##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2006
 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)
  
  
  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 IndexCurrent Compensation ArrangementsComputation of Ratios of Earnings to Fixed ChargesConsent of Bates White, LLCCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 COOPER INDUSTRIES, LTD.
CONSOLIDATED INCOME STATEMENTS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions, where applicable)Revenues
    
    $
    1,287.8
    
    
    $
    1,189.2
    
    
    $
    2,528.7
    
    
    $
    2,334.0Cost of sales
    
    
    870.3
    
    
    
    814.7
    
    
    
    1,717.1
    
    
    
    1,602.3Selling and administrative expenses
    
    
    244.3
    
    
    
    232.9
    
    
    
    481.8
    
    
    
    460.4Operating earnings
    
    
    173.2
    
    
    
    141.6
    
    
    
    329.8
    
    
    
    271.3Interest expense, net
    
    
    12.4
    
    
    
    17.7
    
    
    
    24.5
    
    
    
    35.5Income from continuing operations before
income taxes
    
    
    160.8
    
    
    
    123.9
    
    
    
    305.3
    
    
    
    235.8Income taxes
    
    
    41.0
    
    
    
    26.6
    
    
    
    77.8
    
    
    
    50.7Income from continuing operations
    
    
    119.8
    
    
    
    97.3
    
    
    
    227.5
    
    
    
    185.1Charge related to discontinued operations,
net of income taxes
    
    
    20.3
    
    
    
    
    
    
    
    20.3
    
    
    
    Net income
    
    $
    99.5
    
    
    $
    97.3
    
    
    $
    207.2
    
    
    $
    185.1Income per common share:Basic:Income from continuing operations
    
    $
    1.30
    
    
    $
    1.05
    
    
    $
    2.47
    
    
    $
    1.99Charge from discontinued operations
    
    
    .22
    
    
    
    
    
    
    
    .22
    
    
    
    Net income
    
    $
    1.08
    
    
    $
    1.05
    
    
    $
    2.25
    
    
    $
    1.99Diluted:Income from continuing operations
    
    $
    1.27
    
    
    $
    1.02
    
    
    $
    2.41
    
    
    $
    1.94Charge from discontinued operations
    
    
    .21
    
    
    
    
    
    
    
    .21
    
    
    
    Net income
    
    $
    1.06
    
    
    $
    1.02
    
    
    $
    2.20
    
    
    $
    1.94Cash dividends per common share
    
    $
    .37
    
    
    $
    .37
    
    
    $
    .74
    
    
    $
    .74
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COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2006
    
    
    2005(in millions)ASSETSCash and cash equivalents
    
    $
    350.2
    
    
    $
    452.8Receivables
    
    
    961.6
    
    
    
    842.4Inventories
    
    
    631.1
    
    
    
    538.7Deferred income taxes and other current assets
    
    
    273.4
    
    
    
    297.2Total current assets
    
    
    2,216.3
    
    
    
    2,131.1Property, plant and equipment, less accumulated depreciation
    
    
    664.8
    
    
    
    673.7Goodwill
    
    
    2,181.2
    
    
    
    2,084.0Deferred income taxes and other noncurrent assets
    
    
    284.4
    
    
    
    326.3Total assets
    
    $
    5,346.7
    
    
    $
    5,215.1LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    6.4
    
    
    $
    7.6Accounts payable
    
    
    469.6
    
    
    
    427.8Accrued liabilities
    
    
    479.9
    
    
    
    518.0Current discontinued operations liability
    
    
    218.7
    
    
    
    196.3Current maturities of long-term debt
    
    
    11.6
    
    
    
    11.4Total current liabilities
    
    
    1,186.2
    
    
    
    1,161.1Long-term debt
    
    
    1,000.8
    
    
    
    1,002.9Postretirement benefits other than pensions
    
    
    154.8
    
    
    
    163.0Long-term discontinued operations liability
    
    
    330.0
    
    
    
    330.0Other long-term liabilities
    
    
    389.6
    
    
    
    352.9Total liabilities
    
    
    3,061.4
    
    
    
    3,009.9Common stock, $.01 par value
    
    
    0.9
    
    
    
    0.9Capital in excess of par value
    
    
    306.8
    
    
    
    383.2Retained earnings
    
    
    2,135.7
    
    
    
    1,997.4Accumulated other nonowner changes in equity
    
    
    (158.1
    )
    
    
    (176.3
    )Total shareholders equity
    
    
    2,285.3
    
    
    
    2,205.2Total liabilities and shareholders equity
    
    $
    5,346.7
    
    
    $
    5,215.1
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COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2006
    
    
    2005(in millions)Cash flows from operating activities:Net income
    
    $
    207.2
    
    
    $
    185.1Plus: charge related to discontinued operations
    
    
    20.3
    
    
    
    Income from continuing operations
    
    
    227.5
    
    
    
    185.1Adjustments to reconcile to net cash provided by operating activities:Depreciation and amortization
    
    
    54.6
    
    
    
    57.5Deferred income taxes
    
    
    10.8
    
    
    
    5.3Excess tax benefits from stock options and awards
    
    
    (19.8
    )
    
    
    Restructuring charge payments
    
    
    
    
    
    
    (0.4
    )Changes in assets and liabilities: (1)Receivables
    
    
    (100.2
    )
    
    
    (74.9
    )Inventories
    
    
    (76.3
    )
    
    
    (69.4
    )Accounts payable and accrued liabilities
    
    
    (18.0
    )
    
    
    14.0Other assets and liabilities, net
    
    
    97.4
    
    
    
    64.2Net cash provided by operating activities
    
    
    176.0
    
    
    
    181.4Cash flows from investing activities:Capital expenditures
    
    
    (40.2
    )
    
    
    (47.9
    )Cash paid for acquired businesses
    
    
    (84.2
    )
    
    
    (2.4
    )Proceeds from sales of property, plant and equipment and other
    
    
    4.8
    
    
    
    4.3Net cash used in investing activities
    
    
    (119.6
    )
    
    
    (46.0
    )Cash flows from financing activities:Repayments of debt
    
    
    (2.1
    )
    
    
    (117.9
    )Dividends
    
    
    (68.9
    )
    
    
    (69.4
    )Subsidiary purchase of parent shares
    
    
    (185.4
    )
    
    
    (77.2
    )Excess tax benefits from stock options and awards
    
    
    19.8
    
    
    
    Activity under employee stock plans and other
    
    
    69.9
    
    
    
    41.2Net cash used in financing activities
    
    
    (166.7
    )
    
    
    (223.3
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    7.7
    
    
    
    (27.9
    )Decrease in cash and cash equivalents
    
    
    (102.6
    )
    
    
    (115.8
    )Cash and cash equivalents, beginning of period
    
    
    452.8
    
    
    
    652.8Cash and cash equivalents, end of period
    
    $
    350.2
    
    
    $
    537.0
 
 (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.
 Note 2. Stock-Based Compensation
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
   -5-




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Three Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2005(in millions, except per share amounts)Net income, as reported
    
    
    $  97.3
    
    
    
    $  185.1Add: Stock-based
employee compensation
expense included in
reported net income, net
of related tax effects
    
    
    6.2
    
    
    
    10.2Deduct: Total
stock-based employee
compensation expense
determined under fair
value based method for
all awards, net of
related tax effects
    
    
    (5.6
    )
    
    
    (8.1
    )Pro-forma net income
    
    
    $  97.9
    
    
    
    $  187.2Earnings per share:Basic  as reported
    
    
    $  1.05
    
    
    
    $  1.99Basic  pro-forma
    
    
    $  1.05
    
    
    
    $  2.01Diluted  as reported
    
    
    $  1.02
    
    
    
    $  1.94Diluted  pro-forma
    
    
    $  1.03
    
    
    
    $  1.96
 Share-Based Payment Statement of Cash Flows
     -6-




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Stock Options
   2006
    
    2005Expected volatility
    
    
    18.0
    %
    
    
    27.7
    %Expected dividends
    
    
    1.8
    %
    
    
    2.1
    %Expected term (in years)
    
    
    4.5
    
    
    
    5.0Risk-free rate
    
    
    4.6
    %
    
    
    3.7
    %
  WeightedWeighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    (in millions)Outstanding at January 1, 2006
    
    
    5,428,821
    
    
    $
    48.81Granted
    
    
    765,800
    
    
    $
    82.62Exercised
    
    
    (1,665,524
    )
    
    $
    43.40Forfeited or expired
    
    
    (64,729
    )
    
    $
    66.06Outstanding at June 30, 2006
    
    
    4,464,368
    
    
    $
    56.38
    
    
    
    4.7
    
    
    $
    161.8Vested or expected to vest at
June 30, 2006
    
    
    4,410,937
    
    
    $
    56.06
    
    
    
    4.6
    
    
    $
    159.9Exercisable at June 30, 2006
    
    
    2,651,673
    
    
    $
    45.23
    
    
    
    4.0
    
    
    $
    125.7
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Performance-Based Shares and Restricted Stock Units
    Weighted-AverageGrant-DateNonvested Performance-Based Shares
    
    Shares
    
    
    Fair ValueNonvested at January 1, 2006
    
    
    962,138
    
    
    $
    55.05Granted
    
    
    268,580
    
    
    $
    82.60Vested
    
    
    (288,975
    )
    
    $
    37.58Forfeited
    
    
    (73,324
    )
    
    $
    64.63Nonvested at June 30, 2006
    
    
    868,419
    
    
    $
    68.60
   -8-




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Weighted-AverageGrant-DateNonvested Restricted Stock Units
    
    Shares
    
    
    Fair ValueNonvested at January 1, 2006
    
    
    309,400
    
    
    $
    49.97Granted
    
    
    23,000
    
    
    $
    87.20Vested
    
    
    (100,100
    )
    
    $
    41.04Forfeited
    
    
    (23,000
    )
    
    $
    48.78Nonvested at June 30, 2006
    
    
    209,300
    
    
    $
    58.46
      Note 3. Acquisitions
    -9-




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Note 4. Inventories
 June 30,
    
    
    December 31,2006
    
    
    2005(in millions)Raw materials
    
    $
    217.3
    
    
    
    $  206.1Work-in-process
    
    
    162.2
    
    
    
    137.9Finished goods
    
    
    372.7
    
    
    
    303.7Perishable tooling and supplies
    
    
    14.4
    
    
    
    14.4766.6
    
    
    
    662.1Allowance for excess and obsolete inventory
    
    
    (69.0
    )
    
    
    (58.7
    )Excess of current standard costs over LIFO costs
    
    
    (66.5
    )
    
    
    (64.7
    )Net inventories
    
    $
    631.1
    
    
    
    $  538.7
 Note 5. Shareholders Equity
   Note 6. Segment Information
 RevenuesThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Electrical Products
    
    $
    1,103.5
    
    
    $
    1,010.6
    
    
    $
    2,164.1
    
    
    $
    1,978.9Tools
    
    
    184.3
    
    
    
    178.6
    
    
    
    364.6
    
    
    
    355.1Total revenues
    
    $
    1,287.8
    
    
    $
    1,189.2
    
    
    $
    2,528.7
    
    
    $
    2,334.0
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Operating EarningsThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Electrical Products
    
    $
    177.5
    
    
    $
    148.2
    
    
    $
    337.6
    
    
    $
    283.6Tools
    
    
    19.6
    
    
    
    15.8
    
    
    
    36.9
    
    
    
    30.5Segment operating earnings
    
    
    197.1
    
    
    
    164.0
    
    
    
    374.5
    
    
    
    314.1General Corporate expenses
    
    
    23.9
    
    
    
    22.4
    
    
    
    44.7
    
    
    
    42.8Total operating earnings
    
    
    173.2
    
    
    
    141.6
    
    
    
    329.8
    
    
    
    271.3Interest expense, net
    
    
    12.4
    
    
    
    17.7
    
    
    
    24.5
    
    
    
    35.5Income from continuing
operations before income
taxes
    
    $
    160.8
    
    
    $
    123.9
    
    
    $
    305.3
    
    
    $
    235.8
 Note 7. Pension and Other Postretirement Benefits
   Pension BenefitsThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Components of net periodic benefit cost:Service cost
    
    $
    3.5
    
    
    $
    4.2
    
    
    $
    8.4
    
    
    $
    8.7Interest cost
    
    
    10.4
    
    
    
    10.0
    
    
    
    20.7
    
    
    
    20.4Expected return on plan assets
    
    
    (12.1
    )
    
    
    (12.6
    )
    
    
    (24.7
    )
    
    
    (25.4
    )Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3Recognized actuarial loss
    
    
    3.4
    
    
    
    2.5
    
    
    
    7.2
    
    
    
    4.8Curtailment loss
    
    
    4.2
    
    
    
    
    
    
    
    4.2
    
    
    
    Net periodic benefit (income) cost
    
    $
    9.5
    
    
    $
    4.2
    
    
    $
    16.1
    
    
    $
    8.8
 -11-




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Other Postretirement BenefitsThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Components of net periodic benefit cost:Service cost
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    0.1
    
    
    $
    0.1Interest cost
    
    
    1.3
    
    
    
    1.7
    
    
    
    2.7
    
    
    
    3.5Amortization of prior service cost
    
    
    (0.5
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    Recognized actuarial gain
    
    
    (0.7
    )
    
    
    (0.7
    )
    
    
    (1.4
    )
    
    
    (1.5
    )Curtailment gain
    
    
    (3.2
    )
    
    
    
    
    
    
    (3.2
    )
    
    
    Net periodic benefit (income) cost
    
    $
    (3.0
    )
    
    $
    1.1
    
    
    $
    (2.8
    )
    
    $
    2.1
 Note 8. Income Taxes
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Note 9. Net Income Per Common Share
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Basic:Income from continuing operations
    
    $
    119.8
    
    
    $
    97.3
    
    
    $
    227.5
    
    
    $
    185.1Charge from discontinued operations
    
    
    20.3
    
    
    
    
    
    
    
    20.3
    
    
    
    Net income applicable to common stock
    
    $
    99.5
    
    
    $
    97.3
    
    
    $
    207.2
    
    
    $
    185.1Weighted average common shares outstanding
    
    
    92.2
    
    
    
    93.0
    
    
    
    92.2
    
    
    
    93.0Diluted:Income from continuing operations
    
    $
    119.8
    
    
    $
    97.3
    
    
    $
    227.5
    
    
    $
    185.1Charge from discontinued operations
    
    
    20.3
    
    
    
    
    
    
    
    20.3
    
    
    
    Net income applicable to common stock
    
    $
    99.5
    
    
    $
    97.3
    
    
    $
    207.2
    
    
    $
    185.1Weighted average common shares outstanding
    
    
    92.2
    
    
    
    93.0
    
    
    
    92.2
    
    
    
    93.0Incremental shares from assumed conversions:Options, performance-based stock
awards and other employee awards
    
    
    2.0
    
    
    
    2.4
    
    
    
    2.1
    
    
    
    2.5Weighted average common shares
and common share equivalents
    
    
    94.2
    
    
    
    95.4
    
    
    
    94.3
    
    
    
    95.5
  Note 10. Net Income and Other Nonowner Changes in Equity
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Net income
    
    $
    99.5
    
    
    $
    97.3
    
    
    $
    207.2
    
    
    $
    185.1Foreign currency translation gains
(losses)
    
    
    14.4
    
    
    
    (5.4
    )
    
    
    19.0
    
    
    
    (13.5
    )Change in fair value of derivatives
    
    
    (4.2
    )
    
    
    0.2
    
    
    
    (0.8
    )
    
    
    (1.1
    )Net income and other nonowner changes
in equity
    
    $
    109.7
    
    
    $
    92.1
    
    
    $
    225.4
    
    
    $
    170.5
 Note 11. Restructuring
  -13-




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Note 12. Charge Related to Discontinued Operations
    -14-




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Note 13. Consolidating Financial Information
  -17-




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Consolidating Income Statements
Three Months Ended June 30, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    845.1
    
    
    $
    499.8
    
    
    $
    (57.1
    )
    
    $
    1,287.8Cost of sales
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    588.0
    
    
    
    339.8
    
    
    
    (57.1
    )
    
    
    870.3Selling and administrative
expenses
    
    
    3.2
    
    
    
    5.5
    
    
    
    15.5
    
    
    
    129.7
    
    
    
    90.4
    
    
    
    
    
    
    
    244.3Interest expense, net
    
    
    (0.2
    )
    
    
    10.9
    
    
    
    2.7
    
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    12.4Equity in earnings of
subsidiaries, net of tax
    
    
    131.2
    
    
    
    9.2
    
    
    
    68.8
    
    
    
    25.6
    
    
    
    70.3
    
    
    
    (305.1
    )
    
    
    Intercompany income (expense)
    
    
    (4.1
    )
    
    
    (3.7
    )
    
    
    2.8
    
    
    
    (118.4
    )
    
    
    147.9
    
    
    
    (24.5
    )
    
    
    Income (loss) from continuing
operations before income
taxes
    
    
    124.1
    
    
    
    (10.7
    )
    
    
    53.6
    
    
    
    34.6
    
    
    
    288.8
    
    
    
    (329.6
    )
    
    
    160.8Income tax expense (benefit)
    
    
    
    
    
    
    (7.7
    )
    
    
    (16.6
    )
    
    
    4.1
    
    
    
    61.2
    
    
    
    
    
    
    
    41.0Income (loss) from continuing
operations
    
    
    124.1
    
    
    
    (3.0
    )
    
    
    70.2
    
    
    
    30.5
    
    
    
    227.6
    
    
    
    (329.6
    )
    
    
    119.8Charge related to
discontinued operations, net
of taxes
    
    
    
    
    
    
    20.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.3Net income (loss)
    
    $
    124.1
    
    
    $
    (23.3
    )
    
    $
    70.2
    
    
    $
    30.5
    
    
    $
    227.6
    
    
    $
    (329.6
    )
    
    $
    99.5
 Three Months Ended June 30, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    811.0
    
    
    $
    408.6
    
    
    $
    (30.4
    )
    
    $
    1,189.2Cost of sales
    
    
    
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    574.9
    
    
    
    269.0
    
    
    
    (30.4
    )
    
    
    814.7Selling and administrative
expenses
    
    
    2.5
    
    
    
    2.0
    
    
    
    16.5
    
    
    
    128.2
    
    
    
    83.7
    
    
    
    
    
    
    
    232.9Interest expense, net
    
    
    (0.4
    )
    
    
    13.4
    
    
    
    (0.7
    )
    
    
    
    
    
    
    5.4
    
    
    
    
    
    
    
    17.7Equity in earnings of
subsidiaries, net of tax
    
    
    124.3
    
    
    
    42.8
    
    
    
    83.2
    
    
    
    124.4
    
    
    
    69.0
    
    
    
    (443.7
    )
    
    
    Intercompany income (expense)
    
    
    (1.7
    )
    
    
    (26.8
    )
    
    
    (18.5
    )
    
    
    (36.9
    )
    
    
    107.3
    
    
    
    (23.4
    )
    
    
    Income (loss) before income
taxes
    
    
    120.5
    
    
    
    0.4
    
    
    
    47.9
    
    
    
    195.4
    
    
    
    226.8
    
    
    
    (467.1
    )
    
    
    123.9Income tax expense (benefit)
    
    
    
    
    
    
    (15.9
    )
    
    
    (21.2
    )
    
    
    24.3
    
    
    
    39.4
    
    
    
    
    
    
    
    26.6Net income
    
    $
    120.5
    
    
    $
    16.3
    
    
    $
    69.1
    
    
    $
    171.1
    
    
    $
    187.4
    
    
    $
    (467.1
    )
    
    $
    97.3
 -18-




---



##### Table of Contents



Consolidating Income Statements
Six Months Ended June 30, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,668.2
    
    
    $
    978.2
    
    
    $
    (117.7
    )
    
    $
    2,528.7Cost of sales
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    1,168.8
    
    
    
    666.4
    
    
    
    (117.7
    )
    
    
    1,717.1Selling and administrative
expenses
    
    
    5.5
    
    
    
    7.7
    
    
    
    31.6
    
    
    
    259.8
    
    
    
    177.2
    
    
    
    
    
    
    
    481.8Interest expense, net
    
    
    (0.3
    )
    
    
    21.8
    
    
    
    5.3
    
    
    
    
    
    
    
    (2.3
    )
    
    
    
    
    
    
    24.5Equity in earnings of
subsidiaries, net of tax
    
    
    268.3
    
    
    
    18.5
    
    
    
    149.3
    
    
    
    47.2
    
    
    
    150.4
    
    
    
    (633.7
    )
    
    
    Intercompany income (expense)
    
    
    (7.3
    )
    
    
    (7.0
    )
    
    
    7.8
    
    
    
    (212.8
    )
    
    
    267.9
    
    
    
    (48.6
    )
    
    
    Income (loss) from continuing
operations before income
taxes
    
    
    255.8
    
    
    
    (17.6
    )
    
    
    120.2
    
    
    
    74.0
    
    
    
    555.2
    
    
    
    (682.3
    )
    
    
    305.3Income tax expense (benefit)
    
    
    
    
    
    
    (13.8
    )
    
    
    (30.1
    )
    
    
    11.9
    
    
    
    109.8
    
    
    
    
    
    
    
    77.8Income from continuing
operations
    
    
    255.8
    
    
    
    (3.8
    )
    
    
    150.3
    
    
    
    62.1
    
    
    
    445.4
    
    
    
    (682.3
    )
    
    
    227.5Charge related to
discontinued operations, net
of tax
    
    
    
    
    
    
    20.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.3Net income (loss)
    
    $
    255.8
    
    
    $
    (24.1
    )
    
    $
    150.3
    
    
    $
    62.1
    
    
    $
    445.4
    
    
    $
    (682.3
    )
    
    $
    207.2
 Six Months Ended June 30, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,562.6
    
    
    $
    832.0
    
    
    $
    (60.6
    )
    
    $
    2,334.0Cost of sales
    
    
    0.2
    
    
    
    0.2
    
    
    
    1.4
    
    
    
    1,110.9
    
    
    
    550.2
    
    
    
    (60.6
    )
    
    
    1,602.3Selling and administrative
expenses
    
    
    4.7
    
    
    
    3.8
    
    
    
    31.8
    
    
    
    251.4
    
    
    
    168.7
    
    
    
    
    
    
    
    460.4Interest expense, net
    
    
    (0.9
    )
    
    
    26.9
    
    
    
    (1.7
    )
    
    
    
    
    
    
    11.2
    
    
    
    
    
    
    
    35.5Equity in earnings of
subsidiaries, net of tax
    
    
    238.0
    
    
    
    49.7
    
    
    
    161.8
    
    
    
    160.7
    
    
    
    129.4
    
    
    
    (739.6
    )
    
    
    Intercompany income (expense)
    
    
    (2.5
    )
    
    
    (26.8
    )
    
    
    (45.4
    )
    
    
    (120.8
    )
    
    
    242.0
    
    
    
    (46.5
    )
    
    
    Income (loss) before income
taxes
    
    
    231.5
    
    
    
    (8.0
    )
    
    
    84.9
    
    
    
    240.2
    
    
    
    473.3
    
    
    
    (786.1
    )
    
    
    235.8Income tax expense (benefit)
    
    
    
    
    
    
    (21.5
    )
    
    
    (44.5
    )
    
    
    28.4
    
    
    
    88.3
    
    
    
    
    
    
    
    50.7Net income
    
    $
    231.5
    
    
    $
    13.5
    
    
    $
    129.4
    
    
    $
    211.8
    
    
    $
    385.0
    
    
    $
    (786.1
    )
    
    $
    185.1
 -19-




---



##### Table of Contents



Consolidating Balance Sheets
June 30, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    86.5
    
    
    $
    
    
    
    $
    60.4
    
    
    $
    (2.0
    )
    
    $
    205.3
    
    
    $
    
    
    
    $
    350.2Receivables
    
    
    0.2
    
    
    
    
    
    
    
    6.1
    
    
    
    543.6
    
    
    
    411.7
    
    
    
    
    
    
    
    961.6Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368.3
    
    
    
    262.8
    
    
    
    
    
    
    
    631.1Deferred income taxes and
other current assets
    
    
    0.3
    
    
    
    142.5
    
    
    
    68.6
    
    
    
    38.8
    
    
    
    23.2
    
    
    
    
    
    
    
    273.4Total current assets
    
    
    87.0
    
    
    
    142.5
    
    
    
    135.1
    
    
    
    948.7
    
    
    
    903.0
    
    
    
    
    
    
    
    2,216.3Property, plant and
equipment, less accumulated
depreciation
    
    
    
    
    
    
    
    
    
    
    44.4
    
    
    
    325.8
    
    
    
    294.6
    
    
    
    
    
    
    
    664.8Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,022.9
    
    
    
    1,158.3
    
    
    
    
    
    
    
    2,181.2Investment in subsidiaries
    
    
    3,201.5
    
    
    
    704.7
    
    
    
    3,893.6
    
    
    
    974.9
    
    
    
    1,050.5
    
    
    
    (9,825.2
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,732.5
    
    
    
    
    
    
    
    312.7
    
    
    
    (3,045.2
    )
    
    
    Intercompany accounts
receivable
    
    
    660.4
    
    
    
    634.6
    
    
    
    
    
    
    
    1,240.7
    
    
    
    712.5
    
    
    
    (3,248.2
    )
    
    
    Intercompany notes receivable
    
    
    5.6
    
    
    
    23.5
    
    
    
    704.1
    
    
    
    1.6
    
    
    
    3,872.4
    
    
    
    (4,607.2
    )
    
    
    Deferred income taxes and
other noncurrent assets
    
    
    
    
    
    
    213.1
    
    
    
    28.6
    
    
    
    (49.5
    )
    
    
    92.2
    
    
    
    
    
    
    
    284.4Total assets
    
    $
    3,954.5
    
    
    $
    1,718.4
    
    
    $
    7,538.3
    
    
    $
    4,465.1
    
    
    $
    8,396.2
    
    
    $
    (20,725.8
    )
    
    $
    5,346.7Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.4
    
    
    $
    
    
    
    $
    6.4Accounts payable
    
    
    34.2
    
    
    
    16.0
    
    
    
    7.2
    
    
    
    236.2
    
    
    
    176.0
    
    
    
    
    
    
    
    469.6Accrued liabilities
    
    
    4.9
    
    
    
    30.9
    
    
    
    86.6
    
    
    
    208.4
    
    
    
    149.1
    
    
    
    
    
    
    
    479.9Current discontinued
operations liability
    
    
    
    
    
    
    218.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218.7Current maturities of
long-term debt
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    11.6Total current liabilities
    
    
    39.1
    
    
    
    276.6
    
    
    
    93.8
    
    
    
    444.6
    
    
    
    332.1
    
    
    
    
    
    
    
    1,186.2Long-term debt
    
    
    
    
    
    
    668.3
    
    
    
    323.8
    
    
    
    8.0
    
    
    
    0.7
    
    
    
    
    
    
    
    1,000.8Intercompany accounts payable
    
    
    
    
    
    
    
    
    
    
    3,248.2
    
    
    
    
    
    
    
    
    
    
    
    (3,248.2
    )
    
    
    Intercompany notes payable
    
    
    428.3
    
    
    
    286.0
    
    
    
    1,742.0
    
    
    
    1,705.7
    
    
    
    445.2
    
    
    
    (4,607.2
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term liabilities
    
    
    
    
    
    
    140.4
    
    
    
    207.9
    
    
    
    73.9
    
    
    
    122.2
    
    
    
    
    
    
    
    544.4Total liabilities
    
    
    467.4
    
    
    
    1,701.3
    
    
    
    5,615.7
    
    
    
    2,232.2
    
    
    
    900.2
    
    
    
    (7,855.4
    )
    
    
    3,061.4Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308.6
    
    
    
    (308.6
    )
    
    
    Capital in excess of par value
    
    
    3,341.6
    
    
    
    
    
    
    
    49.3
    
    
    
    1,393.5
    
    
    
    5,159.2
    
    
    
    (9,636.8
    )
    
    
    306.8Retained earnings
    
    
    169.8
    
    
    
    129.8
    
    
    
    2,041.9
    
    
    
    827.1
    
    
    
    2,173.5
    
    
    
    (3,206.4
    )
    
    
    2,135.7Accumulated other non- owner
changes in equity
    
    
    (25.8
    )
    
    
    (112.7
    )
    
    
    (168.6
    )
    
    
    12.3
    
    
    
    (145.3
    )
    
    
    282.0
    
    
    
    (158.1
    )Total shareholders equity
    
    
    3,487.1
    
    
    
    17.1
    
    
    
    1,922.6
    
    
    
    2,232.9
    
    
    
    7,496.0
    
    
    
    (12,870.4
    )
    
    
    2,285.3Total liabilities and
shareholders equity
    
    $
    3,954.5
    
    
    $
    1,718.4
    
    
    $
    7,538.3
    
    
    $
    4,465.1
    
    
    $
    8,396.2
    
    
    $
    (20,725.8
    )
    
    $
    5,346.7
 -20-




---



##### Table of Contents



Consolidating Balance Sheets
December 31, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    64.1
    
    
    $
    
    
    
    $
    144.4
    
    
    $
    (3.5
    )
    
    $
    247.8
    
    
    $
    
    
    
    $
    452.8Receivables
    
    
    0.1
    
    
    
    
    
    
    
    8.6
    
    
    
    469.7
    
    
    
    364.0
    
    
    
    
    
    
    
    842.4Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327.1
    
    
    
    211.6
    
    
    
    
    
    
    
    538.7Deferred income taxes and
other current assets
    
    
    1.2
    
    
    
    130.7
    
    
    
    94.0
    
    
    
    48.8
    
    
    
    22.5
    
    
    
    
    
    
    
    297.2Total current assets
    
    
    65.4
    
    
    
    130.7
    
    
    
    247.0
    
    
    
    842.1
    
    
    
    845.9
    
    
    
    
    
    
    
    2,131.1Property, plant and
equipment, less accumulated
depreciation
    
    
    
    
    
    
    
    
    
    
    41.0
    
    
    
    339.5
    
    
    
    293.2
    
    
    
    
    
    
    
    673.7Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018.3
    
    
    
    1,065.7
    
    
    
    
    
    
    
    2,084.0Investment in subsidiaries
    
    
    2,887.9
    
    
    
    759.5
    
    
    
    3,579.4
    
    
    
    917.6
    
    
    
    899.1
    
    
    
    (9,043.5
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,547.1
    
    
    
    
    
    
    
    312.7
    
    
    
    (2,859.8
    )
    
    
    Intercompany accounts
receivables
    
    
    588.4
    
    
    
    550.5
    
    
    
    
    
    
    
    1,367.3
    
    
    
    589.9
    
    
    
    (3,096.1
    )
    
    
    Intercompany notes receivable
    
    
    43.9
    
    
    
    23.5
    
    
    
    651.1
    
    
    
    0.8
    
    
    
    3,683.4
    
    
    
    (4,402.7
    )
    
    
    Deferred income taxes and
other noncurrent assets
    
    
    
    
    
    
    223.5
    
    
    
    48.7
    
    
    
    (43.2
    )
    
    
    97.3
    
    
    
    
    
    
    
    326.3Total assets
    
    $
    3,585.6
    
    
    $
    1,687.7
    
    
    $
    7,114.3
    
    
    $
    4,442.4
    
    
    $
    7,787.2
    
    
    $
    (19,402.1
    )
    
    $
    5,215.1Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7.6
    
    
    $
    
    
    
    $
    7.6Accounts payable
    
    
    34.1
    
    
    
    14.0
    
    
    
    8.0
    
    
    
    214.7
    
    
    
    157.0
    
    
    
    
    
    
    
    427.8Accrued liabilities
    
    
    3.9
    
    
    
    28.9
    
    
    
    107.5
    
    
    
    238.8
    
    
    
    138.9
    
    
    
    
    
    
    
    518.0Current discontinued
operations liability
    
    
    
    
    
    
    196.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196.3Current maturities of
long-term debt
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    11.4Total current liabilities
    
    
    38.0
    
    
    
    250.2
    
    
    
    115.5
    
    
    
    453.5
    
    
    
    303.9
    
    
    
    
    
    
    
    1,161.1Long-term debt
    
    
    
    
    
    
    670.0
    
    
    
    323.7
    
    
    
    8.0
    
    
    
    1.2
    
    
    
    
    
    
    
    1,002.9Intercompany accounts payables
    
    
    
    
    
    
    
    
    
    
    3,096.1
    
    
    
    
    
    
    
    
    
    
    
    (3,096.1
    )
    
    
    Intercompany notes payable
    
    
    326.0
    
    
    
    258.7
    
    
    
    1,652.8
    
    
    
    1,708.0
    
    
    
    457.2
    
    
    
    (4,402.7
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term liabilities
    
    
    
    
    
    
    131.4
    
    
    
    191.2
    
    
    
    77.0
    
    
    
    116.3
    
    
    
    
    
    
    
    515.9Total liabilities
    
    
    364.0
    
    
    
    1,640.3
    
    
    
    5,379.3
    
    
    
    2,246.5
    
    
    
    878.6
    
    
    
    (7,498.8
    )
    
    
    3,009.9Class A common stock
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.9Class B common stock
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    Subsidiary common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272.9
    
    
    
    (272.9
    )
    
    
    Capital in excess of par value
    
    
    3,232.7
    
    
    
    
    
    
    
    29.4
    
    
    
    1,388.6
    
    
    
    5,082.3
    
    
    
    (9,349.8
    )
    
    
    383.2Retained earnings
    
    
    31.5
    
    
    
    162.4
    
    
    
    1,892.3
    
    
    
    832.5
    
    
    
    1,733.2
    
    
    
    (2,654.5
    )
    
    
    1,997.4Accumulated other non- owner
changes in equity
    
    
    (44.1
    )
    
    
    (115.0
    )
    
    
    (186.7
    )
    
    
    (25.2
    )
    
    
    (179.8
    )
    
    
    374.5
    
    
    
    (176.3
    )Total shareholders equity
    
    
    3,221.6
    
    
    
    47.4
    
    
    
    1,735.0
    
    
    
    2,195.9
    
    
    
    6,908.6
    
    
    
    (11,903.3
    )
    
    
    2,205.2Total liabilities and
shareholders equity
    
    $
    3,585.6
    
    
    $
    1,687.7
    
    
    $
    7,114.3
    
    
    $
    4,442.4
    
    
    $
    7,787.2
    
    
    $
    (19,402.1
    )
    
    $
    5,215.1
 -21-




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##### Table of Contents



Consolidating Statements of Cash Flows
Six Months Ended June 30, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (9.8
    )
    
    $
    (10.4
    )
    
    $
    2.4
    
    
    $
    (64.6
    )
    
    $
    258.4
    
    
    $
    
    
    
    $
    176.0Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (7.4
    )
    
    
    (15.7
    )
    
    
    (17.1
    )
    
    
    
    
    
    
    (40.2
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    (42.7
    )
    
    
    (41.5
    )
    
    
    
    
    
    
    
    
    
    
    (84.2
    )Investment in affiliates
    
    
    (12.2
    )
    
    
    
    
    
    
    (36.0
    )
    
    
    
    
    
    
    
    
    
    
    48.2
    
    
    
    Loans to affiliates
    
    
    (22.1
    )
    
    
    
    
    
    
    (12.3
    )
    
    
    
    
    
    
    (275.4
    )
    
    
    309.8
    
    
    
    Repayments of loans from affiliates
    
    
    62.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87.5
    
    
    
    (149.5
    )
    
    
    Dividends from affiliates
    
    
    5.0
    
    
    
    
    
    
    
    44.7
    
    
    
    
    
    
    
    3.9
    
    
    
    (53.6
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    4.2
    
    
    
    
    
    
    
    4.8Net cash provided by (used in)
investing activities
    
    
    32.7
    
    
    
    
    
    
    
    (53.7
    )
    
    
    (56.6
    )
    
    
    (196.9
    )
    
    
    154.9
    
    
    
    (119.6
    )Cash flows from financing activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.1
    )
    
    
    
    
    
    
    (2.1
    )Borrowings from affiliates
    
    
    148.9
    
    
    
    12.2
    
    
    
    148.6
    
    
    
    
    
    
    
    0.1
    
    
    
    (309.8
    )
    
    
    Repayments of loans to affiliates
    
    
    (46.5
    )
    
    
    
    
    
    
    (60.7
    )
    
    
    (2.4
    )
    
    
    (39.9
    )
    
    
    149.5
    
    
    
    Other intercompany financing
activities
    
    
    4.3
    
    
    
    (1.8
    )
    
    
    (14.6
    )
    
    
    125.1
    
    
    
    (113.0
    )
    
    
    
    
    
    
    Dividends
    
    
    (68.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68.9
    )Dividends paid to affiliates
    
    
    (48.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.0
    )
    
    
    53.6
    
    
    
    Subsidiary purchase of parent shares
    
    
    10.3
    
    
    
    
    
    
    
    (195.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (185.4
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48.2
    
    
    
    (48.2
    )
    
    
    Excess tax benefits from stock
options and awards
    
    
    
    
    
    
    
    
    
    
    19.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.8Employee stock plan activity and
other
    
    
    
    
    
    
    
    
    
    
    69.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69.9Net cash provided by (used in)
financing activities
    
    
    (0.5
    )
    
    
    10.4
    
    
    
    (32.7
    )
    
    
    122.7
    
    
    
    (111.7
    )
    
    
    (154.9
    )
    
    
    (166.7
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.7
    
    
    
    
    
    
    
    7.7Increase (decrease) in cash and cash
equivalents
    
    
    22.4
    
    
    
    
    
    
    
    (84.0
    )
    
    
    1.5
    
    
    
    (42.5
    )
    
    
    
    
    
    
    (102.6
    )Cash and cash equivalents, beginning
of period
    
    
    64.1
    
    
    
    
    
    
    
    144.4
    
    
    
    (3.5
    )
    
    
    247.8
    
    
    
    
    
    
    
    452.8Cash and cash equivalents, end of
period
    
    $
    86.5
    
    
    $
    
    
    
    $
    60.4
    
    
    $
    (2.0
    )
    
    $
    205.3
    
    
    $
    
    
    
    $
    350.2
 -22-




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##### Table of Contents



Consolidating Statements of Cash Flows
Six Months Ended June 30, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (2.1
    )
    
    $
    (69.7
    )
    
    $
    76.1
    
    
    $
    (50.7
    )
    
    $
    274.2
    
    
    $
    (46.4
    )
    
    $
    181.4Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (6.3
    )
    
    
    (20.2
    )
    
    
    (21.4
    )
    
    
    
    
    
    
    (47.9
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    
    
    
    
    (2.4
    )Investment in affiliates
    
    
    (6.3
    )
    
    
    
    
    
    
    (30.3
    )
    
    
    (3.4
    )
    
    
    
    
    
    
    40.0
    
    
    
    Loans to affiliates
    
    
    (46.0
    )
    
    
    
    
    
    
    (60.8
    )
    
    
    (0.7
    )
    
    
    (43.0
    )
    
    
    150.5
    
    
    
    Repayments of loans from affiliates
    
    
    25.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.6
    )
    
    
    Dividends from affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.0
    
    
    
    
    
    
    
    (19.0
    )
    
    
    Other
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    0.3
    
    
    
    2.5
    
    
    
    
    
    
    
    4.3Net cash provided by (used in)
investing activities
    
    
    (26.7
    )
    
    
    1.5
    
    
    
    (97.4
    )
    
    
    (5.0
    )
    
    
    (64.3
    )
    
    
    145.9
    
    
    
    (46.0
    )Cash flows from financing activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117.9
    )
    
    
    
    
    
    
    (117.9
    )Borrowings from affiliates
    
    
    43.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107.5
    
    
    
    (150.5
    )
    
    
    Repayments of loans to affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.6
    )
    
    
    25.6
    
    
    
    Other intercompany financing
activities
    
    
    6.6
    
    
    
    68.2
    
    
    
    (22.6
    )
    
    
    41.3
    
    
    
    (93.5
    )
    
    
    
    
    
    
    Dividends
    
    
    (69.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69.4
    )Dividends paid to affiliates
    
    
    (46.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19.0
    )
    
    
    65.4
    
    
    
    Subsidiary purchase of parent shares
    
    
    10.3
    
    
    
    
    
    
    
    (10.3
    )
    
    
    
    
    
    
    (77.2
    )
    
    
    
    
    
    
    (77.2
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40.0
    
    
    
    (40.0
    )
    
    
    Employee stock plan activity and
other
    
    
    
    
    
    
    
    
    
    
    41.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41.2Net cash provided by (used in)
financing activities
    
    
    (55.9
    )
    
    
    68.2
    
    
    
    8.3
    
    
    
    41.3
    
    
    
    (185.7
    )
    
    
    (99.5
    )
    
    
    (223.3
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27.9
    )
    
    
    
    
    
    
    (27.9
    )Decrease in cash and cash equivalents
    
    
    (84.7
    )
    
    
    
    
    
    
    (13.0
    )
    
    
    (14.4
    )
    
    
    (3.7
    )
    
    
    
    
    
    
    (115.8
    )Cash and cash equivalents, beginning
of period
    
    
    111.5
    
    
    
    
    
    
    
    246.0
    
    
    
    1.2
    
    
    
    294.1
    
    
    
    
    
    
    
    652.8Cash and cash equivalents, end of
period
    
    $
    26.8
    
    
    $
    
    
    
    $
    233.0
    
    
    $
    (13.2
    )
    
    $
    290.4
    
    
    $
    
    
    
    $
    537.0
 -23-




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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 June 30, 2006 Compared With Three Months Ended June 30, 2005
  Revenues:
    Costs and Expenses:
    -24-




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##### Table of Contents




 Operating Earnings:
    Income Taxes:
  Charge Related to Discontinued Operations:
  -25-




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##### Table of Contents



Six Months Ended June 30, 2006 Compared With Six Months Ended June 30, 2005
  Revenues:
    Costs and Expenses:
      -26-




---



##### Table of Contents




 Operating Earnings:
    Restructuring:
    -27-




---



##### Table of Contents



Income Taxes:
  Liquidity and Capital Resources
 Liquidity
       Capital Resources:
   -28-




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##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
  Backlog
  June 30,2006
    
    
    2005(in millions)Electrical Products
    
    $
    575.6
    
    
    $
    378.9Tools
    
    
    71.8
    
    
    
    63.8$
    647.4
    
    
    $
    442.7
 Recently Issued Accounting Standards
  Private Securities Litigation Reform Act Safe Harbor Statement
  -29-




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Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
    -30-




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-31-




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##### Table of Contents



-32-




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-33-




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##### Table of Contents



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 Plans
    
    
    Purchased Under thePeriod
    
    Purchased
    

    Share
    
    
    or Programs(1)
    
    
    Plans or Programs(1)As of 3/31/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,846,6504/01/06  4/30/06
    
    
    460,000
    
    
    $
    87.66
    
    
    
    460,000
    
    
    
    5,386,6505/01/06  5/31/06
    
    
    325,000
    
    
    
    90.61
    
    
    
    325,000
    
    
    
    5,061,6506/01/06  6/30/06
    
    
    537,200
    
    
    
    86.25
    
    
    
    537,200
    
    
    
    4,524,450Total
    
    
    1,322,200
    
    
    $
    87.81
    
    
    
    1,322,200
 
 (1)
    
    On November 2, 2004, Coopers Board of Directors authorized the repurchase of
up to five million 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, matched savings plan and dividend reinvestment plan in order to offset the
dilution that results from issuing shares under these plans. For 2006, Coopers current
estimate is that 2.6 million shares will be issued under equity compensation plans, which is
reflected in the above table. 
   
   1.
    
    Proposal for the election of three directors for terms expiring in 2009:
 Ivor J. Evans
    
    
    Kirk S. Hachigian
    
    
    James R. WilsonVotes For:
    
    
    87,867,271
    
    
    
    87,408,963
    
    
    
    87,946,963Votes Withheld:
    
    
    1,690,220
    
    
    
    2,148,528
    
    
    
    1,610,528
 2.
    
    Proposal to appoint Ernst & Young LLP as independent auditors for 2006:
 Votes For:
    
    
    88,221,832Votes Against:
    
    
    697,737Abstain:
    
    
    637,922Non-Vote:
    
    

 3.
    
    Proposal to approve the Amended and Restated Management Annual Incentive Plan:
 Votes For:
    
    
    78,486,980Votes Against:
    
    
    3,126,377Abstain:
    
    
    997,958Non-Vote:
    
    
    6,946,176
 -34-




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##### Table of Contents



4.
    
    Proposal to approve the Amended and Restated Directors Stock Plan:
 Votes For:
    
    
    75,551,319Votes Against:
    
    
    6,020,797Abstain:
    
    
    1,039,199Non-Vote:
    
    
    6,946,176
 5.
    
    Shareholder proposal to implement a code of conduct based on international labor
organization human rights standards:
 Votes For:
    
    
    4,893,568Votes Against:
    
    
    66,592,637Abstain:
    
    
    11,125,110Non-Vote:
    
    
    6,946,176
 
  10.
    
    Current Compensation Arrangements for Named Executive Officers.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2001 through 2005
and the Six Months Ended June 30, 2006 and 2005.23.
    
    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.
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##### Table of Contents



Cooper Industries, Ltd.(Registrant)Date: August 3, 2006
    
    
    
    /s/ Terry A. KlebeTerry A. KlebeSenior Vice President andChief Financial OfficerDate: August 3, 2006
    
    
    
    /s/ Jeffrey B. LevosJeffrey B. LevosVice President, Finance and

   Chief Accounting Officer
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##### Table of Contents



10.
    
    Current Compensation Arrangements for Named Executive Officers.12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2001 through 2005
and the Six Months Ended June 30, 2006 and 2005.23.
    
    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.