v3.23.3
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
 9 Months Ended
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Financial Instruments Recognized in Consolidated Balance Sheet The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets is as follows:
(In millions)Notional
amount		Other
 current
assets		Other
noncurrent
assets		Other
current
liabilities		Other
noncurrent
liabilities		Type of
hedge		Term
September 30, 2023      
Derivatives designated as hedges      
Forward starting floating-to-fixed interest rate swaps
$53 $— $1 $— $— Cash flow8 years
Currency exchange contracts764 27 1 13 3 Cash flow
1 to 28 months
Commodity contracts58 — — 2 — Cash flow
1 to 12 months
Currency exchange contracts549 — — 2 — Net investment
3 months
Total $27 $2 $17 $3  
Derivatives not designated as hedges     
Currency exchange contracts$4,735 $11  $11  
1 to 7 months
December 31, 2022      
Derivatives designated as hedges      
Currency exchange contracts$1,240 $35 $2 $17 $9 Cash flow
1 to 36 months
Commodity contracts64 4 — 2 — Cash flow
1 to 12 months
Total $39 $2 $19 $9   
Derivatives not designated as hedges      
Currency exchange contracts$4,683 $30  $14  
1 to 12 months
Schedule of Notional Amounts of Outstanding Derivative Positions and Commodity Contracts
As of September 30, 2023, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
CommoditySeptember 30, 2023Term
Aluminum4 Millions of pounds
1 to 11 months
Copper12 Millions of pounds
1 to 12 months
Gold1,662 Troy ounces
1 to 12 months
Silver166,422 Troy ounces
1 to 10 months

Schedule Of Derivative Instruments Recorded In Balance Sheet
The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:
(In millions)Carrying amount of the hedged
assets (liabilities)
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance SheetsSeptember 30, 2023December 31, 2022September 30, 2023December 31, 2022
Long-term debt$(713)$(713)$(44)$(48)
(a) At September 30, 2023 and December 31, 2022, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $44 million and $48 million, respectively.
Schedule of Impact of Hedging Activities to Consolidated Statement of Income
The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:
Three months ended September 30, 2023
(In millions)Net SalesCost of products soldInterest expense - net
Amounts from Consolidated Statements of Income$5,880 $3,684 $33 
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item$— $— $(3)
Derivative designated as hedging instrument— — 3 
Currency exchange contracts
Hedged item$(3)$(16)$— 
Derivative designated as hedging instrument3 16 — 
Three months ended September 30, 2022
(In millions)Net SalesCost of products soldInterest expense - net
Amounts from Consolidated Statements of Income$5,313 $3,545 $37 
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item$— $— $(1)
Derivative designated as hedging instrument— — 1 
Currency exchange contracts
Hedged item$5 $(6)$— 
Derivative designated as hedging instrument(5)6 — 
Commodity contracts
Hedged item$— $3 $— 
Derivative designated as hedging instrument— (3)— 
Nine months ended September 30, 2023
(In millions)Net salesCost of products soldInterest expense - net
Amounts from Consolidated Statements of Income$17,229 $11,030 $124 
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item$— $— $(9)
Derivative designated as hedging instrument— — 9 
Currency exchange contracts
Hedged item$(2)$(46)$— 
Derivative designated as hedging instrument2 46 — 
Commodity contracts
Hedged item$— $(1)$— 
Derivative designated as hedging instrument— 1 — 
Nine months ended September 30, 2022
(In millions)Net salesCost of products soldInterest expense - net
Amounts from Consolidated Statements of Income$15,368 $10,319 $100 
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item$— $— $(1)
Derivative designated as hedging instrument— — 1 
Currency exchange contracts
Hedged item$10 $(12)$— 
Derivative designated as hedging instrument(10)12 — 
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item$— $— $8 
Derivative designated as hedging instrument— — (8)
Schedule of Amounts Recognized in Net Income
The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:
Gain (loss) recognized in Consolidated Statements of IncomeConsolidated Statements of Income classification
 Three months ended
September 30
(In millions)20232022
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts$14 $(52)Interest expense - net
Total$14 $(52)
Gain (loss) recognized in Consolidated Statements of IncomeConsolidated Statements of Income classification
Nine months ended
September 30
(In millions)20232022
Gain (loss) on derivatives not designated as hedges 
Currency exchange contracts$31 $(85)Interest expense - net
Commodity contracts— (15)
Other expense (income) - net and Cost of products sold (a)
Total$31 $(100)
(a) In the second quarter of 2022, Eaton changed the presentation of gains and losses associated with derivative contracts for commodities that are not designated as hedges from Cost of products sold to Other expense (income) - net on the Consolidated Statements of Income. Prior period amounts have not been reclassified as they are not material.
Schedule of Amounts Recognized in Accumulated Other Comprehensive Income (Loss) The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income is as follows:
Gain (loss) recognized in
other comprehensive
income (loss)		Location of gain (loss)
reclassified from
Accumulated other
comprehensive loss 		Gain (loss) reclassified
from Accumulated other
comprehensive loss
Three months ended
September 30		Three months ended
September 30
(In millions)2023202220232022
Derivatives designated as
   cash flow hedges
Forward starting floating-to-fixed
 interest rate swaps		$1 $(36)Interest expense - net$3 $1 
Currency exchange contracts(2)(8)Net sales and Cost of products sold20 (1)
Commodity contracts(1)(3)Cost of products sold— (3)
Derivatives designated as net
   investment hedges
Currency exchange contracts
Effective portion3 — Gain (loss) on sale of business— — 
Amount excluded from effectiveness
      testing		2 — Interest expense - net4 — 
Non-derivative designated as net
   investment hedges
Foreign currency denominated debt85 164 Gain (loss) on sale of business— — 
Total$87 $117 $27 $(3)
Gain (loss) recognized in
other comprehensive
income (loss)		Location of gain (loss)
reclassified from
Accumulated other
comprehensive loss		Gain (loss) reclassified
from Accumulated other
comprehensive loss
Nine months ended
September 30		Nine months ended
September 30
(In millions)2023202220232022
Derivatives designated as cash
   flow hedges
Forward starting floating-to-fixed
   interest rate swaps		$2 $202 Interest expense - net$9 $1 
Currency exchange contracts47 (18)Net sales and Cost of products sold45 3 
Commodity contracts(2)(11)Cost of products sold1 — 
Derivatives designated as net
   investment hedges
Currency exchange contracts
Effective portion21 — Gain (loss) on sale of business— — 
Amount excluded from effectiveness
   testing		11 — Interest expense - net10 — 
Non-derivative designated as net
   investment hedges
Foreign currency denominated debt19 405 Gain (loss) on sale of business— — 
Total$98 $577 $65 $4