<PAGE> 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 WINAMAC HOURLY INVESTMENT PLAN AND TRUST
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 WINAMAC HOURLY
INVESTMENT PLAN AND TRUST
<PAGE> 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
<PAGE> 3
Audited Financial Statements and
Supplemental Schedules
EATON WINAMAC HOURLY INVESTMENT
PLAN AND TRUST
PLAN NUMBER: 160
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
<PAGE> 4
Report of Independent Auditors
Corporate Compensation and Organization
Committee of Eaton Corporation
Eaton Winamac Hourly Investment Plan and Trust
We have audited the accompanying statements of net assets available for benefits
of the Eaton Winamac Hourly Investment Plan and Trust 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 statement 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 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
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Eaton Winamac Hourly Investment Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
Victory Victory Victory Eaton
Prism Victory Stock Special International Common
Magic Balanced Index Value Growth Shares
Fund Fund Fund Fund Fund Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Eaton Corporation Common Shares $ 118,825
Mutual funds $ 61,505 $ 108,190 $ 49,270 $ 33,881
Participant loans receivable
Common/collective trust $ 208,047
EB Money Market fund 160
----------------------------------------------------------------------------------------
Total investments 208,047 61,505 108,190 49,270 33,881 118,985
Receivables:
Employee contributions 2,646 798 1,594 991 557 1,623
Interest 7
----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 210,693 $ 62,303 $ 109,784 $ 50,261 $ 34,438 $ 120,615
========================================================================================
<CAPTION>
Loan
Fund Total
--------------------------------
<S> <C> <C>
ASSETS
Investments:
Eaton Corporation Common Shares $ 118,825
Mutual funds 252,846
Participant loans receivable $ 9,894 9,894
Common/collective trust 208,047
EB Money Market fund 160
--------------------------------
Total investments 9,894 589,772
Receivables:
Employee contributions 8,209
Interest 7
--------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,894 $ 597,988
================================
</TABLE>
2
See notes to financial statements
<PAGE> 6
Eaton Winamac Hourly Investment Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Victory Victory Victory Eaton
Prism Victory Stock Special International Common
Magic Balanced Index Value Growth Shares
Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Eaton Corporation Common Shares $ 110,134
Mutual funds $ 36,327 $ 72,099 $ 48,894 $ 23,926
Participant loans receivable
Common/collective trust $ 142,678
EB Money Market fund 761
-----------------------------------------------------------------------------------------
Total investments 142,678 36,327 72,099 48,894 23,926 110,895
Receivables:
Employee contributions 1,850 373 793 576 278 1,191
Interest 10
-----------------------------------------------------------------------------------------
Total assets 144,528 36,700 72,892 49,470 24,204 112,096
LIABILITIES
Accrued purchase of investments 1,150 227 487 357 165
-----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 143,378 $ 36,473 $ 72,405 $ 49,113 $ 24,039 $ 112,096
=========================================================================================
<CAPTION>
Loan
Fund Total
------------------------------
<S> <C> <C>
ASSETS
Investments:
Eaton Corporation Common Shares $ 110,134
Mutual funds 181,246
Participant loans receivable $ 5,490 5,490
Common/collective trust 142,678
EB Money Market fund 761
------------------------------
Total investments 5,490 440,309
Receivables:
Employee contributions 5,061
Interest 10
------------------------------
Total assets 5,490 445,380
LIABILITIES
Accrued purchase of investments 2,386
------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,490 $ 442,994
==============================
</TABLE>
See notes to financial statements
3
<PAGE> 7
Eaton Winamac Hourly Investment Plan and Trust
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Victory Victory Victory
Prism Victory Stock Special International
Magic Balanced Index Value Growth
Fund Fund Fund Fund Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Employee contributions $ 50,359 $ 14,013 $ 27,419 $ 20,230 $ 9,760
Interest 2,256
Dividends 5,010 13,573 2,970 1,531
----------------------------------------------------------------------------
Total additions 52,615 19,023 40,992 23,200 11,291
DEDUCTIONS
Distributions to participants 9,533 608 1,063 2,442 1,613
Fees and expenses
----------------------------------------------------------------------------
Total deductions 9,533 608 1,063 2,442 1,613
Net realized and unrealized appreciation
(depreciation) in fair value of investments 9,869 3,509 11,370 (8,409) 3,482
Net interfund transfers 14,364 3,906 (13,920) (11,201) (2,761)
----------------------------------------------------------------------------
Net increase 67,315 25,830 37,379 1,148 10,399
Net assets available for benefits at
beginning of year 143,378 36,473 72,405 49,113 24,039
============================================================================
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 210,693 $ 62,303 $ 109,784 $ 50,261 $ 34,438
============================================================================
<CAPTION>
Eaton
Common
Shares Loan
Fund Fund Total
-----------------------------------------------
<S> <C> <C> <C>
ADDITIONS
Employee contributions $ 32,861 $ 154,642
Interest 1,597 $ 547 4,400
Dividends 2,565 25,649
-----------------------------------------------
Total additions 37,023 547 184,691
DEDUCTIONS
Distributions to participants 5,762 1,032 22,053
Fees and expenses 303 303
-----------------------------------------------
Total deductions 6,065 1,032 22,356
Net realized and unrealized appreciation
(depreciation) in fair value of investments (27,162) (7,341)
Net interfund transfers 4,723 4,889 0
-----------------------------------------------
Net increase 8,519 4,404 154,994
Net assets available for benefits at
beginning of year 112,096 5,490 442,994
===============================================
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 120,615 $ 9,894 $ 597,988
===============================================
</TABLE>
See notes to financial statements.
4
<PAGE> 8
Eaton Winamac Hourly Investment Plan and Trust
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 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 the
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 the "Plan
Sponsor") established a 401(k) profit sharing plan and trust to be known as the
Eaton Winamac Hourly Investment Plan and Trust (the "Plan").
The Plan provides that all union employees who are members of UAW Local 1609 of
the Winamac Plant will be eligible for membership in the Plan on the date at
which the employee has completed two months 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 six investment funds offered by the Plan:
<TABLE>
<CAPTION>
Fund Description Sponsor
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prism Magic Fund Insurance Company Contracts Key Bank
Victory Balanced Fund Stocks and Bonds of U.S. Victory Broker Dealer Services
Companies and Government
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
</TABLE>
5
<PAGE> 9
Eaton Winamac Hourly Investment Plan and Trust
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 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 plans actual earnings
thereon.
Participants may borrow from their fund accounts up to an amount equal to the
lesser of $50,000 or 50% of their account balance. Loan transactions are treated
as a transfer from the investment fund to the loan fund. Loan terms vary and are
determined on an individual basis by the Plan administrator. The loans are
secured by the balance in the participant's account and bear interest at a rate
as determined daily by the Trustee for Plan loans. Principal and interest is
paid ratably through payroll deductions.
On termination of service, a participant may receive a lump-sum amount equal to
the value (not to exceed $3,500) of his or her account. Upon death, disability
or retirement, the participant may elect to receive benefit payments in the form
of annual installments to be distributed over his or her life expectancy or the
life expectancy of their designated beneficiary.
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, subject to the
provisions of ERISA. 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.
6
<PAGE> 10
Eaton Winamac Hourly Investment Plan and Trust
Notes to Financial Statements--Continued
C. INVESTMENTS--CONTINUED
The fair value of individual investments that represent 5% or more of the Plan's
net assets available for benefits are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
----------------------------------
<S> <C> <C>
Prism Magic Fund $ 208,047 $ 142,678
Victory Balanced Fund 61,505 36,327
Victory Stock Index Fund 108,190 72,099
Victory Special Value Fund 49,270 48,894
Victory International Growth Fund 33,881 23,926
Eaton Corporation Common Shares 118,825 110,134
</TABLE>
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. Such transactions are
exempt from being prohibited transactions.
7
<PAGE> 11
Eaton Winamac Hourly Investment Plan and Trust
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 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
<PAGE> 12
Eaton Winamac Hourly Investment Plan and Trust
EIN: 34-0196300 Plan No.: 160
Form 5500, Line 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* KeyBank:
Prism Magic Fund 16,185 units $ 188,351 $ 208,047
Victory Balanced Fund 4,187 shares 56,588 61,505
Victory Stock Index Fund 5,094 shares 91,812 108,190
Victory Special Value Fund 3,509 shares 51,659 49,270
Victory International Growth Fund 2,388 shares 31,103 33,881
Employee Benefits Money Market Fund 160 units 160 160
* Eaton Corporation Common Shares 1,681 shares 114,456 118,825
* Participant Loans Receivable 8.75%-9.5%; variable
maturities 9,894
--------------------------------
$ 534,129 $ 589,772
================================
</TABLE>
* Indicates a party-in-interest to the Plan.
9
<PAGE> 13
Eaton Winamac Hourly Investment Plan and Trust
EIN: 34-0196300 Plan No.: 160
Form 5500, Line 27(d)--Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Purchase Selling Cost of Current Net
Description of Asset Price Price Asset Value Gain (Loss)
- --------------------------------------------------------------------------------------------------------------
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
<S> <C> <C> <C> <C> <C>
* Key Bank:
Employee Benefits Money $ 39,770 $ 39,770 $ 39,770
Market Fund $ 40,371 40,371 40,371
Prism Magic Fund 67,717 67,717 67,717
12,217 11,179 12,217 $ 1,038
Victory Balanced Fund 30,492 30,492 30,492
8,823 7,781 8,823 1,042
Victory Stock Index Fund 46,825 46,825 46,825
22,104 19,318 22,104 2,786
Victory Special Value Fund 24,683 24,683 24,683
15,898 16,620 15,898 (722)
* Eaton Common Shares 36,438 36,438 36,438
585 616 585 (31)
</TABLE>
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
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-13855) pertaining to the Eaton Winamac Hourly Investment Plan and
Trust of our report dated June 11, 1999, with respect to the financial
statements and schedules of the Eaton Winamac Hourly Investment Plan and Trust
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
