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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) July 22, 1999
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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.
On July 22, 1999, 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 second quarter of 1999.
Item 7. Financial Statements and Exhibits.
Exhibits
99.1 Company press release dated July 22, 1999 titled "Cooper
Industries Posts Favorable Earnings Gains."
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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: July 22, 1999 /S/ Diane K. Schumacher
------------------------------
Diane K. Schumacher
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
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<S> <C>
99.1 Company press release dated July 22, 1999 titled "Cooper
Industries Posts Favorable Earnings Gains."
</TABLE>
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
July 22, 1999
Contact: John Breed
(713) 209-8835
COOPER INDUSTRIES POSTS FAVORABLE EARNINGS GAINS
Company reports second-quarter earnings of 92 cents per share
HOUSTON, TX, July 22 - Cooper Industries, Inc. (NYSE:CBE) today reported
second-quarter earnings of 92 cents per share (assuming dilution). This
represents a 5 percent increase over second-quarter 1998 earnings of 88 cents
per share. Revenues for the second quarter 1999 were $957.5 million compared to
$951.2 million for the same period last year. Net income for the second quarter
1999 declined to $88 million from $106 million in the same period last year due
to the absence of earnings from the Automotive Products segment, which was sold
in the fourth quarter of 1998.
"We are pleased with our overall results in the second quarter,
particularly in light of persistent weakness in some of our markets," said H.
John Riley, chairman, president and chief executive officer, Cooper Industries,
Inc. "Our earnings gains were the result of improved operating performance as
reflected in increased gross margins and decreased selling and administrative
costs. Our programs to reduce costs and improve profitability are positively
impacting our performance, balancing the loss of the significant contribution to
earnings in 1998 from the divested Automotive Products segment and the adverse
impact of the Asian economic crisis on comparable results.
"Our Electrical Products segment continued its steady performance,
bolstered by improved results in almost all of its businesses," continued Riley.
"This offset an expected slowdown in our Tools & Hardware segment where we are
continuing to reduce costs in response to sluggish industry conditions."
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COOPER INDUSTRIES, INC. PAGE 2
Diluted earnings for the first half of 1999 rose by 5 percent to $1.72
per share versus $1.64 per share for the first six months of 1998. Revenues for
the first half of 1999 were up slightly to $1,882 million compared to $1,845
million for the first six months of 1998. As a result of the previously
mentioned Automotive Products sale, which contributed $58 million or 48 cents
per share in the first half of 1998, net income for the first half of 1999
declined to $163.6 million versus $198.0 million for the first half of 1998. The
majority of the earnings per share impact of the 1998 Automotive Products
segment sale was offset by the use of the sale proceeds to realign the Company's
capital structure through share repurchases and debt reduction. For the first
six months of 1999, interest expense decreased by 52 percent and shares
outstanding decreased by 21 percent.
ELECTRICAL PRODUCTS
Second-quarter 1999 revenues from the Electrical Products segment
increased 4 percent to $751.1 million from $723.9 million for the same period
last year. Year-to-date 1999 revenues from the segment increased by 4 percent to
$1,479.6 million from $1,429.9 million in the first half of 1998. Second-quarter
1999 operating earnings rose 7 percent to $130.9 million from $122.9 million in
the second quarter of 1998. Second-quarter 1999 return on sales was 17.4 percent
versus 17 percent in last year's second quarter. Operating earnings for the
first half of 1999 in Electrical Products were up 5 percent to $252.3 million
compared to $239.5 million last year.
All of Cooper's Electrical Products businesses, except the hazardous
area construction materials business, posted improved results for the second
quarter and year-to-date, led by Cooper's lighting fixture businesses. During
the second quarter, Cooper completed the acquisitions of Neo-Ray, a major
manufacturer of indirect fluorescent lighting products, and Capri-Codec, a
leading French manufacturer of electrical construction materials. These and
other acquisitions, coupled with growing markets and persistent cost management,
contributed to the segment's positive results.
As part of its strategy to increase its international market position,
during the quarter, Cooper announced the agreement to acquire JSB Electrical
plc, a European manufacturer of
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COOPER INDUSTRIES, INC. PAGE 3
emergency lighting, fire detection and security systems. This acquisition is
expected to be finalized in the third quarter 1999.
TOOLS & HARDWARE
Second-quarter 1999 revenues in the Tools & Hardware segment were
$206.4 million compared to $227.3 million in the same period in 1998.
Year-to-date segment revenues were $402.6 million versus $415.4 million for the
first half of 1998. Operating earnings in the second quarter of 1999 were $29.1
million compared to $34.5 million for the second quarter of 1998. For the first
half of 1999, operating earnings for the Tools & Hardware segment were $52.4
million versus $59.7 million in the same period in 1998. Second-quarter 1999
return on sales for the Tools & Hardware segment was 14.1 percent, an
improvement from the first-quarter return on sales of 11.9 percent.
As expected, recent trends in the tools industry continued to impact
results in the second quarter. Domestic aerospace and general industrial tool
markets remain weak. The recent announcement to form a global Tools enterprise
is part of the Company's ongoing effort to increase profitability and expand
margins in markets that are undergoing considerable change.
"All things considered, Cooper's performance for the first half of the
year was strong," continued Riley. "We have solid base businesses with good
growth potential, and we are continuing to maximize the value of those
businesses through internal improvement programs and selected acquisitions.
"We anticipate progressive improvement in our operating results for the
balance of the year, and we expect to achieve our 1999 earnings plan. Cooper's
financial strength solidly positions us for continued long-term growth and
increased returns for our shareholders."
Cooper Industries, with 1998 revenues of $3.7 billion, is a worldwide
manufacturer of electrical products, tools and hardware. Additional information
about Cooper is available on the Company's Internet 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
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COOPER INDUSTRIES, INC. PAGE 4
the Company's products, competitive pressures and future economic conditions.
These factors are discussed in the Company's 1998 Annual Report on Form 10-K and
other Securities and Exchange Commission filings.
Comparisons of 1999 and 1998 second-quarter and year-to-date results
appear on the following pages.
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CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended June 30,
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1999 1998 (1)
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(in millions where applicable)
<S> <C> <C>
Revenues $ 957.5 $ 951.2
Cost of sales 639.8 639.8
Selling and administrative expenses 156.6 156.7
Goodwill amortization 11.5 11.1
Interest expense 12.2 27.4
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Continuing Income Before Income Taxes 137.4 116.2
Income taxes 49.4 41.8
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Continuing Income 88.0 74.4
Discontinued operations, net of tax -- 31.6
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Net Income (2) $ 88.0 $ 106.0
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Net Income Per Common Share:
Basic
Continuing Operations $ .93 $ .62
Discontinued Operations -- .27
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Net Income $ .93 $ .89
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Diluted
Continuing Operations $ .92 $ .62
Discontinued Operations -- .26
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Net Income $ .92 $ .88
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Shares Utilized in Computation
of Income Per Common Share:
Basic 94.2 MILLION 118.6 million
Diluted 95.3 MILLION 120.5 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Quarter Ended June 30,
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1999 1998
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<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 66.8% 67.3%
Selling and administrative expenses 16.4% 16.5%
Continuing Income Before Income Taxes 14.3% 12.2%
Continuing Income 9.2% 7.8%
</TABLE>
(Additional information on next page)
(1) The 1998 amounts have been restated to reflect the reclassification of the
Company's Automotive Products segment as a discontinued operation.
(2) Net income is not comparable quarter-to-quarter due to the impact of the
sale of the Automotive Products business and the resulting use of the
proceeds to reduce debt and buy back shares.
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CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED)
ADDITIONAL INFORMATION FOR THE QUARTER ENDED JUNE 30
SEGMENT INFORMATION
<TABLE>
<CAPTION>
Quarter Ended June 30,
-----------------------
1999 1998
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(in millions)
<S> <C> <C>
Revenues:
Electrical Products $ 751.1 $ 723.9
Tools & Hardware 206.4 227.3
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Total $ 957.5 $ 951.2
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Segment Operating Earnings:
Electrical Products $ 130.9 $ 122.9
Tools & Hardware 29.1 34.5
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Total 160.0 157.4
General Corporate expense 10.4 13.8
Interest expense 12.2 27.4
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Consolidated income from continuing operations
before income taxes $ 137.4 $ 116.2
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended June 30,
----------------------
1999 1998
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<S> <C> <C>
Return on Sales:
Electrical Products 17.4% 17.0%
Tools & Hardware 14.1% 15.2%
Total Segments 16.7% 16.5%
</TABLE>
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CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
1999 1998 (1)
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(in millions where applicable)
<S> <C> <C>
Revenues $ 1,882.2 $ 1,845.3
Cost of sales 1,261.8 1,241.7
Selling and administrative expenses 312.9 311.5
Goodwill amortization 22.8 21.2
Nonrecurring charges 3.7 --
Interest expense 25.4 52.7
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Continuing Income Before Income Taxes 255.6 218.2
Income taxes 92.0 78.5
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Continuing Income 163.6 139.7
Discontinued operations, net of tax -- 58.3
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Net Income (2) $ 163.6 $ 198.0
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Net Income Per Common Share:
Basic
Continuing Operations $ 1.74 $ 1.17
Discontinued Operations -- .49
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Net Income $ 1.74 $ 1.66
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Diluted
Continuing Operations $ 1.72 $ 1.16
Discontinued Operations -- .48
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Net Income $ 1.72 $ 1.64
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Shares Utilized in Computation
of Income Per Common Share:
Basic 94.1 MILLION 119.1 million
Diluted 95.0 MILLION 120.9 million
</TABLE>
PERCENTAGE OF REVENUES
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1999 1998
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<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 67.0% 67.3%
Selling and administrative expenses 16.6% 16.9%
Continuing Income Before Income Taxes 13.6% 11.8%
Continuing Income 8.7% 7.6%
</TABLE>
(Additional information on next page)
(1) The 1998 amounts have been restated to reflect the reclassification of the
Company's Automotive Products segment as a discontinued operation.
(2) Net income is not comparable period-to-period due to the impact of the sale
of the Automotive Products business and the resulting use of the proceeds
to reduce debt and buy back shares.
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CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED)
ADDITIONAL INFORMATION FOR THE SIX MONTHS ENDED JUNE 30
SEGMENT INFORMATION
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1999 1998
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(in millions)
<S> <C> <C>
Revenues:
Electrical Products $ 1,479.6 $ 1,429.9
Tools & Hardware 402.6 415.4
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Total $ 1,882.2 $ 1,845.3
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Segment Operating Earnings
Without Nonrecurring Items:
Electrical Products $ 252.3 $ 239.5
Tools & Hardware 52.4 59.7
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Total 304.7 299.2
Segment Nonrecurring Items:
Electrical Products 3.0 --
Tools & Hardware 1.5 --
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Total 4.5 --
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Segment Operating Earnings
With Nonrecurring Items:
Electrical Products 249.3 239.5
Tools & Hardware 50.9 59.7
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Total segment operating earnings 300.2 299.2
General Corporate nonrecurring items (0.8) --
General Corporate expense 20.0 28.3
Interest expense 25.4 52.7
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Consolidated income from continuing operations
before income taxes $ 255.6 $ 218.2
============ ============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
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1999 1998
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<S> <C> <C>
Return on Sales: (1)
Electrical Products 17.1% 16.7%
Tools & Hardware 13.0% 14.4%
Total Segments 16.2% 16.2%
</TABLE>
(1) Before Nonrecurring Items.
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