EPA Unveils Unique Hydraulic Hybrid Diesel Delivery Truck with UPS, International Truck and Engine, Eaton and U.S. Army.

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) today unveiled the first-ever series hydraulic hybrid diesel urban delivery vehicle, which will provide dramatic improvements in fuel economy and in emission reductions. The development of the hydraulic hybrid is the result of a partnership between the EPA, U.S. Army, UPS, International Truck and Engine Corporation and Eaton Corporation (NYSE:ETN).

The EPA and UPS plan to evaluate the vehicle's fuel economy performance and emissions during a series of tests in 2006. In laboratory testing, the EPA's patented hydraulic hybrid diesel technology achieved a 60 to 70 percent improvement in fuel economy and more than a 40 percent reduction in carbon dioxide emissions, compared to a conventional UPS vehicle.

"EPA and our partners are not just delivering packages with this UPS truck - we are delivering environmental benefits to the American people," said EPA Administrator Stephen L. Johnson. "President Bush is moving technology breakthroughs from the labs to the streets. We are doing what is good for our environment, good for our economy, and good for our nation's energy security."

The EPA cited laboratory tests showing that the technology has the potential to dramatically improve the fuel economy of urban vehicles used in applications such as package delivery, shuttle and transit buses and refuse pick-up.

The EPA estimated that when manufactured in high volume, the added costs of the hybrid components could be recouped in less than three years through lower fuel and brake maintenance costs.

In the series hydraulic hybrid diesel, a high-efficiency diesel engine is combined with a unique hydraulic propulsion system, replacing the conventional drivetrain and transmission. The vehicle uses hydraulic pumps and hydraulic storage tanks to store energy, similar to what is done with electric motors and batteries in hybrid electric vehicles. Fuel economy is increased in three ways: vehicle braking energy is recovered that normally is wasted; the engine is operated more efficiently; and the engine can be shut off when stopped or decelerating.

The diesel hydraulic hybrid truck is potentially eligible to qualify for a tax credit that is up to 40 percent of the incremental cost of the vehicle under a provision of the Energy Policy Act of 2005 for medium- and heavy-duty vehicles.

UPS, International and Eaton have been working with the EPA and the U.S. Army's National Automotive Center on the hydraulic technology for several years.

"The hydraulic hybrid technology is quite promising and we're eager to see how the vehicle performs in a real-world setting," said John Beystehner, chief operating officer of UPS. "We have led our industry in testing alternative fuel vehicles because fuel conservation is critical to our business. We believe the impact of this initiative will go far beyond our industry."

UPS will test the hydraulic hybrid for the next several months. It will be used on a city route in the Detroit area, making daily deliveries to homes and businesses. Previously, UPS partnered with the EPA on its hydrogen fuel cell delivery vehicles, which have been part of the company's fleet since 2003.

"The diesel hydraulic hybrid concept has the potential to offer our truck customers something very unique - performance and near zero emissions with dramatic improvements in fuel economy," said Dee Kapur, International president - Truck Group. "International is pleased to be a part of the integration of this technology into the entire vehicle system to provide true value to our customers."

International has a history of close technical cooperation with the EPA Advanced Technology Division. In 2004, International, under a Cooperative Research and Development Agreement, began work on Clean Diesel Combustion technology to dramatically lower emissions inside the combustion chamber, minimizing the need for aftertreatment.

International is the number one truck manufacturer in the medium duty and school bus market. These vehicles are typically in a mode of stop-and-go operation, which is the optimal mode of operation for the diesel hydraulic hybrid. "To continue to be a market leader, we need to pursue technological advancements that provide benefits to our customers. The diesel hydraulic hybrid is just such a technology," Kapur said.

Eaton has been working with the EPA since October 2001 under a Cooperative Research and Development Agreement involving hydraulic hybrid systems. As part of the company's role in designing and developing hybrid technologies, Eaton engineers have been co-located at EPA's Ann Arbor, Mich. facility. Eaton is also working on a number of other hybrid vehicle initiatives with UPS, International and others.

"Eaton sees the series hybrid as a natural and exciting progression in the development of hydraulic hybrid systems," said Craig Arnold, Eaton senior vice president and president - Fluid Power Group. "We have developed a parallel hybrid system called the Eaton Hydraulic Launch Assist(TM) (HLA(R)) system that we plan to offer commercially starting in 2007. We believe this product will provide our customers with the confidence to consider the series hybrid when it is commercialized."

"Eaton continues to develop a number of hybrid hydraulic and hybrid electric vehicle technologies with wide-ranging customer applications," Arnold said. "We are committed to working with the EPA, our industries and our customers to create a cleaner, brighter future."

About UPS

UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS), and the company can be found on the Web at www.UPS.com.

About International Truck and Engine Corporation

International Truck and Engine Corporation is the operating company of Navistar International Corporation (NYSE:NAV). The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company is also a provider of truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. Additional information is available at www.internationaldelivers.com.

About Eaton Corporation

Eaton Corporation (NYSE:ETN) is a diversified industrial manufacturer with 2005 sales of $11.1 billion. Eaton is a global leader in electrical systems and components for power quality, distribution and control; fluid power systems and services for industrial, mobile and aircraft equipment; 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. Eaton has 60,000 employees and sells products to customers in more than 125 countries. For more information, visit www.eaton.com.