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
</Table>
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%.
# # #