NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Amounts are in millions unless indicated otherwise (per share data assume dilution).
|
|
Note 1.
|
BASIS OF PRESENTATION
|
The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods.
This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s
2015
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.
During the first quarter of
2016
, the Company adopted Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the related debt liability rather than an asset. The Company has applied this standard retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of
$36
and
$35
within the Company's Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, respectively, from Other noncurrent assets to a reduction in Long-term debt.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842), (ASU 2016-02). This accounting standard requires that a lessee recognize a lease asset and a lease liability on its balance sheet for all leases, including operating leases, with a term greater than 12 months. ASU 2016-02 will require additional disclosures in the notes to the consolidated financial statements and is effective for annual and interim reporting periods beginning after December 15, 2018. Eaton is evaluating the impact of ASU 2016-02 and an estimate of the impact to the consolidated financial statements cannot be made at this time.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09). This accounting standard supersedes all existing US GAAP revenue recognition guidance. Under ASU 2014-09, a company will recognize revenue when it transfers the control of promised goods or services to customers in an amount that reflects the consideration which the company expects to collect in exchange for those goods or services. ASU 2014-09 will require additional disclosures in the notes to the consolidated financial statements and is effective for annual and interim reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date (ASU 2015-14). This accounting standard defers the effective date of ASU 2014-09 for one year and permits early adoption as of the original effective date. Eaton is evaluating the impact of ASU 2014-09 and an estimate of the impact to the consolidated financial statements cannot be made at this time.
|
|
Note 2.
|
ACQUISITIONS OF BUSINESSES
|
Acquisition of Ephesus Lighting, Inc.
On October 28, 2015, Eaton acquired Ephesus Lighting, Inc. (Ephesus). Ephesus is a leader in LED lighting for stadiums and other high lumen outdoor and industrial applications. Its sales for the 12 months ended September 30, 2015 were
$23
. Ephesus is reported within the Electrical Products business segment.
Acquisition of UK Safety Technology Manufacturer Oxalis Group Ltd.
On January 12, 2015, Eaton acquired Oxalis Group Ltd. (Oxalis). Oxalis is a manufacturer of closed-circuit television camera stations, public address and general alarm systems and other electrical products for the hazardous area, marine and industrial communications markets. Its sales for the 12 months ended December 31, 2014 were
$9
. Oxalis is reported within the Electrical Systems and Services business segment.
|
|
Note 3.
|
ACQUISITION INTEGRATION CHARGES
|
Eaton incurs integration charges related to acquired businesses. A summary of these charges follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Electrical Products
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
17
|
|
Electrical Systems and Services
|
—
|
|
|
3
|
|
|
1
|
|
|
10
|
|
Hydraulics
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Total business segments
|
1
|
|
|
8
|
|
|
3
|
|
|
29
|
|
Corporate
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
Total acquisition integration charges before income taxes
|
1
|
|
|
10
|
|
|
3
|
|
|
33
|
|
Income taxes
|
—
|
|
|
3
|
|
|
1
|
|
|
11
|
|
Total after income taxes
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
2
|
|
|
$
|
22
|
|
Per ordinary share - diluted
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.05
|
|
Business segment acquisition integration charges in
2016
related to the integration of Ephesus Lighting, Inc. (Ephesus) and
Oxalis Group Ltd. (Oxalis), which were acquired in 2015. The charges associated with Ephesus were included in Cost of
products sold and Selling and administrative expense, while the charges associated with Oxalis were included in Cost of
products sold. Business segment acquisition integration charges in
2015
related primarily to the integration of Cooper
Industries plc (Cooper), which was acquired in 2012. These charges were included in Cost of products sold or Selling and
administrative expense, as appropriate. In Business Segment Information, the charges reduced Operating profit of the related
business segment. See Note 14 for additional information about business segments.
Corporate acquisition integration charges in
2015
also related to the integration of Cooper. These charges were included in Selling and administrative expense. In Business Segment Information, the charges were included in Other corporate expense - net.
|
|
Note 4.
|
RESTRUCTURING CHARGES
|
During
2015
, Eaton announced its intention to undertake actions to reduce its cost structure in all business segments and at corporate. Restructuring charges for the
three
and
nine
months ended
September 30, 2016
, were
$23
and
$121
, respectively, and were
$113
and
$127
for the
three
and
nine
months ended
September 30, 2015
, respectively. The charges associated with restructuring activities are anticipated to be
$145
in
2016
and
$180
in 2017.
A summary of restructuring charges by type follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Workforce reductions
|
$
|
18
|
|
|
$
|
99
|
|
|
$
|
95
|
|
|
$
|
111
|
|
Plant closings and other
|
5
|
|
|
14
|
|
|
26
|
|
|
16
|
|
Total
|
$
|
23
|
|
|
$
|
113
|
|
|
$
|
121
|
|
|
$
|
127
|
|
A summary of restructuring charges by segment follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Electrical Products
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
27
|
|
|
$
|
12
|
|
Electrical Systems & Services
|
7
|
|
|
26
|
|
|
20
|
|
|
26
|
|
Hydraulics
|
10
|
|
|
25
|
|
|
44
|
|
|
34
|
|
Aerospace
|
(1
|
)
|
|
5
|
|
|
3
|
|
|
5
|
|
Vehicle
|
5
|
|
|
29
|
|
|
22
|
|
|
33
|
|
Corporate
|
1
|
|
|
17
|
|
|
5
|
|
|
17
|
|
Total
|
$
|
23
|
|
|
$
|
113
|
|
|
$
|
121
|
|
|
$
|
127
|
|
A summary of liabilities related to workforce reductions, plant closings and other associated costs follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce reductions
|
|
Plant closings and other
|
|
Total
|
Balance at December 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liability recognized
|
112
|
|
|
17
|
|
|
129
|
|
Payments
|
(59
|
)
|
|
(3
|
)
|
|
(62
|
)
|
Other adjustments
|
1
|
|
|
(14
|
)
|
|
(13
|
)
|
Balance at December 31, 2015
|
54
|
|
|
—
|
|
|
54
|
|
Liability recognized
|
95
|
|
|
26
|
|
|
121
|
|
Payments
|
(89
|
)
|
|
(11
|
)
|
|
(100
|
)
|
Other adjustments
|
(1
|
)
|
|
(14
|
)
|
|
(15
|
)
|
Balance at September 30, 2016
|
$
|
59
|
|
|
$
|
1
|
|
|
$
|
60
|
|
These charges were included in Cost of products sold, Selling and administrative expenses or Other income-net, as appropriate. In Business Segment Information, the charges reduced Operating profit of the related business segment. See Note 14 for additional information about business segments.
A summary of goodwill follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electrical
Products
|
|
Electrical
Systems and
Services
|
|
Hydraulics
|
|
Aerospace
|
|
Vehicle
|
|
Total
|
December 31, 2015
|
|
$
|
6,642
|
|
|
$
|
4,279
|
|
|
$
|
1,259
|
|
|
$
|
956
|
|
|
$
|
343
|
|
|
$
|
13,479
|
|
Translation
|
|
(24
|
)
|
|
(12
|
)
|
|
2
|
|
|
(13
|
)
|
|
2
|
|
|
(45
|
)
|
September 30, 2016
|
|
$
|
6,618
|
|
|
$
|
4,267
|
|
|
$
|
1,261
|
|
|
$
|
943
|
|
|
$
|
345
|
|
|
$
|
13,434
|
|
Note 6. DEBT
On September 20, 2016, a subsidiary of Eaton issued Euro denominated notes (Euro Notes) with a face value of
€550
(
$615
based on the September 20, 2016 spot rate), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The Euro Notes mature in 2024 with interest payable annually at a rate of
0.75%
. The issuer received proceeds totaling
€544
(
$609
based on the September 20, 2016 spot rate) from the issuance, net of financing costs and discounts. The senior Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The Euro Notes contain an optional redemption provision by which the Company may make an offer to purchase all or any part of the Euro Notes prior to June 20, 2024 at a purchase price of the greater of (a) 100% of the principal amount of the respective Euro Notes being redeemed, or (b) the sum of the present values of the respective remaining scheduled payments of principal and interest, discounted to the redemption date on an annual basis at the benchmark Bund Rate plus 20 basis points. In each case, the redemption price will include any accrued and unpaid interest on the Euro Notes being redeemed. At any time on or after June 20, 2024, the Company may redeem the Euro Notes, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest. The 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 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees and discounts are amortized in Interest expense - net over the respective terms of the Euro Notes. The Euro Notes are subject to customary non-financial covenants.
On October 14, 2016, Eaton refinanced a
$750
, five-year revolving credit facility with a
$750
, five-year revolving credit facility that will expire October 14, 2021. Eaton also maintains a
$500
, four-year revolving credit facility that will expire on October 3, 2018 and a
$750
, five-year credit facility that will expire October 3, 2019. This refinancing maintains long-term revolving credit facilities at a total of
$2,000
. The revolving credit facilities are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under these revolving credit facilities at
September 30, 2016
or October 14, 2016.
|
|
Note 7.
|
RETIREMENT BENEFITS PLANS
|
The components of retirement benefits expense follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
pension benefit expense
|
|
Non-United States
pension benefit expense
|
|
Other postretirement
benefits expense
|
|
Three months ended September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Service cost
|
$
|
28
|
|
|
$
|
31
|
|
|
$
|
16
|
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost
|
31
|
|
|
39
|
|
|
16
|
|
|
18
|
|
|
4
|
|
|
6
|
|
Expected return on plan assets
|
(63
|
)
|
|
(65
|
)
|
|
(23
|
)
|
|
(25
|
)
|
|
(2
|
)
|
|
(2
|
)
|
Amortization
|
23
|
|
|
29
|
|
|
8
|
|
|
10
|
|
|
(2
|
)
|
|
—
|
|
|
19
|
|
|
34
|
|
|
17
|
|
|
21
|
|
|
1
|
|
|
6
|
|
Settlements
|
24
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total expense
|
$
|
43
|
|
|
$
|
59
|
|
|
$
|
17
|
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
pension benefit expense
|
|
Non-United States
pension benefit expense
|
|
Other postretirement
benefits expense
|
|
Nine months ended September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Service cost
|
$
|
83
|
|
|
$
|
92
|
|
|
$
|
49
|
|
|
$
|
55
|
|
|
$
|
3
|
|
|
$
|
5
|
|
Interest cost
|
94
|
|
|
117
|
|
|
48
|
|
|
54
|
|
|
13
|
|
|
18
|
|
Expected return on plan assets
|
(188
|
)
|
|
(196
|
)
|
|
(71
|
)
|
|
(75
|
)
|
|
(5
|
)
|
|
(4
|
)
|
Amortization
|
69
|
|
|
89
|
|
|
25
|
|
|
30
|
|
|
(6
|
)
|
|
1
|
|
|
58
|
|
|
102
|
|
|
51
|
|
|
64
|
|
|
5
|
|
|
20
|
|
Settlements and curtailments
|
63
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total expense
|
$
|
121
|
|
|
$
|
160
|
|
|
$
|
51
|
|
|
$
|
64
|
|
|
$
|
5
|
|
|
$
|
20
|
|
|
|
Note 8.
|
LEGAL CONTINGENCIES
|
Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, 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. 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 2010, a Brazilian court held that a judgment obtained by a Brazilian company, Raysul, against another Brazilian company, Saturnia, which was sold by Eaton in
2006
, could be enforced against Eaton Ltda. The judgment was based on an alleged violation of an agency agreement between Raysul and Saturnia. At March 31, 2016, the Company had a total accrual of
100
Brazilian Reais related to this matter (
$31
based on June 2016 exchange rates). In June 2016, Eaton signed a settlement agreement and resolved the matter, which did not have a material impact on the consolidated financial statements.
The effective income tax rate for the
third
quarter and first
nine
months of
2016
was expense of
9%
, and
10%
, respectively, compared to an expense of
9%
for the
third
quarter and first
nine
months of
2015
. The increase in the effective tax rate in the first
nine
months of
2016
was primarily due to more income earned in higher tax jurisdictions.
On October 22, 2013, Eaton's Board of Directors adopted a share repurchase program (2013 Program) that authorizes the repurchase of
40 million
ordinary shares. During the first quarter of
2016
,
1.5 million
ordinary shares were repurchased under the 2013 Program in the open market at a total cost of
$82
. During the
three
and
nine
months ended
September 30, 2015
,
4.8 million
and
7.2 million
ordinary shares were repurchased under the 2013 Program in the open market at a total cost of
$284
and
$454
, respectively. On February 24, 2016, the Board of Directors approved a new share repurchase program for share repurchases up to
$2,500
of ordinary shares (2016 Program). Under the 2016 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
nine
months ended
September 30, 2016
,
3.7 million
and
7.7 million
ordinary shares, respectively, were purchased on the open market under the 2016 Program for a total cost of
$243
and
$485
, respectively.
The changes in Shareholders’ equity follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
shareholders’
equity
|
|
Noncontrolling
interests
|
|
Total
equity
|
Balance at December 31, 2015
|
$
|
15,186
|
|
|
$
|
45
|
|
|
$
|
15,231
|
|
Net income (loss)
|
1,418
|
|
|
(1
|
)
|
|
1,417
|
|
Other comprehensive income
|
42
|
|
|
—
|
|
|
42
|
|
Cash dividends paid
|
(780
|
)
|
|
(2
|
)
|
|
(782
|
)
|
Issuance of shares under equity-based compensation plans - net
|
105
|
|
|
—
|
|
|
105
|
|
Repurchase of shares
|
(567
|
)
|
|
—
|
|
|
(567
|
)
|
Balance at September 30, 2016
|
$
|
15,404
|
|
|
$
|
42
|
|
|
$
|
15,446
|
|
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, 2015
|
$
|
(2,492
|
)
|
|
$
|
(1,374
|
)
|
|
$
|
3
|
|
|
$
|
(3,863
|
)
|
Other comprehensive (loss) income
before reclassifications
|
(57
|
)
|
|
33
|
|
|
(35
|
)
|
|
(59
|
)
|
Amounts reclassified from Accumulated other
comprehensive loss (income)
|
—
|
|
|
99
|
|
|
2
|
|
|
101
|
|
Net current-period Other comprehensive
income (loss)
|
(57
|
)
|
|
132
|
|
|
(33
|
)
|
|
42
|
|
Balance at September 30, 2016
|
$
|
(2,549
|
)
|
|
$
|
(1,242
|
)
|
|
$
|
(30
|
)
|
|
$
|
(3,821
|
)
|
The reclassifications out of Accumulated other comprehensive loss follow:
|
|
|
|
|
|
|
|
Nine months ended September 30, 2016
|
|
Consolidated statements
of income classification
|
Amortization of defined benefit pensions and other postretirement benefits items
|
|
|
|
Actuarial loss and prior service cost
|
$
|
(151
|
)
|
1
|
|
Tax benefit
|
52
|
|
|
|
Total, net of tax
|
(99
|
)
|
|
|
|
|
|
|
Gains and (losses) on cash flow hedges
|
|
|
|
Currency exchange contracts
|
(3
|
)
|
|
Cost of products sold
|
Tax benefit
|
1
|
|
|
|
Total, net of tax
|
(2
|
)
|
|
|
|
|
|
|
Total reclassifications for the period
|
$
|
(101
|
)
|
|
|
1
These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 7 for additional information about pension and other postretirement benefits items.
Net Income Per Share Attributable to Eaton Ordinary Shareholders
A summary of the calculation of net income per share attributable to Eaton ordinary shareholders follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(Shares in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income attributable to Eaton ordinary shareholders
|
$
|
523
|
|
|
$
|
446
|
|
|
$
|
1,418
|
|
|
$
|
1,447
|
|
|
|
|
|
|
|
|
|
Weighted-average number of ordinary shares outstanding - diluted
|
455.6
|
|
|
466.4
|
|
|
457.9
|
|
|
468.5
|
|
Less dilutive effect of equity-based compensation
|
1.7
|
|
|
1.3
|
|
|
1.4
|
|
|
1.7
|
|
Weighted-average number of ordinary shares outstanding - basic
|
453.9
|
|
|
465.1
|
|
|
456.5
|
|
|
466.8
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Eaton ordinary shareholders
|
|
|
|
|
|
|
|
Diluted
|
$
|
1.15
|
|
|
$
|
0.96
|
|
|
$
|
3.09
|
|
|
$
|
3.09
|
|
Basic
|
1.15
|
|
|
0.96
|
|
|
3.10
|
|
|
3.10
|
|
For the
third
quarter and first
nine
months of
2016
,
1.5 million
and
1.8 million
stock options, respectively, were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive. For the
third
quarter and first
nine
months of
2015
,
1.8 million
and
1.3 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 periods and their effect, accordingly, would have been antidilutive.
|
|
Note 11.
|
FAIR VALUE MEASUREMENTS
|
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of financial instruments recognized at fair value, and the fair value measurements used, follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
September 30, 2016
|
|
|
|
|
|
|
|
Cash
|
$
|
494
|
|
|
$
|
494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
213
|
|
|
213
|
|
|
—
|
|
|
—
|
|
Net derivative contracts
|
148
|
|
|
—
|
|
|
148
|
|
|
—
|
|
Long-term debt converted to floating interest rates by
interest rate swaps - net
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
Cash
|
$
|
268
|
|
|
$
|
268
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
177
|
|
|
177
|
|
|
—
|
|
|
—
|
|
Net derivative contracts
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
Long-term debt converted to floating interest rates by
interest rate swaps - net
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
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
$8,431
and fair value of
$9,050
at
September 30, 2016
compared to
$7,988
and
$8,231
, respectively, at
December 31, 2015
. 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.
|
|
Note 12.
|
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
|
In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and, to a lesser extent, commodity contracts, to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.
Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Condensed Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated, and is effective, as part of a hedging relationship and, if so, as to the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:
|
|
•
|
Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.
|
|
|
•
|
Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the effective portion of the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive loss and reclassified to income in the same period when the gain or loss on the hedged item is included in income.
|
|
|
•
|
Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the effective portion of the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive loss and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.
|
The gain or loss from a derivative financial instrument designated as a hedge that is effective is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The change in fair value of a derivative financial instrument that is not effective as a hedge is immediately recognized in income.
For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business. Gains and losses associated with commodity hedge contracts are classified in Cost of products sold.
Eaton uses 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 non-derivative net investment hedging instruments on an after-tax basis was
$99
at
September 30, 2016
and
$83
at
December 31, 2015
, and designated on a pre-tax basis was
$607
at
September 30, 2016
.
Derivative Financial Statement Impacts
The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional
amount
|
|
Other
current
assets
|
|
Other
noncurrent
assets
|
|
Other
current
liabilities
|
|
Other
noncurrent
liabilities
|
|
Type of
hedge
|
|
Term
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-to-floating interest rate
swaps
|
$
|
3,765
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair value
|
|
1 month to 19 years
|
Forward starting floating-to-fixed
interest rate swaps
|
450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
Cash flow
|
|
12 years
|
Currency exchange contracts
|
826
|
|
|
5
|
|
|
1
|
|
|
19
|
|
|
14
|
|
|
Cash flow
|
|
1 to 36 months
|
Total
|
|
|
$
|
5
|
|
|
$
|
173
|
|
|
$
|
19
|
|
|
$
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as
hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency exchange contracts
|
$
|
3,991
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
|
|
1 to 24 months
|
Commodity contracts
|
41
|
|
|
2
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
1 to 12 months
|
Total
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-to-floating interest rate
swaps
|
$
|
3,715
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
Fair value
|
|
2 to 19 years
|
Forward starting floating-to-fixed
interest rate swaps
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash flow
|
|
12 years
|
Currency exchange contracts
|
724
|
|
|
18
|
|
|
1
|
|
|
8
|
|
|
6
|
|
|
Cash flow
|
|
1 to 36 months
|
Commodity contracts
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash flow
|
|
1 to 12 months
|
Total
|
|
|
$
|
18
|
|
|
$
|
97
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as
hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency exchange contracts
|
$
|
4,198
|
|
|
$
|
27
|
|
|
|
|
|
$
|
40
|
|
|
|
|
|
|
|
1 to 12 months
|
Total
|
|
|
$
|
27
|
|
|
|
|
$
|
40
|
|
|
|
|
|
|
|
The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany sales and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing
100%
of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts.
The impact of derivative instruments 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
September 30
|
|
|
|
Three months ended
September 30
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
Derivatives designated as
cash flow hedges
|
|
|
|
|
|
|
|
|
|
Forward starting floating-to-fixed
interest rate swaps
|
$
|
1
|
|
|
$
|
—
|
|
|
Interest expense - net
|
|
$
|
—
|
|
|
$
|
—
|
|
Currency exchange contracts
|
(3
|
)
|
|
6
|
|
|
Cost of products sold
|
|
(4
|
)
|
|
5
|
|
Total
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
|
|
$
|
(4
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in
other comprehensive
(loss) income
|
|
Location of gain (loss)
reclassified from
Accumulated other
comprehensive loss
|
|
Gain (loss) reclassified
from Accumulated other
comprehensive loss
|
|
Nine months ended
September 30
|
|
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
Derivatives designated as cash
flow hedges
|
|
|
|
|
|
|
|
|
|
Forward starting floating-to-fixed
interest rate swaps
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
Interest expense - net
|
|
$
|
—
|
|
|
$
|
—
|
|
Currency exchange contracts
|
(35
|
)
|
|
16
|
|
|
Cost of products sold
|
|
(3
|
)
|
|
11
|
|
Total
|
$
|
(53
|
)
|
|
$
|
16
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
11
|
|
Amounts recognized in net income follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Derivatives designated as fair value hedges
|
|
|
|
|
|
|
|
Fixed-to-floating interest rate swaps
|
$
|
(28
|
)
|
|
$
|
65
|
|
|
$
|
78
|
|
|
$
|
62
|
|
Related long-term debt converted to floating interest
rates by interest rate swaps
|
28
|
|
|
(65
|
)
|
|
(78
|
)
|
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gains and losses described above were recognized in Interest expense - net.
The components of inventory follow:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
Raw materials
|
$
|
910
|
|
|
$
|
885
|
|
Work-in-process
|
431
|
|
|
412
|
|
Finished goods
|
1,083
|
|
|
1,131
|
|
Inventory at FIFO
|
2,424
|
|
|
2,428
|
|
Excess of FIFO over LIFO cost
|
(96
|
)
|
|
(105
|
)
|
Total inventory
|
$
|
2,328
|
|
|
$
|
2,323
|
|
|
|
Note 14.
|
BUSINESS SEGMENT INFORMATION
|
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Eaton’s operating segments are Electrical Products, Electrical Systems and Services, Hydraulics, Aerospace and Vehicle. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton’s business segments, see Note 15 to the Consolidated Financial Statements contained in the 2015 Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
|
|
|
|
|
|
|
Electrical Products
|
$
|
1,767
|
|
|
$
|
1,771
|
|
|
$
|
5,231
|
|
|
$
|
5,246
|
|
Electrical Systems and Services
|
1,436
|
|
|
1,487
|
|
|
4,207
|
|
|
4,437
|
|
Hydraulics
|
562
|
|
|
599
|
|
|
1,702
|
|
|
1,907
|
|
Aerospace
|
436
|
|
|
449
|
|
|
1,328
|
|
|
1,367
|
|
Vehicle
|
786
|
|
|
897
|
|
|
2,412
|
|
|
2,841
|
|
Total net sales
|
$
|
4,987
|
|
|
$
|
5,203
|
|
|
$
|
14,880
|
|
|
$
|
15,798
|
|
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
|
|
|
Electrical Products
|
$
|
331
|
|
|
$
|
322
|
|
|
$
|
924
|
|
|
$
|
858
|
|
Electrical Systems and Services
|
197
|
|
|
164
|
|
|
534
|
|
|
573
|
|
Hydraulics
|
61
|
|
|
44
|
|
|
161
|
|
|
184
|
|
Aerospace
|
88
|
|
|
79
|
|
|
251
|
|
|
233
|
|
Vehicle
|
122
|
|
|
136
|
|
|
377
|
|
|
490
|
|
Total segment operating profit
|
799
|
|
|
745
|
|
|
2,247
|
|
|
2,338
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
(99
|
)
|
|
(102
|
)
|
|
(297
|
)
|
|
(306
|
)
|
Interest expense - net
|
(59
|
)
|
|
(59
|
)
|
|
(173
|
)
|
|
(175
|
)
|
Pension and other postretirement benefits expense
|
(18
|
)
|
|
(38
|
)
|
|
(45
|
)
|
|
(99
|
)
|
Other corporate expense - net
|
(50
|
)
|
|
(59
|
)
|
|
(164
|
)
|
|
(168
|
)
|
Income before income taxes
|
573
|
|
|
487
|
|
|
1,568
|
|
|
1,590
|
|
Income tax expense
|
51
|
|
|
42
|
|
|
151
|
|
|
143
|
|
Net income
|
522
|
|
|
445
|
|
|
1,417
|
|
|
1,447
|
|
Less net loss for noncontrolling interests
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
Net income attributable to Eaton ordinary shareholders
|
$
|
523
|
|
|
$
|
446
|
|
|
$
|
1,418
|
|
|
$
|
1,447
|
|
|
|
Note 15.
|
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
|
On November 14, 2013, Eaton Corporation registered senior notes under the Securities Act of 1933 (the Senior Notes). Eaton and certain other of Eaton's
100%
owned direct and indirect subsidiaries (the Guarantors) fully and unconditionally guaranteed (subject, in the case of the Guarantors, other than Eaton, to customary release provisions as described below), on a joint and several basis, the Senior Notes. The following condensed consolidating financial statements are included so that separate financial statements of Eaton, Eaton Corporation and each of the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating adjustments primarily relate to eliminations of investments in subsidiaries and intercompany balances and transactions. The condensed consolidating financial statements present investments in subsidiaries using the equity method of accounting.
The guarantee of a Guarantor that is not a parent of the issuer will be automatically and unconditionally released and discharged in the event of any sale of the Guarantor or of all or substantially all of its assets, or in connection with the release or termination of the Guarantor as a guarantor under all other U.S. debt securities or U.S. syndicated credit facilities, subject to limitations set forth in the indenture. The guarantee of a Guarantor that is a direct or indirect parent of the issuer will only be automatically and unconditionally released and discharged in connection with the release or termination of such Guarantor as a guarantor under all other debt securities or syndicated credit facilities (in both cases, U.S. or otherwise), subject to limitations set forth in the indenture.
During 2015 and 2016, the Company undertook certain steps to restructure ownership of various subsidiaries. The transactions were entirely among wholly-owned subsidiaries under the common control of Eaton. This restructuring has been reflected as of the beginning of the earliest period presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net sales
|
$
|
—
|
|
|
$
|
1,660
|
|
|
$
|
1,583
|
|
|
$
|
3,040
|
|
|
$
|
(1,296
|
)
|
|
$
|
4,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
—
|
|
|
1,329
|
|
|
1,162
|
|
|
2,173
|
|
|
(1,293
|
)
|
|
3,371
|
|
Selling and administrative expense
|
2
|
|
|
330
|
|
|
197
|
|
|
324
|
|
|
—
|
|
|
853
|
|
Research and development expense
|
—
|
|
|
59
|
|
|
43
|
|
|
44
|
|
|
—
|
|
|
146
|
|
Interest expense (income) - net
|
—
|
|
|
59
|
|
|
4
|
|
|
(3
|
)
|
|
(1
|
)
|
|
59
|
|
Other expense (income) - net
|
(1
|
)
|
|
18
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(15
|
)
|
Equity in loss (earnings) of
subsidiaries, net of tax
|
(628
|
)
|
|
(173
|
)
|
|
(895
|
)
|
|
(219
|
)
|
|
1,915
|
|
|
—
|
|
Intercompany expense (income) - net
|
104
|
|
|
(47
|
)
|
|
336
|
|
|
(393
|
)
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
523
|
|
|
85
|
|
|
736
|
|
|
1,146
|
|
|
(1,917
|
)
|
|
573
|
|
Income tax expense (benefit)
|
—
|
|
|
(11
|
)
|
|
10
|
|
|
53
|
|
|
(1
|
)
|
|
51
|
|
Net income (loss)
|
523
|
|
|
96
|
|
|
726
|
|
|
1,093
|
|
|
(1,916
|
)
|
|
522
|
|
Less net loss (income) for
noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Net income (loss) attributable to
Eaton ordinary shareholders
|
$
|
523
|
|
|
$
|
96
|
|
|
$
|
726
|
|
|
$
|
1,093
|
|
|
$
|
(1,915
|
)
|
|
$
|
523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
29
|
|
|
$
|
2
|
|
|
$
|
(55
|
)
|
|
$
|
24
|
|
Total comprehensive income
(loss) attributable to Eaton
ordinary shareholders
|
$
|
547
|
|
|
$
|
120
|
|
|
$
|
755
|
|
|
$
|
1,095
|
|
|
$
|
(1,970
|
)
|
|
$
|
547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net sales
|
$
|
—
|
|
|
$
|
1,755
|
|
|
$
|
1,664
|
|
|
$
|
3,105
|
|
|
$
|
(1,321
|
)
|
|
$
|
5,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
—
|
|
|
1,380
|
|
|
1,269
|
|
|
2,265
|
|
|
(1,317
|
)
|
|
3,597
|
|
Selling and administrative expense
|
2
|
|
|
375
|
|
|
191
|
|
|
339
|
|
|
—
|
|
|
907
|
|
Research and development expense
|
—
|
|
|
65
|
|
|
51
|
|
|
40
|
|
|
—
|
|
|
156
|
|
Interest expense (income) - net
|
—
|
|
|
54
|
|
|
5
|
|
|
(3
|
)
|
|
3
|
|
|
59
|
|
Other expense (income) - net
|
—
|
|
|
11
|
|
|
3
|
|
|
(17
|
)
|
|
—
|
|
|
(3
|
)
|
Equity in loss (earnings) of
subsidiaries, net of tax
|
(534
|
)
|
|
(264
|
)
|
|
(888
|
)
|
|
(64
|
)
|
|
1,750
|
|
|
—
|
|
Intercompany expense (income) - net
|
86
|
|
|
(54
|
)
|
|
258
|
|
|
(290
|
)
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
446
|
|
|
188
|
|
|
775
|
|
|
835
|
|
|
(1,757
|
)
|
|
487
|
|
Income tax expense (benefit)
|
|
|
17
|
|
|
(15
|
)
|
|
38
|
|
|
2
|
|
|
42
|
|
Net income (loss)
|
446
|
|
|
171
|
|
|
790
|
|
|
797
|
|
|
(1,759
|
)
|
|
445
|
|
Less net loss (income) for
noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Net income (loss) attributable to
Eaton ordinary shareholders
|
$
|
446
|
|
|
$
|
171
|
|
|
$
|
790
|
|
|
$
|
798
|
|
|
$
|
(1,759
|
)
|
|
$
|
446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
$
|
(312
|
)
|
|
$
|
(24
|
)
|
|
$
|
(305
|
)
|
|
$
|
(411
|
)
|
|
$
|
740
|
|
|
$
|
(312
|
)
|
Total comprehensive income
(loss) attributable to Eaton
ordinary shareholders
|
$
|
134
|
|
|
$
|
147
|
|
|
$
|
485
|
|
|
$
|
387
|
|
|
$
|
(1,019
|
)
|
|
$
|
134
|
|
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net sales
|
$
|
—
|
|
|
$
|
4,842
|
|
|
$
|
4,793
|
|
|
$
|
8,983
|
|
|
$
|
(3,738
|
)
|
|
$
|
14,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
—
|
|
|
3,788
|
|
|
3,554
|
|
|
6,478
|
|
|
(3,739
|
)
|
|
10,081
|
|
Selling and administrative expense
|
6
|
|
|
1,048
|
|
|
583
|
|
|
1,005
|
|
|
—
|
|
|
2,642
|
|
Research and development expense
|
—
|
|
|
176
|
|
|
138
|
|
|
130
|
|
|
—
|
|
|
444
|
|
Interest expense (income) - net
|
—
|
|
|
169
|
|
|
13
|
|
|
(13
|
)
|
|
4
|
|
|
173
|
|
Other expense (income) - net
|
(1
|
)
|
|
34
|
|
|
(3
|
)
|
|
(58
|
)
|
|
—
|
|
|
(28
|
)
|
Equity in loss (earnings) of
subsidiaries, net of tax
|
(1,726
|
)
|
|
(495
|
)
|
|
(2,384
|
)
|
|
(434
|
)
|
|
5,039
|
|
|
—
|
|
Intercompany expense (income) - net
|
303
|
|
|
(135
|
)
|
|
913
|
|
|
(1,081
|
)
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
1,418
|
|
|
257
|
|
|
1,979
|
|
|
2,956
|
|
|
(5,042
|
)
|
|
1,568
|
|
Income tax expense (benefit)
|
—
|
|
|
9
|
|
|
24
|
|
|
119
|
|
|
(1
|
)
|
|
151
|
|
Net income (loss)
|
1,418
|
|
|
248
|
|
|
1,955
|
|
|
2,837
|
|
|
(5,041
|
)
|
|
1,417
|
|
Less net loss (income) for
noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
3
|
|
|
1
|
|
Net income (loss) attributable to
Eaton ordinary shareholders
|
$
|
1,418
|
|
|
$
|
248
|
|
|
$
|
1,955
|
|
|
$
|
2,835
|
|
|
$
|
(5,038
|
)
|
|
$
|
1,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
$
|
42
|
|
|
$
|
68
|
|
|
$
|
54
|
|
|
$
|
(21
|
)
|
|
$
|
(101
|
)
|
|
$
|
42
|
|
Total comprehensive income
(loss) attributable to Eaton
ordinary shareholders
|
$
|
1,460
|
|
|
$
|
316
|
|
|
$
|
2,009
|
|
|
$
|
2,814
|
|
|
$
|
(5,139
|
)
|
|
$
|
1,460
|
|
CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton Corporation plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net sales
|
$
|
—
|
|
|
$
|
5,263
|
|
|
$
|
5,065
|
|
|
$
|
9,469
|
|
|
$
|
(3,999
|
)
|
|
$
|
15,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
—
|
|
|
4,123
|
|
|
3,837
|
|
|
6,864
|
|
|
(3,959
|
)
|
|
10,865
|
|
Selling and administrative expense
|
6
|
|
|
1,120
|
|
|
539
|
|
|
1,058
|
|
|
—
|
|
|
2,723
|
|
Research and development expense
|
—
|
|
|
202
|
|
|
145
|
|
|
125
|
|
|
—
|
|
|
472
|
|
Interest expense (income) - net
|
—
|
|
|
166
|
|
|
16
|
|
|
(10
|
)
|
|
3
|
|
|
175
|
|
Other expense (income) - net
|
—
|
|
|
17
|
|
|
(5
|
)
|
|
(39
|
)
|
|
—
|
|
|
(27
|
)
|
Equity in loss (earnings) of
subsidiaries, net of tax
|
(1,698
|
)
|
|
(529
|
)
|
|
(2,403
|
)
|
|
(315
|
)
|
|
4,945
|
|
|
—
|
|
Intercompany expense (income) - net
|
245
|
|
|
(362
|
)
|
|
1,010
|
|
|
(893
|
)
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
1,447
|
|
|
526
|
|
|
1,926
|
|
|
2,679
|
|
|
(4,988
|
)
|
|
1,590
|
|
Income tax expense (benefit)
|
—
|
|
|
36
|
|
|
(32
|
)
|
|
154
|
|
|
(15
|
)
|
|
143
|
|
Net income (loss)
|
1,447
|
|
|
490
|
|
|
1,958
|
|
|
2,525
|
|
|
(4,973
|
)
|
|
1,447
|
|
Less net loss (income) for
noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
Net income (loss) attributable to
Eaton ordinary shareholders
|
$
|
1,447
|
|
|
$
|
490
|
|
|
$
|
1,958
|
|
|
$
|
2,524
|
|
|
$
|
(4,972
|
)
|
|
$
|
1,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
$
|
(716
|
)
|
|
$
|
39
|
|
|
$
|
(691
|
)
|
|
$
|
(875
|
)
|
|
$
|
1,527
|
|
|
$
|
(716
|
)
|
Total comprehensive income (loss) attributable to Eaton
ordinary shareholders
|
$
|
731
|
|
|
$
|
529
|
|
|
$
|
1,267
|
|
|
$
|
1,649
|
|
|
$
|
(3,445
|
)
|
|
$
|
731
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
SEPTEMBER 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1
|
|
|
$
|
70
|
|
|
$
|
4
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
494
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
213
|
|
Accounts receivable - net
|
—
|
|
|
510
|
|
|
1,072
|
|
|
2,077
|
|
|
—
|
|
|
3,659
|
|
Intercompany accounts
receivable
|
2
|
|
|
637
|
|
|
4,149
|
|
|
3,484
|
|
|
(8,272
|
)
|
|
—
|
|
Inventory
|
—
|
|
|
365
|
|
|
647
|
|
|
1,395
|
|
|
(79
|
)
|
|
2,328
|
|
Prepaid expenses and
other current assets
|
—
|
|
|
107
|
|
|
40
|
|
|
219
|
|
|
27
|
|
|
393
|
|
Total current assets
|
3
|
|
|
1,689
|
|
|
5,912
|
|
|
7,807
|
|
|
(8,324
|
)
|
|
7,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
—
|
|
|
863
|
|
|
712
|
|
|
1,931
|
|
|
—
|
|
|
3,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
—
|
|
|
1,355
|
|
|
6,264
|
|
|
5,815
|
|
|
—
|
|
|
13,434
|
|
Other intangible assets
|
—
|
|
|
172
|
|
|
3,481
|
|
|
2,036
|
|
|
—
|
|
|
5,689
|
|
Deferred income taxes
|
—
|
|
|
987
|
|
|
—
|
|
|
231
|
|
|
(806
|
)
|
|
412
|
|
Investment in subsidiaries
|
32,690
|
|
|
13,491
|
|
|
72,562
|
|
|
12,194
|
|
|
(130,937
|
)
|
|
—
|
|
Intercompany loans receivable
|
—
|
|
|
7,614
|
|
|
2,182
|
|
|
56,101
|
|
|
(65,897
|
)
|
|
—
|
|
Other assets
|
—
|
|
|
603
|
|
|
129
|
|
|
377
|
|
|
—
|
|
|
1,109
|
|
Total assets
|
$
|
32,693
|
|
|
$
|
26,774
|
|
|
$
|
91,242
|
|
|
$
|
86,492
|
|
|
$
|
(205,964
|
)
|
|
$
|
31,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Current portion of
long-term debt
|
—
|
|
|
251
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
550
|
|
Accounts payable
|
—
|
|
|
415
|
|
|
259
|
|
|
1,116
|
|
|
—
|
|
|
1,790
|
|
Intercompany accounts payable
|
194
|
|
|
3,966
|
|
|
2,982
|
|
|
1,130
|
|
|
(8,272
|
)
|
|
—
|
|
Accrued compensation
|
—
|
|
|
85
|
|
|
51
|
|
|
252
|
|
|
—
|
|
|
388
|
|
Other current liabilities
|
1
|
|
|
630
|
|
|
297
|
|
|
939
|
|
|
(1
|
)
|
|
1,866
|
|
Total current liabilities
|
195
|
|
|
5,347
|
|
|
3,888
|
|
|
3,438
|
|
|
(8,273
|
)
|
|
4,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
6,889
|
|
|
971
|
|
|
16
|
|
|
5
|
|
|
7,881
|
|
Pension liabilities
|
—
|
|
|
605
|
|
|
168
|
|
|
759
|
|
|
—
|
|
|
1,532
|
|
Other postretirement
benefits liabilities
|
—
|
|
|
237
|
|
|
114
|
|
|
78
|
|
|
—
|
|
|
429
|
|
Deferred income taxes
|
—
|
|
|
—
|
|
|
771
|
|
|
401
|
|
|
(806
|
)
|
|
366
|
|
Intercompany loans payable
|
17,094
|
|
|
2,377
|
|
|
44,900
|
|
|
1,526
|
|
|
(65,897
|
)
|
|
—
|
|
Other noncurrent liabilities
|
—
|
|
|
344
|
|
|
214
|
|
|
430
|
|
|
—
|
|
|
988
|
|
Total noncurrent liabilities
|
17,094
|
|
|
10,452
|
|
|
47,138
|
|
|
3,210
|
|
|
(66,698
|
)
|
|
11,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Eaton shareholders' equity
|
15,404
|
|
|
10,975
|
|
|
40,216
|
|
|
79,807
|
|
|
(130,998
|
)
|
|
15,404
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
5
|
|
|
42
|
|
Total equity
|
15,404
|
|
|
10,975
|
|
|
40,216
|
|
|
79,844
|
|
|
(130,993
|
)
|
|
15,446
|
|
Total liabilities and equity
|
$
|
32,693
|
|
|
$
|
26,774
|
|
|
$
|
91,242
|
|
|
$
|
86,492
|
|
|
$
|
(205,964
|
)
|
|
$
|
31,237
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
7
|
|
|
$
|
235
|
|
|
$
|
—
|
|
|
$
|
268
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
2
|
|
|
175
|
|
|
—
|
|
|
177
|
|
Accounts receivable - net
|
—
|
|
|
512
|
|
|
1,030
|
|
|
1,937
|
|
|
—
|
|
|
3,479
|
|
Intercompany accounts
receivable
|
1
|
|
|
842
|
|
|
3,888
|
|
|
2,928
|
|
|
(7,659
|
)
|
|
—
|
|
Inventory
|
—
|
|
|
357
|
|
|
651
|
|
|
1,395
|
|
|
(80
|
)
|
|
2,323
|
|
Prepaid expenses and
other current assets
|
—
|
|
|
77
|
|
|
40
|
|
|
229
|
|
|
23
|
|
|
369
|
|
Total current assets
|
1
|
|
|
1,814
|
|
|
5,618
|
|
|
6,899
|
|
|
(7,716
|
)
|
|
6,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
—
|
|
|
930
|
|
|
750
|
|
|
1,885
|
|
|
—
|
|
|
3,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent assets
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
—
|
|
|
1,355
|
|
|
6,264
|
|
|
5,860
|
|
|
—
|
|
|
13,479
|
|
Other intangible assets
|
—
|
|
|
182
|
|
|
3,624
|
|
|
2,208
|
|
|
—
|
|
|
6,014
|
|
Deferred income taxes
|
—
|
|
|
1,016
|
|
|
—
|
|
|
218
|
|
|
(872
|
)
|
|
362
|
|
Investment in subsidiaries
|
29,627
|
|
|
12,883
|
|
|
60,139
|
|
|
10,046
|
|
|
(112,695
|
)
|
|
—
|
|
Intercompany loans receivable
|
—
|
|
|
8,641
|
|
|
1,573
|
|
|
44,835
|
|
|
(55,049
|
)
|
|
—
|
|
Other assets
|
—
|
|
|
492
|
|
|
122
|
|
|
346
|
|
|
—
|
|
|
960
|
|
Total assets
|
$
|
29,628
|
|
|
$
|
27,313
|
|
|
$
|
78,090
|
|
|
$
|
72,297
|
|
|
$
|
(176,332
|
)
|
|
$
|
30,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
$
|
—
|
|
|
$
|
408
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
426
|
|
Current portion of
long-term debt
|
—
|
|
|
1
|
|
|
240
|
|
|
1
|
|
|
—
|
|
|
242
|
|
Accounts payable
|
—
|
|
|
392
|
|
|
260
|
|
|
1,106
|
|
|
—
|
|
|
1,758
|
|
Intercompany accounts payable
|
219
|
|
|
4,009
|
|
|
2,248
|
|
|
1,183
|
|
|
(7,659
|
)
|
|
—
|
|
Accrued compensation
|
—
|
|
|
77
|
|
|
53
|
|
|
236
|
|
|
—
|
|
|
366
|
|
Other current liabilities
|
1
|
|
|
644
|
|
|
318
|
|
|
875
|
|
|
(5
|
)
|
|
1,833
|
|
Total current liabilities
|
220
|
|
|
5,531
|
|
|
3,119
|
|
|
3,419
|
|
|
(7,664
|
)
|
|
4,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
7,053
|
|
|
675
|
|
|
17
|
|
|
1
|
|
|
7,746
|
|
Pension liabilities
|
—
|
|
|
639
|
|
|
165
|
|
|
782
|
|
|
—
|
|
|
1,586
|
|
Other postretirement
benefits liabilities
|
—
|
|
|
245
|
|
|
118
|
|
|
77
|
|
|
—
|
|
|
440
|
|
Deferred income taxes
|
—
|
|
|
—
|
|
|
815
|
|
|
447
|
|
|
(872
|
)
|
|
390
|
|
Intercompany loans payable
|
14,222
|
|
|
2,962
|
|
|
36,432
|
|
|
1,433
|
|
|
(55,049
|
)
|
|
—
|
|
Other noncurrent liabilities
|
—
|
|
|
346
|
|
|
200
|
|
|
432
|
|
|
—
|
|
|
978
|
|
Total noncurrent liabilities
|
14,222
|
|
|
11,245
|
|
|
38,405
|
|
|
3,188
|
|
|
(55,920
|
)
|
|
11,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Eaton shareholders' equity
|
15,186
|
|
|
10,537
|
|
|
36,566
|
|
|
65,653
|
|
|
(112,756
|
)
|
|
15,186
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
8
|
|
|
45
|
|
Total equity
|
15,186
|
|
|
10,537
|
|
|
36,566
|
|
|
65,690
|
|
|
(112,748
|
)
|
|
15,231
|
|
Total liabilities and equity
|
$
|
29,628
|
|
|
$
|
27,313
|
|
|
$
|
78,090
|
|
|
$
|
72,297
|
|
|
$
|
(176,332
|
)
|
|
$
|
30,996
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net cash provided by (used in)
operating activities
|
$
|
(158
|
)
|
|
$
|
(29
|
)
|
|
$
|
(283
|
)
|
|
$
|
2,384
|
|
|
$
|
—
|
|
|
$
|
1,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property,
plant and equipment
|
—
|
|
|
(62
|
)
|
|
(75
|
)
|
|
(209
|
)
|
|
—
|
|
|
(346
|
)
|
Cash received from (paid for) acquisitions of businesses, net of cash acquired
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Sales (purchases) of short-term investments - net
|
—
|
|
|
—
|
|
|
2
|
|
|
(31
|
)
|
|
—
|
|
|
(29
|
)
|
Investments in affiliates
|
(1,250
|
)
|
|
—
|
|
|
(120
|
)
|
|
(1,370
|
)
|
|
2,740
|
|
|
—
|
|
Return of investments in affiliates
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
Loans to affiliates
|
—
|
|
|
(287
|
)
|
|
(655
|
)
|
|
(6,457
|
)
|
|
7,399
|
|
|
—
|
|
Repayments of loans from affiliates
|
—
|
|
|
1,288
|
|
|
—
|
|
|
4,501
|
|
|
(5,789
|
)
|
|
—
|
|
Other - net
|
—
|
|
|
—
|
|
|
30
|
|
|
(27
|
)
|
|
—
|
|
|
3
|
|
Net cash provided by (used in) investing activities
|
(1,250
|
)
|
|
939
|
|
|
(770
|
)
|
|
(3,593
|
)
|
|
4,303
|
|
|
(371
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
—
|
|
|
22
|
|
|
611
|
|
|
—
|
|
|
—
|
|
|
633
|
|
Payments on borrowings
|
—
|
|
|
(408
|
)
|
|
(240
|
)
|
|
(18
|
)
|
|
—
|
|
|
(666
|
)
|
Proceeds from borrowings from
affiliates
|
3,333
|
|
|
2,815
|
|
|
1,051
|
|
|
200
|
|
|
(7,399
|
)
|
|
—
|
|
Payments on borrowings from
affiliates
|
(637
|
)
|
|
(3,453
|
)
|
|
(1,658
|
)
|
|
(41
|
)
|
|
5,789
|
|
|
—
|
|
Capital contributions from affiliates
|
—
|
|
|
—
|
|
|
1,370
|
|
|
1,370
|
|
|
(2,740
|
)
|
|
—
|
|
Return of capital to affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
47
|
|
|
—
|
|
Other intercompany financing
activities
|
—
|
|
|
158
|
|
|
(81
|
)
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
Cash dividends paid
|
(780
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(780
|
)
|
Exercise of employee stock options
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
Repurchase of shares
|
(567
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(567
|
)
|
Excess tax benefit from
equity-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other - net
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
Net cash provided by (used in)
financing activities
|
1,409
|
|
|
(866
|
)
|
|
1,050
|
|
|
1,385
|
|
|
(4,303
|
)
|
|
(1,325
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of currency on cash
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Total increase (decrease) in cash
|
1
|
|
|
44
|
|
|
(3
|
)
|
|
184
|
|
|
—
|
|
|
226
|
|
Cash at the beginning of the period
|
—
|
|
|
26
|
|
|
7
|
|
|
235
|
|
|
—
|
|
|
268
|
|
Cash at the end of the period
|
$
|
1
|
|
|
$
|
70
|
|
|
$
|
4
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
494
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton
Corporation
plc
|
|
Eaton
Corporation
|
|
Guarantors
|
|
Other
subsidiaries
|
|
Consolidating
adjustments
|
|
Total
|
Net cash provided by (used in)
operating activities
|
$
|
(85
|
)
|
|
$
|
(93
|
)
|
|
$
|
(23
|
)
|
|
$
|
1,830
|
|
|
$
|
—
|
|
|
$
|
1,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property,
plant and equipment
|
—
|
|
|
(68
|
)
|
|
(100
|
)
|
|
(200
|
)
|
|
—
|
|
|
(368
|
)
|
Cash received from (paid for) acquisitions of businesses, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
Sales (purchases) of short-term
investments - net
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
Investments in affiliates
|
(1,482
|
)
|
|
—
|
|
|
(1,176
|
)
|
|
(1,482
|
)
|
|
4,140
|
|
|
—
|
|
Loans to affiliates
|
—
|
|
|
(307
|
)
|
|
(39
|
)
|
|
(7,638
|
)
|
|
7,984
|
|
|
—
|
|
Repayments of loans from affiliates
|
—
|
|
|
306
|
|
|
58
|
|
|
5,514
|
|
|
(5,878
|
)
|
|
—
|
|
Proceeds from sale of businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Other - net
|
—
|
|
|
(41
|
)
|
|
33
|
|
|
(36
|
)
|
|
—
|
|
|
(44
|
)
|
Net cash provided by (used in)
investing activities
|
(1,482
|
)
|
|
(110
|
)
|
|
(1,224
|
)
|
|
(3,803
|
)
|
|
6,246
|
|
|
(373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Payments on borrowings
|
—
|
|
|
(102
|
)
|
|
(301
|
)
|
|
(2
|
)
|
|
—
|
|
|
(405
|
)
|
Proceeds from borrowings from
affiliates
|
2,783
|
|
|
4,577
|
|
|
581
|
|
|
43
|
|
|
(7,984
|
)
|
|
—
|
|
Payments on borrowings from
affiliates
|
(40
|
)
|
|
(4,617
|
)
|
|
(1,160
|
)
|
|
(61
|
)
|
|
5,878
|
|
|
—
|
|
Capital contributions from affiliates
|
—
|
|
|
1,176
|
|
|
1,482
|
|
|
1,482
|
|
|
(4,140
|
)
|
|
—
|
|
Other intercompany financing activities
|
—
|
|
|
(859
|
)
|
|
644
|
|
|
215
|
|
|
—
|
|
|
—
|
|
Cash dividends paid
|
(771
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(771
|
)
|
Exercise of employee stock options
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
Repurchase of shares
|
(454
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(454
|
)
|
Other - net
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
Net cash provided by (used in)
financing activities
|
1,566
|
|
|
175
|
|
|
1,246
|
|
|
1,670
|
|
|
(6,246
|
)
|
|
(1,589
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of currency on cash
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
Total increase (decrease) in cash
|
(1
|
)
|
|
(28
|
)
|
|
(1
|
)
|
|
(333
|
)
|
|
—
|
|
|
(363
|
)
|
Cash at the beginning of the period
|
1
|
|
|
173
|
|
|
13
|
|
|
594
|
|
|
—
|
|
|
781
|
|
Cash at the end of the period
|
$
|
—
|
|
|
$
|
145
|
|
|
$
|
12
|
|
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
418
|
|