Leading as a Premier Diversified Industrial and Maximizing Shareholder Value
Our goal is to lead the ranks of premier diversified industrial companies. To accomplish this, Eaton has undergone a significant transformation in the way it operates. The Eaton Business System is generating real results and capturing the benefits of scale, strength and scope. As we increase innovation and optimize our presence in the most attractive market segments, we are also looking at our businesses differently. That effort also requires carefully assessing each business to ensure it can be accretive to our goals. The end result - an Eaton capable of higher earnings, and higher multiples on those earnings for shareholders.

Creating Balance Through Acquisitions and a Focus on High-Growth Market Segments
Eaton has become a stronger company through acquisitions. A focus on higher-margin, higher-growth market segments has provided the balance to mitigate the impact of volatile economic conditions and the ability to significantly increase shareholder value. Since 1999, Eaton has become a diversified industrial enterprise shaped by over 45 acquisitions and 10 joint ventures. Each opportunity is carefully screened, and must demonstrate the ability to perform in the high growth segments of their markets, create differentiated technologies, and strengthen Eaton's market leadership position. This strategy has produced impressive results, with our acquisitions consistently delivering above their cost of capital, and has made us a better-balanced company in terms of geography, end markets, and the business cycle.

Charting a Challenging Course with our Corporate Goals
We've set some very aggressive targets in our drive to remain at the top of the premier diversified industrial companies. Our goal is to achieve at least 15% income growth while generating returns on invested capital of 15% or more. In doing so, we also aim to achieve at least 10% sales growth, which will come from organic growth within our markets, the ability to outperform our markets, and future acquisitions. To generate superior returns on capital, we continue to maintain our focus on improving margins, reducing fixed and working capital intensity, and generating free cash flow of 9% of sales or more. Generating cash at superior levels ensures we have the funds available to drive growth throughout our businesses.

These goals represent a roadmap that tracks our record of delivering exceptional total returns to shareholders. We will continue to focus on doing business right as Eaton leverages the Eaton Business System for global expansion, product and service innovation, improved profitability, and the pursuit of breakout opportunities.

The above contains forward-looking statements. These statements are subject to various risks and uncertainties, some of which are outside the company's control. The following factors could cause actual results to differ materially from those forward-looking statements: governmental priorities, unanticipated technological problems or further substantial deterioration of economic and financial conditions in the United States. We do not assume any obligation to update these forward-looking statements.