10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended March 31, 2008

Commission file number 1-1396

EATON CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	34-0196300
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
Eaton Center, Cleveland, Ohio	44114-2584
(Address of principal executive offices)	(Zip Code)

(216) 523-5000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

There were 147.1 million Common Shares outstanding as of March 31, 2008.

TABLE OF CONTENTS

PART 1 — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	Item 4. Submission of Matters to a Vote of Security Holders
Signature
Exhibit Index
EX-3(a)
EX-3(b)
EX-12
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART 1 — FINANCIAL INFORMATION

Item 1. Financial Statements

Eaton Corporation
Statements of Consolidated Income

	Three months ended
	March 31
(Millions except for per share data)	2008			2007
Net sales	$	3,496		$	3,113
Cost of products sold		2,532			2,227
Selling & administrative expense		552			507
Research & development expense		89			80
Interest expense-net		38			30
Other (income) expense-net		(1	)		6
Income from continuing operations before income taxes		286			263
Income taxes		42			34
Income from continuing operations		244			229
Income from discontinued operations		3			5
Net income	$	247		$	234
Net income per Common Share assuming dilution
Continuing operations	$	1.62		$	1.53
Discontinued operations		.02			.03
	$	1.64		$	1.56
Average number of Common Shares outstanding assuming dilution		150.5			150.0
Net income per Common Share basic
Continuing operations	$	1.65		$	1.56
Discontinued operations		.02			.03
	$	1.67		$	1.59
Average number of Common Shares outstanding basic		147.7			147.6
Cash dividends paid per Common Share	$	.50		$	.43

See accompanying notes.

Page 2

Eaton Corporation
Condensed Consolidated Balance Sheets

	March 31,		December 31,
(Millions)	2008		2007
ASSETS
Current assets
Cash	$	157		$	142
Short-term investments		426			504
Accounts receivable		2,561			2,208
Inventories		1,634			1,483
Deferred income taxes & other current assets		471			430
		5,249			4,767
Property, plant & equipment-net		2,473			2,333
Goodwill		4,427			3,982
Other intangible assets		1,662			1,557
Deferred income taxes & other assets		835			791
	$	14,646		$	13,430
LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities
Short-term debt	$	1,290		$	825
Current portion of long-term debt		171			160
Accounts payable		1,319			1,170
Accrued compensation		268			355
Other current liabilities		1,214			1,149
		4,262			3,659
Long-term debt		2,704			2,432
Pension liabilities		705			681
Other postretirement liabilities		768			772
Other long-term liabilities & deferred income taxes		707			714
Shareholders’ equity		5,500			5,172
	$	14,646		$	13,430

See accompanying notes.

Page 3

Eaton Corporation
Condensed Statements of Consolidated Cash Flows

	Three months ended
	March 31
(Millions)	2008				2007
Net cash provided by (used in) operating activities
Net income		$	247			$	234
Adjustments to reconcile to net cash provided by (used in) operating activities
Depreciation & amortization			126				109
Pension liabilities			47				47
Changes in working capital, excluding acquisitions & sales of businesses			(348	)			(359	)
Voluntary contributions to United States & United Kingdom qualified pension plans			(13	)			(156	)
Other-net			(76	)			11
			(17	)			(114	)
Net cash provided by (used in) investing activities
Expenditures for property, plant & equipment			(83	)			(67	)
Cash paid for acquisitions of businesses			(634	)			(733	)
Sales of short-term investments-net			137				383
Other-net			(28	)			(29	)
			(608	)			(446	)
Net cash provided by (used in) financing activities
Borrowings with original maturities of more than three months
Proceeds			353				1,205
Payments			(340	)			(358	)
Borrowings (payments) with original maturities of less than three months-net, primarily commercial paper			670				(164	)
Cash dividends paid			(73	)			(63	)
Proceeds from exercise of employee stock options			24				85
Income tax benefit from exercise of employee stock options			6				25
Purchase of Common Shares							(178	)
			640				552
Total increase (decrease) in cash			15				(8	)
Cash at the beginning of the year			142				114
Cash at the end of the period		$	157			$	106

See accompanying notes.

Page 4

Notes to Condensed Consolidated Financial Statements
Dollars in millions, except for per share data (per share data assume dilution)

Preparation of Financial Statements
The accompanying unaudited condensed consolidated financial statements of Eaton Corporation (Eaton) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of financial position, results of operations and cash flows for the stated periods. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2007 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.

Realignment of Business Segment Reporting
In the first quarter of 2008, Eaton realigned its business segment financial reporting structure. The Fluid Power segment was realigned into the Hydraulics segment and the Aerospace segment. The Electrical and Truck segments will continue as individual reporting segments, and the automotive fluid connectors business was transferred to the Automotive segment from Fluid Power. Accordingly, business segment information for prior years has been restated to conform to the current year’s presentation.

Acquisitions of Businesses
In 2008 and 2007, Eaton acquired certain businesses in separate transactions. The Statements of Consolidated Income include the results of these businesses from the effective dates of acquisition. A summary of these transactions follows:

	Date of	Business
Acquired business	acquisition	segment	Annual sales
Balmen Electronic, S.L. A Spain-based distributor and service provider of uninterruptible power supply (UPS) systems	March 31, 2008	Electrical	$6 for 2007
Phoenixtec Power Company Ltd. A Taiwan-based manufacturer of single- and three-phase uninterruptible power supply (UPS) systems	February 26, 2008	Electrical	$515 for 2007
Arrow Hose & Tubing Inc. A Canada-based manufacturer of thermoplastic hose and tubing for the industrial, food and beverage, and agricultural markets	November 8, 2007	Hydraulics	$12 for 2006
MGE small systems UPS business from Schneider Electric A France-based global provider of power quality solutions including uninterruptible power supply (UPS) systems, power distribution units, static transfer switches and surge suppressors	October 31, 2007	Electrical	$245 for the year ended Sept. 30, 2007
Babco Electric Group A Canada-based manufacturer of specialty low- and medium-voltage switchgear and electrical housings for use in the Canadian oil and gas industry and other harsh environments	October 19, 2007	Electrical	$11 for the year ended April 30, 2007

Page 5

	Date of	Business
Acquired business	acquisition	segment	Annual sales
Pulizzi Engineering A U.S. manufacturer of alternating current (AC) power distribution, AC power sequencing, redundant power and remote-reboot power management systems	June 19, 2007	Electrical	$12 for 2006
Technology and related assets of SMC Electrical Products, Inc.’s industrial medium-voltage adjustable frequency drive business	May 18, 2007	Electrical	None
Fuel components division of Saturn Electronics & Engineering, Inc. A U.S. designer and manufacturer of fuel containment and shutoff valves, emissions control valves and specialty actuators	May 2, 2007	Automotive	$28 for 2006
Aphel Technologies Limited A U.K.-based global supplier of high density, fault-tolerant power distribution solutions for datacenters, technical offices, laboratories and retail environments	April 5, 2007	Electrical	$12 for 2006
Argo-Tech Corporation A U.S.-based manufacturer of high performance aerospace engine fuel pumps and systems, airframe fuel pumps and systems, and ground fueling systems for commercial and military aerospace markets	March 16, 2007	Aerospace	$206 for 2006
Power Protection Business of Power Products Ltd. A Czech Republic distributor and service provider of Powerware® products and other uninterruptible power supply (UPS) systems	February 7, 2007	Electrical	$3 for 2006

On April 4, 2008, Eaton acquired The Moeller Group, a Germany-based business, and paid €1.33 billion to acquire the outstanding shares and settle the outstanding debt, net of acquired cash. Included in the liabilities of The Moeller Group was an estimated pension liability of €247 million. This business, which had sales of €1.02 billion for 2007, is a leading supplier of electrical components for commercial and residential building applications, and industrial controls for industrial equipment applications. The business will be integrated into the Electrical segment.

The allocation of the purchase price for certain acquisitions in 2008 and 2007 is not final, and may be subsequently adjusted.

Pro Forma Results of Continuing Operations
As discussed above, in 2007 Eaton acquired the Argo-Tech aerospace business and the MGE small systems UPS business. The combined purchase price for these businesses was $1,345. Unaudited pro forma results of continuing operations for the first quarter of 2007, as if Eaton, Argo-Tech and the MGE small systems UPS business had been consolidated as of the beginning of that period, follow. The pro forma results include estimates and assumptions, which Eaton’s management believes are reasonable. However, the pro forma results do not include any cost savings or other effects of the planned integrations of these businesses, and, accordingly, are not necessarily indicative of the results that would have occurred if the business combinations had been in effect on the date indicated. These pro forma results do not include businesses acquired in 2008 and 2007 that were immaterial.

Page 6

	Three months ended
	March 31, 2007
Net sales	$	3,209
Income from continuing operations		216
Income from continuing operations per Common Share
Assuming dilution	$	1.44
Basic	$	1.46

Restructuring Liabilities
Eaton has undertaken restructuring activities at acquired businesses, including workforce reductions, plant consolidations and facility closures. In accordance with Emerging Issues Task Force (EITF) Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination,” liabilities for these restructuring activities were recorded in the allocation of the purchase price related to the acquired business. A summary of these liabilities, and utilization of the various components, follows:

							Plant
	Workforce reductions						closing
	Employees			Dollars			& other			Total
Balance at January 1, 2008		659			$27			$12			$39
Liabilities recorded in 2008		7						4			4
Utilized in 2008		(174	)		(8	)		(1	)		(9	)
Balance at March 31, 2008		492			$19			$15			$34

Acquisition Integration Charges
In 2008 and 2007, Eaton incurred charges related to the integration of acquired businesses. These charges were recorded as expense as incurred. The charges consisted of plant consolidations and integration. A summary of these charges follows:

	Three months ended
	March 31
	2008		2007
Electrical		$   3		$   2
Hydraulics		2		4
Aerospace		7		7
Automotive		1
Pretax charges		$ 13		$ 13
After-tax charges		$   9		$   9
Per Common Share		$.06		$.06

Charges in 2008 related to the integration of primarily the following acquisitions: in the Electrical segment, the MGE small systems UPS business; in the Hydraulics segment, Ronningen-Petter and Synflex; in the Aerospace segment, Argo-Tech and Cobham; and in the Automotive segment, Saturn.

Charges in 2007 related to the integration of primarily the following acquisitions: in the Electrical segment, Senyuan and Powerware; in the Hydraulics segment, Hayward; and in the Aerospace segment, PerkinElmer and Cobham.

Page 7

Summary of Acquisition Integration & Plant Closing Charges & Liabilities
A summary of acquisition integration charges recorded in 2008, and remaining liabilities related to acquisition integration charges and Excel 07 plant closing charges recorded in prior years, follows:

							Plant
	Workforce reductions						closing
	Employees			Dollars			& other			Total
Balance at January 1, 2008		563			$14			$   1			$ 15
Liabilities recorded in 2008								14			14
Utilized in 2008		(106	)		(3	)		(13	)		(16	)
Balance at March 31, 2008		457			$11			$   2			$ 13

The acquisition integration and plant closing charges were included in the Statements of Consolidated Income in Cost of products sold or Selling & administrative expense, as appropriate. In Business Segment Information, the charges reduced Operating profit of the related business segment.

Long-term Debt & Sale of Eaton Common Shares
In order to initially finance the acquisitions of Phoenixtec and The Moeller Group, on January 25, 2008 Eaton entered into a $3.0 billion revolving credit agreement that may be used either to fund direct loans or to backstop commercial paper borrowings. The proceeds must be used to finance certain acquisitions including, but not limited to, the acquisitions of Phoenixtec and The Moeller Group. All amounts borrowed under this revolving credit agreement, including commercial paper backstopped by this agreement, must be repaid by January 23, 2009, but may be repaid earlier at Eaton’s option, or may be required to be repaid earlier in the event of a default. The commitment amount of the revolving credit agreement will be reduced by the net amount of any proceeds raised through certain future capital market transactions which may include, but are not limited to, debt or equity issuances.

In the first quarter of 2008, Eaton borrowed $250 under the $3.0 billion revolving credit agreement described above to finance the acquisition of Phoenixtec. The $250 borrowed under this agreement was classified as long-term debt at March 31, 2008 because Eaton intended to, and had the ability under its existing $1.5 billion of revolving credit agreement, to refinance this debt on a long-term basis. Subsequently, on April 28, 2008, Eaton sold 17.5 million of its Common Shares in a public offering, resulting in net cash proceeds of $1.43 billion. In addition, 1.18 million Common Shares were sold on May 5, 2008 pursuant to an over-allotment option given to the underwriters of the share offering, resulting in net cash proceeds of $96. The cash proceeds from the Common Share sales are being used to repay borrowings incurred to fund the acquisitions of Phoenixtec and The Moeller Group made under the $3.0 billion revolving credit facility, and to repay commercial paper issued under the backstop provided by the facility.

Retirement Benefit Plans Expense
The components of retirement benefit cost for continuing operations follow:

	Three months ended March 31
							Other
							postretirement
	Pension benefits						benefits
	2008			2007			2008			2007
Service cost		$(35	)		$(36	)		$  (4	)		$  (3	)
Interest cost		(44	)		(41	)		(12	)		(12	)
Expected return on plan assets		48			45
Amortization		(12	)		(19	)		(3	)		(3	)
		(43	)		(51	)		(19	)		(18	)
Settlement loss		(13	)		(7	)
		$(56	)		$(58	)		$(19	)		$(18	)

Page 8

Income Taxes
The effective income tax rate for continuing operations for the first quarter of 2008 was 14.5% compared to 12.7% for the first quarter of 2007.

Comprehensive Income (Loss)
The components of comprehensive income (loss) follow:

	Three months ended
	March 31
	2008		2007
Net income		$247		$234
Foreign currency translation		93		27
Pensions & other postretirement benefits		19		10
Other				5
Comprehensive Income		$359		$276

Inventories
The components of inventories follow:

	March 31,			December 31,
	2008			2007
Raw materials		$   713			$   674
Work-in-process & finished goods		1,031			917
Inventories at FIFO		1,744			1,591
Excess of FIFO over LIFO cost		(110	)		(108	)
		$1,634			$1,483

Net Income per Common Share
A summary of the calculation of net income per Common Share assuming dilution and basic follows:

	Three months ended
	March 31
(Shares in millions)	2008		2007
Income from continuing operations	$	244	$	229
Income from discontinued operations		3		5
Net income	$	247	$	234
Average number of Common Shares outstanding assuming dilution		150.5		150.0
Less dilutive effect of stock options		2.8		2.4
Average number of Common Shares outstanding basic		147.7		147.6
Net income per Common Share assuming dilution
Continuing operations	$	1.62	$	1.53
Discontinued operations		.02		.03
	$	1.64	$	1.56
Net income per Common Share basic
Continuing operations	$	1.65	$	1.56
Discontinued operations		.02		.03
	$	1.67	$	1.59

Page 9

Financial Assets and Liabilities Measured at Fair Value
In the first quarter of 2008, Eaton adopted Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”. This Statement defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance applies to other accounting pronouncements that require or permit fair value measurements. On February 12, 2008, the FASB finalized FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157”. This Staff Position delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities to 2009, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 had no effect on Eaton’s consolidated financial position or results of operations. A summary of financial assets and liabilities that were measured at fair value at March 31, 2008, follows:

				Fair value measurement used
				Quoted prices		Quoted prices
				in active		in active
				markets for		markets for			Other
				identical		similar			unobservable
	Recorded			instruments		instruments			inputs
	value			(Level 1)		(Level 2)			(Level 3)
Short-term investments		$426			$426
Foreign currency forward exchange contracts		5					$   5
Commodity contracts		1					1
Cross currency interest rate swaps		(3	)				(3	)
Fixed-to-floating interest rate swaps		27					27
Long-term debt converted to floating interest rates by interest rate swaps		(27	)				(27	)
		$429			$426		$   3			$0

Page 10

Business Segment Information
As discussed above, in the first quarter of 2008 Eaton realigned its business segment financial reporting structure. The Fluid Power segment was realigned into the Hydraulics segment and the Aerospace segment. The Electrical and Truck segments will continue as individual reporting segments, and the automotive fluid connectors business was transferred to the Automotive segment from Fluid Power. Accordingly, business segment information for prior years has been restated to conform to the current year’s presentation.

	Three months ended
	March 31
	2008			2007
Net sales
Electrical		$1,304			$1,084
Hydraulics		657			574
Aerospace		430			350
Truck		567			576
Automotive		538			529
		$3,496			$3,113
Operating profit
Electrical		$   160			$   120
Hydraulics		78			66
Aerospace		63			45
Truck		85			107
Automotive		46			63
Corporate
Amortization of intangible assets		(25	)		(16	)
Interest expense-net		(38	)		(30	)
Minority interest		(3	)		(2	)
Pension & other postretirement benefit expense		(38	)		(38	)
Stock option expense		(7	)		(7	)
Other corporate expense—net		(35	)		(45	)
Income from continuing operations before income taxes		286			263
Income taxes		42			34
Income from continuing operations		244			229
Income from discontinued operations		3			5
Net income		$   247			$   234

Page 11

Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations

Dollars in millions, except for per share data (per share data assume dilution)

Overview of Eaton
Eaton is a diversified industrial manufacturer with 2007 sales of $13.0 billion. Eaton is a global leader in the design, manufacture, marketing and servicing of electrical systems and components for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; hydraulics, fuel and pneumatic systems for commercial and military aircraft; intelligent truck drivetrain systems for safety and fuel economy; and automotive engine air management systems, powertrain solutions and specialty controls for performance, fuel economy and safety. The principal markets for the Electrical segment are industrial, non-residential and residential construction, commercial, government, institutional, and telecommunications customers. These customers are generally concentrated in North America, Europe and Asia/Pacific; however, sales are made globally, directly by Eaton and indirectly through distributors and manufacturers’ representatives. The principal markets for the Hydraulics segment are original equipment manufacturers and after-market customers of off-highway and industrial equipment, as well as customers in oil and gas, fine chemicals, mining, metal forming, and food and beverage applications. These customers are located globally, and these products are sold and serviced through a variety of channels. The principal markets for the Aerospace segment are manufacturers of commercial and military aircraft and related after-market customers. These customers are located globally, and these products are sold and serviced through a variety of channels. The principal markets for the Truck and Automotive segments are original equipment manufacturers and after-market customers of heavy-, medium-, and light-duty trucks and passenger cars. These customers are located globally, and most sales of these products are made directly to such customers. Eaton has 79,000 employees and sells products to customers in more than 150 countries.

Highlights of Results for 2008
In the first quarter of 2008, Eaton posted first quarter records for sales, net income and net income per Common Share. Net income per share in 2008 improved despite a sharp decline in the North American commercial truck market and weaker North American automotive markets. Sales for the Electrical, Hydraulics and Aerospace business segments increased in 2008 compared to first quarter 2007, setting quarterly records. Operating profits in 2008 for these three business segments increased over the first quarter of 2007.

	Three months ended March 31
	2008			2007			Increase
Continuing operations
Net sales	$	3,496		$	3,113		12%
Gross profit		964			886		9%
Percent of net sales		27.6	%		28.5	%
Income before income taxes		286			263		9%
Income after income taxes	$	244		$	229		7%
Income from discontinued operations		3			5
Net income	$	247		$	234		6%
Net income per Common Share assuming dilution
Continuing operations	$	1.62		$	1.53		6%
Discontinued operations		.02			.03
	$	1.64		$	1.56		5%

Net sales in the first quarter of 2008 were a record for Eaton. Sales growth of 12% in 2008 over the first quarter of 2007 consisted of 6% from acquisitions of businesses; 4% from foreign exchange; and 2% from organic growth. Eaton’s end markets grew an estimated 2% in 2008 compared to the first quarter of 2007, primarily due to the strength of international markets, partially offset by the sharp decline in the North American commercial truck market and weaker North American automotive markets.

Page 12

Gross profit increased 9% in the first quarter of 2008 compared to the first quarter of 2007. This increase was primarily due to sales growth of 12%; the benefits of integrating acquired businesses; further benefits from the Excel 07 program; and continued productivity improvements driven by the Eaton Business System (EBS).

Net income and net income per Common Share assuming dilution for the first quarter of 2008 were first quarter records for Eaton, increasing 6% and 5%, respectively, compared to the first quarter of 2007. The improvements in 2008 were primarily due to higher sales and the other factors that affected gross profit as discussed above, partially offset by increases in selling, administrative, research and development expenses, and higher interest expense.

On March 31, 2008, Eaton acquired Balmen Electronic, S.L., a Spain-based distributor and service provider of uninterruptible power supply (UPS) systems. This business had sales of $6 for 2007 and is included in the Electrical segment.

On February 26, 2008, Eaton acquired Phoenixtec Power Company Ltd., a Taiwan-based manufacturer of single- and three-phase uninterruptible power supply (UPS) systems. This business had sales of $515 for 2007 and is included in the Electrical segment.

On April 4, 2008, Eaton acquired The Moeller Group, a Germany-based business, and paid €1.33 billion to acquire the outstanding shares and settle the outstanding debt, net of acquired cash. Included in the liabilities of The Moeller Group was an estimated pension liability of €247 million. This business, which had sales of €1.02 billion for 2007, is a leading supplier of electrical components for commercial and residential building applications, and industrial controls for industrial equipment applications. The business will be integrated into the Electrical segment.

In order to initially finance the acquisitions of Phoenixtec and The Moeller Group, on January 25, 2008 Eaton entered into a $3.0 billion revolving credit agreement that may be used either to fund direct loans or to backstop commercial paper borrowings. The proceeds must be used to finance certain acquisitions including, but not limited to, the acquisitions of Phoenixtec and The Moeller Group. All amounts borrowed under this revolving credit agreement, including commercial paper backstopped by this agreement, must be repaid by January 23, 2009, but may be repaid earlier at Eaton’s option, or may be required to be repaid earlier in the event of a default. The commitment amount of the revolving credit agreement will be reduced by the net amount of any proceeds raised through certain future capital market transactions which may include, but are not limited to, debt or equity issuances.

In the first quarter of 2008, Eaton borrowed $250 under the $3.0 billion revolving credit agreement described above to finance the acquisition of Phoenixtec. The $250 borrowed under this agreement was classified as long-term debt at March 31, 2008 because Eaton intended to, and had the ability under its existing $1.5 billion of revolving credit agreement, to refinance this debt on a long-term basis. Subsequently, on April 28, 2008, Eaton sold 17.5 million of its Common Shares in a public offering, resulting in net cash proceeds of $1.43 billion. In addition, 1.18 million Common Shares were sold on May 5, 2008 pursuant to an over-allotment option given to the underwriters of the share offering, resulting in net cash proceeds of $96. The cash proceeds from the Common Share sales are being used to repay borrowings incurred to fund the acquisitions of Phoenixtec and The Moeller Group made under the $3.0 billion revolving credit facility, and to repay commercial paper issued under the backstop provided by the facility.

Net cash used by operating activities was $17 in the first quarter of 2008 compared to cash used of $114 in the first quarter of 2007. The improvement of $97 in 2008 was primarily due to a decrease of $143 in voluntary contributions made to the qualified pension plans in the United States and the United Kingdom; higher net income of $13; and a net decrease of $11 in working capital funding; partially offset by other adjustments. Cash and short-term investments totaled $583 at March 31, 2008, down $63 from $646 at year-end 2007, reflecting the use of these assets to fund operating, investing and financing activities.

Page 13

Total debt of $4,165 at March 31, 2008 increased $748 from $3,417 at year-end 2007. The increase in debt during 2008 included the issuance of $1,023 of commercial paper and other borrowings; partially offset by the repayment of $340 of notes, commercial paper and other debt. The increase in total debt during 2008 largely resulted from the funding of acquisitions of businesses for $634; capital expenditures of $83; and cash dividends paid of $73. The net-debt-to-capital ratio was 39.4% at March 31, 2008 compared to 34.9% at year-end 2007, reflecting the combined effect during 2008 of the $748 increase in total debt, a $63 decline in cash and short-term investments, and an increase in Shareholders’ equity of $328.

Net working capital of $987 at March 31, 2008 decreased by $121 from $1,108 at year-end 2007. The decrease reflected the increase of $465 in short-term debt due to higher commercial paper borrowings and a $63 decrease in cash and short-term investments, both of which partially funded operating, investing and financing activities, and a net decrease of $97 in other working capital items. These items were partially offset by the $353 increase in accounts receivable, resulting from increased sales and the acquisition of Phoenixtec in 2008, and the $151 increase in inventories to support higher levels of sales and from the acquisition of Phoenixtec. The current ratio was 1.2 at March 31, 2008 and 1.3 at year-end 2007.

In light of its strong results and future prospects, on January 21, 2008 Eaton increased the quarterly dividend on its Common Shares by 16%, from $.43 per share to $.50 per share, effective for the February 2008 dividend. This is the fourth dividend increase within the last three years, reflecting Eaton’s philosophy of growing its dividend in line with its long-term growth in earnings.

As of mid-April 2008, Eaton continues to anticipate growth of 4% in its end markets in 2008, with international markets modestly stronger than previous expectations in January and U.S. markets slightly weaker. Eaton anticipates net income per Common Share for the second quarter of 2008 to be between $1.80 and $1.90, after acquisition integration charges of $.10 per share. In mid-April, Eaton raised guidance for full year 2008 net income per share by $.05 per share, to $7.30 to $7.80 per share, after acquisition integration charges of $.50 per share.

Results of Operation — 2008 Compared to 2007

	Three months ended March 31
	2008			2007			Increase
Continuing operations
Net sales	$	3,496		$	3,113		12%
Gross profit		964			886		9%
Percent of net sales		27.6	%		28.5	%
Income before income taxes		286			263		9%
Income after income taxes	$	244		$	229		7%
Income from discontinued operations		3			5
Net income	$	247		$	234		6%
Net income per Common Share assuming dilution
Continuing operations	$	1.62		$	1.53		6%
Discontinued operations		.02			.03
	$	1.64		$	1.56		5%

Net sales in the first quarter of 2008 were a record for Eaton. Sales growth of 12% in 2008 over the first quarter of 2007 consisted of 6% from acquisitions of businesses; 4% from foreign exchange; and 2% from organic growth. Eaton’s end markets grew an estimated 2% in 2008 compared to the first quarter of 2007, primarily due to the strength of international markets, partially offset by the sharp decline in the North American commercial truck market and weaker North American automotive markets.

Page 14

Gross profit increased 9% in the first quarter of 2008 compared to the first quarter of 2007. This increase was primarily due to sales growth of 12%; the benefits of integrating acquired businesses; further benefits from the Excel 07 program; and continued productivity improvements driven by the Eaton Business System (EBS).

Other Results of Operations
In 2008 and 2007, Eaton incurred charges related to the integration of acquired businesses. These charges were recorded as expense as incurred. Charges in 2008 related to the integration of primarily the following acquisitions: in the Electrical segment, the MGE small systems UPS business; in the Hydraulics segment, Ronningen-Petter and Synflex; in the Aerospace segment, Argo-Tech and Cobham; and in the Automotive segment, Saturn. Charges in 2007 related to the integration of primarily the following acquisitions: in the Electrical segment, Senyuan and Powerware; in the Hydraulics segment, Hayward; and in the Aerospace segment, PerkinElmer and Cobham. A summary of these charges follows:

	Three months ended
	March 31
	2008		2007
Electrical	$	3	$	2
Hydraulics		2		4
Aerospace		7		7
Automotive		1
Pretax charges	$	13	$	13
After-tax charges	$	9	$	9
Per Common Share	$	.06	$	.06

The acquisition integration charges were included in the Statements of Consolidated Income in Cost of products sold or Selling & administrative expense, as appropriate. In Business Segment Information, the charges reduced Operating profit of the related business segment.

The effective income tax rate for continuing operations for the first quarter of 2008 was 14.5% compared to 12.7% for the first quarter of 2007.

Net income and net income per Common Share assuming dilution for the first quarter of 2008 were first quarter records for Eaton, increasing 6% and 5%, respectively, compared to the first quarter of 2007. The improvements in 2008 were primarily due to higher sales and the other factors that affected gross profit as discussed above, partially offset by increases in selling, administrative, research and development expenses, and higher interest expense.

Results by Business Segment

Electrical

	Three months ended March 31
	2008			2007			Increase
Net sales	$	1,304		$	1,084		20%
Operating profit		160			120		33%
Operating margin		12.3	%		11.1	%

Sales of the Electrical segment reached record levels in the first quarter of 2008. Of the 20% sales increase over the first quarter of 2007, 11% was from acquisitions of businesses within the last year, primarily Phoenixtec and the MGE small systems UPS business; 5% from organic growth; and 4% from foreign exchange. Both the U.S. and non-U.S. end markets for the Electrical segment grew 7% during the first quarter of 2008 compared to first quarter 2007. Eaton is maintaining its prior forecast that global electrical markets will grow by 5 to 6% for full year 2008.

Page 15

Operating profit rose 33% in the first quarter of 2008 and was a first quarter record for this segment. The operating margin was also a first quarter record for this segment. The increase in operating profit over the first quarter of 2007 was largely due to growth in sales; the benefits of integrating acquired businesses; further benefits from the Excel 07 program; and continued productivity improvements. Operating profit reflected acquisition integration charges of $3 in the first quarter of 2008 compared to charges of $2 in the first quarter of 2007, which reduced the operating margin by 0.2% in the first quarters of 2008 and 2007. Acquisition integration charges in 2008 primarily related to the MGE small systems UPS business, while charges in the first quarter of 2007 related to Senyuan and Powerware. The incremental operating margin for the first quarter of 2008 (the increase in operating profit compared to the increase in sales) was 18%. The operating margin for acquired businesses was 16% in the first quarter of 2008.

On March 31, 2008, Eaton acquired Balmen Electronic, S.L., a Spain-based distributor and service provider of uninterruptible power supply (UPS) systems. This business had sales of $6 for 2007.

On February 26, 2008, Eaton acquired Phoenixtec Power Company Ltd., a Taiwan-based manufacturer of single- and three-phase uninterruptible power supply (UPS) systems. This business had sales of $515 for 2007.

On April 4, 2008, Eaton acquired The Moeller Group, a Germany-based business, and paid €1.33 billion to acquire the outstanding shares and settle the outstanding debt, net of acquired cash. Included in the liabilities of The Moeller Group was an estimated pension liability of €247 million. This business, which had sales of €1.02 billion for 2007, is a leading supplier of electrical components for commercial and residential building applications, and industrial controls for industrial equipment applications.

Hydraulics

	Three months ended March 31
	2008			2007			Increase
Net sales	$	657		$	574		14%
Operating profit		78			66		18%
Operating margin		11.9	%		11.5	%

Sales of the Hydraulics segment reached record levels in the first quarter of 2008. The 14% increase in sales over the first quarter of 2007 consisted of 8% from organic growth; 5% from foreign exchange; and 1% from acquisitions of businesses within the last year. Global hydraulics markets grew 4% in the first quarter of 2008 compared to the first quarter of 2007, with non-U.S. markets up 8%, while U.S. markets were flat. Based on the strength outside the U.S., Eaton now believes global hydraulics markets for 2008 will grow 2% compared to its prior estimate of 1% growth.

Operating profit rose 18% in the first quarter of 2008 and was a record for this segment. The increase in operating profit over the first quarter of 2007 was due to growth in sales; benefits of integrating acquired businesses; further benefits from the Excel 07 program; and overall improvement in operating efficiencies. Operating profit reflected acquisition integration charges of $2 in the first quarter of 2008 compared to charges of $4 in the first quarter of 2007, which reduced the operating margin by 0.3% in the first quarter of 2008 and 0.7% in the first quarter of 2007. The acquisition integration charges in 2008 primarily related to Ronningen-Petter and Synflex. Charges in the first quarter of 2007 largely related to Hayward. The incremental operating margin for the first quarter of 2008 was 14%.

Aerospace

	Three months ended March 31
	2008			2007			Increase
Net sales	$	430		$	350		23%
Operating profit		63			45		40%
Operating margin		14.7	%		12.9	%

Page 16

Sales of the Aerospace segment reached record levels in the first quarter of 2008. The 23% increase in sales over the first quarter of 2007 consisted of 11% from organic growth; 11% from acquisitions of businesses within the last year, primarily Argo-Tech; and 1% from foreign exchange. Aerospace markets grew 6% in the first quarter of 2008 compared to the first quarter of 2007. Eaton anticipates the global aerospace market will grow 7% in 2008, slightly stronger than expectations at the start of the year.

Operating profit rose 40% in the first quarter of 2008 and was a first quarter record for this segment. The increase in operating profit over the first quarter of 2007 was due to growth in sales, benefits of integrating acquired businesses, and overall improvement in operating efficiencies. Operating profit reflected acquisition integration charges of $7 in the first quarters of 2008 and 2007, which reduced the operating margin by 1.6% in the first quarter of 2008 and 2.0% in the first quarter of 2007. The acquisition integration charges in 2008 primarily related to Argo-Tech and Cobham. Charges in the first quarter of 2007 largely related to PerkinElmer and Cobham. The incremental operating margin for the first quarter of 2008 was 23%. The operating margin for acquired businesses was 31% in the first quarter of 2008.

Truck

	Three months ended March 31
	2008			2007			(Decrease)
Net sales		$ 567			$576		(2%)
Operating profit		85			107		(21%)
Operating margin		15.0	%		18.6	%

Sales of the Truck segment decreased 2% in the first quarter of 2008 from the first quarter of 2007. The reduction in sales reflected an 8% decline in sales volume; offset by a 6% increase from foreign exchange. The decline in sales was attributable to a decline of 9% in end-market demand in the first quarter of 2008 compared to the first quarter of 2007, with U.S. markets down 24% and non-U.S. markets up 17%. Production of North American heavy-duty trucks totaled 49,000 units in the first quarter of 2008, just slightly ahead of production in the fourth quarter of 2007, but down 34% from the first quarter of 2007. Eaton expects modest growth in second quarter 2008 production of North American heavy-duty trucks, and for 2008 as a whole now estimates production to be 230,000 units, compared to the original expectation in January of 240,000 units.

Operating profit decreased 21% in the first quarter of 2008 from the first quarter of 2007, primarily due to the significant reduction in sales in U.S. markets, partially offset by further benefits from the Excel 07 program. This segment achieved an operating margin of 15.0% in the first quarter of 2008, down 3.6 percentage points from 18.6% in the first quarter of 2007.

Automotive

	Three months ended March 31
							Increase
	2008			2007			(Decrease)
Net sales	$	538			$529		2%
Operating profit		46			63		(27%)
Operating margin		8.6	%		11.9	%

The 2% increase in sales of the Automotive segment in the first quarter of 2008 over the first quarter of 2007 reflected increases of 6% from foreign exchange and 1% from acquisitions of businesses within the last year, offset by a 5% decline in sales volume. In the first quarter of 2008, the global automotive markets were down 1% compared to the first quarter of 2007, with U.S. markets down 8% and non-U.S. markets up 5%. The strike at an automotive supplier, which impacted production at several U.S. vehicle manufacturers, reduced Eaton’s sales and operating margin for the first quarter of 2008. Eaton anticipates the labor situation will be resolved during the second quarter of 2008. For full year 2008, Eaton anticipates global automotive markets to be flat, with U.S. production down 5% offset by growth of 4% in production outside the U.S.

Page 17

Operating profit decreased 27% in the first quarter of 2008 from the first quarter of 2007, largely due to the decline in sales volume, changes in product mix, and impact from the strike at an automotive supplier. Acquisition integration charges were $1 in the first quarter of 2008, which reduced the operating margin by 0.2% in the first quarter of 2008. Acquisition integration charges in 2008 primarily related to Saturn.

Corporate
Amortization of intangible assets of $25 in the first quarter of 2008 increased from $16 in the first quarter of 2007 due to amortization of new intangible assets associated with recently acquired businesses.

Interest expense of $38 in the first quarter of 2008 increased from $30 in the first quarter of 2007, primarily due to borrowings to finance acquisitions of businesses in 2008 and 2007.

Changes in Financial Condition During 2008
Net working capital of $987 at March 31, 2008 decreased by $121 from $1,108 at year-end 2007. The decrease reflected the increase of $465 in short-term debt due to higher commercial paper borrowings and a $63 decrease in cash and short-term investments, both of which partially funded operating, investing and financing activities, and a net decrease of $97 in other working capital items. These items were partially offset by the $353 increase in accounts receivable, resulting from increased sales and the acquisition of Phoenixtec in 2008, and the $151 increase in inventories to support higher levels of sales and from the acquisition of Phoenixtec. The current ratio was 1.2 at March 31, 2008 and 1.3 at year-end 2007.

Net cash used by operating activities was $17 in the first quarter of 2008 compared to cash used of $114 in the first quarter of 2007. The improvement of $97 in 2008 was primarily due to a decrease of $143 in voluntary contributions made to the qualified pension plans in the United States and the United Kingdom; higher net income of $13; and a net decrease of $11 in working capital funding; partially offset by other adjustments. Cash and short-term investments totaled $583 at March 31, 2008, down $63 from $646 at year-end 2007, reflecting the use of these assets to fund operating, investing and financing activities.

Total debt of $4,165 at March 31, 2008 increased $748 from $3,417 at year-end 2007. The increase in debt during 2008 included the issuance of $1,023 of commercial paper and other borrowings; partially offset by the repayment of $340 of notes, commercial paper and other debt. The increase in total debt during 2008 largely resulted from the funding of acquisitions of businesses for $634; capital expenditures of $83; and cash dividends paid of $73. The net-debt-to-capital ratio was 39.4% at March 31, 2008 compared to 34.9% at year-end 2007, reflecting the combined effect during 2008 of the $748 increase in total debt, a $63 decline in cash and short-term investments, and an increase in Shareholders’ equity of $328.

In order to initially finance the acquisitions of Phoenixtec and The Moeller Group, on January 25, 2008 Eaton entered into a $3.0 billion revolving credit agreement that may be used either to fund direct loans or to backstop commercial paper borrowings. The proceeds must be used to finance certain acquisitions including, but not limited to, the acquisitions of Phoenixtec and The Moeller Group. All amounts borrowed under this revolving credit agreement, including commercial paper backstopped by this agreement, must be repaid by January 23, 2009, but may be repaid earlier at Eaton’s option, or may be required to be repaid earlier in the event of a default. The commitment amount of the revolving credit agreement will be reduced by the net amount of any proceeds raised through certain future capital market transactions which may include, but are not limited to, debt or equity issuances.

In the first quarter of 2008, Eaton borrowed $250 under the $3.0 billion revolving credit agreement described above to finance the acquisition of Phoenixtec. The $250 borrowed under this agreement was classified as long-term debt at March 31, 2008 because Eaton intended to, and had the ability under its existing $1.5 billion of revolving credit agreement, to refinance this debt on a long-term basis. Subsequently, on April 28, 2008, Eaton sold 17.5 million of its Common Shares in a public offering, resulting in net cash proceeds of $1.43 billion. In addition, 1.18 million Common Shares were sold on May 5, 2008 pursuant to an over-allotment option given to the underwriters of the share offering, resulting in net cash proceeds of $96. The cash proceeds from the Common Share sales are being used to repay borrowings incurred to fund the acquisitions of Phoenixtec and The Moeller Group made under the $3.0 billion revolving credit facility, and to repay commercial paper issued under the backstop provided by the facility.

Page 18

In light of its strong results and future prospects, on January 21, 2008 Eaton increased the quarterly dividend on its Common Shares by 16%, from $.43 per share to $.50 per share, effective for the February 2008 dividend. This is the fourth dividend increase within the last three years, reflecting Eaton’s philosophy of growing its dividend in line with its long-term growth in earnings.

In the first quarter of 2008, Eaton adopted Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”. This Statement defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The adoption of SFAS No. 157 had no effect on Eaton’s consolidated financial position or results of operations.

Contractual Obligations
There have been no material changes to the table of contractual obligations presented on page 71 of Eaton’s Annual Report on Form 10-K for the year ended December 31, 2007.

Forward-Looking Statements
This Form 10-Q Report contains forward-looking statements concerning Eaton’s second quarter 2008 and full year 2008 net income per Common Share, worldwide markets, growth in relation to end markets, growth from acquisitions and events and trends that may affect Eaton’s future operating results and financial position. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside Eaton’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: unanticipated changes in the markets for Eaton’s business segments; unanticipated downturns in business relationships with customers or their purchases from Eaton; competitive pressures on sales and pricing; increases in the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; the impact of acquisitions and divestitures; unanticipated difficulties integrating acquisitions; new laws and governmental regulations; interest rate or tax rate changes; stock market fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. Eaton does not assume any obligation to update these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in market risk presented on page 70 of Eaton’s Annual Report on Form 10-K for the year ended December 31, 2007.

Item 4. Controls and Procedures

Pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act), an evaluation was performed, under the supervision and with the participation of Eaton’s management, including Alexander M. Cutler — Chairman, Chief Executive Officer and President; and Richard H. Fearon - Executive Vice President — Chief Financial and Planning Officer, of the effectiveness of the design and operation of Eaton’s disclosure controls and procedures. Based on that evaluation, management concluded that Eaton’s disclosure controls and procedures were effective as of March 31, 2008.

Page 19

Disclosure controls and procedures are designed to ensure that information required to be disclosed in Eaton’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Eaton’s reports filed under the Exchange Act is accumulated and communicated to management, including Eaton’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the first quarter of 2008, there was no change in Eaton’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, Eaton’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

At Eaton’s Annual Meeting of Shareholders on April 23, 2008, the Shareholders approved the following proposals:

Approved the election of four directors	For		Withheld
Ned C. Lautenbach		126,067,343		6,654,789
John R. Miller		128,913,496		3,808,636
Gregory R. Page		129,877,836		2,844,296
Victor A. Pelson		129,192,551		3,529,581

Approved an increase in the authorized number of Common Shares from 300 million to 500 million

For	119,241,872
Against	12,264,031
Abstain	1,216,223

Approved the adoption of majority voting in director elections

For	126,246,711
Against	5,061,022
Abstain	1,410,480

Approved the authorization of the Board of Directors to amend the Amended Regulations

For	121,239,243
Against	9,896,943
Abstain	1,582,011

Approved the 2008 Stock Plan

For	104,116,078
Against	16,156,578
Abstain	1,438,070

Approved the Senior Executive Incentive Compensation Plan

For	123,644,027
Against	7,453,818
Abstain	1,620,359

Page 20

Approved the Executive Strategic Incentive Plan

For	124,637,850
Against	6,558,065
Abstain	1,522,288

Approved the appointment of Ernst & Young LLP as independent auditor for 2008

For	129,147,758
Against	2,426,546
Abstain	1,147,803

Item 6. Exhibits
Exhibits — See Exhibit Index attached.

Page 21

Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EATON CORPORATION  

Registrant 

Date: May 5, 2008	/s/ Richard H. Fearon
	Richard H. Fearon
	Executive Vice President - Chief Financial and Planning Officer

Page 22

Eaton Corporation
First Quarter 2008 Report on Form 10-Q

Exhibit Index

3 (a)	Amended Articles of Incorporation (amended and restated as of April 24, 2008) — Filed in conjunction with this Form 10-Q Report
3 (b)	Amended Regulations (amended and restated as of April 23, 2008) — Filed in conjunction with this Form 10-Q Report
4	Instruments defining rights of security holders, including indentures (Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the Commission, upon request, a copy of the instruments defining the rights of holders of long-term debt)
12	Ratio of Earnings to Fixed Charges — Filed in conjunction with this Form 10-Q Report
31.1	Certification of Chief Executive Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report
31.2	Certification of Chief Financial Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report
32.1	Certification of Chief Executive Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report
32.2	Certification of Chief Financial Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report

Page 23

EX-3.A

EXHIBIT 3(a)

Amended and Restated Articles of Incorporation of
Eaton Corporation
As Adopted by the Shareholders at the Annual Meeting
Held on April 23, 2008

     FIRST: The name of said corporation shall be

EATON CORPORATION

     SECOND: The place in the State of Ohio where its principal office is to be located is Cleveland, Cuyahoga County.

     THIRD: Said corporation is formed for the following purposes, to wit:

     1. To produce, manufacture, service, buy or otherwise acquire, deal and traffic in and sell or otherwise dispose of goods, products, merchandise and real and personal property of every class and description; and to acquire, own, hold, lease, sell, mortgage or otherwise deal in and dispose of such real estate and personal property as may be necessary or useful in connection with said business or the carrying out of any of the purposes of the corporation.

     2. To acquire by purchase, subscription, or otherwise, and to own, hold for investment or otherwise, and to use, sell, assign, transfer, mortgage, pledge, exchange or otherwise dispose of shares of stock, bonds, debentures, notes, scrip, securities, evidences of indebtedness, contracts or obligations of any government or governmental body, corporation, association, firm or individual, and also to issue in exchange therefor stocks, bonds or other securities or evidences of indebtedness of this corporation, and while the owner or holder of any such property to receive, collect and dispose of the interest, dividends, income and other rights accruing on or from such property and to possess and exercise in respect thereof all of the rights, powers and privileges of ownership, including all voting powers connected therewith.

     3. To aid in any manner any corporation, association, firm or individual, any shares of stock in which or any bonds, debentures, notes, securities, evidences of indebtedness, contracts or obligations of which are held by or for this corporation, directly or indirectly, or in which or in the welfare of which this corporation shall have any interest, direct or indirect, and to aid or participate in the reorganization, consolidation or merger of any corporation, association or firm in which, or in the welfare of which, this corporation shall have any interest.

     4. To carry on any lawful business and in connection therewith to do any and everything necessary, suitable or proper, and to have all the rights, powers and privileges now or hereafter conferred by the laws of the State of Ohio upon corporations organized under Sections

1701.01 et seq. of the Ohio Revised Code or under any act amendatory thereof, supplementary thereto or substituted therefor.

     In furtherance and not in limitation of the general powers conferred by the laws of the State of Ohio and in furtherance and not in limitation of the purposes hereinbefore stated, it is hereby expressly provided that this corporation shall also have the following authority and powers, to wit:

     (a) To do any and all things hereinabove or hereinafter set forth to the same extent and as fully as natural persons might or could do, either as principal, agent, contractor or otherwise, and either alone or in conjunction with any other individuals, firms, associations, corporations, syndicates or bodies politic;

     (b) To borrow or raise money, without limit, upon any terms, for any purpose of this corporation or of any corporation, association, firm, syndicate or individual having a business or property which this corporation determines to finance, promote or become interested in; to issue, sell and dispose of this corporation’s bonds, debentures, notes, certificates of indebtedness and other obligations, secured or unsecured, and however evidenced, upon any terms, and as security therefor to mortgage, pledge or grant any charge or impose any lien upon all or any part of the real or personal property, rights, interests or franchises of this corporation, whether owned by it at the time or thereafter acquired;

     (c) To make, execute, endorse and accept promissory notes, bills of exchange and other negotiable instruments and to redeem any debt or other obligation before the same shall fall due on any terms and on any advance or premium;

     (d) To guarantee the payment of dividends upon any capital stock, and, by endorsement or otherwise, to guarantee the payment of the principal or interest, or both, on any bonds, debentures, notes, scrip or other obligations or evidences of indebtedness, or the performance of any contracts, leases or obligations of any other corporation or association or of any firm, individual or syndicate in which or in whose welfare this corporation may have any interest;

     (e) To pay for any property, rights or interests acquired by this corporation in cash or other property, rights or interests held by this corporation, or by issuing and delivering in exchange therefor its own stock, bonds, debentures, notes, certificates of indebtedness or other obligations, or any of them, however evidenced; to purchase or otherwise acquire, hold, sell, pledge, transfer or otherwise dispose of and to reissue any shares of its own capital stock (so far as may be permitted by law) and its bonds, debentures, notes or other securities or evidences of indebtedness;

     (f) To do all and everything necessary and proper for the accomplishment of the objects herein enumerated or necessary or incidental to the protection and benefit of this corporation, and in general to carry on such lawful businesses necessary or incidental

-2-

to the attainment of the purposes of this corporation, whether such businesses are similar in nature to the objects and powers hereinabove set forth or otherwise.

     The foregoing provisions of this Article THIRD shall not be construed as imposing any limitation upon the purpose of the corporation to engage in any lawful act or activity for which corporations may be formed under the laws of the State of Ohio, and nothing herein shall be deemed to limit or exclude in any manner any capacity, power, right or privilege given to this corporation by law or the authority which it is or might be permitted to exercise under the statutes of the State of Ohio.

     FOURTH: The authorized number of shares of the corporation is Five Hundred Fourteen Million One Hundred Six Thousand Three Hundred Ninety-Four (514,106,394) classified and designated as follows:

     A. Serial Preferred Shares: Fourteen Million One Hundred Six Thousand Three Hundred Ninety-Four (14,106,394) shares are classified and designated as Serial Preferred Shares without par value and are herein called the “Serial Preferred Shares”; and

     B. Common Shares: Five Hundred Million (500,000,000) shares are classified and designated Common Shares with a par value of Fifty Cents (50¢) each and are herein called the “Common Shares”.

     The express terms of such classes of shares are as follows:

DIVISION A – SERIAL PREFERRED SHARES

     1. Issuance in Series: The Serial Preferred Shares may be issued from time to time in series. All Serial Preferred Shares shall be of equal rank and shall be identical, except in respect of matters that may be fixed by the Board of Directors as herein provided, and each share of a particular series shall be identical with all the other shares of such series, except that in the case of series on which dividends are cumulative the dates from which dividends are cumulative may vary to reflect differences in the dates of issue. Subject to the provisions of Sections 2 to 8, both inclusive, of this Division A, which provisions shall apply to all Serial Preferred Shares, the Board of Directors is hereby authorized to cause Serial Preferred Shares to be issued in one or more series, and with respect to each such series and prior to the issuance thereof, to fix:

     (a) The designation of the series, which may be by distinguishing number, letter or title;

     (b) The number of shares of the series, which number the Board of Directors may (except where otherwise provided in the creation of the series) increase or decrease (but not below the number of shares thereof then outstanding), the shares removed from any series to be available for reissuance in other series;

     (c) The dividend rate of the series;

-3-

     (d) The dates at which dividends, if declared, shall be payable, and in the case of series on which dividends are cumulative the dates from which dividends shall be cumulative;

     (e) The redemption rights and price or prices, if any, for shares of the series;

     (f) The terms, conditions and amount of any sinking fund provided for the purchase or redemption of the shares of the series;

     (g) The amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the corporation;

     (h) Whether the shares of the series shall be convertible into Common Shares or shares of any other series or class, and, if so, the conversion price or prices and the adjustments thereof, and all other terms and conditions upon which such conversion may be made; and

     (i) Restrictions (in addition to those set forth in 6(b) and 6(c) of this Division A) on the issuance of shares of the same series or of any other class or series.

     The Board of Directors is authorized to adopt from time to time and without further shareholder approval, amendments to the Amended Articles of Incorporation of the corporation fixing, with respect to each such series the matters described in clauses (a) to (i), both inclusive, of this Section 1.

     2. Dividend Rights: The holders of Serial Preferred Shares of each series, in preference to the dividend rights of any class of shares of the corporation, shall be entitled to receive out of any funds legally available and when and as declared by the Board of Directors dividends in cash at the rate for such series fixed in accordance with the provisions of Section 1 of this Division A, and no more, payable quarterly on the dates fixed for such series. Such dividends shall be cumulative, in the case of shares of each particular series, from and after the date or dates fixed with respect to such series.

     No dividend for any quarterly dividend period shall be paid upon or declared and set apart for any of the Serial Preferred Shares for any quarterly dividend period unless:

     (a) as to each series of Serial Preferred Shares entitled to cumulative dividends, dividends for all past dividend periods shall have been paid or shall have been declared and a sum sufficient for the payment thereof set apart; and

     (b) as to all series of Serial Preferred Shares, dividends for the current dividend period shall have been paid or be or have been declared and a sum sufficient for the payment thereof set apart ratably in accordance with the amounts which would be payable as dividends on the shares of the respective series for the current dividend period if all dividends for the current dividend period were declared and paid in full.

-4-

     No dividend in respect of past dividend periods shall be paid upon or declared and set apart for payment on any of the Serial Preferred Shares entitled to cumulative dividends unless there shall be or have been declared and set apart for payment on all outstanding shares of Serial Preferred Shares entitled to cumulative dividends, dividends for past dividend periods ratably in accordance with the amounts which would be payable on the shares of the series entitled to cumulative dividends if all dividends due for all past dividend periods were declared and paid in full.

     3. Dividends and Acquisitions of Shares: So long as any Serial Preferred Shares are outstanding, no dividend, except a dividend payable in Common Shares or in any other shares of the corporation ranking junior to the Serial Preferred Shares, shall be paid or declared or any distribution be made, except as aforesaid, on the Common Shares or on any other shares of the corporation, nor shall any Common Shares or any other shares of the corporation be purchased, retired or otherwise acquired by the corporation or any sinking fund payment with respect to any other shares of the corporation be made (except out of the proceeds of the sale of Common Shares or any other shares of the corporation ranking junior to the Serial Preferred Shares received by the corporation subsequent to January 31, 1968):

     (a) Unless in each case all dividends on the Serial Preferred Shares for past quarterly dividend periods and the full dividends for the current quarterly dividend period shall have been declared and paid or a sum sufficient for payment thereof set apart; and

     (b) Unless in each case there shall be no default with respect to the redemption of Serial Preferred Shares of any series from, and no default with respect to any required payment into, any sinking fund provided for shares of such series in accordance with the provisions of Section 1 of this Division A.

     4. Redemption: (a) Subject to the express terms of each series and to the provisions of Section 6(b) (iii) of this Division A, the corporation (i) may from time to time redeem all or any part of the Serial Preferred Shares of any series at the time outstanding at the option of the Board of Directors at the applicable redemption price for such series fixed in accordance with the provisions of Section 1 of this Division A, or (ii) shall from time to time make such redemptions of the Serial Preferred Shares as may be required to fulfill the requirements of any sinking fund provided for shares of such series at the applicable sinking fund redemption price fixed in accordance with the provisions of Section 1 of this Division A, together in each case with accrued and unpaid dividends to the redemption date.

     (b) Notice of every such redemption shall be mailed, by first-class mail, postage prepaid, to the holders of record of the Serial Preferred Shares to be redeemed, at their respective addresses then appearing on the books of the corporation, not less than 30 nor more than 60 days prior to the date fixed for such redemption. At any time before or after notice has been given as above provided, the corporation may deposit the aggregate redemption price of the Serial Preferred Shares to be redeemed, together with accrued and unpaid dividends thereon to the redemption date, with any bank or trust company in Cleveland, Ohio, or New York, New York, having capital and surplus of more than $5,000,000, named in such notice, directed to be paid to

-5-

the respective holders of the Serial Preferred Shares so to be redeemed, in amounts equal to the redemption price of all Serial Preferred Shares so to be redeemed, together with accrued and unpaid dividends thereon to the redemption date, on surrender of the stock certificate or certificates held by such holders, and upon the giving of such notice and the making of such deposit such holders shall cease to be shareholders with respect to such shares, and after such notice shall have been given and such deposit shall have been made such holders shall have no interest in or claim against the corporation with respect to such shares except only to receive such money from such bank or trust company, without interest, or the right to exercise, before the redemption date, any unexpired rights of conversion. In case less than all of the outstanding shares of Serial Preferred Shares are to be redeemed, the corporation shall select by lot the shares so to be redeemed in such manner as shall be prescribed by the Board of Directors.

     If the holders of Serial Preferred Shares which shall have been called for redemption shall not, within six years after such deposit, have claimed the amount deposited for the redemption thereof, any such bank or trust company shall, upon demand, pay over to the corporation such unclaimed amounts and thereupon such bank or trust company and the corporation shall be relieved of all responsibility in respect thereof and to such holders.

     (c) Any Serial Preferred Shares which are redeemed by the corporation pursuant to the provisions of this Section 4 of this Division A and any Serial Preferred Shares which are purchased and delivered in satisfaction of any sinking fund requirements provided for shares of such series and any Serial Preferred Shares which are converted in accordance with their express terms shall be cancelled and not reissued. Any Serial Preferred Shares otherwise acquired by the corporation shall be restored to the status of authorized and unissued Serial Preferred Shares without serial designation.

     5. Rights Upon Liquidation: (a) The holders of Serial Preferred Shares of any series shall in case of liquidation, dissolution or winding up of the corporation, or any reduction of its capital, be entitled to receive in full out of the assets of the corporation, including its capital, before any amount shall be paid or distributed among the holders of Common Shares or any other shares of the corporation, the amounts fixed with respect to shares of such series in accordance with Section 1 of this Division A, plus in any such event an amount equal to all dividends accrued and unpaid thereon to the date of payment of the amount due pursuant to such liquidation, dissolution or winding up of the corporation. In case the net assets of the corporation legally available therefor are insufficient to permit the payment upon all outstanding Serial Preferred Shares of the full preferential amount to which they are respectively entitled, then such net assets shall be distributed ratably upon outstanding shares of Serial Preferred Shares in proportion to the full preferential amount to which each such share is entitled.

     After payment to holders of Serial Preferred Shares of the full preferential amounts as aforesaid, holders of Serial Preferred Shares as such shall have no right or claim to any of the remaining assets of the corporation.

     In this Division “dividends accrued and unpaid” on any share means an amount computed by dividing the annual dividend payable on the share (whether earned, declared, paid or not) by 365 and multiplying the result by the number of days from the date on which

-6-

dividends on the share first became cumulative through the date of payment of the amount due or the redemption date, as the case may be, and subtracting from the product the sum of dividends paid (without interest) on the share and of dividends declared on the share for whose payment a sufficient sum has been set aside.

     (b) The merger or consolidation of the corporation into or with any other corporation, or the merger of any other corporation into it, or the sale, lease, or conveyance of all or any part of the property or business of the corporation, shall not be deemed to be a dissolution, liquidation or winding up of the corporation for the purposes of this Section 5 of this Division A. No purchase, redemption or retirement of any shares of the corporation in any manner authorized or permitted by these Amended Articles of Incorporation shall be considered a reduction of capital within the meaning of this Section 5 of this Division A.

     6. Voting Rights: (a) The holders of Serial Preferred Shares shall be entitled to one vote for each such share upon all matters presented to shareholders; and, except as otherwise provided herein or required by law, the holders of Serial Preferred Shares and the holders of Common Shares shall vote together as one class on all matters.

     If, and so often as, the corporation shah be in default in the payment of the equivalent of six quarterly dividends (whether or not consecutive) on any series of Serial Preferred Shares at the time outstanding, whether or not earned or declared, the holders of Serial Preferred Shares of all series voting separately as a class and in addition to all other rights to vote for directors shall be entitled to elect, as herein provided, two members of the Board of Directors of the corporation; provided, however, that the holders of Serial Preferred Shares shall not have or exercise such special class voting rights except at meetings of the shareholders for the election of directors at which the holders of not less than a majority of the outstanding Serial Preferred Shares of all series are present in person or by proxy; and provided further that the special class voting rights provided for herein when the same shall have become vested shall remain so vested until all dividends on the Serial Preferred Shares of all series then outstanding for past quarterly dividend periods and for the current quarterly dividend period shall have been paid or declared and a sum sufficient for the payment thereof set apart, whereupon the holders of Serial Preferred Shares shall be divested of their special class voting rights in respect of subsequent elections of directors, subject to the revesting of such special class voting rights in the event hereinabove specified in this Section 6(a).

     At any time after such voting power shall have been so vested in the holders of the Serial Preferred Shares, the Secretary of the corporation may, and, upon the written request of the holders of record of 10% or more of the Serial Preferred Shares then outstanding, addressed to him at the principal office of the corporation in the State of Ohio, shall, call a special meeting of the holders of the Serial Preferred Shares for the election of the directors to be elected by them as herein provided to be held within 30 days after such call and at the place and upon the notice provided by law and in the Code of Regulations for the holding of meetings of shareholders; provided, however, that the Secretary shall not be required to call such special meeting in the case of any such request received less than 90 days before the date fixed for any annual meeting of shareholders.

-7-

     If any such special meeting required to be called as provided shall not be called by the Secretary within the 30 days after the receipt of any such request, then the holders of record of 10% or more of the Serial Preferred Shares then outstanding may designate in writing one of their number to call such meeting, and the person so designated may call such meeting to be held at the place and upon the notice above provided and for that purpose shall have access to the stock ledger of the corporation. No such special meeting and no adjournment thereof shall be held on a date later than 30 days before the annual meeting of the shareholders or special meeting held in place thereof next succeeding the time when the holders of the Serial Preferred Shares become entitled to elect directors as above provided. If any such special meeting shall be called as above provided, then, by vote of the holders of at least a majority of those Serial Preferred Shares which are present or represented by proxy at such meeting, the then authorized number of directors of the corporation shall be increased by two and at such meeting, the holders of the Serial Preferred Shares shall be entitled to elect the additional directors so provided for, but any directors so elected shall not hold office beyond the annual meeting of the shareholders or special meeting held in place thereof next succeeding the time when the holders of the Serial Preferred Shares become entitled to elect directors as above provided.

     Whenever the holders of the Serial Preferred Shares shall be divested of the voting power as above provided, the terms of office of all persons elected as directors by the holders of the Serial Preferred Shares as a class shall forthwith terminate and the number of directors shall be reduced accordingly.

     The two directors who may be elected by the holders of Serial Preferred Shares pursuant to the foregoing provisions shall be in addition to any other directors then in office or proposed to be elected otherwise than pursuant to such provisions, and nothing in such provisions shall prevent any change otherwise permitted in the total number of directors of the corporation or require the resignation of any director elected otherwise than pursuant to such provisions.

     (b) The vote or consent of the holders of at least two-thirds of the then outstanding shares of Serial Preferred Shares, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Serial Preferred Shares shall vote separately as a class, shall be necessary to effect any one or more of the following (but so far as the holders of Serial Preferred Shares are concerned, such action may be effected with such vote or consent):

     (i) Any amendment, alteration or repeal of any of the provisions of the Amended Articles of Incorporation or of the Code of Regulations of the corporation which affects adversely the voting powers, rights or preferences of the holders of Serial Preferred Shares; provided, however, that for the purpose of this clause (i) only, neither the amendment of the Amended Articles of Incorporation of the corporation to authorize, or to increase the authorized or outstanding number of shares of Serial Preferred Shares or of any shares of any class ranking on a parity with or junior to the Serial Preferred Shares, nor the increase by the shareholders pursuant to the Code of Regulations of the number of directors of the corporation shall be deemed to affect adversely the voting powers, rights or preferences of the holders of Serial Preferred Shares; and provided, further, that if such amendment, alteration or repeal affects adversely the rights or preferences of one or more but not all of the then outstanding series of Serial Preferred

-8-

Shares, only the vote or consent of the holders of at least two-thirds of the number of the then outstanding shares of the series so affected shall be required;

     (ii) The authorization of, or the increase in the authorized number of, any shares of any class ranking prior to the Serial Preferred Shares; or

     (iii) The purchase or redemption (whether for sinking fund purposes or otherwise) of less than all the then outstanding Serial Preferred Shares except in accordance with a purchase offer made to all holders of record of Serial Preferred Shares, unless all dividends on all Serial Preferred Shares then outstanding for all previous quarterly dividend periods shall have been declared and paid or funds therefor set apart and all accrued sinking fund obligations applicable to all Serial Preferred Shares shall have been complied with.

     (c) The vote or consent of the holders of at least a majority of the then outstanding Serial Preferred Shares, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Serial Preferred Shares shall vote separately as a class, shall be necessary (but so far as the holders of Serial Preferred Shares are concerned such action may be effected with such vote or consent) to authorize any shares ranking on a parity with the Serial Preferred Shares or an increase in the authorized number of shares of Serial Preferred Shares.

     7. No holder of Serial Preferred Shares of any series shall be entitled as such as a matter of right to subscribe for or purchase any part of any issue of shares of the corporation, of any class whatsoever, or any part of any issue of securities convertible into shares of the corporation, of any class whatsoever, and whether issued for cash, property, services, or otherwise.

     8. For the purposes of this Division A:

     (a) Whenever reference is made to shares “ranking prior to the Serial Preferred Shares”, such reference shall mean and include all shares of the corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the corporation are given preference over the rights of the holders of Serial Preferred Shares.

     (b) Whenever reference is made to shares “on a parity with the Serial Preferred Shares”, such reference shall mean and include all shares of the corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the corporation rank on an equality with the rights of the holders of Serial Preferred Shares.

     (c) Whenever reference is made to shares “ranking junior to the Serial Preferred Shares”, such reference shall mean and include all shares of the corporation in respect of which the rights of the holders thereof as to the payment of dividends and as to

-9-

distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of the corporation are junior or subordinate to the rights of the holders of Serial Preferred Shares.

DIVISION B – COMMON SHARES

     1. Dividend Rights: After full dividends on all the outstanding Serial Preferred Shares for all past dividend periods and also the full dividend on such shares for the current dividend period shall have been paid or declared and set apart for payment in accordance with paragraph 2 of Division A above, then out of any funds lawfully available for dividends under the laws of the State of Ohio, dividends may be paid upon the Common Shares and upon any other shares, to the exclusion of the Serial Preferred Shares, if, when and as declared by the Board of Directors in its discretion.

     2. Distribution of Assets: In the event of any liquidation, dissolution or winding up of the corporation, or any reduction of its capital, resulting in any distribution of its assets to its shareholders, after there shall have been paid or set apart for the holders of the Serial Preferred Shares the full preferential amounts to which they are entitled under the provisions of paragraph 6 of Division A above, the holders of the Common Shares shall be entitled to receive as a class, pro rata, to the exclusion of the Serial Preferred Shares, the assets of the corporation remaining for distribution to its shareholders.

     3. Voting Power: The holders of the Common Shares shall, subject to the provisions of the Code of Regulations of the corporation and of the statutes of the State of Ohio relating to the fixing of a record date, be entitled to one vote for each Common Share held by them respectively, for the election of directors (excepting directors to be elected by holders of the Serial Preferred Shares voting as a class) and for all other purposes.

     FIFTH: The corporation, by its Board of Directors, shall have full power and authority, without any consent or vote of the shareholders or any class thereof, from time to time to purchase shares of any class issued by the corporation to the extent permitted by law except as may be otherwise provided in these Amended Articles.

     SIXTH: Notwithstanding any provision of law requiring for any action the vote of a designated proportion of the voting power of the corporation, such action may be taken by the vote of the holders of shares entitling them to exercise a majority of the voting power of this corporation; and notwithstanding any provision of law requiring (or permitting as an alternative to a vote) for any action the written consent of the holders of any designated proportion of the outstanding shares of a corporation, such action may be taken by the written consent of the holders of a majority of the outstanding shares of this corporation–except in each case as may be otherwise provided in these Amended Articles or by the Amended Regulations of the corporation.

     In order for a nominee to be elected a director of the corporation in an uncontested election, the nominee must receive a greater number of votes cast “for” his or her election than

-10-

“against” his or her election. In a contested election, the nominee receiving the greatest number of votes shall be elected. An election shall be considered contested if, as of the record date, there are more nominees for election than director positions to be filled in that election.

     The affirmative vote or written consent of the holders of shares entitling them to exercise two-thirds of the voting power of this corporation, given in person or by proxy at a meeting called for the purpose, shall be necessary:

     1. to approve

     (a) the sale, exchange, lease, transfer or other disposition by the corporation of all, or substantially all, of its assets or business, or

     (b) the consolidation of the corporation, or its merger, into another corporation, or

     (c) the merger into the corporation of another corporation or corporations if the merger involves the issuance or transfer by the corporation to the shareholders of the other constituent corporation or corporations of such number of shares of the corporation as entitle the holders thereof to exercise at least one-sixth of the voting power of the corporation in the election of directors immediately after the consummation of the merger, or

     (d) a combination or majority share acquisition in which the corporation is the acquiring corporation and its voting shares are issued or transferred to another corporation if the combination or majority share acquisition involves the issuance or transfer by the corporation to the shareholders of the other corporation or corporations of such number of shares of the corporation as entitle the holders thereof to exercise at least one-sixth of the voting power of the corporation in the election of directors immediately after the consummation of the combination or majority share acquisition; or

     2. to approve any agreement, contract or other arrangement providing for any of the transactions described in subparagraph 1 above; or

     3. to effect any amendment of the Amended Articles of Incorporation of the corporation which changes the provisions of these subparagraphs 1, 2 or 3 or the aforesaid affirmative vote or consent requirements.

     For purposes of these Amended Articles of Incorporation, the terms “combination”, “majority share acquisition” and “acquiring corporation” shall have the meaning given them by Section 1701.01 of the Ohio General Corporation Law or any similar provision hereinafter enacted.

     SEVENTH: No holder of Common Shares of the corporation shall be entitled, as such, as a matter of right to subscribe for or purchase any part of any issue of shares of the corporation

-11-

of any class whatsoever, or any part of any issue of securities convertible into shares of the corporation of any class whatsoever and whether issued for cash, property, services or otherwise.

     EIGHTH: These Amended Articles of Incorporation shall supersede the heretofore existing Amended Articles of Incorporation of the corporation.

-12-

EX-3.B

Exhibit 3(b)

Amended Regulations of Eaton Corporation
as adopted by the Shareholders at the
Annual Meeting held on April 23, 2008

ARTICLE I

SHAREHOLDERS

SECTION 1 — ANNUAL MEETING

     The annual meeting of the shareholders shall be held on the fourth Wednesday in April in each year, if not a legal holiday, and if a legal holiday, then on the next Wednesday not a legal holiday, for the purpose of electing directors and of considering reports to be laid before said meeting. The annual meeting shall be held at such hour and place as the Board of Directors may designate and cause to be stated in the notice of such meeting given to shareholders. Upon due notice there may also be considered and acted upon at an annual meeting any matter which could properly be considered and acted upon at a special meeting, in which case and for which purpose the annual meeting shall also be considered as, and shall be, a special meeting. In the event the annual meeting is not held or if directors are not elected thereat, a special meeting may be called and held for that purpose.

SECTION 2 — SPECIAL MEETINGS

     Special meetings of the shareholders may be called by the Chairman, President or a Vice President, or by a majority of the members of the Board of Directors acting with or without a meeting, or by the persons who hold not less than fifty per cent of all the shares outstanding and entitled to be voted on the proposal to be submitted at said meeting.

     Upon request in writing delivered either in person or by registered or certified mail, return receipt requested, to the President or Secretary by any persons entitled to call a meeting of shareholders, it shall be the duty of such President or Secretary forthwith to cause to be given to the shareholders entitled thereto notice of such meeting to be held on a date not less than seven nor more than sixty days after the receipt of such request, as such officer may fix. If such notice is not given within fifteen days after the delivery or mailing of such request, the persons calling the meeting may fix the time of meeting and give notice thereof as in the manner hereinafter provided, or cause such notice to be given by any designated representative.

SECTION 3 — PLACE OF MEETINGS

     Any meeting of the shareholders of the Corporation may be held either within or without the State of Ohio.

SECTION 4 — NOTICE OF MEETINGS

     Written notice stating the time, place, and purposes of a meeting of the shareholders shall be given either by personal delivery or by mail not less than seven nor more than sixty days before the date of the meeting to each shareholder of record entitled to notice of the meeting by or at the direction of the President or the Secretary or any other person required or permitted by these Regulations to give such notice. If mailed, such notice shall be addressed to the shareholder at the address of such shareholder appearing on the records of the Corporation. Notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting.

SECTION 5 — WAIVER OF NOTICE

     Notice of the time, place, and purposes of any meeting of shareholders may be waived in writing, either before or after the holding of such meeting, by any shareholder, which writing shall be filed with or entered upon the records of the meeting. The attendance of any shareholder at any such meeting without protesting, prior to or at the commencement of the meeting, the lack of proper notice shall be deemed to be a waiver by such shareholder of notice of such meeting.

SECTION 6 — SHAREHOLDERS ENTITLED TO NOTICE AND TO VOTE

     The Board of Directors may fix a future time not exceeding sixty days preceding any meeting of shareholders as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting or any adjournments thereof, and, in such case, only shareholders of record at the time so fixed shall be entitled to notice of and to vote at such meeting or any adjournments thereof. The Board of Directors may close the books of the Corporation against transfer of shares during the whole or any part of such period, including the date of the meeting of the shareholders and the period ending with the date, if any, to which adjourned. If the Board of Directors shall not fix a record date or close the books against transfer of shares as aforesaid, the shareholders of record at the date next preceding the day of the giving of notice of the meeting shall be entitled to notice thereof and the shareholders of record at the date next preceding the day of the meeting shall be entitled to vote thereat.

     A shareholder of record on the record date or date of closing the books of the Corporation against transfers of shares fixed as aforesaid, shall not lose the right to vote at such meeting by reason of not being a shareholder at the date of such meeting.

     At any meeting of shareholders a list of shareholders entitled to vote, alphabetically arranged, showing the addresses of, and the number and classes of shares held by, each shareholder on the date fixed for closing the books against transfers, or on the record date fixed as hereinbefore provided (or if no such date has been fixed, then on the date next preceding the day of the meeting), shall be produced on the request of any shareholder and such list shall be prima facie evidence of the ownership of shares and of the right of the shareholders to vote when certified by the Secretary or by the agent of the Corporation having charge of the transfers of the shares.

2

SECTION 7 — VOTING

     Except when votes are cumulated in the election of directors as hereinafter provided and except as otherwise provided in the Articles, every shareholder of record at the time fixed as provided in these Regulations for the determination of the shareholders entitled to vote at such meeting shall be entitled to one vote on each proposal submitted to the meeting for each share standing in said shareholder’s name at the time so fixed on which no installment is overdue and unpaid.

     At a meeting of shareholders at which directors are to be elected, only persons nominated as candidates shall be eligible for election as directors.

     If notice in writing is given by any shareholder to the President, a Vice President, or the Secretary, not less than forty-eight hours before the time fixed for holding a meeting of the shareholders for the purpose of electing directors if notice of such meeting shall have been given at least ten days prior thereto, and otherwise not less than twenty-four hours before such time, that the shareholder desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chairman or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as the shareholder possesses and to give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of such shareholder’s votes, or to distribute the shareholder’s votes on the same principle among two or more candidates, as the shareholder sees fit.

SECTION 8 — PROXIES

     A. A person who is entitled to attend a shareholders’ meeting, to vote at a shareholders’ meeting, or to execute consents, waivers, or releases, may be represented at the meeting or vote at the meeting, may execute consents, waivers, and releases, and may exercise any of the person’s other rights, by proxy or proxies appointed by a writing signed by the person, appointed by a verifiable communication authorized by the person, or appointed by any other means or in any other form now or hereafter permitted by Ohio Revised Code Chapter 1701 or any successor statute.

     B. Any transmission that creates a record capable of authentication, including, but not limited to, a telegram, a cablegram, electronic mail, or an electronic, telephonic, or other transmission, that appears to have been transmitted by a person described in subsection A of this Section 8, and that appoints a proxy is a sufficient verifiable communication to appoint a proxy. A photographic, photostatic, facsimile transmission, or equivalent reproduction of a writing that is signed by a person described in subsection A of this Section 8 and that appoints a proxy is a sufficient writing to appoint a proxy.

     C. No appointment of a proxy is valid after the expiration of eleven months after it is made unless the writing or other form of proxy appointment specifies the date on which it is to expire or the length of time it is to continue in force.

3

     D. Unless the writing or other form of proxy appointment otherwise provides:

     (1) Each proxy has the power of substitution, and, if three or more proxies are appointed, a majority of them or of their substitutes may appoint one or more substitutes to act for all;

     (2) If more than one proxy is appointed, then (a) with respect to voting or executing consents, waivers, or releases, or objections to consents at a shareholders’ meeting, a majority of the proxies that attend the meeting, or if only one attends then that one, may exercise all the voting and consenting authority at the meeting; and if one or more attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise that authority with respect to an equal number of shares; (b) with respect to exercising any other authority, a majority may act for all;

     (3) A revocable appointment of a proxy is not revoked by the death or incompetency of the maker unless, before the vote is taken or the authority granted is otherwise exercised, written notice of the death or incompetency of the maker is received by the Corporation from the executor or administrator of the estate of the maker or from the fiduciary having control of the shares in respect of which the proxy was appointed;

     (4) The presence at a meeting of the person appointing a proxy shall not revoke the appointment. Without affecting any vote previously taken, the person appointing a proxy may revoke a revocable appointment by a later appointment received by the Corporation or by giving notice of revocation to the Corporation in writing, by a verifiable communication, by other statutorily permissible means, or in open meeting.

     Any signature on any instrument, or any reproduction of a signature on any photographic, photostatic, facsimile transmission or equivalent reproduction of any instrument, approved by the inspectors hereinafter provided for as genuine, or as a reproduction of a genuine signature, shall be deemed to be the signature of the shareholder whose name is signed thereon, or a reproduction of the genuine signature of such shareholder, as the case may be, and the falsity of such signature or of such reproduction shall in no manner impair the validity of such instrument or such reproduction of such instrument, or of any vote or action taken at such meeting, provided that such shareholder shall not have previously filed with the Corporation his or her authorized signature guaranteed by a reputable bank or trust company. Any record of a verifiable communication, or other statutorily permissible means of proxy appointment, approved by such inspectors as authentic shall be deemed to be authentic, and the falsity of such record shall in no manner impair the validity of such verifiable communication, or other statutorily permissible means of proxy appointment, or of any vote or action taken at such meeting.

SECTION 9 — ORGANIZATION OF MEETING

     The Board of Directors in advance of any meeting of shareholders may appoint inspectors to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the officer or person acting as chairman of any such meeting may, and on the request of any shareholder or proxy shall, make such appointment. In case any person appointed as

4

inspector shall fail or refuse to appear or to act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting, or at the meeting by the officer or person acting as chairman. If there are three or more inspectors, the decision, act, or certificate of a majority of them shall be effective in all respects as the decision, act, or certificate of all. The inspectors of election shall determine the number of shares outstanding, the voting rights with respect to each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies. They shall also receive votes, ballots, assents, consents, waivers and releases, hear and determine all challenges and questions in any way arising in connection with the vote, count and tabulate all votes, assents, consents, waivers and releases, determine and announce the result, and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. No inspector, whether appointed by the Board of Directors or by the officer or person acting as chairman, need be a shareholder.

     On request, the inspectors shall make a report in writing of any challenge, question, or matter determined by them and execute a certificate of any fact found by them.

     The certificate of the inspectors shall be prima facie evidence of the facts stated therein and of the vote as certified by them.

SECTION 10 — QUORUM

     The shareholders present in person or by proxy at any meeting of shareholders shall constitute a quorum for such meeting, but no action required by law, the Articles, or these Regulations to be authorized or taken by the holders of a designated proportion of the shares of any particular class or of each class, may be authorized or taken by a lesser proportion.

     The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.

SECTION 11 — ACTION WITHOUT MEETING

     Any action which may be authorized or taken at a meeting of shareholders may be authorized or taken without a meeting in a writing or writings signed by all of the shareholders who would be entitled to notice of a meeting of the shareholders held for such purpose, which writing or writings shall be filed with or entered upon the records of the Corporation.

SECTION 12 — ACCOUNTS AND REPORTS TO SHAREHOLDERS

     The Board of Directors shall cause to be kept and maintained adequate, correct and complete books and records of account, together with minutes of the proceedings of the incorporators, shareholders, directors, and committees of the directors, and records of the shareholders showing their names and addresses and the number and class of shares issued or transferred of record to or by them from time to time.

     Any shareholder of the Corporation, upon written demand stating the specific purpose thereof, shall have the right to examine in person or by agent or attorney at any reasonable time

5

and for any reasonable and proper purpose, the Articles of the Corporation, its Regulations, its books and records of account, minutes, the aforesaid records of shareholders, and voting trust agreements, if any, on file with the Corporation, and to make copies or extracts thereof.

     At the annual meeting of shareholders, or the meeting held in lieu thereof, the officers of the Corporation shall lay before the shareholders a financial statement consisting of:

     A. A balance sheet containing a summary of the assets, liabilities, stated capital, and surplus (showing separately any capital surplus arising from unrealized appreciation of assets, other capital surplus, and earned surplus) of the Corporation as of a date not more than four months before such meeting: if such meeting is an adjourned meeting, said balance sheet may be as of a date not more than four months before the date of the meeting as originally convened;

     B. A statement of profit and loss and surplus, including a summary of profits, dividends paid, and other changes in the surplus accounts of the Corporation for the period commencing with the date marking the end of the period for which the last preceding statement of profit and loss required under this section was made and ending with the date of said balance sheet.

     The financial statement shall have appended thereto a certificate signed by the President or a Vice President or the Treasurer or an Assistant Treasurer of the Corporation or by a public accountant or firm of public accountants to the effect that the financial statement presents fairly the position of the Corporation and the results of its operations in conformity with generally accepted accounting principles applied on a basis consistent for the period covered thereby, or such other certificate as is in accordance with sound accounting practice.

     Upon the written request of any shareholder made within sixty days after notice of any such meeting has been given, the Corporation not later than the fifth day after receiving such request or the fifth day before such meeting, whichever is the later date, shall mail to such shareholder a copy of such financial statement.

ARTICLE II

BOARD OF DIRECTORS

SECTION 1 — POWERS AND QUALIFICATION

     All the capacity of the Corporation shall be vested in and all its authority, except as otherwise provided by law or by the Articles in regard to action required to be taken, authorized or approved by the shareholders, shall be exercised by the Board of Directors, which shall manage and conduct the business of the Corporation.

     In discharging his or her duties, a director may, when acting in good faith, rely upon the books and records of the Corporation, upon reports made to the Corporation by an officer or employee or by any other person selected for the purpose with reasonable care by the Corporation, and upon financial statements or written reports prepared by an officer or employee

6

of the Corporation in charge of its accounts or certified by a public accountant or firm of public accountants.

     Each person elected a director of the Corporation shall within 60 days from the date of his or her election qualify as such by either (a) accepting in writing his or her election as a director, or (b) being present and acting as a director in a duly called meeting of the Board of Directors.

SECTION 2 — ELECTION, NUMBER AND TERM OF OFFICE

     Directors shall be elected at the annual meeting of shareholders or, if not so elected, at a special meeting of the shareholders called for that purpose.

     The Board of Directors shall be composed of fourteen members and shall be divided into three classes. The first and second classes shall consist of five members each, and the third class shall consist of four members. Directors elected at the first election for the first class shall hold office for a term of one year from the date of their election; directors elected at the first election for the second class shall hold office for a term of two years from the date of their election; and directors elected at the first election for the third class shall hold office for a term of three years from the date of their election. In each instance such directors shall hold office until their successors are chosen and qualified. At each annual election, the successors to the directors of each class whose term shall expire in that year shall be elected to hold office for a term of three years from the date of their election and until their successors are chosen and qualified.

     All directors, for whatever terms elected, shall hold office subject to provisions of law, the Amended Articles and the Amended Regulations as to removals and the creation of vacancies.

     The number of directors of any such class may be fixed or changed by resolution adopted by the vote of the shareholders entitled to exercise 66 2/3% of the voting power of the shares represented at a meeting called to elect directors in person or by proxy at such meeting and entitled to vote at such election, but in no event shall the number of directors of any class be less than three. No reduction in the number of directors shall have the effect of removing any director prior to the expiration of his or her term of office. In the event of any increase in the number of directors of any class, any additional directors elected to such class shall hold office for a term coincident with the term of such class.

     The number of directors may also be changed by the directors by resolution adopted by the vote of a majority of the directors present at a meeting at which a quorum is present.

SECIION 3 — REMOVAL OF DIRECTORS AND FILLING VACANCIES

     The office of a director shall become vacant if he or she dies or resigns.

     The Board of Directors may remove any director and thereby create a vacancy in the Board:

7

     1 — If the director is declared of unsound mind by an order of court, or is adjudicated a bankrupt;

     2 — If the director does not qualify within sixty days as provided by these Regulations.

Any vacancy in the Board of Directors may be filled for the unexpired term by the remaining director or directors, though less than a majority of the whole Board, by a vote of a majority of their number. Within the meaning of this section a vacancy or vacancies shall be deemed to exist in case the shareholders shall increase the authorized number of directors but shall fail at the meeting at which such increase is authorized, or an adjournment thereof, to elect the additional directors so provided for, or in case the shareholders fail at any time to elect the whole authorized number of directors. A vacancy or vacancies shall also be deemed to exist within the meaning of this section in case the directors shall increase the authorized number of directors.

     All the directors, or all the directors of a particular class, or any individual director, may be removed from office by the vote of the holders of 66 2/3% of the voting power entitling them to elect directors in place of those to be removed, provided that unless all the directors, or all the directors of a particular class, are removed, no individual director shall be removed in case the votes of a sufficient number of shares are cast against his or her removal which, if cumulatively voted at an election of all the directors, or all the directors of a particular class, as the case may be, would be sufficient to elect at least one director. In case of any such removal, a new director may be elected at the same meeting for the unexpired term of each director removed. Failure to elect a director to fill the unexpired term of any director removed shall be deemed to create a vacancy in the board.

SECTION 4 — MEETINGS

     Meetings of the Board of Directors may be held at any time within or without the State of Ohio. Such meetings may be held through any communications equipment if all persons participating can hear each other and participation in a meeting pursuant to this paragraph shall constitute presence at such meeting.

     Regular meetings of the Board of Directors shall be held immediately after the annual meetings of the shareholders and at such other stated times as may be fixed by the Board of Directors, and such regular meetings may be held without further notice.

     Special meetings of the Board of Directors may be called by the Chairman of the Board or by the President of the Corporation, or by not less than one-third of the directors. Notice of the time and place of such meetings shall be served upon or telephoned to each director at least twenty-four hours, or given by mail, telegram or cablegram to each director at his or her address as shown by the books of the Corporation at least forty-eight hours, prior to the time of the meeting. Such notice may be waived in writing by any director, either before or after the meeting. Attendance at the meeting by a director without protesting, prior to or at the commencement of the meeting, the lack of proper notice, shall constitute waiver of such notice by such director.

8

SECTION 5 — QUORUM

     A majority of the whole authorized number of directors is necessary to constitute a quorum for a meeting of the directors, except that a majority of the directors in office constitutes a quorum for filling a vacancy in the Board. The act of a majority of the directors present at a meeting at which a quorum is present is the act of the Board, unless the act of a greater number is required by the Articles or these Regulations.

SECTION 6 — ACTION WITHOUT MEETING

     Any action which may be authorized or taken at a meeting of the Board of Directors may be authorized or taken without a meeting with the affirmative vote or approval of, and in a writing or writings signed by all, of the directors, which writing or writings shall be filed with or entered upon the records of the Corporation.

SECTION 7 — FIXING OF RECORD DATE

     A. For any lawful purpose, including, without limitation, the determination of the shareholders who are entitled to:

     (1) receive notice of or to vote at a meeting of shareholders;

     (2) receive payment of any dividend or distribution;

     (3) receive or exercise rights of purchase of or subscription for, or exchange or conversion of, shares or other securities, subject to contract rights with respect thereto; or

     (4) participate in the execution of written consents, waivers or releases, the directors may fix a record date which shall not be a date earlier than the date on which the record date is fixed and, in the cases provided for in clauses (1), (2), and (3) above, shall not be more than sixty days preceding the date of the meeting of the shareholders, or the date fixed for the payment of any dividend or distribution, or the date fixed for the receipt or the exercise of rights, as the case may be.

     B. If a meeting of the shareholders is called by persons entitled to call the same, or action is taken by shareholders without a meeting, and if the directors fail to refuse, within such time as the persons calling such meeting or initiating such other action may request, to fix a record date for the purpose of clause (1) or (4) of division A of this section, then the persons calling such meeting or initiating such other action may fix a record date for such purpose, subject to the limitations set forth in division A of this section.

     C. The record date for the purpose of clause (1) of division A of this section shall continue to be the record date for all adjournments of such meeting, unless the directors or the persons who shall have fixed the original record date shall, subject to the limitations set forth in

9

division A of this section, fix another date, and in case a new record date is so fixed, notice thereof and of the date to which the meeting shall have been adjourned shall be given to shareholders of record as of said date in accordance with the same requirements as those applying to a meeting newly called.

     D. The directors may close the share transfer books against transfers of shares during the whole or any part of the period provided for in division A above, including the date of the meeting of the shareholders and the period ending with the date, if any, to which adjourned.

     E. If no record date is fixed therefor, the record date for determining the shareholders who are entitled to receive notice of, or who are entitled to vote at, a meeting of shareholders, shall be the date next preceding the day on which notice is given, or the date next preceding the day on which the meeting is held, as the case may be.

     F. The record date for a change of shares shall be the time when the certificate of amendment or of amended Articles effecting such change is filed in the office of the Secretary of State.

SECTION 8 — COMMITTEES

     The Board of Directors may from time to time create an Executive Committee, a Finance Committee and such other committees as it may deem to be advisable and may delegate to any such committee any of the powers of the Board of Directors, other than that of filling vacancies among the directors or in any committee of the directors. Any such committee shall be composed of not less than three members of the Board of Directors to serve until otherwise ordered by the Board of Directors and shall act only in the interval between meetings of the Board of Directors and shall be subject at all times to the control and direction of the Board of Directors. The Board of Directors may appoint one or more directors as alternate members of any such committee, who may take the place of any absent member or members at any meeting of such committee.

Any such committee may act by a writing or writings signed by all its members or by a majority of any such committee present at a meeting at which a quorum is present. Meetings of any committee may be held at any time within or without Ohio and through any communications equipment if all persons participating can hear each other. Participation through use of communications equipment shall constitute presence at the meeting. A majority of the whole authorized number of members of any such committee is necessary to constitute a quorum for a meeting of that committee. Any act or authorization of an act by any such committee within the authority delegated to it shall be as effective for all purposes as the act or authorization of the Board of Directors.

10

ARTICLE III

OFFICERS

SECTION 1 — OFFICERS

     The Corporation shall have a Chairman of the Board of Directors and a President (both of whom shall be members of the Board of Directors), a Secretary, a Treasurer and a Controller, all of whom shall be elected by the Board of Directors. The Corporation may also have one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers as the Board may deem advisable, all of whom shall be elected by the Board of Directors. All officers shall hold office for one year and until their successors are elected and qualified, unless otherwise specified by the Board of Directors, provided, however, that any officer shall be subject to removal, with or without cause, at any time by the vote of a majority of the Board of Directors. The election of an officer for a given term, or a general provision in the Articles or these Regulations with respect to term of office, shall not be deemed to create contract rights

     Any two or more offices may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law or by the Articles or these Regulations to be executed, acknowledged or verified by two or more officers.

SECTION 2 — CHAIRMAN OF THE BOARD

     The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors, shall supervise and direct the Corporation’s affairs and the administration thereof by the other executive officers of the Corporation and shall have such other powers and duties as may be assigned to or vested in him or her by the Board of Directors.

SECTION 3 — THE PRESIDENT

     The President, in the absence of the Chairman of the Board, shall preside at all meetings of the shareholders and of the Board of Directors. Subject to the direction of the Board of Directors, the Executive Committee and the Chairman of the Board, the President shall have general charge and authority over the business of the Corporation. The President shall from time to time make such reports of the business of the Corporation as the Board of Directors may require. The President shall perform such other duties and have such powers as are assigned to or vested in him or her by the Board of Directors.

SECTION 4 — THE VICE PRESIDENT

     The Vice President, or, if there be more than one, the Vice Presidents, in order of their seniority by designation (or if not designated, in order of their seniority of election), shall perform the duties of the President in his or her absence or during his or her disability to act. The

11

Vice Presidents shall have such other duties and powers as may be assigned to or vested in them by the Board of Directors or the Executive Committee.

SECTION 5 — THE SECRETARY

     The Secretary shall issue notices of all meetings for which notice is required to be given, shall keep the minutes of all meetings, shall have charge of the corporate seal and corporate record books, shall cause to be prepared for each meeting of shareholders the list of shareholders referred to in Section 6 of Article I hereof, and shall have such other powers and perform such other duties as are assigned to or vested in him or her by the Board of Directors or the Executive Committee.

SECTION 6 — THE TREASURER AND THE CONTROLLER

     (a) The Treasurer shall be the financial officer of the Corporation. The Treasurer shall have the custody of all moneys and securities of the Corporation and shall keep adequate and correct accounts of the Corporation’s receipts and disbursements, including records of customers’ credits and collections. The funds of the Corporation shall be deposited in the name of the Corporation by the Treasurer in such depositories as the Board of Directors may from time to time designate. The Treasurer shall have such other powers and perform such other duties as are assigned to or vested in him or her by the Board of Directors or the Executive Committee.

     (b) The Controller shall be the accounting officer of the Corporation. The Controller shall keep adequate and correct accounts of the Corporation’s business transactions (except those kept by the Treasurer as herein provided), including accounts of its assets, liabilities, gains, losses, stated capital and shares. He or she shall prepare and lay before the shareholders’ meetings the data referred to in Section 12 of Article I hereof, and shall mail copies of such data as required in said section to any shareholder requesting same. The Controller shall have such other powers and perform such other duties as are assigned to or vested in him or her by the Board of Directors or the Executive Committee.

SECTION 7 — OTHER OFFICERS

     Other officers of the Corporation shall have such powers and duties as may be assigned to or vested in them by the Board of Directors or the Executive Committee.

SECTION 8 — AUTHORITY TO SIGN

     Share certificates shall be signed as hereinafter in Article V provided. Except as otherwise specifically provided by the Board of Directors or the Executive Committee of the Corporation, checks, notes, drafts, contracts or other instruments authorized by the Board of Directors or the Executive Committee may be executed and delivered on behalf of the Corporation by the Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.

12

SECTION 9 — DUTIES OF OFFICERS MAY BE DELEGATED

     In case of the absence or disability of an officer of the Corporation, or for any other reason that may seem sufficient to the Board, the Board of Directors may for the time being, delegate his or her powers and duties to any other officer or to any director.

ARTICLE IV

SALARIES, COMPENSATION AND INDEMNIFICATION

SECTION 1 — SALARIES AND COMPENSATION

     The Board of Directors may fix the pay of all officers. The Board may also allow compensation to members of any committee. The Board may vote compensation to any director for attendance at meetings or for any special services.

SECTION 2 — INDEMNIFICATION

     (a) The Corporation shall indemnify any director, officer or employee and any former director, officer or employee of the Corporation and any such director, officer or employee who is or has served at the request of the Corporation as a director, officer or trustee of another corporation, partnership, joint venture, trust or other enterprise (and his or her heirs, executors and administrators) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by such person by reason of the fact that he or she is or was such director, officer, employee or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full extent permitted by applicable law. The indemnification provided for herein shall not be deemed to restrict the right of the Corporation to indemnify agents and others to the extent not prohibited by law. The Corporation may purchase and maintain insurance or furnish similar protection on behalf of or for any person who is or was a director, officer, employee or agent of the Corporation, or any person who is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, joint venture, partnership, trust or other enterprise against any liability asserted against such person or incurred by him or her in any such capacity or arising out of his or her status as such.

     (b) The Corporation is expressly authorized to enter into any indemnification or insurance agreements with or on the behalf of any person who is or was a director, officer, employee or designated agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or designated agent of another corporation, partnership, joint venture, trust or other enterprise, in accordance with the terms of this Article IV or the laws of the State of Ohio. Such agreements may include, but are not limited to, agreements providing for indemnification or the advancement of expenses, agreements providing for insurance, indemnification or the advancement of expenses by way of self-insurance, whether or not funded through the use of a trust, escrow agreement, letter of credit, or other arrangement, in accordance with subsection (a) of this Section 2, and agreements providing for insurance or indemnification through the commercial insurance market.

13

ARTICLE V

CERTIFICATES

SECTION 1 — CERTIFICATES

     Each shareholder of the Corporation shall be entitled to a certificate signed by the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, evidencing the number and class of paid-up shares held by such shareholder in the Corporation, but no certificate for shares shall be executed or delivered until such shares are fully paid, provided, however, that when any such certificate is countersigned by an incorporated transfer agent or registrar, the signature of any such officer upon such certificate may be facsimile, engraved, stamped or printed.

     In case any officer or officers, who shall have signed, or whose facsimile signature shall have been engraved, stamped or printed on any certificate or certificates for shares, shall cease to be such officer or officers of the Corporation, because of death, resignation, or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates, if authenticated by the endorsement thereon of the signature of an incorporated transfer agent or registrar, shall nevertheless be conclusively deemed to have been adopted by the Corporation by the use and delivery thereof and shall be effective in all respects when delivered.

     Such certificates shall be in such form as shall be approved by the Board of Directors and shall contain such statements as are required by the Ohio General Corporation Law.

SECTION 2 — TRANSFER AND REGISTRATION

     The Board of Directors shall have authority to make such rules and regulations, not inconsistent with law, the Articles or these Regulations, as it deems expedient concerning the execution, delivery, transfer and registration of share certificates and may appoint incorporated transfer agents and registrars thereof.

     Transfer books may be kept in any state of the United States or in any foreign country for the purpose of transferring shares issued by the Corporation; but if no transfer agent is appointed to act in this State, the Corporation shall keep an office in this State at which shares shall be transferable, and at which it shall keep books in which shall be recorded the names and addresses of all shareholders, and all transfers of shares.

SECTION 3 — SUBSTITUTED CERTIFICATES

     Any person claiming a share certificate to have been lost, destroyed or stolen, shall make an affidavit or affirmation of that fact, and if required by the Board of Directors shall advertise the same in such manner as the Board of Directors may require, and shall give the Corporation, its transfer agents and its registrars a bond of indemnity, in form and with one or more sureties satisfactory to the Board or anyone designated by the Board with authority to act thereon,

14

whereupon a new certificate may be executed and delivered of the same tenor and for the same number of shares as the one alleged to have been lost, destroyed or stolen.

ARTICLE VI

VOTING UPON STOCKS

SECTION 1 — VOTING UPON STOCKS

     Unless otherwise ordered by the Board of Directors, the Chairman of the Board, the President, a Vice President, the Secretary or the Treasurer of the Corporation, or a proxy appointed by any such officer, shall have full power and authority on behalf of the Corporation to attend, to act and to vote at any meeting of shareholders and to execute consents, waivers and releases relating to the affairs of any other corporation, domestic or foreign, for profit or non-profit, in which the Corporation may hold stock or membership, and at any such meeting shall possess and may exercise any and all of the rights and powers incident to the ownership of such stock and which as the owner thereof the Corporation would have possessed and might have exercised if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

ARTICLE VII

CORPORATE SEAL

SECTION 1 — CORPORATE SEAL

     The seal of the Corporation shall be circular in form with the name of the Corporation followed by the words “Cleveland, Ohio” stamped around the margin, and the words “Corporate Seal” stamped across the center.

ARTICLE VIII

AMENDMENTS

SECTION 1 — AMENDMENTS

     The Regulations of the Corporation may be amended or added to by the Board of Directors (to the extent permitted by the Ohio General Corporation Law) or by the affirmative vote of the shareholders of record entitled to exercise a majority of the voting power on such proposal or, without a meeting, by the written consent of the shareholders of record entitled to exercise 66 2/3% of the voting power on such proposal. Notwithstanding anything to the contrary contained herein, to amend, repeal or add to Article I — Section 2, Article II — Section 2, the last paragraph of Article II — Sections or this paragraph of Article VIII — Section 1, shall require the affirmative vote at a meeting of the shareholders of record entitled to exercise 66

15

2/3% of the voting power on such proposal, unless such action is recommended by two-thirds of the members of the Board of Directors.

     If an amendment is adopted by written consent without a meeting of the shareholders, it shall be the duty of the Secretary to enter the amendment in the records of the Corporation and to mail a copy of such amendment to each shareholder of record who would be entitled to vote thereon and did not participate in the adoption thereof.

16

EX-12

Eaton Corporation
First Quarter 2008 Report on Form 10-Q
Item 6
Exhibit 12
Ratio of Earnings to Fixed Charges

	Three
	months
	ended
	Mar. 31,			Year ended December 31
	2008			2007			2006		2005		2004		2003
Income from continuing operations before income taxes	$	286		$	1,041		$	969	$	964	$	749	$	463
Adjustments
Minority interest in consolidated subsidiaries		3			14			10		5		7		12
(Income) losses of equity investees		(1	)		(6	)		1		1				(3	)
Interest expensed		46			193			139		109		88		93
Amortization of debt issue costs					1			1		1		1		2
Estimated portion of rent expense representing interest		11			44			41		38		37		38
Amortization of capitalized interest		3			12			12		12		17		13
Distributed income of equity investees					1			1		4		3
Adjusted income from continuing operations before income taxes	$	348		$	1,300		$	1,174	$	1,134	$	902	$	618
Fixed charges
Interest expensed	$	46		$	193		$	139	$	109	$	88	$	93
Interest capitalized		4			14			14		13		7		7
Amortization of debt issue costs					1			1		1		1		2
Estimated portion of rent expense representing interest		11			44			41		38		37		38
Total fixed charges	$	61		$	252		$	195	$	161	$	133	$	140
Ratio of earnings to fixed charges		5.70			5.16			6.02		7.04		6.78		4.41

EX-31.1

Eaton Corporation
First Quarter 2008 Report on Form 10-Q
Item 6
Exhibit 31.1
Certification

I, Alexander M. Cutler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eaton Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2008	/s/ Alexander M. Cutler
	Alexander M. Cutler
	Chairman and Chief Executive Officer; President

EX-31.2

Eaton Corporation
First Quarter 2008 Report on Form 10-Q
Item 6
Exhibit 31.2
Certification

I, Richard H. Fearon, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eaton Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2008	/s/ Richard H. Fearon
	Richard H. Fearon
	Executive Vice President – Chief Financial and Planning Officer

EX-32.1

Eaton Corporation
First Quarter 2008 Report on Form 10-Q
Item 6
Exhibit 32.1
Certification

This written statement is submitted in accordance with Section 1350 of Chapter 63 of Title 18 of the United States Code adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (“10-Q Report”).

I hereby certify that, based on my knowledge, the 10-Q Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m), and information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of Eaton Corporation and its consolidated subsidiaries.

Date: May 5, 2008	/s/ Alexander M. Cutler
	Alexander M. Cutler
	Chairman and Chief Executive Officer; President

EX-32.2

Eaton Corporation
First Quarter 2008 Report on Form 10-Q
Item 6
Exhibit 32.2
Certification

This written statement is submitted in accordance with Section 1350 of Chapter 63 of Title 18 of the United States Code adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (“10-Q Report”).

I hereby certify that, based on my knowledge, the 10-Q Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m), and information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of Eaton Corporation and its consolidated subsidiaries.

Date: May 5, 2008	/s/ Richard H. Fearon
	Richard H. Fearon
	Executive Vice President – Chief Financial and Planning Officer