~	~~0.8~~
~~Total assets acquired~~	$	~~2,085.5~~

~~Current liabilities:~~
~~Accounts payable~~	$	~~12.6~~
~~Employee compensation and benefits~~	~~12.3~~
~~Operating lease liabilities~~	~~2.5~~
~~Deferred revenue~~	~~68.4~~
~~Other current liabilities~~	~~8.8~~
~~Total current liabilities~~	~~104.6~~
~~Deferred tax liabilities~~	~~134.4~~
~~Operating lease liabilities~~	~~18.8~~
~~Deferred revenue~~	~~160.9~~
~~Other liabilities~~	~~1.1~~
~~Total liabilities assumed~~	$	~~419.8~~

~~Total purchase price~~	$	~~1,665.7~~

To develop the provisional fair values of assets acquired and liabilities assumed, the Company utilized currently available information and fair value allocation benchmarks from similar completed transactions. Deferred revenue was recognized in accordance with ASC Topic 606, ~~Revenue from Contracts with Customers, as a result of the adoption of ASU 2021-08. See Note 1. General~~goodwill. The goodwill is not deductible for ~~additional information.~~tax purposes. The ~~initial purchase accounting is incomplete and subject to change during the measurement period, which may result in material changes to the~~ purchase price ~~allocation. The~~allocation is preliminary, and the Company is in the process of finalizing information primarily related to the ~~valuation of intangible assets, the measurement of deferred revenue, the associated deferred tax adjustments~~effect on taxes and the corresponding impact on goodwill.

~~The Company currently estimates~~Refer to "Joint Venture" below for details on formation of a joint venture with Essilor International and related activities that customer relationships will be amortized over 13 years and trademarks will be amortized over 14 years. Goodwill is primarily attributable to assembled workforce and expected synergies to be achieved. The goodwill recognized is not deductible for tax purposes.

~~The transaction costs associated with~~occurred in fiscal year 2022 following the acquisition ~~consisted primarily~~ of ~~legal, regulatory and financial advisory fees, which were expensed as incurred as selling, general and administrative expense.~~

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

Generate's revenue and net income for the period from the acquisition date to January 31, 2022 were $33.8 million and $1.6 million, respectively. The following unaudited pro forma information summarizes the combined results of operations of the Company and Generate as if the acquisition had been completed at the beginning of the Company’sSightGlass Vision, Inc. (SGV) in fiscal ~~2021:~~

Three Months Ended January 31,
(In millions) 2022 2021
Revenue $ 823.4 $ 744.8
Net income $ 79.9 $ 2,111.5

The unaudited pro forma information for the first three months of fiscal 2022 and 2021 was calculated after applying the Company's accounting policies and the impact of acquisition date fair value adjustments. The adjustments primarily include increased amortization for the fair value of acquired intangible assets, increased revenue as a result of the ASU 2021-08 deferred revenue adjustments, decreased interest expense as a result of the reversal of Generate's historical interest expense partially offset by additional interest expense on the debt obtained to finance the transaction.

The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred at the beginning of fiscal 2021, or of future results of the consolidated entities.

~~Subsequent Events~~year 2021.

On ~~February 7, 2022, subsequent to the fiscal quarter ended January 31,~~April 6, 2022, CooperSurgical entered into ~~a binding letter of intent~~an asset purchase agreement to acquire Cook Medical's Reproductive Health business, a manufacturer of minimally invasive medical devices focused on the fertility, obstetrics and gynecology markets. The aggregate consideration is $875.0 million in cash, with $675.0 million payable at the closing and the remaining $200.0 million payable in $50.0 million installments following each of the first, second, third and fourth anniversaries of the closing. The transaction is subject to customary closing conditions, ~~including entry into a definitive acquisition agreement and~~such as receipt of required regulatory ~~approvals, and compliance with certain local employee consultation requirements. See Note 15. Subsequent Events for additional information.~~

~~Fiscal Year 2021~~approvals.

~~On May 3, 2021, Coo~~Generate Life SciencesperSurgical completed the acquisition of a privately-held medical device company that develops single-use illuminating medical devices. The purchase price allocation is preliminary, and the Company is in the process of finalizing information primarily related to the valuation of intangible assets and inventory, the associated deferred tax adjustments and the corresponding impact on goodwill.®

On April 26, 2021, CooperVision completed the acquisition of a privately-held UK contact lens manufacturer focusing on specialty contact lenses. This acquisition expands CooperVision's specialty eye care portfolio and accelerates its development of myopia management solutions in the UK.

~~On March 1,~~December 17, 2021, CooperSurgical completed the acquisition of 100% of the equity interests in Generate Life Sciences (Generate), a ~~privately-held medical device company that designed~~privately held leading provider of donor egg and ~~developed~~sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue), and paid an ~~innovative obstetric product for use~~aggregate purchase consideration of approximately $1.663 billion, reflecting working capital, and other adjustments. The cash consideration was funded through a combination of $1.5 billion in ~~urgent obstetrics to reduce risks associated with childbirth.~~proceeds from the issuance of a senior unsecured term loan and available cash on hand.

~~On February 1, 2021, CooperSurgical~~The following table summarizes the fair values of assets acquired ~~all of the remaining equity interests of a privately-held medical device company that developed the Mara~~® ~~Water Vapor Ablation System, which is used for endometrial ablation. The Company accounted for this acquisition~~and liabilities assumed as ~~an asset acquisition, whereby the Company allocated the total cost~~ of the acquisition date:


(In millions)
Current assets:
Cash and cash equivalents	58.6
Trade accounts receivable, net	18.1
Inventories	3.3
Prepaid expense and other current assets	33.1
Total current assets	113.1
Property, plant and equipment	42.6
Goodwill	1,173.9
Customer relationships	718.3
Trademarks	54.9

Other assets	21.5
Total assets acquired	$	2,124.3

Current liabilities:
Accounts payable	$	12.6
Employee compensation and benefits	12.3
Deferred revenue	71.4
Other current liabilities	11.6
Total current liabilities	107.9
Deferred tax liabilities	144.3
Lease liabilities	16.6
Deferred revenue	188.8
Other long-term liabilities	3.6
Total liabilities assumed	$	461.2

Total purchase price	$	1,663.1

Customer relationships will be amortized over 20 years and trademarks will be amortized over 15 years. Goodwill is primarily attributable to ~~the net assets acquired on the basis of their estimated relative fair values on~~assembled workforce and expected synergies to be achieved. The goodwill is not deductible for tax purposes.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

The transaction costs associated with the acquisition ~~date with no goodwill recognized. The primary asset acquired in this asset acquisition is Technology.~~consisted primarily of legal, regulatory and financial advisory fees, which were expensed as incurred as selling, general and administrative expense.

Joint Venture

On January 19, 2021, CooperVision acquired all of the remaining equity interests of SGV, a privately-held medical device company that ~~develops~~developed spectacle lenses for myopia management. The fair value remeasurement of our previous equity investment immediately before the acquisition resulted in a gain of $11.5 million, which was recorded in other income. The terms of the acquisition include upfront cash consideration paid at closing of approximately $40.9 million attributable to the equity interests not held by the Company on the closing date. The transaction ~~also includes~~included potential payments of future consideration that ~~are~~were contingent upon the achievement of the regulatory approval milestone (the regulatory approval payment) and the acquired business reaching certain revenue thresholds over a specified period (the revenue payments). The

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

undiscounted range of the contingent consideration iswas zero to $139.1 million payable to the other former equity interest owners.

~~The estimated fair value~~In March 2022, the entities amended the terms of the contingent consideration, onwhich resulted in CooperVision paying $42.9 million to the ~~acquisition date was approximately $37.9~~former equity interest owners in exchange for the elimination of the revenue payments. CooperVision recognized a net gain of $12.2 million during fiscal 2022.

Further, CooperVision and ~~accordingly,~~Essilor International SAS (Essilor) executed the ~~Company recorded~~Contribution Agreement and Stock Purchase Agreement (the “Agreements”) in March 2022. Essilor paid CooperVision $52.1 million in exchange for 50% interest in SGV and their proportionate share of the revenue payments. As part of the Agreements, each party contributed their interest in SGV and $10 million in cash to form a ~~liability of approximately $30.2 million, which represents~~new joint venture. CooperVision then remeasured the fair value of its retained equity investment in the ~~contingent consideration payable to~~joint venture at $90.0 million which resulted in a $56.9 million gain in Other (income) expense on deconsolidation of SGV in fiscal 2022.

As of January 31, 2023, CooperVision determined that approval would not be achieved within the ~~other former equity interest owners. The fair value~~timeline set forth in the contractual terms of the regulatory approval payment ~~was determined using an option pricing framework based on~~and released the expected payment under the contractual terms and the estimates of the probability of achieving the regulatory approval. The fair value of the revenue payments was determined using a Monte Carlo simulation based on the revenue projections and the expected payment for each simulation.remaining $31.8 million contingent consideration liability.

InAdditional information regarding the joint venture is included in our notes to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal 2021, a $56.8 million expense was recognized in selling, general and administrative expense in the Consolidated Statements of Income and Comprehensive Income, resulting from the increase in fair value of the contingent consideration. This was primarily driven by increases in revenue projections, which increased the estimated fair value of the revenue payments.

~~During the three months~~year ended ~~January~~October 31, 2022, a $3.5 million expense was recognized in selling, general and administrative expense in the Consolidated Statements of Income and Comprehensive Income, resulting from the increase in fair value of the regulatory approval payment. As of January 31, 2022, no contingent consideration has been paid.

~~On December 31, 2020, CooperSurgical completed the acquisition of a privately-held~~ ~~in vitro fertilization (IVF)~~ ~~cryo-storage software solutions company.~~

The pro forma results of operations of these acquisitions have not been presented because the effect of the business combinations described above was not material to the consolidated results of operations.

2022.

Contingent Consideration

Certain of the Company’s business combinations involve potential payments of future consideration that are contingent upon the achievement of regulatory milestones and/or the acquired business reaching certain revenue thresholds. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized in selling, general and administrative expense in the Consolidated Statements of Income and Comprehensive Income.

The following table provides a reconciliation of the beginning and ending balances of contingent consideration:


Three Months Ended January 31,
Period Ended January 31,						Period Ended January 31,	Three Months
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Beginning balance	Beginning balance	$	97.4	$	—	Beginning balance	$	33.4	$	97.4
Purchase price contingent consideration	Purchase price contingent consideration	—		30.2		Purchase price contingent consideration	—		—
Payments	Payments	—		—		Payments	—		—
Change in fair value	Change in fair value	3.5		—		Change in fair value	(31.8)		3.5
Ending balance	Ending balance	$	100.9	$	30.2	Ending balance	$	1.6	$	100.9

~~Assets Held for Sale~~

Note 3. Inventories

The Company concluded the substantive terms of the joint venture during the third quarter of fiscal 2021, and the assets and liabilities of this disposal group were reclassified as held for sale as of July 31, 2021. On August 1, 2021, CooperVision entered into a stockholders agreement, which outlines the terms regarding the operation and management of the joint venture. As of January 31, 2022, the Company was in the process of finalizing the joint venture related ancillary agreements, and the disposal group continues to be classified as held for sale as of January 31, 2022.


(In millions)	January 31, 2023		October 31, 2022
Raw materials	$	191.6	$	173.7
Work-in-process	18.1		15.2
Finished goods	449.4		439.8
Total inventories	$	659.1	$	628.7

129

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Pursuant to ASC 360, assets held for sale were measured at the lower of their carrying amounts or fair value less cost to sell. The Company did not record any impairment during the three months ended January 31, 2022 and fiscal 2021. The Company has determined that this disposal did not qualify as a discontinued operation as the sale was deemed to not be a strategic shift that has or will have a major effect on the Company's operations and financial results.

~~Included in the Company's Consolidated Condensed Balance Sheets as of January 31, 2022 and October 31, 2021 are the following carrying amounts of the assets and liabilities held for sale:~~

(In millions) January 31, 2022 October 31, 2021
ASSETS
Cash $ 0.3 $ 0.3
Goodwill 20.2 23.2
Other intangibles, net 83.6 83.6
Deferred tax assets — (19.9)
Other assets 2.7 2.0
Total assets held-for-sale $ 106.8 $ 89.2
LIABILITIES
Deferred tax liabilities $ 16.8 $ —
Other liabilities 2.2 1.7
Total liabilities held-for-sale $ 19.0 $ 1.7

~~Note 3. Inventories~~

(In millions) January 31, 2022 October 31, 2021
Raw materials $ 148.9 $ 137.7
Work-in-process 13.5 14.0
Finished goods 425.7 433.9
Total inventories $ 588.1 $ 585.6

~~Inventories are stated at the lower of cost and net realizable value. Cost is computed using standard cost that approximates actual cost, on a first-in, first-out basis.~~

Note 4. Intangible Assets

~~Goodwill~~Intangible assets consisted of the following:

(In millions) CooperVision CooperSurgical Total
Balance at October 31, 2021 $ 1,841.0 $ 733.0 $ 2,574.0
Current period additions — 1,291.3 1,291.3
Foreign currency translation adjustment (24.1) (5.5) (29.6)
Balance at January 31, 2022 $ 1,816.9 $ 2,018.8 $ 3,835.7


	January 31, 2023				October 31, 2022
(In millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Weighted Average Amortization Period (in years)

Intangible assets with definite lives:
Customer relationships	$	1,110.4	$	304.1	$	1,092.7	$	287.0	19
Composite intangible asset	1,061.9		371.7		1,061.9		354.0		15
Technology	512.9		327.3		504.1		317.5		12
Trademarks	210.9		66.3		209.6		62.4		15
License and distribution rights and other	50.7		24.8		50.7		23.8		10
	2,946.8		$	1,094.2	2,919.0		$	1,044.7	16
Less: accumulated amortization and translation	1,094.2				1,044.7
Intangible assets with definite lives, net	1,852.6				1,874.3
Intangible assets with indefinite lives, net (1)	10.8				10.8
Total other intangibles, net	$	1,863.4			$	1,885.1

(1) Intangible assets with indefinite lives include technology and trademarks.

Balances include foreign currency translation adjustments.

As of January 31, 2023, the estimate of future amortization expenses for intangible assets with definite lives is as follows:


Fiscal Years:	(In millions)
Remainder of 2023	$	139.2
2024	181.4
2025	171.5
2026	164.0
2027	149.0
Thereafter	1,047.5
Total remaining amortization for intangible assets with definite lives	$	1,852.6

There was no impairment of intangible assets recorded in the three months ended January 31, 2023.

Note 5. Financing Arrangements

The Company evaluates goodwill for impairment annually during the fiscal third quarter and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist. The Company accounts for goodwill, evaluates and tests goodwill balances for impairment in accordance with related accounting standards.

~~The Company performed an annual impairment assessment in the third quarter of fiscal 2021, and its analysis indicated that there was~~ no ~~impairment of goodwill in its reporting units.~~had outstanding debt as follows:

1310

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

~~Other Intangible Assets~~


(In millions)	January 31, 2023		October 31, 2022
Overdraft and other credit facilities	$	51.6	$	57.7
Term loans	—		338.0

Short-term debt, excluding financing leases	51.6		395.7
Financing lease liabilities	16.5		16.9
Short-term debt	$	68.1	$	412.6

Revolving credit	$	276.5	$	—
Term loans	2,350.0		2,350.0
Other	0.1		0.2
Less: unamortized debt issuance cost	(2.9)		(3.1)
Long-term debt, excluding financing leases	2,623.7		2,347.1
Financing lease liabilities	3.6		3.7
Long-term debt	$	2,627.3	$	2,350.8
Total debt	$	2,695.4	$	2,763.4

January 31, 2022 October 31, 2021
(In millions) Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization
Weighted Average Amortization Period
(in years)
Intangible assets with definite lives:
Trademarks $ 298.0 $ 52.8 $ 156.7 $ 49.1 14
Composite intangible asset 1,061.9 300.9 1,061.8 283.2 15
Technology 514.4 297.4 513.0 287.9 10
Customer relationships 844.6 247.6 378.4 240.1 13
License and distribution rights and other 32.5 21.5 33.4 21.6 11
2,751.4 $ 920.2 2,143.3 $ 881.9 14
Less: accumulated amortization and translation 920.2 881.9
Intangible assets with definite lives, net 1,831.2 1,261.4
Intangible assets with indefinite lives, net (1)
10.8 10.1
Total other intangibles, net $ 1,842.0 $ 1,271.5

~~(1)~~ ~~Intangible assets~~Additional information regarding our indebtedness is included in our notes to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, which was filed with ~~indefinite lives include~~ ~~technology~~the Securities and ~~trademarks.~~

~~Balances include foreign currency translation adjustments.~~

~~Intangible assets with definite lives are amortized over the estimated useful life~~Exchange Commission on December 9, 2022. The carrying value of the ~~assets.~~Company's revolving credit facility and term loans approximates fair value based on current market rates (Level 2). As of January 31, ~~2022, the estimate of future amortization expenses for intangible assets with definite lives is as follows:~~

Fiscal Years: (In millions)
Remainder of 2022 $ 146.4
2023 193.0
2024 188.8
2025 178.3
2026 170.6
Thereafter 954.1
Total remaining amortization for intangible assets with definite lives $ 1,831.2

The Company assesses definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset (asset group) may not be recoverable. When events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset may not be recoverable, in accordance with related accounting standards,2023, the Company ~~evaluates whether~~was in compliance with all debt covenants. On February 1, 2023, the ~~definite-lived intangible asset is impaired by comparing~~Company amended its ~~carrying value~~credit agreements to ~~its undiscounted future cash flows.~~

~~The Company assesses indefinite-lived intangible assets annually~~transition the interest rates applicable to the loans denominated in U.S. Dollars from LIBOR to SOFR, as defined in the third quarter of the fiscal year, or whenever events or circumstances indicate that the carrying amount of an indefinite-lived intangible asset (asset group) may not be recoverable. The Company evaluates whether the indefinite-lived intangible asset is impaired by comparing its carrying value to its fair value.

~~The Company performed an annual impairment assessment in the third quarter of fiscal 2021 and did not recognize any intangible asset impairment charges.~~credit agreements.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

~~Note 5. Debt~~

(In millions) January 31, 2022 October 31, 2021
Overdraft and other credit facilities $ 72.0 $ 83.0
Term loan 840.0 —
Less: unamortized debt issuance cost — (0.1)
Short-term debt $ 912.0 $ 82.9
Revolving credit — 546.1
Term loans 2,350.0 850.0
Other 0.2 0.2
Less: unamortized debt issuance cost (3.7) (0.2)
Long-term debt 2,346.5 1,396.1
Total debt $ 3,258.5 $ 1,479.0

2021 Term Loan Agreement ~~on December 17, 2021~~

On December 17, 2021, the Company entered into a Term Loan Agreement (the 2021 Credit Agreement) by and among the Company, the lenders from time to time party thereto, and PNC Bank, National Association, as administrative agent. The 2021 Credit Agreement provides for a term loan facility (the 2021 Term Loan Facility) in an aggregate principal amount of $1.5 billion, which, unless terminated earlier, matures on December 17, 2026. In addition, the Company has the ability from time to time to request an increase to the commitments under the 2021 Term Loan Facility or to establish a new term loan facility under the 2021 Credit Agreement in an aggregate principal amount not to exceed $1.125 billion, upon prior written notice to the administrative agent and subject to the discretionary participation of the lenders funding such term loans and certain limitations set forth in the 2021 Credit Agreement.

Amounts outstanding under the 2021 Term Loan Facility will bear interest, at the Company’s option, at either (i) the alternate base rate, which is a rate per annum equal to the greatest of (a) the administrative agent’s prime rate, (b) one-half of one percent in excess of the federal funds effective rate and (c) 1 percent in excess of the adjusted London interbank offered (“LIBO”) rate for a one-month interest period on such day, or (ii) the adjusted LIBO rate, plus, in each case, an applicable rate of, initially, zero basis points, in respect of base rate loans, and 75 basis points, in respect of adjusted LIBO rate loans. Following a specified period after the closing date, the applicable rates will be determined quarterly by reference to a grid based upon the Company’s ratio of consolidated net indebtedness to consolidated EBITDA, each as defined in the 2021 Credit Agreement.

~~The 2021 Term Loan Facility is not subject to amortization and is not subject to mandatory prepayments prior to maturity.~~ The Company ~~may prepay loan balances from time to time, in whole or in part, without premium or penalty (other than any related breakage costs).~~

~~On December 17, 2021, the Company borrowed $1.5 billion under the 2021 Term Loan Facility and~~ used the proceeds to fund the acquisition of Generate. Refer to ~~Note. 2~~Note 2. Acquisitions and ~~Assets Held for Sale~~Joint Venture for more details.

~~The interest rate on~~On January 31, 2023, the Company had $1.5 billion outstanding under the 2021 Term Loan Facility and the weighted average interest rate was ~~0.85% at January 31, 2022.~~5.04%.

~~The~~ 2021 Credit Agreement contains customary restrictive covenants, as well as financial covenants that require the Company to maintain a certain Total Leverage Ratio and Interest Coverage Ratio, each as defined in the 2021 Credit Agreement, consistent with the 2020 Credit Agreement discussed below.

364-Day Term Loan Agreement ~~on November 2, 2021~~

On November 2, 2021, the Company entered into a 364-day, $840.0 million, term loan agreement by and among the Company, the lenders party thereto and The Bank of Nova Scotia, as administrative agent, ~~(the 2021 364-Day Term Loan Agreement),~~ which ~~matures~~matured on November 1, 2022. The Company used part of the funds to partially repay outstanding borrowings under the 2020 Revolving Credit Facility and for general corporate purposes. The loan was fully repaid by the maturity date.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

Amounts outstanding under the 2021 364-Day Term Loan Agreement will bear interest, at the Company’s option, at either the alternate base rate, or the adjusted LIBO rate (each as defined in the 2021 364-Day Term Loan Agreement), plus, in the case of adjusted LIBO rate loans, an applicable rate of 60 basis points.

The 2021 364-Day Term Loan Agreement contains customary restrictive covenants, as well as financial covenants that require the Company to maintain a certain total leverage ratio and interest coverage ratio, each as defined in the 2021 364-Day Term Loan Agreement, consistent with the 2020 ~~Credit Agreement. discussed below.~~

Revolving Credit and Term Loan Agreement ~~on April 1, 2020~~

On April 1, 2020, the Company entered into a Revolving Credit and Term Loan Agreement (the 2020 Credit Agreement), among the Company, CooperVision International Holding Company, LP, CooperSurgical Netherlands B.V., CooperVision Holding ~~Kft.~~Kft, the lenders from time to time party thereto, and KeyBank National Association, as administrative agent. The 2020 Credit Agreement provides for (a) a multicurrency revolving credit facility (the 2020 Revolving Credit Facility) in an aggregate principal amount of $1.29 billion and (b) a term loan facility (the 2020 Term Loan Facility) in an aggregate principal amount of $850.0 million, each of which, unless terminated earlier, mature on April 1, 2025. ~~In addition, the~~The Company has ~~the ability from time~~an uncommitted option to ~~time to request an~~ increase ~~to the size of~~ the revolving credit facility or establish ~~one or more~~a new term ~~loans under the term~~ loan ~~facility~~ in an aggregate amount up to $1.605 ~~billion, subject to the discretionary participation of the lenders.~~billion.

Amounts outstanding under the 2020 Credit Agreement will bear interest, at the Company’s option, at either the base rate, or the adjusted LIBO rate or adjusted foreign currency rate, plus, in each case, an applicable rate of between 0.00% and 0.50% in respect of base rate loans, and between 0.75% and 1.50% in respect of adjusted LIBO rate or adjusted foreign currency rate loans, in each case in accordance with a pricing grid tied to the Total Leverage Ratio, as defined in the 2020 Credit Agreement. During the term of the 2020 Revolving Credit Facility, the Borrowers may borrow, repay and re-borrow amounts available under the Revolving Credit Facility, subject to voluntary reduction of the revolving commitment.

The Company pays an annual commitment fee that ranges from 0.10% to 0.20% of the unused portion of the 2020 Revolving Credit Facility based upon the Company’s Total Leverage Ratio, as defined in the 2020 Credit Agreement. In addition to the annual commitment fee,On January 31, 2023, the Company ~~is also required to pay certain letter of credit and related fronting fees and other administrative fees pursuant to the terms of the 2020 Credit Agreement.~~

~~On April 1, 2020, the Company borrowed~~had $850.0 million outstanding under the 2020 Term Loan Facility and ~~$445.0~~$276.5 million outstanding under the 2020 Revolving Credit ~~Facility and used the proceeds to repay the outstanding amounts under the previous credit agreement and an outstanding term loan, and for general corporate purposes.~~

On October 30, 2020, the Company entered into Amendment No. 1 to the 2020 Credit Agreement (the First Amendment to the 2020 Credit Agreement). The First Amendment to the 2020 Credit Agreement modifies the 2020 Credit Agreement by, among other things, adding CooperVision International Limited as a revolving borrower and releasing certain borrowers in the 2020 Credit Agreement.

On December 17, 2021, the Company entered into Amendment No. 2 to the 2020 Credit Agreement (the Second Amendment to the 2020 Credit Agreement). The Second Amendment to the 2020 Credit Agreement modifies the 2020 Credit Agreement by, among other things, adding CooperSurgical Holdings Limited as a revolving borrower, releasing CooperVision Holding Kft as a borrower, and updating the benchmark replacement language in the 2020 Credit Agreement.

Facility. The interest rate on the 2020 Term Loan Facility was ~~0.85%~~ atand the 2020 Revolving Credit Facility was 5.37% at January 31, ~~2022.~~

The 2020 Credit Agreement contains customary restrictive covenants, as well as financial covenants that require the Company to maintain a certain Total Leverage Ratio and Interest Coverage Ratio, each as defined in the 2020 Credit Agreement:

•~~Interest Coverage Ratio, as defined, to be at least 3.00 to 1.00 at all times.~~

•~~Total Leverage Ratio, as defined, to be no higher than 3.75 to 1.00.~~

~~At January 31, 2022, the Company was in compliance with the Interest Coverage~~ Ratio at 47.19 to 1.00 and the Total Leverage Ratio at 2.71 to 1.00. The Company, after considering the potential impacts of the COVID-19 pandemic, expects to remain in compliance with its financial maintenance covenant and meet its debt service obligations for at least the twelve months following the date of issuance of these financial statements.

~~Refer to our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 for more details.~~2023.

1611

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

~~The following is a summary of the maximum commitments and the net amounts available to us under credit facilities discussed above as of January 31, 2022:~~

(In millions) Facility Limit Outstanding Borrowings Outstanding Letters of Credit Total Amount Available Maturity Date
2021 Term Loan Facility $ 1,500.0 $ 1,500.0 n/a $ — December 17, 2026
2021 364-Day Term Loan 840.0 840.0 n/a — November 1, 2022
2020 Revolving Credit Facility 1,290.0 — 1.4 1,288.6 April 1, 2025
2020 Term Loan Facility 850.0 850.0 n/a — April 1, 2025
Total $ 4,480.0 $ 3,190.0 $ 1.4 $ 1,288.6

Note 6. Income Taxes

The ~~Company's~~ effective tax rates for the three months ended January 31, ~~2022~~2023 and January 31, ~~2021~~2022 were ~~21.8%~~30.7% and ~~(1,406.3)%~~21.8%, respectively. The increase was primarily due to changes in the geographic composition of pre-tax earnings, an ~~intra-group transfer~~increase in the UK statutory tax rate from 19% to 25%, and capitalization of ~~intellectual property during~~research and experimental expenditures for fiscal 2023 as required by the ~~three months ended January 31, 2021, as discussed below.~~2017 Tax Cuts and Jobs Act.

In November 2020, the Company completed an intra-group transfer of certain intellectual property and related assets of CooperVision to a UK subsidiary as part of a group restructuring to establish headquarters operations in the UK. Determining fair value involved significant judgment related to future revenue growth, operating margins and discount rates. The transfer resulted in a step-up of the UK tax-deductible basis in the intellectual property and goodwill, creating a temporary difference between the book basis and the tax basis of these assets. As a result, the Company recognized a deferred tax asset of $1,987.9 million, with a corresponding income tax benefit, during the three months ended January 31, 2021.

Note 7. Earnings Per Share


Three Months Ended January 31,
Period Ended January 31,						Period Ended January 31,	Three Months
(In millions, except per share amounts)	(In millions, except per share amounts)	2022		2021		(In millions, except per share amounts)	2023		2022
Net income	Net income	$	95.3	$	2,101.1	Net income	$	84.6	$	95.3
Basic:	Basic:					Basic:
Weighted average common shares	Weighted average common shares	49.4		49.1		Weighted average common shares	49.4		49.4
Basic earnings per share	Basic earnings per share	$	1.93	$	42.77	Basic earnings per share	$	1.71	$	1.93
Diluted:	Diluted:					Diluted:
Weighted average common shares	Weighted average common shares	49.4		49.1		Weighted average common shares	49.4		49.4
Effect of dilutive stock plans	Effect of dilutive stock plans	0.5		0.6		Effect of dilutive stock plans	0.3		0.5
Diluted weighted average common shares	Diluted weighted average common shares	49.9		49.7		Diluted weighted average common shares	49.7		49.9
Diluted earnings per share	Diluted earnings per share	$	1.91	$	42.31	Diluted earnings per share	$	1.70	$	1.91

The following table sets forth stock options to purchase our common stock that were not included in the diluted earnings per share calculation because their effect would have been antidilutive for the periods presented:


Three Months Ended January 31,
Period Ended January 31,				Period Ended January 31,	Three Months
(In thousands, except exercise prices)	(In thousands, except exercise prices)	2022	2021	(In thousands, except exercise prices)	2023	2022
Stock option shares excluded	Stock option shares excluded	224	317	Stock option shares excluded	514	224
Range of exercise prices		$345.74 – $406.17	$304.54 – $345.74
Exercise prices				Exercise prices	$300.12 - $406.17	$345.74 - $406.17
Restricted stock units excluded				Restricted stock units excluded	213	—

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

Note 8. Share-Based Compensation ~~Plans~~

The Company has several ~~share-based compensation~~stock plans that are described in the Company’s Annual Report on Form 10‑K for the fiscal year ended October 31, ~~2021. The compensation~~2022. Compensation expense and the related income tax benefit recognized in our Consolidated Statements of Income and Comprehensive Income for share-based awards, including the Employee Stock Purchase Plan, were as follows:


Three Months Ended January 31,
Period Ended January 31,						Period Ended January 31,	Three Months
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Selling, general and administrative expense	Selling, general and administrative expense	$	11.5	$	9.1	Selling, general and administrative expense	$	14.4	$	11.5
Cost of sales	Cost of sales	1.3		1.1		Cost of sales	1.1		1.3
Research and development expense	Research and development expense	0.8		0.6		Research and development expense	0.8		0.8
Total share-based compensation expense	Total share-based compensation expense	$	13.6	$	10.8	Total share-based compensation expense	$	16.3	$	13.6
Related income tax benefit	Related income tax benefit	$	1.6	$	1.2	Related income tax benefit	$	1.7	$	1.6

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note 9. ~~Stockholders’~~Stockholders' Equity

Analysis of Changes in Accumulated Other Comprehensive ~~(Loss)~~ Income:


(In millions)	(In millions)	Foreign Currency Translation Adjustment		Minimum Pension Liability		Derivative Instruments		Total		(In millions)	Foreign Currency Translation Adjustment		Minimum Pension Liability		Derivative Instruments		Total
Balance at October 31, 2020		$	(402.3)	$	(56.7)	$	(13.0)	$	(472.0)
Gross change in value		82.2		29.8		34.3		146.3
Tax effect		(0.2)		(7.2)		(8.2)		(15.6)
Balance at October 31, 2021	Balance at October 31, 2021	$	(320.3)	$	(34.1)	$	13.1	$	(341.3)	Balance at October 31, 2021	$	(320.3)	$	(34.1)	$	13.1	$	(341.3)
Gross change in value	Gross change in value	(49.2)		—		17.6		(31.6)		Gross change in value	(49.2)		—		17.6		(31.6)
Tax effect	Tax effect	—		—		(4.3)		(4.3)		Tax effect	—		—		(4.3)		(4.3)
Balance at January 31, 2022	Balance at January 31, 2022	$	(369.5)	$	(34.1)	$	26.4	$	(377.2)	Balance at January 31, 2022	$	(369.5)	$	(34.1)	$	26.4	$	(377.2)


Balance at October 31, 2022	$	(555.0)	$	(6.2)	$	94.4	$	(466.8)
Gross change in value	84.0		—		(27.8)		56.2
Tax effect	—		—		6.8		6.8
Balance at January 31, 2023	$	(471.0)	$	(6.2)	$	73.4	$	(403.8)

Share Repurchases

In December 2011, the Company's Board of Directors authorized the 2012 Share Repurchase Program and through subsequent amendments, the most recent being in March 2017, the total repurchase authorization was increased from $500.0 million to $1.0 billion of the Company's common stock. ~~This program has no expiration date and may be discontinued at any time. Purchases~~As of January 31, 2023, $256.4 million remains authorized for repurchase under the 2012 Share Repurchase ~~Program are subject to a review of the circumstances in place at the time and may be made from time to time as permitted by securities laws and other legal requirements.~~Program.

During the ~~first quarter of fiscal~~three months ended January 31, 2023, there was no share repurchase under the 2012 Share Repurchase Program. During the three months ended January 31, 2022, the Company repurchased 191.2 thousand shares of ~~the Company’s~~its common stock for ~~$78.5~~$78.5 million, at an average purchase price of ~~$410.41~~$410.41 per share. ~~At January 31, 2022, $256.4 million remained authorized for repurchase under the program.~~

~~During the first quarter of fiscal 2021, the Company repurchased 69.6 thousand shares of the Company’s common stock for $24.8 million, at an average purchase price of $356.61 per share.~~

Dividends

The Company paid a semiannual dividend of approximately $1.5 million or 3 cents per share, on February 10, 2023, to stockholders of record on January 23, 2023. The Company paid a semiannual dividend of approximately $1.5 million or 3 cents per share, on February 9, 2022, to stockholders of record on January 21, 2022.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

~~Note 10. Fair Value Measurements~~

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy:

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

~~Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.~~

~~Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.~~

At January 31, 2022 and October 31, 2021, the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, lines of credit, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments and the ability to obtain financing on similar terms.

The carrying value of the Company's revolving credit facility and term loans approximates fair value based on current market rates (Level 2). On April 6, 2020 the Company entered into 6 interest rate swap contracts which are used to hedge its exposure to changes in cash flows associated with its variable rate debt and are designated as derivatives in a cash flow hedge. The payment streams are based on a total notional amount of $1.5 billion at the inception of the contracts. The interest rate swap contracts had maturities ~~of seven years or less. As of January 31, 2022,~~ ~~3 of the 6 interest rate swap contracts have matured, and the outstanding contracts have a total notional amount of $1.0 billion.~~

The gain or loss on the derivatives is recorded as a component of accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

The fair value of the interest rate swap contracts is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observable market interest rate curves. The interest rate swap contracts were categorized as Level 2 in the fair value hierarchy, as the inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity. Refer to Note 14. Financial Derivatives and Hedging for further information.

~~The Company did not have any cross currency swaps or foreign currency forward contracts as of~~ ~~January 31, 2022 and October 31, 2021.~~

~~The fair value of the Company's contingent consideration for which a liability is recorded is measured on a recurring basis~~ ~~as a Level 3 measurement~~, ~~and the change in fair value is recognized in selling, general and administrative expense in the Consolidated Statements of Income and Comprehensive Income. Refer to~~ ~~Note 2. Acquisitions and Assets Held for Sale for further information.~~

~~Nonrecurring fair value measurements~~

The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described in Note 2. Acquisitions and Assets Held for Sale which are considered a Level 3 measurement.

~~Note 11. Employee Benefits~~

The Company's Retirement Income Plan (the Plan), a defined benefit plan, covers substantially all full-time United States employees. The Company's contributions are designed to fund normal cost on a current basis and to fund the estimated prior service cost of benefit improvements. The unit credit actuarial cost method is used to determine the annual cost. The Company pays the entire cost of the Plan and funds such costs as they accrue. Virtually all of the assets of the Plan are comprised of equities and participation in equity and fixed income funds.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~

~~The Company's results of operations for the three months ended January 31, 2022 and 2021, reflect the following components of net periodic defined benefit costs:~~

Three Months Ended January 31,
(In millions) 2022 2021
Service cost $ 4.6 $ 4.3
Interest cost 1.3 1.1
Expected return on plan assets (4.0) (3.1)
Recognized net actuarial gain 0.6 1.3
Net periodic defined benefit plan cost $ 2.5 $ 3.6

~~The Company did not contribute to the Plan during the first three months of fiscal 2022,~~ and the Company is uncertain of the amount it will contribute during the remainder of the year. The Company did not contribute to the Plan in the first three months of fiscal 2021. The expected rate of return on Plan assets for determining net periodic benefit plan cost is ~~8%.~~

Note ~~12.~~10. Contingencies

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company does not believe that the ultimate resolution of these proceedings or claims pending against it could have a material adverse effect on its financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Note ~~13.~~11. Business Segment Information

The ~~Company discloses~~following tables present revenue and other financial information about its operating segments, which were established based on the way that management organizes segments within the Company for making operating decisions and assessing financial performance. The Company's 2 operating segments are described below.

•~~CooperVision.~~ ~~Competes in the worldwide contact lens market~~ by developing, manufacturing and marketing a broad range of products for contact lens wearers, featuring advanced materials and optics. CooperVision designs its products to solve vision challenges such as astigmatism, presbyopia, myopia, ocular dryness and eye fatigues, with a broad collection of spherical, toric and multifocal contact lenses.

•~~CooperSurgical.~~ Competes in the general health care market with a focus on advancing the health of women, babies and families through a diversified portfolio of products and services focusing on women's health and fertility.

The Company uses operating income, as presented in our financial reports, as the primary measure of segment profitability. The Company does not allocate costs from corporate functions to segment operating income. Items below operating income are not considered when measuring the profitability of a segment. The Company uses the same accounting policies to generate segment results as the Company does for consolidated results.

~~Total identifiable assets are those used in continuing operations except cash and cash equivalents, which the Company includes as corporate assets.~~reportable segment:

2013

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Segment information:


Three Months Ended January 31,
Period Ended January 31,						Period Ended January 31,	Three Months
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
CooperVision net sales by category:	CooperVision net sales by category:					CooperVision net sales by category:
Toric lens	Toric lens	$	182.2	$	162.3	Toric lens	$	189.8	$	182.2
Multifocal lens	Multifocal lens	65.8		57.7		Multifocal lens	71.8		65.8
Single-use sphere lens	Single-use sphere lens	167.0		146.0		Single-use sphere lens	168.3		167.0
Non single-use sphere, other	Non single-use sphere, other	146.5		141.0		Non single-use sphere, other	151.4		146.5
Total CooperVision net sales	Total CooperVision net sales	$	561.5	$	507.0	Total CooperVision net sales	$	581.3	$	561.5
CooperSurgical net sales by category:	CooperSurgical net sales by category:					CooperSurgical net sales by category:
Office and surgical products		$	128.9	$	103.5
Office and surgical						Office and surgical	$	165.2	$	128.9
Fertility	Fertility	96.8		70.0		Fertility	112.0		96.8
CooperSurgical net sales	CooperSurgical net sales	225.7		173.5		CooperSurgical net sales	277.2		225.7
Total net sales	Total net sales	$	787.2	$	680.5	Total net sales	$	858.5	$	787.2
Operating income (loss):	Operating income (loss):					Operating income (loss):
CooperVision	CooperVision	$	127.4	$	127.5	CooperVision	$	160.1	$	127.4
CooperSurgical	CooperSurgical	15.6		17.5		CooperSurgical	5.8		15.6
Corporate	Corporate	(12.2)		(11.6)		Corporate	(16.4)		(12.2)
Total operating income	Total operating income	130.8		133.4		Total operating income	149.5		130.8
Interest expense	Interest expense	6.6		6.4		Interest expense	26.1		6.6

Other expense (income), net		2.3		(12.5)
Other expense, net						Other expense, net	1.3		2.3
Income before income taxes	Income before income taxes	$	121.9	$	139.5	Income before income taxes	$	122.1	$	121.9


(In millions)	(In millions)	January 31, 2022		October 31, 2021		(In millions)	January 31, 2023		October 31, 2022
Total identifiable assets:	Total identifiable assets:					Total identifiable assets:
CooperVision	CooperVision	$	6,918.8	$	6,965.9	CooperVision	$	6,945.7	$	6,778.9
CooperSurgical	CooperSurgical	4,391.8		2,395.6		CooperSurgical	4,333.9		4,407.8
Corporate	Corporate	351.9		244.7		Corporate	281.5		305.6
Total	Total	$	11,662.5	$	9,606.2	Total	$	11,561.1	$	11,492.3

Geographic information:


Three Months Ended January 31,
Period Ended January 31,						Period Ended January 31,	Three Months
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Net sales to unaffiliated customers by country of domicile:	Net sales to unaffiliated customers by country of domicile:					Net sales to unaffiliated customers by country of domicile:
United States	United States	$	365.3	$	313.1	United States	$	434.8	$	365.3
Europe	Europe	250.4		220.8		Europe	248.2		250.4
Rest of world	Rest of world	171.5		146.6		Rest of world	175.5		171.5
Total	Total	$	787.2	$	680.5	Total	$	858.5	$	787.2


(In millions)	(In millions)	January 31, 2022		October 31, 2021		(In millions)	January 31, 2023		October 31, 2022
Net property, plant and equipment by country of domicile:	Net property, plant and equipment by country of domicile:					Net property, plant and equipment by country of domicile:
United States	United States	$	758.1	$	737.5	United States	$	871.3	$	856.1
Europe	Europe	364.9		377.2		Europe	325.3		310.8
Rest of world	Rest of world	238.5		232.9		Rest of world	267.4		266.0
Total	Total	$	1,361.5	$	1,347.6	Total	$	1,464.0	$	1,432.9

2114

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Note ~~14.~~12. Financial Derivatives and Hedging

~~As part of the Company’s overall risk management practices~~On April 6, 2020, the Company ~~enters~~entered into ~~financial derivatives,~~six interest rate ~~swaps designated as cash flow hedges,~~swap contracts which were used to hedge ~~the Company's~~its exposure to changes in cash flows associated with its variable rate ~~debt.~~

debt and were designated as derivatives in a cash flow hedge. The ~~Company records all derivatives~~payment streams were based on ~~its Consolidated Condensed Balance Sheets~~a total notional amount of $1.5 billion at ~~fair value. The accounting for changes in~~ the ~~fair value of derivatives depends on the intended use~~inception of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. All of the Company's derivatives have satisfied the criteria necessary to apply hedge accounting.

The gain or loss on derivative instruments designated and qualifying for cash flow hedge accounting is deferred in other comprehensive income. The changes in fair value for all trades that are not designated for hedge accounting are recognized in current period earnings. Deferred gains or losses from designated cash flow hedges are reclassified into earnings in the period that the hedged interest expense affects earnings. The effectiveness of cash flow hedges is assessed at inception and quarterly thereafter. The Company does not offset fair value amounts recognized for derivative instruments in its Consolidated Condensed Balance Sheets for presentation purposes.

~~Credit risk related to derivative transactions reflects the risk that a party to the transaction could fail to meet its obligation under the derivative~~ contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings to help mitigate counterparty credit risk.

As of January 31, ~~2022 and October 31, 2021,~~2023, three of the ~~Company had the following outstanding derivatives designated as hedging instruments:~~

(In millions, except for number of instruments) Number of Instruments Notional Value
Interest Rate Swap Contracts 3 $ 1,000

~~These~~six interest rate swap contracts have matured and the outstanding contracts have a total notional amount of $1.0 billion and remaining maturities of ~~six~~five years or less. The Company did not have any cross-currency swaps or foreign currency forward contracts as of January 31, 2023.

The interest rate swap contracts are fair valued by netting discounted future fixed cash payments and the discounted expected variable cash receipts, which are estimated based on observable market interest rate curves (Level 2). The cumulative pre-tax impact of the gain on derivatives designated for hedge accounting recognized in accumulated other comprehensive income ~~(loss)~~ was $96.7 million ($73.4 million, net of tax) as of January 31, 2023, and $34.8 million ($26.4 million, net of tax) as of January 31, ~~2022.~~2022. The ~~pre-tax impact of loss on derivatives designated for hedge accounting recognized in other comprehensive income (loss) was~~ ~~$11.2 million~~ ~~($8.5 million, net of tax) as of January 31, 2021.~~

~~The following table summarizes the~~ fair ~~values~~value of derivative instruments ~~as of the periods indicated and the line items~~are classified in ~~the accompanying~~"Other non-current assets" on our Consolidated Condensed Balance ~~Sheets where the instruments are recorded:~~

Derivative Assets
(In millions) January 31, 2022 October 31, 2021
Derivatives designated as cash flow hedges Balance sheet location
Interest rate swap contracts Other non-current assets $ 34.8 $ 17.2
Sheets.

The following table summarizes the amounts recognized with respect to our derivative instruments within the accompanying Consolidated Statements of Income and Comprehensive Income:

Three Months Ended January 31,
(In millions) 2022 2021
Derivatives designated as cash flow hedges Location of Loss Recognized on Derivatives
Interest rate swap contracts Interest expense $ 1.9 $ 2.1

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Condensed Financial Statements~~

~~(Unaudited)~~


Period Ended January 31,		Three Months
(In millions)		2023		2022
Derivatives designated as cash flow hedges	Location of (Gain)/Loss Recognized on Derivatives
Interest rate swap contracts	Interest (income) expense	$	(8.3)	$	1.9

The Company expects that ~~$0.5~~$38.1 million recorded as a component of accumulated other comprehensive ~~income (loss)~~loss will be realized in the Consolidated Statements of Income and Comprehensive Income over the next twelve months and the amount will vary depending on prevailing interest rates.

The following table details the changes in accumulated other comprehensive income:


~~(In millions)~~	~~Amount~~
~~Beginning balance gain as of October 31, 2021~~	$	~~17.2~~
~~Amount recognized in other comprehensive income on interest rate swap contracts, gross ($11.9, net of tax)~~	~~15.7~~
~~Amount reclassified from other comprehensive income into earnings, gross ($1.4, net of tax)~~	~~1.9~~
~~Ending balance gain as of January 31, 2022~~	$	~~34.8~~


Period Ended January 31,	Three Months
(In millions)	2023		2022
Beginning balance gain	$	124.5	$	17.2
Amount recognized in other comprehensive income on interest rate swap contracts, gross ($(14.8) million, net of tax and $11.9 million, net of tax, respectively)	(19.5)		15.7
Amount reclassified from other comprehensive income into earnings, gross ($(6.2) million, net of tax and $1.4 million, net of tax, respectively)	(8.3)		1.9
Ending balance gain	$	96.7	$	34.8

~~Note 15. Subsequent Events~~

On February 7, 2022, subsequent to the fiscal quarter ended January 31, 2022, CooperSurgical entered into a binding letter of intent to acquire Cook Medical's Reproductive Health business, a manufacturer of minimally invasive medical devices focused on the fertility, obstetrics and gynecology markets.

The aggregate consideration is $875.0 million in cash, with $675.0 million payable at the closing and the remaining $200.0 million payable in $50.0 million installments following each of the first, second, third and fourth anniversaries of the closing. The transaction is subject to customary closing conditions, including entry into a definitive acquisition agreement and regulatory approvals, and compliance with certain local employee consultation requirements.

2315

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Note numbers refer to “Notes to Consolidated Condensed Financial Statements” in Item 1. Unaudited Financial Statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These include statements relating to plans, prospects, goals, strategies, future actions, events or performance and other statements which are other than statements of historical fact, ~~including all~~including: statements regarding the expected ~~impact~~impacts of ~~the ongoing Coronavirus disease 2019 (COVID-19) pandemic on our business;~~global macroeconomic, health and political conditions; and statements regarding acquisitions ~~including the~~(including acquired companies' financial ~~position,~~positions, our market position based on acquisitions, product development and business ~~strategy, expected~~strategies, anticipated cost synergies, expected timing and benefits of ~~the transaction, difficulties in integrating~~pending transactions, and integration of acquired entities or operations, as well as estimates of our and the acquired entities' future expenses, sales and earnings per ~~share~~share) that are forward-looking. In addition, all statements regarding anticipated growth in our ~~net sales, anticipated effects of any product recalls,~~revenues, anticipated market conditions, planned product launches, restructuring or business transition expectations, regulatory plans, and expected results of operations ~~and integration of any acquisition~~ are forward-looking. To identify these statements, look for words like “believes,” “outlook,” “probable,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates” or “anticipates” and similar words or phrases. Forward-looking statements necessarily depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Among the factors that could cause our actual results and future actions to differ materially from those described in forward-looking statements are:

•The effects of the ongoing COVID-19 pandemic and related economic disruptions and new governmental regulations on our business, results of operations, cash flow and financial condition, including but not limited to the potential impact on our sales, operations and supply chain.

•Adverse changes in the global or regional general business, political and economic conditions, including the impact of continuing uncertainty and instability of certain countries, man-made or natural disasters and pandemic conditions, that could adversely affect our global markets, and the potential adverse economic impact and related uncertainty caused by these ~~items, including but not limited to, the ongoing COVID-19 pandemic, inflation and escalating global trade barriers, including additional tariffs, by countries such as China.~~items.

•~~Changes in tax laws or their interpretation, changes in statutory tax~~The impact of Russia's invasion of Ukraine and the global response to this invasion on the global economy, European economy, financial markets, energy markets, currency rates and ~~adverse outcomes in tax disputes including but not limited~~our ability to ~~the United States (U.S.), the United Kingdom (UK) and other countries may affect our taxation of earnings recognized in foreign jurisdictions, result in unexpected tax liabilities, and/~~supply product to, or ~~negatively impact our effective tax rate.~~through, affected countries.

•Foreign currency exchange rate and interest rate fluctuations including the risk of fluctuations in the value of foreign currencies or interest rates that would decrease our net sales and earnings.

•Our existing and future variable rate indebtedness and associated interest expense is impacted by rate increases, which could adversely affect our financial health or limit our ability to borrow additional funds.

•Changes in tax laws, examinations by tax authorities, and changes in our geographic composition of income.

•Acquisition-related adverse effects including the failure to successfully achieve the anticipated net sales, margins and earnings benefits of acquisitions, integration delays or costs and the requirement to record significant adjustments to the preliminary fair value of assets acquired and liabilities assumed within the measurement period, required regulatory approvals for an acquisition not being obtained or being delayed or subject to conditions that are not anticipated, adverse impacts of changes to accounting controls and reporting procedures, contingent liabilities or indemnification obligations, increased leverage and lack of access to available financing (including financing for the acquisition or refinancing of debt owed by us on a timely basis and on reasonable terms).

•Adverse changes in global political and economic conditions, and related uncertainty caused by the UK’s withdrawal from the European Union (EU) and its potential impact on, among other things, the movement of goods and materials in our supply chain, additional regulatory approvals and requirements, and increased tariffs and duties.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

•Compliance costs and potential liability in connection with U.S. and foreign laws and health care regulations pertaining to privacy and security of personal information, such as HIPAA and the California Consumer Privacy Act (CCPA) in the U.S. and the General Data Protection Regulation (GDPR) requirements in Europe, including but not limited to those resulting from data security breaches.

•A major disruption in the operations of our manufacturing, accounting and financial reporting, research and development, distribution facilities or raw material supply chain due to ~~the ongoing COVID-19 pandemic,~~challenges associated with integration of acquisitions, man-made or natural disasters, pandemic conditions, cybersecurity incidents or other causes.

•A major disruption in the operations of our manufacturing, accounting and financial reporting, research and development or distribution facilities due to technological problems, including any related to our information systems maintenance, enhancements or new system deployments, integrations or upgrades.

•Market consolidation of large customers globally through mergers or acquisitions resulting in a larger proportion or concentration of our business being derived from fewer customers.

•Disruptions in supplies of raw materials, particularly components used to manufacture our silicone hydrogel lenses.

•New U.S. and foreign government laws and regulations, and changes in existing laws, regulations and enforcement guidance, which affect areas of our operations including, but not limited to, those affecting the health care industry, including the contact lens industry specifically and the medical device or pharmaceutical industries generally, including but not limited to the EU Medical Devices Regulation (MDR) and the EU In Vitro Diagnostic Medical Devices ~~Regulation.~~Regulation (IVDR).

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

•Legal costs, insurance expenses, settlement costs and the risk of an adverse decision, prohibitive injunction or settlement related to product liability, patent infringement, contractual disputes, or other litigation.

•Limitations on sales following product introductions due to poor market acceptance.

•New competitors, product innovations or technologies, including but not limited to, technological advances by competitors, new products and patents attained by competitors, and competitors' expansion through acquisitions.

•Reduced sales, loss of customers and costs and expenses related to product recalls and warning letters.

•Failure to receive, or delays in receiving, regulatory approvals or certifications for products.

•Failure of our customers and end users to obtain adequate coverage and reimbursement from third-party ~~payors~~payers for our products and services.

•The requirement to provide for a significant liability or to write off, or accelerate depreciation on, a significant asset, including goodwill, other intangible assets and idle manufacturing facilities and equipment.

•The success of our research and development activities and other start-up projects.

•Dilution to earnings per share from acquisitions or issuing stock.

•Impact and costs incurred from changes in accounting standards and policies.

•~~Environmental risks, including increasing environmental legislation and the broader impacts of climate change.~~

•Risks related to environmental, social and corporate governance (ESG) issues, including those related to climate change and sustainability.

•Other events described in our Securities and Exchange Commission filings, including the “Business” and “Risk Factors” sections in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2021,~~2022, as such Risk Factors may be updated in quarterly filings including updates made in this filing.

We caution investors that forward-looking statements reflect our analysis only on their stated date. We disclaim any intent to update them except as required by law.

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THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Results of Operations

In this section, we discuss the results of our operations for the first quarter of fiscal ~~2022~~2023 ended January 31, ~~2022~~2023, and compare them with the same period of fiscal ~~2021.~~2022. We also discuss our cash flows and current financial condition under “Capital Resources and Liquidity.” Within the tables presented, percentages are calculated based on the underlying whole-dollar amounts and, therefore, may not recalculate exactly from the rounded numbers used for disclosure purposes.

~~Non-GAAP Financial Measures~~

The succeeding sections of Management’s Discussion and Analysis (MD&A) may include certain financial measures that are not defined by accounting principles generally accepted in the United States (GAAP). These measures, which are referred to as non-GAAP measures, are listed below:

•~~Free Cash Flow~~ ~~- Free cash flow is calculated as net cash provided by operating activities less capital expenditures.~~

•~~Constant currency~~ ~~- Constant currency is defined as excluding the effect of foreign currency fluctuations.~~

For a discussion of these measures and the reasons management believes they are useful to investors, refer to “Summary of Non-GAAP Financial Measures” below. To the extent applicable, this MD&A includes reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

The presentation of these non-GAAP financial measures is not intended to be a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and may be different from non-GAAP financial measures used by other companies, and therefore, may not be comparable among companies.

~~COVID-19 Considerations~~

The World Health Organization categorized COVID-19 as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. These factors have had, and in the future may continue to have, an adverse effect on our sales, operating results and cash flows.Outlook

We have taken an active role in addressing the ongoing pandemic’s impact on our employees, suppliers, distribution channels, operations and customers, including taking precautionary measures, such as implementing contingency plans, and making operational adjustments as necessary. We have taken measures to help ensure the safety of our personnel in all our facilities, and we have endeavored and continue to follow recommended actions of government and health authorities to protect our employees worldwide.

As of the date of this filing, we have not experienced any significant disruption at our manufacturing facilities. We have had no significant disruption in our access to necessary raw materials and other supplies or with our distribution network; however, we have experienced higher unabsorbed fixed overhead costs, labor inefficiencies, higher cost of production and higher freight charges as a result of the COVID-19 pandemic. ~~Our manufacturing and distribut~~ion operations have responded to the impacts related to the COVID-19 pandemic, and we have been able to continue to supply our products around the world without interruption. In the future, we may decide or need to implement additional precautionary measures or operational adjustments as we deem prudent to meet consumer demand or to help further ensure employee safety. We believe that the actions we are ~~taking have enabled us to keep our employees safe and our supply chain intact and will help us emerge from this global pandemic operationally sound and well positioned for long-term growth.~~

The extent to which the global COVID-19 pandemic and related economic disruptions impact our business, results of operations, cash flow and financial condition will depend on future developments. At this time, future developments are highly uncertain, difficult to predict and largely outside of our control. These include, but are not limited to, the spread, duration and severity of the pandemic outbreak and any subsequent waves of additional outbreaks, including the emergence

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

and spread of variants of the COVID-19 virus, actions taken by governments to contain the pandemic, address its impact or respond to the reduction in global and local economic activity, and how quickly and to what extent normal economic and operating conditions can resume. We will continue to closely monitor the developments relating to the COVID-19 pandemic and the responses from governments and private sector participants and their respective impact on our Company and on our customers, suppliers, vendors and business partners.

~~For more information on the risks associated with the COVID-19 pandemic, refer to Part II, Item 1A, "Risk Factors" herein.~~

~~First Quarter Highlights~~

•~~Gross profit of $518.4 million, up 15% from $450.7 million in the prior year period~~

•~~Operating inco~~m~~e of $130.8 million, down 2% f~~r~~om $133.4 million in the prior year period~~

•Diluted earnings per share of $1.91, down 95% from $42.31 per share in the prior year period, primarily due to the income tax benefit related to an intra-group transfer of intellectual property in the prior year period. Refer to Note 6. Income Taxes for further information.

•~~Cash provided by operations~~ of ~~$166.0million, compared to $147.7~~ ~~million in the prior year period~~

~~Outlook~~

~~Overall, we remain~~ optimistic about the long-term prospects for the worldwide contact lens and general health care ~~markets.~~markets, and the resilience of and growth prospects for our businesses and products. However, ~~the impact,~~we face significant risks and ~~uncertainty relating~~uncertainties in our global operating environment. These risks include uncertain global and regional business, political and economic conditions, including but not limited to those associated with man-made or natural disasters, pandemic conditions, inflation, foreign exchange rate fluctuations, regulatory developments, supply chain disruptions, and escalating global trade barriers. For more information on the risks associated with our global ~~COVID-19 pandemic and related economic disruptions, as further described in the “COVID-19 Considerations” section above and in the “Risk Factors” section in~~operating environment, refer to Part II, Item 1A ~~of this filing,~~"Risk Factors" herein. These risks and uncertainties have adversely affected our sales, cash flow and ~~current~~ performance in the past and are likely to further adversely affect our future sales, cash flow and performance. ~~Additionally, other events affecting~~

Global Market and Economic Conditions - Over the ~~economy as a whole, including but not limited~~last few years in the U.S. and globally, market and economic conditions have been challenging, particularly in light of the COVID-19 pandemic. Foreign countries, in particular the Euro zone, have experienced recessionary pressures and face continued concerns about the systemic impacts of adverse economic conditions and geopolitical issues. In addition, changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the war in Ukraine, and steps taken by governments and central banks, particularly in response to the ~~uncertainty~~COVID-19 pandemic, as well as other stimulus and ~~instability of global markets driven by foreign currency volatility,~~spending programs, have led to higher inflation, which is likely to lead to an increase in costs and may cause changes in ~~tax laws, debt concerns,~~fiscal and monetary policy, including increased interest rates. In a higher inflationary environment, we may be unable to raise the ~~uncertainty following~~prices of our products and services sufficiently to keep up with the ~~UK's withdrawal from the EU, changes to existing~~increase in our costs. These market and ~~new regulations, global trade barriers including additional tariffs~~economic conditions could have a material adverse effect on our results of operations and ~~the trend of consolidations within the health care industry could impact our current performance and continue to represent a risk to our future performance.~~financial condition.

CooperVision - We compete in the worldwide contact lens market with our spherical, toric, multifocal, toric multifocal ~~and myopia management~~ contact lenses offered in a variety of materials including using silicone hydrogel Aquaform® technology and PC Technology™ ~~and~~ ~~ActivControl~~® ~~technology.~~. We believe that there will be lower contact lens wearer dropout rates as technology improves and enhances the wearing experience through a combination of improved designs and materials and the growth of preferred modalities such as single-use and monthly wearing options. CooperVision also competes in the myopia management and specialty eye care contact lens markets with myopia management contact lenses using its ActivControl® technology and with products such as orthokeratology (ortho-k) and scleral lenses. In November 2019, CooperVision received ~~United States~~U.S. Food and Drug Administration (FDA) approval for

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

its MiSight® 1 day lens, which is the first and only FDA-approved product indicated to slow the progression of myopia in children with treatment initiated between the ages of 8-12 and became available in the United States during fiscal 2020. In August 2021, CooperVision received Chinese National Medical Products Administration (NMPA) approval for its MiSight® 1 day lens for use in China. CooperVision is focused on greater worldwide market penetration using recently introduced products, and we continue to expand our presence in existing and emerging markets, including through acquisitions.

~~CooperVision acquired the following entity during the three months ended January 31, 2021:~~

•~~A privately-held medical device company on January 19, 2021~~

Our ability to compete successfully with a full range of silicone hydrogel products is an important factor to achieving our desired future levels of sales growth and profitability. CooperVision manufactures and markets a wide variety of silicone hydrogel contact lenses. Our single-use silicone hydrogel product franchises, clariti® and MyDay®, remain a focus as we expect increasing demand for these products, as well as future single-use products, as the global contact lens market continues to shift to this modality. Outside of single-use, the Biofinity® and Avaira Vitality® product families comprise our focus in the FRP, or frequent replacement product, market which encompasses the ~~2-week~~monthly and ~~monthly~~2-week modalities. Included in this segment are unique products such as Biofinity Energys®, which helps individuals with digital eye fatigue.

CooperSurgical - Our CooperSurgical business competes in the general health care market with a commitment to advancing the health of women, babies and families through its diversified portfolio of products and services, ~~focusing on women's health~~including medical devices, fertility, genomics, diagnostics, cryostorage, contraception and ~~fertility.~~healthcare technology services (such as cord blood and cord tissue storage and genomic testing). CooperSurgical has established its market presence and distribution system by developing products and acquiring companies, products and services that complement its business model.

On December 17, 2021, CooperSurgical ~~acquired~~completed the ~~following entity during~~acquisition of 100% of the ~~three months ended January 31, 2022:~~

•equity interests in Generate Life Sciences (Generate), a privately held leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue), ~~on December 17, 2021~~

~~CooperSurgical acquired the following entity during the three months ended January 31, 2021:~~

•~~A privately-held in vitro fertilization (IVF) cryo-storage software solutions company on December 31, 2020~~

~~On February 7, 2022, subsequent to the fiscal quarter ended January 31, 2022, CooperSurgical entered into a binding letter~~and paid an aggregate purchase consideration of intent to acquire the Reproductive Health business of Cook Medical, a manufacturer of minimally invasive medical devices focused on the fertility, obstetrics and gynecology markets. The aggregate consideration is $875.0 million in cash, with $675.0 million payable at the closing and the remaining $200.0 million payable in $50.0 million installments following each of the first, second, third and fourth anniversaries of the closing. The transaction is subject to customary closing conditions, including entry into a definitive acquisition agreement and regulatory approvals, and compliance with certain local employee consultation requirements. See Note 15. Subsequent Events of the Consolidated Condensed Financial Statements for additional information.

~~Capital Resources -~~ ~~At January 31, 2022, we had~~ ~~$280.7 million~~ ~~in unrestricted cash, primarily held in the United States,~~ ~~and~~ $1,288.6 million available under our 2020 Revolving Credit Facility. The $1.5 billion term loan entered into on December 17, 2021, the $840.0 million term loan entered into on November 2, 2021, and the $850.0 million term loan entered into on April 1, 2020 remain outstanding as of January 31, 2022.

~~See Note 5. Debt of the Consolidated Condensed Financial Statements for additional information.~~

~~Assets Held for Sale~~

On February 2, 2021, CooperVision entered into a stock purchase agreement to sell 50% of the equity interest in a wholly-owned subsidiary that was acquired by CooperVision on January 19, 2021. The closing of this transaction is subject to certain closing conditions including required regulatory approvals. We intend to operate the previously wholly-owned subsidiary as a joint venture with the purchaser of the 50% interest once the transaction is closed. We concluded the substantive terms of the joint venture during the third quarter of fiscal 2021, and as of July 31, 2021, the assets and liabilities of this disposal group were reclassified as held for sale. On August 1, 2021, CooperVision entered into a stockholders agreement, which outlines the terms regarding the operation and management of the joint venture. As of January 31, 2022,approximately $1.663 billion.

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THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

~~we were~~Competitive factors in the ~~process~~segments in which CooperSurgical competes include technological and scientific advances, product quality and availability, price and customer service (including response time and effective communication of ~~finalizing the joint venture related ancillary agreements,~~product information to physicians, consumers, fertility clinics and the disposal group continues to be classified as held for sale. We did not record any impairment during the three months ended January 31, 2022 and fiscal 2021, and this disposal did not qualify as a discontinued operation.hospitals).

~~See Note 2. Acquisitions and Assets Held for Sale of the Consolidated Condensed Financial Statements for additional information.~~

~~Transition from LIBOR~~

The UK’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (LIBOR), announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021. In March 2021, the FCA confirmed its intention to stop requiring banks to submit rates required to calculate LIBOR after 2021. However, for U.S. dollar-denominated (USD) LIBOR, only one-week and two-month USD LIBOR will cease to be published after 2021, and all remaining USD LIBOR tenors will continue being published until June 2023. Further, in March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, ~~ReferenceRateReform~~ (~~Topic848~~): ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. This guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. We have material contracts that are indexed to LIBOR and are continuing to monitor this activity and evaluate the related risk. We are continuing to evaluate the scope of impacted contracts and the potential impact. We are also monitoring the developments regarding alternative rates and may amend certain contracts to accommodate those rates if the contract does not already specify a replacement rate. While the notional value of agreements potentially indexed to LIBOR is material, we do not expect a material impact on our financial statements related to this transition.

~~Selected Statistical Information – Percentage of Net Sales~~

Percentage of Net Sales 2022 vs 2021 % Change in Absolute Values
Periods Ended January 31, 2022 2021
Net sales 100 % 100 % 16 %
Cost of sales 34 % 34 % 17 %
Gross profit 66 % 66 % 15 %
Selling, general and administrative expense 41 % 38 % 22 %
Research and development expense 3 % 3 % 22 %
Amortization of intangibles 5 % 5 % 22 %
Operating income 17 % 20 % (2) %

~~Net Sales Growth by Business Unit~~

Periods Ended January 31,
($ in millions) 2022 2021 Increase 2022 vs 2021 % Change
CooperVision $ 561.5 $ 507.0 $ 54.5 11 %
CooperSurgical 225.7 173.5 52.2 30 %
Net sales $ 787.2 $ 680.5 $ 106.7 16 %

CooperVision Net Sales

The contact lens market has two major product categories:

•Spherical lenses including lenses that correct near- and farsightedness uncomplicated by more complex visual defects; and

•Toric and multifocal lenses including lenses that, in addition to correcting near- and farsightedness, address more complex visual defects such as astigmatism and presbyopia by adding optical properties of cylinder and axis, which correct for irregularities in the shape of the cornea.

CooperVision Net Sales by Category

Single-use spheres – This includes Biomedics 1 day, clariti 1 day, MyDay, MiSight and Proclear 1 day

Toric – This includes Avaira Vitality toric, Biomedics toric, Biofinity toric, clariti 1 day toric, MyDay toric and Proclear toric

Multifocal – This includes Biofinity multifocal, Biofinity toric multifocal, clariti 1 day multifocal, MyDay multifocal and Proclear 1 day multifocal

Non single-use sphere, other – This includes our Avaira Vitality spheres, frequent replacement product (FRP) lens portfolio (Biofinity spheres, Biofinity Energys, Biomedics, Proclear spheres, clariti spheres), ortho-k, scleral and custom lenses, contact lens solutions and other

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

~~CooperVision Net Sales by Category~~

~~Toric~~ ~~– Toric lenses include Biofinity toric, MyDay toric, clariti 1 day toric, Biomedics toric, Proclear toric and Avaira Vitality toric~~

~~Multifocal~~ ~~– Multifocal lenses include Biofinity multifocal, Biofinity toric multifocal, clariti 1 day multifocal, MyDay multifocal and Proclear 1 day multifocal~~

~~Single-use spheres~~ ~~– Our single-use lens portfolio includes clariti 1 day, MyDay, MiSight, Proclear 1 day and Biomedics 1 day~~

~~Non single-use sphere, other~~ – Our FRP (frequent replacement product) lens portfolio and other include Biofinity, Biofinity Energys, Avaira Vitality, Biomedics, Proclear, clariti, ortho-k, scleral and custom lens, solutions and other


Three Months Ended January 31, ($ in millions)		2022		2021		2022 vs 2021 % Change

Three Months Ended January 31,								Three Months Ended January 31,					2023 vs 2022 % Change
($ in millions)								($ in millions)	2023		2022
Toric	Toric	$	182.2	$	162.3	12	%	Toric	$	189.8	$	182.2	4	%
Multifocal	Multifocal	65.8		57.7		14	%	Multifocal	71.8		65.8		9	%
Single-use spheres	Single-use spheres	167.0		146.0		14	%	Single-use spheres	168.3		167.0		1	%
Non single-use sphere, other	Non single-use sphere, other	146.5		141.0		4	%	Non single-use sphere, other	151.4		146.5		3	%
		$	561.5	$	507.0	11	%		$	581.3	$	561.5	4	%

In the three months ended January 31, ~~2022:~~2023, the growth experienced across all categories was partially offset by unfavorable foreign exchange rate fluctuations, which approximated $43.4 million.

•Toric and multifocal lenses grew primarily through the success of ~~Biofinity~~MyDay and ~~MyDay.~~Biofinity.

•Single-use sphere lenses ~~growth was~~grew primarily ~~driven by~~through MyDay, clariti and MiSight lenses.

•Non single-use sphere lenses ~~growth was~~grew primarily ~~driven by~~through Biofinity and ~~ortho-k lenses.~~ortho-k.

•"Other" products primarily include lens care which represented ~~approximatel~~yapproximately 1% ~~and 2% of net sales~~ ~~in the first quarter of~~ ~~fiscal 2022 and 2021, respectively.~~

•~~Total silicone hydrogel products increased by 12%, representing 78%~~ of net s~~ales~~sales in the three months ended January 31, ~~2022 compared to 77%~~2023 and 2022.

•Total silicone hydrogel products increased by 4% in the three months ended January 31, ~~2021.~~

•~~Foreign exchange rates~~ ~~negatively impacted~~2023, representing 79% of net sales, ~~by approximately $16.4 million~~compared to 78% in the first quarter of fiscal 2022 and had a positive impact of $14.8 million in the prior year period. In the first quarter of fiscal 2022, net sales increased by 14% in constant currency over the prior year period.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

•Sales growth was primarily driven by an increase in the volume of lenses sold across our core portfolio due to a recovery in demand from the impact of the COVID-19 pandemic. Average realized prices by product did not materially influence sales growth.

•We expect to continue seeing downward pressure and volatility in certain markets related to net sales if the COVID-19 pandemic continues, as optical retailers and healthcare centers continue to restrict access, and social distancing measures continue.three months ended January 31, 2022.

CooperVision Net Sales by Geography

CooperVision competes in the worldwide soft contact lens market and services in three primary regions: the Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific.


Three Months Ended January 31,

Period Ended January 31,								Period Ended January 31,	Three Months
($ in millions)	($ in millions)	2022		2021		2022 vs 2021 % Change		($ in millions)	2023		2022		2023 vs 2022 % Change
Americas	Americas	$	215.5	$	200.4	7	%	Americas	$	241.4	$	215.5	12	%
EMEA	EMEA	213.5		188.8		13	%	EMEA	214.4		213.5		—	%
Asia Pacific	Asia Pacific	132.5		117.8		13	%	Asia Pacific	125.5		132.5		(5)	%
		$	561.5	$	507.0	11	%		$	581.3	$	561.5	4	%

CooperVision's growth in net sales ~~across all regions~~ was primarily attributable to market gains of silicone hydrogel contact lenses. Refer to CooperVision Net Sales by Category above for further discussion.

CooperSurgical Net Sales by Category

CooperSurgical supplies the family health care market with a diversified portfolio of products and services. Our office and surgical offerings include products that facilitate surgical and non-surgical procedures that are commonly performed primarily by obstetricians and gynecologists in hospitals, surgical centers, fertility clinics and medical offices. Fertility offerings include highly specialized products and services that target the IVF process, including diagnostics testing with a goal to make fertility treatment safer, more efficient and convenient.

The chart below shows the percentage of net sales of office and surgical and fertility.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

~~The chart below shows the percentage of net sales of office and surgical products and fertility.~~

Office/Surgical – ~~Our significant office and surgical~~This includes Endosee endometrial imaging products, Fetal Pillow cephalic elevation devices for use in Cesarean sections, illuminated speculum products, Lone Star retractor systems, loop electrosurgical excision procedure (LEEP) products, Mara water ablation systems, newborn stem cell storage, PARAGARD contraceptive IUDs, point-of-care products and services include PARAGARD, Uterine Manipulators, Retractors, Closure products, Point-of-Care products, LEEP products, Endosee, Illuminate, Fetal Pillow and recently acquired stem cell services of Generateuterine positioning products.

Fertility – Our significant fertility products and services include cryostorage, donor gamete services, fertility consumables ~~fertility~~and equipment ~~Embryo Options,~~and genomic services (including preimplantation genetic ~~testing and recently acquired fertility services of Generate~~testing).

Three Months Ended January 31,
($ in millions)
2022 2021 2022 vs 2021 % Change
Office and surgical products $ 128.9 $ 103.5 24 %
Fertility 96.8 70.0 38 %
$ 225.7 $ 173.5 30 %



Three Months Ended January 31,					2023 vs 2022 % Change
($ in millions)	2023		2022
Office and surgical	$	165.2	$	128.9	28	%
Fertility	112.0		96.8		16	%
	$	277.2	$	225.7	23	%

In the three months ended January 31, ~~2022:~~2023, the net sales increase in both categories was primarily due to the addition of Generate. The increase was slightly offset by unfavorable foreign exchange rate fluctuations, which approximated $7.8 million.

Gross Margin

•

Consolidated gross margin decreased in the three months ended January 31, 2023 to 65% compared to 66% in the three months ended January 31, 2022, primarily driven by unfavorable currency.

~~Office~~

Selling, General and ~~surgical products increased~~Administrative Expense (SGA)



Three Months Ended January 31,									2023 vs 2022 % Change
($ in millions)	2023		% Net Sales		2022		% Net Sales
CooperVision	$	187.3	32	%	$	210.8	38	%	(11)	%
CooperSurgical	127.2		46	%	96.1		43	%	32	%
Corporate	16.4		—		12.2		—		34	%
	$	330.9	39	%	$	319.1	41	%	4	%

CooperVision's SGA decreased in the three months ended January 31, 2023 compared to the ~~prior year period mainly~~three months ended January 31, 2022, primarily due to ~~sales from~~ the ~~recently acquired stem cell services~~$31.8 million release of ~~Generate and sales from~~contingent consideration liability associated with SightGlass Vision's regulatory approval milestone.

CooperSurgical's SGA increased in the ~~acquired products, Illuminate and Fetal Pillow~~®~~. Further, there was an increase from other office and surgical products such as closure and neonatal products.~~

•~~Fertility net sales increased~~three months ended January 31, 2023 compared to the ~~prior year period mainly~~three months ended January 31, 2022, primarily due to ~~an increase in revenue from fertility consumables, equipment sales~~the addition of Generate's SGA and ~~preimplantation genetic testing~~acquisition and ~~sales from the recently acquired fertility services of Generate.~~

•~~Foreign exchange rat~~es negatively impacted sales by approximately $4.7 million in the first quarter of fiscal 2022, compared to a positive impact of $1.0 million in the prior year period. In the first quarter of fiscal 2022, net sales increased by 33% in con~~stant currency over the prior year period.~~

•~~Sales growth was primarily driven by stronger demand for our products and services as a result of our customers continuing to reopen their health care facilities and medical offices.~~

•We expect to continue seeing downward pressure and volatility in certain markets related to net sales if the COVID-19 pandemic continues, as hospitals and healthcare centers continue to restrict access, and social distancing measures continue.

integration expenses.

3221

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

~~Gross Margin~~

~~Consolidated gross margin remained relatively flat at 66% in both the first quarter of fiscal 2022 and fiscal 2021.~~

~~Selling, General and Administrative Expense (SGA)~~

Three Months Ended January 31,
($ in millions)
2022 % Net Sales 2021 % Net Sales 2022 vs 2021 % Change
CooperVision $ 210.8 38 % $ 179.1 35 % 18 %
CooperSurgical 96.1 43 % 70.6 41 % 36 %
Corporate 12.2 — 11.5 — 6 %
$ 319.1 41 % $ 261.2 38 % 22 %

CooperVision's SGA increased in the first quarter of fiscal 2022 compared to fiscal 2021 due to increases in distribution costs, general and administrative costs and advertising and marketing activities primarily related to myopia management. ~~CooperVisio~~n's SGA in the first quarter of fiscal 2022 included $6.3 million of costs primarily related to the increase in fair value of the contingent consideration of $3.5 million as described in Note 2. Acquisitions and Assets Held for Sale. CooperVision's SGA ~~in the first quarter of fiscal 2021 included $1.8 million of costs primarily related to acquisition and integration activities.~~

~~CooperSurgical's SG~~A increased in the first quarter of fiscal 2022 compared to fiscal 2021 primarily due to the addition of Generate's SGA. CooperSurgical's SGA in the first quarter of fiscal 2022 included $6.0 million of costs primarily related to acquisition and integration activities. CooperSurgical's SGA in the first quarter of fiscal 2021 included $1.8 million of acquisition and integration expenses.

Corporate SGA i~~ncreased in~~ ~~the first quarter of fiscal 2022 compared to fiscal 2021 primarily due to higher share-based compensation expense.~~

~~Research and Development Expense (R&D)~~

Three Months Ended January 31,
($ in millions)
2022 % Net Sales 2021 % Net Sales 2022 vs 2021 % Change
CooperVision $ 16.1 3 % $ 14.1 3 % 14 %
CooperSurgical 10.1 4 % 7.3 4 % 38 %
$ 26.2 3 % $ 21.4 3 % 22 %

~~In the three months ended January 31, 2022:~~

•~~CooperVision's R&D expense~~ increased in the three months ended January 31, ~~2022~~2023 compared to ~~fiscal 2021, mainly~~the three months ended January 31, 2022, primarily due to ~~myopia management programs, increases in headcount~~share-based compensation related expenses.

Research and ~~timing of R&D projects. As a~~ ~~percentage of sales,~~ Development Expense (R&D)



Three Months Ended January 31,									2023 vs 2022 % Change
($ in millions)	2023		% Net Sales		2022		% Net Sales
CooperVision	$	16.7	3	%	$	16.1	3	%	4	%
CooperSurgical	14.9		5	%	10.1		4	%	47	%
	$	31.6	4	%	$	26.2	3	%	20	%

CooperVision's R&D expense for the three months ended January 31, 2023 remained relatively ~~flat. CooperVision's~~flat year over year. CooperVision's R&D activities are primarily focused on the development of contact lenses, manufacturing technology and process enhancements.

•CooperSurgical's R&D expense increased in the three months ended January 31, ~~2022~~2023 compared to ~~fiscal 2021,~~the three months ended January 31, 2022, mainly due to ~~the addition of Generate's R&D expense and increases in headcount. As a percentage of sales, CooperSurgical's R&D expense remained relatively flat.~~European Medical Device Regulation costs. CooperSurgical's R&D activities are focused on developing and refining diagnostic and therapeutic products including medical interventions, surgical devices and fertility ~~solutions~~.solutions.

Amortization Expense


Three Months Ended January 31, ($ in millions)		2022		% Net Sales		2021		% Net Sales		2022 vs 2021 % Change

Three Months Ended January 31,												Three Months Ended January 31,									2023 vs 2022 % Change
($ in millions)												($ in millions)	2023		% Net Sales		2022		% Net Sales
CooperVision	CooperVision	$	8.2	1	%	$	8.4	2	%	(2)	%	CooperVision	$	8.4	1	%	$	8.2	1	%	2	%
CooperSurgical	CooperSurgical	34.1		15	%	26.3		15	%	30	%	CooperSurgical	38.1		14	%	34.1		15	%	12	%
		$	42.3	5	%	$	34.7	5	%	22	%		$	46.5	5	%	$	42.3	5	%	10	%

CooperVision's amortization expense for the three months ended January 31, 2023 remained relatively flat year over year. CooperSurgical's amortization expense increased in the three months ended January 31, 2023 compared to the three months ended January 31, 2022, primarily due to the amortization of intangible assets newly acquired through acquisitions.

Operating Income



Three Months Ended January 31,									2023 vs 2022 % Change
($ in millions)	2023		% Net Sales		2022		% Net Sales
CooperVision	$	160.1	28	%	$	127.4	23	%	26	%
CooperSurgical	5.8		2	%	15.6		7	%	(63)	%
Corporate	(16.4)		—		(12.2)		—		34	%
	$	149.5	17	%	$	130.8	17	%	14	%

CooperVision's operating income increased in the three months ended January 31, 2023 compared to the three months ended January 31, 2022, primarily due to an increase in net sales partially offset by net changes in operating expenses.

CooperSurgical's operating income decreased in the three months ended January 31, 2023 compared to the three months ended January 31, 2022, primarily due to an increase in SGA and amortization expenses, partially offset by an increase in net sales.

Corporate operating loss increased in the three months ended January 31, 2023 compared to the three months ended January 31, 2022, primarily due to higher share-based compensation expense.

On a consolidated basis, operating income increased in the three months ended January 31, 2023 compared to the three months ended January 31, 2022, primarily due an increase in consolidated net sales.

3322

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

CooperVision's amortization expense remained relatively flat in absolute dollars in the first quarter of fiscal 2022 compared to fiscal 2021. As a percentage of sales, CooperVision's amortization expense decreased, primarily due to an increase in net sales.Interest Expense

~~CooperSurgical's amortization~~



Three Months Ended January 31,									2023 vs 2022 % Change
($ in millions)	2023		% Net Sales		2022		% Net Sales
Interest expense	$	26.1	3	%	$	6.6	1	%	295	%

Interest expense increased ~~in absolute dollars in~~during the three months ended January 31, 2023 compared to the three months ended January 31, 2022, ~~compared to fiscal 2021,~~ primarily due to the amortization of intangible assets newly acquired through acquisitions. As a percentage of sales, CooperSurgical's amortization expense remained relatively flat, primarily due to an increase in net sales.higher average debt balances and higher interest rates.

~~Operating Income~~Other Expense (Income), Net

Three Months Ended January 31,
($ in millions)
2022 % Net Sales 2021 % Net Sales 2022 vs 2021 % Change
CooperVision $ 127.4 23 % $ 127.5 25 % — %
CooperSurgical 15.6 7 % 17.5 10 % (10) %
Corporate (12.2) — (11.6) — (6) %
$ 130.8 17 % $ 133.4 20 % (2) %


Period Ended January 31,	Three Months
($ in millions)	2023		2022

Foreign exchange (gain) loss	(1.0)		3.3
Other expense (income), net	2.3		(1.0)
	$	1.3	$	2.3

~~CooperVision's operating income remained relatively flat in absolute dollars in~~Foreign exchange gain is primarily associated with the relative weakening of the US dollar against foreign currencies and the effect on intercompany receivables during the three months ended January 31, ~~2022 compared to fiscal 2021. As a percentage of~~2023.

Other expense (income), net ~~sales, CooperVision's operating income decreased, primarily due to an increase in net sales.~~

CooperSurgical's operating income decreased in absolute dollars and as a percentage of net sales in the first quarter of fiscal 2022 compared to fiscal 2021, primarily due to an increase in SGA and amortization expense, partially offset by an increase in net sales.

~~Corporate operating loss~~ increased in the three months ended January 31, ~~2022~~2023 compared to ~~fiscal 2021, primarily due to higher share-based compensation expense.~~

On a consolidated basis, operating income decreased in absolute dollars and as a percentage of net sales, primarily due to an increase in SGA and amortization expense, partially offset by an increase in consolidated net sales.

~~Interest Expense~~

Three Months Ended January 31,
($ in millions)
2022 % Net Sales 2021 % Net Sales 2022 vs 2021 % Change
Interest expense $ 6.6 1 % $ 6.4 1 % 3 %

~~Interest expense remained relatively flat as a percentage of net sales and in absolute dollars during~~ the three months ended January 31, 2022, primarily due to loss on minority investments, partially offset by defined benefit plan related income.

Provision for Income Taxes

The effective tax rates for the three months ended January 31, 2023 and January 31, 2022 were 30.7% and 21.8%, respectively. The increase was primarily due to changes in the geographic composition of pre-tax earnings, an increase in the UK statutory tax rate from 19% to 25%, and capitalization of research and experimental expenditures for fiscal 2023 as required by the 2017 Tax Cuts and Jobs Act.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Capital Resources and Liquidity

Working capital on January 31, 2023 and October 31, 2022, was $661.7 million and $253.4 million, respectively. The increase in working capital was primarily due to repayment of the 364-day term loan during the first three months of fiscal 2023. See Note 5. Financing Arrangements for further information.

Cash Flow


($ in millions)	January 31, 2023		January 31, 2022
Operating activities	$	166.6	$	166.0
Investing activities	(113.3)		(1,669.3)
Financing activities	(77.6)		1,693.6
Effect of exchange rate changes on cash, cash equivalents, restricted cash	4.2		(3.7)
Net (decrease) increase in cash, cash equivalents, restricted cash and cash held for sale	$	(20.1)	$	186.6

Operating Cash Flow

Cash provided by operating activities in the first three months of fiscal 2023 remains flat compared to the first three months of fiscal ~~2021.~~2022, primarily due to net changes in other non-cash items, partially offset by the net cash flow from changes in operating capital and the $31.8 million release of contingent consideration liability associated with SGV's regulatory approval milestone.

~~Other Expense (Income), Net~~

Three Months Ended January 31,
($ in millions) 2022 2021
Investment gain $ — $ (11.5)
Foreign exchange loss (gain) 3.3 (0.1)
Other income, net (1.0) (0.9)
$ 2.3 $ (12.5)
Investing Cash Flow

~~On January 19,~~

Cash used in investing activities in the first three months of fiscal 2023 was lower than cash used in the first three months of fiscal 2022, primarily attributable to $1.6 billion cash paid, net of cash acquired, for the Generate acquisition in the first three months of fiscal 2022. Refer to Note 2. Acquisitions and Joint Venture for further information.

Financing Cash Flow

Cash used in financing activities in the first three months of fiscal 2023 was primarily due to repayments of $338.0 million on the 2021 ~~CooperVision acquired all~~364-day term loan, partially offset by $276.5 million of funds drawn on the 2020 revolving credit.

Cash provided by financing activities in the first three months of fiscal 2022 was primarily due to funds received from the 2021 term loan facility ($1.5 billion) and the 2021 364-day term loan facility ($840.0 million), partially offset by $546.1 million repayments of the ~~remaining equity interests~~2021 revolving credit and $78.5 million repurchases of ~~a privately-held medical device company that develops spectacle lenses~~common stock.

Refer to Note 5. Financing Arrangements for ~~myopia management. The fair value remeasurement of our previous equity investment immediately before the acquisition resulted in a gain of~~further information.

~~$11.5 million in the prior year period.~~

~~Foreign exchange loss (gain) primarily resulted from~~The following is a summary of the ~~revaluation~~maximum commitments and ~~settlement~~the net amounts available to us under different credit facilities as of ~~foreign currency-denominated balances.~~January 31, 2023:


(In millions)	Facility Limit		Outstanding Borrowings		Outstanding Letters of Credit		Total Amount Available		Maturity Date

Revolving Credit:
2020 Revolving Credit	$	1,290.0	$	276.5	$	1.4	$	1,012.1	April 1, 2025
Term loan:
2020 Term Loan	850.0		850.0		n/a		—		April 1, 2025
2021 Term Loan	1,500.0		1,500.0		n/a		—		December 17, 2026
Total	$	3,640.0	$	2,626.5	$	1.4	$	1,012.1

As of January 31, 2023, the Company was in compliance with all debt covenants. See Note 5. Financing Arrangements of the Consolidated Condensed Financial Statements for additional information.

3424

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Other income, net increased in the three months ended January 31, 2022, primarily due to an increase in defined benefit plan related income during the period, partially offset by losses on minority investments.

~~Provision for Income Taxes~~

Our effective tax rates for the three months ended January 31, 2022 and January 31, 2021 were 21.8% and (1,406.3)%, respectively. The increase was primarily due to an intra-group transfer of intellectual property during the three months ended January 31, 2021, as discussed below.

In November 2020, we completed an intra-group transfer of certain intellectual property and related assets of CooperVision to a UK subsidiary as part of a group restructuring to establish headquarters operations in the UK. Determining fair value involved significant judgment related to future revenue growth, operating margins and discount rates. The transfer resulted in a step-up of the UK tax-deductible basis in the intellectual property and goodwill, creating a temporary difference between the book basis and the tax basis of these assets. As a result, we recognized a deferred tax asset of $1,987.9 million, with a corresponding income tax benefit, during the three months ended January 31, 2021.

~~Share-Based Compensation Plans~~

We have several share-based compensation plans that are described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. The compensation expense and related income tax benefit recognized in our Consolidated Statements of Income and Comprehensive Income for share-based awards were as follows:

Three Months Ended January 31,
($ in millions) 2022 2021
Selling, general and administrative expense $ 11.5 $ 9.1
Cost of sales 1.3 1.1
Research and development expense 0.8 0.6
Total share-based compensation expense $ 13.6 $ 10.8
Related income tax benefit $ 1.6 $ 1.2

~~Capital Resources and Liquidity~~

~~First Quarter Highlights~~

•~~Operating cash flow of $166.0 million compared to $147.7 million in the prior year period~~

•~~Expenditures for purchases of property, plant and equipment of $57.1 million compared to $55.9 million in the prior year period~~

•~~Cash payments for acquisitions and others of $1,612.2 million compared to $79.8 million in the prior year period~~

•~~Cash provided by operations of $166.0 million offset by capital expenditures of $57.1 million resulted in positive free cash flow of $108.9 million, up 19% compared to the prior year period~~

~~Comparative Statistics~~

($ in millions) January 31, 2022 October 31, 2021
Cash and cash equivalents $ 280.7 $ 95.9
Total assets $ 11,662.5 $ 9,606.2
Working capital $ 33.7 $ 733.2
Total debt $ 3,258.5 $ 1,479.0
Stockholders' equity $ 6,926.1 $ 6,942.0
Ratio of debt to equity 0.47:1 0.21:1
Debt as a percentage of total capitalization 32 % 18 %

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

~~Working Capital~~

~~The decrease in working capital at January 31, 2022 from the end of fiscal 2021 was primarily due to:~~

•~~increase in short-term debt of $829.1 million primarily due to the 2021 364-Day Term Loan Agreement entered into on November 2, 2021; and~~

•~~increase in other current liabilities of $123.8 million, primarily due to the Generate acquisition. Refer to Note 2. Acquisitions and Assets Held for Sale for further information; partially offset by:~~

•~~increase in cash and cash equivalents of $184.8 million;~~

•~~decrease in employee compensation and benefits of $26.5 million;~~

•~~increase in prepaid expenses and other current assets of $17.3 million;~~

•~~decrease in accounts payable of $12.4 million due to timing of payments and the Generate acquisition; and~~

•~~increase in trade accounts receivables of $10.6 million.~~

~~At January 31, 2022, our inventory months on hand was 6.6 compared to 6.8 at October 31, 2021. Inventory remained relatively flat.~~

~~Our days sales outstanding (DSO) were relatively consistent at 61 days at January 31, 2022, compared to 64 days at October 31, 2021.~~

~~Operating Cash Flow~~

Cash provided by operating activities increased by $18.3 million from $147.7 million in the first quarter of fiscal 2021 to $166.0 million in the first quarter of fiscal 2022. This increase in cash flow provided by operating activities primarily consists of:

•~~increase of $1,996.0 million in the net changes in deferred income taxes. Refer to Note 6. Income Taxes for further information;~~

•increase of $56.1 million in net cash flow from changes in operating capital, from $49.9 million outflow in the first quarter of fiscal 2021 to $6.2 million inflow in the first quarter of fiscal 2022; and

•increase of $6.5 million in net changes in depreciation and amortization, from $75.5 million during the first quarter of fiscal 2021 to $82.0 million during the first quarter of fiscal 2022; partially offset by:

•~~decrease in net income of $2,005.8 million from a net income of $2,101.1 million in the first quarter of fiscal 2021 to $95.3 million in the first quarter of fiscal 2022; and~~

•decrease from other non-cash items of $34.5 million, from $2.3 million inflow during the first quarter of fiscal 2021 to 32.2 million outflow during the first quarter of fiscal 2022, primarily due to the net changes in long-term liabilities, partially offset by an investment gain of $11.5 million in the first quarter of fiscal 2021. Refer to Note 2. Acquisitions and Assets Held for Sale for further information.

~~The decrease in net income of $2,005.8 million was primarily due to:~~

•~~recognized income tax benefit of $1,987.9 million in the prior year period. Refer to Note 6. Income Taxes for further information; and~~

•~~an investment gain of $11.5 million recognized in the prior year period. Refer to Note 2. Acquisitions and Assets Held for Sale for further information.~~

~~The $56.1 million increase in the net cash flow from changes in operating capital compared to the prior year period is primarily due to:~~

•~~$40.6 million increase in the net changes in trade and other receivables primarily due to timing of collections; and~~

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

•~~$22.5 million increase in the net changes in accounts payable primarily due to timing of payments and payables assumed from the Generate acquisition; partially offset by:~~

•~~$12.2 million decrease in the net changes in the transaction gain (loss).~~

~~The $34.5~~ ~~million decrease in non-cash~~ ~~items compared to the prior year period is primarily due to:~~

•~~$64.7 million decrease in the net changes in long-term liabilities; partially offset by:~~

•~~an investment gain of $11.5 million recognized in the prior year period. Refer to Note 2. Acquisitions and Assets Held for Sale for further information; and~~

•~~$8.2 million increase from the effect of exchange rate change on cash.~~

~~Investing Cash Flow~~

~~Cash used in investing activities increased by $1,533.6 million to $1,669.3 million in the first quarter of fiscal 2022 from $135.7 million in the first quarter of fiscal 2021 due to:~~

•$1.5 billion increase in payments made for acquisitions in the first quarter of fiscal 2022 compared to the prior year period, largely due to the Generate acquisition in the first three months of fiscal 2022.

~~Financing Cash Flow~~

Cash flows from financing activities increase by $1,707.2 million to $1,693.6 million cash inflow in the first quarter of fiscal 2022 compared to $13.6 million cash outflow in the first quarter of fiscal 2021, primarily due to:

•~~$1,250.0 million increase in proceeds from long-term debt, primarily due to funds received from the 2021 Term Loan Facility; and~~

•~~$839.2 million increase in net proceeds from short-term debt, primarily due to the 2021 364-Day Term Loan Agreement; partially offset by:~~

•$325.4 million increase in repayments of long-term debt, primarily due to repayments of funds from the 2021 Credit Agreement in the first three months of fiscal 2022 compared to repayment of funds from the 2020 Credit Agreement in the prior year period; and

•~~$53.7 million increase in repurchases of common stock.~~

On November 2, 2021, the Company entered into a 364-day, $840.0 million, term loan agreement by and among the Company, the lenders party thereto and The Bank of Nova Scotia, as administrative agent (the 2021 364-Day Term Loan Agreement), which matures on November 1, 2022. The Company used part of the funds to partially repay outstanding borrowings under the 2020 Revolving Credit Facility and for general corporate purposes.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

~~The following is a summary of the maximum commitments and the net amounts available to us under different credit facilities as of January 31, 2022:~~

The 2020 Credit Agreement contains customary restrictive covenants, as well as financial covenants that require us to maintain a certain Total Leverage Ratio and Interest Coverage Ratio. As defined, in the 2020 Credit Agreement, we are required to maintain an Interest Coverage Ratio of at least 3.00 to 1.00, and a Total Leverage Ratio of no higher than 3.75 to 1.00. At January 31, 2022, we were in compliance with the Interest Coverage Ratio at 47.19 to 1.00 and the Total Leverage Ratio at 2.71 to 1.00. The Company, after considering the potential impacts of the COVID-19 pandemic, expects to remain in compliance with its financial maintenance covenant and meet its debt service obligations for at least the twelve months following the date of issuance of these financial statements.

~~See Note 5. Debt of the Consolidated Condensed Financial Statements for additional information.~~

Considering recent market conditions and the ~~ongoing~~ COVID-19 pandemic crisis, we have re-evaluated our operating cash flows and cash requirements and continue to believe that current cash, cash equivalents, future cash flow from operating activities and cash available under our 2020 Credit Agreement will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the Consolidated Condensed Financial Statements included in this quarterly report. To the extent additional funds are necessary to meet our liquidity needs such as that for acquisitions, share repurchases, cash dividends or other activities as we execute our business strategy, we anticipate that additional funds will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all.

Share Repurchase

In December 2011, our Board of Directors authorized the 2012 Share Repurchase Program and through subsequent amendments, the most recent in March 2017, the total repurchase authorization was increased from $500.0 million to $1.0 billion of the Company's common stock. ~~This~~The program has no expiration date and may be discontinued at any time. Purchases under the 2012 Share Repurchase Program are subject to a review of the circumstances in place at the time and may be made from time to time as permitted by securities laws and other legal requirements.

At As of January 31, ~~2022~~,2023, $256.4 million ~~remained~~remains authorized for repurchase under the ~~program.~~2012 Share Repurchase Program.

~~The Company's share repurchases during~~During the three months ended January 31, ~~2022 and January 31, 2021 were as follows:~~

Periods Ended January 31, 2022 2021
Number of shares 191,165 69,622
Average repurchase price per share $ 410.41 $ 356.61
Total costs of shares repurchased (in millions) $ 78.5 $ 24.8
2023, there was no share repurchase under the 2012 Share Repurchase Program.

Dividends

We paid a semiannual dividend of ~~approximately~~approximately $1.5 million oror 3 cents per share, on February 9, ~~2022,~~2023, to ~~stockholders~~stockholders of record onon January ~~21, 2022.~~20, 2023.

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

~~Summary of Non-GAAP Financial Measures~~Transition from LIBOR

The ~~non-GAAP financial measures~~UK’s Financial Conduct Authority (FCA), which regulates the London Interbank Offered Rate (LIBOR), announced in July 2017 that ~~may be included in Management's Discussion~~it will no longer persuade or require banks to submit rates for LIBOR after 2021. In March 2021, the FCA confirmed its intention to stop requiring banks to submit rates required to calculate LIBOR after 2021. However, for U.S. dollar-denominated (USD) LIBOR, only one-week and ~~Analysis and the reasons management believes they are useful to investors are described below. These measures should be considered supplemental in nature and are not intended~~two-month USD LIBOR will cease to be published after 2021, and all remaining USD LIBOR tenors will continue being published until June 2023. Further, in March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. Effective February 1, 2023, the Company transitioned its credit agreements from LIBOR to the Secured Overnight Financing Rate ("SOFR"). While the notional value of agreements potentially indexed to LIBOR is material, we do not expect a ~~substitute for the~~material impact on our financial statements related ~~financial information prepared in accordance with GAAP. In addition, these measures may not be the same as similarly named measures presented by other companies.~~

Free cash flow is defined as cash provided by operating activities less capital expenditures. Management believes free cash flow is useful for investors as an additional measure of liquidity because it represents cash that is available to grow the business, make strategic acquisitions, repay debt, buyback common stock or fund the dividend. We use free cash flow internally to understand, manage, make operating decisions and evaluate our business. In addition, we use free cash flow to help plan and forecast future periods.

Constant currency is defined as excluding the effect of foreign currency rate fluctuations. In order to assist with the assessment of how our underlying businesses performed, we compare the percentage change in net sales from one period to another, excluding the effect of foreign currency fluctuations. To present this information, current period revenue for entities reporting in currencies other than the United States dollar are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year.transition.

Estimates and Critical Accounting Policies

Information regarding estimates and critical accounting policies is included in Management's Discussion and Analysis on Form 10-K for the fiscal year ended October 31, ~~2021.~~2022. There have been no material changes in our policies from those previously discussed in our Form 10-K for the fiscal year ended October 31, ~~2021.~~2022.

Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1. General of the Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Trademarks

ActivControl®, Aquaform®, Avaira Vitality®, Biofinity®, Biofinity Energys®, Biomedics®, Proclear®, MyDay® and MiSight® are registered trademarks of The Cooper Companies, Inc., its affiliates and/or subsidiaries. PC Technology™ is a trademark of The Cooper Companies, Inc., its affiliates and/or ~~subsidiaries.~~subsidiaries. The clariti® mark is a registered trademark of The Cooper Companies, Inc., its affiliates and/or subsidiaries worldwide except in the United States where the use of clariti® is licensed. ~~INSORB~~Endosee®, Insorb®~~PARAGARD~~, Paragard®, Mara® ~~and~~, Fetal Pillow® and Generate Life Sciences®are registered trademarks of CooperSurgical, ~~Inc.~~Inc, its affiliates and/or subsidiaries.

3925

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risks that relate principally to changes in interest rates and foreign currency fluctuations. We do not enter into derivative financial instrument transactions for speculative purposes.

Foreign Currency Exchange Risk

We operate multiple foreign subsidiaries that manufacture and market our products worldwide. As a result, our earnings, cash flow and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables, sales transactions, capital expenditures and net investment in certain foreign operations. Most of our operations outside the United States have their local currency as their functional currency. We are exposed to risks caused by changes in foreign exchange, principally our British pound sterling, euro and Japanese yen ~~and Danish krone~~ denominated debt and receivables denominated in currencies other than the United States dollar, and from operations in other foreign currencies. ~~Although we may enter into foreign exchange agreements with financial institutions to reduce our exposure to fluctuations in~~We did not have any cross-currency swaps or foreign currency ~~values relative to our debt or receivables obligations, these hedging transactions do not eliminate that risk entirely.~~ forward contracts as of January 31, 2023.

Interest Rate Risk

We are ~~also~~ exposed to risks associated with changes in interest rates, as the interest rates on our revolving lines of credit and term loans may vary with the federal funds rate and ~~LIBOR. We may decrease this interest rate risk by hedging a portion of variable rate debt effectively converting it to fixed rate debt for varying periods.~~

On April 6, 2020, we entered into six interest rate swap contracts to hedge the Company's exposure to changes in cash flows associated with its variable rate debt. The interest rate swap contracts became effective on April 6, 2020 and had maturities of seven years or less.SOFR (and, previously, LIBOR). As of January 31, ~~2022, the~~2023, we had outstanding ~~contracts have a total notional~~debt for an aggregate carrying amount of ~~$1.0~~$2.7 billion.

We ~~did not~~ have ~~any cross currency swaps or foreign currency forward contracts as of January 31, 2022.~~

~~On April 1, 2020, we~~ entered, ~~into a Revolving Credit~~ and Term Loan Agreement (the 2020 Credit Agreement), among us, CooperVision International Holding Company, LP, CooperSurgical Netherlands B.V., CooperVision Holding Kft. the lenders from time to time party thereto, and KeyBank National Association, as administrative agent. The 2020 Credit Agreement provides for (a) a multicurrency revolving credit facility (the 2020 Revolving Credit Facility) in an aggregate principal amount of $1.29 billion and (b) a term loan facility (the 2020 Term Loan Facility) in an aggregate principal amount of $850.0 million, each of which, unless terminated earlier, mature on April 1, 2025. The 2020 Credit Agreement replaced our previous credit agreement and funds from the new term loan were used to repay the outstanding amounts under the previous credit agreement, to repay an outstanding term loan, and for general corporate purposes. At January 31, 2022, the Company had $1,288.6 million available under the 2020 Revolving Credit Facility and $850.0 million outstanding under the 2020 Term Loan Facility.

On November 2, 2021, the Company entered into a 364-day, $840.0 million, term loan agreement by and among the Company, the lenders party thereto and The Bank of Nova Scotia, as administrative agent (the 2021 364-Day Term Loan Agreement), which matures on November 1, 2022. The Company used part of the funds to partially repay outstanding borrowings under the 2020 Revolving Credit Facility and for general corporate purposes. At January 31, 2022, the Company had $840.0 million outstanding under the 2021 364-Day Term Loan Agreement.

Our ultimate realized gain or loss with respect to interest rate fluctuations will depend on interest rates, the ~~2021 Term Loan Facility.~~

Ifexposures that arise during the period and our hedging strategies at that time. As an example, if interest rates were to ~~have increased~~increase or ~~decreased~~decrease by 1% or 100 basis points, the quarterly interest expense would have increased or decreased by ~~approximately $3.7~~approximately $4.5 million based on average debt outstanding, ~~for the first quarter of fiscal 2022,~~ after consideration of our interest rate swap ~~contracts.~~

contracts, during the first quarter of fiscal 2023. See Note 5. ~~Debt~~Financing Arrangements of the Consolidated Condensed Financial Statements for additional information.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on management’s evaluation (with the participation of our Chief Executive Officer (our Principal Executive Officer) and Chief Financial Officer (our Principal Financial Officer)), as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) are effective to

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during our first quarter of fiscal ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that certain of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 related considerations and any impact on the design and operating effectiveness of our internal control over financial reporting.

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THE COOPER COMPANIES, INC. AND SUBSIDIARIES

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is included in Note ~~12.~~10. Contingencies of the Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

Our business faces significant risks. These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial. Our business, financial condition and results of operations could be materially adversely affected by any of these risks, and the trading prices of our common stock could decline by virtue of these risks. These risks should be read in conjunction with the other information in this report.

Risk factors describing the major risks to our business can be found under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2021. In the first quarter of fiscal 2022, we updated some of our risk factors as described below.~~ 2022. There have been no ~~other~~ material changes ~~in our~~to the risk factors ~~from those~~ previously ~~discussed~~disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2021.~~

~~Our substantial and expanding international operations are subject to uncertainties which could affect our operating results.~~

A significant portion of our current operations are conducted and located outside the United States, and our growth strategy involves expanding our existing foreign operations and entering into new foreign jurisdictions. We have significant manufacturing and distribution sites in North America, Latin America and Europe. Over half of our net sales for the first quarter of fiscal 2022 and the fiscal year ended October 31, 2021 were derived from the sale of products outside the United States. We believe that sales outside the United States will continue to account for a material portion of our total net sales for the foreseeable future. International operations and business expansion plans are subject to numerous additional risks, including:

•~~we may find it difficult to manage the effects of the ongoing COVID-19 pandemic on our ability to operate internationally and for our employees to travel internationally;~~.

•~~we may have difficulty enforcing intellectual property rights in some foreign countries;~~

•~~we may have difficulty gaining market share in countries such as Japan and China because of regulatory restrictions and customer preferences;~~

•we may find it difficult to grow in emerging markets such as China, India, Russia, Brazil and other developing nations due to, among other things, customer acceptance, undeveloped and/or unfamiliar distribution channels, regulatory restrictions and changes, and business knowledge of these new markets;

•foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including the tariffs enacted by the Chinese government on certain U.S. goods, the scope and duration of which remain uncertain;

•we may find it difficult to comply with a variety of United States and foreign legal, compliance and regulatory requirements such as the Foreign Corrupt Practices Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the United Kingdom Bribery Act, international data security and privacy laws, EU MDR and IVDR;

•~~we may find it difficult to manage a large organization spread throughout various countries;~~

•~~fluctuations in currency exchange rates could adversely affect our results;~~

•~~foreign customers may have longer payment cycles than customers in the United States;~~

•~~failure to comply with United States Department of Commerce and other nations' import-export controls may result in fines and/or penalties;~~

•~~general economic and political conditions in the countries where we operate may have an adverse effect on our operations in those countries or not be favorable to our growth strategy;~~

•natural disasters, pandemics such as COVID-19, war, terrorism, labor disruptions and international conflicts may cause significant economic disruption and political and social instability, resulting in decreased demand for our products, adversely affecting our manufacturing and distribution capabilities, or causing interruptions in our supply chain;

•foreign governments may adopt regulations, including those similar to the EU MDR and IVDR or take other actions that would have a direct or indirect adverse impact on our business and market opportunities, including but not limited to increased enforcement of potentially conflicting and ambiguous anti-bribery laws;

•~~we may have difficulty enforcing agreements and collecting receivables through some foreign legal systems; and~~

•~~we may be subject to unforeseen economic or political events in certain countries that may have an impact on our customers' ability or preferences to buy our products.~~

In addition, Russia’s invasion of Ukraine and the global response to this invasion could have an adverse impact on our business, including by impacting our ability to market and sell products in Russia, by creating disruptions in the global supply chain, by potentially having an adverse impact on the global economy, European economy, financial markets, energy markets, currency rates and otherwise.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could adversely affect our international operations and, consequently, our operating results.

We face risks associated with disruption of our manufacturing, distribution and storage operations, including possible failure to develop necessary manufacturing processes, or constrained, idle or excess capacity, which could adversely affect our profitability or competitive position.

We manufacture a significant portion of the medical device products we sell. Any prolonged disruption in the operations of our existing manufacturing or distribution facilities, or in the operations of our fertility and stem cell storage facilities, whether due to the effects of the COVID-19 pandemic and related work stoppages, technical or labor difficulties, integration difficulties, destruction of or damage to any facility (as a result of natural disaster, use and storage of hazardous materials or other events), enforcement action by the FDA or other regulatory body if we are found to be in non-compliance with current Good Manufacturing Practices (cGMP) or similar foreign requirements or other reasons, could have a material adverse effect on our business, financial condition and results of operations. In addition, materials such as silicone hydrogel require improvements to our manufacturing processes to make them cost effective. While we have improved our manufacturing capabilities for our silicone hydrogel products, our failure to continue to develop improvements to our manufacturing processes and reduce our cost of goods could significantly impact our ability to compete. Conversely, constrained, excess or idle capacity, which could result from acquisitions, unexpected demand, inaccurate sales forecasting or unexpected manufacturing efficiencies, could significantly impact our profitability, capital investments, customer service levels and near-term financial condition.

CooperVision manufactures molded contact lenses, which represent the majority of our contact lens revenues, primarily at our facilities in Costa Rica, Hungary, Puerto Rico, the United Kingdom and the United States, with other smaller facilities also existing in multiple locations around the world. CooperSurgical manufactures the majority of its products in Costa Rica, the United Kingdom and the United States, with other smaller locations also existing in multiple locations around the world. In November 2017, CooperSurgical purchased a manufacturing facility in Costa Rica to consolidate a portion of global manufacturing. We manufacture certain products at only one manufacturing site for certain markets, and certain of our products are approved for manufacturing only at one site. If there were any prolonged disruption in the operations of the approved facility, it could take a significant amount of time to obtain required regulatory approvals, validate a second site and replace lost product, which could result in lost customers and thereby reduce sales, profitability and market share.

CooperVision distributes products out of Belgium, Hungary, the United Kingdom and the United States and various smaller international distribution sites. CooperSurgical primarily distributes products out of its facilities in the United States and the Netherlands and operates fertility and stem cell storage facilities in the United States, Canada and Australia. Any prolonged disruption in the operations of our existing distribution or storage facilities, whether due to technical or labor difficulties, challenges related to system implementation, destruction of or damage to any facility (as a result of natural disaster, use and storage of hazardous materials or other events) or other reasons, could have a material adverse effect on our business, financial condition and results of operations.

We could experience losses from product liability claims or legal claims relating to our service offerings, including such claims and other losses resulting from sales of counterfeit and other infringing products.

We face an inherent risk of exposure to product liability claims in the event that the use of our products results in personal injury. We also face the risk that defects in the design or manufacture of our products or sales of counterfeit or other infringing products might necessitate a product recall and other actions by manufacturers, distributors or retailers in order to safeguard the health of consumers and protect the integrity of the subject brand. Additionally, we face the inherent risk of exposure to legal claims, including negligence, relating to our provision of certain service offerings, including the accuracy

and quality of our genetic testing, fertility cryopreservation, fertility donor gamete supply, and stem cell storage services. Consumers may halt or delay purchases of a product or service that is the subject of a claim or recall or has been counterfeited. We handle some risk with third-party carrier policies that are subject to deductibles and limitations. There can be no assurance that we will not experience material losses due to product liability claims or recalls, legal claims relating to our service offerings, or a decline in sales resulting from sales of counterfeit or other infringing products, in the future.

~~Ethical, legal and social concerns related to the use of genetic information, sperm and egg selection services and stem cells could reduce demand for our service offerings.~~

Genetic testing, sperm and egg selection services and the use of stem cells have raised ethical, legal and social issues regarding privacy and the appropriate uses of information related to these services. Government authorities could, for social or other purposes, limit or regulate the use of genetic information or genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. They also could limit, regulate or prohibit (1) sperm and egg selection services or (2) the use of stem cells. Ethical, legal or social concerns may lead patients to refuse to use, or physicians to be reluctant to order or recommend, genetic tests, sperm and egg selection services and stem cell storage services even if permissible. These and other ethical, legal and social concerns may limit market acceptance and adoption of our service offerings or reduce the potential markets for our service offerings, either of which could have an adverse effect on our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The ~~Company's share repurchase activity during the three-month period ended January 31, 2022, was as follows:~~

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs Maximum Approximate
Dollar Value of Shares
that May Yet Be
Purchased Under
Publicly Announced
Plans or Programs
11/1/21 - 11/30/21 — $ — — $ 334,827,542
12/1/21 - 12/31/21 10,424 $ 414.49 10,424 $ 330,506,945
1/1/22 - 1/31/22 180,741 $ 410.18 180,741 $ 256,371,445
191,165 191,165

~~The transactions described in the table above represent the repurchase of the Company's common stock on the New York Stock Exchange as part of the~~ share repurchase program was approved by the Company’s Board of Directors in December 2011 (the 2012 Share Repurchase Program). The program as amended in December 2012, December 2013 and March 2017 provides authorization to repurchase up to a total of $1.0 billion of the Company’s common stock. ~~Purchases~~As of January 31, 2023, $256.4 million remains authorized for repurchase under the 2012 Share Repurchase Program may be made from time to time on the open market at prevailing market prices or in privately negotiated transactions and are subject to a review of the circumstances in place at the time and will be made from time to time as permitted by securities laws and other legal requirements. This program has no expiration date and may be discontinued at any time.

Program.

During the ~~first quarter of fiscal~~three months ended January 31, 2023, there was no share repurchase under the 2012 Share Repurchase Program. During the three months ended January 31, 2022, ~~we repurch~~the Company repurchased ~~ased~~ 191.2 thousand shares of ~~the Company’s~~its common stock for ~~$78.5~~$78.5 million, at an average purchase price of ~~$410.41 per share. During the first quarter of fiscal 2021, we repurchased 69.6 thousand shares of the Company’s common stock for $24.8 million, at an average purchase price of $356.61~~$410.41 per share.

~~At January 31, 2022, approximately $256.4 million remained authorized under the 2012 Share Repurchase Program.~~

~~THE COOPER COMPANIES, INC. AND SUBSIDIARIES~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

4527

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Item 6. Exhibits


Exhibit Number			Description

10.1			~~The Cooper Companies, Inc. 202~~2 ~~Incentive Payment Plan, incorporated by reference~~Amendment No.1, dated as of February 1, 2023, to ~~Exhibit 10.1 of~~ the ~~Company~~'s ~~Current Report on Form 8-K filed~~on D ~~ecember 10, 2021.~~

~~10.2~~			Term Loan Agreement, dated as of December 17, 2021, by and among The Cooper Companies, Inc.~~, the lenders from time to time party thereto,~~ and PNC Bank, National Association, as the administrative agent.

10.2			Amendment No. 3, dated as of February 1, 2023, to the Revolving Credit and Term Loan Agreement, dated as of April 1, 2020, by and among the Company, CooperVision International Limited, and CooperSurgical Holdings Limited, the borrowers party thereto, and KeyBank National Association, as administrative agent.

10.3			The Cooper Companies, Inc. 2023 Incentive Payment Plan, incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on December ~~17, 2021.~~19, 2022

~~10.3~~			~~Amendment~~ ~~No.2 and~~ J ~~oinder, dated as of December 17, 2021,~~ ~~to Revolving Credit and Term Loan Agreement~~, ~~dated as of~~ ~~April~~ 1 ~~, 202~~0 ~~, among the Company,~~ ~~CooperVision International~~ L ~~imited, CooperVision Holding Kft.,~~ ~~CooperSurgical Holdings Limited,the lenders party thereto, and KeyBank, National Association, as administrative agent~~.

~~10.4~~			Letter of Intent by and among CooperSurgical, Inc. & Cook Medical Holdings LLC (including the form of Purchase Agreement attached as Exhibit A thereto) incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on ~~February 7, 2022.~~

31.1			Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2			Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1			Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350

32.2			Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350

101.1			The following materials from the Company's Quarterly Report on Form 10-Q for the three months period ended January 31, ~~2022~~2023 formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income and Comprehensive Income, (ii) Consolidated Condensed Balance Sheets, (iii) Consolidated Condensed Statements of Stockholders' Equity, (iv) Consolidated Condensed Statements of Cash Flows and (v) related Notes to Consolidated Condensed Financial Statements.

104.1			Cover Page Interactive Data File (embedded within the Inline XBRL document)

4628

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

~~SIGNATURE~~SIGNATURES

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 thereunto duly authorized.


			The Cooper Companies, Inc.
			(Registrant)

Date: March ~~4, 2022~~3, 2023			/s/ Brian G. Andrews
			Brian G. Andrews
			Executive Vice President, Chief Financial Officer &and Treasurer (Principal Financial Officer)



Date: March ~~4, 2022~~3, 2023			/s/ Agostino Ricupati
			Agostino Ricupati
			~~Chief Accounting Officer &~~ Senior Vice President ~~Finance & Tax~~and Chief Accounting Officer (Principal Accounting Officer)

4729


Fiscal Years:	(In millions)
Remainder of 2022	$	146.4
2023	193.0
2024	188.8
2025	178.3
2026	170.6
Thereafter	954.1
Total remaining amortization for intangible assets with definite lives	$	1,831.2


(In millions, except for number of instruments)	Number of Instruments	Notional Value
Interest Rate Swap Contracts	3	$	1,000



	Percentage of Net Sales				2022 vs 2021 % Change in Absolute Values
Periods Ended January 31,	2022		2021
Net sales	100	%	100	%	16	%
Cost of sales	34	%	34	%	17	%
Gross profit	66	%	66	%	15	%
Selling, general and administrative expense	41	%	38	%	22	%
Research and development expense	3	%	3	%	22	%
Amortization of intangibles	5	%	5	%	22	%


Operating income	17	%	20	%	(2)	%


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs
11/1/21 - 11/30/21	—	$	—	—	$	334,827,542
12/1/21 - 12/31/21	10,424	$	414.49	10,424	$	330,506,945
1/1/22 - 1/31/22	180,741	$	410.18	180,741	$	256,371,445
	191,165			191,165