Cooper Industries Reports Record Net Income for 1997 Fourth quarter Diluted Share Earnings up 18%
26 January 1998
Cooper Industries Reports Record Net Income for 1997 Fourth quarter Diluted Share Earnings up 18%
HOUSTON, Jan. 26 -- Cooper Industries, Inc.
announced today that the company's net income rose 25% to a record
$394.6 million from $315.4 million in 1996. Diluted share earnings rose
18% to $3.26 from $2.77 in 1996. Revenues for the year were $5.3 billion,
equaling the previous year despite the sale in May of the company's Kirsch
window treatments business and the strong U.S. dollar. Revenues for the year,
excluding Kirsch, increased 3%.
For the three months ended December 31, 1997, Cooper's net income rose
24% to $108.9 million, compared with $87.7 million in 1996. Diluted share
earnings were 90 cents, up 18% from 76 cents in the same quarter of 1996.
Fourth-quarter revenues declined 3% to $1.29 billion from $1.33 billion in the
comparable 1996 period, due to the sale of Kirsch. Excluding Kirsch, the
company's fourth quarter revenues rose 2%.
Cooper's 1997 share earnings include a 10 cent net contribution from non-
recurring gains, including a 5 cent gain from the favorable settlement of
state income tax issues in the fourth quarter of the year. The company's 1996
earnings per share included a 5 cent contribution from a non-recurring gain,
with 4 cents of this gain occurring in the fourth quarter of the year.
"Cooper Industries had another excellent year in 1997, ending the year
with the highest earnings in the company's history and 13 consecutive quarters
of earnings per share increases," reported H. John Riley, Jr., Cooper's
Chairman, President and Chief Executive Officer. "We made significant
progress, enhancing Cooper's competitiveness in all of our businesses. The
results of our top-performing Electrical Products segment exceeded our
expectations, and we improved margins in both our Tools and Hardware and
Automotive Products businesses. These improvements and other recent steps we
have taken to improve future earnings leave us well positioned to produce
another year of significant earnings growth in 1998," Riley said.
Core business improvements and strategic acquisitions in Cooper's
Electrical Products segment led to record results in 1997 with a 13% increase
in operating earnings, exclusive of nonrecurring items, for the year.
International market penetration and the introduction of new products,
particularly in Cooper's power distribution and circuit protection product
lines, also boosted results in the segment.
Revenues, earnings and margins, excluding nonrecurring items and Kirsch,
for the Company's Tools & Hardware segment increased in 1997, driven by a
strong performance by the segment's power tools business. Distribution system
improvements, new product introductions and streamlined operations in the hand
tools business contributed modestly to these results.
Operating margins for the Automotive Products segment also improved over
1996, despite a difficult market that led to a slight decline in revenues in
this segment. Plant consolidations and continued streamlining of other
business functions resulted in greater efficiencies in 1997, more than
offsetting the impact of lower business volumes. During the year, additional
steps were taken to further reduce cost structures and improve the future
profitability of this segment.
Cooper also achieved major improvements in its capital structure during
the year. The company's debt-to-capital ratio improved from 50% at year-end
1996 to 36% at the close of 1997. Additionally, the company used its strong
cash flow to purchase more than $192 million of its own shares and fund the
acquisition of eight complementary businesses with combined annual sales of
more than $325 million.
"Clearly, 1997 was another outstanding year for Cooper Industries. Recent
actions to increase revenues, improve margins and strengthen our financial
flexibility set the stage for even greater success in 1998 and the years
ahead," Riley added.
Comparisons of 1997 and 1996 fourth-quarter and full-year results appear
on the following pages.
Cooper Industries, with 1997 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 December 31, % Change
1997 1996(A)
(in millions where applicable)
Revenues:
Electrical Products $ 648.5 $ 608.5 6.6%
Tools & Hardware 190.2 188.1 1.1%
Automotive Products 449.4 469.6 -4.3%
Subtotal 1,288.1 1,266.2 1.7%
Kirsch(B) --- 66.3 N.M.
Total segment revenues 1,288.1 1,332.5 -3.3%
Cost of sales 861.1 899.5
Selling and administrative
expenses 223.2 243.5
Goodwill amortization 16.7 16.2
Nonrecurring gains --- (22.8)
Nonrecurring charges --- 13.4
Other (income) expense, net 1.2 1.1
Interest expense 20.1 32.3
Income Before Income Taxes 165.8 149.3
Income Taxes 56.9 61.6
Net Income $ 108.9 $ 87.7 24.2%
Net Income Per Common Share:(C)
Basic $ .91 $ .82 11.0%
Diluted(D) $ .90 $ .76 18.4%
Shares Utilized in Computation
of Income Per Common Share:(C)
Basic 119.9 million 107.3 million
Diluted 121.2 million 124.8 million
PERCENTAGE OF REVENUES
Quarter Ended December 31,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 66.9% 67.5%
Selling and administrative
expenses 17.3% 18.3%
Income Before Income Taxes 12.9% 11.2%
Net Income 8.5% 6.6%
(A) Certain amounts have been reclassified to conform to the 1997
presentation.
(B) Kirsch was sold to Newell Co. on May 30, 1997.
(C) Net income per Common share and shares utilized reflect a mandatory
change in accounting from primary and fully diluted to basic and
diluted. The change had no impact on diluted net income per Common
share.
(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 diluted earnings per share.
CONSOLIDATED RESULTS OF OPERATIONS
Twelve Months Ended December 31, % Change
1997 1996(A)
(in millions where applicable)
Revenues:
Electrical Products $ 2,568.3 $ 2,407.5 6.7%
Tools & Hardware 749.9 720.1 4.1%
Automotive Products 1,873.2 1,903.2 -1.6%
Subtotal 5,191.4 5,030.8 3.2%
Kirsch(B) 97.4 252.9 N.M.
Total segment revenues 5,288.8 5,283.7 0.1%
Cost of sales 3,588.3 3,605.7
Selling and administrative
expenses 925.3 945.4
Goodwill amortization 65.1 65.2
Nonrecurring gains (93.0) (150.4)
Nonrecurring charges 83.9 117.9
Other (income) expense, net 2.1 (0.2)
Interest expense 90.4 142.1
Income Before Income Taxes 626.7 558.0(C)
Income Taxes 232.1 242.6(C)
Net Income $ 394.6 $ 315.4 25.1%
Net Income Per Common Share:(D)
Basic $ 3.36 $ 2.94 14.3%
Diluted(E) $ 3.26 $ 2.77 17.7%
Shares Utilized in Computation
of Income Per Common Share:(D)
Basic 117.5 million 107.3 million
Diluted 122.9 million 124.6 million
PERCENTAGE OF REVENUES
Twelve Months Ended December 31,
1997 1996
Revenues 100.0% 100.0%
Cost of sales 67.8% 68.2%
Selling and administrative
expenses 17.5% 17.9%
Income Before Income Taxes 11.8% 10.6%
Net Income 7.5% 6.0%
(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 offset by income
taxes of $21.9 million related to the 1996 third-quarter write-off of
nondeductible goodwill.
(D) Net income per Common share and shares utilized reflect a mandatory
change in accounting from primary and fully diluted to basic and
diluted. The change had no impact on diluted net income per Common
share.
(E) 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 $29.2 million in 1996, net of
tax) was added back to net income in the computation of 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 1998" set forth in the Company's
Current Report on Form 8-K dated January 26, 1998.
SOURCE Cooper Industries, Inc.