##### Table of Contents



10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarter ended June 30, 2005
  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
    
    98-0355628(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 600 Travis, Suite 5800
    
    Houston, Texas 77002(Address of principal executive offices)
    
    (Zip Code)
  
  
   þ o
  þ o




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesItem 6. ExhibitsSignaturesExhibit IndexComputation of Ratios of Earnings to Fixed ChargesConsent of Bates White, LLCCertification of CEO pursuant to Section 302Certification of CFO pursuant to Section 302Certification of CEO pursuant to Section 906Certification of CFO pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 COOPER INDUSTRIES, LTD.
 CONSOLIDATED INCOME STATEMENTS
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions, where applicable)Revenues
    
    $
    1,189.2
    
    
    $
    1,109.3
    
    
    $
    2,334.0
    
    
    $
    2,173.9Cost of sales
    
    
    814.7
    
    
    
    775.2
    
    
    
    1,602.3
    
    
    
    1,517.2Selling and administrative expenses
    
    
    232.9
    
    
    
    212.0
    
    
    
    460.4
    
    
    
    420.4Operating earnings
    
    
    141.6
    
    
    
    122.1
    
    
    
    271.3
    
    
    
    236.3Interest expense, net
    
    
    17.7
    
    
    
    17.2
    
    
    
    35.5
    
    
    
    34.3Income before income taxes
    
    
    123.9
    
    
    
    104.9
    
    
    
    235.8
    
    
    
    202.0Income taxes
    
    
    26.6
    
    
    
    21.0
    
    
    
    50.7
    
    
    
    40.4Net income
    
    $
    97.3
    
    
    $
    83.9
    
    
    $
    185.1
    
    
    $
    161.6Income per common share:Basic
    
    $
    1.05
    
    
    $
    .91
    
    
    $
    1.99
    
    
    $
    1.74Diluted
    
    $
    1.02
    
    
    $
    .89
    
    
    $
    1.94
    
    
    $
    1.70Cash dividends per common share
    
    $
    .37
    
    
    $
    .35
    
    
    $
    .74
    
    
    $
    .70
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COOPER INDUSTRIES, LTD.
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(in millions)ASSETSCash and cash equivalents
    
    $
    537.0
    
    
    $
    652.8Receivables
    
    
    879.2
    
    
    
    820.9Inventories
    
    
    590.5
    
    
    
    523.0Deferred income taxes and other current assets
    
    
    181.5
    
    
    
    221.9Total current assets
    
    
    2,188.2
    
    
    
    2,218.6Property, plant and equipment, less accumulated depreciation
    
    
    685.9
    
    
    
    696.4Goodwill
    
    
    2,100.5
    
    
    
    2,142.3Deferred income taxes and other noncurrent assets
    
    
    280.6
    
    
    
    283.5Total assets
    
    $
    5,255.2
    
    
    $
    5,340.8LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    6.4
    
    
    $
    97.6Accounts payable
    
    
    408.2
    
    
    
    350.7Accrued liabilities
    
    
    461.0
    
    
    
    488.8Accrual for discontinued operations
    
    
    191.3
    
    
    
    225.1Current maturities of long-term debt
    
    
    591.5
    
    
    
    665.4Total current liabilities
    
    
    1,658.4
    
    
    
    1,827.6Long-term debt
    
    
    694.9
    
    
    
    698.6Postretirement benefits other than pensions
    
    
    169.0
    
    
    
    173.3Other long-term liabilities
    
    
    345.6
    
    
    
    354.8Total liabilities
    
    
    2,867.9
    
    
    
    3,054.3Common stock, $.01 par value
    
    
    0.9
    
    
    
    0.9Capital in excess of par value
    
    
    445.9
    
    
    
    446.2Retained earnings
    
    
    2,087.3
    
    
    
    1,971.6Accumulated other nonowner changes in equity
    
    
    (146.8
    )
    
    
    (132.2
    )Total shareholders equity
    
    
    2,387.3
    
    
    
    2,286.5Total liabilities and shareholders equity
    
    $
    5,255.2
    
    
    $
    5,340.8
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COOPER INDUSTRIES, LTD.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2005
    
    2004(in millions)Cash flows from operating activities:Net income
    
    $
    185.1
    
    
    $
    161.6Adjustments to reconcile to net cash provided by operating activities:Depreciation and amortization
    
    
    57.5
    
    
    
    57.5Deferred income taxes
    
    
    5.3
    
    
    
    18.2Restructuring charge payments
    
    
    (0.4
    )
    
    
    (3.7
    )Changes in assets and liabilities: (1)Receivables
    
    
    (74.9
    )
    
    
    (83.3
    )Inventories
    
    
    (69.4
    )
    
    
    (25.8
    )Accounts payable and accrued liabilities
    
    
    14.0
    
    
    
    27.7Other assets and liabilities, net
    
    
    64.2
    
    
    
    67.1Net cash provided by operating activities
    
    
    181.4
    
    
    
    219.3Cash flows from investing activities:Capital expenditures
    
    
    (47.9
    )
    
    
    (39.0
    )Cash paid for acquired businesses
    
    
    (2.4
    )
    
    
    (10.1
    )Proceeds from sales of property, plant and equipment and other
    
    
    4.3
    
    
    
    7.9Net cash used in investing activities
    
    
    (46.0
    )
    
    
    (41.2
    )Cash flows from financing activities:Proceeds from issuances of debt
    
    
    
    
    
    
    2.0Repayments of debt
    
    
    (117.9
    )
    
    
    (1.5
    )Dividends
    
    
    (69.4
    )
    
    
    (65.1
    )Subsidiary purchase of parent shares
    
    
    (77.2
    )
    
    
    (164.9
    )Activity under employee stock plans and other
    
    
    41.2
    
    
    
    24.1Net cash used in financing activities
    
    
    (223.3
    )
    
    
    (205.4
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (27.9
    )
    
    
    (2.5
    )Decrease in cash and cash equivalents
    
    
    (115.8
    )
    
    
    (29.8
    )Cash and cash equivalents, beginning of period
    
    
    652.8
    
    
    
    463.7Cash and cash equivalents, end of period
    
    $
    537.0
    
    
    $
    433.9
 
 (1)
    
    Net of the effects of acquisitions and translation.  -4-




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COOPER INDUSTRIES, LTD.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Accounting Policies
 Basis of Presentation
  Share-Based Payment
 Note 2. Stock-Based Compensation
  Accounting for Stock-Based Compensation
 -5-




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Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Net income, as reported
    
    $
    97.3
    
    
    $
    83.9
    
    
    $
    185.1
    
    
    $
    161.6Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects
    
    
    6.2
    
    
    
    4.4
    
    
    
    10.2
    
    
    
    6.9Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects
    
    
    (5.6
    )
    
    
    (6.4
    )
    
    
    (8.1
    )
    
    
    (9.0
    )Pro forma net income
    
    $
    97.9
    
    
    $
    81.9
    
    
    $
    187.2
    
    
    $
    159.5Earnings per share:Basic  as reported
    
    $
    1.05
    
    
    $
    .91
    
    
    $
    1.99
    
    
    $
    1.74Basic  pro forma
    
    $
    1.05
    
    
    $
    .89
    
    
    $
    2.01
    
    
    $
    1.72Diluted  as reported
    
    $
    1.02
    
    
    $
    .89
    
    
    $
    1.94
    
    
    $
    1.70Diluted  pro forma
    
    $
    1.03
    
    
    $
    .87
    
    
    $
    1.96
    
    
    $
    1.68
 Note 3. Acquisitions
  Note 4. Inventories
 June 30,
    
    December 31,2005
    
    2004(in millions)Raw materials
    
    $
    209.6
    
    
    $
    185.2Work-in-process
    
    
    152.0
    
    
    
    118.6Finished goods
    
    
    336.5
    
    
    
    320.2Perishable tooling and supplies
    
    
    14.2
    
    
    
    13.2712.3
    
    
    
    637.2Allowance for excess and obsolete inventory
    
    
    (58.7
    )
    
    
    (58.9
    )Excess of current standard costs over LIFO costs
    
    
    (63.1
    )
    
    
    (55.3
    )Net inventories
    
    $
    590.5
    
    
    $
    523.0
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Note 5. Shareholders Equity
   Note 6. Segment Information
 RevenuesThree Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Electrical Products
    
    $
    1,010.6
    
    
    $
    928.9
    
    
    $
    1,978.9
    
    
    $
    1,819.6Tools & Hardware
    
    
    178.6
    
    
    
    180.4
    
    
    
    355.1
    
    
    
    354.3Total revenues
    
    $
    1,189.2
    
    
    $
    1,109.3
    
    
    $
    2,334.0
    
    
    $
    2,173.9
 -7-




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Operating EarningsThree Months Ended
    
    Six Months EndedJune 30,
    

    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Electrical Products
    
    $
    148.2
    
    
    $
    129.4
    
    
    $
    283.6
    
    
    $
    250.2Tools & Hardware
    
    
    15.8
    
    
    
    12.6
    
    
    
    30.5
    
    
    
    24.4Segment operating earnings
    
    
    164.0
    
    
    
    142.0
    
    
    
    314.1
    
    
    
    274.6General Corporate expenses
    
    
    22.4
    
    
    
    19.9
    
    
    
    42.8
    
    
    
    38.3Total operating earnings
    
    
    141.6
    
    
    
    122.1
    
    
    
    271.3
    
    
    
    236.3Interest expense, net
    
    
    17.7
    
    
    
    17.2
    
    
    
    35.5
    
    
    
    34.3Income before income taxes
    
    $
    123.9
    
    
    $
    104.9
    
    
    $
    235.8
    
    
    $
    202.0
 Note 7. Pension and Other Postretirement Benefits
 Pension BenefitsThree Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Components of net periodic benefit cost:Service cost
    
    $
    4.2
    
    
    $
    3.7
    
    
    $
    8.7
    
    
    $
    8.1Interest cost
    
    
    10.0
    
    
    
    10.6
    
    
    
    20.4
    
    
    
    20.7Expected return on plan assets
    
    
    (12.6
    )
    
    
    (11.9
    )
    
    
    (25.4
    )
    
    
    (23.4
    )Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3Recognized actuarial loss
    
    
    2.5
    
    
    
    1.9
    
    
    
    4.8
    
    
    
    3.6Net periodic benefit cost
    
    $
    4.2
    
    
    $
    4.4
    
    
    $
    8.8
    
    
    $
    9.3
 -8-




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Other Postretirement BenefitsThree Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Components of net periodic benefit cost:Service cost
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    0.1Interest cost
    
    
    1.7
    
    
    
    2.0
    
    
    
    3.5
    
    
    
    4.1Recognized actuarial gain
    
    
    (0.7
    )
    
    
    (0.7
    )
    
    
    (1.5
    )
    
    
    (1.4
    )Net periodic benefit cost
    
    $
    1.1
    
    
    $
    1.4
    
    
    $
    2.1
    
    
    $
    2.8
 Note 8. Income Taxes
   Note 9. Net Income Per Common Share
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Basic:Net income applicable to common stock
    
    $
    97.3
    
    
    $
    83.9
    
    
    $
    185.1
    
    
    $
    161.6Weighted average common shares outstanding
    
    
    93.0
    
    
    
    92.2
    
    
    
    93.0
    
    
    
    92.9Diluted:Net income applicable to common stock
    
    $
    97.3
    
    
    $
    83.9
    
    
    $
    185.1
    
    
    $
    161.6Weighted average common shares outstanding
    
    
    93.0
    
    
    
    92.2
    
    
    
    93.0
    
    
    
    92.9Incremental shares from assumed conversions:Options, performance-based stock
awards and other employee awards
    
    
    2.4
    
    
    
    2.2
    
    
    
    2.5
    
    
    
    2.2Weighted average common shares
and common share equivalents
    
    
    95.4
    
    
    
    94.4
    
    
    
    95.5
    
    
    
    95.1
 -9-




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Note 10. Net Income and Other Nonowner Changes in Equity
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(in millions)Net income
    
    $
    97.3
    
    
    $
    83.9
    
    
    $
    185.1
    
    
    $
    161.6Foreign currency translation gains
(losses)
    
    
    (5.4
    )
    
    
    (13.1
    )
    
    
    (13.5
    )
    
    
    1.8Change in fair value of derivatives
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    (1.1
    )
    
    
    1.3Net income and other nonowner
changes in equity
    
    $
    92.1
    
    
    $
    70.7
    
    
    $
    170.5
    
    
    $
    164.7
 Note 11. Restructuring
     -10-




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FacilitiesNumber of
    
    Accrued
    
    Closure andEmployees
    
    Severance
    
    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
    
    
    
    
    
    
    
    
    
    
    0.6Cash expenditures
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2005
    
    
    
    
    
    $
    
    
    
    $
    0.6
   Note 12. Charge Related to Discontinued Operations
   -11-




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Note 13. Consolidating Financial Information
  Consolidating Income Statements
Three Months Ended June 30, 2005
 CooperIndustries,
    
    Guaranteeing
    
    Other
    
    ConsolidatingCooper
    
    LLC
    
    Subsidiaries
    
    Subsidiaries
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    811.0
    
    
    $
    408.6
    
    
    $
    (30.4
    )
    
    $
    1,189.2Cost of sales
    
    
    
    
    
    
    0.2
    
    
    
    575.9
    
    
    
    269.0
    
    
    
    (30.4
    )
    
    
    814.7Selling and administrative
expenses
    
    
    2.5
    
    
    
    2.0
    
    
    
    144.7
    
    
    
    83.7
    
    
    
    
    
    
    
    232.9Interest expense, net
    
    
    (0.4
    )
    
    
    13.4
    
    
    
    (0.7
    )
    
    
    5.4
    
    
    
    
    
    
    
    17.7Equity in earnings of
subsidiaries, net of tax
    
    
    124.3
    
    
    
    42.8
    
    
    
    28.8
    
    
    
    69.0
    
    
    
    (264.9
    )
    
    
    Intercompany income
(expense)
    
    
    (1.7
    )
    
    
    (26.8
    )
    
    
    (55.4
    )
    
    
    107.3
    
    
    
    (23.4
    )
    
    
    Income before income
taxes
    
    
    120.5
    
    
    
    0.4
    
    
    
    64.5
    
    
    
    226.8
    
    
    
    (288.3
    )
    
    
    123.9Income tax expense
(benefit)
    
    
    
    
    
    
    (7.9
    )
    
    
    (4.4
    )
    
    
    38.9
    
    
    
    
    
    
    
    26.6Net income
    
    $
    120.5
    
    
    $
    8.3
    
    
    $
    68.9
    
    
    $
    187.9
    
    
    $
    (288.3
    )
    
    $
    97.3
 Three Months Ended June 30, 2004
 Cooper
    
    Other
    
    ConsolidatingCooper
    
    Ohio
    
    Subsidiaries
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    73.3
    
    
    $
    1,041.0
    
    
    $
    (5.0
    )
    
    $
    1,109.3Cost of sales
    
    
    0.2
    
    
    
    48.9
    
    
    
    731.1
    
    
    
    (5.0
    )
    
    
    775.2Selling and administrative
expenses
    
    
    2.7
    
    
    
    26.8
    
    
    
    182.5
    
    
    
    
    
    
    
    212.0Interest expense, net
    
    
    (0.3
    )
    
    
    12.1
    
    
    
    5.4
    
    
    
    
    
    
    
    17.2Equity in earnings of
subsidiaries, net of tax
    
    
    88.0
    
    
    
    103.1
    
    
    
    41.0
    
    
    
    (232.1
    )
    
    
    Intercompany income
(expense)
    
    
    (1.5
    )
    
    
    (77.6
    )
    
    
    79.1
    
    
    
    
    
    
    
    Income before income
taxes
    
    
    83.9
    
    
    
    11.0
    
    
    
    242.1
    
    
    
    (232.1
    )
    
    
    104.9Income tax expense (benefit)
    
    
    
    
    
    
    (30.0
    )
    
    
    51.0
    
    
    
    
    
    
    
    21.0Net income
    
    $
    83.9
    
    
    $
    41.0
    
    
    $
    191.1
    
    
    $
    (232.1
    )
    
    $
    83.9
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Consolidating Income Statements
Six Months Ended June 30, 2005
 CooperIndustries,
    
    Guaranteeing
    
    Other
    
    ConsolidatingCooper
    
    LLC
    
    Subsidiaries
    
    Subsidiaries
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    1,562.6
    
    
    $
    832.0
    
    
    $
    (60.6
    )
    
    $
    2,334.0Cost of sales
    
    
    0.2
    
    
    
    0.2
    
    
    
    1,112.3
    
    
    
    550.2
    
    
    
    (60.6
    )
    
    
    1,602.3Selling and administrative
expenses
    
    
    4.7
    
    
    
    3.8
    
    
    
    283.2
    
    
    
    168.7
    
    
    
    
    
    
    
    460.4Interest expense, net
    
    
    (0.9
    )
    
    
    26.9
    
    
    
    (1.7
    )
    
    
    11.2
    
    
    
    
    
    
    
    35.5Equity in earnings of
subsidiaries, net of tax
    
    
    238.0
    
    
    
    49.7
    
    
    
    110.6
    
    
    
    129.4
    
    
    
    (527.7
    )
    
    
    Intercompany income
(expense)
    
    
    (2.5
    )
    
    
    (26.8
    )
    
    
    (166.2
    )
    
    
    242.0
    
    
    
    (46.5
    )
    
    
    Income (loss) before
income taxes
    
    
    231.5
    
    
    
    (8.0
    )
    
    
    113.2
    
    
    
    473.3
    
    
    
    (574.2
    )
    
    
    235.8Income tax expense (benefit)
    
    
    
    
    
    
    (21.5
    )
    
    
    (16.1
    )
    
    
    88.3
    
    
    
    
    
    
    
    50.7Net income
    
    $
    231.5
    
    
    $
    13.5
    
    
    $
    129.3
    
    
    $
    385.0
    
    
    $
    (574.2
    )
    
    $
    185.1
 Six Months Ended June 30, 2004
 Cooper
    
    Other
    
    ConsolidatingCooper
    
    Ohio
    
    Subsidiaries
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    140.3
    
    
    $
    2,043.7
    
    
    $
    (10.1
    )
    
    $
    2,173.9Cost of sales
    
    
    0.6
    
    
    
    92.3
    
    
    
    1,434.4
    
    
    
    (10.1
    )
    
    
    1,517.2Selling and administrative
expenses
    
    
    4.7
    
    
    
    52.7
    
    
    
    363.0
    
    
    
    
    
    
    
    420.4Interest expense, net
    
    
    (0.5
    )
    
    
    23.9
    
    
    
    10.9
    
    
    
    
    
    
    
    34.3Equity in earnings of
subsidiaries, net of tax
    
    
    169.1
    
    
    
    226.5
    
    
    
    75.7
    
    
    
    (471.3
    )
    
    
    Intercompany income (expense)
    
    
    (2.7
    )
    
    
    (203.9
    )
    
    
    206.6
    
    
    
    
    
    
    
    Income (loss) before
income taxes
    
    
    161.6

    
    
    
    (6.0
    )
    
    
    517.7
    
    
    
    (471.3
    )
    
    
    202.0Income tax expense (benefit)
    
    
    
    
    
    
    (81.7
    )
    
    
    122.1
    
    
    
    
    
    
    
    40.4Net income
    
    $
    161.6
    
    
    $
    75.7
    
    
    $
    395.6
    
    
    $
    (471.3
    )
    
    $
    161.6
 -14-




---



##### Table of Contents



Consolidating Balance Sheets
June 30, 2005
 CooperIndustries,
    
    Guaranteeing
    
    Other
    
    ConsolidatingCooper
    
    LLC
    
    Subsidiaries
    
    Subsidiaries
    
    Adjustments
    
    TotalCash and cash equivalents
    
    $
    26.8
    
    
    $
    
    
    
    $
    219.8
    
    
    $
    290.4
    
    
    $
    
    
    
    $
    537.0Receivables
    
    
    0.1
    
    
    
    
    
    
    
    531.7
    
    
    
    347.4
    
    
    
    
    
    
    
    879.2Inventories
    
    
    
    
    
    
    
    
    
    
    351.0
    
    
    
    239.5
    
    
    
    
    
    
    
    590.5Deferred income taxes and
other current assets
    
    
    0.4
    
    
    
    100.0
    
    
    
    98.5
    
    
    
    (17.4
    )
    
    
    
    
    
    
    181.5Total current assets
    
    
    27.3
    
    
    
    100.0
    
    
    
    1,201.0
    
    
    
    859.9
    
    
    
    
    
    
    
    2,188.2Property, plant and equipment,
less accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    388.1
    
    
    
    297.8
    
    
    
    
    
    
    
    685.9Goodwill
    
    
    
    
    
    
    
    
    
    
    1,018.0
    
    
    
    1,082.5
    
    
    
    
    
    
    
    2,100.5Investment in subsidiaries
    
    
    4,758.5
    
    
    
    939.4
    
    
    
    4,818.9
    
    
    
    2,368.0
    
    
    
    (12,884.8
    )

    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,490.4
    
    
    
    279.3
    
    
    
    (2,769.7
    )
    
    
    Intercompany accounts
receivables
    
    
    564.5
    
    
    
    875.2
    
    
    
    
    
    
    
    612.5
    
    
    
    (2,052.2
    )
    
    
    Intercompany notes receivable
    
    
    46.0
    
    
    
    
    
    
    
    62.3
    

    
    
    5,877.2
    
    
    
    (5,985.5
    )
    
    
    Deferred income taxes and
other noncurrent assets
    
    
    
    
    
    
    123.9
    
    
    
    31.8
    
    
    
    124.9
    
    
    
    
    
    
    
    280.6Total assets
    
    $
    5,396.3
    
    
    $
    2,038.5
    
    
    $
    10,010.5
    
    
    $
    11,502.1
    
    
    $
    (23,692.2
    )
    
    $
    5,255.2Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.4
    
    
    $
    
    
    
    $
    6.4Accounts payable
    
    
    34.4
    
    
    
    17.4
    
    
    
    195.1
    
    
    
    161.3
    
    
    
    
    
    
    
    408.2Accrued liabilities
    
    
    3.4
    
    
    
    30.0
    
    
    
    304.9
    
    
    
    122.7
    
    
    
    
    
    
    
    461.0Accrual for discontinued
operations
    
    
    
    
    
    
    191.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191.3Current maturities of long-term
debt
    
    
    
    
    
    
    229.0
    
    
    
    
    
    
    
    362.5
    
    
    
    
    
    
    
    591.5Total current liabilities
    
    
    37.8
    
    
    
    467.7
    
    
    
    500.0
    
    
    
    652.9
    
    
    
    
    
    
    
    1,658.4Long-term debt
    
    
    
    
    
    
    685.2
    
    
    
    8.0
    
    
    
    1.7
    
    
    
    
    
    
    
    694.9Intercompany accounts
payables
    
    
    
    
    
    
    
    
    
    
    1,688.6
    
    
    
    363.6
    
    
    
    (2,052.2
    )
    
    
    Intercompany notes payable
    
    
    178.7
    
    
    
    462.9
    
    
    
    5,235.5
    
    
    
    108.4
    
    
    
    (5,985.5
    )
    
    
    Other long-term liabilities
    
    
    
    
    
    
    128.0
    
    
    
    273.6
    
    
    
    113.0
    
    
    
    
    
    
    
    514.6Total liabilities
    
    
    216.5
    
    
    
    1,743.8
    
    
    
    7,705.7
    
    
    
    1,239.6
    
    
    
    (8,037.7
    )
    
    
    2,867.9Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    258.4
    
    
    
    (258.4
    )
    
    
    Capital in excess of par value
    
    
    3,183.6
    
    
    
    
    
    
    
    498.6
    
    
    
    6,396.5
    
    
    
    (9,632.8
    )
    
    
    445.9Retained earnings
    
    
    2,151.4
    
    
    
    411.2
    
    
    
    1,962.9
    
    
    
    3,927.6
    
    
    
    (6,365.8
    )
    
    
    2,087.3Accumulated other nonowner
changes in equity
    
    
    (156.7
    )
    
    
    (116.5
    )
    
    
    (156.7
    )
    
    
    (320.0
    )

    
    
    603.1
    
    
    
    (146.8
    )Total shareholders equity
    
    
    5,179.8
    
    
    
    294.7
    
    
    
    2,304.8
    
    
    
    10,262.5
    
    
    
    (15,654.5
    )
    
    
    2,387.3Total liabilities and
shareholders equity
    
    $
    5,396.3
    
    
    $
    2,038.5
    
    
    $
    10,010.5
    
    
    $
    11,502.1
    
    
    $
    (23,692.2
    )
    
    $
    5,255.2
 -15-




---



##### Table of Contents



Consolidating Balance Sheets
December 31, 2004
 Cooper
    
    Other
    
    ConsolidatingCooper
    
    Ohio
    
    Subsidiaries
    
    Adjustments
    
    TotalCash and cash equivalents
    
    $
    111.5
    
    
    $
    246.1
    
    
    $
    295.2
    
    
    $
    
    
    
    $
    652.8Receivables
    
    
    
    
    
    
    15.0
    
    
    
    805.9
    
    
    
    
    
    
    
    820.9Inventories
    
    
    
    
    
    
    
    
    
    
    523.0
    
    
    
    
    
    
    
    523.0Deferred income taxes and other
current assets
    
    
    1.3
    
    
    
    215.0
    
    
    
    5.6
    
    
    
    
    
    
    
    221.9Total current assets
    
    
    112.8
    
    
    
    476.1
    
    
    
    1,629.7
    
    
    
    
    
    
    
    2,218.6Property, plant and equipment,
less
accumulated depreciation
    
    
    
    
    
    
    34.5
    
    
    
    661.9
    
    
    
    
    
    
    
    696.4Goodwill
    
    
    
    
    
    
    
    
    
    
    2,142.3
    
    
    
    
    
    
    
    2,142.3Investment in subsidiaries
    
    
    2,785.8
    
    
    
    4,796.1
    
    
    
    193.5
    
    
    
    (7,775.4
    )
    
    
    Investment in parent
    
    
    
    
    
    
    2,245.5
    
    
    
    202.2
    
    
    
    (2,447.7
    )
    
    
    Intercompany accounts receivable
    
    
    514.0
    
    
    
    
    
    
    
    681.9
    
    
    
    (1,195.9
    )
    
    
    Intercompany notes receivable
    
    
    25.6
    
    
    
    21.3
    
    
    
    3,899.6
    
    
    
    (3,946.5
    )
    
    
    Deferred income taxes and other
noncurrent assets
    
    
    
    
    
    
    112.6
    
    
    
    170.9
    
    
    
    
    
    
    
    283.5Total assets
    
    $
    3,438.2
    
    
    $
    7,686.1
    
    
    $
    9,582.0
    
    
    $
    (15,365.5
    )
    
    $
    5,340.8Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    97.6
    
    
    $
    
    
    
    $
    97.6Accounts payable
    
    
    32.5
    
    
    
    21.1
    
    
    
    297.1
    
    
    
    
    
    
    
    350.7Accrued liabilities
    
    
    2.9
    
    
    
    130.6
    
    
    
    355.3
    
    
    
    
    
    
    
    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
    
    
    
    1,186.4
    
    
    
    
    
    
    
    1,827.6Long-term debt
    
    
    
    
    
    
    688.3
    
    
    
    10.3
    
    
    
    
    
    
    
    698.6Intercompany accounts payable
    
    
    
    
    
    
    1,195.9
    
    
    
    
    
    
    
    (1,195.9
    )
    
    
    Intercompany notes payable
    
    
    135.7
    
    
    
    3,763.9
    
    
    
    46.9
    
    
    
    (3,946.5
    )
    
    
    Other long-term liabilities
    
    
    
    
    
    
    253.2
    
    
    
    274.9
    
    
    
    
    
    
    
    528.1Total liabilities
    
    
    171.1
    
    
    
    6,507.1
    
    
    
    1,518.5
    
    
    
    (5,142.4
    )
    
    
    3,054.3Class A common stock
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    137.0
    
    
    
    (137.0
    )
    
    
    Capital in excess of par value
    
    
    2,882.2
    
    
    
    12.1
    
    
    
    7,252.0
    
    
    
    (9,700.1
    )
    
    
    446.2Retained earnings
    
    
    350.0
    
    
    
    1,263.8
    
    
    
    773.1
    
    
    
    (415.3
    )
    
    
    1,971.6Accumulated other nonowner
changes in equity
    
    
    33.5
    
    
    
    (96.9
    )
    
    
    (98.6
    )
    
    
    29.8
    
    
    
    (132.2
    )Total shareholders equity
    
    
    3,267.1
    
    
    
    1,179.0
    
    
    
    8,063.5
    
    
    
    (10,223.1
    )
    
    
    2,286.5Total liabilities and
shareholders equity
    
    $
    3,438.2
    
    
    $
    7,686.1
    
    
    $
    9,582.0
    
    
    $
    (15,365.5
    )
    
    $
    5,340.8
 -16-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Six Months Ended June 30, 2005
 Cooper
    
    Guaranteeing
    
    Other
    
    ConsolidatingCooper
    
    Industries, LLC
    
    Subsidiaries
    
    Subsidiaries
    
    Adjustments
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (2.1
    )
    
    $
    (69.7
    )
    
    $
    13.0
    
    
    $
    286.6
    
    
    $
    (46.4
    )
    
    $
    181.4Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (26.5
    )
    
    
    (21.4
    )
    
    
    
    
    
    
    (47.9
    )Cash paid for acquired
businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    
    
    
    
    (2.4
    )Investment in affiliates
    
    
    (6.3
    )
    
    
    
    
    
    
    (33.7
    )
    
    
    
    
    
    
    40.0
    
    
    
    Loans to affiliates
    
    
    (46.0
    )
    
    
    
    
    
    
    (61.5
    )
    
    
    (43.0
    )
    
    
    150.5
    
    
    
    Repayments of loans from
affiliates
    
    
    25.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.6
    )
    
    
    Dividends from subsidiaries
    
    
    
    
    
    
    
    
    
    
    19.0
    
    
    
    
    
    
    
    (19.0
    )
    
    
    Other
    
    
    
    
    
    
    1.5
    
    
    
    0.3
    
    
    
    2.5
    
    
    
    
    
    
    
    4.3Net cash provided by (used
in) investing activities
    
    
    (26.7
    )
    
    
    1.5
    
    
    
    (102.4
    )
    
    
    (64.3
    )
    
    
    145.9
    
    
    
    (46.0
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117.9
    )
    
    
    
    
    
    
    (117.9
    )Borrowings from affiliates
    
    
    43.0
    
    
    
    
    
    
    
    
    
    
    
    107.5
    
    
    
    (150.5
    )
    
    
    Repayments of loans to
affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.6
    )
    
    
    25.6
    
    
    
    Other intercompany financing
activities
    
    
    6.6
    
    
    
    68.2
    
    
    
    31.1
    
    
    
    (105.9
    )
    
    
    
    
    
    
    Dividends
    
    
    (69.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69.4
    )Dividends paid to affiliates
    
    
    (46.4
    )
    
    
    
    
    
    
    
    
    
    
    (19.0
    )
    
    
    65.4
    
    
    
    Subsidiary purchase of parent
shares
    
    
    10.3
    
    
    
    
    
    
    
    (10.3
    )
    
    
    (77.2
    )
    
    
    
    
    
    
    (77.2
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40.0
    
    
    
    (40.0
    )
    
    
    Employee stock plan activity
and other
    
    
    
    
    
    
    
    
    
    
    41.2
    
    
    
    
    
    
    
    
    
    
    
    41.2Net cash provided by (used
in) financing activities
    
    
    (55.9
    )
    
    
    68.2
    
    
    
    62.0
    
    
    
    (198.1
    )
    
    
    (99.5
    )
    
    
    (223.3
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27.9
    )
    
    
    
    
    
    
    (27.9
    )Increase (decrease) in cash and
cash equivalents
    
    
    (84.7
    )
    
    
    
    
    
    
    (27.4
    )
    
    
    (3.7
    )
    
    
    
    
    
    
    (115.8
    )Cash and cash equivalents,
beginning of period
    
    
    111.5
    
    
    
    
    
    
    
    247.2
    
    
    
    294.1
    
    
    
    
    
    
    
    652.8Cash and cash equivalents, end
of period
    
    $
    26.8
    
    
    $
    
    
    
    $
    219.8
    
    
    $
    290.4
    
    
    $
    
    
    
    $
    537.0
 -17-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Six Months Ended June 30, 2004
 Cooper
    
    Other
    
    ConsolidatingCooper
    
    Ohio
    
    Subsidiaries
    
    Adjustments
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (3.8
    )
    
    $
    (53.8
    )
    
    $
    276.9
    
    
    $
    
    
    
    $
    219.3Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    (10.4
    )
    
    
    (28.6
    )
    
    
    
    
    
    
    (39.0
    )Cash paid for acquired
businesses
    
    
    
    
    
    
    
    
    
    
    (10.1
    )
    
    
    
    
    
    
    (10.1
    )Intercompany sale (purchase)
of investment in parent
    
    
    
    
    
    
    109.5
    
    
    
    (109.5
    )
    
    
    
    
    
    
    Intercompany sale (purchase)
of investment in subsidiaries
    
    
    
    
    
    
    (182.1
    )
    
    
    182.1
    
    
    
    
    
    
    
    Investment in affiliates
    
    
    (3.8
    )
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    Loans to affiliates
    
    
    (34.1
    )
    
    
    (3.7
    )
    
    
    (67.7
    )
    
    
    105.5
    
    
    
    Repayments of loans from
affiliates
    
    
    
    
    
    
    
    
    
    
    84.5
    
    
    
    (84.5
    )
    
    
    Dividends from subsidiaries
    
    
    134.0
    
    
    
    3.3
    
    
    
    
    
    
    
    (137.3
    )
    
    
    Other
    
    
    
    
    
    
    0.7
    
    
    
    7.2
    
    
    
    
    
    
    
    7.9Net cash provided by (used
in) investing activities
    
    
    96.1
    
    
    
    (82.7
    )
    
    
    57.9
    
    
    
    (112.5
    )
    
    
    (41.2
    )Cash flows from financing
activities:Proceeds from issuances of
debt
    
    
    
    
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    2.0Repayments of debt
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
    
    
    
    
    
    
    (1.5
    )Borrowings from affiliates
    
    
    67.7
    
    
    
    
    
    
    
    37.8
    
    
    
    (105.5
    )
    
    
    Repayments of loans to
affiliates
    
    
    (132.1
    )
    
    
    
    
    
    
    47.6
    
    
    
    84.5
    
    
    
    Other intercompany financing
activities
    
    
    1.9
    
    
    
    172.1
    
    
    
    (174.0
    )
    
    
    
    
    
    
    Dividends
    
    
    (65.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65.1
    )Dividends paid to affiliates
    
    
    
    
    
    
    
    
    
    
    (137.3
    )
    
    
    137.3
    
    
    
    Subsidiary purchase of parent
shares
    
    
    
    
    
    
    (110.3
    )
    
    
    (54.6
    )
    
    
    
    
    
    
    (164.9
    )Employee stock plan activity
and other
    
    
    
    
    
    
    24.1
    
    
    
    3.8
    
    
    
    (3.8
    )
    
    
    24.1Net cash provided by (used
in) financing activities
    
    
    (127.6
    )
    
    
    85.9
    
    
    
    (276.2
    )
    
    
    112.5
    
    
    
    (205.4
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    (2.5
    )Increase (decrease) in cash and
cash equivalents
    
    
    (35.3
    )
    
    
    (50.6
    )
    
    
    56.1
    
    
    
    
    
    
    
    (29.8
    )Cash and cash equivalents,
beginning of period
    
    
    96.4
    
    
    
    257.2
    
    
    
    110.1
    
    
    
    
    
    
    
    463.7Cash and cash equivalents, end of
period
    
    $
    61.1
    
    
    $
    206.6
    
    
    $
    166.2
    
    
    $
    
    
    
    $
    433.9
 -18-




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Item 2.
    
    Managements Discussion and Analysis of Financial Conditionand Results of Operations
 Results of Operations
 Three Months Ended June 30, 2005 Compared With Three Months Ended June 30, 2004
  Revenues:
    Costs and Expenses:
     -19-




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Operating Earnings:
    Income Taxes:
  -20-




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Six Months Ended June 30, 2005 Compared With Six Months Ended June 30, 2004
  Revenues:
    Costs and Expenses:
      -21-




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Operating Earnings:
     Restructuring:
     -22-




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##### Table of Contents



FacilitiesNumber of
    
    Accrued
    
    Closure andEmployees
    
    Severance
    
    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
    
    
    
    
    
    
    
    
    
    
    0.6Cash expenditures
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2005
    
    
    
    
    
    $
    
    
    
    $
    0.6
   Income Taxes:
  Liquidity and Capital Resources
 Liquidity
  -23-




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Capital Resources:
      -24-




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##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
  Backlog
  June 30,2005
    
    2004(in millions)Electrical Products
    
    $
    378.9
    
    
    $
    330.1Tools & Hardware
    
    
    63.8
    
    
    
    86.4$
    442.7
    
    
    $
    416.5
 Private Securities Litigation Reform Act Safe Harbor Statement
  
 Item 4. Controls and Procedures
  -25-




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-26-




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##### Table of Contents



PART II  OTHER INFORMATION
 
      -27-




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##### Table of Contents



Purchases of Equity Securities
 Total Number of
    
    Maximum Number ofShares Purchased as
    
    Shares that May YetPart of Publicly
    
    Be Purchased UnderTotal Number of
    
    Average Price Paid
    
    Announced Plans or
    
    the Plans orPeriod
    
    Shares Purchased
    
    per Share
    
    Programs(1)
    
    Programs(1)As of 3/31/05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,761,0504/01/04  4/30/05
    
    
    232,500
    
    
    $
    68.08
    
    
    
    232,500
    
    
    
    6,528,5505/01/04  5/31/05
    
    
    254,300
    
    
    
    65.96
    
    
    
    254,300
    
    
    
    6,274,2506/01/04  6/30/05
    
    
    246,500
    
    
    
    67.04
    
    
    
    246,500
    
    
    
    6,027,750Total
    
    
    733,300
    
    
    $
    67.00
    
    
    
    733,300
 
 (1)
    
    On February 9, 2000, Cooper publicly announced that its Board of Directors
authorized the repurchase of up to 5 million shares of Cooper common stock. On November 2,
2004, Coopers Board of Directors authorized the repurchase of up to five million additional
shares of 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 in order
to offset the dilution that results from issuing shares under -28-




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##### Table of Contents



these plans. For 2005, Coopers current estimate is that 2.0 million shares will be issued under
equity compensation plans which is reflected in the above table. 
  12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2000 through 2004
and the Six Months Ended June 30, 2005 and 2004.23.
    
    Consent of Bates White, LLC.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.
 -29-




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Cooper Industries, Ltd.(Registrant)Date: August 3, 2005
    
    /s/ Terry A. KlebeTerry A. KlebeSenior Vice President andChief Financial OfficerDate: August 3, 2005
    
    /s/ Jeffrey B. LevosJeffrey B. LevosVice President and Controller andChief Accounting Officer
 -30-




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##### Table of Contents



12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2000 through 2004
and the Six Months Ended June 30, 2005 and 2004.23.
    
    Consent of Bates White, LLC.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.