THIS PROSPECTUS RELATES TO THE
REGISTRATION STATEMENT ON FORM S-3
(NO. 33-59459) OF EATON CORPORATION
AND IS FILED PURSUANT TO RULE 424(B)(3)
PROSPECTUS
EATON CORPORATION
2,072,400 Common Shares
This Prospectus relates to 2,072,400 Common Shares, $.50 par
value per share (the "Shares"), of Eaton Corporation, an Ohio
corporation ("Eaton" or the "Company"), which are owned by Lehman
Brothers Special Financing Inc. (the "Selling Shareholder"). See
"The Selling Shareholder." The Shares may be offered for sale
from time to time by the Selling Shareholder in open market
ordinary brokerage transactions on the New York Stock Exchange,
the Chicago Stock Exchange, the Pacific Stock Exchange or the
London Stock Exchange at market prices prevailing at the time of
sale, or in private transactions at negotiated prices. Whether
or not any such sales will be made, and the timing and amount of
any sale, is within the sole discretion of the Selling
Shareholder. The Company will not receive any of the proceeds
from the sale of the Shares. See "Plan of Distribution."
The Shares were acquired by the Selling Shareholder from the
Company pursuant to a series of private placements occurring
December 2, 1993 through January 17, 1994. The Shares are being
registered pursuant to the terms of a Stock Purchase Agreement
dated November 22, 1993 by and between the Company and the
Selling Shareholder (the "Stock Purchase Agreement"). Under the
Stock Purchase Agreement, the Selling Shareholder has the right,
under certain circumstances, to request that the Company file a
registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), to register the Shares.
Eaton Common Shares are listed on the New York Stock Exchange.
On May 15, 1995, the average of the high and low prices of Eaton
Common Shares on the New York Stock Exchange was $58.94.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 30, 1995
<PAGE>
No dealer, salesman, or any other person has been authorized
to give any information or to make any representations other than
those contained in this Prospectus in connection with the
offering contained herein, and, if given or made, such
information or representations must not be relied upon as having
been authorized by the Company or the Selling Shareholder. This
Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby to any
person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale hereunder
shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the date
hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy material
and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy material and other
information concerning the Company and the Registration Statement
(as defined herein) can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549-1004, and at the following Regional Offices of the
Commission: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Northeast Regional
Office, 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549-1004, at prescribed rates.
Such reports, proxy material and other information concerning the
Company and the Registration Statement can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois 60605 and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes part of a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto,
the "Registration Statement") filed by the Company with the
Commission under the Securities Act. As permitted by the rules
and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. Statements
contained in this Prospectus or in any document incorporated by
reference in this Prospectus are summaries that are not
necessarily complete and, in each instance, reference is made to
the copy of such document as filed. Each such statement is
qualified in its entirety by such reference. The Registration
Statement, including exhibits and schedules thereto, and
documents or information incorporated by reference may be
inspected without charge at the offices of the Commission, and
copies of such materials may be obtained therefrom at prescribed
rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus
the following documents:
1. The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994;
2. The Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995; and
3. All documents filed by the Company pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the
offering of the Shares.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for all purposes to the extent that a
statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by
reference herein, modifies or replaces such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person
receiving a copy of this Prospectus, upon that person's written
or oral request, a copy (without exhibits, unless those exhibits
are specifically incorporated by reference into the documents
that this Prospectus incorporates) of any documents incorporated
by reference in this Prospectus. Requests for copies should be
directed to Eaton Corporation, Shareholder Relations, Eaton
Center, 1111 Superior Avenue, Cleveland, Ohio 44114-2584
(telephone (216) 523-5000).
THE COMPANY
Eaton Corporation ("Eaton" or the "Company") is a leading
global manufacturer of highly engineered products which serve the
automotive, industrial, construction, commercial, aerospace and
marine markets. The Company offers high-quality products
worldwide and derives a significant majority of its net sales
from products that are number one or number two in the markets
that they serve. Principal products include truck transmissions
and axles, engine components, hydraulic products, electrical
power distribution and control equipment, ion implanters and a
wide variety of controls. Eaton's products are often essential
components of products ranging from heavy-duty trucks and home
appliances to the Space Shuttle. Eaton maintains and expands its
market positions by focusing on the development and production of
high-quality, higher value-added products and by investing in
superior product and process technologies. The Company currently
has approximately 150 manufacturing facilities in 18 countries.
On January 31, 1994, the Company completed the acquisition
of Westinghouse Electric Corporation's Distribution and Control
Business Unit ("DCBU") for an adjusted purchase price of $1.050
billion. DCBU is a leader in the U.S. electrical distribution
industry and in niche industrial control market segments. The
combination of DCBU with the Company's existing industrial
control and power distribution business will strengthen Eaton's
competitive position and provide the opportunity for significant
cost savings resulting from the complementary fit of the two
businesses. In 1993, DCBU had total sales of $1.1 billion. This
addition to the electrical and electronic controls segment of
Eaton's business increased that segment's share to more than
one-half of Eaton's consolidated net sales in 1994, thereby
expanding the end-market diversification of Eaton's sales and
lessening its dependence on the truck and automotive markets.
Vehicle Components
Eaton occupies a strong competitive position in the vehicle
components market and is considered a market leader in many of
its product lines. Eaton's vehicle component product lines
include truck components, passenger car components and
off-highway vehicle components. Major customers for Eaton's
vehicle components are original equipment manufacturers ("OEMs") of
trucks, passenger cars and off-highway vehicles.
Truck Components -- The Company manufactures over 100 models
of medium- and heavy-duty truck transmissions. The Company is
the leading manufacturer of transmissions for heavy-duty trucks.
The market for heavy-duty truck transmissions is affected
significantly by the overall level of economic activity. The
Company also manufactures axles, brakes and engine valves for
trucks, leaf springs for light trucks, sport utility vehicles and
vans, and other truck components.
Passenger Car Components -- The Company manufactures engine
valves, hydraulic valve lifters, viscous fan drives, fans and fan
shrouds, locking differentials, superchargers, tire valves and
other passenger car components.
Off-Highway Vehicle Components -- Eaton products are also
used on farm tractors, backhoes, pavers, excavators, grain
combines, drill rigs, garden tractors and riding mowers. These
products include low-speed, high-torque motors, light-, medium-
and heavy-duty hydrostatic transmissions, hydrostatic power
steering units, a variety of hydraulic pumps, motors, valves and
cylinders and a family of hydrostatic transaxles.
Electrical and Electronic Controls
Eaton is a market leader in the manufacture of electrical
and electronic controls, holding number one or number two
domestic market positions with the majority of its core products.
The Company's product lines include industrial and commercial
controls, automotive and appliance controls and specialty
controls. Eaton markets its electrical and electronic control
products to commercial, industrial, automotive, appliance,
aerospace and government customers.
Industrial and Commercial Controls -- Eaton offers a wide
range of products under the Cutler-Hammer, Westinghouse and
Challenger brand names to control the distribution of electric
power and to protect and govern electric motors. As a
consequence of the DCBU acquisition, Eaton now holds a leadership
position in the power distribution industry. Eaton's power
distribution products include circuit breakers, loadcenters,
safety switches, panelboards and switchboards. These products
serve residential, light commercial and industrial construction
markets. For industrial control markets, Eaton products include
contactors, overload relays, pushbuttons, sensors, variable speed
drives, electronic operator interface devices, industrial
workstations, count controls and logic products. Switches and
controls are used on portable power tools, communication
equipment, medical tools, computer equipment and construction and
agricultural machinery. Eaton also supplies switches, controls
and other products used on commercial and military aircraft and
ships.
These control products are sold through a network of over
1,500 independent distributors. The acquisition of DCBU has
broadened significantly Eaton's electrical and electronic control
product lines and distribution network.
Automotive and Appliance Controls -- Eaton is a supplier of
control products for two large markets -- vehicle manufacturers
and appliance makers. Eaton has a comprehensive line of switches
which are sold to major global automobile manufacturers. Other
vehicle products include speed controls and climate control
components. Appliance controls include electronic and
electro-mechanical control products, including timers, water
valves, and pressure switches. Timers control cycles on clothes
washers, dryers and dishwashers; water valves regulate flow into
clothes washers, dishwashers, refrigerator water dispensers and
icemakers; and pressure switches govern water levels in clothes
washers. Eaton also offers controls for ranges and other cooking
appliances.
Specialty Controls -- The major product of this business
unit is semiconductor manufacturing equipment, primarily ion
implanters. Eaton offers a complete line of ion implanters which
are used by major semiconductor manufacturers to make
microprocessors for a wide variety of products. Other products
included within this business unit are golf grips, engineered
fasteners and industrial clutches and brakes.
Defense Systems
Eaton manufactures defense electronics systems. Eaton's
defense product line includes strategic countermeasures, tactical
jamming systems, electronic intelligence systems and electronic
support measures.
The Company's principal executive office is located at Eaton
Center, 1111 Superior Avenue, Cleveland, Ohio 44114-2584;
telephone (216) 523-5000.
THE SELLING SHAREHOLDER
Within the past three years, affiliates of the Selling
Shareholder have served as underwriter in connection with the
public sale by the Company of its Common Shares and debt
securities.
Pursuant to the Stock Purchase Agreement, the Company agreed
to register the Shares under the Securities Act and, in
connection therewith, agreed to indemnify the Selling Shareholder
against certain liabilities, including liabilities under the
Securities Act.
As of March 31, 1995, the Shares represented approximately
2.67% of the outstanding Eaton Common Shares. Prior to the
issuance of the Shares pursuant to the Stock Purchase Agreement,
the Selling Shareholder did not hold any Eaton Common Shares.
USE OF PROCEEDS
The Selling Shareholder will offer the Shares as principal
for its own account. The Company will receive none of the
proceeds of any such sale.
DESCRIPTION OF EATON COMMON SHARES
The following is a summary of certain of the provisions
concerning the Eaton Common Shares contained in the Company's
Amended Articles of Incorporation (the "Articles") and its
Amended Regulations (the "Regulations"), as affected by debt
agreements with certain lenders. Reference is made to such
Articles and Regulations, which are exhibits to the Registration
Statement, for a full and complete statement of such provisions
and rights, and the following statements are qualified in their
entirety by such reference.
Authorized Number
The Articles authorize the issuance of up to 300,000,000
Eaton Common Shares. As of March 31, 1995, there were 77,832,419
Eaton Common Shares issued and outstanding. The outstanding
Eaton Common Shares are fully paid and non-assessable, and
shareholders are not subject to any liability for calls and
assessments. Eaton does not have any current plans to issue any
additional Eaton Common Shares other than in connection with
exercises of outstanding options to acquire Eaton Common Shares
which have been issued under benefit plans of the Company. The
Articles also authorize the issuance of up to 14,106,394 shares
of preferred stock ("Preferred Shares"). Eaton has been
authorized by its Board of Directors to purchase up to five
million Eaton Common Shares over a five year period beginning
December 21, 1994. No more than 1.5 million shares may be
purchased in any one year. Currently, there are no Preferred
Shares issued and outstanding.
Dividend Rights
Holders of Eaton Common Shares are entitled to receive such
dividends as may be declared by Eaton's Board of Directors,
subject to provisions of law.
Voting Rights
Each Eaton Common Share entitles the holder to one vote,
with the right of cumulative voting in the election of directors,
if certain procedural requirements are met.
Notwithstanding any provision of law requiring the vote of a
designated proportion of the voting power of Eaton for any
action, the Articles provide that such action may be taken by the
vote of the holders of shares entitling them to exercise a
majority of the voting power of Eaton, except in each case as is
otherwise provided in the Articles or Regulations. The Articles
and the Regulations provide for a voting proportion which is
different from that provided by statutory law in order for
shareholders to take action in certain circumstances, including
the following:
(1) Two-thirds vote required to fix or change the
number of directors.
(2) Two-thirds vote required for removal of directors.
(3) Fifty percent of the outstanding Eaton Common
Shares required to call a special meeting of
shareholders.
(4) Two-thirds vote required to amend the Regulations
without a meeting.
(5) Two-thirds vote required to amend the provisions
described in items (1) through (4) above and this
provision, unless such action is recommended by
two-thirds of the members of the Board of
Directors.
(6) Two-thirds vote required to approve certain
transactions, such as the sale, exchange, lease,
transfer or other disposition by Eaton of all, or
substantially all, of its assets or business, or
the consolidation of Eaton or its merger into
another corporation, or certain other mergers and
majority share acquisitions.
(7) Two-thirds vote required to amend the provisions
described in item (6) above, or this provision.
The requirement of a two-thirds vote in certain
circumstances may have the effect of delaying, deferring, or
preventing a change in control of Eaton.
Liquidation Rights
In the event of any voluntary or involuntary
liquidation, dissolution or winding up of Eaton, after the
payment or provision for payment of the debts and other
liabilities of Eaton and the preferential amounts to which
holders of Eaton's Preferred Shares are entitled (if any such
Preferred Shares are then outstanding), the holders of the Eaton
Common Shares are entitled to share pro rata in the assets of
Eaton remaining for distribution to shareholders.
Miscellaneous Rights, Listing and Transfer Agent
The Eaton Common Shares have no preemptive or conversion
rights and there are no redemption or sinking fund provisions
applicable thereto.
The Eaton Common Shares are listed on the New York,
Chicago, Pacific and London Stock Exchanges.
KeyCorp Shareholder Services, Inc., headquartered in
Cleveland, Ohio, is the transfer agent and registrar for the
Eaton Common Shares.
Classification of Board of Directors
The Board of Directors of Eaton is divided into three
approximately equal classes, having staggered terms of office of
three years each. The effect of a classified Board of Directors,
where cumulative voting is in effect, is to require the votes of
more shares to elect one or more members of the Board of
Directors than would be required if the Board of Directors were
not classified. Additionally, the effect of a classified Board
of Directors may be to make it more difficult to acquire control
of Eaton.
Certain Ohio Statutes
Various laws may affect the legal or practical ability
of shareholders to dispose of shares of the Company. Such laws
include the Ohio statutory provisions described below.
Chapter 1704 of the Ohio Revised Code prohibits an
interested shareholder (defined as a beneficial owner, directly
or indirectly, of ten percent (10%) or more of the voting power
of any issuing public Ohio corporation) or any affiliate or
associate of an interested shareholder (as defined in Section
1704.01 of the Ohio Revised Code) from engaging in certain
transactions with the corporation during the three-year period
after the interested shareholder's share acquisition date. The
prohibited transactions include mergers, consolidations, majority
share acquisitions, certain asset sales, loans, certain sales of
shares, dissolution, and certain reclassifications,
recapitalizations, or other transactions that would increase the
proportion of shares held by the interested shareholder. After
expiration of the three-year period, the corporation may
participate in such a transaction with an interested shareholder
only if, among other things, (i) the transaction receives the
approval of the holders of two-thirds of all the voting shares
and the approval of the holders of a majority of the
disinterested voting shares (shares not held by the interested
shareholder) or (ii) the transaction meets certain criteria
designed to ensure that the remaining shareholders receive fair
consideration for their shares. The prohibitions do not apply
if, before the interested shareholder becomes an interested
shareholder, the board of directors of the corporation approves
either the interested shareholder's acquisition of shares or the
otherwise prohibited transaction. The restrictions also do not
apply if a person inadvertently becomes an interested shareholder
or was an interested shareholder prior to the adoption of the
statute on April 11, 1990, unless, subject to certain exceptions,
the interested shareholder increases his, her or its
proportionate share interest on or after April 11, 1990.
Pursuant to Ohio Revised Code Section 1707.043, a public
corporation formed in Ohio may recover profits that a shareholder
makes from the sale of the corporation's securities within
eighteen (18) months after making a proposal to acquire control
or publicly disclosing the possibility of a proposal to acquire
control. The corporation may not, however, recover from a person
who proves in a court of competent jurisdiction either (i) that
his, her or its sole purpose in making the proposal was to
succeed in acquiring control of the corporation and there were
reasonable grounds to believe that such person would acquire
control of the corporation or (ii) such person's purpose was not
to increase any profit or decrease any loss in the stock and the
proposal did not have a material effect on the market price or
trading volume of the stock. Also, before the corporation may
obtain any recovery, the aggregate amount of the profit realized
by such person must exceed $250,000. Any shareholder may bring
an action on behalf of the corporation if a corporation fails or
refuses to bring an action to recover these profits within sixty
(60) days of a written request. The party bringing such an
action may recover his, her or its attorneys' fees if the court
having jurisdiction over such action orders recovery of any
profits.
The Company is also subject to Ohio's Control Share
Acquisition Act (Ohio Revised Code Section 1701.831). The
Control Share Acquisition Act provides that, with certain
exceptions, a person may acquire beneficial ownership of shares
in certain ranges (one-fifth or more but less than one-third,
one-third or more but less than a majority, or a majority or
more) of the voting power of the outstanding shares of an Ohio
corporation meeting certain criteria, which the Company meets,
only if such person has submitted an "acquiring person statement"
and the proposed acquisition has been approved by the vote of a
majority of the shares of the corporation represented at a
special meeting called for such purpose and by a majority of such
shares of the corporation excluding "interested shares," as
defined in Section 1701.01 of the Ohio Revised Code.
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling
Shareholder to offer for sale or to sell the Shares at such time
and at such prices as it, in its sole discretion, chooses. The
Company will not receive any proceeds from these sales.
The distribution, if any, of Shares by the Selling
Shareholder may be effected from time to time in one or more
transactions (which may include block transactions) on the open
market in ordinary brokerage transactions on the New York Stock
Exchange, the Chicago Stock Exchange, the Pacific Stock Exchange,
or the London Stock Exchange (on each of which the Eaton Common
Shares are listed), in privately negotiated transactions, or in a
combination of such methods of sale, at market prices prevailing
at the time of sale, at prices related to such prevailing market
prices or at prices otherwise negotiated. The Selling
Shareholder may effect such transactions by selling shares to or
through broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions
or commissions from the Selling Shareholder and/or the purchasers
of Shares for whom such broker-dealers may act as agent. The
Selling Shareholder and any broker-dealers that participate in
the distribution of the Shares, as well as any purchasers of such
Shares, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received
by them and any profit on the resale of Shares sold by them may
be deemed to be underwriting discounts and commissions.
One or more supplemental prospectuses will be filed
pursuant to Rule 424 under the Securities Act to describe any
material arrangement for the resale of the Shares, if and when
such arrangements are entered into by the Selling Shareholder and
any broker-dealers that participate in the distribution of the
Shares.
To the extent necessary to comply with certain state
securities laws, if applicable, the Selling Shareholder have
advised the Company that the Shares will be sold in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Shares may not be
offered for sale or sold unless the Shares have been registered
or qualified for sale in such states or an exemption from
registration or qualification is available and complied with.
On March 29, 1995, the Company filed a Registration
Statement with the Commission with respect to 1,599,988 Eaton
common shares held by former shareholders of Lectron Products,
Inc. which is intended to permit those holders to sell the shares
from time to time in public transactions. These shares were
acquired from the Company by those holders in private
transactions in November 1994 in connection with the Company's
acquisition of Lectron Products, Inc.
LEGAL MATTERS
The validity of the Shares will be passed upon for the
Company by G. L. Gherlein, Executive Vice President and General
Counsel of the Company. Mr. Gherlein is paid a salary by the
Company and participates in various employee benefit plans
offered to officers of the Company generally.
EXPERTS
The consolidated financial statements of the Company and
its subsidiaries appearing in the Company's Annual Report on Form
10-K for the year ended December 31, 1994, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting
and auditing.
