10-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal year ended December 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13884

COOPER CAMERON CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	76-0451843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1333 West Loop South
Suite 1700
Houston, Texas	77027
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (713) 513-3300

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 Per Share	New York Stock Exchange
Junior Participating Preferred Stock	New York Stock Exchange
Purchase Rights
Par Value $0.01 Per Share

     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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes x No o

     The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of Registrant as of June 30, 2003, our most recently completed second fiscal quarter, was approximately $1,967,302,022. For the purposes of the determination of the above statement amount only, all directors and executive officers of the Registrant are presumed to be affiliates. The number of shares of Common Stock, par value $.01 per share, outstanding as of February 23, 2004 was 53,927,516.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant’s Annual Report to Stockholders for 2003 — Part II.

TABLE OF CONTENTS

		Page
				2003
		2003		Annual
Item		Form 10-K		Report
Part I
1.	Business		1		—
	Markets and Products		1		—
	Market Issues		5		—
	Geographic Breakdown of Revenues		5		—
	New Product Development		5		—
	Competition		6		—
	Manufacturing		6		—
	Backlog		7		—
	Patents, Trademarks and Other Intellectual Property		7		—
	Employees		7		—
	Executive Officers of Registrant		8		—
	Available Information		8		—
	Glossary of Terms		8		—
2.	Properties		9		—
3.	Legal Proceedings		9		—
4.	Submission of Matters to a Vote of Security Holders		10		—
Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		11		—
6.	Selected Financial Data		11		61
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11		25-35
7A.	Quantitative and Qualitative Disclosures about Market Risk		11		35
8.	Financial Statements and Supplementary Data		11		36-60
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		12		—
9A.	Controls and Procedures		12		—
Part III
10.	Directors and Executive Officers of the Registrant		12		—
11.	Executive Compensation		15		—
	Directors’ Compensation		15		—
	Compensation and Governance Committee Report on Executive Compensation		15		—
	Executive Compensation Tables		19		—
	Employment, Termination and Change of Control Arrangements		21		—
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		23		—
	Security Ownership of Certain Beneficial Owners		23		—
	Security Ownership of Management		24		—
13.	Certain Relationships and Related Transactions		24		—
14.	Principal Accountant Fees and Services		24		—
	Principal Accounting Firm Fees		24		—
	Pre-approval Policies and Procedures		25		—
Part IV
15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		25		—
	Signatures		30		—
Portions of the 2003 Annual Report
Consent of Independent Auditors
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO & CFO Pursuant to Section 906

PART I

ITEM 1. BUSINESS

     Cooper Cameron Corporation (“Cooper Cameron” or the “Company”) is a leading international manufacturer of oil and gas pressure control equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron is also a leading manufacturer of centrifugal air compressors, integral and separable gas compressors and turbochargers. See “Glossary of Terms” at the end of Item 1 for definitions of certain terms used in this section. Any reference to Cooper Cameron Corporation, its divisions or business units within this paragraph or elsewhere within this 10-K as being a leader, leading provider, leading manufacturer, or having a leading position is based on the amount of equipment installed worldwide and available industry data.

     Cooper Cameron’s origin dates back to the mid-1800s with the manufacture of steam engines that provided power for plants and textile or rolling mills. By 1900, with the discovery of oil and gas, Cooper Cameron’s predecessors moved into the production of internal combustion engines and gas compressors. Product offerings were added by the Company’s predecessors through various acquisitions, in particular the acquisitions of The Bessemer Gas Engine Company (gas engines and compressors); Pennsylvania Pump and Compressor (reciprocating air and gas compressors); Ajax Iron Works (compressors); Superior (engines and compressors); Joy Petroleum Equipment Group (valves, couplings and wellheads); Joy Industrial Compressor Group (compressors); and Cameron Iron Works (blowout preventers, ball valves, control equipment and McEvoy-Willis wellhead equipment and choke valves).

     Cooper Cameron, a Delaware corporation, was incorporated on November 10, 1994. The Company operated as a wholly-owned subsidiary of Cooper Industries, Inc. (“Cooper”) until June 30, 1995, the effective date of the completion of an exchange offer with Cooper’s stockholders resulting in the Company becoming a separate stand-alone company. The common stock of Cooper Cameron trades on the New York Stock Exchange under the symbol “CAM”.

     In 1998, the Company acquired Orbit Valve International, Inc. (“Orbit®”). Orbit became part of the Cooper Cameron Valves organization. Orbit manufactures and sells high-performance valves and actuators for the oil and gas and petrochemical industries. Orbit’s primary manufacturing facility is located in Little Rock, Arkansas.

     During 1999, the Company sold its rotating natural gas compressor business to Rolls-Royce plc for approximately $200 million. The operations that were sold had primary facilities in Liverpool, United Kingdom, Hengelo in the Netherlands and Mt. Vernon, Ohio.

     In January 2001, the Company decided to exit the market for new Superior brand natural gas engines and close its Springfield, Ohio manufacturing facility. Manufacturing operations at this facility were discontinued in the first half of 2001.

     In September 2002, the Company acquired certain assets of Stewart and Stevenson’s Petroleum Equipment Segment, providing a combination of product line additions and cost savings opportunities within the Cameron division. In December 2002, the Company acquired Nutron Industries, a valve manufacturer based in Edmonton, Canada. This acquisition expanded the product offerings of the Cooper Cameron Valves division, and provided opportunities to grow sales outside the United States, particularly in Canada.

     In January 2004, the Company reached an agreement to acquire Petreco International Inc., a Houston, Texas-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million. Petreco is a market leader in highly engineered custom processing products for the worldwide oil and gas industry. This acquisition will increase the Company’s presence in the oil and gas separation market and is expected to be complementary to existing businesses.

Business Segments

Markets and Products

     During 2003, the Company’s operations were organized into three separate business segments — Cameron, Cooper Cameron Valves and Cooper Compression, each of which conducts business as a division of the Company. In 2004, Petreco International will be added as a fourth division. For additional business segment information for each of the three years in the period ended December 31, 2003, see Note 13 of the Notes to Consolidated Financial Statements, which Notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

1

Cameron Division

     Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Its products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations.

     Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s products are marketed under the brand names Cameron®, W-K-M®, McEvoy® and Willis®. Additionally, Cameron manufactures elastomers, which are used in pressure and flow control equipment and other petroleum industry applications, as well as in the petroleum, petrochemical, rubber molding and plastics industries.

     Cameron’s aftermarket program, CAMSERV™, combines traditional aftermarket services and products, such as equipment maintenance and reconditioning, with Cameron’s information technology toolset. CAMSERV is designed to provide flexible, cost-effective solutions to customer aftermarket needs throughout the world. Cameron also provides an inventory of repair parts, service personnel, planning services and inventory and storage of customers’ idle equipment. During the last couple of years, Cameron has continued to enhance its aftermarket presence worldwide with new facilities in Saudi Arabia, Macae, Brazil and Malabo, Equatorial Guinea. In April 2003, a world-class aftermarket facility was opened in Luanda, Angola to service the growing business in West Africa. Additionally, a major expansion was completed in 2003 at Veracruz, Mexico, and construction has begun on a new offshore service center in Nigeria.

     As petroleum exploration activities have increasingly focused on subsea locations, Cameron directed much of its new product development efforts toward this market. Cameron’s patented SpoolTree™ horizontal subsea production system, which was introduced in 1993, is used in oil and gas fields with subsea completions that require frequent retrieval of downhole equipment. With the SpoolTree system, well completion and workover activities can be performed without a workover riser or removal of the Christmas tree and under conventional blowout preventer control, thereby reducing the time, equipment and expense needed to perform such activities. As a result of license agreements reached during 2003, the Company now receives royalties from two subsea tree manufacturers on their global production of horizontal subsea trees using Cooper Cameron’s patented technology. Cameron plans to add to its tradition of innovation with the introduction of an all-electric subsea production system that is expected to simplify installations, offer greater reliability and provide cost savings to customers. There will be a major offshore trial of the system in the U.K. North Sea during 2004. This electric system will be featured in Cooper Cameron’s display at the 2004 Offshore Technology Conference in Houston, Texas.

     The Cameron Willis Chokes business unit was formed to focus resources on the choke product line with the goal of enhancing Cameron’s performance in this product line. Cameron Willis manufactures Cameron and Willis brand chokes and Cameron brand actuators for the surface and subsea production markets. The Company’s primary choke manufacturing operations have now been consolidated into its Longford, Ireland facility with surface gate valve actuator manufacturing primarily performed at the Cameron Willis plant in Houston, Texas, which commenced operations in an expanded facility in March 2002.

     In 1998, Cameron opened a new research center in Houston, Texas that has ten specially designed test bays to test and evaluate Cameron’s products under realistic conditions. These include environmental test chambers to simulate extreme pressures and temperatures, high-strength fixtures for the application of multi-million pound tensile and bending loads, high pressure gas compressors and test enclosures, a hyperbaric chamber to simulate the external pressures of deep water environments, and two circulation loops for erosion and flow testing.

     During 2001, Cameron reorganized to address the growing market for system-level subsea projects, in which clients entrust their suppliers with more responsibility to deliver complete systems. The Offshore Systems organization was created expressly for such projects and provides concept design, systems engineering, and project management for offshore projects. The Offshore Systems organization has established multiple “Centers of Excellence” facilities, identifying the Company’s most efficient manufacturing and service locations. Using advanced communications technology, Offshore Systems has developed project management processes that allow global management across multiple sites. These processes include the coordination of Cameron’s own Centers of Excellence with the products and services that subcontractors provide to the systems. Centers of Excellence for specific areas include: project management, systems engineering and manifold and flowline connection engineering in Houston, Texas; subsea wellheads in Singapore; subsea trees in Leeds, England; subsea chokes in Longford, Ireland; and subsea production controls in Celle, Germany.

     During 2002, Cameron introduced the new Environmental Safe Guard (ESG™) system, which combines a traditional surface blowout preventer with a subsea device (the ESG unit) at the bottom of the drilling string. This allows operators to use the less expensive second- or third-generation semi submersible rigs, instead of fourth- or fifth-generation units, to drill in deepwater locales. During 2003, these systems were deployed offshore Brazil and Indonesia, as well as in the Mediterranean Sea.

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     Also in 2002, Cameron Controls was reorganized, with drilling controls merging with Cameron’s Drilling organization, and production and workover controls merging with the Offshore Systems organization. Cameron’s two primary controls manufacturing, assembly and testing facilities are located in Celle, Germany and Houston, Texas.

     Cameron primarily markets its products directly to end-users through a worldwide network of sales and marketing employees, supported by agents in some international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees. The balance of Cameron’s products are sold through established independent distributors.

     Cameron’s primary customers include oil and gas majors, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers.

Cooper Cameron Valves Division

     Cooper Cameron Valves (CCV) is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. Large diameter valves are used primarily in natural gas transmission lines. Smaller valves are used in oil and gas gathering and processing systems and in various types of industrial processes in refineries and petrochemical plants. Equipment used in these environments is generally required to meet demanding API 6D and American National Standards Institute (ANSI) standards.

     CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block & bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and services. These products are marketed under the brand names Cameron®, W-K-M®, Orbit®, Demco®, Foster®, NAVCO®, Nutron®, Thornhill Craver™, and TruSeal®. During the first quarter of 2000, CCV expanded its field service capabilities with the acquisition of Valve Sales Inc., a Houston-based valve repair and manufacturing company. As described previously, Nutron, a Canadian valve manufacturer, was acquired in December 2002 in order to further expand CCV’s product offerings, particularly in Canada.

     A major focus during 2003 was rationalization of facilities and the related costs. These efforts include the restructuring of the Oklahoma City plant and the consolidation of CCV’s four Edmonton, Canada facilities into one location. Another area of focus in 2003 was the expansion of the aftermarket business. Six new facilities were added during 2003, including four outside the U.S., and three existing facilities were expanded. CCV now has a total of 15 aftermarket locations worldwide.

     CCV markets its equipment and services through a worldwide network of combined sales and marketing employees, distributors and agents in selected international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     CCV’s primary customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies.

Cooper Compression Division

     Cooper Compression was created in 2002 through the combination of Cooper Energy Services (CES) and Cooper Turbocompressor (CTC). The business is divided into Reciprocating Technology, which encompasses the products and services historically provided by CES, and Centrifugal Technology, which encompasses the air and gas compression markets traditionally served by CTC.

     Cooper Compression is a leading provider of reciprocating and centrifugal technology. Cooper Compression’s products include aftermarket parts and services, integral reciprocating engine-compressors, reciprocating compressors, turbochargers, control systems, integrally geared centrifugal compressors, compressor systems and controls. Its aftermarket services include spare parts, technical services, repairs, overhauls and upgrades.

     Cooper Compression’s products and services are marketed under the Ajax®, Superior®, Cooper-Bessemer®, Penn™, Enterprise™, Texcentric®, Nickles Industrial™, Turbine Specialties™ (Reciprocating Products) and Turbo Air®, Genuine Joy® (aftermarket parts only), Dry Pak™, TA™ and MSG® (centrifugal products) brand names. Cooper Compression provides global support for its products and maintains sales and/or service offices in key international locations.

3

Reciprocating Technology

     Cooper Compression provides Ajax integral engine-compressors (140 to 880 horsepower), which combine the engine and compressor on a single drive shaft, and are used for gas re-injection and storage, as well as on smaller gathering and transmission lines. In addition, a line of 1,800 RPM separable compressors, featuring low vibration, couple free design features, was added in 2001. These compressors (100 to 280 horsepower) are sold in gas gathering, drilling and compression natural gas markets.

     Superior reciprocating compressors (100 to 9,000 horsepower) are used primarily for natural gas applications, including production, storage, withdrawal, processing and transmission, as well as petrochemical processing. The Superior WG compressor series was introduced in 2000 for large project applications up to 9,000 horsepower. These high-speed separable compressor units can be matched with either natural gas engine drivers or electric motors and provide a cost advantage over competitive equipment in the same power range.

     There is an installed base of Cooper-Bessemer, Penn, Enterprise, Superior, Ajax and Joy engines and compressors (up to 30,000 horsepower) for which Cooper Compression provides replacement parts and service on a worldwide basis.

     Cooper Compression’s channel to market utilizes a distributor network in North America for new reciprocating and plant air centrifugal compressors, and direct selling for most international customers. These channels are continually rationalized to provide maximum exposure for our products.

     In addition to the previously described sale of the rotating business, Cooper Compression has undergone a significant level of restructuring to enhance productivity and reduce costs. The closing of the Grove City, Pennsylvania plant and foundry was completed in 2000. Most of the activity previously conducted at that location was outsourced to third parties or relocated to other facilities. In 2001, the relocation of the central warehouse from Mt. Vernon, Ohio to Houston, Texas was completed. The 2001 acquisitions of Nickles Industrial and Turbine Specialties Inc. allowed Cooper Compression to expand its aftermarket business into servicing compression and power equipment from other manufacturers.

     As part of its restructuring, Cooper Compression constructed a Superior separable compressor plant and research and development center in Waller, Texas in 2000. Each manufacturing station in the plant is designed for short cycle, just-in-time machining and assembly to reduce inventory requirements and product lead times. The plant is designed to manufacture the division’s complete line of Superior compressor units to serve the natural gas market. The relocation of the former compressor plant in Mt. Vernon, Ohio to the new Waller facility was completed in the first half of 2001.

     In January 2001, the decision to exit the market for new Superior brand natural gas engines, including its 2400 engine line, and to close the Springfield, Ohio engine plant was announced. The project was substantially completed by the end of the second quarter of 2001.

     Cooper Compression continued its restructuring efforts in 2002 with the fourth quarter decision to close an additional 13 facilities worldwide in order to properly size the business to current market conditions. These actions were largely completed during 2003.

     Cooper Compression’s primary customers in reciprocating technology include gas transmission companies, compression leasing companies, oil and gas producers and processors and independent power producers.

Centrifugal Technology

     Cooper Compression also manufactures and supplies integrally geared centrifugal compressors, compressor systems and controls, as well as aftermarket services, to customers around the world. Centrifugal air compressors, used primarily in manufacturing processes, are sold under the trade name of Turbo Air, with specific models including the TA-2000, TAC-2000, TA-3000, TA-6000, TA-11000 and TA-20000. Engineered Compressors are used in the process air and gas markets and are identified by the trade names of Turbo Air and MSG.

     The process and plant air centrifugal compressors deliver oil-free compressed air and other gases to the customer, thus preventing oil contamination of the finished products. We believe our worldwide customers increasingly prefer oil-free air for quality, safety, operational and environmental reasons.

     Cooper Compression provides installation and maintenance service, parts, repairs, overhauls and upgrades to its worldwide customers for plant air and process gas compressors. It also provides aftermarket service and repairs on all equipment it produces through a worldwide network of distributors, service centers and field service technicians utilizing an extensive inventory of parts.

     Cooper Compression’s customers in centrifugal technology are petrochemical and refining companies, natural gas processing companies, durable goods manufacturers, utilities, air separation and chemical companies.

4

Market Issues

     Cooper Cameron, through its segments, is a leader in the global market for the supply of petroleum production equipment. Cooper Cameron believes that it is well positioned to serve these markets. Plant and service center facilities around the world in major oil- and gas-producing regions provide a broad, global breadth of market coverage.

     The international market continues to be a source of growth for Cooper Cameron. The desire to expand oil and gas resources and transmission capacity in developed and developing countries, for both economic and political reasons, continues to be a major factor affecting market demand. Additionally, establishment of industrial infrastructure in the developing countries will necessitate the growth of basic industries that require plant air and process compression equipment. Production and service facilities in North and South America, Europe, the Far and Middle East and West Africa provide the Company with the ability to serve the global marketplace.

     In each of Cooper Cameron’s business segments, a large population of installed engines, compression equipment, and oil and gas production equipment exists in both the U.S. and international market segments. The rugged, long-lived nature of the equipment provides a relatively stable repair parts and service business. However, with respect to Cooper Compression, approximately 39% of that segment’s revenues come from the sale of replacement parts for equipment that the Company no longer manufacturers. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

     In recent years, the Company’s Cameron Division has been expanding into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for 10.8%, 4.3% and 0.6% of total revenues in 2003, 2002 and 2001, respectively.

Geographic Breakdown of Revenues

     Revenues for the years ended December 31, 2003 and 2002 were generated from shipments to the following regions of the world (dollars in thousands):

					Increase
Region	2003		2002		(Decrease)
North America	$	783,427	$	750,059	$	33,368
South America		79,114		75,992		3,122
Asia, including Middle East		261,481		264,063		(2,582	)
Africa		195,739		205,641		(9,902	)
Europe		299,011		226,676		72,335
Australia, New Zealand And Other		15,574		15,669		(95	)
	$	1,634,346	$	1,538,100	$	96,246

New Product Development

     Cameron has introduced several new drilling products during the last several years. These new products include the 3.5 million-pound load capacity LoadKing™ riser system, used for drilling in up to 10,000-foot water depths; a new lightweight and lower-cost locking mechanism for subsea BOPs; and a new generation of variable-bore ram packers. Additionally, Cameron’s Freestanding Drilling Riser, introduced in 1999, was a winner of the Petroleum Engineer International Special Meritorious Award for Engineering Innovation. During 2002, Cameron’s new Environmental Safe Guard system received World Oil® magazine’s prestigious “Next Generation” award as “Best Drilling/Completion Solution.”

     During 2002, Cameron marked the tenth anniversary of its introduction of the patented SpoolTree™ subsea production system, a tree design referred to generically as a horizontal subsea tree. The SpoolTree has received numerous awards for its advanced technology and innovation, was recognized for its contributions to the industry at the Offshore Technology Conference in Houston during May 2002, and resulted in Cameron receiving the prestigious Queen’s Award for Enterprise in the U.K. A Cameron SpoolTree was installed in 2002 at a depth of 7,209 feet in Marathon’s Camden Hill field in the Gulf of Mexico, a record depth at the time. As a result of license agreements reached during 2003, the Company now receives royalties from two subsea tree manufacturers on their global production of horizontal subsea trees using Cooper Cameron’s patented technology.

5

     Several new controls products have also been added. Cameron launched a new electro-hydraulic drilling control system in 1997 and a new subsea production control system in 1998. In 2001, the Company expanded the CAMTROL system to include all of Cameron’s controls capabilities, including production, drilling and workover. In May 2002, Cameron enhanced its production controls offering by upgrading the controllers and software. These improvements follow the CAMTROL design philosophies of modularity and redundancy. During 2004, the Company plans to introduce an all-electric subsea control system that is expected to simplify installation and offer greater reliability and cost savings to the customer.

     During 2003, Cameron began production of a new lower-cost compact wellhead system. Several of these systems were installed in fields in upstate New York. Additionally, a new valve was designed for extreme applications where manually operated valves would not be a preferred option. This product has been successful in large-bore, high-pressure gas applications or during well stimulation activity, particularly in the Gulf Coast region.

     In 2000, CCV completed the development of a range of 2” to 16” ball valves capable of performing at pressures of 10,000 psi and in water depths of 10,000 feet.

     Cooper Compression has focused product development resources to further expand its high-efficiency plant air compressor line and to provide engineered compressors matched to the requirements of its customers. The latter is being achieved by advances in aerodynamic and rotor dynamic analytical design capability. The year 2001 saw the addition of centrifugal gas applications.

     Through the introduction of its new compressor frames, Cooper Compression’s standard product range was extended up to 2,500 horsepower, positioning itself as a viable supplier of turbo plant air compressors in a wide range of horsepowers. One of the new products, the TAC-2000, won 2001’s Silver Award for Product of the Year from Plant Engineering magazine. In 2001, remote monitoring was added to the control system capabilities. The new Vantage controller is available as an upgrade kit for both proprietary and competitor compressors.

     Cooper Compression’s product range has been expanded through the addition of new compressor frames (TA-6000, TAC-2000, TA-11000 and TA-20000) and the addition of trademarked accessories such as Dry Pak heat of compression dryers and Turboblend, a hydro-cracked turbomachinery lubricating oil. In 2001, an active aftermarket effort was begun, leveraging off of the significant base of installed equipment, the Engineered Compressor product line was redefined and the MSG Renaissance program was introduced to update the MSG product line. Also in 2001, European packaging capability was established to better serve customers in the region. During 2003 and 2002, Cooper Compression continued to penetrate the large markets in Western and Eastern Europe via a newly established regional office in Milan, Italy.

Competition

     Cooper Cameron competes in all areas of its operations with a number of other companies, some of which have financial and other resources comparable to or greater than those of Cooper Cameron.

     Cooper Cameron has a leading position in the petroleum production equipment markets, particularly with respect to its high-pressure products. In these markets, Cooper Cameron competes principally with Balon Corporation, Circor, Dril-Quip, Inc., Dresser Valve, FMC Technologies, Inc., Hydril Company, Aker Kvaerner, Masterflo, Neles-Jamesbury, Varco International, Inc., Wood Group, ABB (Offshore Systems division) and Vetco Gray Inc. (a subsidiary of ABB).

     The principal competitive factors in the petroleum production equipment markets are technology, quality, service and price. Cooper Cameron believes several factors give it a strong competitive position in these markets. Most significant are Cooper Cameron’s broad product offering, its worldwide presence and reputation, its service and repair capabilities, its expertise in high-pressure technology and its experience in alliance and partnership arrangements with customers and other suppliers.

     Cooper Cameron also has a leading position in the compression equipment markets. In these markets, Cooper Cameron competes principally with the Dresser Rand Division of Ingersoll-Rand Company, Ingersoll-Rand Air Solutions Group, Demag, GHH/Borsig, Elliott Company, a division of Ebara, Ariel Corporation and Atlas-Copco AB. The principal competitive factors in the compression equipment markets are engineering and design capabilities, product performance, reliability and quality, service and price. Cooper Cameron has a competent engineering staff and skilled technical and service representatives, with service centers located throughout the world.

Manufacturing

     Cooper Cameron has manufacturing facilities worldwide that conduct a broad variety of processes, including machining, fabrication, assembly and testing using a variety of forged and cast alloyed steels and stainless steel as the primary raw materials. In recent years, Cooper Cameron has rationalized plants and products, closed various manufacturing facilities, moved product lines to achieve economies of scale, and upgraded the remaining facilities. This is an ongoing process as the Company seeks ways to improve delivery performance and reduce costs.

6

Cooper Cameron maintains advanced manufacturing, quality assurance and testing equipment geared to the specific products that it manufactures and uses extensive process automation in its manufacturing operations. The manufacturing facilities utilize computer-aided, numeric-controlled tools and manufacturing techniques that concentrate the equipment necessary to produce similar products in one area of the plant in a configuration commonly known as a manufacturing cell. One operator in a manufacturing cell can monitor and operate several machines, as well as assemble and test products made by such machines, thereby improving operating efficiency and product quality.

     Cooper Cameron’s test capabilities are critical to its overall processes. The Company has the capability to test most equipment at rated operating conditions, measuring all operating parameters, efficiency and emissions. All process compressors for air separation and all plant air compressors are given a mechanical and aerodynamic test in a dedicated test center prior to shipment.

     All of Cooper Cameron’s Asian, European and Latin American manufacturing plants are ISO certified and API licensed. Most of the U.S. plants are ISO certified and certification is planned for the remainder. ISO is an internationally recognized verification system for quality management.

Backlog

     Cooper Cameron’s backlog was approximately $946.6 million at December 31, 2003, (approximately 79% of which is expected to be shipped during 2004) as compared to $827.8 million at December 31, 2002 and $695.4 million at December 31, 2001. Backlog consists of customer orders for which a purchase order has been received, satisfactory credit or financing arrangements exist and delivery is scheduled.

Patents, Trademarks and Other Intellectual Property

     As part of its ongoing research, development and manufacturing activities, Cooper Cameron has a policy of seeking patents when appropriate on inventions involving new products and product improvements. Cooper Cameron owns 242 unexpired United States patents and 487 unexpired foreign patents. During 2003, 12 new U.S. and 30 new foreign patent applications were filed.

     Although in the aggregate these patents are of considerable importance to the manufacturing of many of its products, Cooper Cameron does not consider any single patent or group of patents to be material to its business as a whole.

     Trademarks are also of considerable importance to the marketing of Cooper Cameron’s products. Cooper Cameron considers the following trade names to be material to its business as a whole: Cameron, Cooper-Bessemer, Ajax, Willis and W-K-M. Other important trademarks used by Cooper Cameron include C-B Turbocharger™, Demco, DryPak, Dynacentric™, Dynaseal™, Enterprise, Foster, Genuine Joy, H & H™, McEvoy, MSG, NAVCO®, Nickles Industrial, Nutron®, Orbit, Penn, POW-R-SEAL™, Quad 2000™, SAF-T-SEAL™, Superior, TA, Texcentric, Thornhill Craver, TruSeal, Turbine Specialties (Reciprocating Products), Turbo Air and VANTAGE™. Cooper Cameron has the right to use the trademark Joy on aftermarket parts until November 2027. Cooper Cameron has registered its trademarks in the countries where such registration is deemed material.

     Cooper Cameron also relies on trade secret protection for its confidential and proprietary information. Cooper Cameron routinely enters into confidentiality agreements with its employees, partners and suppliers. There can be no assurance, however, that others will not independently obtain similar information or otherwise gain access to Cooper Cameron’s trade secrets.

Employees

     As of December 31, 2003, Cooper Cameron had approximately 7,700 employees, of which approximately 1,374 were represented by labor unions. Cooper Cameron believes its current relations with employees are good. On January 1, 2003, Cameron signed a new three-year agreement with the Amalgamated Engineering and Electrical Union (AEEU), representing 280 hourly employees in the Leeds, England facility. On July 28, 2003, CTC reached a three-year agreement with the International Association of Machinists (IAM), representing 160 hourly employees at the Buffalo, New York facility. The Company’s relations with the AEEU and IAM are excellent and the signing of these three-year agreements provides a stable environment for these important facilities. During 2004, the Company will have contracts expiring with the International Machinist Union in Brookshire, Texas, representing 46 employees, and the Marine and Ship Builders Union in Singapore, representing 240 employees. Relations with both organizations are excellent and the negotiations are expected to proceed in a timely and satisfactory manner.

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Executive Officers of the Registrant

Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Sheldon R. Erikson (62)	President and Chief Executive Officer since January 1995. Chairman of the Board from 1988 to January 1995 and President and Chief Executive Officer from 1987 to January 1995 of The Western Company of North America.
Franklin Myers (51)	Senior Vice President of Finance and Chief Financial Officer since January 2003. Senior Vice President from July 2001 to January 2003, Senior Vice President and President of the Cooper Energy Services division from August 1998 to July 2001 and Senior Vice President, General Counsel and Secretary from April 1995 to July 1999.
John D. Carne (55)	Vice President since May 2003. President, Cooper Cameron Valves since April 2002. Director of Operations, Eastern Hemisphere, Cameron Division from 1999 to March 2002. Plant Manager, Leeds, England, Cameron Division from 1996 to 1999. Director of Operations, U.K. & Norway, Cooper Energy Services (U.K.) Ltd. from 1988 to 1996.
William C. Lemmer (59)	Vice President, General Counsel and Secretary since July 1999. Vice President, General Counsel and Secretary of Oryx Energy Company from 1994 to March 1999.
Jack B. Moore (50)	Vice President since May 2003. President, Cameron Division since July 2002. Vice President and General Manager, Cameron Western Hemisphere from July 1999 to July 2002. Vice President Western Hemisphere Operations, Vice President Eastern Hemisphere, Vice President Latin American Operations, Director Human Resources, Director Market Research and Director Materials of Baker Hughes Incorporated from 1976 to July 1999.
Robert J. Rajeski (58)	Vice President since July 2000. President, Cooper Compression since October 2002. President, Cooper Turbocompressor division from July 1999 to October 2002 and President, Cooper Energy Services division from July 2001 to October 2002. Vice President and General Manager of Ingersoll-Dresser Pump Co., Engineered Pump division from 1994 to July 1999.
Jane C. Schmitt (53)	Vice President, Human Resources since May 1999. Vice President, Compensation and Benefits from 1996 to 1999, and Director, Compensation and Benefits from 1995 to 1996. Vice President, Human Resources of the CES division from September 1998 to October 1999.
Charles M. Sledge (38)	Vice President and Corporate Controller since July 2001. Senior Vice President, Finance and Treasurer from 1999 to June 2001, and Vice President, Controller from 1996 to 1999, of Stage Stores, Inc., a chain of family apparel stores. Stage Stores, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in June 2000 and successfully emerged from bankruptcy protection in August 2001.

Available Information

     Our website is www.coopercameron.com. Information available free of charge on our website includes previously filed reports with the Securities and Exchange Commission (SEC), charters of the Company’s Audit and Compensation and Governance Committees of the Board, the Company’s Code of Ethics for Management Personnel and Code of Business Conduct and Ethics for Directors, The Company’s Corporate Governance Guidelines, press releases and other documents that may be required to be made available by the SEC or the New York Stock Exchange. The information on our website is updated as soon as reasonably practicable.

The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or any other filing we make with the SEC. Additionally, our previously filed reports and statements are also available at the SEC’s website, www.sec.gov.

Glossary of Terms

Actuator. A hydraulic or electric motor used to open or close valves.

Blowout Preventer. A hydraulically operated system of safety valves installed at the wellhead during drilling and completion operations for the purpose of preventing an increase of high-pressure formation fluids — oil, gas or water — in the wellbore from turning into a “blowout” of the well.

Choke. A type of valve used to control the rate and pressure of the flow of production from a well or through flowlines.

Christmas tree. An assembly of valves, pipes and fittings used to control the flow of oil and gas from the well.

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Compressor. A device used to create a pressure differential in order to move or compress a vapor or a gas.

Centrifugal compressor. A compressor with an impeller or rotor, a rotor shaft and a casing which discharges gases under pressure by centrifugal force.

Integral reciprocating engine-compressor. A compressor in which the crankshaft is shared by the engine and compressor, each having its own piston rods driven by the shared crankshaft.

Integrally geared centrifugal compressor. A compressor in which the motor is geared so that the compressor runs at higher rpms than the motor itself to gain efficiency.

Reciprocating compressor. A compressor in which the compression effect is produced by the reciprocating motion of pistons and plungers operating in cylinders.

Controls. A device which allows the remote triggering of an actuator to open or close a valve.

Elastomer. A rubberized pressure control sealing element used in drilling and wellhead applications.

Riser. Pipe used to connect the wellbore of offshore wells to drilling or production equipment on the surface, and through which drilling fluids or hydrocarbons travel.

Valve. A device used to control the rate of flow in a line, to open or shut off a line completely, or to serve as an automatic or semi-automatic safety device.

Wellhead. The equipment installed at the surface of a wellbore to maintain control of a well and including equipment such as casing head, tubing head and Christmas tree.

ITEM 2. PROPERTIES

     The Company currently operates manufacturing plants ranging in size from approximately 21,000 square feet to approximately 447,000 square feet of manufacturing space. The Company also owns and leases warehouses, distribution centers, aftermarket and storage facilities, and sales offices. The Company leases its corporate headquarters office space and space for the Cameron division headquarters in Houston, Texas.

     The Company manufactures, markets and sells its products and provides services throughout the world, operating facilities in numerous countries. At December 31, 2003, the significant facilities used by Cooper Cameron throughout the world for manufacturing, distribution, aftermarket services, machining, storage and warehousing contained an aggregate of approximately 7,445,815 square feet of space, of which approximately 5,896,361 square feet (79%) was owned and 1,549,454 (21%) was leased. Of this total, approximately 5,171,919 square feet of space (69%) is located in the United States and Canada, 345,825 square feet of space (5%) is located in Mexico and South America, and 1,928,071 square feet of space (26%) is located in Europe, Africa and Asia. The table below shows the number of significant manufacturing, warehouse and distribution and aftermarket facilities by business segment and geographic area. Cameron and CCV share space in certain facilities and, thus, are being reported together.

					Asia/Pacific
	Western		Eastern		and		West
	Hemisphere		Hemisphere		Middle East		Africa		Total
Cameron and CCV		52		15		5		6		78
Cooper Compression		28		2		1		0		31

     Cooper Cameron believes its facilities are suitable for their present and intended purposes and are adequate for the Company’s current and anticipated level of operations.

ITEM 3. LEGAL PROCEEDINGS

     Cooper Cameron is a party to various legal proceedings and administrative actions, including certain environmental matters discussed below, all of which are of an ordinary or routine nature incidental to the operations of the Company. In the opinion of Cooper Cameron’s management, such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations or financial condition.

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Environmental Matters

     Cooper Cameron is subject to numerous U.S. federal, state, local and foreign laws and regulations relating to the storage, handling and discharge of materials into the environment. These include, in the United States, the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), the Clean Water Act, the Clean Air Act (including the 1990 Amendments) and the Resource Conservation and Recovery Act (“RECRA”). Foreign laws include: in Canada, the Environmental Protection Act; in Europe, the EU Environmental Directives; and in Singapore, the Environmental Pollution Control Act. Cooper Cameron believes that its existing environmental control procedures are adequate and it has no current plans for substantial capital expenditures in this area. Cooper Cameron has an active environmental management program aimed at compliance with existing environmental regulations and elimination or significant reduction in the generation of pollutants in its manufacturing processes. Cooper Cameron management intends to continue these policies and programs.

     The cost of environmental remediation and compliance has not been a material expense for the Company during any of the periods presented in this Form 10-K. Cooper Cameron has been identified as a potentially responsible party (“PRP”) with respect to three sites designated for cleanup under CERCLA or similar state laws. The Company’s involvement at two of the sites is believed to be at a de minimis level. The third site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas. The Company believes, based on its review and other factors, that the estimated costs related to these sites will not have a material adverse effect on the Company’s results of operations, financial condition or liquidity. Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations. As of December 31, 2003, the Company’s consolidated financial statements included a liability balance of $9.9 million for environmental matters. See “Environmental Remediation” in Management’s Discussion and Analysis of Results of Operations and Financial Condition of Cooper Cameron for additional information.

     Cooper Cameron is a named defendant in three lawsuits regarding contaminated underground water in a residential area adjacent to a former manufacturing site of one of its predecessors. In Valice v. Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed June 21, 2002), the plaintiffs claim that the contaminated underground water has reduced property values and threatens the health of the area residents and request class action status which, to date, has not been granted. The plaintiffs seek an analysis of the contamination, reclamation, and recovery of actual damages for the loss of property value. In Oxman vs. Meador, Marks, Heritage Texas Properties, and Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed February 7, 2003), and Kramer v. Cooper Cameron, (190th Judicial District, Harris County, filed May 29, 2003), the plaintiffs purchased property in the area and allege a failure by the defendants to disclose the presence of contamination and seek to recover unspecified monetary damages. The Company has been and is currently working with the Texas Commission of Environmental Quality and continues to monitor the underground water in the area. The Company is of the opinion that there is no risk to area residents and that the lawsuits essentially reflect concerns over possible declines in property value. In an effort to mitigate homeowners' concerns and reduce potential exposure from any such decline in property values, the Company has entered into 20 agreements with residents that obligate the Company to either reimburse sellers in the area for the estimated decline in value due to a potential buyer's concerns related to the contamination or to purchase the property after an agreed marketing period. To date, the Company has 2 properties of the 20 which it has purchased that remain unsold, with an appraised value of $6,390,000, and has expended $201,000 on reimbursements and losses on the resale of 5 of the 20. Twelve of these agreements remain outstanding. The Company believes any potential exposure from these agreements, or, based on its review of the facts and law, any potential exposure from these, or similar, suits will not have a material adverse effect on its results of operations, financial condition or liquidity.

Other Matters

     Cooper Cameron is a named defendant in a number of multi-defendant, multi-plaintiff tort lawsuits. To date, the Company has been dismissed from a number of these suits and has settled a number of others for small sums. The Company believes, based on its review of the facts and law, that the potential exposure from the remaining suits will not have a material adverse effect on its results of operations, financial condition or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during the fourth quarter of 2003.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     The common stock of Cooper Cameron, par value $.01 per share (together with the associated Rights to Purchase Series A Junior Participating Preferred Stock), is traded on The New York Stock Exchange (“NYSE”). No dividends were paid during 2003.

     The following table indicates the range of trading prices on the NYSE for January 2, 2003 through December 31, 2003 and for January 2, 2002 through December 31, 2002.

	Price Range ($)
	High		Low		Last
2003
First Quarter	$	54.55	$	44.00	$	49.51
Second Quarter		55.60		44.80		50.38
Third Quarter		51.50		45.00		46.21
Fourth Quarter		48.66		40.98		46.60

	Price Range ($)
	High		Low		Last
2002
First Quarter	$	52.98	$	36.40	$	51.11
Second Quarter		59.60		47.99		48.42
Third Quarter		50.86		35.94		41.76
Fourth Quarter		53.31		38.56		49.82

     As of February 12, 2004, the approximate number of stockholders of record of Cooper Cameron common stock was 1,531.

     Information concerning securities authorized for issuance under equity compensation plans is included in Note 9 of the Notes to Consolidated Financial Statements, which notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

ITEM 6. SELECTED FINANCIAL DATA

     The information set forth under the caption “Selected Consolidated Historical Financial Data of Cooper Cameron Corporation” on page 61 in the 2003 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The information set forth under the caption “Management’s Discussion and Analysis of Results of Operations and Financial Condition of Cooper Cameron Corporation” on pages 25-35 in the 2003 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information for this item is set forth in the section entitled “Market Risk Information” on page 35 in the 2003 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of the Company and the independent auditors’ report set forth on pages 36-60 in the 2003 Annual Report to Stockholders are incorporated herein by reference:

     Report of Independent Auditors.

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     Consolidated Results of Operations for each of the three years in the period ended December 31, 2003.

     Consolidated Balance Sheets as of December 31, 2003 and 2002.

     Consolidated Cash Flows for each of the three years in the period ended December 31, 2003.

     Consolidated Changes in Stockholders’ Equity for each of the three years in the period ended December 31, 2003.

     Notes to Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     Within the 90-day period prior to the filing of this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Disclosure Committee and the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Nathan Avery (69)
Director since 1995	Chairman of the Board and Chief Executive Officer of Galveston-Houston Company, a company specializing in the manufacturing of products to serve the energy and mining industries, from 1972 to December 2000, when it was sold to Komatsu, Ltd. Prior to that he was Chairman of the Board of Directors of Bettis Corporation, an actuator company, until 1996, when Bettis Corporation merged with Daniel Industries Inc., and was a director and member of the Executive Committee of Daniel Industries until June 1999, when Daniel Industries merged with Emerson Electric Co.
C. Baker Cunningham (62)
Director since 1996	Chairman of the Board, President and Chief Executive Officer of Belden Inc., a wire, cable and fiber optic products manufacturing company, since 1993. He served in positions of increasing responsibility with Cooper Industries Inc., a diversified manufacturer, marketer and seller of electrical products, tools and hardware from 1970 to 1993, including Executive Vice President, Operations from 1982 to 1993.
Sheldon R. Erikson (62)
Director since 1995	Chairman of the Board of the Company since 1996. President and Chief Executive Officer and director since 1995. He was Chairman of the Board from 1988 to 1995, and President and Chief Executive Officer from 1987 to 1995, of the Western Company of North America, an international petroleum service company engaged in pressure pumping, well stimulating and cementing. Previously, he was President of the Joy Petroleum Equipment Group of Joy Manufacturing Company. He is a director of Spinnaker Exploration Company. He also serves on the board of directors of the National Petroleum Council, the American Petroleum Institute, and the Petroleum Equipment Suppliers Association.

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Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Lamar Norsworthy (57)
Director since 2001	Chairman of the Board and Chief Executive Officer of Holly Corporation, an independent petroleum refiner, since 1988. He is a director of Zale Lipshy University Hospital and a member of the Board of Visitors of M.D. Anderson Cancer Center.
Michael E. Patrick (60)
Director since 1996	Vice President and Chief Investment Officer of Meadows Foundation Inc., a philanthropic association since 1995. He is a director of BJ Services Company and the RGK Foundation.
David Ross III (63)
Director since 1995	Adjunct professor and member of the Board of Overseers of the Jesse H. Jones Graduate School of Administration at Rice University since 1979. From 1987 until 1993, he was Chairman and Chief Executive Officer of the Sterling Consulting Group, a firm providing analytical research planning and evaluation services to companies in the oil and gas industry. Between 1984 and 1987, he was a principal in the Sterling Group, a firm engaged in leveraged buyouts, primarily in the chemical industry, and Camp, Ross, Santoski & Hanzlik Inc., which provided planning and consulting services to the oil and gas industry.
Bruce W. Wilkinson (59)
Director since 2002	Chairman of the Board and Chief Executive Officer since August 2000 and President and Chief Operating Officer from May 2000 to July 2000 of McDermott International, Inc., an energy services company. He was a Principal of Pinnacle Equity Partners, L.L.C. (a private equity group) from May 1999 to April 2000; Chairman and Chief Executive Officer of Chemical Logistics Corporation (a company formed to consolidate chemical distribution companies) from April 1998 to April 1999; President and Chief Executive Officer of Tyler Corporation (a diversified manufacturing and service company) from April 1997 to October 1997; Interim President and Chief Executive Officer of Proler International Inc. (a ferrous metals recycling company) from July 1996 to December 1996, and Chairman and Chief Executive Officer of CRSS Inc. (a global engineering and construction services company) from October 1989 to March 1996.

     The information under the heading “Executive Officers of the Registrant” in Part I, Item 1 of this Form 10-K is incorporated by reference in this section.

     There are no family relationships among the officers listed, and there are no arrangements or understandings pursuant to which any of them were elected as officers. Officers are appointed or elected annually by the Board of Directors at its first meeting following the Annual Meeting of Stockholders, each to hold office until the corresponding meeting of the Board in the next year or until a successor shall have been elected, appointed or shall have qualified.

     Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act of 1934 requires directors and executive officers of the Company, and persons who own more than ten percent of the Company’s Common Stock, to file with the SEC and the New York Stock Exchange initial reports of beneficial ownership on Form 3 and changes in such ownership on Forms 4 and 5. Based on its review of the copies of such reports, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during 2003, its directors, executive officers and stockholders with holdings greater than ten percent complied with all applicable filing requirements.

     Audit Committee Financial Experts

     The Board of Directors has determined that Mr. Michael E. Patrick, Chairman of the Audit Committee, and Messrs. Lamar Norsworthy and Bruce W. Wilkinson, members of the Audit Committee are “audit committee financial experts” and “independent” as defined under applicable SEC and NYSE rules.

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     Code of Ethics

     The Company has adopted a code of ethics that applies to all of its directors, officers (including its chief executive officer, chief financial officer, chief accounting officer, controller and any person performing similar functions) and employees. The Company has made the Code of Ethics for Management Personnel, the Code of Business Conduct and Ethics for Directors and the Standards of Conduct available on its Internet website at www.coopercameron.com. In the event that the Company makes any amendment to, or grants any waivers of, a provision of the Code of Ethics for Management Personnel that applies to the chief executive officer, chief financial officer or chief accounting officer that requires disclosure under applicable rules of the SEC and New York Stock Exchange, the Company intends to disclose such amendment or waiver and the reasons therefor on its Internet website.

     Shareholder Nominating Procedures

     The Compensation and Governance Committee is the Board Committee responsible for developing the Company’s slate of director nominees for election by stockholders, which the Committee recommends to the Board for its consideration.

     The Committee has the authority to engage the services of a third party search firm to assist in the identification and evaluation of Board member candidates. The Committee has not, to date, utilized any such services.

     The Committee determines the required selection criteria and qualifications of Company director nominees based upon the needs of the Company at the time nominees are considered. A candidate, at a minimum, must possess the ability to apply good business judgment and must be in a position to properly exercise his or her duties of loyalty and care. Candidates should also exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within their chosen fields, and have the ability to quickly grasp complex principles of business, finance, international transactions and the oilfield services industry. In general, candidates who hold an established executive level position in business, finance or education will be preferred. The Committee will consider these criteria for nominees identified by the Committee, by stockholders or through some other source. When current Board members are considered for nomination for reelection, the Committee also takes into consideration their prior Cooper Cameron Board contribution, performance and meeting attendance records.

     The Committee will consider qualified candidates for possible nomination that are submitted by our stockholders. Stockholders wishing to make such a submission may do so by sending the following information to the Compensation and Governance Committee c/o Corporate Secretary at 1333 West Loop South, Suite 1700, Houston, TX 77027: (1) name of the candidate and a brief biographical sketch and resume; (2) contact information for the candidate and a document evidencing the candidate’s willingness to serve as a director if elected; and (3) a signed statement as to the submitting stockholder’s current status as a stockholder and the number of shares currently held.

     The Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the resume and biographical information, an indication of the individual’s willingness to serve and other background information. This information is evaluated against the criteria set forth above and the specific needs of the Company at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet the needs of the Company may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information learned during this process, the Committee determines which nominee(s) to recommend to the Board to submit for election at the next annual meeting. The Committee uses the same process for evaluating all nominees, regardless of the original source of the nomination.

     No candidates for director nominations were submitted to the Committee by any stockholder in connection with the 2004 annual meeting.

     If a stockholder wishes to nominate a director candidate, the shareholder should follow the requirements set out below. In order for a stockholder to be eligible to submit a nomination to the 2005 Meeting, the stockholder must be a stockholder of record both when submitting the nomination as well as on the record date.

     If a stockholder wishes to submit a director nomination to the Compensation and Governance Committee for consideration as a Company director nominee, the stockholder should do so prior to September 1, 2004, in order to provide adequate time to duly consider the nominee and comply with our bylaws. If a stockholder wishes to submit a director nomination to the stockholders in opposition to the Company director nominees for inclusion in the Company’s 2005 proxy material, the notice must be in proper form and received at the Company’s corporate headquarters on or before November 15, 2004. If a stockholder wishes to submit such a nomination at the 2005 annual meeting, and does not want the Committee to consider such nominee as one of the Company’s nominees, and does not seek inclusion of the proposal in the Company’s proxy material, the notice must be in proper form and be received between February 13 and March 14, 2005.

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     To be in proper written form, a stockholder’s notice of a director nomination must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

ITEM 11. EXECUTIVE COMPENSATION

Directors’ Compensation

     The following table displays the components of outside director compensation. Employee directors receive no compensation for serving on the Board or its Committees.

COMPENSATION	AMOUNT/NUMBER
Annual Board Retainer	$	30,000
Annual Option Grant	6,000 shares
Annual Committee Chair Retainer	$	5,000
Board/Committee Meeting Fee	$	1,000

     Options granted to non-employee directors pursuant to the Annual Option Grant have an exercise price equal to the fair market value of the Company’s common stock on the date of grant, become fully exercisable on the first anniversary of the effective date of the grant, and expire five years after the effective date of the grant, subject to prior termination, all pursuant to the terms of the Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (the “Directors’ Plan”), approved at the 1999 Annual Meeting of Stockholders. The effective date for the Annual Option Grant for 2003 and 2004 was and will be the date of the Annual Meeting of Stockholders for each of these years, respectively. The exercise price for the 2003 Annual Option Grant is $49.465. The maximum number of shares to be issued under the Directors’ Plan and the number of shares subject to option are subject to adjustment in the event of stock splits or other changes in the Company’s capital structure.

     Under the Directors’ Deferred Compensation Plan, each non-employee director serving on the board for five or more years and who (i) does not stand for reelection in accordance with the Company policy of not doing so after reaching age 70 or because he or she was not recommended by the Board, (ii) is not reelected by the stockholders, or (iii) dies while a director, will earn a benefit equal to five times the annual retainer in effect for directors at the time of termination of his or her board service. The benefit will be paid in a lump sum when he or she ceases to be a director.

     Outside directors are reimbursed by the Company for the cost, and the tax liability associated with the cost, of their spouse's or companion's travel to the Company's annual offsite Board meeting and are, from time to time, permitted to make use of Company-leased aircraft. The income attributed to outside directors in 2003 for these expenses together with the resulting income tax liability was $6,682 for Mr. Cunningham, $12,500 for Mr. Patrick, $19,541 for Mr. Avery, $24,380 for Mr. Ross, $9,696 for Mr. Norsworthy, and $6,094 for Mr. Wilkinson.

Compensation and Governance Committee Report On Executive Compensation

     General

     The Compensation and Governance Committee of the Board of Directors (the “Committee”) supervises and administers the compensation and benefits policies, practices and plans of the Company pursuant to a written charter which is available on the Company’s website. The Committee has been created by the Board to, among other things, assist the Board in the discharge of its responsibilities with respect to compensation of executive officers. The principal functions of the Committee with respect to executive compensation include:

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• establishing the Company’s overall compensation policy, including compensation philosophy and strategy, short- and long-term incentive plans and programs, stock ownership plans and employee benefit plans, and making recommendations to the Board regarding those plans and programs;

• reviewing and recommending to the Board the compensation and benefits to be paid or provided to the Board of Directors;

• reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer’s compensation, and evaluating the performance of, and setting the compensation to be paid to, the Chief Executive Officer as well as that to be paid to the other executive officers; and

• reviewing and recommending to the Board employment agreements, termination agreements and severance policies and agreements.

     The Company’s primary objective is to increase stockholder value over time by developing executive compensation policies which are consistent with and linked to the Company’s strategic business objectives. It is the policy of the Committee to compensate executive officers based on their responsibilities and experience, the achievement of specific business objectives and established goals and the Company’s long-term performance. The Committee has received advice from a compensation consulting firm as to comparable compensation for executives similarly situated as part of the Committee’s analysis. The compensation of the Chief Executive Officer and the other executive officers consists of a base salary, an annual cash bonus opportunity and stock option awards.

     Base Salary and Annual Incentive Awards

     Each of the Company’s executive officers receives a base salary, and has an opportunity to earn an annual cash bonus under the Company’s Management Incentive Compensation Plan ( “MICP”). Decisions regarding base salaries are made based upon individual performance, job responsibilities, experience and competitive practice determined by compensation surveys. The Committee’s policy is to provide competitive base salaries, taking into account peer industry practices, and place a significant portion of targeted total annual compensation at risk tied to performance-based MICP objectives. The MICP is designed to motivate and reward key management employees whose efforts impact the performance of the Company and its divisions and subsidiaries through the achievement of financial performance targets and, in some instances, individual performance objectives. The Committee is responsible for approving the financial performance targets that are used to determine awards made under the MICP. Performance targets are based upon proposals submitted to the Committee by the Chief Executive Officer which, in turn, reflect the Company’s annual operating plan. The targets which may be used under the MICP by the Committee include: earnings before interest, taxes, depreciation and amortization (“EBITDA”); return on equity (“ROE”); return on sales; return on capital; cash flow; earnings; bookings; revenues; return on net capital employed (“RONCE”); stock price performance; and, economic value added (“EVA”). A target award percentage of base or peer industry median salary is established for each position eligible to participate in the MICP. Annual incentives were awarded to 195 of 237 eligible employees for 2003 performance. The Committee is mindful of the unusual variances that occur in today’s financial arena in running corporations such as the Company. The Committee may take into account unusual items when applying the MICP targets to the actual results. Such items would include acquisitions, divestitures, recapitalizations, restructurings and other similar unforeseeable events. The Committee also considers industry-wide market conditions and peer performance.

     Long-Term Incentives

     It is the policy of the Board to provide executives with incentives that are tied to the long-term performance of the Company. For this purpose, the Committee has granted stock options to the named executive officers and other executive officers pursuant to the Company’s Long-Term Incentive Plan. The Committee determined the number of options granted to each individual based on actual compensation and other factors, including individual performance. The stock options were granted with an exercise price equal to fair market value on the date of grant. The options have a ten-year term and generally vest, or become exercisable, in increments of one-third per year and are fully vested at the end of the first three years after the grant date. From time to time, stock options with a longer vesting period are awarded when retention is a key consideration. In addition, in 2002 and prior years, executive officers were permitted to elect to receive stock options in lieu of all or a portion of their annual salary. The options granted in lieu of salary vested and became fully exercisable at the end of the year for which they were awarded and had a four-year exercise period thereafter.

     The Committee determined that the Options in Lieu of Salary Program had fulfilled its intended purpose of encouraging the executive officers to substantially invest in the stock’s performance, thereby linking the executives’ personal interests to the interests of the Company and its stockholders, and recommended to the Board, which concurred, that the Options in Lieu of Salary Program be discontinued at the end of 2002.

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Compensation of the CEO

     Mr. Erikson currently has a base salary of $800,000 which the Committee, based on a review of the compensation levels of chief executive officers of companies of comparable size in similar businesses, believes to be at or below the median salary level of such executives. He received no bonus for 2003 because the Company did not meet the performance targets established by the Committee. For 2004, Mr. Erikson is eligible to receive a bonus based on a formula which targets 100 percent of his peer industry median salary and adjusts it to reflect Company performance, primarily against earnings per share, cash flow and ROE targets established by the Committee. Mr. Erikson elected to convert the equivalent of one year’s base salary to stock options under the Options in Lieu of Salary Program for each of the years from 1995 through 1999 and for the years 2001 and 2002. The number of options granted to Mr. Erikson under this program for 2002 was 95,455. These options became fully exercisable at the end of 2002.

     The Committee believes that the total options awarded to Mr. Erikson under the Long-Term Incentive Plan are competitive with options granted to CEOs of comparable companies. Through the stock option award, a large percentage of Mr. Erikson’s compensation is tied directly to corporate performance and return to stockholders.

Tax Deductibility of Executive Compensation

     Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1 million on the amount of annual compensation that may be deducted by the Company in any year with respect to the Company’s Chief Executive Officer and each of its other four most highly compensated executive officers. Certain performance-based compensation approved by stockholders is not subject to this deduction limitation, and is, therefore, deductible.

     Options granted under the Company’s Long-Term Incentive Plan and bonuses paid pursuant to the Management Incentive Compensation Plan generally will qualify as performance-based compensation and should be deductible. The Company intends to maximize the deductibility of executive compensation while retaining the discretion necessary to compensate executive officers in a manner commensurate with performance and the competitive market for executive talent, and, therefore, the Committee and/or the Board may from time to time, in circumstances it deems appropriate, award compensation in addition to these option grants and bonus payments that may not be deductible.

Summary

     The Committee believes that the total executive compensation program should link compensation to corporate and individual performance. The Committee will continue to review the compensation of the CEO and other executive officers on an annual basis.

COMPENSATION AND GOVERNANCE COMMITTEE,

David Ross III, Chairman

Nathan M. Avery

C. Baker Cunningham

Five-Year Graph

     The line graph below shows the cumulative total stockholder return on the Company’s Common Stock from December 31, 1998 to December 31, 2003, and compares it, over the same period of time, with the cumulative total returns of the Standard & Poor’s Composite-500 Stock Index and of a Peer Group selected by the Company. The Peer Group includes Baker Hughes Incorporated, BJ Services Company, Halliburton Company, Schlumberger Limited, Smith International, Inc. and Weatherford International, Inc. In each case, cumulative total return is calculated assuming a fixed investment of $100 on December 31, 1998, and the returns on the graph represent the value that each of these investments would have had at the end of each year shown.

	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	1998		1999		2000		2001		2002		2003
Cooper Cameron		100.00		199.74		269.64		164.73		203.35		190.20
S&P 500		100.00		121.00		110.00		97.00		75.50		97.20
Peer Group		100.00		140.50		192.10		130.40		119.00		143.50

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Life of Company Graph

     The line graph below shows the cumulative total stockholder return on the Company’s Common Stock from July 5, 1995, when trading in the Company’s Common Stock commenced following the Company becoming an independent, publicly traded entity, to December 31, 2003, and compares it, over the same period of time, with the cumulative total returns of the same two indices used for the Five-Year Graph, calculated in the same manner and representing the value that each of these investments would have had at the end of each year shown.

	July 5,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	1995		1995		1996		1997		1998		1999		2000		2001		2002		2003
Cooper Cameron		100.00		176.40		380.12		606.21		243.48		486.34		656.52		401.09		495.11		463.11
S&P 500		100.00		114.40		140.70		187.60		241.20		292.00		265.40		233.90		182.20		234.50
Peer Group		100.00		118.70		173.50		272.50		145.10		207.20		298.40		211.40		183.70		222.40

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Executive Compensation Tables

     The following table presents information for the last three years concerning compensation paid to, or accrued for, the Chief Executive Officer and the other four most highly compensated executive officers of the Company during the last year (such officers other than the Chief Executive Officer, collectively referred to as the “other named executive officers”).

SUMMARY COMPENSATION TABLE

											Long-Term Compensation
				Annual Compensation							Awards (1)
											Securities
											Underlying
				Salary $				Other Annual			Options/		All Other
Name and Principal Position	Year			(2)		Bonus $		Compensation $			SARs #		Compensation $ (3)
Sheldon R. Erikson		2003			720,000		0		157,011	(4)		343,865		68,935
Chairman, President and		2002			0		573,930		136,135	(4)		196,000		39,789
Chief Executive Officer		2001			0		672,146		*	(5)		353,594		33,941
Franklin Myers		2003			313,000		0		90,872	(4)		118,714		22,676
Senior Vice President		2002			0		118,107		75,246	(4)		96,551		2,853
of Finance and Chief		2001			0		132,390		*	(5)		106,293		1,032
Financial Officer
William Lemmer		2003			275,000		0		*	(5)		54,371		17,956
Vice President, General Counsel		2002			257,000		84,286		*	(5)		52,000		18,995
and Secretary		2001			145,000		114,430		*	(5)		35,000		12,860
Jack B. Moore		2003			260,000		0		*	(5)		60,000		16,862
Vice President		2002			229,000		88,649		*	(5)		75,000		17,194
		2001	(6)
Robert J. Rajeski		2003			255,000		53,289		*	(5)		40,000		15,301
Vice President		2002			243,000		48,600		*	(5)		52,000		15,765
		2001			221,539		60,000		*	(5)		35,000		48,166

(1) Columns dealing with “Restricted Stock Awards” and “LTIP Payouts” have been omitted since no restricted stock awards or LTIP payouts were awarded to the named executives.

(2) Under the Cooper Cameron Stock Options in Lieu of Salary Program, which was discontinued as of the end of 2002, certain named officers elected to receive a percentage of base pay in non-qualified stock options under the Company’s Long-Term Incentive Plan (“LTIP”) for 2001 and 2002. The 2002 salaries for the named executive officers who so elected were: Mr. Erikson, $630,000; and Mr. Myers, $288,000. The 2001 salaries for the named executive officers who so elected were Mr. Erikson, $600,000; Mr. Myers, $275,000; and Mr. Lemmer, $245,000.

(3) The figures in this column for 2003, 2002 and 2001 include the Company’s contributions to the Cooper Cameron Corporation Retirement Savings Plan and the Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan, as well as amounts paid by the Company for excess life insurance and basic life premiums. For Mr. Rajeski, this figure includes $33,192 in relocation expenses in 2001.

(4) These figures include cash or deferred payments for loss of benefits due to participation in the Options in Lieu of Salary Program and income attributable to personal use of aircraft leased by the Company. For Mr. Erikson, this figure includes $83,563 and $78,059 in payments for lost benefits in 2003 and 2002, respectively, and $52,515 and $42,631 attributable to aircraft usage in 2003 and 2002, respectively.

(5) Perquisites and other personal benefits paid or distributed did not exceed the lesser of $50,000 or 10 percent of this individual’s total salary and bonus.

(6) Mr. Moore became an executive officer in May 2002.

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     The following table presents information concerning the grant of options during 2003 to the Chief Executive Officer and the other named executive officers.

OPTION/SAR GRANTS IN 2003

	Individual Grants
	Number of
	Securities
	Underlying			Percent of		Exercise
	Options/			Total		or Base
	SARs			Options		Price
	Granted			Granted to		Per				Grant Date
	(number of			Employees		Share		Expiration		Present
Name	shares)(1)			in 2003		($) (2)		Date		Value ($)(3)
Sheldon R. Erikson		28,280	(4)		1.69		47.24		10/9/08		441,253
		125,585	(4)		7.51		47.24		11/15/11		1,959,503
		190,000			11.37		42.93		11/12/13		2,694,086
Franklin Myers		75,000			4.49		42.93		11/12/13		1,063,455
		9,318	(4)		0.56		46.34		11/15/11		142,619
		34,396	(4)		2.06		46.34		1/1/07		500,582
William C. Lemmer		4,371	(4)		0.26		48.83		11/15/11		70,496
		50,000			2.99		42.93		11/12/13		708,970
Jack B. Moore		60,000			3.59		42.93		11/12/13		850,764
Robert J. Rajeski		40,000			2.39		42.93		11/12/13		567,176

(1) These shares were granted under the Company’s Long-Term Incentive Plan.

(2) The exercise price of each option is equal to the fair market value of the Company’s shares on the date of grant of the option. The exercise price may be paid in cash, or, in certain instances, by tendering already owned Cooper Cameron Common Stock having a fair market value on the date of exercise equal to the exercise price, except as noted in footnote (4).

(3) The grant date present value is determined using the Black-Scholes option pricing model assuming an expected stock price volatility of 41.8%, a risk-free interest rate of 2.6 percent, a weighted average expected option life of 3.4 years (or remaining time to expiration, if shorter) and no dividend yield. The actual value, if any, that may be realized will depend on the market price of the Company’s Common Stock on the date of exercise. The dollar amounts shown are not intended to forecast possible future appreciation in the Company’s stock price.

(4) These shares were granted under the reload feature of the Long-Term Incentive Plan and vested in full on the date of grant. The exercise price of each option is equal to the closing price on the New York Stock Exchange of the Company’s shares on the day preceding the date of grant.

     The following table presents information concerning exercises of stock options during 2003 and the unexercised options held at the end of 2003 by the Chief Executive Officer and the other named executive officers.

AGGREGATED OPTION/SAR EXERCISES IN 2003
AND 12/31/2003 OPTION/SAR VALUES

					Number of Securities
					Underlying Unexercised				Value of Unexercised
	Shares		Value		Options/SARs at				In-the-Money Options/SARs
	Acquired on		Realized		12/31/03 (#)				at 12/31/03 ($) (1)
Name	Exercise (#)		($)		Exercisable		Unexercisable		Exercisable		Unexercisable
Sheldon R. Erikson		203,455		3,279,071		993,676		385,332		1,433,090		1,576,758
Franklin Myers		55,458		739,810		139,505		141,666		256,027		501,908
William C. Lemmer		5,602		88,680		137,139		96,332		610,905		342,158
Jack B. Moore		3,000		48,270		123,467		123,333		627,170		401,529
Robert J. Rajeski		—		—		114,268		86,332		718,155		305,458

(1) Values are based on the difference between the exercise price and the closing price of $46.60 per share of Common Stock on the New York Stock Exchange on the last trading day of 2003.

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     The following table presents information concerning the estimated annual retirement benefits payable to the Chief Executive Officer and the other named executive officers under the Cooper Cameron Corporation Retirement Plan upon retirement at age 65.

PENSION PLAN TABLE

	Year		Annual
	Individual		Estimated
	Reaches		Benefit at
Name	Age 65		Age 65 ($)
Sheldon R. Erikson		2006		81,891
Franklin Myers		2017		78,289
William C. Lemmer		2009		24,482
Jack B. Moore		2018		60,138
Robert J. Rajeski		2010		23,785

     For each of the individuals shown in the Summary Compensation Table, the table above shows the year each attains age 65 and the projected annual pension benefit at age 65. The retirement benefit is based on a cash balance formula whereby the balance is increased each year by interest and salary credit. The salary credit is 3% of the executive’s annual compensation up to the Social Security Wage Base and 6% for compensation over the Wage Base. The annual pension benefit is the annuity which can be provided by the cash balance account at retirement. The calculation is based on the following assumptions: benefits paid on a straight-life annuity basis; the current mortality table and an interest rate of 5.51% used in the conversion from the account balance to an annuity; year 2003 compensation projected each year based on the age-weighted salary scale used in the actuarial valuations (ranging from 3.0% to 7.0% in these calculations); an assumed 2.5% per annum increase in the Social Security Wage Base; and the year 2003 interest crediting rate of 4.53%. Amounts under the Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan are included in the Annual Estimated Benefit. Projected annual benefits change each year to reflect actual compensation and, in some years, changes in assumptions.

Employment, Termination and Change of Control Arrangements

     The Company has employment agreements containing certain termination and/or severance provisions with Messrs. Erikson and Myers. The Company also has an Executive Severance Policy for and Change of Control Agreements with other executive officers including Messrs. Lemmer, Moore and Rajeski.

     The agreements with Messrs. Erikson and Myers provide for specific terms of employment, including base salary, bonus and benefits over specified periods of time and for severance benefits and certain benefits should a Change of Control, as defined below, occur. The agreements were unanimously approved by the independent members of the Board of Directors.

     The agreement between the Company and Mr. Erikson has a term of three years, which is automatically extended on a monthly basis. The agreement provides that Mr. Erikson will: continue to receive an annual salary of not less than his current salary, which is $800,000, and a bonus as provided under the Company’s Management Incentive Compensation Plan or any other bonus plan adopted by the Board of Directors for executive officers; participate in Cooper Cameron Corporation’s Retirement Plan (a defined benefit plan) and the Long-Term Incentive Plan; and be eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan (a defined contribution plan), the Employee Stock Purchase Plan and any other plans generally available to employees of the Company during his employment. The agreement between the Company and Mr. Myers has substantially the same terms as those described above for Mr. Erikson, except that this agreement has a term of one year, which is automatically extended on a yearly basis. The agreement provides that Mr. Myers will continue to receive an annual salary of not less than his current salary, which is $340,000.

     If either of these executives terminates due to death, retirement, disability or without Good Reason, as defined below, or is terminated by the Company for cause, no salary or other benefits are payable under the agreements. However, if termination occurs by discharge without cause or by the executive with Good Reason, Mr. Erikson is entitled to an amount equal to three times the sum of: the highest base pay during any of the last three years (or its equivalent if paid in compensation other than cash); the higher of the maximum bonus award that he could earn during the current year or the highest bonus he received during any of the three preceding years; and, the value at the time of grant of the highest stock option award he received during any of the five preceding years. Mr. Myers is entitled to two times base salary and bonus calculated in the same manner as in Mr. Erikson’s agreement. They are also entitled to certain other payments relating to benefit plans applicable to all employees. “Good Reason” for termination includes any of the following events which occur without employee consent: a change in status, title(s) or position(s) as an officer of the Company which is not a promotion; a reduction in base salary; termination of

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participation in an ongoing compensation plan; relocation; failure of a successor of the Company to assume the agreement; termination by the Company other than as provided in the agreement; prohibition from engaging in outside activities permitted by the agreement; or any continuing material default by the Company in the performance of its obligations under the agreement.

     The agreements with Messrs. Erikson and Myers also provide for certain benefits in the event of a Change of Control. Each of these officers is entitled under the agreements to accelerated vesting of options granted under the Company’s Long-Term Incentive Plan and to tender shares of Common Stock to the Company, including those acquired by the exercise of stock options following an accelerated vesting, in proportion to the total number of shares actually tendered and at the tender offer price or fair market value of any exchange security. Each of these officers is also entitled under the agreements to tender to the Company options, including those accelerated, in exchange for an amount equal to the Black-Scholes value of such options using the highest such valuation during the one-year period prior to the Change of Control. If Mr. Myers is discharged without cause or resigns for Good Reason in conjunction with, and within two years of, a Change of Control, he is, in lieu of his termination benefits summarized above, entitled to a severance package which includes a payout equal to three times his base salary, bonus, and option grant, each calculated in accordance with the same provisions as found in Mr. Erikson’s agreement described above. These agreements also provide that if any payments made to the executive officer would cause the executive officer to be subject to an excise tax because the payment is a “parachute payment” (as defined in the Internal Revenue Code), then the Company will pay the executive officer an excise tax premium in a sufficient amount to make the executive officer whole with respect to any additional tax that would not have been payable but for the excise tax provision. A “Change of Control” of the Company will occur for purposes of these agreements if (i) any person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s outstanding voting securities, other than through the purchase of voting securities directly from the Company through a private placement; (ii) the current members of the Board, or subsequent members approved by two-thirds of the current members, no longer comprise a majority of the Board; (iii) the Company is merged or consolidated with another corporation or entity and the Company’s stockholders own less than 80% of the outstanding voting securities of the surviving or resulting corporation or entity; (iv) a tender offer or exchange offer is made and consummated by a person other than the Company for the ownership of 20% or more of the Company’s voting securities; or (v) there has been a disposition of all or substantially all of the Company’s assets.

     The Executive Severance Policy for other senior level executives, including Messrs. Lemmer, Moore and Rajeski, sets forth certain salary and benefit rights in the event of the termination of employment. The Executive Severance Policy provides for salary and benefit continuation of 12 months for a covered executive if his or her employment with the Company is terminated by the Company for any reason other than cause.

     The Change of Control agreements with eight other officers, including Messrs. Lemmer and Rajeski, entitle the executive to substantially the same benefits provided to Mr. Myers under his employment agreement in the event of a Change of Control, except that under these agreements a Change of Control resulting from a merger or consolidation does not occur unless the Company’s stockholders own less than 60% of the outstanding voting securities of the surviving or resulting corporation or entity. The Change of Control Agreement with Mr. Moore and one other executive officer entitle the executive to substantially the same benefits provided to Messrs. Lemmer and Rajeski under their agreements in the event of a Change of Control, except that they are not entitled to tender to the Company options in exchange for an amount equal to the Black-Scholes value of such options.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

     The following table lists the stockholders known by the Company to have been the beneficial owners of more than five percent of the Common Stock outstanding and entitled to be voted at the Meeting as of December 31, 2003:

	Shares of		Percent of
	Common		Common
Name and Address of Beneficial Owner	Stock		Stock
FMR Corp.(1)		6,764,563		12.528
82 Devonshire Street
Boston, MA 02109-3614
J.P. Morgan Chase & Co.(2)		3,294,695		6.1
270 Park Ave.
New York, NY 10017
Massachusetts Financial Services Company(3)		2,718,020		5.0
500 Boylston Street
Boston, MA 02116
Neuberger Berman, Inc.(4)		2,806,946		5.2
605 Third Ave.
New York, NY 10158
T. Rowe Price Associates, Inc.(5)		3,453,100		6.3
100 E. Pratt Street
Baltimore, Maryland 21202

(1)	According to a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) by FMR Corp., as of December 31, 2003, Fidelity Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR Corp. and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 6,545,837 shares or 12.123% of Common Stock. Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the funds each has sole power to dispose of the 6,545,837 shares owned by the Funds, but neither FMR Corp nor Edward C. Johnson 3d has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds’ Board of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds’ Boards of Trustees. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp., and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 116,100 shares or 0.215% of Common Stock as a result of its serving as investment manager of the institutional account(s). Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 116,100 shares and sole power to vote or to direct the voting of 116,100 shares of common stock owned by the institutional account(s). Strategic Advisers, Inc, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 26 shares or 0.000% of the outstanding common stock of the Company. Strategic Advisers, Inc. is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940.
(2)	According to a Schedule 13G/A filed with the SEC by J.P. Morgan Chase & Co., dated February 12, 2004, J.P. Morgan Chase had sole voting power over 2,316,719 shares of Common Stock, shared voting power over 7,608 shares, sole dispositive power over 3,275,040 shares and shared dispositive power over 17,176 shares.
(3)	According to a Schedule 13G filed with the SEC by Massachusetts Financial Services Company (“MFS”), dated February 11, 2004, MFS had sole voting power over 2,562,340 shares of Common Stock and sole dispositive power over 2,718,020 shares of Common Stock.
(4)	According to a Schedule 13G/A filed with the SEC by Neuberger Berman, Inc., dated February 13, 2004, Neuberger Berman had sole voting power over 1,543,841 shares of Common Stock, shared voting power over 702,400 shares, sole dispositive power over zero shares and shared dispositive power over 2,806,946 shares. In addition, employee(s) of Neuberger Berman, LLC and Neuberger Berman Management, Inc. own 32,200 shares.
(5)	According to a Schedule 13G/ filed with the SEC by T. Rowe Price Associates, Inc., as of December 31, 2003, T. Rowe Price had sole voting power over 574,900 shares and sole dispositive power over 3,453,100 shares. T. Rowe Price is an Investment Advisor registered under Section 203 of the Investment Advisers Act of 1940. These securities are owned by various individual and institutional investors, which T. Rowe Price Associates, Inc. (Price Associates) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is

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deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

Security Ownership of Management

     The following table sets forth, as of February 12, 2004, unless otherwise noted, the number of shares of Common Stock beneficially owned (as defined by the Securities and Exchange Commission (“SEC”)) by each current director, by each executive officer named in the Summary Compensation Table included herein who is not also a director, and by all directors and executive officers as a group. For information regarding the Company’s stock ownership guidelines for directors and executive officers, see “Information Concerning the Board of Directors-Stock Ownership Guidelines.”

				Number of Shares
	Number of			That May Be
	Shares of			Acquired By Options		Percent
	Common			Exercisable Within		of
Directors	Stock Owned			60 Days (1)(2)		Class
Nathan M. Avery		2,296	(3)		30,870		*
C. Baker Cunningham		12,846			36,870		*
Sheldon R. Erikson		608,154	(4)		993,676		3.0
Lamar Norsworthy		3,500			22,290		*
Michael E. Patrick		2,000			33,570		*
David Ross III		15,796			30,870		*
Bruce W. Wilkinson		0			12,000		*
Executive Officers Named in the Summary Compensation Table Other Than Those Listed Above:
Franklin Myers		51,419	(4)		240,756		*
Robert J. Rajeski		13,265	(4)		114,268		*
William C. Lemmer		9,109	(4)		135,778		*
Jack B. Moore		2,881	(4)		123,467		*
All directors and executive officers as a group (14 persons including those named above)		746,945	(4)		1,970,911		5.0

*	Indicates ownership of less than one percent of Common Stock outstanding.
(1)	As defined by the SEC, securities beneficially owned include securities that the above persons have the right to acquire at any time within 60 days after February 12, 2004.
(2)	Includes shares under options in lieu of fees or salaries that have been earned pursuant to either (i) waiver of directors’ fees by the directors or (ii) waiver of salary by executive officers. Such options are not forfeitable or cancelable, expire five years from the effective date and become exercisable one year from effective date.
(3)	Includes 2,170 shares owned by family members as to which beneficial ownership is disclaimed.
(4)	Includes shares held in the Cooper Cameron Corporation Retirement Savings Plan as of December 31, 2003.

     Information relating to the Company’s equity compensation plans is included in Note 9 of the Notes to Consolidated Financial Statements, which Notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Principal Accounting Firm Fees

     The following table sets forth the U.S. dollar equivalent fees billed or to be billed by the Company’s principal accounting firm, Ernst & Young LLP, for services rendered for the years ended December 31, 2003 and 2002.

24

	Year ended December 31,
	2003		2002
Audit Fees	$	1,108,400	$	865,600
Audit-Related Fees:
Internal audit services		—		74,200
Non-audit accounting consultations and other		53,100		52,900
		53,100		127,100
Tax Fees:
Tax compliance, consulting and advisory services		409,200		425,700
All Other Fees:
Other permitted advisory services		52,700		3,900
Total	$	1,623,400	$	1,422,300

     The Audit Committee performs an annual review and approves the scope of services and proposed fees of the Company’s principal accounting firm. Any projects not specifically included in this approval will be reviewed and approved in advance by the Chairman of the Audit Committee and will be reviewed by the full Audit Committee at the next regularly scheduled meeting.

     The Committee also considered whether the provision of services, other than audit services, is compatible with maintaining the accounting firm’s independence. Effective June 2002, the Company discontinued the use of Ernst & Young LLP for internal audit services and engaged PricewaterhouseCoopers LLP for these services.

Pre-approval Policies and Procedures

     The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee has delegated to the Chairman of the Audit Committee authority to approve permitted services provided that the Chairman reports any decisions to the Committee at its next scheduled meeting.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

(1) Financial Statements:

   All financial statements of the Registrant as set forth under Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules:

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Cooper Cameron Corporation

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Cooper Cameron Corporation (the “Company”) as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated January 27, 2004 (incorporated by reference elsewhere in this Form 10-K). Our audits also included the financial statement schedule included in Item 15(a)(2) of this Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

25

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects the information set forth therein.

	/s/ Ernst & Young LLP
	ERNST & YOUNG LLP
Houston, Texas
January 27, 2004

Schedule II — Valuation and Qualifying Accounts
(dollars in thousands)

			Additions
	Balance at		Charged to		Charged								Balance at
	beginning		costs and		to other								end of
Description	of period		expenses		accounts		Deductions (a)			Translation			period
YEAR ENDED DECEMBER 31, 2003:
Allowance for doubtful accounts	$	2,170	$	15	$	—	$	(388	)	$	26		$	1,823
Allowance for obsolete and excess inventory	$	35,355	$	8,506	$	—	$	(6,784	)	$	240		$	37,317
YEAR ENDED DECEMBER 31, 2002:
Allowance for doubtful accounts	$	3,993	$	396	$	—	$	(2,268	)	$	49		$	2,170
Allowance for obsolete and excess inventory	$	24,732	$	17,950	$	—	$	(7,454	)	$	127		$	35,355
YEAR ENDED DECEMBER 31, 2001:
Allowance for doubtful accounts	$	3,080	$	1,747	$	—	$	(810	)	$	(24	)	$	3,993
Allowance for obsolete and excess inventory	$	24,364	$	6,041	$	—	$	(5,651	)	$	(22	)	$	24,732

(a) Write-offs of uncollectible receivables or obsolete inventory

(3) Exhibits:

3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705) incorporated herein by reference.

26

10.1	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.2	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.3	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820) and incorporated herein by reference.
10.4	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.5	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.6	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.8	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective April 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
10.9	Cooper Cameron Corporation Employee Stock Purchase Plan (Registration Statement No. 33-94948), incorporated herein by reference.
10.10	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.11	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.12	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003 of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.13	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.14	Cooper Cameron Corporation Compensation Deferral Plan (formerly the Cooper Cameron Corporation Management Incentive Compensation Deferral Plan), effective January 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.15	First Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective July 1, 1998, filed as Exhibit 10.12 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Second Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 1999, filed as Exhibit 10.13 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.17	Third Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 2000, filed as Exhibit 10.14 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.18	Fourth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.10 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.19	Fifth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.11 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.20	Sixth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.12 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.21	Cooper Cameron Corporation Directors Deferred Compensation Plan, filed as Exhibit 10.7 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.22	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.

27

10.23	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.24	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.25	Form of Change in Control Agreement, effective July 12, 2000, by and between Cooper Cameron Corporation and Michael C. Jennings, filed as Exhibit 10.22 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27*	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore.
10.28	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2000 Proxy Statement for the Annual Meeting of Stockholders held on May 11, 2000.
10.29	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.30	Executive Severance Program of Cooper Cameron Corporation, approved July 20, 2000, filed as Exhibit 10.25 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.31*	Credit Agreement, dated as of December 12, 2003, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and Bank One, as agent.
10.32	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.33	Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees, filed as Exhibit 4.7 to the Registration Statement on Form S-8 (Registration No. 333-77641), incorporated herein by reference.
10.34	Cooper Cameron Corporation Directors’ 2001 Deferred Compensation Plan dated February 7, 2001, filed as Exhibit 10.33 to the Annual Report on Form 10-K for 2001 of Cooper Cameron Corporation and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36*	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, Mr. Michael C. Jennings, Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans.
13.1	Portions of the 2003 Annual Report to Stockholders are included as an exhibit to this report and have been specifically incorporated by reference elsewhere herein.
21.1*	Subsidiaries of registrant.
23.1	Consent of Independent Auditors.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

28

32.1   Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

   The Company filed a Form 8-K dated October 28, 2003 incorporating therein, as an exhibit, a press release dated October 28, 2003 announcing the Company’s earnings for the three-and nine-month periods ended September 30, 2003.

   The Company filed a Form 8-K dated January 28, 2004 incorporating therein, as an exhibit, a press release dated January 28, 2004 announcing the Company’s earnings for the three-and twelve-month periods ended December 31, 2003.

* Filed Previously

29

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15th day of March, 2004.

COOPER CAMERON CORPORATION
Registrant
By:	/s/ CHARLES M. SLEDGE
	(Charles M. Sledge)
	Vice President and Corporate Controller
	(Principal Accounting Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on this 15th day of March, 2004, below by the following persons on behalf of the Registrant and in the capacities indicated.

Signature	Title
* (Nathan M. Avery)	Director
* (C. Baker Cunningham)	Director
/s/ Sheldon R. Erikson (Sheldon R. Erikson)	Chairman, President and Chief Executive Officer (principal executive officer)
* (Lamar Norsworthy)	Director
* (Michael E. Patrick)	Director
* (David Ross III)	Director
* (Bruce W. Wilkinson)	Director
/s/ Franklin Myers (Franklin Myers)	Senior Vice President, Finance and Chief Financial Officer (principal financial officer)

*By: /s/ William C. Lemmer
William C. Lemmer
Attorney-in-Fact

30

EXHIBIT INDEX

Exhibit		Sequential
Number	Description	Page No.
3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705) incorporated herein by reference.
10.1	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.2	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.3	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820) and incorporated herein by reference.
10.4	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.5	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.6	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.8	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective April 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
10.9	Cooper Cameron Corporation Employee Stock Purchase Plan (Registration Statement No. 33-94948), incorporated herein by reference.
10.10	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.11	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.

Exhibit		Sequential
Number	Description	Page No.
10.12	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003 of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.13	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.14	Cooper Cameron Corporation Compensation Deferral Plan (formerly the Cooper Cameron Corporation Management Incentive Compensation Deferral Plan), effective January 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.15	First Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective July 1, 1998, filed as Exhibit 10.12 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Second Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 1999, filed as Exhibit 10.13 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.17	Third Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 2000, filed as Exhibit 10.14 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.18	Fourth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.10 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.19	Fifth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.11 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.20	Sixth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.12 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.21	Cooper Cameron Corporation Directors Deferred Compensation Plan, filed as Exhibit 10.7 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.22	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.23	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.24	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.25	Form of Change in Control Agreement, effective July 12, 2000, by and between Cooper Cameron Corporation and Michael C. Jennings, filed as Exhibit 10.22 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27*	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore.
10.28	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2000 Proxy Statement for the Annual Meeting of Stockholders held on May 11, 2000.
10.29	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.30	Executive Severance Program of Cooper Cameron Corporation, approved July 20, 2000, filed as Exhibit 10.25 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.

Exhibit		Sequential
Number	Description	Page No.
10.31*	Credit Agreement, dated as of December 12, 2003, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and Bank One, as agent.
10.32	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.33	Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees, filed as Exhibit 4.7 to the Registration Statement on Form S-8 (Registration No. 333-77641), incorporated herein by reference.
10.34	Cooper Cameron Corporation Directors’ 2001 Deferred Compensation Plan dated February 7, 2001, filed as Exhibit 10.33 to the Annual Report on Form 10-K for 2001 of Cooper Cameron Corporation and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36*	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, Mr. Michael C. Jennings, Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans.
13.1	Portions of the 2003 Annual Report to Stockholders are included as an exhibit to this report and have been specifically incorporated by reference elsewhere herein.
21.1*	Subsidiaries of registrant.
23.1	Consent of Independent Auditors.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*  Filed Previously

EX-13.1

Exhibit 13.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF COOPER CAMERON CORPORATION

     The following discussion of Cooper Cameron Corporation’s (the Company) historical results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this Annual Report. All per share amounts included in this discussion are based on diluted shares outstanding.

Overview

     The Company’s operations are organized into three business segments — Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s customers include oil and gas majors, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. CCV’s customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services. The Company’s compression equipment is used throughout the energy industry by gas transmission companies, compression leasing companies, oil and gas producers, independent power producers and a variety of other industries around the world.

     In addition to the historical data contained herein, this Annual Report, including the information set forth in the Company’s Management’s Discussion and Analysis and elsewhere in this report, includes forward-looking statements regarding the Company’s future revenues and earnings, cash generated from operations, capital expenditures, and plans for refinancing of certain debt instruments, as well as expectations regarding rig activity, oil and gas demand and pricing and order activity, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ materially from those described in forward-looking statements. These statements are based on current expectations of the Company’s performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company’s results of operations, liquidity or financial condition. Such factors may include overall demand for, and pricing of, the Company’s products; the size and timing of orders; the Company’s ability to successfully execute large subsea projects it has been awarded; changes in the price of and demand for oil and gas in both domestic and international markets; political and social issues affecting the countries in which the Company does business; fluctuations in currency and financial markets worldwide; and variations in global economic activity. In particular, current and projected oil and gas prices have historically affected customers’ spending levels and their related purchases of the Company’s products and services; however, recently there has been less linkage between commodity prices and spending. Additionally, the Company may change its cost structure, staffing or spending levels due to changes in oil and gas price expectations and the Company’s judgment of how such changes might affect customers’ spending, which may impact the Company’s financial results. See additional factors discussed in “Factors That May Affect Financial Condition and Future Results” contained herein.

     Because the information herein is based solely on data currently available, it is subject to change as a result of, among other things, changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company’s future performance. Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

     The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to warranty obligations, bad debts, inventories, intangible assets, income taxes, pensions and other postretirement benefits, other employee benefit plans, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Critical Accounting Policies

     The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of its consolidated financial statements. These policies and the other sections of the Company’s Management’s Discussion and Analysis of Results of Operations and Financial Condition have been reviewed with the Company’s Audit Committee of the Board of Directors.

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     The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured. As the Company has expanded into the deepwater subsea systems market, a larger percentage of the Company’s revenue has been derived from projects in this market. These long lead-time projects accounted for 10.8% of the Company’s total revenues in 2003 as compared to 4.3% in 2002 and 0.6% in 2001. Since these projects are significantly more complex than the Company’s traditional product lines, scheduled delivery or acceptance dates often change. As a result, there can be more volatility in the Company’s revenues than has historically been present.

     The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of each specific customer. Were the financial condition of a customer to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

     The Company’s aggregate inventories are carried at cost or, if lower, net realizable value. Inventories located in the United States and Canada are carried on the last-in, first-out (LIFO) method. Inventories located outside of the United States and Canada are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. If future conditions cause a reduction in the Company’s estimate of realizable value, additional provisions may be required.

     The Company provides for the estimated cost of product warranties at the time of sale, or, in some cases, when specific warranty problems are encountered. Should actual product failure rates or repair costs differ from the Company’s current estimates, revisions to the estimated warranty liability would be required. See Note 7 of the Notes to Consolidated Financial Statements for additional details surrounding the Company’s warranty accruals.

     The Company accrues for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to income in the period when final determination is made.

     The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized, considering future taxable income and ongoing prudent and feasible tax planning strategies. As of December 31, 2003, the Company had a net operating loss carryforward for U.S. tax purposes of approximately $287.0 million, which does not begin to expire until 2020. Currently, the Company believes it is more likely than not that it will generate sufficient future taxable income to fully utilize this net operating loss carryforward. Accordingly, the Company has not recorded a valuation allowance against this net operating loss carryforward. In the event the oil and gas exploration activity in the United States deteriorates over an extended period of time, the Company may determine that it would not be able to fully realize this deferred tax asset in the future. Should this occur, a valuation allowance against this deferred tax asset would be charged to income in the period such determination was made.

     Through December 31, 2001, the Company reviewed the carrying value of intangible assets, including goodwill, at least annually or whenever there were indications that the intangible might be impaired. In assessing the recoverability of these intangible assets and goodwill, the Company made assumptions regarding estimated future cash flows and other factors to determine the estimated fair value of the respective assets. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), which requires that the Company estimate the fair value of each of its reporting units annually and compare such amounts to their respective book values to determine if an impairment of goodwill is required. Should the Company’s estimate of the fair value of any of its reporting units decline dramatically, an impairment of goodwill might be required.

     The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (FAS 87), which requires that amounts recognized in the financial statements be determined on an actuarial basis. See Note 8 of the Notes to Consolidated Financial Statements for the amounts of pension expense (income) included in the Company’s Results of Operations and the Company’s contributions to the pension plans for the years ended December 31, 2003, 2002 and 2001, as well as the unrecognized net loss at December 31, 2003 and 2002.

     The assumptions used in calculating the amounts recognized in the Company’s financial statements include discount rates, interest costs, expected return on plan assets, retirement and mortality rates, inflation rates, salary growth and other factors. The Company bases the discount rate assumptions on investment yields available at the measurement date on an index of long-term, AA-rated corporate bonds. The Company’s inflation assumption is based on an evaluation of external market indicators. The expected rate of return on plan assets reflects asset allocations, investment strategy and the views of various investment professionals. Retirement and mortality rates are based primarily on actual plan experience. In accordance with FAS 87, actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While the Company believes the assumptions used are appropriate, differences in actual experience or changes in assumptions will affect the Company’s pension obligations and future expense.

     A significant reason for the increase in pension expense over the last three years results from the difference between the actual and assumed rates of return on plan assets. During 2001 and 2002, the Company assumed that the expected long-term rate of return on plan assets for these plans would be between 6.0% and 9.25%. In 2001 and 2002, the Company’s actual rate of return on the pension assets of these plans was substantially less than the assumed rates of return. For 2003, the Company lowered the assumed rate of return to between 6.0% and 8.9%, depending on the plan. The plans earned significantly more than the assumed rates of return in 2003.

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     The following table illustrates the sensitivity to a change in certain assumptions used in (i) the calculation of pension expense for the year ending December 31, 2004 and (ii) the calculation of the projected benefit obligation (PBO) at December 31, 2003 for the Company’s pension plans:

	Impact on 2004			Impact on
	Pre-tax Pension			December 31, 2003
(dollars in millions)	Expense			PBO
Change in Assumption:
25 basis point decrease in discount rate	$	1.1		$	12.2
25 basis point increase in discount rate		(1.1	)		(12.3	)
25 basis point decrease in expected return on assets		0.9			—
25 basis point increase in expected return on assets		(0.9	)		—

Financial Summary

     The following table sets forth the consolidated percentage relationship to revenues of certain income statement items for the periods presented:

	Year Ended December 31,
		2003		2002		2001
Revenues		100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		72.3		71.7		69.2
Selling and administrative expenses		17.7		17.8		16.1
Depreciation and amortization		5.1		5.1		5.3
Interest income		(0.3	)	(0.6	)	(0.6	)
Interest expense		0.5		0.5		0.9
Total costs and expenses		95.3		94.5		90.9
Income before income taxes and cumulative effect of accounting change		4.7		5.5		9.1
Income tax provision		(1.2	)	(1.6	)	(2.8	)
Income before cumulative effect of accounting change		3.5		3.9		6.3
Cumulative effect of accounting change		0.7		—		—
Net income		4.2	%	3.9	%	6.3	%

Results of Operations

2003 Compared to 2002

     The Company had net income of $69.4 million, or $1.25 per share, for the twelve months ended December 31, 2003 compared with $60.5 million, or $1.10 per share in 2002. The results for 2003 and 2002 included pre-tax charges of $14.6 million and $33.3 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges. The results for 2003 also include a $12.2 million after-tax gain resulting from the cumulative effect of adopting Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150). See Note 1 of the Notes to Consolidated Financial Statements for further discussion.

Revenues

     Revenues for 2003 totaled $1.634 billion, an increase of 6.3% from 2002 revenues of $1.538 billion. Increased subsea deliveries in Cameron and the incremental revenue associated with the acquisition of a Canadian valve manufacturer in December 2002 more than offset continued weak market conditions in the domestic natural gas compression and transmission markets, which negatively impacted sales in the Cooper Compression division.

     Cameron’s revenues for 2003 totaled $1.019 billion, an increase of 10.9% from 2002 revenues of $918.7 million. Movement in foreign currencies caused a $32.4 million increase in revenues. Revenues in the subsea market increased 26.5%, revenues in the surface markets increased 1.8% and revenues in the drilling market increased 12.4%. The increase in subsea revenues was attributable to deliveries associated with the large subsea orders received during 2002, primarily related to projects located offshore West Africa and eastern Canada. The increase in drilling revenues was primarily attributable to increased deliveries to customers located in the former Soviet Union.

     CCV’s revenues for 2003 totaled $307.1 million, an increase of 12.3% from 2002 revenues of $273.5 million. Revenues increased 61.2% in the distributor product line, revenues in the engineered product line decreased 12.4%, and revenues in the aftermarket product line increased 9.6%. The vast majority of the revenue increase in the distributor product line was attributable to the acquisition of a Canadian valve manufacturer in December 2002. The decrease in revenues in the engineered product line was attributable to the downturn

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in North American pipeline project activity, which began in 2002. The increase in the aftermarket product line was primarily attributable to new locations that were opened during 2003.

     Cooper Compression’s revenues for 2003 totaled $308.8 million, a decrease of 10.7% from 2002 revenues of $345.9 million. Aftermarket and new unit sales in the gas compression market decreased approximately 21% and 15%, respectively. The decrease in revenues in the gas compression market was attributable primarily to a lack of demand in the U.S. market resulting from, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year, consolidation of the Company’s customer base and a lack of significant development projects that would require Cooper Compression’s equipment. In the air compression portion of Cooper Compression’s business, new unit sales increased 27.2%, while aftermarket revenue decreased 12.7%. The increase in new unit sales in the air compression business was attributable primarily to greater demand in the Asian markets. The decrease in aftermarket sales was attributable primarily to a change in mix from engineered units to plant air units, which do not carry the same level of aftermarket business as engineered units.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2003 was $452.7 million, an increase of 3.9% from 2002 gross margin of $435.6 million. Gross margin as a percentage of revenue for 2003 was 27.7% as compared to 28.3% for 2002. Included in cost of sales for 2003 was $16.2 million of increased costs in Cameron’s subsea business and $15.9 million of non-cash LIFO income, primarily associated with the liquidation of certain low-cost LIFO inventory layers in Cooper Compression. Included in cost of sales in 2002 was $11.2 million related to an inventory write-down in Cooper Compression associated with facility closures.

     Cameron’s gross margin percentage for 2003 was 25.5% as compared to 28.0% for 2002. The decrease in the gross margin percentage resulted primarily from $16.2 million of increased costs in Cameron’s subsea business related to increased scope changes, cost overruns and estimated liquidated damages that could be assessed by Cameron’s customers (which decreased the overall gross margin by 1.6%), as well as an overall increase in subsea revenues, which typically carry a lower margin percentage as compared to Cameron’s traditional surface products.

     CCV’s gross margin percentage for 2003 was 30.6% as compared to 30.5% for 2002. The increase in the gross margin percentage was attributable to higher margins associated with the sales resulting from the acquisition of a Canadian valve manufacturer in December 2002, partially offset by lower margins in the pipeline ball valve product line due to a shift to international projects, which typically carry lower margins as compared to domestic pipeline projects.

     Cooper Compression’s gross margin percentage for 2003 was 32.2% as compared to 27.5% for 2002. The increase in the gross margin percentage resulted from an $11.9 million increase in the amount of LIFO income associated with the liquidation of certain low-cost inventory layers (which increased the 2003 gross margin percentage by 3.9%) and the absence of an $11.2 million write-down of inventory associated with facility closures that was recorded in 2002 (which decreased the 2002 gross margin percentage by 3.3%). Excluding these two items, the gross margin percentage for 2003 actually declined 2.3% from 2002’s level, due primarily to lower margins in the gas and air compression aftermarket business as a result of a shift in the mix of parts sold and pricing pressures.

     Selling and administrative expenses for 2003 were $288.6 million, an increase of 5.7% from 2002’s $273.1 million. The increase in selling and administrative expenses resulted primarily from (i) the impact of a weaker U.S. dollar against the Canadian dollar and most European currencies, which increased selling and administrative expense by $6.0 million, (ii) the acquisition of a Canadian valve manufacturer in December 2002, which resulted in an additional $3.7 million of selling and administrative costs in 2003, (iii) a $5.0 million increase in postretirement benefit plan costs associated primarily with the amortization of unrecognized losses in prior years, (iv) a $3.9 million increase associated with rent on the Cameron headquarters building and costs associated with new facilities and (v) $1.8 million of increased costs associated with CCV’s aftermarket expansion. These increases were partially offset by a $7.5 million reduction in plant closings, business realignment and other related costs discussed below.

     Included within selling and administrative expenses for 2003 and 2002 were $14.6 million and $22.1 million, respectively, of plant closing, business realignment and other related costs. The $14.6 million recorded in 2003 was comprised of (i) $6.2 million for employee severance at Cameron and Cooper Compression, (ii) $1.2 million of costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4.7 million related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1.0 million related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1.5 million related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities.

     Depreciation and amortization expense for 2003 was $83.6 million, an increase of 7.3% from 2002 depreciation and amortization expense of $77.9 million. The increase in depreciation and amortization expense was attributable to (i) a $2.8 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.4 million increase attributable to depreciation and amortization associated with acquisitions, (iii) the impact of a weaker U.S. dollar against the British pound, Canadian dollar and Euro, which increased depreciation and amortization expense by $1.8 million, (iv) $1.8 million of write-downs associated with assets held for sale, and (v) a $7.7 million increase attributable to amortization associated with the Company’s new enterprise-wide business system, partially offset by the lack of depreciation and amortization related to assets that were retired or became fully depreciated, which decreased depreciation and amortization expense by approximately $9.1 million.

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     Interest income for 2003 was $5.2 million as compared to $8.5 million in 2002. The decline in interest income was primarily attributable to lower earnings on the Company’s excess cash balances as the interest rates associated with these investments have declined.

     Interest expense for 2003 was $8.2 million as compared to $8.0 million in 2002. Interest expense for both periods primarily represented interest on the Company’s convertible debentures.

     The $12.2 million cumulative effect of an accounting change recognized during 2003 reflects the impact of adopting FAS 150 (see Note 1 of the Notes to Consolidated Financial Statements). There was no tax expense associated with this item as the gain is not taxable.

     The income tax provision was $20.4 million in 2003 as compared to $24.7 million in 2002. The effective tax rate for 2003 was 26.2% as compared to 29.0% in 2002. The decline in the effective tax rate for 2003 primarily reflects the impact of the Company’s international tax restructuring activities.

Orders and Backlog

     Orders were as follows (in millions):

	Year Ended December 31,
		2003		2002	Increase
Cameron	$	1,082.4	$	1,081.6	$	0.8
CCV		324.0		258.4		65.6
Cooper Compression		340.2		325.0		15.2
	$	1,746.6	$	1,665.0	$	81.6
Orders for 2003 were $1.747 billion, an increase of 4.9% from $1.665 billion in 2002. Cameron’s orders for 2003 were $1.082 billion as compared to $1.082 billion for 2002. Movement in foreign currencies caused a $46.3 million increase in orders. An 11.0% decrease in subsea orders was offset by an 11.3% increase in drilling orders and a 6.0% increase in surface orders. The decrease in subsea orders was due primarily to a reduction in the overall level of project awards in 2003 as compared to 2002. The increase in drilling and surface orders was due primarily to increased activity in Canada and Latin America. CCV’s orders were $324.0 million, an increase of 25.4% from $258.4 million in 2002. Over 90% of this increase is attributable to the distributor product line, in particular, the acquisition of a Canadian valve manufacturer in December 2002. Cooper Compression’s orders were $340.2 million, an increase of 4.7% from $325.0 million in 2002. A 39.7% increase in new unit orders in the gas and air compression businesses was partially offset by a 10.3% decline in aftermarket orders in these businesses. The increase in new unit orders was driven by international sales, particularly Mexico, Asia and Europe. The decrease in aftermarket orders was caused primarily by the financial difficulties domestic customers in the gas compression market have experienced recently.
Backlog was as follows (in millions):
	Year Ended December 31,
		2003		2002	Increase
Cameron	$	771.8	$	695.8	$	76.0
CCV		72.4		56.1		16.3
Cooper Compression		102.4		75.9		26.5
	$	946.6	$	827.8	$	118.8

2002 Compared to 2001

     The Company had net income of $60.5 million, or $1.10 per share, for the twelve months ended December 31, 2002 compared with $98.3 million, or $1.75 per share in 2001. The results for 2002 and 2001 included pre-tax charges of $33.3 million and $20.2 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges.

Revenues

     Revenues for 2002 totaled $1.538 billion, a decrease of 1.6% from 2001 revenues of $1.563 billion. Increased subsea deliveries in Cameron were more than offset by weak market conditions in domestic natural gas and compression and transmission markets, which negatively impacted sales in Cameron’s North American surface and aftermarket business and the CCV and Cooper Compression divisions.

     Cameron’s revenues for 2002 totaled $918.7 million, an increase of 2.4% from 2001 revenues of $897.6 million. Revenue in the subsea and international surface markets increased 13.7%, which more than offset declines in North American surface and aftermarket revenues of 13.0%. The increase in subsea revenues was attributable to the large increase in subsea orders received during 2001, primarily related to projects located offshore West Africa. North American surface and aftermarket revenues declined primarily as a result of weakness in the rig count in this region.

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     CCV’s revenues for 2002 totaled $273.5 million, a decrease of 6.4% from 2001 revenues of $292.3 million. Increased revenues in the Cameron Ball Valve product line of 16.5% were more than offset by declines in the distributor, Orbit and aftermarket product lines, which decreased 17.0%. The increase in the Cameron Ball Valve product line was attributable to the significant pipeline backlog that existed at December 31, 2001. The decline in the distributor product line resulted from weakness in the North American gas market. The decline in the Orbit product line was due to both weakness in the specialty valve market and intense competitive pressures in this market during 2002. Finally, the decline in the aftermarket product line resulted from softness in the pipeline, refining and petrochemical markets during the latter part of 2002.

     Cooper Compression’s revenues for 2002 totaled $345.9 million, a decrease of 7.3% from 2001 revenues of $373.1 million. Increased aftermarket revenues of 7.9% in the gas compression market were more than offset by a 45.3% decline in new unit sales in this market. The air compression portion of Cooper Compression’s business was relatively flat in 2002 as compared to 2001. The increase in aftermarket revenues in the gas compression market was attributable primarily to the acquisitions Cooper Compression made in 2001. The decrease in new unit sales in the gas compression market resulted from a lack of demand in this market attributable to, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year and a lack of significant development projects that would require Cooper Compression’s equipment.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2002 was $435.6 million, a decrease of 9.6% from 2001 gross margin of $481.8 million. Gross margin as a percentage of revenue for 2002 was 28.3% as compared to 30.8% for 2001. The gross margin percentage for 2002 was negatively impacted by an $11.2 million inventory write-down in the Cooper Compression division associated with facility closures, which decreased the gross margin percentage by 0.7%.

     Cameron’s gross margin percentage for 2002 was 28.0% as compared to 31.6% for 2001. The decrease in the gross margin percentage resulted from pricing pressures in the North American surface and aftermarket businesses and the increased subsea shipments during 2002, which typically carry a lower margin percentage as compared to the Company’s traditional surface products.

     CCV’s gross margin percentage for 2002 was 30.5% as compared to 31.1% for 2001. The decline in the gross margin percentage was attributable to relatively fixed overhead costs which did not decline proportionally with the decline in revenues (resulting in an approximate 1.1% decrease in the gross margin percentage), partially offset by a reduction in warranty expense in 2002, which increased the gross margin percentage by 0.5%. Warranty expense in 2001 was abnormally high due to a dispute on an international pipeline project.

     Cooper Compression’s gross margin percentage for 2002 was 27.5% as compared to 28.9% for 2001. The decrease in the gross margin percentage resulted from an $11.2 million inventory write-down associated with facility closures (which decreased Cooper Compression’s margin percentage by 3.3%), partially offset by manufacturing efficiencies and a higher percentage of aftermarket revenues, which typically carry higher margins.

     Selling and administrative expenses for 2002 were $273.1 million, an increase of 8.7% from 2001’s $251.3 million. The increase in selling and administrative expenses resulted primarily from $3.5 million of increased investment associated with the Company’s expansion into the subsea markets and $11.4 million of higher postretirement benefit plan costs, associated primarily with lower returns on pension assets.

     Included within selling and administrative expenses for 2002 and 2001 were $22.1 million and $20.2 million, respectively, of plant closing, business realignment and other related costs. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of: (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of: (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities. Of the $20.2 million recorded in 2001, $4.5 million related to employee severance and relocation costs, $2.5 million related to contract cancellation costs and $11.6 million related to plant shutdown costs.

     Depreciation and amortization expense for 2002 was $77.9 million, a decrease of 6.2% from 2001’s $83.1 million. The decrease in depreciation and amortization expense was attributable to (i) the lack of goodwill amortization for 2002 due to the implementation of FAS 142 (approximately $10.7 million) and (ii) lack of depreciation and amortization related to assets that were retired or became fully depreciated (approximately $5.2 million), partially offset by (i) an $8.5 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.3 million increase attributable to depreciation and amortization associated with acquisitions, and (iii) a $2.0 million increase attributable to accelerated amortization associated with computer systems to be replaced by a new enterprise-wide system.

     Interest income for 2002 was $8.5 million as compared to $8.6 million in 2001. Interest expense for 2002 was $8.0 million, a decrease of $5.5 million from 2001 interest expense of $13.5 million. The decline in interest expense was primarily attributable to the retirement of outstanding higher-cost debt with the proceeds from the lower-cost convertible debentures that were issued in May 2001.

     The effective tax rate for 2002 was 29.0% compared to 31.0% for 2001. The reduction in the effective tax rate for 2002 was primarily attributable to the discontinuance of amortizing goodwill, which has historically been a permanent tax difference.

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Recent Pronouncements

     In May 2003, the Financial Accounting Standards Board (FASB) issued FAS 150, which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12.2 million. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations for 2003. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $38.0 million to purchase the shares covered by these agreements. The shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50.0 million. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $0.2 million, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements.

Liquidity and Capital Resources

     The Company’s combined cash and short-term investment balances increased to $314.1 million at December 31, 2003 from $299.1 million at December 31, 2002, due primarily to stronger Canadian and European currency values versus the U.S. dollar. During 2003, the Company’s operating activities generated $101.6 million of cash as compared to $177.8 million in 2002. Cash flow from operations in 2003 was comprised primarily of net income of $69.4 million, adjusted for depreciation and amortization of $83.6 million, and $38.2 million of working capital increases. The most significant increase in working capital was a $59.8 million increase in inventory, primarily to support the Company’s large subsea projects. The increase in subsea inventories was also impacted by delays in the delivery of certain equipment resulting from the manufacturing issues which arose during the fourth quarter of 2003. Accounts payable and accrued liabilities increased $44.6 million, primarily as a result of the timing of progress payments and cash advances associated with subsea projects. Other assets and liabilities increased $26.2 million, primarily as a result of $18.7 million of contributions to the Company’s various pension plans, as well as $7.4 million related to the purchase of several properties near a former manufacturing site in Houston, Texas.

     During 2003, the Company’s investing activities consumed $52.1 million of cash as compared to $25.3 million in 2002. Capital expenditures in 2003 of $64.7 million decreased from expenditures in 2002 of $82.1 million as the Company’s 2002 expenditures included $24.3 million for its enterprise-wide software system. Cash spent on acquisitions totaled $67.8 million for 2002 and was comprised of the acquisitions of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. During 2002, the Company entered into a sale-leaseback transaction for its Cameron headquarters and sold land formerly used by the Cameron division. The Company realized net proceeds from these transactions of $39.5 million.

     During 2003, the Company’s financing activities consumed $47.9 million of cash, as compared to $2.3 million of cash in 2002. During 2003, the Company repurchased 1,251,900 shares of its stock at a total cost of $48.7 million.

     The Company is attempting to dispose of certain specialized fixed assets with a net book value of $2.6 million at December 31, 2003. Based upon an offer received on this equipment, the Company recorded an $0.8 million write-down on this equipment. If the Company is unable to ultimately dispose of these assets at the recorded value at December 31, 2003, additional write-downs will be required.

     During the fourth quarter of 2003, the Company entered into a credit agreement (the “Credit Agreement”) with various banks which provided for an aggregate multi-currency borrowing capacity as well as the ability to issue letters of credit totaling $200.0 million. The Credit Agreement expires December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66.0 million. The Credit Agreement also contains certain covenants, including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company was in compliance with all loan covenants at year-end. The entire amount of the facility was available for borrowing at December 31, 2003.

     The Company has two series of convertible debentures outstanding. The first series consists of twenty-year zero-coupon convertible debentures with an aggregate principal amount at maturity of approximately $320.8 million. The holders of these debentures have the right to require the Company to repurchase the debentures on May 17, 2004 at an aggregate price of approximately $259.5 million. Accordingly, this obligation has been classified as a current liability as of December 31, 2003 in the Company’s consolidated balance sheet. The holders of the second series of debentures, aggregating $200.0 million, cannot require the Company to repurchase the debentures until May 2006.

     The Company currently believes it will be required to repurchase the first series of convertible debentures during the second quarter of 2004. The Company intends to repurchase these debentures with the proceeds of a new debt issuance. If the Company cannot execute a debt issuance on satisfactory terms, the Company would be forced to fund the repurchase of the debentures with proceeds from the Credit Agreement and available cash balances. Should this occur, the Company’s available liquidity would be negatively impacted.

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

31

     The Company currently expects to fund expenditures for capital requirements (estimated to be approximately $70 million for 2004) and the Petreco acquisition, as well as general liquidity needs, from available cash and short-term investment balances, cash generated from operating activities and amounts available under the Credit Agreement.

     During the third quarter of 2003, the Company terminated two forward purchase agreements with a third-party financial institution covering a total of 1,006,500 shares of the Company’s common stock by paying the third-party financial institution approximately $38.0 million. As a result of the termination, the Company acquired the 1,006,500 shares from the third-party financial institution and recorded the acquired shares as treasury stock. See Note 1 of the Notes to Consolidated Financial Statements.

     The following summarizes the Company’s significant cash contractual obligations and other commercial commitments for the next five years as of December 31, 2003.

(dollars in millions)			Payments Due by Period
			Less Than		1 - 3		4 - 5		After 5
Contractual Obligation	Total		1 Year		Years		Years		Years
Debt	$	461.7	$	261.5	$	200.2	$	—	$	—	(a)
Capital lease obligations		7.5		3.6		3.5		0.4		—	(b)
Operating leases		96.9		13.3		17.7		13.5		52.4
Total contractual cash obligations	$	566.1	$	278.4	$	221.4	$	13.9	$	52.4

(a)	See Note 10 of the Notes to Consolidated Financial Statements for information on redemption rights by the Company, and by holders of the Company’s debentures, that would allow for redemption of the zero-coupon debentures beginning in 2004 and for redemption of the interest-bearing debentures beginning in 2006.
(b)	Payments shown include interest.

(dollars in millions)	Amount of Commitment Expiration Per Period
Other Commercial Obligations	Total		Less Than		1 - 3		4 - 5		After 5
and Off-Balance Sheet Arrangements	Commitment		1 Year		Years		Years		Years
Committed lines of credit	$	200.0	$	—	$	—	$	200.0	$	—
Standby letters of credit		137.6		66.2		55.2		0.1		16.1
Bank guarantees and letters of credit		23.8		—		10.0		1.5		12.3
Guarantees of a portion of joint venture debt		1.5		—		1.5		—		—
Total commercial commitments	$	362.9	$	66.2	$	66.7	$	201.6	$	28.4

     The Company secures certain contractual obligations under various agreements with its customers or other parties through the issuance of letters of credit or bank guarantees. The Company has various agreements with financial institutions to issue such instruments. As of December 31, 2003, the Company had $161.4 million of letters of credit and bank guarantees outstanding. Should these facilities become unavailable to the Company, the Company’s operations and liquidity could be negatively impacted. Circumstances which could result in the withdrawal of such facilities include, but are not limited to, deteriorating financial performance of the Company, deteriorating financial condition of the financial institutions providing such facilities, overall constriction in the credit markets or rating downgrades of the Company.

Factors That May Affect Financial Condition and Future Results

Changes in the U.S. rig count have historically impacted the Company’s orders.

     Historically, the Company’s surface and distributor valve businesses in the U.S. market have tracked changes in the U.S. rig count. However, this correlation did not exist in 2003. The average U.S. rig count increased approximately 24% during the year while the Company’s U.S. surface and U.S. distributor valve orders were essentially flat. The Company believes its surface and distributor valve businesses were negatively impacted by the lack of drilling activity in the Gulf of Mexico, fewer completions of onshore high-temperature/high-pressure wells and a lower level of infrastructure development in the U.S. Such activity typically generates higher orders for the Company as compared to onshore shallow well activity.

Execution of deepwater subsea systems projects exposes the Company to new risks.

     The Company continues to expand into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for 10.8%, 4.3% and 0.6% of total revenues in 2003, 2002 and 2001, respectively. During the fourth quarter of 2003, the Company experienced numerous shipment delays

32

on its deepwater subsea systems contracts. Accordingly, the Company was unable to recognize revenue in 2003 on the delayed shipments, which had an aggregate sales value of approximately $30 million. The Company expects to recognize this revenue in 2004. Additionally, the Company incurred approximately $10.8 million of incremental costs related to these subsea contracts, which was reflected as cost of sales in the fourth quarter of 2003. The Company also recorded $5.4 million of estimated liquidated damages that could be assessed by Cameron’s customers as a result of the delays experienced during the fourth quarter of 2003. To the extent the Company continues to experience difficulties in meeting the technical and/or delivery requirements of the projects, the Company’s earnings or liquidity could be negatively impacted. As of December 31, 2003, the Company had a deepwater subsea backlog of approximately $373.3 million.

Fluctuations in worldwide currency markets can impact the Company’s profitability.

     The Company has established multiple “Centers of Excellence” facilities for manufacturing such products as subsea trees, subsea chokes, subsea production controls and BOPs. These production facilities are located in the United Kingdom and other European and Asian countries. To the extent the Company sells these products in U.S. dollars, the Company’s profitability is eroded when the U.S. dollar weakens against the British pound, the Euro and other currencies. This occurred throughout 2003. The Company estimates that its gross profit, as a percentage of revenue, was negatively impacted by 0.4% during 2003 as a result of the weakening U.S. dollar. To the extent the U.S. dollar continues to weaken, future profitability could be negatively impacted.

Increases in the cost of metals used in the Company’s manufacturing processes could negatively impact the Company’s profitability.

     During the latter part of 2003, commodity prices for items such as nickel, molybdenum and heavy metal scrap that are used to make the steel alloys required for the Company’s products began to increase significantly. Certain of the Company’s suppliers are beginning to attempt to pass these increases on to the Company. If the Company is not successful in raising its prices on products that are manufactured from these metals, future profitability may be negatively impacted.

Cooper Compression’s aftermarket revenues associated with legacy equipment are declining.

     Approximately 39% of Cooper Compression’s revenues come from the sale of replacement parts for equipment that the Company no longer manufactures. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

Changes in the financial condition of the Company’s customers could impact the Company’s business.

     Erosion of the financial condition of customers could adversely affect the Company’s business with regard to both receivables exposure and future revenue realization. In both the Cooper Compression and CCV divisions, a significant portion of revenues for 2001 through 2003 were derived from several domestic customers in the pipeline and gas compression business that are reported to be experiencing financial and/or other difficulties related to their capitalization. The Company believes that these difficulties have negatively impacted the Company’s business with these customers, particularly in the Cooper Compression division. To the extent these customers’ difficulties continue, worsen, and/or result in further curtailments of their expenditures, the Company’s revenues and earnings will continue to be negatively affected.

Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the Company’s sales and profitability.

     Demand for most of the Company’s products and services, and therefore its revenues, depend to a large extent upon the level of capital expenditures related to oil and gas exploration, production, development, processing and transmission. Declines, as well as anticipated declines, in oil and gas prices could negatively affect the level of these activities. Factors that contribute to the volatility of oil and gas prices include the following:

• the demand for oil and gas, which is impacted by economic and political conditions and weather;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing;

• the level of production from non-OPEC countries;

• governmental policies regarding exploration and development of oil and gas reserves;

• the political environments of oil and gas producing regions, including the Middle East;

• the depletion rates of gas wells in North America; and

• advances in exploration and development technology.

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The Company’s international operations expose it to instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business.

     The Company has manufacturing and service operations that are essential parts of its business in developing countries and economically and politically volatile areas in Africa, Latin America, the Middle East and the Asia-Pacific region. Additionally, the Company purchases a large portion of its raw materials and components from a relatively small number of foreign suppliers in countries such as India, South Korea, Taiwan and China. The risks of international business that the Company is exposed to include the following:

• volatility in general economic, social and political conditions;

• differing tax rates, tariffs, exchange controls or other similar restrictions;

• changes in currency rates;

• inability to repatriate income or capital;

• changes in, and compliance with, domestic and foreign laws and regulations which impose a range of restrictions on operations, trade practices, trade partners and investment decisions;

• reductions in the number or capacity of qualified personnel; and

• seizure of equipment.

Implementation of a new enterprise-wide software system could disrupt the Company’s business processes.

     The Company is in the process of implementing a new enterprise-wide software system. During October 2002, the Company converted the U.S. and Canadian operations of Cameron and CCV to the new system. During 2003, the Company converted Cooper Compression, as well as various foreign subsidiaries, to the new system. The Company’s remaining operations are expected to be converted to the new system during 2004. Any disruption in this implementation could negatively affect the Company’s ability to develop, procure, manufacture and/or deliver products, and could disrupt the Company’s financial reporting system.

Changes in the equity and debt markets impact pension expense and funding requirements for the Company’s defined benefit plans.

     The Company accounts for its defined benefit pension plans in accordance with FAS 87, which requires that amounts recognized in the financial statements be determined on an actuarial basis. A significant element in determining the Company’s pension income or expense in accordance with FAS 87 is the expected return on plan assets. The assumed long-term rate of return on assets is applied to a calculated value of plan assets, which results in an estimated return on plan assets that is included in current year pension income or expense. The difference between this expected return and the actual return on plan assets is deferred and amortized against future pension income or expense. Due to the weakness in the overall equity markets from 2000 through 2002, the plan assets earned a rate of return substantially less than the assumed long-term rate of return during this period. As a result, expense associated with the Company’s pension plans has increased significantly from the level recognized historically.

     Additionally, FAS 87 requires the recognition of a minimum pension liability to the extent the assets of the plans are below the accumulated benefit obligation of the plans. In order to avoid recognizing this minimum pension liability, the Company contributed approximately $18.7 million to its pension plans during 2003 and $27.1 million in 2002. If the Company’s pension assets perform poorly in the future, the Company may be required to recognize a minimum pension liability in the future or fund additional amounts to the pension plans.

The Company is subject to environmental, health and safety laws and regulations that expose the Company to potential liability.

     The Company’s operations are subject to a variety of national and state, provisional and local laws and regulations, including laws and regulations relating to the protection of the environment. The Company is required to invest financial and managerial resources to comply with these laws and expects to continue to do so in the future. To date, the cost of complying with governmental regulation has not been material, but the fact that such laws or regulations are frequently changed makes it impossible for the Company to predict the cost or impact of such laws and regulations on the Company’s future operations. The modification of existing laws or regulations or the adoption of new laws or regulations imposing more stringent environmental restrictions could adversely affect the Company.

Excess cash can be invested in marketable securities, which may subject the Company to potential losses.

     The Company has invested in publicly-traded debt and equity securities from time to time. Changes in the financial markets, including interest rates, as well as the performance of the issuing companies, can affect the market value of the Company’s short-term investments.

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Environmental Remediation

     The cost of environmental remediation and compliance has not been a material expense for the Company during any of the periods presented. The Company has been identified as a potentially responsible party (PRP) with respect to three sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or similar state laws. The Company’s involvement at two of the sites is believed to be at a de minimis level. The third site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas.

     Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations.

     The Company has estimated its liability for environmental exposures, and the Company’s consolidated financial statements included a liability balance of $9.9 million for these matters at December 31, 2003. Cash expenditures for the Company’s known environmental exposures are expected to be incurred over the next twenty years, depending on the site. For the known exposures, the accrual reflects the Company’s best estimate of the amount it will incur under the agreed-upon or proposed work plans. The Company’s cost estimates were determined based upon the monitoring or remediation plans set forth in these work plans and have not been reduced by possible recoveries from third parties. These cost estimates are reviewed on an annual basis or more frequently if circumstances occur which indicate a review is warranted. The Company’s estimates include equipment and operating costs for remediation and long-term monitoring of the sites. The Company does not believe that the losses for the known exposures will exceed the current accruals by material amounts, but there can be no assurances to this effect.

Market Risk Information

     A large portion of the Company’s operations consist of manufacturing and sales activities in foreign jurisdictions, principally in Europe, Canada, West Africa, the Middle East, Latin America and the Pacific Rim. As a result, the Company’s financial performance may be affected by changes in foreign currency exchange rates or weak economic conditions in these markets. Overall, the Company generally is a net receiver of Pounds Sterling and Canadian dollars and, therefore, benefits from a weaker U.S. dollar with respect to these currencies. Typically, the Company is a net payer of euros and Norwegian krone as well as other currencies such as the Singapore dollar and the Brazilian real. A weaker U.S. dollar with respect to these currencies may have an adverse effect on the Company. For each of the last three years, the Company’s gain or loss from foreign currency-denominated transactions has not been material.

     In order to mitigate the effect of exchange rate changes, the Company will often attempt to structure sales contracts to provide for collections from customers in the currency in which the Company incurs its manufacturing costs. In certain limited instances, the Company has historically entered into forward foreign currency exchange contracts to hedge specific, large, non-U.S. dollar anticipated receipts or large anticipated receipts in currencies for which the Company does not traditionally have fully offsetting local currency expenditures. As of December 31, 2003, there were no outstanding forward foreign currency exchange contracts.

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Cooper Cameron Corporation

     We have audited the accompanying consolidated balance sheets of Cooper Cameron Corporation as of December 31, 2003 and 2002 and the related statements of consolidated results of operations, consolidated changes in stockholders’ equity and consolidated cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cooper Cameron Corporation at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

Houston, Texas
January 27, 2004

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CONSOLIDATED RESULTS OF OPERATIONS

(dollars in thousands, except per share data)

	Year Ended December 31,
	2003			2002			2001
Revenues	$	1,634,346		$	1,538,100		$	1,562,899
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078
Selling and administrative expenses		288,569			273,105			251,303
Depreciation and amortization		83,565			77,907			83,095
Interest income		(5,198	)		(8,542	)		(8,640	)
Interest expense		8,157			7,981			13,481
Total costs and expenses		1,556,743			1,452,955			1,420,317
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582
Income tax provision		(20,362	)		(24,676	)		(44,237	)
Income before cumulative effect of accounting change		57,241			60,469			98,345
Cumulative effect of accounting change		12,209			—			—
Net income	$	69,450		$	60,469		$	98,345
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82
Cumulative effect of accounting change		0.23			—			—
Net income	$	1.28		$	1.12		$	1.82
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75
Cumulative effect of accounting change		0.21			—			—
Net income	$	1.25		$	1.10		$	1.75

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except shares and per share data)

	December 31,
	2003			2002
Assets
Cash and cash equivalents	$	292,116		$	273,800
Short-term investments		22,033			25,290
Receivables, net		316,135			304,821
Inventories, net		473,207			387,218
Other		44,210			26,732
Total current assets		1,147,701			1,017,861
Plant and equipment, at cost less accumulated depreciation		471,333			475,914
Goodwill, less accumulated amortization		316,098			301,882
Other assets		205,553			202,013
Total assets	$	2,140,685		$	1,997,670
Liabilities and stockholders’ equity
Current portion of long-term debt	$	265,011		$	4,870
Accounts payable and accrued liabilities		397,326			354,377
Accrued income taxes		17,582			15,563
Total current liabilities		679,919			374,810
Long-term debt		204,061			462,942
Postretirement benefits other than pensions		43,446			45,161
Deferred income taxes		46,049			45,641
Other long-term liabilities		30,487			27,813
Total liabilities		1,003,962			956,367
Stockholders’ equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized, 54,933,658 shares issued (54,566,054 at December 31, 2002)		549			546
Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding		—			—
Capital in excess of par value		957,912			949,188
Retained earnings		177,597			108,147
Accumulated other elements of comprehensive income		55,329			(14,789	)
Less: Treasury stock, 1,130,600 shares at December 31, 2003 (54,954 shares at December 31, 2002)		(54,664	)		(1,789	)
Total stockholders’ equity		1,136,723			1,041,303
Total liabilities and stockholders’ equity	$	2,140,685		$	1,997,670

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CONSOLIDATED CASH FLOWS

(dollars in thousands)

	Year Ended December 31,
	2003			2002			2001
Cash flows from operating activities:
Net income	$	69,450		$	60,469		$	98,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		68,242			67,053			63,073
Amortization		15,323			10,854			20,022
Cumulative effect of account change		(12,209	)		—			—
Deferred income taxes and other		(979	)		(1,283	)		27,446
Changes in assets and liabilities, net of translation, acquisitions and non-cash items:
Receivables		3,212			15,632			(36,511	)
Inventories		(59,843	)		67,960			(40,277	)
Accounts payable and accrued liabilities		44,620			(9,579	)		23,342
Other assets and liabilities, net		(26,199	)		(33,281	)		(30,518	)
Net cash provided by operating activities		101,617			177,825			124,922
Cash flows from investing activities:
Capital expenditures		(64,665	)		(82,148	)		(125,004	)
Acquisitions		—			(67,750	)		(51,778	)
Purchases of short-term investments		(154,523	)		(45,862	)		(101,088	)
Sales of short-term investments		157,910			124,395			1,156
Proceeds from sale of Cameron division headquarters building and other property		—			39,460			—
Other		9,172			6,588			5,106
Net cash used for investing activities		(52,106	)		(25,317	)		(271,608	)
Cash flows from financing activities:
Loan repayments, net		(496	)		(7,448	)		(179,080	)
Debentures issued		—			—			450,000
Debenture issuance costs		—			—			(8,364	)
Purchase of treasury stock		(48,652	)		—			(25,082	)
Activity under stock option plans and other		1,280			5,156			6,316
Net cash provided by (used for) financing activities		(47,868	)		(2,292	)		243,790
Effect of translation on cash		16,673			11,944			(2,030	)
Increase in cash and cash equivalents		18,316			162,160			95,074
Cash and cash equivalents, beginning of year		273,800			111,640			16,566
Cash and cash equivalents, end of year	$	292,116		$	273,800		$	111,640

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CONSOLIDATED CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands)

									Accumulated
									other
			Capital in			Retained			elements of
	Common		excess of			earnings			comprehensive			Treasury
	stock		par value			(deficit)			income			stock			Total
Balance — December 31, 2000	$	540	$	929,511		$	(50,667	)	$	(37,105	)	$	—		$	842,279
Net income							98,345									98,345
Foreign currency translation										(15,681	)					(15,681	)
Minimum pension liability, net of $35 in taxes										57						57
Change in fair value of short-term investments										(321	)					(321	)
Comprehensive income																82,400
Purchase of treasury stock													(25,082	)		(25,082	)
Common stock issued under stock option and other employee benefit plans		6		14,828									1,748			16,582
Tax benefit of employee stock benefit plan transactions				7,129												7,129
Costs related to forward stock purchase agreement				(27	)											(27	)
Balance — December 31, 2001		546		951,441			47,678			(53,050	)		(23,334	)		923,281
Net income							60,469									60,469
Foreign currency translation										38,005						38,005
Minimum pension liability, net of $56 in taxes										91						91
Change in fair value of short-term investments, net of $56 in taxes										165						165
Comprehensive income																98,730
Common stock issued under stock option and other employee benefit plans				(4,729	)								21,545			16,816
Tax benefit of employee stock benefit plan transactions				2,944												2,944
Costs related to forward stock purchase agreement and other				(468	)											(468	)
Balance — December 31, 2002		546		949,188			108,147			(14,789	)		(1,789	)		1,041,303
Net income							69,450									69,450
Foreign currency translation										70,908						70,908
Minimum pension liability, net of $433 in taxes										(699	)					(699	)
Change in fair value of short-term investments, net of $56 in taxes										(91	)					(91	)
Comprehensive income																139,568
Purchase of treasury stock													(60,694	)		(60,694	)
Common stock issued under stock option and other employee benefit plans		3		4,447									7,819			12,269
Tax benefit of employee stock benefit plan transactions				4,831												4,831
Costs related to forward stock purchase agreements and other				(554	)											(554	)
Balance — December 31, 2003	$	549	$	957,912		$	177,597		$	55,329		$	(54,664	)	$	1,136,723

The Notes to Consolidated Financial Statements are an integral part of these statements.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary of Major Accounting Policies

     Company Operations - Cooper Cameron Corporation (the Company or Cooper Cameron) is engaged primarily in the manufacture of oil and gas pressure control equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron also manufactures and services air and gas compressors and turbochargers.

     Principles of Consolidation - The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. Investments from 20% to 50% in affiliated companies are accounted for using the equity method. The Company’s operations are organized into three separate business segments. The segments are Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Additional information regarding each segment may be found in Note 13 of the Notes to Consolidated Financial Statements.

     Estimates in Financial Statements - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     Revenue Recognition - The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured.

     Short-term Investments - Investments in available for sale marketable debt and equity securities are carried at market value, based on quoted market prices. Differences between cost and market value are reflected as a component of accumulated other elements of comprehensive income until such time as those differences are realized. The basis for computing realized gains or losses is the specific identification method. The realized gains on short-term investments included in the Consolidated Results of Operations were $278,000, $2,547,000 and $283,000 for the years ended December 31, 2003, 2002 and 2001, respectively. If the Company determines that a loss is other than temporary, such loss will be charged to earnings.

     Receivables - The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of the specific customer.

     Inventories - Aggregate inventories are carried at cost or, if lower, net realizable value. On the basis of current costs, 56% of inventories in 2003 and 64% in 2002 are carried on the last-in, first-out (LIFO) method. The remaining inventories, which are located outside the United States and Canada, are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. During 2003 and 2002, the Company reduced its LIFO inventory levels. These reductions resulted in a liquidation of certain low-cost inventory layers. As a result, the Company recorded non-cash LIFO income of $15,932,000 and $97,000 in 2003 and 2002, respectively.

     Plant and Equipment - Depreciation is provided over the estimated useful lives of the related assets, or in the case of assets under capital leases, over the related lease term, if less, using primarily the straight-line method. The range of estimated useful lives are: buildings — 10 to 40 years; machinery and equipment — 3 to 18 years; and office furniture and equipment, capitalized software, tooling, dies, patterns and all other — 3 to 10 years.

     Goodwill - Prior to 2002, goodwill arising from purchase acquisitions was being amortized over 40 years from respective acquisition dates, with minor exceptions. The Company considered this amortization period to be appropriate due to the long-lived nature of the businesses acquired and the lack of rapid technological change or obsolescence associated with these operations. Through December 31, 2001, the carrying value of the Company’s goodwill was reviewed at the division level at least annually or whenever there were indications that the goodwill might be impaired. With the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), effective January 1, 2002, the Company no longer amortizes goodwill and reviews goodwill at least annually for impairment at the reporting unit level. The Company’s reporting units for FAS 142 purposes are Cameron, CCV, Cooper Energy Services and Cooper Turbocompressor. Cooper Energy Services and Cooper Turbocompressor are combined for segment reporting purposes in the Cooper Compression segment (see Note 13 of the Notes to Consolidated Financial Statements for further discussion of the Company’s business segments).

     The initial evaluation upon adoption, as well as the 2003 and 2002 annual evaluations, indicated that no impairment of goodwill was required.

41

     Income Taxes - The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Income tax expense includes U.S. and foreign income taxes, including U.S. federal taxes on undistributed earnings of foreign subsidiaries to the extent such earnings are planned to be remitted. Taxes are not provided on the translation component of comprehensive income since the effect of translation is not considered to modify the amount of the earnings that are planned to be remitted. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized.

     Environmental Remediation and Compliance - Environmental remediation and postremediation monitoring costs are accrued when such obligations become probable and reasonably estimable. Such future expenditures are not discounted to their present value.

     Product Warranty - Estimated warranty expense is accrued either at the time of sale or, in some cases, when specific warranty problems are encountered. Adjustments to the accruals are made periodically to reflect actual experience.

     Stock-Based Compensation - At December 31, 2003, the Company had two stock-based employee compensation plans and one stock-based compensation plan for its outside directors. These plans are described in further detail in Note 9 of the Notes to Consolidated Financial Statements. The Company measures compensation expense for its stock-based compensation plans using the intrinsic value method. The following table illustrates the effect on net income and earnings per share if the Company had used the alternative fair value method to recognize stock-based employee compensation expense based on the number of shares that vest in each period.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001
Net income, as reported	$	69,450		$	60,469		$	98,345
Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(23,093	)		(22,753	)		(31,270	)
Pro forma net income	$	46,357		$	37,716		$	67,075
Earnings per share:
Basic — as reported	$	1.28		$	1.12		$	1.82
Basic — pro forma	$	0.85		$	0.70		$	1.24
Diluted — as reported	$	1.25		$	1.10		$	1.75
Diluted — pro forma	$	0.84		$	0.68		$	1.21

     Derivative Financial Instruments - The Company recognizes all derivative financial instruments as assets and liabilities and measures them at fair value. For derivative financial instruments that are designated and qualify as a cash flow hedge, the effective portions of changes in fair value of the derivative are recorded in other comprehensive income, net of tax, and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized currently in earnings. Changes in the fair value of derivatives that do not qualify for hedge treatment are recognized currently in earnings. The Company had no outstanding derivatives at December 31, 2003 or 2002.

     Cash Equivalents - For purposes of the Consolidated Cash Flows statement, the Company considers all investments purchased with original maturities of three months or less to be cash equivalents.

     Foreign Currency - For most subsidiaries and branches outside the U.S., the local currency is the functional currency. In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, the financial statements of these subsidiaries and branches are translated into U.S. dollars as follows: assets and liabilities at year-end exchange rates; income, expenses and cash flows at average exchange rates; and stockholders’ equity at historical exchange rates. For those subsidiaries for which the local currency is the functional currency, the resulting translation adjustment is recorded as a component of accumulated other elements of comprehensive income in the accompanying Consolidated Balance Sheets.

     For certain other subsidiaries and branches, operations are conducted primarily in U.S. dollars, which is therefore the functional currency. Non-U.S. dollar monetary assets and liabilities, and the related revenue, expense, gain and loss accounts of these foreign subsidiaries and branches are remeasured at year-end exchange rates. Non-U.S. dollar non-monetary assets and liabilities, and the related revenue, expense, gain and loss accounts are remeasured at historical rates.

     Foreign currency gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in income. The effects of foreign currency transactions were gains (losses) of $5,716,000, $(1,147,000) and $1,767,000 for the years 2003, 2002 and 2001, respectively.

     Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation.

42

     Adoption of New Accounting Standards - In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150), which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12,209,000. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $37,992,000 to purchase the shares covered by these agreements. These shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50,034,000. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $167,000, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. This interpretation did not have any impact on the Company’s consolidated financial statements.

Note 2: Plant Closing, Business Realignment and Other Related Costs

     Plant closing, business realignment and other related costs by segment for the last three years were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002		2001
Amounts included in costs of sales:
Cooper Compression	$	—	$	11,214	$	—
Amounts included in selling and administrative expenses:
Cameron		5,784		6,275		—
CCV		—		—		—
Cooper Compression		3,137		14,637		20,159
Corporate		5,652		1,193		—
		14,573		22,105		20,159
Total costs	$	14,573	$	33,319	$	20,159

     During 2003, the Company’s selling and administrative expenses included plant closing, business realignment and other related costs totaling $14,573,000. This amount was comprised of (i) $6,181,000 for employee severance at Cameron and at Cooper Compression, (ii) $1,240,000 of other plant closure costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4,646,000 related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1,006,000 related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1,500,000 related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition.

     During 2002, the Company recorded $33,319,000 of costs related to plant closing, business realignment and other related activities. Of this amount, Cooper Compression recorded $25,851,000 of costs related generally to the closure of 13 facilities in the gas compression business. This amount was comprised of: (i) $1,632,000 million related to severance and relocation expenses, (ii) $8,177,000 of facility exit costs, including lease termination payments, and (iii) $16,042,000 of facility and inventory write-downs. The $7,468,000 of costs related to the Company’s other divisions consisted of: (i) $1,082,000 related to severance, (ii) $5,193,000 of facility write-downs and losses on property disposals, and (iii) $1,193,000 related to the Company’s international tax restructuring activities.

     During 2001, Cooper Compression recorded $20,159,000 of costs related to the consolidation of the manufacturing operations, closing obsolete facilities and discontinuing the manufacture of new Superior engines in its gas compression business. The costs during 2001 consisted primarily of: (i) $4,516,000 of employee severance and various relocation costs, (ii) $2,544,000 of contract cancellation costs, and (iii) $11,579,000 of plant shutdown costs. Included in the plant shutdown costs were $4,088,000 of costs incurred by the Superior engine business during the shutdown period.

     The number of employees terminated as a result of the above actions was approximately 266, 210 and 190 in 2003, 2002 and 2001, respectively.

43

     A summary of the impact on various liability accounts associated with the aforementioned costs incurred during the year ended December 31, 2003 follows:

	Balance at
	Beginning				Cash			Balance at
(dollars in thousands)	of Year		Additions		Disbursements			End of Year
Severance	$	2,125	$	6,181	$	(6,984	)	$	1,322
Facility closure		8,194		1,240		(4,561	)		4,873
Retained liabilities from sale of Rotating business		3,313		—		(1,534	)		1,779
International tax restructuring		500		1,006		(1,506	)		—
Environmental		5,000		—		(620	)		4,380
Costs associated with an unsuccessful acquisition		—		4,646		(4,165	)		481
Litigation settlement		—		1,500		(1,500	)		—
Total	$	19,132	$	14,573	$	(20,870	)	$	12,835

Note 3: Acquisitions

     During 2002, the Company’s acquisitions consisted of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. Cash and debt consideration for these acquisitions totaled $70,250,000 and resulted in goodwill of approximately $29,317,000, the majority of which resides in the CCV segment.

     During 2001, the Company’s acquisitions consisted primarily of two aftermarket parts and service suppliers in the Cooper Compression division and a supplier of motion compensation solutions in the Cameron division. Cash and debt consideration for these acquisitions totaled $55,350,000 and resulted in goodwill of approximately $27,193,000.

Note 4: Receivables

     Receivables consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Trade receivables	$	304,761		$	297,571
Other receivables		13,197			9,420
Allowance for doubtful accounts		(1,823	)		(2,170	)
	$	316,135		$	304,821

Note 5: Inventories

     Inventories consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Raw materials	$	38,766		$	37,078
Work-in-process		142,328			99,417
Finished goods, including parts and subassemblies		360,154			329,151
Other		2,183			1,818
		543,431			467,464
Excess of current standard costs over LIFO costs		(32,907	)		(44,891	)
Allowance for obsolete and excess inventory		(37,317	)		(35,355	)
	$	473,207		$	387,218

44

Note 6: Plant and Equipment, Goodwill and Other Assets

     Plant and equipment consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Land and land improvements	$	39,137		$	38,140
Buildings		203,072			185,267
Machinery and equipment		531,121			493,876
Tooling, dies, patterns, etc.		51,141			48,119
Office furniture & equipment		96,603			91,991
Capitalized software		114,332			110,538
Assets under capital leases		21,786			21,940
All other		13,116			13,316
Construction in progress		27,925			27,799
		1,098,233			1,030,986
Accumulated depreciation		(626,900	)		(555,072	)
	$	471,333		$	475,914

     During the fourth quarter of 2002, the Company entered into a sale-leaseback transaction involving the Cameron division headquarters building. The sale of the building resulted in net proceeds to the Company of approximately $31,000,000. The building is being leased back from the purchaser over a 22-year period (with options for renewals totaling an additional 15 years) at an initial rate of approximately $2,400,000 per year. This transaction was accounted for as a sale and subsequent operating lease, resulting in the removal of the building from the Company’s plant and equipment balances and a deferral of the related $0.6 million gain, which is being amortized over the initial 22-year term of the lease.

     Goodwill consisted of the following:

	December 31, 2003							December 31, 2002
			Accumulated			Net Book				Accumulated			Net book
(dollars in thousands)	Gross		Amortization			Value		Gross		Amortization			Value
Cameron	$	277,119	$	(131,212	)	$	145,907	$	257,657	$	(121,036	)	$	136,621
CCV		148,134		(40,165	)		107,969		142,453		(39,414	)		103,039
Cooper Compression		103,186		(40,964	)		62,222		103,186		(40,964	)		62,222
	$	528,439	$	(212,341	)	$	316,098	$	503,296	$	(201,414	)	$	301,882

     Changes to goodwill balances are largely related to changes in foreign currency exchange rates applied to goodwill denominated in currencies other than the U.S. dollar.

     Other assets consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Long-term prepaid benefit costs of defined benefit pension plans	$	121,515		$	107,151
Deferred income taxes		52,086			67,517
Intangible assets related to pension plans		116			175
Other intangibles:
Gross		12,492			11,004
Accumulated amortization		(8,978	)		(7,619	)
Other		28,322			23,785
	$	205,553		$	202,013

45

     In June 2001, the FASB issued FAS 142. Under FAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed at least annually for impairment. Following are the pro forma amounts that would have been reported had FAS 142 been effective as of January 1, 2001:

	Year Ended December 31,
(dollars in thousands, except per share data)	2003		2002		2001
Reported net income	$	69,450	$	60,469	$	98,345
Add back goodwill amortization		—		—		10,719
Pro forma net income	$	69,450	$	60,469	$	109,064
Basic earnings per share:
Reported earnings per share	$	1.28	$	1.12	$	1.82
Add back goodwill amortization		—		—		0.19
Pro forma earnings per share	$	1.28	$	1.12	$	2.01
Diluted earnings per share:
Reported earnings per share	$	1.25	$	1.10	$	1.75
Add back goodwill amortization		—		—		0.18
Pro forma earnings per share	$	1.25	$	1.10	$	1.93

     Amortization associated with the Company’s capitalized software and other amortizable intangibles (primarily patents, trademarks and other) recorded as of December 31, 2003 is expected to approximate $11,302,000, $5,879,000, $5,315,000, $5,098,000 and $4,649,000 for the years ending December 31, 2004, 2005, 2006, 2007 and 2008, respectively.

Note 7: Accounts Payable and Accrued Liabilities

     Accounts payable and accrued liabilities consisted of the following:

	December 31,
(dollars in thousands)	2003		2002
Trade accounts and accruals	$	275,248	$	206,002
Salaries, wages and related fringe benefits		62,976		59,059
Payroll and other taxes		20,419		20,170
Product warranty		5,333		5,912
Deferred income taxes		12,074		32,904
Accruals for plant closing, business realignment and other related costs		3,981		11,705
Other		17,295		18,625
	$	397,326	$	354,377

     Activity during the year associated with the Company’s warranty accruals was as follows (dollars in thousands):

	Warranty	Charges
Balance	Provisions During	Against	Translation	Balance
December 31, 2002	the Year	Accrual	and Other	December 31, 2003
$5,912	7,591	(8,474)	304	$5,333

46

Note 8: Employee Benefit Plans

     Total net benefit expense (income) associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

										Postretirement
	Pension Benefits									Benefits
(dollars in thousands)	2003			2002			2001			2003			2002			2001
Service cost	$	6,597		$	6,359		$	5,971		$	11		$	13		$	48
Interest cost		19,842			20,021			18,721			3,118			2,936			3,090
Expected return on plan assets		(23,440	)		(25,572	)		(29,543	)		—			—			—
Amortization of prior service cost		(467	)		(346	)		(351	)		(80	)		(137	)		(136	)
Amortization of losses (gains) and other		7,838			4,322			(5,466	)		—			(500	)		(200	)
Net periodic benefit expense (income)		10,370			4,784			(10,668	)		3,049			2,312			2,802
Curtailment gain		—			—			(577	)		—			—			—
Termination benefit expense		—			—			839			—			—			—
Total net benefit expense (income)	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802
Net benefit expense (income):
U.S. plans	$	5,957		$	2,388		$	(7,500	)	$	3,049		$	2,312		$	2,802
Foreign plans		4,413			2,396			(2,906	)		—			—			—
	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802

     The change in the benefit obligations associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Benefit obligation at beginning of year	$	306,309		$	299,997		$	47,472		$	41,680
Service cost		6,597			6,359			11			13
Interest cost		19,842			20,021			3,118			2,936
Plan participants’ contributions		817			751			—			—
Amendments		(2,131	)		31			(3,825	)		—
Actuarial losses (gains)		30,735			(14,970	)		611			7,754
Exchange rate changes		17,631			14,018			—			—
Benefits paid directly or from plan assets		(20,279	)		(19,898	)		(4,763	)		(4,911	)
Benefit obligation at end of year	$	359,521		$	306,309		$	42,624		$	47,472
Benefit obligations at end of year:
U.S. plans	$	186,728		$	169,139		$	42,624		$	47,472
Foreign plans		172,793			137,170			—			—
	$	359,521		$	306,309		$	42,624		$	47,472

     The total accumulated benefit obligation for the Company’s defined benefit pension plans was $338,198,000 and $287,534,000 at December 31, 2003 and 2002, respectively.

47

     The change in the plan assets associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following::

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Fair value of plan assets at beginning of year	$	286,150		$	295,074		$	—		$	—
Actual return on plan assets		38,735			(32,687	)		—			—
Actuarial gains		1,927			2,969			—			—
Company contributions		18,678			27,124			4,763			4,911
Plan participants’ contributions		817			751			—			—
Exchange rate changes		15,697			12,617			—			—
Benefits paid from plan assets		(19,708	)		(19,698	)		(4,763	)		(4,911	)
Fair value of plan assets at end of year	$	342,296		$	286,150		$	—		$	—
Fair value of plan assets at end of year:
U.S. plans	$	186,288		$	163,666		$	—		$	—
Foreign plans		156,008			122,484			—			—
	$	342,296		$	286,150		$	—		$	—

     Asset investment allocations for the Company’s main defined benefit pension and postretirement benefit plans in the United States and the United Kingdom, which account for over 98% of total plan assets, are as follows:

							Postretirement
	Pension Benefits						Benefits
	2003			2002			2003		2002
U.S. plan:
Equity securities		58	%		52	%		—		—
Fixed income debt securities and cash		42	%		48	%		—		—
U.K. plan:
Equity securities		50	%		57	%		—		—
Fixed income debt securities and cash		50	%		43	%		—		—

     In each jurisdiction, the investment of plan assets is overseen by a plan asset committee whose members act as trustees of the plan and set investment policy. For the years ended December 31, 2003 and 2002, the investment strategy has been designed to approximate the performance of market indexes.

     During 2003, the Company made contributions totaling $18,678,000 to the assets of its various defined benefit plans. Such contributions for 2004 are currently expected to approximate $10,000,000, assuming no change in the current discount rate or expected investment earnings.

     The net assets (liabilities) associated with the Company’s defined benefit pension and postretirement benefit plans recognized on the balance sheet consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Plan assets less than benefit obligations at end of year	$	(17,225	)	$	(20,159	)	$	(42,624	)	$	(47,472	)
Unrecognized net loss		137,503			124,734			3,089			2,477
Unrecognized prior service cost		(4,039	)		(2,380	)		(3,911	)		(166	)
Unrecognized net transition obligation		—			50			—			—
Prepaid (accrued) pension cost		116,239			102,245			(43,446	)		(45,161	)
Underfunded plan adjustments recognized:
Accrued minimum liability		(1,637	)		(563	)		—			—
Intangible asset		116			175			—			—
Accumulated other comprehensive income, net of tax		939			240			—			—
Net assets (liabilities) recognized on balance sheet at end of year	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

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							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)		2003			2002			2003			2002
Balance sheet classification at end of year:
Assets recognized:
U.S. plans	$	66,478		$	62,011		$	—		$	—
Foreign plans		55,153			45,315			—			—
Liabilities recognized:
U.S. plans		(3,707	)		(3,374	)		(43,446	)		(45,161	)
Foreign plans		(3,206	)		(2,095	)		—			—
Accumulated other comprehensive income, net of tax:
U.S. plans		272			68			—			—
Foreign plans		667			172			—			—
	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

     The weighted-average assumptions associated with the Company’s defined benefit pension and postretirement benefit plans were as follows:

						Postretirement
	Pension Benefits					Benefits
		2003		2002			2003		2002
Assumptions related to net benefit costs:
Domestic plans:
Discount rate		7.0	%	7.25	%		6.75	%	7.25	%
Expected return on plan assets		8.9	%	9.25	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							12.0	%	7.0	%
Measurement date		1/1/2003		1/1/2002			10/1/2002		10/1/2001
International plans:
Discount rate		6.0	%	6.0 - 6.25	%
Expected return on plan assets		6.0 - 8.0	%	6.0 - 8.5	%
Rate of compensation increase		2.75 - 4.0	%	3.5 - 4.5	%
Measurement date		12/31/2002		12/31/2001
Assumptions related to end of period benefit obligations:
Domestic plans:
Discount rate		6.25	%	7.0	%		6.25	%	6.75	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							11.0	%	12.0	%
Measurement date		12/31/2003		12/31/2002			10/1/2003		10/1/2002
International plans:
Discount rate		5.5 - 5.75	%	6.0	%
Rate of compensation increase		2.75 - 4.0	%	2.75 - 4.0	%
Measurement date		12/31/2003		12/31/2002

     The discount rates used for valuation calculations were lowered in 2003 to reflect the decrease in long-term interest rates. Additionally, the expected long-term rates of return on assets used to compute expense for the year ended December 31, 2003 were lowered from rates used in 2002 to reflect future investment returns and anticipated asset allocations and investment strategies.

     The rate of compensation increase for the domestic plans is based on an age-grade scale ranging from 7.5% to 3.0% with a weighted-average rate of approximately 4.5%.

     The health care cost trend rate is assumed to decrease gradually from 11.0% to 5.0% by 2010 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

	One-percentage-		One-percentage-
(dollars in thousands)	point Increase		point Decrease
Effect on total of service and interest cost components in 2003	$	219	$	(193	)
Effect on postretirement benefit obligation as of December 31, 2003	$	2,956	$	(2,595	)

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     Year-end amounts applicable to the Company’s pension plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets were as follows:

	Projected Benefit						Accumulated Benefit
	Obligation in Excess						Obligation in Excess
	of Plan Assets						of Plan Assets
(dollars in thousands)		2003			2002			2003			2002
Fair value of applicable plan assets	$	156,464		$	286,150		$	4,493		$	3,512
Projected benefit obligation of applicable plans	$	(177,012	)	$	(306,309	)
Accumulated benefit obligation of applicable plans							$	(11,369	)	$	(8,903	)

     The Company sponsors the Cooper Cameron Corporation Retirement Plan (Retirement Plan) covering the majority of salaried U.S. employees and certain domestic hourly employees, as well as separate defined benefit pension plans for employees of its U.K. and German subsidiaries, and several unfunded defined benefit arrangements for various other employee groups. The U.K. defined benefit pension plan was frozen with respect to new entrants effective June 14, 1996, and the Retirement Plan was frozen with respect to new entrants effective May 1, 2003. Additionally, with respect to the Retirement Plan, the basic credits to participant account balances decreased from 4% of compensation below the Social Security Wage Base plus 8% of compensation in excess of the Social Security Wage Base to 3% and 6%, respectively, and vesting for participants who had not completed three full years of vesting service as of May 1, 2003 changed from a three-year graded vesting with 33% vested after three years and 100% vested after five years to five-year cliff vesting.

     In addition, the Company’s domestic employees who are not covered by a bargaining unit are also eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan. Under this plan, employees’ savings deferrals are partially matched with shares of the Company’s Common stock. In addition, the Company makes cash contributions for hourly employees who are not covered under collective bargaining agreements and will make contributions equal to 2% of earnings of new employees hired on or after May 1, 2003, who are not eligible for participation in the Retirement Plan, based upon the achievement of certain financial objectives by the Company. The Company’s expense under this plan for the years ended December 31, 2003, 2002 and 2001 amounted to $8,050,000, $8,192,000 and $7,581,000, respectively. In addition, the Company provides various savings plans for employees under collective bargaining agreements and, in the case of certain international employees, as required by government mandate, which provide for, among other things, Company matching contributions in cash based on specified formulas. Expense with respect to these various defined contribution plans for the years ended December 31, 2003, 2002, and 2001 amounted to $12,810,000, $10,723,000 and $8,642,000, respectively.

     Certain of the Company’s employees participate in various domestic employee welfare benefit plans, including medical, dental and prescriptions. Certain employees will receive retiree medical, prescription and life insurance benefits.

     All of the welfare benefit plans, including those providing postretirement benefits, are unfunded.

     Effective January 1, 2004, various postretirement benefit plans were consolidated to standardize the provisions across all plans and update the plan design to control rising costs.

     The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted by the U.S. government on December 8, 2003. The Act introduced a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. As provided by Financial Staff Position No. FAS 106-1, issued by the Financial Accounting Standards Board, the Company has elected to defer recognizing the effects of the Act in the accounting for the accumulated postretirement benefit obligations and net postretirement benefit costs of its retiree health care benefit plans until authoritative guidance on the accounting for the federal subsidy is issued or until certain other events occur, if required, for the Company to benefit from the new legislation. Such guidance or events could change previously reported information.

Note 9: Stock Options and Employee Stock Purchase Plan

     The Company maintains two equity compensation plans which require the approval of security holders with regard to shares available for grant — the Long-term Incentive Plan, as Amended and Restated as of November 2002 (the Long-term Incentive Plan) and the Second Amended and Restated 1995 Stock Option Plan for Non-employee Directors (the Non-employee Director Stock Option Plan). An additional plan, the Broad Based 2000 Incentive Plan (the Broad Based Incentive Plan) did not require shareholder approval of the number of shares available for grant at the time the plan was initially established. However, under new corporate governance rules recently implemented by the New York Stock Exchange and approved by the Securities and Exchange Commission, all stock compensation plans now require shareholder approval for future increases in options available for grant and for material plan amendments.

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     The following table summarizes stock option activity for each of the three years ended December 31:

	Number of Shares
	Broad Based			Long-term			Non-employee			Weighted
	Incentive			Incentive			Director			Average
	Plan			Plan			Plan			Exercise Prices
Stock options outstanding at December 31, 2000		797,200			4,670,932			324,774		$	46.96
Options granted		1,180,900			929,490			67,740		$	36.57
Options expired and forfeited		(46,032	)		(120,230	)		(10,290	)	$	48.13
Options exercised		—			(555,385	)		(45,000	)	$	32.01
Stock options outstanding at December 31, 2001		1,932,068			4,924,807			337,224		$	45.03
Options granted		1,012,800			614,802			42,000		$	47.20
Options expired and forfeited		(98,662	)		(124,903	)		(10,808	)	$	51.74
Options exercised		(44,987	)		(311,841	)		(54,946	)	$	32.34
Stock options outstanding at December 31, 2002		2,801,219			5,102,865			313,470		$	45.92
Options granted		274,046			1,397,736			36,000		$	44.26
Options expired and forfeited		(164,725	)		(302,156	)		(65,516	)	$	53.23
Options exercised		(97,888	)		(600,037	)		(6,000	)	$	31.35
Stock options outstanding at December 31, 2003		2,812,652			5,598,408			277,954		$	46.32
Weighted-average exercise price of options outstanding at December 31, 2003	$	44.14		$	46.97		$	55.49		$	46.32

     Information relating to selected ranges of exercise prices for outstanding and exercisable options at December 31, 2003 is as follows:

	Options Outstanding						Options Exercisable
			Weighted-
	Number		Average Years		Weighted-		Number		Weighted-
Range of	Outstanding as		Remaining on		Average		Exercisable as		Average
Exercise Prices	of 12/31/2003		Contractual Life		Exercise Price		of 12/31/2003		Exercise Price
$24.19 - $34.34		1,756,015		6.45	$	31.96		1,306,827	$	31.61
$34.69 - $42.93		2,368,652		7.94	$	42.45		1,064,071	$	41.97
$43.66 - $48.41		1,850,295		8.51	$	46.92		714,875	$	46.94
$48.57 - $60.25		1,948,568		5.38	$	54.15		1,820,671	$	54.38
$60.69 - $79.94		765,484		3.57	$	69.89		763,151	$	69.90
$24.19 - $79.94		8,689,014		6.80	$	46.32		5,669,595	$	47.95

     Options are granted to key employees under the Long-term and Broad Based Incentive Plans and generally become exercisable on the first anniversary date following the date of grant in one-third increments each year. Certain key executives also elected in 2001 to receive options in lieu of salary for the salary period ending December 31, 2002. The options granted under the Options in Lieu of Salary Program became exercisable at the end of the salary period and will expire five years after the beginning of the salary period. The Options in Lieu of Salary Program was discontinued effective January 1, 2003.

     Under the Company’s Non-employee Director Stock Option Plan, non-employee directors receive a grant of 6,000 stock options annually and, for new directors, upon first joining the Board. The options generally expire five years after the date of grant and become exercisable one year following the date of grant. In addition, prior to January 1, 2003, directors were permitted to take either a portion of or their full annual retainer in cash ($30,000) or receive, in lieu of cash, additional stock options. During 2001, all directors received their full retainer for the service year 2002 in stock options. These retainer options, totaling 25,740 shares, became exercisable one year following the beginning of the retainer period and will expire five years following the beginning of the retainer period. The exercise price for all option grants is equal to the fair market value of the Company’s stock at the date of grant.

     As of December 31, 2003, shares reserved for future grants under the Broad Based Incentive, Long-term Incentive and Non-employee Director Stock Option Plans were 50,619, 1,962,529 and 336,012, respectively.

     Had the Company followed the alternative fair value method of accounting for stock-based compensation, the weighted-average fair value per share of options granted during 2003, 2002 and 2001 would have been $14.67, $17.09 and $15.42, respectively. The weighted-

51

average fair value per share of stock purchases under the Employee Stock Purchase Plan during 2003, 2002 and 2001 would have been $15.45, $14.52 and $18.82, respectively. The fair values were estimated using the Black-Scholes model with the following weighted-average assumptions:

	Year Ended December 31,
	2003			2002			2001
Expected life (in years)		3.4			3.3			3.3
Risk-free interest rate		2.6	%		2.4	%		4.5	%
Volatility		41.8	%		47.6	%		53.3	%
Dividend yield		0.0	%		0.0	%		0.0	%

     Further information on the impact on net income and earnings per share of using the alternative fair value method to recognize stock-based employee compensation expense may be found in Note 1 of the Notes to Consolidated Financial Statements.

Employee Stock Purchase Plan

     Under the Cooper Cameron Employee Stock Purchase Plan, the Company is authorized to sell up to 2,000,000 shares of Common stock to its full-time employees in the United States, U.K., Ireland, Norway, Singapore and Canada, nearly all of whom are eligible to participate. Under the terms of the Plan, employees may elect each year to have up to 10% of their annual compensation withheld to purchase the Company’s Common stock. The purchase price of the stock is 85% of the lower of the beginning-of-plan year or end-of-plan year market price of the Company’s Common stock. Under the 2003/2004 plan, more than 1,700 employees elected to purchase approximately 173,000 shares of the Company’s Common stock at $40.71 per share, or 85% of the market price of the Company’s Common stock on July 31, 2004, if lower. A total of 162,440 shares were purchased at $35.85 per share on July 31, 2003 under the 2002/2003 plan.

Note 10: Long-term Debt

     The Company’s debt obligations were as follows:

	December 31,
(dollars in thousands)	2003			2002
Convertible debentures, net of $62,446 of unamortized original issue discount ($65,643 at December 31, 2002)	$	458,310		$	455,113
Other debt		3,399			3,652
Obligations under capital leases		7,363			9,047
		469,072			467,812
Current maturities		(265,011	)		(4,870	)
Long-term portion	$	204,061		$	462,942

     On May 16, 2001, the Company issued two series of convertible debentures with aggregate gross proceeds to the Company of $450,000,000. The first series consisted of twenty-year zero-coupon convertible debentures (the “Zero-Coupon Convertible Debentures”) with an aggregate principal amount at maturity of approximately $320,756,000. The debentures were priced at $779.41 per debenture, which represents a yield-to-maturity of approximately 1.25%. The Company has the right to redeem the Zero-Coupon Convertible Debentures anytime after three years at the issue price plus the accrued original issue discount, and the debenture holders have the right to require the Company to repurchase the debentures on the third, eighth and thirteenth anniversaries of the issue. The Zero-Coupon Convertible Debentures are convertible into the Company’s common stock at a rate of 8.1961 shares per debenture, representing an initial conversion price of $95.095 per share.

     The second series consisted of twenty-year convertible debentures in an aggregate amount of $200,000,000, with an interest rate of 1.75%, payable semi-annually on May 15 and November 15 (the “1.75% Convertible Debentures”). The Company has the right to redeem the 1.75% Convertible Debentures anytime after five years at the principal amount plus accrued and unpaid interest, and the debenture holders have the right to require the Company to repurchase the debentures on the fifth, tenth and fifteenth anniversaries of the issue. The 1.75% Convertible Debentures are convertible into the Company’s common stock at a rate of 10.5158 shares per debenture, or $95.095 per share.

     The net proceeds from the debentures were used to repay amounts outstanding under the Company’s then-existing revolving credit agreement and other borrowings and for other purposes, including share repurchases and acquisitions.

     As of December 31, 2003, the Company was party to a credit agreement (the “Credit Agreement”) with various banks, which provides for a multi-currency borrowing capacity, plus the ability to issue letters of credit, totaling $200,000,000, expiring December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility, plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66,000,000. The Credit

52

Agreement also contains certain covenants including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company is in compliance with all loan covenants. The entire amount of the facility was available for borrowing at December 31, 2003.

     In addition to the above, the Company also has other unsecured and uncommitted credit facilities available to its foreign subsidiaries. Certain of these facilities also include annual facility fees.

     Other debt, which mainly consists of acquisition-related notes, has a weighted-average interest rate of 4.13% at December 31, 2003 (3.87% at December 31, 2002).

     Future maturities of the Company’s debt (excluding capital leases) are $261,475,000 in 2004, $234,000 in 2005 and $200,000,000 in 2006. Maturities in 2004 include $258,310,000 related to the Company’s Zero-Coupon Convertible Debentures, which the holders have the right to require the Company to repurchase on May 17, 2004, for approximately $259,524,000 at that time, and maturities in 2006 include $200,000,000 related to the 1.75% Convertible Debentures, which the holders have the right to require the Company to repurchase on May 18, 2006.

     Interest paid during the years ended December 31, 2003, 2002 and 2001 approximated $4,143,000, $4,901,000 and $12,889,000, respectively. Capitalized interest during these same periods totaled $0, $371,000 and $1,847,000, respectively.

     The Company leases certain facilities, office space, vehicles and office, data processing and other equipment under capital and operating leases. Future minimum lease payments with respect to capital leases and operating leases with terms in excess of one year were as follows:

	Capital			Operating
(dollars in thousands)	Lease Payments			Lease Payments
Year ended December 31:
2004	$	3,582		$	13,274
2005		2,383			9,512
2006		1,134			8,199
2007		423			7,800
2008		19			5,666
Thereafter		—			52,457
Future minimum lease payments		7,541			96,908
Less: amount representing interest		(178	)		—
Lease obligations at December 31, 2003	$	7,363		$	96,908

Note 11: Income Taxes

     The components of income (loss) before income taxes were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002			2001
Income (loss) before income taxes:
U.S. operations	$	21,590	$	(1,958	)	$	62,785
Foreign operations		56,013		87,103			79,797
Income before income taxes	$	77,603	$	85,145		$	142,582

     The provisions for income taxes charged to operations were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
Current:
U.S. federal	$	4,574		$	2,559		$	6,696
U.S. state, local and franchise		1,032			1,835			2,432
Foreign		20,288			21,962			14,509
		25,894			26,356			23,637
Deferred:
U.S. federal		(293	)		(4,768	)		8,541
U.S. state and local		(44	)		(717	)		1,285
Foreign		(5,195	)		3,805			10,774
		(5,532	)		(1,680	)		20,600
Income tax provision	$	20,362		$	24,676		$	44,237

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     The reasons for the differences between the provision for income taxes and income taxes using the U.S. federal income tax rate were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
U.S. federal statutory rate		35.00	%		35.00	%		35.00	%
Nondeductible goodwill		—			0.47			2.07
State and local income taxes		1.26			0.20			1.63
Tax exempt income		(5.76	)		(3.08	)		(3.70	)
Foreign statutory rate differential		(14.84	)		(6.36	)		(3.22	)
Change in valuation allowance on deferred tax assets		7.08			0.81			(1.89	)
Nondeductible expenses		2.30			1.03			0.61
All other		1.20			0.91			0.53
Total		26.24	%		28.98	%		31.03	%
Total income taxes paid	$	16,132		$	25,821		$	15,111

     Components of deferred tax assets (liabilities) were as follows:

	December 31,
(dollars in thousands)	2003			2002
Deferred tax liabilities:
Plant and equipment	$	(37,523	)	$	(28,901	)
Inventory		(46,195	)		(48,236	)
Pensions		(36,687	)		(37,485	)
Other		(37,135	)		(38,544	)
Total deferred tax liabilities		(157,540	)		(153,166	)
Deferred tax assets:
Postretirement benefits other than pensions		16,618			17,274
Reserves and accruals		27,342			32,658
Net operating losses and related deferred tax assets		137,978			115,386
Other		536			1,366
Total deferred tax assets		182,474			166,684
Valuation allowance		(23,613	)		(18,121	)
Net deferred tax assets (liabilities)	$	1,321		$	(4,603	)

     During the last three years, certain of the Company’s international operations have incurred losses that have not been tax benefited, while others utilized part of the unrecorded benefit of prior year losses. As a result of the foregoing, the valuation allowances established in prior years were increased in 2003, 2002, and 2001, respectively, by $5,492,000, $694,000, and $1,226,000 with a corresponding increase in the Company’s income tax expense. In addition, a tax benefit of $3,800,000 was recorded in 2001 relating to certain other foreign losses.

     At December 31, 2003, the Company had U.S. net operating loss carryforwards of approximately $287,000,000 that will expire in 2020 — 2023 if not utilized. At December 31, 2003, the Company had net operating loss carryforwards of approximately $34,000,000 and $15,000,000 in Brazil and Germany, respectively, that had no expiration periods. The Company had a valuation allowance of $23,613,000 as of December 31, 2003 against the net operating loss and other carryforwards. The Company has considered all available evidence in assessing the need for the valuation allowance, including future taxable income and ongoing prudent and feasible tax planning strategies. In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the net deferred tax asset would be charged to income in the period such determination was made.

     The tax benefit that the Company receives with respect to certain stock benefit plan transactions is credited to capital in excess of par value and does not reduce income tax expense. This benefit amounted to $4,831,000, $2,944,000, and $7,129,000 in 2003, 2002, and 2001, respectively.

     The Company considers all unremitted earnings of its foreign subsidiaries, except certain amounts primarily earned before 2003, to essentially be permanently reinvested. An estimate of these amounts considered permanently reinvested is $330,000,000. It is not practical for the Company to compute the amount of additional U.S. tax that would be due on this amount. The Company has provided deferred income taxes on the earnings that the Company anticipates to be remitted.

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Note 12: Stockholders’ Equity

Common Stock

     Under its Amended and Restated Certificate of Incorporation, the Company is authorized to issue up to 150,000,000 shares of Common stock, par value $.01 per share. Additionally, in November 1998, the Company’s board of directors approved the repurchase of up to 10,000,000 shares of Common stock for use in the Company’s various employee stock ownership, option and benefit plans.

     Changes in the number of shares of the Company’s outstanding stock for the last three years were as follows:

	Common		Treasury			Shares
	Stock		Stock			Outstanding
Balance — December 31, 2000		54,011,929		—			54,011,929
Purchase of treasury stock		—		(611,000	)		(611,000	)
Stock issued under stock option and other employee benefit plans		554,125		39,680			593,805
Balance — December 31, 2001		54,566,054		(571,320	)		53,994,734
Stock issued under stock option and other employee benefit plans		—		516,366			516,366
Balance — December 31, 2002		54,566,054		(54,954	)		54,511,100
Purchase of treasury stock		—		(1,251,900	)		(1,251,900	)
Stock issued under stock option and other employee benefit plans		367,604		176,254			543,858
Balance — December 31, 2003		54,933,658		(1,130,600	)		53,803,058

     At December 31, 2003, 12,260,034 shares of unissued Common stock were reserved for future issuance under various employee benefit plans.

Preferred Stock

     The Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $.01 per share. At December 31, 2003, no preferred shares were issued or outstanding. Shares of preferred stock may be issued in one or more series of classes, each of which series or class shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Company prior to issuance of any shares. Each such series or class shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issuance of such series or class of preferred stock as may be adopted by the Board of Directors prior to the issuance of any shares thereof. A total of 1,500,000 shares of Series A Junior Participating Preferred Stock has been reserved for issuance upon exercise of the Stockholder Rights described below.

Stockholder Rights Plan

     On May 23, 1995, the Company’s Board of Directors declared a dividend distribution of one Right for each then-current and future outstanding share of Common stock. Each Right entitles the registered holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 per share, for an exercise price of $300. Unless earlier redeemed by the Company at a price of $.01 each, the Rights become exercisable only in certain circumstances constituting a potential change in control of the Company, described below, and will expire on October 31, 2007.

     Each share of Series A Junior Participating Preferred Stock purchased upon exercise of the Rights will be entitled to certain minimum preferential quarterly dividend payments as well as a specified minimum preferential liquidation payment in the event of a merger, consolidation or other similar transaction. Each share will also be entitled to 100 votes to be voted together with the Common stockholders and will be junior to any other series of Preferred Stock authorized or issued by the Company, unless the terms of such other series provides otherwise.

     Except as otherwise provided in the Plan, in the event any person or group of persons acquire beneficial ownership of 20% or more of the outstanding shares of Common stock, each holder of a Right, other than Rights beneficially owned by the acquiring person or group (which will have become void), will have the right to receive upon exercise of a Right that number of shares of Common stock of the Company, or, in certain instances, Common stock of the acquiring person or group, having a market value equal to two times the current exercise price of the Right.

55

Retained Earnings

     The Company’s retained earnings includes a $441,000,000 charge related to the goodwill write-down that occurred concurrent with the Company becoming a separate stand-alone entity on June 30, 1995 in connection with the split-off from its former parent, Cooper Industries, Inc. Delaware law, under which the Company is incorporated, provides that dividends may be declared by the Company’s Board of Directors from a current year’s earnings as well as from the total of capital in excess of par value plus the retained earnings, which amounted to approximately $1,135,509,000 at December 31, 2003.

Note 13: Business Segments

     The Company’s operations are organized into three separate business segments — Cameron, CCV and Cooper Compression.

     Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services for the energy industry and for manufacturing companies and chemical process industries worldwide.

     The Company’s primary customers are major and independent oil and gas exploration and production companies, foreign national oil and gas companies, engineering and construction companies, drilling contractors, pipeline operators, refiners and other industrial and petrochemical processing companies. Cooper Compression’s customers also include manufacturers and companies in the air separation, power production and chemical process industries.

     The Company markets its equipment through a worldwide network of sales and marketing employees supported by agents and distributors in selected international locations. Due to the extremely technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     For the years ended December 31, 2003, 2002 and 2001, the Company incurred research and development costs, including costs incurred on projects designed to enhance or add to its existing product offerings, totaling $28,703,000, $28,020,000 and $27,388,000, respectively. Cameron accounted for 85%, 85% and 76% of each respective year’s total costs.

     Summary financial data by segment follows:

	For the Year Ended December 31, 2003
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,018,517	$	307,054	$	308,775	$	—		$	1,634,346
Depreciation and amortization	$	51,211	$	12,724	$	17,210	$	2,420		$	83,565
Interest income	$	—	$	—	$	—	$	(5,198	)	$	(5,198	)
Interest expense	$	—	$	—	$	—	$	8,157		$	8,157
Income (loss) before income taxes and cumulative effect of accounting change	$	63,364	$	33,694	$	10,268	$	(29,723	)	$	77,603
Capital expenditures	$	40,153	$	9,664	$	7,152	$	7,696		$	64,665
Total assets	$	1,233,172	$	320,982	$	298,020	$	288,511		$	2,140,685

56

	For the Year Ended December 31, 2002
					Cooper			Corporate
(dollars in thousands)	Cameron		CCV		Compression			& Other			Consolidated
Revenues	$	918,677	$	273,507	$	345,916		$	—		$	1,538,100
Depreciation and amortization	$	46,040	$	10,122	$	19,216		$	2,529		$	77,907
Interest income	$	—	$	—	$	—		$	(8,542	)	$	(8,542	)
Interest expense	$	—	$	—	$	—		$	7,981		$	7,981
Income (loss) before income taxes and cumulative effect of accounting change	$	76,261	$	37,290	$	(8,477	)	$	(19,929	)	$	85,145
Capital expenditures	$	39,253	$	9,266	$	9,689		$	23,940		$	82,148
Total assets	$	1,067,598	$	303,506	$	300,665		$	325,901		$	1,997,670

	For the Year Ended December 31, 2001
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	897,551	$	292,257	$	373,091	$	—		$	1,562,899
Depreciation and amortization	$	48,811	$	14,198	$	18,458	$	1,628		$	83,095
Interest income	$	—	$	—	$	—	$	(8,640	)	$	(8,640	)
Interest expense	$	—	$	—	$	—	$	13,481		$	13,481
Income (loss) before income taxes and cumulative effect of accounting change	$	123,121	$	38,275	$	2,006	$	(20,820	)	$	142,582
Capital expenditures	$	71,056	$	6,985	$	13,011	$	33,952		$	125,004
Total assets	$	1,038,322	$	247,864	$	346,390	$	242,476		$	1,875,052

     Geographic revenue by shipping location and long-lived assets related to operations as of and for the years ended December 31 were as follows:

(dollars in thousands)	2003		2002		2001
Revenues:
United States	$	833,935	$	836,264	$	932,490
United Kingdom		288,693		256,213		220,818
Other foreign countries		511,718		445,623		409,591
Total	$	1,634,346	$	1,538,100	$	1,562,899
Long-lived assets:
United States	$	468,717	$	505,069	$	529,803
United Kingdom		126,758		117,752		102,989
Other foreign countries		195,586		158,535		121,220
Total	$	791,061	$	781,356	$	754,012

     For internal management reporting, and therefore the above segment information, consolidated interest is treated as a Corporate item because short-term investments and debt, including location, type, currency, etc., are managed on a worldwide basis by the Corporate Treasury Department. In addition, spending for the Company’s enterprise-wide software upgrade has been reflected as a Corporate capital expenditure since 2001. In connection with the initial implementation of this system in 2002, amortization expense, as well as the associated asset, is being reflected in each segment’s information above for 2003 and 2002.

57

Note 14: Off-Balance Sheet Risk and Guarantees, Concentrations of Credit Risk and Fair Value of Financial Instruments

Off-Balance Sheet Risk and Guarantees

     At December 31, 2003, the Company was contingently liable with respect to approximately $137,604,000 of standby letters of credit (“letters”) issued on its behalf by financial institutions in connection with the delivery, installation and performance of the Company’s products under contracts with customers throughout the world. The Company was also liable for approximately $23,794,000 of bank guarantees and letters of credit used to secure certain financial obligations of the Company. While many of the letters of credit expire within the next one to three years, the Company would expect to continue to issue new or extend existing letters in the normal course of business. In addition, the Company has provided third parties with guarantees of a portion of the outstanding bank loans of its joint ventures, as well as other matters, totaling $1,494,000 at December 31, 2003. Approximately $20,504,000 of the Company’s cash at December 31, 2003 was restricted for use in support of a portion of the standby letters of credit above and to satisfy certain other third-party obligations.

     The Company’s other off-balance sheet risks were not material.

Concentrations of Credit Risk

     Apart from its normal exposure to its customers, who are predominantly in the energy industry, the Company had no significant concentrations of credit risk at December 31, 2003.

Fair Value of Financial Instruments

     The Company’s financial instruments consist primarily of cash and cash equivalents, short-term marketable debt and equity securities, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables and trade payables and floating-rate debt instruments are considered to be representative of their respective fair values.

     The Company’s short-term investments (which consisted entirely of available-for-sale securities) comprised the following:

	December 31,
(dollars in thousands)	2003				2002
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Auction rate preferred stock	$	22,033	$	22,033	$	25,000	$	25,000
Equity instruments		—		—		290		290
	$	22,033	$	22,033	$	25,290	$	25,290

     The primary portion of the Company’s debt consists of fixed-rate convertible debentures. Based on quoted market prices, the book value for this debt at December 31, 2003 was $4,226,000 higher than the market value. The difference between book value and market value on the Company’s other fixed-rate debt was not material. Additional information on the Company’s debt may be found in Note 10 of the Notes to Consolidated Financial Statements.

Note 15: Summary of Noncash Investing and Financing Activities

     The effect on net assets of noncash investing and financing activities was as follows:

	Year Ended December 31,
(dollars in thousands)	2003				2002
Common stock issued for employee stock ownership plans	$	5,831		$		4,944
Tax benefit of certain employee stock benefit plan transactions		4,831				2,944
Other		(579	)			(3	)

58

Note 16: Earnings Per Share

     The calculation of basic and diluted earnings per share for each period presented was as follows:

	Year Ended December 31,
(amounts in thousands)	2003		2002		2001
Income before cumulative effect of accounting change	$	57,241	$	60,469	$	98,345
Cumulative effect of accounting change		12,209		—		—
Net income		69,450		60,469		98,345
Add back interest on debentures, net of tax		5,248		5,024		3,032
Net income (assuming conversion of convertible debentures)	$	74,698	$	65,493	$	101,377
Average shares outstanding (basic)		54,403		54,215		54,170
Common stock equivalents		665		862		936
Incremental shares from assumed conversion of convertible debentures		4,732		4,732		2,969
Shares utilized in diluted earnings per share calculation		59,800		59,809		58,075

	Year Ended December 31,
	2003		2002		2001
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05	$	1.12	$	1.82
Cumulative effect of accounting change		0.23		—		—
Net income	$	1.28	$	1.12	$	1.82

	Year Ended December 31,
	2003		2002		2001
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04	$	1.10	$	1.75
Cumulative effect of accounting change		0.21		—		—
Net income	$	1.25	$	1.10	$	1.75

Note 17: Accumulated Other Elements of Comprehensive Income

     Accumulated other elements of comprehensive income comprised the following:

	December 31,
(dollars in thousands)	2003			2002
Accumulated foreign currency translation gain (loss)	$	56,268		$	(14,640	)
Accumulated adjustments to record minimum pension liabilities, net of tax		(939	)		(240	)
Difference between cost and fair value of short-term investments, net of tax		—			91
	$	55,329		$	(14,789	)

59

Note 18: Unaudited Quarterly Operating Results

     Unaudited quarterly operating results were as follows:

	2003 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	361,073	$	400,913	$	429,153	$	443,207
Gross margin1		103,975		117,559		123,730		107,432
Plant closing, business realignment and other related costs		5,500		—		5,862		3,211
Income from liquidation of LIFO inventory layers, primarily at Cooper Compression		—		5,899		2,857		7,176
Income before cumulative effect of accounting change		8,411		20,753		24,017		4,060
Net income		8,411		20,753		36,226		4,060
Earnings per share:
Basic -
Income before cumulative effect of accounting change		0.15		0.38		0.44		0.08
Net income		0.15		0.38		0.67		0.08
Diluted -
Income before cumulative effect of accounting change		0.15		0.37		0.42		0.07
Net income		0.15		0.37		0.63		0.07

	2002 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	366,901	$	402,583	$	383,847	$	384,769
Gross margin1		106,982		115,907		112,060		100,647
Plant closing, business realignment and other related costs		—		—		—		33,319
Net income (loss)		19,489		22,667		20,683		(2,370	)
Earnings (loss) per share:
Basic		0.36		0.42		0.38		(0.04	)
Diluted		0.35		0.40		0.37		(0.04	)

¹ Gross margin equals revenues less cost of sales before depreciation and amortization.

Note 19: Unaudited Subsequent Event

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

60

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER CAMERON CORPORATION

     The following table sets forth selected historical financial data for the Company for each of the five years in the period ended December 31, 2003. This information should be read in conjunction with the consolidated financial statements of the Company and notes thereto included elsewhere in this Annual Report.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001			2000			1999
Income Statement Data:
Revenues	$	1,634,346		$	1,538,100		$	1,562,899		$	1,383,733		$	1,469,962
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078			985,404			1,076,276
Selling and administrative expenses		288,569			273,105			251,303			264,173			216,319
Depreciation and amortization		83,565			77,907			83,095			75,321			83,716
Interest income		(5,198	)		(8,542	)		(8,640	)		(2,976	)		(5,099	)
Interest expense		8,157			7,981			13,481			18,038			27,834
Total costs and expenses		1,556,743			1,452,955			1,420,317			1,339,960			1,399,046
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582			43,773			70,916
Income tax provision		(20,362	)		(24,676	)		(44,237	)		(16,113	)		(27,914	)
Income before cumulative effect of accounting change		57,241			60,469			98,345			27,660			43,002
Cumulative effect of accounting change		12,209			—			—			—			—
Net income	$	69,450		$	60,469		$	98,345		$	27,660		$	43,002
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82		$	0.52		$	0.81
Cumulative effect of accounting change		0.23			—			—			—			—
Net income	$	1.28		$	1.12		$	1.82		$	0.52		$	0.81
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75		$	0.50		$	0.78
Cumulative effect of accounting change		0.21			—			—			—			—
Net income	$	1.25		$	1.10		$	1.75		$	0.50		$	0.78
Balance Sheet Data (at the end of period):
Total assets	$	2,140,685		$	1,997,670		$	1,875,052		$	1,493,873		$	1,470,719
Stockholders’ equity		1,136,723			1,041,303			923,281			842,279			714,078
Long-term debt		204,061			462,942			459,142			188,060			195,860
Other long-term obligations		119,982			118,615			114,858			117,503			138,955

61

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements on Forms S-8 or Forms S-3 and S-3/A of Cooper Cameron Corporation of our reports dated January 27, 2004, with respect to the consolidated financial statements and schedule of Cooper Cameron Corporation, incorporated by reference and included in this Annual Report (Form 10-K/A) for the year ended December 31, 2003, respectively.

Registration
Statement No.	Purpose
No. 333-26923	Form S-8 Registration Statements pertaining to the Amended and Restated
No. 33-95004	Cooper Cameron Corporation Long-Term Incentive Plan
No. 333-53545
No. 333-37850
No. 333-10624
No. 33-94948	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Employee Stock Purchase Plan
No. 33-95002	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Retirement Savings Plan
No. 333-57991	Form S-8 Registration Statement pertaining to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant
No. 333-51705	Form S-3 Registration Statement pertaining to the Cooper Cameron Corporation shelf registration of debt securities
No. 333-77641	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees
No. 333-79787	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors
No. 333-46638	Form S-8 Registration Statements pertaining to the Cooper
No. 333-82082	Cameron Corporation Broad Based 2000 Incentive Plan
No. 333-61820
No. 333-104755
No. 333-96565	Form S-3 and S-3/A Registration Statements pertaining to the Cooper Cameron Corporation shelf registration of up to $500 million of securities
No. 333-106225	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Compensation Deferral Plan, Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan and 2003 Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Houston, Texas
March 12, 2004

EX-31.1

EXHIBIT 31.1

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Sheldon R. Erikson, Chairman and Chief Executive Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K/A of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2004

/s/ SHELDON R. ERIKSON

Sheldon R. Erikson

Chairman & Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Franklin Myers, Senior Vice President of Finance and Chief Financial Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K/A of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2004

/s/ FRANKLIN MYERS

Franklin Myers

Senior Vice President of Finance and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K/A for the year ended December 31, 2003 of Cooper Cameron Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 15, 2004

/s/ Sheldon R. Erikson
Name:	Sheldon R. Erikson
Title:	Chairman, President & Chief     Executive Officer
/s/ Franklin Myers
Name:	Franklin Myers
Title:	Senior Vice President of Finance & Chief   Financial Officer