0000950129-01-503605.txt : 20011029 0000950129-01-503605.hdr.sgml : 20011029 ACCESSION NUMBER: 0000950129-01-503605 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011023 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20011024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COOPER INDUSTRIES INC CENTRAL INDEX KEY: 0000024454 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 314156620 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01175 FILM NUMBER: 1764622 BUSINESS ADDRESS: STREET 1: 600 TRAVIS STE 5800 STREET 2: CHASE TOWER CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132098400 MAIL ADDRESS: STREET 1: P O BOX 4446 CITY: HOUSTON STATE: TX ZIP: 77210 FORMER COMPANY: FORMER CONFORMED NAME: COOPER BESSEMER CORP DATE OF NAME CHANGE: 19710505 8-K 1 h91544e8-k.txt COOPER INDUSTRIES, INC. - OCTOBER 23, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 23, 2001 ------------------------------- Cooper Industries, Inc. -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Ohio -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-1175 31-4156620 ------------------------------- ----------------------------------- (Commission File Number) (IRS Employer Identification No.) 600 Travis, Suite 5800, Houston, Texas 77002 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 713/209-8400 -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. Press Release for Third Quarter Earnings On October 23, 2001, Cooper Industries, Inc. (the "Company") issued the press release attached hereto as Exhibit 99.1 setting forth the Company's results of operations for the third quarter of 2001. Business Outlook for the Fourth Quarter 2001 Based on current expectations, the Company estimates its fully diluted earnings per share to be approximately $.65 for the fourth quarter of 2001 and approximately $2.74 for the 2001 fiscal year. The Company's earnings estimates are forward-looking under the Private Securities Litigation Reform Act of 1995 and actual results may differ materially. The principal economic assumptions underlying the Company's earnings estimates are the continued impact of the economic slowdown on the Company's revenues and a reduction of the Company's inventory levels. These estimates are also subject to various risks and uncertainties, many of which are outside the control of the Company, including but not limited to: 1) the pace of recovery of the domestic economy; 2) the level of market demand for the Company's products; 3) the rate at which benefits are realized from cost-reduction programs recently completed, currently under way or to be initiated in the near future; 4) competitive pressures and future global economic conditions; 5) uncertainty in the United States and foreign countries as a result of the terrorist attacks on September 11, 2001; and 6) any actions resulting from the Company's review of strategic alternatives. The estimates also assume, without limitation, no significant change in competitive conditions and other risk factors as set forth in the Company's periodic filings with the Securities and Exchange Commission. Item 7. Financial Statements and Exhibits. Exhibits 99.1 Company press release dated October 23, 2001 titled "Cooper Industries Announces Third-Quarter Earnings of 78 Cents Per Share" 99.2 Company "Sales Trends" to be posted on the Company's website. Item 9. Regulation FD Disclosure Posting of Quarterly Sales Trends On October 23, 2001, the Company will post on its website the "Sales Trends" information attached hereto as Exhibit 99.2. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COOPER INDUSTRIES, INC. (Registrant) Date: October 23, 2001 /s/ D. Bradley McWilliams -------------------------------- D. Bradley McWilliams Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. ----------- 99.1 Company press release dated October 23, 2001 titled "Cooper Industries Announces Third-Quarter Earnings of 78 Cents Per Share" 99.2 Company "Sales Trends" to be posted on the Company's website. EX-99.1 3 h91544ex99-1.txt PRESS RELEASE - THIRD-QUARTER EARNINGS EXHIBIT 99.1 FOR IMMEDIATE RELEASE October 23, 2001 Contact: John Breed (713) 209-8835 COOPER INDUSTRIES ANNOUNCES THIRD-QUARTER EARNINGS OF 78 CENTS PER SHARE Results exceed consensus analyst estimates HOUSTON, TX, Oct. 23 -- Cooper Industries, Inc. (NYSE:CBE) today reported 2001 third-quarter net income of $74.3 million, or $.78 per share (diluted), compared with net income of $91.4 million, or $.97 per share, for the third quarter of 2000. Revenues for the third quarter 2001 were $1.05 billion, compared with $1.15 billion for the same period last year. Third-quarter operating earnings for 2001 were $130.7 million, compared with $169.1 million for 2000. "Cooper performed very well in a tough third-quarter operating environment," said H. John Riley, Jr., chairman, president and chief executive officer. "Operating earnings as a percentage of revenue showed further improvement, and we continued to produce excellent cash flow, a key characteristic of Cooper. "All of this was achieved during one of the most severe economic slowdowns the U.S. manufacturing sector has experienced in the last 20 years. In addition, our businesses managed their way through the distractions related to our August 8 announcement that we would be actively pursuing alternatives aimed at maximizing shareholder value. The fact that our performance has continued to improve since the first quarter reflects the quality of our businesses, the strength of our brands and our ability to produce superior cash flow even in the most difficult operating environment," continued Riley. "Despite pervasive market uncertainty, we continued to invest in significant growth initiatives, including our Cooper Connection distributor relationship program, which is broadening our market coverage and enhancing service to our distributor and end-user customers. -more- Additionally, we are expanding our global strategic sourcing initiative and our programs to move production to lower-cost geographic regions. These actions are contributing to our ability to deliver solid results in this highly volatile economic environment and will enhance our performance as the economy strengthens. "Disciplined cost-reduction and rationalization efforts have strengthened our businesses quarter-over-quarter in 2001," said Riley. "Operating margins increased from 11.8 percent in the 2001 second quarter to 12.4 percent in the 2001 third quarter. Free cash flow during the 2001 third quarter was $114 million before dividends, reflecting additional headcount reductions and stringent controls over discretionary spending and capital expenditures. Our debt-to-total-capitalization ratio at September 30, 2001, was 41.2 percent, further down from 42.6 percent at June 30, 2001, and 44.4 percent at December 31, 2000." Net income for the nine months ended September 30, 2001, was $198.7 million, compared with $268.2 million for the same period in 2000. Earnings per share for the nine months ended September 30, 2001, were $2.09, compared with $2.85 for the same period last year. Total revenues for the 2001 nine-month period were $3.22 billion, compared with $3.35 billion, for the same period in 2000. Operating earnings for the nine-month period in 2001 were $369.6 million, compared with $486.1 million for the same period last year. ELECTRICAL PRODUCTS Third-quarter 2001 revenues from the Electrical Products segment were $874.5 million, compared with $957.3 million for the same period in 2000. Segment operating earnings for the 2001 third quarter were $122.3 million, compared with $156.9 million for the 2000 third quarter. Third-quarter 2001 operating margins increased to 14.0 percent, compared with 12.8 percent for the second quarter 2001. The Company's hazardous-duty electrical products businesses posted double-digit revenue growth during the quarter as a result of strengthening energy and petrochemical markets. Weak electronic and telecommunications markets negatively impacted revenues in Cooper's electrical and electronic circuit protection and telecommunications businesses, and softness in industrial and commercial construction markets resulted in lower revenues in the Company's lighting and wiring devices businesses. Marketplace uncertainty in the utility sector continued to impact revenues in Cooper's power systems businesses. The Company's European-based lighting -more- and security businesses held up reasonably well during the quarter despite evidence of reduced economic activity in both the U.K. and the European continent. For the nine months ended September 30, 2001, revenues from the Electrical Products segment were $2.66 billion, compared with $2.76 billion for the same period in 2000. Operating earnings from the Electrical Products segment for the 2001 nine-month period were $337.8 million, compared with $442.6 million for the same period last year. TOOLS & HARDWARE Third-quarter 2001 revenues for the Tools & Hardware segment were $177.3 million, compared with $188.5 million for the same period in 2000. Increased shipments of assembly equipment and improving demand for new power tools products were more than offset by lower sales of hand tools, which were impacted by weakened industrial and electronics markets. The effects of currency translation reduced revenues in the segment by approximately 2 percent. Third-quarter 2001 operating earnings for the segment were $16.1 million, compared with $20.8 million for the 2000 third quarter. Operating margins for the segment in the 2001 third quarter were 9.1 percent, compared with 11.1 percent in the 2001 second quarter, reflecting the impact of lower sales, reduced absorption of manufacturing costs as production levels were aligned with current order rates and an unfavorable mix within hand tools. Revenues in the Tools & Hardware segment for the nine months ended September 30, 2001, were $555.5 million, compared with $594.9 million for the same period last year. Operating earnings for the year 2001 nine-month period were $54.5 million, compared with $67.4 for the same period last year. "Although none of Cooper's facilities or businesses were directly impacted during the September 11 terrorist attacks, it is still too early to gauge the full effects of these events on both U.S. and global markets," said Riley. "Nevertheless, we believe it is reasonable to expect that the softness in the manufacturing sector may worsen in the short term. We have no doubt, however, that we can and will continue to positively differentiate ourselves from our peers in the difficult times most people are forecasting for the next several quarters. "Cooper is a premier global franchise consisting of strong brands and broad product lines serving a wide range of markets. Our business model generates consistently strong operating margins with a healthy and growing cash flow. Moreover, the disciplined management which -more- sustained our performance in the third quarter will continue. We have all the components necessary to provide long-term growth and profitability." Cooper Industries, with 2000 revenues of $4.5 billion, is a worldwide manufacturer of electrical products, tools and hardware. Additional information about Cooper is available on the Company's Internet site: www.cooperindustries.com. Comparisons of 2001 and 2000 third-quarter and year-to-date results appear on the following pages. Statements in this news release are forward-looking 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, including but not limited to: 1) the pace of recovery of the domestic economy; 2) the level of market demand for the Company's products and improvement in electronic and telecommunications sectors; 3) the rate at which benefits are realized from cost-reduction programs recently completed, currently under way or to be initiated in the near future; 4) competitive pressures and future global economic conditions; 5) uncertainty in the United States and foreign countries as a result of the terrorist attacks on September 11, 2001; and 6) any actions resulting from the Company's review of strategic alternatives. Further information regarding these and other risk factors is set forth in Cooper's filings with the Securities and Exchange Commission, including Cooper's Annual Report on Form 10-K. Cooper will hold a conference call at 12:00 p.m. (Eastern) today to provide shareholders and other interested parties an overview of the Company's third-quarter financial performance. Those interested in hearing the conference call may listen via telephone by dialing (646) 862-1076, or over the Internet through the Investor Center section of the Company's Internet site. A replay will be available by telephone until 5:00 p.m. EST on October 29, 2001, and over the Internet until November 5, 2001. The telephone number to access the replay is (800) 633-8284, and the access code number is 19814882. -more- CONSOLIDATED RESULTS OF OPERATIONS
Quarter Ended September 30, 2001 2000 ---- ---- (in millions where applicable) Revenues $1,051.8 $1,145.8 Cost of sales 730.5 773.1 Selling and administrative expenses 175.3 188.2 Goodwill amortization 15.3 15.4 -------- -------- Operating earnings 130.7 169.1 Interest expense 18.8 28.6 -------- -------- Income Before Income Taxes 111.9 140.5 Income taxes 37.6 49.1 -------- -------- Net Income $ 74.3 $ 91.4 ======== ======== Net Income Per Common Share: Basic $ .79 $ .98 ======== ======== Diluted $ .78 $ .97 ======== ======== Shares Utilized in Computation of Income Per Common Share: Basic 94.3 MILLION 93.4 million Diluted 95.6 MILLION 94.1 million
PERCENTAGE OF REVENUES
Quarter Ended September 30, 2001 2000 ---- ---- Revenues 100.0% 100.0% Cost of sales 69.5% 67.5% Selling and administrative expenses 16.7% 16.4% Operating earnings 12.4% 14.8% Income Before Income Taxes 10.6% 12.3% Net Income 7.1% 8.0%
-more- CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED) ADDITIONAL INFORMATION FOR THE QUARTER ENDED SEPTEMBER 30 SEGMENT INFORMATION
Quarter Ended September 30, 2001 2000 ---- ---- (in millions) Revenues: Electrical Products $ 874.5 $ 957.3 Tools & Hardware 177.3 188.5 -------- -------- Total $1,051.8 $1,145.8 ======== ======== Segment Operating Earnings: Electrical Products $ 122.3 $ 156.9 Tools & Hardware 16.1 20.8 -------- -------- Total 138.4 177.7 General Corporate Expense 7.7 8.6 Interest Expense 18.8 28.6 -------- -------- Income Before Income Taxes $ 111.9 $ 140.5 ======== ========
Quarter Ended September 30, 2001 2000 ---- ---- Return on Sales: (1) Electrical Products 14.0% 16.4% Tools & Hardware 9.1% 11.0% Total Segments 13.2% 15.5%
(1) Adjusting for recent acquisitions, return on sales for the quarter in 2001 was 14.0% for Electrical Products and 9.1% for Tools & Hardware. Return on sales in 2001 for the total of the segments was 13.2%. -more- CONSOLIDATED RESULTS OF OPERATIONS
Nine Months Ended September 30, -------------------------------- 2001 2000 ----- ----- (in millions where applicable) Revenues $3,219.9 $3,352.9 Cost of sales 2,244.1 2,269.3 Selling and administrative expenses 560.8 554.0 Goodwill amortization 45.4 43.5 -------- -------- Operating earnings 369.6 486.1 Interest expense 66.3 73.5 -------- -------- Income Before Income Taxes 303.3 412.6 Income taxes 104.6 144.4 -------- -------- Net Income $ 198.7 $ 268.2 ======== ======== Net Income Per Common Share: Basic $ 2.11 $ 2.87 ======== ======== Diluted $ 2.09 $ 2.85 ======== ======== Shares Utilized in Computation of Income Per Common Share: Basic 94.0 MILLION 93.5 million Diluted 94.9 MILLION 94.1 million
PERCENTAGE OF REVENUES
Nine Months Ended September 30, 2001 2000 ---- ---- Revenues 100.0% 100.0% Cost of sales 69.7% 67.7% Selling and administrative expenses 17.4% 16.5% Operating earnings 11.5% 14.5% Income Before Income Taxes 9.4% 12.3% Net Income 6.2% 8.0%
-more- CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED) ADDITIONAL INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30 SEGMENT INFORMATION
Nine Months Ended September 30, 2001 2000 ---- ---- (in millions where applicable) Revenues: Electrical Products $2,664.4 $2,758.0 Tools & Hardware 555.5 594.9 -------- -------- Total $3,219.9 $3,352.9 ======== ======== Segment Operating Earnings: Electrical Products $ 337.8 $ 442.6 Tools & Hardware 54.5 67.4 -------- -------- Total 392.3 510.0 General Corporate Expense 22.7 23.9 Interest Expense 66.3 73.5 -------- -------- Income Before Income Taxes $ 303.3 $ 412.6 ======== ========
Nine Months Ended September 30, 2001 2000 ---- ---- Return on Sales: (1) Electrical Products 12.7% 16.0% Tools & Hardware 9.8% 11.3% Total Segments 12.2% 15.2%
(1) Adjusting for recent acquisitions, return on sales for the first nine months in 2001 was 13.1% for Electrical Products and 9.8% for Tools & Hardware. Return on sales in 2001 for the total of the segments was 12.5%. # # # EX-99.2 4 h91544ex99-2.txt COMPANY "SALES TRENDS" EXHIBIT 99.2 SALES TRENDS Sales comparisons are presented to help investors understand the general tone of Cooper's business. These include the impacts of acquisitions, divestitures, currency movements, etc. and are not necessarily indicative of business trends. Specific questions regarding sales trends should be directed to Richard Bajenski, Vice President, Investor Relations, bajenski@cooperindustries.com, (713) 209-8610. Sales for the three months ended on the date shown, compared to the same period in the prior year:
04/30/01 05/31/01 06/30/01 07/31/01 08/31/01 09/30/01 -------- -------- -------- -------- -------- -------- Cooper Industries 0-5% (0-5)% (8)% (5-10)% (10-12)% (8)% Electrical Products 0-5% (0-5)% (8)% (5-10)% (10-12)% (9)% Tools & Hardware (5-10)% (0-5)% (7)% (5-10)% (6-8)% (6)%
OBSERVATIONS ON RECENT SALES TRENDS, FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001. COOPER INDUSTRIES Sales for the three months ended September 30, 2001, declined 8%, compared with last year. o Currency translation continues to have a modest negative impact. ELECTRICAL PRODUCTS Sales for the three months ended September 30, 2001, declined 9%, compared with last year. o Demand for hazardous duty electrical construction materials showed continued improvement as increased capital spending in the energy and petrochemical sectors spurred project activity. o Continued softness in domestic industrial and commercial markets led to lower demand for lighting fixtures and wiring devices. o Sales of electrical and electronic fuses, other circuit protection products and enclosures were considerably weakened by lower end-user demand. o Continued uncertainty in the power delivery marketplace has hampered utilities' investments in distribution system products. Demand for distribution transformers and power management products remains weak. o Reduced European economic activity has continued to weaken UK and European demand for lighting fixtures and security products. o Competitive pressures continue to impact pricing in many markets. o Currency translation effects, though negative, have moderated. TOOLS AND HARDWARE Sales for the three months ended September 30, 2001, declined 6%, compared with last year. o Assembly equipment shipments, particularly from European operations, continue at good levels. o Slowing industrial and electronic assembly activity in North America has led to reduced demand for hand tools which has more than offset improved demand for new power tools. o Currency translation effects have been modestly negative. Note: Includes impacts of acquisitions and divestitures.