Net income per share attributable to Eaton ordinary shareholders Diluted $ 1.15 $ 1.23 $ 4.23 $ 3.76 Basic

EATON CORPORATION plc CONSOLIDATED STATEMENTS OF INCOME (In millions except for per share data) Net sales Three months ended December 31 2015 2014 ...
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EATON CORPORATION plc CONSOLIDATED STATEMENTS OF INCOME

(In millions except for per share data)

Net sales

Three months ended December 31 2015 2014 $ 5,057 $ 5,565

Cost of products sold Selling and administrative expense Litigation settlements Research and development expense Interest expense - net Other income - net Income before income taxes Income tax expense (benefit) Net income Less net income for noncontrolling interests Net income attributable to Eaton ordinary shareholders

Year ended December 31 2015 2014 $ 20,855 $ 22,552

3,427 873 — 153 57 (8)

3,847 903 — 154 54 (2)

14,292 3,596 — 625 232 (35)

15,646 3,810 644 647 227 (183)

555 21 534 (2)

609 24 585 (4)

2,145 164 1,981 (2)

1,761 (42) 1,803 (10)

$

532

$

581

$

1,979

$

1,793

$

1.15 1.15

$

1.23 1.24

$

4.23 4.25

$

3.76 3.78

Net income per share attributable to Eaton ordinary shareholders Diluted Basic Weighted-average number of ordinary shares outstanding Diluted Basic

462.7 461.4

472.5 470.0

467.1 465.5

476.8 474.1

Reconciliation of net income attributable to Eaton ordinary shareholders to operating earnings Net income attributable to Eaton ordinary shareholders Excluding acquisition integration charges (after-tax) Operating earnings

$

Net income per share attributable to Eaton ordinary shareholders - diluted Excluding per share impact of acquisition integration charges (after-tax) Operating earnings per ordinary share

$

See accompanying notes.

$

$

532 9 541

$

1.15 0.02 1.17

$

$

$

581 21 602

$

1.23 0.04 1.27

$

$

$

1,979 31 2,010

$

4.23 0.07 4.30

$

$

$

1,793 102 1,895 3.76 0.21 3.97

EATON CORPORATION plc BUSINESS SEGMENT INFORMATION

(In millions)

Three months ended December 31 2015 2014

Year ended December 31 2015 2014

Net sales Electrical Products Electrical Systems and Services Hydraulics Aerospace Vehicle Total net sales

$

$

1,730 1,494 552 440 841 5,057

$

298 203

$

$

1,821 1,650 673 456 965 5,565

$

6,976 5,931 2,459 1,807 3,682 $ 20,855

$

7,254 6,457 2,975 1,860 4,006 $ 22,552

304 242

$

$

Segment operating profit Electrical Products Electrical Systems and Services

$

Hydraulics Aerospace Vehicle Total segment operating profit

1,156 776 246 310 645 3,133

1,184 843

62 77 155 795

81 70 163 860

367 273 645 3,312

— (100) (57) (31) (52)

— (105) (54) (24) (68)

— (406) (232) (130) (220)

(644) (431) (227) (138) (111)

555 21 534 (2)

609 24 585 (4)

2,145 164 1,981 (2)

1,761 (42)

Corporate Litigation settlements Amortization of intangible assets Interest expense - net Pension and other postretirement benefits expense Other corporate expense - net Income before income taxes Income tax expense (benefit) Net income Less net income for noncontrolling interests Net income attributable to Eaton ordinary shareholders See accompanying notes.

$

532

$

581

$

1,979

1,803 (10) $

1,793

EATON CORPORATION plc CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

Assets Current assets Cash Short-term investments Accounts receivable - net Inventory Deferred income taxes Prepaid expenses and other current assets Total current assets

December 31, 2015

December 31, 2014

$

$

Property, plant and equipment - net Other noncurrent assets Goodwill Other intangible assets Deferred income taxes Other assets Total assets Liabilities and shareholders’ equity Current liabilities Short-term debt Current portion of long-term debt Accounts payable Accrued compensation Other current liabilities Total current liabilities

$

$

268 177 3,479 2,323 — 369 6,616

781 245 3,667 2,428 593 386 8,100

3,565

3,750

13,479 6,014 362 995 31,031

13,893 6,556 228 1,002 33,529

426 242 1,758 366 1,833 4,625

$

$

2 1,008 1,940 420 1,985 5,355

Noncurrent liabilities Long-term debt Pension liabilities Other postretirement benefits liabilities Deferred income taxes Other noncurrent liabilities Total noncurrent liabilities

7,781 1,586 440 390 978 11,175

8,024 1,812 513 901 1,085 12,335

Shareholders’ equity Eaton shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity

15,186 45 15,231 31,031

15,786 53 15,839 33,529

See accompanying notes.

$

$

EATON CORPORATION plc NOTES TO THE FOURTH QUARTER 2015 EARNINGS RELEASE Amounts are in millions of dollars unless indicated otherwise (per share data assume dilution). Note 1. NON-GAAP FINANCIAL INFORMATION This earnings release includes certain non-GAAP financial measures. These financial measures include operating earnings, operating earnings per ordinary share, and operating profit before acquisition integration charges for each business segment as well as corporate, each of which excludes amounts that differ from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of each of these financial measures to the most directly comparable GAAP measure is included in this earnings release. Management believes that these financial measures are useful to investors because they exclude transactions of an unusual nature, allowing investors to more easily compare Eaton Corporation plc's (Eaton or the Company) financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton and each business segment. During the second quarter of 2014, Eaton settled litigation matters with ZF Meritor LLC and Meritor Transmission Corporation (collectively, Meritor) and Triumph Actuation Systems, LLC and other claimants (collectively, Triumph), and related litigation, resulting in pre-tax cost totaling $644. Note 2. CHANGES IN ACCOUNTING POLICIES During the fourth quarter of 2015, the Company early adopted Accounting Standard Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the condensed consolidated balance sheet. The Company elected to apply this standard prospectively for 2015 financial statements. As a result, prior periods were not retrospectively adjusted. Note 3. ACQUISITION INTEGRATION CHARGES Eaton incurs integration charges related to acquired businesses. A summary of these charges follows: Operating profit Acquisition Operating profit excluding acquisition integration charges as reported integration charges* Three months ended December 31 2015 2014 2015 2014 2015 2014 Acquisition integration charges Electrical Products Electrical Systems and Services Hydraulics Aerospace Vehicle Total business segments before income taxes Corporate Total acquisition integration charges before income taxes Total after income taxes Per ordinary share - diluted

$

$ $ $

8 5 — — — 13 1

$

14 9 0.02

$ $ $

17 8 1 — — 26 6

$

$

298 203 62 77 155 795

$

$

304 242 81 70 163 860

$

$

306 208 62 77 155 808

$

$

32 21 0.04

*Operating profit excluding acquisition integration charges is used to calculate operating margin where that term is used in this release.

321 250 82 70 163 886

Acquisition integration charges 2015

2014

Operating profit excluding acquisition integration charges*

Operating profit as reported Year ended December 31 2015 2014

2015

2014

Acquisition integration charges Electrical Products $ Electrical Systems and Services Hydraulics Aerospace Vehicle Total business segments Corporate Total acquisition integration charges before income taxes $ Total after income taxes $ Per ordinary share - diluted $

25 15 2 — — 42 5

$

47 31 0.07

$ $ $

66 51 12 — — 129 25

$

$

1,156 776 246 310 645 3,133

$

$

1,184 843 367 273 645 3,312

$

$

1,181 791 248 310 645 3,175

$

$

1,250 894 379 273 645 3,441

154 102 0.21

*Operating profit excluding acquisition integration charges is used to calculate operating margin where that term is used in this release.

Business segment integration charges in 2015 and 2014 were related primarily to the integration of Cooper Industries plc (Cooper). These charges were included in Cost of products sold or Selling and administrative expense, as appropriate. In Business Segment Information, the charges reduced Operating profit of the related business segment. Corporate integration charges in 2015 and 2014 were related to the acquisition of Cooper. These charges were included in Selling and administrative expense. In Business Segment Information, the charges were included in Other corporate expense net.

CONTACT: Eaton Corporation plc Scott Schroeder, +1 (440) 523-5150 (Media Relations) [email protected] or Donald Bullock, +1 (440) 523-5127 (Investor Relations)

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