Cooper Industries Reports Fourth Quarter Earnings of $1.10 Per Share; Full-Year 2005 Earnings Per Share Increases 15 Percent to $4.12

The fourth quarter of 2005 included approximately $.03 per sharefrom a reduction in the effective tax rate to 21 percent for the year.The fourth quarter of 2005 also included a charge of approximately$.03 per share related to finalization of the exit liability for amulti-employer pension plan, and approximately $.03 per share in costsrelated to a previously announced management transition, and sellingand administrative cost-reduction programs.

"We delivered a strong finish to an outstanding year, with goodrevenue growth, continued margin expansion and excellent cash flow inthe fourth quarter," said President and Chief Executive Officer KirkS. Hachigian. "Initiatives focused on joint-marketing programs,geographic expansion and overall productivity each contributed solidresults, even in light of continued pressures in raw materials andenergy costs. The business performed well overall."

Revenues for the full year of 2005 were $4.73 billion, a 6 percentincrease compared with $4.46 billion in revenues for the full year2004. Earnings per share were $4.12, compared with $3.58 for the sameperiod in 2004, an increase of 15 percent. Net income for the fullyear of 2005 rose 15 percent to $391.1 million, compared with $339.8million for the full year 2004.

"For the full year, organic growth contributed to a strong revenueperformance, with solid earnings and margin expansion," saidHachigian. "In 2005, Cooper generated $490.4 million in free cashflow, the fifth consecutive year that free cash flow has exceeded netincome. Cooper's debt-to-total-capitalization ratio net of cash atDec. 31, 2005, was 19.0 percent."

Segment Results

Electrical Products segment revenues for the fourth quarter of2005 increased approximately 4 percent to $991.1 million, comparedwith $950.4 million in the fourth quarter of 2004. Currencytranslation reduced revenues in the quarter by approximately 1percent. Segment operating earnings were $143.2 million, an increaseof approximately 10 percent from $129.8 million in the prior year'sfourth quarter. Fourth quarter 2005 segment operating earningsincluded a $4.0 million charge related to finalization of the exitliability for a multi-employer pension plan on a facility closedduring 2005. Segment operating margin improved to 14.4 percent for thefourth quarter of 2005, compared with 13.7 percent in the same periodlast year.

The increase in revenues for the Electrical Products segmentreflects solid growth against a very strong fourth quarter in 2004.The improvement was driven by continued robust industrial demand andsustained activity in the commercial construction markets. Utilitymarkets also remained healthy. Sales to the retail channel were offslightly against significantly strong sales comparables in the 2004fourth quarter. Repair and reconstruction activity as a result of theU.S. Gulf Coast hurricanes also contributed to demand for the quarter.

The Electrical Products segment revenues for the full year of 2005grew approximately 7 percent to $4.0 billion, compared with $3.7billion for the full year of 2004. Operating earnings for the fullyear of 2005 were $585.0 million, approximately 14 percent above the$511.2 million recorded for the full year 2004.

Tools segment revenues for the fourth quarter of 2005 were $194.9million, compared with 2004 fourth quarter revenues of $198.4 million.Excluding currency translation, segment revenues were approximately 1percent below the 2004 fourth-quarter level. Segment operatingearnings were $20.7 million, compared with $20.0 million for thefourth quarter of 2004. Segment operating margin for the fourthquarter of 2005 was 10.6 percent, compared with 10.1 percent for thesame period last year.

The decline in the Tools segment revenues reflects continueddeferral of automated assembly systems projects from the automotivesector and weak demand for industrial power tools. Solid growth inhand tools from the industrial markets provided a partial offset.

Tools segment revenues for the full year of 2005 were $732.9million, compared with $740.7 million for the full year of 2004.Operating earnings for the segment for the full year 2005 improvedapproximately 6 percent to $66.7 million, compared with $62.7 millionfor the full year of 2004.

Outlook

"With strong economic conditions worldwide, we are optimisticabout our prospects for 2006," said Hachigian. "Industrial marketsremain resilient, and there are indications that non-residentialconstruction will again become a contributor to growth. We continue tosee opportunities in international markets, particularly in EasternEurope, the Middle East and Asia. Although we expect residentialmarkets may slow, the decline should be moderate.

"We have a strong management team, our initiatives haveestablished a solid presence and strong momentum, and we aregenerating significant free cash flow. For 2006, we expect earningsper share to increase 12 to 15 percent, with revenue gains in therange of 4 to 6 percent. We are on-track to deliver continued solidresults and to accelerate the pace of our growth," he concluded.

Discontinued Operations: Pneumo-Abex Proposed Settlement Agreement

On Dec. 19, 2005, Cooper Industries announced that the Company andother parties involved in the resolution of the Federal-MogulCorporation bankruptcy proceeding had reached an agreement regardingCooper's participation in Federal-Mogul's 524 (g) asbestos claimants'trust. A critical term of the proposed settlement was the issuance ofa stay for all pending Abex asbestos claims. At a hearing on Jan. 20,2006, other parties to the bankruptcy proceedings were unable tosatisfy the court's requirements to grant the required stay. As aresult, the proposed settlement agreement will require renegotiationof certain terms.

At this time, the exact manner in which this issue will beresolved is not known. As additional information becomes available,Cooper may adjust the accompanying Income Statement for the quarterand year ending Dec. 31, 2005, to include a Charge to DiscontinuedOperations and related adjustments to the Balance Sheet and Statementof Cash Flows, prior to the filing of the Company's Form 10-K reportfor the year ended Dec. 31, 2005.

About Cooper Industries

Cooper Industries, Ltd. is a global manufacturer of electricalproducts and tools, with 2005 revenues of $4.7 billion, approximately30 percent of which are international sales. Incorporated in Bermudawith administrative headquarters in Houston, Cooper employsapproximately 28,000 people and operates nine divisions: CooperB-Line, Cooper Bussmann, Cooper Crouse-Hinds, Cooper Hand Tools,Cooper Lighting, Cooper Menvier, Cooper Power Systems, Cooper PowerTools and Cooper Wiring Devices. Cooper Connection provides a commonmarketing and selling platform for Cooper's sales to electricaldistributors. For more information, visit the website atwww.cooperindustries.com.

Comparisons of 2005 and 2004 fourth quarter and full-year resultsfollow.

Statements in this news release are forward looking under thePrivate Securities Litigation Reform Act of 1995. Forward-lookingstatements include, but are not limited to, statements regarding theCompany's earnings outlook. These statements are subject to variousrisks and uncertainties, many of which are outside the control of theCompany, and actual results may differ materially from anticipatedresults. Important factors which may affect the actual resultsinclude, but are not limited to: 1) competitive pressures and futureglobal economic conditions, including the level of market demand forthe Company's products; 2) changes in raw material, transportation andenergy costs; 3) the rate at which benefits are realized fromcost-reduction programs recently completed, currently underway or tobe initiated in the near future; 4) the successful implementation ofthe Company's strategic initiatives; 5) mergers and acquisitions, andtheir integration; 6) political developments; 7) changes in the taxlaws, tax treaties or tax regulations; 8) the timing and amount ofshare repurchases by the Company; and 9) the resolution of potentialliability exposure resulting from Federal-Mogul Corporation'sbankruptcy filing.

Conference Call

Cooper will hold a conference call today at 12:00 noon EST toprovide shareholders and other interested parties an overview of theCompany's fourth quarter and full year 2005 performance. Thoseinterested in hearing the conference call may listen via telephone bydialing 866-761-0748, using pass code 61010129, or over the Internetthrough the Investor Center section of the Company's website, usingthe "Management Presentations" link. International callers should dial617-614-2706 and use pass code 61010129.

A replay briefing will be available by telephone until 11:00 p.m.EST on Jan. 31, 2006, and over the Internet through Feb. 5, 2006. Thetelephone number to access the replay is 888-286-8010, and the passcode number is 41588407. International callers should dial617-801-6888 and use the same pass code to hear the replay.

The conference call may include non-GAAP financial measures.Cooper will post a reconciliation of those measures to the mostdirectly comparable GAAP measures in the Investor Center section ofthe Company's website under the heading "Management Presentations."

Informational exhibits concerning the Company's fourth quarter andfull-year performance that may be referred to during the conferencecall will be available in the Investor Center section of the Company'swebsite under the heading "Management Presentations" prior to thebeginning of the call.
CONSOLIDATED RESULTS OF OPERATIONS
(Preliminary)

Quarter Ended December 31,
------------------------------
2005 2004
-------------- ---------------
(in millions where applicable)

Revenues $1,186.0 $1,148.8

Cost of sales 813.4 804.1
Selling and administrative expenses 230.5 214.6
------------- ---------------
Operating earnings 142.1 130.1

Interest expense 12.8 16.8
------------- ---------------

Income before income taxes 129.3 113.3
Income taxes 25.3 24.4
------------- ---------------
Net income $104.0 $88.9
============= ===============

Net income per Common Share:
Basic $1.13 $.96
============= ===============
Diluted $1.10 $.94
============= ===============

Shares Utilized in Computation
of Income Per Common Share:
Basic 91.8 million 92.4 million
Diluted 94.5 million 94.9 million


PERCENTAGE OF REVENUES

Quarter Ended December 31,
------------------------------
2005 2004
-------------- ---------------
Revenues 100.0% 100.0%
Cost of sales 68.6% 70.0%
Selling and administrative expenses 19.4% 18.7%
Operating earnings 12.0% 11.3%
Income before income taxes 10.9% 9.9%
Net income 8.8% 7.7%


CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Quarter Ended December 31
Segment Information
(Preliminary)

Quarter Ended December 31,
------------------------------
2005 2004
--------------- --------------
(in millions)

Revenues:
Electrical Products $991.1 $950.4
Tools & Hardware 194.9 198.4
-------------- ---------------
Total $1,186.0 $1,148.8
============== ===============

Segment Operating Earnings:
Electrical Products $143.2 $129.8
Tools & Hardware 20.7 20.0
-------------- ---------------
Total Segment Operating
Earnings 163.9 149.8

General Corporate Expense 21.8 19.7
Interest expense 12.8 16.8
-------------- ---------------
Income before income taxes $129.3 $113.3
============== ===============


Quarter Ended December 31,
------------------------------
2005 2004
--------------- --------------
Return on Sales:
Electrical Products 14.4% 13.7%
Tools & Hardware 10.6% 10.1%
Total Segments 13.8% 13.0%


CONSOLIDATED RESULTS OF OPERATIONS
(Preliminary)

Twelve Months Ended
December 31,
------------------------------
2005 2004
--------------- --------------
(in millions where applicable)

Revenues $4,730.4 $4,462.9

Cost of sales 3,243.8 3,119.7
Selling and administrative expenses 926.8 846.6
-------------- ---------------
Operating earnings 559.8 496.6

Interest expense 64.8 68.1
-------------- ---------------
Income before income taxes 495.0 428.5
Income taxes 103.9 88.7
-------------- ---------------
Net income $391.1 $339.8
============== ===============

Net income per Common Share:
Basic $4.23 $3.67
============== ===============
Diluted $4.12 $3.58
============== ===============

Shares Utilized in Computation
of Income Per Common Share:
Basic 92.5 million 92.5 million
Diluted 95.0 million 94.8 million


PERCENTAGE OF REVENUES

Twelve Months Ended
December 31,
-------------------------------
2005 2004
--------------- ---------------
Revenues 100.0% 100.0%
Cost of sales 68.6% 69.9%
Selling and administrative expenses 19.6% 19.0%
Operating earnings 11.8% 11.1%
Income before income taxes 10.5% 9.6%
Net income 8.3% 7.6%


CONSOLIDATED RESULTS OF OPERATIONS (Continued)
Additional Information for the Twelve Months Ended December 31
Segment Information
(Preliminary)

Twelve Months Ended
December 31,
------------------------------
2005 2004
--------------- --------------
(in millions)

Revenues:
Electrical Products $3,997.5 $3,722.2
Tools & Hardware 732.9 740.7
--------------- --------------
Total $4,730.4 $4,462.9
=============== ==============

Segment Operating Earnings:
Electrical Products $585.0 $511.2
Tools & Hardware 66.7 62.7
--------------- --------------
Total Segment Operating
Earnings 651.7 573.9

General Corporate Expense 91.9 77.3
Interest expense 64.8 68.1
--------------- --------------
Income before income taxes $495.0 $428.5
=============== ==============


Twelve Months Ended
December 31,
-------------------------------
2005 2004
--------------- ---------------
Return on Sales:
Electrical Products 14.6% 13.7%
Tools & Hardware 9.1% 8.5%
Total Segments 13.8% 12.9%


CONSOLIDATED BALANCE SHEETS
(Preliminary)

December 31,
------------------------
2005 2004
---------- ----------
(in millions)

ASSETS
Cash and cash equivalents $452.8 $652.8
Receivables 842.4 820.9
Inventories 538.7 523.0
Deferred income taxes and other assets 270.2 288.9
---------- ----------
Total current assets 2,104.1 2,285.6
---------- ----------
Property, plant and equipment, less
accumulated depreciation 673.7 696.4
Goodwill 2,084.0 2,142.3
Deferred income taxes and other noncurrent
assets 276.6 283.5
---------- ----------
Total assets $5,138.4 $5,407.8
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt $7.6 $97.6
Accounts payable 427.8 350.7
Accrued liabilities 518.0 488.8
Current discontinued operations liabilities 171.3 225.1
Current maturities of long-term debt 11.4 665.4
---------- ----------
Total current liabilities 1,136.1 1,827.6
---------- ----------
Long-term debt 1,002.9 698.6
Postretirement benefits other than pensions 163.0 173.3
Other long-term liabilities 404.0 421.8
---------- ----------
Total liabilities 2,706.0 3,121.3
---------- ----------
Common stock 0.9 0.9
Capital in excess of par value 383.2 446.2
Retained earnings 2,224.6 1,971.6
Accumulated other nonowner changes in equity (176.3) (132.2)
---------- ----------
Total shareholders' equity 2,432.4 2,286.5
---------- ----------
Total liabilities and shareholders'
equity $5,138.4 $5,407.8
========== ==========


RATIOS OF DEBT-TO-TOTAL CAPITALIZATION
AND NET DEBT-TO-TOTAL CAPITALIZATION
(Preliminary)

December 31,
-------------------------
2005 2004
---------- ----------
(in millions
where applicable)

Short-term debt $7.6 $97.6
Current maturities of long-term debt 11.4 665.4
Long-term debt 1,002.9 698.6
---------- ----------
Total debt 1,021.9 1,461.6
Total shareholders' equity 2,432.4 2,286.5
---------- ----------
Total capitalization $3,454.3 $3,748.1
========== ==========

Total debt-to-total-capitalization ratio 29.6% 39.0%

Total debt $1,021.9 $1,461.6
Less: Cash and cash equivalents 452.8 652.8
---------- ----------
Net debt $569.1 $808.8
========== ==========
Total capitalization $3,454.3 $3,748.1
Less: Cash and cash equivalents 452.8 652.8
---------- ----------
Total capitalization net of cash $3,001.5 $3,095.3
========== ==========

Net debt-to-total-capitalization ratio 19.0% 26.1%


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Preliminary)

Twelve Months Ended
December 31,
-------------------------
2005 2004
---------- ----------
(in millions)


Cash flows from operating activities:
Net income $391.1 $339.8
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 111.0 117.6
Deferred income taxes 21.5 27.7
Restructuring charge payments (0.4) (4.3)
Changes in assets and
liabilities:(1)
Receivables (39.8) (56.7)
Inventories (17.6) 47.6
Accounts payable and accrued
liabilities 86.8 17.8
Other assets and liabilities,
net 20.9 (15.9)
---------- ----------
Net cash provided by
operating activities 573.5 473.6
---------- ----------
Cash flow from investing activities:
Capital expenditures (96.7) (102.8)
Cash paid for acquired businesses (7.1) (48.6)
Proceeds from sales of property, plant
and equipment and other 13.6 11.8
---------- ----------
Net cash used in investing
activities (90.2) (139.6)
---------- ----------
Cash flows from financing activities:
Proceeds from issuances of debt 326.4 94.3
Repayments of debt (710.4) (4.7)
Debt issuance costs (3.8) -
Dividends (138.1) (131.0)
Subsidiary purchase of parent shares (211.0) (202.9)
Activity under employee stock plans and
other 72.7 78.4
---------- ----------
Net cash used in financing
activities (664.2) (165.9)
---------- ----------
Effect of exchange-rate changes on cash and
cash equivalents (19.1) 21.0
---------- ----------
Increase (decrease) in cash and cash
equivalents (200.0) 189.1
Cash and cash equivalents, beginning of year 652.8 463.7
---------- ----------
Cash and cash equivalents, end of year $452.8 $652.8
========== ==========

(1) Net of the effects of translation and acquisitions.

Free Cash Flow Reconciliation

Net cash provided by operating activities $573.5 $473.6
Less capital expenditures (96.7) (102.8)
Add proceeds from sales of property, plant
and equipment and other 13.6 11.8
---------- ----------
Free cash flow $490.4 $382.6
========== ==========