<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-13884
----------------------------------------------------------
Cooper Cameron Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant in its Charter)
Delaware 76-0451843
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
515 Post Oak Blvd., Suite 1200, Houston, Texas 77027
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
713/513-3300
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
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(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, 1999 was
53,286,194.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COOPER CAMERON CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
(dollars in millions, except per share data) 1999 1998
------ ------
<S> <C> <C>
REVENUES ............................................................................... $383.9 $426.9
------ ------
COSTS AND EXPENSES
Cost of sales (exclusive of depreciation
and amortization) ................................................................... 280.0 298.4
Depreciation and amortization .......................................................... 21.0 17.2
Selling and administrative expenses .................................................... 53.6 56.0
Interest expense........................................................................ 7.3 7.2
Nonrecurring/unusual charges ........................................................... 6.2 --
------ ------
368.1 378.8
------ ------
Income before income taxes ....................................................... 15.8 48.1
Income tax provision ................................................................... (5.0) (14.9)
------ ------
Net income ............................................................................. $ 10.8 $ 33.2
====== ======
Earnings per share:
Basic ............................................................................... $ 0.20 $ 0.63
====== ======
Diluted ............................................................................. $ 0.20 $ 0.60
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 3
COOPER CAMERON CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
(dollars in millions, except shares and per share data) 1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents ...................................................... $ 16.5 $ 21.3
Receivables, net ............................................................... 340.2 366.4
Inventories, net ............................................................... 513.5 548.1
Other .......................................................................... 28.6 30.5
--------- ------------
Total current assets ................................................ 898.8 966.3
--------- ------------
Plant and equipment, at cost ................................................... 942.1 938.9
Less: accumulated depreciation ................................................ (455.5) (448.3)
Intangibles .................................................................... 520.6 519.0
Less: accumulated amortization ................................................ (227.4) (225.6)
Other assets ................................................................... 81.4 73.3
--------- ------------
TOTAL ASSETS ................................................... $ 1,760.0 $ 1,823.6
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt ........................................... $ 50.6 $ 49.6
Accounts payable and accrued liabilities ....................................... 403.1 453.6
Accrued income taxes ........................................................... 31.2 26.6
--------- ------------
Total current liabilities ........................................... 484.9 529.8
--------- ------------
Long-term debt ................................................................. 359.7 364.4
Postretirement benefits other than pensions .................................... 70.8 73.9
Deferred income taxes .......................................................... 51.8 51.1
Other long-term liabilities .................................................... 23.7 24.1
--------- ------------
Total liabilities ................................................... 990.9 1,043.3
--------- ------------
Stockholders' Equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized,
53,278,157 shares issued (53,259,620 at
December 31, 1998) ..................................................... .5 .5
Capital in excess of par value ............................................. 882.6 883.6
Retained deficit (including $441.0 charge on June 30, 1995
related to goodwill impairment) ........................................ (110.5) (121.3)
Accumulated other elements of comprehensive income ......................... (3.5) 17.5
--------- ------------
Total stockholders' equity .......................................... 769.1 780.3
--------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY .................................................... $ 1,760.0 $ 1,823.6
========= ============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 4
COOPER CAMERON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
(dollars in millions) 1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................... $ 10.8 $ 33.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................................................. 16.1 13.2
Amortization ................................................................. 4.9 4.0
Deferred income taxes ........................................................ (4.1) 1.2
Changes in assets and liabilities, net of translation and effects of
acquisitions:
Receivables .................................................................. 20.8 57.1
Inventories .................................................................. 26.2 (52.2)
Accounts payable and accrued liabilities ..................................... (37.0) (4.7)
Other assets and liabilities, net ............................................ (12.8) 3.2
------ ------
Net cash provided by operating
activities ....................................................... 24.9 55.0
------ ------
Cash flows from investing activities:
Capital expenditures and proceeds from
sales of plant and equipment, net ................................................ (25.5) (25.3)
Acquisitions ......................................................................... -- (6.2)
------ ------
Net cash used for investing activities ............................... (25.5) (31.5)
------ ------
Cash flows from financing activities:
Loan borrowings (repayments), net .................................................... (.4) 27.6
Purchase of treasury stock ........................................................... -- (36.1)
Activity under stock option plans and other .......................................... (2.6) 3.0
------ ------
Net cash used for financing activities ............................... (3.0) (5.5)
------ ------
Effect of translation on cash ............................................................ (1.2) .2
------ ------
Increase (decrease) in cash and cash equivalents ......................................... (4.8) 18.2
------ ------
Cash and cash equivalents, beginning of period ........................................... 21.3 11.6
------ ------
Cash and cash equivalents, end of period ................................................. $ 16.5 $ 29.8
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE> 5
COOPER CAMERON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Adjustments
The financial information presented as of March 31, 1999 and for the
three-month periods ended March 31, 1999 and 1998 has been prepared from the
books and records without audit. Financial information as of December 31, 1998
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 information
regarding the Company's accounting policies, refer to the consolidated financial
statements and related notes included in the Company's Annual Report to
Stockholders for the year ended December 31, 1998.
Note 2. Nonrecurring/unusual charges
During the first quarter of 1999, all four segments of the Company
incurred additional charges relating to various cost reduction initiatives
started in 1998. These charges, which totaled $6.2 million ($4.2 million, net of
taxes), covered the severance of additional employees during 1999 as well as the
continuation of facility closure and restructuring costs arising from actions
begun last year. The cash flow effect of these actions during the quarter,
including disbursements made relating to items expensed in 1998, totaled
approximately $9.3 million.
Cameron and Cooper Turbocompressor (CTC) incurred approximately $1.8
million for severance. Cooper Cameron Valves (CCV) incurred approximately $3.1
million in costs related primarily to the shut-down of a manufacturing facility
and the transfer of that location's production to another facility, as well as
additional one-time acquisition costs relating to the 1998 purchase of Orbit
Valve International, Inc. Finally, approximately $1.3 million of costs relating
to the ongoing realignment of a Cooper Energy Services (CES) manufacturing
facility were recorded during the quarter.
At March 31, 1999, the remaining accrual related to the above and
previous actions amounted to $6.1 million. The majority of the spending relating
to this accrual should occur during 1999, although certain costs of idle
facilities are anticipated to extend beyond 1999.
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<PAGE> 6
Note 3. Segments
The segment information for the first quarter of 1998 has been
revised to reflect the segment structure which the Company began reporting in
connection with its adoption of SFAS No. 131, effective December 31, 1998.
<TABLE>
<CAPTION>
(dollars in millions) For the Quarter Ended March 31, 1999
-----------------------------------------------------------------------------
Corporate
Cameron CCV CES CTC & Other Consolidated
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues ........................ $ 227.6 $ 54.0 $ 77.6 $ 24.7 $ -- $ 383.9
======= ====== ====== ====== ========== =======
Income (loss) before taxes ...... $ 31.6 $ -- $ (9.1) $ 3.6 $ (10.3) $ 15.8
======= ====== ====== ====== ========== =======
(dollars in millions) For the Quarter Ended March 31, 1998
-----------------------------------------------------------------------------
Corporate
Cameron CCV CES CTC & Other Consolidated
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues ........................ $ 241.7 $ 63.7 $ 91.6 $ 29.9 $ -- $ 426.9
======= ====== ====== ====== ========== =======
Income (loss) before taxes ...... $ 41.8 $ 11.4 $ (0.8) $ 6.0 $ (10.3) $ 48.1
======= ====== ====== ====== ========== =======
</TABLE>
Note 4. Inventories
<TABLE>
<CAPTION>
March 31, December 31,
(dollars in millions) 1999 1998
--------- ------------
<S> <C> <C>
Raw materials ............................................................ $ 56.6 $ 60.3
Work-in-process .......................................................... 204.6 205.9
Finished goods, including parts and subassemblies ........................ 332.5 364.9
Perishable tooling and supplies .......................................... 3.3 3.5
--------- ------------
597.0 634.6
Allowances ............................................................... (83.5) (86.5)
--------- ------------
Net inventories .......................................................... $ 513.5 $ 548.1
========= ============
</TABLE>
Note 5. Retained Deficit
While the Company has a retained deficit, it is able to declare and pay
dividends from a current year's earnings, as well as from the net of capital in
excess of par value less the retained deficit. Accordingly, at March 31, 1999,
the Company had approximately $772.1 million from which dividends could be paid.
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<PAGE> 7
Note 6. Comprehensive Income
The amount of comprehensive income (loss) for each of the three-month
periods ended March 31, 1999 and 1998 and the components of accumulated other
elements of comprehensive income at March 31, 1999 and December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
(dollars in millions) March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net income per Consolidated Results of
Operations ................................................... $ 10.8 $ 33.2
Foreign currency translation gain (loss) ......................... (21.0) .5
-------------- --------------
Comprehensive income (loss) ...................................... $ (10.2) $ 33.7
============== ==============
(dollars in millions) March 31, December 31,
1999 1998
-------------- --------------
Amounts comprising accumulated other elements
of comprehensive income:
Accumulated foreign currency translation
adjustments ............................................. $ (3.2) $ 17.8
Accumulated adjustments to record
minimum pension liabilities ............................. (.3) (.3)
-------------- --------------
Accumulated other elements of
comprehensive income ............................ $ (3.5) $ 17.5
============== ==============
</TABLE>
Note 7. Treasury Locks
During March 1999, the Company entered into interest rate swaps with
various financial institutions to effectively convert $175 million of
outstanding floating rate debt to fixed rate debt. This transaction replaced the
existing treasury locks, or forward rate agreements. The Company paid $8.2
million to the counterparties to the treasury locks in connection with the
termination of these agreements. This payment will be amortized to interest
expense over the 10-year life of the newly-entered-into interest rate swaps,
resulting in a total weighted average interest rate of 6.46% (including the
Company's normal spread over LIBOR which is currently .15%) on the $175 million.
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<PAGE> 8
Note 8. Earnings Per Share
The weighted average number of common shares (utilized for the basic
earnings per share presentation) and common stock equivalents outstanding for
each period presented were as follows:
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
---------------
(amounts in millions) 1999 1998
---- ----
<S> <C> <C>
Average shares outstanding ............................................................... 53.3 52.4
Common stock equivalents ................................................................. .9 3.2
---- ----
Number of shares utilized in diluted
earnings per share calculation ....................................................... 54.2 55.6
==== ====
</TABLE>
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<PAGE> 9
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
In addition to the historical data contained herein, this document
includes forward-looking statements regarding the future revenues, capital
expenditures and profitability of the Company made in reliance upon the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company's actual results may differ materially from those described in
forward-looking statements. Such statements are based on current expectations of
the Company's performance and are subject to a variety of factors, not under the
control of the Company, which can affect the Company's results of operations,
liquidity or financial condition. Such factors may include overall demand for
the Company's products; changes in the price of (and demand for) oil and natural
gas in both domestic and international markets; political and social issues
affecting the countries in which the Company does business; fluctuations in
currency markets worldwide; and variations in global economic activity. In
particular, current and projected oil and natural gas prices directly affect
customer's spending levels and their related purchases of the Company's products
and services; as a result, changes in price expectations may impact the
Company's financial results due to changes in cost structure, staffing or
spending levels.
Because the information herein is based solely on data currently
available, it is subject to change as a result of changes in conditions over
which the Company has no control or influence, and should not therefore be
viewed as assurance regarding the Company's future performance. Additionally,
the Company is not obligated to make public indication of such changes unless
required under applicable disclosure rules and regulations.
FIRST QUARTER 1999 COMPARED TO FIRST QUARTER 1998
Cooper Cameron Corporation had net income of $10.8 million, or $.20 per
share, for the first quarter of 1999, compared to $33.2 million, or $.60 per
share, for the same period in 1998 with declines in earnings in all four
segments. (All per share amounts are based on diluted shares.) Included in the
first quarter 1999 results were $4.2 million, or $.08 per share, in after-tax
nonrecurring/unusual charges ($6.2 million pre-tax).
Of the $6.2 million, approximately $2 million covered severance for
employees in all four segments. The remaining costs related to the previously
announced shutdown of a Cooper Cameron Valves' (CCV) manufacturing facility and
realignment of a Cooper Energy Services (CES) facility, plus additional costs
related to the Company's April 1998 acquisition of Orbit Valve International,
Inc. (Orbit Valve). Approximately $3 million remains to be expensed, under
existing accounting rules, regarding the above actions. See Note 2 of the Notes
to Consolidated Financial Statements for further information regarding these
nonrecurring/unusual charges.
- 9 -
<PAGE> 10
REVENUES
Revenues for the first quarter of 1999 totaled $383.9 million, a
decrease of 10% from the $426.9 million in the first quarter of 1998. First
quarter 1999 revenues included Orbit Valve, which was acquired on April 2, 1998.
Excluding the effect of this acquisition, revenues declined by 13%, with
weakness in all four segments of the Company.
Revenues for Cameron totaled $227.6 million, a decrease of 6% from
first quarter 1998 revenues of $241.7 million. Revenues decreased in surface and
subsea products, while drilling products increased significantly. Drilling and
subsea product revenues were heavily influenced by major project orders booked
in previous periods, while surface products, which have a shorter delivery cycle
and respond more quickly to changes in orders, reflected the current low levels
of activity in this market area. On a geographical basis, revenues declined in
the Asia/Pacific region, were relatively flat in the Eastern Hemisphere, and
increased in the Western Hemisphere as the result of drilling product shipments
for deep-water projects in the Gulf of Mexico.
CCV's revenues of $54.0 million declined by 15% from the $63.7 million
in the first quarter of 1998. Excluding the effect of the Orbit Valve
acquisition, revenues decreased by 37%. The weakness in revenues was
particularly evident in oilfield distributor products, where customers have
excess inventories to be worked off before new orders will be placed with CCV.
Revenues for CES of $77.6 million declined by 15% from the $91.6
million in the first quarter of 1998. The energy-related markets served by this
segment remained very competitive in the first quarter, with industry-wide
overcapacity. The most significant revenue decline was in gas turbine and
compressor projects, where a lack of new major project orders during nearly all
of 1998 limited first quarter revenues. Aftermarket parts sales also declined
from the first quarter of 1998.
CTC had revenues of $24.7 million, or a decrease of 17% from $29.9
million in the first quarter of 1998. This decline was across all lines of the
business, but was most significant in the smaller plant air applications. The
continued low activity levels for products sold directly to Southeast Asian
markets was the most notable factor in the results for the first quarter of
1999. As a secondary effect, stagnant growth in the Asian markets has also
caused industrial development projects in other parts of the world to be pushed
out and, when undertaken, to be more price competitive.
COSTS AND EXPENSES
While revenues decreased $43.0 million in comparison to the first
quarter of 1998, cost of sales (exclusive of depreciation and amortization) only
decreased $18.4 million, leading to a gross margin shortfall of $24.6 million
and an overall gross margin percentage (defined as revenues less cost of sales
as percentage of revenues) decline of three percentage points. This result is
discussed below in more detail for each segment.
Cameron's gross margin percentage was 30.4% in the first quarter of
1999, compared to 33.0% for the same period in 1998. This decrease resulted from
the significant increase in
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<PAGE> 11
relatively lower-margin drilling product revenues and the decrease in
higher-margin surface products. Pricing pressure, which began to increase late
in 1998, continued in the first quarter of 1999, but the effect on first quarter
results was minimized by shipments from backlog at favorable pricing levels.
Providing a partial offset were the benefits of various ongoing cost reductions.
CCV's gross margin percentage decreased from 31.4% in the first quarter
of 1998 to 28.2% in the first quarter of 1999, in spite of the favorable effect
of the higher-margin Orbit Valve products. This decline was caused by pricing
pressure and manufacturing period cost reductions which were unable to keep pace
with the rapid revenue decline.
The gross margin percentage for CES declined from 19.8% in the first
quarter of 1998 to 13.7% in the first quarter of 1999. Pricing pressure
throughout the business, cost reductions that could not keep pace with the
revenue decline, and weakness in the higher-margin parts business were the
primary factors contributing to this decrease. Management is continuing to
evaluate alternatives for correcting this trend.
CTC's gross margin percentage was 35.4% in the first quarter of 1999,
unchanged from the year earlier level. Pricing pressure intensified during 1998
and continued during the first quarter of 1999, as competitors became more
aggressive with the continued absence of orders from Southeast Asia, but was
offset by favorable pricing on first quarter shipments from backlog and cost
reduction initiatives.
Depreciation and amortization expense increased by $3.8 million, from
$17.2 million in the first quarter of 1998 to $21.0 million in the first quarter
of 1999. This increase was primarily due to higher capital spending during 1998
in Cameron and the Orbit Valve acquisition in CCV.
Selling and administrative expenses decreased by $2.4 million, or 4%,
from $56.0 million in the first quarter of 1998 to $53.6 million in the first
quarter of 1999. Cameron and CES decreased by $4.2 million and $.9 million,
respectively, due to cost reductions in response to revenue declines. CCV
increased by $2.7 million from the Orbit Valve acquisition, partially offset by
cost reductions in the remainder of the business.
Reflecting the various factors discussed above, operating income
(defined as earnings before nonrecurring/unusual charges, corporate expenses,
interest, and taxes) totaled $32.3 million, a decrease of $26.1 million from the
first quarter of 1998. Cameron decreased from $41.8 million to $33.2 million,
CCV declined from $11.4 million to $3.1 million, a loss for CES increased from
$(.8) million to $(7.8) million, and CTC declined from $6.0 million to $3.8
million.
Interest expense was $7.3 million in the first quarter of 1999, an
increase of $.1 million from the same period in 1998, as a slightly higher
average debt level was nearly offset by a lower average interest rate. The
unfavorable effect on debt from the Orbit Valve acquisition and increased
capital spending during 1998 were partially offset by working capital
reductions.
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<PAGE> 12
Income taxes were $5.0 million in the first quarter of 1999, a decrease
of $9.9 million from the first quarter of 1998 due to lower earnings, partially
offset by a slight increase in the effective tax rate. The Company's effective
tax rate increased to 32.0% in the first quarter of 1999 from 31.0% in the first
quarter of 1998, mainly due to a change in the mix of domestic and foreign
earnings.
CASH FLOW, LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
During the first three months of 1999, the Company generated
approximately $24.9 million of cash from operating activities, a 55% decline
from the first quarter of 1998. This decline was almost entirely attributable to
the lower income level described previously, which affected all segments.
Improved working capital levels, primarily at Cameron, were largely offset by
the payment the Company made in March to convert its treasury lock agreements
into long-term interest rate swap agreements (see Note 7 of the Notes to
Consolidated Financial Statements).
The cash generated from operations for the first quarter of 1999 was
utilized primarily to fund $27.1 million of capital expenditures, approximately
67% and 26% of which were incurred by Cameron and CES, respectively. The
majority of capital expenditures to be incurred during the first half of 1999
relate to projects committed to during 1998. Capital expenditures during the
second half of 1999 are expected to decline significantly from the first half of
the year and from the corresponding period in the prior year. First quarter
capital expenditures were partially offset with $1.6 million of proceeds from
sales of plant and equipment.
In addition to the above, cash payments for financing activities of
$3.0, over half of which related to capital lease payments, and a stronger U.S.
dollar, which had a negative effect of $1.2 million on the translation of
foreign-denominated cash balances, combined to result in a total reduction in
cash of $4.8 million for the three months ended March 31, 1999.
YEAR 2000
The Company has in place a program dating back to 1997, which is
designed to address the ability of the Company's worldwide internal business,
financial, engineering, manufacturing, facility and other systems (including
date-sensitive equipment as well as computer hardware and software) to handle
transactions beyond 1999. Where necessary, such systems are being modified or
replaced in an attempt to ensure that they are "Year 2000 compliant". The
Company currently estimates that the overall project is over 90% complete and
that the remaining testing and remediation will be completed by the middle of
1999. Estimated costs for the project, excluding internal personnel costs, are
approximately $2.4 million, of which nearly half had been spent through March
31, 1999. This total includes new capital assets that are required because of
Year 2000 issues. All non-capital costs are being expensed as incurred.
The Company has completed inventories of its date-sensitive operating
systems and has upgraded and satisfactorily tested virtually all core operating
systems for Year 2000 (Y2K) compliance. The Company is also in the process of
taking corrective action, where necessary, to deal with certain desktop PCs,
servers and network equipment that have been identified as not
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<PAGE> 13
being Y2K compliant, as well as non-compliant manufacturing equipment (such as
machine tools and calibration/measuring devices) and facility control systems
(e.g. cooling/environmental controls, elevators, electronic locks, etc.) and
anticipates completion by June 30, 1999. In most cases, compliance will be
obtained through vendor supplied upgrades or replacement.
A second phase of the Company's Year 2000 program involves the products
that the Company produces and sells. Although the nature of the Company's
products does not involve a significant number of date-sensitive components, the
Company believes that all products currently being sold will perform properly
beyond the year 1999. The Company is currently working with customers on an
individual basis to help them ensure that products purchased prior to 1998 will
also perform properly beyond 1999.
The third phase of the Company's Year 2000 program involves third-party
vendors and suppliers who provide materials and components utilized in the
products which the Company sells, as well as those such as banks, utilities,
insurance companies, etc. who provide services the Company directly or
indirectly relies on. The Company has contacted each of its key third party
vendors and suppliers and has received close to 100% response from each
regarding the status of their internal Y2K programs. Based on these responses,
the Company has further identified those vendors which are considered to be
critical, sole-source vendors and those who have been deemed as providing
products which are considered to be of "high risk" for non-Y2K compliance. Each
of these vendors have been asked to provide additional assurances that their
products are Y2K compliant. To date, responses have been received from the vast
majority and the Company is currently in the process of following up with those
vendors who have not yet responded or those whose response was considered
unsatisfactory. Contingency plans will be developed in the event a vendor is
considered to be unable to provide compliant products or services on or after
January 1, 2000.
The Company realizes that even with complete Y2K testing and compliance
of all its business systems and sites, possible situations could occur that
would require activation of contingency plans. Accordingly, a contingency
planning process is underway based on the Company's global risk analysis and
industry standard priority definitions to ensure that in the event of a
Y2K-related interruption, business activities can be restored as quickly as
possible. This contingency planning process will be completed by September 30,
1999.
The Company's Year 2000 program is being reviewed and monitored on a
proactive basis by the Company's senior management as well as the Board of
Directors. Due to the complexity of the problem and the necessary reliance on
parties and factors which may be outside the control of or currently unknown to
the Company, complete Year 2000 compliance cannot be guaranteed. However, based
on information currently available, the Company believes it will achieve a level
of compliance such that any unforeseen problems will not have a material adverse
effect on the Company's results of operations, liquidity or financial condition.
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<PAGE> 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Note 7 of the Notes to Consolidated Financial Statements in Part I,
Item 1, for information on significant changes since December 31, 1998 in the
Company's exposure to market risk from its current holdings of financial
instruments.
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<PAGE> 15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended March 31, 1999.
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 Cameron Corporation
(Registrant)
Date May 14, 1999 /s/ THOMAS R. HIX
--------------------------- --------------------------------
Thomas R. Hix
Senior Vice President &
Chief Financial Officer
and authorized to sign on
behalf of the Registrant
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<PAGE> 16
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 16
<SECURITIES> 0
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0
0
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</TABLE>
