Cooper Industries Reports Q2 Earnings
23 July 1998
Cooper Industries Reports Second-Quarter Share Earnings of $0.88
HOUSTON, July 23 -- Cooper Industries, Inc. today
reported that its diluted share earnings for the second quarter of 1998 rose
to 88 cents from 86 cents in 1997. Revenues in the second quarter increased
to $1.43 billion in 1998 from $1.38 billion in the second quarter of 1997.
Cooper's net income increased to $106 million in the second quarter of 1998
from $105.5 million in the comparable period of 1997.
Revenues for the quarter, excluding currency translations and the May 1997
divestiture of Kirsch, increased 7%. Foreign currency changes in relation to
the U.S. dollar reduced reported revenues by approximately 1%.
For the six months ended June 30, 1998, Cooper's diluted share earnings
increased 8% to $1.64 from $1.52 in the comparable period of 1997. The
company's revenues for the first half of 1998 rose 3% to $2.77 billion from
$2.70 billion in the same period of 1997. Excluding Kirsch and currency
translations, revenues for the first six months of 1998 rose 8%. Net income
for the first half of 1998 increased 8% to $198 million from $183 million
during the comparable period of 1997.
"The second quarter was our fifteenth consecutive quarter of year-to-year
earnings per share increases," said H. John Riley, Jr., Chairman, President
and Chief Executive Officer. "This reflects the contributions from recent
complementary acquisitions and profit improvement programs that have been put
in place throughout the company over the past few years. These actions helped
offset the adverse impact of changing economic conditions and lower overall
demand for utility and hazardous duty electrical products. Additionally, work
stoppages at General Motors had a moderate impact on our results during the
quarter."
Revenues for Cooper's Electrical Products segment increased by 10% during
the quarter. The segment experienced strong domestic demand for circuit
protection and lighting products, as well as improving European demand for
circuit protection products during the quarter. Recent acquisitions,
including the December 1997 acquisition of Menvier, a U.K.-based maker of
emergency lighting and security products, contributed to the segment's revenue
growth. These increases offset a reduction in shipments of power equipment
and hazardous duty electrical construction materials to Asia and more
competitive domestic conditions for these products.
Tools & Hardware revenues were up 16% in the second quarter. The segment
benefited from the first-quarter 1998 additions of INTOOL, a manufacturer of
industrial and commercial power tools, and Recoules and Geta-Werk, two small
power tool companies based in Europe. In addition, domestic demand for
consumer and construction-related hand tools improved during the quarter.
Acquisitions and domestic sales increases more than offset the continuing
effects of currency translations and reduced demand from vehicle manufacturers
for automated assembly equipment.
Automotive Products revenues declined about 2% in the quarter. Domestic
original equipment (OE) sales continued to grow, despite the impact of the
recent General Motors strike, while the domestic aftermarket remained soft.
European demand for both OE and aftermarket parts improved modestly. Absent
the effects of recent acquisitions and divestitures and currency translations,
revenues would have been unchanged from the prior year.
On April 3, 1998, Cooper announced it was considering options for exiting
its automotive products business. At this point, the company is continuing
its review of those options, including evaluating proposals from potential
purchasers. Cooper expects to announce a definitive course of action
regarding this matter in the next several weeks.
"Setting that potential event aside, we remain focused on positioning the
company for future growth and on extending our current record of earnings-per-
share increases," Riley said.
Comparisons of 1998 and 1997 second-quarter and year-to-date 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.
Statements in this news release are forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These statements are
subject to various risks and uncertainties, many of which are outside the
control of the Company, such as the level of market demand for the Company's
products, competitive pressures and future economic conditions. These factors
are discussed in the Company's 1997 Annual Report on Form 10-K and Form 8-K,
dated June 19, 1998, and other Securities and Exchange Commission filings.
CONSOLIDATED RESULTS OF OPERATIONS
Quarter Ended June 30, % Change
1998 1997
(in millions where applicable)
Revenues:
Electrical Products $ 723.9 $ 660.7 9.6%
Tools & Hardware 227.3 195.7 16.1%
Subtotal 951.2 856.4 11.1%
Automotive Products 478.1 486.7 (1.8)%
Kirsch(A) --- 41.8 N.M.
Total revenues 1,429.3 1,384.9 3.2%
Cost of sales 970.5 938.4 ---
Selling and administrative
expenses 245.7 238.8 ---
Goodwill amortization 19.2 16.1 ---
Nonrecurring gains --- (69.8) ---
Nonrecurring charges --- 70.5 ---
Other (income) expense, net (1.8) (0.6) ---
Interest expense 27.4 21.3 ---
Income Before Income Taxes 168.3 170.2 ---
Income Taxes 62.3 64.7 ---
Net Income $ 106.0 $ 105.5 0.5%
Net Income Per Common Share:
Basic $ .89 $ .89 0.0%
Diluted $ .88 $ .86(B) 2.3%
Shares Utilized in
Computation of Income Per
Common Share:
Basic 118.6 million 119.3 million
Diluted 120.5 million 123.5 million
PERCENTAGE OF REVENUES
Quarter Ended June 30,
1998 1997
Revenues 100.0% 100.0%
Cost of sales 67.9% 67.8%
Selling and administrative expenses 17.2% 17.2%
Income Before Income Taxes 11.8% 12.3%
Net Income 7.4% 7.6%
(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 $0.1 million for the quarter, net of
tax, was added back to net income in the computation of diluted
earnings per share.
CONSOLIDATED RESULTS OF OPERATIONS
Six Months Ended June 30, % Change
1998 1997
(in millions where applicable)
Revenues:
Electrical Products $ 1,429.9 $ 1,273.4 12.3%
Tools & Hardware 415.4 375.8 10.5%
Subtotal 1,845.3 1,649.2 11.9%
Automotive Products 927.1 957.2 (3.1)%
Kirsch(A) --- 97.4 N.M.
Total revenues 2,772.4 2,703.8 2.5%
Cost of sales 1,882.5 1,844.1 ---
Selling and administrative
expenses 487.7 479.6 ---
Goodwill amortization 37.5 32.1 ---
Nonrecurring gains --- (69.8) ---
Nonrecurring charges --- 70.5 ---
Other (income) expense, net (2.3) 0.9 ---
Interest expense 52.7 50.9 ---
Income Before Income Taxes 314.3 295.5 ---
Income Taxes 116.3 112.3 ---
Net Income $ 198.0 $ 183.2 8.1%
Net Income Per Common Share:
Basic $ 1.66 $ 1.60 3.8%
Diluted $ 1.64 $ 1.52(B) 7.9%
Shares Utilized in Computation
of Income Per Common Share:
Basic 119.1 million 114.4 million
Diluted 120.9 million 124.2 million
PERCENTAGE OF REVENUES
Six Months Ended June 30,
1998 1997
Revenues 100.0% 100.0%
Cost of sales 67.9% 68.2%
Selling and administrative expenses 17.6% 17.7%
Income Before Income Taxes 11.3% 10.9%
Net Income 7.1% 6.8%
(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 $5.8 million, net of tax, was added back
to net income in the computation of diluted earnings per share.