Currency translation and related hedging instruments Pensions and other postretirement benefits
Cash flow
hedges
Total
Balance at December 31, 2016 $ (3,062 ) $ (1,380 ) $ (6 ) $ (4,448 )
Other comprehensive (loss) income
   before reclassifications
743
(46 ) (19 ) 678
Amounts reclassified from Accumulated other
   comprehensive loss (income)
—
99
8
107
Net current-period Other comprehensive
   income (loss)
743
53
(11 ) 785
Balance at September 30, 2017 $ (2,319 ) $ (1,327 ) $ (17 ) $ (3,663 )

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


(In millions)	Three months ended March 31, 2023			Consolidated Statements of Income classification
Gains and (losses) on net investment hedges (amount excluded from effectiveness testing)
Currency exchange contracts	$	1		Interest expense - net
Tax expense	—
Total, net of tax	1

Amortization of defined benefits pensions and other postretirement benefits items
Actuarial loss and prior service cost	(8)		1


Tax benefit	—
Total, net of tax	(8)

Gains and (losses) on cash flow hedges
Floating-to-fixed interest rate swaps	3			Interest expense - net
Currency exchange contracts	11			Net sales and Cost of products sold

Tax expense	(3)
Total, net of tax	11

Total reclassifications for the period	$	4

Nine months ended September 30, 2017
Consolidated statements
of income classification
Amortization of defined benefit pensions and other postretirement benefits items
Actuarial loss and prior service cost $ (146 )
¹

Tax benefit 47

Total, net of tax (99 )

Gains and (losses) on cash flow hedges
Currency exchange contracts (12 ) Cost of products sold
Tax benefit 4

Total, net of tax (8 )

Total reclassifications for the period $ (107 )

¹ These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 79 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)		2023		2022
Net income attributable to Eaton ordinary shareholders		$	638	$	532

Weighted-average number of ordinary shares outstanding - diluted		400.5		401.8
Less dilutive effect of equity-based compensation		2.0		2.6
Weighted-average number of ordinary shares outstanding - basic		398.5		399.2

Net income per share attributable to Eaton ordinary shareholders
Diluted		$	1.59	$	1.33
Basic		1.60		1.33

Three months ended
September 30 Nine months ended
September 30
(Shares in millions) 2017 2016 2017 2016
Net income attributable to Eaton ordinary shareholders $ 1,399
$ 523
$ 2,346
$ 1,418

Weighted-average number of ordinary shares outstanding - diluted 445.2
455.6
448.3
457.9
Less dilutive effect of equity-based compensation 2.6
1.7
2.4
1.4
Weighted-average number of ordinary shares outstanding - basic 442.6
453.9
445.9
456.5

Net income per share attributable to Eaton ordinary shareholders
Diluted $ 3.14
$ 1.15
$ 5.23
$ 3.09
Basic 3.16
1.15
5.26
3.10

For the ~~third~~first quarter of 2023 and ~~first nine months of 2017, 0.2 million and 0.6 million~~2022, all stock options ~~respectively,~~ 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. ~~For the third quarter and first nine months~~

Table of 2016, 1.5 million and 1.8 million stock options, respectively, 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.Contents


~~Note 11.~~	~~FAIR VALUE MEASUREMENTS~~

Note 13. 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:


	Total			Level 1		Level 2			Level 3
September 30, 2017
(In millions)											(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2023											March 31, 2023
Cash	$	791		$	791	$	—		$	—	Cash	$	235	$	235	$	—	$	—
Short-term investments	843			843		—			—		Short-term investments	289		289		—		—
Net derivative contracts	28			—		28			—		Net derivative contracts	44		—		44		—
Contingent future payments from acquisition of Green Motion											Contingent future payments from acquisition of Green Motion	(45)		—		—		(45)

December 31, 2016
December 31, 2022											December 31, 2022
Cash	$	543		$	543	$	—		$	—	Cash	$	294	$	294	$	—	$	—
Short-term investments	203			203		—			—		Short-term investments	261		261		—		—
Net derivative contracts	(3		)	—		(3		)	—		Net derivative contracts	29		—		29		—
Contingent future payments from acquisition of Green Motion											Contingent future payments from acquisition of Green Motion	(44)		—		—		(44)

Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities. ~~No financial instruments were measured using unobservable inputs.~~

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 an initial estimate of $57 million for the 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 $112 million. As of March 31, 2023, the fair value of the contingent future payments has been reduced to $45 million based primarily on anticipated reductions in projected 2023 revenue compared to the initial estimate.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of ~~$8,767~~$8,709 million and fair value of ~~$9,078~~$8,181 million at ~~September 30, 2017~~March 31, 2023 compared to ~~$8,263~~$8,331 million and ~~$8,477,~~$7,625 million, respectively, at December 31, ~~2016.~~2022. The fair value of Eaton's debt instruments ~~were~~was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and ~~are~~is considered a Level 2 fair value measurement.

As discussed in Note 2, on July 31, 2017 Eaton sold a 50% interest in its heavy-duty and medium-duty commercial vehicle automated transmission business to Cummins, Inc. Eaton's remaining 50% interest was remeasured to a fair value

Table of $600 on July 31, 2017 using a discounted cash flow model which is considered a Level 3 fair value measurement. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. Eaton will account for its investment on the equity method of accounting.Contents


~~Note 12.~~	~~DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES~~

Note 14. 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 ~~to a lesser extent,~~ 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 ~~Condensed~~ 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, is effective 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 ~~effective portion of the~~ gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive ~~loss~~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 ~~effective portion of the~~ gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive ~~loss~~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 ~~that is effective~~ is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The ~~change~~cash flows resulting from these financial instruments are classified in ~~fair value~~operating activities on the Condensed Consolidated Statements of ~~a derivative financial instrument that is not effective as a hedge is immediately recognized in income.~~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. ~~Gains and losses associated with commodity hedge contracts are classified in Cost of products sold.~~

Eaton uses currency exchange contracts and 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~~The Company uses the spot rate method to assess hedge effectiveness when currency ~~denominated debt designated as non-derivative~~exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging ~~instruments on an after-tax basis was $89 at September 30, 2017~~relationship and ~~$86 at December 31, 2016, and designated~~the forward points are amortized to Interest expense - net on a ~~pre-tax~~straight-line basis ~~was $643 at September 30, 2017 and $572 at December 31, 2016.~~over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Condensed Consolidated Statements of Cash Flows.

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Derivative Financial Statement Impacts

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


(In millions)													(In millions)	Notional amount		Other current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
March 31, 2023													March 31, 2023
Derivatives designated as hedges													Derivatives designated as hedges

	Notional amount		Other current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
September 30, 2017
Derivatives designated as hedges
Fixed-to-floating interest rate swaps	$	3,715	$	2	$	56	$	—	$	7	Fair value	2 months to 17 years

Currency exchange contracts													Currency exchange contracts	$	1,138	$	49	$	3	$	14	$	5	Cash flow	1 to 34 months
Commodity contracts													Commodity contracts	48		4		—		1		—		Cash flow	1 to 12 months
Currency exchange contracts	921		4		6		25		5		Cash flow	1 to 36 months	Currency exchange contracts	587		1		—		—		—		Net investment	3 months
Total			$	6	$	62	$	25	$	12			Total			$	53	$	3	$	15	$	5

Derivatives not designated as hedges													Derivatives not designated as hedges
Currency exchange contracts	$	3,022	$	21			$	24				1 to 12 months	Currency exchange contracts	$	4,977	$	22			$	14				1 to 12 months

December 31, 2022													December 31, 2022
Derivatives designated as hedges													Derivatives designated as hedges

Currency exchange contracts													Currency exchange contracts	$	1,240	$	35	$	2	$	17	$	9	Cash flow	1 to 36 months
Commodity contracts	1		—				—					1 to 12 months	Commodity contracts	64		4		—		2		—		Cash flow	1 to 12 months
Total			$	21			$	24

December 31, 2016
Derivatives designated as hedges
Fixed-to-floating interest rate swaps	$	3,765	$	1	$	65	$	—	$	8	Fair value	3 months to 18 years
Forward starting floating-to-fixed interest rate swaps	450		—		19		—		1		Cash flow	11 years
Currency exchange contracts	802		11		1		22		17		Cash flow	1 to 36 months
Total			$	12	$	85	$	22	$	26			Total			$	39	$	2	$	19	$	9

Derivatives not designated as hedges													Derivatives not designated as hedges
Currency exchange contracts	$	5,333	$	31			$	85				1 to 12 months	Currency exchange contracts	$	4,683	$	30			$	14				1 to 12 months
Commodity contracts	10		2				—					1 to 12 months
Total			$	33			$	85

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 ~~sales~~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 Statements of Cash Flows.

Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $3,092 million at March 31, 2023 and $2,711 million at December 31, 2022.

As of March 31, 2023, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity

March 31, 2023

Term

Aluminum

Millions of pounds

1 to 12 months

Copper

Millions of pounds

1 to 12 months

Gold

1,690

Troy ounces

1 to 12 months

Silver

510,167

Troy ounces

1 to 12 months

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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, 2023		December 31, 2022			March 31, 2023		December 31, 2022
Long-term debt	$	(713)	$	(713)		$	(47)	$	(48)

(a) At March 31, 2023 and December 31, 2022, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $47 million and $48 million, respectively.

The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:


	Three months ended March 31, 2023
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	5,483	$	3,599	$	50

Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item	$	—	$	—	$	(3)
Derivative designated as hedging instrument	—		—		3

Currency exchange contracts
Hedged item	$	2	$	(15)	$	—
Derivative designated as hedging instrument	(2)		15		—


	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)

Table of Contents

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)	2023		2022
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	11	$	(8)	Interest expense - net
Commodity contracts	—		1		Other expense (income) - net and Cost of products sold (a)
Total	$	11	$	(7)

(a) In the second quarter of 2022, Eaton changed the presentation of gains and losses associated with derivative contracts for commodities that are not designated as hedges from Cost of product sold to Other expense (income) - net on the Consolidated Statements of Income. Prior period amounts have not been reclassified as they are not material.

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















	Gain (loss) recognized in other comprehensive income (loss)				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)	2023		2022			2023		2022
Derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps	$	—	$	124	Interest expense - net	$	3	$	—

Currency exchange contracts	31		—		Net sales and Cost of products sold	11		—
Commodity contracts	2		5		Cost of products sold	—		1

Derivatives designated as net investment hedges
Currency exchange contracts
Effective portion	(14)		—		Gain (loss) on sale of business	—		—
Amount excluded from effectiveness testing	5		—		Interest expense - net	1		—

Non-derivative designated as net investment hedges
Foreign currency denominated debt	(63)		62		Gain (loss) on sale of business	—		—
Total	$	(39)	$	191		$	15	$	1

The pre-tax portion of the fair value of currency exchange contracts designated as net investment hedges included in Accumulated other comprehensive loss were net losses of $14 million at March 31, 2023. The pre-tax portion of the fair value of the forward points included in Accumulated other comprehensive loss were net gains of $4 million at March 31, 2023.

At March 31, 2023, a gain of $38 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.

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
September 30 Three months ended
September 30
2017 2016 2017 2016
Derivatives designated as
cash flow hedges

Forward starting floating-to-fixed
interest rate swaps
$ (10 ) $ 1
Interest expense - net $ —
$ —
Interest rate locks (9 ) —
Interest expense - net —
—
Currency exchange contracts (6 ) (3 ) Cost of products sold (7 ) (4 )
Total $ (25 ) $ (2 ) $ (7 ) $ (4 )

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
Nine months ended
September 30 Nine months ended
September 30
2017 2016 2017 2016
Derivatives designated as cash
flow hedges
Forward starting floating-to-fixed
interest rate swaps $ (15 ) $ (18 ) Interest expense - net $ —
$ —
Interest rate locks (9 ) —
Interest expense - net —
—
Currency exchange contracts (5 ) (35 ) Cost of products sold (12 ) (3 )
Total $ (29 )
$ (53 )

$ (12 )
$ (3 )

Table of Contents

Note 15. RESTRUCTURING CHARGES

~~Amounts recognized~~In the second quarter of 2020, Eaton initiated 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 $335 million. These restructuring activities are expected to be completed in 2023 with total estimated charges of $350 million cumulatively for the entire program. The remaining charges in 2023 are expected to relate primarily to plant closing and other costs.

A summary of restructuring program charges is as follows:


	Three months ended March 31
(In millions except for per share data)		2023		2022
Workforce reductions		$	2	$	5
Plant closing and other		7		13
Total before income taxes		10		18
Income tax benefit		2		4
Total after income taxes		$	8	$	14
Per ordinary share - diluted		$	0.02	$	0.03

Restructuring program charges related to the following segments:


	Three months ended March 31
(In millions)		2023		2022
Electrical Americas		$	2	$	5
Electrical Global		3		5
Aerospace		1		3
Vehicle		2		3

Corporate		1		2
Total		$	10	$	18

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, net1	(13)		47		33
Payments, utilization and translation	(45)		(51)		(96)
Balance at December 31, 2022	38		4		41
Liability recognized	2		7		10
Payments	(5)		(8)		(13)
Balance at March 31, 2023	$	35	$	3	$	38

1The restructuring program liability was adjusted by $30 million in 2022 related to true-ups for completed workforce reductions and the decision not to close a facility in the Vehicle segment that was previously included in the program.

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, ~~income follow:~~as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 16 for additional information about business segments.

Three months ended
September 30 Nine months ended
September 30
2017
2016 2017 2016
Derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps $ (4 ) $ (28 ) $ (7 ) $ 78
Related long-term debt converted to floating interest
rates by interest rate swaps
4
28
7
(78 )
$ —
$ —
$ —
$ —

~~Gains and losses described above were recognized in Interest expense - net.~~


~~Note 13.~~	~~INVENTORY~~

~~Inventory accounted for using the first-in, first out (FIFO) method is carried at lower~~Table of ~~cost or net realizable value. Inventory accounted for using the last-in, first-out (LIFO) method is carried at lower of cost or market. The components of inventory follow:~~

Contents

September 30,
2017 December 31,
2016
Raw materials $ 959
$ 880
Work-in-process 434
396
Finished goods 1,167
1,074
Inventory at FIFO 2,560
2,350
Excess of FIFO over LIFO cost (103 ) (96 )
Total inventory $ 2,457
$ 2,254
Note 16. BUSINESS SEGMENT INFORMATION


~~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~~Eaton's operating segments are Electrical ~~Products,~~Americas, Electrical ~~Systems~~Global, Aerospace, Vehicle, and ~~Services, Hydraulics, Aerospace and Vehicle.~~eMobility. Operating profit includes the operating profit from intersegment sales. For additional information regarding ~~Eaton’s~~Eaton's business segments, see Note 1517 to the Consolidated Financial Statements contained in the ~~2016~~2022 Form 10-K.


	Three months ended March 31
(In millions)		2023		2022
Net sales
Electrical Americas		$	2,294	$	1,891
Electrical Global		1,500		1,437

Aerospace		803		718
Vehicle		739		671
eMobility		147		126
Total net sales		$	5,483	$	4,843

Segment operating profit (loss)
Electrical Americas		$	525	$	361
Electrical Global		274		279

Aerospace		180		159
Vehicle		107		113
eMobility		(4)		(3)
Total segment operating profit		1,082		909

Corporate
Intangible asset amortization expense		(124)		(128)
Interest expense - net		(50)		(32)
Pension and other postretirement benefits income		11		19


Restructuring program charges		(10)		(18)
Other expense - net		(148)		(131)
Income before income taxes		762		619
Income tax expense		123		86
Net income		639		533
Less net income for noncontrolling interests		(1)		(1)
Net income attributable to Eaton ordinary shareholders		$	638	$	532

Three months ended
September 30 Nine months ended
September 30
2017 2016 2017 2016
Net sales
Electrical Products $ 1,857
$ 1,767
$ 5,371
$ 5,231
Electrical Systems and Services 1,421
1,436
4,168
4,207
Hydraulics 634
562
1,854
1,702
Aerospace 438
436
1,303
1,328
Vehicle 861
786
2,495
2,412
Total net sales $ 5,211
$ 4,987
$ 15,191
$ 14,880

Segment operating profit
Electrical Products $ 346
$ 331
$ 957
$ 924
Electrical Systems and Services 196
197
545
534
Hydraulics 80
61
214
161
Aerospace 84
88
244
251
Vehicle 150
122
397
377
Total segment operating profit 856
799
2,357
2,247

Corporate
Amortization of intangible assets (98 ) (99 ) (288 ) (297 )
Interest expense - net (60 ) (59 ) (181 ) (173 )
Pension and other postretirement benefits expense (16 ) (18 ) (38 ) (45 )
Gain on sale of business 1,077
—
1,077
—
Other corporate expense - net (68 ) (50 ) (202 ) (164 )
Income before income taxes 1,691
573
2,725
1,568
Income tax expense 292
51
378
151
Net income 1,399
522
2,347
1,417
Less net (income) loss for noncontrolling interests —
1
(1 ) 1
Net income attributable to Eaton ordinary shareholders $ 1,399
$ 523
$ 2,346
$ 1,418


~~Note 15.~~	~~CONDENSED CONSOLIDATING FINANCIAL STATEMENTS~~

~~On November 14, 2013 and September 15, 2017, Eaton Corporation registered senior notes under the Securities Act~~Table of 1933 (the Senior Notes). Eaton and certain other of Eaton's 100% owned direct and indirect subsidiaries (the Guarantors) fully and unconditionally guaranteed (subject, in the case of the Guarantors, other than Eaton, to customary release provisions as described below), on a joint and several basis, the Senior Notes. The following condensed consolidating financial statements are included so that separate financial statements of Eaton, Eaton Corporation and each of the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating adjustments primarily relate to eliminations of investments in subsidiaries and intercompany balances and transactions. The condensed consolidating financial statements present investments in subsidiaries using the equity method of accounting.

The guarantee of a Guarantor that is not a parent of the issuer will be automatically and unconditionally released and discharged in the event of any sale of the Guarantor or of all or substantially all of its assets, or in connection with the release or termination of the Guarantor as a guarantor under all other U.S. debt securities or U.S. syndicated credit facilities, subject to limitations set forth in the indenture. The guarantee of a Guarantor that is a direct or indirect parent of the issuer will only be automatically and unconditionally released and discharged in connection with the release or termination of such Guarantor as a guarantor under all other debt securities or syndicated credit facilities (in both cases, U.S. or otherwise), subject to limitations set forth in the indenture.

During 2017 and 2016, the Company undertook certain steps to restructure ownership of various subsidiaries. The transactions were entirely among wholly-owned subsidiaries under the common control of Eaton. This restructuring has been reflected as of the beginning of the earliest period presented below.

Contents

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net sales $ —
$ 1,695
$ 1,669
$ 3,223
$ (1,376 ) $ 5,211

Cost of products sold —
1,322
1,225
2,294
(1,372 ) 3,469
Selling and administrative expense 32
330
200
354
—
916
Research and development expense —
53
54
40
—
147
Interest expense (income) - net —
62
5
(7 ) —
60
Gain on Sale of Business —
560
—
517
—
1,077
Other expense (income) - net 23
1
(31 ) 12
—
5
Equity in loss (earnings) of
   subsidiaries, net of tax
(1,573 ) (237 ) (1,900 ) (706 ) 4,416
—
Intercompany expense (income) - net 119
(33 ) 335
(421 ) —
—
Income (loss) before income taxes 1,399
757

1,781

2,174

(4,420 )
1,691
Income tax expense (benefit) —
120
18
154
—
292
Net income (loss) 1,399
637

1,763

2,020

(4,420 )
1,399
Less net loss (income) for
   noncontrolling interests
—
—
—
(1 ) 1
—
Net income (loss) attributable to
   Eaton ordinary shareholders
$ 1,399
$ 637

$ 1,763

$ 2,019

$ (4,419 )
$ 1,399

Other comprehensive income (loss) $ 199
$ (15 ) $ 200
$ 267
$ (452 ) $ 199
Total comprehensive income
  (loss) attributable to Eaton
  ordinary shareholders
$ 1,598
$ 622
$ 1,963
$ 2,286
$ (4,871 ) $ 1,598
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net sales $ —
$ 1,660
$ 1,592
$ 3,032
$ (1,297 ) $ 4,987

Cost of products sold —
1,329
1,168
2,168
(1,294 ) 3,371
Selling and administrative expense 2
332
195
324
—
853
Research and development expense —
59
44
43
—
146
Interest expense (income) - net —
59
4
(3 ) (1 ) 59
Other expense (income) - net (1 ) 2
6
(22 ) —
(15 )
Equity in loss (earnings) of
   subsidiaries, net of tax
(628 ) (173 ) (914 ) (228 ) 1,943
—
Intercompany expense (income) - net 104
(34 ) 333
(403 ) —
—
Income (loss) before income taxes 523
86

756

1,153

(1,945 )
573
Income tax expense (benefit) —
(11 ) 11
52
(1 ) 51
Net income (loss) 523
97

745

1,101

(1,944 )
522
Less net loss (income) for
   noncontrolling interests
—
—
—
—
1
1
Net income (loss) attributable to
   Eaton ordinary shareholders
$ 523
$ 97

$ 745

$ 1,101

$ (1,943 )
$ 523

Other comprehensive income (loss) $ 24
$ 24
$ 29
$ 3
$ (56 ) $ 24
Total comprehensive income
   (loss) attributable to Eaton
   ordinary shareholders
$ 547
$ 121
$ 774
$ 1,104
$ (1,999 ) $ 547

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net sales $ —
$ 4,963
$ 4,936
$ 9,378
$ (4,086 ) $ 15,191

Cost of products sold —
3,948
3,638
6,723
(4,080 ) 10,229
Selling and administrative expense 98
998
591
1,016
—
2,703
Research and development expense —
164
154
122
—
440
Interest expense (income) - net —
180
16
(15 ) —
181
Gain on Sale of Business —
560
—
517
—
1,077
Other expense (income) - net 71
8
(69 ) (20 ) —
(10 )
Equity in loss (earnings) of
   subsidiaries, net of tax
(2,858 ) (612 ) (3,625 ) (931 ) 8,026
—
Intercompany expense (income) - net 343
(106 ) 1,007
(1,244 ) —
—
Income (loss) before income taxes 2,346
943
3,224
4,244
(8,032 ) 2,725
Income tax expense (benefit) —
120
37
222
(1 ) 378
Net income (loss) 2,346
823
3,187
4,022
(8,031 ) 2,347
Less net loss (income) for
   noncontrolling interests
—
—
—
(3 ) 2
(1 )
Net income (loss) attributable to
   Eaton ordinary shareholders
$ 2,346
$ 823
$ 3,187
$ 4,019
$ (8,029 ) $ 2,346

Other comprehensive income (loss) $ 785
$ 35
$ 792
$ 998
$ (1,825 ) $ 785
Total comprehensive income
   (loss) attributable to Eaton
   ordinary shareholders
$ 3,131
$ 858
$ 3,979
$ 5,017
$ (9,854 ) $ 3,131

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
Eaton Corporation plc
Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net sales $ —
$ 4,842
$ 4,815
$ 8,962
$ (3,739 ) $ 14,880

Cost of products sold —
3,788
3,571
6,462
(3,740 ) 10,081
Selling and administrative expense 6
1,048
589
999
—
2,642
Research and development expense —
176
140
128
—
444
Interest expense (income) - net —
169
13
(13 ) 4
173
Other expense (income) - net (1 ) 3
10
(40 ) —
(28 )
Equity in loss (earnings) of
   subsidiaries, net of tax
(1,726 ) (495 ) (2,398 ) (457 ) 5,076
—
Intercompany expense (income) - net 303
(104 ) 901
(1,100 ) —
—
Income (loss) before income taxes 1,418
257
1,989
2,983
(5,079 ) 1,568
Income tax expense (benefit) —
9
24
119
(1 ) 151
Net income (loss) 1,418
248
1,965
2,864
(5,078 ) 1,417
Less net loss (income) for
   noncontrolling interests
—
—
—
(2 ) 3
1
Net income (loss) attributable to
   Eaton ordinary shareholders
$ 1,418
$ 248
$ 1,965
$ 2,862
$ (5,075 ) $ 1,418

Other comprehensive income (loss) $ 42
$ 68
$ 59
$ (7 ) $ (120 ) $ 42
Total comprehensive income (loss) attributable to Eaton
ordinary shareholders $ 1,460
$ 316
$ 2,024
$ 2,855
$ (5,195 ) $ 1,460

CONDENSED CONSOLIDATING BALANCE SHEETS
SEPTEMBER 30, 2017

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Assets
Current assets
Cash $ 1
$ 181
$ 15
$ 594
$ —
$ 791
Short-term investments —
—
—
843
—
843
Accounts receivable - net —
386
1,404
2,172
—
3,962
Intercompany accounts
   receivable
1
1,136
3,616
3,802
(8,555 ) —
Inventory —
330
683
1,529
(85 ) 2,457
Prepaid expenses and
   other current assets
—
89
45
233
29
396
Total current assets 2
2,122

5,763

9,173
(8,611 ) 8,449

Property, plant and
   equipment - net
—
835
687
1,964
—
3,486

Other noncurrent assets
Goodwill —
1,303
6,293
5,949
—
13,545
Other intangible assets —
159
3,305
1,890
—
5,354
Deferred income taxes —
692
—
270
(698 ) 264
Investment in subsidiaries 35,826
14,062
77,001
13,661
(140,550 ) —
Intercompany loans receivable —
7,459
2,655
58,045
(68,159 ) —
Other assets —
794
153
680
—
1,627
Total assets $ 35,828
$ 27,426
$ 95,857
$ 91,632
$ (218,018 ) $ 32,725

Liabilities and
   shareholders’ equity

Current liabilities
Short-term debt $ —
$ —
$ —
$ 5
$ —
$ 5
Current portion of
   long-term debt
—
1,455
36
3
—
1,494
Accounts payable —
382
456
1,201
—
2,039
Intercompany accounts payable 262
3,739
3,614
940
(8,555 ) —
Accrued compensation —
111
57
266
—
434
Other current liabilities 1
636
283
1,009
(1 ) 1,928
Total current liabilities 263
6,323
4,446
3,424
(8,556 ) 5,900

Noncurrent liabilities
Long-term debt —
6,295
969
9
—
7,273
Pension liabilities —
331
76
921
—
1,328
Other postretirement
   benefits liabilities
—
195
98
73
—
366
Deferred income taxes —
—
677
348
(698 ) 327
Intercompany loans payable 18,972
2,013
45,719
1,455
(68,159 ) —
Other noncurrent liabilities —
287
230
378
—
895
Total noncurrent liabilities 18,972
9,121

47,769

3,184

(68,857 )
10,189

Shareholders’ equity
Eaton shareholders' equity 16,593
11,982
43,642
84,985
(140,609 ) 16,593
Noncontrolling interests —
—
—
39
4
43
Total equity 16,593
11,982
43,642
85,024
(140,605 ) 16,636
Total liabilities and equity $ 35,828
$ 27,426

$ 95,857

$ 91,632

$ (218,018 )
$ 32,725

CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2016

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Assets
Current assets
Cash $ 1
$ 92
$ 4
$ 446
$ —
$ 543
Short-term investments —
—
—
203
—
203
Accounts receivable - net —
536
1,049
1,975
—
3,560
Intercompany accounts
   receivable
5
954
4,023
3,633
(8,615 ) —
Inventory —
342
642
1,349
(79 ) 2,254
Prepaid expenses and
   other current assets
—
77
42
237
25
381
Total current assets 6
2,001
5,760
7,843
(8,669 ) 6,941

Property, plant and
   equipment - net
—
857
706
1,880
—
3,443

Other noncurrent assets
Goodwill —
1,355
6,293
5,553
—
13,201
Other intangible assets —
169
3,442
1,903
—
5,514
Deferred income taxes —
904
—
228
(772 ) 360
Investment in subsidiaries 32,795
13,743
72,938
12,577
(132,053 ) —
Intercompany loans receivable —
7,605
2,061
56,598
(66,264 ) —
Other assets —
491
134
335
—
960
Total assets $ 32,801
$ 27,125
$ 91,334
$ 86,917
$ (207,758 ) $ 30,419

Liabilities and
   shareholders’ equity

Current liabilities
Short-term debt $ —
$ —
$ 8
$ 6
$ —
$ 14
Current portion of
   long-term debt
—
1,250
296
6
—
1,552
Accounts payable 1
372
252
1,093
—
1,718
Intercompany accounts payable 281
3,870
3,115
1,349
(8,615 ) —
Accrued compensation —
98
58
223
—
379
Other current liabilities 1
591
291
941
(2 ) 1,822
Total current liabilities 283
6,181
4,020
3,618
(8,617 ) 5,485

Noncurrent liabilities
Long-term debt —
5,767
936
8
—
6,711
Pension liabilities —
610
161
888
—
1,659
Other postretirement
   benefits liabilities
—
198
99
71
—
368
Deferred income taxes —
—
732
361
(772 ) 321
Intercompany loans payable 17,621
2,603
44,788
1,252
(66,264 ) —
Other noncurrent liabilities —
327
211
396
—
934
Total noncurrent liabilities 17,621
9,505

46,927

2,976

(67,036 )
9,993

Shareholders’ equity
Eaton shareholders' equity 14,897
11,439
40,387
80,285
(132,111 ) 14,897
Noncontrolling interests —
—
—
38
6
44
Total equity 14,897
11,439
40,387
80,323
(132,105 ) 14,941
Total liabilities and equity $ 32,801
$ 27,125

$ 91,334

$ 86,917

$ (207,758 )
$ 30,419

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net cash provided by (used in)
   operating activities
$ 528
$ (296 ) $ 802
$ 2,365
$ (1,612 ) $ 1,787

Investing activities
Capital expenditures for property,
   plant and equipment
—
(63 ) (75 ) (213 ) —
(351 )
Cash received from sales (paid for acquisitions) of affiliates —
—
(92 ) 92
—
—
Purchases of short-term investments - net —
—
—
(621 ) —
(621 )
Investments in affiliates (90 ) (108 ) —
(90 ) 288
—
Return of investments in affiliates —
—
20
—
(20 ) —
Loans to affiliates —
(29 ) —
(4,754 ) 4,783
—
Repayments of loans from affiliates —
303
46
3,816
(4,165 ) —
Proceeds from sale of business —
330
—
270
—
600
Other - net —
(36 ) 2
(29 ) —
(63 )
Net cash provided by (used in) investing activities (90 ) 397

(99 )
(1,529 )
886

(435 )

Financing activities
Proceeds from borrowings —
1,000
—
—
—
1,000
Payments on borrowings —
(250 ) (297 ) (6 ) —
(553 )
Proceeds from borrowings from
   affiliates
1,917
1,873
965
28
(4,783 ) —
Payments on borrowings from
   affiliates
(822 ) (2,904 ) (352 ) (87 ) 4,165
—
Capital contributions from affiliates —
—
90
198
(288 ) —
Return of capital to affiliates —
—
—
(20 ) 20
—
Other intercompany financing
   activities
—
287
(290 ) 3
—
—
Cash dividends paid (803 ) —
—
—
—
(803 )
Cash dividends paid to affiliates —
—
(803 ) (809 ) 1,612
—
Exercise of employee stock options 59
—
—
—
—
59
Repurchase of shares (789 ) —
—
—
—
(789 )
Employee taxes paid from shares withheld —
(14 ) (4 ) (3 ) —
(21 )
Other - net —
(4 ) (1 ) (3 ) —
(8 )
Net cash provided by (used in)
   financing activities
(438 ) (12 )
(692 )
(699 )
726

(1,115 )

Effect of currency on cash —
—
—
11
—
11
Total increase (decrease) in cash —
89

11

148

—

248
Cash at the beginning of the period 1
92
4
446
—
543
Cash at the end of the period $ 1
$ 181

$ 15

$ 594

$ —

$ 791

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

Eaton
Corporation
plc

Eaton
Corporation
Guarantors
Other
subsidiaries

Consolidating
adjustments
Total
Net cash provided by (used in)
   operating activities
$ (158 ) $ (17 ) $ (285 ) $ 2,392
$ —
$ 1,932

Investing activities
Capital expenditures for property,
   plant and equipment
—
(62 ) (75 ) (209 ) —
(346 )
Cash received from acquisitions of businesses, net of cash acquired —
—
1
—
—
1
Sales (purchases) of short-term
investments - net —
—
2
(31 ) —
(29 )
Investments in affiliates (1,250 ) —
(120 ) (1,370 ) 2,740
—
Return of investments in affiliates —
—
47
—
(47 ) —
Loans to affiliates —
(287 ) (655 ) (6,457 ) 7,399
—
Repayments of loans from affiliates —
1,288
—
4,501
(5,789 ) —
Other - net —
—
30
(27 ) —
3
Net cash provided by (used in)
   investing activities
(1,250 ) 939

(770 )
(3,593 )
4,303

(371 )

Financing activities
Proceeds from borrowings —
22
611
—
—
633
Payments on borrowings —
(408 ) (240 ) (18 ) —
(666 )
Proceeds from borrowings from
   affiliates
3,333
2,815
1,059
192
(7,399 ) —
Payments on borrowings from
   affiliates
(637 ) (3,453 ) (1,658 ) (41 ) 5,789
—
Capital contributions from affiliates —
—
1,370
1,370
(2,740 ) —
Return of capital to affiliates —
—
—
(47 ) 47
—
Other intercompany financing activities —
158
(81 ) (77 ) —
—
Cash dividends paid (780 ) —
—
—
—
(780 )
Exercise of employee stock options 60
—
—
—
—
60
Repurchase of shares (567 ) —
—
—
—
(567 )
Employee taxes paid from shares withheld —
(12 ) (4 ) (2 ) —
(18 )
Other - net —
—
(3 ) (2 ) —
(5 )
Net cash provided by (used in)
   financing activities
1,409
(878 )
1,054

1,375

(4,303 )
(1,343 )

Effect of currency on cash —
—
—
8
—
8
Total increase (decrease) in cash 1
44

(1 )
182

—

226
Cash at the beginning of the period —
26
7
235
—
268
Cash at the end of the period $ 1
$ 70

$ 6

$ 417

$ —

$ 494


~~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). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding.

COMPANY OVERVIEW

Eaton Corporation plc (Eaton or the Company) is aan intelligent power management company ~~with 2016 net sales~~dedicated to improving the quality of ~~$19.7 billion. The Company provides energy-efficient~~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 ~~help its customers effectively manage~~transform the electrical ~~hydraulic,~~power value chain, investing in electrical vehicle markets, increasing our focus on electrification, and ~~mechanical~~employing digital technologies for power ~~more efficiently, safely,~~management. The Company’s innovations are expected to enable the integration of renewables and ~~sustainably.~~sustainability solutions, with new types of equipment, services, and software. These strategic focus areas are an important part of our response to climate change.

Additionally, over the past several years, Eaton has ~~approximately 96,000 employees~~completed a number of transactions to add higher growth, better margin businesses to its portfolio. These portfolio updates have the Company better aligned with secular growth trends and well positioned for expected further growth. These changes to our portfolio of businesses along with double digit organic sales growth and operational performance has led to 20% growth in ~~over 60 countries~~our net income per share in the first quarter of 2023 compared to the first quarter of 2022.

Founded in 1911, 2023 marks Eaton's 100th anniversary of being listed on the New York Stock Exchange. We reported revenues of $20.8 billion in 2022 and ~~sells products to~~serve customers in more than ~~175~~170 countries.

~~Summary of Results of Operations~~Portfolio Changes

~~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 follows:~~

Three months ended
September 30 Nine months ended
September 30
2017 2016 2017 2016
Net sales $ 5,211
$ 4,987
$ 15,191
$ 14,880
Net income attributable to Eaton ordinary shareholders 1,399
523
2,346
1,418
Net income per share attributable to Eaton ordinary shareholders - diluted $ 3.14
$ 1.15
$ 5.23
$ 3.09

~~On July 31, 2017, Eaton sold a 50% interest in its heavy-duty and medium-duty commercial vehicle automated transmission business for $600 in cash to Cummins, Inc.~~ The Company ~~recognized a pre-tax gain~~continues to actively manage its portfolio of ~~$1,077, of which $533~~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 2022 and 2023, Eaton continued to selectively add businesses to strengthen its portfolio.

Acquisitions of businesses and investments in associate companies

Date of acquisition

Business segment

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.

Jiangsu Huineng Electric Co., Ltd’s circuit breaker business

July 1, 2022

Electrical Global

A 50 percent stake in Jiangsu Huineng Electric Co., Ltd's circuit breaker business which manufactures and markets low-voltage circuit breakers in China.

Jiangsu Ryan Electrical Co. Ltd.

April 23, 2023

Electrical Global

A 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China.

Additional information related to ~~the pre-tax gain from the $600 proceeds from the sale~~acquisitions and ~~$544 related to the Company’s remaining 50% investment~~divestiture of businesses is presented in ~~the joint venture being remeasured to fair value. The after-tax gain was $843. Eaton will account for its investment on the equity method~~Note 2.

Table of ~~accounting.~~Contents

During 2015, Eaton announced a multi-year restructuring initiative to reduce its cost structure and gain efficiencies in all business segments and at corporate in order to respond to declining market conditions. Restructuring charges in the third quarter and first nine months of 2017 were $22 and $75, respectively, and were $23 and $121 in 2016, respectively. Charges from this initiative are primarily comprised of severance costs. Restructuring charges are anticipated to be $100 in 2017 and incremental savings in 2017 are anticipated to be $155.

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

The following discussion of Consolidated Financial Results ~~and Business Segment Results of Operations~~ includes certain non-GAAP financial measures. These financial measures include ~~operating~~adjusted earnings ~~operating~~and adjusted earnings per ordinary share, ~~and operating profit before acquisition integration charges for each business segment as well as corporate,~~ each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of ~~operating~~adjusted earnings and ~~operating~~adjusted earnings per ordinary share to the most directly comparable GAAP measure is included in the Consolidated Financial Results table below. Operating profit before acquisition integration charges is reconciled in the discussion of the operating results of each business segment, and excludes acquisition integration expense related to integration of Ephesus Lighting, Inc. in 2017 and 2016 and Oxalis Group Ltd. in 2016. Management believes that these financial measures are useful to investors because they ~~exclude certain transactions, allowing~~provide additional meaningful financial information that should be considered when assessing our business performance and trends, and they allow 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 ~~and each business segment. For additional information on acquisition~~incurs integration charges ~~see Note 3~~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)		2023		2022
Acquisition integration, divestiture charges and transaction costs		$	13	$	29
Gain on the sale of the Hydraulics business		—		(24)
Total before income taxes		13		5
Income tax benefit		3		1
Total after income taxes		$	11	$	4
Per ordinary share - diluted		$	0.03	$	0.01

Acquisition integration, divestiture charges and transaction costs in 2023 and 2022 are primarily related to the ~~Consolidated Financial Statements.~~acquisition of Royal Power Solutions and other acquisitions completed prior to 2022, and other charges and income to acquire and 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 16, the charges were included in Other expense - net.

Restructuring

In the second quarter of 2020, Eaton initiated 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 $335 million. These restructuring activities are expected to be completed in 2023 with total estimated charges of $350 million cumulatively for the entire program and projected mature year savings of $250 million when fully implemented. The remaining charges in 2023 are expected to relate primarily to plant closing and other costs. Additional information related to this restructuring is presented in Note 15.

Intangible Asset Amortization Expense

Intangible asset amortization expense is as follows:


	Three months ended March 31
(In millions except for per share data)		2023		2022
Intangible asset amortization expense		$	124	$	128
Income tax benefit		27		29
Total after income taxes		$	97	$	99
Per ordinary share - diluted		$	0.24	$	0.25

Table of Contents

Consolidated Financial Results


	Three months ended March 31						Increase (decrease)
(In millions except for per share data)		2023				2022
Net sales			$	5,483			$	4,843		13	%
Gross profit			1,884				1,574			20	%
Percent of net sales			34.4		%		32.5		%
Income before income taxes			762				619			23	%
Net income			639				533			20	%
Less net income for noncontrolling interests			(1)				(1)
Net income attributable to Eaton ordinary shareholders			638				532			20	%
Excluding acquisition and divestiture charges, after-tax			11				4
Excluding restructuring program charges, after-tax			8				14
Excluding intangible asset amortization expense, after-tax			97				99
Adjusted earnings			$	753			$	649		16	%

Net income per share attributable to Eaton ordinary shareholders - diluted			$	1.59			$	1.33		20	%
Excluding per share impact of acquisition and divestiture charges, after-tax			0.03				0.01
Excluding per share impact of restructuring program charges, after-tax			0.02				0.03
Excluding per share impact of intangible asset amortization expense, after-tax			0.24				0.25
Adjusted earnings per ordinary share			$	1.88			$	1.62		16	%

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Net sales $ 5,211
$ 4,987
4.5 % $ 15,191
$ 14,880
2 %
Gross profit 1,742
1,616
8 % 4,962
4,799
3 %
Percent of net sales 33.4 % 32.4 % 32.7 % 32.3 %
Income before income taxes 1,691
573
195 % 2,725
1,568
74 %
Net income 1,399
522
168 % 2,347
1,417
66 %
Less net loss (income) for noncontrolling interests —
1
(1 ) 1

Net income attributable to Eaton
   ordinary shareholders
1,399
523
167 % 2,346
1,418
65 %
Excluding acquisition integration charges,
  after-tax (Note 3)
1
1
2
2

Operating earnings $ 1,400
$ 524
167 % $ 2,348
$ 1,420
65 %

Net income per share attributable to Eaton ordinary shareholders - diluted $ 3.14
$ 1.15
173 % $ 5.23
$ 3.09
69 %
Excluding per share impact of acquisition
   integration charges, after-tax (Note 3)
—
—
—
—

Operating earnings per ordinary share $ 3.14
$ 1.15
173 % $ 5.23
$ 3.09
69 %

Net Sales


Changes in Net sales are summarized as follows:	Three months ended March 31
	2023
Organic growth	15	%


Foreign currency	(2)	%
Total increase (decrease) in Net sales	13	%

~~Net~~Organic sales increased ~~4.5%~~15% in the ~~third~~first quarter of ~~2017 compared to the third quarter of 2016~~2023 due to ~~an increase~~broad-based strength in end-markets of ~~3.5%~~the Electrical Americas and Electrical Global business segments, strength in ~~organic~~ sales to commercial OEM and ~~an increase of 1%~~aftermarket in the Aerospace business segment, and higher sales volumes including inflationary pricing recovery for both Vehicle and eMobility business segments.

Gross Profit

Gross profit margin increased from ~~the impact of positive currency translation. Net sales increased 2%~~32.5% in the first ~~nine months~~quarter of ~~2017 compared~~2022 to 34.4% in the first ~~nine months~~quarter of ~~2016 due to an increase of 2% in organic sales. The increase in organic sales in the third quarter and first nine months of 2017 was~~2023 primarily due to higher sales volumes ~~in the Electrical Products, Hydraulics,~~including inflationary pricing recovery. Conversely, wage and ~~Vehicle business segments.~~

~~Gross Profit~~

Gross profit margin increased from 32.4% in the third quarter of 2016 to 33.4% in the third quarter of 2017, and from 32.3% in the first nine months of 2016 to 32.7% in the first nine months of 2017. The increase in gross profit margin was primarily due to higher sales volumes, savings from restructuring actions, and lower restructuring charges, partially offset by commodity inflation, and ~~the~~operating inefficiencies had an unfavorable impact ~~of three recent hurricanes and the earthquake in Mexico City.~~on gross margin, despite offsetting price actions.

Income Taxes

The effective income tax rate for the ~~third~~first quarter ~~and first nine months~~ of ~~2017~~2023 was expense of ~~17.3% and 13.9%, respectively,~~16.1% compared to expense of ~~8.8% and 9.6%~~13.9% for the ~~third~~first quarter ~~and first nine months~~ of 2016. The tax rate for the third quarter and first nine months of 2017 includes $234 of tax expense on the gain related to the Eaton Cummins joint venture transaction, which closed during the third quarter and is discussed in Note 2. Excluding the impact from the Eaton Cummins joint venture transaction, the effective income tax rate for the third quarter and first nine months of 2017 was expense of 9.5% and 8.8%, respectively.2022. The increase in the effective tax rate in the ~~third~~first quarter of ~~2017~~2023 was primarily due to greater levels of income in higher tax ~~jurisdictions. The decrease in the effective tax rate in the first nine months of 2017 was due to the resolution of tax contingencies in lower tax~~ jurisdictions and a smaller impact from the excess tax benefits recognized for employee share-based payments ~~pursuant to~~in the ~~adoption~~quarter.

Table of ~~ASU 2016-09 as discussed in Note 1.~~Contents

Net Income

~~Net income attributable to Eaton ordinary shareholders of $1,399~~Changes in ~~the third quarter of 2017 increased 167% compared to Net income attributable to Eaton ordinary shareholders of $523 in the third quarter of 2016. Net income attributable to Eaton ordinary shareholders in the first nine months of 2017 was $2,346, an increase~~ of~~65% compared t~~o $1,418 in the first nine months of 2016. The increase in the third quarter and first nine months of 2017 was primarily due to the $843 after-tax gain from the sale of business discussed in Note 2, higher sales volumes, savings from restructuring actions, and lower restructuring charges, partially offset by a higher tax rate, commodity inflation, and the impact of three recent hurricanes and the earthquake in Mexico City.

Net income per ordinary share in the third quarter and first nine months of 2017 included $1.89 and $1.88, respectively, from the gain on the sale of business discussed in Note 2. Net income per ordinary share increased to $3.14 in the third quarter of 2017 compared to $1.15 in the third quarter of 2016. Net in~~come per ordinary share~~ ~~increased~~ to ~~$5.23 in the first nine months of 2017 compared to $3.09 in the first nine months of 2016. The increase in the Net income per ordinary share in the third quarter and first nine months of 2017~~ ~~was due to~~ ~~higher~~ Net income attributable to Eaton ordinary shareholders and ~~the Company's share repurchases over the past year.~~

~~Operating Earnings~~

~~Operating earnings of $1,400 in the third quarter of 2017 increased 167% compared to Operating earnings of $524 in the third quarter of 2016.~~ ~~Operating earnings in the first nine months of 2017 was~~ ~~$2,348, an~~ ~~increase of 65% compared to $1,420 in the first nine months of 2016. The increase in Operating earnings in the third quarter and the first nine months of 2017 was primarily due to higher~~ Net income per share attributable to Eaton ordinary ~~shareholders.~~

Operating earnings per ordinary share increased to $3.14 in the third quarter of 2017 compared to $1.15 in the third quarter of 2016. Operating earnings per ordinary share increased to $5.23 in the first nine months of 2017 compared to $3.09 in the first nine months of 2016. The increase in Operating earnings per ordinary share in the third quarter and first nine months of 2017 was due to higher Operating earnings and the impact of the Company's share repurchases over the past year.shareholders - diluted are summarized as follows:


	Three months ended
(In millions except for per share data)	Dollars		Per share
March 31, 2022	$	532	$	1.33
Business segment results of operations
Performance	160		0.40
Foreign currency	(13)		(0.03)
Corporate
Intangible asset amortization expense	2		0.01
Restructuring program charges	6		0.01
Acquisition and divestiture charges	(7)		(0.02)
Other corporate items	(29)		(0.07)
Tax rate impact	(13)		(0.03)

March 31, 2023	$	638	$	1.59

Business Segment Results of Operations

The following is a discussion of Net sales, operating profit and operating margin by business segment, which includes a discussion of operating profit and operating profit margin before acquisition integration charges. For additional information related to acquisition integration charges, see Note 3 to the Condensed Consolidated Financial Statements.segment.

Electrical ~~Products~~Americas


																							Three months ended March 31							Increase (decrease)
	Three months ended September 30						Increase (decrease)			Nine months ended September 30							Increase (decrease)
	2017			2016					2017				2016
(In millions)																			(In millions)					2023				2022					Increase (decrease)
Net sales	$	1,857		$	1,767			5	%		$	5,371			$	5,231				3	%	Net sales						$	2,294					21	%

Operating profit	$	346		$	331		5	%		$	957			$	924		4	%	Operating profit						$	525				$	361					45	%
Operating margin	18.6		%	18.7		%				17.8		%		17.7		%			Operating margin						22.9		%			19.1		%

Acquisition integration charges	$	1		$	1					$	3			$	2

Before acquisition integration charges
Operating profit	$	347		$	332		5	%		$	960			$	926		4	%
Operating margin	18.7		%	18.8		%				17.9		%		17.7		%

Net sales increased 5% in the third quarter of 2017 compared to the third quarter of 2016 due to an increase of 4% in organic sales and an increase of 1% from the impact of positive currency translation. Net sales increased 3%21% in the first ~~nine months~~quarter of ~~2017~~2023 compared to the first ~~nine months~~quarter of ~~2016~~2022 due to ana 22% increase ~~of 3%~~ in organic ~~sales. Organic~~ sales ~~growth~~with a small offset from negative currency translation. The increase in organic sales reflects broad-based strength in end-markets, with particular strength in commercial & institutional, utility, and data center end-markets.

The operating margin increased from 19.1% in the ~~third~~first quarter ~~and first nine months~~ of ~~2017 was driven by growth~~2022 to 22.9% in the ~~Americas~~first quarter of 2023 primarily due to higher sales volumes including inflationary pricing recovery, partially offset by wage and ~~Europe.~~commodity inflation.

~~Operating~~

Table of Contents

Electrical Global


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	1,500			$	1,437		4	%

Operating profit			$	274			$	279		(2)	%
Operating margin			18.3		%		19.4		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										8	%

Divestiture										(1)	%
Foreign currency										(3)	%
Total increase in Net sales										4	%

The increase in organic sales in the first quarter of 2023 was primarily due to strength in utility, data center and distributed IT end-markets.

The operating margin decreased from ~~18.7%~~19.4% in the ~~third~~first quarter of ~~2016~~2022 to ~~18.6%~~18.3% in the ~~third~~first quarter of ~~2017~~2023 primarily due to operating inefficiencies from ongoing, but improving, supply chain constraints and higher costs to support growth initiatives, partially offset by higher sales volumes including inflationary pricing recovery.

Aerospace


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	803			$	718		12	%

Operating profit			$	180			$	159		13	%
Operating margin			22.5		%		22.1		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										13	%


Foreign currency										(1)	%
Total increase in Net sales										12	%

The increase in organic sales in the ~~impact~~first quarter of ~~recent natural disasters~~2023 was primarily due to strength in sales to commercial OEM and aftermarket.

The operating margin increased from 22.1% in the first quarter of 2022 to 22.5% in the first quarter of 2023 primarily due to higher sales volumes including inflationary pricing recovery, partially offset by commodity and wage inflation.

Table of Contents

Vehicle


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	739			$	671		10	%

Operating profit			$	107			$	113		(5)	%
Operating margin			14.5		%		16.8		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										11	%


Foreign currency										(1)	%
Total increase in Net sales										10	%

The increase in organic sales in the first quarter of 2023 was primarily due to strength in the North America truck and light vehicle markets, South American truck, bus and agriculture markets, and European light vehicle markets.

The operating margin decreased from 16.8% in the first quarter of 2022 to 14.5% in the first quarter of 2023 primarily due to commodity and wage inflation, and operating inefficiencies, partially offset by higher sales volumes including inflationary pricing recovery.

eMobility


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	147			$	126		17	%

Operating loss			$	(4)			$	(3)		(33)	%
Operating margin			(2.7)		%		(2.4)		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										18	%


Foreign currency										(1)	%
Total increase in Net sales										17	%

The increase in organic sales in the first quarter of 2023 was due to strength in North American and European markets primarily due to robust demand for electric vehicles.

The operating margin decreased from negative 2.4% in the first quarter of 2022 to negative 2.7% in the first quarter of 2023 primarily due to manufacturing start-up costs associated with new electric vehicle programs, and wage and commodity inflation, partially offset by higher sales volumes ~~and savings from restructuring actions.~~ ~~Operating margin~~ ~~increased~~ ~~from17.7%~~including inflationary pricing recovery.

Table of Contents

Corporate Expense


	Three months ended March 31					Increase (decrease)
(In millions)		2023			2022
Intangible asset amortization expense			$	124		$	128	(3)	%
Interest expense - net			50			32		56	%
Pension and other postretirement benefits income			(11)			(19)		(42)	%


Restructuring program charges			10			18		(44)	%
Other expense - net			148			131		13	%
Total corporate expense			$	320		$	290	10	%

Total corporate expense was $320 million in the first ~~nine months~~quarter of ~~2016~~2023 compared to ~~17.8%~~$290 million in the first ~~nine months~~quarter of ~~2017~~2022. The increase in Total corporate expense for the first quarter of 2023 was primarily due to higher ~~sales volumes, savings from restructuring actions~~Interest expense - net and ~~lower restructuring charges, partially offset by commodity inflation and the impact of recent natural disasters.~~

Operating margin before acquisition integration charges decreased from 18.8% in the third quarter of 2016 to 18.7% in the third quarter of 2017 due to a decrease in operating margin. Operating margin before acquisition integration charges increased from 17.7% in the first nine months of 2016 to 17.9% in the first nine months of 2017 due to anOther expense - net. The increase in ~~operating margin.~~

~~Electrical Systems and Services~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Net sales $ 1,421
$ 1,436
(1 )% $ 4,168
$ 4,207
(1 )%

Operating profit $ 196
$ 197
(1 )% $ 545
$ 534
2 %
Operating margin 13.8 % 13.7 % 13.1 % 12.7 %

Acquisition integration charges $ —
$ —
$ —
$ 1

Before acquisition integration charges
Operating profit $ 196
$ 197
(1 )% $ 545
$ 535
2 %
Operating margin 13.8 % 13.7 % 13.1 % 12.7 %

Net sales decreased 1% in the third quarter of 2017 compared to the third quarter of 2016 due to a decrease of 2% in organic sales, partially offset by an increase of 1% from the impact of positive currency translation. Net sales decreased 1% in the first nine months of 2017 compared to the first nine months of 2016 due to a decrease of 1% in organic sales. The decrease in organic sales in the third quarter and first nine months of 2017 wasOther expense - net is primarily due to ~~softness in North American assembly markets.~~

~~Operating margin increased from 13.7% in~~ the third quarter of 2016 to 13.8% in the third quarter of 2017. Operating margin increased from 12.7% in the first nine months of 2016 to 13.1% in the first nine months of 2017. These increases are primarily due to savings from restructuring actions and lower restructuring charges, partially offset by commodity inflation.

~~Operating margin before acquisition integration charges increased from 12.7% in the first nine months of 2016 to 13.1% in the first nine months of 2017 due to an increase in operating margin.~~

~~Hydraulics~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Net sales $ 634
$ 562
13 % $ 1,854
$ 1,702
9 %

Operating profit $ 80
$ 61
31 % $ 214
$ 161
33 %
Operating margin 12.6 % 10.9 % 11.5 % 9.5 %

Net sales increased 13% in the third quarter of 2017 compared to the third quarter of 2016 due to an increase of 13% in organic sales. Net sales increased 9% in the first nine months of 2017 compared to the first nine months of 2016 due to an increase of 10% in organic sales, partially offset by a decrease of 1% from the impact of negative currency translation. The increase in organic sales in the third quarter and first nine months of 2017 was due to strength in global OEM markets and distribution channels.

Operating margin increased from 10.9% in the third quarter of 2016 to 12.6% in the third quarter of 2017 primarily due to higher sales volumes partially offset by commodity inflation. Operating margin increased ~~from 9.5% in the first nine months of~~ ~~2016~~ ~~to 11.5% in the first nine months of~~ ~~2017 primarily due to higher sales volumes, savings from restructuring actions and lower restructuring charges, partially offset by commodity inflation.~~

~~Aerospace~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Net sales $ 438
$ 436
— % $ 1,303
$ 1,328
(2 )%

Operating profit $ 84
$ 88
(5 )% $ 244
$ 251
(3 )%
Operating margin 19.2 % 20.2 % 18.7 % 18.9 %

Net sales were flat in the third quarter of 2017 compared to the third quarter of 2016 with no change in organic sales or currency translation. Net sales decreased 2% in the first nine months of 2017 compared to the first nine months of 2016 due to a decrease of 1% in organic sales and a decrease of 1% from the impact of negative currency translation. The decrease in organic sales in the first nine months of 2017 was primarily due to lower sales in military aftermarket, business and regional jets, and lower cost reimbursements2022 gain on ~~certain engineering programs, partially offset by growth in commercial transports.~~

Operating margin decreased from 20.2% in the third quarter of 2016 to 19.2% in third quarter of 2017 primarily due to unfavorable product mix. Operating margin decreased from 18.9% in the first nine months of 2016 to 18.7% in the first nine months of 2017 primarily due to lower sales volumes and unfavorable product mix, partially offset by savings from restructuring actions.

~~Vehicle~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Net sales $ 861
$ 786
10 % $ 2,495
$ 2,412
3 %

Operating profit $ 150
$ 122
23 % $ 397
$ 377
5 %
Operating margin 17.4 % 15.5 % 15.9 % 15.6 %

Net sales increased 10% in the third quarter of 2017 compared to the third quarter of 2016 due to an increase of 9% in organic sales and an increase of 2% from the impact of positive currency translation, partially offset by a decrease of 1% from the sale of athe Hydraulics business discussed in Note 2. ~~The increase in organic sales in the third quarter~~

Table of 2017 was driven by growth in all regions, with particular strength in the North American Class 8 truck market. Net sales increased 3% in the first nine months of 2017 compared to the first nine months of 2016 due to an increase of 2% in organic sales and an increase of 1% from the impact of positive currency translation. The increase in organic sales in the first nine months of 2017 was primarily due to growth in North America.Contents

~~Operating margin increased from 15.5% in the third quarter of 2016 to 17.4% in the third quarter of 2017 primarily due to higher sales volumes. Operating m~~ar~~gin increased from 15.6% in the first nine months of 2016 to 15.9% in the first nine months of 2017~~ ~~primarily due to higher sales volumes, savings from restructuring actions and~~ ~~lower restructuring costs, partially offset by unfavorable product mix and commodity inflation.~~

~~Corporate Expense (Income)~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
2017 2016 2017 2016
Amortization of intangible assets $ 98
$ 99
(1 )% $ 288
$ 297
(3 )%
Interest expense - net 60
59
2 % 181
173
5 %
Pension and other postretirement
benefits expense
16
18
(11 )% 38
45
(16 )%
Gain on sale of business

(1,077 ) —
NM
(1,077 ) —
NM
Other corporate expense - net 68
50
36 % 202
164
23 %
Total corporate expense (income) $ (835 ) $ 226
(469 )% $ (368 ) $ 679
(154 )%

Total corporate income was $835 in the third quarter of 2017 compared to corporate expense of $226 in the third quarter of 2016. Total corporate income was $368 in the first nine months of 2017 compared to corporate expense of $679 in the first nine months of 2016. The change in Total corporate expense (income) for the third quarter and first nine months of 2017 was primarily due to a gain on sale of business discussed in Note 2, partially offset by an increase in other corporate expense - net driven by an increase to the LIFO inventory reserve and higher corporate restructuring expenses.

LIQUIDITY, CAPITAL RESOURCES, AND ~~CHANGES IN~~ FINANCIAL CONDITION

Liquidity and Financial Condition ~~and Liquidity~~

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.

On March 3, 2023, a subsidiary of Eaton issued Euro denominated notes (2023 Euro Notes) in a private issuance with a face value of €300 million ($318 million). The floating rate notes are due June 3, 2024 with interest payable quarterly based on the three-month Euro Interbank Offered Rate plus 25 basis points. Proceeds from the Euro Notes were used to pay down outstanding U.S. dollar commercial paper. The 2023 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton. The 2023 Euro Notes contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2023 Euro Notes at a purchase price of 100.5% of the principal amount plus accrued and unpaid interest. The 2023 Euro Notes are subject to customary non-financial covenants.

The Company maintains revolving credit facilities consisting of a $500 million 364-day revolving credit facility that will expire on October 2, 2023 and a $2,500 million five-year revolving credit facility that will expire on October 1, 2027. The revolving credit facilities totaling $3,000 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, 2023. The Company maintains access to the commercial paper markets through ~~a $2,000~~its $3,000 million commercial paper program, of which ~~is supported by credit facilities~~$59 million was outstanding on March 31, 2023, used primarily to manage fluctuations in working capital.

In 2022, the ~~aggregate principal amount~~Company paid $610 million to acquire Royal Power Solutions and received cash of ~~$2,000. There were no borrowings outstanding under these revolving credit facilities at September 30, 2017.~~ $22 million from Danfoss A/S to fully settle all post-closing adjustments from the sale of the Hydraulics business.

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, 2023 and December 31, 2022, Eaton had cash of $235 million and $294 million, short-term investments of $289 million and $261 million, and short-term debt of $87 million and $324 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.

On September 15, 2017, a subsidiary of Eaton issued senior notes (the Notes) with a face amount of $1,000. The Notes are comprised of two tranches of $700 and $300 which mature in 2027 and 2047, with interest payable semi-annually at a respective rate of 3.1% and 3.9%. The issuer received proceeds totaling $993 from the issuance, net of financing costs.

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

~~Sources and Uses~~Cash Flows

A summary of ~~Cash~~cash flows is as follows:


	Three months ended March 31
(In millions)	2023		2022		Change from 2022
Net cash provided by operating activities	$	335	$	42	$	293
Net cash used in investing activities	(124)		(762)		638
Net cash provided by (used in) financing activities	(281)		652		(933)
Effect of currency on cash	11		8		3

Total decrease in cash	$	(59)	$	(60)

Operating Cash Flow

Net cash provided by operating activities ~~was $1,787~~increased by $293 million in the first ~~nine~~three months of ~~2017, a decrease of $145 in the source of cash~~2023 compared to ~~$1,932~~2022 primarily due to lower working capital balances and higher net income in the first nine months of 2016. The decrease in net cash provided by operating activities in the first nine months of 2017 was driven by higher pension contributions, including $350 contributed to Eaton's U.S. qualified pension plans,2023, partially offset by ~~a lower increase~~cash received from the termination of interest rate swaps in ~~working capital.~~2022.

Investing Cash Flow

Net cash used in investing activities ~~was $435~~decreased by $638 million in the first ~~nine~~three months of ~~2017, an increase in the use of cash of $64~~2023 compared to ~~$371 in the first nine~~ m~~onths of 2016. The increase in the use of cash was~~2022 primarily driven by ~~an increase~~no cash paid for business acquisitions in ~~net purchases of short-term investments of $621 in 2017~~2023 compared to ~~$29~~cash paid for business acquisitions of $612 million in ~~2016, partially offset by proceeds~~2022.

Table of ~~$600 from the sale of a business discussed in Note 2.~~Contents

Financing Cash Flow

Net cash used in financing activities ~~was $1,115~~increased by $933 million in the first ~~nine~~three months of ~~2017, a decrease of $228 in the use of cash~~2023 compared to ~~$1,343~~2022 primarily due to net payments of short-term debt of $236 million in 2023 compared to net proceeds of short-term debt of $1,105 million in 2022, partially offset by higher proceeds from borrowings of $318 million in 2023 compared to no proceeds from borrowings in 2022, and no repurchase of shares in 2023 compared to repurchase of shares of $86 million in 2022.

Uses of Cash

Capital Expenditures

Capital expenditures were $126 million and $115 million in the first ~~nine~~three months of ~~2016. The decrease~~2023 and 2022, respectively. Eaton expects approximately $700 million in capital expenditures in 2023.

Dividends

Cash dividend payments were $334 million and $320 million in the ~~use~~first three months of 2023 and 2022, respectively. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash ~~was primarily~~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 2023.

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. During the three months ended March 31, 2023, no ordinary shares were repurchased. 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. At March 31, 2023, there is $4,714 million still available for share repurchases under the 2022 Program. The Company will continue to pursue share repurchases in 2023 depending on market conditions and capital levels.

Acquisition of Businesses

The Company paid cash of $612 million to acquire a business in the first three months of 2022. There were no business acquisitions in the first three months of 2023. 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, 2023, the Company had Short-term debt of $87 million, Current portion of long-term debt of $8 million, and Long-term debt of $8,701 million.

Supply Chain Finance Program

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. 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. For additional information on the SCF program, see Note 7.

Table of Contents

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), September 15, 2017 (the 2017 Indenture) and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date, the 2022 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of five outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds). 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 (with limited exceptions, for example, see Note 8 of the Financial Statements included herewith), together with the credit facilities described above under Liquidity and Financial Condition (the Credit Facilities), are guaranteed by Eaton and 17 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, 2023, 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 23, 2023 (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.

Though the terms of the indentures vary slightly, generally, each guarantee of the Registered Senior Notes by a guarantor that is a subsidiary of Eaton Corporation provides that it will be automatically and unconditionally released and discharged under certain circumstances, including, but not limited to:

(a)the consummation of certain types of transactions permitted under the applicable indenture, including one that results in such guarantor ceasing to be a subsidiary; and

(b)for Registered Senior Notes issued under the 2022 Indenture, when such guarantor is a guarantor or issuer of indebtedness in an aggregate outstanding principal amount of less than 25% of our total outstanding indebtedness.

Further, each guarantee by a direct or indirect parent of Eaton Corporation (other than Eaton) provides that it will also be released if:

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

(d)such guarantee results 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).

The guarantee of Eaton does not contain any release provisions.

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, the 2012 and 2017 Indentures provide that 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 2022 Indenture provides only that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under indebtedness with an aggregate outstanding principal amount in excess of 25% of the Parent and its Subsidiaries' then-outstanding indebtedness.

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

Table of Contents

Summarized Financial Information of Guarantors and Issuers


(In millions)	March 31, 2023		December 31, 2022
Current assets	$	3,206	$	3,363
Noncurrent assets	12,919		12,938
Current liabilities	2,634		2,948
Noncurrent liabilities	10,378		10,047
Amounts due to subsidiaries that are non-issuers and non-guarantors - net	16,565		16,285

(In millions)			Three months ended March 31, 2023
Net sales			$	3,144
Sales to subsidiaries that are non-issuers and non-guarantors			256
Cost of products sold			2,505
Expense from subsidiaries that are non-issuers and non-guarantors - net			164
Net income			28

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, ~~an increase of $367 in proceeds from borrowings which totaled $1,000 in 2017~~ and ~~$633 in 2016,~~transactions with non-issuer and a decrease of $113 in payments on borrowings which totaled $553 in 2017 and $666 in 2016. This was partially offset by a $222 increase in share repurchases during the first nine months of 2017 compared to the first nine months of 2016.non-guarantor subsidiaries have been presented separately.

FORWARD-LOOKING STATEMENTS

This Form 10-Q Report contains forward-looking statements concerning our acquisition strategy, litigation, expected ~~pension contributions,~~capital expenditures, future dividend payments, anticipated ~~stock~~share repurchases, ~~the impact of the adoption of ASU 2014-09,~~ and ~~the costs~~expected restructuring program charges and ~~benefits of restructuring actions, among other matters.~~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: ~~unexpected results from~~ the ~~implementation~~course of ~~ASU 2014-09,~~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 ~~potential effects on our businesses from natural disasters; 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.


~~ITEM 3.~~ ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

There have been no material changes in exposures to market risk since December 31, ~~2016.~~2022.

Table of Contents


ITEM 4.CONTROLS AND PROCEDURES. ~~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 ~~Richard H. Fearon~~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 ~~September 30, 2017~~.March 31, 2023.

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 ~~third~~first quarter of ~~2017,~~2023, 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.

PART II — OTHER INFORMATION


~~ITEM 1.~~ ITEM 1.LEGAL PROCEEDINGS.	~~LEGAL PROCEEDINGS.~~

Information regarding the Company's current legal proceedings is presented in Note 810 of the Notes to the ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.


~~ITEM 1A.~~ ITEM 1A.RISK FACTORS.	~~RISK FACTORS.~~

“Item 1A. Risk Factors” in Eaton's ~~2016~~2022 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 ~~2016~~2022 Form 10-K.

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


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

During the ~~third~~first quarter of ~~2017, 4.4 million ordinary~~2023, there were no shares ~~were repurchased in the open market at a total cost~~repurchased.

Table of ~~$324 million. These shares were repurchased under the program approved by the Board~~Contents

ITEM 6.EXHIBITS.

Eaton Corporation plc

First Quarter 2023 Report on ~~February 24, 2016. A summary of the shares repurchased in the third quarter of 2017 follows:~~Form 10-Q

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)
July —
$ —
—
$ 1,388
August 4,415,144
$ 73.29
4,415,144
$ 1,064
September —
$ —
—
$ 1,064
Total 4,415,144
$ 73.29
4,415,144


~~ITEM 5.~~	~~OTHER INFORMATION.~~

~~Disclosure Pursuant to Section 13r of the Exchange Act~~

Set forth below is a description of all matters reported by us pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Exchange Act. Concurrently with the filing of this Quarterly Report, we are filing a notice pursuant to Section 13(r) of the Exchange Act that such matters have been disclosed in this Quarterly Report.

During the third quarter, certain of our wholly-owned non-U.S. subsidiaries sold various electrical products to customers in Iran. We received total revenue of approximately 1,015,072 Euros and realized net profits of approximately 282,649 Euros from the sales (approximately $1,197,983 and $333,581 in whole U.S. dollars, respectively). One or more of our non-U.S. subsidiaries intend to continue doing business in Iran under General License H in compliance with U.S. economic sanctions and export control laws, though the Company has no assets or employees in Iran.


~~ITEM 6.~~	~~EXHIBITS.~~

~~Exhibits — See Exhibit Index attached.~~

~~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:~~	~~October 31, 2017~~	~~By:~~	~~/s/ Richard H. Fearon~~
			~~Richard H. Fearon~~
			~~Principal Financial Officer~~
			~~(On behalf of the registrant and as Principal Financial Officer)~~

~~Eaton Corporation plc~~

~~Third Quarter~~ ~~2017~~ ~~Report on Form 10-Q~~

~~Exhibit Index~~


3 (i)
~~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))

~~4.2~~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)

~~4.3~~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)

~~4.4~~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		Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.9		First Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.10		Second Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.11		Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the SEC, upon request, a copy of the instruments defining the rights of holders of its long-term debt other than those set forth in Exhibits ~~4.1-4.3~~(4.2 - 4.7) hereto

1210.1		~~Ratio~~5-Year Revolving Credit Agreement, dated as of ~~Earnings~~October 3, 2022, among Eaton Corporation, the guarantors from time to Fixed Charges — Filed in conjunction with this Form 10-Q Report *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. and BofA Securities, Inc. as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A. as documentation agent.

~~31.1~~10.2		364-Day Revolving Credit Agreement, dated as of October 3, 2022, among Eaton Corporation, 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. and BofA Securities, Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A. as documentation agent.

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 *

Table of Contents


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.

~~Attached as Exhibit 101~~

Table of Contents

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 ~~are~~to be signed on its behalf by the ~~following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income for the~~ ~~three~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, (ii) Consolidated Statements of Comprehensive Income for the~~ ~~three~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, (iii) Condensed Consolidated Balance Sheets at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, (iv) Condensed Consolidated Statements of Cash Flows for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~and (v) Notes to Condensed Consolidated Financial Statements for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~.undersigned, thereunto duly authorized.

EATON CORPORATION plc

Registrant

Date:

May 2, 2023

By:

/s/ Thomas B. Okray

Thomas B. Okray

Principal Financial Officer

(On behalf of the registrant and as Principal Financial Officer)



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			2620
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3230
ITEM 4. CONTROLS AND PROCEDURES			3231
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			3231
ITEM 1A. RISK FACTORS			3231

ITEM 2. UNRESTRICTED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			3331
~~ITEM 5. OTHER INFORMATION~~			33

ITEM 6. EXHIBITS			3332
SIGNATURES			34
~~EXHIBIT INDEX~~			35
~~EX-12~~
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~
~~EX-101 INSTANCE DOCUMENT~~
~~EX-101 SCHEMA DOCUMENT~~
~~EX-101 CALCULATION LINKBASE DOCUMENT~~
~~EX-101 DEFINITION LINKBASE DOCUMENT~~
~~EX-101 LABELS LINKBASE DOCUMENT~~
~~EX-101 PRESENTATION LINKBASE DOCUMENT~~


(In millions)	Deferred Revenue
Balance at January 1, 2023	$	508
Customer deposits and billings	514
Revenue recognized in the period	(421)

~~Note 2.~~Translation	~~SALE OF A BUSINESS~~4


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

~~Note 4.~~Translation	~~RESTRUCTURING CHARGES~~(2)
Balance at March 31, 2022	$	428


(In millions)	SCF Obligations
Balance at January 1, 2023	$	208
Invoices confirmed during the period	297
Invoices paid during the period	(234)
Translation	12
Balance at March 31, 2023	$	283



EATON CORPORATION plc
(Exact name of registrant as specified in its charter)


(In millions)	September 30, 2017			December 31, 2016			(In millions)	March 31, 2023		December 31, 2022
Assets							Assets
Current assets							Current assets
Cash	$	791		$	543		Cash	$	235	$	294
Short-term investments	843			203			Short-term investments	289		261
Accounts receivable - net	3,962			3,560			Accounts receivable - net	4,239		4,076
Inventory	2,457			2,254			Inventory	3,604		3,430

Prepaid expenses and other current assets	396			381			Prepaid expenses and other current assets	772		685
Total current assets	8,449			6,941			Total current assets	9,138		8,746

Property, plant and equipment							Property, plant and equipment
Land and buildings	2,498			2,369			Land and buildings	2,174		2,129
Machinery and equipment	5,940			5,670			Machinery and equipment	6,021		5,885
Gross property, plant and equipment	8,438			8,039			Gross property, plant and equipment	8,195		8,013
Accumulated depreciation	(4,952		)	(4,596		)	Accumulated depreciation	(4,989)		(4,867)
Net property, plant and equipment	3,486			3,443			Net property, plant and equipment	3,206		3,146

Other noncurrent assets							Other noncurrent assets
Goodwill	13,545			13,201			Goodwill	14,894		14,796
Other intangible assets	5,354			5,514			Other intangible assets	5,386		5,485

Operating lease assets							Operating lease assets	579		570
Deferred income taxes	264			360			Deferred income taxes	340		330
Other assets	1,627			960			Other assets	1,975		1,940
Total assets	$	32,725		$	30,419		Total assets	$	35,517	$	35,014

Liabilities and shareholders’ equity							Liabilities and shareholders’ equity
Current liabilities							Current liabilities
Short-term debt	$	5		$	14		Short-term debt	$	87	$	324
Current portion of long-term debt	1,494			1,552			Current portion of long-term debt	8		10
Accounts payable	2,039			1,718			Accounts payable	3,118		3,072
Accrued compensation	434			379			Accrued compensation	350		467

Other current liabilities	1,928			1,822			Other current liabilities	2,524		2,488
Total current liabilities	5,900			5,485			Total current liabilities	6,087		6,360

Noncurrent liabilities							Noncurrent liabilities
Long-term debt	7,273			6,711			Long-term debt	8,701		8,321
Pension liabilities	1,328			1,659			Pension liabilities	651		649
Other postretirement benefits liabilities	366			368			Other postretirement benefits liabilities	174		177
Operating lease liabilities							Operating lease liabilities	466		459
Deferred income taxes	327			321			Deferred income taxes	537		530
Other noncurrent liabilities	895			934			Other noncurrent liabilities	1,417		1,444
Total noncurrent liabilities	10,189			9,993			Total noncurrent liabilities	11,946		11,580

Shareholders’ equity							Shareholders’ equity
Eaton shareholders’ equity	16,593			14,897
Ordinary shares (398.6 million outstanding in 2023 and 397.8 million in 2022)							Ordinary shares (398.6 million outstanding in 2023 and 397.8 million in 2022)	4		4
Capital in excess of par value							Capital in excess of par value	12,502		12,512
Retained earnings							Retained earnings	8,757		8,468
Accumulated other comprehensive loss							Accumulated other comprehensive loss	(3,814)		(3,946)
Shares held in trust							Shares held in trust	—		(1)
Total Eaton shareholders’ equity							Total Eaton shareholders’ equity	17,449		17,038
Noncontrolling interests	43			44			Noncontrolling interests	36		38
Total equity	16,636			14,941			Total equity	17,485		17,075
Total liabilities and equity	$	32,725		$	30,419		Total liabilities and equity	$	35,517	$	35,014


~~Note 3.~~Balance at March 31, 2023			~~ACQUISITION INTEGRATION CHARGES~~$	605



	Workforce reductions			Plant closings and other			Total
Balance at December 31, 2015	$	54		$	—		$	54
Liability recognized	177			34			211
Payments	(116		)	(13		)	(129		)
Other adjustments	(2		)	(20		)	(22		)
Balance at December 31, 2016	113			1			114
Liability recognized	35			40			75
Payments	(78		)	(25		)	(103		)
Other adjustments	(3		)	(12		)	(15		)
Balance at September 30, 2017	$	67		$	4		$	71


(In millions)	January 1, 2023		Translation		March 31, 2023
Electrical Americas	$	7,402	$	8	$	7,411
Electrical Global	3,929		58		3,987

Aerospace	2,844		30		2,873
Vehicle	287		1		288
eMobility	334		—		334
Total	$	14,796	$	98	$	14,894



	Electrical Products		Electrical Systems and Services		Hydraulics		Aerospace		Vehicle			Total
December 31, 2016	$	6,497	$	4,203	$	1,221	$	938	$	342		$	13,201
Goodwill written off from sale of business	—		—		—		—		(52		)	(52		)
Translation	235		114		34		8		5			396
September 30, 2017	$	6,732	$	4,317	$	1,255	$	946	$	295		$	13,545















	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)	2023		2022		2023		2022		2023		2022
Service cost	$	5	$	8	$	11	$	16	$	—	$	—
Interest cost	36		20		21		12		2		2
Expected return on plan assets	(49)		(53)		(30)		(31)		—		—
Amortization	1		8		1		12		(4)		(2)
	(7)		(17)		3		9		(2)		—

Settlements	9		14		1		—		—		—
Total expense (income)	$	2	$	(3)	$	4	$	9	$	(2)	$	—



	United States pension benefit expense						Non-United States pension benefit expense						Other postretirement benefits expense
	Three months ended September 30
	2017			2016			2017			2016			2017			2016
Service cost	$	24		$	28		$	18		$	16		$	1		$	1
Interest cost	30			31			14			16			4			4
Expected return on plan assets	(61		)	(63		)	(24		)	(23		)	(1		)	(2		)
Amortization	21			23			13			8			(3		)	(2		)
	14			19			21			17			1			1
Settlements	17			24			4			—			—			—
Total expense	$	31		$	43		$	25		$	17		$	1		$	1


	United States pension benefit expense						Non-United States pension benefit expense						Other postretirement benefits expense
	Nine months ended September 30
	2017			2016			2017			2016			2017			2016
Service cost	$	72		$	83		$	53		$	49		$	2		$	3
Interest cost	92			94			41			48			11			13
Expected return on plan assets	(183		)	(188		)	(70		)	(71		)	(3		)	(5		)
Amortization	62			69			38			25			(9		)	(6		)
	43			58			62			51			1			5
Settlements and special termination benefits	51			63			4			—			—			—
Total expense	$	94		$	121		$	66		$	51		$	1		$	5


	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, 2023	397.8	$	4	$	12,512	$	8,468	$	(3,946)	$	(1)	$	17,038	$	38	$	17,075


Net income	—	—		—		638		—		—		638		1		639
Other comprehensive income, net of tax								132				132		—		132
Cash dividends paid and accrued	—	—		—		(348)		—		—		(348)		(4)		(352)

Issuance of shares under equity-based compensation plans	0.7	—		(11)		(1)		—		1		(11)		—		(11)

Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		1		1



Balance at March 31, 2023	398.6	$	4	$	12,502	$	8,757	$	(3,814)	$	—	$	17,449	$	36	$	17,485



	Eaton shareholders’ equity			Noncontrolling interests			Total equity
Balance at December 31, 2016	$	14,897		$	44		$	14,941
Cumulative-effect adjustment upon adoption of ASU 2016-09	48			—			48
Net income	2,346			1			2,347
Other comprehensive income	785			—			785
Cash dividends paid	(803		)	(3		)	(806		)
Issuance of shares under equity-based compensation plans - net	109			—			109
Repurchase of shares	(789		)	—			(789		)
Changes in noncontrolling interest - net	—			1			1
Balance at September 30, 2017	$	16,593		$	43		$	16,636


~~ITEM 1.~~	~~FINANCIAL STATEMENTS.~~


~~Note 1.~~	~~BASIS OF PRESENTATION~~


~~Note 8.~~	~~LEGAL CONTINGENCIES~~


~~Note 9.~~	~~INCOME TAXES~~


(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2023	$	(3,264)	$	(810)	$	129	$	(3,946)
Other comprehensive income (loss) before reclassifications	121		(11)		26		136
Amounts reclassified from Accumulated other comprehensive loss (income)	(1)		8		(11)		(4)
Net current-period Other comprehensive income (loss)	119		(2)		15		132
Balance at March 31, 2023	$	(3,145)	$	(813)	$	144	$	(3,814)



	Nine months ended September 30, 2017				Consolidated statements of income classification
Amortization of defined benefit pensions and other postretirement benefits items
Actuarial loss and prior service cost	$	(146	)	¹
Tax benefit	47
Total, net of tax	(99		)

Gains and (losses) on cash flow hedges
Currency exchange contracts	(12		)		Cost of products sold
Tax benefit	4
Total, net of tax	(8		)

Total reclassifications for the period	$	(107	)



	Three months ended September 30				Nine months ended September 30
(Shares in millions)	2017		2016		2017		2016
Net income attributable to Eaton ordinary shareholders	$	1,399	$	523	$	2,346	$	1,418

Weighted-average number of ordinary shares outstanding - diluted	445.2		455.6		448.3		457.9
Less dilutive effect of equity-based compensation	2.6		1.7		2.4		1.4
Weighted-average number of ordinary shares outstanding - basic	442.6		453.9		445.9		456.5

Net income per share attributable to Eaton ordinary shareholders
Diluted	$	3.14	$	1.15	$	5.23	$	3.09
Basic	3.16		1.15		5.26		3.10



	September 30, 2017			December 31, 2016
Raw materials	$	959		$	880
Work-in-process	434			396
Finished goods	1,167			1,074
Inventory at FIFO	2,560			2,350
Excess of FIFO over LIFO cost	(103		)	(96		)
Total inventory	$	2,457		$	2,254




CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017
	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	1,695		$	1,669		$	3,223		$	(1,376	)	$	5,211

Cost of products sold	—			1,322			1,225			2,294			(1,372		)	3,469
Selling and administrative expense	32			330			200			354			—			916
Research and development expense	—			53			54			40			—			147
Interest expense (income) - net	—			62			5			(7		)	—			60
Gain on Sale of Business	—			560			—			517			—			1,077
Other expense (income) - net	23			1			(31		)	12			—			5
Equity in loss (earnings) of subsidiaries, net of tax	(1,573		)	(237		)	(1,900		)	(706		)	4,416			—
Intercompany expense (income) - net	119			(33		)	335			(421		)	—			—
Income (loss) before income taxes	1,399			757			1,781			2,174			(4,420		)	1,691
Income tax expense (benefit)	—			120			18			154			—			292
Net income (loss)	1,399			637			1,763			2,020			(4,420		)	1,399
Less net loss (income) for noncontrolling interests	—			—			—			(1		)	1			—
Net income (loss) attributable to Eaton ordinary shareholders	$	1,399		$	637		$	1,763		$	2,019		$	(4,419	)	$	1,399

Other comprehensive income (loss)	$	199		$	(15	)	$	200		$	267		$	(452	)	$	199
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	1,598		$	622		$	1,963		$	2,286		$	(4,871	)	$	1,598



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)
July	—	$	—	—	$	1,388
August	4,415,144	$	73.29	4,415,144	$	1,064
September	—	$	—	—	$	1,064
Total	4,415,144	$	73.29	4,415,144