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Eaton First Quarter Operating Earnings Per Share of $0.84 Exceed Midpoint of Guidance by 12 Percent



  Eaton First Quarter Operating Earnings Per Share of $0.84 Exceed Midpoint of
  Guidance by 12 Percent

Cooper Industries Integration on Track
2013 Earnings Guidance Affirmed

Business Wire

DUBLIN -- April 29, 2013

Diversified industrial manufacturer Eaton Corporation plc (NYSE:ETN) today
announced record quarterly sales and operating profits, driven by the
acquisition of Cooper Industries. Sales in the first quarter of 2013 were
$5.31 billion, 34 percent above the same period in 2012. Operating earnings
for the first quarter of 2013, excluding charges of $22 million to integrate
recent acquisitions, were a record $400 million, an increase of 28 percent
over 2012. Operating earnings per share, which exclude charges of $0.05 per
share to integrate recent acquisitions, were $0.84 for the first quarter of
2013. This result is a decrease of 9 percent from the first quarter of 2012,
reflecting the shares issued as part of the acquisition of Cooper Industries
and the purchase price accounting charges resulting from the transaction.

Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our
first quarter results are a solid start to the year, coming in above the high
end of our guidance despite markets being slightly weaker than our
expectations. We were able to generate attractive operating margins,
reflecting our enhanced portfolio as a result of the Cooper Industries
acquisition and our continued focus on productivity improvements.

“Our 34 percent sales growth in the first quarter consisted of a decline of 5
percent in core sales and a 1 percent decline from currency translation,
offset by 40 percent growth from acquisitions,” said Cutler. “Our markets in
the first quarter were lower than a year ago, reflecting a continuation of the
sluggish economic conditions experienced in many parts of the world during the
second half of 2012.

“We entered 2013 expecting it would be a year of subpar global economic
growth, leading to approximately 2 to 3 percent growth in our markets,” said
Cutler. “We continue to believe our markets will grow 2 to 3 percent in 2013,
most likely toward the lower end of the range.

“We anticipate operating earnings per share for the second quarter of 2013,
which exclude an estimated $25 million of charges to integrate our recent
acquisitions, to be between $1.05 and $1.15,” said Cutler. “There are two
primary drivers of the expected increase in second quarter operating earnings
per share over the first quarter: first, seasonally higher volumes, since our
sales in the second quarter are typically 5 to 10 percent higher, and second,
the absence of purchase price inventory expense in the second quarter related
to the Cooper Industries acquisition.

“We are maintaining our guidance for full year operating earnings per share of
between $4.05 and $4.45,” said Cutler. “2013 is a year in which our results
will depend more on our execution than on global growth. We are off to a great
start this year, with our execution driving stronger than expected results in
the first quarter. Based on the midpoint of our guidance, our operating
earnings per share in 2013 will grow 8 percent.”

Business Segment Results

Sales for the Electrical Products segment were $1.7 billion, up 87 percent
over 2012, reflecting the impact of the Cooper Industries acquisition.
Operating profits were $241 million. Excluding acquisition integration charges
of $3 million during the quarter, operating profits were $244 million, up 76
percent over the first quarter of 2012.

“Our bookings in the Electrical Products segment were down 3 percent from the
combined bookings of Eaton and legacy Cooper in the first quarter a year ago,”
said Cutler.

Sales for the Electrical Systems and Services segment were $1.5 billion, up 79
percent over the first quarter of 2012, reflecting the impact of the Cooper
Industries acquisition. The segment reported operating profits of $210
million. Excluding acquisition integration charges of $5 million during the
quarter, operating profits were $215 million, up 176 percent. Combined
bookings in the quarter increased 2 percent compared to the first quarter of
2012.

“In both of our Electrical segments, our end markets were strongest in the
U.S., the Middle East and Latin America, with mixed conditions in Asia Pacific
and weakness in Europe,” said Cutler. “We believe sales will improve during
the balance of the year, in line with the normal seasonal pattern of demand.”

Hydraulics segment sales were $756 million, an increase of 3 percent compared
to the first quarter of 2012. Sales growth was driven by revenues from
acquisitions completed in 2012, which accounted for 13 percent growth, offset
by a 9 percent decline in core sales and a 1 percent decline from currency
translation. Operating profits in the first quarter were $78 million.
Excluding acquisition integration charges of $12 million, operating profits
were $90 million, a decline of 18 percent.

“The hydraulics markets in the first quarter grew modestly compared to the
fourth quarter,” said Cutler. “Compared to strong conditions in the first
quarter of 2012, the year-over-year comparisons are negative. Reflecting this,
our bookings in the quarter declined 8 percent from the first quarter of
2012.”

Aerospace segment sales were $434 million, up 1 percent over the first quarter
of 2012. Operating profits in the first quarter were $62 million, an increase
of 3 percent compared to a year earlier.

“Aerospace markets grew modestly in the first quarter, with strongest growth
in the commercial OEM market,” said Cutler.

The Vehicle segment posted sales of $939 million, down 11 percent compared to
the first quarter of 2012. The segment reported operating profits in the first
quarter of $132 million, a decrease of 18 percent from the first quarter of
2012.

“Continuing the trends we saw in the second half of last year, our NAFTA and
European customers experienced generally weaker market conditions,” said
Cutler.

Notice of conference call: Eaton’s conference call to discuss its first
quarter 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 first quarter results, which will be covered during the call.

This news release contains forward-looking statements concerning second
quarter and full year 2013 operating earnings per share, acquisition
integration charges, and the performance of our worldwide 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; strikes or
other labor unrest; the performance of recent acquisitions; unanticipated
difficulties integrating acquisitions; new laws and governmental regulations;
interest rate changes; stock market and currency 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 ended March
31, 2013 are available on the company’s website, www.eaton.com.

Eaton is a diversified power management company providing energy-efficient
solutions that help our customers effectively manage electrical, hydraulic and
mechanical power. A global technology leader, Eaton acquired Cooper Industries
plc in November 2012. The 2012 revenue of the combined companies was $21.8
billion on a pro forma basis. Eaton has approximately 103,000 employees and
sells products to customers in more than 175 countries. For more information,
visit www.eaton.com.

                                                                    
                                                                              
EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF INCOME
                                                                              
                                                         Three months ended
                                                         March 31             
(In millions except for per share data)                2013          2012
Net sales                                              $ 5,310       $ 3,960  
                                                                              
Cost of products sold                                  3,735         2,754
Selling and administrative expense                     958           702
Research and development expense                       152           105
Interest expense-net                                   75            28
Other (income) expense-net                             (10     )     3        
Income before income taxes                             400           368
Income tax expense                                     20            57       
Net income                                             380           311
Less net income for noncontrolling interests           (2      )     —        
Net income attributable to Eaton ordinary              $ 378         $ 311    
shareholders
                                                                              
Net income per ordinary share
Diluted                                                $ 0.79        $ 0.91
Basic                                                  0.80          0.93
                                                                              
Weighted-average number of ordinary shares
outstanding
Diluted                                                475.1         339.8
Basic                                                  471.9         335.4
                                                                              
Cash dividends declared per ordinary share             $ 0.42        $ 0.38
                                                                              
Reconciliation of net income attributable to
Eaton ordinary shareholders to operating
earnings
Net income attributable to Eaton ordinary              $ 378         $ 311
shareholders
Excluding acquisition integration charges and          22            2        
transaction costs (after-tax)
Operating earnings                                     $ 400         $ 313    
                                                                              
Net income per ordinary share - diluted                $ 0.79        $ 0.91
Excluding per share impact of acquisition
integration charges and transaction costs              0.05          0.01     
(after-tax)
Operating earnings per ordinary share                  $ 0.84        $ 0.92   

See accompanying notes.

                                                                    
                                                                      
                                                                      
EATON CORPORATION plc
BUSINESS SEGMENT INFORMATION
                                                                      
                                                         Three months ended   
                                                         March 31
(In millions)                                          2013          2012
Net sales
Electrical Products                                    $ 1,660       $ 886
Electrical Systems and Services                        1,521         852
Hydraulics                                             756           735
Aerospace                                              434           430
Vehicle                                                939           1,057    
Total net sales                                        $ 5,310       $ 3,960  
                                                                      
Segment operating profit
Electrical Products                                    $ 241         $ 139
Electrical Systems and Services                        210           76
Hydraulics                                             78            109
Aerospace                                              62            60
Vehicle                                                132           160      
Total segment operating profit                         723           544
                                                                      
Corporate
Amortization of intangible assets                      (107    )     (42     )
Interest expense-net                                   (75     )     (28     )
Pension and other postretirement benefits              (38     )     (41     )
expense
Inventory step-up adjustment                           (33     )     (2      )
Other corporate expense-net                            (70     )     (63     )
Income before income taxes                             400           368
Income tax expense                                     20            57       
Net income                                             380           311
Less net income for noncontrolling interests           (2      )     —        
Net income attributable to Eaton ordinary              $ 378         $ 311    
shareholders

See accompanying notes.

                                                               
                                                                 
                                                                 
EATON CORPORATION plc
CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                 
                                                  March 31,     December 31,
(In millions)                                     2013          2012
Assets
Current assets
Cash                                              $  639        $   577
Short-term investments                            397           527
Accounts receivable-net                           3,685         3,510
Inventory                                         2,394         2,349
Deferred income taxes                             459           449
Prepaid expenses and other current assets         622           432
Total current assets                              8,196         7,844
                                                                 
Property, plant and equipment-net                 3,841         3,877
                                                                 
Other noncurrent assets
Goodwill                                          14,275        14,396
Other intangible assets                           6,664         6,779
Deferred income taxes                             1,103         1,254
Other assets                                      898           1,698
Total assets                                      $  34,977     $   35,848
                                                                 
Liabilities and shareholders’ equity
Current liabilities
Short-term debt                                   $  84         $   757
Current portion of long-term debt                 569           314
Accounts payable                                  1,978         1,879
Accrued compensation                              318           463
Other current liabilities                         1,954         2,018
Total current liabilities                         4,903         5,431
                                                                 
Noncurrent liabilities
Long-term debt                                    9,473         9,762
Pension liabilities                               1,794         1,997
Other postretirement benefits liabilities         728           732
Deferred income taxes                             2,007         2,024
Other noncurrent liabilities                      862           774
Total noncurrent liabilities                      14,864        15,289
                                                                 
Shareholders’ equity
Eaton shareholders’ equity                        15,167        15,086
Noncontrolling interests                          43            42
Total equity                                      15,210        15,128
Total liabilities and equity                      $  34,977     $   35,848

See accompanying notes.

EATON CORPORATION plc
NOTES TO THE FIRST QUARTER 2013 EARNINGS RELEASE

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

This earnings release includes certain non-GAAP financial measures. These
financial measures include operating earnings, operating earnings per ordinary
share, and operating profit before acquisition integration charges and
transaction costs for each business segment as well as corporate expense, 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

In 2012, Eaton acquired businesses in separate transactions. The Consolidated
Statements of Income include the results of these businesses from the dates of
the transactions. These transactions and the related annual sales prior to
acquisition are summarized below:

                                Date of           Business
Acquired businesses                                               Annual sales
                                transaction       segment
Cooper Industries plc           November 30,      Electrical      $5,409
(Cooper)
A diversified global
manufacturer of
electrical products and
systems, with brands
including Bussmann
electrical and                                    Products;
electronic fuses;               2012              Electrical      for 2011
Crouse-Hinds and CEAG                             Systems and
explosion-proof                                   Services
electrical equipment;
Halo and Metalux
lighting fixtures; and
Kyle and McGraw-Edison
power systems products.
                                                                   
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              Systems and     September
provider of engineering                           Services        30,
services serving mining                                           2012
and other heavy
industrial applications
in Chile and Peru.
                                                                   
Jeil Hydraulics Co.,            July 6,           Hydraulics      $189
Ltd.
A Korean manufacturer
of track drive motors,
swing drive motors,
main control valves and         2012                              for 2011
remote control valves
for the construction
equipment market.
                                                                   
Polimer Kaucuk Sanayi           June 1,           Hydraulics      $335
ve Pazarlama A.S.
A Turkish manufacturer
of hydraulic and
industrial hose for
construction, mining,
agriculture, oil and
gas, manufacturing,             2012                              for 2011
food and beverage, and
chemicals markets. This
business sells its
products under the SEL
brand name.
                                                                   
Gycom Electrical
Low-Voltage Power               June 1,           Electrical      $24
Distribution, Control
and Automation
A Swedish electrical
low-voltage power                                 Systems and
distribution, control           2012              Services        for 2011
and automation
components business.
                                                                   

Sale of Apex Tool Group, LLC

On October 10, 2012, Cooper and Danaher announced they had entered into a
definitive agreement to sell Apex Tool Group, LLC (Apex) to Bain Capital for
approximately $1.6 billion subject to post-closing adjustments. On February 1,
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:

                    Three months ended March 31
                    Acquisition                                   Operating profit
                    integration charges     Operating profit      excluding
                    and                     as reported           acquisition
                    transaction costs                             integration
                                                                  charges
                    2013       2012         2013      2012        2013      2012
Acquisition
integration
charges
Electrical          $ 3        $ —          $ 241     $ 139       $ 244     $ 139
Products
Electrical
Systems and         5          2            210       76          215       78
Services
Hydraulics          12         1            78        109         90        110
Aerospace           —          —            62        60          62        60
Vehicle             —          —            132       160         132       160    
Total
business            20         3            $ 723     $ 544       $ 743     $ 547  
segments
Corporate
integration         6          —       
charges
Total
acquisition         $ 26       $ 3     
integration
charges
                                                                             
Transaction
costs
Corporate
transaction         $ 5        $ —     
costs
Total
transaction         $ 5        $ —     
costs
                                                                             
Total
acquisition
integration
charges and
transaction
costs
before              $ 31       $ 3     
income
taxes
Total after
income              $ 22       $ 2
taxes
Per
ordinary            $ 0.05     $ 0.01
share -
diluted
                                                                             

Business segment integration charges for the first quarter of 2013 were
related primarily to Cooper, Polimer Kaucuk Sanayi ve Pazarlama, Jeil
Hydraulics, and Rolec Comercial e Industrial S.A. Business segment integration
charges for the first quarter of 2012 were related primarily to ACTOM Low
Voltage, E. Begerow GmbH & Co. KG, Tuthill Coupling Group and Internormen
Technology Group. These charges were included in Cost of products sold or
Selling and administrative expense, as appropriate. In Business Segment
Information the charges reduced Operating profit of the related business
segment.

Corporate integration charges in 2013 were related 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 2013 were related to the acquisition of Cooper.
These charges were included in Selling and administrative expense, Interest
expense-net and Other corporate expense-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. RETIREMENT BENEFITS PLANS

The components of retirement benefits expense follow:

                                      Three months ended March 31
                                      Pension             Other postretirement
                                      benefit expense     benefits expense
                                      2013     2012       2013         2012
Service cost                          $ 47     $ 41       $  5         $  4
Interest cost                         57       53         9            9
Expected return on plan               (78  )   (64  )     (2     )     (1    )
assets
Amortization                          40       33         3            4      
                                      66       63         15           16
Settlement loss                       6        6          —            —      
Total expense                         $ 72     $ 69       $  15        $  16  
                                                                              

Note 4. INCOME TAXES

The effective income tax rate for the first quarter of 2013 was 5.0% compared
to 15.6% for the first quarter of 2012. The lower effective tax rate in the
first quarter of 2013 was primarily attributable to recording in the first
quarter of 2013 the entire U.S. research and experimentation credit for 2012
as a result of a legislative change that occurred in January 2013, the effects
of the Cooper transaction and integration, and enhanced utilization of foreign
tax credits in the U.S.

Contact:

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