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SECURITIES AND EXCHANGE COMMISSION
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Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 24, 1997
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Cooper Industries, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Ohio
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(State or Other Jurisdiction of Incorporation)
1-1175 31-4156620
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(Commission File Number) (IRS Employer Identification No.)
600 Travis, Suite 5800, Houston, Texas 77002
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(Address of Principal Executive Offices) (Zip Code)
713/209-8400
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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Second Quarter 1997 Results of Operations
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On July 24, 1997, Cooper Industries ("the Company") issued the press release
attached hereto as Exhibit 99.1 setting forth the Company's results of
operations for the quarter ended June 30, 1997.
Business Outlook for 1997
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The following statements, which are based on current expectations, update the
Company's general business outlook for 1997, as discussed in Management's
Discussion and Analysis of Financial Condition and Results of Operations set
forth in the Company's Annual Report on Form 10-K for the year ended December
31, 1996. The statements are forward looking, and actual results may differ
materially. The comparative figures for 1997 include the effects of acquisitions
and divestitures made through June 30, 1997, exclude Kirsch from the Tools &
Hardware segment in 1996 and 1997, and exclude the effects of the gain on the
sale of Kirsch and of non-recurring charges.
The Company expects revenues to increase by approximately five percent or more
for the Electrical Products and Tools & Hardware segments. Revenues for
Automotive Products are expected to be about the same as in 1996.
Overall, the Company's earnings outlook has not changed, although the mix among
product segments has changed somewhat. The Company expects operating income for
the Electrical Products segment to increase by approximately five to 10 percent.
Operating income for the Tools & Hardware segment is expected to increase by
approximately 10 percent or more. Operating income for the Automotive Products
segment is expected to increase by approximately five to 10 percent.
The above estimates are forward looking statements and involve a number of
assumptions, risks and uncertainties. The primary economic assumptions include,
without limitation, (i) modest growth in the domestic economy; (ii) a modest
improvement in European markets; (iii) a modest increase in construction
spending worldwide, (iv) no significant change in raw material costs, and (v) no
major customer consolidation in the automotive aftermarket. The estimates also
assume, without limitation, no significant change in competitive conditions and
such other risk factors as are discussed from time to time in the Company's
periodic filings with the Securities and Exchange Commission.
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Item 7. Financial Statements and Exhibits.
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Exhibits
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99.1 Company Press Release Dated July 24, 1997 Titled "Cooper
Industries Reports Net Income Up 20%. Second-quarter share
earnings up 12%."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COOPER INDUSTRIES, INC.
(Registrant)
Date: July 24, 1997 /s/D. Bradley McWilliams
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D. Bradley McWilliams
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
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99.1 Company Press Release Dated July 24, 1997 Titled "Cooper
Industries Reports Net Income Up 20%. Second-quarter share
earnings up 12%."
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Cooper Industries
P. O. Box 4446
Houston, Texas 77210 EXHIBIT 99.1
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[GRAPHIC OMITTED]
NEWS
RELEASE
FOR IMMEDIATE RELEASE
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July 24, 1997
Contacts: John Breed Phyllis Piano
713-209-8835 713-209-8415
COOPER INDUSTRIES REPORTS NET INCOME UP 20%
Second-quarter share earnings up 12%
HOUSTON, TX, July 24 -- Second-quarter fully diluted share earnings of Cooper
Industries, Inc. (NYSE-CBE) rose 12% to 86 cents from 77 cents a share in the
same quarter of 1996. Revenues increased 2% to $1.38 billion from $1.35 billion
in the second quarter of 1996. Second-quarter earnings before taxes rose 14% to
$170.2 million from $149.6 million in the second quarter of 1996. Net income
increased 20% to $105.5 million from $88.3 million in the comparable period of
1996.
During the second quarter, Cooper Industries completed the sale of its
Kirsch window coverings business, which affected the year-to-year revenue
comparisons. Excluding Kirsch, second-quarter revenues increased by 5%.
Additionally, the sale of Kirsch resulted in a pre-tax gain of $69.8 million
during the quarter. The company also recorded $70.5 million of nonrecurring
pre-tax charges related to information systems technology that will be replaced
as Cooper complies with Year 2000 requirements, international plant
consolidations and the exiting of certain lower-margin automotive product lines.
For the six months ended June 30, 1997, Cooper's revenues rose 2% to
$2.7 billion, up from $2.6 billion in the same period of 1996. Excluding Kirsch,
revenues increased 4%. Earnings before taxes increased 16% to $295.5 million
compared with $255.3 million in the second quarter of 1996. Fully diluted share
earnings increased 14% to $1.52, compared with $1.33 during the first half of
1996.
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Cooper Industries, Inc. Page 2
"It was another outstanding quarter for Cooper Industries," said H.
John Riley, Jr., Chairman, President and Chief Executive Officer. "The results
can be attributed to continued strong momentum in our Electrical Products
business and a rebound in the performance of our Tools & Hardware segment. In
addition, our Automotive Products business is holding its own in a very
difficult worldwide market," he added.
Revenues for the Electrical Products segment were up 8% during the
quarter, driven by double digit sales gains in the circuit protection and power
systems businesses. Tools & Hardware revenues, excluding Kirsch, increased 9% in
the quarter. Strong aerospace and automotive markets enabled the power tools
business to achieve record performance levels. A new, fully operational hand
tools distribution center helped that business improve its results over the same
period in 1996. Revenues for the Automotive Products segment were down 2% in the
quarter, reflecting a continued soft automotive aftermarket and generally weak
demand for wiper and temperature control products.
"During the second quarter, we took additional decisive actions to
firmly position Cooper for future success. As part of our continuing efforts to
improve the profitability of our Automotive Products segment, we made a decision
to exit certain lower-margin product lines. Most recently, we signed a letter of
intent to exchange our temperature control product lines for the brake business
of Standard Motor Products. In addition, our Moog Automotive business became the
first of several of our operations to install a fully integrated business system
and is now beginning to realize productivity gains. We expect actions like these
to lead to significant margin improvement in our Automotive Products segment,"
Riley said.
"In Electrical Products, our power systems business will benefit from
the recent acquisition of Kearney Company and the implementation of a major
restructuring of distribution transformer manufacturing processes. In addition,
a new, centralized customer service and distribution center for our lighting
products business became fully operational in the quarter and will soon lead to
significantly enhanced service levels and reduced costs.
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Cooper Industries, Inc. Page 3
"For our Tools & Hardware segment, a recently announced facilities
consolidation in Brazil and an ongoing facilities rationalization program in
Europe will help us continue to enhance our performance. Additionally, a program
to implement fully integrated business systems throughout the segment is now
underway," Riley said.
During the quarter, the company purchased approximately one million of
its shares totaling $50 million as part of a $275 million common stock
repurchase program announced in June. As the quarter ended, the company had
reduced its debt-to-total capital ratio to 34%.
"All of these actions position Cooper to achieve our 1997 objectives
and generate continued earnings growth in the years ahead," Riley added.
Comparisons of 1997 and 1996 second-quarter and first-half results
appear on the following pages.
Cooper Industries, with 1996 revenues of $5.3 billion, is a
diversified, worldwide manufacturer of electrical products, tools and hardware,
and automotive products. Additional information about Cooper is available on the
company's World Wide Web site:
www.cooperindustries.com.
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Cooper Industries, Inc. Page 4
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended June 30, % Change
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1997 1996(1)
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(in millions where applicable)
<S> <C> <C> <C>
Revenues:
Electrical Products $ 660.7 $ 611.3 8.1%
Tools & Hardware 195.7 178.9 9.4%
Kirsch(2) 41.8 66.2 NA
Automotive Products 486.7 495.0 -1.7%
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Total Revenues 1,384.9 1,351.4 2.5%
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Cost of sales 938.4 919.3 2.1%
Selling & administrative expenses 238.8 232.8 2.6%
Goodwill amortization 16.1 16.4 -1.8%
Nonrecurring charges 70.5 8.3 NA
Other(income)expense, net (70.4) (11.8) NA
Interest expense 21.3 36.8 -42.1%
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Income Before Income Taxes 170.2 149.6 13.8%
Income Taxes 64.7 61.3 5.5%
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Net Income $ 105.5 $ 88.3 19.5%
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Net Income Per Common Share:
Primary $ .88 $ .82 7.3%
Fully Diluted(3 ) $ .86 $ .77 11.7%
Shares Utilized in Computation
of Income Per Common Share:
Primary 120.0 million 107.7 million
Fully Diluted 123.1 million 124.4 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Quarter Ended June 30,
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1997 1996
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<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 67.8% 68.0%
Selling & administrative expenses 17.2% 17.2%
Goodwill amortization 1.2% 1.2%
Nonrecurring charges 5.1% 0.6%
Other(income)expense, net -5.1% -0.9%
Interest expense 1.5% 2.7%
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Income Before Income Taxes 12.3% 11.1%
Income Taxes 4.7% 4.5%
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Net Income 7.6% 6.5%
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</TABLE>
(1) Certain amounts have been reclassified to conform to the 1997 presentation.
(2) Kirsch revenues represent the revenues prior to the sale to Newell Co. on
May 30, 1997.
(3) The calculations assume conversion of the 7.05% Convertible Subordinated
Debentures to Common stock. As a result, interest on the debentures ($0.1
million in 1997 and $7.3 million in 1996, net of tax) was added back to net
income in the computation of fully diluted earnings per share.
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Cooper Industries, Inc. Page 5
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June 30, % Change
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1997 1996(1)
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(in millions where applicable)
<S> <C> <C> <C>
Revenues:
Electrical Products $1,273.4 $1,185.8 7.4%
Tools & Hardware 375.8 355.5 5.7%
Kirsch(2) 97.4 125.9 NA
Automotive Products 957.2 975.9 -1.9%
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Total Revenues 2,703.8 2,643.1 2.3%
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Cost of sales 1,844.1 1,816.4 1.5%
Selling & administrative expenses 479.6 466.4 2.8%
Goodwill amortization 32.1 32.6 -1.5%
Nonrecurring charges 70.5 19.2 NA
Other(income)expense, net (68.9) (21.2) NA
Interest expense 50.9 74.4 -31.6%
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Income Before Income Taxes 295.5 255.3 15.7%
Income Taxes 112.3 104.9 7.1%
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Net Income $ 183.2 $ 150.4 21.8%
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Net Income Per Common Share:
Primary $ 1.59 $ 1.40 13.6%
Fully Diluted(3) $ 1.52 $ 1.33 14.3%
Shares Utilized in Computation
of Income Per Common Share:
Primary 115.1 million 107.5 million
Fully Diluted 124.0 million 124.4 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Six Months Ended June 30,
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1997 1996
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<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 68.2% 68.7%
Selling & administrative expenses 17.7% 17.6%
Goodwill amortization 1.2% 1.2%
Nonrecurring charges 2.6% 0.7%
Other(income)expense, net -2.5% -0.8%
Interest expense 1.9% 2.8%
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Income Before Income Taxes 10.9% 9.7%
Income Taxes 4.2% 4.0%
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Net Income 6.8% 5.7%
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</TABLE>
(1) Certain amounts have been reclassified to conform to the 1997 presentation.
(2) Kirsch revenues represent the revenues prior to the sale to Newell Co. on
May 30, 1997.
(3) The calculations assume conversion of the 7.05% Convertible Subordinated
Debentures to Common stock. As a result, interest on the debentures ($5.8
million in 1997 and $14.6 million in 1996, net of tax) was added back to
net income in the computation of fully diluted earnings per share.
This press release contains forward-looking statements made in reliance upon the
safe harbor of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve a number of assumptions, risks and
uncertainties that could cause actual results of the company to differ
materially from those matters expressed in or implied by such forward-looking
statements. See "Business Outlook for 1997" set forth in the Company's Current
Report on Form 8-K dated July 24, 1997.
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