##### 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 March 31, 2007
 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
    
    98-0355628(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)600 Travis, Suite 5800
    
    Houston, Texas 77002(Address of principal executive offices)
    
    (Zip Code)
  
  
   þ o
  þ o o
  o þ




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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 1A. Risk FactorsItem 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 6. ExhibitsSignaturesExhibit IndexForm of Executive Stock Incentive AgreementSecond Amendment to Amended Stock Incentive PlanFirst Amendment to Amended Directors' Stock PlanFirst Amendment to Amended Directors' Retainer Fee Stock PlanDescription of Supplemental Executive Retirement Plan and Salary Deferral PlanComputation of Ratio of Earnings to Fixed ChargesConsent of Bates White, LLCCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 COOPER INDUSTRIES, LTD.
CONSOLIDATED INCOME STATEMENTS
 Three Months EndedMarch 31,2007
    
    
    2006(in millions, where applicable)Revenues
    
    $
    1,394.0
    
    
    $
    1,240.9Cost of sales
    
    
    944.9
    
    
    
    846.8Selling and administrative expenses
    
    
    255.4
    
    
    
    237.5Operating earnings
    
    
    193.7
    
    
    
    156.6Interest expense, net
    
    
    12.9
    
    
    
    12.1Income before income taxes
    
    
    180.8
    
    
    
    144.5Income taxes
    
    
    48.9
    
    
    
    36.8Net income
    
    $
    131.9
    
    
    $
    107.7Income per common share:Basic
    
    $
    .72
    
    
    $
    .59Diluted
    
    $
    .71
    
    
    $
    .57Cash dividends per common share
    
    $
    .21
    
    
    $
    .185
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COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2007
    
    
    2006(in millions)ASSETSCash and cash equivalents
    
    $
    304.8
    
    
    $
    423.5Receivables
    
    
    1,007.4
    
    
    
    896.0Inventories
    
    
    672.4
    
    
    
    607.6Deferred income taxes and other current assets
    
    
    235.8
    
    
    
    266.6Total current assets
    
    
    2,220.4
    
    
    
    2,193.7Property, plant and equipment, less accumulated depreciation
    
    
    670.2
    
    
    
    665.4Goodwill
    
    
    2,387.8
    
    
    
    2,336.9Other noncurrent assets
    
    
    208.2
    
    
    
    178.8Total assets
    
    $
    5,486.6
    
    
    $
    5,374.8LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    4.3
    
    
    $
    5.0Accounts payable
    
    
    512.6
    
    
    
    471.7Accrued liabilities
    
    
    473.0
    
    
    
    522.3Current discontinued operations liability
    
    
    229.5
    
    
    
    199.6Current maturities of long-term debt
    
    
    300.6
    
    
    
    300.7Total current liabilities
    
    
    1,520.0
    
    
    
    1,499.3Long-term debt
    
    
    706.4
    
    
    
    702.8Postretirement benefits other than pensions
    
    
    82.4
    
    
    
    83.2Long-term discontinued operations liability
    
    
    330.0
    
    
    
    330.0Other long-term liabilities
    
    
    302.9
    
    
    
    284.2Total liabilities
    
    
    2,941.7
    
    
    
    2,899.5Common stock, $.01 par value
    
    
    1.8
    
    
    
    0.9Capital in excess of par value
    
    
    277.1
    
    
    
    278.4Retained earnings
    
    
    2,390.2
    
    
    
    2,324.4Accumulated other nonowner changes in equity
    
    
    (124.2
    )
    
    
    (128.4
    )Total shareholders equity
    
    
    2,544.9
    
    
    
    2,475.3Total liabilities and shareholders equity
    
    $
    5,486.6
    
    
    $
    5,374.8
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COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2007
    
    
    2006(in millions)Cash flows from operating activities:Net income
    
    $
    131.9
    
    
    $
    107.7Adjustments to reconcile to net cash provided by operating activities:Depreciation and amortization
    
    
    28.9
    
    
    
    27.0Deferred income taxes
    
    
    (4.1
    )
    
    
    8.5Excess tax benefits from stock options and awards
    
    
    (10.4
    )
    
    
    (13.9
    )Changes in assets and liabilities: (1)Receivables
    
    
    (93.2
    )
    
    
    (77.2
    )Inventories
    
    
    (41.6
    )
    
    
    (58.2
    )Accounts payable and accrued liabilities
    
    
    3.2
    
    
    
    (20.8
    )Other assets and liabilities, net
    
    
    59.0
    
    
    
    52.5Net cash provided by operating activities
    
    
    73.7
    
    
    
    25.6Cash flows from investing activities:Capital expenditures
    
    
    (22.1
    )
    
    
    (16.7
    )Cash paid for acquired businesses
    
    
    (124.3
    )
    
    
    (83.2
    )Proceeds from sales of property, plant and equipment and other
    
    
    
    
    
    
    0.2Net cash used in investing activities
    
    
    (146.4
    )
    
    
    (99.7
    )Cash flows from financing activities:Repayments of debt
    
    
    (1.0
    )
    
    
    (2.0
    )Dividends
    
    
    (38.9
    )
    
    
    (34.6
    )Subsidiary purchase of parent shares
    
    
    (39.3
    )
    
    
    (69.3
    )Excess tax benefits from stock options and awards
    
    
    10.4
    
    
    
    13.9Activity under employee stock plans and other
    
    
    21.5
    
    
    
    53.2Net cash used in financing activities
    
    
    (47.3
    )
    
    
    (38.8
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    1.3
    
    
    
    3.7Decrease in cash and cash equivalents
    
    
    (118.7
    )
    
    
    (109.2
    )Cash and cash equivalents, beginning of period
    
    
    423.5
    
    
    
    452.8Cash and cash equivalents, end of period
    
    $
    304.8
    
    
    $
    343.6
 
 (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
  Impact of New Accounting Standards Accounting for Uncertainty in Income Taxes ( . Accounting for Income Taxes.
 Fair Value Measurements
 The Fair
Value Option for Financial Assets and Financial Liabilities
 Note 2. Stock-Based Compensation
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Note 3. Acquisitions
     Total(in millions)Accounts receivable
    
    $
    15.3Inventory
    
    
    21.0Property, plant and equipment
    
    
    10.5Goodwill
    
    
    51.5Other intangible assets
    
    
    37.7Accounts payable
    
    
    (7.0
    )Other assets and liabilities, net
    
    
    (4.7
    )Net cash consideration
    
    $
    124.3
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Note 4. Inventories
 March 31,
    
    
    December 31,2007
    
    
    2006(in millions)Raw materials
    
    $
    240.6
    
    
    $
    204.2Work-in-process
    
    
    178.5
    
    
    
    160.7Finished goods
    
    
    384.7
    
    
    
    366.3Perishable tooling and supplies
    
    
    15.3
    
    
    
    14.6819.1
    
    
    
    745.8Allowance for excess and obsolete inventory
    
    
    (73.0
    )
    
    
    (65.6
    )Excess of current standard costs over LIFO costs
    
    
    (73.7
    )
    
    
    (72.6
    )Net inventories
    
    $
    672.4
    
    
    $
    607.6
 Note 5. Shareholders Equity
     -7-




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Note 6. Segment Information
 Revenues
    
    
    Operating EarningsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in millions)Electrical Products
    
    $
    1,210.6
    
    
    $
    1,060.6
    
    
    $
    193.5
    
    
    $
    160.1Tools
    
    
    183.4
    
    
    
    180.3
    
    
    
    21.8
    
    
    
    17.3Total segments
    
    $
    1,394.0
    
    
    $
    1,240.9
    
    
    
    215.3
    
    
    
    177.4General Corporate expense
    
    
    
    
    
    
    
    
    
    
    21.6
    
    
    
    20.8Interest expense, net
    
    
    
    
    
    
    
    
    
    
    12.9
    
    
    
    12.1Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    180.8
    
    
    $
    144.5
 Note 7. Pension and Other Postretirement Benefits
   Other PostretirementPension Benefits
    
    
    BenefitsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in millions)Components of net periodic benefit cost:Service cost
    
    $
    1.0
    
    
    $
    4.9
    
    
    $
    
    
    
    $
    Interest cost
    
    
    10.2
    
    
    
    10.3
    
    
    
    1.3
    
    
    
    1.4Expected return on plan assets
    
    
    (12.8
    )
    
    
    (12.6
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    (0.5
    )
    
    
    0.2
    
    
    
    (0.5
    )
    
    
    (0.5
    )Recognized actuarial (gain) loss
    
    
    2.6
    
    
    
    3.8
    
    
    
    (0.6
    )
    
    
    (0.7
    )Net periodic benefit cost
    
    $
    0.5
    
    
    $
    6.6
    
    
    $
    0.2
    
    
    $
    0.2
 Note 8. Income Taxes
  -8-




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Accounting for Uncertainty in
Income Taxes
 -9-




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(in millions)Balance at January 1, 2007
    
    $
    122.8Additions for tax positions of the current year
    
    
    1.0Additions for tax positions of prior years
    
    
    1.0Balance at March 31, 2007
    
    $
    124.8
   Note 9. Net Income Per Common Share
  Basic
    
    
    DilutedThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in millions)Net income applicable to common stock
    
    $
    131.9
    
    
    $
    107.7
    
    
    $
    131.9
    
    
    $
    107.7Weighted average common shares outstanding
    
    
    183.0
    
    
    
    184.4
    
    
    
    183.0
    
    
    
    184.4Incremental shares from assumed conversions:Options, performance-based stock
awards and other employee awards
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    4.4Weighted average common shares
and common share equivalents
    
    
    
    
    
    
    
    
    
    
    186.5
    
    
    
    188.8
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Note 10. Net Income and Other Nonowner Changes in Equity
  Three Months EndedMarch 31,2007
    
    
    2006(in millions)Net income
    
    $
    131.9
    
    
    $
    107.7Foreign currency translation gains (losses)
    
    
    (1.1
    )
    
    
    4.6Change in fair value of derivatives
    
    
    4.7
    
    
    
    3.4Net income and other nonowner changes in equity
    
    $
    135.5
    
    
    $
    115.7
 Note 11. Charge Related To Discontinued Operations
    -11-




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-12-




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-13-




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Note 12. Consolidating Financial Information
  -14-




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Consolidating Income Statements
Three Months Ended March 31, 2007
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    918.5
    
    
    $
    536.4
    
    
    $
    (60.9
    )
    
    $
    1,394.0Cost of sales
    
    
    
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    645.1
    
    
    
    360.3
    
    
    
    (60.9
    )
    
    
    944.9Selling and administrative
expenses
    
    
    2.4
    
    
    
    3.5
    
    
    
    15.7
    
    
    
    133.3
    
    
    
    100.5
    
    
    
    
    
    
    
    255.4Interest expense, net
    
    
    (0.6
    )
    
    
    11.2
    
    
    
    3.7
    
    
    
    
    
    
    
    (1.4
    )
    
    
    
    
    
    
    12.9Equity in earnings of
subsidiaries, net of tax
    
    
    169.2
    
    
    
    10.8
    
    
    
    95.7
    
    
    
    20.2
    
    
    
    102.9
    
    
    
    (398.8
    )
    
    
    Intercompany income
(expense)
    
    
    (6.9
    )
    
    
    (4.3
    )
    
    
    15.1
    
    
    
    (39.4
    )
    
    
    64.0
    
    
    
    (28.5
    )
    
    
    Income (loss) before
income taxes
    
    
    160.5
    
    
    
    (8.3
    )
    
    
    91.1
    
    
    
    120.9
    
    
    
    243.9
    
    
    
    (427.3
    )
    
    
    180.8Income tax expense
(benefit)
    
    
    
    
    
    
    (7.3
    )
    
    
    (11.7
    )
    
    
    38.8
    
    
    
    29.1
    
    
    
    
    
    
    
    48.9Net income (loss)
    
    $
    160.5
    
    
    $
    (1.0
    )
    
    $
    102.8
    
    
    $
    82.1
    
    
    $
    214.8
    
    
    $
    (427.3
    )
    
    $
    131.9
 Consolidating Income Statements
Three Months Ended March 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    823.1
    
    
    $
    478.4
    
    
    $
    (60.6
    )
    
    $
    1,240.9Cost of sales
    
    
    
    
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    580.8
    
    
    
    326.6
    
    
    
    (60.6
    )
    
    
    846.8Selling and administrative
expenses
    
    
    2.3
    
    
    
    2.2
    
    
    
    16.1
    
    
    
    130.1
    
    
    
    86.8
    
    
    
    
    
    
    
    237.5Interest expense, net
    
    
    (0.1
    )
    
    
    10.9
    
    
    
    2.6
    
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    12.1Equity in earnings of
subsidiaries, net of tax
    
    
    137.1
    
    
    
    9.3
    
    
    
    80.5
    
    
    
    21.6
    
    
    
    80.1
    
    
    
    (328.6
    )
    
    
    Intercompany income
(expense)
    
    
    (3.2
    )
    
    
    (3.3
    )
    
    
    5.0
    
    
    
    (94.4
    )
    
    
    120.0
    
    
    
    (24.1
    )
    
    
    Income (loss) before
income taxes
    
    
    131.7
    
    
    
    (6.9
    )
    
    
    66.6
    
    
    
    39.4
    
    
    
    266.4
    
    
    
    (352.7
    )
    
    
    144.5Income tax expense
(benefit)
    
    
    
    
    
    
    (6.1
    )
    
    
    (13.5
    )
    
    
    7.8
    
    
    
    48.6
    
    
    
    
    
    
    
    36.8Net income (loss)
    
    $
    131.7
    
    
    $
    (0.8
    )
    
    $
    80.1
    
    
    $
    31.6
    
    
    $
    217.8
    
    
    $
    (352.7
    )
    
    $
    107.7
 -15-




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Consolidating Balance Sheets
March 31, 2007
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash
equivalents
    
    $
    28.1
    
    
    $
    
    
    
    $
    42.8
    
    
    $
    (0.6
    )
    
    $
    234.5
    
    
    $
    
    
    
    $
    304.8Receivables
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    564.7
    
    
    
    442.5
    
    
    
    
    
    
    
    1,007.4Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384.0
    
    
    
    288.4
    
    
    
    
    
    
    
    672.4Deferred income taxes and
other current assets
    
    
    0.7
    
    
    
    126.0
    
    
    
    31.4
    
    
    
    39.3
    
    
    
    38.4
    
    
    
    
    
    
    
    235.8Total current assets
    
    
    29.0
    
    
    
    126.0
    
    
    
    74.2
    
    
    
    987.4
    
    
    
    1,003.8
    
    
    
    
    
    
    
    2,220.4Property, plant and
equipment, less
accumulated
depreciation
    
    
    
    
    
    
    
    
    
    
    50.0
    
    
    
    324.9
    
    
    
    295.3
    
    
    
    
    
    
    
    670.2Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,256.1
    
    
    
    1,131.7
    
    
    
    
    
    
    
    2,387.8Investment in subsidiaries
    
    
    3,878.9
    
    
    
    579.6
    
    
    
    4,189.1
    
    
    
    1,242.7
    
    
    
    1,432.1
    
    
    
    (11,322.4
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,850.6
    
    
    
    
    
    
    
    312.7
    
    
    
    (3,163.3
    )
    
    
    Intercompany accounts
receivable
    
    
    702.3
    
    
    
    820.8
    
    
    
    
    
    
    
    1,002.5
    
    
    
    666.9
    
    
    
    (3,192.5
    )
    
    
    Intercompany notes
receivable
    
    
    60.0
    
    
    
    24.9
    
    
    
    714.5
    
    
    
    0.8
    
    
    
    4,145.4
    
    
    
    (4,945.6
    )
    
    
    Other noncurrent assets
    
    
    
    
    
    
    13.4
    
    
    
    6.4
    
    
    
    37.1
    
    
    
    151.3
    
    
    
    
    
    
    
    208.2Total assets
    
    $
    4,670.2
    
    
    $
    1,564.7
    
    
    $
    7,884.8
    
    
    $
    4,851.5
    
    
    $
    9,139.2
    
    
    $
    (22,623.8
    )
    
    $
    5,486.6Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4.3
    
    
    $
    
    
    
    $
    4.3Accounts payable
    
    
    38.4
    
    
    
    12.9
    
    
    
    9.7
    
    
    
    246.4
    
    
    
    205.2
    
    
    
    
    
    
    
    512.6Accrued liabilities
    
    
    5.3
    
    
    
    39.6
    
    
    
    55.5
    
    
    
    216.6
    
    
    
    156.0
    
    
    
    
    
    
    
    473.0Current discontinued
operations liability
    
    
    
    
    
    
    229.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    229.5Current maturities of
long-term debt
    
    
    
    
    
    
    300.0
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    300.6Total current
liabilities
    
    
    43.7
    
    
    
    582.0
    
    
    
    65.2
    
    
    
    463.0
    
    
    
    366.1
    
    
    
    
    
    
    
    1,520.0Long-term debt
    
    
    
    
    
    
    374.2
    
    
    
    323.9
    
    
    
    8.0
    
    
    
    0.3
    
    
    
    
    
    
    
    706.4Intercompany
accounts payable
    
    
    
    
    
    
    
    
    
    
    3,192.6
    
    
    
    
    
    
    
    
    
    
    
    (3,192.6
    )
    
    
    Intercompany notes
payable
    
    
    593.8
    
    
    
    344.7
    
    
    
    1,874.1
    
    
    
    1,741.2
    
    
    
    391.7
    
    
    
    (4,945.5
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term
liabilities
    
    
    
    
    
    
    (93.5
    )
    
    
    179.6
    
    
    
    166.9
    
    
    
    132.3
    
    
    
    
    
    
    
    385.3Total liabilities
    
    
    637.5
    
    
    
    1,537.4
    
    
    
    5,635.4
    
    
    
    2,379.1
    
    
    
    890.4
    
    
    
    (8,138.1
    )
    
    
    2,941.7Class A common stock
    
    
    2.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    1.8Class B common stock
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.1
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500.3
    
    
    
    (500.3
    )
    
    
    Capital in excess of
par value
    
    
    3,429.4
    
    
    
    
    
    
    
    66.6
    
    
    
    1,445.4
    
    
    
    5,161.5
    
    
    
    (9,825.8
    )
    
    
    277.1Retained earnings
    
    
    592.1
    
    
    
    122.4
    
    
    
    2,318.5
    
    
    
    1,030.4
    
    
    
    2,678.0
    
    
    
    (4,351.2
    )
    
    
    2,390.2Accumulated other non-
owner changes in equity
    
    
    8.0
    
    
    
    (95.1
    )
    
    
    (135.7
    )
    
    
    (3.4
    )
    
    
    (91.0
    )
    
    
    193.0
    
    
    
    (124.2
    )Total shareholders equity
    
    
    4,032.7
    
    
    
    27.3
    
    
    
    2,249.4
    
    
    
    2,472.4
    
    
    
    8,248.8
    
    
    
    (14,485.7
    )
    
    
    2,544.9Total liabilities and
shareholders equity
    
    $
    4,670.2
    
    
    $
    1,564.7
    
    
    $
    7,884.8
    
    
    $
    4,851.5
    
    
    $
    9,139.2
    
    
    $
    (22,623.8
    )
    
    $
    5,486.6
 -16-




---



##### Table of Contents



Consolidating Balance Sheets
December 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    11.5
    
    
    $
    
    
    
    $
    204.9
    
    
    $
    (2.8
    )
    
    $
    209.9
    
    
    $
    
    
    
    $
    423.5Receivables
    
    
    0.2
    
    
    
    
    
    
    
    0.4
    
    
    
    469.3
    
    
    
    426.1
    
    
    
    
    
    
    
    896.0Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    348.6
    
    
    
    259.0
    
    
    
    
    
    
    
    607.6Deferred income taxes and
other current assets
    
    
    1.1
    
    
    
    141.4
    
    
    
    51.9
    
    
    
    25.6
    
    
    
    46.6
    
    
    
    
    
    
    
    266.6Total current assets
    
    
    12.8
    
    
    
    141.4
    
    
    
    257.2
    
    
    
    840.7
    
    
    
    941.6
    
    
    
    
    
    
    
    2,193.7Property, plant and
equipment, less
accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    49.8
    
    
    
    320.0
    
    
    
    295.6
    
    
    
    
    
    
    
    665.4Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,025.0
    
    
    
    1,311.9
    
    
    
    
    
    
    
    2,336.9Investment in subsidiaries
    
    
    3,554.6
    
    
    
    570.0
    
    
    
    4,081.8
    
    
    
    1,219.2
    
    
    
    1,346.2
    
    
    
    (10,771.8
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,811.2
    
    
    
    
    
    
    
    312.8
    
    
    
    (3,124.0
    )
    
    
    Intercompany accounts
receivable
    
    
    686.3
    
    
    
    806.5
    
    
    
    
    
    
    
    1,289.0
    
    
    
    598.6
    
    
    
    (3,380.4
    )
    
    
    Intercompany notes
receivable
    
    
    91.8
    
    
    
    24.9
    
    
    
    758.5
    
    
    
    0.7
    
    
    
    4,067.3
    
    
    
    (4,943.2
    )
    
    
    Other noncurrent assets
    
    
    
    
    
    
    20.0
    
    
    
    2.0
    
    
    
    23.0
    
    
    
    133.8
    
    
    
    
    
    
    
    178.8Total assets
    
    $
    4,345.5
    
    
    $
    1,562.8
    
    
    $
    7,960.5
    
    
    $
    4,717.6
    
    
    $
    9,007.8
    
    
    $
    (22,219.4
    )
    
    $
    5,374.8Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5.0
    
    
    $
    
    
    
    $
    5.0Accounts payable
    
    
    32.1
    
    
    
    17.2
    
    
    
    4.5
    
    
    
    225.9
    
    
    
    192.0
    
    
    
    
    
    
    
    471.7Accrued liabilities
    
    
    5.2
    
    
    
    43.4
    
    
    
    84.5
    
    
    
    230.0
    
    
    
    159.2
    
    
    
    
    
    
    
    522.3Current discontinued
operations liability
    
    
    
    
    
    
    199.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199.6Current maturities of
long-term debt
    
    
    
    
    
    
    300.0
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    
    
    
    
    300.7Total current liabilities
    
    
    37.3
    
    
    
    560.2
    
    
    
    89.0
    
    
    
    455.9
    
    
    
    356.9
    
    
    
    
    
    
    
    1,499.3Long-term debt
    
    
    
    
    
    
    370.5
    
    
    
    323.9
    
    
    
    8.0
    
    
    
    0.4
    
    
    
    
    
    
    
    702.8Intercompany accounts
payable
    
    
    
    
    
    
    
    
    
    
    3,380.4
    
    
    
    
    
    
    
    
    
    
    
    (3,380.4
    )
    
    
    Intercompany notes
payable
    
    
    552.3
    
    
    
    329.9
    
    
    
    1,901.4
    
    
    
    1,707.3
    
    
    
    452.3
    
    
    
    (4,943.2
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term
liabilities
    
    
    
    
    
    
    (57.7
    )
    
    
    119.2
    
    
    
    172.9
    
    
    
    133.0
    
    
    
    
    
    
    
    367.4Total liabilities
    
    
    589.6
    
    
    
    1,532.9
    
    
    
    5,813.9
    
    
    
    2,344.1
    
    
    
    942.6
    
    
    
    (8,323.6
    )
    
    
    2,899.5Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500.3
    
    
    
    (500.3
    )
    
    
    Capital in excess of
par value
    
    
    3,392.0
    
    
    
    
    
    
    
    56.2
    
    
    
    1,431.5
    
    
    
    5,174.7
    
    
    
    (9,776.0
    )
    
    
    278.4Retained earnings
    
    
    358.4
    
    
    
    128.3
    
    
    
    2,230.1
    
    
    
    943.3
    
    
    
    2,485.6
    
    
    
    (3,821.3
    )
    
    
    2,324.4Accumulated other non-owner changes in equity
    
    
    4.0
    
    
    
    (98.4
    )
    
    
    (139.7
    )
    
    
    (1.3
    )
    
    
    (95.4
    )
    
    
    202.4
    
    
    
    (128.4
    )Total shareholders equity
    
    
    3,755.9
    
    
    
    29.9
    
    
    
    2,146.6
    
    
    
    2,373.5
    
    
    
    8,065.2
    
    
    
    (13,895.8
    )
    
    
    2,475.3Total liabilities and
shareholders equity
    
    $
    4,345.5
    
    
    $
    1,562.8
    
    
    $
    7,960.5
    
    
    $
    4,717.6
    
    
    $
    9,007.8
    
    
    $
    (22,219.4
    )
    
    $
    5,374.8
 -17-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2007
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (1.3
    )
    
    $
    (0.5
    )
    
    $
    31.2
    
    
    $
    (36.2
    )
    
    $
    80.5
    
    
    $
    
    
    
    $
    73.7Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (2.8
    )
    
    
    (12.3
    )
    
    
    (7.0
    )
    
    
    
    
    
    
    (22.1
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74.3
    )
    
    
    (50.0
    )
    
    
    
    
    
    
    (124.3
    )Investment in affiliates
    
    
    
    
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    Loans to affiliates
    
    
    (60.0
    )
    
    
    
    
    
    
    (14.8
    )
    
    
    
    
    
    
    (309.0
    )
    
    
    383.8
    
    
    
    Repayments of loans from affiliates
    
    
    91.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    263.6
    
    
    
    (355.4
    )
    
    
    Dividends from affiliates
    
    
    
    
    
    
    
    
    
    
    26.3
    
    
    
    
    
    
    
    2.2
    
    
    
    (28.5
    )
    
    
    Net cash provided by (used in)
investing activities
    
    
    31.8
    
    
    
    
    
    
    
    8.0
    
    
    
    (86.6
    )
    
    
    (100.2
    )
    
    
    0.6
    
    
    
    (146.4
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    (1.0
    )Borrowings from affiliates
    
    
    241.1
    
    
    
    14.8
    
    
    
    127.9
    
    
    
    
    
    
    
    
    
    
    
    (383.8
    )
    
    
    Repayments of loans to affiliates
    
    
    (199.6
    )
    
    
    
    
    
    
    (154.1
    )
    
    
    
    
    
    
    (1.7
    )
    
    
    355.4
    
    
    
    Other intercompany financing
activities
    
    
    5.0
    
    
    
    (14.3
    )
    
    
    (160.7
    )
    
    
    125.0
    
    
    
    45.0
    
    
    
    
    
    
    
    Dividends
    
    
    (38.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38.9
    )Dividends paid to affiliates
    
    
    (28.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28.5
    
    
    
    Subsidiary purchase of parent shares
    
    
    7.0
    
    
    
    
    
    
    
    (46.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39.3
    )Excess tax benefits from stock
options and awards
    
    
    
    
    
    
    
    
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.4Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    Employee stock plan activity and
other
    
    
    
    
    
    
    
    
    
    
    21.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.5Net cash provided by (used in)
financing activities
    
    
    (13.9
    )
    
    
    0.5
    
    
    
    (201.3
    )
    
    
    125.0
    
    
    
    43.0
    
    
    
    (0.6
    )
    
    
    (47.3
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3Increase (decrease) in cash and cash
equivalents
    
    
    16.6
    
    
    
    
    
    
    
    (162.1
    )
    
    
    2.2
    
    
    
    24.6
    
    
    
    
    
    
    
    (118.7
    )Cash and cash equivalents,
beginning of period
    
    
    11.5
    
    
    
    
    
    
    
    204.9
    
    
    
    (2.8
    )
    
    
    209.9
    
    
    
    
    
    
    
    423.5Cash and cash equivalents, end of
period
    
    $
    28.1
    
    
    $
    
    
    
    $
    42.8
    
    
    $
    (0.6
    )
    
    $
    234.5
    
    
    $
    
    
    
    $
    304.8
 -18-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (4.5
    )
    
    $
    1.3
    
    
    $
    (17.1
    )
    
    $
    (71.4
    )
    
    $
    117.3
    
    
    $
    
    
    
    $
    25.6Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (7.0
    )
    
    
    (7.4
    )
    
    
    
    
    
    
    (16.7
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    (42.4
    )
    
    
    (40.8
    )
    
    
    
    
    
    
    
    
    
    
    (83.2
    )Investment in affiliates
    
    
    (4.2
    )
    
    
    
    
    
    
    (35.9
    )
    
    
    
    
    
    
    
    
    
    
    40.1
    
    
    
    Loans to affiliates
    
    
    (22.1
    )
    
    
    
    
    
    
    (12.3
    )
    
    
    
    
    
    
    (145.5
    )
    
    
    179.9
    
    
    
    Repayments of loans from affiliates
    
    
    37.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.4
    
    
    
    (40.3
    )
    
    
    Dividends from affiliates
    
    
    
    
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    2.0
    
    
    
    (24.1
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Net cash provided by (used in)
investing activities
    
    
    11.6
    
    
    
    
    
    
    
    (70.8
    )
    
    
    (47.6
    )
    
    
    (148.5
    )
    
    
    155.6
    
    
    
    (99.7
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.0
    )
    
    
    
    
    
    
    (2.0
    )Borrowings from affiliates
    
    
    59.1
    
    
    
    12.2
    
    
    
    108.5
    
    
    
    
    
    
    
    0.1
    
    
    
    (179.9
    )
    
    
    Repayments of loans to affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    (37.9
    )
    
    
    40.3
    
    
    
    Other intercompany financing
activities
    
    
    0.6
    
    
    
    (13.5
    )
    
    
    (72.9
    )
    
    
    122.2
    
    
    
    (36.4
    )
    
    
    
    
    
    
    Dividends
    
    
    (34.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.6
    )Dividends paid to affiliates
    
    
    (24.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24.1
    
    
    
    Subsidiary purchase of parent shares
    
    
    5.3
    
    
    
    
    
    
    
    (74.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69.3
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40.1
    
    
    
    (40.1
    )
    
    
    Excess tax benefits from stock
options and awards
    
    
    
    
    
    
    
    
    
    
    13.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.9Employee stock plan activity and
other
    
    
    
    
    
    
    
    
    
    
    53.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53.2Net cash provided by (used in)
financing activities
    
    
    6.3
    
    
    
    (1.3
    )
    
    
    28.1
    
    
    
    119.8
    
    
    
    (36.1
    )
    
    
    (155.6
    )
    
    
    (38.8
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.7
    
    
    
    
    
    
    
    3.7Increase (decrease) in cash and cash
equivalents
    
    
    13.4
    
    
    
    
    
    
    
    (59.8
    )
    
    
    0.8
    
    
    
    (63.6
    )
    
    
    
    
    
    
    (109.2
    )Cash and cash equivalents,
beginning of period
    
    
    64.1
    
    
    
    
    
    
    
    144.4
    
    
    
    (3.5
    )
    
    
    247.8
    
    
    
    
    
    
    
    452.8Cash and cash equivalents, end of
period
    
    $
    77.5
    
    
    $
    
    
    
    $
    84.6
    
    
    $
    (2.7
    )
    
    $
    184.2
    
    
    $
    
    
    
    $
    343.6
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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Results of Operations
 Three Months Ended March 31, 2007 Compared With Three Months Ended March 31, 2006
  Revenues:
    Costs and Expenses:
     -20-




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Operating Earnings:
   Income Taxes:
  Liquidity and Capital Resources
 Liquidity
    -21-




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Capital Resources:
       -22-




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##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
  Backlog
  March 31,2007
    
    
    2006(in millions)Electrical Products
    
    $
    738.3
    
    
    $
    505.4Tools
    
    
    59.8
    
    
    
    70.0$
    798.1
    
    
    $
    575.4
 Private Securities Litigation Reform Act Safe Harbor Statement
  
 Item 4. Controls and Procedures
   -23-




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##### Table of Contents



PART II  OTHER INFORMATION
 
       -24-




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-25-




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##### Table of Contents



-26-




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##### Table of Contents



Purchases of Equity Securities (1)
 Total Number of Shares
    
    
    Maximum Number ofTotal Number
    
    
    Average Price
    
    
    Purchased as Part of
    
    
    Shares that May Yet Beof Shares
    
    
    Paid per
    
    
    Publicly Announced
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    Share
    
    
    Plans or Programs(2)
    
    
    Plans or Programs(2)As of 12/31/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,206,7001/01/07  1/31/07
    
    
    215,600
    
    
    $
    45.42
    
    
    
    215,600
    
    
    
    9,991,1002/01/07  2/28/07
    
    
    203,400
    
    
    $
    45.78
    
    
    
    203,400
    
    
    
    9,787,7003/01/07  3/31/07
    
    
    441,400
    
    
    $
    45.87
    
    
    
    441,400
    
    
    
    9,346,300Total
    
    
    860,400
    
    
    $
    45.73
    
    
    
    860,400
 
 (1)
    
    On February 14, 2007, Cooper announced that the Board of Directors approved a
two-for-one stock split of Cooper common stock. The record date for the stock split was
February 28, 2007 and the distribution date was March 15, 2007. All share and per share
information presented in this Form 10-Q has been retroactively restated to reflect the effect
of the stock split.(2)
    
    On November 2, 2004, Coopers Board of Directors authorized the repurchase
of up to ten million shares of Cooper 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. For 2007, Coopers current
estimate is that 3.0 million shares will be issued under equity compensation plans, which is
reflected in the above table. 
   
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##### Table of Contents



10.1
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2007-2009.10.2
    
    Second Amendment to Cooper Industries Amended and Restated Stock Incentive Plan
(February 9, 2005 Restatement).10.3
    
    First Amendment to Cooper Industries, Ltd. Amended and Restated Directors
Stock Plan (February 14, 2006 Restatement).10.4
    
    First Amendment to Cooper Industries, Ltd. Amended and Restated Directors
Retainer Fee Stock Plan (April 1, 2003 Restatement).10.5
    
    Description of Cooper Supplemental Executive Retirement Plan and Base Salary
Deferral Program Adopted effective January 1, 2007.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2002
through 2006 and the Three Months Ended March 31, 2007 and 2006.23.
    
    Consent of Bates White, LLC.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   Cooper Industries, Ltd.
(Registrant)Date: May 7, 2007
    /s/ Terry A. KlebeTerry A. KlebeSenior Vice President and
Chief Financial OfficerDate: May 7, 2007
    /s/ Jeffrey B. LevosJeffrey B. LevosVice President, Finance and
Chief Accounting Officer -28-




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##### Table of Contents



10.1
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2007-2009.10.2
    
    Second Amendment to Cooper Industries Amended and Restated Stock Incentive Plan
(February 9, 2005 Restatement).10.3
    
    First Amendment to Cooper Industries, Ltd. Amended and Restated Directors
Stock Plan (February 14, 2006 Restatement).10.4
    
    First Amendment to Cooper Industries, Ltd. Amended and Restated Directors
Retainer Fee Stock Plan (April 1, 2003 Restatement).10.5
    
    Description of Cooper Supplemental Executive Retirement Plan and Base Salary
Deferral Program Adopted effective January 1, 2007.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2002
through 2006 and the three months ended March 31, 2007 and 2006.23.
    
    Consent of Bates White, LLC.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 -29-