SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Cooper Industries, Ltd.

(Exact name of registrant as specified in its charter)

Bermuda		98-0355628
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 Travis, Suite 5800		Houston, Texas 77002
(Address of principal executive offices)		(Zip Code)

(713) 209-8400

(Registrant’s telephone number, including area code)  

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ       No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ       Accelerated Filer o       Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act). Yes o       No þ

Number of registrant’s common stock outstanding as of June 30, 2006 was 91,537,155 Class A common shares that are held by the public and 12,017,301 Class A common shares and 54,810,129 Class B common shares that are held by the issuer’s wholly owned subsidiaries.

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER INDUSTRIES, LTD.
CONSOLIDATED INCOME STATEMENTS

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
						(in millions, where applicable)
Revenues		$	1,287.8			$	1,189.2			$	2,528.7			$	2,334.0
Cost of sales			870.3				814.7				1,717.1				1,602.3
Selling and administrative expenses			244.3				232.9				481.8				460.4
Operating earnings			173.2				141.6				329.8				271.3
Interest expense, net			12.4				17.7				24.5				35.5
Income from continuing operations before income taxes			160.8				123.9				305.3				235.8
Income taxes			41.0				26.6				77.8				50.7
Income from continuing operations			119.8				97.3				227.5				185.1
Charge related to discontinued operations, net of income taxes			20.3				—				20.3				—
Net income		$	99.5			$	97.3			$	207.2			$	185.1
Income per common share:
Basic:
Income from continuing operations		$	1.30			$	1.05			$	2.47			$	1.99
Charge from discontinued operations			.22				—				.22				—
Net income		$	1.08			$	1.05			$	2.25			$	1.99
Diluted:
Income from continuing operations		$	1.27			$	1.02			$	2.41			$	1.94
Charge from discontinued operations			.21				—				.21				—
Net income		$	1.06			$	1.02			$	2.20			$	1.94
Cash dividends per common share		$	.37			$	.37			$	.74			$	.74

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,
		2006				2005
		(in millions)
ASSETS
Cash and cash equivalents		$	350.2			$	452.8
Receivables			961.6				842.4
Inventories			631.1				538.7
Deferred income taxes and other current assets			273.4				297.2
Total current assets			2,216.3				2,131.1
Property, plant and equipment, less accumulated depreciation			664.8				673.7
Goodwill			2,181.2				2,084.0
Deferred income taxes and other noncurrent assets			284.4				326.3
Total assets		$	5,346.7			$	5,215.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt		$	6.4			$	7.6
Accounts payable			469.6				427.8
Accrued liabilities			479.9				518.0
Current discontinued operations liability			218.7				196.3
Current maturities of long-term debt			11.6				11.4
Total current liabilities			1,186.2				1,161.1
Long-term debt			1,000.8				1,002.9
Postretirement benefits other than pensions			154.8				163.0
Long-term discontinued operations liability			330.0				330.0
Other long-term liabilities			389.6				352.9
Total liabilities			3,061.4				3,009.9
Common stock, $.01 par value			0.9				0.9
Capital in excess of par value			306.8				383.2
Retained earnings			2,135.7				1,997.4
Accumulated other nonowner changes in equity			(158.1	)			(176.3	)
Total shareholders’ equity			2,285.3				2,205.2
Total liabilities and shareholders’ equity		$	5,346.7			$	5,215.1

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended
		June 30,
		2006				2005
		(in millions)
Cash flows from operating activities:
Net income		$	207.2			$	185.1
Plus: charge related to discontinued operations			20.3				—
Income from continuing operations			227.5				185.1
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization			54.6				57.5
Deferred income taxes			10.8				5.3
Excess tax benefits from stock options and awards			(19.8	)			—
Restructuring charge payments			—				(0.4	)
Changes in assets and liabilities: (1)
Receivables			(100.2	)			(74.9	)
Inventories			(76.3	)			(69.4	)
Accounts payable and accrued liabilities			(18.0	)			14.0
Other assets and liabilities, net			97.4				64.2
Net cash provided by operating activities			176.0				181.4
Cash flows from investing activities:
Capital expenditures			(40.2	)			(47.9	)
Cash paid for acquired businesses			(84.2	)			(2.4	)
Proceeds from sales of property, plant and equipment and other			4.8				4.3
Net cash used in investing activities			(119.6	)			(46.0	)
Cash flows from financing activities:
Repayments of debt			(2.1	)			(117.9	)
Dividends			(68.9	)			(69.4	)
Subsidiary purchase of parent shares			(185.4	)			(77.2	)
Excess tax benefits from stock options and awards			19.8				—
Activity under employee stock plans and other			69.9				41.2
Net cash used in financing activities			(166.7	)			(223.3	)
Effect of exchange rate changes on cash and cash equivalents			7.7				(27.9	)
Decrease in cash and cash equivalents			(102.6	)			(115.8	)
Cash and cash equivalents, beginning of period			452.8				652.8
Cash and cash equivalents, end of period		$	350.2			$	537.0

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

     Basis of Presentation — The consolidated financial statements of Cooper Industries, Ltd., a Bermuda company (“Cooper”), have been prepared in accordance with generally accepted accounting principles in the United States.

     The financial information presented as of any date other than December 31 has been prepared from the books and records without audit. Financial information as of December 31 has been derived from Cooper’s audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included. For further information regarding Cooper’s accounting policies, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2005 included in Part IV of Cooper’s 2005 Annual Report on Form 10-K.

     Impact of New Accounting Standards — In June 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48 ¸ Accounting for Uncertainty in Income Taxes (the “Interpretation”). This Interpretation clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a more-likely-than not recognition threshold that a tax position will be sustained upon examination and a measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The cumulative effect of applying the provisions of this Interpretation shall be reported as an adjustment to the opening balance of retained earnings in 2007. Cooper is currently evaluating the impact of the Interpretation on its consolidated financial statements.

Note 2. Stock-Based Compensation

     Effective January 1, 2003, Cooper adopted Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), as amended. Cooper utilized the prospective method of adoption. Cooper accounted for stock-based compensation awards granted, modified or settled prior to January 1, 2003 using the intrinsic value method of accounting as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations (“APB No. 25”). In accordance with APB No. 25, compensation expense was recognized for performance-based and restricted stock awards. No compensation expense was recognized under Cooper’s fixed stock option plans or Employee Stock Purchase Plan for grants prior to January 1, 2003.

     SFAS No. 123 provided an alternative fair value based method for recognizing stock-based compensation in which compensation expense was measured at the grant date based on the value of the award and recognized over the service period, which was usually the vesting period. The fair value of stock options was estimated on the grant date, using the Black-Scholes-Merton option-pricing model. The fair value of restricted stock and performance-based awards granted were measured at the market price on the grant date.

     The following table presents pro forma net income and earnings per share as if the fair value recognition provisions of SFAS No. 123 had been applied to all outstanding and unvested awards in 2005. In 2005, there were essentially two remaining differences between as reported and pro-forma net income and earnings per share. First, Cooper accounted for awards granted prior to January 1, 2003 using the intrinsic value method, whereas the pro-forma amounts reflect those award grants as calculated under SFAS No. 123.

Secondly, the pro-forma amounts reflect recognition of the tax benefits of disqualifying dispositions of incentive stock options in accordance with SFAS No. 123.

		Three Months Ended				Six Months Ended
		June 30, 2005				June 30, 2005
		(in millions, except per share amounts)
Net income, as reported			$  97.3				$  185.1
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects			6.2				10.2
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(5.6	)			(8.1	)
Pro-forma net income			$  97.9				$  187.2
Earnings per share:
Basic — as reported			$  1.05				$  1.99
Basic — pro-forma			$  1.05				$  2.01
Diluted — as reported			$  1.02				$  1.94
Diluted — pro-forma			$  1.03				$  1.96

     In December 2004, the Financial Accounting Standards Board issued FASB Statement 123(R), Share-Based Payment, which is a revision of SFAS No. 123. Statement 123(R) also supersedes APB No. 25, and amends FASB Statement No. 95, Statement of Cash Flows. Effective January 1, 2006, Cooper adopted Statement 123(R) using the modified prospective method. Recognition of compensation cost is based on the requirements of Statement 123(R) for all share-based payments granted after January 1, 2006 and based on the requirements of SFAS No. 123 for all awards granted to employees prior to January 1, 2006 that remained unvested on that date.

     Cooper adopted SFAS No. 123 using the prospective transition method, which applied only to awards granted, modified or settled after the adoption date. Accordingly, compensation expense for some previously granted awards that were not recognized under SFAS No. 123 is recognized under Statement 123(R). However, had we adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share above.

     Cooper uses the Black-Scholes-Merton formula to estimate the value of stock options granted to employees, as well as the straight-line recognition method for awards subject to graded vesting. Cooper has recorded an estimate for forfeitures of 2006 awards of stock options, performance-based shares and restricted stock units. This estimate will be adjusted as actual forfeitures differ from the estimate. Prior to adoption of Statement 123(R), forfeitures were accounted for as recognized when they actually occurred. Upon adoption of Statement 123(R), the cumulative effect of this change in accounting principle to reflect compensation expense that would not have been recognized in periods prior to 2006, had forfeitures been estimated during these periods, was immaterial.

     Statement 123(R) also requires the benefits of tax deductions in excess of recognized compensation expense be reported as a financing cash flow, rather than as an operating cash flow. This requirement reduced net operating cash flows and increased net financing cash flows during the six months ended June 30, 2006 by $19.8 million.

     Cooper has a share-based compensation plan known as the Amended and Restated Stock Incentive Plan (the “Plan”). The Plan provides for the granting of stock options, performance-based share awards and restricted stock units. Since the original Plan’s inception in 1996, the aggregate number of shares authorized under

the Plan is 17 million. As of June 30, 2006, 4,628,103 shares remain available for future grants under the Plan of which no more than 2,848,239 shares are available for grants of performance-based shares and restricted stock units. Activity for each of these stock-incentive awards is discussed in more detail below. Total compensation expense for all share-based compensation arrangements under the Plan was $14.0 million and $16.6 million during the six months ended June 30, 2006 and 2005, respectively. The total income tax benefit recognized in the income statement for all share-based compensation arrangements under the Plan was $5.0 million and $6.4 million during the six months ended June 30, 2006 and 2005, respectively.

Stock Options

     Stock option awards are granted with an exercise price no less than the market price of Cooper’s stock at the date of grant. Stock option awards generally vest over a three-year period with one-third vesting in each successive year so that the option is fully exercisable after three years and generally have five-, seven- and ten-year contractual terms. Stock option awards provide that, upon a change in control in Cooper (as defined in the Plan), all options will be cancelled and Cooper will make a cash payment to the employee equal to the difference in the fair market value of Cooper Class A common shares (or the highest price actually paid for the stock in connection with the change in control, if higher) and the option price.

     The fair value of each stock option award is estimated on the date of grant using the Black-Scholes-Merton option valuation model using the assumptions noted in the following table. Expected volatility in 2006 is based on implied volatilities from traded options on Cooper stock, historical volatility of Cooper stock, and other factors. Cooper believes that the resulting blended volatility represents a more accurate estimate of potential fluctuations in Cooper stock. Cooper uses historical data to estimate employee termination experience. The expected term of options granted is determined based on historical exercise behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

		2006				2005
Expected volatility			18.0	%			27.7	%
Expected dividends			1.8	%			2.1	%
Expected term (in years)			4.5				5.0
Risk-free rate			4.6	%			3.7	%

     A summary of option activity under the Plan as of June 30, 2006, and changes during the six months then ended is presented below:

										Weighted
						Weighted-				Average				Aggregate
						Average				Remaining				Intrinsic
						Exercise				Contractual				Value
Options		Shares				Price				Term				(in millions)
Outstanding at January 1, 2006			5,428,821			$	48.81
Granted			765,800			$	82.62
Exercised			(1,665,524	)		$	43.40
Forfeited or expired			(64,729	)		$	66.06
Outstanding at June 30, 2006			4,464,368			$	56.38				4.7			$	161.8
Vested or expected to vest at June 30, 2006			4,410,937			$	56.06				4.6			$	159.9
Exercisable at June 30, 2006			2,651,673			$	45.23				4.0			$	125.7

     The weighted-average grant date fair values of options granted during the six months ended June 30, 2006 and 2005 were $15.91 and $17.37, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2006 and 2005 was $69.0 million and $29.5 million, respectively.

     As of June 30, 2006, total unrecognized compensation expense related to nonvested stock options was $20.8 million. This expense is expected to be recognized over a weighted-average period of 1.8 years. The total fair value of stock options vested during the six months ended June 30, 2006 and 2005 was $12.6 million and $8.6 million, respectively.

Performance-Based Shares and Restricted Stock Units

     Under the Plan, Cooper grants certain executives and other key employees performance-based share awards with vesting contingent upon meeting Company-wide performance goals, typically tied to cumulative compound growth in earnings per share over a defined multi-year performance period. Awards under the performance-based component of the Plan are typically arranged in levels, with increasing numbers of shares earned as higher levels of growth are achieved. In order to earn the performance shares, participants are generally required to remain actively employed by Cooper for the performance period. Under the Plan, Cooper also awards grants of restricted stock units to certain executives and other key employees in order to provide financial incentive to remain in the employ of Cooper, thereby enhancing management continuity. Cooper may also utilize restricted stock units for new executives and other key employees to replace equity compensation forfeited upon resignation from their former employer. Restricted stock units vest pursuant to time-based service conditions.

     The fair value of each performance-based share and restricted stock unit was calculated at the average (simple two-point high and low) market price on the date of grant. Performance goals for the performance-based shares are currently assumed to be achieved at the maximum level. If goal-level assumptions are not met, compensation expense is adjusted and previously recognized compensation expense is reversed. Upon distribution of performance-based shares, Cooper also pays the recipient cash equal to the aggregate amount of cash dividends that the recipient would have received had they been the owner of record from the date of grant. Dividends on restricted stock units are payable on the dividend payment date or on the date when restrictions lapse, depending upon the specific award. For performance-based share and restricted stock unit awards, upon a change in control in Cooper (as defined in the Plan), all restrictions on those awards will lapse and shares shall be issued as otherwise provided in the Plan.

     A summary of the status of Cooper’s nonvested performance-based shares as of June 30, 2006 and changes during the six months then ended is presented below:

						Weighted-
						Average
						Grant-Date
Nonvested Performance-Based Shares		Shares				Fair Value
Nonvested at January 1, 2006			962,138			$	55.05
Granted			268,580			$	82.60
Vested			(288,975	)		$	37.58
Forfeited			(73,324	)		$	64.63
Nonvested at June 30, 2006			868,419			$	68.60

     The weighted-average grant-date fair value of performance-based shares granted during the six months ended June 30, 2006 and 2005 was $82.60 and $69.36, respectively. The total intrinsic value of performance-based shares awarded during the six months ended June 30, 2006 and 2005 was $24.9 million and $21.7 million, respectively.

     As of June 30, 2006, total unrecognized compensation expense related to nonvested performance-based shares was $32.2 million. This expense is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of performance-based shares vested during the six months ended June 30, 2006 was $10.9 million. No performance-based shares vested during the six months ended June 30, 2005.

     A summary of the status of Cooper’s nonvested restricted stock units as of June 30, 2006, and changes during the six months then ended is presented below:

						Weighted-
						Average
						Grant-Date
Nonvested Restricted Stock Units		Shares				Fair Value
Nonvested at January 1, 2006			309,400			$	49.97
Granted			23,000			$	87.20
Vested			(100,100	)		$	41.04
Forfeited			(23,000	)		$	48.78
Nonvested at June 30, 2006			209,300			$	58.46

     The weighted-average grant-date fair value of restricted stock units granted during the six months ended June 30, 2006 and 2005 was $87.20 and $69.15, respectively. The total intrinsic value of restricted stock units awarded during the six months ended June 30, 2006 and 2005 was $2.0 million and $7.7 million, respectively.

     As of June 30, 2006, total unrecognized compensation expense related to nonvested restricted stock unit compensation arrangements was $7.0 million. This expense is expected to be recognized over a weighted-average period of 2.6 years. The total fair value of restricted stock units vested during the six months ended June 30, 2006 and 2005 was $4.1 million and $0.1 million, respectively.

     Cash received from stock option exercises during the six months ended June 30, 2006 and 2005 was $69.9 million and $41.2 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $25.2 million and $9.4 million, respectively, during the six months ended June 30, 2006 and 2005. Cash used to settle equity instruments granted under all share-based payment arrangements during the six months ended June 30, 2006 and 2005 was immaterial in both periods.

     Cooper has a practice of repurchasing shares on the open market to satisfy shares issued for option exercises and share awards and expects to repurchase approximately 2.6 million shares during 2006, based on estimates of option exercises and share awards vesting for the year.

     The impact of adopting Statement 123(R) on January 1, 2006, on Cooper’s income from continuing operations before income taxes, net income and basic and diluted earnings per share during the six months ended June 30, 2006 was immaterial.

Note 3. Acquisitions

     In January 2006, Cooper acquired G&H Technology, Inc., a designer and manufacturer of advanced, high-reliability connectors and interconnect devices used in aerospace, subsea, military and industrial applications for total consideration of $42.1 million.

     In February 2006, Cooper acquired Wheelock, Inc., a designer and manufacturer of fire safety and emergency incident communication systems and devices for total consideration of $44.5 million.

     The results of operations of the acquisitions are included in the consolidated income statements since the respective acquisition dates. Pro-forma net income and earnings per share for 2006, assuming the acquisitions had been made at the beginning of the year, would not be materially different from reported net income and earnings per share.

Note 4. Inventories

		June 30,				December 31,
		2006				2005
		(in millions)
Raw materials		$	217.3				$  206.1
Work-in-process			162.2				137.9
Finished goods			372.7				303.7
Perishable tooling and supplies			14.4				14.4
			766.6				662.1
Allowance for excess and obsolete inventory			(69.0	)			(58.7	)
Excess of current standard costs over LIFO costs			(66.5	)			(64.7	)
Net inventories		$	631.1				$  538.7

Note 5. Shareholders’ Equity

     At June 30, 2006, 91,537,155 Class A common shares, $.01 par value were issued and outstanding (excluding the 12,017,301 Class A common shares held by wholly-owned subsidiaries as discussed below) compared to 91,556,569 Class A common shares, $.01 par value (excluding the 9,850,101 Class A common shares held by wholly-owned subsidiaries) at December 31, 2005. During the first six months of 2006, Cooper issued 2,147,786 Class A common shares primarily in connection with employee incentive and benefit plans and Cooper’s dividend reinvestment program. During the first six months of 2006, Cooper’s wholly-owned subsidiaries purchased 2,167,200 Class A common shares for $185.4 million under Cooper’s share repurchase plan. The share purchases are recorded by Cooper’s wholly-owned subsidiaries as an investment in its parent company that is eliminated in consolidation.

     A wholly-owned subsidiary also owns all the issued and outstanding Class B common shares. The subsidiary’s investment in the Class B common shares is eliminated in consolidation. If at any time a dividend is declared and paid on the Class A common shares, a like dividend shall be declared and paid on the Class B common shares in an equal amount per share.

Note 6. Segment Information

		Revenues
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Electrical Products		$	1,103.5			$	1,010.6			$	2,164.1			$	1,978.9
Tools			184.3				178.6				364.6				355.1
Total revenues		$	1,287.8			$	1,189.2			$	2,528.7			$	2,334.0

		Operating Earnings
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Electrical Products		$	177.5			$	148.2			$	337.6			$	283.6
Tools			19.6				15.8				36.9				30.5
Segment operating earnings			197.1				164.0				374.5				314.1
General Corporate expenses			23.9				22.4				44.7				42.8
Total operating earnings			173.2				141.6				329.8				271.3
Interest expense, net			12.4				17.7				24.5				35.5
Income from continuing operations before income taxes		$	160.8			$	123.9			$	305.3			$	235.8

Note 7. Pension and Other Postretirement Benefits

     During June 2006, Cooper announced that, effective January 1, 2007, future benefit accruals will cease under the Cooper U. S. Salaried Pension Plan. Benefits earned through December 31, 2006 will remain in each participant’s Salaried Pension Plan account. The account balance will continue to earn interest credits until a participant is eligible for and elects to receive the plan benefit. Cooper recognized a curtailment loss of $4.2 million in the second quarter of 2006 as a result of this action. Beginning in 2007, Cooper will make a cash contribution equal to 3% of compensation to the Retirement Savings and Stock-Ownership Plan (“CO-SAV”). Cooper will further increase the company-matching contribution under the CO-SAV plan to a dollar-for-dollar match with Cooper stock up to 6% of employee contributions.

     Cooper also announced the elimination of postretirement life insurance for active employees, effective January 1, 2007. As a result, Cooper recognized a curtailment gain of $3.2 million in the second quarter of 2006.

		Pension Benefits
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Components of net periodic benefit cost:
Service cost		$	3.5			$	4.2			$	8.4			$	8.7
Interest cost			10.4				10.0				20.7				20.4
Expected return on plan assets			(12.1	)			(12.6	)			(24.7	)			(25.4	)
Amortization of prior service cost			0.1				0.1				0.3				0.3
Recognized actuarial loss			3.4				2.5				7.2				4.8
Curtailment loss			4.2				—				4.2				—
Net periodic benefit (income) cost		$	9.5			$	4.2			$	16.1			$	8.8

		Other Postretirement Benefits
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Components of net periodic benefit cost:
Service cost		$	0.1			$	0.1			$	0.1			$	0.1
Interest cost			1.3				1.7				2.7				3.5
Amortization of prior service cost			(0.5	)			—				(1.0	)			—
Recognized actuarial gain			(0.7	)			(0.7	)			(1.4	)			(1.5	)
Curtailment gain			(3.2	)			—				(3.2	)			—
Net periodic benefit (income) cost		$	(3.0	)		$	1.1			$	(2.8	)		$	2.1

Note 8. Income Taxes

     The effective tax rate was 25.5% for the six months ended June 30, 2006 and 21.5% for the six months ended June 30, 2005. The rate increase is primarily related to increased earnings in 2006 without a corresponding increase in tax benefits.

     Cooper is under examination by the Internal Revenue Service for the 2002-2004 tax years. Cooper is also under examination by various United States state and local taxing authorities as well as various taxing authorities in other countries. Cooper fully cooperates with all audits, but defends existing positions vigorously. These audits are in various stages of completion. To provide for potential tax exposures, Cooper maintains an allowance for tax contingencies, which management believes is adequate. The results of future audit assessments, if any, could have a material effect on Cooper’s cash flows as these audits are completed. However, management does not believe that any of these matters will have a material adverse effect on Cooper’s consolidated results of operations.

     In 2005, Cooper protested the Internal Revenue Service examination findings for the 2000-2001 tax years. The Internal Revenue Service has challenged Cooper’s treatment of gains and interest deductions claimed on its 2000 and 2001 federal income tax returns, relating to transactions involving government securities. If the proposed adjustments are upheld, it would require that Cooper pay approximately $26.5 million in taxes plus accrued interest for those years. There would be an additional payment related to those items for the 2002-2003 tax years of approximately $67.2 million in taxes plus accrued interest if the Internal Revenue Service prevails in its proposed treatment for the 2000-2001 tax years. Interest will continue to accrue until the matter is resolved. Cooper believes these transactions were properly reported on its federal income tax returns in accordance with applicable tax laws and regulations in effect during the period involved and is challenging these adjustments vigorously. While the outcome of proceedings of this type cannot be predicted with certainty, management believes that the ultimate outcome of this matter will not have a material impact on Cooper’s consolidated financial condition or results of operations.

Note 9. Net Income Per Common Share

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Basic:
Income from continuing operations		$	119.8			$	97.3			$	227.5			$	185.1
Charge from discontinued operations			20.3				—				20.3				—
Net income applicable to common stock		$	99.5			$	97.3			$	207.2			$	185.1
Weighted average common shares outstanding			92.2				93.0				92.2				93.0
Diluted:
Income from continuing operations		$	119.8			$	97.3			$	227.5			$	185.1
Charge from discontinued operations			20.3				—				20.3				—
Net income applicable to common stock		$	99.5			$	97.3			$	207.2			$	185.1
Weighted average common shares outstanding			92.2				93.0				92.2				93.0
Incremental shares from assumed conversions:
Options, performance-based stock awards and other employee awards			2.0				2.4				2.1				2.5
Weighted average common shares and common share equivalents			94.2				95.4				94.3				95.5

Options and employee awards are not considered in the calculations if the effect would be antidilutive.

Note 10. Net Income and Other Nonowner Changes in Equity

     The components of net income and other nonowner changes in equity, net of related taxes, were as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
		(in millions)
Net income		$	99.5			$	97.3			$	207.2			$	185.1
Foreign currency translation gains (losses)			14.4				(5.4	)			19.0				(13.5	)
Change in fair value of derivatives			(4.2	)			0.2				(0.8	)			(1.1	)
Net income and other nonowner changes in equity		$	109.7			$	92.1			$	225.4			$	170.5

Note 11. Restructuring

     During the fourth quarter of 2003, Cooper recorded net restructuring charges of $16.9 million, or $13.6 million after taxes ($.14 per diluted common share). This represented costs associated with restructuring projects undertaken in 2003 of $18.4 million, partially offset by a $1.5 million adjustment of estimates for restructuring projects initiated in 2002.

     The most significant action included in the charges was an announcement of the closing of Cooper Wiring Devices’ manufacturing operations in New York City. This action included plans for the withdrawal from a multiple-employer pension plan. Cooper recorded a $12.5 million obligation as an estimate of Cooper’s portion of unfunded benefit obligations of the plan. In 2005, Cooper finalized activities related to withdrawal from the multi-employer pension plan and recorded an additional $4.0 million pre-tax charge. The remaining $5.9 million charge primarily represents severance for announced employment reductions at several locations. Substantially all of the severance payments were made as of March 31, 2006.

     A total of 114 salaried and 150 hourly personnel were eliminated as a result of these actions, and all personnel were terminated as of December 31, 2004. The majority of the severance obligation was paid by the first half of 2004. The multiple-employer pension obligation is expected to be paid over 20 years, beginning in 2006.

     See “Restructuring” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Note 12. Charge Related to Discontinued Operations

     In October 1998, Cooper sold its Automotive Products business to Federal-Mogul Corporation (“Federal-Mogul”). These discontinued businesses (including the Abex product line obtained from Pneumo-Abex Corporation (“Pneumo”) in 1994) were operated through subsidiary companies, and the stock of those subsidiaries was sold to Federal-Mogul pursuant to a Purchase and Sale Agreement dated August 17, 1998 (“1998 Agreement”). In conjunction with the sale, Federal-Mogul indemnified Cooper for certain liabilities of these subsidiary companies, including liabilities related to the Abex product line and any potential liability that Cooper may have to Pneumo pursuant to a 1994 Mutual Guaranty Agreement between Cooper and Pneumo. On October 1, 2001, Federal-Mogul and several of its affiliates filed a Chapter 11 bankruptcy petition and indicated that Federal-Mogul may not honor the indemnification obligations to Cooper. As of the date of this filing, Federal-Mogul had not rejected the 1998 Agreement, which includes the indemnification to Cooper. If Federal-Mogul rejects the 1998 Agreement, Cooper will be relieved of its future obligations under the 1998 Agreement, including specific indemnities relating to payment of taxes and certain obligations regarding insurance for its former Automotive Products businesses. To the extent Cooper is obligated to Pneumo for any asbestos-related claims arising from the Abex product line (“Abex Claims”), Cooper has rights, confirmed by Pneumo, to significant insurance for such claims. Based on information provided by representatives of Federal-Mogul and recent claims experience, from August 28, 1998 through June 30, 2006, a total of 139,408 Abex Claims were filed, of which 100,590 claims have been resolved leaving 38,818 Abex Claims pending at June 30, 2006, that are the responsibility of Federal-Mogul. During the three months ended June 30, 2006, 951 claims were filed and 564 claims were resolved. Since August 28, 1998, the average indemnity payment for resolved Abex Claims was $2,084 before insurance. A total of $95 million was spent on defense costs for the period August 28, 1998 through June 30, 2006. Historically, existing insurance coverage has provided 50% to 80% of the total defense and indemnity payments for Abex Claims. However, insurance recovery is currently at a lower percentage (approximately 30%) due to exhaustion of primary layers of coverage and litigation with certain excess insurers.

     With the assistance of independent advisors, Bates White, LLC, in the fourth quarter of 2001 Cooper completed a thorough analysis of its potential exposure for asbestos liabilities in the event Federal-Mogul rejects the 1998 Agreement. Based on Cooper’s analysis of its contingent liability exposure resulting from Federal-Mogul’s bankruptcy, Cooper concluded that an additional fourth-quarter 2001 discontinued operations provision of $30 million after-tax, or $.32 per share, was appropriate to reflect the potential net impact of this issue.

     Throughout 2003, Cooper worked towards resolution of the indemnification issues and future handling of the Abex-related claims within the Federal-Mogul bankruptcy proceedings. This included negotiations with the representatives of Federal-Mogul, its bankruptcy committees and the future claimants (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 would 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.

     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.

     In December 2005, Cooper announced that the Company and other parties involved in the resolution of the Federal-Mogul bankruptcy proceeding had reached an agreement regarding Cooper’s participation in Federal Mogul’s proposed 524 (g) asbestos trust. By participating in this trust, Cooper would resolve its liability for asbestos claims arising from Cooper’s former Abex Friction Products business. The proposed settlement agreement was subject to court approval, approval of 75 percent of the current Abex asbestos claimants and certain other approvals. The settlement would resolve more than 38,000 pending Abex Claims. Future claims would be resolved through the bankruptcy trust, and Cooper would be protected against future claims by an injunction to be issued by the district court upon plan confirmation.

     Key terms and aspects of the proposed settlement agreement included Cooper agreeing to pay $130 million in cash into the trust, with $115 million payable upon Federal-Mogul’s emergence from bankruptcy. The remainder would be due on January 15, 2007, or upon emergence from bankruptcy, if later. Cooper would receive a total of $37.5 million during the funding period from other parties associated with the Federal-Mogul bankruptcy. Cooper would further provide the trust 1.4 million shares of the Company’s stock upon Federal-Mogul’s emergence from bankruptcy. The agreement provided that the trust may, during the first year after issuance, sell these shares to Cooper at market prices and, thereafter, in open market transactions.

     The proposed settlement agreement also provided for further payments by Cooper subject to the amount and timing of insurance proceeds. Cooper agreed to make 25 annual payments of up to $20 million each, reduced by certain insurance proceeds received by the trust. In years that the insurance proceeds exceed $17 million, Cooper would be required to contribute $3 million with the excess insurance proceeds carried over to the next year. The trust would retain 10 percent of the insurance proceeds for indemnity claims paid by the trust until Cooper’s obligation is satisfied and would retain 15 percent thereafter. The agreement also provided for Cooper to receive the insurance proceeds related to indemnity and defense costs paid prior to the date a stay of current claims is entered by the bankruptcy court. Cooper would also be required to forego certain claims and objections in the Federal-Mogul bankruptcy proceedings. In addition, the parties involved had agreed to petition the court for a stay on all current claims outstanding.

     Although the payments related to the settlement could extend to 25 years and the collection of insurance proceeds could extend beyond 25 years, the liability and insurance would be undiscounted on Cooper’s balance sheet as the amount of the actual annual payments is not reasonably predictable.

     A critical term of the proposed settlement was the issuance of a preliminary injunction staying all pending Abex asbestos claims. At a hearing on January 20, 2006, other parties to the bankruptcy proceedings were unable to satisfy the court’s requirements to grant the required preliminary injunction. As a result, the proposed settlement agreement required renegotiation of certain terms. The final determination of whether Cooper would participate in the Federal-Mogul 524(g) trust was unknown. However, Cooper management concluded that, at the date of the filing of its 2005 Form 10-K, the most likely outcome in the range of potential outcomes was a revised settlement approximating the December 2005 proposed settlement. Accordingly, Cooper recorded a $227.2 million after-tax discontinued operations charge, net of a $127.8 million income tax benefit, in the fourth quarter of 2005.

     The fourth quarter 2005 charge to discontinued operations included payments to a 524(g) trust over 25 years that were undiscounted, and the insurance recoveries only included recoveries where insurance in place agreements, settlements or policy recoveries were probable. If the negotiations with the Representatives in early 2004 had resulted in an agreement, Cooper would have paid all the consideration when Federal-Mogul emerged from bankruptcy and the 524(g) trust was formed and would have relinquished all rights to insurance. The lack of discounting and the limited recognition of insurance recoveries in the fourth quarter 2005 charge to discontinued operations were a significant component of the increase in the accrual for discontinued operations. While it is not possible to quantify, the accrual for discontinued operations also includes a premium for resolving the inherent uncertainty associated with resolving Abex Claims though the tort system. If Cooper is unable to reach a settlement to participate in the Federal-Mogul 524(g) trust, the accrual for discontinued operations potentially may have to be reduced to the estimated liability and related insurance recoveries through the tort system. There are numerous assumptions that are required to project the liability in the tort system and Cooper has not completed the analysis and determined the liability that would be recorded under this scenario.

     Cooper, through Pneumo-Abex LLC, has access to Abex insurance policies with remaining limits on policies with solvent insurers in excess of $750 million. Cooper included insurance recoveries of approximately $215 million pre-tax in the fourth quarter 2005 charge to discontinued operations discussed above. Cooper believes that it is likely that additional insurance recoveries will be recorded in the future as new insurance in place agreements are consummated and settlements with insurance carriers are completed. However, extensive litigation with the insurance carriers may be required to receive those additional recoveries.

     On July 7, 2006, Cooper announced a revised agreement had been reached regarding Cooper’s participation in Federal-Mogul’s 524(g) trust. The revised proposed settlement agreement remains subject to court approval, to approval by 75 percent of the current Abex asbestos claimants and to certain other approvals.

     Key terms and aspects of the revised proposed settlement agreement include Cooper agreeing to pay $256 million in cash into the trust on the date Federal-Mogul emerges from bankruptcy, which includes elimination of the contribution of 1.4 million common shares to the trust by increasing the cash contribution. Removing the Company’s common stock as a component of the revised settlement agreement eliminates additional charges and reversals of charges that may have occurred to account for any changes in the market value of the Company’s stock. Cooper has or will receive $37.5 million from other parties toward its cash obligation.

     As in the December 2005 agreement, Cooper has agreed to make 25 annual payments of up to $20 million each to the trust with such payments being reduced by insurance proceeds. The minimum annual payment of $3 million in the December 2005 agreement has been eliminated. However, Cooper has agreed to make advances, beginning in 2015 through 2021, in the event the trust is unable to pay outstanding qualified claims at 100 percent of the value provided for in the trust agreement. In the event that advances are made by Cooper, they will accrue interest at 5 percent per annum, and will be repaid in years where excess funds are available in the trust or credited against the future year annual payments. The maximum advances are $36.6 million.

     Cooper, through Pneumo, has access to Abex insurance policies, with remaining limits on policies with solvent insurers in excess of $750 million. The trust will retain 10 percent of the insurance proceeds for indemnity claims paid by the trust for the first 25 years and thereafter will retain 15 percent.

     Cooper will pay all defense costs through the date Federal-Mogul emerges from bankruptcy and will be reimbursed for indemnity payments to the extent such payments are eligible for payment from the trust. Cooper will retain the rights to receive the insurance proceeds related to indemnity and defense costs paid prior to the date Federal-Mogul emerges from bankruptcy.

     As in the December 2005 proposed agreement, Cooper will forego certain claims and objections in the Federal-Mogul bankruptcy proceedings. However, under the revised proposed agreement, which is subject to court approval, in the event that Cooper’s participation in the Federal-Mogul 524(g) trust is not approved for any reason, Cooper would receive a cash payment of $138 million on the date Federal-Mogul emerges from bankruptcy and 20 percent of any insurance policy settlements related to the former Wagner business purchased by Federal-Mogul in 1998. If Cooper participates in the trust, it will receive 12 percent of any Wagner insurance settlements.

     Accordingly, Cooper recorded a $20.3 million after-tax discontinued operations charge, net of an $11.4 million income tax benefit, in the second quarter of 2006.

     If a settlement within the 524(g) trust is in fact achieved on a basis consistent with the terms discussed above, Cooper will periodically assess the current overall adequacy of the accrual for discontinued operations, including updates to the assumptions regarding estimates of insurance recoveries, levels of defense and indemnity payments and other assumptions related to the matter. As this additional information becomes available, Cooper will record a charge or credit to the accrual for discontinued operations, which may be significant.

     From a cash flow perspective, Cooper management continues to believe that a settlement on the terms of the revised agreement would allow Cooper to continue to grow through acquisitions and return cash to shareholders through dividends and stock repurchases. The settlement agreement remains subject to bankruptcy court approval, approval by the current claimants and other matters. 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 $548.7 million at June 30, 2006 and $526.3 million at December 31, 2005.

Note 13. Consolidating Financial Information

     Cooper and certain of its principal operating subsidiaries (the “Guarantors”) fully and unconditionally guarantee, on a joint and several basis, the registered debt securities of Cooper Industries, LLC and Cooper US, Inc. The following condensed consolidating financial information is included so that separate financial statements of Cooper Industries, LLC, Cooper US, Inc. or the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating financial statements present investments in subsidiaries using the equity method of accounting. Intercompany investments in the Class A and Class B common shares are accounted for using the cost method.

Consolidating Income Statements
Three Months Ended June 30, 2006
(in millions)

						Cooper				Cooper
						Industries,				US,								Other				Consolidating
		Cooper				LLC				Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	—			$	845.1			$	499.8			$	(57.1	)		$	1,287.8
Cost of sales			—				(0.2	)			(0.2	)			588.0				339.8				(57.1	)			870.3
Selling and administrative expenses			3.2				5.5				15.5				129.7				90.4				—				244.3
Interest expense, net			(0.2	)			10.9				2.7				—				(1.0	)			—				12.4
Equity in earnings of subsidiaries, net of tax			131.2				9.2				68.8				25.6				70.3				(305.1	)			—
Intercompany income (expense)			(4.1	)			(3.7	)			2.8				(118.4	)			147.9				(24.5	)			—
Income (loss) from continuing operations before income taxes			124.1				(10.7	)			53.6				34.6				288.8				(329.6	)			160.8
Income tax expense (benefit)			—				(7.7	)			(16.6	)			4.1				61.2				—				41.0
Income (loss) from continuing operations			124.1				(3.0	)			70.2				30.5				227.6				(329.6	)			119.8
Charge related to discontinued operations, net of taxes			—				20.3				—				—				—				—				20.3
Net income (loss)		$	124.1			$	(23.3	)		$	70.2			$	30.5			$	227.6			$	(329.6	)		$	99.5

Three Months Ended June 30, 2005
(in millions)

						Cooper				Cooper
						Industries,				US,								Other				Consolidating
		Cooper				LLC				Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	—			$	811.0			$	408.6			$	(30.4	)		$	1,189.2
Cost of sales			—				0.2				1.0				574.9				269.0				(30.4	)			814.7
Selling and administrative expenses			2.5				2.0				16.5				128.2				83.7				—				232.9
Interest expense, net			(0.4	)			13.4				(0.7	)			—				5.4				—				17.7
Equity in earnings of subsidiaries, net of tax			124.3				42.8				83.2				124.4				69.0				(443.7	)			—
Intercompany income (expense)			(1.7	)			(26.8	)			(18.5	)			(36.9	)			107.3				(23.4	)			—
Income (loss) before income taxes			120.5				0.4				47.9				195.4				226.8				(467.1	)			123.9
Income tax expense (benefit)			—				(15.9	)			(21.2	)			24.3				39.4				—				26.6
Net income		$	120.5			$	16.3			$	69.1			$	171.1			$	187.4			$	(467.1	)		$	97.3

Consolidating Income Statements
Six Months Ended June 30, 2006
(in millions)

						Cooper				Cooper
						Industries,				US,								Other				Consolidating
		Cooper				LLC				Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	—			$	1,668.2			$	978.2			$	(117.7	)		$	2,528.7
Cost of sales			—				(0.4	)			—				1,168.8				666.4				(117.7	)			1,717.1
Selling and administrative expenses			5.5				7.7				31.6				259.8				177.2				—				481.8
Interest expense, net			(0.3	)			21.8				5.3				—				(2.3	)			—				24.5
Equity in earnings of subsidiaries, net of tax			268.3				18.5				149.3				47.2				150.4				(633.7	)			—
Intercompany income (expense)			(7.3	)			(7.0	)			7.8				(212.8	)			267.9				(48.6	)			—
Income (loss) from continuing operations before income taxes			255.8				(17.6	)			120.2				74.0				555.2				(682.3	)			305.3
Income tax expense (benefit)			—				(13.8	)			(30.1	)			11.9				109.8				—				77.8
Income from continuing operations			255.8				(3.8	)			150.3				62.1				445.4				(682.3	)			227.5
Charge related to discontinued operations, net of tax			—				20.3				—				—				—				—				20.3
Net income (loss)		$	255.8			$	(24.1	)		$	150.3			$	62.1			$	445.4			$	(682.3	)		$	207.2

Six Months Ended June 30, 2005
(in millions)

						Cooper				Cooper
						Industries,				US,								Other				Consolidating
		Cooper				LLC				Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	—			$	1,562.6			$	832.0			$	(60.6	)		$	2,334.0
Cost of sales			0.2				0.2				1.4				1,110.9				550.2				(60.6	)			1,602.3
Selling and administrative expenses			4.7				3.8				31.8				251.4				168.7				—				460.4
Interest expense, net			(0.9	)			26.9				(1.7	)			—				11.2				—				35.5
Equity in earnings of subsidiaries, net of tax			238.0				49.7				161.8				160.7				129.4				(739.6	)			—
Intercompany income (expense)			(2.5	)			(26.8	)			(45.4	)			(120.8	)			242.0				(46.5	)			—
Income (loss) before income taxes			231.5				(8.0	)			84.9				240.2				473.3				(786.1	)			235.8
Income tax expense (benefit)			—				(21.5	)			(44.5	)			28.4				88.3				—				50.7
Net income		$	231.5			$	13.5			$	129.4			$	211.8			$	385.0			$	(786.1	)		$	185.1

Consolidating Balance Sheets
June 30, 2006
(in millions)

						Cooper				Cooper
						Industries,				US,								Other				Consolidating
		Cooper				LLC				Inc.				Guarantors				Subsidiaries				Adjustments				Total
Cash and cash equivalents		$	86.5			$	—			$	60.4			$	(2.0	)		$	205.3			$	—			$	350.2
Receivables			0.2				—				6.1				543.6				411.7				—				961.6
Inventories			—				—				—				368.3				262.8				—				631.1
Deferred income taxes and other current assets			0.3				142.5				68.6				38.8				23.2				—				273.4
Total current assets			87.0				142.5				135.1				948.7				903.0				—				2,216.3
Property, plant and equipment, less accumulated depreciation			—				—				44.4				325.8				294.6				—				664.8
Goodwill			—				—				—				1,022.9				1,158.3				—				2,181.2
Investment in subsidiaries			3,201.5				704.7				3,893.6				974.9				1,050.5				(9,825.2	)			—
Investment in parent			—				—				2,732.5				—				312.7				(3,045.2	)			—
Intercompany accounts receivable			660.4				634.6				—				1,240.7				712.5				(3,248.2	)			—
Intercompany notes receivable			5.6				23.5				704.1				1.6				3,872.4				(4,607.2	)			—
Deferred income taxes and other noncurrent assets			—				213.1				28.6				(49.5	)			92.2				—				284.4
Total assets		$	3,954.5			$	1,718.4			$	7,538.3			$	4,465.1			$	8,396.2			$	(20,725.8	)		$	5,346.7
Short-term debt		$	—			$	—			$	—			$	—			$	6.4			$	—			$	6.4
Accounts payable			34.2				16.0				7.2				236.2				176.0				—				469.6
Accrued liabilities			4.9				30.9				86.6				208.4				149.1				—				479.9
Current discontinued operations liability			—				218.7				—				—				—				—				218.7
Current maturities of long-term debt			—				11.0				—				—				0.6				—				11.6
Total current liabilities			39.1				276.6				93.8				444.6				332.1				—				1,186.2
Long-term debt			—				668.3				323.8				8.0				0.7				—				1,000.8
Intercompany accounts payable			—				—				3,248.2				—				—				(3,248.2	)			—
Intercompany notes payable			428.3				286.0				1,742.0				1,705.7				445.2				(4,607.2	)			—
Long-term discontinued operations liability			—				330.0				—				—				—				—				330.0
Other long-term liabilities			—				140.4				207.9				73.9				122.2				—				544.4
Total liabilities			467.4				1,701.3				5,615.7				2,232.2				900.2				(7,855.4	)			3,061.4
Class A common stock			1.0				—				—				—				—				(0.1	)			0.9
Class B common stock			0.5				—				—				—				—				(0.5	)			—
Subsidiary common stock			—				—				—				—				308.6				(308.6	)			—
Capital in excess of par value			3,341.6				—				49.3				1,393.5				5,159.2				(9,636.8	)			306.8
Retained earnings			169.8				129.8				2,041.9				827.1				2,173.5				(3,206.4	)			2,135.7
Accumulated other non- owner changes in equity			(25.8	)			(112.7	)			(168.6	)			12.3				(145.3	)			282.0				(158.1	)
Total shareholders’ equity			3,487.1				17.1				1,922.6				2,232.9				7,496.0				(12,870.4	)			2,285.3
Total liabilities and shareholders’ equity		$	3,954.5			$	1,718.4			$	7,538.3			$	4,465.1			$	8,396.2			$	(20,725.8	)		$	5,346.7