10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

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

Commission File Number 1-31330

Cooper Industries plc

 

(Exact name of registrant as specified in its charter)

Ireland		98-0632292
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5 Fitzwilliam Square		Dublin 2, Ireland
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ       No o

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

Large Accelerated Filer þ		Accelerated Filer o		Non-Accelerated Filer o		Smaller Reporting Company 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 shares outstanding as of September 30, 2011 was 158,101,261.

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER INDUSTRIES PLC
CONSOLIDATED INCOME STATEMENTS
(unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
						(in millions, except per share data)
Revenues		$	1,389.7			$	1,240.7			$	4,036.3			$	3,806.0
Cost of sales			931.2				821.6				2,682.0				2,537.7
Selling and administrative expenses			269.2				236.7				779.8				737.1
Equity in (income) of Apex Tool Group, LLC			(16.0	)			(10.5	)			(44.9	)			(10.5	)
Loss related to contribution of net assets to Apex Tool Group, LLC			—				—				—				134.5
Restructuring charges			—				1.5				—				8.0
Operating earnings			205.3				191.4				619.4				399.2
Interest expense, net			16.4				12.3				49.8				36.2
Income from continuing operations before income taxes			188.9				179.1				569.6				363.0
Income taxes expense			28.7				37.4				92.2				61.1
Income from continuing operations			160.2				141.7				477.4				301.9
Income related to discontinued operations, net of income taxes			—				—				190.3				—
Net income		$	160.2			$	141.7			$	667.7			$	301.9
Income per common share:
Basic:
Income from continuing operations		$	.99			$	.86			$	2.91			$	1.81
Income from discontinued operations			—				—				1.16				—
Net income		$	.99			$	.86			$	4.07			$	1.81
Diluted:
Income from continuing operations		$	.98			$	.85			$	2.87			$	1.79
Income from discontinued operations			—				—				1.14				—
Net income		$	.98			$	.85			$	4.01			$	1.79
Cash dividends declared per common share		$	.29			$	.27			$	.87			$	.81

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES PLC
CONSOLIDATED BALANCE SHEETS
(unaudited)

		September 30,				December 31,
		2011				2010
		(in millions)
ASSETS
Cash and cash equivalents		$	430.6			$	1,035.3
Receivables, less allowances			942.3				795.9
Inventories			506.3				438.9
Current discontinued operations receivable			3.8				13.0
Other current assets			225.8				207.5
Total current assets			2,108.8				2,490.6
Property, plant and equipment, less accumulated depreciation			615.7				608.3
Investment in Apex Tool Group, LLC			531.2				511.3
Goodwill			2,513.6				2,356.5
Other intangible assets, less accumulated amortization			372.6				333.6
Long-term discontinued operations receivable			5.1				150.6
Other noncurrent assets			175.0				217.7
Total assets		$	6,322.0			$	6,668.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt		$	6.2			$	7.7
Accounts payable			465.4				462.6
Accrued liabilities			527.7				510.1
Current discontinued operations liability			9.4				45.4
Current maturities of long-term debt			0.7				0.6
Total current liabilities			1,009.4				1,026.4
Long-term debt			1,420.9				1,420.4
Long-term discontinued operations liability			40.5				701.7
Other long-term liabilities			398.2				314.0
Total liabilities			2,869.0				3,462.5
Common stock, $.01 par value			1.7				1.7
Retained earnings			4,288.9				3,658.7
Treasury stock			(671.6	)			(288.6	)
Accumulated other nonowner changes in equity			(166.0	)			(165.7	)
Total shareholders’ equity			3,453.0				3,206.1
Total liabilities and shareholders’ equity		$	6,322.0			$	6,668.6

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

		Nine Months Ended
		September 30,
		2011				2010
		(in millions)
Cash flows from operating activities:
Net income		$	667.7			$	301.9
(Income) related to discontinued operations			(190.3	)			—
Income from continuing operations			477.4				301.9
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization			96.7				107.7
Deferred income taxes			53.1				(35.6	)
Excess tax benefits from stock options and awards			(13.3	)			(4.8	)
Distribution of earnings from Apex Tool Group, LLC			20.9				—
Equity in (income) of Apex Tool Group, LLC			(44.9	)			(10.5	)
Loss related to contribution of net assets to Apex Tool Group, LLC			—				134.5
Restructuring charges			—				8.0
Changes in assets and liabilities: (1)
Receivables			(115.5	)			(150.7	)
Inventories			(37.3	)			(61.4	)
Accounts payable and accrued liabilities			(5.5	)			91.2
Discontinued operations assets and liabilities, net			(246.6	)			(10.2	)
Other assets and liabilities, net			(8.0	)			26.9
Net cash provided by operating activities			177.0				397.0
Cash flows from investing activities:
Capital expenditures			(84.8	)			(57.9	)
Cash paid for acquired businesses			(250.1	)			(21.6	)
Cash restricted for business acquisition			—				(34.9	)
Proceeds from sales of property, plant and equipment and other			15.8				(4.6	)
Net cash used in investing activities			(319.1	)			(119.0	)
Cash flows from financing activities:
Short-term debt, net			(4.6	)			(2.3	)
Debt issuance costs			(1.0	)			—
Dividends			(141.4	)			(132.7	)
Purchases of treasury shares			(383.0	)			(276.0	)
Excess tax benefits from stock options and awards			13.3				4.8
Proceeds from exercise of stock options and other			54.8				34.5
Net cash used in financing activities			(461.9	)			(371.7	)
Effect of exchange rate changes on cash and cash equivalents			(0.7	)			8.1
Decrease in cash and cash equivalents			(604.7	)			(85.6	)
Cash and cash equivalents, beginning of period			1,035.3				381.6
Cash and cash equivalents, end of period		$	430.6			$	296.0

The accompanying notes are an integral part of these statements.

COOPER INDUSTRIES PLC

Note 1. Accounting Policies

     Basis of Presentation - The consolidated financial statements of Cooper Industries plc, an Irish 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, 2010 included in Part IV of Cooper’s 2010 Annual Report on Form 10-K.

     On March 26, 2010, Cooper announced that it entered into a Framework Agreement with Danaher Corporation to create a joint venture combining Cooper’s Tools business with certain Tools businesses from Danaher’s Tools and Components Segment (the “Joint Venture”). On July 6, 2010, Cooper announced the completion of the Joint Venture, named Apex Tool Group, LLC. Cooper and Danaher each own a 50% interest in the Joint Venture, have equal representation on its Board of Directors and have a 50% voting interest in the Joint Venture. At completion of the transaction in July 2010 Cooper deconsolidated the Tools business assets and liabilities contributed to the Joint Venture and recognized Cooper’s 50% ownership interest as an equity investment. Recording the investment at its fair value of $480 million resulted in a pretax loss of $134.5 million related to the transaction, which was recognized in the second quarter of 2010. Beginning in the third quarter of 2010, Cooper recognizes its proportionate share of the Joint Venture’s operating results using the equity method.

     New Accounting Pronouncements – In June 2011 the Financial Accounting Standards Board issued revised guidance on the presentation of comprehensive income that will be effective for Cooper beginning in 2012. This guidance eliminates the option to present the components of comprehensive income as part of the statement of shareholders’ equity and also requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The implementation of this revised guidance in 2012 will change the presentation of our financial statements but will not have any impact on our consolidated financial condition, results of operations or cash flows.

Note 2. Acquisitions

     Cooper has completed a number of acquisitions that were selected because of their strategic fit with existing Cooper businesses or were new strategic lines that were complementary to Cooper’s operations. In the nine month period ended September 30, 2011, Cooper completed four acquisitions, two in the Energy and Safety Solutions segment (including Gitiesse srl, a manufacturer of marine and oil and gas communications systems specializing in the manufacture of digital integrated multimedia communications systems for vessels worldwide) and two in the Electrical Products Group (including Martek Power, a manufacturer of power electronic components specializing in the manufacture of highly specialized power management devices for the military, heavy-duty transportation, aerospace, medical, telecom and hybrid/electrical vehicle markets), and also acquired certain other intangible assets in the Electrical Products Group. In 2010 Cooper completed five acquisitions, four in the Energy and Safety Solutions segment and one in the Electrical Products Group, and also acquired certain other intangible assets in the Electrical Products Group.

     The acquisition date fair value of the total consideration for the 2011 transactions was approximately $263.3 million and resulted in the preliminary recognition of aggregate goodwill of $154.4 million, substantially all of which is not expected to be deductible for tax purposes. The goodwill arising from the

2011 transactions includes $116.4 million related to the Electrical Products Group segment and $38.0 million related to the Energy and Safety Solutions segment. The goodwill arises because the purchase price reflects a number of factors including the future earnings and cash flow potential of these businesses and the complimentary strategic fit and resulting synergies these businesses bring to existing operations. The transactions consummated in 2011 also resulted in the preliminary recognition of $57.0 million in other intangible assets consisting primarily of customer relationships, technology and trademarks. All of the other intangibles are finite-lived intangible assets that are preliminarily expected to be amortized over periods of 3 to 15 years with a weighted average amortization period of approximately 10 years.

     The following table summarizes the preliminary aggregate estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the acquisitions consummated during the nine months ended September 30, 2011:

		(in millions)
Receivables		$	30.4
Inventories			33.2
Property, plant and equipment			6.9
Goodwill			154.4
Other intangible assets			57.0
Accounts payable			(18.8	)
Debt			(2.7	)
Other assets and liabilities, net			(10.3	)
Net cash consideration		$	250.1

     The unaudited pro forma information for the periods set forth below gives effect to all prior acquisitions as if they had occurred at the beginning of the period. This data is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisitions been consummated as of that time.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Revenues		$	1,399.7			$	1,287.2			$	4,124.4			$	3,946.2
Income from continuing operations			160.7				144.5				481.7				310.0
Diluted earnings per share from continuing operations		$	.98			$	.87			$	2.89			$	1.84

Note 3. Inventories

		September 30,				December 31,
		2011				2010
		(in millions)
Raw materials		$	206.5			$	168.6
Work-in-process			118.9				97.9
Finished goods			314.4				288.5
Perishable tooling and supplies			7.2				7.6
			647.0				562.6
Allowance for excess and obsolete inventory			(63.9	)			(57.8	)
Excess of FIFO costs over LIFO costs			(76.8	)			(65.9	)
Net inventories		$	506.3			$	438.9

Note 4. Goodwill

     Cooper has goodwill of $2.51 billion and $2.36 billion at September 30, 2011 and December 31, 2010, respectively. Cooper completed its annual impairment tests for each reporting unit’s goodwill as of January 1, 2011. The results of step one of the goodwill impairment tests did not require the completion of step two of the test for any reporting unit.

Note 5. Contingencies

     Cooper and its subsidiaries are defendants or otherwise involved in a number of lawsuits in the ordinary course of business. Cooper records its best estimate of a loss when the loss is considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, Cooper records the minimum estimated liability related to the lawsuits or claims. As additional information becomes available, Cooper assesses the potential liability related to pending litigation and claims and revises its estimates. Due to uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ from the estimates. In the opinion of management and based on liability accruals provided, the ultimate exposure with respect to these pending lawsuits and claims is not expected to have a material adverse effect on Cooper’s consolidated financial position or cash flows, although they could have a material adverse effect on the results of operations for a particular reporting period.

     The U.S. Federal Government has enacted legislation intended to deny certain federal funding and government contracts to U.S. companies that reincorporate outside the United States, including Section 745 of the Consolidated Appropriations Act, 2008 (Public Law 110-161), Section 724(c) of the Transportation, Treasury, Housing and Urban Development, the Judiciary, and Independent Agencies Appropriations Act, 2006 (Public Law 109-115), and 6 U.S.C. 395(b) of The Homeland Security Act. Cooper has self-reported to the Department of Defense certain transactions aggregating approximately $8 million with U.S. government entities which may be subject to the legislation. At the time of this filing, it is not possible to determine whether any fines or penalties may be assessed against Cooper.

     In connection with laws and regulations pertaining to the protection of the environment, Cooper and its subsidiaries are party to several environmental proceedings and remediation investigations and cleanups and, along with other companies, have been named a potentially responsible party (PRP) for certain sites at which hazardous substances have been released into the environment (“Superfund sites”).

     Each of these matters is subject to various uncertainties and it is possible that some of these matters will be decided unfavorably against Cooper. The resolution of these matters often spans several years and frequently involves regulatory oversight or adjudication. Additionally, many remediation requirements are not fixed and are likely to be affected by future technological, site and regulatory developments. Consequently, the ultimate liability with respect to such matters, as well as the timing of cash disbursements cannot be determined with certainty.

     Environmental remediation costs are accrued based on estimates of known environmental remediation exposures. Such accruals are adjusted as information develops or circumstances change. The environmental liability accrual includes amounts related to sites owned by Cooper, retained environmental liabilities related to sites previously owned by Cooper and third-party sites where Cooper was a potentially responsible party. Third-party sites usually involve multiple contributors where Cooper’s liability will be determined based on an estimate of Cooper’s proportionate responsibility for the total cleanup. The amount actually accrued for such sites is based on these estimates as well as an assessment of the financial capacity of the other potentially responsible parties. At September 30, 2011, Cooper had an accrual of $29.7 million with respect to potential environmental liabilities, including $8.8 million classified as a long-term liability. Cooper has not utilized any form of discounting in establishing its environmental liability accruals.

     In the first quarter of 2010 Cooper received two notices of potential liability under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) from the

United States Environmental Protection Agency with respect to the release or threatened release of hazardous substances, pollutants, and contaminants into the 17-mile stretch of the river known as the Lower Passaic River Study Area, which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey. The EPA sent notices to over 125 companies. The notices to Cooper identified three former sites in the Newark area owned by the former Thomas A. Edison, Inc. and McGraw-Edison Company. The notice alleges that as the successor to Thomas A. Edison, Inc. and the McGraw-Edison Company, the former owners and operators of the facilities, Cooper may be potentially liable for response costs and clean up of the site. Although the notices do not state an amount of potential liability, Cooper has included a provision for this claim in its environmental accrual assessment based on Cooper’s current estimate of the most likely amount of losses that it believes will be incurred.

Note 6. Debt

     On May 26, 2011, Cooper entered into a credit agreement that provides a $500 million five-year committed bank credit facility that replaced Cooper’s previous credit facility that was to mature in August 2012. The agreement for the credit facility requires that Cooper maintains a prescribed limit on debt as a percentage of total capitalization. Retained earnings are unrestricted as to the payment of dividends, except to the extent that payment would cause a violation of the prescribed limit on the debt-to-total capitalization ratio. The credit agreement is not subject to termination based upon a decrease in Cooper’s debt ratings or a material adverse change. At September 30, 2011, Cooper has $500 million available under this credit facility.

     At September 30, 2011, Cooper has $6.2 million of short-term debt and has no commercial paper borrowings outstanding.

Note 7. Shareholders’ Equity

     Cooper Industries plc has common shares, $.01 par value outstanding of 158,101,261 (net of 14,325,562 treasury shares) and 164,130,802 (net of 6,537,900 treasury shares) at September 30, 2011 and December 31, 2010, respectively. During the first nine months of 2011, Cooper purchased 7,787,662 shares of treasury stock at an average price of $49.18 per share under the Board of Directors authorizations discussed below. During the first nine months of 2011, Cooper issued 1,758,121 common shares primarily in connection with employee incentive and benefit plans and Cooper’s dividend reinvestment program.

     On February 9, 2009, Cooper’s Board of Directors authorized the purchase of 10 million shares of common stock. Cooper’s Board has also authorized the repurchase of shares issued from time to time under its equity compensation plans, matched savings plan and dividend reinvestment plan in order to offset the dilution that results from issuing shares under these plans. For 2011 Cooper’s current estimate is that 3 million shares would be issued under equity compensation plans. Cooper may continue to repurchase shares under these authorizations from time to time during 2011. The decision whether to do so will depend on the favorability of market conditions, as well as potential cash requirements for acquisitions and debt repayments. As of September 30, 2011, 3,941,073 shares remain available to be repurchased under the authorizations by the Board of Directors. On November 1, 2011, Cooper’s Board of Directors increased the share repurchase authorization by 10 million shares.

Note 8. Segment Information

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Segment Revenues
Energy and Safety Solutions		$	752.2			$	655.7			$	2,184.1			$	1,840.0
Electrical Products Group			637.5				585.0				1,852.2				1,654.8
Total Electrical segments			1,389.7				1,240.7				4,036.3				3,494.8
Tools			—				—				—				311.2
Total segment revenues		$	1,389.7			$	1,240.7			$	4,036.3			$	3,806.0
Segment Operating Earnings
Energy and Safety Solutions		$	125.6			$	111.1			$	375.4			$	310.9
Electrical Products Group			88.3				94.2				270.0				250.3
Total Electrical segments			213.9				205.3				645.4				561.2
Tools			—				—				—				33.1
Total segment operating earnings			213.9				205.3				645.4				594.3
General Corporate expense			24.6				22.9				70.9				63.1
Equity in (income) of Apex Tool Group, LLC			(16.0	)			(10.5	)			(44.9	)			(10.5	)
Loss related to contribution of net assets to Apex Tool Group, LLC			—				—				—				134.5
Restructuring charges			—				1.5				—				8.0
Interest expense, net			16.4				12.3				49.8				36.2
Income from continuing operations before income taxes		$	188.9			$	179.1			$	569.6			$	363.0

Note 9. Stock-Based Compensation

     Cooper had a share-based compensation plan known as the Amended and Restated Stock Incentive Plan (the “Prior Stock Plan”). The Prior Stock Plan provided for the granting of stock options, performance-based share awards and restricted stock units. Since the Prior Stock Plan’s original inception in 1996 the aggregate number of shares authorized under the Prior Stock Plan was 41 million. On May 2, 2011, Cooper shareholders approved the Cooper Industries plc 2011 Omnibus Incentive Compensation Plan (the “2011 Incentive Plan”) which replaced the Prior Stock Plan and the Management Annual Incentive Plan (the “Bonus Plan”). The 2011 Incentive Plan is intended to promote our long-term success and achievement of both our short- and long-term business objectives and increase shareholder value by attracting, motivating, and retaining non-employee directors, officers and employees. The 2011 Incentive Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance unit awards, performance share awards, other stock-based awards, cash-based awards and dividend equivalents to eligible participants. At the time of approval of the 2011 Incentive Plan, there were 10.6 million shares available for future grants, including approximately 4.0 million shares that were available for future grants under the Prior Stock Plan and the Bonus Plan which were transferred to and are now available for issuance under the 2011 Incentive Plan. Shares that are subject to outstanding awards under the Prior Stock Plan that are forfeited or are otherwise settled or terminated without a distribution of shares will be transferred to and available for issuance under the 2011 Incentive Plan. At May 2, 2011, Cooper had approximately 9.4 million stock awards outstanding under the Prior Stock Plan.

     During the nine month period ended September 30, 2011, Cooper granted 1,316,090 stock option awards, 402,778 performance-based shares and 223,503 restricted stock units. As of September 30, 2011, 10,824,883 shares were available for future grants under the 2011 Incentive Plan. Total compensation expense for all share-based compensation arrangements was $28.1 million and $24.1 million for the nine month periods ended September 30, 2011 and 2010, respectively. The total income tax benefit recognized in the income statement for all share-based compensation arrangements was $10.3 million and $8.7 million for the nine month periods ended September 30, 2011 and 2010, respectively.

Note 10. Income Taxes

     The effective tax rate for continuing operations was 16.2% for the nine months ended September 30, 2011 and 16.8% for the nine months ended September 30, 2010. Income tax expense for continuing operations was reduced by $9.7 million during the nine months ended September 30, 2011 for discrete tax adjustments related to the settlement of the discontinued operations asbestos liability that was required under accounting principles to be classified in continuing operations. During the nine months ended September 30, 2010 Cooper reduced income tax expense for continuing operations by $40.8 million to recognize the discrete tax effects related to the contribution of net assets to the Tools joint venture. Excluding these discrete tax adjustments, Cooper’s effective tax rate for continuing operations was 17.9% for the nine months ended September 30, 2011 and 20.5% for the nine months ended September 30, 2010.

     Net deferred taxes recognized in the balance sheet consist of:

		September				December
		30, 2011				31, 2010
		(in millions)
Other current assets		$	91.4			$	76.0
Other noncurrent assets			—				42.1
Other long-term liabilities			(114.2	)			—
Net deferred tax assets (liabilities)		$	(22.8	)		$	118.1

     The decrease during 2011 in the net deferred tax assets recognized was primarily related to the settlement of the discontinued operations asbestos liability as further discussed in Note 15 of the Notes to the Consolidated Financial Statements.

     The Internal Revenue Service (IRS) completed its examinations of Cooper’s 2007 and 2008 Federal Tax Returns and issued notices of assessment in the amounts of $16 million and $14 million, respectively, primarily by challenging Cooper’s intercompany pricing with a foreign affiliate. During the first quarter of 2011 the IRS and Cooper finalized a settlement regarding these matters. After consideration of the related liability Cooper had recorded, the settlement had no significant effect on Cooper’s consolidated financial statements.

     In June 2008 the German Tax Authorities issued a proposed audit finding related to a 2004 reorganization that was treated as a non-taxable event. In December 2009 at Cooper’s request, the German taxing authorities finalized and issued a notice of assessment for €62.8 million, inclusive of €5.7 million of interest, related to this matter. To continue to challenge the German tax authorities finding, Cooper paid the assessment in December 2009 for approximately $90 million and filed a suit to challenge the notice of assessment. Cooper continues to believe that the reorganization was properly reflected on its German income tax returns in accordance with applicable tax laws and regulations in effect during the period involved and will challenge the assessment vigorously. Although the outcome of the proceedings with the German Tax Authorities cannot be predicted with certainty, management believes that it is more likely than not that its tax position related to the 2004 reorganization will prevail. As such, Cooper has recognized the €62.8 million tax payment, including interest, in other noncurrent assets in the accompanying balance sheets.

The German tax payment has been included in Cooper’s foreign tax credit calculations in the United States, which would be amended upon successful defense of the German reorganization.

     Cooper is under examination by various United States State and Local taxing authorities, as well as various taxing authorities in other countries. Cooper is no longer subject to U.S. Federal income tax examinations by tax authorities for years prior to 2010 and, with few exceptions, Cooper is no longer subject to State and Local, or non-U.S. income tax examinations by tax authorities for years before 2000. 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 a liability for unrecognized tax benefits, 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.

     At September 30, 2011 and December 31, 2010, Cooper has a foreign deferred tax asset of approximately $1.1 billion and $1.1 billion, respectively, relating to a net operating loss carryforward that was approved by a foreign jurisdiction in September 2009. Although this net operating loss carryforward has an indefinite life, a corresponding valuation allowance for the same amount was recognized because management believes at this time it is more likely than not that the deferred tax asset will not be realized.

     Cooper has unrecognized gross tax benefits of $14.2 million at September 30, 2011. Approximately $9.2 million of the unrecognized tax benefits would favorably impact the effective tax rate if recognized. Cooper believes it is reasonably possible that additional tax benefits in the range of approximately $1 to $6 million could be recognized during the next 12 months as audits close and statutes expire.

Note 11. Pension and Other Postretirement Benefits

		Pension Benefits
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Components of net periodic benefit cost:
Service cost		$	0.6			$	0.7			$	1.8			$	2.5
Interest cost			8.4				9.1				25.2				28.6
Expected return on plan assets			(10.9	)			(10.6	)			(32.7	)			(32.1	)
Amortization of prior service cost			(0.6	)			(0.7	)			(2.0	)			(2.0	)
Recognized actuarial loss			5.4				5.2				15.3				15.9
Net periodic benefit cost		$	2.9			$	3.7			$	7.6			$	12.9

		Other Postretirement Benefits
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Components of net periodic benefit cost:
Interest cost		$	0.9			$	1.1			$	2.7			$	3.5
Amortization of prior service cost			(0.5	)			(0.5	)			(1.5	)			(1.5	)
Recognized actuarial gain			(0.8	)			(0.5	)			(2.4	)			(1.5	)
Net periodic benefit cost (gain)		$	(0.4	)		$	0.1			$	(1.2	)		$	0.5

Note 12. Net Income Per Common Share

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Basic:
Income from continuing operations		$	160.2			$	141.7			$	477.4			$	301.9
Income from discontinued operations			—				—				190.3				—
Net income applicable to common stock		$	160.2			$	141.7			$	667.7			$	301.9
Weighted average common shares outstanding			162.3				165.3				164.3				166.9
Diluted:
Income from continuing operations		$	160.2			$	141.7			$	477.4			$	301.9
Income from discontinued operations			—				—				190.3				—
Net income applicable to common stock		$	160.2			$	141.7			$	667.7			$	301.9
Weighted average common shares outstanding			162.3				165.3				164.3				166.9
Incremental shares from assumed conversions:
Options, performance-based stock awards and other employee awards			1.7				1.8				2.2				1.9
Weighted average common shares and common share equivalents			164.0				167.1				166.5				168.8

     Options and employee awards are not included as common stock equivalents in the calculations if the effect would be anti-dilutive. Anti-dilutive options and employee awards of 1.5 million and 2.6 million shares were excluded from the calculations during the nine month periods ended September 30, 2011 and 2010 respectively.

Note 13. Net Income and Other Nonowner Changes in Equity

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

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
		(in millions)
Net income		$	160.2			$	141.7			$	667.7			$	301.9
Foreign currency translation1			(54.2	)			67.1				(10.5	)			99.3
Change in fair value of derivatives			4.6				(3.3	)			4.3				(5.8	)
Pension and postretirement benefit plans2			2.2				3.1				5.9				7.6
Net income and other nonowner changes in equity		$	112.8			$	208.6			$	667.4			$	403.0

Note 14. Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments

Derivative Instruments and Hedging Activities

     As a result of having sales, purchases and certain intercompany transactions denominated in currencies other than the functional currencies of Cooper’s businesses, Cooper is exposed to the effect of currency exchange rate changes on its cash flows and earnings. Cooper enters into currency forward exchange contracts to hedge significant non-functional currency denominated transactions for periods consistent with the terms of the underlying transactions. Contracts generally have maturities that do not exceed one year.

     Currency forward exchange contracts executed to hedge forecasted transactions are accounted for as cash flow hedges. Currency forward exchange contracts executed to hedge a recognized asset, liability or firm commitment are accounted for as fair value hedges. Cooper sometimes enters into certain currency forward exchange contracts that are not designated as hedges. These contracts are intended to reduce cash flow volatility generally related to short-term intercompany financing transactions. Cooper also enters into commodity swaps to reduce the volatility of price fluctuations on a portion of up to eighteen months of forecasted material purchases. These instruments are designated as cash flow hedges. Cooper does not enter into speculative derivative transactions.

     During October 2005 Cooper entered into cross-currency swaps designated as cash flow hedges to effectively convert its newly issued $325 million, 5.25% fixed-rate debt maturing in November 2012 to €272.6 million of 3.55% fixed-rate debt. The $325 million debt issuance proceeds were swapped to €272.6 million and lent through an intercompany loan to a non-U.S. subsidiary to partially fund repayment of the 300 million Euro bond debt that matured on October 25, 2005. The cross-currency swaps mature in November 2012.

     Assets and liabilities measured on a recurring basis at fair value using Level 2 inputs and a market approach are as follows:

		September 30, 2011								December 31, 2010
		Assets				Liabilities				Assets				Liabilities
		(in millions)
Short-term currency forward exchange contracts		$	17.4			$	(23.2	)		$	23.9			$	(24.7	)
Long-term currency forward exchange contracts			59.5				(24.4	)			63.3				(26.4	)
Short-term commodity swaps			—				(3.3	)			2.9				—
Long-term cross-currency swaps			—				(35.2	)			—				(30.2	)

     Except as discussed below, the currency forward exchange contracts and commodity swaps in the above table are designated as hedging instruments. Currency forward exchange contracts representing assets of approximately $38.8 and $48.7 million and liabilities of $28.0 and $38.3 million at September 30, 2011 and December 31, 2010, respectively are not designated as hedging instruments.

     There were no changes in the valuation techniques used to measure asset or liability fair values on a recurring basis in 2011 or 2010.

     Gains or losses on derivative instruments are reported in the same line item as the underlying hedged transaction in the consolidated statements of income. The net gain or loss on currency forward exchange contracts was not material in the nine month periods ended September 30, 2011 and 2010. For commodity swaps, Cooper recognized, in cost of sales, a net gain of $1.4 and $1.9 million in the nine month periods ended September 30, 2011 and 2010, respectively. At September 30, 2011, Cooper estimates that approximately $3.6 million of net gains on derivative instruments designated as cash flow hedges will be reclassified from accumulated other nonowner changes in equity to earnings during the next twelve months. The amount of discontinued cash flow hedges in the nine month periods ended September 30, 2011 and 2010 was not material.

     The table below summarizes the U. S. dollar equivalent contractual amounts of Cooper’s forward exchange contracts at September 30, 2011 and December 31, 2010.

		September 30,				December 31,
		2011				2010
		(in millions)
U.S. Dollar		$	579.4			$	894.8
Euro			411.7				335.4
British Pound Sterling			153.2				143.9
Canadian Dollar			—				370.6
Other			23.9				32.3
		$	1,168.2			$	1,777.0

     The contractual amounts of Cooper’s commodity swap contracts at September 30, 2011 and December 31, 2010 was approximately $19 million and $14 million, respectively.

Other Instruments

     In the normal course of business, Cooper executes stand-by letters of credit, performance bonds and other guarantees that ensure Cooper’s performance or payment to third parties that are not reflected in the consolidated balance sheets. The aggregate notional value of these instruments was $119.7 million and $108.7 million at September 30, 2011 and December 31, 2010, respectively. In the past, no significant claims have been made against these financial instruments. Management believes the likelihood of demand

for payment under these instruments is minimal and expects no material losses to occur in connection with these instruments.

Concentrations of Credit Risk

     Concentrations of credit risk with respect to trade receivables are limited due to the wide variety of customers as well as their dispersion across many different geographic areas with no one customer receivable exceeding 4.6% of accounts receivable at September 30, 2011 (5.0% at December 31, 2010). At September 30, 2011, Cooper has approximately 32% of its cash and cash equivalents held at two financial institutions. Cooper believes these financial institutions to be financially stable.

Fair Value of Financial Instruments Other than Derivatives

     Cooper’s financial instruments other than derivative instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables, and trade payables are considered to be representative of their respective fair values. Cooper had a book value of approximately $1.43 billion and $1.43 billion for debt instruments at September 30, 2011 and December 31, 2010, respectively. The fair value of these debt instruments, as represented primarily by quoted market prices, was approximately $1.55 billion and $1.52 billion at September 30, 2011 and December 31, 2010, respectively.

Note 15. Discontinued Operations Receivable and Liability

     In October 1998 Cooper sold its Automotive Products business to Federal-Mogul Corporation (“Federal-Mogul”). These discontinued businesses (including the Abex Friction 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 Friction product line and any potential liability that Cooper may have to Pneumo pursuant to a 1994 Mutual Guaranty Agreement (the “Mutual Guaranty”) between Cooper and Pneumo. On October 1, 2001, Federal-Mogul and several of its affiliates filed a Chapter 11 bankruptcy petition. The Bankruptcy Court for the District of Delaware confirmed Federal-Mogul’s plan of reorganization and Federal-Mogul emerged from bankruptcy in December 2007. As part of Federal-Mogul’s Plan of Reorganization, Cooper and Federal-Mogul reached a settlement agreement that was subject to approval by the Bankruptcy Court resolving Federal-Mogul’s indemnification obligations to Cooper. On September 30, 2008, the Bankruptcy Court issued its final ruling denying Cooper’s participation in the proposed Federal-Mogul 524(g) trust resulting in Cooper implementing the previously approved Plan B Settlement, where Cooper continued to resolve through the tort system the asbestos related claims arising from the Abex Friction product line that it had sold to Federal-Mogul in 1998. As discussed further below, on February 1, 2011, Cooper entered into a settlement agreement that closed on April 5, 2011 resolving Cooper’s liability under the Mutual Guaranty with Pneumo.

     In December 2005 Cooper reached an initial agreement in negotiations with the representatives of Federal-Mogul, its bankruptcy committees and the future claimants (the “Representatives”) regarding Cooper’s participation in Federal Mogul’s proposed 524(g) asbestos trust. By participating in this trust, Cooper would have resolved its liability for asbestos claims arising from Cooper’s former Abex Friction Products business. The proposed settlement agreement was subject to court approval and certain other approvals. Future claims would have been resolved through the bankruptcy trust. While the details of the proposed settlement agreement evolved during the on-going negotiations throughout 2006 and 2007, the underlying principles of the proposed settlement arrangements being negotiated principally included fixed payments to a 524(g) trust over 25 years that were subject to reduction for insurance proceeds received in the future. Although the final determination of whether Cooper would participate in the Federal-Mogul 524(g) trust was unknown, Cooper’s management concluded that the most likely outcome in the range of potential outcomes was a settlement approximating the then current settlement proposals. Accordingly, the accrual for potential liabilities related to the Automotive Products sale and the Federal-Mogul bankruptcy during this

time included estimated payments to a 524(g) trust over 25 years that were undiscounted, and included insurance recoveries where insurance in place agreements, settlements or policy recoveries were probable.

     The U.S. Bankruptcy Court for the District of Delaware confirmed Federal-Mogul’s plan of reorganization on November 8, 2007, and the U.S. District Court for the District of Delaware affirmed the Bankruptcy Court’s order on November 14, 2007. As part of its ruling, the Bankruptcy Court approved the Plan B Settlement between Cooper and Federal-Mogul, which would require payment of $138 million to Cooper in the event Cooper’s participation in the Federal-Mogul 524(g) trust was not approved for any reason, or if Cooper elected not to participate or to pursue participation in the trust. In an effort to continue working towards approval of Cooper’s participation in the trust and to address certain legal issues identified by the Court, Cooper, Pneumo-Abex, Federal-Mogul, and other plan supporters filed the Modified Plan A Settlement Documents on December 13, 2007. The Modified Plan A Settlement Documents would have required Cooper to make an initial payment of $248.5 million in cash to the Federal-Mogul trust upon implementation of Plan A with additional annual payments of up to $20 million each due over 25 years. On September 30, 2008, the Bankruptcy Court issued its ruling denying the Modified Plan A Settlement resulting in Cooper not participating in the Federal-Mogul 524(g) trust and instead proceeding with the Plan B Settlement that had previously been approved by the Bankruptcy Court. As a result of the Plan B Settlement, Cooper received the $138 million payment, plus interest of $3 million, in October 2008 from the Federal-Mogul Bankruptcy estate and continued to resolve through the tort system the asbestos related claims arising from the Abex Friction product line that it had sold to Federal-Mogul in 1998. Additionally, under Plan B, Cooper continued to have access to Abex insurance policies. As a result of the September 30, 2008 Bankruptcy Court ruling discussed above, Cooper adjusted its accounting in the third quarter of 2008 to reflect the separate assets and liabilities related to the on-going activities to resolve the potential asbestos related claims through the tort system. Cooper recorded income from discontinued operations of $16.6 million, net of a $9.4 million income tax expense, in the third quarter of 2008 to reflect the Plan B Settlement. During 2009 Cooper recognized after tax gains from discontinued operations of $25.5 million, which is net of a $16.2 million income tax expense, from negotiated insurance settlements consummated in 2009 that were not previously recognized. At December 31, 2010, 2009 and 2008, Cooper had a discontinued operations accrual of $747.1 million, $784.5 million and $815.1 million, respectively, and had related insurance receivables of $163.6 million, $179.3 million and $192.3 million, respectively.

     The amounts recognized by Cooper for its asbestos liability and related insurance receivables under the Plan B settlement were not discounted and relied on assumptions that were based on currently known facts and strategy. The value of the liability on a discounted basis net of the amount of insurance recoveries likely to materialize in the future would have been significantly lower than the net amounts recognized in the balance sheet. Prior to the first quarter 2011 adjustment for the April 5, 2011 settlement agreement with Pneumo discussed below, Cooper estimated that the liability for pending and future indemnity and defense costs for the next 45 years was $736.3 million. This estimated liability was before any tax benefit and was not discounted as the timing of the actual payments on resolution of claims through the tort system was not reasonably predictable. The methodology used to project Cooper’s liability estimate relied upon a number of assumptions including Cooper’s recent claims experience and declining future asbestos spending based on past trends and publicly available epidemiological data, changes in various jurisdictions, management’s judgment about the current and future litigation environment, and the availability to claimants of other payment sources. Under the Plan B settlement, Cooper, through Pneumo-Abex LLC, had access to Abex insurance policies with remaining limits on policies with solvent insurers in excess of $660 million. Insurance recoveries reflected as receivables in the balance sheet included recoveries where insurance-in-place agreements, settlements or policy recoveries were considered probable. Prior to the first quarter 2011 adjustment for the April 5, 2011 settlement agreement with Pneumo discussed below, Cooper’s receivable for recoveries of costs from insurers amounted to $151.9 million.

     On February 1, 2011, Cooper entered into a settlement agreement that following satisfaction of various closing conditions closed on April 5, 2011. The settlement agreement terminated the Mutual Guaranty between Cooper and Pneumo and created a Settlement Trust. As a result of the April 2011 settlement the Company and its subsidiaries have no further obligations under the Mutual Guaranty. Under the settlement agreement, a subsidiary of Cooper will make payments to the Settlement Trust totaling $307.5

million ($250 million was paid at closing and the remainder is due in installments over four years, subject to certain adjustments). Cooper made the $250 million initial payment to the Settlement Trust on April 5, 2011. Other payments due under the settlement agreement total approximately $49.6 million, after certain reductions for indemnity and defense payments made by Cooper subsequent to the February 1, 2011 settlement agreement and prior to the closing on April 5, 2011. At September 30, 2011, the remaining payments are due in installments in April of each year as follows: $9.1 million in 2012, $17.0 million in 2013, and $11.75 million in each of 2014 and 2015.

     As discussed above, the Company had previously recorded an estimated accrual on an undiscounted basis for pending and future indemnity and defense costs under the Mutual Guaranty. In addition, the Company had recorded receivables for related insurance recoveries where insurance-in-place agreements, settlements or policy recoveries were considered probable. As a result of the settlement agreement, in the first quarter of 2011 Cooper adjusted its previously recorded net liability for its obligations under the Mutual Guaranty to the amounts payable under the settlement agreement and related unpaid legal expenses resulting in the recognition of an after-tax gain from discontinued operations of $190.3 million, which is net of a $105.6 million income tax expense. Cooper also has approximately $8.9 million in receivables for non-Abex related insurance recoveries remaining on the balance sheet at September 30, 2011 due through 2014 under previously recognized insurance settlements.

     The following table presents the cash activity related to these discontinued operations assets and liabilities through September 30, 2011.

		Nine Months Ended
		September 30,
		2011				2010
		(in millions)
Cash Flow:
Indemnity and defense payments		$	(10.5	)		$	(23.0	)
Insurance recoveries			14.9				14.5
Payment to Pneumo Settlement Trust			(250.0	)			—
Other			(1.0	)			(1.7	)
Net cash flow related to discontinued operations assets and liabilities		$	(246.6	)		$	(10.2	)

Note 16. Consolidating Financial Information

     Cooper Industries plc along with Cooper Industries, Ltd. and certain of Cooper’s principal operating subsidiaries (the “Guarantors”) fully and unconditionally guarantee, on a joint and several basis, the registered debt securities of Cooper US, Inc. The following condensed consolidating financial information is included so that the separate financial statements of 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.

Consolidating Income Statements
Three Months Ended September 30, 2011
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	886.5			$	688.3			$	(185.1	)		$	1,389.7
Cost of sales			—				(0.9	)			621.9				495.3				(185.1	)			931.2
Selling and administrative expenses			0.2				18.5				134.1				120.7				(4.3	)			269.2
Equity in (income) of Apex Tool Group, LLC			—				—				—				(16.0	)			—				(16.0	)
Interest expense, net			—				16.3				—				0.1				—				16.4
Equity in earnings of subsidiaries, net of tax			156.4				88.7				139.3				207.2				(591.6	)			—
Intercompany income (expense)			(0.3	)			(13.8	)			(37.2	)			51.3				—				—
Income (loss) before income taxes			155.9				41.0				232.6				346.7				(587.3	)			188.9
Income tax expense (benefit)			—				(20.6	)			33.7				15.6				—				28.7
Net income		$	155.9			$	61.6			$	198.9			$	331.1			$	(587.3	)		$	160.2

Consolidating Income Statements
Three Months Ended September 30, 2010
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	820.1			$	596.5			$	(175.9	)		$	1,240.7
Cost of sales			—				(0.9	)			579.4				419.0				(175.9	)			821.6
Selling and administrative expenses			0.5				17.7				124.5				96.3				(2.3	)			236.7
Equity in (income) of Apex Tool Group, LLC			—				—				—				(10.5	)			—				(10.5	)
Loss related to contribution of net assets to Apex Tool Group, LLC			—				—				—				(0.5	)			0.5				—
Restructuring charges			—				—				2.0				(0.5	)			—				1.5
Interest expense, net			—				12.3				—				—				—				12.3
Equity in earnings of subsidiaries, net of tax			73.1				74.5				139.6				42.2				(329.4	)			—
Intercompany income (expense)			(0.3	)			(19.2	)			(44.7	)			60.4				3.8				—
Income (loss) before income taxes			72.3				26.2				209.1				195.3				(323.8	)			179.1
Income tax expense (benefit)			—				(16.1	)			33.4				20.1				—				37.4
Net income		$	72.3			$	42.3			$	175.7			$	175.2			$	(323.8	)		$	141.7

Consolidating Income Statements
Nine Months Ended September 30, 2011
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	2,600.4			$	1,987.5			$	(551.6	)		$	4,036.3
Cost of sales			—				(2.7	)			1,822.5				1,413.8				(551.6	)			2,682.0
Selling and administrative expenses			—				92.4				389.7				342.8				(45.1	)			779.8
Equity in (income) of Apex Tool Group, LLC			—				—				—				(44.9	)			—				(44.9	)
Interest expense, net			—				50.0				—				(0.2	)			—				49.8
Equity in earnings of subsidiaries, net of tax			623.3				457.2				602.5				480.6				(2,163.6	)			—
Intercompany income (expense)			(1.0	)			(54.6	)			(121.5	)			176.8				0.3				—
Income (loss) from continuing operations before income taxes			622.3				262.9				869.2				933.4				(2,118.2	)			569.6
Income tax expense (benefit)			—				(72.1	)			105.5				58.8				—				92.2
Income from continuing operations			622.3				335.0				763.7				874.6				(2,118.2	)			477.4
Income from discontinued operations, net of tax			—				—				—				190.3				—				190.3
Net income		$	622.3			$	335.0			$	763.7			$	1,064.9			$	(2,118.2	)		$	667.7

Consolidating Income Statements
Nine Months Ended September 30, 2010
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Revenues		$	—			$	—			$	2,292.6			$	2,007.3			$	(493.9	)		$	3,806.0
Cost of sales			—				(0.7	)			1,626.2				1,406.1				(493.9	)			2,537.7
Selling and administrative expenses			2.6				80.1				352.8				334.8				(33.2	)			737.1
Equity in (income) of Apex Tool Group, LLC			—				—				—				(10.5	)			—				(10.5	)
Loss related to contribution of net assets to Apex Tool Group, LLC			—				2.4				—				131.6				0.5				134.5
Restructuring charges			—				—				3.8				4.2				—				8.0
Interest expense, net			—				36.7				—				(0.5	)			—				36.2
Equity in earnings of subsidiaries, net of tax			143.9				133.8				301.4				8.7				(587.8	)			—
Intercompany income (expense)			0.1				(60.2	)			(120.5	)			176.8				3.8				—
Income (loss) before income taxes			141.4				(44.9	)			490.7				327.1				(551.3	)			363.0
Income tax expense (benefit)			—				(53.7	)			84.5				30.3				—				61.1
Net income		$	141.4			$	8.8			$	406.2			$	296.8			$	(551.3	)		$	301.9

Consolidating Balance Sheets
September 30, 2011
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Cash and cash equivalents		$	78.0			$	118.6			$	8.1			$	225.9			$	—			$	430.6
Receivables, less allowances			0.2				0.5				266.8				674.8				—				942.3
Inventories			—				—				257.9				248.4				—				506.3
Current discontinued operations receivable			—				—				—				3.8				—				3.8
Other current assets			0.9				73.6				38.0				113.3				—				225.8
Total current assets			79.1				192.7				570.8				1,266.2				—				2,108.8
Property, plant and equipment, less accumulated depreciation			—				38.8				320.8				256.1				—				615.7
Investment in Apex Tool Group, LLC			—				—				—				531.2				—				531.2
Investment in subsidiaries			990.3				3,371.5				5,244.8				4,865.0				(14,471.6	)			—
Investment in parent			—				3,428.0				—				312.7				(3,740.7	)			—
Intercompany accounts receivable			81.4				—				1,102.3				983.4				(2,167.1	)			—
Intercompany notes receivable			9,564.5				564.9				6,956.3				4,003.6				(21,089.3	)			—
Goodwill			—				—				1,288.3				1,225.3				—				2,513.6
Other intangible assets, less accumulated amortization			—				—				85.3				287.3				—				372.6
Long-term discontinued operations receivable			—				—				—				5.1				—				5.1
Other noncurrent assets			0.5				(3.9	)			1.5				176.9				—				175.0
Total assets		$	10,715.8			$	7,592.0			$	15,570.1			$	13,912.8			$	(41,468.7	)		$	6,322.0
Short-term debt		$	—			$	—			$	—			$	6.2			$	—			$	6.2
Accounts payable			46.6				23.9				173.1				221.8				—				465.4
Accrued liabilities			1.3				59.8				212.6				255.6				(1.6	)			527.7
Current discontinued operations liability			—				—				—				9.4				—				9.4
Current maturities of long- term debt			—				—				—				0.7				—				0.7
Total current liabilities			47.9				83.7				385.7				493.7				(1.6	)			1,009.4
Long-term debt			—				1,419.4				—				1.5				—				1,420.9
Intercompany accounts payable			—				2,167.1				—				—				(2,167.1	)			—
Intercompany notes payable			419.1				1,815.1				1,849.0				17,006.1				(21,089.3	)			—
Long-term discontinued operations liability			—				—				—				40.5				—				40.5
Other long-term liabilities			—				34.8				203.2				160.2				—				398.2
Total liabilities			467.0				5,520.1				2,437.9				17,702.0				(23,258.0	)			2,869.0
Common stock			1.7				—				—				—				—				1.7
Subsidiary preferred stock			—				—				2,872.0				335.1				(3,207.1	)			—
Subsidiary common stock			—				—				9.2				257.8				(267.0	)			—
Capital in excess of par value			10,251.5				820.9				6,300.5				(8,320.4	)			(9,052.5	)			—
Retained earnings			624.2				1,377.9				4,089.5				4,106.6				(5,909.3	)			4,288.9
Treasury stock			(671.6	)			—				—				—				—				(671.6	)
Accumulated other non- owner changes in equity			43.0				(126.9	)			(139.0	)			(168.3	)			225.2				(166.0	)
Total shareholders’ equity			10,248.8				2,071.9				13,132.2				(3,789.2	)			(18,210.7	)			3,453.0
Total liabilities and shareholders’ equity		$	10,715.8			$	7,592.0			$	15,570.1			$	13,912.8			$	(41,468.7	)		$	6,322.0

Consolidating Balance Sheets
December 31, 2010
(in millions)

		Cooper
		Industries				Cooper								Other				Consolidating
		plc				US, Inc.				Guarantors				Subsidiaries				Adjustments				Total
Cash and cash equivalents		$	63.2			$	36.8			$	2.6			$	932.7			$	—			$	1,035.3
Receivables, less allowances			—				2.5				218.7				574.7				—				795.9
Inventories			—				—				234.7				204.2				—				438.9
Current discontinued operations receivable			—				—				—				13.0				—				13.0
Other current assets			0.6				72.4				30.7				103.8				—				207.5
Total current assets			63.8				111.7				486.7				1,828.4				—				2,490.6
Property, plant and equipment, less accumulated depreciation			—				42.1				316.8				249.4				—				608.3
Investment in Apex Tool Group, LLC			—				—				—				511.3				—				511.3
Investment in subsidiaries			3,035.5				2,923.6				4,608.9				741.6				(11,309.6	)			—
Investment in parent			—				3,428.1				—				312.7				(3,740.8	)			—
Intercompany accounts receivable			71.9				—				1,974.1				1,244.2				(3,290.2	)			—
Intercompany notes receivable			40.0				1,674.8				3,348.3				5,394.7				(10,457.8	)			—
Goodwill			—				—				1,288.3				1,068.2				—				2,356.5
Other intangible assets, less accumulated amortization			—				—				85.7				247.9				—				333.6
Long-term discontinued operations receivable			—				—				—				150.6				—				150.6
Other noncurrent assets			—				13.1				(178.2	)			382.8				—				217.7
Total assets		$	3,211.2			$	8,193.4			$	11,930.6			$	12,131.8			$	(28,798.4	)		$	6,668.6
Short-term debt		$	—			$	—			$	—			$	7.7			$	—			$	7.7
Accounts payable			44.7				20.3				201.8				195.8				—				462.6
Accrued liabilities			1.2				66.3				210.4				233.6				(1.4	)			510.1
Current discontinued operations liability			—				—				—				45.4				—				45.4
Current maturities of long-term debt			—				—				—				0.6				—				0.6
Total current liabilities			45.9				86.6				412.2				483.1				(1.4	)			1,026.4
Long-term debt			—				1,418.5				—				1.9				—				1,420.4
Intercompany accounts payable			—				3,290.2				—				—				(3,290.2	)			—
Intercompany notes payable			419.7				1,587.2				4,436.2				4,014.7				(10,457.8	)			—
Long-term discontinued operations liability			—				—				—				701.7				—				701.7
Other long-term liabilities.			—				103.6				54.5				155.9				—				314.0
Total liabilities			465.6				6,486.1				4,902.9				5,357.3				(13,749.4	)			3,462.5
Common stock			1.7				—				—				—				—				1.7
Subsidiary preferred stock			—				—				2,872.1				335.1				(3,207.2	)			—
Subsidiary common stock			—				—				9.2				257.8				(267.0	)			—
Capital in excess of par value			2,811.0				770.4				1,936.7				2,106.3				(7,624.4	)			—
Retained earnings			145.0				1,049.4				2,288.5				4,133.5				(3,957.7	)			3,658.7
Treasury stock			(288.6	)			—				—				—				—				(288.6	)
Accumulated other non- owner changes in equity			76.5				(112.5	)			(78.8	)			(58.2	)			7.3				(165.7	)
Total shareholders’ equity			2,745.6				1,707.3				7,027.7				6,774.5				(15,049.0	)			3,206.1
Total liabilities and shareholders’ equity		$	3,211.2			$	8,193.4			$	11,930.6			$	12,131.8			$	(28,798.4	)		$	6,668.6