Document x1ryKN9yJEdqLyQyjQpov1B9b

elOvk Page 14 of 84 Table of Contents Federal-Mogul bankruptcy proceedings This included negotiations with the Representatives regarding participation in Federal-Mogul's proposed 524(g) asbestos trust Based on the status of the negotiations in 2004, Cooper concluded that it was probable that Federal-Mogul will reject the 1998 Agreement Cooper also concluded that the Representatives would require any negotiated settlement through the Federal-Mogul bankruptcy to be at the high end of the Bates White, LLC liability analysis and with substantially lower insurance recovery assumptions and higher administrative costs While Cooper believes that the insurance has significant additional value, extensive litigation with the insurance carriers may be required to receive recoveries and there is risk that court decisions could reduce the value of the recoveries Additionally, the assumptions on liability payments could prove inaccurate over time If Cooper is unable to reach a settlement with the Representatives and the 1998 Agreement is rejected, Cooper would be required to reflect an accrual for the total estimated liability and a receivable for the probable insurance recoveries Generally accepted accounting principles provide relatively conservative requirements for the recording of insurance recoveries and a substantial portion of the potential insurance recoveries would not be reflected as receivables until future events occur During late February and early March 2004, Cooper reassessed the accrual required based on the then current status of the negotiations with the Representatives and the liability and insurance receivable that would be required to be recorded if this matter is not settled within the Federal-Mogul bankruptcy Cooper concluded that resolution within the Federal-Mogul proposed 524(g) asbestos trust would likely be within the range of the liabilities, net of insurance recoveries, that Cooper would accrue if this matter were not settled within the Federal-Mogul bankruptcy Accordingly, Cooper recorded a $126 0 million after-tax discontinued operations charge, net of a $70 9 income tax benefit, in the fourth quarter of 2003 Cooper has continued discussions with the Representatives, but to date has been unable to reach a satisfactory conclusion At this time, the exact manner in which this issue will be resolved is not known The accrual for potential liabilities related to the Automotive Products sale and the Federal-Mogul bankruptcy was $225 1 million and $252 5 million at December 31, 2004 and 2003, respectively ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of the fiscal year covered by this report, no matters were submitted to a vote of the shareholders PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Cooper Class A common shares (symbol - CBE) are listed on the New York Stock Exchange Options for Cooper Class A common shares are listed on the American Stock Exchange Cooper Class B common shares are not publicly traded The Class B common shares were issued to Cooper Industries, Inc in connection with the reincorporation merger in May 2002 whereby Cooper Industries, Inc , formerly the publicly traded parent company, became a wholly-owned subsidiary of Cooper Industries, Ltd Effective January 1, 2005, the Class B common shares were transferred to Cooper US, Inc , which is a wholly-owned Cooper subsidiary Cooper US, Inc is the only holder of Class B common shares The holders of Class B common shares are not entitled to vote, except as to matters for which the Bermuda Companies Act specifically requires voting rights for otherwise nonvoting shares Cooper Industries, Ltd and Cooper subsidiaries holding Class A or Class B common shares have entered into a voting agreement whereby any Class A or Class B common shares held by such Cooper subsidiaries will be voted (or abstained from voting) in the same proportion as the other holders of Class A common shares Therefore, Class A and Class B common shares held by Cooper subsidiaries do not dilute the voting power of the Class A common shares held by the public 10 http //www sec gov/Archives/edgar/data/1141982/000095012905001490/h22660el0vk.htm 2/6/2006