e11vk
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
     
þ   Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2009
OR
     
o   Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from_________ to _____________
Commission file number                                                                                  
  A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:
Eaton Savings Plan
  B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Eaton Corporation
1111 Superior Avenue
Cleveland, Ohio 44114-2584
SIGNATURES
     The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  (Name of Plan)
EATON SAVINGS PLAN
 
 
Date: June 23, 2010  By:   Eaton Corporation Pension    
    Administration Committee   
       
  By:   /s/ B. K. Rawot    
    B. K. Rawot   
    Senior Vice President and Controller
Eaton Corporation 
 
 
 
 

 


 

EATON SAVINGS PLAN
FINANCIAL STATEMENTS
WITH
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
December 31, 2009

 


 

INDEX
         
    Page  
Report of Independent Registered Public Accounting Firm
       
 
       
Financial Statements:
       
 
       
Statement of Net Assets Available for Benefits
    2  
 
       
Statement of Changes in Net Assets Available for Benefits
    3  
 
       
Notes to Financial Statements
    4 - 14  
 
       
Supplemental Schedule:
       
 
       
Schedule of Assets Held for Investment Purposes at End of Year
    15  

 


 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Pension Administration Committee and the Pension Investment Committee — Eaton Corporation
We have audited the accompanying Statement of Net Assets Available for Benefits of the EATON SAVINGS PLAN as of December 31, 2009 and 2008 and the related Statement of Changes in Net Assets Available for Benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Eaton Savings Plan as of December 31, 2009 and 2008, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2009, is presented for the purposes of additional analysis and is not a required part of the financial statements but is supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ MEADEN & MOORE, LTD.
MEADEN & MOORE, LTD.
Certified Public Accountants
June 22, 2010
Cleveland, Ohio

 


 

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
Eaton Savings Plan
                 
    December 31  
    2009     2008  
ASSETS
               
Receivable — Employee contributions
  $ 2,826,023     $  
Receivable — Interest
    108,761        
 
           
 
               
Total Receivables
    2,934,784        
 
               
Investments:
               
Plan interest in Eaton Employee
               
Savings Trust
    2,087,666,025       1,733,203,859  
Plan interest in Eaton Employee
               
Savings Trust — Eaton Stable Value Fund
    124,440,918       127,328,754  
 
           
 
               
Total Master Trust Investments
    2,212,106,943       1,860,532,613  
Participant Loans
    56,228,661       54,859,860  
 
           
 
               
Total Investments
    2,268,335,604       1,915,392,473  
 
           
 
               
Net Assets Available for Benefits, at Fair Value
    2,271,270,388       1,915,392,473  
 
               
Adjustment from fair value to contract value for fully benefit-
           
responsive investment contract
    (2,237,494 )     1,532,613  
 
           
 
               
Net Assets Available for Benefits
  $ 2,269,032,894     $ 1,916,925,086  
 
           
See accompanying notes.

-2-


 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Eaton Savings Plan
                 
    Year Ended December 31  
    2009     2008  
Additions to Net Assets Attributed to:
               
Contributions:
               
Employer
  $ 11,258,427     $ 47,719,474  
Employee
    87,387,026       111,303,564  
Rollover
    13,996,905       13,065,781  
 
           
 
    112,642,358       172,088,819  
Plan interest in Eaton Employee Savings
               
Trust investment gain
    422,826,617        
Interest and dividend income
    3,677,529       4,453,408  
 
           
 
               
Total Additions before Transfers
    539,146,504       176,542,227  
 
               
Transfers from other plans
    96,338       216,640  
 
           
 
               
Total Additions
    539,242,842       176,758,867  
 
               
Deductions from Net Assets Attributed to:
               
Plan interest in Eaton Employee Savings
               
Trust investment loss
          860,090,357  
Benefits paid to participants
    186,503,026       198,032,409  
Administrative expenses
    525,695       606,085  
 
           
 
               
Total Deductions before Transfers
    187,028,721       1,058,728,851  
 
               
Transfers to other plans
    106,313       2,224  
 
           
 
               
Total Deductions
    187,135,034       1,058,731,075  
 
           
 
               
Net Increase/(Decrease)
    352,107,808       (881,972,208 )
 
               
Net Assets Available for Benefits:
               
Beginning of Year
    1,916,925,086       2,798,897,294  
 
           
 
               
End of Year
  $ 2,269,032,894     $ 1,916,925,086  
 
           
See accompanying notes.

- 3 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
1   Description of Plan
 
    The following description of The Eaton Savings Plan (“the Plan”) provides only general information. Participants should refer to the Plan document and summary plan description, which is available from the Company’s Human Resources Department upon request, for a complete description of the Plan’s provisions.
 
    General:
 
    Effective July 1, 1974, Eaton Corporation (Eaton, the Company, or the Plan Sponsor) established the Plan. The Plan was established to encourage eligible employees to make systematic savings through payroll deductions, to provide additional security at retirement and to acquire a proprietary interest in the Company. Effective July 5, 1989, the portion of the Plan attributable to Company contributions was designed to be invested primarily in Eaton Common Shares and constitute an employee stock ownership plan within the meaning of Code Section 4975(e)(7). Effective January 1, 2002, the Plan was amended and restated. In conjunction with the amendment and restatement, the Plan was renamed the Eaton Savings Plan.
 
    Eligibility:
 
    An Eaton employee who is in the regular service of a class of an employee in a division or group to which Eaton Corporation has extended eligibility for membership in the Plan (other than a temporary employee who is hired for a specific, limited period of time or for the performance of a specific, limited assignment or employees covered by a collective bargaining agreement that does not specify coverage under the Plan) will be eligible to participate on any date established in accordance with administrative procedure which follows the date an employee first incurs an hour of service.
 
    Contributions:
 
    Employee Contributions — Employees may make a combination of before-tax and after-tax contributions ranging from 1% to 30% of their compensation. Catch-up contributions are permitted in the Plan, allowing participants age 50 and older to defer an additional amount of their compensation as prescribed by the Internal Revenue Code.
 
    Employer Contributions — Participants of the Plan receive a Company matching contribution of 100% of the first 3% of their compensation, plus 50% of the next 2% of compensation. The Company matching contribution was suspended effective with the first full pay period beginning after April 1, 2009. The Company matching contribution will be reinstated effective July 1, 2010.
 
    Contributions are subject to limitations on annual additions and other limitations imposed by the Internal Revenue Code as defined in the Plan agreement.
 
    Rollover contributions from other Plans are also accepted, providing certain specified conditions are met.

- 4 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
1   Description of Plan, Continued
 
    Participants’ Accounts:
 
    Each participant’s account is credited with the participant’s contributions, Company matching contributions, and an allocation of the Plan’s earnings and is charged with an allocation of administrative expenses. Allocations are based on participant account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.
 
    Vesting:
 
    All participants are 100% vested, subject to certain provisions as defined by the Plan, in elective deferrals, company contributions and rollover contributions made to the Plan, and actual earnings thereon.
 
    Participants’ Loans:
 
    Participants may borrow from their fund accounts up to a maximum equal to the lesser of $50,000 or 50% of their account balance (excluding any contributions made under a Savings Plan, Individual Retirement Account or Company contributions made in the previous 24 months), reduced by their highest outstanding loan balance during the preceding 12 months. Loan terms range from 1-5 years except for loans used for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at a rate based on the prime interest rate as determined by the Trustee. Principal and interest are paid through payroll deduction.
 
    Hardship Withdrawals:
 
    Hardship withdrawals are permitted in accordance with Internal Revenue Service guidelines.
 
    Payment of Benefits:
 
    Upon termination of service, retirement, death or total and permanent disability, a participant is eligible to receive a lump sum amount equal to the value of his or her account. A participant may choose to take partial withdrawals.
 
    Investment Options:
 
    Contributions may be invested in any of the fund options available under the Plan.

- 5 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
2   Summary of Significant Accounting Policies
 
    Basis of Accounting:
 
    The financial statements of the Eaton Savings Plan are prepared on the accrual basis of accounting.
 
    Investment Valuation and Income Recognition:
 
    The Plan’s trustee is Fidelity Management Trust Company, and the Plan’s investments, excluding participant loans, were invested in the Eaton Employee Savings Trust (Master Trust), which was established for the investment of assets of the Plan and the Eaton Personal Investment Plan. The fair value of the Plan’s interest in the individual funds of the Master Trust is based on the value of the Plan’s interest in the fund as of January 1, 2002, plus actual contributions and allocated investment income (loss) less actual distributions.
 
    Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Investments traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and asked prices. Common/collective trust funds and pooled separate accounts are valued at the redemption value of the units held at year-end. Participant loans are valued at cost, which approximates fair value. The Eaton Stable Value Fund invests primarily in investment contracts issued by insurance companies, banks or other financial institutions, including investment contracts backed by high-quality fixed income securities.
 
    Under the revised accounting standards, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
 
    Purchases and sales of securities are recorded on a trade-date basis.
 
    Use of Estimates:
 
    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

- 6 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
2   Summary of Significant Accounting Policies, Continued
 
    Administrative Fees:
 
    All administrative costs, management fees and expenses of the Plan are paid by the trustee from the Master Trust unless such costs, fees and expenses are paid by the Company. The Company elected to pay certain administrative costs during 2009 and 2008 on behalf of the Plan. Certain transaction costs are paid by the employee.
 
    Plan Termination:
 
    The Company may amend, modify, suspend, or terminate the Plan. No amendment, modification, suspension, or termination of the Plan shall have the effect of providing that any amounts then held under the Plan may be used or diverted to any purpose other than for the exclusive benefit of members or their beneficiaries.
 
    Risks and Uncertainties:
 
    The Master Trust’s investments include investments, as listed in Footnote 4, with varying degrees of risk, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the statement of net assets available for Plan benefits.
 
    Reclassifications:
 
    Certain prior year amounts have been reclassified to conform with the current years presentation.
 
3   Tax Status
 
    On May 16, 2003, the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended; however, the Plan Administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt as of the financial statement date.
 
4   Investments
 
    Fidelity Management Trust Company, trustee and recordkeeper of the Plan, holds the Plan’s investment assets and executes investment transactions, and all investment assets of the Plan, except for participant loans, are pooled for investment purposes in the Master Trust.

- 7 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
4   Investments, Continued
 
    A summary of the assets of the Master Trust is as follows:
                 
    2009     2008  
Registered investment companies
  $ 1,054,862,616     $ 809,602,073  
Eaton common shares
    566,855,536       458,101,411  
Common collective trusts
    348,625,820       340,126,988  
U.S. government securities
    115,814,070       96,371,693  
Guaranteed investment contracts
    112,783,573       119,563,824  
Interest-bearing cash
    48,056,220       45,304,644  
Corporate debt instruments
    40,675,433       54,137,923  
Receivables
    13,517,793       11,755,944  
Non interest-bearing cash
    9,417        
Liabilities
    (12,943,413 )     (7,440,527 )
Adjustment from fair value to contract value for fully benefit-responsive investment contract
    (2,393,042 )     1,632,175  
 
           
Total Investments
  $ 2,285,864,023     $ 1,929,156,148  
 
           
The Plan had a 96.7% and 96.5% interest in the assets of the Master Trust as of December 31, 2009 and 2008, respectively.
Investment income and administrative expenses relating to the Master Trust are allocated to the individual Plans based upon the average balance invested by each Plan in each of the individual funds of the Master Trust. A summary of the Master Trust’s net investment income allocated to the participating Plans for the year ended December 31, 2009 and 2008, is as follows:
                 
    2009     2008  
Interest and dividend income
  $ 42,408,799     $ 64,413,793  
Net appreciation in fair value of investment funds:
               
Registered investment companies
    228,371,890       (516,817,688 )
Separate accounts
    130,869,711       (378,690,874 )
Common collective trusts
    32,793,242       (52,253,485 )
 
           
 
  $ 434,443,642     $ (883,348,254 )
 
           
At December 31, 2009 and 2008, respectively, the Eaton Fixed Income Fund was comprised of U.S. government securities (69% and 57%), corporate debt instruments (24% and 32%), interest-bearing and non interest-bearing cash (5% and 6%), and pooled separate accounts (2% and 5%).

- 8 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
4   Investments, Continued
 
    The Master Trust funds are invested in various investments through the Fidelity Management Trust Company. Investments which constitute more than 5% of the Master Trust’s net assets are:
                 
    2009     2008  
Eaton Stable Value Fund
  $ 130,724,187     $ 137,217,538  
Fidelity Contrafund
  $ 137,679,930     $ 110,825,820  
Vanguard Institutional Index
  $ 138,868,213     $ 115,777,490  
EB Money Market Fund
  $ 155,936,734     $ 177,522,862  
Eaton Fixed Income Fund
  $ 167,290,070     $ 169,955,591  
Eaton Common Shares Fund (A unitized fund consisting of Eaton Shares and cash)
  $ 580,209,860     $ 466,831,646  
5   Party-in-Interest Transactions
 
    Party-in-interest transactions included the investments in the common stock of Eaton and the investment funds of the trustee and the payments of administrative expenses by the Company. Such transactions are exempt from being prohibited transactions.
 
    During 2009 and 2008, the Master Trust received $18,218,408 and $16,649,395, respectively, in common stock dividends from the Company.
 
6   Recently Issued Accounting Pronouncements
 
    In 2009, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Codification, which establishes a sole source of U.S. authoritative generally accepted accounting principles (GAAP). The Codification is meant to simplify user access to all authoritative accounting standards by reorganizing U.S. GAAP pronouncements into approximately ninety accounting topics within a consistent structure; its purpose is not to create new accounting and reporting standards. Pursuant to the provisions of the Codification, the Plan has updated references to U.S. GAAP in these financial statements. The adoption of the Codification did not have a material effect on the net assets available for benefits and changes in those net assets.
 
    In 2009, the Plan adopted the new Subsequent Events Standard, as amended, which established general guidance for accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued. The Plan has evaluated subsequent events through the date the financial statements were issued, and reports that the Company matching contribution will be reinstated effective July 1, 2010.

- 9 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
6   Recently Issued Accounting Pronouncements, continued
 
    In 2009, the Plan adopted the additional required guidance of the Fair Value Measurements and Disclosures Standard. This standard addresses accounting and disclosures related to non-financial assets and liabilities, primarily goodwill, intangible assets, non-financial assets and liabilities related to acquired businesses, and impairment and restructuring activities. In 2009, the Plan also adopted the revised guidance for measuring liabilities at fair value. This guidance addresses circumstances in which a quoted price in an active market for the identical liability is not available. The adoption of these standards did not have a material effect on the net assets available for benefits and changes in those net assets.
 
7   Benefit-Responsive Investment Fund
 
    The Plan holds the Eaton Stable Value Fund, a fund managed by Vanguard, that invests in benefit-responsive investment contracts. The fund is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The traditional guaranteed investment contract issuers are contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan and the synthetic contract issuers are contractually obligated to guarantee the payment of a specific interest rate to the Plan.
 
    As described in Note 2, because the guaranteed investment contracts are fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by Vanguard, represents contributions made under the contracts, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
 
    The average market yield of the Fund for 2009 and 2008 was 4.03% and 4.38%, respectively. This yield is calculated based on actual investment income from the underlying investments for the last month of the year, annualized and divided by the fair value of the investment portfolio on the report date. The average yield of the Fund with an adjustment to reflect the actual interest rate credited to participants in the Fund was 3.13% and 3.86%, respectively.
 
    There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be less than zero percent. Such interest rates are reviewed quarterly for resetting.
 
    The fair value is based on various valuation approaches dependent on the underlying investments of the contract.

- 10 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
7   Benefit-Responsive Investment Fund, Continued
 
    Certain events limit the ability of the Plan to transact at contract value with the issuers. The Plan Administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants is probable.
 
    The issuer may terminate the contract for cause at any time.
 
8   Fair Value Measurements
 
    In the first quarter 2008, the Plan adopted ASC 820, “Fair Value Measurements and Disclosures,” which became effective on January 1, 2008. ASC 820, which applies to financial assets and liabilities, establishes a framework for measuring fair value, establishes a fair value hierarchy based on inputs used to measure fair value, and expands disclosure about fair value measurements. Adopting this statement has not had an effect on the Plan’s net assets available for benefits and changes in those net assets.
 
    In accordance with ASC 820, the Plan has categorized the financial instruments, based on the degree of subjectivity inherent in the valuation technique, into a fair value hierarchy of three levels, as follows:
    Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
    Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
    Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.
    Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2009 and 2008.
 
    Registered investment companies (mutual funds), and separate accounts: Valued at the net asset value (NAV) of shares held by the Plan at year end. Separate accounts may include U.S. government securities and corporate debt securities.
 
    Common collective trusts: Valued at the net unit value of units held by the trust at year end. The unit value is determined by dividing the Total Value of fund Assets by the Total Number of Units of the Fund owned.
 
    Participant loans: Valued at amortized cost, which approximates fair value.
 
    Guaranteed investment contract: Valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer.

- 11 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
8   Fair Value Measurements, Continued
 
    The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
 
    The following table sets forth by level on a recurring basis, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2009:
                                 
    Level 1     Level 2     Level 3        
    Fair Value     Fair Value     Fair Value     Totals  
Registered investment companies
                               
Large-cap equity funds
  $ 471,406,767     $     $     $ 471,406,767  
Balanced funds
    169,850,256                   169,850,256  
International equity funds
    152,374,956                   152,374,956  
Mid-cap equity funds
    85,234,313                   85,234,313  
Bond funds
    75,639,467                   75,639,467  
Small-cap equity funds
    46,457,036                   46,457,036  
REIT funds
    13,876,296                   13,876,296  
World equity funds
    6,998,377                   6,998,377  
 
                       
Total
    1,021,837,468                   1,021,837,468  
 
                       
 
Guaranteed investment contracts
                               
Stable value funds
          124,440,918             124,440,918  
 
Common collective trusts
                               
Money market funds
          148,509,864             148,509,864  
Bond funds
          66,568,952             66,568,952  
Asset allocation funds
          59,398,871             59,398,871  
International equity funds
          36,354,478             36,354,478  
Mid-cap equity funds
          28,041,614             28,041,614  
 
                       
Total
          338,873,779             338,873,779  
 
                       
 
Separate accounts
                               
Company stock funds
          569,481,504             569,481,504  
Bond funds
          157,473,274             157,473,274  
 
                       
Total
          726,954,778             726,954,778  
 
                       
 
Participant loans
                56,228,661       56,228,661  
 
                       
Total assets at fair value
  $ 1,021,837,468     $ 1,190,269,475     $ 56,228,661     $ 2,268,335,604  
 
                       

- 12 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
8   Fair Value Measurements, Continued
 
    The following table sets forth by level on a recurring basis, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2008:
                                 
    Level 1     Level 2     Level 3        
    Fair Value     Fair Value     Fair Value     Totals  
Registered investment companies
                               
Large-cap equity funds
  $ 377,690,688     $     $     $ 377,690,688  
Balanced funds
    153,310,186                   153,310,186  
International equity funds
    96,445,313                   96,445,313  
Mid-cap equity funds
    57,751,929                   57,751,929  
Bond funds
    47,101,268                   47,101,268  
Small-cap equity funds
    35,896,888                   35,896,888  
REIT funds
    9,037,459                   9,037,459  
World equity funds
    5,280,919                   5,280,919  
 
                       
Total
    782,514,650                   782,514,650  
 
                       
 
                               
Guaranteed investment contracts
                               
Stable value funds
          127,328,754             127,328,754  
 
                               
Common collective trusts
                               
Money market funds
          169,332,916             169,332,916  
Bond funds
          67,270,488             67,270,488  
Asset allocation funds
          44,099,453             44,099,453  
International equity funds
          29,623,393             29,623,393  
Mid-cap equity funds
          21,476,123             21,476,123  
 
                       
Total
          331,802,373             331,802,373  
 
                       
 
                               
Separate accounts
                               
Company stock funds
          458,814,090             458,814,090  
Bond funds
          160,072,746             160,072,746  
 
                       
Total
          618,886,836             618,886,836  
 
                       
 
                               
Participant loans
                54,859,860       54,859,860  
 
                       
Total assets at fair value
  $ 782,514,650     $ 1,078,017,963     $ 54,859,860     $ 1,915,392,473  
 
                       

- 13 -


 

NOTES TO FINANCIAL STATEMENTS
Eaton Savings Plan
8   Fair Value Measurements, Continued
 
    The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2009:
         
    Participant Loans  
Balance, beginning of year
  $ 54,859,860  
Borrowings and repayments (net)
    1,368,801  
 
     
Balance, end of year
  $ 56,228,661  
 
     
    The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2008:
         
    Participant Loans  
Balance, beginning of year
  $ 56,525,751  
Borrowings and repayments (net)
    (1,665,891 )
 
     
Balance, end of year
  $ 54,859,860  
 
     

- 14 -


 

SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
Form 5500, Schedule H, Part IV, Line 4i
Eaton Savings Plan
EIN 34-0196300
Plan Number 055
December 31, 2009
                     
    (b)   ( c )          
    Identity of Issue,   Description of Investment Including       (e)  
    Borrower, Lessor,   Maturity Date, Rate of Interest,   (d)   Current  
(a)   or Similar Party   Collateral, Par or Maturity Value   Cost   Value  
*
  Interest in Eaton Employee Savings Trust Master Trust   Master Trust   N/A   $ 2,087,666,025  
*
  Eaton Stable Value Fund — see Footnote 1   Guaranteed Investment Contract   N/A     122,203,424  
*
  Participant Loans   4%-10.5%, various maturity dates   N/A     56,228,661  
 
                 
 
              $ 2,266,098,110  
 
                 
 
    Footnote 1 — denotes contract value
 
*   Party-in-interest to the Plan.

- 15 -


 

Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-147267, Form S-8 No. 333-77243, Form S-8 No. 333-03599, Form S-8 No. 333-104367 and Form S-8 No. 333-158820) pertaining to the Eaton Savings Plan of our report dated June 22, 2010, with respect to the financial statements of the Eaton Savings Plan included in this Annual Report (Form 11-K) for the years ended December 31, 2009 and 2008.
/s/ Meaden & Moore, Ltd
Meaden & Moore, Ltd
Cleveland, Ohio
June 22, 2010