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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) January 26, 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)
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.
Fourth Quarter and Year-End 1997 Results of Operations
On January 26, 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 fourth quarter and year ended December 31, 1997.
Set forth below is certain additional financial information by industry segment
for the Company's years ended December 31, 1996 and December 31, 1997:
<TABLE>
<CAPTION>
Revenues Operating Earnings*
------------------------------- ------------------------
1997 1996 1997 1996
------------ ----------- --------- -------
(in millions) (in millions)
<S> <C> <C> <C> <C>
Electrical Products $ 2,568.3 $ 2,407.5 $ 461.6 $ 408.3
Tools & Hardware 749.9 720.1 99.6 91.4
Automotive Products 1,873.2 1,903.2 186.9 189.3
---------- ---------- --------- ---------
Subtotal $ 5,191.4 $ 5,030.8 $ 748.1 $ 689.0
Kirsch 97.4 252.9 4.8 22.0
---------- ---------- --------- ---------
Total $ 5,288.8 $ 5,283.7 $ 752.9 $ 711.0
========== ========== ========= =========
</TABLE>
* Excluding non-recurring gains and accruals.
Business Outlook for 1998
Based on current information and business conditions, the Company expects to
achieve in 1998 a double-digit increase in earnings over 1997 earnings before
nonrecurring items ($3.16).
The above statement is forward-looking, and actual results may differ
materially. The above statement is based on 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; (v) no major customer consolidation in
the automotive aftermarket; and (vi) no significant adverse changes in the
relationship of the currencies of Western European countries to the U.S. dollar.
The estimate also assumes, 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.
-2-
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Item 7. Financial Statements and Exhibits.
Exhibits
99.1 Company Press Release Dated January 26, 1998 Titled "Cooper
Industries Reports Record Net Income for 1997. Fourth
quarter diluted share earnings up 18%."
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: January 26, 1998 /s/ D. Bradley McWilliams
----------------------------
D. Bradley McWilliams
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
99.1 Company Press Release Dated January 26, 1998 Titled "Cooper
Industries Reports Record Net Income for 1997. Fourth quarter
diluted share earnings up 18%."
<PAGE> 1
Cooper Industries
P. O. Box 4446
Houston, Texas 77210 EXHIBIT 99.1
------------
[ Cooper Logo]
NEWS
RELEASE
FOR IMMEDIATE RELEASE
January 26, 1998
Contact: John Breed
(713) 209-8835
COOPER INDUSTRIES REPORTS RECORD NET INCOME FOR 1997
Fourth quarter diluted share earnings up 18%
HOUSTON, TX, Jan. 26 -- Cooper Industries, Inc. (NYSE-CBE) announced today that
the company's net income rose 25% to a record $394.6 million from $315.4 million
in 1996. Diluted share earnings rose 18% to $3.26 from $2.77 in 1996. Revenues
for the year were $5.3 billion, equaling the previous year despite the sale in
May of the company's Kirsch window treatments business and the strong U.S.
dollar. Revenues for the year, excluding Kirsch, increased 3%.
For the three months ended December 31, 1997, Cooper's net income rose
24% to $108.9 million, compared with $87.7 million in 1996. Diluted share
earnings were 90 cents, up 18% from 76 cents in the same quarter of 1996.
Fourth-quarter revenues declined 3% to $1.29 billion from $1.33 billion in the
comparable 1996 period, due to the sale of Kirsch. Excluding Kirsch, the
company's fourth quarter revenues rose 2%.
Cooper's 1997 share earnings include a 10 cent net contribution from
non-recurring gains, including a 5 cent gain from the favorable settlement of
state income tax issues in the fourth quarter of the year. The company's 1996
earnings per share included a 5 cent contribution from a non-recurring gain,
with 4 cents of this gain occurring in the fourth quarter of the year.
"Cooper Industries had another excellent year in 1997, ending the year
with the highest earnings in the company's history and 13 consecutive quarters
of earnings per share increases," reported H. John Riley, Jr., Cooper's
Chairman, President and Chief Executive Officer. "We made significant progress,
enhancing Cooper's competitiveness in all of our businesses. The
<PAGE> 2
COOPER INDUSTRIES, INC. PAGE 2
results of our top-performing Electrical Products segment exceeded our
expectations, and we improved margins in both our Tools and Hardware and
Automotive Products businesses. These improvements and other recent steps we
have taken to improve future earnings leave us well positioned to produce
another year of significant earnings growth in 1998," Riley said.
Core business improvements and strategic acquisitions in Cooper's
ELECTRICAL PRODUCTS segment led to record results in 1997 with a 13% increase in
operating earnings, exclusive of nonrecurring items, for the year. International
market penetration and the introduction of new products, particularly in
Cooper's power distribution and circuit protection product lines, also boosted
results in the segment.
Revenues, earnings and margins, excluding nonrecurring items and
Kirsch, for the Company's TOOLS & HARDWARE segment increased in 1997, driven by
a strong performance by the segment's power tools business. Distribution system
improvements, new product introductions and streamlined operations in the hand
tools business contributed modestly to these results.
Operating margins for the AUTOMOTIVE PRODUCTS segment also improved
over 1996, despite a difficult market that led to a slight decline in revenues
in this segment. Plant consolidations and continued streamlining of other
business functions resulted in greater efficiencies in 1997, more than
offsetting the impact of lower business volumes. During the year, additional
steps were taken to further reduce cost structures and improve the future
profitability of this segment.
Cooper also achieved major improvements in its capital structure during
the year. The company's debt-to-capital ratio improved from 50% at year-end 1996
to 36% at the close of 1997. Additionally, the company used its strong cash flow
to purchase more than $192 million of its own shares and fund the acquisition of
eight complementary businesses with combined annual sales of more than $325
million.
"Clearly, 1997 was another outstanding year for Cooper Industries.
Recent actions to increase revenues, improve margins and strengthen our
financial flexibility set the stage for even greater success in 1998 and the
years ahead," Riley added.
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COOPER INDUSTRIES, INC. PAGE 3
Comparisons of 1997 and 1996 fourth-quarter and full-year results
appear on the following pages.
Cooper Industries, with 1997 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 December 31, % Change
------------------------------ --------
1997 1996(1)
--------- ----------
(in millions where applicable)
<S> <C> <C> <C>
Revenues:
Electrical Products $ 648.5 $ 608.5 6.6%
Tools & Hardware 190.2 188.1 1.1%
Automotive Products 449.4 469.6 -4.3%
--------- --------
Subtotal 1,288.1 1,266.2 1.7%
Kirsch(2) - 66.3 N.M.
--------- --------
Total segment revenues 1,288.1 1,332.5 -3.3%
Cost of sales 861.1 899.5
Selling and administrative expenses 223.2 243.5
Goodwill amortization 16.7 16.2
Nonrecurring gains - (22.8)
Nonrecurring charges - 13.4
Other (income) expense, net 1.2 1.1
Interest expense 20.1 32.3
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Income Before Income Taxes 165.8 149.3
Income Taxes 56.9 61.6
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Net Income $ 108.9 $ 87.7 24.2%
========= =========
Net Income Per Common Share:(3)
Basic $ .91 $ .82 11.0%
Diluted(4) $ .90 $ .76 18.4%
Shares Utilized in Computation
of Income Per Common Share:(3)
Basic 119.9 million 107.3 million
Diluted 121.2 million 124.8 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Quarter Ended December 31,
--------------------------
1997 1996
------ ------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 66.9% 67.5%
Selling and administrative expenses 17.3% 18.3%
Income Before Income Taxes 12.9% 11.2%
Net Income 8.5% 6.6%
======= ======
</TABLE>
(1) Certain amounts have been reclassified to conform to the 1997 presentation.
(2) Kirsch was sold to Newell Co. on May 30, 1997.
(3) Net income per Common share and shares utilized reflect a mandatory
change in accounting from primary and fully diluted to basic and
diluted. The change had no impact on diluted net income per Common
share.
(4) The calculation assumes conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($7.3 million in 1996, net of tax) was added back to net
income in the computation of diluted earnings per share.
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COOPER INDUSTRIES, INC. PAGE 5
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Twelve Months Ended December 31, % Change
------------------------------ --------
1997 1996(1)
--------- ----------
(in millions where applicable)
<S> <C> <C> <C>
Revenues:
Electrical Products $ 2,568.3 $ 2,407.5 6.7%
Tools & Hardware 749.9 720.1 4.1%
Automotive Products 1,873.2 1,903.2 -1.6%
--------- --------
Subtotal 5,191.4 5,030.8 3.2%
Kirsch(2) 97.4 252.9 N.M.
--------- ---------
Total segment revenues 5,288.8 5,283.7 0.1%
Cost of sales 3,588.3 3,605.7
Selling and administrative expenses 925.3 945.4
Goodwill amortization 65.1 65.2
Nonrecurring gains (93.0) (150.4)
Nonrecurring charges 83.9 117.9
Other (income) expense, net 2.1 (0.2)
Interest expense 90.4 142.1
--------- --------
Income Before Income Taxes 626.7 558.0(3)
Income Taxes 232.1 242.6(3)
--------- --------
Net Income $ 394.6 $ 315.4 25.1%
========= ========
Net Income Per Common Share:(4)
Basic $ 3.36 $ 2.94 14.3%
Diluted(5) $ 3.26 $ 2.77 17.7%
Shares Utilized in Computation
of Income Per Common Share:(4)
Basic 117.5 million 107.3 million
Diluted 122.9 million 124.6 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
--------------------------------
1997 1996
------- ------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 67.8% 68.2%
Selling and administrative expenses 17.5% 17.9%
Income Before Income Taxes 11.8% 10.6%
Net Income 7.5% 6.0%
======== ========
</TABLE>
(1) Certain amounts have been reclassified to conform to the 1997 presentation.
(2) Kirsch was sold to Newell Co. on May 30, 1997.
(3) Income before income taxes includes $21.9 million offset by income taxes
of $21.9 million related to the 1996 third-quarter write-off of
nondeductible goodwill.
(4) Net income per Common share and shares utilized reflect a mandatory
change in accounting from primary and fully diluted to basic and
diluted. The change had no impact on diluted net income per Common share.
(5) The calculation assumes conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($5.8 million in 1997 and $29.2 million in 1996, net of tax)
was added back to net income in the
computation of 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 1998" set forth in the Company's Current
Report on Form 8-K dated January 26, 1998.
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