Eaton Announces Price Increase

Eaton Announces Price Increase For Its Electrical Business Effective May 16, 2005

Eaton announces a price increase for its electrical business, including Cutler-Hammer products, effective Monday, May 16, 2005. The average increase for standard distribution, control products and engineered products will be approximately 5% with the exception of Dry-Type Distribution Transformers. Transformer list prices will increase between 10% and 50% as a result of the unprecedented world demand for electrical steel.

The price increase will be implemented primarily through list price changes and will apply to domestic and export channel partners, including both distributors and retail accounts, as well as manufactured housing, OEMs and end-user customers.

During the last 12 months, all manufacturers have continued to experience unprecedented inflationary pressures in many raw materials. We do not anticipate that these cost increases will subside in 2005 and expect even further increases. We have made every effort to control our internal costs but are unable to make up the losses due to the magnitude of the increases absorbed over the last two years.