Document and Entity Information
Document and Entity Information shares in Millions | 6 Months Ended |
Jun. 30, 2019shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Eaton Corp plc |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2019 |
Document Fiscal Year Focus | 2019 |
Current Fiscal Year End Date | --12-31 |
Document Quarterly Report | true |
Document Transition Report | false |
Entity Incorporation, State or Country Code | L2 |
City Area Code | +353 |
Local Phone Number | 1637 2900 |
Entity Central Index Key | 0001551182 |
Entity File Number | 000-54863 |
Amendment Flag | false |
Document Fiscal Period Focus | Q2 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Shell Company | false |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Common Stock, Shares Outstanding (in shares) | 420 |
Entity Tax Identification Number | 98-1059235 |
Entity Address, Address Line One | Eaton House, |
Entity Address, Address Line Two | 30 Pembroke Road, |
Entity Address, City or Town | Dublin 4, |
Entity Address, Country | IE |
Entity Address, Postal Zip Code | D04 Y0C2 |
Title of 12(b) Security | Ordinary shares ($0.01 par value) |
Trading Symbol | ETN |
Security Exchange Name | NYSE |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 |
Cost of products sold | 3,697 | 3,671 | 7,270 | 7,244 |
Selling and administrative expense | 907 | 901 | 1,824 | 1,790 |
Research and development expense | 151 | 145 | 307 | 301 |
Interest expense - net | 63 | 68 | 129 | 138 |
Other (income) expense - net | (23) | 8 | (33) | 6 |
Income before income taxes | 738 | 694 | 1,341 | 1,259 |
Income tax expense | 102 | 83 | 183 | 161 |
Net income | 636 | 611 | 1,158 | 1,098 |
Less net income for noncontrolling interests | 0 | (1) | 0 | 0 |
Net income attributable to Eaton ordinary shareholders | $ 636 | $ 610 | $ 1,158 | $ 1,098 |
Net income per share attributable to Eaton ordinary shareholders | ||||
Diluted (usd per share) | $ 1.50 | $ 1.39 | $ 2.73 | $ 2.50 |
Basic (usd per share) | $ 1.51 | $ 1.40 | $ 2.74 | $ 2.51 |
Weighted-average number of ordinary shares outstanding | ||||
Diluted (shares) | 423.1 | 437.3 | 424.5 | 439.5 |
Basic (shares) | 421.6 | 435.2 | 422.8 | 437 |
Cash dividends declared per ordinary share (usd per share) | $ 0.71 | $ 0.66 | $ 1.42 | $ 1.32 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 636 | $ 611 | $ 1,158 | $ 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 |
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 |
Other comprehensive (loss) income, net of tax | ||||
Currency translation and related hedging instruments | (36) | (671) | 17 | (414) |
Pensions and other postretirement benefits | 32 | 56 | 53 | 82 |
Cash flow hedges | (26) | (9) | (33) | 4 |
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | (30) | (624) | 37 | (328) |
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ 606 | $ (14) | $ 1,195 | $ 770 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 412 | $ 283 |
Short-term investments | 385 | 157 |
Accounts receivable - net | 3,944 | 3,858 |
Inventory | 2,853 | 2,785 |
Prepaid expenses and other current assets | 532 | 507 |
Total current assets | 8,126 | 7,590 |
Land and buildings | 2,464 | 2,466 |
Machinery and equipment | 6,261 | 6,106 |
Gross property, plant and equipment | 8,725 | 8,572 |
Accumulated depreciation | (5,215) | (5,105) |
Net property, plant and equipment | 3,510 | 3,467 |
Other noncurrent assets | ||
Goodwill | 13,463 | 13,328 |
Other intangible assets | 4,766 | 4,846 |
Operating lease assets | 419 | 0 |
Deferred income taxes | 303 | 293 |
Other assets | 1,657 | 1,568 |
Total assets | 32,244 | 31,092 |
Current liabilities | ||
Short-term debt | 2 | 414 |
Current portion of long-term debt | 5 | 339 |
Accounts payable | 2,268 | 2,130 |
Accrued compensation | 357 | 457 |
Other current liabilities | 1,818 | 1,814 |
Total current liabilities | 4,450 | 5,154 |
Noncurrent liabilities | ||
Long-term debt | 8,079 | 6,768 |
Pension liabilities | 1,266 | 1,304 |
Other postretirement benefits liabilities | 324 | 321 |
Operating lease liabilities | 311 | 0 |
Deferred income taxes | 389 | 349 |
Other noncurrent liabilities | 1,064 | 1,054 |
Total noncurrent liabilities | 11,433 | 9,796 |
Shareholders’ equity | ||
Ordinary shares (420.0 million outstanding in 2019 and 423.6 million in 2018) | 4 | 4 |
Capital in excess of par value | 12,112 | 12,090 |
Retained Earnings | 8,300 | 8,161 |
Accumulated Other Comprehensive Loss | (4,108) | (4,145) |
Shares held in trust | (2) | (3) |
Total Eaton shareholders’ equity | 16,306 | 16,107 |
Noncontrolling interests | 55 | 35 |
Total equity | 16,361 | 16,142 |
Total liabilities and equity | $ 32,244 | $ 31,092 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net income | $ 1,158 | $ 1,098 |
Adjustments to reconcile to net cash provided by operating activities | ||
Depreciation and amortization | 442 | 457 |
Deferred income taxes | 7 | (109) |
Pension and other postretirement benefits expense | 75 | 82 |
Contributions to pension plans | (62) | (72) |
Contributions to other postretirement benefits plans | (6) | (12) |
Changes in working capital | (333) | (482) |
Other - net | 150 | (124) |
Net cash provided by operating activities | 1,431 | 838 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (298) | (280) |
Cash paid for acquisition of a business, net of cash acquired | (243) | 0 |
Sales (purchases) of short-term investments - net | (221) | 284 |
Proceeds for settlement of currency exchange contracts not designated as hedges - net | 50 | 0 |
Other - net | 2 | (41) |
Net cash provided by (used in) investing activities | (710) | (37) |
Financing activities | ||
Proceeds from borrowings | 1,232 | 500 |
Payments on borrowings | (757) | (486) |
Cash dividends paid | (609) | (578) |
Exercise of employee stock options | 25 | 21 |
Repurchase of shares | (440) | (600) |
Employee taxes paid from shares withheld | (44) | (23) |
Other - net | (6) | (2) |
Net cash provided by (used in) financing activities | (599) | (1,168) |
Effect of currency on cash | 7 | 62 |
Total increase (decrease) in cash | 129 | (305) |
Cash at the beginning of the period | 283 | 561 |
Cash at the end of the period | $ 412 | $ 256 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods. This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2018 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission. Leases The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease. Adoption of New Accounting Standards Eaton adopted Accounting Standard Update 2016-02, Leases (Topic 842), and related amendments, in the first quarter of 2019 using the optional transition method and has not restated prior periods. The Company elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the carry forward of historical lease classification of existing leases. The Company recorded a cumulative-effect adjustment of less than $1 to retained earnings as of January 1, 2019. Additionally, the adoption of the new standard resulted in the recording of lease assets and lease liabilities for operating leases of $435 and $446 , respectively, as of January 1, 2019. The adoption of the standard did not have a material impact to the Consolidated Statements of Income or Cash Flows. Eaton adopted Accounting Standard Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, in the first quarter 2019 using the modified retrospective approach for hedge instruments that existed at the date of adoption. ASU 2017-12 is intended to better align the Company's risk management activities with financial reporting for hedging relationships. The standard eliminates the requirement to separately measure and report hedge ineffectiveness, expands the ability to hedge specific risk components, and generally requires the change in value of the hedge instrument and hedged item to be presented in the same income statement line. The new disclosure requirements were applied on a prospective basis and comparative information has not been restated. The adoption of the standard did not have a material impact on the consolidated financial statements. |
ACQUISITION AND DIVESTITURE OF
ACQUISITION AND DIVESTITURE OF BUSINESSES | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition and Divestiture of Businesses | ACQUISITION AND DIVESTITURES OF BUSINESSES Acquired controlling interest of Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. On April 15, 2019, Eaton completed the acquisition of an 82.275% controlling interest in Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. (Ulusoy Elektrik), a leading manufacturer of electrical switchgear based in Ankara, Turkey, with a primary focus on medium-voltage solutions for industrial and utility customers. Its sales for the 12 months ended September 30, 2018 were $126 . The purchase price for the shares is approximately $214 on a cash and debt free basis. As required by the Turkish capital markets legislation, Eaton filed an application to execute a mandatory tender offer for the remaining shares shortly after the transaction closed. During the tender offer, Eaton purchased additional shares for $33 through July 2019 to increase its ownership interest to 93.7% . Ulusoy Elektrik is reported within the Electrical Systems and Services business segment. Acquisition of Innovative Switchgear Solutions, Inc. On July 19, 2019, Eaton acquired Innovative Switchgear Solutions, Inc. (ISG), a specialty manufacturer of medium-voltage electrical equipment serving the North American utility, commercial and industrial markets. Its 2018 sales were approximately $18 . ISG will be reported within the Electrical Systems and Services business segment. Commitment to acquire Souriau-Sunbank Connection Technologies On July 22, 2019, Eaton committed to acquire the Souriau-Sunbank Connection Technologies (Souriau-Sunbank) business of TransDigm Group Inc. for $920 . Headquartered in Versailles, France, Souriau-Sunbank is a global leader in highly engineered electrical interconnect solutions for harsh environments in the aerospace, defense, industrial, energy, and transport markets. Its sales for the 12 months ended June 30, 2019 were $363 . Completion of the acquisition is subject to the required consultation processes with works councils, customary closing conditions, regulatory approvals, and Transdigm’s completion of other required steps. The transaction is expected to close by the end of 2019. Spin-off of Lighting business On March 1, 2019, Eaton announced it plans to pursue a tax-free spin-off of its Lighting business. The spin-off will create an independent, publicly traded company and is expected to be completed by the end of 2019. Plan to divest Automotive Fluid Conveyance business |
ACQUISITION, INTEGRATION AND DI
ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES | 6 Months Ended |
Jun. 30, 2019 | |
Acquisition, Integration and Divestiture Charges [Abstract] | |
ACQUISITION INTEGRATION CHARGES | ACQUISITION INTEGRATION AND DIVESTITURE CHARGES Eaton incurs integration charges related to acquired businesses, and transaction and other charges to divest businesses. A summary of these charges follows: Three months ended Six months ended 2019 2018 2019 2018 Electrical Products $ 1 $ — $ 2 $ — Electrical Systems and Services 1 — 1 — Corporate 12 — 23 — Total acquisition integration and divestiture charges before income tax 14 — 26 — Income taxes — — 1 — Total after income taxes $ 14 $ — $ 25 $ — Per ordinary share - diluted $ 0.03 $ — $ 0.06 $ — Business segment charges in 2019 are related to the planned spin-off of the Lighting business and the acquisition of Ulusoy Elektrik, and were included in Selling and administrative expense. In Business Segment Information, the charges reduced Operating profit of the related business segment. Corporate charges in 2019 are primarily related to the planned spin-off of the Lighting business and were included in Selling and administrative expense. In Business Segment Information, the charges were included in Other corporate expense - net. See Note 15 for additional information about business segments. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services. The Company’s six operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market. Three months ended June 30, 2019 Net sales United States Rest of World Total Electrical Products $ 1,115 $ 734 $ 1,849 Electrical Systems and Services 1,049 533 1,582 Hydraulics 306 392 698 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 299 $ 218 517 Commercial Passenger and Light Duty Vehicle $ 425 $ 378 803 eMobility 84 Total $ 5,533 Three months ended June 30, 2018 Net sales United States Rest of World Total Electrical Products $ 1,033 $ 773 $ 1,806 Electrical Systems and Services 983 530 1,513 Hydraulics 309 414 723 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 266 $ 197 463 Commercial Passenger and Light Duty Vehicle $ 452 $ 447 899 eMobility 83 Total $ 5,487 Six months ended June 30, 2019 Net sales United States Rest of World Total Electrical Products $ 2,162 $ 1,447 $ 3,609 Electrical Systems and Services 2,025 1,021 3,046 Hydraulics 596 788 1,384 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 586 $ 433 1,019 Commercial Passenger and Light Duty Vehicle $ 856 $ 757 1,613 eMobility 167 Total $ 10,838 Six months ended June 30, 2018 Net sales United States Rest of World Total Electrical Products $ 1,993 $ 1,545 $ 3,538 Electrical Systems and Services 1,877 1,017 2,894 Hydraulics 606 827 1,433 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 530 $ 391 921 Commercial Passenger and Light Duty Vehicle $ 882 $ 910 1,792 eMobility 160 Total $ 10,738 The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivables from customers were $3,585 and $3,402 at June 30, 2019 and December 31, 2018 , respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $93 and $94 at June 30, 2019 and December 31, 2018 , respectively, and are recorded in Prepaid expenses and other current assets. Changes in the deferred revenue liabilities are as follows: Deferred Revenue Balance at December 31, 2018 $ 248 Customer deposits and billings 440 Revenue recognized in the period (440 ) Translation 5 Balance at June 30, 2019 $ 253 Deferred Revenue Balance at January 1, 2018 $ 227 Customer deposits and billings 463 Revenue recognized in the period (443 ) Translation (3 ) Balance at June 30, 2018 $ 244 A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at June 30, 2019 and December 31, 2018 was approximately $5.5 billion and $5.3 billion , respectively. At both June 30, 2019 and December 31, 2018 , Eaton expects to recognize approximately 87% |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Change in the carrying amount of goodwill by segment follows: December 31, Additions Translation June 30, Electrical Products $ 6,562 $ — $ (12 ) $ 6,550 Electrical Systems and Services 4,241 144 13 4,398 Hydraulics 1,212 — (10 ) 1,202 Aerospace 941 — — 941 Vehicle 292 — — 292 eMobility 80 — — 80 Total $ 13,328 $ 144 $ (9 ) $ 13,463 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES Eaton leases certain manufacturing facilities, warehouses, distribution centers, office space, vehicles and equipment. Most real estate leases contain renewal options. The exercise of lease renewal options is at the Company's sole discretion. The Company's lease agreements typically do not contain any significant guarantees of asset values at the end of a lease or restrictive covenants. Payments within certain lease agreements are adjusted periodically for changes in an index or rate. The components of lease expense follows: Three months ended June 30, 2019 Six months ended June 30, 2019 Operating lease cost $ 36 $ 78 Finance lease cost: Amortization of lease assets 1 2 Interest on lease liabilities 1 1 Short-term lease cost 14 27 Variable lease cost 7 11 Sublease income (1 ) (2 ) Total lease cost $ 58 $ 117 The net amount recorded on sale leaseback transactions for the three and six months ended June 30, 2019 were losses of $2 and gains of $16 , respectively. Supplemental cash flow information related to leases follows: Six months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ (76 ) Operating cash outflows - interest payments on finance leases (1 ) Financing cash outflows - payments on finance lease obligations (2 ) Lease assets obtained in exchange for new lease obligations: Operating leases $ 42 Finance leases 12 Supplemental balance sheet information related to leases follows: June 30, 2019 Operating Leases Operating lease assets $ 419 Other current liabilities 121 Operating lease liabilities 311 Total operating lease liabilities $ 432 Finance Leases Land and buildings $ 18 Machinery and equipment 12 Accumulated depreciation (13 ) Net property, plant and equipment $ 17 Current portion of long-term debt $ 5 Long-term debt 13 Total finance lease liabilities $ 18 Weighted-average remaining lease term Operating leases 5.2 years Finance leases 4.1 years Weighted-average discount rate Operating leases 3.6 % Finance leases 6.1 % Maturities of lease liabilities at June 30, 2019 follows: Operating Leases Finance Leases 2019 $ 74 $ 3 2020 126 6 2021 94 5 2022 63 3 2023 43 3 Thereafter 87 1 Total lease payments $ 487 $ 21 Less imputed interest 55 3 Total present value of lease liabilities $ 432 $ 18 A summary of minimum rental commitments at December 31, 2018 under noncancelable operating leases, which expire at various dates and in most cases contain renewal options, for each of the next five years and thereafter in the aggregate, follow: Operating Leases 2019 $ 165 2020 133 2021 106 2022 75 2023 53 Thereafter 110 Total lease commitments $ 642 |
DEBT DEBT
DEBT DEBT | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT On May 14, 2019, a subsidiary of Eaton issued euro denominated notes (2019 Euro Notes) with a face value of €1,100 ( $1,232 based on the May 14, 2019 spot rate), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2019 Euro Notes are comprised of two tranches of €600 and €500 , which mature in 2021 and 2025, respectively, with interest payable annually at a respective rate of 0.02% and 0.70% . The issuer received proceeds totaling €1,097 ( $1,229 based on the May 14, 2019 spot rate) from the issuance, net of financing costs and discounts. The 2019 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2019 Euro Notes contain customary optional redemption and par call provisions. The 2019 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2019 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense-net over the respective terms of the 2019 Euro Notes. The 2019 Euro Notes are subject to customary non-financial covenants. |
RETIREMENT BENEFITS PLANS
RETIREMENT BENEFITS PLANS | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
RETIREMENT BENEFITS PLANS | RETIREMENT BENEFITS PLANS The components of retirement benefits expense follow: United States Non-United States Other postretirement Three months ended June 30 2019 2018 2019 2018 2019 2018 Service cost $ 23 $ 25 $ 15 $ 16 $ 1 $ — Interest cost 34 31 14 13 4 4 Expected return on plan assets (59 ) (64 ) (27 ) (26 ) (1 ) (1 ) Amortization 16 23 9 10 (4 ) (3 ) 14 15 11 13 — — Settlements 13 11 1 — — — Total expense $ 27 $ 26 $ 12 $ 13 $ — $ — United States Non-United States Other postretirement Six months ended June 30 2019 2018 2019 2018 2019 2018 Service cost $ 46 $ 50 $ 29 $ 32 $ 1 $ 1 Interest cost 68 61 29 27 7 7 Expected return on plan assets (117 ) (127 ) (54 ) (53 ) (1 ) (2 ) Amortization 31 47 19 20 (7 ) (6 ) 28 31 23 26 — — Settlements 23 25 1 — — — Total expense $ 51 $ 56 $ 24 $ 26 $ — $ — |
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL CONTINGENCIES | LEGAL CONTINGENCIES Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, patent infringement, personal injuries, antitrust matters, and employment-related matters. Eaton is also subject to asbestos claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with these claims and proceedings. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the consolidated financial statements. In December 2011, Pepsi-Cola Metropolitan Bottling Company, Inc. (“Pepsi”) filed an action against (a) Cooper Industries, LLC, Cooper Industries, Ltd., Cooper Holdings, Ltd., Cooper US, Inc., and Cooper Industries plc (collectively, “Cooper”), (b) M&F Worldwide Corp., Mafco Worldwide Corp., Mafco Consolidated Group LLC, and PCT International Holdings, Inc. (collectively, “Mafco”), and (c) the Pneumo Abex Asbestos Claims Settlement Trust (the “Trust”) in Texas state court. Pepsi alleged that it was harmed by a 2011 settlement agreement (“2011 Settlement”) among Cooper, Mafco, and Pneumo Abex, LLC (“Pneumo,” which prior to the 2011 Settlement was a Mafco subsidiary), which settlement resolved litigation that Pneumo had previously brought against Cooper involving, among other things, a guaranty related to Pneumo’s friction products business. In November 2015, after a Texas court ruled that Pepsi's claims should be heard in arbitration, Pepsi filed a demand for arbitration against Cooper, Mafco, the Trust, and Pneumo. Pepsi subsequently dropped claims against all parties except Cooper. An arbitration under the auspices of the American Arbitration Association commenced in October 2017. Pepsi’s experts opined, among other things, that the value contributed to the Trust for a release of the guaranty was below reasonably equivalent value, and that an inability of Pneumo to satisfy future liabilities could result in plaintiffs suing Pepsi under various theories. Cooper submitted various expert reports and, among other things, Cooper’s experts opined that Pepsi had no basis to seek any damages and that Cooper paid reasonably equivalent value for the release of its indemnity obligations under the guaranty. The arbitration proceedings closed in December 2017. On July 11, 2018, the arbitration panel made certain findings and concluded that the value contributed to the Trust did not constitute reasonably equivalent value, but ordered the parties to recalculate the amount that should have been contributed to the Trust as of the date of the 2011 transaction. Based on the findings made by the panel and the recalculation ordered by the panel, Cooper believed that no additional amount should be contributed. Pepsi argued that an additional $347 should be contributed. Cooper and its expert disagreed with Pepsi’s argument and believed that Pepsi’s recalculation was flawed and failed to comply with the instructions of the panel. On August 23, 2018, the panel issued its final award and ordered Cooper to pay $293 to Pneumo Abex. On August 30, 2018, Pepsi sought to confirm the award in Texas state court, which Cooper opposed on October 9, 2018. Cooper further requested that the court vacate the award on various grounds, including that Cooper was prejudiced by the conduct of the proceedings, the panel exceeded its powers, and because the panel denied Cooper a full and fair opportunity to present certain evidence. The court confirmed the award at the confirmation hearing, which was held on October 12, 2018. On November 2, 2018, the Company appealed. On November 28, 2018, the Company paid $297 , the full judgment plus accrued post-judgment interest, to Pneumo Abex and preserved its rights, including to appeal. On April 25, 2019, the appeal that Cooper filed was dismissed. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective income tax rate for the second quarter and the first six months of 2019 was expense of 13.9% and 13.7% compared to expense of 12.0% and 12.8% for the second quarter and first six months of 2018 . The increase in the effective tax rate in the second quarter and first six months of 2019 was due to greater levels of income in higher tax jurisdictions. As the Company has previously disclosed, Eaton's United States subsidiaries ("Eaton US") received a Notice in 2014 from the Internal Revenue Service ("IRS") for tax years 2007 through 2010 which included proposed assessments involving two issues: the recognition of income for several of Eaton US's controlled foreign corporations, and transfer pricing adjustments for products manufactured in the Company's facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the United States. The Company believed the proposed assessments were without merit and contested both matters in the United States Tax Court ("Tax Court"). Eaton US and the IRS both moved for partial summary judgment on the controlled foreign corporation income recognition issue. The Tax Court heard oral arguments on the motions in January 2018, following which the Court ordered further briefing, which was completed in March 2018. On February 25, 2019, the Tax Court granted the IRS's motion for partial summary judgment and denied Eaton's. The Company intends to appeal the Tax Court's partial summary judgment decision to the United States Sixth Circuit Court of Appeals. The Company believes that it will be successful on appeal and has not recorded any additional impact of the Tax Court's decision in its consolidated financial statements. As previously disclosed, the transfer pricing issue included in the Notice remains unresolved at this point. The total potential impact of the Tax Court's partial summary judgment decision on the controlled foreign corporation income recognition issue is not estimable until all matters in the open tax years have been resolved. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | EQUITY On February 24, 2016, the Board of Directors adopted a share repurchase program for share repurchases up to $2,500 of ordinary shares (2016 Program). During the three and six months ended June 30, 2018 , 4.0 million and 7.7 million ordinary shares, respectively, were repurchased under the 2016 Program in the open market at a total cost of $300 and $600 , respectively. On February 27, 2019, the Board of Directors adopted a new share repurchase program for share repurchases up to $5,000 of ordinary shares (2019 Program). Under the 2019 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 and six months ended June 30, 2019 , 3.2 million and 5.1 million ordinary shares, respectively, were repurchased under the 2019 Program in the open market at a total cost of $260 and $410 , respectively. The changes in Shareholders’ equity follow: 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 December 31, 2018 423.6 $ 4 $ 12,090 $ 8,161 $ (4,145 ) $ (3 ) $ 16,107 $ 35 $ 16,142 Net income — — — 522 — — 522 — 522 Other comprehensive income, net of tax 67 67 — 67 Cash dividends paid and accrued — — — (309 ) — — (309 ) (1 ) (310 ) Issuance of shares under equity-based compensation plans 1.4 — (5 ) 1 — — (4 ) — (4 ) Repurchase of shares (1.9 ) — — (150 ) — — (150 ) — (150 ) Balance at March 31, 2019 423.1 $ 4 $ 12,085 $ 8,225 $ (4,078 ) $ (3 ) $ 16,233 $ 34 $ 16,267 Net income — — — 636 — — 636 — 636 Other comprehensive loss, net of tax (30 ) (30 ) (30 ) Cash dividends paid — — — (300 ) — — (300 ) (1 ) (301 ) Issuance of shares under equity-based compensation plans 0.1 — 27 (1 ) — 1 27 — 27 Acquisition of a business — — — — — — — 51 51 Acquisition of noncontrolling interest obtained through tender offer — — — — — — — (29 ) (29 ) Repurchase of Shares (3.2 ) — — (260 ) — — (260 ) — (260 ) Balance at June 30, 2019 420.0 $ 4 $ 12,112 $ 8,300 $ (4,108 ) $ (2 ) $ 16,306 $ 55 $ 16,361 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 December 31, 2017 439.9 $ 4 $ 11,987 $ 8,669 $ (3,404 ) $ (3 ) $ 17,253 $ 37 $ 17,290 Cumulative-effect adjustment upon adoption of ASU 2014-09 — — — (2 ) — — (2 ) — (2 ) Cumulative-effect adjustment upon adoption of ASU 2016-16 — — — (199 ) — — (199 ) — (199 ) Net income — — — 488 — — 488 (1 ) 487 Other comprehensive income, net of tax 296 296 — 296 Cash dividends paid and accrued — — — (290 ) — — (290 ) — (290 ) Issuance of shares under equity-based compensation plans 1.1 — 18 (1 ) — — 17 — 17 Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — 2 2 Repurchase of shares (3.7 ) — — (300 ) — — (300 ) — (300 ) Balance at March 31, 2018 437.3 $ 4 $ 12,005 $ 8,365 $ (3,108 ) $ (3 ) $ 17,263 $ 38 $ 17,301 Net income — — — 610 — — 610 1 611 Other comprehensive loss, net of tax — (624 ) (624 ) (624 ) Cash dividends paid — — — (288 ) — — (288 ) (1 ) (289 ) Issuance of shares under equity-based compensation plans — — 28 — — 1 29 — 29 Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — (3 ) (3 ) Repurchase of Shares (4.0 ) — — (300 ) — — (300 ) — (300 ) Balance at June 30, 2018 433.3 $ 4 $ 12,033 $ 8,387 $ (3,732 ) $ (2 ) $ 16,690 $ 35 $ 16,725 The changes in Accumulated other comprehensive loss follow: Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow hedges Total Balance at December 31, 2018 $ (2,864 ) $ (1,278 ) $ (3 ) $ (4,145 ) Other comprehensive (loss) income before reclassifications 17 — (30 ) (13 ) Amounts reclassified from Accumulated other comprehensive loss — 53 (3 ) 50 Net current-period Other comprehensive (loss) income 17 53 (33 ) 37 Balance at June 30, 2019 $ (2,847 ) $ (1,225 ) $ (36 ) $ (4,108 ) The reclassifications out of Accumulated other comprehensive loss follow: Six months ended June 30, 2019 Consolidated statements of income classification Amortization of defined benefit pensions and other postretirement benefits items Actuarial loss and prior service cost $ (67 ) 1 Tax benefit 14 Total, net of tax (53 ) Gains and (losses) on cash flow hedges Currency exchange contracts 4 Cost of products sold Tax expense (1 ) Total, net of tax 3 Total reclassifications for the period $ (50 ) 1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 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 follows: Three months ended Six months ended (Shares in millions) 2019 2018 2019 2018 Net income attributable to Eaton ordinary shareholders $ 636 $ 610 $ 1,158 $ 1,098 Weighted-average number of ordinary shares outstanding - diluted 423.1 437.3 424.5 439.5 Less dilutive effect of equity-based compensation 1.5 2.1 1.7 2.5 Weighted-average number of ordinary shares outstanding - basic 421.6 435.2 422.8 437.0 Net income per share attributable to Eaton ordinary shareholders Diluted $ 1.50 $ 1.39 $ 2.73 $ 2.50 Basic 1.51 1.40 2.74 2.51 For the second quarter and first six months of 2019 , 0.8 million and 1.2 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. For the second quarter and first six months of 2018 , 0.6 million and 0.3 million |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. A summary of financial instruments recognized at fair value, and the fair value measurements used, follows: Total Level 1 Level 2 Level 3 June 30, 2019 Cash $ 412 $ 412 $ — $ — Short-term investments 385 385 — — Net derivative contracts 33 — 33 — December 31, 2018 Cash $ 283 $ 283 $ — $ — Short-term investments 157 157 — — Net derivative contracts 14 — 14 — 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. Other Fair Value Measurements Long-term debt and the current portion of long-term debt had a carrying value of $8,084 and fair value of $8,513 at June 30, 2019 compared to $7,107 and $7,061 , respectively, at December 31, 2018 . The fair value of Eaton's debt instruments were estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities, and are considered a Level 2 fair value measurement. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and, commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes. Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated, and is effective, as part of a hedging relationship and, if so, as to the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as: • Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value. • Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income. • Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income. The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Condensed Consolidated Statements of Cash Flows. For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business. Eaton uses certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). Foreign currency denominated debt designated as a non-derivative net investment hedging instrument had a carrying value on a pre-tax basis of $1,867 at June 30, 2019 and $623 at December 31, 2018 . Derivative Financial Statement Impacts The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows: Notional amount Other current assets Other noncurrent assets Other current liabilities Other noncurrent liabilities Type of hedge Term June 30, 2019 Derivatives designated as hedges Fixed-to-floating interest rate swaps $ 2,225 $ — $ 59 $ — $ 1 Fair value 18 months to 16 years Forward starting floating-to-fixed interest rate swaps 300 — — — 30 Cash flow 34 years Currency exchange contracts 1,132 9 — 9 12 Cash flow 1 to 36 months Commodity contracts 12 — — — — Cash flow 1 to 7 months Total $ 9 $ 59 $ 9 $ 43 Derivatives not designated as hedges Currency exchange contracts $ 4,718 $ 35 $ 18 1 to 12 months Commodity contracts 4 — — 1 month Total $ 35 $ 18 December 31, 2018 Derivatives designated as hedges Fixed-to-floating interest rate swaps $ 2,550 $ — $ 22 $ 1 $ 26 Fair value 3 months to 16 years Forward starting floating-to-fixed interest rate swaps 100 — — — 3 Cash flow 34 years Currency exchange contracts 951 19 2 11 8 Cash flow 1 to 36 months Total $ 19 $ 24 $ 12 $ 37 Derivatives not designated as hedges Currency exchange contracts $ 3,886 $ 40 $ 20 1 to 12 months Total $ 40 $ 20 The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. For the six months ended June 30, 2019 , $50 of cash inflow resulting from the settlement of these derivatives has been classified in investing activities on the Condensed Consolidated Statement of Cash Flows. The net cash flow from the settlement of these derivatives has been presented in operating activities in prior periods and have not been restated as such amounts are not material. As of June 30, 2019 , the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions: June 30, 2019 Commodity (millions of pounds) Term Copper 5 1 to 7 months The following amounts were recorded on the consolidated balance sheet related to fixed-to-floating interest rate swaps: 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 Sheet June 30, 2019 June 30, 2019 Long-term debt $ (2,838 ) $ (100 ) (a) At June 30, 2019 , these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $42 . The impact of hedging activities to the Consolidated Statement of Income are as follow: Three months ended June 30, 2019 Net Sales Cost of products sold Interest expense - net Amounts from Consolidated Statement of Income $ 5,533 $ 3,697 $ 63 Gain (loss) on derivatives designated as cash flow hedges Currency exchange contracts Hedged item $ 2 $ (4 ) $ — Derivative designated as hedging instrument (2 ) 4 — Commodity contracts Hedged item $ — $ — $ — Derivative designated as hedging instrument — — — Gain (loss) on derivatives designated as fair value hedges Fixed-to-floating interest rate swaps Hedged item $ — $ — $ (40 ) Derivative designated as hedging instrument — — 40 Six months ended June 30, 2019 Net Sales Cost of products sold Interest expense - net Amounts from Consolidated Statement of Income $ 10,838 $ 7,270 $ 129 Gain (loss) on derivatives designated as cash flow hedges Currency exchange contracts Hedged item $ 5 $ (9 ) $ — Derivative designated as hedging instrument (5 ) 9 — Commodity contracts Hedged item $ — $ — $ — Derivative designated as hedging instrument — — — Gain (loss) on derivatives designated as fair value hedges Fixed-to-floating interest rate swaps Hedged item $ — $ — $ (63 ) Derivative designated as hedging instrument — — 63 The impact of derivatives not designated as hedges to the Consolidated Statement of Income are as follow: Gain (loss) recognized in Consolidated Statement of Income Consolidated Statement of Income classification Three months ended 2019 Gain (loss) on derivatives not designated as hedges Currency exchange contracts $ 8 Other income - net Commodity Contracts (1 ) Cost of products sold Total $ 7 Gain (loss) recognized in Consolidated Statement of Income Consolidated Statement of Income classification Six months ended 2019 Gain (loss) on derivatives not designated as hedges Currency exchange contracts $ 48 Other income - net Commodity Contracts — Cost of products sold Total $ 48 The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statement of Income and Comprehensive Income follow: 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 Three months ended 2019 2018 2019 2018 Derivatives designated as cash flow hedges Forward starting floating-to-fixed interest rate swaps $ (18 ) $ — Interest expense - net $ — $ — Currency exchange contracts (10 ) (15 ) Cost of products sold 2 (4 ) Commodity contracts (2 ) — Cost of products sold — — Non-derivative designated as net investment hedges Foreign currency denominated debt — 41 Other income - net — — Total $ (30 ) $ 26 $ 2 $ (4 ) Gain (loss) recognized in Location of gain (loss) Gain (loss) reclassified Six months ended Six months ended 2019 2018 2019 2018 Derivatives designated as cash Forward starting floating-to-fixed $ (27 ) $ — Interest expense - net $ — $ — Currency exchange contracts (10 ) (2 ) Cost of products sold 4 (8 ) Commodity contracts — — Cost of products sold — — Non-derivative designated as net investment hedges Foreign currency denominated debt 12 17 Other income - net — — Total $ (25 ) $ 15 $ 4 $ (8 ) At June 30, 2019 and June 30, 2018 , $0 and a loss of $5 |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory is carried at lower of cost or net realizable value. The components of inventory follow: June 30, December 31, Raw materials $ 1,089 $ 1,077 Work-in-process 565 500 Finished goods 1,199 1,208 Total inventory $ 2,853 $ 2,785 |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Eaton’s operating segments are Electrical Products, Electrical Systems and Services, Hydraulics, Aerospace, Vehicle, and eMobility. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton’s business segments, see Note 16 to the Consolidated Financial Statements contained in the 2018 Form 10-K. Three months ended Six months ended 2019 2018 2019 2018 Net sales Electrical Products $ 1,849 $ 1,806 $ 3,609 $ 3,538 Electrical Systems and Services 1,582 1,513 3,046 2,894 Hydraulics 698 723 1,384 1,433 Aerospace 517 463 1,019 921 Vehicle 803 899 1,613 1,792 eMobility 84 83 167 160 Total net sales $ 5,533 $ 5,487 $ 10,838 $ 10,738 Segment operating profit Electrical Products $ 361 $ 334 $ 692 $ 641 Electrical Systems and Services 275 227 467 394 Hydraulics 80 101 160 191 Aerospace 127 90 243 179 Vehicle 136 166 258 298 eMobility 7 14 12 25 Total segment operating profit 986 932 1,832 1,728 Corporate Amortization of intangible assets (94 ) (96 ) (187 ) (194 ) Interest expense - net (63 ) (68 ) (129 ) (138 ) Pension and other postretirement benefits expense (2 ) 1 (2 ) (1 ) Other corporate expense - net (89 ) (75 ) (173 ) (136 ) Income before income taxes 738 694 1,341 1,259 Income tax expense 102 83 183 161 Net income 636 611 1,158 1,098 Less net income for noncontrolling interests — (1 ) — — Net income attributable to Eaton ordinary shareholders $ 636 $ 610 $ 1,158 $ 1,098 |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Condensed Consolidating Financial Information [Abstract] | |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | CONDENSED CONSOLIDATING FINANCIAL STATEMENTS The Registered Senior Notes issued by Eaton Corporation are registered under the Securities Act of 1933. Eaton and certain 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 Registered 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. See Note 7 of Eaton's 2018 Form 10-K for additional information related to the Registered Senior Notes. 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 2019 and 2018 , 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. These restructurings have been reflected as of the beginning of the earliest period presented below. CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 1,824 $ 1,902 $ 3,134 $ (1,327 ) $ 5,533 Cost of products sold — 1,421 1,377 2,230 (1,331 ) 3,697 Selling and administrative expense 2 360 205 340 — 907 Research and development expense — 35 37 79 — 151 Interest expense (income) - net — 66 5 (7 ) (1 ) 63 Other expense (income) - net (1 ) 6 (14 ) (14 ) — (23 ) Equity in loss (earnings) of subsidiaries, net of tax (647 ) (176 ) (731 ) (660 ) 2,214 — Intercompany expense (income) - net 10 38 426 (474 ) — — Income (loss) before income taxes 636 74 597 1,640 (2,209 ) 738 Income tax expense (benefit) — 6 (23 ) 118 1 102 Net income (loss) 636 68 620 1,522 (2,210 ) 636 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 636 $ 68 $ 620 $ 1,522 $ (2,210 ) $ 636 Other comprehensive income (loss) $ (30 ) $ 10 $ (19 ) $ 2 $ 7 $ (30 ) Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ 606 $ 78 $ 601 $ 1,524 $ (2,203 ) $ 606 CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 1,809 $ 1,790 $ 3,242 $ (1,354 ) $ 5,487 Cost of products sold — 1,427 1,289 2,312 (1,357 ) 3,671 Selling and administrative expense 2 396 200 303 — 901 Research and development expense — 37 35 73 — 145 Interest expense (income) - net — 67 4 (6 ) 3 68 Other expense (income) - net (37 ) 9 36 — — 8 Equity in loss (earnings) of subsidiaries, net of tax (587 ) (189 ) (899 ) (642 ) 2,317 — Intercompany expense (income) - net 12 24 557 (593 ) — — Income (loss) before income taxes 610 38 568 1,795 (2,317 ) 694 Income tax expense (benefit) — (7 ) (14 ) 104 — 83 Net income (loss) 610 45 582 1,691 (2,317 ) 611 Less net loss (income) for noncontrolling interests — — — (1 ) — (1 ) Net income (loss) attributable to Eaton ordinary shareholders $ 610 $ 45 $ 582 $ 1,690 $ (2,317 ) $ 610 Other comprehensive income (loss) $ (624 ) $ (25 ) $ (584 ) $ (1,381 ) $ 1,990 $ (624 ) Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ (14 ) $ 20 $ (2 ) $ 309 $ (327 ) $ (14 ) CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 3,582 $ 3,722 $ 6,172 $ (2,638 ) $ 10,838 Cost of products sold — 2,811 2,666 4,425 (2,632 ) 7,270 Selling and administrative expense 6 721 410 687 — 1,824 Research and development expense — 76 75 156 — 307 Interest expense (income) - net — 135 9 (13 ) (2 ) 129 Other expense (income) - net (13 ) (2 ) (22 ) 4 — (33 ) Equity in loss (earnings) of subsidiaries, net of tax (1,174 ) (482 ) (1,562 ) (1,395 ) 4,613 — Intercompany expense (income) - net 23 2 873 (898 ) — — Income (loss) before income taxes 1,158 321 1,273 3,206 (4,617 ) 1,341 Income tax expense (benefit) — 15 (35 ) 204 (1 ) 183 Net income (loss) 1,158 306 1,308 3,002 (4,616 ) 1,158 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 1,158 $ 306 $ 1,308 $ 3,002 $ (4,616 ) $ 1,158 Other comprehensive income (loss) $ 37 $ 4 $ 53 $ 93 $ (150 ) $ 37 Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ 1,195 $ 310 $ 1,361 $ 3,095 $ (4,766 ) $ 1,195 CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 3,498 $ 3,490 $ 6,433 $ (2,683 ) $ 10,738 Cost of products sold — 2,779 2,525 4,622 (2,682 ) 7,244 Selling and administrative expense 5 737 378 670 — 1,790 Research and development expense — 76 76 149 — 301 Interest expense (income) - net — 135 8 (7 ) 2 138 Other expense (income) - net (19 ) 14 27 (16 ) — 6 Equity in loss (earnings) of subsidiaries, net of tax (1,101 ) (437 ) (1,696 ) (1,283 ) 4,517 — Intercompany expense (income) - net 17 2 1,044 (1,063 ) — — Income (loss) before income taxes 1,098 192 1,128 3,361 (4,520 ) 1,259 Income tax expense (benefit) — (13 ) (28 ) 203 (1 ) 161 Net income (loss) 1,098 205 1,156 3,158 (4,519 ) 1,098 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 1,098 $ 205 $ 1,156 $ 3,158 $ (4,519 ) $ 1,098 Other comprehensive income (loss) $ (328 ) $ (15 ) $ (300 ) $ (772 ) $ 1,087 $ (328 ) Total comprehensive income (loss) attributable to Eaton $ 770 $ 190 $ 856 $ 2,386 $ (3,432 ) $ 770 CONDENSED CONSOLIDATING BALANCE SHEETS JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Assets Current assets Cash $ 1 $ 70 $ 9 $ 332 $ — $ 412 Short-term investments — 100 — 285 — 385 Accounts receivable - net — 608 1,170 2,166 — 3,944 Intercompany accounts receivable 2 739 2,102 2,416 (5,259 ) — Inventory — 537 854 1,544 (82 ) 2,853 Prepaid expenses and other current assets — 96 29 391 16 532 Total current assets 3 2,150 4,164 7,134 (5,325 ) 8,126 Property, plant and equipment - net — 851 670 1,989 — 3,510 Other noncurrent assets Goodwill — 1,330 6,705 5,428 — 13,463 Other intangible assets — 124 2,980 1,662 — 4,766 Operating lease assets — 148 59 212 — 419 Deferred income taxes — 297 — 292 (286 ) 303 Investment in subsidiaries 17,693 26,501 72,600 26,986 (143,780 ) — Intercompany loans receivable 9 5,703 6,962 59,617 (72,291 ) — Other assets — 777 156 724 — 1,657 Total assets $ 17,705 $ 37,881 $ 94,296 $ 104,044 $ (221,682 ) $ 32,244 Liabilities and shareholders’ equity Current liabilities Short-term debt $ — $ — $ — $ 2 $ — $ 2 Current portion of long-term debt — 3 — 2 — 5 Accounts payable — 484 472 1,312 — 2,268 Intercompany accounts payable 8 1,245 2,852 1,154 (5,259 ) — Accrued compensation — 76 45 236 — 357 Other current liabilities 1 539 265 1,014 (1 ) 1,818 Total current liabilities 9 2,347 3,634 3,720 (5,260 ) 4,450 Noncurrent liabilities Long-term debt — 5,886 2,187 6 — 8,079 Pension liabilities — 379 128 759 — 1,266 Other postretirement benefits liabilities — 167 83 74 — 324 Operating lease liabilities — 108 45 158 — 311 Deferred income taxes — — 474 201 (286 ) 389 Intercompany loans payable 1,390 5,347 64,429 1,125 (72,291 ) — Other noncurrent liabilities — 400 295 369 — 1,064 Total noncurrent liabilities 1,390 12,287 67,641 2,692 (72,577 ) 11,433 Shareholders’ equity Eaton shareholders' equity 16,306 23,247 23,021 97,577 (143,845 ) 16,306 Noncontrolling interests — — — 55 — 55 Total equity 16,306 23,247 23,021 97,632 (143,845 ) 16,361 Total liabilities and equity $ 17,705 $ 37,881 $ 94,296 $ 104,044 $ (221,682 ) $ 32,244 CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Assets Current assets Cash $ 1 $ 21 $ — $ 261 $ — $ 283 Short-term investments — — — 157 — 157 Accounts receivable - net — 483 1,400 1,975 — 3,858 Intercompany accounts receivable — 1,575 1,851 2,968 (6,394 ) — Inventory — 540 766 1,555 (76 ) 2,785 Prepaid expenses and other current assets — 107 32 354 14 507 Total current assets 1 2,726 4,049 7,270 (6,456 ) 7,590 Property, plant and equipment - net — 843 678 1,946 — 3,467 Other noncurrent assets Goodwill — 1,330 6,705 5,293 — 13,328 Other intangible assets — 128 3,054 1,664 — 4,846 Deferred income taxes — 340 — 288 (335 ) 293 Investment in subsidiaries 16,476 25,956 71,334 25,557 (139,323 ) — Intercompany loans receivable 1,508 5,912 8,406 59,078 (74,904 ) — Other assets — 746 117 705 — 1,568 Total assets $ 17,985 $ 37,981 $ 94,343 $ 101,801 $ (221,018 ) $ 31,092 Liabilities and shareholders’ equity Current liabilities Short-term debt $ — $ 388 $ — $ 26 $ — $ 414 Current portion of long-term debt — 338 — 1 — 339 Accounts payable — 476 416 1,238 — 2,130 Intercompany accounts payable 32 1,127 3,206 2,029 (6,394 ) — Accrued compensation — 135 71 251 — 457 Other current liabilities 30 525 259 1,002 (2 ) 1,814 Total current liabilities 62 2,989 3,952 4,547 (6,396 ) 5,154 Noncurrent liabilities Long-term debt — 5,814 945 7 2 6,768 Pension liabilities — 383 130 791 — 1,304 Other postretirement benefits liabilities — 166 83 72 — 321 Deferred income taxes — 1 508 175 (335 ) 349 Intercompany loans payable 1,816 5,182 66,507 1,399 (74,904 ) — Other noncurrent liabilities — 389 291 374 — 1,054 Total noncurrent liabilities 1,816 11,935 68,464 2,818 (75,237 ) 9,796 Shareholders’ equity Eaton shareholders' equity 16,107 23,057 21,927 94,401 (139,385 ) 16,107 Noncontrolling interests — — — 35 — 35 Total equity 16,107 23,057 21,927 94,436 (139,385 ) 16,142 Total liabilities and equity $ 17,985 $ 37,981 $ 94,343 $ 101,801 $ (221,018 ) $ 31,092 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net cash provided by (used in) operating activities $ (49 ) $ 685 $ 366 $ 429 $ — $ 1,431 Investing activities Capital expenditures for property, plant and equipment — (50 ) (56 ) (192 ) — (298 ) Cash paid for acquisition of a business, net of cash acquired — — — (243 ) — (243 ) Sales (purchases) of short-term — (100 ) — (121 ) — (221 ) Loans to affiliates — (292 ) (280 ) (3,260 ) 3,832 — Repayments of loans from affiliates — 556 — 1,982 (2,538 ) — Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net — (1 ) — 51 — 50 Other - net — (15 ) 26 (9 ) — 2 Net cash provided by (used in) investing activities — 98 (310 ) (1,792 ) 1,294 (710 ) Financing activities Proceeds from borrowings — — 1,232 — — 1,232 Payments on borrowings — (728 ) — (29 ) — (757 ) Proceeds from borrowings from affiliates 1,089 1,790 381 572 (3,832 ) — Payments on borrowings from affiliates (16 ) (1,607 ) (458 ) (457 ) 2,538 — Other intercompany financing activities — (154 ) (1,191 ) 1,345 — — Cash dividends paid (609 ) — — — — (609 ) Exercise of employee stock options 25 — — — — 25 Repurchase of shares (440 ) — — — — (440 ) Employee taxes paid from shares withheld — (35 ) (7 ) (2 ) — (44 ) Other - net — — (4 ) (2 ) — (6 ) Net cash provided by (used in) financing activities 49 (734 ) (47 ) 1,427 (1,294 ) (599 ) Effect of currency on cash — — — 7 — 7 Total increase (decrease) in cash — 49 9 71 — 129 Cash at the beginning of the period 1 21 — 261 — 283 Cash at the end of the period $ 1 $ 70 $ 9 $ 332 $ — $ 412 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net cash provided by (used in) operating activities $ — $ (109 ) $ 103 $ 928 $ (84 ) $ 838 Investing activities Capital expenditures for property, plant and equipment — (49 ) (50 ) (181 ) — (280 ) Sales (purchases) of short-term — — — 284 — 284 Investments in affiliates — (36 ) — — 36 — Loans to affiliates — (100 ) (84 ) (3,564 ) 3,748 — Repayments of loans from affiliates — 507 886 3,110 (4,503 ) — Other - net — (23 ) — (18 ) — (41 ) Net cash provided by (used in) investing activities — 299 752 (369 ) (719 ) (37 ) Financing activities Proceeds from borrowings — 481 — 19 — 500 Payments on borrowings — (450 ) (36 ) — — (486 ) Proceeds from borrowings from affiliates 2,383 1,216 50 99 (3,748 ) — Payments on borrowings from affiliates (1,226 ) (1,993 ) (524 ) (760 ) 4,503 — Capital contributions from affiliates — — — 36 (36 ) — Other intercompany financing activities — 395 (348 ) (47 ) — — Cash dividends paid (578 ) — — — — (578 ) Cash dividends paid to affiliates — — — (84 ) 84 — Exercise of employee stock options 21 — — — — 21 Repurchase of shares (600 ) — — — — (600 ) Employee taxes paid from shares withheld — (16 ) (5 ) (2 ) — (23 ) Other - net — (1 ) — (1 ) — (2 ) Net cash provided by (used in) financing activities — (368 ) (863 ) (740 ) 803 (1,168 ) Effect of currency on cash — — — 62 — 62 Total increase (decrease) in cash — (178 ) (8 ) (119 ) — (305 ) Cash at the beginning of the period — 183 18 360 — 561 Cash at the end of the period $ — $ 5 $ 10 $ 241 $ — $ 256 |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods. This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2018 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission. |
Leases | Leases |
Adoption of ASU 2016-02 | Adoption of New Accounting Standards Eaton adopted Accounting Standard Update 2016-02, Leases (Topic 842), and related amendments, in the first quarter of 2019 using the optional transition method and has not restated prior periods. The Company elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the carry forward of historical lease classification of existing leases. The Company recorded a cumulative-effect adjustment of less than $1 to retained earnings as of January 1, 2019. Additionally, the adoption of the new standard resulted in the recording of lease assets and lease liabilities for operating leases of $435 and $446 , respectively, as of January 1, 2019. The adoption of the standard did not have a material impact to the Consolidated Statements of Income or Cash Flows. |
Adoption of ASU 2017-12 | Eaton adopted Accounting Standard Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, in the first quarter 2019 using the modified retrospective approach for hedge instruments that existed at the date of adoption. ASU 2017-12 is intended to better align the Company's risk management activities with financial reporting for hedging relationships. The standard eliminates the requirement to separately measure and report hedge ineffectiveness, expands the ability to hedge specific risk components, and generally requires the change in value of the hedge instrument and hedged item to be presented in the same income statement line. The new disclosure requirements were applied on a prospective basis and comparative information has not been restated. The adoption of the standard did not have a material impact on the consolidated financial statements. |
ACQUISITION, INTEGRATION AND _2
ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES (Table) | 6 Months Ended |
Jun. 30, 2019 | |
Acquisition, Integration and Divestiture Charges [Abstract] | |
Acquisition Integration Charges | Eaton incurs integration charges related to acquired businesses, and transaction and other charges to divest businesses. A summary of these charges follows: Three months ended Six months ended 2019 2018 2019 2018 Electrical Products $ 1 $ — $ 2 $ — Electrical Systems and Services 1 — 1 — Corporate 12 — 23 — Total acquisition integration and divestiture charges before income tax 14 — 26 — Income taxes — — 1 — Total after income taxes $ 14 $ — $ 25 $ — Per ordinary share - diluted $ 0.03 $ — $ 0.06 $ — |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Sales | The Company’s six operating segments and the following tables disaggregate sales by lines of businesses, geographic destination, market channel or end market. Three months ended June 30, 2019 Net sales United States Rest of World Total Electrical Products $ 1,115 $ 734 $ 1,849 Electrical Systems and Services 1,049 533 1,582 Hydraulics 306 392 698 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 299 $ 218 517 Commercial Passenger and Light Duty Vehicle $ 425 $ 378 803 eMobility 84 Total $ 5,533 Three months ended June 30, 2018 Net sales United States Rest of World Total Electrical Products $ 1,033 $ 773 $ 1,806 Electrical Systems and Services 983 530 1,513 Hydraulics 309 414 723 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 266 $ 197 463 Commercial Passenger and Light Duty Vehicle $ 452 $ 447 899 eMobility 83 Total $ 5,487 Six months ended June 30, 2019 Net sales United States Rest of World Total Electrical Products $ 2,162 $ 1,447 $ 3,609 Electrical Systems and Services 2,025 1,021 3,046 Hydraulics 596 788 1,384 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 586 $ 433 1,019 Commercial Passenger and Light Duty Vehicle $ 856 $ 757 1,613 eMobility 167 Total $ 10,838 Six months ended June 30, 2018 Net sales United States Rest of World Total Electrical Products $ 1,993 $ 1,545 $ 3,538 Electrical Systems and Services 1,877 1,017 2,894 Hydraulics 606 827 1,433 Original Equipment Manufacturers Aftermarket, Distribution and End User Aerospace $ 530 $ 391 921 Commercial Passenger and Light Duty Vehicle $ 882 $ 910 1,792 eMobility 160 Total $ 10,738 |
Schedule of Changes in Deferred Revenue Liabilities | Changes in the deferred revenue liabilities are as follows: Deferred Revenue Balance at December 31, 2018 $ 248 Customer deposits and billings 440 Revenue recognized in the period (440 ) Translation 5 Balance at June 30, 2019 $ 253 Deferred Revenue Balance at January 1, 2018 $ 227 Customer deposits and billings 463 Revenue recognized in the period (443 ) Translation (3 ) Balance at June 30, 2018 $ 244 |
GOODWILL (Tables)
GOODWILL (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Change in the carrying amount of goodwill by segment follows: December 31, Additions Translation June 30, Electrical Products $ 6,562 $ — $ (12 ) $ 6,550 Electrical Systems and Services 4,241 144 13 4,398 Hydraulics 1,212 — (10 ) 1,202 Aerospace 941 — — 941 Vehicle 292 — — 292 eMobility 80 — — 80 Total $ 13,328 $ 144 $ (9 ) $ 13,463 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense follows: Three months ended June 30, 2019 Six months ended June 30, 2019 Operating lease cost $ 36 $ 78 Finance lease cost: Amortization of lease assets 1 2 Interest on lease liabilities 1 1 Short-term lease cost 14 27 Variable lease cost 7 11 Sublease income (1 ) (2 ) Total lease cost $ 58 $ 117 |
Supplemental Cash Flow Related To Leases | Supplemental cash flow information related to leases follows: Six months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ (76 ) Operating cash outflows - interest payments on finance leases (1 ) Financing cash outflows - payments on finance lease obligations (2 ) Lease assets obtained in exchange for new lease obligations: Operating leases $ 42 Finance leases 12 |
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases follows: June 30, 2019 Operating Leases Operating lease assets $ 419 Other current liabilities 121 Operating lease liabilities 311 Total operating lease liabilities $ 432 Finance Leases Land and buildings $ 18 Machinery and equipment 12 Accumulated depreciation (13 ) Net property, plant and equipment $ 17 Current portion of long-term debt $ 5 Long-term debt 13 Total finance lease liabilities $ 18 Weighted-average remaining lease term Operating leases 5.2 years Finance leases 4.1 years Weighted-average discount rate Operating leases 3.6 % Finance leases 6.1 % |
Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities at June 30, 2019 follows: Operating Leases Finance Leases 2019 $ 74 $ 3 2020 126 6 2021 94 5 2022 63 3 2023 43 3 Thereafter 87 1 Total lease payments $ 487 $ 21 Less imputed interest 55 3 Total present value of lease liabilities $ 432 $ 18 |
Finance Lease, Liability, Maturity | Maturities of lease liabilities at June 30, 2019 follows: Operating Leases Finance Leases 2019 $ 74 $ 3 2020 126 6 2021 94 5 2022 63 3 2023 43 3 Thereafter 87 1 Total lease payments $ 487 $ 21 Less imputed interest 55 3 Total present value of lease liabilities $ 432 $ 18 |
Schedule of Future Minimum Rental Payments for Operating Leases | at December 31, 2018 under noncancelable operating leases, which expire at various dates and in most cases contain renewal options, for each of the next five years and thereafter in the aggregate, follow: Operating Leases 2019 $ 165 2020 133 2021 106 2022 75 2023 53 Thereafter 110 Total lease commitments $ 642 |
RETIREMENT BENEFIT PLANS (Table
RETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Retirement Benefits Plans Expense | The components of retirement benefits expense follow: United States Non-United States Other postretirement Three months ended June 30 2019 2018 2019 2018 2019 2018 Service cost $ 23 $ 25 $ 15 $ 16 $ 1 $ — Interest cost 34 31 14 13 4 4 Expected return on plan assets (59 ) (64 ) (27 ) (26 ) (1 ) (1 ) Amortization 16 23 9 10 (4 ) (3 ) 14 15 11 13 — — Settlements 13 11 1 — — — Total expense $ 27 $ 26 $ 12 $ 13 $ — $ — United States Non-United States Other postretirement Six months ended June 30 2019 2018 2019 2018 2019 2018 Service cost $ 46 $ 50 $ 29 $ 32 $ 1 $ 1 Interest cost 68 61 29 27 7 7 Expected return on plan assets (117 ) (127 ) (54 ) (53 ) (1 ) (2 ) Amortization 31 47 19 20 (7 ) (6 ) 28 31 23 26 — — Settlements 23 25 1 — — — Total expense $ 51 $ 56 $ 24 $ 26 $ — $ — |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Changes in Shareholders' equity | The changes in Shareholders’ equity follow: 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 December 31, 2018 423.6 $ 4 $ 12,090 $ 8,161 $ (4,145 ) $ (3 ) $ 16,107 $ 35 $ 16,142 Net income — — — 522 — — 522 — 522 Other comprehensive income, net of tax 67 67 — 67 Cash dividends paid and accrued — — — (309 ) — — (309 ) (1 ) (310 ) Issuance of shares under equity-based compensation plans 1.4 — (5 ) 1 — — (4 ) — (4 ) Repurchase of shares (1.9 ) — — (150 ) — — (150 ) — (150 ) Balance at March 31, 2019 423.1 $ 4 $ 12,085 $ 8,225 $ (4,078 ) $ (3 ) $ 16,233 $ 34 $ 16,267 Net income — — — 636 — — 636 — 636 Other comprehensive loss, net of tax (30 ) (30 ) (30 ) Cash dividends paid — — — (300 ) — — (300 ) (1 ) (301 ) Issuance of shares under equity-based compensation plans 0.1 — 27 (1 ) — 1 27 — 27 Acquisition of a business — — — — — — — 51 51 Acquisition of noncontrolling interest obtained through tender offer — — — — — — — (29 ) (29 ) Repurchase of Shares (3.2 ) — — (260 ) — — (260 ) — (260 ) Balance at June 30, 2019 420.0 $ 4 $ 12,112 $ 8,300 $ (4,108 ) $ (2 ) $ 16,306 $ 55 $ 16,361 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 December 31, 2017 439.9 $ 4 $ 11,987 $ 8,669 $ (3,404 ) $ (3 ) $ 17,253 $ 37 $ 17,290 Cumulative-effect adjustment upon adoption of ASU 2014-09 — — — (2 ) — — (2 ) — (2 ) Cumulative-effect adjustment upon adoption of ASU 2016-16 — — — (199 ) — — (199 ) — (199 ) Net income — — — 488 — — 488 (1 ) 487 Other comprehensive income, net of tax 296 296 — 296 Cash dividends paid and accrued — — — (290 ) — — (290 ) — (290 ) Issuance of shares under equity-based compensation plans 1.1 — 18 (1 ) — — 17 — 17 Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — 2 2 Repurchase of shares (3.7 ) — — (300 ) — — (300 ) — (300 ) Balance at March 31, 2018 437.3 $ 4 $ 12,005 $ 8,365 $ (3,108 ) $ (3 ) $ 17,263 $ 38 $ 17,301 Net income — — — 610 — — 610 1 611 Other comprehensive loss, net of tax — (624 ) (624 ) (624 ) Cash dividends paid — — — (288 ) — — (288 ) (1 ) (289 ) Issuance of shares under equity-based compensation plans — — 28 — — 1 29 — 29 Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — (3 ) (3 ) Repurchase of Shares (4.0 ) — — (300 ) — — (300 ) — (300 ) Balance at June 30, 2018 433.3 $ 4 $ 12,033 $ 8,387 $ (3,732 ) $ (2 ) $ 16,690 $ 35 $ 16,725 |
Schedule of Accumulated Other Comprehensive Loss | The changes in Accumulated other comprehensive loss follow: Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow hedges Total Balance at December 31, 2018 $ (2,864 ) $ (1,278 ) $ (3 ) $ (4,145 ) Other comprehensive (loss) income before reclassifications 17 — (30 ) (13 ) Amounts reclassified from Accumulated other comprehensive loss — 53 (3 ) 50 Net current-period Other comprehensive (loss) income 17 53 (33 ) 37 Balance at June 30, 2019 $ (2,847 ) $ (1,225 ) $ (36 ) $ (4,108 ) |
Reclassification Out of Accumulated Other Comprehensive Loss | The reclassifications out of Accumulated other comprehensive loss follow: Six months ended June 30, 2019 Consolidated statements of income classification Amortization of defined benefit pensions and other postretirement benefits items Actuarial loss and prior service cost $ (67 ) 1 Tax benefit 14 Total, net of tax (53 ) Gains and (losses) on cash flow hedges Currency exchange contracts 4 Cost of products sold Tax expense (1 ) Total, net of tax 3 Total reclassifications for the period $ (50 ) 1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items. |
Calculation of Net Income Per Ordinary Share Attributable to Shareholders | A summary of the calculation of net income per share attributable to Eaton ordinary shareholders follows: Three months ended Six months ended (Shares in millions) 2019 2018 2019 2018 Net income attributable to Eaton ordinary shareholders $ 636 $ 610 $ 1,158 $ 1,098 Weighted-average number of ordinary shares outstanding - diluted 423.1 437.3 424.5 439.5 Less dilutive effect of equity-based compensation 1.5 2.1 1.7 2.5 Weighted-average number of ordinary shares outstanding - basic 421.6 435.2 422.8 437.0 Net income per share attributable to Eaton ordinary shareholders Diluted $ 1.50 $ 1.39 $ 2.73 $ 2.50 Basic 1.51 1.40 2.74 2.51 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments Recognized at Fair Value and Fair Value Measurement Used | A summary of financial instruments recognized at fair value, and the fair value measurements used, follows: Total Level 1 Level 2 Level 3 June 30, 2019 Cash $ 412 $ 412 $ — $ — Short-term investments 385 385 — — Net derivative contracts 33 — 33 — December 31, 2018 Cash $ 283 $ 283 $ — $ — Short-term investments 157 157 — — Net derivative contracts 14 — 14 — |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments Recognized in Condensed Consolidated Balance Sheet | The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets follows: Notional amount Other current assets Other noncurrent assets Other current liabilities Other noncurrent liabilities Type of hedge Term June 30, 2019 Derivatives designated as hedges Fixed-to-floating interest rate swaps $ 2,225 $ — $ 59 $ — $ 1 Fair value 18 months to 16 years Forward starting floating-to-fixed interest rate swaps 300 — — — 30 Cash flow 34 years Currency exchange contracts 1,132 9 — 9 12 Cash flow 1 to 36 months Commodity contracts 12 — — — — Cash flow 1 to 7 months Total $ 9 $ 59 $ 9 $ 43 Derivatives not designated as hedges Currency exchange contracts $ 4,718 $ 35 $ 18 1 to 12 months Commodity contracts 4 — — 1 month Total $ 35 $ 18 December 31, 2018 Derivatives designated as hedges Fixed-to-floating interest rate swaps $ 2,550 $ — $ 22 $ 1 $ 26 Fair value 3 months to 16 years Forward starting floating-to-fixed interest rate swaps 100 — — — 3 Cash flow 34 years Currency exchange contracts 951 19 2 11 8 Cash flow 1 to 36 months Total $ 19 $ 24 $ 12 $ 37 Derivatives not designated as hedges Currency exchange contracts $ 3,886 $ 40 $ 20 1 to 12 months Total $ 40 $ 20 |
Schedule of Notional Amounts of Outstanding Derivative Positions | As of June 30, 2019 , the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions: June 30, 2019 Commodity (millions of pounds) Term Copper 5 1 to 7 months |
Schedule Of Derivative Instruments Recorded In Balance Sheet | The following amounts were recorded on the consolidated balance sheet related to fixed-to-floating interest rate swaps: 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 Sheet June 30, 2019 June 30, 2019 Long-term debt $ (2,838 ) $ (100 ) (a) At June 30, 2019 , these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $42 . |
Schedule of Impact of Hedging Activities to Consolidated Statement of Income | The impact of hedging activities to the Consolidated Statement of Income are as follow: Three months ended June 30, 2019 Net Sales Cost of products sold Interest expense - net Amounts from Consolidated Statement of Income $ 5,533 $ 3,697 $ 63 Gain (loss) on derivatives designated as cash flow hedges Currency exchange contracts Hedged item $ 2 $ (4 ) $ — Derivative designated as hedging instrument (2 ) 4 — Commodity contracts Hedged item $ — $ — $ — Derivative designated as hedging instrument — — — Gain (loss) on derivatives designated as fair value hedges Fixed-to-floating interest rate swaps Hedged item $ — $ — $ (40 ) Derivative designated as hedging instrument — — 40 Six months ended June 30, 2019 Net Sales Cost of products sold Interest expense - net Amounts from Consolidated Statement of Income $ 10,838 $ 7,270 $ 129 Gain (loss) on derivatives designated as cash flow hedges Currency exchange contracts Hedged item $ 5 $ (9 ) $ — Derivative designated as hedging instrument (5 ) 9 — Commodity contracts Hedged item $ — $ — $ — Derivative designated as hedging instrument — — — Gain (loss) on derivatives designated as fair value hedges Fixed-to-floating interest rate swaps Hedged item $ — $ — $ (63 ) Derivative designated as hedging instrument — — 63 |
Amounts Recognized in Net Income | The impact of derivatives not designated as hedges to the Consolidated Statement of Income are as follow: Gain (loss) recognized in Consolidated Statement of Income Consolidated Statement of Income classification Three months ended 2019 Gain (loss) on derivatives not designated as hedges Currency exchange contracts $ 8 Other income - net Commodity Contracts (1 ) Cost of products sold Total $ 7 Gain (loss) recognized in Consolidated Statement of Income Consolidated Statement of Income classification Six months ended 2019 Gain (loss) on derivatives not designated as hedges Currency exchange contracts $ 48 Other income - net Commodity Contracts — Cost of products sold Total $ 48 |
Amounts Recognized in Accumulated Other Comprehensive Loss | The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statement of Income and Comprehensive Income follow: 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 Three months ended 2019 2018 2019 2018 Derivatives designated as cash flow hedges Forward starting floating-to-fixed interest rate swaps $ (18 ) $ — Interest expense - net $ — $ — Currency exchange contracts (10 ) (15 ) Cost of products sold 2 (4 ) Commodity contracts (2 ) — Cost of products sold — — Non-derivative designated as net investment hedges Foreign currency denominated debt — 41 Other income - net — — Total $ (30 ) $ 26 $ 2 $ (4 ) Gain (loss) recognized in Location of gain (loss) Gain (loss) reclassified Six months ended Six months ended 2019 2018 2019 2018 Derivatives designated as cash Forward starting floating-to-fixed $ (27 ) $ — Interest expense - net $ — $ — Currency exchange contracts (10 ) (2 ) Cost of products sold 4 (8 ) Commodity contracts — — Cost of products sold — — Non-derivative designated as net investment hedges Foreign currency denominated debt 12 17 Other income - net — — Total $ (25 ) $ 15 $ 4 $ (8 ) |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | The components of inventory follow: June 30, December 31, Raw materials $ 1,089 $ 1,077 Work-in-process 565 500 Finished goods 1,199 1,208 Total inventory $ 2,853 $ 2,785 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Business Segment Information | Three months ended Six months ended 2019 2018 2019 2018 Net sales Electrical Products $ 1,849 $ 1,806 $ 3,609 $ 3,538 Electrical Systems and Services 1,582 1,513 3,046 2,894 Hydraulics 698 723 1,384 1,433 Aerospace 517 463 1,019 921 Vehicle 803 899 1,613 1,792 eMobility 84 83 167 160 Total net sales $ 5,533 $ 5,487 $ 10,838 $ 10,738 Segment operating profit Electrical Products $ 361 $ 334 $ 692 $ 641 Electrical Systems and Services 275 227 467 394 Hydraulics 80 101 160 191 Aerospace 127 90 243 179 Vehicle 136 166 258 298 eMobility 7 14 12 25 Total segment operating profit 986 932 1,832 1,728 Corporate Amortization of intangible assets (94 ) (96 ) (187 ) (194 ) Interest expense - net (63 ) (68 ) (129 ) (138 ) Pension and other postretirement benefits expense (2 ) 1 (2 ) (1 ) Other corporate expense - net (89 ) (75 ) (173 ) (136 ) Income before income taxes 738 694 1,341 1,259 Income tax expense 102 83 183 161 Net income 636 611 1,158 1,098 Less net income for noncontrolling interests — (1 ) — — Net income attributable to Eaton ordinary shareholders $ 636 $ 610 $ 1,158 $ 1,098 |
CONDENSED CONSOLIDATING FINAN_2
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Condensed Consolidating Financial Information [Abstract] | |
Condensed Consolidating Financial Statements | CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 1,824 $ 1,902 $ 3,134 $ (1,327 ) $ 5,533 Cost of products sold — 1,421 1,377 2,230 (1,331 ) 3,697 Selling and administrative expense 2 360 205 340 — 907 Research and development expense — 35 37 79 — 151 Interest expense (income) - net — 66 5 (7 ) (1 ) 63 Other expense (income) - net (1 ) 6 (14 ) (14 ) — (23 ) Equity in loss (earnings) of subsidiaries, net of tax (647 ) (176 ) (731 ) (660 ) 2,214 — Intercompany expense (income) - net 10 38 426 (474 ) — — Income (loss) before income taxes 636 74 597 1,640 (2,209 ) 738 Income tax expense (benefit) — 6 (23 ) 118 1 102 Net income (loss) 636 68 620 1,522 (2,210 ) 636 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 636 $ 68 $ 620 $ 1,522 $ (2,210 ) $ 636 Other comprehensive income (loss) $ (30 ) $ 10 $ (19 ) $ 2 $ 7 $ (30 ) Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ 606 $ 78 $ 601 $ 1,524 $ (2,203 ) $ 606 CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 1,809 $ 1,790 $ 3,242 $ (1,354 ) $ 5,487 Cost of products sold — 1,427 1,289 2,312 (1,357 ) 3,671 Selling and administrative expense 2 396 200 303 — 901 Research and development expense — 37 35 73 — 145 Interest expense (income) - net — 67 4 (6 ) 3 68 Other expense (income) - net (37 ) 9 36 — — 8 Equity in loss (earnings) of subsidiaries, net of tax (587 ) (189 ) (899 ) (642 ) 2,317 — Intercompany expense (income) - net 12 24 557 (593 ) — — Income (loss) before income taxes 610 38 568 1,795 (2,317 ) 694 Income tax expense (benefit) — (7 ) (14 ) 104 — 83 Net income (loss) 610 45 582 1,691 (2,317 ) 611 Less net loss (income) for noncontrolling interests — — — (1 ) — (1 ) Net income (loss) attributable to Eaton ordinary shareholders $ 610 $ 45 $ 582 $ 1,690 $ (2,317 ) $ 610 Other comprehensive income (loss) $ (624 ) $ (25 ) $ (584 ) $ (1,381 ) $ 1,990 $ (624 ) Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ (14 ) $ 20 $ (2 ) $ 309 $ (327 ) $ (14 ) CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 3,582 $ 3,722 $ 6,172 $ (2,638 ) $ 10,838 Cost of products sold — 2,811 2,666 4,425 (2,632 ) 7,270 Selling and administrative expense 6 721 410 687 — 1,824 Research and development expense — 76 75 156 — 307 Interest expense (income) - net — 135 9 (13 ) (2 ) 129 Other expense (income) - net (13 ) (2 ) (22 ) 4 — (33 ) Equity in loss (earnings) of subsidiaries, net of tax (1,174 ) (482 ) (1,562 ) (1,395 ) 4,613 — Intercompany expense (income) - net 23 2 873 (898 ) — — Income (loss) before income taxes 1,158 321 1,273 3,206 (4,617 ) 1,341 Income tax expense (benefit) — 15 (35 ) 204 (1 ) 183 Net income (loss) 1,158 306 1,308 3,002 (4,616 ) 1,158 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 1,158 $ 306 $ 1,308 $ 3,002 $ (4,616 ) $ 1,158 Other comprehensive income (loss) $ 37 $ 4 $ 53 $ 93 $ (150 ) $ 37 Total comprehensive income (loss) attributable to Eaton ordinary shareholders $ 1,195 $ 310 $ 1,361 $ 3,095 $ (4,766 ) $ 1,195 CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net sales $ — $ 3,498 $ 3,490 $ 6,433 $ (2,683 ) $ 10,738 Cost of products sold — 2,779 2,525 4,622 (2,682 ) 7,244 Selling and administrative expense 5 737 378 670 — 1,790 Research and development expense — 76 76 149 — 301 Interest expense (income) - net — 135 8 (7 ) 2 138 Other expense (income) - net (19 ) 14 27 (16 ) — 6 Equity in loss (earnings) of subsidiaries, net of tax (1,101 ) (437 ) (1,696 ) (1,283 ) 4,517 — Intercompany expense (income) - net 17 2 1,044 (1,063 ) — — Income (loss) before income taxes 1,098 192 1,128 3,361 (4,520 ) 1,259 Income tax expense (benefit) — (13 ) (28 ) 203 (1 ) 161 Net income (loss) 1,098 205 1,156 3,158 (4,519 ) 1,098 Less net loss (income) for noncontrolling interests — — — — — — Net income (loss) attributable to Eaton ordinary shareholders $ 1,098 $ 205 $ 1,156 $ 3,158 $ (4,519 ) $ 1,098 Other comprehensive income (loss) $ (328 ) $ (15 ) $ (300 ) $ (772 ) $ 1,087 $ (328 ) Total comprehensive income (loss) attributable to Eaton $ 770 $ 190 $ 856 $ 2,386 $ (3,432 ) $ 770 CONDENSED CONSOLIDATING BALANCE SHEETS JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Assets Current assets Cash $ 1 $ 70 $ 9 $ 332 $ — $ 412 Short-term investments — 100 — 285 — 385 Accounts receivable - net — 608 1,170 2,166 — 3,944 Intercompany accounts receivable 2 739 2,102 2,416 (5,259 ) — Inventory — 537 854 1,544 (82 ) 2,853 Prepaid expenses and other current assets — 96 29 391 16 532 Total current assets 3 2,150 4,164 7,134 (5,325 ) 8,126 Property, plant and equipment - net — 851 670 1,989 — 3,510 Other noncurrent assets Goodwill — 1,330 6,705 5,428 — 13,463 Other intangible assets — 124 2,980 1,662 — 4,766 Operating lease assets — 148 59 212 — 419 Deferred income taxes — 297 — 292 (286 ) 303 Investment in subsidiaries 17,693 26,501 72,600 26,986 (143,780 ) — Intercompany loans receivable 9 5,703 6,962 59,617 (72,291 ) — Other assets — 777 156 724 — 1,657 Total assets $ 17,705 $ 37,881 $ 94,296 $ 104,044 $ (221,682 ) $ 32,244 Liabilities and shareholders’ equity Current liabilities Short-term debt $ — $ — $ — $ 2 $ — $ 2 Current portion of long-term debt — 3 — 2 — 5 Accounts payable — 484 472 1,312 — 2,268 Intercompany accounts payable 8 1,245 2,852 1,154 (5,259 ) — Accrued compensation — 76 45 236 — 357 Other current liabilities 1 539 265 1,014 (1 ) 1,818 Total current liabilities 9 2,347 3,634 3,720 (5,260 ) 4,450 Noncurrent liabilities Long-term debt — 5,886 2,187 6 — 8,079 Pension liabilities — 379 128 759 — 1,266 Other postretirement benefits liabilities — 167 83 74 — 324 Operating lease liabilities — 108 45 158 — 311 Deferred income taxes — — 474 201 (286 ) 389 Intercompany loans payable 1,390 5,347 64,429 1,125 (72,291 ) — Other noncurrent liabilities — 400 295 369 — 1,064 Total noncurrent liabilities 1,390 12,287 67,641 2,692 (72,577 ) 11,433 Shareholders’ equity Eaton shareholders' equity 16,306 23,247 23,021 97,577 (143,845 ) 16,306 Noncontrolling interests — — — 55 — 55 Total equity 16,306 23,247 23,021 97,632 (143,845 ) 16,361 Total liabilities and equity $ 17,705 $ 37,881 $ 94,296 $ 104,044 $ (221,682 ) $ 32,244 CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Assets Current assets Cash $ 1 $ 21 $ — $ 261 $ — $ 283 Short-term investments — — — 157 — 157 Accounts receivable - net — 483 1,400 1,975 — 3,858 Intercompany accounts receivable — 1,575 1,851 2,968 (6,394 ) — Inventory — 540 766 1,555 (76 ) 2,785 Prepaid expenses and other current assets — 107 32 354 14 507 Total current assets 1 2,726 4,049 7,270 (6,456 ) 7,590 Property, plant and equipment - net — 843 678 1,946 — 3,467 Other noncurrent assets Goodwill — 1,330 6,705 5,293 — 13,328 Other intangible assets — 128 3,054 1,664 — 4,846 Deferred income taxes — 340 — 288 (335 ) 293 Investment in subsidiaries 16,476 25,956 71,334 25,557 (139,323 ) — Intercompany loans receivable 1,508 5,912 8,406 59,078 (74,904 ) — Other assets — 746 117 705 — 1,568 Total assets $ 17,985 $ 37,981 $ 94,343 $ 101,801 $ (221,018 ) $ 31,092 Liabilities and shareholders’ equity Current liabilities Short-term debt $ — $ 388 $ — $ 26 $ — $ 414 Current portion of long-term debt — 338 — 1 — 339 Accounts payable — 476 416 1,238 — 2,130 Intercompany accounts payable 32 1,127 3,206 2,029 (6,394 ) — Accrued compensation — 135 71 251 — 457 Other current liabilities 30 525 259 1,002 (2 ) 1,814 Total current liabilities 62 2,989 3,952 4,547 (6,396 ) 5,154 Noncurrent liabilities Long-term debt — 5,814 945 7 2 6,768 Pension liabilities — 383 130 791 — 1,304 Other postretirement benefits liabilities — 166 83 72 — 321 Deferred income taxes — 1 508 175 (335 ) 349 Intercompany loans payable 1,816 5,182 66,507 1,399 (74,904 ) — Other noncurrent liabilities — 389 291 374 — 1,054 Total noncurrent liabilities 1,816 11,935 68,464 2,818 (75,237 ) 9,796 Shareholders’ equity Eaton shareholders' equity 16,107 23,057 21,927 94,401 (139,385 ) 16,107 Noncontrolling interests — — — 35 — 35 Total equity 16,107 23,057 21,927 94,436 (139,385 ) 16,142 Total liabilities and equity $ 17,985 $ 37,981 $ 94,343 $ 101,801 $ (221,018 ) $ 31,092 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2019 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net cash provided by (used in) operating activities $ (49 ) $ 685 $ 366 $ 429 $ — $ 1,431 Investing activities Capital expenditures for property, plant and equipment — (50 ) (56 ) (192 ) — (298 ) Cash paid for acquisition of a business, net of cash acquired — — — (243 ) — (243 ) Sales (purchases) of short-term — (100 ) — (121 ) — (221 ) Loans to affiliates — (292 ) (280 ) (3,260 ) 3,832 — Repayments of loans from affiliates — 556 — 1,982 (2,538 ) — Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net — (1 ) — 51 — 50 Other - net — (15 ) 26 (9 ) — 2 Net cash provided by (used in) investing activities — 98 (310 ) (1,792 ) 1,294 (710 ) Financing activities Proceeds from borrowings — — 1,232 — — 1,232 Payments on borrowings — (728 ) — (29 ) — (757 ) Proceeds from borrowings from affiliates 1,089 1,790 381 572 (3,832 ) — Payments on borrowings from affiliates (16 ) (1,607 ) (458 ) (457 ) 2,538 — Other intercompany financing activities — (154 ) (1,191 ) 1,345 — — Cash dividends paid (609 ) — — — — (609 ) Exercise of employee stock options 25 — — — — 25 Repurchase of shares (440 ) — — — — (440 ) Employee taxes paid from shares withheld — (35 ) (7 ) (2 ) — (44 ) Other - net — — (4 ) (2 ) — (6 ) Net cash provided by (used in) financing activities 49 (734 ) (47 ) 1,427 (1,294 ) (599 ) Effect of currency on cash — — — 7 — 7 Total increase (decrease) in cash — 49 9 71 — 129 Cash at the beginning of the period 1 21 — 261 — 283 Cash at the end of the period $ 1 $ 70 $ 9 $ 332 $ — $ 412 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2018 Eaton Corporation plc Eaton Corporation Guarantors Other subsidiaries Consolidating adjustments Total Net cash provided by (used in) operating activities $ — $ (109 ) $ 103 $ 928 $ (84 ) $ 838 Investing activities Capital expenditures for property, plant and equipment — (49 ) (50 ) (181 ) — (280 ) Sales (purchases) of short-term — — — 284 — 284 Investments in affiliates — (36 ) — — 36 — Loans to affiliates — (100 ) (84 ) (3,564 ) 3,748 — Repayments of loans from affiliates — 507 886 3,110 (4,503 ) — Other - net — (23 ) — (18 ) — (41 ) Net cash provided by (used in) investing activities — 299 752 (369 ) (719 ) (37 ) Financing activities Proceeds from borrowings — 481 — 19 — 500 Payments on borrowings — (450 ) (36 ) — — (486 ) Proceeds from borrowings from affiliates 2,383 1,216 50 99 (3,748 ) — Payments on borrowings from affiliates (1,226 ) (1,993 ) (524 ) (760 ) 4,503 — Capital contributions from affiliates — — — 36 (36 ) — Other intercompany financing activities — 395 (348 ) (47 ) — — Cash dividends paid (578 ) — — — — (578 ) Cash dividends paid to affiliates — — — (84 ) 84 — Exercise of employee stock options 21 — — — — 21 Repurchase of shares (600 ) — — — — (600 ) Employee taxes paid from shares withheld — (16 ) (5 ) (2 ) — (23 ) Other - net — (1 ) — (1 ) — (2 ) Net cash provided by (used in) financing activities — (368 ) (863 ) (740 ) 803 (1,168 ) Effect of currency on cash — — — 62 — 62 Total increase (decrease) in cash — (178 ) (8 ) (119 ) — (305 ) Cash at the beginning of the period — 183 18 360 — 561 Cash at the end of the period $ — $ 5 $ 10 $ 241 $ — $ 256 |
BASIS OF PRESENTATION - Narrati
BASIS OF PRESENTATION - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease assets | $ 419 | $ 0 | |
Operating Lease Liabilities | $ 432 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative-effect adjustment upon adoption | $ 1 | ||
Operating lease assets | 435 | ||
Operating Lease Liabilities | $ 446 |
ACQUISITION AND DIVESTITURE O_2
ACQUISITION AND DIVESTITURE OF BUSINESSES (Details) - USD ($) $ in Millions | Jul. 22, 2019 | Apr. 15, 2019 | Jul. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. | ||||||
Business Acquisition [Line Items] | ||||||
Business Acquisition, Percentage of Interests Acquired | 82.275% | |||||
Business Acquisition, Pro Forma Revenue | $ 126 | |||||
Payments to Acquire Businesses, Gross | $ 214 | |||||
Innovative Switchgear Solutions, Inc. (ISG) | ||||||
Business Acquisition [Line Items] | ||||||
Business Acquisition, Pro Forma Revenue | $ 18 | |||||
Souriau-Sunbank Connection Technologies | ||||||
Business Acquisition [Line Items] | ||||||
Business Acquisition, Pro Forma Revenue | $ 363 | |||||
Subsequent Event [Member] | Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S. | ||||||
Business Acquisition [Line Items] | ||||||
Business Acquisition, Percentage of Interests Acquired | 93.70% | |||||
Business Combination, Consideration Transferred | $ 33 | |||||
Subsequent Event [Member] | Souriau-Sunbank Connection Technologies | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination, Consideration to be Transferred | $ 920 |
ACQUISITION, INTEGRATION AND _3
ACQUISITION, INTEGRATION AND DIVESTITURE CHARGES (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 14 | $ 0 | $ 26 | $ 0 |
Income taxes | 0 | 0 | 1 | 0 |
Total after income taxes | $ 14 | $ 0 | $ 25 | $ 0 |
Per ordinary share - diluted (dollars per share) | $ 0.03 | $ 0 | $ 0.06 | $ 0 |
Electrical Products | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 1 | $ 0 | $ 2 | $ 0 |
Electrical Systems and Services | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | 1 | 0 | 1 | 0 |
Corporate | ||||
Acquisition, integration and divestiture charges [Line Items] | ||||
Acquisition integration charges | $ 12 | $ 0 | $ 23 | $ 0 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Number of operating segments | segment | 6 | |
Accounts receivables from customers | $ 3,585 | $ 3,402 |
Unbilled receivables | 93 | 94 |
Backlog of unsatisfied or partially satisfied obligations | $ 5,500 | $ 5,300 |
Backlog expected to be recognized in the next twelve months (as a percent) | 87.00% | 87.00% |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Disaggregation of Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 |
Electrical Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,849 | 1,806 | 3,609 | 3,538 |
Electrical Products | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,115 | 1,033 | 2,162 | 1,993 |
Electrical Products | Rest of World | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 734 | 773 | 1,447 | 1,545 |
Electrical Systems and Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,582 | 1,513 | 3,046 | 2,894 |
Electrical Systems and Services | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,049 | 983 | 2,025 | 1,877 |
Electrical Systems and Services | Rest of World | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 533 | 530 | 1,021 | 1,017 |
Hydraulics | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 698 | 723 | 1,384 | 1,433 |
Hydraulics | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 306 | 309 | 596 | 606 |
Hydraulics | Rest of World | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 392 | 414 | 788 | 827 |
Aerospace | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 517 | 463 | 1,019 | 921 |
Aerospace | Original Equipment Manufacturers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 299 | 266 | 586 | 530 |
Aerospace | Aftermarket, Distribution and End User | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 218 | 197 | 433 | 391 |
Vehicle | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 803 | 899 | 1,613 | 1,792 |
Vehicle | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 425 | 452 | 856 | 882 |
Vehicle | Passenger and Light Duty | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 378 | 447 | 757 | 910 |
eMobility | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 84 | $ 83 | $ 167 | $ 160 |
REVENUE RECOGNITION - Schedul_2
REVENUE RECOGNITION - Schedule of Changes in Deferred Revenue Liabilities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Movement in Deferred Revenue [Roll Forward] | ||
Beginning balance | $ 248 | $ 227 |
Customer deposits and billings | 440 | 463 |
Revenue recognized in the period | (440) | (443) |
Translation | 5 | (3) |
Ending balance | $ 253 | $ 244 |
GOODWILL (Details)
GOODWILL (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 13,328 |
Additions | 144 |
Translation | (9) |
Ending balance | 13,463 |
Electrical Products | |
Goodwill [Roll Forward] | |
Beginning balance | 6,562 |
Additions | 0 |
Translation | (12) |
Ending balance | 6,550 |
Electrical Systems and Services | |
Goodwill [Roll Forward] | |
Beginning balance | 4,241 |
Additions | 144 |
Translation | 13 |
Ending balance | 4,398 |
Hydraulics | |
Goodwill [Roll Forward] | |
Beginning balance | 1,212 |
Additions | 0 |
Translation | (10) |
Ending balance | 1,202 |
Aerospace | |
Goodwill [Roll Forward] | |
Beginning balance | 941 |
Additions | 0 |
Translation | 0 |
Ending balance | 941 |
Vehicle | |
Goodwill [Roll Forward] | |
Beginning balance | 292 |
Additions | 0 |
Translation | 0 |
Ending balance | 292 |
eMobility | |
Goodwill [Roll Forward] | |
Beginning balance | 80 |
Additions | 0 |
Translation | 0 |
Ending balance | $ 80 |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 36 | $ 78 |
Finance lease cost - Amortization of lease assets | 1 | 2 |
Interest on lease liabilities | 1 | 1 |
Short-term lease cost | 14 | 27 |
Variable lease cost | 7 | 11 |
Sublease income | (1) | (2) |
Total lease cost | $ 58 | $ 117 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Net gain (loss) on sale leaseback transaction | $ (2) | $ 16 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information Related To Leases (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash outflows - payments on operating leases | $ (76) |
Operating cash outflows - interest payments on finance leases | (1) |
Financing cash outflows - payments on finance lease obligations | (2) |
Lease assets obtained in exchange for new lease obligations: | |
Operating leases | 42 |
Finance leases | $ 12 |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Lessee, Lease, Description [Line Items] | ||
Operating lease assets | $ 419 | $ 0 |
Other current liabilities | 121 | |
Operating lease liabilities | 311 | $ 0 |
Total operating lease liabilities | 432 | |
Accumulated depreciation | (13) | |
Net property, plant and equipment | 17 | |
Current portion of long-term debt | 5 | |
Long-term debt | 13 | |
Total finance lease liabilities | $ 18 | |
Operating leases, weighted average remaining term | 5 years 2 months 12 days | |
Finance leases, weighted average remaining lease term | 4 years 1 month 6 days | |
Operating Lease, weighted average discount rate | 3.60% | |
Finance Lease, weighted average discount rate | 6.10% | |
Land and Building | ||
Lessee, Lease, Description [Line Items] | ||
Finance Lease, right-of-use asset | $ 18 | |
Machinery and Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Finance Lease, right-of-use asset | $ 12 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities Operating and Financing (Details) $ in Millions | Jun. 30, 2019USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | $ 74 |
2020 | 126 |
2021 | 94 |
2022 | 63 |
2023 | 43 |
Thereafter | 87 |
Total lease payments | 487 |
Less imputed interest | 55 |
Operating Lease Liabilities | 432 |
Finance Lease, Liability, Payment, Due [Abstract] | |
2019 | 3 |
2020 | 6 |
2021 | 5 |
2022 | 3 |
2023 | 3 |
Thereafter | 1 |
Total lease payments | 21 |
Less imputed interest | 3 |
Total finance lease liabilities | $ 18 |
LEASES - Maturities of Lease _2
LEASES - Maturities of Lease Liabilities (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 165 |
2020 | 133 |
2021 | 106 |
2022 | 75 |
2023 | 53 |
Thereafter | 110 |
Total lease payments | $ 642 |
DEBT DEBT (Details)
DEBT DEBT (Details) - May 14, 2019 € in Millions, $ in Millions | EUR (€) | USD ($) | USD ($) |
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 1,100 | $ 1,232 | |
Proceeds from Issuance of Debt | 1,097 | $ 1,229 | |
Tranche One | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 600 | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.02% | 0.02% | |
Tranche Two | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | € 500 | ||
Debt Instrument, Interest Rate, Stated Percentage | 0.70% | 0.70% |
RETIREMENT BENEFIT PLANS (Detai
RETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Pension plan | United States pension benefit expense | ||||
Retirement benefits plans expense | ||||
Service cost | $ 23 | $ 25 | $ 46 | $ 50 |
Interest cost | 34 | 31 | 68 | 61 |
Expected return on plan assets | (59) | (64) | (117) | (127) |
Amortization | 16 | 23 | 31 | 47 |
Total | 14 | 15 | 28 | 31 |
Settlements | 13 | 11 | 23 | 25 |
Total expense | 27 | 26 | 51 | 56 |
Pension plan | Non-United States pension benefit expense | ||||
Retirement benefits plans expense | ||||
Service cost | 15 | 16 | 29 | 32 |
Interest cost | 14 | 13 | 29 | 27 |
Expected return on plan assets | (27) | (26) | (54) | (53) |
Amortization | 9 | 10 | 19 | 20 |
Total | 11 | 13 | 23 | 26 |
Settlements | 1 | 0 | 1 | 0 |
Total expense | 12 | 13 | 24 | 26 |
Other postretirement benefits expense | ||||
Retirement benefits plans expense | ||||
Service cost | 1 | 0 | 1 | 1 |
Interest cost | 4 | 4 | 7 | 7 |
Expected return on plan assets | (1) | (1) | (1) | (2) |
Amortization | (4) | (3) | (7) | (6) |
Total | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Total expense | $ 0 | $ 0 | $ 0 | $ 0 |
LEGAL CONTINGENCIES (Details)
LEGAL CONTINGENCIES (Details) - Pneumo Abex Case - USD ($) $ in Millions | Nov. 28, 2018 | Aug. 23, 2018 | Jul. 11, 2018 |
Loss Contingencies [Line Items] | |||
Loss Contingency, Damages Sought, Value | $ 347 | ||
Amount awarded to other party | $ 293 | ||
Payments for Legal Settlements | $ 297 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax rate, percent | 13.90% | 12.00% | 13.70% | 12.80% |
EQUITY - Changes in Shareholder
EQUITY - Changes in Shareholders's Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Feb. 27, 2019 | Feb. 24, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | $ 16,267 | $ 16,142 | $ 17,301 | $ 17,290 | $ 16,142 | $ 17,290 | ||
Net income | 636 | 522 | 611 | 487 | 1,158 | 1,098 | ||
Other comprehensive income (loss), net of tax | (30) | 67 | (624) | 296 | 37 | (328) | ||
Cash dividends paid and accrued | (301) | (310) | (289) | (290) | ||||
Issuance of shares under equity-based compensation plans | 27 | (4) | 29 | 17 | ||||
Changes in noncontrolling interest of consolidated subsidiaries - net | (3) | 2 | ||||||
Acquisition of a business | 51 | |||||||
Acquisition of noncontrolling interest obtained through tender offer | (29) | |||||||
Repurchase of shares | (260) | (150) | (300) | (300) | ||||
Ending balance | 16,361 | 16,267 | 16,725 | 17,301 | 16,361 | 16,725 | ||
Ordinary shares | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | $ 4 | $ 4 | $ 4 | $ 4 | $ 4 | $ 4 | ||
Beginning balance, shares | 423,100,000 | 423,600,000 | 437,300,000 | 439,900,000 | 423,600,000 | 439,900,000 | ||
Issuance of shares under equity-based compensation plans, shares | 100,000 | 1,400,000 | 1,100,000 | |||||
Repurchase of shares, shares | (3,200,000) | (1,900,000) | (4,000,000) | (3,700,000) | ||||
Ending balance, shares | 420,000,000 | 423,100,000 | 433,300,000 | 437,300,000 | 420,000,000 | 433,300,000 | ||
Ending balance | $ 4 | $ 4 | $ 4 | $ 4 | $ 4 | $ 4 | ||
Capital in excess of par value | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 12,085 | 12,090 | 12,005 | 11,987 | 12,090 | 11,987 | ||
Issuance of shares under equity-based compensation plans | 27 | (5) | 28 | 18 | ||||
Ending balance | 12,112 | 12,085 | 12,033 | 12,005 | 12,112 | 12,033 | ||
Retained earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 8,225 | 8,161 | 8,365 | 8,669 | 8,161 | 8,669 | ||
Net income | 636 | 522 | 610 | 488 | ||||
Cash dividends paid and accrued | (300) | (309) | (288) | (290) | ||||
Issuance of shares under equity-based compensation plans | (1) | 1 | (1) | 0 | ||||
Repurchase of shares | (260) | (150) | (300) | (300) | ||||
Ending balance | 8,300 | 8,225 | 8,387 | 8,365 | 8,300 | 8,387 | ||
Accumulated other comprehensive loss | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (4,078) | (4,145) | (3,108) | (3,404) | (4,145) | (3,404) | ||
Other comprehensive income (loss), net of tax | (30) | 67 | (624) | 296 | ||||
Ending balance | (4,108) | (4,078) | (3,732) | (3,108) | (4,108) | (3,732) | ||
Shares held in trust | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (3) | (3) | (3) | (3) | (3) | (3) | ||
Issuance of shares under equity-based compensation plans | 1 | 1 | ||||||
Ending balance | (2) | (3) | (2) | (3) | (2) | (2) | ||
Eaton shareholders’ equity | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 16,233 | 16,107 | 17,263 | 17,253 | 16,107 | 17,253 | ||
Net income | 636 | 522 | 610 | 488 | ||||
Other comprehensive income (loss), net of tax | (30) | 67 | (624) | 296 | ||||
Cash dividends paid and accrued | (300) | (309) | (288) | (290) | ||||
Issuance of shares under equity-based compensation plans | 27 | (4) | 29 | 17 | ||||
Repurchase of shares | (260) | (150) | (300) | (300) | ||||
Ending balance | 16,306 | 16,233 | 16,690 | 17,263 | 16,306 | 16,690 | ||
Noncontrolling interests | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 34 | 35 | 38 | 37 | 35 | 37 | ||
Net income | 1 | (1) | ||||||
Cash dividends paid and accrued | (1) | (1) | (1) | |||||
Changes in noncontrolling interest of consolidated subsidiaries - net | (3) | 2 | ||||||
Acquisition of a business | 51 | |||||||
Acquisition of noncontrolling interest obtained through tender offer | (29) | |||||||
Ending balance | $ 55 | $ 34 | $ 35 | 38 | $ 55 | $ 35 | ||
Cumulative-effect adjustment upon adoption of ASU 2014-09 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | (2) | |||||||
Cumulative-effect adjustment upon adoption of ASU 2014-09 | Retained earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | (2) | |||||||
Cumulative-effect adjustment upon adoption of ASU 2014-09 | Eaton shareholders’ equity | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | (2) | |||||||
Cumulative-effect adjustment upon adoption of ASU 2016-16 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | (199) | |||||||
Cumulative-effect adjustment upon adoption of ASU 2016-16 | Retained earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | (199) | |||||||
Cumulative-effect adjustment upon adoption of ASU 2016-16 | Eaton shareholders’ equity | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment upon adoption | $ (199) | |||||||
2016 Program | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Share repurchase program, authorized (in shares) | 2,500,000,000 | |||||||
Ordinary shares purchased (in shares) | 4,000,000 | 7,700,000 | ||||||
Shares repurchased | $ 300 | $ 600 | ||||||
2019 Program | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Share repurchase program, authorized (in shares) | 5,000,000,000 | |||||||
Ordinary shares purchased (in shares) | 3,200,000 | 5,100,000 | ||||||
Shares repurchased | $ 260 | $ 410 |
EQUITY - Changes in Accumulated
EQUITY - Changes in Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | $ (4,145) | $ (4,145) | ||||
Other comprehensive (loss) income before reclassifications | (13) | |||||
Amounts reclassified from Accumulated other comprehensive loss | 50 | |||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | $ (30) | 67 | $ (624) | $ 296 | 37 | $ (328) |
Ending balance | (4,108) | (4,108) | ||||
Currency translation and related hedging instruments | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (2,864) | (2,864) | ||||
Other comprehensive (loss) income before reclassifications | 17 | |||||
Amounts reclassified from Accumulated other comprehensive loss | 0 | |||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | 17 | |||||
Ending balance | (2,847) | (2,847) | ||||
Pensions and other postretirement benefits | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (1,278) | (1,278) | ||||
Other comprehensive (loss) income before reclassifications | 0 | |||||
Amounts reclassified from Accumulated other comprehensive loss | 53 | |||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | 53 | |||||
Ending balance | (1,225) | (1,225) | ||||
Cash flow hedges | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (3) | (3) | ||||
Other comprehensive (loss) income before reclassifications | (30) | |||||
Amounts reclassified from Accumulated other comprehensive loss | (3) | |||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | (33) | |||||
Ending balance | (36) | (36) | ||||
Accumulated other comprehensive loss | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (4,145) | (4,145) | ||||
Other comprehensive (loss) income attributable to Eaton ordinary shareholders | (30) | $ 67 | $ (624) | $ 296 | ||
Ending balance | $ (4,108) | $ (4,108) |
EQUITY - Reclassifications Out
EQUITY - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Currency exchange contracts | $ 3,697 | $ 3,671 | $ 7,270 | $ 7,244 | |
Income tax expense | $ 102 | $ 83 | 183 | $ 161 | |
Total reclassifications for the period | (50) | ||||
Gains and (losses) on cash flow hedges | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Total reclassifications for the period | 3 | ||||
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Total reclassifications for the period | (50) | ||||
Reclassification out of Accumulated Other Comprehensive Income | Amortization of defined benefit pensions and other postretirement benefits items | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Actuarial loss and prior service cost | [1] | (67) | |||
Income tax expense | 14 | ||||
Total reclassifications for the period | (53) | ||||
Currency exchange contracts | Reclassification out of Accumulated Other Comprehensive Income | Gains and (losses) on cash flow hedges | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Currency exchange contracts | 4 | ||||
Income tax expense | (1) | ||||
Total reclassifications for the period | $ 3 | ||||
[1] | These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items. |
EQUITY - Calculation of Net Inc
EQUITY - Calculation of Net Income per Ordinary Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Calculation of net income per ordinary share attributable to ordinary shareholders | ||||
Net Income Attributable to Eaton ordinary shareholders | $ 636 | $ 610 | $ 1,158 | $ 1,098 |
Weighted-average number of ordinary shares outstanding - diluted (shares) | 423.1 | 437.3 | 424.5 | 439.5 |
Less dilutive effect of equity-based compensation (shares) | 1.5 | 2.1 | 1.7 | 2.5 |
Weighted-average number of ordinary shares outstanding - basic (shares) | 421.6 | 435.2 | 422.8 | 437 |
Net income per share attributable to Eaton ordinary shareholders | ||||
Diluted (usd per share) | $ 1.50 | $ 1.39 | $ 2.73 | $ 2.50 |
Basic (usd per share) | $ 1.51 | $ 1.40 | $ 2.74 | $ 2.51 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.8 | 0.6 | 1.2 | 0.3 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Financial Instruments at Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | $ 412 | $ 283 | $ 256 | $ 561 |
Short-term investments | 385 | 157 | ||
Net derivative contracts | 33 | 14 | ||
Level 1 | ||||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | 412 | 283 | ||
Short-term investments | 385 | 157 | ||
Net derivative contracts | 0 | 0 | ||
Level 2 | ||||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | 0 | 0 | ||
Short-term investments | 0 | 0 | ||
Net derivative contracts | 33 | 14 | ||
Level 3 | ||||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||||
Cash | 0 | 0 | ||
Short-term investments | 0 | 0 | ||
Net derivative contracts | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Other
FAIR VALUE MEASUREMENTS - Other Fair Value Measurements (Details) - Level 2 - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Other Fair Value Measurements [Line Items] | ||
Carrying value of long-term debt and current portion of long-term debt | $ 8,084 | $ 7,107 |
Fair value of long-term debt and current portion of long-term debt | $ 8,513 | $ 7,061 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Financial Instrument Recognized in the Consolidated Balance sheet (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | |||
Foreign currency note payable, noncurrent, pre-tax | $ 1,867 | $ 623 | |
Derivatives not designated as hedges | |||
Percentage of intercompany balance sheet exposure | 100.00% | ||
Proceeds for settlement of currency exchange contracts not designated as hedges - net | $ 50 | $ 0 | |
Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 9 | 19 | |
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 35 | 40 | |
Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 59 | 24 | |
Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 9 | 12 | |
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 18 | 20 | |
Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 43 | 37 | |
Currency exchange contracts | Other current assets | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 35 | 40 | |
Currency exchange contracts | Other current liabilities | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 18 | 20 | |
Commodity contracts | Other current assets | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, asset, at fair value | 0 | ||
Commodity contracts | Other current liabilities | |||
Derivatives not designated as hedges | |||
Derivative instruments not designated as hedging instruments, liability, at fair value | 0 | ||
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives designated as hedges | |||
Notional amount | 2,225 | 2,550 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 59 | 22 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | 1 | |
Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 1 | 26 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives designated as hedges | |||
Notional amount | 300 | 100 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | 0 | |
Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 30 | 3 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives designated as hedges | |||
Notional amount | 1,132 | 951 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 9 | 19 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | 2 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 9 | 11 | |
Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 12 | 8 | |
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives designated as hedges | |||
Notional amount | 12 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other current assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other noncurrent assets | |||
Derivatives designated as hedges | |||
Derivative asset designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other current liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | ||
Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | Other noncurrent liabilities | |||
Derivatives designated as hedges | |||
Derivative liability designated as hedging instrument | 0 | ||
Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives designated as hedges | |||
Notional amount | 4,718 | $ 3,886 | |
Derivatives not designated as hedges | Commodity contracts | |||
Derivatives designated as hedges | |||
Notional amount | $ 4 | ||
Minimum | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Minimum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 18 months | 3 months | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, remaining maturity | 34 years | 34 years | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | 1 month | |
Minimum | Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Minimum | Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | 1 month | |
Minimum | Derivatives not designated as hedges | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month | ||
Maximum | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 7 months | ||
Maximum | Derivatives designated as hedges | Fair value hedging | Fixed-to-floating interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 16 years | 16 years | |
Maximum | Derivatives designated as hedges | Fair value hedging | Forward starting floating-to-fixed interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, remaining maturity | 34 years | 34 years | |
Maximum | Derivatives designated as hedges | Cash Flow Hedging | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 36 months | 36 months | |
Maximum | Derivatives designated as hedges | Cash Flow Hedging | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 7 months | ||
Maximum | Derivatives not designated as hedges | Currency exchange contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 12 months | 12 months | |
Maximum | Derivatives not designated as hedges | Commodity contracts | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, term of contract | 1 month |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Volume of Outstanding Commodity Contracts (Details) - Commodity contracts | 6 Months Ended |
Jun. 30, 2019lb | |
Derivative [Line Items] | |
Derivative, outstanding commodity contract | 5,000,000 |
Minimum | |
Derivative [Line Items] | |
Derivative, term of contract | 1 month |
Maximum | |
Derivative [Line Items] | |
Derivative, term of contract | 7 months |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Balance Sheet Related to Fixed-to-Floating Interest Rate Swaps (Details) - Long-term debt $ in Millions | Jun. 30, 2019USD ($) |
Derivative [Line Items] | |
Discontinued hedge, cumulative adjustment | $ 42 |
Interest Rate Swap | |
Derivative [Line Items] | |
Carrying amount of the hedged assets (liabilities) | (2,838) |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) | $ (100) |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivative on Consolidated Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 |
Cost of products sold | 3,697 | $ 3,671 | 7,270 | $ 7,244 |
Interest expense - net | 63 | 129 | ||
Cash Flow Hedging | Net Sales | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 2 | 5 | ||
Gain (loss) on hedging instrument | (2) | (5) | ||
Cash Flow Hedging | Net Sales | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Cost of products sold | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | (4) | (9) | ||
Gain (loss) on hedging instrument | 4 | 9 | ||
Cash Flow Hedging | Cost of products sold | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Interest expense - net | Currency exchange contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Cash Flow Hedging | Interest expense - net | Commodity contracts | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Net Sales | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Cost of products sold | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | 0 | 0 | ||
Gain (loss) on hedging instrument | 0 | 0 | ||
Fair value hedging | Interest expense - net | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Gain (loss) on hedged item | (40) | (63) | ||
Gain (loss) on hedging instrument | $ 40 | $ 63 |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ 7 | $ 48 |
Currency exchange contracts | Other income - net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | 8 | 48 |
Commodity contracts | Cost of products sold | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ (1) | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_8
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recognized in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Cash flow hedge gain (loss) to be reclassified within the next twelve months | $ 0 | $ (5) | ||
Interest expense - net | Forward starting floating-to-fixed interest rate swaps | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | $ (18) | $ 0 | (27) | 0 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Cost of products sold | Currency exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | (10) | (15) | (10) | (2) |
Gain (loss) reclassified from Accumulated other comprehensive loss | 2 | (4) | 4 | (8) |
Cost of products sold | Commodity contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | (2) | 0 | 0 | 0 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Other income - net | Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive (loss) income | 0 | 41 | 12 | 17 |
Gain (loss) reclassified from Accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Total | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total, gain (loss) on derivative and net investment hedge recognized in other comprehensive (loss) income | (30) | 26 | (25) | 15 |
Total, gain (loss) on derivative and net investment hedge recognized in accumulated other comprehensive (loss) income | $ 2 | $ (4) | $ 4 | $ (8) |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,089 | $ 1,077 |
Work-in-process | 565 | 500 |
Finished goods | 1,199 | 1,208 |
Total inventory | $ 2,853 | $ 2,785 |
BUSINESS SEGMENT INFORMATION (D
BUSINESS SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Segment Information | ||||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 | ||
Corporate | ||||||
Interest expense - net | 63 | 68 | 129 | 138 | ||
Pension and other postretirement benefits expense | (75) | (82) | ||||
Other corporate expense - net | (23) | 8 | (33) | 6 | ||
Income before income taxes | 738 | 694 | 1,341 | 1,259 | ||
Income tax expense | 102 | 83 | 183 | 161 | ||
Net income | 636 | $ 522 | 611 | $ 487 | 1,158 | 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net Income Attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Electrical Products | ||||||
Business Segment Information | ||||||
Net sales | 1,849 | 1,806 | 3,609 | 3,538 | ||
Electrical Systems and Services | ||||||
Business Segment Information | ||||||
Net sales | 1,582 | 1,513 | 3,046 | 2,894 | ||
Hydraulics | ||||||
Business Segment Information | ||||||
Net sales | 698 | 723 | 1,384 | 1,433 | ||
Aerospace | ||||||
Business Segment Information | ||||||
Net sales | 517 | 463 | 1,019 | 921 | ||
Vehicle | ||||||
Business Segment Information | ||||||
Net sales | 803 | 899 | 1,613 | 1,792 | ||
eMobility | ||||||
Business Segment Information | ||||||
Net sales | 84 | 83 | 167 | 160 | ||
Total business segments | ||||||
Business Segment Information | ||||||
Net sales | 5,533 | 5,487 | 10,838 | 10,738 | ||
Segment operating profit | 986 | 932 | 1,832 | 1,728 | ||
Total business segments | Electrical Products | ||||||
Business Segment Information | ||||||
Net sales | 1,849 | 1,806 | 3,609 | 3,538 | ||
Segment operating profit | 361 | 334 | 692 | 641 | ||
Total business segments | Electrical Systems and Services | ||||||
Business Segment Information | ||||||
Net sales | 1,582 | 1,513 | 3,046 | 2,894 | ||
Segment operating profit | 275 | 227 | 467 | 394 | ||
Total business segments | Hydraulics | ||||||
Business Segment Information | ||||||
Net sales | 698 | 723 | 1,384 | 1,433 | ||
Segment operating profit | 80 | 101 | 160 | 191 | ||
Total business segments | Aerospace | ||||||
Business Segment Information | ||||||
Net sales | 517 | 463 | 1,019 | 921 | ||
Segment operating profit | 127 | 90 | 243 | 179 | ||
Total business segments | Vehicle | ||||||
Business Segment Information | ||||||
Net sales | 803 | 899 | 1,613 | 1,792 | ||
Segment operating profit | 136 | 166 | 258 | 298 | ||
Total business segments | eMobility | ||||||
Business Segment Information | ||||||
Net sales | 84 | 83 | 167 | 160 | ||
Segment operating profit | 7 | 14 | 12 | 25 | ||
Corporate | ||||||
Corporate | ||||||
Amortization of intangible assets | (94) | (96) | (187) | (194) | ||
Interest expense - net | (63) | (68) | (129) | (138) | ||
Pension and other postretirement benefits expense | (2) | 1 | (2) | (1) | ||
Other corporate expense - net | $ (89) | $ (75) | $ (173) | $ (136) |
CONDENSED CONSOLIDATING FINAN_3
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Narrative (Details) | May 14, 2019 | Sep. 15, 2017 | Oct. 14, 2016 |
Condensed Consolidating Financial Information [Abstract] | |||
Eaton and certain other 100% owned subsidiaries guarantee of Senior Debt | 100.00% | 100.00% | 100.00% |
CONDENSED CONSOLIDATING FINAN_4
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Consolidating Statements of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | $ 5,533 | $ 5,487 | $ 10,838 | $ 10,738 | ||
Cost of products sold | 3,697 | 3,671 | 7,270 | 7,244 | ||
Selling and administrative expense | 907 | 901 | 1,824 | 1,790 | ||
Research and development expense | 151 | 145 | 307 | 301 | ||
Interest expense (income) - net | 63 | 68 | 129 | 138 | ||
Other (income) expense - net | (23) | 8 | (33) | 6 | ||
Equity in loss (earnings) of subsidiaries, net of tax | 0 | 0 | 0 | 0 | ||
Intercompany expense (income) - net | 0 | 0 | 0 | 0 | ||
Income before income taxes | 738 | 694 | 1,341 | 1,259 | ||
Income tax expense (benefit) | 102 | 83 | 183 | 161 | ||
Net income | 636 | $ 522 | 611 | $ 487 | 1,158 | 1,098 |
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Other comprehensive income (loss) | (30) | $ 67 | (624) | $ 296 | 37 | (328) |
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 606 | (14) | 1,195 | 770 | ||
Guarantors | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 1,902 | 1,790 | 3,722 | 3,490 | ||
Cost of products sold | 1,377 | 1,289 | 2,666 | 2,525 | ||
Selling and administrative expense | 205 | 200 | 410 | 378 | ||
Research and development expense | 37 | 35 | 75 | 76 | ||
Interest expense (income) - net | 5 | 4 | 9 | 8 | ||
Other (income) expense - net | (14) | 36 | (22) | 27 | ||
Equity in loss (earnings) of subsidiaries, net of tax | (731) | (899) | (1,562) | (1,696) | ||
Intercompany expense (income) - net | 426 | 557 | 873 | 1,044 | ||
Income before income taxes | 597 | 568 | 1,273 | 1,128 | ||
Income tax expense (benefit) | (23) | (14) | (35) | (28) | ||
Net income | 620 | 582 | 1,308 | 1,156 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 620 | 582 | 1,308 | 1,156 | ||
Other comprehensive income (loss) | (19) | (584) | 53 | (300) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 601 | (2) | 1,361 | 856 | ||
Other subsidiaries | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 3,134 | 3,242 | 6,172 | 6,433 | ||
Cost of products sold | 2,230 | 2,312 | 4,425 | 4,622 | ||
Selling and administrative expense | 340 | 303 | 687 | 670 | ||
Research and development expense | 79 | 73 | 156 | 149 | ||
Interest expense (income) - net | (7) | (6) | (13) | (7) | ||
Other (income) expense - net | (14) | 0 | 4 | (16) | ||
Equity in loss (earnings) of subsidiaries, net of tax | (660) | (642) | (1,395) | (1,283) | ||
Intercompany expense (income) - net | (474) | (593) | (898) | (1,063) | ||
Income before income taxes | 1,640 | 1,795 | 3,206 | 3,361 | ||
Income tax expense (benefit) | 118 | 104 | 204 | 203 | ||
Net income | 1,522 | 1,691 | 3,002 | 3,158 | ||
Less net loss (income) for noncontrolling interests | 0 | (1) | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 1,522 | 1,690 | 3,002 | 3,158 | ||
Other comprehensive income (loss) | 2 | (1,381) | 93 | (772) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 1,524 | 309 | 3,095 | 2,386 | ||
Consolidating adjustments | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | (1,327) | (1,354) | (2,638) | (2,683) | ||
Cost of products sold | (1,331) | (1,357) | (2,632) | (2,682) | ||
Selling and administrative expense | 0 | 0 | 0 | 0 | ||
Research and development expense | 0 | 0 | 0 | 0 | ||
Interest expense (income) - net | (1) | 3 | (2) | 2 | ||
Other (income) expense - net | 0 | 0 | 0 | 0 | ||
Equity in loss (earnings) of subsidiaries, net of tax | 2,214 | 2,317 | 4,613 | 4,517 | ||
Intercompany expense (income) - net | 0 | 0 | 0 | 0 | ||
Income before income taxes | (2,209) | (2,317) | (4,617) | (4,520) | ||
Income tax expense (benefit) | 1 | 0 | (1) | (1) | ||
Net income | (2,210) | (2,317) | (4,616) | (4,519) | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | (2,210) | (2,317) | (4,616) | (4,519) | ||
Other comprehensive income (loss) | 7 | 1,990 | (150) | 1,087 | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | (2,203) | (327) | (4,766) | (3,432) | ||
Eaton Corporation plc | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 0 | 0 | 0 | 0 | ||
Cost of products sold | 0 | 0 | 0 | 0 | ||
Selling and administrative expense | 2 | 2 | 6 | 5 | ||
Research and development expense | 0 | 0 | 0 | 0 | ||
Interest expense (income) - net | 0 | 0 | 0 | 0 | ||
Other (income) expense - net | (1) | (37) | (13) | (19) | ||
Equity in loss (earnings) of subsidiaries, net of tax | (647) | (587) | (1,174) | (1,101) | ||
Intercompany expense (income) - net | 10 | 12 | 23 | 17 | ||
Income before income taxes | 636 | 610 | 1,158 | 1,098 | ||
Income tax expense (benefit) | 0 | 0 | 0 | 0 | ||
Net income | 636 | 610 | 1,158 | 1,098 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 636 | 610 | 1,158 | 1,098 | ||
Other comprehensive income (loss) | (30) | (624) | 37 | (328) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | 606 | (14) | 1,195 | 770 | ||
Eaton Corporation | ||||||
Consolidating Statements of Comprehensive Income, Captions [Line Items] | ||||||
Net sales | 1,824 | 1,809 | 3,582 | 3,498 | ||
Cost of products sold | 1,421 | 1,427 | 2,811 | 2,779 | ||
Selling and administrative expense | 360 | 396 | 721 | 737 | ||
Research and development expense | 35 | 37 | 76 | 76 | ||
Interest expense (income) - net | 66 | 67 | 135 | 135 | ||
Other (income) expense - net | 6 | 9 | (2) | 14 | ||
Equity in loss (earnings) of subsidiaries, net of tax | (176) | (189) | (482) | (437) | ||
Intercompany expense (income) - net | 38 | 24 | 2 | 2 | ||
Income before income taxes | 74 | 38 | 321 | 192 | ||
Income tax expense (benefit) | 6 | (7) | 15 | (13) | ||
Net income | 68 | 45 | 306 | 205 | ||
Less net loss (income) for noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income attributable to Eaton ordinary shareholders | 68 | 45 | 306 | 205 | ||
Other comprehensive income (loss) | 10 | (25) | 4 | (15) | ||
Total comprehensive income (loss) attributable to Eaton ordinary shareholders | $ 78 | $ 20 | $ 310 | $ 190 |
CONDENSED CONSOLIDATING FINAN_5
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||||||
Cash | $ 412 | $ 283 | $ 256 | $ 561 | ||
Short-term investments | 385 | 157 | ||||
Accounts receivable - net | 3,944 | 3,858 | ||||
Intercompany accounts receivable | 0 | 0 | ||||
Inventory | 2,853 | 2,785 | ||||
Prepaid expenses and other current assets | 532 | 507 | ||||
Total current assets | 8,126 | 7,590 | ||||
Property, plant and equipment - net | 3,510 | 3,467 | ||||
Other noncurrent assets | ||||||
Goodwill | 13,463 | 13,328 | ||||
Other intangible assets | 4,766 | 4,846 | ||||
Operating lease assets | 419 | 0 | ||||
Deferred income taxes | 303 | 293 | ||||
Investment in subsidiaries | 0 | 0 | ||||
Intercompany loans receivables | 0 | 0 | ||||
Other assets | 1,657 | 1,568 | ||||
Total assets | 32,244 | 31,092 | ||||
Current liabilities | ||||||
Short-term debt | 2 | 414 | ||||
Current portion of long-term debt | 5 | 339 | ||||
Accounts payable | 2,268 | 2,130 | ||||
Intercompany accounts payable | 0 | 0 | ||||
Accrued compensation | 357 | 457 | ||||
Other current liabilities | 1,818 | 1,814 | ||||
Total current liabilities | 4,450 | 5,154 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 8,079 | 6,768 | ||||
Pension liabilities | 1,266 | 1,304 | ||||
Other postretirement benefits liabilities | 324 | 321 | ||||
Operating lease liabilities | 311 | 0 | ||||
Deferred income taxes | 389 | 349 | ||||
Intercompany loans payable | 0 | 0 | ||||
Other noncurrent liabilities | 1,064 | 1,054 | ||||
Total noncurrent liabilities | 11,433 | 9,796 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 16,306 | 16,107 | ||||
Noncontrolling interests | 55 | 35 | ||||
Total equity | 16,361 | $ 16,267 | 16,142 | 16,725 | $ 17,301 | 17,290 |
Total liabilities and equity | 32,244 | 31,092 | ||||
Consolidating adjustments | ||||||
Current assets | ||||||
Cash | 0 | 0 | 0 | 0 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 0 | 0 | ||||
Intercompany accounts receivable | (5,259) | (6,394) | ||||
Inventory | (82) | (76) | ||||
Prepaid expenses and other current assets | 16 | 14 | ||||
Total current assets | (5,325) | (6,456) | ||||
Property, plant and equipment - net | 0 | 0 | ||||
Other noncurrent assets | ||||||
Goodwill | 0 | 0 | ||||
Other intangible assets | 0 | 0 | ||||
Operating lease assets | 0 | |||||
Deferred income taxes | (286) | (335) | ||||
Investment in subsidiaries | (143,780) | (139,323) | ||||
Intercompany loans receivables | (72,291) | (74,904) | ||||
Other assets | 0 | 0 | ||||
Total assets | (221,682) | (221,018) | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 0 | 0 | ||||
Intercompany accounts payable | (5,259) | (6,394) | ||||
Accrued compensation | 0 | 0 | ||||
Other current liabilities | (1) | (2) | ||||
Total current liabilities | (5,260) | (6,396) | ||||
Noncurrent liabilities | ||||||
Long-term debt | 0 | 2 | ||||
Pension liabilities | 0 | 0 | ||||
Other postretirement benefits liabilities | 0 | 0 | ||||
Operating lease liabilities | 0 | |||||
Deferred income taxes | (286) | (335) | ||||
Intercompany loans payable | (72,291) | (74,904) | ||||
Other noncurrent liabilities | 0 | 0 | ||||
Total noncurrent liabilities | (72,577) | (75,237) | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | (143,845) | (139,385) | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | (143,845) | (139,385) | ||||
Total liabilities and equity | (221,682) | (221,018) | ||||
Other subsidiaries | ||||||
Current assets | ||||||
Cash | 332 | 261 | 241 | 360 | ||
Short-term investments | 285 | 157 | ||||
Accounts receivable - net | 2,166 | 1,975 | ||||
Intercompany accounts receivable | 2,416 | 2,968 | ||||
Inventory | 1,544 | 1,555 | ||||
Prepaid expenses and other current assets | 391 | 354 | ||||
Total current assets | 7,134 | 7,270 | ||||
Property, plant and equipment - net | 1,989 | 1,946 | ||||
Other noncurrent assets | ||||||
Goodwill | 5,428 | 5,293 | ||||
Other intangible assets | 1,662 | 1,664 | ||||
Operating lease assets | 212 | |||||
Deferred income taxes | 292 | 288 | ||||
Investment in subsidiaries | 26,986 | 25,557 | ||||
Intercompany loans receivables | 59,617 | 59,078 | ||||
Other assets | 724 | 705 | ||||
Total assets | 104,044 | 101,801 | ||||
Current liabilities | ||||||
Short-term debt | 2 | 26 | ||||
Current portion of long-term debt | 2 | 1 | ||||
Accounts payable | 1,312 | 1,238 | ||||
Intercompany accounts payable | 1,154 | 2,029 | ||||
Accrued compensation | 236 | 251 | ||||
Other current liabilities | 1,014 | 1,002 | ||||
Total current liabilities | 3,720 | 4,547 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 6 | 7 | ||||
Pension liabilities | 759 | 791 | ||||
Other postretirement benefits liabilities | 74 | 72 | ||||
Operating lease liabilities | 158 | |||||
Deferred income taxes | 201 | 175 | ||||
Intercompany loans payable | 1,125 | 1,399 | ||||
Other noncurrent liabilities | 369 | 374 | ||||
Total noncurrent liabilities | 2,692 | 2,818 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 97,577 | 94,401 | ||||
Noncontrolling interests | 55 | 35 | ||||
Total equity | 97,632 | 94,436 | ||||
Total liabilities and equity | 104,044 | 101,801 | ||||
Guarantors | ||||||
Current assets | ||||||
Cash | 9 | 0 | 10 | 18 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 1,170 | 1,400 | ||||
Intercompany accounts receivable | 2,102 | 1,851 | ||||
Inventory | 854 | 766 | ||||
Prepaid expenses and other current assets | 29 | 32 | ||||
Total current assets | 4,164 | 4,049 | ||||
Property, plant and equipment - net | 670 | 678 | ||||
Other noncurrent assets | ||||||
Goodwill | 6,705 | 6,705 | ||||
Other intangible assets | 2,980 | 3,054 | ||||
Operating lease assets | 59 | |||||
Deferred income taxes | 0 | 0 | ||||
Investment in subsidiaries | 72,600 | 71,334 | ||||
Intercompany loans receivables | 6,962 | 8,406 | ||||
Other assets | 156 | 117 | ||||
Total assets | 94,296 | 94,343 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 472 | 416 | ||||
Intercompany accounts payable | 2,852 | 3,206 | ||||
Accrued compensation | 45 | 71 | ||||
Other current liabilities | 265 | 259 | ||||
Total current liabilities | 3,634 | 3,952 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 2,187 | 945 | ||||
Pension liabilities | 128 | 130 | ||||
Other postretirement benefits liabilities | 83 | 83 | ||||
Operating lease liabilities | 45 | |||||
Deferred income taxes | 474 | 508 | ||||
Intercompany loans payable | 64,429 | 66,507 | ||||
Other noncurrent liabilities | 295 | 291 | ||||
Total noncurrent liabilities | 67,641 | 68,464 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 23,021 | 21,927 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 23,021 | 21,927 | ||||
Total liabilities and equity | 94,296 | 94,343 | ||||
Eaton Corporation | ||||||
Current assets | ||||||
Cash | 70 | 21 | 5 | 183 | ||
Short-term investments | 100 | 0 | ||||
Accounts receivable - net | 608 | 483 | ||||
Intercompany accounts receivable | 739 | 1,575 | ||||
Inventory | 537 | 540 | ||||
Prepaid expenses and other current assets | 96 | 107 | ||||
Total current assets | 2,150 | 2,726 | ||||
Property, plant and equipment - net | 851 | 843 | ||||
Other noncurrent assets | ||||||
Goodwill | 1,330 | 1,330 | ||||
Other intangible assets | 124 | 128 | ||||
Operating lease assets | 148 | |||||
Deferred income taxes | 297 | 340 | ||||
Investment in subsidiaries | 26,501 | 25,956 | ||||
Intercompany loans receivables | 5,703 | 5,912 | ||||
Other assets | 777 | 746 | ||||
Total assets | 37,881 | 37,981 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 388 | ||||
Current portion of long-term debt | 3 | 338 | ||||
Accounts payable | 484 | 476 | ||||
Intercompany accounts payable | 1,245 | 1,127 | ||||
Accrued compensation | 76 | 135 | ||||
Other current liabilities | 539 | 525 | ||||
Total current liabilities | 2,347 | 2,989 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 5,886 | 5,814 | ||||
Pension liabilities | 379 | 383 | ||||
Other postretirement benefits liabilities | 167 | 166 | ||||
Operating lease liabilities | 108 | |||||
Deferred income taxes | 0 | 1 | ||||
Intercompany loans payable | 5,347 | 5,182 | ||||
Other noncurrent liabilities | 400 | 389 | ||||
Total noncurrent liabilities | 12,287 | 11,935 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 23,247 | 23,057 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 23,247 | 23,057 | ||||
Total liabilities and equity | 37,881 | 37,981 | ||||
Eaton Corporation plc | ||||||
Current assets | ||||||
Cash | 1 | 1 | $ 0 | $ 0 | ||
Short-term investments | 0 | 0 | ||||
Accounts receivable - net | 0 | 0 | ||||
Intercompany accounts receivable | 2 | 0 | ||||
Inventory | 0 | 0 | ||||
Prepaid expenses and other current assets | 0 | 0 | ||||
Total current assets | 3 | 1 | ||||
Property, plant and equipment - net | 0 | 0 | ||||
Other noncurrent assets | ||||||
Goodwill | 0 | 0 | ||||
Other intangible assets | 0 | 0 | ||||
Operating lease assets | 0 | |||||
Deferred income taxes | 0 | 0 | ||||
Investment in subsidiaries | 17,693 | 16,476 | ||||
Intercompany loans receivables | 9 | 1,508 | ||||
Other assets | 0 | 0 | ||||
Total assets | 17,705 | 17,985 | ||||
Current liabilities | ||||||
Short-term debt | 0 | 0 | ||||
Current portion of long-term debt | 0 | 0 | ||||
Accounts payable | 0 | 0 | ||||
Intercompany accounts payable | 8 | 32 | ||||
Accrued compensation | 0 | 0 | ||||
Other current liabilities | 1 | 30 | ||||
Total current liabilities | 9 | 62 | ||||
Noncurrent liabilities | ||||||
Long-term debt | 0 | 0 | ||||
Pension liabilities | 0 | 0 | ||||
Other postretirement benefits liabilities | 0 | 0 | ||||
Operating lease liabilities | 0 | |||||
Deferred income taxes | 0 | 0 | ||||
Intercompany loans payable | 1,390 | 1,816 | ||||
Other noncurrent liabilities | 0 | 0 | ||||
Total noncurrent liabilities | 1,390 | 1,816 | ||||
Shareholders’ equity | ||||||
Eaton shareholders' equity | 16,306 | 16,107 | ||||
Noncontrolling interests | 0 | 0 | ||||
Total equity | 16,306 | 16,107 | ||||
Total liabilities and equity | $ 17,705 | $ 17,985 |
CONDENSED CONSOLIDATING FINAN_6
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 1,431 | $ 838 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (298) | (280) |
Cash paid for acquisition of a business, net of cash acquired | (243) | 0 |
Sales (purchases) of short-term investments - net | (221) | 284 |
Investments in affiliates | 0 | |
Loans to affiliates | 0 | 0 |
Repayments of loans from affiliates | 0 | 0 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 50 | 0 |
Other - net | 2 | (41) |
Net cash provided by (used in) investing activities | (710) | (37) |
Financing activities | ||
Proceeds from borrowings | 1,232 | 500 |
Payments on borrowings | (757) | (486) |
Proceeds from borrowings from affiliates | 0 | 0 |
Payments on borrowings from affiliates | 0 | 0 |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | (609) | (578) |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 25 | 21 |
Repurchase of shares | (440) | (600) |
Payment, Tax Withholding, Share-based Payment Arrangement | (44) | (23) |
Other - net | (6) | (2) |
Net cash provided by (used in) financing activities | (599) | (1,168) |
Effect of currency on cash | 7 | 62 |
Total increase (decrease) in cash | 129 | (305) |
Cash at the beginning of the period | 283 | 561 |
Cash at the end of the period | 412 | 256 |
Consolidating adjustments | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 0 | (84) |
Investing activities | ||
Capital expenditures for property, plant and equipment | 0 | 0 |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 36 | |
Loans to affiliates | 3,832 | 3,748 |
Repayments of loans from affiliates | (2,538) | (4,503) |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 0 | 0 |
Net cash provided by (used in) investing activities | 1,294 | (719) |
Financing activities | ||
Proceeds from borrowings | 0 | 0 |
Payments on borrowings | 0 | 0 |
Proceeds from borrowings from affiliates | (3,832) | (3,748) |
Payments on borrowings from affiliates | 2,538 | 4,503 |
Capital contributions from affiliates | (36) | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 84 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | 0 | 0 |
Other - net | 0 | 0 |
Net cash provided by (used in) financing activities | (1,294) | 803 |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 0 | 0 |
Cash at the beginning of the period | 0 | 0 |
Cash at the end of the period | 0 | 0 |
Guarantors | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 366 | 103 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (56) | (50) |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 0 | |
Loans to affiliates | (280) | (84) |
Repayments of loans from affiliates | 0 | 886 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 26 | 0 |
Net cash provided by (used in) investing activities | (310) | 752 |
Financing activities | ||
Proceeds from borrowings | 1,232 | 0 |
Payments on borrowings | 0 | (36) |
Proceeds from borrowings from affiliates | 381 | 50 |
Payments on borrowings from affiliates | (458) | (524) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | (1,191) | (348) |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (7) | (5) |
Other - net | (4) | 0 |
Net cash provided by (used in) financing activities | (47) | (863) |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 9 | (8) |
Cash at the beginning of the period | 0 | 18 |
Cash at the end of the period | 9 | 10 |
Other subsidiaries | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 429 | 928 |
Investing activities | ||
Capital expenditures for property, plant and equipment | (192) | (181) |
Cash paid for acquisition of a business, net of cash acquired | (243) | |
Sales (purchases) of short-term investments - net | (121) | 284 |
Investments in affiliates | 0 | |
Loans to affiliates | (3,260) | (3,564) |
Repayments of loans from affiliates | 1,982 | 3,110 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 51 | |
Other - net | (9) | (18) |
Net cash provided by (used in) investing activities | (1,792) | (369) |
Financing activities | ||
Proceeds from borrowings | 0 | 19 |
Payments on borrowings | (29) | 0 |
Proceeds from borrowings from affiliates | 572 | 99 |
Payments on borrowings from affiliates | (457) | (760) |
Capital contributions from affiliates | 36 | |
Other intercompany financing activities | 1,345 | (47) |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | (84) | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (2) | (2) |
Other - net | (2) | (1) |
Net cash provided by (used in) financing activities | 1,427 | (740) |
Effect of currency on cash | 7 | 62 |
Total increase (decrease) in cash | 71 | (119) |
Cash at the beginning of the period | 261 | 360 |
Cash at the end of the period | 332 | 241 |
Eaton Corporation plc | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (49) | 0 |
Investing activities | ||
Capital expenditures for property, plant and equipment | 0 | 0 |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | 0 | 0 |
Investments in affiliates | 0 | |
Loans to affiliates | 0 | 0 |
Repayments of loans from affiliates | 0 | 0 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | 0 | |
Other - net | 0 | 0 |
Net cash provided by (used in) investing activities | 0 | 0 |
Financing activities | ||
Proceeds from borrowings | 0 | 0 |
Payments on borrowings | 0 | 0 |
Proceeds from borrowings from affiliates | 1,089 | 2,383 |
Payments on borrowings from affiliates | (16) | (1,226) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | 0 | 0 |
Cash dividends paid | (609) | (578) |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 25 | 21 |
Repurchase of shares | (440) | (600) |
Payment, Tax Withholding, Share-based Payment Arrangement | 0 | 0 |
Other - net | 0 | 0 |
Net cash provided by (used in) financing activities | 49 | 0 |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 0 | 0 |
Cash at the beginning of the period | 1 | 0 |
Cash at the end of the period | 1 | 0 |
Eaton Corporation | ||
Condensed Consolidating Statements of Cash Flows, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 685 | (109) |
Investing activities | ||
Capital expenditures for property, plant and equipment | (50) | (49) |
Cash paid for acquisition of a business, net of cash acquired | 0 | |
Sales (purchases) of short-term investments - net | (100) | 0 |
Investments in affiliates | (36) | |
Loans to affiliates | (292) | (100) |
Repayments of loans from affiliates | 556 | 507 |
Proceeds (payments) for settlement of currency exchange contracts not designated as hedges - net | (1) | |
Other - net | (15) | (23) |
Net cash provided by (used in) investing activities | 98 | 299 |
Financing activities | ||
Proceeds from borrowings | 0 | 481 |
Payments on borrowings | (728) | (450) |
Proceeds from borrowings from affiliates | 1,790 | 1,216 |
Payments on borrowings from affiliates | (1,607) | (1,993) |
Capital contributions from affiliates | 0 | |
Other intercompany financing activities | (154) | 395 |
Cash dividends paid | 0 | 0 |
Cash dividends paid to affiliates | 0 | |
Exercise of employee stock options | 0 | 0 |
Repurchase of shares | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (35) | (16) |
Other - net | 0 | (1) |
Net cash provided by (used in) financing activities | (734) | (368) |
Effect of currency on cash | 0 | 0 |
Total increase (decrease) in cash | 49 | (178) |
Cash at the beginning of the period | 21 | 183 |
Cash at the end of the period | $ 70 | $ 5 |