-----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, OSNCk9pQsgUaybdfD9x9pk7x5UmpxhxkIBGxPbh3KVdGdvqDwQ4Tp2rRYqkPblVg SqbZ6KEqS1Cx0tlzVU+WJg== 0000950152-99-005631.txt : 19990630 0000950152-99-005631.hdr.sgml : 19990630 ACCESSION NUMBER: 0000950152-99-005631 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: 99654333 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 CORPORATION/HUTCHINSON HYDRAULICS PLAN 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: THE EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION HUTCHINSON PLANT 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 11 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) THE EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION HUTCHINSON PLANT 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 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION-HUTCHINSON PLANT PLAN NUMBER: 089 DECEMBER 31, 1998 AND 1997 PLAN SPONSOR Eaton Corporation Eaton Center Cleveland, Ohio 44114 Employer Identification Number 34-0196300 PLAN ADMINISTRATOR Eaton Corporation Corporate Compensation and Organization Committee Eaton Center Cleveland, Ohio 44114 (216) 523-5000 4 REPORT OF INDEPENDENT AUDITORS Corporate Compensation and Organization Committee of Eaton Corporation Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division--Hutchinson Plant We have audited the accompanying statements of net assets available for benefits of the Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division--Hutchinson Plant 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. The supplemental schedules are the responsibility of the Plan's management. The Fund Information in the statements of net assets available for benefits and the statement 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 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. /s/ Ernst & Young LLP Cleveland, Ohio June 11, 1999 5 Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division--Hutchinson Plant Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998
Victory Victory Victory Eaton Victory Stock Special International Prism Common Balanced Index Value Growth Magic Shares Loan Fund Fund Fund Fund Fund Fund Fund Total ------------------------------------------------------------------------------------------------- ASSETS Investments: Eaton Corporation Common Shares $ 917,954 $ 917,954 Mutual funds $ 405,558 $ 1,068,994 $ 346,074 $ 154,991 1,975,617 Common/collective trusts $ 4,544,904 4,544,904 Participant loans receivable $323,529 323,529 Other investments 2,004 2,004 ------------------------------------------------------------------------------------------------- Total investments 405,558 1,068,994 346,074 154,991 4,544,904 919,958 323,529 7,764,008 Receivables: Contributions receivable 1,121 2,195 1,116 546 8,450 2,434 15,862 Interest receivable 33 33 ------------------------------------------------------------------------------------------------- Total assets 406,679 1,071,189 347,190 155,537 4,553,354 922,425 323,529 7,779,903 ------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 406,679 $ 1,071,189 $ 347,190 $ 155,537 $ 4,553,354 $ 922,425 $323,529 $ 7,779,903 =================================================================================================
See notes to financial statements. 2 6 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1997
Victory Victory Victory Eaton Victory Stock Special International Prism Common Balanced Index Value Growth Magic Shares Loan Fund Fund Fund Fund Fund Fund Fund Total ------------------------------------------------------------------------------------------------- ASSETS Investments: Eaton Corporation Common Shares $ 943,730 $ 943,730 Mutual funds $ 315,252 $ 658,364 $ 351,692 $ 107,996 1,433,304 Common/collective trusts $ 4,320,551 4,320,551 Participant loans receivable $ 297,474 297,474 Other investments 8,465 8,465 ------------------------------------------------------------------------------------------------- Total investments 315,252 658,364 351,692 107,996 4,320,551 952,195 297,474 7,003,524 Receivables: Interest receivable 40 40 ------------------------------------------------------------------------------------------------- Total assets 315,252 658,364 351,692 107,996 4,320,551 952,235 297,474 7,003,564 LIABILITIES Accrued purchase of investments 5,914 5,914 ------------------------------------------------------------------------------------------------- Total liabilities 5,914 5,914 ------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 315,252 $ 658,364 $ 351,692 $ 107,996 $ 4,320,551 $ 946,321 $ 297,474 $ 6,997,650 =================================================================================================
See notes to financial statements. 3 7 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1998
Victory Victory Victory Eaton Victory Stock Special International Prism Common Balanced Index Value Growth Magic Shares Loan Fund Fund Fund Fund Fund Fund Fund Total -------------------------------------------------------------------------------------------------- ADDITIONS Contributions--employee $ 75,871 $ 128,775 $ 77,962 $ 29,346 $ 445,963 $ 133,360 $ 891,277 Interest income 122 879 $ 26,469 27,470 Dividend income 32,746 104,544 15,861 5,477 20,400 179,028 ------------------------------------------------------------------------------------------------- Total additions 108,617 233,319 93,823 34,823 446,085 154,639 26,469 1,097,775 DEDUCTIONS Distributions to participants 7,569 15,553 2,475 621 418,142 9,254 3,528 457,142 Fees and expenses 2,365 2,365 ------------------------------------------------------------------------------------------------- Total deductions 7,569 15,553 2,475 621 418,142 11,619 3,528 459,507 Net realized and unrealized appreciation (depreciation) in fair value of investments 27,167 100,291 (52,596) 15,123 256,685 (202,685) 143,985 Net interfund transfers (36,788) 94,768 (43,254) (1,784) (51,825) 35,769 3,114 0 ------------------------------------------------------------------------------------------------- Net increase (decrease) 91,427 412,825 (4,502) 47,541 232,803 (23,896) 26,055 782,253 Net assets available for benefits at beginning of year 315,252 658,364 351,692 107,996 4,320,551 946,321 297,474 6,997,650 ------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 406,679 $ 1,071,189 $ 347,190 $ 155,537 $ 4,553,354 $ 922,425 $ 323,529 $7,779,903 ==================================================================================================
See notes to financial statements. 4 8 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 A. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value as measured by quoted prices in active markets except for the Prism Magic Fund where the investments are stated at fair value as determined by the trustee. The participant loans receivable are valued at their outstanding balances, which approximate fair value. The cost of shares sold for the mutual funds and the Eaton Common Shares Fund is based upon the average cost of each participant's shares sold. Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying financial statements and notes. Actual results could differ from these estimates. B. DESCRIPTION OF THE PLAN The Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division--Hutchinson Plant (the "Plan") generally provides that all hourly employees of the Hydraulics Division--Hutchinson Plant, to which the Corporate Compensation and Organization Committee of Eaton Corporation (the "Company" or the "Plan Sponsor") has extended eligibility (other than temporary employees and employees covered by a collective bargaining agreement that does not specify coverage under the Plan), will be eligible for membership in the Plan on the date at which the employee has attained age 18. Eligible employees may make either before-tax or after-tax contributions from 1 to 15 percent of their base pay. All contributions to the Plan are non-forfeitable at all times as defined in the Plan document. 5 9 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT NOTES TO FINANCIAL STATEMENTS--CONTINUED B. DESCRIPTION OF THE PLAN--CONTINUED Contributions are allocated by the employee to the six investment funds:
Fund Description Sponsor - ------------------------------------------------------------------------------------------------------------- Victory Balanced Fund Common Stocks and Fixed Income Victory Broker Dealer Services Securities Victory Stock Index Fund Standard & Poor's 500 Index Victory Broker Dealer Services Victory Special Value Fund Small to Mid-Size Corporate Stock Victory Broker Dealer Services Victory International Growth Fund International Stock Victory Broker Dealer Services Prism Magic Fund Insurance Company Contracts Key Bank Eaton Common Shares Fund Company Stock Eaton Corporation
Each participant's account is credited with the participant's contribution and an allocation of the Plan's earnings and administrative expenses. Allocations are based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Participants are immediately vested in their contributions plus actual earnings thereon. On termination of service a participant is eligible to receive a lump-sum amount equal to the value of his account. Participants may borrow from their fund accounts a minimum of $1,000, up to a maximum equal to the lessor of $50,000 or 50% of their vested account balance, reduced by their highest outstanding loan balance during the preceding 12 months. Loan transactions are treated as a transfer from (to) the investment fund and loan fund. Loan terms range from 1-5 years or up to 10 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate determined daily by the Trustee. Principal and interest is paid ratably through monthly payroll deductions. The Company elected to pay certain administrative costs during 1998 on behalf of the Plan. 6 10 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT NOTES TO FINANCIAL STATEMENTS--CONTINUED B. DESCRIPTION OF THE PLAN--CONTINUED 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. 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 represented 5% or more of the Plan's net assets available for benefits are as follows:
DECEMBER 31 1998 1997 ------------------------------------ Victory Balanced Fund $ 405,558 $ 315,252 Victory Stock Index Fund 1,068,994 658,364 Victory Special Value Fund 346,074 351,692 Prism Magic Fund 4,544,904 4,320,551 Eaton Corporation Common Shares 917,954 943,730
D. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated December 23, 1997, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 7 11 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT NOTES TO FINANCIAL STATEMENTS--CONTINUED E. 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 by the Company. Such transactions are exempt from being prohibited transactions. F. 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 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. 8 12 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT EIN: 34-0196300 PLAN NUMBER 089 FORM 5500, ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1998
Current Identity of Issue, Borrower or Similar Party Description of Investment Cost Value - ------------------------------------------------------------------------------------------------------------------- * Eaton Corporation Common Shares 12,986 shares $ 892,911 $ 917,954 * KeyBank: Victory Balanced Fund 27,608 units 359,505 405,558 Victory International Growth Fund 10,923 units 143,579 154,991 Victory Special Value Fund 24,649 units 348,589 346,074 Victory Stock Index Fund 50,329 units 890,146 1,068,994 Prism Magic Fund 353,579 units 3,892,116 4,544,904 Employee Benefits Money Market Fund* 2,004 units 2,004 2,004 * Participant loans receivable 8.25-10%; variable maturities 323,529 ------------------------------- $ 6,528,850 $ 7,764,008 ===============================
* Indicates party-in-interest to the Plan. 9 13 EATON CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE HYDRAULICS DIVISION--HUTCHINSON PLANT EIN: 34-0196300 PLAN NUMBER 089 FORM 5500, ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998
Purchase Selling Cost of Current Description of Asset Price Price Asset Value Net Gain - ----------------------------------------------------------------------------------------------------------------------- CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS * Key Bank Prism Magic Fund $ 547,039 $ 547,039 $ 547,039 $ 579,371 504,506 579,371 $ 74,865 Employee Benefits Money Market Fund 272,825 272,825 272,825 279,286 279,286 279,286 Victory Stock Index Fund 419,769 419,769 419,769 109,430 90,624 109,430 18,806
There were no category (i), (ii) or (iv) reportable transactions during the year ended December 31, 1998. * Indicates party-in-interest to the Plan. 10 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. 333-13873) pertaining to the Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division - Hutchinson Plant of our report dated June 11, 1999, with respect to the financial statements and schedules of the Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics Division - Hutchinson Plant included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP Cleveland, Ohio June 23, 1999 11 -----END PRIVACY-ENHANCED MESSAGE-----