Eaton Corporation posted record net income per share of $1.07 for the third quarter of 2011, an increase of 37 percent over the $0.78 earned in the third quarter of 2010.


Sales in the third quarter were $4.12 billion, 15 percent above the third quarter of 2010. Net income in the third quarter was $365 million compared to $268 million in 2010.

Net income in both periods included charges for integration of acquisitions. Before these acquisition integration charges, operating earnings per share in the third quarter of 2011 were $1.08 compared to $0.79 per share in 2010, an increase of 37 percent. Operating earnings in the third quarter were $367 million compared to $272 million in 2010.

"Our record third quarter results were at the midpoint of our guidance range, which we had increased in our July earnings release. This achievement is despite our incurring $0.06 per share of non-cash mark-to-market losses on commodity hedge contracts resulting from the virtually unprecedented declines in metals prices which occurred during the last two weeks of September. We also achieved record operating margins and very strong cash flow in the third quarter, demonstrating that our business is continuing to perform well despite the uncertainty affecting the world economy and a number of our end markets," said Alexander M. Cutler, Eaton chairman and chief executive officer.

"Sales in the third quarter increased 15 percent compared to the third quarter of 2010," said Cutler." The 15 percent sales growth was comprised of 11 percent core growth, 2 percent from acquisitions, and 2 percent from foreign exchange. End markets grew 11 percent in the quarter.

"We are very pleased with our 14.6 percent segment operating margin in the third quarter, setting a new segment operating margin record," said Cutler.

"Our operating cash flow in the third quarter was $642 million, almost equal to the record operating cash flow we recorded in the fourth quarter of 2008," said Cutler. "We took advantage of our strong cash flow and the depressed price of our shares to buy back 2 percent of our outstanding shares during the third quarter, at an average price of just over $39 per share.

"We anticipate net income per share for the fourth quarter of 2011 to be between $1.04 and $1.14," said Cutler. "Operating earnings per share for the fourth quarter, which exclude charges to integrate our recent acquisitions, are anticipated to be between $1.06 and $1.16.

"We are affirming the midpoint of our full year earnings guidance as we continue to anticipate record operating earnings per share in 2011, our 100th anniversary year," said Cutler. "Our guidance for net income per share is between $3.91 and $4.01 and for operating earnings per share is between $3.95 and $4.05. This represents growth in 2011 operating earnings per share of between 41 and 44 percent."

Truck Segment Results

The Truck segment posted sales of $715 million in the third quarter, up 34 percent compared to 2010 and a record quarterly sales level for this segment. Truck production in the third quarter was up 25 percent, with U.S. markets up 51 percent and non-U.S. markets up 7 percent. The segment reported operating profits of $139 million.

"We now expect the NAFTA Class 8 market to total 255,000 units, a small reduction from our forecast in July," said Cutler. "Outside NAFTA, we are seeing a continuation of modest growth.

"Our Truck segment is performing very well," said Cutler. "We are at record sales levels despite the NAFTA markets still operating well below the peak levels of 2006. This reflects the substantial growth we have had in our non-NAFTA truck business over the last five years."


The company's comparative financial results for the three months and nine months ended September 30, 2011 are available on the company's website, www.eaton.com.