-----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, PMO1z5enN7kVWPu3LveaEhkV5+Bmfbh9Kn2W8EGVznFTw0fWqKgVlKJ77t3iGcpM czlaoH+5+EsJ/AhiMOdt/A== 0000950152-99-005636.txt : 19990630 0000950152-99-005636.hdr.sgml : 19990630 ACCESSION NUMBER: 0000950152-99-005636 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: 99654387 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 FORM 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: EATON CORPORATION 401(k) SAVINGS PLAN FOR THE HOURLY RATE EMPLOYEES AT AIRFLEX DIVISION 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) EATON CORPORATION 401(k) SAVINGS PLAN FOR THE HOURLY RATE EMPLOYEES AT AIRFLEX DIVISION 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 401(k) SAVINGS PLAN FOR THE HOURLY RATE EMPLOYEES AT AIRFLEX DIVISION PLAN NUMBER: 159 DECEMBER 31, 1998 AND 1997 PLAN SPONSOR Eaton Corporation Eaton Center Cleveland, Ohio 44114 (216) 523-5000 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 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division We have audited the accompanying statements of net assets available for benefits of the Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division 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 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 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 auditing procedures applied in our audits of the basic 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 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998
Prism Victory Victory Victory Money Prism Victory Stock Special International Market Magic Balanced Index Value Growth Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------------- ASSETS Investments: Eaton Corporation Common Shares Mutual funds $ 53,945 $ 72,294 $ 21,818 $ 23,002 Participant loans receivable Common/collective trust $ 64,134 $ 33,876 -------------------------------------------------------------------------------- Total investments 64,134 33,876 53,945 72,294 21,818 23,002 Receivables: Contributions receivable 847 351 496 833 407 322 Interest receivable -------------------------------------------------------------------------------- Total assets 64,981 34,227 54,441 73,127 22,225 23,324 LIABILITIES Accrued purchase of investments -------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 64,981 $ 34,227 $ 54,441 $ 73,127 $ 22,225 $ 23,324 ================================================================================ Eaton Common Shares Loan Fund Fund Total ------------------------------------------ ASSETS Investments: Eaton Corporation Common Shares $ 124,906 $ 124,906 Mutual funds 171,059 Participant loans receivable $ 19,642 19,642 Common/collective trust 98,010 ------------------------------------------ Total investments 124,906 19,642 413,617 Receivables: Contributions receivable 1,712 4,968 Interest receivable 6 6 ------------------------------------------ Total assets 126,624 19,642 418,591 LIABILITIES Accrued purchase of investments 565 565 ------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS $ 126,059 $ 19,642 $ 418,026 ==========================================
See notes to financial statements 2 6 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Statement of Net Assets Available for Benefits, with Fund Information December 31, 1997
Prism Victory Victory Victory Money Prism Victory Stock Special International Market Magic Balanced Index Value Growth Fund Fund Fund Fund Fund Fund ------------------------------------------------------------------------------ ASSETS Investments: Eaton Corporation Common Shares Mutual funds $ 37,869 $ 45,211 $ 26,892 $ 18,233 Participant loans receivable Common/collective trust $ 41,705 $ 38,970 Other investments ------------------------------------------------------------------------------ Total investments 41,705 38,970 37,869 45,211 26,892 18,233 Receivables: Interest receivable ------------------------------------------------------------------------------ Total assets 41,705 38,970 37,869 45,211 26,892 18,233 LIABILITIES Accrued purchase of investments ------------------------------------------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS $ 41,705 $ 38,970 $ 37,869 $ 45,211 $ 26,892 $ 18,233 ============================================================================== Eaton Common Shares Loan Fund Fund Total ------------------------------------------ ASSETS Investments: Eaton Corporation Common Shares $ 121,380 $ 121,380 Mutual funds 128,205 Participant loans receivable $ 13,091 13,091 Common/collective trust 80,675 Other investments 2,095 2,095 ------------------------------------------ Total investments 123,475 13,091 345,446 Receivables: Interest receivable 7 7 ------------------------------------------ Total assets 123,482 13,091 345,453 LIABILITIES Accrued purchase of investments 1,543 1,543 ------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS $ 121,939 $ 13,091 $ 343,910 ==========================================
See notes to financial statements 3 7 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Statement of Changes in Net Assets Available for Benefits, with Fund Information Year Ended December 31, 1998
Prism Victory Victory Victory Money Prism Victory Stock Special International Market Magic Balanced Index Value Growth Fund Fund Fund Fund Fund Fund ------------------------------------------------------------------------------- ADDITIONS Employee contributions $ 13,948 $ 7,719 $ 10,231 $ 16,949 $ 6,730 $ 6,037 Interest 2 Dividends 4,230 7,298 1,008 815 ------------------------------------------------------------------------------- Total additions 13,950 7,719 14,461 24,247 7,738 6,852 DEDUCTIONS Distributions to participants 3,855 11,705 775 243 1,510 Fees and expenses ------------------------------------------------------------------------------- Total deductions 3,855 11,705 775 243 1,510 Net realized and unrealized appreciation (depreciation) in fair value of investments 2,628 2,061 3,435 7,063 (4,052) 2,682 Net interfund transfers 10,553 (2,818) (549) (3,151) (8,353) (2,933) ------------------------------------------------------------------------------- Net increase (decrease) 23,276 (4,743) 16,572 27,916 (4,667) 5,091 Net assets available for benefits at beginning of year 41,705 38,970 37,869 45,211 26,892 18,233 ------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 64,981 $ 34,227 $ 54,441 $ 73,127 $ 22,225 $ 23,324 =============================================================================== Eaton Common Shares Loan Fund Fund Total ------------------------------------------ ADDITIONS Employee contributions $ 31,575 $ 93,189 Interest 119 $ 850 971 Dividends 2,728 16,079 ------------------------------------------ Total additions 34,422 850 110,239 DEDUCTIONS Distributions to participants 2,409 20,497 Fees and expenses 321 321 ------------------------------------------ Total deductions 2,730 20,818 Net realized and unrealized appreciation (depreciation) in fair value of investments (29,122) (15,305) Net interfund transfers 1,550 5,701 ------------------------------------------ Net increase (decrease) 4,120 6,551 74,116 Net assets available for benefits at beginning of year 121,939 13,091 343,910 ------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 126,059 $ 19,642 $ 418,026 ==========================================
See notes to financial statements. 4 8 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Notes to Financial Statements December 31, 1998 A. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value as measured by quoted prices in active markets except for the Prism Money Market Fund and Prism Magic Fund, for which 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 mutual funds and Eaton Common Shares Fund 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. B. DESCRIPTION OF THE PLAN Effective January 1, 1995, Eaton Corporation (the "Company" or "Plan Sponsor") established a 401(k) profit sharing plan and trust to be known as the Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division (the "Plan"). The Plan provides that all union employees of the Airflex Division who are members of UPIU local 7967 will be eligible for membership in the Plan on the date at which the employee has completed ninety working days of service with the Company. Eligible employees may elect to make before-tax contributions from 1 to 15 percent of their compensation. Contributions are allocated by the employee among the following investment funds:
Fund Description Sponsor - ------------------------------------------------------------------------------------------------------- Prism Money Market Fund Money Market Instruments Key Bank Prism Magic Fund Insurance Company Contracts Key Bank Victory Balanced Fund Stocks and Bonds of U.S. Victory Broker Dealer Companies and Government Services Victory Stock Index Fund Standard & Poor's 500 Index Victory Broker Dealer Services Victory Special Value Fund Corporate Stocks Victory Broker Dealer Services Victory International Growth Fund International Stocks Victory Broker Dealer Services Eaton Common Shares Fund Company Stock Eaton Corporation
5 9 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Notes to Financial Statements--Continued B. DESCRIPTION OF THE PLAN--CONTINUED 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 participant 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 up to the lesser 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 the investment fund to the loan fund. Loan terms range from 1-5 years except for loans used 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 based on the prime interest rates as determined daily by the Trustee. Principal and interest is paid ratably through monthly payroll deductions. All administrative and transaction costs, management fees and expenses of the Plan shall be paid by the trustee from the trust unless such costs, fees and expenses are paid by the Company. 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 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Notes to Financial Statements--Continued C. INVESTMENT ASSETS Key Trust Company of Ohio, N.A., trustee of the plan, holds the Plan's investment assets and executes investment 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 --------------------------------- Prism Money Market Fund $ 64,134 $ 41,705 Prism Magic Fund 33,876 38,970 Victory Balanced Fund 53,945 37,869 Victory Stock Index Fund 72,294 45,211 Victory Special Value Fund 21,818 26,892 Victory International Growth Fund 23,002 18,233 Eaton Corporation Common Shares 124,906 121,380
D. INCOME TAX STATUS The Plan has not received a determination letter from the Internal Revenue Service stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code"). However, the Plan Administrator believes that the Plan is qualified and, therefore, the related trust is exempt from taxation. 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. 7 11 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division Notes to Financial Statements--Continued 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 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. 8 12 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division EIN 34-0196300 Plan Number 159 Form 5500, Line 27(a)--Schedule of Assets Held for Investment Purposes December 31, 1998
Description of Current Identity of Issue Investment Cost Value --------------------------------------------------------------------------------------------------------------- * Key Bank: Prism Money Market Fund 5,355 units $ 59,603 $ 64,134 Prism Magic Fund 2,636 units 30,289 33,876 Victory Balanced Fund 3,672 shares 46,847 53,945 Victory Stock Index Fund 3,404 shares 61,211 72,294 Victory Special Value Fund 1,554 shares 22,464 21,818 Victory International Growth Fund 1,621 shares 21,281 23,002 * Eaton Corporation Common Shares 1,767 shares 122,126 124,906 * Participant Loans Receivable 8.75-9.50% variable maturities 19,642 -------------------------------- $ 363,821 $ 413,617 ================================
* Indicates a party-in-interest to the Plan. 9 13 Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division EIN 34-0196300 Plan Number 159 Form 5500, Line 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: Employee Benefits Money Market Fund $ 65,242 $ 65,242 $ 65,242 $ 67,337 67,337 67,337 Prism Money Market Fund 27,676 27,676 27,676 7,875 7,324 7,875 $ 551 Prism Magic Fund 8,203 8,203 8,203 15,358 13,986 15,358 1,372 Victory Stock Index Fund 34,765 34,765 34,765 14,745 12,376 14,745 2,369 Victory Special Value Fund 8,045 8,045 8,045 9,067 9,406 9,067 (339) * Eaton Common Shares 38,538 38,538 38,538 5,890 5,619 5,890 271
There were no category (i), (ii) or (iv) reportable transactions during the year ended December 31, 1998. * Indicates a 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. 333-13861) pertaining to the Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division of our report dated June 11, 1999, with respect to the financial statements and schedules of the Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex Division 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-----