Document yrn0g8MkYQbgLMbXNw3Rj6nyr

Charge Related to Discontinued Operations A $30 million charge, net of a $20 million income tax benefit, was recorded in 2001 related to potential asbestos obligations regarding the Automotive Products segment which was sold m 1998 See Note 3 of the Notes to Consolidated Financial Statements Diluted Earnings Per Share Diluted earnings per share from continuing operations, excludmg after-tax nonrecurring charges of $44 5 million and a $50 million tax benefit due to the reversal of reserves as a result of recent favorable Appellate level third party court decisions related to certain tax return issues, was $2 69 in 2001 compared to $3 80 in 2000 Diluted earnings per share, excludmg after-tax nonrecurring enlarges of $2 4 million, was $3 52 in 1999 Percentage ofRevenues Cost of Sales Selling and Administrative . Year Ended December 31, 2001 2000 69 9% 67 7% 17 3% 16 4% 1999 67 3% 16 6% 2001 vs 2000 Percentage ofRevenues Cost of sales, as a percentage of revenues, increased 2 2 points over 2000 The increase m the cost of sales percentage was due to lower manufacturing volumes and the resultmg costs of production inefficiencies from adjusting manufacturing capacity Selling and administration expenses, as a percentage of revenues, mcreased nine tenths of a pomt This increase resulted primarily from lower than anticipated revenues partially offset by cost-reduction efforts throughout the year 2000 vs 1999 Percentage ofRevenues Cost of sales, as a percentage of revenues, m 2000 mcreased four tenths of a point from 1999 This mcrease was primarily due to the impact of acquisitions Excludmg the effect of acquisitions, cost of sales as a percentage of revenues improved three tenths of a pomt to 67 0%, compared to 67 3% for 1999 Selling and administrative expenses, as a percentage of revenues, decreased two tenths of a pomt from 1999 due to lower general corporate expense and the impact of acquisitions Earnings Outlook The following sets forth Cooper's general busmess outlook for 2002, based on current expectations Comments on changes m segment operating earnings are based on 2001 operatmg earnings adjusted to eliminate goodwill amortization to be comparable to 2002 See "Impact of New Accounting Standards" m Note 1 of the Notes to Consolidated Financial Statements Cooper expects revenues and operatmg earnings for the Electrical Products segment to be relatively unchanged from 2001 and return on sales to be approximately 14 percent Revenues for the Tools & Hardware segment are expected to be near the prior year levels and operatmg earnings are projected to decrease approximately 20 percent Return on sales is expected to be approximately 8 5 percent The above statements are forward looking, and actual results may differ materially The above statements are based on a number of assumptions, risks and uncertainties The primary economic assumptions mclude, without limitation (1) slow growth m the domestic economy during the first part of the year and modestly improving growth thereafter, (2) modest growth m European and Latin American markets, (3) a gradual improvement m worldwide energy-related project spendmg, (4) no significant change m raw matenal or energy costs, (5) realization of benefits of cost-reduction programs with no major disruptions from those programs currently underway, and (6) no significant adverse changes m the relationship of the U S dollar to the currencies of countries in which Cooper does busmess The estimates also assume, without limitation, no significant change m competitive conditions and such other risk factors as are discussed from tune to time m Cooper's periodic filings with the Secunties and Exchange Commission 18