Form 8-K
8-K — Eaton Corp plc
Accession: 0001551182-26-000034
Filed: 2026-10-16
Period: 2026-10-16
CIK: 0001551182
SIC: 3590 (MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT)
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — etn-20261016.htm (Primary)
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8-K
8-K (Primary)
Filename: etn-20261016.htm · Sequence: 1
etn-20261016
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2026
EATON CORPORATION plc
(Exact name of registrant as specified in its charter)
Ireland 000-54863 98-1059235
(State or other jurisdiction
of incorporation) (Commission
File Number) (I.R.S. Employer
Identification No.)
Eaton House, 30 Pembroke Road, Dublin 4, Ireland D04 Y0C2
(Address of principal executive offices) (Zip Code)
+353
1637 2900
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Ordinary shares ($0.01 par value) ETN New York Stock Exchange
3.850% Senior Notes due 2028 ETN/28 New York Stock Exchange
3.950% Senior Notes due 2029 ETN/29 New York Stock Exchange
4.450% Senior Notes due 2030 ETN/30 New York Stock Exchange
4.200% Senior Notes due 2031 ETN/31 New York Stock Exchange
4.500% Senior Notes due 2033 ETN/33 New York Stock Exchange
3.550% Senior Notes due 2034 ETN/34 New York Stock Exchange
3.625% Senior Notes due 2035 ETN/35 New York Stock Exchange
4.800% Senior Notes due 2036 ETN/36 New York Stock Exchange
4.000% Senior Notes due 2038 ETN/38 New York Stock Exchange
5.450% Senior Notes due 2056 ETN/56 New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 Other Events.
Eaton Corporation plc ("Eaton" or the "Company") is filing this Current Report on Form 8-K ("Form 8-K") solely to recast certain segment financial information and related disclosures included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, originally filed with the Securities and Exchange Commission (the "SEC") on February 26, 2026 (the "2025 Form 10-K"). The recast information reflects a change in segment reporting implemented during the first quarter of 2026, as described below and in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2026, filed with the SEC on May 5, 2026, and Quarterly Report on Form 10-Q for the period ended June 30, 2026, filed with the SEC on July 31, 2026 (collectively referred to as the "2026 Form 10-Qs"). The information in this Form 8-K is not an amendment to or restatement of the 2025 Form 10-K.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
The rules of the SEC require that when a registrant prepares, on or after the date a registrant reports an accounting change such as the change in segment reporting described above, a new registration, proxy, or information statement (or amends a previously filed registration, proxy, or information statement) that includes or incorporates by reference financial statements, the registrant must recast the prior period financial statements included or incorporated by reference in the registration, proxy, or information statement to reflect these types of changes. Accordingly, the Company is filing this Form 8-K to recast the consolidated financial statements reported in the 2025 Form 10-K to reflect the change in segment reporting described above. The changes do not represent a restatement of previously issued financial statements.
Included within Exhibit 99.1 to this Form 8-K and incorporated herein are the following items from the 2025 Form 10-K, each recast to reflect the impact of the Company's change in business segments on the Company's consolidated financial information and certain related disclosures:
a.Part I, Item 1 - Business
b.Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
c.Part II, Item 8 - Financial Statements and Supplementary Data
d.Part IV, Item 15 - Exhibits and Financial Statement Schedules
The Company is also filing with this Form 8-K the Report of Independent Registered Public Accounting Firm on the Company's consolidated financial statements for the year ended December 31, 2025, which is unchanged from the 2025 Form 10-K, other than the dual date to reflect the recast of the Company's change in business segments.
Unaffected items and unaffected portions of the 2025 Form 10-K have not been repeated in, and are not amended or modified by, Exhibit 99.1. Exhibit 99.1 does not include the report of the independent registered public accounting firm on the effectiveness of the Company’s internal control over financial reporting, Management’s Report on Financial Statements, Management’s Report on Internal Control Over Financial Reporting or the list of exhibits appearing in Part IV, Item 15 of the 2025 Form 10-K. References in Exhibit 99.1 to any portion of the 2025 Form 10-K not included therein refer to the 2025 Form 10-K as originally filed.
The information included in this Form 8-K does not amend or restate the Company's audited consolidated financial statements included in the 2025 Form 10-K. This Form 8-K does not reflect events occurring after the Company filed the 2025 Form 10-K and does not modify or update the disclosures therein in any way, other than as expressly noted above. This Form 8-K does not purport to update the 2025 Form 10-K for any information, uncertainties, transactions, risks, events or trends occurring, or known to management as of the filing of this Form 8-K. Therefore, this Form 8-K should be read in conjunction with the 2025 Form 10-K and Company's filings made with the SEC subsequent to the filing of the 2025 Form 10-K, including, without limitation, the 2026 Form 10-Qs. The 2026 Form 10-Qs and other filings contain important information events, developments, and updates to certain expectations of the Company that have occurred since the filing of the 2025 Form 10-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Exhibit Description
23.1
Consent of Independent Registered Public Accounting Firm
99.1
Items from the Company's Annual Report on Form 10-K for the year ended December 31, 2025, revised to reflect recast segment information.
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Eaton Corporation plc
Date: October 16, 2026 By: /s/ Andrea Trabacchin
Andrea Trabacchin
Senior Vice President and Controller
EX-23.1
EX-23.1
Filename: etn12312025ex231recast.htm · Sequence: 2
Document
Eaton Corporation plc
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements of our report dated February 26, 2026 (except for Notes 1, 3, 6, 16 and 18, as to which the date is October 16, 2026), with respect to the consolidated financial statements of Eaton Corporation plc, included in this Current Report on Form 8-K.
Registration
Number Description Filing Date
333-281174 Form S-3 Registration Statement August 1, 2024
333-259545 Form S-3 Registration Statement September 15, 2021
333-249823 Form S-8 Registration Statement-2020 Stock Plan November 3, 2020
333-207689 Form S-8 Registration Statement-2015 Stock Plan October 30, 2015
333-202308 Form S-3 Registration Statement February 26, 2015
333-185206 Multiple plans - Form S-8 Registration Statement November 30, 2012
Amended and Restated 2012 Stock Plan
Second Amended and Restated 2009 Stock Plan
Amended and Restated 2008 Stock Plan
Amended and Restated 2004 Stock Plan
Amended and Restated 2002 Stock Plan
Amended and Restated 1998 Stock Plan
Amended and Restated 1995 Stock Plan
Eaton Incentive Compensation Deferral Plan II
Eaton Corporation Deferred Incentive Compensation Plan II
2005 Non-Employee Director Fee Deferral Plan
Eaton Savings Plan
Eaton Personal Investment Plan
Eaton Puerto Rico Retirement Savings Plan
Cooper Retirement Savings and Stock Ownership Plan
/s/ Ernst & Young LLP
Cleveland, Ohio
October 16, 2026
EX-99.1
EX-99.1
Filename: etn-20261016_d2.htm · Sequence: 3
etn-20261016_d2
Table of Contents
Exhibit 99.1
TABLE OF CONTENTS
Part I
2
Item 1.
Business
2
Part II
7
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
7
Item 8.
Financial Statements and Supplementary Data
7
Part IV
8
Item 15.
Exhibits and Financial Statement Schedules
8
Table of Contents
Part I
Item 1. Business.
Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are capitalizing on the megatrends of the electrification, digitalization, and the reindustrialization of and growth of megaprojects in North America and increased global infrastructure spending, all of which are expanding our end markets and positioning Eaton for growth for years to come. We are strengthening our participation across the entire electrical power value chain and benefiting from momentum in the data center and utility end markets as well as a growth cycle in the commercial aerospace and defense markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is helping to solve the world’s most urgent power management challenges and building a more sustainable society for people today and for future generations.
Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of $27.4 billion in 2025, the Company serves customers in 180 countries.
Eaton electronically files or furnishes reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) to the United States Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy and information statements, as well as any amendments to those reports. As soon as reasonably practicable, these reports are available free of charge through the Company's website at www.eaton.com. These filings are also accessible on the SEC's website at www.sec.gov.
Acquisitions and Divestiture of Businesses
In 2025, the Company acquired Fibrebond Corporation (Fibrebond) and Resilient Power Systems Inc. (Resilient), and announced an agreement to acquire Boyd Thermal. Additionally, on January 23, 2026, the Company closed the acquisition of Ultra PCS Limited (Ultra PCS). The acquisition of Resilient strengthens our power distribution offerings and accelerates the commercialization of solid-state transformer technology for future global applications in data centers and energy storage. Adding Fibrebond to the portfolio expands Eaton’s presence in the growing market for modular solutions for multi-tenant and hyperscale data center customers. The acquisition of Ultra PCS expands and integrates Eaton’s offerings in next-generation aerospace solutions. The agreement to acquire Boyd Thermal expands Eaton’s existing portfolio of solutions for data center customers to include critical liquid cooling technology, enabling the Company to serve hyperscale and colocation customers from the chip to the grid.
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of its legacy Vehicle and eMobility operating segments, into an independent, publicly traded company.
More information regarding the Company's acquisitions and divestiture is presented in Note 2 of the Notes to the consolidated financial statements.
Business Segment Information
Information by business segment regarding principal products, principal markets, methods of distribution and net sales is presented in Note 18 of the Notes to the consolidated financial statements. Additional information regarding Eaton's segments and business is presented below.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
Electrical Americas and Electrical Global
Eaton’s Electrical sector helps customers manage power in a way that’s reliable, efficient, safe and sustainable. From the grid to homes, buildings, data centers and industrials – Eaton plays a vital role in modernizing infrastructure and accelerating the electrification of society. As the world’s demand for electricity grows, so does the need for Eaton’s innovative technology and solutions.
Principal methods of competition in these segments are performance of products and systems, technology, customer service and support, and price. Eaton has a strong competitive position in these segments and, with respect to many products, is considered among the market leaders. In normal economic cycles, sales of these segments are historically lower in the first quarter and higher in the third and fourth quarters of a specific year. In 2025, 22% of these segments' sales were made to six large customers of electrical products and electrical systems and services.
2
Table of Contents
Aerospace
Eaton’s industry-leading portfolio of aerospace technologies elevates aircraft efficiency, safety and performance for customers across the commercial, military and space markets. As the demand for more electric and sustainable aviation solutions amplifies, the company is uniquely positioned to help power the next generation of platforms.
Principal methods of competition in this segment are total cost of ownership, product and system performance, quality, design engineering capabilities, and timely delivery. Eaton has a strong competitive position in this segment and, with respect to many products and platforms, is considered among the market leaders. In 2025, 20% of this segment's sales were made to three large original equipment manufacturers of aircraft.
Mobility
Eaton provides differentiated technologies that improve safety, efficiency, and performance for customers in the automotive, commercial vehicle, aftermarket and off-road segments. The company is committed to enabling the transition to electrified vehicles (EVs) while also continuing to provide innovative and efficient internal combustion engine (ICE) solutions.
Principal methods of competition in this segment are product performance, technology, global service, and price. Eaton is considered among the market leaders in this segment. In 2025, 37% of this segment's sales were made to five large original equipment manufacturers of vehicles and related components.
Information Concerning Eaton's Business in General
Raw Materials
Eaton's major requirements for raw materials include iron, steel, copper, nickel, aluminum, lead, silver, gold, titanium, rubber, plastic, electronic components, chemicals, and fluids. Materials are purchased in various forms, such as coils, sheets, strips, ingots, bars, extrusions, castings, forgings, stampings, powder metal, plastic resins, and pellets. Raw materials, as well as parts and other components, are purchased from many suppliers. Under normal circumstances, the Company has no difficulty obtaining its raw materials. To mitigate the impact of supply chain risk events we continue to invest in supply chain resiliency and work closely with our partners.
Intellectual Property
Eaton considers its intellectual property, including without limitation patents, trade names, domain names, trademarks, confidential information, and trade secrets to be of significant value to its business as a whole. The Company's products 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 develops and acquires new intellectual property on an ongoing basis and considers all of its intellectual property to be valuable. Based on the broad scope of the Company's product lines, management believes that the loss or expiration of any single intellectual property right would not in and of itself have a material effect on Eaton's consolidated financial statements or its business segments. The Company works diligently to protect its intellectual property, including innovations, through various legal means.
Environmental Contingencies
Our comprehensive sustainability strategy is driven by our mission to improve the quality of life and the environment. We are committed to reducing our footprint, eliminating waste, and making the best use of natural resources. The operations of the Company involve emissions, as well as the use and disposal of certain substances regulated under environmental protection laws. Eaton continues to modify processes on an ongoing, regular basis in order to reduce the impact on the environment, including the reduction or elimination of certain chemicals used in, and wastes generated from, operations. Compliance with laws that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, are not expected to have a material adverse effect upon capital expenditures, including expenditures for environmental control facilities, earnings or the competitive position of the Company. Compliance with future environmental protection laws may require an increase in capital expenditures. Information regarding the Company's liabilities related to environmental matters is presented in Note 11 of the Notes to the consolidated financial statements.
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Human Capital Management
Eaton has approximately 97,000 employees globally. The number of persons employed by our business segments and corporate at December 31, 2025 are as follows:
(In thousands) 2025
Electrical Americas
35
Electrical Global 26
Aerospace 14
Mobility 12
Corporate 10
Total number of persons employed 97
Eaton uses and monitors a variety of metrics to demonstrate our objectives related to employee attraction, development, and retention are met. Most notably, Eaton tracks the following:
Inclusion and Diversity
Eaton aspires to be a model of inclusion and diversity in the industry - known for the way it welcomes all employees to the table and includes them by listening to what they have to offer.
We’re doing this because we believe an inclusive and diverse workforce makes better decisions. Our success depends on our ability to attract and retain the best employees without regard to race, color, social or economic status, religion, national origin, marital status, age, veteran status, sexual orientation, gender identity, or any protected status. It is the policy of the Company to make all decisions regarding employment based on the principle of equal employment opportunity and without discrimination. We embrace the power of diverse experiences, backgrounds and perspectives from all our employees to drive innovation and sustainable growth that benefits our employees, investors, customers and communities.
We also believe that when we value the uniqueness of each individual, we can attract and retain top talent, enable higher-performing teams, and accelerate the process of becoming an enterprise that can win in all markets.
At December 31, 2025, Eaton’s workforce distribution is as follows:
Total Global Number of women
(Global) Percentage of women
(Global) U.S. total
Number of minorities (U.S. only)1
Percentage of minorities (U.S. only)1
Board of directors 12 4 33.3 % 9 5 55.6 %
Executive leadership team
19 2 10.5 % 18 6 33.3 %
Executives 718 189 26.3 % 517 116 22.4 %
Managers 8,983 2,272 25.3 % 4,556 1,036 22.7 %
All other employees 87,583 30,452 34.8 % 24,911 9,657 38.8 %
All employees 97,303 32,915 33.8 % 30,002 10,815 36.0 %
1 Excluding Puerto Rico
Our plan to be a model of inclusion and diversity among our peers encompasses a number of actions, including an examination into our programs, practices, processes, and policies to look for opportunities to strengthen our entire workforce.
Compensation
A key component of Eaton’s attraction and retention strategy is providing a competitive total rewards package which includes items such as salaries, wages, short- and long-term incentive compensation, in addition to health, welfare, retirement, and other benefits. Eaton regularly benchmarks its compensation and benefits practices against those of our industry peers and in the markets in which we operate to evaluate how our plans and programs are aligned with external practices in effort to maintain a high performing workforce.
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Safety
At Eaton, our goal is to support the safety, health and wellness of our employees. We have established safety principles that underline the importance of protecting our employees’ well-being and require each individual to be responsible and accountable for recognizing and correcting at-risk behavior or unsafe conditions. We recognize that all injuries and occupational illnesses are preventable, and a workplace with zero incidents is achievable.
Throughout our operations, our goal is to have no safety incidents and we continue to make progress towards that goal. Our 2024 Total Recordable Case Rate (TRCR) was 0.39 and our Days Away Case Rate (DACR) was 0.17. We have consistently reduced our annual TRCR and consider our 2030 target of 0.25 to be a world-leading safety rating. Our 2025 TRCR will be provided in our annual Sustainability Report to be issued in 2026.
Achieving work-life balance
We aspire to support the safety, health and wellbeing of our employees. We do this by helping all our employees maximize their physical, financial and emotional wellbeing, both at work and at home. Eaton’s three dimensions of wellbeing focus on increasing engagement and productivity, and improving health risks. We believe wellbeing is a state of balance that consists of having the appropriate resources, opportunities, and challenges needed to achieve optimal health and performance for the individual and the organization. Our culture of wellbeing is anchored by the global framework of country-level assessments of resources and commitment to provide our employees with the knowledge and support needed to live well.
Achieving work-life balance is a common concern of today's employees. Flexible work solutions and inclusive programs will help us remain competitive in attracting and retaining the best talent and make it possible for employees in varied situations to be able to remain at Eaton. Flexible solutions include compressed work weeks, remote working, job sharing, part-time work, flextime, and telework.
Engagement
Fully engaged employees feel motivated to contribute to organizational success and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organizational goals. Examples of how we engage our employees include enterprise-wide town halls, hosting informal listening meetings and surveying groups of employees on specific subjects. 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. Our most recent engagement survey of all employees was completed in 2025. Of those who responded to the survey, 86% had favorable engagement indicating they were proud to work at Eaton, felt personal accomplishment from their work, and would recommend Eaton as a place to work.
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Information about our Executive Officers
A listing of executive officers, their ages, positions and offices held over the past five years, as of February 1, 2026, is as follows:
Name Age Position (Date elected to position)
Paulo Ruiz 51 Director of Eaton Corporation plc (September 2, 2024 - present)
Chief Executive Officer of Eaton Corporation (June 1, 2025 - present)
President and Chief Operating Officer of Eaton Corporation
(September 2, 2024 - May 31, 2025)
President and Chief Operating Officer - Industrial Sector of Eaton Corporation
(July 5, 2022 - December 31, 2024)
President Energy Solutions and Services of Eaton Corporation
(August 2, 2021 - July 5, 2022)
Hydraulics Group President of Eaton Corporation (April 1, 2019 - August 2, 2021)
Olivier Leonetti 61 Executive Vice President and Chief Financial Officer of Eaton Corporation
(February 5, 2024 - present)
Executive Vice President and Chief Financial Officer of Johnson Controls
International, plc, a global leader in smart, healthy and sustainable buildings
(September 2020 - January 2024)
Kaled Awada 51 Executive Vice President and Chief Human Resources Officer of Eaton Corporation
(October 6, 2025 – present)
Executive Vice President, Chief People Officer of PG&E Corporation and Pacific Gas
and Electric Company, a public utility company (January 2024 – September 2025)
Executive Vice President and Chief Human Resources Officer of Tenneco Inc., an
automotive components manufacturer (September 2018 – November 2022)
Lucy Clark Dougherty 56 Executive Vice President and Chief Legal Officer of Eaton Corporation
(April 4, 2025 – present)
General Counsel of Eaton Corporation (January 27, 2025 – April 3, 2025)
Senior Vice President, General Counsel and Secretary of Polaris Inc., a manufacturer of
powersports vehicles (June 2019 – November 2024)
Peter Denk 51 President and Chief Operating Officer - Industrial Sector of Eaton Corporation
(January 1, 2025 - present)
President - Mobility Group of Eaton Corporation (April 1, 2023 - December 31, 2024)
President - Vehicle Group, North America of Eaton Corporation
(June 4, 2018 - March 31, 2023)
Antonio Galvao 64 President - Mobility Group of Eaton Corporation (January 1, 2025 - present)
President - Mobility Group and Corporate, South America of Eaton Corporation
(August 1, 2012 - December 31, 2024)
Heath B. Monesmith 55 President and Chief Operating Officer - Electrical Sector of Eaton Corporation
(July 5, 2022 - present)
President and Chief Operating Officer - Industrial Sector of Eaton Corporation
(July 1, 2019 - July 4, 2022)
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Adam Wadecki 42 Senior Vice President and Controller of Eaton Corporation (April 22, 2024 - present)
Senior Vice President, Internal Audit of Eaton Corporation
(September 27, 2023 - April 21, 2024)
Chief Financial Officer, Corporate Finance and Finance Transformation of General
Electric and its successor, General Electric Healthcare, a health technology company
(April 2023 - September 2023)
Chief Financial Officer of Global Medical Imaging of General Electric and its
successor, General Electric Healthcare (June 2021 - April 2023)
Vice President, Grainger Business Unit Finance of W.W. Grainger, Inc., an industrial
supply company (January 2020 - May 2021)
Mike Yelton 56 President - Americas Region, Electrical Sector of Eaton Corporation
(April 1, 2023 - present)
President - Assemblies and Residential Solutions, Electrical Sector, America Region
of Eaton Corporation (January 1, 2023 - April 1, 2023)
President - Commercial and Residential Distribution Solutions Business of Eaton
Corporation (July 1, 2019 - January 1, 2023)
There are no family relationships among the officers listed, and there are no arrangements or understandings pursuant to which any of them were elected as officers. All officers hold office for one year and until their successors are elected and qualified, unless otherwise specified by the Board of Directors; provided, however, that any officer is subject to removal with or without cause, at any time, by a vote of a majority of the Board of Directors.
Part II
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Information required by this Item is presented in “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Exhibit 99.1.
Item 8. Financial Statements and Supplementary Data.
The report of the independent registered public accounting firm, consolidated financial statements, and notes to consolidated financial statements are presented in Item 15 of this Exhibit 99.1.
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Part IV
Item 15. Exhibits and Financial Statement Schedules.
(a) (1) The report of the independent registered public accounting firm, consolidated financial statements and notes to consolidated financial statements are included in Item 8 above:
Reports of Ernst & Young LLP Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Statements of Income - Years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Comprehensive Income - Years ended December 31, 2025, 2024 and 2023
Consolidated Balance Sheets - December 31, 2025 and 2024
Consolidated Statements of Cash Flows - Years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Shareholders' Equity - Years ended December 31, 2025, 2024 and 2023
Notes to consolidated financial statements
(2) All other schedules for which provision is made in Regulation S-X of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.
(b) See exhibits incorporated by reference to or filed in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2025.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Eaton Corporation plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Eaton Corporation plc (“the Company”) as of December 31, 2025 and 2024, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 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, 2025, 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 26, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
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Unrecognized Income Tax Benefits
Description of the Matter
As discussed in Note 12 to the consolidated financial statements, the Company had gross unrecognized income tax benefits of $1,300 million related to its uncertain tax positions at December 31, 2025. 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 certain 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 new factors affecting existing uncertain tax positions.
We also evaluated the Company’s assessment of its uncertain tax positions. Our audit procedures included, among others, evaluating management’s accounting policies and documentation to assess the appropriateness and consistency of the methods and assumptions used to develop certain of its uncertain tax positions and related unrecognized income tax benefit amounts. We also tested the completeness and accuracy of the underlying data used by the Company for certain uncertain tax positions. 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 litigation, including current year developments with respect to the Company's ongoing litigation and examinations with respect to certain open tax 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, for certain uncertain tax positions we involved tax subject matter professionals to evaluate the application of relevant tax 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.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1923.
Cleveland, Ohio
February 26, 2026
except for Notes 1, 3, 6, 16 and 18, as to which the date is
October 16, 2026
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EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31
(In millions except for per share data) 2025 2024 2023
Net sales $ 27,448 $ 24,878 $ 23,196
Cost of products sold 17,131 15,375 14,762
Selling and administrative expense 4,311 4,077 3,795
Research and development expense 797 794 754
Interest expense - net 241 130 151
Other expense (income) - net 37 (64) (93)
Income before income taxes 4,932 4,566 3,827
Income tax expense 841 768 604
Net income 4,090 3,798 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
Net income per share attributable to Eaton ordinary shareholders
Diluted $ 10.45 $ 9.50 $ 8.02
Basic 10.48 9.54 8.06
Weighted-average number of ordinary shares outstanding
Diluted 391.2 399.4 401.1
Basic 389.9 397.6 399.1
Cash dividends declared per ordinary share $ 4.16 $ 3.76 $ 3.44
The accompanying notes are an integral part of these consolidated financial statements.
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EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December 31
(In millions) 2025 2024 2023
Net income $ 4,090 $ 3,798 $ 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders 4,087 3,794 3,218
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments 240 (370) 235
Pensions and other postretirement benefits (18) (49) (185)
Cash flow hedges 1 (17) (11)
Other comprehensive income (loss) attributable to Eaton
ordinary shareholders 223 (436) 39
Total comprehensive income attributable to Eaton ordinary shareholders $ 4,310 $ 3,358 $ 3,257
The accompanying notes are an integral part of these consolidated financial statements.
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EATON CORPORATION plc
CONSOLIDATED BALANCE SHEETS
December 31
(In millions) 2025 2024
Assets
Current assets
Cash $ 622 $ 555
Short-term investments 181 1,525
Accounts receivable - net 5,387 4,619
Inventory 4,721 4,227
Prepaid expenses and other current assets 1,444 874
Total current assets 12,355 11,801
Property, plant and equipment
Land and buildings 2,361 2,239
Machinery and equipment 7,667 6,823
Gross property, plant and equipment 10,028 9,062
Accumulated depreciation (5,712) (5,333)
Net property, plant and equipment 4,316 3,729
Other noncurrent assets
Goodwill 15,769 14,713
Other intangible assets 5,054 4,658
Operating lease assets 768 806
Deferred income taxes 707 609
Other assets 2,281 2,066
Total assets $ 41,251 $ 38,381
Liabilities and shareholders’ equity
Current liabilities
Short-term debt $ 1 $ —
Current portion of long-term debt 1,136 674
Accounts payable 4,168 3,678
Accrued compensation 644 670
Other current liabilities 3,421 2,835
Total current liabilities 9,370 7,857
Noncurrent liabilities
Long-term debt 8,758 8,478
Pension liabilities 702 741
Other postretirement benefits liabilities 161 164
Operating lease liabilities 637 669
Deferred income taxes 265 275
Other noncurrent liabilities 1,889 1,667
Total noncurrent liabilities 12,412 11,994
Shareholders’ equity
Ordinary shares (387.9 million outstanding in 2025 and 392.9 million in 2024)
4 4
Capital in excess of par value 12,837 12,731
Retained earnings 10,702 10,096
Accumulated other comprehensive loss (4,118) (4,342)
Shares held in trust — (1)
Total Eaton shareholders’ equity 19,425 18,488
Noncontrolling interests 44 43
Total equity 19,469 18,531
Total liabilities and equity $ 41,251 $ 38,381
The accompanying notes are an integral part of these consolidated financial statements.
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EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31
(In millions) 2025 2024 2023
Operating activities
Net income $ 4,090 $ 3,798 $ 3,223
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization 1,006 921 926
Deferred income taxes 45 (154) (182)
Pension and other postretirement benefits expense 43 24 15
Contributions to pension plans (124) (110) (113)
Contributions to other postretirement benefits plans (16) (18) (20)
Changes in working capital
Accounts receivable - net (420) (215) (341)
Inventory (256) (566) (282)
Unbilled receivables (357) (52) (54)
Accounts payable 332 399 256
Accrued compensation (50) 21 197
Accrued income and other taxes (116) 142 61
Deferred revenue liabilities 202 2 119
Other current assets (198) (27) (58)
Other current liabilities 145 77 (47)
Other - net 146 85 (76)
Net cash provided by operating activities 4,472 4,327 3,624
Investing activities
Capital expenditures for property, plant and equipment (919) (808) (757)
Cash paid for acquisition of businesses, net of cash acquired (1,490) (50) —
Proceeds from sales of property, plant and equipment 80 85 76
Investments in associate companies (16) (70) (68)
Return of investment from associate companies — 33 9
Sales (purchases) of short-term investments - net 1,339 575 (1,861)
Proceeds from (payments for) settlement of currency exchange contracts
not designated as hedges - net
3 (3) 92
Other - net (98) (32) (65)
Net cash used in investing activities (1,101) (271) (2,575)
Financing activities
Proceeds from borrowings 1,058 1,084 818
Payments on borrowings (717) (1,015) (19)
Short-term debt, net 1 (8) (311)
Cash dividends paid (1,626) (1,500) (1,379)
Exercise of employee stock options 39 69 78
Repurchase of shares (1,862) (2,492) —
Employee taxes paid from shares withheld (52) (70) (49)
Other - net (14) (4) (9)
Net cash used in financing activities (3,173) (3,936) (871)
Effect of currency on cash (131) (52) 16
Total increase in cash 67 67 194
Cash at the beginning of the period 555 488 294
Cash at the end of the period $ 622 $ 555 $ 488
The accompanying notes are an integral part of these consolidated financial statements.
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EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Ordinary shares Capital in excess of par value Retained earnings Accumulated other comprehensive loss Shares held in trust Total Eaton shareholders' equity Noncontrolling interests Total equity
(In millions) Shares Dollars
Balance at January 1, 2023 397.8 $ 4 $ 12,512 $ 8,468 $ (3,946) $ (1) $ 17,038 $ 38 $ 17,075
Net income — — — 3,218 — — 3,218 5 3,223
Other comprehensive income, net of tax 39 39 39
Cash dividends paid — — — (1,379) — — (1,379) (9) (1,388)
Issuance of shares under equity-based compensation plans
1.5 — 122 (2) — — 120 — 120
Changes in noncontrolling interest of consolidated subsidiaries - net
— — — — — — (1) (1)
Balance at December 31, 2023 399.4 4 12,634 10,305 (3,906) (1) 19,036 33 19,069
Net income — — — 3,794 — — 3,794 4 3,798
Other comprehensive loss, net of tax (436) (436) (436)
Cash dividends paid — — — (1,500) — — (1,500) (2) (1,502)
Issuance of shares under equity-based compensation plans
1.3 — 96 (2) — — 94 — 94
Changes in noncontrolling interest of consolidated subsidiaries - net
— — — — — — — 8 8
Repurchase of shares (7.8) — — (2,500) — — (2,500) — (2,500)
Balance at December 31, 2024 392.9 4 12,731 10,096 (4,342) (1) 18,488 43 18,531
Net income — — — 4,087 — — 4,087 3 4,090
Other comprehensive income, net of tax 223 223 223
Cash dividends paid — — — (1,626) — — (1,626) (2) (1,628)
Issuance of shares under equity-based compensation plans
0.7 — 107 (1) — — 106 — 106
Repurchase of shares (5.7) — — (1,854) — — (1,854) — (1,854)
Balance at December 31, 2025 387.9 $ 4 $ 12,837 $ 10,702 $ (4,118) $ — $ 19,425 $ 44 $ 19,469
The accompanying notes are an integral part of these consolidated financial statements.
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EATON CORPORATION plc
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts are in millions unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding.
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information and Basis of Presentation
Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is helping to solve the world’s most urgent power management challenges and building a more sustainable society for people today and for future generations.
Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of $27.4 billion in 2025, the Company serves customers in 180 countries.
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and notes. Actual results could differ from these estimates. Management has evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of Eaton and all subsidiaries and other entities it controls. Intercompany transactions and balances have been eliminated. The equity method of accounting is used for investments in associate companies where the Company has significant influence and generally a 20% to 50% ownership interest. Equity investments are evaluated for impairment whenever events or circumstances indicate the book value of the investment exceeds fair value. An impairment would exist if there is an other-than-temporary decline in value. Investments in associate companies included in Other assets on the Consolidated Balance Sheets were $903 million and $872 million as of December 31, 2025 and 2024, respectively. Income from these investments was $8 million, $12 million, and $20 million for 2025, 2024 and 2023, respectively, and reported in Other expense (income) - net on the Consolidated Statements of Income. Eaton does not have off-balance sheet arrangements with unconsolidated entities.
Eaton's reporting currency is United States Dollars (USD). The functional currency for most subsidiaries is their local currency. Financial statements for these subsidiaries are translated at exchange rates in effect at the balance sheet date as to assets and liabilities and weighted-average exchange rates as to revenues and expenses. The resulting translation adjustments are recognized in Accumulated other comprehensive loss. Monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary are remeasured to the functional currency at the exchange rate in effect at the balance sheet date. 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. Gains from the remeasurement of foreign currency were $13 million, $15 million, and $27 million for 2025, 2024 and 2023, respectively, net of the impact of currency exchange contracts.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Adoption of New Accounting Standards
Eaton adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), in the fourth quarter of 2025 on a prospective basis. This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. The adoption of the standard did not have a material impact on the consolidated financial statements.
Eaton adopted Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05), in the fourth quarter of 2025 on a prospective basis. This accounting standard provides a practical expedient allowing entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses. The adoption did not have a material impact on the consolidated financial statements and related disclosures.
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Goodwill and Indefinite Life Intangible Assets
Goodwill is evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis. Additionally, goodwill is evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets. The Company’s reporting units are equivalent to the business segments, except for the Aerospace segment which has two reporting units. Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results. The Company performs a quantitative analysis using a discounted cash flow model and other valuation techniques, but may elect to perform a qualitative analysis.
The annual goodwill impairment test was performed using a qualitative analysis in 2025 for all reporting units other than the legacy eMobility reporting unit which used a quantitative analysis in 2025. The annual goodwill impairment test was performed using a quantitative analysis in 2024 for all reporting units other than the legacy Vehicle and eMobility reporting units which used a qualitative analysis in 2024. A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
Quantitative analyses were performed by estimating the fair value of the reporting unit using a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The future cash flows were based on the Company's long-term operating plan and a terminal value was used to estimate the reporting unit's cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions. Sensitivity analyses were performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
Based on these analyses performed in 2025 and 2024, the fair value of Eaton's reporting units continue to substantially exceed their respective carrying amounts and thus, no impairment exists.
Indefinite life intangible assets consist of certain trademarks. They are evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis to determine whether their fair values exceed their respective carrying amounts. Indefinite life intangible asset impairment testing for 2025 and 2024 was performed using a quantitative analysis. The Company determines the fair value of these assets using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows, and profitability. Additionally, indefinite life intangible assets are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired. For 2025 and 2024, the fair value of indefinite lived intangible assets exceeded the respective carrying value.
For additional information about goodwill and other intangible assets, see Note 6.
Leases
The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton typically uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease.
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Other Long-Lived Assets
Depreciation and amortization for property, plant and equipment, and intangible assets subject to amortization, are generally computed by the straight-line method and included in Cost of products sold, Selling and administrative expense, and Research and development expense, as appropriate. The Company uses the following depreciation and amortization periods:
Category Estimated useful life or amortization period
Buildings
Generally 40 years
Machinery and equipment
3 - 10 years
Software
5 - 15 years
Customer relationships, certain trademarks, and patents and technology
Weighted-average of 18 years
Other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The asset group would be considered impaired when the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value. Determining asset groups and underlying cash flows requires the use of significant judgment.
Retirement Benefits Plans
For the principal pension plans in the United States, Canada, Puerto Rico, and the United Kingdom, the Company uses a market-related value of plan assets to calculate the expected return on assets used to determine net periodic benefit costs. The market-related value of plan assets is a calculated value that recognizes changes in the fair value of plan assets over a five year period. All other plans use fair value of plan assets.
Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor. The Company’s corridors are set at either 8% or 10%, depending on the plan, of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If most or all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used. The amortization periods on a weighted average basis for United States and Non-United States pension plans are approximately 21 years and 10 years, respectively. The amortization period for other postretirement benefits plans is 9 years.
Asset Retirement Obligations
A conditional asset retirement obligation is recognized at fair value when incurred if the fair value of the liability can be reasonably estimated. Uncertainty about the timing or method of settlement of a conditional asset retirement obligation would be considered in the measurement of the liability when sufficient information exists. Eaton believes that for substantially all of its asset retirement obligations, there is an indeterminate settlement date because the range of time over which the Company may settle the obligation is unknown or cannot be estimated. A liability for these obligations will be recognized when sufficient information is available to estimate fair value.
Income Taxes
Deferred income tax assets and liabilities are determined based on the difference between the financial statement and tax basis of the respective assets and liabilities, using enacted tax rates in effect for the year when the differences are expected to reverse. Deferred income tax assets are recognized for income tax loss carryforwards and income tax credit carryforwards. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Eaton evaluates and adjusts the amount of unrecognized income tax benefits based on changes in facts and circumstances. Eaton recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense. Eaton's policy is to recognize income tax effects from accumulated other comprehensive income when individual units of account are sold, terminated, or extinguished. For additional information about income taxes, see 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 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.
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Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated as part of a hedging relationship, is effective and the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:
•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.
•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.
•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.
The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Consolidated Statements of Cash Flows. For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.
Eaton uses currency exchange contracts and certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). The Company uses the spot rate method to assess hedge effectiveness when currency exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging relationship and the forward points are amortized to Interest expense - net on a straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Consolidated Statements of Cash Flows.
Currency exchange contracts not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 95% to 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Consolidated Statements of Cash Flows.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements.
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In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiring costs to be capitalized when (1) the Company authorizes and commits to funding the software project and (2) it is probable the software project will be completed. The standard also requires additional annual and interim disclosures, including the capitalized software balance and accumulated amortization. ASU 2025-06 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2027, with early adoption permitted and may be applied prospectively, retrospectively, or using a modified prospective transition approach. The Company is evaluating the impact of ASU 2025-06 to the consolidated financial statements and related disclosures.
In December 2025, the FASB issued Accounting Standards Update 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities (ASU 2025-10). This accounting standard requires a government grant to be recognized when (1) it is probable the conditions of the grant will be met and (2) the grant will be received. ASU 2025-10 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2028, with early adoption permitted and may be applied using a modified prospective approach, modified retrospective approach, or a retrospective approach. The Company is evaluating the impact of ASU 2025-10 to the consolidated financial statements and related disclosures.
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Note 2. ACQUISITIONS AND DIVESTITURE OF BUSINESSES
Acquisition of a 49% stake in Jiangsu Ryan Electrical Co. Ltd.
On April 23, 2023, Eaton acquired a 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment.
Acquisition of Exertherm
On May 20, 2024, Eaton acquired Exertherm, a U.K.-based provider of thermal monitoring solutions for electrical equipment. Exertherm is reported within the Electrical Americas business segment.
Acquisition of a 49% stake in NordicEPOD AS
On May 31, 2024, Eaton acquired a 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment.
Acquisition of Fibrebond Corporation
On April 1, 2025, Eaton acquired Fibrebond Corporation (Fibrebond) for $1.43 billion, net of cash acquired. Fibrebond is a U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers. Fibrebond had sales of approximately $378 million for the twelve months ended February 28, 2025, and is reported within the Electrical Americas business segment.
The acquisition of Fibrebond has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of December 31, 2025. The Company is finalizing its review of the preliminary estimates, primarily related to third-party valuations for Other intangible assets and Property, plant and equipment, which may result in additional adjustments to these estimates. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.
(In millions) Preliminary Allocation Measurement Period Adjustments Adjusted Preliminary Allocation
Accounts receivable $ 50 $ (5) $ 45
Inventory 96 5 101
Prepaid expenses and other current assets 72 (5) 67
Property, plant and equipment 104 13 117
Other intangible assets 709 6 715
Other assets 3 — 3
Accounts payable (48) — (48)
Other current liabilities (106) 26 (80)
Other noncurrent liabilities (2) (23) (25)
Total identifiable net assets $ 878 $ 17 $ 895
Goodwill 572 (32) 540
Total consideration, net of cash received $ 1,450 $ (15) $ 1,435
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Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Fibrebond. Goodwill recognized as a result of the acquisition is deductible for tax purposes. The adjusted preliminary estimated fair value of the customer relationships, technology, trademarks and backlog intangible assets of $410 million, $171 million, $74 million and $60 million, respectively were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The estimated useful lives for the customer relationships, technology, trademarks and backlog intangible assets were 17 years, 9 years, 17 years and 2 years, respectively. See Note 6 for additional information about goodwill and other intangible assets.
As part of the acquisition, Eaton assumed $240 million of employee transaction and retention awards. Awards vest in six equal annual installments starting in the second quarter of 2025, subject to continued employment with Eaton. Forfeited employee awards are paid to former Fibrebond shareholders annually. Eaton recognizes compensation expense for the awards over the requisite service period and any employee forfeitures owed to former Fibrebond shareholders are expensed immediately in Other expense (income) - net. During 2025, compensation expense of $51 million, $16 million and $15 million were included in Costs of products sold, Selling and administrative expense, and Other expense (income) - net, respectively, on the Consolidated Statements of Income.
Eaton's 2025 consolidated financial statements include Fibrebond results of operations, including segment operating profit of $156 million on sales of $474 million, from the date of acquisition through December 31, 2025.
Acquisition of Resilient Power Systems Inc.
On August 6, 2025, Eaton acquired Resilient Power Systems Inc. (Resilient), a leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology. Resilient was acquired for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration based on 2025 through 2028 revenue performance and achievement of technology-based milestones. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in milestone achievements and discount rates, with a maximum possible undiscounted value of $45 million. Resilient is reported within the Electrical Americas business segment.
As part of the acquisition, Eaton assumed employee incentives with a maximum payout of $50 million contingent upon achievement of the same revenue performance and technology-based milestones, as well as continued employment with Eaton. The incentives will be paid over three years, starting in 2026 and concluding in 2028. As of December 31, 2025, the Company expects to pay $38 million of employee incentives based on the estimated probability of the milestones being achieved. Compensation expense will be recognized over the requisite service period. For 2025, compensation expense of $10 million was included in Selling and administrative expense on the Consolidated Statements of Income.
Agreement to Acquire Boyd Thermal
On November 2, 2025, Eaton signed an agreement to acquire Boyd Thermal, a U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. Boyd Thermal employs more than 5,000 people with manufacturing sites across North America, Asia, and Europe. Under the terms of the agreement, Eaton will pay $9.5 billion for Boyd Thermal. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2026.
Acquisition of Ultra PCS Limited
On January 23, 2026, Eaton acquired Ultra PCS Limited (Ultra PCS) for $1.53 billion, net of cash acquired. Ultra PCS is headquartered in the U.K. with operations in the U.K. and the U.S. Ultra PCS produces electronic controls, sensing, stores ejection and data processing solutions, enabling mission success for global aerospace customers in the air and on the ground. Ultra PCS will be reported within the Aerospace business segment.
The acquisition of Ultra PCS will be accounted for using the acquisition method of accounting. Due to the timing of the closing date, the Company is unable to provide the preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date.
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Spin-off of Mobility business
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of its legacy Vehicle and eMobility operating segments, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
Note 3. REVENUE RECOGNITION
Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.
The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when title and risk and rewards of ownership have transferred to the customer. Sales recognized over time were approximately 7% of Eaton’s consolidated Net sales in 2025 and less than 5% of consolidated Net sales in 2024 and 2023. Sales recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. Sales for service contracts generally are recognized as the services are provided. For agreements with multiple performance obligations, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, we generally allocate sales price to each distinct obligation based on the price of each item sold in separate transactions.
Due to the nature of the work required to be performed for obligations recognized over time, Eaton estimates total costs by contract. The estimate of total costs are subject to judgment. Estimated amounts are included in the recognized sales price to the extent it is not probable that a significant reversal of cumulative sales will occur. Additionally, contracts can be modified to account for changes in contract specifications, requirements or sale price. The effect of a contract modification on the sales price or adjustments to the measure of completion under the input method are recognized as adjustments to revenue on a cumulative catch-up basis.
Payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is not significant. Eaton does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. Sales, value added, and other taxes collected concurrent with revenue are excluded from Net sales. Shipping and handling costs are treated as fulfillment costs and are included in Cost of products sold.
Eaton records reductions to sales for returns, and customer and distributor incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience, trend analysis, and projected market conditions in the various markets served. The rebate programs offered vary across businesses due to the numerous markets Eaton serves, but the most common incentives relate to amounts paid or credited to customers for achieving defined volume levels. Accrued rebates of $360 million and $361 million as of December 31, 2025 and 2024, respectively, are generally paid annually and are included in Other current liabilities. Returns are estimated at the time of the sale primarily based on historical experience and are recorded gross on the Consolidated Balance Sheets.
Sales commissions are expensed when the amortization period is less than a year and are generally not capitalized as they are typically earned at the completion of the contract when the customer is invoiced or when the customer pays Eaton.
Sales of products and services varies by segment and are discussed in Note 18.
In the Electrical Americas segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The majority of the sales in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
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In the Electrical Global segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America, as well as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The majority of the sales contracts in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
In the Aerospace segment, sales contracts are primarily for aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. These sales contracts are primarily based on a customer’s purchase order, and frequently covered by terms and conditions included in a long-term agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. Our military contracts are primarily fixed-price contracts that are not subject to performance-based payments or progress payments from the customer.
Many of the products and services in power distribution and power quality services in the Electrical Americas and Electrical Global business segments and contracts to develop new products that are fully funded by customers in the Aerospace business segment meet the definition of continuous transfer of control to customers and are recognized over time. These products are engineered to a customer’s design specifications, have no alternative use to Eaton, and are controlled by the customer as evidenced by the customer’s contractual ownership of the work in process or our right to payment for work performed to date plus a reasonable margin. As control is transferring over time, sales are recognized based on the extent of progress towards completion of the obligation. Eaton generally uses an input method to determine the progress completed and sales are recorded proportionally as costs are incurred. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
In the Mobility segment, sales contracts are primarily for drivetrains, powertrain systems, mechanical, electrical, and electrical components and systems used in on-road and off-road vehicles. Sales contracts are primarily based on a customer’s purchase order or a blanket purchase order subject to firm releases, frequently covered by terms and conditions included in a master supply agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility.
In limited circumstances, primarily in the Electrical and Mobility segments, Eaton sells separately-priced warranties that extend the warranty coverage beyond the standard coverage offered on specific products. Sales for these separately-priced warranties are recorded based on their stand-alone selling price and are recognized as revenue over the length of the warranty period.
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The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:
(In millions) 2025 2024 2023
Electrical Americas
Products $ 3,205 $ 3,009 $ 2,949
Systems 10,070 8,426 7,149
Total $ 13,276 $ 11,436 $ 10,098
Electrical Global
Products $ 3,885 $ 3,493 $ 3,462
Systems 2,930 2,755 2,622
Total $ 6,815 $ 6,248 $ 6,084
Aerospace
Original Equipment Manufacturers $ 1,640 $ 1,500 $ 1,350
Aftermarket 1,553 1,312 1,183
Industrial and Other 1,055 931 878
Total $ 4,249 $ 3,744 $ 3,413
Mobility
Vehicle $ 2,505 $ 2,790 $ 2,965
eMobility 604 662 636
Total $ 3,109 $ 3,451 $ 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $4,682 million and $4,079 million at December 31, 2025 and 2024, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $759 million and $330 million at December 31, 2025 and 2024, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized and not yet billed from increased business activity in 2025, higher revenue recognized over time in 2025, and unbilled receivables associated with the Fibrebond acquisition.
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Changes in the deferred revenue liabilities are as follows:
(In millions) Deferred Revenue
Balance at January 1, 2024
$ 626
Customer deposits and billings 2,719
Revenue recognized in the period (2,712)
Translation (15)
Balance at December 31, 2024
$ 618
Customer deposits and billings 4,074
Revenue recognized in the period (3,854)
Deferred revenue from business acquisition 73
Translation 12
Balance at December 31, 2025
$ 923
Deferred revenue liabilities of $899 million and $602 million as of December 31, 2025 and 2024, respectively, were included in Other current liabilities on the Consolidated Balance Sheets with the remaining balance presented in Other noncurrent liabilities.
A significant portion of open orders placed with Eaton are by customers of electrical products and electrical system and services, original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at December 31, 2025 was approximately $19.8 billion. At December 31, 2025, approximately 69% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.
Note 4. CREDIT LOSSES FOR RECEIVABLES
Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days.
Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-off based on historic experience adjusted for current market conditions. The Company's global credit department performs the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of current market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made.
Accounts receivable are net of an allowance for credit losses of $57 million and $55 million at December 31, 2025 and 2024, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.
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Note 5. INVENTORY
Inventory is carried at lower of cost or net realizable value using the first-in, first-out (FIFO) method. Cost components include raw materials, purchased components, direct labor, indirect labor, utilities, depreciation, inbound freight charges, purchasing and receiving costs, and inspection costs.
The components of inventory are as follows:
December 31
(In millions) 2025 2024
Raw materials $ 1,726 $ 1,614
Work-in-process 1,034 1,038
Finished goods 1,961 1,576
Total inventory $ 4,721 $ 4,227
Note 6. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amount of goodwill by segment are as follows:
(In millions) January 1, 2024 Additions Translation December 31, 2024 Additions Translation December 31, 2025
Electrical Americas $ 7,415 $ 17 $ (35) $ 7,396 $ 581 $ 33 $ 8,010
Electrical Global 4,038 — (196) 3,842 — 314 4,156
Aerospace 2,901 — (45) 2,856 — 121 2,977
Mobility 623 — (5) 619 — 7 626
Total $ 14,977 $ 17 $ (281) $ 14,713 $ 581 $ 475 $ 15,769
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. The Company's reporting units are equivalent to the business segments, except for the Aerospace segment which continues to have two reporting units.
As a result of the re-segmentation, the goodwill of the legacy Vehicle and eMobility reporting units was combined and assigned to the new Mobility reporting unit. The re-segmentation did not result in a reallocation of goodwill using a relative fair value methodology, as the re-segmentation resulted in a combination of previously existing reporting units and did not change the composition of other reporting units.
The 2025 additions to goodwill relate primarily to the anticipated synergies of acquiring Fibrebond and Resilient. The allocation of the purchase price from these acquisitions are preliminary and will be completed during the measurement period. The 2024 additions to goodwill relate primarily to the anticipated synergies of acquiring Exertherm.
A summary of other intangible assets is as follows:
December 31
2025 2024
(In millions) Historical
cost Accumulated
amortization Historical
cost Accumulated
amortization
Intangible assets not subject to amortization
Trademarks $ 1,215 $ 1,200
Intangible assets subject to amortization
Customer relationships $ 5,236 $ 2,934 $ 4,659 $ 2,577
Patents and technology 2,225 1,191 1,979 1,056
Trademarks 1,214 787 1,107 693
Other 235 159 169 131
Total intangible assets subject to amortization $ 8,911 $ 5,071 $ 7,915 $ 4,456
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Amortization expense related to intangible assets subject to amortization in 2025, and estimated amortization expense for each of the next five years, is as follows
(In millions)
2025 $ 461
2026 469
2027 438
2028 365
2029 328
2030 286
Note 7. SUPPLY CHAIN FINANCE PROGRAM
The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, a third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. If a supplier elects to participate in the SCF program, the supplier decides which invoices are sold to the financial institution and the Company has no economic interest in a supplier’s decision to sell an invoice. Payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. The amounts due to the financial institution for suppliers that participate in the SCF program are included in Accounts payable on the Consolidated Balance Sheets, and the associated payments are included in operating activities on the Consolidated Statements of Cash Flows.
The changes in SCF obligations are as follows:
(In millions) SCF Obligations
Balance at January 1, 2024
$ 369
Invoices confirmed during the period 1,424
Invoices paid during the period (1,389)
Translation (6)
Balance at December 31, 2024
398
Invoices confirmed during the period 1,728
Invoices paid during the period (1,583)
Balance at December 31, 2025
$ 543
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Note 8. LEASES
Eaton leases certain manufacturing facilities, warehouses, distribution centers, office space, vehicles, and equipment. Most real estate leases contain renewal options. The exercise of lease renewal options is at the Company's sole discretion. The Company's lease agreements typically do not contain any significant guarantees of asset values at the end of a lease or restrictive covenants, with the exception of the non-cancellable synthetic lease discussed below. Payments within certain lease agreements are adjusted periodically for changes in an index or rate.
The components of lease expense are as follows:
(In millions) 2025 2024 2023
Operating lease cost $ 251 $ 227 $ 200
Finance lease cost:
Amortization of lease assets 9 12 15
Interest on lease liabilities 1 1 1
Short-term lease cost 23 19 18
Variable lease cost 26 29 28
Sublease income (1) (1) (1)
Total lease cost $ 309 $ 287 $ 261
During 2025, 2024 and 2023, Eaton entered into sale leaseback transactions primarily for certain non-production facilities and recorded gains of $38 million, $56 million and $53 million, respectively, in Other expense (income) - net. The terms of the new operating leases ranged from 2 to 15 years.
In March 2025, Eaton entered into a non-cancellable synthetic lease for a manufacturing facility, for which the Company is the construction agent. Construction costs are expected to be approximately $185 million. The lease will commence upon completion of construction of the facility which is expected to be in the first half of 2027. The term of the lease is five years after commencement. At the end of the lease term, Eaton will be required to either negotiate a renewal of the lease, purchase the facility, or sell the facility. Upon lease commencement, the lease classification will be determined and the lease asset and lease liability recognized. The lease arrangement contains a residual value guarantee of approximately 85% of the total construction cost.
Supplemental cash flow information related to leases is as follows:
(In millions) 2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - payments on operating leases $ (198) $ (200) $ (180)
Operating cash outflows - interest payments on finance leases (1) (1) (1)
Financing cash outflows - payments on finance lease obligations (9) (14) (18)
Lease assets obtained in exchange for new lease obligations, including leases acquired:
Operating leases $ 193 $ 268 $ 183
Finance leases 6 13 38
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Supplemental balance sheet information related to leases is as follows:
December 31
(In millions) 2025 2024
Operating Leases
Operating lease assets $ 768 $ 806
Other current liabilities 152 163
Operating lease liabilities 637 669
Total operating lease liabilities $ 789 $ 832
Finance Leases
Land and buildings $ 9 $ 5
Machinery and equipment 47 61
Accumulated depreciation (31) (37)
Net property, plant and equipment $ 25 $ 29
Current portion of long-term debt $ 7 $ 9
Long-term debt 18 19
Total finance lease liabilities $ 25 $ 28
December 31
2025 2024
Weighted-average remaining lease term
Operating leases 8.0 years 7.1 years
Finance leases 4.7 years 4.2 years
Weighted-average discount rate
Operating leases 4.7 % 4.4 %
Finance leases 3.8 % 3.7 %
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) Operating Leases Finance Leases
2026 $ 183 $ 8
2027 150 7
2028 122 4
2029 97 3
2030 72 2
Thereafter 332 3
Total lease payments 957 27
Less imputed interest 168 2
Total present value of lease liabilities $ 789 $ 25
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Note 9. DEBT
A summary of long-term debt, including the current portion, is as follows:
December 31
(In millions) 2025 2024
6.50% debentures due 2025
$ — $ 145
0.70% Euro notes due 2025
— 520
0.128% Euro notes due 2026
1,057 935
3.10% senior notes due 2027
700 700
4.35% senior notes due 2028
500 500
7.65% debentures due 2029
200 200
0.577% Euro notes due 2030
704 624
4.450% senior notes due 2030
500 —
3.601% Euro notes due 2031
587 520
4.00% senior notes due 2032
700 700
4.15% sustainability-linked senior notes due 2033
1,300 1,300
5.45% debentures due 2034
137 137
3.625% Euro notes due 2035
587 —
3.802% Euro notes due 2036
587 520
5.80% notes due 2037
240 240
4.15% senior notes due 2042
1,000 1,000
3.92% senior notes due 2047
300 300
4.70% senior notes due 2052
700 700
5.25% to 7.875% notes (maturities ranging from 2026 to 2035)
99 99
Finance leases 25 28
Deferred debt issuance costs (47) (45)
Unamortized discount (13) (7)
Fair value hedging adjustment 31 37
Total long-term debt 9,894 9,152
Less current portion of long-term debt (1,136) (674)
Long-term debt less current portion $ 8,758 $ 8,478
Substantially all these long-term debt instruments are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries (the Senior Notes). Further, as of December 31, 2025, all of these long-term debt instruments, except the 0.128% Euro notes due 2026, the 0.577% Euro notes due 2030, the 3.601% Euro notes due 2031, and the 3.802% Euro notes due 2036 are registered by Eaton Corporation under the Securities Act of 1933, as amended (the Registered Senior Notes).
On May 9, 2025, a subsidiary of Eaton issued Euro denominated notes (2025 Euro Notes) with a face amount of €500 million ($564 million). The 2025 Euro Notes mature in 2035 with interest payable annually at a rate of 3.625% per annum. The issuer received proceeds totaling €494 million ($558 million) from the 2025 Euro Notes issuance, net of financing costs and discounts. The 2025 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Euro Notes contain customary optional redemption and par call provisions. The 2025 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 2025 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Euro Notes. The 2025 Euro Notes are subject to customary non-financial covenants.
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Also on May 9, 2025, the same subsidiary of Eaton issued senior notes (2025 Notes) with a face amount of $500 million. The 2025 Notes mature in 2030 with interest payable semi-annually at a rate of 4.45% per annum. The issuer received proceeds totaling $495 million from the 2025 Notes issuance, net of financing costs and discounts. The 2025 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Notes contain customary optional redemption and par call provisions. The 2025 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2025 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Notes. The 2025 Notes are subject to customary non-financial covenants.
On September 29, 2025, a subsidiary of Eaton entered into a new $3,000 million five-year revolving credit agreement that will expire on September 27, 2030 (New Revolving Credit Agreement), which replaced the $500 million 364-day revolving credit agreement dated September 30, 2024 and $2,500 million five-year revolving credit agreement dated October 3, 2022. The New Revolving Credit Agreement is used to support commercial paper borrowings and is 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 the New Revolving Credit Agreement at December 31, 2025. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which nonewas outstanding on December 31, 2025. On February 6, 2026, a subsidiary of Eaton exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The upsize was executed under the New Revolving Credit Agreement, and the facility’s maturity date remains unchanged at September 27, 2030. Also on February 6, 2026, the Company increased its commercial paper program from $3,000 million to $4,000 million.
On February 6, 2026, a subsidiary of Eaton entered into a senior unsecured delayed-draw term loan facility (Term Credit Agreement) in an aggregate principal amount of up to $8,000 million. The proceeds of the Term Credit Agreement, if drawn, will be used solely by the Company to finance a portion of the expected acquisition of Boyd Thermal. The Term Credit Agreement will mature and be payable in full on December 31, 2026 unless the Term Credit Agreement is terminated earlier pursuant to its terms. The Term Credit Agreement is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company has not drawn on the Term Credit Agreement.
In addition to the revolving credit facility, the Company also had available lines of credit of $872 million from various banks primarily for the issuance of letters of credit, of which there was $350 million outstanding at December 31, 2025. Borrowings outside the United States are generally denominated in local currencies.
Short-term debt of $1 million at December 31, 2025 was entirely comprised of short-term debt outside the United States. There was no short-term debt outstanding at December 31, 2024.
Eaton is in compliance with each of its debt covenants for all periods presented.
Maturities of long-term debt for each of the next five years are as follows:
(In millions)
2026 $ 1,136
2027 706
2028 504
2029 203
2030 1,206
Interest paid on debt is as follows:
(In millions)
2025 $ 351
2024 329
2023 319
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Note 10. RETIREMENT BENEFITS PLANS
Eaton has defined benefits pension plans and other postretirement benefits plans.
Obligations and Funded Status
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Funded status
Fair value of plan assets $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
Benefit obligations (2,650) (2,700) (2,038) (1,863) (194) (196)
Funded status $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in the Consolidated
Balance Sheets
Other assets $ — $ — $ 256 $ 231 $ — $ —
Other current liabilities (9) (29) (42) (31) (13) (14)
Pension liabilities and Other postretirement
benefits liabilities (172) (226) (530) (515) (161) (164)
Total $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in Accumulated other
comprehensive loss (pre-tax)
Net actuarial loss (gain) $ 847 $ 904 $ 738 $ 678 $ (72) $ (87)
Prior service cost 3 5 15 6 — —
Total $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
Change in Benefit Obligations
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,700 $ 2,824 $ 1,863 $ 2,022 $ 196 $ 212
Service cost 16 18 45 46 — 1
Interest cost 135 134 88 85 11 10
Actuarial loss (gain) 55 (20) 13 (82) 2 (11)
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 155 (87) 1 (3)
Plan amendments — 2 10 (3) — —
Other — — 3 3 11 16
Balance at December 31 $ 2,650 $ 2,700 $ 2,038 $ 1,863 $ 194 $ 196
Accumulated benefit obligation $ 2,650 $ 2,686 $ 1,925 $ 1,766
During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and was effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.
Actuarial losses related to changes in the United States and Non-United States benefit obligations in 2025 of $55 million and $13 million, respectively, were primarily due to decreases in the discount rates used to measure the obligations as well as unfavorable plan experience. Actuarial gains related to changes in the United States and Non-United States benefit obligations in 2024 of $20 million and $82 million, respectively, were primarily due to increases in the discount rates used to measure the obligations.
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Change in Plan Assets
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,445 $ 2,604 $ 1,548 $ 1,633 $ 18 $ 17
Actual return on plan assets 250 84 111 (10) 2 1
Employer contributions 30 15 94 95 16 18
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 105 (52) — —
Other — — 3 3 11 11
Balance at December 31 $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
The components of pension plans with an accumulated benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Accumulated benefit obligation $ 2,650 $ 2,686 $ 640 $ 701
Fair value of plan assets 2,469 2,445 121 209
The components of pension plans with a projected benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Projected benefit obligation $ 2,650 $ 2,700 $ 738 $ 772
Fair value of plan assets 2,469 2,445 166 225
Other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets have been disclosed in the Obligations and Funded Status table.
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss are as follows:
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 909 $ 871 $ 684 $ 661 $ (87) $ (93)
Prior service cost arising during the year — 2 10 (3) — —
Net loss (gain) arising during the year (4) 86 30 62 1 (7)
Currency translation — — 54 (18) 1 —
Less amounts included in expense during the year (55) (50) (25) (18) 13 13
Net change for the year (59) 38 69 23 15 6
Balance at December 31 $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
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Benefits Expense
The components of retirement benefits expense (income) are as follows:
United States
pension benefit expense Non-United States pension benefit expense Other postretirement
benefits expense (income)
(In millions) 2025 2024 2023 2025 2024 2023 2025 2024 2023
Service cost $ 16 $ 18 $ 19 $ 45 $ 46 $ 43 $ — $ 1 $ 1
Interest cost 135 134 142 88 85 85 11 10 10
Expected return on plan assets (190) (190) (195) (128) (134) (121) (1) (1) (1)
Amortization 15 9 4 16 11 7 (13) (13) (17)
(24) (29) (30) 21 8 14 (3) (3) (7)
Settlements, curtailments, and special termination benefits 40 41 34 9 7 4 — — —
Total expense (income) $ 16 $ 12 $ 4 $ 30 $ 15 $ 18 $ (3) $ (3) $ (7)
The components of retirement benefits expense (income) other than service costs are included in Other expense (income) - net.
Retirement Benefits Plans Assumptions
In 2025, 2024 and 2023, for purposes of determining liabilities related to the majority of its plans in the United States, the Company used the Pri-2012 mortality tables as well as mortality tables that are based on the Company's own experience and generational improvement scales that are based on MP-2021.
To estimate the service and interest cost components of net periodic benefit cost for the vast majority of its defined benefits pension and other postretirement benefits plans, the Company used a spot rate approach by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of the period to the relevant projected cash flows.
Pension Plans
United States
pension plans Non-United States
pension plans
2025 2024 2023 2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.34 % 5.61 % 5.14 % 5.11 % 4.92 % 4.52 %
Rate of compensation increase 3.05 % 3.32 % 3.40 % 3.13 % 3.16 % 3.17 %
Interest rate used to credit cash balance plans 4.56 % 4.79 % 4.01 % 2.50 % 2.01 % 1.59 %
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.61 % 5.14 % 5.47 % 4.92 % 4.52 % 4.83 %
Discount rate used to determine service cost 5.76 % 5.24 % 5.54 % 5.90 % 6.00 % 5.90 %
Discount rate used to determine interest cost 5.29 % 4.98 % 5.33 % 4.71 % 4.47 % 4.80 %
Expected long-term return on plan assets 7.00 % 6.50 % 6.50 % 6.63 % 6.79 % 6.32 %
Rate of compensation increase 3.32 % 3.40 % 3.33 % 3.16 % 3.17 % 3.12 %
Interest rate used to credit cash balance plans 4.79 % 4.01 % 3.67 % 2.01 % 1.59 % 2.32 %
The expected long-term rate of return on pension assets was determined for each country and reflects long-term historical data taking into account each plan's target asset allocation. The expected long-term rates of return on pension assets for United States pension plans and Non-United States pension plans for 2026 are 7.50% and 7.00%, respectively. The discount rates were determined using appropriate bond data for each country.
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Other Postretirement Benefits Plans
Substantially all of the obligation for other postretirement benefits plans relates to United States plans. Assumptions used to determine other postretirement benefits obligations and expense are as follows:
Other postretirement
benefits plans
2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.24 % 5.57 % 5.11 %
Health care cost trend rate assumed for next year 6.50 % 6.70 % 7.70 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2035 2034 2033
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.57 % 5.11 % 5.46 %
Discount rate used to determine service cost 5.84 % 5.25 % 5.53 %
Discount rate used to determine interest cost 5.29 % 4.96 % 5.32 %
Initial health care cost trend rate 6.70 % 7.70 % 7.10 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2034 2033 2031
Employer Contributions to Retirement Benefits Plans
Contributions to pension plans that Eaton expects to make in 2026, and made in 2025, 2024 and 2023, are as follows:
(In millions)
Expected in 2026
2025 2024 2023
United States plans $ 9 $ 30 $ 15 $ 16
Non-United States plans 89 94 95 97
Total contributions $ 98 $ 124 $ 110 $ 113
The following table provides the estimated pension and other postretirement benefit payments for each of the next five years, and the five years thereafter in the aggregate. For other postretirement benefits liabilities, the Company expects minor subsidy receipts related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that would reduce the estimated payments listed below.
(In millions) Estimated
United States
pension payments Estimated
non-United States
pension payments Estimated other postretirement
benefit payments
2026 $ 276 $ 135 $ 15
2027 259 135 19
2028 250 136 18
2029 241 141 17
2030 226 144 17
2031 - 2035
1,008 757 75
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Pension Plan Assets
Investment policies and strategies are developed on a country and plan specific basis. The United States plan, representing 59% of worldwide pension assets, and the United Kingdom plans representing 26% of worldwide pension assets, are invested primarily in debt securities largely for liability hedging, as the majority of the assets are in plans that are well-funded. In general, the plans are primarily allocated to diversified high-quality publicly traded debt, primarily through separately managed accounts and commingled funds in the form of common collective and other trusts. The United States plan's target allocation is 21% United States equities, 11% non-United States equities, 4% public real estate (primarily equity of real estate investment trusts), 46% debt securities and 18% other, including private equity, private debt and cash equivalents. The United Kingdom plans' target asset allocations are 16% equities and the remainder in debt securities, cash equivalents and real estate investments. The equity risk for the plans is managed through broad diversification across industries, geographies, and levels of market capitalization. The majority of debt allocations for these plans are longer duration government and corporate debt. The United States, United Kingdom and Canada pension plans are authorized to use derivatives, including the use of futures, swaps and options, to achieve more economically desired market exposures.
Fair Value Measurements
Financial instruments included in pension and other postretirement benefits plan assets are categorized into a fair value hierarchy of three levels, based on the degree of subjectivity inherent in the valuation methodology are as follows:
Level 1 -Quoted prices (unadjusted) for identical assets in active markets.
Level 2 -Quoted prices for similar assets in active markets, and inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 -Unobservable prices or inputs.
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables to permit a reconciliation to total plan assets.
Pension Plans
A summary of the fair value of pension plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2025
Common collective trusts
Non-United States equity and global equities $ 211 $ — $ 211 $ —
Fixed income 32 — 32 —
Fixed income securities 1,647 — 1,647 —
United States treasuries 258 255 3 —
Real estate 248 100 32 116
Cash equivalents 49 25 24 —
Exchange traded funds 105 105 — —
Other 419 — 50 369
Common collective and other trusts measured at net asset value
1,287
Money market funds measured at net asset value 2
Pending purchases and sales of plan assets, and interest
receivable (67)
Total pension plan assets $ 4,191 $ 485 $ 1,999 $ 485
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $158 million at December 31, 2025, which will be satisfied by a reallocation of pension plan assets.
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(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2024
Common collective trusts
Non-United States equity and global equities $ 241 $ — $ 241 $ —
Fixed income 28 — 28 —
Fixed income securities 1,582 — 1,582 —
United States treasuries 461 453 8 —
Real estate 212 63 25 124
Cash equivalents 83 55 28 —
Exchange traded funds 91 91 — —
Other 402 — 40 362
Common collective and other trusts measured at net asset value
978
Pending purchases and sales of plan assets, and interest
receivable (85)
Total pension plan assets $ 3,993 $ 662 $ 1,952 $ 486
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer, and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $128 million at December 31, 2024, which will be satisfied by a reallocation of pension plan assets.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2025 and 2024 due to the following:
(In millions) Real estate Other Total
Balance at January 1, 2024 $ 199 $ 370 $ 569
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
(24) 29 5
Purchases, sales, settlements - net
(51) (37) (88)
Transfers into or out of Level 3 — — —
Balance at December 31, 2024 124 362 486
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
14 32 46
Purchases, sales, settlements - net
(22) (25) (47)
Transfers into or out of Level 3 — — —
Balance at December 31, 2025 $ 116 $ 369 $ 485
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Other Postretirement Benefits Plans
A summary of the fair value of other postretirement benefits plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2025
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
17
Total other postretirement benefits plan assets $ 20 $ 3 $ — $ —
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2024
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
15
Total other postretirement benefits plan assets $ 18 $ 3 $ — $ —
Valuation Methodologies
Following is a description of the valuation methodologies used for pension and other postretirement benefits plan assets measured at fair value. There have been no changes in the methodologies used at December 31, 2025 and 2024.
Common collective and other trusts - Valued at the net unit value of units held by the trust at year end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned. The equity investments in collective trusts are predominantly in index funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. The investments in other trusts are predominantly in exchange traded funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. Common collective and other trusts measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets.
Fixed income securities - These securities consist of publicly traded United States and non-United States fixed interest obligations (principally corporate and government bonds and debentures). The fair value of corporate and government debt securities is determined through third-party pricing models that consider various assumptions, including time value, yield curves, credit ratings, and current market prices. The Company verifies the results of trustees or custodians and evaluates the pricing classification of these securities by performing analyses using other third-party sources.
United States treasuries - Valued at the closing price of each security.
Real estate - Consists of direct investments in the stock of publicly traded companies and investments in pooled funds that invest directly in real estate. The publicly traded companies are valued based on the closing price reported in an active market on which the individual securities are traded and as such are classified as Level 1. The pooled funds rely on appraisal-based valuations and as such are classified as Level 3.
Cash equivalents - Primarily certificates of deposit, commercial paper, and repurchase agreements.
Exchange traded funds - Valued at the closing price of the exchange traded fund's shares.
Money market funds - Money market funds measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets.
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Other - These assets consist of private equity, private debt, insurance contracts primarily for international plans, futures contracts, and over-the-counter options. Investments in private equity and private debt are valued at net asset value or estimated fair value based on quarterly financial information received from the investment advisor, third party appraisal or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables and performance multiples. Futures contracts and options are valued based on the closing prices of contracts or indices as available using third-party sources.
For additional information regarding fair value measurements, see Note 15.
Defined Contribution Plans
The Company has various defined contribution benefit plans, primarily consisting of the plans in the United States. The total contributions related to these plans are charged to expense and are as follows:
(In millions)
2025 $ 239
2024 220
2023 201
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Note 11. COMMITMENTS AND CONTINGENCIES
Legal Contingencies
Eaton is subject to a broad range of claims, administrative proceedings, and legal proceedings, including, but not limited to, claims for punitive damages, penalties, and interest, in a variety of matters, including, but not limited to, contract, indemnity, tax, patent infringement, intellectual property, personal injury, commercial, warranty, product liability, environmental, antitrust and trade regulation, class action, and labor and employment matters. Eaton is also subject to legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with claims and proceedings involving Eaton. 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.
Environmental Contingencies
Eaton has established policies to ensure that its operations are conducted in keeping with good corporate citizenship and with a positive commitment to the protection of the natural and workplace environments. The Company requires that its businesses be certified to ISO 14001, an international standard for environmental management systems. The Company routinely reviews EHS performance at each of its manufacturing facilities and continuously strives to improve its environmental footprint, including carbon, waste, water and related operational profiles consistent with our sustainability goals.
Eaton is involved in remedial response and voluntary environmental remediation at a number of sites, including certain of its currently-owned or formerly-owned plants. The Company has also been named a potentially responsible party under the United States federal Superfund law, or the state equivalents thereof, at a number of disposal sites. The Company became involved in these sites as a result of government action or in connection with business acquisitions. At the end of 2025, the Company was involved with a total of 103 sites worldwide, including the Superfund sites mentioned above, with none of these sites being individually significant to the Company.
Remediation activities, generally involving soil and/or groundwater contamination, include pre-cleanup activities such as fact finding and investigation, risk assessment, feasibility study, design and action planning, performance (where actions may range from monitoring, to removal of contaminants, to installation of longer-term remediation systems), and operation and maintenance of a remediation system. The extent of expected remediation activities and costs varies by site. A number of factors affect the cost of environmental remediation, including the number of parties involved at a particular site, the determination of the extent of contamination, the length of time the remediation may require, the complexity of environmental regulations, and the continuing advancement of remediation technology. Taking these factors into account, Eaton has estimated the costs of remediation, which will be paid over a period of years. The Company accrues an amount on an undiscounted basis, consistent with the estimates of these costs, when it is probable that a liability has been incurred. Actual results may differ from these estimates. At December 31, 2025 and 2024, the Company had an accrual totaling $69 million and $70 million, respectively, for these costs.
Based upon Eaton's analysis and subject to the difficulty in estimating these future costs, the Company expects that any sum it may be required to pay in connection with environmental matters is not reasonably possible to exceed the recorded liability by an amount that would have a material effect on its financial position, results of operations or cash flows.
Warranty Accruals
Product warranty accruals are established at the time the related sale is recognized through a charge to Cost of products sold. Warranty accrual estimates are based primarily on historical warranty claim experience and specific customer contracts. Provisions for warranty accruals are comprised of basic warranties for products sold, as well as accruals for product recalls and other events when they are known and estimable. A summary of the current and long-term warranty accruals is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 150 $ 136 $ 125
Provision 82 81 100
Settled (60) (65) (91)
Warranty accruals from business acquisition and other 2 (3) 2
Balance at December 31 $ 174 $ 150 $ 136
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Note 12. INCOME TAXES
Eaton Corporation plc is domiciled in Ireland. Income (loss) before income taxes and income tax expense (benefit) are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.
Income (loss) before income taxes
(In millions) 2025 2024 2023
Ireland $ 188 $ 183 $ (3)
Foreign 4,744 4,383 3,830
Total income before income taxes $ 4,932 $ 4,566 $ 3,827
Income tax expense (benefit)
(In millions) 2025 2024 2023
Current
Ireland $ 85 $ 128 $ 42
Foreign 711 794 744
Total current income tax expense 796 922 786
Deferred
Ireland (3) (16) 1
Foreign 48 (138) (183)
Total deferred income tax expense (benefit) 45 (154) (182)
Total income tax expense $ 841 $ 768 $ 604
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Reconciliations of income taxes from the Ireland national statutory rate of 25% to the consolidated effective income tax rate are as follows:
2025
(Amounts in millions) Amount Percent
Income taxes at the applicable statutory rate $ 1,233 25.0 %
Ireland
Nontaxable or nondeductible items
Nondeductible interest expense 78 1.6 %
Other Adjustments
Tax rate differential - Ireland tax on trading income (61) (1.2) %
Other items - net 30 0.6 %
Foreign tax effects
United States
Tax rate differential (96) (1.9) %
State and local income taxes 62 1.3 %
Effect of cross-border tax laws – foreign derived intangible income
(64) (1.3) %
Other items - net (61) (1.2) %
United Arab Emirates
Tax rate differential (86) (1.7) %
Other items - net 32 0.6 %
Puerto Rico operations
Tax rate differential (71) (1.4) %
Other foreign jurisdictions (33) (0.7) %
Changes in unrecognized tax benefits (123) (2.5) %
Effective income tax expense rate $ 841 17.1 %
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2024 2023
Income taxes at the applicable statutory rate 25.0 % 25.0 %
Ireland operations
Ireland tax on trading income (0.9) % (1.3) %
Nondeductible interest expense 0.9 % 2.6 %
Ireland other - net 1.2 % (0.2) %
Foreign operations
Earnings taxed at other than the applicable statutory tax rate (6.7) % (9.9) %
Other items (0.2) % 2.2 %
Worldwide operations
Adjustments to tax liabilities 0.1 % (0.2) %
Adjustments to valuation allowances (2.6) % (2.4) %
Effective income tax expense rate 16.8 % 15.8 %
During 2025, income tax expense of $841 million was recognized (an effective tax rate of 17.1%) compared to income tax expense of $768 million in 2024 (an effective tax rate of 16.8%) and income tax expense of $604 million in 2023 (an effective tax rate of 15.8%). The increase in the effective tax rate from 16.8% in 2024 to 17.1% in 2025 was primarily due to greater levels of income earned in higher tax jurisdictions. The increase in the effective tax rate from 15.8% in 2023 to 16.8% in 2024 was due to greater levels of income earned in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments and the reduction of valuation allowances on foreign tax attributes.
No provision has been made for income taxes on undistributed earnings of foreign subsidiaries at December 31, 2025, since it is the Company's intention to indefinitely reinvest undistributed earnings of its foreign subsidiaries. The Company expects to deploy capital to those markets which offer particularly attractive growth opportunities. The cash that is permanently reinvested is typically used to expand operations either organically or through acquisitions. It is not practicable to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings.
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Worldwide income tax payments, net of tax refunds, are as follows:
(In millions) 2025
Ireland $ 105
Foreign
United States 374
Germany 72
Other foreign 358
Total income taxes paid $ 909
2024 total income taxes paid $ 752
2023 total income taxes paid 727
Deferred Income Tax Assets and Liabilities
Components of noncurrent deferred income taxes are as follows:
December 31
2025 2024
(In millions) Noncurrent assets and liabilities
Accruals and other adjustments
Employee benefits $ 250 $ 295
Depreciation and amortization (792) (791)
Other accruals and adjustments 609 460
Ireland income tax loss carryforwards 1 1
Foreign income tax loss carryforwards 3,784 3,674
Foreign income tax credit carryforwards 213 252
Valuation allowance for income tax loss and income tax credit carryforwards (3,623) (3,556)
Total deferred income taxes $ 442 $ 334
At December 31, 2025, Eaton Corporation plc and its foreign subsidiaries had income tax loss carryforwards and income tax credit carryforwards that are available to reduce future taxable income or tax liabilities. These carryforwards and their respective expiration dates are summarized below:
(In millions) 2026
through
2030 2031
through
2035 2036
through
2040 2041
through
2050 Not
subject to
expiration
Valuation
allowance
Ireland income tax loss carryforwards $ — $ — $ — $ — $ 8 $ —
Ireland deferred income tax assets for income tax loss
carryforwards — — — — 1 (1)
Foreign income tax loss carryforwards 26 739 10,914 208 6,396 —
Foreign deferred income tax assets for income tax loss carryforwards
6 179 2,608 51 943 (3,527)
Foreign deferred income tax assets for income tax loss carryforwards after ASU 2013-11
4 179 2,608 51 943 (3,527)
Foreign income tax credit carryforwards
148 48 27 20 43 (95)
Foreign income tax credit carryforwards after ASU 2013-11
82 45 23 20 43 (95)
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Recoverability of Deferred Income Tax Assets
Eaton is subject to the income tax laws in the jurisdictions in which it operates. In order to determine its income tax provision for financial statement purposes, Eaton must make significant estimates and judgments about its business operations in these jurisdictions. These estimates and judgments are also used in determining the deferred income tax assets and liabilities that have been recognized for differences between the financial statement and income tax basis of assets and liabilities, and income tax loss carryforwards and income tax credit carryforwards.
Management evaluates the realizability of deferred income tax assets for each of the jurisdictions in which it operates. If the Company experiences cumulative pre-tax income in a particular jurisdiction in the three-year period including the current and prior two years, management normally concludes that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments, or changes in tax laws, would lead management to conclude otherwise. However, if the Company experiences cumulative pre-tax losses in a particular jurisdiction in the three-year period including the current and prior two years, management then considers a series of factors in the determination of whether the deferred income tax assets can be realized. These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, carryback capability under the tax law in the particular country, prudent and feasible tax planning strategies, changes in tax laws, and estimates of future earnings and taxable income using the same assumptions as those used for the Company's goodwill and other impairment testing. After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, management would conclude that no valuation allowance would be required. To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, management would establish a valuation allowance.
Applying the above methodology, valuation allowances have been established for certain deferred income tax assets to the extent they are not expected to be realized within the particular tax carryforward period.
Unrecognized Income Tax Benefits
A summary of gross unrecognized income tax benefits is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 1,361 $ 1,300 $ 1,235
Increases and decreases as a result of positions taken during prior years
Other increases, including currency translation 6 22 42
Other decreases, including currency translation (31) (22) (5)
Increases as a result of positions taken during the current year 86 93 86
Decreases relating to settlements with tax authorities (20) (18) (6)
Decreases as a result of a lapse of the applicable statute of limitations (102) (14) (52)
Balance at December 31 $ 1,300 $ 1,361 $ 1,300
Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in facts and circumstances. The Company does not enter into any of the United States Internal Revenue Service (IRS) Listed Transactions as set forth in Treasury Regulation 1.6011-4.
If all unrecognized income tax benefits were recognized, the net impact on the provision for income tax expense would be $813 million.
As of December 31, 2025 and 2024, Eaton had accrued approximately $218 million and $225 million, respectively, for the payment of worldwide interest and penalties, which are not included in the table of unrecognized income tax benefits above. Eaton recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense.
The Company believes that the final resolution of all the assessments discussed below will not have a material impact on its consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of any one of these matters deviate from our reasonable expectations, final resolution may have a material adverse impact on the Company’s consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct, and that its accrual of unrecognized income tax benefits is appropriate with respect to these matters.
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Eaton or its subsidiaries file income tax returns in Ireland and many countries around the world. With only a few exceptions, Eaton and its subsidiaries are no longer subject to examinations for years before 2015.
Brazil Tax Years 2005-2012
The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $24 million plus $121 million of interest and penalties (translated at the December 31, 2025 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision. On May 20, 2022, the court largely upheld its prior decision without further clarification. On June 9, 2022, the Company filed its notice of appeal to the second level court. On July 11, 2024, the court published a favorable decision resulting in the cancellation of a portion of the penalties imposed by the tax authorities. As a result of the favorable decision, the alleged interest and penalties was reduced from $121 million to $82 million (translated at the December 31, 2025 exchange rate). The Company intends to continue its challenge of the assessment in the judicial system.
As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $30 million plus $120 million of interest and penalties (translated at the December 31, 2025 exchange rate), which the Company is challenging in the judicial system. On April 4, 2024, the court published a favorable decision resulting in a reduction to the Case 1 assessment for the goodwill generated from the acquisition of a third-party business. In the same decision, the court confirmed the cancellation of a portion of the penalties imposed by the tax authorities. In May 2025, Eaton obtained a favorable decision that cancelled a portion of the assessment due to the expiration of the statute of limitations. As a result of the favorable decisions, the alleged tax deficiency was reduced to $22 million plus $62 million of interest and penalties (translated at the December 31, 2025 exchange rate). The remainder of Case 1 is still pending resolution at the first judicial level.
Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of December 31, 2025, the Company pledged Brazilian real estate assets with net book value of $17 million and provided additional security in the form of bank secured bonds and insurance bonds totaling $101 million and a cash deposit of $28 million (translated at the December 31, 2025 exchange rate).
United States Tax Disputes
The IRS typically audits large corporate taxpayers on a continuous basis, generally resulting in many open tax years if there are disputed tax positions upon completion of the audits. The IRS has completed its examination of the consolidated income tax returns of the Company’s United States subsidiaries (Eaton US) for 2007 through 2016 and the statuses of the various tax years are discussed below. The IRS has challenged certain tax positions of Eaton US, and the Company is attempting to resolve those issues in litigation and the IRS administrative process, as described in more detail below. The IRS is currently examining tax years 2017 through 2019, and the statute of limitations for those years is open until December 31, 2027. Tax years 2020 and later are subject to future examination by the IRS. Income tax returns of states and localities within the United States will be reopened to the extent of United States federal income tax adjustments. For some states and localities, the statute of limitations is open as early as the 2007 tax year. The Eaton US tax positions challenged by the IRS are items that recur beyond the tax years for which the IRS has proposed adjustments. Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct. However, if there is a final unfavorable resolution of any of the issues discussed below, it may have a material adverse impact on the Company’s consolidated financial statements.
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U.S. Tax Years 2007-2010
In 2014, the IRS issued a Statutory Notice of Deficiency for Eaton US for the 2007 through 2010 tax years (the 2007-10 Notice), which Eaton US contested in Tax Court. The 2007-10 Notice proposed assessments of $190 million in additional taxes plus $72 million in penalties, net of agreed credits and deductions. The proposed assessments pertained to: (i) transfer pricing adjustments for products manufactured in the Company's facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the United States, and (ii) the separate proposed assessment noted below. The proposed assessment in the 2007-10 Notice for transfer pricing adjustments has been resolved in Tax Court. Eaton US set its transfer prices for products sold between these affiliates at the same prices that Eaton US sells such products to third parties as required by two successive Advance Pricing Agreements (APAs) Eaton US entered into with the IRS that governed the 2005-2010 tax years. Eaton US has continued to apply the APA pricing methodology for 2011 through the current reporting period. In 2011, the IRS sent a letter to Eaton stating that it was retrospectively canceling the APAs. The issue in Tax Court involved whether the IRS improperly cancelled the APAs. On July 26, 2017, the Tax Court issued a ruling in which it agreed with Eaton US that the IRS must abide by the terms of the APAs for the tax years 2005-2006. On May 24, 2021, the IRS filed a notice to appeal the Tax Court’s ruling to the United States Sixth Circuit Court of Appeals. In July 2022, the Sixth Circuit panel heard oral arguments, and on August 25, 2022, issued a ruling in favor of Eaton US, confirming that the IRS must abide by the terms of the APAs. The Sixth Circuit Court of Appeals ruling for tax years 2005-2006 also resolved the APA cancellation issue for the 2007-2010 years. The ruling on the APA issue did not have a material impact on Eaton’s consolidated financial statements. Eaton and the IRS recognized that the ruling on the enforceability of the APA did not address a secondary issue regarding the transfer pricing for a certain royalty paid from 2006-2010. On November 15, 2023, the IRS also agreed to use the royalty rate reported by Eaton for the 2007-2010 tax years. On October 21, 2024, the IRS confirmed to the Tax Court that the Company was not liable for penalties related to the APA cancellation issue.
The 2007-10 Notice also included a separate proposed assessment involving the recognition of income for several of Eaton US’s controlled foreign corporations. The Company believes that the proposed assessment is without merit and contested the matter in Tax Court. In October 2017, Eaton and the IRS both moved for partial summary judgment on this issue. On February 25, 2019, the Tax Court granted the IRS’s motion for partial summary judgment and denied Eaton’s. The Company intends to appeal the Tax Court’s partial summary judgment decision to the United States Sixth Circuit Court of Appeals. The total potential impact of the Tax Court's partial summary judgment decision on the controlled foreign corporation income recognition issue is not estimable until all matters in the open tax years have been resolved.
U.S. Tax Years 2011-2013
In 2018, the IRS completed its examination of Eaton US for tax years 2011 through 2013 and proposed adjustments. Those adjustments were the subject of administrative appeals, which concluded without resolution. As a result, on December 21, 2022, the IRS issued Statutory Notices of Deficiency for Eaton US for these tax years (the 2011-2013 Notice) proposing assessments of $749 million in additional taxes plus $110 million in penalties, net of agreed credits and deductions. The proposed assessments pertain to: (i) transfer pricing adjustments similar to those proposed in the 2007-10 Notice for products manufactured in the Company’s facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the U.S.; (ii) adjustments involving the recognition of income for several of Eaton US’s controlled foreign corporations; (iii) transfer pricing adjustments for products manufactured in one of the Company’s facilities in Mexico and sold to affiliated companies located in the U.S.; and (iv) adjustments challenging the appropriate interest rate on intercompany debt and amount of intercompany fees charged for financial guarantees on external debt. On March 3, 2023, the Company filed its petition to the U.S. Tax Court. Of the four categories of proposed assessments, Eaton's dispute regarding the IRS adjustments related to interest rates and guarantee fees was heard in the U.S. Tax Court in November and December 2025. The timing of when the Tax Court will issue its decision is uncertain. The Company will vigorously defend its positions through litigation, which will take several years for final resolution.
U.S. Tax Years 2014-2016
In 2021, the IRS completed its examination of Eaton US for tax years 2014 through 2016 and has proposed adjustments, including: (i) transfer pricing adjustments similar to those proposed in the 2007-10 and 2011-2013 Notices for products manufactured in the Company’s facilities in Puerto Rico, and the Dominican Republic and sold to affiliated companies located in the U.S.; (ii) transfer pricing adjustments similar to those proposed in the 2011-2013 Notice for products manufactured in one of the Company’s facilities in Mexico and sold to affiliated companies located in the U.S.; and (iii) adjustments similar to those proposed in the 2011-2013 Notice challenging the appropriate interest rate on intercompany debt and amount of intercompany fees charged for financial guarantees on external debt. On November 29, 2021, the case was formally assigned to administrative appeals, and the Company will attempt to resolve certain of the issues in this administrative forum. However, if acceptable resolutions are not achieved, the Company will vigorously defend its positions through litigation, which if undertaken will likely take several years for final resolution. The statute of limitations on these tax years currently remains open until December 31, 2026.
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Note 13. EATON SHAREHOLDERS' EQUITY
There are 750 million Eaton ordinary shares authorized ($0.01 par value per share), 387.9 million and 392.9 million of which were issued and outstanding at December 31, 2025 and 2024, respectively. Eaton's Memorandum and Articles of Association authorized 40 thousand deferred ordinary shares (€1.00 par value per share) and 10 thousand preferred A shares ($1.00 par value per share), all of which were issued and outstanding at December 31, 2025 and 2024, and 10 million serial preferred shares ($0.01 par value per share), none of which is outstanding at December 31, 2025 and 2024. At December 31, 2025, there were 8,691 holders of record of Eaton ordinary shares. Additionally, 13,766 current and former employees were shareholders through participation in the Eaton Savings Plan, the Eaton Personal Investment Plan, or The Eaton Puerto Rico Retirement Savings Plan.
On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 2025 and 2024, 5.7 million and 7.8 million ordinary shares were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $1.9 billion and $2.5 billion, respectively. During 2023, no ordinary shares were repurchased.
Eaton has deferral plans that permit certain employees and directors to defer a portion of their compensation. A trust contains $3 million of ordinary shares and marketable securities at December 31, 2025 and 2024 to fund a portion of these liabilities. The marketable securities were included in Other assets and the ordinary shares were included in Shareholders' equity at historical cost.
On February 26, 2026, Eaton's Board of Directors declared a quarterly dividend of $1.10 per ordinary share, a 6% increase over the dividend paid in the fourth quarter of 2025. The dividend is payable on March 27, 2026 to shareholders of record on March 10, 2026.
Comprehensive Income (Loss)
Comprehensive income (loss) consists primarily of net income, currency translation and related hedging instruments, changes in unrecognized costs of pension and other postretirement benefits, and changes in the effective portion of open derivative contracts designated as cash flow hedges. The following table summarizes the pre-tax and after-tax amounts recognized in Comprehensive income (loss):
2025 2024 2023
(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Currency translation and related hedging instruments
Gain (loss) from currency translation and related hedging
instruments $ 246 $ 255 $ (358) $ (355) $ 252 $ 247
Amortization of gains on net investment hedges (amount
excluded from effectiveness testing) reclassified to earnings (15) (15) (15) (15) (12) (12)
231 240 (373) (370) 241 235
Pensions and other postretirement benefits
Prior service credit (cost) arising during the year (10) (7) 1 1 — —
Net gain (loss) arising during the year (27) (18) (141) (104) (246) (189)
Currency translation (55) (43) 18 13 (29) (21)
Amortization of actuarial loss and prior service cost
reclassified to earnings 67 50 55 41 32 24
(25) (18) (67) (49) (243) (185)
Cash flow hedges
Gain (loss) on derivatives designated as cash flow hedges 29 23 (6) (5) 63 50
Changes in cash flow hedges reclassified to earnings (27) (22) (16) (12) (78) (61)
2 1 (22) (17) (14) (11)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders $ 208 $ 223 $ (462) $ (436) $ (17) $ 39
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The changes in Accumulated other comprehensive loss are as follows:
(In millions) Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow
hedges Total
Balance at January 1, 2025
$ (3,399) $ (1,044) $ 101 $ (4,342)
Other comprehensive income (loss) before
reclassifications 255 (68) 23 210
Amounts reclassified from Accumulated other
comprehensive loss (income) (15) 50 (22) 13
Net current-period Other comprehensive
income (loss) 240 (18) 1 223
Balance at December 31, 2025
$ (3,159) $ (1,062) $ 102 $ (4,118)
The reclassifications out of Accumulated other comprehensive loss are as follows:
(In millions) December 31, 2025 Consolidated Statements
of Income classification
Gains and (losses) on net investment hedges (amount excluded
from effectiveness testing)
Currency exchange contracts $ 15 Interest expense - net
Tax expense —
Total, net of tax 15
Amortization of defined benefits pensions and other
postretirement benefits items
Actuarial loss and prior service cost (67) 1
Tax benefit 17
Total, net of tax (50)
Gains and (losses) on cash flow hedges
Floating-to-fixed interest rate swaps 13 Interest expense - net
Currency exchange contracts 13 Net sales and Cost of products sold
Commodity contracts 1 Cost of products sold
Tax expense (6)
Total, net of tax 22
Total reclassifications for the period $ (13)
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 10 for additional information about pension and other postretirement benefits items.
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Net Income Per Share Attributable to Eaton Ordinary Shareholders
A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
(In millions except for per share data) 2025 2024 2023
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
Weighted-average number of ordinary shares outstanding - diluted 391.2 399.4 401.1
Less dilutive effect of equity-based compensation 1.3 1.8 2.0
Weighted-average number of ordinary shares outstanding - basic 389.9 397.6 399.1
Net income per share attributable to Eaton ordinary shareholders
Diluted $ 10.45 $ 9.50 $ 8.02
Basic 10.48 9.54 8.06
In 2025, 2024, and 2023, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive.
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Note 14. EQUITY-BASED COMPENSATION
Eaton recognizes equity-based compensation expense based on the grant date fair value of the award. Awards with service conditions or both service and market conditions are expensed over the period during which an employee is required to provide service in exchange for the award. Awards with both service and performance conditions are expensed over the period an employee is required to provide service based on the number of units for which achievement of the performance objective is probable. The Company estimates forfeitures as part of recording equity-based compensation expense.
Restricted Stock Units and Awards
Restricted stock units (RSUs) and restricted stock awards (RSAs) have been issued to certain employees and directors. The fair value of RSUs and RSAs are determined based on the closing market price of the Company’s ordinary shares at the date of grant. The RSUs entitle the holder to receive one ordinary share for each RSU upon vesting, generally over three years. RSAs are issued and outstanding at the time of grant, but remain subject to forfeiture until vested, generally over ten years. A summary of the RSU and RSA activity for 2025 is as follows:
(Restricted stock units and awards in millions) Number of restricted
stock units and awards Weighted-average fair
value per unit and award
Non-vested at January 1 0.7 $ 202.76
Granted 0.3 305.76
Vested (0.4) 210.02
Forfeited — 275.66
Non-vested at December 31 0.6 $ 244.44
Information related to RSUs and RSAs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for RSUs and RSAs $ 84 $ 74 $ 65
After-tax expense for RSUs and RSAs 65 58 51
Fair value of vested RSUs and RSAs 107 126 84
As of December 31, 2025, total compensation expense not yet recognized related to non-vested RSUs and RSAs was $90 million, and the weighted-average period in which the expense is expected to be recognized is 2.2 years. Excess tax benefit for RSUs and RSAs totaled $5 million, $8 million, and $4 million for 2025, 2024, and 2023, respectively.
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Performance Share Units
Performance share units (PSUs) have been issued to certain employees that vest based on the satisfaction of a three-year service period and the market condition of total shareholder return relative to that of a group of peers. Awards earned at the end of the three-year vesting period range from 0% to 200% of the targeted number of PSUs granted based on the ranking of total shareholder return of the Company, assuming reinvestment of all dividends, relative to a defined peer group of companies. Equity-based compensation expense for these PSUs is recognized over the period during which an employee is required to provide service in exchange for the award. Upon vesting, dividends that have accumulated during the vesting period are paid on earned awards.
The Company uses a Monte Carlo simulation to estimate the fair value of PSUs with market conditions. The principal assumptions utilized in valuing these PSUs include the expected stock price volatility (based on the most recent 3-year period as of the grant date) and the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon bonds with a three-year maturity as of the grant date). A summary of the assumptions used in determining fair value of these PSUs is as follows:
2025 2024 2023
Expected volatility 29 % 26 % 27 %
Risk-free interest rate 3.96 % 4.36 % 4.35 %
Weighted-average fair value of PSUs granted $ 296.52 $ 362.38 $ 203.18
A summary of these PSUs that vested is as follows:
(Performance share units in millions) 2025 2024 2023
Percent payout 138 % 163 % 187 %
Shares vested 0.2 0.2 0.3
A summary of the 2025 activity for these PSUs is as follows:
(Performance share units in millions) Number of performance
share units Weighted-average fair
value per unit
Non-vested at January 1 0.2 $ 248.21
Granted1
0.1 296.52
Adjusted for performance results achieved2
— 203.18
Vested (0.2) 203.18
Forfeited (0.1) 303.41
Non-vested at December 31 0.1 $ 332.05
1 Performance shares granted assuming the Company will perform at target relative to peers.
2 Adjustments for the number of shares vested under the 2023 awards at the end of the three-year performance period ended December 31, 2025, being higher than the target number of shares.
Information related to PSUs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for PSUs $ 22 $ 23 $ 22
After-tax expense for PSUs 18 18 17
As of December 31, 2025, total compensation expense not yet recognized related to non-vested PSUs was $23 million and the weighted-average period in which the expense is to be recognized is 1.6 years. Excess tax benefit for PSUs totaled $6 million, $11 million, and $7 million for 2025, 2024, and 2023, respectively.
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Stock Options
Under various plans, stock options have been granted to certain employees and directors to purchase ordinary shares at prices equal to fair market value on the date of grant. Substantially all of these options vest ratably during the three-year period following the date of grant and expire 10 years from the date of grant. Compensation expense is recognized for stock options based on the fair value of the options at the date of grant and amortized on a straight-line basis over the period the employee or director is required to provide service.
The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options. The principal assumptions utilized in valuing stock options include the expected stock price volatility (based on the most recent historical period equal to the expected life of the option); the expected option life (an estimate based on historical experience); the expected dividend yield; and the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon with a maturity equal to the expected life of the option). A summary of the assumptions used in determining the fair value of stock options is as follows:
2025 2024 2023
Expected volatility 30 % 29 % 27 %
Expected option life in years 6.2 6.3 6.3
Expected dividend yield 1.5 % 1.5 % 2.0 %
Risk-free interest rate
4.3%
4.0 to 4.5%
4.1 to 4.3%
Weighted-average fair value of stock options granted $ 102.50 $ 93.42 $ 48.79
A summary of stock option activity is as follows:
(Options and aggregate intrinsic value in millions) Weighted-average
exercise price per option Options Weighted-average
remaining
contractual life
in years Aggregate
intrinsic
value
Outstanding at January 1, 2025
$ 130.25 1.6
Granted 297.35 0.1
Exercised 104.73 (0.4)
Forfeited and canceled 252.95 —
Outstanding at December 31, 2025
$ 152.22 1.3 5.2 $ 214
Exercisable at December 31, 2025
$ 119.93 1.0 4.3 $ 199
Reserved for future grants at December 31, 2025
17.1
The aggregate intrinsic value in the table above represents the total excess of the $318.51 closing price of Eaton ordinary shares on the last trading day of 2025 over the exercise price of the stock option, multiplied by the related number of options outstanding and exercisable. The aggregate intrinsic value is not recognized for financial accounting purposes and the value changes based on the daily changes in the fair market value of the Company's ordinary shares.
Information related to stock options is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for stock options $ 20 $ 11 $ 10
After-tax expense for stock options 16 9 8
Proceeds from stock options exercised 39 69 78
Income tax benefit related to stock options exercised
Tax benefit classified in operating activities in the Consolidated
Statements of Cash Flows 17 30 22
Intrinsic value of stock options exercised 88 165 116
Total fair value of stock options vested $ 11 $ 11 $ 10
Stock options exercised 0.4 0.8 1.0
As of December 31, 2025, total compensation expense not yet recognized related to non-vested stock options was $9 million, and the weighted-average period in which the expense is expected to be recognized is 1.4 years.
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Note 15. FAIR VALUE MEASUREMENTS
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
(In millions) Total Quoted prices in active markets for identical assets
(Level 1) Other observable inputs
(Level 2) Unobservable inputs
(Level 3)
December 31, 2025
Cash $ 622 $ 622 $ — $ —
Short-term investments 181 181 — —
Derivative contract assets
26 — 26 —
Derivative contract liabilities
(64) — (64) —
Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) (31) — — (31)
December 31, 2024
Cash $ 555 $ 555 $ — $ —
Short-term investments 1,525 1,525 — —
Derivative contract assets
28 — 28 —
Derivative contract liabilities
(44) — (44) —
Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.
Other Fair Value Measurements
Long-term debt and the current portion of long-term debt had a carrying value of $9,894 million and fair value of $9,587 million at December 31, 2025 compared to $9,152 million and $8,651 million, respectively, at December 31, 2024. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.
Short-Term Investments
Eaton invests excess cash generated from operations in short-term marketable investments. Short-term investments are recorded at carrying value, which approximates the fair value due to the short-term maturities of these investments. A summary of short-term investments is as follows:
December 31
(In millions) 2025 2024
Time deposits and certificates of deposit with banks $ 181 $ 157
Money market investments — 1,368
Total short-term investments $ 181 $ 1,525
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Note 16. RESTRUCTURING CHARGES
In the second quarter of 2020, Eaton initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of $382 million through December 31, 2023. This multi-year restructuring program was substantially complete at the end of 2023, with final payments primarily made in 2024.
During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $335 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $102 million and plant closing and other costs of $38 million, resulting in total estimated charges of $475 million for the entire program.
A summary of restructuring program charges is as follows:
(In millions except for per share data) 2025 2024 2023
Workforce reductions $ 81 $ 120 $ 19
Plant closing and other 52 83 38
Total before income taxes 133 202 57
Income tax benefit 29 43 11
Total after income taxes $ 103 $ 160 $ 46
Per ordinary share - diluted $ 0.26 $ 0.40 $ 0.11
Restructuring program charges related to the following segments:
(In millions) 2025 2024 2023
Electrical Americas $ 14 $ 12 $ 5
Electrical Global 63 88 26
Aerospace 10 9 5
Mobility1
31 64 13
Corporate 14 29 8
Total $ 133 $ 202 $ 57
A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
(In millions) Workforce reductions Plant closing and other Total
Balance at January 1, 2024
$ 35 $ 6 $ 41
Liability recognized, net 120 83 202
Payments, utilization and translation (59) (81) (141)
Balance at December 31, 2024
96 7 103
Liability recognized, net1
81 52 133
Payments, utilization and translation (67) (51) (118)
Balance at December 31, 2025
$ 109 $ 8 $ 118
1The restructuring program liability was adjusted by $12 million in the fourth quarter of 2025 primarily related to true-ups for completed workforce reductions in the Mobility segment.
These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 18 for additional information about business segments.
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Note 17. GOVERNMENT GRANTS
The Company recognizes the benefit of government grants when they are probable of being received and the specified conditions associated with the grants have been satisfied. Grants for capital investments are generally recognized as deferred income on the Consolidated Balance Sheets, then amortized to income over the life of the related assets. Grants for other expenses are recognized as reductions of the related expense over the period incurred.
In 2024, the Company entered into an agreement to receive government grants from a non-Irish government entity. The grants will be recognized over the term of the agreement beginning in 2024 through 2033. The terms of the agreement and the commitments made by the Company and the government entity have been omitted because they are legally prohibited from being disclosed. Under the agreement, for the years ended December 31, 2025 and 2024, the Company reduced Selling and administrative expense by $15 million and $1 million, respectively, on the Consolidated Statements of Income. As of December 31, 2025 and 2024, the Company recognized unamortized deferred income of $67 million and $9 million, respectively, within Other noncurrent liabilities and Other current liabilities, respectively, on the Consolidated Balance Sheets.
For the year ended December 31, 2023, government grants did not have a material impact on the consolidated financial statements.
Note 18. 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. The Company's chief operating decision maker is the chief executive officer.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change. Eaton’s segments are as follows:
Electrical Americas and Electrical Global
The Electrical Americas segment consists of electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The Electrical Global segment consists of electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America; as well as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The principal markets for these segments are commercial & institutional, data centers and distributed IT, industrial, utilities, residential, and machinery OEMs. These products are used wherever there is a demand for electrical power in data centers, utilities, industrial and energy facilities, commercial buildings, apartment and office buildings, hospitals, factories, and residencies. The segments share certain common global customers, but a large number of customers are located regionally. Sales are made through distributors, resellers, and manufacturers’ representatives, as well as directly to original equipment manufacturers, utilities, and certain other end users.
Aerospace
The Aerospace segment is a leading global supplier of aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. Products include hydraulic power generation systems for aerospace applications including pumps, motors, hydraulic power units, hose and fittings, electro-hydraulic pumps; controls and sensing products including valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems and nose wheel steering systems; fluid conveyance products, including hose, thermoplastic tubing, fittings, adapters, couplings, sealing and ducting; fuel systems including air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, valves, adapters and regulators; mission systems including oxygen generation system, payload carriages, and thermal management products; high performance interconnect products including wiring connectors and cables. The Aerospace segment also includes filtration systems including hydraulic filters, bag filters, strainers and cartridges; and golf grips. The principal markets for the Aerospace segment are manufacturers of commercial and military aircraft and related after-market customers, as well as industrial applications. These manufacturers and other customers operate globally. Products are sold and serviced through a variety of channels.
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Mobility
The Mobility segment designs, manufactures, markets, and supplies a broad portfolio of mechanical, electrical, and electronic systems that improve emissions, fuel economy, power management, performance, and safety across on‑road and off‑road vehicles. The Mobility segment serves global OEMs and aftermarket customers with solutions spanning internal combustion, hybrid, and electrified powertrains, including transmissions and transmission components, clutches, differentials, hybrid systems, engine valves, fuel and vapor components, as well as high‑voltage inverters and converters, power electronics, circuit protection, vehicle controls, and power distribution systems. The principal markets for the Mobility segment are OEM and aftermarket customers of heavy-, medium-, and light‑duty trucks, SUVs, CUVs, passenger cars, construction, agricultural, material handling, and mining equipment.
Other Information
No single customer represented greater than 10% of net sales in 2025, 2024 or 2023, respectively.
The accounting policies of the business segments are generally the same as the policies described in Note 1, except that, as described further in the following paragraph, certain items are not allocated to the businesses. Intersegment sales and transfers are accounted for at the same prices as if the sales and transfers were made to third parties. These intersegment sales are eliminated in consolidation. Operating profit (loss) includes the operating profit from intersegment sales.
The chief operating decision maker uses segment operating profit (loss) as an input to assess segment performance and determine appropriate resource allocations, including capital, financial, and employee resources. Segment operating profit (loss) results are regularly evaluated versus annual profit plan, forecast and/or prior year.
Other segment items are primarily comprised of Cost of products sold, Selling and administrative expense, Research and development expense, depreciation of property, plant and equipment, and certain items included in Other expense (income) - net on the Consolidated Statements of Income. The Company's chief operating decision maker manages these items on a consolidated basis.
Corporate includes all the Company's amortization of intangible assets, interest expense - net and restructuring program charges (Note 16) and the non-service cost portion of pension and other postretirement benefits income. Other expense - net includes all the Company's costs associated with acquisitions, divestitures, and gains and losses on the sale of certain businesses and other items that are of a corporate or functional governance nature. For purposes of business segment performance measurement, a portion of corporate costs, excluding amortization of intangibles assets, acquisition integration and divestiture costs, and restructuring program charges, are allocated to the businesses. These allocations are periodically adjusted to pass on year-over-year cost savings or increases to the businesses in a manner that is consistent with how the chief operating decision maker assesses performance. Identifiable assets of the business segments exclude goodwill, other intangible assets, and general corporate assets, which principally consist of certain cash, short-term investments, deferred income taxes, certain accounts receivable, certain property, plant and equipment, and certain other assets.
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Business Segment Information
(In millions) 2025 2024 2023
Net sales
Electrical Americas $ 13,276 $ 11,436 $ 10,098
Electrical Global 6,815 6,248 6,084
Aerospace 4,249 3,744 3,413
Mobility 3,109 3,451 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
Other segment items
Electrical Americas $ 9,304 $ 7,981 $ 7,423
Electrical Global 5,492 5,099 4,908
Aerospace 3,236 2,885 2,633
Mobility 2,704 2,955 3,140
Total other segment items $ 20,735 $ 18,919 $ 18,103
Segment operating profit
Electrical Americas $ 3,972 $ 3,455 $ 2,675
Electrical Global 1,323 1,149 1,176
Aerospace 1,013 859 780
Mobility 405 496 461
Total segment operating profit 6,713 5,959 5,093
Corporate
Intangible asset amortization expense (486) (425) (450)
Interest expense - net (241) (130) (151)
Pension and other postretirement benefits income 19 40 46
Restructuring program charges (133) (202) (57)
Other expense - net (941) (675) (654)
Income before income taxes 4,932 4,566 3,827
Income tax expense 841 768 604
Net income 4,090 3,798 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
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(In millions) 2025 2024 2023
Identifiable assets
Electrical Americas $ 6,283 $ 4,933 $ 4,163
Electrical Global 3,852 3,233 2,868
Aerospace 2,684 2,392 2,276
Mobility 2,708 2,620 2,814
Total identifiable assets 15,526 13,178 12,121
Goodwill 15,769 14,713 14,977
Other intangible assets 5,054 4,658 5,091
Corporate 4,902 5,833 6,243
Total assets $ 41,251 $ 38,381 $ 38,432
Capital expenditures for property, plant and equipment
Electrical Americas $ 413 $ 362 $ 309
Electrical Global 249 163 142
Aerospace 103 83 97
Mobility 103 158 172
Total 868 766 721
Corporate 52 42 36
Total expenditures for property, plant and equipment $ 919 $ 808 $ 757
Depreciation of property, plant and equipment
Electrical Americas $ 133 $ 118 $ 108
Electrical Global 108 102 96
Aerospace 77 70 69
Mobility 123 120 113
Total 441 409 386
Corporate 36 37 43
Total depreciation of property, plant and equipment $ 477 $ 446 $ 429
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Geographic Region Information
Net sales are measured based on the geographic destination of sales. Long-lived assets consist of property, plant and equipment - net.
(In millions) 2025 2024 2023
Net sales
United States $ 17,122 $ 15,151 $ 14,071
Canada 1,083 1,058 949
Latin America 1,461 1,680 1,549
Europe 5,078 4,530 4,339
Asia Pacific 2,704 2,459 2,288
Total $ 27,448 $ 24,878 $ 23,196
Long-lived assets
United States $ 2,344 $ 1,990 $ 1,773
Canada 42 31 31
Latin America 524 465 476
Europe 935 790 797
Asia Pacific 472 453 453
Total $ 4,316 $ 3,729 $ 3,530
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Amounts are in millions of dollars or shares unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding.
COMPANY OVERVIEW
Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are capitalizing on the megatrends of the electrification, digitalization, and the reindustrialization of and growth of megaprojects in North America and increased global infrastructure spending, all of which are expanding our end markets and positioning Eaton for growth for years to come. We are strengthening our participation across the entire electrical power value chain and benefiting from momentum in the data center and utility end markets as well as a growth cycle in the commercial aerospace and defense markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is helping to solve the world’s most urgent power management challenges and building a more sustainable society for people today and for future generations.
Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of $27.4 billion in 2025, the Company serves customers in 180 countries.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
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Portfolio Changes
The Company continues to actively manage its portfolio of businesses to deliver on its strategic objectives. The Company is focused on deploying its capital toward businesses that provide opportunities for above-market growth, strong returns, and align with secular trends and its power management strategies. Over the past three years and continuing in 2026, Eaton completed several transactions to strengthen its portfolio.
Acquisitions of businesses and investments in associate companies Date of acquisition Business segment
Jiangsu Ryan Electrical Co. Ltd. April 23, 2023 Electrical Global
A 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China.
Exertherm May 20, 2024 Electrical Americas
A U.K. based provider of thermal monitoring solutions for electrical equipment.
NordicEPOD AS May 31, 2024 Electrical Global
A 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region.
Fibrebond Corporation April 1, 2025 Electrical Americas
A U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers.
Resilient Power Systems, Inc. August 6, 2025 Electrical Americas
A leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology.
Ultra PCS Limited
January 23, 2026
Aerospace
Producer of electronic controls, sensing, stores ejection and data processing solutions with operations in the U.K. and U.S.
On November 2, 2025, Eaton signed an agreement to acquire Boyd Thermal, a U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. Boyd Thermal employs more than 5,000 people with manufacturing sites across North America, Asia, and Europe. Under the terms of the agreement, Eaton will pay $9.5 billion for Boyd Thermal. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2026.
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of its legacy Vehicle and eMobility operating segments, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
Additional information related to acquisitions of businesses is presented in Note 2.
Summary of Results of Operations
A summary of Eaton’s Net sales, Net income attributable to Eaton ordinary shareholders, and Net income per share attributable to Eaton ordinary shareholders - diluted is as follows:
(In millions except for per share data) 2025 2024 2023
Net sales $ 27,448 $ 24,878 $ 23,196
Net income attributable to Eaton ordinary shareholders 4,087 3,794 3,218
Net income per share attributable to Eaton ordinary shareholders - diluted $ 10.45 $ 9.50 $ 8.02
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RESULTS OF OPERATIONS
Non-GAAP Financial Measures
The following discussion of Consolidated Financial Results includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per ordinary share, each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of adjusted earnings and adjusted earnings per ordinary share to the most directly comparable GAAP measure is included in the Consolidated Financial Results table below. Management believes that these financial measures are useful to investors because they provide additional meaningful financial information that should be considered when assessing our business performance and trends, and they allow investors to more easily compare Eaton’s financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton.
Acquisition and Divestiture Charges
Eaton incurs integration charges and transaction costs to acquire and integrate businesses, and transaction, separation and other costs to divest and exit businesses. Eaton also recognizes gains and losses on the sale of businesses. A summary of these Corporate items is as follows:
(In millions except for per share data) 2025 2024 2023
Acquisition integration, divestiture charges and transaction costs $ 183 $ 36 $ 54
Income tax benefit 38 10 15
Total after income taxes $ 145 $ 26 $ 39
Per ordinary share - diluted $ 0.37 $ 0.06 $ 0.10
Acquisition integration, divestiture charges and transaction costs in 2025 are primarily related to the following:
•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, and Exertherm, the expected acquisition of Boyd Thermal, transactions completed prior to 2023, and other charges to acquire and exit businesses.
•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $82 million
•Employee incentive compensation expense related to the acquisition of Resilient of $10 million
Acquisition integration, divestiture charges and transaction costs in 2024 and 2023 are primarily related to acquisitions completed prior to 2023, and include other charges and income to acquire and exit businesses, and the reduction in fair value of contingent future consideration from the Green Motion SA acquisition. Costs in 2023 also include certain indemnity claims associated with the sale of 50% interest in the commercial vehicle automated transmission business in 2017.
Charges in 2025, 2024, and 2023 were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net. In Business Segment Information in Note 18, the charges were included in Other expense - net.
Restructuring Programs
In the second quarter of 2020, Eaton initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of $382 million through December 31, 2023. This restructuring program was substantially complete at the end of 2023 and mature year benefits from the program of approximately $265 million were realized in 2024.
During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $335 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $102 million and plant closing and other costs of $38 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented.
Additional information related to these restructuring programs is presented in Note 16.
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Intangible Asset Amortization Expense
Intangible asset amortization expense is as follows:
(In millions except for per share data) 2025 2024 2023
Intangible asset amortization expense $ 486 $ 425 $ 450
Income tax benefit 101 91 98
Total after income taxes $ 384 $ 335 $ 353
Per ordinary share - diluted $ 0.99 $ 0.84 $ 0.89
Consolidated Financial Results
(In millions except for per share data) 2025
Change
from 2024
2024
Change
from 2023
2023
Net sales $ 27,448 10 % $ 24,878 7 % $ 23,196
Gross profit 10,317 9 % 9,503 13 % 8,434
Percent of net sales 37.6 % 38.2 % 36.4 %
Income before income taxes 4,932 8 % 4,566 19 % 3,827
Net income 4,090 8 % 3,798 18 % 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders 4,087 8 % 3,794 18 % 3,218
Excluding acquisition and divestiture charges, after-tax 145 26 39
Excluding restructuring program charges, after-tax 103 160 46
Excluding intangible asset amortization expense, after-tax 384 335 353
Adjusted earnings $ 4,720 9 % $ 4,314 18 % $ 3,657
Net income per share attributable to Eaton ordinary shareholders - diluted
$ 10.45 10 % $ 9.50 18 % $ 8.02
Excluding per share impact of acquisition and divestiture charges, after-tax 0.37 0.06 0.10
Excluding per share impact of restructuring program charges, after-tax 0.26 0.40 0.11
Excluding per share impact of intangible asset amortization expense, after-tax 0.99 0.84 0.89
Adjusted earnings per ordinary share $ 12.07 12 % $ 10.80 18 % $ 9.12
Net Sales
Changes in Net sales: 2025 2024
Organic growth 8 % 8 %
Acquisitions of businesses
2 % — %
Foreign currency — % (1) %
Total increase in Net sales 10 % 7 %
2025: Organic sales increased 8% in 2025 due to strength in data center end-markets in the Electrical Americas and Electrical Global business segments, strength in machine OEM and residential end-markets in the Electrical Global business segment, and broad-based strength across all markets in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americas and Electrical Global business segments, and weakness in the North American region in the Mobility business segment.
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2024: Organic sales increased 8% in 2024 due to strength in commercial & institutional end-markets in the Electrical Americas business segment, strength in utility end-markets in the Electrical Global business segment, strength in data center end-markets in the Electrical Americas and Electrical Global business segments, strength in commercial OEM, commercial aftermarket, and military OEM in the Aerospace business segment, and strength in the South American and European regions in the Mobility business segment, partially offset by weakness in residential end-markets in the Electrical Americas and Electrical Global business segments and weakness in the North American region in the Mobility business segment.
Additionally, during 2024, certain facilities in the Electrical Americas business segment were impacted by Hurricane Helene, and the Aerospace business segment was impacted by industry related labor strikes. These events had a negative impact on Net sales in 2024 of $128 million.
Gross Profit
2025: Gross profit margin decreased from 38.2% in 2024 to 37.6% in 2025. Material factors affecting this decrease were a 280 basis point decline from higher commodity and wage inflation and a 50 basis point decline from higher acquisition and divestiture charges, partially offset by a 260 basis point increase from higher sales.
2024: Gross profit margin increased from 36.4% in 2023 to 38.2% in 2024. Material factors affecting this increase were a 290 basis point increase from higher sales and a 90 basis point increase from operating efficiencies, partially offset by a 100 basis point decline from higher commodity and wage inflation and a 70 basis point decline from higher costs to support growth initiatives.
Income Taxes
During 2025, income tax expense of $841 million was recognized (an effective tax rate of 17.1%) compared to income tax expense of $768 million in 2024 (an effective tax rate of 16.8%) and income tax expense of $604 million in 2023 (an effective tax rate of 15.8%). The increase in the effective tax rate from 16.8% in 2024 to 17.1% in 2025 was primarily due to greater levels of income earned in higher tax jurisdictions. The increase in the effective tax rate from 15.8% in 2023 to 16.8% in 2024 was due to greater levels of income earned in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments and the reduction of valuation allowances on foreign tax attributes.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law in the United States. The OBBBA extends and modifies certain provisions of the 2017 Tax Cuts and Jobs Act and has multiple effective dates, with some provisions beginning in 2025. The OBBBA did not have a material impact on the Company’s consolidated financial statements in 2025. The Company will continue to assess the impact of OBBBA and does not expect the OBBBA to have a material impact on its effective tax rate in future periods.
Net Income
Changes in Net income attributable to Eaton ordinary shareholders and Net income per share attributable to Eaton ordinary shareholders - diluted are summarized as follows:
2025 2024
(In millions except for per share data) Dollars Per share Dollars Per share
Prior year
$ 3,794 $ 9.50 $ 3,218 $ 8.02
Business segment results of operations
Operational performance
601 1.55 730 1.82
Foreign currency 22 0.06 (7) (0.02)
Corporate
Intangible asset amortization expense (50) (0.16) 18 0.05
Restructuring program charges 57 0.14 (114) (0.29)
Acquisition and divestiture charges (119) (0.31) 13 0.04
Other corporate items (207) (0.52) (21) (0.05)
Tax rate impact (11) (0.03) (45) (0.11)
Impact of shares 0.22 0.04
Current year
$ 4,087 $ 10.45 $ 3,794 $ 9.50
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Business Segment Results of Operations
The following is a discussion of Net sales, operating profit (loss) and operating margin by business segment. Additionally, the Company uses the following metrics as indicators of customer demand and future revenue expectations in the Electrical Americas, Electrical Global, and Aerospace business segments. The Company believes these metrics are useful to investors for the same reasons.
•Backlog: Includes orders to which customers are firmly committed
•Organic change in backlog: Percentage change in backlog, excluding (1) the impact of foreign currency, (2) divestitures, and (3) firm orders in place prior to closing of business acquisitions
•Organic change in customer orders: Percentage change in firm customer orders on a trailing twelve month basis, excluding (1) the impact of foreign currency, (2) divestitures, and (3) firm orders in place prior to closing of business acquisitions
•Book-to-bill: Average of the ratio of firm customer orders to Net sales for the last four quarters
Electrical Americas
(In millions) 2025 Change
from 2024 2024 Change
from 2023 2023
Net sales $ 13,276 16 % $ 11,436 13 % $ 10,098
Operating profit $ 3,972 15 % $ 3,455 29 % $ 2,675
Operating margin 29.9 % 30.2 % 26.5 %
Changes in Net sales: 2025 2024
Organic growth 12 % 13 %
Acquisitions of businesses
4 % — %
Total increase in Net sales 16 % 13 %
Change from December 31
Performance metrics: December 31, 2025 December 31, 2024 2025 vs. 2024 2024 vs. 2023
Backlog $ 13,246 $ 10,141 31 % 28 %
Organic change in backlog 19 % 29 %
Organic change in customer orders 16 % 16 %
Book-to-bill 1.2 1.2
The increase in organic sales in 2025 was due to strength in data center end-markets, partially offset by weakness in industrial end-markets. The increase in organic sales in 2024 was due to strength in data center and commercial & institutional end-markets, partially offset by weakness in residential end-markets.
The operating margin decreased from 30.2% in 2024 to 29.9% in 2025. Material factors affecting this decrease were a 380 basis point decline from higher commodity and wage inflation and a 70 basis point decline from higher costs to support growth initiatives, partially offset by a 380 basis point increase from higher sales. The operating margin increased from 26.5% in 2023 to 30.2% in 2024. Material factors affecting this increase were a 560 basis point increase from higher sales and a 150 basis point increase from operating efficiencies, partially offset by a 190 basis point decline from higher costs to support growth initiatives and a 130 basis point decline from higher commodity and wage inflation.
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Electrical Global
(In millions) 2025 Change
from 2024 2024 Change
from 2023 2023
Net sales $ 6,815 9 % $ 6,248 3 % $ 6,084
Operating profit $ 1,323 15 % $ 1,149 (2) % $ 1,176
Operating margin 19.4 % 18.4 % 19.3 %
Changes in Net sales: 2025 2024
Organic growth 7 % 4 %
Foreign currency 2 % (1) %
Total increase in Net sales 9 % 3 %
Change from December 31
Performance metrics: December 31, 2025 December 31, 2024 2025 vs. 2024 2024 vs. 2023
Backlog $ 2,034 $ 1,704 19 % 12 %
Organic change in backlog 13 % 16 %
Organic change in customer orders 6 % 4 %
Book-to-bill 1.0 1.1
The increase in organic sales in 2025 was due to strength in data center, machine OEM, and residential end-markets, partially offset by weakness in industrial end-markets. Additionally, the increase in organic sales in 2025 was due to strength in the Asia Pacific and European regions and in the Global Energy Infrastructure Solutions (GEIS) business. The increase in organic sales in 2024 was due to strength in data center and utility end-markets, partially offset by weakness in residential end-markets. Additionally, the increase in organic sales in 2024 was due to strength in the Asia Pacific and European regions.
The operating margin increased from 18.4% in 2024 to 19.4% in 2025. Material factors affecting this increase were a 270 basis point increase from higher sales, partially offset by a 230 basis point decline from higher commodity and wage inflation. The operating margin decreased from 19.3% in 2023 to 18.4% in 2024. Material factors affecting this decrease were a 150 basis point decline from higher wage inflation, a 70 basis point decline from the sale of a non-production facility in the third quarter of 2023, a 60 basis point decline from higher support costs, and a 50 basis point decline from unfavorable product mix, partially offset by a 140 basis point increase from operating efficiencies and a 90 basis point increase from higher sales.
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Aerospace
(In millions) 2025 Change
from 2024 2024 Change
from 2023 2023
Net sales $ 4,249 13 % $ 3,744 10 % $ 3,413
Operating profit $ 1,013 18 % $ 859 10 % $ 780
Operating margin 23.9 % 23.0 % 22.9 %
Changes in Net sales: 2025 2024
Organic growth 12 % 10 %
Foreign currency 1 % — %
Total increase in Net sales 13 % 10 %
Change from December 31
Performance metrics: December 31, 2025 December 31, 2024 2025 vs. 2024 2024 vs. 2023
Backlog $ 4,316 $ 3,721 16 % 15 %
Organic change in backlog 13 % 16 %
Organic change in customer orders 11 % 10 %
Book-to-bill 1.1 1.1
The increase in organic sales in 2025 was due to broad-based strength across all markets, with particular strength in military aftermarket. The increase in organic sales in 2024 was due to strength in commercial OEM, commercial aftermarket, and military OEM.
The operating margin increased from 23.0% in 2024 to 23.9% in 2025. Material factors affecting this increase were a 540 basis point increase from higher sales, partially offset by a 260 basis point decline from higher commodity and wage inflation, a 70 basis point decline from operating inefficiencies, a 60 basis point decline from higher costs to support growth initiatives, and a 60 basis point decline from the sale of a production facility in the first quarter of 2024. The operating margin increased from 22.9% in 2023 to 23.0% in 2024. Material factors affecting the operating margin were a 470 basis point increase from higher sales and a 70 basis point increase from the sale of a production facility in the first quarter of 2024, partially offset by a 280 basis point decline from higher commodity and wage inflation, a 180 basis point decline from higher costs to support growth initiatives, and a 70 basis point decline from unfavorable product mix.
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Mobility
(In millions) 2025 Change
from 2024 2024 Change
from 2023 2023
Net sales $ 3,109 (10) % $ 3,451 (4) % $ 3,601
Operating profit $ 405 (18) % $ 496 8 % $ 461
Operating margin 13.0 % 14.4 % 12.8 %
Changes in Net sales: 2025 2024
Organic growth (10) % (3) %
Foreign currency — % (1) %
Total decrease in Net sales (10) % (4) %
The decrease in organic sales in 2025 was due to weakness in the North American region. The decrease in organic sales in 2024 was due to weakness in the North American region, partially offset by strength in the South American and European regions.
The operating margin decreased from 14.4% in 2024 to 13.0% in 2025. Material factors affecting this decrease were a 250 basis point decline from higher commodity and wage inflation, a 100 basis point decline from unfavorable product mix and a 50 basis point decline from lower sales, partially offset by a 230 basis point increase from operating efficiencies and a 70 basis point increase from the reimbursement of research and development and support costs by a customer. The operating margin increased from 12.8% in 2023 to 14.4% in 2024. Material factors affecting this increase were a 160 basis point increase from operating efficiencies and a 90 basis point increase from the sale of a non-production facility in the second quarter of 2024, partially offset by a 100 basis point decline from unfavorable product mix.
Corporate Expense
(In millions) 2025 Change
from 2024 2024 Change
from 2023 2023
Intangible asset amortization expense $ 486 14 % $ 425 (6) % $ 450
Interest expense - net 241 85 % 130 (14) % 151
Pension and other postretirement benefits income (19) (53) % (40) (13) % (46)
Restructuring program charges 133 (34) % 202 254 % 57
Other expense - net 941 39 % 675 3 % 654
Total corporate expense $ 1,782 28 % $ 1,392 10 % $ 1,266
The material factors affecting the increase in Total corporate expense in 2025 were higher Other expense - net, Interest expense - net, and Intangible asset amortization expense, partially offset by lower Restructuring program charges. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs and tax litigation charges. The material factor affecting the increase in Total corporate expense in 2024 was higher Restructuring program charges.
LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION
Liquidity and Financial Condition
Eaton’s objective is to finance its business through operating cash flow and an appropriate mix of equity and long-term and short-term debt. By diversifying its debt maturity structure, Eaton reduces liquidity risk.
On May 9, 2025, a subsidiary of Eaton issued Euro denominated notes (2025 Euro Notes) with a face amount of €500 million ($564 million). The 2025 Euro Notes mature in 2035 with interest payable annually at a rate of 3.625% per annum. The issuer received proceeds totaling €494 million ($558 million) from the 2025 Euro Notes issuance, net of financing costs and discounts. The 2025 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Euro Notes contain customary optional redemption and par call provisions. The 2025 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 2025 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Euro Notes. The 2025 Euro Notes are subject to customary non-financial covenants.
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Also on May 9, 2025, the same subsidiary of Eaton issued senior notes (2025 Notes) with a face amount of $500 million. The 2025 Notes mature in 2030 with interest payable semi-annually at a rate of 4.45% per annum. The issuer received proceeds totaling $495 million from the 2025 Notes issuance, net of financing costs and discounts. The 2025 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Notes contain customary optional redemption and par call provisions. The 2025 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2025 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Notes. The 2025 Notes are subject to customary non-financial covenants.
On September 29, 2025, a subsidiary of Eaton entered into a new $3,000 million five-year revolving credit agreement that will expire on September 27, 2030 (New Revolving Credit Agreement), which replaced the $500 million 364-day revolving credit agreement dated September 30, 2024 and $2,500 million five-year revolving credit agreement dated October 3, 2022. The New Revolving Credit Agreement is used to support commercial paper borrowings and is 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 the New Revolving Credit Agreement at December 31, 2025. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which none was outstanding on December 31, 2025. On February 6, 2026, a subsidiary of Eaton exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The upsize was executed under the New Revolving Credit Agreement, and the facility’s maturity date remains unchanged at September 27, 2030. Also on February 6, 2026, the Company increased its commercial paper program from $3,000 million to $4,000 million.
On February 6, 2026, a subsidiary of Eaton entered into a senior unsecured delayed-draw term loan facility (Term Credit Agreement) in an aggregate principal amount of up to $8,000 million. The proceeds of the Term Credit Agreement, if drawn, will be used solely by the Company to finance a portion of the expected acquisition of Boyd Thermal. The Term Credit Agreement will mature and be payable in full on December 31, 2026 unless the Term Credit Agreement is terminated earlier pursuant to its terms. The Term Credit Agreement is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company has not drawn on the Term Credit Agreement.
In addition to the revolving credit facility, the Company also had available lines of credit of $872 million from various banks primarily for the issuance of letters of credit, of which there was $350 million outstanding at December 31, 2025.
Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of December 31, 2025 and 2024, Eaton had cash of $622 million and $555 million, short-term investments of $181 million and $1,525 million, respectively, with $1 million short-term debt as of December 31, 2025 and no short-term debt as of December 31, 2024. Eaton has investment grade credit ratings from the two major rating agencies as reflected in the following ratings assigned to its debt:
Credit Rating Agency (long- /short-term rating) Rating Outlook
Standard & Poor's A-/A-2 Stable outlook
Moody's A3/P-2 Stable outlook
Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facility, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund capital expenditures and acquisitions of businesses, as well as scheduled payments of long-term debt, for at least the next 12 months and the foreseeable future thereafter.
On April 1, 2025, the Company paid $1.43 billion, net of cash acquired, to acquire Fibrebond Corporation. On August 6, 2025, the Company acquired Resilient Power Systems Inc. for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration. In addition, on January 23, 2026, the Company paid $1.53 billion, net of cash acquired, to acquire Ultra PCS Limited and the Company expects to close the acquisition of Boyd Thermal in the second quarter of 2026 for $9.5 billion.
For additional information on financing transactions and debt, see Note 9.
Eaton’s credit facilities and indentures governing certain long-term debt contain various covenants, the violation of which would limit or preclude the use of the credit facilities for future borrowings, or might accelerate the maturity of the related outstanding borrowings covered by the indentures. At Eaton’s present credit rating level, the most restrictive financial covenant provides that the ratio of secured debt (or lease payments due under a sale and leaseback transaction) to adjusted consolidated net worth (or consolidated net tangible assets, in each case as defined in the relevant credit agreement or indenture) may not exceed 10%. Eaton's actual ratios are substantially below the required threshold. In addition, Eaton is in compliance with each of its debt covenants for all periods presented.
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Cash Flows
A summary of cash flows is as follows:
(In millions) 2025 Change
from 2024 2024 Change
from 2024 2023
Net cash provided by operating activities $ 4,472 $ 145 $ 4,327 $ 703 $ 3,624
Net cash used in investing activities (1,101) (830) (271) 2,304 (2,575)
Net cash used in financing activities (3,173) 763 (3,936) (3,065) (871)
Effect of currency on cash (131) (79) (52) (68) 16
Total increase in cash $ 67 $ 67 $ 194
Operating Cash Flow
Net cash provided by operating activities increased by $145 million in 2025 compared to 2024. The material factor affecting this increase was higher net income of $292 million.
Net cash provided by operating activities increased by $703 million in 2024 compared to 2023. The material factor affecting this increase was higher net income of $575 million.
Investing Cash Flow
Net cash used in investing activities increased by $830 million in 2025 compared to 2024. Material factors affecting this increase were an increase in cash paid for business acquisitions to $1,490 million in 2025 from $50 million in 2024, and an increase in capital expenditures for property, plant and equipment to $919 million in 2025 from $808 million in 2024, partially offset by sales of short-term investments to $1,339 million in 2025 from $575 million in 2024.
Net cash used in investing activities decreased by $2,304 million in 2024 compared to 2023. Material factors affecting this decrease were sales of short-term investments of $575 million in 2024 compared to purchases of short-term investments of $1,861 million in 2023, partially offset by payments for settlement of currency exchange contracts not designated as hedges of $3 million in 2024 compared to proceeds from settlement of currency exchange contracts not designated as hedges of $92 million in 2023.
Financing Cash Flow
Net cash used in financing activities decreased by $763 million in 2025 compared to 2024. Material factors affecting this decrease were a decrease in repurchase of shares to $1,862 million in 2025 from $2,492 million in 2024, and a decrease in payments on borrowings to $717 million in 2025 from $1,015 million in 2024, partially offset by an increase in cash dividends paid to $1,626 million in 2025 from $1,500 million in 2024.
Net cash used in financing activities increased by $3,065 million in 2024 compared to 2023. Material factors affecting this increase were an increase in repurchase of shares to $2,492 million in 2024 compared to no repurchase of shares in 2023, and an increase in payments on borrowings to $1,015 million in 2024 from $19 million in 2023, partially offset by a decrease in net payments of short-term debt to $8 million in 2024 from $311 million in 2023, and an increase in proceeds from borrowings to $1,084 million in 2024 from $818 million in 2023.
Uses of Cash
Purchases of Goods and Services
The Company purchases goods and services in the normal course of business based on expected usage. For certain purchases, the Company enters into purchase obligations with various vendors, which include short-term and long-term commitments for purchases of raw materials, outstanding non-cancelable purchase orders, releases under blanket purchase orders, and commitments under ongoing service arrangements. As of December 31, 2025, the Company has purchase obligations to support the operation of its business similar to those included in historical cash flow trends.
Capital Expenditures
Capital expenditures were $919 million, $808 million, and $757 million in 2025, 2024, and 2023, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $1.1 billion in capital expenditures in 2026.
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Dividends
Cash dividend payments were $1,626 million, $1,500 million, and $1,379 million in 2025, 2024, and 2023, respectively. On February 26, 2026, Eaton's Board of Directors declared a quarterly dividend of $1.10 per ordinary share, a 6% increase over the dividend paid in the fourth quarter of 2025. The dividend is payable on March 27, 2026 to shareholders of record on March 10, 2026. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash flows, among other factors, and is subject to declaration by the Eaton Board of Directors. The Company intends to continue to pay quarterly dividends in 2026.
Share Repurchases
On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 2025 and 2024, 5.7 million and 7.8 million ordinary shares were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $1.9 billion and $2.5 billion, respectively. During 2023, no ordinary shares were repurchased. At December 31, 2025, there is $7,597 million still available for share repurchase under the 2025 Program. The Company does not intend to pursue share repurchases in 2026 due to the expected acquisition of Boyd Thermal in the second quarter of 2026.
Acquisition of Businesses and Investments in Associate Companies
The Company paid cash of $1,490 million and $50 million in 2025 and 2024, respectively, to acquire businesses. There were no business acquisitions in 2023. The Company paid cash of $16 million, $70 million, and $68 million in 2025, 2024, and 2023, respectively, for investments in associate companies. The Company will continue to focus on deploying its capital toward businesses that provide opportunities for higher growth and strong returns, and align with secular trends and its power management strategies.
Debt
The Company manages a number of short-term and long-term debt instruments, including commercial paper. At December 31, 2025, the Company had Short-term debt of $1 million, Current portion of long-term debt of $1,136 million, and Long-term debt of $8,758 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 9.
Leases
See Note 8 for maturities of lease liabilities.
Unrecognized Income Tax Benefits
At December 31, 2025, the gross unrecognized income tax benefits totaled $1,300 million and interest and penalties were $218 million. Eaton cannot predict with reasonable certainty the timing of cash settlements with the respective taxing authorities. For additional information about income taxes see Note 12.
Defined Benefits Plans
Pension Plans
During 2025, the fair value of plan assets in the Company’s employee pension plans increased $198 million to $4,191 million at December 31, 2025. The increase in plan assets was primarily due to higher than expected return on plan assets, contributions, and the impact of positive currency translation. At December 31, 2025, the net unfunded position of $497 million in pension liabilities consisted of $587 million in plans that have no funding requirements and $166 million in plans that require funding, offset by $256 million in plans that are overfunded.
Funding requirements are a major consideration in making contributions to Eaton’s pension plans. With respect to the Company’s pension plans worldwide, the Company intends to contribute annually not less than the minimum required by applicable law and regulations. In 2025, $124 million was contributed to the pension plans. The Company anticipates making $98 million of contributions to certain pension plans during 2026. The funded status of the Company’s pension plans at the end of 2026, and future contributions, will depend primarily on the actual return on assets during the year and the discount rate used to calculate certain benefits at the end of the year. For additional information about pension plans see Note 10.
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Supply Chain Finance Program
A third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. The SCF program does not have a significant impact on the Company’s liquidity as payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. For additional information on the SCF program, see Note 7.
Guaranteed Debt
Issuers, Guarantors and Guarantor Structure
Eaton Corporation has issued senior notes pursuant to indentures dated April 1, 1994 (the 1994 Indenture), November 20, 2012 (the 2012 Indenture), September 15, 2017 (the 2017 Indenture), and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date and the Third Supplemental Indenture dated May 18, 2023, the 2022 Indenture). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of four outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds) and Registered Senior Notes (as defined below) issued under an indenture dated May 9, 2025 (as supplemented by the First and Second Supplemental Indentures of the same date, the 2025 Indenture). The senior notes issued under the 1994, 2012, 2017, 2022, and 2025 Indentures are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). The Eurobonds and the Registered Senior Notes (together, the Senior Notes) comprise substantially all of Eaton’s long-term indebtedness.
Substantially all of the Senior Notes (with limited exceptions), together with the credit facilities described above under Liquidity and Financial Condition (the Credit Facilities), are guaranteed by Eaton and 17 of its subsidiaries. Accordingly, they rank equally with each other. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Eaton and its subsidiaries. As of December 31, 2025, Eaton has no material, long-term secured debt. The guaranteed Registered Senior Notes are also structurally subordinated to the liabilities of Eaton's subsidiaries that are not guarantors. Except as described below under Future Guarantors, Eaton is not obligated to cause its subsidiaries to guarantee the Registered Senior Notes.
The table set forth in Exhibit 22 filed with the Form 10-Q filed on August 5, 2025 (10-Q Exhibit 22) and incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2025 details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.
Terms of Guarantees of Registered Securities
Payment of principal and interest on the Registered Senior Notes is guaranteed, on an unsecured, unsubordinated basis by the subsidiaries of Eaton set forth in the table referenced in the 10-Q Exhibit 22. Each guarantee is full and unconditional, and joint and several. Each guarantor’s guarantee is an unsecured obligation that ranks equally with all its other unsecured and unsubordinated indebtedness. The obligations of each guarantor under its guarantee of the Registered Senior Notes are subject to a customary savings clause or similar provision designed to prevent such guarantee from constituting a fraudulent conveyance or otherwise legally impermissible or voidable obligation.
Though the terms of the indentures vary slightly, generally, each guarantee of the Registered Senior Notes by a guarantor that is a subsidiary of Eaton Corporation provides that it will be automatically and unconditionally released and discharged under certain circumstances, including, but not limited to:
(a)the consummation of certain types of transactions permitted under the applicable indenture, including one that results in such guarantor ceasing to be a subsidiary; and
(b)for Registered Senior Notes issued under the 2022 and 2025 Indentures, when such guarantor is a guarantor or issuer of indebtedness in an aggregate outstanding principal amount of less than 25% of our total outstanding indebtedness.
Further, each guarantee by a direct or indirect parent of Eaton Corporation (other than Eaton) provides that it will also be released if:
(c)such guarantee (so long as the guarantor is not obligated under any other U.S. debt obligations), becomes prohibited by any applicable law, rule or regulation or by any contractual obligation; or
(d)such guarantee results in material adverse tax consequences to Eaton or any of its subsidiaries (so long as the applicable guarantor is not obligated under any other U.S. debt obligation).
The guarantee of Eaton does not contain any release provisions.
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Future Guarantors
The 2012 and 2017 Indentures generally provide that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under any series of debt securities or a syndicated credit facility. Further, the 2012 and 2017 Indentures provide that any entity that becomes a direct or indirect parent entity of Eaton Corporation and holds any material assets, with certain limited exceptions, or owes any material liabilities must become a guarantor. The 2022 and 2025 Indentures provide only that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under indebtedness with an aggregate outstanding principal amount in excess of 25% of the Parent and its Subsidiaries’ then-outstanding indebtedness.
The 1994 Indenture does not contain provisions with respect to future guarantors.
Summarized Financial Information of Guarantors and Issuers
(In millions) December 31, 2025
Current assets $ 4,075
Noncurrent assets 13,439
Current liabilities 4,598
Noncurrent liabilities 10,788
Amounts due to subsidiaries that are non-issuers and non-guarantors - net 9,499
(In millions) 2025
Net sales $ 16,241
Sales to subsidiaries that are non-issuers and non-guarantors 967
Cost of products sold 11,154
Expense from subsidiaries that are non-issuers and non-guarantors - net 943
Net income 1,515
The financial information presented is that of the issuers and the guarantors, which includes Eaton Corporation plc, on a combined basis and the financial information of non-issuer and non-guarantor subsidiaries has been excluded. Intercompany balances and transactions between the issuers and guarantors have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in the United States requires management to make certain estimates and assumptions that may involve the exercise of significant judgment. For any estimate or assumption used, there may be other reasonable estimates or assumptions that could have been used. However, based on facts and circumstances inherent in developing estimates and assumptions, management believes it is unlikely that applying other such estimates and assumptions would have caused materially different amounts to have been reported. Actual results may differ from these estimates.
Revenue Recognition
Sales are recognized when control of promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. Sales recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. Sales for service contracts generally are recognized as the services are provided. For agreements with multiple performance obligations, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, we generally allocate sales price to each distinct obligation based on the price of each item sold in separate transactions.
Due to the nature of the work required to be performed for obligations recognized over time, Eaton estimates total costs by contract. The estimate of total costs are subject to judgment. Estimated amounts are included in the recognized sales price to the extent it is not probable that a significant reversal of cumulative sales will occur. Additionally, contracts can be modified to account for changes in contract specifications, requirements or sale price. The effect of a contract modification on the sales price or adjustments to the measure of completion under the input method are recognized as adjustments to revenue on a cumulative catch-up basis.
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Eaton records reductions to sales for returns, and customer and distributor incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience, trend analysis, and projected market conditions in the various markets served. The rebate programs offered vary across businesses due to the numerous markets Eaton serves, but the most common incentives relate to amounts paid or credited to customers for achieving defined volume levels. Returns are estimated at the time of the sale primarily based on historical experience and are recorded gross on the Consolidated Balance Sheets. See Note 3 for additional information.
Impairment of Goodwill and Indefinite Life Intangible Assets
Goodwill
Goodwill is evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis. Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets. The Company’s reporting units are equivalent to the business segments, except for the Aerospace segment which has two reporting units. Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results. The Company performs a quantitative analysis using a discounted cash flow model and other valuation techniques, but may elect to perform a qualitative analysis.
Additionally, goodwill is evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Events or circumstances that may result in an impairment review include changes in macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price.
The annual goodwill impairment test was performed using a qualitative analysis in 2025 for all reporting units other than the legacy eMobility reporting unit which used a quantitative analysis in 2025. The annual goodwill impairment test was performed using a quantitative analysis in 2024 for all reporting units other than the legacy Vehicle and eMobility reporting units which used a qualitative analysis in 2024. A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
Quantitative analyses were performed by estimating the fair value of the reporting unit using a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The future cash flows were based on the Company's long-term operating plan and a terminal value was used to estimate the reporting unit's cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions. Sensitivity analyses were performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
Based on these analyses performed in 2025 and 2024, the fair value of Eaton's reporting units continue to substantially exceed their respective carrying amounts and thus, no impairment exists.
Indefinite Life Intangible Assets
Indefinite life intangible assets consist of certain trademarks. They are evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis to determine whether their fair values exceed their respective carrying amounts. Indefinite life intangible asset impairment testing for 2025 and 2024 was performed using a quantitative analysis. Determining the fair value of these assets requires significant judgment and the Company uses a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows and profitability. Sensitivity analyses were performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
Additionally, indefinite life intangible assets are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired. Events or circumstances that may result in an impairment review include changes in industry and market considerations, cost factors, financial performance, and other relevant entity-specific events that could affect inputs used to determine the respective fair values of the indefinite-lived intangible assets.
For 2025 and 2024, the fair value of indefinite lived intangible assets exceeded the respective carrying value.
For additional information about goodwill and other intangible assets see Note 6.
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Acquisitions of Businesses
The acquisition of a business is accounted for using the acquisition method of accounting which requires assets and liabilities to be recognized at their fair values on the acquisition date. The initial fair value of assets acquired and liabilities assumed may be revised based on the final determination of fair value during the measurement period of up to 12 months from the acquisition date. 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. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. Sensitivity analyses are performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. For additional information about the acquisitions of businesses see Note 2.
Recoverability of Deferred Income Tax Assets
Eaton is subject to the income tax laws in the jurisdictions in which it operates. In order to determine the income tax provision for financial statement purposes, Eaton must make significant estimates and judgments about its business operations in these jurisdictions. These estimates and judgments are also used in determining the deferred income tax assets and liabilities that have been recognized for differences between the financial statement and income tax basis of assets and liabilities, and income tax loss carryforwards and income tax credit carryforwards.
Management evaluates the realizability of deferred income tax assets for each jurisdiction in which it operates. If the Company experiences cumulative pre-tax income in a particular jurisdiction in a three-year period including the current and prior two years, management normally concludes that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments, or changes in tax laws, would lead management to conclude otherwise. However, if the Company experiences cumulative pre-tax losses in a particular jurisdiction in a three-year period including the current and prior two years, management then considers a series of factors in the determination of whether the deferred income tax assets can be realized. These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, carryback capability under the tax law in a particular country, prudent and feasible tax planning strategies, changes in tax laws, and estimates of future earnings and taxable income using the same assumptions as those used for the Company’s goodwill and other impairment testing. After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, management would conclude that no valuation allowance would be required. To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, management would establish a valuation allowance. For additional information about income taxes see Note 12.
Unrecognized Income Tax Benefits
Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in law, facts and circumstances.
The evaluation and determination of the amount of unrecognized income tax benefits related to uncertain tax positions is complex and involves both the exercise of judgment and the utilization of certain estimates and assumptions. Each tax position carries unique facts and circumstances that must be evaluated in light of current tax laws, regulations, and judicial decisions. Additionally, the ultimate resolution of the majority of Eaton’s unrecognized income tax benefits is dependent upon uncontrollable factors such as the timing of finalizing resolutions of audit disputes through reaching settlement agreements or concluding litigation, or changes in law.
Pension and Other Postretirement Benefits Plans
The measurement of liabilities related to pension plans and other postretirement benefits plans is based on assumptions related to future events including interest rates, return on plan assets, rate of compensation increases, and health care cost trend rates. Actual plan asset performance will either reduce or increase losses included in accumulated other comprehensive loss, which ultimately affects net income.
The discount rate for United States plans was determined by discounting the expected future benefit payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date and solving for the single rate that would generate the same benefit obligation. Only corporate bonds with a rating of Aa, determined by averaging the ratings by Moody’s, Standard & Poor's, and Fitch, were included. Callable bonds that are not make-whole bonds and certain other non-comparable bonds were eliminated. Finally, a subset of bonds was selected by grouping the universe of bonds by duration and retaining 50% of the bonds that had the highest yields.
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The discount rates for non-United States plans were determined by region and are based on high quality long-term corporate and government bonds. Consideration has been given to the duration of the liabilities in each plan when selecting the bonds to be used in determining the discount rate.
To estimate the service and interest cost components of net periodic benefit cost for the vast majority of its defined benefits pension and other postretirement benefits plans, the Company used a spot rate approach by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of the period to the relevant projected cash flows.
Key assumptions used to calculate pension and other postretirement benefits expense are adjusted at each year-end. A 1-percentage point change in the assumed rate of return on pension plan assets is estimated to have approximately a $46 million effect on pension expense. Likewise, a 1-percentage point change in the discount rate is estimated to have approximately a $15 million effect on pension expense. A 1-percentage point change in the assumed rate of return on other postretirement benefits assets is estimated to have less than $1 million effect on other postretirement benefits expense. A 1-percentage point change in the discount rate is estimated to have a $2 million effect on expense for other postretirement benefits plans.
Additional information related to changes in key assumptions used to recognize expense for other postretirement benefits plans is found in Note 10.
FORWARD-LOOKING STATEMENTS
This Exhibit 99.1 contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the anticipated closing of acquisitions and the successful integration of such acquisitions, the anticipated separation of the Mobility business, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of February 26, 2026, the date on which the Annual Report on Form 10-K for the year ended December 31, 2025 was filed. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.
The following factors could cause actual results to differ materially from those in the forward-looking statements: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; reliance on suppliers to provide raw materials, components and services; the development and use of artificial intelligence in our business operations, including potential impacts on compliance with law and our reputation; service interruptions, data corruption, loss or impairment, network security and related operational impacts due to cybersecurity attacks; weather disruptions and regulatory, market and social reactions to such disruptions; our ability to identify, attract, develop, engage and retain qualified employees; our ability to complete the anticipated spin-off of our Mobility segment and difficulties and costs in connection therewith; stock price and end market impacts due to technology disruptions; volatility of end markets; continued successful research, development and marketing of new or improved products; geopolitical, economic or other risks arising from worldwide or regional economic conditions; the global nature of Eaton’s business and exposure to economic and political instability, including war or armed conflict, changes in governmental laws, regulations and policies; changes in countries’ trade policies, including the imposition of sanctions or tariffs; changes in our tax rates or tax laws and regulations applicable to our business; rules, regulations, audits and investigations and related compliance risks associated with being a governmental contractor; our ability to protect our intellectual property; litigation and environmental regulations impacting our business; and the other risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2025 and other reports filed by the Company with the SEC. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
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Filename: R2.htm · Sequence: 11
v3.26.3
CONSOLIDATED STATEMENTS OF INCOME - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income Statement [Abstract]
Net sales
$ 27,448
$ 24,878
$ 23,196
Cost of products sold
17,131
15,375
14,762
Selling and administrative expense
4,311
4,077
3,795
Research and development expense
797
794
754
Interest expense - net
241
130
151
Other expense (income) - net
37
(64)
(93)
Income before income taxes
4,932
4,566
3,827
Income tax expense
841
768
604
Net income
4,090
3,798
3,223
Less net income for noncontrolling interests
(3)
(4)
(5)
Net income attributable to Eaton ordinary shareholders
$ 4,087
$ 3,794
$ 3,218
Net income per share attributable to Eaton ordinary shareholders
Diluted (USD per share)
$ 10.45
$ 9.50
$ 8.02
Basic (USD per share)
$ 10.48
$ 9.54
$ 8.06
Weighted-average number of ordinary shares outstanding
Diluted (in shares)
391.2
399.4
401.1
Basic (in shares)
389.9
397.6
399.1
Cash dividends declared per ordinary share (USD per share)
$ 4.16
$ 3.76
$ 3.44
X
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Filename: R3.htm · Sequence: 12
v3.26.3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Statement of Comprehensive Income [Abstract]
Net income
$ 4,090
$ 3,798
$ 3,223
Less net income for noncontrolling interests
(3)
(4)
(5)
Net income attributable to Eaton ordinary shareholders
4,087
3,794
3,218
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments
240
(370)
235
Pensions and other postretirement benefits
(18)
(49)
(185)
Cash flow hedges
1
(17)
(11)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders
223
(436)
39
Total comprehensive income attributable to Eaton ordinary shareholders
$ 4,310
$ 3,358
$ 3,257
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Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.
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v3.26.3
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Current assets
Cash
$ 622
$ 555
Short-term investments
181
1,525
Accounts receivable - net
5,387
4,619
Inventory
4,721
4,227
Prepaid expenses and other current assets
1,444
874
Total current assets
12,355
11,801
Property, plant and equipment
Land and buildings
2,361
2,239
Machinery and equipment
7,667
6,823
Gross property, plant and equipment
10,028
9,062
Accumulated depreciation
(5,712)
(5,333)
Net property, plant and equipment
4,316
3,729
Other noncurrent assets
Goodwill
15,769
14,713
Other intangible assets
5,054
4,658
Operating lease assets
768
806
Deferred income taxes
707
609
Other assets
2,281
2,066
Total assets
41,251
38,381
Current liabilities
Short-term debt
1
0
Current portion of long-term debt
1,136
674
Accounts payable
4,168
3,678
Accrued compensation
644
670
Other current liabilities
3,421
2,835
Total current liabilities
9,370
7,857
Noncurrent liabilities
Long-term debt
8,758
8,478
Pension liabilities
702
741
Other postretirement benefits liabilities
161
164
Operating lease liabilities
637
669
Deferred income taxes
265
275
Other noncurrent liabilities
1,889
1,667
Total noncurrent liabilities
12,412
11,994
Shareholders’ equity
Ordinary shares (387.9 million outstanding in 2025 and 392.9 million in 2024)
4
4
Capital in excess of par value
12,837
12,731
Retained earnings
10,702
10,096
Accumulated other comprehensive loss
(4,118)
(4,342)
Shares held in trust
0
(1)
Total Eaton shareholders’ equity
19,425
18,488
Noncontrolling interests
44
43
Total equity
19,469
18,531
Total liabilities and equity
$ 41,251
$ 38,381
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
shares in Millions
Dec. 31, 2025
Dec. 31, 2024
Statement of Financial Position [Abstract]
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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Operating activities
Net income
$ 4,090
$ 3,798
$ 3,223
Adjustments to reconcile to net cash provided by operating activities
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1,006
921
926
Deferred income taxes
45
(154)
(182)
Pension and other postretirement benefits expense
43
24
15
Contributions to pension plans
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(110)
(113)
Contributions to other postretirement benefits plans
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(18)
(20)
Changes in working capital
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(420)
(215)
(341)
Inventory
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(566)
(282)
Unbilled receivables
(357)
(52)
(54)
Accounts payable
332
399
256
Accrued compensation
(50)
21
197
Accrued income and other taxes
(116)
142
61
Deferred revenue liabilities
202
2
119
Other current assets
(198)
(27)
(58)
Other current liabilities
145
77
(47)
Other - net
146
85
(76)
Net cash provided by operating activities
4,472
4,327
3,624
Investing activities
Capital expenditures for property, plant and equipment
(919)
(808)
(757)
Cash paid for acquisition of businesses, net of cash acquired
(1,490)
(50)
0
Proceeds from sales of property, plant and equipment
80
85
76
Investments in associate companies
(16)
(70)
(68)
Return of investment from associate companies
0
33
9
Sales (purchases) of short-term investments - net
1,339
575
(1,861)
Proceeds from (payments for) settlement of currency exchange contracts not designated as hedges - net
3
(3)
92
Other - net
(98)
(32)
(65)
Net cash used in investing activities
(1,101)
(271)
(2,575)
Financing activities
Proceeds from borrowings
1,058
1,084
818
Payments on borrowings
(717)
(1,015)
(19)
Short-term debt, net
1
(8)
(311)
Cash dividends paid
(1,626)
(1,500)
(1,379)
Exercise of employee stock options
39
69
78
Repurchase of shares
(1,862)
(2,492)
0
Employee taxes paid from shares withheld
(52)
(70)
(49)
Other - net
(14)
(4)
(9)
Net cash used in financing activities
(3,173)
(3,936)
(871)
Effect of currency on cash
(131)
(52)
16
Total increase in cash
67
67
194
Cash at the beginning of the period
555
488
294
Cash at the end of the period
$ 622
$ 555
$ 488
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v3.26.3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)
shares in Millions, $ in Millions
Total
Total Eaton shareholders' equity
Ordinary shares
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Shares held in trust
Noncontrolling interests
Balance at beginning of period (in shares) at Dec. 31, 2022
397.8
Balance at beginning of period at Dec. 31, 2022
$ 17,075
$ 17,038
$ 4
$ 12,512
$ 8,468
$ (3,946)
$ (1)
$ 38
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income
3,223
3,218
3,218
5
Other comprehensive income (loss), net of tax
39
39
39
Cash dividends paid
(1,388)
(1,379)
(1,379)
(9)
Issuance of shares under equity-based compensation plans (in shares)
1.5
Issuance of shares under equity-based compensation plans
120
120
122
(2)
Changes in noncontrolling interest of consolidated subsidiaries - net
(1)
0
(1)
Balance at end of period (in shares) at Dec. 31, 2023
399.4
Balance at end of period at Dec. 31, 2023
19,069
19,036
$ 4
12,634
10,305
(3,906)
(1)
33
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income
3,798
3,794
3,794
4
Other comprehensive income (loss), net of tax
(436)
(436)
(436)
Cash dividends paid
(1,502)
(1,500)
(1,500)
(2)
Issuance of shares under equity-based compensation plans (in shares)
1.3
Issuance of shares under equity-based compensation plans
94
94
96
(2)
Changes in noncontrolling interest of consolidated subsidiaries - net
8
8
Repurchase of shares (in shares)
(7.8)
Repurchase of shares
(2,500)
(2,500)
(2,500)
Balance at end of period (in shares) at Dec. 31, 2024
392.9
Balance at end of period at Dec. 31, 2024
18,531
18,488
$ 4
12,731
10,096
(4,342)
(1)
43
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income
4,090
4,087
4,087
3
Other comprehensive income (loss), net of tax
223
223
223
Cash dividends paid
(1,628)
(1,626)
(1,626)
(2)
Issuance of shares under equity-based compensation plans (in shares)
0.7
Issuance of shares under equity-based compensation plans
106
106
107
(1)
Repurchase of shares (in shares)
(5.7)
Repurchase of shares
(1,854)
(1,854)
(1,854)
Balance at end of period (in shares) at Dec. 31, 2025
387.9
Balance at end of period at Dec. 31, 2025
$ 19,469
$ 19,425
$ 4
$ 12,837
$ 10,702
$ (4,118)
$ 0
$ 44
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v3.26.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information and Basis of Presentation
Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is helping to solve the world’s most urgent power management challenges and building a more sustainable society for people today and for future generations.
Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of $27.4 billion in 2025, the Company serves customers in 180 countries.
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and notes. Actual results could differ from these estimates. Management has evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of Eaton and all subsidiaries and other entities it controls. Intercompany transactions and balances have been eliminated. The equity method of accounting is used for investments in associate companies where the Company has significant influence and generally a 20% to 50% ownership interest. Equity investments are evaluated for impairment whenever events or circumstances indicate the book value of the investment exceeds fair value. An impairment would exist if there is an other-than-temporary decline in value. Investments in associate companies included in Other assets on the Consolidated Balance Sheets were $903 million and $872 million as of December 31, 2025 and 2024, respectively. Income from these investments was $8 million, $12 million, and $20 million for 2025, 2024 and 2023, respectively, and reported in Other expense (income) - net on the Consolidated Statements of Income. Eaton does not have off-balance sheet arrangements with unconsolidated entities.
Eaton's reporting currency is United States Dollars (USD). The functional currency for most subsidiaries is their local currency. Financial statements for these subsidiaries are translated at exchange rates in effect at the balance sheet date as to assets and liabilities and weighted-average exchange rates as to revenues and expenses. The resulting translation adjustments are recognized in Accumulated other comprehensive loss. Monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary are remeasured to the functional currency at the exchange rate in effect at the balance sheet date. 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. Gains from the remeasurement of foreign currency were $13 million, $15 million, and $27 million for 2025, 2024 and 2023, respectively, net of the impact of currency exchange contracts.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Adoption of New Accounting Standards
Eaton adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), in the fourth quarter of 2025 on a prospective basis. This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. The adoption of the standard did not have a material impact on the consolidated financial statements.
Eaton adopted Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05), in the fourth quarter of 2025 on a prospective basis. This accounting standard provides a practical expedient allowing entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses. The adoption did not have a material impact on the consolidated financial statements and related disclosures.
Goodwill and Indefinite Life Intangible Assets
Goodwill is evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis. Additionally, goodwill is evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets. The Company’s reporting units are equivalent to the business segments, except for the Aerospace segment which has two reporting units. Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results. The Company performs a quantitative analysis using a discounted cash flow model and other valuation techniques, but may elect to perform a qualitative analysis.
The annual goodwill impairment test was performed using a qualitative analysis in 2025 for all reporting units other than the legacy eMobility reporting unit which used a quantitative analysis in 2025. The annual goodwill impairment test was performed using a quantitative analysis in 2024 for all reporting units other than the legacy Vehicle and eMobility reporting units which used a qualitative analysis in 2024. A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
Quantitative analyses were performed by estimating the fair value of the reporting unit using a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The future cash flows were based on the Company's long-term operating plan and a terminal value was used to estimate the reporting unit's cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions. Sensitivity analyses were performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
Based on these analyses performed in 2025 and 2024, the fair value of Eaton's reporting units continue to substantially exceed their respective carrying amounts and thus, no impairment exists.
Indefinite life intangible assets consist of certain trademarks. They are evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis to determine whether their fair values exceed their respective carrying amounts. Indefinite life intangible asset impairment testing for 2025 and 2024 was performed using a quantitative analysis. The Company determines the fair value of these assets using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows, and profitability. Additionally, indefinite life intangible assets are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired. For 2025 and 2024, the fair value of indefinite lived intangible assets exceeded the respective carrying value.
For additional information about goodwill and other intangible assets, see Note 6.
Leases
The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton typically uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease.
Other Long-Lived Assets
Depreciation and amortization for property, plant and equipment, and intangible assets subject to amortization, are generally computed by the straight-line method and included in Cost of products sold, Selling and administrative expense, and Research and development expense, as appropriate. The Company uses the following depreciation and amortization periods:
Category Estimated useful life or amortization period
Buildings
Generally 40 years
Machinery and equipment
3 - 10 years
Software
5 - 15 years
Customer relationships, certain trademarks, and patents and technology
Weighted-average of 18 years
Other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The asset group would be considered impaired when the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value. Determining asset groups and underlying cash flows requires the use of significant judgment.
Retirement Benefits Plans
For the principal pension plans in the United States, Canada, Puerto Rico, and the United Kingdom, the Company uses a market-related value of plan assets to calculate the expected return on assets used to determine net periodic benefit costs. The market-related value of plan assets is a calculated value that recognizes changes in the fair value of plan assets over a five year period. All other plans use fair value of plan assets.
Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor. The Company’s corridors are set at either 8% or 10%, depending on the plan, of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If most or all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used. The amortization periods on a weighted average basis for United States and Non-United States pension plans are approximately 21 years and 10 years, respectively. The amortization period for other postretirement benefits plans is 9 years.
Asset Retirement Obligations
A conditional asset retirement obligation is recognized at fair value when incurred if the fair value of the liability can be reasonably estimated. Uncertainty about the timing or method of settlement of a conditional asset retirement obligation would be considered in the measurement of the liability when sufficient information exists. Eaton believes that for substantially all of its asset retirement obligations, there is an indeterminate settlement date because the range of time over which the Company may settle the obligation is unknown or cannot be estimated. A liability for these obligations will be recognized when sufficient information is available to estimate fair value.
Income Taxes
Deferred income tax assets and liabilities are determined based on the difference between the financial statement and tax basis of the respective assets and liabilities, using enacted tax rates in effect for the year when the differences are expected to reverse. Deferred income tax assets are recognized for income tax loss carryforwards and income tax credit carryforwards. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Eaton evaluates and adjusts the amount of unrecognized income tax benefits based on changes in facts and circumstances. Eaton recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense. Eaton's policy is to recognize income tax effects from accumulated other comprehensive income when individual units of account are sold, terminated, or extinguished. For additional information about income taxes, see 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 commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.
Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated as part of a hedging relationship, is effective and the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:
•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.
•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.
•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.
The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Consolidated Statements of Cash Flows. For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.
Eaton uses currency exchange contracts and certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). The Company uses the spot rate method to assess hedge effectiveness when currency exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging relationship and the forward points are amortized to Interest expense - net on a straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Consolidated Statements of Cash Flows.
Currency exchange contracts not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 95% to 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Consolidated Statements of Cash Flows.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiring costs to be capitalized when (1) the Company authorizes and commits to funding the software project and (2) it is probable the software project will be completed. The standard also requires additional annual and interim disclosures, including the capitalized software balance and accumulated amortization. ASU 2025-06 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2027, with early adoption permitted and may be applied prospectively, retrospectively, or using a modified prospective transition approach. The Company is evaluating the impact of ASU 2025-06 to the consolidated financial statements and related disclosures.
In December 2025, the FASB issued Accounting Standards Update 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities (ASU 2025-10). This accounting standard requires a government grant to be recognized when (1) it is probable the conditions of the grant will be met and (2) the grant will be received. ASU 2025-10 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2028, with early adoption permitted and may be applied using a modified prospective approach, modified retrospective approach, or a retrospective approach. The Company is evaluating the impact of ASU 2025-10 to the consolidated financial statements and related disclosures.
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v3.26.3
ACQUISITIONS AND DIVESTITURE OF BUSINESSES
12 Months Ended
Dec. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]
ACQUISITIONS AND DIVESTITURE OF BUSINESSES
ACQUISITIONS AND DIVESTITURE OF BUSINESSES
Acquisition of a 49% stake in Jiangsu Ryan Electrical Co. Ltd.
On April 23, 2023, Eaton acquired a 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment.
Acquisition of Exertherm
On May 20, 2024, Eaton acquired Exertherm, a U.K.-based provider of thermal monitoring solutions for electrical equipment. Exertherm is reported within the Electrical Americas business segment.
Acquisition of a 49% stake in NordicEPOD AS
On May 31, 2024, Eaton acquired a 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment.
Acquisition of Fibrebond Corporation
On April 1, 2025, Eaton acquired Fibrebond Corporation (Fibrebond) for $1.43 billion, net of cash acquired. Fibrebond is a U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers. Fibrebond had sales of approximately $378 million for the twelve months ended February 28, 2025, and is reported within the Electrical Americas business segment.
The acquisition of Fibrebond has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of December 31, 2025. The Company is finalizing its review of the preliminary estimates, primarily related to third-party valuations for Other intangible assets and Property, plant and equipment, which may result in additional adjustments to these estimates. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.
(In millions) Preliminary Allocation Measurement Period Adjustments Adjusted Preliminary Allocation
Accounts receivable $ 50 $ (5) $ 45
Inventory 96 5 101
Prepaid expenses and other current assets 72 (5) 67
Property, plant and equipment 104 13 117
Other intangible assets 709 6 715
Other assets 3 — 3
Accounts payable (48) — (48)
Other current liabilities (106) 26 (80)
Other noncurrent liabilities (2) (23) (25)
Total identifiable net assets $ 878 $ 17 $ 895
Goodwill 572 (32) 540
Total consideration, net of cash received $ 1,450 $ (15) $ 1,435
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Fibrebond. Goodwill recognized as a result of the acquisition is deductible for tax purposes. The adjusted preliminary estimated fair value of the customer relationships, technology, trademarks and backlog intangible assets of $410 million, $171 million, $74 million and $60 million, respectively were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The estimated useful lives for the customer relationships, technology, trademarks and backlog intangible assets were 17 years, 9 years, 17 years and 2 years, respectively. See Note 6 for additional information about goodwill and other intangible assets.
As part of the acquisition, Eaton assumed $240 million of employee transaction and retention awards. Awards vest in six equal annual installments starting in the second quarter of 2025, subject to continued employment with Eaton. Forfeited employee awards are paid to former Fibrebond shareholders annually. Eaton recognizes compensation expense for the awards over the requisite service period and any employee forfeitures owed to former Fibrebond shareholders are expensed immediately in Other expense (income) - net. During 2025, compensation expense of $51 million, $16 million and $15 million were included in Costs of products sold, Selling and administrative expense, and Other expense (income) - net, respectively, on the Consolidated Statements of Income.
Eaton's 2025 consolidated financial statements include Fibrebond results of operations, including segment operating profit of $156 million on sales of $474 million, from the date of acquisition through December 31, 2025.
Acquisition of Resilient Power Systems Inc.
On August 6, 2025, Eaton acquired Resilient Power Systems Inc. (Resilient), a leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology. Resilient was acquired for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration based on 2025 through 2028 revenue performance and achievement of technology-based milestones. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in milestone achievements and discount rates, with a maximum possible undiscounted value of $45 million. Resilient is reported within the Electrical Americas business segment.
As part of the acquisition, Eaton assumed employee incentives with a maximum payout of $50 million contingent upon achievement of the same revenue performance and technology-based milestones, as well as continued employment with Eaton. The incentives will be paid over three years, starting in 2026 and concluding in 2028. As of December 31, 2025, the Company expects to pay $38 million of employee incentives based on the estimated probability of the milestones being achieved. Compensation expense will be recognized over the requisite service period. For 2025, compensation expense of $10 million was included in Selling and administrative expense on the Consolidated Statements of Income.
Agreement to Acquire Boyd Thermal
On November 2, 2025, Eaton signed an agreement to acquire Boyd Thermal, a U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. Boyd Thermal employs more than 5,000 people with manufacturing sites across North America, Asia, and Europe. Under the terms of the agreement, Eaton will pay $9.5 billion for Boyd Thermal. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2026.
Acquisition of Ultra PCS Limited
On January 23, 2026, Eaton acquired Ultra PCS Limited (Ultra PCS) for $1.53 billion, net of cash acquired. Ultra PCS is headquartered in the U.K. with operations in the U.K. and the U.S. Ultra PCS produces electronic controls, sensing, stores ejection and data processing solutions, enabling mission success for global aerospace customers in the air and on the ground. Ultra PCS will be reported within the Aerospace business segment.
The acquisition of Ultra PCS will be accounted for using the acquisition method of accounting. Due to the timing of the closing date, the Company is unable to provide the preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date.
Spin-off of Mobility business
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of its legacy Vehicle and eMobility operating segments, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
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v3.26.3
REVENUE RECOGNITION
12 Months Ended
Dec. 31, 2025
Revenue from Contract with Customer [Abstract]
REVENUE RECOGNITION
REVENUE RECOGNITION
Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.
The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when title and risk and rewards of ownership have transferred to the customer. Sales recognized over time were approximately 7% of Eaton’s consolidated Net sales in 2025 and less than 5% of consolidated Net sales in 2024 and 2023. Sales recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. Sales for service contracts generally are recognized as the services are provided. For agreements with multiple performance obligations, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, we generally allocate sales price to each distinct obligation based on the price of each item sold in separate transactions.
Due to the nature of the work required to be performed for obligations recognized over time, Eaton estimates total costs by contract. The estimate of total costs are subject to judgment. Estimated amounts are included in the recognized sales price to the extent it is not probable that a significant reversal of cumulative sales will occur. Additionally, contracts can be modified to account for changes in contract specifications, requirements or sale price. The effect of a contract modification on the sales price or adjustments to the measure of completion under the input method are recognized as adjustments to revenue on a cumulative catch-up basis.
Payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is not significant. Eaton does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. Sales, value added, and other taxes collected concurrent with revenue are excluded from Net sales. Shipping and handling costs are treated as fulfillment costs and are included in Cost of products sold.
Eaton records reductions to sales for returns, and customer and distributor incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience, trend analysis, and projected market conditions in the various markets served. The rebate programs offered vary across businesses due to the numerous markets Eaton serves, but the most common incentives relate to amounts paid or credited to customers for achieving defined volume levels. Accrued rebates of $360 million and $361 million as of December 31, 2025 and 2024, respectively, are generally paid annually and are included in Other current liabilities. Returns are estimated at the time of the sale primarily based on historical experience and are recorded gross on the Consolidated Balance Sheets.
Sales commissions are expensed when the amortization period is less than a year and are generally not capitalized as they are typically earned at the completion of the contract when the customer is invoiced or when the customer pays Eaton.
Sales of products and services varies by segment and are discussed in Note 18.
In the Electrical Americas segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The majority of the sales in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
In the Electrical Global segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America, as well as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The majority of the sales contracts in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
In the Aerospace segment, sales contracts are primarily for aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. These sales contracts are primarily based on a customer’s purchase order, and frequently covered by terms and conditions included in a long-term agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. Our military contracts are primarily fixed-price contracts that are not subject to performance-based payments or progress payments from the customer.
Many of the products and services in power distribution and power quality services in the Electrical Americas and Electrical Global business segments and contracts to develop new products that are fully funded by customers in the Aerospace business segment meet the definition of continuous transfer of control to customers and are recognized over time. These products are engineered to a customer’s design specifications, have no alternative use to Eaton, and are controlled by the customer as evidenced by the customer’s contractual ownership of the work in process or our right to payment for work performed to date plus a reasonable margin. As control is transferring over time, sales are recognized based on the extent of progress towards completion of the obligation. Eaton generally uses an input method to determine the progress completed and sales are recorded proportionally as costs are incurred. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
In the Mobility segment, sales contracts are primarily for drivetrains, powertrain systems, mechanical, electrical, and electrical components and systems used in on-road and off-road vehicles. Sales contracts are primarily based on a customer’s purchase order or a blanket purchase order subject to firm releases, frequently covered by terms and conditions included in a master supply agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility.
In limited circumstances, primarily in the Electrical and Mobility segments, Eaton sells separately-priced warranties that extend the warranty coverage beyond the standard coverage offered on specific products. Sales for these separately-priced warranties are recorded based on their stand-alone selling price and are recognized as revenue over the length of the warranty period.
The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:
(In millions) 2025 2024 2023
Electrical Americas
Products $ 3,205 $ 3,009 $ 2,949
Systems 10,070 8,426 7,149
Total $ 13,276 $ 11,436 $ 10,098
Electrical Global
Products $ 3,885 $ 3,493 $ 3,462
Systems 2,930 2,755 2,622
Total $ 6,815 $ 6,248 $ 6,084
Aerospace
Original Equipment Manufacturers $ 1,640 $ 1,500 $ 1,350
Aftermarket 1,553 1,312 1,183
Industrial and Other 1,055 931 878
Total $ 4,249 $ 3,744 $ 3,413
Mobility
Vehicle $ 2,505 $ 2,790 $ 2,965
eMobility 604 662 636
Total $ 3,109 $ 3,451 $ 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $4,682 million and $4,079 million at December 31, 2025 and 2024, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $759 million and $330 million at December 31, 2025 and 2024, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized and not yet billed from increased business activity in 2025, higher revenue recognized over time in 2025, and unbilled receivables associated with the Fibrebond acquisition.
Changes in the deferred revenue liabilities are as follows:
(In millions) Deferred Revenue
Balance at January 1, 2024
$ 626
Customer deposits and billings 2,719
Revenue recognized in the period (2,712)
Translation (15)
Balance at December 31, 2024
$ 618
Customer deposits and billings 4,074
Revenue recognized in the period (3,854)
Deferred revenue from business acquisition 73
Translation 12
Balance at December 31, 2025
$ 923
Deferred revenue liabilities of $899 million and $602 million as of December 31, 2025 and 2024, respectively, were included in Other current liabilities on the Consolidated Balance Sheets with the remaining balance presented in Other noncurrent liabilities.
A significant portion of open orders placed with Eaton are by customers of electrical products and electrical system and services, original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at December 31, 2025 was approximately $19.8 billion. At December 31, 2025, approximately 69% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.
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-URI https://asc.fasb.org/1943274/2147479806/606-10-50-12
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-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
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-URI https://asc.fasb.org/1943274/2147479806/606-10-50-12
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-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
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-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
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-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
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-URI https://asc.fasb.org/1943274/2147479806/606-10-50-13
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v3.26.3
CREDIT LOSSES FOR RECEIVABLES
12 Months Ended
Dec. 31, 2025
Credit Loss [Abstract]
CREDIT LOSSES FOR RECEIVABLES
CREDIT LOSSES FOR RECEIVABLES
Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days.
Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-off based on historic experience adjusted for current market conditions. The Company's global credit department performs the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of current market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made.
Accounts receivable are net of an allowance for credit losses of $57 million and $55 million at December 31, 2025 and 2024, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.
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v3.26.3
INVENTORY
12 Months Ended
Dec. 31, 2025
Inventory Disclosure [Abstract]
INVENTORY
INVENTORY
Inventory is carried at lower of cost or net realizable value using the first-in, first-out (FIFO) method. Cost components include raw materials, purchased components, direct labor, indirect labor, utilities, depreciation, inbound freight charges, purchasing and receiving costs, and inspection costs.
The components of inventory are as follows:
December 31
(In millions) 2025 2024
Raw materials $ 1,726 $ 1,614
Work-in-process 1,034 1,038
Finished goods 1,961 1,576
Total inventory $ 4,721 $ 4,227
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v3.26.3
GOODWILL AND OTHER INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amount of goodwill by segment are as follows:
(In millions) January 1, 2024 Additions Translation December 31, 2024 Additions Translation December 31, 2025
Electrical Americas $ 7,415 $ 17 $ (35) $ 7,396 $ 581 $ 33 $ 8,010
Electrical Global 4,038 — (196) 3,842 — 314 4,156
Aerospace 2,901 — (45) 2,856 — 121 2,977
Mobility 623 — (5) 619 — 7 626
Total $ 14,977 $ 17 $ (281) $ 14,713 $ 581 $ 475 $ 15,769
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. The Company's reporting units are equivalent to the business segments, except for the Aerospace segment which continues to have two reporting units.
As a result of the re-segmentation, the goodwill of the legacy Vehicle and eMobility reporting units was combined and assigned to the new Mobility reporting unit. The re-segmentation did not result in a reallocation of goodwill using a relative fair value methodology, as the re-segmentation resulted in a combination of previously existing reporting units and did not change the composition of other reporting units.
The 2025 additions to goodwill relate primarily to the anticipated synergies of acquiring Fibrebond and Resilient. The allocation of the purchase price from these acquisitions are preliminary and will be completed during the measurement period. The 2024 additions to goodwill relate primarily to the anticipated synergies of acquiring Exertherm.
A summary of other intangible assets is as follows:
December 31
2025 2024
(In millions) Historical
cost Accumulated
amortization Historical
cost Accumulated
amortization
Intangible assets not subject to amortization
Trademarks $ 1,215 $ 1,200
Intangible assets subject to amortization
Customer relationships $ 5,236 $ 2,934 $ 4,659 $ 2,577
Patents and technology 2,225 1,191 1,979 1,056
Trademarks 1,214 787 1,107 693
Other 235 159 169 131
Total intangible assets subject to amortization $ 8,911 $ 5,071 $ 7,915 $ 4,456
Amortization expense related to intangible assets subject to amortization in 2025, and estimated amortization expense for each of the next five years, is as follows
(In millions)
2025 $ 461
2026 469
2027 438
2028 365
2029 328
2030 286
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v3.26.3
SUPPLY CHAIN FINANCE PROGRAM
12 Months Ended
Dec. 31, 2025
Payables and Accruals [Abstract]
SUPPLY CHAIN FINANCE PROGRAM
SUPPLY CHAIN FINANCE PROGRAM
The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, a third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. If a supplier elects to participate in the SCF program, the supplier decides which invoices are sold to the financial institution and the Company has no economic interest in a supplier’s decision to sell an invoice. Payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. The amounts due to the financial institution for suppliers that participate in the SCF program are included in Accounts payable on the Consolidated Balance Sheets, and the associated payments are included in operating activities on the Consolidated Statements of Cash Flows.
The changes in SCF obligations are as follows:
(In millions) SCF Obligations
Balance at January 1, 2024
$ 369
Invoices confirmed during the period 1,424
Invoices paid during the period (1,389)
Translation (6)
Balance at December 31, 2024
398
Invoices confirmed during the period 1,728
Invoices paid during the period (1,583)
Balance at December 31, 2025
$ 543
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-Paragraph 3
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v3.26.3
LEASES
12 Months Ended
Dec. 31, 2025
Leases [Abstract]
LEASES
LEASES
Eaton leases certain manufacturing facilities, warehouses, distribution centers, office space, vehicles, and equipment. Most real estate leases contain renewal options. The exercise of lease renewal options is at the Company's sole discretion. The Company's lease agreements typically do not contain any significant guarantees of asset values at the end of a lease or restrictive covenants, with the exception of the non-cancellable synthetic lease discussed below. Payments within certain lease agreements are adjusted periodically for changes in an index or rate.
The components of lease expense are as follows:
(In millions) 2025 2024 2023
Operating lease cost $ 251 $ 227 $ 200
Finance lease cost:
Amortization of lease assets 9 12 15
Interest on lease liabilities 1 1 1
Short-term lease cost 23 19 18
Variable lease cost 26 29 28
Sublease income (1) (1) (1)
Total lease cost $ 309 $ 287 $ 261
During 2025, 2024 and 2023, Eaton entered into sale leaseback transactions primarily for certain non-production facilities and recorded gains of $38 million, $56 million and $53 million, respectively, in Other expense (income) - net. The terms of the new operating leases ranged from 2 to 15 years.
In March 2025, Eaton entered into a non-cancellable synthetic lease for a manufacturing facility, for which the Company is the construction agent. Construction costs are expected to be approximately $185 million. The lease will commence upon completion of construction of the facility which is expected to be in the first half of 2027. The term of the lease is five years after commencement. At the end of the lease term, Eaton will be required to either negotiate a renewal of the lease, purchase the facility, or sell the facility. Upon lease commencement, the lease classification will be determined and the lease asset and lease liability recognized. The lease arrangement contains a residual value guarantee of approximately 85% of the total construction cost.
Supplemental cash flow information related to leases is as follows:
(In millions) 2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - payments on operating leases $ (198) $ (200) $ (180)
Operating cash outflows - interest payments on finance leases (1) (1) (1)
Financing cash outflows - payments on finance lease obligations (9) (14) (18)
Lease assets obtained in exchange for new lease obligations, including leases acquired:
Operating leases $ 193 $ 268 $ 183
Finance leases 6 13 38
Supplemental balance sheet information related to leases is as follows:
December 31
(In millions) 2025 2024
Operating Leases
Operating lease assets $ 768 $ 806
Other current liabilities 152 163
Operating lease liabilities 637 669
Total operating lease liabilities $ 789 $ 832
Finance Leases
Land and buildings $ 9 $ 5
Machinery and equipment 47 61
Accumulated depreciation (31) (37)
Net property, plant and equipment $ 25 $ 29
Current portion of long-term debt $ 7 $ 9
Long-term debt 18 19
Total finance lease liabilities $ 25 $ 28
December 31
2025 2024
Weighted-average remaining lease term
Operating leases 8.0 years 7.1 years
Finance leases 4.7 years 4.2 years
Weighted-average discount rate
Operating leases 4.7 % 4.4 %
Finance leases 3.8 % 3.7 %
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) Operating Leases Finance Leases
2026 $ 183 $ 8
2027 150 7
2028 122 4
2029 97 3
2030 72 2
Thereafter 332 3
Total lease payments 957 27
Less imputed interest 168 2
Total present value of lease liabilities $ 789 $ 25
LEASES
LEASES
Eaton leases certain manufacturing facilities, warehouses, distribution centers, office space, vehicles, and equipment. Most real estate leases contain renewal options. The exercise of lease renewal options is at the Company's sole discretion. The Company's lease agreements typically do not contain any significant guarantees of asset values at the end of a lease or restrictive covenants, with the exception of the non-cancellable synthetic lease discussed below. Payments within certain lease agreements are adjusted periodically for changes in an index or rate.
The components of lease expense are as follows:
(In millions) 2025 2024 2023
Operating lease cost $ 251 $ 227 $ 200
Finance lease cost:
Amortization of lease assets 9 12 15
Interest on lease liabilities 1 1 1
Short-term lease cost 23 19 18
Variable lease cost 26 29 28
Sublease income (1) (1) (1)
Total lease cost $ 309 $ 287 $ 261
During 2025, 2024 and 2023, Eaton entered into sale leaseback transactions primarily for certain non-production facilities and recorded gains of $38 million, $56 million and $53 million, respectively, in Other expense (income) - net. The terms of the new operating leases ranged from 2 to 15 years.
In March 2025, Eaton entered into a non-cancellable synthetic lease for a manufacturing facility, for which the Company is the construction agent. Construction costs are expected to be approximately $185 million. The lease will commence upon completion of construction of the facility which is expected to be in the first half of 2027. The term of the lease is five years after commencement. At the end of the lease term, Eaton will be required to either negotiate a renewal of the lease, purchase the facility, or sell the facility. Upon lease commencement, the lease classification will be determined and the lease asset and lease liability recognized. The lease arrangement contains a residual value guarantee of approximately 85% of the total construction cost.
Supplemental cash flow information related to leases is as follows:
(In millions) 2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - payments on operating leases $ (198) $ (200) $ (180)
Operating cash outflows - interest payments on finance leases (1) (1) (1)
Financing cash outflows - payments on finance lease obligations (9) (14) (18)
Lease assets obtained in exchange for new lease obligations, including leases acquired:
Operating leases $ 193 $ 268 $ 183
Finance leases 6 13 38
Supplemental balance sheet information related to leases is as follows:
December 31
(In millions) 2025 2024
Operating Leases
Operating lease assets $ 768 $ 806
Other current liabilities 152 163
Operating lease liabilities 637 669
Total operating lease liabilities $ 789 $ 832
Finance Leases
Land and buildings $ 9 $ 5
Machinery and equipment 47 61
Accumulated depreciation (31) (37)
Net property, plant and equipment $ 25 $ 29
Current portion of long-term debt $ 7 $ 9
Long-term debt 18 19
Total finance lease liabilities $ 25 $ 28
December 31
2025 2024
Weighted-average remaining lease term
Operating leases 8.0 years 7.1 years
Finance leases 4.7 years 4.2 years
Weighted-average discount rate
Operating leases 4.7 % 4.4 %
Finance leases 3.8 % 3.7 %
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) Operating Leases Finance Leases
2026 $ 183 $ 8
2027 150 7
2028 122 4
2029 97 3
2030 72 2
Thereafter 332 3
Total lease payments 957 27
Less imputed interest 168 2
Total present value of lease liabilities $ 789 $ 25
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v3.26.3
DEBT
12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]
DEBT
DEBT
A summary of long-term debt, including the current portion, is as follows:
December 31
(In millions) 2025 2024
6.50% debentures due 2025
$ — $ 145
0.70% Euro notes due 2025
— 520
0.128% Euro notes due 2026
1,057 935
3.10% senior notes due 2027
700 700
4.35% senior notes due 2028
500 500
7.65% debentures due 2029
200 200
0.577% Euro notes due 2030
704 624
4.450% senior notes due 2030
500 —
3.601% Euro notes due 2031
587 520
4.00% senior notes due 2032
700 700
4.15% sustainability-linked senior notes due 2033
1,300 1,300
5.45% debentures due 2034
137 137
3.625% Euro notes due 2035
587 —
3.802% Euro notes due 2036
587 520
5.80% notes due 2037
240 240
4.15% senior notes due 2042
1,000 1,000
3.92% senior notes due 2047
300 300
4.70% senior notes due 2052
700 700
5.25% to 7.875% notes (maturities ranging from 2026 to 2035)
99 99
Finance leases 25 28
Deferred debt issuance costs (47) (45)
Unamortized discount (13) (7)
Fair value hedging adjustment 31 37
Total long-term debt 9,894 9,152
Less current portion of long-term debt (1,136) (674)
Long-term debt less current portion $ 8,758 $ 8,478
Substantially all these long-term debt instruments are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries (the Senior Notes). Further, as of December 31, 2025, all of these long-term debt instruments, except the 0.128% Euro notes due 2026, the 0.577% Euro notes due 2030, the 3.601% Euro notes due 2031, and the 3.802% Euro notes due 2036 are registered by Eaton Corporation under the Securities Act of 1933, as amended (the Registered Senior Notes).
On May 9, 2025, a subsidiary of Eaton issued Euro denominated notes (2025 Euro Notes) with a face amount of €500 million ($564 million). The 2025 Euro Notes mature in 2035 with interest payable annually at a rate of 3.625% per annum. The issuer received proceeds totaling €494 million ($558 million) from the 2025 Euro Notes issuance, net of financing costs and discounts. The 2025 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Euro Notes contain customary optional redemption and par call provisions. The 2025 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 2025 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Euro Notes. The 2025 Euro Notes are subject to customary non-financial covenants.
Also on May 9, 2025, the same subsidiary of Eaton issued senior notes (2025 Notes) with a face amount of $500 million. The 2025 Notes mature in 2030 with interest payable semi-annually at a rate of 4.45% per annum. The issuer received proceeds totaling $495 million from the 2025 Notes issuance, net of financing costs and discounts. The 2025 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Notes contain customary optional redemption and par call provisions. The 2025 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2025 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Notes. The 2025 Notes are subject to customary non-financial covenants.
On September 29, 2025, a subsidiary of Eaton entered into a new $3,000 million five-year revolving credit agreement that will expire on September 27, 2030 (New Revolving Credit Agreement), which replaced the $500 million 364-day revolving credit agreement dated September 30, 2024 and $2,500 million five-year revolving credit agreement dated October 3, 2022. The New Revolving Credit Agreement is used to support commercial paper borrowings and is 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 the New Revolving Credit Agreement at December 31, 2025. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which nonewas outstanding on December 31, 2025. On February 6, 2026, a subsidiary of Eaton exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The upsize was executed under the New Revolving Credit Agreement, and the facility’s maturity date remains unchanged at September 27, 2030. Also on February 6, 2026, the Company increased its commercial paper program from $3,000 million to $4,000 million.
On February 6, 2026, a subsidiary of Eaton entered into a senior unsecured delayed-draw term loan facility (Term Credit Agreement) in an aggregate principal amount of up to $8,000 million. The proceeds of the Term Credit Agreement, if drawn, will be used solely by the Company to finance a portion of the expected acquisition of Boyd Thermal. The Term Credit Agreement will mature and be payable in full on December 31, 2026 unless the Term Credit Agreement is terminated earlier pursuant to its terms. The Term Credit Agreement is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company has not drawn on the Term Credit Agreement.
In addition to the revolving credit facility, the Company also had available lines of credit of $872 million from various banks primarily for the issuance of letters of credit, of which there was $350 million outstanding at December 31, 2025. Borrowings outside the United States are generally denominated in local currencies.
Short-term debt of $1 million at December 31, 2025 was entirely comprised of short-term debt outside the United States. There was no short-term debt outstanding at December 31, 2024.
Eaton is in compliance with each of its debt covenants for all periods presented.
Maturities of long-term debt for each of the next five years are as follows:
(In millions)
2026 $ 1,136
2027 706
2028 504
2029 203
2030 1,206
Interest paid on debt is as follows:
(In millions)
2025 $ 351
2024 329
2023 319
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v3.26.3
RETIREMENT BENEFITS PLANS
12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]
RETIREMENT BENEFITS PLANS
RETIREMENT BENEFITS PLANS
Eaton has defined benefits pension plans and other postretirement benefits plans.
Obligations and Funded Status
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Funded status
Fair value of plan assets $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
Benefit obligations (2,650) (2,700) (2,038) (1,863) (194) (196)
Funded status $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in the Consolidated
Balance Sheets
Other assets $ — $ — $ 256 $ 231 $ — $ —
Other current liabilities (9) (29) (42) (31) (13) (14)
Pension liabilities and Other postretirement
benefits liabilities (172) (226) (530) (515) (161) (164)
Total $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in Accumulated other
comprehensive loss (pre-tax)
Net actuarial loss (gain) $ 847 $ 904 $ 738 $ 678 $ (72) $ (87)
Prior service cost 3 5 15 6 — —
Total $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
Change in Benefit Obligations
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,700 $ 2,824 $ 1,863 $ 2,022 $ 196 $ 212
Service cost 16 18 45 46 — 1
Interest cost 135 134 88 85 11 10
Actuarial loss (gain) 55 (20) 13 (82) 2 (11)
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 155 (87) 1 (3)
Plan amendments — 2 10 (3) — —
Other — — 3 3 11 16
Balance at December 31 $ 2,650 $ 2,700 $ 2,038 $ 1,863 $ 194 $ 196
Accumulated benefit obligation $ 2,650 $ 2,686 $ 1,925 $ 1,766
During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and was effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.
Actuarial losses related to changes in the United States and Non-United States benefit obligations in 2025 of $55 million and $13 million, respectively, were primarily due to decreases in the discount rates used to measure the obligations as well as unfavorable plan experience. Actuarial gains related to changes in the United States and Non-United States benefit obligations in 2024 of $20 million and $82 million, respectively, were primarily due to increases in the discount rates used to measure the obligations.
Change in Plan Assets
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,445 $ 2,604 $ 1,548 $ 1,633 $ 18 $ 17
Actual return on plan assets 250 84 111 (10) 2 1
Employer contributions 30 15 94 95 16 18
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 105 (52) — —
Other — — 3 3 11 11
Balance at December 31 $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
The components of pension plans with an accumulated benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Accumulated benefit obligation $ 2,650 $ 2,686 $ 640 $ 701
Fair value of plan assets 2,469 2,445 121 209
The components of pension plans with a projected benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Projected benefit obligation $ 2,650 $ 2,700 $ 738 $ 772
Fair value of plan assets 2,469 2,445 166 225
Other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets have been disclosed in the Obligations and Funded Status table.
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss are as follows:
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 909 $ 871 $ 684 $ 661 $ (87) $ (93)
Prior service cost arising during the year — 2 10 (3) — —
Net loss (gain) arising during the year (4) 86 30 62 1 (7)
Currency translation — — 54 (18) 1 —
Less amounts included in expense during the year (55) (50) (25) (18) 13 13
Net change for the year (59) 38 69 23 15 6
Balance at December 31 $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
The components of retirement benefits expense (income) are as follows:
United States
pension benefit expense Non-United States pension benefit expense Other postretirement
benefits expense (income)
(In millions) 2025 2024 2023 2025 2024 2023 2025 2024 2023
Service cost $ 16 $ 18 $ 19 $ 45 $ 46 $ 43 $ — $ 1 $ 1
Interest cost 135 134 142 88 85 85 11 10 10
Expected return on plan assets (190) (190) (195) (128) (134) (121) (1) (1) (1)
Amortization 15 9 4 16 11 7 (13) (13) (17)
(24) (29) (30) 21 8 14 (3) (3) (7)
Settlements, curtailments, and special termination benefits 40 41 34 9 7 4 — — —
Total expense (income) $ 16 $ 12 $ 4 $ 30 $ 15 $ 18 $ (3) $ (3) $ (7)
The components of retirement benefits expense (income) other than service costs are included in Other expense (income) - net.
Retirement Benefits Plans Assumptions
In 2025, 2024 and 2023, for purposes of determining liabilities related to the majority of its plans in the United States, the Company used the Pri-2012 mortality tables as well as mortality tables that are based on the Company's own experience and generational improvement scales that are based on MP-2021.
To estimate the service and interest cost components of net periodic benefit cost for the vast majority of its defined benefits pension and other postretirement benefits plans, the Company used a spot rate approach by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of the period to the relevant projected cash flows.
Pension Plans
United States
pension plans Non-United States
pension plans
2025 2024 2023 2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.34 % 5.61 % 5.14 % 5.11 % 4.92 % 4.52 %
Rate of compensation increase 3.05 % 3.32 % 3.40 % 3.13 % 3.16 % 3.17 %
Interest rate used to credit cash balance plans 4.56 % 4.79 % 4.01 % 2.50 % 2.01 % 1.59 %
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.61 % 5.14 % 5.47 % 4.92 % 4.52 % 4.83 %
Discount rate used to determine service cost 5.76 % 5.24 % 5.54 % 5.90 % 6.00 % 5.90 %
Discount rate used to determine interest cost 5.29 % 4.98 % 5.33 % 4.71 % 4.47 % 4.80 %
Expected long-term return on plan assets 7.00 % 6.50 % 6.50 % 6.63 % 6.79 % 6.32 %
Rate of compensation increase 3.32 % 3.40 % 3.33 % 3.16 % 3.17 % 3.12 %
Interest rate used to credit cash balance plans 4.79 % 4.01 % 3.67 % 2.01 % 1.59 % 2.32 %
The expected long-term rate of return on pension assets was determined for each country and reflects long-term historical data taking into account each plan's target asset allocation. The expected long-term rates of return on pension assets for United States pension plans and Non-United States pension plans for 2026 are 7.50% and 7.00%, respectively. The discount rates were determined using appropriate bond data for each country.
Other Postretirement Benefits Plans
Substantially all of the obligation for other postretirement benefits plans relates to United States plans. Assumptions used to determine other postretirement benefits obligations and expense are as follows:
Other postretirement
benefits plans
2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.24 % 5.57 % 5.11 %
Health care cost trend rate assumed for next year 6.50 % 6.70 % 7.70 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2035 2034 2033
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.57 % 5.11 % 5.46 %
Discount rate used to determine service cost 5.84 % 5.25 % 5.53 %
Discount rate used to determine interest cost 5.29 % 4.96 % 5.32 %
Initial health care cost trend rate 6.70 % 7.70 % 7.10 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2034 2033 2031
Employer Contributions to Retirement Benefits Plans
Contributions to pension plans that Eaton expects to make in 2026, and made in 2025, 2024 and 2023, are as follows:
(In millions)
Expected in 2026
2025 2024 2023
United States plans $ 9 $ 30 $ 15 $ 16
Non-United States plans 89 94 95 97
Total contributions $ 98 $ 124 $ 110 $ 113
The following table provides the estimated pension and other postretirement benefit payments for each of the next five years, and the five years thereafter in the aggregate. For other postretirement benefits liabilities, the Company expects minor subsidy receipts related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that would reduce the estimated payments listed below.
(In millions) Estimated
United States
pension payments Estimated
non-United States
pension payments Estimated other postretirement
benefit payments
2026 $ 276 $ 135 $ 15
2027 259 135 19
2028 250 136 18
2029 241 141 17
2030 226 144 17
2031 - 2035
1,008 757 75
Pension Plan Assets
Investment policies and strategies are developed on a country and plan specific basis. The United States plan, representing 59% of worldwide pension assets, and the United Kingdom plans representing 26% of worldwide pension assets, are invested primarily in debt securities largely for liability hedging, as the majority of the assets are in plans that are well-funded. In general, the plans are primarily allocated to diversified high-quality publicly traded debt, primarily through separately managed accounts and commingled funds in the form of common collective and other trusts. The United States plan's target allocation is 21% United States equities, 11% non-United States equities, 4% public real estate (primarily equity of real estate investment trusts), 46% debt securities and 18% other, including private equity, private debt and cash equivalents. The United Kingdom plans' target asset allocations are 16% equities and the remainder in debt securities, cash equivalents and real estate investments. The equity risk for the plans is managed through broad diversification across industries, geographies, and levels of market capitalization. The majority of debt allocations for these plans are longer duration government and corporate debt. The United States, United Kingdom and Canada pension plans are authorized to use derivatives, including the use of futures, swaps and options, to achieve more economically desired market exposures.
Fair Value Measurements
Financial instruments included in pension and other postretirement benefits plan assets are categorized into a fair value hierarchy of three levels, based on the degree of subjectivity inherent in the valuation methodology are as follows:
Level 1 -Quoted prices (unadjusted) for identical assets in active markets.
Level 2 -Quoted prices for similar assets in active markets, and inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 -Unobservable prices or inputs.
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables to permit a reconciliation to total plan assets.
Pension Plans
A summary of the fair value of pension plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2025
Common collective trusts
Non-United States equity and global equities $ 211 $ — $ 211 $ —
Fixed income 32 — 32 —
Fixed income securities 1,647 — 1,647 —
United States treasuries 258 255 3 —
Real estate 248 100 32 116
Cash equivalents 49 25 24 —
Exchange traded funds 105 105 — —
Other 419 — 50 369
Common collective and other trusts measured at net asset value
1,287
Money market funds measured at net asset value 2
Pending purchases and sales of plan assets, and interest
receivable (67)
Total pension plan assets $ 4,191 $ 485 $ 1,999 $ 485
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $158 million at December 31, 2025, which will be satisfied by a reallocation of pension plan assets.
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2024
Common collective trusts
Non-United States equity and global equities $ 241 $ — $ 241 $ —
Fixed income 28 — 28 —
Fixed income securities 1,582 — 1,582 —
United States treasuries 461 453 8 —
Real estate 212 63 25 124
Cash equivalents 83 55 28 —
Exchange traded funds 91 91 — —
Other 402 — 40 362
Common collective and other trusts measured at net asset value
978
Pending purchases and sales of plan assets, and interest
receivable (85)
Total pension plan assets $ 3,993 $ 662 $ 1,952 $ 486
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer, and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $128 million at December 31, 2024, which will be satisfied by a reallocation of pension plan assets.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2025 and 2024 due to the following:
(In millions) Real estate Other Total
Balance at January 1, 2024 $ 199 $ 370 $ 569
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
(24) 29 5
Purchases, sales, settlements - net
(51) (37) (88)
Transfers into or out of Level 3 — — —
Balance at December 31, 2024 124 362 486
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
14 32 46
Purchases, sales, settlements - net
(22) (25) (47)
Transfers into or out of Level 3 — — —
Balance at December 31, 2025 $ 116 $ 369 $ 485
Other Postretirement Benefits Plans
A summary of the fair value of other postretirement benefits plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2025
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
17
Total other postretirement benefits plan assets $ 20 $ 3 $ — $ —
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2024
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
15
Total other postretirement benefits plan assets $ 18 $ 3 $ — $ —
Valuation Methodologies
Following is a description of the valuation methodologies used for pension and other postretirement benefits plan assets measured at fair value. There have been no changes in the methodologies used at December 31, 2025 and 2024.
Common collective and other trusts - Valued at the net unit value of units held by the trust at year end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned. The equity investments in collective trusts are predominantly in index funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. The investments in other trusts are predominantly in exchange traded funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. Common collective and other trusts measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets.
Fixed income securities - These securities consist of publicly traded United States and non-United States fixed interest obligations (principally corporate and government bonds and debentures). The fair value of corporate and government debt securities is determined through third-party pricing models that consider various assumptions, including time value, yield curves, credit ratings, and current market prices. The Company verifies the results of trustees or custodians and evaluates the pricing classification of these securities by performing analyses using other third-party sources.
United States treasuries - Valued at the closing price of each security.
Real estate - Consists of direct investments in the stock of publicly traded companies and investments in pooled funds that invest directly in real estate. The publicly traded companies are valued based on the closing price reported in an active market on which the individual securities are traded and as such are classified as Level 1. The pooled funds rely on appraisal-based valuations and as such are classified as Level 3.
Cash equivalents - Primarily certificates of deposit, commercial paper, and repurchase agreements.
Exchange traded funds - Valued at the closing price of the exchange traded fund's shares.
Money market funds - Money market funds measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets.
Other - These assets consist of private equity, private debt, insurance contracts primarily for international plans, futures contracts, and over-the-counter options. Investments in private equity and private debt are valued at net asset value or estimated fair value based on quarterly financial information received from the investment advisor, third party appraisal or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables and performance multiples. Futures contracts and options are valued based on the closing prices of contracts or indices as available using third-party sources.
For additional information regarding fair value measurements, see Note 15.
Defined Contribution Plans
The Company has various defined contribution benefit plans, primarily consisting of the plans in the United States. The total contributions related to these plans are charged to expense and are as follows:
(In millions)
2025 $ 239
2024 220
2023 201
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v3.26.3
COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2025
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Legal Contingencies
Eaton is subject to a broad range of claims, administrative proceedings, and legal proceedings, including, but not limited to, claims for punitive damages, penalties, and interest, in a variety of matters, including, but not limited to, contract, indemnity, tax, patent infringement, intellectual property, personal injury, commercial, warranty, product liability, environmental, antitrust and trade regulation, class action, and labor and employment matters. Eaton is also subject to legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with claims and proceedings involving Eaton. 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.
Environmental Contingencies
Eaton has established policies to ensure that its operations are conducted in keeping with good corporate citizenship and with a positive commitment to the protection of the natural and workplace environments. The Company requires that its businesses be certified to ISO 14001, an international standard for environmental management systems. The Company routinely reviews EHS performance at each of its manufacturing facilities and continuously strives to improve its environmental footprint, including carbon, waste, water and related operational profiles consistent with our sustainability goals.
Eaton is involved in remedial response and voluntary environmental remediation at a number of sites, including certain of its currently-owned or formerly-owned plants. The Company has also been named a potentially responsible party under the United States federal Superfund law, or the state equivalents thereof, at a number of disposal sites. The Company became involved in these sites as a result of government action or in connection with business acquisitions. At the end of 2025, the Company was involved with a total of 103 sites worldwide, including the Superfund sites mentioned above, with none of these sites being individually significant to the Company.
Remediation activities, generally involving soil and/or groundwater contamination, include pre-cleanup activities such as fact finding and investigation, risk assessment, feasibility study, design and action planning, performance (where actions may range from monitoring, to removal of contaminants, to installation of longer-term remediation systems), and operation and maintenance of a remediation system. The extent of expected remediation activities and costs varies by site. A number of factors affect the cost of environmental remediation, including the number of parties involved at a particular site, the determination of the extent of contamination, the length of time the remediation may require, the complexity of environmental regulations, and the continuing advancement of remediation technology. Taking these factors into account, Eaton has estimated the costs of remediation, which will be paid over a period of years. The Company accrues an amount on an undiscounted basis, consistent with the estimates of these costs, when it is probable that a liability has been incurred. Actual results may differ from these estimates. At December 31, 2025 and 2024, the Company had an accrual totaling $69 million and $70 million, respectively, for these costs.
Based upon Eaton's analysis and subject to the difficulty in estimating these future costs, the Company expects that any sum it may be required to pay in connection with environmental matters is not reasonably possible to exceed the recorded liability by an amount that would have a material effect on its financial position, results of operations or cash flows.
Warranty Accruals
Product warranty accruals are established at the time the related sale is recognized through a charge to Cost of products sold. Warranty accrual estimates are based primarily on historical warranty claim experience and specific customer contracts. Provisions for warranty accruals are comprised of basic warranties for products sold, as well as accruals for product recalls and other events when they are known and estimable. A summary of the current and long-term warranty accruals is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 150 $ 136 $ 125
Provision 82 81 100
Settled (60) (65) (91)
Warranty accruals from business acquisition and other 2 (3) 2
Balance at December 31 $ 174 $ 150 $ 136
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INCOME TAXES
12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]
INCOME TAXES
INCOME TAXES
Eaton Corporation plc is domiciled in Ireland. Income (loss) before income taxes and income tax expense (benefit) are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.
Income (loss) before income taxes
(In millions) 2025 2024 2023
Ireland $ 188 $ 183 $ (3)
Foreign 4,744 4,383 3,830
Total income before income taxes $ 4,932 $ 4,566 $ 3,827
Income tax expense (benefit)
(In millions) 2025 2024 2023
Current
Ireland $ 85 $ 128 $ 42
Foreign 711 794 744
Total current income tax expense 796 922 786
Deferred
Ireland (3) (16) 1
Foreign 48 (138) (183)
Total deferred income tax expense (benefit) 45 (154) (182)
Total income tax expense $ 841 $ 768 $ 604
Reconciliations of income taxes from the Ireland national statutory rate of 25% to the consolidated effective income tax rate are as follows:
2025
(Amounts in millions) Amount Percent
Income taxes at the applicable statutory rate $ 1,233 25.0 %
Ireland
Nontaxable or nondeductible items
Nondeductible interest expense 78 1.6 %
Other Adjustments
Tax rate differential - Ireland tax on trading income (61) (1.2) %
Other items - net 30 0.6 %
Foreign tax effects
United States
Tax rate differential (96) (1.9) %
State and local income taxes 62 1.3 %
Effect of cross-border tax laws – foreign derived intangible income
(64) (1.3) %
Other items - net (61) (1.2) %
United Arab Emirates
Tax rate differential (86) (1.7) %
Other items - net 32 0.6 %
Puerto Rico operations
Tax rate differential (71) (1.4) %
Other foreign jurisdictions (33) (0.7) %
Changes in unrecognized tax benefits (123) (2.5) %
Effective income tax expense rate $ 841 17.1 %
2024 2023
Income taxes at the applicable statutory rate 25.0 % 25.0 %
Ireland operations
Ireland tax on trading income (0.9) % (1.3) %
Nondeductible interest expense 0.9 % 2.6 %
Ireland other - net 1.2 % (0.2) %
Foreign operations
Earnings taxed at other than the applicable statutory tax rate (6.7) % (9.9) %
Other items (0.2) % 2.2 %
Worldwide operations
Adjustments to tax liabilities 0.1 % (0.2) %
Adjustments to valuation allowances (2.6) % (2.4) %
Effective income tax expense rate 16.8 % 15.8 %
During 2025, income tax expense of $841 million was recognized (an effective tax rate of 17.1%) compared to income tax expense of $768 million in 2024 (an effective tax rate of 16.8%) and income tax expense of $604 million in 2023 (an effective tax rate of 15.8%). The increase in the effective tax rate from 16.8% in 2024 to 17.1% in 2025 was primarily due to greater levels of income earned in higher tax jurisdictions. The increase in the effective tax rate from 15.8% in 2023 to 16.8% in 2024 was due to greater levels of income earned in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments and the reduction of valuation allowances on foreign tax attributes.
No provision has been made for income taxes on undistributed earnings of foreign subsidiaries at December 31, 2025, since it is the Company's intention to indefinitely reinvest undistributed earnings of its foreign subsidiaries. The Company expects to deploy capital to those markets which offer particularly attractive growth opportunities. The cash that is permanently reinvested is typically used to expand operations either organically or through acquisitions. It is not practicable to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings.
Worldwide income tax payments, net of tax refunds, are as follows:
(In millions) 2025
Ireland $ 105
Foreign
United States 374
Germany 72
Other foreign 358
Total income taxes paid $ 909
2024 total income taxes paid $ 752
2023 total income taxes paid 727
Deferred Income Tax Assets and Liabilities
Components of noncurrent deferred income taxes are as follows:
December 31
2025 2024
(In millions) Noncurrent assets and liabilities
Accruals and other adjustments
Employee benefits $ 250 $ 295
Depreciation and amortization (792) (791)
Other accruals and adjustments 609 460
Ireland income tax loss carryforwards 1 1
Foreign income tax loss carryforwards 3,784 3,674
Foreign income tax credit carryforwards 213 252
Valuation allowance for income tax loss and income tax credit carryforwards (3,623) (3,556)
Total deferred income taxes $ 442 $ 334
At December 31, 2025, Eaton Corporation plc and its foreign subsidiaries had income tax loss carryforwards and income tax credit carryforwards that are available to reduce future taxable income or tax liabilities. These carryforwards and their respective expiration dates are summarized below:
(In millions) 2026
through
2030 2031
through
2035 2036
through
2040 2041
through
2050 Not
subject to
expiration
Valuation
allowance
Ireland income tax loss carryforwards $ — $ — $ — $ — $ 8 $ —
Ireland deferred income tax assets for income tax loss
carryforwards — — — — 1 (1)
Foreign income tax loss carryforwards 26 739 10,914 208 6,396 —
Foreign deferred income tax assets for income tax loss carryforwards
6 179 2,608 51 943 (3,527)
Foreign deferred income tax assets for income tax loss carryforwards after ASU 2013-11
4 179 2,608 51 943 (3,527)
Foreign income tax credit carryforwards
148 48 27 20 43 (95)
Foreign income tax credit carryforwards after ASU 2013-11
82 45 23 20 43 (95)
Recoverability of Deferred Income Tax Assets
Eaton is subject to the income tax laws in the jurisdictions in which it operates. In order to determine its income tax provision for financial statement purposes, Eaton must make significant estimates and judgments about its business operations in these jurisdictions. These estimates and judgments are also used in determining the deferred income tax assets and liabilities that have been recognized for differences between the financial statement and income tax basis of assets and liabilities, and income tax loss carryforwards and income tax credit carryforwards.
Management evaluates the realizability of deferred income tax assets for each of the jurisdictions in which it operates. If the Company experiences cumulative pre-tax income in a particular jurisdiction in the three-year period including the current and prior two years, management normally concludes that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments, or changes in tax laws, would lead management to conclude otherwise. However, if the Company experiences cumulative pre-tax losses in a particular jurisdiction in the three-year period including the current and prior two years, management then considers a series of factors in the determination of whether the deferred income tax assets can be realized. These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, carryback capability under the tax law in the particular country, prudent and feasible tax planning strategies, changes in tax laws, and estimates of future earnings and taxable income using the same assumptions as those used for the Company's goodwill and other impairment testing. After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, management would conclude that no valuation allowance would be required. To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, management would establish a valuation allowance.
Applying the above methodology, valuation allowances have been established for certain deferred income tax assets to the extent they are not expected to be realized within the particular tax carryforward period.
Unrecognized Income Tax Benefits
A summary of gross unrecognized income tax benefits is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 1,361 $ 1,300 $ 1,235
Increases and decreases as a result of positions taken during prior years
Other increases, including currency translation 6 22 42
Other decreases, including currency translation (31) (22) (5)
Increases as a result of positions taken during the current year 86 93 86
Decreases relating to settlements with tax authorities (20) (18) (6)
Decreases as a result of a lapse of the applicable statute of limitations (102) (14) (52)
Balance at December 31 $ 1,300 $ 1,361 $ 1,300
Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in facts and circumstances. The Company does not enter into any of the United States Internal Revenue Service (IRS) Listed Transactions as set forth in Treasury Regulation 1.6011-4.
If all unrecognized income tax benefits were recognized, the net impact on the provision for income tax expense would be $813 million.
As of December 31, 2025 and 2024, Eaton had accrued approximately $218 million and $225 million, respectively, for the payment of worldwide interest and penalties, which are not included in the table of unrecognized income tax benefits above. Eaton recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense.
The Company believes that the final resolution of all the assessments discussed below will not have a material impact on its consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of any one of these matters deviate from our reasonable expectations, final resolution may have a material adverse impact on the Company’s consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct, and that its accrual of unrecognized income tax benefits is appropriate with respect to these matters.
Eaton or its subsidiaries file income tax returns in Ireland and many countries around the world. With only a few exceptions, Eaton and its subsidiaries are no longer subject to examinations for years before 2015.
Brazil Tax Years 2005-2012
The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $24 million plus $121 million of interest and penalties (translated at the December 31, 2025 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision. On May 20, 2022, the court largely upheld its prior decision without further clarification. On June 9, 2022, the Company filed its notice of appeal to the second level court. On July 11, 2024, the court published a favorable decision resulting in the cancellation of a portion of the penalties imposed by the tax authorities. As a result of the favorable decision, the alleged interest and penalties was reduced from $121 million to $82 million (translated at the December 31, 2025 exchange rate). The Company intends to continue its challenge of the assessment in the judicial system.
As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $30 million plus $120 million of interest and penalties (translated at the December 31, 2025 exchange rate), which the Company is challenging in the judicial system. On April 4, 2024, the court published a favorable decision resulting in a reduction to the Case 1 assessment for the goodwill generated from the acquisition of a third-party business. In the same decision, the court confirmed the cancellation of a portion of the penalties imposed by the tax authorities. In May 2025, Eaton obtained a favorable decision that cancelled a portion of the assessment due to the expiration of the statute of limitations. As a result of the favorable decisions, the alleged tax deficiency was reduced to $22 million plus $62 million of interest and penalties (translated at the December 31, 2025 exchange rate). The remainder of Case 1 is still pending resolution at the first judicial level.
Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of December 31, 2025, the Company pledged Brazilian real estate assets with net book value of $17 million and provided additional security in the form of bank secured bonds and insurance bonds totaling $101 million and a cash deposit of $28 million (translated at the December 31, 2025 exchange rate).
United States Tax Disputes
The IRS typically audits large corporate taxpayers on a continuous basis, generally resulting in many open tax years if there are disputed tax positions upon completion of the audits. The IRS has completed its examination of the consolidated income tax returns of the Company’s United States subsidiaries (Eaton US) for 2007 through 2016 and the statuses of the various tax years are discussed below. The IRS has challenged certain tax positions of Eaton US, and the Company is attempting to resolve those issues in litigation and the IRS administrative process, as described in more detail below. The IRS is currently examining tax years 2017 through 2019, and the statute of limitations for those years is open until December 31, 2027. Tax years 2020 and later are subject to future examination by the IRS. Income tax returns of states and localities within the United States will be reopened to the extent of United States federal income tax adjustments. For some states and localities, the statute of limitations is open as early as the 2007 tax year. The Eaton US tax positions challenged by the IRS are items that recur beyond the tax years for which the IRS has proposed adjustments. Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct. However, if there is a final unfavorable resolution of any of the issues discussed below, it may have a material adverse impact on the Company’s consolidated financial statements.
U.S. Tax Years 2007-2010
In 2014, the IRS issued a Statutory Notice of Deficiency for Eaton US for the 2007 through 2010 tax years (the 2007-10 Notice), which Eaton US contested in Tax Court. The 2007-10 Notice proposed assessments of $190 million in additional taxes plus $72 million in penalties, net of agreed credits and deductions. The proposed assessments pertained to: (i) transfer pricing adjustments for products manufactured in the Company's facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the United States, and (ii) the separate proposed assessment noted below. The proposed assessment in the 2007-10 Notice for transfer pricing adjustments has been resolved in Tax Court. Eaton US set its transfer prices for products sold between these affiliates at the same prices that Eaton US sells such products to third parties as required by two successive Advance Pricing Agreements (APAs) Eaton US entered into with the IRS that governed the 2005-2010 tax years. Eaton US has continued to apply the APA pricing methodology for 2011 through the current reporting period. In 2011, the IRS sent a letter to Eaton stating that it was retrospectively canceling the APAs. The issue in Tax Court involved whether the IRS improperly cancelled the APAs. On July 26, 2017, the Tax Court issued a ruling in which it agreed with Eaton US that the IRS must abide by the terms of the APAs for the tax years 2005-2006. On May 24, 2021, the IRS filed a notice to appeal the Tax Court’s ruling to the United States Sixth Circuit Court of Appeals. In July 2022, the Sixth Circuit panel heard oral arguments, and on August 25, 2022, issued a ruling in favor of Eaton US, confirming that the IRS must abide by the terms of the APAs. The Sixth Circuit Court of Appeals ruling for tax years 2005-2006 also resolved the APA cancellation issue for the 2007-2010 years. The ruling on the APA issue did not have a material impact on Eaton’s consolidated financial statements. Eaton and the IRS recognized that the ruling on the enforceability of the APA did not address a secondary issue regarding the transfer pricing for a certain royalty paid from 2006-2010. On November 15, 2023, the IRS also agreed to use the royalty rate reported by Eaton for the 2007-2010 tax years. On October 21, 2024, the IRS confirmed to the Tax Court that the Company was not liable for penalties related to the APA cancellation issue.
The 2007-10 Notice also included a separate proposed assessment involving the recognition of income for several of Eaton US’s controlled foreign corporations. The Company believes that the proposed assessment is without merit and contested the matter in Tax Court. In October 2017, Eaton and the IRS both moved for partial summary judgment on this issue. On February 25, 2019, the Tax Court granted the IRS’s motion for partial summary judgment and denied Eaton’s. The Company intends to appeal the Tax Court’s partial summary judgment decision to the United States Sixth Circuit Court of Appeals. The total potential impact of the Tax Court's partial summary judgment decision on the controlled foreign corporation income recognition issue is not estimable until all matters in the open tax years have been resolved.
U.S. Tax Years 2011-2013
In 2018, the IRS completed its examination of Eaton US for tax years 2011 through 2013 and proposed adjustments. Those adjustments were the subject of administrative appeals, which concluded without resolution. As a result, on December 21, 2022, the IRS issued Statutory Notices of Deficiency for Eaton US for these tax years (the 2011-2013 Notice) proposing assessments of $749 million in additional taxes plus $110 million in penalties, net of agreed credits and deductions. The proposed assessments pertain to: (i) transfer pricing adjustments similar to those proposed in the 2007-10 Notice for products manufactured in the Company’s facilities in Puerto Rico and the Dominican Republic and sold to affiliated companies located in the U.S.; (ii) adjustments involving the recognition of income for several of Eaton US’s controlled foreign corporations; (iii) transfer pricing adjustments for products manufactured in one of the Company’s facilities in Mexico and sold to affiliated companies located in the U.S.; and (iv) adjustments challenging the appropriate interest rate on intercompany debt and amount of intercompany fees charged for financial guarantees on external debt. On March 3, 2023, the Company filed its petition to the U.S. Tax Court. Of the four categories of proposed assessments, Eaton's dispute regarding the IRS adjustments related to interest rates and guarantee fees was heard in the U.S. Tax Court in November and December 2025. The timing of when the Tax Court will issue its decision is uncertain. The Company will vigorously defend its positions through litigation, which will take several years for final resolution.
U.S. Tax Years 2014-2016
In 2021, the IRS completed its examination of Eaton US for tax years 2014 through 2016 and has proposed adjustments, including: (i) transfer pricing adjustments similar to those proposed in the 2007-10 and 2011-2013 Notices for products manufactured in the Company’s facilities in Puerto Rico, and the Dominican Republic and sold to affiliated companies located in the U.S.; (ii) transfer pricing adjustments similar to those proposed in the 2011-2013 Notice for products manufactured in one of the Company’s facilities in Mexico and sold to affiliated companies located in the U.S.; and (iii) adjustments similar to those proposed in the 2011-2013 Notice challenging the appropriate interest rate on intercompany debt and amount of intercompany fees charged for financial guarantees on external debt. On November 29, 2021, the case was formally assigned to administrative appeals, and the Company will attempt to resolve certain of the issues in this administrative forum. However, if acceptable resolutions are not achieved, the Company will vigorously defend its positions through litigation, which if undertaken will likely take several years for final resolution. The statute of limitations on these tax years currently remains open until December 31, 2026.
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v3.26.3
EATON SHAREHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2025
Equity [Abstract]
EATON SHAREHOLDERS' EQUITY
EATON SHAREHOLDERS' EQUITY
There are 750 million Eaton ordinary shares authorized ($0.01 par value per share), 387.9 million and 392.9 million of which were issued and outstanding at December 31, 2025 and 2024, respectively. Eaton's Memorandum and Articles of Association authorized 40 thousand deferred ordinary shares (€1.00 par value per share) and 10 thousand preferred A shares ($1.00 par value per share), all of which were issued and outstanding at December 31, 2025 and 2024, and 10 million serial preferred shares ($0.01 par value per share), none of which is outstanding at December 31, 2025 and 2024. At December 31, 2025, there were 8,691 holders of record of Eaton ordinary shares. Additionally, 13,766 current and former employees were shareholders through participation in the Eaton Savings Plan, the Eaton Personal Investment Plan, or The Eaton Puerto Rico Retirement Savings Plan.
On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 2025 and 2024, 5.7 million and 7.8 million ordinary shares were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $1.9 billion and $2.5 billion, respectively. During 2023, no ordinary shares were repurchased.
Eaton has deferral plans that permit certain employees and directors to defer a portion of their compensation. A trust contains $3 million of ordinary shares and marketable securities at December 31, 2025 and 2024 to fund a portion of these liabilities. The marketable securities were included in Other assets and the ordinary shares were included in Shareholders' equity at historical cost.
On February 26, 2026, Eaton's Board of Directors declared a quarterly dividend of $1.10 per ordinary share, a 6% increase over the dividend paid in the fourth quarter of 2025. The dividend is payable on March 27, 2026 to shareholders of record on March 10, 2026.
Comprehensive Income (Loss)
Comprehensive income (loss) consists primarily of net income, currency translation and related hedging instruments, changes in unrecognized costs of pension and other postretirement benefits, and changes in the effective portion of open derivative contracts designated as cash flow hedges. The following table summarizes the pre-tax and after-tax amounts recognized in Comprehensive income (loss):
2025 2024 2023
(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Currency translation and related hedging instruments
Gain (loss) from currency translation and related hedging
instruments $ 246 $ 255 $ (358) $ (355) $ 252 $ 247
Amortization of gains on net investment hedges (amount
excluded from effectiveness testing) reclassified to earnings (15) (15) (15) (15) (12) (12)
231 240 (373) (370) 241 235
Pensions and other postretirement benefits
Prior service credit (cost) arising during the year (10) (7) 1 1 — —
Net gain (loss) arising during the year (27) (18) (141) (104) (246) (189)
Currency translation (55) (43) 18 13 (29) (21)
Amortization of actuarial loss and prior service cost
reclassified to earnings 67 50 55 41 32 24
(25) (18) (67) (49) (243) (185)
Cash flow hedges
Gain (loss) on derivatives designated as cash flow hedges 29 23 (6) (5) 63 50
Changes in cash flow hedges reclassified to earnings (27) (22) (16) (12) (78) (61)
2 1 (22) (17) (14) (11)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders $ 208 $ 223 $ (462) $ (436) $ (17) $ 39
The changes in Accumulated other comprehensive loss are as follows:
(In millions) Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow
hedges Total
Balance at January 1, 2025
$ (3,399) $ (1,044) $ 101 $ (4,342)
Other comprehensive income (loss) before
reclassifications 255 (68) 23 210
Amounts reclassified from Accumulated other
comprehensive loss (income) (15) 50 (22) 13
Net current-period Other comprehensive
income (loss) 240 (18) 1 223
Balance at December 31, 2025
$ (3,159) $ (1,062) $ 102 $ (4,118)
The reclassifications out of Accumulated other comprehensive loss are as follows:
(In millions) December 31, 2025 Consolidated Statements
of Income classification
Gains and (losses) on net investment hedges (amount excluded
from effectiveness testing)
Currency exchange contracts $ 15 Interest expense - net
Tax expense —
Total, net of tax 15
Amortization of defined benefits pensions and other
postretirement benefits items
Actuarial loss and prior service cost (67) 1
Tax benefit 17
Total, net of tax (50)
Gains and (losses) on cash flow hedges
Floating-to-fixed interest rate swaps 13 Interest expense - net
Currency exchange contracts 13 Net sales and Cost of products sold
Commodity contracts 1 Cost of products sold
Tax expense (6)
Total, net of tax 22
Total reclassifications for the period $ (13)
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 10 for additional information about pension and other postretirement benefits items.
Net Income Per Share Attributable to Eaton Ordinary Shareholders
A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
(In millions except for per share data) 2025 2024 2023
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
Weighted-average number of ordinary shares outstanding - diluted 391.2 399.4 401.1
Less dilutive effect of equity-based compensation 1.3 1.8 2.0
Weighted-average number of ordinary shares outstanding - basic 389.9 397.6 399.1
Net income per share attributable to Eaton ordinary shareholders
Diluted $ 10.45 $ 9.50 $ 8.02
Basic 10.48 9.54 8.06
In 2025, 2024, and 2023, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive.
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v3.26.3
EQUITY-BASED COMPENSATION
12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION
Eaton recognizes equity-based compensation expense based on the grant date fair value of the award. Awards with service conditions or both service and market conditions are expensed over the period during which an employee is required to provide service in exchange for the award. Awards with both service and performance conditions are expensed over the period an employee is required to provide service based on the number of units for which achievement of the performance objective is probable. The Company estimates forfeitures as part of recording equity-based compensation expense.
Restricted Stock Units and Awards
Restricted stock units (RSUs) and restricted stock awards (RSAs) have been issued to certain employees and directors. The fair value of RSUs and RSAs are determined based on the closing market price of the Company’s ordinary shares at the date of grant. The RSUs entitle the holder to receive one ordinary share for each RSU upon vesting, generally over three years. RSAs are issued and outstanding at the time of grant, but remain subject to forfeiture until vested, generally over ten years. A summary of the RSU and RSA activity for 2025 is as follows:
(Restricted stock units and awards in millions) Number of restricted
stock units and awards Weighted-average fair
value per unit and award
Non-vested at January 1 0.7 $ 202.76
Granted 0.3 305.76
Vested (0.4) 210.02
Forfeited — 275.66
Non-vested at December 31 0.6 $ 244.44
Information related to RSUs and RSAs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for RSUs and RSAs $ 84 $ 74 $ 65
After-tax expense for RSUs and RSAs 65 58 51
Fair value of vested RSUs and RSAs 107 126 84
As of December 31, 2025, total compensation expense not yet recognized related to non-vested RSUs and RSAs was $90 million, and the weighted-average period in which the expense is expected to be recognized is 2.2 years. Excess tax benefit for RSUs and RSAs totaled $5 million, $8 million, and $4 million for 2025, 2024, and 2023, respectively.
Performance Share Units
Performance share units (PSUs) have been issued to certain employees that vest based on the satisfaction of a three-year service period and the market condition of total shareholder return relative to that of a group of peers. Awards earned at the end of the three-year vesting period range from 0% to 200% of the targeted number of PSUs granted based on the ranking of total shareholder return of the Company, assuming reinvestment of all dividends, relative to a defined peer group of companies. Equity-based compensation expense for these PSUs is recognized over the period during which an employee is required to provide service in exchange for the award. Upon vesting, dividends that have accumulated during the vesting period are paid on earned awards.
The Company uses a Monte Carlo simulation to estimate the fair value of PSUs with market conditions. The principal assumptions utilized in valuing these PSUs include the expected stock price volatility (based on the most recent 3-year period as of the grant date) and the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon bonds with a three-year maturity as of the grant date). A summary of the assumptions used in determining fair value of these PSUs is as follows:
2025 2024 2023
Expected volatility 29 % 26 % 27 %
Risk-free interest rate 3.96 % 4.36 % 4.35 %
Weighted-average fair value of PSUs granted $ 296.52 $ 362.38 $ 203.18
A summary of these PSUs that vested is as follows:
(Performance share units in millions) 2025 2024 2023
Percent payout 138 % 163 % 187 %
Shares vested 0.2 0.2 0.3
A summary of the 2025 activity for these PSUs is as follows:
(Performance share units in millions) Number of performance
share units Weighted-average fair
value per unit
Non-vested at January 1 0.2 $ 248.21
Granted1
0.1 296.52
Adjusted for performance results achieved2
— 203.18
Vested (0.2) 203.18
Forfeited (0.1) 303.41
Non-vested at December 31 0.1 $ 332.05
1 Performance shares granted assuming the Company will perform at target relative to peers.
2 Adjustments for the number of shares vested under the 2023 awards at the end of the three-year performance period ended December 31, 2025, being higher than the target number of shares.
Information related to PSUs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for PSUs $ 22 $ 23 $ 22
After-tax expense for PSUs 18 18 17
As of December 31, 2025, total compensation expense not yet recognized related to non-vested PSUs was $23 million and the weighted-average period in which the expense is to be recognized is 1.6 years. Excess tax benefit for PSUs totaled $6 million, $11 million, and $7 million for 2025, 2024, and 2023, respectively.
Stock Options
Under various plans, stock options have been granted to certain employees and directors to purchase ordinary shares at prices equal to fair market value on the date of grant. Substantially all of these options vest ratably during the three-year period following the date of grant and expire 10 years from the date of grant. Compensation expense is recognized for stock options based on the fair value of the options at the date of grant and amortized on a straight-line basis over the period the employee or director is required to provide service.
The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options. The principal assumptions utilized in valuing stock options include the expected stock price volatility (based on the most recent historical period equal to the expected life of the option); the expected option life (an estimate based on historical experience); the expected dividend yield; and the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon with a maturity equal to the expected life of the option). A summary of the assumptions used in determining the fair value of stock options is as follows:
2025 2024 2023
Expected volatility 30 % 29 % 27 %
Expected option life in years 6.2 6.3 6.3
Expected dividend yield 1.5 % 1.5 % 2.0 %
Risk-free interest rate
4.3%
4.0 to 4.5%
4.1 to 4.3%
Weighted-average fair value of stock options granted $ 102.50 $ 93.42 $ 48.79
A summary of stock option activity is as follows:
(Options and aggregate intrinsic value in millions) Weighted-average
exercise price per option Options Weighted-average
remaining
contractual life
in years Aggregate
intrinsic
value
Outstanding at January 1, 2025
$ 130.25 1.6
Granted 297.35 0.1
Exercised 104.73 (0.4)
Forfeited and canceled 252.95 —
Outstanding at December 31, 2025
$ 152.22 1.3 5.2 $ 214
Exercisable at December 31, 2025
$ 119.93 1.0 4.3 $ 199
Reserved for future grants at December 31, 2025
17.1
The aggregate intrinsic value in the table above represents the total excess of the $318.51 closing price of Eaton ordinary shares on the last trading day of 2025 over the exercise price of the stock option, multiplied by the related number of options outstanding and exercisable. The aggregate intrinsic value is not recognized for financial accounting purposes and the value changes based on the daily changes in the fair market value of the Company's ordinary shares.
Information related to stock options is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for stock options $ 20 $ 11 $ 10
After-tax expense for stock options 16 9 8
Proceeds from stock options exercised 39 69 78
Income tax benefit related to stock options exercised
Tax benefit classified in operating activities in the Consolidated
Statements of Cash Flows 17 30 22
Intrinsic value of stock options exercised 88 165 116
Total fair value of stock options vested $ 11 $ 11 $ 10
Stock options exercised 0.4 0.8 1.0
As of December 31, 2025, total compensation expense not yet recognized related to non-vested stock options was $9 million, and the weighted-average period in which the expense is expected to be recognized is 1.4 years
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v3.26.3
FAIR VALUE MEASUREMENTS
12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
(In millions) Total Quoted prices in active markets for identical assets
(Level 1) Other observable inputs
(Level 2) Unobservable inputs
(Level 3)
December 31, 2025
Cash $ 622 $ 622 $ — $ —
Short-term investments 181 181 — —
Derivative contract assets
26 — 26 —
Derivative contract liabilities
(64) — (64) —
Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) (31) — — (31)
December 31, 2024
Cash $ 555 $ 555 $ — $ —
Short-term investments 1,525 1,525 — —
Derivative contract assets
28 — 28 —
Derivative contract liabilities
(44) — (44) —
Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.
Other Fair Value Measurements
Long-term debt and the current portion of long-term debt had a carrying value of $9,894 million and fair value of $9,587 million at December 31, 2025 compared to $9,152 million and $8,651 million, respectively, at December 31, 2024. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.
Short-Term Investments
Eaton invests excess cash generated from operations in short-term marketable investments. Short-term investments are recorded at carrying value, which approximates the fair value due to the short-term maturities of these investments. A summary of short-term investments is as follows:
December 31
(In millions) 2025 2024
Time deposits and certificates of deposit with banks $ 181 $ 157
Money market investments — 1,368
Total short-term investments $ 181 $ 1,525
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The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.
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v3.26.3
RESTRUCTURING CHARGES
12 Months Ended
Dec. 31, 2025
Restructuring and Related Activities [Abstract]
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES
In the second quarter of 2020, Eaton initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of $382 million through December 31, 2023. This multi-year restructuring program was substantially complete at the end of 2023, with final payments primarily made in 2024.
During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $335 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $102 million and plant closing and other costs of $38 million, resulting in total estimated charges of $475 million for the entire program.
A summary of restructuring program charges is as follows:
(In millions except for per share data) 2025 2024 2023
Workforce reductions $ 81 $ 120 $ 19
Plant closing and other 52 83 38
Total before income taxes 133 202 57
Income tax benefit 29 43 11
Total after income taxes $ 103 $ 160 $ 46
Per ordinary share - diluted $ 0.26 $ 0.40 $ 0.11
Restructuring program charges related to the following segments:
(In millions) 2025 2024 2023
Electrical Americas $ 14 $ 12 $ 5
Electrical Global 63 88 26
Aerospace 10 9 5
Mobility1
31 64 13
Corporate 14 29 8
Total $ 133 $ 202 $ 57
A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
(In millions) Workforce reductions Plant closing and other Total
Balance at January 1, 2024
$ 35 $ 6 $ 41
Liability recognized, net 120 83 202
Payments, utilization and translation (59) (81) (141)
Balance at December 31, 2024
96 7 103
Liability recognized, net1
81 52 133
Payments, utilization and translation (67) (51) (118)
Balance at December 31, 2025
$ 109 $ 8 $ 118
1The restructuring program liability was adjusted by $12 million in the fourth quarter of 2025 primarily related to true-ups for completed workforce reductions in the Mobility segment.
These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 18 for additional information about business segments.
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v3.26.3
GOVERNMENT GRANTS
12 Months Ended
Dec. 31, 2025
Government Assistance [Abstract]
GOVERNMENT GRANTS
GOVERNMENT GRANTS
The Company recognizes the benefit of government grants when they are probable of being received and the specified conditions associated with the grants have been satisfied. Grants for capital investments are generally recognized as deferred income on the Consolidated Balance Sheets, then amortized to income over the life of the related assets. Grants for other expenses are recognized as reductions of the related expense over the period incurred.
In 2024, the Company entered into an agreement to receive government grants from a non-Irish government entity. The grants will be recognized over the term of the agreement beginning in 2024 through 2033. The terms of the agreement and the commitments made by the Company and the government entity have been omitted because they are legally prohibited from being disclosed. Under the agreement, for the years ended December 31, 2025 and 2024, the Company reduced Selling and administrative expense by $15 million and $1 million, respectively, on the Consolidated Statements of Income. As of December 31, 2025 and 2024, the Company recognized unamortized deferred income of $67 million and $9 million, respectively, within Other noncurrent liabilities and Other current liabilities, respectively, on the Consolidated Balance Sheets.
For the year ended December 31, 2023, government grants did not have a material impact on the consolidated financial statements.
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v3.26.3
BUSINESS SEGMENT INFORMATION
12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company's chief operating decision maker is the chief executive officer.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change. Eaton’s segments are as follows:
Electrical Americas and Electrical Global
The Electrical Americas segment consists of electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The Electrical Global segment consists of electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America; as well as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The principal markets for these segments are commercial & institutional, data centers and distributed IT, industrial, utilities, residential, and machinery OEMs. These products are used wherever there is a demand for electrical power in data centers, utilities, industrial and energy facilities, commercial buildings, apartment and office buildings, hospitals, factories, and residencies. The segments share certain common global customers, but a large number of customers are located regionally. Sales are made through distributors, resellers, and manufacturers’ representatives, as well as directly to original equipment manufacturers, utilities, and certain other end users.
Aerospace
The Aerospace segment is a leading global supplier of aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. Products include hydraulic power generation systems for aerospace applications including pumps, motors, hydraulic power units, hose and fittings, electro-hydraulic pumps; controls and sensing products including valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems and nose wheel steering systems; fluid conveyance products, including hose, thermoplastic tubing, fittings, adapters, couplings, sealing and ducting; fuel systems including air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, valves, adapters and regulators; mission systems including oxygen generation system, payload carriages, and thermal management products; high performance interconnect products including wiring connectors and cables. The Aerospace segment also includes filtration systems including hydraulic filters, bag filters, strainers and cartridges; and golf grips. The principal markets for the Aerospace segment are manufacturers of commercial and military aircraft and related after-market customers, as well as industrial applications. These manufacturers and other customers operate globally. Products are sold and serviced through a variety of channels.
Mobility
The Mobility segment designs, manufactures, markets, and supplies a broad portfolio of mechanical, electrical, and electronic systems that improve emissions, fuel economy, power management, performance, and safety across on‑road and off‑road vehicles. The Mobility segment serves global OEMs and aftermarket customers with solutions spanning internal combustion, hybrid, and electrified powertrains, including transmissions and transmission components, clutches, differentials, hybrid systems, engine valves, fuel and vapor components, as well as high‑voltage inverters and converters, power electronics, circuit protection, vehicle controls, and power distribution systems. The principal markets for the Mobility segment are OEM and aftermarket customers of heavy-, medium-, and light‑duty trucks, SUVs, CUVs, passenger cars, construction, agricultural, material handling, and mining equipment.
Other Information
No single customer represented greater than 10% of net sales in 2025, 2024 or 2023, respectively.
The accounting policies of the business segments are generally the same as the policies described in Note 1, except that, as described further in the following paragraph, certain items are not allocated to the businesses. Intersegment sales and transfers are accounted for at the same prices as if the sales and transfers were made to third parties. These intersegment sales are eliminated in consolidation. Operating profit (loss) includes the operating profit from intersegment sales.
The chief operating decision maker uses segment operating profit (loss) as an input to assess segment performance and determine appropriate resource allocations, including capital, financial, and employee resources. Segment operating profit (loss) results are regularly evaluated versus annual profit plan, forecast and/or prior year.
Other segment items are primarily comprised of Cost of products sold, Selling and administrative expense, Research and development expense, depreciation of property, plant and equipment, and certain items included in Other expense (income) - net on the Consolidated Statements of Income. The Company's chief operating decision maker manages these items on a consolidated basis.
Corporate includes all the Company's amortization of intangible assets, interest expense - net and restructuring program charges (Note 16) and the non-service cost portion of pension and other postretirement benefits income. Other expense - net includes all the Company's costs associated with acquisitions, divestitures, and gains and losses on the sale of certain businesses and other items that are of a corporate or functional governance nature. For purposes of business segment performance measurement, a portion of corporate costs, excluding amortization of intangibles assets, acquisition integration and divestiture costs, and restructuring program charges, are allocated to the businesses. These allocations are periodically adjusted to pass on year-over-year cost savings or increases to the businesses in a manner that is consistent with how the chief operating decision maker assesses performance. Identifiable assets of the business segments exclude goodwill, other intangible assets, and general corporate assets, which principally consist of certain cash, short-term investments, deferred income taxes, certain accounts receivable, certain property, plant and equipment, and certain other assets.
Business Segment Information
(In millions) 2025 2024 2023
Net sales
Electrical Americas $ 13,276 $ 11,436 $ 10,098
Electrical Global 6,815 6,248 6,084
Aerospace 4,249 3,744 3,413
Mobility 3,109 3,451 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
Other segment items
Electrical Americas $ 9,304 $ 7,981 $ 7,423
Electrical Global 5,492 5,099 4,908
Aerospace 3,236 2,885 2,633
Mobility 2,704 2,955 3,140
Total other segment items $ 20,735 $ 18,919 $ 18,103
Segment operating profit
Electrical Americas $ 3,972 $ 3,455 $ 2,675
Electrical Global 1,323 1,149 1,176
Aerospace 1,013 859 780
Mobility 405 496 461
Total segment operating profit 6,713 5,959 5,093
Corporate
Intangible asset amortization expense (486) (425) (450)
Interest expense - net (241) (130) (151)
Pension and other postretirement benefits income 19 40 46
Restructuring program charges (133) (202) (57)
Other expense - net (941) (675) (654)
Income before income taxes 4,932 4,566 3,827
Income tax expense 841 768 604
Net income 4,090 3,798 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
(In millions) 2025 2024 2023
Identifiable assets
Electrical Americas $ 6,283 $ 4,933 $ 4,163
Electrical Global 3,852 3,233 2,868
Aerospace 2,684 2,392 2,276
Mobility 2,708 2,620 2,814
Total identifiable assets 15,526 13,178 12,121
Goodwill 15,769 14,713 14,977
Other intangible assets 5,054 4,658 5,091
Corporate 4,902 5,833 6,243
Total assets $ 41,251 $ 38,381 $ 38,432
Capital expenditures for property, plant and equipment
Electrical Americas $ 413 $ 362 $ 309
Electrical Global 249 163 142
Aerospace 103 83 97
Mobility 103 158 172
Total 868 766 721
Corporate 52 42 36
Total expenditures for property, plant and equipment $ 919 $ 808 $ 757
Depreciation of property, plant and equipment
Electrical Americas $ 133 $ 118 $ 108
Electrical Global 108 102 96
Aerospace 77 70 69
Mobility 123 120 113
Total 441 409 386
Corporate 36 37 43
Total depreciation of property, plant and equipment $ 477 $ 446 $ 429
Geographic Region Information
Net sales are measured based on the geographic destination of sales. Long-lived assets consist of property, plant and equipment - net.
(In millions) 2025 2024 2023
Net sales
United States $ 17,122 $ 15,151 $ 14,071
Canada 1,083 1,058 949
Latin America 1,461 1,680 1,549
Europe 5,078 4,530 4,339
Asia Pacific 2,704 2,459 2,288
Total $ 27,448 $ 24,878 $ 23,196
Long-lived assets
United States $ 2,344 $ 1,990 $ 1,773
Canada 42 31 31
Latin America 524 465 476
Europe 935 790 797
Asia Pacific 472 453 453
Total $ 4,316 $ 3,729 $ 3,530
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v3.26.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and notes. Actual results could differ from these estimates. Management has evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission.
Consolidation Policy
The consolidated financial statements include the accounts of Eaton and all subsidiaries and other entities it controls. Intercompany transactions and balances have been eliminated. The equity method of accounting is used for investments in associate companies where the Company has significant influence and generally a 20% to 50% ownership interest. Equity investments are evaluated for impairment whenever events or circumstances indicate the book value of the investment exceeds fair value. An impairment would exist if there is an other-than-temporary decline in value. Investments in associate companies included in Other assets on the Consolidated Balance Sheets were $903 million and $872 million as of December 31, 2025 and 2024, respectively. Income from these investments was $8 million, $12 million, and $20 million for 2025, 2024 and 2023, respectively, and reported in Other expense (income) - net on the Consolidated Statements of Income. Eaton does not have off-balance sheet arrangements with unconsolidated entities.
Foreign Currency Translation
Eaton's reporting currency is United States Dollars (USD). The functional currency for most subsidiaries is their local currency. Financial statements for these subsidiaries are translated at exchange rates in effect at the balance sheet date as to assets and liabilities and weighted-average exchange rates as to revenues and expenses. The resulting translation adjustments are recognized in Accumulated other comprehensive loss. Monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary are remeasured to the functional currency at the exchange rate in effect at the balance sheet date. 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. Gains from the remeasurement of foreign currency were $13 million, $15 million, and $27 million for 2025, 2024 and 2023, respectively, net of the impact of currency exchange contracts.
Segment
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Adoption of New Accounting Standards and Recently Issued Accounting Pronouncements
Adoption of New Accounting Standards
Eaton adopted Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), in the fourth quarter of 2025 on a prospective basis. This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. The adoption of the standard did not have a material impact on the consolidated financial statements.
Eaton adopted Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05), in the fourth quarter of 2025 on a prospective basis. This accounting standard provides a practical expedient allowing entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses. The adoption did not have a material impact on the consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiring costs to be capitalized when (1) the Company authorizes and commits to funding the software project and (2) it is probable the software project will be completed. The standard also requires additional annual and interim disclosures, including the capitalized software balance and accumulated amortization. ASU 2025-06 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2027, with early adoption permitted and may be applied prospectively, retrospectively, or using a modified prospective transition approach. The Company is evaluating the impact of ASU 2025-06 to the consolidated financial statements and related disclosures.
In December 2025, the FASB issued Accounting Standards Update 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities (ASU 2025-10). This accounting standard requires a government grant to be recognized when (1) it is probable the conditions of the grant will be met and (2) the grant will be received. ASU 2025-10 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2028, with early adoption permitted and may be applied using a modified prospective approach, modified retrospective approach, or a retrospective approach. The Company is evaluating the impact of ASU 2025-10 to the consolidated financial statements and related disclosures.
Goodwill and Indefinite Life Intangible Assets
Goodwill and Indefinite Life Intangible Assets
Goodwill is evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis. Additionally, goodwill is evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets. The Company’s reporting units are equivalent to the business segments, except for the Aerospace segment which has two reporting units. Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results. The Company performs a quantitative analysis using a discounted cash flow model and other valuation techniques, but may elect to perform a qualitative analysis.
The annual goodwill impairment test was performed using a qualitative analysis in 2025 for all reporting units other than the legacy eMobility reporting unit which used a quantitative analysis in 2025. The annual goodwill impairment test was performed using a quantitative analysis in 2024 for all reporting units other than the legacy Vehicle and eMobility reporting units which used a qualitative analysis in 2024. A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
Quantitative analyses were performed by estimating the fair value of the reporting unit using a discounted cash flow model. The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The future cash flows were based on the Company's long-term operating plan and a terminal value was used to estimate the reporting unit's cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions. Sensitivity analyses were performed around certain of these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
Based on these analyses performed in 2025 and 2024, the fair value of Eaton's reporting units continue to substantially exceed their respective carrying amounts and thus, no impairment exists.
Indefinite life intangible assets consist of certain trademarks. They are evaluated annually for impairment as of July 1 using either a quantitative or qualitative analysis to determine whether their fair values exceed their respective carrying amounts. Indefinite life intangible asset impairment testing for 2025 and 2024 was performed using a quantitative analysis. The Company determines the fair value of these assets using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows, and profitability. Additionally, indefinite life intangible assets are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired. For 2025 and 2024, the fair value of indefinite lived intangible assets exceeded the respective carrying value.
Leases
Leases
The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, Eaton typically uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, the Company combines payments for leased assets, related services and other components of a lease.
Other Long-Lived Assets
Other Long-Lived Assets
Depreciation and amortization for property, plant and equipment, and intangible assets subject to amortization, are generally computed by the straight-line method and included in Cost of products sold, Selling and administrative expense, and Research and development expense, as appropriate. The Company uses the following depreciation and amortization periods:
Category Estimated useful life or amortization period
Buildings
Generally 40 years
Machinery and equipment
3 - 10 years
Software
5 - 15 years
Customer relationships, certain trademarks, and patents and technology
Weighted-average of 18 years
Other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The asset group would be considered impaired when the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value. Determining asset groups and underlying cash flows requires the use of significant judgment.
Retirement Benefits Plans
Retirement Benefits Plans
For the principal pension plans in the United States, Canada, Puerto Rico, and the United Kingdom, the Company uses a market-related value of plan assets to calculate the expected return on assets used to determine net periodic benefit costs. The market-related value of plan assets is a calculated value that recognizes changes in the fair value of plan assets over a five year period. All other plans use fair value of plan assets.
Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor. The Company’s corridors are set at either 8% or 10%, depending on the plan, of the greater of the plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over an average employee future service period that differs by plan. If most or all of the plan’s participants are no longer actively accruing benefits, the average life expectancy is used. The amortization periods on a weighted average basis for United States and Non-United States pension plans are approximately 21 years and 10 years, respectively. The amortization period for other postretirement benefits plans is 9 years.
Asset Retirement Obligations
Asset Retirement Obligations
A conditional asset retirement obligation is recognized at fair value when incurred if the fair value of the liability can be reasonably estimated. Uncertainty about the timing or method of settlement of a conditional asset retirement obligation would be considered in the measurement of the liability when sufficient information exists. Eaton believes that for substantially all of its asset retirement obligations, there is an indeterminate settlement date because the range of time over which the Company may settle the obligation is unknown or cannot be estimated. A liability for these obligations will be recognized when sufficient information is available to estimate fair value.
Income Taxes
Income Taxes
Deferred income tax assets and liabilities are determined based on the difference between the financial statement and tax basis of the respective assets and liabilities, using enacted tax rates in effect for the year when the differences are expected to reverse. Deferred income tax assets are recognized for income tax loss carryforwards and income tax credit carryforwards. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. Eaton recognizes an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Eaton evaluates and adjusts the amount of unrecognized income tax benefits based on changes in facts and circumstances. Eaton recognizes interest and penalties related to unrecognized income tax benefits in the provision for income tax expense. Eaton's policy is to recognize income tax effects from accumulated other comprehensive income when individual units of account are sold, terminated, or extinguished. For additional information about income taxes, see Note 12.
Derivative Financial Instruments and Hedging Activities
Derivative Financial Instruments and Hedging Activities
In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.
Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated as part of a hedging relationship, is effective and the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:
•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.
•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.
•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.
The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Consolidated Statements of Cash Flows. For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.
Eaton uses currency exchange contracts and certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). The Company uses the spot rate method to assess hedge effectiveness when currency exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging relationship and the forward points are amortized to Interest expense - net on a straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Consolidated Statements of Cash Flows.
Currency exchange contracts not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 95% to 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Consolidated Statements of Cash Flows.
Revenue Recognition
Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.
The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when title and risk and rewards of ownership have transferred to the customer. Sales recognized over time were approximately 7% of Eaton’s consolidated Net sales in 2025 and less than 5% of consolidated Net sales in 2024 and 2023. Sales recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. Sales for service contracts generally are recognized as the services are provided. For agreements with multiple performance obligations, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, we generally allocate sales price to each distinct obligation based on the price of each item sold in separate transactions.
Due to the nature of the work required to be performed for obligations recognized over time, Eaton estimates total costs by contract. The estimate of total costs are subject to judgment. Estimated amounts are included in the recognized sales price to the extent it is not probable that a significant reversal of cumulative sales will occur. Additionally, contracts can be modified to account for changes in contract specifications, requirements or sale price. The effect of a contract modification on the sales price or adjustments to the measure of completion under the input method are recognized as adjustments to revenue on a cumulative catch-up basis.
Payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is not significant. Eaton does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. Sales, value added, and other taxes collected concurrent with revenue are excluded from Net sales. Shipping and handling costs are treated as fulfillment costs and are included in Cost of products sold.
Eaton records reductions to sales for returns, and customer and distributor incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience, trend analysis, and projected market conditions in the various markets served. The rebate programs offered vary across businesses due to the numerous markets Eaton serves, but the most common incentives relate to amounts paid or credited to customers for achieving defined volume levels. Accrued rebates of $360 million and $361 million as of December 31, 2025 and 2024, respectively, are generally paid annually and are included in Other current liabilities. Returns are estimated at the time of the sale primarily based on historical experience and are recorded gross on the Consolidated Balance Sheets.
Sales commissions are expensed when the amortization period is less than a year and are generally not capitalized as they are typically earned at the completion of the contract when the customer is invoiced or when the customer pays Eaton.
Sales of products and services varies by segment and are discussed in Note 18.
In the Electrical Americas segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The majority of the sales in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
In the Electrical Global segment, sales contracts are primarily for electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America, as well as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The majority of the sales contracts in this segment contain performance obligations satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. However, certain power distribution and power quality services are recognized over time.
In the Aerospace segment, sales contracts are primarily for aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. These sales contracts are primarily based on a customer’s purchase order, and frequently covered by terms and conditions included in a long-term agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility. Our military contracts are primarily fixed-price contracts that are not subject to performance-based payments or progress payments from the customer.
Many of the products and services in power distribution and power quality services in the Electrical Americas and Electrical Global business segments and contracts to develop new products that are fully funded by customers in the Aerospace business segment meet the definition of continuous transfer of control to customers and are recognized over time. These products are engineered to a customer’s design specifications, have no alternative use to Eaton, and are controlled by the customer as evidenced by the customer’s contractual ownership of the work in process or our right to payment for work performed to date plus a reasonable margin. As control is transferring over time, sales are recognized based on the extent of progress towards completion of the obligation. Eaton generally uses an input method to determine the progress completed and sales are recorded proportionally as costs are incurred. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
In the Mobility segment, sales contracts are primarily for drivetrains, powertrain systems, mechanical, electrical, and electrical components and systems used in on-road and off-road vehicles. Sales contracts are primarily based on a customer’s purchase order or a blanket purchase order subject to firm releases, frequently covered by terms and conditions included in a master supply agreement. In this segment, performance obligations are generally satisfied at a point in time either when we ship the product from our facility, or when it arrives at the customer’s facility.
In limited circumstances, primarily in the Electrical and Mobility segments, Eaton sells separately-priced warranties that extend the warranty coverage beyond the standard coverage offered on specific products. Sales for these separately-priced warranties are recorded based on their stand-alone selling price and are recognized as revenue over the length of the warranty period.
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v3.26.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]
Schedule of Depreciation and Amortization Periods
The Company uses the following depreciation and amortization periods:
Category Estimated useful life or amortization period
Buildings
Generally 40 years
Machinery and equipment
3 - 10 years
Software
5 - 15 years
Customer relationships, certain trademarks, and patents and technology
Weighted-average of 18 years
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v3.26.3
ACQUISITIONS AND DIVESTITURE OF BUSINESSES (Tables)
12 Months Ended
Dec. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date, as well as measurement period adjustments recorded as of December 31, 2025. The Company is finalizing its review of the preliminary estimates, primarily related to third-party valuations for Other intangible assets and Property, plant and equipment, which may result in additional adjustments to these estimates. The current measurement period adjustments did not have a material impact to the Consolidated Statements of Income.
(In millions) Preliminary Allocation Measurement Period Adjustments Adjusted Preliminary Allocation
Accounts receivable $ 50 $ (5) $ 45
Inventory 96 5 101
Prepaid expenses and other current assets 72 (5) 67
Property, plant and equipment 104 13 117
Other intangible assets 709 6 715
Other assets 3 — 3
Accounts payable (48) — (48)
Other current liabilities (106) 26 (80)
Other noncurrent liabilities (2) (23) (25)
Total identifiable net assets $ 878 $ 17 $ 895
Goodwill 572 (32) 540
Total consideration, net of cash received $ 1,450 $ (15) $ 1,435
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v3.26.3
REVENUE RECOGNITION (Tables)
12 Months Ended
Dec. 31, 2025
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregation of Sales
The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:
(In millions) 2025 2024 2023
Electrical Americas
Products $ 3,205 $ 3,009 $ 2,949
Systems 10,070 8,426 7,149
Total $ 13,276 $ 11,436 $ 10,098
Electrical Global
Products $ 3,885 $ 3,493 $ 3,462
Systems 2,930 2,755 2,622
Total $ 6,815 $ 6,248 $ 6,084
Aerospace
Original Equipment Manufacturers $ 1,640 $ 1,500 $ 1,350
Aftermarket 1,553 1,312 1,183
Industrial and Other 1,055 931 878
Total $ 4,249 $ 3,744 $ 3,413
Mobility
Vehicle $ 2,505 $ 2,790 $ 2,965
eMobility 604 662 636
Total $ 3,109 $ 3,451 $ 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
Schedule of Changes in Deferred Revenue Liabilities
Changes in the deferred revenue liabilities are as follows:
(In millions) Deferred Revenue
Balance at January 1, 2024
$ 626
Customer deposits and billings 2,719
Revenue recognized in the period (2,712)
Translation (15)
Balance at December 31, 2024
$ 618
Customer deposits and billings 4,074
Revenue recognized in the period (3,854)
Deferred revenue from business acquisition 73
Translation 12
Balance at December 31, 2025
$ 923
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v3.26.3
INVENTORY (Tables)
12 Months Ended
Dec. 31, 2025
Inventory Disclosure [Abstract]
Schedule of Components of Inventory
The components of inventory are as follows:
December 31
(In millions) 2025 2024
Raw materials $ 1,726 $ 1,614
Work-in-process 1,034 1,038
Finished goods 1,961 1,576
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v3.26.3
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
12 Months Ended
Dec. 31, 2025
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Changes in Carrying Amount of Goodwill
Changes in the carrying amount of goodwill by segment are as follows:
(In millions) January 1, 2024 Additions Translation December 31, 2024 Additions Translation December 31, 2025
Electrical Americas $ 7,415 $ 17 $ (35) $ 7,396 $ 581 $ 33 $ 8,010
Electrical Global 4,038 — (196) 3,842 — 314 4,156
Aerospace 2,901 — (45) 2,856 — 121 2,977
Mobility 623 — (5) 619 — 7 626
Total $ 14,977 $ 17 $ (281) $ 14,713 $ 581 $ 475 $ 15,769
Schedule of Other Intangible Assets
A summary of other intangible assets is as follows:
December 31
2025 2024
(In millions) Historical
cost Accumulated
amortization Historical
cost Accumulated
amortization
Intangible assets not subject to amortization
Trademarks $ 1,215 $ 1,200
Intangible assets subject to amortization
Customer relationships $ 5,236 $ 2,934 $ 4,659 $ 2,577
Patents and technology 2,225 1,191 1,979 1,056
Trademarks 1,214 787 1,107 693
Other 235 159 169 131
Total intangible assets subject to amortization $ 8,911 $ 5,071 $ 7,915 $ 4,456
Schedule of Amortization Expense of Intangible Assets
Amortization expense related to intangible assets subject to amortization in 2025, and estimated amortization expense for each of the next five years, is as follows
(In millions)
2025 $ 461
2026 469
2027 438
2028 365
2029 328
2030 286
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v3.26.3
SUPPLY CHAIN FINANCE PROGRAM (Tables)
12 Months Ended
Dec. 31, 2025
Payables and Accruals [Abstract]
Schedule of Changes in SCF Obligations
The changes in SCF obligations are as follows:
(In millions) SCF Obligations
Balance at January 1, 2024
$ 369
Invoices confirmed during the period 1,424
Invoices paid during the period (1,389)
Translation (6)
Balance at December 31, 2024
398
Invoices confirmed during the period 1,728
Invoices paid during the period (1,583)
Balance at December 31, 2025
$ 543
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-Paragraph 3
-Subparagraph (b)(2)
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v3.26.3
LEASES (Tables)
12 Months Ended
Dec. 31, 2025
Leases [Abstract]
Schedule of Components of Lease Expense and Supplemental Cash Flow Information
The components of lease expense are as follows:
(In millions) 2025 2024 2023
Operating lease cost $ 251 $ 227 $ 200
Finance lease cost:
Amortization of lease assets 9 12 15
Interest on lease liabilities 1 1 1
Short-term lease cost 23 19 18
Variable lease cost 26 29 28
Sublease income (1) (1) (1)
Total lease cost $ 309 $ 287 $ 261
Supplemental cash flow information related to leases is as follows:
(In millions) 2025 2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - payments on operating leases $ (198) $ (200) $ (180)
Operating cash outflows - interest payments on finance leases (1) (1) (1)
Financing cash outflows - payments on finance lease obligations (9) (14) (18)
Lease assets obtained in exchange for new lease obligations, including leases acquired:
Operating leases $ 193 $ 268 $ 183
Finance leases 6 13 38
Schedule of Supplemental Balance Sheet Information related to Leases
Supplemental balance sheet information related to leases is as follows:
December 31
(In millions) 2025 2024
Operating Leases
Operating lease assets $ 768 $ 806
Other current liabilities 152 163
Operating lease liabilities 637 669
Total operating lease liabilities $ 789 $ 832
Finance Leases
Land and buildings $ 9 $ 5
Machinery and equipment 47 61
Accumulated depreciation (31) (37)
Net property, plant and equipment $ 25 $ 29
Current portion of long-term debt $ 7 $ 9
Long-term debt 18 19
Total finance lease liabilities $ 25 $ 28
December 31
2025 2024
Weighted-average remaining lease term
Operating leases 8.0 years 7.1 years
Finance leases 4.7 years 4.2 years
Weighted-average discount rate
Operating leases 4.7 % 4.4 %
Finance leases 3.8 % 3.7 %
Schedule of Maturities of Operating Lease Liabilities
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) Operating Leases Finance Leases
2026 $ 183 $ 8
2027 150 7
2028 122 4
2029 97 3
2030 72 2
Thereafter 332 3
Total lease payments 957 27
Less imputed interest 168 2
Total present value of lease liabilities $ 789 $ 25
Schedule of Maturities of Finance Lease Liabilities
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) Operating Leases Finance Leases
2026 $ 183 $ 8
2027 150 7
2028 122 4
2029 97 3
2030 72 2
Thereafter 332 3
Total lease payments 957 27
Less imputed interest 168 2
Total present value of lease liabilities $ 789 $ 25
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v3.26.3
DEBT (Tables)
12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]
Schedule of Long-Term Debt, including Current Portion
A summary of long-term debt, including the current portion, is as follows:
December 31
(In millions) 2025 2024
6.50% debentures due 2025
$ — $ 145
0.70% Euro notes due 2025
— 520
0.128% Euro notes due 2026
1,057 935
3.10% senior notes due 2027
700 700
4.35% senior notes due 2028
500 500
7.65% debentures due 2029
200 200
0.577% Euro notes due 2030
704 624
4.450% senior notes due 2030
500 —
3.601% Euro notes due 2031
587 520
4.00% senior notes due 2032
700 700
4.15% sustainability-linked senior notes due 2033
1,300 1,300
5.45% debentures due 2034
137 137
3.625% Euro notes due 2035
587 —
3.802% Euro notes due 2036
587 520
5.80% notes due 2037
240 240
4.15% senior notes due 2042
1,000 1,000
3.92% senior notes due 2047
300 300
4.70% senior notes due 2052
700 700
5.25% to 7.875% notes (maturities ranging from 2026 to 2035)
99 99
Finance leases 25 28
Deferred debt issuance costs (47) (45)
Unamortized discount (13) (7)
Fair value hedging adjustment 31 37
Total long-term debt 9,894 9,152
Less current portion of long-term debt (1,136) (674)
Long-term debt less current portion $ 8,758 $ 8,478
Schedule of Maturities of Long-Term Debt
Maturities of long-term debt for each of the next five years are as follows:
(In millions)
2026 $ 1,136
2027 706
2028 504
2029 203
2030 1,206
Schedule of Interest Paid on Debt
Interest paid on debt is as follows:
(In millions)
2025 $ 351
2024 329
2023 319
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v3.26.3
RETIREMENT BENEFITS PLANS (Tables)
12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]
Schedule of Obligations and Funded Status
Obligations and Funded Status
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Funded status
Fair value of plan assets $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
Benefit obligations (2,650) (2,700) (2,038) (1,863) (194) (196)
Funded status $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in the Consolidated
Balance Sheets
Other assets $ — $ — $ 256 $ 231 $ — $ —
Other current liabilities (9) (29) (42) (31) (13) (14)
Pension liabilities and Other postretirement
benefits liabilities (172) (226) (530) (515) (161) (164)
Total $ (181) $ (255) $ (316) $ (315) $ (174) $ (178)
Amounts recognized in Accumulated other
comprehensive loss (pre-tax)
Net actuarial loss (gain) $ 847 $ 904 $ 738 $ 678 $ (72) $ (87)
Prior service cost 3 5 15 6 — —
Total $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
Schedule of Change in Benefit Obligations
Change in Benefit Obligations
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,700 $ 2,824 $ 1,863 $ 2,022 $ 196 $ 212
Service cost 16 18 45 46 — 1
Interest cost 135 134 88 85 11 10
Actuarial loss (gain) 55 (20) 13 (82) 2 (11)
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 155 (87) 1 (3)
Plan amendments — 2 10 (3) — —
Other — — 3 3 11 16
Balance at December 31 $ 2,650 $ 2,700 $ 2,038 $ 1,863 $ 194 $ 196
Accumulated benefit obligation $ 2,650 $ 2,686 $ 1,925 $ 1,766
Schedule of Change in Plan Assets
Change in Plan Assets
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 2,445 $ 2,604 $ 1,548 $ 1,633 $ 18 $ 17
Actual return on plan assets 250 84 111 (10) 2 1
Employer contributions 30 15 94 95 16 18
Gross benefits paid (256) (258) (139) (121) (27) (29)
Currency translation — — 105 (52) — —
Other — — 3 3 11 11
Balance at December 31 $ 2,469 $ 2,445 $ 1,722 $ 1,548 $ 20 $ 18
Schedule of Components of Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
The components of pension plans with an accumulated benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Accumulated benefit obligation $ 2,650 $ 2,686 $ 640 $ 701
Fair value of plan assets 2,469 2,445 121 209
Schedule of Components of Pension Plans with Projected Benefit Obligations in Excess of Plan Assets
The components of pension plans with a projected benefit obligation in excess of plan assets at December 31 are as follows:
United States
pension liabilities Non-United States
pension liabilities
(In millions) 2025 2024 2025 2024
Projected benefit obligation $ 2,650 $ 2,700 $ 738 $ 772
Fair value of plan assets 2,469 2,445 166 225
Schedule of Changes in Pension and Other Postretirement Benefits Liabilities recognized in Accumulated Other Comprehensive Income (Loss)
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss are as follows:
United States
pension liabilities Non-United States
pension liabilities Other postretirement
liabilities
(In millions) 2025 2024 2025 2024 2025 2024
Balance at January 1 $ 909 $ 871 $ 684 $ 661 $ (87) $ (93)
Prior service cost arising during the year — 2 10 (3) — —
Net loss (gain) arising during the year (4) 86 30 62 1 (7)
Currency translation — — 54 (18) 1 —
Less amounts included in expense during the year (55) (50) (25) (18) 13 13
Net change for the year (59) 38 69 23 15 6
Balance at December 31 $ 850 $ 909 $ 753 $ 684 $ (72) $ (87)
Schedule of Benefits Expense
The components of retirement benefits expense (income) are as follows:
United States
pension benefit expense Non-United States pension benefit expense Other postretirement
benefits expense (income)
(In millions) 2025 2024 2023 2025 2024 2023 2025 2024 2023
Service cost $ 16 $ 18 $ 19 $ 45 $ 46 $ 43 $ — $ 1 $ 1
Interest cost 135 134 142 88 85 85 11 10 10
Expected return on plan assets (190) (190) (195) (128) (134) (121) (1) (1) (1)
Amortization 15 9 4 16 11 7 (13) (13) (17)
(24) (29) (30) 21 8 14 (3) (3) (7)
Settlements, curtailments, and special termination benefits 40 41 34 9 7 4 — — —
Total expense (income) $ 16 $ 12 $ 4 $ 30 $ 15 $ 18 $ (3) $ (3) $ (7)
Schedule of Assumptions Used to Determine Pension Plans Expense
Pension Plans
United States
pension plans Non-United States
pension plans
2025 2024 2023 2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.34 % 5.61 % 5.14 % 5.11 % 4.92 % 4.52 %
Rate of compensation increase 3.05 % 3.32 % 3.40 % 3.13 % 3.16 % 3.17 %
Interest rate used to credit cash balance plans 4.56 % 4.79 % 4.01 % 2.50 % 2.01 % 1.59 %
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.61 % 5.14 % 5.47 % 4.92 % 4.52 % 4.83 %
Discount rate used to determine service cost 5.76 % 5.24 % 5.54 % 5.90 % 6.00 % 5.90 %
Discount rate used to determine interest cost 5.29 % 4.98 % 5.33 % 4.71 % 4.47 % 4.80 %
Expected long-term return on plan assets 7.00 % 6.50 % 6.50 % 6.63 % 6.79 % 6.32 %
Rate of compensation increase 3.32 % 3.40 % 3.33 % 3.16 % 3.17 % 3.12 %
Interest rate used to credit cash balance plans 4.79 % 4.01 % 3.67 % 2.01 % 1.59 % 2.32 %
Schedule of Assumptions Used to Determine Other Postretirement Benefits Obligations and Expense
Assumptions used to determine other postretirement benefits obligations and expense are as follows:
Other postretirement
benefits plans
2025 2024 2023
Assumptions used to determine benefit obligation at year-end
Discount rate 5.24 % 5.57 % 5.11 %
Health care cost trend rate assumed for next year 6.50 % 6.70 % 7.70 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2035 2034 2033
Assumptions used to determine expense
Discount rate used to determine benefit obligation 5.57 % 5.11 % 5.46 %
Discount rate used to determine service cost 5.84 % 5.25 % 5.53 %
Discount rate used to determine interest cost 5.29 % 4.96 % 5.32 %
Initial health care cost trend rate 6.70 % 7.70 % 7.10 %
Ultimate health care cost trend rate 4.75 % 4.75 % 4.75 %
Year ultimate health care cost trend rate is achieved 2034 2033 2031
Schedule of Employer Contributions to Pension Plans
Contributions to pension plans that Eaton expects to make in 2026, and made in 2025, 2024 and 2023, are as follows:
(In millions)
Expected in 2026
2025 2024 2023
United States plans $ 9 $ 30 $ 15 $ 16
Non-United States plans 89 94 95 97
Total contributions $ 98 $ 124 $ 110 $ 113
Schedule of Expected Pension and Other Postretirement Benefit Payments and Expected Subsidy
The following table provides the estimated pension and other postretirement benefit payments for each of the next five years, and the five years thereafter in the aggregate. For other postretirement benefits liabilities, the Company expects minor subsidy receipts related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that would reduce the estimated payments listed below.
(In millions) Estimated
United States
pension payments Estimated
non-United States
pension payments Estimated other postretirement
benefit payments
2026 $ 276 $ 135 $ 15
2027 259 135 19
2028 250 136 18
2029 241 141 17
2030 226 144 17
2031 - 2035
1,008 757 75
Schedule of Fair Value of Pension Plan Assets
A summary of the fair value of pension plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2025
Common collective trusts
Non-United States equity and global equities $ 211 $ — $ 211 $ —
Fixed income 32 — 32 —
Fixed income securities 1,647 — 1,647 —
United States treasuries 258 255 3 —
Real estate 248 100 32 116
Cash equivalents 49 25 24 —
Exchange traded funds 105 105 — —
Other 419 — 50 369
Common collective and other trusts measured at net asset value
1,287
Money market funds measured at net asset value 2
Pending purchases and sales of plan assets, and interest
receivable (67)
Total pension plan assets $ 4,191 $ 485 $ 1,999 $ 485
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $158 million at December 31, 2025, which will be satisfied by a reallocation of pension plan assets.
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2)
Unobservable
inputs
(Level 3)1
2024
Common collective trusts
Non-United States equity and global equities $ 241 $ — $ 241 $ —
Fixed income 28 — 28 —
Fixed income securities 1,582 — 1,582 —
United States treasuries 461 453 8 —
Real estate 212 63 25 124
Cash equivalents 83 55 28 —
Exchange traded funds 91 91 — —
Other 402 — 40 362
Common collective and other trusts measured at net asset value
978
Pending purchases and sales of plan assets, and interest
receivable (85)
Total pension plan assets $ 3,993 $ 662 $ 1,952 $ 486
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer, and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $128 million at December 31, 2024, which will be satisfied by a reallocation of pension plan assets.
Schedule of Fair Value Measurement of Plan Assets using Significant Unobservable Inputs
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2025 and 2024 due to the following:
(In millions) Real estate Other Total
Balance at January 1, 2024 $ 199 $ 370 $ 569
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
(24) 29 5
Purchases, sales, settlements - net
(51) (37) (88)
Transfers into or out of Level 3 — — —
Balance at December 31, 2024 124 362 486
Actual return on plan assets:
Gains (losses) relating to assets still held at year-end
14 32 46
Purchases, sales, settlements - net
(22) (25) (47)
Transfers into or out of Level 3 — — —
Balance at December 31, 2025 $ 116 $ 369 $ 485
Schedule of Fair Value of Other Postretirement Benefits Plan Assets
A summary of the fair value of other postretirement benefits plan assets at December 31, 2025 and 2024, is as follows:
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2025
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
17
Total other postretirement benefits plan assets $ 20 $ 3 $ — $ —
(In millions) Total Quoted prices
in active
markets for
identical assets
(Level 1) Other
observable
inputs
(Level 2) Unobservable
inputs
(Level 3)
2024
Cash equivalents $ 3 $ 3 $ — $ —
Common collective and other trusts measured at net asset value
15
Total other postretirement benefits plan assets $ 18 $ 3 $ — $ —
Schedule of Employer Contributions to Defined Contribution Benefit Plans, Charged to Expense
The total contributions related to these plans are charged to expense and are as follows:
(In millions)
2025 $ 239
2024 220
2023 201
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v3.26.3
COMMITMENTS AND CONTINGENCIES (Tables)
12 Months Ended
Dec. 31, 2025
Commitments and Contingencies Disclosure [Abstract]
Schedule of Current and Long-Term Warranty Accruals
A summary of the current and long-term warranty accruals is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 150 $ 136 $ 125
Provision 82 81 100
Settled (60) (65) (91)
Warranty accruals from business acquisition and other 2 (3) 2
Balance at December 31 $ 174 $ 150 $ 136
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v3.26.3
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]
Schedule of Income (Loss) before Income Taxes
Eaton Corporation plc is domiciled in Ireland. Income (loss) before income taxes and income tax expense (benefit) are summarized below based on the geographic location of the operation to which such earnings and income taxes are attributable.
Income (loss) before income taxes
(In millions) 2025 2024 2023
Ireland $ 188 $ 183 $ (3)
Foreign 4,744 4,383 3,830
Total income before income taxes $ 4,932 $ 4,566 $ 3,827
Schedule of Income Tax Expense (Benefit)
Income tax expense (benefit)
(In millions) 2025 2024 2023
Current
Ireland $ 85 $ 128 $ 42
Foreign 711 794 744
Total current income tax expense 796 922 786
Deferred
Ireland (3) (16) 1
Foreign 48 (138) (183)
Total deferred income tax expense (benefit) 45 (154) (182)
Total income tax expense $ 841 $ 768 $ 604
Schedule of Reconciliation of Effective Income Tax Rate
Reconciliations of income taxes from the Ireland national statutory rate of 25% to the consolidated effective income tax rate are as follows:
2025
(Amounts in millions) Amount Percent
Income taxes at the applicable statutory rate $ 1,233 25.0 %
Ireland
Nontaxable or nondeductible items
Nondeductible interest expense 78 1.6 %
Other Adjustments
Tax rate differential - Ireland tax on trading income (61) (1.2) %
Other items - net 30 0.6 %
Foreign tax effects
United States
Tax rate differential (96) (1.9) %
State and local income taxes 62 1.3 %
Effect of cross-border tax laws – foreign derived intangible income
(64) (1.3) %
Other items - net (61) (1.2) %
United Arab Emirates
Tax rate differential (86) (1.7) %
Other items - net 32 0.6 %
Puerto Rico operations
Tax rate differential (71) (1.4) %
Other foreign jurisdictions (33) (0.7) %
Changes in unrecognized tax benefits (123) (2.5) %
Effective income tax expense rate $ 841 17.1 %
2024 2023
Income taxes at the applicable statutory rate 25.0 % 25.0 %
Ireland operations
Ireland tax on trading income (0.9) % (1.3) %
Nondeductible interest expense 0.9 % 2.6 %
Ireland other - net 1.2 % (0.2) %
Foreign operations
Earnings taxed at other than the applicable statutory tax rate (6.7) % (9.9) %
Other items (0.2) % 2.2 %
Worldwide operations
Adjustments to tax liabilities 0.1 % (0.2) %
Adjustments to valuation allowances (2.6) % (2.4) %
Effective income tax expense rate 16.8 % 15.8 %
Schedule of Worldwide Income Tax Payments
Worldwide income tax payments, net of tax refunds, are as follows:
(In millions) 2025
Ireland $ 105
Foreign
United States 374
Germany 72
Other foreign 358
Total income taxes paid $ 909
2024 total income taxes paid $ 752
2023 total income taxes paid 727
Schedule of Components of Deferred Income Taxes
Components of noncurrent deferred income taxes are as follows:
December 31
2025 2024
(In millions) Noncurrent assets and liabilities
Accruals and other adjustments
Employee benefits $ 250 $ 295
Depreciation and amortization (792) (791)
Other accruals and adjustments 609 460
Ireland income tax loss carryforwards 1 1
Foreign income tax loss carryforwards 3,784 3,674
Foreign income tax credit carryforwards 213 252
Valuation allowance for income tax loss and income tax credit carryforwards (3,623) (3,556)
Total deferred income taxes $ 442 $ 334
Schedule of Foreign Tax Loss Carryforwards and Income Tax Credit Carryforwards
These carryforwards and their respective expiration dates are summarized below:
(In millions) 2026
through
2030 2031
through
2035 2036
through
2040 2041
through
2050 Not
subject to
expiration
Valuation
allowance
Ireland income tax loss carryforwards $ — $ — $ — $ — $ 8 $ —
Ireland deferred income tax assets for income tax loss
carryforwards — — — — 1 (1)
Foreign income tax loss carryforwards 26 739 10,914 208 6,396 —
Foreign deferred income tax assets for income tax loss carryforwards
6 179 2,608 51 943 (3,527)
Foreign deferred income tax assets for income tax loss carryforwards after ASU 2013-11
4 179 2,608 51 943 (3,527)
Foreign income tax credit carryforwards
148 48 27 20 43 (95)
Foreign income tax credit carryforwards after ASU 2013-11
82 45 23 20 43 (95)
Schedule of Unrecognized Tax Benefits
A summary of gross unrecognized income tax benefits is as follows:
(In millions) 2025 2024 2023
Balance at January 1 $ 1,361 $ 1,300 $ 1,235
Increases and decreases as a result of positions taken during prior years
Other increases, including currency translation 6 22 42
Other decreases, including currency translation (31) (22) (5)
Increases as a result of positions taken during the current year 86 93 86
Decreases relating to settlements with tax authorities (20) (18) (6)
Decreases as a result of a lapse of the applicable statute of limitations (102) (14) (52)
Balance at December 31 $ 1,300 $ 1,361 $ 1,300
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v3.26.3
EATON SHAREHOLDERS' EQUITY (Tables)
12 Months Ended
Dec. 31, 2025
Equity [Abstract]
Schedule of Pre-Tax and After-Tax Amounts Recognized in Comprehensive Income (Loss)
The following table summarizes the pre-tax and after-tax amounts recognized in Comprehensive income (loss):
2025 2024 2023
(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Currency translation and related hedging instruments
Gain (loss) from currency translation and related hedging
instruments $ 246 $ 255 $ (358) $ (355) $ 252 $ 247
Amortization of gains on net investment hedges (amount
excluded from effectiveness testing) reclassified to earnings (15) (15) (15) (15) (12) (12)
231 240 (373) (370) 241 235
Pensions and other postretirement benefits
Prior service credit (cost) arising during the year (10) (7) 1 1 — —
Net gain (loss) arising during the year (27) (18) (141) (104) (246) (189)
Currency translation (55) (43) 18 13 (29) (21)
Amortization of actuarial loss and prior service cost
reclassified to earnings 67 50 55 41 32 24
(25) (18) (67) (49) (243) (185)
Cash flow hedges
Gain (loss) on derivatives designated as cash flow hedges 29 23 (6) (5) 63 50
Changes in cash flow hedges reclassified to earnings (27) (22) (16) (12) (78) (61)
2 1 (22) (17) (14) (11)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders $ 208 $ 223 $ (462) $ (436) $ (17) $ 39
Schedule of Changes in Accumulated Other Comprehensive Loss
The changes in Accumulated other comprehensive loss are as follows:
(In millions) Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow
hedges Total
Balance at January 1, 2025
$ (3,399) $ (1,044) $ 101 $ (4,342)
Other comprehensive income (loss) before
reclassifications 255 (68) 23 210
Amounts reclassified from Accumulated other
comprehensive loss (income) (15) 50 (22) 13
Net current-period Other comprehensive
income (loss) 240 (18) 1 223
Balance at December 31, 2025
$ (3,159) $ (1,062) $ 102 $ (4,118)
Schedule of Reclassifications out of Accumulated Other Comprehensive Loss
The reclassifications out of Accumulated other comprehensive loss are as follows:
(In millions) December 31, 2025 Consolidated Statements
of Income classification
Gains and (losses) on net investment hedges (amount excluded
from effectiveness testing)
Currency exchange contracts $ 15 Interest expense - net
Tax expense —
Total, net of tax 15
Amortization of defined benefits pensions and other
postretirement benefits items
Actuarial loss and prior service cost (67) 1
Tax benefit 17
Total, net of tax (50)
Gains and (losses) on cash flow hedges
Floating-to-fixed interest rate swaps 13 Interest expense - net
Currency exchange contracts 13 Net sales and Cost of products sold
Commodity contracts 1 Cost of products sold
Tax expense (6)
Total, net of tax 22
Total reclassifications for the period $ (13)
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 10 for additional information about pension and other postretirement benefits items.
Schedule of Net Income per Share
A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
(In millions except for per share data) 2025 2024 2023
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
Weighted-average number of ordinary shares outstanding - diluted 391.2 399.4 401.1
Less dilutive effect of equity-based compensation 1.3 1.8 2.0
Weighted-average number of ordinary shares outstanding - basic 389.9 397.6 399.1
Net income per share attributable to Eaton ordinary shareholders
Diluted $ 10.45 $ 9.50 $ 8.02
Basic 10.48 9.54 8.06
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v3.26.3
EQUITY-BASED COMPENSATION (Tables)
12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]
Schedule of RSU and RSA activity
A summary of the RSU and RSA activity for 2025 is as follows:
(Restricted stock units and awards in millions) Number of restricted
stock units and awards Weighted-average fair
value per unit and award
Non-vested at January 1 0.7 $ 202.76
Granted 0.3 305.76
Vested (0.4) 210.02
Forfeited — 275.66
Non-vested at December 31 0.6 $ 244.44
Schedule of Information Related to RSUs and RSAs
Information related to RSUs and RSAs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for RSUs and RSAs $ 84 $ 74 $ 65
After-tax expense for RSUs and RSAs 65 58 51
Fair value of vested RSUs and RSAs 107 126 84
Schedule of Assumptions Used in Determining Fair Value of PSUs
A summary of the assumptions used in determining fair value of these PSUs is as follows:
2025 2024 2023
Expected volatility 29 % 26 % 27 %
Risk-free interest rate 3.96 % 4.36 % 4.35 %
Weighted-average fair value of PSUs granted $ 296.52 $ 362.38 $ 203.18
Schedule of PSU Activity
A summary of these PSUs that vested is as follows:
(Performance share units in millions) 2025 2024 2023
Percent payout 138 % 163 % 187 %
Shares vested 0.2 0.2 0.3
A summary of the 2025 activity for these PSUs is as follows:
(Performance share units in millions) Number of performance
share units Weighted-average fair
value per unit
Non-vested at January 1 0.2 $ 248.21
Granted1
0.1 296.52
Adjusted for performance results achieved2
— 203.18
Vested (0.2) 203.18
Forfeited (0.1) 303.41
Non-vested at December 31 0.1 $ 332.05
1 Performance shares granted assuming the Company will perform at target relative to peers.
2 Adjustments for the number of shares vested under the 2023 awards at the end of the three-year performance period ended December 31, 2025, being higher than the target number of shares.
Schedule of Information Related to PSUs
Information related to PSUs is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for PSUs $ 22 $ 23 $ 22
After-tax expense for PSUs 18 18 17
Schedule of Assumptions Used in Determining Fair Value of Stock Options
A summary of the assumptions used in determining the fair value of stock options is as follows:
2025 2024 2023
Expected volatility 30 % 29 % 27 %
Expected option life in years 6.2 6.3 6.3
Expected dividend yield 1.5 % 1.5 % 2.0 %
Risk-free interest rate
4.3%
4.0 to 4.5%
4.1 to 4.3%
Weighted-average fair value of stock options granted $ 102.50 $ 93.42 $ 48.79
Schedule of Stock Option Activity
A summary of stock option activity is as follows:
(Options and aggregate intrinsic value in millions) Weighted-average
exercise price per option Options Weighted-average
remaining
contractual life
in years Aggregate
intrinsic
value
Outstanding at January 1, 2025
$ 130.25 1.6
Granted 297.35 0.1
Exercised 104.73 (0.4)
Forfeited and canceled 252.95 —
Outstanding at December 31, 2025
$ 152.22 1.3 5.2 $ 214
Exercisable at December 31, 2025
$ 119.93 1.0 4.3 $ 199
Reserved for future grants at December 31, 2025
17.1
Schedule of Information Related to Stock Options
Information related to stock options is as follows:
(In millions) 2025 2024 2023
Pre-tax expense for stock options $ 20 $ 11 $ 10
After-tax expense for stock options 16 9 8
Proceeds from stock options exercised 39 69 78
Income tax benefit related to stock options exercised
Tax benefit classified in operating activities in the Consolidated
Statements of Cash Flows 17 30 22
Intrinsic value of stock options exercised 88 165 116
Total fair value of stock options vested $ 11 $ 11 $ 10
Stock options exercised 0.4 0.8 1.0
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v3.26.3
FAIR VALUE MEASUREMENTS (Tables)
12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]
Schedule of Financial Instruments Recognized at Fair Value
A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
(In millions) Total Quoted prices in active markets for identical assets
(Level 1) Other observable inputs
(Level 2) Unobservable inputs
(Level 3)
December 31, 2025
Cash $ 622 $ 622 $ — $ —
Short-term investments 181 181 — —
Derivative contract assets
26 — 26 —
Derivative contract liabilities
(64) — (64) —
Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) (31) — — (31)
December 31, 2024
Cash $ 555 $ 555 $ — $ —
Short-term investments 1,525 1,525 — —
Derivative contract assets
28 — 28 —
Derivative contract liabilities
(44) — (44) —
Schedule of Carrying Value of Short-Term Investments
A summary of short-term investments is as follows:
December 31
(In millions) 2025 2024
Time deposits and certificates of deposit with banks $ 181 $ 157
Money market investments — 1,368
Total short-term investments $ 181 $ 1,525
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v3.26.3
RESTRUCTURING CHARGES (Tables)
12 Months Ended
Dec. 31, 2025
Restructuring and Related Activities [Abstract]
Schedule of Restructuring Program Charges
A summary of restructuring program charges is as follows:
(In millions except for per share data) 2025 2024 2023
Workforce reductions $ 81 $ 120 $ 19
Plant closing and other 52 83 38
Total before income taxes 133 202 57
Income tax benefit 29 43 11
Total after income taxes $ 103 $ 160 $ 46
Per ordinary share - diluted $ 0.26 $ 0.40 $ 0.11
Restructuring program charges related to the following segments:
(In millions) 2025 2024 2023
Electrical Americas $ 14 $ 12 $ 5
Electrical Global 63 88 26
Aerospace 10 9 5
Mobility1
31 64 13
Corporate 14 29 8
Total $ 133 $ 202 $ 57
Schedule of Liabilities Related to Restructuring
A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
(In millions) Workforce reductions Plant closing and other Total
Balance at January 1, 2024
$ 35 $ 6 $ 41
Liability recognized, net 120 83 202
Payments, utilization and translation (59) (81) (141)
Balance at December 31, 2024
96 7 103
Liability recognized, net1
81 52 133
Payments, utilization and translation (67) (51) (118)
Balance at December 31, 2025
$ 109 $ 8 $ 118
1The restructuring program liability was adjusted by $12 million in the fourth quarter of 2025 primarily related to true-ups for completed workforce reductions in the Mobility segment.
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v3.26.3
BUSINESS SEGMENT INFORMATION (Tables)
12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]
Schedule of Business Segment Information
Business Segment Information
(In millions) 2025 2024 2023
Net sales
Electrical Americas $ 13,276 $ 11,436 $ 10,098
Electrical Global 6,815 6,248 6,084
Aerospace 4,249 3,744 3,413
Mobility 3,109 3,451 3,601
Total net sales $ 27,448 $ 24,878 $ 23,196
Other segment items
Electrical Americas $ 9,304 $ 7,981 $ 7,423
Electrical Global 5,492 5,099 4,908
Aerospace 3,236 2,885 2,633
Mobility 2,704 2,955 3,140
Total other segment items $ 20,735 $ 18,919 $ 18,103
Segment operating profit
Electrical Americas $ 3,972 $ 3,455 $ 2,675
Electrical Global 1,323 1,149 1,176
Aerospace 1,013 859 780
Mobility 405 496 461
Total segment operating profit 6,713 5,959 5,093
Corporate
Intangible asset amortization expense (486) (425) (450)
Interest expense - net (241) (130) (151)
Pension and other postretirement benefits income 19 40 46
Restructuring program charges (133) (202) (57)
Other expense - net (941) (675) (654)
Income before income taxes 4,932 4,566 3,827
Income tax expense 841 768 604
Net income 4,090 3,798 3,223
Less net income for noncontrolling interests (3) (4) (5)
Net income attributable to Eaton ordinary shareholders $ 4,087 $ 3,794 $ 3,218
Schedule of Identifiable Assets, Capital Expenditures, and Depreciation by Segment
(In millions) 2025 2024 2023
Identifiable assets
Electrical Americas $ 6,283 $ 4,933 $ 4,163
Electrical Global 3,852 3,233 2,868
Aerospace 2,684 2,392 2,276
Mobility 2,708 2,620 2,814
Total identifiable assets 15,526 13,178 12,121
Goodwill 15,769 14,713 14,977
Other intangible assets 5,054 4,658 5,091
Corporate 4,902 5,833 6,243
Total assets $ 41,251 $ 38,381 $ 38,432
Capital expenditures for property, plant and equipment
Electrical Americas $ 413 $ 362 $ 309
Electrical Global 249 163 142
Aerospace 103 83 97
Mobility 103 158 172
Total 868 766 721
Corporate 52 42 36
Total expenditures for property, plant and equipment $ 919 $ 808 $ 757
Depreciation of property, plant and equipment
Electrical Americas $ 133 $ 118 $ 108
Electrical Global 108 102 96
Aerospace 77 70 69
Mobility 123 120 113
Total 441 409 386
Corporate 36 37 43
Total depreciation of property, plant and equipment $ 477 $ 446 $ 429
Schedule of Geographic Region Information
Net sales are measured based on the geographic destination of sales. Long-lived assets consist of property, plant and equipment - net.
(In millions) 2025 2024 2023
Net sales
United States $ 17,122 $ 15,151 $ 14,071
Canada 1,083 1,058 949
Latin America 1,461 1,680 1,549
Europe 5,078 4,530 4,339
Asia Pacific 2,704 2,459 2,288
Total $ 27,448 $ 24,878 $ 23,196
Long-lived assets
United States $ 2,344 $ 1,990 $ 1,773
Canada 42 31 31
Latin America 524 465 476
Europe 935 790 797
Asia Pacific 472 453 453
Total $ 4,316 $ 3,729 $ 3,530
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v3.26.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)
$ in Millions
12 Months Ended
Dec. 31, 2025
USD ($)
country
reporting_unit
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
Accounting Policies [Line Items]
Net sales
$ 27,448
$ 24,878
$ 23,196
Countries where products are sold (more than) | country
180
Investments in associate companies
$ 903
872
Income (loss) from investments in associate companies
8
12
20
Gains from remeasurement of foreign currency
$ 13
15
27
Other postretirement benefits expense (income)
Accounting Policies [Line Items]
Defined benefit plan, amortization period of gain (loss)
9 years
Aerospace Segment
Accounting Policies [Line Items]
Net sales
$ 4,249
$ 3,744
$ 3,413
Number of reporting units | reporting_unit
2
United States | Pension plans
Accounting Policies [Line Items]
Defined benefit plan, amortization period of gain (loss)
21 years
Non-United States plans | Pension plans
Accounting Policies [Line Items]
Defined benefit plan, amortization period of gain (loss)
10 years
Minimum
Accounting Policies [Line Items]
Defined benefit plan, accounting corridor for amortization of net actuarial gains (losses) (as a percent)
8.00%
Portion of intercompany balance sheet exposure (as a percent)
95.00%
Maximum
Accounting Policies [Line Items]
Defined benefit plan, accounting corridor for amortization of net actuarial gains (losses) (as a percent)
10.00%
Portion of intercompany balance sheet exposure (as a percent)
100.00%
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Depreciation and Amortization Periods (Details)
Dec. 31, 2025
Customer relationships
Long-Lived Assets [Line Items]
Weighted-average amortization period of finite-lived intangible assets
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Patents and technology
Long-Lived Assets [Line Items]
Weighted-average amortization period of finite-lived intangible assets
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Certain trademarks
Long-Lived Assets [Line Items]
Weighted-average amortization period of finite-lived intangible assets
18 years
Buildings
Long-Lived Assets [Line Items]
Useful life
40 years
Machinery and equipment | Minimum
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Useful life
3 years
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Software | Minimum
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v3.26.3
ACQUISITIONS AND DIVESTITURE OF BUSINESSES - Narrative (Details)
$ in Millions
3 Months Ended
9 Months Ended
12 Months Ended
Jan. 23, 2026
USD ($)
Aug. 06, 2025
USD ($)
Apr. 01, 2025
USD ($)
installment
Jun. 30, 2026
USD ($)
employee
Dec. 31, 2025
USD ($)
Dec. 31, 2025
USD ($)
Feb. 28, 2025
USD ($)
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
May 31, 2024
Apr. 23, 2023
Business Combination [Line Items]
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$ 50
$ 0
Jiangsu Huineng Electric Co. Ltd.
Business Combination [Line Items]
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49.00%
NordicEPOD AS
Business Combination [Line Items]
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49.00%
Fibrebond Corporation
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Acquired entity, prior year sales
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6
Operating profit of acquiree since acquisition date
$ 156
Revenue of acquiree since acquisition date
$ 474
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Business Combination [Line Items]
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17 years
Fibrebond Corporation | Technology
Business Combination [Line Items]
Adjusted preliminary estimated fair value
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Useful life of intangible assets acquired
9 years
Fibrebond Corporation | Trademarks
Business Combination [Line Items]
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Useful life of intangible assets acquired
17 years
Fibrebond Corporation | Backlog Intangible Assets
Business Combination [Line Items]
Adjusted preliminary estimated fair value
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Useful life of intangible assets acquired
2 years
Fibrebond Corporation | Cost of products sold
Business Combination [Line Items]
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51
Fibrebond Corporation | Selling, General and Administrative Expenses
Business Combination [Line Items]
Employee compensation expense
16
Fibrebond Corporation | Other Expense
Business Combination [Line Items]
Employee compensation expense
15
Resilient Power Systems Inc.
Business Combination [Line Items]
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$ 55
Total consideration for acquisition
86
Contingent consideration expected to be paid
31
Maximum potential payments based on future revenue performance
45
Employee incentives, maximum payout
$ 50
38
Business acquisition, recognized liability assumed, employee incentives, term
3 years
Resilient Power Systems Inc. | Selling, General and Administrative Expenses
Business Combination [Line Items]
Business acquisition, employee incentives expense
$ 10
Boyd Thermal | Forecast
Business Combination [Line Items]
Cash purchase price, net of cash received
$ 9,500
Number of employees | employee
5,000
Ultra PCS Limited | Subsequent Event
Business Combination [Line Items]
Cash purchase price, net of cash received
$ 1,530
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v3.26.3
ACQUISITIONS AND DIVESTITURE OF BUSINESSES - Assets Acquired and Liabilities Assumed (Details) - USD ($)
$ in Millions
9 Months Ended
Dec. 31, 2025
Apr. 01, 2025
Dec. 31, 2024
Dec. 31, 2023
Allocations
Goodwill
$ 15,769
$ 14,713
$ 14,977
Fibrebond Corporation
Allocations
Accounts receivable
45
$ 50
Measurement Period Adjustments, Accounts receivable
(5)
Inventory
101
96
Measurement Period Adjustments, Inventory
5
Prepaid expenses and other current assets
67
72
Measurement Period Adjustments, Prepaid expenses and other current assets
(5)
Property, plant and equipment
117
104
Measurement Period Adjustments, Property, plant, and equipment
13
Other intangible assets
715
709
Measurement Period Adjustments, Other intangible assets
6
Other assets
3
3
Measurement Period Adjustments, Other assets
0
Accounts payable
(48)
(48)
Measurement Period Adjustments, Accounts payable
0
Other current liabilities
(80)
(106)
Measurement Period Adjustments, Other current liabilities
26
Other noncurrent liabilities
(25)
(2)
Measurement Period Adjustments, Other noncurrent liabilities
(23)
Total identifiable net assets
895
878
Measurement Period Adjustments, Total identifiable net assets
17
Goodwill
540
572
Measurement Period Adjustments, Goodwill
(32)
Total consideration, net of cash received
1,435
$ 1,450
Measurement Period Adjustments, Total consideration, net of cash received
$ (15)
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v3.26.3
REVENUE RECOGNITION - Narrative (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Disaggregation of Revenue [Line Items]
Sales recognized over time, as a percent of Consolidated Net Sales (less than) (as a percent)
7.00%
5.00%
5.00%
Accrued rebates
$ 360
$ 361
Accounts receivables from customers
4,682
4,079
Unbilled receivables
759
330
Deferred revenue liabilities, included in other current liabilities
899
$ 602
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
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Backlog of unsatisfied or partially satisfied obligations
$ 19,800
Backlog expected to be recognized in the next twelve months, percent
69.00%
Expected timing of satisfaction
12 months
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v3.26.3
REVENUE RECOGNITION - Disaggregation of Sales (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Disaggregation of Revenue [Line Items]
Total net sales
$ 27,448
$ 24,878
$ 23,196
Electrical Americas
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Total net sales
13,276
11,436
10,098
Electrical Global
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Total net sales
6,815
6,248
6,084
Aerospace
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Total net sales
4,249
3,744
3,413
Aerospace | Original Equipment Manufacturers
Disaggregation of Revenue [Line Items]
Total net sales
1,640
1,500
1,350
Aerospace | Aftermarket
Disaggregation of Revenue [Line Items]
Total net sales
1,553
1,312
1,183
Aerospace | Industrial and Other
Disaggregation of Revenue [Line Items]
Total net sales
1,055
931
878
Mobility
Disaggregation of Revenue [Line Items]
Total net sales
3,109
3,451
3,601
Products | Electrical Americas
Disaggregation of Revenue [Line Items]
Total net sales
3,205
3,009
2,949
Products | Electrical Global
Disaggregation of Revenue [Line Items]
Total net sales
3,885
3,493
3,462
Systems | Electrical Americas
Disaggregation of Revenue [Line Items]
Total net sales
10,070
8,426
7,149
Systems | Electrical Global
Disaggregation of Revenue [Line Items]
Total net sales
2,930
2,755
2,622
Vehicle | Mobility
Disaggregation of Revenue [Line Items]
Total net sales
2,505
2,790
2,965
eMobility | Mobility
Disaggregation of Revenue [Line Items]
Total net sales
$ 604
$ 662
$ 636
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REVENUE RECOGNITION - Changes in Deferred Revenue Liabilities (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Movement in Deferred Revenue [Roll Forward]
Balance at beginning of period
$ 618
$ 626
Customer deposits and billings
4,074
2,719
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(3,854)
(2,712)
Deferred revenue from business acquisition
73
Translation
12
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$ 923
$ 618
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v3.26.3
CREDIT LOSSES FOR RECEIVABLES (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Credit Loss [Abstract]
Allowance for credit losses
$ 57
$ 55
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v3.26.3
INVENTORY (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Inventory Disclosure [Abstract]
Raw materials
$ 1,726
$ 1,614
Work-in-process
1,034
1,038
Finished goods
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v3.26.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill by Segment (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Goodwill [Roll Forward]
Balance at beginning of period
$ 14,713
$ 14,977
Additions
581
17
Translation
475
(281)
Balance at end of period
15,769
14,713
Electrical Americas
Goodwill [Roll Forward]
Balance at beginning of period
7,396
7,415
Additions
581
17
Translation
33
(35)
Balance at end of period
8,010
7,396
Electrical Global
Goodwill [Roll Forward]
Balance at beginning of period
3,842
4,038
Additions
0
0
Translation
314
(196)
Balance at end of period
4,156
3,842
Aerospace
Goodwill [Roll Forward]
Balance at beginning of period
2,856
2,901
Additions
0
0
Translation
121
(45)
Balance at end of period
2,977
2,856
Mobility
Goodwill [Roll Forward]
Balance at beginning of period
619
623
Additions
0
0
Translation
7
(5)
Balance at end of period
$ 626
$ 619
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3 Months Ended
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Mar. 31, 2026
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v3.26.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets by Major Class (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Summary of other intangible assets
Intangible assets not subject to amortization
$ 1,215
$ 1,200
Intangible assets subject to amortization
Historical cost
8,911
7,915
Accumulated amortization
5,071
4,456
Customer relationships
Intangible assets subject to amortization
Historical cost
5,236
4,659
Accumulated amortization
2,934
2,577
Patents and technology
Intangible assets subject to amortization
Historical cost
2,225
1,979
Accumulated amortization
1,191
1,056
Trademarks
Intangible assets subject to amortization
Historical cost
1,214
1,107
Accumulated amortization
787
693
Other
Intangible assets subject to amortization
Historical cost
235
169
Accumulated amortization
$ 159
$ 131
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v3.26.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization Expense of Intangible Assets (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2025
$ 461
2026
469
2027
438
2028
365
2029
328
2030
$ 286
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v3.26.3
SUPPLY CHAIN FINANCE PROGRAM (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Supplier Finance Program, Obligation [Roll Forward]
Balance at beginning period
$ 398
$ 369
Invoices confirmed during the period
1,728
1,424
Invoices paid during the period
(1,583)
(1,389)
Translation
(6)
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$ 543
$ 398
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v3.26.3
LEASES - Components of Lease Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Leases [Abstract]
Operating lease cost
$ 251
$ 227
$ 200
Finance lease cost:
Amortization of lease assets
9
12
15
Interest on lease liabilities
1
1
1
Short-term lease cost
23
19
18
Variable lease cost
26
29
28
Sublease income
(1)
(1)
(1)
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$ 309
$ 287
$ 261
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v3.26.3
LEASES - Narrative (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Mar. 31, 2025
Lessee, Lease, Description [Line Items]
Gain on sale leaseback transactions
$ 38
$ 56
$ 53
Construction in progress, expected costs
$ 185
Remaining lease term (in years)
5 years
Residual value guarantee, percentage
85.00%
Minimum
Lessee, Lease, Description [Line Items]
Lease term
2 years
Maximum
Lessee, Lease, Description [Line Items]
Lease term
15 years
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v3.26.3
LEASES - Supplemental Cash Flow Information Related to Leases (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows - payments on operating leases
$ (198)
$ (200)
$ (180)
Operating cash outflows - interest payments on finance leases
(1)
(1)
(1)
Financing cash outflows - payments on finance lease obligations
(9)
(14)
(18)
Lease assets obtained in exchange for new lease obligations, including leases acquired:
Operating leases
193
268
183
Finance leases
$ 6
$ 13
$ 38
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v3.26.3
LEASES - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Lessee, Lease, Description [Line Items]
Operating lease assets
$ 768
$ 806
Other current liabilities
152
163
Operating lease liabilities
637
669
Total operating lease liabilities
789
832
Accumulated depreciation
(31)
(37)
Net property, plant and equipment
25
29
Current portion of long-term debt
7
9
Long-term debt
18
19
Total finance lease liabilities
$ 25
$ 28
Weighted-average remaining lease term
Operating leases
8 years
7 years 1 month 6 days
Finance leases
4 years 8 months 12 days
4 years 2 months 12 days
Weighted-average discount rate
Operating leases
4.70%
4.40%
Finance leases
3.80%
3.70%
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]
Other current liabilities
Other current liabilities
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]
Property, Plant and Equipment, Net
Property, Plant and Equipment, Net
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]
Long-Term Debt and Lease Obligation, Current
Long-Term Debt and Lease Obligation, Current
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]
Long-term debt less current portion
Long-term debt less current portion
Land and buildings
Lessee, Lease, Description [Line Items]
Finance Lease, right-of-use asset
$ 9
$ 5
Machinery and equipment
Lessee, Lease, Description [Line Items]
Finance Lease, right-of-use asset
$ 47
$ 61
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Filename: R61.htm · Sequence: 70
v3.26.3
LEASES - Maturities of Operating and Financing Lease Liabilities (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Operating Leases
2026
$ 183
2027
150
2028
122
2029
97
2030
72
Thereafter
332
Total lease payments
957
Less imputed interest
168
Total present value of lease liabilities
789
$ 832
Finance Leases
2026
8
2027
7
2028
4
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3
2030
2
Thereafter
3
Total lease payments
27
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2
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$ 28
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v3.26.3
DEBT - Long-term Debt, including Current Portion (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2024
Dec. 31, 2025
Debt Instrument [Line Items]
Finance leases
$ 28
$ 25
Deferred debt issuance costs
(45)
(47)
Unamortized discount
$ (7)
(13)
Hedged Liability Statement Of Financial Position Extensible Enumeration Not Disclosed Flag
Fair value hedging adjustment
Fair value hedging adjustment
$ 37
31
Long-term debt
9,152
9,894
Less current portion of long-term debt
(674)
(1,136)
Long-term debt less current portion
8,478
8,758
Notes | 0.70% Euro notes due 2025
Debt Instrument [Line Items]
Long-term debt
520
$ 0
Debt instrument, stated interest rate
0.70%
Notes | 0.128% Euro notes due 2026
Debt Instrument [Line Items]
Long-term debt
935
$ 1,057
Debt instrument, stated interest rate
0.128%
Notes | 0.577% Euro notes due 2030
Debt Instrument [Line Items]
Long-term debt
624
$ 704
Debt instrument, stated interest rate
0.577%
Notes | 3.601% Euro notes due 2031
Debt Instrument [Line Items]
Long-term debt
520
$ 587
Debt instrument, stated interest rate
3.601%
Notes | 3.625% Euro notes due 2035
Debt Instrument [Line Items]
Long-term debt
0
$ 587
Debt instrument, stated interest rate
3.625%
Notes | 3.802% Euro notes due 2036
Debt Instrument [Line Items]
Long-term debt
520
$ 587
Debt instrument, stated interest rate
3.802%
Notes | 5.80% notes due 2037
Debt Instrument [Line Items]
Long-term debt
240
$ 240
Debt instrument, stated interest rate
5.80%
Notes | 5.25% to 7.875% notes (maturities ranging from 2026 to 2035)
Debt Instrument [Line Items]
Long-term debt
99
$ 99
Notes | 5.25% to 7.875% notes (maturities ranging from 2026 to 2035) | Minimum
Debt Instrument [Line Items]
Debt instrument, stated interest rate
5.25%
Notes | 5.25% to 7.875% notes (maturities ranging from 2026 to 2035) | Maximum
Debt Instrument [Line Items]
Debt instrument, stated interest rate
7.875%
Debentures | 6.50% debentures due 2025
Debt Instrument [Line Items]
Long-term debt
145
$ 0
Debt instrument, stated interest rate
6.50%
Debentures | 7.65% debentures due 2029
Debt Instrument [Line Items]
Long-term debt
200
$ 200
Debt instrument, stated interest rate
7.65%
Debentures | 5.45% debentures due 2034
Debt Instrument [Line Items]
Long-term debt
137
$ 137
Debt instrument, stated interest rate
5.45%
Senior notes | 3.10% senior notes due 2027
Debt Instrument [Line Items]
Long-term debt
700
$ 700
Debt instrument, stated interest rate
3.10%
Senior notes | 4.35% senior notes due 2028
Debt Instrument [Line Items]
Long-term debt
500
$ 500
Debt instrument, stated interest rate
4.35%
Senior notes | 4.450% senior notes due 2030
Debt Instrument [Line Items]
Long-term debt
0
$ 500
Debt instrument, stated interest rate
4.45%
Senior notes | 4.00% senior notes due 2032
Debt Instrument [Line Items]
Long-term debt
700
$ 700
Debt instrument, stated interest rate
4.00%
Senior notes | 4.15% sustainability-linked senior notes due 2033
Debt Instrument [Line Items]
Long-term debt
1,300
$ 1,300
Debt instrument, stated interest rate
4.15%
Senior notes | 4.15% senior notes due 2042
Debt Instrument [Line Items]
Long-term debt
1,000
$ 1,000
Debt instrument, stated interest rate
4.15%
Senior notes | 3.92% senior notes due 2047
Debt Instrument [Line Items]
Long-term debt
300
$ 300
Debt instrument, stated interest rate
3.92%
Senior notes | 4.70% senior notes due 2052
Debt Instrument [Line Items]
Long-term debt
$ 700
$ 700
Debt instrument, stated interest rate
4.70%
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Filename: R63.htm · Sequence: 72
v3.26.3
DEBT - Narrative (Details)
€ in Millions, $ in Millions
12 Months Ended
May 09, 2025
USD ($)
May 09, 2025
EUR (€)
Dec. 31, 2025
USD ($)
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
Feb. 06, 2026
USD ($)
Sep. 29, 2025
USD ($)
May 09, 2025
EUR (€)
Debt Instrument [Line Items]
Proceeds from borrowings
$ 1,058
$ 1,084
$ 818
Short-term debt
1
$ 0
Revolving Credit Facility
Debt Instrument [Line Items]
Borrowings outstanding
0
Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
$ 4,000
Credit facility, borrowing capacity upsized
1,000
Credit facility, current borrowing capacity
3,000
Letter of Credit
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
872
Letters of credit outstanding, amount
$ 350
Delayed Draw Term Loan (DDTL) | Subsequent Event
Debt Instrument [Line Items]
Face value of debt instrument
8,000
0.128% Euro Notes Due 2026 | Tranche One | Notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
0.128%
0.577% Euro Notes Due 2030 | Tranche Two | Notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
0.577%
3.601% Euro notes due 2031 | Notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
3.601%
3.802% Euro notes due 2036 | Notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
3.802%
2025 Euro Notes | Senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
3.625%
3.625%
Face value of debt instrument
$ 564
€ 500
Proceeds from borrowings
$ 558
€ 494
Redemption price (as a percent)
101.00%
101.00%
2025 Notes | Senior notes
Debt Instrument [Line Items]
Debt instrument, stated interest rate
4.45%
4.45%
Face value of debt instrument
$ 500
Proceeds from borrowings
$ 495
Redemption price (as a percent)
101.00%
101.00%
Five Year Credit Facility Expiring On September 27, 2030 | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
$ 3,000
Long-term debt, term
5 years
364 Day Credit Facility Dated September 30, 2024 | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
$ 500
Long-term debt, term
364 days
Five Year Credit Facility Dated October 3, 2022 | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
$ 2,500
Long-term debt, term
5 years
Commercial Paper | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
$ 3,000
Borrowings outstanding
$ 0
Commercial Paper | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity
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Credit facility, current borrowing capacity
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$ in Millions
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v3.26.3
DEBT - Interest Paid on Debt (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Debt Disclosure [Abstract]
Interest paid on debt
$ 351
$ 329
$ 319
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v3.26.3
RETIREMENT BENEFITS PLANS - Obligations and Funded Status (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Funded status
Fair value of plan assets
$ 4,191
$ 3,993
Pension plans | United States
Funded status
Fair value of plan assets
2,469
2,445
$ 2,604
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(2,650)
(2,700)
(2,824)
Funded status
(181)
(255)
Amounts recognized in the Consolidated Balance Sheets
Other assets
0
0
Other current liabilities
(9)
(29)
Pension liabilities and Other postretirement benefits liabilities
(172)
(226)
Total
(181)
(255)
Amounts recognized in Accumulated other comprehensive loss (pre-tax)
Net actuarial loss (gain)
847
904
Prior service cost
3
5
Total
850
909
871
Pension plans | Non-United States plans
Funded status
Fair value of plan assets
1,722
1,548
1,633
Benefit obligations
(2,038)
(1,863)
(2,022)
Funded status
(316)
(315)
Amounts recognized in the Consolidated Balance Sheets
Other assets
256
231
Other current liabilities
(42)
(31)
Pension liabilities and Other postretirement benefits liabilities
(530)
(515)
Total
(316)
(315)
Amounts recognized in Accumulated other comprehensive loss (pre-tax)
Net actuarial loss (gain)
738
678
Prior service cost
15
6
Total
753
684
661
Other postretirement benefits expense (income)
Funded status
Fair value of plan assets
20
18
17
Benefit obligations
(194)
(196)
(212)
Funded status
(174)
(178)
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0
0
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(13)
(14)
Pension liabilities and Other postretirement benefits liabilities
(161)
(164)
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(174)
(178)
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(72)
(87)
Prior service cost
0
0
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$ (72)
$ (87)
$ (93)
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v3.26.3
RETIREMENT BENEFITS PLANS - Change in Benefit Obligations (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Pension plans | United States
Change in benefit obligations
Balance at January 1
$ 2,700
$ 2,824
Service cost
16
18
$ 19
Interest cost
135
134
142
Actuarial loss (gain)
55
(20)
Gross benefits paid
(256)
(258)
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0
0
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0
2
Other
0
0
Balance at December 31
2,650
2,700
2,824
Accumulated benefit obligation
2,650
2,686
Pension plans | Non-United States plans
Change in benefit obligations
Balance at January 1
1,863
2,022
Service cost
45
46
43
Interest cost
88
85
85
Actuarial loss (gain)
13
(82)
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(139)
(121)
Currency translation
155
(87)
Plan amendments
10
(3)
Other
3
3
Balance at December 31
2,038
1,863
2,022
Accumulated benefit obligation
1,925
1,766
Other postretirement benefits expense (income)
Change in benefit obligations
Balance at January 1
196
212
Service cost
0
1
1
Interest cost
11
10
10
Actuarial loss (gain)
2
(11)
Gross benefits paid
(27)
(29)
Currency translation
1
(3)
Plan amendments
0
0
Other
11
16
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$ 194
$ 196
$ 212
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RETIREMENT BENEFITS PLANS - Narrative (Details) - Pension plans - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2026
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
United States
Defined Benefit Plan Disclosure [Line Items]
Actuarial loss (gain)
$ 55
$ (20)
Expected long-term return on plan assets
7.00%
6.50%
6.50%
United States | Forecast
Defined Benefit Plan Disclosure [Line Items]
Expected long-term return on plan assets
7.50%
Non-United States plans
Defined Benefit Plan Disclosure [Line Items]
Actuarial loss (gain)
$ 13
$ (82)
Expected long-term return on plan assets
6.63%
6.79%
6.32%
Non-United States plans | Forecast
Defined Benefit Plan Disclosure [Line Items]
Expected long-term return on plan assets
7.00%
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v3.26.3
RETIREMENT BENEFITS PLANS - Change in Plan Assets (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Change in plan assets
Beginning balance
$ 3,993
Ending balance
4,191
$ 3,993
Pension plans
Change in plan assets
Employer contributions
124
110
$ 113
Pension plans | United States
Change in plan assets
Beginning balance
2,445
2,604
Actual return on plan assets
250
84
Employer contributions
30
15
16
Gross benefits paid
(256)
(258)
Currency translation
0
0
Other
0
0
Ending balance
2,469
2,445
2,604
Pension plans | Non-United States plans
Change in plan assets
Beginning balance
1,548
1,633
Actual return on plan assets
111
(10)
Employer contributions
94
95
97
Gross benefits paid
(139)
(121)
Currency translation
105
(52)
Other
3
3
Ending balance
1,722
1,548
1,633
Other postretirement benefits expense (income)
Change in plan assets
Beginning balance
18
17
Actual return on plan assets
2
1
Employer contributions
16
18
Gross benefits paid
(27)
(29)
Currency translation
0
0
Other
11
11
Ending balance
$ 20
$ 18
$ 17
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v3.26.3
RETIREMENT BENEFITS PLANS - Components of Pension Plans with Accumulated and Projected Benefit Obligation in Excess of Plan Assets (Details) - Pension plans - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
United States
Components of pension plans with an accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation
$ 2,650
$ 2,686
Fair value of plan assets
2,469
2,445
Components of pension plans with a projected benefit obligation in excess of plan assets
Projected benefit obligation
2,650
2,700
Fair value of plan assets
2,469
2,445
Non-United States plans
Components of pension plans with an accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation
640
701
Fair value of plan assets
121
209
Components of pension plans with a projected benefit obligation in excess of plan assets
Projected benefit obligation
738
772
Fair value of plan assets
$ 166
$ 225
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v3.26.3
RETIREMENT BENEFITS PLANS - Changes in Pension and Other Postretirement Liabilities Recognized in AOCI (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Pension plans | United States
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss
Balance at January 1
$ 909
$ 871
Prior service cost arising during the year
0
2
Net loss (gain) arising during the year
(4)
86
Currency translation
0
0
Less amounts included in expense during the year
(55)
(50)
Net change for the year
(59)
38
Balance at December 31
850
909
Pension plans | Non-United States plans
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss
Balance at January 1
684
661
Prior service cost arising during the year
10
(3)
Net loss (gain) arising during the year
30
62
Currency translation
54
(18)
Less amounts included in expense during the year
(25)
(18)
Net change for the year
69
23
Balance at December 31
753
684
Other postretirement benefits expense (income)
Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss
Balance at January 1
(87)
(93)
Prior service cost arising during the year
0
0
Net loss (gain) arising during the year
1
(7)
Currency translation
1
0
Less amounts included in expense during the year
13
13
Net change for the year
15
6
Balance at December 31
$ (72)
$ (87)
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v3.26.3
RETIREMENT BENEFITS PLANS - Benefits Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Pension plans | United States
Defined Benefit Plans and Other Postretirement Benefit Plans
Service cost
$ 16
$ 18
$ 19
Interest cost
135
134
142
Expected return on plan assets
(190)
(190)
(195)
Amortization
15
9
4
Total
(24)
(29)
(30)
Settlements, curtailments, and special termination benefits
40
41
34
Total expense (income)
16
12
4
Pension plans | Non-United States plans
Defined Benefit Plans and Other Postretirement Benefit Plans
Service cost
45
46
43
Interest cost
88
85
85
Expected return on plan assets
(128)
(134)
(121)
Amortization
16
11
7
Total
21
8
14
Settlements, curtailments, and special termination benefits
9
7
4
Total expense (income)
30
15
18
Other postretirement benefits expense (income)
Defined Benefit Plans and Other Postretirement Benefit Plans
Service cost
0
1
1
Interest cost
11
10
10
Expected return on plan assets
(1)
(1)
(1)
Amortization
(13)
(13)
(17)
Total
(3)
(3)
(7)
Settlements, curtailments, and special termination benefits
0
0
0
Total expense (income)
$ (3)
$ (3)
$ (7)
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RETIREMENT BENEFITS PLANS - Pension Plans Assumptions (Details) - Pension plans
12 Months Ended
Dec. 31, 2026
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
United States
Assumptions used to determine benefit obligation at year-end (as a percent)
Discount rate
5.34%
5.61%
5.14%
Rate of compensation increase
3.05%
3.32%
3.40%
Interest rate used to credit cash balance plans
4.56%
4.79%
4.01%
Assumptions used to determine expense (as a percent)
Discount rate used to determine benefit obligation
5.61%
5.14%
5.47%
Discount rate used to determine service cost
5.76%
5.24%
5.54%
Discount rate used to determine interest cost
5.29%
4.98%
5.33%
Expected long-term return on plan assets
7.00%
6.50%
6.50%
Rate of compensation increase
3.32%
3.40%
3.33%
Interest rate used to credit cash balance plans
4.79%
4.01%
3.67%
Non-United States plans
Assumptions used to determine benefit obligation at year-end (as a percent)
Discount rate
5.11%
4.92%
4.52%
Rate of compensation increase
3.13%
3.16%
3.17%
Interest rate used to credit cash balance plans
2.50%
2.01%
1.59%
Assumptions used to determine expense (as a percent)
Discount rate used to determine benefit obligation
4.92%
4.52%
4.83%
Discount rate used to determine service cost
5.90%
6.00%
5.90%
Discount rate used to determine interest cost
4.71%
4.47%
4.80%
Expected long-term return on plan assets
6.63%
6.79%
6.32%
Rate of compensation increase
3.16%
3.17%
3.12%
Interest rate used to credit cash balance plans
2.01%
1.59%
2.32%
Forecast | United States
Assumptions used to determine expense (as a percent)
Expected long-term return on plan assets
7.50%
Forecast | Non-United States plans
Assumptions used to determine expense (as a percent)
Expected long-term return on plan assets
7.00%
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v3.26.3
RETIREMENT BENEFITS PLANS - Other Postretirement Benefits Plan Assumptions (Details) - Other postretirement benefits expense (income)
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Assumptions used to determine benefit obligation at year-end (as a percent)
Discount rate
5.24%
5.57%
5.11%
Health care cost trend rate assumed for next year
6.50%
6.70%
7.70%
Ultimate health care cost trend rate
4.75%
4.75%
4.75%
Year ultimate health care cost trend rate is achieved
2035
2034
2033
Assumptions used to determine expense (as a percent)
Discount rate used to determine benefit obligation
5.57%
5.11%
5.46%
Discount rate used to determine service cost
5.84%
5.25%
5.53%
Discount rate used to determine interest cost
5.29%
4.96%
5.32%
Initial health care cost trend rate
6.70%
7.70%
7.10%
Ultimate health care cost trend rate
4.75%
4.75%
4.75%
Year ultimate health care cost trend rate is achieved
2034
2033
2031
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v3.26.3
RETIREMENT BENEFITS PLANS - Employer Contributions to Retirement Benefits Plans (Details) - Pension plans - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Defined Benefit Plans and Other Postretirement Benefit Plans
Expected future contributions, defined benefit plans
$ 98
Employer contributions to pension plans
124
$ 110
$ 113
United States
Defined Benefit Plans and Other Postretirement Benefit Plans
Expected future contributions, defined benefit plans
9
Employer contributions to pension plans
30
15
16
Non-United States plans
Defined Benefit Plans and Other Postretirement Benefit Plans
Expected future contributions, defined benefit plans
89
Employer contributions to pension plans
$ 94
$ 95
$ 97
X
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v3.26.3
RETIREMENT BENEFITS PLANS - Estimated Pension and Other Postretirement Benefit Payments (Details)
$ in Millions
Dec. 31, 2025
USD ($)
Pension plans | United States
Defined Benefit Plans and Other Postretirement Benefit Plans
2026
$ 276
2027
259
2028
250
2029
241
2030
226
2031 - 2035
1,008
Pension plans | Non-United States plans
Defined Benefit Plans and Other Postretirement Benefit Plans
2026
135
2027
135
2028
136
2029
141
2030
144
2031 - 2035
757
Other postretirement benefits expense (income)
Defined Benefit Plans and Other Postretirement Benefit Plans
2026
15
2027
19
2028
18
2029
17
2030
17
2031 - 2035
$ 75
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v3.26.3
RETIREMENT BENEFITS PLANS - Fair Value of Pension Plan Assets (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Defined Benefit Plan Disclosure [Line Items]
United States pension plans percentage of worldwide pension assets
59.00%
United Kingdom pension plans percentage of worldwide pension assets
26.00%
United States pension plans' target allocation of United States equities
21.00%
United States pension plans' target allocation of non-United States equities
11.00%
United States pension plans' target allocation of real estate
4.00%
United State pension plans' target allocation of debt securities
46.00%
United States pension plans' target allocation of other, including private equity, private debt, and cash equivalents
18.00%
United Kingdom pension plans' target allocation of equities
16.00%
Total pension plan assets
$ 4,191
$ 3,993
Pending purchases and sales of plan assets, and interest receivable
(67)
(85)
Unfunded commitments
158
128
Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
485
662
Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
1,999
1,952
Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
485
486
Non-United States equity and global equities | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
211
241
Non-United States equity and global equities | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Non-United States equity and global equities | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
211
241
Non-United States equity and global equities | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Fixed income | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
32
28
Fixed income | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Fixed income | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
32
28
Fixed income | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Fixed income securities | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
1,647
1,582
Fixed income securities | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Fixed income securities | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
1,647
1,582
Fixed income securities | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
United States treasuries | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
258
461
United States treasuries | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
255
453
United States treasuries | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
3
8
United States treasuries | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Real estate | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
248
212
Real estate | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
100
63
Real estate | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
32
25
Real estate | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
116
124
Cash equivalents | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
49
83
Cash equivalents | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
25
55
Cash equivalents | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
24
28
Cash equivalents | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Exchange traded funds | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
105
91
Exchange traded funds | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
105
91
Exchange traded funds | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Exchange traded funds | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Other | Fair Value, Inputs, Level 1, 2 and 3
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
419
402
Other | Quoted prices in active markets for identical assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
0
0
Other | Other observable inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
50
40
Other | Unobservable inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
369
362
Common collective and other trusts measured at net asset value | Fair Value Measured at Net Asset Value Per Share
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
1,287
$ 978
Money market funds measured at net asset value | Fair Value Measured at Net Asset Value Per Share
Defined Benefit Plan Disclosure [Line Items]
Total pension plan assets
$ 2
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Filename: R78.htm · Sequence: 87
v3.26.3
RETIREMENT BENEFITS PLANS - Change in Plan Level 3 Assets (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward]
Beginning balance
$ 3,993
Ending balance
4,191
$ 3,993
Unobservable inputs (Level 3)
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward]
Beginning balance
486
Ending balance
485
486
Unobservable inputs (Level 3) | Real estate
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Beginning balance
124
Ending balance
116
124
Unobservable inputs (Level 3) | Other
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Beginning balance
362
Ending balance
369
362
Pension plans | Unobservable inputs (Level 3)
Defined Benefit Plan, Change in Fair Value of Plan Assets, Level 3 Reconciliation [Roll Forward]
Beginning balance
486
569
Gains (losses) relating to assets still held at year-end
46
5
Purchases, sales, settlements - net
(47)
(88)
Transfers into or out of Level 3
0
0
Ending balance
485
486
Pension plans | Unobservable inputs (Level 3) | Real estate
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Beginning balance
124
199
Gains (losses) relating to assets still held at year-end
14
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Purchases, sales, settlements - net
(22)
(51)
Transfers into or out of Level 3
0
0
Ending balance
116
124
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Beginning balance
362
370
Gains (losses) relating to assets still held at year-end
32
29
Purchases, sales, settlements - net
(25)
(37)
Transfers into or out of Level 3
0
0
Ending balance
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$ 362
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RETIREMENT BENEFITS PLANS - Fair Value of Other Postretirement Benefits Plan Assets (Details) - Other postretirement benefits expense (income) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Fair Value of Other Postretirement Benefits Plan Assets [Line Items]
Cash equivalents
$ 3
$ 3
Common collective and other trusts measured at net asset value
17
15
Total other postretirement benefits plan assets
20
18
Quoted prices in active markets for identical assets (Level 1)
Fair Value of Other Postretirement Benefits Plan Assets [Line Items]
Cash equivalents
3
3
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3
3
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0
0
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0
0
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Cash equivalents
0
0
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$ 0
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RETIREMENT BENEFITS PLANS - Defined Contribution Plans (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Retirement Benefits [Abstract]
Employer contributions to defined contribution plans
$ 239
$ 220
$ 201
X
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v3.26.3
COMMITMENTS AND CONTINGENCIES - Narrative (Details)
$ in Millions
12 Months Ended
Dec. 31, 2025
USD ($)
site
Dec. 31, 2024
USD ($)
Commitments and Contingencies Disclosure [Abstract]
Number of environmental remediation sites world wide
103
Number of environmental remediation sites world wide with individual significance
0
Environmental Loss Contingency, Statement Of Financial Position, Extensible Enumeration, Not Disclosed Flag
Company had an accrual totaling
Company had an accrual totaling
Accrual for environmental loss contingencies | $
$ 69
$ 70
X
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v3.26.3
COMMITMENTS AND CONTINGENCIES - Current and Long-Term Warranty Accruals (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Current and long-term warranty accruals [Roll Forward]
Balance at January 1
$ 150
$ 136
$ 125
Provision
82
81
100
Settled
(60)
(65)
(91)
Warranty accruals from business acquisition and other
2
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2
Balance at December 31
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$ 150
$ 136
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v3.26.3
INCOME TAXES - Income (Loss) before Income Taxes (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income (Loss) Before Income Taxes [Line Items]
Total income before income taxes
$ 4,932
$ 4,566
$ 3,827
Ireland
Income (Loss) Before Income Taxes [Line Items]
Total income before income taxes
188
183
(3)
Foreign
Income (Loss) Before Income Taxes [Line Items]
Total income before income taxes
$ 4,744
$ 4,383
$ 3,830
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-Section 55
-Paragraph 4
-Publisher FASB
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v3.26.3
INCOME TAXES - Income Tax (Benefit) Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Current
Ireland
$ 85
$ 128
$ 42
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711
794
744
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922
786
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(16)
1
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(154)
(182)
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$ 841
$ 768
$ 604
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v3.26.3
INCOME TAXES - Reconciliation of Effective Income Tax Rate (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Amount
Income taxes at the applicable statutory rate
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Changes in unrecognized tax benefits
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Total income tax expense
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$ 768
$ 604
Percent
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25.00%
25.00%
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16.80%
15.80%
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Tax rate differential
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$ 30
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Tax rate differential
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0.60%
United States
Amount
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$ (96)
State and local income taxes
62
Effect of cross-border tax laws – foreign derived intangible income
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Other items - net
$ (61)
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(1.90%)
State and local income taxes
1.30%
Effect of cross-border tax laws – foreign derived intangible income
(1.30%)
Other items - net
(1.20%)
United Arab Emirates
Amount
Tax rate differential
$ (86)
Other items - net
$ 32
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(1.70%)
Other items - net
0.60%
Puerto Rico operations
Amount
Tax rate differential
$ (71)
Percent
Tax rate differential
(1.40%)
Other foreign jurisdictions
Amount
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$ (33)
Percent
Tax rate differential
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v3.26.3
INCOME TAXES - Reconciliation of Effective Income Tax Rate Operations (Details)
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Reconciliation of income taxes from appropriate statutory rate to the consolidated effective income tax rate [Line Items]
Income taxes at the applicable statutory rate
25.00%
25.00%
25.00%
Effective income tax expense rate
17.10%
16.80%
15.80%
Ireland operations
Reconciliation of income taxes from appropriate statutory rate to the consolidated effective income tax rate [Line Items]
Ireland tax on trading income
(0.90%)
(1.30%)
Nondeductible interest expense
0.90%
2.60%
Other items - net
1.20%
(0.20%)
Foreign operations
Reconciliation of income taxes from appropriate statutory rate to the consolidated effective income tax rate [Line Items]
Other items - net
(0.20%)
2.20%
Tax rate differential
(6.70%)
(9.90%)
Worldwide operations
Reconciliation of income taxes from appropriate statutory rate to the consolidated effective income tax rate [Line Items]
Adjustments to tax liabilities
0.10%
(0.20%)
Adjustments to valuation allowances
(2.60%)
(2.40%)
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v3.26.3
INCOME TAXES - Narrative (Details)
12 Months Ended
Dec. 31, 2025
USD ($)
taxCase
Dec. 31, 2024
USD ($)
Dec. 31, 2023
USD ($)
Jul. 11, 2024
USD ($)
Jul. 10, 2024
USD ($)
Apr. 04, 2024
USD ($)
Dec. 21, 2022
USD ($)
Aug. 31, 2021
USD ($)
Nov. 30, 2019
USD ($)
Income Taxes (Textuals) [Line Items]
Income tax expense
$ 841,000,000
$ 768,000,000
$ 604,000,000
Effective income tax expense rate
17.10%
16.80%
15.80%
Provision for income taxes on undistributed earnings of foreign subsidiaries
$ 0
Unrecognized tax benefits that would impact effective tax rate
813,000,000
Income tax examination, penalties and interest accrued
218,000,000
$ 225,000,000
Tax Years 2007-2010
Income Taxes (Textuals) [Line Items]
IRS Statutory Notice of Deficiency proposed assessment of additional federal taxes
190,000,000
Penalties associated with IRS Statutory Notice of Deficiency proposed assessment
72,000,000
Tax Years 2011-2013
Income Taxes (Textuals) [Line Items]
IRS Statutory Notice of Deficiency proposed assessment of additional federal taxes
$ 749,000,000
Penalties associated with IRS Statutory Notice of Deficiency proposed assessment
$ 110,000,000
Secretariat of the Federal Revenue Bureau of Brazil
Income Taxes (Textuals) [Line Items]
Pledged real estate assets
17,000,000
Real estate bond
101,000,000
Real estate cash deposit
$ 28,000,000
Secretariat of the Federal Revenue Bureau of Brazil | Tax Years 2005-2012
Income Taxes (Textuals) [Line Items]
Income tax examination, penalties and interest accrued
$ 121,000,000
Number of tax cases | taxCase
2
Alleged tax deficiency
$ 24,000,000
Secretariat of the Federal Revenue Bureau of Brazil | Tax Years 2009-2012
Income Taxes (Textuals) [Line Items]
Income tax examination, penalties and interest accrued
$ 82,000,000
$ 121,000,000
Secretariat of the Federal Revenue Bureau of Brazil | Tax Years 2005-2008
Income Taxes (Textuals) [Line Items]
Income tax examination, penalties and interest accrued
$ 62,000,000
$ 120,000,000
Alleged tax deficiency
$ 22,000,000
$ 30,000,000
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v3.26.3
INCOME TAXES - Worldwide Income Tax Payments (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Income Taxes (Textuals) [Line Items]
Ireland
$ 105
Total income taxes paid
909
$ 752
$ 727
United States
Income Taxes (Textuals) [Line Items]
Foreign
374
Germany
Income Taxes (Textuals) [Line Items]
Foreign
72
Other foreign
Income Taxes (Textuals) [Line Items]
Foreign
$ 358
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v3.26.3
INCOME TAXES - Components of Deferred Income Taxes (Details) - Noncurrent assets and liabilities - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Accruals and other adjustments
Employee benefits
$ 250
$ 295
Depreciation and amortization
(792)
(791)
Other accruals and adjustments
609
460
Ireland income tax loss carryforwards
1
1
Foreign income tax loss carryforwards
3,784
3,674
Foreign income tax credit carryforwards
213
252
Valuation allowance for income tax loss and income tax credit carryforwards
(3,623)
(3,556)
Total deferred income taxes
$ 442
$ 334
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v3.26.3
INCOME TAXES - Operating Loss and Tax Credit Carryforwards by Expiration Dates (Details)
$ in Millions
Dec. 31, 2025
USD ($)
2026 through 2030 | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
$ 0
Deferred income tax assets for income tax loss carryforwards
0
2031 through 2035 | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
0
Deferred income tax assets for income tax loss carryforwards
0
2036 through 2040 | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
0
Deferred income tax assets for income tax loss carryforwards
0
2041 through 2050 | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
0
Deferred income tax assets for income tax loss carryforwards
0
Not subject to expiration | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
8
Deferred income tax assets for income tax loss carryforwards
1
Valuation allowance | Ireland
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
0
Deferred income tax assets for income tax loss carryforwards
1
Foreign Tax Authority | 2026 through 2030
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
26
Deferred income tax assets for income tax loss carryforwards
6
Foreign income tax credit carryforwards
148
Foreign Tax Authority | 2026 through 2030 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Foreign income tax credit carryforwards
82
Foreign Tax Authority | 2026 through 2030 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
4
Foreign Tax Authority | 2031 through 2035
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
739
Deferred income tax assets for income tax loss carryforwards
179
Foreign income tax credit carryforwards
48
Foreign Tax Authority | 2031 through 2035 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Foreign income tax credit carryforwards
45
Foreign Tax Authority | 2031 through 2035 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
179
Foreign Tax Authority | 2036 through 2040
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
10,914
Deferred income tax assets for income tax loss carryforwards
2,608
Foreign income tax credit carryforwards
27
Foreign Tax Authority | 2036 through 2040 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Foreign income tax credit carryforwards
23
Foreign Tax Authority | 2036 through 2040 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
2,608
Foreign Tax Authority | 2041 through 2050
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
208
Deferred income tax assets for income tax loss carryforwards
51
Foreign income tax credit carryforwards
20
Foreign Tax Authority | 2041 through 2050 | After ASU 2013-11
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Foreign income tax credit carryforwards
20
Foreign Tax Authority | 2041 through 2050 | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
51
Foreign Tax Authority | Not subject to expiration
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
6,396
Deferred income tax assets for income tax loss carryforwards
943
Foreign income tax credit carryforwards
43
Foreign Tax Authority | Not subject to expiration | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Foreign income tax credit carryforwards
43
Foreign Tax Authority | Not subject to expiration | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
943
Foreign Tax Authority | Valuation allowance
Operating Loss and Tax Credit Carry Forward [Line Items]
Operating loss carryforwards
0
Deferred income tax assets for income tax loss carryforwards
3,527
Foreign income tax credit carryforwards
95
Foreign Tax Authority | Valuation allowance | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Foreign income tax credit carryforwards
95
Foreign Tax Authority | Valuation allowance | After ASU 2013-11
Operating Loss and Tax Credit Carry Forward [Line Items]
Deferred income tax assets for income tax loss carryforwards
$ 3,527
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v3.26.3
INCOME TAXES - Gross Unrecognized Income Tax Benefits (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at January 1
$ 1,361
$ 1,300
$ 1,235
Increases and decreases as a result of positions taken during prior years
Other increases, including currency translation
6
22
42
Other decreases, including currency translation
(31)
(22)
(5)
Increases as a result of positions taken during the current year
86
93
86
Decreases relating to settlements with tax authorities
(20)
(18)
(6)
Decreases as a result of a lapse of the applicable statute of limitations
(102)
(14)
(52)
Balance at December 31
$ 1,300
$ 1,361
$ 1,300
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v3.26.3
EATON SHAREHOLDERS' EQUITY - Narrative (Details)
12 Months Ended
Feb. 26, 2026
$ / shares
Feb. 27, 2025
USD ($)
Feb. 23, 2022
USD ($)
Dec. 31, 2025
USD ($)
employee
$ / shares
shares
Dec. 31, 2024
USD ($)
$ / shares
shares
Dec. 31, 2023
$ / shares
shares
Dec. 31, 2025
€ / shares
Dec. 31, 2025
USD ($)
holder
$ / shares
shares
Dec. 31, 2024
€ / shares
Dec. 31, 2024
USD ($)
$ / shares
shares
Class of Stock [Line Items]
Ordinary shares authorized (shares)
750,000,000
750,000,000
Ordinary share par value (USD per share) | $ / shares
$ 0.01
$ 0.01
Ordinary shares issued (in shares)
387,900,000
392,900,000
Ordinary shares outstanding (in shares)
387,900,000
392,900,000
Deferred ordinary shares authorized (in shares)
40,000
40,000
Deferred ordinary shares, shares issued and outstanding (in shares)
40,000
40,000
Deferred ordinary shares par value (EUR per share) | € / shares
€ 1.00
€ 1.00
Number of holders of record of Eaton ordinary shares | holder
8,691
Number of current and former employees who were shareholders through various Eaton plans | employee
13,766
Ordinary shares purchased (in shares)
0
Deferred compensation plan trust of shares and marketable securities | $
$ 3,000,000
$ 3,000,000
Quarterly dividends declared per share (USD per share) | $ / shares
$ 4.16
$ 3.76
$ 3.44
Subsequent Event
Class of Stock [Line Items]
Quarterly dividends declared per share (USD per share) | $ / shares
$ 1.10
Dividend increase percentage over dividend paid in prior quarter (as a percent)
6.00%
2022 Program
Class of Stock [Line Items]
Share repurchase program, authorized amount | $
$ 5,000,000,000.0
Stock repurchase program, period in force
3 years
2025 Program
Class of Stock [Line Items]
Share repurchase program, authorized amount | $
$ 9,000,000,000.0
Stock repurchase program, period in force
3 years
2025 and 2022 Program
Class of Stock [Line Items]
Ordinary shares purchased (in shares)
5,700,000
7,800,000
Stock repurchased | $
$ 1,900,000,000
$ 2,500,000,000
Preferred A Stock
Class of Stock [Line Items]
Preferred stock issued (in shares)
10,000
10,000
Preferred stock, par value (in USD per share) | $ / shares
$ 1.00
$ 1.00
Preferred stock authorized (in shares)
10,000
10,000
Preferred stock outstanding (in shares)
10,000
10,000
Serial Preferred
Class of Stock [Line Items]
Preferred stock, par value (in USD per share) | $ / shares
$ 0.01
$ 0.01
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10,000,000
10,000,000
Preferred stock outstanding (in shares)
0
0
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v3.26.3
EATON SHAREHOLDERS' EQUITY - Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Pre-tax
Other Comprehensive Income (Loss), before Tax, Total
$ 208
$ (462)
$ (17)
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
210
Amounts reclassified from Accumulated other comprehensive loss (income)
13
Net current-period Other comprehensive income (loss)
223
(436)
39
Currency translation and related hedging instruments
Pre-tax
Other comprehensive income (loss) arising during the year, before reclassifications, pre-tax
246
(358)
252
Amortization of gains on net investment hedges (amount excluded from effectiveness testing) reclassified to earnings, pre-tax
(15)
(15)
(12)
Other Comprehensive Income (Loss), before Tax, Total
231
(373)
241
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
255
(355)
247
Amortization of gains on net investment hedges (amount excluded from effectiveness testing) reclassified to earnings, after-tax
(15)
(15)
(12)
Net current-period Other comprehensive income (loss)
240
(370)
235
Prior service credit (cost) arising during the year
Pre-tax
Other comprehensive income (loss) arising during the year, before reclassifications, pre-tax
(10)
1
0
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
(7)
1
0
Pensions and other postretirement benefits
Pre-tax
Reclassification from AOCI, pre-tax
67
55
32
Other Comprehensive Income (Loss), before Tax, Total
(25)
(67)
(243)
After-tax
Amounts reclassified from Accumulated other comprehensive loss (income)
50
41
24
Net current-period Other comprehensive income (loss)
(18)
(49)
(185)
Net gain (loss) arising during the year
Pre-tax
Other comprehensive income (loss) arising during the year, before reclassifications, pre-tax
(27)
(141)
(246)
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
(18)
(104)
(189)
Currency translation
Pre-tax
Other comprehensive income (loss) arising during the year, before reclassifications, pre-tax
(55)
18
(29)
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
(43)
13
(21)
Cash flow hedges
Pre-tax
Other comprehensive income (loss) arising during the year, before reclassifications, pre-tax
29
(6)
63
Reclassification from AOCI, pre-tax
(27)
(16)
(78)
Other Comprehensive Income (Loss), before Tax, Total
2
(22)
(14)
After-tax
Other comprehensive income (loss) arising during the year, before reclassifications, after-tax
23
(5)
50
Amounts reclassified from Accumulated other comprehensive loss (income)
(22)
(12)
(61)
Net current-period Other comprehensive income (loss)
$ 1
$ (17)
$ (11)
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v3.26.3
EATON SHAREHOLDERS' EQUITY - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period
$ 18,531
$ 19,069
$ 17,075
Other comprehensive income (loss) before reclassifications
210
Amounts reclassified from Accumulated other comprehensive loss (income)
13
Net current-period Other comprehensive income (loss)
223
(436)
39
Balance at end of period
19,469
18,531
19,069
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period
(4,342)
(3,906)
(3,946)
Balance at end of period
(4,118)
(4,342)
$ (3,906)
Currency translation and related hedging instruments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period
(3,399)
Other comprehensive income (loss) before reclassifications
255
Amounts reclassified from Accumulated other comprehensive loss (income)
(15)
Net current-period Other comprehensive income (loss)
240
Balance at end of period
(3,159)
(3,399)
Pensions and other postretirement benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period
(1,044)
Other comprehensive income (loss) before reclassifications
(68)
Amounts reclassified from Accumulated other comprehensive loss (income)
50
Net current-period Other comprehensive income (loss)
(18)
Balance at end of period
(1,062)
(1,044)
Cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period
101
Other comprehensive income (loss) before reclassifications
23
Amounts reclassified from Accumulated other comprehensive loss (income)
(22)
Net current-period Other comprehensive income (loss)
1
Balance at end of period
$ 102
$ 101
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v3.26.3
EATON SHAREHOLDERS' EQUITY - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
$ 4,932
$ 4,566
$ 3,827
Tax expense
(841)
(768)
(604)
Total, net of tax
4,087
$ 3,794
$ 3,218
Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total, net of tax
(13)
Gains and (losses) on net investment hedges (amount excluded from effectiveness testing) | Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
15
Tax expense
0
Total, net of tax
15
Amortization of defined benefits pensions and other postretirement benefits items | Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
(67)
Tax expense
17
Total, net of tax
(50)
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Tax expense
(6)
Total, net of tax
22
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Loss | Floating-to-fixed interest rate swaps
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
13
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Loss | Currency exchange contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
13
Gains and (losses) on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Loss | Commodity contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes
$ 1
X
- Definition
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Filename: R96.htm · Sequence: 105
v3.26.3
EATON SHAREHOLDERS' EQUITY - Net Income per Ordinary Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Equity [Abstract]
Net income attributable to Eaton ordinary shareholders
$ 4,087
$ 3,794
$ 3,218
Weighted-average number of ordinary shares outstanding - diluted (in shares)
391.2
399.4
401.1
Less: dilutive effect of equity-based compensation (in shares)
1.3
1.8
2.0
Weighted-average number of ordinary shares outstanding - basic (in shares)
389.9
397.6
399.1
Diluted (USD per share)
$ 10.45
$ 9.50
$ 8.02
Basic (USD per share)
$ 10.48
$ 9.54
$ 8.06
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The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.
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v3.26.3
EQUITY-BASED COMPENSATION - Narrative (Details) - USD ($)
$ / shares in Units, $ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share price (USD per share)
$ 318.51
Total compensation expense not yet recognized of stock options
$ 9
RSUs and RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total compensation expense not yet recognized of equity instrument other than options
$ 90
Period for recognition of total compensation expense not yet recognized
2 years 2 months 12 days
Excess tax benefit
$ 5
$ 8
$ 4
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares received upon vesting (in shares)
1
Vesting period
3 years
RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period
10 years
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period
3 years
Total compensation expense not yet recognized of equity instrument other than options
$ 23
Period for recognition of total compensation expense not yet recognized
1 year 7 months 6 days
Excess tax benefit
$ 6
$ 11
$ 7
PSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rate
0.00%
PSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rate
200.00%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period
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shares in Millions
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v3.26.3
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$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
RSUs and RSAs
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$ 65
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v3.26.3
EQUITY-BASED COMPENSATION - Stock Options Fair Value Assumptions (Details) - $ / shares
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value of stock options granted (USD per share)
$ 102.50
$ 93.42
$ 48.79
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility
30.00%
29.00%
27.00%
Expected option life in years
6 years 2 months 12 days
6 years 3 months 18 days
6 years 3 months 18 days
Expected dividend yield
1.50%
1.50%
2.00%
Risk-free interest rate
4.30%
Risk-free interest rate, minimum
4.00%
4.10%
Risk-free interest rate, maximum
4.50%
4.30%
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v3.26.3
EQUITY-BASED COMPENSATION - Stock Options Activity (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Weighted-average exercise price per option
Balance at beginning of period (USD per share)
$ 130.25
Granted (USD per share)
297.35
Exercised (USD per share)
104.73
Forfeited and cancelled (USD per share)
252.95
Balance at end of period (USD per share)
152.22
$ 130.25
Exercisable at end of period (USD per share)
$ 119.93
Options
Outstanding at beginning of period (in shares)
1.6
Granted (in shares)
0.1
Exercised (in shares)
(0.4)
(0.8)
(1.0)
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0.0
Outstanding at end of period (in shares)
1.3
1.6
Exercisable at end of period (in shares)
1.0
Reserved for future grants at end of period (in shares)
17.1
Weighted-average remaining contractual life in years
Outstanding at end of period
5 years 2 months 12 days
Exercisable at end of period
4 years 3 months 18 days
Aggregate intrinsic value
Outstanding at end of period
$ 214.0
Exercisable at end of period
$ 199.0
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EQUITY-BASED COMPENSATION - Information Related to Stock Options (Details) - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
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$ 69
$ 78
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17
30
22
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165
116
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$ 11
$ 11
$ 10
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0.4
0.8
1.0
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
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$ 11
$ 10
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v3.26.3
FAIR VALUE MEASUREMENTS - Assets Measured on Recurring Basis (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Summary of financial instruments recognized at fair value and fair value measurement used
Cash
$ 622
$ 555
Short-term investments
$ 181
$ 1,525
Derivative Asset Statement Of Financial Position Extensible Enumeration Not Disclosed Flag
Derivative contract assets
Derivative contract assets
Derivative contract assets
$ 26
$ 28
Derivative Liability Statement Of Financial Position Extensible Enumeration Not Disclosed Flag
Derivative contract liabilities
Derivative contract liabilities
Derivative contract liabilities
$ (64)
$ (44)
Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2)
(31)
Quoted prices in active markets for identical assets (Level 1)
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Cash
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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Fair Value Disclosures [Abstract]
Long-term debt and current portion of long term debt, carrying value
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$ 9,152
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$ 8,651
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FAIR VALUE MEASUREMENTS - Short-Term Investments (Details) - USD ($)
$ in Millions
Dec. 31, 2025
Dec. 31, 2024
Fair Value Disclosures [Abstract]
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$ 181
$ 157
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0
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$ 1,525
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v3.26.3
RESTRUCTURING CHARGES - Narrative (Details) - USD ($)
$ in Millions
12 Months Ended
24 Months Ended
45 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2025
Dec. 31, 2023
Restructuring Cost and Reserve [Line Items]
Restructuring charges
$ 133
$ 202
$ 57
$ 335
Estimated charges
$ 475
475
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]
Cost of products sold, Other Nonoperating Income (Expense), Research and Development Expense, Selling, General and Administrative Expense
Workforce reductions
Restructuring Cost and Reserve [Line Items]
Restructuring charges
$ 81
120
19
Estimated charges
102
102
Plant closing and other
Restructuring Cost and Reserve [Line Items]
Restructuring charges
52
$ 83
$ 38
Estimated charges
$ 38
$ 38
COVID-19
Restructuring Cost and Reserve [Line Items]
Restructuring charges
$ 382
COVID-19 | Workforce reductions
Restructuring Cost and Reserve [Line Items]
Restructuring charges
199
COVID-19 | Plant closing and other
Restructuring Cost and Reserve [Line Items]
Restructuring charges
$ 184
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Amount expected to be recognized in earnings for the specified restructuring cost.
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$ 202
$ 57
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$ 0.40
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12 Months Ended
24 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2025
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$ 202
$ 57
$ 335
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14
12
5
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88
26
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10
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5
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12 Months Ended
24 Months Ended
Dec. 31, 2025
Dec. 31, 2025
Dec. 31, 2024
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Dec. 31, 2025
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GOVERNMENT GRANTS (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Government Assistance [Abstract]
Decrease in selling and administrative expense
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$ 1
Government assistance deferred income, liability, noncurrent
$ 67
Government assistance deferred income, liability, current
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BUSINESS SEGMENT INFORMATION - Business Segment Information (Details) - USD ($)
$ in Millions
12 Months Ended
24 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2025
Business Segment Information
Total net sales
$ 27,448
$ 24,878
$ 23,196
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17,131
15,375
14,762
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(24)
(15)
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(202)
(57)
$ (335)
Income before income taxes
4,932
4,566
3,827
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841
768
604
Net income
4,090
3,798
3,223
Less net income for noncontrolling interests
(3)
(4)
(5)
Net income attributable to Eaton ordinary shareholders
4,087
3,794
3,218
Electrical Americas
Business Segment Information
Total net sales
13,276
11,436
10,098
Electrical Global
Business Segment Information
Total net sales
6,815
6,248
6,084
Aerospace
Business Segment Information
Total net sales
4,249
3,744
3,413
Mobility
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Total net sales
3,109
3,451
3,601
Operating segments
Business Segment Information
Total net sales
27,448
24,878
23,196
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20,735
18,919
18,103
Segment operating profit (loss)
6,713
5,959
5,093
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Total net sales
13,276
11,436
10,098
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9,304
7,981
7,423
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3,972
3,455
2,675
Restructuring program charges
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(12)
(5)
Operating segments | Electrical Global
Business Segment Information
Total net sales
6,815
6,248
6,084
Other segment items
5,492
5,099
4,908
Segment operating profit (loss)
1,323
1,149
1,176
Restructuring program charges
(63)
(88)
(26)
Operating segments | Aerospace
Business Segment Information
Total net sales
4,249
3,744
3,413
Other segment items
3,236
2,885
2,633
Segment operating profit (loss)
1,013
859
780
Restructuring program charges
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(9)
(5)
Operating segments | Mobility
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Total net sales
3,109
3,451
3,601
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2,704
2,955
3,140
Segment operating profit (loss)
405
496
461
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(64)
(13)
Corporate
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Intangible asset amortization expense
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(425)
(450)
Interest expense - net
(241)
(130)
(151)
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19
40
46
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(29)
(8)
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$ (675)
$ (654)
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v3.26.3
BUSINESS SEGMENT INFORMATION - Identifiable Assets, Capital Expenditures for PPE, and Depreciation of PPE by Segment (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Segment Reporting Information [Line Items]
Total assets
$ 41,251
$ 38,381
$ 38,432
Goodwill
15,769
14,713
14,977
Other intangible assets
5,054
4,658
5,091
Total expenditures for property, plant and equipment
919
808
757
Total depreciation of property, plant and equipment
477
446
429
Operating segments
Segment Reporting Information [Line Items]
Total assets
15,526
13,178
12,121
Total expenditures for property, plant and equipment
868
766
721
Total depreciation of property, plant and equipment
441
409
386
Corporate
Segment Reporting Information [Line Items]
Total assets
4,902
5,833
6,243
Total expenditures for property, plant and equipment
52
42
36
Total depreciation of property, plant and equipment
36
37
43
Electrical Americas
Segment Reporting Information [Line Items]
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8,010
7,396
7,415
Electrical Americas | Operating segments
Segment Reporting Information [Line Items]
Total assets
6,283
4,933
4,163
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413
362
309
Total depreciation of property, plant and equipment
133
118
108
Electrical Global
Segment Reporting Information [Line Items]
Goodwill
4,156
3,842
4,038
Electrical Global | Operating segments
Segment Reporting Information [Line Items]
Total assets
3,852
3,233
2,868
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249
163
142
Total depreciation of property, plant and equipment
108
102
96
Aerospace
Segment Reporting Information [Line Items]
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2,977
2,856
2,901
Aerospace | Operating segments
Segment Reporting Information [Line Items]
Total assets
2,684
2,392
2,276
Total expenditures for property, plant and equipment
103
83
97
Total depreciation of property, plant and equipment
77
70
69
Mobility
Segment Reporting Information [Line Items]
Goodwill
626
619
623
Mobility | Operating segments
Segment Reporting Information [Line Items]
Total assets
2,708
2,620
2,814
Total expenditures for property, plant and equipment
103
158
172
Total depreciation of property, plant and equipment
$ 123
$ 120
$ 113
X
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v3.26.3
BUSINESS SEGMENT INFORMATION - Geographic Region Information (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2025
Dec. 31, 2024
Dec. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
$ 27,448
$ 24,878
$ 23,196
Long-lived assets
4,316
3,729
3,530
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
17,122
15,151
14,071
Long-lived assets
2,344
1,990
1,773
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
1,083
1,058
949
Long-lived assets
42
31
31
Latin America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
1,461
1,680
1,549
Long-lived assets
524
465
476
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
5,078
4,530
4,339
Long-lived assets
935
790
797
Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales
2,704
2,459
2,288
Long-lived assets
$ 472
$ 453
$ 453
X
- Definition
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
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