- Annual Report of Employee Stock Plans (11-K)
June 18 2009 - 8:01AM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
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þ
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Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Fee required)
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For the fiscal year ended December 31, 2008
Or
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o
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Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 (No fee
required)
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For the transition period from
to
Commission file number
A.
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Full title of the plan and the address of the plan, if different from that of
the issuer named below:
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Eaton Savings Plan
B.
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Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
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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.
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(Name of Plan)
EATON SAVINGS PLAN
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Date: June 18, 2009
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By:
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Eaton Corporation Pension
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Administration Committee
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By:
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/s/ B. K. Rawot
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B. K. Rawot
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Senior Vice President and Controller Eaton Corporation
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EATON SAVINGS PLAN
FINANCIAL STATEMENTS
WITH
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
December 31, 2008
INDEX
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Page
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Financial Statements:
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2
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3
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4 - 13
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Supplemental Schedule:
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14
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Pension Administration Committee and the
Pension Investment Committee Eaton Corporation
We have audited the accompanying Statement of Net Assets Available for Benefits of the EATON
SAVINGS PLAN as of December 31, 2008 and 2007 and the related Statement of Changes in Net Assets
Available for Benefits for the years then ended. These financial statements are the responsibility
of the Plans management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (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. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis of designing
audit procedures that are appropriate in the circumstances, but not for expressing an opinion on
the effectiveness of the Plans internal control over financial reporting. Accordingly, we express
no such opinion. 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 audit provides a reasonable basis for our opinion.
During 2008, the Plan adopted Statement of Accounting Standards (SFAS) 157, Fair Value
Measurements.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of Eaton Savings Plan as of December 31, 2008 and
2007, and the changes in its net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
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 at end of year) as of December
31, 2008, is presented for the purposes of additional analysis and is not a required part of the
financial statements but is supplemental information required by the Department of Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plans management. The supplemental
information has been subjected to the 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.
/s/ MEADEN & MOORE, LTD.
Certified Public Accountants
June 18, 2009
Cleveland, Ohio
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
Eaton Savings Plan
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December 31
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2008
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2007
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ASSETS
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Receivable Employer contributions
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$
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$
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1,630,321
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Receivable Employee contributions
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3,500,351
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Receivable Interest
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143,445
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Total Receivables
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5,274,117
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Investments:
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Plan interest in Eaton Employee
Savings Trust
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1,733,203,859
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2,639,004,204
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Plan interest in Eaton Employee
Savings Trust Eaton Stable Value Fund
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127,328,754
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98,706,890
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Total Master Trust Investments
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1,860,532,613
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2,737,711,094
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Participant Loans
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54,859,860
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56,525,751
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Total Investments
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1,915,392,473
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2,794,236,845
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Net Assets Available for Benefits, at Fair Value
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1,915,392,473
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2,799,510,962
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Adjustment from fair value to contract value for fully benefit-
responsive investment contract
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1,532,613
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(613,668
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Net Assets Available for Benefits
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$
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1,916,925,086
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$
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2,798,897,294
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See accompanying notes.
- 2 -
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Eaton Savings Plan
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Year Ended December 31
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2008
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2007
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Additions to Net Assets Attributed to:
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Contributions:
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Employer
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$
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47,719,474
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$
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45,318,681
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Employee
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111,303,564
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105,958,659
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Rollover
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13,065,781
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17,183,923
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172,088,819
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168,461,263
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Plan interest in Eaton Employee Savings
Trust investment gain
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335,627,577
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Interest and dividend income
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4,453,408
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4,194,666
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Total Additions before Transfers
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176,542,227
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508,283,506
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Transfers from other plans
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216,640
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62,426,365
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Total Additions
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176,758,867
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570,709,871
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Deductions from Net Assets Attributed to:
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Plan interest in Eaton Employee Savings
Trust investment loss
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860,090,357
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Benefits paid to participants
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198,032,409
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265,583,043
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Administrative expenses
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606,085
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611,218
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Total Deductions before Transfers
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1,058,728,851
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266,194,261
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Transfers to other plans
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2,224
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3
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Total Deductions
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1,058,731,075
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266,194,264
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Net Increase/(Decrease)
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(881,972,208
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304,515,607
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Net Assets Available for Benefits:
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Beginning of Year
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2,798,897,294
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2,494,381,687
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End of Year
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$
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1,916,925,086
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$
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2,798,897,294
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See accompanying notes.
- 3 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
1
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Description of Plan
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The following description of The Eaton Savings Plan (the Plan) provides only general information.
Participants should refer to the Plan document and summary plan description, which is available
from the Companys Human Resources Department upon request, for a complete description of the
Plans provisions.
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General:
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Effective July 1, 1974, Eaton Corporation (Eaton, the Company, or the Plan Sponsor) established the
Plan. The Plan was established to encourage eligible employees to make systematic savings through
payroll deductions, to provide additional security at retirement and to acquire a proprietary
interest in the Company. Effective July 5, 1989, the portion of the Plan attributable to Company
contributions was designed to be invested primarily in Eaton Common Shares and constitute an
employee stock ownership plan within the meaning of Code Section 4975(e)(7). Effective January 1,
2002, the Plan was amended and restated. In conjunction with the amendment and restatement, the
Plan was renamed the Eaton Savings Plan.
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Eligibility:
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An Eaton employee who is in the regular service of a class of an employee in a division or group to
which Eaton Corporation has extended eligibility for membership in the Plan (other than a temporary
employee who is hired for a specific, limited period of time or for the performance of a specific,
limited assignment or employees covered by a collective bargaining agreement that does not specify
coverage under the Plan) will be eligible to participate on any date established in accordance with
administrative procedure which follows the date an employee first incurs an hour of service.
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Contributions:
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Employee Contributions Employees may make a combination of before-tax and after-tax contributions
ranging from 1% to 30% of their compensation. Catch-up contributions are permitted in the Plan,
allowing participants age 50 and older to defer an additional amount of their compensation as
prescribed by the Internal Revenue Code.
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Employer Contributions Participants of the Plan receive a Company matching contribution of 100%
of the first 3% of their compensation, plus 50% of the next 2% of compensation. The Company
matching contribution will be suspended effective with the first full pay period beginning after
April 1, 2009.
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Contributions are subject to limitations on annual additions and other limitations imposed by the
Internal Revenue Code as defined in the Plan agreement.
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- 4 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
1
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Description of Plan, Continued
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Participants Accounts:
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Each participants account is credited with the participants contributions, Company matching
contributions, and an allocation of the Plans earnings and is charged with an allocation of
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 participants account.
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Rollover contributions from other Plans are also accepted, providing certain specified conditions
are met.
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Vesting:
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All participants are 100% vested, subject to certain provisions as defined by the Plan, in
elective deferrals, company contributions and rollover contributions made to the Plan, and actual
earnings thereon.
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Participants Loans:
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Participants may borrow from their fund accounts up to a maximum equal to the lesser of $50,000 or
50% of their account balance (excluding any contributions made under a Savings Plan, Individual
Retirement Account or Company contributions made in the previous 24 months), 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 participants account and bear interest at a rate based on the prime interest rate as
determined by the Trustee. Principal and interest are paid through payroll deduction.
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Hardship Withdrawals:
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Hardship withdrawals are permitted in accordance with Internal Revenue Service guidelines.
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Payment of Benefits:
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Upon termination of service, retirement, death or total and permanent disability, a participant is
eligible to receive a lump sum amount equal to the value of his or her account. A participant may
choose to take partial withdrawals.
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Investment Options:
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Contributions may be invested in any of the fund options available under the Plan.
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- 5 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
2
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Summary of Significant Accounting Policies
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Basis of Accounting:
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The financial statements of the Eaton Savings Plan are prepared on the accrual basis of accounting.
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Investment Valuation and Income Recognition:
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The Plans trustee is Fidelity Management Trust Company, and the Plans investments, excluding
participant loans, were invested in the Eaton Employee Savings Trust (Master Trust), which was
established for the investment of assets of the Plan and the Eaton Personal Investment Plan. The
fair value of the Plans interest in the individual funds of the Master Trust is based on the value
of the Plans interest in the fund as of January 1, 2002, plus actual contributions and allocated
investment income (loss) less actual distributions.
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Securities traded on a national securities exchange are valued at the last reported sales price on
the last business day of the Plan year. Investments traded in the over-the-counter market and
listed securities for which no sale was reported on that date are valued at the average of the last
reported bid and asked prices. Common/collective trust funds and pooled separate accounts are
valued at the redemption value of the units held at year-end. Participant loans are valued at cost,
which approximates fair value. The Eaton Stable Value Fund invests primarily in investment
contracts issued by insurance companies, banks or other financial institutions, including
investment contracts backed by high-quality fixed income securities.
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As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1,
Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and
Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to
be reported at fair value. However, contract value is the relevant measurement attribute for that
portion of the net assets available for benefits of a defined-contribution plan attributable to
fully benefit-responsive investment contracts because contract value is the amount participants
would receive if they were to initiate permitted transactions under the terms of the Plan. As
required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of
the investment contracts as well as the adjustment of the fully benefit-responsive investment
contracts from fair value to contract value. The Statement of
Changes in Net Assets Available for Benefits is prepared on a contract value basis.
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Purchases and sales of securities are recorded on a trade-date basis.
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- 6 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
2
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Summary of Significant Accounting Policies, Continued
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Use of Estimates:
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The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
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Administrative Fees:
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All administrative costs, management fees and expenses of the Plan are paid by the trustee from the
Master Trust unless such costs, fees and expenses are paid by the Company. The Company elected to
pay certain administrative costs during 2008 and 2007 on behalf of the Plan. Certain transaction
costs are paid by the employee.
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Plan Termination:
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The Company may amend, modify, suspend, or terminate the Plan. 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.
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Risks and Uncertainties:
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The Master Trusts investments include investments, as listed in Footnote 4, with varying degrees
of risk, such as interest rate, credit and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and such changes could materially
affect the amounts reported in the statement of net assets available for Plan benefits.
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3
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Tax Status
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On May 16, 2003, the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code. The Plan has been
amended; however, the Plan Administrator and the Plans tax counsel believe that the Plan is
currently designed and being operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related trust
was tax-exempt as of the financial statement date.
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- 7 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
4
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Investments
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Fidelity Management Trust Company, trustee and recordkeeper of the Plan, holds the Plans
investment assets and executes investment transactions, and all investment assets of the Plan,
except for participant loans, are pooled for investment purposes in the Master Trust.
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A summary of the assets of the Master Trust is as follows:
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2008
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2007
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Registered investment companies
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$
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947,981,290
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$
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1,590,817,582
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Eaton common shares
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458,101,411
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734,478,885
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Guaranteed investment contracts
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119,563,824
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89,991,700
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Common collective trusts
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201,747,771
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198,648,938
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U.S. government securities
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96,371,693
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86,483,398
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Corporate debt instruments
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54,137,923
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84,501,583
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Interest-bearing cash
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45,304,644
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45,756,058
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Non interest-bearing cash
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170,187
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Receivables
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11,755,944
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17,426,800
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Adjustment from fair value to contract value
for fully benefit-responsive investment contract
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1,632,175
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(642,584
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Total Investments
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$
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1,936,596,675
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$
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2,847,632,547
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The Plan had a 96.5% and 96.6% interest in the assets of the Master Trust as of December 31, 2008
and 2007, respectively.
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Investment income and administrative expenses relating to the Master Trust are allocated to the
individual Plans based upon the average balance invested by each Plan in each of the individual
funds of the Master Trust. A summary of the Master Trusts net investment income allocated to the
participating Plans for the year ended December 31, 2008 and 2007, is as follows:
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2008
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2007
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Interest and dividend income
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$
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64,413,793
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$
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121,364,611
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Net Appreciation in Fair Value of Investments:
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Eaton Common Shares Fund
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(382,587,625
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181,521,540
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Registered investment companies
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(569,071,173
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31,336,704
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Eaton Fixed Income Fund
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3,896,751
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10,465,809
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$
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(883,348,254
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$
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344,688,664
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- 8 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
4
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Investments, Continued
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At December 31, 2008 and 2007, respectively, the Eaton Fixed Income Fund was comprised of U.S.
government securities (57% and 47%), corporate debt instruments (32% and 46%), interest-bearing and
non interest-bearing cash (6% and 7%), and pooled separate accounts (5% and 0%).
|
|
|
|
The Master Trust funds are invested in various investments through the Fidelity Management Trust
Company. Investments which constitute more than 5% of the Master Trusts net assets are:
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
Fidelity Contrafund
|
|
$
|
110,825,820
|
|
|
$
|
186,509,853
|
|
Eaton Stable Value Fund
|
|
$
|
137,217,538
|
|
|
|
N/A
|
|
EB Money Market Fund
|
|
$
|
177,522,862
|
|
|
$
|
184,288,151
|
|
Vanguard Institutional Index
|
|
$
|
115,777,490
|
|
|
$
|
202,601,079
|
|
Eaton Fixed Income Fund
|
|
$
|
169,955,591
|
|
|
$
|
184,178,086
|
|
Eaton Common Shares Fund (A unitized fund consisting of Eaton Shares and cash)
|
|
$
|
466,831,646
|
|
|
$
|
751,827,178
|
|
5
|
|
Party-in-Interest Transactions
|
|
|
|
Party-in-interest transactions included the investments in the common stock of Eaton and the
investment funds of the trustee and the payments of administrative expenses by the Company. Such
transactions are exempt from being prohibited transactions.
|
|
|
|
During 2008 and 2007, the Master Trust received $16,649,395 and $13,855,208, respectively, in
common stock dividends from the Company.
|
|
6
|
|
Rollovers
|
|
|
|
During 2007, former employees of Saturn Electronics & Engineering, Inc. chose to rollover 401(k)
balances totaling $816,590. These rollovers include $90,671 of participant loans. The balance of
the rollovers relates to other employees hired into the organization.
|
- 9 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
7
|
|
Transfers In
|
|
|
|
On August 31, 2007, the Argo Tech Employees Savings Plan and the Argo Tech Costa Mesa 401(k) Plan
were merged into the Eaton Savings Plan. As a result, 401(k) balances totaling $60,638,438 were
transferred into the Plan. In addition, a total of $1,181,484 in participant loans was transferred
into the Eaton Savings Plan as a result of these plan mergers. The balance of the transfers relate
to the other Eaton plans.
|
|
8
|
|
Recently Issued Accounting Pronouncements
|
|
|
|
In March 2008, the FASB issued SFAS 161, Disclosure about Derivative Instruments and Hedging
Activities, which amends the disclosure requirements of SFAS 133. SFAS 161 requires increased
disclosures about derivative instruments and hedging activities and their effects on an entitys
financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years
beginning after November 15, 2008, with early adoption permitted. SFAS 161 is not expected to have
a material impact on the Plans financial statements.
|
|
|
|
In May 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Account Standards (SFAS) 162, The hierarchy of Generally Accepted Accounting Principles, which
is intended to improve financial reporting by identifying the sources of accounting principles and
a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities.
SFAS 162 will be effected 60 days after U.S. Securities and Exchange Commission approves the Public
Company Accounting Oversight Boards amendments to AU section 411, The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles. SFAS 162 is not expected to have a
material impact on the Plans financial statements.
|
- 10 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
8
|
|
Recently Issued Accounting Pronouncements, Continued
|
|
|
In April 2009, the FASB issued three FASB Staff Positions, which provide additional guidance and
enhance disclosures regarding fair value measurements and impairment of securities, FASB Staff
Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value Financial Instruments,
FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, and FASB Staff Position No. FAS 157-4, Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly. These staff positions 1) require that the fair
value of all financial instruments be disclosed in both interim and annual reporting periods; 2)
modify the criteria used to assess other-than-temporary impairments (OTTI) of debt securities and
collectability of cash flows; 3) bifurcate the recognition of OTTI between earnings and other
comprehensive income; 4) require expanded and more frequent disclosures about OTTI; 5) permit to estimated fair
values when, due to significant decrease in the volume and level of market activity or evidence
that a market is not orderly, the valuation technique does not fairly present the price at which
willing market participants would transact at the measurement date; and 6) require disclosure about
inputs and valuation techniques used to measure fair value for both interim and annual reporting
periods. The staff positions are effective for interim reporting periods ending after June 15,
2009, with early adoption permitted. The sponsor has not determined the effect of adopting the
staff positions on the net assets available for benefits and changes in those net assets.
|
9
|
|
Benefit-Responsive Investment Contract
|
|
|
The Plan holds an interest in a benefit-responsive investment contract with Vanguard in the Eaton
Stable Value Fund. Vanguard maintains the contributions in a general account. The account is
credited with earnings on the underlying investments and charged for participant withdrawals and
administrative expenses. The guaranteed investment contract issuer is contractually obligated to
repay the principal and a specified interest rate that is guaranteed to the Plan.
|
|
|
As described in Note 2, because the guaranteed investment contracts are fully benefit-responsive,
contract value is the relevant measurement attribute for that portion of the net assets available
for benefits attributable to the guaranteed investment contract. Contract value, as reported to the
Plan by Vanguard, represents contributions made under the contracts, plus earnings, less
participant withdrawals and administrative expenses. Participants may ordinarily direct the
withdrawal or transfer of all or a portion of their investment at contract value.
|
|
|
The average market yield of the Fund for 2008 and 2007 was 4.64% and 4.68%, respectively. This
yield is calculated based on actual investment income from the underlying investments for the last
month of the year, annualized and divided by the fair value of the investment portfolio on the
report date. The average yield of the Fund with an adjustment to reflect the actual interest rate
credited to participants in the Fund was 3.82% and 4.69%, respectively.
|
- 11 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
9
|
|
Benefit-Responsive Investment Contract, Continued
|
|
|
|
There are no reserves against contract value for credit risk of the contract issuer or otherwise.
The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be
less than zero percent. Such interest rates are reviewed quarterly for resetting.
|
|
|
|
The fair value is based on various valuation approaches dependent on the underlying investments of
the contract.
|
|
|
|
Certain events limit the ability of the Plan to transact at contract value with the issuers. The
Plan Administrator does not believe that the occurrence of any such value event, which would limit
the Plans ability to transact at contract value with participants is probable. The issuer may
terminate the contract for cause at any time.
|
|
10
|
|
Fair Value Measurements
|
|
|
|
In the first quarter 2008, we adopted SFAS 157, Fair Value Measurements, which became effective
on January 1, 2008. SFAS 157, which applies to financial assets and liabilities, establishes a
framework for measuring fair value, establishes a fair value hierarchy based on inputs used to
measure fair value, and expands disclosure about fair value measurements. Adopting this statement
has not had an effect on our financial condition, cash flows, or results of operations.
|
|
|
|
In accordance with SFAS 157, we have categorized our financial instruments, based on the degree of
subjectivity inherent in the valuation technique, into a fair value hierarchy of three levels, as
follows:
|
|
|
|
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
|
|
|
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument.
|
|
|
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
|
|
|
|
Following is a description of the valuation methodologies used for assets measured at fair value.
There have been no changes in the methodologies used at December 31, 2008 and 2007.
|
|
|
|
Registered investment companies (mutual funds), and separate accounts
: Valued at the net asset
value (NAV) of shares held by the Plan at year end. Separate accounts may include U.S. government
securities and corporate debt securities.
|
- 12 -
NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
10
|
|
Fair Value Measurements, Continued
|
|
|
|
Common collective trusts:
Valued at the net unit value of units held by the trust at year end.
The unit value determined by the Total Value of Fund Assets divided by the Total Number of Units of
the Fund owned.
|
|
|
|
Participant loans
: Valued at amortized cost, which approximates fair value.
|
|
|
|
Guaranteed investment contract
: Valued at fair value by discounting the related cash flows based on
current yields of similar instruments with comparable durations considering the credit-worthiness
of the issuer.
|
|
|
|
The methods described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Plan believes its
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.
|
|
|
|
The following table sets forth by level, within the fair value hierarchy, the Plans assets at fair
value as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Totals
|
|
Registered investment companies
|
|
$
|
782,514,650
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
782,514,650
|
|
Guaranteed investment contracts
|
|
|
|
|
|
|
127,328,754
|
|
|
|
|
|
|
|
127,328,754
|
|
Common collective trusts
|
|
|
|
|
|
|
331,802,373
|
|
|
|
|
|
|
|
331,802,373
|
|
Separate accounts
|
|
|
|
|
|
|
618,886,836
|
|
|
|
|
|
|
|
618,886,836
|
|
Participant loans
|
|
|
|
|
|
|
|
|
|
|
54,859,860
|
|
|
|
54,859,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
782,514,650
|
|
|
$
|
1,078,017,963
|
|
|
$
|
54,859,860
|
|
|
$
|
1,915,392,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below sets forth a summary of changes in the fair value of the Plans level 3 assets for
the year ended December 31, 2008:
|
|
|
|
|
|
|
|
Participant Loans
|
|
Balance, beginning of year
|
|
$
|
56,525,751
|
|
Purchases, sales, issuances and settlements (net)
|
|
|
(1,665,891
|
)
|
|
|
|
|
Balance, end of year
|
|
$
|
54,859,860
|
|
|
|
|
|
- 13 -
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
Form 5500, Schedule H, Part IV, Line 4i
Eaton Savings Plan
EIN 34-0196300
Plan Number 055
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
( c )
|
|
|
|
|
|
|
|
|
|
Identity of Issue,
|
|
Description of Investment Including
|
|
|
|
|
|
(e)
|
|
|
|
Borrower, Lessor,
|
|
Maturity Date, Rate of Interest,
|
|
(d)
|
|
|
Current
|
|
(a)
|
|
or Similar Party
|
|
Collateral, Par or Maturity Value
|
|
Cost
|
|
|
Value
|
|
*
|
|
Interest in Eaton Employee Savings Trust Master Trust
|
|
Master Trust
|
|
|
N/A
|
|
|
$
|
1,733,203,859
|
|
*
|
|
Interest in Eaton Stable Value Fund-Footnote 1
|
|
Guaranteed Investment Contract
|
|
|
N/A
|
|
|
|
128,861,367
|
|
*
|
|
Participant Loans
|
|
4%-11%, various maturity dates
|
|
|
|
|
|
|
54,859,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,916,925,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnote 1-denotes contract value
|
|
*
|
|
Party-in-interest to the Plan.
|
- 14 -
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No.
333-147267, Form S-8 No. 333-77243, Form S-8 No. 333-03599, Form S-8 No. 333-104367 and Form S-8
No. 333-158820) pertaining to the Eaton Savings Plan of our report dated June 18, 2009, with
respect to the financial statements of the Eaton Savings Plan included in this Annual Report (Form
11-K) for the years ended December 31, 2008 and 2007.
Meaden & Moore, Ltd
/s/ Meaden & Moore, Ltd
Cleveland, Ohio
June 18, 2009
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