Filed Pursuant To Rule 424(b)(2)
                                                      Registration No. 333-74355
PROSPECTUS SUPPLEMENT
 
(TO PROSPECTUS DATED JULY 25, 2003)
                                   EATON LOGO
 
                                  $75,000,000
 
                               EATON CORPORATION
 
                        5.45% Senior Debentures due 2034
                               ------------------
 
     The senior debentures will bear interest at the rate of 5.45% per year.
Interest on the senior debentures is payable on April 15 and October 15 of each
year, beginning on April 15, 2005. The senior debentures will mature on October
15, 2034. Interest on the senior debentures will accrue from October 21, 2004.
The senior debentures are not redeemable prior to maturity.
 
     The senior debentures will be unsecured obligations of our company and will
rank equally with all of our other unsecured senior indebtedness.
                               ------------------
 
     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 related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
                               ------------------
 


                                                            PER SENIOR
                                                            DEBENTURE        TOTAL
                                                            ----------    ------------
                                                                    
Public Offering Price                                        99.9424%     $ 74,956,800
Underwriting Discount                                         0.6000%     $    450,000
Proceeds to Eaton (before expenses) (1)                      99.3424%     $ 74,506,800

 
---------------
 
(1) Plus accrued interest from October 21, 2004 if settlement occurs after that
    date.
                               ------------------
     Legg Mason Wood Walker, Incorporated expects to deliver the senior
debentures to the purchaser on or about October 21, 2004.
                               ------------------
 
                             LEGG MASON WOOD WALKER
                                  INCORPORATED
 
October 18, 2004

 
     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT, AND LEGG MASON WOOD WALKER, INCORPORATED HAS 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,
AND LEGG MASON WOOD WALKER, INCORPORATED IS 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
 
                             PROSPECTUS SUPPLEMENT
 


                                                              PAGE
                                                              ----
                                                           
Recent Developments.........................................  S-3
Where You Can Find More Information.........................  S-3
Special Note Regarding Forward-Looking Statements...........  S-4
Use of Proceeds.............................................  S-4
Description of Senior Debentures............................  S-5
Underwriting................................................  S-6
Legal Opinions..............................................  S-6
                            PROSPECTUS
Where You Can Find More Information.........................    2
The Company.................................................    3
Use of Proceeds.............................................    3
Ratio of Earnings to Fixed Charges..........................    3
Prospectus..................................................    3
Prospectus Supplement.......................................    4
Description of Debt Securities..............................    4
Description of Debt Warrants................................   20
Description of Preferred Shares.............................   22
Description of Common Shares................................   25
Plan of Distribution........................................   29
Legal Opinions..............................................   29
Experts.....................................................   30

 
                                       S-2

 
                              RECENT DEVELOPMENTS
 
     On October 14, 2004, we issued a press release announcing certain financial
results for the third quarter of 2004. The press release reported that our net
income per share was $1.09, sales were a record $2.54 billion, and net income
was $170 million.
 
     The press release was furnished to the Securities and Exchange Commission
as an exhibit to our Form 8-K dated October 14, 2004.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
     We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read and copy any document we
file at the SEC's public reference rooms at 450 Fifth Street, N.W., 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, the Chicago Stock Exchange and the Pacific Exchange,
and information about us also is 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 until this offering of the senior debentures has been completed.
 
        - Annual Report on Form 10-K for the year ended December 31, 2003.
 
        - Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.
 
        - Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.
 
        - Current Reports on Form 8-K filed on April 8, April 14, July 15, and
          September 13, 2004.
 
     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. 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.
 
                                       S-3

 
               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
     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 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. 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.
 
                                USE OF PROCEEDS
 
     We expect the proceeds, net of underwriting discounts and commissions, from
the sale of the senior debentures offered by this prospectus supplement to be
$74,506,800 before expenses. We will use these proceeds to repay a portion of
our 6.95% notes maturing on November 15, 2004 or for general corporate purposes.
 
                                       S-4

 
                        DESCRIPTION OF SENIOR DEBENTURES
 
GENERAL
 
     The following description of the particular terms of the senior debentures
offered by this prospectus supplement supplements the description of the general
terms and provisions of debt securities under the heading "Description of Debt
Securities" in the accompanying prospectus. Capitalized terms used in this
section of this prospectus supplement that are otherwise not defined have the
meanings given to them in the accompanying prospectus.
 
     The senior debentures will be unsecured senior debt issued under the
Indenture dated as of April 1, 1994, as supplemented from time to time (the
"Senior Indenture"), which we entered into with JPMorgan Chase Bank (formerly
Chemical Bank), Senior Trustee.
 
     We will issue the senior debentures in the aggregate principal amount of
$75,000,000. The senior debentures will mature on October 15, 2034. We will
issue the senior debentures only in book-entry form, in denominations of $1,000
and integral multiples of $1,000. The senior debentures may not be redeemed
prior to maturity and are not subject to any sinking fund.
 
     We may, without the consent of the holders of the senior debentures, issue
additional debt securities having the same ranking and the same interest rate,
maturity and other terms as the senior debentures. Any such additional debt
securities and the senior debentures will constitute a single series under the
Senior Indenture. None of these additional debt securities may be issued if an
Event of Default has occurred and is continuing with respect to the senior
debentures.
 
     The senior debentures will bear interest at the annual rate shown on the
cover of this prospectus supplement and will accrue interest from October 21,
2004 or from the most recent date to which interest has been paid or provided
for. Interest will be payable twice a year, on April 15 and October 15,
beginning on April 15, 2005.
 
     In some circumstances, we may elect to discharge our obligations on the
senior debentures through defeasance or covenant defeasance. See "Description of
Debt Securities -- Defeasance and Covenant Defeasance" in the accompanying
prospectus for more information about how we may do this.
 
BOOK-ENTRY SYSTEM
 
     We will issue the senior debentures in the form of one or more fully
registered global securities, as described in "Description of Debt
Securities -- Book-Entry Debt Securities" in the accompanying prospectus. We
will deposit these global securities with, or on behalf of, The Depository Trust
Company, New York, New York, known as DTC, and register these securities in the
name of DTC's nominee.
 
                                       S-5

 
                                  UNDERWRITING
 
     Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, Legg Mason Wood Walker,
Incorporated has agreed to purchase, and we have agreed to sell to Legg Mason
Wood Walker, Incorporated, $75,000,000 aggregate principal amount of the senior
debentures.
 
     The underwriting agreement provides that the obligations of Legg Mason Wood
Walker, Incorporated to purchase the senior debentures included in this offering
are subject to approval of legal matters by counsel and to other conditions.
Legg Mason Wood Walker, Incorporated is obligated to purchase all the senior
debentures if they purchase any of the senior debentures.
 
     Legg Mason Wood Walker, Incorporated proposes to offer all of the senior
debentures directly to the public at the public offering price set forth on the
cover page of this prospectus supplement.
 
     The following table shows the underwriting discounts and commissions that
we are to pay to Legg Mason Wood Walker, Incorporated in connection with this
offering (expressed as a percentage of the principal amount of the notes).
 


                                                              PAID BY EATON
                                                              -------------
                                                           
Per senior debenture........................................      0.60%

 
     We estimate that our net expenses for this offering will be $115,000.
 
     In the ordinary course of its business, Legg Mason Wood Walker,
Incorporated or its affiliates may in the future engage in investment banking
transactions with us.
 
     We have agreed to indemnify Legg Mason Wood Walker, Incorporated 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.
 
                                 LEGAL OPINIONS
 
     The validity of the senior debentures will be passed upon for our company
by J. Robert Horst, our Vice President and General Counsel, and for the
underwriter by Shearman & Sterling LLP, New York, New York. Mr. Horst is paid a
salary by our company and participates in various employee benefit plans offered
to officers of our company generally.
 
                                       S-6

 
                                   EATON LOGO
 
                               EATON CORPORATION
 
                          By this prospectus, we offer
                      up to $500,000,000 of the following:
 

                          
      DEBT SECURITIES            DEBT WARRANTS WITH
     PREFERRED SHARES         DEBT SECURITIES AS UNITS
       COMMON SHARES             DEBT WARRANTS WITH
       DEBT WARRANTS          PREFERRED SHARES AS UNITS

 
     We will provide the specific terms and the public offering prices of these
securities in supplements to this prospectus. This prospectus may not be used to
sell securities unless accompanied by a prospectus supplement. You should read
this prospectus and the prospectus supplements carefully before you invest.
 
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
                 The date of this prospectus is July 25, 2003.

 
                      WHERE YOU CAN FIND MORE INFORMATION
 
     We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on its public reference room. 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, the Chicago Stock Exchange, the Pacific
Exchange and the London Stock Exchange, and information about us also is
available there.
 
     This prospectus 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.
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 Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our offering of
securities has been completed.
 
        - Annual Report on Form 10-K for the year ended December 31, 2002.
 
        - Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.
 
        - Current Report on Form 8-K dated January 21, 2003.
 
     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
               Attn: Shareholder Relations
               (216) 523-5000
 
     You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. This prospectus 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 is current only as of the date of this prospectus.
 
                                        2

 
                                  THE COMPANY
 
We are a global diversified industrial manufacturer of highly engineered
products which serve the industrial, vehicle, construction, commercial and
aerospace markets. Our principal products include fluid power systems,
electrical power quality, distribution and control products, automotive engine
air management and fuel economy products and intelligent truck systems for fuel
economy and safety. We sell our products in more than 50 countries.
 
     Our operations are categorized into these four business segments:
 
        - Fluid Power
 
        - Industrial and Commercial Controls
 
        - Automotive
 
        - Truck
 
     Our principal executive office is located at Eaton Center, 1111 Superior
Avenue, Cleveland, Ohio 44114-2584, and our telephone number is (216) 523-5000.
 
                                USE OF PROCEEDS
 
     Except as may be described otherwise in a prospectus supplement, we will
use the net proceeds from the sale of the securities under this prospectus for
general corporate purposes, which may include additions to working capital,
acquisitions, or the retirement of existing indebtedness via repayment,
redemption or exchange.
 
                       RATIO OF EARNINGS TO FIXED CHARGES
 
     The following table shows our ratio of earnings to fixed charges for the
three months ended March 31, 2003 and for each of the five years in the period
ended December 31, 2002.
 


                                                                  YEAR ENDED DECEMBER 31,
                                         THREE MONTHS ENDED   --------------------------------
                                           MARCH 31, 2003     2002   2001   2000   1999   1998
                                         ------------------   ----   ----   ----   ----   ----
                                                                        
Ratio of Earnings to Fixed Charges.....        3.83           3.71   2.44   3.25   5.31   5.42

 
     For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of consolidated pretax income before adjustment for minority
interests in consolidated subsidiaries or income (loss) of equity investees,
plus (1) amortization of capitalized interest, (2) distributed income of equity
investees and (3) fixed charges described below, excluding capitalized interest.
"Fixed charges" consist of (1) interest expensed, (2) interest capitalized, (3)
amortization of debt issue costs and (4) that portion of rent expense estimated
to represent interest. Because we have not had any Preferred Shares outstanding
during the last five years and have, therefore, not paid any dividends on
Preferred Shares, our ratio of earnings to combined fixed charges and Preferred
Share dividends has been the same as the ratio of earnings to fixed charges for
each of the above periods.
 
                                   PROSPECTUS
 
     This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell any combination of debt securities, warrants to purchase debt securities,
preferred shares and common shares with a par value of $.50 per share in one or
more offerings up to a total dollar amount of $500 million or the equivalent if
any of the securities are denominated in a currency, currency unit or composite
currency other than the U.S. dollar.
 
                                        3

 
                             PROSPECTUS SUPPLEMENT
 
     This prospectus provides you with a general description of the debt
securities, debt warrants, preferred shares and common shares we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add to or change information contained in this prospectus.
If so, the prospectus supplement should be read as superseding this prospectus.
You should read both this prospectus and any prospectus supplement, together
with additional information described under the heading "Where You Can Find More
Information".
 
     The prospectus supplement to be attached to the front of this prospectus
will describe:
 
        - the terms of any debt securities that we offer, including the terms
          under the caption "Provisions Applicable to Both the Senior and
          Subordinated Indentures -- General";
 
        - the terms of any debt warrants that we offer, including the exercise
          price, detachability, expiration date and other terms;
 
        - the terms of any preferred shares that we offer, including the
          specific designations and dividend, redemption, liquidation, voting
          and other rights not described in this prospectus and any terms for
          conversion or exchange;
 
        - the terms of any common shares that we offer; and
 
        - any initial public offering price, the purchase price and net proceeds
          to our company and the other specific terms related to our offering of
          such Securities.
 
     For more details on the terms of the Securities, you should read the
exhibits filed with our registration statements.
 
                         DESCRIPTION OF DEBT SECURITIES
 
     We may issue debt securities from time to time in one or more distinct
series. This section summarizes the material terms of the debt securities that
are common to all series. Most of the financial and other terms of any series of
debt securities that we offer will be described in a prospectus supplement to be
attached to the front of this prospectus. Since the terms of specific debt
securities may differ from the general information we have provided below, you
should rely on information in the prospectus supplement that is inconsistent
with the information below. As used in this section, "we", "us", "our" and "our
company" refer to Eaton Corporation and not to its subsidiaries, unless the
context otherwise requires.
 
     The debt securities are governed by a document called an "Indenture." An
Indenture is a contract between us and a financial institution acting as Trustee
on your behalf. The Trustee has two main roles. First, the Trustee can enforce
your rights against us if we default. There are some limitations on the extent
to which the Trustee acts on your behalf, described later beginning on page 10
of this prospectus. Second, the Trustee performs certain administrative duties
for us.
 
     Senior securities will be issued under an Indenture dated as of April 1,
1994, as supplemented from time to time (the "Senior Indenture"), which we
entered into with Chemical Bank, as trustee (the "Senior Trustee"), and
subordinated securities will be issued under a separate indenture (the
"Subordinated Indenture"), which we will enter into with a trustee (the
"Subordinated Trustee") if we decide to issue any subordinated securities.
JPMorgan Chase Bank (formerly known as Chemical Bank), is acting as Senior
Trustee. The term "Trustee" refers to either the Senior Trustee or the
Subordinated Trustee, as appropriate. We will refer to the Senior Indenture and
the Subordinated Indenture, as executed, together as the "Indentures" and each
as an "Indenture". The Indentures are subject to and governed by the Trust
Indenture Act of 1939.
 
                                        4

 
     The Indentures and associated documents contain the full legal text of the
matters described in this section. We have filed the form of each Indenture as
an exhibit to a registration statement that we have filed with the SEC. See
"Where You Can Find More Information" on page 2 of this prospectus for
information on how to obtain copies of the Indentures.
 
     Because this section is a summary of the material terms of the Indentures,
it does not describe every aspect of the debt securities. This summary is
qualified in its entirety by the provisions of the Indentures, including
definitions of certain terms used in the Indentures. For example, in this
section, we use capitalized words to signify terms that are specifically defined
in the Indentures. Some of the definitions are repeated in this prospectus, but
for the rest you will need to read the Indentures. We also include references in
parentheses to certain sections of the Indentures or the Trust Indenture Act.
Whenever we refer to particular sections or defined terms of the Indentures,
those sections or defined terms are incorporated by reference in this prospectus
or in the prospectus supplement. Unless otherwise noted, the section numbers
refer to the applicable section for both Indentures.
 
PROVISIONS APPLICABLE TO BOTH THE SENIOR AND SUBORDINATED INDENTURES
 
GENERAL
 
     The debt securities will be our unsecured obligations. The senior
securities will rank equally with all of our other unsecured and unsubordinated
indebtedness. The subordinated securities will be subordinated in right of
payment to the prior payment in full of our Senior Indebtedness as described
below under "--Subordinated Indenture Provisions--Subordination".
 
     Under the Indentures, we may issue any debt securities offered under this
prospectus and the attached prospectus supplement and any debt securities
issuable upon the exercise of debt warrants or upon conversion or exchange of
other offered securities, as well as other unsecured debt securities.
 
     With respect to the offered debt securities and any underlying debt
securities, you should read the prospectus supplement for the following and
other terms, which will be established by authority of our Board of Directors
before the issuance of the debt securities:
 
        - the title of the debt securities and whether they will be senior
          securities or subordinated securities, including whether subordinated
          securities are convertible subordinated securities;
 
        - the total principal amount of the debt securities and any limit on the
          total principal amount of debt securities of each series;
 
        - the date or dates when the principal of the debt securities will be
          payable or how those dates will be determined;
 
        - the interest rate or rates which the debt securities will bear, if
          any, or how such rate or rates will be determined, the date or dates
          from which interest will accrue, if any, or how such date or dates
          will be determined, the interest payment dates, the record dates for
          such payments, if any, or how such date or dates will be determined
          and the basis upon which interest will be calculated, if other than
          that of a 360-day year of twelve 30-day months;
 
        - whether the amount of payments of principal of (or premium, if any) or
          interest on the debt securities will be determined with reference to
          an index, formula or other method (which could be based on one or more
          Currencies, commodities, equity indices or other indices) and how such
          amounts will be determined;
 
        - any optional redemption provisions;
 
        - any sinking fund or other provisions that would obligate us to
          repurchase or redeem the debt securities;
                                        5

 
        - if other than U.S. dollars, the Currency or Currencies of the debt
          securities;
 
        - if other than denominations of $1,000 in the case of Registered
          Securities and $5,000 in the case of Bearer Securities, the
          denominations in which the offered debt securities will be issued;
 
        - if not the principal amount of the debt securities, the portion of the
          principal amount at which the debt securities will be issued and, if
          not the principal amount of the debt securities, the portion of the
          principal amount payable upon acceleration of the maturity of the debt
          securities or how that portion will be determined;
 
        - the form of the debt securities, including whether the debt securities
          are to be issuable in permanent or temporary global form, as
          Registered Securities, Bearer Securities or both, any restrictions on
          the offer, sale or delivery of Bearer Securities, and the terms, if
          any, upon which you may exchange Bearer Securities for Registered
          Securities and vice versa (if permitted by applicable laws and
          regulations);
 
        - any modifications or additions to the provisions of Article Fourteen
          of the applicable Indenture described under "Defeasance and Covenant
          Defeasance" if that Article is applicable to the debt securities;
 
        - any changes or additions to the Events of Default or our covenants
          with respect to the debt securities;
 
        - the place or places, if any, other than or in addition to The City of
          New York, of payment, transfer, conversion and/or exchange of the debt
          securities, and where notices or demands to or upon us in respect of
          the debt securities may be served;
 
        - whether we or a holder may elect payment of the principal or interest
          in one or more Currencies other than that in which such debt
          securities are stated to be payable, and the period or periods within
          which, and the terms and conditions upon which, that election may be
          made, and the time and manner of determining the exchange rate between
          the Currency or Currencies in which they are stated to be payable and
          the Currency or Currencies in which they are to be so payable;
 
        - if other than the Trustee, the identity of each Security Registrar
          and/or Paying Agent;
 
        - the designation of the Exchange Rate Agent, if applicable;
 
        - the Person to whom any interest on any Registered Security of the
          series will be payable, if other than the registered holder at the
          close of business on the record date, the manner in which, or the
          Person to whom any interest on any Bearer Security of the series will
          be payable, if not upon presentation and surrender of the coupons
          relating to the Bearer Security as they mature, and the extent to
          which, or the manner in which, any interest payable on a temporary
          Global Security on an Interest Payment Date will be paid if not in the
          manner provided in the applicable Indenture;
 
        - whether and under what circumstances we will pay additional amounts as
          contemplated by Section 1005 of the applicable Indenture ("Additional
          Amounts") in respect of any tax, assessment or governmental charge
          and, if so, whether we will have the option to redeem the debt
          securities rather than pay the Additional Amounts (and the terms of
          any such option);
 
        - any provisions granting special rights to the holders of the debt
          securities upon the occurrence of specified events;
 
        - in the case of subordinated securities, any terms modifying the
          subordination provisions;
 
        - in the case of convertible subordinated securities, any terms by which
          they may be convertible into common shares;
                                        6

 
        - if we issue the debt securities in definitive form, the terms and
          conditions under which definitive securities will be issued;
 
        - if we issue the debt securities upon the exercise of debt warrants,
          the time, manner and place for them to be authenticated and delivered;
 
        - the manner for paying principal and interest and the manner for
          transferring the debt securities; and
 
        - any other terms of the debt securities that are consistent with the
          requirements of the Trust Indenture Act.
 
     For purposes of this prospectus, any reference to the payment of principal
of (or premium, if any) or interest on debt securities will include Additional
Amounts if required by the terms of the debt securities.
 
     The Indentures do not limit the amount of debt securities that we are
authorized to issue from time to time. (Section 301) When a single Trustee is
acting for all debt securities issued under an Indenture, those Securities are
called the "Indenture Securities." Each Indenture also provides that there may
be more than one Trustee thereunder, each for a series of Indenture Securities.
See "Resignation of Trustee" on page 16 of this prospectus. At a time when two
or more Trustees are acting under either Indenture, each with respect to only
certain series, the term "Indenture Securities" means the series of debt
securities for which each respective Trustee is acting. If there is more than
one Trustee under either Indenture, the powers and trust obligations of each
Trustee will apply only to the Indenture Securities for which it is Trustee. If
two or more Trustees are acting under either Indenture, then the Indenture
Securities for which each Trustee is acting would be treated as if issued under
separate indentures.
 
     We may issue Indenture Securities with terms different from those of
Indenture Securities already issued. Without the consent of the holders thereof,
we may reopen a previous issue of a series of Indenture Securities and issue
additional Indenture Securities of that series unless the reopening was
restricted when that series was created.
 
     If any series of debt securities are sold for, payable in or denominated in
one or more foreign Currencies, we will specify applicable restrictions,
elections, tax consequences, specific terms and other information in the
applicable prospectus supplement.
 
     There is no requirement that we issue debt securities in the future under
the Indentures, and we may use other indentures or documentation, containing
different provisions in connection with future issues of such other debt
securities.
 
     We may issue the debt securities as "original issue discount securities,"
which are debt securities, including any zero-coupon debt securities, that are
issued and sold at a discount from their stated principal amount. Original issue
discount securities provide that, upon acceleration of their maturity, an amount
less than their principal amount will become due and payable. We will describe
United States federal income tax consequences and other considerations
applicable to original issue discount securities in any prospectus supplement
relating to them.
 
CONVERSION AND EXCHANGE
 
     If you may convert or exchange debt securities for other Securities, the
prospectus supplement will explain terms and conditions of such conversion or
exchange, including:
 
        - the conversion price or exchange ratio (or the calculation method);
 
        - the conversion or exchange period (or how such period will be
          determined);
 
        - if conversion or exchange will be mandatory, at your option or at our
          option;
 
                                        7

 
        - provisions for adjustment of the conversion price or the exchange
          ratio; and
 
        - provisions affecting conversion or exchange in the event of the
          redemption of the debt securities.
 
     The terms may also include provisions under which the number or amount of
other Securities to be received by the holders of such debt securities upon
conversion or exchange would be calculated according to the market price of such
other Securities as of a time stated in the prospectus supplement.
 
ADDITIONAL MECHANICS
 
  Form, Exchange and Transfer
 
     We may issue debt securities as follows:
 
        - as Registered Securities;
 
        - as Bearer Securities (with interest coupons attached unless otherwise
          stated in the prospectus supplement) (Section 201);
 
        - as both Registered Securities and Bearer Securities;
 
        - in denominations that are even multiples of $1,000 for Registered
          Securities and even multiples of $5,000 for Bearer Securities (Section
          302); or
 
        - in global form. See "--Book-Entry Debt Securities".
 
     You may have your Registered Securities separated into smaller
denominations or combined into larger denominations, as long as the total
principal amount is not changed. (Section 305) This is called an "exchange." If
provided in the prospectus supplement, you may exchange your Bearer Securities
with all unmatured coupons, except as provided below, and all matured coupons
which are in default for Registered Securities of the same series as long as the
total principal amount is not changed. Bearer Securities surrendered in exchange
for Registered Securities between a Regular Record Date or a Special Record Date
and the relevant interest payment dates will be surrendered without the coupon
relating to such interest payment dates. Interest will not be payable in respect
of the Registered Security issued in exchange for that Bearer Security, but will
be payable only to the holder of such coupon when due in accordance with the
terms of the applicable Indenture. Unless we specify otherwise in the prospectus
supplement, we will not issue Bearer Securities in exchange for Registered
Securities. (Section 305)
 
     You may transfer Registered Securities of a series and you may exchange
debt securities of a series at the office of the Trustee. The Trustee will act
as our agent for registering Registered Securities in the names of holders and
transferring debt securities. We may designate someone else to perform this
function. Whoever maintains the list of registered holders is called the
"Security Registrar". The Security Registrar also will perform transfers.
(Section 305)
 
     You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will be made only if the Security Registrar is satisfied with your
proof of ownership. (Section 305)
 
     If we designate additional transfer agents, we will name them in the
accompanying prospectus supplement. We may cancel the designation of any
particular transfer agent. We may also approve a change in the office through
which any transfer agent acts.
 
     If we redeem less than all of the Securities of a redeemable series, we may
block the transfer or exchange of Securities during the period beginning 15 days
before the day we mail the notice of redemption or publish the notice (in the
case of Bearer Securities) and ending on the day of that
 
                                        8

 
mailing or publication, as the case may be, in order to freeze the list of
holders to prepare the mailing. We may also decline to register transfers or
exchanges of debt securities selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed. (Section 305)
 
     If the offered debt securities are redeemable, we will describe the
procedures for redemption in the accompanying prospectus supplement.
 
     IN THIS "ADDITIONAL MECHANICS" SECTION OF THIS PROSPECTUS, "YOU" MEANS
DIRECT HOLDERS AND NOT INDIRECT HOLDERS OF DEBT SECURITIES.
 
PAYMENT AND PAYING AGENTS
 
     We will pay interest to you, if you are listed in the Trustee's records as
the owner of your debt security at the close of business on a particular day in
advance of each due date for interest on your debt security. Interest will be
paid to you if you are listed as the owner even if you no longer own the debt
security on the interest due date. That particular day, usually about two weeks
in advance of the interest due date, is called the "Regular Record Date" and is
defined in the prospectus supplement. Persons who are listed in the Trustee's
records as the owners of debt securities at the close of business on a
particular day are referred to as "holders". (Section 307) Holders buying and
selling debt securities must work out between themselves the appropriate
purchase price since we will pay all the interest for an interest period to the
holders on the Regular Record Date. The most common manner is to adjust the
sales price of the debt securities to prorate interest fairly between buyer and
seller based on their respective ownership periods within the particular
interest period.
 
     We will deposit interest, principal and any other money due on the debt
securities with the Paying Agent that we name in the prospectus supplement.
 
     IF YOU PLAN TO HAVE A BANK OR BROKERAGE FIRM HOLD YOUR SECURITIES, YOU
SHOULD ASK THEM FOR INFORMATION ON HOW YOU WILL RECEIVE PAYMENTS. (Section 305)
 
     If we issue Bearer Securities, unless we provide otherwise in the
prospectus supplement, we will maintain an office or agency outside the United
States for the payment of all amounts due on the Bearer Securities. If we list
the debt securities on any stock exchange located outside the United States, we
will maintain an office or agency for those debt securities in any city located
outside the United States required by that stock exchange. (Section 1002) We
will specify the initial locations of such offices and agencies in the
prospectus supplement. Unless otherwise provided in the prospectus supplement,
we will make payment of interest on any Bearer Securities on or before Maturity
only against surrender of coupons for such interest installments as they mature.
(Section 1001) Unless otherwise provided in the prospectus supplement, we will
not make payment with respect to any Bearer Security at any of our offices or
agencies in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States. Notwithstanding the foregoing, we will make payments of principal of
(and premium, if any) and interest on Bearer Securities payable in U.S. dollars
at the office of our Paying Agent in The City of New York if (but only if)
payment of the full amount in U.S. dollars at all offices or agencies outside
the United States is illegal or effectively precluded by exchange controls or
other similar restrictions. (Section 1002)
 
     We may from time to time designate additional offices or agencies, approve
a change in the location of any office or agency and, except as provided above,
rescind the designation of any office or agency. (Section 1002)
 
EVENTS OF DEFAULT
 
     You will have special rights if an Event of Default occurs as to the debt
securities of your series which is not cured, as described later in this
subsection. (Section 501) Please refer to the prospectus supplement for
information about any changes to the Events of Default or our covenants
                                        9

 
that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
 
     What Is an Event of Default? The term "Event of Default" as to the debt
securities of your series means any of the following:
 
        - we do not pay the principal of (or premium, if any) on a debt security
          of such series on its due date;
 
        - we do not pay interest on a debt security of such series within 30
          days of its due date;
 
        - we do not make or satisfy any sinking fund payment in respect of debt
          securities of such series within 30 days of its due date;
 
        - we remain in breach of a covenant in respect of debt securities of
          such series for 60 days after we receive a written notice of default
          stating we are in breach. The notice must be sent by either the
          Trustee or holders of 25% of the principal amount of debt securities
          of such series;
 
        - we file for bankruptcy, or certain other events in bankruptcy,
          insolvency or reorganization occur; or
 
        - there occurs any other Event of Default as to debt securities of the
          series described in the prospectus supplement. (Section 501)
 
     An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities issued under an Indenture.
 
     The Trustee may withhold notice to the holders of debt securities of a
particular series of any default if it considers its withholding of notice to be
in the interest of the holders of that series, except that the Trustee may not
withhold notice if the default is in the payment of principal of (or premium, if
any) or interest on the debt securities. (Section 601)
 
     Remedies if an Event of Default Occurs. If an Event of Default has occurred
and we have not cured it, the Trustee or the holders of 25% in principal amount
of the debt securities of the affected series may declare the entire principal
amount of all the debt securities of that series to be due and immediately
payable by notifying us (or the Trustee, if the holders give notice) in writing.
This is called a declaration of acceleration of maturity. A declaration of
acceleration of maturity may be canceled by the holders of at least a majority
in principal amount of the debt securities of the affected series by notifying
us (or the Trustee, if the holders give notice) in writing. (Section 502)
 
     Except in cases of default, where the Trustee has some special duties, the
Trustee is not required to take any action under the Indenture at the request of
any holders unless the holders offer the Trustee reasonable protection from
expenses and liability (called an "indemnity"). (Section 602 and Trust Indenture
Act Section 315) If reasonable indemnity is provided, the holders of a majority
in principal amount of the Outstanding debt securities of the relevant series
may direct the time, method and place of conducting any lawsuit or other formal
legal action seeking any remedy available to the Trustee. The Trustee may refuse
to follow those directions in certain circumstances. (Section 512) No delay or
omission in exercising any right or remedy will be treated as a waiver of that
right, remedy or Event of Default. (Section 511)
 
     Before you are allowed to bypass the Trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your rights or protect
your interest relating to the debt securities, the following must occur:
 
        - you must give the Trustee written notice that an Event of Default has
          occurred and remains uncured (Section 507);
 
                                        10

 
        - the holders of 25% in principal amount of all outstanding debt
          securities of the relevant series must make a written request that the
          Trustee take action because of the default (Section 507) and must
          offer reasonable indemnity to the Trustee against the cost and other
          liabilities of taking that action (Section 602);
 
        - the Trustee must not have instituted a proceeding for 60 days after
          receipt of the above notice and offer of indemnity (Section 507); and
 
        - the holders of a majority in principal amount of the debt securities
          must not have given the Trustee a direction inconsistent with the
          above notice during such 60-day period. (Section 507)
 
     However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt securities on or after the due date. (Section 508)
 
     Holders of a majority in principal amount of the debt securities of the
affected series may waive any past defaults other than the following:
 
        - the payment of principal, any premium, interest or Additional Amounts
          on any debt security or related coupon; or
 
        - in respect of a covenant that under Article Ten of the applicable
          Indenture cannot be modified or amended without the consent of each
          holder. (Section 513)
 
     IF YOUR SECURITIES ARE HELD FOR YOU BY A BANK OR BROKERAGE FIRM, YOU SHOULD
CONSULT THEM FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO THE TRUSTEE
OR MAKE A REQUEST OF THE TRUSTEE AND HOW TO MAKE OR CANCEL A DECLARATION OF
ACCELERATION.
 
     Each year, we will furnish the Trustee with a written statement of certain
of our officers certifying that, to their knowledge, we are in compliance with
the Indenture and the debt securities, or else specifying any default. (Section
1004)
 
MERGER, CONSOLIDATION OR SALE OF ASSETS
 
     Under the terms of the Indentures, we are generally permitted to
consolidate or merge with another firm. We are also permitted to sell or
transfer our assets substantially as an entirety to another firm (Section 801).
However, we may not take any of these actions unless all of the following
conditions are met:
 
        - where we merge or consolidate out of existence or sell or transfer our
          assets substantially as an entirety, the resulting firm must agree to
          be legally responsible for all obligations under the debt securities
          and the applicable Indenture (Section 801);
 
        - the merger, consolidation or sale or transfer of assets substantially
          as an entirety must not cause a default on the debt securities. For
          purposes of this no-default test, a default would include an Event of
          Default that has occurred and not been cured, as described on page 10
          of this prospectus under "--What Is an Event of Default?" (Section
          801);
 
        - where we merge or consolidate out of existence or sell or transfer our
          assets substantially as an entirety, the resulting firm (if a
          corporation) must be a corporation organized under the laws of the
          United States or any state thereof or the District of Columbia
          (Section 801);
 
        - under the Senior Indenture, we may not merge, consolidate or sell or
          transfer our assets substantially as an entirety if, as a result, any
          of our property or assets or any property or assets of a Restricted
          Subsidiary (as defined) would become subject to any mortgage, lien or
          other encumbrance unless either:
 
                                        11

 
           - the mortgage, lien or other encumbrance could be created pursuant
             to Section 1009 of such Indenture (see "--Senior Indenture
             Provisions--Limitation on Liens" on page 17) without equally and
             ratably securing the Indenture Securities; or
 
           - the Indenture Securities are secured equally and ratably with or
             prior to the debt secured by the mortgage, lien or other
             encumbrance (Section 803);
 
        - we must deliver certain certificates and documents to the Trustee
          (Section 801); and
 
        - we must satisfy any other requirements specified in the prospectus
          supplement.
 
MODIFICATION OR WAIVER
 
     There are three types of changes we can make to the Indentures and the debt
securities.
 
     Changes Requiring Your Approval. First, there are changes that cannot be
made to your debt securities without your specific approval. (Section 902)
Following is a list of those types of changes:
 
        - a change of the Stated Maturity of the principal of or interest on a
          debt security;
 
        - a reduction of any amounts due on a debt security;
 
        - a reduction of the amount of principal payable upon acceleration of
          the Maturity of a Security following a default;
 
        - an adverse effect on any right of repayment at your option;
 
        - a change of the place (except as otherwise described in this
          prospectus) or Currency of payment on a debt security;
 
        - impairment of your right to sue for payment;
 
        - with respect to debt securities issued under the Subordinated
          Indenture, an adverse effect on the right to convert any debt
          securities as provided in Article 15 of the Subordinated Indenture;
 
        - a modification of the subordination provisions in the Subordinated
          Indenture in a manner that is adverse to you as a holder of the
          Subordinated Securities;
 
        - a reduction of the percentage of holders of debt securities whose
          consent is needed to modify or amend the Indenture;
 
        - a reduction of the percentage of holders of debt securities whose
          consent is needed to waive compliance with certain provisions of the
          Indenture or to waive certain defaults;
 
        - a modification of any other aspect of the provisions of the Indenture
          dealing with modification and waiver of past defaults (Section 513),
          the quorum or voting requirements of the debt securities (Section 1504
          of the Senior Indenture and Section 1704 of the Subordinated
          Indenture) or provisions relating to the waiver of certain covenants
          (Section 1011 of the Senior Indenture and Section 1008 of the
          Subordinated Indenture), except to increase any percentage of consents
          required to amend an Indenture or for any waiver or to add certain
          provisions that cannot be modified without the approval of each holder
          under Section 902; or
 
        - a change of any of our obligations to pay Additional Amounts.
 
     Changes Requiring a Majority Vote. The second type of change to the
Indenture and the Outstanding debt securities is the kind that requires a vote
in favor by holders of Outstanding debt securities owning a majority of the
principal amount of the particular series affected. Most changes fall into this
category, except for clarifying changes and certain other changes that would not
adversely affect holders of the Outstanding debt securities in any material
respect. The same vote
 
                                        12

 
would be required for us to obtain a waiver of all or part of certain covenants
in the applicable Indenture (Section 1011 of the Senior Indenture and Section
1008 of the Subordinated Indenture) or a waiver of a past default. However, we
cannot obtain a waiver of a payment default or any other aspect of the
Indentures or the Outstanding debt securities listed in the first category
described previously under "--Changes Requiring Your Approval" unless we obtain
your individual consent to the waiver. (Section 902)
 
     Changes Not Requiring Approval. The third type of change does not require
any vote by you as holders of Outstanding debt securities. This type is limited
to clarifications and certain other changes that would not adversely affect
holders of the Outstanding debt securities in any material respect. (Section
901)
 
     Further Details Concerning Voting. When taking a vote, we will use the
following rules to decide how much principal amount to attribute to a debt
security:
 
        - for original issue discount securities, we will use the principal
          amount that would be due and payable on the voting date if the
          Maturity of the debt securities were accelerated to that date because
          of a default;
 
        - for debt securities whose principal amount is not known (for example,
          because it is based on an index), we will use a special rule for that
          debt security described in the prospectus supplement; and
 
        - for debt securities denominated in one or more foreign Currencies or
          Currency units, we will use the U.S. dollar equivalent.
 
     Debt securities will not be considered Outstanding, and therefore not
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described later under "Defeasance and
Covenant Defeasance". (Section 101)
 
     We will generally be entitled to set any day as a record date for the
purpose of determining the holders of debt securities that are entitled to vote
or take other action under the applicable Indenture. If we set a record date for
a vote or other action to be taken by holders of a particular series, that vote
or action may be taken only by persons who are holders of debt securities of
that series on the record date. (Section 104)
 
     IF YOUR SECURITIES ARE HELD BY A BANK OR BROKERAGE FIRM, YOU SHOULD CONSULT
THEM FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO
CHANGE THE APPLICABLE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
 
     Each Indenture contains provisions for convening meetings of the holders of
debt securities issued as Bearer Securities. (Section 1501 of the Senior
Indenture and Section 1701 of the Subordinated Indenture) A meeting may be
called at any time by the applicable Trustee, and also, upon request, by us or
by the holders of at least 10% in principal amount of the Outstanding debt
securities of that series, upon notice given as provided in the applicable
Indenture. (Section 1502 of the Senior Indenture and Section 1702 of the
Subordinated Indenture)
 
     Except for any consent that must be given by the holder of each debt
security affected thereby, as described above, the holders of a majority in
principal amount of the Outstanding debt securities of a series may adopt any
resolution presented at a meeting at which a quorum is present. However, any
resolution with respect to any action which the Indenture expressly provides may
be taken by a specified percentage less than a majority in principal amount of
the Outstanding debt securities of a series may be adopted at a meeting at which
a quorum is present by vote of that specified percentage. Any resolution passed
or decision taken at any meeting of holders of debt securities of a series in
accordance with the applicable Indenture will be binding on all holders of debt
securities of that series and any related coupons. The quorum at any meeting
called to adopt a resolution will
                                        13

 
be persons holding or representing a majority in principal amount of the
Outstanding debt securities of a series, except that if any action is to be
taken at such meeting which may be given by the holders of not less than a
specified percentage in principal amount of the Outstanding debt securities of a
series, the persons holding or representing such specified percentage in
principal amount of the Outstanding debt securities of that series will
constitute a quorum. (Section 1504 of the Senior Indenture and Section 1704 of
the Subordinated Indenture)
 
     Notwithstanding the above, if any action is to be taken at a meeting of
holders of debt securities of a series that the applicable Indenture expressly
provides may be taken by the holders of a specified percentage in principal
amount of all Outstanding debt securities affected thereby or of the holders of
such series and one or more additional series:
 
        - there will be no minimum quorum requirement for that meeting; and
 
        - the principal amount of the Outstanding debt securities of that series
          that vote in favor of such action will be taken into account in
          determining whether that action has been taken under such Indenture.
          (Section 1504 of the Senior Indenture and Section 1704 of the
          Subordinated Indenture)
 
DEFEASANCE AND COVENANT DEFEASANCE
 
     The following discussion of defeasance and covenant defeasance will be
applicable to your series of debt securities only if we choose to have them
apply to that series. If we do so choose, we will specify the choice in the
prospectus supplement. (Section 1401)
 
     Defeasance. If there is a change in U.S. federal tax law, as described
below, we can legally release ourselves from all payment and other obligations
on the debt securities (called "defeasance") if we put in place the following
other arrangements for you to be repaid:
 
        - We must deposit in trust for your benefit and the benefit of all other
          direct holders of the debt securities a combination of money and U.S.
          government or U.S. government agency obligations that will generate
          enough cash to make interest, principal and any other payments on the
          debt securities on their various due dates.
 
        - We must deliver to the Trustee a legal opinion confirming that there
          has been a change in current federal tax law or an IRS ruling that
          lets us make the above deposit without causing you to be taxed on the
          debt securities any differently than if we did not make the deposit
          and just repaid the debt securities ourselves. (Sections 1402 and
          1404) Under current federal tax law, the deposit and our legal release
          from the debt securities would be treated as though we paid you your
          share of the cash and notes or bonds at the time the cash and notes or
          bonds are deposited in trust in exchange for your debt securities, and
          you would recognize gain or loss on the debt securities at the time of
          the deposit.
 
     If we ever did accomplish defeasance, as described above, you would have to
rely solely on the trust deposit for repayment of the debt securities. You could
not look to us for repayment in the event of any shortfall. Conversely, the
trust deposit would most likely be protected from claims of our lenders and
other creditors if we ever become bankrupt or insolvent. You would also be
released from the subordination provisions on the subordinated debt securities
described later under "Subordination" on page 19 of this prospectus. If we
accomplish a defeasance, we would retain only the obligations to register the
transfer or exchange of the debt securities, to maintain an office or agency in
respect of the debt securities and to hold moneys for payment in trust.
 
     Covenant Defeasance. Under current federal tax law, we can make the same
type of deposit described above and be released from some of the restrictive
covenants in the Indentures. These covenants relate to "Limitation on Liens" and
"Limitation on Sale and Leaseback Transactions" described in Sections 1009 and
1010 respectively of the Senior Indenture and are summarized
 
                                        14

 
beginning on page 17 of this prospectus. We can also be released from any other
covenant in the Indentures which may be specified in the prospectus supplement
if we make the same type of deposit described above. This is called "covenant
defeasance". In that event, you would lose the protection of those covenants but
would gain the protection of having money and debt securities set aside in trust
to repay the debt securities. You also would be released from the subordination
provisions on the subordinated securities described under "Subordination" on
page 19 of this prospectus. In order to achieve covenant defeasance, we must do
the following:
 
        - deposit in trust for your benefit and the benefit of all other direct
          holders of the debt securities a combination of money and U.S.
          government or U.S. government agency obligations that will generate
          enough cash to make interest, principal and any other payments on the
          debt securities on their various due dates; and
 
        - deliver to the Trustee a legal opinion of our counsel confirming that,
          under current federal income tax law, we may make the above deposit
          without causing you to be taxed on the debt securities any differently
          than if we did not make the deposit and just repaid the debt
          securities ourselves.
 
     If we accomplish covenant defeasance, you can still look to us for
repayment of the debt securities if there were a shortfall in the trust deposit
or the Trustee is prevented from making payment. In fact, if one of the
remaining Events of Default occurred, such as our bankruptcy, and the debt
securities become immediately due and payable, there may be such a shortfall.
Depending on the event causing the default, you may not be able to obtain
payment of the shortfall.
 
BOOK-ENTRY DEBT SECURITIES
 
     We may issue debt securities of a series in whole or in part in global form
that we will deposit with, or on behalf of, a depositary that we identify in a
prospectus supplement. Global securities may be issued in either registered or
bearer form and in either temporary or permanent form (each, a "Global
Security"). Global Securities will be registered in the name of a financial
institution we select, and the debt securities included in the Global Securities
may not be transferred to the name of any other direct holder unless the special
circumstances described below occur. The financial institution that acts as the
sole direct holder of the Global Security is called the "Depositary". Any person
wishing to own a debt security must do so indirectly by virtue of an account
with a broker, bank or other financial institution that, in turn, has an account
with the Depositary.
 
     Special Investor Considerations for Global Securities. Our obligations, as
well as the obligations of the Trustee and those of any third parties employed
by us or the Trustee, run only to Persons who are registered as holders of debt
securities. For example, once we make payment to the registered holder, we have
no further responsibility for the payment even if that holder is legally
required to pass the payment along to you but does not do so. As an indirect
holder, an investor's rights relating to a Global Security will be governed by
the account rules of the investor's financial institution and of the Depositary,
as well as general laws relating to debt securities transfers.
 
     You should be aware that when we issue debt securities in the form of
Global Securities:
 
        - you cannot get debt securities registered in your own name;
 
        - you cannot receive physical certificates for your interest in the debt
          securities;
 
        - you must look to your own bank or brokerage firm for payments on the
          debt securities and protection of your legal rights relating to the
          debt securities;
 
        - you may not be able to sell interests in the debt securities to some
          insurance companies and other institutions that are required by law to
          hold the physical certificates of debt securities that they own;
 
                                        15

 
        - the Depositary's policies will govern payments, transfers, exchanges
          and other matters relating to your interest in the Global Security. We
          and the Trustee have no responsibility for any aspect of the
          Depositary's actions or for its records of ownership interests in the
          Global Security. We and the Trustee also do not supervise the
          Depositary in any way; and
 
        - the Depositary will usually require that interests in a Global
          Security be purchased or sold within its system using same-day funds.
 
     Special Situations when Global Security Will be Terminated. In a few
special situations described later, a Global Security will terminate and
interests in it will be exchanged for physical certificates representing debt
securities. After that exchange, the choice of whether to hold debt securities
directly or indirectly through an account at your bank or brokerage firm will be
up to you. You must consult your own bank or broker to find out how to have
interests in debt securities transferred to your own name, so that they will be
direct holders.
 
     The special situations for termination of a Global Security are:
 
        - when the Depositary notifies us that it is unwilling, unable or no
          longer qualified to continue as Depositary (unless a replacement
          Depositary is named);
 
        - when an Event of Default on the debt securities has occurred and has
          not been cured; and
 
        - when and if we decide to terminate a Global Security.
 
     The prospectus supplement may list situations for terminating a Global
Security that would apply only to the particular series of debt securities
covered by the prospectus supplement. When a Global Security terminates, the
Depositary (and neither we nor the Trustee) is responsible for deciding the
names of the institutions that will be the initial direct holders. (Section 302)
Unless otherwise provided in the prospectus supplement, debt securities that are
represented by a Global Security will be issued in denominations of $1,000 and
any integral multiple thereof and will be issued in registered form only,
without coupons.
 
RESIGNATION OF TRUSTEE
 
     Each Trustee may resign or be removed with respect to one or more series of
Indenture Securities, and a successor Trustee may be appointed to act with
respect to such series. (Section 608) In the event that two or more persons are
acting as Trustee with respect to different series of Indenture Securities under
one of the Indentures, each such Trustee will be a Trustee of a trust separate
and apart from the trust administered by any other such Trustee (Section 609),
and any action described herein to be taken by the "Trustee" may then be taken
by each such Trustee with respect to, and only with respect to, the one or more
series of Indenture Securities for which it is Trustee.
 
SENIOR INDENTURE PROVISIONS
 
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
 
     Under the terms of the Senior Indenture, we will not, and will not permit
any Restricted Subsidiary (as defined) to, sell or transfer any manufacturing
plant owned by us or any Restricted Subsidiary with the intention of taking back
a lease on such property unless:
 
        - the sale or transfer of property is made within 120 days after the
          later of the date of
 
           - the acquisition of such property,
 
           - the completion of construction of such property, or
 
                                        16

 
           - the commencement of full operation thereof;
 
        - such lease has a term, including permitted extensions and renewals, of
          not more than three years, and it is intended that the use by us or
          the Restricted Subsidiary of the manufacturing plant covered by such
          lease will be discontinued on or before the expiration of such term;
 
        - the amount that we realize from such sale or transfer, together with
          the value (as defined) of then outstanding Sale and Leaseback
          Transactions not otherwise permitted by the Senior Indenture and the
          outstanding aggregate principal amount of mortgage, pledge or lien
          indebtedness not otherwise permitted by the Senior Indenture will not
          exceed 10% of our Consolidated Net Tangible Assets (as defined); or
 
        - we will cause an amount equal to the value (as defined) of the
          manufacturing plant to be sold or transferred and leased to be applied
          to the retirement (other than any mandatory retirement) within 120
          days of the effective date of such Sale and Leaseback Transaction of
          either the Indenture Securities or other funded indebtedness which is
          equal in rank to the Indenture Securities, or both. (Section 1010 of
          the Senior Indenture)
 
     These provisions are intended to preserve our assets and to limit our
ability to incur leases which effectively constitute indebtedness.
 
LIMITATION ON LIENS
 
     Under the terms of the Senior Indenture, with certain exceptions, we will
not, directly or indirectly, and we will not permit any Restricted Subsidiary
to, create or assume any mortgage, pledge or other lien of or upon any of our or
their assets unless all of the outstanding Indenture Securities of each series
are secured by such mortgage, pledge or lien equally and ratably with any and
all other obligations and indebtedness thereby secured for so long as any such
other obligations and indebtedness will be so secured. Among the exceptions are:
 
        - the creation of any mortgage or other lien on any of our property or
          property of any Restricted Subsidiary to secure indebtedness incurred
          prior to, at the time of, or within 120 days after the later of, the
          acquisition, the completion of construction or the commencement of
          full operation of such property; and
 
        - mortgages or liens on any property that we or any Restricted
          Subsidiary acquire after the date of the Senior Indenture existing at
          the time of such acquisition; provided that we incur the secured
          indebtedness for the purpose of financing all or any part of the
          acquisition or construction of any such property.
 
     In addition, we or any Restricted Subsidiary may create or assume any
mortgage, pledge or other lien not otherwise permitted by the Senior Indenture
for the purpose of securing indebtedness or other obligations so long as the
aggregate of all such indebtedness and other obligations then outstanding,
together with the value of all outstanding Sale and Leaseback Transactions not
otherwise permitted, will not exceed 10% of Consolidated Net Tangible Assets.
(Section 1009 of the Senior Indenture)
 
DEFINITIONS
 
     The Senior Indenture defines the term "Consolidated Net Tangible Assets" as
our total assets and those of our consolidated subsidiaries, including the
investment in (at equity) and the net amount of advances to and accounts
receivable from corporations which are not consolidated subsidiaries, less the
following:
 
        - our current liabilities and those of our consolidated subsidiaries,
          including an amount equal to indebtedness required to be redeemed by
          reason of any sinking fund payment
 
                                        17

 
          due in 12 months or less from the date as of which current liabilities
          are to be determined;
 
        - all of our other liabilities and those of our consolidated
          subsidiaries other than Funded Debt (as defined), deferred income
          taxes and liabilities for employee post-retirement health plans
          recognized in accordance with Statement of Financial Accounting
          Standards No. 106;
 
        - all of our and our consolidated subsidiaries' depreciation and
          valuation reserves and all other reserves (except for reserves for
          contingencies which have not been allocated to any particular
          purpose);
 
        - the book amount of all our and our consolidated subsidiaries'
          segregated intangible assets, including, but without limitation, such
          items as goodwill, trademarks, trade names, patents and unamortized
          debt discount and expense, less unamortized debt premium; and
 
        - appropriate adjustments on account of minority interests of other
          persons holding stock in subsidiaries.
 
     Consolidated Net Tangible Assets is to be determined on a consolidated
basis in accordance with generally accepted accounting principles and as
provided in the Senior Indenture. (Section 101 of the Senior Indenture)
 
     The Senior Indenture defines the term "Restricted Subsidiary" as any of our
subsidiaries except:
 
        - any subsidiary substantially all the assets of which are located, or
          substantially all of the business of which is carried on, outside of
          the United States and Canada, or any subsidiary substantially all the
          assets of which consist of stock or other securities of such a
          subsidiary;
 
        - any subsidiary principally engaged in the business of financing notes
          and accounts receivable and any subsidiary substantially all the
          assets of which consist of the stock or other securities of such
          subsidiary; or
 
        - any subsidiary acquired or organized after the date of the Indenture,
          unless our Board of Directors has designated it as a Restricted
          Subsidiary and such designation will not result in the breach of any
          covenant or agreement in the Senior Indenture. (Section 101 of the
          Senior Indenture)
 
     The Senior Indenture defines the term "Funded Debt" as indebtedness for
borrowed money owed or guaranteed by us or any of our consolidated subsidiaries,
and any other indebtedness which under generally accepted accounting principles
would appear as debt on the balance sheet of such corporation, which matures by
its terms more than twelve months from the date as of which Funded Debt is to be
determined or is extendible or renewable at the option of the obligor to a date
more than twelve months from the date as of which Funded Debt is to be
determined. (Section 101 of the Senior Indenture)
 
     For purposes of the Limitation on Liens and Limitation on Sale and
Leaseback Transactions, the Senior Indenture defines the term "value" with
respect to a manufacturing plant as the amount equal to the greater of:
 
        - the net proceeds of the sale or transfer of such manufacturing plant;
          or
 
        - the fair value of such manufacturing plant at the time of entering
          into such Sale and Leaseback Transaction, as determined by our Board
          of Directors.
 
     This amount is divided first by the number of full years of the term of the
lease and then multiplied by the number of full years of such term remaining at
the time of determination, without
                                        18

 
regard to renewal or extension options contained in such lease. (Section 1010 of
the Senior Indenture)
 
SUBORDINATED INDENTURE PROVISIONS
 
SUBORDINATION
 
     Article 16 of the Subordinated Indenture provides that the payment of
principal of (premium, if any) and interest on subordinated securities will be
subordinated in right of payment to the prior payment in full of Senior
Indebtedness. We may make no payment with respect to subordinated securities
while a default exists with respect to our Senior Indebtedness.
 
     The Subordinated Indenture defines "Senior Indebtedness" as:
 
        - indebtedness of our company, whether outstanding on the date of the
          Subordinated Indenture or thereafter created, incurred, assumed or
          guaranteed for money borrowed from banks or other lending institutions
          and any other indebtedness or obligations of our company evidenced by
          a bond, debenture, note or other similar instrument, including without
          limitation, overdrafts, letters of credit issued for our account and
          commercial paper;
 
        - any other indebtedness that constitutes purchase money indebtedness
          for payment of which we are directly or contingently liable (excluding
          trade accounts payable);
 
        - any direct or contingent indebtedness or obligation represented by
          guarantees or instruments having a similar effect that we enter into
          (whether prior to the date of the Subordinated Indenture or
          thereafter) with reference to lease or purchase money obligations of a
          subsidiary or affiliate of our company or any other corporation in
          which we hold or have an option to purchase 50% or more of the
          outstanding capital stock; and
 
        - renewals, extensions and refundings of any indebtedness described in
          the three bullet points above, unless in any case the terms of the
          instrument creating or evidencing such indebtedness provide that the
          indebtedness is on a parity with or is junior to the Subordinated
          Indebtedness.
 
     Any indebtedness that becomes indebtedness of our company by operation of
merger, consolidation or other acquisition will constitute Senior Indebtedness
if that indebtedness would have been Senior Indebtedness had it been issued by
us. By reason of this subordination, in the event that we become insolvent,
holders of our Senior Indebtedness may receive more, ratably, and holders of
Subordinated Indebtedness may receive less, ratably, than our other creditors.
The Subordinated Indenture does not limit our ability to issue Senior
Indebtedness.
 
     If this prospectus is being delivered in connection with a series of
subordinated debt, the accompanying prospectus supplement or the information
incorporated by reference will set forth the approximate amount of Senior
Indebtedness outstanding as of a recent date.
 
THE TRUSTEES UNDER THE INDENTURES
 
     JPMorgan Chase Bank is the Trustee under the Senior Indenture. We may
appoint JPMorgan Chase Bank as trustee under the Subordinated Indenture.
JPMorgan Chase Bank is among the banks with which we maintain ordinary banking
relationships. JPMorgan Chase Bank also serves as trustee under other indentures
under which our 7.65% Debentures due 2029 ("7.65% Debentures"), 6 1/2%
Debentures due 2025 ("6 1/2% Debentures"), 7 5/8% Debentures due 2024 ("7 5/8%
Debentures"), 5.75% Notes due 2012 ("5.75% Notes"), 8% Debentures due 2006 ("8%
Debentures") and 6.95% Notes due 2004 ("6.95% Notes") are outstanding.
 
     In the event that a default occurs under either Indenture or under the
indentures which govern the 7.65% Debentures, the 6 1/2% Debentures, the 7 5/8%
Debentures, the 5.75% Notes, the 8%
                                        19

 
Debentures or the 6.95% Notes at a time when Indenture Securities are
outstanding under the Subordinated Indenture, unless the default is cured or
waived within 90 days, the provisions of the Trust Indenture Act require that,
if JPMorgan Chase Bank is Subordinated Trustee, it must resign as Trustee under
either the Subordinated Indenture or each of the Senior Indenture, the 7.65%
Debentures indenture, the 6 1/2% Debentures indenture, the 7 5/8% Debentures
indenture, the 5.75% Notes indenture, the 8% Debentures indenture and the 6.95%
Notes indenture. In such circumstance, we expect that JPMorgan Chase Bank would
resign as Trustee under the Subordinated Indenture.
 
FOREIGN CURRENCY RISKS--FLUCTUATIONS AND CONTROLS
 
     Debt securities denominated or payable in foreign currencies may entail
significant risks. For example, the value of the currencies, in comparison to
United States dollars, may decline, or foreign governments may impose or modify
controls regarding the payment of foreign currency obligations. These events may
cause the value of debt securities denominated or payable in those foreign
currencies to fall substantially. These risks will vary depending upon the
foreign currency or currencies involved and will be more fully described in the
applicable prospectus supplement.
 
                          DESCRIPTION OF DEBT WARRANTS
 
     We may issue, either together with other debt securities or preferred
shares or separately, debt warrants to purchase underlying debt securities. We
will issue debt warrants, if any, under warrant agreements (each, a "debt
warrant agreement") that would be between us and a bank or trust company, as
warrant agent (the "debt warrant agent"), that we will describe in a prospectus
supplement. The form of the debt warrant agreement is contained in a
registration statement that we have filed with the SEC. See "Where You Can Find
More Information" on page 2 of this prospectus for information on how to obtain
a copy of the debt warrant agreement. The following is a summary of the material
terms of the debt warrant agreement. This summary is not complete and is
qualified in its entirety by reference to all the provisions of the debt warrant
agreement and the accompanying debt warrant certificates, including the
definitions therein of certain terms.
 
GENERAL
 
     You should read the prospectus supplement for the terms of the offered debt
warrants, including the following:
 
        - the initial offering price;
 
        - the title and aggregate number of such debt warrants;
 
        - the designation, aggregate principal amount and other terms of the
          senior securities purchasable upon exercise of the debt warrants;
 
        - if applicable, the designation and terms of the debt securities or
          preferred shares with which the debt warrants are issued and the
          number of debt warrants issued with each debt security or preferred
          share;
 
        - if applicable, the date on and after which the debt warrants and the
          related debt securities or preferred shares will be separately
          transferable;
 
        - the principal amount of senior securities purchasable upon exercise of
          one debt warrant and the price at which such principal amount of
          senior securities may be purchased upon such exercise;
 
        - the date on which the right to exercise the debt warrants will
          commence and the date on which such right will expire;
 
                                        20

 
        - if applicable, a discussion of United States federal income tax
          consequences applicable to the exercise of the debt warrants and to
          the senior securities purchasable upon the exercise of the debt
          warrants;
 
        - the identity of the debt warrant agent;
 
        - whether the debt warrants represented by the debt warrant certificates
          will be issued in registered or bearer form, and, if registered, where
          they may be transferred or registered; and
 
        - any other terms of the debt warrants.
 
     Debt warrant certificates may be exchanged for new debt warrant
certificates of different denominations and, if in registered form, may be
presented for registration of transfer, and may be exercised at the corporate
trust office of the debt warrant agent or any other office indicated in the
prospectus supplement relating thereto. (Section 3.01 of the debt warrant
agreement)
 
EXERCISE OF DEBT WARRANTS
 
     Each offered debt warrant will entitle the holder thereof to purchase such
amount of underlying debt securities at the exercise price set forth in, or
calculable from, the prospectus supplement relating to such offered debt
warrants. After the close of business on the expiration date, unexercised debt
warrants will become void.
 
     You may exercise debt warrants by payment to the debt warrant agent of the
applicable exercise price and by delivery to the debt warrant agent of the
related debt warrant certificate, properly completed. Debt warrants will be
deemed to have been exercised upon receipt of the exercise price, subject to the
receipt by the debt warrant agent, within five business days thereafter, of the
debt warrant certificate or certificates evidencing the debt warrants. Upon
receipt of such payment and the properly completed debt warrant certificates at
the corporate trust office of the debt warrant agent or any other office
indicated in the prospectus supplement, we will, as soon as practicable, deliver
the amount of the underlying debt securities purchased upon such exercise. If
fewer than all of the debt warrants represented by any debt warrant certificate
are exercised, a new debt warrant certificate will be issued for the unexercised
debt warrants. If you hold a debt warrant, you must pay any tax or other
governmental charge that may be imposed in connection with any transfer involved
in the issuance of underlying debt securities purchased upon such exercise.
 
MODIFICATIONS
 
     There are three types of changes we can make to the debt warrant agreement
and the offered debt warrants.
 
     Changes Requiring Your Approval. First, there are changes that cannot be
made to your debt warrants without your specific approval. Those types of
changes include modifications and amendments that:
 
        - accelerate the expiration date;
 
        - increase the exercise price;
 
        - reduce the number of outstanding debt warrants, the consent of the
          holders of which is required for any such modification or amendment;
          or
 
        - otherwise materially and adversely affect the rights of the holders of
          the debt warrants.
 
     Changes Requiring a Majority Vote. The second type of change to the debt
warrant agreement and the offered debt warrants is the kind that requires a vote
in favor by holders of debt warrants
 
                                        21

 
owning a majority of the principal amount of the particular series affected.
Most changes fall into this category.
 
     Changes Not Requiring Approval. The third type of change does not require
any vote by holders of debt warrants. This type of change is limited to
clarifications and other changes that would not adversely affect holders of the
debt warrants.
 
NO RIGHTS AS HOLDERS OF UNDERLYING DEBT SECURITIES
 
     Before you exercise the warrants, you are not entitled to payments of
principal of (or premium, if any) or interest on the related underlying debt
securities or to exercise any other rights whatsoever as a holder of the
underlying debt securities.
 
                        DESCRIPTION OF PREFERRED SHARES
 
     The following description sets forth the general terms and provisions of
the preferred shares. If we offer preferred shares, we will describe the
specific designation and rights in a prospectus supplement, and we will file a
description with the SEC.
 
GENERAL
 
     Our Board of Directors is authorized without further shareholder action to
issue one or more series of up to 14,106,394 preferred shares. The Board of
Directors can also determine the number of shares, dividend rates, dividend
payment dates, and dates from which dividends will be cumulative, redemption
rights or prices, sinking fund provisions, liquidation prices, conversion rights
and restrictions on the issuance of shares of the same series or any other class
or series. As of the date of this prospectus, no preferred shares are issued or
outstanding.
 
     The preferred shares will have the dividend, liquidation, redemption,
voting rights and conversion rights set forth below unless otherwise provided in
the prospectus supplement relating to a particular series of offered preferred
shares.
 
     We will set forth the following terms of the offered preferred shares in
the prospectus supplement:
 
        - the title and stated value of the offered preferred shares, the
          liquidation preference per share and the number of shares offered;
 
        - the price at which we will issue the offered preferred shares;
 
        - the dividend rates and dates on which dividends will be payable, as
          well as the dates from which dividends will commence to cumulate or
          the method(s) of calculation thereof;
 
        - the period or periods within which, the price or prices at which, and
          the terms and conditions upon which the offered preferred shares may
          be redeemed, in whole or in part, at our option, if we are to have
          that option;
 
        - our obligation, if any, to redeem or purchase the offered preferred
          shares pursuant to any sinking fund or analogous provisions or at the
          option of a holder thereof, and the period or periods within which,
          the price or prices at which, and the terms and conditions upon which
          the offered preferred shares will be redeemed or purchased in whole or
          in part pursuant to such obligation;
 
        - any rights on the part of the holder to convert the offered preferred
          shares into our common shares;
 
        - any additional dividend, liquidation, redemption, sinking fund, voting
          and other rights, preferences, privileges, limitations and
          restrictions;
 
                                        22

 
        - the terms of any debt warrants that we will offer together with or
          separately from the offered preferred shares;
 
        - the national securities exchanges, if any, upon which the offered
          preferred shares will be listed;
 
        - the procedures for any auction or remarketing, if any, of the offered
          preferred shares; and
 
        - any other terms of the offered preferred shares.
 
     The preferred shares will be fully paid and nonassessable, and for each
share issued a sum equal to the stated value will be credited to our preferred
stock account.
 
     We have adopted a rights plan and are subject to certain provisions of Ohio
law, each of which may have the effect of delaying, deferring or preventing a
change in control of our company. See "Description of Common Shares--Rights
Plan" and "--Certain Ohio Statutes".
 
DIVIDENDS
 
     As a holder of offered preferred shares, you will be entitled to receive
cash dividends, when and as declared by the Board of Directors out of our assets
legally available for payment, at such rate and on such quarterly dates as will
be set forth in the applicable prospectus supplement. Each dividend will be
payable to holders of record as they appear on our stock books on the record
dates fixed by the Board of Directors. Dividends will be cumulative from and
after the date set forth in the applicable prospectus supplement.
 
     If we have not paid or declared and set apart for payment full cumulative
dividends on any preferred shares for any dividend period or we are in default
with respect to the redemption of preferred shares or any sinking fund for any
preferred shares, we may not do the following:
 
        - declare any dividends (except a dividend payable in shares ranking
          junior to the preferred shares) on, or make any distribution (except
          as aforesaid) on, the common shares or any of our other shares; or
 
        - make any payment on account of the purchase, redemption or other
          retirement of our common shares or any of our other shares except out
          of the proceeds of the sale of common shares or any other shares
          ranking junior to the preferred shares.
 
     If dividends on preferred shares are in arrears, and there will be
outstanding shares of any other series of preferred shares ranking on a parity
as to dividends with the preferred shares, we, in making any dividend payment on
account of such arrears, are required to make payments ratably upon all
outstanding preferred shares and such other series of preferred shares in
proportion to the respective amounts of dividends in arrears on such preferred
shares and shares of such other series.
 
LIQUIDATION RIGHTS
 
     In the event of any voluntary or involuntary liquidation, dissolution or
winding up of our company, the holders of the offered preferred shares will be
entitled to receive liquidating distributions in the amount set forth in the
applicable prospectus supplement plus all accrued and unpaid dividends. This
distribution will be made out of our assets available for distribution to
shareholders and will be made before any distribution is made to holders of our
common shares. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of our company, the amounts payable with respect to the preferred
shares and any of our other shares ranking on a parity with the preferred shares
are not paid in full, the holders of those shares will share ratably in any such
distribution of our assets in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the holders of preferred
shares will not be entitled to any further participation in any distribution of
our assets. A consolidation or
                                        23

 
merger of our company with or into any other corporation or corporations or a
sale of all or substantially all of our assets will not be deemed to be a
liquidation, dissolution or winding up of our company.
 
REDEMPTION
 
     The offered preferred shares will be redeemable in whole or in part at our
option, at the times and at the redemption prices that we set forth in the
applicable prospectus supplement.
 
     We may not redeem less than all the outstanding shares of any series of
preferred shares unless full cumulative dividends have been paid or declared and
set apart for payment upon all outstanding shares of such series of preferred
shares for all past dividend periods. In addition, all of our matured
obligations with respect to all sinking funds, retirement funds or purchase
funds for all series of preferred shares then outstanding must have been met.
 
VOTING RIGHTS
 
     The holders of the offered preferred shares are entitled to one vote per
share on all matters presented to our shareholders.
 
     If the equivalent of six quarterly dividends payable on any series of
preferred shares are in default, whether or not declared or consecutive, the
holders of all outstanding series of preferred shares, voting as a single class
without regard to series, will be entitled to elect two directors until all
dividends in default have been paid or declared and set apart for payment. The
holders of preferred shares will not have or exercise such special class voting
rights except at meetings of the shareholders for the election of directors at
which the holders of not less than a majority of the outstanding preferred
shares of all series are present in person or by proxy.
 
     The affirmative vote of the holders of at least two-thirds of the
outstanding preferred shares, voting as a single class without regard to series,
will be required for any amendment of our Amended Articles of Incorporation or
Amended Regulations that will adversely affect the preferences, rights or voting
powers of the preferred shares. If not all series of preferred shares would be
affected as to their preferences, rights or voting powers, only the consent of
holders of at least two-thirds of the shares of each series that would be
affected, voting separately as a class, will be required. A two-thirds vote is
also required to issue any class of stock that will have preference as to
dividends or distribution of assets over any outstanding series of preferred
shares.
 
     The affirmative vote of the holders of a majority of the outstanding
preferred shares will be necessary to increase the authorized number of
preferred shares or to authorize any shares ranking on a parity with the
preferred shares. The Regulations may be amended to increase the number of
directors, without the vote of the holders of outstanding preferred shares.
 
CONVERSION RIGHTS
 
     We will state in the prospectus supplement for any series of offered
preferred shares whether shares in that series are convertible into common
shares. Unless otherwise provided in the applicable prospectus supplement, if a
series of preferred shares is convertible into common shares, holders of
convertible preferred shares of that series will have the right, at their option
and at any time, to convert any of those convertible preferred shares in
accordance with their terms. However, if that series of convertible preferred
shares is called for redemption, the conversion rights pertaining to them will
terminate at the close of business on the date before the redemption date.
 
     Unless we specify otherwise in the applicable prospectus supplement, the
conversion rate is subject to adjustment in certain events, including the
following:
 
        - the issuance of common shares or capital shares of any other class as
          a dividend or distribution on the common shares;
 
                                        24

 
        - subdivisions and combinations of the common shares;
 
        - the issuance of certain rights or warrants to all holders of common
          shares entitling those holders to subscribe for or purchase common
          shares, or securities convertible into common shares, within the
          period specified in the prospectus supplement at less than the current
          market price as defined in the Certificate of Designations for such
          series of convertible preferred shares; and
 
        - the distribution of evidences of indebtedness or assets or rights or
          warrants to all holders of common shares (excluding cash dividends,
          distributions, rights or warrants, referred to above).
 
     No adjustments in the conversion rate will be made as a result of regular
quarterly or other periodic or recurrent cash dividends or distributions or for
cash dividends or distributions to the extent paid from retained earnings. No
adjustment in the conversion price will be required unless such adjustment would
require a change of at least 1% in the conversion price then in effect or a
period of three years will have elapsed from the date of occurrence of any event
requiring any such adjustment; provided that any adjustment that would otherwise
be required to be made will be carried forward and taken into account in any
subsequent adjustment. We reserve the right to make such increases in the
conversion rate in addition to those required in the foregoing provisions as we,
in our discretion, determine to be advisable in order that certain stock-related
distributions or subdivisions of the common shares hereafter made by us to our
shareholders will not be taxable. Except as stated above, the conversion rate
will not be adjusted for the issuance of common shares or any securities
convertible into or exchangeable for common shares, or securities carrying the
right to purchase any of the foregoing.
 
     In the case of:
 
        - any reclassification or change of the common shares;
 
        - a consolidation or merger involving our company; or
 
        - a sale or conveyance to another corporation of the property and assets
          of our company as an entirety or substantially as an entirety,
 
in each case as a result of which holders of common shares will be entitled to
receive stock, securities, or other property or assets, including cash, with
respect to or in exchange for such common shares, the holders of the convertible
preferred shares then outstanding will be entitled thereafter to convert those
convertible preferred shares into the kind and amount of shares and other
securities or property which they would have received upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
had those convertible preferred shares been converted into common shares
immediately prior to the reclassification, change, consolidation, merger,
combination, sale or conveyance.
 
     In the event of a taxable distribution to holders of common shares or other
transaction which results in any adjustment of the conversion rate, the holders
of convertible preferred shares may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend; in certain other circumstances, the absence of such an adjustment may
result in a taxable dividend to the holders of common shares or the convertible
preferred shares.
 
                          DESCRIPTION OF COMMON SHARES
 
     The following is a summary of the material provisions concerning the common
shares contained in our Amended Articles of Incorporation ("Articles") and our
Amended Regulations ("Regulations"), as affected by debt agreements. Reference
is made to such Articles and Regulations, which we
 
                                        25

 
have filed with the SEC. See "Where You Can Find More Information" on page 2 of
this prospectus for information on how to obtain a copy of the Articles and
Regulations.
 
AUTHORIZED NUMBER
 
     The Articles authorize the issuance of up to 300,000,000 common shares.
Common shares issued and outstanding totaled 71,114,820 on May 31, 2003 and
74,858,997 on June 6, 2003, immediately after a public offering of 3,700,000
common shares. The outstanding common shares are fully paid and non-assessable,
and shareholders are not subject to any liability for calls and assessments. The
Articles also authorize the issuance of up to 14,106,394 preferred shares.
Currently, there are no preferred shares issued and outstanding.
 
DIVIDENDS
 
     Holders of common shares may receive dividends that our Board of Directors
declares.
 
VOTING RIGHTS
 
     Each common share entitles the holder to one vote. Directors are elected by
cumulative voting, which means that each common share entitles the holder to the
number of votes equal to the number of directors to be elected. All votes in
respect of such share may be cast for one or more of the directors to be
elected. Cumulative voting may have the effect of increasing minority
shareholders' representation on the Board of Directors.
 
     The Articles provide that action may be taken by the vote of the holders of
shares entitling them to exercise a majority of the voting power of the Company,
except in each case as is otherwise provided in the Articles or Regulations. The
Articles and Regulations provide for a voting proportion, which is different
from that provided by statutory law, in order for shareholders to take action in
certain circumstances, including the following:
 
          (1) two-thirds vote required to fix or change the number of directors;
 
          (2) two-thirds vote required for removal of directors;
 
          (3) fifty percent of the outstanding shares required to call a special
     meeting of shareholders;
 
          (4) two-thirds vote required to amend the Regulations without a
     meeting;
 
          (5) two-thirds vote required to amend the provisions described in
     items (1) and (4) above and this provision, unless such action is
     recommended by two-thirds of the members of the Board of Directors;
 
          (6) two-thirds vote required to approve certain transactions, such as
     the sale, exchange, lease, transfer or other disposition by the Company of
     all, or substantially all, of its assets or business, or the consolidation
     of the Company or its merger into another corporation, or certain other
     mergers and majority share acquisitions; and
 
          (7) two-thirds vote required to amend the provisions described in item
     (6) above, or this provision.
 
     The requirement of a two-thirds vote in certain circumstances may have the
effect of delaying, deferring or preventing a change in control of our company.
 
RIGHTS PLAN
 
     We have adopted a rights plan, which may have the effect of delaying or
preventing a change in control of our company. This plan attached to each common
share one right (a "Right") that, when exercisable, entitles the holder of the
Right to purchase one one-hundredth of a share of Series A
                                        26

 
Participating Preferred Stock at a purchase price of $250, subject to
adjustment. If certain takeover events occur, exercise of the Rights would
entitle the holders thereof (other than the acquiring person or group) to
receive common shares or common stock of a surviving corporation, or cash,
property or other securities, with a market value equal to twice the purchase
price. Those takeover events include a person or group becoming the owner of 20%
or more of the common shares or the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 20% or more of
the outstanding common shares. Accordingly, exercise of the Rights may cause
substantial dilution to a person who attempts to acquire our company.
 
     The Rights automatically attach to each outstanding common share, including
any shares offered pursuant to the applicable prospectus supplement. There is no
monetary value presently assigned to the Rights, and they will not trade
separately from the common shares unless and until they become exercisable. The
Rights, which expire on July 12, 2005, may be redeemed, at the option of our
Board of Directors, at a price of $.01 per Right at any time prior to a group or
person acquiring ownership of 20% or more of the outstanding common shares. The
Rights Agreement may have certain antitakeover effects, although it is not
intended to preclude any acquisition or business combination that is at a fair
price and otherwise in the best interests of our company and our shareholders as
determined by our Board of Directors. However, a shareholder could potentially
disagree with the Board's determination of what constitutes a fair price or the
best interests of our company and our shareholders.
 
     The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between us and Equiserve Trust Company N.A. (formerly
known as First Chicago Trust Company of New York), as Rights Agent. We have
filed a copy of the Rights Agreement as an exhibit to the registration statement
of which this prospectus forms a part. See "Where You Can Find More Information"
on page 2 of this prospectus for information on how to obtain a copy of the
Rights Agreement. The above description of the Rights is a summary of the
material terms of the Rights, does not purport to be complete and is qualified
in its entirety by reference to the Rights Agreement.
 
LIQUIDATION RIGHTS
 
     In the event of any voluntary or involuntary liquidation, dissolution or
winding up of our company, after the payment or provision for payment of our
debts and other liabilities and the preferential amounts to which holders of our
preferred shares are entitled, if any such preferred shares are then
outstanding, the holders of the common shares are entitled to share pro rata in
our assets remaining for distribution to shareholders.
 
MISCELLANEOUS RIGHTS, LISTING AND TRANSFER AGENTS
 
     Our common shares have no preemptive or conversion rights and there are no
redemption or sinking fund provisions applicable thereto.
 
     Our outstanding common shares are listed on the New York Stock Exchange,
the Chicago Stock Exchange, the Pacific Exchange and the London Stock Exchange.
Equiserve Trust Company N.A. is the transfer agent and registrar for our common
shares.
 
CLASSIFICATION OF BOARD OF DIRECTORS
 
     Our Board of Directors is divided into three approximately equal classes,
having staggered terms of office of three years each. The effect of a classified
Board of Directors, where cumulative voting is in effect, is to require the
votes of more shares to elect one or more members of the Board of Directors than
would be required if the Board of Directors were not classified. Additionally,
the effect of a classified Board of Directors may be to make it more difficult
to acquire control of our company.
 
                                        27

 
CERTAIN OHIO STATUTES
 
     Various laws may affect the legal or practical ability of shareholders to
dispose of shares of our company. Such laws include the Ohio statutory
provisions described below.
 
     Chapter 1704 of the Ohio Revised Code prohibits an interested shareholder
(defined as a beneficial owner, directly or indirectly, of ten percent (10%) or
more of the voting power of any issuing public Ohio corporation) or any
affiliate or associate of an interested shareholder (as defined in Section
1704.01 of the Ohio Revised Code) from engaging in certain transactions with the
corporation during the three-year period after the interested shareholder's
share acquisition date.
 
     The prohibited transactions include mergers, consolidations, majority share
acquisitions, certain asset sales, loans, certain sales of shares, dissolution,
and certain reclassifications, recapitalizations, or other transactions that
would increase the proportion of shares held by the interested shareholder.
 
     After expiration of the three-year period, the corporation may participate
in such a transaction with an interested shareholder only if, among other
things:
 
        - the transaction receives the approval of the holders of two-thirds of
          all the voting shares and the approval of the holders of a majority of
          the disinterested voting shares (shares not held by the interested
          shareholder); or
 
        - the transaction meets certain criteria designed to ensure that the
          remaining shareholders receive fair consideration for their shares.
 
     The prohibitions do not apply if, before the interested shareholder becomes
an interested shareholder, the board of directors of the corporation approves
either the interested shareholder's acquisition of shares or the otherwise
prohibited transaction. The restrictions also do not apply if a person
inadvertently becomes an interested shareholder or was an interested shareholder
prior to the adoption of the statute on April 11, 1990, unless, subject to
certain exceptions, the interested shareholder increases his, her or its
proportionate share interest on or after April 11, 1990.
 
     Pursuant to Ohio Revised Code Section 1707.043, a public corporation formed
in Ohio may recover profits that a shareholder makes from the sale of the
corporation's securities within eighteen (18) months after making a proposal to
acquire control or publicly disclosing the possibility of a proposal to acquire
control. The corporation may not, however, recover from a person who proves in a
court of competent jurisdiction either of the following:
 
        - that his, her or its sole purpose in making the proposal was to
          succeed in acquiring control of the corporation and there were
          reasonable grounds to believe that such person would acquire control
          of the corporation; or
 
        - such person's purpose was not to increase any profit or decrease any
          loss in the stock, and the proposal did not have a material effect on
          the market price or trading volume of the stock.
 
Also, before the corporation may obtain any recovery, the aggregate amount of
the profit realized by such person must exceed $250,000. Any shareholder may
bring an action on behalf of the corporation if a corporation fails or refuses
to bring an action to recover these profits within sixty (60) days of a written
request. The party bringing such an action may recover attorneys' fees if the
court having jurisdiction over such action orders recovery of any profits.
 
CONTROL SHARE ACQUISITION ACT
 
     We are also subject to Ohio's Control Share Acquisition Act (Ohio Revised
Code 1701.831). The Control Share Acquisition Act provides that, with certain
exceptions, a person may acquire beneficial ownership of shares in certain
ranges (one-fifth or more but less than one-third, one-third or more but less
than a majority, or a majority or more) of the voting power of the outstanding
shares of an Ohio corporation meeting certain criteria, which our company meets,
only if such person has
                                        28

 
submitted an "acquiring person statement" and the proposed acquisition has been
approved by the vote of a majority of the shares of the corporation represented
at a special meeting called for such purpose and by a majority of such shares of
the corporation excluding "interested shares," as defined in Section 1701.01 of
the Ohio Revised Code.
 
                              PLAN OF DISTRIBUTION
 
     We may sell the offered securities as follows:
 
        - through agents;
 
        - to or through underwriters; or
 
        - directly to other purchasers.
 
     We will identify any underwriters or agents and describe their compensation
in a prospectus supplement.
 
     We, directly or through agents, may sell, and the underwriters may resell,
the offered securities in one or more transactions, including negotiated
transactions. These transactions may be:
 
        - at a fixed public offering price or prices, which may be changed;
 
        - at market prices prevailing at the time of sale;
 
        - at prices related to such prevailing market prices; or
 
        - at negotiated prices.
 
     In connection with the sale of offered securities, the underwriters or
agents may receive compensation from us or from purchasers of the offered
securities for whom they may act as agents. The underwriters may sell offered
securities to or through dealers, who may also receive compensation from
purchasers of the offered securities for whom they may act as agents.
Compensation may be in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of the
offered securities may be underwriters as defined in the Securities Act of 1933,
and any discounts or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act of 1933.
 
     We will indemnify the underwriters and agents against certain civil
liabilities, including liabilities under the Securities Act of 1933.
 
     Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
business.
 
     If we indicate in the prospectus supplement relating to a particular series
or issue of offered securities, we will authorize underwriters, dealers or
agents to solicit offers by certain institutions to purchase such offered
securities from us pursuant to delayed delivery contracts providing for payment
and delivery at a future date. Such contracts will be subject only to those
conditions that we specify in the prospectus supplement, and we will specify in
the prospectus supplement the commission payable for solicitation of such
contracts.
 
                                 LEGAL OPINIONS
 
     The validity of the offered securities will be passed upon for us by J.
Robert Horst, Vice President and General Counsel, and for any underwriters,
dealers or agents by Shearman & Sterling LLP, 599 Lexington Avenue, New York,
New York 10022. Mr. Horst is paid a salary by our company and participates in
various employee benefit plans offered to officers of our company generally.
 
                                        29

 
                                    EXPERTS
 
     Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 2002, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
 
                                        30

 
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                                  $75,000,000
 
                               EATON CORPORATION
 
                        5.45% SENIOR DEBENTURES DUE 2034
 
                                  [EATON LOGO]
 
                      ------------------------------------
                             PROSPECTUS SUPPLEMENT
 
                                OCTOBER 18, 2004
                      ------------------------------------
 
                             LEGG MASON WOOD WALKER
                                  INCORPORATED
 
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