DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Financial Instruments

A summary of interest rate swaps outstanding at December 31, 2023, is as follows:

Forward Starting Floating-to-Fixed Interest Rate Swaps

(Notional amount in millions)
Notional amount		Floating interest rate to be received	Fixed interest rate to be paid	Basis for contracted floating interest rate received
$	55	—%	3.01%	6 month Euribor
55		—%	2.54%	6 month Euribor
55		—%	2.32%	6 month Euribor

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

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
December 31, 2023
Derivatives designated as hedges
Forward starting floating-to-fixed interest rate swaps	$	165	$	—	$	—	$	—	$	3	Cash flow	8 years
Currency exchange contracts	505		17		3		7		1		Cash flow	1 to 25 months
Commodity contracts	54		1		—		1		—		Cash flow	1 to 12 months
Currency exchange contracts	564		—		—		1		—		Net investment	3 months
Total			$	17	$	3	$	9	$	4
Derivatives not designated as hedges
Currency exchange contracts	$	4,797	$	12			$	8				1 to 7 months
December 31, 2022
Derivatives designated as hedges
Currency exchange contracts	$	1,240	$	35	$	2	$	17	$	9	Cash flow	1 to 36 months
Commodity contracts	64		4		—		2		—		Cash flow	1 to 12 months
Total			$	39	$	2	$	19	$	9
Derivatives not designated as hedges
Currency exchange contracts	$	4,683	$	30			$	14				1 to 12 months

Schedule of Notional Amounts of Outstanding Derivative Positions and Commodity Contracts

As of December 31, 2023, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	December 31, 2023		Term
Aluminum	4	Millions of pounds	1 to 11 months
Copper	11	Millions of pounds	1 to 12 months
Gold	1,611	Troy ounces	1 to 12 months
Silver	67,285	Troy ounces	1 to 10 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)1
Location on Consolidated Balance Sheets	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Long-term debt	$	(713)	$	(713)	$	(42)	$	(48)

1 At December 31, 2023 and December 31, 2022, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $42 million and $48 million, respectively.

Schedule of Impact of Hedging Activities to Consolidated Statement of Income

The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:

	2023
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	23,196	$	14,762	$	151
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item	$	—	$	—	$	(13)
Derivative designated as hedging instrument	—		—		13
Currency exchange contracts
Hedged item	$	(2)	$	(58)	$	—
Derivative designated as hedging instrument	2		58		—
Commodity contracts
Hedged item	$	—	$	(1)	$	—
Derivative designated as hedging instrument	—		1		—

	2022
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	20,752	$	13,865	$	144
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item	$	—	$	—	$	(4)
Derivative designated as hedging instrument	—		—		4
Currency exchange contracts
Hedged item	$	17	$	(26)	$	—
Derivative designated as hedging instrument	(17)		26		—
Commodity contracts
Hedged item	$	—	$	4	$	—
Derivative designated as hedging instrument	—		(4)		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	8
Derivative designated as hedging instrument	—		—		(8)

	2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	19,628	$	13,293	$	144
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	6	$	—	$	—
Derivative designated as hedging instrument	(6)		—		—
Commodity contracts
Hedged item	$	—	$	(9)	$	—
Derivative designated as hedging instrument	—		9		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	51
Derivative designated as hedging instrument	—		—		(51)

Schedule of Amounts Recognized in Net Income

The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:

	Gain (loss) recognized in Consolidated Statements of Income						Consolidated Statements of Income classification
(In millions)	2023		2022		2021
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	57	$	(56)	$	—	Interest expense - net
Commodity contracts	—		(15)		11		Other expense (income) - net and Cost of products sold1
Total	$	57	$	(71)	$	11

1 In 2022, Eaton changed the presentation of gains and losses associated with derivative contracts for commodities that are not designated as hedges from Cost of product sold to Other expense (income) - net on the Consolidated Statements of Income. Prior period amounts have not been reclassified as they are not material.

Schedule of Amounts Recognized in Accumulated Other Comprehensive Income (Loss)

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

	Gain (loss) recognized in other  comprehensive (loss) income
(In millions)	2023		2022		2021
Derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps	$	(2)	$	202	$	50
Currency exchange contracts	66		13		(6)
Commodity contracts	—		(5)		6
Derivatives designated as net investment hedges
Currency exchange contracts
Effective portion	8		—		—
Amount excluded from effectiveness testing	15		—		—
Non-derivative designated as net investment hedges
Foreign currency denominated debt	(110)		171		240
Total	$	(24)	$	381	$	290

	Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
(In millions)		2023		2022		2021
Derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps	Interest expense - net	$	13	$	4	$	—
Currency exchange contracts	Net sales and Cost of products sold	64		9		(6)
Commodity contracts	Cost of products sold	1		(4)		9
Derivatives designated as net investment hedges
Currency exchange contracts
Effective portion	Gain (loss) on sale of business	—		—		—
Amount excluded from effectiveness testing	Interest expense - net	12		—		—
Non-derivative designated as net investment hedges
Foreign currency denominated debt	Gain (loss) on sale of business	—		—		—
Total		$	89	$	9	$	3