Stock Split FAQ

What is a two-for-one stock split in the form of a 100% stock dividend?
A 100% stock dividend is a common way to implement a two-for-one stock split. On the payment date, February 28, 2011, each stockholder is receiving one additional share of stock for each share owned as of the close of business on the record date, February 7, 2011. Since there will be twice as many shares after the split, it is expected that each share will be worth half of what it was worth immediately prior to the split, while the overall value of a stockholder’s investment remains the same.
 
Why is the stock being split?
Eaton's Board of Directors made a decision to split the stock in order to make the shares more affordable to a broader range of potential investors and to increase liquidity in the trading of Eaton shares.
 
What kind of record will I receive of the additional shares in my Registered Stockholder account?
Stockholders with a registered account at Eaton’s transfer agent, Computershare Shareholder Services, will receive a Direct Registration Transaction advice or Statement of Account form with details regarding the split transaction and the number of additional shares. Since the stock split shares are being issued to registered shareholders in book-entry form rather than in the form of a stock certificate, holders of record will not receive a new stock certificate representing the additional stock split shares. If you would prefer to receive a stock certificate, you may request one from Computershare at 888-597-8625.
 
If my shares are held in street name, how will I be notified?
Your broker will notify you.

What is the Direct Registration System?
The Direct Registration System (“DRS”) allows your shares to be owned, reported, transferred, and sold electronically, thereby eliminating the need for a physical stock certificate.
 
What do I do with my current, pre-split, stock certificates?
Keep them – do not destroy them. The stock certificates are still valid. All of your certificates should be kept in a safe place. However, as mentioned above, today most shares are kept in paperless fashion and stockholders with certificates have the option to conveniently convert all valid certificates to DRS.
 
I Participate in Eaton’s Dividend Reinvestment Plan. How will the Split Impact the Current Quarter’s Investment?
If you participate in the Eaton Corporation Shareholder Dividend Reinvestment Plan, the number of shares in your dividend reinvestment account as of February 7, including fractional shares, will double as a result of the stock split. A statement reflecting that adjustment will be mailed to you. No certificates or checks will be issued as a result of the split of shares in dividend reinvestment accounts. Further, Eaton’s normally scheduled dividend payment date this quarter is February 25, 2011. Shares purchased in connection with this dividend will also be split on February 28. A second account statement will be sent to you showing your new balance after February 28.
 
What are the U.S. Tax Consequences of the Split?
Eaton has been advised that, under the Internal Revenue Code and the regulations thereunder, as presently in effect, the receipt of one additional share for each share held on February 7, 2011 will not constitute taxable income to shareholders for U.S. Federal tax purposes; that the tax cost basis for each share held by a shareholder on February 7, 2011 will be allocated equally between each additional share received as the result of the stock split and each share held on February 7, 2011; and that the holding period of each new share, for purposes of determining long-term capital gain treatment, will include the holding period of the old share on which the distribution was made.
 
I understand that Eaton has announced a dividend with a Record Date of February 7, 2011. Also, Eaton has announced a 2-for-1 stock split effective the same day. How do these two announcements relate to each other and how do they affect me?
The announced cash dividend of 68 cents per share will be paid on the pre-split shares. February 7, 2011 will serve as the record date for both distributions, but the cash dividend will be paid first, on February 25. The Stock Split will occur three days later, on February 28. You will not receive this cash dividend on the new shares you receive as a result of the split on or after February 28.
 
Will I be able to vote my stock split shares at the 2011 Annual Meeting?
Yes. The record date for the 2011 Annual Meeting is February 28, 2011 and all shares outstanding on that date may be voted at the Annual Meeting, including shares issued in connection with the Stick Split.

How can I update my address?
If you are a registered shareholder, you can update your address by contacting our transfer agent, Computershare, at 888-597-8625.