CLEVELAND — Diversified industrial manufacturer Eaton Corp. announced net income per share of $1.09 for the third quarter of 2004, an increase of 58 percent over net income per share of 69 cents in the third quarter of 2003. Sales in the quarter were a record $2.54 billion, 26 percent above the same period in 2003. Net income was $170 million compared to $107 million in 2003, an increase of 59 percent.

Net income in both periods included charges for restructuring activities related to the integration of acquisitions. Before these restructuring charges, operating earnings per share in the third quarter of 2004 were $1.13 versus 72 cents per share in 2003, an increase of 57 percent, and operating earnings for the third quarter of 2004 were $177 million compared to $112 million in 2003, an increase of 58 percent.

Alexander Cutler, Eaton chairman and CEO, said, “We are very pleased with our third quarter. Sales growth of 26 percent in the quarter consisted of 13 percent from organic growth, 11 percent from acquisitions, and 2 percent from exchange rates. Our organic growth was comprised of 9 percent in our end markets and 4 percent from outgrowing our end markets.

“We continue to expect our markets to grow between 7 and 8 percent for full year 2004,” said Cutler. “Mobile hydraulics and truck markets have continued their strong performance, while electrical markets have posted modest growth and automotive markets are likely to post a small decline for the year.

“We are pleased with our third quarter margins, which were strong despite the normal seasonal weakness in our automotive business, higher metals costs, and the addition of the Powerware business, whose margins are currently lower than the rest of our electrical business,” said Cutler.

“We anticipate that net income per share for 2004 will be between $3.95 and $4.05, and accordingly we anticipate that net income per share for the fourth quarter of 2004 will be between $.98 and $1.08. Operating earnings per share, which exclude restructuring charges to integrate our recent acquisitions, are anticipated for 2004 to be between $4.10 and $4.20, with operating earnings per share for the fourth quarter of between $1.03 and $1.13.”

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

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