-----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, NG0S9XLw3embOQBXR+ccYf5S4ngjlR3ajDwuhDvLqdTr6EqHYuvQX17T9U22olOK 3Ed8dm2aEETBRxpiFwH5eQ== /in/edgar/work/20000628/0000950152-00-004963/0000950152-00-004963.txt : 20000920 0000950152-00-004963.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950152-00-004963 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON CORP CENTRAL INDEX KEY: 0000031277 STANDARD INDUSTRIAL CLASSIFICATION: [3600 ] IRS NUMBER: 340196300 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-01396 FILM NUMBER: 662178 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 11-K 1 e11-k.txt EATON CORP. AEROQUIP-VICKERS SAV. & PROFIT 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [x] Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1999 Or [ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to ___________ Commission file number ____________________________________ A. Full title of the plan and the address of the plan, if different from that of the issuer named below: AEROQUIP-VICKERS SAVINGS AND PROFIT SHARING PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Eaton Corporation 1111 Superior Avenue Cleveland, Ohio 44114-2584 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. (Name of Plan) AEROQUIP-VICKERS SAVINGS AND PROFIT SHARING PLAN Date: June 28, 2000 By: Eaton Corporation Pension Administration Committee By: /s/ S. J. Cook -------------------------------- (Signature) S. J. Cook Vice President-Human Resources Eaton Corporation 2 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES Aeroquip-Vickers Savings and Profit-Sharing Plan December 31, 1999 and 1998 and Year Ended December 31, 1999 with Report of Independent Auditors 3 Aeroquip Vickers Savings and Profit-Sharing Plan Financial Statements and Supplemental Schedule December 31, 1999 and 1998 and Year Ended December 31, 1999 CONTENTS Report of Independent Auditors...........................................................................1 AUDITED FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits..........................................................2 Statement of Changes in Net Assets Available for Benefits................................................3 Notes to Financial Statements............................................................................4 SUPPLEMENTAL SCHEDULES Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes at End of Year..............................................................................11 Schedule H, Line 4(j)--Schedule of Reportable Transactions..............................................13
4 Report of Independent Auditors Administrative Committee Aeroquip-Vickers Savings and Profit-Sharing Plan We have audited the accompanying statements of net assets available for benefits of the Aeroquip-Vickers Savings and Profit-Sharing Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes at end of year as of December 31, 1999 and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Cleveland, Ohio /s/ Ernst & Young LLP June 9, 2000 1 5 Aeroquip-Vickers Savings and Profit-Sharing Plan Statements of Net Assets Available for Benefits
DECEMBER 31 1999 1998 -------------------------------------------- ASSETS Contributions receivable from employer $ 18,204,426 $ 23,623,629 Contributions receivable from participants 138,383 - Fixed income fund units receivable (payable), net 2,043,703 (25,924) Investments: Investment Contracts 218,331,970 234,317,290 Vanguard Mutual Funds 590,607,034 456,876,257 Eaton Common Shares Fund 11,745,772 - Aeroquip-Vickers Stock Fund - 47,267,654 Cincinnati Milacron Stock Fund 626,602 858,168 Loans receivable from participants 20,502,635 19,541,011 -------------------------------------------- 841,814,013 758,860,380 -------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 862,200,525 $ 782,458,085 ============================================
See accompanying notes. 2 6 Aeroquip-Vickers Savings and Profit-Sharing Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999
ADDITIONS Contributions by participants $ 21,398,943 Contributions by employer 24,376,645 Investment income: Interest 20,089,419 Dividends 32,469,069 Net appreciation in fair value of investments 76,311,297 ---------------------- 128,869,785 Transfer from M.C. Aerospace Corporation Tax Deferred Savings Plan 1,611,057 ---------------------- 176,256,430 DEDUCTIONS Distributions to participants 96,436,048 Investment management fees 77,942 ---------------------- 96,513,990 ---------------------- Net increase 79,742,440 Net assets available for benefits at beginning of year 782,458,085 ---------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 862,200,525 ======================
See accompanying notes. 3 7 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements December 31, 1999 and 1998 and Year Ended December 31, 1999 A. DESCRIPTION OF THE PLAN The Aeroquip-Vickers Savings and Profit-Sharing Plan (the "Plan") is a defined contribution plan. Eligible participants include all U. S. regular full-time salaried employees and non-bargaining hourly employees of Aeroquip-Vickers, Inc. ("Company") and its subsidiaries, Aeroquip Corporation ("Aeroquip") and Vickers, Incorporated ("Vickers"), on their ninety-first day of employment. Effective January 1, 2000 covered employees are immediately eligible for participation in the Plan. Bargaining unit employees are eligible to participate only if the bargaining agreement permits participation. Temporary employees who work less than 1,000 hours during a 12-month period and interns are not eligible to participate in the Plan. Participants may contribute to the Plan on a pretax basis by salary reduction up to 15 percent of their annual compensation (in increments of 1 percent) subject to an annual limit imposed by the Internal Revenue Service. Each participant individually directs his or her contributions and the Company's contributions into the investment funds offered by the Plan (in multiples of 1 percent), except for 25 percent of the Company's profit-sharing contribution. The contribution receivable amount primarily consists of the profit sharing contributions for the year. Profit-sharing contributions to the Plan by the Company are based on the level of return on net assets of the Company. These contributions are paid to the Plan by the Company during the first quarter of the following year. The Company matches 50% to 100% of participant contributions not exceeding 1% to 5% of the total compensation of the participant, depending on the location and contribution level of the participant. A participant is entitled to the distributions provided by the contributions and income thereon (including realized and unrealized gains and losses) allocated to the participant's account. 4 8 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED Upon termination of employment due to retirement, total and permanent disability or death, a participant or his or her spousal beneficiary will be entitled to receive a distribution of the participant's entire account without regard to the Plan's vesting rules: (i) in one lump sum amount; or (ii) in monthly installments of a fixed amount or over a specified period of time in an amount of at least $100 per month. Distribution payments to non-spousal beneficiaries will be made in a lump sum only. If the value of a participant's account is less than $3,500, the plan administrator will distribute the participant's entire interest in one lump sum payment. Profit-sharing and matching contributions and their earnings may be withdrawn prior to age 59-1/2 in an amount not to exceed the value of the pretax contributions account at December 31, 1993 and only after all after-tax contributions and their earnings have been withdrawn. Withdrawals of profit-sharing allocations and matching contributions during a participant's employment are not permitted prior to age 59-1/2, unless the participant can show financial hardship for which he or she has no other available resources. Such situations are limited to: (i) certain medical expenses; (ii) payment of tuition and related educational fees for post-secondary education for the next year; (iii) costs related to the purchase of a principal residence; or (iv) payments necessary to avoid eviction from, or a foreclosure on the mortgage of, the participant's principal residence. In December 1995, the Company acquired the Electronic Systems Division ("ESD") of Cincinnati Milacron, Inc. The ESD employees' retirement funds were transferred into the Plan in March 1996 and such participants became eligible for participation in the Plan as of the date of transfer. Participants were given the option to retain their investment in the Cincinnati Milacron Stock Fund or to direct their funds into any options available within the Plan. The Cincinnati Milacron Stock Fund is invested in Cincinnati Milacron Common Stock. Cash dividends paid on shares held by the Trust are used to purchase additional shares for participant accounts. No contributions, rollovers, or transfers are permitted into the fund. 5 9 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED The Aeroquip-Vickers Stock Fund was invested in Aeroquip-Vickers Common Stock. Cash dividends paid on shares held by the Trust were used to purchase additional shares for participant accounts. For each participant's profit-sharing allocation, 25% was automatically invested in the Aeroquip-Vickers Stock Fund until distribution to the participant or until the participant reached age 55. Participants could also elect to have additional amounts over the Company's 25% profit-sharing contribution invested in the Aeroquip-Vickers Stock Fund. Aeroquip-Vickers common stock was acquired in open market purchases at fair market value. On April 9, 1999, the Eaton Corporation ("Eaton") completed the acquisition of the Company whereby Eaton acquired all of the outstanding shares of the Company for $58 per share in cash. All participants with investments in Aeroquip-Vickers stock were redeemed by Eaton for $58 per share with the proceeds being reinvested in Vanguard mutual funds based on the participant's investment election for future contributions. If notification of investment elections was not received, all monies were invested in The Vanguard U.S. Money Market Treasury Fund. The Eaton Common Shares Fund is invested in Eaton Corporation Common Stock. Cash dividends paid on shares held by the Trust are used to purchase additional shares for participant accounts. For each participant's 1999 profit-sharing contribution, 25% will be automatically invested in the Eaton Common Shares Fund until distribution to the participant or until the participant reaches age 55. Participants can also elect to have additional amounts over the Company's 25% profit-sharing contribution invested in the Eaton Common Shares Fund. Participants of the Plan have general purpose and home loans available. Under a general purpose or home loan, a participant may borrow up to the lesser of one-half of his or her vested account balance or the total of his or her pretax, matching and roll-in contributions to the Plan, up to a maximum of $50,000. In no event may the aggregate amount of loans exceed $50,000. All loans are repaid to the Plan in equal installments through payroll deductions or direct payment over a period not to exceed five years for general purpose and twenty years for home loans. Interest is charged at the prime rate, plus 1 percent at the loan origination date. Certain administrative costs are paid by the Plan Sponsor. 6 10 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED The Company reserves the right to amend, modify or terminate the Plan at any time. Information concerning the Plan document, matching and profit-sharing contributions and vesting is contained in the summary plan description ("SPD") for the plan. Copies of the SPD are available from the Human Resource Services department of the Company. B. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accounting records of the Plan are maintained on the accrual basis of accounting. INVESTMENT VALUATION AND INCOME RECOGNITION Marketable securities are stated at aggregate fair value and are valued at the last sales price quoted by a national securities exchange on the last business day of the plan year. Mutual funds are stated at the net asset value on the last business day of the plan year. The participant loans receivable are valued at their outstanding balances, which approximate fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Investment contracts consist of fully benefit-responsive insurance company and bank investment contracts. These investment contracts are stated at contract value. These contracts pay a negotiated fixed or variable interest rate for a period of one to five years. At December 31, 1999 and 1998, the investment contracts had a weighted average crediting interest rate of 6.25% and 7.97%, respectively. The average yield on these contracts was 7.01% and 7.35% for the years ended December 31, 1999 and 1998, respectively. The contract value of these contracts approximates fair value. Contracts are negotiated with insurance companies or financial institutions rated AA+ by Standard and Poor's or its equivalent and have a maximum average contract life of five years. 7 11 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued B. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from these estimates. RECLASSIFICATION Certain prior year amounts have been reclassified to conform to the current year presentation. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:
Net Appreciation in Fair Value of Investments --------------------- Common stock $ 49,192,574 Registered investment companies 27,118,723 --------------------- $ 76,311,297 =====================
8 12 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED Investments that represent 5% or more of fair value of the Plan's net assets are as follows:
DECEMBER 31 1999 1998 ------------------------------------------- Vanguard 500 Index Fund $ 173,282,460 $ 127,189,820 Vanguard Morgan Growth Fund 74,220,860 48,514,594 Vanguard STAR Fund 104,110,513 103,574,121 Vanguard Windsor II Fund 80,286,198 98,226,344 Vanguard Prime Money Market 61,818,109 - Aeroquip-Vickers Common Stock* - 47,267,654
* Nonparticipant-directed D. NONPARTICIPANT-DIRECTED INVESTMENTS Information regarding the net assets and the significant components of the changes in net assets relating to nonparticipant-directed investments is as follows: Aeroquip-Vickers Stock Fund (Nonparticipant-directed portion): DECEMBER 31, 1998 --------------------- Net assets: Contribution receivable $ 5,946,544 Aeroquip-Vickers Common Stock 23,246,637 --------------------- $ 29,193,181 ===================== Changes in net assets: Dividends $ 183,578 Net appreciation 17,098,322 Benefits paid to participants (1,020,428) Transfers to participant-directed investments (45,454,653) --------------------- $ (29,193,181) ===================== 9 13 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements--Continued D. NONPARTICIPANT-DIRECTED INVESTMENTS--CONTINUED Eaton Common Shares Fund (Nonparticipant-directed portion): The portion of the contribution receivable at December 31, 1999 which is designated to be nonparticipant-directed (see Note A) is $4,538,498. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated July 22, 1997, stating that the Plan is qualified under section 401(a) of the Internal Revenue Code of 1986 (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Sponsor has indicated that it will take the necessary steps, if any, to maintain the Plan's qualified status. 10 14 Aeroquip-Vickers Savings and Profit-Sharing Plan EIN 34-4288310 Plan 15 Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Current Identity of Issue Description of Investment Value - ------------------------------------------------------------------------------------------------------------------------ *Vanguard 500 Index Fund Registered Investment Company; 1,280,444 shares $ 173,282,460 *Vanguard International Growth Fund Registered Investment Company; 1,388,746 shares 31,232,893 *Vanguard LifeStrategy Conservative Growth Fund Registered Investment Company; 515,577 shares 7,785,216 *Vanguard LifeStrategy Growth Fund Registered Investment Company; 530,356 shares 11,354,931 *Vanguard LT Corporate Fund Registered Investment Company; 982,295 shares 7,966,415 *Vanguard Morgan Growth Fund Registered Investment Company; 3,238,257 shares 74,220,860 *Vanguard STAR Fund Registered Investment Company; 5,717,217 shares 104,110,513 *Vanguard Treasury Money Market Registered Investment Company; 38,549,439 shares 38,549,439 *Vanguard Windsor II Fund Registered Investment Company; 3,215,306 shares 80,286,198 *Vanguard Prime Money Market Fund Registered Investment Company; 61,819,109 shares 61,818,109 *Eaton Corporation Common Stock Company Stock; 161,732 shares 11,745,772 *Cincinnati Milacron Stock Company Stock; 40,755 shares 626,602 *Participant loans Interest rates ranging from 6% - 10% 20,502,635 AIG 18293 Unallocated Insurance Contract; maturity date 1/31/02, 6.37% 8,485,933 AIG 995 Unallocated Insurance Contract; maturity date 3/31/03, 6.21% 8,857,686 AIG Financial 205838 Unallocated Insurance Contract; duration 4.95 years, 5.88% 21,124,662 Allstate 6080 Unallocated Insurance Contract; maturity date 2/14/03, 6.10% 7,178,245 Allstate GA-6139 Unallocated Insurance Contract; maturity date 10/15/03, 5.64% 10,587,847
11 15 Aeroquip-Vickers Savings and Profit-Sharing Plan EIN 34-4288310 Plan 15 Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes at End of Year--Continued
Current Identity of Issue Description of Investment Value - ------------------------------------------------------------------------------------------------------------------------ CDC 394-01 Unallocated Insurance Contract; maturity date 2/22/04, 6.27% 8,052,152 CDC 394-02 Unallocated Insurance Contract; maturity date 1/25/04, 5.66% 20,203,149 CDC 394-03 Unallocated Insurance Contract; maturity date 5/25/04, 5.88% 9,151,426 Deutsche Bank TRI1 Unallocated Insurance Contract; maturity date 6/30/00, 6.45% 8,996,105 John Hancock 8693 Unallocated Insurance Contract; maturity date 9/30/00, 6.37% 10,158,589 John Hancock 8833 Unallocated Insurance Contract; maturity date 12/29/00, 6.75% 9,074,722 Life of Virginia GS-3099 Unallocated Insurance Contract; maturity date 7/31/01, 5.99% 5,124,243 Metropolitan Life 24762 Unallocated Insurance Contract; maturity date 3/31/00, 6.77% 5,994,742 Metropolitan Life 24790 Unallocated Insurance Contract; maturity date 4/30/01, 6.74% 17,471,499 New York Life 30507 Unallocated Insurance Contract; maturity date 12/31/01, 6.65% 15,686,803 Principal Life 4-18623-02 Unallocated Insurance Contract; maturity date 3/31/02, 6.85% 6,100,764 Principal Life 4-18623-03 Unallocated Insurance Contract; maturity date 2/28/01, 6.83% 14,176,279 Rabobank TRI119601 Unallocated Insurance Contract; maturity date 9/30/01, 6.47% 6,070,896 Security Life 0120 Unallocated Insurance Contract; maturity date 9/30/02, 5.74% 19,955,696 UBS 2303 Unallocated Insurance Contract; maturity date 6/30/02, 6.78% 5,880,532 ------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 841,814,013 ===================
* Party-in-interest to the Plan. 12 16 Aeroquip-Vickers Savings and Profit-Sharing Plan EIN 34-4288310 Plan 15 Schedule H, Line 4(j)--Schedule of Reportable Transactions Year Ended December 31, 1999
Current Value of Asset Identity of Description of Purchase Selling Cost of on Transaction Net Issue Asset Price Price Asset Date Gain - ----------------------------------------------------------------------------------------------------------------------------------- CATEGORY (i)--SINGLE TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS Vanguard Aeroquip-Vickers Common Stock* $ 40,547,286 $ 25,581,403 $ 40,547,286 $ 14,965,883 CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS Vanguard Aeroquip- Vickers $ 6,130,122 6,130,122 6,130,122 Common Stock* 46,475,081 29,418,660 46,475,081 17,056,421
* Party-in-interest to the Plan. There were no category (ii) or (iv) reportable transactions during 1999. EX-23 2 ex23.txt EXHIBIT 23 1 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-86391) pertaining to the Aeroquip-Vickers Savings and Profit Sharing Plan of our report dated June 9, 2000, with respect to the financial statements and schedules of the Aeroquip-Vickers Savings and Profit Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1999. /s/ Ernst & Young LLP Cleveland, Ohio June 26, 2000 -----END PRIVACY-ENHANCED MESSAGE-----