Cooper Industries Reports Record Second Quarter; Continuing Earnings of $1.27 Per Share, Up 25 Percent.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- Company Increases Full-Year Outlook Cooper Industries Cooper Industries NYSE: CBE is one of the oldest large companies in the United States, having been founded in 1833 as a partnership in Mount Vernon, Ohio. Incorporated in Ohio as The C. & G. , Ltd. (NYSE NYSE See: New York Stock Exchange :CBE CBE Commander of the Order of the British Empire (a Brit. title) CBE n abbr (= Companion of (the Order of) the British Empire) → título de nobleza CBE n abbr (= ) today reported second quarter 2006 earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $1.27 (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), an increase of 25 percent compared with $1.02 earnings per share for the second quarter of 2005. Second quarter 2006 revenues increased 8 percent to $1.29 billion, compared with $1.19 billion for the same period last year. Income from continuing operations rose 23 percent to $119.8 million, compared with the prior year amount of $97.3 million. "With a second consecutive record quarter, our businesses continue to deliver excellent results, powered by strong core demand in key served markets, including industrial, utility and commercial construction, plus a growing global economy," said Cooper Industries Chairman, President and Chief Executive Officer Kirk S. Hachigian. "This quarter is again characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by good execution on customer-focused initiatives, including marketing programs, new product introductions, continued global expansion and increased productivity and service, all of which contribute to organic growth, increased margins and strong cash flow." As previously announced, the Company and other parties involved in the resolution of the Federal-Mogul Federal-Mogul Corporation is a major automotive parts supplier based in Southfield, Michigan, USA. Currently operating under Chapter 11 reorganization, Federal-Mogul employs some 41,000 people in 24 countries. Corporation ("FMC See fixed mobile convergence. ") bankruptcy proceedings bankruptcy proceedings n. the bankruptcy procedure is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, or, under Chapter 11 or 13, to allow reorganization or refinancing under a plan to meet the debts of the party reached a revised agreement regarding Cooper's participation in FMC's 524(g) asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. claimants' trust. In light of the revised agreement, the Company recognized an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. charge in the 2006 second quarter of $20.3 million, or $.21 per diluted share. Inclusive of inclusive of prep. Taking into consideration or account; including. the charge, net income for the second quarter of 2006 was $99.5 million, or $1.06 per share, compared with $97.3 million, or $1.02 per share, for the prior year's second quarter. "Cooper's financial position remains very strong. The Company's debt-to-total capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. ratio, net of cash at June June: see month. 30, 2006, was 22.6 percent, compared with 24.0 percent at the same time last year," said Hachigian. Revenues for the first six months of 2006 were $2.53 billion, an 8 percent increase from the $2.33 billion in revenues for the first six months of 2005. Earnings per share from continuing operations for the first six months of 2006 were $2.41, compared with $1.94 for the same period in 2005, an increase of 24 percent. Income from continuing operations for the first six months of 2006 rose 23 percent to $227.5 million, compared with $185.1 million for the first six months of last year. Segment Results Electrical Products segment revenues for the second quarter of 2006 increased 9 percent to $1.10 billion, compared with $1.01 billion in the second quarter of 2005. Recent acquisitions contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2 percent to the year-over-year growth. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency translation had a negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . impact on the second quarter. Segment operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were $177.5 million, an increase of 20 percent from $148.2 million in the prior year's second quarter. Segment operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved 140 basis points to 16.1 percent for the second quarter of 2006. The increase in revenues for the Electrical Products segment reflects continued strong growth in industrial and utility markets, and improved activity in commercial markets. Sales to the retail channel were soft, against very strong comparables in the second quarter of 2005. Electrical Products segment revenues for the first half of 2006 grew 9 percent to $2.16 billion, compared with $1.98 billion in 2005. Segment operating earnings for the first six months increased 19 percent to $337.6 million compared with $283.6 million for the same period last year. Tools segment revenues for the second quarter of 2006 increased 3 percent to $184.3 million, compared with 2005 second quarter revenues of $178.6 million. Currency translation increased revenues approximately 1 percent in the quarter. Segment operating earnings for the period were $19.6 million, an increase of 24 percent, compared with $15.8 million for the second quarter of 2005. Segment operating margin for the second quarter of 2006 improved 180 basis points to 10.6 percent, compared with 8.8 percent for the same period last year. The increase in revenues in the Tools segment reflects improved demand for both hand and power tools from industrial markets, and increased shipments of assembly equipment. Revenues for the first six months of 2006 increased 3 percent to $364.6 million, compared with $355.1 million for the same period last year. Segment operating earnings for the first half of 2006 grew 21 percent to $36.9 million, compared with $30.5 million in the prior-year period. Outlook "While recent political events and higher interest rates are a concern, the worldwide economic environment remains strong, and our business performance remains on track, which provides us with cautious optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. for the remainder of 2006," said Hachigian. "The global energy infrastructure continues to grow, with solid demand from utilities and the industrial sector, and improving nonresidential Adj. 1. nonresidential - not residential; "the commercial or nonresidential areas of a town"; "community colleges are typically nonresidential" residential - used or designed for residence or limited to residences; "a residential hotel"; "a residential quarter"; "a construction offsetting slower residential construction. While commodity pricing and energy continue to drive cost pressures, our initiatives provide the foundation for the Company to deliver record earnings. "We now expect 2006 revenues to increase in the range of 7 to 9 percent, with earnings per share from continuing operations between $4.90 and $5.05, an increase of $ .15 per share from the Company's previous outlook. This represents a 19 to 23 percent increase, compared with full-year results for 2005. Third quarter 2006 revenue increases are expected to be in the range of 7 to 9 percent, with earnings per share of $1.28 to $1.35." About Cooper Industries Cooper Industries, Ltd. is a global manufacturer of electrical products and tools, with 2005 revenues of $4.7 billion, approximately 30 percent of which are international sales. Incorporated in Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the with
administrative headquarters in Houston, Cooper Cooper may refer to:
["B-LINE, Bell Line Drawing Language", A.J. Frank, Proc Fall JCC 33 1968]. , Cooper Bussmann, Cooper Crouse-Hinds, Cooper Lighting, Cooper Menvier, Cooper Power Systems, Cooper Wiring Devices Cooper Wiring Devices is a division of Cooper Industries and provides a wide range of residential, institutional and industrial specification grade electrical devices for consumers and building contractors. External links
distributer, distributor . For more information, visit the website at www.cooperindustries.com. Comparisons of 2006 and 2005 second quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results appear on the following pages. Statements in this news release are forward looking under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. include, but are not limited to, statements regarding the Company's earnings outlook. These statements are subject to various risks and uncertainties, many of which are outside the control of the Company, and actual results may differ materially from anticipated results. Important factors which may affect the actual results include, but are not limited to: 1) competitive pressures and future global economic conditions, including the level of market demand for the Company's products; 2) changes in raw material, transportation and energy costs; 3) the ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution and realize the expected benefits from strategic initiatives including revenue growth plans, and cost-control and productivity improvement programs; 4) any disruptions from manufacturing rationalizations and the implementation of the Enterprise Business System; 5) mergers and acquisitions, and their integration; 6) political developments; 7) changes in financial markets including currency exchange fluctuations; 8) changes in legislation and regulations including changes in the tax laws, tax treaties or tax regulations; 9) the timing and amount of share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. by the Company; and 10) the resolution of potential liability exposure resulting from Federal-Mogul Corporation's bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filing. Conference Call Cooper will hold a conference call today at 12:00 noon EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to provide shareholders and other interested parties an overview of the Company's second quarter 2006 performance. Those interested in hearing the conference call may listen via telephone by dialing 866-510-0712, using pass code 77723553, or over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through the Investor Center section of the Company's website, using the "Management Presentations" link. International callers should dial 617-597-5380 and use pass code 77723553. A replay briefing will be available by telephone until 11:00 p.m. EDT on July July: see month. 27, 2006, and over the Internet through August 3, 2006. The telephone number to access the replay is 888-286-8010, and the pass code is 53271922. International callers should dial 617-801-6888 and use the same pass code. The conference call may include non-GAAP financial measures. Cooper will post a reconciliation of those measures to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures in the Investor Center section of the Company's website under the heading "Management Presentations." Informational exhibits concerning the Company's second quarter performance that may be referred to during the conference call will be available in the Investor Center section of the Company's website under the heading "Management Presentations" prior to the beginning of the call.
CONSOLIDATED RESULTS OF OPERATIONS
Quarter Ended June 30,
-------------------------
2006 2005
------------ ------------
(in millions where
applicable)
Revenues $1,287.8 $1,189.2
Cost of sales 870.3 814.7
Selling and administrative expenses 244.3 232.9
------------ ------------
Operating earnings 173.2 141.6
Interest expense, net 12.4 17.7
------------ ------------
Income from continuing operations before
income taxes 160.8 123.9
Income taxes 41.0 26.6
------------ ------------
Income from continuing operations 119.8 97.3
Charge related to discontinued operations 20.3 -
------------ ------------
Net income $99.5 $97.3
============ ============
Net Income Per Common share:
Basic:
Continuing operations $1.30 $1.05
Discontinued operations charge .22 --
------------ ------------
Net income $1.08 $1.05
============ ============
Diluted:
Continuing operations $1.27 $1.02
Discontinued operations charge .21 --
------------ ------------
Net income $1.06 $1.02
============ ============
Shares Utilized in Computation of Income Per
Common Share:
Basic 92.2 million 93.0 million
Diluted 94.2 million 95.4 million
PERCENTAGE OF REVENUES
Quarter Ended June 30,
-------------------------
2006 2005
------------ ------------
Revenues 100.0% 100.0%
Cost of sales 67.6% 68.5%
Selling and administrative expenses 19.0% 19.6%
Operating earnings 13.4% 11.9%
Income from continuing operations before
income taxes 12.5% 10.4%
Income from continuing operations 9.3% 8.2%
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Quarter Ended June 30
Segment Information
Quarter Ended June 30,
-------------------------
2006 2005
------------ ------------
(in millions)
Revenues:
Electrical Products $1,103.5 $1,010.6
Tools 184.3 178.6
------------ ------------
Total $1,287.8 $1,189.2
============ ============
Segment Operating Earnings:
Electrical Products $177.5 $148.2
Tools 19.6 15.8
------------ ------------
Total Segment Operating Earnings 197.1 164.0
General Corporate Expense 23.9 22.4
Interest expense, net 12.4 17.7
------------ ------------
Income from continuing operations before
income taxes $160.8 $123.9
============ ============
Quarter Ended June 30,
-------------------------
2006 2005
------------ ------------
Return on Sales:
Electrical Products 16.1% 14.7%
Tools 10.6% 8.8%
Total Segments 15.3% 13.8%
CONSOLIDATED RESULTS OF OPERATIONS
Six Months Ended June 30,
-------------------------
2006 2005
------------ ------------
(in millions where
applicable)
Revenues $2,528.7 $2,334.0
Cost of sales 1,717.1 1,602.3
Selling and administrative expenses 481.8 460.4
------------ ------------
Operating earnings 329.8 271.3
Interest expense, net 24.5 35.5
------------ ------------
Income from continuing operations before
income taxes 305.3 235.8
Income taxes 77.8 50.7
------------ ------------
Income from continuing operations 227.5 185.1
Charge related to discontinued operations 20.3 -
------------ ------------
Net Income $207.2 $185.1
============ ============
Net Income Per Common share:
Basic:
Continuing operations $2.47 $1.99
Discontinued operations charge .22 --
------------ ------------
Net income $2.25 $1.99
============ ============
Diluted:
Continuing operations $2.41 $1.94
Discontinued operations charge .21 --
------------ ------------
Net income $2.20 $1.94
============ ============
Shares Utilized in Computation of Income Per
Common Share:
Basic 92.2 million 93.0 million
Diluted 94.3 million 95.5 million
PERCENTAGE OF REVENUES
Six Months Ended June 30,
-------------------------
2006 2005
------------ ------------
Revenues 100.0% 100.0%
Cost of sales 67.9% 68.7%
Selling and administrative expenses 19.1% 19.7%
Operating earnings 13.0% 11.6%
Income from continuing operations before
income taxes 12.1% 10.1%
Income from continuing operations 9.0% 7.9%
CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Six Months Ended June 30
Segment Information
Six Months Ended June 30,
-------------------------
2006 2005
------------ ------------
(in millions)
Revenues:
Electrical Products $2,164.1 $1,978.9
Tools 364.6 355.1
------------ ------------
Total $2,528.7 $2,334.0
============ ============
Segment Operating Earnings:
Electrical Products $337.6 $283.6
Tools 36.9 30.5
------------ ------------
Total Segment Operating Earnings 374.5 314.1
General Corporate Expense 44.7 42.8
Interest expense, net 24.5 35.5
------------ ------------
Income from continuing operations before
income taxes $305.3 $235.8
============ ============
Six Months Ended June 30,
-------------------------
2006 2005
------------ ------------
Return on Sales:
Electrical Products 15.6% 14.3%
Tools 10.1% 8.6%
Total Segments 14.8% 13.5%
CONSOLIDATED BALANCE SHEETS
(PRELIMINARY)
June 30, Dec. 31,
------------ ------------
2006 2005
------------ ------------
(in millions)
ASSETS
Cash and cash equivalents $350.2 $452.8
Receivables 961.6 842.4
Inventories 631.1 538.7
Deferred income taxes and other assets 273.4 297.2
------------ ------------
Total current assets 2,216.3 2,131.1
------------ ------------
Property, plant and equipment, less
accumulated depreciation 664.8 673.7
Goodwill 2,181.2 2,084.0
Deferred income taxes and other noncurrent
assets 284.4 326.3
------------ ------------
Total assets $5,346.7 $5,215.1
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt $6.4 $7.6
Accounts payable 469.6 427.8
Accrued liabilities 479.9 518.0
Current discontinued operations liability 218.7 196.3
Current maturities of long-term debt 11.6 11.4
------------ ------------
Total current liabilities 1,186.2 1,161.1
------------ ------------
Long-term debt 1,000.8 1,002.9
Postretirement benefits other than pensions 154.8 163.0
Long-term discontinued operations liability 330.0 330.0
Other long-term liabilities 389.6 352.9
------------ ------------
Total liabilities 3,061.4 3,009.9
------------ ------------
Common stock 0.9 0.9
Capital in excess of par value 306.8 383.2
Retained earnings 2,135.7 1,997.4
Accumulated other nonowner changes in equity (158.1) (176.3)
------------ ------------
Total shareholders' equity 2,285.3 2,205.2
------------ ------------
Total liabilities and shareholders' equity $5,346.7 $5,215.1
============ ============
RATIOS OF DEBT-TO-TOTAL CAPITALIZATION
AND NET DEBT-TO-TOTAL CAPITALIZATION
(PRELIMINARY)
June 30, Dec. 31,
------------ ------------
2006 2005
------------ ------------
(in millions where
applicable)
Short-term debt $6.4 $7.6
Current maturities of long-term debt 11.6 11.4
Long-term debt 1,000.8 1,002.9
------------ ------------
Total debt 1,018.8 1,021.9
Total shareholders' equity 2,285.3 2,205.2
------------ ------------
Total capitalization $3,304.1 $3,227.1
============ ============
Total debt-to-total-capitalization ratio 30.8% 31.7%
Total debt $1,018.8 $1,021.9
Less cash and cash equivalents 350.2 452.8
------------ ------------
Net debt 668.6 569.1
============ ============
Total capitalization 3,304.1 3,227.1
Less cash and cash equivalents 350.2 452.8
------------ ------------
Total capitalization net of cash $2,953.9 $2,774.3
============ ============
Net debt-to-total-capitalization ratio 22.6% 20.5%
CONSOLIDATED STATEMENTS OF CASH FLOWS
(PRELIMINARY)
Six Months Ended June 30,
-------------------------
2006 2005
------------ ------------
(in millions)
Cash flows from operating activities:
Net income $207.2 $185.1
Plus: charge for discontinued operations 20.3 -
------------ ------------
Income from continuing operations 227.5 185.1
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 54.6 57.5
Deferred income taxes 10.8 5.3
Excess tax benefits from stock options
and awards (19.8) -
Restructuring charge payments - (0.4)
Changes in assets and liabilities(1)
Receivables (100.2) (74.9)
Inventories (76.3) (69.4)
Accounts payable and accrued
liabilities (18.0) 14.0
Other assets and liabilities, net 97.4 64.2
------------ ------------
Net cash provided by operating
activities 176.0 181.4
------------ ------------
Cash flows from investing activities:
Capital expenditures (40.2) (47.9)
Cash paid for acquired businesses (84.2) (2.4)
Proceeds from sales of property, plant and
equipment and other 4.8 4.3
------------ ------------
Net cash used in investing activities (119.6) (46.0)
------------ ------------
Cash flows from financing activities:
Repayments of debt (2.1) (117.9)
Dividends (68.9) (69.4)
Subsidiary purchase of parent shares (185.4) (77.2)
Excess tax benefits from stock options and
awards 19.8 -
Activity under employee stock plans and
other 69.9 41.2
------------ ------------
Net cash used in financing activities (166.7) (223.3)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 7.7 (27.9)
------------ ------------
Decrease in cash and cash equivalents (102.6) (115.8)
Cash and cash equivalents, beginning of
period 452.8 652.8
------------ ------------
Cash and cash equivalents, end of period $350.2 $537.0
============ ============
(1) Net of the effects of translation and
acquisitions
Free Cash Flow Reconciliation
Three Months Ended June
30,
-------------------------
2006 2005
------------ ------------
(in millions)
Net cash provided by operating activities $150.4 $161.2
Less capital expenditures (23.5) (28.0)
Add proceeds from sales of property, plant
and equipment and other 4.6 3.8
------------ ------------
Free cash flow $131.5 $137.0
============ ============
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