10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

Commission file number 000-54863

EATON CORPORATION plc

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

Act. ☐

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

There were 399.0 million Ordinary Shares outstanding as of March 31, 2022.

TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS	2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4. CONTROLS AND PROCEDURES	33
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	33
ITEM 1A. RISK FACTORS	33
ITEM 2. UNRESTRICTED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 6. EXHIBITS	35
SIGNATURES	37

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME

	Three months ended March 31
(In millions except for per share data)	2022		2021
Net sales	$	4,843	$	4,692
Cost of products sold	3,269		3,184
Selling and administrative expense	790		795
Research and development expense	165		148
Interest expense - net	32		38
Gain on sale of business	24		—
Other income - net	(8)		(11)
Income before income taxes	619		538
Income tax expense	86		79
Net income	533		459
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	532	$	458
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.33	$	1.14
Basic	1.33		1.15
Weighted-average number of ordinary shares outstanding
Diluted	401.8		400.9
Basic	399.2		398.3
Cash dividends declared per ordinary share	$	0.81	$	0.76

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

2

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three months ended March 31
(In millions)	2022		2021
Net income	$	533	$	459
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	532		458
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	(62)		(172)
Pensions and other postretirement benefits	77		47
Cash flow hedges	101		95
Other comprehensive income (loss) attributable to Eaton    ordinary shareholders	116		(30)
Total comprehensive income attributable to Eaton   ordinary shareholders	$	648	$	428

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

3

EATON CORPORATION plc

CONSOLIDATED BALANCE SHEETS

(In millions)	March 31, 2022		December 31, 2021
Assets
Current assets
Cash	$	237	$	297
Short-term investments	268		271
Accounts receivable - net	3,667		3,297
Inventory	3,317		2,969
Prepaid expenses and other current assets	705		677
Total current assets	8,194		7,511
Property, plant and equipment
Land and buildings	2,245		2,227
Machinery and equipment	5,685		5,591
Gross property, plant and equipment	7,930		7,818
Accumulated depreciation	(4,832)		(4,754)
Net property, plant and equipment	3,098		3,064
Other noncurrent assets
Goodwill	14,955		14,751
Other intangible assets	6,012		5,855
Operating lease assets	449		442
Deferred income taxes	388		392
Other assets	2,112		2,012
Total assets	$	35,208	$	34,027
Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	1,116	$	13
Current portion of long-term debt	1,728		1,735
Accounts payable	2,867		2,797
Accrued compensation	331		501
Other current liabilities	2,214		2,166
Total current liabilities	8,256		7,212
Noncurrent liabilities
Long-term debt	6,763		6,831
Pension liabilities	831		872
Other postretirement benefits liabilities	260		263
Operating lease liabilities	342		337
Deferred income taxes	635		559
Other noncurrent liabilities	1,465		1,502
Total noncurrent liabilities	10,296		10,364
Shareholders’ equity
Ordinary shares (399.0 million outstanding in 2022 and 398.8 million in 2021)	4		4
Capital in excess of par value	12,427		12,449
Retained earnings	7,707		7,594
Accumulated other comprehensive loss	(3,517)		(3,633)
Shares held in trust	(1)		(1)
Total Eaton shareholders’ equity	16,620		16,413
Noncontrolling interests	36		38
Total equity	16,656		16,451
Total liabilities and equity	$	35,208	$	34,027

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

4

EATON CORPORATION plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31
(In millions)	2022		2021
Operating activities
Net income	$	533	$	459
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	244		208
Deferred income taxes	15		(39)
Pension and other postretirement benefits expense	6		14
Contributions to pension plans	(32)		(243)
Contributions to other postretirement benefits plans	(6)		(6)
Gain on sale of business	(24)		—
Changes in working capital	(785)		(108)
Other - net	91		(25)
Net cash provided by operating activities	42		260
Investing activities
Capital expenditures for property, plant and equipment	(115)		(119)
Cash paid for acquisitions of businesses, net of cash acquired	(612)		(1,700)
Investments in associate companies	(17)		(80)
Purchases of short-term investments - net	(1)		(280)
Payments for settlement of currency exchange contracts not designated as hedges - net	—		(17)
Other - net	(17)		(5)
Net cash used in investing activities	(762)		(2,201)
Financing activities
Proceeds from borrowings	—		1,798
Payments on borrowings	(4)		(3)
Short-term debt, net	1,105		463
Cash dividends paid	(320)		(300)
Exercise of employee stock options	8		21
Repurchase of shares	(86)		(59)
Employee taxes paid from shares withheld	(50)		(37)
Other - net	(1)		(8)
Net cash provided by financing activities	652		1,875
Effect of currency on cash	8		(11)
Less: Increase in cash classified as held for sale	—		(7)
Decrease in cash	(60)		(84)
Cash at the beginning of the period	297		438
Cash at the end of the period	$	237	$	354

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

5

EATON CORPORATION plc

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1.BASIS OF PRESENTATION

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

This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2021 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

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

Note 2.ACQUISITIONS AND DIVESTITURE OF BUSINESSES

Acquisition of Tripp Lite

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

The acquisition of Tripp Lite has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. During the measurement period which ended in March 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below. The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

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

6

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Tripp Lite. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. The estimated fair values of the customer relationships, trademarks and technology intangible assets of $539 million, $33 million and $32 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The estimated useful lives for customer relationships, trademarks and technology intangible assets were 20 years, 15 years, and 5 years, respectively. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include Tripp Lite’s results of operations, including sales of $26 million, from the date of acquisition through March 31, 2021.

Acquisition of Mission Systems

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

The acquisition of Mission Systems has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. There has not been a material change from the estimated fair values of the assets acquired and liabilities assumed presented in Note 2 to the Consolidated Financial Statements in the 2021 Form 10-K. Draft third-party valuations for Other intangible assets and Property, plant and equipment have been received. These preliminary estimates will be finalized in the second quarter of 2022 when our review of the third-party valuations are completed, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

Sale of Hydraulics business

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S. As a result of the sale, the Company received $3.1 billion, net of cash sold, and recognized a pre-tax gain of $617 million in 2021. According to the terms of the sales agreement, the Company finalized negotiations of post-closing adjustments with Danfoss A/S during the first quarter of 2022. As a result of these negotiations, the Company recognized an additional pre-tax gain of $24 million. The business had sales of $1.3 billion in 2021 through the date of the sale.

7

Acquisition of Royal Power Solutions

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

The acquisition of Royal Power Solutions has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

(In millions)	January 5, 2022
Accounts receivable	$	36
Inventory	43
Prepaid expenses and other current assets	1
Property, plant and equipment	25
Other intangible assets	306
Other assets	21
Accounts payable	(24)
Other current liabilities	(10)
Other noncurrent liabilities	(70)
Total identifiable net assets	328
Goodwill	284
Total consideration, net of cash received	$	612

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Royal Power Solutions. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $306 million are expected to include customer relationships, trademarks and technology. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2022 Condensed Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $5 million on sales of $38 million, from the date of acquisition through March 31, 2022.

8

Note 3.    REVENUE RECOGNITION

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

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

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas
Products	$	603	$	520
Systems	1,288		1,102
Total	$	1,891	$	1,622
Electrical Global
Products	$	876	$	713
Systems	561		540
Total	$	1,437	$	1,253
Hydraulics
United States	$	—	$	222
Rest of World	—		339
Total	$	—	$	561
Aerospace
Original Equipment Manufacturers	$	293	$	208
Aftermarket	221		146
Industrial and Other	204		165
Total	$	718	$	519
Vehicle
Commercial	$	402	$	342
Passenger and Light Duty	269		312
Total	$	671	$	654
eMobility	$	126	$	83
Total net sales	$	4,843	$	4,692

9

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $3,216 million and $2,896 million at March 31, 2022 and December 31, 2021, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $194 million and $187 million at March 31, 2022 and December 31, 2021, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in 2022.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	342
Revenue recognized in the period	(334)
Translation	(2)
Balance at March 31, 2022	$	428

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	276
Revenue recognized in the period	(262)
Translation and other	(3)
Balance at March 31, 2021	$	268

Deferred revenue liabilities of $401 million and $395 million as of March 31, 2022 and December 31, 2021, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities.

A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at March 31, 2022 was approximately $9.3 billion. At March 31, 2022, approximately 87% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.

Note 4. CREDIT LOSSES FOR RECEIVABLES

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

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

Accounts receivable are net of an allowance for credit losses of $42 million at March 31, 2022 and December 31, 2021. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

10

Note 5.    INVENTORY

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

(In millions)	March 31, 2022		December 31, 2021
Raw materials	$	1,219	$	1,096
Work-in-process	783		620
Finished goods	1,315		1,253
Total inventory	$	3,317	$	2,969

Note 6.    GOODWILL

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

(In millions)	January 1, 2022		Additions		Translation		March 31, 2022
Electrical Americas	$	7,417	$	5	$	6	$	7,428
Electrical Global	4,183		2		(65)		4,120
Aerospace	2,781		8		(36)		2,753
Vehicle	290		—		—		290
eMobility	80		284		—		364
Total	$	14,751	$	299	$	(95)	$	14,955

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

Note 7.    RETIREMENT BENEFITS PLANS

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

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended March 31
(In millions)	2022		2021		2022		2021		2022		2021
Service cost	$	8	$	10	$	16	$	19	$	—	$	—
Interest cost	20		17		12		10		2		2
Expected return on plan assets	(53)		(56)		(31)		(30)		—		—
Amortization	8		10		12		19		(2)		(1)
	(17)		(19)		9		18		—		1
Settlements	14		14		—		—		—		—
Total expense (income)	$	(3)	$	(5)	$	9	$	18	$	—	$	1

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

During the first quarter of 2022, the Company recognized settlement losses from lump-sum distributions of $14 million, and remeasured certain pension plans as a result of lump-sum distributions exceeding or expected to exceed the sum of service and interest costs for the year. These remeasurements resulted in increases of $32 million in pension assets, decreases of $15 million in pension liabilities, and decreases of $47 million in other comprehensive loss.

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

11

Note 8.    LEGAL CONTINGENCIES

Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations and indemnity claims, 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 Condensed Consolidated Financial Statements.

Note 9.     INCOME TAXES

The effective income tax rate for the first quarter of 2022 was expense of 13.9% compared to expense of 14.7% for the first quarter of 2021. The decrease in the effective tax rate in the first quarter of 2022 was primarily due to the excess tax benefits recognized for employee share-based payments in the first quarter of 2022.

Brazil Tax Years 2005-2012

The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $29 million plus $107 million of interest and penalties (translated at the March 31, 2022 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision, which is currently pending with the court. The Company intends to continue its challenge of this assessment in the judicial system, including appealing the April 18, 2022 decision, if necessary.

As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $35 million plus $115 million of interest and penalties (translated at the March 31, 2022 exchange rate), which the Company is challenging in the judicial system. This case is still pending resolution at the first judicial level.

Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of March 31, 2022, the Company pledged Brazilian real estate assets with net book value of $22 million and provided additional security in the form of bank secured bonds totaling $113 million and a cash deposit of $20 million (translated at the March 31, 2022 exchange rate).

The Company believes that the final resolution of both of the assessments will not have a material impact on its condensed consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s condensed consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct.

12

Note 10. EQUITY

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 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 months ended March 31, 2022, 0.6 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $86 million. During the three months ended March 31, 2021, 0.5 million ordinary shares were repurchased under the 2019 Program in the open market at a total cost of $59 million.

The changes in Shareholders’ equity are as follows:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2022	398.8	$	4	$	12,449	$	7,594	$	(3,633)	$	(1)	$	16,413	$	38	$	16,451
Net income	—	—		—		532		—		—		532		1		533
Other comprehensive income, net of tax								116				116		—		116
Cash dividends paid and accrued	—	—		—		(331)		—		—		(331)		(2)		(333)
Issuance of shares under equity-based compensation plans	0.8	—		(22)		(2)		—		—		(24)		—		(24)
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(1)		(1)
Repurchase of shares	(0.6)	—		—		(86)		—		—		(86)		—		(86)
Balance at March 31, 2022	399.0	$	4	$	12,427	$	7,707	$	(3,517)	$	(1)	$	16,620	$	36	$	16,656

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)		—		(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037

The changes in Accumulated other comprehensive loss are as follows:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2022	$	(2,617)	$	(986)	$	(30)	$	(3,633)
Other comprehensive income (loss) before    reclassifications	(62)		47		102		87
Amounts reclassified from Accumulated other    comprehensive loss (income)	—		30		(1)		29
Net current-period Other comprehensive    income (loss)	(62)		77		101		116
Balance at March 31, 2022	$	(2,679)	$	(909)	$	71	$	(3,517)

13

The reclassifications out of Accumulated other comprehensive loss are as follows:

(In millions)	Three months ended March 31, 2022			Consolidated statements of income classification
Amortization of defined benefit pensions and other   postretirement benefits items
Actuarial loss and prior service cost	$	(32)	1
Tax benefit	2
Total, net of tax	(30)
Gains and (losses) on cash flow hedges
Commodity contracts	1			Cost of products sold
Tax expense	—
Total, net of tax	1
Total reclassifications for the period	$	(29)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 7 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 is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Net income attributable to Eaton ordinary shareholders	$	532	$	458
Weighted-average number of ordinary shares outstanding - diluted	401.8		400.9
Less dilutive effect of equity-based compensation	2.6		2.6
Weighted-average number of ordinary shares outstanding - basic	399.2		398.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.33	$	1.14
Basic	1.33		1.15

For the first quarter of 2022, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive. For the first quarter of 2021, 0.1 million of stock options were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.

14

Note 11.     FAIR VALUE MEASUREMENTS

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

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

(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2022
Cash	$	237	$	237	$	—	$	—
Short-term investments	268		268		—		—
Net derivative contracts	44		—		44		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)
December 31, 2021
Cash	$	297	$	297	$	—	$	—
Short-term investments	271		271		—		—
Net derivative contracts	41		—		41		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)

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.

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $106 million, including $49 million of cash paid at closing and $57 million of estimated fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $109 million.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of $8,491 million and fair value of $8,709 million at March 31, 2022 compared to $8,566 million and $9,232 million, respectively, at December 31, 2021. The fair value of Eaton's debt instruments were estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.

15

Note 12.     DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

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

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

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

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

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

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

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

Eaton uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $2,819 million at March 31, 2022 and $2,880 million at December 31, 2021.

16

Derivative Financial Statement Impacts

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

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
March 31, 2022
Derivatives designated as hedges
Forward starting floating-to-fixed  interest rate swaps	$	1,700	$	—	$	45	$	—	$	33	Cash flow	10 to 30 years
Currency exchange contracts	1,248		21		—		12		5		Cash flow	1 to 36 months
Commodity contracts	58		5		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	45	$	12	$	38
Derivatives not designated as hedges
Currency exchange contracts	$	4,664	$	42			$	20				1 to 12 months
Commodity contracts	41		2				1					1 month
Total			$	44			$	21
December 31, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	22	$	29	$	—	$	—	Fair value	8 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,350		—		38		—		79		Cash flow	11 to 31 years
Currency exchange contracts	1,212		17		2		11		3		Cash flow	1 to 36 months
Commodity contracts	50		2		—		1		—		Cash flow	1 to 12 months
Total			$	41	$	69	$	12	$	82
Derivatives not designated as hedges
Currency exchange contracts	$	5,285	$	34			$	9				1 to 12 months
Commodity contracts	62		1				1					1 month
Total			$	35			$	10

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

As of March 31, 2022, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	March 31, 2022		Term
Copper	10	Millions of pounds	1 to 12 months
Gold	1,418	Troy ounces	1 to 12 months
Silver	560,367	Troy ounces	1 to 12 months

17

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

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Long-term debt	$	(2,413)	$	(2,413)	$	(70)	$	(84)

(a) At March 31, 2022 and December 31, 2021, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $70 million and $33 million, respectively.

The impact of hedging activities to the Consolidated Statements of Income is as follows:

	Three months ended March 31, 2022
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,843	$	3,269	$	32
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	2	$	(3)	$	—
Derivative designated as hedging instrument	(2)		3		—
Commodity contracts
Hedged item	$	—	$	(1)	$	—
Derivative designated as hedging instrument	—		1		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	8
Derivative designated as hedging instrument	—		—		(8)

	Three months ended March 31, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,692	$	3,184	$	38
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	3	$	1	$	—
Derivative designated as hedging instrument	(3)		(1)		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	19
Derivative designated as hedging instrument	—		—		(19)

18

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

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended March 31
(In millions)	2022		2021
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(8)	$	(63)	Interest expense - net
Commodity Contracts	1		2		Cost of products sold
Total	$	(7)	$	(61)

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

	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended March 31					Three months ended March 31
(In millions)	2022		2021			2022		2021
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	124	$	129	Interest expense - net	$	—	$	—
Currency exchange contracts	—		(13)		Net sales and Cost of products sold	—		(4)
Commodity contracts	5		3		Cost of products sold	1		2
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	62		144		Interest expense - net	—		—
Total	$	191	$	263		$	1	$	(2)

At March 31, 2022, a gain of $14 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next 12 months.

19

Note 13.     RESTRUCTURING CHARGES

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of $310 million. These restructuring activities are expected to incur additional expenses of $40 million in 2022 primarily comprised of plant closing and other costs, resulting in total estimated charges of $350 million for the entire program.

A summary of restructuring program charges is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Workforce reductions	$	5	$	2
Plant closing and other	13		14
Total before income taxes	18		16
Income tax benefit	4		4
Total after income taxes	$	14	$	12
Per ordinary share - diluted	$	0.03	$	0.03

Restructuring program charges related to the following segments:

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas	$	5	$	5
Electrical Global	5		2
Aerospace	3		1
Vehicle	3		6
Corporate	2		2
Total	$	18	$	16

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

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	$	139	$	3	$	142
Liability recognized	21		57		78
Payments, utilization and translation	(64)		(52)		(116)
Balance at December 31, 2021	$	96	$	8	$	104
Liability recognized	5		13		18
Payments, utilization and translation	(12)		(14)		(26)
Balance at March 31, 2022	$	89	$	7	$	96

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 14 for additional information about business segments.

20

Note 14.     BUSINESS SEGMENT INFORMATION

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

	Three months ended March 31
(In millions)	2022		2021
Net sales
Electrical Americas	$	1,891	$	1,622
Electrical Global	1,437		1,253
Hydraulics	—		561
Aerospace	718		519
Vehicle	671		654
eMobility	126		83
Total net sales	$	4,843	$	4,692
Segment operating profit (loss)
Electrical Americas	$	361	$	332
Electrical Global	279		213
Hydraulics	—		84
Aerospace	159		96
Vehicle	113		113
eMobility	(3)		(7)
Total segment operating profit	909		831
Corporate
Intangible asset amortization expense	(128)		(92)
Interest expense - net	(32)		(38)
Pension and other postretirement benefits income	19		14
Restructuring program charges	(18)		(16)
Other expense - net	(131)		(161)
Income before income taxes	619		538
Income tax expense	86		79
Net income	533		459
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	532	$	458

21

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

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

COMPANY OVERVIEW

Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to improving the quality of life and protecting the environment for people everywhere. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power – today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we're accelerating the planet's transition to renewable energy, helping to solve the world's most urgent power management challenges, and doing what's best for our stakeholders and all of society.

Eaton’s businesses are well-positioned to take advantage of secular growth trends related to the energy transition from fossil fuels to renewables. We are responding to these trends by innovating solutions that transform the electrical power value chain, investing in electrical vehicle markets, increasing our focus on electrification, and employing digital technologies for power management. The Company’s innovations are expected to enable the integration of renewables and sustainability solutions, with new types of equipment, services, and software. These strategic focus areas are an important part of our response to climate change.

Founded in 1911, Eaton has been listed on the New York Stock Exchange for nearly a century. We reported revenues of $19.6 billion in 2021 and serve customers in more than 170 countries.

Portfolio Changes

The Company continues to actively manage its portfolio of businesses to deliver on its strategic objectives. The Company is focused on deploying its capital toward businesses that provide opportunities for above-market growth, strong returns, and align with secular trends and its power management strategies. During 2021 and 2022, Eaton has completed a number of transactions to strengthen its portfolio.

Acquisitions of businesses and investments in associate companies	Date of acquisition	Business segment
Tripp Lite	March 17, 2021	Electrical Americas
A leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas.
Green Motion SA	March 22, 2021	Electrical Global
A leading designer and manufacturer of electric vehicle charging hardware and related software.
HuanYu High Tech	March 29, 2021	Electrical Global
A 50 percent stake in HuanYu High Tech, a subsidiary of HuanYu Group that manufactures and markets low-voltage circuit breakers and contactors in China, and throughout the Asia-Pacific region.
Mission Systems	June 1, 2021	Aerospace
A leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets.
Jiangsu YiNeng Electric's busway business	June 25, 2021	Electrical Global
A 50 percent stake in Jiangsu YiNeng Electric's busway business which manufactures and markets busway products in China.
Royal Power Solutions	January 5, 2022	eMobility
A manufacturer of high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets.

Divestiture of business	Date of divestiture	Business segment
Hydraulics business	August 2, 2021	Hydraulics

Additional information related to acquisitions and divestiture of businesses is presented in Note 2.

22

Restructuring

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of $310 million. These restructuring activities are expected to incur additional expenses of $40 million in 2022 primarily comprised of plant closing and other costs, resulting in total estimated charges of $350 million for the entire program. The projected mature year savings from these restructuring actions are expected to be $250 million when fully implemented in 2023. Additional information related to this restructuring is presented in Note 13.

Summary of Results of Operations

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

	Three months ended March 31
(In millions except for per share data)	2022		2021
Net sales	$	4,843	$	4,692
Net income attributable to Eaton ordinary shareholders	532		458
Net income per share attributable to Eaton ordinary shareholders - diluted	$	1.33	$	1.14

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

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

Acquisition and Divestiture Charges

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

	Three months ended March 31
(In millions except for per share data)	2022		2021
Acquisition integration, divestiture charges and transaction costs	$	29	$	46
Gain on the sale of the Hydraulics business	(24)		—
Total before income taxes	5		46
Income tax benefit	1		9
Total after income taxes	$	4	$	37
Per ordinary share - diluted	$	0.01	$	0.09

Acquisition integration, divestiture charges and transaction costs in 2022 are primarily related to the acquisitions of Royal Power Solutions, Souriau-Sunbank Connection Technologies, Green Motion, Tripp Lite, and Mission Systems, and other charges to acquire and exit businesses. Charges in 2021 are primarily related to the divestiture of the Hydraulics business, the acquisitions of Tripp Lite, Mission Systems, Souriau-Sunbank Connection Technologies, and Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S., and other charges to exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information in Note 14, the charges were included in Other expense - net.

23

Intangible Asset Amortization Expense

Intangible asset amortization expense is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Intangible asset amortization expense	$	128	$	92
Income tax benefit	29		22
Total after income taxes	$	99	$	70
Per ordinary share - diluted	$	0.25	$	0.18

Consolidated Financial Results

	Three months ended March 31						Increase (decrease)
(In millions except for per share data)	2022			2021
Net sales	$	4,843		$	4,692		3	%
Gross profit	1,574			1,508			4	%
Percent of net sales	32.5		%	32.1		%
Income before income taxes	619			538			15	%
Net income	533			459			16	%
Less net income for noncontrolling interests	(1)			(1)
Net income attributable to Eaton ordinary shareholders	532			458			16	%
Excluding acquisition and divestiture charges, after-tax	4			37
Excluding restructuring program charges, after-tax	14			12
Excluding intangible asset amortization expense, after-tax	99			70
Adjusted earnings	$	649		$	577		12	%
Net income per share attributable to Eaton ordinary shareholders - diluted	$	1.33		$	1.14		17	%
Excluding per share impact of acquisition and divestiture charges, after-tax	0.01			0.09
Excluding per share impact of restructuring program charges, after-tax	0.03			0.03
Excluding per share impact of intangible asset amortization expense, after-tax	0.25			0.18
Adjusted earnings per ordinary share	$	1.62		$	1.44		13	%

Net Sales

Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	10	%
Acquisitions of businesses	6	%
Divestiture of business	(12)	%
Foreign currency	(1)	%
Total increase (decrease) in Net sales	3	%

Organic sales increased 10% in the first quarter of 2022 due to broad-based strength in end-markets of the Electrical Americas and Electrical Global business segments, and the impact of the continued recovery of commercial aviation from the reduction of travel restrictions from the COVID-19 pandemic in the Aerospace business segment. Despite strong growth, many of our businesses continue to be impacted by supply chain disruptions or shortages, inflation, labor shortages, and plant shutdowns associated with lockdowns in various cities around the globe.

The acquisitions of Tripp Lite, Mission Systems, and Royal Power Solutions increased sales in the first quarter of 2022, while the divestiture of the Hydraulics business reduced sales.

24

Gross Profit

Gross profit margin increased from 32.1% in the first quarter of 2021 to 32.5% in the first quarter of 2022 primarily due to higher organic sales. Gross profit also improved due to the net impact of the acquisition of Tripp Lite and Royal Power Solutions and the divestiture of the Hydraulics business. Conversely, commodity and logistics inflation had an unfavorable impact on gross margin during the first quarter of 2022, despite offsetting pricing actions.

Income Taxes

The effective income tax rate for the first quarter of 2022 was expense of 13.9% compared to expense of 14.7% for the first quarter of 2021. The decrease in the effective tax rate in the first quarter of 2022 was primarily due to the excess tax benefits recognized for employee share-based payments in the first quarter of 2022.

Net Income

Net income attributable to Eaton ordinary shareholders of $532 million in the first quarter of 2022 increased 16% compared to Net income attributable to Eaton ordinary shareholders of $458 million in the first quarter of 2021. The increase in the first quarter of 2022 was primarily due to higher gross profit and lower acquisition and divestiture charges, partially offset by higher intangible asset amortization expense.

Net income per ordinary share increased to $1.33 in the first quarter of 2022 compared to $1.14 in the first quarter of 2021. The increase in Net income per ordinary share in the first quarter of 2022 was due to higher Net income attributable to Eaton ordinary shareholders and the impact of the Company's share repurchases over the past year.

Adjusted Earnings

Adjusted earnings of $649 million in the first quarter of 2022 increased 12% compared to Adjusted earnings of $577 million in the first quarter of 2021. The increase in Adjusted earnings in the first quarter of 2022 was primarily due to higher Net income attributable to Eaton ordinary shareholders, adjusted for acquisition and divestiture charges, restructuring program charges, and intangible asset amortization expense.

Adjusted earnings per ordinary share increased to $1.62 in the first quarter of 2022 compared to $1.44 in the first quarter of 2021. The increase in Adjusted earnings per ordinary share in the first quarter of 2022 was due to higher Adjusted earnings and the impact of the Company's share repurchases over the past year.

Business Segment Results of Operations

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

Electrical Americas

	Three months ended March 31						Increase (decrease)
(In millions)	2022			2021
Net sales	$	1,891		$	1,622		17	%
Operating profit	$	361		$	332		9	%
Operating margin	19.1		%	20.5		%
Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	10		%
Acquisition of Tripp Lite	7		%
Total increase (decrease) in Net sales	17		%

The increase in organic sales in the first quarter of 2022 reflects broad-based strength in end-markets, with particular strength in residential and industrial.

The operating margin decreased from 20.5% in the first quarter of 2021 to 19.1% in the first quarter of 2022 primarily due to commodity and logistics inflation, supply chain disruptions, and increased costs for growth related investments, partially offset by higher organic sales and the acquisition of Tripp Lite.

25

Electrical Global

	Three months ended March 31						Increase (decrease)
(In millions)	2022			2021
Net sales	$	1,437		$	1,253		15	%
Operating profit	$	279		$	213		31	%
Operating margin	19.4		%	17.0		%
Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	18		%
Foreign currency	(3)		%
Total increase (decrease) in Net sales	15		%

The increase in organic sales in the first quarter of 2022 was primarily due to broad-based strength in end-markets, with particular strength in commercial and industrial markets, including oil and gas.

The operating margin increased from 17.0% in the first quarter of 2021 to 19.4% in the first quarter of 2022 primarily due to higher organic sales.

Hydraulics

On August 2, 2021, Eaton completed the sale of the Hydraulics business segment. For the three months ended March 31, 2021, the Hydraulics segment generated net sales of $561 million and operating profit of $84 million.

Aerospace

	Three months ended March 31						Increase (decrease)
(In millions)	2022			2021
Net sales	$	718		$	519		38	%
Operating profit	$	159		$	96		66	%
Operating margin	22.1		%	18.5		%
Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	15		%
Acquisition of Mission Systems	25		%
Foreign currency	(2)		%
Total increase (decrease) in Net sales	38		%

The increase in organic sales in the first quarter of 2022 was primarily due to the continued recovery of commercial aviation from the reduction of travel restrictions from the COVID-19 pandemic.

The operating margin increased from 18.5% in the first quarter of 2021 to 22.1% in the first quarter of 2022 primarily due to higher organic sales volumes and favorable product mix.

26

Vehicle

	Three months ended March 31						Increase (decrease)
(In millions)	2022			2021
Net sales	$	671		$	654		3	%
Operating profit	$	113		$	113		—	%
Operating margin	16.8		%	17.3		%
Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	3		%
Total increase (decrease) in Net sales	3		%

The increase in organic sales in the first quarter of 2022 was primarily due to strength in the North American truck aftermarket and the South American truck, bus and agriculture markets, partially offset by weakness in global light vehicle markets.

The operating margin decreased from 17.3% in the first quarter of 2021 to 16.8% in the first quarter of 2022 primarily due to commodity and logistics inflation, partially offset by higher organic sales.

eMobility

	Three months ended March 31						Increase (decrease)
(In millions)	2022			2021
Net sales	$	126		$	83		52	%
Operating profit (loss)	$	(3)		$	(7)		57	%
Operating margin	(2.4)		%	(8.4)		%
Changes in Net sales are summarized as follows:	Three months ended March 31
	2022
Organic growth	7		%
Acquisition of Royal Power Solutions	46		%
Foreign currency	(1)		%
Total increase (decrease) in Net sales	52		%

The increase in organic sales in the first quarter of 2022 was primarily due to strength in North America truck and off road markets.

The operating margin increased from negative 8.4% in the first quarter of 2021 to negative 2.4% in the first quarter of 2022 primarily due to the acquisition of Royal Power Solutions.

27

Corporate Expense

	Three months ended March 31				Increase (decrease)
(In millions)	2022		2021
Intangible asset amortization expense	$	128	$	92	39	%
Interest expense - net	32		38		(16)	%
Pension and other postretirement benefits income	(19)		(14)		36	%
Restructuring program charges	18		16		13	%
Other expense - net	131		161		(19)	%
Total corporate expense	$	290	$	293	(1)	%

Total corporate expense was $290 million in the first quarter of 2022 compared to Total corporate expense of $293 million in the first quarter of 2021. The decrease in Total corporate expense for the first quarter of 2022 was primarily due to lower Other expense - net, lower Interest expense - net, and higher Pension and other postretirement benefits income, partially offset by higher Intangible asset amortization expense. The decrease in Other expense - net is primarily due to the 2022 gain on sale of the Hydraulics business discussed in Note 2 and lower acquisition and divestiture charges.

28

LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION

Liquidity and Financial Condition

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

The Company maintains revolving credit facilities consisting of a $500 million 364-day revolving credit facility that will expire on October 3, 2022 and a $2,000 million five-year revolving credit facility that will expire on October 4, 2026. The revolving credit facilities totaling $2,500 million are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under Eaton’s revolving credit facilities at March 31, 2022. The Company maintains access to the commercial paper markets through its $2,500 million commercial paper program, of which $1,096 million was outstanding on March 31, 2022.

Eaton received proceeds of $3.1 billion from the sale of its Hydraulics business in 2021. The Company paid $4.45 billion to acquire Tripp Lite and Mission Systems in 2021, and $612 million to acquire Royal Power Solutions in 2022.

Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of March 31, 2022 and December 31, 2021, Eaton had cash of $237 million and $297 million, short-term investments of $268 million and $271 million, and short-term debt of $1,116 million and $13 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under existing revolving credit facilities, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund capital expenditures and acquisitions of businesses, as well as scheduled payments of long-term debt.

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

Cash Flows

A summary of cash flows is as follows:

	Three months ended March 31
(In millions)	2022		2021		Change from 2021
Net cash provided by operating activities	$	42	$	260	$	(218)
Net cash used in investing activities	(762)		(2,201)		1,439
Net cash provided by financing activities	652		1,875		(1,223)
Effect of currency on cash	8		(11)		19
Increase in cash classified as held for sale	—		(7)		7
Total decrease in cash	$	(60)	$	(84)

Operating Cash Flow

Net cash provided by operating activities decreased by $218 million in the first three months of 2022 compared to 2021. The decrease in net cash provided by operating activities in the first three months of 2022 was primarily due to higher working capital balances to support the Company’s organic growth, partially offset by lower pension contributions in 2022 due to a $200 million contribution to Eaton's U.S. qualified pension plan in 2021, cash received from the termination of interest rate swaps in 2022, and higher net income in 2022.

Investing Cash Flow

Net cash used in investing activities decreased by $1,439 million in the first three months of 2022 compared to 2021. The decrease in the use of cash in the first three months of 2022 was primarily driven by cash paid in 2022 for business acquisitions of $612 million compared to cash paid in 2021 for business acquisitions of $1,700 million, and net purchases of short-term investments of $1 million in 2022 compared to $280 million in 2021.

Financing Cash Flow

Net cash provided by financing activities decreased by $1,223 million in the first three months of 2022 compared to 2021. The decrease in the source of cash in the first three months of 2022 was primarily due to no proceeds from borrowings in 2022 compared to proceeds from borrowings of $1,798 million in 2021, partially offset by net proceeds of short-term debt of $1,105 million in 2022 compared to $463 million in 2021.

29

Uses of Cash

Capital Expenditures

Capital expenditures were $115 million and $119 million in the first three months of 2022 and 2021, respectively. Eaton expects approximately $650 million in capital expenditures in 2022.

Dividends

Cash dividend payments were $320 million and $300 million in the first three months of 2022 and 2021, respectively. On February 23, 2022, Eaton's Board of Directors declared a quarterly dividend of $0.81 per ordinary share, a 7% increase over the dividend paid in the fourth quarter of 2021. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash flows, among other factors, and is subject to declaration by the Eaton Board of Directors. The Company intends to continue to pay quarterly dividends in 2022.

Share Repurchases

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 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. In the first three months of 2022, 0.6 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $86 million. In the first three months of 2021, 0.5 million ordinary shares were repurchased under the 2019 Program in the open market at a total cost of $59 million. The Company will continue to pursue share repurchases in 2022 depending on market conditions and capital levels.

Acquisition of Businesses

The Company paid cash of $612 million and $1,700 million to acquire businesses in the first three months of 2022 and 2021, respectively. The Company will continue to focus on deploying its capital toward businesses that provide opportunities for higher growth and strong returns, and align with secular trends and its power management strategies.

Debt

The Company manages a number of short-term and long-term debt instruments, including commercial paper. At March 31, 2022, the Company had Short-term debt of $1,116 million, Current portion of long-term debt of $1,728 million, and Long-term debt of $6,763 million.

30

Supply Chain Finance Program

The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, a third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. If a supplier elects to participate in the SCF program, the supplier decides which invoices are sold to the financial institution and the Company has no economic interest in a supplier’s decision to sell an invoice. The SCF program does not have a significant impact on the Company’s liquidity as payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. The amounts due to the financial institution for suppliers that participate in the SCF program are included in Accounts payable on the Company’s Consolidated Balance Sheets, and the associated payments are included in operating activities on the Condensed Consolidated Statements of Cash Flows. At  March 31, 2022 and December 31, 2021, Accounts payable included $168 million and $151 million, respectively, payable to suppliers that have elected to participate in the SCF program.

Guaranteed Debt

Issuers, Guarantors and Guarantor Structure    

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

Substantially all of the Senior Notes, together with the credit facilities described above under Financial Condition and Liquidity (the Credit Facilities), are guaranteed by Eaton and 18 of its subsidiaries. Accordingly, they rank equally with each other. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Eaton and its subsidiaries. As of March 31, 2022, Eaton has no material, long-term secured debt. The guaranteed Registered Senior Notes are also structurally subordinated to the liabilities of Eaton's subsidiaries that are not guarantors. Except as described below under Future Guarantors, Eaton is not obligated to cause its subsidiaries to guarantee the Registered Senior Notes.

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

Terms of Guarantees of Registered Securities

Payment of principal and interest on the Registered Senior Notes is guaranteed, on an unsecured, unsubordinated basis by the subsidiaries of Eaton set forth in the table referenced in the 10-K Exhibit 22. Each guarantee is full and unconditional, and joint and several. Each guarantor's guarantee is an unsecured obligation that ranks equally with all its other unsecured and unsubordinated indebtedness. The obligations of each guarantor under its guarantee of the Registered Senior Notes is subject to a customary savings clause or similar provision designed to prevent such guarantee from constituting a fraudulent conveyance or otherwise legally impermissible or voidable obligation.

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

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

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

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

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

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

The guarantee of Eaton does not contain any release provisions.

31

Future Guarantors

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

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

Summarized Financial Information of Guarantors and Issuers

(In millions)	March 31, 2022		December 31, 2021
Current assets	$	3,264	$	3,032
Noncurrent assets	11,578		11,553
Current liabilities	4,944		3,950
Noncurrent liabilities	8,349		8,461
Amounts due to subsidiaries that are non-issuers and non-guarantors - net	16,621		18,006
			Three months ended March 31
(In millions)			2022
Net sales			$	2,550
Sales to subsidiaries that are non-issuers and non-guarantors			215
Cost of products sold			2,125
Expense from subsidiaries that are non-issuers and non-guarantors - net			89
Net income			42

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

FORWARD-LOOKING STATEMENTS

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

32

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in exposures to market risk since December 31, 2021.

ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures - Pursuant to SEC Rule 13a-15, an evaluation was performed under the supervision and with the participation of Eaton’s management, including Craig Arnold - Principal Executive Officer; and Thomas B. Okray - Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, management concluded that Eaton’s disclosure controls and procedures were effective as of March 31, 2022.

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

During the first quarter of 2022, there was no change in Eaton’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Management is currently evaluating the impact of businesses acquired in the past twelve months on Eaton's internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

Information regarding the Company's current legal proceedings is presented in Note 8 of the Notes to the condensed consolidated financial statements.

ITEM 1A.RISK FACTORS.

“Item 1A. Risk Factors” in Eaton's 2021 Form 10-K includes a discussion of the Company's risk factors. There have been no material changes from the risk factors described in the 2021 Form 10-K, except as follows:

Eaton uses a variety of raw materials and components in its businesses, and significant shortages, price increases or supplier insolvencies, or similar challenges for our customers could adversely impact our results of operations.

Eaton's major requirements for raw materials are described in Item 1 “Raw Materials” of our Form 10-K for the year ended December 31, 2021. Shortages have affected the prices Eaton's businesses are charged as global economies recover from the COVID-19 pandemic.

Additionally, some of our suppliers of component parts and logistics have increased their prices in response to increases in their costs of raw materials, energy and/or labor. If we are unable to increase prices commensurately with increased costs without compromising the competitive position of our products and services, our results could be negatively impacted. These economic conditions have also impacted customers in certain of our end markets, potentially affecting short-term demand for some of our products. These conditions may be exacerbated by Russia's invasion of Ukraine and the related economic and other retaliatory measures taken by the United States, the European Union and other nations. While Russia's invasion of Ukraine has not had a material impact on Eaton’s results to date, it is impossible to determine its outcome, or how it will affect global macroeconomic conditions generally in the future. Should these trends continue or worsen, the Company and/or some of our customers may be impacted, which could have a material adverse impact on our operating results.

33

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

(c) Issuer's Purchases of Equity Securities

During the first quarter of 2022, 0.6 million ordinary shares were repurchased in the open market at a total cost of $86 million. These shares were repurchased under the program approved by the Board on February 23, 2022 (the 2022 Program). A summary of the shares repurchased in the first quarter of 2022 is as follows:

Month	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
January	—	$	—	—	$	1,972
February	—	$	—	—	$	5,000
March	584,539	$	147.22	584,539	$	4,914
Total	584,539	$	147.22	584,539

34

ITEM 6.EXHIBITS.

Eaton Corporation plc

First Quarter 2022 Report on Form 10-Q

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

35

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

_______________________________

* Submitted electronically herewith.

36

SIGNATURES

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

			EATON CORPORATION plc
			Registrant
Date:	May 3, 2022	By:	/s/ Thomas B. Okray
			Thomas B. Okray
			Principal Financial Officer
			(On behalf of the registrant and as Principal Financial Officer)

37

EX-31.1

Eaton Corporation plc

First Quarter 2022 Report on Form 10-Q

Exhibit 31.1

Certification

I, Craig Arnold, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	May 3, 2022	/s/ Craig Arnold
		Craig Arnold
		Principal Executive Officer

EX-31.2

Eaton Corporation plc

First Quarter 2022 Report on Form 10-Q

Exhibit 31.2

Certification

I, Thomas B. Okray, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	May 3, 2022	/s/ Thomas B. Okray
		Thomas B. Okray
		Principal Financial Officer

EX-32.1

Eaton Corporation plc

First Quarter 2022 Report on Form 10-Q

Exhibit 32.1

Certification

This written statement is submitted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation plc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (“10-Q Report”).

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

Date:	May 3, 2022	/s/ Craig Arnold
		Craig Arnold
		Principal Executive Officer

EX-32.2

Eaton Corporation plc

First Quarter 2022 Report on Form 10-Q

Exhibit 32.2

Certification

This written statement is submitted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. It accompanies Eaton Corporation plc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (“10-Q Report”).

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

Date:	May 3, 2022	/s/ Thomas B. Okray
		Thomas B. Okray
		Principal Financial Officer

XML

Cover Page shares in Millions	3 Months Ended
	Mar. 31, 2022 shares
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Mar. 31, 2022
Entity File Number	000-54863
Entity Registrant Name	EATON CORPORATION plc
Entity Incorporation, State or Country Code	L2
Entity Tax Identification Number	98-1059235
Entity Address, Address Line One	Eaton House,
Entity Address, Address Line Two	30 Pembroke Road,
Entity Address, City or Town	Dublin 4,
Entity Address, Country	IE
Entity Address, Postal Zip Code	D04 Y0C2
City Area Code	+353
Local Phone Number	1637 2900
Title of 12(b) Security	Ordinary shares ($0.01 par value)
Trading Symbol	ETN
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	399.0
Entity Central Index Key	0001551182
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Net sales	$ 4,843	$ 4,692
Cost of products sold	3,269	3,184
Selling and administrative expense	790	795
Research and development expense	165	148
Interest expense - net	32	38
Gain on sale of business	24	0
Other income - net	(8)	(11)
Income before income taxes	619	538
Income tax expense	86	79
Net income	533	459
Less net income for noncontrolling interests	(1)	(1)
Net income attributable to Eaton ordinary shareholders	$ 532	$ 458
Net income per share attributable to Eaton ordinary shareholders
Diluted (USD per share)	$ 1.33	$ 1.14
Basic (USD per share)	$ 1.33	$ 1.15
Weighted-average number of ordinary shares outstanding
Diluted (shares)	401.8	400.9
Basic (shares)	399.2	398.3
Cash dividends declared per ordinary share (USD per share)	$ 0.81	$ 0.76

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 533	$ 459
Less net income for noncontrolling interests	(1)	(1)
Net income attributable to Eaton ordinary shareholders	532	458
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	(62)	(172)
Pensions and other postretirement benefits	77	47
Cash flow hedges	101	95
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	116	(30)
Total comprehensive income attributable to Eaton ordinary shareholders	$ 648	$ 428

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash	$ 237	$ 297
Short-term investments	268	271
Accounts receivable - net	3,667	3,297
Inventory	3,317	2,969
Prepaid expenses and other current assets	705	677
Total current assets	8,194	7,511
Property, plant and equipment
Land and buildings	2,245	2,227
Machinery and equipment	5,685	5,591
Gross property, plant and equipment	7,930	7,818
Accumulated depreciation	(4,832)	(4,754)
Net property, plant and equipment	3,098	3,064
Other noncurrent assets
Goodwill	14,955	14,751
Other intangible assets	6,012	5,855
Operating lease assets	449	442
Deferred income taxes	388	392
Other assets	2,112	2,012
Total assets	35,208	34,027
Current liabilities
Short-term debt	1,116	13
Current portion of long-term debt	1,728	1,735
Accounts payable	2,867	2,797
Accrued compensation	331	501
Other current liabilities	2,214	2,166
Total current liabilities	8,256	7,212
Noncurrent liabilities
Long-term debt	6,763	6,831
Pension liabilities	831	872
Other postretirement benefits liabilities	260	263
Operating lease liabilities	342	337
Deferred income taxes	635	559
Other noncurrent liabilities	1,465	1,502
Total noncurrent liabilities	10,296	10,364
Shareholders’ equity
Ordinary shares (399.0 million outstanding in 2022 and 398.8 million in 2021)	4	4
Capital in excess of par value	12,427	12,449
Retained earnings	7,707	7,594
Accumulated other comprehensive loss	(3,517)	(3,633)
Shares held in trust	(1)	(1)
Total Eaton shareholders’ equity	16,620	16,413
Noncontrolling interests	36	38
Total equity	16,656	16,451
Total liabilities and equity	$ 35,208	$ 34,027

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Ordinary shares outstanding (shares)	399.0	398.8

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating activities
Net income	$ 533	$ 459
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	244	208
Deferred income taxes	15	(39)
Pension and other postretirement benefits expense	6	14
Contributions to pension plans	(32)	(243)
Contributions to other postretirement benefits plans	(6)	(6)
Gain on sale of business	(24)	0
Changes in working capital	(785)	(108)
Other - net	91	(25)
Net cash provided by operating activities	42	260
Investing activities
Capital expenditures for property, plant and equipment	(115)	(119)
Cash paid for acquisitions of businesses, net of cash acquired	(612)	(1,700)
Investments in associate companies	(17)	(80)
Purchases of short-term investments - net	(1)	(280)
Payments for settlement of currency exchange contracts not designated as hedges - net	0	(17)
Other - net	(17)	(5)
Net cash used in investing activities	(762)	(2,201)
Financing activities
Proceeds from borrowings	0	1,798
Payments on borrowings	(4)	(3)
Short-term debt, net	1,105	463
Cash dividends paid	(320)	(300)
Exercise of employee stock options	8	21
Repurchase of shares	(86)	(59)
Employee taxes paid from shares withheld	(50)	(37)
Other - net	(1)	(8)
Net cash provided by financing activities	652	1,875
Effect of currency on cash	8	(11)
Less: Increase in cash classified as held for sale	0	(7)
Decrease in cash	(60)	(84)
Cash at the beginning of the period	297	438
Cash at the end of the period	$ 237	$ 354

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

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 2021 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

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

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS AND DIVESTITURES OF BUSINESSES

ACQUISITIONS AND DIVESTITURE OF BUSINESSES

Acquisition of Tripp Lite

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

The acquisition of Tripp Lite has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. During the measurement period which ended in March 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below. The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

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

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Tripp Lite. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. The estimated fair values of the customer relationships, trademarks and technology intangible assets of $539 million, $33 million and $32 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The estimated useful lives for customer relationships, trademarks and technology intangible assets were 20 years, 15 years, and 5 years, respectively. See Note 6 for additional information about goodwill.

Eaton's 2021 Condensed Consolidated Financial Statements include Tripp Lite’s results of operations, including sales of $26 million, from the date of acquisition through March 31, 2021.

Acquisition of Mission Systems

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

The acquisition of Mission Systems has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. There has not been a material change from the estimated fair values of the assets acquired and liabilities assumed presented in Note 2 to the Consolidated Financial Statements in the 2021 Form 10-K. Draft third-party valuations for Other intangible assets and Property, plant and equipment have been received. These preliminary estimates will be finalized in the second quarter of 2022 when our review of the third-party valuations are completed, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

Sale of Hydraulics business

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S. As a result of the sale, the Company received $3.1 billion, net of cash sold, and recognized a pre-tax gain of $617 million in 2021. According to the terms of the sales agreement, the Company finalized negotiations of post-closing adjustments with Danfoss A/S during the first quarter of 2022. As a result of these negotiations, the Company recognized an additional pre-tax gain of $24 million. The business had sales of $1.3 billion in 2021 through the date of the sale.

Acquisition of Royal Power Solutions

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

The acquisition of Royal Power Solutions has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

(In millions)	January 5, 2022
Accounts receivable	$	36
Inventory	43
Prepaid expenses and other current assets	1
Property, plant and equipment	25
Other intangible assets	306
Other assets	21
Accounts payable	(24)
Other current liabilities	(10)
Other noncurrent liabilities	(70)
Total identifiable net assets	328
Goodwill	284
Total consideration, net of cash received	$	612

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Royal Power Solutions. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $306 million are expected to include customer relationships, trademarks and technology. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.

Eaton's 2022 Condensed Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $5 million on sales of $38 million, from the date of acquisition through March 31, 2022.

XML

REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2022

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

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

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas
Products	$	603	$	520
Systems	1,288		1,102
Total	$	1,891	$	1,622
Electrical Global
Products	$	876	$	713
Systems	561		540
Total	$	1,437	$	1,253
Hydraulics
United States	$	—	$	222
Rest of World	—		339
Total	$	—	$	561
Aerospace
Original Equipment Manufacturers	$	293	$	208
Aftermarket	221		146
Industrial and Other	204		165
Total	$	718	$	519
Vehicle
Commercial	$	402	$	342
Passenger and Light Duty	269		312
Total	$	671	$	654
eMobility	$	126	$	83
Total net sales	$	4,843	$	4,692

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $3,216 million and $2,896 million at March 31, 2022 and December 31, 2021, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $194 million and $187 million at March 31, 2022 and December 31, 2021, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in 2022.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	342
Revenue recognized in the period	(334)
Translation	(2)
Balance at March 31, 2022	$	428

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	276
Revenue recognized in the period	(262)
Translation and other	(3)
Balance at March 31, 2021	$	268

Deferred revenue liabilities of $401 million and $395 million as of March 31, 2022 and December 31, 2021, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities.

A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at March 31, 2022 was approximately $9.3 billion. At March 31, 2022, approximately 87% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.

XML

CREDIT LOSSES FOR RECEIVABLES

3 Months Ended

Mar. 31, 2022

Credit Loss [Abstract]

CREDIT LOSSES FOR RECEIVABLES

CREDIT LOSSES FOR RECEIVABLES

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

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

Accounts receivable are net of an allowance for credit losses of $42 million at March 31, 2022 and December 31, 2021. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

XML

INVENTORY

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

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

(In millions)	March 31, 2022		December 31, 2021
Raw materials	$	1,219	$	1,096
Work-in-process	783		620
Finished goods	1,315		1,253
Total inventory	$	3,317	$	2,969

XML

GOODWILL

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

GOODWILL

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

(In millions)	January 1, 2022		Additions		Translation		March 31, 2022
Electrical Americas	$	7,417	$	5	$	6	$	7,428
Electrical Global	4,183		2		(65)		4,120
Aerospace	2,781		8		(36)		2,753
Vehicle	290		—		—		290
eMobility	80		284		—		364
Total	$	14,751	$	299	$	(95)	$	14,955

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

XML

RETIREMENT BENEFITS PLANS

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

RETIREMENT BENEFITS PLANS

RETIREMENT BENEFITS PLANS

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

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended March 31
(In millions)	2022		2021		2022		2021		2022		2021
Service cost	$	8	$	10	$	16	$	19	$	—	$	—
Interest cost	20		17		12		10		2		2
Expected return on plan assets	(53)		(56)		(31)		(30)		—		—
Amortization	8		10		12		19		(2)		(1)
	(17)		(19)		9		18		—		1
Settlements	14		14		—		—		—		—
Total expense (income)	$	(3)	$	(5)	$	9	$	18	$	—	$	1

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

During the first quarter of 2022, the Company recognized settlement losses from lump-sum distributions of $14 million, and remeasured certain pension plans as a result of lump-sum distributions exceeding or expected to exceed the sum of service and interest costs for the year. These remeasurements resulted in increases of $32 million in pension assets, decreases of $15 million in pension liabilities, and decreases of $47 million in other comprehensive loss.

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

XML

LEGAL CONTINGENCIES	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
LEGAL CONTINGENCIES	LEGAL CONTINGENCIESEaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations and indemnity claims, 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 Condensed Consolidated Financial Statements.

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective income tax rate for the first quarter of 2022 was expense of 13.9% compared to expense of 14.7% for the first quarter of 2021. The decrease in the effective tax rate in the first quarter of 2022 was primarily due to the excess tax benefits recognized for employee share-based payments in the first quarter of 2022.

Brazil Tax Years 2005-2012

The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $29 million plus $107 million of interest and penalties (translated at the March 31, 2022 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision, which is currently pending with the court. The Company intends to continue its challenge of this assessment in the judicial system, including appealing the April 18, 2022 decision, if necessary.

As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $35 million plus $115 million of interest and penalties (translated at the March 31, 2022 exchange rate), which the Company is challenging in the judicial system. This case is still pending resolution at the first judicial level.

Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of March 31, 2022, the Company pledged Brazilian real estate assets with net book value of $22 million and provided additional security in the form of bank secured bonds totaling $113 million and a cash deposit of $20 million (translated at the March 31, 2022 exchange rate).

The Company believes that the final resolution of both of the assessments will not have a material impact on its condensed consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s condensed consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct.

XML

EQUITY

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

EQUITY

EQUITY

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 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 months ended March 31, 2022, 0.6 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $86 million. During the three months ended March 31, 2021, 0.5 million ordinary shares were repurchased under the 2019 Program in the open market at a total cost of $59 million.

The changes in Shareholders’ equity are as follows:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2022	398.8	$	4	$	12,449	$	7,594	$	(3,633)	$	(1)	$	16,413	$	38	$	16,451
Net income	—	—		—		532		—		—		532		1		533
Other comprehensive income, net of tax								116				116		—		116
Cash dividends paid and accrued	—	—		—		(331)		—		—		(331)		(2)		(333)
Issuance of shares under equity-based compensation plans	0.8	—		(22)		(2)		—		—		(24)		—		(24)
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(1)		(1)
Repurchase of shares	(0.6)	—		—		(86)		—		—		(86)		—		(86)
Balance at March 31, 2022	399.0	$	4	$	12,427	$	7,707	$	(3,517)	$	(1)	$	16,620	$	36	$	16,656

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)		—		(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037

The changes in Accumulated other comprehensive loss are as follows:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2022	$	(2,617)	$	(986)	$	(30)	$	(3,633)
Other comprehensive income (loss) before    reclassifications	(62)		47		102		87
Amounts reclassified from Accumulated other    comprehensive loss (income)	—		30		(1)		29
Net current-period Other comprehensive    income (loss)	(62)		77		101		116
Balance at March 31, 2022	$	(2,679)	$	(909)	$	71	$	(3,517)

The reclassifications out of Accumulated other comprehensive loss are as follows:

(In millions)	Three months ended March 31, 2022			Consolidated statements of income classification
Amortization of defined benefit pensions and other   postretirement benefits items
Actuarial loss and prior service cost	$	(32)	1
Tax benefit	2
Total, net of tax	(30)
Gains and (losses) on cash flow hedges
Commodity contracts	1			Cost of products sold
Tax expense	—
Total, net of tax	1
Total reclassifications for the period	$	(29)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 7 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 is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Net income attributable to Eaton ordinary shareholders	$	532	$	458
Weighted-average number of ordinary shares outstanding - diluted	401.8		400.9
Less dilutive effect of equity-based compensation	2.6		2.6
Weighted-average number of ordinary shares outstanding - basic	399.2		398.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.33	$	1.14
Basic	1.33		1.15

For the first quarter of 2022, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive. For the first quarter of 2021, 0.1 million of stock options were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.

XML

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

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

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

(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2022
Cash	$	237	$	237	$	—	$	—
Short-term investments	268		268		—		—
Net derivative contracts	44		—		44		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)
December 31, 2021
Cash	$	297	$	297	$	—	$	—
Short-term investments	271		271		—		—
Net derivative contracts	41		—		41		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)

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.

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $106 million, including $49 million of cash paid at closing and $57 million of estimated fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $109 million.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of $8,491 million and fair value of $8,709 million at March 31, 2022 compared to $8,566 million and $9,232 million, respectively, at December 31, 2021. The fair value of Eaton's debt instruments were estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

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

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

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

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

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

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

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

Eaton uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $2,819 million at March 31, 2022 and $2,880 million at December 31, 2021.

Derivative Financial Statement Impacts

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

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
March 31, 2022
Derivatives designated as hedges
Forward starting floating-to-fixed  interest rate swaps	$	1,700	$	—	$	45	$	—	$	33	Cash flow	10 to 30 years
Currency exchange contracts	1,248		21		—		12		5		Cash flow	1 to 36 months
Commodity contracts	58		5		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	45	$	12	$	38
Derivatives not designated as hedges
Currency exchange contracts	$	4,664	$	42			$	20				1 to 12 months
Commodity contracts	41		2				1					1 month
Total			$	44			$	21
December 31, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	22	$	29	$	—	$	—	Fair value	8 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,350		—		38		—		79		Cash flow	11 to 31 years
Currency exchange contracts	1,212		17		2		11		3		Cash flow	1 to 36 months
Commodity contracts	50		2		—		1		—		Cash flow	1 to 12 months
Total			$	41	$	69	$	12	$	82
Derivatives not designated as hedges
Currency exchange contracts	$	5,285	$	34			$	9				1 to 12 months
Commodity contracts	62		1				1					1 month
Total			$	35			$	10

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

As of March 31, 2022, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	March 31, 2022		Term
Copper	10	Millions of pounds	1 to 12 months
Gold	1,418	Troy ounces	1 to 12 months
Silver	560,367	Troy ounces	1 to 12 months

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

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Long-term debt	$	(2,413)	$	(2,413)	$	(70)	$	(84)

(a) At March 31, 2022 and December 31, 2021, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $70 million and $33 million, respectively.

The impact of hedging activities to the Consolidated Statements of Income is as follows:

	Three months ended March 31, 2022
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,843	$	3,269	$	32
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	2	$	(3)	$	—
Derivative designated as hedging instrument	(2)		3		—
Commodity contracts
Hedged item	$	—	$	(1)	$	—
Derivative designated as hedging instrument	—		1		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	8
Derivative designated as hedging instrument	—		—		(8)

	Three months ended March 31, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,692	$	3,184	$	38
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	3	$	1	$	—
Derivative designated as hedging instrument	(3)		(1)		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	19
Derivative designated as hedging instrument	—		—		(19)

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

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended March 31
(In millions)	2022		2021
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(8)	$	(63)	Interest expense - net
Commodity Contracts	1		2		Cost of products sold
Total	$	(7)	$	(61)

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

	Gain (loss) recognized in other comprehensive (loss) income				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended March 31					Three months ended March 31
(In millions)	2022		2021			2022		2021
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	124	$	129	Interest expense - net	$	—	$	—
Currency exchange contracts	—		(13)		Net sales and Cost of products sold	—		(4)
Commodity contracts	5		3		Cost of products sold	1		2
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	62		144		Interest expense - net	—		—
Total	$	191	$	263		$	1	$	(2)

At March 31, 2022, a gain of $14 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next 12 months.

XML

RESTRUCTURING CHARGES

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of $310 million. These restructuring activities are expected to incur additional expenses of $40 million in 2022 primarily comprised of plant closing and other costs, resulting in total estimated charges of $350 million for the entire program.

A summary of restructuring program charges is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Workforce reductions	$	5	$	2
Plant closing and other	13		14
Total before income taxes	18		16
Income tax benefit	4		4
Total after income taxes	$	14	$	12
Per ordinary share - diluted	$	0.03	$	0.03

Restructuring program charges related to the following segments:

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas	$	5	$	5
Electrical Global	5		2
Aerospace	3		1
Vehicle	3		6
Corporate	2		2
Total	$	18	$	16

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

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	$	139	$	3	$	142
Liability recognized	21		57		78
Payments, utilization and translation	(64)		(52)		(116)
Balance at December 31, 2021	$	96	$	8	$	104
Liability recognized	5		13		18
Payments, utilization and translation	(12)		(14)		(26)
Balance at March 31, 2022	$	89	$	7	$	96

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 14 for additional information about business segments.

XML

BUSINESS SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

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

	Three months ended March 31
(In millions)	2022		2021
Net sales
Electrical Americas	$	1,891	$	1,622
Electrical Global	1,437		1,253
Hydraulics	—		561
Aerospace	718		519
Vehicle	671		654
eMobility	126		83
Total net sales	$	4,843	$	4,692
Segment operating profit (loss)
Electrical Americas	$	361	$	332
Electrical Global	279		213
Hydraulics	—		84
Aerospace	159		96
Vehicle	113		113
eMobility	(3)		(7)
Total segment operating profit	909		831
Corporate
Intangible asset amortization expense	(128)		(92)
Interest expense - net	(32)		(38)
Pension and other postretirement benefits income	19		14
Restructuring program charges	(18)		(16)
Other expense - net	(131)		(161)
Income before income taxes	619		538
Income tax expense	86		79
Net income	533		459
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	532	$	458

XML

BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2022

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 2021 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

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

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

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

The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

(In millions)	January 5, 2022
Accounts receivable	$	36
Inventory	43
Prepaid expenses and other current assets	1
Property, plant and equipment	25
Other intangible assets	306
Other assets	21
Accounts payable	(24)
Other current liabilities	(10)
Other noncurrent liabilities	(70)
Total identifiable net assets	328
Goodwill	284
Total consideration, net of cash received	$	612

XML

REVENUE RECOGNITION (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Sales

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

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas
Products	$	603	$	520
Systems	1,288		1,102
Total	$	1,891	$	1,622
Electrical Global
Products	$	876	$	713
Systems	561		540
Total	$	1,437	$	1,253
Hydraulics
United States	$	—	$	222
Rest of World	—		339
Total	$	—	$	561
Aerospace
Original Equipment Manufacturers	$	293	$	208
Aftermarket	221		146
Industrial and Other	204		165
Total	$	718	$	519
Vehicle
Commercial	$	402	$	342
Passenger and Light Duty	269		312
Total	$	671	$	654
eMobility	$	126	$	83
Total net sales	$	4,843	$	4,692

Schedule of Changes in Deferred Revenue Liabilities

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	342
Revenue recognized in the period	(334)
Translation	(2)
Balance at March 31, 2022	$	428

(In millions)	Deferred Revenue
Balance at January 1, 2021	$	257
Customer deposits and billings	276
Revenue recognized in the period	(262)
Translation and other	(3)
Balance at March 31, 2021	$	268

XML

INVENTORY (Tables)

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Schedule of Components of Inventory

The components of inventory are as follows:

(In millions)	March 31, 2022		December 31, 2021
Raw materials	$	1,219	$	1,096
Work-in-process	783		620
Finished goods	1,315		1,253
Total inventory	$	3,317	$	2,969

XML

GOODWILL (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

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

(In millions)	January 1, 2022		Additions		Translation		March 31, 2022
Electrical Americas	$	7,417	$	5	$	6	$	7,428
Electrical Global	4,183		2		(65)		4,120
Aerospace	2,781		8		(36)		2,753
Vehicle	290		—		—		290
eMobility	80		284		—		364
Total	$	14,751	$	299	$	(95)	$	14,955

XML

RETIREMENT BENEFIT PLANS (Tables)

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Schedule of Retirement Benefits Expense

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

	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended March 31
(In millions)	2022		2021		2022		2021		2022		2021
Service cost	$	8	$	10	$	16	$	19	$	—	$	—
Interest cost	20		17		12		10		2		2
Expected return on plan assets	(53)		(56)		(31)		(30)		—		—
Amortization	8		10		12		19		(2)		(1)
	(17)		(19)		9		18		—		1
Settlements	14		14		—		—		—		—
Total expense (income)	$	(3)	$	(5)	$	9	$	18	$	—	$	1

XML

EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Schedule of Changes in Shareholders' Equity

The changes in Shareholders’ equity are as follows:

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2022	398.8	$	4	$	12,449	$	7,594	$	(3,633)	$	(1)	$	16,413	$	38	$	16,451
Net income	—	—		—		532		—		—		532		1		533
Other comprehensive income, net of tax								116				116		—		116
Cash dividends paid and accrued	—	—		—		(331)		—		—		(331)		(2)		(333)
Issuance of shares under equity-based compensation plans	0.8	—		(22)		(2)		—		—		(24)		—		(24)
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(1)		(1)
Repurchase of shares	(0.6)	—		—		(86)		—		—		(86)		—		(86)
Balance at March 31, 2022	399.0	$	4	$	12,427	$	7,707	$	(3,517)	$	(1)	$	16,620	$	36	$	16,656

	Ordinary shares			Capital in excess of par value		Retained earnings		Accumulated other comprehensive loss		Shares held in trust		Total Eaton shareholders' equity		Noncontrolling interests		Total equity
(In millions)	Shares	Dollars
Balance at January 1, 2021	398.1	$	4	$	12,329	$	6,794	$	(4,195)	$	(2)	$	14,930	$	43	$	14,973
Net income	—	—		—		458		—		—		458		1		459
Other comprehensive loss, net of tax								(30)				(30)		—		(30)
Cash dividends paid and accrued	—	—		—		(309)		—		—		(309)		—		(309)
Issuance of shares under equity-based compensation plans	0.9	—		6		(1)		—		—		5		—		5
Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(2)		(2)
Repurchase of shares	(0.5)	—		—		(59)		—		—		(59)		—		(59)
Balance at March 31, 2021	398.5	$	4	$	12,335	$	6,883	$	(4,225)	$	(2)	$	14,995	$	42	$	15,037

Schedule of Accumulated Other Comprehensive Loss

The changes in Accumulated other comprehensive loss are as follows:

(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2022	$	(2,617)	$	(986)	$	(30)	$	(3,633)
Other comprehensive income (loss) before    reclassifications	(62)		47		102		87
Amounts reclassified from Accumulated other    comprehensive loss (income)	—		30		(1)		29
Net current-period Other comprehensive    income (loss)	(62)		77		101		116
Balance at March 31, 2022	$	(2,679)	$	(909)	$	71	$	(3,517)

Schedule of Reclassifications of Accumulated Other Comprehensive Loss

The reclassifications out of Accumulated other comprehensive loss are as follows:

(In millions)	Three months ended March 31, 2022			Consolidated statements of income classification
Amortization of defined benefit pensions and other   postretirement benefits items
Actuarial loss and prior service cost	$	(32)	1
Tax benefit	2
Total, net of tax	(30)
Gains and (losses) on cash flow hedges
Commodity contracts	1			Cost of products sold
Tax expense	—
Total, net of tax	1
Total reclassifications for the period	$	(29)

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 7 for additional information about pension and other postretirement benefits items.

Schedule of Net Income per Ordinary Share Attributable to Shareholders

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

	Three months ended March 31
(In millions except for per share data)	2022		2021
Net income attributable to Eaton ordinary shareholders	$	532	$	458
Weighted-average number of ordinary shares outstanding - diluted	401.8		400.9
Less dilutive effect of equity-based compensation	2.6		2.6
Weighted-average number of ordinary shares outstanding - basic	399.2		398.3
Net income per share attributable to Eaton ordinary shareholders
Diluted	$	1.33	$	1.14
Basic	1.33		1.15

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

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

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

(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2022
Cash	$	237	$	237	$	—	$	—
Short-term investments	268		268		—		—
Net derivative contracts	44		—		44		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)
December 31, 2021
Cash	$	297	$	297	$	—	$	—
Short-term investments	271		271		—		—
Net derivative contracts	41		—		41		—
Contingent consideration from acquisition of Green Motion	(57)		—		—		(57)

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Financial Instruments Recognized in Condensed Consolidated Balance Sheet

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

(In millions)	Notional amount		Other  current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
March 31, 2022
Derivatives designated as hedges
Forward starting floating-to-fixed  interest rate swaps	$	1,700	$	—	$	45	$	—	$	33	Cash flow	10 to 30 years
Currency exchange contracts	1,248		21		—		12		5		Cash flow	1 to 36 months
Commodity contracts	58		5		—		—		—		Cash flow	1 to 12 months
Total			$	26	$	45	$	12	$	38
Derivatives not designated as hedges
Currency exchange contracts	$	4,664	$	42			$	20				1 to 12 months
Commodity contracts	41		2				1					1 month
Total			$	44			$	21
December 31, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate  swaps	$	1,800	$	22	$	29	$	—	$	—	Fair value	8 months to 13 years
Forward starting floating-to-fixed  interest rate swaps	1,350		—		38		—		79		Cash flow	11 to 31 years
Currency exchange contracts	1,212		17		2		11		3		Cash flow	1 to 36 months
Commodity contracts	50		2		—		1		—		Cash flow	1 to 12 months
Total			$	41	$	69	$	12	$	82
Derivatives not designated as hedges
Currency exchange contracts	$	5,285	$	34			$	9				1 to 12 months
Commodity contracts	62		1				1					1 month
Total			$	35			$	10

Schedule of Notional Amounts of Outstanding Derivative Positions

As of March 31, 2022, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity	March 31, 2022		Term
Copper	10	Millions of pounds	1 to 12 months
Gold	1,418	Troy ounces	1 to 12 months
Silver	560,367	Troy ounces	1 to 12 months

Schedule of Derivative Instruments Recorded in Balance Sheet

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

(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Long-term debt	$	(2,413)	$	(2,413)	$	(70)	$	(84)

(a) At March 31, 2022 and December 31, 2021, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $70 million and $33 million, respectively.

Schedule of Impact of Hedging Activities to Consolidated Statement of Income

The impact of hedging activities to the Consolidated Statements of Income is as follows:

	Three months ended March 31, 2022
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,843	$	3,269	$	32
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	2	$	(3)	$	—
Derivative designated as hedging instrument	(2)		3		—
Commodity contracts
Hedged item	$	—	$	(1)	$	—
Derivative designated as hedging instrument	—		1		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	8
Derivative designated as hedging instrument	—		—		(8)

	Three months ended March 31, 2021
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	4,692	$	3,184	$	38
Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts
Hedged item	$	3	$	1	$	—
Derivative designated as hedging instrument	(3)		(1)		—
Commodity contracts
Hedged item	$	—	$	(2)	$	—
Derivative designated as hedging instrument	—		2		—
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item	$	—	$	—	$	19
Derivative designated as hedging instrument	—		—		(19)

Schedule of Amounts Recognized in Net Income

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

	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended March 31
(In millions)	2022		2021
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	(8)	$	(63)	Interest expense - net
Commodity Contracts	1		2		Cost of products sold
Total	$	(7)	$	(61)

Schedule of Amounts Recognized in Accumulated Other Comprehensive Income

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

	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 March 31					Three months ended March 31
(In millions)	2022		2021			2022		2021
Derivatives designated as cash    flow hedges
Forward starting floating-to-fixed interest rate swaps	$	124	$	129	Interest expense - net	$	—	$	—
Currency exchange contracts	—		(13)		Net sales and Cost of products sold	—		(4)
Commodity contracts	5		3		Cost of products sold	1		2
Non-derivative designated as net    investment hedges
Foreign currency denominated debt	62		144		Interest expense - net	—		—
Total	$	191	$	263		$	1	$	(2)

XML

RESTRUCTURING CHARGES (Tables)

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Program Charges

A summary of restructuring program charges is as follows:

	Three months ended March 31
(In millions except for per share data)	2022		2021
Workforce reductions	$	5	$	2
Plant closing and other	13		14
Total before income taxes	18		16
Income tax benefit	4		4
Total after income taxes	$	14	$	12
Per ordinary share - diluted	$	0.03	$	0.03

Restructuring program charges related to the following segments:

	Three months ended March 31
(In millions)	2022		2021
Electrical Americas	$	5	$	5
Electrical Global	5		2
Aerospace	3		1
Vehicle	3		6
Corporate	2		2
Total	$	18	$	16

Schedule of Liabilities Related to Restructuring

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

(In millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	$	139	$	3	$	142
Liability recognized	21		57		78
Payments, utilization and translation	(64)		(52)		(116)
Balance at December 31, 2021	$	96	$	8	$	104
Liability recognized	5		13		18
Payments, utilization and translation	(12)		(14)		(26)
Balance at March 31, 2022	$	89	$	7	$	96

XML

BUSINESS SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Schedule of Business Segment Information

	Three months ended March 31
(In millions)	2022		2021
Net sales
Electrical Americas	$	1,891	$	1,622
Electrical Global	1,437		1,253
Hydraulics	—		561
Aerospace	718		519
Vehicle	671		654
eMobility	126		83
Total net sales	$	4,843	$	4,692
Segment operating profit (loss)
Electrical Americas	$	361	$	332
Electrical Global	279		213
Hydraulics	—		84
Aerospace	159		96
Vehicle	113		113
eMobility	(3)		(7)
Total segment operating profit	909		831
Corporate
Intangible asset amortization expense	(128)		(92)
Interest expense - net	(32)		(38)
Pension and other postretirement benefits income	19		14
Restructuring program charges	(18)		(16)
Other expense - net	(131)		(161)
Income before income taxes	619		538
Income tax expense	86		79
Net income	533		459
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	532	$	458

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES - Narrative (Details) - USD ($) $ in Millions						3 Months Ended			7 Months Ended
	Jan. 05, 2022	Aug. 02, 2021	Jun. 01, 2021	Mar. 31, 2021	Mar. 17, 2021	Mar. 31, 2022	Mar. 31, 2022	Mar. 31, 2021	Aug. 02, 2021
Business Acquisition [Line Items]
Cash purchase price, net of cash received						$ 612		$ 1,700
Held-for-sale | Hydraulics Business
Business Acquisition [Line Items]
Cash purchase price, net of cash sold		$ 3,100							$ 3,100
Disposed of by Sale | Hydraulics Business
Business Acquisition [Line Items]
Pre-tax gain (loss) on disposal		$ 617				24
Sales of business sold									$ 1,300
Tripp Lite
Business Acquisition [Line Items]
Cash purchase price, net of cash received					$ 1,650
Other intangible assets					630	$ 604	$ 604
Revenue of acquiree since acquisition date				$ 26
Tripp Lite | Customer relationships
Business Acquisition [Line Items]
Other intangible assets					$ 539
Useful life of intangible assets acquired					20 years
Tripp Lite | Trademarks
Business Acquisition [Line Items]
Other intangible assets					$ 33
Useful life of intangible assets acquired					15 years
Tripp Lite | Technology intangible assets
Business Acquisition [Line Items]
Other intangible assets					$ 32
Useful life of intangible assets acquired					5 years
Mission Systems
Business Acquisition [Line Items]
Cash purchase price, net of cash received			$ 2,800
Royal Power Solutions
Business Acquisition [Line Items]
Cash purchase price, net of cash received	$ 612
Other intangible assets	$ 306
Revenue of acquiree since acquisition date							38
Operating profit of acquiree since acquisition date							$ 5

XML

ACQUISITIONS AND DIVESTITURES OF BUSINESSES - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2022	Jan. 05, 2022	Dec. 31, 2021	Mar. 17, 2021
Allocations
Goodwill	$ 14,955		$ 14,751
Tripp Lite
Allocations
Short-term investments	5			$ 5
Accounts receivable	93			94
Inventory	179			184
Prepaid expenses and other current assets	5			6
Property, plant and equipment	1			6
Other intangible assets	604			630
Other assets	2			0
Accounts payable	(13)			(13)
Other current liabilities	(34)			(32)
Other noncurrent liabilities	(167)			(157)
Total identifiable net assets	675			723
Goodwill	976			928
Total consideration, net of cash received	1,651			$ 1,651
Measurement Period Adjustments
Accounts receivable	(1)
Inventory	(5)
Prepaid expenses and other current assets	(1)
Property, plant and equipment	(5)
Other intangible assets	(26)
Other assets	2
Other current liabilities	(2)
Other noncurrent liabilities	(10)
Total identifiable net assets	(48)
Goodwill	48
Total consideration, net of cash received	$ 0
Royal Power Solutions
Allocations
Accounts receivable		$ 36
Inventory		43
Prepaid expenses and other current assets		1
Property, plant and equipment		25
Other intangible assets		306
Other assets		21
Accounts payable		(24)
Other current liabilities		(10)
Other noncurrent liabilities		(70)
Total identifiable net assets		328
Goodwill		284
Total consideration, net of cash received		$ 612

XML

REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Accounts receivables from customers	$ 3,216	$ 2,896
Unbilled receivables	194	187
Deferred revenue liabilities, included in other current liabilities	401	$ 395
Backlog of unsatisfied or partially satisfied obligations	$ 9,300
Backlog expected to be recognized in the next twelve months (as a percent)	87.00%

XML

REVENUE RECOGNITION - Disaggregation of Sales (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Net sales	$ 4,843	$ 4,692
Electrical Americas
Disaggregation of Revenue [Line Items]
Net sales	1,891	1,622
Electrical Americas | Products
Disaggregation of Revenue [Line Items]
Net sales	603	520
Electrical Americas | Systems
Disaggregation of Revenue [Line Items]
Net sales	1,288	1,102
Electrical Global
Disaggregation of Revenue [Line Items]
Net sales	1,437	1,253
Electrical Global | Products
Disaggregation of Revenue [Line Items]
Net sales	876	713
Electrical Global | Systems
Disaggregation of Revenue [Line Items]
Net sales	561	540
Hydraulics
Disaggregation of Revenue [Line Items]
Net sales	0	561
Hydraulics | United States
Disaggregation of Revenue [Line Items]
Net sales	0	222
Hydraulics | Rest of World
Disaggregation of Revenue [Line Items]
Net sales	0	339
Aerospace
Disaggregation of Revenue [Line Items]
Net sales	718	519
Aerospace | Original Equipment Manufacturers
Disaggregation of Revenue [Line Items]
Net sales	293	208
Aerospace | Aftermarket
Disaggregation of Revenue [Line Items]
Net sales	221	146
Aerospace | Industrial and Other
Disaggregation of Revenue [Line Items]
Net sales	204	165
Vehicle
Disaggregation of Revenue [Line Items]
Net sales	671	654
Vehicle | Commercial
Disaggregation of Revenue [Line Items]
Net sales	402	342
Vehicle | Passenger and Light Duty
Disaggregation of Revenue [Line Items]
Net sales	269	312
eMobility
Disaggregation of Revenue [Line Items]
Net sales	$ 126	$ 83

XML

REVENUE RECOGNITION - Changes in Deferred Revenue Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Movement in Deferred Revenue [Roll Forward]
Balance at beginning of period	$ 422	$ 257
Customer deposits and billings	342	276
Revenue recognized in the period	(334)	(262)
Translation	(2)
Translation and other		(3)
Balance at end of period	$ 428	$ 268

XML

CREDIT LOSSES FOR RECEIVABLES - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Credit Loss [Abstract]
Allowance for credit losses	$ 42	$ 42

XML

INVENTORY - Summary (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 1,219	$ 1,096
Work-in-process	783	620
Finished goods	1,315	1,253
Total inventory	$ 3,317	$ 2,969

XML

GOODWILL - Summary (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 14,751
Additions	299
Translation	(95)
Balance at end of period	14,955
Electrical Americas
Goodwill [Roll Forward]
Balance at beginning of period	7,417
Additions	5
Translation	6
Balance at end of period	7,428
Electrical Global
Goodwill [Roll Forward]
Balance at beginning of period	4,183
Additions	2
Translation	(65)
Balance at end of period	4,120
Aerospace
Goodwill [Roll Forward]
Balance at beginning of period	2,781
Additions	8
Translation	(36)
Balance at end of period	2,753
Vehicle
Goodwill [Roll Forward]
Balance at beginning of period	290
Additions	0
Translation	0
Balance at end of period	290
eMobility
Goodwill [Roll Forward]
Balance at beginning of period	80
Additions	284
Translation	0
Balance at end of period	$ 364

XML

RETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Pension plan
Retirement benefits plans expense (income)
Settlement loss	$ 14
Pension plan | Pension Assets
Retirement benefits plans expense (income)
Comprehensive income (loss) from pension remeasurement	32
Pension plan | Pension Liabilities
Retirement benefits plans expense (income)
Comprehensive income (loss) from pension remeasurement	15
Pension plan | Other Comprehensive Income (Loss)
Retirement benefits plans expense (income)
Comprehensive income (loss) from pension remeasurement	(47)
Pension plan | United States pension benefit expense (income)
Retirement benefits plans expense (income)
Service cost	8	$ 10
Interest cost	20	17
Expected return on plan assets	(53)	(56)
Amortization	8	10
Total	(17)	(19)
Settlements	14	14
Total expense (income)	(3)	(5)
Pension plan | Non-United States pension benefit expense (income)
Retirement benefits plans expense (income)
Service cost	16	19
Interest cost	12	10
Expected return on plan assets	(31)	(30)
Amortization	12	19
Total	9	18
Settlements	0	0
Total expense (income)	9	18
Postretirement plan
Retirement benefits plans expense (income)
Service cost	0	0
Interest cost	2	2
Expected return on plan assets	0	0
Amortization	(2)	(1)
Total	0	1
Settlements	0	0
Total expense (income)	$ 0	$ 1

XML

INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Aug. 31, 2021	Nov. 30, 2019
Income Tax Examination [Line Items]
Effective income tax rate (benefit) expense (as a percent)	13.90%	14.70%
Secretariat of the Federal Revenue Bureau of Brazil
Income Tax Examination [Line Items]
Alleged tax deficiency			$ 35
Income tax examination, penalties and interest accrued			$ 115
Net book value of pledged real estate assets	$ 22
Real estate bond	113
Pledged cash deposit	$ 20
Secretariat of the Federal Revenue Bureau of Brazil | Tax Years 2005-2012
Income Tax Examination [Line Items]
Alleged tax deficiency				$ 29
Income tax examination, penalties and interest accrued				$ 107

XML

EQUITY - Narrative (Details) - USD ($) shares in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Feb. 23, 2022	Feb. 27, 2019
Class of Stock [Line Items]
Antidilutive shares excluded from net income per share (shares)		0.1
2019 Program
Class of Stock [Line Items]
Share repurchase program, authorized amount				$ 5,000,000,000
Ordinary shares purchased (shares)		0.5
Stock repurchased, value		$ 59,000,000
2022 Program
Class of Stock [Line Items]
Share repurchase program, authorized amount			$ 5,000,000,000
Ordinary shares purchased (shares)	0.6
Stock repurchased, value	$ 86,000,000

XML

EQUITY - Changes in Shareholders' Equity (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	$ 16,451	$ 14,973
Net income	533	459
Other comprehensive income (loss), net of tax	116	(30)
Cash dividends paid and accrued	(333)	(309)
Issuance of shares under equity-based compensation plans	(24)	5
Changes in noncontrolling interest of consolidated subsidiaries - net	(1)	(2)
Repurchase of shares	(86)	(59)
Balance at end of period	16,656	15,037
Total Eaton shareholders' equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	16,413	14,930
Net income	532	458
Other comprehensive income (loss), net of tax	116	(30)
Cash dividends paid and accrued	(331)	(309)
Issuance of shares under equity-based compensation plans	(24)	5
Repurchase of shares	(86)	(59)
Balance at end of period	$ 16,620	$ 14,995
Ordinary shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period (shares)	398.8	398.1
Balance at beginning of period	$ 4	$ 4
Issuance of shares under equity-based compensation plans (shares)	0.8	0.9
Repurchase of shares (shares)	(0.6)	(0.5)
Balance at end of period (shares)	399.0	398.5
Balance at end of period	$ 4	$ 4
Capital in excess of par value
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	12,449	12,329
Issuance of shares under equity-based compensation plans	(22)	6
Balance at end of period	12,427	12,335
Retained earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	7,594	6,794
Net income	532	458
Cash dividends paid and accrued	(331)	(309)
Issuance of shares under equity-based compensation plans	(2)	(1)
Repurchase of shares	(86)	(59)
Balance at end of period	7,707	6,883
Accumulated other comprehensive loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(3,633)	(4,195)
Other comprehensive income (loss), net of tax	116	(30)
Balance at end of period	(3,517)	(4,225)
Shares held in trust
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(1)	(2)
Balance at end of period	(1)	(2)
Noncontrolling interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	38	43
Net income	1	1
Cash dividends paid and accrued	(2)	0
Changes in noncontrolling interest of consolidated subsidiaries - net	(1)	(2)
Balance at end of period	$ 36	$ 42

XML

EQUITY - Changes in Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 16,451	$ 14,973
Other comprehensive income (loss) before reclassifications	87
Amounts reclassified from Accumulated other comprehensive loss (income)	29
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	116	(30)
Balance at end of period	16,656	$ 15,037
Accumulated other comprehensive loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(3,633)
Balance at end of period	(3,517)
Currency translation and related hedging instruments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(2,617)
Other comprehensive income (loss) before reclassifications	(62)
Amounts reclassified from Accumulated other comprehensive loss (income)	0
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	(62)
Balance at end of period	(2,679)
Pensions and other postretirement benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(986)
Other comprehensive income (loss) before reclassifications	47
Amounts reclassified from Accumulated other comprehensive loss (income)	30
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	77
Balance at end of period	(909)
Cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(30)
Other comprehensive income (loss) before reclassifications	102
Amounts reclassified from Accumulated other comprehensive loss (income)	(1)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders	101
Balance at end of period	$ 71

XML

EQUITY - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes	$ 619	$ 538
Income tax expense (benefit)	86	79
Net Income Attributable to Eaton ordinary shareholders	532	$ 458
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Income Attributable to Eaton ordinary shareholders	(29)
Pensions and other postretirement benefits | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes	(32)
Income tax expense (benefit)	(2)
Net Income Attributable to Eaton ordinary shareholders	(30)
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense (benefit)	0
Net Income Attributable to Eaton ordinary shareholders	1
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income | Commodity contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes	$ 1

XML

EQUITY - Calculation of Net Income per Ordinary Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Calculation of net income per ordinary share attributable to ordinary shareholders
Net Income Attributable to Eaton ordinary shareholders	$ 532	$ 458
Weighted-average number of ordinary shares outstanding - diluted (shares)	401.8	400.9
Less dilutive effect of equity-based compensation (shares)	2.6	2.6
Weighted-average number of ordinary shares outstanding - basic (shares)	399.2	398.3
Net income per share attributable to Eaton ordinary shareholders
Diluted (USD per share)	$ 1.33	$ 1.14
Basic (USD per share)	$ 1.33	$ 1.15

XML

FAIR VALUE MEASUREMENTS - Financial Instruments at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	$ 237	$ 297
Short-term investments	268	271
Net derivative contracts	44	41
Contingent consideration from acquisition of Green Motion	(57)	(57)
Level 1
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	237	297
Short-term investments	268	271
Net derivative contracts	0	0
Contingent consideration from acquisition of Green Motion	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	44	41
Contingent consideration from acquisition of Green Motion	0	0
Level 3
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items]
Cash	0	0
Short-term investments	0	0
Net derivative contracts	0	0
Contingent consideration from acquisition of Green Motion	$ (57)	$ (57)

XML

FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	Mar. 22, 2021	Mar. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Contingent consideration from acquisition of Green Motion		$ 57	$ 57
Long-term debt and current portion of long term debt, carrying value		8,491	8,566
Long-term debt and current portion of long-term debt, fair value		$ 8,709	$ 9,232
Green Motion, SA
Business Acquisition [Line Items]
Total consideration to be transferred for acquisition	$ 106
Cash paid at closing	49
Contingent consideration from acquisition of Green Motion	57
Maximum potential payments based on future revenue performance	$ 109

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Derivative [Line Items]
Proportion of intercompany balance sheet exposure (as a percent)	100.00%
Cash flow hedge gain to be reclassified within the next twelve months	$ 14
Non-derivative net investment hedge
Derivative [Line Items]
Foreign currency note payable, noncurrent, after-tax	$ 2,819	$ 2,880

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Financial Instrument Recognized in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2022	Jun. 30, 2021	Dec. 31, 2021
Derivatives designated as hedges | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	$ 26		$ 41
Derivatives designated as hedges | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	45		69
Derivatives designated as hedges | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	12		12
Derivatives designated as hedges | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	38		82
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Notional amount			1,800
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument			22
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument			29
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument			0
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument			0
Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps
Derivatives, Fair Value [Line Items]
Notional amount	1,700		1,350
Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	0		0
Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	45		38
Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0		0
Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	33		79
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Notional amount	1,248		1,212
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	21		17
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	0		2
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	12		11
Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	5		3
Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Notional amount	58		50
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	5		2
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other noncurrent assets
Derivatives, Fair Value [Line Items]
Derivative asset designated as hedging instrument	0		0
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0		1
Derivatives designated as hedges | Cash flow hedging | Commodity contracts | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Derivative liability designated as hedging instrument	0		0
Derivatives not designated as hedges | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	44		35
Derivatives not designated as hedges | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	21		10
Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Notional amount	4,664		5,285
Derivatives not designated as hedges | Currency exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	42		34
Derivatives not designated as hedges | Currency exchange contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	20		9
Derivatives not designated as hedges | Commodity contracts
Derivatives, Fair Value [Line Items]
Notional amount	41		62
Derivatives not designated as hedges | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative asset not designated as hedging instrument	2		1
Derivatives not designated as hedges | Commodity contracts | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability not designated as hedging instrument	$ 1		$ 1
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity		8 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	10 years	11 years
Minimum | Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Minimum | Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	1 month	1 month
Maximum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity		13 years
Maximum | Derivatives designated as hedges | Cash flow hedging | Forward starting floating-to-fixed interest rate swaps
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	30 years	31 years
Maximum | Derivatives designated as hedges | Cash flow hedging | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	36 months	36 months
Maximum | Derivatives designated as hedges | Cash flow hedging | Commodity contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	12 months	12 months
Maximum | Derivatives not designated as hedges | Currency exchange contracts
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	12 months	12 months

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Volume of Outstanding Commodity Contracts (Details) - Commodity contracts lb in Millions	3 Months Ended
	Mar. 31, 2022 ozt lb
Copper
Derivative [Line Items]
Derivative, outstanding commodity contract | lb	10
Copper | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Copper | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months
Gold
Derivative [Line Items]
Derivative, outstanding commodity contract	1,418
Gold | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Gold | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months
Silver
Derivative [Line Items]
Derivative, outstanding commodity contract	560,367
Silver | Minimum
Derivative [Line Items]
Derivative, term of contract	1 month
Silver | Maximum
Derivative [Line Items]
Derivative, term of contract	12 months

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Balance Sheet Related to Fixed-to-Floating Interest Rate Swaps (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Interest rate swap
Derivative [Line Items]
Carrying amount of the hedged assets (liabilities)	$ (2,413)	$ (2,413)
Long-term debt
Derivative [Line Items]
Discontinued hedge, cumulative adjustment	70	33
Long-term debt | Interest rate swap
Derivative [Line Items]
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities)	$ (70)	$ (84)

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives on Consolidated Statement of Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative [Line Items]
Net sales	$ 4,843	$ 4,692
Cost of products sold	3,269	3,184
Interest expense - net	32	38
Cash flow hedging | Net sales | Currency exchange contracts
Derivative [Line Items]
Gain (loss) on hedged item	2	3
Gain (loss) on hedging instrument	(2)	(3)
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	(3)	1
Gain (loss) on hedging instrument	3	(1)
Cash flow hedging | Cost of products sold | Commodity contracts
Derivative [Line Items]
Gain (loss) on hedged item	(1)	(2)
Gain (loss) on hedging instrument	1	2
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	8	19
Gain (loss) on hedging instrument	$ (8)	$ (19)

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	$ (7)	$ (61)
Currency exchange contracts | Interest expense - net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	(8)	(63)
Commodity contracts | Cost of products sold
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivatives not designated as hedges	$ 1	$ 2

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Amounts recognized in accumulated other comprehensive income
Total, gain (loss) on derivative and net investment hedge recognized in other comprehensive (loss) income	$ 191	$ 263
Total, gain (loss) on derivative and net investment hedge recognized in accumulated other comprehensive (loss) income	1	(2)
Interest expense - net | Net investment hedging
Amounts recognized in accumulated other comprehensive income
Non-derivative designated as net investment hedges	62	144
Gain (loss) reclassified from Accumulated other comprehensive loss	0	0
Forward Starting Floating-to-Fixed Interest Rate Swap | Interest expense - net | Cash flow hedging
Amounts recognized in accumulated other comprehensive income
Derivatives designated as cash flow hedges	124	129
Gain (loss) reclassified from Accumulated other comprehensive loss	0	0
Currency exchange contracts | Net sales and Cost of products sold | Cash flow hedging
Amounts recognized in accumulated other comprehensive income
Derivatives designated as cash flow hedges	0	(13)
Gain (loss) reclassified from Accumulated other comprehensive loss	0	(4)
Commodity contracts | Cost of products sold | Cash flow hedging
Amounts recognized in accumulated other comprehensive income
Derivatives designated as cash flow hedges	5	3
Gain (loss) reclassified from Accumulated other comprehensive loss	$ 1	$ 2

XML

RESTRUCTURING CHARGES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended			24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 18	$ 16		$ 78	$ 214	$ 310
Estimated charges	$ 350					$ 350
Forecast
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 40

XML

RESTRUCTURING CHARGES - Restructuring Program Charges (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		12 Months Ended		24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 18	$ 16	$ 78	$ 214	$ 310
Income tax benefit	4	4
Total after income taxes	$ 14	$ 12
Per ordinary share - diluted (USD per share)	$ 0.03	$ 0.03
Workforce reductions
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 5	$ 2	21	172
Plant closing and other
Restructuring Cost and Reserve [Line Items]
Total before income taxes	$ 13	$ 14	$ 57	$ 42

XML

RESTRUCTURING CHARGES - Restructuring Program Charges Related to Segments (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended		24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 18	$ 16	$ 78	$ 214	$ 310
Operating segments | Electrical Americas
Restructuring Cost and Reserve [Line Items]
Restructuring charges	5	5
Operating segments | Electrical Global
Restructuring Cost and Reserve [Line Items]
Restructuring charges	5	2
Operating segments | Aerospace
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	1
Operating segments | Vehicle
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	6
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 2	$ 2

XML

RESTRUCTURING CHARGES - Liabilities Related to Restructuring (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended		24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Restructuring Reserve [Roll Forward]
Balance at beginning of period	$ 104	$ 142	$ 142	$ 0
Liability recognized	18	16	78	214	$ 310
Payments, utilization and translation	(26)		(116)	(72)
Balance at end of period	96		104	142	96
Workforce reductions
Restructuring Reserve [Roll Forward]
Balance at beginning of period	96	139	139	0
Liability recognized	5	2	21	172
Payments, utilization and translation	(12)		(64)	(33)
Balance at end of period	89		96	139	89
Plant closing and other
Restructuring Reserve [Roll Forward]
Balance at beginning of period	8	3	3	0
Liability recognized	13	$ 14	57	42
Payments, utilization and translation	(14)		(52)	(39)
Balance at end of period	$ 7		$ 8	$ 3	$ 7

XML

BUSINESS SEGMENT INFORMATION - Summary (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended		24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2022
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	$ 4,843	$ 4,692
Interest expense - net	(32)	(38)
Pension and other postretirement benefits income	(6)	(14)
Restructuring program charges	(18)	(16)	$ (78)	$ (214)	$ (310)
Other expense - net	8	11
Income before income taxes	619	538
Income tax expense	86	79
Net income	533	459
Less net income for noncontrolling interests	(1)	(1)
Net income attributable to Eaton ordinary shareholders	532	458
Electrical Americas
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,891	1,622
Electrical Global
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,437	1,253
Hydraulics
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	0	561
Aerospace
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	718	519
Vehicle
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	671	654
eMobility
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	126	83
Operating segments
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	4,843	4,692
Segment operating profit (loss)	909	831
Operating segments | Electrical Americas
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,891	1,622
Segment operating profit (loss)	361	332
Restructuring program charges	(5)	(5)
Operating segments | Electrical Global
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	1,437	1,253
Segment operating profit (loss)	279	213
Restructuring program charges	(5)	(2)
Operating segments | Hydraulics
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	0	561
Segment operating profit (loss)	0	84
Operating segments | Aerospace
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	718	519
Segment operating profit (loss)	159	96
Restructuring program charges	(3)	(1)
Operating segments | Vehicle
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	671	654
Segment operating profit (loss)	113	113
Restructuring program charges	(3)	(6)
Operating segments | eMobility
Segment Reporting Information, Profit (Loss) [Abstract]
Net sales	126	83
Segment operating profit (loss)	(3)	(7)
Corporate
Segment Reporting Information, Profit (Loss) [Abstract]
Intangible asset amortization expense	(128)	(92)
Interest expense - net	(32)	(38)
Pension and other postretirement benefits income	19	14
Restructuring program charges	(2)	(2)
Other expense - net	$ (131)	$ (161)