CLEVELAND -- Eaton Corp. has announced net income per share of $1.56 for the first quarter of 2007, an increase of 15 percent over net income per share of $1.36 in the first quarter of 2006. Sales in the quarter were $3.2 billion, 5 percent above the same period in 2006 and a record for the first quarter. Net income was $234 million, also a record for the first quarter.

Net income in both periods included charges for integration of acquisitions. Before acquisition integration charges, operating earnings per share in the first quarter of 2007 were $1.62 versus $1.40 per share in 2006, an increase of 16 percent. Operating earnings for the first quarter of 2007 were $243 million compared to $214 million in 2006.

Alexander Cutler, Eaton chairman and chief executive officer, said, “We had a strong first quarter, with earnings per share well above the top end of our guidance. The 16 percent growth in operating earnings per share in the first quarter represents our twentieth quarter in a row with year-over-year operating earnings per share growth of more than 10 percent. Our strong performance in the quarter is further demonstration of our improved business diversification and geographic balance. Sales growth in the first quarter of 5 percent consisted of 1 percent from organic growth, 2 percent from acquisitions, and 2 percent from higher foreign exchange rates. Our end markets declined slightly more than 1 percent in the quarter, driven by the decline in the NAFTA heavy-duty truck market.

“Compared to the midpoint of our operating earnings per share guidance for the quarter, we achieved an additional 15 cents per share from stronger than expected performance across all segments, as well as a gain of 7 cents per share from state tax settlements and a tax law change affecting certain foreign operations,” said Cutler. “Our segment operating margin before acquisition integration charges was 13.3 percent in the first quarter compared to the 12.9 percent segment operating margin we recorded a year ago. Our margins are benefiting from the actions we undertook last year in our Excel 07 program.

Cutler added that the company continues to anticipate a decline of 3 to 4 percent in its end markets in 2007, primarily due to the decline in the NAFTA heavy-duty truck market.

The company anticipates net income per share for the second quarter of 2007 to be between $1.35 and $1.45. Operating earnings per share, which excludes charges to integrate recent acquisitions, are expected to be between $1.40 and $1.50 in the second quarter of 2007. Eaton is raising its full-year guidance for both net income per share and operating earnings per share by 15 cents, to $6.20 to $6.40, and $6.45 to $6.65, respectively.

“The increase in our full-year guidance is less than the 22 cents per share by which our operating earnings per share in the first quarter exceeded the midpoint of our guidance due to our expectation that the NAFTA heavy-duty truck market over the balance of the year will be slightly weaker than our original expectations,” said Cutler.

For more information about Eaton, visit: http://www.eaton.com.