10-Q

SECURITIES AND EXCHANGE COMMISSION

(Mark One)

For the quarter ended March 31, 2005

OR

For the transition period from ____________ to ____________

Cooper Industries, Ltd.

(713) 209-8400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

Number of registrant’s common stock outstanding as of March 31, 2005 was 92,849,043 Class A common shares that are held by the public and 7,766,537 Class A common shares and 54,810,129 Class B common shares that are held by the issuer’s wholly-owned subsidiaries.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COOPER INDUSTRIES, LTD.
CONSOLIDATED INCOME STATEMENTS

The accompanying notes are an integral part of these statements.

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COOPER INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these statements.

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COOPER INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these statements.

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COOPER INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

     Basis of Presentation - The consolidated financial statements of Cooper Industries, Ltd., a Bermuda company (“Cooper”), have been prepared in accordance with generally accepted accounting principles in the United States.

     The financial information presented as of any date other than December 31 has been prepared from the books and records without audit. Financial information as of December 31 has been derived from Cooper’s audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included. For further information regarding Cooper’s accounting policies, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2004 included in Part IV of Cooper’s 2004 Annual Report on Form 10-K.

     In December 2004, the Financial Accounting Standards Board issued FASB Statement 123(R), Share-Based Payment, which is a revision of SFAS No. 123. For Cooper, the revised statement is effective January 1, 2006. Statement 123(R) must be applied to new awards and previously granted awards that are not fully vested on the effective date. Cooper adopted SFAS No. 123 on January 1, 2003 using the prospective transition method which applied only to awards granted, modified or settled after the adoption date. Accordingly, compensation cost for some previously granted unvested awards that were not recognized under SFAS No. 123 will be recognized under Statement 123(R). Had we adopted Statement 123(R) in prior periods the impact of that standard would approximate the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in Note 2 of the Notes to the Consolidated Financial Statements.

Note 2. Stock-Based Compensation

     Under Cooper stock option plans, officers, directors and key employees may be granted options to purchase Cooper’s common stock at no less than 100% of the market price on the date the option is granted. Options generally become exercisable ratably over a three-year period commencing one year from the grant date and have a maximum term of ten years. The plans also provide for the granting of performance-based stock awards and restricted stock awards to certain key executives that generally vest over periods ranging from three to five years. Cooper also has an Employee Stock Purchase Plan which provides employees an option to purchase common stock. There is currently no outstanding offering under the Employee Stock Purchase Plan.

     Effective January 1, 2003, Cooper adopted Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), as amended. Cooper utilized the prospective method of adoption. Cooper accounts for stock-based compensation awards granted, modified or settled prior to January 1, 2003 using the intrinsic value method of accounting as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations (“APB No. 25”). SFAS No. 123 provides an alternative fair value based method for recognizing stock-based compensation in which compensation expense is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The fair value of stock options granted was estimated using the Black-Scholes option-pricing model. The fair value of restricted stock and performance-based awards granted was measured at the market price on the grant date. Stock-based compensation expense was $6.6 million and $4.3 million during the three months ended March 31, 2005 and 2004, respectively.

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     The following table presents pro forma income and earnings per share as if the fair value based method had been applied to all outstanding and unvested awards in each period.

Note 3. Acquisitions

     During March of 2004, Cooper acquired a manufacturer of specification and commercial grade lighting fixtures, for $10.1 million.

Note 4. Inventories

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Note 5. Shareholders’ Equity

     At March 31, 2005, 92,849,043 Class A common shares, $.01 par value were issued and outstanding (excluding the 7,766,537 Class A common shares held by wholly-owned subsidiaries as discussed below) compared to 92,543,660 Class A common shares, $.01 par value (excluding the 3,700,200 Class A common shares held by wholly-owned subsidiaries) at December 31, 2004. During the first quarter of 2005, Cooper issued 705,383 Class A common shares primarily in connection with employee incentive and benefit plans and Cooper’s dividend reinvestment program. During the first quarter of 2005, Cooper’s wholly-owned subsidiaries purchased 400,000 outstanding Class A common shares for $28.0 million under the Company’s share repurchase plan and a wholly-owned subsidiary purchased 3,669,037 previously unissued Class A common shares for a purchase price based on the fair market value of the shares. The share purchases are recorded by Cooper’s wholly-owned subsidiaries as an investment in its parent company that is eliminated in consolidation. During the first quarter of 2005, 2,700 Class A common shares held by wholly-owned subsidiaries were issued in connection with employee incentive plans, leaving 7,766,537 Class A common shares held by wholly-owned subsidiaries at March 31, 2005.

     A wholly-owned subsidiary also owns all the issued and outstanding Class B common shares. The subsidiary’s investment in the Class B common shares is eliminated in consolidation. If at any time a dividend is declared and paid on the Class A common shares, a like dividend shall be declared and paid on the Class B common shares in an equal amount per share. During 2004, Cooper’s wholly-owned subsidiaries waived their rights to receive the regular quarterly dividend declared. During the first quarter of 2005, Cooper’s wholly-owned subsidiaries elected to receive the regular quarterly dividend of $.37 per share (or an aggregate of $23.1 million) on all Class A and Class B common shares held.

Note 6. Segment Information

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Note 7. Pension and Other Postretirement Benefits

Note 8. Income Taxes

     The effective tax rate was 21.5% for the three months ended March 31, 2005 and 20.0% for the three months ended March 31, 2004. The increase is primarily related to increased projected earnings in 2005 without a corresponding increase in projected tax benefits.

     In April 2005, Cooper received an Examination Report from the Internal Revenue Service, which included a challenge to the treatment of gains and interest deductions claimed on Cooper’s 2000 and 2001 federal income tax returns, relating to transactions involving government securities. If the proposed adjustment is upheld, it would require that Cooper pay approximately $26.5 million in taxes plus accrued interest. Interest will continue to accrue until the matter is resolved. Cooper believes these transactions were properly reported on its federal income tax returns in accordance with applicable tax laws and regulations in effect during the period involved. Cooper is challenging these adjustments vigorously. While the outcome of proceedings of this type cannot be predicted with certainty, management believes that the ultimate outcome of this matter will not have a material impact on Cooper’s consolidated financial position, results of operations, or cash flows.

Note 9. Net Income Per Common Share

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Options and employee awards are not considered in the calculations if the effect would be antidilutive.

Note 10. Net Income and Other Nonowner Changes in Equity

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

Note 11. Restructuring Charges

     During the fourth quarter of 2003, Cooper recorded net restructuring charges of $16.9 million, or $13.6 million after taxes ($.14 per diluted common share). This represented costs associated with restructuring projects undertaken in 2003 of $18.4 million, partially offset by a $1.5 million adjustment of estimates for restructuring projects initiated in 2002.

     The most significant action included in the charges was an announcement of the closing of Cooper Wiring Devices’ manufacturing operations in New York City. This action will include the withdrawal from a multiple-employer pension plan. Cooper recorded a $12.5 million obligation as an estimate of Cooper’s portion of unfunded benefit obligations of the plan. The remaining $5.9 million charge primarily represents severance for announced employment reductions at several locations. The 2003 net impact of the charges was $16.4 million on the Electrical Products segment, $(0.4) million on the Tools & Hardware segment and $0.9 million related to General Corporate. As of March 31, 2005, Cooper had paid a total of $5.1 million for these actions, all of which was for severance costs.

     A total of 114 salaried and 150 hourly personnel were eliminated as a result of these actions, and all personnel were terminated as of December 31, 2004. The majority of the severance obligation was paid by the first half of 2004. The multiple-employer pension obligation is expected to be paid over 15 years, beginning in 2005.

     During the fourth quarter of 2002, Cooper committed to (1) the closure of ten manufacturing facilities, (2) further employment reductions to appropriately size Cooper’s workforce to market conditions, and (3) the write-off of assets related to production rationalization activities. These actions were taken as a part of Cooper management’s ongoing assessment of required production capacity in consideration of current demand levels. In connection with these commitments, certain production capacity and related assets were sold, outsourced, discontinued or moved to a lower cost environment. Cooper recorded a provision for these announced actions of $39.1 million ($15.0 million of which was non-cash), or $29.8 million after taxes ($.32 per diluted common share). Of this amount, $24.0 million ($11.0 million of which was non-cash) was associated with the Electrical Products segment, $12.7 million ($3.4 million of which was non-cash) was associated with the Tools & Hardware segment and the remainder was related to General Corporate.

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     The following table reflects activity related to the fourth quarter 2002 restructuring charge.

     A total of 435 salaried and 771 hourly positions were eliminated as a result of the planned closure and rationalization actions. Of those planned position eliminations, approximately 600 positions were replaced ultimately as a result of Cooper’s ongoing efforts to relocate production capacity to lower cost locations.

     See “Restructuring Charges” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Note 12. Charge Related to Discontinued Operations

     In October 1998, Cooper sold its Automotive Products business to Federal-Mogul Corporation (“Federal-Mogul”). These discontinued businesses (including the Abex product line obtained from Pneumo-Abex Corporation (“Pneumo”) in 1994) were operated through subsidiary companies, and the stock of those subsidiaries was sold to Federal-Mogul pursuant to a Purchase and Sale Agreement dated August 17, 1998 (“1998 Agreement”). In conjunction with the sale, Federal-Mogul indemnified Cooper for certain liabilities of these subsidiary companies, including liabilities related to the Abex product line and any potential liability that Cooper may have to Pneumo pursuant to a 1994 Mutual Guaranty Agreement between Cooper and Pneumo. On October 1, 2001, Federal-Mogul and several of its affiliates filed a Chapter 11 bankruptcy petition and indicated that Federal-Mogul may not honor the indemnification obligations to Cooper. As of the date of this filing, Federal-Mogul had not rejected the 1998 Agreement, which includes the indemnification to Cooper. If Federal-Mogul rejects the 1998 Agreement, Cooper will be relieved of its future obligations under the 1998 Agreement, including specific indemnities relating to payment of taxes and certain obligations regarding insurance for its former Automotive Products businesses. To the extent Cooper is obligated to Pneumo for any asbestos-related claims arising from the Abex product line (“Abex Claims”), Cooper has rights, confirmed by Pneumo, to significant insurance for such claims. Based on information provided by representatives of Federal-Mogul and recent claims experience, from August 28, 1998 through March 31, 2005, a total of 134,215 Abex Claims were filed, of which 87,361 claims have been resolved leaving 46,854 Abex Claims pending at March 31, 2005, that are the responsibility of Federal-Mogul. During the three months ended March 31, 2005, 2,855 claims were filed, 900 claims were resolved and based on an audit of records, 1,801 claims were tendered back to Pneumo Abex since Cooper believes they do not qualify as indemnified claims under the 1994 Agreement with Pneumo Abex. Since August 28, 1998, the average indemnity payment for resolved Abex Claims was $1,950 before insurance. A total of $69.2 million was spent on defense costs for the period August 28, 1998 through March 31, 2005. Historically, existing insurance coverage has provided 50% to 80% of the total defense and indemnity payments for Abex Claims.

     With the assistance of independent advisors, Bates White, LLC, in the fourth quarter of 2001 Cooper completed a thorough analysis of its potential exposure for asbestos liabilities in the event Federal-Mogul rejects the 1998 Agreement. Based on Cooper’s analysis of its contingent liability exposure resulting from

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Federal-Mogul’s bankruptcy, Cooper concluded that an additional fourth-quarter 2001 discontinued operations provision of $30 million after-tax, or $.32 per share, was appropriate to reflect the potential net impact of this issue. The analysis included a review of the twenty-year history of Abex Claims; the average indemnity payments for resolved claims; the jurisdictions in which claims had been filed; Bates White, LLC data on the incidence of asbestos exposure and diseases in various industries; existing insurance coverage including the insurance recovered by Pneumo and Federal-Mogul for pre-bankruptcy claims and the contractual indemnities. Assumptions were made regarding future claim filings and indemnity payments, and, based on the advisor’s data, the expected population of persons exposed to asbestos in particular industries. All of this data was used to determine a reasonable expectation of future claims, indemnity payments and insurance coverage. Cooper is preserving its rights as a creditor for breach of Federal-Mogul’s indemnification to Cooper and its rights against all Federal-Mogul subsidiaries. Cooper intends to take all actions to seek a resolution of the indemnification issues and future handling of the Abex-related claims within the Federal-Mogul bankruptcy proceedings.

     Cooper’s fourth-quarter 2001 analysis of the contingent liability exposure assumed that the liabilities would be settled within the Federal-Mogul bankruptcy proceedings. This analysis assumed that representatives of Federal-Mogul, its bankruptcy committees and the future claimants (the “Representatives”) would reach similar conclusions regarding the potential future liabilities and insurance recoveries as Cooper did based on the Bates White, LLC analysis. Throughout 2003, Cooper worked towards resolution of the indemnification issues and future handling of the Abex-related claims within the Federal-Mogul bankruptcy proceedings. This included negotiations with the Representatives regarding participation in Federal-Mogul’s proposed 524(g) asbestos trust. Based on the status of negotiations in 2004, Cooper concluded that it was probable that Federal-Mogul will reject the 1998 Agreement. Cooper also concluded that the Representatives would require any negotiated settlement through the Federal-Mogul bankruptcy to be at the high end of the Bates White, LLC liability analysis and with substantially lower insurance recovery assumptions and higher administrative costs.

     While Cooper believes that the insurance has significant additional value, extensive litigation with the insurance carriers may be required to receive recoveries and there is risk that court decisions could reduce the value of the recoveries. Additionally, the assumptions on liability payments could prove inaccurate over time. If Cooper is unable to reach a settlement with the Representatives and the 1998 Agreement is rejected, Cooper would be required to reflect an accrual for the total estimated liability and a receivable for the probable insurance recoveries. Generally accepted accounting principles provide relatively conservative requirements for the recording of insurance recoveries and a substantial portion of the potential insurance recoveries would not be reflected as receivables until future events occur.

     During late February and early March 2004, Cooper reassessed the accrual required based on the then current status of the negotiations with the Representatives and the liability and insurance receivable that would be required to be recorded if this matter is not settled within the Federal-Mogul bankruptcy. Cooper concluded that resolution within the Federal-Mogul proposed 524(g) asbestos trust would likely be within the range of the liabilities, net of insurance recoveries, that Cooper would accrue if this matter were not settled within the Federal-Mogul bankruptcy. Accordingly, Cooper recorded a $126.0 million after-tax discontinued operations charge, net of a $70.9 million income tax benefit, in the fourth quarter of 2003.

     Cooper has continued discussions with the Representatives, but to date has been unable to reach a satisfactory conclusion. At this time, the exact manner in which this issue will be resolved is not known. The accrual for potential liabilities related to the Automotive Products sale and the Federal-Mogul bankruptcy was $218.6 million at March 31, 2005 and $225.1 million at December 31, 2004.

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Note 13. Consolidating Financial Information

     Prior to January 1, 2005, Cooper fully and unconditionally guaranteed the registered debt securities of Cooper Industries, Inc. (“Cooper Ohio”), a wholly-owned indirect subsidiary. Effective January 1, 2005, Cooper Industries, LLC, a wholly-owned indirect subsidiary, became the successor issuer of Cooper Ohio’s registered debt securities as a result of a merger of Cooper Ohio into Cooper Industries, LLC. Cooper and certain principal operating subsidiaries fully and unconditionally guarantee, on a joint and several basis, the registered debt securities of Cooper Industries, LLC. The following condensed consolidating financial information is included so that separate financial statements of Cooper Industries, LLC or Cooper Ohio are not required to be filed with the Securities and Exchange Commission. The consolidating financial statements present investments in subsidiaries using the equity method of accounting. Intercompany investments in the Class A and Class B common shares are accounted for using the cost method.

Consolidating Income Statements
Three Months Ended March 31, 2005
(in millions)

Consolidating Income Statements
Three Months Ended March 31, 2004
(in millions)

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Consolidating Balance Sheets
March 31, 2005
(in millions)

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Consolidating Balance Sheets
December 31, 2004
(in millions)

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Consolidating Statements of Cash Flows
Three Months Ended March 31, 2005
(in millions)

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Consolidating Statements of Cash Flows
Three Months Ended March 31, 2004
(in millions)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Three Months Ended March 31, 2005 Compared With Three Months Ended March 31, 2004

     Net income for the first quarter of 2005 was $87.8 million on revenues of $1,144.8 million compared with 2004 first quarter net income of $77.7 million on revenues of $1,064.6 million. First quarter diluted earnings per share increased 13.6% to $.92 from $.81 in 2004.

Revenues:

     Revenues for the first quarter of 2005 increased 8% compared to the first quarter of 2004. The impact of foreign currency translation increased reported revenues by approximately one percent for the quarter and the impact of acquisitions increased reported revenues by approximately one percent for the quarter.

     Electrical Products segment revenues increased 9% compared to the first quarter of 2004. Excluding the impact of favorable currency translation, revenues increased approximately 8% in the first quarter of 2005. Growth was primarily achieved through higher prices to recover increased material and other costs and from improved demand in key North American residential, commercial and industrial markets, which positively impacted our lighting, fuse protection, hazardous duty, wiring devices and enclosure businesses. Continued investments in system upgrades by utilities resulted in revenue gains in Cooper’s power transmission and distribution equipment business. European lighting and security markets showed modest improvement. Partially offsetting improved residential, utility, commercial and industrial volumes were lower retail channel sales relative to very strong comparables in the prior year.

     Tools & Hardware segment revenues for the first quarter of 2005 increased 2% from the first quarter of 2004. Excluding the impact of favorable currency translation, revenues were essentially flat with the first quarter of 2004. Tools & Hardware segment revenues reflected improved demand for hand tools from industrial markets, offset by decreased activity for power tools from the industrial market and lower North American hand tool retail sales relative to a strong quarter in the prior year.

Costs and Expenses:

     Cost of sales, as a percentage of revenues, was 68.8% for the first quarter of 2005 compared to 69.7% for the comparable 2004 quarter. The decrease in the cost of sales percentage was primarily due to favorable sales mix, realization of price increases, benefits of restructuring activities in prior periods and ongoing sourcing and productivity initiatives, more than offsetting increased material, energy and transportation costs.

     Electrical Products segment cost of sales, as a percentage of revenues, was 68.4% for the first quarter of 2005 compared to 69.0% for the first quarter of 2004. The decrease in the cost of sales percentage was primarily a result of productivity improvement initiatives, realized price increases, continued benefits of global sourcing activities and favorable business mix. Tools & Hardware segment cost of sales, as a percentage of revenues, was 70.8% for the first quarter of 2005 compared to 72.9% for the first quarter of 2004. The decrease in cost of sales percentage reflects the impact of pricing actions, cost structure alignment actions and benefits achieved through productivity improvement initiatives.

     Selling and administrative expenses, as a percentage of revenues, for the first quarter of 2005 were 19.9% compared to 19.6% for the first quarter of 2004. The increase is due to higher stock-based compensation and other incentive programs, increased audit and Sarbanes-Oxley Act compliance costs and selling and marketing costs related to Cooper’s sales growth initiatives.

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     Electrical Products segment selling and administrative expenses, as a percentage of revenues, for the first quarter of 2005 were 17.7% compared to 17.4% for the first quarter of 2004. The increase in selling and administrative expenses percentage is primarily due to increased incentive compensation and costs to support growth.

     Tools & Hardware segment selling and administrative expenses, as a percentage of revenues, for the first quarter of 2005 were 20.9% compared to 20.3% for the first quarter of 2004. The increase in the selling and administrative expenses percentage is primarily due to increased incentive costs and globalization initiatives.

     Interest expense, net for the first quarter of 2005 increased $0.7 million from the 2004 first quarter primarily as a result of both higher average interest rates and average debt balances, partially offset by higher cash and cash equivalents balances. Average debt balances were $1.41 billion and $1.34 billion and average interest rates were 5.9% and 5.6% for the first quarter of 2005 and 2004, respectively. The increase in average debt balances resulted from approximately $90 million of short-term debt which was borrowed in the fourth quarter of 2004 and repaid in the first quarter of 2005.

Operating Earnings:

     Electrical Products segment first quarter 2005 operating earnings increased 12% to $135.4 million from $120.8 million for the same quarter of last year, with revenue increases, favorable sales mix, price realization and benefits of cost reduction efforts more than offsetting increased costs.

     Tools & Hardware segment first quarter 2005 operating earnings increased 25% to $14.7 million compared to $11.8 million in the first quarter of 2004. The increase is a result of productivity initiatives and product cost reduction actions.

     General Corporate expense increased $2.0 million to $20.4 million during the first quarter of 2005 compared to $18.4 million during the first quarter of 2004. This increase primarily resulted from increased stock-based and other incentive compensation expenses, as well as increased audit and Sarbanes-Oxley compliance costs.

Income Taxes:

     The effective tax rate was 21.5% for the three months ended March 31, 2005 and 20.0% for the three months ended March 31, 2004. The increase is primarily related to increased projected earnings in 2005 without a corresponding increase in projected tax benefits.

Restructuring Charges:

     During the fourth quarter of 2003, Cooper recorded net restructuring charges of $16.9 million, or $13.6 million after taxes ($.14 per diluted common share). This represented costs associated with restructuring projects undertaken in 2003 of $18.4 million, partially offset by a $1.5 million adjustment of estimates for restructuring projects initiated in 2002.

     The most significant action included in the charges was an announcement of the closing of Cooper Wiring Devices’ manufacturing operations in New York City. This action will include the withdrawal from a multiple-employer pension plan. Cooper recorded a $12.5 million obligation as an estimate of Cooper’s portion of unfunded benefit obligations of the plan. The remaining $5.9 million charge primarily represents severance for announced employment reductions at several locations. The 2003 net impact of the charges was $16.4 million on the Electrical Products segment, $(0.4) million on the Tools & Hardware segment and $0.9 million related to General Corporate. As of March 31, 2005, Cooper had paid a total of $5.1 million for these actions, all of which was for severance costs.

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     A total of 114 salaried and 150 hourly personnel were eliminated as a result of these actions. The multiple-employer pension obligation is expected to be paid over 15 years beginning in 2005. Cooper estimates the annual savings from the personnel reductions was approximately $6 million, (net of additional employees added in lower-cost regions) with most of the savings beginning in the first quarter of 2004. The savings from the withdrawal from the multiple-employer pension plan are approximately $1 million per year and are expected to begin in 2006. The majority of the eliminated costs previously were reflected as cost of sales.

     During the fourth quarter of 2002, Cooper committed to (1) the closure of ten manufacturing facilities, (2) further employment reductions to appropriately size Cooper’s workforce to market conditions, and (3) the write-off of assets related to production rationalization activities. These actions were taken as a part of Cooper management’s ongoing assessment of required production capacity in consideration of the current demand levels. In connection with these commitments, certain production capacity and related assets were sold, outsourced, discontinued or moved to a lower cost environment. Cooper recorded a provision for these announced actions of $39.1 million ($15.0 million of which was non-cash), or $29.8 million after taxes ($.32 per diluted common share). Of this amount, $24.0 million ($11.0 million of which was non-cash) was associated with the Electrical Products segment, $12.7 million ($3.4 million of which was non-cash) was associated with the Tools & Hardware segment and the remainder was related to General Corporate. During 2003, Cooper reduced estimates of the cost related to those actions by $1.5 million.

     The following table reflects activity related to the fourth quarter 2002 restructuring charge.