ACQUISITION, TECHNOLOGY AND LOGISTICS O FFICE OF Ti 3000 DEFENSE PENTAGON WASHING-ION.

BRIGHTEN-UP 'w ur ho me NOW!

SHIPPER THE BENDIX CORPORATION FRICTION MATERIALS DIVISION TROY, NEW YORK CLEVELAND, TENN.

mi .mt THE BENDIX CORPORATION FRICTION MATERIALS DIVISION TROY, NEW YORK FQiVj NTH FIELD ACT DP f> Q HOX. 2003 Ll-?

THE BENDIX CORPORATION FRICTION MATERIALS DIVISION TROV.

THE BENDiX CORPORATION FRICTION MATERIALS DIVISION TROY.

:Mf 23* THE BENDIX CORPORATION FRICTION MATERIALS DIVISION TROY, NEW TGRK POSO KTRF1E1&"ACT:: OEP. .solo p,o aOX 2305 .

Fm2J# . - THE BENDIX CORPORATION tv. 12,-67 FRICTION MATERIALS DIVISION TROY,.NEW YORK CLEVELAND* TENN.

SHJfPER THE BENDIX CORPORATION FRICTION MATERIALS DIVISION TROY, NEW YORK CLEVELAND, TENN.

In October 2000, Cooper issued Euro 300 million five-year bonds The bonds bear interest at 6 25% and mature m October 2005 The proceeds from the borrowing were primarily used to repay outstanding commercial paper debt During 1999, Cooper completed a shelf registration statement to issue up to $500 million of debt securities At December 31, 2001, all $500 million of the shelf registration was available to be issued The following table summarizes Cooper's contractual obligations at December 31, 2001 and the effect such obligations are expected to have on its liquidity and cash flows in future periods Contractual Obligations Total Long-Term Debt Short-Term Debt Noncancellable Operating Leases $ 1,167 9 132 9 111 8 $ 1,412 6 Less than One Year $ 60 9 132 9 31 1 $ 224 9 Payments Due One to Three Years (in millions) $ 434 0 - 39 8 $ 473 8 Four to Five Years $ 543 8 - 22 6 $ 566 4 After Five Years $ 129 2 - 18 3 $ 147 5 Other Commitments Cooper executes letters of credit, performance bonds and other guarantees m the normal course of busmess that ensure Cooper's performance or payments to third parties The aggregate notional value of these instruments was $112 0 million at December 31, 2001 Seventy-nine percent of these instruments have an expiration date within one year In the past, no significant claims have been made agamst these financial instruments Management believes the likelihood of demand for payment under these instruments is minimal and expects no material cash outlays to occur in connection with these instruments Capitalization During the first quarter of 2000, Cooper's Board of Directors authorized the repurchase of up to five million shares of common stock As of December 31, 2001, there were 4 2 million shares available for repurchase under this authorization Cooper has resumed its share repurchase program during 2002 Cooper has targeted a 35% to 45% debt-to-total capitalization ratio and intends to utilize cash flows to maintain a debt-to-capitahzation ratio within this range.

COOPER INDUSTRIES, INC.

COOPER INDUSTRIES LTD(Form 424B2, Received 10/25/2002 13 39 31) Page 26 of 68 13 continuing for any senes, either the trustee or the holders of not less than 25% m total principal amount of the debt secunties of the senes then outstanding, voting separately as a senes, may declare the pnncipal of all outstanding debt secunties of the senes and the accrued interest to be due and payable immediately In the case of debt securities issued bearing no interest or below-market interest, the amount that may be declared due and payable immediately is the portion of the principal specified in the terms of the debt secunties, along with the accrued interest.

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elOvk Page 25 of 84 Table of Contents $1 34 billion and average interest rates were 5 63% and 5 82% for 2004 and 2003, respectively The decrease in average interest rates primarily resulted from the benefit of interest rate swaps entered into during August 2003 that effectively converted $300 million of 5 25% fixed-rate debt to variable-rate debt at the six month LIBOR rate plus 1 91% Interest expense, net decreased $0 4 million in 2003 compared to 2002 Higher average interest rates on lower average debt balances resulted in an increase in interest expense that was offset by an increase in interest income earned on higher cash and cash equivalent balances Average debt balances were $1 34 billion and $1 40 billion and average interest rates were 5 82% and 5 37% for 2003 and 2002, respectively The increase in average interest rates primarily resulted from Cooper's replacement in 2002 of substantially all variable rate commercial paper borrowings with long-term fixed-rate debt During August 2003, Cooper entered into interest-rate swaps to effectively convert $300 million of 5 25% long-term fixed-rate debt to variable-rate debt at the six-month LIBOR rate plus 1 91% (with semi-annual reset) The notional principal amount and maturity dates of the interest-rate swaps match the underlying long-term debt During the years ended December 31, 2004 and 2003, Cooper recognized $5 1 million and $2 4 million, respectively, reductions of interest expense, net related to the interest-rate swaps Interest Income on Tax Refund During October 2003, Cooper received a refund of $75 9 million for certain claims relating to tax years prior to 1994 The refund included interest of $28 6 million See Note 12 of the Notes to the Consolidated Financial Statements Income Tax Expense The effective tax rate attributable to continuing operations for 2004 was 20 7% compared to 20 8% for 2003 The effective tax rate attributable to continuing operations for 2003 was 20 8% compared to 23 7% for 2002 The effective tax rate attributable to continuing operations decreased in 2003 when compared to 2002, primarily as a result of full year effect of the reorganization as discussed in Note 1 of the Notes to the Consolidated Financial Statements See Note 12 of the Notes to the Consolidated Financial Statements Charge Related to Discontinued Operations In the fourth quarter of 2003, Cooper concluded that an additional $126 0 million charge, net of a $70 9 million income tax benefit, related to potential asbestos obligations regarding the Automotive Products segment which was sold in 1998 was required in order to adjust the existing accrual to an amount that will be within the likely range of outcomes See Note 16 of the Notes to the Consolidated Financial Statements Diluted Earnings Per Share Diluted earnings per share from continuing operations was $3 58 in 2004, $2 92 in 2003 and $2 28 in 2002 Percentage ofRevenues Cost of Sales Electrical Products Tools & Hardware Selling and Administrative Electrical Products Tools & Hardware _______Year Ended December 31, 2004 2003 2002 69 3% 72 6% 69 9% 74 9% 71 2% 75 0% 17 0% 18 9% 17 2% 19 5% 16 7% 20 7% 2004 vs 2003 Percentage ofRevenues Electrical Products segment cost of sales, as a percentage of revenues, decreased 0 6 points compared to 2003 The decrease in cost of sale percentage was primarily a 21 http //www.sec gov/Archives/edgar/data/l 141982/000095012905001490/h22660el0vk htm 2/6/2006