Business Segment and Geographic Region Information

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

BUSINESS SEGMENT AND GEOGRAPHIC REGION INFORMATION

BUSINESS SEGMENT AND GEOGRAPHIC REGION 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 segments are as follows:

Electrical Americas and Electrical Rest of World

The Electrical segments are global leaders in electrical components and systems for power quality, distribution and control. Products include circuit breakers, switchgear, UPS systems, power distribution units, panelboards, loadcenters, motor controls, meters, sensors, relays and inverters. The principal markets for the Electrical Americas and Electrical Rest of World segments are industrial, institutional, governmental, utility, commercial, residential and information technology. These products are used wherever there is a demand for electrical power in commercial buildings, data centers, residences, apartment and office buildings, hospitals, factories and utilities. The segments share several common global customers, but a large number of customers are located regionally and sales are made directly to original equipment manufacturers and indirectly through distributors, resellers and manufacturers representatives.

Hydraulics

The Hydraulics segment is a global leader in hydraulics components, systems and services for industrial and mobile equipment. Eaton offers a wide range of power products including pumps, motors and hydraulic power units; a broad range of controls and sensing products including valves, cylinders and electronic controls; a full range of fluid conveyance products including industrial and hydraulic hose, fittings, and assemblies, thermoplastic hose and tubing, couplings, connectors, and assembly equipment; filtration systems solutions; heavy-duty drum and disc brakes; and golf grips. The principal markets for the Hydraulics segment include oil and gas, renewable energy, marine, agriculture, construction, mining, forestry, utility, material handling, truck and bus, machine tools, molding, primary metals and power generation. Key manufacturing customers in these markets and other customers are located globally, and these products are sold and serviced through a variety of channels.

Aerospace

The Aerospace segment is a leading global supplier of aerospace fuel, hydraulics and pneumatic systems for commercial and military use. Products include hydraulic power generation systems for aerospace applications including pumps, motors, hydraulic power units, hose and fittings, electro-hydraulic pumps and power and load management systems; controls and sensing products including valves, cylinders, electronic controls, electromechanical actuators, sensors, displays and panels, aircraft flap and slat systems and nose wheel steering systems; fluid conveyance products, including hose, thermoplastic tubing, fittings, adapters, couplings, sealing and ducting; and fuel systems including fuel pumps, sensors, valves, adapters and regulators. The principal markets for the Aerospace segment are manufacturers of commercial and military aircraft and related after-market customers. These manufacturers and other customers operate globally, and these products are sold and serviced through a variety of channels.

Truck

The Truck segment is a leader in the design, manufacture and marketing of a complete line of drivetrain and powertrain systems and components for performance, fuel economy and safety for commercial vehicles. Products include transmissions, clutches and hybrid power systems. The principal markets for the Truck segment are original equipment manufacturers and after-market customers of heavy-, medium-, and light-duty trucks and passenger cars. These manufacturers and other customers are located globally, and most sales of these products are made directly to these customers.

Automotive

The Automotive segment is a leading supplier of automotive drivetrain and powertrain systems for performance, fuel economy and safety including critical components that reduce emissions and fuel consumption and improve stability, performance, fuel economy and safety of cars, light trucks and commercial vehicles. Products include superchargers, engine valves and valve actuation systems, cylinder heads, locking and limited slip differentials, transmission and engine controls, fuel vapor components, compressor control clutches for mobile refrigeration, fluid connectors and hoses for air conditioning and power steering, underhood plastic components, fluid conveyance products including, hose, thermoplastic tubing, fittings, adapters, couplings and sealing products for the global automotive industry. The principal markets for the Automotive segment are original equipment manufacturers and aftermarket customers of light-duty trucks, SUVs, CUVs, and passenger cars. These manufacturers and other customers are located globally, and most sales of these products are made directly to these customers.

Other Information

No single customer represented greater than 10% of net sales in 2011, 2010 or 2009, respectively.

The accounting policies of the business segments are generally the same as the policies described in Note 1, except that inventory and related cost of products sold of the segments are accounted for using the FIFO method and operating profit only reflects the service cost component related to pensions and other postretirement benefits. Intersegment sales and transfers are accounted for at the same prices as if the sales and transfers were made to third parties. These intersegment sales are eliminated in consolidation.

For purposes of business segment performance measurement, the Company does not allocate items that are of a non-operating nature, or corporate organizational and functional expenses of a governance nature. Corporate expenses consist of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs. Identifiable assets of the business segments exclude goodwill, other intangible assets, and general corporate assets, which principally consist of cash, short-term investments, deferred income taxes, certain accounts receivable, certain property, plant and equipment, and certain other assets.

Business Segment Information
	2011			2010			2009
Net sales
Electrical Americas	$	4,192		$	3,675		$	3,410
Electrical Rest of World	2,984			2,748			2,483
Hydraulics	2,835			2,212			1,692
Aerospace	1,648			1,536			1,602
Truck	2,644			1,997			1,457
Automotive	1,746			1,547			1,229
Total net sales	$	16,049		$	13,715		$	11,873
Segment operating profit
Electrical Americas	$	605		$	529		$	518
Electrical Rest of World	278			264			107
Hydraulics	438			279			51
Aerospace	244			220			245
Truck	486			245			39
Automotive	209			163			(10		)
Total segment operating profit	2,260			1,700			950
Corporate
Amortization of intangible assets	(190		)	(181		)	(170		)
Interest expense-net	(118		)	(136		)	(150		)
Pension and other postretirement benefits expense	(142		)	(120		)	(212		)
Other corporate expense-net	(257		)	(227		)	(115		)
Income before income taxes	1,553			1,036			303
Income tax expense (benefit)	201			99			(82		)
Net income	1,352			937			385
Less net income for noncontrolling interests	(2		)	(8		)	(2		)
Net income attributable to Eaton common shareholders	$	1,350		$	929		$	383

Business segment operating profit was reduced by acquisition integration charges as follows:

	2011		2010		2009
Electrical Americas	$	8	$	2	$	4
Electrical Rest of World	2		33		60
Hydraulics	4		1		3
Aerospace	—		4		12
Automotive	—		—		1
Total	$	14	$	40	$	80

Business Segment Information

	2011		2010		2009
Identifiable assets
Electrical Americas	$	1,364	$	1,272	$	1,050
Electrical Rest of World	1,531		1,630		1,625
Hydraulics	1,265		1,080		939
Aerospace	754		726		729
Truck	920		866		797
Automotive	863		904		866
Total identifiable assets	6,697		6,478		6,006
Goodwill	5,537		5,454		5,435
Other intangible assets	2,192		2,272		2,441
Corporate	3,447		3,048		2,400
Total assets	$	17,873	$	17,252	$	16,282
Capital expenditures for property, plant and equipment
Electrical Americas	$	65	$	59	$	30
Electrical Rest of World	52		49		39
Hydraulics	70		45		21
Aerospace	21		21		16
Truck	80		59		30
Automotive	92		61		24
Total	380		294		160
Corporate	188		100		35
Total expenditures for property, plant and equipment	$	568	$	394	$	195
Depreciation of property, plant and equipment
Electrical Americas	$	53	$	55	$	56
Electrical Rest of World	58		56		61
Hydraulics	54		52		57
Aerospace	26		25		26
Truck	74		76		83
Automotive	73		77		85
Total	338		341		368
Corporate	29		28		30
Total depreciation of property, plant and equipment	$	367	$	369	$	398

Geographic Region Information

Net sales are measured based on the geographic destination of sales. Long-lived assets consist of property, plant and equipment-net.

	2011		2010		2009
Net sales
United States	$	7,165	$	6,166	$	5,574
Canada	815		666		562
Latin America	1,952		1,629		1,159
Europe	4,092		3,532		3,157
Asia Pacific	2,025		1,722		1,421
Total	$	16,049	$	13,715	$	11,873
Long-lived assets
United States	$	1,227	$	1,102	$	1,024
Canada	27		25		23
Latin America	247		275		272
Europe	649		664		748
Asia Pacific	452		411		378
Total	$	2,602	$	2,477	$	2,445

Eaton is a net exporter of products from its United States operations. In 2011, 2010 and 2009, Eaton's net exports were $961, $840 and $710, respectively.