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Equity
 6 Months Ended
Jun. 30, 2011
Stockholders' Equity Note [Abstract]  
EQUITY
EQUITY
Eaton has a common share repurchase plan that authorizes the repurchase of 10 million common shares. The shares are expected to be repurchased over time, depending on market conditions, the market price of the Company’s common shares, the Company’s capital levels and other considerations. During the first six months of 2011, 1.3 million common shares were repurchased in the open market at a total cost of $68. No common shares were repurchased in the open market in the first six months of 2010.
The changes in Shareholders’ equity follow:
 
Eaton
shareholders’
equity
 
Noncontrolling
interests
 
Total
equity
Balance at December 31, 2010
$
7,362


 
$
41


 
$
7,403


 
 
 
 
 
 
Net income
623


 
1


 
624


Other comprehensive income
368


 
—


 
368


Total comprehensive income
991


 
1


 
992


Cash dividends paid
(232
)
 
(7
)
 
(239
)
Issuance of shares under equity-based compensation plans-net
99


 
—


 
99


Repurchase of shares
(68
)
 
—


 
(68
)
Balance at June 30, 2011
$
8,152


 
$
35


 
$
8,187




Comprehensive Income (Loss)
Comprehensive income (loss) consists primarily of net income, foreign currency translation and related hedging instruments, changes in unrecognized costs of pension and other postretirement benefits, and changes in the effective portion of open derivative contracts designated as cash flow hedges. The following table summarizes the components of Comprehensive income (loss):
 
Three months ended

June 30
 
Six months ended

June 30
 
2011
 
2010
 
2011
 
2010
Net income
$
338


 
$
229


 
$
624


 
$
385


 
 
 
 
 
 
 
 
Foreign currency translation and related hedging instruments
121


 
(307
)
 
338


 
(483
)
Pensions and other postretirement benefits
19


 
28


 
35


 
47


Cash flow hedges
(4
)
 
(5
)
 
(5
)
 
(9
)
Other comprehensive income (loss)
136


 
(284
)
 
368


 
(445
)
Total comprehensive income (loss)
474


 
(55
)
 
992


 
(60
)
Adjustment for comprehensive income attributable to noncontrolling interests
(1
)
 
(3
)
 
(1
)
 
(4
)
Total Comprehensive income (loss) attributable to Eaton common shareholders
$
473


 
$
(58
)
 
$
991


 
$
(64
)


Net Income per Common Share
A summary of the calculation of net income per common share attributable to common shareholders follows:
 
Three months ended

June 30
 
Six months ended

June 30
(Shares in millions)
2011
 
2010
 
2011
 
2010
Net income attributable to Eaton common shareholders
$
336


 
$
226


 
$
623


 
$
381


 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding-diluted
345.7


 
340.4


 
345.7


 
339.8


Less dilutive effect of stock options and restricted stock awards
4.8


 
5.7


 
5.2


 
5.3


Weighted-average number of common shares outstanding-basic
340.9


 
334.7


 
340.5


 
334.5


 
 
 
 
 
 
 
 
Net income per common share
 
 
 
 
 
 
 
Diluted
$
0.97


 
$
0.66


 
$
1.80


 
$
1.12


Basic
0.99


 
0.67


 
1.83


 
1.14




For the second quarter and first six months of 2011, 0.7 million stock options, respectively, were excluded from the calculation of diluted net income per common share because the exercise price of the options exceeded the average market price of the common shares during the period and their effect, accordingly, would have been antidilutive. For the second quarter and first six months of 2010, 7.2 million stock options, respectively, were excluded from the calculation of diluted net income per common share because the exercise price of the options exceeded the average market price of the common shares during the period and their effect, accordingly, would have been antidilutive.