Cooper Industries Reassesses Year-End 2005 Accrual for Discontinued Operations; Company's Earnings Outlook for 2006 Remains Unchanged

Business Wire, March 1, 2006

HOUSTON -- Cooper Industries, Ltd. (NYSE:CBE) today announced that it has reassessed its accrual for discontinued operations, and, as a result, for the year ended Dec. 31, 2005, the Company recorded an after-tax discontinued operations charge of $227.2 million, or $2.39 per diluted share. The Company concluded the additional charge was necessary in order to adjust its accrual for contingent asbestos liability exposure related to the Federal-Mogul Corporation ("Federal-Mogul") bankruptcy to the terms being negotiated with Federal-Mogul representatives.

Cooper Industries sold its Automotive Products business, including its Abex Friction Products business, to Federal-Mogul in October 1998 and was indemnified for liabilities related to the divested business, pursuant to a Purchase and Sale Agreement. On Oct. 1, 2001, Federal-Mogul and several of its affiliates filed a Chapter 11 bankruptcy petition and indicated that Federal-Mogul may not honor its indemnity obligations to Cooper, including its obligations for claims related to the Abex Friction Products business.

In mid-December 2005, Cooper and other parties involved in the resolution of the Federal-Mogul bankruptcy proceeding reached an agreement regarding Cooper's participation in Federal-Mogul's 524 (g) asbestos claimants' trust. The proposed settlement agreement was subject to certain conditions, including the issuance of a preliminary injunction staying all of the pending Abex asbestos claims for which Federal-Mogul provided indemnification.

At a hearing on Jan. 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 will require renegotiation of certain terms. Cooper remains in negotiations with the Federal-Mogul representatives, and the exact manner in which this issue will be resolved is not yet known. However, Cooper management has concluded that, at the date of the filing of its Form 10-K, the most likely outcome in the range of potential outcomes is a revised settlement approximating the December 2005 proposed settlement.

After giving effect to the charge, the Company had a fourth quarter 2005 net loss of $123.2 million, or $1.30 per diluted share. For the full year 2005, net income was $163.9 million, or $1.73 per diluted share. The charge does not impact 2005 consolidated revenues, income from continuing operations or cash flows previously reported in the Company's news release issued on Jan. 24, 2006. Also, the Company's outlook for 2006 earnings per share from continuing operations remains unchanged.

At Dec. 31, 2005, the accrual for potential liabilities related to the 1998 sale of the Company's Automotive Products business and the related Federal-Mogul bankruptcy was $526.3 million.

The financial statements included with Cooper's News Release dated Jan. 24, 2006, have been revised to reflect the additional year-end accrual and appear on the following pages.

Further information is set forth in Cooper's Annual Report on Form l0-K filed with the Securities and Exchange Commission today.

About Cooper Industries

Cooper Industries, Ltd. is a global manufacturer of electrical products and tools, with 2005 revenues of $4.7 billion, approximately 30 percent of which are international sales. Incorporated in Bermuda with administrative headquarters in Houston, Cooper employs approximately 29,000 people and operates nine divisions: Cooper B-Line, Cooper Bussmann, Cooper Crouse-Hinds, Cooper Hand Tools, Cooper Lighting, Cooper Menvier, Cooper Power Systems, Cooper Power Tools and Cooper Wiring Devices. Cooper Connection provides a common marketing and selling platform for Cooper's sales to electrical distributors. For more information, visit the website at www.cooperindustries.com.

Forward-Looking Statements

Statements in this news release are forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the Company's earnings outlook. These statements are subject to various risks and uncertainties, many of which are outside the control of the Company, and actual results may differ materially from anticipated results. Important factors which may affect the actual results include, but are not limited to: 1) competitive pressures and future global economic conditions, including the level of market demand for the Company's products; 2) changes in raw material, transportation and energy costs; 3) the rate at which benefits are realized from cost-reduction programs recently completed, currently underway or to be initiated in the near future; 4) the successful implementation of the Company's strategic initiatives; 5) mergers and acquisitions, and their integration; 6) political developments; 7) changes in the tax laws, tax treaties or tax regulations; 8) the timing and amount of share repurchases by the Company; and 9) the resolution of potential liability exposure resulting from Federal-Mogul Corporation's bankruptcy filing.