-----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, GP6Drmy3Ql+2rb9cnW8GJbg+rabSNNrWdAMmZz0tU+QFngncQJdEjCxhBn0B9Mmh sDeR40Y5nq4lu0CFln/0pg== 0000950152-99-005630.txt : 19990630 0000950152-99-005630.hdr.sgml : 19990630 ACCESSION NUMBER: 0000950152-99-005630 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 11-K SEC ACT: SEC FILE NUMBER: 033-12842 FILM NUMBER: 99654330 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 EATON CORP/CUTLER-HAMMER DE PUERTO RICO 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 (Fee required) For the fiscal year ended December 31, 1998 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 COMPANY 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 Exhibit The following exhibit is filed herewith: Exhibit No. (23) Consent of Independent Auditors 12 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 COMPANY RETIREMENT SAVINGS PLAN 2 Date: June 28, 1999 By: Eaton Corporation Pension Administration Committee By: /s/ S. J. Cook ------------------------------ (Signature) S. J. Cook Vice President-Human Resources Eaton Corporation 3 Audited Financial Statements and Supplemental Schedules CUTLER-HAMMER DE PUERTO RICO COMPANY RETIREMENT SAVINGS PLAN PLAN NUMBER 002 DECEMBER 31, 1998 AND 1997 PLAN SPONSOR Cutler-Hammer de Puerto Rico Company P.O. Box 146 Aguas Buenas, Puerto Rico 00607 (787) 732-7891 Employer Identification Number: 34-1756466 PLAN ADMINISTRATOR Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Committee P.O. Box 146 Aguas Buenas, Puerto Rico 00607 (787) 732-7891 4 Report of Independent Auditors Corporate Compensation and Organization Committee of Eaton Corporation Cutler-Hammer de Puerto Rico Company Retirement Savings Plan We have audited the accompanying statements of net assets available for benefits of the Cutler-Hammer de Puerto Rico Company Retirement Savings Plan as of December 31, 1998 and 1997 and the related statement of changes in net assets available for benefits for the year ended December 31, 1998. 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 generally accepted auditing standards. 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, 1998 and 1997, and the changes in its net assets available for benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. 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 as of December 31, 1998, and reportable transactions for the year then ended, are presented for purpose 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 Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and the changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to 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. /s/ Ernst & Young LLP Cleveland, Ohio June 11, 1999 1 5 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998
EB Magic Indexed Eaton Fund Stock Fund Stock Fund Total -------------------------------------------------------------------- ASSETS Investments: Eaton Corporation Common Shares $ 1,038,972 $ 1,038,972 Mutual funds $ 4,243,942 4,243,942 Common/collective trust $ 5,856,744 5,856,744 Money market fund 1,567 5,095 6,662 -------------------------------------------------------------------- Total investments 5,856,744 4,245,509 1,044,067 11,146,320 Receivables: Contributions receivable-employer 31,663 26,156 11,013 68,832 Contributions receivable-employee 83,460 68,945 29,029 181,434 Interest receivable 3 151 6 160 -------------------------------------------------------------------- Total assets 5,971,870 4,340,761 1,084,115 11,396,746 LIABILITIES Accrued purchase of investment 5,080 5,080 -------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 5,971,870 $ 4,340,761 $ 1,079,035 $ 11,391,666 ====================================================================
See notes to financial statements. 6 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1997
EB Magic Indexed Eaton Fund Stock Fund Stock Fund Total -------------------------------------------------------------------- ASSETS Investments: Eaton Corporation Common Shares $ 1,160,161 $ 1,160,161 Mutual funds $ 2,009,078 2,009,078 Common/collective trust $ 5,605,446 5,605,446 Money market funds 687 99,033 99,720 -------------------------------------------------------------------- Total investments 5,605,446 2,009,765 1,259,194 8,874,405 Receivables: Contributions receivable-employer 32,801 9,979 8,392 51,172 Contributions receivable-employee 81,580 24,818 20,872 127,270 Interest receivable 131 83 120 334 -------------------------------------------------------------------- Total assets 5,719,958 2,044,645 1,288,578 9,053,181 LIABILITIES Accrued purchase of investment 98,996 98,996 -------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 5,719,958 $ 2,044,645 $ 1,189,582 $ 8,954,185 ====================================================================
See notes to financial statements. 3 7 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Statement of Changes in Net Assets Available For Benefits, with Fund Information Year Ended December 31, 1998
EB Magic Indexed Eaton Fund Stock Fund Stock Fund Total -------------------------------------------------------------------- ADDITIONS Contributions--Employees $ 832,746 $ 656,665 $ 321,427 $ 1,810,838 Contributions--Employer 343,715 223,117 112,020 678,852 Interest 2,172 5,846 962 8,980 Dividends 394,596 24,508 419,104 -------------------------------------------------------------------- Total additions 1,178,633 1,280,224 458,917 2,917,774 DEDUCTIONS Distributions to participants 537,034 246,694 136,078 919,806 -------------------------------------------------------------------- Total deductions 537,034 246,694 136,078 919,806 Net realized and unrealized appreciation (depreciation) 369,592 335,515 (265,594) 439,513 in fair value of investments Net interfund transfers (759,279) 927,071 (167,792) -------------------------------------------------------------------- Net increase (decrease) 251,912 2,296,116 (110,547) 2,437,481 Net assets available for benefits at beginning of year 5,719,958 2,044,645 1,189,582 8,954,185 ==================================================================== NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 5,971,870 $ 4,340,761 $ 1,079,035 $ 11,391,666 ====================================================================
See notes to financial statements. 4 8 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Notes to Financial Statements December 31, 1998 and 1997 A. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION Investments are stated at fair value as measured by quoted prices in active markets except for the EB Magic Fund, for which the investments are stated at fair value as determined by the trustee. 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. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. B. DESCRIPTION OF PLAN Effective February 1, 1994, Cutler-Hammer de Puerto Rico Company (the "Company" or the "Plan Sponsor") a wholly-owned subsidiary of Eaton Corporation, established a defined contribution plan to be known as the Cutler-Hammer de Puerto Rico Company Retirement Savings Plan (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 8% of their compensation. The Company has agreed to voluntarily contribute 50% of the employee contributions not exceeding 2% of the total compensation of the employee. 5 9 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Notes to Financial Statements--Continued B. DESCRIPTION OF PLAN--CONTINUED Contributions are allocated by the employee to the three investment funds:
Fund Description Sponsor - -------------------------------------------------------------------------------- EB Magic Fund Insurance Company Key Bank Contracts Indexed Stock Fund Publicly-traded Victory Broker Common Stocks Dealer Services Eaton Stock Fund Company Stock Eaton Corporation
All administrative and transaction costs, management fees and expenses of the Plan shall be paid by the Company. Each participant's account is credited with the participant's contributions and allocations of Company contributions, Plan earnings and administrative expenses. 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. No amendment, modification, suspension or termination of the Plan shall have the effect of providing that any amounts then held under the Plan may be used or diverted to any purpose other than for the exclusive benefit of members or their beneficiaries. Information about the Plan is contained in the Plan Document, which is available from the Human Resources Department upon request. 6 10 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS Key Trust Company of Ohio, N.A., trustee of the plan, holds the Plan's investment assets and executes transactions. 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 1998 1997 -------------------------------------- EB Managed Guaranteed Investment Contract Fund $ 5,856,744 $ 5,605,446 Victory Stock Index Fund 4,243,942 2,009,078 Eaton Corporation Common Shares 1,038,972 1,160,161
D. 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, 1998 -------------------- Net assets available for benefits per the financial statements $ 11,391,666 Amounts allocated to withdrawing participants (246,530) --------------- NET ASSETS AVAILABLE FOR BENEFITS PER FORM 5500 $ 11,145,136 ===============
7 11 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Notes to Financial Statements--Continued D. 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, 1998 -------------------- Benefits paid to participants per the financial statements $ 919,806 Add: Amounts allocated to withdrawing participants at December 31, 1998 246,530 -------------------- BENEFITS PAID TO PARTICIPANTS PER FORM 5500 $ 1,166,336 ====================
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1998 but not yet paid. E. INCOME TAX STATUS The Plan has received a determination letter from the Puerto Rico Treasury Department 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. F. TRANSACTIONS WITH PARTIES-IN-INTEREST Party-in-interest transactions included the investment in the special funds of the trustee and the payment of administrative expenses. Such transactions are exempt from being prohibited transactions. 8 12 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan Notes to Financial Statements--Continued G. YEAR 2000 ISSUE (UNAUDITED) The Plan Sponsor has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Plan Sponsor is taking a two phase approach. The first phase addresses internal systems that must be modified or replaced to function properly. Both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Plan Sponsor anticipates substantially completing this phase of the project by mid-1999. Costs associated with modifying software and equipment are not estimated to be significant and will be paid by the Plan Sponsor. For the second phase of the project, Plan management established communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated that they will be year 2000 compliant by mid-1999. If modification of data processing systems of either the Plan, the Plan Sponsor, or its service providers are not completed timely, the year 2000 problem could have an impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 9 13 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan EIN 34-1756466 Plan Number: 002 Form 5500, Line 27(a)--Schedule of Assets Held for Investment Purposes December 31, 1998
Description of Current Identity of issue Investment Cost Value - ------------------------------------------------------------------------------------------------ * KeyBank: EB Managed Guaranteed Investment Contract Fund 447,746 units $ 4,905,364 $ 5,856,744 Victory Stock Index Fund 199,809 shares 3,527,201 4,243,942 EB Money Market Fund 6,662 units 6,662 6,662 * Eaton Corporation Common Shares 14,698 shares 1,040,706 1,038,972 ----------------------------------- $ 9,479,933 $ 11,146,320 ===================================
* Indicates a party-in-interest to the Plan. 10 14 Cutler-Hammer de Puerto Rico Company Retirement Savings Plan EIN 34-1756466 Plan Number: 002 Form 5500, Line 27(d)--Schedule of Reportable Transactions Year Ended December 31, 1998
Purchase Selling Cost of Current Description of Assets Price Price Assets Value Net Gain - ----------------------------------------------------------------------------------------------------------------------------------- CATEGORY (i)--SINGLE TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS * KeyBank: Victory Stock Index Fund $ 716,615 $ 716,615 $ 716,615 EB Managed Guaranteed Investment Contract Fund $ 505,000 426,598 505,000 $ 78,402 EB Money Market Fund 716,615 716,615 716,615 715,602 715,602 715,602 505,000 505,000 505,000 716,615 716,615 716,615 624,657 624,657 624,657 CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS * KeyBank: Victory Stock Index Fund 160,000 121,633 160,000 38,367 2,059,349 2,059,349 2,059,349 EB Managed Guaranteed Investment Contract Fund 912,201 774,263 912,201 137,938 793,907 793,907 793,907 EB Money Market Fund 4,618,412 4,618,412 4,618,412 4,525,354 4,525,354 4,525,354
There were no category (ii) or (iv) reportable transactions during the year ended December 31, 1998. * Indicates a party-in-interest to the Plan 11 EX-23 2 EXHIBIT 23 1 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-35697) pertaining to the Cutler-Hammer de Puerto Rico Company Retirement Savings Plan of our report dated June 11, 1999, with respect to the financial statements and schedules of the Cutler-Hammer de Puerto Rico Company Retirement Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP Cleveland, Ohio June 23, 1999 12 -----END PRIVACY-ENHANCED MESSAGE-----