1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 1-1175
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Cooper Industries, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 31-4156620
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Travis, Suite 5800 Houston, Texas 77002
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(Address of principal executive offices) (Zip Code)
(713) 209-8400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- ------
Number of shares outstanding of issuer's common stock as of July 31, 2001 was
93,650,500.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COOPER INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
(in millions, where applicable)
Revenues ............................... $ 1,073.0 $ 1,168.2 $ 2,168.1 $ 2,207.1
Cost of sales .......................... 744.7 794.5 1,513.6 1,496.2
Selling and administrative expenses .... 186.0 189.4 385.5 365.8
Goodwill amortization .................. 15.3 14.7 30.1 28.1
Interest expense, net .................. 22.4 26.6 47.5 44.9
--------- --------- --------- ---------
Income before income taxes ......... 104.6 143.0 191.4 272.1
Income taxes ........................... 36.6 50.1 67.0 95.3
--------- --------- --------- ---------
Net Income ......................... $ 68.0 $ 92.9 $ 124.4 $ 176.8
========= ========= ========= =========
Income per Common Share:
Basic .............................. $ .72 $ 1.00 $ 1.32 $ 1.89
========= ========= ========= =========
Diluted ............................ $ .72 $ .99 $ 1.32 $ 1.88
========= ========= ========= =========
Cash dividends per Common Share ........ $ .35 $ .35 $ .70 $ .70
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
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COOPER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
ASSETS (in millions)
Cash and cash equivalents .................................. $ 16.3 $ 26.4
Receivables ................................................ 821.3 828.8
Inventories ................................................ 734.6 706.9
Deferred income taxes and other current assets ............. 142.1 173.0
------------ ------------
Total current assets .............................. 1,714.3 1,735.1
------------ ------------
Property, plant and equipment, less accumulated
depreciation.............................................. 865.0 870.4
Goodwill, less accumulated amortization .................... 1,969.6 2,013.5
Deferred income taxes and other noncurrent assets .......... 174.1 170.3
------------ ------------
Total assets ...................................... $ 4,723.0 $ 4,789.3
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt ............................................ $ 182.4 $ 166.1
Accounts payable ........................................... 411.0 470.1
Accrued liabilities ........................................ 481.1 486.3
Accrued income taxes ....................................... 1.9 --
Current maturities of long-term debt ....................... 3.1 51.1
------------ ------------
Total current liabilities ......................... 1,079.5 1,173.6
------------ ------------
Long-term debt ............................................. 1,276.3 1,300.8
Postretirement benefits other than pensions ................ 203.6 211.2
Other long-term liabilities ................................ 195.4 199.5
------------ ------------
Total liabilities ................................. 2,754.8 2,885.1
------------ ------------
Common stock, $5.00 par value .............................. 615.0 615.0
Capital in excess of par value ............................. 660.9 663.3
Retained earnings .......................................... 2,283.9 2,225.0
Common stock held in treasury, at cost ..................... (1,459.0) (1,470.0)
Unearned employee stock ownership plan compensation ........ -- (8.6)
Accumulated other non-owner changes in equity .............. (132.6) (120.5)
------------ ------------
Total shareholders' equity ........................ 1,968.2 1,904.2
------------ ------------
Total liabilities and shareholders' equity ........ $ 4,723.0 $ 4,789.3
============ ============
The accompanying notes are an integral part of these statements.
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COOPER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
----------------------------
2001 2000
------------ ------------
(in millions)
Cash flows from operating activities:
Net income ....................................................... $ 124.4 $ 176.8
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization .................................... 92.8 83.9
Deferred income taxes ............................................ 6.1 10.6
Changes in assets and liabilities:(1)
Receivables .................................................. (3.5) (81.4)
Inventories .................................................. (49.7) (72.8)
Accounts payable and accrued liabilities ..................... (56.7) (3.1)
Accrued income taxes ......................................... 2.3 8.4
Other assets and liabilities, net ............................ 24.4 1.4
------------ ------------
Net cash provided by operating activities .............. 140.1
123.8
Cash flows from investing activities:
Cash received from (paid for) acquired businesses ................ 11.8 (562.7)
Capital expenditures ............................................. (69.4) (94.9)
Proceeds from sales of property, plant and equipment ............. 3.6 7.5
------------ ------------
Net cash used in investing activities .................. (54.0) (650.1)
Cash flows from financing activities:
Proceeds from issuances of debt .................................. 135.9 628.1
Repayments of debt ............................................... (168.9) (2.9)
Dividends ........................................................ (65.5) (65.3)
Acquisition of treasury shares ................................... -- (39.3)
Activity under employee stock plans .............................. 2.1 1.0
------------ ------------
Net cash provided by (used in) financing activities .... (96.4) 521.6
Effect of exchange rate changes on cash and cash equivalents ......... 0.2 0.3
------------ ------------
Decrease in cash and cash equivalents ................................ (10.1) (4.4)
Cash and cash equivalents, beginning of period ....................... 26.4 26.9
------------ ------------
Cash and cash equivalents, end of period ............................. $ 16.3 $ 22.5
============ ============
(1) Net of the effects of acquisitions and translation.
The accompanying notes are an integral part of these statements.
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COOPER INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Basis of Presentation - The financial information presented as of any
date other than December 31 has been prepared from the books and records without
audit. Financial information as of December 31 has been derived from Cooper's
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods indicated, have
been included. For further information regarding Cooper's accounting policies,
refer to the Consolidated Financial Statements and related notes for the year
ended December 31, 2000 included as Appendix D to Cooper's Proxy Statement dated
March 8, 2001.
Impact of New Accounting Standards - In June 2001, the Financial
Accounting Standards Board issued Statements of Financial Accounting Standards
No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible
Assets, effective for fiscal years beginning after December 15, 2001. Cooper
will adopt the new standards effective January 1, 2002. Under the new
statements, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. In 2002, Cooper will perform the first of the
required impairment tests of goodwill and indefinite-lived intangible assets as
of January 1, 2002 and has not yet determined what the effect of these tests
will be on its consolidated results of operations and financial position.
NOTE 2. ACQUISITIONS AND DIVESTITURES
During the first six months of 2001, Cooper received purchase price
adjustments of $11.8 million net, related to previously acquired businesses.
During the first six months of 2000, Cooper completed three
acquisitions in its Electrical Products segment and one small acquisition in its
Tools & Hardware segment. In March 2000, Cooper acquired Eagle Electric for a
total cost of $124.6 million. Eagle manufactures and sells electrical wiring
devices including switches, receptacles, plugs and connectors, cords and other
electrical accessories to the residential and commercial markets. In May 2000,
Cooper acquired B-Line Systems for $430.6 million. B-Line Systems manufactures
and markets support systems and enclosures for electrical, mechanical and
telecommunications/data applications. Cooper also acquired a small Indian
manufacturer of electrical products and a small Hungarian assembly equipment
manufacturer.
The acquisitions have been accounted for as purchase transactions and
the results of the acquisitions are included in Cooper's consolidated income
statements from the date of acquisition.
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NOTE 3. INVENTORIES
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
(in millions)
Raw materials .................................. $ 237.9 $ 230.1
Work-in-process ................................ 141.2 134.6
Finished goods ................................. 412.8 404.5
Perishable tooling and supplies ................ 21.6 20.5
------------ ------------
813.5 789.7
Excess of current standard costs over LIFO
costs ........................................ (78.9) (82.8)
------------ ------------
Net inventories ..................... $ 734.6 $ 706.9
============ ============
NOTE 4. LONG-TERM DEBT
At June 30, 2001, commercial paper of $400 million was classified as
long-term debt, reflecting Cooper's intention to refinance this amount during
the 12-month period following the balance sheet date through either continued
short-term borrowing or utilization of available bank credit facilities.
During 1999, Cooper completed a shelf registration statement to issue
up to $500 million of debt securities. At June 30, 2001, all $500 million of the
shelf registration was available to be issued.
NOTE 5. COMMON STOCK
During the first quarter of 2000, Cooper repurchased 1.1 million shares
of its common stock at a cost of $39.3 million.
NOTE 6. SEGMENT INFORMATION
REVENUES
-------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
(in millions)
Electrical Products .......... $ 879.9 $ 961.6 $ 1,789.9 $ 1,800.7
Tools & Hardware ............. 193.1 206.6 378.2 406.4
---------- ---------- ---------- ----------
Total revenues ............ $ 1,073.0 $ 1,168.2 $ 2,168.1 $ 2,207.1
========== ========== ========== ==========
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OPERATING EARNINGS
-------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
(in millions)
Electrical Products .............................. $ 112.9 $ 152.5 $ 215.5 $ 285.7
Tools & Hardware ................................. 21.5 24.6 38.4 46.6
---------- ---------- ---------- ----------
Total management reporting .................... 134.4 177.1 253.9 332.3
General corporate expenses ....................... 7.4 7.5 15.0 15.3
Interest expense, net ............................ 22.4 26.6 47.5 44.9
---------- ---------- ---------- ----------
Income before income taxes ....................... $ 104.6 $ 143.0 $ 191.4 $ 272.1
========== ========== ========== ==========
NOTE 7. NET INCOME PER COMMON SHARE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
BASIC: (in millions)
Net income applicable to Common stock ............ $ 68.0 $ 92.9 $ 124.4 $ 176.8
========== ========== ========== ==========
Weighted average Common shares outstanding ....... 93.9 93.3 93.9 93.5
========== ========== ========== ==========
DILUTED:
Net income applicable to Common stock ............ $ 68.0 $ 92.9 $ 124.4 $ 176.8
========== ========== ========== ==========
Weighted average Common shares outstanding ....... 93.9 93.3 93.9 93.5
Incremental shares from assumed conversions:
Options, performance-based stock
awards and other employee awards .......... 0.7 0.6 0.7 0.7
---------- ---------- ---------- ----------
Weighted average Common shares
and Common share equivalents ................. 94.6 93.9 94.6 94.2
========== ========== ========== ==========
Options and employee awards are not considered in the calculations if the effect
would be antidilutive.
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NOTE 8. NET INCOME AND OTHER NON-OWNER CHANGES IN EQUITY
The components of net income and other non-owner changes in equity, net
of related taxes, were as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
(in millions)
Net income ............................... $ 68.0 $ 92.9 $ 124.4 $ 176.8
Foreign currency translation gains
and losses ........................... 0.8 (24.3) (11.8) (35.4)
Change in fair value of derivatives ...... -- -- (0.3) --
---------- ---------- ---------- ----------
Net income and other non-owner
changes in equity .................... $ 68.8 $ 68.6 $ 112.3 $ 141.4
========== ========== ========== ==========
NOTE 9. SUPPLEMENTAL CASH FLOW INFORMATION
Assets acquired and liabilities assumed or incurred from the acquisition of
businesses during the six months ended June 30, 2000 were as follows (in
millions):
Fair value of assets acquired................................................... $ 618.9
Liabilities assumed or incurred................................................. (56.2)
----------
Cash used to acquire businesses, net of cash acquired........................ $ 562.7
==========
NOTE 10. SUBSEQUENT EVENTS
On August 1, 2001, Danaher Corporation ("Danaher") announced it had made an
unsolicited proposal to Cooper for a merger through a stock and cash transaction
valued by Danaher at $54 to $58 per Cooper share, subject to conducting due
diligence procedures. On August 8, 2001, Cooper announced that its Board of
Directors unanimously rejected Danaher's proposal. Cooper's Board of Directors
authorized management to explore all strategic alternatives that would maximize
shareholder value including mergers, sales, strategic alliances, acquisitions or
other similar strategic alternatives. Cooper's Board also announced the August
30th Special Meeting of Shareholders to vote on Cooper's plan to reorganize and
change its place of incorporation from Ohio to Bermuda has been postponed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2000
Net income for the second quarter of 2001 was $68.0 million on revenues
of $1,073.0 million compared with 2000 second quarter net income of $92.9
million on revenues of $1,168.2 million. Second quarter diluted earnings per
share were $.72 compared to $.99 in 2000.
REVENUES:
Revenues for the second quarter of 2001 were 8% lower than the second
quarter of 2000. After excluding the effects of recent acquisitions and
divestitures, revenues were 10% below the second quarter of
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last year. The impact of foreign currency translation reduced reported revenues
by approximately 1% for the quarter.
Second quarter 2001 Electrical Products revenues were 8% below the
second quarter of 2000. Excluding the incremental impact of acquisitions and a
1% reduction in revenues due to foreign currency translation, segment revenues
were 10% lower than the second quarter of last year. The hazardous-duty
electrical products business showed improvement during the quarter as increased
capital spending in the energy and petrochemical sectors spurred modest project
activity. Other electrical businesses continued to be impacted by weakness in
the overall North American economy which affected virtually all of the markets
served by the Electrical Products segment. A slowdown in domestic industrial
production and construction activity, rationalization of distributors' inventory
levels, and slowed consumer spending impacted demand across all of the
businesses. Additionally, sales of electrical and electronic circuit protection
and telecommunications systems equipment were below the second quarter of the
prior year due to the significant slowing in telecommunications and electronics
markets. An uncertain economic environment for utility customers reduced sales
of electrical distribution equipment.
Tools & Hardware segment revenues for the quarter were 7% below the
second quarter of 2000. Hand tools sales reflected the impact of weak market
conditions on demand from both the domestic industrial and retail channels.
Power tools and domestic assembly equipment were affected by the overall
slowdown in industrial activity, particularly in the domestic automotive
industry. Strong shipments of assembly equipment from European operations
provided a partial offset. A strong U.S. Dollar reduced total Tools & Hardware
revenues during the quarter by approximately 3%.
COSTS AND EXPENSES:
Cost of sales, as a percentage of revenues, was 69.4% for the second
quarter of 2001 compared to 68.0% for the comparable 2000 quarter. The increase
in the cost of sales percentage was due to lower manufacturing volumes and the
resulting costs of manufacturing inefficiencies from adjusting production
capacity. Selling and administrative expenses, as a percentage of revenues, for
the second quarter of 2001 were 17.3% compared to 16.2% for the second quarter
of 2000. The increase in the selling and administrative expense percentage
reflects lower than anticipated revenues, partially offset by reductions in
spending.
Goodwill amortization increased as a result of acquisitions completed
during 2000. Interest expense, net for the first quarter of 2001 decreased $4.2
million from the 2000 second quarter primarily as a result of lower average
interest rates.
SEGMENT OPERATING EARNINGS:
Electrical Products segment second quarter 2001 operating earnings of
$112.9 million were 26% below the same quarter of last year. Excluding the
earnings effect of recent acquisitions, operating earnings were down 28% from
the previous year quarter. The decrease was due to lower than anticipated
revenues reflective of the overall weakness of the U.S. economy, competitive
market conditions, and production inefficiencies related to lower manufacturing
levels.
Tools & Hardware segment operating earnings were $21.5 million for the
2001 second quarter, compared to $24.6 million in the second quarter of 2000.
The lower operating earnings primarily reflected the impact of the reduction in
revenues from the second quarter of the prior year.
INCOME TAXES:
Taxes on income decreased primarily as a result of lower taxable
earnings. The effective tax rate was 35% for the three months ended June 30,
2001 and 2000.
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SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000
Net income for the first six months of 2001 was $124.4 million on
revenues of $2,168.1 million compared with 2000 first six months net income of
$176.8 million on revenues of $2,207.1 million. The first six months diluted
earnings per share were $1.32 compared to $1.88 in 2000.
REVENUES:
Revenues for the first six months of 2001 were 2% below the first six
months of 2000. After excluding the effects of recent acquisitions and
divestitures, revenues were 8% lower than the first six months of last year. The
impact of foreign currency translation reduced reported revenues by
approximately 1% for the six month period.
Year-to-date 2001 Electrical Products revenues were 1% less than the
last year. Excluding the incremental impact of acquisitions and a 1% reduction
in revenues due to foreign currency translation, segment revenues were 7% below
last year. The continued weakness in the North American economy affected
virtually all of the markets served by the Electrical Products segment. A
contraction in domestic manufacturing and industrial activity, excess inventory
in distributor's warehouses and slowed consumer spending impacted demand across
all of the businesses. Additionally, sales of electrical and electronic circuit
protection equipment and telecommunications systems products were affected by
weakness in the telecommunications and electronics markets. An uncertain
economic environment for utility customers reduced sales of electrical
distribution equipment.
Tools & Hardware segment revenues for the first six months of 2001 were
7% below the first half of 2000. Hand tools sales reflected lower demand from
both the domestic industrial and retail channels, as distributors and retailers
adjusted volumes and reduced inventories. Power tools and domestic assembly
equipment sales were affected by the overall slowdown in industrial activity. A
strong U.S. Dollar reduced total Tools & Hardware revenues during the period by
approximately 3%.
COSTS AND EXPENSES:
Cost of sales, as a percentage of revenues, was 69.8% for the first six
months of 2001 compared to 67.8% for the comparable 2000 period. The increase in
the cost of sales percentage was due to lower manufacturing volumes and the
resulting costs of production inefficiencies from adjusting manufacturing
capacity. Selling and administrative expenses, as a percentage of revenues, for
the first half of 2001 were 17.8% compared to 16.6% for the first half of 2000.
Excluding the impact of recent acquisitions, selling and administrative expense,
as a percentage of revenues for the first six months of 2001, was 17.6%. The
increase in the selling and administrative expense percentage reflects lower
than anticipated revenues.
Goodwill amortization increased as a result of acquisitions completed
during 2000. Interest expense, net for the first half of 2001 increased $2.6
million from the 2000 first half primarily as a result of additional borrowings
to fund acquisitions made in the first half of 2000.
SEGMENT OPERATING EARNINGS:
Electrical Products segment first half 2001 operating earnings were
$215.5 million compared to $285.7 million for the same period of last year.
Excluding the earnings effect of recent acquisitions, operating earnings were
27% below the same period in the previous year. The reduction from prior year
was due to lower than anticipated revenues reflective of the overall weakness of
the U.S. economy, competitive market conditions, and production inefficiencies
related to lower manufacturing levels.
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Tools & Hardware segment operating earnings were $38.4 million for the
2001 first half, compared to $46.6 million in the first half of 2000. The lower
operating earnings primarily reflected the impact of reduced revenues from the
prior year.
INCOME TAXES:
Taxes on income decreased primarily as a result of lower taxable
earnings. The effective tax rate was 35% for the six months ended June 30, 2001
and 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cooper's operating working capital (defined as receivables and
inventories less accounts payable) increased $79 million during the first half
of 2001. This increase in operating working capital for the 2001 six month
period was primarily related to a lower than anticipated level of shipments and
a reduction in accounts payable. Operating working capital turnover for the
first half of 2001 was 3.9 turns compared to 4.2 turns in the same period of
2000, reflecting the impact of lower than planned shipments.
Cash provided from operating activities was $140 million in the first
half of 2001. These funds plus cash received of $12 million related to previous
acquisitions, were used to fund capital expenditures of $69 million, dividends
of $66 million and net debt repayments of $33 million. During the first half of
2000, cash provided by operating activities totaled $124 million. These funds,
along with net borrowings of $625 million, were used to fund capital
expenditures of $95 million, acquisitions of $563 million, share repurchases of
$39 million and dividends of $65 million.
Cooper is conducting several initiatives to maximize cash flows for the
balance of the year. These actions include reduced capital spending, elimination
of discretionary spending and workforce reductions. As a result, Cooper
currently anticipates a continuation of its long-term ability to annually
generate approximately $200 million in cash flow available for acquisitions,
debt repayment and common stock repurchases.
In connection with acquisitions accounted for as purchases, Cooper
records, to the extent appropriate, accruals for the costs of closing duplicate
facilities, severing redundant personnel and integrating the acquired businesses
into existing Cooper operations. Cash flows from operating activities are
reduced by the amounts expended against the various accruals established in
connection with each acquisition. Spending against these accruals was $3.7
million and $1.7 million during the six months ended June 30, 2001 and 2000,
respectively.
During the fourth quarter of 1998, Cooper announced a voluntary and
involuntary severance program and committed to consolidate several facilities.
The following table reflects the activity during the six months ended June 30,
2001 related to the 1998 employee reduction and facility consolidation plan
accruals.
No. of Accrued Facility
Employees Severance Consolidation
---------- ---------- -------------
(in millions)
Balance at December 31, 2000 ........... 607 $ 5.1 $ 3.0
Employees terminated ................... (192) -- --
Cash expenditures ...................... -- (2.4) (0.3)
---------- ---------- ----------
Balance at June 30, 2001 ............... 415 $ 2.7 $ 2.7
========== ========== ==========
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Cooper anticipates that the accrued severance and facility
consolidation accruals will be expended during 2001 as terminated employees are
paid, the additional employees leave the employment of Cooper and facility
consolidations are completed. As of June 30, 2001, Cooper anticipates incurring
in excess of $3 million related to severance costs, facility exit costs and
disruptions to operations under the 1998 employee reduction and facility
consolidation plan that could not be accrued. A majority of the $3 million
relates to operating inefficiencies, training, personnel and inventory
relocation costs which are required to be expensed as incurred during 2001. This
paragraph contains forward-looking statements and actual results may differ
materially. The statements are based on a number of assumptions, risks and
uncertainties including the number of employees actually severed, the timing of
the facility consolidations, the magnitude of any disruption from facility
consolidations and the ability to achieve the projected cost reductions. The
estimates also assume, without limitation, no significant change in competitive
conditions and such other risk factors as are discussed from time to time in
Cooper's periodic filings with the Securities and Exchange Commission.
During December 1999, Cooper completed a shelf registration to issue up
to $500 million of debt securities. At June 30, 2001, all $500 million of the
shelf registration was available to be issued.
Cooper has targeted a 35% to 45% debt-to-total capitalization ratio and
intends to utilize cash flows to maintain a debt-to-total capitalization ratio
within this range. Excess cash flows are utilized to fund acquisitions or to
purchase shares of Cooper Common stock. Cooper's debt-to-total capitalization
ratio was 42.6% at June 30, 2001, 48.8% at June 30, 2000 and 44.4% at December
31, 2000.
The statements above concerning anticipated cash flows and the
anticipated debt-to-capitalization ratio contain forward-looking information,
and actual results may differ materially. The statements are based on certain
assumptions, including no significant change in the composition of Cooper's
business segments, no material change in the amount of revenues and no
significant adverse changes in the relationship of the U.S. dollar to the
currencies of countries in which Cooper does business. The statement also
assumes, without limitation, no significant change in competitive conditions and
such other risk factors as are discussed from time to time in Cooper's periodic
filings with the Securities and Exchange Commission.
BACKLOG
Sales backlog represents the dollar amount of all firm open orders for
which all terms and conditions pertaining to the sale have been approved such
that a future sale is reasonably expected. Sales backlog by segment was as
follows:
JUNE 30,
-----------------------
2001 2000
---------- ----------
(in millions)
Electrical Products .................... $ 282.3 $ 376.8
Tools & Hardware ....................... 87.0 104.2
---------- ----------
$ 369.3 $ 481.0
========== ==========
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 of Notes to Consolidated Financial Statements.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Cooper is subject to various suits, legal proceedings and claims that
arise in the normal course of business. While it is not feasible to predict the
outcome of these matters with certainty, management is of the opinion that their
ultimate disposition should not have a material adverse effect on Cooper's
financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders was held on April 24, 2001 in
Houston, Texas. Four proposals, as described in Cooper's Proxy
statement dated March 8, 2001, were voted upon at the meeting.
Following is a brief description of the matters voted upon and the
results of voting.
1. Proposal for the election of four directors for terms expiring in
2004:
John D. Ong H. Lee Scott Dan F. Smith Gerald B. Smith
----------- ------------ ------------ ---------------
Votes For: 81,793,266 81,816,920 81,818,674 81,839,723
Votes Withheld: 1,149,560 1,125,906 1,124,152 1,103,103
2. Proposal to approve the Amended and Restated Stock Incentive Plan:
Votes For: 69,833,546
Votes Against: 5,579,958
Abstain: 629,827
Non-Vote: 6,899,495
3. Proposal to approve the Amended and Restated Management Annual
Incentive Plan:
Votes For: 77,958,032
Votes Against: 4,385,123
Abstain: 599,671
Non-Vote: 0
4. Proposal for a global set of corporate standards:
Votes For: 6,663,538
Votes Against: 64,009,558
Abstain: 5,376,812
Non-Vote: 6,892,918
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12. Computation of Ratios of Earnings to Fixed Charges for the
Calendar Years 2000 through 1996 and the Six Months Ended
June 30, 2001 and 2000.
(b) Reports on Form 8-K
Cooper filed a report on Form 8-K dated April 24, 2001, which
included a copy of a press release containing Cooper's financial
results for the first quarter of 2001.
Cooper filed a report on Form 8-K dated April 30, 2001, which
included "Sales Trends" information posted on Cooper's website.
Cooper filed a report on Form 8-K dated May 23, 2001, which
included "Sales Trends" information posted on Cooper's website.
Cooper filed a report on Form 8-K dated June 11, 2001, which
included a copy of a press release announcing a plan to
reorganize Cooper and change its place of incorporation from
Ohio to Bermuda.
Cooper filed a report on Form 8-K dated June 21, 2001, which
included "Sales Trends" information posted on Cooper's website.
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 thereunto duly authorized.
Cooper Industries, Inc.
----------------------------------
(Registrant)
Date: August 14, 2001 /s/ D. Bradley McWilliams
----------------------------------
D. Bradley McWilliams
Senior Vice President and
Chief Financial Officer
Date: August 14, 2001 /s/ Jeffrey B. Levos
----------------------------------
Jeffrey B. Levos
Vice President and Controller
and Chief Accounting Officer
-14-
15
EXHIBIT 12
Exhibit Index
EXHIBIT
NUMBER DESCRIPTION
------- -----------
12. Computation of Ratios of Earnings to Fixed Charges for the
Calendar Years 2000 through 1996 and the Six Months Ended June
30, 2001 and 2000.