EATON CORPORATION plc |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | ||||
(Address of principal executive offices) | (Zip Code) |
(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 | |||||||||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||
Smaller reporting company | Emerging growth company | (Do not check if a smaller reporting company) |
TABLE OF CONTENTS | |
ITEM 1. | FINANCIAL STATEMENTS. |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
(In millions except for per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net sales | $ | $ | $ | $ | |||||||||||
Cost of products sold | |||||||||||||||
Selling and administrative expense | |||||||||||||||
Research and development expense | |||||||||||||||
Interest expense - net | |||||||||||||||
Other (income) expense - net | ( | ) | ( | ) | |||||||||||
Income before income taxes | |||||||||||||||
Income tax expense | |||||||||||||||
Net income | |||||||||||||||
Less net income for noncontrolling interests | ( | ) | |||||||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ | $ | $ | |||||||||||
Net income per share attributable to Eaton ordinary shareholders | |||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Basic | |||||||||||||||
Weighted-average number of ordinary shares outstanding | |||||||||||||||
Diluted | |||||||||||||||
Basic | |||||||||||||||
Cash dividends declared per ordinary share | $ | $ | $ | $ |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Less net income for noncontrolling interests | ( | ) | |||||||||||||
Net income attributable to Eaton ordinary shareholders | |||||||||||||||
Other comprehensive (loss) income, net of tax | |||||||||||||||
Currency translation and related hedging instruments | ( | ) | ( | ) | ( | ) | |||||||||
Pensions and other postretirement benefits | |||||||||||||||
Cash flow hedges | ( | ) | ( | ) | ( | ) | |||||||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | ( | ) | ( | ) | ( | ) | |||||||||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ | $ | ( | ) | $ | $ |
(In millions) | June 30, 2019 | December 31, 2018 | |||||
Assets | |||||||
Current assets | |||||||
Cash | $ | $ | |||||
Short-term investments | |||||||
Accounts receivable - net | |||||||
Inventory | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Property, plant and equipment | |||||||
Land and buildings | |||||||
Machinery and equipment | |||||||
Gross property, plant and equipment | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net property, plant and equipment | |||||||
Other noncurrent assets | |||||||
Goodwill | |||||||
Other intangible assets | |||||||
Operating lease assets | |||||||
Deferred income taxes | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and shareholders’ equity | |||||||
Current liabilities | |||||||
Short-term debt | $ | $ | |||||
Current portion of long-term debt | |||||||
Accounts payable | |||||||
Accrued compensation | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Noncurrent liabilities | |||||||
Long-term debt | |||||||
Pension liabilities | |||||||
Other postretirement benefits liabilities | |||||||
Operating lease liabilities | |||||||
Deferred income taxes | |||||||
Other noncurrent liabilities | |||||||
Total noncurrent liabilities | |||||||
Shareholders’ equity | |||||||
Ordinary shares (420.0 million outstanding in 2019 and 423.6 million in 2018) | |||||||
Capital in excess of par value | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Shares held in trust | ( | ) | ( | ) | |||
Total Eaton shareholders’ equity | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Six months ended June 30 | |||||||
(In millions) | 2019 | 2018 | |||||
Operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile to net cash provided by operating activities | |||||||
Depreciation and amortization | |||||||
Deferred income taxes | ( | ) | |||||
Pension and other postretirement benefits expense | |||||||
Contributions to pension plans | ( | ) | ( | ) | |||
Contributions to other postretirement benefits plans | ( | ) | ( | ) | |||
Changes in working capital | ( | ) | ( | ) | |||
Other - net | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities | |||||||
Capital expenditures for property, plant and equipment | ( | ) | ( | ) | |||
Cash paid for acquisition of a business, net of cash acquired | ( | ) | |||||
Sales (purchases) of short-term investments - net | ( | ) | |||||
Proceeds for settlement of currency exchange contracts not designated as hedges - net | |||||||
Other - net | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing activities | |||||||
Proceeds from borrowings | |||||||
Payments on borrowings | ( | ) | ( | ) | |||
Cash dividends paid | ( | ) | ( | ) | |||
Exercise of employee stock options | |||||||
Repurchase of shares | ( | ) | ( | ) | |||
Employee taxes paid from shares withheld | ( | ) | ( | ) | |||
Other - net | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of currency on cash | |||||||
Total increase (decrease) in cash | ( | ) | |||||
Cash at the beginning of the period | |||||||
Cash at the end of the period | $ | $ |
Note 1. | BASIS OF PRESENTATION |
Note 2. | ACQUISITION AND DIVESTITURES OF BUSINESSES |
Note 3. | ACQUISITION INTEGRATION AND DIVESTITURE CHARGES |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Electrical Products | $ | $ | $ | $ | |||||||||||
Electrical Systems and Services | |||||||||||||||
Corporate | |||||||||||||||
Total acquisition integration and divestiture charges before income tax | |||||||||||||||
Income taxes | |||||||||||||||
Total after income taxes | $ | $ | $ | $ | |||||||||||
Per ordinary share - diluted | $ | $ | $ | $ |
Note 4. | REVENUE RECOGNITION |
Three months ended June 30, 2019 | |||||||||||
Net sales | United States | Rest of World | Total | ||||||||
Electrical Products | $ | $ | $ | ||||||||
Electrical Systems and Services | |||||||||||
Hydraulics | |||||||||||
Original Equipment Manufacturers | Aftermarket, Distribution and End User | ||||||||||
Aerospace | $ | $ | |||||||||
Commercial | Passenger and Light Duty | ||||||||||
Vehicle | $ | $ | |||||||||
eMobility | |||||||||||
Total | $ |
Three months ended June 30, 2018 | |||||||||||
Net sales | United States | Rest of World | Total | ||||||||
Electrical Products | $ | $ | $ | ||||||||
Electrical Systems and Services | |||||||||||
Hydraulics | |||||||||||
Original Equipment Manufacturers | Aftermarket, Distribution and End User | ||||||||||
Aerospace | $ | $ | |||||||||
Commercial | Passenger and Light Duty | ||||||||||
Vehicle | $ | $ | |||||||||
eMobility | |||||||||||
Total | $ |
Six months ended June 30, 2019 | |||||||||||
Net sales | United States | Rest of World | Total | ||||||||
Electrical Products | $ | $ | $ | ||||||||
Electrical Systems and Services | |||||||||||
Hydraulics | |||||||||||
Original Equipment Manufacturers | Aftermarket, Distribution and End User | ||||||||||
Aerospace | $ | $ | |||||||||
Commercial | Passenger and Light Duty | ||||||||||
Vehicle | $ | $ | |||||||||
eMobility | |||||||||||
Total | $ |
Six months ended June 30, 2018 | |||||||||||
Net sales | United States | Rest of World | Total | ||||||||
Electrical Products | $ | $ | $ | ||||||||
Electrical Systems and Services | |||||||||||
Hydraulics | |||||||||||
Original Equipment Manufacturers | Aftermarket, Distribution and End User | ||||||||||
Aerospace | $ | $ | |||||||||
Commercial | Passenger and Light Duty | ||||||||||
Vehicle | $ | $ | |||||||||
eMobility | |||||||||||
Total | $ |
Deferred Revenue | |||
Balance at December 31, 2018 | $ | ||
Customer deposits and billings | |||
Revenue recognized in the period | ( | ) | |
Translation | |||
Balance at June 30, 2019 | $ |
Deferred Revenue | |||
Balance at January 1, 2018 | $ | ||
Customer deposits and billings | |||
Revenue recognized in the period | ( | ) | |
Translation | ( | ) | |
Balance at June 30, 2018 | $ |
Note 5. | GOODWILL |
December 31, 2018 | Additions | Translation | June 30, 2019 | ||||||||||||
Electrical Products | $ | $ | $ | ( | ) | $ | |||||||||
Electrical Systems and Services | |||||||||||||||
Hydraulics | ( | ) | |||||||||||||
Aerospace | |||||||||||||||
Vehicle | |||||||||||||||
eMobility | |||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
Note 6. | LEASES |
Three months ended June 30, 2019 | Six months ended June 30, 2019 | ||||||
Operating lease cost | $ | $ | |||||
Finance lease cost: | |||||||
Amortization of lease assets | |||||||
Interest on lease liabilities | |||||||
Short-term lease cost | |||||||
Variable lease cost | |||||||
Sublease income | ( | ) | ( | ) | |||
Total lease cost | $ | $ |
Six months ended June 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash outflows - payments on operating leases | $ | ( | ) |
Operating cash outflows - interest payments on finance leases | ( | ) | |
Financing cash outflows - payments on finance lease obligations | ( | ) | |
Lease assets obtained in exchange for new lease obligations: | |||
Operating leases | $ | ||
Finance leases |
June 30, 2019 | |||
Operating Leases | |||
Operating lease assets | $ | ||
Other current liabilities | |||
Operating lease liabilities | |||
Total operating lease liabilities | $ | ||
Finance Leases | |||
Land and buildings | $ | ||
Machinery and equipment | |||
Accumulated depreciation | ( | ) | |
Net property, plant and equipment | $ | ||
Current portion of long-term debt | $ | ||
Long-term debt | |||
Total finance lease liabilities | $ | ||
Weighted-average remaining lease term | |||
Operating leases | |||
Finance leases | |||
Weighted-average discount rate | |||
Operating leases | % | ||
Finance leases | % |
Operating Leases | Finance Leases | ||||||
2019 | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
Thereafter | |||||||
Total lease payments | $ | $ | |||||
Less imputed interest | |||||||
Total present value of lease liabilities | $ | $ |
Operating Leases | |||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease commitments | $ |
Note 7. | DEBT |
United States pension benefit expense | Non-United States pension benefit expense | Other postretirement benefits expense | ||||||||||||||||||||||
Three months ended June 30 | ||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Interest cost | ||||||||||||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Amortization | ( | ) | ( | ) | ||||||||||||||||||||
Settlements | ||||||||||||||||||||||||
Total expense | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
United States pension benefit expense | Non-United States pension benefit expense | Other postretirement benefits expense | ||||||||||||||||||||||
Six months ended June 30 | ||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Interest cost | ||||||||||||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Amortization | ( | ) | ( | ) | ||||||||||||||||||||
Settlements | ||||||||||||||||||||||||
Total expense | $ | $ | $ | $ | $ | $ |
Note 9. | LEGAL CONTINGENCIES |
Note 10. |
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 December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | |||||||||||||||||||||||||||||||||
Cash dividends paid and accrued | — | — | — | ( | ) | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||
Repurchase of shares | ( | ) | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | ( | ) | — | — | |||||||||||||||||||||||||||||
Acquisition of a business | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Acquisition of noncontrolling interest obtained through tender offer | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||
Repurchase of Shares | ( | ) | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
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 December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Cumulative-effect adjustment upon adoption of ASU 2014-09 | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Cumulative-effect adjustment upon adoption of ASU 2016-16 | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Net income | — | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | |||||||||||||||||||||||||||||||||
Cash dividends paid and accrued | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | ( | ) | — | — | — | ||||||||||||||||||||||||||||
Changes in noncontrolling interest of consolidated subsidiaries - net | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Repurchase of shares | ( | ) | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
Cash dividends paid | — | — | — | ( | ) | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | — | — | — | ||||||||||||||||||||||||||||||
Changes in noncontrolling interest of consolidated subsidiaries - net | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||
Repurchase of Shares | ( | ) | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Currency translation and related hedging instruments | Pensions and other postretirement benefits | Cash flow hedges | Total | ||||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive (loss) income before reclassifications | ( | ) | ( | ) | |||||||||||
Amounts reclassified from Accumulated other comprehensive loss | ( | ) | |||||||||||||
Net current-period Other comprehensive (loss) income | ( | ) | |||||||||||||
Balance at June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Six months ended June 30, 2019 | Consolidated statements of income classification | ||||
Amortization of defined benefit pensions and other postretirement benefits items | |||||
Actuarial loss and prior service cost | $ | ( | ) | 1 | |
Tax benefit | |||||
Total, net of tax | ( | ) | |||
Gains and (losses) on cash flow hedges | |||||
Currency exchange contracts | Cost of products sold | ||||
Tax expense | ( | ) | |||
Total, net of tax | |||||
Total reclassifications for the period | $ | ( | ) |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
(Shares in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ | $ | $ | |||||||||||
Weighted-average number of ordinary shares outstanding - diluted | |||||||||||||||
Less dilutive effect of equity-based compensation | |||||||||||||||
Weighted-average number of ordinary shares outstanding - basic | |||||||||||||||
Net income per share attributable to Eaton ordinary shareholders | |||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Basic |
Note 12. | FAIR VALUE MEASUREMENTS |
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2019 | |||||||||||||||
Cash | $ | $ | $ | $ | |||||||||||
Short-term investments | |||||||||||||||
Net derivative contracts | |||||||||||||||
December 31, 2018 | |||||||||||||||
Cash | $ | $ | $ | $ | |||||||||||
Short-term investments | |||||||||||||||
Net derivative contracts |
Note 13. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
• | 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. |
Notional amount | Other current assets | Other noncurrent assets | Other current liabilities | Other noncurrent liabilities | Type of hedge | Term | |||||||||||||||||
June 30, 2019 | |||||||||||||||||||||||
Derivatives designated as hedges | |||||||||||||||||||||||
Fixed-to-floating interest rate swaps | $ | $ | $ | $ | $ | Fair value | 18 months to 16 years | ||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | Cash flow | 34 years | |||||||||||||||||||||
Currency exchange contracts | Cash flow | 1 to 36 months | |||||||||||||||||||||
Commodity contracts | Cash flow | 1 to 7 months | |||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Derivatives not designated as hedges | |||||||||||||||||||||||
Currency exchange contracts | $ | $ | $ | 1 to 12 months | |||||||||||||||||||
Commodity contracts | 1 month | ||||||||||||||||||||||
Total | $ | $ | |||||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||
Derivatives designated as hedges | |||||||||||||||||||||||
Fixed-to-floating interest rate swaps | $ | $ | $ | $ | $ | Fair value | 3 months to 16 years | ||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | Cash flow | 34 years | |||||||||||||||||||||
Currency exchange contracts | Cash flow | 1 to 36 months | |||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Derivatives not designated as hedges | |||||||||||||||||||||||
Currency exchange contracts | $ | $ | $ | 1 to 12 months | |||||||||||||||||||
Total | $ | $ |
June 30, 2019 | |||||
Commodity | (millions of pounds) | Term | |||
Copper | 1 to 7 months |
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 Sheet | June 30, 2019 | June 30, 2019 | |||||
Long-term debt | $ | ( | ) | $ | ( | ) |
Three months ended June 30, 2019 | |||||||||||
Net Sales | Cost of products sold | Interest expense - net | |||||||||
Amounts from Consolidated Statement of Income | $ | $ | $ | ||||||||
Gain (loss) on derivatives designated as cash flow hedges | |||||||||||
Currency exchange contracts | |||||||||||
Hedged item | $ | $ | ( | ) | $ | ||||||
Derivative designated as hedging instrument | ( | ) | |||||||||
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 | $ | $ | $ | ( | ) | ||||||
Derivative designated as hedging instrument |
Six months ended June 30, 2019 | |||||||||||
Net Sales | Cost of products sold | Interest expense - net | |||||||||
Amounts from Consolidated Statement of Income | $ | $ | $ | ||||||||
Gain (loss) on derivatives designated as cash flow hedges | |||||||||||
Currency exchange contracts | |||||||||||
Hedged item | $ | $ | ( | ) | $ | ||||||
Derivative designated as hedging instrument | ( | ) | |||||||||
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 | $ | $ | $ | ( | ) | ||||||
Derivative designated as hedging instrument |
Gain (loss) recognized in Consolidated Statement of Income | Consolidated Statement of Income classification | ||||
Three months ended June 30 | |||||
2019 | |||||
Gain (loss) on derivatives not designated as hedges | |||||
Currency exchange contracts | $ | Other income - net | |||
Commodity Contracts | ( | ) | Cost of products sold | ||
Total | $ | ||||
Gain (loss) recognized in Consolidated Statement of Income | Consolidated Statement of Income classification | ||||
Six months ended June 30 | |||||
2019 | |||||
Gain (loss) on derivatives not designated as hedges | |||||
Currency exchange contracts | $ | Other income - net | |||
Commodity Contracts | Cost of products sold | ||||
Total | $ |
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 June 30 | Three months ended June 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | $ | ( | ) | $ | Interest expense - net | $ | $ | ||||||||||
Currency exchange contracts | ( | ) | ( | ) | Cost of products sold | ( | ) | ||||||||||
Commodity contracts | ( | ) | Cost of products sold | ||||||||||||||
Non-derivative designated as net investment hedges | |||||||||||||||||
Foreign currency denominated debt | Other income - net | ||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||
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 | |||||||||||||||
Six months ended June 30 | Six months ended June 30 | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | $ | ( | ) | $ | Interest expense - net | $ | $ | ||||||||||
Currency exchange contracts | ( | ) | ( | ) | Cost of products sold | ( | ) | ||||||||||
Commodity contracts | Cost of products sold | ||||||||||||||||
Non-derivative designated as net investment hedges | |||||||||||||||||
Foreign currency denominated debt | Other income - net | ||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | ( | ) |
June 30, 2019 | December 31, 2018 | ||||||
Raw materials | $ | $ | |||||
Work-in-process | |||||||
Finished goods | |||||||
Total inventory | $ | $ |
Note 15. | BUSINESS SEGMENT INFORMATION |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | |||||||||||||||
Electrical Products | $ | $ | $ | $ | |||||||||||
Electrical Systems and Services | |||||||||||||||
Hydraulics | |||||||||||||||
Aerospace | |||||||||||||||
Vehicle | |||||||||||||||
eMobility | |||||||||||||||
Total net sales | $ | $ | $ | $ | |||||||||||
Segment operating profit | |||||||||||||||
Electrical Products | $ | $ | $ | $ | |||||||||||
Electrical Systems and Services | |||||||||||||||
Hydraulics | |||||||||||||||
Aerospace | |||||||||||||||
Vehicle | |||||||||||||||
eMobility | |||||||||||||||
Total segment operating profit | |||||||||||||||
Corporate | |||||||||||||||
Amortization of intangible assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest expense - net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Pension and other postretirement benefits expense | ( | ) | ( | ) | ( | ) | |||||||||
Other corporate expense - net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||||||
Income tax expense | |||||||||||||||
Net income | |||||||||||||||
Less net income for noncontrolling interests | ( | ) | |||||||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ | $ | $ |
Note 16. | CONDENSED CONSOLIDATING FINANCIAL STATEMENTS |
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2019 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Cost of products sold | ( | ) | |||||||||||||||||||||
Selling and administrative expense | |||||||||||||||||||||||
Research and development expense | |||||||||||||||||||||||
Interest expense (income) - net | ( | ) | ( | ) | |||||||||||||||||||
Other expense (income) - net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Equity in loss (earnings) of subsidiaries, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Intercompany expense (income) - net | ( | ) | |||||||||||||||||||||
Income (loss) before income taxes | ( | ) | |||||||||||||||||||||
Income tax expense (benefit) | ( | ) | |||||||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||||||
Less net loss (income) for noncontrolling interests | |||||||||||||||||||||||
Net income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Other comprehensive income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ |
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2018 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Cost of products sold | ( | ) | |||||||||||||||||||||
Selling and administrative expense | |||||||||||||||||||||||
Research and development expense | |||||||||||||||||||||||
Interest expense (income) - net | ( | ) | |||||||||||||||||||||
Other expense (income) - net | ( | ) | |||||||||||||||||||||
Equity in loss (earnings) of subsidiaries, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Intercompany expense (income) - net | ( | ) | |||||||||||||||||||||
Income (loss) before income taxes | ( | ) | |||||||||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | |||||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||||||
Less net loss (income) for noncontrolling interests | ( | ) | ( | ) | |||||||||||||||||||
Net income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Other comprehensive income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Cost of products sold | ( | ) | |||||||||||||||||||||
Selling and administrative expense | |||||||||||||||||||||||
Research and development expense | |||||||||||||||||||||||
Interest expense (income) - net | ( | ) | ( | ) | |||||||||||||||||||
Other expense (income) - net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Equity in loss (earnings) of subsidiaries, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Intercompany expense (income) - net | ( | ) | |||||||||||||||||||||
Income (loss) before income taxes | ( | ) | |||||||||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | |||||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||||||
Less net loss (income) for noncontrolling interests | |||||||||||||||||||||||
Net income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Other comprehensive income (loss) | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ |
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2018 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net sales | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Cost of products sold | ( | ) | |||||||||||||||||||||
Selling and administrative expense | |||||||||||||||||||||||
Research and development expense | |||||||||||||||||||||||
Interest expense (income) - net | ( | ) | |||||||||||||||||||||
Other expense (income) - net | ( | ) | ( | ) | |||||||||||||||||||
Equity in loss (earnings) of subsidiaries, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Intercompany expense (income) - net | ( | ) | |||||||||||||||||||||
Income (loss) before income taxes | ( | ) | |||||||||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||||||
Less net loss (income) for noncontrolling interests | |||||||||||||||||||||||
Net income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Other comprehensive income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ | $ | $ | $ | $ | ( | ) | $ |
CONDENSED CONSOLIDATING BALANCE SHEETS JUNE 30, 2019 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets | |||||||||||||||||||||||
Cash | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Accounts receivable - net | |||||||||||||||||||||||
Intercompany accounts receivable | ( | ) | |||||||||||||||||||||
Inventory | ( | ) | |||||||||||||||||||||
Prepaid expenses and other current assets | |||||||||||||||||||||||
Total current assets | ( | ) | |||||||||||||||||||||
Property, plant and equipment - net | |||||||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||
Other intangible assets | |||||||||||||||||||||||
Operating lease assets | |||||||||||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||||||||||
Investment in subsidiaries | ( | ) | |||||||||||||||||||||
Intercompany loans receivable | ( | ) | |||||||||||||||||||||
Other assets | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Liabilities and shareholders’ equity | |||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||
Short-term debt | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Current portion of long-term debt | |||||||||||||||||||||||
Accounts payable | |||||||||||||||||||||||
Intercompany accounts payable | ( | ) | |||||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Other current liabilities | ( | ) | |||||||||||||||||||||
Total current liabilities | ( | ) | |||||||||||||||||||||
Noncurrent liabilities | |||||||||||||||||||||||
Long-term debt | |||||||||||||||||||||||
Pension liabilities | |||||||||||||||||||||||
Other postretirement benefits liabilities | |||||||||||||||||||||||
Operating lease liabilities | |||||||||||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||||||||||
Intercompany loans payable | ( | ) | |||||||||||||||||||||
Other noncurrent liabilities | |||||||||||||||||||||||
Total noncurrent liabilities | ( | ) | |||||||||||||||||||||
Shareholders’ equity | |||||||||||||||||||||||
Eaton shareholders' equity | ( | ) | |||||||||||||||||||||
Noncontrolling interests | |||||||||||||||||||||||
Total equity | ( | ) | |||||||||||||||||||||
Total liabilities and equity | $ | $ | $ | $ | $ | ( | ) | $ |
CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2018 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets | |||||||||||||||||||||||
Cash | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Accounts receivable - net | |||||||||||||||||||||||
Intercompany accounts receivable | ( | ) | |||||||||||||||||||||
Inventory | ( | ) | |||||||||||||||||||||
Prepaid expenses and other current assets | |||||||||||||||||||||||
Total current assets | ( | ) | |||||||||||||||||||||
Property, plant and equipment - net | |||||||||||||||||||||||
Other noncurrent assets | |||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||
Other intangible assets | |||||||||||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||||||||||
Investment in subsidiaries | ( | ) | |||||||||||||||||||||
Intercompany loans receivable | ( | ) | |||||||||||||||||||||
Other assets | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
Liabilities and shareholders’ equity | |||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||
Short-term debt | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Current portion of long-term debt | |||||||||||||||||||||||
Accounts payable | |||||||||||||||||||||||
Intercompany accounts payable | ( | ) | |||||||||||||||||||||
Accrued compensation | |||||||||||||||||||||||
Other current liabilities | ( | ) | |||||||||||||||||||||
Total current liabilities | ( | ) | |||||||||||||||||||||
Noncurrent liabilities | |||||||||||||||||||||||
Long-term debt | |||||||||||||||||||||||
Pension liabilities | |||||||||||||||||||||||
Other postretirement benefits liabilities | |||||||||||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||||||||||
Intercompany loans payable | ( | ) | |||||||||||||||||||||
Other noncurrent liabilities | |||||||||||||||||||||||
Total noncurrent liabilities | ( | ) | |||||||||||||||||||||
Shareholders’ equity | |||||||||||||||||||||||
Eaton shareholders' equity | ( | ) | |||||||||||||||||||||
Noncontrolling interests | |||||||||||||||||||||||
Total equity | ( | ) | |||||||||||||||||||||
Total liabilities and equity | $ | $ | $ | $ | $ | ( | ) | $ |
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2019 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | ( | ) | $ | $ | $ | $ | $ | |||||||||||||||
Investing activities | |||||||||||||||||||||||
Capital expenditures for property, plant and equipment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Cash paid for acquisition of a business, net of cash acquired | ( | ) | ( | ) | |||||||||||||||||||
Sales (purchases) of short-term investments - net | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Loans to affiliates | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Repayments of loans from affiliates | ( | ) | |||||||||||||||||||||
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | ( | ) | |||||||||||||||||||||
Other - net | ( | ) | ( | ) | |||||||||||||||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Financing activities | |||||||||||||||||||||||
Proceeds from borrowings | |||||||||||||||||||||||
Payments on borrowings | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Proceeds from borrowings from affiliates | ( | ) | |||||||||||||||||||||
Payments on borrowings from affiliates | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Other intercompany financing activities | ( | ) | ( | ) | |||||||||||||||||||
Cash dividends paid | ( | ) | ( | ) | |||||||||||||||||||
Exercise of employee stock options | |||||||||||||||||||||||
Repurchase of shares | ( | ) | ( | ) | |||||||||||||||||||
Employee taxes paid from shares withheld | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Other - net | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Effect of currency on cash | |||||||||||||||||||||||
Total increase (decrease) in cash | |||||||||||||||||||||||
Cash at the beginning of the period | |||||||||||||||||||||||
Cash at the end of the period | $ | $ | $ | $ | $ | $ |
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2018 | |||||||||||||||||||||||
Eaton Corporation plc | Eaton Corporation | Guarantors | Other subsidiaries | Consolidating adjustments | Total | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Investing activities | |||||||||||||||||||||||
Capital expenditures for property, plant and equipment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Sales (purchases) of short-term investments - net | |||||||||||||||||||||||
Investments in affiliates | ( | ) | |||||||||||||||||||||
Loans to affiliates | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Repayments of loans from affiliates | ( | ) | |||||||||||||||||||||
Other - net | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Financing activities | |||||||||||||||||||||||
Proceeds from borrowings | |||||||||||||||||||||||
Payments on borrowings | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Proceeds from borrowings from affiliates | ( | ) | |||||||||||||||||||||
Payments on borrowings from affiliates | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Capital contributions from affiliates | ( | ) | |||||||||||||||||||||
Other intercompany financing activities | ( | ) | ( | ) | |||||||||||||||||||
Cash dividends paid | ( | ) | ( | ) | |||||||||||||||||||
Cash dividends paid to affiliates | ( | ) | |||||||||||||||||||||
Exercise of employee stock options | |||||||||||||||||||||||
Repurchase of shares | ( | ) | ( | ) | |||||||||||||||||||
Employee taxes paid from shares withheld | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Other - net | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Effect of currency on cash | |||||||||||||||||||||||
Total increase (decrease) in cash | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Cash at the beginning of the period | |||||||||||||||||||||||
Cash at the end of the period | $ | $ | $ | $ | $ | $ |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 5,533 | $ | 5,487 | $ | 10,838 | $ | 10,738 | |||||||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | |||||||||||
Net income per share attributable to Eaton ordinary shareholders - diluted | $ | 1.50 | $ | 1.39 | $ | 2.73 | $ | 2.50 |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 5,533 | $ | 5,487 | 1 | % | $ | 10,838 | $ | 10,738 | 1 | % | |||||||||
Gross profit | 1,836 | 1,816 | 1 | % | 3,568 | 3,494 | 2 | % | |||||||||||||
Percent of net sales | 33.2 | % | 33.1 | % | 32.9 | % | 32.5 | % | |||||||||||||
Income before income taxes | 738 | 694 | 6 | % | 1,341 | 1,259 | 7 | % | |||||||||||||
Net income | 636 | 611 | 4 | % | 1,158 | 1,098 | 5 | % | |||||||||||||
Less net income for noncontrolling interests | — | (1 | ) | — | — | ||||||||||||||||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 4 | % | 1,158 | 1,098 | 5 | % | |||||||||||||
Excluding acquisition integration and divestiture charges, after-tax (Note 3) | 14 | — | 25 | — | |||||||||||||||||
Adjusted earnings | $ | 650 | $ | 610 | 7 | % | $ | 1,183 | $ | 1,098 | 8 | % | |||||||||
Net income per share attributable to Eaton ordinary shareholders - diluted | $ | 1.50 | $ | 1.39 | 8 | % | $ | 2.73 | $ | 2.50 | 9 | % | |||||||||
Excluding per share impact of acquisition integration and divestiture charges, after-tax (Note 3) | 0.03 | — | 0.06 | — | |||||||||||||||||
Adjusted earnings per ordinary share | $ | 1.53 | $ | 1.39 | 10 | % | $ | 2.79 | $ | 2.50 | 12 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 1,849 | $ | 1,806 | 2 | % | $ | 3,609 | $ | 3,538 | 2 | % | |||||||||
Operating profit | $ | 361 | $ | 334 | 8 | % | $ | 692 | $ | 641 | 8 | % | |||||||||
Operating margin | 19.5 | % | 18.5 | % | 19.2 | % | 18.1 | % | |||||||||||||
Acquisition integration and divestiture charges | $ | 1 | $ | — | $ | 2 | $ | — | |||||||||||||
Before acquisition integration and divestiture charges | |||||||||||||||||||||
Operating profit | $ | 362 | $ | 334 | 8 | % | $ | 694 | $ | 641 | 8 | % | |||||||||
Operating margin | 19.6 | % | 18.5 | % | 19.2 | % | 18.1 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 1,582 | $ | 1,513 | 5 | % | $ | 3,046 | $ | 2,894 | 5 | % | |||||||||
Operating profit | $ | 275 | $ | 227 | 21 | % | $ | 467 | $ | 394 | 19 | % | |||||||||
Operating margin | 17.4 | % | 15.0 | % | 15.3 | % | 13.6 | % | |||||||||||||
Acquisition integration and divestiture charges | $ | 1 | $ | — | $ | 1 | $ | — | |||||||||||||
Before acquisition integration and divestiture charges | |||||||||||||||||||||
Operating profit | $ | 276 | $ | 227 | 22 | % | $ | 468 | $ | 394 | 19 | % | |||||||||
Operating margin | 17.4 | % | 15.0 | % | 15.4 | % | 13.6 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 698 | $ | 723 | (3 | )% | $ | 1,384 | $ | 1,433 | (3 | )% | |||||||||
Operating profit | $ | 80 | $ | 101 | (21 | )% | $ | 160 | $ | 191 | (16 | )% | |||||||||
Operating margin | 11.5 | % | 14.0 | % | 11.6 | % | 13.3 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 517 | $ | 463 | 12 | % | $ | 1,019 | $ | 921 | 11 | % | |||||||||
Operating profit | $ | 127 | $ | 90 | 41 | % | $ | 243 | $ | 179 | 36 | % | |||||||||
Operating margin | 24.6 | % | 19.4 | % | 23.8 | % | 19.4 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 803 | $ | 899 | (11 | )% | $ | 1,613 | $ | 1,792 | (10 | )% | |||||||||
Operating profit | $ | 136 | $ | 166 | (18 | )% | $ | 258 | $ | 298 | (13 | )% | |||||||||
Operating margin | 16.9 | % | 18.5 | % | 16.0 | % | 16.6 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net sales | $ | 84 | $ | 83 | 1 | % | $ | 167 | $ | 160 | 4 | % | |||||||||
Operating profit | $ | 7 | $ | 14 | (50 | )% | $ | 12 | $ | 25 | (52 | )% | |||||||||
Operating margin | 8.3 | % | 16.9 | % | 7.2 | % | 15.6 | % |
Three months ended June 30 | Increase (decrease) | Six months ended June 30 | Increase (decrease) | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Amortization of intangible assets | $ | 94 | $ | 96 | (2 | )% | $ | 187 | $ | 194 | (4 | )% | |||||||||
Interest expense - net | 63 | 68 | (7 | )% | 129 | 138 | (7 | )% | |||||||||||||
Pension and other postretirement benefits expense | 2 | (1 | ) | (300 | )% | 2 | 1 | 100 | % | ||||||||||||
Other corporate expense - net | 89 | 75 | 19 | % | 173 | 136 | 27 | % | |||||||||||||
Total corporate expense | $ | 248 | $ | 238 | 4 | % | $ | 491 | $ | 469 | 5 | % |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1. | LEGAL PROCEEDINGS. |
ITEM 1A. | RISK FACTORS. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
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) | ||||||||||
April | 420,534 | $ | 82.92 | 420,534 | $ | 4,552 | ||||||||
May | 2,808,448 | $ | 80.16 | 2,808,448 | $ | 4,517 | ||||||||
June | — | $ | — | — | $ | 4,292 | ||||||||
Total | 3,228,982 | $ | 80.52 | 3,228,982 |
ITEM 6. | EXHIBITS. |
3 (i) | |||
3 (ii) | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.4 | |||
4.5 | |||
4.6 | |||
4.7 | 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 (4.1 - 4.6) hereto | ||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
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 * |
* | Submitted electronically herewith. |
EATON CORPORATION plc | ||||
Registrant | ||||
Date: | July 30, 2019 | By: | /s/ Richard H. Fearon | |
Richard H. Fearon | ||||
Principal Financial Officer | ||||
(On behalf of the registrant and as Principal Financial Officer) |
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: | July 30, 2019 | /s/ Craig Arnold | |
Craig Arnold | |||
Principal Executive Officer |
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: | July 30, 2019 | /s/ Richard H. Fearon | |
Richard H. Fearon | |||
Principal Financial Officer |
Date: | July 30, 2019 | /s/ Craig Arnold | |
Craig Arnold | |||
Principal Executive Officer |
Date: | July 30, 2019 | /s/ Richard H. Fearon | |
Richard H. Fearon | |||
Principal Financial Officer |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 636 | $ 611 | $ 1,158 | $ 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 |
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 |
Other comprehensive (loss) income, net of tax | ||||
Currency translation and related hedging instruments | (36) | (671) | 17 | (414) |
Pensions and other postretirement benefits | 32 | 56 | 53 | 82 |
Cash flow hedges | (26) | (9) | (33) | 4 |
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | (30) | (624) | 37 | (328) |
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ 606 | $ (14) | $ 1,195 | $ 770 |
BASIS OF PRESENTATION |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
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 2018 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. Leases The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease. Adoption of New Accounting Standards Eaton adopted Accounting Standard Update 2016-02, Leases (Topic 842), and related amendments, in the first quarter of 2019 using the optional transition method and has not restated prior periods. The Company elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the carry forward of historical lease classification of existing leases. The Company recorded a cumulative-effect adjustment of less than $1 to retained earnings as of January 1, 2019. Additionally, the adoption of the new standard resulted in the recording of lease assets and lease liabilities for operating leases of $435 and $446, respectively, as of January 1, 2019. The adoption of the standard did not have a material impact to the Consolidated Statements of Income or Cash Flows. Eaton adopted Accounting Standard Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, in the first quarter 2019 using the modified retrospective approach for hedge instruments that existed at the date of adoption. ASU 2017-12 is intended to better align the Company's risk management activities with financial reporting for hedging relationships. The standard eliminates the requirement to separately measure and report hedge ineffectiveness, expands the ability to hedge specific risk components, and generally requires the change in value of the hedge instrument and hedged item to be presented in the same income statement line. The new disclosure requirements were applied on a prospective basis and comparative information has not been restated. The adoption of the standard did not have a material impact on the consolidated financial statements.
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ACQUISITION AND DIVESTITURE OF BUSINESSES |
6 Months Ended |
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Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition and Divestiture of Businesses | ACQUISITION AND DIVESTITURES OF BUSINESSES Acquired controlling interest of Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. On April 15, 2019, Eaton completed the acquisition of an 82.275% controlling interest in Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. (Ulusoy Elektrik), a leading manufacturer of electrical switchgear based in Ankara, Turkey, with a primary focus on medium-voltage solutions for industrial and utility customers. Its sales for the 12 months ended September 30, 2018 were $126. The purchase price for the shares is approximately $214 on a cash and debt free basis. As required by the Turkish capital markets legislation, Eaton filed an application to execute a mandatory tender offer for the remaining shares shortly after the transaction closed. During the tender offer, Eaton purchased additional shares for $33 through July 2019 to increase its ownership interest to 93.7%. Ulusoy Elektrik is reported within the Electrical Systems and Services business segment. Acquisition of Innovative Switchgear Solutions, Inc. On July 19, 2019, Eaton acquired Innovative Switchgear Solutions, Inc. (ISG), a specialty manufacturer of medium-voltage electrical equipment serving the North American utility, commercial and industrial markets. Its 2018 sales were approximately $18. ISG will be reported within the Electrical Systems and Services business segment. Commitment to acquire Souriau-Sunbank Connection Technologies On July 22, 2019, Eaton committed to acquire the Souriau-Sunbank Connection Technologies (Souriau-Sunbank) business of TransDigm Group Inc. for $920. Headquartered in Versailles, France, Souriau-Sunbank is a global leader in highly engineered electrical interconnect solutions for harsh environments in the aerospace, defense, industrial, energy, and transport markets. Its sales for the 12 months ended June 30, 2019 were $363. Completion of the acquisition is subject to the required consultation processes with works councils, customary closing conditions, regulatory approvals, and Transdigm’s completion of other required steps. The transaction is expected to close by the end of 2019. Spin-off of Lighting business On March 1, 2019, Eaton announced it plans to pursue a tax-free spin-off of its Lighting business. The spin-off will create an independent, publicly traded company and is expected to be completed by the end of 2019. Plan to divest Automotive Fluid Conveyance business On March 1, 2019, Eaton announced it plans to sell its Automotive Fluid Conveyance business.
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ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES |
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Acquisition, Integration and Divestiture Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION INTEGRATION CHARGES | ACQUISITION INTEGRATION AND DIVESTITURE CHARGES Eaton incurs integration charges related to acquired businesses, and transaction and other charges to divest businesses. A summary of these charges follows:
Business segment charges in 2019 are related to the planned spin-off of the Lighting business and the acquisition of Ulusoy Elektrik, and were included in Selling and administrative expense. In Business Segment Information, the charges reduced Operating profit of the related business segment. Corporate charges in 2019 are primarily related to the planned spin-off of the Lighting business and were included in Selling and administrative expense. In Business Segment Information, the charges were included in Other corporate expense - net. See Note 15 for additional information about business segments.
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REVENUE RECOGNITION |
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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 six operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market.
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 $3,585 and $3,402 at June 30, 2019 and December 31, 2018, 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 $93 and $94 at June 30, 2019 and December 31, 2018, respectively, and are recorded in Prepaid expenses and other current assets. Changes in the deferred revenue liabilities are as follows:
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GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL | GOODWILL Change in the carrying amount of goodwill by segment follows:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES Eaton leases certain manufacturing facilities, warehouses, distribution centers, office space, vehicles and equipment. Most real estate leases contain renewal options. The exercise of lease renewal options is at the Company's sole discretion. The Company's lease agreements typically do not contain any significant guarantees of asset values at the end of a lease or restrictive covenants. Payments within certain lease agreements are adjusted periodically for changes in an index or rate. The components of lease expense follows:
The net amount recorded on sale leaseback transactions for the three and six months ended June 30, 2019 were losses of $2 and gains of $16, respectively. Supplemental cash flow information related to leases follows:
Supplemental balance sheet information related to leases follows:
Maturities of lease liabilities at June 30, 2019 follows:
A summary of minimum rental commitments at December 31, 2018 under noncancelable operating leases, which expire at various dates and in most cases contain renewal options, for each of the next five years and thereafter in the aggregate, follow:
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DEBT DEBT |
6 Months Ended |
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Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT On May 14, 2019, a subsidiary of Eaton issued euro denominated notes (2019 Euro Notes) with a face value of €1,100 ($1,232 based on the May 14, 2019 spot rate), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2019 Euro Notes are comprised of two tranches of €600 and €500, which mature in 2021 and 2025, respectively, with interest payable annually at a respective rate of 0.02% and 0.70%. The issuer received proceeds totaling €1,097 ($1,229 based on the May 14, 2019 spot rate) from the issuance, net of financing costs and discounts. The 2019 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2019 Euro Notes contain customary optional redemption and par call provisions. The 2019 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 2019 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 2019 Euro Notes. The 2019 Euro Notes are subject to customary non-financial covenants.
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RETIREMENT BENEFITS PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT BENEFITS PLANS | RETIREMENT BENEFITS PLANS The components of retirement benefits expense follow:
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LEGAL CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL CONTINGENCIES | 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. In December 2011, Pepsi-Cola Metropolitan Bottling Company, Inc. (“Pepsi”) filed an action against (a) Cooper Industries, LLC, Cooper Industries, Ltd., Cooper Holdings, Ltd., Cooper US, Inc., and Cooper Industries plc (collectively, “Cooper”), (b) M&F Worldwide Corp., Mafco Worldwide Corp., Mafco Consolidated Group LLC, and PCT International Holdings, Inc. (collectively, “Mafco”), and (c) the Pneumo Abex Asbestos Claims Settlement Trust (the “Trust”) in Texas state court. Pepsi alleged that it was harmed by a 2011 settlement agreement (“2011 Settlement”) among Cooper, Mafco, and Pneumo Abex, LLC (“Pneumo,” which prior to the 2011 Settlement was a Mafco subsidiary), which settlement resolved litigation that Pneumo had previously brought against Cooper involving, among other things, a guaranty related to Pneumo’s friction products business. In November 2015, after a Texas court ruled that Pepsi's claims should be heard in arbitration, Pepsi filed a demand for arbitration against Cooper, Mafco, the Trust, and Pneumo. Pepsi subsequently dropped claims against all parties except Cooper. An arbitration under the auspices of the American Arbitration Association commenced in October 2017. Pepsi’s experts opined, among other things, that the value contributed to the Trust for a release of the guaranty was below reasonably equivalent value, and that an inability of Pneumo to satisfy future liabilities could result in plaintiffs suing Pepsi under various theories. Cooper submitted various expert reports and, among other things, Cooper’s experts opined that Pepsi had no basis to seek any damages and that Cooper paid reasonably equivalent value for the release of its indemnity obligations under the guaranty. The arbitration proceedings closed in December 2017. On July 11, 2018, the arbitration panel made certain findings and concluded that the value contributed to the Trust did not constitute reasonably equivalent value, but ordered the parties to recalculate the amount that should have been contributed to the Trust as of the date of the 2011 transaction. Based on the findings made by the panel and the recalculation ordered by the panel, Cooper believed that no additional amount should be contributed. Pepsi argued that an additional $347 should be contributed. Cooper and its expert disagreed with Pepsi’s argument and believed that Pepsi’s recalculation was flawed and failed to comply with the instructions of the panel. On August 23, 2018, the panel issued its final award and ordered Cooper to pay $293 to Pneumo Abex. On August 30, 2018, Pepsi sought to confirm the award in Texas state court, which Cooper opposed on October 9, 2018. Cooper further requested that the court vacate the award on various grounds, including that Cooper was prejudiced by the conduct of the proceedings, the panel exceeded its powers, and because the panel denied Cooper a full and fair opportunity to present certain evidence. The court confirmed the award at the confirmation hearing, which was held on October 12, 2018. On November 2, 2018, the Company appealed. On November 28, 2018, the Company paid $297, the full judgment plus accrued post-judgment interest, to Pneumo Abex and preserved its rights, including to appeal. On April 25, 2019, the appeal that Cooper filed was dismissed.
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INCOME TAXES |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective income tax rate for the second quarter and the first six months of 2019 was expense of 13.9% and 13.7% compared to expense of 12.0% and 12.8% for the second quarter and first six months of 2018. The increase in the effective tax rate in the second quarter and first six months of 2019 was due to greater levels of income in higher tax jurisdictions. As the Company has previously disclosed, Eaton's United States subsidiaries ("Eaton US") received a Notice in 2014 from the Internal Revenue Service ("IRS") for tax years 2007 through 2010 which included proposed assessments involving two issues: the recognition of income for several of Eaton US's controlled foreign corporations, and 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. The Company believed the proposed assessments were without merit and contested both matters in the United States Tax Court ("Tax Court"). Eaton US and the IRS both moved for partial summary judgment on the controlled foreign corporation income recognition issue. The Tax Court heard oral arguments on the motions in January 2018, following which the Court ordered further briefing, which was completed in March 2018. On February 25, 2019, the Tax Court granted the IRS's motion for partial summary judgment and denied Eaton's. The Company intends to appeal the Tax Court's partial summary judgment decision to the United States Sixth Circuit Court of Appeals. The Company believes that it will be successful on appeal and has not recorded any additional impact of the Tax Court's decision in its consolidated financial statements. As previously disclosed, the transfer pricing issue included in the Notice remains unresolved at this point. The total potential impact of the Tax Court's partial summary judgment decision on the controlled foreign corporation income recognition issue is not estimable until all matters in the open tax years have been resolved.
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EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY On February 24, 2016, the Board of Directors adopted a share repurchase program for share repurchases up to $2,500 of ordinary shares (2016 Program). During the three and six months ended June 30, 2018, 4.0 million and 7.7 million ordinary shares, respectively, were repurchased under the 2016 Program in the open market at a total cost of $300 and $600, respectively. On February 27, 2019, the Board of Directors adopted a new share repurchase program for share repurchases up to $5,000 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 six months ended June 30, 2019, 3.2 million and 5.1 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $260 and $410, respectively. The changes in Shareholders’ equity follow:
The changes in Accumulated other comprehensive loss follow:
The reclassifications out of Accumulated other comprehensive loss follow:
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:
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FAIR VALUE MEASUREMENTS |
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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 recognized at fair value, and the fair value measurements used, follows:
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. No financial instruments were measured using unobservable inputs. Other Fair Value Measurements Long-term debt and the current portion of long-term debt had a carrying value of $8,084 and fair value of $8,513 at June 30, 2019 compared to $7,107 and $7,061, respectively, at December 31, 2018. 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.
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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 a non-derivative net investment hedging instrument had a carrying value on a pre-tax basis of $1,867 at June 30, 2019 and $623 at December 31, 2018. Derivative Financial Statement Impacts The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows:
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. For the six months ended June 30, 2019, $50 of cash inflow resulting from the settlement of these derivatives has been classified in investing activities on the Condensed Consolidated Statement of Cash Flows. The net cash flow from the settlement of these derivatives has been presented in operating activities in prior periods and have not been restated as such amounts are not material. As of June 30, 2019, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
The following amounts were recorded on the consolidated balance sheet related to fixed-to-floating interest rate swaps:
(a) At June 30, 2019, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $42. The impact of hedging activities to the Consolidated Statement of Income are as follow:
The impact of derivatives not designated as hedges to the Consolidated Statement of Income are as follow:
The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statement of Income and Comprehensive Income follow:
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INVENTORY |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | INVENTORY Inventory is carried at lower of cost or net realizable value. The components of inventory follow:
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BUSINESS SEGMENT INFORMATION |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 Products, Electrical Systems and Services, Hydraulics, Aerospace, Vehicle, and eMobility. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton’s business segments, see Note 16 to the Consolidated Financial Statements contained in the 2018 Form 10-K.
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CONDENSED CONSOLIDATING FINANCIAL STATEMENTS |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | CONDENSED CONSOLIDATING FINANCIAL STATEMENTS The Registered Senior Notes issued by Eaton Corporation are registered under the Securities Act of 1933. Eaton and certain of Eaton's 100% owned direct and indirect subsidiaries (the Guarantors) fully and unconditionally guaranteed (subject, in the case of the Guarantors, other than Eaton, to customary release provisions as described below), on a joint and several basis, the Registered Senior Notes. The following condensed consolidating financial statements are included so that separate financial statements of Eaton, Eaton Corporation and each of the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating adjustments primarily relate to eliminations of investments in subsidiaries and intercompany balances and transactions. The condensed consolidating financial statements present investments in subsidiaries using the equity method of accounting. See Note 7 of Eaton's 2018 Form 10-K for additional information related to the Registered Senior Notes. The guarantee of a Guarantor that is not a parent of the issuer will be automatically and unconditionally released and discharged in the event of any sale of the Guarantor or of all or substantially all of its assets, or in connection with the release or termination of the Guarantor as a guarantor under all other U.S. debt securities or U.S. syndicated credit facilities, subject to limitations set forth in the indenture. The guarantee of a Guarantor that is a direct or indirect parent of the issuer will only be automatically and unconditionally released and discharged in connection with the release or termination of such Guarantor as a guarantor under all other debt securities or syndicated credit facilities (in both cases, U.S. or otherwise), subject to limitations set forth in the indenture. During 2019 and 2018, the Company undertook certain steps to restructure ownership of various subsidiaries. The transactions were entirely among wholly-owned subsidiaries under the common control of Eaton. These restructurings have been reflected as of the beginning of the earliest period presented below.
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BASIS OF PRESENTATION (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | 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 2018 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.
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Leases | Leases The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease.
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Adoption of ASU 2016-02 | Adoption of New Accounting Standards Eaton adopted Accounting Standard Update 2016-02, Leases (Topic 842), and related amendments, in the first quarter of 2019 using the optional transition method and has not restated prior periods. The Company elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the carry forward of historical lease classification of existing leases. The Company recorded a cumulative-effect adjustment of less than $1 to retained earnings as of January 1, 2019. Additionally, the adoption of the new standard resulted in the recording of lease assets and lease liabilities for operating leases of $435 and $446, respectively, as of January 1, 2019. The adoption of the standard did not have a material impact to the Consolidated Statements of Income or Cash Flows.
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Adoption of ASU 2017-12 | Eaton adopted Accounting Standard Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, in the first quarter 2019 using the modified retrospective approach for hedge instruments that existed at the date of adoption. ASU 2017-12 is intended to better align the Company's risk management activities with financial reporting for hedging relationships. The standard eliminates the requirement to separately measure and report hedge ineffectiveness, expands the ability to hedge specific risk components, and generally requires the change in value of the hedge instrument and hedged item to be presented in the same income statement line. The new disclosure requirements were applied on a prospective basis and comparative information has not been restated. The adoption of the standard did not have a material impact on the consolidated financial statements.
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ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES (Table) |
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Acquisition, Integration and Divestiture Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Integration Charges | Eaton incurs integration charges related to acquired businesses, and transaction and other charges to divest businesses. A summary of these charges follows:
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REVENUE RECOGNITION (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Sales | The Company’s six operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market.
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Schedule of Changes in Deferred Revenue Liabilities | Changes in the deferred revenue liabilities are as follows:
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GOODWILL (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Change in the carrying amount of goodwill by segment follows:
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LEASES (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense | The components of lease expense follows:
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Supplemental Cash Flow Related To Leases | Supplemental cash flow information related to leases follows:
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Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases follows:
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Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities at June 30, 2019 follows:
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Finance Lease, Liability, Maturity | Maturities of lease liabilities at June 30, 2019 follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | at December 31, 2018 under noncancelable operating leases, which expire at various dates and in most cases contain renewal options, for each of the next five years and thereafter in the aggregate, follow:
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RETIREMENT BENEFIT PLANS (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits Plans Expense | The components of retirement benefits expense follow:
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EQUITY (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Shareholders' equity | The changes in Shareholders’ equity follow:
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Schedule of Accumulated Other Comprehensive Loss | The changes in Accumulated other comprehensive loss follow:
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Reclassification Out of Accumulated Other Comprehensive Loss | The reclassifications out of Accumulated other comprehensive loss follow:
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.
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Calculation 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:
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Instruments Recognized at Fair Value and Fair Value Measurement Used | A summary of financial instruments recognized at fair value, and the fair value measurements used, follows:
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments Recognized in Condensed Consolidated Balance Sheet | The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows:
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Schedule of Notional Amounts of Outstanding Derivative Positions | As of June 30, 2019, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
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Schedule Of Derivative Instruments Recorded In Balance Sheet | The following amounts were recorded on the consolidated balance sheet related to fixed-to-floating interest rate swaps:
(a) At June 30, 2019, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $42.
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Schedule of Impact of Hedging Activities to Consolidated Statement of Income | The impact of hedging activities to the Consolidated Statement of Income are as follow:
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Amounts Recognized in Net Income | The impact of derivatives not designated as hedges to the Consolidated Statement of Income are as follow:
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Amounts Recognized in Accumulated Other Comprehensive Loss | The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statement of Income and Comprehensive Income follow:
|
INVENTORY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | The components of inventory follow:
|
BUSINESS SEGMENT INFORMATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information |
|
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Statements |
|
BASIS OF PRESENTATION - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease assets | $ 419 | $ 0 | |
Operating Lease Liabilities | $ 432 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative-effect adjustment upon adoption | $ 1 | ||
Operating lease assets | 435 | ||
Operating Lease Liabilities | $ 446 |
ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 14 | $ 0 | $ 26 | $ 0 |
Income taxes | 0 | 0 | 1 | 0 |
Total after income taxes | $ 14 | $ 0 | $ 25 | $ 0 |
Per ordinary share - diluted (dollars per share) | $ 0.03 | $ 0 | $ 0.06 | $ 0 |
Electrical Products | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 1 | $ 0 | $ 2 | $ 0 |
Electrical Systems and Services | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | 1 | 0 | 1 | 0 |
Corporate | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 12 | $ 0 | $ 23 | $ 0 |
REVENUE RECOGNITION - Narrative (Details) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019
USD ($)
segment
|
Dec. 31, 2018
USD ($)
|
|
Revenue from Contract with Customer [Abstract] | ||
Number of operating segments | segment | 6 | |
Accounts receivables from customers | $ 3,585 | $ 3,402 |
Unbilled receivables | 93 | 94 |
Backlog of unsatisfied or partially satisfied obligations | $ 5,500 | $ 5,300 |
Backlog expected to be recognized in the next twelve months (as a percent) | 87.00% | 87.00% |
REVENUE RECOGNITION - Schedule of Changes in Deferred Revenue Liabilities (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Movement in Deferred Revenue [Roll Forward] | ||
Beginning balance | $ 248 | $ 227 |
Customer deposits and billings | 440 | 463 |
Revenue recognized in the period | (440) | (443) |
Translation | 5 | (3) |
Ending balance | $ 253 | $ 244 |
GOODWILL (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 13,328 |
Additions | 144 |
Translation | (9) |
Ending balance | 13,463 |
Electrical Products | |
Goodwill [Roll Forward] | |
Beginning balance | 6,562 |
Additions | 0 |
Translation | (12) |
Ending balance | 6,550 |
Electrical Systems and Services | |
Goodwill [Roll Forward] | |
Beginning balance | 4,241 |
Additions | 144 |
Translation | 13 |
Ending balance | 4,398 |
Hydraulics | |
Goodwill [Roll Forward] | |
Beginning balance | 1,212 |
Additions | 0 |
Translation | (10) |
Ending balance | 1,202 |
Aerospace | |
Goodwill [Roll Forward] | |
Beginning balance | 941 |
Additions | 0 |
Translation | 0 |
Ending balance | 941 |
Vehicle | |
Goodwill [Roll Forward] | |
Beginning balance | 292 |
Additions | 0 |
Translation | 0 |
Ending balance | 292 |
eMobility | |
Goodwill [Roll Forward] | |
Beginning balance | 80 |
Additions | 0 |
Translation | 0 |
Ending balance | $ 80 |
LEASES - Components of Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 36 | $ 78 |
Finance lease cost - Amortization of lease assets | 1 | 2 |
Interest on lease liabilities | 1 | 1 |
Short-term lease cost | 14 | 27 |
Variable lease cost | 7 | 11 |
Sublease income | (1) | (2) |
Total lease cost | $ 58 | $ 117 |
LEASES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Net gain (loss) on sale leaseback transaction | $ (2) | $ 16 |
LEASES - Supplemental Cash Flow Information Related To Leases (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash outflows - payments on operating leases | $ (76) |
Operating cash outflows - interest payments on finance leases | (1) |
Financing cash outflows - payments on finance lease obligations | (2) |
Lease assets obtained in exchange for new lease obligations: | |
Operating leases | 42 |
Finance leases | $ 12 |
LEASES - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
Operating lease assets | $ 419 | $ 0 |
Other current liabilities | 121 | |
Operating lease liabilities | 311 | $ 0 |
Total operating lease liabilities | 432 | |
Accumulated depreciation | (13) | |
Net property, plant and equipment | 17 | |
Current portion of long-term debt | 5 | |
Long-term debt | 13 | |
Total finance lease liabilities | $ 18 | |
Operating leases, weighted average remaining term | 5 years 2 months 12 days | |
Finance leases, weighted average remaining lease term | 4 years 1 month 6 days | |
Operating Lease, weighted average discount rate | 3.60% | |
Finance Lease, weighted average discount rate | 6.10% | |
Land and Building | ||
Lessee, Lease, Description [Line Items] | ||
Finance Lease, right-of-use asset | $ 18 | |
Machinery and Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Finance Lease, right-of-use asset | $ 12 |
LEASES - Maturities of Lease Liabilities Operating and Financing (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | $ 74 |
2020 | 126 |
2021 | 94 |
2022 | 63 |
2023 | 43 |
Thereafter | 87 |
Total lease payments | 487 |
Less imputed interest | 55 |
Operating Lease Liabilities | 432 |
Finance Lease, Liability, Payment, Due [Abstract] | |
2019 | 3 |
2020 | 6 |
2021 | 5 |
2022 | 3 |
2023 | 3 |
Thereafter | 1 |
Total lease payments | 21 |
Less imputed interest | 3 |
Total finance lease liabilities | $ 18 |
LEASES - Maturities of Lease Liabilities (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 165 |
2020 | 133 |
2021 | 106 |
2022 | 75 |
2023 | 53 |
Thereafter | 110 |
Total lease payments | $ 642 |
DEBT DEBT (Details) - May 14, 2019 € in Millions, $ in Millions |
EUR (€) |
USD ($) |
USD ($) |
---|---|---|---|
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 1,100 | $ 1,232 | |
Proceeds from Issuance of Debt | 1,097 | $ 1,229 | |
Tranche One | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 600 | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.02% | 0.02% | |
Tranche Two | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 500 | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.70% | 0.70% |
RETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Pension plan | United States pension benefit expense | ||||
Retirement benefits plans expense | ||||
Service cost | $ 23 | $ 25 | $ 46 | $ 50 |
Interest cost | 34 | 31 | 68 | 61 |
Expected return on plan assets | (59) | (64) | (117) | (127) |
Amortization | 16 | 23 | 31 | 47 |
Total | 14 | 15 | 28 | 31 |
Settlements | 13 | 11 | 23 | 25 |
Total expense | 27 | 26 | 51 | 56 |
Pension plan | Non-United States pension benefit expense | ||||
Retirement benefits plans expense | ||||
Service cost | 15 | 16 | 29 | 32 |
Interest cost | 14 | 13 | 29 | 27 |
Expected return on plan assets | (27) | (26) | (54) | (53) |
Amortization | 9 | 10 | 19 | 20 |
Total | 11 | 13 | 23 | 26 |
Settlements | 1 | 0 | 1 | 0 |
Total expense | 12 | 13 | 24 | 26 |
Other postretirement benefits expense | ||||
Retirement benefits plans expense | ||||
Service cost | 1 | 0 | 1 | 1 |
Interest cost | 4 | 4 | 7 | 7 |
Expected return on plan assets | (1) | (1) | (1) | (2) |
Amortization | (4) | (3) | (7) | (6) |
Total | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Total expense | $ 0 | $ 0 | $ 0 | $ 0 |
LEGAL CONTINGENCIES (Details) - Pneumo Abex Case - USD ($) $ in Millions |
Nov. 28, 2018 |
Aug. 23, 2018 |
Jul. 11, 2018 |
---|---|---|---|
Loss Contingencies [Line Items] | |||
Loss Contingency, Damages Sought, Value | $ 347 | ||
Amount awarded to other party | $ 293 | ||
Payments for Legal Settlements | $ 297 |
INCOME TAXES (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax rate, percent | 13.90% | 12.00% | 13.70% | 12.80% |
EQUITY - Calculation of Net Income per Ordinary Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Calculation of net income per ordinary share attributable to ordinary shareholders | ||||
Net Income Attributable to Eaton ordinary shareholders | $ 636 | $ 610 | $ 1,158 | $ 1,098 |
Weighted-average number of ordinary shares outstanding - diluted (shares) | 423.1 | 437.3 | 424.5 | 439.5 |
Less dilutive effect of equity-based compensation (shares) | 1.5 | 2.1 | 1.7 | 2.5 |
Weighted-average number of ordinary shares outstanding - basic (shares) | 421.6 | 435.2 | 422.8 | 437.0 |
Net income per share attributable to Eaton ordinary shareholders | ||||
Diluted (usd per share) | $ 1.50 | $ 1.39 | $ 2.73 | $ 2.50 |
Basic (usd per share) | $ 1.51 | $ 1.40 | $ 2.74 | $ 2.51 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.8 | 0.6 | 1.2 | 0.3 |
FAIR VALUE MEASUREMENTS - Summary of Financial Instruments at Fair Value (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | $ 412 | $ 283 | $ 256 | $ 561 |
Short-term investments | 385 | 157 | ||
Net derivative contracts | 33 | 14 | ||
Level 1 | ||||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | 412 | 283 | ||
Short-term investments | 385 | 157 | ||
Net derivative contracts | 0 | 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 | 33 | 14 | ||
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 |
FAIR VALUE MEASUREMENTS - Other Fair Value Measurements (Details) - Level 2 - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Fair Value Measurements [Line Items] | ||
Carrying value of long-term debt and current portion of long-term debt | $ 8,084 | $ 7,107 |
Fair value of long-term debt and current portion of long-term debt | $ 8,513 | $ 7,061 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Financial Instrument Recognized in the Consolidated Balance sheet (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Derivatives, Fair Value [Line Items] | |||
Foreign currency note payable, noncurrent, pre-tax | $ 1,867 | $ 623 | |
Derivatives not designated as hedges | |||
Percentage of intercompany balance sheet exposure | 100.00% | ||
Proceeds for settlement of currency exchange contracts not designated as hedges - net | $ 50 | $ 0 | |
Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 9 | 19 | |
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 35 | 40 | |
Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 59 | 24 | |
Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 9 | 12 | |
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 18 | 20 | |
Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 43 | 37 | |
Currency exchange contracts | Other current assets | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 35 | 40 | |
Currency exchange contracts | Other current liabilities | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 18 | 20 | |
Commodity contracts | Other current assets | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 0 | ||
Commodity contracts | Other current liabilities | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 0 | ||
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives designated as hedges | |||
Notional amount | 2,225 | 2,550 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 59 | 22 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | 1 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 1 | 26 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives designated as hedges | |||
Notional amount | 300 | 100 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 30 | 3 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives designated as hedges | |||
Notional amount | 1,132 | 951 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 9 | 19 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 2 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 9 | 11 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 12 | 8 | |
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives designated as hedges | |||
Notional amount | 12 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | ||
Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives designated as hedges | |||
Notional amount | 4,718 | $ 3,886 | |
Derivatives not designated as hedges | Commodity contracts | |||
Derivatives designated as hedges | |||
Notional amount | $ 4 | ||
Minimum | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Minimum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 18 months | 3 months | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, remaining maturity | 34 years | 34 years | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | 1 month | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Minimum | Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | 1 month | |
Minimum | Derivatives not designated as hedges | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Maximum | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 7 months | ||
Maximum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 16 years | 16 years | |
Maximum | Derivatives designated as hedges | Fair value hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, remaining maturity | 34 years | 34 years | |
Maximum | Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 36 months | 36 months | |
Maximum | Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 7 months | ||
Maximum | Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 12 months | 12 months | |
Maximum | Derivatives not designated as hedges | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Volume of Outstanding Commodity Contracts (Details) - Commodity contracts |
6 Months Ended |
---|---|
Jun. 30, 2019
lb
| |
Derivative [Line Items] | |
Derivative, outstanding commodity contract | 5,000,000 |
Minimum | |
Derivative [Line Items] | |
Derivative, term of contract | 1 month |
Maximum | |
Derivative [Line Items] | |
Derivative, term of contract | 7 months |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Balance Sheet Related to Fixed-to-Floating Interest Rate Swaps (Details) - Long-term debt $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Derivative [Line Items] | |
Discontinued hedge, cumulative adjustment | $ 42 |
Interest Rate Swap | |
Derivative [Line Items] | |
Carrying amount of the hedged assets (liabilities) | (2,838) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) | $ (100) |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivative on Consolidated Statement of Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 |
Cost of products sold | 3,697 | $ 3,671 | 7,270 | $ 7,244 |
Interest expense - net | 63 | 129 | ||
Cash Flow Hedging | Net Sales | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 2 | 5 | ||
Gain (loss) on hedging instrument | (2) | (5) | ||
Cash Flow Hedging | Net Sales | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Cost of products sold | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | (4) | (9) | ||
Gain (loss) on hedging instrument | 4 | 9 | ||
Cash Flow Hedging | Cost of products sold | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Interest expense - net | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Interest expense - net | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Net Sales | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Cost of products sold | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Interest expense - net | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | (40) | (63) | ||
Gain (loss) on hedging instrument | $ 40 | $ 63 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ 7 | $ 48 |
Currency exchange contracts | Other income - net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | 8 | 48 |
Commodity contracts | Cost of products sold | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ (1) | $ 0 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recognized in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Cash flow hedge gain (loss) to be reclassified within the next twelve months | $ 0 | $ (5) | ||
Interest expense - net | Forward starting floating-to-fixed interest rate swaps | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | $ (18) | $ 0 | (27) | 0 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Cost of products sold | Currency exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | (10) | (15) | (10) | (2) |
Gain (loss) reclassified from Accumulated other comprehensive loss | 2 | (4) | 4 | (8) |
Cost of products sold | Commodity contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | (2) | 0 | 0 | 0 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Other income - net | Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | 0 | 41 | 12 | 17 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Total | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total, gain (loss) on derivative and net investment hedge recognized in other comprehensive (loss) income | (30) | 26 | (25) | 15 |
Total, gain (loss) on derivative and net investment hedge recognized in accumulated other comprehensive (loss) income | $ 2 | $ (4) | $ 4 | $ (8) |
INVENTORY (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,089 | $ 1,077 |
Work-in-process | 565 | 500 |
Finished goods | 1,199 | 1,208 |
Total inventory | $ 2,853 | $ 2,785 |
BUSINESS SEGMENT INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Business Segment Information | ||||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 | ||
Corporate | ||||||
Interest expense - net | 63 | 68 | 129 | 138 | ||
Pension and other postretirement benefits expense | (75) | (82) | ||||
Other corporate expense - net | (23) | 8 | (33) | 6 | ||
Income before income taxes | 738 | 694 | 1,341 | 1,259 | ||
Income tax expense | 102 | 83 | 183 | 161 | ||
Net income | 636 | $ 522 | 611 | $ 487 | 1,158 | 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net Income Attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Electrical Products | ||||||
Business Segment Information | ||||||
Net sales | 1,849 | 1,806 | 3,609 | 3,538 | ||
Electrical Systems and Services | ||||||
Business Segment Information | ||||||
Net sales | 1,582 | 1,513 | 3,046 | 2,894 | ||
Hydraulics | ||||||
Business Segment Information | ||||||
Net sales | 698 | 723 | 1,384 | 1,433 | ||
Aerospace | ||||||
Business Segment Information | ||||||
Net sales | 517 | 463 | 1,019 | 921 | ||
Vehicle | ||||||
Business Segment Information | ||||||
Net sales | 803 | 899 | 1,613 | 1,792 | ||
eMobility | ||||||
Business Segment Information | ||||||
Net sales | 84 | 83 | 167 | 160 | ||
Total business segments | ||||||
Business Segment Information | ||||||
Net sales | 5,533 | 5,487 | 10,838 | 10,738 | ||
Segment operating profit | 986 | 932 | 1,832 | 1,728 | ||
Total business segments | Electrical Products | ||||||
Business Segment Information | ||||||
Net sales | 1,849 | 1,806 | 3,609 | 3,538 | ||
Segment operating profit | 361 | 334 | 692 | 641 | ||
Total business segments | Electrical Systems and Services | ||||||
Business Segment Information | ||||||
Net sales | 1,582 | 1,513 | 3,046 | 2,894 | ||
Segment operating profit | 275 | 227 | 467 | 394 | ||
Total business segments | Hydraulics | ||||||
Business Segment Information | ||||||
Net sales | 698 | 723 | 1,384 | 1,433 | ||
Segment operating profit | 80 | 101 | 160 | 191 | ||
Total business segments | Aerospace | ||||||
Business Segment Information | ||||||
Net sales | 517 | 463 | 1,019 | 921 | ||
Segment operating profit | 127 | 90 | 243 | 179 | ||
Total business segments | Vehicle | ||||||
Business Segment Information | ||||||
Net sales | 803 | 899 | 1,613 | 1,792 | ||
Segment operating profit | 136 | 166 | 258 | 298 | ||
Total business segments | eMobility | ||||||
Business Segment Information | ||||||
Net sales | 84 | 83 | 167 | 160 | ||
Segment operating profit | 7 | 14 | 12 | 25 | ||
Corporate | ||||||
Corporate | ||||||
Amortization of intangible assets | (94) | (96) | (187) | (194) | ||
Interest expense - net | (63) | (68) | (129) | (138) | ||
Pension and other postretirement benefits expense | (2) | 1 | (2) | (1) | ||
Other corporate expense - net | $ (89) | $ (75) | $ (173) | $ (136) |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Narrative (Details) |
May 14, 2019 |
Sep. 15, 2017 |
Oct. 14, 2016 |
---|---|---|---|
Condensed Consolidating Financial Information [Abstract] | |||
Eaton and certain other 100% owned subsidiaries guarantee of Senior Debt | 100.00% | 100.00% | 100.00% |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 | ||
Cost of products sold | 3,697 | 3,671 | 7,270 | 7,244 | ||
Selling and administrative expense | 907 | 901 | 1,824 | 1,790 | ||
Research and development expense | 151 | 145 | 307 | 301 | ||
Interest expense (income) - net | 63 | 68 | 129 | 138 | ||
Other (income) expense - net | (23) | 8 | (33) | 6 | ||
Equity in loss (earnings) of subsidiaries, net of tax | 0 | 0 | 0 | 0 | ||
Intercompany expense (income) - net | 0 | 0 | 0 | 0 | ||
Income before income taxes | 738 | 694 | 1,341 | 1,259 | ||
Income tax expense (benefit) | 102 | 83 | 183 | 161 | ||
Net income | 636 | $ 522 | 611 | $ 487 | 1,158 | 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Other comprehensive income (loss) | (30) | $ 67 | (624) | $ 296 | 37 | (328) |
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 606 | (14) | 1,195 | 770 | ||
Guarantors | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 1,902 | 1,790 | 3,722 | 3,490 | ||
Cost of products sold | 1,377 | 1,289 | 2,666 | 2,525 | ||
Selling and administrative expense | 205 | 200 | 410 | 378 | ||
Research and development expense | 37 | 35 | 75 | 76 | ||
Interest expense (income) - net | 5 | 4 | 9 | 8 | ||
Other (income) expense - net | (14) | 36 | (22) | 27 | ||
Equity in loss (earnings) of subsidiaries, net of tax | (731) | (899) | (1,562) | (1,696) | ||
Intercompany expense (income) - net | 426 | 557 | 873 | 1,044 | ||
Income before income taxes | 597 | 568 | 1,273 | 1,128 | ||
Income tax expense (benefit) | (23) | (14) | (35) | (28) | ||
Net income | 620 | 582 | 1,308 | 1,156 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 620 | 582 | 1,308 | 1,156 | ||
Other comprehensive income (loss) | (19) | (584) | 53 | (300) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 601 | (2) | 1,361 | 856 | ||
Other subsidiaries | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 3,134 | 3,242 | 6,172 | 6,433 | ||
Cost of products sold | 2,230 | 2,312 | 4,425 | 4,622 | ||
Selling and administrative expense | 340 | 303 | 687 | 670 | ||
Research and development expense | 79 | 73 | 156 | 149 | ||
Interest expense (income) - net | (7) | (6) | (13) | (7) | ||
Other (income) expense - net | (14) | 0 | 4 | (16) | ||
Equity in loss (earnings) of subsidiaries, net of tax | (660) | (642) | (1,395) | (1,283) | ||
Intercompany expense (income) - net | (474) | (593) | (898) | (1,063) | ||
Income before income taxes | 1,640 | 1,795 | 3,206 | 3,361 | ||
Income tax expense (benefit) | 118 | 104 | 204 | 203 | ||
Net income | 1,522 | 1,691 | 3,002 | 3,158 | ||
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 1,522 | 1,690 | 3,002 | 3,158 | ||
Other comprehensive income (loss) | 2 | (1,381) | 93 | (772) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 1,524 | 309 | 3,095 | 2,386 | ||
Consolidating adjustments | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | (1,327) | (1,354) | (2,638) | (2,683) | ||
Cost of products sold | (1,331) | (1,357) | (2,632) | (2,682) | ||
Selling and administrative expense | 0 | 0 | 0 | 0 | ||
Research and development expense | 0 | 0 | 0 | 0 | ||
Interest expense (income) - net | (1) | 3 | (2) | 2 | ||
Other (income) expense - net | 0 | 0 | 0 | 0 | ||
Equity in loss (earnings) of subsidiaries, net of tax | 2,214 | 2,317 | 4,613 | 4,517 | ||
Intercompany expense (income) - net | 0 | 0 | 0 | 0 | ||
Income before income taxes | (2,209) | (2,317) | (4,617) | (4,520) | ||
Income tax expense (benefit) | 1 | 0 | (1) | (1) | ||
Net income | (2,210) | (2,317) | (4,616) | (4,519) | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | (2,210) | (2,317) | (4,616) | (4,519) | ||
Other comprehensive income (loss) | 7 | 1,990 | (150) | 1,087 | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | (2,203) | (327) | (4,766) | (3,432) | ||
Eaton Corporation plc | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 0 | 0 | 0 | 0 | ||
Cost of products sold | 0 | 0 | 0 | 0 | ||
Selling and administrative expense | 2 | 2 | 6 | 5 | ||
Research and development expense | 0 | 0 | 0 | 0 | ||
Interest expense (income) - net | 0 | 0 | 0 | 0 | ||
Other (income) expense - net | (1) | (37) | (13) | (19) | ||
Equity in loss (earnings) of subsidiaries, net of tax | (647) | (587) | (1,174) | (1,101) | ||
Intercompany expense (income) - net | 10 | 12 | 23 | 17 | ||
Income before income taxes | 636 | 610 | 1,158 | 1,098 | ||
Income tax expense (benefit) | 0 | 0 | 0 | 0 | ||
Net income | 636 | 610 | 1,158 | 1,098 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Other comprehensive income (loss) | (30) | (624) | 37 | (328) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 606 | (14) | 1,195 | 770 | ||
Eaton Corporation | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 1,824 | 1,809 | 3,582 | 3,498 | ||
Cost of products sold | 1,421 | 1,427 | 2,811 | 2,779 | ||
Selling and administrative expense | 360 | 396 | 721 | 737 | ||
Research and development expense | 35 | 37 | 76 | 76 | ||
Interest expense (income) - net | 66 | 67 | 135 | 135 | ||
Other (income) expense - net | 6 | 9 | (2) | 14 | ||
Equity in loss (earnings) of subsidiaries, net of tax | (176) | (189) | (482) | (437) | ||
Intercompany expense (income) - net | 38 | 24 | 2 | 2 | ||
Income before income taxes | 74 | 38 | 321 | 192 | ||
Income tax expense (benefit) | 6 | (7) | 15 | (13) | ||
Net income | 68 | 45 | 306 | 205 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 68 | 45 | 306 | 205 | ||
Other comprehensive income (loss) | 10 | (25) | 4 | (15) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ 78 | $ 20 | $ 310 | $ 190 |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|---|
Current assets | ||||||
Cash | $ 412 | $ 283 | $ 256 | $ 561 | ||
Short-term investments | 385 | 157 | ||||
Accounts receivable - net | 3,944 | 3,858 | ||||
Intercompany accounts receivable | 0 | 0 | ||||
Inventory | 2,853 | 2,785 | ||||
Prepaid expenses and other current assets | 532 | 507 | ||||
Total current assets | 8,126 | 7,590 | ||||
Property, plant and equipment - net | 3,510 | 3,467 | ||||
Other noncurrent assets | ||||||
Goodwill | 13,463 | 13,328 | ||||
Other intangible assets | 4,766 | 4,846 | ||||
Operating lease assets | 419 | 0 | ||||
Deferred income taxes | 303 | 293 | ||||
Investment in subsidiaries | 0 | 0 | ||||
Intercompany loans receivables | 0 | 0 | ||||
Other assets | 1,657 | 1,568 | ||||
Total assets | 32,244 | 31,092 | ||||
Current liabilities | ||||||
Short-term debt | 2 | 414 | ||||
Current portion of long-term debt | 5 | 339 | ||||
Accounts payable | 2,268 | 2,130 | ||||
Intercompany accounts payable | 0 | 0 | ||||
Accrued compensation | 357 | 457 | ||||
Other current liabilities | 1,818 | 1,814 | ||||
Total current liabilities | 4,450 | 5,154 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 8,079 | 6,768 | ||||
Pension liabilities | 1,266 | 1,304 | ||||
Other postretirement benefits liabilities | 324 | 321 | ||||
Operating lease liabilities | 311 | 0 | ||||
Deferred income taxes | 389 | 349 | ||||
Intercompany loans payable | 0 | 0 | ||||
Other noncurrent liabilities | 1,064 | 1,054 | ||||
Total noncurrent liabilities | 11,433 | 9,796 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 16,306 | 16,107 | ||||
Noncontrolling interests | 55 | 35 | ||||
Total equity | 16,361 | $ 16,267 | 16,142 | 16,725 | $ 17,301 | 17,290 |
Total liabilities and equity | 32,244 | 31,092 | ||||
Consolidating adjustments | ||||||
Current assets | ||||||
Cash | 0 | 0 | 0 | 0 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 0 | 0 | ||||
Intercompany accounts receivable | (5,259) | (6,394) | ||||
Inventory | (82) | (76) | ||||
Prepaid expenses and other current assets | 16 | 14 | ||||
Total current assets | (5,325) | (6,456) | ||||
Property, plant and equipment - net | 0 | 0 | ||||
Other noncurrent assets | ||||||
Goodwill | 0 | 0 | ||||
Other intangible assets | 0 | 0 | ||||
Operating lease assets | 0 | |||||
Deferred income taxes | (286) | (335) | ||||
Investment in subsidiaries | (143,780) | (139,323) | ||||
Intercompany loans receivables | (72,291) | (74,904) | ||||
Other assets | 0 | 0 | ||||
Total assets | (221,682) | (221,018) | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 0 | 0 | ||||
Intercompany accounts payable | (5,259) | (6,394) | ||||
Accrued compensation | 0 | 0 | ||||
Other current liabilities | (1) | (2) | ||||
Total current liabilities | (5,260) | (6,396) | ||||
Noncurrent liabilities | ||||||
Long-term debt | 0 | 2 | ||||
Pension liabilities | 0 | 0 | ||||
Other postretirement benefits liabilities | 0 | 0 | ||||
Operating lease liabilities | 0 | |||||
Deferred income taxes | (286) | (335) | ||||
Intercompany loans payable | (72,291) | (74,904) | ||||
Other noncurrent liabilities | 0 | 0 | ||||
Total noncurrent liabilities | (72,577) | (75,237) | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | (143,845) | (139,385) | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | (143,845) | (139,385) | ||||
Total liabilities and equity | (221,682) | (221,018) | ||||
Other subsidiaries | ||||||
Current assets | ||||||
Cash | 332 | 261 | 241 | 360 | ||
Short-term investments | 285 | 157 | ||||
Accounts receivable - net | 2,166 | 1,975 | ||||
Intercompany accounts receivable | 2,416 | 2,968 | ||||
Inventory | 1,544 | 1,555 | ||||
Prepaid expenses and other current assets | 391 | 354 | ||||
Total current assets | 7,134 | 7,270 | ||||
Property, plant and equipment - net | 1,989 | 1,946 | ||||
Other noncurrent assets | ||||||
Goodwill | 5,428 | 5,293 | ||||
Other intangible assets | 1,662 | 1,664 | ||||
Operating lease assets | 212 | |||||
Deferred income taxes | 292 | 288 | ||||
Investment in subsidiaries | 26,986 | 25,557 | ||||
Intercompany loans receivables | 59,617 | 59,078 | ||||
Other assets | 724 | 705 | ||||
Total assets | 104,044 | 101,801 | ||||
Current liabilities | ||||||
Short-term debt | 2 | 26 | ||||
Current portion of long-term debt | 2 | 1 | ||||
Accounts payable | 1,312 | 1,238 | ||||
Intercompany accounts payable | 1,154 | 2,029 | ||||
Accrued compensation | 236 | 251 | ||||
Other current liabilities | 1,014 | 1,002 | ||||
Total current liabilities | 3,720 | 4,547 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 6 | 7 | ||||
Pension liabilities | 759 | 791 | ||||
Other postretirement benefits liabilities | 74 | 72 | ||||
Operating lease liabilities | 158 | |||||
Deferred income taxes | 201 | 175 | ||||
Intercompany loans payable | 1,125 | 1,399 | ||||
Other noncurrent liabilities | 369 | 374 | ||||
Total noncurrent liabilities | 2,692 | 2,818 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 97,577 | 94,401 | ||||
Noncontrolling interests | 55 | 35 | ||||
Total equity | 97,632 | 94,436 | ||||
Total liabilities and equity | 104,044 | 101,801 | ||||
Guarantors | ||||||
Current assets | ||||||
Cash | 9 | 0 | 10 | 18 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 1,170 | 1,400 | ||||
Intercompany accounts receivable | 2,102 | 1,851 | ||||
Inventory | 854 | 766 | ||||
Prepaid expenses and other current assets | 29 | 32 | ||||
Total current assets | 4,164 | 4,049 | ||||
Property, plant and equipment - net | 670 | 678 | ||||
Other noncurrent assets | ||||||
Goodwill | 6,705 | 6,705 | ||||
Other intangible assets | 2,980 | 3,054 | ||||
Operating lease assets | 59 | |||||
Deferred income taxes | 0 | 0 | ||||
Investment in subsidiaries | 72,600 | 71,334 | ||||
Intercompany loans receivables | 6,962 | 8,406 | ||||
Other assets | 156 | 117 | ||||
Total assets | 94,296 | 94,343 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 472 | 416 | ||||
Intercompany accounts payable | 2,852 | 3,206 | ||||
Accrued compensation | 45 | 71 | ||||
Other current liabilities | 265 | 259 | ||||
Total current liabilities | 3,634 | 3,952 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 2,187 | 945 | ||||
Pension liabilities | 128 | 130 | ||||
Other postretirement benefits liabilities | 83 | 83 | ||||
Operating lease liabilities | 45 | |||||
Deferred income taxes | 474 | 508 | ||||
Intercompany loans payable | 64,429 | 66,507 | ||||
Other noncurrent liabilities | 295 | 291 | ||||
Total noncurrent liabilities | 67,641 | 68,464 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 23,021 | 21,927 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 23,021 | 21,927 | ||||
Total liabilities and equity | 94,296 | 94,343 | ||||
Eaton Corporation | ||||||
Current assets | ||||||
Cash | 70 | 21 | 5 | 183 | ||
Short-term investments | 100 | 0 | ||||
Accounts receivable - net | 608 | 483 | ||||
Intercompany accounts receivable | 739 | 1,575 | ||||
Inventory | 537 | 540 | ||||
Prepaid expenses and other current assets | 96 | 107 | ||||
Total current assets | 2,150 | 2,726 | ||||
Property, plant and equipment - net | 851 | 843 | ||||
Other noncurrent assets | ||||||
Goodwill | 1,330 | 1,330 | ||||
Other intangible assets | 124 | 128 | ||||
Operating lease assets | 148 | |||||
Deferred income taxes | 297 | 340 | ||||
Investment in subsidiaries | 26,501 | 25,956 | ||||
Intercompany loans receivables | 5,703 | 5,912 | ||||
Other assets | 777 | 746 | ||||
Total assets | 37,881 | 37,981 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 388 | ||||
Current portion of long-term debt | 3 | 338 | ||||
Accounts payable | 484 | 476 | ||||
Intercompany accounts payable | 1,245 | 1,127 | ||||
Accrued compensation | 76 | 135 | ||||
Other current liabilities | 539 | 525 | ||||
Total current liabilities | 2,347 | 2,989 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 5,886 | 5,814 | ||||
Pension liabilities | 379 | 383 | ||||
Other postretirement benefits liabilities | 167 | 166 | ||||
Operating lease liabilities | 108 | |||||
Deferred income taxes | 0 | 1 | ||||
Intercompany loans payable | 5,347 | 5,182 | ||||
Other noncurrent liabilities | 400 | 389 | ||||
Total noncurrent liabilities | 12,287 | 11,935 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 23,247 | 23,057 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 23,247 | 23,057 | ||||
Total liabilities and equity | 37,881 | 37,981 | ||||
Eaton Corporation plc | ||||||
Current assets | ||||||
Cash | 1 | 1 | $ 0 | $ 0 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 0 | 0 | ||||
Intercompany accounts receivable | 2 | 0 | ||||
Inventory | 0 | 0 | ||||
Prepaid expenses and other current assets | 0 | 0 | ||||
Total current assets | 3 | 1 | ||||
Property, plant and equipment - net | 0 | 0 | ||||
Other noncurrent assets | ||||||
Goodwill | 0 | 0 | ||||
Other intangible assets | 0 | 0 | ||||
Operating lease assets | 0 | |||||
Deferred income taxes | 0 | 0 | ||||
Investment in subsidiaries | 17,693 | 16,476 | ||||
Intercompany loans receivables | 9 | 1,508 | ||||
Other assets | 0 | 0 | ||||
Total assets | 17,705 | 17,985 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 0 | 0 | ||||
Intercompany accounts payable | 8 | 32 | ||||
Accrued compensation | 0 | 0 | ||||
Other current liabilities | 1 | 30 | ||||
Total current liabilities | 9 | 62 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 0 | 0 | ||||
Pension liabilities | 0 | 0 | ||||
Other postretirement benefits liabilities | 0 | 0 | ||||
Operating lease liabilities | 0 | |||||
Deferred income taxes | 0 | 0 | ||||
Intercompany loans payable | 1,390 | 1,816 | ||||
Other noncurrent liabilities | 0 | 0 | ||||
Total noncurrent liabilities | 1,390 | 1,816 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 16,306 | 16,107 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 16,306 | 16,107 | ||||
Total liabilities and equity | $ 17,705 | $ 17,985 |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 1,431 | $ 838 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (298) | (280) |
Cash paid for acquisition of a business, net of cash acquired | (243) | 0 |
Sales (purchases) of short-term investments - net | (221) | 284 |
Investments in affiliates | 0 | |
Loans to affiliates | 0 | 0 |
Repayments of loans from affiliates | 0 | 0 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 50 | 0 |
Other - net | 2 | (41) |
Net cash provided by (used in) investing activities | (710) | (37) |
Financing activities | ||
Proceeds from borrowings | 1,232 | 500 |
Payments on borrowings | (757) | (486) |
Proceeds from borrowings from affiliates | 0 | 0 |
Payments on borrowings from affiliates | 0 | 0 |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | (609) | (578) |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 25 | 21 |
Repurchase of shares | (440) | (600) |
Payment, Tax Withholding, Share-based Payment Arrangement | (44) | (23) |
Other - net | (6) | (2) |
Net cash provided by (used in) financing activities | (599) | (1,168) |
Effect of currency on cash | 7 | 62 |
Total increase (decrease) in cash | 129 | (305) |
Cash at the beginning of the period | 283 | 561 |
Cash at the end of the period | 412 | 256 |
Consolidating adjustments | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 0 | (84) |
Investing activities | ||
Capital expenditures for property, plant and equipment | 0 | 0 |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 36 | |
Loans to affiliates | 3,832 | 3,748 |
Repayments of loans from affiliates | (2,538) | (4,503) |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 0 | 0 |
Net cash provided by (used in) investing activities | 1,294 | (719) |
Financing activities | ||
Proceeds from borrowings | 0 | 0 |
Payments on borrowings | 0 | 0 |
Proceeds from borrowings from affiliates | (3,832) | (3,748) |
Payments on borrowings from affiliates | 2,538 | 4,503 |
Capital contributions from affiliates | (36) | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 84 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | 0 | 0 |
Other - net | 0 | 0 |
Net cash provided by (used in) financing activities | (1,294) | 803 |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 0 | 0 |
Cash at the beginning of the period | 0 | 0 |
Cash at the end of the period | 0 | 0 |
Guarantors | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 366 | 103 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (56) | (50) |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 0 | |
Loans to affiliates | (280) | (84) |
Repayments of loans from affiliates | 0 | 886 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 26 | 0 |
Net cash provided by (used in) investing activities | (310) | 752 |
Financing activities | ||
Proceeds from borrowings | 1,232 | 0 |
Payments on borrowings | 0 | (36) |
Proceeds from borrowings from affiliates | 381 | 50 |
Payments on borrowings from affiliates | (458) | (524) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | (1,191) | (348) |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (7) | (5) |
Other - net | (4) | 0 |
Net cash provided by (used in) financing activities | (47) | (863) |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 9 | (8) |
Cash at the beginning of the period | 0 | 18 |
Cash at the end of the period | 9 | 10 |
Other subsidiaries | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 429 | 928 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (192) | (181) |
Cash paid for acquisition of a business, net of cash acquired | (243) | |
Sales (purchases) of short-term investments - net | (121) | 284 |
Investments in affiliates | 0 | |
Loans to affiliates | (3,260) | (3,564) |
Repayments of loans from affiliates | 1,982 | 3,110 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 51 | |
Other - net | (9) | (18) |
Net cash provided by (used in) investing activities | (1,792) | (369) |
Financing activities | ||
Proceeds from borrowings | 0 | 19 |
Payments on borrowings | (29) | 0 |
Proceeds from borrowings from affiliates | 572 | 99 |
Payments on borrowings from affiliates | (457) | (760) |
Capital contributions from affiliates | 36 | |
Other intercompany financing activities | 1,345 | (47) |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | (84) | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (2) | (2) |
Other - net | (2) | (1) |
Net cash provided by (used in) financing activities | 1,427 | (740) |
Effect of currency on cash | 7 | 62 |
Total increase (decrease) in cash | 71 | (119) |
Cash at the beginning of the period | 261 | 360 |
Cash at the end of the period | 332 | 241 |
Eaton Corporation plc | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (49) | 0 |
Investing activities | ||
Capital expenditures for property, plant and equipment | 0 | 0 |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 0 | |
Loans to affiliates | 0 | 0 |
Repayments of loans from affiliates | 0 | 0 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 0 | 0 |
Net cash provided by (used in) investing activities | 0 | 0 |
Financing activities | ||
Proceeds from borrowings | 0 | 0 |
Payments on borrowings | 0 | 0 |
Proceeds from borrowings from affiliates | 1,089 | 2,383 |
Payments on borrowings from affiliates | (16) | (1,226) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | (609) | (578) |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 25 | 21 |
Repurchase of shares | (440) | (600) |
Payment, Tax Withholding, Share-based Payment Arrangement | 0 | 0 |
Other - net | 0 | 0 |
Net cash provided by (used in) financing activities | 49 | 0 |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 0 | 0 |
Cash at the beginning of the period | 1 | 0 |
Cash at the end of the period | 1 | 0 |
Eaton Corporation | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 685 | (109) |
Investing activities | ||
Capital expenditures for property, plant and equipment | (50) | (49) |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | (100) | 0 |
Investments in affiliates | (36) | |
Loans to affiliates | (292) | (100) |
Repayments of loans from affiliates | 556 | 507 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | (1) | |
Other - net | (15) | (23) |
Net cash provided by (used in) investing activities | 98 | 299 |
Financing activities | ||
Proceeds from borrowings | 0 | 481 |
Payments on borrowings | (728) | (450) |
Proceeds from borrowings from affiliates | 1,790 | 1,216 |
Payments on borrowings from affiliates | (1,607) | (1,993) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | (154) | 395 |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (35) | (16) |
Other - net | 0 | (1) |
Net cash provided by (used in) financing activities | (734) | (368) |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 49 | (178) |
Cash at the beginning of the period | 21 | 183 |
Cash at the end of the period | $ 70 | $ 5 |
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