Document 7M2E7r848nB4Mva8nyEbgN23o

elOvk Page 7 of 84 Table of Contents Operations in the United States are conducted by wholly-owned subsidiaries of Cooper, organized by the two business segments Activities outside the United States contribute significantly to the revenues and operating earnings of both segments of Cooper These activities are conducted in major commercial countries by wholly-owned subsidiaries and jointlyowned companies, the management of which is structured through Cooper's two business segments As a result of these international operations, sales and distribution networks are maintained throughout most of the industrialized world Cooper generally believes that there are no substantial differences in the business risks associated with these international operations compared with domestic activities, although Cooper is subject to certain political and economic uncertainties encountered in activities outside the United States, including trade barriers, restrictions on foreign exchange and currency fluctuations The five countries in which Cooper generates the most international revenues are Canada, Germany, France, Mexico and the United Kingdom Cooper has operations in India, Malaysia and China and has several joint ventures with operations in China Investments in India, Malaysia and China are subject to greater risks related to economic and political uncertainties as compared to most countries where Cooper has operations Exhibit 21 0 contains a list of Cooper's subsidiaries Financial information with respect to Cooper's industry segments and geographic areas is contained in Note 15 of the Notes to the Consolidated Financial Statements A discussion of acquisitions and divestitures is included in Notes 3, 7 and 16 of the Notes to the Consolidated Financial Statements With its two business segments, Cooper serves three major markets industrial, construction and electrical power distribution Cooper also serves the electronics and telecommunications markets Markets for Cooper's products and services are worldwide, though the United States is the largest market Within the United States, there is no material geographic concentration by state or region Cooper experiences substantial competition in both of its business segments The number and size of competitors vary considerably depending on the product line Cooper cannot specify with exactitude the number of competitors in each product category or their relative market position However, most operating units experience significant competition from both larger and smaller companies with the key competitive factors being price, quality, brand name and availability Cooper considers its reputation as a manufacturer of a broad line of quality products and premier brands to be an important factor in its businesses Cooper believes that it is among the leading manufacturers in the world of electrical distribution equipment, wiring devices, support systems, hazardous duty electrical equipment, emergency lighting, lighting fixtures, fuses, nonpower hand tools and industrial power tools Cooper's research and development activities are for purposes of improving existing products and services and originating new products During 2004, approximately $70 6 million was spent for research and development activities as compared with approximately $63 4 million in 2003 and $54 0 million in 2002 Cooper obtains and holds patents on products and designs in the United States and many foreign countries where operations are conducted or products are sold Although in the aggregate Cooper's patents are important in the operation of its businesses, the loss by expiration or otherwise of any one patent or license or group of patents or licenses would not materially affect its business Cooper does not presently anticipate that compliance with currently applicable environmental regulations and controls will significantly change its competitive position, capital spending or earnings during 2005 Cooper has been a party to administrative and legal proceedings with governmental agencies that have arisen under statutory provisions regulating the discharge or potential discharge of material into the environment Orders and decrees consented to by Cooper, or currently under negotiation with state regulatory agencies, have contained agreed-upon timetables for fulfilling reporting or remediation obligations or maintaining specified air and water discharge levels in connection with permits for the operations of various plants Cooper believes it is in compliance with the orders and decrees, and such compliance is not material to the business or financial condition of Cooper For additional information concerning Cooper's accruals for environmental liabilities, see Note 7 of the Notes to the Consolidated Financial Statements 4 http //www sec.gov/Archives/edgar/data/1141982/000095012905001490/h22660el0vk htm 2/6/2006