CLEVELAND -- Eaton Corp. has announced net income per share of $1.14 for the third quarter of 2009, a decrease of 39 percent from net income per share of $1.87 in the third quarter of 2008. Sales in the quarter were $3 billion, 26 percent below the same period in 2008. Net income was $193 million compared to $315 million in 2008, a decrease of 39 percent.

Net income in both periods included charges related to the integration of acquisitions. Before these acquisition integration charges, operating earnings per share in the third quarter of 2009 were $1.21 versus $1.95 in 2008, a decrease of 38 percent.

Alexander Cutler, Eaton chairman and chief executive officer, said, “We are pleased with our third quarter results, which significantly exceeded our guidance. The results reflect the impact of the substantial enterprise-wide reductions in costs we have enacted during the past year. Our revenues in the third quarter grew 4 percent over the second quarter, reflecting equally the very early stages of recovery in our end markets and benefit from the strengthening of currencies against the dollar.

“The sales decline of 26 percent in the quarter consisted of a 23 percent decline in core sales and a 3 percent decline from exchange rates compared to the third quarter of 2008,” said Cutler. “Our end markets declined by 24 percent in the quarter.

“Our margin performance in the third quarter was much improved, with our segment operating margin rebounding to 10.9 percent from 8.2 percent in the second quarter,” said Cutler. “We realized significant improvements in the margins of our Electrical Rest of World, Truck, and Automotive segments.

“Our operating cash flow in the third quarter was $471 million and free cash flow was $431 million,” said Cutler. “In the last four quarters, operating cash flow totaled $1.6 billion – the highest we have ever had in a four quarter period. This strong cash flow has allowed us to pay down debt and improve our liquidity, as has been our plan.

“As we look at our end markets, we expect the economic recovery we are beginning to experience in our early cycle markets will continue,” said Cutler. “For the full year, we still believe our end markets will decline by 21 to 22 percent.

“We anticipate fourth quarter net income per share will be between $1 and $1.10 and operating earnings per share, which exclude charges to integrate our recent acquisitions, will be between $1.15 and $1.25,” said Cutler. “Accordingly, for the full year, we anticipate that net income per share will be between $2.05 and $2.15, and operating earnings per share will be between $2.40 and $2.50.”

The Automotive segment posted third quarter sales of $326 million, down 27 percent from the third quarter of 2008. Automotive unit production in the third quarter declined 17 percent, with North American production down 21 percent and production outside the U.S. down 15 percent compared to the third quarter of 2008.

Operating profits in the third quarter were $23 million, up 21 percent compared to the third quarter of 2008.

“Global automotive production improved in the third quarter, to a large extent as a result of the governmental stimulus programs,” said Cutler. “We were pleased with the 7.1 percent margin we earned in Automotive in the third quarter, representing a major improvement over the negative (7.0) percent margin in the second quarter.”