Eaton Reports Third Quarter 2001 Operating
CLEVELAND--(BUSINESS WIRE)--Oct. 15, 2001--Diversified industrial
manufacturer Eaton Corporation (NYSE:ETN) today announced operating
earnings per share of 66 cents for the third quarter of 2001, 38
percent below comparable results one year earlier. Sales in the
quarter were $1.75 billion, 13 percent below last year. Net income
before unusual items was $47 million versus last year's $77 million.
During the quarter, the company recognized pre-tax charges of
$33 million related to the restructuring of its operations. It also
realized a gain of $23 million from the sale of non-core businesses.
After all unusual items in both periods, third quarter net income was
$40 million compared to $69 million one year ago.
For the first nine months of 2001, operating earnings per share
were $2.64 on sales of $5.60 billion. Comparable earnings last year
were $4.23 per share, on sales of $6.36 billion.
Alexander M. Cutler, chairman and chief executive officer, said,
"Eaton's third quarter earnings came in about where we expected in the
wake of the September 11, 2001 terrorist attack on our nation. While
it is still early to accurately assess the full impact of that tragedy
on the U.S. and world economy, we remain comfortable with the guidance
we provided earlier for Eaton's fourth quarter 2001 and full year 2002
"The rough parallel to the current situation that we have found
helpful is the Gulf War of 1990 -- 1991. If the analogy holds, the
overall U.S. economy will decline again in the fourth quarter and then
should begin to regain its bearings sometime next spring, with a
recovery that is aided by the full impact of a year's monetary easing,
low inflation, tax cuts and additional fiscal stimulus," Cutler said.
"International markets are trailing the U.S. economy with the normal
6-month lag, and are expected to continue weakening throughout the
"We expect Eaton's markets will be down again this quarter and
remain below year-ago levels until the second half of 2002. The
eventual market rebound will be first reflected in our Truck and
Automotive segments, with the turnaround in our Fluid Power and
Industrial & Commercial Controls segments not anticipated before
"Because of our aggressive actions earlier in the year, Eaton is
in good shape to weather these extended, difficult operating
conditions. The $110 million we will have invested in restructuring
Eaton this year should deliver $75 million in net savings to the
bottom line in 2002. Eaton's net debt leverage is now below 50
percent, and we will have paid off over $500 million of debt by
year-end. While the economic environment remains highly uncertain, we
anticipate fourth quarter 2001 operating earnings will be in the range
of 60-70 cents per share. Our 2002 operating earnings guidance of
$3.75-$4.25 per share is also unchanged, but will be boosted by 87
cents per share after taking into account the impact of SFAS 142. The
company should be significantly cash flow positive again in 2002,"
"While the global business environment remains highly uncertain,
we are determined to remain focused on that which we can control, and
actions we can take, to ensure that Eaton delivers superior
performance to our owners over the near- and long-term horizon."
Third quarter sales of Eaton's largest business segment, Fluid
Power, were $600 million, 5 percent below one year earlier. Excluding
the impact of acquisitions and divestitures made over the past year,
comparable sales were off about 10 percent. This compares with about
an 11 percent decline in Fluid Power's markets, with North American
fluid power industry shipments off about 18 percent and aerospace
markets up about 3 percent. Segment profits before restructuring
charges were $35 million, off 38 percent from one year ago.
Said Cutler, "Traditional mobile and industrial hydraulics markets
remain very weak and aren't anticipated to recover before mid-2002.
Eaton Corporation is a global $8 billion diversified industrial
manufacturer that is a leader in fluid power systems, electrical power
quality, distribution and control, automotive engine air management
and fuel economy, and intelligent truck systems for fuel economy and
safety. Eaton has 51,000 employees and sells products in more than 50
countries. For more information, visit
Source: Eaton Corporation plc