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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    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 1-31330
 Cooper Industries, Ltd.
  Bermuda
(State or Other Jurisdiction of
Incorporation or Organization)
    
    98-0355628
(I.R.S. Employer
Identification Number)600 Travis, Suite 5800, Houston, Texas
(Address of Principal Executive Offices)
    
    77002
(Zip Code)
 713/209-8400
 Securities registered pursuant to Section 12(b) of the Act:
 Name of Each ExchangeTitle of Each Class
    
    on Which RegisteredClass A Common Shares, $0.01 par value
    
    The New York Stock ExchangeRights to Purchase Preferred Shares
    
    The New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:
    
    None
 þ o
 o þ
 þ o
 þ
  þ o o
 o þ
  Number of registrants common shares outstanding as of January 31, 2006  91,808,297 publicly
traded Class A common shares, 10,050,101 Class A common shares held by the issuers subsidiaries,
and 54,810,129 Class B common shares held by the issuers subsidiaries.
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 Part I
    
    PageItem 1: Business
    
    2Item 1A: Risk Factors
    
    7Item 1B: Unresolved Staff Comments
    
    8Item 2: Properties
    
    8Item 3: Legal Proceedings
    
    10Item 4: Submission of Matters to a Vote of Security Holders
    
    12Part IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    12Item 6: Selected Financial Data
    
    14Item 7: Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    15Item 7A: Quantitative and Qualitative Disclosures about Market Risk
    
    31Item 8: Financial Statements and Supplementary Data
    
    31Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
    
    31Item 9A: Controls and Procedures
    
    31Item 9B: Other Information
    
    31Part IIIItem 10: Directors and Executive Officers of the Registrant
    
    32Item 11: Executive Compensation
    
    32Item 12: Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    32Item 13: Certain Relationships and Related Transactions
    
    32Item 14: Principal Accountant Fees and Services
    
    32Part IVItem 15: Exhibits and Financial Statement Schedules
    
    32Computation of Ratios of Earnings to Fixed ChargesList of SubsidiariesConsent of Ernst & Young LLPConsent of Bates White, LLCPowers of AttorneyCertification of CEO pursuant to Section 302Certification of CFO pursuant to Section 302Certification of CEO pursuant to Section 906Certification of CFO pursuant to Section 906




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PART I
 
 ITEM 1. BUSINESS
 GENERAL
      2




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www.cooperindustries.com
  Electrical Products
    3




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Tools
    4




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COOPER INDUSTRIES, LTD.
PRODUCTS, MARKETS AND DISTRIBUTION METHODS BY SEGMENT
 Electrical
Products Major Products and Brands
 Access
Cabinets, E2 Cabinets Enviroshield  Arktite eXLink  Ametrix Corelite Neo-Ray  Aspire Siena .
Aspire RF .
AtLite  B-Line  Blessing, CSA, Pretronica Univel  Bussmann Buss  Cam-Lok  Capri-Codec  CEAG  Cent-R-Rail Redi-Rail  Champ Hazard-Gard  Coiltronics  Combined Technologies  Condulet  Cooper Fire, Fulleon Nugelec  Cooper Power Systems  Cooper Wiring Devices  Crompton  Crouse-Hinds CEAG  Crouse-Hinds  CUBEFuse  DLS  Domex  Dura-Cooper Dura-Green  Edison Edison Pro  Edison Series Metering  Eletromec  Emerald  EMSA  EnKlosures  Envirotemp  EX-Cell NEXT  Fail-Safe  Farallon  Fusetron  Halo  Hart-Lock  INVUE  IriS  JSB, Luminox Menvier  Karp, Edison, Mercury B&S  Kearney  Kyle  Limitron  Little Brother  Low-Peak  Lumière  Magnum  McGraw-Edison Lumark  McGraw-Edison  MEDC  Media Sync  Metalux  Mobile X-Ray .
Mini-Line  MWS  Myers  Nortem  NOVA  Novitas  Optima  Portfolio  Posi-Break  Posi-Lok  Power-Lock  PowerPlus  PowerStor  RMC+  Regalsafe  Regent  Royer  Ruff-in  Scantronic Menvier  Shaper  Shock Sentry  SpecOne  Streetworks  Sure-Lites  SurgBloc  Thepitt  TransX  UltraSIL  VariGap VariStar  Willsher & Quick
 Tools  Major Products and Brands
 Airetool, Automated Systems, Cleco, DGD, Dotco,Gardner-
Denver*, Rotor Tool  Apex  Campbell  Crescent  Diamond  Erem  Kahnetics  Lufkin  Master Power  Metronix  Nicholson  Plumb  Utica  Weller  Wire-Wrap  Wiss H.K. Porter  Xcelite
 
 *
    
    Gardner-Denver is a registered trademark of Gardner Denver, Inc. and is used by Cooper
Industries under license. 5




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##### Table of Contents



COOPER INDUSTRIES, LTD.
PRODUCTS, MARKETS AND DISTRIBUTION METHODS BY SEGMENT   (Continued)
 ELECTRICAL PRODUCTS
 Major Markets
  Principal Distribution Methods
  TOOLS
 Major Markets
  Principal Distribution Methods
  6




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ITEM 1A. RISK FACTORS
  Our Businesses Are Subject to Competitive Pressures.
  Demand for Our Products Is Sensitive to the Economic Conditions in the Markets We Serve.
  Price Increases or Significant Shortages of Raw Materials and Components Could Adversely Affect Our
Operating Costs and the Competitive Position of Our Products.
  Operations and Supply Sources Located Outside the United States, Particularly Emerging Markets, Are
Subject to Increased Risks.
  7




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Our Key Strategic Initiatives Affect Our Ability to Grow Revenues, Control Costs and Improve
Productivity.
  We Engage in Acquisitions and May Encounter Difficulties in Integrating These Businesses.
  We Have Liability Exposure for Asbestos-Related Claims.
  We Could Incur a Material Amount of Taxes if There Are Unfavorable Changes in the Tax Laws or Their
Interpretation.
  Inability to Maintain Access to Capital Markets May Adversely Affect Our Business and Financial
Results.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  8




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##### Table of Contents



Square Footage ofNumber and Nature of Facilities
    
    Plants and FacilitiesNumber ofSegment
    
    Employees
    
    Manufacturing
    
    Warehouse
    
    Sales
    
    Other
    
    Owned
    
    LeasedElectrical Products
    
    
    23,500

    
    
    71

    
    
    49

    
    
    110

    
    
    17

    
    
    10,756,770

    
    
    2,989,426Tools
    
    
    5,132

    
    
    23
    
    
    
    11
    
    
    
    20
    
    
    
    2
    
    
    
    3,743,716
    
    
    
    416,206Other
    
    
    271

    
    
    0

    
    
    0

    
    
    0

    
    
    2

    
    
    0

    
    
    137,853Total
    
    
    28,903

    
    
    94

    
    
    60

    
    
    130

    
    
    21

    
    
    14,500,486

    
    
    3,543,485
 
 *
    
    Multi-purpose facilities at a single location are listed in each applicable column. Manufacturing Plant Locations
 EuropeUnited
    
    (Other
    
    United
    
    
    
    
    
    South
    
    
    
    
    
    
    
    
    
    
    
    
    
    RepublicSegment
    
    States
    
    Than UK)
    
    Kingdom
    
    Mexico
    
    America
    
    Australia
    
    Canada
    
    China
    
    of China
    
    India
    
    Korea
    
    MalaysiaElectrical Products
    
    
    32
    
    
    
    10
    
    
    
    9
    
    
    
    9
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Tools
    
    
    11
    
    
    
    7
    
    
    
    0
    
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    43
    
    
    
    17
    
    
    
    9
    
    
    
    11
    
    
    
    4
    
    
    
    2
    
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1
 
 *
    
    Does not include joint venture operations. 9




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ITEM 3. LEGAL PROCEEDINGS
      10




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11




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  12




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##### Table of Contents



Quarter1
    
    2
    
    3
    
    42005
    
    
    High
    
    $
    72.65
    
    
    $
    72.28
    
    
    $
    69.77
    
    
    $
    75.75Low
    
    
    64.12
    
    
    
    62.10
    
    
    
    62.08
    
    
    
    66.052004
    
    
    High
    
    $
    58.68
    
    
    $
    59.41
    
    
    $
    59.74
    
    
    $
    68.44Low
    
    
    51.34
    
    
    
    52.09
    
    
    
    53.90
    
    
    
    59.12
   Purchases of Equity Securities
 Total Number of Shares
    
    Maximum Number ofTotal Number of
    
    
    
    
    
    Purchased as Part of
    
    Shares that May Yet BeShares
    
    Average Price
    
    Publicly Announced Plans
    
    Purchased Under thePeriod
    
    Purchased
    
    Paid per Share
    
    or Programs
    
    Plans or Programs(1)As of 9/30/05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,651,65010/01/05  10/31/05
    
    
    210,000
    
    
    $
    67.97
    
    
    
    210,000
    
    
    
    4,441,65011/01/05  11/30/05
    
    
    210,000
    
    
    $
    71.96
    
    
    
    210,000
    
    
    
    4,231,65012/01/05  12/31/05
    
    
    210,000
    
    
    $
    73.33
    
    
    
    210,000
    
    
    
    4,021,650Total
    
    
    630,000
    
    
    $
    71.09
    
    
    
    630,000
 
 (1)
    
    On February 9, 2000, Cooper publicly announced that its Board of Directors
authorized the repurchase of up to 5 million shares of Cooper Class A common stock.
On November 2, 2004, Coopers Board of Directors authorized the repurchase of up to
five million additional shares of the Coopers Class A common stock. Cooper has also
announced that the Board authorized the repurchase of shares issued from time to time
under its equity compensation plans, matched savings plan and dividend reinvestment
plan in order to offset the dilution that results from issuing shares under these
plans.  13




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ITEM 6. SELECTED FINANCIAL DATA
  Years Ending December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in millions, except per share data)INCOME STATEMENT DATA:Revenues
    
    $
    4,730.4
    
    
    $
    4,462.9
    
    
    $
    4,061.4
    
    
    $
    3,960.5
    
    
    $
    4,209.5Income from continuing operations
    
    $
    391.1
    
    
    $
    339.8
    
    
    $
    274.3
    
    
    $
    213.7
    
    
    $
    261.3Charge from discontinued operations, net
of taxes
    
    
    227.2
    
    
    
    
    
    
    
    126.0
    
    
    
    
    
    
    
    30.0Net Income
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3
    
    
    $
    213.7
    
    
    $
    231.3INCOME PER COMMON SHARE DATA:Basic -Income from continuing operations
    
    $
    4.23
    
    
    $
    3.67
    
    
    $
    2.96
    
    
    $
    2.29
    
    
    $
    2.78Charge from discontinued operations
    
    
    2.46
    
    
    
    
    
    
    
    1.36
    
    
    
    
    
    
    
    .32Net Income
    
    $
    1.77
    
    
    $
    3.67
    
    
    $
    1.60
    
    
    $
    2.29
    
    
    $
    2.46Diluted -Income from continuing operations
    
    $
    4.12
    
    
    $
    3.58
    
    
    $
    2.92
    
    
    $
    2.28
    
    
    $
    2.75Charge from discontinued operations
    
    
    2.39
    
    
    
    
    
    
    
    1.34
    
    
    
    
    
    
    
    .31Net Income
    
    $
    1.73
    
    
    $
    3.58
    
    
    $
    1.58
    
    
    $
    2.28
    
    
    $
    2.44BALANCE SHEET DATA (at December 31):Total assets
    
    $
    5,215.1
    
    
    $
    5,407.8
    
    
    $
    4,965.3
    
    
    $
    4,687.9
    
    
    $
    4,611.4Long-term debt, excluding current maturities
    
    
    1,002.9
    
    
    
    698.6
    
    
    
    1,336.7
    
    
    
    1,280.7
    
    
    
    1,107.0Shareholders equity
    
    
    2,205.2
    
    
    
    2,286.5
    
    
    
    2,118.2
    
    
    
    2,002.4
    
    
    
    2,023.2CASH DIVIDENDS PER COMMON
SHARE
    
    $
    1.48
    
    
    $
    1.40
    
    
    $
    1.40
    
    
    $
    1.40
    
    
    $
    1.40
  14




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Critical Accounting Policies
      15




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16




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18




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Results of Operations
 Revenues
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in millions)Electrical Products
    
    $
    3,997.5
    
    
    $
    3,722.2
    
    
    $
    3,358.4Tools
    
    
    732.9
    
    
    
    740.7
    
    
    
    703.0Total Revenues
    
    $
    4,730.4
    
    
    $
    4,462.9
    
    
    $
    4,061.4
  2005 vs. 2004 Revenues
   2004 vs. 2003 Revenues
   19




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Operating Results
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in millions, except per share data)Electrical Products
    
    $
    585.0
    
    
    $
    511.2
    
    
    $
    418.7Tools
    
    
    66.7
    
    
    
    62.7
    
    
    
    39.4Total Segment Operating Earnings
    
    
    651.7
    
    
    
    573.9
    
    
    
    458.1General Corporate Expense
    
    
    91.9
    
    
    
    77.3
    
    
    
    66.1Operating Earnings
    
    
    559.8
    
    
    
    496.6
    
    
    
    392.0Interest Expense, net
    
    
    64.8
    
    
    
    68.1
    
    
    
    74.1Interest Income on Tax Refund
    
    
    
    
    
    
    
    
    
    
    (28.6
    )Income from Continuing Operations Before Income Taxes
    
    
    495.0
    
    
    
    428.5
    
    
    
    346.5Income Tax Expense
    
    
    103.9
    
    
    
    88.7
    
    
    
    72.2Income from Continuing Operations
    
    
    391.1
    
    
    
    339.8
    
    
    
    274.3Charge Related to Discontinued Operations
    
    
    227.2
    
    
    
    
    
    
    
    126.0Net Income
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3Diluted Earnings Per ShareIncome from Continuing Operations
    
    $
    4.12
    
    
    $
    3.58
    
    
    $
    2.92Charge from Discontinued Operations
    
    
    2.39
    
    
    
    
    
    
    
    1.34Net Income
    
    $
    1.73
    
    
    $
    3.58
    
    
    $
    1.58
  2005 vs. 2004 Segment Operating Earnings
   20




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2004 vs. 2003 Segment Operating Earnings
   Restructuring
      21




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Number of
    
    
    Accrued
    
    
    Facilities ClosureEmployees
    
    
    Severance

    
    
    and Rationalization($ in millions)Balance at December 31, 2002
    
    
    1,022
    
    
    $
    16.2
    
    
    $
    5.8Employees terminated
    
    
    (982
    )
    
    
    
    
    
    
    Cash expenditures
    
    
    
    
    
    
    (14.9
    )
    
    
    (2.9
    )Reversal of excess accruals
    
    
    (9
    )
    
    
    (0.9
    )
    
    
    (0.6
    )Balance at December 31, 2003
    
    
    31
    
    
    
    0.4
    
    
    
    2.3Employees terminated
    
    
    (31
    )
    
    
    
    
    
    
    Cash expenditures
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.7
    )Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    0.6Reversal of excess accruals
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Balance at December 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    
    General Corporate Expense
  22




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Interest Expense, Net
   Interest Income on Tax Refund
 Income Tax Expense
 Charge Related to Discontinued Operations
 Diluted Earnings Per Share
 23




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Percentage of Revenues
 Year Ended December 31,2005
    
    2004
    
    2003Cost of Sales:Electrical Products
    
    
    68.1
    %
    
    
    69.3
    %
    
    
    69.9
    %Tools
    
    
    70.8
    %
    
    
    72.6
    %
    
    
    74.9
    %Selling and Administrative:Electrical Products
    
    
    17.2
    %
    
    
    17.0
    %
    
    
    17.2
    %Tools
    
    
    20.1
    %
    
    
    18.9
    %
    
    
    19.5
    %
 2005 vs. 2004 Percentage of Revenues
  2004 vs. 2003 Percentage of Revenues
   Earnings Outlook
  24




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Pricing and Volume
    Effect of Inflation
  Liquidity and Capital Resources
 Operating Working Capital
 For purposes of this discussion, operating working capital is defined as receivables and
inventories less accounts payable.
  25




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Cash Flows
      26




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Debt
      
  Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
  27




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Payments DueFour to
    
    
    AfterLess than
    
    
    One to
    
    
    Five
    
    
    FiveTotal
    
    
    One Year
    
    
    Three Years
    
    
    Years
    
    
    Years(in millions)Contractual Obligations:Long-Term Debt
    
    $
    1,014.3
    
    
    $
    11.4
    
    
    $
    393.9
    
    
    $
    277.3
    
    
    $
    331.7Short-Term Debt
    
    
    7.6
    
    
    
    7.6
    
    
    
    
    
    
    
    
    
    
    
    Noncancellable Operating Leases
    
    
    85.0
    
    
    
    22.0
    
    
    
    34.3
    
    
    
    15.0
    
    
    
    13.7Purchase Obligations
    
    
    277.8
    
    
    
    276.9
    
    
    
    0.8
    
    
    
    0.1
    
    
    
    Other Long-Term
Liabilities(1)
    
    
    253.7
    
    
    
    15.8
    
    
    
    32.1
    
    
    
    29.0
    
    
    
    176.8$
    1,638.4
    
    
    $
    333.7
    
    
    $
    461.1
    
    
    $
    321.4
    
    
    $
    522.2
 
 (1)
    
    Includes unfunded other postretirement benefit obligations, unfunded non-U.S.
defined benefit pension plan liabilities, other postemployment benefit liabilities and
environmental liabilities. Capitalization
    Capital Expenditures and Commitments
  Interest Rate and Currency Risk
  28




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2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total($ in millions)Long-term debt:Fixed-rate (U.S.
Dollar)
    
    $
    11.4
    
    
    $
    300.8
    
    
    $
    100.3
    
    
    $
    275.0
    
    
    $
    2.3
    
    
    $
    325.0
    
    
    $
    1,014.8Average interest-rate
    
    
    5.5
    %
    
    
    5.5
    %
    
    
    5.5
    %
    
    
    5.4
    %
    
    
    5.3
    %
    
    
    5.3
    %
    
    
    5.4
    %Variable-rate (U.S.
Dollar)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8.0
    
    
    $
    8.0Average interest-rate
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %
    
    
    4.5
    %Interest-rate swaps:Fixed to variable:Notional amount(1)
    
    $
    300.0
    
    
    $
    300.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    300.0Average pay-rate
    
    
    6.78
    %
    
    
    6.80
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.79
    %Average receive-rate
    
    
    5.25
    %
    
    
    5.25
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.25
    %Cross-currency interest-rate
swaps:Fixed to fixed:Notional amount(2)
    
    $
    325.0
    
    
    $
    325.0
    
    
    $
    325.0
    
    
    $
    325.0
    
    
    $
    325.0
    
    
    $
    325.0
    
    
    $
    325.0Average pay-rate
    
    
    3.5275
    %
    
    
    3.5275
    %
    
    
    3.5275
    %
    
    
    3.5275
    %
    
    
    3.5275
    %
    
    
    3.5275
    %
    
    
    3.5275
    %Average receive-rate
    
    
    5.232
    %
    
    
    5.232
    %
    
    
    5.232
    %
    
    
    5.232
    %
    
    
    5.232
    %
    
    
    5.232
    %
    
    
    5.232
    %
 
 (1)
    
    Cooper entered into interest-rate swaps to effectively convert its fixed-rate
$300 million senior unsecured debt due in July 2007 to variable-rate debt.(2)
    
    Cooper entered into cross-currency interest-rate swaps to effectively convert $325
million of 5.25% senior unsecured debt due in November 2012 to Euro 272.6 million with an
annual interest rate of 3.55%  2006(in millions, whereapplicable)Canadian Dollar Functional CurrencyBuy U.S. Dollars / Sell Canadian DollarsNotional amount
    
    $
    98.9Average contract rate
    
    
    .8542U.S. Dollar Functional CurrencyBuy Mexican Pesos / Sell U.S. DollarsNotional amount
    
    $
    19.1Average contract rate
    
    
    .0884
 29




---



##### Table of Contents



2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    Thereafter
    
    Total($ in millions)Long-term debt:Fixed-rate (U.S. Dollar)
    
    $
    229.4
    
    
    $
    12.2
    
    
    $
    300.8
    
    
    $
    100.4
    
    
    $
    275.0
    
    
    $
    2.2
    
    
    $
    920.0Average interest-rate
    
    
    5.8
    %
    
    
    5.5
    %
    
    
    5.6
    %
    
    
    5.6
    %
    
    
    5.5
    %
    
    
    6.8
    %
    
    
    5.8
    %Fixed-rate (Euro)
    
    $
    409.1
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    409.1Average interest-rate
    
    
    6.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.3
    %Variable-rate (GBP)
    
    $
    26.9
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    26.9Average interest-rate
    
    
    4.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.5
    %Variable-rate (U.S. Dollar)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8.0
    
    
    $
    8.0Average interest-rate
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.4
    %Interest-rate swaps:Fixed to variable:Notional amount(1)
    
    $
    300.0
    
    
    $
    300.0
    
    
    $
    300.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    300.0Average pay-rate
    
    
    5.06
    %
    
    
    5.71
    %
    
    
    5.95
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.49
    %Average receive-rate
    
    
    5.25
    %
    
    
    5.25
    %
    
    
    5.25
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.25
    %
 
 (1)
    
    Cooper entered into interest-rate swaps to effectively convert its fixed-rate
$300 million senior unsecured debt due in July 2007 to variable-rate debt.  2005(in millions, whereapplicable)U.S. Dollar Functional CurrencyBuy Canadian Dollars / Sell U.S. DollarsNotional amount
    
    $
    89.7Average contract rate
    
    
    0.8083Canadian Functional CurrencyBuy U.S. Dollars / Sell Canadian DollarsNotional amount
    
    $
    14.8Average contract rate
    
    
    0.7610U.S. Dollar Functional CurrencyBuy Euro / Sell U.S. DollarsNotional amount
    
    $
    14.6Average contract rate
    
    
    1.338
 30




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##### Table of Contents



Recently Issued Accounting Standards
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
   
 ITEM 9B.
    
    OTHER INFORMATION
  31




---



##### 



PART III
 
 ITEM 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    1. Financial Statements and Other Financial Data.
  
 PageReport of Management on Internal Control Over Financial Reporting
    
    F-1Report of Independent Registered Public Accounting Firm on Internal Control
Over Financial Reporting
    
    F-2Report of Independent Registered Public Accounting Firm
    
    F-3Consolidated Income Statements for each of the three years in the period ended
December 31, 2005
    
    F-4Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    F-5Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 2005
    
    F-6Consolidated Statements of Shareholders Equity for each of the three years in
the period ended December 31, 2005
    
    F-7Notes to Consolidated Financial Statements
    
    F-8
  32




---



##### Table of Contents



2.
    
    Financial Statement Schedules
  3.
    
    Exhibits
 2.0
    
    
    Agreement and Plan of Merger among Cooper Industries, Inc., Cooper
Mergerco, Inc. and Cooper Industries, Ltd. (incorporated herein by reference to
Annex I to Coopers Registration Statement on Form S-4, Registration No. 333-62740).3.1
    
    
    Memorandum of Association of Cooper Industries, Ltd. (incorporated herein
by reference to Annex II to Coopers Registration Statement on Form S-4,
Registration No. 333-62740).3.2
    
    
    Amended and Restated Bye-Laws of Cooper Industries, Ltd. (incorporated
herein by reference to Annex III to Coopers Registration Statement on Form S-4,
Registration No. 333-62740).4.1
    
    
    Rights Agreement dated as of May 16, 2002 between Cooper Industries, Ltd.
and EquiServe Trust Company, N.A., as Rights Agent (incorporated herein by reference
to Exhibit 4.4 to Coopers Registration Statement on Form 8-A, Registration No.
001-31330).4.2
    
    
    Amended and Restated Voting Agreement between Cooper Industries, Ltd.,
Cooper Industries, Inc. and Cooper Bermuda Investments Ltd. (incorporated herein by
reference to Exhibit 4 to Coopers Form 10-Q for the quarter ended March 31, 2004).4.3
    
    
    Indenture dated as of January 15, 1990, between Cooper Industries, Inc.
and The Chase Manhattan Bank (National Association), as Trustee (incorporated herein
by reference to Exhibit 4(a) to Coopers Registration Statement on Form S-3,
Registration No. 33-33011).4.4
    
    
    First Supplemental Indenture dated as of May 15, 2002 between Cooper
Industries, Inc. and JPMorgan Chase Bank, N.A., as successor Trustee to The Chase
Manhattan Bank (National Association) (incorporated herein by reference to Exhibit
4.3 to Coopers Form 10-Q for the quarter ended June 30, 2002).4.5
    
    
    Second Supplemental Indenture dated as of June 21, 2002 among Cooper
Industries, Inc., Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.4 to Coopers Form 10-Q for the
quarter ended June 30, 2002).4.6
    
    
    Third Supplemental Indenture dated as of October 28, 2002 among Cooper
Industries, Inc., Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.1 to Coopers Form 10-Q for the
quarter ended September 30, 2002).
 33




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##### Table of Contents



4.7
    
    
    Fourth Supplemental Indenture dated as of January 1, 2005 among Cooper
Industries, LLC, Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4 to Coopers Form 10-Q for the quarter ended
March 31, 2005).4.8
    
    
    Indenture dated as of November 8, 2005 among Cooper US, Inc., Cooper
Industries, Ltd., Subsidiary Guarantors and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4.1 to Coopers Form 8-K filed November 9,
2005).4.9
    
    
    Registration Rights Agreement dated November 8, 2005 among Cooper US,
Inc., Cooper Industries, Ltd., Subsidiary Guarantors, and Banc of America Securities
LLC and Citigroup Global Markets, Inc. as representatives of several initial
purchasers of $325 million aggregate principal amount of debt securities
(incorporated by reference to Exhibit 4.2 to Coopers Form 8-K filed November 9,
2005).10.1
    
    
    Cooper Industries, Inc. Directors Deferred Compensation Plan (incorporated
by reference to Exhibit 10.2 to Coopers Form 10-K for the year ended December 31,
1997).10.2
    
    
    Cooper Industries, Inc. Directors
Retirement Plan (incorporated by reference to Exhibit 10.3 to
Coopers Form 10-K for the year ended December 31,
1997).10.3
    
    
    Cooper Industries, Inc. Executive Restricted Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 to Coopers Form 10-K for the year ended
December 31, 1997).10.4
    
    
    First Amendment to Cooper Industries, Inc. Executive Restricted Stock
Incentive Plan (incorporated by reference to Exhibit 10.4 to Coopers Form 10-K for
the year ended December 31, 2003).10.5
    
    
    Cooper Industries, Inc. Supplemental Excess Defined Benefit Plan (August 1,
1998 Restatement) (incorporated by reference to Exhibit 10(iii) to Coopers Form 10-Q
for the quarter ended September 30, 1998).10.6
    
    
    First Amendment to Cooper Industries, Inc. Supplemental Excess Defined
Benefit Plan (August 1, 1998 Restatement) (incorporated by reference to Exhibit 10.6
to Coopers Form 10-K for the year ended December 31, 2003).10.7
    
    
    Cooper Industries, Inc. Supplemental Excess Defined Contribution Plan
(August 1, 1998 Restatement) (incorporated by reference to Exhibit 10(iv) to Coopers
Form 10-Q for the quarter ended September 30, 1998).10.8
    
    
    First, Second and Third Amendments to Cooper Industries, Inc. Supplemental
Excess Defined Contribution Plan (August 1, 1998 Restatement) (incorporated by
reference to Exhibit 10.8 to Coopers Form 10-K for the year ended December 31,
2003).10.9
    
    
    Management Incentive Compensation Deferral Plan (incorporated by reference
to Exhibit 10.7 to Coopers Form 10-K for the year ended December 31, 1997).10.10
    
    
    Third and Fourth Amendments to Management Incentive Compensation Deferral
Plan (incorporated by reference to Exhibit 10.10 to Coopers Form 10-K for the year
ended December 31, 2003).
 34




---



##### Table of Contents



10.11
    
    
    Crouse-Hinds Company Officers Disability and Supplemental Pension Plan
(September 10, 1999 Restatement, as amended) (incorporated by reference to Exhibit
10.11 to Coopers Form 10-K for the year ended December 31, 2003).10.12
    
    
    Cooper Industries Amended and Restated Stock Incentive Plan (February 9,
2005 Restatement) (incorporated herein by reference to Exhibit 10.4 to Coopers Form
10-Q for the quarter ended March 31, 2005).10.13
    
    
    Form of Incentive Stock Option Agreement for Cooper Industries, Inc. Stock
Incentive Plan (incorporated by reference to Exhibit 10.14 to Coopers Form 10-K for
the year ended December 31, 2003).10.14
    
    
    Form of Nonqualified Stock Option Agreement for Cooper Industries, Inc.
Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to Coopers Form
10-K for the year ended December 31, 2003).10.15
    
    
    Form of Cooper Industries, Inc. Executive Stock Incentive Agreement for
the performance period January 1, 2004 to December 31, 2006 (incorporated by
reference to Exhibit 10 to Coopers Form 10-Q for the quarter ended March 31, 2004).10.16
    
    
    Form of Cooper US, Inc. Executive Stock Incentive Agreement for the
performance period January 1, 2005 to December 31, 2007 (incorporated by reference to
Exhibit 10.3 to Coopers Form 10-Q for the period ended March 31, 2005).10.17
    
    
    Cooper Industries, Inc. Amended and Restated Management Annual Incentive
Plan (February 14, 2001 Restatement) (incorporated herein by reference to Appendix C
to Coopers Proxy Statement for the Annual Meeting of Shareholders held on April 24,
2001).10.18
    
    
    First Amendment to Cooper Industries, Inc. Amended and Restated Management
Annual Incentive Plan (February 14, 2001 Restatement) (incorporated by reference to
Exhibit 10.18 to Coopers Form 10-K for the year ended December 31, 2003).10.19
    
    
    Amended and Restated Cooper Industries, Ltd. Directors Stock Plan (April
29, 2003 Restatement) (incorporated herein by reference to Exhibit 10.2 to Coopers
Form 10-Q for the quarter ended June 30, 2003).10.20
    
    
    Form of Directors Nonqualified Stock Option Agreement for Directors
Stock Plan (incorporated herein by reference to Exhibit 10.18 to Coopers Form 10-K
for the year ended December 31, 1997).10.21
    
    
    Cooper Industries, Ltd. Amended and Restated Directors Retainer Fee Stock
Plan (April 1, 2003 Restatement) (incorporated by reference to Exhibit 10.21 to
Coopers Form 10-K for the year ended December 31, 2003).10.22
    
    
    Summary of Compensation Arrangements for Named Executive Officers
(incorporated herein by reference to Exhibit 10.1 to Coopers Form 8-K dated February
13, 2006).10.23
    
    
    Summary of Nonemployee Director Compensation (incorporated by reference to Exhibit
10.2 to Coopers Form 8-K dated February 13, 2006).
 35




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##### Table of Contents



10.24
    
    
    Form of Management Continuity Agreement between Cooper Industries, Ltd. and key
management personnel which applies if there is a Change in Control of Cooper
(incorporated herein by reference to Exhibit 10.5 to Coopers Form 10-Q for the
quarter ended March 31, 2005).10.25
    
    
    Form of Indemnification Agreement between Cooper Industries, Ltd. and key
management personnel (incorporated by reference to Exhibit 10.23 to Coopers Form
10-K for the year ended December 31, 2003).10.26
    
    
    Purchase and Sale Agreement between Cooper Industries, Inc. and
Federal-Mogul Corporation dated August 17, 1998 (incorporated herein by reference to
Exhibit 10(i) of Coopers Form 10-Q for the quarter ended September 30, 1998).10.27
    
    
    Cooper (UK 2002) Employee Share Purchase Plan (incorporated by reference
to Exhibit 10.25 to Coopers Form 10-K for the year ended December 31, 2003).10.28
    
    
    Five-Year Credit Agreement dated November 3, 2004 among Cooper Industries,
Ltd., Cooper US, Inc. and the banks named therein (incorporated by reference to
Exhibit 10.25 of Coopers Form 10-K for the year ended December 31, 2004).12.0
    
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar years
2001 through 2005.21.0
    
    
    List of Cooper Industries, Ltd. Subsidiaries.23.1
    
    
    Consent of Ernst & Young LLP.23.2
    
    
    Consent of Bates White, LLC.24.0
    
    
    Powers of Attorney from members of the Board of Directors of Cooper Industries, Ltd.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
   
 36




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##### Table of Contents



SIGNATURES
  COOPER INDUSTRIES, LTD.Date: March 1, 2006
    
    By:
    
    /s/ Kirk S. HachigianKirk S. Hachigian, Chairman, President
    and Chief Executive Officer
  Signature
    
    Title
    
    Date/s/ Kirk S. Hachigian
    
    Chairman, President and Chief Executive Officer
    
    March 1, 2006Kirk S. Hachigian/s/ Terry A. Klebe
    
    Senior Vice President and Chief Financial Officer
    
    March 1, 2006Terry A. Klebe/s/ Jeffrey B. Levos
    
    Vice President, Finance and Chief Accounting Officer
    
    March 1, 2006Jeffrey B. Levos*STEPHEN G. BUTLER
    
    Director
    
    March 1, 2006Stephen G. Butler*LINDA A. HILL
    
    Director
    
    March 1, 2006Linda A. Hill*JAMES J. POSTL
    
    Director
    
    March 1, 2006James J. Postl*DAN F. SMITH
    
    Director
    
    March 1, 2006Dan F. Smith*GERALD B. SMITH
    
    Director
    
    March 1, 2006Gerald B. Smith
 * By:
    
    /s/ Diane K. Schumacher

Diane K. Schumacher, as Attorney-In-Factfor each of the persons indicated
 37




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##### Table of Contents



REPORT OF MANAGEMENT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
  Internal Control 
Integrated Framework
  Kirk S. Hachigian
    

Terry A. Klebe
    

Jeffrey B. LevosChairman, President and
    
    Senior Vice President and
    
    Vice President, Finance andChief Executive Officer
    
    Chief Financial Officer
    

and Chief Accounting Officer
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
       ERNST & YOUNG LLPHouston, TexasFebruary 20, 2006
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      ERNST & YOUNG LLPHouston, TexasFebruary 20, 2006
 F-3




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
 
 CONSOLIDATED INCOME STATEMENTS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in millions, except per share data)Revenues
    
    $
    4,730.4
    
    
    $
    4,462.9
    
    
    $
    4,061.4Cost of sales
    
    
    3,243.8
    
    
    
    3,119.7
    
    
    
    2,871.9Selling and administrative expenses
    
    
    926.8
    
    
    
    846.6
    
    
    
    794.9Restructuring
    
    
    
    
    
    
    
    
    
    
    2.6Operating earnings
    
    
    559.8
    
    
    
    496.6
    
    
    
    392.0Interest expense, net
    
    
    64.8
    
    
    
    68.1
    
    
    
    74.1Interest income on tax refund
    
    
    
    
    
    
    
    
    
    
    (28.6
    )Income from continuing operations before income taxes
    
    
    495.0
    
    
    
    428.5
    
    
    
    346.5Income taxes
    
    
    103.9
    
    
    
    88.7
    
    
    
    72.2Income from continuing operations
    
    
    391.1
    
    
    
    339.8
    
    
    
    274.3Charge related to discontinued operations, net of income taxes
    
    
    227.2
    
    
    
    
    
    
    
    126.0Net income
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3Income per Common shareBasic:Income from continuing operations
    
    $
    4.23
    
    
    $
    3.67
    
    
    $
    2.96Charge from discontinued operations
    
    
    2.46
    
    
    
    
    
    
    
    1.36Net income
    
    $
    1.77
    
    
    $
    3.67
    
    
    $
    1.60Diluted:Income from continuing operations
    
    $
    4.12
    
    
    $
    3.58
    
    
    $
    2.92Charge from discontinued operations
    
    
    2.39
    
    
    
    
    
    
    
    1.34Net income
    
    $
    1.73
    
    
    $
    3.58
    
    
    $
    1.58Cash dividends per Common share
    
    $
    1.48
    
    
    $
    1.40
    
    
    $
    1.40
  F-4




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004(in millions)ASSETSCash and cash equivalents
    
    $
    452.8
    
    
    $
    652.8Receivables
    
    
    842.4
    
    
    
    820.9Inventories
    
    
    538.7
    
    
    
    523.0Deferred income taxes and other current assets
    
    
    297.2
    
    
    
    288.9Total current assets
    
    
    2,131.1
    
    
    
    2,285.6Property, plant and equipment, less accumulated depreciation
    
    
    673.7
    
    
    
    696.4Goodwill
    
    
    2,084.0
    
    
    
    2,142.3Deferred income taxes and other noncurrent assets
    
    
    326.3
    
    
    
    283.5Total assets
    
    $
    5,215.1
    
    
    $
    5,407.8LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    7.6
    
    
    $
    97.6Accounts payable
    
    
    427.8
    
    
    
    350.7Accrued liabilities
    
    
    518.0
    
    
    
    488.8Current discontinued operations liability
    
    
    196.3
    
    
    
    225.1Current maturities of long-term debt
    
    
    11.4
    
    
    
    665.4Total current liabilities
    
    
    1,161.1
    
    
    
    1,827.6Long-term debt
    
    
    1,002.9
    
    
    
    698.6Postretirement benefits other than pensions
    
    
    163.0
    
    
    
    173.3Long-term discontinued operations liability
    
    
    330.0
    
    
    
    Other long-term liabilities
    
    
    352.9
    
    
    
    421.8Total liabilities
    
    
    3,009.9
    
    
    
    3,121.3Common stock, $.01 par value
    
    
    0.9
    
    
    
    0.9Capital in excess of par value
    
    
    383.2
    
    
    
    446.2Retained earnings
    
    
    1,997.4
    
    
    
    1,971.6Accumulated other nonowner changes in equity
    
    
    (176.3
    )
    
    
    (132.2
    )Total shareholders equity
    
    
    2,205.2
    
    
    
    2,286.5Total liabilities and shareholders equity
    
    $
    5,215.1
    
    
    $
    5,407.8
  F-5




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in millions)Cash flows from operating activities:Net income
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3Plus: charge related to discontinued operations
    
    
    227.2
    
    
    
    
    
    
    
    126.0Income from continuing operations
    
    
    391.1
    
    
    
    339.8
    
    
    
    274.3Adjustments to reconcile to net cash provided by operating
activities:Depreciation and amortization
    
    
    111.0
    
    
    
    117.6
    
    
    
    121.4Deferred income taxes
    
    
    21.5
    
    
    
    27.7
    
    
    
    99.3Restructuring payments
    
    
    (0.4
    )
    
    
    (4.3
    )
    
    
    (17.8
    )Changes in assets and liabilities: (1)Receivables
    
    
    (39.8
    )
    
    
    (56.7
    )
    
    
    (3.2
    )Inventories
    
    
    (17.6
    )
    
    
    47.6
    
    
    
    45.9Accounts payable and accrued liabilities
    
    
    86.8
    
    
    
    17.8
    
    
    
    (22.4
    )Other assets and liabilities, net
    
    
    20.9
    
    
    
    (15.9
    )
    
    
    (52.2
    )Net cash provided by operating activities
    
    
    573.5
    
    
    
    473.6
    
    
    
    445.3Cash flows from investing activities:Capital expenditures
    
    
    (96.7
    )
    
    
    (102.8
    )
    
    
    (79.9
    )Cash paid for acquired businesses
    
    
    (7.1
    )
    
    
    (48.6
    )
    
    
    Proceeds from sales of property, plant and equipment and other
    
    
    13.6
    
    
    
    11.8
    
    
    
    18.1Net cash used in investing activities
    
    
    (90.2
    )
    
    
    (139.6
    )
    
    
    (61.8
    )Cash flows from financing activities:Proceeds from issuances of debt
    
    
    326.4
    
    
    
    94.3
    
    
    
    4.3Repayments of debt
    
    
    (710.4
    )
    
    
    (4.7
    )
    
    
    (174.4
    )Debt issuance costs
    
    
    (3.8
    )
    
    
    
    
    
    
    Dividends
    
    
    (138.1
    )
    
    
    (131.0
    )
    
    
    (129.7
    )Subsidiary purchase of parent shares
    
    
    (211.0
    )
    
    
    (202.9
    )
    
    
    (5.5
    )Activity under employee stock plans and other
    
    
    72.7
    
    
    
    78.4
    
    
    
    63.2Net cash used in financing activities
    
    
    (664.2
    )
    
    
    (165.9
    )
    
    
    (242.1
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (19.1
    )
    
    
    21.0
    
    
    
    20.3Increase (decrease) in cash and cash equivalents
    
    
    (200.0
    )
    
    
    189.1
    
    
    
    161.7Cash and cash equivalents, beginning of year
    
    
    652.8
    
    
    
    463.7
    
    
    
    302.0Cash and cash equivalents, end of year
    
    $
    452.8
    
    
    $
    652.8
    
    
    $
    463.7
 
 (1)
    
    Net of the effects of acquisitions and translation.  F-6




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Capital
    
    
    
    
    
    
    AccumulatedIn Excess
    
    
    
    
    
    
    NonownerCommon
    
    
    of Par
    
    
    Retained
    
    
    Changes inStock
    
    
    Value
    
    
    Earnings
    
    
    Equity
    
    
    Total(in millions)Balance December 31, 2002
    
    $
    0.9
    
    
    $
    422.7
    
    
    $
    1,744.2
    
    
    $
    (165.4
    )
    
    $
    2,002.4Net income
    
    
    
    
    
    
    
    
    
    
    148.3
    
    
    
    
    
    
    
    148.3Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22.9
    )
    
    
    (22.9
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26.2
    
    
    
    26.2Change in fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.4
    )
    
    
    (1.4
    )Net income and other nonowner
changes in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150.2Common stock dividends
    
    
    
    
    
    
    
    
    
    
    (129.7
    )
    
    
    
    
    
    
    (129.7
    )Stock-based compensation
    
    
    
    
    
    
    7.1
    
    
    
    
    
    
    
    
    
    
    
    7.1Subsidiary purchase of parent shares
    
    
    
    
    
    
    (5.5
    )
    
    
    
    
    
    
    
    
    
    
    (5.5
    )Stock issued under employee stock plans
    
    
    
    
    
    
    92.0
    
    
    
    
    
    
    
    
    
    
    
    92.0Other activity
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    1.7Balance December 31, 2003
    
    
    0.9
    
    
    
    518.0
    
    
    
    1,762.8
    
    
    
    (163.5
    )
    
    
    2,118.2Net income
    
    
    
    
    
    
    
    
    
    
    339.8
    
    
    
    
    
    
    
    339.8Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8.0
    )
    
    
    (8.0
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.3
    
    
    
    36.3Change in fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.0
    
    
    
    3.0Net income and other nonowner
changes in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371.1Common stock dividends
    
    
    
    
    
    
    
    
    
    
    (131.0
    )
    
    
    
    
    
    
    (131.0
    )Stock-based compensation
    
    
    
    
    
    
    21.5
    
    
    
    
    
    
    
    
    
    
    
    21.5Subsidiary purchase of parent shares
    
    
    
    
    
    
    (202.9
    )
    
    
    
    
    
    
    
    
    
    
    (202.9
    )Stock issued under employee stock plans
    
    
    
    
    
    
    107.5
    
    
    
    
    
    
    
    
    
    
    
    107.5Other activity
    
    
    
    
    
    
    2.1
    
    
    
    
    
    
    
    
    
    
    
    2.1Balance December 31, 2004
    
    
    0.9
    
    
    
    446.2
    
    
    
    1,971.6
    
    
    
    (132.2
    )
    
    
    2,286.5Net income
    
    
    
    
    
    
    
    
    
    
    163.9
    
    
    
    
    
    
    
    163.9Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11.0
    )
    
    
    (11.0
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37.9
    )
    
    
    (37.9
    )Change in fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8
    
    
    
    4.8Net income and other nonowner
changes in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119.8Common stock dividends
    
    
    
    
    
    
    
    
    
    
    (138.1
    )
    
    
    
    
    
    
    (138.1
    )Stock-based compensation
    
    
    
    
    
    
    40.3
    
    
    
    
    
    
    
    
    
    
    
    40.3Subsidiary purchase of parent shares
    
    
    
    
    
    
    (211.0
    )
    
    
    
    
    
    
    
    
    
    
    (211.0
    )Stock issued under employee stock plans
    
    
    
    
    
    
    106.4
    
    
    
    
    
    
    
    
    
    
    
    106.4Other activity
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1.3Balance December 31, 2005
    
    $
    0.9
    
    
    $
    383.2
    
    
    $
    1,997.4
    
    
    $
    (176.3
    )
    
    $
    2,205.2
  F-7




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation:
 Principles of Consolidation:
 Use of Estimates:
 Cash Equivalents:
 Accounts Receivable:
 Inventories:
 Property, Plant and Equipment:
 Goodwill: Goodwill and Other Intangible
Assets
 Revenue Recognition:
 F-8




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Research and Development Expenditures:
 Stock-Based Compensation: Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
   Year Ended December 312005
    
    
    2004
    
    
    2003(in millions)Net income, as reported
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3Add: Stock-based employee compensation
expense included in reported net income,
net of
related tax effects
    
    
    24.9
    
    
    
    13.3
    
    
    
    6.3Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (20.9
    )
    
    
    (14.6
    )
    
    
    (12.6
    )Pro forma net income
    
    $
    167.9
    
    
    $
    338.5
    
    
    $
    142.0
 F-9




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Year Ended December 312005
    
    2004
    
    2003Earnings per share:Basic  as reported
    
    $
    1.77
    
    
    $
    3.67
    
    
    $
    1.60Basic  pro forma
    
    $
    1.81
    
    
    $
    3.66
    
    
    $
    1.53Diluted  as reported
    
    $
    1.73
    
    
    $
    3.58
    
    
    $
    1.58Diluted  pro forma
    
    $
    1.77
    
    
    $
    3.57
    
    
    $
    1.52
 Impact of New Accounting Standards: Consolidation of Variable Interest Entities
 Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003
 Share-Based Payment Statement of Cash Flows
    F-10




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Reclassification:
 NOTE 2: RESTRUCTURING
     F-11




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
    Number of
    
    
    Accrued
    
    
    Facilities ClosureEmployees
    
    
    Severance
    
    
    and Rationalization($ in millions)Balance at December 31, 2002
    
    
    1,022
    
    
    $
    16.2
    
    
    $
    5.8Employees terminated
    
    
    (982
    )
    
    
    
    
    
    
    Cash expenditures
    
    
    
    
    
    
    (14.9
    )
    
    
    (2.9
    )Reversal of excess accrual
    
    
    (9
    )
    
    
    (0.9
    )
    
    
    (0.6
    )Balance at December 31, 2003
    
    
    31
    
    
    
    0.4
    
    
    
    2.3Employees terminated
    
    
    (31
    )
    
    
    
    
    
    
    Cash expenditures
    
    
    
    
    
    
    (0.4
    )
    
    
    (1.7
    )Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    0.6Reversal of excess accruals
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Balance at December 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    
   NOTE 3: ACQUISITIONS
  F-12




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 4: INVENTORIES
 December 31,2005
    
    
    2004(in millions)Raw materials
    
    $
    206.1
    
    
    $
    185.2Work-in-process
    
    
    137.9
    
    
    
    118.6Finished goods
    
    
    303.7
    
    
    
    320.2Perishable tooling and supplies
    
    
    14.4
    
    
    
    13.2662.1
    
    
    
    637.2Allowance for excess and obsolete inventory
    
    
    (58.7
    )
    
    
    (58.9
    )Excess of current standard costs over LIFO costs
    
    
    (64.7
    )
    
    
    (55.3
    )Net inventories
    
    $
    538.7
    
    
    $
    523.0
 NOTE 5: PROPERTY, PLANT AND EQUIPMENT
 December 31,2005
    
    
    2004(in millions)Land and land improvements
    
    $
    60.6
    
    
    $
    69.2Buildings
    
    
    474.5
    
    
    
    478.9Machinery and equipment
    
    
    808.9
    
    
    
    802.2Tooling, dies and patterns
    
    
    258.4
    
    
    
    257.0All other
    
    
    323.4
    
    
    
    342.7Construction in progress
    
    
    85.1
    
    
    
    58.62,010.9
    
    
    
    2,008.6Accumulated depreciation
    
    
    (1,337.2
    )
    
    
    (1,312.2
    )$
    673.7
    
    
    $
    696.4
 NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS
  ElectricalProducts
    
    
    Tools
    
    
    Total(in millions)Balance December 31, 2003
    
    $
    1,757.2
    
    
    $
    299.4
    
    
    $
    2,056.6Additions to goodwill
    
    
    37.9
    
    
    
    
    
    
    
    37.9Translation adjustments
    
    
    45.0
    
    
    
    2.8
    
    
    
    47.8Balance December 31, 2004
    
    
    1,840.1
    
    
    
    302.2
    
    
    
    2,142.3Additions to goodwill
    
    
    5.9
    
    
    
    
    
    
    
    5.9Translation adjustments
    
    
    (63.8
    )
    
    
    (0.4
    )
    
    
    (64.2
    )Balance December 31, 2005
    
    $
    1,782.2
    
    
    $
    301.8
    
    
    $
    2,084.0
  F-13




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  NOTE 7: ACCRUED LIABILITIES
 December 31,2005
    
    
    2004(in millions)Salaries, wages and employee benefit plans
    
    $
    244.0
    
    
    $
    232.7Commissions and customer incentives
    
    
    132.7
    
    
    
    115.6Product and environmental liability accruals
    
    
    36.2
    
    
    
    39.1Facility integration of acquired businesses
    
    
    6.3
    
    
    
    11.0Other (individual items less than 5% of total current liabilities)
    
    
    98.8
    
    
    
    90.4$
    518.0
    
    
    $
    488.8
     F-14




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##### Table of Contents



COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
   2005
    
    
    2004
    
    
    2003(in millions)Balance, beginning of year
    
    $
    11.0
    
    
    $
    18.1
    
    
    $
    29.1Spending
    
    
    (4.7
    )
    
    
    (7.1
    )
    
    
    (11.0
    )Balance, end of year
    
    $
    6.3
    
    
    $
    11.0
    
    
    $
    18.1
  F-15




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 8: DEBT AND LEASE COMMITMENTS
 December 31,2005
    
    
    2004(in millions)5.25% senior unsecured notes, due July 2007
    
    $
    292.7
    
    
    $
    300.25.50% senior unsecured notes, due November 2009
    
    
    275.0
    
    
    
    275.06.25% Euro bonds maturing in October 2005
    
    
    
    
    
    
    409.15.25% senior unsecured notes, due November 2012
    
    
    325.0
    
    
    
    6.72% - 6.91% second series medium-term notes, due through 2010
    
    
    13.3
    
    
    
    242.36.38% third series medium-term notes, due through 2008
    
    
    100.0
    
    
    
    100.04.45% Pound Sterling notes payable maturing at various dates through 2005
    
    
    
    
    
    
    26.9Other
    
    
    8.3
    
    
    
    10.5Total long-term debt
    
    
    1,014.3
    
    
    
    1,364.0Current maturities
    
    
    (11.4
    )
    
    
    (665.4
    )Long-term portion
    
    $
    1,002.9
    
    
    $
    698.6
   
     F-16




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
   NOTE 9: COMMON AND PREFERRED STOCK
     F-17




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
     NOTE 10: STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
  F-18




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    6,255,732
    
    
    $
    42.69
    
    
    
    7,325,526
    
    
    $
    40.32
    
    
    
    7,318,903
    
    
    $
    40.74Granted
    
    
    1,197,800
    
    
    $
    69.69
    
    
    
    1,062,750
    
    
    $
    55.65
    
    
    
    1,421,100
    
    
    $
    37.36Exercised
    
    
    (1,905,428
    )
    
    $
    41.42
    
    
    
    (1,993,088
    )
    
    $
    40.93
    
    
    
    (1,184,395
    )
    
    $
    39.40Canceled
    
    
    (119,283
    )
    
    $
    55.37
    
    
    
    (139,456
    )
    
    $
    42.04
    
    
    
    (230,082
    )
    
    $
    40.12Outstanding at end of year
    
    
    5,428,821
    
    
    $
    48.81
    
    
    
    6,255,732
    
    
    $
    42.69
    
    
    
    7,325,526
    
    
    $
    40.32Options exercisable at end of year
    
    
    3,209,490
    
    
    
    
    
    
    
    3,488,466
    
    
    
    
    
    
    
    3,642,301Options available for grant at end of year
    
    
    3,576,143
    
    
    
    
    
    
    
    5,013,148
    
    
    
    
    
    
    
    1,351,330
 Options Outstanding
    
    Options ExercisableWeightedShares
    
    Average
    
    Weighted
    
    Shares
    
    WeightedOutstanding
    
    Remaining
    
    Average
    
    Exercisable
    
    AverageRange of
    
    At
    
    Contractual
    
    Exercise
    
    At
    
    ExerciseExercise Prices

    
    12/31/05
    
    Life
    
    Price
    
    12/31/05
    
    Price$29.46  $35.21
    
    
    1,132,291
    
    
    
    5.1
    
    
    $
    35.13
    
    
    
    1,132,291
    
    
    $
    35.13$36.76  $39.06
    
    
    1,141,970
    
    
    
    2.7
    
    
    $
    37.51
    
    
    
    726,689
    
    
    $
    37.62$39.77  $43.47
    
    
    213,059
    
    
    
    3.1
    
    
    $
    43.41
    
    
    
    211,392
    
    
    $
    43.44$45.06  $46.10
    
    
    728,088
    
    
    
    4.4
    
    
    $
    46.02
    
    
    
    728,088
    
    
    $
    46.02$50.67  $57.56
    
    
    1,049,213
    
    
    
    4.6
    
    
    $
    55.78
    
    
    
    409,330
    
    
    $
    56.00$64.10  $74.44
    
    
    1,164,200
    
    
    
    6.0
    
    
    $
    69.65
    
    
    
    1,700
    
    
    $
    70.945,428,821
    
    
    
    
    
    
    
    
    
    
    
    3,209,490
    F-19




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 11: ACCUMULATED NONOWNER CHANGES IN EQUITY
 GainMinimum
    
    
    (Loss) On
    
    
    CumulativePension
    
    
    Derivative
    
    
    TranslationLiability
    
    
    Instruments
    
    
    Adjustment
    
    
    Total(in millions)Balance December 31, 2002
    
    $
    (36.8
    )
    
    $
    (0.1
    )
    
    $
    (128.5
    )
    
    $
    (165.4
    )Current year other nonowner changes in equity
    
    
    (22.9
    )
    
    
    (1.4
    )
    
    
    26.2
    
    
    
    1.9Balance December 31, 2003
    
    
    (59.7
    )
    
    
    (1.5
    )
    
    
    (102.3
    )
    
    
    (163.5
    )Current year other nonowner changes in equity
    
    
    (8.0
    )
    
    
    3.0
    
    
    
    36.3
    
    
    
    31.3Balance December 31, 2004
    
    
    (67.7
    )
    
    
    1.5
    
    
    
    (66.0
    )
    
    
    (132.2
    )Current year other nonowner changes in equity
    
    
    (11.0
    )
    
    
    4.8
    
    
    
    (37.9
    )
    
    
    (44.1
    )Balance December 31, 2005
    
    $
    (78.7
    )
    
    $
    6.3
    
    
    $
    (103.9
    )
    
    $
    (176.3
    )
 2005
    
    
    2004
    
    
    2003Before
    
    
    Tax
    
    
    
    
    
    
    Before
    
    
    Tax
    
    
    
    
    
    
    Before
    
    
    TaxTax
    
    
    (Expense)
    
    
    Net
    
    
    Tax
    
    
    (Expense)
    
    
    Net
    
    
    Tax
    
    
    (Expense)
    
    
    NetAmount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    Amount(in millions)Minimum pension
liability adjustment
    
    $
    (18.1
    )
    
    $
    7.1
    
    
    $
    (11.0
    )
    
    $
    (13.3
    )
    
    $
    5.3
    
    
    $
    (8.0
    )
    
    $
    (38.1
    )
    
    $
    15.2
    
    
    $
    (22.9
    )Change in fair value of
derivatives
    
    
    10.7
    
    
    
    (4.3
    )
    
    
    6.4
    
    
    
    5.2
    
    
    
    (2.1
    )
    
    
    3.1
    
    
    
    (4.7
    )
    
    
    1.9
    
    
    
    (2.8
    )Reclassification to
earnings
    
    
    (2.7
    )
    
    
    1.1
    
    
    
    (1.6
    )
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    (0.1
    )
    
    
    2.4
    
    
    
    (1.0
    )
    
    
    1.48.0
    
    
    
    (3.2
    )
    
    
    4.8
    
    
    
    5.0
    
    
    
    (2.0
    )
    
    
    3.0
    
    
    
    (2.3
    )
    
    
    0.9
    
    
    
    (1.4
    )Translation adjustment
    
    
    (58.3
    )
    
    
    20.4
    
    
    
    (37.9
    )
    
    
    55.8
    
    
    
    (19.5
    )
    
    
    36.3
    
    
    
    40.2
    
    
    
    (14.0
    )
    
    
    26.2Other nonowner changes in equity
    
    $
    (68.4
    )
    
    $
    24.3
    
    
    $
    (44.1
    )
    
    $
    47.5
    
    
    $
    (16.2
    )
    
    $
    31.3
    
    
    $
    (0.2
    )
    
    $
    2.1
    
    
    $
    1.9
 F-20




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 12: INCOME TAXES
 Year Ended December 31,2005
    
    
    2004
    
    2003($ in millions)Components of income from continuing operations
before income taxes:U.S. operations
    
    $
    104.4
    
    
    $
    71.3
    
    
    $
    56.1Non-U.S. operations
    
    
    390.6
    
    
    
    357.2
    
    
    
    290.4Income from continuing operations before
income taxes
    
    $
    495.0
    
    
    $
    428.5
    
    
    $
    346.5Components of income tax expense:Current:U.S. Federal
    
    $
    21.5
    
    
    $
    4.6
    
    
    $
    (62.1
    )U.S. state and local
    
    
    14.2
    
    
    
    4.9
    
    
    
    (8.2
    )NonU.S
    
    
    46.7
    
    
    
    51.5
    
    
    
    43.282.4
    
    
    
    61.0
    
    
    
    (27.1
    )Deferred:U.S. Federal
    
    
    3.6
    
    
    
    19.8
    
    
    
    79.7U.S. state and local
    
    
    1.7
    
    
    
    4.7
    
    
    
    21.0NonU.S
    
    
    16.2
    
    
    
    3.2
    
    
    
    (1.4
    )21.5
    
    
    
    27.7
    
    
    
    99.3Income tax expense
    
    $
    103.9
    
    
    $
    88.7
    
    
    $
    72.2Total income taxes paid
    
    $
    90.9
    
    
    $
    87.3
    
    
    $
    30.8Effective tax rate reconciliation:U.S. Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes
    
    
    1.2
    
    
    
    1.5
    
    
    
    2.4NonU.S. Operations
    
    
    (13.8
    )
    
    
    (13.5
    )
    
    
    (15.8
    )Extraterritorial income exclusion
    
    
    (0.6
    )
    
    
    (1.0
    )
    
    
    (1.2
    )Tax credits
    
    
    (0.7
    )
    
    
    (1.3
    )
    
    
    (0.2
    )Other
    
    
    (0.1
    )
    
    
    
    
    
    
    0.6Effective tax rate attributable to
continuing operations
    
    
    21.0
    %
    
    
    20.7
    %
    
    
    20.8
    %
 F-21




---



##### Table of Contents



COOPER
INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  December 31,2005
    
    
    2004(in millions)Components of deferred tax assets and liabilities:Deferred tax assets:Postretirement and other employee welfare benefits
    
    $
    65.7
    
    
    $
    71.2Accrued liabilities
    
    
    349.7
    
    
    
    211.6Minimum pension liability
    
    
    52.1
    
    
    
    45.1Net operating loss carryforward
    
    
    15.6
    
    
    
    Other
    
    
    32.5
    
    
    
    24.4Gross deferred tax assets
    
    
    515.6
    
    
    
    352.3Valuation allowance
    
    
    (9.6
    )
    
    
    Total deferred tax assets
    
    
    506.0
    
    
    
    352.3Deferred tax liabilities:Property, plant and equipment and intangibles
    
    
    (190.8
    )
    
    
    (180.5
    )Inventories
    
    
    (13.2
    )
    
    
    (13.9
    )Pension plans
    
    
    (70.6
    )
    
    
    (71.0
    )Other
    
    
    
    
    
    
    (4.0
    )Total deferred tax liabilities
    
    
    (274.6
    )
    
    
    (269.4
    )Net deferred tax asset
    
    $
    231.4
    
    
    $
    82.9
    F-22




---



##### Table of Contents



COOPER
INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 13: PENSION AND OTHER POSTRETIREMENT BENEFITS
  OtherPension Benefits
    
    
    Postretirement Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions)Change in benefit obligation:Benefit obligation at January 1
    
    $
    763.7
    
    
    $
    691.5
    
    
    $
    129.5
    
    
    $
    138.8Service cost
    
    
    17.5
    
    
    
    16.2
    
    
    
    0.2
    
    
    
    0.2Interest cost
    
    
    41.0
    
    
    
    41.8
    
    
    
    6.8
    
    
    
    8.2Benefit payments
    
    
    (59.4
    )
    
    
    (52.4
    )
    
    
    (13.9
    )
    
    
    (13.3
    )Actuarial (gain) loss
    
    
    37.8
    
    
    
    46.4
    
    
    
    1.5
    
    
    
    (4.4
    )Exchange rate changes
    
    
    (17.2
    )
    
    
    11.1
    
    
    
    
    
    
    
    Settlements
    
    
    (1.3
    )
    
    
    
    
    
    
    
    
    
    
    Amendments
    
    
    
    
    
    
    
    
    
    
    (19.1
    )
    
    
    Other
    
    
    1.6
    
    
    
    9.1
    
    
    
    
    
    
    
    Benefit obligation at December 31
    
    
    783.7
    
    
    
    763.7
    
    
    
    105.0
    
    
    
    129.5Change in plan assets:Fair value of plan assets at January 1
    
    
    660.5
    
    
    
    584.6
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    34.4
    
    
    
    50.9
    
    
    
    
    
    
    
    Employer contributions
    
    
    20.0
    
    
    
    61.7
    
    
    
    13.9
    
    
    
    13.3Benefit payments
    
    
    (56.7
    )
    
    
    (49.8
    )
    
    
    (13.9
    )
    
    
    (13.3
    )Exchange rate changes
    
    
    (7.5
    )
    
    
    4.9
    
    
    
    
    
    
    
    Settlements
    
    
    (1.3
    )
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    0.7
    
    
    
    8.2
    
    
    
    
    
    
    
    Fair value of plan assets at December 31
    
    
    650.1
    
    
    
    660.5
    
    
    
    
    
    
    
    Funded status
    
    
    (133.6
    )
    
    
    (103.2
    )
    
    
    (105.0
    )
    
    
    (129.5
    )Unrecognized actuarial (gain) loss
    
    
    246.6
    
    
    
    204.0
    
    
    
    (38.5
    )
    
    
    (43.0
    )Unrecognized prior service cost
    
    
    6.8
    
    
    
    8.0
    
    
    
    (19.5
    )
    
    
    (0.8
    )Net amount recognized
    
    $
    119.8
    
    
    $
    108.8
    
    
    $
    (163.0
    )
    
    $
    (173.3
    )
 F-23




---



##### Table of Contents



COOPER
INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 OtherPension Benefits
    
    
    Postretirement Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions)Amounts recognized in the balance sheet consist of:Prepaid benefit asset
    
    $
    120.1
    
    
    $
    120.2
    
    
    $
    
    
    
    $
    Accrued benefit liability
    
    
    (131.7
    )
    
    
    (124.1
    )
    
    
    (163.0
    )
    
    
    (173.3
    )Intangible asset
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other nonowner changes in equity
    
    
    130.8
    
    
    
    112.7
    
    
    
    
    
    
    
    Net amount recognized
    
    $
    119.8
    
    
    $
    108.8
    
    
    $
    (163.0
    )
    
    $
    (173.3
    )
   Pension Benefits
    
    
    Other Postretirement Benefits2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003(in millions)Components of net periodic benefit cost:Service cost
    
    $
    17.5
    
    
    $
    16.2
    
    
    $
    16.8
    
    
    $
    0.2
    
    
    $
    0.2
    
    
    $
    0.2Interest cost
    
    
    41.0
    
    
    
    41.8
    
    
    
    42.0
    
    
    
    6.8
    
    
    
    8.2
    
    
    
    9.2Expected return on plan assets
    
    
    (50.7
    )
    
    
    (47.1
    )
    
    
    (40.1
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of unrecognized
transition obligation
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.6
    
    
    
    (0.4
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Recognized actuarial (gain) loss
    
    
    10.0
    
    
    
    7.4
    
    
    
    8.9
    
    
    
    (3.0
    )
    
    
    (2.8
    )
    
    
    (3.5
    )Settlement
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Curtailment
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    18.9
    
    
    $
    18.9
    
    
    $
    28.7
    
    
    $
    3.6
    
    
    $
    5.5
    
    
    $
    5.8
 OtherPension Benefits
    
    Postretirement Benefits2005
    
    2004
    
    2005
    
    2004Weighted average assumptions
used to determine benefit
obligations as of December
31:Discount rate
    
    
    4.25% - 5.60
    %
    
    
    5.00% - 5.75
    %
    
    
    5.60
    %
    
    
    5.75
    %Rate of compensation increase
    
    
    2.25% - 4.00
    %
    
    
    2.25% - 4.00
    %
    
    
    
    
    
    
    
 F-24




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##### Table of Contents



COOPER
INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 OtherPension Benefits
    
    Postretirement Benefits2005
    
    2004
    
    2005
    
    2004Weighted average assumptions
used to determine net costs
for the years ended December
31:Discount rate
    
    
    5.00% - 5.75
    %
    
    
    5.50% - 6.25
    %
    
    
    5.75
    %
    
    
    6.25
    %Expected return on plan assets
    
    
    6.00% - 8.25
    %
    
    
    6.25% - 8.50
    %
    
    
    
    
    
    
    Rate of compensation increase
    
    
    2.75% - 4.00
    %
    
    
    2.75% - 4.00
    %
    
    
    
    
    
    
    
 2005
    
    2004Assumed healthcare cost trend rates:Healthcare cost trend rate assumed for next year
    
    
    9.00
    %
    
    
    9.00
    %Rate to which trend rate is assumed to decline (ultimate trend rate)
    
    
    5.00
    %
    
    
    5.00
    %Year that rate reaches ultimate trend rate
    
    
    2010
    
    
    
    2009
 1-Percentage-
    
    1-Percentage-Point Increase
    
    Point Decrease(in millions)A one-percentage-point change in the assumed health care cost
trend rate would have the following effects:Effect on total of service and interest cost components
    
    $
    0.6
    
    
    $
    (0.5
    )Effect on the postretirement benefit obligation
    
    $
    6.0
    
    
    $
    (5.0
    )
  Percentage of Plan Assetsat December 31,Asset Category
    
    2005
    
    
    2004Equity Securities
    
    
    60
    %
    
    
    75
    %Debt Securities
    
    
    40
    %
    
    
    25
    %100
    %
    
    
    100
    %
     F-25




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
   NOTE 14: RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
   NOTE 15: INDUSTRY SEGMENTS AND GEOGRAPHIC INFORMATION
 Industry Segments
     F-26




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Revenues
    
    Operating Earnings
    
    Total AssetsYear Ended December 31,
    
    Year Ended December 31,
    
    Year Ended December 31,2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003(in millions)Electrical Products
    
    $
    3,997.5
    
    
    $
    3,722.2
    
    
    $
    3,358.4
    
    
    $
    585.0
    
    
    $
    511.2
    
    
    $
    435.1
    
    
    $
    3,600.9
    
    
    $
    3,591.8
    
    
    $
    3,433.2Tools
    
    
    732.9
    
    
    
    740.7
    
    
    
    703.0
    
    
    
    66.7
    
    
    
    62.7
    
    
    
    39.0
    
    
    
    700.5
    
    
    
    737.0
    
    
    
    734.6Total management reporting
    
    $
    4,730.4
    
    
    $
    4,462.9
    
    
    $
    4,061.4
    
    
    
    651.7
    
    
    
    573.9
    
    
    
    474.1
    
    
    
    4,301.4
    
    
    
    4,328.8
    
    
    
    4,167.8Segment restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.0
    )Net segment operating earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    651.7
    
    
    
    573.9
    
    
    
    458.1General Corporate:Restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.4Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91.9
    )
    
    
    (77.3
    )
    
    
    (79.5
    )Operating earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559.8
    
    
    
    496.6
    
    
    
    392.0Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64.8
    )
    
    
    (68.1
    )
    
    
    (74.1
    )Interest income on tax refund
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28.6Consolidated income from
continuing operations before
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    495.0
    
    
    $
    428.5
    
    
    $
    346.5Corporate assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    913.7
    
    
    
    1,079.0
    
    
    
    797.5Consolidated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,215.1
    
    
    $
    5,407.8
    
    
    $
    4,965.3
 Electrical
    
    
    
    
    
    
    
    
    
    ConsolidatedProducts
    
    Tools
    
    Corporate
    
    Total(in millions)2005Depreciation
    
    $
    88.7
    
    
    $
    20.1
    
    
    $
    2.2
    
    
    $
    111.0Capital expenditures
    
    
    69.9
    
    
    
    12.4
    
    
    
    14.4
    
    
    
    96.7Investment in
unconsolidated affiliates
    
    
    21.6
    
    
    
    
    
    
    
    
    
    
    
    21.62004Depreciation
    
    $
    93.9
    
    
    $
    21.7
    
    
    $
    2.0
    
    
    $
    117.6Capital expenditures
    
    
    73.0
    
    
    
    10.2
    
    
    
    19.6
    
    
    
    102.8Investment in
unconsolidated affiliates
    
    
    23.3
    
    
    
    
    
    
    
    
    
    
    
    23.32003Depreciation
    
    $
    90.3
    
    
    $
    26.9
    
    
    $
    4.2
    
    
    $
    121.4Restructuring
    
    
    16.4
    
    
    
    (0.4
    )
    
    
    (13.4
    )
    
    
    2.6Capital expenditures
    
    
    54.7
    
    
    
    12.8
    
    
    
    12.4
    
    
    
    79.9Investment in
unconsolidated affiliates
    
    
    21.9
    
    
    
    
    
    
    
    
    
    
    
    21.9
 F-27




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##### Table of Contents

\

COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Geographic Information
  Revenues
    
    
    Long-Lived Assets2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003(in millions)United States
    
    $
    3,459.5
    
    
    $
    3,264.4
    
    
    $
    2,984.3
    
    
    $
    726.3
    
    
    $
    703.4
    
    
    $
    674.5Germany
    
    
    235.0
    
    
    
    249.7
    
    
    
    250.2
    
    
    
    35.0
    
    
    
    42.4
    
    
    
    41.4United Kingdom
    
    
    311.3
    
    
    
    283.6
    
    
    
    241.1
    
    
    
    57.2
    
    
    
    67.3
    
    
    
    56.0Canada
    
    
    205.1
    
    
    
    181.6
    
    
    
    159.8
    
    
    
    0.8
    
    
    
    0.9
    
    
    
    0.9Mexico
    
    
    139.2
    
    
    
    132.1
    
    
    
    126.5
    
    
    
    87.7
    
    
    
    85.6
    
    
    
    74.6Other countries
    
    
    380.3
    
    
    
    351.5
    
    
    
    299.5
    
    
    
    69.0
    
    
    
    54.5
    
    
    
    45.9$
    4,730.4
    
    
    $
    4,462.9
    
    
    $
    4,061.4
    
    
    $
    976.0
    
    
    $
    954.1
    
    
    $
    893.3
  International Revenues2005
    
    
    2004
    
    
    2003(in millions)Electrical Products
    
    $
    1,152.6
    
    
    $
    1,052.5
    
    
    $
    913.3Tools
    
    
    312.9
    
    
    
    329.0
    
    
    
    324.0$
    1,465.5
    
    
    $
    1,381.5
    
    
    $
    1,237.3
 NOTE 16: CHARGE RELATED TO DISCONTINUED OPERATIONS
  F-28




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
        F-29




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
       F-30




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  NOTE 17:
    
    FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES, CONCENTRATIONS OF CREDIT RISK AND FAIR
VALUE OF FINANCIAL INSTRUMENTS
 Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging
Activities
    F-31




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
     
   F-32




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  December 31,2005
    
    
    2004(in millions)Canadian Dollar
    
    $
    
    
    
    $
    92.2U.S. Dollar
    
    
    108.2
    
    
    
    17.4Mexican Peso
    
    
    19.1
    
    
    
    Euro
    
    
    0.2
    
    
    
    15.2British Pound Sterling
    
    
    0.4
    
    
    
    2.9$
    127.9
    
    
    $
    127.7
 Other Instruments
    Concentrations of Credit Risk
  Fair Value of Financial Instruments Other than Derivatives
  F-33




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 NOTE 18: NET INCOME PER COMMON SHARE
 Basic
    
    
    DilutedYear Ended December 31,
    
    
    Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003($ in millions, shares in thousands)Income from continuing operations
    
    $
    391.1
    
    
    $
    339.8
    
    
    $
    274.3
    
    
    $
    391.1
    
    
    $
    339.8
    
    
    $
    274.3Charge from discontinued operations
    
    
    227.2
    
    
    
    
    
    
    
    126.0
    
    
    
    227.2
    
    
    
    
    
    
    
    126.0Net income applicable to common stock
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3
    
    
    $
    163.9
    
    
    $
    339.8
    
    
    $
    148.3Weighted average common shares outstanding
    
    
    92,520
    
    
    
    92,480
    
    
    
    92,683
    
    
    
    92,520
    
    
    
    92,480
    
    
    
    92,683Incremental shares from assumed conversions:Options, performance-based stock awards
and other employee awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,529
    
    
    
    2,283
    
    
    
    1,088Weighted average common shares and common
share equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,049
    
    
    
    94,763
    
    
    
    93,771
  NOTE 19: UNAUDITED QUARTERLY OPERATING RESULTS
 2005 (by quarter)1
    
    
    2
    
    
    3
    
    
    4(in millions, except per share data)Revenues
    
    $
    1,144.8
    
    
    $
    1,189.2
    
    
    $
    1,210.4
    
    
    $
    1,186.0Cost of sales
    
    
    787.6
    
    
    
    814.7
    
    
    
    828.1
    
    
    
    813.4Selling and administrative expenses
    
    
    227.5
    
    
    
    232.9
    
    
    
    235.9
    
    
    
    230.5Operating earnings
    
    
    129.7
    
    
    
    141.6
    
    
    
    146.4
    
    
    
    142.1Interest expense, net
    
    
    17.8
    
    
    
    17.7
    
    
    
    16.5
    
    
    
    12.8Income from continuing operations before income taxes
    
    
    111.9
    
    
    
    123.9
    
    
    
    129.9
    
    
    
    129.3Income taxes
    
    
    24.1
    
    
    
    26.6
    
    
    
    27.9
    
    
    
    25.3Income from continuing operations
    
    
    87.8
    
    
    
    97.3
    
    
    
    102.0
    
    
    
    104.0Charge related to discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227.2Net income (loss)
    
    $
    87.8
    
    
    $
    97.3
    
    
    $
    102.0
    
    
    $
    (123.2
    )Income (loss) per Common shareBasic:Income from continuing operations
    
    $
    .94
    
    
    $
    1.05
    
    
    $
    1.11
    
    
    $
    1.13Charge from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.47Net income (loss)
    
    $
    .94
    
    
    $
    1.05
    
    
    $
    1.11
    
    
    $
    (1.34
    )Diluted:Income from continuing operations
    
    $
    .92
    
    
    $
    1.02
    
    
    $
    1.08
    
    
    $
    1.10Charge from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.40Net income (loss)
    
    $
    .92
    
    
    $
    1.02
    
    
    $
    1.08
    
    
    $
    (1.30
    )
 F-34




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2004 (by quarter)1
    
    
    2
    
    
    3
    
    
    4(in millions, except per share data)Revenues
    
    $
    1,064.6
    
    
    $
    1,109.3
    
    
    $
    1,140.2
    
    
    $
    1,148.8Cost of sales
    
    
    742.0
    
    
    
    775.2
    
    
    
    798.4
    
    
    
    804.1Selling and administrative expenses
    
    
    208.4
    
    
    
    212.0
    
    
    
    211.6
    
    
    
    214.6Operating earnings
    
    
    114.2
    
    
    
    122.1
    
    
    
    130.2
    
    
    
    130.1Interest expense, net
    
    
    17.1
    
    
    
    17.2
    
    
    
    17.0
    
    
    
    16.8Income before income taxes
    
    
    97.1
    
    
    
    104.9
    
    
    
    113.2
    
    
    
    113.3Income taxes
    
    
    19.4
    
    
    
    21.0
    
    
    
    23.9
    
    
    
    24.4Net income
    
    $
    77.7
    
    
    $
    83.9
    
    
    $
    89.3
    
    
    $
    88.9Income per Common shareBasic
    
    $
    .83
    
    
    $
    .91
    
    
    $
    .97
    
    
    $
    .96Diluted
    
    $
    .81
    
    
    $
    .89
    
    
    $
    .95
    
    
    $
    .94
 NOTE 20: CONSOLIDATING FINANCIAL INFORMATION
  F-35




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Income Statements
Year Ended December 31, 2005
 CooperCooper
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Industries, LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,124.2
    
    
    $
    1,745.7
    
    
    $
    (139.5
    )
    
    $
    4,730.4Cost of sales
    
    
    0.2
    
    
    
    0.4
    
    
    
    1.1
    
    
    
    2,203.4
    
    
    
    1,178.2
    
    
    
    (139.5
    )
    
    
    3,243.8Selling and administrative
expenses
    
    
    8.9
    
    
    
    9.8
    
    
    
    70.4
    
    
    
    495.8
    
    
    
    341.9
    
    
    
    
    
    
    
    926.8Interest expense, net
    
    
    (1.1
    )
    
    
    51.3
    
    
    
    (1.3
    )
    
    
    
    
    
    
    15.9
    
    
    
    
    
    
    
    64.8Equity in earnings of
subsidiaries, net of tax
    
    
    259.1
    
    
    
    55.9
    
    
    
    100.7
    
    
    
    117.5
    
    
    
    39.9
    
    
    
    (573.1
    )
    
    
    Intercompany income
(expense)
    
    
    (6.7
    )
    
    
    (59.0
    )
    
    
    (73.7
    )
    
    
    (373.6
    )
    
    
    593.5
    
    
    
    (80.5
    )
    
    
    Income (loss) from
continuing operations
before income taxes
    
    
    244.4
    
    
    
    (64.6
    )
    
    
    (43.2
    )
    
    
    168.9
    
    
    
    843.1
    
    
    
    (653.6
    )
    
    
    495.0Income tax expense
(benefit)
    
    
    
    
    
    
    (44.7
    )
    
    
    (82.9
    )
    
    
    15.1
    
    
    
    216.4
    
    
    
    
    
    
    
    103.9Income from continuing
operations
    
    
    244.4
    
    
    
    (19.9
    )
    
    
    39.7
    
    
    
    153.8
    
    
    
    626.7
    
    
    
    (653.6
    )
    
    
    391.1Charge related to
discontinued operations,
net of taxes
    
    
    
    
    
    
    227.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227.2Net income (loss)
    
    $
    244.4
    
    
    $
    (247.1
    )
    
    $
    39.7
    
    
    $
    153.8
    
    
    $
    626.7
    
    
    $
    (653.6
    )
    
    $
    163.9
 Consolidating Income Statements
Year Ended December 31, 2004
 Cooper
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    185.5
    
    
    $
    2,666.5
    
    
    $
    1,656.2
    
    
    $
    (45.3
    )
    
    $
    4,462.9Cost of sales
    
    
    0.7
    
    
    
    124.1
    
    
    
    1,891.1
    
    
    
    1,149.1
    
    
    
    (45.3
    )
    
    
    3,119.7Selling and administrative
expenses
    
    
    9.5
    
    
    
    90.5
    
    
    
    432.7
    
    
    
    313.9
    
    
    
    
    
    
    
    846.6Interest expense, net
    
    
    (1.0
    )
    
    
    47.8
    
    
    
    
    
    
    
    21.3
    
    
    
    
    
    
    
    68.1Equity in earnings of
subsidiaries, net of tax
    
    
    353.4
    
    
    
    379.5
    
    
    
    30.0
    
    
    
    162.0
    
    
    
    (924.9
    )
    
    
    Intercompany income (expense)
    
    
    (4.4
    )
    
    
    (256.9
    )
    
    
    (329.5
    )
    
    
    590.8
    
    
    
    
    
    
    
    Income before income taxes
    
    
    339.8
    
    
    
    45.7
    
    
    
    43.2
    
    
    
    924.7
    
    
    
    (924.9
    )
    
    
    428.5Income tax expense (benefit)
    
    
    
    
    
    
    (116.3
    )
    
    
    (3.1
    )
    
    
    208.1
    
    
    
    
    
    
    
    88.7Net income
    
    $
    339.8
    
    
    $
    162.0
    
    
    $
    46.3
    
    
    $
    716.6
    
    
    $
    (924.9
    )
    
    $
    339.8
 F-36




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Income Statements
Year Ended December 31, 2003
 Cooper
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    281.8
    
    
    $
    2,278.2
    
    
    $
    1,526.1
    
    
    $
    (24.7
    )
    
    $
    4,061.4Cost of sales
    
    
    
    
    
    
    183.9
    
    
    
    1,623.6
    
    
    
    1,089.1
    
    
    
    (24.7
    )
    
    
    2,871.9Selling and administrative
expenses
    
    
    7.2
    
    
    
    115.1
    
    
    
    386.1
    
    
    
    286.5
    
    
    
    
    
    
    
    794.9Restructuring
    
    
    
    
    
    
    (13.1
    )
    
    
    13.8
    
    
    
    1.9
    
    
    
    
    
    
    
    2.6Interest expense, net
    
    
    (0.3
    )
    
    
    53.3
    
    
    
    
    
    
    
    21.1
    
    
    
    
    
    
    
    74.1Interest income on tax refund
    
    
    
    
    
    
    (28.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28.6
    )Equity in earnings of
subsidiaries, net of tax
    
    
    165.8
    
    
    
    342.1
    
    
    
    36.6
    
    
    
    (17.2
    )
    
    
    (527.3
    )
    
    
    Intercompany income (expense)
    
    
    (0.2
    )
    
    
    (338.3
    )
    
    
    (301.4
    )
    
    
    650.3
    
    
    
    (10.4
    )
    
    
    Income (loss) from continuing
operations before income taxes
    
    
    158.7
    
    
    
    (25.0
    )
    
    
    (10.1
    )
    
    
    760.6
    
    
    
    (537.7
    )
    
    
    346.5Income tax expense (benefit)
    
    
    
    
    
    
    (134.0
    )
    
    
    (30.5
    )
    
    
    236.7
    
    
    
    
    
    
    
    72.2Income from continuing
operations
    
    
    158.7
    
    
    
    109.0
    
    
    
    20.4
    
    
    
    523.9
    
    
    
    (537.7
    )
    
    
    274.3Charge related to discontinued
operations, net of taxes
    
    
    
    
    
    
    126.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126.0Net income (loss)
    
    $
    158.7
    
    
    $
    (17.0
    )
    
    $
    20.4
    
    
    $
    523.9
    
    
    $
    (537.7
    )
    
    $
    148.3
 F-37




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Balance Sheets
December 31, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash
equivalents
    
    $
    64.1
    
    
    $
    
    
    
    $
    144.4
    
    
    $
    (3.5
    )
    
    $
    247.8
    
    
    $
    
    
    
    $
    452.8Receivables
    
    
    0.1
    
    
    
    
    
    
    
    8.6
    
    
    
    469.7
    
    
    
    364.0
    
    
    
    
    
    
    
    842.4Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327.1
    
    
    
    211.6
    
    
    
    
    
    
    
    538.7Deferred income taxes and
other current assets
    
    
    1.2
    
    
    
    130.7
    
    
    
    94.0
    
    
    
    48.8
    
    
    
    22.5
    
    
    
    
    
    
    
    297.2Total current assets
    
    
    65.4
    
    
    
    130.7
    
    
    
    247.0
    
    
    
    842.1
    
    
    
    845.9
    
    
    
    
    
    
    
    2,131.1Property, plant and
equipment, less
accumulated
depreciation
    
    
    
    
    
    
    
    
    
    
    41.0
    
    
    
    339.5
    
    
    
    293.2
    
    
    
    
    
    
    
    673.7Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018.3
    
    
    
    1,065.7
    
    
    
    
    
    
    
    2,084.0Investment in subsidiaries
    
    
    2,887.9
    
    
    
    759.5
    
    
    
    3,579.4
    
    
    
    917.6
    
    
    
    899.1
    
    
    
    (9,043.5
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,547.1
    
    
    
    
    
    
    
    312.7
    
    
    
    (2,859.8
    )
    
    
    Intercompany accounts
receivables
    
    
    588.4
    
    
    
    550.5
    
    
    
    
    
    
    
    1,367.3
    
    
    
    589.9
    
    
    
    (3,096.1
    )
    
    
    Intercompany notes
receivable
    
    
    43.9
    
    
    
    23.5
    
    
    
    651.1
    
    
    
    0.8
    
    
    
    3,683.4
    
    
    
    (4,402.7
    )
    
    
    Deferred income taxes
and other noncurrent
assets
    
    
    
    
    
    
    223.5
    
    
    
    48.7
    
    
    
    (43.2
    )
    
    
    97.3
    
    
    
    
    
    
    
    326.3Total assets
    
    $
    3,585.6
    
    
    $
    1,687.7
    
    
    $
    7,114.3
    
    
    $
    4,442.4
    
    
    $
    7,787.2
    
    
    $
    (19,402.1
    )
    
    $
    5,215.1Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.6
    
    
    $
    
    
    
    $
    7.6Accounts payable
    
    
    34.1
    
    
    
    14.0
    
    
    
    8.0
    
    
    
    214.7
    
    
    
    157.0
    
    
    
    
    
    
    
    427.8Accrued liabilities
    
    
    3.9
    
    
    
    28.9
    
    
    
    107.5
    
    
    
    238.8
    
    
    
    138.9
    
    
    
    
    
    
    
    518.0Current discontinued
operations liability
    
    
    
    
    
    
    196.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196.3Current maturities of
long-term debt
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    11.4Total current
liabilities
    
    
    38.0
    
    
    
    250.2
    
    
    
    115.5
    
    
    
    453.5
    
    
    
    303.9
    
    
    
    
    
    
    
    1,161.1Long-term debt
    
    
    
    
    
    
    670.0
    
    
    
    323.7
    
    
    
    8.0
    
    
    
    1.2
    
    
    
    
    
    
    
    1,002.9Intercompany
accounts payables
    
    
    
    
    
    
    
    
    
    
    3,096.1
    
    
    
    
    
    
    
    
    
    
    
    (3,096.1
    )
    
    
    Intercompany notes
payable
    
    
    326.0
    
    
    
    258.7
    
    
    
    1,652.8
    
    
    
    1,708.0
    
    
    
    457.2
    
    
    
    (4,402.7
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term
liabilities
    
    
    
    
    
    
    131.4
    
    
    
    191.2
    
    
    
    77.0
    
    
    
    116.3
    
    
    
    
    
    
    
    515.9Total liabilities
    
    
    364.0
    
    
    
    1,640.3
    
    
    
    5,379.3
    
    
    
    2,246.5
    
    
    
    878.6
    
    
    
    (7,498.8
    )
    
    
    3,009.9Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272.9
    
    
    
    (272.9
    )
    
    
    Capital in excess of
par value
    
    
    3,232.7
    
    
    
    
    
    
    
    29.4
    
    
    
    1,388.6
    
    
    
    5,082.3
    
    
    
    (9,349.8
    )
    
    
    383.2Retained earnings
    
    
    31.5
    
    
    
    162.4
    
    
    
    1,892.3
    
    
    
    832.5
    
    
    
    1,733.2
    
    
    
    (2,654.5
    )
    
    
    1,997.4Accumulated other non-
owner changes in equity
    
    
    (44.1
    )
    
    
    (115.0
    )
    
    
    (186.7
    )
    
    
    (25.2
    )
    
    
    (179.8
    )
    
    
    374.5
    
    
    
    (176.3
    )Total shareholders equity
    
    
    3,221.6
    
    
    
    47.4
    
    
    
    1,735.0
    
    
    
    2,195.9
    
    
    
    6,908.6
    
    
    
    (11,903.3
    )
    
    
    2,205.2Total liabilities and
shareholders equity
    
    $
    3,585.6
    
    
    $
    1,687.7
    
    
    $
    7,114.3
    
    
    $
    4,442.4
    
    
    $
    7,787.2
    
    
    $
    (19,402.1
    )
    
    $
    5,215.1
 F-38




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Balance Sheets
December 31, 2004
 Cooper
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    111.5
    
    
    $
    246.1
    
    
    $
    1.2
    
    
    $
    294.0
    
    
    $
    
    
    
    $
    652.8Receivables
    
    
    
    
    
    
    15.0
    
    
    
    440.4
    
    
    
    365.5
    
    
    
    
    
    
    
    820.9Inventories
    
    
    
    
    
    
    
    
    
    
    324.8
    
    
    
    198.2
    
    
    
    
    
    
    
    523.0Deferred income taxes and other
current assets
    
    
    1.3
    
    
    
    230.5
    
    
    
    60.5
    
    
    
    (3.4
    )
    
    
    
    
    
    
    288.9Total current assets
    
    
    112.8
    
    
    
    491.6
    
    
    
    826.9
    
    
    
    854.3
    
    
    
    
    
    
    
    2,285.6Property, plant and equipment,
less accumulated depreciation
    
    
    
    
    
    
    34.5
    
    
    
    367.2
    
    
    
    294.7
    
    
    
    
    
    
    
    696.4Goodwill
    
    
    
    
    
    
    
    
    
    
    1,018.4
    
    
    
    1,123.9
    
    
    
    
    
    
    
    2,142.3Investment in subsidiaries
    
    
    2,786.2
    
    
    
    5,347.1
    
    
    
    851.6
    
    
    
    193.8
    
    
    
    (9,178.7
    )
    
    
    Investment in parent
    
    
    
    
    
    
    2,245.5
    
    
    
    
    
    
    
    202.2
    
    
    
    (2,447.7
    )
    
    
    Intercompany accounts
receivables
    
    
    514.0
    
    
    
    
    
    
    
    1,371.9
    
    
    
    71.7
    
    
    
    (1,957.6
    )
    
    
    Intercompany notes receivable
    
    
    25.7
    
    
    
    21.3
    
    
    
    
    
    
    
    5,601.7
    
    
    
    (5,648.7
    )
    
    
    Other noncurrent assets
    
    
    
    
    
    
    112.6
    
    
    
    76.3
    
    
    
    94.6
    
    
    
    
    
    
    
    283.5Total assets
    
    $
    3,438.7
    
    
    $
    8,252.6
    
    
    $
    4,512.3
    
    
    $
    8,436.9
    
    
    $
    (19,232.7
    )
    
    $
    5,407.8Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    97.6
    
    
    $
    
    
    
    $
    97.6Accounts payable
    
    
    32.5
    
    
    
    21.1
    
    
    
    178.9
    
    
    
    118.2
    
    
    
    
    
    
    
    350.7Accrued liabilities
    
    
    2.9
    
    
    
    130.6
    
    
    
    211.2
    
    
    
    144.1
    
    
    
    
    
    
    
    488.8Accrual for discontinued
operations
    
    
    
    
    
    
    225.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225.1Current maturities of long-term
debt
    
    
    
    
    
    
    229.0
    
    
    
    
    
    
    
    436.4
    
    
    
    
    
    
    
    665.4Total current liabilities
    
    
    35.4
    
    
    
    605.8
    
    
    
    390.1
    
    
    
    796.3
    
    
    
    
    
    
    
    1,827.6Long-term debt
    
    
    
    
    
    
    688.3
    
    
    
    8.0
    
    
    
    2.3
    
    
    
    
    
    
    
    698.6Intercompany accounts payable
    
    
    
    
    
    
    1,744.1
    
    
    
    
    
    
    
    213.5
    
    
    
    (1,957.6
    )
    
    
    Intercompany notes payable
    
    
    135.7
    
    
    
    3,763.9
    
    
    
    1,702.1
    
    
    
    47.0
    
    
    
    (5,648.7
    )
    
    
    Deferred income taxes and other
long-term liabilities
    
    
    
    
    
    
    262.1
    
    
    
    180.4
    
    
    
    152.6
    
    
    
    
    
    
    
    595.1Total liabilities
    
    
    171.1
    
    
    
    7,064.2
    
    
    
    2,280.6
    
    
    
    1,211.7
    
    
    
    (7,606.3
    )
    
    
    3,121.3Class A common stock
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Class B common stock
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157.1
    
    
    
    (157.1
    )
    
    
    Capital in excess of par value
    
    
    2,882.2
    
    
    
    12.1
    
    
    
    1,572.0
    
    
    
    6,209.4
    
    
    
    (10,229.5
    )
    
    
    446.2Retained earnings
    
    
    350.0
    
    
    
    1,272.9
    
    
    
    613.1
    
    
    
    939.6
    
    
    
    (1,204.0
    )
    
    
    1,971.6Accumulated other nonowner
changes in equity
    
    
    33.9
    
    
    
    (96.6
    )
    
    
    46.6
    
    
    
    (80.9
    )
    
    
    (35.2
    )
    
    
    (132.2
    )Total shareholders equity
    
    
    3,267.6
    
    
    
    1,188.4
    
    
    
    2,231.7
    
    
    
    7,225.2
    
    
    
    (11,626.4
    )
    
    
    2,286.5Total liabilities and
shareholders equity
    
    $
    3,438.7
    
    
    $
    8,252.6
    
    
    $
    4,512.3
    
    
    $
    8,436.9
    
    
    $
    (19,232.7
    )
    
    $
    5,407.8
 F-39




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Statements of Cash Flows
Year Ended December 31, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (10.4
    )
    
    $
    (141.6
    )
    
    $
    2.0
    
    
    $
    103.6
    
    
    $
    619.9
    
    
    $
    
    
    
    $
    573.5Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (14.4
    )
    
    
    (40.7
    )
    
    
    (41.6
    )
    
    
    
    
    
    
    (96.7
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.1
    )
    
    
    
    
    
    
    (7.1
    )Investment in affiliates
    
    
    (11.1
    )
    
    
    (225.0
    )
    
    
    (49.2
    )
    
    
    (3.4
    )
    
    
    
    
    
    
    288.7
    
    
    
    Sale of investment in affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130.9
    
    
    
    (130.9
    )Loans to affiliates
    
    
    (46.0
    )
    
    
    (23.5
    )
    
    
    (646.7
    )
    
    
    (0.7
    )
    
    
    (238.3
    )
    
    
    955.2
    
    
    
    Repayments of loans from affiliates
    
    
    27.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46.2
    
    
    
    (73.9
    )
    
    
    Dividends from affiliates
    
    
    10.0
    
    
    
    0.9
    
    
    
    98.4
    
    
    
    52.8
    
    
    
    5.1
    
    
    
    (167.2
    )
    
    
    Other
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    0.6
    
    
    
    11.5
    
    
    
    
    
    
    
    13.6Net cash provided by (used in)
investing
activities
    
    
    (19.4
    )
    
    
    (246.1
    )
    
    
    (611.9
    )
    
    
    8.6
    
    
    
    (93.3
    )
    
    
    871.9
    
    
    
    (90.2
    )Cash flows from financing
activities:Proceeds from issuances of debt
    
    
    
    
    
    
    
    
    
    
    325.0
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    326.4Repayments of debt
    
    
    
    
    
    
    (229.0
    )
    
    
    
    
    
    
    
    
    
    
    (481.4
    )
    
    
    
    
    
    
    (710.4
    )Borrowings from affiliates
    
    
    235.8
    
    
    
    258.7
    
    
    
    
    
    
    
    5.9
    
    
    
    454.8
    
    
    
    (955.2
    )
    
    
    Repayments of loans to affiliates
    
    
    (46.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27.7
    )
    
    
    73.9
    
    
    
    Other intercompany financing
activities
    
    
    (11.7
    )
    
    
    358.0
    
    
    
    227.6
    
    
    
    (100.6
    )
    
    
    (473.3
    )
    
    
    
    
    
    
    Dividends
    
    
    (138.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (138.1
    )Dividends paid to affiliates
    
    
    (70.2
    )
    
    
    
    
    
    
    
    
    
    
    (22.2
    )
    
    
    (74.8
    )
    
    
    167.2
    
    
    
    Subsidiary purchase of parent
shares
    
    
    12.8
    
    
    
    
    
    
    
    (113.3
    )
    
    
    
    
    
    
    (110.5
    )
    
    
    
    
    
    
    (211.0
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157.8
    
    
    
    (157.8
    )
    
    
    Employee stock plan activity and
other
    
    
    
    
    
    
    
    
    
    
    68.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68.9Net cash provided by (used in)
financing activities
    
    
    (17.6
    )
    
    
    387.7
    
    
    
    508.2
    
    
    
    (116.9
    )
    
    
    (553.7
    )
    
    
    (871.9
    )
    
    
    (664.2
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19.1
    )
    
    
    
    
    
    
    (19.1
    )Decrease in cash and cash
equivalents
    
    
    (47.4
    )
    
    
    
    
    
    
    (101.7
    )
    
    
    (4.7
    )
    
    
    (46.2
    )
    
    
    
    
    
    
    (200.0
    )Cash and cash equivalents,
beginning of period
    
    
    111.5
    
    
    
    
    
    
    
    246.1
    
    
    
    1.2
    
    
    
    294.0
    
    
    
    
    
    
    
    652.8Cash and cash equivalents, end of
period
    
    $
    64.1
    
    
    $
    
    
    
    $
    144.4
    
    
    $
    (3.5
    )
    
    $
    247.8
    
    
    $
    
    
    
    $
    452.8
 F-40




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Statements of Cash Flows
Year Ended December 31, 2004
 Cooper
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (7.3
    )
    
    $
    (173.9
    )
    
    $
    45.7
    
    
    $
    609.1
    
    
    $
    
    
    
    $
    473.6Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    (21.4
    )
    
    
    (40.7
    )
    
    
    (40.7
    )
    
    
    
    
    
    
    (102.8
    )Cash paid for acquired business
    
    
    
    
    
    
    
    
    
    
    (10.1
    )
    
    
    (38.5
    )
    
    
    
    
    
    
    (48.6
    )Intercompany sale (purchase) of
investment in parent
    
    
    
    
    
    
    (182.1
    )
    
    
    
    
    
    
    182.1
    
    
    
    
    
    
    
    Intercompany sale (purchase) of
investment in subsidiaries
    
    
    
    
    
    
    109.5
    
    
    
    
    
    
    
    (109.5
    )
    
    
    
    
    
    
    Investments in affiliates
    
    
    (9.0
    )
    
    
    (80.3
    )
    
    
    
    
    
    
    
    
    
    
    89.3
    
    
    
    Loans to affiliates
    
    
    (60.5
    )
    
    
    (23.6
    )
    
    
    
    
    
    
    (154.0
    )
    
    
    238.1
    
    
    
    Repayments of loans from
affiliates
    
    
    35.1
    
    
    
    23.0
    
    
    
    
    
    
    
    84.5
    
    
    
    (142.6
    )
    
    
    Dividends from subsidiaries
    
    
    134.0
    
    
    
    87.7
    
    
    
    
    
    
    
    
    
    
    
    (221.7
    )
    
    
    Other
    
    
    
    
    
    
    28.3
    
    
    
    10.0
    
    
    
    1.8
    
    
    
    (28.3
    )
    
    
    11.8Net cash provided by (used
in) investing activities
    
    
    99.6
    
    
    
    (58.9
    )
    
    
    (40.8
    )
    
    
    (74.3
    )
    
    
    (65.2
    )
    
    
    (139.6
    )Cash flows from financing
activities:Proceeds from issuances of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94.3
    
    
    
    
    
    
    
    94.3Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.7
    )
    
    
    
    
    
    
    (4.7
    )Borrowings from affiliates
    
    
    176.1
    
    
    
    
    
    
    
    8.5
    
    
    
    53.5
    
    
    
    (238.1
    )
    
    
    Repayments of loans from
affiliates
    
    
    (132.1
    )
    
    
    
    
    
    
    (0.8
    )
    
    
    (9.7
    )
    
    
    142.6
    
    
    
    Other intercompany financing
activities
    
    
    9.8
    
    
    
    253.6
    
    
    
    (11.5
    )
    
    
    (251.9
    )
    
    
    
    
    
    
    Dividends
    
    
    (131.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (131.0
    )Dividends paid to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221.7
    )
    
    
    221.7
    
    
    
    Subsidiary purchase of parent
shares
    
    
    
    
    
    
    (110.3
    )
    
    
    
    
    
    
    (92.6
    )
    
    
    
    
    
    
    (202.9
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89.3
    
    
    
    (89.3
    )
    
    
    Employee stock plan activity
and other
    
    
    
    
    
    
    78.4
    
    
    
    
    
    
    
    (28.3
    )
    
    
    28.3
    
    
    
    78.4Net cash provided by (used
in) financing activities
    
    
    (77.2
    )
    
    
    221.7
    
    
    
    (3.8
    )
    
    
    (371.8
    )
    
    
    65.2
    
    
    
    (165.9
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.0
    
    
    
    
    
    
    
    21.0Increase (decrease) in cash and
cash equivalents
    
    
    15.1
    
    
    
    (11.1
    )
    
    
    1.1
    
    
    
    184.0
    
    
    
    
    
    
    
    189.1Cash and cash equivalents,
beginning of year
    
    
    96.4
    
    
    
    257.2
    
    
    
    0.1
    
    
    
    110.0
    
    
    
    
    
    
    
    463.7Cash and cash equivalents, end
of year
    
    $
    111.5
    
    
    $
    246.1
    
    
    $
    1.2
    
    
    $
    294.0
    
    
    $
    
    
    
    $
    652.8
 F-41




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##### Table of Contents



COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Consolidating Statements of Cash Flows
Year Ended December 31, 2003
 Cooper
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (6.1
    )
    
    $
    (290.5
    )
    
    $
    40.9
    
    
    $
    701.0
    
    
    $
    
    
    
    $
    445.3Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    (16.4
    )
    
    
    (35.2
    )
    
    
    (28.3
    )
    
    
    
    
    
    
    (79.9
    )Investments in affiliates
    
    
    
    
    
    
    (23.2
    )
    
    
    
    
    
    
    
    
    
    
    23.2
    
    
    
    Loans to affiliates
    
    
    
    
    
    
    (27.9
    )
    
    
    
    
    
    
    (122.0
    )
    
    
    149.9
    
    
    
    Repayments from affiliates
    
    
    
    
    
    
    26.5
    
    
    
    
    
    
    
    15.0
    
    
    
    (41.5
    )
    
    
    Dividends from subsidiaries
    
    
    101.0
    
    
    
    5.6
    
    
    
    
    
    
    
    
    
    
    
    (106.6
    )
    
    
    Other
    
    
    
    
    
    
    8.7
    
    
    
    2.5
    
    
    
    6.9
    
    
    
    
    
    
    
    18.1Net cash provided by (used
in investing activities
    
    
    101.0
    
    
    
    (26.7
    )
    
    
    (32.7
    )
    
    
    (128.4
    )
    
    
    25.0
    
    
    
    (61.8
    )Cash flows from financing
activities:Proceeds from issuances of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.3
    
    
    
    
    
    
    
    4.3Repayments of debt
    
    
    
    
    
    
    (169.7
    )
    
    
    
    
    
    
    (4.7
    )
    
    
    
    
    
    
    (174.4
    )Borrowings from affiliates
    
    
    91.9
    
    
    
    15.0
    
    
    
    
    
    
    
    43.0
    
    
    
    (149.9
    )
    
    
    Repayments to affiliates
    
    
    
    
    
    
    (15.0
    )
    
    
    
    
    
    
    (26.5
    )
    
    
    41.5
    
    
    
    Other intercompany financing
activities
    
    
    4.0
    
    
    
    443.5
    
    
    
    (8.1
    )
    
    
    (439.4
    )
    
    
    
    
    
    
    Dividends
    
    
    (129.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129.7
    )Dividends paid to parent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (106.6
    )
    
    
    106.6
    
    
    
    Subsidiary purchase of parent
shares
    
    
    
    
    
    
    (5.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.5
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23.2
    
    
    
    (23.2
    )
    
    
    Employee stock plan activity
and other
    
    
    1.4
    
    
    
    61.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63.2Net cash provided by (used
in) financing activities
    
    
    (32.4
    )
    
    
    330.1
    
    
    
    (8.1
    )
    
    
    (506.7
    )
    
    
    (25.0
    )
    
    
    (242.1
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.3
    
    
    
    
    
    
    
    20.3Increase in cash and cash
equivalents
    
    
    62.5
    
    
    
    12.9
    
    
    
    0.1
    
    
    
    86.2
    
    
    
    
    
    
    
    161.7Cash and cash equivalents,
beginning of year
    
    
    33.9
    
    
    
    244.3
    
    
    
    
    
    
    
    23.8
    
    
    
    
    
    
    
    302.0Cash and cash equivalents, end
of year
    
    $
    96.4
    
    
    $
    257.2
    
    
    $
    0.1
    
    
    $
    110.0
    
    
    $
    
    
    
    $
    463.7
 F-42




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##### Table of Contents



Index to Exhibits
 2.0
    
    Agreement and Plan of Merger among Cooper Industries, Inc., Cooper Mergerco,
Inc. and Cooper Industries, Ltd. (incorporated herein by reference to Annex I to
Coopers Registration Statement on Form S-4, Registration No. 333-62740).3.1
    
    Memorandum of Association of Cooper Industries, Ltd. (incorporated herein by
reference to Annex II to Coopers Registration Statement on Form S-4, Registration No.
333-62740).3.2
    
    Amended and Restated Bye-Laws of Cooper Industries, Ltd. (incorporated herein
by reference to Annex III to Coopers Registration Statement on Form S-4, Registration
No. 333-62740).4.1
    
    Rights Agreement dated as of May 16, 2002 between Cooper Industries, Ltd. and
EquiServe Trust Company, N.A., as Rights Agent (incorporated herein by reference to
Exhibit 4.4 to Coopers Registration Statement on Form 8-A, Registration No.
001-31330).4.2
    
    Amended and Restated Voting Agreement between Cooper Industries, Ltd., Cooper
Industries, Inc. and Cooper Bermuda Investments Ltd. (incorporated herein by reference
to Exhibit 4 to Coopers Form 10-Q for the quarter ended March 31, 2004).4.3
    
    Indenture dated as of January 15, 1990, between Cooper Industries, Inc. and The
Chase Manhattan Bank (National Association), as Trustee (incorporated herein by
reference to Exhibit 4(a) to Coopers Registration Statement on Form S-3, Registration
No. 33-33011).4.4
    
    First Supplemental Indenture dated as of May 15, 2002 between Cooper
Industries, Inc. and JPMorgan Chase Bank, N.A., as successor Trustee to The Chase
Manhattan Bank (National Association) (incorporated herein by reference to Exhibit 4.3
to Coopers Form 10-Q for the quarter ended June 30, 2002).4.5
    
    Second Supplemental Indenture dated as of June 21, 2002 among Cooper
Industries, Inc., Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.4 to Coopers Form 10-Q for the quarter
ended June 30, 2002).4.6
    
    Third Supplemental Indenture dated as of October 28, 2002 among Cooper
Industries, Inc., Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.1 to Coopers Form 10-Q for the quarter
ended September 30, 2002).




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##### Table of Contents



4.7
    
    Fourth Supplemental Indenture dated as of January 1, 2005 among Cooper
Industries, LLC, Cooper Industries, Ltd. and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4 to Coopers Form 10-Q for the quarter ended
March 31, 2005).4.8
    
    Indenture dated as of November 8, 2005 among Cooper US, Inc., Cooper
Industries, Ltd., Subsidiary Guarantors and JPMorgan Chase Bank, N.A., as Trustee
(incorporated by reference to Exhibit 4.1 to Coopers Form 8-K filed November 9, 2005).4.9
    
    Registration Rights Agreement dated November 8, 2005 among Cooper US, Inc.,
Cooper Industries, Ltd., Subsidiary Guarantors, and Banc of America Securities LLC and
Citigroup Global Markets, Inc. as representatives of several initial purchasers of $325
million aggregate principal amount of debt securities (incorporated by reference to
Exhibit 4.2 to Coopers Form 8-K filed November 9, 2005).10.1
    
    Cooper Industries, Inc. Directors Deferred Compensation Plan (incorporated by
reference to Exhibit 10.2 to Coopers Form 10-K for the year ended December 31, 1997).10.2
    
    Cooper Industries, Inc. Directors Retirement Plan (incorporated by reference to
Exhibit 10.3 to Coopers Form 10-K for the year ended December 31, 1997).10.3
    
    Cooper Industries, Inc. Executive Restricted Stock Incentive Plan (incorporated
by reference to Exhibit 10.4 to Coopers Form 10-K for the year ended December 31,
1997).10.4
    
    First Amendment to Cooper Industries, Inc. Executive Restricted Stock Incentive
Plan (incorporated by reference to Exhibit 10.4 to Coopers Form 10-K for the year ended
December 31, 2003).10.5
    
    Cooper Industries, Inc. Supplemental Excess Defined Benefit Plan (August 1, 1998
Restatement) (incorporated by reference to Exhibit 10(iii) to Coopers Form 10-Q for the
quarter ended September 30, 1998).10.6
    
    First Amendment to Cooper Industries, Inc. Supplemental Excess Defined Benefit
Plan (August 1, 1998 Restatement) (incorporated by reference to Exhibit 10.6 to Coopers
Form 10-K for the year ended December 31, 2003).10.7
    
    Cooper Industries, Inc. Supplemental Excess Defined Contribution Plan (August 1,
1998 Restatement) (incorporated by reference to Exhibit 10(iv) to Coopers Form 10-Q for
the quarter ended September 30, 1998).10.8
    
    First, Second and Third Amendments to Cooper Industries, Inc. Supplemental Excess
Defined Contribution Plan (August 1, 1998 Restatement) (incorporated by reference to
Exhibit 10.8 to Coopers Form 10-K for the year ended December 31, 2003).10.9
    
    Management Incentive Compensation Deferral Plan (incorporated by reference to
Exhibit 10.7 to Coopers Form 10-K for the year ended December 31, 1997).10.10
    
    Third and Fourth Amendments to Management Incentive Compensation Deferral Plan
(incorporated by reference to Exhibit 10.10 to Coopers Form 10-K for the year ended
December 31, 2003).




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##### Table of Contents



10.11
    
    Crouse-Hinds Company Officers Disability and Supplemental Pension Plan
(September 10, 1999 Restatement, as amended) (incorporated by reference to Exhibit 10.11
to Coopers Form 10-K for the year ended December 31, 2003).10.12
    
    Cooper Industries Amended and Restated Stock Incentive Plan (February 9, 2005
Restatement) (incorporated herein by reference to Exhibit 10.4 to Coopers Form 10-Q for
the quarter ended March 31, 2005).10.13
    
    Form of Incentive Stock Option Agreement for Cooper Industries, Inc. Stock
Incentive Plan (incorporated by reference to Exhibit 10.14 to Coopers Form 10-K for the
year ended December 31, 2003).10.14
    
    Form of Nonqualified Stock Option Agreement for Cooper Industries, Inc. Stock
Incentive Plan (incorporated by reference to Exhibit 10.15 to Coopers Form 10-K for the
year ended December 31, 2003).10.15
    
    Form of Cooper Industries, Inc. Executive Stock Incentive Agreement for the
performance period January 1, 2004 to December 31, 2006 (incorporated by reference to
Exhibit 10 to Coopers Form 10-Q for the quarter ended March 31, 2004).10.16
    
    Form of Cooper US, Inc. Executive Stock Incentive Agreement for the performance
period January 1, 2005 to December 31, 2007 (incorporated by reference to Exhibit 10.3
to Coopers Form 10-Q for the period ended March 31, 2005).10.17
    
    Cooper Industries, Inc. Amended and Restated Management Annual Incentive Plan
(February 14, 2001 Restatement) (incorporated herein by reference to Appendix C to
Coopers Proxy Statement for the Annual Meeting of Shareholders held on April 24, 2001).10.18
    
    First Amendment to Cooper Industries, Inc. Amended and Restated Management
Annual Incentive Plan (February 14, 2001 Restatement) (incorporated by reference to
Exhibit 10.18 to Coopers Form 10-K for the year ended December 31, 2003).10.19
    
    Amended and Restated Cooper Industries, Ltd. Directors Stock Plan (April 29,
2003 Restatement) (incorporated herein by reference to Exhibit 10.2 to Coopers Form
10-Q for the quarter ended June 30, 2003).10.20
    
    Form of Directors Nonqualified Stock Option Agreement for Directors Stock Plan
(incorporated herein by reference to Exhibit 10.18 to Coopers Form 10-K for the year
ended December 31, 1997).10.21
    
    Cooper Industries, Ltd. Amended and Restated Directors Retainer Fee Stock Plan
(April 1, 2003 Restatement) (incorporated by reference to Exhibit 10.21 to Coopers Form
10-K for the year ended December 31, 2003).10.22
    
    Summary of Compensation Arrangements for Named Executive Officers (incorporated
herein by reference to Exhibit 10.1 to Coopers Form 8-K dated February 13, 2006).10.23
    
    Summary of Nonemployee Director Compensation (incorporated by reference to
Exhibit 10.2 to Coopers Form 8-K dated February 13, 2006).




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##### Table of Contents



10.24
    
    Form of Management Continuity Agreement between Cooper Industries, Ltd. and key
management personnel which applies if there is a Change in Control of Cooper
(incorporated herein by reference to Exhibit 10.5 to Coopers Form 10-Q for the quarter
ended March 31, 2005).10.25
    
    Form of Indemnification Agreement between Cooper Industries, Ltd. and key
management personnel (incorporated by reference to Exhibit 10.23 to Coopers Form 10-K
for the year ended December 31, 2003).10.26
    
    Purchase and Sale Agreement between Cooper Industries, Inc. and Federal-Mogul
Corporation dated August 17, 1998 (incorporated herein by reference to Exhibit 10(i) of
Coopers Form 10-Q for the quarter ended September 30, 1998).10.27
    
    Cooper (UK 2002) Employee Share Purchase Plan (incorporated by reference to
Exhibit 10.25 to Coopers Form 10-K for the year ended December 31, 2003).10.28
    
    Five-Year Credit Agreement dated November 3, 2004 among Cooper Industries, Ltd.,
Cooper US, Inc. and the banks named therein (incorporated by reference to Exhibit 10.25
of Coopers Form 10-K for the year ended December 31, 2004).12.0
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar years 2001 through 2005.21.0
    
    List of Cooper Industries, Ltd. Subsidiaries.23.1
    
    Consent of Ernst & Young LLP.23.2
    
    Consent of Bates White, LLC.24.0
    
    Powers of Attorney from members of the Board of Directors of Cooper Industries, Ltd.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.