United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 2000
--------------
Commission file number 1-1396
------
Eaton Corporation
- -------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0196300
- -------------------------------------------------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
Eaton Center, Cleveland, Ohio 44114-2584
- -------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 523-5000
- -------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months
and (2) has been subject to such filing requirements for the past
ninety days. Yes X
---
There were 72.7 million Common Shares outstanding as of March 31,
2000.
<PAGE>
Page 2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Eaton Corporation
<TABLE>
Condensed Consolidated Balance Sheets
<CAPTION>
March 31, December 31,
(Millions) 2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash & short-term investments $ 101 $ 165
Accounts receivable 1,406 1,267
Inventories 975 965
Deferred income taxes & other
current assets 438 385
------ ------
2,920 2,782
Property, plant & equipment 2,320 2,369
Goodwill 2,010 1,905
Other intangible assets 620 625
Deferred income taxes & other assets 732 756
------ ------
$8,602 $8,437
====== ======
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt & current portion of
long-term debt $ 927 $ 970
Accounts payable & other current
liabilities 1,697 1,679
------ ------
2,624 2,649
Long-term debt 2,104 1,915
Postretirement benefits other than pensions 671 667
Deferred income taxes & other liabilities 540 582
Shareholders' equity 2,663 2,624
------ ------
$8,602 $8,437
====== ======
See accompanying notes.
</TABLE>
<PAGE>
Page 3
Eaton Corporation
<TABLE>
Statements of Consolidated Income
<CAPTION>
Three Months Ended
March 31
------------------
(Millions except for per share data) 2000 1999
---- ----
<S> <C> <C>
Net sales $2,325 $1,661
Costs & expenses
Cost of products sold 1,663 1,172
Selling & administrative 362 275
Research & development 84 71
------ ------
2,109 1,518
------ ------
Income from operations 216 143
Other income (expense)
Interest expense - net (44) (21)
Other - net 29 1
------ ------
(15) (20)
------ ------
Income before income taxes 201 123
Income taxes 70 39
------ ------
Net income $ 131 $ 84
====== ======
Net income per Common Share
Assuming dilution $ 1.77 $ 1.17
Basic 1.80 1.18
Average number of Common Shares outstanding
Assuming dilution 73.8 72.2
Basic 72.9 71.2
Cash dividends paid per Common Share $ .44 $ .44
See accompanying notes.
</TABLE>
<PAGE>
Page 4
Eaton Corporation
<TABLE>
Condensed Statements of Consolidated Cash Flows
<CAPTION>
Three Months Ended
March 31
------------------
(Millions) 2000 1999
---- ----
<S> <C> <C>
Net cash (used in) provided by operating activities
Net income $ 131 $ 84
Adjustments to reconcile to net cash (used in)
provided by operating activities
Depreciation 87 66
Amortization 30 20
Changes in operating assets & liabilities,
excluding acquisitions and sales of
businesses (292) (194)
Other - net (14) 17
----- -----
(58) (7)
Net cash (used in) provided by investing activities
Acquisitions of businesses, less cash acquired (27) (11)
Sales of corporate assets 48
Expenditures for property, plant & equipment (65) (77)
Other - net 51 6
----- -----
7 (82)
Net cash provided by (used in) financing activities
Borrowings with original maturities of more than
three months
Proceeds 464 103
Payments (574) (284)
Borrowings with original maturities of less than
three months - net 273 249
Cash dividends paid (32) (32)
Purchase of Common Shares (96)
Other 2 (7)
----- -----
37 29
----- -----
Decrease in cash (14) (60)
Cash at beginning of year 81 80
----- -----
Cash at end of period $ 67 $ 20
===== =====
See accompanying notes.
</TABLE>
<PAGE>
Page 5
The following notes are included in accordance with the requirements
of Regulation S-X and Form 10-Q:
All references to net income per Common Share assume dilution, unless
otherwise indicated.
Preparation of Financial Statements
- -----------------------------------
The condensed consolidated financial statements of Eaton Corporation
(Eaton or the Company) are unaudited. However, in the opinion of
management, all adjustments have been made which are necessary for a
fair presentation of financial position, results of operations and
cash flows for the stated periods. These financial statements should
be read in conjunction with the consolidated financial statements and
related notes included in the Company's 1999 Annual Report on Form
10-K. The interim period results are not necessarily indicative of
the results to be expected for the full year.
Acquisition of a Business
- -------------------------
On April 9, 1999, the Company completed the acquisition of Aeroquip-
Vickers, Inc. for $1.623 billion in cash. The acquisition was accounted
for by the purchase method of accounting and, accordingly, the
statements of consolidated income for the first quarter of 1999 do not
include the results of Aeroquip-Vickers. The operating results of
Aeroquip-Vickers beginning with the second quarter of 1999 are reported
in Business Segment Information in Fluid Power and Other Components.
The assets acquired and liabilities assumed were recorded at estimated
fair values as determined by the Company's management based on
information currently available and on current assumptions as to future
operations. The Company has obtained independent appraisals of the fair
values of the acquired property, plant and equipment, and identified
intangible assets, and their remaining useful lives. The Company has
substantially completed the review and determination of the fair values
of the other assets acquired and liabilities assumed. A summary of the
assets acquired and liabilities assumed in the acquisition follows (in
millions):
Estimated fair values
Assets acquired $1,757
Liabilities assumed (1,185)
Goodwill (amortized by the straight-line
method over forty years) 1,051
------
Purchase price 1,623
Less cash acquired & liability for
outstanding shares (32)
------
Net cash paid $1,591
======
<PAGE>
Page 6
Unaudited pro forma results of operations for the three month period
ended March 31, 1999 as if Eaton and Aeroquip-Vickers had been combined
as of the beginning of that period, follow (in millions). The pro forma
results do not include any cost savings or other effects of the planned
integration of Eaton and Aeroquip-Vickers, and are not necessarily
indicative of the results which would have occurred if the business
combination had been in effect on the dates indicated, or which may
result in the future.
Pro forma
Three months ended
March 31, 1999
------------------
Net sales $2,199
Net income 73
Net income per Common Share
Assuming dilution $ 1.01
Basic 1.03
As a result of the acquisition of Aeroquip-Vickers, Eaton incurred
acquisition integration expenses for the incremental costs to exit and
consolidate activities at Aeroquip-Vickers locations, to involuntarily
terminate Aeroquip-Vickers employees, and for other costs to integrate
operating locations and other activities of Aeroquip-Vickers with
Eaton. Generally accepted accounting principles require that these
acquisition integration costs, which are not associated with the
generation of future revenues and have no future economic benefit, be
reflected as assumed liabilities in the allocation of the purchase
price to the net assets acquired. On the other hand, these same
principles require that acquisition integration expenses which are
associated with the generation of future revenues and have future
economic benefit, and those associated with integrating Eaton
operations into Aeroquip-Vickers locations, must be recorded as
expense. These expenses are discussed in the "Unusual Charges"
footnote. The components of the acquisition integration liabilities
included in the purchase price allocation for Aeroquip-Vickers are as
follows (in millions):
<TABLE>
<CAPTION>
Workforce reductions Plant
-------------------- consolidation
Employees Dollars & other Total
--------- ------- -------------- -----
<S> <C> <C> <C> <C>
1999 470 $ 31 $ 1 $ 32
Utilized in 1999 (460) (28) (1) (29)
----- --- --- ---
Balance at
December 31, 1999 10 3 0 3
2000 1,585 56 13 69
Utilized in the first
quarter of 2000 (90) (7) (1) (8)
----- --- --- ---
Balance remaining at
March 31, 2000 1,505 $ 52 $ 12 $ 64
===== === === ===
</TABLE>
<PAGE>
Page 7
The acquisition integration liabilities are based on the Company's
current integration plan which focuses on three key areas of
integration: 1) manufacturing process and supply chain rationalization,
including plant closings, 2) elimination of redundant administrative
overhead and support activities, and 3) restructuring and repositioning
of the sales/marketing and research and development organizations to
eliminate redundancies in these activities. Amounts provided in 2000
for workforce reductions primarily relate to plant closings and
consolidations, for which decisions were finalized in the first quarter
of 2000. Adjustments to these liabilities in the future, if any, will
be 1) recorded as a reduction of net income, if the ultimate liability
exceeds the estimate, or 2) recorded as a reduction of goodwill, if the
ultimate amount of the liability is below the estimate.
Unusual Charges
- ---------------
The Company recorded charges of $8 million ($5 million aftertax, or
$.07 per Common Share) in the first quarter of 2000 associated with the
integration of Aeroquip-Vickers into the Company, as discussed in the
"Acquisitions of Businesses" footnote. These charges primarily related
to plant consolidation and other expenses, including fees paid to
outside consultants, travel expenses, and relocation of inventory and
equipment. These charges reduced operating profit of the Fluid Power
and Other Components segment and are included in the Consolidated
Statement of Income in Income from Operations.
Other Income (Expense)
- ---------------------
In the first quarter of 2000, the Company recorded a net pretax gain on
the sale of corporate assets of $10 million ($7 million aftertax, or
$.09 per Common Share) which was included in other income.
Possible Sale of Equity in Semiconductor Equipment Business
- -----------------------------------------------------------
On May 5,2000, the Company announced that its wholly-owned subsidiary,
Axcelis Technologies, Inc. had filed a registration statement with the
Securities and Exchange Commission for an initial public offering (IPO)
of common stock. Axcelis consists of all semiconductor operations of
the Company.
After the offering, Eaton will own more than 80% of the shares of
Axcelis. Eaton currently plans to complete a distribution of the
remaining stock on a tax-free basis to Eaton shareholders approximately
six months following the completion of the IPO, subject to receiving a
favorable tax ruling from the Internal Revenue Service and Board of
Directors' approval.
The registration statement has not yet become effective. These
securities may not be sold, nor may offers to buy be accepted, prior to
the time the registration statement becomes effective. There will not
<PAGE>
Page 8
be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Refinancing of Debt
- -------------------
In March 2000, the Company sold Euro 200 million of 6% notes due 2007.
Net proceeds from the sale of the notes were used to reduce outstanding
commercial paper and short-term notes that were issued in connection
with the 1999 acquisition of Aeroquip-Vickers.
Comprehensive Income
- --------------------
The principal difference between net income as historically reported
in the Statements of Consolidated Income and comprehensive income are
foreign currency translation adjustments recorded in Shareholders'
Equity. Comprehensive income (loss) is as follows (in millions):
Three Months Ended
March 31
-------------------
2000 1999
---- ----
Net income $ 131 $ 84
Foreign currency translation
and other adjustments (15) (99)
------ ------
Comprehensive income (loss) $ 116 $ (15)
====== ======
Inventories
- -----------
March 31, December 31,
(Millions) 2000 1999
---- ----
Raw materials $ 364 $ 341
Work-in-process and
finished goods 650 661
------ ------
Gross inventories at FIFO 1,014 1,002
Excess of current cost
over LIFO cost (39) (37)
------ ------
Net inventories $ 975 $ 965
====== ======
<PAGE>
Page 9
Net Income per Common Share
- ---------------------------
The calculation of net income per Common Share - assuming dilution
and basic follows (millions except for per share data):
Three Months Ended
March 31
------------------
2000 1999
---- ----
Net income $ 131 $ 84
==== ====
Average number of Common Shares
outstanding-assuming dilution 73.8 72.2
Less dilutive effect of stock
options .9 1.0
---- ----
Average number of Common Shares
outstanding-basic 72.9 71.2
==== ====
Net income per Common Share
Assuming dilution $1.77 $1.17
Basic 1.80 1.18
Summary Financial Information for Eaton ETN Offshore Ltd.
- ---------------------------------------------------------
Eaton ETN Offshore Ltd. (Eaton Offshore), a wholly-owned subsidiary of
Eaton, was incorporated by Eaton in 1990 under the laws of Ontario,
Canada, primarily for the purpose of raising funds through the offering
of debt securities in the United States and making these funds
available to Eaton or its subsidiaries. Eaton Offshore owns the common
stock of a number of Eaton's subsidiaries which are engaged principally
in the manufacture and/or sale of electrical and electronic controls,
truck transmissions and engine components. On April 1, 1998, the
division that manufactured leaf spring assemblies was sold and on
August 31, 1999, the Engineered Fasteners division was sold. Summary
financial information for Eaton Offshore and its consolidated
subsidiaries is as follows (in millions):
Three Months Ended
March 31
------------------
2000 1999
---- ----
Income statement data
Net sales $112 $111
Gross profit 33 30
Net income 13 2
<PAGE>
Page 10
March 31, December 31,
2000 1999
---- ----
Balance sheet data
Current assets $405 $354
Noncurrent assets 184 184
Net intercompany payables 113 93
Current liabilities 87 92
Noncurrent liabilities 141 115
Minority interest 6 3
<PAGE>
Page 11
Eaton Corporation
<TABLE>
Business Segment Information
<CAPTION>
Three Months Ended
March 31
------------------
(Millions) 2000 1999
---- ----
<S> <C> <C>
Net sales
Automotive Components $ 497 $ 478
Fluid Power & Other Components 665 159
Industrial & Commercial Controls 579 512
Semiconductor Equipment 141 57
Truck Components 443 382
------ ------
Total ongoing operations 2,325 1,588
Divested operations 73
------ ------
Total net sales $2,325 $1,661
====== ======
Operating profit (loss)
Automotive Components $ 74 $ 62
Fluid Power & Other Components 67 22
Industrial & Commercial Controls 49 27
Semiconductor Equipment 27 (12)
Truck Components 60 60
------ ------
Total ongoing operations 277 159
Divested operations 15
Amortization of goodwill & other
intangible assets (27) (17)
Interest expense - net (44) (21)
Corporate & other - net (5) (13)
------ ------
Income before income taxes $ 201 $ 123
====== ======
See accompanying notes.
</TABLE>
<PAGE>
Page 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
- ---------------------
Sales for the first quarter of 2000 were $2.33 billion, an increase of
40% above the comparable period in 1999. All business segments reported
record sales in the first quarter of 2000. As displayed in the
Statement of Consolidated Income, Income from Operations of $216
million in the first quarter of 2000 increased 51% from the same period
in 1999. These increases reflect the acquisition of Aeroquip-Vickers
which was consolidated with the Company's results beginning in the
second quarter of 1999. During the first quarter of 2000, Aeroquip-
Vickers added about $.17 per share to the Company's earnings before
restructuring charges.
During the first quarter of 2000, the Company recorded restructuring
charges of $8 million ($5 million aftertax, or $.07 per Common Share).
These charges were associated with the continuing integration of
Aeroquip-Vickers into the Company and reduced operating profit of the
Fluid Power and Other Components segment. The Company also recorded a
net pretax gain on the sale of corporate assets of $10 million ($7
million aftertax, or $.09 per Common Share) which is included in
corporate and other-net in Business Segment Information and in other
income-net in the Statement of Consolidated Income.
Operating earnings per share during the first quarter of 2000,
excluding restructuring charges and net gain on the sale of corporate
assets, were $1.75, 50% above one year earlier. Including unusual
items, net income in the first quarter of 2000 was $131 million
compared to last year's $84 million. First quarter 2000 fully diluted
earnings per share were $1.77, 51% from last year's first quarter of
$1.17.
Automotive Components
- ---------------------
Automotive Components continued its consistent pattern of record
performance and achieved all-time record sales in the first quarter of
2000 of $497 million, 4% above last year's record. Excluding the impact
of the weak Euro, sales volume was up nearly 8%. This compares to a 7%
increase in NAFTA light vehicle production, a 4% rise in Europe, and a
nearly 30% rise in South American output.
Operating profit for the first quarter of 2000 of $74 million was also
an all-time record, increasing 19% compared to the same period in 1999.
This segment's differentiated product platforms drove the increase in
operating profit.
Fluid Power & Other Components
- -----------------------------
Fluid Power and Other Components achieved all-time record sales in the
first quarter of 2000 reaching $665 million, nearly 320% above year
<PAGE>
Page 13
earlier results. Including Aeroquip-Vickers in 1999 results on a pro
forma basis, sales were off less than 1%. The Company is now
anticipating stronger industry conditions. Commercial aircraft
shipments seem to have bottomed and Aeroquip's fluid conveyance
business continues modestly higher. The incipient rebound in Fluid
Power markets is also encouraging. Industry orders were up over 10% in
the first quarter, while the Company's orders were up 18%.
Before restructuring charges of $8 million, operating profit was $75
million for the first quarter of 2000, 240% ahead of last year.
Including Aeroquip-Vickers in 1999 results on a pro forma basis,
profits were 39% higher than one year ago.
During the first quarter of 2000, the Company announced that its
Aeroquip business unit acquired the Ocala, Florida-based clamps,
flanges, seals and flexible joint business of Honeywell International,
Inc.
Industrial & Commercial Controls
- --------------------------------
Industrial and Commercial Controls sales in the first quarter of 2000
reached a record $579 million, 13% ahead of last year. This segment's
sales growth continued to exceed the 8% rise in the North American
market for electrical distribution equipment and industrial controls.
The Company's Cutler-Hammer business achieved 12% year-to-year growth.
The Company is seeing market share gains in its traditional business as
well as a 20% rise in sales of Cutler-Hammer's Engineering Services and
Systems business. In addition, sales of the Company's Navy Controls
business were 70% above last year.
Operating profit for the first quarter of 2000 was a record $49
million, an increase of 81% compared to the same period in 1999. The
increase in operating profit can be attributed to the increase in sales
as well as the continuing benefits realized from the restructuring
actions taken in 1998.
Semiconductor Equipment
- -----------------------
Semiconductor Equipment sales in the first quarter of 2000 were a
record $141 million, 147% above last year's comparable results. Current
industry forecasts are now calling for a worldwide rise in
semiconductor capital equipment purchases this year of over 40%, as
part of what is expected to be a multi-year industry rebound. The
Company is fully participating in this trend.
Operating profits were $27 million in the first quarter of 2000
compared to an operating loss of $12 million in last year's first
quarter. These results reflect the benefits of the fundamental
restructuring this business undertook during 1998 and early 1999.
On May 5,2000, the Company announced that its wholly-owned subsidiary,
Axcelis Technologies, Inc. had filed a registration statement with the
Securities and Exchange Commission for an initial public offering (IPO)
<PAGE>
Page 14
of common stock. Axcelis consists of all semiconductor operations of
the Company.
After the offering, Eaton will own more than 80% of the shares of
Axcelis. Eaton currently plans to complete a distribution of the
remaining stock on a tax-free basis to Eaton shareholders approximately
six months following the completion of the IPO, subject to receiving a
favorable tax ruling from the Internal Revenue Service and Board of
Directors' approval.
The registration statement has not yet become effective. These
securities may not be sold, nor may offers to buy be accepted, prior to
the time the registration statement becomes effective. There will not
be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Truck Components
- ----------------
Truck Components sales in the first quarter of 2000 were an all-time
record of $443 million, 16% above last year's comparable results. This
compares with an 8% rise in NAFTA Class 8 factory sales, a 5% rise in
European commercial truck production, and a 4% drop in South American
truck output. First quarter activity was even stronger than in last
year's fourth quarter, and successful new product initiatives have
enabled the Company to measurably outpace the market.
Operating profits in the first quarter of 2000 were $60 million,
consistent with the same period in 1999. Struggling to meet surging
demand, profits were reduced by about $14 million in extraordinary
premium freight costs to keep customer lines running. These
extraordinary expenses are not expected to continue during the rest of
2000.
Non-operating Income (Expense)
- ------------------------------
Amortization of goodwill and other intangible assets related to
acquisitions of $27 million in the first quarter of 2000 increased by
$10 million compared to the same period in 1999. The increase was
primarily attributable to the amortization of goodwill and other
intangible assets related to the acquisition of Aeroquip-Vickers.
Net interest expense of $44 million in the first quarter of 2000
increased by $23 million compared to the same period in 1999. The
increase was primarily due to additional borrowings required to
partially finance the acquisition of Aeroquip-Vickers.
Corporate and other expenses of $5 million in the first quarter of 2000
decreased by $8 million compared to the same period in 1999. The
decrease was primarily attributable to the $10 million pretax gain on
the sale of corporate assets in 2000.
<PAGE>
Page 15
Changes in Financial Condition
- ------------------------------
Total debt increased to $3.0 billion at March 31, 2000 from $2.9
billion at year-end 1999 primarily due to an increase in commercial
paper to finance cash used in operating activities and the repurchases
of Common Shares.
In March 2000, the Company sold Euro 200 million of 6% notes due 2007.
Net proceeds from the sale of the notes were used to reduce outstanding
commercial paper and short-term notes that were issued in connection
with the 1999 acquisition of Aeroquip-Vickers.
On April 3, 2000, the Company entered into an additional $400 million
credit facility with a five-year term. This agreement increased its
total multi-year credit facility to $900 million, $500 million expiring
in 2003 and $400 million expiring in 2005. The Company also entered
into a $900 million credit facility with a 364-day term to replace the
expired 364-day facility. The Company's credit facilities total $1.8
billion.
The Company remained in a strong financial position at March 31, 2000;
net working capital increased to $296 million at March 31, 2000 from
$133 million at the end of 1999 (the current ratio was 1.1 at each of
those dates). The increase in accounts receivable was the primary cause
of the increase in working capital.
In January 2000, to avoid the dilution of earnings per share resulting
from the exercise of stock options, the Board of Directors authorized
the purchase of up to $500 million of Common Shares over a five-year
period. This authorization replaced the expired five million share
repurchase program authorized in 1994. In the first quarter of 2000,
1.3 million shares were repurchased at a cost of $96 million primarily
under the expired program.
Forward-Looking Statements
- --------------------------
This Form 10-Q contains forward-looking statements concerning the
reorganization of, and an initial public offering for, the semiconductor
equipment operations, industry conditions pertaining to Fluid Power
and Other Components, corporate performance during the year 2000,
semiconductor capital equipment purchases and expenses pertaining to
Truck Components. Those statements should be used with caution.
They are subject to various risks and uncertainties, many of which
are outside the control of the Company. Important factors which could
cause actual results to differ materially from those in the forward-
looking statements include market conditions for the initial public
offering for the semiconductor equipment operations, market conditions
pertaining to Fluid Power and Other Components, semiconductor equipment,
and Truck Components, continuity of business relationships with and
purchases by major customers, competitive pressure on sales and pricing,
increases in material and other production costs which cannot be
recouped in product pricing and global economic and financial conditions.
We do not assume any obligation to update these forward-looking statements.
<PAGE>
Page 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk
A discussion of market risk exposures is included in Part II, Item 7A,
"Quantitative and Qualitative Disclosure about Market Risk", of the
Company's 1999 Annual Report on Form 10-K. Long-term debt increased to
$2.1 billion at March 31, 2000 from $1.9 billion at the end of 1999.
This increase is primarily due to the offering in March of Euro 200
million of 6% notes due 2007. The carrying value of this additional
debt approximated its fair value at March 31, 2000. There were no other
material changes during the three months ended March 31, 2000.
<PAGE>
Page 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On April 25, 2000, the Company settled a pending claim with the Civil
Division of the Department of Justice under the Clean Air Act. The
settlement provided for a payment of $400,000, which the Company made
on April 28, 2000. This matter was reported in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 and related to
the discharge of ozone depleting chemicals and the maintenance of
refrigerant equipment by uncertified personnel of the Aeroquip
Corporation facility at Fitzgerald, Georgia. This was a location
acquired as part of the acquisition of Aeroquip-Vickers in April 1999.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on April 26, 2000,
at which shareholders re-elected three directors, elected one new
director, adopted Amended Regulations and ratified the appointment of
the accounting firm of Ernst & Young LLP as the Company's independent
auditors for 2000.
Results of the voting in connection with each issue were as follows:
Voting on Directors For Withheld Total
- ------------------- --- -------- -----
Alexander M. Cutler 63,082,925 1,525,116 64,608,041
Stephen R. Hardis 62,950,615 1,657,426 64,608,041
Deborah L. McCoy 63,097,586 1,510,455 64,608,041
Gary L. Tooker 63,133,583 1,474,458 64,608,041
Adoption of Amended Regulations
- -------------------------------
In Favor 61,751,663
Against 2,149,988
Abstain 706,390
----------
Total 64,608,041
==========
Ratification of Independent Auditors
- ------------------------------------
In Favor 63,744,157
Against 415,528
Abstain 448,356
----------
Total 64,608,041
==========
The Company also announced at the Annual Meeting of Shareholders that
Alexander M. Cutler will be elected Chairman and Chief Executive
Officer when the current Chairman and Chief Executive Officer, Stephen
R. Hardis, retires on July 31, 2000. Cutler, currently President and
<PAGE>
Page 18
Chief Operating Officer, will continue to serve as President when he
assumes the office of Chairman.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index attached.
(b) Reports on Form 8-K.
1. On February 1, 2000, the Company filed a Current Report on
Form 8-K regarding the fourth quarter 1999 earnings release.
2. On February 3, 2000, the Company filed a Current Report on
Form 8-K regarding the distribution agreement with Goldman, Sachs & Co.
and Chase Securities for up to $800 million of the Company's medium-
term notes.
3. On February 25, 2000, the Company filed a Current Report on
Form 8-K which included the 1999 financial statements and exhibits and
the February 24, 2000 press release regarding the possible sale of a
minority interest in the Semiconductor Equipment business.
4. On February 29, 2000, the Company filed a Current Report on
Form 8-K regarding the public offering outside the United States of
Euro 200 million of 10-year notes.
5. On March 29, 2000, the Company filed a Current Report on Form
8-K regarding the subscription agreement to sell, outside the United
States, Euro 200 million of 6% notes due March 2007.
6. On April 17, 2000, the Company filed a Current Report on Form
8-K regarding the first quarter 2000 earnings release.
<PAGE>
Page 19
Signature
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Eaton Corporation
----------------------------
Registrant
Date: May 12, 2000 /s/ Adrian T. Dillon
----------------------------
Adrian T. Dillon
Executive Vice President -
Chief Financial and Planning
Officer; Principal Financial
Officer
<PAGE>
Page 20
EATON CORPORATION
EXHIBIT INDEX
Regulation S-K,
Item 601 - Exhibit
Reference Number Exhibit
- ------------------ -------
4 Pursuant to Regulation S-K
Item 601 (b)(4), the Company
agrees to furnish to the
Commission, upon request, a copy
of the instruments defining
the rights of holders of long-term
debt of the Company and its
subsidiaries.
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets and the Statemens of Consolidated Income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 67
<SECURITIES> 34
<RECEIVABLES> 1,432
<ALLOWANCES> 26
<INVENTORY> 975
<CURRENT-ASSETS> 2,920
<PP&E> 4,008
<DEPRECIATION> 1,688
<TOTAL-ASSETS> 8,602
<CURRENT-LIABILITIES> 2,624
<BONDS> 2,104
0
0
<COMMON> 36
<OTHER-SE> 2,627
<TOTAL-LIABILITY-AND-EQUITY> 8,602
<SALES> 2,325
<TOTAL-REVENUES> 2,325
<CGS> 1,663
<TOTAL-COSTS> 2,109
<OTHER-EXPENSES> (29)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 201
<INCOME-TAX> 70
<INCOME-CONTINUING> 131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131
<EPS-BASIC> 1.80
<EPS-DILUTED> 1.77
</TABLE>
