Eaton (ETN) 10-K risk factor changes: FY2022 vs FY2021

The global outbreak of COVID-19 [removed: has] disrupted economic activity around the world.

As a result, we and our employees, suppliers, customers and others [removed: have been and may continue to be] [added: were, at times,] restricted or prevented from conducting normal business activities, [removed: including] as a result of shutdowns, travel restrictions and other actions that [removed: may be] [added: were] requested or mandated by governmental authorities.

[removed: While a substantial portion of our businesses and facilities have been classified as essential in jurisdictions in which facility closures have been mandated,] [added: None the less,] we can give no assurance that there will not be additional closures in the future or that our businesses and facilities will be classified as essential in each of the jurisdictions in which we [removed: operate.][added: operate, should future outbreaks and/or additional strains of the virus impact global economic activity.]

The [added: duration of and] extent to which the COVID-19 pandemic continues to impact our results of operations and financial condition will depend on future developments that are highly uncertain and cannot be [removed: predicted, including the resurgence of COVID-19 as a result of new variants, the effectiveness of COVID-19 vaccines and the speed at which populations are vaccinated around the globe, the impact of COVID-19 on economic activity and regulatory actions taken to contain the impact of COVID-19 on public health and the global economy.][added: predicted.]

The impact of COVID-19 may also [added: continue to] exacerbate other risks discussed in Item 1A of this Annual Report on Form 10-K, any of which could have a material effect on our results of operations.

Eaton uses a variety of raw [removed: materials and] [added: materials,] components [added: and services] in its businesses, and significant [removed: shortages, price increases, or supplier insolvencies] [added: inflation] could increase operating costs [removed: and adversely impact the competitive positions of Eaton's products.][added: that may not be fully recouped in product pricing.]

[removed: Shortages] [added: Global shortages] have [removed: affected] [added: continued to affect] the prices Eaton's businesses are charged [removed: as global economies recover from the COVID-19 pandemic.][added: for raw materials, particularly commodities.]

If this trend [removed: continues,] [added: continues and we are unable to fully recoup these price increases in product pricing,] the competitive position of our products and services may be impacted, which could have a material adverse impact on operating results.

Further, some of Eaton's suppliers of component parts have increased their prices in response to [removed: increases in] [added: increased] costs of raw materials that they use to manufacture component [removed: parts, including logistics inflation.][added: parts.]

Eaton may be subject to risks relating to changes in its tax [removed: rates] [added: rates, changes in global tax laws and regulations,] or exposure to additional income tax liabilities.

These impacts were partially mitigated for us, given that a substantial portion of our businesses and facilities were classified as essential in jurisdictions in which facility closures were mandated, and most of these disruptions have subsided.

Further, the pandemic has, and could further disrupt our supply chain.

Further, Eaton has been impacted by logistics and wage inflation.

Significant shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers could continue to adversely impact our results of operations.

Eaton has been impacted by supply chain disruptions.

Further, labor shortages persist broadly in select markets.

Some of our suppliers have experienced the same conditions and in response, have continued to increase their prices in response to increases in their costs of raw materials, energy and/or labor.

While we strive to recoup these increased costs through our pricing, if we are unable to do so without compromising the competitive position of our products and services, our results could continue to be impacted by this trend.

Further, should these trends continue or worsen, the impact could have a material adverse impact on our operating results.

We have experienced and could continue to experience supply and labor shortages as the Company expands its production capacity to meet increased customer demand as global economies recover.

Founded in 1911, [removed: Eaton has been] [added: 2023 marks Eaton's 100th anniversary of being] listed on the New York Stock [removed: Exchange for nearly a century.][added: Exchange.]

We reported revenues of [removed: $19.6] [added: $20.8] billion in [removed: 2021] [added: 2022] and serve customers in more than 170 countries.

In [removed: 2021, 22%] [added: 2022, 24%] of these segments' sales were made to seven large customers of electrical products and electrical systems and services.

In [removed: 2021, 20%] [added: 2022, 22%] of this segment's sales were made to three large original equipment manufacturers of aircraft.

In [removed: 2021, 36%] [added: 2022, 32%] of this segment's sales were made to [removed: four] [added: three] large original equipment manufacturers of vehicles and related components.

In [removed: 2021, 18%] [added: 2022, 26%] of this segment's sales were made to [removed: three] [added: six] large original equipment manufacturers of vehicles, construction equipment and related components.

Materials are purchased in various forms, such as [removed: bar stock,] [added: coils, sheets, strips, ingots, bars,] extrusions, castings, forgings, [added: stampings,] powder metal, [removed: coils, sheets, strips, stampings,] plastic [removed: resins] [added: resins,] and pellets.

However, as global economies recovered from the COVID-19 pandemic [added: and reacted to Russia's ongoing war] in [removed: 2021,] [added: Ukraine,] some of our businesses were impacted by inflation and supply chain constraints, including limited availability of select materials and delivery delays.

The Company's products [removed: are] [added: may be] manufactured, marketed and sold using a portfolio of patents, trademarks, licenses, and other forms of intellectual property, some of which expire in the future.

Eaton has approximately [removed: 86,000] [added: 92,000] employees globally.

The number of persons employed by our reportable segments and corporate at December 31, [removed: 2021] [added: 2022] are as follows:

| Electrical Americas | | | [removed: 28] [added: 30] | | |

| Aerospace | | | [removed: 12] [added: 13] | | |

| Vehicle | | | [removed: 11] [added: 12] | | |

| eMobility | | | [removed: 1] [added: 2] | | |

| Corporate | | | [removed: 8] [added: 9] | | |

| Total number of persons employed | | | [removed: 86] [added: 92] | | |

At December 31, [removed: 2021,] [added: 2022,] Eaton’s distribution by gender, and United States distribution by minority status, is as follows:

| Global leadership team | | | | | | 25 | | | | | | [removed: 6] [added: 5] | | | | | | [removed: 24.0] [added: 20.0] | | % | | | | 23 | | | | | | 13 | | | | | | 56.5 | | % |

Eaton’s [removed: 2021] [added: 2022] total employee costs was $5.5 billion including salaries, wages, equity-based compensation, pension and other benefits.

The total compensation of our median employee on October 1, [removed: 2020,] [added: 2021,] as reported in our [removed: 2021] [added: 2022] Proxy Statement filed [removed: in] [added: on] March [removed: 2021,] [added: 18, 2022,] and as calculated in accordance with Item 402(u) of Regulation S-K, was [removed: $63,951.][added: $56,287.]

For example, in [removed: 2020] [added: 2021] we reduced our Total Recordable Case Rate (TRCR) by [removed: 26% (0.40)] [added: 7% (0.39)] and our Days Away Case Rate (DACR) by [removed: 26% (0.17)] [added: 12% (0.15)] compared to [removed: 2019.][added: 2020.]

Our TRCR of [removed: 0.40] [added: 0.39] approaches our long-term goal of 0.25, which we believe is a world-class safety rate.

Our [removed: 2021 survey on employee] [added: most recent] engagement [added: survey of all employees was completed in 2021 and] showed a favorable response from 83 percent of employees who completed it.

[removed: We] [added: In addition, we have programs focused on career development of employees at all levels and we] are committed to a wide range of strategies designed to improve and sustain employee engagement over the long-term.

Eaton’s businesses are well-positioned to take advantage of secular growth trends related to the energy transition from fossil fuels to renewables.

We are responding to these trends by innovating solutions that transform the electrical power value chain, investing in electrical vehicle markets, increasing our focus on electrification, and employing digital technologies for power management.

The Company’s innovations are expected to enable the integration of renewables and sustainability solutions, with new types of equipment, services, and software.

These strategic focus areas are an important part of our response to climate change.

| (In thousands) | | | 2022 | | |

| Board of directors | | | | | | 11 | | | | | | 4 | | | | | | 36.4 | | % | | | | 9 | | | | | | 4 | | | | | | 44.4 | | % |

| Executives | | | | | | 618 | | | | | | 140 | | | | | | 22.7 | | % | | | | 429 | | | | | | 85 | | | | | | 19.8 | | % |

| Managers | | | | | | 8,202 | | | | | | 1,998 | | | | | | 24.4 | | % | | | | 4,270 | | | | | | 871 | | | | | | 20.4 | | % |

| All other employees | | | | | | 83,079 | | | | | | 29,276 | | | | | | 35.2 | | % | | | | 22,702 | | | | | | 8,248 | | | | | | 36.3 | | % |

| All employees | | | | | | 91,924 | | | | | | 31,419 | | | | | | 34.2 | | % | | | | 27,424 | | | | | | 9,217 | | | | | | 33.6 | | % |

Our 2022 TRCR will be provided in our annual Sustainability Report to be issued in 2023.

In 2022, we performed a limited employee survey which generally showed similar results as 2021.

We plan to perform another survey of all employees in 2023.

COVID-19

Information related to the impact of the COVID-19 pandemic on the Company is presented in “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.

Additional information related to the impact of supply chain constraints and inflation is presented in “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.

| (In thousands) | | | 2021 | | |

| Board of directors | | | | | | 12 | | | | | | 4 | | | | | | 33.3 | | % | | | | 10 | | | | | | 4 | | | | | | 40.0 | | % |

| Executives | | | | | | 587 | | | | | | 137 | | | | | | 23.3 | | % | | | | 413 | | | | | | 70 | | | | | | 16.9 | | % |

| Managers | | | | | | 7,185 | | | | | | 1,697 | | | | | | 23.6 | | % | | | | 3,668 | | | | | | 731 | | | | | | 19.9 | | % |

| All other employees | | | | | | 78,150 | | | | | | 26,827 | | | | | | 34.3 | | % | | | | 20,171 | | | | | | 7,340 | | | | | | 36.4 | | % |

| All employees | | | | | | 85,947 | | | | | | 28,667 | | | | | | 33.4 | | % | | | | 24,275 | | | | | | 8,154 | | | | | | 33.6 | | % |

Further, in 2021, the Company took a number of measures to continue to protect our workforce from the COVID-19 pandemic, including the following as appropriate:

- Training our employees at sites around the world in cleaning and disinfecting protocols

- Enacting social distancing procedures, staggered shifts, a rotating office work schedule, and modified workspace and meeting space layouts as appropriate

- Requiring employees to stay at home if they are feeling ill, and encouraging increased hand washing and hygiene practices across all sites

- Advising employees to take advantage of flexible work options

- Restricting visitors to all sites

- Encouraging vaccination for all employees and at select locations, arranging for vaccination clinics and transportation

- Consulting regularly with doctors and health care organizations

- Updating the Company's response plan as new information became available

In the event an employee suspects they have been exposed to COVID-19, or testing confirms it, sites will implement a response plan that includes:

- Communication with all who may have been exposed

- Disinfecting work stations and common areas

- Shutting down the facility if warranted

These actions are aligned with preventive health protocols of governmental authorities and health organizations including the Centers for Disease Control (U.S.) and the World Health Organization.

In addition, we have programs focused on career development of employees at all levels.

For the year ended December 31, [removed: 2021][added: 2022]

The aggregate market value of Ordinary Shares held by non-affiliates of the registrant as of June 30, [removed: 2021] [added: 2022] was [removed: $59.1] [added: $50.2] billion.

As of January 31, [removed: 2022,] [added: 2023,] there were [removed: 398.8] [added: 398.0] million Ordinary Shares outstanding.

Portions of the Proxy Statement for the [removed: 2022] [added: 2023] annual shareholders meeting are incorporated by reference into Part III.

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| [Item [removed: 14.](#i07263c46541c4e4fb51563d7ec8000f1_76)] [added: 14.](#i47fac5fc965f4a95b0a5cca7943fd9ee_82)] | | | [Principal Accounting Fees and [removed: Services](#i07263c46541c4e4fb51563d7ec8000f1_76)] [added: Services](#i47fac5fc965f4a95b0a5cca7943fd9ee_82)] | | | | | | [removed: [12](#i07263c46541c4e4fb51563d7ec8000f1_76)] [added: [11](#i47fac5fc965f4a95b0a5cca7943fd9ee_82)] | | |

| [Item [removed: 15.](#i07263c46541c4e4fb51563d7ec8000f1_82)] [added: 15.](#i47fac5fc965f4a95b0a5cca7943fd9ee_88)] | | | [Exhibits, Financial Statement [removed: Schedules](#i07263c46541c4e4fb51563d7ec8000f1_82)] [added: Schedules](#i47fac5fc965f4a95b0a5cca7943fd9ee_88)] | | | | | | [removed: [12](#i07263c46541c4e4fb51563d7ec8000f1_82)] [added: [12](#i47fac5fc965f4a95b0a5cca7943fd9ee_88)] | | |

| [Item [removed: 16.](#i07263c46541c4e4fb51563d7ec8000f1_85)] [added: 16.](#i47fac5fc965f4a95b0a5cca7943fd9ee_91)] | | | [Form 10-K [removed: Summary](#i07263c46541c4e4fb51563d7ec8000f1_85)] [added: Summary](#i47fac5fc965f4a95b0a5cca7943fd9ee_91)] | | | | | | [removed: [16](#i07263c46541c4e4fb51563d7ec8000f1_85)] [added: [16](#i47fac5fc965f4a95b0a5cca7943fd9ee_91)] | | |

| [Part I](#i47fac5fc965f4a95b0a5cca7943fd9ee_10) | | | | | | | | | [2](#i47fac5fc965f4a95b0a5cca7943fd9ee_10) | | |

| [Part II](#i47fac5fc965f4a95b0a5cca7943fd9ee_34) | | | | | | | | | [9](#i47fac5fc965f4a95b0a5cca7943fd9ee_34) | | |

| [Part IV](#i47fac5fc965f4a95b0a5cca7943fd9ee_85) | | | | | | | | | [11](#i47fac5fc965f4a95b0a5cca7943fd9ee_85) | | |

| [SIGNATURES](#i47fac5fc965f4a95b0a5cca7943fd9ee_94) | | | | | | | | | [17](#i47fac5fc965f4a95b0a5cca7943fd9ee_94) | | |

| [Part I](#i07263c46541c4e4fb51563d7ec8000f1_10) | | | | | | | | | [2](#i07263c46541c4e4fb51563d7ec8000f1_10) | | |

| [Part II](#i07263c46541c4e4fb51563d7ec8000f1_34) | | | | | | | | | [10](#i07263c46541c4e4fb51563d7ec8000f1_34) | | |

| [Part IV](#i07263c46541c4e4fb51563d7ec8000f1_79) | | | | | | | | | [12](#i07263c46541c4e4fb51563d7ec8000f1_79) | | |

| [SIGNATURES](#i07263c46541c4e4fb51563d7ec8000f1_88) | | | | | | | | | [17](#i07263c46541c4e4fb51563d7ec8000f1_88) | | |

The Company maintains manufacturing facilities at approximately [removed: 224] [added: 216] locations in 36 countries.

A listing of executive officers, their ages, positions and offices held over the past five years, as of February 1, [removed: 2022,] [added: 2023,] is as follows:

| Name | | | | | | Age | | | | | | Position (Date elected to position) | | | [added: | | |]

| Craig Arnold | | | | | | [removed: 61] [added: 62] | | | | | | Chairman of Eaton Corporation plc (June 1, 2016 - present) | | | [added: | | |]

| | | | | | | | | | | | | Chief Executive Officer of Eaton Corporation (June 1, 2016 - present) | | | [added: | | |]

| | | | | | | | | | | | | Director of Eaton Corporation plc (September 1, 2015 - present) | | | [added: | | |]

| | | | | | | | | | | | | President and Chief Operating Officer [added: - Industrial Sector] of Eaton Corporation | | | [added: | | |]

| Thomas B. Okray | | | | | | [removed: 59] [added: 60] | | | | | | Executive Vice President and Chief Financial Officer of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (March 2021 - present) | | | [added: | | |]

| | | | | | | | | | | | | Executive Vice President and Chief Financial Officer-Elect of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (January 2021 - March 2021) | | | [added: | | |]

| | | | | | | | | | | | | Senior Vice President and Chief Financial Officer of W.W. Grainger, Inc. | | | [added: | | |]

| | | | | | | | | | | | | (April 2018 - December 2020) | | | [added: | | |]

| | | | | | | | | | | | | Executive Vice President and Chief Financial Officer of Advance Auto Parts, Inc. | | | [added: | | |]

| | | | | | | | | | | | | (October 2016 - April 2018) | | | [added: | | |]

| [removed: Uday Yadav] [added: Heath B. Monesmith] | | | | | | [removed: 58] [added: 52] | | | | | | President and Chief Operating Officer - Electrical Sector of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (July 1, 2019 - present) | | | [added: | | |]

| [added: Paulo Ruiz] | | | | | | [added: 48] | | | | | | [added: President and] Chief Operating Officer - Industrial Sector of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | Executive Vice President and General Counsel of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (March 1, 2017 - January 6, 2020) | | | [added: | | |]

| | | | | | | | | | | | | Senior Vice President [added: Global Financial Services] and [removed: Deputy General Counsel] [added: Systems] of Eaton Corporation | | | [added: | | |]

| [removed: April Miller Boise] [added: Taras Szmagala] | | | | | | [removed: 53] [added: 56] | | | | | | Executive Vice President, Chief Legal Officer [removed: and Secretary] of Eaton Corporation | | | [added: | | |]

| Ernest W. Marshall, Jr. | | | | | | [removed: 53] [added: 54] | | | | | | Executive Vice President and Chief Human Resources Officer of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (July 1, 2018 - present) | | | [added: | | |]

| | | | | | | | | | | | | Vice President - Human Resources, Aviation Division of General Electric | | | [added: | | |]

| | | | | | | | | | | | | (August 1, 2013 - June 30, 2018) | | | [added: | | |]

| Daniel [added: R.] Hopgood | | | | | | [removed: 50] [added: 51] | | | | | | Senior Vice President and Controller of Eaton Corporation (April 1, 2021 - present) | | | [added: | | |]

| | | | | | | | | | | | | [removed: Senior Vice] President [removed: Global Financial Services and] [added: - Electrical] Systems [added: and Services Group] of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (September 2017 - March 30, 2021) | | | [added: | | |]

| Joao V. Faria | | | | | | [removed: 57] [added: 58] | | | | | | President - Vehicle Group of Eaton Corporation (May 1, 2017 - present) | | | [added: | | |]

| Nandakumar Cheruvatath | | | | | | [removed: 60] [added: 61] | | | | | | President - Aerospace Group of Eaton Corporation (September 1, 2015 - present) | | | [added: | | |]

| Brian S. Brickhouse | | | | | | [removed: 58] [added: 59] | | | | | | President - Americas Region, Electrical Sector of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | President [removed: - Electrical Systems] [added: Energy Solutions] and Services [removed: Group] of Eaton Corporation | | | [added: | | |]

| | | | | | | | | | | | | (July 1, 2018 - June 30, 2019) | | | [added: | | |]

| | | | | | | | | | | | | President, Asia Pacific Region, Electrical (May 15, 2015 - June 30, 2018) | | | [added: | | |]

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| | | | | | | | | | | | | (July 5, 2022 - present) | | | | | |

| | | | | | | | | | | | | (July 1, 2019 - July 4, 2022) | | | | | |

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| | | | | | | | | | | | | (July 5, 2022 - present) | | | | | |

| | | | | | | | | | | | | (August 2, 2021 - July 5, 2022) | | | | | |

| | | | | | | | | | | | | Hydraulics Group President of Eaton Corporation | | | | | |

| | | | | | | | | | | | | (April 1, 2019 - August 2, 2021) | | | | | |

| | | | | | | | | | | | | Chief Executive Officer of Dresser-Rand, a Siemens Business | | | | | |

| | | | | | | | | | | | | (October 9, 2017 - April 1, 2019) | | | | | |

| | | | | | | | | | | | | | | | | | |

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| | | | | | | | | | | | | (June 24, 2022 - present) | | | | | |

| | | | | | | | | | | | | Senior Vice President, Public and Community Affairs and Corporate Communications | | | | | |

| | | | | | | | | | | | | (March 20, 2017 - June 24, 2022) | | | | | |

| | | | | | | | | | | | | Senior Vice President, Public and Community Affairs | | | | | |

| | | | | | | | | | | | | (January 1, 2016 - March 19, 2017) | | | | | |

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| | | | | | | | | | | | | (September 1, 2015 - May 31, 2016) | | |

| | | | | | | | | | | | | Vice President, Finance, Global Customer Fulfillment of Amazon.com, Inc. | | |

| | | | | | | | | | | | | (July 2015 - September 2016) | | |

| | | | | | | | | | | | | (September 1, 2015 - June 30, 2019) | | |

| Heath B. Monesmith | | | | | | 51 | | | | | | President and Chief Operating Officer - Industrial Sector of Eaton Corporation | | |

| | | | | | | | | | | | | (May 15, 2015 - March 1, 2017) | | |

| | | | | | | | | | | | | (January 6, 2020 - present) | | |

| | | | | | | | | | | | | Senior Vice President, Chief Legal Officer and Corporate Secretary of Meritor, Inc. | | |

| | | | | | | | | | | | | (August 15, 2016 - December 13, 2019) | | |

| | | | | | | | | | | | | Senior Vice President, General Counsel, Head of Global Mergers and Acquisitions, | | |

| | | | | | | | | | | | | and Corporate Secretary of Avintiv, Inc. (March 23, 2015 - December 31, 2015) | | |

| | | | | | | | | | | | | Senior Vice President, Finance and Planning, Industrial Sector of Eaton Corporation | | |

| | | | | | | | | | | | | (September 2013 - September 2017) | | |

| | | | | | | | | | | | | Vice President and General Manager, Latin America, Electrical Sector and | | |

| | | | | | | | | | | | | President, Latin America (August 1, 2013 - April 30, 2017) | | |

At December 31, [removed: 2021,] [added: 2022,] there were [removed: 10,447] [added: 10,034] holders of record of the Company's ordinary shares.

Additionally, [removed: 14,835] [added: 14,158] current and former employees were shareholders through participation in the Eaton Savings [removed: Plan (ESP),] [added: Plan,] the Eaton Personal Investment [removed: Plan (EPIP),] [added: Plan,] and [removed: the] [added: The] Eaton Puerto Rico Retirement Savings Plan.

Issuer’s Purchases of Equity Securities

During the fourth quarter of 2022, there were no shares repurchased.

Based on that evaluation, Eaton's management concluded that the Company's disclosure controls and procedures were effective as of December 31, [removed: 2021.][added: 2022.]

“Report of Independent Registered Public Accounting Firm” relating to internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] is included in Item 15 of this Form 10-K.

During the fourth quarter of [removed: 2021,] [added: 2022,] there was no change in Eaton's internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Management is currently evaluating the impact of the businesses acquired in 2021 on Eaton's internal control over financial reporting.

Information required with respect to the directors of the Company is set forth under the caption “Election of Directors” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

There were no changes during the fourth quarter [removed: 2021] [added: 2022] to the procedures by which security holders may recommend nominees to the Company's Board of Directors.

Information related to the Audit Committee, and members of the Committee who are financial experts, is set forth under the caption “Board Committees - Audit Committee” in the definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Information required with respect to delinquent Section 16(a) reports is set forth under the caption “Delinquent Section 16(a) Reports” in the Company’s definitive Proxy Statement to be filed on or about March 18, 2022 and is incorporated by reference.

Information required with respect to executive compensation is set forth under the caption “Compensation Discussion and Analysis” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Information required with respect to securities authorized for issuance under equity-based compensation plans is set forth under the caption “Equity Compensation Plans” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Information required with respect to security ownership of certain beneficial owners, is set forth under the caption “Share Ownership Tables” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Information required with respect to certain relationships and related transactions, as well as director independence, is set forth under the caption “Director Independence” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Information required with respect to principal accountant fees and services is set forth under the caption “Audit Committee Report” in the Company's definitive Proxy Statement to be filed on or about March [removed: 18, 2022,] [added: 17, 2023,] and is incorporated by reference.

Consolidated Statements of Income - Years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019][added: 2020]

Consolidated Statements of Comprehensive Income - Years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019][added: 2020]

Consolidated Balance Sheets - December 31, [removed: 2021] [added: 2022] and [removed: 2020][added: 2021]

Consolidated Statements of Cash Flows - Years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019][added: 2020]

Consolidated Statements of Shareholders' Equity - Years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019][added: 2020]

[removed: (3)] [added: (b)] Exhibits incorporated by reference to or filed in conjunction with this form 10-K are listed below.

| [removed: 4.8] [added: 4.11] | | | Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the SEC, upon request, a copy of the instruments defining the rights of holders of its long-term debt other than those set forth in Exhibits (4.2 - [removed: 4.7)] [added: 4.10)] hereto | | | | | | | | |

| | | | (e) | | | [First Amendment to Excess Benefits Plan II (2008 restatement) - Incorporated by reference to the [removed: Form](http://www.sec.gov/Archives/edgar/data/1551182/000155118213000005/etn12312012ex10e.htm) [10-K] [added: Form 10-K] Report for the year ended December 31, 2012](http://www.sec.gov/Archives/edgar/data/1551182/000155118213000005/etn12312012ex10e.htm) | | | | | |

| | | | (n) | | | [Form of Restricted Share Agreement (Non-Employee Directors) - Incorporated by reference to the [removed: Form](http://www.sec.gov/Archives/edgar/data/31277/000095012310007207/l38711exv10w2.htm) [8-K] [added: Form 8-K] Report filed February 1, 2010](http://www.sec.gov/Archives/edgar/data/31277/000095012310007207/l38711exv10w2.htm) | | | | | |

| | | | (bb) | | | [Form of Indemnification Agreement entered into with directors - Incorporated by reference to the [removed: Form](http://www.sec.gov/Archives/edgar/data/1551182/000155118213000005/etn12312012ex10bb.htm) [10-K] [added: Form 10-K] Report for the year ended December 31, 2012](http://www.sec.gov/Archives/edgar/data/1551182/000155118213000005/etn12312012ex10bb.htm) | | | | | |

| | | | (rr) | | | [Seventh Amendment to Eaton Savings Plan 2016 [removed: Restatement](https://www.sec.gov/Archives/edgar/data/0001551182/000155118221000022/etn12312020ex10rr.htm) [\-](https://www.sec.gov/Archives/edgar/data/0001551182/000155118221000022/etn12312020ex10rr.htm) [Incorporated] [added: Restatement - Incorporated] by reference to the Form 10-K Report for the year ended December 31, 2020](https://www.sec.gov/Archives/edgar/data/0001551182/000155118221000022/etn12312020ex10rr.htm) | | | | | |

| | | | (zz) | | | [Amendment to Eaton Corporation Supplemental Benefits Plan - Incorporated by reference to the [removed: Form](http://www.sec.gov/Archives/edgar/data/1551182/000155118217000014/etn12312016ex10zz.htm) [10-K] [added: Form 10-K] Report for the year ended December 31, 2016](http://www.sec.gov/Archives/edgar/data/1551182/000155118217000014/etn12312016ex10zz.htm) | | | | | |

| | | | (ggg) | | | [removed: [Stock and Asset Purchase Agreement, dated January 21, 2020] [added: [2020 Stock Plan] - Incorporated by reference to the Form [removed: 8-K] [added: S-8] filed on [removed: January 27, 2020](http://www.sec.gov/Archives/edgar/data/1551182/000155118220000011/a101stockandassetpurch.htm)] [added: November 3, 2020](https://www.sec.gov/Archives/edgar/data/1551182/000155118220000192/a2020stockplan-exhibit43.htm)] | | | | | |

| | | | [removed: (iii)] [added: (hhh)] | | | [5-Year Revolving Credit Agreement, dated as of October [removed: 4, 2021,] [added: 3, 2022,] among Eaton [removed: Corporation plc, Eaton] Corporation, [removed: Eaton Capital Unlimited,] the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, [removed: N.A.,] [added: N.A. and] BofA Securities, [removed: Inc., BNP Paribas Securities Corp., Deutsche Bank Securities] Inc. [removed: and Morgan Stanley Senior Funding, Inc.,] as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, [removed: N.A., BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc.,] [added: N.A.] as documentation [removed: agents, incorporated by reference to Exhibit 99.1 to The Form 8-K filed by the registrant on October 8, 2021.](https://www.sec.gov/Archives/edgar/data/1551182/000114036121034100/brhc10029675_ex99-1.htm)] [added: agent.](https://www.sec.gov/Archives/edgar/data/1551182/000114036122036580/brhc10042768_ex10-1.htm)] | | | | | |

| | | | [removed: (jjj)] [added: (iii)] | | | [364-Day Revolving Credit Agreement, dated as of October [removed: 4, 2021,] [added: 3, 2022,] among Eaton [removed: Corporation plc, Eaton] Corporation, [removed: Eaton Capital Unlimited,] the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, [removed: N.A.,] [added: N.A. and] BofA Securities, Inc., [removed: BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc.,] as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, [removed: N.A., BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc.,] [added: N.A.] as documentation [removed: agents, incorporated by reference to Exhibit 99.2 to The Form 8-K filed by the registrant on October 8, 2021.](https://www.sec.gov/Archives/edgar/data/1551182/000114036121034100/brhc10029675_ex99-2.htm)] [added: agent.](https://www.sec.gov/Archives/edgar/data/1551182/000114036122036580/brhc10042768_ex10-2.htm)] | | | | | |

| 21 | | | | | | [Subsidiaries of Eaton Corporation plc - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex21.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex21.htm)] | | | | | |

| 22 | | | | | | [Table of Senior Notes, Issuer and [removed: Guarantors (incorporated by reference to the] [added: Guarantors](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm) [\-](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm) [](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm)[F](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm)[iled](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm) [in conjunction with this] Form 10-K Report [removed: filed on February 24, 2021)](https://www.sec.gov/Archives/edgar/data/1551182/000155118221000022/etn12312020ex22.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex22.htm)] | | | | | |

| 23 | | | | | | [Consent of Independent Registered Public Accounting Firm - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex23.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex23.htm)] | | | | | |

| 24 | | | | | | [Power of Attorney - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex24.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex24.htm)] | | | | | |

| 31.1 | | | | | | [Certification of Principal Executive Officer (Pursuant to the Sarbanes-Oxley Act of 2002, Section 302) - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex311.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex311.htm)] | | | | | |

| 31.2 | | | | | | [Certification of Principal Financial Officer (Pursuant to the Sarbanes-Oxley Act of 2002, Section 302) - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex312.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex312.htm)] | | | | | |

| 32.1 | | | | | | [Certification of Principal Executive Officer (Pursuant to the Sarbanes-Oxley Act of 2002, Section 906) - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex321.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex321.htm)] | | | | | |

| 32.2 | | | | | | [Certification of Principal Financial Officer (Pursuant to the Sarbanes-Oxley Act of 2002, Section 906) - Filed in conjunction with this Form 10-K Report [removed: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118222000004/etn12312021ex322.htm)] [added: *](https://www.sec.gov/Archives/edgar/data/1551182/000155118223000004/etn12312022ex322.htm)] | | | | | |

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] (ii) Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] (iii) Consolidated Balance Sheets at December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] (iv) Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] (v) Consolidated Statements of Shareholders' Equity for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] and (vi) Notes to Consolidated Financial Statements for the year ended December 31, [removed: 2021.][added: 2022.]

| 4.8 | | | [Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee](https://www.sec.gov/Archives/edgar/data/1551182/000114036122030734/ny20005030x5_ex4-1.htm) | | | | | | | | |

| 4.9 | | | [First Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee](https://www.sec.gov/Archives/edgar/data/1551182/000114036122030734/ny20005030x5_ex4-2.htm) | | | | | | | | |

| 4.10 | | | [Second Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee](https://www.sec.gov/Archives/edgar/data/1551182/000114036122030734/ny20005030x5_ex4-3.htm) | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | (hhh) | | | [2020 Stock Plan - Incorporated by reference to the Form S-8 filed on November 3, 2020](https://www.sec.gov/Archives/edgar/data/1551182/000155118220000192/a2020stockplan-exhibit43.htm) | | | | | |

| Date: | | | February 23, [removed: 2022] [added: 2023] | | | By: | | | /s/ Thomas B. Okray | | |

Date: February 23, [removed: 2022][added: 2023]

| /s/ Daniel [added: R.] Hopgood | | | | | | | | | | | | * | | | | | | | | |

| Daniel [added: R.] Hopgood | | | | | | Principal Accounting Officer | | | | | | [removed: Christopher M. Connor] [added: Olivier Leonetti] | | | | | | Director | | |

| [removed: Olivier Leonetti] [added: Deborah L. McCoy] | | | | | | Director | | | | | | [removed: Deborah L. McCoy] [added: Silvio Napoli] | | | | | | Director | | |

| [removed: Silvio Napoli] [added: Gregory R. Page] | | | | | | Director | | | | | | [removed: Gregory R. Page] [added: Sandra Pianalto] | | | | | | Director | | |

| [removed: Sandra Pianalto] [added: Robert V. Pragada] | | | | | | Director | | | | | | [removed: Robert V. Pragada] [added: Lori J. Ryerkerk] | | | | | | Director | | |

| [removed: Lori J. Ryerkerk] [added: Gerald B. Smith] | | | | | | Director | | | | | | [removed: Gerald B. Smith] [added: Dorothy C. Thompson] | | | | | | Director | | |

| [removed: Dorothy C. Thompson] [added: Darryl L. Wilson] | | | | | | Director | | | | | | [removed: Darryl L. Wilson] | | | | | | [removed: Director] | | |

We have audited the accompanying consolidated balance sheets of Eaton Corporation plc (“the Company”) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, [removed: 2022] [added: 2023] expressed an unqualified opinion thereon.

| *Description of the Matter* | | | As discussed in Note 11 to the consolidated financial statements, the Company had gross unrecognized income tax benefits of [removed: $1,120] [added: $1,235] million related to its uncertain tax positions at December 31, [removed: 2021.] [added: 2022.] Unrecognized income tax benefits are recorded under the two-step recognition and measurement principles when a tax position does not meet the more likely than not standard, or if a tax position meets the more likely than not standard, but the financial statement tax benefit is reduced as part of the measurement step. The balance of unrecognized income tax benefits is comprised of uncertain tax positions which meet the more likely than not standard, but the financial statement tax benefit has been reduced as part of measuring the tax position. Auditing management’s analysis of its uncertain tax positions and resulting unrecognized income tax benefits is complex as each tax position carries unique facts and circumstances that must be evaluated and ultimate resolution is dependent on uncontrollable factors such as the timing of finalizing resolutions of audit disputes through reaching settlement agreements or concluding litigation, or changes in law, and other factors. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of management’s controls related to uncertain tax positions. For example, we tested controls over management’s application of the two-step recognition and measurement principles and management’s review of the inputs and resultant calculations of unrecognized income tax benefits, as well as the identification of uncertain tax positions. We also evaluated the Company’s assessment of its uncertain tax positions. Our audit procedures [removed: included] [added: included, among others,] evaluating management’s accounting policies and documentation to assess the appropriateness and consistency of the methods and assumptions used to develop its uncertain tax positions and related unrecognized income tax benefit amounts by jurisdiction. We also tested the completeness and accuracy of the underlying data used by the Company. For example, we compared the unrecognized income tax benefits recorded with similar positions in prior periods and assessed management’s consideration of current tax controversy and [added: litigation, including current year developments with respect to the Company's ongoing] litigation and [removed: trends in similar positions challenged by] [added: examinations with respect to certain open] tax [removed: authorities.] [added: years in the United States.] We also assessed the historical accuracy of management’s estimates of its unrecognized income tax benefits with the resolution of those positions. In addition, we involved tax subject matter professionals to evaluate the application of relevant tax [removed: laws] [added: laws, regulations, case law, and Company-specific controversy developments] in the Company’s recognition determination. We have also evaluated the Company’s income tax disclosures in relation to these matters. | | |

| | | | Valuation of Customer Relationships [added: and Technology] Intangible [removed: Asset] [added: Assets] in the Acquisition of [removed: Tripp Lite] [added: Mission Systems] | | |

| *Description of the Matter* | | | As discussed in Note 2 to the consolidated financial statements, during [removed: March] [added: June] 2021, the Company completed the acquisition of [removed: Tripp Lite] [added: Mission Systems] for a total purchase price of [removed: approximately $1.65] [added: $2.8] billion, net of cash received. The acquisition was accounted for using the acquisition method of accounting. The consideration paid in the acquisition must be allocated to the acquired assets and liabilities assumed generally based on their fair value with the excess of the purchase price over those fair values allocated to goodwill. The [added: preliminary] estimates of the fair value of intangible assets [added: made as of the acquisition date] were [removed: recorded] [added: revised during the measurement period] in [removed: 2021 based upon] [added: 2022 as] third-party [removed: valuations, which resulted] [added: valuations were received and finalized resulting] in the recognition of [added: customer relationships and technology] intangible assets [removed: totaling approximately $604 million,] of [removed: which approximately $539] [added: $764] million [removed: related to customer relationships.] [added: and $612 million, respectively.] Auditing the Company’s accounting for its acquisition of [removed: Tripp Lite] [added: Mission Systems] was complex because the customer relationships [added: and technology] intangible [removed: asset] [added: assets] recognized [removed: was] [added: were] material to the consolidated financial statements and the [removed: estimate] [added: estimates] of fair value involved subjectivity. The subjectivity was primarily due to the sensitivity of the [added: respective] fair [removed: value] [added: values] to underlying assumptions about the future performance of the acquired business. The Company used [removed: a] discounted cash flow [removed: model] [added: models] to measure the [removed: customer relationships] intangible [removed: asset.] [added: assets.] The significant assumptions used to estimate the fair value of the [removed: customer relationships] intangible [removed: asset] [added: assets] included the discount [removed: rate] [added: rates] and certain assumptions that form the basis of the forecasted results (e.g., revenue growth rates and future EBITDA margins). These significant assumptions are forward looking and could be affected by future economic and market conditions. [added: The fair value of technology intangible assets is also based on the selection of royalty rates used in the valuation model.] | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its accounting for the acquisition of [removed: Tripp Lite,] [added: Mission Systems,] including recognition and measurement of the intangible assets acquired. For example, we tested controls over the recognition and measurement of [removed: the] customer relationships [added: and technology] intangible [removed: asset,] [added: assets,] including management’s review of the methods and significant assumptions used to develop the fair value [removed: estimate.] [added: estimates.] To test the estimated fair [removed: value] [added: values] of the customer relationships [added: and technology] intangible [removed: asset,] [added: assets,] we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company's valuation specialist, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, when evaluating the assumptions related to the revenue growth rates and future EBITDA margins, we compared the assumptions to the past performance of [removed: Tripp Lite] [added: Mission Systems] and expected industry trends and considered whether they were consistent with evidence obtained in other areas of the audit. We also performed sensitivity analyses to evaluate the changes in the fair value of the customer relationships [added: and technology] intangible [removed: asset] [added: assets] that would result from changes in the significant assumptions. We involved our EY valuation specialists to assist with our evaluation of the methodology used by the Company and certain significant assumptions included in the fair value [removed: estimate.] [added: estimates.] | | |

We have prepared the accompanying consolidated financial statements and related information of Eaton Corporation plc ("Eaton") included herein for the three years ended December 31, [removed: 2021.][added: 2022.]

The Board of Directors pursues its responsibility for the quality of Eaton's financial reporting primarily through its Audit Committee, which is composed of [removed: six] [added: five] independent directors.

| /s/ Craig Arnold | | | | | | /s/ Thomas B. Okray | | | | | | /s/ Daniel [added: R.] Hopgood | | |

We have audited Eaton Corporation plc’s (“the Company”) internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes and our report dated February 23, [removed: 2022] [added: 2023] expressed an unqualified opinion thereon.

Under the supervision and with the participation of Eaton's management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2021.][added: 2022.]

Based on this evaluation under the framework referred to above, management concluded that the Company's internal control over financial reporting was effective as of December 31, [removed: 2021.][added: 2022.]

The independent registered public accounting firm Ernst & Young LLP has issued an audit report on the effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2021.][added: 2022.]

| (In millions except for per share data) | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Net sales | | | $ | [removed: 19,628] [added: 20,752] | | | | | $ | [removed: 17,858] [added: 19,628] | | | | | $ | [removed: 21,390] [added: 17,858] | |

| Cost of products sold | | | [removed: 13,293] [added: 13,865] | | | | | | [removed: 12,408] [added: 13,293] | | | | | | [removed: 14,338] [added: 12,408] | | |

| Selling and administrative expense | | | [removed: 3,256] [added: 3,227] | | | | | | [removed: 3,075] [added: 3,256] | | | | | | [removed: 3,583] [added: 3,075] | | |

| Research and development expense | | | [removed: 616] [added: 665] | | | | | | [removed: 551] [added: 616] | | | | | | [removed: 606] [added: 551] | | |

| Interest expense - net | | | 144 | | | | | | [removed: 149] [added: 144] | | | | | | [removed: 199] [added: 149] | | |

| Gain on sale of businesses | | | [removed: 617] [added: 24] | | | | | | [removed: 221] [added: 617] | | | | | | [removed: —] [added: 221] | | |

| Other expense [added: (income)] - net | | | [removed: 40] [added: (36)] | | | | | | [removed: 150] [added: 40] | | | | | | [removed: 73] [added: 150] | | |

| Income before income taxes | | | [removed: 2,896] [added: 2,911] | | | | | | [removed: 1,746] [added: 2,896] | | | | | | [removed: 2,591] [added: 1,746] | | |

| Income tax expense | | | [removed: 750] [added: 445] | | | | | | [removed: 331] [added: 750] | | | | | | [removed: 378] [added: 331] | | |

| Net income | | | [removed: 2,146] [added: 2,465] | | | | | | [removed: 1,415] [added: 2,146] | | | | | | [removed: 2,213] [added: 1,415] | | |

| Less net income for noncontrolling interests | | | [removed: (2)] [added: (4)] | | | | | | [removed: (5)] [added: (2)] | | | | | | [removed: (2)] [added: (5)] | | |

| Net income attributable to Eaton ordinary shareholders | | | $ | [removed: 2,144] [added: 2,462] | | | | | $ | [removed: 1,410] [added: 2,144] | | | | | $ | [removed: 2,211] [added: 1,410] | |

| Diluted | | | $ | [removed: 5.34] [added: 6.14] | | | | | $ | [removed: 3.49] [added: 5.34] | | | | | $ | [removed: 5.25] [added: 3.49] | |

| * | | | | | | | | | | | | | | | | | | | | |

February 23, 2023

| February 23, 2023 | | | | | | | | | | | | | | |

February 23, 2023

| /s/ Craig Arnold | | | | | | /s/ Thomas B. Okray | | | | | | /s/ Daniel R. Hopgood | | |

| February 23, 2023 | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Repurchase of shares | | | (2.0) | | | | | | — | | | | | | — | | | | | | (286) | | | | | | — | | | | | | — | | | | | | (286) | | | | | | — | | | | | | (286) | | |

| Balance at December 31, 2022 | | | 397.8 | | | | | | $ | 4 | | | | | $ | 12,512 | | | | | $ | 8,468 | | | | | $ | (3,946) | | | | | $ | (1) | | | | | $ | 17,038 | | | | | $ | 38 | | | | | $ | 17,075 | |

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

Note 1.

For subsidiaries operating in highly inflationary economies, non-monetary assets and liabilities such as inventory and property, plant and equipment and their related expenses are remeasured at historical exchange rates, while monetary assets and liabilities are remeasured at exchange rates in effect at the balance sheet date.

Remeasurement adjustments for these subsidiaries are recognized in income.

The Company’s new revolving credit facilities discussed in Note 8 do not reference LIBOR and all interest rate swaps that referenced LIBOR have been settled.

Note 2.

During the measurement period which ended in March 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below.

As of December 31, 2022, the fair value of the contingent future payments has been reduced to $44 million based primarily on anticipated reductions in projected 2023 revenue compared to the initial estimates at closing.

This reduction is presented in Other expense (income) - net on the Consolidated Statements of Income.

During the measurement period which ended in June 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below.

The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

The estimated fair values of the customer relationships, technology, and backlog intangible assets of $764 million, $612 million, and $86 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates.

The estimated fair value of technology intangibles is also based on the selection of royalty rates used in the valuation model.

According to the terms of the sale agreement, the Company finalized negotiations of post-closing adjustments with Danfoss A/S during the first quarter of 2022.

As a result of these negotiations, the Company recognized an additional pre-tax gain of $24 million and received cash of $22 million from Danfoss A/S to fully settle all post-closing adjustments.

During the measurement period which ended in December 2022, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below.

The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.

| (In millions) | | | | | | Preliminary Allocation | | | | | | Measurement Period Adjustments | | | | | | Final Allocation | | |

| Goodwill | | | | | | 284 | | | | | | (29) | | | | | | 255 | | |

The estimated fair values of the customer relationships, technology, trademarks, and other intangible assets of $230 million, $90 million, $16 million, and $5 million, respectively, were determined using either the relief-from-royalty model, the multi-period excess earnings model, or the lost income model, which are discounted cash flow models that rely on the Company's estimates.

The estimated fair value of technology and trademark intangibles are also based on the selection of royalty rates used in the valuation model.

Eaton's 2022 Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $21 million on sales of $158 million, from the date of acquisition through December 31, 2022.

*Russia*

During the second quarter of 2022, in light of the ongoing war with Ukraine, the Company decided to exit its business operations in Russia and recorded charges of $29 million presented in Other expense (income) - net on the Consolidated Statements of Income.

The charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance.

*Acquisition of a 50% stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business*

On July 1, 2022, Eaton acquired a 50 percent stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business, which manufactures and markets low-voltage circuit breakers in China.

Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

Accrued rebates of $400 million and $327 million as of December 31, 2022 and 2021, respectively, are generally paid annually and were included in Other current liabilities.

| Translation and other | | | (29) | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| * | | | | | | | | | | | | * | | | | | | | | |

February 23, 2022

| February 23, 2022 | | | | | | | | | | | | | | |

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the entities that were acquired during 2021 (as described in Note 2), which are included in the 2021 consolidated financial statements of the Company and constituted approximately 12% of total assets (inclusive of acquired intangible assets) as of December 31, 2021 and approximately 5% of net sales for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the entities that were acquired during 2021.

Our evaluation of internal control over financial reporting did not include the internal controls of the entities that were acquired during 2021 (as described in Note 2), which are included in the 2021 consolidated financial statements and constituted approximately 12% of total assets (inclusive of acquired intangible assets) as of December 31, 2021 and approximately 5% of net sales for the year then ended.

| Liabilities held for sale | | | — | | | | | | 468 | | |

| Balance at January 1, 2019 | | | 423.6 | | | | | | $ | 4 | | | | | $ | 12,090 | | | | | $ | 8,161 | | | | | $ | (4,145) | | | | | $ | (3) | | | | | $ | 16,107 | | | | | $ | 35 | | | | | $ | 16,142 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 2,211 | | | | | | — | | | | | | — | | | | | | 2,211 | | | | | | 2 | | | | | | 2,213 | | |

| Acquisition of noncontrolling interest obtained through tender offer | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (33) | | | | | | (33) | | |

| Repurchase of shares | | | (12.5) | | | | | | — | | | | | | — | | | | | | (1,000) | | | | | | — | | | | | | — | | | | | | (1,000) | | | | | | — | | | | | | (1,000) | | |

Adoption of New Accounting Standard

Eaton adopted Accounting Standards Update 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, in the fourth quarter of 2021.

This standard requires unbilled receivables (revenue recognized exceeds amount billed to customer) and deferred revenue liabilities (advanced payments and billings in excess of revenue recognized) from contracts with customers acquired as part of an acquisition of a business to be recognized and measured using revenue recognition accounting guidance, rather than at fair value.

The adoption of the standard was applied to businesses acquired during 2021 and did not have a material impact on the consolidated financial statements.

The Company has established a cross-functional project team to evaluate the potential impacts of alternative rates as replacements to LIBOR in the Company’s contracts, which primarily include revolving credit facilities, fixed-to-floating interest rate swaps, and forward starting floating-to-fixed interest rate swaps.

As of December 31, 2021, the Company’s $500 million 364-day revolving credit facility that will expire on October 3, 2022 and $2,000 million five-year revolving credit facility that will expire on October 4, 2026 both include a transition process from LIBOR to an alternative rate.

The Company’s interest rate swaps are expected to settle prior to June 30, 2023.

Goodwill impairment testing was also performed using quantitative analyses in 2020 for the Electrical Americas, Electrical Global, Hydraulics and Aerospace reporting units due to a reorganization of the Company’s businesses and in 2020 as a result of the Hydraulics business being classified as held for sale as discussed in Note 2.

The Company used the relative fair value method to reallocate goodwill.

These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions.

*Acquisition of 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.

The purchase price for the shares was $214 million 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 million to increase its ownership interest to 93.7%.

*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.

ISG is reported within the Electrical Americas business segments.

*Acquisition of Souriau-Sunbank Connection Technologies*

On December 20, 2019, Eaton acquired the Souriau-Sunbank Connection Technologies (Souriau-Sunbank) business of TransDigm Group Inc. for a cash purchase price of $907 million, net of cash received.

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.

The final allocation as of the date of acquisition follows:

| Noncontrolling interests | | | | | | | | | | | | | | | (3) | | |

| Goodwill | | | | | | | | | | | | | | | 457 | | |

The Company generally determines the fair value of intangible assets acquired using third-party valuations that are prepared using discounted cash flow models that rely on the Company's estimates.