Document XzYp5JbLzVqozXmL39J1XZXw4

COOPER INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The ESOP purchased Cooper Common stock which was financed through external borrowings and loans from Cooper The external ESOP debt matured m July 1999 and was frilly repaid The purchases funded by loans between the ESOP and Cooper were treated as eliminated intercompany loans for financial statement purposes These intercompany loans were paid m full durmg 2001 Cooper made annual contributions to the ESOP to fund the payment of principal and interest As the debt was repaid, unallocated shares were allocated to CO-SAV participants to satisfy Cooper's matchmg obligation or to replace dividends on allocated shares with Cooper Common shares m years prior to 2000 Dividends paid on unallocated ESOP shares of $0 1 million, $0 5 million and $10 million durmg 2001,2000 and 1999, respectively, were used to reduce the amount of cash requned to fund principal and interest payments on ESOP debt Dividends paid on allocated ESOP shares of $3 8 million durmg 1999 were used to pay additional principal and mterest payments m order to allocate shares equivalent to the dividend amount to participants m the CO-SAV plan Cooper contributed an additional $8 4 million, $9 6 million and $13 5 million m cash to the ESOP durmg 2001, 2000 and 1999, respectively, to fund principal and mterest payments on ESOP debt The number of allocated, committed to be allocated, and unallocated ESOP shares at December 31, 2001 and 2000 is summarized below Allocated to CO-SAV participant accounts Committed to be allocated Unallocated . Shares Purchased Pnor to 1994 2001 2000 2,950,973 2,783,473 1,111 166,389 Shares Purchased In 1994 2001 2000 928,837 928,837 Shares purchased by the ESOP pnor to 1994 are accounted for in accordance with Statement of Position 76-3, Accounting Practices for Certain Employee Stock Ownership Plans and Emerging Issues Task Force Issue 89-8, Expense Recognitionfor Employee Stock Ownership Plans Compensation expense is equal to Cooper's COSAV matchmg obligation, adjusted for the difference between the fair market value and cost of the shares committed to be allocated Compensation expense is reduced by the amount of dividends paid on unallocated ESOP shares available for future matchmg All shares issued to the ESOP are considered outstanding for purposes of computing earnings per share Shares purchased by the ESOP m 1994 are accounted for m accordance with Statement of Position 93-6, Employers' Accountingfor Employee Stock Ownership Plans ("SOP 93-6") SOP 93-6 was effective for fiscal years beginning after December 15, 1993. Compensation expense is recognized at the fan value of the shares committed to be allocated which is equal to the amount of Cooper's CO-SAV matchmg obligation Unearned employee stock ownership plan compensation is credited as shares are committed to be allocated based on the cost of the shares to the ESOP The difference between the fan market value and cost of the shares committed to be allocated is recorded as an adjustment to capital m excess of par value Dividends paid on unallocated shares are recorded as a reduction of ESOP debt, accmed mterest or accrued employee benefits Unallocated shares are not treated as outstanding m the earnings per share computation Compensation expense for the CO-SAV plan and the ESOP was $23 0 million, $20 2 million and $18 6 million m 2001, 2000 and 1999, respectively F-21