Cooper Industries Reports Q1 Earnings and Income
22 April 1998
Cooper Industries Reports Net Income up 18% First-Quarter Share Earnings up 13%
HOUSTON, April 22 -- Cooper Industries, Inc.
today reported that net income increased 18% to $92.0 million in the first
quarter of 1998 from $77.7 million in the comparable period of 1997. Diluted
share earnings for the first quarter of 1998 rose 13% to 76 cents from 67
cents in 1997. Revenues in the first quarter increased to $1.34 billion in
1998 from $1.32 billion in the first quarter of 1997.
Revenues for the quarter, excluding recent divestitures and currency
translations, increased 8%. Revenues for the first quarter of 1997 include
sales from Kirsch, the window treatments business that the company sold in
May 1997. In addition, foreign currency changes in relation to the U.S.
dollar reduced reported revenues by approximately 2%.
"Cooper is off to a very good start in 1998, posting our fourteenth
consecutive quarter of year-to-year earnings per share increases," said H. J.
Riley, Jr., Chairman, President and Chief Executive Officer. "During the
quarter, we saw overall growth in both North American and Latin American
markets, an increase in demand in Europe across all our businesses and closure
on a number of value-adding strategic programs in our automotive business.
"In addition, we acquired four businesses, one in our electrical products
segment and three in our tools and hardware segment. Combined, these
businesses are expected to add more than $130 million to annual revenues.
We are also pleased to see significantly improved operating margins during
the quarter, indicating that the profit improvement programs we have in place
are producing the intended results," Riley added.
The Electrical Products segment continued to report record revenues, with
an increase of 15% over 1997. All of the electrical businesses had solid
revenue gains in North America and Europe. Segment revenues in Europe were
also enhanced by the late-1997 addition of Menvier, a U.K.-based manufacturer
of emergency lighting, alarms and safety systems. Absent acquisitions and
currency effects, electrical products revenues were up 6%.
Tools & Hardware revenues grew 4% during the quarter. Increased domestic
and international demand for power tools was partially offset by lower demand
for industrial hand tools in North America. Foreign currency translation
reduced the segment's revenues for the quarter by approximately 3%. Included
in the segment's growth in the quarter were three recent acquisitions of power
tool businesses: Recoules of France, Geta-Werk of Germany, and INTOOL, a
U.S.-based business. Absent acquisitions and currency effects, Tools &
Hardware revenues increased 2%.
Automotive Products revenues declined 5% in the first quarter. During
the quarter, Cooper sold its unprofitable remanufactured CV joint business
and completed an exchange of businesses with Standard Motor Products,
Inc. Absent the effect of market disruptions related to these actions,
currency movements and a small contribution from recent acquisitions,
segment revenues would have been down less than 2% during the quarter.
Cooper also announced that it is reviewing alternatives for exiting the
automotive business, including an initial public offering or sale of the
business. The company anticipates that a separation would make it easier
for the investment community to analyze and evaluate Cooper's remaining
operations.
"Going forward, our strong first quarter results set the stage for 1998 to
be a very good year for Cooper," said Riley. "The plans we have in place
should accelerate Cooper's profitable growth and allow our company to
produce greater shareholder value."
Comparisons of 1998 and 1997 first-quarter results appear on the
following page.
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 March 31, % Change
1998 1997
(in millions where applicable)
Revenues:
Electrical Products $ 706.0 $ 612.7 15.2%
Tools & Hardware 188.1 180.1 4.4%
Subtotal 894.1 792.8 12.8%
Automotive Products 449.0 470.5 -4.6%
Kirsch (A) --- 55.6 N.M.
Total revenues 1,343.1 1,318.9 1.8%
Cost of sales 912.0 905.7
Selling and administrative
expenses 242.0 240.8 ---
Goodwill amortization 18.3 16.0 ---
Other (income) expense, net (0.5) 1.5 ---
Interest expense 25.3 29.6 ---
Income Before
Income Taxes 146.0 125.3 ---
Income Taxes 54.0 47.6 ---
Net Income $ 92.0 $ 77.7 18.4%
Net Income Per Common Share:
Basic $ .77 $ .71 8.5%
Diluted $ .76 $ .67 (B) 13.4%
Shares Utilized in Computation
of Income Per Common Share:
Basic 119.7 million 109.5 million ---
Diluted 121.2 million 124.8 million ---
PERCENTAGE OF REVENUES
Quarter Ended March 31,
1998 1997
Revenues 100.0% 100.0%
Cost of sales 67.9% 68.7%
Selling and administrative expenses 18.0% 18.3%
Income Before Income Taxes 10.9% 9.5%
Net Income 6.8% 5.9%
(A) Kirsch was sold to Newell Co. on May 30, 1997.
(B) The 1997 calculation assumes conversion of the remaining 7.05%
Convertible Subordinated Debentures to Common stock. As a result,
interest on the debentures of $5.7 million, 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 "Earnings Outlook" in Management's Discussion and Analysis of
Financial Condition and Results of Operations set forth in Appendix A to the
Company's Proxy Statement for the 1998 Annual Meeting of Shareholders.
SOURCE Cooper Industries, Inc.