-----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, PwzORT0o3erp/PHbZzMm07sL5WudeuHeC/k+rWnR0xMQi36Byu05ZamjeZc52Ofr uNStsulvSJMtLLpxMwzF/A== 0000950152-99-007305.txt : 19990903 0000950152-99-007305.hdr.sgml : 19990903 ACCESSION NUMBER: 0000950152-99-007305 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981230 FILED AS OF DATE: 19990902 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: 99704909 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/AEROQUIP-VICKERS SAVINGS & PRFT 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 30, 1998 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: September 1, 1999 By: Eaton Corporation Pension Administration Committee By: /s/ S. J. Cook ------------------- (Signature) S. J. Cook Vice President-Human Resources Eaton Corporation 2 FINANCIAL STATEMENTS AEROQUIP-VICKERS SAVINGS AND PROFIT-SHARING PLAN YEARS ENDED DECEMBER 31, 1998 AND 1997 WITH REPORT OF INDEPENDENT AUDITORS 3 Aeroquip-Vickers Savings and Profit-Sharing Plan Financial Statements Years ended December 31, 1998 and 1997 CONTENTS Report of Independent Auditors................................................1 Audited Financial Statements Statements of Assets Available for Plan Benefits..............................2 Statements of Changes in Assets Available for Plan Benefits...................3 Notes to Financial Statements.................................................4 Supplemental Schedules Line 27a - Schedule of Assets Held for Investment Purposes...................14 Line 27d - Schedule of Reportable Transactions...............................15 4 [ERNST & YOUNG LLP LETTERHEAD] Report of Independent Auditors Administrative Committee Aeroquip-Vickers Savings and Profit-Sharing Plan We have audited the accompanying statements of assets available for plan benefits of the Aeroquip-Vickers Savings and Profit-Sharing Plan as of December 31, 1998 and 1997, and the related statement of changes in assets available for plan 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 assets available for plan benefits of the Plan at December 31, 1998 and 1997, and the changes in its assets available for plan 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 management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 financial statements taken as a whole. Ernst & Young LLP Cleveland, OH June 11, 1999 1 5
Aeroquip-Vickers Savings and Profit-Sharing Plan Statements of Assets Available for Plan Benefits DECEMBER 31 1998 1997 ------------------------------------ ASSETS (Note 1) Contributions receivable from employer $ 23,623,629 $ 27,508,579 Contributions receivable from employees -- 302,958 Investments: Fixed Income Fund 245,763,003 231,860,798 Vanguard Mutual Funds 445,404,620 388,303,242 Aeroquip-Vickers Stock Fund (Note 8) 47,267,654 46,772,500 Cincinnati Milacron Stock Fund 858,168 1,378,428 Loans receivable from plan participants 19,541,011 17,856,938 ------------------------------ 758,834,456 686,171,906 ------------------------------ Assets available for plan benefits $782,458,085 $713,983,443 ==============================
See accompanying notes. 2 6
Aeroquip-Vickers Savings and Profit-Sharing Plan Statements of Changes in Assets Available for Plan Benefits Year ended December 31, 1998 Additions: Contributions by employees $ 24,565,166 Contributions by employer 30,755,413 Net investment income: Interest 17,875,573 Dividends 27,977,000 ------------ 45,852,573 Realized and unrealized gains on investments 20,507,683 ------------ 121,680,835 Deductions: Distributions to participants 53,084,733 Investment management fees 99,609 Asset transfers out due to sales of facilities 21,853 ------------ 53,206,195 ------------ Net additions 68,474,640 Assets available for plan benefits at beginning of year 713,983,445 ------------ Assets available for plan benefits at end of year $782,458,085 ============
See accompanying notes. 3 7 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements December 31, 1998 1. 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. 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) up to an annual limit imposed by the Internal Revenue Service ($10,000 in 1998). 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. These contributions are paid to the Plan by the Company during the first quarter of the following year. 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. 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. 4 8 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) On December 7, 1996, the Company acquired the Electrical Engineering & Manufacturing Company (EEMCO), a division of DATRON, Inc. The EEMCO employees' funds were transferred into the Plan in February 1997 and such participants became eligible for participation in the Plan as of the date of transfer. On July 25, 1997, the Company sold its interest in two manufacturing facilities to its 51%-owned subsidiary, Aeroquip Inoac Company. The two manufacturing facilities employees' retirement funds were transferred out of this plan in September 1997 and such participants were terminated from the plan as of the date of transfer. Each participant individually directs his or her contributions and Aeroquip-Vickers' contributions, except for 25 percent of Aeroquip-Vickers profit-sharing contribution, into one or more of the following investment funds (in multiples of 1 percent). (1) The Fixed Income Fund is invested in fully benefit-responsive insurance company investment contracts, including synthetic investment contracts, bank investment contracts and their equivalents. These contracts pay a negotiated fixed or variable interest rate for a period of one to five years. At December 31, 1998 and 1997, the investment contracts had a weighted average crediting interest rate of 7.80% and 6.92%, respectively. The average yield on these contracts was 7.27% and 6.68% for the years ended December 31, 1998 and 1997, respectively. 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. (2) Vanguard Mutual Funds are managed by The Vanguard Fiduciary Trust Company. There are nine individual mutual funds in which participants may invest: (a) Vanguard Treasury Money Market Portfolio Fund (Money Market Fund): Money in the Money Market Fund is 100 percent invested in securities backed by the full faith and credit of the U. S. Government. It seeks the maximum current income that is consistent with the preservation of capital and liquidity. Average maturities for the securities held by the Money Market Fund are normally maintained in the range of 30 - 60 days and no longer than one year. 5 9 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) (b) Vanguard LifeStrategy Portfolios - Conservative Growth Portfolio (LifeStrategy Conservative Growth Fund): Money in the Conservative Growth Portfolio is invested in a portfolio of Vanguard mutual funds that emphasizes either equity, fixed income, or money market securities and seeks to provide a combination of income and low-to-moderate growth by investing in a combination of stocks, bonds, and short-term reserves. (c) Vanguard Fixed Income Securities - Long-term Corporate Portfolio Fund (Fixed Income Securities Fund): Money in the Fixed income Securities Fund is invested in a diversified portfolio of long-term investment grade bonds which seeks to provide a high and sustainable level of current income consistent with the maintenance of principal and liquidity. (d) Vanguard STAR Portfolio Fund (STAR Fund): Money in the STAR Fund is invested in a portfolio of Vanguard mutual funds that emphasizes either equity, fixed income or money market securities. It is designed as a balanced "fund of funds" for long-term investors. (e) Vanguard/Windsor II Fund (Windsor II Fund): Money in the Windsor II Fund is invested in stocks which, in the opinion of the fund's investment manager, are undervalued in the marketplace. The stocks held in the Windsor II Fund tend to offer above-average dividend yields and will normally have below-average price-to earnings ratios and below-average price-to-book value ratios relative to the stock market in general. (f) Vanguard Index Trust - 500 Portfolio Fund (Index Fund): Money in the Index Fund is invested in stocks of the companies which make up the Standard & Poor's 500 Composite Stock Price Index. The objective of the Index Fund is to match the performance of the Standard & Poor's 500 Index. (g) Vanguard LifeStrategy Portfolios - Growth Portfolio (LifeStrategy Growth Fund): Money in the Growth Portfolio is invested in a portfolio of Vanguard mutual funds that emphasizes either equity, fixed income, or money market securities and seeks to provide a combination of long-term growth and income by investing in a combination of stocks, bonds, and short-term reserves. 6 10 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) (h) Vanguard/Morgan Growth Fund (Morgan Growth Fund): Money in the Morgan Growth Fund is invested primarily in stocks of "established growth" companies. The companies will normally be medium and larger size companies with above-average growth in sales and earnings over extended periods. (i) Vanguard International Growth Portfolio Fund (International Growth Fund): Money in the International Growth Fund is invested in non-U. S. stocks that have been selected for their growth potential. The International Growth Fund tends to be widely diversified both geographically and in terms of size of companies. (3) Aeroquip-Vickers Stock Fund (see Note 8) is invested in Aeroquip-Vickers common stock. Cash dividends paid on shares held by the Trust are used to purchase additional shares for participant accounts. Twenty-five percent of each participant's profit-sharing allocation is automatically invested in the Aeroquip-Vickers Stock Fund until distribution to the participant or until the participant reaches age 55. Upon reaching age 55, the participant has the option to redirect the investment from the Aeroquip-Vickers Stock Fund into any of the other available funds. Participants may also elect to have additional amounts over Aeroquip-Vickers' 25 percent profit-sharing contribution invested in the Aeroquip-Vickers Stock Fund. Aeroquip-Vickers common stock is acquired in open market purchases at fair market value. Participant directed contributions to the Aeroquip-Vickers Stock Fund amounted to $1,939,923 and $1,661,888 for the years ended December 31, 1998 and 1997, respectively, with accumulated participant contributions and earnings of $27,686,220 and $19,120,338 at December 31, 1998 and 1997, respectively. (4) 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. 7 11 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) The Plan invests in shares of mutual funds managed by an affiliate of Vanguard Fiduciary Trust Company ("VFTC"). The VFTC acts as trustee for only those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules. 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 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. Aeroquip-Vickers, Inc. reserves the right to amend, modify or terminate the Plan at any time. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accounting records of the Plan are maintained on the accrual basis. 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 difference between fair value and the cost of investments is reflected in the statement of changes in assets available for plan benefits as unrealized gains (losses) on investments. Guaranteed investment contracts are stated at contract value. The contract value of these fully benefit-responsive contracts approximates the fair value. 8 12 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Loans receivable are stated at cost which approximates fair value. Realized gains or losses on the sales of investments represent the differences between the proceeds received upon the sale and the cost of investments sold, determined on an average cost basis. 3. DISTRIBUTIONS 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. 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. 9 13 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. INCOME TAX STATUS The Plan has received a favorable determination letter from the Internal Revenue Service stating that the Plan is qualified under section 401(a) of the Internal Revenue Code of 1986 (the "Code") and that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 5. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates. 10 14
Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 6. CHANGES IN ASSETS BY INVESTMENT OPTION Aeroquip- Cincinnati Fixed Vanguard Vickers Milacron Income Fund Mutual Funds Stock Fund Stock Fund ---------------------------------------------------------------- Assets available for plan benefits at December 31, 1997 $ 231,860,799 $ 388,303,288 $ 46,772,500 $ 1,378,433 Reclassification of prior year contributions receivable 5,357,334 15,006,194 7,574,845 ---------------------------------------------------------------- 237,218,133 403,309,482 54,347,345 1,378,433 Additions: Contributions: Employee 5,066,601 18,448,142 1,050,423 Employer 5,759,305 18,184,249 6,811,859 ---------------------------------------------------------------- 10,825,906 36,632,391 7,862,282 Net investment income: Interest 16,258,835 Dividends 26,873,417 1,082,083 21,500 Realized and unrealized gains on investments 42,664,510 (21,903,633) (253,194) ---------------------------------------------------------------- 27,084,741 106,170,318 (12,959,268) (231,694) Deductions: Distributions to participants 19,877,622 28,541,336 3,265,784 5,958 Investment management fees 22,906 68,337 8,252 114 Asset transfers out due to sales of facilities 2,934 9,436 7,875 ---------------------------------------------------------------- 19,903,462 28,619,109 3,281,911 6,072 ---------------------------------------------------------------- Net additions prior to transfers 7,181,279 77,551,209 (16,241,179) (237,766) Net transfers among investment funds 5,460,273 (22,596,511) 15,828,877 (282,500) Assets available for plan benefits at December 31, 1998 $ 249,859,685 $ 458,264,180 $ 53,935,043 $ 858,167 ================================================================ Investment amount included in assets available for plan benefits: December 31, 1998 $ 245,763,003 $ 445,404,620 $ 47,267,654 $ 858,168 ================================================================ December 31,1997 $ 231,860,798 $ 388,303,242 $ 46,772,500 $ 1,378,428 ================================================================ Participant Contributions Loans Receivable Total ---------------------------------------------- Assets available for plan benefits at December 31, 1997 $ 17,730,050 $ 27,938,375 $ 713,983,445 Reclassification of prior year contributions receivable 2 (27,938,375) -- ---------------------------------------------- 17,730,052 -- 713,983,445 Additions: Contributions: Employee 24,565,166 Employer 30,755,413 ---------------------------------------------- 55,320,579 Net investment income: Interest 1,616,738 17,875,573 Dividends 27,977,000 Realized and unrealized gains on investments 20,507,683 ---------------------------------------------- 1,616,738 121,680,835 Deductions: Distributions to participants 1,394,033 53,084,733 Investment management fees 99,609 Asset transfers out due to sales of facilities 1,608 21,853 ---------------------------------------------- 1,395,641 53,206,195 ---------------------------------------------- Net additions prior to transfers 221,097 68,474,640 Net transfers among investment funds 1,589,861 -- ---------------------------------------------- Assets available for plan benefits at December 31, 1998 $ 19,541,010 $ -- $ 782,458,085 ============================================== Investment amount included in assets available for plan benefits: December 31, 1998 $ 19,541,011 $ -- $ 758,834,456 ============================================== December 31,1997 $ 17,856,938 $ -- $ 686,171,906 ==============================================
11 15 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 7. VANGUARD MUTUAL FUNDS A summary of the activity within the separate Vanguard Mutual Fund options for the year ended December 31, 1998 is as follows:
LifeStrategy Fixed Money Conservative Income Market Growth Securities Star Fund Fund Fund Fund ---------------------------------------------------------------- Assets available for plan benefits at December 31, 1997 $ 16,064,455 $ 3,408,126 $ 5,421,025 $ 102,515,386 Reclassification of prior year contributions receivable 3,322,140 117,189 221,528 2,941,051 ---------------------------------------------------------------- 19,386,595 3,525,315 5,642,553 105,456,437 Additions: Contributions: Employee 1,460,821 331,103 344,327 3,297,520 Employer 3,574,173 205,556 281,218 3,248,296 --------------------------------------------------------------- 5,034,994 536,659 625,545 6,545,816 Dividends 943,057 327,484 672,182 8,506,689 Realized and unrealized gains on investments 423,633 9,289 3,371,691 --------------------------------------------------------------- 5,978,051 1,287,776 1,307,016 18,424,196 Deductions: Distributions to participants 2,287,921 315,876 1,051,049 6,129,366 Investment management fees 13,688 853 594 21,968 Asset transfers out due to sales of facilities 4,229 --------------------------------------------------------------- 2,301,609 316,729 1,051,643 6,155,563 --------------------------------------------------------------- Net additions prior to transfers 3,676,442 971,047 255,373 12,268,633 Net transfers among investment funds 1,290,616 2,757,139 3,670,678 (11,959,246) --------------------------------------------------------------- Assets available for plan benefits at December 31, 1998 $ 24,353,653 $ 7,253,501 $ 9,568,604 $ 105,765,824 =============================================================== Investment amount included in assets available for plan benefits: December 31, 1998 $ 21,340,616 $ 7,105,342 $ 9,318,313 $ 103,574,121 =============================================================== December 31,1997 $ 16,064,455 $ 3,408,126 $ 5,421,025 $ 102,515,386 =============================================================== LifeStrategy Morgan Windsor II Index 500 Growth Growth Fund Fund Fund Fund ---------------------------------------------------------------- Assets available for plan benefits at December 31, 1997 $ 88,863,479 $ 101,121,055 $ 3,079,518 $ 43,025,550 Reclassification of prior year contributions receivable 2,700,866 3,145,753 197,786 1,551,034 ---------------------------------------------------------------- 91,564,345 104,266,808 3,277,304 44,576,584 Additions: Contributions: Employee 4,035,321 4,781,371 464,427 2,250,202 Employer 3,411,997 4,267,624 373,113 1,899,307 ---------------------------------------------------------------- 7,447,318 9,048,995 837,540 4,149,509 Dividends 9,968,435 1,982,408 186,410 3,797,256 Realized and unrealized gains on investments 3,925,642 26,140,605 636,306 4,871,560 ---------------------------------------------------------------- 21,341,395 37,172,008 1,660,256 12,818,325 Deductions: Distributions to participants 5,878,638 8,131,710 289,273 3,117,067 Investment management fees 15,293 8,754 1,055 3,909 Asset transfers out due to sales of facilities 5,207 ---------------------------------------------------------------- 5,893,931 8,145,671 290,328 3,120,976 ---------------------------------------------------------------- Net additions prior to transfers 15,447,464 29,026,337 1,369,928 9,697,349 Net transfers among investment funds (6,524,596) (3,256,090) 1,045,059 (4,493,674) ---------------------------------------------------------------- Assets available for plan benefits at December 31, 1998 $ 100,487,213 $ 130,037,044 $ 5,692,291 $ 49,780,259 ================================================================ Investment amount included in assets available for plan benefits: December 31, 1998 $ 98,226,344 $ 127,189,820 $ 5,418,342 $ 48,514,594 ================================================================ December 31,1997 $ 88,863,479 $ 101,121,009 $ 3,079,518 $ 43,025,550 ================================================================ Total International Vanguard Growth Mutual Fund Funds ------------------------------- Assets available for plan benefits at December 31, 1997 $ 24,804,694 $ 388,303,288 Reclassification of prior year contributions receivable 808,847 15,006,194 ------------------------------ 25,613,541 403,309,482 Additions: Contributions: Employee 1,483,050 18,448,142 Employer 922,965 18,184,249 ------------------------------ 2,406,015 36,632,391 Dividends 489,496 26,873,417 Realized and unrealized gains on investments 3,285,784 42,664,510 ------------------------------ 6,181,295 106,170,318 Deductions: Distributions to participants 1,340,436 28,541,336 Investment management fees 2,223 68,337 Asset transfers out due to sales of facilities 9,436 ------------------------------ 1,342,659 28,619,109 ------------------------------ Net additions prior to transfers 4,838,636 77,551,209 Net transfers among investment funds (5,126,397) (22,596,511) ------------------------------ Assets available for plan benefits at December 31, 1998 $ 25,325,780 $ 458,264,180 ============================== Investment amount included in assets available for plan benefits: December 31, 1998 $ 24,717,128 $ 445,404,620 ============================== December 31,1997 $ 24,804,694 $ 388,303,242
12 16 Aeroquip-Vickers Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 8. SUBSEQUENT EVENT On February 1, 1999, Eaton Corporation and Aeroquip-Vickers, Inc. announced that the companies had entered into an "Agreement and Plan of Merger" whereby Eaton Corporation would acquire all of the outstanding shares of Aeroquip-Vickers, Inc. for $58 per share in cash. The merger was finalized in April 1999. All participants with 401(k) 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. 9. 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 June 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 formal 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 early 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 a material 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. 13 17 Supplemental Schedules 18
Aeroquip-Vickers Savings and Profit-Sharing Plan Employer Identification No. 34-4288310 Plan No. 015 Line 27a - Schedule of Assets Held for Investment Purpose December 31, 1998 CURRENT IDENTITY OF ISSUE INVESTMENT TYPE COST VALUE - -------------------------------------------------------------------------------------------------------------------------------- *Vanguard 500 Index Fund Registered Investment Company $ 76,040,010.35 $127,189,820.41 *Vanguard International Growth Fund Registered Investment Company 20,482,770.00 24,717,129.05 *Vanguard LifeStrategy Conservative Growth Fund Registered Investment Company 6,633,386.69 7,105,341.61 *Vanguard LifeStrategy Growth Fund Registered Investment Company 4,734,730.78 5,418,341.80 *Vanguard LT Corporate Fund Registered Investment Company 9,115,714.61 9,318,313.42 *Vanguard Morgan Growth Fund Registered Investment Company 39,032,886.20 48,514,593.51 *Vanguard STAR Fund Registered Investment Company 88,040,535.65 103,574,121.22 *Vanguard Treasury Money Market Registered Investment Company 21,340,615.50 21,340,615.50 *Vanguard Windsor II Fund Registered Investment Company 80,067,743.95 98,226,343.68 *Aeroquip-Vickers Stock Fund Company Stock Fund 56,309,848.99 47,267,654.44 *Cincinnati Milacron Stock Company Stock Fund 893,555.89 858,168.42 *Participant loans 6% - 10% - 19,541,010.69 *Aeroquip-Vickers Fixed Income Fund Unallocated Insurance Contract 245,763,002.61 245,763,002.61 -------------------- Total assets held for investment purposes $758,834,456.36 ==================== * - Party-in-interest
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Aeroquip-Vickers Savings and Profit-Sharing Plan Employer Identification No. 34-4288310 Plan No. 015 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998 HISTORICAL IDENTITY OF PARTY DESCRIPTION OF ASSET (INCLUDE INTEREST PURCHASE SELLING COST INVOLVED RATE AND MATURITY IN THE CASE OF A LOAN) PRICE PRICE OF ASSET - ------------------------------------------------------------------------------------------------------------------------------------ The Vanguard Group Vanguard 500 Index Fund $43,220,552.44 The Vanguard Group Vanguard 500 Index Fund $43,363,493.59 $34,658,923.35 The Vanguard Group Vanguard STAR Fund 24,435,768.22 The Vanguard Group Vanguard STAR Fund 26,748,731.01 23,152,898.76 The Vanguard Group Vanguard Treasury Money Market 20,722,269.68 The Vanguard Group Vanguard Treasury Money Market 15,447,613.05 15,447,613.05 The Vanguard Group Vanguard Windsor II Fund 37,763,908.13 The Vanguard Group Vanguard Windsor II Fund 32,340,093.95 27,174,824.33 The Vanguard Group Aeroquip-Vickers Fixed Income Fund 94,966,381.30 The Vanguard Group Aeroquip-Vickers Fixed Income Fund 81,064,172.97 81,064,172.97 N/A Aeroquip-Vickers Stock Fund 48,713,526.20 N/A Aeroquip-Vickers Stock Fund 26,314,738.83 23,906,604.10 CURRENT VALUE OF ASSET ON IDENTITY OF PARTY DESCRIPTION OF ASSET (INCLUDE INTEREST TRANSACTION HISTORICAL INVOLVED RATE AND MATURITY IN THE CASE OF A LOAN) DATE GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------- The Vanguard Group Vanguard 500 Index Fund $43,220,552.44 The Vanguard Group Vanguard 500 Index Fund 43,363,493.59 $8,704,570.24 The Vanguard Group Vanguard STAR Fund 24,435,768.22 The Vanguard Group Vanguard STAR Fund 26,748,731.01 3,595,832.25 The Vanguard Group Vanguard Treasury Money Market 20,722,269.68 The Vanguard Group Vanguard Treasury Money Market 15,447,613.05 - The Vanguard Group Vanguard Windsor II Fund 37,763,908.13 The Vanguard Group Vanguard Windsor II Fund 32,340,093.95 5,165,269.62 The Vanguard Group Aeroquip-Vickers Fixed Income Fund 94,966,381.30 The Vanguard Group Aeroquip-Vickers Fixed Income Fund 81,064,172.97 - N/A Aeroquip-Vickers Stock Fund 48,713,526.20 N/A Aeroquip-Vickers Stock Fund 26,314,738.83 2,408,134.73
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