COO filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data. 
 
 Report of Independent Registered Public Accounting Firm 
 
 To the Stockholders and the Board of Directors 
 The Cooper Companies, Inc.: 
 Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting 
 We have audited the accompanying consolidated balance sheets of The Cooper Companies, Inc. and subsidiaries (the Company) as of October 31, 2022 and 2021, 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, 2022, and the related notes and financial statement Schedule II (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of October 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended October 31, 2022, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 
 The Cooper Companies, Inc., acquired Generate Life Sciences (Generate) on December 17, 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of October 31, 2022, Generate’s internal control over financial reporting associated with total assets of $2.1 billion and total revenues of $ 249.5 million included in the consolidated financial statements of the Company as of and for the year ended October 31, 2022. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Generate. 
 Basis for Opinions 
 The Company’s management is responsible for these consolidated financial statements, 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. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. 
 Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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. 
 Definition and Limitations of Internal Control Over Financial Reporting 
 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 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 
 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. 
 Critical Audit Matter 
 The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 
 Fair value of acquired customer relationships intangible asset 
 
 As discussed in Notes 1 and 3 to the consolidated financial statements, the Company consummated the acquisition of Generate Life Sciences (Generate) for $ 1.663 billion during the year ended October 31, 2022. The acquisition-date fair value of Generate’s customer relationships intangible assets was $ 718.3 million, which included a customer relationships intangible asset related to newborn stem cell storage contracts (stem cell customer relationships intangible asset). 
 We identified the evaluation of the acquisition-date fair value of the stem cell customer relationships intangible asset in the acquisition of Generate as a critical audit matter. We performed sensitivity analyses to determine the key assumptions used to value the stem cell customer relationships intangible asset which required challenging auditor judgment. The fair value of the acquired intangible assets were sensitive to possible changes in the forecasted revenue and discount rate assumptions, requiring a high degree of auditor judgment and the assistance of valuation professionals with specialized skills and knowledge. 
 The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls over the development of the key assumptions identified above. We evaluated forecasted revenue by comparing it to the historical performance of peer companies, the Company and the acquired business. We also assessed the Company’s ability to accurately forecast by comparing forecasted revenue of the acquired business to actual results since the acquisition date. We involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating the discount rate by comparing it against a discount rate range that was independently developed based on publicly available market data for comparable entities, and (2) developing a fair value estimate of the stem cell customer relationships intangible asset using the Company’s cash flow projections and independently developed range of discount rates and comparing it to the Company’s estimate. 
 
 /s/ KPMG LLP 
 We have served as the Company’s auditor since 1982. 
 San Francisco, California 
 December 9, 2022 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Consolidated Statements of Income 
 
 Years Ended October 31,
 (In millions, except for earnings per share) 
 2022 2021 2020 
 Net sales $ 3,308.4 $ 2,922.5 $ 2,430.9 
 Cost of sales 1,168.8 966.7 896.1 
 Gross profit 2,139.6 1,955.8 1,534.8 
 Selling, general and administrative expense 1,342.2 1,211.2 992.5 
 Research and development expense 110.3 92.7 93.3 
 Amortization of intangibles 179.5 146.1 137.2 
 
 Operating income 507.6 505.8 311.8 
 Interest expense 57.3 23.1 36.8 
 
 Other (income) expense, net ( 25.0 ) ( 8.8 ) 8.5 
 Income before income taxes 475.3 491.5 266.5 
 Provision for income taxes (Note 6) 89.5 ( 2,453.2 ) 28.1 
 Net income $ 385.8 $ 2,944.7 $ 238.4 
 
 Earnings per share (Note 7) 
 Basic $ 7.83 $ 59.80 $ 4.85 
 Diluted $ 7.76 $ 59.16 $ 4.81 
 Number of shares used to compute earnings per share: 
 Basic 49.3 49.2 49.1 
 Diluted 49.7 49.8 49.6 

 The accompanying notes are an integral part of these Consolidated Financial Statements. 
 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Consolidated Statements of Comprehensive Income 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Net income $ 385.8 $ 2,944.7 $ 238.4 
 Other comprehensive (loss) income: 
 Cash flow hedges, net of tax of $ 26.1 , $ 8.2 and $( 4.1 ), respectively 
 81.3 26.1 ( 13.0 ) 
 Change in minimum pension liability, net of tax of $ 8.7 , $ 7.2 and $( 4.0 ), respectively 
 27.9 22.6 ( 12.8 ) 
 Foreign currency translation adjustment ( 234.7 ) 82.0 0.9 
 
 Other comprehensive (loss) income ( 125.5 ) 130.7 ( 24.9 ) 
 Comprehensive income $ 260.3 $ 3,075.4 $ 213.5 
 
 The accompanying notes are an integral part of these Consolidated Financial Statements. 
 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Consolidated Balance Sheets 
 October 31,
 (In millions) 
 2022 2021 
 ASSETS 
 Current assets: 
 Cash and cash equivalents $ 138.2 $ 95.9 
 Trade accounts receivable, net of allowance for credit losses of $ 20.7 at October 31, 2022 and $ 9.2 at October 31, 2021 
 557.8 515.3 
 Inventories (Note 1) 628.7 585.6 
 
 Prepaid expense and other current assets 208.9 179.3 
 Assets held-for-sale — 89.2 
 Total current assets 1,533.6 1,465.3 
 Property, plant and equipment, net 1,432.9 1,347.6 
 
 Goodwill (Note 4) 3,609.7 2,574.0 
 Other intangibles, net (Note 4) 1,885.1 1,271.5 
 Deferred tax assets 2,443.1 2,546.6 
 Other assets 587.9 401.2 
 Total assets $ 11,492.3 $ 9,606.2 
 LIABILITIES AND STOCKHOLDERS’ EQUITY 
 Current liabilities: 
 Short-term debt (Note 5) $ 412.6 $ 83.4 
 Accounts payable 248.8 161.4 
 Employee compensation and benefits 152.1 148.7 
 Deferred revenue 93.6 19.0 
 
 Other current liabilities 373.1 317.9 
 Liabilities held-for-sale — 1.7 
 Total current liabilities 1,280.2 732.1 
 Long-term debt (Note 5) $ 2,350.8 $ 1,397.6 
 Deferred tax liabilities 149.9 24.1 
 Long-term tax payable 113.2 139.6 
 Deferred revenue 198.3 $ 0.1 
 
 Accrued pension liability and other 225.2 370.7 
 Total liabilities $ 4,317.6 $ 2,664.2 
 Contingencies (Note 12) 
 Stockholders’ equity: 
 Preferred stock, $ 10 cents par value, 1.0 shares authorized, zero shares issued or outstanding 
 — — 
 Common stock, $ 10 cents par value, 120.0 shares authorized, 53.8 issued and 49.3 outstanding at October 31, 2022 and 53.7 issued and 49.3 outstanding at October 31, 2021 
 5.4 5.4 
 Additional paid-in capital 1,765.5 1,715.2 
 Accumulated other comprehensive loss ( 466.8 ) ( 341.3 ) 
 Retained earnings 6,584.9 6,202.1 
 Treasury stock at cost: 4.5 shares at October 31, 2022 and 4.4 shares at October 31, 2021 
 ( 714.5 ) ( 639.6 ) 
 Total Cooper stockholders' equity 7,174.5 6,941.8 
 Noncontrolling interests 0.2 0.2 
 Stockholders’ equity (Note 8) 7,174.7 6,942.0 
 Total liabilities and stockholders’ equity $ 11,492.3 $ 9,606.2 

 The accompanying notes are an integral part of these Consolidated Financial Statements. 
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 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, 2019 49.1 $ 4.9 4.1 $ 0.4 $ 1,615.0 $ ( 447.1 ) $ 3,026.4 $ ( 571.2 ) $ 0.2 $ 3,628.6 
 Net income — — — — — — 238.4 — — 238.4 
 Other comprehensive loss, net of tax — — — — — ( 24.9 ) — — — ( 24.9 ) 
 Issuance of common stock for stock plans, net and employee stock purchase plan 0.2 — — — ( 5.0 ) — — 1.7 — ( 3.3 ) 
 Treasury stock repurchase ( 0.2 ) — 0.2 — — — — ( 47.8 ) — ( 47.8 ) 
 Dividends on common stock ($ 0.03 per share) 
 — — — — — — ( 3.0 ) — — ( 3.0 ) 
 Share-based compensation expense — — — — 36.8 — — — — 36.8 
 Balance at October 31, 2020 49.1 $ 4.9 4.3 $ 0.4 $ 1,646.8 $ ( 472.0 ) $ 3,261.8 $ ( 617.3 ) $ 0.2 $ 3,824.8 
 Net income — — — — — — 2,944.7 — — 2,944.7 
 Other comprehensive income, net of tax — — — — — 130.7 — — — 130.7 
 Issuance of common stock for stock plans, net and employee stock purchase plan 0.3 0.1 — — 24.6 — — 2.5 $ — 27.2 
 Treasury stock repurchase ( 0.1 ) — 0.1 — — — — ( 24.8 ) — ( 24.8 ) 
 
 Dividends on common stock ($ 0.03 per share) 
 — — — — — — ( 3.0 ) — — ( 3.0 ) 
 Share-based compensation expense — — — — 43.8 — — — — 43.8 
 ASU 2016-13 adoption — — — — — — ( 1.4 ) — — ( 1.4 ) 
 
 Balance at October 31, 2021 49.3 $ 5.0 4.4 $ 0.4 $ 1,715.2 $ ( 341.3 ) $ 6,202.1 $ ( 639.6 ) $ 0.2 $ 6,942.0 
 Net income — — — — — — 385.8 — — 385.8 
 Other comprehensive income, net of tax — — — — — ( 125.5 ) — — — ( 125.5 ) 
 Issuance of common stock for stock plans, net and employee stock purchase plan 0.1 — — — ( 2.1 ) — — 3.6 — 1.5 
 Treasury stock repurchase ( 0.1 ) — 0.1 — — — — ( 78.5 ) — ( 78.5 ) 
 
 Dividends on common stock ($ 0.03 per share) 
 — — — — — — ( 3.0 ) — — ( 3.0 ) 
 Share-based compensation expense — — — — 52.4 — — — — 52.4 
 Balance at October 31, 2022 49.3 $ 5.0 4.5 $ 0.4 $ 1,765.5 $ ( 466.8 ) $ 6,584.9 $ ( 714.5 ) $ 0.2 $ 7,174.7 

 The accompanying notes are an integral part of these Consolidated Financial Statements. 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Consolidated Statements of Cash Flows 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Cash flows from operating activities: 
 Net income $ 385.8 $ 2,944.7 $ 238.4 
 Adjustments to reconcile net income to net cash provided by operating activities: 
 Depreciation and amortization 346.1 309.3 287.1 
 Impairment of intangibles 2.3 — — 
 Share-based compensation expense 54.2 43.8 37.6 
 Non-cash operating lease expense 32.2 31.8 32.5 
 Impairment and loss on disposal of property, plant and equipment, and other 2.2 ( 5.0 ) 17.7 
 Change in fair value of contingent consideration ( 10.3 ) 66.1 — 
 Deferred income taxes 53.9 ( 2,502.2 ) ( 0.9 ) 
 Change in assets and liabilities: 
 Accounts receivable ( 33.8 ) ( 75.5 ) 8.5 
 Inventories ( 40.4 ) ( 9.2 ) ( 62.3 ) 
 Other assets ( 16.9 ) ( 69.1 ) ( 41.1 ) 
 Operating lease right-of-use assets and liabilities, net ( 51.3 ) ( 27.5 ) ( 20.0 ) 
 Accounts payable 49.9 ( 16.0 ) 23.2 
 Accrued liabilities 32.4 59.1 ( 9.3 ) 
 Accrued income taxes ( 27.4 ) 10.0 ( 12.4 ) 
 Other long-term liabilities ( 34.2 ) ( 21.7 ) ( 12.4 ) 
 Settlement of contingent consideration ( 52.3 ) — — 
 Net cash provided by operating activities 692.4 738.6 486.6 
 Cash flows from investing activities: 
 Purchases of property, plant and equipment ( 242.0 ) ( 214.4 ) ( 310.4 ) 
 Acquisitions of businesses and assets, net of cash acquired ( 1,641.3 ) ( 235.9 ) ( 54.1 ) 
 Proceeds from sale of interest in a subsidiary 52.1 — — 
 Net cash used in investing activities ( 1,831.2 ) ( 450.3 ) ( 364.5 ) 
 Cash flows from financing activities: 
 Proceeds from long-term debt, net of issuance costs 1,511.0 1,427.4 3,199.8 
 Repayments of long-term debt ( 561.5 ) ( 1,416.0 ) ( 3,235.9 ) 
 Net proceeds from (repayments of) short-term debt, other 329.3 ( 321.3 ) ( 4.5 ) 
 Repurchase of common stock ( 78.5 ) ( 24.8 ) ( 47.8 ) 
 Proceeds related to share-based compensation awards 8.9 33.7 13.5 
 Payments related to share-based compensation awards ( 16.8 ) ( 13.2 ) ( 20.3 ) 
 Dividends on common stock ( 3.0 ) ( 3.0 ) ( 3.0 ) 
 Issuance of common stock for employee stock purchase plan 7.2 5.8 2.7 
 Settlement of contingent consideration ( 2.9 ) — — 
 Net cash provided by (used in) financing activities 1,193.7 ( 311.4 ) ( 95.5 ) 
 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 12.9 ) 2.9 0.7 
 Net increase (decrease) in cash, cash equivalents and restricted cash 42.0 ( 20.2 ) 27.3 
 Cash, cash equivalents, restricted cash and cash held for sale at beginning of year 96.6 116.8 89.5 
 Cash, cash equivalents and restricted cash at end of year $ 138.6 $ 96.6 $ 116.8 
 Supplemental disclosures of cash flow information: 
 Cash paid for: 
 Interest $ 49.1 $ 28.4 $ 46.5 

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 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Income taxes $ 66.6 $ 63.2 $ 51.1 
 Operating lease liabilities $ 45.3 $ 37.4 $ 40.6 
 Operating lease ROU assets obtained in exchange for lease obligations $ 29.8 $ 26.5 $ 17.7 
 Reconciliation of cash flow information: 
 Cash and cash equivalents $ 138.2 $ 95.9 $ 115.9 
 Restricted cash included in other current assets 0.4 0.4 0.9 
 Cash held for sale — 0.3 — 
 Total cash, cash equivalents, restricted cash and cash held for sale $ 138.6 $ 96.6 $ 116.8 

 The accompanying notes are an integral part of these Consolidated Financial Statements. 
 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Note 1. Organization and Significant Accounting Policies 
 Organization 
 The Cooper Companies, Inc. (Cooper, we or the Company) is a global medical device company publicly traded on the NYSE (NYSE:COO). Cooper operates through two 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 women, babies and families. 
 
 Principles of Consolidation 
 The financial statements in this report include the results of all of Cooper's consolidated entities. All significant intercompany transactions and balances are eliminated on consolidation. 
 
 Use of Estimates 
 
 The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates. 
 
 In particular, the COVID-19 pandemic negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. These factors have had, and in the future may have, an adverse effect on our sales, operating results and cash flows. 
 
 The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations, and financial condition, including sales, expenses, manufacturing, clinical trials, research and development costs, reserves and allowances, fair value measurements, asset impairment charges, contingent consideration obligations, and the effectiveness of the Company's hedging instruments, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak (including new and more contagious variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, public acceptance and efficacy of vaccines and other treatments, United States and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume. There was not a material impact to the estimates in the Company’s Consolidated Financial Statements for fiscal 2022. 
 
 The Company continually monitors and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material changes to the estimates and material impacts to the Company’s Consolidated Financial Statements in future reporting periods. 
 
 Revenue recognition 
 Net Sales 
 The Company sells its products principally to a limited number of distributors, group purchasing organizations, eye care or health care professionals including independent practices, corporate retailers, hospitals and clinics or authorized resellers (collectively, its Customers). These Customers may subsequently resell the Company’s products to eye care or health care providers and patients. In addition to product supply and distribution agreements with Customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. The Company considers purchase orders, which in some cases are governed by master sales agreements, to be contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Revenues from product sales are recognized when the Customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or delivery to the Customer. Taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that the Company would have recognized is one year or less. See Note 12. Business Segment Information for disaggregation of revenue. 
 
 Reserves for Variable Consideration 
 Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates and other allowances that are offered within contracts between the Company and its Customers, health care providers, payors and other indirect customers relating to the Company’s sales of its products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified primarily in current liabilities. Variable consideration is estimated based on the most likely amount or expected value approach, depending on which method the Company expects to better predict the amount of consideration to which it will be entitled. Once the Company elects one of the methods to estimate variable consideration for a particular type of performance obligation, the Company applies that method consistently. 
 Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. 
 
 Trade Discounts and Allowances 
 The Company generally provides Customers with discounts, which include incentive fees that are stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. 
 
 Product Returns 
 Consistent with industry practice, the Company generally offers Customers a limited right of return for a product that has been purchased from the Company. The Company estimates the amount of its product sales that may be returned by its Customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. Historically, returns have been infrequent and insignificant relative to our total sales. Our refund liability for product returns was $ 14.5 million and $ 13.7 million at October 31, 2022 and 2021, respectively, which is included in Accrued Liabilities on our Consolidated Balance Sheets and represents the expected value of the aggregate refunds that will be due to our customers. 
 
 Rebates and Chargebacks 
 Rebates are estimated based on contractual terms, historical experience, customer mix, trend analysis and projected market conditions in the various markets served. 
 Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list wholesale prices charged to the Company’s direct customers. For certain office and surgical products in CooperSurgical, customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by customers. CooperSurgical rebates are predominately related to the Medicaid rebate provision that is estimated based upon contractual terms, historical experience, and trend analysis. 
 Contract Liabilities 
 Deferred revenue primarily represents prepaid stem cell storage as part of the CooperSurgical business unit. Revenue related to stem cell storage is recognized over the service period, which can range from one year to the lifetime of a customer. 
 Share-Based Compensation 
 We grant various share-based compensation awards, including stock options, performance unit shares, restricted stock and restricted stock units. The Company accounts for share-based compensation expense based on estimated grant-date fair value, and expenses the amount over the vesting period of the award. 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. 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 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. 
 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. 
 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 average rates for each month. 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 $ 22.0 million for fiscal 2022, $ 5.5 million for fiscal 2021 and $ 1.2 million for fiscal 2020. 
 Financial Derivatives and Hedging 
 Derivatives are recorded on the Consolidation Balance Sheets at fair value. Accounting for gains or losses resulting from changes in the values of those derivatives depends on the use of the derivative instrument and whether it qualifies for hedge accounting. 
 
 The gain or loss on derivative instruments designated and qualifying for cash flow hedge accounting is deferred in other comprehensive income. The changes in fair value for all trades that are not designated for hedge accounting are recognized in current period earnings. Deferred gains or losses from designated cash flow hedges are reclassified into earnings in the period that the hedged interest expense affects earnings. The effectiveness of cash flow hedges is assessed at inception and quarterly thereafter. The Company does not offset fair value amounts recognized for derivative instruments in its Consolidated Balance Sheets for presentation purposes. 
 Fair Value Measurements 
 Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: 
 Level 1: Quoted market prices in active markets for identical assets or liabilities. 
 Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. 
 Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. 
 The carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, lines of credit, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments and the ability to obtain financing on similar terms. 
 The carrying value of the Company's revolving credit facility and term loans approximates fair value based on current market rates (Level 2). 
 The fair value of the Company's interest rate swap contracts is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observable market interest rate curves. The interest rate swap contracts were categorized as Level 2 in the fair value hierarchy, as the inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity. The gain or loss on the derivatives is recorded as a component of accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Refer to Note 13. Financial Derivatives and Hedging for further information. 
 The Company uses fair value measures when determining assets and liabilities acquired in an acquisition, which are considered a Level 3 measurement. The fair value of the Company's contingent consideration for which a liability is recorded and the initial measurement of the joint venture interest are a Level 3 measurement , and the change in fair value is recognized in selling, 
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 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 general and administrative expense in the Consolidated Statements of Income. Refer to Note 3. Acquisitions and Joint Venture for further information. 
 Income taxes 
 Income taxes are estimated based on enacted income tax laws and the results of operations in each jurisdiction. Deferred tax assets and liabilities are estimated based on temporary differences between the financial reporting basis and income tax basis of assets and liabilities. Deferred tax assets are also estimated based on net operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance to the extent it is more likely than not they are not expected to be realized. Adjustments to deferred tax assets and liabilities due to changes in tax laws, changes in jurisdiction from intra-group transfers of assets, and changes in judgment regarding a valuation allowance are recognized in provision for income taxes in the quarter in which such changes occur. Long-term tax payable is estimated income tax to be paid for unrecognized tax benefits. A tax benefit is recognized if it is more likely than not a tax position will be sustained based on its technical merits in a tax authority examination, based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Adjustments to unrecognized tax benefits due to changes in judgment are recognized in provision for income taxes in the quarter in which such changes occur. Interest and penalties related to unrecognized tax benefits are recognized in provision for income taxes. 
 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. 
 Cash and Cash Equivalents 
 The Company considers all short-term, highly liquid investments purchased with maturities of three months or less to be cash equivalents. 
 Inventories 
 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. 
 
 October 31,
 (In millions) 
 2022 2021 
 Raw materials $ 173.7 $ 137.7 
 Work-in-process 15.2 14.0 
 Finished goods 439.8 433.9 
 $ 628.7 $ 585.6 

 In assessing the value of inventories, we make estimates and judgments regarding aging of inventories and other relevant issues potentially affecting the salable condition of products and estimated prices at which those products will sell. On an ongoing basis, we review the carrying value of our inventory, measuring number of months on hand and other indications of salability. We reduce the value of inventory if there are indications that the carrying value is greater than 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. 
 Property, Plant and Equipment 
 
 We record property, plant, and equipment at cost. We compute depreciation expense using the straight-line method over the estimated useful lives of the assets. Useful lives are generally 3 to 15 years except for buildings which are depreciated over 30 to 40 years and leasehold improvements, which we amortize over the shorter of the useful life or the lease term. We charge maintenance and repairs to expense as we incur them. 
 
 77 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 October 31,
 (In millions) 
 2022 2021 
 Land and improvements $ 18.7 $ 20.3 
 Buildings and improvements 415.6 388.0 
 Machinery and equipment 1,973.6 1,863.6 
 Construction in progress 393.0 383.8 
 Property, plant and equipment, at cost $ 2,800.9 $ 2,655.7 
 Less: Accumulated depreciation 1,387.2 1,308.1 
 Property, plant and equipment, net $ 1,413.7 $ 1,347.6 
 Finance lease ROU assets, net 19.2 — 
 $ 1,432.9 $ 1,347.6 

 Leases 
 We consider an arrangement a lease if the arrangement transfers the right to control the use of an identified asset in exchange for consideration. We have operating leases, but do not have material financing leases. The Company primarily has operating leases for office, manufacturing and warehouse space, vehicles, and office equipment. 
 
 Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the noncancellable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. Changes in the lease term assumption could impact the right-of-use assets and lease liabilities recognized on the Consolidated Balance Sheets. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term on a collateralized basis. 
 
 The Company’s operating leases typically include non-lease components such as common-area maintenance costs. The Company has elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. 
 Leases with a term of one year or less are not recognized on the Consolidated Balance Sheets, while the associated lease payments are expensed in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term. 
 Operating leases are classified in “Other current liabilities”, “Accrued pension liability and other”, and “Other assets” on our consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the expected lease term and included in selling, general and administrative expenses in the Consolidated Statements of Income. Financing leases are classified in "Property, plant and equipment", "Short-term debt", and "Long-term debt" on our consolidated balance sheets. See Note 2. Operating Leases and Note 5. Financing Arrangements for further information. 
 Cloud Computing Arrangements 
 
 The Company capitalizes certain costs related to the acquisition and development of internal use software, including implementation costs incurred in a cloud computing arrangement, during the application development stages of projects. Capitalized implementation costs are amortized on a straight-line basis over the expected term of the hosting arrangement, which includes consideration of the non-cancellable contractual term and reasonably certain renewals. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred. Implementation costs are included in “Other assets” in the Consolidated Balance Sheets. Amortization of capitalized implementation costs is included in the same line item in the Consolidated Statements of Income as the expense for fees for the associated hosting arrangement. 
 
 Valuation of goodwill 
 We evaluate goodwill for impairment annually during the fiscal third quarter and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist. Goodwill is tested for impairment at the reporting unit level by performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. We perform a qualitative assessment to test each reporting unit's goodwill for impairment, which 
 78 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 includes 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 amount that the carrying value exceeds the fair value of the reporting unit. 
 Long-lived Assets 
 We review long-lived assets held and used, intangible assets with definite 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. 
 Indefinite-lived Intangible Assets 
 We assess indefinite-lived intangible assets annually in the third quarter of the fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of an indefinite-lived intangible asset (asset group) may not be recoverable. We evaluate whether the indefinite-lived intangible asset is impaired by comparing its carrying value to its fair value. If the carrying value of an indefinite-lived intangible asset is not recoverable, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair value. 
 
 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 discount rates and projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, over the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Direct acquisition costs are expensed as incurred. 
 
 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. 
 
 Treasury Stock 
 We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. 
 Exit costs 
 
 During the second quarter of fiscal 2022, the Company initiated a plan to exit its contact lens care business, a non-core business unit of the CooperVision segment. We expect the exit activity to be substantially completed in the first half of fiscal 2023. Exit charges recognized in the three and twelve months ended October 31, 2022, were $ 9.2 million and $ 33.2 million, of which $ 26.7 million is recognized in cost of sales and $ 6.5 million is recognized in selling, general, and administrative expense in the Consolidated Statements of Income. Exit costs primarily related to inventory write-down, asset impairments and employee-related costs. Total exit costs are expected to be in a range of $ 30.0 million to $ 40.0 million. 
 
 Accounting Pronouncements Recently Adopted 
 
 On November 1, 2021, we prospectively adopted ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to the business combinations entered into during fiscal 2022. This update requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. 
 
 79 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Accounting Pronouncements Issued Not Yet Adopted 
 
 In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848) : Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance generally can be applied from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04 on the Consolidated Condensed Financial Statements. 
 
 In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for fiscal years beginning after December 15, 2021, and should be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2021-10 on the Consolidated Condensed Financial Statements. 
 No other recently issued accounting pronouncements had or are expected to have a material impact on our Consolidated Financial Statements. 
 
 Note 2. Operating Leases 
 
 The following table presents information about leases on the Consolidated Balance Sheets: 
 
 October 31,
(In millions) 2022 2021 
 Operating Leases 
 Operating lease right-of-use assets $ 230.1 $ 257.0 
 
 Operating lease liabilities, current 35.5 35.7 
 Operating lease liabilities, non-current 205.5 231.7 
 Total operating lease liabilities $ 241.0 $ 267.4 
 
 Weighted average remaining lease term (in years) 9.8 10.6 
 Weighted average discount rate 3 % 3 % 

 Operating lease expense for the fiscal years ended October 31, 2022, 2021 and 2020 was $ 45.0 million, $ 44.1 million and $ 41.2 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, 2022 are: 
 
 (In millions) 
 2023 $ 42.2 
 2024 36.6 
 2025 32.8 
 2026 30.2 
 2027 26.6 
 Thereafter 115.8 
 Total lease payments $ 284.2 
 Less: interest 43.2 
 Present value of lease liabilities $ 241.0 

 80 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Note 3. Acquisitions and Joint Venture 
 The following is a summary of the allocation of the total purchase consideration for business and asset acquisitions that the Company completed during fiscal 2022, 2021, and 2020: 
 
 (In millions) 2022 2021 2020 
 Technology $ 1.9 $ 178.6 $ — 
 In-Process Research & Development (IPR&D) — 20.0 — 
 Customer relationships 729.2 7.5 11.4 
 Trademarks 55.4 1.3 5.1 
 Other — 0.6 3.9 
 Total identifiable intangible assets $ 786.5 $ 208.0 $ 20.4 
 
 Goodwill 1,184.8 91.6 15.3 
 Net tangible liabilities ( 286.5 ) ( 10.8 ) ( 0.3 ) 
 Fair value of contingent consideration ( 1.5 ) ( 39.1 ) — 
 Total closing purchase price $ 1,683.3 $ 249.7 $ 35.4 

 All acquisitions were funded by cash generated from operations or facility borrowings. 
 For business acquisitions, the Company recorded tangible and intangible assets acquired and liabilities assumed at their fair values as of the applicable date of acquisition. For asset acquisitions, the Company recorded tangible and intangible assets acquired and liabilities assumed at their estimated and relative fair values as of the applicable date of acquisition. 
 The Company believes these acquisitions strengthen CooperSurgical's and CooperVision's businesses through the addition of new distributors or complementary products and services. 
 Fiscal Year 2022 
 On May 31, 2022, CooperVision completed the acquisition of a privately-held Denmark-based contact lens distributor focusing on orthokeratology and scleral contact lenses. This acquisition expands CooperVision's ortho-k eye care portfolio in the Nordic market. 
 On April 6, 2022, CooperSurgical completed the acquisition of a private cryopreservation services company that specializes in cryogenic services. The purchase price allocation is preliminary, and the Company is in the process of finalizing information primarily related to the effect on taxes and the corresponding impact on goodwill. 
 
 Refer to "Fiscal Year 2021" below for details on formation of a joint venture with Essilor International and related activities that occurred in fiscal year 2022 following the acquisition of SightGlass Vision, Inc. (SGV) in fiscal year 2021. 
 
 On April 6, 2022, CooperSurgical entered into an asset purchase agreement to acquire Cook Medical's Reproductive Health business, a manufacturer of minimally invasive medical devices focused on the fertility, obstetrics and gynecology markets. The aggregate consideration is $ 875.0 million in cash, with $ 675.0 million payable at the closing and the remaining $ 200.0 million payable in $ 50.0 million installments following each of the first, second, third and fourth anniversaries of the closing. The transaction is subject to customary closing conditions, such as receipt of required regulatory approvals. 
 Generate Life Sciences® 
 
 On December 17, 2021, CooperSurgical completed the acquisition of 100 % of the equity interests in Generate Life Sciences (Generate), a privately held leading provider of donor egg and sperm for fertility treatments, fertility cryopreservation services and newborn stem cell storage (cord blood & cord tissue), and paid an aggregate purchase consideration of approximately $ 1.663 billion, reflecting working capital, and other adjustments. The cash consideration was funded through a combination of $ 1.5 billion in proceeds from the issuance of a senior unsecured term loan and available cash on hand. 
 
 The Company has accounted for the acquisition of Generate as a business combination, in accordance with ASC Topic 805, Business Combinations. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date: 
 81 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 (In millions) 
 
 Current assets: 
 Cash and cash equivalents 
 $ 58.6 
 Trade accounts receivable, net 
 18.1 
 Inventories 
 3.3 
 Prepaid expense and other current assets 
 33.5 
 Total current assets 113.5 
 Property, plant and equipment 
 42.6 
 
 Goodwill 1,177.3 
 Customer relationships 718.3 
 Trademarks 54.9 
 
 Other assets 
 21.5 
 Total assets acquired 
 $ 2,128.1 
 
 Current liabilities: 
 Accounts payable 
 $ 12.6 
 Employee compensation and benefits 
 12.3 
 
 Deferred revenue 68.0 
 Other current liabilities 
 12.4 
 Total current liabilities 105.3 
 Deferred tax liabilities 
 147.3 
 
 Lease liabilities 
 16.6 
 Deferred revenue 
 192.2 
 
 Other long-term liabilities 
 3.6 
 Total liabilities assumed 
 $ 465.0 
 
 Total purchase price 
 $ 1,663.1 

 The Company is in the process of finalizing purchase accounting information primarily related to deferred tax adjustments and the corresponding impact on goodwill. The Company recorded measurement period adjustments of $ 115.3 million to goodwill in fiscal 2022. 
 
 Deferred revenue was recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers, as a result of the adoption of ASU 2021-08. See Note 1. Organization and Significant Accounting Policies for additional information. 
 
 The Company currently estimates that customer relationships will be amortized over 20 years and trademarks will be amortized over 15 years. Goodwill is primarily attributable to assembled workforce and expected synergies to be achieved. The goodwill recognized is not deductible for tax purposes. 
 
 The transaction costs associated with the acquisition consisted primarily of legal, regulatory and financial advisory fees, which were expensed as incurred as selling, general and administrative expense. 
 
 Generate's revenue and net income for the period from the acquisition date to October 31, 2022, were $ 249.5 million and $ 27.8 million , respectively. The following unaudited pro forma information summarizes the combined results of operations of the Company and Generate as if the acquisition had been completed at the beginning of the Company’s fiscal 2021: 
 
 (In millions) 2022 2021 
 Revenue $ 3,344.3 $ 3,183.2 
 Net income $ 370.7 $ 2,959.8 

 The unaudited pro forma information for fiscal 2022 and 2021 was calculated after applying the Company's accounting policies and the impact of acquisition date fair value adjustments. The adjustments primarily include increased amortization for the fair value of acquired intangible assets, increased depreciation for the fair value of acquired property, plant, and equipment, 
 82 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 increased revenue as a result of the ASU 2021-08 deferred revenue adjustments, decreased interest expense as a result of the reversal of Generate's historical interest expense partially offset by additional interest expense on the debt obtained to finance the transaction. 
 
 The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred at the beginning of fiscal 2021, or of future results of the consolidated entities. 
 Subsequent Event 
 On November 1, 2022, subsequent to the fiscal year ended October 31, 2022, CooperVision closed an Agreement and Plan of Merger (the “Merger Agreement”) to acquire a U.S. based privately held leading expert in specialty contact lenses for both normal and irregular corneal conditions. The Company is in the process of finalizing purchase accounting information. 
 Fiscal Year 2021 
 On May 3, 2021, CooperSurgical completed the acquisition of a privately-held medical device company that develops single-use illumin ating medical devices. 
 
 On April 26, 2021, CooperVision completed the acquisition of a privately-held UK contact lens manufacturer focusing on specialty contact lenses. This acquisition expands CooperVision’s specialty eye care portfolio and accelerates its development of myopia management solutions in the UK. 
 
 On March 1, 2021, CooperSurgical completed the acquisition of a privately-held medical device company that designed and developed an innovative obstetric product for use in urgent obstetrics to reduce risks associated with childbirth. 
 
 On February 1, 2021, CooperSurgical acquired all of the remaining equity interests of a privately-held medical device company that developed the Mara ® Water Vapor Ablation System, which is used for endometrial ablation. The Company accounted for this acquisition 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 with no goodwill recognized. The primary asset acquired in this asset acquisition is Technology. 
 
 On January 19, 2021, CooperVision acquired all of the remaining equity interests of SGV, a privately-held medical device company that developed spectacle lenses for myopia management. The transaction included potential payments of future consideration that were contingent upon the achievement of the regulatory approval milestone (the regulatory approval payment) and the acquired business reaching certain revenue thresholds over a specified period (the revenue payments). The undiscounted range of the contingent consideration was zero to $ 139.1 million payable to the other former equity interest owners. 
 
 The fair value of the regulatory approval payment was determined using an option pricing framework based on the expected payment under the contractual terms and the estimates of the probability of achieving the regulatory approval. The fair value of the revenue payments was determined using a Monte Carlo simulation based on the revenue projections and the expected payment for each simulation. 
 
 In March 2022, the entities amended the terms of the contingent consideration, which resulted in CooperVision paying $ 42.9 million to the former equity interest owners in exchange for the elimination of the revenue payments. CooperVision recognized a net gain of $ 12.2 million during fiscal 2022. As of October 31, 2022, the remaining contingent liability related to regulatory approval payment was $ 31.8 million. 
 
 In March 2022, CooperVision and Essilor International SAS (Essilor) entered into a Contribution Agreement and a Stock Purchase Agreement under which Essilor paid CooperVision $ 52.1 million in exchange for a 50 % interest in SGV and a proportionate share of certain revenue-based milestone payments related to the January 2021 acquisition of SGV by CooperVision. As part of these agreements, each party contributed their interest in SGV and $ 10 million in cash to form a new joint venture. CooperVision then remeasured the fair value of its retained equity investment in the joint venture at $ 90.0 million which resulted in a $ 56.9 million gain in Other (income) expense on deconsolidation of SGV. 
 
 The fair value of the joint venture was determined using the income valuation approach. Under the income approach, we used a discounted cash flow model (“DCF”) in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate expected rate of return. The discount rate used for cash flows reflects capital market conditions and the specific risks associated with the business. This valuation approaches is considered a Level 3 fair value measurement. Fair value determination requires complex assumptions and judgment by management in projecting future operating results, selecting guideline companies for comparisons, determining appropriate 
 83 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 market value multiples, selecting the discount rate to measure the risks inherent in the future cash flows. Any material changes in key assumptions, including failure to meet business plans, deterioration in the financial market, an increase in interest rate or an increase in the cost of equity financing by market participants within the industry or other unanticipated events and circumstances, may affect such estimates. 
 On December 31, 2020, CooperSurgical completed the acquisition of a privately-held in vitro fertilization (IVF) cryostorage software solutions company. 
 The pro forma results of operations of these acquisitions have not been presented because the effect of the business combinations described above was not material to the consolidated results of operations. 
 Fiscal Year 2020 
 On August 7, 2020, CooperVision completed the acquisition of a privately-held U.S contact lens manufacturer focusing on ortho-k lenses. This acquisition expands CooperVision’s specialty eye care portfolio and its leadership in addressing the increasing severity and prevalence of myopia. 
 On December 13, 2019, CooperSurgical completed the acquisition of a privately-held distributor of IVF medical devices and systems. 
 The pro forma results of operations of these acquisitions have not been presented because the effect of the business combinations described above was not material to the consolidated results of operations. 
 Contingent Consideration 
 
 Certain of the Company’s business combinations involve potential payments of future consideration that are contingent upon the achievement of regulatory milestones and/or the acquired business reaching certain revenue thresholds. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized in selling, general and administrative expense in the Consolidated Statements of Income. 
 
 The following table provides a reconciliation of the beginning and ending balances of contingent consideration: 
 
 (In millions) 2022 2021 
 Beginning balance $ 97.4 $ — 
 Purchase price contingent consideration 1.5 31.3 
 Payments ( 55.2 ) — 
 Change in fair value ( 10.3 ) 66.1 
 Ending balance $ 33.4 $ 97.4 

 Note 4. Intangible Assets 
 Goodwill 
 The Company has three reporting units: CooperVision and within the CooperSurgical segment, Office/Surgical and Fertility, reflecting the current way the Company manages its business. There was no impairment of goodwill in its reporting units in fiscal 2022, 2021, and 2020. 
 
 (In millions) CooperVision CooperSurgical Total 
 
 Balance at October 31, 2021 $ 1,841.0 $ 733.0 $ 2,574.0 
 Net additions 0.9 1,183.9 1,184.8 
 
 Foreign currency translation adjustment ( 131.6 ) ( 17.5 ) ( 149.1 ) 
 Balance at October 31, 2022 $ 1,710.3 $ 1,899.4 $ 3,609.7 

 Of the October 31, 2022 goodwill balance, $ 214.1 million for CooperSurgical and $ 22.4 million for CooperVision is expected to be deductible for tax purposes. Of the October 31, 2021 goodwill balance, $ 137.2 million for CooperSurgical and $ 24.6 million for CooperVision was expected to be deductible for tax purposes. 
 84 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Other Intangible Assets 
 
 October 31, 2022 October 31, 2021 
 (In millions) Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization Weighted Average Amortization Period (in years) 
 
 Intangible assets with definite lives: 
 Trademarks $ 209.6 $ 62.4 $ 156.7 $ 49.1 15 
 Composite intangible asset 1,061.9 354.0 1,061.8 283.2 15 
 Technology 504.1 317.5 513.0 287.9 12 
 Customer relationships 1,092.7 287.0 378.4 240.1 19 
 License and distribution rights and other 50.7 23.8 33.4 21.6 11 
 2,919.0 $ 1,044.7 2,143.3 $ 881.9 16 
 Less: accumulated amortization and translation 1,044.7 881.9 
 Intangible assets with definite lives, net $ 1,874.3 $ 1,261.4 
 Intangible assets with indefinite lives, net (1) 
 10.8 10.1 
 Total other intangibles, net $ 1,885.1 $ 1,271.5 

 (1) Intangible assets with indefinite lives include technology and trademarks. 
 Balances include foreign currency translation adjustments. 
 Intangible assets with definite lives are amortized over the estimated useful life of the assets. As of October 31, 2022, the estimate of future amortization expenses for intangible assets with definite lives is as follows: 
 
 Fiscal years: (In millions) 
 2023 $ 183.2 
 2024 179.2 
 2025 169.3 
 2026 162.0 
 Thereafter 1,180.6 
 Total remaining amortization for intangible assets with definite lives $ 1,874.3 

 The Company considered the impact on its near and long-term forecasts from the general deterioration of economic and market conditions as a result of higher inflation, regional and global conflict, supply chain disruption, and the ongoing disruptions of the COVID-19 pandemic and determined that it was not more likely than not that the fair value of reporting units or relevant asset groups was below carrying amounts. Therefore, the Company determined that there was no impairment to either its definite-lived or indefinite-lived intangible assets during fiscal 2022, 2021 and 2020. There was an immaterial impairment charge related to our exit from the contact lens care business. 
 
 85 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Note 5. Financing Arrangements 
 The Company had outstanding debt as follows: 
 
 October 31,
 (In millions) 
 2022 2021 
 
 Overdraft and other credit facilities $ 57.7 $ 83.0 
 Term loans 338.0 — 
 Less: unamortized debt issuance cost — ( 0.1 ) 
 Short-term debt, excluding financing leases 395.7 82.9 
 Financing lease liabilities 16.9 0.5 
 Short-term debt $ 412.6 $ 83.4 
 
 Revolving credit $ — $ 546.1 
 Term loans 2,350.0 850.0 
 Other 0.2 0.2 
 Less: unamortized debt issuance cost ( 3.1 ) ( 0.2 ) 
 Long-term debt, excluding financing leases 2,347.1 1,396.1 
 
 Financing lease liabilities 3.7 1.5 
 Long-term debt $ 2,350.8 $ 1,397.6 
 Total debt $ 2,763.4 $ 1,481.0 

 As of October 31, 2022, the Company was in compliance with all debt covenants. 
 
 Term Loan Agreement on December 17, 2021 
 
 On December 17, 2021, the Company entered into a Term Loan Agreement (the 2021 Credit Agreement) by and among the Company, the lenders from time to time party thereto, and PNC Bank, National Association, as administrative agent. The 2021 Credit Agreement provides for a term loan facility (the 2021 Term Loan Facility) in an aggregate principal amount of $ 1.5 billion, which, unless terminated earlier, matures on December 17, 2026. In addition, the Company has the ability from time to time to request an increase to the commitments under the 2021 Term Loan Facility or to establish a new term loan facility under the 2021 Credit Agreement in an aggregate principal amount not to exceed $ 1.125 billion, upon prior written notice to the administrative agent and subject to the discretionary participation of the lenders funding such term loans and certain limitations set forth in the 2021 Credit Agreement. 
 
 Amounts outstanding under the 2021 Term Loan Facility will bear interest, at the Company’s option, at either (i) the alternate base rate, which is a rate per annum equal to the greatest of (a) the administrative agent’s prime rate, (b) one-half of one percent in excess of the federal funds effective rate and (c) one percent in excess of the adjusted London interbank offered rate (“LIBOR”) for a one-month interest period on such day, or (ii) the adjusted LIBOR, plus, in each case, an applicable rate of, initially, zero basis points, in respect of base rate loans, and 75 basis points, in respect of adjusted LIBOR loans. Following a specified period after the closing date, the applicable rates will be determined quarterly by reference to a grid based upon the Company’s ratio of consolidated net indebtedness to consolidated EBITDA, each as defined in the 2021 Credit Agreement. 
 
 The Company may prepay loan balances from time to time, in whole or in part, without premium or penalty (other than any related breakage costs). 
 
 On December 17, 2021, the Company borrowed $ 1.5 billion under the 2021 Term Loan Facility and used the proceeds to fund the acquisition of Generate. Refer to Note 3. Acquisitions and Joint Venture for more details. 
 
 The interest rate on the 2021 Term Loan Facility was 4.44 % at October 31, 2022. 
 
 The 2021 Credit Agreement contains customary restrictive covenants, as well as financial covenants that require the Company to maintain a certain Total Leverage Ratio and Interest Coverage Ratio, each as defined in the 2021 Credit Agreement, consistent with the 2020 Credit Agreement discussed below. 
 86 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Term Loan Agreement on November 2, 2021 
 
 On November 2, 2021, the Company entered into a 364 -day, $ 840.0 million, term loan agreement by and among the Company, the lenders party thereto and The Bank of Nova Scotia, as administrative agent, which matured subsequent to year end on November 1, 2022. The Company used part of the funds to partially repay outstanding borrowings under the 2020 Revolving Credit Facility and for general corporate purposes. 
 
 We repaid $ 502.0 million during fiscal 2022. Amounts outstanding under the 2021 364 -Day Term Loan Agreement will bear interest, at the Company’s option, at either the alternate base rate, or the adjusted LIBOR (each as defined in the 2021 364 -Day Term Loan Agreement), plus, in the case of adjusted LIBOR loans, an applicable rate of 60 basis points. 
 
 The 2021 364 -Day Term Loan Agreement contains customary restrictive covenants, as well as financial covenants that require the Company to maintain a certain total leverage ratio and interest coverage ratio, each as defined in the 2021 364 -Day Term Loan Agreement, consistent with the 2020 Credit Agreement discussed below. 
 
 Revolving Credit and Term Loan Agreement on April 1, 2020 
 
 On April 1, 2020, the Company entered into a Revolving Credit and Term Loan Agreement (the 2020 Credit Agreement), among the Company, CooperVision International Holding Company, LP, CooperSurgical Netherlands B.V., CooperVision Holding Kft. the lenders from time to time party thereto, and KeyBank National Association, as administrative agent. The 2020 Credit Agreement provides for (a) a multicurrency revolving credit facility (the 2020 Revolving Credit Facility) in an aggregate principal amount of $ 1.29 billion and (b) a term loan facility (the 2020 Term Loan Facility) in an aggregate principal amount of $ 850.0 million, each of which, unless terminated earlier, mature on April 1, 2025. The Company used $ 850.0 million under the 2020 Term Loan Facility and $ 445.0 million under the 2020 Revolving Credit Facility to fully repay all borrowings outstanding under a previously existing term loan agreement and transfer all letters of credit and borrowings outstanding under a previously existing credit agreement to the 2020 Credit Agreement. The Company has an uncommitted option to increase the revolving credit facility or establish a new term loan in an aggregate amount up to $ 1.605 billion. 
 
 On October 30, 2020, the Company entered into Amendment No. 1 to the 2020 Credit Agreement, adding CooperVision International Limited as a revolving borrower and releasing certain borrowers in the 2020 Credit Agreement. 
 On December 17, 2021, the Company entered into Amendment No.2 to the 2020 Credit Agreement, modifying the 2020 Credit Agreement by, among other things, adding CooperSurgical Holdings Limited as a revolving borrower, releasing CooperVision Holding Kft as a borrower, and updating the benchmark replacement language in the 2020 Credit Agreement. 
 
 The 2020 Credit Agreement will bear interest, at the Company’s option, at either the base rate, or the adjusted LIBOR or adjusted foreign currency rate, plus, in each case, an applicable rate of between 0.00 % and 0.50 % in respect of base rate loans, and between 0.75 % and 1.50 % in respect of adjusted LIBOR or adjusted foreign currency rate loans, in each case in accordance with a pricing grid tied to the Total Leverage Ratio, as defined in the 2020 Credit Agreement. The Company may borrow, repay and re-borrow amounts available under the Revolving Credit Facility, subject to voluntary reduction of the revolving commitment. 
 The Company pays an annual commitment fee that ranges from 0.10 % to 0.20 % of the unused portion of the 2020 Revolving Credit Facility based upon the Company’s Total Leverage Ratio, as defined in the 2020 Credit Agreement. 
 At October 31, 2022, the Company had $ 850.0 million outstanding under the 2020 Term Loan Facility and none outstanding under the 2020 Revolving Credit Facility. The interest rate on the 2020 Term Loan Facility was 4.13 % at October 31, 2022. The interest rate on the 2020 Revolving Credit Facility was 4.13 % at October 31, 2022. 
 Payments on the outstanding long-term debt balance of $ 850.0 million are due in the fiscal year ending October 31, 2025. 
 
 European and Asian Pacific Credit Facilities 
 The Company maintains European credit facilities. The aggregate facility limit was $ 30.7 million and $ 35.8 million at October 31, 2022 and 2021, respectively. At October 31, 2022, $ 12.3 million of the facilities was utilized and the weighted average interest rate on the outstanding balances was 2.46 %. 
 The Company maintains Yen-denominated credit facilities in Japan. The aggregate facility limit was $ 73.0 million and $ 95.0 million at October 31, 2022 and 2021, respectively. At October 31, 2022, $ 45.4 million of the combined facilities was utilized and the weighted average interest rate on the outstanding balances was 0.40 %. 
 Each facility is supported by a continuing and unconditional guaranty. 
 87 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Note 6. Income Taxes 
 
 Effective Tax Rate 
 
 The effective tax rates for fiscal 2022 and 2021 were 18.8 % and ( 499.1 )%, respectively. The increase was primarily due to an intra-group transfer of intellectual property in fiscal 2021 and UK tax rate change in fiscal 2021, as discussed below. The increase was also due to changes in the geographic composition of pre-tax earnings and changes in excess tax benefits from share-based compensation. 
 
 The effective tax rate for fiscal 2022 was lower than the US federal statutory rate primarily due to foreign earnings in jurisdictions with lower tax rates and changes in unrecognized tax benefits, partially offset by foreign earnings subject to US tax. The effective tax rate for fiscal 2021 was lower than the US federal statutory tax rate primarily due to the intra-group transfer, UK tax rate change, and earnings in foreign jurisdictions with lower tax rates partially offset by foreign earnings subject to US tax. 
 
 In November 2020, the Company completed an intra-group transfer of certain intellectual property and related assets of CooperVision to a UK subsidiary as part of a group restructuring to establish headquarters operations in the UK. Determining fair value involved significant judgment related to future revenue growth, operating margins, and discount rates. The transfer resulted in a step-up of the UK tax-deductible basis in the intellectual property and goodwill, creating a temporary difference between the book basis and the tax basis of these assets. As a result, the Company recognized a deferred tax asset of $ 1,987.9 million, with a corresponding income tax benefit, during the first quarter of fiscal 2021. During the third quarter of fiscal 2021, the Company recognized a $ 536.7 million tax benefit related primarily to the remeasurement of this deferred tax asset caused by the UK enactment of a 25% corporate tax rate. 
 
 Components of income before income taxes: 
 
 Years Ended October 31,
(In millions) 2022 2021 2020 
 Income before income taxes: 
 United States $ 31.4 $ ( 31.0 ) $ ( 88.0 ) 
 Foreign 443.9 522.5 354.5 
 $ 475.3 $ 491.5 $ 266.5 
 
 88 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Components of provision for income taxes: 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Current: 
 Federal $ 10.2 $ 21.0 $ 1.4 
 State 3.8 1.3 1.1 
 Foreign 21.7 26.7 26.5 
 35.7 49.0 29.0 
 
 Deferred: 
 Federal 10.5 ( 8.8 ) 3.2 
 State ( 2.2 ) ( 0.5 ) 0.8 
 Foreign 45.6 ( 2,492.9 ) ( 4.9 ) 
 53.9 ( 2,502.2 ) ( 0.9 ) 
 Provision for income taxes $ 89.5 $ ( 2,453.2 ) $ 28.1 

 Reconciliation between the expected provision for income taxes at the US federal statutory rate and the provision for income taxes: 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Provision for income taxes at United States statutory tax rate $ 99.8 $ 103.2 $ 56.0 
 (Decrease) increase in taxes resulting from: 
 Foreign earnings in jurisdictions with lower tax rates ( 22.3 ) ( 43.6 ) ( 54.7 ) 
 Foreign earnings subject to United States tax 20.7 25.4 32.0 
 
 Excess tax benefits from share-based compensation ( 2.6 ) ( 13.0 ) ( 6.2 ) 
 Deferred tax asset step-up ( 3.4 ) 3.2 ( 9.0 ) 
 United States provision-to-return 0.5 ( 1.2 ) 7.0 
 Intra-group transfer to UK subsidiary — ( 1,987.8 ) — 
 Remeasurement of deferred tax assets from UK rate change — ( 536.7 ) — 
 Change in unrecognized tax benefits ( 12.7 ) ( 7.6 ) ( 0.1 ) 
 State tax provision 5.0 0.8 1.9 
 Other, net 4.5 4.1 1.2 
 Provision for income taxes $ 89.5 $ ( 2,453.2 ) $ 28.1 

 89 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Components of deferred tax assets and liabilities: 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 
 Deferred tax assets: 
 Accounts receivable $ 4.9 $ 3.4 
 Inventories 6.3 6.1 
 Accrued liabilities, reserves and compensation accruals 79.9 78.1 
 Foreign deferred tax assets 2,500.5 2,531.5 
 Share-based compensation 14.5 28.6 
 Net operating loss and tax credit carryforwards 19.6 19.3 
 Intangible assets — 6.8 
 Capitalized research and experimental expenses 15.4 13.5 
 Total gross deferred tax assets 2,641.1 2,687.3 
 Less: valuation allowance ( 60.1 ) ( 51.8 ) 
 Deferred tax assets 2,581.0 2,635.5 
 Deferred tax liabilities: 
 Tax deductible goodwill ( 39.7 ) ( 34.0 ) 
 Intangible assets ( 153.8 ) — 
 Plant and equipment ( 48.8 ) ( 46.5 ) 
 Foreign deferred tax liabilities ( 45.5 ) ( 32.5 ) 
 
 Total gross deferred tax liabilities ( 287.8 ) ( 113.0 ) 
 Net deferred tax assets $ 2,293.2 $ 2,522.5 

 In assessing the realizability of deferred tax assets, the Company analyzes whether some or all deferred tax assets will not be realized. This analysis considers historical taxable income, the projected reversal of deferred tax liabilities, projected taxable income and tax planning strategies. Based upon this analysis, it is more likely than not the deferred tax assets, net of valuation allowance, will be realized. The increase in valuation allowance is primarily related to foreign tax attributes. 
 
 At October 31, 2022, the Company had federal net operating loss carryforwards of $ 65.4 million and state net operating loss carryforwards of $ 97.3 million. Federal net operating loss carryforwards of $ 17.1 million expire on various dates between 2025 and 2037 and $ 48.3 million do not expire. The state net operating loss carryforwards expire on various dates between 2026 through 2042. 
 
 A tax benefit is recognized if it is more likely than not that a tax position will be sustained on its technical merits, based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. 
 
 90 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Changes in unrecognized tax benefits: 
 
 (In millions) 
 Balance at October 31, 2020 $ 58.5 
 Decrease based on tax positions in prior fiscal years ( 8.3 ) 
 Increase based on tax positions in current fiscal year 307.2 
 Settlements ( 1.9 ) 
 Lapses of statutes of limitations ( 1.7 ) 
 Balance at October 31, 2021 $ 353.8 
 Decrease based on tax positions in prior fiscal years ( 12.5 ) 
 
 Settlements ( 0.2 ) 
 
 Lapses of statutes of limitations ( 4.2 ) 
 
 Balance at October 31, 2022 $ 336.9 
 
 These tax benefits, if recognized, would reduce provision for income taxes for 2022, 2021 and 2020, by $ 324.3 million, $ 336.5 million, and $ 46.0 million, respectively. Interest and penalties related to unrecognized tax benefits are recognized in provision for income taxes. As of October 31, 2022, 2021 and 2020, accrued gross interest and penalties related to unrecognized tax benefits was $ 5.4 million, $ 6.4 million, and $ 7.3 million, respectively. 
 
 Included in the balance of unrecognized tax benefits at October 31, 2022 is $ 9.1 million related to tax positions for which it is reasonably possible that the total amounts could change during the next twelve months. 
 
 Filed tax returns are subject to examination by tax authorities in major tax jurisdictions after fiscal 2016, including the UK and the US. 
 
 Note 7. Earnings Per Share 
 
 Years Ended October 31, 
 (In millions, except for earnings per share) 2022 2021 2020 
 Net income $ 385.8 $ 2,944.7 $ 238.4 
 Basic: 
 Weighted average common shares 49.3 49.2 49.1 
 Basic earnings per share $ 7.83 $ 59.80 $ 4.85 
 Diluted: 
 Weighted average common shares 49.3 49.2 49.1 
 Effect of dilutive stock plans 0.4 0.6 0.5 
 Diluted weighted average common shares 49.7 49.8 49.6 
 Diluted earnings per share $ 7.76 $ 59.16 $ 4.81 

 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) 2022 2021 2020 
 Stock option shares excluded 227 107 207 
 Exercise prices $ 300.12 - $ 406.17 
 $ 345.74 $ 304.54 
 Restricted stock units excluded 87 2 1 

 91 

 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 Derivatives Minimum Pension Liability Total 
 Balance at October 31, 2019 $ ( 403.2 ) $ — $ ( 43.9 ) $ ( 447.1 ) 
 Gross change in value 0.9 ( 17.1 ) ( 16.8 ) ( 33.0 ) 
 Tax effect — 4.1 4.0 8.1 
 
 Balance at October 31, 2020 $ ( 402.3 ) $ ( 13.0 ) $ ( 56.7 ) $ ( 472.0 ) 
 Gross change in value $ 82.2 $ 34.3 $ 29.8 $ 146.3 
 Tax effect ( 0.2 ) ( 8.2 ) ( 7.2 ) ( 15.6 ) 
 
 Balance at October 31, 2021 $ ( 320.3 ) $ 13.1 $ ( 34.1 ) $ ( 341.3 ) 
 Gross change in value $ ( 234.7 ) $ 107.4 $ 36.6 $ ( 90.7 ) 
 
 Tax effect — ( 26.1 ) ( 8.7 ) ( 34.8 ) 
 Balance at October 31, 2022 $ ( 555.0 ) $ 94.4 $ ( 6.2 ) $ ( 466.8 ) 

 Share Repurchases 
 In December 2011, the Company's Board of Directors authorized the 2012 Share Repurchase Program and through subsequent amendments, the most recent in March 2017, the total repurchase authorization was increased from $ 500.0 million to $ 1.0 billion of the Company's common stock. This program has no expiration date and may be discontinued at any time. Purchases 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. 
 For the years ended October 31, 2022 and 2021, the Company's share repurchases were as follow: 
 
 Years Ended October 31, 2022 2021 
 Number of shares 191,165 69,622 
 Average repurchase price per share $ 410.4 $ 356.6 
 Total costs of shares repurchased (in millions) $ 78.5 $ 24.8 

 At October 31, 2022, $ 256.4 million remained authorized for repurchase under the program. 
 
 Note 9. Stock Plans 
 
 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 Third Amended and Restated 2007 Plan 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 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 6,930,000 shares in the form of specified equity awards including stock options, restricted stock units and performance share awards, subject to adjustment for future stock splits, stock dividends, expirations, forfeitures and similar events. RSUs have no dividend or voting rights prior to vesting. 
 
 As of October 31, 2022, 690,596 shares remained available under the Third Amended and Restated 2007 Plan for future grants. The amount of available shares includes shares which may be distributed under performance share awards. 
 
 92 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Share-Based Compensation 
 Compensation expense and the related tax benefit recognized in our Consolidated Statements of Income for share-based awards, including the Employee Stock Purchase Plan, were as follows: 
 
 October 31, 
 (In millions) 2022 2021 2020 
 Selling, general and administrative expense $ 46.7 $ 38.4 $ 32.2 
 Cost of sales 4.5 3.9 4.0 
 Research and development expense 3.0 2.4 2.4 
 Total compensation expense $ 54.2 $ 44.7 $ 38.6 
 Related income tax benefit $ 5.0 $ 5.6 $ 4.8 

 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. 
 
 Years Ended October 31, 2022 2021 2020 
 Expected life 4.1 years 4.0 years 4.4 years 
 Expected volatility 25.8 % 30.3 % 24.5 % 
 Risk-free interest rate 1.1 % 0.3 % 1.6 % 
 Dividend yield 0.02 % 0.02 % 0.02 % 

 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, 2021 972,692 $ 245.09 
 Granted 122,760 $ 403.44 
 Exercised ( 26,866 ) $ 171.87 
 Forfeited or expired ( 4,743 ) $ 325.21 
 Outstanding at October 31, 2022 1,063,843 $ 264.85 5.75 
 Vested and expected to vest at October 31, 2022 1,038,594 $ 262.91 5.70 $ 38,806,329 
 Vested and exercisable at October 31, 2022 624,512 $ 223.45 4.57 $ 35,586,767 

 The weighted-average fair value of options granted during fiscal 2022, 2021 and 2020, estimated as of the grant date using the Black-Scholes option pricing model, for the 2007 Plan was $ 90.41 , $ 84.10 and $ 70.45 , respectively. The total intrinsic value of options exercised during the fiscal years ended October 31, 2022, 2021 and 2020 was $ 6.6 million, $ 64.7 million and $ 22.6 million, respectively. 
 
 Stock options 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 Plan generally vest over a range of three to five years based on service conditions and expire no later than ten years after the grant date. Options granted under the 2020 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. As of October 31, 2022, there was $ 21.0 million of total unrecognized compensation cost related to nonvested options, which is expected to be recognized over a remaining weighted-average vesting period of 2.3 years. 
 
 93 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Restricted Stock Units 
 
 RSUs granted under the 2007 Plan generally vest over three to five years . The grant-date fair value of RSUs is estimated based on the market price of our common stock. We recognize compensation expense ratably over the vesting period. As of October 31, 2022, there was $ 64.4 million of total unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a remaining weighted-average vesting period of 2.5 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, 2021 317,335 $ 293.80 
 Granted 113,079 $ 399.21 
 Vested and issued ( 113,301 ) $ 271.74 
 Forfeited or expired ( 27,875 ) $ 324.67 
 Non-vested RSUs at October 31, 2022 289,238 $ 340.68 

 Performance Units 
 
 Performance units may be 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. We granted performance unit awards on December 8, 2020 under the 2007 Plan. The performance shares actually earned will range from zero to 200 % of the target number of performance shares for performance periods ending in fiscal 2021 through fiscal 2024. 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, 2022, there was $ 11.2 million of total unrecognized compensation cost related to non-vested performance units, which is expected to be recognized over a remaining weighted-average vesting period of 1.8 years. 
 Employee Stock Purchase Plan 
 
 On March 18, 2019, the Company received stockholder approval for the Employee Stock Purchase Plan (ESPP). The first offering period began on November 4, 2019 and offerings are generally made on a quarterly basis. The purpose of the ESPP is to provide eligible employees of the Company with the opportunity to acquire shares of common stock at 85 % of the market price on the last business day of each offering period by means of accumulated payroll deductions. The ESPP initially authorized the issuance of 1,000,000 shares of common stock. These shares will be made available from shares of common stock reacquired by the Company as Treasury Stock. During fiscal 2022 and 2021, we issued 22,695 and 17,575 shares to our employees under the ESPP, respectively. At October 31, 2022, the number of shares remaining available for future issuance under the ESPP was 948,090 shares. Total ESPP share-based compensation recognized during fiscal 2022 and 2021 was $ 1.1 million and $ 1.0 million, respectively. 
 
 Note 10. Employee Benefits 
 
 Cooper's Retirement Income Plan 
 
 The Company's Retirement Income Plan (Plan), a defined benefit plan, is only available to full-time United States employees, subject to the soft freeze mentioned below. 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. 
 
 94 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 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 and fair value of the Plan assets at October 31, 2022, 2021 and 2020 and the funded status of the Plan and net periodic pension costs for each of the years in the three-year periods ended October 31, 2022. The net amounts recognized in the Consolidated Balance Sheets consist of noncurrent liabilities. The accumulated benefit obligation was $ 134.9 million, $ 207.6 million and $ 195.8 million for the years ended October 31, 2022, 2021 and 2020. 
 
 Retirement Income Plan 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Change in benefit obligation 
 Benefit obligation, beginning of year $ 230.9 $ 218.8 $ 189.7 
 Service cost 18.3 17.2 13.9 
 Interest cost 5.1 4.4 5.2 
 Benefits paid ( 13.1 ) ( 11.5 ) ( 10.0 ) 
 
 Actuarial (gain)/loss ( 93.2 ) 2.0 20.0 
 Benefit obligation, end of year $ 148.0 $ 230.9 $ 218.8 
 Change in plan assets 
 Fair value of plan assets, beginning of year $ 199.5 $ 159.5 $ 136.0 
 Actual return on plan assets ( 43.5 ) 38.8 10.1 
 Employer contributions — 12.7 23.4 
 Benefits paid ( 13.1 ) ( 11.5 ) ( 10.0 ) 
 Fair value of plan assets, end of year $ 142.9 $ 199.5 $ 159.5 
 Funded status at end of year $ ( 5.1 ) $ ( 31.4 ) $ ( 59.3 ) 

 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Amounts recognized in accumulated other comprehensive income consist of: 
 
 Net loss $ 8.0 $ 44.4 $ 74.2 
 Accumulated other comprehensive income $ 8.0 $ 44.4 $ 74.2 

 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Reconciliation of (prepaid) accrued pension cost: 
 (Prepaid)/Accrued pension cost at prior fiscal year end $ ( 13.0 ) $ ( 14.8 ) $ ( 3.7 ) 
 Net periodic benefit cost 10.1 14.5 12.3 
 Contributions made during the year — ( 12.7 ) ( 23.4 ) 
 
 (Prepaid)/Accrued pension cost at fiscal year end $ ( 2.9 ) $ ( 13.0 ) $ ( 14.8 ) 

 95 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Components of net periodic benefit cost and other amounts recognized in the Consolidated Statements of Income: 
 Net periodic benefit cost: 
 Service cost $ 18.3 $ 17.2 $ 13.9 
 Interest cost 5.1 4.4 5.2 
 Expected return on plan assets ( 15.5 ) ( 12.5 ) ( 10.8 ) 
 
 Recognized actuarial loss 2.2 5.4 4.0 
 Net periodic pension cost $ 10.1 $ 14.5 $ 12.3 

 Years Ended October 31,
 (In millions) 
 2022 2021 2020 
 Other changes in plan assets and benefit obligations recognized in other comprehensive income: 
 
 Net (gain) loss $ ( 34.1 ) $ ( 24.4 ) $ 20.8 
 
 Amortizations of net gain ( 2.5 ) ( 5.4 ) ( 4.0 ) 
 
 Total recognized in other comprehensive (income) loss $ ( 36.6 ) $ ( 29.8 ) $ 16.8 
 Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 26.2 ) $ ( 15.2 ) $ 29.0 

 Years Ended October 31, 2022 2021 2020 
 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 2.76 % 2.78 % 3.13 % 
 Service Cost 2.79 % 2.86 % 3.18 % 
 Interest Cost 2.28 % 2.07 % 2.78 % 
 Discount rate for determining benefit obligations at year end 5.74 % 2.76 % 2.78 % 
 Rate of compensation increase for determining expense 3.60 % 3.60 % 3.60 % 
 Rate of compensation increase for determining benefit obligations at year end 3.60 % 3.60 % 3.60 % 
 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 10/31/2022 10/31/2021 10/31/2020 

 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 rated AA or above, 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 2.76 %, which is 0.02 % lower than prior fiscal year, had been used, the projected benefit obligation would have been $ 217.2 million, and the accumulated benefit obligation would have been $ 194.2 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. 
 
 Reasons for Significant Liability Gains and Losses 
 
 The projected benefit obligation experienced a net gain of approximately $ 93.2 million during the year. This net gain is primarily due to gains from assumption changes of approximately $ 97.1 million, offset by losses of approximately $ 3.9 million 
 96 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 due to demographic experience. The key assumption changes were the increase in the discount rate (gain of $ 72.7 million), a change in the assumed payment form election probabilities (gain of $ 0.3 million), and changes in assumptions for lump sum determination (gain of $ 24.1 million). The primary reasons for demographic losses were the net effect of retirement rates, termination rates, salary increases and other experience that was different from assumed. 
 
 Plan Assets 
 
 Weighted-average asset allocations at year end, by asset category are as follows: 
 
 Years Ended October 31, 2022 2021 2020 
 Asset category 
 Cash and cash equivalents 2.0 % 5.0 % 11.8 % 
 
 Equity mutual funds 65.8 % 62.8 % 57.7 % 
 Hedging Strategy Funds 5.2 % 4.7 % 4.3 % 
 
 Bond mutual funds 27.0 % 27.5 % 26.2 % 
 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 70 % equities with the remainder invested in fixed income, hedging strategy funds and cash. Presently, this diversified portfolio is expected to return roughly 8 % in the long run. 
 
 As of the measurement date of October 31, 2022, the fair value measurement of plan assets is as follows: 
 
 (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 $ 2.9 $ 2.9 $ — $ — 
 
 Equity mutual funds 93.9 93.9 — — 
 Hedging Strategy Funds 7.5 7.5 — — 
 Bond mutual funds 38.6 14.5 24.1 — 
 Total $ 142.9 $ 118.8 $ 24.1 $ — 

 The Plan has an established process for determining the fair value of plan assets. For investments in equity and bond mutual funds, and real estate funds, fair value is based on observable, Level 1 inputs. 
 
 While the Company believes its 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. 
 
 Plan Cash Flows 
 
 Contributions 
 
 The Company made no contributions to the Plan in fiscal 2022. The Company contributions to the Plan were $ 12.7 million for fiscal 2021 and, $ 23.4 million for fiscal 2020. The Company closely monitors the funded status of the Plan with respect to legislative and accounting rules. The Company does not expect to make a contribution to the Plan during fiscal 2023. 
 
 97 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Estimated Future Benefit Payments 
 
 Years
 (In millions) 
 
 2023 $ 9.4 
 2024 $ 11.0 
 2025 $ 11.9 
 2026 $ 11.4 
 2027 $ 11.9 
 2028-2032 $ 66.1 

 Plan Soft Freeze 
 
 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. 
 
 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 $ 9.0 million, $ 7.2 million and $ 6.8 million for the years ended October 31, 2022, 2021 and 2020, respectively. 
 
 Note 11. Contingencies 
 
 The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company does not believe that the ultimate resolution of these proceedings or claims pending against it could have a material adverse effect on its financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies . Legal fees are expensed as incurred. 
 
 Note 12. Business Segment Information 
 The Company discloses information about its operating segments, which were established based on the way that management organizes segments within the Company for making operating decisions and assessing financial performance. The Company's 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 general health care market with a focus on advancing the health of women, babies and families through a diversified portfolio of products and services focusing on women's health and fertility. 
 The Company uses operating income, as presented in our financial reports, as the primary measure of segment profitability. The Company does not allocate costs from corporate functions to segment operating income. 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 2022, 2021 and 2020. 
 Total identifiable assets are those used in continuing operations except cash and cash equivalents, which the Company includes as corporate assets. 
 98 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 The following table presents a summary of our business segment net sales: 
 
 (In millions) 2022 2021 2020 
 CooperVision net sales by category: 
 Toric lens $ 737.4 $ 697.5 $ 598.2 
 Multifocal lens 264.4 238.6 197.0 
 Single-use sphere lens 661.6 616.3 529.0 
 Non single-use sphere, other 579.9 599.6 518.8 
 Total CooperVision net sales 2,243.3 2,152.0 1,843.0 
 CooperSurgical net sales by category: 
 Office and surgical products 633.6 451.3 358.8 
 Fertility 431.5 319.2 229.1 
 Total CooperSurgical net sales 1,065.1 770.5 587.9 
 Total net sales $ 3,308.4 $ 2,922.5 $ 2,430.9 

 99 

 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, 2022, follows: 
 
 (In millions) CooperVision CooperSurgical Corporate Consolidated 
 2022 
 Net sales $ 2,243.3 $ 1,065.1 $ — $ 3,308.4 
 Operating income (loss) $ 494.3 $ 67.1 $ ( 53.8 ) $ 507.6 
 Interest expense 57.3 
 Other (income), net ( 25.0 ) 
 Income before income taxes $ 475.3 
 Identifiable assets $ 6,778.9 $ 4,407.8 $ 305.6 $ 11,492.3 
 Depreciation expense $ 144.5 $ 22.1 $ — $ 166.6 
 Amortization expense $ 32.3 $ 147.2 $ — $ 179.5 
 Capital expenditures $ 223.0 $ 19.0 $ — $ 242.0 
 2021 
 Net sales $ 2,152.0 $ 770.5 $ — $ 2,922.5 
 Operating income (loss) $ 481.3 $ 71.8 $ ( 47.3 ) $ 505.8 
 Interest expense 23.1 
 Other (income), net ( 8.8 ) 
 Income before income taxes $ 491.5 
 Identifiable assets $ 6,965.9 $ 2,395.6 $ 244.7 $ 9,606.2 
 Depreciation expense $ 148.3 $ 14.9 $ — $ 163.2 
 Amortization expense $ 35.7 $ 110.4 $ — $ 146.1 
 Capital expenditures $ 190.0 $ 24.4 $ — $ 214.4 
 2020 
 Net sales $ 1,843.0 $ 587.9 $ — $ 2,430.9 
 Operating income (loss) $ 375.7 $ ( 14.7 ) $ ( 49.2 ) $ 311.8 
 Interest expense 36.8 
 Other expense, net 8.5 
 Income before income taxes $ 266.5 
 Identifiable assets $ 4,236.3 $ 2,293.8 $ 207.4 $ 6,737.5 
 Depreciation expense $ 138.2 $ 11.7 $ — $ 149.9 
 Amortization expense $ 32.4 $ 104.8 $ — $ 137.2 
 Capital expenditures $ 260.3 $ 50.1 $ — $ 310.4 

 100 

 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, 2022, follows: 
 
 (In millions) United
States Europe Rest of
World, Other
Eliminations
& Corporate Consolidated 
 2022 
 Net sales to unaffiliated customers $ 1,638.5 $ 987.2 $ 682.7 $ 3,308.4 
 Sales between geographic areas 514.4 897.3 ( 1,411.7 ) — 
 Net sales $ 2,152.9 $ 1,884.5 $ ( 729.0 ) $ 3,308.4 
 Operating income $ 71.8 $ 403.8 $ 32.0 $ 507.6 
 Long-lived assets $ 856.1 $ 310.8 $ 266.0 $ 1,432.9 
 2021 
 Net sales to unaffiliated customers $ 1,339.2 $ 957.9 $ 625.4 $ 2,922.5 
 Sales between geographic areas 494.9 815.1 ( 1,310.0 ) — 
 Net sales $ 1,834.1 $ 1,773.0 $ ( 684.6 ) $ 2,922.5 
 Operating (loss) income $ ( 26.8 ) $ 416.2 $ 116.4 $ 505.8 
 Long-lived assets $ 737.5 $ 377.2 $ 232.9 $ 1,347.6 
 2020 
 Net sales to unaffiliated customers $ 1,103.6 $ 789.8 $ 537.5 $ 2,430.9 
 Sales between geographic areas 391.7 327.1 ( 718.8 ) — 
 Net sales $ 1,495.3 $ 1,116.9 $ ( 181.3 ) $ 2,430.9 
 Operating (loss) income $ ( 14.5 ) $ 21.9 $ 304.4 $ 311.8 
 Long-lived assets $ 721.3 $ 363.0 $ 197.6 $ 1,281.9 

 101 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 
 Note 13. Financial Derivatives and Hedging 
 
 As part of the Company’s overall risk management practices the Company enters into financial derivatives, interest rate swaps designated as cash flow hedges, to hedge the Company's exposure to changes in cash flows associated with its variable rate debt. 
 Credit risk related to derivative transactions reflects the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings to help mitigate counterparty credit risk. 
 On April 6, 2020 the Company entered into six interest rate swap contracts which were used to hedge its exposure to changes in cash flows associated with its variable rate debt and were designated as derivatives in a cash flow hedge. The payment streams were based on a total notional amount of $ 1.5 billion at the inception of the contracts. As of October 31, 2022, three of the six interest rate swap contracts have matured and the outstanding contracts have a total notional amount of $ 1.0 billion and remaining maturities of five years or less. . 
 
 The Company did not have any cross-currency swaps or foreign currency forward contracts as of October 31, 2022. 
 The pre-tax impact of gain on derivatives designated for hedge accounting recognized in other comprehensive income (loss) was $ 124.5 million ($ 30.1 million, net of tax) as of October 31, 2022. The pre-tax impact of gain on derivatives designated for hedge accounting recognized in other comprehensive income (loss) was $ 17.2 million ($ 13.1 million, net of tax) as of October 31, 2021. The fair value of derivative instruments are classified in "Other non-current assets" on our consolidated balance sheets. 
 The following table summarizes the amounts recognized with respect to our derivative instruments within the accompanying Consolidated Statements of Income: 
 
 Periods Ended October 31, 
 (In millions) 2022 2021 2020 
 Derivatives designated as cash flow hedges Location of Loss (Income) Recognized on Derivatives 
 Interest rate swap contracts Interest expense (income) $ ( 2.3 ) $ 8.0 $ 3.7 

 The Company expects that ($ 38.3 million) recorded as a component of accumulated other comprehensive income (loss) will be realized in the Consolidated Statements of Income over the next twelve months and the amount will vary depending on prevailing interest rates. 
 
 The following table details the changes in accumulated other comprehensive income: 
 
 (In millions) Amount 
 Balance as of October 31, 2020 $ ( 17.1 ) 
 Amount recognized in other comprehensive income on interest rate swap contracts, gross ($ 20.0 , net of tax) 
 26.3 
 Amount reclassified from other comprehensive income into earnings, gross ($ 6.1 , net of tax) 
 8 
 Balance gain as of October 31, 2021 $ 17.2 
 Amount recognized in other comprehensive income on interest rate swap contracts, gross ($ 79.7 , net of tax) 
 105.1 
 Amount reclassified from other comprehensive income into earnings, gross ($ 1.7 , net of tax) 
 2.2 
 Balance gain as of October 31, 2022 $ 124.5 

 102 

 THE COOPER COMPANIES, INC. AND SUBSIDIARIES 

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 
 
 None.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
COOPER COMPANIES, INC. 10-K

Item 8. Financial Statements and Supplementary Data
