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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:
EATON CORPORATION 401(k) SAVINGS PLAN FOR THE HOURLY RATE EMPLOYEES AT
AIRFLEX DIVISION
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)
EATON CORPORATION 401(k) SAVINGS
PLAN FOR THE HOURLY RATE
EMPLOYEES AT AIRFLEX DIVISION
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 401(k) Savings Plan for the Hourly Rate Employees
at Airflex Division
December 31, 1999 and 1998 and Year Ended December 31, 1999
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Report of Independent Auditors
Corporate Compensation and Organization Committee of
Eaton Corporation
Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
We have audited the accompanying statements of net assets available for benefits
of the Eaton Corporation 401(k) Savings Plan for the Hourly Rate Employees at
Airflex Division 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to auditing procedures applied in our audits 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
June 9, 2000
1
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
------------------------------------
<S> <C> <C>
ASSETS
Investments:
Mutual funds $ 234,259 $ 171,059
Common/collective trust fund 98,465 98,010
Eaton Corporation Common Shares 139,004 124,906
Participant loans receivable 20,592 19,642
------------------------------------
Total investments 492,320 413,617
Receivables:
Interest 13 6
Employee contributions 3,253 4,968
------------------------------------
Total receivables 3,266 4,974
------------------------------------
Total assets 495,586 418,591
LIABILITIES
Accrued purchase of investments - 565
------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 495,586 $ 418,026
====================================
</TABLE>
See notes to financial statements
2
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 1999
<TABLE>
<CAPTION>
ADDITIONS
<S> <C>
Investment income:
Interest and dividends $ 21,017
Net appreciation in fair value of investments 27,977
-------------------
48,994
Employee contributions 70,115
-------------------
Total additions 119,109
DEDUCTIONS
Distributions to participants 41,549
-------------------
Net increase 77,560
Net assets available for benefits:
Beginning of year 418,026
-------------------
END OF YEAR $ 495,586
===================
</TABLE>
See notes to financial statements.
3
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
Notes to Financial Statements
December 31, 1999 and 1998 and
Year Ended December 31, 1999
A. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are prepared on the accrual basis of
accounting.
Investments are stated at fair value as measured by quoted prices in active
markets except for common/collective trust funds, which 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 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 amounts
reported in the financial statements and accompanying notes. Actual results
could differ from these estimates.
Certain prior years amounts have been reclassified to conform to the current
year presentation.
B. DESCRIPTION OF THE PLAN
Effective January 1, 1995, Eaton Corporation (the "Company" or "Plan Sponsor")
established a 401(k) profit sharing plan and trust to be known as the Eaton
Corporation 401(k) Savings Plan for the Hourly Rate Employees at Airflex
Division (the "Plan").
The Plan provides that all union employees of the Airflex Division who are
members of UPIU local 7967 will be eligible for membership in the Plan on the
date at which the employee has completed ninety working days 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 investment funds offered by the Plan.
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
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 participant 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 up to the lesser 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 except
for loans used 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 based on
the prime interest rates as determined daily by the Trustee. Principal and
interest are paid ratably through monthly payroll deductions.
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 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.
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
Notes to Financial Statements--Continued
C. INVESTMENT ASSETS
Key Trust Company of Ohio, N.A., trustee of the plan, holds the Plan's
investment assets and executes investment 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:
<TABLE>
<CAPTION>
Net Realized
and Unrealized
Appreciation
in Fair Value
of Investments
--------------------
<S> <C>
Common/collective trust funds $ 5,011
Common stock 8,324
Mutual funds 14,642
--------------------
$ 27,977
====================
</TABLE>
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
1999 1998
----------------------------------
<S> <C> <C>
Prism Money Market Fund $ 58,793 $ 64,134
Prism Magic Fund 39,186 33,876
Victory Balanced Fund 72,999 53,945
Victory Stock Index Fund 100,697 72,294
Victory Special Value Fund 28,087 21,818
Victory International Growth Fund 32,476 23,002
Eaton Corporation Common Shares 139,004 124,906
</TABLE>
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
Notes to Financial Statements--Continued
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 include the investment in the funds of the
trustee and the payment of administrative expenses by the Company. Such
transactions are exempt from being prohibited transactions.
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Eaton Corporation 401(k) Savings Plan for the
Hourly Rate Employees at Airflex Division
EIN 34-0196300 Plan Number 159
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
Description of Current
Identity of Issue Investment Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
* Key Bank:
EB Money Market Fund 486 units $ 486
Prism Money Market Fund 4,679 units 58,793
Prism Magic Fund 2,881 units 39,186
Victory Balanced Fund 5,166 shares 72,999
Victory Stock Index Fund 4,122 shares 100,697
Victory Special Value Fund 2,152 shares 28,087
Victory International Growth Fund 1,799 shares 32,476
* Eaton Corporation Common Shares 1,914 shares 139,004
* Participant Loans Receivable 8.75-9.50% variable
maturities 20,592
-----------------
$ 492,320
=================
</TABLE>
* Indicates a party-in-interest to the Plan.
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