EXPLANATORY NOTE

 

This filing under Rule 424(b)(2) is being made solely to reflect the payment of the registration fee with respect to 1,750,000 common shares issuable upon the exercise of the underwriters' over-allotment option. Eaton Corporation previously wired to its account with the Securities and Exchange Commission funds sufficient to cover the full $63,549 registration fee for 19,250,000 common shares offered by this prospectus supplement, which reflects the total number of shares offered, including those subject to the over-allotment option. Of these funds, $57,771 was credited with respect to the offering on April 23, 2008.

 

CALCULATION OF REGISTRATION FEE

 

 (1) $ 57,771 was credited with respect to the offering on April 23, 2008.

 

Filed Pursuant to Rule 424(b)(2)

Registration Number: 333-130318

 

PROSPECTUS SUPPLEMENT

(To Prospectus Dated December 14, 2005)

17,500,000 Shares

 

Eaton Corporation

Common Shares

 

 

 

 

We are selling 17,500,000 of our common shares. We have granted the underwriters an option to purchase up to 1,750,000 additional shares to cover over-allotments.

 

Our common shares are listed on the New York Stock Exchange and the Chicago Stock Exchange under the symbol “ETN.” On April 22, 2008, the closing price for our common shares on the New York Stock Exchange was $85.09 per share.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

 

The underwriters expect to deliver the common shares to purchasers on or about April 28, 2008 through the book-entry facilities of The Depository Trust Company.

 

Joint Book-Running Managers

 

 

Co-Managers

 

 

 

 

April 22, 2008

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

 

 

TABLE OF CONTENTS

 

 

We file annual, quarterly and special reports and other information with the Securities and Exchange Commission (“SEC”). You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on its public reference rooms. Our SEC filings are also available to the public from the SEC’s web site at http://www.sec.gov. Our common shares are listed on the New York Stock Exchange and the Chicago Stock Exchange, and information about us is also available there.

 

This prospectus supplement is part of a registration statement that we have filed with the SEC. The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to other documents that we identify as part of this prospectus supplement. Our subsequent filings of similar documents with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until we sell all of these securities.

 

 

You may obtain a copy of these filings at no cost by writing to or telephoning us at the following address:

 

Eaton Corporation
Eaton Center
1111 Superior Avenue
Cleveland, Ohio 44114-2584
(216) 523-5000

 

You should rely only on the information incorporated by reference or provided in this prospectus supplement and the accompanying prospectus. We have not authorized anyone else to provide you with different information. This prospectus supplement is an offer to sell or buy only the securities described in this document, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement is current only as of the date of this prospectus supplement.

 

Some of the statements included or incorporated by reference in the accompanying prospectus or this prospectus supplement constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, “anticipates” and variations of these and similar expressions are used to identify these forward-looking statements. These forward-looking statements refer to, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we can give no assurance that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from the forward-looking statements we make in those documents are set forth in those documents, and include those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by those cautionary statements. We will not update these forward-looking statements even though our situation will change in the future.

 

SUMMARY

Issuer		Eaton Corporation
Common shares offered		17,500,000 shares
Common shares estimated to be outstanding immediately after this offering		164.6 million shares
Use of proceeds		We expect the net proceeds from the sale of the common shares offered by this prospectus supplement to be approximately $1,425.5 million, after deducting underwriting discounts and commission and offering expenses. We will use these proceeds to repay borrowings under our revolving credit facility, which we entered into on January 25, 2008, or to repay commercial paper issued under the backstop provided by the facility. The revolving credit facility, in the amount of $3.0 billion, was entered into to either fund direct loans or to backstop commercial paper borrowings. As of April 18, 2008, borrowings under our revolving credit facility totaled $917.3 million at an average interest rate of 3.01%.

		Commercial paper issued under the backstop provided by the facility totaled $1,574.0 million at an average interest rate of 2.71%, with an average maturity period of 30 days. The proceeds of the revolving credit facility were used to finance the acquisitions of The Moeller Group, on April 4, 2008 and Phoenixtec Power Company Ltd. on February 26, 2008. See “Use of Proceeds.”
New York Stock Exchange symbol		ETN

	•	12,386,060 common shares that were subject to outstanding stock options at a weighted average exercise price of $61.64 per share as of March 31, 2008;
	•	503,102 common shares of unvested restricted stock awarded as of March 31, 2008; and
	•	1,165,903 common shares reserved for future grants under our director and employee stock plans as of March 31, 2008 (or approximately 3,750,000 as of April 23, 2008, due to the anticipated approval of a new stock plan at our annual meeting of shareholders).

 

We expect the net proceeds from the sale of the common shares offered by this prospectus supplement to be approximately $1,425.5 million, after deducting underwriting discounts and commission and offering expenses. We will use these proceeds to repay borrowings under our revolving credit facility, which we entered into on January 25, 2008, or to repay commercial paper issued under the backstop provided by the facility. The revolving credit facility, in the amount of $3.0 billion, was entered into to either fund direct loans or to backstop commercial paper borrowings. As of April 18, 2008, borrowings under our revolving credit facility totaled $917.3 million at an average interest rate of 3.01%. Commercial paper issued under the backstop provided by the facility totaled $1,574.0 million at an average interest rate of 2.71%, with an average maturity period of 30 days. The proceeds of the revolving credit facility were used to finance the acquisitions of The Moeller Group, on April 4, 2008 and Phoenixtec Power Company Ltd. on February 26, 2008.

 

The following table sets forth the capitalization of Eaton and its consolidated subsidiaries at December 31, 2007. The “As Adjusted” capitalization set forth below gives effect to the issuance of the common shares offered hereby, after deducting underwriting discounts and commission and offering expenses.

 

 

Our common shares are traded on the New York Stock Exchange under the symbol “ETN.” The common shares are also traded on the Chicago Stock Exchange.

 

The following table sets forth the high and low closing prices of the common shares on the New York Stock Exchange and the cash dividends declared per common share during the fiscal quarters indicated. On April 22, 2008, the closing price for our common shares on that exchange was $85.09 per share.

 

 

Dividends on our common shares are payable at the discretion of our board of directors out of funds legally available therefor. Future payments of dividends (and the amounts of these dividends) will depend on our financial condition, results of operations, capital requirements and any other factors that the board of directors deems relevant.

 

 

 

Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are acting as joint book-running managers of the offering and are acting as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of common shares set forth opposite the underwriter’s name.

 

 

The underwriting agreement provides that the obligations of the underwriters to purchase the common shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the common shares (other than those covered by the over-allotment option described below) if they purchase any of the common shares.

 

The underwriters propose to offer some of the common shares directly to the public at the public offering price set forth on the cover page of this prospectus supplement and some of the common shares to dealers at the public offering price less a concession not to exceed $1.51 per share. If all of the common shares are not sold at the initial offering price, the representatives may change the public offering price and the other selling terms.

 

If the underwriters sell more common shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase up to 1,750,000 additional common shares at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional common shares approximately proportionate to that underwriter’s initial purchase commitment. Any common shares issued or sold under the option will be issued and sold on the same terms and conditions as the other common shares that are the subject of this offering.

 

We have agreed that for a period of 90 days from the date of this prospectus supplement, and certain of our officers have agreed that for a period of 30 days from the date of this prospectus supplement, we and they, with certain exceptions, will not, without the prior written consent of Citigroup Global Markets Inc., J.P. Morgan Securities Inc., and Morgan Stanley & Co. Incorporated, dispose of or hedge any common shares or any securities convertible into or exchangeable for common shares, subject to certain exceptions. Citigroup Global Markets Inc., J.P. Morgan Securities Inc., and Morgan Stanley & Co. Incorporated in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice. Notwithstanding the foregoing, if (i) during the last 17 days of the 30- or 90-day periods described above, we issue an earnings release or material news or a material event relating to our company occurs; or (ii) prior to the expiration of the 30- or 90-day restricted periods, as applicable, we announce that we will release earnings results during the 16-day period beginning on the last day of the 30- or 90-day period, the restrictions

described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

Notice to Prospective Investors in the European Economic Area

 

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of common shares described in this prospectus supplement may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the common shares that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time:

 

 

Each purchaser of common shares described in this prospectus supplement located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

 

For purposes of this provision, the expression an “offer to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

 

The seller of the common shares has not authorized and does not authorize the making of any offer of common shares through any financial intermediary on its behalf, other than offers made by the underwriters with a view to the final placement of the common shares as contemplated in this prospectus supplement. Accordingly, no purchaser of the common shares, other than the underwriters, is authorized to make any further offer of the common shares on behalf of the seller or the underwriters.

 

Notice to Prospective Investors in the United Kingdom

 

This prospectus supplement is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (“Qualified Investors”) that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This prospectus supplement and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant persons should not act or rely on this document or any of its contents.

 

Our common shares are listed on the New York Stock Exchange and the Chicago Stock Exchange under the symbol “ETN.”

As described in “Use of Proceeds,” some of the net proceeds of this offering may be used to pay down borrowings under our revolving credit facility. Because more than 10% of the proceeds of this offering, not including underwriting compensation, may be received by affiliates of the underwriters in this offering, this offering is being conducted in compliance with National Association of Securities Dealers (“NASD”) Conduct Rule 2710(h). Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering, as the offering is of a class of equity securities for which a “bona fide independent market,” as defined by the NASD rules, exists as of the date of the filing of the registration statement and as of the effective date thereof.

 

The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional common shares.

 

 

We estimate that our total expenses for this offering will be approximately $400,000.

 

In connection with the offering, the underwriters may purchase and sell common shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.

 

 

 

 

 

 

The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when Citigroup Global Markets Inc., J.P. Morgan Securities Inc., or Morgan Stanley & Co. Incorporated, in covering short positions or making stabilizing purchases, repurchase common shares originally sold by that syndicate member in order to cover short positions or make stabilizing purchases.

 

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the common shares. They may also cause the price of the common shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may

conduct these transactions on the New York Stock Exchange or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

 

The underwriters have performed investment banking and advisory services for us from time to time for which they have received customary fees and expenses. The underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business.

 

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

 

The validity of the common shares will be passed upon for our company by Mark M. McGuire, our General Counsel, and for the underwriters by Shearman & Sterling LLP, New York, New York. Mr. McGuire is paid a salary by our company and participates in various employee benefit plans offered to certain employees of our company generally.

 

Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the year ended December 31, 2007 and management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007, as set forth in their reports, which are incorporated by reference in this prospectus supplement and elsewhere in the registration statement. Our consolidated financial statements and schedule and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2007 are incorporated by reference in reliance on Ernst & Young LLP’s reports, given on their authority as experts in accounting and auditing.

 

 

17,500,000 Shares

 

Eaton Corporation

Common Shares

 

 

PROSPECTUS SUPPLEMENT

 

April 22, 2008

 

 

Joint Book-Running Managers

 

Citi

JPMorgan

Morgan Stanley

 

Co-Managers

 

 

Banc of America Securities LLC

KeyBanc Capital Markets

 

Barclays Capital

BNP PARIBAS

BNY Capital Markets, Inc.

Deutsche Bank Securities

Goldman, Sachs & Co.

Merrill Lynch & Co.