10-Q 1 etn-20220331.htm 10-Q etn-20220331
0001551182false2022Q112/31truefalse00015511822022-01-012022-03-3100015511822022-03-31xbrli:sharesiso4217:USD00015511822021-01-012021-03-31iso4217:USDxbrli:shares00015511822021-12-310001551182us-gaap:FairValueInputsLevel1Member2022-03-3100015511822020-12-3100015511822021-03-310001551182etn:TrippLiteMember2021-03-172021-03-170001551182etn:TrippLiteMember2021-03-170001551182etn:TrippLiteMember2022-03-310001551182etn:TrippLiteMember2021-03-172022-03-310001551182us-gaap:CustomerRelationshipsMemberetn:TrippLiteMember2021-03-170001551182us-gaap:TrademarksMemberetn:TrippLiteMember2021-03-170001551182us-gaap:TechnologyBasedIntangibleAssetsMemberetn:TrippLiteMember2021-03-170001551182us-gaap:CustomerRelationshipsMemberetn:TrippLiteMember2021-03-172021-03-170001551182us-gaap:TrademarksMemberetn:TrippLiteMember2021-03-172021-03-170001551182us-gaap:TechnologyBasedIntangibleAssetsMemberetn:TrippLiteMember2021-03-172021-03-170001551182etn:TrippLiteMember2021-03-172021-03-310001551182etn:CobhamMissionSystemsMember2021-06-012021-06-010001551182us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMemberetn:HydraulicsBusinessMember2021-08-020001551182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberetn:HydraulicsBusinessMember2021-08-022021-08-020001551182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberetn:HydraulicsBusinessMember2022-01-012022-03-310001551182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberetn:HydraulicsBusinessMember2021-01-012021-08-020001551182etn:RoyalPowerSolutionsMember2022-01-052022-01-050001551182etn:RoyalPowerSolutionsMember2022-01-050001551182etn:RoyalPowerSolutionsMember2022-01-052022-03-310001551182etn:ElectricalAmericasSegmentMemberus-gaap:ProductMember2022-01-012022-03-310001551182etn:ElectricalAmericasSegmentMemberus-gaap:ProductMember2021-01-012021-03-310001551182etn:ElectricalAmericasSegmentMemberetn:SystemsMember2022-01-012022-03-310001551182etn:ElectricalAmericasSegmentMemberetn:SystemsMember2021-01-012021-03-310001551182etn:ElectricalAmericasSegmentMember2022-01-012022-03-310001551182etn:ElectricalAmericasSegmentMember2021-01-012021-03-310001551182etn:ElectricalGlobalSegmentMemberus-gaap:ProductMember2022-01-012022-03-310001551182etn:ElectricalGlobalSegmentMemberus-gaap:ProductMember2021-01-012021-03-310001551182etn:ElectricalGlobalSegmentMemberetn:SystemsMember2022-01-012022-03-310001551182etn:ElectricalGlobalSegmentMemberetn:SystemsMember2021-01-012021-03-310001551182etn:ElectricalGlobalSegmentMember2022-01-012022-03-310001551182etn:ElectricalGlobalSegmentMember2021-01-012021-03-310001551182country:USetn:HydraulicsSegmentMember2022-01-012022-03-310001551182country:USetn:HydraulicsSegmentMember2021-01-012021-03-310001551182us-gaap:NonUsMemberetn:HydraulicsSegmentMember2022-01-012022-03-310001551182us-gaap:NonUsMemberetn:HydraulicsSegmentMember2021-01-012021-03-310001551182etn:HydraulicsSegmentMember2022-01-012022-03-310001551182etn:HydraulicsSegmentMember2021-01-012021-03-310001551182etn:AerospaceSegmentMemberetn:OriginalEquipmentManufacturersMember2022-01-012022-03-310001551182etn:AerospaceSegmentMemberetn:OriginalEquipmentManufacturersMember2021-01-012021-03-310001551182etn:AerospaceSegmentMemberetn:AftermarketDistributionAndEndUserMember2022-01-012022-03-310001551182etn:AerospaceSegmentMemberetn:AftermarketDistributionAndEndUserMember2021-01-012021-03-310001551182etn:AerospaceSegmentMemberetn:IndustrialandOtherMember2022-01-012022-03-310001551182etn:AerospaceSegmentMemberetn:IndustrialandOtherMember2021-01-012021-03-310001551182etn:AerospaceSegmentMember2022-01-012022-03-310001551182etn:AerospaceSegmentMember2021-01-012021-03-310001551182etn:VehicleSegmentMemberetn:CommercialMember2022-01-012022-03-310001551182etn:VehicleSegmentMemberetn:CommercialMember2021-01-012021-03-310001551182etn:PassengerAndLightDutyMemberetn:VehicleSegmentMember2022-01-012022-03-310001551182etn:PassengerAndLightDutyMemberetn:VehicleSegmentMember2021-01-012021-03-310001551182etn:VehicleSegmentMember2022-01-012022-03-310001551182etn:VehicleSegmentMember2021-01-012021-03-310001551182etn:EMobilitySegmentMember2022-01-012022-03-310001551182etn:EMobilitySegmentMember2021-01-012021-03-31xbrli:pure0001551182etn:ElectricalAmericasSegmentMember2021-12-310001551182etn:ElectricalAmericasSegmentMember2022-03-310001551182etn:ElectricalGlobalSegmentMember2021-12-310001551182etn:ElectricalGlobalSegmentMember2022-03-310001551182etn:AerospaceSegmentMember2021-12-310001551182etn:AerospaceSegmentMember2022-03-310001551182etn:VehicleSegmentMember2021-12-310001551182etn:VehicleSegmentMember2022-03-310001551182etn:EMobilitySegmentMember2021-12-310001551182etn:EMobilitySegmentMember2022-03-310001551182us-gaap:PensionPlansDefinedBenefitMembercountry:US2022-01-012022-03-310001551182us-gaap:PensionPlansDefinedBenefitMembercountry:US2021-01-012021-03-310001551182us-gaap:PensionPlansDefinedBenefitMemberus-gaap:ForeignPlanMember2022-01-012022-03-310001551182us-gaap:PensionPlansDefinedBenefitMemberus-gaap:ForeignPlanMember2021-01-012021-03-310001551182us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-03-310001551182us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-03-310001551182us-gaap:PensionPlansDefinedBenefitMember2022-01-012022-03-310001551182us-gaap:PensionPlansDefinedBenefitMemberetn:PensionAssetsMember2022-01-012022-03-310001551182us-gaap:PensionPlansDefinedBenefitMemberetn:PensionLiabilitiesMember2022-01-012022-03-310001551182us-gaap:PensionPlansDefinedBenefitMemberus-gaap:OtherComprehensiveIncomeMember2022-01-012022-03-310001551182us-gaap:SecretariatOfTheFederalRevenueBureauOfBrazilMemberetn:TaxYears20052012Member2019-11-300001551182us-gaap:SecretariatOfTheFederalRevenueBureauOfBrazilMember2021-08-310001551182us-gaap:SecretariatOfTheFederalRevenueBureauOfBrazilMember2022-03-310001551182etn:A2019ProgramMember2019-02-270001551182etn:A2022ProgramMember2022-02-230001551182etn:A2022ProgramMember2022-01-012022-03-310001551182etn:A2019ProgramMember2021-01-012021-03-310001551182us-gaap:CommonStockMember2021-12-310001551182us-gaap:AdditionalPaidInCapitalMember2021-12-310001551182us-gaap:RetainedEarningsMember2021-12-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001551182us-gaap:TrustForBenefitOfEmployeesMember2021-12-310001551182us-gaap:ParentMember2021-12-310001551182us-gaap:NoncontrollingInterestMember2021-12-310001551182us-gaap:RetainedEarningsMember2022-01-012022-03-310001551182us-gaap:ParentMember2022-01-012022-03-310001551182us-gaap:NoncontrollingInterestMember2022-01-012022-03-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001551182us-gaap:CommonStockMember2022-01-012022-03-310001551182us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001551182us-gaap:CommonStockMember2022-03-310001551182us-gaap:AdditionalPaidInCapitalMember2022-03-310001551182us-gaap:RetainedEarningsMember2022-03-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001551182us-gaap:TrustForBenefitOfEmployeesMember2022-03-310001551182us-gaap:ParentMember2022-03-310001551182us-gaap:NoncontrollingInterestMember2022-03-310001551182us-gaap:CommonStockMember2020-12-310001551182us-gaap:AdditionalPaidInCapitalMember2020-12-310001551182us-gaap:RetainedEarningsMember2020-12-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001551182us-gaap:TrustForBenefitOfEmployeesMember2020-12-310001551182us-gaap:ParentMember2020-12-310001551182us-gaap:NoncontrollingInterestMember2020-12-310001551182us-gaap:RetainedEarningsMember2021-01-012021-03-310001551182us-gaap:ParentMember2021-01-012021-03-310001551182us-gaap:NoncontrollingInterestMember2021-01-012021-03-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001551182us-gaap:CommonStockMember2021-01-012021-03-310001551182us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001551182us-gaap:CommonStockMember2021-03-310001551182us-gaap:AdditionalPaidInCapitalMember2021-03-310001551182us-gaap:RetainedEarningsMember2021-03-310001551182us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001551182us-gaap:TrustForBenefitOfEmployeesMember2021-03-310001551182us-gaap:ParentMember2021-03-310001551182us-gaap:NoncontrollingInterestMember2021-03-310001551182us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-12-310001551182us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-12-310001551182us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2021-12-310001551182us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2021-12-310001551182us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-01-012022-03-310001551182us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-01-012022-03-310001551182us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2022-01-012022-03-310001551182us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-03-310001551182us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-03-310001551182us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2022-03-310001551182us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2022-03-310001551182us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001551182us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-03-310001551182us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001551182us-gaap:FairValueInputsLevel2Member2022-03-310001551182us-gaap:FairValueInputsLevel3Member2022-03-310001551182us-gaap:FairValueInputsLevel1Member2021-12-310001551182us-gaap:FairValueInputsLevel2Member2021-12-310001551182us-gaap:FairValueInputsLevel3Member2021-12-310001551182etn:GreenMotionSAMember2021-03-222021-03-220001551182etn:GreenMotionSAMember2021-03-220001551182etn:NonderivativenetinvestmenthedgeMember2022-03-310001551182etn:NonderivativenetinvestmenthedgeMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMemberus-gaap:OtherAssetsMember2022-03-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMemberus-gaap:OtherLiabilitiesMember2022-03-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-03-310001551182us-gaap:CashFlowHedgingMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-01-012022-03-310001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2022-03-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2022-03-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:CashFlowHedgingMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2022-03-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2022-03-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2022-03-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:OtherAssetsMemberus-gaap:NondesignatedMember2022-03-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2022-03-310001551182us-gaap:ForeignExchangeContractMembersrt:MinimumMemberus-gaap:NondesignatedMember2022-01-012022-03-310001551182srt:MaximumMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2022-01-012022-03-310001551182us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:OtherAssetsMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2022-03-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:OtherAssetsMemberus-gaap:NondesignatedMember2022-03-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2022-03-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-12-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:OtherAssetsMemberus-gaap:FairValueHedgingMember2021-12-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-12-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:FairValueHedgingMember2021-12-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-12-310001551182srt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-01-012021-06-300001551182srt:MaximumMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-01-012021-06-300001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMemberus-gaap:OtherAssetsMember2021-12-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMemberus-gaap:OtherLiabilitiesMember2021-12-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-12-310001551182us-gaap:CashFlowHedgingMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-01-012021-06-300001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-01-012021-06-300001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2021-12-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2021-12-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-06-300001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-06-300001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:CashFlowHedgingMembersrt:MinimumMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2021-01-012021-06-300001551182srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CommodityContractMember2021-01-012021-06-300001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2021-12-310001551182us-gaap:OtherNoncurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001551182us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2021-12-310001551182us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2021-12-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:OtherAssetsMemberus-gaap:NondesignatedMember2021-12-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2021-12-310001551182us-gaap:ForeignExchangeContractMembersrt:MinimumMemberus-gaap:NondesignatedMember2021-01-012021-06-300001551182srt:MaximumMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2021-01-012021-06-300001551182us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:OtherAssetsMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2021-12-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:CommodityContractMember2021-01-012021-06-300001551182us-gaap:OtherAssetsMemberus-gaap:NondesignatedMember2021-12-310001551182us-gaap:OtherLiabilitiesMemberus-gaap:NondesignatedMember2021-12-310001551182etn:CopperMemberus-gaap:CommodityContractMember2022-01-012022-03-31utr:lb0001551182srt:MinimumMemberetn:CopperMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182srt:MaximumMemberetn:CopperMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:GoldMemberus-gaap:CommodityContractMember2022-01-012022-03-31utr:ozt0001551182srt:MinimumMemberus-gaap:GoldMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182srt:MaximumMemberus-gaap:GoldMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182etn:SilverMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182srt:MinimumMemberetn:SilverMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182srt:MaximumMemberetn:SilverMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:InterestRateSwapMember2022-03-310001551182us-gaap:InterestRateSwapMember2021-12-310001551182us-gaap:LongTermDebtMemberus-gaap:InterestRateSwapMember2022-03-310001551182us-gaap:LongTermDebtMemberus-gaap:InterestRateSwapMember2021-12-310001551182us-gaap:LongTermDebtMember2022-03-310001551182us-gaap:LongTermDebtMember2021-12-310001551182us-gaap:SalesRevenueNetMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2022-01-012022-03-310001551182us-gaap:SalesRevenueNetMemberus-gaap:CashFlowHedgingMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:SalesRevenueNetMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-01-012022-03-310001551182us-gaap:CostOfSalesMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-01-012022-03-310001551182us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-01-012022-03-310001551182us-gaap:SalesRevenueNetMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2021-01-012021-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2021-01-012021-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2021-01-012021-03-310001551182us-gaap:SalesRevenueNetMemberus-gaap:CashFlowHedgingMemberus-gaap:CommodityContractMember2021-01-012021-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMemberus-gaap:CommodityContractMember2021-01-012021-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:CommodityContractMember2021-01-012021-03-310001551182us-gaap:SalesRevenueNetMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2021-01-012021-03-310001551182us-gaap:CostOfSalesMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2021-01-012021-03-310001551182us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2021-01-012021-03-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2022-01-012022-03-310001551182us-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2021-01-012021-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CommodityContractMember2022-01-012022-03-310001551182us-gaap:CostOfSalesMemberus-gaap:CommodityContractMember2021-01-012021-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberetn:ForwardStartingFloatingtoFixedInterestRateSwapMember2021-01-012021-03-310001551182us-gaap:CashFlowHedgingMemberetn:NetsalesandCostofproductssoldMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001551182us-gaap:CashFlowHedgingMemberetn:NetsalesandCostofproductssoldMemberus-gaap:ForeignExchangeContractMember2021-01-012021-03-310001551182us-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2022-01-012022-03-310001551182us-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2021-01-012021-03-3100015511822020-04-012022-03-310001551182srt:ScenarioForecastMember2022-01-012022-12-310001551182us-gaap:EmployeeSeveranceMember2022-01-012022-03-310001551182us-gaap:EmployeeSeveranceMember2021-01-012021-03-310001551182us-gaap:FacilityClosingMember2022-01-012022-03-310001551182us-gaap:FacilityClosingMember2021-01-012021-03-310001551182etn:ElectricalAmericasSegmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-03-310001551182etn:ElectricalAmericasSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-03-310001551182us-gaap:OperatingSegmentsMemberetn:ElectricalGlobalSegmentMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMemberetn:ElectricalGlobalSegmentMember2021-01-012021-03-310001551182us-gaap:OperatingSegmentsMemberetn:AerospaceSegmentMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMemberetn:AerospaceSegmentMember2021-01-012021-03-310001551182us-gaap:OperatingSegmentsMemberetn:VehicleSegmentMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMemberetn:VehicleSegmentMember2021-01-012021-03-310001551182us-gaap:CorporateNonSegmentMember2022-01-012022-03-310001551182us-gaap:CorporateNonSegmentMember2021-01-012021-03-310001551182us-gaap:EmployeeSeveranceMember2019-12-310001551182us-gaap:FacilityClosingMember2019-12-3100015511822019-12-310001551182us-gaap:EmployeeSeveranceMember2020-01-012020-12-310001551182us-gaap:FacilityClosingMember2020-01-012020-12-3100015511822020-01-012020-12-310001551182us-gaap:EmployeeSeveranceMember2020-12-310001551182us-gaap:FacilityClosingMember2020-12-310001551182us-gaap:EmployeeSeveranceMember2021-01-012021-12-310001551182us-gaap:FacilityClosingMember2021-01-012021-12-3100015511822021-01-012021-12-310001551182us-gaap:EmployeeSeveranceMember2021-12-310001551182us-gaap:FacilityClosingMember2021-12-310001551182us-gaap:EmployeeSeveranceMember2022-03-310001551182us-gaap:FacilityClosingMember2022-03-310001551182us-gaap:OperatingSegmentsMemberetn:HydraulicsSegmentMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMemberetn:HydraulicsSegmentMember2021-01-012021-03-310001551182us-gaap:OperatingSegmentsMemberetn:EMobilitySegmentMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMemberetn:EMobilitySegmentMember2021-01-012021-03-310001551182us-gaap:OperatingSegmentsMember2022-01-012022-03-310001551182us-gaap:OperatingSegmentsMember2021-01-012021-03-31
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)
Ireland98-1059235
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
Eaton House, 30 Pembroke Road,Dublin 4,IrelandD04 Y0C2
(Address of principal executive offices)(Zip Code)
+3531637 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 classTrading SymbolName of each exchange on which registered
Ordinary shares ($0.01 par value)ETNNew 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.





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)20222021
Net sales$4,843 $4,692 
Cost of products sold3,269 3,184 
Selling and administrative expense790 795 
Research and development expense165 148 
Interest expense - net32 38 
Gain on sale of business24  
Other income - net(8)(11)
Income before income taxes619 538 
Income tax expense86 79 
Net income533 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 
Basic1.33 1.15 
Weighted-average number of ordinary shares outstanding
Diluted401.8 400.9 
Basic399.2 398.3 
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)20222021
Net income$533 $459 
Less net income for noncontrolling interests(1)(1)
Net income attributable to Eaton ordinary shareholders532 458 
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments(62)(172)
Pensions and other postretirement benefits77 47 
Cash flow hedges101 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 investments268 271 
Accounts receivable - net3,667 3,297 
Inventory3,317 2,969 
Prepaid expenses and other current assets705 677 
Total current assets8,194 7,511 
Property, plant and equipment
Land and buildings2,245 2,227 
Machinery and equipment5,685 5,591 
Gross property, plant and equipment7,930 7,818 
Accumulated depreciation(4,832)(4,754)
Net property, plant and equipment3,098 3,064 
Other noncurrent assets
Goodwill14,955 14,751 
Other intangible assets6,012 5,855 
Operating lease assets449 442 
Deferred income taxes388 392 
Other assets2,112 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 debt1,728 1,735 
Accounts payable2,867 2,797 
Accrued compensation331 501 
Other current liabilities2,214 2,166 
Total current liabilities8,256 7,212 
Noncurrent liabilities  
Long-term debt6,763 6,831 
Pension liabilities831 872 
Other postretirement benefits liabilities260 263 
Operating lease liabilities342 337 
Deferred income taxes635 559 
Other noncurrent liabilities1,465 1,502 
Total noncurrent liabilities10,296 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 value12,427 12,449 
Retained earnings7,707 7,594 
Accumulated other comprehensive loss(3,517)(3,633)
Shares held in trust(1)(1)
Total Eaton shareholders’ equity16,620 16,413 
Noncontrolling interests36 38 
Total equity16,656 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)20222021
Operating activities  
Net income$533 $459 
Adjustments to reconcile to net cash provided by operating activities  
Depreciation and amortization244 208 
Deferred income taxes15 (39)
Pension and other postretirement benefits expense6 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 - net91 (25)
Net cash provided by operating activities42 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, net1,105 463 
Cash dividends paid(320)(300)
Exercise of employee stock options8 21 
Repurchase of shares(86)(59)
Employee taxes paid from shares withheld (50)(37)
Other - net(1)(8)
Net cash provided by financing activities652 1,875 
Effect of currency on cash8 (11)
Less: Increase in cash classified as held for sale (7)
Decrease in cash(60)(84)
Cash at the beginning of the period297 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 AllocationMeasurement Period AdjustmentsFinal
Allocation
Short-term investments$5 $— $5 
Accounts receivable 94 (1)93 
Inventory184 (5)179 
Prepaid expenses and other current assets6 (1)5 
Property, plant and equipment6 (5)1 
Other intangible assets630 (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 assets723 (48)675 
Goodwill928 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 
Inventory43 
Prepaid expenses and other current assets1 
Property, plant and equipment25 
Other intangible assets306 
Other assets21 
Accounts payable(24)
Other current liabilities(10)
Other noncurrent liabilities(70)
Total identifiable net assets328 
Goodwill284 
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)20222021
Electrical Americas
Products$603 $520 
Systems1,288 1,102 
Total$1,891 $1,622 
Electrical Global
Products$876 $713 
Systems561 540 
Total$1,437 $1,253 
Hydraulics
United States$ $222 
Rest of World 339 
Total$ $561 
Aerospace
Original Equipment Manufacturers$293 $208 
Aftermarket221 146 
Industrial and Other204 165 
Total$718 $519 
Vehicle
Commercial$402 $342 
Passenger and Light Duty269 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 billings342 
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 billings276 
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-process783 620 
Finished goods1,315 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
AdditionsTranslationMarch 31,
2022
Electrical Americas$7,417 $5 $6 $7,428 
Electrical Global4,183 2 (65)4,120 
Aerospace2,781 8 (36)2,753 
Vehicle290   290 
eMobility80 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)202220212022202120222021
Service cost$8 $10 $16 $19 $ $ 
Interest cost20 17 12 10 2 2 
Expected return on plan assets(53)(56)(31)(30)  
Amortization8 10 12 19 (2)(1)
(17)(19)9 18  1 
Settlements14 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 sharesCapital in excess of par valueRetained earningsAccumulated other comprehensive lossShares held in trustTotal Eaton shareholders' equityNoncontrolling interestsTotal equity
(In millions)SharesDollars
Balance at January 1, 2022398.8 $4 $12,449 $7,594 $(3,633)$(1)$16,413 $38 $16,451 
Net income— — — 532 — — 532 1 533 
Other comprehensive income, net of tax116 116 — 116 
Cash dividends paid and accrued— — — (331)— — (331)(2)(333)
Issuance of shares under equity-based compensation plans0.8 — (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, 2022399.0 $4 $12,427 $7,707 $(3,517)$(1)$16,620 $36 $16,656 
Ordinary sharesCapital in excess of par valueRetained earningsAccumulated other comprehensive lossShares held in trustTotal Eaton shareholders' equityNoncontrolling interestsTotal equity
(In millions)SharesDollars
Balance at January 1, 2021398.1 $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 plans0.9 — 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, 2021398.5 $4 $12,335 $6,883 $(4,225)$(2)$14,995 $42 $15,037 
The changes in Accumulated other comprehensive loss are as follows:
(In millions)Currency translation and related hedging instrumentsPensions and other postretirement benefitsCash flow
hedges
Total
Balance at January 1, 2022$(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, 2022Consolidated statements
of income classification
Amortization of defined benefit pensions and other
  postretirement benefits items
Actuarial loss and prior service cost$(32)1
Tax benefit2 
Total, net of tax(30)
Gains and (losses) on cash flow hedges
Commodity contracts1 Cost of products sold
Tax expense 
Total, net of tax1 
Total reclassifications for the period$(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)20222021
Net income attributable to Eaton ordinary shareholders$532 $458 
Weighted-average number of ordinary shares outstanding - diluted401.8 400.9 
Less dilutive effect of equity-based compensation2.6 2.6 
Weighted-average number of ordinary shares outstanding - basic399.2 398.3 
Net income per share attributable to Eaton ordinary shareholders
Diluted$1.33 $1.14 
Basic1.33 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)TotalLevel 1Level 2Level 3
March 31, 2022