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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, 1999
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 CORPORATION INVESTMENT PLAN FOR HOURLY EMPLOYEES OF THE
HYDRAULICS DIVISION HUTCHINSON PLANT
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)
THE EATON CORPORATION
INVESTMENT PLAN FOR HOURLY
EMPLOYEES OF THE HYDRAULICS
DIVISION HUTCHINSON PLANT
Date: June 27, 2000 By: Eaton Corporation Pension
Administration Committee
By: /s/ S. J. Cook
------------------------
(Signature)
S. J. Cook
Vice President-Human Resources
Eaton Corporation
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AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics
Division--Hutchinson Plant
December 31, 1999 and 1998 and Year Ended December 31, 1999
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Audited Financial Statements and Supplemental Schedule
December 31, 1999 and 1998 and
Year Ended December 31, 1999
CONTENTS
Report of Independent Auditors ..........................................1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits..........................2
Statement of Changes in Net Assets Available for Benefits................3
Notes to Financial Statements ...........................................4
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4(i)--Schedule of Assets Held for Investment
Purposes at End of Year...............................................8
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Report of Independent Auditors
Corporate Compensation and Organization Committee of Eaton Corporation Eaton
Corporation Investment Plan for Hourly Employees of the
Hydraulics Division--Hutchinson Plant
We have audited the accompanying statements of net assets available for benefits
of the Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics
Division--Hutchinson Plant as of December 31, 1999 and 1998, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 1999, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is 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 schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audit of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Cleveland, Ohio /s/ Ernst & Young LLP
1
June 9, 2000
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
-------------------------------------
<S> <C> <C>
ASSETS
Investments:
Eaton Corporation Common Shares $ 839,109 $ 917,954
Mutual funds 2,678,029 1,975,617
Common/collective trust fund 4,924,512 4,544,904
Participant loans receivable 363,067 323,529
Money market fund 4,614 2,004
-------------------------------------
Total investments 8,809,331 7,764,008
Receivables:
Contributions--employees 15,245 15,862
Other 979 -
Interest 53 33
-------------------------------------
Total receivables 16,277 15,895
-------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 8,825,608 $ 7,779,903
=====================================
</TABLE>
2
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1999
ADDITIONS
Investment income:
Interest and dividends $ 208,809
Net appreciation in fair value of investments 527,773
----------------
736,582
Employee contributions 823,038
-----------------
Total additions 1,559,620
DEDUCTIONS
Distributions to participants 513,915
-----------------
Net increase 1,045,705
Net assets available for benefit:
Beginning of year 7,779,903
-----------------
END OF YEAR $ 8,825,608
=================
See notes to financial statements.
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Notes to Financial Statements
December 31, 1999 and 1998 and
Year Ended December 31, 1999
A. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared on the accrual basis of accounting.
Investments are stated at fair value as measured by quoted prices in active
markets except for the Prism Magic Fund, which is 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 the mutual funds and Eaton Common Shares is based
upon the average cost of each participant's shares sold.
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 those estimates.
Certain amounts in the prior year financial statements have been reclassified to
conform to the current year presentation.
B. DESCRIPTION OF THE PLAN
The Eaton Corporation Investment Plan for Hourly Employees of the Hydraulics
Division--Hutchinson Plant (the "Plan") generally provides that all hourly
employees of the Hydraulics Division--Hutchinson Plant, to which the Corporate
Compensation and Organization Committee of Eaton Corporation (the "Company" or
the "Plan Sponsor") has extended eligibility (other than temporary employees and
employees covered by a collective bargaining agreement that does not specify
coverage under the Plan), will be eligible for membership in the Plan on the
date at which the employee has attained age 18.
Eligible employees may make either before-tax or after-tax contributions from 1
to 15 percent of their base pay. all contributions to the Plan are
non-forfeitable at all times as defined in the Plan document.
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
Contributions are allocated by the employee to any of the six investment funds
offered by the Plan.
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 plus actual earnings thereon. On
termination of service, a participant is eligible to receive a lump-sum amount
equal to the value of his account.
Participants may borrow from their fund accounts a minimum of $1,000, up to a
maximum equal to the lessor of $50,000 or 50% of their vested account balance,
reduced by their highest outstanding loan balance during the preceding 12
months. Loan terms range from 1-5 years or up to 10 years for the purchase of a
primary residence. The loans are secured by the balance in the participant's
account and bear interest at a rate determined daily by the Trustee. Principal
and interest are paid ratably through monthly payroll deductions.
The Company elected to pay certain administrative costs during 1999 on behalf of
the Plan.
The Company may amend, modify, suspend or terminate the Plan at any time,
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.
5
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Notes to Financial Statements--Continued
C. INVESTMENTS
Key Trust Company of Ohio, N.A., trustee of the Plan, holds the Plan's
investment assets and executes transactions.
During 1999, the Plan's investments (including investments purchased, sold as
well as held during the year) appreciated in fair value as determined by quoted
market prices as follows:
Common/collective trust fund $ 267,161
Shares of registered investment companies 183,459
Common stock 77,153
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$ 527,773
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The fair value of individual investments that represented 5% or more of the
Plan's net assets available for benefits are as follows:
DECEMBER 31
1999 1998
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Victory Balanced Fund $ 514,902 $ 405,558
Victory Stock Index Fund 1,498,921 1,068,994
Prism Magic Fund 4,924,512 4,544,904
Eaton Corporation Common Shares 839,109 917,954
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
Notes to Financial Statements--Continued
D. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated December 23, 1997, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt
from taxation. Once qualified, the Plan is required to operate in conformity
with the IRC to maintain its qualification. The Plan Administrator believes the
Plan is being operated in compliance with the applicable requirements of the IRC
and, therefore, believes that the Plan is qualified and the related trust is tax
exempt.
E. TRANSACTIONS WITH PARTIES-IN-INTEREST
Party-in-interest transactions included the investment in the investment funds
of the trustee and the payment of administrative expenses by the Company. Such
transactions are exempt from being prohibited transactions.
During 1999 and 1998, the Plan received $22,785 and $21,279, respectively, in
cash dividends on Eaton Common Shares.
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Eaton Corporation Investment Plan for Hourly Employees
of the Hydraulics Division--Hutchinson Plant
EIN: 34-0196300 Plan Number 089
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
Identity of Issue, Description of Current
Borrower or Similar Party Investment Value
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
* Eaton Corporation Common Shares 11,554 shares $ 839,109
* KeyBank:
Victory Balanced Fund 36,440 shares 514,902
Victory International Growth Fund 14,066 shares 253,891
Victory Special Value Fund 31,442 shares 410,315
Victory Stock Index Fund 61,356 shares 1,498,921
Prism Magic Fund 362,051 shares 4,924,512
Employee Benefits Money Market Fund 4,614 units 4,614
* Participant loans receivable 8.75-10%; variable
maturities 363,067
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$ 8,809,331
============
</TABLE>
* Indicates party-in-interest to the Plan.
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