CLEVELAND, OHIO…Eaton Corporation's (NYSE:ETN) Board of Directors today authorized the company to spend up to $500 million to purchase shares of its common stock. The company intends to purchase these shares in the open market and, market conditions permitting, expects to complete these repurchases by year-end 2000. The company noted that this new program is in addition to the continuing $500 million, five-year repurchase program authorized by Eaton's Board earlier this year.

"In today's market, the best way to translate Eaton's outstanding cash flow performance into value for long-term investors is to harness our capacity to support additional borrowings so we can take advantage of the intrinsic value we see in this enterprise," said Stephen R. Hardis, Eaton's chairman and chief executive officer. "It would be inconsistent with our responsibilities to our owners if we did not take advantage of what we believe is a major buying opportunity.

"Our stock price has been unaffected by Eaton's strong earnings results and the July 10th initial public offering by Axcelis Technologies, Inc., which is more than 80 percent owned by Eaton Corporation. Eaton's long-term owners have not been rewarded for the material progress we've achieved in strengthening our businesses, gaining far more balanced sources of earnings and delivering five years of healthy growth in our business.

"This does not represent a change in our long-term strategy," Hardis continued. "We will not compromise our ability to make the investments necessary to fund our growth programs. We are prepared to issue new shares to help fund a major purchase if attractive opportunities develop and if our shares are better valued.

"Money today is rushing to so-called new economy companies while funds that traditionally invested in high quality, diversified industrial companies, like Eaton, have seen massive redemptions," said Hardis. "The result is the unavoidable rationing of money available for investment in these robust older enterprises, and investors' self-fulfilling belief that there is no penalty for delaying such an investment. Even worse, when Wall Street regards results as disappointing, the market's penalties are as severe as if the company had been valued at high multiples in anticipation of extraordinary growth."

Eaton Corporation is a global manufacturer of highly engineered products that serve industrial, vehicle, construction, commercial, aerospace and semiconductor markets. Principal products include hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, engine components, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 64,000 employees and 200 manufacturing sites in 24 countries. Eaton's sales for 1999 were $8.4 billion.