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, 2017 and 2016, 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, 2017. In connection with our audits of the consolidated financial statements, we have also audited financial statement Schedule II. We also have audited the Company’s internal control over financial reporting as of October 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) 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 and 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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Cooper Companies, Inc. and subsidiaries as of October 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended October 31, 2017, 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, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

San Francisco, California

December 22, 2017

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

Years Ended October 31, (In millions, except for earnings per share)	2017				2016				2015
Net sales	$	2,139.0			$	1,966.8			$	1,797.1
Cost of sales	773.2				793.7				726.8
Gross profit	1,365.8				1,173.1				1,070.3
Selling, general and administrative expense	799.1				722.8				712.5
Research and development expense	69.2				65.4				69.6
Amortization of intangibles	68.4				60.8				51.5
Operating income	429.1				324.1				236.7
Interest expense	33.4				26.2				18.1
Other expense, net	1.7				2.3				3.1
Income before income taxes	394.0				295.6				215.5
Provision for income taxes	21.1				20.7				10.4
Net income	372.9				274.9				205.1
Less: net income attributable to noncontrolling interests	—				1.0				1.6
Net income attributable to Cooper stockholders	$	372.9			$	273.9			$	203.5
Earnings per share attributable to Cooper stockholders - basic	$	7.63			$	5.65			$	4.20
Earnings per share attributable to Cooper stockholders - diluted	$	7.52			$	5.59			$	4.14
Number of shares used to compute earnings per share attributable to Cooper stockholders:
Basic	48.9				48.5				48.5
Diluted	49.6				49.0				49.2

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive income

Years Ended October 31, (In millions)	2017				2016				2015
Net income	$	372.9			$	274.9			$	205.1
Other comprehensive income (loss)
Foreign currency translation adjustment	107.7				(289.6		)		(79.4		)
Change in value of derivative instruments, net of tax provision of $0, $0 and $0.03, respectively	—				—				0.1
Change in minimum pension liability, net of tax provision (benefit) of $4.2, $(5.3) and $(3.9), respectively	6.6				(8.4		)		(6.1		)
Other comprehensive income (loss)	114.3				(298.0		)		(85.4		)
Comprehensive income (loss)	487.2				(23.1		)		119.7
Less: comprehensive income attributable to noncontrolling interests	—				0.9				0.5
Comprehensive income (loss) attributable to Cooper stockholders	$	487.2			$	(24.0	)		$	119.2

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

October 31, (In millions)	2017				2016
ASSETS
Current assets:
Cash and cash equivalents	$	88.8			$	100.8
Trade accounts receivable, net of allowance for doubtful accounts of $10.8 at October 31, 2017 and $8.5 at October 31, 2016	316.6				291.4
Inventories	454.1				417.7
Deferred tax assets (1)	—				49.7
Prepaid expense and other current assets	93.7				77.5
Total current assets	953.2				937.1
Property, plant and equipment, at cost	1,757.5				1,603.2
Less: accumulated depreciation and amortization	847.4				725.5
	910.1				877.7
Goodwill	2,354.8				2,164.7
Other intangibles, net	504.7				441.1
Deferred tax assets (1)	60.3				6.1
Other assets	75.6				51.9
	$	4,858.7			$	4,478.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	23.4			$	226.3
Accounts payable	142.1				107.4
Employee compensation and benefits	84.1				77.7
Other current liabilities	146.5				131.8
Total current liabilities	396.1				543.2
Long-term debt	1,149.3				1,107.4
Deferred tax liabilities	38.8				37.5
Accrued pension liability and other	98.7				94.6
Total liabilities	1,682.9				1,782.7
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock, 10 cents par value, shares authorized: 1.0; zero shares issued or outstanding	—				—
Common stock, 10 cents par value, shares authorized: 120.0; issued 52.4 at October 31, 2017 and 52.1 at October 31, 2016	5.2				5.2
Additional paid-in capital	1,526.7				1,494.0
Accumulated other comprehensive loss	(375.3		)		(489.6		)
Retained earnings	2,434.2				2,046.3
Treasury stock at cost: 3.6 shares at October 31, 2017 and 3.3 shares at October 31, 2016	(415.1		)		(360.1		)
Total Cooper stockholders' equity	3,175.7				2,695.8
Noncontrolling interests	0.1				0.1
Stockholders’ equity	3,175.8				2,695.9
	$	4,858.7			$	4,478.6
(1) Prospective adoption of ASU 2015-17, Balance Sheet Classification of Deferred Taxes. Refer to Note 1.

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 millions)	Shares			Amount				Shares			Amount
Balance at October 31, 2014	48.1			$	4.8			2.8			$	0.2			$	1,386.8			$	(106.2	)		$	1,578.8			$	(294.6	)		$	18.6			$	2,588.4
Prior year adjustment (see note 1)	—		—	—			—	—		—	—			—	—			—	—				(4.1		)		—			—	—				(4.1		)
Net income attributable to Cooper stockholders	—			—				—			—				—				—				203.5				—				—				203.5
Other comprehensive loss, net of tax	—			—				—			—				—				(85.4		)		—				—				—				(85.4		)
Issuance of common stock for stock plans	0.7			0.1				—			—				(6.7		)		—				—				1.8				—				(4.8		)
Treasury stock repurchase	(0.5	)		(0.1		)		0.5			0.1				—				—				—				(67.3		)		—				(67.3		)
Tax benefit from exercise of stock options	—			—				—			—				18.3				—				—				—				—				18.3
Dividends on common stock	—			—				—			—				—				—				(2.9		)		—				—				(2.9		)
Share-based compensation expense	—			—				—			—				32.9				—				—				—				—				32.9
Purchase of shares from noncontrolling interests	—			—				—			—				3.4				—				—				—				(11.5		)		(8.1		)
Distributions to noncontrolling interests	—			—				—			—				—				—				—				—				(0.7		)		(0.7		)
Balance at October 31, 2015	48.3			$	4.8			3.3			$	0.3			$	1,434.7			$	(191.6	)		$	1,775.3			$	(360.1	)		$	6.4			$	2,669.8
Net income attributable to Cooper stockholders	—			—				—			—				—				—				273.9				—				—				273.9
Other comprehensive loss, net of tax	—			—				—			—				—				(298.0		)		—				—				—				(298.0		)
Issuance of common stock for stock plans	0.5			0.1				—			—				7.1				—				—				—				—				7.2
Tax benefit from exercise of stock options	—			—				—			—				20.9				—				—				—				—				20.9
Dividends on common stock	—			—				—			—				—				—				(2.9		)		—				—				(2.9		)
Share-based compensation expense	—			—				—			—				29.9				—				—				—				—				29.9
Purchase of shares from noncontrolling interests	—			—				—			—				1.4				—				—				—				(3.6		)		(2.2		)
Distributions to noncontrolling interests	—			—				—			—				—				—				—				—				(0.7		)		(0.7		)
Noncontrolling interests	—			—				—			—				—				—				—				—				(2.0		)		(2.0		)
Balance at October 31, 2016	48.8			$	4.9			3.3			$	0.3			$	1,494.0			$	(489.6	)		$	2,046.3			$	(360.1	)		$	0.1			$	2,695.9
Net income attributable to Cooper stockholders	—			—				—			—				—				—				372.9				—				—				372.9
Other comprehensive loss, net of tax	—			—				—			—				—				114.3				—				—				—				114.3
Issuance of common stock for stock plans	0.3			—				—			—				(5.3		)		—				—				—				—				(5.3		)
Treasury stock repurchase	(0.3	)		—				0.3			—				—				—				—				(55.0		)		—				(55.0		)
Dividends on common stock	—			—				—			—				—				—				(2.9		)		—				—				(2.9		)
Share-based compensation expense	—			—				—			—				38.2				—				—				—				—				38.2
ASU2016-09 adoption	—			—				—			—				(0.2		)		—				17.9				—				—				17.7
Balance at October 31, 2017	48.8			$	4.9			3.6			$	0.3			$	1,526.7			$	(375.3	)		$	2,434.2			$	(415.1	)		$	0.1			$	3,175.8

See accompanying notes to consolidated financial statements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended October 31, (In millions)	2017				2016					2015
Cash flows from operating activities:
Net income	$	372.9			$	274.9				$	205.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	188.4				198.3					191.4
Share-based compensation expense	37.2				29.9					32.9
Loss on disposal of property, plant and equipment	6.1				30.6					42.4
Deferred income taxes	(7.1		)		(10.7		)			5.6
Excess tax benefit from share-based compensation awards (1)	—				(19.8		)			(17.3		)
Provision for doubtful accounts	2.3				2.6					(0.1		)
Change in assets and liabilities:
Accounts receivable	(25.1		)		1.6					(4.5		)
Inventories	(30.9		)		12.2					(37.4		)
Other assets	(13.8		)		(5.2		)			(22.6		)
Accounts payable	25.0				(10.5		)			10.1
Accrued liabilities	18.9				9.1					(10.7		)
Accrued income taxes	9.9				(8.9		)			(4.3		)
Other long-term liabilities	9.8				5.5					0.3
Cash provided by operating activities	593.6				509.6					390.9
Cash flows from investing activities:
Purchases of property, plant and equipment	(127.2		)		(152.6		)	—		(243.0		)
Acquisitions of businesses, net of cash acquired, and other	(254.1		)		(266.1		)	—		(44.9		)
Cash used in investing activities	(381.3		)		(418.7		)			(287.9		)
Cash flows from financing activities:
Proceeds from long-term debt	1,413.8				1,577.3					1,201.3
Repayments of long-term debt	(1,364.6		)		(1,460.4		)			(1,372.1		)
Net (repayments of) proceeds from short-term debt	(211.7		)		(131.9		)			184.7
Payment of loan notes issued for Sauflon acquisition	—				—					(51.2		)
Repurchase of common stock	(55.0		)		—					(67.3		)
Proceeds related to share-based compensation awards	10.7				20.4					19.8
Payments related to share-based compensation awards	(16.0		)		(13.2		)			(24.6		)
Excess tax benefit from share-based compensation awards (1)	—				19.8					17.3
Purchase of Origio shares from noncontrolling interests	—				(2.2		)			(8.1		)
Dividends on common stock	(2.9		)		(2.9		)			(2.9		)
Debt issuance costs	—				(12.6		)			—
Distributions to noncontrolling interests	—				(0.7		)			(1.1		)
Payment of contingent consideration	(4.3		)		(0.5		)			(3.2		)
Proceeds from construction allowance	2.1				5.5					0.7
Cash used in financing activities	(227.9		)		(1.4		)			(106.7		)
Effect of exchange rate changes on cash and cash equivalents	3.6				(5.1		)			(5.1		)
Net (decrease) increase in cash and cash equivalents	(12.0		)		84.4					(8.8		)
Cash and cash equivalents at beginning of year	100.8				16.4					25.2
Cash and cash equivalents at end of year	$	88.8			$	100.8				$	16.4
Supplemental disclosures of cash flow information:
Cash paid for:
Interest, net of amounts capitalized	$	31.3			$	23.7				$	14.0
Income taxes	$	15.6			$	29.4				$	12.2
Litigation settlement charges	$	—			$	—				$	17.0

(1)Adoption of ASU 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting, excess tax benefits classified as operating activity on a prospective basis. Refer to Note 1.

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

•	CooperSurgical primarily develops, manufactures, markets medical devices and procedures solutions, and provides services to improve health care delivery to families.

Significant Accounting Policies

Management's significant accounting policies include estimates and judgments which are an integral part of financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP). We believe that the accounting policies described in this section address the more significant policies utilized by management when preparing our consolidated financial statements in accordance with GAAP. We believe that the accounting policies and 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. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most important to aid in fully understanding and evaluating our reported financial results are:

•

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's medical devices, surgical instruments, accessories, diagnostic products and services, this primarily occurs when title and risk of ownership transfers to our customers, and/or when services are rendered. 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. We record 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 saleability. We reduce the value of inventory if there are indications that the carrying value is greater than net realizable value, 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 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

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

possible that impairment may exist in accordance with related accounting standards. We performed our annual impairment test in our fiscal third quarter of 2017, and our analysis indicated that we had no impairment of goodwill. We performed our annual impairment test in our fiscal third quarter of 2016 and concluded that we had no impairment of goodwill in that year.

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, we may have to recognize a non-cash impairment of our 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.

In the third quarter of fiscal 2017, we adopted ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment where FASB eliminated Step 2 from the goodwill impairment test, which required a hypothetical purchase price allocation. The adoption had no material impact on the Company's reported financial results. We performed a qualitative assessment 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 fair value of a reporting unit will be compared with its carrying amount and an impairment charge will be recognized for the carrying amount which exceeds the reporting unit's fair value. 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.

•

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. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. 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

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 use the 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.

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 Cooper's common 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 we record in future periods may differ significantly from what we have recorded in the current period.

Cumulative Adjustment

During the first quarter of fiscal 2017, the Company identified and recorded an amount of $4.1 million, net of income tax expense, to reflect a net cumulative decrease to retained earnings as of the opening balance sheet for the fiscal year ended October 31, 2015 and a corresponding net increase in other current liabilities and deferred tax asset, all associated with an understatement of accruals for rebates in prior years. Accordingly, the Company has not revised income statements or cash flows of any periods as the impact to all periods is minimal since the understated rebates liability was accumulated primarily prior to fiscal 2014. Based upon evaluation and consideration of provisions under ASC 250, Accounting Changes and Error Corrections, that incorporates SEC Staff Accounting Bulletin (SAB) No. 99, Materiality, we determined that the impact is not material to our prior year's consolidated financial statements. However, we have revised our prior year Balance Sheet at October 31, 2016 in this Annual Report on Form 10-K to reflect this adjustment.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Accounting Pronouncements Issued Not Yet Adopted

In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires an entity to disaggregate the service cost component from the other components of net benefit cost. The service cost component is presented in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period and the other components of net benefit costs are presented separately as other income/expense below income from operations. ASU 2017-07 is effective for the Company in our fiscal 2019 and is not expected to have a significant impact on the Company's consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 provides guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. ASU 2016-18 will be effective for the Company in fiscal 2019 and is not expected to have a significant impact on the Company's Consolidated Statements of Cash Flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax consequences on an intra-entity transfer of an asset other than inventory when the transfer occurs. The ASU changes the timing of the recognition of the income tax consequences of non-inventory transfers which under current guidance defers the income tax consequences until the asset is sold to an outside party or otherwise recognized. The guidance for the amendments of ASU 2016-16 requires companies to apply a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. We are currently evaluating the impact of ASU 2016-16 which is effective for the Company in our fiscal year and interim periods beginning on November 1, 2018.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of ASU 2016-02, which is effective for the Company in our fiscal year and interim periods beginning on November 1, 2019.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under current guidance, an entity subsequently measures inventory at the lower of cost or market, with market defined as replacement cost, net realizable value (NRV), or NRV less a normal profit margin. An entity uses current replacement cost provided that it is not above NRV (i.e., the ceiling) or below NRV less an “approximately normal profit margin” (i.e., the floor). ASU 2015-11 eliminates this analysis and requires entities to measure most inventory “at the lower of cost and NRV.” ASU 2015-11 is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. The Company does not expect the new guidance to have a material impact on the Company’s consolidated financial statements.

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 initially applying the update recognized at the date of the initial application along with additional disclosures.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

We have been monitoring the activity of the FASB and the Transition Resource Group as it relates to specific industry interpretive guidance and further overall interpretations and clarifications. In fiscal year 2017, we began our plan on adoption of ASU 2014-09. Our plan entails activities such as reviewing significant revenue streams (and related costs) and representative contracts to determine the potential changes to existing accounting policies, completion of an accounting guidance gap analysis, and identifying and addressing the impact that ASU 2014-09 will have on business processes, systems and internal controls to support the recognition and disclosure requirements. We are currently in the process of completing our accounting gap analysis.

We are currently evaluating the full impact of ASU 2014-09 and related amendments on its consolidated financial statements and related disclosures. Currently, we have not identified any material expected changes of ASU 2014-09 on the Company’s consolidated financial statements, and are in the process of quantifying the impact. We plan to adopt ASU 2014-09, in our fiscal year and interim periods beginning on November 1, 2018 and we currently expect to apply the modified retrospective transition method. This would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the ASU 2014-09 to contracts in process as of the adoption date. Under this method, the Company would not restate the prior consolidated financial statements presented. However, the Company would include additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during our fiscal year 2019, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

Accounting Pronouncements Recently Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment. FASB eliminated Step 2 from the goodwill impairment test, which required a hypothetical purchase price allocation. Under the amendments in this update, an entity should perform goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the carrying amount which exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company has elected to early adopt ASU 2017-04 effective in the third quarter of fiscal 2017. The adoption had no material impact on the Company's reported financial results.

In January 2017, the FASB issued ASU 2017-01, Business Combination (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company has elected to early adopt ASU 2017-01 effective in the second quarter of fiscal 2017. The adoption had no material impact for the Company.

In March 2016, the FASB issued ASU 2016-09, Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to improve the accounting for share-based payments to employees. ASU 2016-09 requires excess tax benefits (windfall tax benefits) and tax deficiencies (shortfalls) to be recognized as income tax expense or benefit in the income statement when awards vest or are settled. Companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital. This ASU also requires companies to classify cash flows resulting from employee share-based payments, including the additional tax benefits or expenses related to the vesting or settlement of share-based awards, as cash flows from operating activities rather than financing activities. The standard also allows for additional employee tax withholding on the exercise or release of awards, without triggering liability classification of the award. Finally, the update allows an accounting policy election for the treatment of forfeitures of stock based awards. Companies can elect to continue to estimate forfeitures expected to occur, or account for forfeitures as they occur. The Company has elected to early adopt ASU 2016-09 effective November 1, 2016.

Accordingly, the Company recognized $17.9 million in deferred tax assets associated with excess tax benefits not previously recognized in deferred taxes as a cumulative-effect adjustment to retained earnings at November

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1, 2016. The Company also recognized excess tax benefits as a discrete income tax benefit of $13.5 million during fiscal 2017, which is classified as an operating activity in the Consolidated Statements of Cash Flows on a prospective basis. The Company elected to continue to estimate forfeitures that are expected to occur when estimating the amount of compensation expense to record in each accounting period.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present all deferred tax assets and liabilities as noncurrent in the Balance Sheet. ASU 2015-17 can be early adopted for any period that has not been issued on a prospective or retrospective basis. The Company elected to early adopt this guidance on a prospective basis for the quarter ended January 31, 2017. No prior periods were retrospectively adjusted.

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 $1.4 million for fiscal 2017, $1.6 million for fiscal 2016, and $3.5 million for fiscal 2015.

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.

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 group are compared to the asset group'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

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

Inventories

October 31, (In millions)	2017				2016
Raw materials	$	107.0			$	86.0
Work-in-process	13.3				12.6
Finished goods	333.8				319.1
	$	454.1			$	417.7

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

Property, Plant and Equipment

October 31, (In millions)	2017				2016
Land and improvements	$	17.7			$	18.2
Buildings and improvements	279.2				259.9
Machinery and equipment	1,270.5				1,171.1
Construction in progress	190.1				154.0
Less: Accumulated depreciation	847.4				725.5
	$	910.1			$	877.7

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 30 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 $5.2 million and $3.1 million for the years ended October 31, 2017 and 2016, 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, 2017 and 2016, the number of shares in treasury was approximately 3.6 million and 3.3 million, respectively. During the year ended October 31, 2017, 257,500 shares were purchased and no shares were purchased during the year ended October 31, 2016. See Note 8 for additional information on the share repurchase program.

Note 2. Acquisitions

The following is a summary of the allocation of the total purchase consideration for acquisitions that the Company completed during the fiscal periods 2017, 2016 and 2015:

(In millions)	2017			2016			2015
Technology	71.7			32.9			—
Customer Relationships	43.1			47.3			21.0
Trademarks	7.1			13.7			3.2
Non-compete agreement	—			0.1			—
Total identifiable intangible assets	121.9			94.0			24.2
Goodwill	123.1			164.7			16.9
Net (liabilities) assets	(4.8	)		(0.9	)		6.6
Total purchase price	240.2			257.8			47.7

We purchased 100% of the equity interest in all the entities we acquired in fiscal year 2017, 2016 and 2015. All the acquisitions were primarily paid in cash and funded by our debt borrowings. The Company accounted for each acquisition using the acquisition method of accounting. Accordingly, we recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the applicable date of acquisition.

We believe these acquisitions strengthen CooperSurgical's and CooperVision's business through the addition of new or complementary products and services.

The pro forma results of operations of these acquisitions made in fiscal year 2017, 2016 and 2015 have not been presented because the impact of the business combinations described below, individually and in the aggregate, were not material to our consolidated results of operations.

Fiscal Year 2017

On August 3, 2017, CooperVision completed the acquisition of Procornea Holding B.V. (Procornea). Procornea is a Netherlands based manufacturer and distributor of specialty contact lenses, mainly orthokeratology (ortho-k) which expands CooperVision's access to myopia (nearsightedness) management markets with new products. Ortho-k contact lenses are overnight lenses which enable corneal topography correction for Myopia patients. The purchase price allocation is preliminary and we are in the process of finalizing information related to assets, liabilities and the corresponding effect on goodwill.

On June 30, 2017, CooperVision completed the acquisition of Grand Vista LLC, a long-standing distribution partner in Russia. Grand Vista LLC is engaged in contact lens and contact lens solutions and lens care product distribution business in Russia. The purchase price allocation is preliminary and we are in the process of finalizing information related to assets, liabilities and corresponding effect on goodwill.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On November 4, 2016, CooperSurgical completed the acquisition of Wallace, the in-vitro fertilization (IVF) segment of Smiths Medical International, Ltd., a division of Smiths Group plc. Wallace manufactures a range of IVF and ob/gyn products. We have completed the purchase price allocation for this acquisition.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Subsequent Events

On November 1, 2017, subsequent to our fiscal year ended October 31, 2017, CooperSurgical acquired the global rights and business of the PARAGARD Intrauterine Device (IUD) business (PARAGARD) from Teva Pharmaceuticals Industries Limited (Teva) for $1.1 billion.

On December 1, 2017, CooperVision acquired Paragon Vision Sciences, a leading provider of ortho-k specialty contact lenses and oxygen permeable rigid contact lens materials for approximately $80.0 million.

See Note 15. Subsequent Events for more details.

Fiscal Year 2016

Purchase price allocation for the following acquisitions in fiscal year 2016 and 2015 are completed.

On September 6, 2016, CooperVision completed the acquisition of Soflex, an Israel based manufacturer and distributor of soft contact lenses.

On May 31, 2016, CooperSurgical completed the acquisition of Reprogenetics UK, a U.K.-based genetics laboratory specializing in service offerings of preimplantation genetic screening (PGS) and preimplantation genetic diagnosis (PGD) used during the IVF process.

On May 25, 2016, CooperSurgical completed the acquisition of Recombine Inc., a United States based clinical genetic testing company specializing in carrier screening. Recombine operates in the IVF market and creates comprehensive genetic carrier screening tests.

On May 4, 2016, CooperSurgical completed the acquisition of Kivex Biotec A/S (K-Systems), a Danish manufacturer and distributor of equipment, including workstations and incubators for IVF clinics.

On March 31, 2016 CooperSurgical completed the acquisition of Genesis Genetics Inc., a United States based genetics laboratory specializing in PGS and PGD used during the IVF process.

On February 8, 2016, CooperSurgical completed the acquisition of The Pipette Company, an Australian manufacturer and distributor of micro pipettes for the Assisted Reproductive Technology market, in CSI business segment. TPC also manufactures micropipettes for other applications including micromanipulation of non‐human gametes and embryos, DNA injection into cells, stem cell research and other specialized research applications.

On December 17, 2015, we completed the acquisition of Research Instruments Limited (RI), a U.K. manufacturer and supplier of IVF medical devices and systems, in CSI business segment. RI specializes in preimplantation genetic screening (PGS) products, develops and manufactures hardware, software and consumable products.

Fiscal Year 2015

On August 7, 2015, we completed the acquisition of Reprogenetics LLC, a United States based genetics laboratory specializing in PGS and PGD used during the IVF process.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 3. Restructuring and Integration Costs

2014 Sauflon Integration Plan

During the fourth quarter of fiscal 2014 and 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 product and equipment rationalization, workforce reductions and consolidation of duplicative facilities. The total restructuring costs under this plan were $148.3 million. As of October 31, 2016, our activities related to this restructuring and integration plan were essentially complete. There were no charges related to the 2014 Sauflon Integration Plan in fiscal 2017.

In fiscal 2016, we recorded in cost of sales $56.4 million of expense, arising from production-related asset disposals, accelerated depreciation on equipment, and inventory rationalization, primarily related to older lens products, based on our review of products, materials and manufacturing processes of Sauflon. We recorded in cost of sales $1.1 million of employee termination costs. We recorded in selling, general and administrative expense a reduction of $1.1 million due to decreased expected employee termination payments; and we recorded $0.2 million of expense for lease termination costs. In addition, CooperVision incurred $10.0 million of integration costs in fiscal 2016, included in operating expenses.

In fiscal 2015, we recorded in cost of sales $57.7 million of expense, arising from production-related asset disposals and accelerated depreciation on equipment, primarily related to our hydrogel lenses, based on our review of products, materials and manufacturing processes of Sauflon. We recorded in cost of sales $4.0 million of employee termination costs. We recorded in selling, general and administrative expense a reduction of $7.2 million, as a result of decreased estimates in expected employee termination costs and voluntary terminations; and we recorded $0.4 million of expense for lease termination costs. We recorded in research and development expense $0.7 million of employee termination costs. In addition, CooperVision incurred $35.2 million of integration costs in fiscal 2015, included in operating expenses.

A summary of the cumulative total restructuring costs by major component recognized at October 31, 2016, is as follows:

(In millions)	Employee-related				Facilities-related				Product Rationalization				Total
Cumulative amounts as of October 31, 2016	$	17.8			$	1.1			$	129.4			$	148.3

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table summarizes the restructuring activities by major component:

(In millions)	Employee-related				Facilities-related				Product Rationalization				Total
Balance at October 31, 2014	$	19.9			$	0.5			$	—			$	20.4
Additions during fiscal 2015	$	(2.5	)		$	0.4			$	57.7			$	55.6
Payments during the fiscal year	(9.0		)		(0.4		)		—				(9.4		)
Non-cash adjustments (a) (b)	0.2				(0.2		)		(57.7		)		(57.7		)
Balance at October 31, 2015	$	8.6			$	0.3			$	—			$	8.9
Additions during fiscal 2016	—				0.2				56.4				56.6
Payments during the fiscal year	(5.2		)		(0.2		)		—				(5.4		)
Non-cash adjustments (a) (b)	(0.6		)		—				(56.4		)		(57.0		)
Balance at October 31, 2016	$	2.8			$	0.3			$	—			$	3.1
Additions during fiscal 2017	—				—				—				—
Payments during the fiscal year	(1.5		)		—				—				(1.5		)
Non-cash adjustments (a) (b)	(0.8		)		(0.3		)		—				(1.1		)
Balance at October 31, 2017	$	0.5			$	—			$	—			$	0.5

(a) Non-cash adjustments for employee-related and facilities-related costs represent currency translation adjustment.

(b) Non-cash adjustments for product rationalization represent equipment disposals, inventory write-offs and accelerated depreciation.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4. Intangible Assets

Goodwill

(In millions)	CooperVision				CooperSurgical				Total
Balance as of October 31, 2015	$	1,827.6			$	369.5			$	2,197.1
Net additions during the year ended October 31, 2016	9.1				156.9				166.0
Translation	(190.3		)		(8.1		)		(198.4		)
Balance as of October 31, 2016	$	1,646.4			$	518.3			$	2,164.7
Net additions during the year ended October 31, 2017	28.6				94.4				123.0
Translation	60.7				6.4				67.1
Balance as of October 31, 2017	$	1,735.7			$	619.1			$	2,354.8

Of the October 31, 2017 goodwill balance, $117.9 million for CooperSurgical and $19.7 million for CooperVision is expected to be deductible for tax purposes.

Other Intangible Assets

	As of October 31, 2017								As of October 31, 2016
(In millions)	Gross Carrying Amount				Accumulated Amortization & Translation				Gross Carrying Amount				Accumulated Amortization & Translation				Weighted Average Amortization Period
																	(In years)
Trademarks	$	44.5			$	10.3			$	36.6			$	6.8			12
Technology	428.8				173.2				354.8				139.3				11
Customer relationships	335.5				145.3				285.7				121.9				13
License and distribution rights and other	69.2				44.5				65.8				33.8				9
	878.0				$	373.3			742.9				$	301.8			12
Less accumulated amortization and translation	373.3								301.8
Other intangible assets, net	$	504.7							$	441.1

Included in Technology at October 31, 2017 and October 31, 2016, is $7.4 million of acquired in-process research and development from Sauflon that is not amortized.

We estimate that amortization expense for our existing other intangible assets will be approximately $69.0 million in fiscal 2018, $66.5 million in fiscal 2019, $56.5 million in fiscal 2020, $55.0 million in fiscal 2021 and $53.7 million in fiscal 2022.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5. Debt

October 31, (In millions)	2017				2016
Short-term:
Overdraft and other credit facilities	$	23.4			$	17.1
Current portion of long-term debt	—				210.7
Less: unamortized debt issuance cost	—				(1.5		)
	$	23.4			$	226.3
Long term:
Credit Agreement	$	323.0			$	—
Term loans	830.0				1,111.2
Other	0.2				0.2
Less: unamortized debt issuance cost	(3.9		)		(4.0		)
	$	1,149.3			$	1,107.4

Annual maturities of long-term debt as of October 31, 2017, are as follows:

Year (In millions)
2018	$	—
2019	$	323.0
2020	$	—
2021	$	830.2
2022	$	—
Thereafter	$	—

$1.425 billion Term Loan

Subsequent to the fiscal year ended October 31, 2017, on November 1, 2017, in connection with the PARAGARD acquisition, we entered into a five-year, $1.425 billion, senior unsecured term loan agreement by and among the Company, the lenders party thereto and DNB Bank ASA, New York Branch, as administrative agent (the 2017 Term Loan Agreement) which matures on November 1, 2022. The Company used part of the facility to fund the PARAGARD acquisition and used the remainder of the funds to partially repay outstanding borrowings under our revolving credit agreement. Please refer to Note 15. Subsequent Events for more details.

Revolving Credit and Term Loan Agreement on March 1, 2016 (2016 Credit Agreement)

On March 1, 2016, we entered into a Revolving Credit and Term Loan Agreement (2016 Credit Agreement), among the Company, CooperVision International Holding Company, LP, the lenders party thereto and KeyBank National Association, as administrative agent. The 2016 Credit Agreement provides for a multicurrency revolving credit facility in an aggregate principal amount of $1.0 billion and a term loan facility in an aggregate principal amount of $830.0 million, each of which, unless terminated earlier, mature on March 1, 2021. In addition, we have the ability from time to time to request an increase to the size of the revolving credit facility or establish one or more new term loans under the term loan facility in an aggregate amount up to $750.0 million, subject to the discretionary participation of the lenders.

Amounts outstanding under the 2016 Credit Agreement will bear interest, at our option, at either the base rate, or the adjusted LIBO rate or adjusted foreign currency rate (each as defined in the 2016 Credit

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Agreement), plus, in each case, an applicable rate of between 0.00% and 0.75%, in respect of base rate loans and between 1.00% and 1.75% in respect of adjusted LIBO rate or adjusted foreign currency rate loans, in each case in accordance with a pricing grid tied to the Total Leverage Ratio, as defined in the 2016 Credit Agreement.

We pay an annual commitment fee that ranges from 0.125% to 0.25% of the unused portion of the revolving credit facility depending on certain financial ratios. In addition to the annual commitment fee described above, we are also required to pay certain letter of credit and related fronting fees and other administrative fees pursuant to the terms of the 2016 Credit Agreement.

The 2016 Credit Agreement contains customary restrictive covenants, as well as financial covenants that require us to maintain a certain total leverage ratio and interest coverage ratio, each as defined in the 2016 Credit Agreement:

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

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

At October 31, 2017, we were in compliance with the Interest Coverage Ratio at 21.29 to 1.00 and the Total Leverage Ratio at 1.53 to 1.00.

At October 31, 2017, we had $830.0 million outstanding under the term loan and $676.7 million available under the revolving credit agreement.

$700 million Term Loan and $300 million Term Loan

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 (as subsequently amended, the 2014 Term Loan Agreement) with a maturity date of August 4, 2017. 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. We repaid $493.0 million of the outstanding balance in fiscal 2016 and fully repaid the remaining outstanding balance of $207.0 million in the second quarter of fiscal 2017 using the funds from the 2016 Credit Agreement, as well as from cash provided by operations.

At October 31, 2017, we had no outstanding balance under the 2014 Term Loan.

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 (as subsequently amended, the 2013 Term Loan Agreement), with a maturity date of September 12, 2018, subject to amortization of principal of 5.0% per annum payable quarterly beginning October 31, 2016, with the balance payable at maturity. In fiscal 2016, we repaid $15.0 million of the outstanding balance and fully repaid the remaining outstanding balance of $285.0 million in May 2017 using the funds from the 2016 Credit Agreement.

At October 31, 2017, we had no outstanding balance under the 2013 Term Loan.

Amounts outstanding under the 2014 and 2013 Term Loan Agreements (Term Loan Agreements) bear interest, at our option, at either the base rate, or the adjusted LIBO rate (each as defined in the Term Loan Agreements), plus, in each case, an applicable rate of between 0.00% and 0.50% in respect of base rate loans and between 0.75% and 1.50% in respect of adjusted LIBO rate loans, in each case in accordance with a pricing grid tied to the Total Leverage Ratio, as defined in the Term Loan Agreements.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Term Loan Agreements contain 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 agreements, consistent with the 2016 Credit Agreement discussed above.

European Credit Facilities

We maintain European credit facilities in the form of continuing and unconditional guarantees. The aggregate facility limit was $36.3 million and $34.0 million at October 31, 2017 and 2016, respectively. We 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, 2017, $0.7 million of the facility was utilized. The weighted average interest rate on the outstanding balances was 0.9%.

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 $0.7 million at October 31, 2017 and 2016, respectively. At October 31, 2017, none of these facilities 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 $53.0 million and $56.9 million at October 31, 2017 and 2016, respectively. We 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, 2017, $21.2 million of the combined facilities was utilized. The weighted average interest rate on the outstanding balances was 0.4%.

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 $11.4 million and $11.2 million at October 31, 2017 and 2016, respectively. We 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, 2017, $0.7 million of the facilities were utilized. The weighted average interest rate on the outstanding balances was 3.4%.

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, 2017 and October 31, 2016 was $4.9 million and $4.6 million, respectively.

Note 6. Income Taxes

Cooper's effective tax rate (ETR) (provision for income taxes divided by pretax income) was 5.3% , 7.0% and 4.8% for fiscal 2017, 2016 and 2015, respectively. The ETR in fiscal 2017 decreased in comparison to fiscal 2016 due to the shift in the geographic mix of income as well as discrete benefits from adopting ASU 2016-9 (Excess tax benefit from share-based compensation). The ETR in fiscal 2016 increased in comparison to fiscal 2015 partially due to an increase in foreign non-deductible integration and transaction expenses, partially offset by renewal of the R&D tax credit and lower state income taxes.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The ETR is below the United States statutory rate as a majority of our taxable income is earned in foreign jurisdictions with lower tax rates. The ratio of domestic income to worldwide income significantly impacts our overall tax rate due to the fact that the tax rates in the majority of foreign jurisdictions where we operate are significantly lower than the statutory rate in the United States.

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 millions)	2017				2016				2015
Income before income taxes:
United States	$	7.8			$	31.5			$	31.9
Foreign	386.2				264.1				183.6
	$	394.0			$	295.6			$	215.5
Income tax provision	$	21.1			$	20.7			$	10.4

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

Years Ended October 31, (In millions)	2017				2016				2015
Current:
Federal	$	6.9			$	14.6			$	0.2
State	1.8				1.3				1.2
Foreign	19.5				15.5				3.4
	28.2				31.4				4.8
Deferred:
Federal	(3.9		)		(3.9		)		12.0
State	1.4				(0.7		)		(0.5		)
Foreign	(4.6		)		(6.1		)		(5.9		)
	(7.1		)		(10.7		)		5.6
Income tax provision	$	21.1			$	20.7			$	10.4

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 millions)	2017				2016				2015
Computed expected provision for taxes	$	137.9			$	103.5			$	75.4
(Decrease) increase in taxes resulting from:
Income earned outside the United States subject to different tax rates	(114.6		)		(81.2		)		(72.6		)
State taxes, net of federal income tax benefit	3.9				1.2				1.5
Research and development credit	(0.7		)		(1.2		)		(0.7		)
Incentive stock option compensation and non-deductible employee compensation	(12.9		)		0.5				0.4
Tax accrual adjustment	5.0				(5.0		)		3.8
Other, net	2.5				2.9				2.6
Actual provision for income taxes	$	21.1			$	20.7			$	10.4

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

Years Ended October 31, (In millions)	2017				2016
Deferred tax assets:
Accounts receivable, principally due to allowances for doubtful accounts	$	5.4			$	3.3
Inventories	6.1				6.2
Litigation settlements	0.8				0.5
Accrued liabilities, reserves and compensation accruals	50.4				50.3
Foreign deferred tax assets (Puerto Rico tax incentives)	37.9				—
Restricted stock and stock option expenses	39.7				24.5
Net operating loss carryforwards	3.7				2.7
Plant and equipment	—				0.4
Research and experimental expenses - Section 59(e)	5.1				6.7
Tax credit carryforwards	8.7				1.8
Total gross deferred tax assets	157.8				96.4
Less valuation allowance	(59.1		)		(13.3		)
Deferred tax assets	98.7				83.1
Deferred tax liabilities:
Tax deductible goodwill	(32.4		)		(29.5		)
Plant and equipment	(4.8		)		—
Transaction costs	(1.1		)		(1.1		)
Foreign deferred tax liabilities	(13.0		)		(5.6		)
Other intangible assets	(25.9		)		(31.2		)
Total gross deferred tax liabilities	(77.2		)		(67.4		)
Net deferred tax assets	$	21.5			$	15.7

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 allowance at October 31, 2017. 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.

A valuation allowance of $59.1 million and $13.3 million was recorded against our gross deferred tax asset balance as of October 31, 2017, and October 31, 2016, respectively. The increase is principally related to previously unrecorded deferred taxes associated with certain tax incentives offered by the Puerto Rican government in the areas of local manufacturing, energy use and R&D that have been subject to a full valuation allowance with no impact to our Consolidated Statements of Income.

As of October 31, 2017, there was approximately $2.5 billion of undistributed earnings in our foreign subsidiaries which we have not provided for federal income tax since we intend to reinvest this amount outside the United States indefinitely.

At October 31, 2017, we had federal net operating loss carryforwards of $31.8 million and state net operating loss carryforwards of $43.7 million. Additionally, we had $7.0 million of federal alternative minimum tax credits, $7.4 million of federal research credits and $1.5 million of California research credits. The federal net operating loss and federal research credits carryforwards expire on various dates between 2026 through 2037, and the federal alternative minimum tax credits carry forward indefinitely. The state net operating loss carryforwards expire on various dates between 2019 through 2037, 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, 2015	$	40.3
Increase from prior year's UTB's	4.5
Increase from current year's UTB's	6.7
UTB (decrease) from expiration of statute of limitations	(11.6		)
Balance at October 31, 2016	39.9
Increase from prior year's UTB's	12.9
Increase from current year's UTB's	9.9
UTB (decrease) from expiration of statute of limitations	(2.8		)
Balance at October 31, 2017	$	59.9

As of October 31, 2017, we had unrecognized tax benefits of $40.4 million, including $3.7 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 tax as additional income tax expense.

Included in the balance of unrecognized tax benefits at October 31, 2017, is $6.1 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, 2017, the tax years for which we remain subject to United States federal income tax assessment upon examination are 2014 through 2016, 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 2013 through 2016.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 7. Earnings Per Share

Years Ended October 31,
(In millions, except for earnings per share)	2017				2016				2015
Net income attributable to Cooper stockholders	$	372.9			$	273.9			$	203.5
Basic:
Weighted average common shares	48.9				48.5				48.5
Basic earnings per share attributable to Cooper stockholders	$	7.63			$	5.65			$	4.20
Diluted:
Weighted average common shares	48.9				48.5				48.5
Effect of dilutive stock options	0.7				0.5				0.7
Diluted weighted average common shares	49.6				49.0				49.2
Diluted earnings per share attributable to Cooper stockholders	$	7.52			$	5.59			$	4.14

The following table sets forth stock options to purchase our 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)	2017				2016			2015
Stock option shares excluded	90				392			123
Range of exercise prices	$	175.31			$131.60-$162.69			$	162.28
Restricted stock units excluded	3				2			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 millions)	Foreign Currency Translation Adjustment				Change in Value of Derivative Instruments				Minimum Pension Liability				Total
Balance at October 31, 2014	$	(92.4	)		$	(0.1	)		$	(13.7	)		$	(106.2	)
Gross change in value for the period	(79.4		)		—				(10.0		)		(89.4		)
Reclassification adjustments for loss realized in income	—				0.1				—				0.1
Tax effect for the period	—				—				3.9				3.9
Balance at October 31, 2015	$	(171.8	)		$	—			$	(19.8	)		$	(191.6	)
Gross change in value for the period	$	(289.6	)		$	—			$	(13.7	)		$	(303.3	)
Tax effect for the period	—				—				5.3				5.3
Balance at October 31, 2016	$	(461.4	)		$	—			$	(28.2	)		$	(489.6	)
Gross change in value for the period	$	107.7			$	—			$	10.8			$	118.5
Tax effect for the period	—				—				(4.2		)		(4.2		)
Balance at October 31, 2017	$	(353.7	)		$	—			$	(21.6	)		$	(375.3	)

Share Repurchases

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

During the fiscal year ended October 31, 2017, we repurchased 258 thousand shares of our common stock for $55.0 million and approximately $563.5 million remained authorized for repurchase under the program. During the three months ended October 31, 2017, we repurchased 108 thousand shares of our common stock for $25.5 million at an average purchase price of $237.12 per share. During the second quarter of fiscal 2017, we repurchased 150 thousand shares of our common stock for $29.5 million at an average price of $196.82.

During the fiscal year ended October 31, 2016, we did not repurchase any shares under the 2012 Share Repurchase Program.

Cash Dividends

In fiscal 2017 and 2016, we paid semiannual dividends of 3 cents per share: an aggregate of $1.5 million or 3 cents per share on February 9, 2017, to stockholders of record on January 23, 2017; $1.5 million or 3 cents per share on August 7, 2017, to stockholders of record on July 21, 2017; $1.4 million or 3 cents per share on February 9, 2016, to stockholders of record on January 22, 2016; and $1.5 million or 3 cents per share on August 5, 2016, to stockholders of record on July 22, 2016.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Stockholders' Rights Plan

Our stockholders' rights plan, where each outstanding share of our common stock carried one-half of one preferred share purchase right expired on October 29, 2017.

Note 9. Stock Plans

At October 31, 2017, Cooper had the following share-based compensation plans:

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

In March 2006, we received stockholder approval of the 2006 Directors Plan. The 2006 Directors Plan was subsequently amended and restated, and approved by stockholders, in March 2009 and again in March 2011. The Board of Directors further amended the Second Amended and Restated 2006 Directors Plan in October 2011, October 2012, October 2013 and October 2016.

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 equity award grants to Non-Employee Directors on November 15 of each fiscal year which subsequently vest on the first anniversary of the date of grant. Grants may be awarded in the form of stock options, restricted stock, restricted stock units (RSUs), or a combination of award types. Awards will have a total grant value of $270,000, or $285,500 in the case of the Lead Director and $297,000 in the case of the Chairman of the Board.

Under the 2006 Directors Plan, grants of stock options will have an exercise price equal to 100% of fair market value on the date of grant and shall expire no more than 10 years after the grant date. Awards of restricted stock provide the right to purchase shares for $0.10 per share, subject to restrictions on sale or transfer which lapse on the first anniversary of the date of grant. Restricted shares retain dividend and voting rights. RSUs entitle the recipient to receive shares of common stock, without any payment in cash or property. Legal ownership of the shares is not transferred until the unit vests and RSUs have no dividend or voting rights prior to vesting.

As of October 31, 2017, 139,874 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, we received stockholder approval of the 2007 LTIP. The 2007 LTIP was subsequently amended and restated, and granted stockholder approval in March 2009, March 2011, and March 2016.

The Third Amended and Restated 2007 LTIP is designed to increase our stockholder value by attracting, retaining and motivating key employees and consultants who directly influence our profitability. The Third Amended and Restated 2007 LTIP authorizes either our 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, 2026, up to 6,930,000 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 2017, we granted stock options, restricted stock units (RSUs) and performance share awards to employees under the Third Amended and Restated 2007 LTIP. All stock options 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 and RSUs have no dividend or voting rights prior to vesting. 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, 2017, 1,801,934 shares remained available under the Third 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)	2017				2016				2015
Selling, general and administrative expense	$	33.1			$	26.2			$	29.2
Cost of sales	2.8				2.6				2.8
Research and development expense	1.3				1.1				0.9
Total compensation expense	$	37.2			$	29.9			$	32.9
Related income tax benefit	$	11.4			$	9.0			$	10.2

We capitalized share-based compensation expense as part of the cost of inventory in the amounts of $3.7 million, $2.6 million, and $2.8 million during the fiscal years ended October 31, 2017, 2016 and 2015, respectively.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 our common 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,	2017			2016			2015
Expected life	5.5 years			4.8 - 5.5 years			4.8 - 5.5 years
Expected volatility	24.5	%		27.6% - 27.7%			29.0% - 29.5%
Risk-free interest rate	1.2%			1.3% - 1.5%			1.3% - 1.5%
Dividend yield	0.03	%		0.04	%		0.04	%

The activity and status of our stock option plans 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, 2016	1,105,388			$	107.74
Granted	194,416			$	175.31
Exercised	200,108			$	53.42
Forfeited or expired	35,230			$	136.90
Outstanding at October 31, 2017	1,064,466			$	129.33			6.95
Vested and expected to vest at October 31, 2017	1,045,509			$	128.99			6.92		$	116,337,456
Vested and exercisable at October 31, 2017	439,137			$	106.07			5.44		$	58,929,605

The weighted-average fair value of each option granted during fiscal 2017, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 LTIP was $44.00. No options were granted under the 2006 Directors Plan in fiscal 2017. The expected requisite service period for options granted to employees in fiscal 2017 was 60 months. The total intrinsic value of options exercised during the fiscal year ended October 31, 2017 was $31.6 million.

The weighted-average fair value of each option granted during fiscal 2016, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 LTIP was $37.24. For the 2006 Directors Plan, the weighted-average fair values of options granted for 2016 was $43.91.

Stock awards outstanding under our 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 five years based on 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 and expire no later than ten years after the grant date. We generally recognize compensation expense ratably over the vesting period.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

However, Directors' options grants would have been expensed on the date of grant as the 2006 Directors Plan did not contain a substantive future requisite service period. No options were granted under the 2006 Directors Plan in fiscal 2017. As of October 31, 2017, there was $10.7 million of total unrecognized compensation cost related to nonvested options, which is expected to be recognized over a remaining weighted-average vesting period of 3.1 years.

Restricted Stock Units

RSUs granted under the 2007 LTIP generally vest over 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, 2017, there was $60.0 million of total unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a remaining weighted-average vesting period of 3.2 years.

The status of our non-vested RSUs is summarized below:

	Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Non-vested RSUs at October 31, 2016	507,779			$	131.63
Granted	201,877			$	177.05
Vested and issued	150,423			$	126.27
Forfeited or expired	25,381			$	139.65
Non-vested RSUs at October 31, 2017	533,852			$	149.93

Performance Units

Performance units are granted to selected 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 2017 through fiscal 2019. Subject to limited exceptions set forth in the performance share plan, any shares earned will be distributed in the subsequent fiscal year 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 quarter 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, 2017, there was $4.7 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 1.3 years.

Performance units granted on February 2, 2015 completed their performance period on October 31, 2017 and met 100% 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 2018. We also granted performance unit awards on January 29, 2016 and February 1, 2017 and with specific performance goals for each period ending on October 31, 2018 and October 31, 2019, 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.

Beginning in fiscal 2016, we refined the method used to determine the service and interest cost components of our net periodic benefit cost. Previously, the cost was determined using a single weighted-average discount rate derived from the yield curve. Under the refined method, known as the spot rate approach, we will use individual spot rates along the yield curve that correspond with the timing of each benefit payment. We believe this change provides a more precise measurement of service and interest costs by improving the correlation between projected cash outflows and corresponding spot rates on the yield curve. Compared to the previous method, the spot rate approach decreased the service and interest components of our benefit costs in fiscal 2016, which was immaterial. There is no impact on the total benefit obligation. We accounted for this change prospectively as a change in accounting estimate.

The following table sets forth the Plan's benefit obligations and fair value of the Plan assets at October 31, 2017, 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, 2017.

Retirement Income Plan

Years Ended October 31, (In millions)	2017				2016				2015
Change in benefit obligation
Benefit obligation, beginning of year	$	138.9			$	117.3			$	101.1
Service cost	10.2				8.9				8.8
Interest cost	4.4				4.3				4.6
Benefits paid	(2.6		)		(2.3		)		(4.7		)
Actuarial loss (gain)	0.8				10.7				7.5
Benefit obligation, end of year	$	151.7			$	138.9			$	117.3
Change in plan assets
Fair value of plan assets, beginning of year	$	89.2			$	79.5			$	72.2
Actual return on plan assets	16.2				2.0				2.0
Employer contributions	10.0				10.0				10.0
Benefits paid	(2.6		)		(2.3		)		(4.7		)
Fair value of plan assets, end of year	$	112.8			$	89.2			$	79.5
Funded status at end of year	$	(38.9	)		$	(49.7	)		$	(37.8	)

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended October 31, (In millions)	2017				2016				2015
Amounts recognized in the statement of financial position consist of:
Noncurrent asset	$	—			$	—			$	—
Current liability	—				—				—
Noncurrent liabilities	(38.9		)		(49.7		)		(37.8		)
Net amount recognized at year end	$	(38.9	)		$	(49.7	)		$	(37.8	)

Years Ended October 31, (In millions)	2017				2016				2015
Amounts recognized in accumulated other comprehensive income consist of:
Net transition obligation	$	—			$	—			$	—
Prior service cost	—				—				—
Net loss	34.9				45.8				32.1
Accumulated other comprehensive income	$	34.9			$	45.8			$	32.1

Years Ended October 31, (In millions)	2017				2016				2015
Information for pension plans with accumulated benefit obligations in excess of plan assets
Projected benefit obligation	$	151.7			$	138.9			$	117.3
Accumulated benefit obligation	$	133.3			$	121.2			$	102.6
Fair value of plan assets	$	112.8			$	89.2			$	79.5

Years Ended October 31, (In millions)	2017				2016				2015
Reconciliation of prepaid (accrued) pension cost
Accrued pension cost at prior fiscal year end	$	(4.0	)		$	(5.7	)		$	(6.8	)
Net periodic benefit cost	10.0				8.3				8.9
Contributions made during the year	10.0				10.0				10.0
Accrued pension cost at fiscal year end	$	(4.0	)		$	(4.0	)		$	(5.7	)

Years Ended October 31, (In millions)	2017				2016				2015
Components of net periodic benefit cost and other amounts recognized in the fiscal year
Net periodic benefit cost:
Service cost	$	10.2			$	8.9			$	8.8
Interest cost	4.4				4.3				4.6
Expected return on plan assets	(7.3		)		(6.6		)		(6.0		)
Amortization of transitional (asset) or obligation	—				—				—
Amortization of prior service cost	—				—				—
Recognized actuarial loss	2.7				1.7				1.5
Net periodic pension cost	$	10.0			$	8.3			$	8.9

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended October 31, (In millions)	2017				2016				2015
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net transition obligation	$	—			$	—			$	—
Prior service cost	—				—				—
Net loss (gain)	(8.1		)		15.4				11.5
Amortizations of net transition obligation	—				—				—
Amortizations of prior service cost	—				—				—
Amortizations of net (gain)	(2.7		)		(1.7		)		(1.5		)
Total recognized in other comprehensive income	$	(10.8	)		$	13.7			$	10.0
Total recognized in net periodic benefit cost and other comprehensive income	$	(0.8	)		$	22.0			$	18.9

There is no estimated net transition obligation or prior service cost, but $1.7 million of estimated net loss for the plan will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year.

Years Ended October 31,	2017			2016			2015
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:
Projected Benefit Obligation	3.74	%		4.25	%		4.25	%
Service Cost	3.90	%		4.42	%		4.25	%
Interest Cost	3.23	%		3.70	%		4.25	%
Discount rate for determining benefit obligations at year end	3.75	%		3.74	%		4.25	%
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	%		8.00	%
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	10/31/2017			10/31/2016			10/31/2015

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 3.74%, which is similar to prior fiscal year, had been used, the projected benefit obligation would have been $152.0 million, and the accumulated benefit obligation would have been $133.5 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,	2017			2016			2015
Asset category
Cash and cash equivalents	0.9	%		4.9	%		2.2	%
Corporate common stock	12.2	%		8.9	%		9.0	%
Equity mutual funds	49.9	%		47.2	%		52.0	%
Real estate funds	2.9	%		4.3	%		3.3	%
Bond mutual funds	34.1	%		34.7	%		33.5	%
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.

Fair Value Measurement of Plan Assets

(In millions)	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	$	1.1			$	1.1			$	—			$	—
Corporate common stock	13.7				13.7				—				—
Equity mutual funds	56.2				56.2				—				—
Real estate funds	3.3				3.3				—				—
Bond mutual funds	38.5				38.5				—				—
Total	$	112.8			$	112.8			$	—			$	—

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 $10.0 million for each of the fiscal years 2017, 2016 and 2015. 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 2018.

Estimated Future Benefit Payments

Years (In millions)
2018	$	3.3
2019	$	3.8
2020	$	4.3
2021	$	4.8
2022	$	5.4
2023-2027	$	36.1

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, were $5.2 million, $4.4 million and $4.2 million for the years ended October 31, 2017, 2016 and 2015, 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

At October 31, 2017 and October 31, 2016, 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:

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

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 at October 31, 2017 and October 31, 2016 and are categorized as Level 2 of the fair value hierarchy. The Company did not have any derivative assets or liabilities that may include interest rate swaps, cross currency swaps or foreign currency forward contracts as of October 31, 2017 and October 31, 2016.

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, 2017, were payable as follows:

(In millions)
2018	$	33.4
2019	30.0
2020	25.8
2021	21.7
2022	18.8
2023 and thereafter	145.8
	$	275.5

Aggregate rental expense for both cancelable and noncancelable contracts amounted to $32.2 million, $29.9 million and $27.5 million in 2017, 2016 and 2015, 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. (for purpose of this section, collectively “CooperVision” or “we”) for patent infringement. In the action, JJVC alleged that certain CooperVision products infringe JJVC’s European Patent No. EP 1 754 728 B1, and was seeking damages and to enjoin these products from selling in Germany. We were challenging the validity of the patent before the European Patent Office.

In July 2015, CooperVision made a one-time lump sum payment to JJVC of $17.0 million to settle our existing patent disputes. As a result of the settlement, we withdrew our opposition to the JJVC patent filed before the European Patent Office, and JJVC withdrew its complaint of infringement pending before the district court of Dusseldorf, Germany. The settlement included worldwide, non-exclusive, perpetual and royalty-free cross-licenses between the parties to certain patents including the JJVC patent referenced above. The settlement also included reciprocal covenants not to sue on those patents which were not licensed with respect to each party’s current, core commercialized product offerings, including all silicone hydrogel lenses. Neither party admitted any liability as part of the settlement.

Since March 2015, over 50 putative class action complaints were filed by contact lens consumers alleging that contact lens manufacturers, in conjunction with their respective Unilateral Pricing Policy (UPP), conspired to reach agreements between each other and certain distributors and retailers regarding the prices

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

at which certain contact lenses could be sold to consumers. The plaintiffs are seeking damages against CooperVision, Inc., other contact lens manufacturers, distributors and retailers, in various courts around the United States. In June 2015, all of the class action cases were consolidated and transferred to the United States District Court for the Middle District of Florida. CooperVision and the other defendants jointly filed a motion to dismiss the complaints in December 2015. In June 2016, the motion to dismiss with respect to claims brought under the Maryland Consumer Protection Act was granted, but the motion to dismiss with respect to claims brought under Section 1 of the Sherman Act and other state laws was denied. The actions currently are in discovery. In March 2017, the plaintiffs filed a motion for class certification. In August 2017, CooperVision entered into a settlement agreement with the plaintiffs, without any admission of liability, to settle all claims against CooperVision, subject to Court approval of the settlement. The Company recorded a settlement accrual of $3.0 million in the third quarter fiscal ended July 31, 2017.

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company does not believe that an estimate of possible loss or a range of loss can be made at this time. Legal fees are recognized as incurred.

Other

The UK Tax Authorities have begun an inquiry regarding the application of UK Diverted Profits Tax (DPT) to us for fiscal year 2015. We believe that the transactions in question were at arm’s length with no intention to divert profit from the UK and therefore are outside the intended reach of the Diverted Profit Tax.

On December 20, 2017, the U.K. Tax Authorities issued a DPT charging notice of approximately GBP 31.0 million with respect to the transfer out of the United Kingdom of certain intellectual property rights in connection with the 2014 acquisition of Sauflon Pharmaceutical Ltd. Although the taxes were paid on the transfer, the UK Tax Authorities are challenging the value assigned to such property. We intend to contest the charging notice vigorously. The process for resolving such a notice can be lengthy and could involve litigation. The company is cooperating with the Tax authorities to resolve this issue. The outcome of this matter cannot be predicted with certainty and may have an adverse impact on our financial condition and results.

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, and amortization of intangible assets. Corporate operating loss is principally corporate headquarters expense. Interest expense, loss on extinguishment of debt and other income and expenses are not allocated to individual segments.

One customer, a CooperVision contact lens distributor, accounted for approximately 11% of our consolidated net revenue in both the fiscal year ended October 31, 2017 and October 31, 2016. No customers accounted for 10% or more of our consolidated net revenue in the fiscal year ended October 31, 2015.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 millions)	2017				2016				2015
CooperVision net sales by category:
Toric lens	$	526.8			$	480.2			$	440.1
Multifocal lens	177.2				169.8				162.1
Single-use sphere lens	438.3				403.1				357.2
Non single-use sphere and other	531.8				524.1				528.4
Total CooperVision net sales	1,674.1				1,577.2				1,487.8
CooperSurgical net sales	464.9				389.6				309.3
Total net sales	$	2,139.0			$	1,966.8			$	1,797.1

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, 2017, follows:

(In millions)	CooperVision				CooperSurgical				Corporate				Consolidated
2017
Net sales	$	1,674.1			$	464.9			$	—			$	2,139.0
Operating income (loss)	$	418.4			$	58.5			$	(47.8	)		$	429.1
Interest expense													33.4
Other expense, net													1.7
Income before income taxes													$	394.0
Identifiable assets	$	3,562.6			$	1,107.5			$	188.6			$	4,858.7
Depreciation expense	$	115.0			$	4.7			$	0.3			$	120.0
Amortization expense	$	36.7			$	31.7			$	—			$	68.4
Capital expenditures	$	108.2			$	18.9			$	0.1			$	127.2
2016
Net sales	$	1,577.2			$	389.6			$	—			$	1,966.8
Operating income (loss)	$	309.8			$	60.2			$	(45.9	)		$	324.1
Interest expense													26.2
Other expense, net													2.3
Income before income taxes													$	295.6
Identifiable assets	$	3,382.4			$	907.1			$	189.1			$	4,478.6
Depreciation expense	$	131.3			$	5.9			$	0.3			$	137.5
Amortization expense	$	40.1			$	20.7			$	—			$	60.8
Capital expenditures	$	142.8			$	9.8			$	—			$	152.6
2015
Net sales	$	1,487.8			$	309.3			$	—			$	1,797.1
Operating income (loss)	$	229.8			$	56.1			$	(49.2	)		$	236.7
Interest expense													18.1
Other expense, net													3.1
Income before income taxes													$	215.5
Identifiable assets	$	3,714.6			$	674.9			$	73.0			$	4,462.5
Depreciation expense	$	134.0			$	5.6			$	0.3			$	139.9
Amortization expense	$	36.6			$	14.9			$	—			$	51.5
Capital expenditures	$	238.3			$	4.6			$	0.1			$	243.0

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, 2017, follows:

(In millions)	United States				Europe				Rest of World, Other Eliminations & Corporate				Consolidated
2017
Sales to unaffiliated customers	$	931.1			$	746.2			$	461.7			$	2,139.0
Sales between geographic areas	255.7				440.5				(696.2		)		—
Net sales	$	1,186.8			$	1,186.7			$	(234.5	)		$	2,139.0
Operating income	$	37.8			$	1.6			$	389.7			$	429.1
Long-lived assets	$	472.8			$	352.3			$	85.0			$	910.1
2016
Sales to unaffiliated customers	$	886.5			$	681.1			$	399.2			$	1,966.8
Sales between geographic areas	254.7				464.1				(718.8		)		—
Net sales	$	1,141.2			$	1,145.2			$	(319.6	)		$	1,966.8
Operating income	$	77.7			$	6.0			$	240.4			$	324.1
Long-lived assets	$	464.1			$	334.4			$	79.2			$	877.7
2015
Sales to unaffiliated customers	$	811.9			$	647.3			$	337.9			$	1,797.1
Sales between geographic areas	250.0				493.1				(743.1		)		—
Net sales	$	1,061.9			$	1,140.4			$	(405.2	)		$	1,797.1
Operating income (loss)	$	30.7			$	(37.6	)		$	243.6			$	236.7
Long-lived assets	$	494.2			$	407.9			$	65.0			$	967.1

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 14. Selected Quarterly Financial Data (Unaudited)

(In millions, except for earnings per share)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
2017
Net sales	$	499.1			$	522.4			$	556.0			$	561.5
Gross profit	$	312.4			$	343.9			$	356.2			$	353.4
Income before income taxes	$	80.1			$	109.5			$	107.7			$	96.6
Net income attributable to Cooper stockholders	$	75.8			$	104.9			$	103.6			$	88.6
Earnings per share attributable to Cooper stockholders - basic	$	1.55			$	2.14			$	2.12			$	1.82
Earnings per share attributable to Cooper stockholders - diluted	$	1.53			$	2.12			$	2.09			$	1.78
2016
Net sales	$	449.6			$	483.8			$	514.7			$	518.7
Gross profit	$	262.0			$	298.5			$	316.6			$	296.0
Income before income taxes	$	50.7			$	82.6			$	93.4			$	68.9
Net income attributable to Cooper stockholders	$	51.4			$	74.1			$	87.9			$	60.5
Earnings per share attributable to Cooper stockholders - basic	$	1.06			$	1.53			$	1.81			$	1.25
Earnings per share attributable to Cooper stockholders - diluted	$	1.05			$	1.52			$	1.79			$	1.23

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 15. Subsequent Events

PARAGARD Acquisition

On November 1, 2017, subsequent to our fiscal year ended October 31, 2017, CooperSurgical acquired the global rights and business of the PARAGARD Intrauterine Device (IUD) business (PARAGARD) from Teva Pharmaceuticals Industries Limited (Teva) for $1.1 billion.

This acquisition broadens and strengthens CooperSurgical's current product portfolio in office and surgical procedures. PARAGARD is the only hormone-free, long lasting, reversible contraceptive option approved by FDA available in the United States and IUDs represent a large and growing segment of the contraceptive market.

We have not yet completed the initial purchase price allocation for this acquisition due to the timing of the close of acquisition, including obtaining all of the information required for the valuation of the acquired intangible assets, goodwill, assets and liabilities assumed.

Due to the timing of the close of the PARAGARD acquisition, supplemental pro forma information has not been provided as compilation of such data is impracticable since Teva has not accounted PARAGARD as a separate entity, subsidiary or division, standalone financial statements were not readily available. The pro forma revenue and earnings of the combined financial will be included in our Form 10-Q for the fiscal quarter ending January 31, 2018.

$1.425 billion Term Loan

In September 2017, the Company arranged a commitment for a Bridge Loan Facility of $1.1 billion to support funding of the anticipated PARAGARD acquisition. Proceeds from the Bridge Loan, if drawn, were intended to be used to finance the acquisition of PARAGARD. In October 2017, the Company terminated the commitments in respect of the Bridge Loan Facility and no bridge loans were drawn because we secured the term loan agreement described below.

Subsequent to the fiscal year ended October 31, 2017, on November 1, 2017, in connection with the PARAGARD acquisition, we entered into a new five-year, $1.425 billion, senior unsecured term loan agreement by and among the Company, the lenders party thereto and DNB Bank ASA, New York Branch, as administrative agent (the 2017 Term Loan Agreement) which matures on November 1, 2022. The Company used part of the facility to fund the PARAGARD acquisition and used the remainder of the funds to partially repay outstanding borrowings under our revolving credit agreement.

Amounts outstanding under the 2017 Term Loan Agreement will bear interest, at our option, at either the base rate, or the adjusted LIBO rate (each as defined in the 2017 Term Loan Agreement), plus, in each case, an applicable rate of, between 0.00% and 0.75% in respect of base rate loans and between 1.00% and 1.75% in respect of adjusted LIBO rate loans, in each case in accordance with a pricing grid tied to the Total Leverage Ratio as defined in the 2017 Term Loan Agreement.

The 2017 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 2017 Term Loan Agreement, consistent with the 2016 Credit Agreement discussed in Note 5.

Other Acquisition

THE COOPER COMPANIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On December 1, 2017, CooperVision acquired Paragon Vision Sciences, a leading provider of orthokeratology (ortho-k) specialty contact lenses and oxygen permeable rigid contact lens materials for approximately $80.0 million. This acquisition broadens and strengthens CooperVision's existing product portfolio.

The pro forma results of operations of this acquisition will not be presented as the effects of the business combination is not material to our consolidated results of operations.

THE COOPER COMPANIES, INC. AND SUBSIDIARIES