Cooper Industries Reports Q3 Earnings
23 October 1997
Cooper Industries Reports Net Income Up 33% Third-quarter share earnings up 24%
HOUSTON, Oct. 23 -- Third-quarter fully diluted share
earnings of Cooper Industries, Inc. rose 24% to 84 cents from
68 cents a share in the same quarter of 1996. Net income increased 33% to
$102.5 million from $77.3 million in the comparable period of 1996. Excluding
divestitures, revenues increased 4% to $1.30 billion from $1.25 billion.
In the third quarter of 1997, Cooper recorded a $23 million pre-tax gain
from the exchange of securities that was partially offset by nonrecurring
pre-tax charges of $13 million for plant consolidations and the implementation
of new information systems. Exclusive of these nonrecurring items, net
income rose 25% to $96.4 million from $77.3 million, and share earnings
increased 16% to 79 cents from 68 cents.
"Excluding nonrecurring items, revenues, operating profits and margins
improved in all three of our business segments, despite the impact of a
strengthening U.S. dollar on European sales and slower business activities in
certain international markets," said H. John Riley, Jr., Chairman, President
and Chief Executive Officer. "Additionally, our strong cash flow allowed us
to make further value-adding, complementary acquisitions and to continue share
repurchases during the quarter."
For the nine months ended September 30, 1997, Cooper's revenues, excluding
divestitures, rose 4% to $3.90 billion, up from $3.76 billion in the same
period of 1996. Net income increased 25% to $285.7 million from $227.7
million in 1996. Fully diluted share earnings increased 18% to $2.36,
compared with $2.00 during the first nine months of 1996.
In the first nine months of 1997, Cooper Industries recorded $93.0
million in pre-tax gains from divestitures and the sale and exchange of
securities that were partially offset by nonrecurring pre-tax charges of
$83.9 million. Exclusive of nonrecurring items in 1996 and 1997, net income
rose 23% to $280.1 million from $227.0 million and share earnings increased
16% to $2.31 from $1.99.
Revenues for the Electrical Products segment were up 5% over the third
quarter of 1996, driven by double digit sales gains in the power systems and
circuit protection businesses. Sales of lighting fixtures were up modestly,
while, as expected, revenues for electrical construction materials were down
due to one-time major project shipments last year. Tools & Hardware revenues,
excluding the Kirsch window covering operation that was sold by Cooper in May,
increased 4% during the quarter. This increase was primarily driven by
continuing demand for aircraft and automotive assembly equipment and the
introduction of new hand tool products. Slowing demand for hand tools in the
U.S. and European industrial markets partially offset the increase. Revenues
for the Automotive Products segment were up 2% in the quarter, due to
moderately improved sales in the domestic automotive aftermarket and stronger
worldwide original equipment demand. These increases helped counter generally
weak demand in the European aftermarket.
The company's acquisitions during the quarter included Thepitt, a
manufacturer of electrical outlet boxes and covers, and Coiltronics, a maker
of inductors and transformers used in computers and other consumer
electronics. These operations are expected to add to the performance
potential of Cooper's Electrical Products segment.
During the quarter, the company purchased approximately 1.8 million of
its shares for a total of $96 million as part of a $275 million common stock
repurchase program announced in June. At the end of the third quarter, the
company's debt-to-total capital ratio was 33.9%.
"Cooper continues to deliver strong earnings increases from revenue
growth and improving margins," said Riley. "While we have some concerns about
the domestic and European economies, we are focused on meeting our 1997
objectives and extending our record of consistent earnings per share growth.
As a result, Cooper is headed for a record earnings year in 1997," Riley
added.
Comparisons of 1997 and 1996 third-quarter 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 September 30, % Change
1997 1996(A)
(in millions where applicable)
Revenues:
Electrical Products $ 646.4 $ 613.2 5.4%
Tools & Hardware 183.9 176.5 4.2%
Automotive Products 466.6 457.7 1.9%
Subtotal 1,296.9 1,247.4 4.0%
Kirsch(B) --- 60.7 N.M.
Total segment revenues 1,296.9 1,308.1 -0.9%
Cost of sales 883.1 889.8
Selling and administrative
expenses 222.5 235.5
Goodwill amortization 16.3 16.4
Nonrecurring gains (23.2) (107.2)
Nonrecurring charges 13.4 85.3
Other (income) expense, net --- (0.5)
Interest expense 19.4 35.4
Income Before Income Taxes 165.4 153.4(C)
Income Taxes 62.9 76.1(C)
Net Income $ 102.5 $ 77.3 32.6%
Net Income Per Common Share:
Primary $ .84 $ .72 16.7%
Fully Diluted $ .84 $ .68(D) 23.5%
Shares Utilized in Computation
of Income Per Common Share:
Primary 122.1 million 107.6 million
Fully Diluted 122.1 million 124.6 million
PERCENTAGE OF REVENUES
Quarter Ended September 30,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 68.1% 68.0%
Selling and administrative
expenses 17.2% 18.0%
Income Before Income Taxes 12.8% 11.7%
Net Income 7.9% 5.9%
(A) Certain amounts have been reclassified to conform to the 1997
presentation.
(B) Kirsch was sold to Newell Co. on May 30, 1997.
(C) Income before income taxes includes $21.9 million of nonrecurring
gains net of nonrecurring charges. Income taxes include $21.9 million
related to nondeductible nonrecurring charges.
(D) The calculation assumes conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($7.3 million in 1996, net of tax) was added back to net
income in the computation of fully diluted earnings per share.
CONSOLIDATED RESULTS OF OPERATIONS
Nine Months Ended September 30, % Change
1997 1996(A)
(in millions where applicable)
Revenues:
Electrical Products $1,919.8 $1,799.0 6.7%
Tools & Hardware 559.7 532.0 5.2%
Automotive Products 1,423.8 1,433.6 -0.7%
Subtotal 3,903.3 3,764.6 3.7%
Kirsch(B) 97.4 186.6 N.M.
Total segment revenues 4,000.7 3,951.2 1.3%
Cost of sales 2,727.2 2,706.2
Selling and administrative
expenses 702.1 701.9
Goodwill amortization 48.4 49.0
Nonrecurring gains (93.0) (127.6)
Nonrecurring charges 83.9 104.5
Other (income) expense, net 0.9 (1.3)
Interest expense 70.3 109.8
Income Before Income Taxes 460.9 408.7(C)
Income Taxes 175.2 181.0(C)
Net Income $ 285.7 $ 227.7 25.5%
Net Income Per Common Share:
Primary $ 2.43 $ 2.12 14.6%
Fully Diluted(D) $ 2.36 $ 2.00 18.0%
Shares Utilized in Computation
of Income Per Common Share:
Primary 117.4 million 107.5 million
Fully Diluted 123.3 million 124.5 million
PERCENTAGE OF REVENUES
Nine Months Ended September 30,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 68.2% 68.5%
Selling and administrative
expenses 17.5% 17.8%
Income Before Income Taxes 11.5% 10.3%
Net Income 7.1% 5.8%
(A) Certain amounts have been reclassified to conform to the 1997
presentation.
(B) Kirsch was sold to Newell Co. on May 30, 1997.
(C) Income before income taxes includes $21.9 million of nonrecurring
gains net of nonrecurring charges. Income taxes include $21.9 million
related to nondeductible nonrecurring charges.
(D) The calculation assumes conversion of the 7.05% Convertible
Subordinated Debentures to Common stock. As a result, interest on the
debentures ($5.8 million in 1997 and $21.9 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.