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Cooper Industries 2010 Outlook Meeting New York City February 23, 2010 Material in this presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and the financial condition indicated in these forward-looking statements. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: market and economic conditions, competitive pressures, volatility of raw material, transportation and energy costs, our ability to develop and introduce new products, our ability to implement revenue growth plans and cost-reduction programs, mergers and acquisitions and their integration, implementation of manufacturing rationalization programs, changes in mix of products sold, changes in financial markets including currency exchange rate fluctuations, changes in legislation and regulations (including changes in tax laws), and the resolution of potential liabilities and insurance recoveries resulting from Pneumo-Abex related asbestos claims. A discussion of these factors may be found in the Company’s Annual Report on Form 10-K and other recent SEC filings. A reconciliation of any non-GAAP financial measure included in this presentation to the most directly comparable GAAP measure can be accessed in the “Investors” section of the Cooper Industries website, www.cooperindustries.com. This is a copyrighted presentation of Cooper Industries plc and is intended for the exclusive use of the participating audience. No other use of this presentation may be made without the express written consent of Cooper Industries. Cooper Industries 2010 Outlook Meeting Kirk Hachigian Chairman & Chief Executive Officer 2010 Outlook 2008 Outlook ¾ Globalization – China NX – Middle East NX ¾ Notification Platform ¾ Cooper Crouse-Hinds – Cooper MTL ¾ SVP Corporate Development ¾ CFO Today 2009 Outlook ¾ Cooper Lighting ¾ Cooper Lighting ¾ Cooper Power Systems ¾ Cooper Power Systems ¾ Cooper Crouse-Hinds ¾ Cooper Safety/ Globalization ¾ SVP Corporate Development ¾ CFO ¾ Cooper B-Line ¾ SVP Corporate Development ¾ CFO Significant Exposure To Key End Markets And Cooper Leadership Team 4 Today’s Agenda Cooper Today Kirk Hachigian, Chairman & CEO Cooper Lighting Neil Schrimsher, President Cooper Power Systems Mike Stoessl, President Cooper Safety/Globalization Grant Gawronski, VP Int’l. Cooper B-Line Kevin Kissling, President Innovation & M&A Tom O’Grady, SVP of Corp. Dev. 2010 Outlook Terry Klebe, SVP and CFO Summary Kirk Hachigian, Chairman & CEO 5 Organization Update ¾ Terry Klebe (CFO) to retire in 2010 ¾ Neil Schrimsher (Division President, Cooper Lighting) promoted to additional role of EVP Cooper Connection ─ Mark Eubanks promoted to VP/GM of Cooper Lighting ¾ Grant Gawronski (VP International) promoted to Division President, Cooper Crouse-Hinds ¾ Laura Ulz (VP Operations) promoted to Division President, Cooper Tools Strong Internal Bench Allows Smooth Transition 6 2009 Highlights ¾ Sales down 22%, adjusted EPS fell only 30% ¾ Exited the year with Electrical margins of 15%+ and Tools’ margins of 8%+: – No cost headwinds in 2010 (pension/401K/furloughs) ¾ Free cash flow of $633M, or 12% of sales (9th year FCF > recurring income): – Total working capital down 23% (inventory down 25%) – Net debt of $553M – Capital expenditures of $127M (vs. $137M last year) – Completed 3 acquisitions – Protected $1/share dividend ¾ Exited 2009 with our highest new product vitality in many years with improved global platform Exiting Toughest Economy In 50 Years Extremely Well Positioned 7 Total Shareholder Return Compound Annual Return For Annual Periods Ending December 31, 2009 50.7% Peer Group Avg. Cooper 40.4% S&P 500 26.5% 10.8% 7.1% 5.9% 2.7% -0.9% 10 Years 0.4% 5 Years 1 Year Cooper Delivers Consistent, Sustainable Long-Term Shareholder Returns Peer Group: Acuity; Danaher; Dover; Eaton; Emerson; Hubbell; Illinois Tool Works; Snap-On; Ingersoll-Rand; Newell Rubbermaid; Parker-Hannifin; Pentair; Stanley Works; SPX; Thomas & Betts 8 Four Legs To Cooper’s Story ¾ Core culture and values: – Who we are – How we behave – Culture of accountability ¾ Build/acquire great businesses and brands ¾ Execute our five business initiatives every day – process driven and sustainable performance ¾ Maintain a conservative capital structure and invest for the long-term Execute For Short-term Results While We Invest In Our Long-term Future 9 Evolution Of Change CULTURE/ VALUES COOPER INITIATIVES PEOPLE GLOBAL BUSINESS PORTFOLIO Building A Leadership Team, Business Process And Culture/Values To Drive Long-term Exceptional Performance 10 10 “Change” Redefines Cooper Industries ¾ Spent $100M And Five Years Installing A Single Enterprise System ¾ Strengthened Our Portfolio To Sustain Higher Core Growth: – 61% Industrial/Utility – Built Strategic Growth Platforms To Penetrate New Markets – Expanded Internationally ¾ Improved Customer Loyalty, Advanced New Product Development And Built An Industrial Training Center ¾ Lowered Our Fixed Cost Structure – LCC Sourcing − Value Engineering – Lean/Productivity − In-Sourcing ¾ Assembled World-class Leadership Team ¾ Strengthened Our Balance Sheet And Doubled Our Free Cash Flow…Returning More Cash To Our Owners Our People, Processes And Culture/Values Drive Long-Term Performance 11 Other Re si. Portfolio In Great Shape Industrial Tools Int’l. Early Late Commercial Electrical Products Utility 61% Industrial/Utility (Was 47% 6 Yrs Ago) 89% Electrical U.S. Mid 39% International ~70% Early/Mid Cycle (Was 26% in 2000) Large, Global, Healthy End-Markets… That Long-term…Grow At 3% Based on FY2009 12 Long-Term Global Trends Energy Demand / Utility Grid Global Infrastructure Conservation / “Green” / Energy Efficiency & Reliability Safety / Protection / Mass Notification Cooper Uniquely Positioned To Penetrate Key Global Trends 13 Platforms Bussmann B-Line Crouse-Hinds Wire Management Commercial & Industrial Explosion-Proof Electrical Support Products Lighting Electronic Consumer Instrumentation Enclosures Airport Lighting Transportation Power Systems Joining Tools Fire & Mass Notification Reliability Products Emergency Lighting Commercial Lighting Glands/ Boxes Utility Automation Interconnect Architectural Tools Safety Transformers Line Installation & Protection Commercial Products Hand Tools Wiring Devices Chain Products Industrial Power Tools Electrical Distribution Consumer Assembly Systems Consumables Platforms For Organic And Acquired Growth 14 Acquisition Priorities Bussmann Transportation Bussmann Electrical Bussmann Electronics Crouse-Hinds Connectivity Crouse-Hinds Instrumentation Crouse-Hinds Industrial EX Power Systems Global Products Power Systems Utility Automation Lighting Controls Lighting LED Cooper Safety Fire/Mass Notif. Cooper Architectural & Safety Lighting Highest Impact, Largest Market Opportunities; Focus Primarily On Industrial / Utility 15 Access To New Markets Platform Market Size Acquisitions Platform Market Size Acquisitions Utility Automation $1.9B Cannon Cybectec Cyme Lighting Controls $2.7B Novitas Polaron PCI Transpower Notification $2.0B MEDC Wheelock Madahcom Roam Secure LED $1.5B RSA Io Lighting Clarity IMS Specialty Connectors $6.0B WPI G&H CCH Industrial EX $1.5B Hyundai MTL Pauluhn Iluram Bussmann Transportation $2.9B Sure Power Omnex Bussmann Electrical $6.6B Xian Bussmann Electronics $3.3B Save Fuse CPS Global Standards B-Line Support Sys. $1.3B GS Metals Joining Tools $.3B Transtech Airport Lighting $18.0B $2.2B Nature Filtronic Platforms Provide Access To $50B+ Of Higher Growth, More Profitable, Less Cyclical, More Global Markets 16 Cooper’s Business Initiatives Customer Loyalty Ease of Doing Business / Quality / Delivery Innovation Leveraging Technology To Drive Customer Value Globalization Competing And Winning Everywhere In The World Talent Development Acquire, Assess, Develop, Deploy Operational Excellence Driving Continuous Improvement – Order To Cash Clear, Measurable Initiatives To Drive Growth And Our Global Competitive Position 17 Customer Loyalty Cooper Connection Strategic Pricing Loyalty Initiatives Sales Force Excellence + Marketing Communication Strategic Marketing Technology Center Product Mgmt. Leadership Building Upon A Legacy Of Innovation, Service & Expertise 18 Innovation - Product Vitality New Product % of Sales 25% ¾ LED Innovation Center Opened July 2009 (Peachtree City, GA) – Reduced New Product Time To Market – Leverage Across Cooper Businesses 19% ¾ Cooper Ranked #9 Industrial Innovator, Up 20 Places From 2008* 15% * From The Patent Board’s Dec 09 Industrial Component Supplier Patent Scorecard 7% 2003 2008 2009 Revised Target New Product Leadership Drives Organic Growth And Margin Expansion 19 Globalization – Building Global Presence % of Sales Outside of U.S. 37% 32% 39% 34% 26% 2000 Revs $1.2B - 2006 2007 2008 2009 $1.6B $2.0B $2.4B $2.0B Significant Change In Global Exposure….39% Of Sales in 2009 Outside The U.S. 20 Talent Development Talent Acquisition • University Recruiting • Recruiter Strategy • Networking Talent Assessment & Development • Assessment & Potential • Robust MD&P • Global Leaders • Development Programs • Learning Curriculum • Cooper University • Performance Mgmt. & Compensation Talent Deployment • Succession Planning • Career Paths Pay For Performance Building A “Talent Academy” 21 Enhanced Competitive Position 9 New enterprise system 9 Core productivity program 9 Lower overall fixed cost 9 Less capital intensive business model Faster, Leaner With Core Productivity Programs In Place 22 Operational Excellence Strategic Imperative Ongoing Ongoing Productivity ProductivityFrom From MVP/Lean/VAVE MVP/Lean/VAVE Fully FullyLeverage Leverage Global GlobalStrategic Strategic Sourcing Sourcing&& Supply SupplyChain Chain Optimize OptimizeGlobal Global Footprint Footprint Area Of Focus ¾ Safety ¾Delivery & Quality Benefit ¾ Improve Employee Safety ¾Inventory & Payables ¾ Increase Customer Service & Loyalty ¾Direct/Indirect Material Costs ¾ Ongoing Cost Out & Elimination of Waste ¾Labor Costs ¾Infrastructure Costs ¾ Reduce Working Capital Strong Foundation For Continuous Improvement & Growth 23 Capital Expenditures ($ In Millions) $175 7% $137 $115 $100 $103 $116 $97 $74 % of Sales 2000 2001 2002 3.9% 2.7% 1.9% $127 $85 2003 2004 2005 2006 2007 2008 2009 2.5% 2.3% 2.1% 1.6% 2.0% 2.1% 2.5% Less Capital Intensive Business Model… While Funding Strategic Growth 24 2009 Operating Working Capital INVENTORY $641.8 25% 6.8 turns 6.8 turns $483.9 2008 2009 RECEIVABLES $1,011.4 PAYABLES 21% $492.5 22% $384.4 2008 2009 OPERATING WORKING CAPITAL $1,160.7 $797.7 23% 61 days 58 days 5.6 turns 5.4 turns $897.2 2008 2009 2008 2009 Continued Exceptional Operating Working Capital Execution 25 Free Cash Flow To Income* ($ In Millions) 2.0 10.8% As a % of Sales 12.5% 9.5% 1.5 7.5% 10.4% 8.6% 10.3% 11.6% 11.7% 7.7% 1.0 6.4% 5.4% 0.5 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $196 $247 $344 $314 $428 $384 $383 $490 $535 $682 $761 $633 Strong Cash Flow In Up And Down Cycles * Recurring Income from Continuing Operations 26 Total Debt (Dec. 31, 2009) ($ Millions) Amount $ 325 300 300 925 10 0 935 (382) $ 553 Rate 3.55% 5.56% 5.75% Due Date Nov 20121 Apr 2015 Jul 2017 Long-Term Debt Short-Term & Misc. Long-Term Debt Commercial Paper Total Debt Cash Net Debt ($952 at December 31, 2008) Balance Sheet Remains A Strategic Asset 1 Swapped to Euro Debt - 5.25% note rate at date of issuance 27 2009 Summary / 2010 Outlook ¾ Cost structure and balance sheet aligned for new economic reality ¾ Continued to invest during the downturn: – Vitality Index at a record level – Expanded global footprint – Completed three acquisitions ¾ Portfolio diversity will provide years of end-market growth especially coming off such depressed levels ¾ Demonstrated cash generation ability in up and down economies ¾ Remain focused on total shareholder returns (guidance/dividend/buy-backs) Well Positioned For Another Decade Of Exceptional Shareholder Returns 28 Cooper Industries 2010 Outlook Meeting Cooper Lighting Neil Schrimsher, President Cooper Lighting Business Portfolio Leadership Brands… Broad Portfolio Of Industry Leading Products & Brands 30 Cooper Lighting Overview Revenues: ~$1.1 Billion Customer Loyalty Geographic Mix: ~80% U.S. ¾ Delivering Solutions to Channel Members & End User Markets Innovation Market Performance ¾ Extensive Product Portfolio ¾ New Product Vitality Over 25% Globalization ¾ Specification with Higher End Architectural Products & Controls Operating Excellence ¾ Productivity Gains – $32M Benefit ¾ Working Capital Improvements – 230bps Initiatives Provide Strong Foundation & Enable Performance 31 Cooper Lighting End Markets Commercial & Industrial ¾ Energy – Accelerating Results in New, Retrofit & Renovation ¾ Healthcare & Education Remain Attractive ¾ Institutional – Government & Public Buildings ¾ ARRA Funding Residential ¾ HALO #1 Recessed Brand ¾ Packaging, Merchandising Solutions & Energy Star NPI al i r st u Ind Commercial Residential Ro ad w ay Roadway / Highway ¾ Broadest LED Outdoor Offering ¾ Utility Rebate Program Expansion Broad Market Exposure, Reaching Attractive Long-Term Markets 32 Lighting Key Economic Indicators Segment Near-Term Trend Long-Term Trend ¾ Residential ¾ Commercial Construction ¾ Industrial ¾ Recovery Act / Stimulus (ARRA) Construction Starts *Internal Estimates Challenging Market Conditions…With Opportunities 33 Business Priorities 1. Operational Excellence ¾ Driving Productivity & Continuous Improvement 2. Energy Efficiency Leadership Energy & Innovation 3. Innovation & Technology ¾ Controls ¾ LED Executing On Fundamentals & Generating Results 34 Lean Continuous Improvement … Realized Benefits 9 Productivity Gains – $32M Benefit ¾ Standard Work ¾ Value Streams ¾ Visual Management ¾ Engagement & Accountability 9 Working Capital Improvements – 230bps 9 Continue to Generate Cash Flow in Excess of Earnings 9 Service Enhancements …Complexity Management ¾ Delivering Customer Facing “Above the Skin” Benefits & Manufacturing “Below the Skin” Opportunities Emergency EmergencyExit ExitSignage Signage(3(3Product ProductFamilies) Families) Above Abovethe theSkin Skin • •Red Red&&Green GreenCapability CapabilityininOne OneUnit… Unit…an anIndustry IndustryFirst! First! Realized Benefits • • •Added AddedPatented PatentedTechnology Technology––EZ EZ Key ExternalBattery BatteryDisconnect Disconnect • • • •Lower LowerEnergy EnergyUsage Usage&&Industry-Leading Industry-LeadingBattery BatteryRecharge RechargeTime Time • Below Belowthe theSkin Skin • • •Common CommonComponents ComponentsAcross AcrossAll AllThree ThreeFamilies Families • •Enabled EnabledDiscontinuation DiscontinuationofofThree ThreeProduct ProductFamilies Families KeyTMTMExternal Differentiated Product Component Inventory Reduction 85% SKU Reduction Sales Increase Margin Expansion Continuing To Drive Competitiveness And Generate FCF 35 Business Priorities 1. Operational Excellence ¾ Driving Productivity & Continuous Improvement 2. Energy Efficiency Leadership Energy & Innovation 3. Innovation & Technology ¾ Controls ¾ LED Executing On Fundamentals & Generating Results 36 Energy Efficiency Inefficient Lighting Systems are Common… …Energy Codes Expanding AHJ Regulatory Efforts Continue to Address Projected Demands… …Cooper Delivering Solutions & Results ~$200M CALIFORNIA PER CAPITA ELECTRICITY USAGE kW/h per person ¾ Retrofit / Renovation 50%+ CAGR 2000 - 1990 - 1980 - 1970 - 1960 - Source: DOE 2006 2007 2008 2009 Energy Generates Results In All Economic Cycles 37 Energy Strategy Occupancy Sensors Product Breadth Control Systems Retrofit Products Focused Channel Efforts Linear / Highbay End Users Recessed / LED Lighting Control Contractors & ESCOs Distribution Goldman Sachs Results Svc/Programs Specifiers Sears Warehouse • 43 Story LEED Gold Certified • $400K in Annual Energy Savings • Balancing Environmental Responsibility, Resource Efficiency, & Occupant Comfort. • 40% Energy Savings Per Sq/Ft • 28% More Energy Efficient Than Code - Compliant Building • Title 24 Compliant • 8 Month Payback Leveraging Products & Channel Position For Results 38 Business Priorities 1. Operational Excellence ¾ Driving Productivity & Continuous Improvement 2. Energy Efficiency Leadership Energy & Innovation 3. Innovation & Technology ¾ Controls ¾ LED Executing On Fundamentals & Generating Results 39 Controls Platform High Performance Architectural Performance Theatrical $750M, 10%+ CAGR $300M, 5%+ CAGR $300M, 5%+ CAGR Cooper – 2x Market Cooper – 3x Market Cooper - 3x Market ¾ Launched “iLumin” Brand in US ¾ Launched “Zero88” Brand in US ¾ Dimming, AV Integration, BMS ¾ “Value” Theatrical Technology Cooper Actions Market Energy Management ¾ Launched Greengate Brand ¾ Global Product Development ¾ Incorporated Integral Metering ¾ Energy Savings Solutions ¾ 1st with Integral Metering in Dimming Platform ¾ Entertainment Performance Product Solutions ¾ Global Platform ¾ Scene Setting Solutions Common Theme For Product Platforms: Strong Specification Position & Unique Technology Component 40 Controls Positioning Cooper Controls Overview: Investments/ Acquisitions Energy Management ¾ Novitas (2006) ¾ PCI Lighting Controls (2007) Architectural / Performance Theatrical ¾ Polaron: (2007) iLight/zero88 ¾ EDI (2009) Breadth of Offering Relevant Product Solutions in ALL Categories ¾ Energy Management Sensors ¾ Low-Voltage Relay Panels ¾ LED Controllers ¾ Architectural Dimming Cabinet ¾ Theatrical Desks/ Dimmers Organic Innovation New Product Introductions Global Specification Local People, Local Products ¾ EnergyFocused Applications ¾ UL & CE Compliant Products ¾ Metering / Consumption Awareness ¾ “On the Ground” Sales/Support Staff on 4 Continents ¾ Unique Technology & IP ¾ Specification Driven Products ¾ Specifier & EndUser Focused ¾ End-to-End Controls Solutions Project Successes Global Project Specifications ¾ Atlantis, Dubai ¾ 1 Hyde Park, UK ¾ Marriott Gateway, USA ¾ Thurgood Marshall Federal Courthouse, NYC ¾ Nemours Children's Hospital, USA Acquisitions Acquisitions Provide Provide Platform Platform For For Growth: Growth: Organic Organic Innovation Innovation & & Expanded Expanded Solutions Solutions To To The The Existing Existing Channel Channel 41 Lighting Controls Application Commercial Occupancy Sensor Applications Retail 16% Base (SF) Office 17% Education 14% Other 28% Healthcare Hospitality 4% 7% Value Cooper Response – Industry Leading Breadth & Performance Industrial 14% …vs. No Automatic Controls: ¾ High Acceptance Within Segments ¾ 25-50% Lighting Energy Savings ¾ < 2 yr Payback $280M Market Opportunity @ 5% Penetration Retrofit New Construction Significant Growth Potential For Cooper 42 Business Priorities 1. Operational Excellence ¾ Driving Productivity & Continuous Improvement 2. Energy Efficiency Leadership Energy & Innovation 3. Innovation & Technology ¾ Controls ¾ LED Executing On Fundamentals & Generating Results 43 LED Dynamics White LED Components 160 $20.0 $18.0 $16.0 120 $14.0 100 $12.0 80 $10.0 60 $8.0 $6.0 40 Cost 20 $4.0 $2.0 0 Cost ($/kilolumen) Efficiency 140 Efficacy (lumens/watt) Fixture Market by Source LED 2% HID LED 12% CFL Inc / Hal All Other 88% Fluor. LED 25% All Other 75% $0.0 2007 2012 2017 2009 2012 Est. 2015 Est. Cooper Delivering Best-in-Class Capabilities… Technology Technology Products Products Supply Supply Chain Chain Commercialization Commercialization Technology Advancing – Focus Shifting To Application (Luminaires) 44 LED Innovation Center Advanced Research & Development ¾ LED, Advanced Lighting Technologies ¾ Product Design – Optics, Thermals, Electronics, Mechanical, Ind. Design ¾ Performance & Reliability Testing ¾ Prototype and Pilot Manufacturing ¾ Build Robust IP Pipeline World Class LED Capability & Capacity 45 Track & Recessed LED Application Track & Recessed Downlighting Cooper Response – Industry Leading Brands & Performance 869 Million Units US Installed Base (Units) Value CFL 17% INC 83% …vs Incandescent: ¾ Up to 85% Less Energy ¾ Eliminates Up to 40 Replacements $550M Market Opportunity @ 5% LED Penetration New Construction Retrofit 4”/ 6”, 600/900/1200 Lumen, Housings, Trims Halo LED Watts Energy Savings 600 Series 14 Up to 75% 900 Series 14 Up to 81% 1200 Series 25 Up to 72% 4” Series 12 Up to 72% Small Track 8 Up to 85% Medium Track 18 Up to 80% Significant Growth Potential For Cooper 46 Outdoor LED Application Street & Area Lighting Cooper Response – Industry Leading Breadth & Performance 137 Million Units US Installed Base (Units) HPS 39% Metal Halide 27% INC 10% MV 13% Value FLU 6% …vs Metal Halide: ¾ 30-60% Less Energy ¾ Eliminates >7 Replacements $1.6B Market Opportunity New Construction Retrofit @ 5% LED Penetration Significant Growth Potential For Cooper 47 North American Commercialization Marketing Support & Tools ¾ ¾ ¾ ¾ Literature, Samples Web & e-Tools Marketing Programs Energy Rebates, Calculators Customer Events / Training ¾ ¾ ¾ ¾ 60 Day Blitz 20 Major Markets Agency Training 2500+ Influencers & Customers Accelerating Adoption With Commercialization Tools & Education 48 Cooper Lighting Summary ¾ Challenging Short-term Market Conditions…. Significant Long-term Opportunities ¾ Driving Productivity & Continuous Improvement ¾ Energy & Sustainability – Delivering Energy Efficient Lighting Solutions & Results ¾ Innovation – Leadership Platforms with Technology & Specification Capability Well Positioned To Outperform The Market In 2010 & Beyond 49 Cooper Industries 2010 Outlook Meeting Cooper Power Systems Mike Stoessl, Group President Cooper Power Systems Portfolio Automation & Communication Solutions #1 Demand Response Systems #2 AMI PLC Provider #1 Planning Software #1 Smart Sensors Reliability & Power Quality #1 in Overhead Switchgear #1 in Capacitors #1 in Voltage Regulators Connection & Components #1 in HV Fuses #2 in Surge Arresters #2 Molded Rubber Accessories Transformers #2 Distribution Transformers North American Industry Leading Products 51 Power Systems Business Overview Market Size: ~$45 Billion Customer Profile (Global T&D) Revenues: ~$1.1 Billion Geographic Mix: ~32% Outside U.S. Sales Growth Leading Brands AGR C t i -Dig e l g n Si High 2003 2004 2005 2006 2007 2008 2009 Ref: ’03 -’08 CAGR of ~15% Global Growth With Strong Presence And Brand 52 Power Systems End-Market Evolution 2004 2009 ¾ US Reliability & Automation – Power Quality, Efficiency & Productivity Solutions ¾ US Connection & Restoration – Power Delivery Solutions For Utilities ¾ Commercial & Industrial – Wind & Solar, Wastewater, Oil & Gas, Military, Hospitals ¾ International – Large Presence In Asia, Latin America, Australia Significant Exposure To Attractive, High Growth Markets Note - 2004 figures do not equal 100% due to rounding 53 Power Systems Economic Indicators Short-Term Leading Indicators ¾ Utility Revenues Trend Long-Term Leading Indicators ¾ Electricity Demand ¾ Global Economic Development ¾ Demand For Reliability ¾ Aging Grid, Retirements ¾ Infrastructure/stimulus ¾ SmartGrid Investments ¾ International ¾ Legislative Trends ¾ Non-Residential construction ¾ Housing starts Millions of units ¾ Inventory Rebuild Trend 54 Power Systems Business Priorities ¾ Leverage 2009 Operational Improvements – Lean Culture Driving Delivery, Quality, Inventory To Best-in-class – Value Engineering Well Balanced With New Product Development – Leadtime Improvements Allowing Sales Wins ¾ Automation and Energy Efficiency – Positioning Over Last Five Years Paying Off ¾ Globalization – Further Expansion In Middle East, South America, Asia – +50% Increase In Asia-for-Asia New Product Releases ¾ Increased Focus On Targeted Industrial Markets – Rapidly Expanding Renewable Energy Sector, Data Centers – “Consultant to the Consultant” Application Expertise Well Positioned For Years Of Growth 55 END to END Efficiency Green Circuits Network Growth Strategies CPS Has Solutions That Enhance System Efficiencies: Power Quality & Optimization Low-loss Distribution Equipment Improved Utilization & Automation “Energy Efficiency And Demand Response Will Continue To Be The ‘First Fuel’ Choice For Utilities” Rick Rick Nicholson Nicholson, IDC IDC Energy Energy Insights Insights 56 Smart Grid Trend Data CPS Smart Grid Solutions Smart Grid Revenue (World Markets) AMI Distribution Automation PHEV Substation Automation ¾ AMI ¾ Demand Response Transmission Source: Pike Research’s report, “Smart Grid Technologies” Dec 2009 ¾ Substation Automation ¾ Distribution Automation ~$200M n Sig 2005 nt a ific wt o Gr h ¾ Enterprise Software ¾ Planning, Modeling & Simulation 2006 2007 2008 2009 CPS Well Positioned To Benefit From Automation Drivers 57 Smart Grid Stimulus ~$4B Smart Grid Stimulus Allocation Distribution Automation $642M ¾ Government Contracting Slow ¾ Initial RFP Processes, Vendor Substation Automation $203 M Negotiations Underway Other $284 M Demand Response $161 M Stimulus Timing ¾ Order Flow Pending Gov’t Contracting RFP Processes AMI $2,757 M Vendor Contracting Orders Sales Allocation By Cooper Solutions Oct ‘09 Today Contracting Issues Slowing Stimulus Funding 58 Renewables Summary Trend Data Renewable Portfolio Standards in 24 States Current Drivers ¾Renewable Portfolio Standards ¾Tax Incentives ¾ Increased Cost Competitiveness (Wind) Long-term Drivers ¾ Fossil Fuel Price Volatility ¾ Increased Cost Competitiveness (Wind/Solar) ¾ Clean Energy Reform ¾ Federal Renewable Energy Standards US Annual Utility Scale Capacity Additions (MW) Wind - Bars Solar - Line 3,000 2,500 20% CAGR 2,000 1,000 % C AG R 1,500 97 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 500 Growth Strategies ¾ Broad Reach ¾ Application Expertise For Complex Systems ¾ Tailored Transformers ¾ Software Modeling Products ¾ Collection Systems 0 2006 2007 2008 2009 2010 2011 2012 Well Positioned For Significant Renewable Sector Growth 59 Power Systems Globalization Drivers ¾ Global Electricity Demand Increasing (China & India) ¾ World-wide Infrastructure Investment In Electrical Grid ¾ Global Climate Change Response World Energy Consumption Non-OECD countries account for 93% of the increase in global demand between 2007 – 2030, driven largely by China & India Power Systems Well Positioned ¾ Asia / LA Capacity Expansion ¾ Innovation Pipeline Improving ¾ Global Technical Talent ¾ Amorphous Transformers ¾ Exporting China Switchgear Products ¾ Cyme Systems Analysis Capability Seven Factories Outside The U.S…..Local Products For Local Markets 60 Power Systems Summary ¾ Worst Behind Us ¾ Investments In Last Cycle Paying Off – – – – Operational Performance Automation And Efficiency Targeted Industrial Segments Globalization ¾ Positive Long-Term Trends, Enhanced by Global Stimulus Programs – – – – – – Electricity Demand Global Economic Development Demand For Reliability Aging Grid SmartGrid Investments Legislative Trends Towards Reliable, Efficient, Domestic Power Sources ¾ Broad Product Portfolio To Reliably Distribute Power To Customers Around The Globe Positioned For Years Of Strong Recovery 61 Cooper Industries 2010 Outlook Meeting Cooper Safety & Globalization Grant Gawronski Cooper Safety Product Portfolio Emergency Lighting • Technical Central Battery & Self Contained Solutions • Market Leader – Europe & Middle East Notification & Fire Solutions • Full Line UL & EN Fire Products • Comprehensive Mass Notification Solution Lighting • Leading LED Package • Strong UK Commercial /Industrial Exposure Cable Glands & Commercial Products • Heavy Industrial Base For Cable Glands • Commercial Products For Comm/Resi Construction Security • UK Based Intruder Business • Great Product Technology Broad Offering Capitalizing On Global Infrastructure Build 63 Cooper Safety Business Overview Market Size (served): ~$8 Billion Customer Profile Revenues: ~$500 Million Geographic Mix: ~90% Outside U.S. Sales Growth Mid -Dig e l g Sin 2003 GR A C it 2009 Ref: ’03 -’08 CAGR of ~14% Leading Brands Wheelock Strong Products…Excellent Customer Franchise 64 Cooper Safety End Markets Industrial Commercial 15% 66% XXX ¾ Commercial • #1 Position In Emergency Lighting in Europe and Middle East • Strong UK Lighting Business • Huge Project Pipeline in Mid East + UK Olympic Opportunity ¾ Industrial XXX • MEDC Strong In Industrial OEM 8% Signaling Resi 6% • Comprehensive Industrial Military 5% Notification XXXXXX • Gland Business Growing . . . ¾ Residential • Limited Exposure Through Security and Commercial Products Broad Market Exposure Across EMEA 65 Cooper Safety Key Economic Indicators Segment Near-Term Trend Long-Term Trend ¾ Industrial Production ¾ Non-Resi Construction ¾ Energy Standards/Stimulus ¾ Safety/Notification ¾ London Olympics Key Eurozone GDP Projections Eurozone Non-Resi Construction ¾ 2008 to 2010….Steep Decline ¾ 2010 Flattens Out With London Olympics, Energy Efficiency Trends Source: IMF ¾ Safety Well Positioned To Capitalize On Growth Trends GDP Recovering….Construction Levels Flatten Out 66 Cooper Safety Business Priorities ¾ Geographic Expansion ¾ Technology & Alternative Energy Growth ¾ Notification & Safety Penetration ¾ Leverage Cooper Portfolio Across Europe - Crouse-Hinds, B-Line, Bussmann Drive >5% Organic Long-Term Growth Rate 67 Technology & Alternative Energy ¾ Smart Systems - Networked Emergency Lighting - Wireless Addressable Fire Systems ¾ Technical Customer Solutions - Custom LED Applications - Military/Institutional Notification ¾ Core Product Efficiency Upgrades - Legislated Energy Savings - Long-Life Applications Technology And Innovation Accelerate Core Growth 68 Notification Strategy Overview Fire Devices Technology Interface Emergency Communications Systems Market Participant Fulleon (EN) Extend Reach ¾ Capture Market Entitlement Wheelock (UL) ¾ OEM Provider For Fire Industry Hazardous MEDC Mass Notification Systems WAVES RSAN (Electronic) Access Control ¾ Expand Range And Available Market ¾ Extend Reach Globally ¾ Standardize Notification Technology Video Surveillance Technology Solutions Driving Growth 69 Leveraging The European Portfolio European Electrical Distribution Combined Product Offering ¾Majority Share Held by Global Players Cooper Safety ¾Breadth of Portfolio A Key For Partnership Cooper Crouse-Hinds ¾Local Presence Across The Continent Cooper Portfolio ¾Broad Line of EU/Global Products Cooper B-Line Cooper Bussmann ¾Significant European Presence ¾Dedicated Industrial Sales Team Driving Divisional Cross Selling ¾Global Partnerships . . . Europe/US/Asia Pacific ¾Increased Selling Opportunities ¾Application And Technical Support Through Local Presence Partnering For Growth With Global Electrical Distributors 70 Cooper Safety Summary ¾ Safety Is A Leading European Electrical Products Platform ¾ Technology and Alternative Energy Products Gaining Momentum - Emergency Lighting, Mass Notification, LED Solutions ¾ Growing In Emerging Markets…Established Player Providing A Broad Electrical Product Offering ¾ Big European Presence…Able to Effectively Integrate Acquisitions With Synergy Upside Well Positioned To Continue To Outperform The Market In 2010 And Beyond 71 Cooper Industries 2010 Outlook Meeting Cooper Globalization Grant Gawronski International Investments +17% +22% YOY Growth Rate -20% -16% Core +16% +5% +11% Cybectec Xian Fuse N. Africa CBE Europe Polaron Capacitor JV NX SE Asia Hyundai Cyme WD China Digital China NX Mid East CC Europe Saudi Mfg Romania Mfg NX China MEDC NX Mexico NX Australia Save Fuse NX Russia NX India MTL NX Korea MX Mfg Plan China HQ NX Japan Nature Clarity Xian Mfg 2003 2004 2008 2009 2005 2006 2007 Despite 2009 Downturn, Continued Investments To Support Global Growth Opportunity 73 2009 – Manufacturing In Saudi Arabia 74 2009 – China Bussmann Xian 75 2009 – China CWD Dongguan 76 Global Footprint Manufacturing: ¾ Australia ¾ Brazil ¾ Canada ¾ China ¾ Colombia ¾ Denmark ¾ France ¾ Germany ¾ Greece ¾ Hungary ¾ India ¾ Italy ¾ Korea ¾ Mexico ¾ Netherlands ¾ Romania ¾ Saudi Arabia ¾ Spain ¾ Switzerland ¾ Sweden ¾ Taiwan ¾ United Kingdom ¾ United States MANUFACTURING SALES Manufacture in 23 Countries – Sell in ~100 77 2004 – 2009 Summary ¾Significant Investments In Place To Grow International Revenues ¾Divisions Have Been Successful – Doubling Revenue In 5 Years ¾Our Foundation Is Solid . . . Continue Strategic Investments in 2010 and Beyond ¾Growth Model Transferrable To Other Geographies ¾Extremely Well Positioned To Restore Growth Track Record Of Growth….Well Positioned For Global Economic Recovery In 2010 78 2010 International Focus 2X 2X 2X 39% Of Revenues Now Generated Outside The US – Big Targets Remain 79 Global Growth Strategy ¾ Local Products For Local Markets ¾ Leverage Global Cooper Presence With Key End Users ¾ Strengthen Operational And Commercial Footprint In South America Global Portfolio And Expanding Global Presence Driving Growth 80 Asia – Local Products For Local Markets Cooper Power Systems Asia Revenue Nearly Tripled The Business 2004 2009 Strong Power Systems Asia Foundation…. Positioned For Sustained Growth 81 Asia Vitality RTEFE PDSE XINFA Switchgear MRP Components Capacitor Nature VCB Localized Products • Capacitors • Reclosers • Controls • IEC VCB • RMU • IEC MRP • ANSI MRP • Cutout • Components NATURE CSPC Strong Local Product Platform Drives Asia-For-Asia Product Offering 82 Global Customer Opportunity EPC: Global Engineering, Procurement and Construction Company Cooper Focus: Oil & Gas, Industrial Processes, Mining & Power Projects Canada 38 EPCs UK South Korea Western Europe 14 EPCs 14 EPCs USA 54 EPC’s 30 EPCs Middle East South America 42 EPCs Japan 15 EPC’s 15 EPCs India 12 EPCs Aust / SEA 12 EPCs Billions Of Global Project Opportunity 83 Global Oil & Gas Product Strategy IEC and IECEx Products For All Continents 9 International Certification CSA 9 Canadian Certification UL 9 Certification for United States NEC ATEX 9 Certification for the European Union Gost 9 Russian Certification 9 North American Certification 9CEPEL Brazilian Certification Cooper’s Broad Offering Of Certified Global Products Critical To Continued Success GB 9 Certification for China 84 Expanding Global Presence World-wide Relationships Span The Project Cycle Mid East Contractor Base Is Common For High Profile Commercial & Utility Leverage Relationship And Provide Solutions Established Cooper Relationships Create New Opportunities 85 B-Line Middle East/North Africa Growth Regional Expansion + GCC + Iraq North Africa ~$100M Target p Ex 2010 l a i t n one th w o Gr Target B-Line Capitalizing On Global Cooper Presence 86 Cooper In Latin/South America IEC NEMA NEMA 40% IEC 60% ¾ ~$350M Annual Revenues ¾ Solid Business For Power Systems, Crouse Hinds….Driven by Local Presence ¾ Resources = Results - Wiring Devices – Venezuela - Crouse-Hinds – Columbia Increased Local Presence And Products Position Us For Strong Growth 87 Latin/South America Growth Strategy GUA Add Sales Presence – Local Feet On The Street HON CR VEN VEN COL Colombia As 2nd S.A. “Base Of Operations” VEN SUR COL EC ¾ Recent Crouse-Hinds Acquisition ¾ Excellent Presence With Distribution Pursue Acquisition To Expand Penetration In Brazil/S.A. BRA PERU BRAZIL BOLIVIA PAR CHI URU ¾ Power Systems Presence ¾ Significant Electrical Product Opportunities ¾ Leverage Existing Cooper Infrastructure 3 Pronged Approach To Growth 88 Globalization Summary +17% -20% -16% Core +22% +16% +5% Cybectec Xian Fuse N. Africa CBE Europe Polaron Capacitor JV NX SE Asia Hyundai Cyme WD China Save Fuse NX Russia NX India MTL Digital China Nature Clarity Xian Mfg 2008 2009 NX Mid East CC Europe MEDC NX Australia MX Mfg Plan 2004 China HQ 2005 NX Japan 2006 2007 Saudi Mfg Asia Romania Mfg Mid East L. America Driving Strong, Sustainable International Growth GPT 2010 89 Cooper Industries 2010 Outlook Meeting Cooper B-Line Kevin Kissling, President Support Systems (~80%) Cooper B-Line Product Portfolio Cable Tray Pipe Bolted Spring Steel Framing Fasteners Hangers Safety Grating ¾ Support Structure For Electrical, Mechanical And Data Transmission Lines ¾ Cable Management ¾ People/Structural Support ¾ Physical Asset Protection For Electrical And Data Systems ¾ Cable Management Enclosures (~20%) #1 in North America Electrical Enclosures Meter Sockets Rack & Runway Electronic Enclosures Broad Portfolio Of Specified Products For 91 Engineered Facility Subsystems 91 Cooper B-Line Business Overview Market Size: ~$3 Billion (NA) ~$19 Billion (WW) Revenues: ~$350 Million Customer Profile Geographic Mix: ~90% U.S. ~70% Electrical Distribution Sales Growth h Hig -Dig e l g Sin 2003 GR A it C Leading Brands ¾ ¾ ¾ ¾ ¾ ¾ B-Line Flextray GripStrut Ruff-In Access Promise 2009 Ref: ’03 -’08 CAGR of ~18% Solid Growth, Large Served Market…Big Opportunity Overseas 92 B-Line End Markets Commercial ¾ ¾ ¾ ¾ ¾ Industrial Government Healthcare Education Office Hospitality Commercial Industrial Other ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ Manufacturing Petro Chem Pharmaceuticals Food & Beverage Oil & Gas Mining Power Generation Alternatives Other Utility Data Centers Telecomm OEM Diverse End-Market Exposure Provides Growth Opportunities Through The Cycle 93 B-Line Economic Drivers ST Trend LT Trend Opportunities ¾ Global Fixed Investment Globalization, Middle East ¾ E&P Investment EPC relationships, Drive Spec ¾ Non-Resi Construction/ABI Lowest Total Cost Innovation ¾ Stimulus (Gov’t Bldg) ARRA Compliant, Vertical Focus ¾ Alternative Energy Solar Racking, Nuclear Quarterly ABI World Fixed Investment* $12.0 65.0 $10.0 60.0 $2.0 $0.0 35.0 *Source: IHS Global Insight, AIA 2009 2010 2011 2012 2013 30.0% 10.0% 2009 2008 2007 2006 2005 2004 2003 45.0 40.0% 20.0% 50.0 40.0 2008 Acquisition O&G 55.0 2002 $4.0 % 2001 AG C 3 –’1 ’09 $6.0 6 R~ 50.0% ABI Quarterly YoY Growth (3Q Lag) 2000 $8.0 Sales Growth AIA Billing Index* 70.0 1999 Trillions $14.0 Dot-Com 30.0 Commercial Construction Challenging In ShortTerm….Favorable Long-Term Dynamics 0.0% -10.0% -20.0% -30.0% -40.0% 94 Long-Term Global Trends Energy Demand / Utility Grid Global Infrastructure Conservation / “Green” / Energy Efficiency & Reliability Safety / Protection / Mass Notification Cooper Uniquely Positioned To Penetrate Key Global Trends 95 B-Line Business Priorities ¾ Continue Relentless Pursuit Of Specification, Innovation And Service Leadership ¾ Expand Pursuit To Faster Growing Global And Emerging Vertical Markets…Leveraging The Cooper Portfolio And Localizing Manufacturing ¾ Global Oil And Gas ¾ Alternative Energy – Solar And Nuclear ¾ Continue To Provide Labor Saving Products And Superior Service To Support Core North American Business Growth Win in Attractive Verticals Through Innovation, Driving Specification And Superior Service 96 Global Infrastructure/Oil & Gas Global O&G Investment By Year/Region Upstream $700 $600 Production facilities North America Middle East Europe (Inc. Russia) Asia Pacific 9 Offshore Platforms 9 Drilling Rigs 9 LNG Plants $500 Midstream $400 Transportation $300 9 Pipelines 9 Terminals $200 Downstream $100 Refining 9 Fuels 9 Lubricants 9 Chemicals $0 2010 2011 2012 2013 Cable Tray Portfolio $Bils *Source: IIR, EIC and B-Line Estimates Building Out Global Specification Team Significant Global Opportunities ¾ Saudi Arabia And GCC ¾ Canada – Tar Sands ¾ Korean Contractors And EPCs ¾ Australian LNG Investments Driving Cooper B-Line’s Global Expansion…. Leveraging Crouse-Hinds And Safety Portfolios 97 Saudi Arabia – Middle East Growth Middle East Operations: ¾ Wholly-Owned Cooper Entity – Operational in ~12 Months ¾ Exceed Saudi Content Within Work Force – Recognized By End Users ¾ Leveraged Cooper Ops Excellence Platform – ARAMCO Vendor Approval In 4 Months ¾ Strong Engagement In Oil & Gas And Commercial Mega Projects Throughout The Region Positioned To Win In A Growing Region 98 98 Alternative Energy/Solar Cumulative Solar Megawatt Growth* MWs 3,000 2,500 2,000 PV Specific Racking And Cable Management Product Solutions Roof Mount (Non Resi) Ground Mount 1,500 1,000 Roof Top 500 0 2010 2011 2012 2013 Electrical Distribution Channel Strength To Serve The Market Cable Mgmt Ground Mount Emerging Market, Utilizing Adjacent Products… Migrating Towards Electrical Distribution *Source: SEPA, NREL, B-Line Estimates 99 Driving Loyalty Through Superior Service Distributors ¾ Industry Leading Service Guarantee Program – Across All Channel of Distribution ¾ Customer Benefits: – Lower Inventory – Service to Their Customers Specifiers/Engineers ¾ Leading Design Tools and Support – Sales Engineering – Design Tools (Ex: BIM) ¾ Customer Benefits: – Reduced Design Time – Optimized Design for Material Cost Contractors ¾ Labor Savings Product Solutions – Innovative Customer Driven Solutions – Lowest Installed Cost ¾ Customer Benefits: – Speed of Installation – Lower Labor Cost Providing Lowest Total Installed Cost Throughout The Value Chain 100 Cooper B-Line Summary ¾ Broadly Specified With Leading Position And Brand Preference ¾ Reputation For Customer Focus And Service ¾ Globalizing The Business To Participate In Faster Growing Markets ¾ Developing Innovative New Products To Get In Front Of Emerging Verticals Driving To Double The Business Again Through Globalization And Innovation 101 Cooper Industries 2010 Outlook Meeting Cooper Growth Strategy Tom O’Grady, Sr. VP Business Development Sustainable Growth Strategy Market Growth 3% + Initiatives 2% + Acquisitions 5% Customer Loyalty Established Brands, Leading Market Positions…Cooper Connection End-Market Growth Innovation Acquisitions Large, Global, Healthy & Diverse End-Markets Introduce New Products With Focus On Technology Solutions Disciplined Strategy… Build Key Platforms, Increase Technology, Accelerate Globalization Globalization International Opportunity Offers Substantial Upside Growth Through All Economic Cycles 103 Innovation And M&A ¾ Innovation Drives Profitable Core Growth – Access To / Leverages New Technologies Across Businesses – Creates Value-Added Solutions – Extends Technical Leadership – Ability To Participate In High-Growth Market Opportunities ¾ M&A Facilitates Growth And New Technologies – Builds Platforms – Accelerates Globalization – Access To New Markets Balance Between Core Growth Initiatives And Acquisitions Positions Cooper For Sustainable Long-Term Growth 104 Cooper Industries 2010 Outlook Meeting Innovation Tom O’Grady, Sr. VP Business Development Innovation - Product Vitality New Product % of Sales 25% 19% 15% 7% 2003 2008 2009 Revised Target Cooper Ranked In Top 10 By The Patent Board For Strength Of Patent Portfolio Measured By Technology Strength 106 Value-Added Solutions LED Industrial Wireless TO FROM Utility Automation Value-Added Solutions Driven By Acquisitions And Internal Development 107 Extend Technical Leadership RF / Wireless Outage Advisor Wireless Wide – Area Notification Wireless Sensor Networks Transportation Radio Control Industrial WiFi Wireless Tool Tether Power Systems Safety Bussmann & Crouse-Hinds Bussmann Bussmann, Crouse & Power Sys. Tools LED LED Exit Sign LED Healthcare LED Vapor Tight Utility Light EVLED LED Down-Light LED Outdoor Lighting, Safety & Crouse-Hinds Lighting Crouse-Hinds Crouse-Hinds Lighting & Safety Lighting Higher Specification – Higher Technology – Greater Global Growth Opportunities 108 High-Growth Markets Solar Combiner String Combiner Solar Rack Array Combiner AC/DC Disconnect Transformer Innovation Initiatives Across Divisions Have Positioned Cooper To Grow In Key High Growth End Markets 109 High-Growth Markets 1 Wind 1 Nacelle 2 3 2 Tower 3 Transformer Significant Opportunity Across Cooper Businesses To Drive Growth 110 Cooper Industries 2010 Outlook Meeting M&A Tom O’Grady, Sr. VP Business Development Acquisition Core Strategy Acquisition Focus Areas Platforms Technology ¾ Strengthen The “Core” ¾ Specification/Technology Driven Businesses ¾ Enhance Global Footprint Globalization ¾ Strong Balance Sheet ¾ Talented Management Executing A Consistent And Disciplined Strategy 112 Platforms Bussmann B-Line Crouse-Hinds Wire Management Commercial & Industrial Explosion-Proof Electrical Support Products Lighting Electronic Consumer Instrumentation Enclosures Airport Lighting Transportation Power Systems Joining Tools Fire & Mass Notification Reliability Products Emergency Lighting Commercial Lighting Glands/ Boxes Utility Automation Interconnect Architectural Tools Safety Transformers Line Installation & Protection Commercial Products Hand Tools Wiring Devices Chain Products Industrial Power Tools Electrical Distribution Consumer Assembly Systems Consumables Platforms For Organic And Acquired Growth 113 Platform Priorities Bussmann Transportation Bussmann Electrical Bussmann Electronics Crouse-Hinds Connectivity Crouse-Hinds Instrumentation Crouse-Hinds Industrial EX Power Systems Global Products Power Systems Utility Automation Lighting Controls Lighting LED Cooper Safety Fire/Mass Notif. Cooper Architectural & Safety Lighting Highest Impact, Largest Market Opportunities; Focus Primarily On Industrial / Utility 114 Accelerates Globalization Applications Capacitor Bank Chongqing Green Garden Bridge Olympic Swimming Centre GPS Personal Navigation Solutions Capacitor Switchgear Combo Light Flood Light Power Inductor Global Infrastructure Investments Driving Growth In Key Local Markets 115 Accelerates Globalization Bussmann International Acquisitions ¾ Access To Local Markets ¾ Local Products ¾ Local Sales & Engineering Teams ¾ Accelerate Growth Local Presence Driving Long-Term Growth In Key Global Markets 116 Access To New Markets Platform Market Size Acquisitions Platform Market Size Acquisitions Utility Automation $1.9B Cannon Cybectec Cyme Lighting Controls $2.7B Novitas Polaron PCI Transpower Notification $2.0B MEDC Wheelock Madahcom Roam Secure LED $1.5B RSA Io Lighting Clarity IMS Specialty Connectors $6.0B WPI G&H CCH Industrial EX $1.5B Hyundai MTL Pauluhn Iluram Bussmann Transportation $2.9B Sure Power Omnex Bussmann Electrical $6.6B Xian Bussmann Electronics $3.3B Save Fuse CPS Global Standards B-Line Support Sys. $1.3B GS Metals Joining Tools $.3B Transtech Airport Lighting $18.0B $2.2B Nature Filtronic Platforms Provide Access To $50B+ Of Higher Growth, More Profitable, Less Cyclical, More Global Markets 117 2004 - 2010 M&A Activity Summary > 1,100 Targets Identified in Over 50 Countries 90+ Deals Presented > $12B in Revenue 29 Closed Deals Screening ¾ Closed 29 Deals Across all 8 Divisions ¾ 15 International Deals in 7 Countries Diligence ¾ Executed on 11 Strategic Growth Platforms ¾ Strengthened the Core Execution ¾ Specification/Technology Driven Businesses ¾ Enhanced Our Global Footprint Proven Process Capability in M&A… Stepping Up Size And Scale 118 Innovation And M&A Summary ¾ Growth Is A Blend Of Internal Development And M&A – Access To $50B+ Higher Growth, More Profitable And Less Cyclical Global Markets ¾ Past 5 Years - Cooper Invested: – – ~$500M In NPD ~1B in M&A ¾ Today - Nearly 20% Of Cooper Revenue Is From Products Introduced In The Past 3 Years ¾ Cooper Is In The Top 10 For Patent Portfolio & Technology Compared To Our Global Industrial Peers ¾ Cooper Is Leveraging Its Developed & Acquired Technology Across Divisions New Products – New Customers – New Growth Opportunities 119 Cooper Industries 2010 Outlook Meeting 2009 Financial Highlights Terry Klebe, SVP and CFO Macro-Economic Environment in 2009 ¾ Deepest Global Recession Since Great Depression… Worldwide Government Intervention/Stimulus To “Save” Economy ¾ Weakening U.S. Dollar Throughout Year, Credit Markets Froze And Thawed - Lending Standards Changed Forever? ¾ Global Industrial Markets Depressed, MRO And Early Cycle Products Start Recovery By Year-End ¾ Housing Markets Slowly Crawling Back In Second Half ¾ Utility Spending Weak For Entire Year On Reduced Electricity Consumption And Tightened Credit ¾ Commercial Construction Activity Free Fall ¾ Commodity Deflation Every Market And Geography Impacted Deeply By Great Recession of 2008/2009 121 Cooper Team Response ¾ Began Adjusting Businesses Before The Crash In November 2008 ¾ Implemented Contingency Plans Beginning In Q4 2008 ¾ Stepped Into The Economic Reality Early In 2009 And Rapidly Adjusted Businesses For 20%+ Revenue Decline ¾ Stabilized The Businesses By End Of Third Quarter For New Market Reality And Positioned For Return To Growth ¾ Continued To Provide Our Best Estimates For Quarterly And Annual Results The Cooper Team Outperforms In Good And Bad Economic Times 122 2009 EPS Guidance CONTINUING EARNINGS PER SHARE * (diluted) $3.00 $2.80 Hi gh $2.80 $2.60 $2.40 E nd of R a ng e $2.60 Low End of R a $2.50 $2.45 $2.52 nge $2.45 $2.20 $2.30 $2.30 2009 Q1 Update 2009 Q2 Update $2.35 $2.00 2009 Outlook Guidance 2009 Q3 Update FY 2009 Results FY 2009 EPS Of $2.52 Within Original Guidance Range Of $2.45 to $2.80 * Excludes unusual items. 123 Full Year 2009 2008 2009 $2.52 $0.21 Excluding Unusual Items Restructuring / Impairment $0.13 $3.51 Discrete Tax Items GAAP $0.14 $0.08 Excluding Unusual Items $3.59 Restructuring Discrete Tax Items $2.46 GAAP Excluding Unusual Items, EPS Decreased 30% to $2.52 124 2009 Revenue Performance Electrical Products $5.8B $6.5B $4.5B -- 22% 22% $5.1B FX -1.8% Acq. -- 22% 22% FX Acq. .6% Core -20.4% -2.0% 2008 .6% 2009 Tools Core -20.9% $0.77B $0.56B -- 27% 27% FX 2008 -2.8% Core -24.4% 2009 2008 2009 All Segments Hit Hard By Economic Downturn 125 2009 Revenue Growth Geographic Region U.S. + Canada ROW (ex Eur) - 22% Electrical Distribution - 22% - 16% - 23% Customer Channel (Core -16.7%) (Core -16.7%) (Core -22.8%) - 21% - 15% Retail W. Europe Utility -17% Direct / OEM - 30% Non-Electr. Distribution (ex Utility) All Channels And All Regions Severely Impacted 126 2009 Operating Income* Cooper Industries: - 38% Electrical Products: - 31% $930M $930M 16.2% 14.3% 14.1% $574M 11.3% $638M 2008 2009 Tools: - 77% $81M 10.6% 2008 2009 $19M Operating Income Return on Revenues 3.3% 2008 2009 Significant Impact From Global Economic Downturn * Excluding unusual items 127 Revenue Growth and ROS History Electrical Products Year over year growth Core 20% 15.4% 15% 10.8% 5% 1.0% 0% -0.3% -10% 12.7% 7.4% 10% -5% 10.7% -4.7% 8.4% 6.3% 8.4% 9.4% 4.6% -4.6% -15.4% -22.0% -23.1% -20.6% -15% -17.0% -20% -18.8% -25% -25.1% -24.8% -30% ROS* 2001 2002 2003 2004 2005 2006 2007 2008 1Q09 2Q09 3Q09 4Q09 12.5% 12.0% 13.0% 13.7% 14.6% 15.9% 16.6% 16.2% 12.4% 13.6% 15.1% 15.5% * Excl. Restructuring 4 Years To Recover To 15% ROS In Last Cycle… 2 Quarters This Time 128 Revenue Growth and ROS History Tools Year over year growth Core 10.6% 10% 5.4% 5.4% 0% 2.3% 3.5% -2.4% 2.5% 4.8% 1.4% -6.2% -1.0% -10% -13.2% -3.7% -9.6% -24.5% -29.5% -12.2% -27.8% -7.0% -20% -30% -31.0% -31.5% -35.3% -40% ROS* 2001 2002 2003 2004 2005 2006 2007 2008 1Q09 2Q09 3Q09 4Q09 9.5% 4.3% 5.5% 8.5% 9.1% 11.3% 11.8% 10.6% -3.1% 2.1% 4.9% 8.3% Strong Sequential Margin Improvement *Excl. Restructuring 129 Capital Utilization Improvement 7.0 Inventory Turns 70 6.0 Receivable DSO 65 5.0 60 4.0 55 3.0 2003 7.0 2004 2005 2006 2007 2008 2003 2009 OWC Turns $150 6.0 2004 2005 2006 2007 2008 2009 Capital Expenditures ($millions) $100 5.0 4.0 $50 3.0 2.0 $0 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 Depreciation 2006 2007 2008 2009 Capital Spending 130 Free Cash Flow To Recurring Income* 2.5 2.0 1.5 1.0 0.5 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Nine Consecutive Years Of >1x Conversion * Recurring Income from Continuing Operations, excluding unusual items 131 Total Debt (Dec. 31, 2009) ($ Millions) Amount $ 325 300 300 925 10 0 935 (382) $ 553 Rate 3.55% 5.56% 5.75% Due Date Nov 20121 Apr 2015 Jul 2017 Long-Term Debt Short-Term & Misc. Long-Term Debt Commercial Paper Total Debt Cash Net Debt ($952 at December 31, 2008) Balance Sheet Remains A Strategic Asset 1 Swapped to Euro Debt - 5.25% note rate at date of issuance 132 Net-Debt To Total Capitalization* 50% 40% 38.8% 36.2% 30% 29.3% 26.8% 26.1% 20.5% 19.1% 24.8% 20% 15.7% 10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 Continue To Invest In Long-Term Growth While Maintaining A Conservative Capital Structure * Net Debt: Total Debt less Cash and Investments 133 Return on Invested Capital 14.3% 14.7% 13.5% 10.7% 10.8% 9.7% 8.2% 2003 2004 2005 2006 2007 2008 Disciplined Capital Management Continues To Drive Returns 2009 134 2009 Summary ¾ Cost Structure And Balance Sheet Adjusted Rapidly And Efficiently ¾ Sequential Margin Improvements ¾ Ninth Consecutive Year Free Cash Flow Exceeds Recurring Income ¾ Continued Strategic Investments In Downturn – New Products, Global Expansion, Acquisitions ¾ Maintained Conservative Capital Structure ¾ Positioned Cooper For The Future Well Positioned To Leverage Growth Opportunities 135 Cooper Industries 2010 Outlook Meeting 2010 Outlook Terry Klebe, SVP and CFO End Markets 2009 Revenues Other 5% Industrial 39% 2010 Revenue Forecast Other 5% Resi 10% Commercial 24% Utility 22% Industrial 41% Resi 11% Commercial 21% Utility 22% Diversified End-Market Exposure… Strong Penetration In International Markets 137 2010 Forecast: Industrial Market 2009 Revenue $2.0 Billion Canada 5% Latin Amer. 8% Asia Pac. 10% U.S. 53% Europe, M.E., Africa (EMEA) 24% ¾ Industrial Production – U.S. markets flat to up – International markets grow (especially developing markets) ¾ Factory Utilization – Capacity utilization shows modest improvement ¾ Capital Spending – MRO orders improve, improved credit markets help CapEx – Energy efficiency spend continues ¾ Energy – Worldwide infrastructure projects activity increasing Cooper Revenue Grows 3% to 7% (0% to 4% Core) On Improving International Markets And MRO Spend 138 2010 Forecast: Commercial Market 2009 Revenue $1.2 Billion CanadaLatin 6% Amer. Asia 3% Pac. 3% U.S. 62% EMEA 26% ¾ Energy efficiency / LED adoption continues to grow ¾ U.S. non-residential down 15% to 20% ¾ International markets mixed • Europe flat to down • Developing markets grow ¾ Economic stimulus package a wild card ¾ U.S. commercial construction recovery not foreseen until 2011 Cooper Revenue Declines 7% to 12% (-9% to -15% Core) On Commercial Construction Continued Weakness 139 2010 Forecast: Utility Market 2009 Revenue $1.1 Billion ¾ Smart grid / utility automation Canada 6% U.S. 68% continues to grow Latin Amer. 9% ¾ International growth Asia Pac. 13% EMEA 4% ¾ U.S utility modest spending increase in late 2010 ¾ Aging grid continues to need upgrade with long-term outlook positive ¾ Stimulus package opportunities… Smart Grid and T&D investments Cooper Revenue -2% to +2% As U.S Utility Spending Does Not Improve Until Late 2010 140 2010 Forecast: Residential / Retail Market 2009 Revenue $0.5 Billion ¾ Remodeling and renovation activity increases as sales of existing and new homes increase Canada 17% ¾ Housing starts continue slow, uneven improvement EMEA 4% U.S. 79% ¾ Gov’t home buyer tax credits helps growth in first half of 2010 ¾ Inventory of unsold / foreclosed homes down from 2009 levels ¾ Consumer confidence shows gradual improvement Cooper Revenue Increases 4% to 9% (3% to 6% Core) On Improved Housing Markets 141 End Markets: Today vs. Past Other 2% Industrial 29% Utility 18% 2009 2003 Other 5% Resi 18% Industrial 39% Commercial 33% Utility + Industrial = 47% Commercial + Resi = 51% Resi 10% Commercial 24% Utility 22% Utility + Industrial = 61% Commercial + Resi = 34% Expanding Industrial And Utility Exposure 142 2010 Revenue Growth Forecast Revenues (w/FX a 2% tailwind) -1% to +4% - Electrical Products -2% to +3% - Tools +7% to +12% Recovery In Most Markets Offset By Contraction In Non-Residential Construction 143 Major Items Impacting 2010 Forecast Revenue ¾ Overall Markets +/– ¾ Sales Mix ¾ Currency Translation (+2% revenue tailwind) ¾ Price / Material Economics E.P.S. +/– + + + +/– +/– ¾ Restructuring Benefits (+$.11 E.P.S. carryover) + ¾ Restructuring Expense (-$.06 to -$.08) + ¾ Pension and OPEB Cost (+$.03 E.P.S.) + ¾ Interest Cost (+$.04 E.P.S.) + ¾ Income Tax Rate (19% to 21% for 2010) –– ¾ Strategic Initiatives + ¾ Fully Diluted Shares Flat Positioned Positioned Very Very Well Well For For Strong Strong E.P.S. E.P.S. Growth Growth On On Flattish Flattish Revenues Revenues w/ w/ Strong Strong E.P.S. E.P.S. Growth Growth If If Core Core Revenues Revenues Exceed Exceed Forecast Forecast 144 Capital Utilization Improvement 7.0 Inventory Turns 70 6.0 Receivable DSO 65 5.0 60 4.0 OWC Turns $150 6.0 20 10 E 20 09 20 08 20 07 20 06 20 05 20 04 20 10 E 20 09 20 08 20 07 20 06 20 05 20 04 20 03 7.0 20 03 55 3.0 Capital Expenditures ($millions) $100 5.0 4.0 $50 3.0 Depreciation 20 10 E 20 09 20 08 20 07 20 06 20 05 20 04 20 10 E 20 09 20 08 20 07 20 06 20 05 20 04 20 03 20 03 $0 2.0 Capital Spending 145 Free Cash Flow to Recurring Income 2.0 1.2 1.4 1.1 1.3 1.1 1.2 1.2 1.5 >1.0 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 E 1.0 Expect Free Cash Flow In Excess Of Recurring Income For 10th Year In A Row 146 Outlook 1Q‘10 1Q’09 Revenues Electrical Tools Earnings per Share* 1Q’10 V% $1.26B 1.13B .13B $1.22 to $1.29B -3% to +2% -4% to +1% +10% to +15% $.47 $.65 to $.70 +38% to +49% Currency Translation In Forecast Adds 4% To Q1 ‘10 Revenues…. Significant Earnings Leverage On Core Revenue Decline * Excluding unusual items 147 2010 Financial Summary ¾ Timing Of End-Market Recoveries Vary….Modest Revenue Growth Helped By FX ¾ Earnings Per Share Full Year $2.70 to $2.90 ¾ Free Cash Flow >1x Continuing Income – Targeting Over $500 million in FCF – Tenth Consecutive Year ¾ Balance Sheet Used for Internal Investments, Dividends, Selective Acquisitions and Stock Buybacks Focus On Solid Earnings Leverage And Continued Strong Cash Generation 148 Cooper Industries 2010 Outlook Meeting Summary Kirk Hachigian, Chairman & CEO Cooper In 2006 (Slide from Feb 2009 Outlook) ¾ Revenue - $5.2B (Down 20% From 2008) ¾ Margins: – Electrical – Tools 14-16% 10-11% ¾ Free Cash Flow (After Cap Ex) - $500M ¾ EPS - $2.58* 2010 EPS Estimate Of $2.70 to $2.90 Well Positioned Heading Out Of The Storm…With An Attractive Dividend * 2006 Share count 187.6M vs. ~169M shares today 150 2010 Outlook Improving Headwinds + Capital markets are dramatically improved ─ High unemployment remains + Global economies are stable/improving; emerging markets remain strong ─ Record levels of excess capacity + Positive indicators ─ Manufacturing ─ Housing + Government stimulus… low interest rates ─ Construction and commercial real estate remain weak ─ Reforms are creating uncertainty: ▪ Financial ▪ Healthcare ▪ Energy/Climate ▪ Tax Growth Will Come From Customer Loyalty, Innovation And Globalization 151 Portfolio Diversity Market Outlook End Market % of Sales Industrial 39% Commercial 24% Utility 22% Resi/Other 15% International 39% 2010 2011 2012 2013 2014 2010 Revenue Neutral…Next Four Years Look Strong 152 Net-Debt To Total Capitalization* 50% 45% 43.9% Percent 40% 35% 30% 25% 20% 15.7% 15% 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 10% Much Better Positioned Than Last Downturn * Net Debt: Total Debt less Cash and Investments 153 Capital Allocation 2010 Debt Dividend Acquisitions Stock Buy-Back No Debt Due In 2010 And No Commercial Paper Outstanding ~$180M in 2010 – 8% Increase From 2009 Bolt-ons – Drive More Size & Scale Cheap/Low Risk/No Market Premium (~12M Share Authorization) Balanced Approach To Maximize Shareholder Value 154 Cooper Business Model Customer Loyalty Innovation Globalization Cooper Growth Mandate Talent Development Op. Excellence M&A Focused And Proven Business Model 155 2003-2008 Cycle Results ¾ 2003-2008 Electrical Sales Up 11.4% (7.4% Core) On Average ¾ 2003-2008 EPS Total Cooper Grew 20% Per Year ¾ Free Cash Flow Averaged $560M Per Year… Always Greater Than Recurring Income Exceptional Growth/Earnings And Cash Leverage On An Up Cycle 156 Shareholder Value Creation Great Portfolio Business Model/Execution ¾ Diverse ¾ Strong Cash Flow ¾ Global ¾ Technology ¾ Rapidly Scalable ¾ Performance-Based Culture Cash Deployment ¾ Disciplined M&A ¾ Dividends ¾ Buybacks All The Pieces Are In Place For Continued Exceptional Returns 157 Cooper Industries 2010 Outlook Questions & Answers
