Document YdXBbXE9qo9d1joadRVbXDwy

COOPER INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 12: INCOME TAXES Components of income from continuing operations before income taxes U S operations Foreign operations Income from continuing operations before income taxes Components of income tax expense Current U S Federal U S state and local Foreign Deferred U S Federal U S state and local Foreign Income tax expense Total income taxes paid Effective tax rate reconciliation U S Federal statutory rate State and local income taxes Foreign statutory rate differential Nondeductible goodwill Foreign Sales Corporation Tax credits Reduction in tax reserves Other Effective tax rate attributable to contmuing operations Year Ended December 31, 2001 2000 1999 (in millions, except for percentages) $ 2119 104 5 $ 3164 $ 433 7 1162 $ 549 9 $ 390 7 127 9 $ 518 6 $ 60 8 62 23 2 90 2 (43 9) 25 63 (35 1) $ 55 1 $ 100 8 $ 640 13 28 4 93 7 72 8 194 66 98 8 $ 192 5 $ 132 3 $ 84 3 62 36 2 126 7 48 0 104 16 60 0 $ 186 7 $ 132 5 35 0% 14 (3 5) 43 (14) (0 2) (15 8) (2 4) 17 4% 35 0% 22 (1 2) 24 (0 8) (14) (1 2) 35 0% 35 0% 19 (1 5) 23 (0 7) (0 3) (0 7) 36 0% A $50 million U S Federal tax benefit was recorded m 2001 as a result of recent favorable Appellate level third party court decisions related to certain income tax return issues These court decisions have validated Cooper's tax return treatment of similar transactions executed m 1997 and prior years that are bemg contested by the Internal Revenue Service In light of the Fifth Circuit Court decision, issued m December 2001, Cooper concluded that the tax reserve related to these transactions is no longer required F-17