Eaton Reports Fourth Quarter Net Income of $0.46 Per Share

  Eaton Reports Fourth Quarter Net Income of $0.46 Per Share

Earnings Reflect Anticipated Adjustments from Closing Cooper Acquisition in
Fourth Quarter
Bridge Financing for Cooper Acquisition Has Been Repaid
Cooper Integration on Track

Business Wire

DUBLIN -- February 5, 2013

Diversified industrial manufacturer Eaton Corporation plc (NYSE:ETN) today
announced net income per share of $0.46 for the fourth quarter of 2012,
reflecting the impact of closing the acquisition of Cooper Industries plc on
November 30, 2012. Net income included charges related to integrating recent
acquisitions and transaction costs related to acquisitions. Excluding these
charges, operating earnings per share in the fourth quarter of 2012 were $0.82
compared to $1.08 per share in the fourth quarter of 2011. Operating earnings
per share in 2012 included restructuring actions of $(0.14) per share taken in
the fourth quarter related to weaker than originally anticipated end market
demand in the fourth quarter of 2012, weakness which is expected to continue
into early 2013.

Sales in the quarter were $4.3 billion, 7 percent higher than the same period
in 2011. Net income in the fourth quarter of 2012 was $179 million compared to
$362 million in 2011, a decrease of 51 percent. Operating earnings, which
exclude acquisition integration charges and acquisition transaction costs,
were $316 million compared to $366 million in 2011, a decrease of 14 percent.

Alexander M. Cutler, Eaton chairman and chief executive officer, said, “We
closed the acquisition of Cooper at the end of November and are off to a great
start on the integration of Cooper into Eaton. As we had previously
communicated, the closing of the Cooper transaction resulted in several
unusual financial impacts to our fourth quarter results. Among these were $152
million of transaction costs reflected in our fourth quarter results. We also
incurred $24 million of acquisition integration charges in the quarter.

“Sales growth in the fourth quarter of 7 percent consisted of a decline of 6
percent in core sales and a reduction of 1 percent from foreign exchange,
offset by an increase of 14 percent from acquisitions. Of the 14 percent sales
growth from acquisitions, Cooper represented 12 percent. End markets in the
fourth quarter declined by 5 percent,” said Cutler.

For the full year 2012, sales were $16.3 billion, 2 percent higher than 2011.
Net income was $1.22 billion, and net income per share was $3.46. Operating
earnings in 2012 totaled $1.38 billion, an increase of 2 percent compared to
2011. Operating earnings per share for 2012 were $3.94 versus $3.96 in 2011.

“Our full year 2012 sales increase of just 2 percent reflects the impact of
continued uncertainty about economic growth in all major regions of the
world,” said Cutler. “Looking back at 2012, while weak economic conditions
impacted our sales growth, with the acquisition of Cooper, 2012 will go down
in Eaton’s history as a year of immense transformation.

“We were able to obtain very attractive financing on the debt we issued in
connection with the Cooper acquisition,” said Cutler. “We issued $4.9 billion
of term debt, with maturities from 3 to 30 years, at an average rate of 2.74
percent. We also used $1.67 billion of our bridge facility to close the
transaction. As of last Friday, we have repaid the bridge financing.

“Our board will address the first quarter dividend at its meeting later this
month,” said Cutler.

“In 2013, we anticipate our revenues will grow approximately 42 percent,” said
Cutler. “Acquisitions completed in 2012 are expected to add $6 billion of
revenues.

“We expect that 2013 operating earnings per share will set a record,” said
Cutler. “We estimate that first quarter operating earnings per share, which
exclude an estimated $33 million of charges to integrate our recent
acquisitions, will be between $0.70 and $0.80 per share. Note that this
guidance includes a charge of $0.06 to complete the Cooper inventory purchase
price adjustment.

“For the full year 2013, we estimate that operating earnings per share, which
exclude an estimated $145 million of charges to integrate our recent
acquisitions, will be between $4.05 and $4.45 per share,” said Cutler. “Based
on the midpoint of this guidance, our operating earnings per share in 2013
will grow 8 percent.”

Business Segment Results

Fourth quarter sales for the Electrical Americas segment were $1.2 billion, up
3 percent from the fourth quarter of 2011. Operating profits in the fourth
quarter were $190 million. Excluding acquisition integration charges of $3
million during the quarter, operating profits totaled $193 million, up 11
percent from the fourth quarter of 2011.

“End markets for our Electrical Americas segment grew 1 percent during the
fourth quarter, and our orders grew 11 percent,” said Cutler. “Our operating
margin was 16.7 percent.

“Our U.S. nonresidential electrical and residential electrical markets showed
good growth during the quarter, while the power quality market remained soft,”
said Cutler.

Fourth quarter sales for the Electrical Rest of World segment were $711
million, up 2 percent over the fourth quarter of 2011. This is the first
quarter of revenue growth in over a year. Operating profits were $68 million.
Excluding acquisition integration charges of $3 million during the quarter,
operating profits totaled $71 million, up 1 percent over the fourth quarter of
2011.

“During the fourth quarter, our Rest of World electrical markets declined 5
percent, as both Europe and APAC remained soft,” said Cutler. “Despite the
market decline, we were able to grow our revenues and post an operating margin
of 10.0 percent in the quarter. The restructuring actions we took in the
quarter reduced the margin by 0.4 percent. Orders in the fourth quarter
increased 2 percent.”

Fourth quarter sales for the Cooper segment were $470 million, reflecting
Eaton’s ownership of Cooper for the month of December. Operating profits were
$66 million. Excluding acquisition integration charges of $2 million during
the quarter, operating profits were $68 million.

“In 2013, we are going to be resegmenting our electrical business,” said
Cutler. “We will be reporting two segments, the first named Electrical
Products and the second named Electrical Systems and Services. For 2013, we
expect our overall electrical markets to grow 3 to 4 percent.”

In the Hydraulics segment, fourth quarter sales were $693 million, 2 percent
lower than the fourth quarter of 2011. The 2 percent sales decline was made up
of 10 percent growth from acquisitions offset by an 11 percent decline in core
growth and a 1 percent decline from foreign exchange. Hydraulics markets in
the fourth quarter declined 11 percent compared to the same period in 2011,
with U.S. markets down 9 percent and non-U.S. markets down 12 percent.

Operating profits in the fourth quarter were $44 million. Excluding
acquisition integration charges of $7 million in the fourth quarter of 2012,
operating profits were $51 million, down 52 percent from the fourth quarter of
2011.

“The global hydraulics market had another weak quarter, as mobile OEMs in
particular maintained a cautious stance regarding future volumes. Our bookings
in the quarter declined 24 percent from the fourth quarter of 2011,” said
Cutler. “To address continued weakness in our Hydraulics markets, particularly
in Europe, we took restructuring actions in the fourth quarter that reduced
our Hydraulics margins by 2.5 percent. For 2013, we anticipate global
hydraulics markets will decline by 4 percent, with U.S. markets down a bit
more than non-U.S. markets.”

The Aerospace segment posted fourth quarter sales of $434 million, an increase
of 1 percent over the fourth quarter of 2011. Aerospace markets in the fourth
quarter grew by 1 percent. Aerospace orders declined by 4 percent during the
quarter. Operating profits in the fourth quarter were $45 million, down 42
percent from the fourth quarter of 2011.

“Aerospace markets in the fourth quarter posted just 1 percent growth, as good
growth in commercial deliveries and modest growth in the commercial
aftermarket was largely offset by a decline in the defense aerospace markets,”
said Cutler. “The mix shift we have experienced has been the primary driver of
our lower margins in 2012. We also took restructuring actions in the quarter
to improve the efficiency of the business, reducing our operating margin by
0.9 percent. For 2013, we anticipate our aerospace markets will grow 2
percent.”

The Truck segment posted sales of $504 million in the fourth quarter, down 26
percent compared to 2011. Truck markets in the fourth quarter declined 13
percent, with U.S. markets down 14 percent and non-U.S. markets down 12
percent. Operating profits were $81 million, down 41 percent from the fourth
quarter of 2011, partly impacted by restructuring actions taken to reflect
weaker markets. The restructuring actions reduced the operating margin by 1.6
percent.

The Automotive segment posted fourth quarter sales of $367 million, down 8
percent from the fourth quarter of 2011. Automotive unit production in the
fourth quarter declined by 7 percent, with U.S. markets up 5 percent and
non-U.S. markets down 11 percent. Operating profits in the fourth quarter were
$17 million, down 60 percent from the fourth quarter of 2011 largely due to
restructuring actions taken during the quarter to deal with continued soft
conditions in Europe. The restructuring actions reduced the operating margin
by 2.7 percent.

“Starting in 2013, our truck and automotive drivetrain and powertrain systems
businesses will be reported as the Vehicle segment,” said Cutler. “We expect
our Vehicle markets to grow 2 percent during 2013.”

Eaton is a diversified power management company providing energy-efficient
solutions that help our customers effectively manage electrical, hydraulic and
mechanical power. With 2012 sales of $16.3 billion, Eaton is a global
technology leader in electrical products, systems and services for power
quality, distribution and control, power transmission, lighting and wiring
products; hydraulics components, systems and services for industrial and
mobile equipment; aerospace fuel, hydraulics and pneumatic systems for
commercial and military use; and truck and automotive drivetrain and
powertrain systems for performance, fuel economy and safety. Eaton acquired
Cooper Industries plc in 2012. Eaton has approximately 103,000 employees and
sells products to customers in 175 countries. For more information, visit
www.eaton.com.

Notice of conference call: Eaton’s conference call to discuss its fourth
quarter and full year 2012 results is available to all interested parties as a
live audio webcast today at 10 a.m. United States Eastern time via a link on
the center of Eaton’s home page. This news release can be accessed under its
headline on the home page. Also available on the website prior to the call
will be a presentation on fourth quarter results, which will be covered during
the call.

This news release contains forward-looking statements concerning the first
quarter 2013 and full year 2013 operating earnings per share, the growth in
full year 2013 revenues, the performance of our worldwide markets, and our
growth in relation to end markets. These statements should be used with
caution and are subject to various risks and uncertainties, many of which are
outside the company’s control. The following factors could cause actual
results to differ materially from those in the forward-looking statements:
unanticipated changes in the markets for the company’s business segments;
unanticipated downturns in business relationships with customers or their
purchases from us; competitive pressures on sales and pricing; increases in
the cost of material and other production costs, or unexpected costs that
cannot be recouped in product pricing; the introduction of competing
technologies; unexpected technical or marketing difficulties; unexpected
claims, charges, litigation or dispute resolutions; the impact of acquisitions
and divestitures; unanticipated difficulties integrating acquisitions or
realizing expected synergies from the Cooper acquisition; new laws and
governmental regulations; interest rate changes; changes in currency exchange
rates; stock market fluctuations; and unanticipated deterioration of economic
and financial conditions in the United States and around the world. We do not
assume any obligation to update these forward-looking statements.

Financial Results

The company’s comparative financial results for the three months and year
ended December 31, 2012 are available on the company’s website, www.eaton.com.

                                                           
                                                                      
EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF
INCOME
                                                                      
                                    Three months ended     Year ended
                                                           December 31
                                    December 31
(In millions except for per         2012       2011        2012       2011
share data)
Net sales                           $  4,333   $ 4,033     $ 16,311   $ 16,049
                                                                      
Cost of products sold               3,132      2,817        11,448   11,261
Selling and administrative          815        707         2,894      2,738
expense
Research and development            126        101         439        417
expense
Interest expense-net                108        26          208        118
Other expense (income)-net          64         (8)         71         (38)
Income before income taxes          88         390         1,251      1,553
Income tax (benefit)                (92)       29          31         201
expense
Net income                          180        361         1,220      1,352
Adjustment for net (income)
loss for noncontrolling             (1)        1           (3)        (2)
interests
Net income attributable to          $  179     $ 362       $ 1,217    $ 1,350
Eaton common shareholders
                                                                      
Net income per common share
Diluted                             $  0.46    $ 1.07      $ 3.46     $ 3.93
Basic                                  0.47      1.08        3.54       3.98
                                                                      
Weighted-average number of
common shares outstanding
Diluted                             384.4      338.1       350.9      342.8
Basic                               381.3      334.2       347.8      338.3
                                                                      
Reconciliation of net
income attributable to
Eaton common shareholders
to operating earnings
Net income attributable to          $  179     $ 362       $ 1,217    $ 1,350
Eaton common shareholders
Excluding acquisition
integration charges and             137        4            167      10
transaction costs
(after-tax)
Operating earnings                  $  316     $ 366       $ 1,384    $ 1,360
                                                                      
Net income per common share         $  0.46    $ 1.07      $ 3.46     $ 3.93
- diluted
Excluding per share impact
of acquisition integration          0.36       0.01        0.48        0.03
charges and transaction
costs (after-tax)
Operating earnings per              $  0.82    $ 1.08      $ 3.94     $ 3.96
common share
                                                                        
See accompanying notes.
                                                                        

                                                      
                                                                    
EATON CORPORATION plc                                              
BUSINESS SEGMENT
INFORMATION
                                                                      
                                    Three months ended     Year ended
                                    December 31            December 31
(In millions)                       2012       2011        2012       2011
Net sales
Electrical Americas                 $  1,154   $ 1,121     $ 4,517    $ 4,192
Electrical Rest of World            711        699         2,731      2,984
Cooper                              470        —           470        —
Hydraulics                          693        705         2,960      2,835
Aerospace                           434        430         1,719      1,648
Truck                               504        680         2,309      2,644
Automotive                          367        398         1,605      1,746
Total net sales                     $  4,333   $ 4,033     $ 16,311   $ 16,049
                                                                      
Segment operating profit
Electrical Americas                 $  190     $ 173       $ 749      $ 605
Electrical Rest of World            68         69          249        278
Cooper                              66         —           66         —
Hydraulics                          44         103         369        438
Aerospace                           45         78          213        244
Truck                               81         137         420        486
Automotive                          17         42          150        209
Total segment operating             511        602         2,216      2,260
profit
                                                                      
Corporate
Amortization of intangible          (66)       (47)        (195)      (190)
assets
Interest expense-net                (108)      (26)        (208)      (118)
Pension and other
postretirement benefits             (41)       (37)        (162)      (142)
expense
Inventory step-up                   (38)       —           (42)       (5)
adjustment
Other corporate expense-net         (170)      (102)       (358)      (252)
Income before income taxes          88         390         1,251      1,553
Income tax (benefit)                (92)       29          31         201
expense
Net income                          180        361         1,220      1,352
Adjustment for net (income)
loss for noncontrolling             (1)        1           (3)        (2)
interests
Net income attributable to          $  179     $ 362       $ 1,217    $ 1,350
Eaton common shareholders
                                                                        
See accompanying notes.
                                                                        

                                                           
                                                                  
EATON CORPORATION plc
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                  
                                                 December 31,     December 31,
(In millions)                                    2012             2011
Assets
Current assets
Cash                                             $   577          $   385
Short-term investments                           527              699
Accounts receivable-net                          3,510            2,444
Inventory                                        2,349            1,701
Other current assets                             945              597
Total current assets                             7,908            5,826
                                                                  
Property, plant and equipment-net                3,877            2,602
                                                                  
Other noncurrent assets
Goodwill                                         14,396           5,537
Other intangible assets                          6,779            2,192
Deferred income taxes                            1,261            1,134
Other assets                                     1,615            582
Total assets                                     $   35,836       $   17,873
                                                                  
Liabilities and shareholders’ equity
Current liabilities
Short-term debt                                  $   757          $   86
Current portion of long-term debt                314              321
Accounts payable                                 1,879            1,491
Accrued compensation                             463              420
Other current liabilities                        2,006            1,319
Total current liabilities                        5,419            3,637
                                                                  
Noncurrent liabilities
Long-term debt                                   9,762            3,366
Pension liabilities                              1,997            1,793
Other postretirement benefits                    732              642
liabilities
Deferred income taxes                            2,024            442
Other noncurrent liabilities                     774              501
Total noncurrent liabilities                     15,289           6,744
                                                                  
Shareholders’ equity
Eaton shareholders’ equity                       15,086           7,469
Noncontrolling interests                         42               23
Total equity                                     15,128           7,492
Total liabilities and equity                     $   35,836       $   17,873
                                                                      
See accompanying notes.
                                                                      

EATON CORPORATION plc
NOTES TO THE FOURTH QUARTER 2012 EARNINGS RELEASE

Amounts are in millions of dollars unless indicated otherwise (per share data
assume dilution).

Eaton Corporation plc (Eaton or Company), formerly known as Eaton Corporation
Limited, was incorporated under the laws of Ireland on May 10, 2012, and
became the successor registrant to Eaton Corporation on November 30, 2012, in
connection with the consummation of Eaton's acquisition of Cooper Industries
plc (Cooper). Eaton Corporation shares were cancelled and exchanged for Eaton
Corporation plc shares on a one-for-one basis.On December 3, 2012, Eaton
Corporation plc began trading on the New York Stock Exchange under the same
symbol used by Eaton Corporation (“ETN”) prior to November 30, 2012. See Note
1 for additional information about the acquisition of Cooper.

This earnings release includes certain non-GAAP financial measures. These
financial measures include operating earnings, operating earnings per common
share, and operating profit before acquisition integration charges and
transaction costs, each of which excludes amounts that differ from the most
directly comparable measure calculated in accordance with generally accepted
accounting principles (GAAP). A reconciliation of each of these financial
measures to the most directly comparable GAAP measure is included in this
earnings release. Management believes that these financial measures are useful
to investors because they exclude transactions of an unusual nature, allowing
investors to more easily compare Eaton's financial performance period to
period. Management uses this information in monitoring and evaluating the
on-going performance of Eaton and each business segment.

Note 1. ACQUISITIONS AND SALE OF BUSINESSES

On November 30, 2012, Eaton Corporation acquired Cooper for a purchase price
of $13,192. The total purchase price is comprised of cash totaling $6,543 and
Eaton share consideration valued at $6,649. Cooper is a diversified global
manufacturer of electrical products and systems, with brands including
Bussmann electrical and electronic fuses; Crouse-Hinds and CEAG
explosion-proof electrical equipment; Halo and Metalux lighting fixtures; and
Kyle and McGraw-Edison power systems products. Cooper had annual sales of
$5,409 million for 2011. Eaton's Consolidated Financial Statements include
Cooper's results of operations from November 30, 2012 through December31,
2012. For segment reporting purposes, Cooper has been identified as a segment
at December31, 2012.

In 2012 and 2011, Eaton acquired other businesses and entered into a joint
venture in separate transactions. The Consolidated Statements of Income
include the results of these businesses from the dates of the transactions or
formation. These transactions and the related annual sales prior to
acquisition are summarized below:

Acquired businesses and      Date of         Business     Annual sales
joint venture                    transaction       segment
Rolec Comercial e                September 28,     Electrical     $85 for the
Industrial S.A.
A Chilean manufacturer
of integrated power
assemblies and low- and                                           12 months
medium-voltage                                                    ended
switchgear, and a                2012              Americas       September
provider of engineering                                           30,
services serving mining                                           2012
and other heavy
industrial applications
in Chile and Peru.
                                                                  
Jeil Hydraulics Co.,             July 6,           Hydraulics     $189 for
Ltd.                                                              2011
A Korean manufacturer of
track drive motors,
swing drive motors, main
control valves and               2012
remote control valves
for the construction
equipment market.
                                                                  
Polimer Kaucuk Sanayi ve         June 1,           Hydraulics     $335 for
Pazarlama A.S.                                                    2011
A Turkish manufacturer
of hydraulic and
industrial hose for
construction, mining,
agriculture, oil and
gas, manufacturing, food         2012
and beverage, and
chemicals markets. This
business sells its
products under the SEL
brand name.
                                                                  
Gycom Electrical
Low-Voltage Power                June 1,           Electrical     $24 for 2011
Distribution, Control
and Automation
A Swedish electrical
low-voltage power                                  Rest of
distribution, control            2012              World
and automation
components business.
                                                                  
E.A. Pedersen Company            December 29,      Electrical     $37 for 2011
A United States
manufacturer of medium
voltage switchgear,
metal-clad switchgear,
power control buildings          2011              Americas
and relay control panels
primarily for the
electrical utilities
industry.
                                                                  
IE Power, Inc.                   August 31,        Electrical     $5 for 2010
A Canadian provider of
high power inverters for
a variety of
mission-critical                 2011              Americas
applications including
solar, wind and battery
energy storage.
                                                                  
E. Begerow GmbH & Co. KG         August 15,        Hydraulics     $84 for 2010
A German system provider
of advanced liquid
filtration solutions.
This business develops
and produces
technologically                  2011
innovative filter media
and filtration systems
for food and beverage,
chemical, pharmaceutical
and industrial
applications.
                                                                  
ACTOM Low Voltage                June 30,          Electrical     $65 for the
A South African
manufacturer and
supplier of motor                                                 year ended
control components,              2011              Rest of        May 31,
engineered electrical                              World          2011
distribution systems and
uninterruptible power
supply (UPS) systems.
                                                                  
C.I. ESI de Colombia             June 2,           Electrical     $8 for 2010
S.A.
A Colombian distributor
of industrial electrical
equipment and
engineering services in
the Colombian market,            2011              Americas
focused on oil and gas,
mining, and industrial
and commercial
construction.
                                                                  
Internormen Technology           May 12,           Hydraulics     $55 for 2010
Group
A Germany-based
manufacturer of
hydraulic filtration and
instrumentation with             2011
sales and distribution
subsidiaries in China,
the United States, India
and Brazil.
                                                                  
Eaton-SAMC (Shanghai)
Aircraft Conveyance              March 8,          Aerospace      Joint
System Manufacturing                                              venture
Co., Ltd.
A 49%-owned joint
venture in China
focusing on the design,
development,
manufacturing and                2011
support of fuel and
hydraulic conveyance
systems for the global
civil aviation market.
                                                                  
Tuthill Coupling Group           January 1,        Hydraulics     $35 for the
A United States based
manufacturer of
pneumatic and hydraulic
quick coupling solutions                                          year ended
and leak-free connectors         2011                             November 30,
used in industrial,                                               2010
construction, mining,
defense, energy and
power applications.
                                                                  

Sale of Apex Tool Group, LLC

In July 2010, Cooper formed a joint venture, named Apex Tool Group, LLC
(Apex), with Danaher Corporation (Danaher). Apex was formed by combining
Cooper’s Tools business with certain Tools businesses from Danaher’s Tools and
Components segment. Cooper and Danaher each owned a 50% interest in the joint
venture, had equal representation on its Board of Directors and had a 50%
voting interest in the joint venture.

On October 10, 2012, Cooper and Danaher announced they had entered into a
definitive agreement to sell Apex to Bain Capital for approximately $1.6
billion subject to post-closing adjustments. On February1, 2013, the sale of
Apex was completed.

Note 2. ACQUISITION INTEGRATION CHARGES AND TRANSACTION COSTS

Eaton incurs integration charges and transaction costs related to acquired
businesses. A summary of these charges follows:

                    Acquisition                               Operating profit
                    integration         Operating profit      excluding
                charges and       as reported         acquisition
                    transaction                               integration
                    costs                                     charges
                    Three months ended December 31
                    2012    2011     2012     2011      2012     2011
Acquisition
integration
charges
Electrical          $ 3      $ 1        $ 190     $ 173       $ 193     $ 174
Americas
Electrical
Rest of             3        1          68        69          71        70
World
Cooper              2        —          66        —           68        —
Hydraulics          7        3          44        103         51        106
Aerospace           —        —          45        78          45        78
Truck               —        —          81        137         81        137
Automotive          —        —          17        42          17        42
Total
business            15       5          $ 511     $ 602       $ 526     $ 607
segments
Corporate
integration         9        —
charges
Total
acquisition         $ 24     $ 5
integration
charges
                                                                        
Transaction
costs
Corporate
transaction         $ 90     $ —
costs
Financing           62       —
fees
Total
transaction         $ 152    $ —
costs
                                                                        
Total
acquisition
integration
charges and
transaction         $ 176    $ 5
costs
before
income
taxes
Total after
income              $ 137    $ 4
taxes
Per common
share -             $ 0.36   $ 0.01
diluted
                                                                      
                    Year ended December 31
                    2012     2011       2012      2011        2012      2011
Acquisition
integration
charges
Electrical          $ 7      $ 8        $ 749     $ 605       $ 756     $ 613
Americas
Electrical
Rest of             8        2          249       278         257       280
World
Cooper              2        —          66        —           68        —
Hydraulics          16       4          369       438         385       442
Aerospace           —        —          213       244         213       244
Truck               —        —          420       486         420       486
Automotive          —        —          150       209         150       209
Total
business            33       14         $ 2,216   $ 2,260     $ 2,249   $ 2,274
segments
Corporate
integration         11       —
charges
Total
acquisition         $ 44     $ 14
integration
charges
                                                                        
Transaction
costs
Corporate
transaction         $ 106    $ —
costs
Financing           72       —
fees
Total
transaction         $ 178    $ —
costs
                                                                        
Total
acquisition
integration
charges and
transaction         $ 222    $ 14
costs
before
income
taxes
Total after
income              $ 167    $ 10
taxes
Per common
share -             $ 0.48   $ 0.03
diluted
                                                                        

Integration charges for the fourth quarter of 2012 were related primarily to
Polimer Kaucuk Sanayi ve Pazarlama (SEL), Cooper and Jeil Hydraulics.
Integration charges for the full year of 2012 were related primarily to SEL,
Jeil Hydraulics, The Moeller Group, Cooper and Internormen Technology Group.
Integration charges in 2011 were related primarily to CopperLogic, Tuthill
Coupling Group, Wright Line Holding, EMC Engineers and Internormen Technology
Group. These charges were included in Cost of products sold or Selling and
administrative expense, as appropriate.

Corporate integration charges in2012were related primarily to the
acquisition of Cooper. These charges were included in Selling and
administrative expense. In Business Segment Information the charges were
included in Other corporate expense-net.

Acquisition-related transaction costs, such as investment banking, legal, and
other professional fees are not included as a component of consideration
transferred in an acquisition, but are expensed as incurred.
Acquisition-related transaction costs in 2012 were related primarily to the
acquisition of Cooper. These charges were included in Selling and
administrative expense, Interest expense-net, and Other expense (income)-net.
In Business Segment Information the charges were included in Interest
expense-net and Other corporate expense-net.

See Note 1 for additional information about Cooper and other business
acquisitions.

Note 3. DEBT

On November 14, 2012, Eaton received proceeds totaling $4,853, net of
financing costs and nominal discounts, from the issuance ofsenior notes (the
Senior Notes) totaling $4,900 related to financing the cash portion of the
acquisition of Cooper. The Senior Notes are comprised of five tranches which
mature in 2015, 2017, 2022, 2032 and 2042, with interest payable semi-annually
at a respective rate of 0.95%, 1.50%, 2.75%, 4.00% and 4.15%. The Senior Notes
are fully and unconditionally guaranteed on an unsubordinated, unsecured basis
by Eaton and certain of its direct and indirect subsidiaries, including
Cooper, and are subject to customary covenants. This debt obligation is
classified as long-term based on its terms.

On November 30, 2012, the closing date of the acquisition of Cooper, Eaton
borrowed $1,669 on a $6,750 364-day bridge facility (the Facility) which was
obtained on May 21, 2012. The Facility was obtained to finance a portion of
the cash paid to acquire Cooper. At December31, 2012, $669 remained
outstanding on the Facility and was classified as current based on its terms.
On February1, 2013, Eaton repaid the outstanding balance on the Facility.

Note 4. RETIREMENT BENEFITS PLANS

The components of retirement benefits expense follow:

                                  Three months ended December 31
                                      Pension           Other postretirement
                                      benefit expense     benefits expense
                                      2012     2011      2012        2011
Service cost                          $  42     $ 35      $   4        $   3
Interest cost                         55        52        9            11
Expected return on plan               (68)      (58)      (1)          —
assets
Amortization                          34        22        3            3
                                      63        51        15           17
Curtailment loss                      1         —         —            —
Settlement loss                       4         6         —            —
Total expense                         $  68     $ 57      $   15       $   17
                                                                   
                                      Year ended December 31
                                      Pension             Other postretirement
                                      benefit expense     benefits expense
                                      2012      2011      2012         2011
Service cost                          $  165    $ 141     $   17       $   15
Interest cost                         211       210       38           41
Expected return on plan               (260)     (234)     (6)          —
assets
Amortization                          133       88        13           12
                                      249       205       62           68
Curtailment loss                      1         1         —            —
Settlement loss                       23        21        —            —
Total expense                         $  273    $ 227     $   62       $   68
                                                                           

Note 5. INCOME TAXES

The effective tax rate for the fourth quarter of 2012 was a benefit of 102.8%
compared to expense of 7.2% for the fourth quarter 2011. The effective tax
rate for full year 2012 was expense of 2.5% compared to expense of 12.9% for
full year 2011. The lower effective tax rates in both the fourth quarter and
full year 2012, compared to 2011, were primarily attributable to realization
of a significant international tax benefit from actions taken after the
acquisition of Cooper, enhanced foreign tax credit utilization, lower tax
provisions in several international locations associated with restructuring
actions, and greater levels of income in lower tax jurisdictions.

Contact:

Eaton Corporation
Media Relations
Scott R. Schroeder, +1 440-523-5150
scottrschroeder@eaton.com
or
Investor Relations
Donald Bullock, +1 440-523-5127