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10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 2005 OR o
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ____________ to ____________ Commission File Number
    
    1-31330
 Cooper Industries, Ltd. 
  Bermuda
    
    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)
 (713) 209-8400 
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o Number of registrants common stock outstanding as of March 31, 2005 was 92,849,043 Class A common
shares that are held by the public and 7,766,537 Class A common shares and 54,810,129 Class B
common shares that are held by the issuers wholly-owned subsidiaries.




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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 IndexFourth Supplemental IndentureSummary of Executive Compensation ArrangementsSummary of Nonemployees Director CompensationForm of Executive Stock Incentive AgreementAmended and Restated Stock Incentive PlanForm of Management Continuity AgreementComputation 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 EndedMarch 31,2005
    
    
    2004(in millions, where applicable)Revenues
    
    $
    1,144.8
    
    
    $
    1,064.6Cost of sales
    
    
    787.6
    
    
    
    742.0Selling and administrative expenses
    
    
    227.5
    
    
    
    208.4Operating earnings
    
    
    129.7
    
    
    
    114.2Interest expense, net
    
    
    17.8
    
    
    
    17.1Income before income taxes
    
    
    111.9
    
    
    
    97.1Income taxes
    
    
    24.1
    
    
    
    19.4Net income
    
    $
    87.8
    
    
    $
    77.7Income per common share:Basic
    
    $
    .94
    
    
    $
    .83Diluted
    
    $
    .92
    
    
    $
    .81Cash dividends per common share
    
    $
    .37
    
    
    $
    .35
 The accompanying notes are an integral part of these statements. -2-




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COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS March 31,
    
    
    December 31,2005
    
    
    2004(in millions)ASSETSCash and cash equivalents
    
    $
    524.8
    
    
    $
    652.8Receivables
    
    
    841.0
    
    
    
    820.9Inventories
    
    
    579.7
    
    
    
    523.0Deferred income taxes and other current assets
    
    
    198.5
    
    
    
    221.9Total current assets
    
    
    2,144.0
    
    
    
    2,218.6Property, plant and equipment, less accumulated depreciation
    
    
    688.1
    
    
    
    696.4Goodwill
    
    
    2,124.6
    
    
    
    2,142.3Deferred income taxes and other noncurrent assets
    
    
    283.5
    
    
    
    283.5Total assets
    
    $
    5,240.2
    
    
    $
    5,340.8LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    7.2
    
    
    $
    97.6Accounts payable
    
    
    377.6
    
    
    
    350.7Accrued liabilities
    
    
    432.0
    
    
    
    488.8Accrual for discontinued operations
    
    
    218.6
    
    
    
    225.1Current maturities of long-term debt
    
    
    643.1
    
    
    
    665.4Total current liabilities
    
    
    1,678.5
    
    
    
    1,827.6Long-term debt
    
    
    693.9
    
    
    
    698.6Postretirement benefits other than pensions
    
    
    171.1
    
    
    
    173.3Other long-term liabilities
    
    
    352.1
    
    
    
    354.8Total liabilities
    
    
    2,895.6
    
    
    
    3,054.3Common stock, $.01 par value
    
    
    0.9
    
    
    
    0.9Capital in excess of par value
    
    
    460.5
    
    
    
    446.2Retained earnings
    
    
    2,024.8
    
    
    
    1,971.6Accumulated other nonowner changes in equity
    
    
    (141.6
    )
    
    
    (132.2
    )Total shareholders equity
    
    
    2,344.6
    
    
    
    2,286.5Total liabilities and shareholders equity
    
    $
    5,240.2
    
    
    $
    5,340.8
 The accompanying notes are an integral part of these statements. -3-




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COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months EndedMarch 31,2005
    
    
    2004(in millions)Cash flows from operating activities:Net income
    
    $
    87.8
    
    
    $
    77.7Adjustments to reconcile to net cash provided by operating activities:Depreciation and amortization
    
    
    29.3
    
    
    
    29.4Deferred income taxes
    
    
    9.6
    
    
    
    15.6Restructuring charge payments
    
    
    (0.2
    )
    
    
    (2.6
    )Changes in assets and liabilities: (1)Receivables
    
    
    (29.1
    )
    
    
    (43.2
    )Inventories
    
    
    (55.9
    )
    
    
    (14.3
    )Accounts payable and accrued liabilities
    
    
    (40.1
    )
    
    
    (18.6
    )Other assets and liabilities, net
    
    
    18.8
    
    
    
    18.8Net cash provided by operating activities
    
    
    20.2
    
    
    
    62.8Cash flows from investing activities:Capital expenditures
    
    
    (19.9
    )
    
    
    (16.7
    )Cash paid for acquired businesses
    
    
    (2.4
    )
    
    
    (10.1
    )Proceeds from sales of property, plant and equipment and other
    
    
    0.5
    
    
    
    3.3Net cash used in investing activities
    
    
    (21.8
    )
    
    
    (23.5
    )Cash flows from financing activities:Proceeds from issuances of debt
    
    
    
    
    
    
    1.0Repayments of debt
    
    
    (90.1
    )
    
    
    (0.8
    )Dividends
    
    
    (34.6
    )
    
    
    (32.9
    )Subsidiary purchase of parent shares
    
    
    (28.0
    )
    
    
    (109.5
    )Activity under employee stock plans and other
    
    
    25.4
    
    
    
    12.2Net cash used in financing activities
    
    
    (127.3
    )
    
    
    (130.0
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    0.9
    
    
    
    1.7Decrease in cash and cash equivalents
    
    
    (128.0
    )
    
    
    (89.0
    )Cash and cash equivalents, beginning of period
    
    
    652.8
    
    
    
    463.7Cash and cash equivalents, end of period
    
    $
    524.8
    
    
    $
    374.7
   (1) Net of the effects of acquisitions and translation. The accompanying notes are an integral part of these statements. -4-




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COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies Basis of Presentation- The consolidated financial statements of Cooper Industries, Ltd., a
Bermuda company (Cooper), have been prepared in accordance with generally accepted accounting
principles in the United States. The financial information presented as of any date other than December 31 has been prepared
from the books and records without audit. Financial information as of December 31 has been derived
from Coopers audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair presentation of the financial
information for the periods indicated, have been included. For further information regarding
Coopers accounting policies, refer to the Consolidated Financial Statements and related notes for
the year ended December 31, 2004 included in Part IV of Coopers 2004 Annual Report on Form 10-K. In December 2004, the Financial Accounting Standards Board issued FASB Statement 123(R),
Share-Based Payment, which is a revision of SFAS No. 123. For Cooper, the revised statement is
effective January 1, 2006. Statement 123(R) must be applied to new awards and previously granted
awards that are not fully vested on the effective date. Cooper adopted SFAS No. 123 on January 1,
2003 using the prospective transition method which applied only to awards granted, modified or
settled after the adoption date. Accordingly, compensation cost for some previously granted
unvested awards that were not recognized under SFAS No. 123 will be recognized under Statement
123(R). Had we adopted Statement 123(R) in prior periods the impact of that standard would
approximate the impact of SFAS No. 123 as described in the disclosure of pro forma net income and
earnings per share in Note 2 of the Notes to the Consolidated Financial Statements. Note 2. Stock-Based Compensation Under Cooper stock option plans, officers, directors and key employees may be granted options
to purchase Coopers common stock at no less than 100% of the market price on the date the option
is granted. Options generally become exercisable ratably over a three-year period commencing one
year from the grant date and have a maximum term of ten years. The plans also provide for the
granting of performance-based stock awards and restricted stock awards to certain key executives
that generally vest over periods ranging from three to five years. Cooper also has an Employee
Stock Purchase Plan which provides employees an option to purchase common stock. There is currently
no outstanding offering under the Employee Stock Purchase Plan. Effective January 1, 2003, Cooper adopted Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation(SFAS No. 123), as amended. Cooper utilized the
prospective method of adoption. Cooper accounts for stock-based compensation awards granted,
modified or settled prior to January 1, 2003 using the intrinsic value method of accounting as
prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
and related interpretations (APB No. 25). SFAS No. 123 provides an alternative fair value based
method for recognizing stock-based compensation in which compensation expense is measured at the
grant date based on the value of the award and is recognized over the service period, which is
usually the vesting period. The fair value of stock options granted was estimated using the
Black-Scholes option-pricing model. The fair value of restricted stock and performance-based awards
granted was measured at the market price on the grant date. Stock-based compensation expense was
$6.6 million and $4.3 million during the three months ended March 31, 2005 and 2004, respectively. -5-




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The following table presents pro forma income and earnings per share as if the fair value
based method had been applied to all outstanding and unvested awards in each period. Three Months EndedMarch 31,2005
    
    
    2004(in millions)Net income, as reported
    
    $
    87.8
    
    
    $
    77.7Add: Stock-based employee compensation expense
included in reported net income, net of related tax effects
    
    
    4.0
    
    
    
    2.5Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects
    
    
    (2.5
    )
    
    
    (2.6
    )Pro forma net income
    
    $
    89.3
    
    
    $
    77.6Earnings per share:Basic  as reported
    
    $
    .94
    
    
    $
    .83Basic  pro forma
    
    $
    .96
    
    
    $
    .83Diluted  as reported
    
    $
    .92
    
    
    $
    .81Diluted  pro forma
    
    $
    .94
    
    
    $
    .81
 Note 3. Acquisitions During March of 2004, Cooper acquired a manufacturer of specification and commercial grade
lighting fixtures, for $10.1 million. Note 4. Inventories March 31,
    
    
    December 31,2005
    
    
    2004(in millions)Raw materials
    
    $
    213.5
    
    
    $
    185.2Work-in-process
    
    
    129.0
    
    
    
    118.6Finished goods
    
    
    340.3
    
    
    
    320.2Perishable tooling and supplies
    
    
    13.4
    
    
    
    13.2696.2
    
    
    
    637.2Allowance for excess and obsolete inventory
    
    
    (58.7
    )
    
    
    (58.9
    )Excess of current standard costs over LIFO costs
    
    
    (57.8
    )
    
    
    (55.3
    )Net inventories
    
    $
    579.7
    
    
    $
    523.0
 -6-




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Note 5. Shareholders Equity At March 31, 2005, 92,849,043 Class A common shares, $.01 par value were issued and
outstanding (excluding the 7,766,537 Class A common shares held by wholly-owned subsidiaries as
discussed below) compared to 92,543,660 Class A common shares, $.01 par value (excluding the
3,700,200 Class A common shares held by wholly-owned subsidiaries) at December 31, 2004. During
the first quarter of 2005, Cooper issued 705,383 Class A common shares primarily in connection with
employee incentive and benefit plans and Coopers dividend reinvestment program. During the first
quarter of 2005, Coopers wholly-owned subsidiaries purchased 400,000 outstanding Class A common
shares for $28.0 million under the Companys share repurchase plan and a wholly-owned subsidiary
purchased 3,669,037 previously unissued Class A common shares for a purchase price based on the
fair market value of the shares. The share purchases are recorded by Coopers wholly-owned
subsidiaries as an investment in its parent company that is eliminated in consolidation. During
the first quarter of 2005, 2,700 Class A common shares held by wholly-owned subsidiaries were
issued in connection with employee incentive plans, leaving 7,766,537 Class A common shares held by
wholly-owned subsidiaries at March 31, 2005. A wholly-owned subsidiary also owns all the issued and outstanding Class B common shares. The
subsidiarys investment in the Class B common shares is eliminated in consolidation. If at any
time a dividend is declared and paid on the Class A common shares, a like dividend shall be
declared and paid on the Class B common shares in an equal amount per share. During 2004, Coopers
wholly-owned subsidiaries waived their rights to receive the regular quarterly dividend declared.
During the first quarter of 2005, Coopers wholly-owned subsidiaries elected to receive the regular
quarterly dividend of $.37 per share (or an aggregate of $23.1 million) on all Class A and Class B
common shares held. Note 6. Segment Information Revenues
    
    
    Operating EarningsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions)Electrical Products
    
    $
    968.3
    
    
    $
    890.7
    
    
    $
    135.4
    
    
    $
    120.8Tools & Hardware
    
    
    176.5
    
    
    
    173.9
    
    
    
    14.7
    
    
    
    11.8Total segments
    
    $
    1,144.8
    
    
    $
    1,064.6
    
    
    
    150.1
    
    
    
    132.6General Corporate expense
    
    
    
    
    
    
    
    
    
    
    20.4
    
    
    
    18.4Interest expense, net
    
    
    
    
    
    
    
    
    
    
    17.8
    
    
    
    17.1Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    111.9
    
    
    $
    97.1
 -7-




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Note 7. Pension and Other Postretirement Benefits Other PostretirementPension Benefits
    
    
    BenefitsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions)Components of net periodic benefit cost:Service cost
    
    $
    4.5
    
    
    $
    4.4
    
    
    $
    
    
    
    $
    Interest cost
    
    
    10.4
    
    
    
    10.1
    
    
    
    1.8
    
    
    
    2.1Expected return on plan assets
    
    
    (12.8
    )
    
    
    (11.5
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    Recognized actuarial (gain) loss
    
    
    2.3
    
    
    
    1.7
    
    
    
    (0.8
    )
    
    
    (0.7
    )Net periodic benefit cost
    
    $
    4.6
    
    
    $
    4.9
    
    
    $
    1.0
    
    
    $
    1.4
 Note 8. Income Taxes The effective tax rate was 21.5% for the three months ended March 31, 2005 and 20.0% for the
three months ended March 31, 2004. The increase is primarily related to increased projected
earnings in 2005 without a corresponding increase in projected tax benefits. In April 2005, Cooper received an Examination Report from the Internal Revenue Service, which
included a challenge to the treatment of gains and interest deductions claimed on Coopers 2000 and
2001 federal income tax returns, relating to transactions involving government securities. If the
proposed adjustment is upheld, it would require that Cooper pay approximately $26.5 million in
taxes plus accrued interest. Interest will continue to accrue until the matter is resolved. Cooper
believes these transactions were properly reported on its federal income tax returns in accordance
with applicable tax laws and regulations in effect during the period involved. Cooper is
challenging these adjustments vigorously. While the outcome of proceedings of this type cannot be
predicted with certainty, management believes that the ultimate outcome of this matter will not
have a material impact on Coopers consolidated financial position, results of operations, or cash
flows. Note 9. Net Income Per Common Share Basic
    
    
    DilutedThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions)Net income applicable to common stock
    
    $
    87.8
    
    
    $
    77.7
    
    
    $
    87.8
    
    
    $
    77.7Weighted average common shares outstanding
    
    
    93.0
    
    
    
    93.5
    
    
    
    93.0
    
    
    
    93.5Incremental shares from assumed conversions:Options, performance-based stock
awards and other employee awards
    
    
    
    
    
    
    
    
    
    
    2.6
    
    
    
    2.2Weighted average common shares
and common share equivalents
    
    
    
    
    
    
    
    
    
    
    95.6
    
    
    
    95.7
 -8-




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Options and employee awards are not considered in the calculations if the effect would be
antidilutive. Note 10. Net Income and Other Nonowner Changes in Equity The components of net income and other nonowner changes in equity, net of related taxes, were
as follows: Three Months EndedMarch 31,2005
    
    
    2004(in millions)Net income
    
    $
    87.8
    
    
    $
    77.7Foreign currency translation gains (losses)
    
    
    (8.1
    )
    
    
    14.9Change in fair value of derivatives
    
    
    (1.3
    )
    
    
    1.4Net income and other nonowner changes in equity
    
    $
    78.4
    
    
    $
    94.0
 Note 11. Restructuring Charges During the fourth quarter of 2003, Cooper recorded net restructuring charges of $16.9 million,
or $13.6 million after taxes ($.14 per diluted common share). This represented costs associated
with restructuring projects undertaken in 2003 of $18.4 million, partially offset by a $1.5 million
adjustment of estimates for restructuring projects initiated in 2002. The most significant action included in the charges was an announcement of the closing of
Cooper Wiring Devices manufacturing operations in New York City. This action will include the
withdrawal from a multiple-employer pension plan. Cooper recorded a $12.5 million obligation as an
estimate of Coopers portion of unfunded benefit obligations of the plan. The remaining $5.9
million charge primarily represents severance for announced employment reductions at several
locations. The 2003 net impact of the charges was $16.4 million on the Electrical Products
segment, $(0.4) million on the Tools & Hardware segment and $0.9 million related to General
Corporate. As of March 31, 2005, Cooper had paid a total of $5.1 million for these actions, all of
which was for severance costs. A total of 114 salaried and 150 hourly personnel were eliminated as a result of these actions,
and all personnel were terminated as of December 31, 2004. The majority of the severance obligation
was paid by the first half of 2004. The multiple-employer pension obligation is expected to be paid
over 15 years, beginning in 2005. During the fourth quarter of 2002, Cooper committed to (1) the closure of ten manufacturing
facilities, (2) further employment reductions to appropriately size Coopers workforce to market
conditions, and (3) the write-off of assets related to production rationalization activities.
These actions were taken as a part of Cooper managements ongoing assessment of required production
capacity in consideration of current demand levels. In connection with these commitments, certain
production capacity and related assets were sold, outsourced, discontinued or moved to a lower cost
environment. Cooper recorded a provision for these announced actions of $39.1 million ($15.0
million of which was non-cash), or $29.8 million after taxes ($.32 per diluted common share). Of
this amount, $24.0 million ($11.0 million of which was non-cash) was associated with the Electrical
Products segment, $12.7 million ($3.4 million of which was non-cash) was associated with the Tools
& Hardware segment and the remainder was related to General Corporate. -9-




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The following table reflects activity related to the fourth quarter 2002 restructuring charge. 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 March 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    0.6
 A total of 435 salaried and 771 hourly positions were eliminated as a result of the
planned closure and rationalization actions. Of those planned position eliminations, approximately
600 positions were replaced ultimately as a result of Coopers ongoing efforts to relocate
production capacity to lower cost locations. See Restructuring Charges in Managements Discussion and Analysis of Financial Condition and
Results of Operations for additional information. Note 12. Charge Related to Discontinued Operations In October 1998, Cooper sold its Automotive Products business to Federal-Mogul Corporation
(Federal-Mogul). These discontinued businesses (including the Abex product line obtained from
Pneumo-Abex Corporation (Pneumo) in 1994) were operated through subsidiary companies, and the
stock of those subsidiaries was sold to Federal-Mogul pursuant to a Purchase and Sale Agreement
dated August 17, 1998 (1998 Agreement). In conjunction with the sale, Federal-Mogul indemnified
Cooper for certain liabilities of these subsidiary companies, including liabilities related to the
Abex product line and any potential liability that Cooper may have to Pneumo pursuant to a 1994
Mutual Guaranty Agreement between Cooper and Pneumo. On October 1, 2001, Federal-Mogul and several
of its affiliates filed a Chapter 11 bankruptcy petition and indicated that Federal-Mogul may not
honor the indemnification obligations to Cooper. As of the date of this filing, Federal-Mogul had
not rejected the 1998 Agreement, which includes the indemnification to Cooper. If Federal-Mogul
rejects the 1998 Agreement, Cooper will be relieved of its future obligations under the 1998
Agreement, including specific indemnities relating to payment of taxes and certain obligations
regarding insurance for its former Automotive Products businesses. To the extent Cooper is
obligated to Pneumo for any asbestos-related claims arising from the Abex product line (Abex
Claims), Cooper has rights, confirmed by Pneumo, to significant insurance for such claims. Based
on information provided by representatives of Federal-Mogul and recent claims experience, from
August 28, 1998 through March 31, 2005, a total of 134,215 Abex Claims were filed, of which 87,361
claims have been resolved leaving 46,854 Abex Claims pending at March 31, 2005, that are the
responsibility of Federal-Mogul. During the three months ended March 31, 2005, 2,855 claims were
filed, 900 claims were resolved and based on an audit of records, 1,801 claims were tendered back
to Pneumo Abex since Cooper believes they do not qualify as indemnified claims under the 1994
Agreement with Pneumo Abex. Since August 28, 1998, the average indemnity payment for resolved Abex
Claims was $1,950 before insurance. A total of $69.2 million was spent on defense costs for the
period August 28, 1998 through March 31, 2005. Historically, existing insurance coverage has
provided 50% to 80% of the total defense and indemnity payments for Abex Claims. With the assistance of independent advisors, Bates White, LLC, in the fourth quarter of 2001
Cooper completed a thorough analysis of its potential exposure for asbestos liabilities in the
event Federal-Mogul rejects the 1998 Agreement. Based on Coopers analysis of its contingent
liability exposure resulting from -10-




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Federal-Moguls bankruptcy, Cooper concluded that an additional fourth-quarter 2001 discontinued
operations provision of $30 million after-tax, or $.32 per share, was appropriate to reflect the
potential net impact of this issue. The analysis included a review of the twenty-year history of
Abex Claims; the average indemnity payments for resolved claims; the jurisdictions in which claims
had been filed; Bates White, LLC data on the incidence of asbestos exposure and diseases in various
industries; existing insurance coverage including the insurance recovered by Pneumo and
Federal-Mogul for pre-bankruptcy claims and the contractual indemnities. Assumptions were made
regarding future claim filings and indemnity payments, and, based on the advisors data, the
expected population of persons exposed to asbestos in particular industries. All of this data was
used to determine a reasonable expectation of future claims, indemnity payments and insurance
coverage. Cooper is preserving its rights as a creditor for breach of Federal-Moguls
indemnification to Cooper and its rights against all Federal-Mogul subsidiaries. Cooper intends to
take all actions to seek a resolution of the indemnification issues and future handling of the
Abex-related claims within the Federal-Mogul bankruptcy proceedings. Coopers fourth-quarter 2001 analysis of the contingent liability exposure assumed that the
liabilities would be settled within the Federal-Mogul bankruptcy proceedings. This analysis
assumed that representatives of Federal-Mogul, its bankruptcy committees and the future claimants
(the Representatives) would reach similar conclusions regarding the potential future liabilities
and insurance recoveries as Cooper did based on the Bates White, LLC analysis. Throughout 2003,
Cooper worked towards resolution of the indemnification issues and future handling of the
Abex-related claims within the Federal-Mogul bankruptcy proceedings. This included negotiations
with the Representatives regarding participation in Federal-Moguls proposed 524(g) asbestos trust.
Based on the status of negotiations in 2004, Cooper concluded that it was probable that
Federal-Mogul will reject the 1998 Agreement. Cooper also concluded that the Representatives would
require any negotiated settlement through the Federal-Mogul bankruptcy to be at the high end of the
Bates White, LLC liability analysis and with substantially lower insurance recovery assumptions and
higher administrative costs. While Cooper believes that the insurance has significant additional value, extensive
litigation with the insurance carriers may be required to receive recoveries and there is risk that
court decisions could reduce the value of the recoveries. Additionally, the assumptions on
liability payments could prove inaccurate over time. If Cooper is unable to reach a settlement
with the Representatives and the 1998 Agreement is rejected, Cooper would be required to reflect an
accrual for the total estimated liability and a receivable for the probable insurance recoveries.
Generally accepted accounting principles provide relatively conservative requirements for the
recording of insurance recoveries and a substantial portion of the potential insurance recoveries
would not be reflected as receivables until future events occur. During late February and early March 2004, Cooper reassessed the accrual required based on the
then current status of the negotiations with the Representatives and the liability and insurance
receivable that would be required to be recorded if this matter is not settled within the
Federal-Mogul bankruptcy. Cooper concluded that resolution within the Federal-Mogul proposed
524(g) asbestos trust would likely be within the range of the liabilities, net of insurance
recoveries, that Cooper would accrue if this matter were not settled within the Federal-Mogul
bankruptcy. Accordingly, Cooper recorded a $126.0 million after-tax discontinued operations charge,
net of a $70.9 million income tax benefit, in the fourth quarter of 2003. Cooper has continued discussions with the Representatives, but to date has been unable to
reach a satisfactory conclusion. At this time, the exact manner in which this issue will be
resolved is not known. The accrual for potential liabilities related to the Automotive Products
sale and the Federal-Mogul bankruptcy was $218.6 million at March 31, 2005 and $225.1 million at
December 31, 2004. -11-




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##### Table of Contents



Note 13. Consolidating Financial Information Prior to January 1, 2005, Cooper fully and unconditionally guaranteed the registered debt
securities of Cooper Industries, Inc. (Cooper Ohio), a wholly-owned indirect subsidiary.
Effective January 1, 2005, Cooper Industries, LLC, a wholly-owned indirect subsidiary, became the
successor issuer of Cooper Ohios registered debt securities as a result of a merger of Cooper Ohio
into Cooper Industries, LLC. Cooper and certain principal operating subsidiaries fully and
unconditionally guarantee, on a joint and several basis, the registered debt securities of Cooper
Industries, LLC. The following condensed consolidating financial information is included so that
separate financial statements of Cooper Industries, LLC or Cooper Ohio are not required to be filed
with the Securities and Exchange Commission. The consolidating financial statements present
investments in subsidiaries using the equity method of accounting. Intercompany investments in the
Class A and Class B common shares are accounted for using the cost method. Consolidating Income Statements
Three Months Ended March 31, 2005
(in millions) CooperIndustries,
    
    
    Guaranteeing
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    751.6
    
    
    $
    423.4
    
    
    $
    (30.2
    )
    
    $
    1,144.8Cost of sales
    
    
    0.2
    
    
    
    
    
    
    
    536.4
    
    
    
    281.2
    
    
    
    (30.2
    )
    
    
    787.6Selling and administrative expenses
    
    
    2.2
    
    
    
    1.8
    
    
    
    138.5
    
    
    
    85.0
    
    
    
    
    
    
    
    227.5Interest expense, net
    
    
    (0.5
    )
    
    
    13.5
    
    
    
    (1.0
    )
    
    
    5.8
    
    
    
    
    
    
    
    17.8Equity in earnings of subsidiaries,
net of tax
    
    
    113.7
    
    
    
    6.9
    
    
    
    81.8
    
    
    
    60.4
    
    
    
    (262.8
    )
    
    
    Intercompany income (expense)
    
    
    (0.8
    )
    
    
    
    
    
    
    (110.8
    )
    
    
    134.7
    
    
    
    (23.1
    )
    
    
    Income (loss) before income
taxes
    
    
    111.0
    
    
    
    (8.4
    )
    
    
    48.7
    
    
    
    246.5
    
    
    
    (285.9
    )
    
    
    111.9Income tax expense (benefit)
    
    
    
    
    
    
    (13.6
    )
    
    
    (11.7
    )
    
    
    49.4
    
    
    
    
    
    
    
    24.1Net income
    
    $
    111.0
    
    
    $
    5.2
    
    
    $
    60.4
    
    
    $
    197.1
    
    
    $
    (285.9
    )
    
    $
    87.8
 Consolidating Income Statements
Three Months Ended March 31, 2004
(in millions) Cooper
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    67.0
    
    
    $
    1,002.7
    
    
    $
    (5.1
    )
    
    $
    1,064.6Cost of sales
    
    
    0.4
    
    
    
    43.4
    
    
    
    703.3
    
    
    
    (5.1
    )
    
    
    742.0Selling and administrative expenses
    
    
    2.0
    
    
    
    25.9
    
    
    
    180.5
    
    
    
    
    
    
    
    208.4Interest expense, net
    
    
    (0.2
    )
    
    
    11.8
    
    
    
    5.5
    
    
    
    
    
    
    
    17.1Equity in earnings of subsidiaries,
net of tax
    
    
    81.1
    
    
    
    123.4
    
    
    
    34.7
    
    
    
    (239.2
    )
    
    
    Intercompany income (expense)
    
    
    (1.2
    )
    
    
    (126.3
    )
    
    
    127.5
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    77.7
    
    
    
    (17.0
    )
    
    
    275.6
    
    
    
    (239.2
    )
    
    
    97.1Income tax expense (benefit)
    
    
    
    
    
    
    (51.7
    )
    
    
    71.1
    
    
    
    
    
    
    
    19.4Net income
    
    $
    77.7
    
    
    $
    34.7
    
    
    $
    204.5
    
    
    $
    (239.2
    )
    
    $
    77.7
 -12-




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##### Table of Contents



Consolidating Balance Sheets
March 31, 2005
(in millions) CooperIndustries,
    
    
    Guaranteeing
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    82.0
    
    
    $
    
    
    
    $
    161.3
    
    
    $
    281.5
    
    
    $
    
    
    
    $
    524.8Receivables
    
    
    
    
    
    
    
    
    
    
    483.2
    
    
    
    357.8
    
    
    
    
    
    
    
    841.0Inventories
    
    
    
    
    
    
    
    
    
    
    344.1
    
    
    
    235.6
    
    
    
    
    
    
    
    579.7Deferred income taxes and
other current assets
    
    
    0.8
    
    
    
    109.2
    
    
    
    117.0
    
    
    
    (28.5
    )
    
    
    
    
    
    
    198.5Total current assets
    
    
    82.8
    
    
    
    109.2
    
    
    
    1,105.6
    
    
    
    846.4
    
    
    
    
    
    
    
    2,144.0Property, plant and equipment,
less accumulated depreciation
    
    
    
    
    
    
    0.4
    
    
    
    391.5
    
    
    
    296.2
    
    
    
    
    
    
    
    688.1Goodwill
    
    
    
    
    
    
    
    
    
    
    1,018.0
    
    
    
    1,106.6
    
    
    
    
    
    
    
    2,124.6Investment in subsidiaries
    
    
    4,646.5
    
    
    
    718.3
    
    
    
    4,832.5
    
    
    
    2,314.4
    
    
    
    (12,511.7
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,490.4
    
    
    
    230.2
    
    
    
    (2,720.6
    )
    
    
    Intercompany accounts
receivable
    
    
    541.4
    
    
    
    893.2
    
    
    
    
    
    
    
    874.8
    
    
    
    (2,309.4
    )
    
    
    Intercompany notes receivable
    
    
    4.5
    
    
    
    
    
    
    
    63.4
    
    
    
    5,834.1
    
    
    
    (5,902.0
    )
    
    
    Deferred income taxes and other
noncurrent assets
    
    
    
    
    
    
    109.8
    
    
    
    47.2
    
    
    
    126.5
    
    
    
    
    
    
    
    283.5Total assets
    
    $
    5,275.2
    
    
    $
    1,830.9
    
    
    $
    9,948.6
    
    
    $
    11,629.2
    
    
    $
    (23,443.7
    )
    
    $
    5,240.2Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.2
    
    
    $
    
    
    
    $
    7.2Accounts payable
    
    
    34.4
    
    
    
    11.8
    
    
    
    186.0
    
    
    
    145.4
    
    
    
    
    
    
    
    377.6Accrued liabilities
    
    
    3.3
    
    
    
    25.0
    
    
    
    279.7
    
    
    
    124.0
    
    
    
    
    
    
    
    432.0Accrual for discontinued
operations
    
    
    
    
    
    
    218.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218.6Current maturities of long-term
debt
    
    
    
    
    
    
    229.0
    
    
    
    
    
    
    
    414.1
    
    
    
    
    
    
    
    643.1Total current liabilities
    
    
    37.7
    
    
    
    484.4
    
    
    
    465.7
    
    
    
    690.7
    
    
    
    
    
    
    
    1,678.5Long-term debt
    
    
    
    
    
    
    683.1
    
    
    
    8.1
    
    
    
    2.7
    
    
    
    
    
    
    
    693.9Intercompany accounts payable
    
    
    
    
    
    
    
    
    
    
    1,661.7
    
    
    
    647.7
    
    
    
    (2,309.4
    )
    
    
    Intercompany notes payable
    
    
    135.7
    
    
    
    462.9
    
    
    
    5,235.5
    
    
    
    67.9
    
    
    
    (5,902.0
    )
    
    
    Other long-term liabilities
    
    
    
    
    
    
    78.0
    
    
    
    329.2
    
    
    
    116.0
    
    
    
    
    
    
    
    523.2Total liabilities
    
    
    173.4
    
    
    
    1,708.4
    
    
    
    7,700.2
    
    
    
    1,525.0
    
    
    
    (8,211.4
    )
    
    
    2,895.6Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    246.9
    
    
    
    (246.9
    )
    
    
    Capital in excess of par value
    
    
    3,152.4
    
    
    
    
    
    
    
    495.3
    
    
    
    6,405.4
    
    
    
    (9,592.6
    )
    
    
    460.5Retained earnings
    
    
    2,099.4
    
    
    
    272.5
    
    
    
    1,904.6
    
    
    
    3,748.7
    
    
    
    (6,000.4
    )
    
    
    2,024.8Accumulated other nonowner
changes in equity
    
    
    (151.5
    )
    
    
    (150.0
    )
    
    
    (151.5
    )
    
    
    (296.8
    )
    
    
    608.2
    
    
    
    (141.6
    )Total shareholders equity
    
    
    5,101.8
    
    
    
    122.5
    
    
    
    2,248.4
    
    
    
    10,104.2
    
    
    
    (15,232.3
    )
    
    
    2,344.6Total liabilities and
shareholders equity
    
    $
    5,275.2
    
    
    $
    1,830.9
    
    
    $
    9,948.6
    
    
    $
    11,629.2
    
    
    $
    (23,443.7
    )
    
    $
    5,240.2
 -13-




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##### Table of Contents



Consolidating Balance Sheets
December 31, 2004
(in millions) 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
 -14-




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##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2005
(in millions) CooperIndustries,
    
    
    Guaranteeing
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used
in) operating activities
    
    $
    0.4
    
    
    $
    
    
    
    $
    (87.2
    )
    
    $
    130.1
    
    
    $
    (23.1
    )
    
    $
    20.2Cash flows from
investing activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (11.3
    )
    
    
    (8.6
    )
    
    
    
    
    
    
    (19.9
    )Cash paid for acquired
businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    
    
    
    
    (2.4
    )Investment in affiliates
    
    
    (2.8
    )
    
    
    
    
    
    
    (33.6
    )
    
    
    
    
    
    
    36.4
    
    
    
    Loans to affiliates
    
    
    
    
    
    
    
    
    
    
    (60.7
    )
    
    
    
    
    
    
    60.7
    
    
    
    Repayments of loans to
affiliates
    
    
    21.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.1
    )
    
    
    Dividends from subsidiaries
    
    
    
    
    
    
    
    
    
    
    8.4
    
    
    
    
    
    
    
    (8.4
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    
    0.5Net cash provided by
(used in) investing
activities
    
    
    18.3
    
    
    
    
    
    
    
    (97.0
    )
    
    
    (10.7
    )
    
    
    67.6
    
    
    
    (21.8
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90.1
    )
    
    
    
    
    
    
    (90.1
    )Borrowings from affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60.7
    
    
    
    (60.7
    )
    
    
    Repayments of loans
from affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.1
    )
    
    
    21.1
    
    
    
    Other intercompany
financing activities
    
    
    4.1
    
    
    
    
    
    
    
    78.3
    
    
    
    (82.4
    )
    
    
    
    
    
    
    Dividends
    
    
    (34.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.6
    )Dividends paid to affiliates
    
    
    (23.1
    )
    
    
    
    
    
    
    
    
    
    
    (8.4
    )
    
    
    31.5
    
    
    
    Subsidiary purchase of
parent
shares
    
    
    5.4
    
    
    
    
    
    
    
    (5.4
    )
    
    
    (28.0
    )
    
    
    
    
    
    
    (28.0
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.4
    
    
    
    (36.4
    )
    
    
    Employee stock plan activity
and other
    
    
    
    
    
    
    
    
    
    
    25.4
    
    
    
    
    
    
    
    
    
    
    
    25.4Net cash provided by
(used in) financing
activities
    
    
    (48.2
    )
    
    
    
    
    
    
    98.3
    
    
    
    (132.9
    )
    
    
    (44.5
    )
    
    
    (127.3
    )Effect of exchange rate
changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    0.9Decrease in cash and cash
equivalents
    
    
    (29.5
    )
    
    
    
    
    
    
    (85.9
    )
    

    
    (12.6
    )
    
    
    
    
    
    
    (128.0
    )Cash and cash equivalents,
beginning of period
    
    
    111.5
    
    
    
    
    
    
    
    247.2
    
    
    
    294.1
    
    
    
    
    
    
    
    652.8Cash and cash equivalents,
end of period
    
    $
    82.0
    
    
    $
    
    
    
    $
    161.3
    
    
    $
    281.5
    
    
    $
    
    
    
    $
    524.8
 -15-




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##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2004
(in millions) Cooper
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    Ohio
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (1.1
    )
    
    $
    (55.3
    )
    
    $
    119.2
    
    
    $
    
    
    
    $
    62.8Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (3.6
    )
    
    
    (13.1
    )
    
    
    
    
    
    
    (16.7
    )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
    
    
    
    
    
    
    
    Loans to affiliates
    
    
    
    
    
    
    
    
    
    
    (38.5
    )
    
    
    38.5
    
    
    
    Dividends from subsidiaries
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    (1.0
    )
    
    
    Other
    
    
    
    
    
    
    0.7
    
    
    
    2.6
    
    
    
    
    
    
    
    3.3Net cash provided by (used in)
investing activities
    
    
    
    
    
    
    (74.5
    )
    
    
    13.5
    
    
    
    37.5
    
    
    
    (23.5
    )Cash flows from financing activities:Proceeds from issuances of debt
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    1.0Repayments of debt
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    (0.8
    )Borrowings from affiliates
    
    
    38.5
    
    
    
    
    
    
    
    
    
    
    
    (38.5
    )
    
    
    Other intercompany financing
activities
    
    
    0.5
    
    
    
    59.2
    
    
    
    (59.7
    )
    
    
    
    
    
    
    Dividends
    
    
    (32.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32.9
    )Dividends paid to affiliates
    
    
    
    
    
    
    
    
    
    
    (1.0
    )
    
    
    1.0
    
    
    
    Subsidiary purchase of parent shares
    
    
    
    
    
    
    (109.5
    )
    
    
    
    
    
    
    
    
    
    
    (109.5
    )Employee stock plan activity and
other
    
    
    
    
    
    
    12.2
    
    
    
    
    
    
    
    
    
    
    
    12.2Net cash provided by (used in)
financing activities
    
    
    6.1
    
    
    
    (38.1
    )
    
    
    (60.5
    )
    
    
    (37.5
    )
    
    
    (130.0
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    1.7Increase (decrease) in cash and cash
equivalents
    
    
    5.0
    
    
    
    (167.9
    )
    
    
    73.9
    
    
    
    
    
    
    
    (89.0
    )Cash and cash equivalents, beginning
of period
    
    
    96.4
    
    
    
    257.2
    
    
    
    110.1
    
    
    
    
    
    
    
    463.7Cash and cash equivalents, end of
period
    
    $
    101.4
    
    
    $
    89.3
    
    
    $
    184.0
    
    
    $
    
    
    
    $
    374.7
 -16-




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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, 2005 Compared With Three Months Ended March 31, 2004 Net income for the first quarter of 2005 was $87.8 million on revenues of $1,144.8 million
compared with 2004 first quarter net income of $77.7 million on revenues of $1,064.6 million.
First quarter diluted earnings per share increased 13.6% to $.92 from $.81 in 2004. Revenues: Revenues for the first quarter of 2005 increased 8% compared to the first quarter of 2004.
The impact of foreign currency translation increased reported revenues by approximately one percent
for the quarter and the impact of acquisitions increased reported revenues by approximately one
percent for the quarter. Electrical Products segment revenues increased 9% compared to the first quarter of 2004.
Excluding the impact of favorable currency translation, revenues increased approximately 8% in the
first quarter of 2005. Growth was primarily achieved through higher prices to recover increased
material and other costs and from improved demand in key North American residential, commercial and
industrial markets, which positively impacted our lighting, fuse protection, hazardous duty, wiring
devices and enclosure businesses. Continued investments in system upgrades by utilities resulted
in revenue gains in Coopers power transmission and distribution equipment business. European
lighting and security markets showed modest improvement. Partially offsetting improved
residential, utility, commercial and industrial volumes were lower retail channel sales relative to
very strong comparables in the prior year. Tools & Hardware segment revenues for the first quarter of 2005 increased 2% from the first
quarter of 2004. Excluding the impact of favorable currency translation, revenues were essentially
flat with the first quarter of 2004. Tools & Hardware segment revenues reflected improved demand
for hand tools from industrial markets, offset by decreased activity for power tools from the
industrial market and lower North American hand tool retail sales relative to a strong quarter in
the prior year. Costs and Expenses: Cost of sales, as a percentage of revenues, was 68.8% for the first quarter of 2005 compared
to 69.7% for the comparable 2004 quarter. The decrease in the cost of sales percentage was
primarily due to favorable sales mix, realization of price increases, benefits of restructuring
activities in prior periods and ongoing sourcing and productivity initiatives, more than offsetting
increased material, energy and transportation costs. Electrical Products segment cost of sales, as a percentage of revenues, was 68.4% for the
first quarter of 2005 compared to 69.0% for the first quarter of 2004. The decrease in the cost of
sales percentage was primarily a result of productivity improvement initiatives, realized price
increases, continued benefits of global sourcing activities and favorable business mix. Tools &
Hardware segment cost of sales, as a percentage of revenues, was 70.8% for the first quarter of
2005 compared to 72.9% for the first quarter of 2004. The decrease in cost of sales percentage
reflects the impact of pricing actions, cost structure alignment actions and benefits achieved
through productivity improvement initiatives. Selling and administrative expenses, as a percentage of revenues, for the first quarter of
2005 were 19.9% compared to 19.6% for the first quarter of 2004. The increase is due to higher
stock-based compensation and other incentive programs, increased audit and Sarbanes-Oxley Act
compliance costs and selling and marketing costs related to Coopers sales growth initiatives. -17-




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##### Table of Contents



Electrical Products segment selling and administrative expenses, as a percentage of revenues,
for the first quarter of 2005 were 17.7% compared to 17.4% for the first quarter of 2004. The
increase in selling and administrative expenses percentage is primarily due to increased incentive
compensation and costs to support growth. Tools & Hardware segment selling and administrative expenses, as a percentage of revenues, for
the first quarter of 2005 were 20.9% compared to 20.3% for the first quarter of 2004. The increase
in the selling and administrative expenses percentage is primarily due to increased incentive costs
and globalization initiatives. Interest expense, net for the first quarter of 2005 increased $0.7 million from the 2004 first
quarter primarily as a result of both higher average interest rates and average debt balances,
partially offset by higher cash and cash equivalents balances. Average debt balances were $1.41
billion and $1.34 billion and average interest rates were 5.9% and 5.6% for the first quarter of
2005 and 2004, respectively. The increase in average debt balances resulted from approximately $90
million of short-term debt which was borrowed in the fourth quarter of 2004 and repaid in the first
quarter of 2005. Operating Earnings: Electrical Products segment first quarter 2005 operating earnings increased 12% to $135.4
million from $120.8 million for the same quarter of last year, with revenue increases, favorable
sales mix, price realization and benefits of cost reduction efforts more than offsetting increased
costs. Tools & Hardware segment first quarter 2005 operating earnings increased 25% to $14.7 million
compared to $11.8 million in the first quarter of 2004. The increase is a result of productivity
initiatives and product cost reduction actions. General Corporate expense increased $2.0 million to $20.4 million during the first quarter of
2005 compared to $18.4 million during the first quarter of 2004. This increase primarily resulted
from increased stock-based and other incentive compensation expenses, as well as increased audit
and Sarbanes-Oxley compliance costs. Income Taxes: The effective tax rate was 21.5% for the three months ended March 31, 2005 and 20.0% for the
three months ended March 31, 2004. The increase is primarily related to increased projected
earnings in 2005 without a corresponding increase in projected tax benefits. Restructuring Charges: During the fourth quarter of 2003, Cooper recorded net restructuring charges of $16.9 million,
or $13.6 million after taxes ($.14 per diluted common share). This represented costs associated
with restructuring projects undertaken in 2003 of $18.4 million, partially offset by a $1.5 million
adjustment of estimates for restructuring projects initiated in 2002. The most significant action included in the charges was an announcement of the closing of
Cooper Wiring Devices manufacturing operations in New York City. This action will include the
withdrawal from a multiple-employer pension plan. Cooper recorded a $12.5 million obligation as an
estimate of Coopers portion of unfunded benefit obligations of the plan. The remaining $5.9
million charge primarily represents severance for announced employment reductions at several
locations. The 2003 net impact of the charges was $16.4 million on the Electrical Products
segment, $(0.4) million on the Tools & Hardware segment and $0.9 million related to General
Corporate. As of March 31, 2005, Cooper had paid a total of $5.1 million for these actions, all of
which was for severance costs. -18-




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##### Table of Contents



A total of 114 salaried and 150 hourly personnel were eliminated as a result of these actions.
The multiple-employer pension obligation is expected to be paid over
15 years beginning in 2005.
Cooper estimates the annual savings from the personnel reductions was approximately $6 million,
(net of additional employees added in lower-cost regions) with most of the savings beginning in the
first quarter of 2004. The savings from the withdrawal from the multiple-employer pension plan are
approximately $1 million per year and are expected to begin in
2006. The majority of the
eliminated costs previously were reflected as cost of sales. During the fourth quarter of 2002, Cooper committed to (1) the closure of ten manufacturing
facilities, (2) further employment reductions to appropriately size Coopers workforce to market
conditions, and (3) the write-off of assets related to production rationalization activities.
These actions were taken as a part of Cooper managements ongoing assessment of required production
capacity in consideration of the current demand levels. In connection with these commitments,
certain production capacity and related assets were sold, outsourced, discontinued or moved to a
lower cost environment. Cooper recorded a provision for these announced actions of $39.1 million
($15.0 million of which was non-cash), or $29.8 million after taxes ($.32 per diluted common
share). Of this amount, $24.0 million ($11.0 million of which was non-cash) was associated with
the Electrical Products segment, $12.7 million ($3.4 million of which was non-cash) was associated
with the Tools & Hardware segment and the remainder was related to General Corporate. During 2003,
Cooper reduced estimates of the cost related to those actions by $1.5 million. The following table reflects activity related to the fourth quarter 2002 restructuring charge. 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 March 31, 2005
    
    
    
    
    
    $
    
    
    
    $
    0.6
 A total of 435 salaried and 771 hourly positions were eliminated as a result of the
planned closure and rationalization actions. Of those position eliminations, approximately 600
positions were replaced ultimately as a result of Coopers ongoing efforts to relocate production
capacity to lower cost locations. Substantially all of the closure and rationalization activities
were initiated and completed by the end of 2003. The expenditures related to the 2002 restructuring
charge were funded from cash provided by operating activities. Cooper estimates that the earnings impact in 2003 from these actions was approximately $10
million in pretax savings, the majority of which benefited the second half of the year. The
initial savings were realized from personnel reductions that principally impacted selling and
administrative expenses and lower costs of sales. Cooper estimates that incremental savings of
$25.0 to $30.0 million were realized in 2004, largely reflected as lower cost of sales. -19-




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##### Table of Contents



Liquidity and Capital Resources Liquidity: Coopers operating working capital (defined as receivables and inventories less accounts
payable) increased $50 million during the first quarter of 2005. A $20 million increase in
receivables and a $57 million increase in inventories, partially offset by an increase in accounts
payable, were driven by increased sales volumes and actions to improve customer service through
improved inventory availability. Operating working capital turnover (defined as annualized
revenues divided by average quarterly operating working capital) for the 2005 first quarter of 4.5
turns increased from 4.3 turns in the same period of 2004 and primarily resulted from revenues
growing at a higher rate than the increase in operating working capital. Cash provided by operating activities was $20 million during the 2005 first quarter. This
cash, plus an additional $128 million of cash and cash equivalents and $25 million of cash received
from employee stock activity were primarily used to fund capital expenditures of $20 million,
dividends of $35 million, share purchases of $28 million and debt reduction of $90 million. Cash provided by operating activities was $63 million during the 2004 first quarter. This
cash, plus an additional $89 million of cash and cash equivalents and $12 million of cash received
from employee stock activity were primarily used to fund capital expenditures of $17 million, an
acquisition of $10 million, dividends of $33 million and share purchases of $110 million. In connection with acquisitions accounted for as purchases, Cooper records, to the extent
appropriate, accruals for the costs of closing duplicate facilities, severing redundant personnel
and integrating the acquired businesses into existing Cooper operations. Cash flows from operating
activities are reduced by the amounts expended against the various accruals established in
connection with each acquisition. Spending against these accruals was $0.5 million and $1.9
million during the three months ended March 31, 2005 and 2004, respectively. Cooper is continuing to focus on initiatives to maximize cash flows. Cooper currently
anticipates a continuation of its long-term ability to annually generate approximately $200 million
in cash flow available for acquisitions, debt repayments and common stock repurchases. As discussed in Note 12 of Notes to the Consolidated Financial Statements, Cooper is
continuing discussions with the representatives of Federal-Mogul, its bankruptcy committees and the
future claimants regarding settlement of Coopers contingent liabilities related to the Automotive
Products sale to Federal-Mogul. It is likely that if a settlement is reached, the settlement would
involve a cash contribution. Cooper anticipates that any settlement cash contribution amounts
would be funded from operating cash flows and existing cash. Capital Resources: Cooper has targeted a 35% to 45% debt-to-total capitalization ratio and intends to utilize
cash flows to maintain a debt-to-total capitalization ratio within this range. Excess cash flows
are utilized to fund acquisitions or to purchase shares of Cooper common stock. Coopers
debt-to-total capitalization ratio was 36.4% at March 31, 2005, 39.0% at December 31, 2004 and
39.1% at March 31, 2004. At March 31, 2005 and December 31, 2004, Cooper had short-term debt of $7.2 million and $97.6
million, respectively and had no commercial paper outstanding. Coopers practice is to back up its short-term debt balance with a combination of cash and
committed credit facilities. At March 31, 2005 and December 31, 2004, Cooper had cash and cash
equivalents of $524.8 million and $652.8 million, respectively. At March 31, 2005, Cooper had a
$500 -20-




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##### Table of Contents



million committed credit facility which matures in November 2009. Short-term debt to the extent
not backed up by cash, reduces the amount of additional liquidity provided by the committed credit
facility. The credit facility agreement is not subject to termination based on a decrease in Coopers
debt ratings or a material adverse change clause. The principal financial covenants in the
agreement limit Coopers debt-to-total capitalization ratio to 60% and require Cooper to maintain a
minimum earnings before interest expense, income taxes, depreciation and amortization to interest
ratio of 3 to 1. Cooper is in compliance with all covenants set forth in the credit facility
agreement. Coopers access to the commercial paper market could be adversely affected by a change in the
credit ratings assigned to its commercial paper. Should Coopers access to the commercial paper
market be adversely affected due to a change in its credit ratings, Cooper would rely on a
combination of available cash and its committed credit facility to provide short-term funding. The
committed credit facility does not contain any provision which makes its availability to Cooper
dependent on Coopers credit ratings. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations As of March 31, 2005, there have been no material changes to Coopers off-balance sheet
arrangements and contractual obligations as described in its Annual Report on Form 10-K for the
year ended December 31, 2004. Backlog Sales backlog represents the dollar amount of all firm open orders for which all terms and
conditions pertaining to the sale have been approved such that a future sale is reasonably
expected. Sales backlog by segment was as follows: March 31,2005
    
    
    2004(in millions)Electrical Products
    
    $
    405.4
    
    
    $
    327.4Tools & Hardware
    
    
    70.0
    
    
    
    86.7$
    475.4
    
    
    $
    414.1
 Private Securities Litigation Reform Act Safe Harbor Statement This Form 10-Q includes certain forward-looking statements. The forward-looking statements
reflect Coopers expectations, objectives and goals with respect to future events and financial
performance, and are based on assumptions and estimates which Cooper believes are reasonable.
Forward-looking statements include, but are not limited to, statements regarding the facilities
closure and production rationalization plan and cost-reduction programs, potential liability
exposure resulting from Federal-Mogul Corporations (Federal-Mogul) bankruptcy filing, and any
statements regarding future revenues, cost and expenses, earnings, earnings per share, margins,
cash flows and capital expenditures. Cooper wishes to caution readers not to put undue reliance on
these statements and that actual results could differ materially from anticipated results.
Important factors which may affect the actual results include, but are not limited to, the
resolution of Federal-Moguls bankruptcy proceedings, political developments, market and economic
conditions, changes in raw material and energy costs, industry competition, the net effects of
Coopers cost-control and productivity improvement programs, the timing and net effects of facility
closures and the magnitude of any disruptions from such closures, the successful implementation of
Coopers strategic initiatives, changes in mix of products sold, mergers and acquisitions and their
integration into Cooper, the timing and amount of any share repurchases, changes in financial
markets including foreign currency rate fluctuations and changing legislation and regulations
including changes in tax law, tax treaties or tax -21-




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##### Table of Contents



regulations. The forward-looking statements contained in this report are intended to qualify
for the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. 
 Item 4. Controls and Procedures As of the end of the period covered by this report, Coopers management, under the supervision
and with the participation of the Chief Executive Officer and Chief Financial Officer, performed an
evaluation of the effectiveness of the design and operation of Coopers disclosure controls and
procedures. Based on that evaluation, Coopers management, including the Chief Executive Officer
and Chief Financial Officer, concluded that the disclosure controls and procedures are effective.
There have been no significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of this evaluation. Cooper is executing a multi-year process of implementing an Enterprise Business System (EBS)
globally. Implementing an EBS system on a global basis involves significant changes in business
processes. The implementation is phased, which reduces the risks associated with making these
changes. In addition, Cooper is taking the necessary steps to monitor and maintain appropriate
internal controls during the implementations. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings Cooper is subject to various suits, legal proceedings and claims that arise in the normal
course of business. While it is not feasible to predict the outcome of these matters with
certainty, management is of the opinion that their ultimate disposition should not have a material
adverse effect on Coopers financial statements. In October 1998, Cooper sold its Automotive Products business to Federal-Mogul Corporation
(Federal-Mogul). These discontinued businesses (including the Abex product line obtained from
Pneumo-Abex Corporation (Pneumo) in 1994) were operated through subsidiary companies, and the
stock of those subsidiaries was sold to Federal-Mogul pursuant to a Purchase and Sale Agreement
dated August 17, 1998 (1998 Agreement). In conjunction with the sale, Federal-Mogul indemnified
Cooper for certain liabilities of these subsidiary companies, including liabilities related to the
Abex product line and any potential liability that Cooper may have to Pneumo pursuant to a 1994
Mutual Guaranty Agreement between Cooper and Pneumo. On October 1, 2001, Federal-Mogul and several
of its affiliates filed a Chapter 11 bankruptcy petition and indicated that Federal-Mogul may not
honor the indemnification obligations to Cooper. As of the date of this filing, Federal-Mogul had
not rejected the 1998 Agreement, which includes the indemnification to Cooper. If Federal-Mogul
rejects the 1998 Agreement, Cooper will be relieved of its future obligations under the 1998
Agreement, including specific indemnities relating to payment of taxes and certain obligations
regarding insurance for its former Automotive Products businesses. To the extent Cooper is
obligated to Pneumo for any asbestos-related claims arising from the Abex product line (Abex
Claims), Cooper has rights, confirmed by Pneumo, to significant insurance for such claims. Based
on information provided by representatives of Federal-Mogul and recent claims experience, from
August 28, 1998 through March 31, 2005, a total of 134,215 Abex Claims were filed, of which 87,361
claims have been resolved leaving 46,854 Abex Claims pending at March 31, 2005, that are the
responsibility of Federal-Mogul. During the three months ended March 31, 2005, 2,855 claims were
filed and 900 claims were resolved and based on an audit of records, 1,801 claims were tendered
back to Pneumo Abex since Cooper believes they do not qualify as indemnified claims under the 1994
Agreement with Pneumo Abex. Since August 28, 1998, the average indemnity payment for resolved Abex
Claims was $1,950 before insurance. A total of $69.2 million was spent on defense costs for the
period August 28, 1998 through March 31, 2005. Historically, existing insurance coverage has
provided 50% to 80% of the total defense and indemnity payments for Abex Claims. -22-




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With the assistance of independent advisors, Bates White, LLC, in the fourth quarter of 2001
Cooper completed a thorough analysis of its potential exposure for asbestos liabilities in the
event Federal-Mogul rejects the 1998 Agreement. Based on Coopers analysis of its contingent
liability exposure resulting from Federal-Moguls bankruptcy, Cooper concluded that an additional
fourth-quarter 2001 discontinued operations provision of $30 million after-tax, or $.32 per share,
was appropriate to reflect the potential net impact of this issue. The analysis included a review
of the twenty-year history of Abex Claims; the average indemnity payments for resolved claims; the
jurisdictions in which claims had been filed; Bates White, LLC data on the incidence of asbestos
exposure and diseases in various industries; existing insurance coverage including the insurance
recovered by Pneumo and Federal-Mogul for pre-bankruptcy claims and the contractual indemnities.
Assumptions were made regarding future claim filings and indemnity payments, and, based on the
advisors data, the expected population of persons exposed to asbestos in particular industries.
All of this data was used to determine a reasonable expectation of future claims, indemnity
payments and insurance coverage. Cooper is preserving its rights as a creditor for breach of
Federal-Moguls indemnification to Cooper and its rights against all Federal-Mogul subsidiaries.
Cooper intends to take all actions to seek a resolution of the indemnification issues and future
handling of the Abex-related claims within the Federal-Mogul bankruptcy proceedings. Coopers fourth-quarter 2001 analysis of the contingent liability exposure assumed that the
liabilities would be settled within the Federal-Mogul bankruptcy proceedings. This analysis
assumed that representatives of Federal-Mogul, its bankruptcy committees and the future claimants
(the Representatives) would reach similar conclusions regarding the potential future liabilities
and insurance recoveries as Cooper did based on the Bates White, LLC analysis. Throughout 2003,
Cooper worked towards resolution of the indemnification issues and future handling of the
Abex-related claims within the Federal-Mogul bankruptcy proceedings. This included negotiations
with the Representatives regarding participation in Federal-Moguls proposed 524(g) asbestos trust.
Based on the status of the negotiations in 2004, Cooper concluded that it was probable that
Federal-Mogul will reject the 1998 Agreement. Cooper also concluded that the Representatives would
require any negotiated settlement through the Federal-Mogul bankruptcy to be at the high end of the
Bates White, LLC liability analysis and with substantially lower insurance recovery assumptions and
higher administrative costs. While Cooper believes that the insurance has significant additional value, extensive
litigation with the insurance carriers may be required to receive recoveries and there is risk that
court decisions could reduce the value of the recoveries. Additionally, the assumptions on
liability payments could prove inaccurate over time. If Cooper is unable to reach a settlement
with the Representatives and the 1998 Agreement is rejected, Cooper would be required to reflect an
accrual for the total estimated liability and a receivable for the probable insurance recoveries.
Generally accepted accounting principles provide relatively conservative requirements for the
recording of insurance recoveries and a substantial portion of the potential insurance recoveries
would not be reflected as receivables until future events occur. During late February and early March 2004, Cooper reassessed the accrual required based on the
then current status of the negotiations with the Representatives and the liability and insurance
receivable that would be required to be recorded if this matter is not settled within the
Federal-Mogul bankruptcy. Cooper concluded that resolution within the Federal-Mogul proposed
524(g) asbestos trust would likely be within the range of the liabilities, net of insurance
recoveries, that Cooper would accrue if this matter were not settled within the Federal-Mogul
bankruptcy. Accordingly, Cooper recorded a $126.0 million after-tax discontinued operations charge,
net of a $70.9 million income tax benefit, in the fourth quarter of 2003. Cooper has continued discussions with the Representatives, but to date has been unable to
reach a satisfactory conclusion. At this time, the exact manner in which this issue will be
resolved is not known. The accrual for potential liabilities related to the Automotive Products
sale and the Federal-Mogul bankruptcy was $218.6 million at March 31, 2005 and $225.1 million at
December 31, 2004. -23-




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Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities The following table reflects activity related to equity securities purchased by Coopers
wholly-owned subsidiaries during the three months ended March 31, 2005: Purchases of Equity Securities 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(1)
    
    
    Plans or Programs(1)As of 12/31/04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,161,0501/01/05  1/31/05
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    6,761,0502/01/05  2/28/05
    
    
    180,000
    
    
    
    69.40
    
    
    
    180,000
    
    
    
    6,581,0503/01/05  3/31/05
    
    
    220,000
    
    
    
    70.68
    
    
    
    220,000
    
    
    
    6,361,050Total
    
    
    400,000
    
    
    $
    70.10
    
    
    
    400,000
   (1)
    
    On February 9, 2000, Cooper publicly announced that its Board of Directors
authorized the repurchase of up to 5 million shares of Cooper 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 these plans. For 2005, Coopers
current estimate is that 1.6 million shares will be issued under equity compensation plans
which is reflected in the above table. 
 Item 6. Exhibits 4.
    
    Fourth Supplemental Indenture dated as of January 1, 2005 among Cooper
Industries, LLC, Cooper Industries, Ltd. and JP Morgan Chase Bank, as Trustee.10.1
    
    Summary of Executive Compensation Arrangements for Named Executive Officers.10.2
    
    Summary of Nonemployee Director Compensation.10.3
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2005-2007.10.4
    
    Cooper Industries Amended and Restated Stock Incentive Plan (Amended and
Restated February 9, 2005).10.5
    
    Form of Management Continuity Agreement between Cooper Industries, Ltd., Cooper
US, Inc. and key management personnel which applies if there is a change in control of
Cooper.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2000
through 2004 and the Three Months Ended March 31, 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.
 -24-




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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.
 -25-




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Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Cooper Industries, Ltd.(Registrant)Date: May 9, 2005
    
    /s/ Terry A. KlebeTerry A. KlebeSenior Vice President and Chief Financial OfficerDate: May 9, 2005
    
    /s/ J. B. LevosJeffrey B. LevosVice President and Controller and Chief Accounting Officer
 -26-




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Exhibit Index Exhibit No. 4.
    
    Fourth Supplemental Indenture dated as of January 1, 2005 among Cooper Industries,
LLC, Cooper Industries, Ltd. and JP Morgan Chase Bank, as Trustee.10.1
    
    Summary of Executive Compensation Arrangements for Named Executive Officers.10.2
    
    Summary of Nonemployee Director Compensation.10.3
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2005-2007.10.4
    
    Cooper Industries Amended and Restated Stock Incentive Plan (Amended and Restated February 9, 2005).10.5
    
    Form of Management Continuity Agreement between Cooper Industries, Ltd., Cooper US,
Inc. and key management personnel which applies if there is a change in control of
Cooper.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2000
through 2004 and the Three Months Ended March 31, 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.