-----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, VhDgghag6OXnjXbYhRGpb4L+X0dff2KN9vX3CHLHQ7ZKdxeEyoaOKGmmYPLUGtiH 7GPhEo2p8g9ege5zXQj8YQ== 0000950152-03-006561.txt : 20030630 0000950152-03-006561.hdr.sgml : 20030630 20030630143849 ACCESSION NUMBER: 0000950152-03-006561 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON CORP CENTRAL INDEX KEY: 0000031277 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340196300 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-56644 FILM NUMBER: 03763858 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 l01712ae11vk.txt EATON CORP 11-K/CUTLER-HAMMER DE PUERTO RICO CO. 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 (Fee required) For the fiscal year ended December 31, 2002 Or [ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Fee required) 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: CUTLER-HAMMER DE PUERTO RICO INC. RETIREMENT SAVINGS 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) CUTLER-HAMMER DE PUERTO RICO INC. RETIREMENT SAVINGS PLAN Date: June 27, 2003 By: Eaton Corporation Pension Administration Committee By: /s/ S. J. Cook ------------------------------ (Signature) S. J. Cook Vice President-Human Resources Eaton Corporation AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan December 31, 2002 and 2001 and Year ended December 31, 2002 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Financial Statements and Supplemental Schedule December 31, 2002 and 2001 and Year ended December 31, 2002 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 Schedule Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year)...............9 Report of Independent Auditors Cutler-Hammer de Puerto Rico, Inc. -- Plan Sponsor We have audited the accompanying statements of net assets available for benefits of the Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan as of December 31, 2002 and 2001 and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. 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, 2002 and 2001, and the changes in its net assets available for benefits for the year ended December 31, 2002, 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 schedule of assets (held at end of year) as of December 31, 2002, is presented for purposes of additional analysis and is not a required part of the financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Cleveland, Ohio June 13, 2003 1 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Statements of Net Assets Available for Benefits
DECEMBER 31 2002 2001 ----------------------------- ASSETS Investments: Common stock at fair value $ 1,299,829 $ 1,469,874 Mutual funds 3,490,366 4,738,731 Common/collective trust funds 13,250,369 10,969,493 Money market funds 1,340 1,944 ----------------------------- Total investments 18,041,904 17,180,042 Receivables: Contributions--Employer 95,677 92,017 Contributions--Participants 214,296 223,720 Interest 3,124 31 Net pending sale 42,076 -- ----------------------------- Total receivables 355,173 315,768 ----------------------------- Net assets available for benefits $18,397,077 $17,495,810 =============================
See notes to financial statements. 2 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Statement of Changes in Net Assets Available for Benefits Year ended December 31, 2002 ADDITIONS Investment income: Interest and dividends $ 97,634 Contributions: Participants 2,233,247 Employer 930,173 ----------- 3,163,420 ----------- 3,261,054 DEDUCTIONS Benefits paid to participants 2,011,673 ----------- 1,249,381 Net depreciation in fair value of investments 348,114 ----------- Net increase 901,267 Net assets available for benefits at beginning of year 17,495,810 ----------- Net assets available for benefits at end of year $18,397,077 =========== See notes to financial statements. 3 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Notes to Financial Statements December 31, 2002 and 2001 and Year ended December 31, 2002 1. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan (the Plan) are prepared under the accrual method of accounting. INVESTMENT VALUATION AND INCOME RECOGNITION Investments are stated at fair value as measured by quoted prices in active markets except for the money market funds, which are stated at fair value as determined by the trustee. Purchases and sales of securities are recorded on a trade-date basis. The cost of shares sold for mutual funds and common shares is based upon the average cost of each participant's shares sold for purposes of determining realized gains and losses. Dividends are recorded on the ex-dividend date. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results are not expected to differ from these estimates. 2. DESCRIPTION OF PLAN Effective February 1, 1994, Cutler-Hammer de Puerto Rico, Inc. (the Company or the Plan Sponsor), a wholly-owned subsidiary of Eaton Corporation, established the Plan. The Plan provides that all employees of the Company are eligible immediately upon employment. Eligible employees may elect to make before-tax contributions to the Plan up to a maximum of 10% of their compensation. The Company has agreed to voluntarily contribute 50% of the employee contributions not exceeding 3% of the total compensation of the employee. 4 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF PLAN (CONTINUED) Contributions are allocated by the employee to any of the five investment funds offered by the Plan. Substantially all administrative, management fees and other expenses of the Plan shall be paid by the Company. Certain transaction costs are borne by the participants. Each participant's account is credited with the participant's contributions and allocations of Company contributions, Plan earnings and transaction costs. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. On termination of service, a participant may receive a lump-sum amount equal to the vested value of his or her account. Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company contribution portion of their accounts plus actual earnings thereon is based on years of continuous service. Participants are 100% vested after three years of credited service or upon the death of the participant. Forfeitures of non-vested amounts shall be used to reduce future Company contributions. The Company may amend, modify, suspend or terminate the Plan, provided that no assets held by the Plan or income thereon received by the Trustee for the purposes of the Plan shall be used for, or diverted to, purposes other than for the exclusive benefit of participating employees or their beneficiaries. Information about the Plan is contained in the Plan Document, which is available from the Human Resources Department upon request. 3. INVESTMENTS Key Trust Company of Ohio, N.A., trustee of the Plan, holds the Plan's investment assets and executes investment transactions. 5 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The fair value of individual investments that represent 5% or more of the Plan's net assets available for benefits are as follows: DECEMBER 31 2002 2001 ------------------------------- Key Bank EB Managed Guaranteed Investment Contract Fund $13,250,369 $10,969,493 Key Bank Victory Stock Index Fund 3,012,411 4,221,929 Eaton Corporation Common Shares 1,299,829 1,322,787 During 2002, the Plan's investments (including investments purchased, sold as well as held during the year) appreciated (depreciated) in fair value as follows: Common stock $ 13,752 Mutual funds (1,014,921) Common/collective trust funds 653,055 ----------- $ (348,114) =========== 4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
DECEMBER 31 2002 2001 --------------------------------- Net assets available for benefits per the financial statements $ 18,397,077 $ 17,495,810 Amounts allocated to withdrawing participants (319,313) (700,316) --------------------------------- Net assets available for benefits per Form 5500 $ 18,077,764 $ 16,795,494 =================================
6 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (CONTINUED) The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: YEAR ENDED DECEMBER 31, 2002 ------------ Benefits paid to participants per the financial statements $ 2,011,673 Add amounts allocated to withdrawing participants at December 31, 2002 319,313 Deduct amounts allocated to withdrawing participants at December 31, 2001 (700,316) ----------- Benefits paid to participants per Form 5500 $ 1,630,670 =========== Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to the end of the Plan year but not yet paid. 5. INCOME TAX STATUS The Plan has received a determination letter from the Puerto Rico Treasury Department dated August 24, 1999, stating that the Plan meets the requirements for qualification under Puerto Rico income tax laws and that the related trust is exempt from income taxes. Subsequent to this issuance of the determination letter, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the income tax laws of Puerto Rico to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the income tax laws of Puerto Rico and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. 7 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 6. TRANSACTIONS WITH PARTIES-IN-INTEREST Party-in-interest transactions include the investment in the common stock of Eaton, the investment in the special funds of the trustee and the payment of administrative expenses by the Company. Such transactions are exempt from being prohibited transactions. During 2002, the Plan received $29,583 in common stock dividends from the Eaton Corporation. On June 30, 2000, Eaton Corporation's (Eaton) semiconductor equipment operations were reorganized into a wholly owned subsidiary, Axcelis Technologies, Inc. (Axcelis). In July 2000, Axcelis completed an initial public offering for the sale of 20% of its common stock shares. On December 29, 2000, Eaton distributed its remaining interest in Axcelis to Eaton shareholders as a dividend (spin-off) which was tax free to Eaton and its shareholders for United States income tax purposes. Eaton shareholders (including the Plan) received 1.179023 shares of Axcelis common stock per each whole Eaton common share held as of December 6, 2000 and cash payments for fractional shares. The Axcelis common shares were received by the Plan on January 5, 2001. The Plan established an Axcelis Common Stock Fund to hold the shares of Axcelis common stock received as a dividend. This fund expired on December 31, 2002. Upon termination of the Axcelis Common Stock Fund, all Axcelis common stock held by the Plan were sold and will be invested in a stable value fund. The Plan had a receivable of $45,154 related to the pending sale of the final shares of Axcelis Common Stock at December 31, 2002. 8 Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan EIN: 34-1756466 Plan Number: 002 Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) December 31, 2002 DESCRIPTION OF CURRENT IDENTITY OF ISSUE INVESTMENT VALUE - -------------------------------------------------------------------------------- COMMON STOCK Eaton Corporation Common Shares* 16,641 shares $ 1,299,829 MUTUAL FUNDS Key Bank Victory Stock Index Fund* 231,546 units 3,012,411 Vanguard Developed Markets Index Open-End Fund 22,801 units 130,880 Vanguard Balanced Index Fund Open-End Fund 22,177 units 347,075 ----------- 3,490,366 COMMON/COLLECTIVE TRUST FUNDS Key Bank EB Managed Guaranteed Investment* Contract Fund 796,124 units 13,250,369 MONEY MARKET FUND Key Bank EB Money Market Fund* 1,340 units 1,340 ----------- $18,041,904 =========== * Indicates a party-in-interest to the Plan. 9 EX-23.1 3 l01712aexv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-35697 and Form S-8 No. 333-97373) pertaining to the Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan of Eaton Corporation of our report dated June 13, 2003, with respect to the financial statements and schedule of the Cutler-Hammer de Puerto Rico, Inc. Retirement Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2002. /s/ Ernst & Young LLP Cleveland, Ohio June 27, 2003 EX-99.1 4 l01712aexv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CERTIFICATION Each of the undersigned hereby certifies, for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in her capacity as a member of the Pension Administration Committee, that, to her knowledge, the Annual Report for the Cutler-Hammer de Puerto Rico Inc. Retirement Savings Plan (the "Plan") on Form 11-K for the period ended December 31, 2002, fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the net assets available for benefits and changes in net assets available for benefits of the Plan. The Board of Directors of Eaton Corporation has delegated administration responsibility for the Plan to the Pension Administration Committee. This certification is being furnished to the Securities and Exchange Commission as an exhibit to such Form 11-K. Date: June 27, 2003 By: /s/ Susan J. Cook ----------------- Chairperson of the Pension Administration Committee of Eaton Corporation and Vice President - Human Resources of Eaton Corporation Date: June 27, 2003 By: /s/ Billie K. Rawot ------------------- Member of the Pension Administration Committee of Eaton Corporation and Vice President - Controller of Eaton Corporation -----END PRIVACY-ENHANCED MESSAGE-----