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 June 30, 2022

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 398.3 million Ordinary Shares outstanding as of June 30, 2022.

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	26
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
ITEM 4. CONTROLS AND PROCEDURES	40
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	40
ITEM 1A. RISK FACTORS	40
ITEM 2. UNRESTRICTED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	41
ITEM 6. EXHIBITS	42
SIGNATURES	44

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME

	Three months ended June 30				Six months ended June 30
(In millions except for per share data)	2022		2021		2022		2021
Net sales	$	5,212	$	5,215	$	10,054	$	9,907
Cost of products sold	3,505		3,545		6,774		6,729
Selling and administrative expense	828		876		1,618		1,671
Research and development expense	168		154		333		302
Interest expense - net	31		37		63		75
Gain on sale of business	—		—		24		—
Other income - net	(41)		(17)		(50)		(28)
Income before income taxes	720		620		1,339		1,158
Income tax expense	119		114		205		193
Net income	601		506		1,135		965
Less net income for noncontrolling interests	—		—		(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	601	$	506	$	1,133	$	964
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.50	$	1.26	$	2.82	$	2.40
Basic	1.51		1.27		2.84		2.42
Weighted-average number of ordinary shares outstanding
Diluted	400.7		401.4		401.2		401.2
Basic	399.0		398.8		399.1		398.6
Cash dividends declared per ordinary share	$	0.81	$	0.76	$	1.62	$	1.52

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

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EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three months ended June 30				Six months ended June 30
(In millions)	2022		2021		2022		2021
Net income	$	601	$	506	$	1,135	$	965
Less net income for noncontrolling interests	—		—		(1)		(1)
Net income attributable to Eaton ordinary shareholders	601		506		1,133		964
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	(470)		80		(533)		(92)
Pensions and other postretirement benefits	(41)		161		36		208
Cash flow hedges	68		(47)		169		48
Other comprehensive income (loss) attributable to Eaton    ordinary shareholders	(444)		194		(328)		164
Total comprehensive income attributable to Eaton   ordinary shareholders	$	157	$	700	$	805	$	1,128

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

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EATON CORPORATION plc

CONSOLIDATED BALANCE SHEETS

(In millions)	June 30, 2022		December 31, 2021
Assets
Current assets
Cash	$	364	$	297
Short-term investments	259		271
Accounts receivable - net	3,837		3,297
Inventory	3,445		2,969
Prepaid expenses and other current assets	781		677
Total current assets	8,687		7,511
Property, plant and equipment
Land and buildings	2,156		2,227
Machinery and equipment	5,654		5,591
Gross property, plant and equipment	7,810		7,818
Accumulated depreciation	(4,768)		(4,754)
Net property, plant and equipment	3,043		3,064
Other noncurrent assets
Goodwill	14,805		14,751
Other intangible assets	5,689		5,855
Operating lease assets	493		442
Deferred income taxes	403		392
Other assets	2,033		2,012
Total assets	$	35,153	$	34,027
Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	1,392	$	13
Current portion of long-term debt	2,030		1,735
Accounts payable	3,013		2,797
Accrued compensation	363		501
Other current liabilities	2,176		2,166
Total current liabilities	8,974		7,212
Noncurrent liabilities
Long-term debt	6,277		6,831
Pension liabilities	772		872
Other postretirement benefits liabilities	253		263
Operating lease liabilities	386		337
Deferred income taxes	628		559
Other noncurrent liabilities	1,446		1,502
Total noncurrent liabilities	9,762		10,364
Shareholders’ equity
Ordinary shares (398.3 million outstanding in 2022 and 398.8 million in 2021)	4		4
Capital in excess of par value	12,452		12,449
Retained earnings	7,886		7,594
Accumulated other comprehensive loss	(3,961)		(3,633)
Shares held in trust	(1)		(1)
Total Eaton shareholders’ equity	16,380		16,413
Noncontrolling interests	36		38
Total equity	16,416		16,451
Total liabilities and equity	$	35,153	$	34,027

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

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EATON CORPORATION plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended June 30
(In millions)	2022		2021
Operating activities
Net income	$	1,135	$	965
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	479		437
Deferred income taxes	(14)		(73)
Pension and other postretirement benefits expense	21		27
Contributions to pension plans	(55)		(268)
Contributions to other postretirement benefits plans	(12)		(13)
Gain on sale of business	(24)		—
Changes in working capital	(1,144)		(169)
Other - net	(5)		(9)
Net cash provided by operating activities	382		897
Investing activities
Capital expenditures for property, plant and equipment	(254)		(272)
Proceeds from sales of property, plant and equipment	92		16
Cash paid for acquisitions of businesses, net of cash acquired	(612)		(4,500)
Proceeds from sale of business, net of cash sold	22		—
Investments in associate companies	(17)		(122)
Sales (purchases) of short-term investments - net	(4)		401
Proceeds from (payments for) settlement of currency exchange contracts not designated as hedges - net	(9)		30
Other - net	(41)		(36)
Net cash used in investing activities	(822)		(4,483)
Financing activities
Proceeds from borrowings	—		1,798
Payments on borrowings	(6)		(1,009)
Short-term debt, net	1,384		3,380
Cash dividends paid	(654)		(613)
Exercise of employee stock options	13		31
Repurchase of shares	(186)		(76)
Employee taxes paid from shares withheld	(58)		(44)
Other - net	(1)		(14)
Net cash provided by financing activities	492		3,453
Effect of currency on cash	15		(13)
Less: Increase in cash classified as held for sale	—		(13)
Total increase (decrease) in cash	66		(159)
Cash at the beginning of the period	297		438
Cash at the end of the period	$	364	$	279

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

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EATON CORPORATION plc

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amounts are in millions unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding.

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 2021 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.

Eaton's reporting currency is United States Dollars (USD). The functional currency for most subsidiaries is their local currency. Financial statements for these subsidiaries are translated at exchange rates in effect at the balance sheet date as to assets and liabilities and weighted-average exchange rates as to revenues and expenses. The resulting translation adjustments are recognized in Accumulated other comprehensive loss. For subsidiaries operating in highly inflationary economies, non-monetary assets and liabilities such as inventory and property, plant and equipment and their related expenses are remeasured at historical exchange rates, while monetary assets and liabilities are remeasured at exchange rates in effect at the balance sheet date. Remeasurement adjustments for these subsidiaries are recognized in income.

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

Note 2.ACQUISITIONS AND DIVESTITURE OF BUSINESSES

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 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. During the measurement period which ended in March 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below. The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

(In millions)	Preliminary Allocation		Measurement Period Adjustments		Final Allocation
Short-term investments	$	5	$	—	$	5
Accounts receivable	94		(1)		93
Inventory	184		(5)		179
Prepaid expenses and other current assets	6		(1)		5
Property, plant and equipment	6		(5)		1
Other intangible assets	630		(26)		604
Other assets	—		2		2
Accounts payable	(13)		—		(13)
Other current liabilities	(32)		(2)		(34)
Other noncurrent liabilities	(157)		(10)		(167)
Total identifiable net assets	723		(48)		675
Goodwill	928		48		976
Total consideration, net of cash received	$	1,651	$	—	$	1,651

6

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. The estimated fair values of the customer relationships, trademarks and technology intangible assets of $539 million, $33 million, and $32 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, 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. The estimated useful lives for customer relationships, trademarks and technology intangible assets were 20 years, 15 years, and 5 years, respectively. 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 $53 million on sales of $151 million, from the date of acquisition through June 30, 2021.

Acquisition of Mission Systems

On June 1, 2021, Eaton acquired Mission Systems for $2.80 billion, net of cash received. Mission Systems is a leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets. Mission Systems is reported within the Aerospace business segment.

The acquisition of Mission Systems 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. During the measurement period which ended in June 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below. The 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		5		50
Property, plant and equipment	86		11		97
Other intangible assets	1,575		(113)		1,462
Other assets	19		(4)		15
Accounts payable	(40)		—		(40)
Other current liabilities	(159)		(43)		(202)
Other noncurrent liabilities	(77)		(31)		(108)
Total identifiable net assets	1,712		(176)		1,536
Goodwill	1,088		176		1,264
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 Mission Systems. As a result of the acquisition, goodwill of $572 million recognized in the United States is expected to be deductible for tax purposes. The estimated fair values of the customer relationships, technology, and backlog intangible assets of $764 million, $612 million, and $86 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The estimated fair value of technology intangibles is also based on the selection of royalty rates used in the valuation model. 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. The estimated useful lives for customer relationships, technology, and backlog intangible assets were 22 years, 21 years, and 2 years, respectively. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include Mission Systems’ results of operations, including segment operating profit of $19 million on sales of $72 million, from the date of acquisition through June 30, 2021.

7

Sale of Hydraulics business

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 in 2021. According to the terms of the sales agreement, the Company finalized negotiations of post-closing adjustments with Danfoss A/S during the first quarter of 2022. As a result of these negotiations, the Company recognized an additional pre-tax gain of $24 million. In the second quarter of 2022, Eaton received cash of $22 million from Danfoss A/S to fully settle all post-closing adjustments. The business had sales of $1.3 billion in 2021 through the date of the sale.

Acquisition of Royal Power Solutions

On January 5, 2022, Eaton acquired Royal Power Solutions for $612 million, net of cash received. Royal Power Solutions is a U.S. based manufacturer of high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets. Royal Power Solutions is reported within the eMobility business segment.

The acquisition of Royal Power Solutions 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, as well as measurement period adjustments recorded as of June 30, 2022. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. 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	$	36	$	—	$	36
Inventory	43		—		43
Prepaid expenses and other current assets	1		—		1
Property, plant and equipment	25		—		25
Other intangible assets	306		—		306
Other assets	21		(21)		—
Accounts payable	(24)		—		(24)
Other current liabilities	(10)		—		(10)
Other noncurrent liabilities	(70)		21		(49)
Total identifiable net assets	328		—		328
Goodwill	284		—		284
Total consideration, net of cash received	$	612	$	—	$	612

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Royal Power Solutions. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $306 million are expected to 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 2022 Condensed Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $11 million on sales of $79 million, from the date of acquisition through June 30, 2022.

Russia

During the second quarter of 2022, in light of the ongoing war with Ukraine, the Company decided to exit its business operations in Russia and recorded charges of $29 million presented in Other income - net on the Consolidated Statements of Income. The charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance.

Acquisition of a 50% stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business

On July 1, 2022, Eaton acquired a 50 percent stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business, which manufactures and markets low-voltage circuit breakers in China. Eaton will account for this investment on the equity method of accounting and will report it within the Electrical Global business segment.

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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. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:

	Three months ended June 30				Six months ended June 30
(In millions)	2022		2021		2022		2021
Electrical Americas
Products	$	695	$	555	$	1,298	$	1,075
Systems	1,436		1,294		2,724		2,396
Total	$	2,131	$	1,849	$	4,022	$	3,471
Electrical Global
Products	$	878	$	846	$	1,754	$	1,559
Systems	617		572		1,178		1,112
Total	$	1,495	$	1,418	$	2,932	$	2,671
Hydraulics
United States	$	—	$	235	$	—	$	457
Rest of World	—		325		—		664
Total	$	—	$	560	$	—	$	1,121
Aerospace
Original Equipment Manufacturers	$	285	$	239	$	577	$	447
Aftermarket	242		191		463		337
Industrial and Other	215		195		419		360
Total	$	742	$	625	$	1,459	$	1,144
Vehicle
Commercial	$	445	$	384	$	847	$	726
Passenger and Light Duty	263		291		532		603
Total	$	708	$	675	$	1,379	$	1,329
eMobility	$	136	$	88	$	262	$	171
Total net sales	$	5,212	$	5,215	$	10,054	$	9,907

9

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 receivable from customers were $3,405 million and $2,896 million at June 30, 2022 and December 31, 2021, 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 $209 million and $187 million at June 30, 2022 and December 31, 2021, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in 2022.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	742
Revenue recognized in the period	(705)
Translation	(15)
Balance at June 30, 2022	$	444

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	570
Revenue recognized in the period	(545)
Deferred revenue from business acquisitions	99
Translation and other	(3)
Balance at June 30, 2021	$	378

Deferred revenue liabilities of $421 million and $395 million as of June 30, 2022 and December 31, 2021, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities.

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 June 30, 2022 was approximately $10.2 billion. At June 30, 2022, approximately 87% of this backlog is targeted for delivery to customers 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-off 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 $49 million and $42 million at June 30, 2022 and December 31, 2021, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

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Note 5.    INVENTORY

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

(In millions)	June 30, 2022		December 31, 2021
Raw materials	$	1,224	$	1,096
Work-in-process	833		620
Finished goods	1,388		1,253
Total inventory	$	3,445	$	2,969

Note 6.    GOODWILL

Changes in the carrying amount of goodwill by segment are as follows:

(In millions)	January 1, 2022		Additions		Translation		June 30, 2022
Electrical Americas	$	7,417	$	5	$	(15)	$	7,406
Electrical Global	4,183		2		(270)		3,915
Aerospace	2,781		184		(132)		2,833
Vehicle	290		—		(3)		287
eMobility	80		284		—		364
Total	$	14,751	$	475	$	(420)	$	14,805

The 2022 additions to goodwill relate primarily to the anticipated synergies of acquiring Royal Power Solutions and Mission Systems. The allocation of the Royal Power Solutions purchase price is preliminary and will be completed during the measurement period.

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Note 7.    RETIREMENT BENEFITS PLANS

The components of retirement benefits expense (income) are as follows:

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended June 30
(In millions)	2022		2021		2022		2021		2022		2021
Service cost	$	8	$	10	$	14	$	19	$	1	$	—
Interest cost	28		16		12		11		1		1
Expected return on plan assets	(52)		(55)		(29)		(30)		—		—
Amortization	4		10		12		18		(2)		—
	(12)		(19)		9		18		—		1
Settlements	17		12		1		1		—		—
Total expense (income)	$	5	$	(7)	$	10	$	19	$	—	$	1
	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Six months ended June 30
(In millions)	2022		2021		2022		2021		2022		2021
Service cost	$	16	$	20	$	30	$	38	$	1	$	—
Interest cost	48		33		24		21		3		3
Expected return on plan assets	(105)		(111)		(60)		(60)		—		—
Amortization	12		20		24		37		(4)		(1)
	(29)		(38)		18		36		—