Document 6ww5n6228OaMO08MJJyavgn6E

COOPER INDUSTRIES LTD(Form 424B2, Received 10/25/2002 13:39 31) Page 57 of 68 reclassify $0.3 million of net losses on derivative instruments designated as cash flow hedges from accumulated nonowner changes m equity to earnings during the next twelve months The amount of discontinued cash flow hedges during 2001 was not material The table below summarizes, by currency, the U S dollar equivalent contractual amounts of Cooper's forward exchange contracts at December 31, 2001 and 2000 British Pound Sterling ...................... Euro .. . . Mexican Peso . ... Swiss Franc .............................. Australian Dollar ... .. Norwegian Krone Other . ... . . . December 31, 2001 2000 (m millions) $08 $17.6 85 15.1 44 22 29 2.7 22 15 - 20 12 $20 1 $41.0 OTHER INSTRUMENTS In the normal course of business, Cooper executes letters of credit, performance bonds and other guarantees that ensure Cooper's performance or payment to third parties that are not reflected in the consolidated balance sheets The aggregate notional value of these instruments was $112 0 million and $1119 million at December 31, 2001 and 2000, respectively In the past, no significant claims have been made against these financial instruments Management believes the likelihood of demand for payment under these instruments is minimal and expects no material losses to occur in connection with these instruments The following transactions were implemented to partially align Cooper's interest rate exposure profile with its short term interest rate expectations in an economically efficient manner that is consistent with its tax position During 2001, Cooper sold at a premium U.S Treasury secunties due November 2002 Cooper obtained these secunties pursuant to a repurchase agreement containing provisions that limit Cooper's interest rate exposure under this agreement to a maximum cost of $7.0 million The repurchase agreement will be settled immediately pnor to the matunty of the securities Settlement of this transaction will not require any financing by Cooper and this transaction does not create an asset or liability, other than as descnbed above. The face amount of the secunties was $10 billion Also dunng 2001, Cooper purchased at a discount Federal Home Loan Mortgage Corporation Notes due February 2003 and immediately transferred these notes pursuant to a secunties loan agreement Subsequently, Cooper eliminated any potential cost under the secunties loan agreement and realized a gam of approximately $1 9 million The secunties loan agreement will be settled immediately pnor to the matunty of the notes Settlement of this transaction will not require any financing by Cooper and this transaction does not create a liability The face amount of the notes was $480 million. In 1999, Cooper entered into a similar executory contract Upon settlement of the contract in 2000, Cooper realized a Vit+rv /fwmrwr diorplinlrlof pAtn/<>aAr\of', /loO* ,TT\__ pnu o.nn/_i i -11 no-t 1/10 /^nn^