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SECURITIES AND EXCHANGE COMMISSION
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) October 22, 1998
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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)
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<S> <C>
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)
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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.
On October 22, 1998, Cooper Industries, Inc. (the "Company") issued the press
release attached hereto as Exhibit 99.1 setting forth the Company's results of
operations for the third quarter of 1998.
Item 7. Financial Statements and Exhibits.
Exhibits
99.1 Company Press Release Dated October 22, 1998 Titled
"Cooper Industries Reports Third-Quarter Share Earnings of
$0.81."
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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: October 22, 1998 /s/ Diane K. Schumacher
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Diane K. Schumacher
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit No. Description
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[S] [C]
99.1 Company Press Release Dated October 22, 1998 Titled "Cooper
Industries Reports Third-Quarter Share Earnings of $0.81."
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Exhibit 99.1
FOR IMMEDIATE RELEASE
October 22, 1998
Contact: John Breed
713-209-8835
COOPER REPORTS THIRD-QUARTER SHARE EARNINGS OF $.81
HOUSTON, TX, Oct. 22 -- Cooper Industries, Inc. (NYSE:CBE) reported today that
its third-quarter net income was $93 million or $.81 per diluted share,
compared to $96 million or $.79 per diluted share, excluding nonrecurring
items, in 1997. For the nine months ended September 30, 1998, Cooper's net
income was $291 million or $2.45 per diluted share, compared to $280 million or
$2.31 per share, excluding nonrecurring items, in 1997.
In early October 1998, Cooper completed the sale of its automotive
business. Consequently, the company's past financial performance has been
restated, with this segment's results reported as discontinued operations. A
review of the performance of Cooper's continuing operations follows.
Cooper's third-quarter revenues from continuing operations increased
11 percent to $924 million compared to $830 million in the third quarter of
1997. The company's income from continuing operations during the quarter was
$67 million or $.59 per diluted share compared with $70 million or $.57 per
diluted share, before nonrecurring items, in 1997.
For the nine months ended September 30, 1998, Cooper's revenues from
continuing operations, excluding Kirsch, which was sold in May 1997, increased
12 percent to $2.8 billion from $2.5 billion in the same period of 1997. The
company's income from continuing operations was $207 million, or $1.74 per
diluted share, compared with $192 million or $1.60 per share before
nonrecurring items, in the first nine months of 1997.
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"Cooper's ability to increase earnings in the face of short-term
market disruptions is evidence that the actions we have been taking to reduce
costs and improve productivity are working," said H. John Riley, Jr., Chairman,
President and Chief Executive Officer. "We expect to continue to see earnings
improvements from these programs in the fourth quarter and in 1999."
Revenues for the ELECTRICAL PRODUCTS segment increased 12 percent from
the prior year's third quarter, driven by strong demand for lighting and
circuit protection products and the impact of recent acquisitions. Worldwide
sales of the segment's hazardous-duty electrical construction materials
stabilized during the quarter, though this business continues to experience
lower demand for equipment for major projects and competitive pricing
pressures. The operating performance of the power systems business continues
to be adversely affected by economic conditions in Asia and an unfavorable
domestic product mix.
TOOLS & HARDWARE segment revenues increased 9 percent from the prior
year's third quarter. Sales associated with recent acquisitions in the
company's power tools business more than offset the impact of reduced shipments
of power tools to aircraft and automotive manufacturers and slowing demand for
hand tools in industrial markets. In addition, the implementation of business
enterprise systems at a number of facilities had a modest negative effect on
revenues during the quarter.
On October 9, 1998, Cooper completed the sale of its automotive
business for $1.9 billion. Proceeds from this sale are being used to
repurchase shares, reduce debt and fund value-adding acquisitions. In
anticipation of the sale, Cooper recently completed a $500 million stock
repurchase program. By the end of the third quarter, the company had reduced
its shares outstanding by 11 percent from year-end 1997 to approximately 107
million shares.
"All of these actions will add value for our shareholders and
strengthen the company's performance," said Riley. "Looking ahead, we expect
that the timing of the automotive sale and related debt repayments and stock
repurchases will unfavorably impact year-to-year earnings comparisons for the
fourth quarter. However, this will be more than offset by a gain from the
scheduled exchange of our DECS(SM) (Debt Exchangeable for Common Stock(SM)).
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"During the fourth quarter, we will be working to reshape our capital
structure to offset the automotive segment's contribution to earnings and to
maintain a strong balance sheet that provides more than adequate capacity for
future growth. By year-end, Cooper will have been transformed into a company
focused on higher growth and less volatile markets. While the year ahead looks
to be challenging, we will be well prepared to extend our record of earnings
per share growth," Riley said.
Comparisons of 1998 and 1997 third-quarter and year-to-date results
appear on the following pages.
Cooper Industries, a worldwide manufacturer of electrical products,
tools and hardware, is headquartered in Houston, Texas. Additional information
about Cooper is available on the company's World Wide Web site:
www.cooperindustries.com.
Statements in this news release are forward-looking under the Private
Securities Litigation Reform Act of 1995. These statements are subject to
various risks and uncertainties, many of which are outside the control of the
company, such as the level of market demand for the company's products,
competitive pressures and future economic conditions. These factors are
discussed in the company's 1997 Annual Report on Form 10-K and other Securities
and Exchange Commission filings.
# # #
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CONSOLIDATED RESULTS OF OPERATIONS
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<CAPTION>
Quarter Ended September 30, % Change
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1998 1997(1)
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(in millions where applicable)
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Revenues:
Electrical Products $ 724.0 $ 646.4 12.0%
Tools & Hardware 200.0 183.9 8.8%
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Total revenues 924.0 830.3 11.3%
Cost of sales 621.8 554.4
Selling and administrative expenses 151.0 138.0
Goodwill amortization 11.2 8.1
Nonrecurring gains - (23.2)
Nonrecurring charges - 3.8
Interest expense 34.8 19.4
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Income Before Income Taxes 105.2 129.8
Income Taxes 37.9 48.2
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Continuing income 67.3 81.6
Discontinued operations, net of tax 25.9 20.9
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Net Income $ 93.2 $ 102.5(2)
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Net Income Per Common Share:
Basic
Continuing Operations $ 0.59 $ 0.68
Discontinued Operations 0.23 0.17
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Net Income $ 0.82 $ 0.85
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Diluted
Continuing Operations $ 0.59 $ 0.67
Discontinued Operations 0.22 0.17
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Net Income $ 0.81 $ 0.84
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Shares Utilized in Computation
of Income Per Common Share:
Basic 113.5 million 121.0 million
Diluted 114.7 million 122.5 million
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PERCENTAGE OF REVENUES
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<CAPTION>
Quarter Ended September 30,
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1998 1997
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Revenues 100.0% 100.0%
Cost of sales 67.3% 66.8%
Selling and administrative expenses 16.3% 16.6%
Continuing Income Before Income Taxes 11.4% 15.6%
Continuing Income 7.3% 9.8%
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(Additional information on next page)
(1) The 1997 amounts have been restated to reflect the reclassification of the
Company's Automotive Products segment as a discontinued operation.
(2) Net income includes approximately $6 million of net nonrecurring gains.
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CONSOLIDATED RESULTS OF OPERATIONS (Continued)
ADDITIONAL INFORMATION FOR THE QUARTER ENDED SEPTEMBER 30, 1998
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<CAPTION>
Net Income Per
Net Income Diluted Common Share
1998 1997 1998 1997
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(in millions where applicable)
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From Continuing Operations:
Before nonrecurring items $ 67.3 $ 69.6 $ .59 $ .57
Nonrecurring items - 12.0 - .10
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67.3 81.6 .59 .67
From Discontinued Operations:
Before nonrecurring items 25.9 26.9 .22 .22
Nonrecurring items - (6.0) - (.05)
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25.9 20.9 .22 .17
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Net Income $ 93.2 $ 102.5 $ .81 $ .84
========= ========= ========== =========
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CONSOLIDATED RESULTS OF OPERATIONS
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<CAPTION>
Nine Months Ended September 30, % Change
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1998 1997(1)
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(in millions where applicable)
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Revenues:
Electrical Products $ 2,153.9 $ 1,919.8 12.2%
Tools & Hardware 615.4 559.7 10.0%
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Subtotal 2,769.3 2,479.5 11.7%
Kirsch(2) - 97.4 n.m.
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Total revenues 2,769.3 2,576.9 7.5%
Cost of sales 1,863.5 1,733.7
Selling and administrative expenses 462.5 442.9
Goodwill amortization 32.4 23.9
Nonrecurring gains - (93.0)
Nonrecurring charges - 40.5
Interest expense 87.5 70.3
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Continuing Income Before Income Taxes 323.4 358.6
Income Taxes 116.4 133.2
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Continuing income 207.0 225.4
Discontinued operations, net of tax 84.2 60.3
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Net Income $ 291.2 $ 285.7(3)
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Net Income Per Common Share:
Basic
Continuing Operations $ 1.76 $ 1.93
Discontinued Operations 0.72 0.52
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Net Income $ 2.48 $ 2.45
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Diluted
Continuing Operations $ 1.74 $ 1.87(4)
Discontinued Operations 0.71 0.49
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Net Income $ 2.45 $ 2.36
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Shares Utilized in Computation
of Income Per Common Share:
Basic 117.2 million 116.6 million
Diluted 118.8 million 123.7 million
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PERCENTAGE OF REVENUES
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<CAPTION>
Nine Months Ended September 30,
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1998 1997
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Revenues 100.0% 100.0%
Cost of sales 67.3% 67.3%
Selling and administrative expenses 16.7% 17.2%
Continuing Income Before Income Taxes 11.7% 13.9%
Continuing Income 7.5% 8.7%
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(1) The 1997 amounts have been restated to reflect the reclassification of the
Company's Automotive Products segment as a discontinued operation.
(2) Kirsch was sold to Newell Co. on May 30, 1997.
(3) Net income includes approximately $6 million of net nonrecurring gains.
(4) The 1997 calculation assumes conversion of the remaining 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures of $5.8 million, net of tax, was added back to continuing income
and net income in the computation of diluted earnings per share.
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CONSOLIDATED RESULTS OF OPERATIONS (Continued)
ADDITIONAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
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<CAPTION>
Net Income Per
Net Income Diluted Common Share
1998 1997 1998 1997
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(in millions where applicable)
<S> <C> <C> <C> <C>
From Continuing Operations:
Before nonrecurring items $ 207.0 $ 192.4 $ 1.74 $ 1.60
Nonrecurring items - 33.0 - .27
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207.0 225.4 1.74 1.87
From Discontinued Operations:
Before nonrecurring items 84.2 87.2 .71 .71
Nonrecurring items - (26.9) - (.22)
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84.2 60.3 .71 .49
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Net Income $ 291.2 $ 285.7 $ 2.45 $ 2.36
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