Financial Overview

(in million dollars)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Overall
Sales	22,046	16,311	35.2	-
Operating profit	3,178	2,216	43.4	-
Vehicle
Sales	3,835	3,914	(2.0)	1)
Operating profit	592	570	3.9	-

Factors
1)
Vehicle
-In 2013, net sales decreased 2% compared to 2012 due to the impact of currency translation. Flat core sales in 2013 were primarily due to lower sales volumes in the NAFTA Class 8 truck market, offset by strength in the Latin American vehicle markets and the global light vehicle markets.

Contracts

-In Jan. 2014, the Company announced that its technologies are on six of the Ward's 10 Best Engines 2014. The Eaton technologies that are part of the winning engines and the seven Eaton facilities that supply them include:
Superchargers – Eaton Twin Vortices Series (TVS):
・Audi S5 – 3.0L TFSI V-6 (Tczew, Poland)
Valve actuation – Cylinder deactivation system:
・Chevrolet Corvette – 6.2L LTI V-8 (Roxboro, North Carolina, USA)
Valves – High performance, super alloy and lightweight:
・Audi S5 – 3.0L TFSI V-6 (Nordhausen, Germany)
・BMW 535d – 3.0L N57 I-6 (Bosconero, Italy)
・Chevrolet Corvette – 6.2L LTI V-8 (Kearney, Nebraska, USA)
・Ford Fiesta – 1.0L EcoBoost 3-cylinder (Nordhausen and Bielsko Biala, Poland)
・Honda Accord – 3.5L SOHC V-6 (Westminster, South Carolina, USA – Joint Venture facility)
・Ram 1500 Crew Cab – 3.0L RA630 V-6 (Bielsko Biala, Poland)
 (From a press release on January 15, 2014)

"SuperTruck" Program

-In Feb. 2014, Cummins Inc. and Peterbilt Motors Co., a division of PACCAR, announced that the latest version of their SuperTruck demonstration tractor-trailer achieved 10.7 mpg last month under real-world driving conditions. Cummins has partnered with Peterbilt for the SuperTruck project. The project objectives have included development and demonstration of a highly efficient and clean diesel engine, an advanced waste heat recovery system, an aerodynamic tractor and trailer combination and a lithium ion battery-auxiliary power unit, to reduce engine idling. The Cummins-Peterbilt SuperTruck uses the Class 8 Peterbilt Model 579, powered by a Cummins ISX15 engine. Eaton Corp. also part of the Cummins-Peterbilt SuperTruck project team, is developing a next-generation automated transmission that improves fuel efficiency in heavy-duty trucks. (From a press release on February 18, 2014)

R&D Expenditures

(in million dollars)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	644	439	417

 

R&D Facilities

<Czech Republic>
-In July 2013, the Company announced the beginning of construction work on its new Innovation Center in Roztoky in the Czech Republic. Eaton is investing in the new facility to accommodate the rapid expansion of its European Innovation Center in Prague, which was opened in 2012. Eaton's European Innovation Center develops power management solutions for its European customers in the electrical, hydraulic, aerospace and vehicle industries. The new building will be completed around the end of 2014 with employees moving in from the beginning of 2015. Eaton aims to expand its workforce at the Innovation Center from 25 employees today to more than 140 by the end of 2016. (From a press release on July 22, 2013)

New Products

Fast-chargers for EVs
-In Dec. 2013, the Company announced that it has released the first HyperCharger capable of fast-charging electric vehicles (EVs) up to one megawatt (MW). Designed to charge the world's largest fleets of electric buses, the on-route charger was recently installed in several cities, including Tallahassee, Florida, Worchester, Massachusetts, and Stockton, California. The HyperCharger is scalable from 200 KW to one MW. On a recent demonstration route, the HyperCharger recorded an average of eight charges and 240 miles per day utilizing 100 percent on–route charging. (From a press release on December 9, 2013)

EV charging station
-In Sept. 2013, the Company announced the release of Dual AC Level 2 electric vehicle charging stations for simultaneous charging of two electric vehicles. The stations can charge electric vehicle batteries up to three times faster than traditional charging systems to offer a cost-effective solution for residential, commercial and fleet electric vehicle operations. (From a press release on September 30, 2013)

Capital Expenditure

(in million dollars)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	614	593	568
Vehicle	161	148	172

Investments in USA

-In Feb. 2014, the Company has announced its U.S. Engine Valve (USEV) joint venture with Nittan Valve Company, Ltd. will invest USD 40 million in engine valve manufacturing facilities in South Carolina and Nebraska over the next five years. The investment will result in the creation of up to 150 new jobs by 2016. Between 2013 and 2017, USEV will invest nearly USD 34 million in a 38,000 square-foot expansion, and new valve machining equipment and forge presses for its Westminster, S.C. facility. The Westminster facility expansion is underway and scheduled to be completed March 2014. USEV will invest an additional USD 6 million in Eaton's Kearney, Neb. facility to support expanded valve production. (From a press release on February 6, 2014)

-In Au.g. 2013, the Company has announced that its South Bend, Indiana, USA facility has added a USD 1.9 million cross-wedge-rolling machine for use in the production of transmission shafts for heavy-duty trucks. The new machine, which is expected to be fully operational by mid-September, improves manufacturing efficiency by completing a forging process in South Bend with the cross-wedge-rolling system. The South Bend plant supplies gear forgings to three Eaton facilities – in Kings Mountain, North Carolina; Shenandoah, Iowa; and San Luis Potosi, Mexico – which assemble them into transmissions for truck manufacturers. (From a press release on August 20, 2013)