Cooper Industries, Incorporated 10-K Reports: 2001   2000   1999   1998   1997   1996   1995   1993  

0000950129-99-001221.hdr.sgml : 19990331
ACCESSION NUMBER:		0000950129-99-001221
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	19981231
FILED AS OF DATE:		19990330

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COOPER INDUSTRIES INC
		CENTRAL INDEX KEY:			0000024454
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC LIGHTING & WIRING EQUIPMENT [3640]
		IRS NUMBER:				314156620
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-01175
		FILM NUMBER:		99577534

	BUSINESS ADDRESS:	
		STREET 1:		600 TRAVIS, SUITE 5800
		STREET 2:		FIRST CITY TWR
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77002
		BUSINESS PHONE:		7132098400

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 4446
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77210

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	COOPER BESSEMER CORP
		DATE OF NAME CHANGE:	19710505


10-K405
1
COOPER INDUSTRIES, INC. - DATED 12/31/1998


   1



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       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

                             Cooper Industries, Inc.
             (Exact Name of Registrant as Specified in Its Charter)

                Ohio                                         31-4156620
   (State or Other Jurisdiction of                        (I.R.S. Employer
    Incorporation or Organization)                      Identification Number)

600 Travis, Suite 5800, Houston, Texas                          77002
(Address of Principal Executive Offices)                      (Zip Code)

                                  713/209-8400
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:




                                                   Name of Each Exchange
         Title of Each Class                        on Which Registered 
         -------------------                       ---------------------
                                                                                                       
Common Stock, $5 par value                      The New York Stock Exchange
                                                Pacific Exchange

Rights to Purchase Preferred Stock              The New York Stock Exchange
                                                Pacific Exchange



Securities registered pursuant to Section 12(g) of the Act:     None

         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  [ ]
                  



   2



         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         The aggregate value of the registrant's voting stock held by
non-affiliates of the registrant as of March 1, 1999 was $4,061,138,074.

         Number of shares outstanding of registrant's Common Stock as of

                           March 1, 1999 - 94,337,288


                       DOCUMENTS INCORPORATED BY REFERENCE

Cooper Industries, Inc. Proxy Statement for the Annual Meeting of Shareholders
to be held on April 27, 1999 (Part I - Item 1, Part II - Items 6, 7, 7A and 8,
Part III - Items 10, 11 and 12 and Part IV - Item 14(a)(1))







                             Continuation of Page 1
   3
                                    PART I


ITEM 1. BUSINESS; ITEM 2. PROPERTIES


                                     GENERAL

         The terms "Cooper" or "Company" refer to the registrant, Cooper
Industries, Inc. Cooper was incorporated under the laws of the State of Ohio on
January 8, 1919.

         The Company's continuing businesses operate in two business segments:
Electrical Products and Tools & Hardware. On October 9, 1998, the Company
divested its Automotive Products segment for proceeds of $1.9 billion. The
Automotive Products segment is reflected in the consolidated financial
statements incorporated by reference herein as a discontinued operation. The
discussion of the Company's business under Items 1 and 2 hereof includes only
the Company's continuing operations.

         Cooper manufactures, markets and sells its products and provides
services throughout the world. Cooper has manufacturing facilities in 19
countries and currently employs approximately 28,100 people. On December 31,
1998, the plants and other facilities used by Cooper throughout the world
contained an aggregate of approximately 18,070,000 square feet of space, of
which approximately 84 percent was owned and 16 percent was leased. The charts
on the next page show the number of employees, square footage of facilities
owned and leased and location of manufacturing facilities for each industry
segment. During the fourth quarter of 1998, Cooper announced its plans to shut
down or downsize about a dozen facilities throughout Cooper's worldwide
operations. With these adjustments, Cooper believes its facilities will be
adequate and suitable for its anticipated level of operations. Certain equipment
and production facilities have been financed by industrial revenue bonds issued
by local government authorities and are subject to security arrangements
customary in such financings.







                                      -2-
   4


 

                                                                                                Square Footage of
                                  Number and Nature of Facilities                             Plants and Facilities
                                  -------------------------------                             --------------------- 
                  Number of                                                                                                        
Segment           Employees      Manufacturing   Warehouse    Sales         Other            Owned              Leased
- -------           ---------      -------------   ---------    -----         -----            -----              ------
                                                                                                
Electrical         20,400              76            6          77            5            10,265,000          1,803,000
Products

Tools &             7,400              35            9          14            1             4,940,000            917,000
Hardware

Other                 300               -            -           -            1                     -            145,000


                   ------            ----         ----        ----         ----            ----------          ---------      
Total              28,100             111           15          91            7            15,205,000          2,865,000







                                                         Manufacturing Plant Locations
                                                         -----------------------------        
                                                                                             Europe
                          United                                    South       United       (Other                   Republic of
Segment                   States         Canada      Mexico        America      Kingdom     Than UK)     Australia       China
- -------                   ------         ------      ------        -------      -------     --------     ---------    -----------
                                                                                              
Electrical                  37              2          8              3            11           12           2              1
Products

Tools &                     19              -          4              3             1            7           1              -
Hardware
                          ----           ----        ---           ----         -----       ------       -----        -------
Total                       56              2         12              6            12           19           3              1






                                      -3-
   5




     Operations in the United States are conducted by unincorporated divisions
and wholly-owned subsidiaries of the Company, organized by the two business
segments. Activities outside the United States contribute significantly to the
revenues and operating earnings of both segments of Cooper. These activities are
conducted in major commercial countries by wholly-owned subsidiaries and
jointly-owned companies, the management of which is structured through the
Company's two business segments. As a result of these international operations,
sales and distribution networks are maintained throughout most of the
industrialized world. Cooper generally believes that there are no substantial
differences in the business risks associated with these international operations
compared with domestic activities, although Cooper is subject to certain
political and economic uncertainties encountered in activities outside the
United States, including trade barriers, restrictions on foreign exchange and
currency fluctuations. As the U.S. dollar strengthens against foreign currencies
at a rate greater than inflation in those countries, the Company may experience
lower segment revenues and operating earnings. The five countries in which the
Company generates the most international revenues are Canada, Germany, France,
Mexico and the United Kingdom. The Company has several small joint ventures with
operations in China. Investments in China are subject to greater risks related
to economic and political uncertainties as compared to most countries where the
Company has operations. Exhibit 21.0 contains a list of Cooper's subsidiaries.

     Data with respect to Cooper's industry segments, domestic and international
operations and export sales are contained in Note 15 of the Notes to
Consolidated Financial Statements, incorporated herein by reference to pages
A-37 through A-40 of Appendix A to the Cooper Proxy Statement for the 1999
Annual Meeting of Shareholders. A discussion of acquisitions and divestitures is
included in Notes 3, 7, 17 and 19 of the Notes to Consolidated Financial
Statements, incorporated herein by reference to pages A-25 through A-28 and A-41
through A-43 of Appendix A to the Cooper Proxy Statement for the 1999 Annual
Meeting of Shareholders.

     With its two business segments, Cooper serves three major markets:
industrial, construction, and electrical power distribution. Markets for
Cooper's products and services are worldwide, though the United States is the
largest market. Within the United States, there is no material geographic
concentration by state or region. Most operating units experience significant
competition from both larger and smaller companies with the key competitive
factors being price, quality, brand name and availability. Cooper believes that
it is among the leading manufacturers in the world of electrical distribution
equipment, hazardous duty electrical equipment, emergency lighting, lighting
fixtures, fuses, nonpower hand tools, industrial power tools and chain products.

     Cooper's research and development activities are for purposes of improving
existing products and services and originating new products. During 1998,
approximately $50.4 million was spent for research and development activities as
compared with approximately $41.8 million in 1997 and $39.4 million in 1996.
Cooper obtains and holds patents on products and designs in the United States
and many foreign countries where operations are conducted or products are sold.
Although in the aggregate Cooper's patents are important in the operation of its
businesses, the loss by expiration or otherwise of any one patent or group of
patents would not materially affect its business.




                                      -4-
   6

     Cooper does not presently anticipate that compliance with currently
applicable environmental regulations and controls will significantly change its
competitive position, capital spending or earnings during 1999. Cooper has been
a party to administrative and legal proceedings with governmental agencies that
have arisen under statutory provisions regulating the discharge or potential
discharge of material into the environment. Orders and decrees consented to by
Cooper have contained agreed-upon timetables for fulfilling reporting or
remediation obligations or maintaining specified air and water discharge levels
in connection with permits for the operations of various plants. Cooper believes
it is in compliance with the orders and decrees, and such compliance is not
material to the business or financial condition of Cooper. For additional
information concerning the Company's accruals for environmental liabilities, see
Note 7 of the Notes to Consolidated Financial Statements, incorporated herein by
reference to pages A-27 and A-28 of Appendix A to the Cooper Proxy Statement for
the 1999 Annual Meeting of Shareholders.

     Approximately 58 percent of Cooper's hourly production work force in the
United States is employed in 43 manufacturing facilities, distribution centers
and warehouses not covered by labor agreements. Numerous agreements covering
approximately 42 percent of the hourly production employees exist with 23
bargaining units at 22 operations in the United States. Cooper also has
agreements with various unions at 38 international operations. During 1998, new
agreements were concluded covering hourly production employees at 10 operations
in the United States. Cooper considers its employee relations to be excellent.

     Sales backlog at December 31, 1998 was approximately $385 million, all of
which is for delivery during 1999, compared with backlog of approximately $324
million (excluding December 1997 acquisitions) at December 31, 1997.

     The following describes the business conducted by each of the Company's
business segments. Additional information regarding the products, markets and
distribution methods for each segment is set forth on the table at the end of
this Item. Information concerning market conditions, as well as information
concerning revenues and operating earnings for each segment, is incorporated
herein by reference to pages A-1 through A-15 of Appendix A to the Cooper Proxy
Statement for the 1999 Annual Meeting of Shareholders.

                               Electrical Products

     The Electrical Products segment manufactures, markets and sells electrical
and circuit protection products, including fittings, enclosures, plugs,
receptacles, lighting fixtures, fuses, emergency lighting, fire detection
systems and security products for use in residential, commercial and industrial
construction, maintenance and repair applications. The segment also
manufactures, markets and sells products for use by utilities and in industry
for electrical power transmission and distribution, including distribution
switchgear, transformers, transformer terminations and accessories, capacitors,
voltage regulators, surge arresters, pole line hardware and other related power
systems components.

     The principal raw material requirements include copper, tin, lead,
plastics, insulating materials, pig iron, aluminum ingots, steel, aluminum and
brass. These raw materials are available from and supplied by numerous sources
located in the United States and abroad.




                                      -5-
   7

     Demand for Electrical Products follows general economic conditions and is
generally sensitive to activity in the construction market, industrial
production levels and spending by utilities for replacements, expansions and
efficiency improvements. The segment's product lines are marketed directly to
original equipment manufacturers and utilities and to a variety of end users
through major distributor chains and thousands of independent distributors.

                                Tools & Hardware

     The Tools & Hardware segment manufactures, markets and sells hand tools and
chain and clamp products for industrial, construction and consumer markets; and
air-powered and electric tools for general industry, primarily automotive and
aerospace manufacturers.

     The principal raw material requirements include rolled coiled steel, wood,
plastic pellets, flat and bar stock steel, brass, copper, tin plate, fiberglass,
aluminum, iron castings and plastic sheet. These materials are available from
and supplied by numerous sources in the United States and abroad.

     Demand for nonpowered hand tools, chain and clamp products and industrial
power tools is driven by employment levels and industrial activity in major
industrial countries and by consumer spending. In addition, demand for
industrial power tools is influenced by automotive and aerospace production. The
segment's products are sold by a company salesforce, independent distributors
and retailers.







                                      -6-
   8

              Products, Markets and Distribution Methods by Segment
 


                              ELECTRICAL PRODUCTS
                           MAJOR PRODUCTS AND BRANDS*
                           -------------------------

ARKTITE plugs and receptacles.
ARROW HART wiring devices.
ATLITE indoor commercial lighting.  
BLESSING, CSA, PRETRONICA and UNIVEL emergency lighting and power systems.
BUSS electrical and electronic fuses.
CAM-LOK electrical connectors.
CEAG emergency lighting systems.
CHAMP and HAZARD-GARD HID and flourescent lighting.
COILTRONICS inductors and transformers.
CONDULET fittings and outlet bodies.
COOPER POWER SYSTEMS distribution transformers, power capacitors, voltage
regulators, surge arresters and pole line hardware and SCADA master stations.
CROUSE-HINDS and CEAG electrical construction materials and CROUSE-HINDS
aviation lighting products. 
EDISON and EDISON PRO relays. 
ELETROMEC DIN style fuses. 
FAIL-SAFE high abuse, clean room and vandal-resistant lighting fixtures.
FULLEON, NUGELEC and TRANSMOULD fire detection systems. 
HALO recessed and track lighting fixtures. 
HOMELUX consumer fluorescent lighting. 
IRIS lighting systems.
KARP, EDISON, MERCURY and B&S electrical fuses. 
KEARNEY fuses, connectors, tools and switches. 
KYLE distribution switchgear. 
LUMIERE specification grade landscape lighting. 
LUMINOX and MENVIER emergency lighting and fire detection systems. 
MAGNUM terminal strips and disconnect blocks. 
MCGRAW-EDISON and LUMARK indoor and outdoor lighting. 
METALUX fluorescent lighting. 
MOLDED PRODUCTS connectors and systems. 
MWS modular wiring systems. 
MYERS electrical hubs. 
NOVA reclosers, sectionalizers and switches. 
PORTFOLIO architectural recessed lighting. 
MCGRAW-EDISON and RTE transformer components, cable accessories and fuses. 
SCANTRONIC and MENVIER security systems. 
SURE-LITES and ATLITE exit and emergency lighting. 
SURGX ESD protection devices. 
THEPITT electrical outlet and switch boxes. 
TRANSX transient voltage protection devices. 
WESTERN POWER fiberglass.




                                TOOLS & HARDWARE
                           MAJOR PRODUCTS AND BRANDS*
                           -------------------------   

AIRETOOL, ASSEMBLY SYSTEMS, BUCKEYE, CLECO, COOPER 
AUTOMATION, DGD, DOLER, DOTCO, GARDNER-DENVER,
GARDOTRANS, KOTTHAUS + BUSCH, QUACKENBUSH, ROTOR
TOOL and RECOULES industrial power tools and assembly equipment.
APEX and GETA screwdriver bits, impact sockets and universal joints.
CAMPBELL chain products.
CRESCENT pliers and wrenches.
DIAMOND farrier tools and horseshoes.
EREM precision cutters and tweezers.
LUFKIN measuring tapes.
MASTER POWER industrial air tools.
METRONIX servos and drive controls.
NICHOLSON files and saws.
PLUMB hammers.
STUHR finishing tools.
UTICA torque measuring and controls.
WELLER soldering equipment.
WIRE WRAP solderless connection equipment.
WISS and H.K. PORTER cutting products.
XCELITE screwdrivers and nutdrivers.

* Brand names, which appear in bold type, are registered trademarks of Cooper
Industries, Inc. or its subsidiaries, except Assembly Systems, AtLite, Blessing,
B&S, Condulet, Cooper Automation, CSA, Eletromec, Fail-Safe, Fulleon,
Gardotrans, Geta, Iris, Karp, Kearney, Kotthaus + Busch, Lumiere, Luminox,
Menvier, Mercury, Metronix, Molded Products, MWS, Myers, NOVA, Nugelec,
Portfolio, Pretronica, Quackenbush, Recoules, SCADA, Scantronic, Stuhr, Thepitt,
Transmould, TransX, Univel and Western Power, which are unregistered trademarks.
Gardner-Denver and SurgX are registered trademarks of Gardner Denver Machinery
Inc. and SurgX Corporation, respectively, and are used by Cooper Industries
under license.


                                      -7-
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         Products, Markets and Distribution Methods by Segment (Cont'd.)


                               ELECTRICAL PRODUCTS

MAJOR MARKETS