<PAGE>   1
                                   FORM 10-Q

                       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 September 30, 1997

                                       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)

<TABLE>
<S>                                                    <C>
                  Ohio                                    31-4156620
------------------------------------------------------------------------------
      (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization)                  Identification No.)

      600 Travis, Suite 5800                           Houston, Texas   77002
------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)
</TABLE>

                                 (713) 209-8400
______________________________________________________________________________
              (Registrant's telephone number, including area code)

______________________________________________________________________________
  (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 October 31, 1997
was 121,003,527.
<PAGE>   2
                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                            COOPER INDUSTRIES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                       Three Months Ended                 Nine Months Ended
                                                          September 30,                     September 30,
                                                   ---------------------------        ----------------------------
                                                      1997             1996              1997              1996
                                                   ----------       ----------        ----------        ----------
                                                                (in millions, except per share data)
<S>                                                <C>              <C>               <C>               <C>

REVENUES  . . . . . . . . . . . . . . . . . . .    $ 1,296.9        $ 1,308.1         $ 4,000.7         $ 3,951.2

Cost of sales . . . . . . . . . . . . . . . . .        883.1            889.8           2,727.2           2,706.2

Selling and administrative expenses . . . . . .        222.5            235.5             702.1             701.9

Goodwill amortization . . . . . . . . . . . . .         16.3             16.4              48.4              49.0

Nonrecurring gains  . . . . . . . . . . . . . .        (23.2)          (107.2)            (93.0)           (127.6)

Nonrecurring charges  . . . . . . . . . . . . .         13.4             85.3              83.9             104.5

Other (income) expense, net . . . . . . . . . .          -               (0.5)              0.9              (1.3)

Interest expense  . . . . . . . . . . . . . . .         19.4             35.4              70.3             109.8
                                                   ---------        ---------         ---------         ---------
   Income before income taxes . . . . . . . . .        165.4            153.4             460.9             408.7

Income taxes  . . . . . . . . . . . . . . . . .         62.9             76.1             175.2             181.0
                                                   ---------        ---------         ---------         ---------
   NET INCOME . . . . . . . . . . . . . . . . .    $   102.5        $    77.3         $   285.7         $   227.7
                                                   =========        =========         =========         =========

INCOME PER COMMON SHARE:

   Primary . .. . . . . . . . . . . . . . . . .    $     .84        $     .72         $    2.43         $    2.12
                                                                                                            
   Fully Diluted . . . .. . . . . . . . . . . .    $     .84        $     .68         $    2.36         $    2.00

CASH DIVIDENDS PER COMMON SHARE . . . . . . . .    $     .33        $     .33         $     .99         $     .99
                                                                                                              
</TABLE>





The accompanying notes are an integral part of these statements.





                                     - 2 -
<PAGE>   3
                            COOPER INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                September 30,      December 31,
                                                                                    1997              1996          
                                                                                 -----------       ------------
                                  ASSETS                                               (in millions)
<S>                                                                              <C>                <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .        $    14.7          $    16.1
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            988.2              959.4
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            935.8              971.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            137.2              151.5
                                                                               -------------       ------------
         Total current assets . . . . . . . . . . . . . . . . . . . . . .          2,075.9            2,098.1
                                                                               -------------       ------------
Property, plant and equipment, less accumulated depreciation. . . . . . .          1,147.0            1,241.3
Intangibles, less accumulated amortization  . . . . . . . . . . . . . . .          2,160.0            2,154.9
Investments in marketable equity securities . . . . . . . . . . . . . . .            367.5              367.1
Deferred income taxes and other assets  . . . . . . . . . . . . . . . . .             64.3               89.0
                                                                               -------------       ------------
         Total assets . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 5,814.7          $ 5,950.4
                                                                               =============       ============

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   111.0          $    98.2
Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . .            469.5              586.2
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .            599.6              581.8
Accrued income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .             57.1               37.3
Current maturities of long-term debt  . . . . . . . . . . . . . . . . . .             84.1               77.8
                                                                               -------------       ------------
         Total current liabilities  . . . . . . . . . . . . . . . . . . .          1,321.3            1,381.3
                                                                               -------------       ------------
Long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,098.5            1,737.7
Postretirement benefits other than pensions . . . . . . . . . . . . . . .            560.6              606.4
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . .            310.6              334.8
                                                                               -------------       ------------
         Total liabilities  . . . . . . . . . . . . . . . . . . . . . . .          3,291.0            4,060.2
                                                                               -------------       ------------

Common stock, $5.00 par value . . . . . . . . . . . . . . . . . . . . . .            615.0              540.2
Capital in excess of par value  . . . . . . . . . . . . . . . . . . . . .            680.2              150.1
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,444.9            1,275.3
Unearned employee stock ownership plan compensation . . . . . . . . . . .            (72.6)             (92.9)
Common stock held in treasury, at cost  . . . . . . . . . . . . . . . . .           (106.3)               -
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (37.5)              17.5
                                                                               -------------       ------------
         Total shareholders' equity . . . . . . . . . . . . . . . . . . .          2,523.7            1,890.2
                                                                               -------------       ------------
         Total liabilities and shareholders' equity . . . . . . . . . . .        $ 5,814.7          $ 5,950.4
                                                                               =============       ============
</TABLE>





The accompanying notes are an integral part of these statements.

                                     - 3 -
<PAGE>   4
                            COOPER INDUSTRIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                           September 30,
                                                                                     --------------------------
                                                                                        1997           1996
                                                                                     -----------    -----------
                                                                                          (in millions)
<S>                                                                                  <C>            <C>
Cash flows from operating activities:
   Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $  285.7       $   227.7
Adjustments to reconcile to net cash provided by operating activities:
   Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . .         165.7           177.4
   Deferred income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . .          (4.9)           15.8
   Gain on sales of marketable equity securities  . . . . . . . . . . . . . . .           -            (127.6)
   Gain on the sale of Kirsch . . . . . . . . . . . . . . . . . . . . . . . . .         (69.8)            -
   Gain on exchange of DECS . . . . . . . . . . . . . . . . . . . . . . . . . .         (23.2)            -
   Nonrecurring asset write-down  . . . . . . . . . . . . . . . . . . . . . . .          54.8            85.3
   Changes in assets and liabilities: (1)
        Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (73.5)          (21.4)
        Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (33.6)           (9.3)
        Accounts payable and accrued liabilities  . . . . . . . . . . . . . . .         (28.1)          (67.4)
        Accrued income taxes  . . . . . . . . . . . . . . . . . . . . . . . . .          23.1            43.0
        Other assets and liabilities, net . . . . . . . . . . . . . . . . . . .          (1.1)           25.2
                                                                                     -----------    -----------
                 Net cash provided by operating activities  . . . . . . . . . .         295.1           348.7
                                                                                     -----------    -----------
Cash flows from investing activities:
   Cash paid for acquired businesses  . . . . . . . . . . . . . . . . . . . . .        (152.9)         (235.8)
   Proceeds from the disposition of businesses  . . . . . . . . . . . . . . . .         216.0             -
   Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (141.9)         (139.8)
   Proceeds from sales of marketable equity securities  . . . . . . . . . . . .           -             204.0
   Proceeds from sales of property, plant and equipment . . . . . . . . . . . .           6.2            20.4
   Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           -               2.2
                                                                                     -----------    -----------
                 Net cash used in investing activities  . . . . . . . . . . . .         (72.6)         (149.0)
                                                                                     -----------    -----------
Cash flows from financing activities:
   Proceeds from issuances of debt  . . . . . . . . . . . . . . . . . . . . . .         287.2           314.1
   Repayments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (263.6)         (415.2)
   Dividends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (117.7)         (106.9)
   Acquisition of treasury stock  . . . . . . . . . . . . . . . . . . . . . . .        (141.4)            -
   Debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           -              (0.8)
   Activity under employee stock plans and other  . . . . . . . . . . . . . . .          13.1             1.8
                                                                                     -----------    -----------
                 Net cash used in financing activities  . . . . . . . . . . . .        (222.4)         (207.0)
                                                                                     -----------    -----------
Effect of exchange rate changes on cash and cash equivalents  . . . . . . . . .          (1.5)           (0.6)
                                                                                     -----------    -----------
Decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .          (1.4)           (7.9)
Cash and cash equivalents, beginning of period  . . . . . . . . . . . . . . . .          16.1            17.7
                                                                                     -----------    -----------
Cash and cash equivalents, end of period  . . . . . . . . . . . . . . . . . . .      $   14.7       $     9.8
                                                                                     ===========    ===========
</TABLE>

   (1)   Net of the effects of acquisitions, divestitures and translation.


The accompanying notes are an integral part of these statements.

                                     - 4 -
<PAGE>   5
                            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
the audited financial statements of the Company, 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
the Company's accounting policies, refer to the Consolidated Financial
Statements and related notes for the year ended December 31, 1996 included as
Appendix A to the Company's Proxy Statement dated March 12, 1997.

         Derivative Financial Instruments -  The Company enters into two types
of derivative financial instruments: foreign exchange forward contracts and
commodity contracts.  All contracts are hedges of actual or anticipated
transactions with the gain or loss on the contract recognized in the same
period and in the same category of income or expense as the underlying hedged
transaction.  The Company does not enter into speculative derivative
transactions or hedges of anticipated transactions  unless there is a high
probability the transactions will occur.  In December 1995 the Company hedged
its investment in marketable equity securities of Wyman-Gordon Company (See
Note 5 of Notes to Consolidated Financial Statements).

NOTE 2.  STATEMENTS OF OPERATIONS RECLASSIFICATIONS

         The September 30, 1996 consolidated statements of income have been
reclassified to (i) conform the classification of amounts billed to customers
and refunded upon the return of a rebuildable part; (ii) include depreciation
expense in its natural expense categories of cost of sales and selling and
administrative expenses; and (iii) reflect goodwill amortization, nonrecurring
charges and other income and expense as separate line items.  The
reclassifications resulted in a decrease in revenue in Cooper's Automotive
Products segment for amounts billed to customers and refunded when the customer
returns a rebuildable part.  Previously, several businesses of Cooper presented
these billings and refunds in various manners.  The conforming of the
classification of these billings and refunds and the other reclassifications
had no effect on segment operating earnings or net income.  The new statement
of income presentation is more consistent with the presentation of other
companies in similar lines of business.

NOTE 3.  NONRECURRING INCOME AND EXPENSES

         On May 30, 1997 the Company completed the sale of the Kirsch window
treatment division.  The sale resulted in a gain before income taxes of $69.8
million ($43.3 million after income taxes) in the second quarter of 1997.
During the third quarter, the Company exchanged a portion of its DECS(SM) (Debt
Exchangeable for Common Stock) for Wyman-Gordon Company ("Wyman-Gordon") common
stock and realized a gain of $23.2 million ($14.4 million after income taxes).
During the second quarter of 1997 the Company incurred charges of $70.5 million
($43.7 million after income taxes) for actions management committed to during
the period after concluding an evaluation of (i) geographic manufacturing
distribution and certain product lines within the Tools & Hardware and



                                     - 5 -
<PAGE>   6
Automotive Products segments and (ii) information systems relating to year 2000
compliance.  The second quarter 1997 charges include adjustments to the
carrying value of assets of $54.9 million and accruals for continuing
obligations for replaced systems and facility consolidations of $15.6 million.
The second quarter charges decreased operating earnings of the Electrical
Products segment by $15.9 million, Tools & Hardware segment by $18.7 million,
and the Automotive Products segment by $33.8 million and increased general
corporate expenses by $2.1 million. In the third quarter, the Company recorded
a charge of $13.4 million ($8.3 million after income taxes) primarily related
to severance obligations for facility consolidations committed to in the second
quarter of 1997 and announced in the third quarter of 1997 and incentive
payments and obligations committed to by management related to information
systems.  The third quarter charge decreased operating earnings of the Tools &
Hardware segment by $3.8 million and the Automotive Products segment by $9.6
million.

         The Company has begun a consolidation of international manufacturing
and distribution in the Tools & Hardware segment and the consolidation of
international sales and distribution in the Automotive Products segment.
Adjustments to the carrying value of assets and accruals, detailed above, were
recorded for projects committed to by management.  Severance and certain other
costs related to projects committed to by management are not expensed until the
affected employees are notified.  A majority of such costs have been accrued
with the third quarter 1997 facility consolidation announcements.  The
remaining committed but unannounced consolidations are not anticipated to
result in significant additional expenses.  No significant additional
consolidations are presently being considered.

         The Company anticipates that accruals for announced consolidations
will be expended during the remainder of 1997 and the majority of the accruals
for continuing obligations for replaced systems and facility consolidations
will be expended in 1998 and 1999.  As a result, cash expenditures will be
relatively uniform over the next two years and will not have a significant
impact on cash flows in any period.

         During the second quarter, the Company began negotiations with
Standard Motor Products to exchange its temperature control business for the
brake products business owned by Standard Motor Products and executed a letter
of intent in July 1997.  The second quarter charge against the Automotive
Products segment includes adjustments to the carrying value of assets related
to remanufacturing businesses, including a portion of the temperature control
business, which are in the process of being divested.  The Company is currently
in the process of responding to a second request from the Department of Justice
relating to this transaction.

         The Company, during the second quarter of 1997, also completed its
initial analysis of the impact of existing system capabilities to function at
the turn of the century.  Four of the Company's eight divisions are
implementing new enterprise systems with the remaining four divisions revising
or replacing existing software.  Accordingly, the Company recorded a $38.9
million charge in the second quarter primarily related to the adjustment in the
carrying value of existing hardware and software which will be abandoned when
the enterprise systems are implemented or replaced as the other systems are
upgraded to be year 2000 compliant.  An additional $4.8 million charge in the
third quarter related to redundant costs and incentives paid or committed to
for new systems. While depreciation and amortization will be reduced as
existing hardware and software is abandoned or replaced, depreciation and
amortization of new systems and equipment, as well as expenses related to
revising current software to be year 2000 compliant and implementation of new
systems, are likely to exceed the reduction in depreciation and amortization in
most future periods.  Based on the current assessment and decisions to replace
systems, the Company does not anticipate that expenditures



                                     - 6 -
<PAGE>   7
related to revising current software to be year 2000 compliant will exceed $2
million in any quarterly period through the anticipated completion date in
early 1999.

NOTE 4.  INVENTORIES
<TABLE>
<CAPTION>
                                                                                 September 30,      December 31,
                                                                                    1997               1996
                                                                                 -------------      ------------
                                                                                         (in millions)
<S>                                                                              <C>                <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   282.9          $   302.9
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            190.8              205.2
Finished goods  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            530.6              513.8
Perishable tooling and supplies . . . . . . . . . . . . . . . . . . . . .             54.0               54.2
                                                                                 -------------      ------------
                                                                                   1,058.3            1,076.1
Less allowances (primarily LIFO reserves) . . . . . . . . . . . . . . . .           (122.5)            (105.0)
                                                                                 -------------      ------------
         Net inventories                                                         $   935.8          $   971.1
                                                                                 =============      ============
</TABLE>


NOTE 5.  LONG-TERM DEBT

         At September 30, 1997, $150.0  million of commercial paper and bank
loans was reclassified to long-term debt, reflecting the Company'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
revolving bank credit facilities.

         In December 1995, the Company issued DECS(SM) which, at maturity, are
mandatorily exchangeable into shares of Wyman-Gordon common stock or, at the
Company's option, into cash in lieu of shares.  The DECS are a hedge of the
Company's investment in Wyman-Gordon common stock and upon issuance locked in a
minimum after-tax gain of $100.6 million.  This unrealized gain, plus any net
appreciation of the investment in Wyman-Gordon common stock offset by the
appreciation attributable to the DECS since the issuance of the DECS, is
included in shareholders' equity as an unrealized gain on investments in
marketable equity securities, net of tax.   During the quarter ended September
30, 1997, the Company exchanged a portion of the DECS and recognized 15% of the
locked-in after-tax gain (See Note 3 of Notes to Consolidated Financial
Statements).  Long-term debt included an increase of $0.3 million at September
30, 1997 as compared to December 31, 1996, reflecting the increase in the
market value of the Wyman-Gordon common stock exchangeable into the DECS, net
of the exchange of a portion of the DECS during the nine months ended September
30, 1997.

         During the first half of 1997, the Company completed calls on its
7.05% Convertible Subordinated Debentures.  Of the $690 million in debentures,
a total of $610 million was converted to approximately 14.8 million shares of
Cooper Common stock and approximately $80 million was redeemed for cash.


                                     - 7 -
<PAGE>   8
NOTE 6.  COMMON AND PREFERRED STOCK

         Under a Shareholder Rights Plan adopted by the Board of Directors in
1997, share purchase Rights were declared as a dividend at the rate of one
Right for each share of Common stock.  Each Right entitles the holder to buy
one one-hundredth of a share of Series A Participating Preferred stock at a
purchase price of $225 per one one-hundredth of a share, or in certain
circumstances Common stock having a value of twice the purchase price, and
becomes exercisable only in certain circumstances constituting a potential
change of control on a basis considered inadequate by the Board of Directors.
The Rights expire August 5, 2007 and, at Cooper's option, may be redeemed prior
to expiration for $.01 per Right.

         During the first nine months of 1997, the Company repurchased
approximately 2.8 million shares of its common stock at a cost of $145.2
million.  The Company reissued .7 million of such shares primarily in
connection with its Employee Stock Purchase Plan and the exercise of employee
stock options.

NOTE 7.  NET INCOME PER COMMON SHARE

         Primary and fully diluted net income per Common share is computed
based on the following information:


<TABLE>
<CAPTION>
                                                          Three Months Ended            Nine Months Ended
                                                             September 30,                 September 30,
                                                        -----------------------        ----------------------
                                                          1997           1996            1997         1996
                                                        --------     ----------        --------     ---------
PRIMARY:                                                                   (in millions)
<S>                                                     <C>            <C >            <C>            <C>
Net income  . . . . . . . . . . . . . . . . . . . .     $ 102.5        $  77.3         $ 285.7        $ 227.7
                                                        ========     ==========        ========     =========
Average Common shares and
   Common share equivalents . . . . . . . . . . . .       122.1          107.6           117.4          107.5
                                                        ========     ==========        ========     =========
FULLY DILUTED:
Net income  . . . . . . . . . . . . . . . . . . . .     $ 102.5        $  77.3         $ 285.7        $ 227.7

Interest expense related to the 7.05%
   Convertible Subordinated Debentures,
   net of tax . . . . . . . . . . . . . . . . . . .         -              7.3             5.8           21.9
                                                        --------     ----------        --------     ---------
Net income applicable to Common stock . . . . . . .     $ 102.5        $  84.6         $ 291.5        $ 249.6
                                                        ========     ==========        ========     =========
Average Common shares and
   Common share equivalents . . . . . . . . . . . .       122.1          107.9           117.6          107.8

Additional shares assuming conversion of
   the 7.05% Convertible Subordinated
   Debentures . . . . . . . . . . . . . . . . . . .         -             16.7             5.7           16.7
                                                        --------     ----------        --------     ---------
Average Common shares and
   Common share equivalents . . . . . . . . . . . .       122.1          124.6           123.3          124.5
                                                        ========     ==========        ========     =========

</TABLE>

                                     - 8 -
<PAGE>   9
NOTE 8.  INDUSTRY SEGMENT REVENUES

<TABLE>
<CAPTION>
                                                          Three Months Ended              Nine Months Ended
                                                            September 30,                   September 30,
                                                      --------------------------      -------------------------
                                                         1997            1996            1997           1996
                                                      ----------      ----------      ----------     ----------
                                                                            (in millions)
<S>                                                   <C>             <C>             <C>            <C>
Electrical Products . . . . . . . . . . . . . . .        $646.4       $   613.2       $ 1,919.8      $ 1,799.0
Tools & Hardware  . . . . . . . . . . . . . . . .         183.9           176.5           559.7          532.0
Automotive Products . . . . . . . . . . . . . . .         466.6           457.7         1,423.8        1,433.6
                                                      ----------      ----------      ----------     ----------
         Subtotal                                       1,296.9         1,247.4         3,903.3        3,764.6
Kirsch                                                      -              60.7            97.4          186.6
                                                      ----------      ----------      ----------     ----------
         Total                                        $ 1,296.9       $ 1,308.1       $ 4,000.7      $ 3,951.2
                                                      ==========      ==========      ==========     ==========
</TABLE>

NOTE 9.  INCOME TAXES

         See Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.


NOTE 10.     SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES

         The following noncash transactions have been excluded from the
consolidated statements of cash flows:

<TABLE>
<CAPTION>
                                                                                      Nine Months Ended
                                                                                        September 30,
                                                                                   ---------------------------
                                                                                     1997             1996
                                                                                   ----------       ----------
                                                                                        (in millions)
<S>                                                                                <C>              <C>
Assets acquired and liabilities assumed or incurred from the
    acquisition of businesses:
       Fair value of assets acquired  . . . . . . . . . . . . . . . . . . . .      $   165.2        $    96.2
       Cash used to acquire businesses (1)  . . . . . . . . . . . . . . . . .         (152.9)           (72.2)
                                                                                   ----------       ----------
         Liabilities assumed or incurred  . . . . . . . . . . . . . . . . . .      $    12.3        $    24.0
                                                                                   ==========       ==========

Conversion of 7.05% Convertible Subordinated Debentures
    for Cooper Common stock . . . . . . . . . . . . . . . . . . . . . . . . .      $   610.0              -

Exchange of DECS for Wyman-Gordon common stock  . . . . . . . . . . . . . . .      $    33.8              -

</TABLE>


    (1)  An additional $163.6 million was paid during the first quarter of 1996
         for the December 31, 1995 acquisition of CEAG.


                                     - 9 -
<PAGE>   10
NOTE 11.     RECENTLY ISSUED ACCOUNTING STANDARDS

         In February 1997 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share.   This
statement is effective for financial statements issued for periods ending after
December 15, 1997, does not permit earlier application and requires all prior
period earnings per share to be restated to conform to a new computational
method.  The Company does not anticipate that the implementation of this new
standard will impact earnings per share by more than 3% on an annual basis.


                                     - 10 -
<PAGE>   11
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1996

         Net income for the third quarter of 1997 increased 33% to $102.5
million on revenues of $1.30 billion compared with 1996 net income of $77.3
million on revenues of $1.31 billion.  Third quarter fully diluted share
earnings increased 24% to $.84 from $.68 in 1996.   Net income for the third
quarter of this year reflects (1) the benefit of a lower effective income tax
rate (See Income Taxes); (2) the redemption and conversion of the Company's
7.05% Convertible Subordinated Debentures in the first half of 1997; (3) the
purchase of approximately 2.8 million shares of the Company's outstanding
Common Stock during the second and third quarters of 1997; (4) nonrecurring
gains, net of nonrecurring charges, of $6.1 million (See Note 3 of Notes to
Consolidated Financial Statements); and (5) the absence of the Kirsch business
in the 1997 quarter.  The absence of Kirsch operations, net of the effect of
lower interest expense resulting from repaying debt with the net proceeds from
the sale, reduced earnings per share for the third quarter of 1997 by
approximately $.02. The impact of the other items referred to above increased
earnings per share for the third quarter by approximately $.10 ($.05 per share
related to net nonrecurring items) over the comparable amount in the prior
year.

REVENUES:

         Revenues for the third quarter of 1997 decreased 1% (increased 4%
excluding Kirsch revenues in 1996) compared to the third quarter of 1996.
After excluding the effects of acquisitions and the Kirsch divestiture,
revenues increased 2% compared to the third quarter of last year.  Overall, the
Company estimates that the strengthening of the U.S. dollar against most
European currencies decreased reported revenues by approximately 1% compared to
the third quarter of 1996.

         Revenues in the Electrical Products segment increased 5% from the
third quarter of 1996.  Excluding acquisitions, revenues were 3% ahead of the
third quarter of 1996.  Domestic revenues increased with the strongest growth
in sales of power equipment and circuit protection products. Revenues from
operations in Latin America also continued to contribute positively to the
revenue growth.  These gains were offset somewhat in Europe by the strength of
the U.S. dollar against the local currencies, which reduced revenues measured
in U.S. dollars, and the absence of major project shipments made in the prior
year.

         Tools & Hardware segment revenues, excluding Kirsch, increased 4%
compared to the third quarter of 1996.  Adjusted for recent acquisitions,
revenues were 3% above last year.  Domestically, sales increased due to
continuing demand for aircraft and automotive assembly equipment and tools.
Providing a partial offset was slowing demand for hand tools in the U.S. and
European industrial markets and the strength of the U.S. dollar against most
European currencies.

         Revenues in the Automotive Products segment rose 2% from the prior
year period.  A recent acquisition had a negligible impact on the year-to-year
increase in revenues.  Revenues for the segment were affected by a moderately
improved domestic aftermarket.  Latin American demand continued to improve.
Weak European aftermarket demand partially offset this increase.


                                     - 11 -
<PAGE>   12
INCOME BEFORE INCOME TAXES:

         Income before income taxes increased 8% to $165.4 million for the third
quarter of 1997, compared to $153.4 million for the same period of 1996. Income
before income taxes was impacted by nonrecurring gains and charges in the third
quarter of 1997 and 1996. Nonrecurring gains included a $23.2 million gain on
the exchange of the DECS(SM) in 1997 and a $107.2 million gain in 1996 on the
sale of marketable equity securities.  Nonrecurring charges for the 1997 third
quarter are discussed in Note 3 of Notes to Consolidated Financial Statements.
Nonrecurring charges for the third quarter of 1996 included an $85.3 million
write-down of the long-lived assets of the Company's automotive brake business.
Cost of sales, as a percentage of revenues, increased slightly due to the
absence of Kirsch in 1997 third quarter results.  Effective leveraging of period
costs, plus the absence of Kirsch resulted in a significant decline in selling
and administrative expenses as a percentage of revenues in the third quarter of
1997 compared to the third quarter of 1996. The Kirsch business had a lower cost
of sales and higher selling and administrative expenses.  Excluding Kirsch from
1996 results for the quarter would have increased cost of sales .1 point and
decreased selling and administrative expenses .3 points from the reported
amounts.  The remaining decrease in selling and administrative expenses as a
percentage of sales was across most businesses.  Interest expense declined $16.0
million from the same period of last year due to lower interest rates, lower
debt levels and the conversion of $610 million of the Company's 7.05%
Convertible Subordinated Debentures to Cooper Common Stock.

         Operating earnings of the Electrical Products segment reflect a
significant increase over the third quarter of 1996 both before and after the
impact of recent acquisitions.  The increase in earnings was the result of the
increase in revenues and improved operating margins across most businesses.

         Excluding nonrecurring charges and Kirsch, the Tools & Hardware
segment's operating earnings improved significantly compared to the same period
last year.  Volume increases and several cost improvement actions, including
the 1996 upgrade of the hand tools distribution center and consolidation of
forged tool production more than offset the impact of a stronger U.S. dollar on
European sales and operating earnings.

         Excluding nonrecurring charges, operating earnings of the Automotive
Products segment increased compared to the same period last year at a greater
rate than the increase in revenues.  A weak European aftermarket was offset by
improved domestic and Latin American aftermarket demand.

INCOME TAXES:

         The effective tax rate for the third quarter was 38.0%, compared to
49.6% for the same period of 1996.  The 1996 rate was abnormally high due to
the third quarter asset write-down which included a write-off of nondeductible
goodwill.  Excluding the gain on marketable equity securities and the
nonrecurring asset write-down, the 1996 third quarter effective tax rate was
41.2%. The rate reduction from 41.2% to 38.0% stems from the Company's tax
planning efforts, including changing its international tax structure,
maximizing tax incentives for exports and increasing research and development
tax credits.  In addition, as earnings have increased, nondeductible goodwill
has less of an impact on the effective tax rate.


                                     - 12 -
<PAGE>   13
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1996

         Net income for the first nine months of 1997 increased 25% to $285.7
million on revenues of $4.00 billion compared with 1996 net income of $227.7
million on revenues of $3.95 billion.  Fully diluted share earnings increased
18% to $2.36 from $2.00 in 1996.  Net income for the first nine months of this
year reflects (1) the benefit of a lower effective income tax rate (See Income
Taxes); (2) the redemption and conversion of the Company's 7.05% Convertible
Subordinated Debentures in the first half of 1997; (3) the purchase of
approximately 2.8 million shares of the Company's outstanding Common Stock in
the second and third quarters of 1997; (4) nonrecurring gains, net of
nonrecurring charges, of $5.6 million in 1997 (See Note 3 of Notes to
Consolidated Financial Statements); and (5) the absence of the Kirsch business
for four months in the nine months ended September 30, 1997.  The absence of
Kirsch operations, net of the effect of lower interest expense resulting from
repaying debt with the net proceeds from the sale, reduced earnings per share
for the nine months ended September 30, 1997 by approximately $.02.  The impact
of other items referred to above increased earnings per share by approximately
$.17 ($.05 per share for net nonrecurring items).

REVENUES:

         Revenues for the first nine months of 1997 increased 1% (4% excluding
Kirsch from both periods) compared to the first nine months of 1996.  After
excluding the effects of acquisitions and the Kirsch divestiture, revenues
increased 2% compared to the first nine months of 1996.  Overall, the Company
estimates that the strengthening of the U.S. dollar against most European
currencies decreased reported revenues by approximately 1% compared to the
first nine months of 1996.

         Revenues for the Electrical Products segment were up 7% from the first
three quarters of 1996.  Excluding acquisitions, revenues increased 5%.  The
segment continued to benefit from the strong U.S. electrical, electronic and
telecommunications markets, market share improvement, a stable Mexican economy
and increased penetration into foreign markets.  These gains were tempered
somewhat by the strength of the U.S. dollar against local currencies in Europe,
which reduced revenues measured in U.S. dollars.

         Tools & Hardware segment revenues, excluding Kirsch, increased 5%
compared to the first nine months of 1996.  Adjusted for recent acquisitions,
revenues were 3% above last year.  Domestically, revenues were up due to
continued growth in demand for power tools and assembly equipment for the
automotive and aircraft assembly market.  The strengthening of the U.S. dollar
against local currencies in Europe and weak demand in the industrial tool
market partially offset these revenue increases.  The segment experienced
continued strong sales of assembly equipment and tools to European automotive
manufacturers.

         Revenues in the Automotive Products segment decreased 1% from the
prior year period.  The effects of recent acquisitions had a negligible impact
on revenues in the Automotive Products segment. Revenues for the segment were
affected by a slow domestic and European aftermarket.  In addition, sales of
weather-related products declined to more normal levels due to less severe
winter weather compared to the prior year.  Temperature control products
continued to experience severe competitive market conditions.  Strong worldwide
original equipment demand and increased revenues in Latin American markets
provided a partial offset.


                                     - 13 -
<PAGE>   14
INCOME BEFORE INCOME TAXES:

         Income before income taxes increased 13% to $460.9 million for the
first nine months of 1997, compared to $408.7 million for the same period of
1996.  Income before income taxes was impacted by nonrecurring gains and
charges for the nine month period ended September 30, 1997 and 1996.
Nonrecurring gains in 1997 included $69.8 million on the sale of the Kirsch
division and $23.2 million on the exchange of the DECS(SM).  Gains on the sale
of marketable equity securities made up the 1996 amount.  Nonrecurring charges
for 1997 are discussed in Note 3 of Notes to Consolidated Financial Statements.
Nonrecurring charges for 1996 include costs associated with plant
consolidations and product line rationalization, environmental expenses related
to divested businesses, and a write-down of the long-lived assets of the
Company's automotive brake business.  Cost of sales, as a percentage of
revenues, declined primarily due to product cost improvements and an overall
favorable mix of higher margin products.  The decline was partially offset by
the impact of Kirsch for five months in 1997 and nine months in 1996.  Selling
and administrative expenses decreased as a percentage of revenues in the first
nine months of 1997 compared to the first nine months of 1996 reflecting the
impact of programs to effectively leverage period costs.  The inclusion of
Kirsch for five months in 1997 and nine months in 1996 represented
approximately .1 point of the decline in selling and administrative expenses.
Interest expense declined $39.5 million from the same period of last year due
to lower interest rates, lower debt levels and the conversion during the period
of $610 million of the Company's 7.05% Convertible Subordinated Debentures to
Cooper Common Stock.

         Excluding nonrecurring charges, operating earnings of the Electrical
Products segment reflected a significant increase in year-to-year earnings over
the first nine months of 1996 both before and after acquisitions.  The
improvement resulted from increased revenues and improved operating margins
across most businesses.

         Excluding nonrecurring charges and Kirsch, the Tools & Hardware
segment's operating earnings improved compared to the same period last year
both before and after considering recent acquisitions.  Increased revenues and
cost improvement actions, including the 1996 upgrade of the hand tools
distribution center and consolidation of forged tool production, were primarily
responsible for the earnings improvement.

         Excluding nonrecurring charges, operating earnings of the Automotive
Products segment were down compared to the same period last year both before
and after considering acquisitions.  Lower demand for wiper blades, compared to
the abnormally high sales volume in the same period last year, and lower sales
of ignition, chassis and temperature control products in the aftermarket were
the primary drivers of the decrease in earnings.

INCOME TAXES:

         The effective tax rate for the first nine months was 38.0%, compared
to 44.3% for the same period of 1996.  The 1996 rate was abnormally high due to
the third quarter asset write-down which included the write-off of
nondeductible goodwill.  Excluding the impact of this write-down and the
nonrecurring gain on the sales of marketable equity securities, the effective
tax rate was 41.1% for the first nine months of 1996.  The rate reduction from
41.1% to 38.0% stems from the Company's tax planning efforts, including
changing its international tax structure, maximizing tax incentives for exports
and increasing research and development tax credits.  In addition, as earnings
have increased, nondeductible goodwill has less of an impact on the effective
tax rate.


                                     - 14 -
<PAGE>   15
LIQUIDITY AND CAPITAL RESOURCES:

         The Company's "operating working capital" (defined as receivables and
inventories less accounts payable) increased $110.2 million during the first
nine months of 1997 compared to an increase of $103.0 million in the first nine
months of 1996.  Operating working capital turnover improved to 3.8 turns from
3.6 turns for the first nine months of last year.

         Cash flows from operating activities in the first nine months of 1997
totalled $295 million as cash generated from earnings more than offset
increases in operating working capital.  These funds, along with $216 million
in proceeds from the sale of Kirsch and an increase in debt of $24 million,
were used to fund acquisitions of $153 million, capital expenditures of $142
million, dividends of $118 million and purchases of the Company's Common stock
of $141 million.  During the first nine months of 1996 cash flows from
operating activities totalled $349 million.  The cash flows from operating
activities plus proceeds from the sale of securities provided funding for
capital expenditures of $140 million, dividends of $107 million, acquisitions
totalling $236 million and debt reduction of $101 million during the first nine
months of 1996.

         In connection with acquisitions accounted for as purchases, the
Company records, to the extent appropriate, accruals for the costs of closing
duplicate facilities, severing redundant personnel and integrating the acquired
businesses into existing Company 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 for the nine months ended September 30, 1997 and September 30, 1996
was $5.9 million and $10.9 million, respectively.  There were no significant
additions to these accruals during the first nine months of 1997.

         During the first six months of 1997, the Company made three calls of
its 7.05% Convertible Subordinated Debentures.  The first call for $190 million
of debentures on January 22, 1997, resulted in $165.4 million being converted
into approximately 4 million shares of Cooper Common Stock, and $24.6 million
being redeemed for cash on February 21, 1997.  In addition, $6.6 million of
debentures were voluntarily converted to 162,000 shares of common stock during
the quarter.  The second call, on March 19, 1997, for $300 million of
outstanding debentures resulted in $250 million being converted into
approximately 6 million shares of Cooper Common Stock, and $50 million being
redeemed for cash on April 18, 1997.  On April 22, 1997, the Company called the
remaining $194 million of debentures, which resulted in $188 million being
converted into approximately 4.6 million shares of Cooper Common Stock, and $6
million being redeemed for cash on May 22, 1997.

         At September 30, 1997, the Company's debt-to-total capitalization
ratio was 33.9% compared to 52.6% at September 30, 1996.  Excluding the DECS,
which at maturity are mandatorily exchangeable into shares of Wyman-Gordon
common stock or, at the Company's option, into cash in lieu of shares, the
Company's debt-to-total capitalization ratio was 27.9% at September 30, 1997
compared to 48.3% at September 30, 1996.

         During the second and third quarters the Company purchased
approximately 2.8 million shares of its outstanding Common Stock for $145
million ($4 million payable in October 1997).  This action was taken as part of
the remaining $275 million Common Stock repurchase authorization program.

         The Company has targeted a 35% to 45% debt-to-capitalization ratio and
intends to utilize cash flows to maintain approximately a 35% ratio with excess
cash utilized to purchase shares of the Company's Common stock or to fund
acquisitions.


                                     - 15 -
<PAGE>   16
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:

<TABLE>
<CAPTION>
                                                                                          September 30,
                                                                                      1997            1996
                                                                                    ---------       ---------
                                                                                        (in millions)
<S>                                                                                 <C>             <C>
Electrical Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  273.7        $  238.3

Tools & Hardware (1)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         71.0            93.6

Automotive Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        115.1           113.6
                                                                                    ---------       ---------
                                                                                    $  459.8        $  445.5
                                                                                    =========       =========
</TABLE>
(1)      1996 includes Kirsch sales backlog of $7.9 million.


                                     - 16 -
<PAGE>   17
                          PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

            (a)    Exhibits

                   12.    Computation of Ratios of Earnings to Fixed Charges
                          for the Calendar Years 1996 through 1992 and the Nine
                          Months Ended September 30, 1997 and 1996.

                   27.    Financial Data Schedule.

            (b)    Reports on Form 8-K

                   The Company filed a report on Form 8-K dated July 24, 1997,
                   which included a copy of a press release containing the
                   Company's financial results for the three months ended June
                   30, 1997, and the business outlook for the remainder of
                   1997.

                   The Company filed a report on form 8-K dated August 5, 1997,
                   which included a description of the terms of the Rights
                   declared as a dividend on August 5, 1997 under the
                   Shareholders Rights Plan and a copy of the Rights Agreement
                   and Press Release announcing adoption of the Plan.


                                     - 17 -
<PAGE>   18
                                   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     November 11, 1997             /s/ D. Bradley McWilliams
 ---------------------------------      -----------------------------
                                        D. Bradley McWilliams
                                        Senior Vice President and
                                        Chief Financial Officer



 Date     November 11, 1997             /s/ Terry A. Klebe
 ---------------------------------      -----------------------------
                                        Terry A. Klebe
                                        Vice President and Controller
                                         and Chief Accounting Officer

                                     - 18 -
<PAGE>   19
                                 Exhibit Index


Exhibit No.

         12.       Computation of Ratios of Earnings to Fixed Charges for the
                   Calendar Years 1996 through 1992 and the Nine Months Ended
                   September 30, 1997 and 1996.

         27.       Financial Data Schedule.





                                     - 19 -