Eaton Corporation is a global $7.3 billion diversified industrial manufacturer focused on fluid power systems, electrical power distribution and control, automotive engine air management, and intelligent truck systems. In 2001, Eaton faced challenges from a weak global economy and declining end markets, but took actions to resize operations, repay debt, and position itself for future growth when markets recover. The annual report discusses Eaton's financial performance in 2001, leadership response to challenges, and strategies for integrating operations to leverage its scale and diversity.
The Progressive Corporation reported financial results for February 2005, with net premiums written up 12% and net income down 12% compared to February 2004. Progressive saw growth in both its Personal and Commercial Auto business lines. The combined ratio was 85.2%, an increase of 1.5 percentage points from the prior year. Policies in force increased 12% overall, with growth across all business segments.
The Progressive Corporation reported its October 2004 results. Net premiums written increased 9% to $1.279.8 million compared to October 2003. Net income decreased 4% to $140.2 million while the combined ratio increased 2.3 percentage points to 87.0%. Progressive continues to respond to claims from hurricanes in August and September, with losses representing 1.5 percentage points of the loss ratio for the month. On October 22, Progressive repurchased 16.9 million shares for $1.5 billion through a Dutch auction tender offer.
The Progressive Corporation reported financial results for May 2004, with net premiums written up 16% and net income up 14% compared to May 2003. Key highlights included strong growth across personal and commercial lines of business, a combined ratio of 86.6%, and continued profitability in all but three personal lines markets. Policies in force also grew 15% year-over-year. Progressive continued to experience catastrophe losses which contributed to a higher loss ratio for the month.
The Progressive Corporation reported its November 2004 results, including a 7% increase in net premiums written and an 8% increase in net premiums earned compared to November 2003. Net income decreased 6% to $93.8 million while the combined ratio increased 2.9 percentage points to 89.6%. Personal lines policies in force grew 11% year-over-year while commercial auto policies increased 15%. Growth is slowing across most markets and businesses. Investment income was impacted by $3.8 million in special stock dividends while realized losses included $6 million in common stock impairments.
- The Progressive Corporation reported financial results for January 2004, including a 16% increase in net premiums written, a 21% increase in net premiums earned, and a 47% increase in net income compared to January 2003.
- Progressive saw growth in both its Personal Lines and Commercial Auto businesses, with personal auto policies in force up 18% and commercial auto policies up 26% compared to the previous year.
- The company had favorable loss development and a combined ratio of 83.0%, contributing to strong profitability in the month.
- The Progressive Corporation reported financial results for February 2004, with net premiums written up 12% and net income up 63% compared to February 2003.
- Net income was $145.1 million or $0.66 per share, with a combined ratio of 83.7%.
- Personal Lines policies in force grew 16% year-over-year while Commercial Auto policies grew 25%. Premium growth rates declined as expected but remained strong.
The Progressive Corporation reported its results for May 2005. Net premiums written increased 2% compared to May 2004. Net income increased 16% to $126.1 million, while earnings per share increased 27% to $0.63. The combined ratio improved 0.8 percentage points to 85.8%. Personal lines policies in force grew 11% year-over-year.
The Progressive Corporation announced financial results for December 2005 and the full year 2005. For December, net income was $122.9 million, down 32% from the previous year due to an additional week of results in 2004. For the full year, net income was $1.393.9 billion, down 15% from 2004 which had 53 weeks of activity compared to 52 weeks in 2005. The company also held a conference call in March 2006 to discuss the full year 2005 results and filed its annual report with the SEC.
The Progressive Corporation reported financial results for February 2005, with net premiums written up 12% and net income down 12% compared to February 2004. Progressive saw growth in both its Personal and Commercial Auto business lines. The combined ratio was 85.2%, an increase of 1.5 percentage points from the prior year. Policies in force increased 12% overall, with growth across all business segments.
The Progressive Corporation reported its October 2004 results. Net premiums written increased 9% to $1.279.8 million compared to October 2003. Net income decreased 4% to $140.2 million while the combined ratio increased 2.3 percentage points to 87.0%. Progressive continues to respond to claims from hurricanes in August and September, with losses representing 1.5 percentage points of the loss ratio for the month. On October 22, Progressive repurchased 16.9 million shares for $1.5 billion through a Dutch auction tender offer.
The Progressive Corporation reported financial results for May 2004, with net premiums written up 16% and net income up 14% compared to May 2003. Key highlights included strong growth across personal and commercial lines of business, a combined ratio of 86.6%, and continued profitability in all but three personal lines markets. Policies in force also grew 15% year-over-year. Progressive continued to experience catastrophe losses which contributed to a higher loss ratio for the month.
The Progressive Corporation reported its November 2004 results, including a 7% increase in net premiums written and an 8% increase in net premiums earned compared to November 2003. Net income decreased 6% to $93.8 million while the combined ratio increased 2.9 percentage points to 89.6%. Personal lines policies in force grew 11% year-over-year while commercial auto policies increased 15%. Growth is slowing across most markets and businesses. Investment income was impacted by $3.8 million in special stock dividends while realized losses included $6 million in common stock impairments.
- The Progressive Corporation reported financial results for January 2004, including a 16% increase in net premiums written, a 21% increase in net premiums earned, and a 47% increase in net income compared to January 2003.
- Progressive saw growth in both its Personal Lines and Commercial Auto businesses, with personal auto policies in force up 18% and commercial auto policies up 26% compared to the previous year.
- The company had favorable loss development and a combined ratio of 83.0%, contributing to strong profitability in the month.
- The Progressive Corporation reported financial results for February 2004, with net premiums written up 12% and net income up 63% compared to February 2003.
- Net income was $145.1 million or $0.66 per share, with a combined ratio of 83.7%.
- Personal Lines policies in force grew 16% year-over-year while Commercial Auto policies grew 25%. Premium growth rates declined as expected but remained strong.
The Progressive Corporation reported its results for May 2005. Net premiums written increased 2% compared to May 2004. Net income increased 16% to $126.1 million, while earnings per share increased 27% to $0.63. The combined ratio improved 0.8 percentage points to 85.8%. Personal lines policies in force grew 11% year-over-year.
The Progressive Corporation announced financial results for December 2005 and the full year 2005. For December, net income was $122.9 million, down 32% from the previous year due to an additional week of results in 2004. For the full year, net income was $1.393.9 billion, down 15% from 2004 which had 53 weeks of activity compared to 52 weeks in 2005. The company also held a conference call in March 2006 to discuss the full year 2005 results and filed its annual report with the SEC.
The Progressive Corporation reported its March 2008 results. Net premiums written decreased 2% to $1.118 billion compared to March 2007. Net income decreased 46% to $71.3 million compared to the previous year. The combined ratio increased 4.6 points to 92.8. Policies in force increased for total personal auto, special lines, and commercial auto compared to the previous year. Progressive offers auto insurance nationwide and its commercial auto business writes insurance for small businesses.
The Progressive Corporation reported its November 2005 results. Net premiums written increased 5% to $986.3 million compared to November 2004. Net income decreased 11% to $83.3 million compared to the prior year. The combined ratio was 89.9%, a 0.3 point increase from November 2004. Progressive incurred losses of $4.2 million from Hurricane Wilma and $3 million from Hurricane Katrina in November, bringing its total losses from the storms to $76.6 million and $188.6 million, respectively.
Progressive reported its December 2008 results. Net premiums written were $905.7 million, unchanged from the prior year. Net income was a loss of $123.2 million compared to income of $67.6 million in the prior year. The combined ratio was 98.9%, up 3.1 percentage points from the prior year, driven by losses on securities. Policies in force increased 2% for personal auto and 7% for special lines compared to the prior year. Progressive also announced a conference call in February to discuss 2008 results.
The Progressive Corporation announced financial results for December 2004 and the fourth quarter of 2004. For December, net premiums written increased 32% to $1.135.5 million and net income increased 59% to $179.5 million. For the quarter, net premiums written rose 15% to $3.352.3 million and net income grew 16% to $413.5 million. The company also announced it would hold a conference call on March 3, 2005 to discuss its annual report.
The Progressive Corporation reported its October 2005 results. Net premiums written increased 4% to $1.328 billion compared to October 2004. Net income decreased 46% to $75.4 million compared to the same period last year. The combined ratio was 94.2, a deterioration of 7.2 points from October 2004, due to $84.4 million in losses from Hurricanes Wilma and Katrina. Progressive provides auto insurance to personal and commercial drivers throughout the US.
The Progressive Corporation reported financial results for March 2005. Net premiums written increased 5% to $1.127 billion compared to March 2004. Net income decreased 11% to $135.2 million compared to the prior year. Earnings per share fell 3% to $0.67. The combined ratio was 84.8, an increase of 2 percentage points from the prior year. Policies in force grew 12% year-over-year for personal lines and 14% for commercial auto.
The Progressive Corporation reported its financial results for July 2004. Net premiums written increased 7% to $1.298 billion compared to July 2003. Net income grew 18% to $168.1 million, while earnings per share rose 19% to $0.77. The combined ratio improved 3.3 percentage points to 82.6. Personal lines net premiums written grew 6% and commercial auto rose 19%. Progressive continued to experience strong profitability with only two unprofitable markets.
The document is a proxy statement for ConAgra Foods' annual meeting of stockholders on September 25, 2008. It provides information on matters to be voted on including the election of directors and ratification of the appointment of the independent auditor. It invites stockholders to attend the meeting and provides instructions on how to vote, including by proxy.
first energy 3Q 08 Consolidated Finan Communityfinance21
This document summarizes FirstEnergy's financial results for the third quarter of 2008 compared to the third quarter of 2007. Key points include:
- Earnings per share increased to $1.55 from $1.36 due to higher wholesale sales prices and lower expenses, partially offset by higher fuel costs.
- Electric deliveries declined 2% due to mild weather while generation revenues increased due to higher wholesale prices. Fuel and purchased power expenses rose due to higher market prices.
- FirstEnergy increased its full-year 2008 earnings guidance due to better-than-expected third quarter results.
This document is an amendment to a previously filed Form 10-K for ConAgra Foods Inc. It provides restated financial statements for fiscal years 2004, 2003 and 2002, and the first two quarters of fiscal 2005 due to errors discovered in income tax accounting. The errors resulted in an aggregate net increase in income tax expense of approximately $105 million for the periods affected. As a result of the restatement, ending stockholders' equity was reduced by $45.6 million as of May 30, 2004. The filing amends and restates items 6, 7, 8, 9A and 15 to reflect the restatement and its effects.
The Sherwin-Williams Company reported record financial results for 2007. Net sales increased 2.5% to $8 billion, a new record. Net income grew 6.9% to $615.6 million. Earnings per share increased 12% to $4.70. Cash from operations was $874.5 million, an increase of nearly $60 million over 2006. The company completed seven acquisitions to expand its product offerings and store presence globally.
The Sherwin-Williams Company reported another successful year in 2003 with net sales increasing 4.3% to $5.41 billion. Income before the cumulative effect of change in accounting principle grew 6.9% to $332.1 million. Diluted earnings per share set a new record high of $2.26, up 10.8% from the prior year. Cash flow from operations exceeded $550 million for the third consecutive year. The company strengthened its balance sheet, invested in capital expenditures and acquisitions, paid dividends, and repurchased shares. All operating segments increased sales with the exception of the Automotive Finishes segment, which saw a 0.6% increase. The company expects continued growth through
This document summarizes the Q1 FY2004 earnings results of a large packaged foods company. Key points include:
- Q1 EPS was $0.37 compared to $0.43 in Q1 FY2003, impacted by various one-time gains and losses.
- Packaged foods sales were down $168M excluding divested businesses, with a 5% volume decline.
- Several major brands saw growth, while others like Butterball declined.
- Corporate expenses increased due to litigation expenses from a past joint venture.
- The effective tax rate for FY2004 is estimated at 38%.
The document summarizes Henkel's financial results for the second quarter and first half of 2004 compared to the same periods in 2003. Net sales increased 9% in the second quarter and 6% year-to-date. Earnings from continuing operations rose 26% in the second quarter and 9% year-to-date due to growth across all business segments. Discontinued operations generated a large gain of $550 million from the exchange of businesses and increased earnings from discontinued operations significantly for both periods. As a result, net earnings increased substantially.
United Health Group Consolidated Financial Statementsfinance3
UnitedHealth Group reported strong financial results in 2001 with record revenues of $23.5 billion, up 11% from 2000. Net earnings reached a record $913 million, up 30% from 2000. All business segments experienced revenue and earnings growth. The consolidated operating margin increased to 6.7% due to productivity gains and a shift to higher-margin fee-based products. Return on shareholders' equity improved to 24.5% from 19.0% in 2000, demonstrating superior performance.
This document provides financial highlights and operating results for Illinois Tool Works Inc. for the years 1997-1999. It summarizes key financial metrics including operating revenues, operating income, income from continuing operations, and cash dividends paid. Operating revenues grew 11% to $9.33 billion in 1999. Operating income rose 14% to $1.49 billion. Income from continuing operations increased 13% to $911.9 million. Cash dividends paid per share grew 22% to $0.61. The company achieved record financial results in 1999 due to strong performances across many of its business segments.
This document provides financial highlights and operating results for Illinois Tool Works Inc. for the years 1999, 1998 and 1997. Some key details include:
- Operating revenues increased 11% to $9.33 billion in 1999. Operating income grew 14% to $1.49 billion. Income from continuing operations rose 13% to $912 million.
- All business segments experienced growth in revenues and operating income from 1998 to 1999, with the exception of a 1% decline in operating income for the Specialty Systems - International segment.
- Per share earnings for income from continuing operations increased 13% to $3.04 basic and 12% to $2.99 diluted over the prior year. Cash dividends paid per
- The Progressive Corporation reported financial results for February 2005, with net premiums written up 12% and net income down 12% compared to February 2004.
- Personal lines policies in force grew 12% year over year while commercial auto policies in force rose 14%.
- The combined ratio was 85.2% for February 2005, an increase of 1.5 percentage points from February 2004, driven partly by lower favorable reserve development on prior accident years.
This document summarizes the financial performance of a company for the third quarter and first six months of 2005 compared to the same periods in 2004. It shows that net sales increased 6% for both periods while earnings from continuing operations decreased 38% and 24% respectively due to higher costs. The household products division grew sales and earnings both periods, while other divisions saw mixed results.
- Tricon Global Restaurants owns KFC, Pizza Hut, and Taco Bell restaurant chains. In 2001, the company saw increases in ongoing operating profit, net income, and earnings per share compared to 2000, though total revenues declined slightly.
- The company aims to improve customer satisfaction ratings by focusing on running great restaurants and improving the customer experience, which it recognizes is an area that needs significant improvement. It plans to train employees to have a "Customer Mania" mindset with the goal of becoming the best in the industry for customer service.
- The document reports financial results for Clorox for the third quarter and first nine months of fiscal year 2006 compared to the same periods in fiscal year 2005. Net sales increased 7% in the third quarter and 6% year-to-date. Earnings from continuing operations were $110 million for the third quarter and $301 million year-to-date.
The Progressive Corporation reported its March 2008 results. Net premiums written decreased 2% to $1.118 billion compared to March 2007. Net income decreased 46% to $71.3 million compared to the previous year. The combined ratio increased 4.6 points to 92.8. Policies in force increased for total personal auto, special lines, and commercial auto compared to the previous year. Progressive offers auto insurance nationwide and its commercial auto business writes insurance for small businesses.
The Progressive Corporation reported its November 2005 results. Net premiums written increased 5% to $986.3 million compared to November 2004. Net income decreased 11% to $83.3 million compared to the prior year. The combined ratio was 89.9%, a 0.3 point increase from November 2004. Progressive incurred losses of $4.2 million from Hurricane Wilma and $3 million from Hurricane Katrina in November, bringing its total losses from the storms to $76.6 million and $188.6 million, respectively.
Progressive reported its December 2008 results. Net premiums written were $905.7 million, unchanged from the prior year. Net income was a loss of $123.2 million compared to income of $67.6 million in the prior year. The combined ratio was 98.9%, up 3.1 percentage points from the prior year, driven by losses on securities. Policies in force increased 2% for personal auto and 7% for special lines compared to the prior year. Progressive also announced a conference call in February to discuss 2008 results.
The Progressive Corporation announced financial results for December 2004 and the fourth quarter of 2004. For December, net premiums written increased 32% to $1.135.5 million and net income increased 59% to $179.5 million. For the quarter, net premiums written rose 15% to $3.352.3 million and net income grew 16% to $413.5 million. The company also announced it would hold a conference call on March 3, 2005 to discuss its annual report.
The Progressive Corporation reported its October 2005 results. Net premiums written increased 4% to $1.328 billion compared to October 2004. Net income decreased 46% to $75.4 million compared to the same period last year. The combined ratio was 94.2, a deterioration of 7.2 points from October 2004, due to $84.4 million in losses from Hurricanes Wilma and Katrina. Progressive provides auto insurance to personal and commercial drivers throughout the US.
The Progressive Corporation reported financial results for March 2005. Net premiums written increased 5% to $1.127 billion compared to March 2004. Net income decreased 11% to $135.2 million compared to the prior year. Earnings per share fell 3% to $0.67. The combined ratio was 84.8, an increase of 2 percentage points from the prior year. Policies in force grew 12% year-over-year for personal lines and 14% for commercial auto.
The Progressive Corporation reported its financial results for July 2004. Net premiums written increased 7% to $1.298 billion compared to July 2003. Net income grew 18% to $168.1 million, while earnings per share rose 19% to $0.77. The combined ratio improved 3.3 percentage points to 82.6. Personal lines net premiums written grew 6% and commercial auto rose 19%. Progressive continued to experience strong profitability with only two unprofitable markets.
The document is a proxy statement for ConAgra Foods' annual meeting of stockholders on September 25, 2008. It provides information on matters to be voted on including the election of directors and ratification of the appointment of the independent auditor. It invites stockholders to attend the meeting and provides instructions on how to vote, including by proxy.
first energy 3Q 08 Consolidated Finan Communityfinance21
This document summarizes FirstEnergy's financial results for the third quarter of 2008 compared to the third quarter of 2007. Key points include:
- Earnings per share increased to $1.55 from $1.36 due to higher wholesale sales prices and lower expenses, partially offset by higher fuel costs.
- Electric deliveries declined 2% due to mild weather while generation revenues increased due to higher wholesale prices. Fuel and purchased power expenses rose due to higher market prices.
- FirstEnergy increased its full-year 2008 earnings guidance due to better-than-expected third quarter results.
This document is an amendment to a previously filed Form 10-K for ConAgra Foods Inc. It provides restated financial statements for fiscal years 2004, 2003 and 2002, and the first two quarters of fiscal 2005 due to errors discovered in income tax accounting. The errors resulted in an aggregate net increase in income tax expense of approximately $105 million for the periods affected. As a result of the restatement, ending stockholders' equity was reduced by $45.6 million as of May 30, 2004. The filing amends and restates items 6, 7, 8, 9A and 15 to reflect the restatement and its effects.
The Sherwin-Williams Company reported record financial results for 2007. Net sales increased 2.5% to $8 billion, a new record. Net income grew 6.9% to $615.6 million. Earnings per share increased 12% to $4.70. Cash from operations was $874.5 million, an increase of nearly $60 million over 2006. The company completed seven acquisitions to expand its product offerings and store presence globally.
The Sherwin-Williams Company reported another successful year in 2003 with net sales increasing 4.3% to $5.41 billion. Income before the cumulative effect of change in accounting principle grew 6.9% to $332.1 million. Diluted earnings per share set a new record high of $2.26, up 10.8% from the prior year. Cash flow from operations exceeded $550 million for the third consecutive year. The company strengthened its balance sheet, invested in capital expenditures and acquisitions, paid dividends, and repurchased shares. All operating segments increased sales with the exception of the Automotive Finishes segment, which saw a 0.6% increase. The company expects continued growth through
This document summarizes the Q1 FY2004 earnings results of a large packaged foods company. Key points include:
- Q1 EPS was $0.37 compared to $0.43 in Q1 FY2003, impacted by various one-time gains and losses.
- Packaged foods sales were down $168M excluding divested businesses, with a 5% volume decline.
- Several major brands saw growth, while others like Butterball declined.
- Corporate expenses increased due to litigation expenses from a past joint venture.
- The effective tax rate for FY2004 is estimated at 38%.
The document summarizes Henkel's financial results for the second quarter and first half of 2004 compared to the same periods in 2003. Net sales increased 9% in the second quarter and 6% year-to-date. Earnings from continuing operations rose 26% in the second quarter and 9% year-to-date due to growth across all business segments. Discontinued operations generated a large gain of $550 million from the exchange of businesses and increased earnings from discontinued operations significantly for both periods. As a result, net earnings increased substantially.
United Health Group Consolidated Financial Statementsfinance3
UnitedHealth Group reported strong financial results in 2001 with record revenues of $23.5 billion, up 11% from 2000. Net earnings reached a record $913 million, up 30% from 2000. All business segments experienced revenue and earnings growth. The consolidated operating margin increased to 6.7% due to productivity gains and a shift to higher-margin fee-based products. Return on shareholders' equity improved to 24.5% from 19.0% in 2000, demonstrating superior performance.
This document provides financial highlights and operating results for Illinois Tool Works Inc. for the years 1997-1999. It summarizes key financial metrics including operating revenues, operating income, income from continuing operations, and cash dividends paid. Operating revenues grew 11% to $9.33 billion in 1999. Operating income rose 14% to $1.49 billion. Income from continuing operations increased 13% to $911.9 million. Cash dividends paid per share grew 22% to $0.61. The company achieved record financial results in 1999 due to strong performances across many of its business segments.
This document provides financial highlights and operating results for Illinois Tool Works Inc. for the years 1999, 1998 and 1997. Some key details include:
- Operating revenues increased 11% to $9.33 billion in 1999. Operating income grew 14% to $1.49 billion. Income from continuing operations rose 13% to $912 million.
- All business segments experienced growth in revenues and operating income from 1998 to 1999, with the exception of a 1% decline in operating income for the Specialty Systems - International segment.
- Per share earnings for income from continuing operations increased 13% to $3.04 basic and 12% to $2.99 diluted over the prior year. Cash dividends paid per
- The Progressive Corporation reported financial results for February 2005, with net premiums written up 12% and net income down 12% compared to February 2004.
- Personal lines policies in force grew 12% year over year while commercial auto policies in force rose 14%.
- The combined ratio was 85.2% for February 2005, an increase of 1.5 percentage points from February 2004, driven partly by lower favorable reserve development on prior accident years.
This document summarizes the financial performance of a company for the third quarter and first six months of 2005 compared to the same periods in 2004. It shows that net sales increased 6% for both periods while earnings from continuing operations decreased 38% and 24% respectively due to higher costs. The household products division grew sales and earnings both periods, while other divisions saw mixed results.
- Tricon Global Restaurants owns KFC, Pizza Hut, and Taco Bell restaurant chains. In 2001, the company saw increases in ongoing operating profit, net income, and earnings per share compared to 2000, though total revenues declined slightly.
- The company aims to improve customer satisfaction ratings by focusing on running great restaurants and improving the customer experience, which it recognizes is an area that needs significant improvement. It plans to train employees to have a "Customer Mania" mindset with the goal of becoming the best in the industry for customer service.
- The document reports financial results for Clorox for the third quarter and first nine months of fiscal year 2006 compared to the same periods in fiscal year 2005. Net sales increased 7% in the third quarter and 6% year-to-date. Earnings from continuing operations were $110 million for the third quarter and $301 million year-to-date.
The document summarizes the financial performance of a company for the third quarter and first nine months of fiscal years 2007 and 2006. It shows that net sales increased 7% for the quarter and 5% year-to-date. Earnings from continuing operations increased 15% for the quarter and 14% year-to-date. The Household and Specialty segments saw increased sales and earnings growth while International saw moderate growth. Total assets were $3.69 billion with total liabilities of $3.60 billion, leaving stockholders' equity of $159 million.
Yum! Brands had a very successful financial year in 2002, with revenue growth of 12% and ongoing operating earnings per share growth of 19%. A key driver of growth was the company's international business, where ongoing operating profits grew 22% and over 1,000 new restaurants were opened. Looking ahead, Yum! Brands plans to double its number of international restaurants in the next 8-10 years. Additionally, the company sees potential to expand in the US through its strategy of "multibranding", which involves offering multiple brands like KFC, Taco Bell, and Pizza Hut under the same roof. This allows Yum! to drive higher sales and pursue new market opportunities. The goal is to remodel
This document summarizes the financial performance of a company for the third quarter and first nine months of 2005 compared to the same periods in 2004. It shows that net sales increased slightly for the quarter but increased 5% year-to-date, while earnings from continuing operations increased for both periods. On a segment level, the Household Group - North America saw stable sales growth and increased earnings for the quarter and year-to-date. Total assets decreased slightly from the previous fiscal year end while long-term debt increased significantly.
Lincoln Financial Group has focused its business on wealth accumulation and wealth protection for the high-net-worth and retirement markets in the US. It has narrowed its focus through divesting businesses like its reinsurance operations and managed healthcare to concentrate on annuities, life insurance, and investment management. This focus has led to strong financial performance and earnings growth, though performance was impacted in 2001 by market declines. Lincoln's target markets in high-net-worth individuals and retirees have seen double-digit growth. Its life insurance and retirement products have strong positions in their target markets due to innovative product design and administrative services.
The Progressive Corporation reported its results for May 2005. Net premiums written increased 2% compared to May 2004. Net income increased 16% to $126.1 million, while earnings per share increased 27% to $0.63. The combined ratio improved 0.8 percentage points to 85.8%. Personal lines policies in force grew 11% year-over-year.
The document provides financial information for Procter & Gamble for the fourth quarter and fiscal year 2006 compared to 2005, including:
- Net sales increased 5% in the fourth quarter and 6% for the fiscal year.
- Earnings from continuing operations were $142 million in the fourth quarter and $443 million for the fiscal year.
The document is P&G's 2000 annual report which summarizes the company's financial and operating performance for the fiscal year.
1) Net sales grew 5% to $39.9 billion while net earnings fell 6% to $3.5 billion due to higher costs from organizational changes and new investments. Core earnings excluding restructuring costs grew 2% to a record $4.2 billion.
2) The CEO acknowledges the year's challenges but expresses confidence that by focusing on big brands, innovation, customer partnerships, and cost control, P&G can restore balanced growth in sales and profits.
3) Looking forward, the new organizational structure aims to leverage P&G's strengths in understanding consumer needs
USG Corporation had a very successful year in 1999. Net sales increased 15% to $3.6 billion, operating profit rose 25% to $730 million, net earnings increased 27% to $421 million, and diluted earnings per share were $8.39 compared to $6.61 in 1998. To continue this growth, USG is investing in new state-of-the-art manufacturing facilities to increase production capacity and replace older, higher-cost plants. They are also focusing on innovation, expanding distribution through L&W Supply, strengthening customer relationships, and building their brands.
This document summarizes the financial performance of a company for the third quarter and fiscal year ending June 30, 2005 compared to the prior year. It shows that net sales increased 6% for the quarter and 5% for the year. Earnings from continuing operations were $156 million for the quarter and $517 million for the year. The company also had significant earnings from discontinued operations of $579 million for the year from the sale of a business unit.
The Clorox Company reported financial results for the second quarter of fiscal year 2004. Net sales increased 2% to $947 million compared to $926 million in the previous year. Earnings from continuing operations were $111 million, up 27% from $87 million last year. Earnings per share from continuing operations were $0.52 compared to $0.39 the previous year. The company saw sales growth in its Household Products-North America and Household Products-Latin America/Other segments, while Specialty Products sales remained flat.
Motorola experienced a difficult year in 2001 with declining sales and losses. The company implemented a 5-point plan to rebuild value that included strengthening management, stabilizing finances, reducing costs, pursuing growth through innovation, and reevaluating strategies. While most sectors struggled, PCS improved market share and profitability and BCS bolstered its leadership in cable equipment through acquisitions. The company remains focused on innovation in communications solutions and returning to profitability.
This document provides quarterly financial data for Citigroup, including:
1) Income statements for Citigroup's major business segments broken down by product and region, showing revenues, expenses, profits.
2) Key metrics for Citigroup as a whole, including revenues, income, earnings per share, assets, equity.
3) Specific data on performance of Citigroup's Global Consumer credit card business, including revenues, expenses, profits, and effects of securitization activities.
ConAgra Foods is selling its chicken business to focus on branded and value-added food items. The sale includes chicken processing operations and will generate cash for ConAgra to reinvest. ConAgra will receive Class A shares in Pilgrim's Pride, the chicken company acquiring its business, representing 7% of voting shares and 49% of equity. It can sell up to 1/3 of these shares annually but expects to reduce ownership over time based on market conditions. ConAgra will also receive notes from Pilgrim's Pride due in 2011 with a 10.5% interest rate to be paid semi-annually.
ConAgra Foods is selling its United Agri Products business to focus on branded and value-added products, as part of a broader strategy of divesting non-core businesses over the past year including fresh beef/pork, canned seafood, and cheese operations. The sale is expected to close by December 31, 2003 for cash and $60-75 million in preferred stock. ConAgra will retain some international UAP operations generating $250 million in annual sales, concentrated in several countries. Proceeds will be used for debt paydown and general corporate purposes including acquisitions and stock buybacks.
ConAgra Foods divested its poultry business to focus on branded, value-added foods with strong margins and growth. The $300 million cash and 25 million Pilgrim's Pride shares valued at $245 million totaled less than the poultry business' estimated $545 million book value due to the shares being valued based on past prices, not current prices. ConAgra Foods can sell up to 1/3 of the shares each year and account for shares eligible for resale within a year as securities, and other shares using cost accounting. The poultry business was previously reported in Meat Processing but is now in Discontinued Operations.
ConAgra Foods completed the divestiture of its chicken processing and crop inputs businesses, finalizing its strategy to focus on branded, value-added food opportunities. The company received $300 million in cash and 25 million shares of Pilgrim's Pride stock worth $245 million for the chicken business. ConAgra can sell up to 1/3 of the Pilgrim's Pride shares per year and will account for the shares as securities held for resale within one year or using the cost method if the eligibility for resale is over one year away. The chicken business was previously reported as part of ConAgra's Meat Processing segment but is now in Discontinued Operations.
ConAgra Foods has divested several commodity businesses and acquired branded and value-added food products to focus on higher margin businesses. The company is planning a share repurchase program using cash from strong operating cash flows and recent divestitures. ConAgra expects to continue investing in growth through acquisitions and paying down debt while deploying cash to dividends, debt repayment, and share repurchases as appropriate.
The document provides a Q&A summary of ConAgra Foods' financial results for Q2 FY04 compared to Q2 FY03. Key points include:
- Q2 FY04 diluted EPS was $0.51 compared to $0.44 in Q2 FY03, impacted by $0.04 in discontinued operations in FY04 and $0.03 in divestiture expenses in FY03.
- Sales comparability was impacted by $506M in divested fresh meat businesses in FY03 and $154M in divested canned food businesses in FY03.
- Examples of brand sales growth included Banquet, Chef Boyardee, Egg Beaters
Packaged Foods sales increased 4% excluding divestitures, with 2% volume growth. Several brands posted sales growth including Armour, Banquet, and Blue Bonnet, while others like ACT II and Butterball declined. Sales comparability was affected by $155 million in divested businesses last year. Operating profit grew 5% in Packaged Foods and 10% overall when adjusting for divested businesses and cost savings initiatives. The company is implementing cost cutting measures expected to save more than implementation costs in the future.
The document provides the quarterly and annual financial results for a company. Some key highlights include:
- Several consumer brands posted sales growth for the quarter including Banquet, Blue Bonnet, and Chef Boyardee, while others like ACT II and Eckrich saw declines.
- Total depreciation and amortization was around $93 million for the quarter and $352 million for the fiscal year.
- Capital expenditures were around $106 million for the quarter and $352 million for the fiscal year.
- Net interest expense was $80 million for the quarter and $275 million for the fiscal year.
- Corporate expenses were around $95 million for the quarter and $342 million
- Major brands in the Retail Products segment that posted sales growth included ACT II, Armour, Banquet, and Blue Bonnet. Brands that posted sales declines included Healthy Choice, Slim Jim, and Snack Pack.
- Retail volume increased 8% while foodservice volume was flat excluding divested businesses.
- Increased input costs negatively impacted operating profits in the Retail Products segment by approximately $45 million.
- Capital expenditures were approximately $105 million, reflecting increased investment in information systems.
This document contains the questions and answers from ConAgra Foods' Q2 FY2005 earnings call. Some key details include:
- Several major brands in the Retail Products segment posted sales growth, while others saw declines.
- Retail volume increased 7% and Foodservice volume decreased 1% excluding divested businesses.
- Capital expenditures increased significantly year-over-year due to investments in information systems.
- The company received proceeds from the sale of its minority interest in Swift Foods and shares of Pilgrim's Pride stock.
This document summarizes the Q3 2005 earnings results of a major food company. Some key highlights include: 1) Major brands in the Retail Products segment saw mixed sales results, with growth for brands like Chef Boyardee but declines for brands like Butterball. 2) Unit volumes declined 3% for Retail Products but increased 4% for Foodservice Products. 3) The packaged meats operations were slightly profitable but profits were over $45 million lower than the previous year. The company expects some improvement but not year-over-year profit gains for packaged meats in Q4.
This document summarizes ConAgra Foods' earnings results for fiscal year 2005 (FY05) in a question and answer format. Some key details include:
- FY05 diluted EPS was $1.23, including $0.12 in expenses that impacted comparability.
- Major brands in the Retail Products segment that saw sales growth included ACT II, Banquet, and Blue Bonnet. Brands that saw declines included Armour and Butterball.
- Retail Products volume increased 2% while Foodservice Products volume decreased 2% in Q4.
- Total depreciation and amortization was approximately $351 million for FY05 and $90 million for Q4. Capital expenditures
The document provides the questions and answers from the Q1 FY06 earnings call for ConAgra Foods. Some key details from the summary include:
- Sales grew for major brands like Butterball but declined for brands like ACT II. Retail Products volume declined 3% while Foodservice increased 4%.
- Depreciation and amortization was $89 million. Capital expenditures were $71 million and net interest expense was $68 million. Corporate expense was $73 million.
- Gross margin was 21.6% and operating margin was 10.9%. The effective tax rate for FY06 is estimated to be 36%.
Major brands in the Retail Products segment that posted sales growth included ACT II, Blue Bonnet, Butterball, Kid Cuisine, Marie Callender's, Reddi-wip and Ro*Tel. Brands that posted sales declines included Armour, Banquet, Cook's, DAVID, Eckrich, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, LaChoy, Orville Redenbacher, PAM, Parkay, Peter Pan, Slim Jim, Snack Pack, Swiss Miss, Van Camp's and Wesson. Retail Products volume declined 5% for the quarter while Foodservice Products volume increased 2%. Corporate expense for the quarter was approximately $103 million
The document provides financial information from ConAgra Foods' Q3 FY06 quarterly earnings call. Some key details include:
- Retail segment sales grew 4% and Foodservice grew 1% over the prior year. Several major brands posted sales growth while others declined.
- Gross margin was 24.8% and operating margin was 12.5% for the quarter.
- Net debt was $3.6 billion, down from $4.5 billion a year prior due to debt repayment of $500 million during the quarter.
- Capital expenditures for the quarter and fiscal year-to-date were below prior year levels. Projected fiscal year expenditures are up to $400
- Major brands in the Consumer Foods segment that posted sales growth in Q4 FY06 included Blue Bonnet, Chef Boyardee, DAVID, Egg Beaters, Hebrew National, and Hunt's. Brands that posted sales declines included ACT II, Banquet, Healthy Choice, Peter Pan, Slim Jim, Snack Pack, and Van Camp's.
- Consumer Foods volume declined 2% in Q4 while Food and Ingredients volume increased 1%.
- Total depreciation and amortization for Q4 was approximately $85 million and approximately $353 million for all of FY06. Capital expenditures were approximately $92 million for Q4 and $288 million for FY
This document summarizes the Q1 FY07 financial results of ConAgra Foods. Some key highlights include:
- Consumer Foods volume increased 1% and Food and Ingredients volume increased 2% in Q1.
- Gross margin was 24.7% and operating margin was 11.7% for the quarter.
- Net debt decreased to $2.88 billion from $3.97 billion in Q1 FY06.
- Restructuring charges totaled $39 million pre-tax, impacting costs in Consumer Foods and corporate expenses.
Major brands in the Consumer Foods segment that posted sales growth included Egg Beaters, Healthy Choice, and Slim Jim. Brands that posted sales declines included ACT II and Blue Bonnet. Total depreciation and amortization from continuing operations was $88 million for the quarter and $177 million year-to-date. Capital expenditures were $66 million for the quarter and $111 million year-to-date. Net interest expense was $52 million for the quarter and $110 million year-to-date.
1) Several major brands in the Consumer Foods segment posted sales growth for the quarter, while others like ACT II and Banquet saw declines. Overall, Consumer Foods volume declined 1% excluding divested businesses.
2) Total depreciation and amortization from continuing operations was around $91 million for the quarter and $268 million year-to-date. Capital expenditures were around $147 million for the quarter and $258 million year-to-date.
3) The company's net debt at the end of the quarter was around $3 billion, with a net debt to total capital ratio of 39%.
1) Several major brands in the Consumer Foods segment posted sales growth for the quarter, while others such as ACT II and Knott's Berry Farm saw declines.
2) Consumer Foods volume was flat excluding divested businesses, while Food and Ingredients volume increased 3%.
3) Capital expenditures increased significantly both for the quarter and full fiscal year compared to the previous year.
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3. Eaton Corporation is
a global $7.3 billion
diversified industrial
manufacturer that is a
leader in fluid power
systems; electrical
power quality, distribu-
tion and control;
automotive engine air
management and fuel
economy; and intelli-
gent truck systems for
fuel economy and
safety. Eaton has 49,000
employees and sells
products in more than
50 countries. For more
information, visit
www.eaton.com.
Financial Highlights
2
Letter to Shareholders
4
Focal Points
6
Financial Review Table of
16
Contents
Report of Management
17
Report of Independent
17
Auditors
Consolidated Financial
18
Statements
Financial Review
22
Management’s Discussion
34
and Analysis
Quarterly Data
40
Six-Year Consolidated
41
Financial Summary
Directors
42
Corporate Officers
42
Appointed Officers
42
Shareholder Information
43
4. Measure
7,104
6,515 6,358 8,005 8,309 7,299
Net Sales from Continuing Operations
(Millions of dollars)
1996 1997 1998 1999 2000 2001
Income from Continuing Operations 472
336 446 425 383 233
Excluding Unusual Items
(Millions of dollars)
1996 1997 1998 1999 2000 2001
6.03
4.29 6.14 5.76 5.28 3.30
Income from Continuing Operations per
Common Share Excluding Unusual Items
1996 1997 1998 1999 2000 2001
Net Cash Provided by Operating 774
669 623 708 519 765
Activities of Continuing Operations
(Millions of dollars)
1996 1997 1998 1999 2000 2001
2
5. Excluding
unusual items As reported
2001 2000 2001 2000
(Millions except for per share data)
Continuing operations
Net sales $ 7,299 $ 8,309 $ 7,299 $ 8,309
Income before income taxes 346 582 278 552
Income after income taxes 233 383 169 363
Income from continuing operations
per Common Share assuming dilution $ 3.30 $ 5.28 $ 2.39 $ 5.00
Cash earnings from continuing operations
per Common Share assuming dilution $ 4.40 $ 6.37 $ 3.49 $ 6.09
Average number of Common Shares
outstanding assuming dilution 70.5 72.6
Cash dividends paid per Common Share $ 1.76 $ 1.76
Market price per Common Share
High $ 81.43 $ 86.56
Low 55.12 57.50
Total assets $ 7,646 $ 8,180
Total debt 2,440 3,004
Shareholders’ equity 2,475 2,410
Shareholders’ equity per Common Share $ 35.61 $ 35.29
Common Shares outstanding 69.5 68.3
Income from continuing operations as reported includes the
following unusual items:
Income was reduced by unusual charges, primarily for
restructuring and acquisition integration actions, of $129 in
2001 ($86 after-tax, or $1.21 per Common Share) and $52 in
2000 ($34 after-tax, or $.47 per share).
Income in 2001 was increased by a net pretax gain related
to the sales of businesses of $61 ($22 after-tax, or $.30 per
Common Share). Income in 2000 was increased by a net pre-
tax gain related to the sales of corporate assets of $22 ($14
after-tax, or $.19 per share).
Cash earnings per Common Share represent income per share
before non-cash amortization expense for goodwill and other
intangible assets of $1.10 per share in 2001 and $1.09 in 2000.
This summary includes amounts for continuing operations only
and excludes the semiconductor equipment operations which
were spun-off to Eaton shareholders on December 29, 2000
and are reported as discontinued operations.
3
6. Resolve
To Our Shareholders: culture. The courage shown hard to capture the full Eaton sales declined by
by our employees — by benefits of the scale and only 12 percent. We also
returning immediately to scope within the entire garnered important new
To say that 2001 was a
normal activities in their enterprise. Our performance business commitments
difficult year is to vastly
family lives, jobs, and com- in 2001 benefited directly during the year in each
understate the challenges
munities — was a powerful from this approach and the of our business seg-
faced by our corporation
demonstration of leadership implementation of the Eaton ments, which will con-
and the community we call
at a time when leadership Business System. tribute to our ability to
the civilized world. Our end
was sorely needed. continue to outgrow our
markets weakened, the Beginning in late 2000, we
end markets in 2002.
economy declined and Leadership is always a pre- took swift and decisive
the world changed. cious resource for an enter- actions when we foresaw a We resized our resources
•
prise, but it is especially continued, dramatic weaken- to ensure that Eaton could
The year began with our
critical during a period of ing of the North American continue to compete
markets experiencing their
dramatic economic change, industrial economy. Our oper- successfully at far lower
worst deterioration since the
like the one we experienced ating plan focused on three levels of economic activity.
early 1980s. And this decline
in 2001. We are working to critical elements: outgrowing Aggressive actions were
continued at an increasing
ensure that our strategy is our end markets, resizing the taken throughout the year,
rate through the first eight
clear, our operational objec- corporation and strengthen- including a total of $119
months of 2001. Then the
tives are broadly under- ing our balance sheet. million of restructuring
markets, the economy, and
stood and the execution activities, the closing of 17
the world were further shak- While our sales and earn-
is increasingly crisp. manufacturing plants and
en by the tragic events of ings declined substantially
an 18 percent reduction in
September eleventh. We all Our strategy remains the during 2001, we achieved
our total employment.
will long remember this same: to reposition Eaton very credible results:
horrific day. Corporation as a premier During a period of
•
We were again successful
•
diversified industrial enter- depressed end markets,
I am proud of the collective in outgrowing our end
prise. As an important ele- lower sales and reduced
resolve of the employees markets in each of our
ment of this transformation, profitability, we strength-
of Eaton who helped those four business segments.
we have changed our ened Eaton’s balance
directly affected by these The weighted average of
management model. We sheet markedly. We repaid
senseless acts of terrorism our end markets declined
now run our corporation more than $560 million
and rededicated themselves by approximately 15 per-
as an integrated operating of debt, improving our net
to the principles of freedom cent during 2001, while
company and are working debt to capital ratio from
and the power of an inclusive
4
7. As a better balanced, leaner, and more focused
enterprise, Eaton is well positioned to take full
advantage of the coming upturn in our end markets.
55 percent to below 47 We are operating in a Our vision remains the
percent. The outstanding period of increased uncer- same — we are committed
cash flow generation tainty. While the North to our goals of 10 percent
from our operations American markets may be growth through the economic
reflects continued at the bottom of the cycle, cycle, a 30 percent improve-
improvement in our man- markets in Europe, South ment in the rate of profitabil-
ufacturing processes and America and parts of Asia- ity and a further 15 percent
the benefits of our new Pacific are weakening. improvement in our working
business model’s capital velocity. While 2001
We expect 2002 to be a
increased involvement has been a disappointing
transitional year during which
with strategic suppliers. year in terms of the decline
our end markets will remain
We also successfully in our end markets and the
depressed in the first half,
divested several non-core resultant decline in our earn-
with the prospect of a mild
businesses during 2001. ings, we remain confident in
recovery at the end of the
Eaton’s potential and com-
The value of the changed year. Eaton is ready for the
•
mitted to our heightened
Eaton is beginning to challenge. We have signifi-
performance targets.
be recognized by the cantly improved our compet-
financial markets. During itive position. We have
a year when the Dow resized our enterprise to
declined by 7.1 percent, compete successfully at
the S&P 500 by 13 per- lower levels of activity. And
cent and the NASDAQ by we have strengthened our
21.1 percent, Eaton’s 2001 balance sheet considerably. Alexander M. Cutler
all-in return was 16.9 per- As a better balanced, leaner, Chairman and Chief
cent. For our shareholders and more focused enterprise,
Executive Officer
who elected to hold the Eaton is well positioned
shares of Axcelis, which to take full advantage of
they received at the end the coming upturn in our
of 2000, the combined end markets.
all-in return was an
impressive 21.7 percent.
8. Rejuvenate
Our Business Model
First we changed the Over the last few years, more capable of achieving a less vertically integrated
Eaton has undergone a dra- savings and efficiencies organization, we can suc-
company. Now we’re
matic transformation. We with our supplier partners, cessfully drive other key
changing the way we changed from a traditional and better equipped to seize growth initiatives across the
do business. vehicle components manu- new service and aftermarket company including: new
facturer to a truly diversified business. Our Cutler-Hammer product development; global
industrial enterprise with four Engineering Services and expansion and acquisition;
broad business segments: Systems (C-H ESS) business partnerships and outsourc-
Fluid Power, Industrial demonstrated how Eaton’s ing opportunities; robust
& Commercial Controls, redesigned management supply chain management;
Automotive and Truck. We model enabled us to profit a strategic marketing focus;
changed our business model from new market sectors. heightened levels of cus-
and began managing our A total solutions source for tomer responsiveness;
enterprise as one integrated facility electrical service and involvement in burgeoning
operating company instead of system needs, C-H ESS areas of the economy; and
four independent businesses. sales grew at a rate of 23 total immersion in a Web-
We introduced the Eaton percent in 2001, in an econ- enabled environment. For
Business System as a frame- omy where most business- example, we continued to
work for capturing the bene- es spiraled downward. Our invest in Eaton University,
fits of our size, strength and business model also helped our largely virtual institute
scope. And we expanded the grow Eaton’s Truck aftermar- for training and professional
roles of Eaton’s four senior ket division, established in development. From tradi-
vice presidents. In addition March 2000 to mitigate the tional classrooms to a
to running their lines of impact of industry down- complete Web-based learn-
business, they were given turns and create additional ing environment, Eaton
corporate responsibility for growth by offering parts University is helping to
the company-wide functions and service solutions to develop the skills and talent
of marketing, innovation, customers in the commer- of our employees and
quality, regional operations cial vehicle market. During channel partners. Fueled
and supplier resource the second half of 2001, by a new business model
management. It’s working. it posted five consecutive that delivers real results,
Today, we are less capital months of sales growth, Eaton is well on its way to
intensive, quicker in re- amidst a declining market becoming a premier diversi-
sponding to market cycles, for new vehicles. With fied industrial.
7
9. Anticipate
Organizing for Success
We can’t control the The key to success in the these restructuring actions our employees pulled
global marketplace is antici- to deliver $100 million of together during these tough
global economy or our
pating change and capitaliz- savings in 2002. Additional times to ensure that we
end markets, but we ing on it. In 2001, Eaton restructuring actions under- kept our commitments to
can manage Eaton. faced sharp declines in near- taken in early 2002 in the our customers. We now
ly all of our markets. While Truck, Fluid Power and stand more focused, resilient
we could not control the Industrial & Commercial and prepared for any future
economy, we could — and Controls segments are challenge. And as an enter-
did — take decisive actions expected to yield an addi- prise, Eaton is stronger,
to help ensure the contin- tional $30 million of savings, more competitive and better
ued competitiveness of our for a total of $130 million of positioned to take maximum
organization. We lowered savings during the year. In advantage of the eventual
our structural costs and 2001, we also acquired new economic recovery.
resized the company to businesses to help us reach
operate more effectively and or exceed our target of
efficiently. We shed busi- growing earnings per share
nesses and product lines by 10 percent through the
that no longer fit our strate- cycle. All of this would have
gic objectives. We closed been impossible to accom-
plants and consolidated plish without the continued
facilities and functions. And dedication of Eaton employ-
we reduced the size of our ees around the world.
workforce in order to com- Whether working on restruc-
pete at lower levels of eco- turing actions or ongoing
nomic activity. We expect business improvements,
8
10. Integrate
The Power of One Eaton
We create value when To become a premier diver- use innovative business Our Nordhausen, Germany
sified industrial, Eaton is practices to meet require- facility, which produces
the whole of our
building value in each of its ments and achieve objec- engine valves, exemplifies
enterprise exceeds the individual businesses while tives. The most effective the EBS in action. From
combination of its leveraging the diversity and approaches are evaluated 1996 to 2001, the facility
diverse parts. It’s the scale of the entire enter- and selected as best prac- has achieved on-time deliv-
prise. The Eaton Business tices and re-deployed ery rates of 100 percent and
power of one Eaton.
System (EBS) is our frame- throughout the company to increased output by 12
work for managing Eaton’s harness the power of one percent annually. As a result,
worldwide operations as Eaton. In 2001, we devel- it was one of four recipients
one integrated operating oped and implemented of the 2001 Eaton Business
company in order to exceed the Eaton Lean System, a Excellence Award. The
the rising performance new EBS tool which simpli- remaining one-third of Eaton
expectations of all our stake- fies and improves manufac- facilities will achieve Eaton
holders. By providing a turing and office processes. Business Excellence certifi-
common philosophy, set of The EBS also fostered the cation by the middle of 2002.
values, management tools creation and introduction of
and measures, the EBS lays the PROLaunch product
the foundation for achieving development system, a
operational excellence. series of integrated steps
Together, its interrelated using Six Sigma for design
elements positively impact and development to make
Eaton’s results through new product launches
improvements in working cost-effective and flawless.
capital, cost savings, operat- By year-end, approximately
ing margins, and the launch- two-thirds of Eaton’s
ing of new products. The facilities met the rigorous
EBS focuses on improving standards of the EBS,
results by encouraging busi- with some facilities far
ness units and plants to exceeding the requirements.
11
11. Innovate
Bold New Solutions
We make airplanes Eaton’s tradition of innovation the light commercial vehicle engine power and electric
continued in 2001, with break- market, recovers energy nor- power merge to produce sig-
fly, power flow and
throughs in several exciting mally lost during braking and nificant economic and envi-
vehicles go. Our prod- product technologies. Our converts it into hydraulic ronmental benefits. Eaton
ucts aren’t always Industrial & Commercial Con- power. This stored energy is plans to deliver a prototype to
visible, but Eaton trols segment introduced its then used with the engine- FedEx Express in 2002. An
new Intelligent Technologies based power when a driver Eaton technology with future
innovation touches
(IT) line of motor control and accelerates, resulting in fuel cross-business applications in
your life.
software products during the savings and improved exhaust all our segments is our next
year, including soft starters emissions. Fuel savings of 25 generation Fluid Condition
and motor control centers, to 35 percent are expected in Monitor (FCM). Targeted initial-
used to control equipment common metropolitan stop- ly for automotive and
from air compressors to ski and-go applications such as off-road applications, FCM
lifts. Through distinctive pack- buses, garbage trucks and technology uses an intelligent
aging, diagnostic and safety delivery vehicles. In 2001, sensor to monitor additive
features, we help customers Eaton delivered two prototype depletion in engine, hydraulic
improve productivity and HLA systems to Ford. The and transmission fluids and
reduce installation and main- hybrid electric powertrain, predict their remaining useful
tenance costs. Future expan- being developed by our Truck life in real time. As a result,
sion of the widely adopted IT segment for pick-up and deliv- vehicle users will drive farther
line includes network connec- ery vehicles, is another Eaton between oil changes, sched-
tivity and a “system well- innovation designed to ule oil changes when conven-
ness” capability, enabling our improve vehicle performance, ient and enjoy lower mainte-
C-H ESS business to help cus- efficiency, exhaust emissions nance costs. FCM technology
tomers protect and optimize and life cycle ownership also senses system health
critical assets — their people costs. It works by using a and can warn operators of
and capital investments. smaller engine equipped with impending problems before
Eaton’s Fluid Power segment an electric motor to provide they happen, thereby avoiding
made significant progress on the missing power that a larg- high repair costs associated
our new Hydraulic Launch er engine would have provid- with failures. Cost-effective
Assist (HLA) technology, being ed. Similar to HLA technology, and environmentally-friendly,
developed in conjunction with energy usually lost during FCM technology will be tested
the Ford Motor Company and braking is reclaimed and then by customers in 2002. It’s
the U.S. Environmental retained in batteries or other breakthrough solutions like
Protection Agency. The tech- energy storage devices. these that make a difference
nology, to be introduced in During vehicle operation, in the world around us.
12
12. Accelerate
Growth Opportunities
Eaton gets real growth High-performance products our $500 million multi-year result of the National
come out of Eaton facilities variable valve actuation Electrical Code guideline
and real profits from
every day — products that technology contract with requiring all 15 and 20 amp
real products. contribute to our customers’ General Motors reinforce bedroom outlet circuits in
success. And as they our Automotive segment’s new construction in compli-
succeed, so do we. Our strategic focus on improving ant states be protected by
Aerospace business won safety, performance, fuel AFCI circuit breakers begin-
nearly $2 billion in future economy and the environ- ning January 1, 2002.
commercial and military ment. Our Truck segment Development work contin-
contracts during the year accelerated its global reach ues in the transfer of our
with fluid power system with the $250 million AFCI technology to applica-
awards on Lockheed DaimlerChrysler AG multi- tions in the aerospace and
Martin’s Joint Strike Fighter, year contract to supply automotive industries. By
the U.S. Army’s new RAH-66 medium-duty transmission winning new business and
Comanche helicopter, components in Europe and pursuing innovative growth
Gulfstream’s new GIV air- South America, and Penske opportunities, Eaton will
craft, and the world’s largest Logistics’ commitment to continue to outperform its
lighter-than-air cargo airship install our Eaton VORAD end markets.
from CargoLifter AG. In addi- EVT-300 Collision Warning
tion, Airbus selected Eaton Systems throughout its trac-
to provide the hydraulic tor fleet. Eaton’s arc fault
power generation system circuit interrupter (AFCI)
for the world’s largest com- business — the breakthrough
mercial airliner, the A380. technology that detects dan-
We also secured a contract gerous arcing faults in elec-
with General Electric to trical wiring to help prevent
develop the gas turbine fires from ever starting — is
engine lubrication system booming with recent retail
to power the Army’s M2 penetration into major home
main battle tank and centers and hardware
Crusader armored vehicle. stores. We expect additional
New supercharger contracts growth from this product
with Mercedes-Benz and technology in 2002 as a
15
13. Perform
Report of Management
17
Report of Independent Auditors
17
Consolidated Financial Statements
18
Financial Review
22
Management’s Discussion and Analysis
34
Quarterly Data
40
Six-Year Consolidated Financial Summary
41
Directors
42
Corporate Officers
42
Appointed Officers
42
Shareholder Information
43
16
14. Report of Management Report of Independent Auditors
Eaton Corporation To the Shareholders
Eaton Corporation
We have prepared the accompanying consolidated financial statements
and related information included herein for each of the three years in We have audited the consolidated balance sheets of Eaton Corporation
the period ended December 31, 2001. The primary responsibility for the as of December 31, 2001 and 2000, and the related statements of con-
integrity of the financial information included in this annual report solidated income, shareholders’ equity, and cash flows for each of the
rests with management. Such information was prepared in accordance three years in the period ended December 31, 2001. These financial
with accounting principles generally accepted in the United States, statements are the responsibility of the Company’s management. Our
appropriate in the circumstances, based on our best estimates and responsibility is to express an opinion on these financial statements
judgments and giving due consideration to materiality. The opinion of based on our audits.
Ernst & Young LLP, Eaton’s independent auditors, on those financial We conducted our audits in accordance with auditing standards gen-
statements is included herein. erally accepted in the United States. Those standards require that
The Company maintains internal accounting control systems which we plan and perform the audit to obtain reasonable assurance about
provide reasonable assurance that assets are safeguarded from loss or whether the financial statements are free of material misstatement.
unauthorized use, and which produce reliable accounting records for An audit includes examining, on a test basis, evidence supporting the
preparation of financial information. There are limits inherent in all sys- amounts and disclosures in the financial statements. An audit also
tems of internal accounting control based on the recognition that the includes assessing the accounting principles used and significant esti-
cost of such systems should not be excessive relative to the benefits to mates made by management, as well as evaluating the overall financial
be derived. We believe Eaton’s systems provide this appropriate balance. statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
The systems and controls and compliance therewith are reviewed by
an extensive program of internal audits and by our independent auditors. In our opinion, the financial statements referred to above present fairly,
Their activities are coordinated to obtain maximum audit coverage in all material respects, the consolidated financial position of Eaton
with a minimum of duplicate effort and cost. The independent auditors Corporation at December 31, 2001 and 2000, and the consolidated
receive copies of all reports issued by the internal auditors at the results of its operations and its cash flows for each of the three years
same time they are released to management and have access to all in the period ended December 31, 2001, in conformity with accounting
audit work papers. principles generally accepted in the United States.
The Company maintains high standards when selecting, training and
developing personnel, to ensure that management’s objectives of
maintaining strong, effective internal accounting controls and unbiased,
uniform reporting standards are attained. We believe our policies and
procedures provide reasonable assurance that operations are conducted Cleveland, Ohio
in conformity with law and with Eaton’s commitment to a high standard January 21, 2002
of business conduct.
The Board of Directors pursues its responsibility for the quality of the
Company’s financial reporting primarily through its Audit Committee,
which is composed of four outside directors. The Audit Committee
meets regularly with management, internal auditors and independent
auditors to ensure that they are meeting their responsibilities and to
discuss matters concerning internal accounting control systems,
accounting and financial reporting. The internal auditors and indepen-
dent auditors have full and free access to senior management and
the Audit Committee.
Alexander M. Cutler Billie K. Rawot
Chairman and Chief Executive Vice President and Controller
Officer; President
January 21, 2002
17
15. Consolidated Balance Sheets
December 31 2001 2000
(Millions)
Assets
Current assets
Cash $ 112 $ 82
Short-term investments 199 44
Accounts receivable 1,070 1,219
Inventories 681 872
Deferred income taxes 153 147
Other current assets 172 207
2,387 2,571
Property, plant & equipment
Land & buildings 763 792
Machinery & equipment 3,053 3,255
3,816 4,047
Accumulated depreciation (1,766) (1,773)
2,050 2,274
Goodwill 1,902 2,026
Other intangible assets 533 556
Other assets 774 753
$ 7,646 $ 8,180
Liabilities & Shareholders’ Equity
Current liabilities
Short-term debt $ 58 $ 447
Current portion of long-term debt 130 110
Accounts payable 418 396
Accrued compensation 158 199
Accrued income & other taxes 258 192
Other current liabilities 647 763
1,669 2,107
Long-term debt 2,252 2,447
Postretirement benefits other than pensions 670 679
Deferred income taxes & other liabilities 580 537
Shareholders’ equity
Common Shares (69.5 in 2001 and 68.3 in 2000) 35 34
Capital in excess of par value 1,348 1,266
Retained earnings 1,447 1,410
Accumulated other comprehensive income (loss) (299) (267)
Deferred compensation plans (56) (33)
2,475 2,410
$ 7,646 $ 8,180
The Financial Review on pages 22 to 33 is an integral part of the consolidated financial statements.
18
16. Statements of Consolidated Income
Year ended December 31 2001 2000 1999
(Millions except for per share data)
Net sales $ 7,299 $ 8,309 $ 8,005
Costs & expenses
Cost of products sold 5,503 6,092 5,792
Selling & administrative 1,220 1,299 1,248
Research & development 228 269 262
6,951 7,660 7,302
Income from operations 348 649 703
Other income (expense)
Interest expense – net (142) (177) (152)
Gain on sales of businesses 61 340
Other – net 11 80 52
(70) (97) 240
Income from continuing operations before income taxes 278 552 943
Income taxes 109 189 340
Income from continuing operations 169 363 603
Income from discontinued operations 90 14
Net income $ 169 $ 453 $ 617
Net income per Common Share assuming dilution
Continuing operations $ 2.39 $ 5.00 $ 8.17
Discontinued operations 1.24 .19
$ 2.39 $ 6.24 $ 8.36
Average number of Common Shares outstanding 70.5 72.6 73.7
Net income per Common Share basic
Continuing operations $ 2.43 $ 5.06 $ 8.31
Discontinued operations 1.25 .20
$ 2.43 $ 6.31 $ 8.51
Average number of Common Shares outstanding 69.4 71.8 72.5
Cash dividends paid per Common Share $ 1.76 $ 1.76 $ 1.76
The Financial Review on pages 22 to 33 is an integral part of the consolidated financial statements.
19
17. Statements of Consolidated Cash Flows
Year ended December 31 2001 2000 1999
(Millions)
Net cash provided by operating activities of continuing operations
Income from continuing operations $ 169 $ 363 $ 603
Adjustments to reconcile to net cash provided by operating activities
Depreciation & amortization 355 364 332
Amortization of goodwill & other intangible assets 94 98 89
Deferred income taxes 72 44 52
Pension assets (84) (67) (69)
Other long-term liabilities 30 35 54
Gain on sales of businesses & corporate assets (61) (22) (340)
Other non-cash items in income 2 (6) 15
Changes in working capital, excluding acquisitions & sales of businesses
Accounts receivable 98 (39) (59)
Inventories 149 (13) 17
Accounts payable 64 (16) (3)
Accrued income & other taxes 61 (86) 67
Other current liabilities (129) (44) (58)
Other working capital accounts (53) (81) 2
Other–net (2) (11) 6
765 519 708
Net cash used in investing activities of continuing operations
Expenditures for property, plant & equipment (295) (386) (480)
Acquisitions of businesses, less cash acquired (35) (115) (1,602)
Sales of businesses & corporate assets 403 122 544
Proceeds from initial public offering of subsidiary 349
(Purchases) sales of short-term investments (154) 40 (34)
Other – net 22 (34) (49)
(59) (24) (1,621)
Net cash (used in) provided by financing activities of continuing operations
Borrowings with original maturities of more than three months
Proceeds 1,481 1,555 1,917
Payments (1,419) (1,560) (1,517)
Borrowings with original maturities of less than three months – net (643) 150 519
Cash dividends paid (120) (127) (128)
Purchase of Common Shares (12) (417) (5)
Sale of Common Shares 147
Proceeds from exercise of employee stock options 37 10 34
Other – net 1 (9)
(676) (388) 958
Cash provided by continuing operations 30 107 45
Net cash used in discontinued operations (104) (43)
Total increase in cash 30 3 2
Cash at beginning of year 82 79 77
Cash at end of year $ 112 $ 82 $ 79
The Financial Review on pages 22 to 33 is an integral part of the consolidated financial statements.
20
18. Statements of Consolidated Shareholders’ Equity
Accumulated
Common Shares Capital in other Deferred Total
excess of Retained comprehensive compensation shareholders’
income (loss)
Shares Dollars par value earnings ESOP plans equity
(Millions)
Balance at January 1, 1999 71.7 $ 36 $ 853 $ 1,321 $ (110) $ (6) $ (37) $ 2,057
Net income 617 617
Other comprehensive income (loss) (110) (110)
Total comprehensive income 507
Cash dividends paid (128) (128)
Issuance of shares under employee
benefit plans, including tax benefit .8 49 (1) 6 54
Put option obligation (7) (7)
Sale of shares 1.6 1 146 147
Purchase of shares (.1) (5) (1) (6)
Balance at December 31, 1999 74.0 37 1,041 1,804 (220) 0 (38) 2,624
Net income 453 453
Other comprehensive income (loss) (47) (47)
Total comprehensive income 406
Cash dividends paid (127) (127)
Issuance of shares under employee
benefit plans, including tax benefit .3 57 (1) 6 62
Put option obligation 7 7
Purchase of shares (6.0) (3) (112) (302) (1) (418)
Initial public offering and
spin-off of subsidiary 272 (416) (144)
Other – net 1 (1) 0
Balance at December 31, 2000 68.3 34 1,266 1,410 (267) 0 (33) 2,410
Net income 169 169
Other comprehensive income (loss) (32) (32)
Total comprehensive income 137
Cash dividends paid (120) (120)
Issuance of shares under employee
benefit plans, including tax benefit 1.1 1 64 (2) (1) 62
Issuance of shares to trust .3 22 (22) 0
Purchase of shares (.2) (4) (8) (12)
Other – net (2) (2)
Balance at December 31, 2001 69.5 $ 35 $ 1,348 $ 1,447 $ (299) $ 0 $ (56) $ 2,475
The Financial Review on pages 22 to 33 is an integral part of the consolidated financial statements.
21
19. Financial Review
Dollars and shares in millions, except per share data (per share data Statements of Financial Accounting Standards (SFAS) No.141 “Busi-
assume dilution) ness Combinations” and No.142 “Goodwill and Other Intangible
Assets” were issued by the Financial Accounting Standards Board
Accounting Policies (FASB) in the third quarter of 2001. SFAS No.141 eliminates the pooling-
Consolidation and Basis of Presentation of-interests method for business combinations and requires use
of the purchase method.
The consolidated financial statements include accounts of Eaton and
SFAS No.142 changes the accounting for goodwill and indefinite life
all majority-owned subsidiaries and other controlled entities. The equity
intangibles from an amortization approach to a non-amortization ap-
method of accounting is used for investments in associate companies
proach requiring periodic testing for impairment of the asset. Upon
and joint ventures where the Company has a 20% to 50% ownership
adoption of the Statement on January 1, 2002, the provisions of SFAS
interest. These associate companies and joint ventures are not material
No.142 require discontinuance of amortization of goodwill and indefinite
either individually, or in the aggregate, to Eaton’s financial position, net
life intangible assets which were recorded in connection with previous
income or cash flows.
business combinations. The adoption of SFAS No.142 will result in an
The Company does not have off-balance sheet arrangements, financings
annual decrease in pretax amortization expense associated with good-
or other relationships with unconsolidated entities or other persons, also
will and certain intangible assets of approximately $70.
known as “special purpose entities” (SPEs). In the ordinary course of
Under SFAS No.142, an impairment test will be required upon adoption
business, Eaton leases certain real properties, primarily sales and office
and at least annually to determine potential write-downs of goodwill and
facilities, and equipment, as described under “Lease Commitments” in
indefinite life intangible assets. The Company does not expect to recog-
the Financial Review. Transactions with related parties are in the ordinary
nize an impairment charge upon adoption of this Statement. Eaton also
course of business, are conducted on an arm’s-length basis, and are not
does not plan to reclassify any intangible assets from goodwill upon
material to Eaton’s financial position, net income or cash flows.
adoption of the Statement.
Foreign Currency Translation In the third quarter of 2001, the FASB also issued SFAS No.144 “Ac-
counting for Impairment or Disposal of Long-Lived Assets”. This State-
The functional currency for principally all subsidiaries outside the United
ment addresses the conditions under which an impairment charge
States is the local currency. Financial statements for these subsidiaries
should be recorded related to long-lived assets to be held and used,
are translated into United States dollars at year-end exchange rates as
except for goodwill, and those to be disposed of by sale or otherwise.
to assets and liabilities and weighted-average exchange rates as to
The provisions of this Statement are effective January 1, 2002. The
revenues and expenses. The resulting translation adjustments are re-
Company does not expect this Statement to have a material impact
corded in shareholders’ equity in accumulated other comprehensive
on its financial position, net income or cash flows.
income (loss).
Financial Instruments
Inventories
In the normal course of business, Eaton is exposed to fluctuations in
Inventories are carried at lower of cost or market. Inventories in the
foreign currencies, interest rates, and commodity prices. The Company
United States are generally accounted for using the last-in, first-out
uses various financial instruments, primarily foreign currency forward
(LIFO) method. Remaining United States and all other inventories are
exchange contracts, interest rate swaps and commodity futures con-
accounted for using the first-in, first-out (FIFO) method.
tracts to manage exposure to price fluctuations. Financial instruments
Depreciation and Amortization used by Eaton are straightforward, non-leveraged, instruments for
which quoted market prices are readily available from a number of
Depreciation and amortization are computed by the straight-line method
independent services. Financial instruments are not bought and sold
for financial statement purposes. Cost of buildings is depreciated over
solely for trading purposes, except for nominal amounts authorized
forty years and machinery and equipment over principally three to ten
under limited, controlled circumstances (in 2001, resulted in an imma-
years. Goodwill and intangible assets, primarily consisting of patents,
terial net gain). Credit loss from these instruments has never been
trademarks and tradenames have been amortized over a range of five
experienced since the counterparties to the instruments are major
to forty years. Software is amortized over a range of three to five years.
international financial institutions with strong credit ratings and due
Goodwill and other long-lived assets are reviewed for impairment when-
to control over the limit of positions entered into with any one party.
ever events or changes in circumstances indicate the carrying amount
may not be recoverable. Events or circumstances that would result in
an impairment review primarily include operations reporting losses or a
significant change in the use of an asset. The asset would be considered
impaired when the future net undiscounted cash flows generated by the
asset are less than its carrying value. An impairment loss would be rec-
ognized based on the amount by which the carrying value of the asset
exceeds its fair value.
22
20. Effective January 1, 2001, Eaton adopted Statement of Financial Options for Common Shares
Accounting Standard (SFAS) No.133, “Accounting for Derivative
The Company applies the intrinsic value based method described in
Instruments and Hedging Activities,” as amended. SFAS No.133 re-
Accounting Principles Board Opinion No. 25 to account for stock op-
quires all derivative financial instruments to be recognized as either
tions granted to employees to purchase Common Shares. Under this
assets or liabilities on the balance sheet and to be measured at fair
method, no compensation expense is recognized on the grant date,
value. Accounting for the gain or loss resulting from the change in
since on that date the option price equals the market price of the un-
the financial instrument’s fair value depends on whether it has been
derlying Common Shares.
designated, and effective, as a hedge and, if so, on the nature of the
hedging activity. The adoption of SFAS No.133 did not have a material Revenue Recognition
effect on the Company’s financial position, net income or cash flows.
Substantially all revenues are recognized when products are shipped to
Eaton’s accounting policies related to financial instruments under
unaffiliated customers. Shipping and handling costs billed to customers
SFAS No.133 are summarized below:
are included in net sales and the related costs in cost of products sold.
Fair value hedge Financial instruments can be designated as hedges
The Securities and Exchange Commission’s (SEC) Staff Accounting
of changes in the fair value of a recognized fixed-rate asset or liability,
Bulletin (SAB) No.101, “Revenue Recognition” provides guidance on
or a firm commitment to acquire an asset or liability. In these cases,
the SEC staff’s views on application of generally accepted accounting
the gain or loss from the hedge and the offsetting gain or loss from
principles to selected revenue recognition issues. The Company’s
the hedged item are recognized immediately in net income.
revenue recognition policy is in accordance with generally accepted
Cash flow hedge Financial instruments can be designated as hedges of
accounting principles and SAB No.101.
variable cash flows from a recognized variable-rate asset or liability, or a
Estimates
forecasted acquisition of an asset or liability. For these hedges, the ef-
fective portion of the gain or loss from the financial instrument is initially
Preparation of financial statements in conformity with accounting prin-
reported as a component of other comprehensive income in share-
ciples generally accepted in the United States requires management to
holders’ equity and subsequently reclassified to net income when the
make estimates and assumptions in certain circumstances that affect
forecasted transaction affects net income. The ineffective portion of the
amounts reported in the accompanying consolidated financial state-
gain or loss from the financial instrument is immediately recognized in
ments and notes. Actual results could differ from these estimates.
net income.
Financial Presentation Changes
Foreign currency net investment hedge Financial instruments can be
designated as hedges of the foreign currency exposure from a net in-
Certain amounts for prior years have been reclassified to conform to
vestment in one of the Company’s foreign operations. In these cases,
the current year presentation.
the gain or loss from the hedge and the foreign currency gain or loss
from the hedged net assets are reported as a component of other
comprehensive income in shareholders’ equity.
Foreign currency fair value hedge Financial instruments can be desig-
nated as hedges of the foreign currency exposure related to a recognized
asset or liability, or a firm commitment to acquire an asset or liability. For
these hedges, the gain or loss from the hedge and the offsetting foreign
currency gain or loss from the hedged item are recognized immediately
in net income.
Foreign currency cash flow hedge Financial instruments can be desig-
nated as hedges of the foreign currency exposure related to the cash
flows associated with a recognized asset or liability, or a forecasted
acquisition of an asset or liability. In these cases, the effective portion of
the gain or loss from the financial instrument is initially reported as a
component of other comprehensive income in shareholders’ equity and
subsequently reclassified to net income when the forecasted transac-
tion affects net income. The ineffective portion of the gain or loss from
the financial instrument is immediately recognized in net income.
Non-hedging financial instruments The gain or loss related to financial
instruments that are not designated as hedges, are recognized imme-
diately in net income.
23
21. Financial Review
Unusual Charges
Acquisitions of Businesses
2001 Charges
The Company acquired businesses for a combined net cash purchase
price of $35 in 2001, $115 in 2000 and $1,602 in 1999. All acquisitions In response to extraordinarily weak economic conditions in 2001, and
were accounted for by the purchase method of accounting and, ac- to reduce fixed operating costs, Eaton undertook restructuring actions
cordingly, the Statements of Consolidated Income include the results that were needed to help maintain a competitive advantage in the
of the acquired businesses from the effective dates of acquisition. current economic environment. The Fluid Power segment incurred
charges throughout the year associated with the ongoing integration
In March 2001, Eaton completed the purchase of the remaining unowned
of Aeroquip-Vickers and other recent business acquisitions. The In-
50% interest of Sumitomo Eaton Hydraulics Company (known as Eaton
dustrial & Commercial Controls segment announced a restructuring
Fluid Power Ltd.), the former joint venture with Sumitomo Heavy In-
program in the second quarter and took charges in each subsequent
dustries. This business manufactures a complete line of hydraulic mo-
quarter. The Truck segment announced a plan in the first quarter and
tors under the Orbit and Orbitol brand names primarily for the Japanese
recorded associated charges in every quarter of the year.
mobile equipment market and has annualized sales of $76 in the Pacific
region. The operating results of this business are reported in Business Restructuring actions in the Truck business consisted of $35 of work-
Segment Information in Fluid Power. During 2001, the Company also force reductions for 1,038 employees and $20 of asset write-downs
acquired the commercial clutch manufacturing assets of Transmisiones and plant consolidation and other expenses. The workforce reductions
TSP, S.A. de C.V. in Mexico and completed the acquisition of the Euro- consisted of severance and other employee benefits for the elimination
pean portion of the vehicle mirror actuator business of Donnelley of salary positions within the organization and manufacturing personnel
Corporation, located in Manorhamilton, Ireland. at the closed facilities. The Company completed the closure of manu-
facturing facilities in Hillsville, Virginia, and in Tipton, Gloucester and
In September 2000, the industrial cylinder business of International
Aycliffe, United Kingdom, consolidating production to a facility in Gdansk,
Motion Control Incorporated was acquired for $75. This business, which
Poland, as well as completing the closure of the heavy-duty transmis-
had 1999 sales of $63, manufactures industrial cylinders which are pri-
sion plant in St. Nazaire, France.
marily used by machine and equipment builders to transfer and apply
fluid power. The operating results of this business are reported in Restructuring actions in the Industrial & Commercial Controls business
Business Segment Information in Fluid Power. consisted of $21 of workforce separation costs for the termination of
887 personnel, primarily manufacturing, and $9 of plant consolidation
In April 1999, the Company acquired Aeroquip-Vickers, Inc. for $1,589.
and other expenses.
The operating results of this business are reported in Business Segment
Information in Fluid Power. As a result of the acquisition of Aeroquip- In connection with the acquisition of businesses in the Fluid Power
Vickers, Eaton incurred acquisition integration costs related to Aeroquip- segment, Eaton incurred acquisition integration costs related to Eaton
Vickers locations and employees. Acquisition integration costs not locations and employees. In accordance with generally accepted ac-
associated with the generation of future revenues, and which had no counting principles, these costs were recorded as expense as incurred.
future economic benefit, were reflected as assumed liabilities in the Integration charges related to the acquisition of Aeroquip-Vickers and
purchase price allocation. Acquisition integration liabilities of $49 re- other recent acquisitions included $15 for plant consolidation and other
mained at December 31, 2000 and were substantially utilized in 2001. expenses and $7 for workforce reductions. Workforce reductions include
severance and other related employee benefits for the termination of
Sales of Businesses and Corporate Assets 239 personnel.
The Company sold businesses, product lines and certain corporate Restructuring actions related to corporate staff consisted of $8 for
assets for aggregate cash proceeds of $403 in 2001, $122 in 2000 workforce reductions, representing 10% of the corporate staff, as well
and $544 in 1999. as $4 for asset writedowns and other expenses. A corporate charge
of $10 related to an arbitration was recorded in the second quarter of
The sales of businesses in 2001 included the Vehicle Switch/Electronics
2001. The arbitration award related to a contractual dispute over sup-
Division (VS/ED), the Air Conditioning and Refrigeration business, and
ply arrangements initiated in February 1999 against Vickers, Incorpo-
certain assets of the Automotive and Truck segments. The sales of
rated, a subsidiary of Aeroquip-Vickers, Inc., which was acquired by
these businesses resulted in a net pretax gain of $61 ($22 after-tax,
Eaton in April 1999.
or $.30 per Common Share).
2000 Charges
The sales of certain corporate assets and product lines in 2000 resulted
in a net pretax gain of $22 ($14 after-tax or $.19 per Common Share).
Integration charges related to the acquisition of Aeroquip-Vickers con-
Divestitures in 1999 included the sale of the Engineered Fasteners and sisted of $46 of plant consolidation and other expenses and $1 for work-
Fluid Power divisions. The sales of these businesses, and adjustments force reductions. The workforce reduction charges consist of severance
related to businesses sold in prior periods, resulted in a net pretax gain and other related employee benefits and included the termination of
of $340 ($198 after-tax, or $2.68 per Common Share). Substantially all approximately 110 employees, primarily manufacturing personnel. The
of Vickers Electronic Systems was sold, which was acquired in the ac- Company also incurred $5 of corporate charges related to the restruc-
quisition of Aeroquip-Vickers, resulting in no gain or loss. turing of certain functions.
The net gains on the sales of businesses in 2001 and 1999 were reported
1999 Charges
as a separate line item in the Statements of Consolidated Income and
Business Segment Information. The net gain on the sales of corporate Integration charges related to the acquisition of Aeroquip-Vickers in-
assets and product lines in 2000 was included in the Statements of cluded $21 for plant consolidation and other expenses. In addition, a $2
Consolidated Income in Other income – net and in Business Segment liability for workforce reductions, severance and other related employee
Information in Corporate & other – net. The operating results of VS/ED benefits, was recorded and included the termination of 70 employees.
and the businesses sold in 1999 are reported in Business Segment
Information as Divested operations.
24
22. As part of the ongoing effort to restructure European operations in the The consolidated financial statements present the semiconductor
Truck segment, a restructuring liability of $7 was recorded in 1999. This equipment operations as a discontinued operation for 2000 and 1999.
charge related to workforce reductions, severance and other related Operating results of discontinued operations are summarized as follows:
employee benefits, for the termination of 190 employees, primarily 2000 1999
manufacturing personnel.
Net sales $ 679 $ 397
Summary of Unusual Charges Income before income taxes $ 132 $ 20
Income taxes 42 6
A summary of unusual charges recorded in each year follows:
Net income $ 90 $ 14
2001 2000 1999
Operational restructuring charges
Debt and Other Financial Instruments
Fluid Power $ 22 $ 47 $ 21
Industrial & Commercial Controls 30 At December 31, 2001, short-term debt was $58, which related to lines
Truck 55 7 of credit of subsidiaries outside the United States. These subsidiaries
Corporate 22 5 2 have available lines of credit, primarily short-term, aggregating $119
from various banks worldwide.
Pretax $ 129 $ 52 $ 30
Long-term debt, excluding the current portion, follows:
After-tax $ 86 $ 34 $ 20
Per Common Share 1.21 .47 .27 2001 2000
Variable rate notes due 2003 ( 3.08% at December 31, 2001
The operational restructuring charges are included in the Statements of
based on 3-month LIBOR plus 0.73%) $ 150
Consolidated Income in Income from operations and reduced operating
6.95% notes due 2004 250 $ 250
profit of the related business segment. The corporate charges are in-
1.62% Yen notes due 2006 38
cluded in the Statements of Consolidated Income in Income from oper-
8% debentures due 2006
ations, except for $11 in 2001, which primarily related to the arbitration
($80 converted to floating rate of 4.9% by interest
award, which is included in the Statements of Consolidated Income in
rate swap) 86 86
Other expense – net. All of the corporate charges are included in Busi-
8.9% debentures due 2006
ness Segment Information in Corporate & other – net.
(converted to floating rate of 5.9% by interest
Restructuring Liabilities rate swap) 100 100
6% Euro 200 million notes due 2007
Restructuring liabilities of $8 remained at December 31, 2000 related (converted to floating rate of 4.1% by interest
to prior restructuring actions and were fully utilized in 2001. A move- rate swap) 177 186
ment of the various components of charges related to 2001 restructur- 8.1% debentures due 2022 100 100
ing actions are as follows: 7-5/8% debentures due 2024 66 66
Inventory & Plant 6-1/2% debentures due 2025
Workforce reductions other asset consolidation
(due 2005 at option of debenture holders) 145 145
Employees Dollars write-downs & other Total
7.875% debentures due 2026 82 82
2001 charges 2,310 $ 71 $ 20 $ 28 $ 119
7.65% debentures due 2029
Utilized in 2001 (1,966) (50) (20) (26) (96)
($100 converted to floating rate of 3.3% by interest
Liabilities remaining at rate swap) 200 200
December 31, 2001 344 $ 21 $ 0 $ 2 $ 23 6.4% to 7.6% medium-term notes due at various
dates ranging from 2002 to 2018 131 157
Commercial paper
Discontinued Operations
($100 converted to fixed rate of 3.7% by interest
On June 30, 2000, the Company’s semiconductor equipment operations rate swap) 630 900
were reorganized into a wholly-owned subsidiary, Axcelis Technologies, Other 97 175
Inc. (Axcelis). In July 2000, Axcelis completed an initial public offering $ 2,252 $ 2,447
(IPO) for the sale of 17.6% of its common stock. The net proceeds from
the IPO were $349. On December 29, 2000 Eaton distributed its re- The Company has multi-year credit facilities of $900, $500 of which
maining interest in Axcelis to Eaton shareholders as a dividend (spin- expires in May 2003 and $400 expires in April 2005. Commercial paper
off). The gain on the IPO of $272 was recorded as a direct increase to of $630 is classified as long-term debt because Eaton intends, and has
shareholders’ equity. The spin-off was recorded as a direct reduction the ability under this agreement, to refinance these notes on a long-
of shareholders’ equity of $416. term basis.
25