<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 1-1175
--------------------------------------------------------
Cooper Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-4156620
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Travis, Suite 5800 Houston, Texas 77002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(713) 209-8400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Number of shares outstanding of issuer's common stock as of April 30, 1998 was
120,723,333.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COOPER INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
--------- ---------
(in millions)
<S> <C> <C>
REVENUES .............................. $ 1,343.1 $ 1,318.9
Cost of sales.......................... 912.0 905.7
Selling and administrative expenses.... 242.0 240.8
Goodwill amortization ................. 18.3 16.0
Other (income) expense, net ........... (.5) 1.5
Interest expense ...................... 25.3 29.6
--------- ---------
Income before income taxes ........ 146.0 125.3
Income taxes .......................... 54.0 47.6
--------- ---------
NET INCOME ........................ $ 92.0 $ 77.7
========= =========
INCOME PER COMMON SHARE:
Basic ............................. $ .77 $ .71
Diluted ........................... $ .76 $ .67
CASH DIVIDENDS PER COMMON SHARE ....... $ .33 $ .33
</TABLE>
The accompanying notes are an integral part of these statements.
-2-
<PAGE> 3
COOPER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- --------
ASSETS (in millions)
<S> <C> <C>
Cash and cash equivalents........................................ $ 15.4 $ 30.3
Receivables ..................................................... 1,036.0 991.7
Inventories ..................................................... 1,005.6 958.2
Other ........................................................... 200.7 156.5
-------- --------
Total current assets ................................... 2,257.7 2,136.7
-------- --------
Property, plant and equipment, less accumulated depreciation .... 1,205.2 1,198.8
Intangibles, less accumulated amortization ...................... 2,566.0 2,389.9
Investments in marketable equity securities ..................... 320.3 274.8
Deferred income taxes and other assets .......................... 123.9 52.3
-------- --------
Total assets ........................................... $6,473.1 $6,052.5
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt ................................................. $ 107.8 $ 139.0
Accounts payable ................................................ 529.2 574.5
Accrued liabilities ............................................. 658.4 589.5
Accrued income taxes ............................................ 54.3 23.8
Current maturities of long-term debt ............................ 327.8 58.3
-------- --------
Total current liabilities .............................. 1,677.5 1,385.1
-------- --------
Long-term debt .................................................. 1,334.7 1,272.2
Postretirement benefits other than pensions ..................... 554.3 558.0
Other long-term liabilities ..................................... 255.0 260.6
-------- --------
Total liabilities ...................................... 3,821.5 3,475.9
-------- --------
Common stock, $5.00 par value ................................... 615.0 615.0
Capital in excess of par value .................................. 674.8 679.8
Retained earnings ............................................... 1,567.1 1,514.5
Common stock held in treasury, at cost .......................... (121.5) (149.7)
Unearned employee stock ownership plan compensation ............. (60.2) (66.5)
Accumulated other non-owner changes in equity ................... (23.6) (16.5)
-------- --------
Total shareholders' equity ............................. 2,651.6 2,576.6
-------- --------
Total liabilities and shareholders' equity ............. $6,473.1 $6,052.5
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
COOPER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
--------- ---------
(in millions)
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................ $ 92.0 $ 77.7
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization ......................................... 55.9 54.9
Deferred income taxes ................................................. 5.6 (2.5)
Changes in assets and liabilities: (1)
Receivables ....................................................... (46.0) (66.5)
Inventories ....................................................... (39.2) (47.7)
Accounts payable and accrued liabilities .......................... (25.2) (46.0)
Accrued income taxes .............................................. 31.3 29.2
Other assets and liabilities, net ................................. (64.4) 7.8
--------- ---------
Net cash provided by operating activities ................... 10.0 6.9
--------- ---------
Cash flows from investing activities:
Cash paid for acquired businesses ..................................... (231.3) (4.9)
Capital expenditures .................................................. (44.9) (45.6)
Proceeds from sales of property, plant and equipment .................. 5.2 2.3
--------- ---------
Net cash used in investing activities ....................... (271.0) (48.2)
--------- ---------
Cash flows from financing activities:
Proceeds from issuances of debt ....................................... 287.9 104.6
Repayments of debt .................................................... (22.7) (31.8)
Dividends ............................................................. (39.8) (37.0)
Debt issue costs ...................................................... (0.7) --
Acquisition of treasury stock ......................................... (2.4) --
Activity under stock plans ............................................ 24.8 1.4
--------- ---------
Net cash provided by financing activities ................... 247.1 37.2
--------- ---------
Effect of exchange rate changes on cash and cash equivalents .............. (1.0) 0.2
--------- ---------
Decrease in cash and cash equivalents ..................................... (14.9) (3.9)
Cash and cash equivalents, beginning of period ............................ 30.3 16.1
--------- ---------
Cash and cash equivalents, end of period .................................. $ 15.4 $ 12.2
========= =========
</TABLE>
(1) Net of the effects of acquisitions, divestitures and translation.
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 5
COOPER INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Basis of Presentation - The financial information presented as of any
date other than December 31 has been prepared from the books and records without
audit. Financial information as of December 31 has been derived from the audited
financial statements of the Company, but does not include all disclosures
required by generally accepted accounting principles. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial information for the periods
indicated, have been included. For further information regarding the Company's
accounting policies, refer to the Consolidated Financial Statements and related
notes for the year ended December 31, 1997 included as Appendix A to the
Company's Proxy Statement dated March 11, 1998.
Income per Common Share - In the fourth quarter of 1997, Cooper adopted
Statement of Financial Accounting Standards No. 128, Earnings Per Share. The new
accounting standard required all prior periods' income per Common share to be
restated based on a new computational method for average shares outstanding.
Adopting the new standard had no impact on previously reported fully diluted,
currently referred to as diluted, income per Common share from continuing
operations. Adopting the new standard also had no impact on previously reported
primary, currently referred to as basic, income per common share for the quarter
ended March 31, 1997. Unlike primary earnings per share, basic earnings per
share excludes the dilutive effects of common stock equivalents.
Net Income and Other Non-Owner Changes in Equity - Effective January 1,
1998, Cooper adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income ("SFAS No. 130"). The adoption of this statement
had no impact on net income or shareholders' equity. SFAS No. 130 requires the
reporting of comprehensive income, which includes net income plus non-owner
changes in equity, including unrealized gains or losses on investments, the
minimum pension liability adjustment and foreign currency translation. During
the three months ended March 31, 1998 and 1997, net income and other non-owner
changes in equity were $84.9 million and $48.5 million, respectively. The
components of net income and other non-owner changes in equity, net of related
taxes, for the three-month periods ended March 31, 1998 and 1997 were as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1998 1997
-------- --------
(in millions)
<S> <C> <C>
Net income............................................. $ 92.0 $ 77.7
Foreign currency translation loss ..................... (11.2) (26.4)
Unrealized gains (losses) on investments .............. 4.1 (2.8)
-------- --------
Net income and other non-owner changes in equity ...... $ 84.9 $ 48.5
======== ========
</TABLE>
Recently Issued Accounting Standards - In March 1998, the AICPA issued
SOP 98-1, Accounting for the Costs of Computer Software Developed for or
Obtained For Internal Use. The SOP requires companies to capitalize qualifying
computer software costs incurred during the application development stage. The
SOP is effective for fiscal years beginning after December 15, 1998 and permits
early adoption. Cooper adopted the SOP in the first quarter of 1998. The
adoption had no impact on net income as Cooper's policy was materially
consistent with the requirements of the SOP.
-5-
<PAGE> 6
NOTE 2. ACQUISITIONS AND DIVESTITURES
During the first quarter of 1998, the Company completed three
acquisitions in its Tools & Hardware segment and one small acquisition in its
Electrical Products segment. In March 1998, the Company acquired Intool for a
total cost of $217.5 million. Intool manufactures and sells pneumatic and
electric assembly tools, precision-drilling equipment, fastening systems and
portable and fixed mounted tools used in industrial, automotive, aerospace and
energy markets and had annual revenues of approximately $117 million. The other
three acquisitions were two small businesses in France and Germany that extended
the global product lines of the Company's Power Tools division and a small
Electrical Products switch business in Mexico. The acquisitions have been
accounted for as purchase transactions and the results of the acquisitions are
included in Cooper's consolidated income statements from the date of
acquisition.
Effective March 28, 1998, the Company completed the exchange of its
automotive temperature control business for the brake products business of
Standard Motor Products. In February 1998, the Company completed the sale of its
constant velocity joint remanufacturing business. For accounting purposes, the
exchange transaction is recorded as the sale of the Company's temperature
control business and the purchase of the Standard Motor Products' brake
business. The fair market value of the temperature control business assets was
equal to the net book value of the assets after the write-down of the assets
made in the second quarter of 1997. The acquisition cost of the brake business
assets was approximately $81 million, subject to adjustment based on the actual
book value of certain assets at the acquisition date. The constant velocity
joint remanufacturing business was sold for approximately $4 million.
NOTE 3. EVALUATION OF EXITING THE AUTOMOTIVE PRODUCTS SEGMENT
In April 1998, the Company announced that it had engaged an investment
banking firm to assist in the evaluation of options for exiting the automotive
business. For the year ended December 31, 1997, the Automotive Products segment
had revenues of $1.9 billion (36% of the Company's total revenues) and segment
operating earnings of $143.5 million ($186.9 million, excluding nonrecurring
charges - 25% of the Company's segment operating earnings, excluding
nonrecurring charges).
The Company is evaluating a possible initial public offering of the
Automotive Products segment as well as other alternatives, including a sale to a
third party.
The Company anticipates completing the evaluation and the Company's
Board of Directors approving a transaction, if any, in the second or third
quarter of 1998.
NOTE 4. INVENTORIES
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(in millions)
<S> <C> <C>
Raw materials ............................... $ 297.3 $ 295.7
Work-in-process ............................. 194.6 178.7
Finished goods .............................. 541.2 512.1
Perishable tooling and supplies ............. 54.5 54.5
------------ ------------
1,087.6 1,041.0
Less LIFO reserves .......................... (82.0) (82.8)
------------ ------------
Net inventories .................. $ 1,005.6 $ 958.2
============ ============
</TABLE>
-6-
<PAGE> 7
NOTE 5. LONG-TERM DEBT
At March 31, 1998, $462.1 million of commercial paper and bank loans
was reclassified to long-term debt, reflecting the Company's intention to
refinance this amount during the 12-month period following the balance sheet
date through either continued short-term borrowing or utilization of available
revolving bank credit facilities.
During the quarter ended March 31, 1998, the Company issued $150
million of five-year medium term notes at an average interest rate of 5.9% under
an existing shelf registration statement.
In December 1995, the Company issued DECS(SM) (Debt Exchangeable for
Common Stock), which mature on January 1, 1999. At maturity, the DECS are
mandatorily exchangeable into shares of Wyman-Gordon common stock or, at the
Company's option, into cash in lieu of shares. The DECS are a hedge of the
Company's investment in Wyman-Gordon common stock and will result in the Company
realizing a minimum after-tax gain of $85.6 million upon redemption of the
remaining DECS. This unrealized gain, plus any net appreciation of the
investment in Wyman-Gordon common stock offset by the appreciation attributable
to the DECS, is included in shareholders equity as an unrealized gain on
investments in marketable equity securities, net of tax. Current maturities of
long-term debt included an increase of $39.2 million at March 31, 1998,
reflecting the increase, during the quarter, in the market value of the
Wyman-Gordon common stock exchangeable into the DECS.
NOTE 6. COMMON AND PREFERRED STOCK
During the first three months of 1998, the Company repurchased 46,100
shares of its common stock at a cost of $2.4 million. The Company reissued
approximately .6 million of treasury shares primarily in connection with the
exercise of employee stock options and the Company's dividend reinvestment
program during the first three months of 1998.
-7-
<PAGE> 8
NOTE 7. NET INCOME PER COMMON SHARE
Basic and diluted net income per Common share is computed based on the
following information:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
------------ ------------
(in millions)
<S> <C> <C>
BASIC:
Net income ........................................................... $ 92.0 $ 77.7
============ ============
Weighted average Common shares outstanding ........................... 119.7 109.5
============ ============
DILUTED:
Net income ........................................................... $ 92.0 $ 77.7
Interest expense related to the 7.05% Convertible
Subordinated Debentures, net of tax .............................. -- 5.7
------------ ------------
Net income and effect of assumed conversions ......................... $ 92.0 $ 83.4
============ ============
Weighted average Common shares outstanding ........................... 119.7 109.5
Incremental shares from assumed conversions:
Options, performance-based stock awards and
other employee awards ........................................ 1.5 1.0
Additional shares assuming conversion of the
7.05% Convertible Subordinated Debentures .................... -- 14.3
------------ ------------
Weighted average Common shares and Common share equivalents .......... 121.2 124.8
============ ============
</TABLE>
NOTE 8. INDUSTRY SEGMENT REVENUES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
------------ ------------
(in millions)
<S> <C> <C>
Electrical Products ............... $ 706.0 $ 612.7
Tools & Hardware .................. 188.1 180.1
Automotive Products ............... 449.0 470.5
------------ ------------
Subtotal .................... 1,343.1 1,263.3
Kirsch ............................ -- 55.6
------------ ------------
Total ....................... $ 1,343.1 $ 1,318.9
============ ============
</TABLE>
-8-
<PAGE> 9
NOTE 9. SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES
The following noncash transactions have been excluded from the
consolidated statements of cash flows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1998 1997
------------ ------------
(in millions)
<S> <C> <C>
Assets acquired and liabilities assumed or incurred from
the acquisition of businesses: (1)
Fair value of assets acquired ........................... $ 255.5 $ 8.1
Cash used to acquire businesses ......................... (231.3) (4.9)
------------ ------------
Liabilities assumed or incurred ................... $ 24.2 $ 3.2
============ ============
Conversion of 7.05% Convertible Subordinated Debentures
for Cooper Common stock ..................................... $ -- $ 172.0
</TABLE>
(1) Excludes approximately $81 million recorded on a preliminary basis for the
acquisition of Standard Motor Products' brake business in exchange for the
Company's automotive temperature control business.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1997
Net income for the first quarter of 1998 increased 18% to $92.0 million
on revenues of $1.34 billion compared with 1997 net income of $77.7 million on
revenues of $1.32 billion. First quarter diluted share earnings increased 13% to
$.76 from $.67 in 1997. Revenues, excluding Kirsch which was divested May 30,
1997, increased 6%.
REVENUES:
Revenues for the first quarter of 1998 increased 2% (increased 6%
excluding Kirsch revenues in 1997) compared to the first quarter of 1997. After
excluding the effects of acquisitions and the Kirsch divestiture, revenues were
level with the first quarter of last year. Overall, the Company estimates that
the strengthening of the U.S. dollar against most European currencies decreased
reported revenues by approximately 2% compared to the first quarter of 1997.
Revenues in the Electrical Products segment increased 15% from the
first quarter of 1997. Excluding acquisitions, revenues were 5% ahead of the
first quarter of 1997. Each of the electrical businesses experienced solid
revenue gains in North America and Europe. Revenues from operations in Latin
America also contributed to the revenue growth. These gains were offset somewhat
in Europe by the strength of the U.S. dollar against the local currencies, which
reduced revenues measured in U.S. dollars.
Tools & Hardware segment revenues increased 4% compared to the first
quarter of 1997. Adjusted for recent acquisitions, revenues were slightly below
last year. Power tool sales increased due to continuing domestic and
international demand for industrial tools. Providing an offset was slowing
demand for hand tools in the U.S. and European industrial markets and the
strength of the U.S. dollar against most European currencies. Absent the impact
of acquisitions and the unfavorable currency effects, Tools & Hardware revenues
increased 2% over the prior year.
Revenues in the Automotive Products segment decreased 5% from the prior
year period. Excluding two recent acquisitions, revenues were down 6% from the
same period last year. Revenues for the segment were affected by a weak domestic
and European aftermarket and weak sales in Asia attributable to the economic
crisis in that region. The anticipated exchange of the temperature control
business for the brake business of Standard Motor Products (completed effective
March 28, 1998), the anticipated sale of the constant velocity joint
remanufacturing business (completed in February 1998) and the conversion of a
large customer to a cash basis sales arrangement following the filing of a
Chapter 11 reorganization, had a negative impact on revenues of approximately
$13 million compared to the same period of the prior year. Partially offsetting
this decline was improvement in original equipment market sales and continuing
improvement in Latin American demand.
INCOME BEFORE INCOME TAXES:
Income before income taxes increased 17% to $146.0 million for the
first quarter of 1998 compared to $125.3 million for the same period of 1997.
Cost of sales, as a percentage of revenues, decreased .8 points with most
businesses improving gross margins. Effective leveraging of period costs, plus
the absence of Kirsch, resulted in a .3 points decline in selling and
administrative expenses as a percentage of revenues in the first quarter of 1998
compared to the first quarter of 1997. The Kirsch business had relatively higher
selling and administrative expenses. Excluding Kirsch from 1997 results for the
quarter would have decreased selling and administrative expenses .5 points from
the reported amount. The remaining increase in selling and administrative
expenses as a percentage of sales related primarily to lower sales and an
allowance
-10-
<PAGE> 11
for bad debts recorded in the first quarter in the Automotive Products
segment. Interest expense declined $4.3 million from the same period of last
year due to the conversion during 1997 of $610 million of the Company's 7.05%
Convertible Subordinated Debentures to Cooper Common stock, partially offset by
additional debt incurred to fund stock repurchases and acquisitions.
Operating earnings of the Electrical Products segment reflect a
significant increase over the first quarter of 1997 both before and after the
impact of recent acquisitions. The increase in earnings was the result of the
increase in revenues, favorable product mix and cost savings across most
businesses.
Excluding Kirsch, the Tools & Hardware segment's operating earnings
both before and after the impact of acquisitions improved significantly compared
to the same period last year. The increase in earnings was driven by volume
increases in the power tools business and favorable product mix in the hand
tools business.
Operating earnings of the Automotive Products segment decreased
compared to the same period last year. A weak domestic and European aftermarket
was only partially offset by improved Latin American aftermarket demand. During
the first quarter of 1998, a large customer of the Automotive Products segment
filed for reorganization under Chapter 11 of the U. S. Bankruptcy Code. The
Company had receivables from the customer of approximately $15 million at the
time of the filing and accrued a receivable reserve of approximately $2.3
million during the quarter. In addition to the impact of the charge to earnings
for the receivable reserve, reduced sales following the bankruptcy filing had a
negative impact on operating earnings.
INCOME TAXES:
The effective tax rate for the first quarter was 37.0% compared to
38.0% for the same period of 1997. The rate reduction from 38.0% to 37.0%
results from the Company's tax planning efforts and nondeductible goodwill
having less of an impact on the effective tax rate as earnings increase.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's operating working capital (defined as receivables and
inventories less accounts payable) increased $137 million during the first three
months of 1998 compared to an increase of $149 million in the first three months
of 1997. Operating working capital turnover was maintained at 3.7 turns, the
same as the first three months of last year.
Cash flows from operating activities in the first three months of 1998
totaled $10 million as cash generated from earnings was sufficient to offset
increases in operating working capital. These funds, along with a net increase
in debt of $265 million and cash received from the exercise of stock options,
were used to fund acquisitions of $231 million, capital expenditures of $45
million, dividends of $40 million and purchases of the Company's Common stock of
$2.4 million. During the first three months of 1997, cash flows from operating
activities totaled $7 million. The cash flows from operating activities plus
proceeds from net borrowings of $73 million provided funding for capital
expenditures of $46 million and dividends of $37 million during the first three
months of 1997.
In connection with acquisitions accounted for as purchases, the Company
records, to the extent appropriate, accruals for the costs of closing duplicate
facilities, severing redundant personnel and integrating the acquired businesses
into existing Company operations. Cash flows from operating activities are
reduced by the amounts expended against the various accruals established in
connection with each acquisition. Spending against these accruals for the three
months ended March 31, 1998 and March 31, 1997 was $1.5 million and $2.0
million, respectively. There were no significant additions to these accruals
during the first three months of 1998.
-11-
<PAGE> 12
At March 31, 1998, the Company's debt-to-total capitalization ratio was
40.0% compared to 45.9% at March 31, 1997. Excluding the DECS, which at maturity
are mandatorily exchangeable into shares of Wyman-Gordon common stock or, at the
Company's option, into cash in lieu of shares, the Company's debt-to-total
capitalization ratio was 36.1% at March 31, 1998 compared to 41.5% at March 31,
1997.
During the quarter ended March 31, 1998, the Company issued $150
million of five-year medium-term notes at an average interest rate of 5.9%
under an existing shelf registration statement.
During the first quarter the Company purchased 46,100 shares of its
outstanding Common Stock for $2.4 million as part of the previously authorized
$275 million repurchase program. In April 1998, the Board of Directors approved
an extension of the Company's stock buyback authorization for an additional $300
million.
The Company has targeted a 35% to 45% debt-to-capitalization ratio,
with excess cash being utilized to fund acquisitions or to purchase shares of
the Company's Common stock.
BACKLOG:
Sales backlog represents the dollar amount of all firm open orders for
which all terms and conditions pertaining to the sale have been approved such
that a future sale is reasonably expected. Sales backlog by segment was as
follows:
<TABLE>
<CAPTION>
March 31,
---------------------
1998 1997
-------- --------
(in millions)
<S> <C> <C>
Electrical Products .......... $ 297.8 $ 273.5
Tools & Hardware (1) ......... 88.2 90.4
Automotive Products .......... 128.8 135.3
-------- --------
$ 514.8 $ 499.2
======== ========
</TABLE>
(1) 1997 includes Kirsch sales backlog of $7.5 million.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits
12. Computation of Ratios of Earnings to Fixed Charges for the
Calendar Years 1997 through 1993 and the Three Months Ended
March 31, 1998 and 1997.
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated January 26, 1998,
which included a copy of a press release containing the Company's
financial results for the quarter and year ended December 31,
1997 and the business outlook for 1998.
The Company filed a report on Form 8-K dated February 2, 1998,
which included the business outlook for 1998.
-13-
<PAGE> 14
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 thereunto duly authorized.
Cooper Industries, Inc.
-------------------------------------
(Registrant)
Date: May 6, 1998 /s/ D. Bradley McWilliams
- ----------------------------------- -------------------------------------
D. Bradley McWilliams
Senior Vice President and
Chief Financial Officer
Date: May 6, 1998 /s/ Terry A. Klebe
- ----------------------------------- -------------------------------------
Terry A. Klebe
Vice President and Controller
and Chief Accounting Officer
-14-
<PAGE> 15
Exhibit Index
Exhibit No.
12. Computation of Ratios of Earnings to Fixed Charges for the
Calendar Years 1997 through 1993 and the Three Months Ended March
31, 1998 and 1997.
27. Financial Data Schedule.
<PAGE> 1
EXHIBIT 12
COOPER INDUSTRIES, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
---------------------- -----------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Expense $ 25,300 $ 29,600 $ 90,400 $ 142,100 $ 151,000 $ 73,300 $ 80,900
Estimated Interest Portion of
Rent Expense 5,047 4,815 18,755 17,362 16,865 19,289 20,701
--------- --------- --------- --------- --------- --------- ---------
Fixed Charges $ 30,347 $ 34,415 $ 109,155 $ 159,462 $ 167,865 $ 92,589 $ 101,601
========= ========= ========= ========= ========= ========= =========
Income From Continuing
Operations Before Income Taxes $ 146,000 $ 125,300 $ 626,700 $ 558,000 $ 478,000 $ 504,700 $ 506,000
Add: Fixed Charges 30,347 34,415 109,155 159,462 167,865 92,589 101,601
Dividends From Less Than
50% Owned Companies -- -- -- 359 968 835 2,395
Less: Equity in (Earnings) / Losses
of Less Than 50% Owned
Companies 371 (412) (155) (1,281) (1,000) (1,900) (1,200)
--------- --------- --------- --------- --------- --------- ---------
Earnings Before Fixed Charges $ 176,718 $ 159,303 $ 735,700 $ 716,540 $ 645,833 $ 596,224 $ 608,796
========= ========= ========= ========= ========= ========= =========
Ratio of Earnings to Fixed Charges 5.8x 4.6x 6.7x 4.5x 3.8x 6.4x 6.0x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER INDICATED AS
REPORTED ON THE COMPANY'S FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,400
<SECURITIES> 0
<RECEIVABLES> 1,036,000
<ALLOWANCES> 0
<INVENTORY> 1,005,600
<CURRENT-ASSETS> 2,257,700
<PP&E> 2,420,000
<DEPRECIATION> (1,214,800)
<TOTAL-ASSETS> 6,473,100
<CURRENT-LIABILITIES> 1,677,500
<BONDS> 1,334,700
0
0
<COMMON> 615,000
<OTHER-SE> 2,036,600
<TOTAL-LIABILITY-AND-EQUITY> 6,473,100
<SALES> 1,343,100
<TOTAL-REVENUES> 1,343,100
<CGS> 912,000
<TOTAL-COSTS> 912,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,300
<INCOME-PRETAX> 146,000
<INCOME-TAX> 54,000
<INCOME-CONTINUING> 92,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,000
<EPS-PRIMARY> .77
<EPS-DILUTED> .76
</TABLE>
