##### Table of Contents



10-Q
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 600 Travis, Suite 5800
    
    Houston, Texas 77002(Address of principal executive offices)
    
    (Zip Code)
  
  
   þ o
  þ o o
  o þ




---



TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitive and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 6. ExhibitsSignaturesExhibit IndexForm of Executive Stock Incentive AgreementComputation of Ratios of Earnings to Fixed ChargesConsent of Bates White, LLCCertification pursuant to Section 302Certification pursuant to Section 302Certification pursuant to Section 906Certification pursuant to Section 906    Table of Contents  
 PART
I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 COOPER INDUSTRIES, LTD.
CONSOLIDATED INCOME STATEMENTS
 Three Months EndedMarch 31,2006
    
    
    2005(in millions, where applicable)Revenues
    
    $
    1,240.9
    
    
    $
    1,144.8Cost of sales
    
    
    846.8
    
    
    
    787.6Selling and administrative expenses
    
    
    237.5
    
    
    
    227.5Operating earnings
    
    
    156.6
    
    
    
    129.7Interest expense, net
    
    
    12.1
    
    
    
    17.8Income before income taxes
    
    
    144.5
    
    
    
    111.9Income taxes
    
    
    36.8
    
    
    
    24.1Net income
    
    $
    107.7
    
    
    $
    87.8Income per common share:Basic
    
    $
    1.17
    
    
    $
    .94Diluted
    
    $
    1.14
    
    
    $
    .92Cash dividends per common share
    
    $
    .37
    
    
    $
    .37
  -2-




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2006
    
    
    2005(in millions)ASSETSCash and cash equivalents
    
    $
    343.6
    
    
    $
    452.8Receivables
    
    
    930.6
    
    
    
    842.4Inventories
    
    
    609.9
    
    
    
    538.7Deferred income taxes and other current assets
    
    
    287.0
    
    
    
    297.2Total current assets
    
    
    2,171.1
    
    
    
    2,131.1Property, plant and equipment, less accumulated depreciation
    
    
    671.7
    
    
    
    673.7Goodwill
    
    
    2,154.2
    
    
    
    2,084.0Deferred income taxes and other noncurrent assets
    
    
    289.0
    
    
    
    326.3Total assets
    
    $
    5,286.0
    
    
    $
    5,215.1LIABILITIES AND SHAREHOLDERS EQUITYShort-term debt
    
    $
    6.1
    
    
    $
    7.6Accounts payable
    
    
    478.0
    
    
    
    427.8Accrued liabilities
    
    
    453.2
    
    
    
    518.0Current discontinued operations liability
    
    
    198.0
    
    
    
    196.3Current maturities of long-term debt
    
    
    11.4
    
    
    
    11.4Total current liabilities
    
    
    1,146.7
    
    
    
    1,161.1Long-term debt
    
    
    1,002.1
    
    
    
    1,002.9Postretirement benefits other than pensions
    
    
    159.9
    
    
    
    163.0Long-term discontinued operations liability
    
    
    330.0
    
    
    
    330.0Other long-term liabilities
    
    
    356.4
    
    
    
    352.9Total liabilities
    
    
    2,995.1
    
    
    
    3,009.9Common stock, $.01 par value
    
    
    0.9
    
    
    
    0.9Capital in excess of par value
    
    
    387.8
    
    
    
    383.2Retained earnings
    
    
    2,070.5
    
    
    
    1,997.4Accumulated other nonowner changes in equity
    
    
    (168.3
    )
    
    
    (176.3
    )Total shareholders equity
    
    
    2,290.9
    
    
    
    2,205.2Total liabilities and shareholders equity
    
    $
    5,286.0
    
    
    $
    5,215.1
  -3-




---



##### Table of Contents



COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2006
    
    
    2005(in millions)Cash flows from operating activities:Net income
    
    $
    107.7
    
    
    $
    87.8Adjustments to reconcile to net cash provided by operating activities:Depreciation and amortization
    
    
    27.0
    
    
    
    29.3Deferred income taxes
    
    
    8.5
    
    
    
    9.6Restructuring charge payments
    
    
    
    
    
    
    (0.2
    )Excess tax benefits from stock options and awards
    
    
    (13.9
    )
    
    
    Changes in assets and liabilities: (1)Receivables
    
    
    (77.2
    )
    
    
    (29.1
    )Inventories
    
    
    (58.2
    )
    
    
    (55.9
    )Accounts payable and accrued liabilities
    
    
    (20.8
    )
    
    
    (40.1
    )Other assets and liabilities, net
    
    
    52.5
    
    
    
    18.8Net cash provided by operating activities
    
    
    25.6
    
    
    
    20.2Cash flows from investing activities:Capital expenditures
    
    
    (16.7
    )
    
    
    (19.9
    )Cash paid for acquired businesses
    
    
    (83.2
    )
    
    
    (2.4
    )Proceeds from sales of property, plant and equipment and other
    
    
    0.2
    
    
    
    0.5Net cash used in investing activities
    
    
    (99.7
    )
    
    
    (21.8
    )Cash flows from financing activities:Repayments of debt
    
    
    (2.0
    )
    
    
    (90.1
    )Dividends
    
    
    (34.6
    )
    
    
    (34.6
    )Subsidiary purchase of parent shares
    
    
    (69.3
    )
    
    
    (28.0
    )Excess tax benefits from stock options and awards
    
    
    13.9
    
    
    
    Proceeds from stock option exercises
    
    
    53.2
    
    
    
    25.4Net cash used in financing activities
    
    
    (38.8
    )
    
    
    (127.3
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    3.7
    
    
    
    0.9Decrease in cash and cash equivalents
    
    
    (109.2
    )
    
    
    (128.0
    )Cash and cash equivalents, beginning of period
    
    
    452.8
    
    
    
    652.8Cash and cash equivalents, end of period
    
    $
    343.6
    
    
    $
    524.8
 
 (1)
    
    Net of the effects of acquisitions and translation.  -4-




---



##### Table of Contents



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




---



##### Table of Contents



Three Months Ended March 312005(in millions)Net income, as reported
    
    $
    87.8Add: Stock-based employee
compensation expense included in
reported net income, net of related
tax effects
    
    
    4.0Deduct: Total stock-based
employee compensation expense
determined under fair value based
method for all awards, net of
related tax effects
    
    
    (2.5
    )Pro-forma net income
    
    $
    89.3
 Three Months Ended March 312005Earnings per share:Basic  as reported
    
    $
    .94Basic  pro forma
    
    $
    .96Diluted  as reported
    
    $
    .92Diluted  pro forma
    
    $
    .94
 Share-Based Payment Statement of Cash Flows
     -6-




---



##### Table of Contents



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
    
    
    749,300
    
    
    $
    82.38Exercised
    
    
    (1,238,046
    )
    
    $
    42.37Forfeited or expired
    
    
    (31,903
    )
    
    $
    69.75Outstanding at March 31, 2006
    
    
    4,908,172
    
    
    $
    55.43
    
    
    
    4.86
    
    
    $
    156.3Vested or expected to vest at
March 31, 2006
    
    
    4,855,721
    
    
    $
    55.13
    
    
    
    4.86
    
    
    $
    156.1Exercisable at March 31, 2006
    
    
    2,986,772
    
    
    $
    44.75
    
    
    
    4.13
    
    
    $
    127.0
 -7-




---



##### Table of Contents



Performance-Based Shares and Restricted Stock Units
    Weighted-AverageGrant-DateNonvested Performance-Based Shares
    
    Shares
    
    Fair ValueNonvested at January 1, 2006
    
    
    962,138
    
    
    $
    55.05Granted
    
    
    259,240
    
    
    $
    82.38Vested
    
    
    (288,975
    )
    
    $
    37.58Forfeited
    
    
    (31,730
    )
    
    $
    62.99Nonvested at March 31, 2006
    
    
    900,673
    
    
    $
    68.18
   -8-




---



##### Table of Contents



Weighted-AverageGrant-DateNonvested Restricted Stock Units
    
    Shares
    
    Fair ValueNonvested at January 1, 2006
    
    
    309,400
    
    
    $
    49.97Granted
    
    
    8,550
    
    
    $
    82.38Vested
    
    
    (85,100
    )
    
    $
    38.43Forfeited
    
    
    (7,500
    )
    
    $
    43.93Nonvested at March 31, 2006
    
    
    225,350
    
    
    $
    55.76
      Note 3. Acquisitions
    -9-




---



##### Table of Contents



Note 4. Inventories
 March 31,
    
    
    December 31,2006
    
    
    2005(in millions)Raw materials
    
    $
    220.5
    
    
    $
    206.1Work-in-process
    
    
    158.7
    
    
    
    137.9Finished goods
    
    
    347.2
    
    
    
    303.7Perishable tooling and supplies
    
    
    14.2
    
    
    
    14.4740.6
    
    
    
    662.1Allowance for excess and obsolete inventory
    
    
    (64.9
    )
    
    
    (58.7
    )Excess of current standard costs over LIFO costs
    
    
    (65.8
    )
    
    
    (64.7
    )Net inventories
    
    $
    609.9
    
    
    $
    538.7
 Note 5. Shareholders Equity
   Note 6. Segment Information
 Revenues
    
    
    Operating EarningsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Electrical Products
    
    $
    1,060.6
    
    
    $
    968.3
    
    
    $
    160.1
    
    
    $
    135.4Tools
    
    
    180.3
    
    
    
    176.5
    
    
    
    17.3
    
    
    
    14.7Total segments
    
    $
    1,240.9
    
    
    $
    1,144.8
    
    
    
    177.4
    
    
    
    150.1General Corporate expense
    
    
    
    
    
    
    
    
    
    
    20.8
    
    
    
    20.4Interest expense, net
    
    
    
    
    
    
    
    
    
    
    12.1
    
    
    
    17.8Income before income taxes
    
    
    
    
    
    
    
    
    
    $
    144.5
    
    
    $
    111.9
 -10-




---



##### Table of Contents



Note 7. Pension and Other Postretirement Benefits
 Other PostretirementPension Benefits
    
    
    BenefitsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Components of net periodic benefit cost:Service cost
    
    $
    4.9
    
    
    $
    4.5
    
    
    $
    
    
    
    $
    Interest cost
    
    
    10.3
    
    
    
    10.4
    
    
    
    1.4
    
    
    
    1.8Expected return on plan assets
    
    
    (12.6
    )
    
    
    (12.8
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    0.2
    
    
    
    0.2
    
    
    
    (0.5
    )
    
    
    Recognized actuarial (gain) loss
    
    
    3.8
    
    
    
    2.3
    
    
    
    (0.7
    )
    
    
    (0.8
    )Net periodic benefit cost
    
    $
    6.6
    
    
    $
    4.6
    
    
    $
    0.2
    
    
    $
    1.0
 Note 8. Income Taxes
    -11-




---



##### Table of Contents



Note 9. Net Income Per Common Share
 Basic
    
    
    DilutedThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in millions)Net income applicable to common stock
    
    $
    107.7
    
    
    $
    87.8
    
    
    $
    107.7
    
    
    $
    87.8Weighted 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
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    2.6Weighted average common shares
and common share equivalents
    
    
    
    
    
    
    
    
    
    
    94.4
    
    
    
    95.6
  Note 10. Net Income and Other Nonowner Changes in Equity
  Three Months EndedMarch 31,2006
    
    
    2005(in millions)Net income
    
    $
    107.7
    
    
    $
    87.8Foreign currency translation gains (losses)
    
    
    4.6
    
    
    
    (8.1
    )Change in fair value of derivatives
    
    
    3.4
    
    
    
    (1.3
    )Net income and other nonowner changes in equity
    
    $
    115.7
    
    
    $
    78.4
 Note 11. Restructuring Charges
    -12-




---



##### Table of Contents



Note 12. Charge Related to Discontinued Operations
     -13-




---



##### Table of Contents



-14-




---



##### Table of Contents



Note 13. Consolidating Financial Information
  -15-




---



##### Table of Contents



Consolidating Income Statements
Three Months Ended March 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    823.1
    
    
    $
    478.4
    
    
    $
    (60.6
    )
    
    $
    1,240.9Cost of sales
    
    
    
    
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    580.8
    
    
    
    326.6
    
    
    
    (60.6
    )
    
    
    846.8Selling and
administrative
expenses
    
    
    2.3
    
    
    
    2.2
    
    
    
    16.1
    
    
    
    130.1
    
    
    
    86.8
    
    
    
    
    
    
    
    237.5Interest expense, net
    
    
    (0.1
    )
    
    
    10.9
    
    
    
    2.6
    
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    12.1Equity in earnings
of subsidiaries, net
of tax
    
    
    137.1
    
    
    
    9.3
    
    
    
    80.5
    
    
    
    21.6
    
    
    
    80.1
    
    
    
    (328.6
    )
    
    
    Intercompany income
(expense)
    
    
    (3.2
    )
    
    
    (3.3
    )
    
    
    5.0
    
    
    
    (94.4
    )
    
    
    120.0
    
    
    
    (24.1
    )
    
    
    Income (loss) before
income taxes
    
    
    131.7
    
    
    
    (6.9
    )
    
    
    66.6
    
    
    
    39.4
    
    
    
    266.4
    
    
    
    (352.7
    )
    
    
    144.5Income tax expense
(benefit)
    
    
    
    
    
    
    (6.1
    )
    
    
    (13.5
    )
    
    
    7.8
    
    
    
    48.6
    
    
    
    
    
    
    
    36.8Net income (loss)
    
    $
    131.7
    
    
    $
    (0.8
    )
    
    $
    80.1
    
    
    $
    31.6
    
    
    $
    217.8
    
    
    $
    (352.7
    )
    
    $
    107.7
 Consolidating Income Statements
Three Months Ended March 31, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc.
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    751.6
    
    
    $
    423.4
    
    
    $
    (30.2
    )
    
    $
    1,144.8Cost of sales
    
    
    0.2
    
    
    
    
    
    
    
    0.4
    
    
    
    536.0
    
    
    
    281.2
    
    
    
    (30.2
    )
    
    
    787.6Selling and
administrative expenses
    
    
    2.2
    
    
    
    1.8
    
    
    
    15.3
    
    
    
    123.2
    
    
    
    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
    
    
    
    78.6
    
    
    
    36.3
    
    
    
    60.4
    
    
    
    (295.9
    )
    
    
    Intercompany income
(expense)
    
    
    (0.8
    )
    
    
    
    
    
    
    (26.9
    )
    
    
    (83.9
    )
    
    
    134.7
    
    
    
    (23.1
    )
    
    
    Income (loss) before
income taxes
    
    
    111.0
    
    
    
    (8.4
    )
    
    
    37.0
    
    
    
    44.8
    
    
    
    246.5
    
    
    
    (319.0
    )
    
    
    111.9Income tax expense
(benefit)
    
    
    
    
    
    
    (5.6
    )
    
    
    (23.3
    )
    
    
    4.1
    
    
    
    48.9
    
    
    
    
    
    
    
    24.1Net income (loss)
    
    $
    111.0
    
    
    $
    (2.8
    )
    
    $
    60.3
    
    
    $
    40.7
    
    
    $
    197.6
    
    
    $
    (319.0
    )
    
    $
    87.8
 -16-




---



##### Table of Contents



Consolidating Balance Sheets
March 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    77.5
    
    
    $
    
    
    
    $
    84.6
    
    
    $
    (2.7
    )
    
    $
    184.2
    
    
    $
    
    
    
    $
    343.6Receivables
    
    
    
    
    
    
    
    
    
    
    9.2
    
    
    
    528.6
    
    
    
    392.8
    
    
    
    
    
    
    
    930.6Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    360.3
    
    
    
    249.6
    
    
    
    
    
    
    
    609.9Deferred income taxes and
other current assets
    
    
    0.7
    
    
    
    133.1
    
    
    
    94.6
    
    
    
    42.4
    
    
    
    16.2
    
    
    
    
    
    
    
    287.0Total current assets
    
    
    78.2
    
    
    
    133.1
    
    
    
    188.4
    
    
    
    928.6
    
    
    
    842.8
    
    
    
    
    
    
    
    2,171.1Property, plant and
equipment, less
accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    41.4
    
    
    
    332.0
    
    
    
    298.3
    
    
    
    
    
    
    
    671.7Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018.6
    
    
    
    1,135.6
    
    
    
    
    
    
    
    2,154.2Investment in subsidiaries
    
    
    3,051.1
    
    
    
    696.1
    
    
    
    3,812.0
    
    
    
    938.2
    
    
    
    968.1
    
    
    
    (9,465.5
    )
    
    
    Investment in parent
    
    
    
    
    
    
    
    
    
    
    2,616.4
    
    
    
    
    
    
    
    312.7
    
    
    
    (2,929.1
    )
    
    
    Intercompany accounts
receivables
    
    
    642.8
    
    
    
    638.8
    
    
    
    
    
    
    
    1,242.8
    
    
    
    635.2
    
    
    
    (3,159.6
    )
    
    
    Intercompany notes
receivable
    
    
    28.1
    
    
    
    23.5
    
    
    
    680.2
    
    
    
    1.6
    
    
    
    3,827.3
    
    
    
    (4,560.7
    )
    
    
    Deferred income taxes and
other noncurrent assets
    
    
    
    
    
    
    206.8
    
    
    
    25.9
    
    
    
    (46.7
    )
    
    
    103.0
    
    
    
    
    
    
    
    289.0Total assets
    
    $
    3,800.2
    
    
    $
    1,698.3
    
    
    $
    7,364.3
    
    
    $
    4,415.1
    
    
    $
    8,123.0
    
    
    $
    (20,114.9
    )
    
    $
    5,286.0Short-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.1
    
    
    $
    
    
    
    $
    6.1Accounts payable
    
    
    34.4
    
    
    
    11.9
    
    
    
    7.5
    
    
    
    243.8
    
    
    
    180.4
    
    
    
    
    
    
    
    478.0Accrued liabilities
    
    
    4.2
    
    
    
    27.6
    
    
    
    84.8
    
    
    
    195.7
    
    
    
    140.9
    
    
    
    
    
    
    
    453.2Current discontinued
operations liability
    
    
    
    
    
    
    198.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198.0Current maturities of
long-term debt
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    11.4Total current liabilities
    
    
    38.6
    
    
    
    248.5
    
    
    
    92.3
    
    
    
    439.5
    
    
    
    327.8
    
    
    
    
    
    
    
    1,146.7Long-term debt
    
    
    
    
    
    
    669.4
    
    
    
    323.8
    
    
    
    8.0
    
    
    
    0.9
    
    
    
    
    
    
    
    1,002.1Intercompany accounts
payables
    
    
    
    
    
    
    
    
    
    
    3,159.6
    
    
    
    
    
    
    
    
    
    
    
    (3,159.6
    )
    
    
    Intercompany notes payable
    
    
    385.2
    
    
    
    278.4
    
    
    
    1,762.2
    
    
    
    1,705.7
    
    
    
    429.2
    
    
    
    (4,560.7
    )
    
    
    Long-term discontinued
operations liability
    
    
    
    
    
    
    330.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    330.0Other long-term liabilities
    
    
    
    
    
    
    131.0
    
    
    
    190.0
    
    
    
    76.3
    
    
    
    119.0
    
    
    
    
    
    
    
    516.3Total liabilities
    
    
    423.8
    
    
    
    1,657.3
    
    
    
    5,527.9
    
    
    
    2,229.5
    
    
    
    876.9
    
    
    
    (7,720.3
    )
    
    
    2,995.1Class 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
    
    
    3,306.5
    
    
    
    
    
    
    
    43.3
    
    
    
    1,388.6
    
    
    
    5,153.6
    
    
    
    (9,504.2
    )
    
    
    387.8Retained earnings
    
    
    104.5
    
    
    
    153.1
    
    
    
    1,971.5
    
    
    
    801.0
    
    
    
    1,951.0
    
    
    
    (2,910.6
    )
    
    
    2,070.5Accumulated other non-
owner changes in equity
    
    
    (36.1
    )
    
    
    (112.1
    )
    
    
    (178.4
    )
    
    
    (4.0
    )
    
    
    (167.1
    )
    
    
    329.4
    
    
    
    (168.3
    )Total shareholders equity
    
    
    3,376.4
    
    
    
    41.0
    
    
    
    1,836.4
    
    
    
    2,185.6
    
    
    
    7,246.1
    
    
    
    (12,394.6
    )
    
    
    2,290.9Total liabilities and
shareholders equity
    
    $
    3,800.2
    
    
    $
    1,698.3
    
    
    $
    7,364.3
    
    
    $
    4,415.1
    
    
    $
    8,123.0
    
    
    $
    (20,114.9
    )
    
    $
    5,286.0
 -17-




---



##### 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
 -18-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2006
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    (4.5
    )
    
    $
    1.3
    
    
    $
    (17.1
    )
    
    $
    (71.4
    )
    
    $
    117.3
    
    
    $
    
    
    
    $
    25.6Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    (7.0
    )
    
    
    (7.4
    )
    
    
    
    
    
    
    (16.7
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    (42.4
    )
    
    
    (40.8
    )
    
    
    
    
    
    
    
    
    
    
    (83.2
    )Investment in affiliates
    
    
    (4.2
    )
    
    
    
    
    
    
    (35.9
    )
    
    
    
    
    
    
    
    
    
    
    40.1
    
    
    
    Loans to affiliates
    
    
    (22.1
    )
    
    
    
    
    
    
    (12.3
    )
    
    
    
    
    
    
    (145.5
    )
    
    
    179.9
    
    
    
    Repayments of loans from affiliates
    
    
    37.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.4
    
    
    
    (40.3
    )
    
    
    Dividends from affiliates
    
    
    
    
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    2.0
    
    
    
    (24.1
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Net cash provided by (used in)
investing activities
    
    
    11.6
    
    
    
    
    
    
    
    (70.8
    )
    
    
    (47.6
    )
    
    
    (148.5
    )
    
    
    155.6
    
    
    
    (99.7
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.0
    )
    
    
    
    
    
    
    (2.0
    )Borrowings from affiliates
    
    
    59.1
    
    
    
    12.2
    
    
    
    108.5
    
    
    
    
    
    
    
    0.1
    
    
    
    (179.9
    )
    
    
    Repayments of loans to affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    (37.9
    )
    
    
    40.3
    
    
    
    Other intercompany financing
activities
    
    
    0.6
    
    
    
    (13.5
    )
    
    
    (72.9
    )
    
    
    122.2
    
    
    
    (36.4
    )
    
    
    
    
    
    
    Dividends
    
    
    (34.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.6
    )Dividends paid to affiliates
    
    
    (24.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24.1
    
    
    
    Subsidiary purchase of parent
shares
    
    
    5.3
    
    
    
    
    
    
    
    (74.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69.3
    )Issuance of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40.1
    
    
    
    (40.1
    )
    
    
    Excess tax benefits from stock
options and awards
    
    
    
    
    
    
    
    
    
    
    13.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.9Proceeds from stock option
exercises
    
    
    
    
    
    
    
    
    
    
    53.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53.2Net cash provided by (used in)
financing activities
    
    
    6.3
    
    
    
    (1.3
    )
    
    
    28.1
    
    
    
    119.8
    
    
    
    (36.1
    )
    
    
    (155.6
    )
    
    
    (38.8
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.7
    
    
    
    
    
    
    
    3.7Increase (decrease) in cash and
cash equivalents
    
    
    13.4
    
    
    
    
    
    
    
    (59.8
    )
    
    
    0.8
    
    
    
    (63.6
    )
    
    
    
    
    
    
    (109.2
    )Cash and cash equivalents,
beginning of period
    
    
    64.1
    
    
    
    
    
    
    
    144.4
    
    
    
    (3.5
    )
    
    
    247.8
    
    
    
    
    
    
    
    452.8Cash and cash equivalents, end of
period
    
    $
    77.5
    
    
    $
    
    
    
    $
    84.6
    
    
    $
    (2.7
    )
    
    $
    184.2
    
    
    $
    
    
    
    $
    343.6
 -19-




---



##### Table of Contents



Consolidating Statements of Cash Flows
Three Months Ended March 31, 2005
 Cooper
    
    
    CooperIndustries,
    
    
    US,
    
    
    
    
    
    
    Other
    
    
    ConsolidatingCooper
    
    
    LLC
    
    
    Inc
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    0.4
    
    
    $
    (23.0
    )
    
    $
    30.5
    
    
    $
    (91.4
    )
    
    $
    126.8
    
    
    $
    (23.1
    )
    
    $
    20.2Cash flows from investing
activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (2.0
    )
    
    
    (9.3
    )
    
    
    (8.6
    )
    
    
    
    
    
    
    (19.9
    )Cash paid for acquired businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    
    
    
    
    (2.4
    )Investment in affiliates
    
    
    (2.8
    )
    
    
    
    
    
    
    (30.0
    )
    
    
    (3.3
    )
    
    
    
    
    
    
    36.1
    
    
    
    Loans to affiliates
    
    
    
    
    
    
    
    
    
    
    (63.2
    )
    
    
    
    
    
    
    
    
    
    
    63.2
    
    
    
    Repayments of loans from affiliates
    
    
    21.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.1
    )
    
    
    Dividends from affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.4
    
    
    
    
    
    
    
    (8.4
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    
    0.5Net cash provided by (used in)
investing activities
    
    
    18.3
    
    
    
    
    
    
    
    (95.2
    )
    
    
    (4.0
    )
    
    
    (10.7
    )
    
    
    69.8
    
    
    
    (21.8
    )Cash flows from financing
activities:Repayments of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90.1
    )
    
    
    
    
    
    
    (90.1
    )Borrowings from affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    60.7
    
    
    
    (63.2
    )
    
    
    Repayments of loans to affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.1
    )
    
    
    21.1
    
    
    
    Other intercompany financing
activities
    
    
    4.1
    
    
    
    23.0
    
    
    
    (26.0
    )
    
    
    78.0
    
    
    
    (79.1
    )
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.1
    
    
    
    (36.1
    )
    
    
    Proceeds from stock option
exercises
    
    
    
    
    
    
    
    
    
    
    25.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.4Net cash provided by (used in)
financing activities
    
    
    (48.2
    )
    
    
    23.0
    
    
    
    (6.0
    )
    
    
    80.5
    
    
    
    (129.9
    )
    
    
    (46.7
    )
    
    
    (127.3
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    0.9Decrease in cash and cash
equivalents
    
    
    (29.5
    )
    
    
    
    
    
    
    (70.7
    )
    
    
    (14.9
    )
    
    
    (12.9
    )
    
    
    
    
    
    
    (128.0
    )Cash and cash equivalents,
beginning of period
    
    
    111.5
    
    
    
    
    
    
    
    246.1
    
    
    
    1.2
    
    
    
    294.0
    
    
    
    
    
    
    
    652.8Cash and cash equivalents, end of
period
    
    $
    82.0
    
    
    $
    
    
    
    $
    175.4
    
    
    $
    (13.7
    )
    
    $
    281.1
    
    
    $
    
    
    
    $
    524.8
 -20-




---



##### 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, 2006 Compared With Three Months Ended March 31, 2005
  Revenues:
    Costs and Expenses:
     -21-




---



##### Table of Contents




 Operating Earnings:
   Income Taxes:
  Restructuring Charges:
    -22-




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity
       Capital Resources:
    -23-




---



##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
  Backlog
  March 31,2006
    
    
    2005(in millions)Electrical Products
    
    $
    505.4
    
    
    $
    405.4Tools & Hardware
    
    
    70.0
    
    
    
    70.0$
    575.4
    
    
    $
    475.4
 Private Securities Litigation Reform Act Safe Harbor Statement
  -24-




---



##### Table of Contents



Item 3. Quantitive and Qualitative Disclosures about Market Risk
 Managements Discussion
and Analysis of Financial Condition and Results of Operations.
 
 Item 4. Controls and Procedures
   
 PART
II  OTHER INFORMATION
 
    -25-




---



##### Table of Contents



-26-




---



##### Table of Contents



-27-




---



##### 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
    
    Purchased Under thePeriod
    
    Purchased
    
    Share
    
    Plans or Programs(1)
    
    Plans or Programs(1)As of 12/31/05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,021,6501/01/06  1/31/06
    
    
    200,000
    
    
    $
    77.08
    
    
    
    200,000
    
    
    
    6,321,6502/01/06  2/28/06
    
    
    190,000
    
    
    $
    82.04
    
    
    
    190,000
    
    
    
    6,131,6503/01/06  3/31/06
    
    
    455,000
    
    
    $
    84.20
    
    
    
    455,000
    
    
    
    5,676,650Total
    
    
    845,000
    
    
    $
    82.01
    
    
    
    845,000
 
 (1)
    
    On November 2, 2004, Coopers Board of Directors authorized the repurchase of
up to five million shares of the Coopers Class A common stock. Cooper has also announced
that the Board authorized the repurchase of shares issued from time to time under its equity
compensation plans, matched savings plan and dividend reinvestment plan in order to offset the
dilution that results from issuing shares under these plans. For 2006, Coopers current
estimate is that 2.5 million shares will be issued under equity compensation plans, which is
reflected in the above table. 
   
   -28-




---



##### Table of Contents



10.1
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2006-2008.10.2
    
    Cooper Industries Amended and Restated Management Annual Incentive Plan
(Amended and Restated February 13, 2006) (incorporated by reference to Appendix C to
Coopers Proxy Statement for the Annual Meeting of Shareholders held on April 25,
2006).10.3
    
    Amended and Restated Cooper Industries, Ltd. Directors Stock Plan (Amended and
Restated February 14, 2006) (incorporated by reference to Appendix D to Coopers Proxy
Statement for the Annual Meeting of Shareholders held on April 25, 2006).12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2001
through 2005 and the Three Months Ended March 31, 2006 and 2005.23.
    
    Consent of Bates White, LLC.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   Cooper Industries, Ltd.(Registrant)Date: May 2, 2006
    /s/ Terry A. KlebeTerry A. KlebeSenior Vice President and
Chief Financial OfficerDate: May 2, 2006
    /s/ Jeffrey B. LevosJeffrey B. LevosVice President, Finance and
Chief Accounting Officer -29-




---



##### Table of Contents



10.1
    
    Form of Executive Stock Incentive Agreement for the Performance Period 2006-2008.10.2
    
    Cooper Industries Amended and Restated Management Annual Incentive Plan
(Amended and Restated February 13, 2006) (incorporated by reference to Appendix C to
Coopers Proxy Statement for the Annual Meeting of Shareholders held on April 25,
2006).10.3
    
    Amended and Restated Cooper Industries, Ltd. Directors Stock Plan (Amended and
Restated February 14, 2006) (incorporated by reference to Appendix D to Coopers Proxy
Statement for the Annual Meeting of Shareholders held on April 25, 2006).12.
    
    Computation of Ratios of Earnings to Fixed Charges for the Calendar Years 2001
through 2005 and the three months ended March 31, 2006 and 2005.23.
    
    Consent of Bates White, LLC.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.