Eaton Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity Note [Abstract]

Eaton Shareholders' Equity [Text Block]

EATON SHAREHOLDERS' EQUITY

There are 500 million common shares authorized ($0.50 par value per share), 334.4 million of which were issued and outstanding at the end of 2011. At December 31, 2011, there were 8,191 holders of record of common shares. Additionally, 18,220 current and former employees were shareholders through participation in the Eaton Savings Plan (ESP), Eaton Personal Investment Plan (EPIP), and the Eaton Puerto Rico Retirement Savings Plan.

Eaton has a common share repurchase program (2007 Program) that authorizes the repurchase of 10 million common shares. In 2011, 8.3 million common shares were repurchased under the 2007 Program in the open market at a total cost of $343. On September 28, 2011, Eaton's Board of Directors approved a common share repurchase program (2011 Program) that replaced the 2007 Program and authorizes the purchase of up to 20 million shares, not to exceed an aggregate purchase price of $1.25 billion. The common shares are expected to be repurchased over time, depending on market conditions, the market price of common shares, capital levels and other considerations. In 2011, no common shares were repurchased under the 2011 Program. No common shares were repurchased in the open market in 2010 or 2009.

Eaton has deferral plans that permit certain employees and directors to defer a portion of their compensation. A trust contains $6 and $9 of common shares and marketable securities, as valued at December 31, 2011 and 2010, respectively, to fund a portion of these liabilities. The marketable securities were included in Other assets and the common shares were included in Shareholders' equity at historical cost.

Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss as reported in the Consolidated Balance Sheets follow:

	2011			2010
Foreign currency translation and related hedging instruments (net of income tax benefit of    $43 in 2011 and $32 in 2010)	$	(502	)	$	(261	)
Pensions (net of income tax benefit of $651 in 2011 and $489 in 2010)	(1,309		)	(972		)
Other postretirement benefits (net of income tax benefit of $110 in 2011 and $99 in 2010)	(138		)	(122		)
Cash flow hedges (net of income tax benefit of $8 in 2011 and income tax expense of    $4 in 2010)	(15		)	7
Total accumulated other comprehensive loss	$	(1,964	)	$	(1,348	)

Net Income per Common Share

A summary of the calculation of net income per common share attributable to common shareholders follows:

(Shares in millions)	2011		2010		2009
Net income attributable to Eaton common shareholders	$	1,350	$	929	$	383
Weighted-average number of common shares outstanding-diluted	342.8		339.5		335.8
Less dilutive effect of stock options and restricted stock awards	4.5		4.0		3.1
Weighted-average number of common shares outstanding-basic	338.3		335.5		332.7
Net income per common share
Diluted	$	3.93	$	2.73	$	1.14
Basic	3.98		2.76		1.16

In 2011, 2010 and 2009, 1.5 million, 6.9 million and 16.3 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.