10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021

Commission file number 000-54863

EATON CORPORATION plc

(Exact name of registrant as specified in its charter)

Ireland				98-1059235
(State or other jurisdiction of incorporation or organization)				(IRS Employer Identification Number)
Eaton House,	30 Pembroke Road,	Dublin 4,	Ireland	D04 Y0C2
(Address of principal executive offices)				(Zip Code)

			+353	1637 2900
	(Registrant's telephone number, including area code)
	Not applicable
	(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading Symbol		Name of each exchange on which registered
Ordinary shares ($0.01 par value)		ETN		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐	(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 398.6 million Ordinary Shares outstanding as of September 30, 2021.

TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS	2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4. CONTROLS AND PROCEDURES	39
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	39
ITEM 1A. RISK FACTORS	39
ITEM 6. EXHIBITS	41
SIGNATURES	43

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Net sales	$	4,923	$	4,526	$	14,830	$	13,171
Cost of products sold	3,338		3,051		10,067		9,230
Selling and administrative expense	834		754		2,505		2,310
Research and development expense	152		132		454		411
Interest expense - net	37		41		112		113
Gain on sale of businesses	617		—		617		221
Other expense - net	66		23		38		135
Income before income taxes	1,113		525		2,271		1,193
Income tax expense	483		78		676		254
Net income	630		447		1,595		939
Less net income for noncontrolling interests	(1)		(1)		(2)		(4)
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.57	$	1.11	$	3.97	$	2.31
Basic	1.58		1.11		4.00		2.32
Weighted-average number of ordinary shares outstanding
Diluted	401.9		402.3		401.4		404.9
Basic	398.9		400.4		398.7		403.3
Cash dividends declared per ordinary share	$	0.76	$	0.73	$	2.28	$	2.19

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Net income	$	630	$	447	$	1,595	$	939
Less net income for noncontrolling interests	(1)		(1)		(2)		(4)
Net income attributable to Eaton ordinary shareholders	629		446		1,593		935
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	170		217		78		(276)
Pensions and other postretirement benefits	83		16		291		128
Cash flow hedges	(10)		43		38		(95)
Other comprehensive income (loss) attributable to Eaton    ordinary shareholders	243		276		407		(243)
Total comprehensive income attributable to Eaton   ordinary shareholders	$	872	$	722	$	2,000	$	692

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

EATON CORPORATION plc

CONSOLIDATED BALANCE SHEETS

(In millions)	September 30, 2021		December 31, 2020
Assets
Current assets
Cash	$	271	$	438
Short-term investments	389		664
Accounts receivable - net	3,393		2,904
Inventory	2,802		2,109
Assets held for sale	—		2,487
Prepaid expenses and other current assets	632		576
Total current assets	7,487		9,178
Property, plant and equipment
Land and buildings	2,248		2,184
Machinery and equipment	5,563		5,404
Gross property, plant and equipment	7,811		7,588
Accumulated depreciation	(4,786)		(4,624)
Net property, plant and equipment	3,025		2,964
Other noncurrent assets
Goodwill	14,767		12,903
Other intangible assets	6,041		4,175
Operating lease assets	448		428
Deferred income taxes	422		426
Other assets	1,938		1,750
Total assets	$	34,128	$	31,824
Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	428	$	1
Current portion of long-term debt	116		1,047
Accounts payable	2,591		1,987
Accrued compensation	489		351
Liabilities held for sale	—		468
Other current liabilities	2,290		2,027
Total current liabilities	5,914		5,881
Noncurrent liabilities
Long-term debt	8,520		7,010
Pension liabilities	1,029		1,588
Other postretirement benefits liabilities	273		330
Operating lease liabilities	343		326
Deferred income taxes	494		277
Other noncurrent liabilities	1,541		1,439
Total noncurrent liabilities	12,200		10,970
Shareholders’ equity
Ordinary shares (398.6 million outstanding in 2021 and 398.1 million in 2020)	4		4
Capital in excess of par value	12,411		12,329
Retained earnings	7,345		6,794
Accumulated other comprehensive loss	(3,788)		(4,195)
Shares held in trust	(1)		(2)
Total Eaton shareholders’ equity	15,971		14,930
Noncontrolling interests	43		43
Total equity	16,014		14,973
Total liabilities and equity	$	34,128	$	31,824

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

EATON CORPORATION plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine months ended September 30
(In millions)	2021		2020
Operating activities
Net income	$	1,595	$	939
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	684		603
Deferred income taxes	(123)		(7)
Pension and other postretirement benefits expense	41		159
Contributions to pension plans	(318)		(92)
Contributions to other postretirement benefits plans	(15)		(16)
Gain on sale of businesses	(197)		(91)
Changes in working capital	(299)		357
Other - net	—		149
Net cash provided by operating activities	1,368		2,001
Investing activities
Capital expenditures for property, plant and equipment	(412)		(291)
Cash paid for acquisitions of businesses, net of cash acquired	(4,500)		(200)
Proceeds from sales of businesses, net of cash sold	3,110		1,408
Investments in associate companies	(124)		(19)
Sales (purchases) of short-term investments - net	264		(121)
Payments for settlement of currency exchange contracts not designated as hedges - net	(3)		(28)
Other - net	(23)		(40)
Net cash provided by (used in) investing activities	(1,688)		709
Financing activities
Proceeds from borrowings	1,798		—
Payments on borrowings	(1,011)		(7)
Short-term debt, net	430		(253)
Cash dividends paid	(916)		(884)
Exercise of employee stock options	48		31
Repurchase of shares	(122)		(1,464)
Employee taxes paid from shares withheld	(46)		(36)
Other - net	(15)		(6)
Net cash provided by (used in) financing activities	166		(2,619)
Effect of currency on cash	(13)		(30)
Less: Increase in cash classified as held for sale	—		(2)
Total increase (decrease) in cash	(167)		59
Cash at the beginning of the period	438		370
Cash at the end of the period	$	271	$	429

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

EATON CORPORATION plc

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amounts are in millions unless indicated otherwise (per share data assume dilution).

Note 1.BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods.

This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2020 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Note 2.ACQUISITIONS AND DIVESTITURES OF BUSINESSES

Acquisition of Power Distribution, Inc.

On February 25, 2020, Eaton acquired Power Distribution, Inc. a leading supplier of mission critical power distribution, static switching, and power monitoring equipment and services for data centers and industrial and commercial customers. The company is headquartered in Richmond, Virginia, and had 2019 sales of $125 million. Power Distribution, Inc. is reported within the Electrical Americas business segment.

Sale of Lighting business

On March 2, 2020, Eaton sold its Lighting business to Signify N.V. for a cash purchase price of $1.4 billion. As a result of the sale, the Company recognized a pre-tax gain of $221 million in 2020. The Lighting business, which had sales of $1.6 billion in 2019 as part of the Electrical Americas business segment, served customers in commercial, industrial, residential, and municipal markets.

Acquisition of Tripp Lite

On March 17, 2021, Eaton acquired Tripp Lite for $1.65 billion, net of cash received. Tripp Lite is a leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas. Tripp Lite had sales of over $400 million in 2020. Tripp Lite is reported within the Electrical Americas business segment.

The acquisition of Tripp Lite has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

6

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Short-term investments	$	5	$	—	$	5
Accounts receivable	94		—		94
Inventory	184		—		184
Prepaid expenses and other current assets	6		(1)		5
Property, plant and equipment	6		—		6
Other intangible assets	630		—		630
Accounts payable	(13)		—		(13)
Other current liabilities	(32)		(3)		(35)
Other noncurrent liabilities	(157)		(4)		(161)
Total identifiable net assets	723		(8)		715
Goodwill	928		8		936
Total consideration, net of cash received	$	1,651	$	—	$	1,651

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Tripp Lite. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $630 million include customer relationships, trademarks and technology. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include Tripp Lite’s results of operations, including segment operating profit of $96 million on sales of $283 million, from the date of acquisition through September 30, 2021.

Acquisition of Green Motion SA

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $105 million, including $49 million of cash paid at closing and $56 million of estimated fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $109 million. Green Motion SA is reported within the Electrical Global business segment.

Acquisition of a 50% stake in HuanYu High Tech

On March 29, 2021, Eaton acquired a 50 percent stake in HuanYu High Tech, a subsidiary of HuanYu Group that manufactures and markets low-voltage circuit breakers and contactors in China, and throughout the Asia-Pacific region. HuanYu High Tech had 2019 sales of $106 million and has production operations in Wenzhou, China. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

7

Acquisition of Cobham Mission Systems

On June 1, 2021, Eaton acquired Cobham Mission Systems (CMS) for $2.80 billion, net of cash received. CMS is a leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets. CMS had sales of over $700 million in 2020. CMS is reported within the Aerospace business segment.

The acquisition of CMS has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Accounts receivable	$	84	$	—	$	84
Inventory	179		(1)		178
Prepaid expenses and other current assets	45		(4)		41
Property, plant and equipment	86		—		86
Other intangible assets	1,575		—		1,575
Other assets	19		—		19
Accounts payable	(40)		—		(40)
Other current liabilities	(159)		7		(152)
Other noncurrent liabilities	(77)		—		(77)
Total identifiable net assets	1,712		2		1,714
Goodwill	1,088		(2)		1,086
Total consideration, net of cash received	$	2,800	$	—	$	2,800

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring CMS. As a result of the acquisition, goodwill of $292 million recognized in the United States is expected to be deductible for tax purposes. Other intangible assets of $1,575 million include customer relationships, technology and backlog. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include CMS’s results of operations, including segment operating profit of $65 million on sales of $252 million, from the date of acquisition through September 30, 2021.

Acquisition of a 50% stake in Jiangsu YiNeng Electric's busway business

On June 25, 2021, Eaton acquired a 50 percent stake in Jiangsu YiNeng Electric's busway business, which manufactures and markets busway products in China and had sales of $60 million in 2020. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

Sale of Hydraulics business

On January 21, 2020, Eaton entered into an agreement to sell its Hydraulics business to Danfoss A/S, a Danish industrial company. The Hydraulics business is a global leader in hydraulics components, systems, and services for industrial and mobile equipment. The business had sales of $1.8 billion in 2020.

During the first quarter of 2020, the Company determined the Hydraulics business met the criteria to be classified as held for sale. Therefore, assets and liabilities of the business have been presented as held for sale in the Consolidated Balance Sheet as of December 31, 2020. Assets and liabilities classified as held for sale are measured at the lower of carrying value or fair value less costs to sell. No write-down was required as fair value of the Hydraulics business assets less the costs to sell exceed their respective carrying values. Depreciation and amortization expense was not recorded for the period in which Other long-lived assets were classified as held for sale.

8

The Company used the relative fair value method to allocate goodwill to the Hydraulics business. The fair value of the Hydraulics business was estimated based on a combination of the price paid to Eaton by Danfoss A/S and a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions.

The assets and liabilities classified as held for sale for the Hydraulics business on the December 31, 2020 Consolidated Balance Sheet are as follows:

(In millions)	December 31, 2020
Accounts receivable - net	$	345
Inventory	369
Prepaid expenses and other current assets	18
Net property, plant and equipment	504
Goodwill	920
Other intangible assets	248
Operating lease assets	61
Deferred income taxes	6
Other noncurrent assets	16
Assets held for sale - current	$	2,487
Accounts payable	$	241
Accrued compensation	26
Other current liabilities	101
Pension liabilities	60
Operating lease liabilities	35
Deferred income taxes	3
Other noncurrent liabilities	2
Liabilities held for sale - current	$	468

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S. As a result of the sale, the Company received $3.1 billion, net of cash sold, and recognized a pre-tax gain of $617 million, subject to post-closing adjustments to be negotiated with Danfoss A/S. The Hydraulics business did not meet the criteria to be classified as discontinued operations as the sale does not represent a strategic shift that will have a major effect on the Company's operations.

9

Note 3.    REVENUE RECOGNITION

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

The Company’s operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market.

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas
Products	$	594	$	562	$	1,669	$	1,725
Systems	1,260		1,137		3,656		3,252
Total	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global
Products	$	887	$	671	$	2,446	$	1,926
Systems	534		525		1,646		1,525
Total	$	1,421	$	1,196	$	4,092	$	3,451
Hydraulics
United States	$	77	$	191	$	534	$	601
Rest of World	102		248		766		756
Total	$	179	$	439	$	1,300	$	1,357
Aerospace
Original Equipment Manufacturers	$	281	$	230	$	728	$	754
Aftermarket	238		158		575		527
Industrial and Other	226		152		586		400
Total	$	745	$	540	$	1,889	$	1,681
Vehicle
Commercial	$	364	$	284	$	1,090	$	742
Passenger and Light Duty	276		289		879		756
Total	$	640	$	573	$	1,969	$	1,498
eMobility	$	84	$	79	$	255	$	207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171

10

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivables from customers were $2,976 million and $2,539 million at September 30, 2021 and December 31, 2020, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $169 million and $90 million at September 30, 2021 and December 31, 2020, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized and not yet billed during the quarter, and unbilled receivables from the acquisition of Cobham Mission Systems.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	891
Revenue recognized in the period	(858)
Deferred revenue from business acquisitions	99
Translation and other	(8)
Balance at September 30, 2021	$	381

(In millions)	Deferred Revenue
Balance at January 1, 2020	$	234
Customer deposits and billings	753
Revenue recognized in the period	(728)
Translation	1
Deferred revenue reclassified to held for sale	(11)
Balance at September 30, 2020	$	249

A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at September 30, 2021 was approximately $7.3 billion. At September 30, 2021, Eaton expects to recognize approximately 87% of this backlog in the next twelve months and the rest thereafter.

Note 4. CREDIT LOSSES FOR RECEIVABLES

Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days.

Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-offs based on historic experience adjusted for market conditions. The Company’s segments, supported by our global credit department, perform the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made.

Accounts receivable are net of an allowance for credit losses of $46 million and $48 million at September 30, 2021 and December 31, 2020. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

11

Note 5.    INVENTORY

Inventory is carried at lower of cost or net realizable value. The components of inventory follow:

(In millions)	September 30, 2021		December 31, 2020
Raw materials	$	1,038	$	803
Work-in-process	601		498
Finished goods	1,163		808
Total inventory	$	2,802	$	2,109

Note 6.    GOODWILL

Change in the carrying amount of goodwill by segment follows:

(In millions)	January 1, 2021		Additions		Translation		September 30, 2021
Electrical Americas	$	6,456	$	936	$	(8)	$	7,384
Electrical Global	4,295		64		(134)		4,225
Aerospace	1,777		1,086		(76)		2,787
Vehicle	293		—		(3)		290
eMobility	82		—		(1)		81
Total	$	12,903	$	2,086	$	(222)	$	14,767

The 2021 additions to goodwill relate to the anticipated synergies of acquiring Cobham Mission Systems, Tripp Lite, and Green Motion SA. The allocations of the purchase price from these acquisitions are preliminary and will be completed during the measurement periods.

12

Note 7. DEBT

On March 8, 2021, a subsidiary of Eaton issued Euro denominated notes (2021 Euro Notes) with a face value of €1,500 million ($1,798 million), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2021 Euro Notes are comprised of two tranches of €900 million and €600 million, which mature in 2026 and 2030, respectively, with interest payable annually at a respective rate of 0.128% and 0.577%. The issuer received proceeds totaling €1,494 million ($1,790 million) from the issuance, net of financing costs and discounts. The senior 2021 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2021 Euro Notes contain customary optional redemption and par call provisions. The 2021 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2021 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense-net over the respective terms of the 2021 Euro Notes. The 2021 Euro Notes are subject to customary non-financial covenants.

On May 17, 2021, the Company entered into a $2,500 million 364-day revolving credit facility, which brought the Company’s total revolving credit facilities to $4,500 million. At June 30, 2021, the Company had access to the commercial paper markets through its $4,500 million commercial paper program, of which $3,372 million was outstanding including funds to finance the acquisition of Cobham Mission Systems discussed in Note 2. Eaton used the proceeds from the sale of the Hydraulics business, which was completed August 2, 2021, to reduce its outstanding commercial paper borrowings.

On September 22, 2021, the Company downsized the 364-day revolving credit facility from $2,500 million to $500 million, which reduced the Company's total revolving credit facilities to $2,500 million. In September 2021, the Company also downsized its commercial paper program to $2,500 million. There were no borrowings outstanding under Eaton’s revolving credit facilities at September 30, 2021. The Company had access to the commercial paper markets through its $2,500 million commercial paper program, of which $421 million was outstanding on September 30, 2021.

On October 4, 2021, the Company replaced its existing $500 million 364-day revolving credit facility, $750 million five-year revolving credit facility, $500 million four-year revolving credit facility, and $750 million five-year revolving credit facility, with a new $500 million 364-day revolving credit facility and a new $2,000 million five-year revolving credit facility that will expire on October 4, 2026. The revolving credit facilities totaling $2,500 million are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company maintains access to the commercial paper markets through its $2,500 million commercial paper program.

13

Note 8.    RETIREMENT BENEFITS PLANS

The components of retirement benefits expense (income) follow:

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	9	$	25	$	17	$	19	$	1	$	—
Interest cost	19		26		9		11		1		3
Expected return on plan assets	(56)		(59)		(30)		(27)		—		(1)
Amortization	8		26		18		15		(3)		(3)
	(20)		18		14		18		(1)		(1)
Settlements, curtailments and special termination benefits	20		14		15		1		(1)		—
Total expense (income)	$	—	$	32	$	29	$	19	$	(2)	$	(1)
	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Nine months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	29	$	73	$	55	$	55	$	1	$	1
Interest cost	52		78		30		33		4		7
Expected return on plan assets	(167)		(174)		(90)		(81)		—		(1)
Amortization	28		77		55		44		(4)		(9)
	(58)		54		50		51		1		(2)
Settlements, curtailments and special termination benefits	46		49		16		7		(1)		—
Total expense (income)	$	(12)	$	103	$	66	$	58	$	—	$	(2)

During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and is effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.

During the third quarter and first nine months of 2021, the Company recognized settlement losses from lump-sum distributions of $21 million and $48 million, respectively, and remeasured certain pension plans as a result of lump-sum distributions exceeding the sum of service and interest costs for the year. These remeasurements resulted in increases of $49 million for the third quarter of 2021 and decreases of $132 million for the first nine months of 2021 in pension liabilities and other comprehensive loss.

Total retirement benefits expense for the third quarter and first nine months of 2021 of $27 million and $54 million, respectively, included $13 million of settlement and curtailment expense related to the sale of the Hydraulics business discussed in Note 2.

The components of retirement benefits expense (income) other than service costs are included in Other expense - net.

14

Note 9.    LEGAL CONTINGENCIES

Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, patent infringement, personal injuries, antitrust matters, and employment-related matters. Eaton is also subject to asbestos claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with these claims and proceedings. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the consolidated financial statements.

Note 10.     INCOME TAXES

The effective income tax rate for the third quarter of 2021 was expense of 43.4% compared to expense of 14.8% for the third quarter of 2020. The effective income tax rate for the first nine months of 2021 was expense of 29.8% compared to expense of 21.3% for the first nine months of 2020. The increase in the effective tax rates in the third quarter and first nine months of 2021 was primarily due to the tax impact on the gain from the sale of the Hydraulics business in 2021 discussed in Note 2.

In 2011, the United States Internal Revenue Service (“IRS”) issued a Statutory Notice of Deficiency (the “2011 Notice”) for the Company’s United States subsidiaries (“Eaton US”) for the 2005 and 2006 tax years. The 2011 Notice proposed assessments of $75 million in additional taxes plus $52 million in penalties related primarily to transfer pricing adjustments for products manufactured in the Company's facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the United States. Eaton US has set its transfer prices for products sold between these affiliates at the same prices that Eaton US sells such products to third parties as required by two successive Advance Pricing Agreements (APAs) Eaton US entered into with the IRS that governed the 2005-2010 tax years. Eaton US has continued to apply the arms-length transfer pricing methodology for 2011 through the current reporting period. Immediately prior to the 2011 Notice being issued, the IRS sent a letter stating that it was retrospectively canceling the APAs. Eaton US contested the proposed assessments in United States Tax Court. The case involved both whether the APAs should be enforced and, if not, the appropriate transfer pricing methodology. On July 26, 2017, the United States Tax Court issued a ruling in which it agreed with Eaton US that the IRS must abide by the terms of the APAs for the tax years 2005-2006. The Tax Court’s ruling on the APAs did not have a material impact on Eaton’s consolidated financial statements. On May 24, 2021, the IRS filed a notice to appeal the Tax Court’s ruling to the United States Sixth Circuit Court of Appeals, and on October 7, 2021 the IRS formally filed its appeal. The Company continues to believe it will prevail on appeal and does not expect the final resolution to have a material impact on its consolidated financial statements.

During the second quarter of 2021, the IRS completed its examination of the consolidated income tax returns of Eaton US for tax years 2014 through 2016 and has proposed a number of adjustments primarily related to certain transfer pricing tax positions, including adjustments similar to those proposed and previously disclosed for prior audit periods for products manufactured in the Company’s facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the U.S., and adjustments related to intercompany financing. The Company intends to pursue its administrative appeals alternatives. The Company believes that final resolution of the proposed adjustments will not have a material impact on its consolidated financial statements.

During 2010, the Company received a tax assessment, which included interest and penalties, in Brazil for the tax years 2005 through 2008 that relates to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. In 2018, the Company received an unfavorable result at the final tax administrative appeals level. In August 2021, the Company was notified of a recalculation from an original alleged tax deficiency of $24 million plus $67 million of interest and penalties to a revised alleged tax deficiency of $31 million plus $99 million of interest and penalties (translated at the September 30, 2021 exchange rate). During 2014, the Company received a tax assessment, which included interest and penalties, for the 2009 through 2012 tax years (primarily relating to the same issues concerning the 2005 through 2008 tax years). In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $26 million plus $92 million of interest and penalties (translated at the September 30, 2021 exchange rate). The Company is challenging both of the assessments in the judicial system. Challenges in the judicial system are expected to take up to 10 years to resolve and require provision of certain assets as security for the alleged deficiencies. As of December 31, 2020, the Company pledged Brazilian real estate assets with net book value of $10 million (translated at the September 30, 2021 exchange rate). During 2021, the Company pledged additional Brazilian real estate assets with net book value of $9 million and provided additional security in the form of a bond of $75 million and cash deposit of $10 million (translated at the September 30, 2021 exchange rate). The Company continues to believe that final resolution of both of the assessments will not have a material impact on its consolidated financial statements.

15

The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s consolidated financial statements. However, Eaton believes that its interpretations of tax law, and application of tax laws to our facts, are correct and that its accrual of unrecognized income tax benefits is appropriate with respect to these matters.

Note 11. EQUITY

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5,000 million of ordinary shares (2019 Program). Under the 2019 Program, the ordinary shares are expected to be repurchased over time, depending on market conditions, the market price of ordinary shares, capital levels, and other considerations. During the three and nine months ended September 30, 2021, 0.3 million and 0.9 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $46 million and $122 million, respectively. During the three and nine months ended September 30, 2020, 1.7 million and 15.9 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $177 million and $1,477 million, respectively.

The changes in Shareholders’ equity follow:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)				(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037
Net income	—	—		—		506		—		—		506		—		506
Other comprehensive income, net of tax								194				194				194
Cash dividends paid	—	—		—		(304)		—		—		(304)		—		(304)
Issuance of shares under equity-based compensation plans	0.2	—		33		—		—		1		34		—		34
Repurchase of shares	(0.1)	—		—		(17)		—		—		(17)		—		(17)
Balance at June 30, 2021	398.6	$	4	$	12,368	$	7,068	$	(4,031)	$	(1)	$	15,408	$	42	$	15,450
Net income	—	—		—		629		—		—		629		1		630
Other comprehensive income, net of tax								243				243				243
Cash dividends paid	—	—		—		(303)		—		—		(303)		—		(303)
Issuance of shares under equity-based compensation plans	0.3	—		43		(3)		—		—		40		—		40
Repurchase of shares	(0.3)	—		—		(46)		—		—		(46)		—		(46)
Balance at September 30, 2021	398.6	$	4	$	12,411	$	7,345	$	(3,788)	$	(1)	$	15,971	$	43	$	16,014

16

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2020	413.3	$	4	$	12,200	$	8,170	$	(4,290)	$	(2)	$	16,082	$	51	$	16,133
Net income	—	—		—		438		—		—		438		—		438
Other comprehensive loss, net of tax								(676)				(676)				(676)
Cash dividends paid and accrued	—	—		—		(300)		—		—		(300)		(5)		(305)
Issuance of shares under equity-based compensation plans	0.9	—		3		(1)		—		(1)		1		—		1
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(3)		(3)
Repurchase of shares	(14.2)	—		—		(1,300)		—		—		(1,300)		—		(1,300)
Balance at March 31, 2020	400.0	$	4	$	12,203	$	7,007	$	(4,966)	$	(3)	$	14,245	$	43	$	14,288
Net income	—	—		—		51		—		—		51		3		54
Other comprehensive income, net of tax								157				157				157
Cash dividends paid	—	—		—		(292)		—		—		(292)		(1)		(293)
Issuance of shares under equity-based compensation plans	0.1	—		25		1		—		1		27		—		27
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		2		2
Balance at June 30, 2020	400.1	$	4	$	12,228	$	6,767	$	(4,809)	$	(2)	$	14,188	$	47	$	14,235
Net income	—	—		—		446		—		—		446		1		447
Other comprehensive income, net of tax								276				276				276
Cash dividends paid	—	—		—		(292)		—		—		(292)		(2)		(294)
Issuance of shares under equity-based compensation plans	0.2	—		38		(3)		—		—		35		—		35
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(4)		(4)
Repurchase of shares	(1.7)	—		—		(177)		—		—		(177)		—		(177)
Balance at September 30, 2020	398.6	$	4	$	12,266	$	6,741	$	(4,533)	$	(2)	$	14,476	$	42	$	14,518

The changes in Accumulated other comprehensive loss follow:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2021	$	(2,647)	$	(1,481)	$	(67)	$	(4,195)
Other comprehensive income (loss)    before reclassifications	(291)		178		41		(72)
Amounts reclassified from Accumulated other    comprehensive loss (income)	369		113		(3)		479
Net current-period Other comprehensive    income (loss)	78		291		38		407
Balance at September 30, 2021	$	(2,569)	$	(1,190)	$	(29)	$	(3,788)

17

The reclassifications out of Accumulated other comprehensive loss follow:

(In millions)	Nine months ended September 30, 2021			Consolidated statements of income classification
Currency translation losses
Sale of business	$	(369)		Gain on sale of businesses
Tax benefit	—
Total, net of tax	(369)
Amortization of defined benefit pensions and other postretirement benefits items
Actuarial loss and prior service cost	(140)		1
Tax benefit	27
Total, net of tax	(113)
Gains and (losses) on cash flow hedges
Currency exchange contracts	(2)			Net sales and Cost of products sold
Commodity contracts	7			Cost of products sold
Tax expense	(2)
Total, net of tax	3
Total reclassifications for the period	$	(479)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items.

Net Income Per Share Attributable to Eaton Ordinary Shareholders

A summary of the calculation of net income per share attributable to Eaton ordinary shareholders follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935
Weighted-average number of ordinary shares outstanding - diluted	401.9		402.3		401.4		404.9
Less dilutive effect of equity-based compensation	3.0		1.9		2.7		1.6
Weighted-average number of ordinary shares outstanding - basic	398.9		400.4		398.7		403.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.57	$	1.11	$	3.97	$	2.31
Basic	1.58		1.11		4.00		2.32

For the third quarter and first nine months of 2021, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive. For the third quarter and first nine months of 2020, 0.3 million and 0.8 million stock options, respectively, were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.

18

Note 12.     FAIR VALUE MEASUREMENTS

Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, follows:

(In millions)	Total		Level 1		Level 2		Level 3
September 30, 2021
Cash	$	271	$	271	$	—	$	—
Short-term investments	389		389		—		—
Net derivative contracts	26		—		26		—
Contingent consideration from acquisition of Green Motion (Note 2)	(56)		—		—		(56)
December 31, 2020
Cash	$	438	$	438	$	—	$	—
Short-term investments	664		664		—		—
Net derivative contracts	31		—		31		—

Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of $8,636 million and fair value of $9,359 million at September 30, 2021 compared to $8,057 million and $9,075 million, respectively, at December 31, 2020. The fair value of Eaton's debt instruments were estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities, and are considered a Level 2 fair value measurement.

19

Note 13.     DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and, commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.

Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated, and is effective, as part of a hedging relationship and, if so, as to the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:

•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.

•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.

•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.

The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Condensed Consolidated Statements of Cash Flows.

For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.

Eaton uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $2,941 million at September 30, 2021 and $2,020 million at December 31, 2020.

20

Derivative Financial Statement Impacts

The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows:

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
September 30, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	2	$	65	$	—	$	—	Fair value	11 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,000		—		40		—		69		Cash flow	11 to 31 years
Currency exchange contracts	1,271		10		3		15		2		Cash flow	1 to 36 months
Commodity contracts	50		2		—		3		—		Cash flow	1 to 12 months
Total			$	14	$	108	$	18	$	71
Derivatives not designated as  hedges
Currency exchange contracts	$	6,089	$	17			$	25				1 to 12 months
Commodity contracts	27		1				—					1 month
Total			$	18			$	25
December 31, 2020
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	2,075	$	2	$	100	$	—	$	—	Fair value	6 months to 14 years
Forward starting floating-to-fixed  interest rate swaps	900		—		17		—		108		Cash flow	12 to 32 years
Currency exchange contracts	946		20		6		20		1		Cash flow	1 to 36 months
Commodity contracts	24		4		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	123	$	20	$	109
Derivatives not designated as  hedges
Currency exchange contracts	$	5,227	$	43			$	34				1 to 12 months
Commodity contracts	18		2				—					1 month
Total			$	45			$	34

The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Condensed Consolidated Statements of Cash Flows.

21

As of September 30, 2021, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	September 30, 2021		Term
Copper	9	millions of pounds	1 to 12 months
Gold	1,351	Troy ounces	1 to 12 months
Silver	476,721	Troy ounces	1 to 12 months

The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Long-term debt	$	(2,413)	$	(2,688)	$	(101)	$	(139)

(a) At September 30, 2021 and December 31, 2020, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $34 million and $37 million, respectively.

The impact of hedging activities to the Consolidated Statements of Income are as follow:

	Three months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,923	$	3,338	$	37
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	—	$	(3)	$	—
Derivative designated as hedging instrument	—		3		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	9
Derivative designated as hedging instrument	—		—		(9)

22

	Three months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,526	$	3,051	$	41
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	3	$	—
Derivative designated as hedging instrument	(4)		(3)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	11
Derivative designated as hedging instrument	—		—		(11)

	Nine months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	14,830	$	10,067	$	112
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	(2)	$	—
Derivative designated as hedging instrument	(4)		2		—
Commodity contracts
Hedged item	$	—	$	(7)	$	—
Derivative designated as hedging instrument	—		7		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	35
Derivative designated as hedging instrument	—		—		(35)

23

	Nine months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	13,171	$	9,230	$	113
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	9	$	4	$	—
Derivative designated as hedging instrument	(9)		(4)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	(58)
Derivative designated as hedging instrument	—		—		58

The impact of derivatives not designated as hedges to the Consolidated Statements of Income are as follow:

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(32)	$	49	Interest expense - net
Commodity contracts	1		—		Cost of products sold
Total	$	(31)	$	49

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Nine months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(9)	$	(54)	Interest expense - net
Commodity contracts	10		1		Cost of products sold
Total	$	1	$	(53)

24

The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income follow:

	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended September 30					Three months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as    cash flow hedges
Forward starting floating-to-fixed  interest rate swaps	$	1	$	35	Interest expense - net	$	—	$	—
Currency exchange contracts	(6)		11		Net sales and Cost of products sold	3		(6)
Commodity contracts	(3)		1		Cost of products sold	2		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	74		(83)		Interest expense - net	—		—
Total	$	66	$	(36)		$	5	$	(6)
	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Nine months ended September 30					Nine months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	62	$	(101)	Interest expense - net	$	—	$	—
Currency exchange contracts	(11)		(34)		Net sales and Cost of products sold	(2)		(12)
Commodity contracts	2		2		Cost of products sold	7		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	178		(78)		Interest expense - net	—		—
Total	$	231	$	(211)		$	5	$	(12)

At September 30, 2021, a loss of $6 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next 12 months.

25

Note 14.     RESTRUCTURING CHARGES

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions. Restructuring charges incurred under this program were $214 million in 2020 and $63 million for the nine months ended September 30, 2021. These restructuring activities are expected to incur additional expenses of $33 million in 2021, and $10 million in 2022, primarily comprised of plant closing and other costs, resulting in total estimated charges of $320 million for the entire program.

A summary of restructuring program charges by type follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Workforce reductions	$	19	$	3	$	19	$	169
Plant closing and other	15		7		44		28
Total before income taxes	34		10		63		197
Income tax benefit	9		2		15		41
Total after income taxes	$	25	$	8	$	48	$	156
Per ordinary share - diluted	$	0.06	$	0.02	$	0.12	$	0.39

Restructuring program charges related to the following segments:

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas	$	5	$	3	$	13	$	16
Electrical Global	11		2		13		53
Aerospace	1		2		4		32
Vehicle	5		3		16		93
eMobility	—		—		1		1
Corporate	12		—		16		2
Total	$	34	$	10	$	63	$	197

A summary of liabilities related to workforce reductions, plant closing and other associated costs follows:

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	139		3		142
Liability recognized	19		44		63
Payments, utilization and translation	(55)		(33)		(88)
Balance at September 30, 2021	$	103	$	14	$	117

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 15 for additional information about business segments.

26

Note 15.     BUSINESS SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Eaton's operating segments are Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility. On August 2, 2021, Eaton completed the sale of the Hydraulics business. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 17 to the Consolidated Financial Statements contained in the 2020 Form 10-K.

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Net sales
Electrical Americas	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global	1,421		1,196		4,092		3,451
Hydraulics	179		439		1,300		1,357
Aerospace	745		540		1,889		1,681
Vehicle	640		573		1,969		1,498
eMobility	84		79		255		207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171
Segment operating profit (loss)
Electrical Americas	$	402	$	377	$	1,127	$	993
Electrical Global	285		198		757		542
Hydraulics	20		43		177		135
Aerospace	164		100		391		315
Vehicle	115		80		349		140
eMobility	(8)		(2)		(21)		(3)
Total segment operating profit	978		796		2,780		2,122
Corporate
Intangible asset amortization expense	(126)		(90)		(326)		(265)
Interest expense - net	(37)		(41)		(112)		(113)
Pension and other postretirement benefits income (expense)	14		(9)		44		(29)
Restructuring program charges	(34)		(10)		(63)		(197)
Other income (expense) - net	318		(121)		(52)		(325)
Income before income taxes	1,113		525		2,271		1,193
Income tax expense	483		78		676		254
Net income	630		447		1,595		939
Less net income for noncontrolling interests	(1)		(1)		(2)		(4)
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935

27

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Amounts are in millions of dollars or shares unless indicated otherwise (per share data assume dilution).

COMPANY OVERVIEW

Eaton Corporation plc (Eaton or the Company) is a power management company with 2020 net sales of $17.9 billion. Eaton's mission is to improve the quality of life and environment through the use of power management technologies and services. We provide sustainable solutions that help our customers effectively manage electrical, hydraulic, and mechanical power - more safely, more efficiently and more reliably. Eaton has approximately 85,000 employees in 60 countries and sells products to customers in more than 175 countries.

Summary of Results of Operations

A summary of Eaton’s Net sales, Net income attributable to Eaton ordinary shareholders, and Net income per share attributable to Eaton ordinary shareholders - diluted follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Net sales	$	4,923	$	4,526	$	14,830	$	13,171
Net income attributable to Eaton ordinary shareholders	629		446		1,593		935
Net income per share attributable to Eaton ordinary shareholders - diluted	$	1.57	$	1.11	$	3.97	$	2.31

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions. Restructuring charges incurred for the three and nine months ended September 30, 2021 were $34 million and $63 million, respectively, and were $10 million and $197 million, respectively, for the three and nine months ended September 30, 2020. These restructuring activities are expected to incur additional expenses of $33 million in 2021, and $10 million in 2022, primarily comprised of plant closing and other costs, resulting in total estimated charges of $320 million for the entire program. The projected mature year savings from these restructuring actions are expected to be $230 million when fully implemented in 2023. Additional information related to this restructuring is presented in Note 14.

On February 25, 2020, Eaton acquired Power Distribution, Inc. a leading supplier of mission critical power distribution, static switching, and power monitoring equipment and services for data centers and industrial and commercial customers. The company is headquartered in Richmond, Virginia, and had 2019 sales of $125 million. Power Distribution, Inc. is reported within the Electrical Americas business segment.

On March 2, 2020, Eaton sold its Lighting business to Signify N.V. for a cash purchase price of $1.4 billion. As a result of the sale, the Company recognized a pre-tax gain of $221 million in 2020. The Lighting business, which had sales of $1.6 billion in 2019 as part of the Electrical Americas business segment, served customers in commercial, industrial, residential, and municipal markets.

On March 17, 2021, Eaton acquired Tripp Lite for $1.65 billion, net of cash received. Tripp Lite is a leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas. Tripp Lite had sales of over $400 million in 2020. Tripp Lite is reported within the Electrical Americas business segment.

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $105 million, including $49 million of cash paid at closing and $56 million of estimated fair value of contingent future consideration based on 2023 and 2024 revenue performance, with a maximum possible undiscounted value of $109 million. Green Motion SA is reported within the Electrical Global business segment.

On March 29, 2021, Eaton acquired a 50 percent stake in HuanYu High Tech, a subsidiary of HuanYu Group that manufactures and markets low-voltage circuit breakers and contactors in China, and throughout the Asia-Pacific region. HuanYu High Tech had 2019 sales of $106 million and has production operations in Wenzhou, China. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

28

On June 1, 2021, Eaton acquired Cobham Mission Systems (CMS) for $2.80 billion, net of cash received. CMS is a leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets. CMS had sales of over $700 million in 2020. CMS is reported within the Aerospace business segment.

On June 25, 2021, Eaton acquired a 50 percent stake in Jiangsu YiNeng Electric's busway business, which manufactures and markets busway products in China and had sales of $60 million in 2020. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S, a Danish industrial company. As a result of the sale, the Company received $3.1 billion, net of cash sold, and recognized a pre-tax gain of $617 million, subject to post-closing adjustments to be negotiated with Danfoss A/S. The Hydraulics business is a global leader in hydraulics components, systems, and services for industrial and mobile equipment. The business had sales of $1.8 billion in 2020.

COVID-19

The Company was impacted by the COVID-19 pandemic in select markets and industries. As a result, our businesses have been focused on cost control measures where appropriate to offset the volume declines we experienced in addition to executing on our multi-year restructuring program we decided to undertake in the second quarter of 2020. In the first nine months of 2021, the Company has seen broad-based strength in its end-markets and regions as our businesses have largely recovered from the negative impact of the COVID-19 pandemic. However as global economies recover, many of our businesses have been impacted by supply chain disruptions and inflation. Additionally, our Aerospace business segment continues to see some softness in demand due to the impact of continued travel restrictions on commercial aviation, particularly in international travel.

Eaton's products and support services are vital to hospitals, emergency services, military sites, utilities, public works, transportation, and shipping providers. In addition, data centers, retail outlets, airports, and governments, as well as the networks that support schools and remote workers, rely on the Company's products to serve their customers and communities. As a result, the Company's plants are generally not subject to extended shutdowns.

The Company continues to monitor the pandemic’s impact throughout the world, including guidance from governmental authorities and world health organizations. The Company’s actions to protect the safety and health of its workforce are aligned with its preventive health protocols and those of governmental authorities and health organizations including the Centers for Disease Controls (U.S.) and the World Health Organization.

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

The following discussion of Consolidated Financial Results includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per ordinary share, each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of adjusted earnings and adjusted earnings per ordinary share to the most directly comparable GAAP measure is included in the Consolidated Financial Results table below. During the first quarter of 2021, the Company revised its definition of adjusted earnings to exclude intangible asset amortization expense and prior periods have been retrospectively adjusted to apply this change. Management believes that these financial measures are useful to investors because they exclude certain transactions, allowing investors to more easily compare Eaton’s financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton.

29

Acquisition and Divestiture Charges and Income

Eaton incurs integration charges and transaction costs to acquire businesses, and transaction costs and other charges to divest and exit businesses. Eaton also recognizes gains and losses on the sale of businesses. A summary of these Corporate items follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Acquisition integration, divestiture charges and transaction costs	$	179	$	28	$	312	$	263
Gain on sale of the Hydraulics and Lighting businesses	(617)		—		(617)		(221)
Total charges (income) before income taxes	(438)		28		(305)		42
Income tax expense (benefit)	386		(7)		362		68
Total charges (income) after income taxes	$	(52)	$	21	$	57	$	110
Charges (income) per ordinary share - diluted	$	(0.13)	$	0.05	$	0.14	$	0.27

Acquisition integration, divestiture charges and transaction costs in 2021 are primarily related to the divestiture of the Hydraulics business, the acquisitions of Tripp Lite, Cobham Mission Systems, Souriau-Sunbank Connection Technologies, and Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S., and other charges to acquire and exit businesses including certain indemnity claims associated with the sale of 50% interest in the commercial vehicle automated transmission business in 2017. Charges in 2020 are primarily related to the divestitures of the Hydraulics business and the Lighting business, the acquisitions of Souriau-Sunbank and Ulusoy Elektrik, and other charges to exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, Interest expense - net, or Other expense - net. In Business Segment Information in Note 15, the charges were included in Other income (expense) - net.

Intangible Asset Amortization Expense

Intangible asset amortization expense follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Intangible asset amortization expense	$	126	$	90	$	326	$	265
Income tax benefit	27		21		56		62
Total after income taxes	$	99	$	69	$	270	$	203
Per ordinary share - diluted	$	0.25	$	0.17	$	0.68	$	0.50

30

Consolidated Financial Results

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions except for per share data)	2021			2020					2021			2020
Net sales	$	4,923		$	4,526		9	%	$	14,830		$	13,171		13	%
Gross profit	1,585			1,475			7	%	4,763			3,941			21	%
Percent of net sales	32.2		%	32.6		%			32.1		%	29.9		%
Income before income taxes	1,113			525			112	%	2,271			1,193			90	%
Net income	630			447			41	%	1,595			939			70	%
Less net income for noncontrolling interests	(1)			(1)					(2)			(4)
Net income attributable to Eaton ordinary shareholders	629			446			41	%	1,593			935			70	%
Excluding acquisition and divestiture charges (income), after-tax	(52)			21					57			110
Excluding restructuring program charges, after-tax	25			8					48			156
Excluding intangible asset amortization expense, after-tax	99			69					270			203
Adjusted earnings	$	701		$	544		29	%	$	1,968		$	1,404		40	%
Net income per share attributable to Eaton ordinary shareholders - diluted	$	1.57		$	1.11		41	%	$	3.97		$	2.31		72	%
Excluding per share impact of acquisition and divestiture charges (income), after-tax	(0.13)			0.05					0.14			0.27
Excluding per share impact of restructuring program charges, after-tax	0.06			0.02					0.12			0.39
Excluding per share impact of intangible asset amortization expense, after-tax	0.25			0.17					0.68			0.50
Adjusted earnings per ordinary share	$	1.75		$	1.35		30	%	$	4.91		$	3.47		41	%

Net Sales

Net sales increased 9% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 8% in organic sales, an increase of 7% from acquisitions of businesses, and an increase of 1% from the impact of positive currency translation, partially offset by a decrease of 7% from the divestiture of the Hydraulics business discussed in Note 2. The Company experienced constraints in its supply chain during the third quarter of 2021, which had a negative impact on Net sales. Despite these constraints, organic sales increased in the third quarter of 2021 primarily due to growth in the Electrical Global and Vehicle business segments. Net sales increased 13% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 11% in organic sales, an increase of 4% from acquisitions of businesses, and an increase of 2% from the impact of positive currency translation, partially offset by a decrease of 4% from the divestitures of the Hydraulics and Lighting businesses discussed in Note 2. The increase in organic sales in the first nine months of 2021 reflects broad-based strength in end-markets and regions as our business segments have largely recovered from the negative impact of the COVID-19 pandemic except for a decrease in the Aerospace business segment due to the continued impact of the pandemic on commercial aviation.

Gross Profit

Gross profit margin decreased from 32.6% in the third quarter of 2020 to 32.2% in the third quarter of 2021 primarily due to higher acquisition and divestiture costs, higher intangible asset amortization expense, and commodity and logistics inflation, partially offset by higher sales volumes in the Electrical Global and Vehicle business segments, the divestiture of the Hydraulics business, the acquisitions of Tripp Lite and Cobham Mission Systems, and savings from restructuring actions. Gross profit margin increased from 29.9% in first nine months of 2020 to 32.1% in first nine months of 2021 primarily due to higher sales volumes in the Electrical Americas, Electrical Global, and Vehicle business segments, the acquisitions of Tripp Lite and Cobham Mission Systems, and savings from restructuring actions, partially offset by lower organic sales volumes in the Aerospace business segment and commodity and logistics inflation.

31

Income Taxes

The effective income tax rate for the third quarter of 2021 was expense of 43.4% compared to expense of 14.8% for the third quarter of 2020. The effective income tax rate for the first nine months of 2021 was expense of 29.8% compared to expense of 21.3% for the first nine months of 2020. The increase in the effective tax rates in the third quarter and first nine months of 2021 was primarily due to the tax impact on the gain from the sale of the Hydraulics business in 2021 discussed in Note 2.

Net Income

Net income attributable to Eaton ordinary shareholders of $629 million in the third quarter of 2021 increased 41% compared to Net income attributable to Eaton ordinary shareholders of $446 million in the third quarter of 2020. Net income in the third quarter of 2021 included an after-tax gain of $197 million on the sale of the Hydraulics business. Excluding this gain, the decrease in the third quarter of 2021 was primarily due to higher acquisition and divestiture charges, partially offset by higher gross profit. Net income attributable to Eaton ordinary shareholders of $1,593 million in the first nine months of 2021 increased 70% compared to Net income attributable to Eaton ordinary shareholders of $935 million in the first nine months of 2020. Net income in the first nine months of 2021 and 2020 included after-tax gains of $197 million on the sale of the Hydraulics business and $91 million on the sale of the Lighting business, respectively. Excluding these gains, the increase in the first nine months of 2021 was primarily due to higher gross profit and lower restructuring program charges, partially offset by higher acquisition and divestiture charges and higher intangible asset amortization expense.

Net income per ordinary share increased to $1.57 in the third quarter of 2021 compared to $1.11 in the third quarter of 2020. Net income per ordinary share in 2021 included $0.49 from the sale of the Hydraulics business. Excluding this gain, the decrease in Net income per ordinary share in the third quarter of 2021 was due to lower Net income attributable to Eaton ordinary shareholders. Net income per ordinary share increased to $3.97 in the first nine months of 2021compared to $2.31 in the first nine months of 2020. Net income per ordinary share in the first nine months of 2021 and 2020 included $0.49 and $0.22 from the sale of the Hydraulics and Lighting businesses, respectively. Excluding these gains, the increase in Net income per ordinary share in the first nine months of 2021 was due to higher Net income attributable to Eaton ordinary shareholders and the impact of the Company's share repurchases over the past year.

Adjusted Earnings

Adjusted earnings of $701 million in the third quarter of 2021 increased 29% compared to Adjusted earnings of $544 million in the third quarter of 2020. Adjusted earnings of $1,968 million in the first nine months of 2021 increased 40% compared to Adjusted earnings of $1,404 million in the first nine months of 2020. The increase in Adjusted earnings in the third quarter and first nine months of 2021 was primarily due to higher Net income attributable to Eaton ordinary shareholders, adjusted for acquisition and divestiture charges (income), restructuring program charges, and intangible asset amortization expense.

Adjusted earnings per ordinary share increased to $1.75 in the third quarter of 2021 compared to $1.35 in the third quarter of 2020. Adjusted earnings per ordinary share increased to $4.91 in the first nine months of 2021 compared to $3.47 in the first nine months of 2020. The increase in Adjusted earnings per ordinary share in the third quarter and first nine months of 2021 was due to higher Adjusted earnings and the impact of the Company's share repurchases over the past year.

32

Business Segment Results of Operations

The following is a discussion of Net sales, operating profit and operating margin by business segment.

Electrical Americas

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions)	2021			2020					2021			2020
Net sales	$	1,854		$	1,699		9	%	$	5,325		$	4,977		7	%
Operating profit	$	402		$	377		7	%	$	1,127		$	993		13	%
Operating margin	21.7		%	22.2		%			21.2		%	20.0		%

Net sales increased 9% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 8% from the acquisition of Tripp Lite and an increase of 1% in organic sales. The Electrical Americas business segment experienced constraints in its supply chain during the third quarter of 2021, which had a negative impact on Net sales. Despite these constraints, organic sales increased in the third quarter of 2021 primarily due to strength in data center and residential end-markets, partially offset by weakness in large industrial projects and sales to utilities. Net sales increased 7% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 6% from the acquisitions of Tripp Lite and Power Distribution, Inc., an increase of 5% in organic sales, and an increase of 1% from the impact of positive currency translation, partially offset by a decrease of 5% from the divestiture of the Lighting business. The increase in organic sales in the first nine months of 2021 was primarily due to broad-based strength in end-markets as they have largely recovered from the COVID-19 pandemic, except for weakness in large industrial projects.

The operating margin decreased from 22.2% in the third quarter of 2020 to 21.7% in the third quarter of 2021 primarily due to commodity and logistics inflation, partially offset by the acquisition of Tripp Lite, higher organic sales volumes, and savings from restructuring actions. The operating margin increased from 20.0% in the first nine months of 2020 to 21.2% in the first nine months of 2021 primarily due to higher organic sales volumes, the acquisition of Tripp Lite, the favorable impact of the divestiture of the Lighting business, and savings from restructuring actions, partially offset by commodity and logistics inflation.

Electrical Global

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions)	2021			2020					2021			2020
Net sales	$	1,421		$	1,196		19	%	$	4,092		$	3,451		19	%
Operating profit	$	285		$	198		44	%	$	757		$	542		40	%
Operating margin	20.1		%	16.6		%			18.5		%	15.7		%

Net sales increased 19% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 18% in organic sales and an increase of 1% from the impact of positive currency translation. Net sales increased 19% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 15% in organic sales and an increase of 4% from the impact of positive currency translation. The increase in organic sales in the third quarter and first nine months of 2021 was primarily due to broad-based strength in end-markets as they have largely recovered from the COVID-19 pandemic.

The operating margin increased from 16.6% in the third quarter of 2020 to 20.1% in the third quarter of 2021 and from 15.7% in the first nine months of 2020 to 18.5% in the first nine months of 2021 primarily due to higher sales volumes, and savings from restructuring actions and other costs control measures, partially offset by commodity and logistics inflation.

33

Hydraulics

	Three months ended September 30						Nine months ended September 30
(In millions)	2021			2020			2021			2020
Net sales	$	179		$	439		$	1,300		$	1,357
Operating profit	$	20		$	43		$	177		$	135
Operating margin	11.2		%	9.8		%	13.6		%	9.9		%

On August 2, 2021, Eaton completed the sale of the Hydraulics business segment. As a result, net sales and operating profit for the third quarter and first nine months of 2021 are not directly comparable to the third quarter and first nine months of 2020, since 2021 only includes the results of the Hydraulics business through the date of the sale.

Aerospace

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions)	2021			2020					2021			2020
Net sales	$	745		$	540		38	%	$	1,889		$	1,681		12	%
Operating profit	$	164		$	100		64	%	$	391		$	315		24	%
Operating margin	22.0		%	18.5		%			20.7		%	18.7		%

Net sales increased 38% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 33% from the acquisition of Cobham Mission Systems, an increase of 4% in organic sales, and an increase of 1% from the impact of positive currency translation. The increase in organic sales in the third quarter of 2021 was primarily due to higher sales in commercial markets, partially offset by weakness in military markets. Net sales increased 12% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 15% from the acquisition of Cobham Mission Systems and an increase of 2% from the impact of positive currency translation, partially offset by a decrease of 5% in organic sales. The decrease in organic sales in the first nine months of 2021 was primarily due to the impact of continued travel restrictions from the COVID-19 pandemic on commercial aviation.

The operating margin increased from 18.5% in the third quarter of 2020 to 22.0% in third quarter of 2021 primarily due to the acquisition of Cobham Mission Systems, higher sales volumes, and savings from restructuring actions. The operating margin increased from 18.7% in the first nine months of 2020 to 20.7% in the first nine months of 2021 primarily due to savings from restructuring actions and the acquisition of Cobham Mission Systems, partially offset by lower organic sales volumes.

34

Vehicle

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions)	2021			2020					2021			2020
Net sales	$	640		$	573		12	%	$	1,969		$	1,498		31	%
Operating profit	$	115		$	80		44	%	$	349		$	140		149	%
Operating margin	18.0		%	14.0		%			17.7		%	9.3		%

Net sales increased 12% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 11% in organic sales and an increase of 1% from the impact of positive currency translation. The Vehicle business segment's organic sales were negatively impacted in the third quarter of 2021 as a result of its customers experiencing supply chain constraints leading to reduced production levels and historic low vehicle inventory. Despite these challenges, organic sales increased in the third quarter of 2021 primarily due to strength in the North American Class 8 truck market and the South American light vehicle market, partially offset by weakness in the North American light vehicle market. Net sales increased 31% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 30% in organic sales and an increase of 1% from the impact of positive currency translation. The increase in organic sales in the first nine months of 2021 was primarily due to strength in all regions compared to 2020 which was significantly impacted by plant shutdowns due to the COVID-19 pandemic.

The operating margin increased from 14.0% in the third quarter of 2020 to 18.0% in the third quarter of 2021 primarily due to higher sales volumes, favorable product mix, and savings from restructuring actions, partially offset by commodity and logistics inflation. The operating margin increased from 9.3% in the first nine months of 2020 to 17.7% in the first nine months of 2021 primarily due to higher sales volumes and savings from restructuring actions, partially offset by commodity and logistics inflation.

eMobility

	Three months ended September 30						Increase (decrease)		Nine months ended September 30						Increase (decrease)
(In millions)	2021			2020					2021			2020
Net sales	$	84		$	79		6	%	$	255		$	207		23	%
Operating profit (loss)	$	(8)		$	(2)		(300)	%	$	(21)		$	(3)		(600)	%
Operating margin	(9.5)		%	(2.5)		%			(8.2)		%	(1.4)		%

Net sales increased 6% in the third quarter of 2021 compared to the third quarter of 2020 due to an increase of 6% in organic sales. The eMobility business segment's organic sales were negatively impacted in the third quarter of 2021 as a result of its customers experiencing supply chain constraints leading to reduced production levels. Despite these challenges, organic sales increased in the third quarter of 2021 primarily due to strength in North American and Asia Pacific regions, partially offset by weakness in Europe. Net sales increased 23% in the first nine months of 2021 compared to the first nine months of 2020 due to an increase of 21% in organic sales and an increase of 2% from the impact of positive currency translation. The increase in organic sales in the first nine months of 2021 was primarily due to strength in North American and Asia Pacific regions compared to 2020 which was significantly impacted by plant shutdowns due to the COVID-19 pandemic.

The operating margin decreased from negative 2.5% in the third quarter of 2020 to negative 9.5% in the third quarter of 2021 and from negative 1.4% in the first nine months of 2020 to negative 8.2% in the first nine months of 2021 primarily due to increased research and development costs and manufacturing start-up costs associated with new electric vehicle programs, and commodity and logistics inflation, partially offset by higher sales volumes.

35

Corporate Expense (Income)

	Three months ended September 30				Increase (decrease)		Nine months ended September 30				Increase (decrease)
(In millions)	2021		2020				2021		2020
Intangible asset amortization expense	$	126	$	90	40	%	$	326	$	265	23	%
Interest expense - net	37		41		(10)	%	112		113		(1)	%
Pension and other postretirement benefits (income) expense	(14)		9		(256)	%	(44)		29		(252)	%
Restructuring program charges	34		10		240	%	63		197		(68)	%
Other (income) expense - net	(318)		121		(363)	%	52		325		(84)	%
Total corporate (income) expense	$	(135)	$	271	(150)	%	$	509	$	929	(45)	%

Total corporate income was $135 million in the third quarter of 2021 compared to Total corporate expense of $271 million in the third quarter of 2020. The change in Total corporate (income) expense for the third quarter of 2021 was primarily due to the change in Other (income) expense - net and the favorable impact of the freeze on the Company's United States pension plans discussed in Note 8, partially offset by higher Intangible asset amortization expense, and higher Restructuring program charges discussed in Note 14. The change in Other (income) expense - net is primarily due to the 2021 gain on sale of the Hydraulics business discussed in Note 2, partially offset by higher acquisition and divestiture charges.

Total corporate expense was $509 million in the first nine months of 2021 compared to Total corporate expense of $929 million in the first nine months of 2020. The decrease in Total corporate expense for the first nine months of 2021 was primarily due to lower Other expense - net, lower Restructuring program charges, and the favorable impact of the freeze on the Company's United States pension plans, partially offset by higher Intangible asset amortization expense. The decrease in Other expense - net is primarily due to the 2021 gain on sale of the Hydraulics business compared to the 2020 gain on the sale of the Lighting business, partially offset by higher acquisition and divestiture charges.

LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION

Financial Condition and Liquidity

Eaton’s objective is to finance its business through operating cash flow and an appropriate mix of equity and long-term and short-term debt. By diversifying its debt maturity structure, Eaton reduces liquidity risk.

On March 8, 2021, a subsidiary of Eaton issued Euro denominated notes (2021 Euro Notes) with a face value of €1,500 million ($1,798 million), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2021 Euro Notes are comprised of two tranches of €900 million and €600 million, which mature in 2026 and 2030, respectively, with interest payable annually at a respective rate of 0.128% and 0.577%. The issuer received proceeds totaling €1,494 million ($1,790 million) from the issuance, net of financing costs and discounts.

On May 17, 2021, the Company entered into a $2,500 million 364-day revolving credit facility, which brought the Company’s total revolving credit facilities to $4,500 million. At June 30, 2021, the Company had access to the commercial paper markets through its $4,500 million commercial paper program, of which $3,372 million was outstanding including funds to finance the acquisition of Cobham Mission Systems discussed in Note 2. Eaton used the proceeds from the sale of the Hydraulics business, which was completed August 2, 2021, to reduce its outstanding commercial paper borrowings.

On September 22, 2021, the Company downsized the 364-day revolving credit facility from $2,500 million to $500 million, which reduced the Company's total revolving credit facilities to $2,500 million. In September 2021, the Company also downsized its commercial paper program to $2,500 million. There were no borrowings outstanding under Eaton’s revolving credit facilities at September 30, 2021. The Company had access to the commercial paper markets through its $2,500 million commercial paper program, of which $421 million was outstanding on September 30, 2021.

On October 4, 2021, the Company replaced its existing $500 million 364-day revolving credit facility, $750 million five-year revolving credit facility, $500 million four-year revolving credit facility, and $750 million five-year revolving credit facility, with a new $500 million 364-day revolving credit facility and a new $2,000 million five-year revolving credit facility that will expire on October 4, 2026. The revolving credit facilities totaling $2,500 million are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company maintains access to the commercial paper markets through its $2,500 million commercial paper program.

36

Eaton completed the $1.4 billion sale of its Lighting business on March 2, 2020, the acquisitions of Tripp Lite for $1.65 billion on March 17, 2021 and Cobham Mission Systems for $2.80 billion on June 1, 2021, and the $3.1 billion sale of its Hydraulics business on August 2, 2021. Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under existing revolving credit facilities, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund acquisitions of businesses, as well as scheduled payments of long-term debt.

Eaton was in compliance with each of its debt covenants for all periods presented.

Sources and Uses of Cash

Operating Cash Flow

Net cash provided by operating activities was $1,368 million in the first nine months of 2021, a decrease of $633 million compared to $2,001 million in the first nine months of 2020. The decrease in net cash provided by operating activities in the first nine months of 2021 was primarily due to higher working capital balances to support the Company’s organic growth as our business segments have largely recovered from the negative impact of the COVID-19 pandemic, taxes paid on the sale of the Hydraulics business, and a pension contribution to Eaton's U.S. qualified pension plan in 2021.

Investing Cash Flow

Net cash used in investing activities was $1,688 million in the first nine months of 2021, an increase of $2,397 million in the use of cash compared to net cash provided by investing activities of $709 million in the first nine months of 2020. The increase in the use of cash was primarily driven by cash paid for business acquisitions discussed in Note 2, partially offset by proceeds received in 2021 from the sale of the Hydraulics business of $3,110 million compared to proceeds received in 2020 from the sale of the Lighting business of $1,408 million, and net sales of short-term investments of $264 million in 2021 compared to net purchases of $121 million in 2020.

Financing Cash Flow

Net cash provided by financing activities was $166 million in the first nine months of 2021, an increase of $2,785 million in the source of cash compared to net cash used in financing activities of $2,619 million in the first nine months of 2020. The increase in the source of cash was primarily due to higher proceeds from borrowings of $1,798 million in 2021 compared to no proceeds from borrowings in 2020, lower share repurchases of $122 million in 2021 compared to $1,464 million in 2020, and net proceeds of short-term debt of $430 million in 2021 compared to net payments of $253 million in 2020, partially offset by higher payments on borrowings of $1,011 million in 2021 compared to $7 million in 2020.

Guaranteed Debt

Issuers, Guarantors and Guarantor Structure    

Eaton Corporation has issued senior notes pursuant to indentures dated April 1, 1994 (the 1994 Indenture), November 20, 2012 (the 2012 Indenture) and September 15, 2017 (the 2017 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton Corporation is also the issuer of one outstanding series of privately placed debt securities (the PPNs), and Eaton Capital Unlimited Company, another subsidiary of Eaton, is the issuer of four outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds). The PPNs, the Eurobonds and the Registered Senior Notes (together, the Senior Notes) comprise substantially all of Eaton’s long-term indebtedness.

Substantially all of the Senior Notes, together with the credit facilities described above under Financial Condition and Liquidity (the Credit Facilities), are guaranteed by Eaton and 18 of its subsidiaries. Accordingly, they rank equally with each other. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Eaton and its subsidiaries. As of September 30, 2021, Eaton has no material, long-term secured debt. The guaranteed Registered Senior Notes are also structurally subordinated to the liabilities of Eaton's subsidiaries that are not guarantors. Except as described below under Future Guarantors, Eaton is not obligated to cause its subsidiaries to guarantee the Registered Senior Notes.

The table set forth in Exhibit 22 filed with the Form 10-K filed on February 24, 2021, details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.

37

Terms of Guarantees of Registered Securities

Payment of principal and interest on the Registered Senior Notes is guaranteed, on an unsecured, unsubordinated basis by the subsidiaries of Eaton set forth in the table referenced in Exhibit 22. Each guarantee is full and unconditional, and joint and several. Each guarantor's guarantee is an unsecured obligation that ranks equally with all its other unsecured and unsubordinated indebtedness. The obligations of each guarantor under its guarantee of the Registered Senior Notes is subject to a customary savings clause or similar provision designed to prevent such guarantee from constituting a fraudulent conveyance or otherwise legally impermissible or voidable obligation.

Generally, each guarantee of the Registered Senior Notes by a guarantor other than Eaton provides that it will be automatically and unconditionally released and discharged upon:

(a)the consummation of any transaction permitted under the applicable indenture resulting in such guarantor ceasing to be a subsidiary, such as a sale to a third party;

(b)such guarantee (so long as the guarantor is not obligated under any other U.S. debt obligations), becoming prohibited by any applicable law, rule or regulation or by any contractual obligation;

(c)such guarantee resulting in material adverse tax consequences to Eaton or any of its subsidiaries (so long as the applicable guarantor is not obligated under any other U.S. debt obligation); or

(d)such guarantor becoming a controlled foreign corporation within the meaning Section 957(a) of the Internal Revenue Code (a CFC), or an entity the material assets of which is limited to equity interests of a CFC.

Notwithstanding the foregoing, each guarantee by a direct or indirect parent of Eaton Corporation (other than Eaton) provides that it will be released only under the circumstances described in subparagraphs (b) and (c) above.

The guarantee of Eaton does not contain any release provisions.

Future Guarantors

The 2012 and 2017 Indentures generally provide that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under any series of debt securities or a syndicated credit facility. Further, any entity that becomes a direct or indirect parent entity of Eaton Corporation and holds any material assets, with certain limited exceptions, or owes any material liabilities must become a guarantor.

The 1994 Indenture does not contain provisions with respect to future guarantors.

Summarized Financial Information of Guarantors and Issuers

(In millions)	September 30, 2021		December 31, 2020
Current assets	$	2,815	$	4,031
Noncurrent assets	11,554		11,642
Current liabilities	2,517		2,916
Noncurrent liabilities	10,171		9,049
Amounts due to subsidiaries that are non-issuers and non-guarantors - net	17,076		15,938
			Nine months ended September 30
(In millions)			2021
Net sales			$	7,769
Sales to subsidiaries that are non-issuers and non-guarantors			686
Cost of products sold			6,423
Expense from subsidiaries that are non-issuers and non-guarantors - net			392
Net income			470

The financial information presented is that of Eaton Corporation and the Guarantors, which includes Eaton Corporation plc, on a combined basis and the financial information of non-issuer and non-guarantor subsidiaries has been excluded. Intercompany balances and transactions between Eaton Corporation and Guarantors have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately.

38

FORWARD-LOOKING STATEMENTS

This Form 10-Q Report contains forward-looking statements concerning anticipated additional charges and projected savings from restructuring actions, the future impact of COVID-19, the performance of our end markets, tax controversies and legal contingencies, among other matters. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside Eaton’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: unanticipated changes in the markets for the Company’s business segments; unanticipated downturns in business relationships with customers or their purchases from us; the potential effects on our businesses from natural disasters; the availability of credit to customers and suppliers; competitive pressures on sales and pricing; unanticipated changes in the cost of material and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; the impact of acquisitions and divestitures; unanticipated difficulties integrating acquisitions; new laws and governmental regulations; interest rate changes; tax rate changes or exposure to additional income tax liability; stock market and currency fluctuations; war, civil or political unrest or terrorism; the course of the COVID-19 pandemic and government responses thereto, and unanticipated deterioration of economic and financial conditions in the United States and around the world. Eaton does not assume any obligation to update these forward-looking statements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in exposures to market risk since December 31, 2020.

ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures - Pursuant to SEC Rule 13a-15, an evaluation was performed under the supervision and with the participation of Eaton’s management, including Craig Arnold - Principal Executive Officer; and Thomas B. Okray - Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, management concluded that Eaton’s disclosure controls and procedures were effective as of September 30, 2021.

Disclosure controls and procedures are designed to ensure that information required to be disclosed in Eaton’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Eaton’s reports filed under the Exchange Act is accumulated and communicated to management, including Eaton’s Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

During the third quarter of 2021, there was no change in Eaton’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Management is currently evaluating the impact of businesses acquired in the past twelve months on Eaton's internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

Information regarding the Company's current legal proceedings is presented in Notes 9 and 10 of the Notes to the condensed consolidated financial statements.

ITEM 1A.RISK FACTORS.

“Item 1A. Risk Factors” in Eaton's 2020 Form 10-K includes a discussion of the Company's risk factors. There have been no material changes from the risk factors described in the 2020 Form 10-K.

39

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(c) Issuer's Purchases of Equity Securities

During the third quarter of 2021, 0.3 million ordinary shares were repurchased in the open market at a total cost of $46 million. These shares were repurchased under the program approved by the Board on February 27, 2019 (the 2019 Program). A summary of the shares repurchased in the third quarter of 2021 follows:

Month	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
July	—	$	—	—	$	2,018
August	—	$	—	—	$	2,018
September	295,815	$	157.26	295,815	$	1,972
Total	295,815	$	157.26	295,815

40

ITEM 6.EXHIBITS.

Eaton Corporation plc

Third Quarter 2021 Report on Form 10-Q

3 (i)	Certificate of Incorporation — Incorporated by reference to the Form S-8 filed November 30, 2012
3 (ii)	Amended and Restated Memorandum and Articles of Incorporation — Incorporated by reference to the Form 8-K filed on May 1, 2017
4.1	Description of Eaton Corporation plc’s Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 of the registrant's Form 10-K filed on February 26, 2020)
4.2	Indenture dated as of November 20, 2012, among Turlock Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 of Eaton Corporation plc's Form 8-K Current Report filed on November 26, 2012 (Commission File No. 333-182303))
4.3	Supplemental Indenture No. 1, dated as of November 30, 2012, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 of the registrant's Form S-4 filed on September 6, 2013)
4.4	Supplemental Indenture No. 2, dated as of January 8, 2013, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.3 of the registrant's Form S-4 filed on September 6, 2013)
4.5	Supplemental Indenture No. 3, dated as of December 20, 2013, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.4 of the registrant's Form 10-K filed on February 28, 2018)
4.6	Supplemental Indenture No. 4, dated as of December 20, 2017 and effective as of January 1, 2018, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.5 of the registrant's Form 10-K filed on February 28, 2018)
4.7	Supplemental Indenture No. 5, dated as of February 16, 2018, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.6 of the registrant's Form 10-K filed on February 28, 2018)
4.8	Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the SEC, upon request, a copy of the instruments defining the rights of holders of its long-term debt other than those set forth in Exhibits (4.2 - 4.7) hereto
10.1	5-Year Revolving Credit Agreement, dated as of October 4, 2021, among Eaton Corporation plc, Eaton Corporation, Eaton Capital Unlimited, the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A., BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc., as documentation agents, incorporated by reference to Exhibit 99.1 to The Form 8-K filed by the registrant on October 8, 2021.
10.2	364-Day Revolving Credit Agreement, dated as of October 4, 2021, among Eaton Corporation plc, Eaton Corporation, Eaton Capital Unlimited, the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A., BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc., as documentation agents, incorporated by reference to Exhibit 99.2 to The Form 8-K filed by the registrant on October 8, 2021.
22	Table of Senior Notes, Issuer and Guarantors (incorporated by reference to the Form 10-K Report filed on February 24, 2021)
31.1	Certification of Principal Executive Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report *
31.2	Certification of Principal Financial Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report *
32.1	Certification of Principal Executive Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report *
32.2	Certification of Principal Financial Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report *

41

101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF	XBRL Taxonomy Extension Label Definition Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

_______________________________

* Submitted electronically herewith.

42

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			EATON CORPORATION plc
			Registrant
Date:	November 2, 2021	By:	/s/ Thomas B. Okray
			Thomas B. Okray
			Principal Financial Officer
			(On behalf of the registrant and as Principal Financial Officer)

43

EX-31.1

Eaton Corporation plc

Third Quarter 2021 Report on Form 10-Q

Item 6

Exhibit 31.1

Certification

I, Craig Arnold, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Eaton Corporation plc;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 2, 2021	/s/ Craig Arnold
		Craig Arnold
		Principal Executive Officer

EX-31.2

Eaton Corporation plc

Third Quarter 2021 Report on Form 10-Q

Item 6

Exhibit 31.2

Certification

I, Thomas B. Okray, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Eaton Corporation plc;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 2, 2021	/s/ Thomas B. Okray
		Thomas B. Okray
		Principal Financial Officer

EX-32.1

Eaton Corporation plc

Third Quarter 2021 Report on Form 10-Q

Item 6

Exhibit 32.1

Certification

This written statement is submitted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation plc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (“10-Q Report”).

I hereby certify that, based on my knowledge, the 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m), and information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of Eaton Corporation plc and its consolidated subsidiaries.

Date:	November 2, 2021	/s/ Craig Arnold
		Craig Arnold
		Principal Executive Officer

EX-32.2

Eaton Corporation plc

Third Quarter 2021 Report on Form 10-Q

Item 6

Exhibit 32.2

Certification

This written statement is submitted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation plc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (“10-Q Report”).

I hereby certify that, based on my knowledge, the 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m), and information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of Eaton Corporation plc and its consolidated subsidiaries.

Date:	November 2, 2021	/s/ Thomas B. Okray
		Thomas B. Okray
		Principal Financial Officer

XML

Cover Page shares in Millions	9 Months Ended
	Sep. 30, 2021 shares
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Sep. 30, 2021
Entity File Number	000-54863
Entity Registrant Name	EATON CORPORATION plc
Entity Incorporation, State or Country Code	L2
Entity Tax Identification Number	98-1059235
Entity Address, Address Line One	Eaton House,
Entity Address, Address Line Two	30 Pembroke Road,
Entity Address, City or Town	Dublin 4,
Entity Address, Country	IE
Entity Address, Postal Zip Code	D04 Y0C2
City Area Code	+353
Local Phone Number	1637 2900
Title of 12(b) Security	Ordinary shares ($0.01 par value)
Trading Symbol	ETN
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	398.6
Entity Central Index Key	0001551182
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Net sales	$ 4,923	$ 4,526	$ 14,830	$ 13,171
Cost of products sold	3,338	3,051	10,067	9,230
Selling and administrative expense	834	754	2,505	2,310
Research and development expense	152	132	454	411
Interest expense - net	37	41	112	113
Gain on sale of businesses	617	0	617	221
Other expense - net	66	23	38	135
Income before income taxes	1,113	525	2,271	1,193
Income tax expense	483	78	676	254
Net income	630	447	1,595	939
Less net income for noncontrolling interests	(1)	(1)	(2)	(4)
Net Income Attributable to Eaton ordinary shareholders	$ 629	$ 446	$ 1,593	$ 935
Net income per share attributable to Eaton ordinary shareholders
Diluted (USD per share)	$ 1.57	$ 1.11	$ 3.97	$ 2.31
Basic (USD per share)	$ 1.58	$ 1.11	$ 4.00	$ 2.32
Weighted-average number of ordinary shares outstanding
Diluted (shares)	401.9	402.3	401.4	404.9
Basic (shares)	398.9	400.4	398.7	403.3
Cash dividends declared per ordinary share (USD per share)	$ 0.76	$ 0.73	$ 2.28	$ 2.19

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 630	$ 447	$ 1,595	$ 939
Less net income for noncontrolling interests	(1)	(1)	(2)	(4)
Net income attributable to Eaton ordinary shareholders	629	446	1,593	935
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	170	217	78	(276)
Pensions and other postretirement benefits	83	16	291	128
Cash flow hedges	(10)	43	38	(95)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	243	276	407	(243)
Total comprehensive income attributable to Eaton ordinary shareholders	$ 872	$ 722	$ 2,000	$ 692

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Current assets
Cash	$ 271	$ 438
Short-term investments	389	664
Accounts receivable - net	3,393	2,904
Inventory	2,802	2,109
Assets held for sale	0	2,487
Prepaid expenses and other current assets	632	576
Total current assets	7,487	9,178
Property, plant and equipment
Land and buildings	2,248	2,184
Machinery and equipment	5,563	5,404
Gross property, plant and equipment	7,811	7,588
Accumulated depreciation	(4,786)	(4,624)
Net property, plant and equipment	3,025	2,964
Other noncurrent assets
Goodwill	14,767	12,903
Other intangible assets	6,041	4,175
Operating lease assets	448	428
Deferred income taxes	422	426
Other assets	1,938	1,750
Total assets	34,128	31,824
Current liabilities
Short-term debt	428	1
Current portion of long-term debt	116	1,047
Accounts payable	2,591	1,987
Accrued compensation	489	351
Liabilities held for sale	0	468
Other current liabilities	2,290	2,027
Total current liabilities	5,914	5,881
Noncurrent liabilities
Long-term debt	8,520	7,010
Pension liabilities	1,029	1,588
Other postretirement benefits liabilities	273	330
Operating lease liabilities	343	326
Deferred income taxes	494	277
Other noncurrent liabilities	1,541	1,439
Total noncurrent liabilities	12,200	10,970
Shareholders’ equity
Ordinary shares (398.6 million outstanding in 2021 and 398.1 million in 2020)	4	4
Capital in excess of par value	12,411	12,329
Retained earnings	7,345	6,794
Accumulated other comprehensive loss	(3,788)	(4,195)
Shares held in trust	(1)	(2)
Total Eaton shareholders’ equity	15,971	14,930
Noncontrolling interests	43	43
Total equity	16,014	14,973
Total liabilities and equity	$ 34,128	$ 31,824

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Ordinary shares outstanding (shares)	398.6	398.1

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Operating activities
Net income	$ 1,595	$ 939
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	684	603
Deferred income taxes	(123)	(7)
Pension and other postretirement benefits expense	41	159
Contributions to pension plans	(318)	(92)
Contributions to other postretirement benefits plans	(15)	(16)
Gain on sale of businesses	(197)	(91)
Changes in working capital	(299)	357
Other - net	0	149
Net cash provided by operating activities	1,368	2,001
Investing activities
Capital expenditures for property, plant and equipment	(412)	(291)
Cash paid for acquisitions of businesses, net of cash acquired	(4,500)	(200)
Proceeds from sales of businesses, net of cash sold	3,110	1,408
Investments in associate companies	(124)	(19)
Sales (purchases) of short-term investments - net	264	(121)
Payments for settlement of currency exchange contracts not designated as hedges - net	(3)	(28)
Other - net	(23)	(40)
Net cash provided by (used in) investing activities	(1,688)	709
Financing activities
Proceeds from borrowings	1,798	0
Payments on borrowings	(1,011)	(7)
Short-term debt, net	430	(253)
Cash dividends paid	(916)	(884)
Exercise of employee stock options	48	31
Repurchase of shares	(122)	(1,464)
Employee taxes paid from shares withheld	(46)	(36)
Other - net	(15)	(6)
Net cash provided by (used in) financing activities	166	(2,619)
Effect of currency on cash	(13)	(30)
Less: Increase in cash classified as held for sale	0	(2)
Total increase (decrease) in cash	(167)	59
Cash at the beginning of the period	438	370
Cash at the end of the period	$ 271	$ 429

XML

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods.

This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2020 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

Certain prior year amounts have been reclassified to conform to the current year presentation.

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS AND DIVESTITURES OF BUSINESSES

ACQUISITIONS AND DIVESTITURES OF BUSINESSES

Acquisition of Power Distribution, Inc.

On February 25, 2020, Eaton acquired Power Distribution, Inc. a leading supplier of mission critical power distribution, static switching, and power monitoring equipment and services for data centers and industrial and commercial customers. The company is headquartered in Richmond, Virginia, and had 2019 sales of $125 million. Power Distribution, Inc. is reported within the Electrical Americas business segment.

Sale of Lighting business

On March 2, 2020, Eaton sold its Lighting business to Signify N.V. for a cash purchase price of $1.4 billion. As a result of the sale, the Company recognized a pre-tax gain of $221 million in 2020. The Lighting business, which had sales of $1.6 billion in 2019 as part of the Electrical Americas business segment, served customers in commercial, industrial, residential, and municipal markets.

Acquisition of Tripp Lite

On March 17, 2021, Eaton acquired Tripp Lite for $1.65 billion, net of cash received. Tripp Lite is a leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas. Tripp Lite had sales of over $400 million in 2020. Tripp Lite is reported within the Electrical Americas business segment.

The acquisition of Tripp Lite has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Short-term investments	$	5	$	—	$	5
Accounts receivable	94		—		94
Inventory	184		—		184
Prepaid expenses and other current assets	6		(1)		5
Property, plant and equipment	6		—		6
Other intangible assets	630		—		630
Accounts payable	(13)		—		(13)
Other current liabilities	(32)		(3)		(35)
Other noncurrent liabilities	(157)		(4)		(161)
Total identifiable net assets	723		(8)		715
Goodwill	928		8		936
Total consideration, net of cash received	$	1,651	$	—	$	1,651

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Tripp Lite. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $630 million include customer relationships, trademarks and technology. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include Tripp Lite’s results of operations, including segment operating profit of $96 million on sales of $283 million, from the date of acquisition through September 30, 2021.

Acquisition of Green Motion SA

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $105 million, including $49 million of cash paid at closing and $56 million of estimated fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $109 million. Green Motion SA is reported within the Electrical Global business segment.

Acquisition of a 50% stake in HuanYu High Tech

On March 29, 2021, Eaton acquired a 50 percent stake in HuanYu High Tech, a subsidiary of HuanYu Group that manufactures and markets low-voltage circuit breakers and contactors in China, and throughout the Asia-Pacific region. HuanYu High Tech had 2019 sales of $106 million and has production operations in Wenzhou, China. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

Acquisition of Cobham Mission Systems

On June 1, 2021, Eaton acquired Cobham Mission Systems (CMS) for $2.80 billion, net of cash received. CMS is a leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets. CMS had sales of over $700 million in 2020. CMS is reported within the Aerospace business segment.

The acquisition of CMS has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Accounts receivable	$	84	$	—	$	84
Inventory	179		(1)		178
Prepaid expenses and other current assets	45		(4)		41
Property, plant and equipment	86		—		86
Other intangible assets	1,575		—		1,575
Other assets	19		—		19
Accounts payable	(40)		—		(40)
Other current liabilities	(159)		7		(152)
Other noncurrent liabilities	(77)		—		(77)
Total identifiable net assets	1,712		2		1,714
Goodwill	1,088		(2)		1,086
Total consideration, net of cash received	$	2,800	$	—	$	2,800

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring CMS. As a result of the acquisition, goodwill of $292 million recognized in the United States is expected to be deductible for tax purposes. Other intangible assets of $1,575 million include customer relationships, technology and backlog. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include CMS’s results of operations, including segment operating profit of $65 million on sales of $252 million, from the date of acquisition through September 30, 2021.

Acquisition of a 50% stake in Jiangsu YiNeng Electric's busway business

On June 25, 2021, Eaton acquired a 50 percent stake in Jiangsu YiNeng Electric's busway business, which manufactures and markets busway products in China and had sales of $60 million in 2020. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

Sale of Hydraulics business

On January 21, 2020, Eaton entered into an agreement to sell its Hydraulics business to Danfoss A/S, a Danish industrial company. The Hydraulics business is a global leader in hydraulics components, systems, and services for industrial and mobile equipment. The business had sales of $1.8 billion in 2020.

During the first quarter of 2020, the Company determined the Hydraulics business met the criteria to be classified as held for sale. Therefore, assets and liabilities of the business have been presented as held for sale in the Consolidated Balance Sheet as of December 31, 2020. Assets and liabilities classified as held for sale are measured at the lower of carrying value or fair value less costs to sell. No write-down was required as fair value of the Hydraulics business assets less the costs to sell exceed their respective carrying values. Depreciation and amortization expense was not recorded for the period in which Other long-lived assets were classified as held for sale.

The Company used the relative fair value method to allocate goodwill to the Hydraulics business. The fair value of the Hydraulics business was estimated based on a combination of the price paid to Eaton by Danfoss A/S and a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions.

The assets and liabilities classified as held for sale for the Hydraulics business on the December 31, 2020 Consolidated Balance Sheet are as follows:

(In millions)	December 31, 2020
Accounts receivable - net	$	345
Inventory	369
Prepaid expenses and other current assets	18
Net property, plant and equipment	504
Goodwill	920
Other intangible assets	248
Operating lease assets	61
Deferred income taxes	6
Other noncurrent assets	16
Assets held for sale - current	$	2,487
Accounts payable	$	241
Accrued compensation	26
Other current liabilities	101
Pension liabilities	60
Operating lease liabilities	35
Deferred income taxes	3
Other noncurrent liabilities	2
Liabilities held for sale - current	$	468

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S. As a result of the sale, the Company received $3.1 billion, net of cash sold, and recognized a pre-tax gain of $617 million, subject to post-closing adjustments to be negotiated with Danfoss A/S. The Hydraulics business did not meet the criteria to be classified as discontinued operations as the sale does not represent a strategic shift that will have a major effect on the Company's operations.

XML

REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

The Company’s operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market.

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas
Products	$	594	$	562	$	1,669	$	1,725
Systems	1,260		1,137		3,656		3,252
Total	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global
Products	$	887	$	671	$	2,446	$	1,926
Systems	534		525		1,646		1,525
Total	$	1,421	$	1,196	$	4,092	$	3,451
Hydraulics
United States	$	77	$	191	$	534	$	601
Rest of World	102		248		766		756
Total	$	179	$	439	$	1,300	$	1,357
Aerospace
Original Equipment Manufacturers	$	281	$	230	$	728	$	754
Aftermarket	238		158		575		527
Industrial and Other	226		152		586		400
Total	$	745	$	540	$	1,889	$	1,681
Vehicle
Commercial	$	364	$	284	$	1,090	$	742
Passenger and Light Duty	276		289		879		756
Total	$	640	$	573	$	1,969	$	1,498
eMobility	$	84	$	79	$	255	$	207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivables from customers were $2,976 million and $2,539 million at September 30, 2021 and December 31, 2020, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $169 million and $90 million at September 30, 2021 and December 31, 2020, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized and not yet billed during the quarter, and unbilled receivables from the acquisition of Cobham Mission Systems.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	891
Revenue recognized in the period	(858)
Deferred revenue from business acquisitions	99
Translation and other	(8)
Balance at September 30, 2021	$	381

(In millions)	Deferred Revenue
Balance at January 1, 2020	$	234
Customer deposits and billings	753
Revenue recognized in the period	(728)
Translation	1
Deferred revenue reclassified to held for sale	(11)
Balance at September 30, 2020	$	249

A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at September 30, 2021 was approximately $7.3 billion. At September 30, 2021, Eaton expects to recognize approximately 87% of this backlog in the next twelve months and the rest thereafter.

XML

CREDIT LOSSES FOR RECEIVABLES

9 Months Ended

Sep. 30, 2021

Credit Loss [Abstract]

CREDIT LOSSES FOR RECEIVABLES

CREDIT LOSSES FOR RECEIVABLES

Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days.

Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-offs based on historic experience adjusted for market conditions. The Company’s segments, supported by our global credit department, perform the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made.

Accounts receivable are net of an allowance for credit losses of $46 million and $48 million at September 30, 2021 and December 31, 2020. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

XML

INVENTORY

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

Inventory is carried at lower of cost or net realizable value. The components of inventory follow:

(In millions)	September 30, 2021		December 31, 2020
Raw materials	$	1,038	$	803
Work-in-process	601		498
Finished goods	1,163		808
Total inventory	$	2,802	$	2,109

XML

GOODWILL

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

GOODWILL

Change in the carrying amount of goodwill by segment follows:

(In millions)	January 1, 2021		Additions		Translation		September 30, 2021
Electrical Americas	$	6,456	$	936	$	(8)	$	7,384
Electrical Global	4,295		64		(134)		4,225
Aerospace	1,777		1,086		(76)		2,787
Vehicle	293		—		(3)		290
eMobility	82		—		(1)		81
Total	$	12,903	$	2,086	$	(222)	$	14,767

The 2021 additions to goodwill relate to the anticipated synergies of acquiring Cobham Mission Systems, Tripp Lite, and Green Motion SA. The allocations of the purchase price from these acquisitions are preliminary and will be completed during the measurement periods.

XML

DEBT

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT

DEBT

On March 8, 2021, a subsidiary of Eaton issued Euro denominated notes (2021 Euro Notes) with a face value of €1,500 million ($1,798 million), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2021 Euro Notes are comprised of two tranches of €900 million and €600 million, which mature in 2026 and 2030, respectively, with interest payable annually at a respective rate of 0.128% and 0.577%. The issuer received proceeds totaling €1,494 million ($1,790 million) from the issuance, net of financing costs and discounts. The senior 2021 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2021 Euro Notes contain customary optional redemption and par call provisions. The 2021 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2021 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense-net over the respective terms of the 2021 Euro Notes. The 2021 Euro Notes are subject to customary non-financial covenants.

On May 17, 2021, the Company entered into a $2,500 million 364-day revolving credit facility, which brought the Company’s total revolving credit facilities to $4,500 million. At June 30, 2021, the Company had access to the commercial paper markets through its $4,500 million commercial paper program, of which $3,372 million was outstanding including funds to finance the acquisition of Cobham Mission Systems discussed in Note 2. Eaton used the proceeds from the sale of the Hydraulics business, which was completed August 2, 2021, to reduce its outstanding commercial paper borrowings.

On September 22, 2021, the Company downsized the 364-day revolving credit facility from $2,500 million to $500 million, which reduced the Company's total revolving credit facilities to $2,500 million. In September 2021, the Company also downsized its commercial paper program to $2,500 million. There were no borrowings outstanding under Eaton’s revolving credit facilities at September 30, 2021. The Company had access to the commercial paper markets through its $2,500 million commercial paper program, of which $421 million was outstanding on September 30, 2021.

On October 4, 2021, the Company replaced its existing $500 million 364-day revolving credit facility, $750 million five-year revolving credit facility, $500 million four-year revolving credit facility, and $750 million five-year revolving credit facility, with a new $500 million 364-day revolving credit facility and a new $2,000 million five-year revolving credit facility that will expire on October 4, 2026. The revolving credit facilities totaling $2,500 million are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company maintains access to the commercial paper markets through its $2,500 million commercial paper program.

XML

RETIREMENT BENEFITS PLANS

9 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

RETIREMENT BENEFITS PLANS

RETIREMENT BENEFITS PLANS

The components of retirement benefits expense (income) follow:

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	9	$	25	$	17	$	19	$	1	$	—
Interest cost	19		26		9		11		1		3
Expected return on plan assets	(56)		(59)		(30)		(27)		—		(1)
Amortization	8		26		18		15		(3)		(3)
	(20)		18		14		18		(1)		(1)
Settlements, curtailments and special termination benefits	20		14		15		1		(1)		—
Total expense (income)	$	—	$	32	$	29	$	19	$	(2)	$	(1)
	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Nine months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	29	$	73	$	55	$	55	$	1	$	1
Interest cost	52		78		30		33		4		7
Expected return on plan assets	(167)		(174)		(90)		(81)		—		(1)
Amortization	28		77		55		44		(4)		(9)
	(58)		54		50		51		1		(2)
Settlements, curtailments and special termination benefits	46		49		16		7		(1)		—
Total expense (income)	$	(12)	$	103	$	66	$	58	$	—	$	(2)

During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and is effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.

During the third quarter and first nine months of 2021, the Company recognized settlement losses from lump-sum distributions of $21 million and $48 million, respectively, and remeasured certain pension plans as a result of lump-sum distributions exceeding the sum of service and interest costs for the year. These remeasurements resulted in increases of $49 million for the third quarter of 2021 and decreases of $132 million for the first nine months of 2021 in pension liabilities and other comprehensive loss.

Total retirement benefits expense for the third quarter and first nine months of 2021 of $27 million and $54 million, respectively, included $13 million of settlement and curtailment expense related to the sale of the Hydraulics business discussed in Note 2.

The components of retirement benefits expense (income) other than service costs are included in Other expense - net.

XML

LEGAL CONTINGENCIES	9 Months Ended
	Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
LEGAL CONTINGENCIES	LEGAL CONTINGENCIESEaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, patent infringement, personal injuries, antitrust matters, and employment-related matters. Eaton is also subject to asbestos claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with these claims and proceedings. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the consolidated financial statements.

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective income tax rate for the third quarter of 2021 was expense of 43.4% compared to expense of 14.8% for the third quarter of 2020. The effective income tax rate for the first nine months of 2021 was expense of 29.8% compared to expense of 21.3% for the first nine months of 2020. The increase in the effective tax rates in the third quarter and first nine months of 2021 was primarily due to the tax impact on the gain from the sale of the Hydraulics business in 2021 discussed in Note 2.

In 2011, the United States Internal Revenue Service (“IRS”) issued a Statutory Notice of Deficiency (the “2011 Notice”) for the Company’s United States subsidiaries (“Eaton US”) for the 2005 and 2006 tax years. The 2011 Notice proposed assessments of $75 million in additional taxes plus $52 million in penalties related primarily to transfer pricing adjustments for products manufactured in the Company's facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the United States. Eaton US has set its transfer prices for products sold between these affiliates at the same prices that Eaton US sells such products to third parties as required by two successive Advance Pricing Agreements (APAs) Eaton US entered into with the IRS that governed the 2005-2010 tax years. Eaton US has continued to apply the arms-length transfer pricing methodology for 2011 through the current reporting period. Immediately prior to the 2011 Notice being issued, the IRS sent a letter stating that it was retrospectively canceling the APAs. Eaton US contested the proposed assessments in United States Tax Court. The case involved both whether the APAs should be enforced and, if not, the appropriate transfer pricing methodology. On July 26, 2017, the United States Tax Court issued a ruling in which it agreed with Eaton US that the IRS must abide by the terms of the APAs for the tax years 2005-2006. The Tax Court’s ruling on the APAs did not have a material impact on Eaton’s consolidated financial statements. On May 24, 2021, the IRS filed a notice to appeal the Tax Court’s ruling to the United States Sixth Circuit Court of Appeals, and on October 7, 2021 the IRS formally filed its appeal. The Company continues to believe it will prevail on appeal and does not expect the final resolution to have a material impact on its consolidated financial statements.

During the second quarter of 2021, the IRS completed its examination of the consolidated income tax returns of Eaton US for tax years 2014 through 2016 and has proposed a number of adjustments primarily related to certain transfer pricing tax positions, including adjustments similar to those proposed and previously disclosed for prior audit periods for products manufactured in the Company’s facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the U.S., and adjustments related to intercompany financing. The Company intends to pursue its administrative appeals alternatives. The Company believes that final resolution of the proposed adjustments will not have a material impact on its consolidated financial statements.

During 2010, the Company received a tax assessment, which included interest and penalties, in Brazil for the tax years 2005 through 2008 that relates to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. In 2018, the Company received an unfavorable result at the final tax administrative appeals level. In August 2021, the Company was notified of a recalculation from an original alleged tax deficiency of $24 million plus $67 million of interest and penalties to a revised alleged tax deficiency of $31 million plus $99 million of interest and penalties (translated at the September 30, 2021 exchange rate). During 2014, the Company received a tax assessment, which included interest and penalties, for the 2009 through 2012 tax years (primarily relating to the same issues concerning the 2005 through 2008 tax years). In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $26 million plus $92 million of interest and penalties (translated at the September 30, 2021 exchange rate). The Company is challenging both of the assessments in the judicial system. Challenges in the judicial system are expected to take up to 10 years to resolve and require provision of certain assets as security for the alleged deficiencies. As of December 31, 2020, the Company pledged Brazilian real estate assets with net book value of $10 million (translated at the September 30, 2021 exchange rate). During 2021, the Company pledged additional Brazilian real estate assets with net book value of $9 million and provided additional security in the form of a bond of $75 million and cash deposit of $10 million (translated at the September 30, 2021 exchange rate). The Company continues to believe that final resolution of both of the assessments will not have a material impact on its consolidated financial statements.

The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s consolidated financial statements. However, Eaton believes that its interpretations of tax law, and application of tax laws to our facts, are correct and that its accrual of unrecognized income tax benefits is appropriate with respect to these matters.

XML

EQUITY

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Note [Abstract]

EQUITY

EQUITY

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5,000 million of ordinary shares (2019 Program). Under the 2019 Program, the ordinary shares are expected to be repurchased over time, depending on market conditions, the market price of ordinary shares, capital levels, and other considerations. During the three and nine months ended September 30, 2021, 0.3 million and 0.9 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $46 million and $122 million, respectively. During the three and nine months ended September 30, 2020, 1.7 million and 15.9 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $177 million and $1,477 million, respectively.

The changes in Shareholders’ equity follow:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)				(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037
Net income	—	—		—		506		—		—		506		—		506
Other comprehensive income, net of tax								194				194				194
Cash dividends paid	—	—		—		(304)		—		—		(304)		—		(304)
Issuance of shares under equity-based compensation plans	0.2	—		33		—		—		1		34		—		34
Repurchase of shares	(0.1)	—		—		(17)		—		—		(17)		—		(17)
Balance at June 30, 2021	398.6	$	4	$	12,368	$	7,068	$	(4,031)	$	(1)	$	15,408	$	42	$	15,450
Net income	—	—		—		629		—		—		629		1		630
Other comprehensive income, net of tax								243				243				243
Cash dividends paid	—	—		—		(303)		—		—		(303)		—		(303)
Issuance of shares under equity-based compensation plans	0.3	—		43		(3)		—		—		40		—		40
Repurchase of shares	(0.3)	—		—		(46)		—		—		(46)		—		(46)
Balance at September 30, 2021	398.6	$	4	$	12,411	$	7,345	$	(3,788)	$	(1)	$	15,971	$	43	$	16,014

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2020	413.3	$	4	$	12,200	$	8,170	$	(4,290)	$	(2)	$	16,082	$	51	$	16,133
Net income	—	—		—		438		—		—		438		—		438
Other comprehensive loss, net of tax								(676)				(676)				(676)
Cash dividends paid and accrued	—	—		—		(300)		—		—		(300)		(5)		(305)
Issuance of shares under equity-based compensation plans	0.9	—		3		(1)		—		(1)		1		—		1
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(3)		(3)
Repurchase of shares	(14.2)	—		—		(1,300)		—		—		(1,300)		—		(1,300)
Balance at March 31, 2020	400.0	$	4	$	12,203	$	7,007	$	(4,966)	$	(3)	$	14,245	$	43	$	14,288
Net income	—	—		—		51		—		—		51		3		54
Other comprehensive income, net of tax								157				157				157
Cash dividends paid	—	—		—		(292)		—		—		(292)		(1)		(293)
Issuance of shares under equity-based compensation plans	0.1	—		25		1		—		1		27		—		27
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		2		2
Balance at June 30, 2020	400.1	$	4	$	12,228	$	6,767	$	(4,809)	$	(2)	$	14,188	$	47	$	14,235
Net income	—	—		—		446		—		—		446		1		447
Other comprehensive income, net of tax								276				276				276
Cash dividends paid	—	—		—		(292)		—		—		(292)		(2)		(294)
Issuance of shares under equity-based compensation plans	0.2	—		38		(3)		—		—		35		—		35
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(4)		(4)
Repurchase of shares	(1.7)	—		—		(177)		—		—		(177)		—		(177)
Balance at September 30, 2020	398.6	$	4	$	12,266	$	6,741	$	(4,533)	$	(2)	$	14,476	$	42	$	14,518

The changes in Accumulated other comprehensive loss follow:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2021	$	(2,647)	$	(1,481)	$	(67)	$	(4,195)
Other comprehensive income (loss)    before reclassifications	(291)		178		41		(72)
Amounts reclassified from Accumulated other    comprehensive loss (income)	369		113		(3)		479
Net current-period Other comprehensive    income (loss)	78		291		38		407
Balance at September 30, 2021	$	(2,569)	$	(1,190)	$	(29)	$	(3,788)

The reclassifications out of Accumulated other comprehensive loss follow:

(In millions)	Nine months ended September 30, 2021			Consolidated statements of income classification
Currency translation losses
Sale of business	$	(369)		Gain on sale of businesses
Tax benefit	—
Total, net of tax	(369)
Amortization of defined benefit pensions and other postretirement benefits items
Actuarial loss and prior service cost	(140)		1
Tax benefit	27
Total, net of tax	(113)
Gains and (losses) on cash flow hedges
Currency exchange contracts	(2)			Net sales and Cost of products sold
Commodity contracts	7			Cost of products sold
Tax expense	(2)
Total, net of tax	3
Total reclassifications for the period	$	(479)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items.

Net Income Per Share Attributable to Eaton Ordinary Shareholders

A summary of the calculation of net income per share attributable to Eaton ordinary shareholders follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935
Weighted-average number of ordinary shares outstanding - diluted	401.9		402.3		401.4		404.9
Less dilutive effect of equity-based compensation	3.0		1.9		2.7		1.6
Weighted-average number of ordinary shares outstanding - basic	398.9		400.4		398.7		403.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.57	$	1.11	$	3.97	$	2.31
Basic	1.58		1.11		4.00		2.32

For the third quarter and first nine months of 2021, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive. For the third quarter and first nine months of 2020, 0.3 million and 0.8 million stock options, respectively, were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.

XML

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, follows:

(In millions)	Total		Level 1		Level 2		Level 3
September 30, 2021
Cash	$	271	$	271	$	—	$	—
Short-term investments	389		389		—		—
Net derivative contracts	26		—		26		—
Contingent consideration from acquisition of Green Motion (Note 2)	(56)		—		—		(56)
December 31, 2020
Cash	$	438	$	438	$	—	$	—
Short-term investments	664		664		—		—
Net derivative contracts	31		—		31		—

Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of $8,636 million and fair value of $9,359 million at September 30, 2021 compared to $8,057 million and $9,075 million, respectively, at December 31, 2020. The fair value of Eaton's debt instruments were estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities, and are considered a Level 2 fair value measurement.

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and, commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.

Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated, and is effective, as part of a hedging relationship and, if so, as to the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:

•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.

•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.

•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.

The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Condensed Consolidated Statements of Cash Flows.

For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.

Eaton uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $2,941 million at September 30, 2021 and $2,020 million at December 31, 2020.

Derivative Financial Statement Impacts

The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows:

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
September 30, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	2	$	65	$	—	$	—	Fair value	11 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,000		—		40		—		69		Cash flow	11 to 31 years
Currency exchange contracts	1,271		10		3		15		2		Cash flow	1 to 36 months
Commodity contracts	50		2		—		3		—		Cash flow	1 to 12 months
Total			$	14	$	108	$	18	$	71
Derivatives not designated as  hedges
Currency exchange contracts	$	6,089	$	17			$	25				1 to 12 months
Commodity contracts	27		1				—					1 month
Total			$	18			$	25
December 31, 2020
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	2,075	$	2	$	100	$	—	$	—	Fair value	6 months to 14 years
Forward starting floating-to-fixed  interest rate swaps	900		—		17		—		108		Cash flow	12 to 32 years
Currency exchange contracts	946		20		6		20		1		Cash flow	1 to 36 months
Commodity contracts	24		4		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	123	$	20	$	109
Derivatives not designated as  hedges
Currency exchange contracts	$	5,227	$	43			$	34				1 to 12 months
Commodity contracts	18		2				—					1 month
Total			$	45			$	34

The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Condensed Consolidated Statements of Cash Flows.

As of September 30, 2021, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	September 30, 2021		Term
Copper	9	millions of pounds	1 to 12 months
Gold	1,351	Troy ounces	1 to 12 months
Silver	476,721	Troy ounces	1 to 12 months

The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Long-term debt	$	(2,413)	$	(2,688)	$	(101)	$	(139)

(a) At September 30, 2021 and December 31, 2020, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $34 million and $37 million, respectively.

The impact of hedging activities to the Consolidated Statements of Income are as follow:

	Three months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,923	$	3,338	$	37
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	—	$	(3)	$	—
Derivative designated as hedging instrument	—		3		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	9
Derivative designated as hedging instrument	—		—		(9)

	Three months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,526	$	3,051	$	41
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	3	$	—
Derivative designated as hedging instrument	(4)		(3)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	11
Derivative designated as hedging instrument	—		—		(11)

	Nine months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	14,830	$	10,067	$	112
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	(2)	$	—
Derivative designated as hedging instrument	(4)		2		—
Commodity contracts
Hedged item	$	—	$	(7)	$	—
Derivative designated as hedging instrument	—		7		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	35
Derivative designated as hedging instrument	—		—		(35)

	Nine months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	13,171	$	9,230	$	113
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	9	$	4	$	—
Derivative designated as hedging instrument	(9)		(4)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	(58)
Derivative designated as hedging instrument	—		—		58

The impact of derivatives not designated as hedges to the Consolidated Statements of Income are as follow:

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(32)	$	49	Interest expense - net
Commodity contracts	1		—		Cost of products sold
Total	$	(31)	$	49

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Nine months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(9)	$	(54)	Interest expense - net
Commodity contracts	10		1		Cost of products sold
Total	$	1	$	(53)

The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income follow:

	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended September 30					Three months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as    cash flow hedges
Forward starting floating-to-fixed  interest rate swaps	$	1	$	35	Interest expense - net	$	—	$	—
Currency exchange contracts	(6)		11		Net sales and Cost of products sold	3		(6)
Commodity contracts	(3)		1		Cost of products sold	2		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	74		(83)		Interest expense - net	—		—
Total	$	66	$	(36)		$	5	$	(6)
	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Nine months ended September 30					Nine months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	62	$	(101)	Interest expense - net	$	—	$	—
Currency exchange contracts	(11)		(34)		Net sales and Cost of products sold	(2)		(12)
Commodity contracts	2		2		Cost of products sold	7		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	178		(78)		Interest expense - net	—		—
Total	$	231	$	(211)		$	5	$	(12)

At September 30, 2021, a loss of $6 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next 12 months.

XML

RESTRUCTURING CHARGES

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions. Restructuring charges incurred under this program were $214 million in 2020 and $63 million for the nine months ended September 30, 2021. These restructuring activities are expected to incur additional expenses of $33 million in 2021, and $10 million in 2022, primarily comprised of plant closing and other costs, resulting in total estimated charges of $320 million for the entire program.

A summary of restructuring program charges by type follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Workforce reductions	$	19	$	3	$	19	$	169
Plant closing and other	15		7		44		28
Total before income taxes	34		10		63		197
Income tax benefit	9		2		15		41
Total after income taxes	$	25	$	8	$	48	$	156
Per ordinary share - diluted	$	0.06	$	0.02	$	0.12	$	0.39

Restructuring program charges related to the following segments:

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas	$	5	$	3	$	13	$	16
Electrical Global	11		2		13		53
Aerospace	1		2		4		32
Vehicle	5		3		16		93
eMobility	—		—		1		1
Corporate	12		—		16		2
Total	$	34	$	10	$	63	$	197

A summary of liabilities related to workforce reductions, plant closing and other associated costs follows:

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	139		3		142
Liability recognized	19		44		63
Payments, utilization and translation	(55)		(33)		(88)
Balance at September 30, 2021	$	103	$	14	$	117

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 15 for additional information about business segments.

XML

BUSINESS SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Eaton's operating segments are Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility. On August 2, 2021, Eaton completed the sale of the Hydraulics business. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 17 to the Consolidated Financial Statements contained in the 2020 Form 10-K.

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Net sales
Electrical Americas	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global	1,421		1,196		4,092		3,451
Hydraulics	179		439		1,300		1,357
Aerospace	745		540		1,889		1,681
Vehicle	640		573		1,969		1,498
eMobility	84		79		255		207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171
Segment operating profit (loss)
Electrical Americas	$	402	$	377	$	1,127	$	993
Electrical Global	285		198		757		542
Hydraulics	20		43		177		135
Aerospace	164		100		391		315
Vehicle	115		80		349		140
eMobility	(8)		(2)		(21)		(3)
Total segment operating profit	978		796		2,780		2,122
Corporate
Intangible asset amortization expense	(126)		(90)		(326)		(265)
Interest expense - net	(37)		(41)		(112)		(113)
Pension and other postretirement benefits income (expense)	14		(9)		44		(29)
Restructuring program charges	(34)		(10)		(63)		(197)
Other income (expense) - net	318		(121)		(52)		(325)
Income before income taxes	1,113		525		2,271		1,193
Income tax expense	483		78		676		254
Net income	630		447		1,595		939
Less net income for noncontrolling interests	(1)		(1)		(2)		(4)
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935

XML

BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods.

This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2020 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

Certain prior year amounts have been reclassified to conform to the current year presentation.

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES (Tables)

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Short-term investments	$	5	$	—	$	5
Accounts receivable	94		—		94
Inventory	184		—		184
Prepaid expenses and other current assets	6		(1)		5
Property, plant and equipment	6		—		6
Other intangible assets	630		—		630
Accounts payable	(13)		—		(13)
Other current liabilities	(32)		(3)		(35)
Other noncurrent liabilities	(157)		(4)		(161)
Total identifiable net assets	723		(8)		715
Goodwill	928		8		936
Total consideration, net of cash received	$	1,651	$	—	$	1,651

The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of September 30, 2021. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Adjusted Preliminary Allocation
Accounts receivable	$	84	$	—	$	84
Inventory	179		(1)		178
Prepaid expenses and other current assets	45		(4)		41
Property, plant and equipment	86		—		86
Other intangible assets	1,575		—		1,575
Other assets	19		—		19
Accounts payable	(40)		—		(40)
Other current liabilities	(159)		7		(152)
Other noncurrent liabilities	(77)		—		(77)
Total identifiable net assets	1,712		2		1,714
Goodwill	1,088		(2)		1,086
Total consideration, net of cash received	$	2,800	$	—	$	2,800

Schedule of Assets and Liabilities Classified as Held-for-Sale

The assets and liabilities classified as held for sale for the Hydraulics business on the December 31, 2020 Consolidated Balance Sheet are as follows:

(In millions)	December 31, 2020
Accounts receivable - net	$	345
Inventory	369
Prepaid expenses and other current assets	18
Net property, plant and equipment	504
Goodwill	920
Other intangible assets	248
Operating lease assets	61
Deferred income taxes	6
Other noncurrent assets	16
Assets held for sale - current	$	2,487
Accounts payable	$	241
Accrued compensation	26
Other current liabilities	101
Pension liabilities	60
Operating lease liabilities	35
Deferred income taxes	3
Other noncurrent liabilities	2
Liabilities held for sale - current	$	468

XML

REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Sales

The Company’s operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market.

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas
Products	$	594	$	562	$	1,669	$	1,725
Systems	1,260		1,137		3,656		3,252
Total	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global
Products	$	887	$	671	$	2,446	$	1,926
Systems	534		525		1,646		1,525
Total	$	1,421	$	1,196	$	4,092	$	3,451
Hydraulics
United States	$	77	$	191	$	534	$	601
Rest of World	102		248		766		756
Total	$	179	$	439	$	1,300	$	1,357
Aerospace
Original Equipment Manufacturers	$	281	$	230	$	728	$	754
Aftermarket	238		158		575		527
Industrial and Other	226		152		586		400
Total	$	745	$	540	$	1,889	$	1,681
Vehicle
Commercial	$	364	$	284	$	1,090	$	742
Passenger and Light Duty	276		289		879		756
Total	$	640	$	573	$	1,969	$	1,498
eMobility	$	84	$	79	$	255	$	207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171

Schedule of Changes in Deferred Revenue Liabilities

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	891
Revenue recognized in the period	(858)
Deferred revenue from business acquisitions	99
Translation and other	(8)
Balance at September 30, 2021	$	381

(In millions)	Deferred Revenue
Balance at January 1, 2020	$	234
Customer deposits and billings	753
Revenue recognized in the period	(728)
Translation	1
Deferred revenue reclassified to held for sale	(11)
Balance at September 30, 2020	$	249

XML

INVENTORY (Tables)

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Schedule of Components of Inventory

The components of inventory follow:

(In millions)	September 30, 2021		December 31, 2020
Raw materials	$	1,038	$	803
Work-in-process	601		498
Finished goods	1,163		808
Total inventory	$	2,802	$	2,109

XML

GOODWILL (Tables)

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

Change in the carrying amount of goodwill by segment follows:

(In millions)	January 1, 2021		Additions		Translation		September 30, 2021
Electrical Americas	$	6,456	$	936	$	(8)	$	7,384
Electrical Global	4,295		64		(134)		4,225
Aerospace	1,777		1,086		(76)		2,787
Vehicle	293		—		(3)		290
eMobility	82		—		(1)		81
Total	$	12,903	$	2,086	$	(222)	$	14,767

XML

RETIREMENT BENEFIT PLANS (Tables)

9 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

Schedule of Retirement Benefits Expense

The components of retirement benefits expense (income) follow:

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	9	$	25	$	17	$	19	$	1	$	—
Interest cost	19		26		9		11		1		3
Expected return on plan assets	(56)		(59)		(30)		(27)		—		(1)
Amortization	8		26		18		15		(3)		(3)
	(20)		18		14		18		(1)		(1)
Settlements, curtailments and special termination benefits	20		14		15		1		(1)		—
Total expense (income)	$	—	$	32	$	29	$	19	$	(2)	$	(1)
	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Nine months ended September 30
(In millions)	2021		2020		2021		2020		2021		2020
Service cost	$	29	$	73	$	55	$	55	$	1	$	1
Interest cost	52		78		30		33		4		7
Expected return on plan assets	(167)		(174)		(90)		(81)		—		(1)
Amortization	28		77		55		44		(4)		(9)
	(58)		54		50		51		1		(2)
Settlements, curtailments and special termination benefits	46		49		16		7		(1)		—
Total expense (income)	$	(12)	$	103	$	66	$	58	$	—	$	(2)

XML

EQUITY (Tables)

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Note [Abstract]

Schedule of Changes in Shareholders' Equity

The changes in Shareholders’ equity follow:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)				(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037
Net income	—	—		—		506		—		—		506		—		506
Other comprehensive income, net of tax								194				194				194
Cash dividends paid	—	—		—		(304)		—		—		(304)		—		(304)
Issuance of shares under equity-based compensation plans	0.2	—		33		—		—		1		34		—		34
Repurchase of shares	(0.1)	—		—		(17)		—		—		(17)		—		(17)
Balance at June 30, 2021	398.6	$	4	$	12,368	$	7,068	$	(4,031)	$	(1)	$	15,408	$	42	$	15,450
Net income	—	—		—		629		—		—		629		1		630
Other comprehensive income, net of tax								243				243				243
Cash dividends paid	—	—		—		(303)		—		—		(303)		—		(303)
Issuance of shares under equity-based compensation plans	0.3	—		43		(3)		—		—		40		—		40
Repurchase of shares	(0.3)	—		—		(46)		—		—		(46)		—		(46)
Balance at September 30, 2021	398.6	$	4	$	12,411	$	7,345	$	(3,788)	$	(1)	$	15,971	$	43	$	16,014

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2020	413.3	$	4	$	12,200	$	8,170	$	(4,290)	$	(2)	$	16,082	$	51	$	16,133
Net income	—	—		—		438		—		—		438		—		438
Other comprehensive loss, net of tax								(676)				(676)				(676)
Cash dividends paid and accrued	—	—		—		(300)		—		—		(300)		(5)		(305)
Issuance of shares under equity-based compensation plans	0.9	—		3		(1)		—		(1)		1		—		1
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(3)		(3)
Repurchase of shares	(14.2)	—		—		(1,300)		—		—		(1,300)		—		(1,300)
Balance at March 31, 2020	400.0	$	4	$	12,203	$	7,007	$	(4,966)	$	(3)	$	14,245	$	43	$	14,288
Net income	—	—		—		51		—		—		51		3		54
Other comprehensive income, net of tax								157				157				157
Cash dividends paid	—	—		—		(292)		—		—		(292)		(1)		(293)
Issuance of shares under equity-based compensation plans	0.1	—		25		1		—		1		27		—		27
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		2		2
Balance at June 30, 2020	400.1	$	4	$	12,228	$	6,767	$	(4,809)	$	(2)	$	14,188	$	47	$	14,235
Net income	—	—		—		446		—		—		446		1		447
Other comprehensive income, net of tax								276				276				276
Cash dividends paid	—	—		—		(292)		—		—		(292)		(2)		(294)
Issuance of shares under equity-based compensation plans	0.2	—		38		(3)		—		—		35		—		35
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(4)		(4)
Repurchase of shares	(1.7)	—		—		(177)		—		—		(177)		—		(177)
Balance at September 30, 2020	398.6	$	4	$	12,266	$	6,741	$	(4,533)	$	(2)	$	14,476	$	42	$	14,518

Schedule of Accumulated Other Comprehensive Loss

The changes in Accumulated other comprehensive loss follow:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2021	$	(2,647)	$	(1,481)	$	(67)	$	(4,195)
Other comprehensive income (loss)    before reclassifications	(291)		178		41		(72)
Amounts reclassified from Accumulated other    comprehensive loss (income)	369		113		(3)		479
Net current-period Other comprehensive    income (loss)	78		291		38		407
Balance at September 30, 2021	$	(2,569)	$	(1,190)	$	(29)	$	(3,788)

Schedule of Reclassifications of Accumulated Other Comprehensive Loss

The reclassifications out of Accumulated other comprehensive loss follow:

(In millions)	Nine months ended September 30, 2021			Consolidated statements of income classification
Currency translation losses
Sale of business	$	(369)		Gain on sale of businesses
Tax benefit	—
Total, net of tax	(369)
Amortization of defined benefit pensions and other postretirement benefits items
Actuarial loss and prior service cost	(140)		1
Tax benefit	27
Total, net of tax	(113)
Gains and (losses) on cash flow hedges
Currency exchange contracts	(2)			Net sales and Cost of products sold
Commodity contracts	7			Cost of products sold
Tax expense	(2)
Total, net of tax	3
Total reclassifications for the period	$	(479)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items.

Schedule of Net Income per Ordinary Share Attributable to Shareholders

A summary of the calculation of net income per share attributable to Eaton ordinary shareholders follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935
Weighted-average number of ordinary shares outstanding - diluted	401.9		402.3		401.4		404.9
Less dilutive effect of equity-based compensation	3.0		1.9		2.7		1.6
Weighted-average number of ordinary shares outstanding - basic	398.9		400.4		398.7		403.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.57	$	1.11	$	3.97	$	2.31
Basic	1.58		1.11		4.00		2.32

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Financial Instruments Recognized at Fair Value and Fair Value Measurements Used

A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, follows:

(In millions)	Total		Level 1		Level 2		Level 3
September 30, 2021
Cash	$	271	$	271	$	—	$	—
Short-term investments	389		389		—		—
Net derivative contracts	26		—		26		—
Contingent consideration from acquisition of Green Motion (Note 2)	(56)		—		—		(56)
December 31, 2020
Cash	$	438	$	438	$	—	$	—
Short-term investments	664		664		—		—
Net derivative contracts	31		—		31		—

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Financial Instruments Recognized in Condensed Consolidated Balance Sheet

The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows:

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
September 30, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	2	$	65	$	—	$	—	Fair value	11 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,000		—		40		—		69		Cash flow	11 to 31 years
Currency exchange contracts	1,271		10		3		15		2		Cash flow	1 to 36 months
Commodity contracts	50		2		—		3		—		Cash flow	1 to 12 months
Total			$	14	$	108	$	18	$	71
Derivatives not designated as  hedges
Currency exchange contracts	$	6,089	$	17			$	25				1 to 12 months
Commodity contracts	27		1				—					1 month
Total			$	18			$	25
December 31, 2020
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	2,075	$	2	$	100	$	—	$	—	Fair value	6 months to 14 years
Forward starting floating-to-fixed  interest rate swaps	900		—		17		—		108		Cash flow	12 to 32 years
Currency exchange contracts	946		20		6		20		1		Cash flow	1 to 36 months
Commodity contracts	24		4		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	123	$	20	$	109
Derivatives not designated as  hedges
Currency exchange contracts	$	5,227	$	43			$	34				1 to 12 months
Commodity contracts	18		2				—					1 month
Total			$	45			$	34

Schedule of Notional Amounts of Outstanding Derivative Positions

As of September 30, 2021, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	September 30, 2021		Term
Copper	9	millions of pounds	1 to 12 months
Gold	1,351	Troy ounces	1 to 12 months
Silver	476,721	Troy ounces	1 to 12 months

Schedule of Derivative Instruments Recorded in Balance Sheet

The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Long-term debt	$	(2,413)	$	(2,688)	$	(101)	$	(139)

(a) At September 30, 2021 and December 31, 2020, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $34 million and $37 million, respectively.

Schedule of Impact of Hedging Activities to Consolidated Statement of Income

The impact of hedging activities to the Consolidated Statements of Income are as follow:

	Three months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,923	$	3,338	$	37
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	—	$	(3)	$	—
Derivative designated as hedging instrument	—		3		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	9
Derivative designated as hedging instrument	—		—		(9)

	Three months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,526	$	3,051	$	41
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	3	$	—
Derivative designated as hedging instrument	(4)		(3)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	11
Derivative designated as hedging instrument	—		—		(11)

	Nine months ended September 30, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	14,830	$	10,067	$	112
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	4	$	(2)	$	—
Derivative designated as hedging instrument	(4)		2		—
Commodity contracts
Hedged item	$	—	$	(7)	$	—
Derivative designated as hedging instrument	—		7		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	35
Derivative designated as hedging instrument	—		—		(35)

	Nine months ended September 30, 2020
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	13,171	$	9,230	$	113
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	9	$	4	$	—
Derivative designated as hedging instrument	(9)		(4)		—
Commodity contracts
Hedged item	$	—	$	—	$	—
Derivative designated as hedging instrument	—		—		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	(58)
Derivative designated as hedging instrument	—		—		58

Schedule of Amounts Recognized in Net Income

The impact of derivatives not designated as hedges to the Consolidated Statements of Income are as follow:

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(32)	$	49	Interest expense - net
Commodity contracts	1		—		Cost of products sold
Total	$	(31)	$	49

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Nine months ended September 30
(In millions)	2021		2020
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(9)	$	(54)	Interest expense - net
Commodity contracts	10		1		Cost of products sold
Total	$	1	$	(53)

Schedule of Amounts Recognized in Accumulated Other Comprehensive Income

The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income follow:

	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended September 30					Three months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as    cash flow hedges
Forward starting floating-to-fixed  interest rate swaps	$	1	$	35	Interest expense - net	$	—	$	—
Currency exchange contracts	(6)		11		Net sales and Cost of products sold	3		(6)
Commodity contracts	(3)		1		Cost of products sold	2		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	74		(83)		Interest expense - net	—		—
Total	$	66	$	(36)		$	5	$	(6)
	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Nine months ended September 30					Nine months ended September 30
(In millions)	2021		2020			2021		2020
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	62	$	(101)	Interest expense - net	$	—	$	—
Currency exchange contracts	(11)		(34)		Net sales and Cost of products sold	(2)		(12)
Commodity contracts	2		2		Cost of products sold	7		—
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	178		(78)		Interest expense - net	—		—
Total	$	231	$	(211)		$	5	$	(12)

XML

RESTRUCTURING CHARGES (Tables)

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Program Charges

A summary of restructuring program charges by type follows:

	Three months ended September 30				Nine months ended September 30
(In millions except for per share data)	2021		2020		2021		2020
Workforce reductions	$	19	$	3	$	19	$	169
Plant closing and other	15		7		44		28
Total before income taxes	34		10		63		197
Income tax benefit	9		2		15		41
Total after income taxes	$	25	$	8	$	48	$	156
Per ordinary share - diluted	$	0.06	$	0.02	$	0.12	$	0.39

Restructuring program charges related to the following segments:

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Electrical Americas	$	5	$	3	$	13	$	16
Electrical Global	11		2		13		53
Aerospace	1		2		4		32
Vehicle	5		3		16		93
eMobility	—		—		1		1
Corporate	12		—		16		2
Total	$	34	$	10	$	63	$	197

Schedule of Liabilities Related to Restructuring

A summary of liabilities related to workforce reductions, plant closing and other associated costs follows:

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	139		3		142
Liability recognized	19		44		63
Payments, utilization and translation	(55)		(33)		(88)
Balance at September 30, 2021	$	103	$	14	$	117

XML

BUSINESS SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Schedule of Business Segment Information

	Three months ended September 30				Nine months ended September 30
(In millions)	2021		2020		2021		2020
Net sales
Electrical Americas	$	1,854	$	1,699	$	5,325	$	4,977
Electrical Global	1,421		1,196		4,092		3,451
Hydraulics	179		439		1,300		1,357
Aerospace	745		540		1,889		1,681
Vehicle	640		573		1,969		1,498
eMobility	84		79		255		207
Total net sales	$	4,923	$	4,526	$	14,830	$	13,171
Segment operating profit (loss)
Electrical Americas	$	402	$	377	$	1,127	$	993
Electrical Global	285		198		757		542
Hydraulics	20		43		177		135
Aerospace	164		100		391		315
Vehicle	115		80		349		140
eMobility	(8)		(2)		(21)		(3)
Total segment operating profit	978		796		2,780		2,122
Corporate
Intangible asset amortization expense	(126)		(90)		(326)		(265)
Interest expense - net	(37)		(41)		(112)		(113)
Pension and other postretirement benefits income (expense)	14		(9)		44		(29)
Restructuring program charges	(34)		(10)		(63)		(197)
Other income (expense) - net	318		(121)		(52)		(325)
Income before income taxes	1,113		525		2,271		1,193
Income tax expense	483		78		676		254
Net income	630		447		1,595		939
Less net income for noncontrolling interests	(1)		(1)		(2)		(4)
Net income attributable to Eaton ordinary shareholders	$	629	$	446	$	1,593	$	935

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES - Narrative (Details) - USD ($) $ in Millions						4 Months Ended	6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 02, 2021	Jun. 01, 2021	Mar. 22, 2021	Mar. 17, 2021	Mar. 02, 2020	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Jun. 25, 2021	Mar. 29, 2021
Business Acquisition [Line Items]
Cash purchase price, net of cash received								$ 4,500	$ 200
Contingent consideration expected to be paid to former shareholders						$ 56	$ 56	56
Lighting Business | Disposed of by Sale
Divestiture of Business [Abstract]
Sales of business sold											$ 1,600
Cash purchase price, net of cash sold					$ 1,400
Pre-tax gain (loss) on disposal					$ 221
Hydraulics Business | Disposed of by Sale
Divestiture of Business [Abstract]
Pre-tax gain (loss) on disposal	$ 617
Hydraulics Business | Held-for-sale
Divestiture of Business [Abstract]
Sales of business sold										$ 1,800
Cash purchase price, net of cash sold	$ 3,100
Power Distribution, Inc.
Business Acquisition [Line Items]
Revenue reported by acquiree for last annual period											125
Tripp Lite
Business Acquisition [Line Items]
Revenue reported by acquiree for last annual period										400
Cash purchase price, net of cash received				$ 1,650
Intangible assets acquired				$ 630		630	630	630
Operating profit of acquiree since acquisition date							96
Revenue of acquiree since acquisition date							283
Cobham Mission Systems
Business Acquisition [Line Items]
Revenue reported by acquiree for last annual period										700
Intangible assets acquired		$ 1,575				1,575	$ 1,575	$ 1,575
Operating profit of acquiree since acquisition date						65
Revenue of acquiree since acquisition date						$ 252
Total consideration to be transferred for acquisition		2,800
Goodwill, expected to be deductible for tax purposes		$ 292
Green Motion, SA
Business Acquisition [Line Items]
Total consideration to be transferred for acquisition			$ 105
Cash paid at closing			49
Contingent consideration expected to be paid to former shareholders			56
Maximum potential payments based on future revenue performance			$ 109
HuanYu High Tech
Business Acquisition [Line Items]
Revenue reported by acquiree for last annual period											$ 106
Ownership interest acquired (as a percent)													50.00%
Jiangsu YiNeng Electric
Business Acquisition [Line Items]
Revenue reported by acquiree for last annual period										$ 60
Ownership interest acquired (as a percent)												50.00%

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	4 Months Ended	6 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Jun. 01, 2021	Mar. 17, 2021	Dec. 31, 2020
Allocations
Goodwill	$ 14,767	$ 14,767			$ 12,903
Tripp Lite
Allocations
Short-term investments	5	5		$ 5
Accounts receivable	94	94		94
Inventory	184	184		184
Prepaid expenses and other current assets	5	5		6
Property, plant and equipment	6	6		6
Other intangible assets	630	630		630
Accounts payable	(13)	(13)		(13)
Other current liabilities	(35)	(35)		(32)
Other noncurrent liabilities	(161)	(161)		(157)
Total identifiable net assets	715	715		723
Goodwill	936	936		928
Total consideration, net of cash received	1,651	1,651		$ 1,651
Measurement Period Adjustments
Prepaid expenses and other current assets		(1)
Other current liabilities		(3)
Other noncurrent liabilities		(4)
Total identifiable net assets		(8)
Goodwill		8
Total consideration, net of cash received		0
Cobham Mission Systems
Allocations
Accounts receivable	84	84	$ 84
Inventory	178	178	179
Prepaid expenses and other current assets	41	41	45
Property, plant and equipment	86	86	86
Other intangible assets	1,575	1,575	1,575
Other assets	19	19	19
Accounts payable	(40)	(40)	(40)
Other current liabilities	(152)	(152)	(159)
Other noncurrent liabilities	(77)	(77)	(77)
Total identifiable net assets	1,714	1,714	1,712
Goodwill	1,086	1,086	1,088
Total consideration, net of cash received	2,800	$ 2,800	$ 2,800
Measurement Period Adjustments
Inventory	(1)
Prepaid expenses and other current assets	(4)
Other current liabilities	7
Total identifiable net assets	2
Goodwill	(2)
Total consideration, net of cash received	$ 0

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES - Sale of Businesses (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale - current	$ 0	$ 2,487
Hydraulics Business | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable - net		345
Inventory		369
Prepaid expenses and other current assets		18
Net property, plant and equipment		504
Goodwill		920
Other intangible assets		248
Operating lease assets		61
Deferred income taxes		6
Other noncurrent assets		16
Assets held for sale - current		2,487
Accounts payable		241
Accrued compensation		26
Other current liabilities		101
Pension liabilities		60
Operating lease liabilities		35
Deferred income taxes		3
Other noncurrent liabilities		2
Liabilities held for sale - current		$ 468

XML

REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Revenue from Contract with Customer [Abstract]
Accounts receivables from customers	$ 2,976	$ 2,539
Unbilled receivables	169	$ 90
Backlog of unsatisfied or partially satisfied obligations	$ 7,300
Backlog expected to be recognized in the next twelve months (as a percent)	87.00%

XML

REVENUE RECOGNITION - Disaggregation of Sales (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 4,923	$ 4,526	$ 14,830	$ 13,171
Electrical Americas
Disaggregation of Revenue [Line Items]
Net sales	1,854	1,699	5,325	4,977
Electrical Americas | Products
Disaggregation of Revenue [Line Items]
Net sales	594	562	1,669	1,725
Electrical Americas | Systems
Disaggregation of Revenue [Line Items]
Net sales	1,260	1,137	3,656	3,252
Electrical Global
Disaggregation of Revenue [Line Items]
Net sales	1,421	1,196	4,092	3,451
Electrical Global | Products
Disaggregation of Revenue [Line Items]
Net sales	887	671	2,446	1,926
Electrical Global | Systems
Disaggregation of Revenue [Line Items]
Net sales	534	525	1,646	1,525
Hydraulics
Disaggregation of Revenue [Line Items]
Net sales	179	439	1,300	1,357
Hydraulics | United States
Disaggregation of Revenue [Line Items]
Net sales	77	191	534	601
Hydraulics | Rest of World
Disaggregation of Revenue [Line Items]
Net sales	102	248	766	756
Aerospace
Disaggregation of Revenue [Line Items]
Net sales	745	540	1,889	1,681
Aerospace | Original Equipment Manufacturers
Disaggregation of Revenue [Line Items]
Net sales	281	230	728	754
Aerospace | Aftermarket
Disaggregation of Revenue [Line Items]
Net sales	238	158	575	527
Aerospace | Industrial and Other
Disaggregation of Revenue [Line Items]
Net sales	226	152	586	400
Vehicle
Disaggregation of Revenue [Line Items]
Net sales	640	573	1,969	1,498
Vehicle | Commercial
Disaggregation of Revenue [Line Items]
Net sales	364	284	1,090	742
Vehicle | Passenger and Light Duty
Disaggregation of Revenue [Line Items]
Net sales	276	289	879	756
eMobility
Disaggregation of Revenue [Line Items]
Net sales	$ 84	$ 79	$ 255	$ 207

XML

REVENUE RECOGNITION - Changes in Deferred Revenue Liabilities (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Movement in Deferred Revenue [Roll Forward]
Balance at beginning of period	$ 257	$ 234
Customer deposits and billings	891	753
Revenue recognized in the period	(858)	(728)
Deferred revenue from business acquisitions	99
Translation and other	(8)
Translation		1
Deferred revenue reclassified to held for sale		(11)
Balance at end of period	$ 381	$ 249

XML

CREDIT LOSSES FOR RECEIVABLES - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Credit Loss [Abstract]
Allowance for credit losses	$ 46	$ 48

XML

INVENTORY - Summary (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 1,038	$ 803
Work-in-process	601	498
Finished goods	1,163	808
Total inventory	$ 2,802	$ 2,109

XML

GOODWILL - Summary (Details) $ in Millions	9 Months Ended
	Sep. 30, 2021 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 12,903
Additions	2,086
Translation	(222)
Balance at end of period	14,767
Electrical Americas
Goodwill [Roll Forward]
Balance at beginning of period	6,456
Additions	936
Translation	(8)
Balance at end of period	7,384
Electrical Global
Goodwill [Roll Forward]
Balance at beginning of period	4,295
Additions	64
Translation	(134)
Balance at end of period	4,225
Aerospace
Goodwill [Roll Forward]
Balance at beginning of period	1,777
Additions	1,086
Translation	(76)
Balance at end of period	2,787
Vehicle
Goodwill [Roll Forward]
Balance at beginning of period	293
Additions	0
Translation	(3)
Balance at end of period	290
eMobility
Goodwill [Roll Forward]
Balance at beginning of period	82
Additions	0
Translation	(1)
Balance at end of period	$ 81

XML

DEBT - Narrative (Details) € in Millions	Oct. 04, 2021 USD ($)	Sep. 30, 2021 USD ($)	Sep. 22, 2021 USD ($)	May 17, 2021 USD ($)	Mar. 08, 2021 EUR (€) tranche	Mar. 08, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 08, 2021 USD ($) tranche
Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity			$ 2,500,000,000	$ 4,500,000,000
Borrowings outstanding		$ 0
364 Day Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity		$ 500,000,000	$ 500,000,000	$ 2,500,000,000
Debt instrument, term (in years)		364 days	364 days	364 days
364 Day Credit Facility | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 500,000,000
Debt instrument, term (in years)	364 days
Commercial Paper | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity			$ 2,500,000,000				$ 4,500,000,000
Commercial paper, amount outstanding		$ 421,000,000					$ 3,372,000,000
Commercial Paper | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 2,500,000,000
Five Year Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity		$ 750,000,000
Long-term debt, term (in years)		5 years
Five Year Credit Facility | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 2,000,000,000
Long-term debt, term (in years)	5 years
Four Year Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity		$ 500,000,000
Long-term debt, term (in years)		4 years
Notes | 2021 Euro Notes
Debt Instrument [Line Items]
Face value of debt instrument					€ 1,500			$ 1,798,000,000
Number of tranches | tranche					2			2
Proceeds from issuance of notes					€ 1,494	$ 1,790,000,000
Redemption price (as a percent)					101.00%	101.00%
Notes | 2021 Euro Notes | Tranche One
Debt Instrument [Line Items]
Face value of debt instrument | €					€ 900
Debt instrument, stated interest rate (as a percent)		0.128%
Notes | 2021 Euro Notes | Tranche Two
Debt Instrument [Line Items]
Face value of debt instrument | €					€ 600
Debt instrument, stated interest rate (as a percent)		0.577%

XML

RETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Pension plan
Retirement benefits plans expense (income)
Total expense (income)	$ 27		$ 54
Settlement loss	21		48
Increase (decrease) in pension liabilities from pension remeasurement	49		(132)
Pension plan | Settlement and curtailment expense
Retirement benefits plans expense (income)
Total expense (income)	13		13
Pension plan | United States pension benefit expense (income)
Retirement benefits plans expense (income)
Service cost	9	$ 25	29	$ 73
Interest cost	19	26	52	78
Expected return on plan assets	(56)	(59)	(167)	(174)
Amortization	8	26	28	77
Total	(20)	18	(58)	54
Settlements, curtailments and special termination benefits	20	14	46	49
Total expense (income)	0	32	(12)	103
Pension plan | Non-United States pension benefit expense (income)
Retirement benefits plans expense (income)
Service cost	17	19	55	55
Interest cost	9	11	30	33
Expected return on plan assets	(30)	(27)	(90)	(81)
Amortization	18	15	55	44
Total	14	18	50	51
Settlements, curtailments and special termination benefits	15	1	16	7
Total expense (income)	29	19	66	58
Postretirement plan
Retirement benefits plans expense (income)
Service cost	1	0	1	1
Interest cost	1	3	4	7
Expected return on plan assets	0	(1)	0	(1)
Amortization	(3)	(3)	(4)	(9)
Total	(1)	(1)	1	(2)
Settlements, curtailments and special termination benefits	(1)	0	(1)	0
Total expense (income)	$ (2)	$ (1)	$ 0	$ (2)

XML

INCOME TAXES - Effective Tax Rate (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate (benefit) expense (as a percent)	43.40%	14.80%	29.80%	21.30%

XML

INCOME TAXES - Additional Taxes and Penalties (Details) - USD ($) $ in Millions	Sep. 30, 2021	Aug. 31, 2021	Dec. 31, 2020	Nov. 30, 2019	Dec. 31, 2018
Income Tax Examination [Line Items]
Pledged real estate assets	$ 9		$ 10
Pledged bond	75
Pledged cash deposit	10
Tax Years 2005-2008
Income Tax Examination [Line Items]
IRS Statutory Notice of Deficiency proposed assessment of additional federal taxes		$ 31			$ 24
Penalties associated with IRS Statutory Notice of Deficiency proposed assessment		$ 99			$ 67
Tax Years 2009-2012
Income Tax Examination [Line Items]
IRS Statutory Notice of Deficiency proposed assessment of additional federal taxes				$ 26
Penalties associated with IRS Statutory Notice of Deficiency proposed assessment				$ 92
Tax Years 2005-2006
Income Tax Examination [Line Items]
IRS Statutory Notice of Deficiency proposed assessment of additional federal taxes	75
Penalties associated with IRS Statutory Notice of Deficiency proposed assessment	$ 52

XML

EQUITY - Narrative (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Feb. 27, 2019
Class of Stock [Line Items]
Antidilutive shares excluded from net income per share (shares)		0.3		0.8
2019 Program
Class of Stock [Line Items]
Share repurchase program, authorized amount					$ 5,000
Ordinary shares purchased (shares)	0.3	1.7	0.9	15.9
Stock repurchased, value	$ 46	$ 177	$ 122	$ 1,477

XML

EQUITY - Changes in Shareholders' Equity (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	$ 15,450	$ 15,037	$ 14,973	$ 14,235	$ 14,288	$ 16,133	$ 14,973	$ 16,133
Net income	630	506	459	447	54	438	1,595	939
Other comprehensive income (loss), net of tax	243	194	(30)	276	157	(676)	407	(243)
Cash dividends paid and accrued	(303)	(304)	(309)	(294)	(293)	(305)
Issuance of shares under equity-based compensation plans	40	34	5	35	27	1
Changes in noncontrolling interest of consolidated subsidiaries - net			(2)	(4)	2	(3)
Repurchase of shares	(46)	(17)	(59)	(177)		(1,300)
Balance at end of period	16,014	15,450	15,037	14,518	14,235	14,288	16,014	14,518
Total Eaton shareholders' equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	15,408	14,995	14,930	14,188	14,245	16,082	14,930	16,082
Net income	629	506	458	446	51	438
Other comprehensive income (loss), net of tax	243	194	(30)	276	157	(676)
Cash dividends paid and accrued	(303)	(304)	(309)	(292)	(292)	(300)
Issuance of shares under equity-based compensation plans	40	34	5	35	27	1
Repurchase of shares	(46)	(17)	(59)	(177)		(1,300)
Balance at end of period	$ 15,971	$ 15,408	$ 14,995	$ 14,476	$ 14,188	$ 14,245	$ 15,971	$ 14,476
Ordinary shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period (shares)	398.6	398.5	398.1	400.1	400.0	413.3	398.1	413.3
Balance at beginning of period	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4
Issuance of shares under equity-based compensation plans (shares)	0.3	0.2	0.9	0.2	0.1	0.9
Repurchase of shares (shares)	(0.3)	(0.1)	(0.5)	(1.7)		(14.2)
Balance at end of period (shares)	398.6	398.6	398.5	398.6	400.1	400.0	398.6	398.6
Balance at end of period	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4	$ 4
Capital in excess of par value
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	12,368	12,335	12,329	12,228	12,203	12,200	12,329	12,200
Issuance of shares under equity-based compensation plans	43	33	6	38	25	3
Balance at end of period	12,411	12,368	12,335	12,266	12,228	12,203	12,411	12,266
Retained earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	7,068	6,883	6,794	6,767	7,007	8,170	6,794	8,170
Net income	629	506	458	446	51	438
Cash dividends paid and accrued	(303)	(304)	(309)	(292)	(292)	(300)
Issuance of shares under equity-based compensation plans	(3)	0	(1)	(3)	1	(1)
Repurchase of shares	(46)	(17)	(59)	(177)		(1,300)
Balance at end of period	7,345	7,068	6,883	6,741	6,767	7,007	7,345	6,741
Accumulated other comprehensive loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(4,031)	(4,225)	(4,195)	(4,809)	(4,966)	(4,290)	(4,195)	(4,290)
Other comprehensive income (loss), net of tax	243	194	(30)	276	157	(676)
Balance at end of period	(3,788)	(4,031)	(4,225)	(4,533)	(4,809)	(4,966)	(3,788)	(4,533)
Shares held in trust
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(1)	(2)	(2)	(2)	(3)	(2)	(2)	(2)
Issuance of shares under equity-based compensation plans	0	1			1	(1)
Balance at end of period	(1)	(1)	(2)	(2)	(2)	(3)	(1)	(2)
Noncontrolling interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	42	42	43	47	43	51	43	51
Net income	1	0	1	1	3
Cash dividends paid and accrued	0	0		(2)	(1)	(5)
Changes in noncontrolling interest of consolidated subsidiaries - net			(2)	(4)	2	(3)
Balance at end of period	$ 43	$ 42	$ 42	$ 42	$ 47	$ 43	$ 43	$ 42

XML

EQUITY - Changes in Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 15,450	$ 15,037	$ 14,973	$ 14,235	$ 14,288	$ 16,133	$ 14,973	$ 16,133
Other comprehensive income (loss) before reclassifications							(72)
Amounts reclassified from Accumulated other comprehensive loss (income)							479
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	243	194	(30)	276	157	(676)	407	(243)
Balance at end of period	16,014	$ 15,450	15,037	$ 14,518	$ 14,235	$ 14,288	16,014	$ 14,518
Accumulated other comprehensive loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period			(4,195)				(4,195)
Balance at end of period	(3,788)						(3,788)
Currency translation and related hedging instruments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period			(2,647)				(2,647)
Other comprehensive income (loss) before reclassifications							(291)
Amounts reclassified from Accumulated other comprehensive loss (income)							369
Other comprehensive income (loss) attributable to Eaton ordinary shareholders							78
Balance at end of period	(2,569)						(2,569)
Pensions and other postretirement benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period			(1,481)				(1,481)
Other comprehensive income (loss) before reclassifications							178
Amounts reclassified from Accumulated other comprehensive loss (income)							113
Other comprehensive income (loss) attributable to Eaton ordinary shareholders							291
Balance at end of period	(1,190)						(1,190)
Cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period			$ (67)				(67)
Other comprehensive income (loss) before reclassifications							41
Amounts reclassified from Accumulated other comprehensive loss (income)							(3)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders							38
Balance at end of period	$ (29)						$ (29)

XML

EQUITY - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of businesses	$ 617	$ 0	$ 617	$ 221
Income before income taxes	1,113	525	2,271	1,193
Income tax expense (benefit)	(483)	(78)	(676)	(254)
Net income attributable to Eaton ordinary shareholders	$ 629	$ 446	1,593	$ 935
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income attributable to Eaton ordinary shareholders			(479)
Currency translation and related hedging instruments | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of businesses			(369)
Income tax expense (benefit)			0
Net income attributable to Eaton ordinary shareholders			(369)
Pensions and other postretirement benefits | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes			(140)
Income tax expense (benefit)			27
Net income attributable to Eaton ordinary shareholders			(113)
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense (benefit)			(2)
Net income attributable to Eaton ordinary shareholders			3
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income | Currency exchange contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes			(2)
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income | Commodity contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes			$ 7

XML

EQUITY - Calculation of Net Income per Ordinary Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Calculation of net income per ordinary share attributable to ordinary shareholders
Net Income Attributable to Eaton ordinary shareholders	$ 629	$ 446	$ 1,593	$ 935
Weighted-average number of ordinary shares outstanding - diluted (shares)	401.9	402.3	401.4	404.9
Less dilutive effect of equity-based compensation (shares)	3.0	1.9	2.7	1.6
Weighted-average number of ordinary shares outstanding - basic (shares)	398.9	400.4	398.7	403.3
Net income per share attributable to Eaton ordinary shareholders
Diluted (USD per share)	$ 1.57	$ 1.11	$ 3.97	$ 2.31
Basic (USD per share)	$ 1.58	$ 1.11	$ 4.00	$ 2.32

XML

FAIR VALUE MEASUREMENTS - Financial Instruments at Fair Value (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	$ 271	$ 438
Short-term investments	389	664
Net derivative contracts	26	31
Contingent consideration from acquisition of Green Motion (Note 2)	(56)
Level 1
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	271	438
Short-term investments	389	664
Net derivative contracts	0	0
Contingent consideration from acquisition of Green Motion (Note 2)	0
Level 2
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	0	0
Short-term investments	0	0
Net derivative contracts	26	31
Contingent consideration from acquisition of Green Motion (Note 2)	0
Level 3
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	0	0
Short-term investments	0	0
Net derivative contracts	0	$ 0
Contingent consideration from acquisition of Green Motion (Note 2)	$ (56)

XML

FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Fair Value Disclosures [Abstract]
Long-term debt and current portion of long term debt, carrying value	$ 8,636	$ 8,057
Long-term debt and current portion of long-term debt, fair value	$ 9,359	$ 9,075

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Derivative [Line Items]
Proportion of intercompany balance sheet exposure (as a percent)	100.00%
Cash flow hedge loss to be reclassified within the next twelve months	$ 6
Non-derivative net investment hedge
Derivative [Line Items]
Foreign currency note payable, noncurrent, after-tax	$ 2,941	$ 2,020

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Financial Instrument Recognized in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Derivatives designated as hedges | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	$ 14	$ 26
Derivatives designated as hedges | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	108	123
Derivatives designated as hedges | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	18	20
Derivatives designated as hedges | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	71	109
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Notional amount	1,800	2,075
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	2	2
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	65	100
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0	0
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0	0
Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps
Derivatives, Fair Value [Line Items]
Notional amount	1,000	900
Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	0	0
Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	40	17
Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0	0
Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	69	108
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Notional amount	1,271	946
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	10	20
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	3	6
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	15	20
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	2	1
Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Notional amount	50	24
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	2	4
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	0	0
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	3	0
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0	0
Derivatives not designated as hedges | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	18	45
Derivatives not designated as hedges | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	25	34
Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Notional amount	6,089	5,227
Derivatives not designated as hedges | Currency exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	17	43
Derivatives not designated as hedges | Currency exchange contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	25	34
Derivatives not designated as hedges | Commodity contracts
Derivatives, Fair Value [Line Items]
Notional amount	27	18
Derivatives not designated as hedges | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	1	2
Derivatives not designated as hedges | Commodity contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	$ 0	$ 0
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	11 months	6 months
Minimum | Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	11 years	12 years
Minimum | Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Maximum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	13 years	14 years
Maximum | Derivatives designated as hedges | Cash flow hedging | Floating-to-fixed interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	31 years	32 years
Maximum | Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	36 months	36 months
Maximum | Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	12 months	12 months
Maximum | Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	12 months	12 months

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Volume of Outstanding Commodity Contracts (Details) - Commodity contracts lb in Millions	9 Months Ended
	Sep. 30, 2021 lb ozt
Copper
Derivative [Line Items]
Derivative, outstanding commodity contract | lb	9
Copper | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Copper | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months
Gold
Derivative [Line Items]
Derivative, outstanding commodity contract	1,351
Gold | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Gold | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months
Silver
Derivative [Line Items]
Derivative, outstanding commodity contract	476,721
Silver | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Silver | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Balance Sheet Related to Fixed-to-Floating Interest Rate Swaps (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Fixed-to-floating interest rate swaps
Derivative [Line Items]
Carrying amount of the hedged assets (liabilities)	$ (2,413)	$ (2,688)
Long-term debt
Derivative [Line Items]
Discontinued hedge, cumulative adjustment	34	37
Long-term debt | Fixed-to-floating interest rate swaps
Derivative [Line Items]
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities)	$ (101)	$ (139)

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives on Consolidated Statement of Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Derivative [Line Items]
Net sales	$ 4,923	$ 4,526	$ 14,830	$ 13,171
Cost of products sold	3,338	3,051	10,067	9,230
Interest expense - net	37	41	112	113
Cash flow hedging | Net sales | Currency exchange contracts
Derivative [Line Items]
Gain (loss) on hedged item	0	4	4	9
Gain (loss) on hedging instrument	0	(4)	(4)	(9)
Cash flow hedging | Net sales | Commodity contracts
Derivative [Line Items]
Gain (loss) on hedged item	0	0	0	0
Gain (loss) on hedging instrument	0	0	0	0
Cash flow hedging | Cost of products sold | Currency exchange contracts
Derivative [Line Items]
Gain (loss) on hedged item	(3)	3	(2)	4
Gain (loss) on hedging instrument	3	(3)	2	(4)
Cash flow hedging | Cost of products sold | Commodity contracts
Derivative [Line Items]
Gain (loss) on hedged item	(2)	0	(7)	0
Gain (loss) on hedging instrument	2	0	7	0
Cash flow hedging | Interest expense - net | Currency exchange contracts
Derivative [Line Items]
Gain (loss) on hedged item	0	0	0	0
Gain (loss) on hedging instrument	0	0	0	0
Cash flow hedging | Interest expense - net | Commodity contracts
Derivative [Line Items]
Gain (loss) on hedged item	0	0	0	0
Gain (loss) on hedging instrument	0	0	0	0
Fair value hedging | Net sales | Fixed-to-floating interest rate swaps
Derivative [Line Items]
Gain (loss) on hedged item	0	0	0	0
Gain (loss) on hedging instrument	0	0	0	0
Fair value hedging | Cost of products sold | Fixed-to-floating interest rate swaps
Derivative [Line Items]
Gain (loss) on hedged item	0	0	0	0
Gain (loss) on hedging instrument	0	0	0	0
Fair value hedging | Interest expense - net | Fixed-to-floating interest rate swaps
Derivative [Line Items]
Gain (loss) on hedged item	9	11	35	(58)
Gain (loss) on hedging instrument	$ (9)	$ (11)	$ (35)	$ 58

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	$ (31)	$ 49	$ 1	$ (53)
Currency exchange contracts | Interest expense - net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	(32)	49	(9)	(54)
Commodity contracts | Cost of products sold
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	$ 1	$ 0	$ 10	$ 1

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Amounts recognized in accumulated other comprehensive income
Total, gain (loss) on derivative and net investment hedge recognized in other comprehensive (loss) income	$ 66	$ (36)	$ 231	$ (211)
Total, gain (loss) on derivative and net investment hedge recognized in accumulated other comprehensive (loss) income	5	(6)	5	(12)
Interest expense - net | Non-derivative designated as net investment hedges
Amounts recognized in accumulated other comprehensive income
Gain (loss) recognized in other comprehensive (loss) income	74	(83)	178	(78)
Gain (loss) reclassified from Accumulated other comprehensive loss	0	0	0	0
Forward Starting Floating-to-Fixed Interest Rate Swap | Interest expense - net | Derivatives designated as cash flow hedges
Amounts recognized in accumulated other comprehensive income
Gain (loss) recognized in other comprehensive (loss) income	1	35	62	(101)
Gain (loss) reclassified from Accumulated other comprehensive loss	0	0	0	0
Currency exchange contracts | Net sales and Cost of products sold | Derivatives designated as cash flow hedges
Amounts recognized in accumulated other comprehensive income
Gain (loss) recognized in other comprehensive (loss) income	(6)	11	(11)	(34)
Gain (loss) reclassified from Accumulated other comprehensive loss	3	(6)	(2)	(12)
Commodity contracts | Cost of products sold | Derivatives designated as cash flow hedges
Amounts recognized in accumulated other comprehensive income
Gain (loss) recognized in other comprehensive (loss) income	(3)	1	2	2
Gain (loss) reclassified from Accumulated other comprehensive loss	$ 2	$ 0	$ 7	$ 0

XML

RESTRUCTURING CHARGES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2022	Dec. 31, 2020
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 34	$ 10	$ 63	$ 197		$ 214
Estimated charges		$ 320		$ 320
Forecast
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 33					$ 10

XML

RESTRUCTURING CHARGES - Restructuring Program Charges (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 34	$ 10	$ 63	$ 197	$ 214
Income tax benefit	9	2	15	41
Total after income taxes	$ 25	$ 8	$ 48	$ 156
Per ordinary share - diluted (USD per share)	$ 0.06	$ 0.02	$ 0.12	$ 0.39
Workforce reductions
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 19	$ 3	$ 19	$ 169	172
Plant closing and other
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 15	$ 7	$ 44	$ 28	$ 42

XML

RESTRUCTURING CHARGES - Restructuring Program Charges Related to Segments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 34	$ 10	$ 63	$ 197	$ 214
Operating segments | Electrical Americas
Restructuring Cost and Reserve [Line Items]
Restructuring charges	5	3	13	16
Operating segments | Electrical Global
Restructuring Cost and Reserve [Line Items]
Restructuring charges	11	2	13	53
Operating segments | Aerospace
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1	2	4	32
Operating segments | Vehicle
Restructuring Cost and Reserve [Line Items]
Restructuring charges	5	3	16	93
Operating segments | eMobility
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	1	1
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 12	$ 0	$ 16	$ 2

XML

RESTRUCTURING CHARGES - Liabilities Related to Restructuring (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Restructuring Reserve [Roll Forward]
Balance at beginning of period			$ 142	$ 0	$ 0
Liability recognized	$ 34	$ 10	63	197	214
Payments, utilization and translation			(88)		(72)
Balance at end of period	117		117		142
Workforce reductions
Restructuring Reserve [Roll Forward]
Balance at beginning of period			139	0	0
Liability recognized	19	3	19	169	172
Payments, utilization and translation			(55)		(33)
Balance at end of period	103		103		139
Plant closing and other
Restructuring Reserve [Roll Forward]
Balance at beginning of period			3	0	0
Liability recognized	15	$ 7	44	$ 28	42
Payments, utilization and translation			(33)		(39)
Balance at end of period	$ 14		$ 14		$ 3

XML

BUSINESS SEGMENT INFORMATION - Summary (Details) - USD ($) $ in Millions	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	$ 4,923			$ 4,526			$ 14,830	$ 13,171
Interest expense - net	(37)			(41)			(112)	(113)
Pension and other postretirement benefits income (expense)							(41)	(159)
Restructuring program charges	(34)			(10)			(63)	(197)	$ (214)
Other income (expense) - net	(66)			(23)			(38)	(135)
Income before income taxes	1,113			525			2,271	1,193
Income tax expense	483			78			676	254
Net income	630	$ 506	$ 459	447	$ 54	$ 438	1,595	939
Less net income for noncontrolling interests	(1)			(1)			(2)	(4)
Net income attributable to Eaton ordinary shareholders	629			446			1,593	935
Electrical Americas
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,854			1,699			5,325	4,977
Electrical Global
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,421			1,196			4,092	3,451
Hydraulics
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	179			439			1,300	1,357
Aerospace
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	745			540			1,889	1,681
Vehicle
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	640			573			1,969	1,498
eMobility
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	84			79			255	207
Operating segments
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	4,923			4,526			14,830	13,171
Segment operating profit (loss)	978			796			2,780	2,122
Operating segments | Electrical Americas
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,854			1,699			5,325	4,977
Segment operating profit (loss)	402			377			1,127	993
Restructuring program charges	(5)			(3)			(13)	(16)
Operating segments | Electrical Global
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,421			1,196			4,092	3,451
Segment operating profit (loss)	285			198			757	542
Restructuring program charges	(11)			(2)			(13)	(53)
Operating segments | Hydraulics
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	179			439			1,300	1,357
Segment operating profit (loss)	20			43			177	135
Operating segments | Aerospace
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	745			540			1,889	1,681
Segment operating profit (loss)	164			100			391	315
Restructuring program charges	(1)			(2)			(4)	(32)
Operating segments | Vehicle
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	640			573			1,969	1,498
Segment operating profit (loss)	115			80			349	140
Restructuring program charges	(5)			(3)			(16)	(93)
Operating segments | eMobility
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	84			79			255	207
Segment operating profit (loss)	(8)			(2)			(21)	(3)
Restructuring program charges	0			0			(1)	(1)
Corporate
Segment Reporting Information, Profit (Loss) [Abstract]
Intangible asset amortization expense	(126)			(90)			(326)	(265)
Interest expense - net	(37)			(41)			(112)	(113)
Pension and other postretirement benefits income (expense)	14			(9)			44	(29)
Restructuring program charges	(12)			0			(16)	(2)
Other income (expense) - net	$ 318			$ (121)			$ (52)	$ (325)