v2.4.0.8
Eaton Shareholders' Equity
 12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Eaton Shareholders' Equity [Text Block]
EATON SHAREHOLDERS' EQUITY
There are 750 million Eaton ordinary shares authorized ($0.01 par value per share), 475.1 million and 470.7 million of which were issued and outstanding at December 31, 2013 and 2012, 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, 2013 and 2012, and 10 million serial preferred shares ($0.01 par value per share), none of which were outstanding at December 31, 2013 and 2012. At December 31, 2013, there were 19,538 holders of record of Eaton ordinary shares. Additionally, 28,128 current and former employees were shareholders through participation in the Eaton Savings Plan, Eaton Personal Investment Plan, Eaton Puerto Rico Retirement Savings Plan, and the Cooper Retirement Savings and Stock Ownership Plan.
Eaton Corporation had a common share repurchase program (2007 Program) that authorized the repurchase of 10 million common shares. In 2011, 8.3 million Eaton Corporation common shares were repurchased under the 2007 Program in the open market at a total cost of $343. On September 28, 2011, Eaton Corporation's Board of Directors replaced the 2007 Program with a common share repurchase program (2011 Program) which authorized the purchase of up to 20 million common shares, not to exceed an aggregate purchase price of $1.25 billion. No common shares were purchased under the 2011 Program. On April 24, 2013, the Company's shareholders authorized the Board of Directors to adopt an ordinary share repurchase program (2013 Program) for up to 40 million ordinary shares at prices between 70% and 120% of the closing price of Eaton's ordinary shares on the day of purchase. On October 22, 2013, Eaton's Board of Directors adopted the 2013 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. In 2013, no ordinary shares were repurchased under the 2013 Program. In 2012, no common shares were repurchased under the 2011 Program.
Eaton has deferral plans that permit certain employees and directors to defer a portion of their compensation. A trust contains $24 and $12 of ordinary shares and marketable securities, as valued at December 31, 2013 and 2012, respectively, 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, 2014, Eaton's Board of Directors declared a quarterly dividend of $0.49 per ordinary share, payable on March 21, 2014, to shareholders of record at the close of business on March 10, 2014.
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):
 
2013
 
2012
 
2011
 
Pre-tax
 
After-tax
 
Pre-tax
 
After-tax
 
Pre-tax
 
After-tax
Currency translation and related hedging instruments
$
(30
)
 
$
(28
)
 
$
144

 
$
135

 
$
(252
)
 
$
(241
)
 
 
 
 
 
 
 
 
 
 
 
 
Pensions and other postretirement benefits
 
 
 
 
 
 
 
 
 
 
 
Prior service cost arising during the year
(6
)
 
(4
)
 
(1
)
 
(1
)
 
(5
)
 
(4
)
Net gain (loss) arising during the year
456

 
277

 
(386
)
 
(262
)
 
(648
)
 
(417
)
Currency translation
(5
)
 
(4
)
 
(15
)
 
(12
)
 
5

 
4

Other
2

 
16

 
(2
)
 
15

 
—

 
(15
)
Amortization of actuarial loss and prior service cost
   reclassified to earnings
229

 
144

 
170

 
108

 
122

 
79

 
676

 
429

 
(234
)
 
(152
)
 
(526
)
 
(353
)
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedges
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on derivatives designated as cash flow hedges
6

 
3

 
10

 
10

 
(28
)
 
(21
)
Changes in cash flow hedges reclassified to earnings
—

 
—

 
7

 
7

 
—

 
(1
)
Cash flow hedges, net of reclassification adjustments
6

 
3

 
17

 
17

 
(28
)
 
(22
)
Other comprehensive income (loss) attributable to Eaton
   ordinary shareholders
$
652

 
$
404

 
$
(73
)
 
$
—

 
$
(806
)
 
$
(616
)

The changes in Accumulated other comprehensive (loss) income follow:
 
Currency translation and related hedging instruments
 
Pensions and other postretirement benefits
 
Cash flow
hedges
 
Total
Balance at December 31, 2012
$
(367
)
 
$
(1,599
)
 
$
2

 
$
(1,964
)
Other comprehensive (loss) income
    before reclassifications
(28
)
 
285

 
3

 
260

Amounts reclassified from Accumulated other
   comprehensive (loss) income
—

 
144

 
—

 
144

Net current-period other comprehensive
   (loss) income
(28
)
 
429

 
3

 
404

Balance at December 31, 2013
$
(395
)
 
$
(1,170
)
 
$
5

 
$
(1,560
)

The reclassifications out of Accumulated other comprehensive (loss) income follow:
 
 
December 31, 2013
 
Consolidated Statements of
Income classification
Amortization of defined benefit pension items
 
 
 
 
Actuarial loss
 
$
(229
)
 
1 
 
 
(229
)
 
 
Tax benefit
 
85

 
 
Total, net of tax
 
(144
)
 
 
 
 
 
 
 
Gains and losses on cash flow hedges
 
 
 
 
Floating-to-fixed interest rate swaps
 
(1
)
 
Interest expense - net
Currency exchange contracts
 
2

 
Cost of products sold
Commodity contracts
 
(1
)
 
Cost of products sold
 
 
—

 
 
Tax expense
 
—

 
 
Total, net of tax
 
—

 
 
 
 
 
 
 
Total reclassifications for the period
 
$
(144
)
 
 

1 These components of Accumulated other comprehensive loss are included in the computation of net periodic pension cost. See Note 6 for additional information about defined benefit pension items.
Net Income per Ordinary Share
A summary of the calculation of net income per ordinary share attributable to ordinary shareholders follows:
(Shares in millions)
2013
 
2012
 
2011
Net income attributable to Eaton ordinary shareholders
$
1,861

 
$
1,217

 
$
1,350

 
 
 
 
 
 
Weighted-average number of ordinary shares outstanding - diluted
476.7

 
350.9

 
342.8

Less dilutive effect of equity-based compensation
3.2

 
3.1

 
4.5

Weighted-average number of ordinary shares outstanding - basic
473.5

 
347.8

 
338.3

 
 
 
 
 
 
Net income per ordinary share
 
 
 
 
 
Diluted
$
3.90

 
$
3.46

 
$
3.93

Basic
3.93

 
3.54

 
3.98


In 2013, 2012, and 2011, 0.2 million, 2.2 million, and 1.5 million stock options, respectively, were excluded from the calculation of diluted net income per ordinary share because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.