Cooper Industries Reports Q2 Earnings
24 July 1997
Cooper Industries Reports Net Income Up 20% Second-quarter share earnings up 12%
HOUSTON, July 24, 1997 -- Second-quarter fully diluted share
earnings of Cooper Industries, Inc. rose 12% to 86 cents from
77 cents a share in the same quarter of 1996. Revenues increased 2% to
$1.38 billion from $1.35 billion in the second quarter of 1996. Second-quarter
earnings before taxes rose 14% to $170.2 million from $149.6 million in the
second quarter of 1996. Net income increased 20% to $105.5 million from
$88.3 million in the comparable period of 1996.
During the second quarter, Cooper Industries completed the sale of its
Kirsch window coverings business, which affected the year-to-year revenue
comparisons. Excluding Kirsch, second-quarter revenues increased by 5%.
Additionally, the sale of Kirsch resulted in a pre-tax gain of $69.8 million
during the quarter. The company also recorded $70.5 million of nonrecurring
pre-tax charges related to information systems technology that will be
replaced as Cooper complies with Year 2000 requirements, international plant
consolidations and the exiting of certain lower-margin automotive product
lines.
For the six months ended June 30, 1997, Cooper's revenues rose 2% to
$2.7 billion, up from $2.6 billion in the same period of 1996. Excluding
Kirsch, revenues increased 4%. Earnings before taxes increased 16% to $295.5
million compared with $255.3 million in the second quarter of 1996. Fully
diluted share earnings increased 14% to $1.52, compared with $1.33 during the
first half of 1996.
"It was another outstanding quarter for Cooper Industries," said H. John
Riley, Jr., Chairman, President and Chief Executive Officer. "The results can
be attributed to continued strong momentum in our Electrical Products business
and a rebound in the performance of our Tools & Hardware segment. In
addition, our Automotive Products business is holding its own in a very
difficult worldwide market," he added.
Revenues for the Electrical Products segment were up 8% during the
quarter, driven by double digit sales gains in the circuit protection and
power systems businesses. Tools & Hardware revenues, excluding Kirsch,
increased 9% in the quarter. Strong aerospace and automotive markets enabled
the power tools business to achieve record performance levels. A new, fully
operational hand tools distribution center helped that business improve its
results over the same period in 1996. Revenues for the Automotive Products
segment were down 2% in the quarter, reflecting a continued soft automotive
aftermarket and generally weak demand for wiper and temperature control
products.
"During the second quarter, we took additional decisive actions to firmly
position Cooper for future success. As part of our continuing efforts to
improve the profitability of our Automotive Products segment, we made a
decision to exit certain lower-margin product lines. Most recently, we signed
a letter of intent to exchange our temperature control product lines for the
brake business of Standard Motor Products. In addition, our Moog Automotive
business became the first of several of our operations to install a fully
integrated business system and is now beginning to realize productivity gains.
We expect actions like these to lead to significant margin improvement in our
Automotive Products segment," Riley said.
"In Electrical Products, our power systems business will benefit from the
recent acquisition of Kearney Company and the implementation of a major
restructuring of distribution transformer manufacturing processes. In
addition, a new, centralized customer service and distribution center for our
lighting products business became fully operational in the quarter and will
soon lead to significantly enhanced service levels and reduced costs.
"For our Tools & Hardware segment, a recently announced facilities
consolidation in Brazil and an ongoing facilities rationalization program in
Europe will help us continue to enhance our performance. Additionally, a
program to implement fully integrated business systems throughout the segment
is now underway," Riley said.
During the quarter, the company purchased approximately one million of
its shares totaling $50 million as part of a $275 million common stock
repurchase program announced in June. As the quarter ended, the company had
reduced its debt-to-total capital ratio to 34%.
"All of these actions position Cooper to achieve our 1997 objectives and
generate continued earnings growth in the years ahead," Riley added.
Comparisons of 1997 and 1996 second-quarter and first-half results appear
on the following pages.
Cooper Industries, with 1996 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: http://www.cooperindustries.com.
CONSOLIDATED RESULTS OF OPERATIONS
Quarter Ended June 30, % Change
1997 1996(1)
(in millions where applicable)
Revenues:
Electrical Products $ 660.7 $ 611.3 8.1%
Tools & Hardware 195.7 178.9 9.4%
Kirsch(2) 41.8 66.2 NA
Automotive Products 486.7 495.0 -1.7%
Total Revenues 1,384.9 1,351.4 2.5%
Cost of sales 938.4 919.3 2.1%
Selling & administrative
expenses 238.8 232.8 2.6%
Goodwill amortization 16.1 16.4 -1.8%
Nonrecurring charges 70.5 8.3 NA
Other(income)expense, net (70.4) (11.8) NA
Interest expense 21.3 36.8 -42.1%
Income Before Income Taxes 170.2 149.6 13.8%
Income Taxes 64.7 61.3 5.5%
Net Income $ 105.5 $ 88.3 19.5%
Net Income Per Common Share:
Primary $ .88 $ .82 7.3%
Fully Diluted(3 ) $ .86 $ .77 11.7%
Shares Utilized in Computation
of Income Per Common Share:
Primary 120.0 million 107.7 million
Fully Diluted 123.1 million 124.4 million
PERCENTAGE OF REVENUES
Quarter Ended June 30,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 67.8% 68.0%
Selling & administrative
expenses 17.2% 17.2%
Goodwill amortization 1.2% 1.2%
Nonrecurring charges 5.1% 0.6%
Other(income)expense, net -5.1% -0.9%
Interest expense 1.5% 2.7%
Income Before Income Taxes 12.3% 11.1%
Income Taxes 4.7% 4.5%
Net Income 7.6% 6.5%
(1) Certain amounts have been reclassified to conform to the 1997
presentation.
(2) Kirsch revenues represent the revenues prior to the sale to
Newell Co. on May 30, 1997.
(3) The calculations assume conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($0.1 million in 1997 and $7.3 million in 1996, net of tax)
was added back to net income in the computation of fully diluted
earnings per share.
CONSOLIDATED RESULTS OF OPERATIONS
Six Months Ended June 30, % Change
1997 1996(1)
(in millions where applicable)
Revenues:
Electrical Products $1,273.4 $1,185.8 7.4%
Tools & Hardware 375.8 355.5 5.7%
Kirsch(2) 97.4 125.9 NA
Automotive Products 957.2 975.9 -1.9%
Total Revenues 2,703.8 2,643.1 2.3%
Cost of sales 1,844.1 1,816.4 1.5%
Selling & administrative
expenses 479.6 466.4 2.8%
Goodwill amortization 32.1 32.6 -1.5%
Nonrecurring charges 70.5 19.2 NA
Other(income)expense, net (68.9) (21.2) NA
Interest expense 50.9 74.4 -31.6%
Income Before
Income Taxes 295.5 255.3 15.7%
Income Taxes 112.3 104.9 7.1%
Net Income $ 183.2 $ 150.4 21.8%
Net Income Per Common Share:
Primary $ 1.59 $ 1.40 13.6%
Fully Diluted(3) $ 1.52 $ 1.33 14.3%
Shares Utilized in Computation
of Income Per Common Share:
Primary 115.1 million 107.5 million
Fully Diluted 124.0 million 124.4 million
PERCENTAGE OF REVENUES
Six Months Ended June 30,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 68.2% 68.7%
Selling & administrative expenses 17.7% 17.6%
Goodwill amortization 1.2% 1.2%
Nonrecurring charges 2.6% 0.7%
Other(income)expense, net -2.5% -0.8%
Interest expense 1.9% 2.8%
Income Before Income Taxes 10.9% 9.7%
Income Taxes 4.2% 4.0%
Net Income 6.8% 5.7%
(1) Certain amounts have been reclassified to conform to the 1997
presentation.
(2) Kirsch revenues represent the revenues prior to the sale to
Newell Co. on May 30, 1997.
(3) The calculations assume conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($5.8 million in 1997 and $14.6 million in 1996, net of tax)
was added back to net income in the computation of fully 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 1997" set forth in the Company's
Current Report on Form 8-K dated July 24, 1997.
SOURCE Cooper Industries, Inc.