Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

The Cooper Companies, Inc.:

We have audited the accompanying consolidated balance sheets of The Cooper Companies, Inc. and subsidiaries (the Company) as of October 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended October 31, 2014. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II. We also have audited the Company’s internal control over financial reporting as of October 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under item 9A. Our responsibility is to express an opinion on these consolidated financial statements, financial statement schedule and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

The Company acquired Sauflon Pharmaceuticals Limited on August 6, 2014, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of October 31, 2014, Sauflon Pharmaceuticals Limited’s internal control over financial reporting which represented 3% and 30%, respectively, of total net sales and total assets of the related consolidated financial statement amounts of the Company as of and for the year ended October 31, 2014. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Sauflon Pharmaceuticals Limited.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and subsidiaries as of October 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended October 31, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

San Francisco, California

December 19, 2014

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

Years Ended October 31, (In thousands, except per share amounts)	2014				2013				2012
Net sales	$	1,717,776			$	1,587,725			$	1,445,136
Cost of sales	626,206				560,917				521,126
Gross profit	1,091,570				1,026,808				924,010
Selling, general and administrative expense	683,115				610,735				564,903
Research and development expense	66,259				58,827				51,730
Amortization of intangibles	35,710				30,239				23,979
Loss on divestiture of Aime	—				21,062				—
Operating income	306,486				305,945				283,398
Interest expense	7,965				9,168				11,771
Gain on insurance proceeds	—				14,084				5,000
Loss on extinguishment of debt	—				—				1,404
Other expense (income), net	1,987				(1,410		)		(229		)
Income before income taxes	296,534				312,271				275,452
Provision for income taxes	24,705				15,365				26,808
Net income	271,829				296,906				248,644
Income attributable to noncontrolling interests	1,973				755				305
Net income attributable to Cooper stockholders	$	269,856			$	296,151			$	248,339
Earnings per share attributable to Cooper stockholders - basic	$	5.61			$	6.09			$	5.18
Earnings per share attributable to Cooper stockholders - diluted	$	5.51			$	5.96			$	5.05
Number of shares used to compute earnings per share attributable to Cooper stockholders:
Basic	48,061				48,615				47,913
Diluted	48,960				49,685				49,152

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years Ended October 31, (In thousands)	2014				2013				2012
Net income	$	271,829			$	296,906			$	248,644
Other comprehensive (loss) income:
Foreign currency translation adjustment	(87,763		)		2,607				(4,658		)
Change in value of derivative instruments, net of tax provision of $630, $857 and $289, respectively	986				1,341				452
Change in minimum pension liability, net of tax (benefit) provision of $(2,348), $7,399 and $(5,764), respectively	(3,643		)		11,601				(8,986		)
Unrealized gain on marketable securities, net of tax provision of $20 in fiscal 2012	—				—				41
Reclassification of realized gain on marketable securities to net income, net of tax of $27 in fiscal 2013	—				(50		)		—
Other comprehensive (loss) income	(90,420		)		15,499				(13,151		)
Comprehensive income	181,409				312,405				235,493
Comprehensive (income) loss attributable to noncontrolling interests	(733		)		717				(285		)
Comprehensive income attributable to Cooper stockholders	$	180,676			$	313,122			$	235,208

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

October 31, (In thousands)	2014				2013
ASSETS
Current assets:
Cash and cash equivalents	$	25,222			$	77,393
Trade accounts receivable, net of allowance for doubtful accounts of $6,025 at October 31, 2014 and $5,261 at October 31, 2013	276,280				229,537
Inventories	381,474				338,917
Deferred tax assets	40,224				41,179
Prepaid expense and other current assets	68,417				60,215
Total current assets	791,617				747,241
Property, plant and equipment, at cost	1,525,917				1,240,576
Less: accumulated depreciation and amortization	588,592				500,709
	937,325				739,867
Goodwill	2,220,921				1,387,611
Other intangibles, net	453,605				198,769
Deferred tax assets	15,732				16,279
Other assets	39,140				47,494
	$	4,458,340			$	3,137,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	101,518			$	42,987
Accounts payable	116,353				108,172
Employee compensation and benefits	67,904				63,414
Accrued income taxes	4,034				2,518
Other current liabilities	152,373				104,162
Total current liabilities	442,182				321,253
Long-term debt	1,280,833				301,670
Deferred tax liabilities	69,525				24,883
Accrued pension liability and other	77,360				65,961
Total liabilities	1,869,900				713,767
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock, 10 cents par value, shares authorized: 1,000; zero shares issued or outstanding	—				—
Common stock, 10 cents par value, shares authorized: 120,000; issued 50,983 at October 31, 2014 and 50,335 at October 31, 2013	5,099				5,034
Additional paid-in capital	1,386,800				1,329,329
Accumulated other comprehensive loss	(106,182		)		(15,762		)
Retained earnings	1,578,823				1,311,851
Treasury stock at cost: 2,840 shares at October 31, 2014 and 2,340 shares at October 31, 2013	(294,662		)		(225,917		)
Total Cooper stockholders' equity	2,569,878				2,404,535
Noncontrolling interests	18,562				18,959
Stockholders’ equity	2,588,440				2,423,494
	$	4,458,340			$	3,137,261

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

	Common Shares							Treasury Stock							Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings				Treasury Stock				Noncontrolling Interests				Total Stockholders' Equity
(In thousands)	Shares			Amount				Shares			Amount
Balance at October 31, 2011	47,846			$	4,785			169			$	17			$	1,180,250			$	(18,110	)		$	773,136			$	(2,590	)		$	—			$	1,937,488
Net income attributable to Cooper stockholders	—			—				—			—				—				—				248,339				—				—				248,339
Other comprehensive loss, net of tax	—			—				—			—				—				(13,151		)		—				—				—				(13,151		)
Issuance of common stock for stock plans	1,578			157				(146	)		(14		)		45,923				—				—				8,987				—				55,053
Treasury stock repurchase	(984	)		(98		)		984			98				—				—				—				(71,150		)		—				(71,150		)
Tax benefit from exercise of stock options	—			—				—			—				17,566				—				—				—				—				17,566
Dividends on common stock	—			—				—			—				—				—				(2,857		)		—				—				(2,857		)
Share-based compensation expense	—			—				—			—				21,540				—				—				—				—				21,540
Noncontrolling interests	—			—				—			—				(77		)		—				—				—				20,407				20,330
Balance at October 31, 2012	48,440			$	4,844			1,007			$	101			$	1,265,202			$	(31,261	)		$	1,018,618			$	(64,753	)		$	20,407			$	2,213,158
Net income attributable to Cooper stockholders	—			—				—			—				—				—				296,151				—				—				296,151
Other comprehensive income, net of tax	—			—				—			—				—				15,499				—				—				—				15,499
Issuance of common stock for stock plans	976			98				(88	)		(9		)		13,028				—				—				6,170				—				19,287
Treasury stock repurchase	(1,421	)		(142		)		1,421			142				—				—				—				(167,334		)		—				(167,334		)
Tax benefit from exercise of stock options	—			—				—			—				21,799				—				—				—				—				21,799
Dividends on common stock	—			—				—			—				—				—				(2,918		)		—				—				(2,918		)
Share-based compensation expense	—			—				—			—				28,538				—				—				—				—				28,538
Purchase of shares from noncontrolling interests	—			—				—			—				762				—				—				—				(1,062		)		(300		)
Distributions to noncontrolling interests	—			—				—			—				—				—				—				—				(1,141		)		(1,141		)
Noncontrolling interests	—			—				—			—				—				—				—				—				755				755
Balance at October 31, 2013	47,995			$	4,800			2,340			$	234			$	1,329,329			$	(15,762	)		$	1,311,851			$	(225,917	)		$	18,959			$	2,423,494
Net income attributable to Cooper stockholders	—			—				—			—				—				—				269,856				—				—				269,856
Other comprehensive loss, net of tax	—			—				—			—				—				(90,420		)		—				—				—				(90,420		)
Issuance of common stock for stock plans	720			72				(72	)		(7		)		1,487				—				—				7,033				—				8,585
Treasury stock repurchase	(572	)		(57		)		572			57				—				—				—				(75,778		)		—				(75,778		)
Tax benefit from exercise of stock options	—			—				—			—				19,469				—				—				—				—				19,469
Dividends on common stock	—			—				—			—				—				—				(2,884		)		—				—				(2,884		)
Share-based compensation expense	—			—				—			—				36,515				—				—				—				—				36,515
Distributions to noncontrolling interests	—			—				—			—				—				—				—				—				(2,370		)		(2,370		)
Noncontrolling interests	—			—				—			—				—				—				—				—				1,973				1,973
Balance at October 31, 2014	48,143			$	4,815			2,840			$	284			$	1,386,800			$	(106,182	)		$	1,578,823			$	(294,662	)		$	18,562			$	2,588,440

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended October 31, (In thousands)	2014				2013				2012
Cash flows from operating activities:
Net income	$	271,829			$	296,906			$	248,644
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	138,201				125,349				111,214
Accrued litigation settlements	—				—				1,724
Share-based compensation expense	36,515				28,538				21,540
Loss on divestiture of Aime	—				21,062				—
Loss on disposal of property, plant and equipment	9,814				6,711				4,265
Loss on extinguishment of debt and other	—				—				867
Deferred income taxes	(16,005		)		(17,188		)		(6,806		)
Excess tax benefit from share-based compensation awards	(19,300		)		(18,081		)		(10,760		)
Provision for doubtful accounts	764				890				(456		)
Change in assets and liabilities:
Accounts receivable	(5,167		)		55				(4,956		)
Inventories	(7,582		)		(22,574		)		(58,094		)
Other assets	(13,468		)		(22,870		)		(7,924		)
Accounts payable	1,288				(6,294		)		13,575
Accrued liabilities	34,017				(983		)		(12,258		)
Accrued income taxes	18,098				27,717				9,506
Other long-term liabilities	5,819				(3,313		)		5,040
Cash provided by operating activities	454,823				415,925				315,121
Cash flows from investing activities:
Purchases of property, plant and equipment	(238,065		)		(178,127		)		(99,779		)
Acquisitions of businesses, net of cash acquired, and other	(1,109,702		)		(13,045		)		(145,319		)
Insurance proceeds received	1,359				1,254				6,624
Cash used in investing activities	(1,346,408		)		(189,918		)		(238,474		)
Cash flows from financing activities:
Proceeds from long-term debt	2,561,700				1,767,000				1,262,469
Repayments of long-term debt	(1,666,441		)		(1,813,663		)		(1,254,267		)
Net (repayments of) proceeds from short-term debt	(7,331		)		21,036				(63,631		)
Repurchase of common stock	(75,778		)		(167,334		)		(71,150		)
Proceeds from issuance of common stock for employee stock plans	8,585				19,287				55,053
Excess tax benefit from share-based compensation awards	19,300				18,081				10,760
Purchase of Origio shares from noncontrolling interests	—				(4,199		)		(2,158		)
Dividends on common stock	(2,884		)		(2,918		)		(2,857		)
Debt issuance costs	(925		)		(210		)		(1,323		)
Distributions to noncontrolling interests	(2,438		)		(1,007		)		—
Payment of contingent consideration	(3,819		)		(3,600		)		(1,339		)
Proceeds from construction allowance	12,196				5,930				—
Cash provided by (used) in financing activities	842,165				(161,597		)		(68,443		)
Effect of exchange rate changes on cash and cash equivalents	(2,751		)		143				(539		)
Net (decrease) increase in cash and cash equivalents	(52,171		)		64,553				7,665
Cash and cash equivalents at beginning of year	77,393				12,840				5,175
Cash and cash equivalents at end of year	$	25,222			$	77,393			$	12,840
Supplemental disclosures of cash flow information:
Cash paid for:
Interest, net of amounts capitalized	$	4,149			$	5,428			$	10,559
Income taxes	$	15,918			$	13,971			$	15,781
Litigation settlement charges	$	—			$	—			$	10,000

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continued)

Year Ended October 31, (In thousands)	2014
On August 6, 2014, The Cooper Companies, Inc. acquired all of the issued share capital of Sauflon Pharmaceuticals Limited for total consideration of approximately $1.13 billion. Liabilities were assumed as follows:
Supplemental disclosures of non-cash investing activities:
Fair value of assets acquired	$	1,305,828
Less:
Cash paid, net of cash acquired	(1,063,077		)
Loan notes issued	(57,954		)
Liabilities assumed	$	184,797

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

General

The Cooper Companies, Inc. (Cooper, we or the Company) is a global medical device company publicly traded on the NYSE Euronext (NYSE:COO). Cooper is dedicated to being A Quality of Life CompanyTM with a focus on delivering shareholder value. Cooper operates through our business units, CooperVision and CooperSurgical.

•	CooperVision develops, manufactures and markets a broad range of soft contact lenses for the worldwide vision correction market.

•	CooperSurgical develops, manufactures and markets medical devices and procedure solutions to improve healthcare delivery to women.

Estimates and Critical Accounting Policies

Management estimates and judgments are an integral part of financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). We believe that the critical accounting policies described in this section address the more significant estimates required of management when preparing our consolidated financial statements in accordance with GAAP. We consider an accounting estimate critical if changes in the estimate may have a material impact on our financial condition or results of operations. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods.

•

Revenue recognition - We recognize product net sales, net of discounts, returns and rebates in accordance with related accounting standards and SEC Staff Accounting Bulletins. As required by these standards, we recognize revenue when it is realized or realizable and earned, based on terms of sale with the customer, where persuasive evidence of an agreement exists, delivery has occurred, the seller's price is fixed and determinable and collectability is reasonably assured. For contact lenses as well as CooperSurgical medical devices, diagnostic products and surgical instruments and accessories, this primarily occurs when title and risk of ownership transfers to our customers. We believe our revenue recognition policies are appropriate in all circumstances, and that our policies are reflective of our customer arrangements. We record, based on historical statistics, estimated reductions to revenue for customer incentive programs offered including cash discounts, promotional and advertising allowances, volume discounts, contractual pricing allowances, rebates and specifically established customer product return programs. The Company records taxes collected from customers on a net basis, as these taxes are not included in net sales.

•

Net realizable value of inventory - In assessing the value of inventories, we make estimates and judgments regarding aging of inventories and other relevant issues potentially affecting the saleable condition of products and estimated prices at which those products will sell. On an ongoing basis, we review the carrying value of our inventory, measuring number of months on hand and other indications of salability. We reduce the value of inventory if there are indications that the carrying value is greater than market, resulting in a new, lower-cost basis for that inventory. Subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. While estimates are involved, historically, obsolescence has not been a significant factor due to long product dating and lengthy product life cycles.

•

Valuation of goodwill - We account for goodwill and evaluate our goodwill balances and test them 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 in accordance with related accounting standards. We performed our annual impairment test in our fiscal third quarter of 2014, and our analysis

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

indicated that we had no impairment of goodwill. We performed our annual impairment test in our fiscal third quarter of 2013 and concluded that we had no impairment of goodwill in that year.

In fiscal 2014 and 2013, we performed qualitative assessments to test each reporting unit's goodwill for impairment. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance and other relevant events and factors affecting each reporting unit. Based on our qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, the two-step impairment test will be performed.

Initially, we compare the book value of net assets to the fair value of each reporting unit that has goodwill assigned to it. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of the impairment. A reporting unit is the level of reporting at which goodwill is tested for impairment. Our reporting units are the same as our business segments - CooperVision and CooperSurgical - reflecting the way that we manage our business.

Goodwill impairment analysis and measurement is a process that requires significant judgment. If our common stock price trades below book value per share, there are changes in market conditions or a future downturn in our business, or a future annual goodwill impairment test indicates an impairment of our goodwill, the Company may have to recognize a non-cash impairment of its goodwill that could be material, and could adversely affect our results of operations in the period recognized and also adversely affect our total assets, stockholders' equity and financial condition.

•

Business combinations - We routinely consummate business combinations. Results of operations for acquired companies are included in our consolidated results of operations from the date of acquisition. We recognize separately from goodwill, the identifiable assets acquired, including acquired in-process research and development, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date fair values as defined by accounting standards related to fair value measurements. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Direct acquisition costs are expensed as incurred.

•

Income taxes - We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As part of the process of preparing our consolidated financial statements, we must estimate our income tax expense for each of the jurisdictions in which we operate. This process requires significant management judgments and involves estimating our current tax exposures in each jurisdiction including the impact, if any, of additional taxes resulting from tax examinations as well as judging the recoverability of deferred tax assets. To the extent recovery of deferred tax assets is not likely based on our estimation of future taxable income in each jurisdiction, a valuation allowance is established. Tax exposures can involve complex issues and may require an extended period to resolve. Frequent changes in tax laws in each jurisdiction complicate future estimates. To determine the tax rate, we are required to estimate full-year income and the related income tax expense in each jurisdiction. We update the estimated effective tax rate for the effect of significant unusual items as they are identified. Changes in the geographic mix or estimated level of annual pre-tax income can affect the overall effective tax rate, and such changes could be material.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Regarding accounting for uncertainty in income taxes, we recognize the benefit from a tax position only if it is more likely than not that the position would be sustained upon audit based solely on the technical merits of the tax position. We measure the income tax benefits from the tax positions that are recognized, assess the timing of the derecognition of previously recognized tax benefits and classify and disclose the liabilities within the consolidated financial statements for any unrecognized tax benefits based on the guidance in the interpretation of related accounting guidance for income taxes. The interpretation also provides guidance on how the interest and penalties related to tax positions may be recorded and classified within our Consolidated Statement of Income and presented in the Consolidated Balance Sheet. We classify interest and penalties related to uncertain tax positions as additional income tax expense.

•

Share-Based Compensation - We grant various share-based compensation awards, including stock options, performance unit shares, restricted stock and restricted stock units. Under fair value recognition provisions, share-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating Cooper's stock price volatility, employee exercise behaviors and related employee forfeiture rates.

The expected life of the share-based awards is based on the observed and expected time to post-vesting forfeiture and/or exercise. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. In determining the expected volatility, management considers implied volatility from publicly-traded options on the Company's stock at the date of grant, historical volatility and other factors. The risk-free interest rate is based on the continuous rates provided by the United States Treasury with a term equal to the expected life of the award. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.

As share-based compensation expense recognized in our Consolidated Statement of Income is based on awards ultimately expected to vest, the amount of expense has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant, based on historical experience, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

If factors change and we employ different assumptions in the application of the fair value recognition provisions, the compensation expense that it records in future periods may differ significantly from what it has recorded in the current period.

Accounting Pronouncements Issued and Not Yet Adopted

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. When a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available, or the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. We do not anticipate the adoption of these amendments, which are effective for the Company for the fiscal year beginning on November 1, 2014, will have a material impact on our consolidated results of operations, financial condition or cash flows.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 sets forth a new revenue recognition model that requires identifying the contract, identifying the performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction of performance obligations. The amendments in the ASU can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

initially applying the update recognized at the date of the initial application along with additional disclosures. We are currently evaluating the impact of ASU 2014-09, which is effective for the Company in our fiscal year beginning on November 1, 2017.

Consolidation

The financial statements in this report include the accounts of all of Cooper's consolidated entities. All significant intercompany transactions and balances are eliminated in consolidation.

Foreign Currency Translation

Most of our operations outside the United States use their local currency as their functional currency. We translate these assets and liabilities into United States dollars at year-end exchange rates. We translate income and expense accounts at weighted average rates for each year. We record gains and losses from the translation of financial statements in foreign currencies into United States dollars in other comprehensive income. We record gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location's functional currency in net income for each period. We recorded in other expense and income a net foreign exchange loss of $2.9 million for fiscal 2014, a net foreign exchange gain of $0.1 million for fiscal 2013 and a net foreign exchange loss of $1.5 million for fiscal 2012.

Divested Operation

Aime Divestiture - In our prior fiscal year, on October 31, 2013, we completed a transaction to sell Aime, our rigid gas-permeable contact lens and solutions business in Japan, to Nippon Contact Lens Inc. The business was originally obtained as part of the December 1, 2010 acquisition which included obtaining the rights to market Biofinity in Japan. The divestiture was consistent with CooperVision’s strategy to focus on its core soft contact lens business.

The Aime divestiture was originally announced on May 31, 2013 and met the criteria for classification as held for sale during the fiscal fourth quarter of 2013. During the fourth quarter of 2013, we completed several conditions to closing and facilitated the transfer of manufacturing technology. We recorded a pre-tax loss of approximately $21.1 million in our Consolidated Statement of Income for fiscal 2013. Results from operations of Aime are included in our Consolidated Statements of Income for fiscal 2013 and 2012 and we have not segregated the results of operations or net assets of Aime on our financial statements for any period presented. The disposition of the assets and liabilities of Aime did not qualify for classification as discontinued operations as CooperVision shall maintain continuing involvement through a distribution arrangement with Aime for a minimum of three years. The financial statement impact of the Aime product line was not material for any of the fiscal years presented.

Financial Instruments

We may use derivatives to reduce market risks associated with changes in foreign exchange and interest rates. We do not use derivatives for trading or speculative purposes. We believe that the counterparties with which we enter into forward exchange contracts and interest rate swap agreements are financially sound and that the credit risk of these contracts is not significant.

We operate multiple foreign subsidiaries that manufacture and/or sell 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. Our policy is to minimize, to the extent reasonable and practical, transaction, remeasurement and specified economic exposures with derivatives instruments such as foreign exchange forward contracts and cross currency

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

swaps. The gains and losses on these derivatives are intended to at least partially offset the transaction gains and losses recognized in earnings.

Exposures are reduced whenever possible by taking advantage of offsetting payable and receivable balances and netting net sales against expenses, also referred to as natural hedges. We may employ the use of foreign currency derivative instruments to manage a portion of the remaining foreign exchange risk. Our risk management objectives and the strategies for achieving those objectives depend on the type of exposure being hedged.

We are also exposed to risks associated with changes in interest rates, as the interest rate on our credit agreements vary. To mitigate this risk, we may hedge portions of our variable rate debt by swapping those portions to fixed rates. We only enter into derivative financial instruments with institutions with which we have an International Swap Dealers Association (ISDA) agreement in place. When applicable, we record interest rate derivatives as net on our Consolidated Balance Sheet, in accordance with derivative accounting. When we net or set-off our interest rate derivative obligations, only the net asset or liability position will be credit affected. For the years ending October 31, 2014 and 2013, all of our interest rate derivatives were in a liability position and, therefore, were not set-off in the Consolidated Balance Sheet. Since ISDA agreements are signed between the Company and each respective financial institution, netting is permitted on a per institution basis only. On an ongoing basis, we monitor counterparty credit ratings. We consider our credit non-performance risk to be minimal because we award and disperse derivatives business between multiple commercial institutions that have at least an investment grade credit rating.

On March 10, 2011, we entered into five floating-to-fixed interest rate swaps to fix the floating rate debt under our revolving Credit Agreement or any future credit facility whose variable debt is tied to the London Interbank Offered Rate (LIBOR). These interest rate swaps with notional values totaling $200.0 million, served to fix the floating rate debt for remaining terms between 2 and 14 months with fixed rates between 1.27% and 1.78%. We qualified and designated these swaps as cash flow hedges and recorded the offset of the cumulative fair market value (net of tax effect) to accumulated other comprehensive income in our Consolidated Balance Sheet.

Effectiveness testing of the hedge relationship and measurement to quantify ineffectiveness is performed at a minimum each fiscal quarter using the hypothetical derivative method. The one outstanding swap has been and is expected to remain highly effective for the life of the swap. Effective amounts are reclassified to interest expense as the related hedged expense is incurred. The $0.1 million fair value of the outstanding swap is recorded in our Consolidated Balance Sheet and additional liabilities of $0.1 million and $0.3 million as of October 31, 2014 and 2013, respectively, were recorded and attributable to accrued interest. We expect to reclassify the remaining $0.1 million from other comprehensive income to interest expense in our Consolidated Statements of Income over the next 12 months.

Litigation

We are subject to various legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. If we believe the likelihood of an adverse legal outcome is probable and the amount is estimable, we accrue a liability in accordance with accounting guidance for contingencies. We consult with legal counsel on matters related to litigation and seek input both within and outside the Company.

Insurance Proceeds

On October 28, 2011, a manufacturing building in the United Kingdom experienced an incident in which a pipe broke in our fire suppression system, causing water and fire retardant foam damage to the facility. While this incident did not substantially impact our existing customers, the repairs to the facility and resultant decrease in manufacturing capacity impacted the timing of marketing initiatives to generate additional sales. In January 2013, we resolved our business interruption claim with our insurer for a total of $19.1 million. We received payments

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

of $5.0 million in our fiscal fourth quarter of 2012. In our fiscal first quarter of 2013, we recorded the remaining $14.1 million in our Consolidated Statement of Income of which we received payment of $2.9 million during the fiscal first quarter of 2013 and the remaining $11.2 million in the fiscal second quarter of 2013.

Long-lived Assets

We review long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows associated with the asset are compared to the asset's carrying amount to determine if a write-down is required. If the undiscounted cash flows are less than the carrying amount, an impairment loss is recorded to the extent that the carrying amount exceeds the fair value. If management has committed to a plan to dispose of long-lived assets, the assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell.

CooperVision provides optometric practices with in-office lenses used in marketing programs to facilitate efficient and convenient fitting of contact lenses by practitioners. Such lens fitting sets generally consist of a physical binder or rack to store contact lenses and an array of lenses. We record the costs associated with the original fitting set to other long-term assets on our Consolidated Balance Sheet. We amortize such costs over their estimated useful lives to selling, general and administrative expense on our Consolidated Statements of Income. We also expense the cost for lenses provided to practitioners as replenishment for fitting sets in the period shipped to selling, general and administrative expense on our Consolidated Statements of Income.

Cash and Cash Equivalents

Cash and cash equivalents include short-term income producing investments with maturity dates of three months or less. These investments are readily convertible to cash and are carried at cost, which approximates market value.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Inventories

October 31, (In thousands)	2014				2013
Raw materials	$	76,870			$	79,331
Work-in-process	14,344				10,515
Finished goods	290,260				249,071
	$	381,474			$	338,917

Inventories are stated at the lower of cost or market. Cost is computed using standard cost that approximates actual cost, on a first-in, first-out basis. See Note 2 for additional information on the increase in finished goods inventory related to the acquisition of Sauflon.

Property, Plant and Equipment

October 31, (In thousands)	2014				2013
Land and improvements	$	20,552			$	16,282
Buildings and improvements	205,490				184,616
Machinery and equipment	980,755				831,356
Construction in progress	319,120				208,322
Less: Accumulated depreciation	588,592				500,709
	$	937,325			$	739,867

Property, plant and equipment are stated at cost. We compute depreciation using the straight-line method in amounts sufficient to write off depreciable assets over their estimated useful lives. We amortize leasehold improvements over their estimated useful lives or the period of the related lease, whichever is shorter. We depreciate buildings over 35 to 40 years and machinery and equipment over 3 to 15 years.

We expense costs for maintenance and repairs and capitalize major replacements, renewals and betterments. We eliminate the cost and accumulated depreciation of depreciable assets retired or otherwise disposed of from the asset and accumulated depreciation accounts and reflect any gains or losses in operations for the period. We had capitalized interest included in construction in progress of $5.6 million and $3.1 million for the years ended October 31, 2014 and 2013, respectively.

Earnings Per Share

We determine basic earnings per share (EPS) by using the weighted average number of shares outstanding. We determine diluted EPS by increasing the weighted average number of shares outstanding in the denominator by the number of outstanding dilutive equity awards using the treasury stock method.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Treasury Stock

We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. At October 31, 2014 and 2013, the number of shares in treasury was 2,840,279 and 2,339,740, respectively. A total of 571,939 shares were purchased during the year ended October 31, 2014, and 1,420,728 shares were purchased during the year ended October 31, 2013. See Note 8 for additional information on the share repurchase program.

Note 2. Acquisitions

Sauflon Acquisition

On August 6, 2014, the acquisition date, we completed the acquisition of the entire issued share capital of Sauflon Pharmaceuticals Limited (Sauflon), a privately-owned European manufacturer and distributor of soft contact lenses and solutions, based in Twickenham, United Kingdom. The fair value of the consideration transferred for Sauflon was approximately $1,073.2 million in cash, $1,063.1 million net of cash acquired, and approximately $58.0 million in the form of loan notes issued by Cooper. The loan notes are denominated in British pounds and are classified as short-term debt.

The Sauflon acquisition is intended to accelerate the growth in sales of our single-use products by enabling a multi-tier, single-use strategy with a full suite of hydrogel and silicone hydrogel product offerings in the major product categories of sphere, toric and multifocal lenses. This acquisition is also intended to provide for enhanced relationships with key European retailers and opportunities for operational synergies.

The acquisition was accounted for under the acquisition method of accounting, and the related assets acquired and liabilities assumed were recorded at fair value. While the acquisition was completed on August 6, 2014, we accounted for the acquisition as of August 1, 2014, and have included the operating results of Sauflon in our CooperVision business segment from that date. The impact of Sauflon's results of operations for the period August 1, 2014 through August 5, 2014 on our CooperVision business segment results of operations was de minimis. Similarly, we have determined that any difference in the fair value of assets acquired and liabilities assumed with respect to Sauflon between August 1, 2014 and August 6, 2014 was de minimis.

The following table summarizes our consideration paid for Sauflon and the preliminary allocation of purchase price to assets acquired and liabilities assumed recognized on August 1, 2014. We repaid substantially all of the acquired debt concurrently with the acquisition with our available funds.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In millions)	Useful Lives of Intangible Assets	Fair Value
Goodwill		$	857.1
Trademarks	10 years	$	7.2
Technology	10 years	138.2
Customer relationships	15 years	39.3
License and distribution rights and other	2 to 5 years	51.6
In-process research and development	N/A	43.1
Purchased intangible assets		$	279.4
Cash and cash equivalents		$	10.1
Property, plant and equipment		83.9
Inventories		36.2
Trade accounts receivable		42.3
Other current assets		6.9
Debt		(85.1		)
Accounts payable		(23.6		)
Long term deferred tax liabilities		(56.5		)
Other creditors and current liabilities		(19.6		)
Net tangible liabilities		$	(5.4	)
Total purchase consideration		$	1,131.1

The amounts of revenue and net loss of Sauflon included in our Consolidated Statement of Income from August 1, 2014 to October 31, 2014, were $49.7 million and $2.0 million, respectively. We incurred $20.0 million of acquisition costs that were expensed as operating expenses in fiscal 2014.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. The goodwill recorded as part of the acquisition of Sauflon is ascribed to our CooperVision business segment and is not amortized. This goodwill includes the following:

▪	The expected synergies and other benefits that we believe will result from combining the operations of Sauflon with the operations of CooperVision;

▪	Any intangible assets that did not qualify for separate recognition, as well as future, yet unidentified projects and products; and

▪	The value of the going-concern element of Sauflon's existing businesses (the higher rate of return on the assembled collection of net assets versus if CooperVision had acquired all of the net assets separately).

Management determined fair values of the identifiable intangible assets through a combination of income approaches including relief from royalty, with-and-without, multi-period excess earnings and disaggregated methods. The valuation models were based on estimates of future operating projections of the acquired business and rights to sell products as well as judgments on the discount rates used and other variables. We determined the forecasts based on a number of factors, including our best estimate of near-term net sales expectations and long-term projections, which include review of internal and independent market analyses. The discount rate used was representative of the weighted average cost of capital.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The fair value of assets acquired and liabilities assumed was based upon preliminary valuations, and our estimates and assumptions are subject to change as the valuations are finalized, within the measurement period not to exceed 12 months from the acquisition date. We are currently in the process of verifying data and finalizing information related to the Sauflon valuation and recording of inventory, liabilities, commitments and contingencies, including potential legal matters, income taxes and the corresponding effect on goodwill.

The unaudited pro forma financial results presented below for the fiscal years ended October 31, 2014 and 2013, include the effects of pro forma adjustments as if the acquisition occurred on November 1, 2012. The pro forma results were prepared using the acquisition method of accounting and combine the historical results of Cooper and Sauflon for the fiscal years ended October 31, 2014 and 2013, including the effects of the business combination, primarily amortization expense related to the fair value of identifiable intangible assets acquired, interest expense associated with the financing obtained by Cooper in connection with the acquisition, and the elimination of incurred acquisition-related costs.

The fiscal 2014 unaudited pro forma financial information is not adjusted to exclude $36.1 million of restructuring costs and costs incurred to integrate the operations of Cooper with Sauflon. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor is it intended to be a projection of future results.

Years Ended October 31, (In millions, except per share amounts, pro forma, unaudited)	2014				2013
Revenue	$	1,858.2			$	1,746.3
Net income attributable to Cooper stockholders	$	276.0			$	284.9
Diluted earnings per share	$	5.64			$	5.73

The pro forma results for fiscal 2014 were adjusted to include pre-tax amortization of intangible assets totaling $22.2 million, and an additional $6.4 million of interest expense. The pro forma results were adjusted to exclude pre-tax acquisition-related costs totaling $20.4 million.

The pro forma results for fiscal 2013 were adjusted to include pre-tax amortization of intangible assets totaling $29.7 million and an additional $9.3 million of interest expense.

Origio Acquisition

On July 11, 2012, the acquisition date, we completed a voluntary tender offer for the outstanding shares of Origio a/s at a purchase price of NOK 28 per share in cash and acquired 97% of the outstanding shares. As a result, the fair value of the consideration transferred for Origio was approximately $147.4 million in cash, $143.6 million net of cash acquired. During our fiscal fourth quarter of 2012 and our fiscal first quarter of 2013, we completed a mandatory redemption to obtain the remaining shares in accordance with the Danish Companies Act.

Origio, based in Malov, Denmark, is a leading global in-vitro fertilization (IVF) medical device company that develops, manufactures and distributes highly specialized products that target IVF treatment with a goal to make fertility treatment safer, more efficient and convenient.

The acquisition was accounted for under the acquisition method of accounting, and the related assets acquired and liabilities assumed were recorded at fair value. During the fiscal second quarter of 2013, we received the remaining information necessary to complete the fair value measurements of assets acquired and liabilities assumed for fixed assets, income taxes and commitments and contingencies resulting in a net increase to

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

goodwill of $12.4 million. While we closed the acquisition of shares on July 11, 2012, we accounted for the acquisition as of July 1, 2012, and included the operating results of Origio in our CooperSurgical business segment from that date. The impact of Origio's results of operations for the period July 1, 2012 through July 10, 2012 on our CooperSurgical business segment results of operations was de minimis. Similarly, we have determined that any difference in the fair value of assets acquired and liabilities assumed with respect to Origio between July 1, 2012 and July 11, 2012 was de minimis.

We allocated the fair value of the purchase price as follows: $8.5 million for working capital, including $3.8 million of cash, $22.4 million for property, plant and equipment, $1.9 million for net other liabilities, $25.6 million for net deferred tax liabilities, $22.1 million for noncontrolling interests and $45.4 million of debt. We repaid substantially all of the acquired debt concurrent with the acquisition with available funds. Additionally, the allocation of the purchase price includes amortizable intangible assets of $107.7 million and goodwill of $103.7 million. The intangible assets include $82.1 million for customer relationships with an estimated useful life of 15 years; $17.4 million for technology with an estimated useful life of 10 years; and $8.2 million for trade names with estimated useful lives of 17 years. We incurred $4.9 million of acquisition costs that were expensed in operations in fiscal 2012.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. The goodwill recorded as part of the acquisition of Origio, of which $13.1 million is deductible for tax purposes, is ascribed to our CooperSurgical business segment and is not amortized. This goodwill includes the following:

▪	The expected synergies and other benefits that we believed will result from combining the operations of Origio with the operations of CooperSurgical;

▪	Any intangible assets that did not qualify for separate recognition, as well as future, yet unidentified projects and products; and

▪	The value of the going-concern element of Origio's existing businesses (the higher rate of return on the assembled collection of net assets versus if CooperSurgical had acquired all of the net assets separately).

Management assigned fair values to the identifiable intangible assets through a combination of the discounted cash flow, multi-period excess earnings and relief from royalty methods. The valuation models were based on estimates of future operating projections of the acquired business and rights to sell products as well as judgments on the discount rates used and other variables. We determined the forecasts based on a number of factors including our best estimate of near-term net sales expectations and long-term projections, which include review of internal and independent market analyses. The discount rate used was representative of the weighted average cost of capital.

In fiscal 2012, the year we acquired Origio, the pro forma results of operations were not presented because the effects of the business combination described above was not material to our consolidated results of operations.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 3. Restructuring and Integration Costs

2014 Sauflon Integration Plan

During the fiscal fourth quarter of 2014, in connection with the Sauflon acquisition, our CooperVision business unit initiated restructuring and integration activities to optimize operational synergies of the combined companies. These activities include workforce reductions, consolidation of duplicative facilities and product rationalization. We expect these activities to be completed by our fiscal first quarter of 2016.

In fiscal 2014, we recorded restructuring charges of $20.3 million for employee termination costs; $15.3 million for product rationalization, including inventory write-offs and production-related asset impairments, primarily related to our Avaira Toric contact lenses, based on our review of products, materials and manufacturing processes of Sauflon; and $0.5 million of lease termination costs for facility closures. In addition, CooperVision incurred $2.8 million of integration costs recorded in selling, general and administrative expense.

Of the employee termination costs, $19.7 million are recorded in selling, general and administrative expense and $0.6 million in research and development expense. The product rationalization costs are recorded in cost of sales. The lease termination costs and other related costs are recorded in selling, general and administrative expense.

The following table summarizes the restructuring activities by major component for the year ended October 31, 2014:

(In millions)	Employee-related				Facilities-related				Product Rationalization (a)				Total
Additions during fiscal 2014	$	20.3			$	0.5			$	15.3			$	36.1
Payments during the year	(0.4		)		—				—				(0.4		)
Non-cash adjustments	—				—				(15.3		)		(15.3		)
Balance as of October 31, 2014	$	19.9			$	0.5			$	—			$	20.4

(a) Non-cash adjustments for product rationalization were recorded as asset impairments and inventory write-offs.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4. Intangible Assets

Goodwill

(In thousands)	CooperVision				CooperSurgical				Total
Balance as of October 31, 2012	$	1,044,054			$	326,193			$	1,370,247
Net additions during the year ended October 31, 2013	3,363				11,017				14,380
Translation	1,061				1,923				2,984
Balance as of October 31, 2013	$	1,048,478			$	339,133			$	1,387,611
Net additions during the year ended October 31, 2014	857,146				25,543				882,689
Translation	(44,063		)		(5,316		)		(49,379		)
Balance as of October 31, 2014	$	1,861,561			$	359,360			$	2,220,921

Of the October 31, 2014 goodwill balance, $76.1 million for CooperSurgical and $17.8 million for CooperVision is expected to be deductible for tax purposes.

Other Intangible Assets

	As of October 31, 2014								As of October 31, 2013
(In thousands)	Gross Carrying Amount				Accumulated Amortization & Translation				Gross Carrying Amount				Accumulated Amortization & Translation				Weighted Average Amortization Period
																	(In years)
Trademarks	$	21,281			$	2,937			$	12,481			$	2,337			14
Technology	326,620				93,780				133,842				84,371				11
Customer relationships	233,246				90,704				199,379				75,700				14
License and distribution rights and other	73,479				13,600				24,947				9,472				8
	654,626				$	201,021			370,649				$	171,880			12
Less accumulated amortization and translation	201,021								171,880
Other intangible assets, net	$	453,605							$	198,769

Included in Technology for fiscal 2014 is $43.1 million of acquired in-process research and development from Sauflon that is not amortized. See Note 2 for additional information on acquired intangible assets from Sauflon.

We estimate that amortization expense for our existing other intangible assets will be $52.2 million in fiscal 2015, $49.8 million in fiscal 2016, $46.4 million in fiscal 2017, $44.4 million in fiscal 2018 and $41.6 million in fiscal 2019.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5. Debt

October 31, (In thousands)	2014				2013
Short-term:
Loan notes issued for Sauflon acquisition	$	55,074			$	—
Overdraft and other credit facilities	46,444				42,987
	$	101,518			$	42,987
Long-term:
Credit Agreement	$	279,500			$	—
Term loans	1,000,000				300,000
Other	1,333				1,670
	$	1,280,833			$	301,670

Annual maturities of long-term debt as of October 31, 2014, are as follows:

Year (In millions)
2015	$	—
2016	$	0.3
2017	$	979.8
2018	$	300.4
2019	$	—
Thereafter	$	0.3

Credit Agreement

On May 31, 2012, Cooper entered into an amendment to our Credit Agreement, dated as of January 12, 2011, by and among the Company, CooperVision International Holding Company, LP, the lenders party thereto and KeyBank National Association, as administrative agent. The Credit Agreement, as amended, provides for a multicurrency revolving credit facility in an aggregate commitment amount of $1.0 billion and the aggregate commitment amount under the revolving facility may be increased, upon written request by Cooper, by $500.0 million. The amended Credit Agreement has a termination date of May 31, 2017.

In connection with the Sauflon acquisition, on June 30, 2014, we entered into an amendment (Credit Agreement Amendment) to the Credit Agreement, dated as of January 12, 2011, as amended, by and among (i) the Company, (ii) CooperVision International Holding Company, LP, an indirect subsidiary of the Company, (iii) the lenders from time to time party thereto and (iv) Keybank National Association, as administrative agent. The Credit Agreement Amendment modifies certain provisions of the Credit Agreement to, among other things, amend certain restrictive covenants and related definitions to allow for certain indebtedness, investments, guaranty obligations, acquisitions, intercompany loans, capital distributions and dispositions of assets made or to be made in connection with the acquisition.

The commitment fee rate ranges between 0.100% and 0.275% of the unused portion of the revolving facility based on a pricing grid tied to our Total Leverage Ratio (as defined below and in the Credit Agreement). The applicable margin rates on loans outstanding under the Credit Agreement will bear interest based, at our option, on either the base rate or the adjusted Eurodollar rate (currently referred to as LIBOR) or adjusted foreign currency rate (each as defined in the amended Credit Agreement), plus an applicable margin of

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

between 0.00% and 0.75% in respect of base rate loans and between 1.00% and 1.75% in respect of adjusted Eurodollar rate or adjusted foreign currency rate loans, in each case in accordance with a pricing grid tied to our Total Leverage Ratio, as defined in the Credit Agreement. In addition to the annual commitment fee, we are also required to pay certain letter of credit and related fronting fees and other administrative fees pursuant to the terms of the Credit Agreement.

The Credit Agreement is not secured by any of the Company's, or any of its subsidiaries’, assets. All obligations under the Credit Agreement will be guaranteed by each of our existing and future direct and indirect material domestic subsidiaries.

Pursuant to the terms of the Credit Agreement and the term loans discussed below, we are also required to maintain specified financial ratios:

•	The ratio of Consolidated Proforma EBITDA to Consolidated Interest Expense (as defined, Interest Coverage Ratio) be at least 3.00 to 1.00 at all times.

•	The ratio of Consolidated Funded Indebtedness to Consolidated Proforma EBITDA (as defined, Total Leverage Ratio) be no higher than 3.75 to 1.00.

At October 31, 2014, we were in compliance with the Interest Coverage Ratio at 70.49 to 1.00 and the Total Leverage Ratio at 2.45 to 1.00.

At October 31, 2014, we had $720.3 million available under the Credit Agreement.

In fiscal 2012, we recorded a $1.4 million loss for debt issuance costs as a result of amending the Credit Agreement. The remaining $6.0 million of existing debt issuance costs and the approximately $1.3 million of costs incurred to amend the Credit Agreement are carried in other assets and amortized to interest expense over the life of the Credit Agreement.

$300.0 million Term Loan on September 12, 2013

On September 12, 2013, we entered into a five-year, $300.0 million, senior unsecured term loan agreement by and among the Company; the lenders party thereto and KeyBank National Association, as administrative agent. This syndicated credit facility will mature on September 12, 2018, and will be subject to amortization of principal of 5.0% per annum payable quarterly beginning October 31, 2016, with the balance payable at maturity.

Amounts outstanding under this term loan agreement will bear interest, at the Company's option, at either the base rate, which is a rate per annum equal to the greatest of (a) KeyBank's prime rate, (b) 0.5% in excess of the federal funds effective rate and (c) 1% in excess of the adjusted Eurodollar rate (currently referred to as LIBOR) for a one-month interest period on such day, or the adjusted Eurodollar rate, plus, in each case, an applicable margin. The applicable margins will be determined quarterly by reference to a grid based upon the Company's Total Leverage Ratio, as defined in the term loan agreement, and consistent with the revolving Credit Agreement discussed above.

This 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 agreement, consistent with the revolving Credit Agreement discussed above. The agreement also contains customary events of default, the occurrence of which would permit the Administrative Agent to declare the principal, accrued interest and other obligations of the Company under the agreement to be immediately due and payable.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In connection with the Sauflon acquisition, on June 30, 2014, we entered into an amendment to this term loan agreement, dated as of September 12, 2013, by and among (i) the Company, (ii) the lenders from time to time party thereto and (iii) KeyBank National Association, as administrative agent. This term loan amendment modifies certain provisions of the term loan agreement to, among other things, amend certain restrictive covenants and related definitions to allow for certain indebtedness, investments, guaranty obligations, acquisitions, intercompany loans, capital distributions and dispositions of assets made or to be made in connection with the acquisition.

On August 4, 2014, we entered into Amendment No. 2 to this term loan agreement, dated as of September 12, 2013, as amended by Amendment No. 1 dated as of June 30, 2014, by and among the Company, the lenders party thereto and KeyBank National Association, as administrative agent. The term loan amendment modifies certain provisions of the term loan agreement to remove the call premium related to prepayments and/or refinancing of the term loan agreement, effective August 4, 2014.

At October 31, 2014, we had $300.0 million outstanding under this term loan.

$700.0 million Term Loan on August 4, 2014

On August 4, 2014, we entered into a three-year, $700.0 million, senior unsecured term loan agreement by and among the Company, the lenders party thereto and KeyBank National Association as administrative agent. This syndicated credit facility will mature and the balance is payable on August 4, 2017. There is no amortization of principal and we may prepay loan balances from time to time, in whole or in part, without premium or penalty.

Amounts outstanding under this term loan agreement will bear interest, at the Company’s option, at either the base rate, which is a rate per annum equal to the greatest of (a) KeyBank’s prime rate, (b) 0.5% in excess of the federal funds effective rate and (c) 1% in excess of the adjusted Eurodollar rate (currently referred to as LIBOR) for a one-month interest period on such day, or the adjusted Eurodollar rate, plus, in each case, an applicable margin. The applicable margins will be determined quarterly by reference to a grid based upon the Company’s Total Leverage Ratio, as defined in the term loan agreement and consistent with the revolving Credit Agreement discussed above.

This 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 agreement, and consistent with the revolving Credit Agreement as discussed above. This term loan agreement also contains customary events of default, the occurrence of which would permit the Administrative Agent to declare the principal, accrued interest and other obligations of the Company under the agreement to be immediately due and payable.

In August 2014, we utilized this facility to fund the acquisition of Sauflon, as well as to provide working capital and for general corporate purposes.

At October 31, 2014, we had $700.0 million outstanding under this term loan.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

European Credit Facilities

We maintain European credit facilities in the form of continuing and unconditional guarantees. The aggregate facility limit was $37.6 million and $37.3 million at October 31, 2014 and 2013, respectively. The Company will pay all forms of indebtedness in the currency in which it is denominated for those certain subsidiaries. Interest expense is calculated on all outstanding balances based on an applicable base rate for each country plus a fixed spread common across most subsidiaries covered under the guaranty. At October 31, 2014, $8.1 million of the facility was utilized. The weighted average interest rate on the outstanding balances was 1.62%.

In addition to these European credit facilities, we also have available certain non-guaranteed Euro-denominated overdraft facilities. The aggregate facility limit was $0.8 million and $0.9 million at October 31, 2014 and 2013, respectively. At October 31, 2014, $0.5 million of this facility was utilized.

Asian Pacific Credit Facilities

We maintain Yen-denominated credit facilities in Japan supported by continuing and unconditional guarantees. The aggregate facility limit was $53.5 million and $73.9 million at October 31, 2014 and 2013, respectively. The Company will pay all forms of indebtedness in Yen upon demand. Interest expense is calculated on the outstanding balance based on the base rate or TIBOR plus a fixed spread. At October 31, 2014, $29.4 million of the combined facilities was utilized. The weighted average interest rate on the outstanding balances was 0.52%.

We maintain credit facilities for certain of our Asia Pacific subsidiaries. Each facility is supported by a continuing and unconditional guaranty. The aggregate facility limit was $11.9 million and $12.2 million at October 31, 2014 and 2013, respectively. The Company will pay all forms of indebtedness, for each facility, in the currency in which it is denominated for those certain subsidiaries. Interest expense is calculated on all outstanding balances based on an applicable base rate for each country plus a fixed spread common across all subsidiaries covered under each guaranty. At October 31, 2014, $1.2 million of the facility was utilized. The weighted average interest rate on the outstanding balances was 5.52%.

Letters of Credit

We maintain letters of credit throughout the world with various financial institutions that primarily serve as guarantee notes on certain debt obligations. The aggregate outstanding amount of letters of credit at October 31, 2014 was $2.9 million.

Note 6. Income Taxes

Cooper's effective tax rate (ETR) (provision for income taxes divided by pretax income) for fiscal year 2014 was 8.3% and fiscal year 2013 was 4.9%. The increase in the ETR in fiscal 2014 reflects the inclusion in the fiscal 2013 ETR of several discrete items causing a reduction in that year. These items related primarily to the statutory income tax rate reduction in the United Kingdom and the renewal of the R&D tax credit in the United States. The ETR is below the United States statutory rate as a majority of our income is earned in foreign jurisdictions with lower tax rates reflecting the shift in the geographic mix of income during recent periods with income earned in foreign jurisdictions increasing as compared to income earned in the United States. As a result, the ratio of domestic income to worldwide income has decreased over recent fiscal periods effectively lowering the overall tax rate due to the fact that the tax rates in the majority of foreign jurisdictions where the Company operates are significantly lower than the statutory rate in the United States.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The components of income from continuing operations before income taxes and extraordinary items and the income tax provision related to income from all operations in our Consolidated Statements of Income consist of:

Years Ended October 31, (In thousands)	2014				2013				2012
Income before income taxes:
United States	$	32,554			$	38,911			$	40,650
Foreign	263,980				273,360				234,802
	$	296,534			$	312,271			$	275,452
Income tax provision	$	24,705			$	15,365			$	26,808

The income tax provision (benefit) related to income from continuing operations in our Consolidated Statements of Income consists of:

Years Ended October 31, (In thousands)	2014				2013				2012
Current:
Federal	$	22,988			$	21,605			$	17,863
State	1,127				1,053				1,400
Foreign	16,595				9,895				14,351
	40,710				32,553				33,614
Deferred:
Federal	(5,278		)		(8,058		)		(3,573		)
State	(871		)		(815		)		(851		)
Foreign	(9,856		)		(8,315		)		(2,382		)
	(16,005		)		(17,188		)		(6,806		)
Income tax provision	$	24,705			$	15,365			$	26,808

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

We reconcile the provision for income taxes attributable to income from operations and the amount computed by applying the statutory federal income tax rate of 35% to income before income taxes as follows:

Years Ended October 31, (In thousands)	2014				2013				2012
Computed expected provision for taxes	$	103,787			$	109,295			$	96,408
(Decrease) increase in taxes resulting from:
Income earned outside the United States subject to different tax rates	(85,503		)		(97,002		)		(71,282		)
State taxes, net of federal income tax benefit	525				525				294
Foreign source income subject to United States tax	796				294				—
Research and development credit	(126		)		(2,066		)		(131		)
Incentive stock option compensation and non-deductible employee compensation	441				371				347
Tax accrual adjustment	3,786				2,854				665
Other, net	999				1,094				507
Actual provision for income taxes	$	24,705			$	15,365			$	26,808

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities are:

October 31, (In thousands)	2014				2013
Deferred tax assets:
Accounts receivable, principally due to allowances for doubtful accounts	$	1,355			$	1,145
Inventories	4,442				4,812
Litigation settlements	116				184
Accrued liabilities, reserves and compensation accruals	38,108				36,377
Restricted stock	24,677				19,925
Net operating loss carryforwards	6,245				3,555
Plant and equipment	5,701				5,514
Research and experimental expenses - Section 59(e)	3,822				5,318
Tax credit carryforwards	11,623				11,091
Total gross deferred tax assets	96,089				87,921
Less valuation allowance	(14,506		)		(968		)
Deferred tax assets	81,583				86,953
Deferred tax liabilities:
Tax deductible goodwill	(24,207		)		(21,575		)
Transaction cost	(1,144		)		(1,144		)
Foreign deferred tax liabilities	(41,942		)		(10,179		)
Other intangible assets	(27,880		)		(20,195		)
Bonus adjustments under new accounting method	—				(1,300		)
Total gross deferred tax liabilities	(95,173		)		(54,393		)
Net deferred tax (liabilities) assets	$	(13,590	)		$	32,560

Current deferred tax liabilities of $20 thousand at October 31, 2014, and $20 thousand at October 31, 2013, are included in other accrued liabilities on the balance sheet.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at October 31, 2014. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. During the year ended October 31, 2012, we recorded in purchase accounting deferred tax assets in connection with our acquisition of Origio a/s and subsidiaries. A valuation allowance of $1.1 million was recorded in the process for Origio's capital loss arising from a building write-down expense related to the former headquarters location in Jyllig, Denmark. During the fiscal third quarter of 2013, we revalued the deferred tax assets and liabilities residing in Denmark, along with the related valuation allowance, to reflect the newly enacted tax rate change that incrementally decreased the corporate tax rate. As a result, the valuation allowance was reduced to $1.0 million.

For the year ended October 31, 2014, we recorded in purchase accounting deferred tax assets in connection with its acquisition of Sauflon Pharmaceuticals, Ltd., and subsidiaries. A valuation allowance of $13.5 million was set up against Sauflon Hungary's development tax credits.

We have not provided for federal income tax on approximately $1.7 billion of undistributed earnings of our foreign subsidiaries since we intend to reinvest this amount outside the United States indefinitely.

At October 31, 2014, we had federal net operating loss carryforwards of $9.8 million and state net operating loss carryforwards of $40.4 million. We also had federal net operating loss carryforwards of $4.3 million related to share option exercises as of October 31, 2014. A tax benefit and a credit to additional paid-in capital for the excess deduction would not be recognized until such deduction reduces taxes payable. Additionally, we had $6.6 million of federal alternative minimum tax credits, $4.2 million of federal research credits and $0.8 million of California research credits. The federal net operating loss and federal research credits carryforwards expire on various dates between 2026 through 2034, and the federal alternative minimum tax credits carry forward indefinitely. The state net operating loss carryforwards expire on various dates between 2019 through 2034, and the California research credits carry forward indefinitely. The net operating loss and other tax credits may be subject to certain limitations upon utilization under Section 382 of the Internal Revenue Code.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The aggregated changes in the balance of gross unrecognized tax benefits were as follows:

(In millions)
Balance at October 31, 2012	$	28.1
(Decrease) from prior year's UTB's	(1.3		)
Increase from current year's UTB's	6.4
UTB (decrease) from expiration of statute of limitations	(6.8		)
Balance at October 31, 2013	26.4
Increase from prior year's UTB's	2.5
Increase from current year's UTB's	6.0
UTB (decrease) from expiration of statute of limitations	(3.5		)
Balance at October 31, 2014	$	31.4

As of October 31, 2014, we had unrecognized tax benefits of $32.0 million, including $4.1 million of related accrued interest and penalties that, if recognized, would affect our effective tax rate. It is our policy to recognize interest and penalties directly related to incomes taxes as additional income tax expense.

Included in the balance of unrecognized tax benefits at October 31, 2014, is $10.2 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits related to expiring statutes in various jurisdictions worldwide and is comprised of transfer pricing and other items.

We are required to file income tax returns in the United States federal jurisdiction, various state and local jurisdictions, and many foreign jurisdictions.

As of October 31, 2014, the tax years for which we remain subject to United States federal income tax assessment upon examination are 2011 through 2013, as well as other major tax jurisdictions including the United Kingdom, Japan and France. We remain subject to income tax examinations in Australia for the tax years 2010 through 2013.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 7. Earnings Per Share

Years Ended October 31,
(In thousands, except per share amounts)	2014				2013				2012
Net income attributable to Cooper stockholders	$	269,856			$	296,151			$	248,339
Basic:
Weighted average common shares	48,061				48,615				47,913
Basic earnings per share attributable to Cooper stockholders	$	5.61			$	6.09			$	5.18
Diluted:
Weighted average common shares	48,061				48,615				47,913
Effect of dilutive stock options	899				1,070				1,239
Diluted weighted average common shares	48,960				49,685				49,152
Diluted earnings per share attributable to Cooper stockholders	$	5.51			$	5.96			$	5.05

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

Years Ended October 31,
(In thousands, except exercise prices)	2014				2013				2012
Stock option shares excluded	138				—				24
Range of exercise prices	$	119.89			$	—			$80.51-$87.22
Restricted stock units excluded	1				—				—

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 8. Stockholders’ Equity

Analysis of changes in accumulated other comprehensive income (loss):

(In thousands)	Foreign Currency Translation Adjustment				Unrealized Gain (Loss) on Marketable Securities				Change in Value of Derivative Instruments				Minimum Pension Liability				Total
Balance at October 31, 2011	$	(2,541	)		$	9			$	(2,826	)		$	(12,752	)		$	(18,110	)
Gross change in value for the period	(4,658		)		61				(1,420		)		(14,750		)		(20,767		)
Reclassification adjustments for loss realized in income	—				—				2,161				—				2,161
Tax effect for the period	—				(20		)		(289		)		5,764				5,455
Balance at October 31, 2012	$	(7,199	)		$	50			$	(2,374	)		$	(21,738	)		$	(31,261	)
Gross change in value for the period	$	2,607			$	—			$	(726	)		$	19,000			$	20,881
Reclassification adjustments for (gain) loss realized in income	—				(77		)		2,924				—				2,847
Tax effect for the period	—				27				(857		)		(7,399		)		(8,229		)
Balance at October 31, 2013	$	(4,592	)		$	—			$	(1,033	)		$	(10,137	)		$	(15,762	)
Gross change in value for the period	$	(87,763	)		$	—			$	(60	)		$	(5,991	)		$	(93,814	)
Reclassification adjustments for loss realized in income	—				—				1,676				—				1,676
Tax effect for the period	—				—				(630		)		2,348				1,718
Balance at October 31, 2014	$	(92,355	)		$	—			$	(47	)		$	(13,780	)		$	(106,182	)

Share Repurchases

In December 2011, our Board of Directors authorized the 2012 Share Repurchase Program and subsequently amended the total repurchase authorization to $500.0 million of the Company's common stock. With the amendment, this program has no expiration date and may be discontinued at any time. Purchases under the 2012 Share Repurchase Program are subject to a review of the circumstances in place at the time and may be made from time to time as permitted by securities laws and other legal requirements.

During the twelve months ended October 31, 2014, we repurchased 572 thousand shares of our common stock for $75.8 million and approximately $185.7 million remained authorized for repurchase under the program. During the three months ended October 31, 2014, we repurchased 176 thousand shares of the Company's common stock for $25.8 million at an average purchase price of $146.64 per share. For the three months ended January 31, 2014, we repurchased 396 thousand shares of the Company's common stock for $50.0 million at an average purchase price of $126.21 per share. We did not repurchase shares during the three-month periods ended July 31, 2014 and April 30, 2014.

During the twelve months ended October 31, 2013, we repurchased 1.42 million shares of our common stock for $167.3 million. During the twelve months ended October 31, 2012, we repurchased 984 thousand shares of our common stock for $71.2 million.

Cash Dividends

In fiscal 2014 and 2013, we paid semiannual dividends of 3 cents per share: an aggregate of approximately $1.4 million or 3 cents per share on February 7, 2014, to stockholders of record on January 24, 2014; $1.5 million or 3 cents per share on August 6, 2014, to stockholders of record on July 24, 2014; $1.4 million or

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3 cents per share on February 7, 2013, to stockholders of record on January 25, 2013; $1.5 million or 3 cents per share on August 6, 2013, to stockholders of record on July 24, 2013.

Stockholders' Rights Plan

Under our stockholders' rights plan, each outstanding share of our common stock carries one-half of one preferred share purchase right (Right). The Rights will become exercisable only under certain circumstances involving acquisition of beneficial ownership of 20% or more of our common stock by a person or group (Acquiring Person) without the prior consent of Cooper's Board of Directors. If a person or group becomes an Acquiring Person, each Right would then entitle the holder (other than an Acquiring Person) to purchase, for the then purchase price of the Right (currently $450, subject to adjustment), shares of Cooper's common stock, or shares of common stock of any person into which we are thereafter merged or to which 50% or more of our assets or earning power is sold, with a market value of twice the purchase price. The Rights will expire in October 2017 unless earlier exercised or redeemed. The Board of Directors may redeem the Rights for $0.01 per Right prior to any person or group becoming an Acquiring Person.

Note 9. Stock Plans

At October 31, 2014, Cooper had the following share-based compensation plans:

2006 Long-Term Incentive Plan for Non-Employee Directors (2006 Directors Plan)

In March 2006, the Company received stockholder approval of the 2006 Directors Plan, and it was amended by the Board of Directors in March 2007, October 2007, October 2008 and December 2008. The Company received stockholder approval of an amendment and restatement of the 2006 Directors Plan in March 2009 and the Board of Directors amended the Amended and Restated 2006 Directors Plan in October 2009 and October 2010. The Company received stockholder approval of a further amendment and restatement of the 2006 Directors Plan in March 2011 and the Board of Directors amended the Second Amended and Restated 2006 Directors Plan in October 2011, October 2012 and October 2013.

The Second Amended and Restated 2006 Directors Plan, as amended, authorizes either Cooper's Board of Directors or a designated committee thereof composed of two or more Non-Employee Directors to grant to Non-Employee Directors during the period ending March 21, 2019, equity awards for up to 950,000 shares of common stock, subject to adjustment for future stock splits, stock dividends, expirations, forfeitures and similar events.

As amended, the Second Amended and Restated 2006 Directors Plan provides for annual grants of stock options and restricted stock to Non-Employee Directors on November 1 and November 15, respectively, of each fiscal year. Specifically, each Non-Employee Director may be awarded on each November 15 the right to purchase for $0.10 per share, a number of shares of restricted stock with a total value of $135,000 or $148,000 in the case of the Non-Executive Chairman of the Board on the date of grant. The restrictions on the restricted stock will lapse on the first anniversary of the date of grant. Each Non-Employee Director may also be awarded on each November 1, a grant of options to purchase common stock with an approximate accounting value of $135,000, or in the case of the Lead Director and/or any non-executive Chairman of the Board, as the case may be, of $148,500. These options vest on the first anniversary of the date of grant. Options expire no more than 10 years after the grant date. In December 2008, the 2006 Directors' Plan was also amended to allow discretionary granting of stock options and/or restricted stock with similar terms to the annual grant other than the specific share requirements. As of October 31, 2014, 211,598 shares remained available under the 2006 Directors' Plan for future grants.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2007 Long-Term Incentive Plan (2007 LTIP)

In March 2007, the Company received stockholder approval of the 2007 LTIP and in October 2007, the Board of Directors amended the 2007 LTIP. In March 2009, the Company received stockholder approval of an amendment and restatement of the 2007 LTIP and in March 2011, the Company received stockholder approval of a further amendment and restatement of the 2007 LTIP.

The Second Amended and Restated 2007 LTIP is designed to increase Cooper's stockholder value by attracting, retaining and motivating key employees and consultants who directly influence our profitability. The Second Amended and Restated 2007 LTIP authorizes either Cooper's Board of Directors, or a designated committee thereof composed of two or more Non-Employee Directors, to grant to eligible individuals during the period ending December 31, 2017, up to 5,230,000 shares in the form of specified equity awards including stock option, restricted stock unit and performance share awards, subject to adjustment for future stock splits, stock dividends, expirations, forfeitures and similar events.

During fiscal 2014, the Company granted stock options, restricted stock units (RSUs) and performance share awards to employees under the Second Amended and Restated 2007 LTIP. Equity awards are granted at 100% of fair market value on the date of grant and expire no more than 10 years after the grant date. Stock options may become exercisable based on our common stock achieving certain price targets, specified time periods elapsing or other criteria designated by the Board of Directors or its authorized committee at their discretion. RSUs are nontransferable awards entitling the recipient to receive shares of common stock, without any payment in cash or property, in one or more installments at a future date or dates as determined by the Board of Directors or its authorized committee. For RSUs, legal ownership of the shares is not transferred to the employee until the unit vests, which is generally over a specified time period. Performance share awards are nontransferable awards entitling the recipient to receive a variable number of shares of common stock, without any payment in cash or property, in one or more installments at a future date or dates as determined by the Board of Directors or its authorized committee. Legal ownership of the shares is not transferred to the recipient until the award vests, and the number of shares distributed is dependent upon the achievement of certain performance targets over a specified period of time. As of October 31, 2014, 1,484,564 shares remained available under the Second Amended and Restated 2007 LTIP for future grants. The amount of available shares includes shares which may be distributed under performance share awards.

Share-Based Compensation

The compensation cost and related tax benefit recognized in our consolidated financial statements for share-based awards were as follows:

October 31,
(In millions)	2014				2013				2012
Selling, general and administrative expense	$	32.4			$	25.3			$	19.2
Cost of sales	2.2				1.9				1.3
Research and development expense	1.9				1.3				1.0
Capitalized in inventory	2.2				1.9				1.3
Total compensation expense	$	38.7			$	30.4			$	22.8
Related income tax benefit	$	11.7			$	8.8			$	7.0

Cash received from exercises under all share-based payment arrangements for the fiscal years ended October 31, 2014, 2013 and 2012 was approximately $8.6 million, $19.3 million and $55.1 million, respectively.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Details regarding the valuation and accounting for share-based awards follow.

Stock Options

The fair value of each stock option award granted is estimated on the date of grant using the Black-Scholes option valuation model and assumptions noted in the following table. The expected life of the awards is based on the observed and expected time to post-vesting forfeiture and/or exercise. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. In determining the expected volatility, management considers implied volatility from publicly-traded options on the Company's stock at the date of grant, historical volatility and other factors. The risk-free interest rate is based on the continuous rates provided by the United States Treasury with a term equal to the expected life of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.

Years Ended October 31,	2014			2013			2012
Expected life	4.8 - 5.5 years			4.7 - 5.5 years			4.3 - 5.7 years
Expected volatility	31.5% - 35.3%			34.8% - 35.9%			39.5% - 43.8%
Risk-free interest rate	1.36% - 1.61%			0.63% - 0.78%			0.69% - 1.08%
Dividend yield	0.05	%		0.06	%		0.09	%

The activity and status of the Company's stock option plans for the fiscal year ended and at October 31, 2014, are summarized below:

	Number of Shares			Weighted- Average Exercise Price Per Share				Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at October 31, 2013	1,708,676			$	54.58
Granted	164,166			$	121.25
Exercised	522,165			$	52.00
Forfeited or expired	26,741			$	81.76
Outstanding at October 31, 2014	1,323,936			$	63.32			5.53
Vested and exercisable at October 31, 2014	900,031			$	48.02			4.37		$	104,293,959

The weighted-average fair value of each option granted during fiscal 2014, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 LTIP was $41.73. The weighted-average fair value of each option granted during fiscal 2013, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 LTIP was $31.51. For the 2006 Directors Plan, the weighted-average fair values of options granted for fiscal 2014 and 2013 were $44.20 and $32.20, respectively. The expected requisite service period for options granted to employees in fiscal 2014 was 60 months. The total intrinsic value of options exercised during the year ended October 31, 2014 was $46.7 million.

Stock awards outstanding under the Company's current plans have been granted at prices which are either equal to or above the market value of the common stock on the date of grant. Options granted under the 2007 LTIP generally vest over four to five years based on market and service conditions and expire no later than ten years after the grant date. Options granted under the 2006 Directors Plan generally vest in one year or upon achievement of a market condition and expire no later than ten years after the grant date. We generally recognize compensation expense ratably over the vesting period. Directors' options and restricted stock grants

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

are expensed on the date of grant as the 2006 Directors Plan does not contain a substantive future requisite service period. As of October 31, 2014, there was $4.9 million of total unrecognized compensation cost related to nonvested options, which is expected to be recognized over a remaining weighted-average vesting period of 3 years.

Restricted Stock Units

RSUs granted under the 2007 LTIP have been granted at prices which are either equal to or above the market value of the stock on the date of grant and generally vest over four to five years. The fair value of restricted stock units is estimated on the date of grant based on the market price of our common stock. We recognize compensation expense ratably over the vesting period. As of October 31, 2014, there was $40.9 million of total unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a remaining weighted-average vesting period of 3.4 years.

The status of the Company's non-vested RSUs at October 31, 2013, is summarized below:

	Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Non-vested RSUs at October 31, 2013	647,185			$	73.33
Granted	217,450			$	120.5
Vested and issued	232,138			$	65.4
Forfeited or expired	33,830			$	81.13
Non-vested RSUs at October 31, 2014	598,667			$	93.09

Performance Units

Performance units are granted to selected executives and other key employees with vesting contingent upon meeting future reported earnings per share goals over a defined performance cycle, usually three years. Performance units, if earned, may be paid in cash or shares of common stock. The performance shares actually earned will range from zero to 150% of the target number of performance shares for performance periods ending in fiscal 2014 through fiscal 2016. Subject to limited exceptions set forth in the performance share plan, any shares earned will be distributed in the immediate subsequent fiscal period after the performance period. The fair value of performance unit awards is estimated on the date of grant based on the current market price of our common stock and the estimate of probability of award achievement. This estimate is reviewed each fiscal period and adjustments are recorded if it is determined that the estimate of probability of award achievement has changed.

We recognize compensation expense ratably over the vesting period. As of October 31, 2014, there was $8.2 million of total unrecognized compensation cost related to non-vested performance units, which is expected to be recognized over a remaining weighted-average vesting period of 1.6 years.

Performance units granted on December 14, 2011 vested on October 31, 2014 and met 150% of the target and, subject to the provisions of the plan, we expect to grant a similar performance award in our fiscal first quarter of 2015. We also granted performance unit awards on December 12, 2012 and December 11, 2013 with specific performance goals for each period ending on October 31, 2015 and October 31, 2016, respectively.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 10. Employee Benefits

Cooper's Retirement Income Plan

Cooper's Retirement Income Plan (Plan), a defined benefit plan, covers substantially all full-time United States employees. Cooper'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. Cooper 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 following table sets forth the Plan's benefit obligations and fair value of the Plan assets at October 31, 2014, and the funded status of the Plan and net periodic pension costs for each of the years in the three-year period ended October 31, 2014.

Retirement Income Plan

Years Ended October 31, (In thousands)	2014				2013				2012
Change in benefit obligation
Benefit obligation, beginning of year	$	84,160			$	88,607			$	64,989
Service cost	7,074				7,383				4,937
Interest cost	3,950				3,287				3,053
Benefits paid	(1,768		)		(3,508		)		(1,308		)
Actuarial loss (gain)	7,695				(11,609		)		16,936
Benefit obligation, end of year	$	101,111			$	84,160			$	88,607
Change in plan assets
Fair value of plan assets, beginning of year	$	59,266			$	47,427			$	39,098
Actual return on plan assets	5,955				9,113				4,411
Employer contributions	8,788				6,234				5,226
Benefits paid	(1,768		)		(3,508		)		(1,308		)
Fair value of plan assets, end of year	$	72,241			$	59,266			$	47,427
Funded status at end of year	$	(28,870	)		$	(24,894	)		$	(41,180	)

Years Ended October 31, (In thousands)	2014				2013				2012
Amounts recognized in the statement of financial position consist of:
Noncurrent asset	$	—			$	—			$	—
Current liability	—				—				—
Noncurrent liabilities	(28,870		)		(24,894		)		(41,180		)
Net amount recognized at year end	$	(28,870	)		$	(24,894	)		$	(41,180	)

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended October 31, (In thousands)	2014				2013				2012
Amounts recognized in accumulated other comprehensive income consist of:
Net transition obligation	$	—			$	—			$	—
Prior service cost	4				28				53
Net loss	22,056				15,982				34,957
Accumulated other comprehensive income	$	22,060			$	16,010			$	35,010

Years Ended October 31, (In thousands)	2014				2013				2012
Information for pension plans with accumulated benefit obligations in excess of plan assets
Projected benefit obligation	$	101,111			$	84,160			$	88,607
Accumulated benefit obligation	$	88,563			$	73,641			$	77,596
Fair value of plan assets	$	72,241			$	59,266			$	47,427

Years Ended October 31, (In thousands)	2014				2013				2012
Reconciliation of prepaid (accrued) pension cost
Accrued pension cost at prior fiscal year end	$	(8,884	)		$	(6,170	)		$	(5,660	)
Net periodic benefit cost	6,714				8,948				5,736
Contributions made during the year	8,788				6,234				5,226
Accrued pension cost at fiscal year end	$	(6,810	)		$	(8,884	)		$	(6,170	)

Years Ended October 31, (In thousands)	2014				2013				2012
Components of net periodic benefit cost and other amounts recognized in other comprehensive income
Net periodic benefit cost:
Service cost	$	7,074			$	7,383			$	4,937
Interest cost	3,950				3,287				3,053
Expected return on plan assets	(4,950		)		(3,932		)		(3,424		)
Amortization of transitional (asset) or obligation	—				—				20
Amortization of prior service cost	24				24				24
Recognized actuarial loss	616				2,186				1,126
Net periodic pension cost	$	6,714			$	8,948			$	5,736

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended October 31, (In thousands)	2014				2013				2012
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net transition obligation	$	—			$	—			$	—
Prior service cost	—				—				—
Net loss (gain)	6,690				(16,790		)		15,950
Amortizations of net transition obligation	—				—				(21		)
Amortizations of prior service cost	(24		)		(24		)		(24		)
Amortizations of net gain	(616		)		(2,186		)		(1,126		)
Total recognized in other comprehensive income	$	6,050			$	(19,000	)		$	14,779
Total recognized in net periodic benefit cost and other comprehensive income	$	12,764			$	(10,052	)		$	20,515

The estimated net loss, net transition obligation and prior service cost for the plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $987 thousand, $0 and $4 thousand, respectively.

Years Ended October 31,	2014			2013			2012
Weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligation at year end:
Discount rate for determining net periodic pension cost	4.75	%		3.75	%		4.75	%
Discount rate for determining benefit obligations at year end	4.25	%		4.75	%		3.75	%
Rate of compensation increase for determining expense	4.00	%		4.00	%		4.00	%
Rate of compensation increase for determining benefit obligations at year end	4.00	%		4.00	%		4.00	%
Expected rate of return on plan assets for determining net periodic pension cost	8.00	%		8.00	%		8.50	%
Expected rate of return on plan assets at year end	8.00	%		8.00	%		8.00	%
Measurement date for determining assets and benefit obligations at year end	10/31/2014			10/31/2013			10/31/2012

The discount rate enables us to state expected future cash flows at a present value on the measurement date. The discount rate used for the plan is based primarily on the yields of a universe of high quality corporate bonds or the spot rate of high quality AA-rated corporate bonds, with durations corresponding to the expected durations of the benefit obligations. A change in the discount rate will cause the present value of benefit obligations to change in the opposite direction. If a discount rate of 4.75%, which is similar to prior fiscal year, had been used, the projected benefit obligation would have been $93.0 million, and the accumulated benefit obligation would have been $81.9 million.

The expected rate of return on plan assets was determined based on a review of historical returns, both for this plan and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class listed below. These expected future returns were then blended based on this Plan's target asset allocation.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Plan Assets

Weighted-average asset allocations at year end, by asset category are as follows:

Years Ended October 31,	2014			2013			2012
Asset category
Cash and cash equivalents	3.0	%		5.3	%		3.0	%
Corporate common stock	9.0	%		14.6	%		16.5	%
Equity mutual funds	52.1	%		47.5	%		43.2	%
Real estate funds	4.1	%		3.8	%		5.2	%
Bond mutual funds	31.8	%		28.8	%		32.1	%
Total	100.0	%		100.0	%		100.0	%

The Plan invests in a diversified portfolio of assets intended to minimize risk of poor returns while maximizing expected portfolio returns. To achieve the long-term rate of return, plan assets will be invested in a mixture of instruments, including but not limited to, corporate common stock (may include the Company's stock), investment grade bond funds, cash, balanced funds, real estate funds, small or large cap equity funds and international equity funds. The allocation of assets will be determined by the investment manager, and will typically include 50% to 80% equities with the remainder invested in fixed income and cash. Presently, this diversified portfolio is expected to return roughly 8.0% in the long run. Effective November 1, 2012, the expected rate of return on assets was reduced from 8.5% to 8.0%.

Fair Value Measurement of Plan Assets

(In thousands)	Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Asset category
Cash and cash equivalents	$	2,191			$	2,191			$	—			$	—
Corporate common stock	6,516				6,516				—				—
Equity mutual funds	37,635				37,635				—				—
Real estate funds	2,953				2,953				—				—
Bond mutual funds	22,946				22,946				—				—
Total	$	72,241			$	72,241			$	—			$	—

The Plan has an established process for determining the fair value of plan assets. Fair value is based upon quoted market prices, as Level 1 inputs, where available. For our investments in equity and bond mutual funds, and real estate funds, fair value is based on observable, Level 1 inputs, as price quotes are available and the fair values of these funds were not impacted by liquidity restrictions or the fund status. Level 2 assets are those where price quotes are not readily available and the fair value would be determined based on other observable inputs. Level 3 assets are those where price quotes are not readily available and the fair value would be determined based on unobservable inputs.

While we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Plan Cash Flows

Contributions

The Company contributions to the pension plan were $8.8 million, $6.2 million and $5.2 million for fiscal 2014, 2013 and 2012, respectively. We closely monitor the funded status of the Plan with respect to legislative and accounting rules. We expect to make contributions of about $10.0 million during fiscal 2015.

Estimated Future Benefit Payments

Years (In thousands)
2015	$	2,258
2016	$	2,646
2017	$	3,049
2018	$	3,418
2019	$	3,874
2020 - 2024	$	26,797

Cooper's 401(k) Savings Plan

Cooper's 401(k) savings plan provides for the deferral of compensation as described in the Internal Revenue Code and is available to substantially all United States employees. Employees who participate in the 401(k) plan may elect to have up to 75% of their pre-tax salary or wages deferred and contributed to the trust established under the plan. Cooper's contributions on account of participating employees, net of forfeiture credits, were $4.0 million, $3.4 million and $2.9 million for the years ended October 31, 2014, 2013 and 2012, respectively.

International Pension Plans

For our employees outside the United States, we also participate in country-specific defined contribution plans and government-sponsored retirement plans. The defined contribution plans are administered by third-party trustees and we are not directly responsible for providing benefits to participants of government-sponsored plans. The Company’s contributions to such plans are not significant individually or in the aggregate.

Note 11. Fair Value Measurements

As of October 31, 2014 and October 31, 2013, the carrying value of cash and cash equivalents, accounts receivable, prepaid expenses 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.

Assets and liabilities are measured and reported at fair value per related accounting standards that 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:

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

We believe that the balances of our revolving Credit Agreement and term loans approximated their fair values as of October 31, 2014 and October 31, 2013 and are categorized as Level 2 of the fair value hierarchy.

We have derivative assets and liabilities that include interest rate swaps, cross currency swaps and foreign currency forward contracts. The impact of the counterparty’s creditworthiness when in an asset position and Cooper's creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments. Both the counterparty and Cooper are expected to continue to perform under the contractual terms of the instruments.

We may use interest rate swaps to maintain our desired mix of fixed-rate and variable-rate debt. The swaps exchange fixed and variable rate payments without exchanging the notional principal amount of the debt. We have elected to use the income approach to value the derivatives using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated but not compelled to transact. Level 2 inputs are limited to quoted prices for similar assets or liabilities in active markets, specifically Eurodollar futures contracts up to three years, and inputs other than quoted prices that are observable for the asset or liability - specifically LIBOR cash and swap rates and credit risk at commonly quoted intervals. Mid-market pricing is used as a practical expedient for fair value measurements.

We may use foreign exchange forward contracts to minimize, to the extent reasonable and practical, our exposure to the impact of foreign currency fluctuations. We have elected to use the income approach to value the derivatives using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated but not compelled to transact. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability - specifically LIBOR cash rates, credit risk at commonly quoted intervals, foreign exchange spot rates and forward points. Mid-market pricing is used as a practical expedient for fair value measurements.

The following table sets forth Cooper’s financial assets and liabilities that were measured at fair value on a recurring basis using Level 2 inputs during the fiscal years 2014 and 2013, within the fair value hierarchy at October 31:

(In millions)	2014				2013
Assets:
Foreign exchange contracts	$	0.6			$	0.3
Liabilities:
Credit Agreement	$	279.5			$	—
Term loans	1,000.0				300.0
Interest rate swaps	0.1				1.7
Foreign exchange contracts	3.3				0.6
	$	1,282.9			$	302.3

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 12. Commitments and Contingencies

Lease Commitments

Total minimum annual rental obligations under noncancelable operating leases (substantially all real property or equipment) in force at October 31, 2014, were payable as follows:

(In thousands)
2015	$	25,288
2016	21,815
2017	17,955
2018	16,349
2019	14,965
2020 and thereafter	60,707
	$	157,079

Aggregate rental expense for both cancelable and noncancelable contracts amounted to $25.6 million, $22.8 million and $33.2 million in 2014, 2013 and 2012, respectively.

Legal Proceedings

On or about November 11, 2014, Johnson & Johnson Vision Care (JJVC) filed an action in the district court of Dusseldorf, Germany, against CooperVision GmbH and CooperVision, Inc. (collectively “CooperVision”) for patent infringement. In the action, JJVC alleges that certain CooperVision products infringe JJVC’s European Patent No. EP 1 754 728 B1, and is seeking damages and to enjoin these products from selling in Germany. CooperVision is challenging the validity of the patent before the European Patent Office. CooperVision denies JJVC’s allegations of infringement and intends to defend the action vigorously and to continue its challenge to the patent before the European Patent Office. We are not in a position to assess whether any loss or adverse effect on our financial condition is probable or remote or to estimate the range of potential loss, if any.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 13. Business Segment Information

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

Total net sales include sales to customers as reported in our Consolidated Statements of Income and sales between geographic areas that are priced at terms that allow for a reasonable profit for the seller. Operating income (loss) is total net sales less cost of sales, selling, general and administrative expenses, research and development expenses, amortization of intangible assets and the loss on divestiture of Aime. Corporate operating loss is principally corporate headquarters expense. Interest expense, gain on insurance proceeds, loss on extinguishment of debt and other income and expenses are not allocated to individual segments. Neither of our business segments relies on any one major customer.

Identifiable assets are those used in continuing operations except cash and cash equivalents, which we include as corporate assets. Long-lived assets are property, plant and equipment.

The following table presents a summary of our business segment net sales:

(In thousands)	2014				2013				2012
CooperVision net sales by category:
Toric lens	$	429,194			$	388,066			$	357,211
Multifocal lens	147,687				121,734				94,443
Single-use sphere lens	307,956				271,000				267,090
Non single-use sphere and other eye care products and other	507,810				487,519				470,500
Total CooperVision net sales	1,392,647				1,268,319				1,189,244
CooperSurgical net sales	325,129				319,406				255,892
Total net sales	$	1,717,776			$	1,587,725			$	1,445,136

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Information by business segment for each of the years in the three-year period ended October 31, 2014, follows:

(In thousands)	CooperVision				CooperSurgical				Corporate				Consolidated
2014
Net sales	$	1,392,647			$	325,129			$	—			$	1,717,776
Operating income (loss)	$	288,998			$	69,031			$	(51,543	)		$	306,486
Other expense, net													(1,987		)
Interest expense													(7,965		)
Income before income taxes													$	296,534
Identifiable assets	$	3,699,614			$	646,200			$	112,526			$	4,458,340
Depreciation expense	$	95,535			$	6,486			$	470			$	102,491
Amortization expense	$	22,704			$	13,006			$	—			$	35,710
Capital expenditures	$	233,632			$	4,173			$	260			$	238,065
2013
Net sales	$	1,268,319			$	319,406			$	—			$	1,587,725
Operating income (loss)	$	289,272			$	60,685			$	(44,012	)		$	305,945
Other income, net													1,410
Interest expense													(9,168		)
Gain on insurance proceeds													14,084
Income before income taxes													$	312,271
Identifiable assets	$	2,376,022			$	632,844			$	128,395			$	3,137,261
Depreciation expense	$	88,350			$	6,316			$	444			$	95,110
Amortization expense	$	16,710			$	13,529			$	—			$	30,239
Capital expenditures	$	170,739			$	6,888			$	500			$	178,127
2012
Net sales	$	1,189,244			$	255,892			$	—			$	1,445,136
Operating income (loss)	$	262,806			$	58,956			$	(38,364	)		$	283,398
Other income, net													229
Interest expense													(11,771		)
Gain on insurance proceeds													5,000
Loss on extinguishment of debt													(1,404		)
Income before income taxes													$	275,452
Identifiable assets	$	2,251,476			$	607,673			$	82,235			$	2,941,384
Depreciation expense	$	82,829			$	4,106			$	300			$	87,235
Amortization expense	$	15,578			$	8,401			$	—			$	23,979
Capital expenditures	$	92,459			$	6,647			$	673			$	99,779

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Information by geographical area by country of domicile for each of the years in the three-year period ended October 31, 2014, follows:

(In thousands)	United States				Europe				Rest of World, Other Eliminations & Corporate				Consolidated
2014
Sales to unaffiliated customers	$	773,739			$	582,445			$	361,592			$	1,717,776
Sales between geographic areas	230,649				345,988				(576,637		)		—
Net sales	$	1,004,388			$	928,433			$	(215,045	)		$	1,717,776
Operating income (loss)	$	47,803			$	(10,330	)		$	269,013			$	306,486
Long-lived assets	$	499,195			$	406,433			$	31,697			$	937,325
2013
Sales to unaffiliated customers	$	742,216			$	479,144			$	366,365			$	1,587,725
Sales between geographic areas	230,382				326,338				(556,720		)		—
Net sales	$	972,598			$	805,482			$	(190,355	)		$	1,587,725
Operating income (loss)	$	49,712			$	(5,388	)		$	261,621			$	305,945
Long-lived assets	$	427,560			$	297,157			$	15,150			$	739,867
2012
Sales to unaffiliated customers	$	680,757			$	408,813			$	355,566			$	1,445,136
Sales between geographic areas	198,593				318,196				(516,789		)		—
Net sales	$	879,350			$	727,009			$	(161,223	)		$	1,445,136
Operating income	$	44,977			$	5,367			$	233,054			$	283,398
Long-lived assets	$	371,314			$	261,269			$	7,672			$	640,255

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 14. Selected Quarterly Financial Data (Unaudited)

(In thousands)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter*
2014
Net sales	$	404,980			$	412,317			$	432,482			$	467,997
Gross profit	$	262,929			$	268,499			$	280,590			$	279,552
Income before income taxes	$	79,456			$	87,821			$	94,383			$	34,875
Net income attributable to Cooper stockholders	$	71,843			$	79,160			$	88,067			$	30,787
Earnings per share attributable to Cooper stockholders - basic	$	1.50			$	1.65			$	1.83			$	0.64
Earnings per share attributable to Cooper stockholders - diluted	$	1.47			$	1.62			$	1.80			$	0.63
2013
Net sales	$	379,839			$	384,041			$	411,993			$	411,852
Gross profit	$	240,498			$	254,179			$	268,274			$	263,857
Income before income taxes**	$	80,976			$	78,940			$	91,264			$	61,091
Net income attributable to Cooper stockholders	$	74,667			$	75,136			$	88,951			$	57,397
Earnings per share attributable to Cooper stockholders - basic	$	1.54			$	1.55			$	1.82			$	1.18
Earnings per share attributable to Cooper stockholders - diluted	$	1.50			$	1.52			$	1.79			$	1.15

*Fiscal fourth quarter 2014 results include the operating results of Sauflon Pharmaceuticals Ltd., acquired in August 2014, and the related acquisition, integration and restructuring costs. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 and Note 2 and Note 3 for additional information.

**Fiscal fourth quarter 2013 results include the $21.1 million loss on divestiture of Aime. See Note 1 for additional information.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES