CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

On November 14, 2013, Eaton Corporation registered senior notes under the Securities Act of 1933 (the Senior Notes). Eaton and certain other of Eaton's 100% owned direct and indirect subsidiaries (the Guarantors) fully and unconditionally guaranteed (subject, in the case of the Guarantors, other than Eaton, to customary release provisions as described below), on a joint and several basis, the Senior Notes. The following condensed consolidating financial statements are included so that separate financial statements of Eaton, Eaton Corporation and each of the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating adjustments primarily relate to eliminations of investments in subsidiaries and intercompany balances and transactions. The condensed consolidating financial statements present investments in subsidiaries using the equity method of accounting. See Note 6 for additional information related to the Senior Notes.

The guarantee of a Guarantor that is not a parent of the issuer will be automatically and unconditionally released and discharged in the event of any sale of the Guarantor or of all or substantially all of its assets, or in connection with the release or termination of the Guarantor as a guarantor under all other U.S. debt securities or U.S. syndicated credit facilities, subject to limitations set forth in the indenture. The guarantee of a Guarantor that is a direct or indirect parent of the issuer will only be automatically and unconditionally released and discharged in connection with the release or termination of such Guarantor as a guarantor under all other debt securities or syndicated credit facilities (in both cases, U.S. or otherwise), subject to limitations set forth in the indenture.

During 2016 and 2015, the Company undertook certain steps to restructure ownership of various subsidiaries. The transactions were entirely among wholly-owned subsidiaries under the common control of Eaton. This restructuring has been reflected as of the beginning of the earliest period presented below.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2016

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,447		$	6,351		$	11,961		$	(5,012	)	$	19,747

Cost of products sold	—			5,078			4,686			8,649			(5,013		)	13,400
Selling and administrative expense	141			1,155			760			1,449			—			3,505
Research and development expense	—			235			186			168			—			589
Interest expense (income) - net	—			230			18			(14		)	(1		)	233
Other expense (income) - net	(35		)	(48		)	42			(66		)	—			(107		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,439		)	(741		)	(3,322		)	(898		)	7,400			—
Intercompany expense (income) - net	411			(157		)	1,230			(1,484		)	—			—
Income (loss) before income taxes	1,922			695			2,751			4,157			(7,398		)	2,127
Income tax expense (benefit)	—			34			28			139			1			202
Net income (loss)	1,922			661			2,723			4,018			(7,399		)	1,925
Less net loss (income) for noncontrolling interests	—			—			—			(5		)	2			(3		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,922		$	661		$	2,723		$	4,013		$	(7,397	)	$	1,922

Other comprehensive income (loss)	(585		)	53			(567		)	(803		)	1,317			(585		)
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	1,337		$	714		$	2,156		$	3,210		$	(6,080	)	$	1,337

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2015

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,925		$	6,659		$	12,533		$	(5,262	)	$	20,855

Cost of products sold	—			5,508			5,036			8,981			(5,233		)	14,292
Selling and administrative expense	141			1,223			738			1,494			—			3,596
Research and development expense	—			266			197			162			—			625
Interest expense (income) - net	—			222			21			(13		)	2			232
Other expense (income) - net	—			—			24			(59		)	—			(35		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,456		)	(789		)	(3,285		)	(689		)	7,219			—
Intercompany expense (income) - net	336			(425		)	1,218			(1,129		)	—			—
Income (loss) before income taxes	1,979			920			2,710			3,786			(7,250		)	2,145
Income tax expense (benefit)	—			103			(69		)	141			(11		)	164
Net income (loss)	1,979			817			2,779			3,645			(7,239		)	1,981
Less net loss (income) for noncontrolling interests	—			—			—			(3		)	1			(2		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,979		$	817		$	2,779		$	3,642		$	(7,238	)	$	1,979

Other comprehensive income (loss)	(964		)	6			(952		)	(1,179		)	2,125			(964		)
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	1,015		$	823		$	1,827		$	2,463		$	(5,113	)	$	1,015

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2014

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,990		$	6,885		$	13,521		$	(4,844	)	$	22,552

Cost of products sold	—			5,519			5,075			9,882			(4,830		)	15,646
Selling and administrative expense	171			1,246			742			1,651			—			3,810
Litigation settlements	—			644			—			—			—			644
Research and development expense	—			240			202			205			—			647
Interest expense (income) - net	—			225			25			(29		)	6			227
Other expense (income) - net	—			(17		)	(81		)	(85		)	—			(183		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,191		)	(657		)	(2,660		)	(295		)	5,803			—
Intercompany expense (income) - net	227			(263		)	855			(819		)	—			—
Income (loss) before income taxes	1,793			53			2,727			3,011			(5,823		)	1,761
Income tax expense (benefit)	—			(100		)	79			(14		)	(7		)	(42		)
Net income (loss)	1,793			153			2,648			3,025			(5,816		)	1,803
Less net loss (income) for noncontrolling interests	—			—			—			(8		)	(2		)	(10		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,793		$	153		$	2,648		$	3,017		$	(5,818	)	$	1,793

Other comprehensive income (loss)	(1,339		)	(191		)	(1,370		)	(1,646		)	3,207			(1,339		)
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	454		$	(38	)	$	1,278		$	1,371		$	(2,611	)	$	454

CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2016

	Eaton Corporation plc		Eaton Corporation		Guarantors		Other subsidiaries		Consolidating adjustments			Total
Assets
Current assets
Cash	$	1	$	92	$	4	$	446	$	—		$	543
Short-term investments	—		—		—		203		—			203
Accounts receivable - net	—		536		1,049		1,975		—			3,560
Intercompany accounts receivable	5		954		4,023		3,633		(8,615		)	—
Inventory	—		342		642		1,349		(79		)	2,254
Prepaid expenses and other current assets	—		77		42		237		25			381
Total current assets	6		2,001		5,760		7,843		(8,669		)	6,941

Property, plant and equipment - net	—		857		706		1,880		—			3,443

Other noncurrent assets
Goodwill	—		1,355		6,293		5,553		—			13,201
Other intangible assets	—		169		3,442		1,903		—			5,514
Deferred income taxes	—		904		—		228		(772		)	360
Investment in subsidiaries	32,795		13,743		72,938		12,516		(131,992		)	—
Intercompany loans receivable	—		7,605		2,061		56,598		(66,264		)	—
Other assets	—		491		134		335		—			960
Total assets	$	32,801	$	27,125	$	91,334	$	86,856	$	(207,697	)	$	30,419

Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	—	$	—	$	8	$	6	$	—		$	14
Current portion of long-term debt	—		1,250		296		6		—			1,552
Accounts payable	1		372		252		1,093		—			1,718
Intercompany accounts payable	281		3,870		3,115		1,349		(8,615		)	—
Accrued compensation	—		98		58		223		—			379
Other current liabilities	1		591		291		941		(2		)	1,822
Total current liabilities	283		6,181		4,020		3,618		(8,617		)	5,485

Noncurrent liabilities
Long-term debt	—		5,767		936		8		—			6,711
Pension liabilities	—		610		161		888		—			1,659
Other postretirement benefits liabilities	—		198		99		71		—			368
Deferred income taxes	—		—		732		361		(772		)	321
Intercompany loans payable	17,621		2,603		44,788		1,252		(66,264		)	—
Other noncurrent liabilities	—		327		211		396		—			934
Total noncurrent liabilities	17,621		9,505		46,927		2,976		(67,036		)	9,993

Shareholders’ equity
Eaton shareholders’ equity	14,897		11,439		40,387		80,224		(132,050		)	14,897
Noncontrolling interests	—		—		—		38		6			44
Total equity	14,897		11,439		40,387		80,262		(132,044		)	14,941
Total liabilities and equity	$	32,801	$	27,125	$	91,334	$	86,856	$	(207,697	)	$	30,419

CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2015

	Eaton Corporation plc		Eaton Corporation		Guarantors		Other subsidiaries		Consolidating adjustments			Total
Assets
Current assets
Cash	$	—	$	26	$	7	$	235	$	—		$	268
Short-term investments	—		—		2		175		—			177
Accounts receivable - net	—		512		1,036		1,931		—			3,479
Intercompany accounts receivable	1		842		3,903		3,033		(7,779		)	—
Inventory	—		357		658		1,388		(80		)	2,323
Prepaid expenses and other current assets	—		77		41		228		23			369
Total current assets	1		1,814		5,647		6,990		(7,836		)	6,616

Property, plant and equipment - net	—		930		751		1,884		—			3,565

Other noncurrent assets
Goodwill	—		1,355		6,295		5,829		—			13,479
Other intangible assets	—		182		3,634		2,198		—			6,014
Deferred income taxes	—		1,016		—		218		(872		)	362
Investment in subsidiaries	29,627		12,931		60,216		9,968		(112,742		)	—
Intercompany loans receivable	—		8,641		1,573		44,835		(55,049		)	—
Other assets	—		492		122		346		—			960
Total assets	$	29,628	$	27,361	$	78,238	$	72,268	$	(176,499	)	$	30,996

Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	—	$	408	$	—	$	18	$	—		$	426
Current portion of long-term debt	—		1		240		1		—			242
Accounts payable	—		392		266		1,100		—			1,758
Intercompany accounts payable	219		4,009		2,380		1,171		(7,779		)	—
Accrued compensation	—		77		53		236		—			366
Other current liabilities	1		644		319		874		(5		)	1,833
Total current liabilities	220		5,531		3,258		3,400		(7,784		)	4,625

Noncurrent liabilities
Long-term debt	—		7,053		675		17		1			7,746
Pension liabilities	—		639		165		782		—			1,586
Other postretirement benefits liabilities	—		245		118		77		—			440
Deferred income taxes	—		—		818		444		(872		)	390
Intercompany loans payable	14,222		2,962		36,436		1,429		(55,049		)	—
Other noncurrent liabilities	—		346		200		432		—			978
Total noncurrent liabilities	14,222		11,245		38,412		3,181		(55,920		)	11,140

Shareholders’ equity
Eaton shareholders’ equity	15,186		10,585		36,568		65,650		(112,803		)	15,186
Noncontrolling interests	—		—		—		37		8			45
Total equity	15,186		10,585		36,568		65,687		(112,795		)	15,231
Total liabilities and equity	$	29,628	$	27,361	$	78,238	$	72,268	$	(176,499	)	$	30,996

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2016

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(253	)	$	(215	)	$	(236	)	$	3,256		$	—		$	2,552

Investing activities
Capital expenditures for property, plant and equipment	—			(92		)	(114		)	(291		)	—			(497		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			1			—			—			1
Sales (purchases) of short-term investment - net	—			—			2			(42		)	—			(40		)
Investments in affiliates	(1,250		)	—			(120		)	(1,370		)	2,740			—
Return of investments in affiliates	—			—			47			—			(47		)	—
Loans to affiliates	—			(337		)	(655		)	(8,208		)	9,200			—
Repayments of loans from affiliates	—			1,293			—			5,893			(7,186		)	—
Other - net	—			(9		)	41			(25		)	—			7
Net cash provided by (used in) investing activities	(1,250		)	855			(798		)	(4,043		)	4,707			(529		)

Financing activities
Proceeds from borrowings	—			21			610			—			—			631
Payments on borrowings	—			(408		)	(231		)	(14		)	—			(653		)
Proceeds from borrowings from affiliates	3,843			4,045			1,120			192			(9,200		)	—
Payments on borrowings from affiliates	(646		)	(4,655		)	(1,844		)	(41		)	7,186			—
Capital contribution from affiliates	—			—			1,370			1,370			(2,740		)	—
Return of investments in affiliates	—			—			—			(47		)	47			—
Other intercompany financing activities	—			422			10			(432		)	—			—
Cash dividends paid	(1,037		)	—			—			—			—			(1,037		)
Cash dividends paid to affiliates	—			—			—			—			—			—
Exercise of employee stock options	74			—			—			—			—			74
Repurchase of shares	(730		)	—			—			—			—			(730		)
Excess tax benefit from equity-based compensation	—			1			—			—			—			1
Other - net	—			—			(4		)	(2		)	—			(6		)
Net cash provided by (used in) financing activities	1,504			(574		)	1,031			1,026			(4,707		)	(1,720		)

Effect of currency on cash	—			—			—			(28		)	—			(28		)
Total increase (decrease) in cash	1			66			(3		)	211			—			275
Cash at the beginning of the period	—			26			7			235			—			268
Cash at the end of the period	$	1		$	92		$	4		$	446		$	—		$	543

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2015

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(137	)	$	(46	)	$	(288	)	$	2,846		$	(4	)	$	2,371

Investing activities
Capital expenditures for property, plant and equipment	—			(94		)	(146		)	(266		)	—			(506		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			(35		)	(37		)	—			(72		)
Sales (purchases) of short-term investments - net	—			—			(2		)	39			—			37
Investments in affiliates	(1,482		)	—			(1,176		)	(1,482		)	4,140			—
Loans to affiliates	—			(1,235		)	(39		)	(10,608		)	11,882			—
Repayments of loans from affiliates	—			342			359			7,148			(7,849		)	—
Proceeds from the sales of businesses	—			—			—			1			—			1
Other - net	—			(50		)	47			(32		)	—			(35		)
Net cash provided by (used in) investing activities	(1,482		)	(1,037		)	(992		)	(5,237		)	8,173			(575		)

Financing activities
Proceeds from borrowings	—			408			—			17			—			425
Payments on borrowings	—			(724		)	(301		)	(2		)	—			(1,027		)
Proceeds from borrowings from affiliates	3,322			6,885			997			678			(11,882		)	—
Payments on borrowings from affiliates	(48		)	(6,122		)	(1,282		)	(397		)	7,849			—
Capital contribution from affiliates	—			1,176			1,482			1,482			(4,140		)	—
Other intercompany financing activities	—			(688		)	378			310			—			—
Cash dividends paid	(1,026		)	—			—			—			—			(1,026		)
Cash dividends received from affiliates	—			—			—			(4		)	4			—
Exercise of employee stock options	52			—			—			—			—			52
Repurchase of shares	(682		)	—			—			—			—			(682		)
Excess tax benefit from equity-based compensation	—			1			—			—			—			1
Other - net	—			—			—			(10		)	—			(10		)
Net cash provided by (used in) financing activities	1,618			936			1,274			2,074			(8,169		)	(2,267		)

Effect of currency on cash	—			—			—			(42		)	—			(42		)
Total increase (decrease) in cash	(1		)	(147		)	(6		)	(359		)	—			(513		)
Cash at the beginning of the period	1			173			13			594			—			781
Cash at the end of the period	$	—		$	26		$	7		$	235		$	—		$	268

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2014

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(93	)	$	(411	)	$	(218	)	$	2,568		$	32		$	1,878

Investing activities
Capital expenditures for property, plant and equipment	—			(127		)	(168		)	(337		)	—			(632		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			—			2			—			2
Sales (purchases) of short-term investments - net	—			—			133			389			—			522
Investments in affiliates	(753		)	—			—			(753		)	1,506			—
Loans to affiliates	—			(354		)	(162		)	(10,546		)	11,062			—
Repayments of loans from affiliates	—			978			212			8,451			(9,641		)	—
Proceeds from the sales of businesses	—			93			175			14			—			282
Other - net	—			(47		)	44			(28		)	—			(31		)
Net cash provided by (used in) investing activities	(753		)	543			234			(2,808		)	2,927			143

Financing activities
Proceeds from borrowings	—			—			—			—			—			—
Payments on borrowings	—			(553		)	(1		)	(28		)	—			(582		)
Proceeds from borrowings from affiliates	2,628			7,599			808			27			(11,062		)	—
Payments on borrowings from affiliates	(476		)	(6,907		)	(1,875		)	(383		)	9,641			—
Issuance of stock to affiliates	—			—			753			753			(1,506		)	—
Other intercompany financing activities	217			(169		)	302			(350		)	—			—
Cash dividends paid	(929		)	—			—			—			—			(929		)
Cash dividends paid to affiliates	—			—			—			32			(32		)	—
Exercise of employee stock options	54			—			—			—			—			54
Repurchase of shares	(650		)	—			—			—			—			(650		)
Excess tax benefit from equity-based compensation	—			20			—			—			—			20
Other - net	—			—			—			(43		)	—			(43		)
Net cash provided by (used in) financing activities	844			(10		)	(13		)	8			(2,959		)	(2,130		)

Effect of currency on cash	—			—			—			(25		)	—			(25		)
Total increase (decrease) in cash	(2		)	122			3			(257		)	—			(134		)
Cash at the beginning of the period	3			51			10			851			—			915
Cash at the end of the period	$	1		$	173		$	13		$	594		$	—		$	781