Cooper Companies COO · USD

Note 12. Business Segment InformationThe Company discloses information about its operating segments, which were established based on the way that our Chief Operating Decision Maker (CODM) organizes segments within the Company for making operating decisions and assessing financial performance. Our CODM is our Chief Executive Officer. The Company's two operating segments are described below. •CooperVision. Competes in the worldwide contact lens market by developing, manufacturing and marketing a broad range of products for contact lens wearers, featuring advanced materials and optics.•CooperSurgical. Competes in the fertility and women's health care market through its diversified portfolio of products and services, including fertility products and services, medical devices, cryostorage (such as cord blood and cord tissue storage) and contraception.The CODM uses operating income, as presented in our financial reports, as the primary measure of segment profitability to assess the performance of the segments and make decisions on resource allocation across segments. The Company does not allocate costs from corporate functions to segment operating income. The Company uses the same accounting policies to generate segment results as it does for consolidated results.No customers accounted for 10% or more of our consolidated net revenue in fiscal 2025, 2024 and 2023. Total identifiable assets are those used in continuing operations except cash and cash equivalents, which the Company includes as corporate assets. The following table presents a summary of our business segment net sales:(In millions)202520242023CooperVision net sales by category:Toric and multifocal$1,351.3 $1,257.2 $1,134.4 Sphere, other1,392.5 1,352.2 1,289.3 Total CooperVision net sales2,743.8 2,609.4 2,423.7 CooperSurgical net sales by category:Office and surgical 824.0 774.7 689.5 Fertility524.6 511.3 480.0 Total CooperSurgical net sales1,348.6 1,286.0 1,169.5 Total net sales$4,092.4 $3,895.4 $3,593.2 Information by business segment for each of the years in the three-year period ended October 31, 2025, follows:(In millions)CooperVisionCooperSurgicalCorporate (1)Consolidated2025Net sales$2,743.8 $1,348.6 $— $4,092.4 Cost of sales932.6 477.7 — 1,410.3 Amortization expense21.0 178.2 — 199.2 Selling, general and administrative expense969.3 568.4 90.1 1,627.8 Research and development expense91.3 80.9 — 172.2 Operating income (loss)$729.6 $43.4 $(90.1)$682.9 Interest expense100.0 Other expense, net16.

Note 6. Income TaxesComponents of income before income taxes:Years Ended October 31,(In millions)202520242023Income before income taxes:United States$(143.0)$(87.1)$(135.7)Foreign709.5 669.4 548.6 $566.5 $582.3 $412.9 Components of provision for income taxes: Years Ended October 31,(In millions)202520242023Current:Federal$28.8 $38.2 $37.3 State3.8 1.3 3.7 Foreign23.8 31.6 33.0 Total current provision for income taxes56.4 71.1 74.0 Deferred:Federal(5.1)(19.6)(36.7)State(1.5)0.5 (7.5)Foreign141.8 138.0 88.9 Total deferred provision for income taxes135.2 118.9 44.7 Total provision for income taxes$191.6 $190.0 $118.7 Reconciliation between the expected provision for income taxes at the U.S. federal statutory rate and the provision for income taxes:Years Ended October 31,(In millions)202520242023Provision for income taxes at United States statutory tax rate$118.9 $122.3 $86.7 (Decrease) increase in taxes resulting from:Foreign earnings in jurisdictions with different tax rates20.5 27.8 7.0 Foreign earnings subject to United States tax50.7 45.5 34.3 Excess tax benefits from share-based compensation(0.3)(5.1)(2.4)Changes in valuation allowance10.1 — — Changes in unrecognized tax benefits(12.5)0.6 — State tax provision1.0 1.2 (4.2)Nontaxable or nondeductible items9.2 9.4 0.1 Prior year tax returns(2.4)(6.3)0.7 Other, net(3.6)(5.4)(3.5)Provision for income taxes$191.6 $190.0 $118.7 Components of deferred tax assets and liabilities:Years Ended October 31,(In millions)20252024Deferred tax assets:Inventory$55.6 $43.0 Employee compensation and benefits32.7 34.2 Lease liabilities49.3 43.0 Accrued liabilities90.0 89.4 Net operating loss carryforwards250.9 229.6 Foreign goodwill938.8 1,129.5 Foreign intangible assets859.4 817.9 Other deferred tax assets63.4 59.5 Total gross deferred tax assets2,340.1 2,446.1 Less: valuation allowance(32.8)(23.3)Deferred tax assets2,307.3 2,422.8 Deferred tax liabilities:Property, plant and equipment(67.8)(51.7)Right of use assets(45.5)(40.6)U.S. goodwill(52.7)(44.5)U.S. intangible assets(115.7)(130.4)Other deferred tax liabilities(41.4)(41.3)Total gross deferred tax liabilities(323.1)(308.5)Net deferred tax assets$1,984.2 $2,114.3 Changes in valuation allowance:Years Ended October 31,(In millions)202520242023Beginning balance$23.3 $20.7 $60.1 Increases16.82.82.6Decreases(7.3)(0.2)(42.0)Ending balance$32.8 $23.3 $20.

Note 2. Operating LeasesThe following table presents information about leases on the Consolidated Balance Sheets: October 31,(In millions)20252024Operating LeasesOperating lease right-of-use assets$270.9$260.7Operating lease liabilities, current37.838.6Operating lease liabilities, non-current 240.5230.8Total operating lease liabilities$278.3$269.4Weighted-average remaining lease term (in years)10.710.3Weighted-average discount rate5%4%Operating lease expense for the fiscal years ended October 31, 2025, 2024 and 2023 was $56.2 million, $47.4 million and $48.1 million.Maturity of Lease Liabilities The minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of October 31, 2025, are: (In millions)2026$48.5 202744.5 202839.8 202934.6 203028.2 Thereafter163.2 Total lease payments$358.8 Less: interest80.5 Present value of lease liabilities$278.3 Excluded from the above table are additional leases to expand manufacturing as well as research and development capacity that have not yet commenced. The undiscounted lease payments are estimated at $140.2 million for leases that will commence starting in fiscal 2026 with initial terms ranging from 20 to 24 years.

Note 3. Acquisitions and Joint VentureAll acquisitions were funded by cash generated from operations or facility borrowings.The Company believes these acquisitions strengthen CooperSurgical's and CooperVision's businesses through the addition of new distributors or complementary products and services.Fiscal Year 2024On August 1, 2024, CooperSurgical completed the acquisition of obp Surgical, a U.S.-based medical device company with a suite of single-use cordless surgical retractors with integrated light source and evacuation channels. The purchase price of the acquisition was $100.0 million. Assets acquired consisted primarily of $45.6 million of developed technology, $8.5 million of customer relationships, $7.7 million of inventory, $5.4 million of other net assets, and $50.6 million of goodwill, which is primarily related to expected synergies from combined operations. The goodwill is not deductible for tax purposes.On June 7, 2024, CooperSurgical acquired a fertility company that specializes in sperm separation devices. The purchase price of the acquisition was $33.5 million. The Company accounted for this acquisition as an asset acquisition, whereby the Company allocated the total cost of the acquisition to the net assets acquired on the basis of their estimated relative fair values on the acquisition date. The primary asset acquired in this asset acquisition is a composite intangible asset of $39.6 million. The value of the composite intangible asset reflects, in addition to the purchase price, a deferred tax liability of $8.3 million arising from book/tax basis differences generated upon the acquisition. The composite intangible asset encompasses the portfolio of intellectual property associated with the sperm separation devices including the patents, trademarks, customer relationships, regulatory approvals, and commercialization rights, which have been valued as a single composite intangible asset as they are inextricably linked.On November 1, 2023, CooperSurgical completed the acquisition of select Cook Medical assets focused primarily on the obstetrics, doppler monitoring, and gynecology surgery markets. The purchase price of the acquisition was $300.0 million, with $200.0 million paid at closing and two cash payments of $50.0 million each to be paid on November 1, 2024, and November 1, 2025. The present value of the acquisition purchase price was $291.6 million, which is included in the Company's balance sheet.

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our information assets and communication networks and mitigate risks to our assets, data, employees and customers. Our cybersecurity risk management program includes a cybersecurity incident response plan which is regularly updated to include structured processes encompassing preparation, identification, notification, containment, analysis, eradication, recovery and follow up.We have designed and assessed our program based on the Center for Internet Security Critical Security Controls (CIS Controls) and Safeguards. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the CIS Controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.Our cybersecurity risk management program includes:•responsibility for inventory and control of enterprise and software assets, technical and administrative controls and testing of our controls and security measures; •risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;•a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;•the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls, including monitoring and alerting;•cybersecurity awareness training of our employees, incident response personnel, and senior management; and•a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.

Note 9. Stock PlansAll share, restricted stock unit (RSU), option, per share, per RSU and per option information presented below have been adjusted to reflect the four-for-one stock split effected on February 16, 2024. Refer to Note 1. Organization and Significant Accounting Policies.2007 Long-Term Incentive Plan (2007 Plan)In March 2007, we received stockholder approval of the 2007 Plan. The 2007 Plan was subsequently amended and restated, and granted stockholder approval in March 2009, March 2011, and March 2016.The 2007 Plan 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 27,720,000 shares in the form of specified equity awards including stock options, restricted stock units and performance share awards. RSUs have no dividend or voting rights prior to vesting. Awards under the 2007 Plan remain outstanding but new awards are no longer being granted.2023 Long-Term Incentive Plan (2023 Plan)In March 2023, we received stockholder approval of the 2023 Plan. The 2023 Plan authorizes either our Board of Directors, or a designated committee thereof composed of two or more non-employee directors, to grant to eligible individuals up to 5,460,000 shares in the form of specified equity awards including stock options, restricted stock units (RSUs) and performance share units (PSUs), subject to adjustment for future stock splits, stock dividends, expirations, forfeitures, and similar events. In addition, the 2023 Plan includes any shares which were available for issuance under the 2007 Plan at the time of stockholder approval of this plan and shares which become available as a result of the forfeiture or expiration of awards made under the 2007 Plan. As of October 31, 2025, 4,315,716 shares remained available under the 2023 Plan for future grants. The amount of available shares includes shares which may be distributed under performance shares.Share-Based CompensationThe compensation expense and related income tax benefit recognized in our Consolidated Statements of Income for share-based awards, including the Employee Stock Purchase Plan, were as follows:Years Ended October 31,(In millions)202520242023Selling, general and administrative expense$62.9 $67.6 $54.8 Cost of sales4.9 4.7 4.2 Research and development expense2.7 2.8 3.1 Total compensation expense$70.5 $75.1 $62.1 Related income tax benefit$9.2 $12.

Note 11. ContingenciesThe Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company does not believe that the ultimate resolution of these proceedings or claims pending against it could have a material adverse effect on its financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.

Note 10. Employee BenefitsBenefits Related To Workforce Optimization InitiativesFrom time to time, the Company might engage in workforce optimization activities. Employee severance and other termination benefit packages are primarily determined based on established benefit arrangements, local statutory requirements, and historical benefit practices. We recognize the contractual component of these benefits when payment is probable and estimable; additional elements of severance and termination benefits associated with non-recurring benefits are recognized ratably over each employee’s required future service period. We recognized termination benefits expense of $35.0 million associated with the workforce optimization initiatives in fiscal 2025.Retirement Income PlanThe Company's Retirement Income Plan (Plan), a defined benefit plan, is only available to full-time United States employees. On June 18, 2019, the Board of Directors of the Company approved a soft freeze of the Plan effective August 1, 2019. The Plan was closed to employees hired on or after August 1, 2019, including former participants or employees rehired on or after August 1, 2019, and employees hired in connection with a stock or asset acquisition, merger or other similar transaction on or after August 1, 2019. Existing employees already covered by the Plan, continue to accrue their benefits. The Company's contributions are designed to fund normal cost on a current basis and to fund the estimated prior service cost of benefit improvements. The unit credit actuarial cost method is used to determine the annual cost. The Company pays the entire cost of the Plan and funds such costs as they accrue. Virtually all of the assets of the Plan are comprised of equities and participation in equity and fixed income funds.The Company uses individual spot rates along the yield curve that correspond with the timing of each benefit payment to determine the service and interest costs of components of its net periodic benefit cost utilizing the correlation of projected cash outflows and corresponding spot rates on the yield curve. The following table sets forth the Plan's benefit obligations, fair value of the Plan assets and funded status of the Plan at October 31, 2025 and 2024, and net periodic pension costs for each of the years in the three-year periods ended October 31, 2025. The net amounts recognized in the Consolidated Balance Sheets consist of non-current liabilities.