-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S+LN9AI0ctMxW1EgzV23z6PolmYrhZi8sWWQL7PjxYKoJdqsTocjNdcik+kktHou Z/1ezZgpcANupuUoGkdEmg== 0000031277-00-000008.txt : 20000515 0000031277-00-000008.hdr.sgml : 20000515 ACCESSION NUMBER: 0000031277-00-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON CORP CENTRAL INDEX KEY: 0000031277 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 340196300 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01396 FILM NUMBER: 630360 BUSINESS ADDRESS: STREET 1: EATON CTR STREET 2: 1111 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2584 BUSINESS PHONE: 2165235000 MAIL ADDRESS: STREET 1: 1111 SUPERIOR AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114 FORMER COMPANY: FORMER CONFORMED NAME: EATON YALE & TOWNE INC DATE OF NAME CHANGE: 19710822 10-Q 1 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 period ended March 31, 2000 -------------- Commission file number 1-1396 ------ Eaton Corporation - ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0196300 - ------------------------------------------------------------- (State of incorporation) (I.R.S. Employer Identification No.) Eaton Center, Cleveland, Ohio 44114-2584 - ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 523-5000 - ------------------------------------------------------------- (Registrant's telephone number, including area code) 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 twelve months and (2) has been subject to such filing requirements for the past ninety days. Yes X --- There were 72.7 million Common Shares outstanding as of March 31, 2000. Page 2 Part I - FINANCIAL INFORMATION Item 1. Financial Statements Eaton Corporation Condensed Consolidated Balance Sheets
March 31, December 31, (Millions) 2000 1999 ---- ---- ASSETS Current assets Cash & short-term investments $ 101 $ 165 Accounts receivable 1,406 1,267 Inventories 975 965 Deferred income taxes & other current assets 438 385 ------ ------ 2,920 2,782 Property, plant & equipment 2,320 2,369 Goodwill 2,010 1,905 Other intangible assets 620 625 Deferred income taxes & other assets 732 756 ------ ------ $8,602 $8,437 ====== ====== LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Short-term debt & current portion of long-term debt $ 927 $ 970 Accounts payable & other current liabilities 1,697 1,679 ------ ------ 2,624 2,649 Long-term debt 2,104 1,915 Postretirement benefits other than pensions 671 667 Deferred income taxes & other liabilities 540 582 Shareholders' equity 2,663 2,624 ------ ------ $8,602 $8,437 ====== ====== See accompanying notes.
Page 3 Eaton Corporation Statements of Consolidated Income
Three Months Ended March 31 ------------------ (Millions except for per share data) 2000 1999 ---- ---- Net sales $2,325 $1,661 Costs & expenses Cost of products sold 1,663 1,172 Selling & administrative 362 275 Research & development 84 71 ------ ------ 2,109 1,518 ------ ------ Income from operations 216 143 Other income (expense) Interest expense - net (44) (21) Other - net 29 1 ------ ------ (15) (20) ------ ------ Income before income taxes 201 123 Income taxes 70 39 ------ ------ Net income $ 131 $ 84 ====== ====== Net income per Common Share Assuming dilution $ 1.77 $ 1.17 Basic 1.80 1.18 Average number of Common Shares outstanding Assuming dilution 73.8 72.2 Basic 72.9 71.2 Cash dividends paid per Common Share $ .44 $ .44 See accompanying notes.
Page 4 Eaton Corporation Condensed Statements of Consolidated Cash Flows
Three Months Ended March 31 ------------------ (Millions) 2000 1999 ---- ---- Net cash (used in) provided by operating activities Net income $ 131 $ 84 Adjustments to reconcile to net cash (used in) provided by operating activities Depreciation 87 66 Amortization 30 20 Changes in operating assets & liabilities, excluding acquisitions and sales of businesses (292) (194) Other - net (14) 17 ----- ----- (58) (7) Net cash (used in) provided by investing activities Acquisitions of businesses, less cash acquired (27) (11) Sales of corporate assets 48 Expenditures for property, plant & equipment (65) (77) Other - net 51 6 ----- ----- 7 (82) Net cash provided by (used in) financing activities Borrowings with original maturities of more than three months Proceeds 464 103 Payments (574) (284) Borrowings with original maturities of less than three months - net 273 249 Cash dividends paid (32) (32) Purchase of Common Shares (96) Other 2 (7) ----- ----- 37 29 ----- ----- Decrease in cash (14) (60) Cash at beginning of year 81 80 ----- ----- Cash at end of period $ 67 $ 20 ===== ===== See accompanying notes.
Page 5 The following notes are included in accordance with the requirements of Regulation S-X and Form 10-Q: All references to net income per Common Share assume dilution, unless otherwise indicated. Preparation of Financial Statements - ----------------------------------- The condensed consolidated financial statements of Eaton Corporation (Eaton or the Company) are unaudited. However, in the opinion of management, all adjustments have been made which 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 the Company's 1999 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Acquisition of a Business - ------------------------- On April 9, 1999, the Company completed the acquisition of Aeroquip- Vickers, Inc. for $1.623 billion in cash. The acquisition was accounted for by the purchase method of accounting and, accordingly, the statements of consolidated income for the first quarter of 1999 do not include the results of Aeroquip-Vickers. The operating results of Aeroquip-Vickers beginning with the second quarter of 1999 are reported in Business Segment Information in Fluid Power and Other Components. The assets acquired and liabilities assumed were recorded at estimated fair values as determined by the Company's management based on information currently available and on current assumptions as to future operations. The Company has obtained independent appraisals of the fair values of the acquired property, plant and equipment, and identified intangible assets, and their remaining useful lives. The Company has substantially completed the review and determination of the fair values of the other assets acquired and liabilities assumed. A summary of the assets acquired and liabilities assumed in the acquisition follows (in millions): Estimated fair values Assets acquired $1,757 Liabilities assumed (1,185) Goodwill (amortized by the straight-line method over forty years) 1,051 ------ Purchase price 1,623 Less cash acquired & liability for outstanding shares (32) ------ Net cash paid $1,591 ====== Page 6 Unaudited pro forma results of operations for the three month period ended March 31, 1999 as if Eaton and Aeroquip-Vickers had been combined as of the beginning of that period, follow (in millions). The pro forma results do not include any cost savings or other effects of the planned integration of Eaton and Aeroquip-Vickers, and are not necessarily indicative of the results which would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future. Pro forma Three months ended March 31, 1999 ------------------ Net sales $2,199 Net income 73 Net income per Common Share Assuming dilution $ 1.01 Basic 1.03 As a result of the acquisition of Aeroquip-Vickers, Eaton incurred acquisition integration expenses for the incremental costs to exit and consolidate activities at Aeroquip-Vickers locations, to involuntarily terminate Aeroquip-Vickers employees, and for other costs to integrate operating locations and other activities of Aeroquip-Vickers with Eaton. Generally accepted accounting principles require that these acquisition integration costs, which are not associated with the generation of future revenues and have no future economic benefit, be reflected as assumed liabilities in the allocation of the purchase price to the net assets acquired. On the other hand, these same principles require that acquisition integration expenses which are associated with the generation of future revenues and have future economic benefit, and those associated with integrating Eaton operations into Aeroquip-Vickers locations, must be recorded as expense. These expenses are discussed in the "Unusual Charges" footnote. The components of the acquisition integration liabilities included in the purchase price allocation for Aeroquip-Vickers are as follows (in millions):
Workforce reductions Plant -------------------- consolidation Employees Dollars & other Total --------- ------- -------------- ----- 1999 470 $ 31 $ 1 $ 32 Utilized in 1999 (460) (28) (1) (29) ----- --- --- --- Balance at December 31, 1999 10 3 0 3 2000 1,585 56 13 69 Utilized in the first quarter of 2000 (90) (7) (1) (8) ----- --- --- --- Balance remaining at March 31, 2000 1,505 $ 52 $ 12 $ 64 ===== === === ===
Page 7 The acquisition integration liabilities are based on the Company's current integration plan which focuses on three key areas of integration: 1) manufacturing process and supply chain rationalization, including plant closings, 2) elimination of redundant administrative overhead and support activities, and 3) restructuring and repositioning of the sales/marketing and research and development organizations to eliminate redundancies in these activities. Amounts provided in 2000 for workforce reductions primarily relate to plant closings and consolidations, for which decisions were finalized in the first quarter of 2000. Adjustments to these liabilities in the future, if any, will be 1) recorded as a reduction of net income, if the ultimate liability exceeds the estimate, or 2) recorded as a reduction of goodwill, if the ultimate amount of the liability is below the estimate. Unusual Charges - --------------- The Company recorded charges of $8 million ($5 million aftertax, or $.07 per Common Share) in the first quarter of 2000 associated with the integration of Aeroquip-Vickers into the Company, as discussed in the "Acquisitions of Businesses" footnote. These charges primarily related to plant consolidation and other expenses, including fees paid to outside consultants, travel expenses, and relocation of inventory and equipment. These charges reduced operating profit of the Fluid Power and Other Components segment and are included in the Consolidated Statement of Income in Income from Operations. Other Income (Expense) - --------------------- In the first quarter of 2000, the Company recorded a net pretax gain on the sale of corporate assets of $10 million ($7 million aftertax, or $.09 per Common Share) which was included in other income. Possible Sale of Equity in Semiconductor Equipment Business - ----------------------------------------------------------- On May 5,2000, the Company announced that its wholly-owned subsidiary, Axcelis Technologies, Inc. had filed a registration statement with the Securities and Exchange Commission for an initial public offering (IPO) of common stock. Axcelis consists of all semiconductor operations of the Company. After the offering, Eaton will own more than 80% of the shares of Axcelis. Eaton currently plans to complete a distribution of the remaining stock on a tax-free basis to Eaton shareholders approximately six months following the completion of the IPO, subject to receiving a favorable tax ruling from the Internal Revenue Service and Board of Directors' approval. The registration statement has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. There will not Page 8 be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Refinancing of Debt - ------------------- In March 2000, the Company sold Euro 200 million of 6% notes due 2007. Net proceeds from the sale of the notes were used to reduce outstanding commercial paper and short-term notes that were issued in connection with the 1999 acquisition of Aeroquip-Vickers. Comprehensive Income - -------------------- The principal difference between net income as historically reported in the Statements of Consolidated Income and comprehensive income are foreign currency translation adjustments recorded in Shareholders' Equity. Comprehensive income (loss) is as follows (in millions): Three Months Ended March 31 ------------------- 2000 1999 ---- ---- Net income $ 131 $ 84 Foreign currency translation and other adjustments (15) (99) ------ ------ Comprehensive income (loss) $ 116 $ (15) ====== ====== Inventories - ----------- March 31, December 31, (Millions) 2000 1999 ---- ---- Raw materials $ 364 $ 341 Work-in-process and finished goods 650 661 ------ ------ Gross inventories at FIFO 1,014 1,002 Excess of current cost over LIFO cost (39) (37) ------ ------ Net inventories $ 975 $ 965 ====== ====== Page 9 Net Income per Common Share - --------------------------- The calculation of net income per Common Share - assuming dilution and basic follows (millions except for per share data): Three Months Ended March 31 ------------------ 2000 1999 ---- ---- Net income $ 131 $ 84 ==== ==== Average number of Common Shares outstanding-assuming dilution 73.8 72.2 Less dilutive effect of stock options .9 1.0 ---- ---- Average number of Common Shares outstanding-basic 72.9 71.2 ==== ==== Net income per Common Share Assuming dilution $1.77 $1.17 Basic 1.80 1.18 Summary Financial Information for Eaton ETN Offshore Ltd. - --------------------------------------------------------- Eaton ETN Offshore Ltd. (Eaton Offshore), a wholly-owned subsidiary of Eaton, was incorporated by Eaton in 1990 under the laws of Ontario, Canada, primarily for the purpose of raising funds through the offering of debt securities in the United States and making these funds available to Eaton or its subsidiaries. Eaton Offshore owns the common stock of a number of Eaton's subsidiaries which are engaged principally in the manufacture and/or sale of electrical and electronic controls, truck transmissions and engine components. On April 1, 1998, the division that manufactured leaf spring assemblies was sold and on August 31, 1999, the Engineered Fasteners division was sold. Summary financial information for Eaton Offshore and its consolidated subsidiaries is as follows (in millions): Three Months Ended March 31 ------------------ 2000 1999 ---- ---- Income statement data Net sales $112 $111 Gross profit 33 30 Net income 13 2 Page 10 March 31, December 31, 2000 1999 ---- ---- Balance sheet data Current assets $405 $354 Noncurrent assets 184 184 Net intercompany payables 113 93 Current liabilities 87 92 Noncurrent liabilities 141 115 Minority interest 6 3 Page 11 Eaton Corporation Business Segment Information
Three Months Ended March 31 ------------------ (Millions) 2000 1999 ---- ---- Net sales Automotive Components $ 497 $ 478 Fluid Power & Other Components 665 159 Industrial & Commercial Controls 579 512 Semiconductor Equipment 141 57 Truck Components 443 382 ------ ------ Total ongoing operations 2,325 1,588 Divested operations 73 ------ ------ Total net sales $2,325 $1,661 ====== ====== Operating profit (loss) Automotive Components $ 74 $ 62 Fluid Power & Other Components 67 22 Industrial & Commercial Controls 49 27 Semiconductor Equipment 27 (12) Truck Components 60 60 ------ ------ Total ongoing operations 277 159 Divested operations 15 Amortization of goodwill & other intangible assets (27) (17) Interest expense - net (44) (21) Corporate & other - net (5) (13) ------ ------ Income before income taxes $ 201 $ 123 ====== ====== See accompanying notes.
Page 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Sales for the first quarter of 2000 were $2.33 billion, an increase of 40% above the comparable period in 1999. All business segments reported record sales in the first quarter of 2000. As displayed in the Statement of Consolidated Income, Income from Operations of $216 million in the first quarter of 2000 increased 51% from the same period in 1999. These increases reflect the acquisition of Aeroquip-Vickers which was consolidated with the Company's results beginning in the second quarter of 1999. During the first quarter of 2000, Aeroquip- Vickers added about $.17 per share to the Company's earnings before restructuring charges. During the first quarter of 2000, the Company recorded restructuring charges of $8 million ($5 million aftertax, or $.07 per Common Share). These charges were associated with the continuing integration of Aeroquip-Vickers into the Company and reduced operating profit of the Fluid Power and Other Components segment. The Company also recorded a net pretax gain on the sale of corporate assets of $10 million ($7 million aftertax, or $.09 per Common Share) which is included in corporate and other-net in Business Segment Information and in other income-net in the Statement of Consolidated Income. Operating earnings per share during the first quarter of 2000, excluding restructuring charges and net gain on the sale of corporate assets, were $1.75, 50% above one year earlier. Including unusual items, net income in the first quarter of 2000 was $131 million compared to last year's $84 million. First quarter 2000 fully diluted earnings per share were $1.77, 51% from last year's first quarter of $1.17. Automotive Components - --------------------- Automotive Components continued its consistent pattern of record performance and achieved all-time record sales in the first quarter of 2000 of $497 million, 4% above last year's record. Excluding the impact of the weak Euro, sales volume was up nearly 8%. This compares to a 7% increase in NAFTA light vehicle production, a 4% rise in Europe, and a nearly 30% rise in South American output. Operating profit for the first quarter of 2000 of $74 million was also an all-time record, increasing 19% compared to the same period in 1999. This segment's differentiated product platforms drove the increase in operating profit. Fluid Power & Other Components - ----------------------------- Fluid Power and Other Components achieved all-time record sales in the first quarter of 2000 reaching $665 million, nearly 320% above year Page 13 earlier results. Including Aeroquip-Vickers in 1999 results on a pro forma basis, sales were off less than 1%. The Company is now anticipating stronger industry conditions. Commercial aircraft shipments seem to have bottomed and Aeroquip's fluid conveyance business continues modestly higher. The incipient rebound in Fluid Power markets is also encouraging. Industry orders were up over 10% in the first quarter, while the Company's orders were up 18%. Before restructuring charges of $8 million, operating profit was $75 million for the first quarter of 2000, 240% ahead of last year. Including Aeroquip-Vickers in 1999 results on a pro forma basis, profits were 39% higher than one year ago. During the first quarter of 2000, the Company announced that its Aeroquip business unit acquired the Ocala, Florida-based clamps, flanges, seals and flexible joint business of Honeywell International, Inc. Industrial & Commercial Controls - -------------------------------- Industrial and Commercial Controls sales in the first quarter of 2000 reached a record $579 million, 13% ahead of last year. This segment's sales growth continued to exceed the 8% rise in the North American market for electrical distribution equipment and industrial controls. The Company's Cutler-Hammer business achieved 12% year-to-year growth. The Company is seeing market share gains in its traditional business as well as a 20% rise in sales of Cutler-Hammer's Engineering Services and Systems business. In addition, sales of the Company's Navy Controls business were 70% above last year. Operating profit for the first quarter of 2000 was a record $49 million, an increase of 81% compared to the same period in 1999. The increase in operating profit can be attributed to the increase in sales as well as the continuing benefits realized from the restructuring actions taken in 1998. Semiconductor Equipment - ----------------------- Semiconductor Equipment sales in the first quarter of 2000 were a record $141 million, 147% above last year's comparable results. Current industry forecasts are now calling for a worldwide rise in semiconductor capital equipment purchases this year of over 40%, as part of what is expected to be a multi-year industry rebound. The Company is fully participating in this trend. Operating profits were $27 million in the first quarter of 2000 compared to an operating loss of $12 million in last year's first quarter. These results reflect the benefits of the fundamental restructuring this business undertook during 1998 and early 1999. On May 5,2000, the Company announced that its wholly-owned subsidiary, Axcelis Technologies, Inc. had filed a registration statement with the Securities and Exchange Commission for an initial public offering (IPO) Page 14 of common stock. Axcelis consists of all semiconductor operations of the Company. After the offering, Eaton will own more than 80% of the shares of Axcelis. Eaton currently plans to complete a distribution of the remaining stock on a tax-free basis to Eaton shareholders approximately six months following the completion of the IPO, subject to receiving a favorable tax ruling from the Internal Revenue Service and Board of Directors' approval. The registration statement has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. There will not be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Truck Components - ---------------- Truck Components sales in the first quarter of 2000 were an all-time record of $443 million, 16% above last year's comparable results. This compares with an 8% rise in NAFTA Class 8 factory sales, a 5% rise in European commercial truck production, and a 4% drop in South American truck output. First quarter activity was even stronger than in last year's fourth quarter, and successful new product initiatives have enabled the Company to measurably outpace the market. Operating profits in the first quarter of 2000 were $60 million, consistent with the same period in 1999. Struggling to meet surging demand, profits were reduced by about $14 million in extraordinary premium freight costs to keep customer lines running. These extraordinary expenses are not expected to continue during the rest of 2000. Non-operating Income (Expense) - ------------------------------ Amortization of goodwill and other intangible assets related to acquisitions of $27 million in the first quarter of 2000 increased by $10 million compared to the same period in 1999. The increase was primarily attributable to the amortization of goodwill and other intangible assets related to the acquisition of Aeroquip-Vickers. Net interest expense of $44 million in the first quarter of 2000 increased by $23 million compared to the same period in 1999. The increase was primarily due to additional borrowings required to partially finance the acquisition of Aeroquip-Vickers. Corporate and other expenses of $5 million in the first quarter of 2000 decreased by $8 million compared to the same period in 1999. The decrease was primarily attributable to the $10 million pretax gain on the sale of corporate assets in 2000. Page 15 Changes in Financial Condition - ------------------------------ Total debt increased to $3.0 billion at March 31, 2000 from $2.9 billion at year-end 1999 primarily due to an increase in commercial paper to finance cash used in operating activities and the repurchases of Common Shares. In March 2000, the Company sold Euro 200 million of 6% notes due 2007. Net proceeds from the sale of the notes were used to reduce outstanding commercial paper and short-term notes that were issued in connection with the 1999 acquisition of Aeroquip-Vickers. On April 3, 2000, the Company entered into an additional $400 million credit facility with a five-year term. This agreement increased its total multi-year credit facility to $900 million, $500 million expiring in 2003 and $400 million expiring in 2005. The Company also entered into a $900 million credit facility with a 364-day term to replace the expired 364-day facility. The Company's credit facilities total $1.8 billion. The Company remained in a strong financial position at March 31, 2000; net working capital increased to $296 million at March 31, 2000 from $133 million at the end of 1999 (the current ratio was 1.1 at each of those dates). The increase in accounts receivable was the primary cause of the increase in working capital. In January 2000, to avoid the dilution of earnings per share resulting from the exercise of stock options, the Board of Directors authorized the purchase of up to $500 million of Common Shares over a five-year period. This authorization replaced the expired five million share repurchase program authorized in 1994. In the first quarter of 2000, 1.3 million shares were repurchased at a cost of $96 million primarily under the expired program. Forward-Looking Statements - -------------------------- This Form 10-Q contains forward-looking statements concerning the reorganization of, and an initial public offering for, the semiconductor equipment operations, industry conditions pertaining to Fluid Power and Other Components, corporate performance during the year 2000, semiconductor capital equipment purchases and expenses pertaining to Truck Components. Those statements should be used with caution. They are subject to various risks and uncertainties, many of which are outside the control of the Company. Important factors which could cause actual results to differ materially from those in the forward- looking statements include market conditions for the initial public offering for the semiconductor equipment operations, market conditions pertaining to Fluid Power and Other Components, semiconductor equipment, and Truck Components, continuity of business relationships with and purchases by major customers, competitive pressure on sales and pricing, increases in material and other production costs which cannot be recouped in product pricing and global economic and financial conditions. We do not assume any obligation to update these forward-looking statements. Page 16 Item 3. Quantitative and Qualitative Disclosures about Market Risk A discussion of market risk exposures is included in Part II, Item 7A, "Quantitative and Qualitative Disclosure about Market Risk", of the Company's 1999 Annual Report on Form 10-K. Long-term debt increased to $2.1 billion at March 31, 2000 from $1.9 billion at the end of 1999. This increase is primarily due to the offering in March of Euro 200 million of 6% notes due 2007. The carrying value of this additional debt approximated its fair value at March 31, 2000. There were no other material changes during the three months ended March 31, 2000. Page 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings On April 25, 2000, the Company settled a pending claim with the Civil Division of the Department of Justice under the Clean Air Act. The settlement provided for a payment of $400,000, which the Company made on April 28, 2000. This matter was reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and related to the discharge of ozone depleting chemicals and the maintenance of refrigerant equipment by uncertified personnel of the Aeroquip Corporation facility at Fitzgerald, Georgia. This was a location acquired as part of the acquisition of Aeroquip-Vickers in April 1999. Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Shareholders on April 26, 2000, at which shareholders re-elected three directors, elected one new director, adopted Amended Regulations and ratified the appointment of the accounting firm of Ernst & Young LLP as the Company's independent auditors for 2000. Results of the voting in connection with each issue were as follows: Voting on Directors For Withheld Total - ------------------- --- -------- ----- Alexander M. Cutler 63,082,925 1,525,116 64,608,041 Stephen R. Hardis 62,950,615 1,657,426 64,608,041 Deborah L. McCoy 63,097,586 1,510,455 64,608,041 Gary L. Tooker 63,133,583 1,474,458 64,608,041 Adoption of Amended Regulations - ------------------------------- In Favor 61,751,663 Against 2,149,988 Abstain 706,390 ---------- Total 64,608,041 ========== Ratification of Independent Auditors - ------------------------------------ In Favor 63,744,157 Against 415,528 Abstain 448,356 ---------- Total 64,608,041 ========== The Company also announced at the Annual Meeting of Shareholders that Alexander M. Cutler will be elected Chairman and Chief Executive Officer when the current Chairman and Chief Executive Officer, Stephen R. Hardis, retires on July 31, 2000. Cutler, currently President and Page 18 Chief Operating Officer, will continue to serve as President when he assumes the office of Chairman. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - See Exhibit Index attached. (b) Reports on Form 8-K. 1. On February 1, 2000, the Company filed a Current Report on Form 8-K regarding the fourth quarter 1999 earnings release. 2. On February 3, 2000, the Company filed a Current Report on Form 8-K regarding the distribution agreement with Goldman, Sachs & Co. and Chase Securities for up to $800 million of the Company's medium- term notes. 3. On February 25, 2000, the Company filed a Current Report on Form 8-K which included the 1999 financial statements and exhibits and the February 24, 2000 press release regarding the possible sale of a minority interest in the Semiconductor Equipment business. 4. On February 29, 2000, the Company filed a Current Report on Form 8-K regarding the public offering outside the United States of Euro 200 million of 10-year notes. 5. On March 29, 2000, the Company filed a Current Report on Form 8-K regarding the subscription agreement to sell, outside the United States, Euro 200 million of 6% notes due March 2007. 6. On April 17, 2000, the Company filed a Current Report on Form 8-K regarding the first quarter 2000 earnings release. Page 19 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 12, 2000 /s/ Adrian T. Dillon ---------------------------- Adrian T. Dillon Executive Vice President - Chief Financial and Planning Officer; Principal Financial Officer Page 20 EATON CORPORATION EXHIBIT INDEX Regulation S-K, Item 601 - Exhibit Reference Number Exhibit - ------------------ ------- 4 Pursuant to Regulation S-K Item 601 (b)(4), the Company agrees to furnish to the Commission, upon request, a copy of the instruments defining the rights of holders of long-term debt of the Company and its subsidiaries. 27 Financial Data Schedule EX-27 2
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets and the Statemens of Consolidated Income and is qualified in its entirety by reference to such financial statements. 1,000,000 3-MOS DEC-30-2000 MAR-31-2000 67 34 1,432 26 975 2,920 4,008 1,688 8,602 2,624 2,104 0 0 36 2,627 8,602 2,325 2,325 1,663 2,109 (29) 0 44 201 70 131 0 0 0 131 1.80 1.77
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