Revenues:
Revenues for the first quarter of 2009 decreased 19% compared to the first quarter of 2008. The impact of acquisitions increased comparable revenues for the first quarter 2009 by approximately 2% with currency translation decreasing reported revenues by 4% for the quarter.
Electrical Products segment revenues decreased 17% compared to the first quarter of 2008. The impact of acquisitions increased revenues by approximately 2% for the quarter and unfavorable currency translation decreased reported revenues by nearly 4% for the quarter. The global recession resulted in weakness in all markets for the Electrical Products segment, especially the North America and Western European markets which reported revenue declines of nearly 18%.
Tools segment revenues for the first quarter of 2009 decreased 32% from the first quarter of 2008. Unfavorable currency translation decreased revenues by approximately 7% over the first quarter of 2008. Continuing lower revenues from declining retail market activity, weaker demand in the North American and Western Europe industrial market and lower requirements for assembly systems for the light passenger vehicle markets drove the reduction in revenue. Costs and Expenses:
Cost of sales, as a percentage of revenues, was 70.4% for the first quarter of 2009 compared to 66.1% for the comparable 2008 quarter. The increase in the cost of sales percentage resulted from negative leverage on fixed costs due to lower demand for products, additional production curtailments to reduce overall inventory levels to align with slowing market demands, and the higher cost of commodities not fully offset by available market price increases in certain product lines.
Electrical Products segment cost of sales, as a percentage of revenues, was 69.7% for the first quarter of 2009 compared to 65.7% for the first quarter of 2008. The increase in cost of sales as a percentage of revenues in comparison to the prior year first quarter was due to negative leverage of fixed costs from reduced demand due to the global market slowdown, additional actions taken to adjust inventory levels to forecasted declining market conditions and higher cost of commodities subject to extended purchase contracts and hedging activities not fully offset by available market price increases in certain product lines. Tools segment cost of sales, as a percentage of revenues, was 77.9% for the first quarter of 2009 compared to 68.9% for the first quarter of 2008. The increase in the cost of sales percentage was driven by unfavorable leverage of fixed costs due to lower production volumes and further actions taken to adjust inventory levels to market conditions.
Selling and administrative expenses, as a percentage of revenues, for the first quarter of 2009 was 20.4% compared to 19.5% for the first quarter of 2008. The increase in percentage is reflective of the reduced revenue levels offset by cost reduction actions taken to align the overall selling and administrative expenses with current and projected market demand. Currency related gains of $5.1 million in the first quarter of 2008 reduced the comparative corporate selling and administrative expenses.
Electrical Products segment selling and administrative expenses, as a percentage of revenues for the first quarter of 2009, were 18.0% compared to 17.9% for the first quarter of 2008. The increase in percentage reflects the impact of 17% lower comparable revenue levels for the first quarter 2009 which impact was nearly offset by cost reduction actions taken during the fourth quarter of 2008 and the first quarter of 2009 to adjust segment selling and administrative expenses to global market conditions.
Tools segment selling and administrative expenses, as a percentage of revenues for the first quarter of 2009, were 25.2% compared to 21.8% for the first quarter of 2008. The increase in selling and administrative expenses, as a percentage of revenues, was driven by the 32% reduction in comparable first quarter 2009 revenues partially offset by cost reduction actions implemented for the segment.

Net interest expense in the first quarter of 2009 increased $0.3 million from the 2008 first quarter, primarily as a result of higher average interest rates partially offset by lower average borrowings and lower interest earned on cash invested. Average debt balances were $1.23 billion and $1.39 billion and average interest rates were 5.34% and 5.05% for the first quarter of 2009 and 2008, respectively.
Operating Earnings:
Electrical Products segment first quarter 2009 operating earnings decreased 37% to $140.0 million from $223.5 million for the same quarter of last year. The decrease resulted from the reduced global market demand, adjustments to production volumes to align with the market demand and the impact of higher costs for commodities not offset by available price increases in the market for certain product lines. The Electrical Products segment continues its investment in productivity initiatives which include manufacturing productivity improvements, product redesign and selling and administrative expense reductions to improve operating earnings in addition to continuing review of additional restructuring actions.
Tools segment first quarter 2009 operating loss was $3.9 million compared to operating earnings of $17.2 million in the first quarter of 2008. The decrease resulted from the impact of lower unit volumes and further curtailment of production volumes to adjust inventory levels to current and forecasted market demand. The Tools segment continues its investment in productivity initiatives to improve operating earnings in addition to continuing review of additional restructuring actions.
Restructuring:
At December 31, 2008, Cooper had an accrual of $29.7 million for future cash expenditures related to its fourth quarter 2008 restructuring actions. The fourth quarter 2008 restructuring actions included the elimination of 1,314 hourly and 930 salaried positions.
In the first quarter of 2009, Cooper recorded a pre-tax restructuring charge of $8.8 million primarily for severance costs as a result of management's ongoing assessment of its hourly and salary workforce and its required production capacity in consideration of current and anticipated market conditions and demand levels. An incremental total of 340 hourly and 309 salary positions are being eliminated as a result of the first quarter 2009 restructuring actions to reduce Cooper's workforce.
During the first quarter of 2009, Cooper expended $15.9 million in cash related to its fourth quarter 2008 restructuring actions and an additional $1.9 million for the first quarter 2009 restructuring actions. At March 31, 2009, Cooper has an accrual for future cash expenditures related to the restructuring actions of $20.7 million. The related cash payments will be substantially completed in 2009. See Note 2 of the Notes to the Consolidated Financial Statements.
Income Taxes:
The effective tax rate was 10.9% for the three months ended March 31, 2009 and 26.1% for the three months ended March 31, 2008. Cooper reduced income taxes expense by $8.4 million and $4.6 million in the first quarter of 2009 and 2008, respectively, for discrete tax items primarily related to foreign taxes. Excluding the impacts of these discrete items, Cooper's effective tax rate for the first quarter of 2009 would have been 20.1% and 28.3 % in the first quarter of 2008. This decrease is primarily related to lower earnings in 2009 without a corresponding decrease in projected tax benefits. Income Related to Discontinued Operations:
During the first quarter of 2009, Cooper recognized a gain from discontinued operations of $18.9 million, net of a $12.0 million income tax expense (or $.11 per diluted share) related to its asbestos liability regarding the Automotive Products segment, which was sold in 1998. The income resulted from negotiated insurance settlements consummated in the first quarter of 2009 that were not previously recognized. Cooper believes that it is likely that additional insurance recoveries will be recorded in the future as new insurance-

in-place agreements are consummated or settlements with insurance carriers are completed. Timing and value of these agreements and settlements cannot be currently estimated as they may be subject to extensive additional negotiation and litigation. See Note 16 of the Notes to the Consolidated Financial Statements.

are reduced by the $17.8 million expended in connection with the restructuring actions. See Note 2 of the Notes to the Consolidated Financial Statements for further information.
Cooper currently anticipates that it will implement additional restructuring actions during 2009 as it continues to evaluate its cost structure and currently expects to incur restructuring charges in the range of $24 to $30 million during 2009, with approximately $10 million expected during the second quarter of 2009.
Cooper has $275 million of long-term debt that matures in November 2009. Cooper currently anticipates that it will annually generate in excess of $500 million in cash flow available for acquisitions, debt repayments, dividends and common stock repurchases.
Capital Resources:
Cooper targets a 30% to 40% debt-to-total capitalization ratio. Excess cash flows are utilized to fund acquisitions or to purchase shares of Cooper common stock. Cooper's debt-to-total capitalization ratio was 31.7% at March 31, 2009, 32.1% at December 31, 2008 and 34.4% at March 31, 2008.
At March 31, 2009 and December 31, 2008, Cooper had cash and cash equivalents of $303.9 million and $258.8 million, respectively and short-term investments of $15.6 million and $21.9 million, respectively. At March 31, 2009 and December 31, 2008, Cooper had short-term debt of $19.4 million and $25.6 million, respectively.
Cooper's practice is to back up its short-term debt balance with a combination of cash, cash equivalents, and committed credit facilities. At March 31, 2009, Cooper has $516 million of committed credit facilities, of which $16 million matures in September 2009 and $500 million matures in November 2009. Short-term debt, to the extent not backed up by cash or short-term investments, reduces the amount of additional liquidity provided by the committed credit facilities.
The credit facility agreements are not subject to termination based on a decrease in Cooper's debt ratings or a material adverse change clause. The principal financial covenants in the agreements limit Cooper's debt-to-total capitalization ratio to 60% and require Cooper to maintain a minimum earnings before interest expense, income taxes, depreciation and amortization to interest ratio of 3 to 1. Cooper is in compliance with all covenants set forth in the credit facility agreements.
Cooper is currently negotiating a new committed credit facility prior to the maturity of the current facility. However, there can be no assurance that a new facility will be negotiated in that time, or at all, and it is likely that the terms of a new facility will not be as attractive as in the existing facility that expires in November 2009. Cooper is evaluating the size of the new facility necessary to provide flexibility in light of the increased costs related to a new committed credit facility.
Cooper's access to the commercial paper market could be adversely affected by a change in the credit ratings assigned to its commercial paper. Should Cooper's access to the commercial paper market be adversely affected due to a change in its credit ratings, Cooper would rely on a combination of available cash and its committed credit facilities to provide short-term funding. The committed credit facilities do not contain any provision, which makes their availability to Cooper dependent on Cooper's credit ratings.
Even though the commercial paper markets have been stable and conducive to issuances during the first quarter of 2009, the continued volatility in the credit and financial markets could result in the commercial paper markets not being conducive to the issuance of commercial paper or, if issued, the commercial paper may not be at reasonably attractive interest rates. See further discussion above under Liquidity.

Critical Accounting Estimates and Recently Issued Accounting Standards We disclosed our critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2008. No significant changes have occurred to those policies except our adoption of SFAS No. 141(R) effective January 1, 2009. SFAS No. 141(R) provides enhanced guidance related to the measurement of identifiable assets acquired, liabilities assumed and disclosure of information related to business combinations and their effect on Cooper. Cooper implemented SFAS No. 141(R) prospectively to business combinations completed on or after January 1, 2009. See Note 1 of the Notes to the Consolidated Financial Statements.
Cooper had goodwill of $2.55 billion and $2.57 billion at March 31, 2009 and December 31, 2008, respectively. Cooper records goodwill related to business acquisitions when the purchase price exceeds the fair value of identified assets and liabilities acquired. Under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142"), goodwill is subject to an annual impairment test. Cooper has designated January 1 as the date of its annual goodwill impairment test. If an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value; an interim impairment test would be performed between annual tests. Cooper has identified eight reporting units for which goodwill is tested for impairment.
Goodwill impairment is evaluated using a two-step process. The first step of the goodwill impairment test compares the fair value of a reporting unit with its carrying value. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test shall be performed. The second step compares the implied fair value of the reporting unit's goodwill to the carrying amount of its goodwill to measure the amount of impairment loss. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (e.g., the fair value of the reporting unit is allocated to all of the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit).
The primary technique we utilize in estimating the fair value of our reporting units is discounted cash flow analysis. Discounted cash flow analysis requires us to make various judgments, estimates and assumptions about future sales, operating margins, growth rates, capital expenditures, working capital and discount rates. The starting point for these assumptions is the long range financial forecast. The detailed planning process that we undertake to prepare the long range financial forecast takes into consideration a multitude of factors including inflationary and deflationary forces, pricing strategies, customer analysis, operational issues, competitor analysis, customer needs and other marketplace data, among others. Assumptions are also made for perpetual growth rates for periods beyond the long range financial forecast period.
The long range financial forecast is typically completed in the third quarter of each year, and it serves as the primary basis for our estimate of reporting unit fair values, absent significant changes in our outlook on future results. In the fourth quarter of 2008, the global financial and credit crisis and economic slowdown impacted the majority of our businesses. As a result, we revised the operating plans and discounted cash flows included in our initial long range financial forecast for each reporting unit to reflect our most current assessment of estimated fair value for purposes of the January 1, 2009 goodwill impairment test. In addition, we compared the sum of the fair values that resulted from our discounted cash flow analysis to our market capitalization to determine that our estimates of fair value were reasonable. As of December 31, 2008, our equity market capitalization was approximately $5.1 billion, compared to the $2.6 billion book value of equity.
In the first step of our January 1, 2009 impairment tests, we determined that, in all cases, the estimated fair value of each reporting unit exceeded its carrying value by at least 35 percent; therefore, step two of the goodwill impairment test was not required for any reporting unit. There are significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting

units, it is possible that a material change could occur. If actual results are not consistent with our current estimates and assumptions, we may be required to perform the second step of the impairment test, which could result in a material impairment of our goodwill.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations As of March 31, 2009, there have been no material changes to Cooper's off-balance sheet arrangements and contractual obligations as described in its Annual Report on Form 10-K for the year ended December 31, 2008.

                                                 March 31,
                                             2009        2008
                                               (in millions)
                      Electrical Products   $ 616.0     $ 804.2
                      Tools                    55.1        71.3

                                            $ 671.1     $ 875.5