Cooper Industries Reports Third Quarter Record Revenues and Record Earnings of $1.37 Per Share, Up 27 Percent.Cooper Increases Full Year Outlook to $5.04 - $5.10 HOUSTON -- 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 third quarter 2006 earnings per share of $1.37 (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 27 percent compared with $1.08 earnings per share for the third quarter of 2005. Third quarter 2006 revenues increased 9 percent to $1.31 billion, compared with $1.21 billion for the same period last year. Net income rose 26 percent to $128.2 million, compared with the prior year amount of $102.0 million. "Our businesses continue to deliver excellent results, powered by continued strong demand in the key industrial, utility and nonresidential construction end-markets," said Cooper Industries Chairman and Chief Executive Officer Kirk S. Hachigian. "The third 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 solid execution and progress on our strategic initiatives, including Cooper Connection, Globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation , Strategic Sourcing, Enterprise Business Systems and Productivity, all of which contribute to organic growth, increased margins and strong cash flow." "Cooper's financial position remains very strong, even after several acquisitions and the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of more than 3 million shares year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . We ended the third quarter with a 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, of 24.6 percent which gives us the flexibility to continue investing in our business, and paying a competitive dividend, while also pursuing further strategic acquisitions," said Hachigian. Revenues for the first nine months of 2006 were $3.84 billion, an 8 percent increase from the $3.54 billion in revenues for the first nine months of 2005. 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 for the first nine months of 2006 were $3.78, compared with $3.02 for the same period in 2005, an increase of 25 percent. Income from continuing operations for the first nine months of 2006 rose 24 percent to $355.7 million, compared with $287.1 million for the first nine months of last year. Segment Results Electrical Products segment revenues for the third quarter of 2006 increased 10 percent to $1.13 billion, compared with $1.03 billion in the third quarter of 2005. Excluding the impact of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency translation, revenues increased approximately 9 percent compared to prior year. Recent acquisitions contributed approximately 2 percent to the year-over-year growth. 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 $186.4 million, an increase of 18 percent from $158.2 million in the prior year's third quarter. Segment operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved 110 basis points to 16.5 percent for the third quarter of 2006. The increase in revenues for the Electrical Products segment was driven by continued strong growth in industrial and utility markets, and improved activity in nonresidential construction markets, partially offset by reduced sales through the retail channel. Electrical Products segment revenues for the first nine months of 2006 grew 9 percent to $3.29 billion, compared with $3.01 billion in 2005. Segment operating earnings for the first nine months increased 19 percent to $524.0 million compared with $441.8 million for the same period last year. Tools segment revenues for the third quarter of 2006 increased 2 percent to $187.2 million, compared with 2005 third quarter revenues of $182.9 million. Currency translation increased revenues approximately 1 percent in the quarter. Segment operating earnings for the period were $24.3 million, compared with $15.5 million for the third quarter of 2005. Segment operating margin for the third quarter of 2006 improved to 13.0 percent, compared with 8.5 percent for the same period last year. Revenues for the first nine months of 2006 increased 3 percent to $551.8 million, compared with $538.0 million for the same period last year. Segment operating earnings for the first nine months of 2006 grew 33 percent to $61.2 million, compared with $46.0 million in the prior-year period. Outlook "Our outlook remains positive for the remainder of 2006, driven by the strength in our diversified diversified (di·verˑ·s portfolio of businesses and products, our ability to consistently execute upon our strategic initiatives and a continued favorable global economic outlook," said Hachigian. "We expect to continue to see solid demand from the utility and industrial sectors, and improvement in nonresidential construction markets. "We continue to be committed to deliver a balance of revenue growth, margin expansion and cash generation. We expect 2006 revenues to increase in the range of 8 to 9 percent, with earnings per share from continuing operations between $5.04 and $5.10, an increase from our previous outlook of $4.90 to $5.05 for the full year. Fourth quarter 2006 revenue increases are expected to be in the range of 8 to 10 percent, with earnings per share of $1.26 to $1.32." 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 with administrative headquarters in Houston, Cooper employs approximately 29,000 people and operates eight divisions: Cooper B-Line, 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 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 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 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 third quarter 2006 performance. Those interested in hearing the conference call may listen via telephone by dialing 800-329-9097, using pass code 12810143, 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 617-614-4929 and use pass code 12810143. 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 third 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.
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PERCENTAGE OF REVENUES >
>
Quarter Ended Sept. 30, >
2006 >
2005
>
Revenues 100.0% >
100.0%
Cost of sales 67.5% >
68.4%
Selling and administrative expenses 18.3% >
19.5%
Operating earnings 14.2% >
12.1%
Income before income taxes 13.1% >
10.7%
Net income 9.8% >
8.4%
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Quarter Ended Sept. 30, >
2006 >
2005
>
Return on Sales: >
Electrical Products 16.5% >
15.4%
Tools 13.0% >
8.5%
Total Segments 16.0% >
14.4%
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[TABLE OMITTED]
Nine Months Ended Sept. 30, >
2006 >
2005
>
Return on Sales: >
Electrical Products 15.9% >
14.7%
Tools 11.1% >
8.6%
Total Segments 15.2% >
13.8%
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