Cooper Industries Reports Full Year 2008 Earnings - aftermarketNews

Cooper Industries Reports Full Year 2008 Earnings

Company reports fourth quarter earnings from continuing operations of 84 cents per share.

HOUSTON — Cooper Industries has reported fourth quarter 2008 earnings per share from continuing operations of 65 cents (diluted), compared with 98 cents for the fourth quarter of 2007. During the fourth quarter of 2008 Cooper recognized a pre-tax restructuring charge of $35.7 million or 15 cents per share relating primarily to reductions in force. Cooper also recognized during the fourth quarter of 2008 a pre-tax $9.1 million impairment charge (4 cents per share) related to an investment in a joint venture operation. Excluding restructuring and asset impairment charges, the fourth quarter 2008 earnings per share from continuing operations of 84 cents is 1 percent higher than prior year results of 83 cents (excluding Belden income and discrete tax items).

Fourth quarter 2008 results include the favorable impact of a lower effective tax rate, impact from change in estimate for long-term stock compensation and other items, which improved reported quarterly results by approximately 9 cents per share. Fourth quarter 2008 revenues decreased 1 percent to $1.52 billion, compared with $1.54 billion for the same period last year. Excluding unusual items, income from continuing operations for the fourth quarter declined 6 percent to $143.7 million, compared with $152.7 million for the prior year’s fourth quarter.

“As the quarter progressed, the credit crisis deepened with the economic deterioration in the U.S. and Europe spreading around the world. Cooper earlier announced its intention to reduce our work force by more than 1,000 employees and to take a fourth quarter charge estimated to be in the range of $20 million to $22 million. As economic conditions deteriorated, we determined it was necessary to increase the reduction in work force to in excess of 2,200 employees globally and recorded a restructuring charge of $35.7 million,” said Cooper Industries’ Chairman and Chief Executive Officer Kirk Hachigian.

During 2008 Cooper generated $761 million in free cash flow after $137 million of capital expenditures. Total debt net of cash and investments totaled $952 million compared to $940 million at Dec. 31, 2007. “Our free cash flow has exceeded continuing income, exclusive of tax accrual reversals, for the eighth year in a row. Our teams responded quickly to the dramatic changes in our markets and did an outstanding job adjusting production rates and improving working capital efficiency. We end the year with an excellent balance sheet and preserve our financial flexibility to continue to invest in the long-term and return capital to our shareholders,” said Hachigian.

Revenues for the 12 months of 2008 were $6.52 billion, a 10 percent increase from the $5.90 billion in revenues for the 12 months of 2007. For the 12 months of 2008, income from continuing operations excluding unusual items rose 8 percent to $630.8 million, compared with $582.8 million for the prior year’s 12 months. Earnings per share from continuing operations excluding unusual items were $3.59 or up 14 percent, compared with prior year’s $3.14.

As was previously announced on Oct. 1, 2008, Cooper will not participate in the Federal-Mogul Corporation Asbestos Trust and is instead proceeding under Plan B. Therefore, the Federal-Mogul bankruptcy estate paid Cooper $141 million in early October. Cooper’s financial statements reflect the assets and liabilities related to the on-going activities under Plan B. As a result of these adjustments, the company recognized an after-tax discontinued operations income of $16.6 million or 9 cents per share in the third quarter of 2008.

 “We are very proud and grateful to our employees, customers and suppliers for making our 175th year a record performance. We are excited about the future of our end markets, global reach and trends in new technologies. We are also extremely well prepared to navigate a very difficult 2009 market environment. We have been refining our strategy, business initiatives and core values for several years and have great momentum as we enter these challenging times. Our balance sheet also provides us exceptional fire power to execute our long-term strategy,” commented Hachigian.

“For 2009 we now are forecasting earnings per share from continuing operations to decline to $2.45 to $2.80 with revenue declining in the range of 10 to 15 percent. For the first quarter of 2009, we expect earnings per share from continuing operations of $.45 to $.65 with revenue declines in the range of 10 to 15 percent. Given the trends in our markets in the fourth quarter, we are taking a conservative position and approach to 2009. As with prior years, we look forward to reviewing our detailed 2009 outlook on February 19th in New York City with the investment community,” said Hachigian.

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