Cooper Industries Reports First-Quarter 2001 Earnings in Line With Recent Guidance

Apr 24, 2001, 01:00 ET from Cooper Industries, Inc.

    HOUSTON, April 24 /PRNewswire Interactive News Release/ -- Cooper
 Industries, Inc. (NYSE:   CBE) today reported first-quarter earnings per share
 of $.60 (diluted), compared with $.89 for the first quarter of 2000.  Earnings
 were in line with recent Company guidance.  Revenues for the first quarter
 2001 grew to $1.10 billion, compared with $1.04 billion for the same period
 last year.  Absent acquisitions, revenues for the 2001 first quarter would
 have been $978.3 million.  Operating earnings for the first quarter 2001 were
 $111.9 million, compared with $147.4 million for the first quarter 2000.  Net
 income for the 2001 first quarter was $56.4 million, compared with
 $83.9 million for the same period in 2000.
     "It is very evident that the manufacturing sector has been particularly
 hard hit by the weakened North American economy," said H. John Riley, Jr.,
 chairman, president and chief executive officer.  "Despite the inherent
 challenges of doing business in this environment, we continued to grow the
 size and scope of our business during the quarter.  This is a direct result of
 our strategy to continue to amass through internal growth and acquisitions a
 premier group of electrical products and tools businesses with brand names
 that hold leadership positions in their respective markets.
     "Our earnings performance in the quarter was, however, affected by lower
 margins due to a rapid decline in business volumes, the resulting increased
 market competition and the costs of production inefficiencies as we adjust
 manufacturing capacity accordingly.  Also during the quarter, we experienced
 an abnormally negative mix in sales skewed to lower-margin products,"
 continued Riley.
     "Importantly, we continued to invest in key growth initiatives and value-
 added projects to lower costs and enhance our distribution channels.  At the
 same time, we are taking decisive and accelerated actions to appropriately
 size our businesses to market conditions by reducing headcount and curtailing
 discretionary spending and by taking other actions to further emphasize cash
 generation."
 
                                Segment Results
 
     Demand for Cooper's products is affected by overall economic conditions,
 with particular sensitivity to construction activity; electrical, electronic
 and telecommunications demand; capital spending in the energy and automotive
 industries; and spending in the utility sector.
     First-quarter 2001 revenues for the Company's Electrical Products segment
 were $910.0 million driven by the impact of acquisitions, compared with
 $839.1 million for the same period last year.  Without acquisitions, segment
 revenues declined by 5 percent from the same period last year.  Operating
 earnings in the first quarter 2001 for Electrical Products were
 $102.6 million, compared with $133.2 million for the 2000 first quarter.
     Revenues for the 2001 first quarter for the Company's Tools & Hardware
 segment were $185.1 million, compared with $199.8 million for the first
 quarter of 2000.  Operating earnings for the first quarter 2001 for Tools &
 Hardware were $16.9 million, compared with $22.0 million for the same period
 last year.
     During the first quarter of 2001, the weakness in the overall North
 American economy resulted in dynamics that affected virtually all of the
 markets Cooper served.
     A contraction in domestic industrial production and construction activity
 and excess inventory in distributors' warehouses impacted demand across all of
 our businesses.  In addition, slowed consumer spending has resulted in reduced
 purchases by major retailers as they adjust inventory levels to current market
 requirements.
     Telecommunications and electronics -- industries that accounted for
 significant growth for Cooper in 2000 -- were considerably weakened by lower
 demand from key customers in these markets.  This resulted in significant
 rescheduling and, in some cases, cancellations of orders.  Due to continued
 industry consolidation, energy-related capital projects have yet to respond
 measurably despite a very positive price environment.  In addition, utility
 spending remains uncertain as a result of the overall economic environment.
 On a more positive note, our European-based electrical products and tools
 businesses posted results in line with expectations for the quarter.
 
                                    Outlook
 
     "Since the fourth quarter of last year, we have been adjusting our
 business plans as the economy weakened.  Early on, we curtailed capital
 spending, instituted headcount freezes and reviewed all discretionary
 expenditures," continued Riley.  "During the past three months, these actions
 have increased in urgency and have been significantly accelerated.  All but
 the most critical capital projects have been deferred until we begin to see
 reasonable signs of recovery.  We are taking further actions to eliminate all
 discretionary spending, with a concerted emphasis on cash flow.  And we are
 implementing workforce reductions both in headcount and in man-hours worked.
 As a result of specific actions already taken and planned, we expect total
 headcount will be reduced by approximately 2,000 employees by year end.
     "As part of our ongoing broad-based cost-reduction initiatives, we are
 continuing to move labor to lower-cost geographical areas.  As a result of our
 current assessment of business conditions, we are further accelerating
 completion of factories in Mexico and the outsourcing of certain products to
 our Asian joint-venture partners.
     "Cooper's outstanding brands, strong distribution channels and solid
 financial base continue to position the Company to generate value for our
 shareholders even during this challenging period," continued Riley.  "At this
 time, despite uncertain economic conditions, we are comfortable with current
 analyst consensus estimates regarding the Company's financial performance for
 2001.  Furthermore, we expect that as markets recover, Cooper will emerge as
 an even more formidable competitor in the global electrical products and tools
 marketplace."
 
     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 first-quarter 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 growth in the domestic
 economy, and in European and Latin American markets; 2) the rate of recovery
 in electronic product demand; 3) the rate of improvement in worldwide energy-
 related project spending; 4) significant changes in raw material and energy
 costs; and 5) the rate at which benefits are realized from cost reduction
 programs recently completed, currently under way or to be initiated in the
 near future.  The estimates also assume, without limitation, no significant
 change in competitive conditions and no significant adverse changes in the
 relationship of the U.S. dollar to the currencies of countries in which Cooper
 does business.
     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 2:00 p.m. (Central) today, to
 provide shareholders and other interested parties an overview of the Company's
 first-quarter financial performance.  Those who wish to hear the conference
 call may listen by telephone by dialing (212) 896-6015, or over the Internet
 through the Investor Center section of the Company's Web site.  A replay will
 be available by telephone until April 30, 2001, and over the Internet until
 May 7, 2001.  The telephone number to access the replay is (800) 633-8284, and
 the access code number is 18389658.
 
     Contact:  John Breed of Cooper Industries, 713-209-8835.
 
 
                       CONSOLIDATED RESULTS OF OPERATIONS
 
                                           Quarter Ended March 31,
                                            2001             2000
                                       (in millions where applicable)
 
      Revenues                            $1,095.1         $1,038.9
 
      Cost of sales                          768.9            701.7
      Selling and administrative expenses    199.5            176.4
      Goodwill amortization                   14.8             13.4
      Operating earnings                     111.9            147.4
 
      Interest expense                        25.1             18.3
 
             Income Before Income Taxes       86.8            129.1
      Income Taxes                            30.4             45.2
             Net Income                   $   56.4        $    83.9
 
      Net Income Per Common Share:
             Basic                        $    .60        $     .89
             Diluted                      $    .60        $     .89
 
      Shares Utilized in Computation
       of Income Per Common Share:
             Basic                       93.8 million     93.8 million
             Diluted                     94.7 million     94.4 million
 
                             PERCENTAGE OF REVENUES
 
                                                 Quarter Ended March 31,
                                                   2001          2000
 
      Revenues                                     100.0%        100.0%
      Cost of sales                                 70.2%         67.5%
      Selling and administrative expenses           18.2%         17.0%
      Operating earnings                            10.2%         14.2%
      Income Before Income Taxes                     7.9%         12.4%
      Net Income                                     5.2%          8.1%
 
 
                 CONSOLIDATED RESULTS OF OPERATIONS (Continued)
 
             Additional Information for the Quarter Ended March 31
 
                              Segment Information
 
                                          Quarter Ended March 31,
                                           2001             2000
                                               (in millions)
 
      Revenues:
        Electrical Products              $  910.0         $  839.1
        Tools & Hardware                    185.1            199.8
          Total                          $1,095.1         $1,038.9
 
      Segment Operating Earnings:
        Electrical Products              $  102.6         $  133.2
        Tools & Hardware                     16.9             22.0
          Total                             119.5            155.2
 
      General Corporate expense               7.6              7.8
      Interest expense                       25.1             18.3
      Income before income taxes         $   86.8         $  129.1
 
                                          Quarter Ended March 31,
                                           2001            2000
      Return on Sales: (A)
        Electrical Products                11.3%           15.9%
        Tools & Hardware                    9.1%           11.0%
          Total Segments                   10.9%           14.9%
 
      (A)  Adjusting for recent acquisitions, return on sales in 2001 was
           12.2% for Electrical Products and 9.1% for Tools & Hardware.  Return
           on sales in 2001 for the total of the segments was 11.6%.
 
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SOURCE Cooper Industries, Inc.
    HOUSTON, April 24 /PRNewswire Interactive News Release/ -- Cooper
 Industries, Inc. (NYSE:   CBE) today reported first-quarter earnings per share
 of $.60 (diluted), compared with $.89 for the first quarter of 2000.  Earnings
 were in line with recent Company guidance.  Revenues for the first quarter
 2001 grew to $1.10 billion, compared with $1.04 billion for the same period
 last year.  Absent acquisitions, revenues for the 2001 first quarter would
 have been $978.3 million.  Operating earnings for the first quarter 2001 were
 $111.9 million, compared with $147.4 million for the first quarter 2000.  Net
 income for the 2001 first quarter was $56.4 million, compared with
 $83.9 million for the same period in 2000.
     "It is very evident that the manufacturing sector has been particularly
 hard hit by the weakened North American economy," said H. John Riley, Jr.,
 chairman, president and chief executive officer.  "Despite the inherent
 challenges of doing business in this environment, we continued to grow the
 size and scope of our business during the quarter.  This is a direct result of
 our strategy to continue to amass through internal growth and acquisitions a
 premier group of electrical products and tools businesses with brand names
 that hold leadership positions in their respective markets.
     "Our earnings performance in the quarter was, however, affected by lower
 margins due to a rapid decline in business volumes, the resulting increased
 market competition and the costs of production inefficiencies as we adjust
 manufacturing capacity accordingly.  Also during the quarter, we experienced
 an abnormally negative mix in sales skewed to lower-margin products,"
 continued Riley.
     "Importantly, we continued to invest in key growth initiatives and value-
 added projects to lower costs and enhance our distribution channels.  At the
 same time, we are taking decisive and accelerated actions to appropriately
 size our businesses to market conditions by reducing headcount and curtailing
 discretionary spending and by taking other actions to further emphasize cash
 generation."
 
                                Segment Results
 
     Demand for Cooper's products is affected by overall economic conditions,
 with particular sensitivity to construction activity; electrical, electronic
 and telecommunications demand; capital spending in the energy and automotive
 industries; and spending in the utility sector.
     First-quarter 2001 revenues for the Company's Electrical Products segment
 were $910.0 million driven by the impact of acquisitions, compared with
 $839.1 million for the same period last year.  Without acquisitions, segment
 revenues declined by 5 percent from the same period last year.  Operating
 earnings in the first quarter 2001 for Electrical Products were
 $102.6 million, compared with $133.2 million for the 2000 first quarter.
     Revenues for the 2001 first quarter for the Company's Tools & Hardware
 segment were $185.1 million, compared with $199.8 million for the first
 quarter of 2000.  Operating earnings for the first quarter 2001 for Tools &
 Hardware were $16.9 million, compared with $22.0 million for the same period
 last year.
     During the first quarter of 2001, the weakness in the overall North
 American economy resulted in dynamics that affected virtually all of the
 markets Cooper served.
     A contraction in domestic industrial production and construction activity
 and excess inventory in distributors' warehouses impacted demand across all of
 our businesses.  In addition, slowed consumer spending has resulted in reduced
 purchases by major retailers as they adjust inventory levels to current market
 requirements.
     Telecommunications and electronics -- industries that accounted for
 significant growth for Cooper in 2000 -- were considerably weakened by lower
 demand from key customers in these markets.  This resulted in significant
 rescheduling and, in some cases, cancellations of orders.  Due to continued
 industry consolidation, energy-related capital projects have yet to respond
 measurably despite a very positive price environment.  In addition, utility
 spending remains uncertain as a result of the overall economic environment.
 On a more positive note, our European-based electrical products and tools
 businesses posted results in line with expectations for the quarter.
 
                                    Outlook
 
     "Since the fourth quarter of last year, we have been adjusting our
 business plans as the economy weakened.  Early on, we curtailed capital
 spending, instituted headcount freezes and reviewed all discretionary
 expenditures," continued Riley.  "During the past three months, these actions
 have increased in urgency and have been significantly accelerated.  All but
 the most critical capital projects have been deferred until we begin to see
 reasonable signs of recovery.  We are taking further actions to eliminate all
 discretionary spending, with a concerted emphasis on cash flow.  And we are
 implementing workforce reductions both in headcount and in man-hours worked.
 As a result of specific actions already taken and planned, we expect total
 headcount will be reduced by approximately 2,000 employees by year end.
     "As part of our ongoing broad-based cost-reduction initiatives, we are
 continuing to move labor to lower-cost geographical areas.  As a result of our
 current assessment of business conditions, we are further accelerating
 completion of factories in Mexico and the outsourcing of certain products to
 our Asian joint-venture partners.
     "Cooper's outstanding brands, strong distribution channels and solid
 financial base continue to position the Company to generate value for our
 shareholders even during this challenging period," continued Riley.  "At this
 time, despite uncertain economic conditions, we are comfortable with current
 analyst consensus estimates regarding the Company's financial performance for
 2001.  Furthermore, we expect that as markets recover, Cooper will emerge as
 an even more formidable competitor in the global electrical products and tools
 marketplace."
 
     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 first-quarter 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 growth in the domestic
 economy, and in European and Latin American markets; 2) the rate of recovery
 in electronic product demand; 3) the rate of improvement in worldwide energy-
 related project spending; 4) significant changes in raw material and energy
 costs; and 5) the rate at which benefits are realized from cost reduction
 programs recently completed, currently under way or to be initiated in the
 near future.  The estimates also assume, without limitation, no significant
 change in competitive conditions and no significant adverse changes in the
 relationship of the U.S. dollar to the currencies of countries in which Cooper
 does business.
     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 2:00 p.m. (Central) today, to
 provide shareholders and other interested parties an overview of the Company's
 first-quarter financial performance.  Those who wish to hear the conference
 call may listen by telephone by dialing (212) 896-6015, or over the Internet
 through the Investor Center section of the Company's Web site.  A replay will
 be available by telephone until April 30, 2001, and over the Internet until
 May 7, 2001.  The telephone number to access the replay is (800) 633-8284, and
 the access code number is 18389658.
 
     Contact:  John Breed of Cooper Industries, 713-209-8835.
 
 
                       CONSOLIDATED RESULTS OF OPERATIONS
 
                                           Quarter Ended March 31,
                                            2001             2000
                                       (in millions where applicable)
 
      Revenues                            $1,095.1         $1,038.9
 
      Cost of sales                          768.9            701.7
      Selling and administrative expenses    199.5            176.4
      Goodwill amortization                   14.8             13.4
      Operating earnings                     111.9            147.4
 
      Interest expense                        25.1             18.3
 
             Income Before Income Taxes       86.8            129.1
      Income Taxes                            30.4             45.2
             Net Income                   $   56.4        $    83.9
 
      Net Income Per Common Share:
             Basic                        $    .60        $     .89
             Diluted                      $    .60        $     .89
 
      Shares Utilized in Computation
       of Income Per Common Share:
             Basic                       93.8 million     93.8 million
             Diluted                     94.7 million     94.4 million
 
                             PERCENTAGE OF REVENUES
 
                                                 Quarter Ended March 31,
                                                   2001          2000
 
      Revenues                                     100.0%        100.0%
      Cost of sales                                 70.2%         67.5%
      Selling and administrative expenses           18.2%         17.0%
      Operating earnings                            10.2%         14.2%
      Income Before Income Taxes                     7.9%         12.4%
      Net Income                                     5.2%          8.1%
 
 
                 CONSOLIDATED RESULTS OF OPERATIONS (Continued)
 
             Additional Information for the Quarter Ended March 31
 
                              Segment Information
 
                                          Quarter Ended March 31,
                                           2001             2000
                                               (in millions)
 
      Revenues:
        Electrical Products              $  910.0         $  839.1
        Tools & Hardware                    185.1            199.8
          Total                          $1,095.1         $1,038.9
 
      Segment Operating Earnings:
        Electrical Products              $  102.6         $  133.2
        Tools & Hardware                     16.9             22.0
          Total                             119.5            155.2
 
      General Corporate expense               7.6              7.8
      Interest expense                       25.1             18.3
      Income before income taxes         $   86.8         $  129.1
 
                                          Quarter Ended March 31,
                                           2001            2000
      Return on Sales: (A)
        Electrical Products                11.3%           15.9%
        Tools & Hardware                    9.1%           11.0%
          Total Segments                   10.9%           14.9%
 
      (A)  Adjusting for recent acquisitions, return on sales in 2001 was
           12.2% for Electrical Products and 9.1% for Tools & Hardware.  Return
           on sales in 2001 for the total of the segments was 11.6%.
 
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 SOURCE  Cooper Industries, Inc.