CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

On November 14, 2013, Eaton Corporation registered senior notes under the Securities Act of 1933 (the Senior Notes). Eaton and certain other of Eaton's 100% owned direct and indirect subsidiaries (the Guarantors) fully and unconditionally guaranteed (subject, in the case of the Guarantors, other than Eaton, to customary release provisions as described below), on a joint and several basis, the Senior Notes. The following condensed consolidating financial statements are included so that separate financial statements of Eaton, Eaton Corporation and each of the Guarantors are not required to be filed with the Securities and Exchange Commission. The consolidating adjustments primarily relate to eliminations of investments in subsidiaries and intercompany balances and transactions. The condensed consolidating financial statements present investments in subsidiaries using the equity method of accounting. See Note 6 for additional information related to the Senior Notes.

The guarantee of a Guarantor that is not a parent of the issuer will be automatically and unconditionally released and discharged in the event of any sale of the Guarantor or of all or substantially all of its assets, or in connection with the release or termination of the Guarantor as a guarantor under all other U.S. debt securities or U.S. syndicated credit facilities, subject to limitations set forth in the indenture. The guarantee of a Guarantor that is a direct or indirect parent of the issuer will only be automatically and unconditionally released and discharged in connection with the release or termination of such Guarantor as a guarantor under all other debt securities or syndicated credit facilities (in both cases, U.S. or otherwise), subject to limitations set forth in the indenture.

During 2015, the Company undertook certain steps to restructure ownership of various subsidiaries. The transactions were entirely among wholly-owned subsidiaries under the common control of Eaton. This restructuring has been reflected as of the beginning of the earliest period presented below.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2015

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,925		$	6,654		$	12,538		$	(5,262	)	$	20,855

Cost of products sold	—			5,508			5,033			8,984			(5,233		)	14,292
Selling and administrative expense	141			1,223			737			1,495			—			3,596
Research and development expense	—			266			196			163			—			625
Interest expense (income) - net	—			222			21			(13		)	2			232
Other expense (income) - net	—			27			2			(64		)	—			(35		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,456		)	(793		)	(3,267		)	(666		)	7,182			—
Intercompany expense (income) - net	336			(452		)	1,239			(1,123		)	—			—
Income (loss) before income taxes	1,979			924			2,693			3,762			(7,213		)	2,145
Income tax expense (benefit)	—			103			(73		)	145			(11		)	164
Net income (loss)	1,979			821			2,766			3,617			(7,202		)	1,981
Less net loss (income) for noncontrolling interests	—			—			—			(3		)	1			(2		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,979		$	821		$	2,766		$	3,614		$	(7,201	)	$	1,979

Other comprehensive income (loss)	(964		)	1			(947		)	(1,170		)	2,116			(964		)
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	1,015		$	822		$	1,819		$	2,444		$	(5,085	)	$	1,015

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2014

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,990		$	6,885		$	13,521		$	(4,844	)	$	22,552

Cost of products sold	—			5,519			5,075			9,882			(4,830		)	15,646
Selling and administrative expense	171			1,246			743			1,650			—			3,810
Litigation settlements	—			644			—			—			—			644
Research and development expense	—			240			202			205			—			647
Interest expense (income) - net	—			225			25			(29		)	6			227
Other expense (income) - net	—			(17		)	(81		)	(85		)	—			(183		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,191		)	(663		)	(2,654		)	(292		)	5,800			—
Intercompany expense (income) - net	227			(263		)	855			(819		)	—			—
Income (loss) before income taxes	1,793			59			2,720			3,009			(5,820		)	1,761
Income tax expense (benefit)	—			(100		)	76			(11		)	(7		)	(42		)
Net income (loss)	1,793			159			2,644			3,020			(5,813		)	1,803
Less net loss (income) for noncontrolling interests	—			—			—			(8		)	(2		)	(10		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,793		$	159		$	2,644		$	3,012		$	(5,815	)	$	1,793

Other comprehensive income (loss)	(1,339		)	(197		)	(1,368		)	(1,646		)	3,211			(1,339		)
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	454		$	(38	)	$	1,276		$	1,366		$	(2,604	)	$	454

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2013

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net sales	$	—		$	6,695		$	6,421		$	13,579		$	(4,649	)	$	22,046

Cost of products sold	—			5,227			4,784			10,010			(4,652		)	15,369
Selling and administrative expense	32			1,400			749			1,705			—			3,886
Research and development expense	—			255			200			189			—			644
Interest expense (income) - net	—			271			28			(22		)	(6		)	271
Other expense (income) - net	—			8			4			(20		)	—			(8		)
Equity in loss (earnings) of subsidiaries, net of tax	(2,147		)	(657		)	(2,005		)	(277		)	5,086			—
Intercompany expense (income) - net	254			(155		)	(433		)	334			—			—
Income (loss) before income taxes	1,861			346			3,094			1,660			(5,077		)	1,884
Income tax expense (benefit)	—			(108		)	(90		)	207			2			11
Net income (loss)	1,861			454			3,184			1,453			(5,079		)	1,873
Less net loss (income) for noncontrolling interests	—			—			—			(9		)	(3		)	(12		)
Net income (loss) attributable to Eaton ordinary shareholders	$	1,861		$	454		$	3,184		$	1,444		$	(5,082	)	$	1,861

Other comprehensive income (loss)	404			221			475			262			(958		)	404
Total comprehensive income (loss) attributable to Eaton ordinary shareholders	$	2,265		$	675		$	3,659		$	1,706		$	(6,040	)	$	2,265

CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2015

	Eaton Corporation plc		Eaton Corporation		Guarantors		Other subsidiaries		Consolidating adjustments			Total
Assets
Current assets
Cash	$	—	$	26	$	7	$	235	$	—		$	268
Short-term investments	—		—		2		175		—			177
Accounts receivable - net	—		512		1,030		1,937		—			3,479
Intercompany accounts receivable	1		842		3,888		2,928		(7,659		)	—
Inventory	—		357		651		1,395		(80		)	2,323
Prepaid expenses and other current assets	—		77		40		229		23			369
Total current assets	1		1,814		5,618		6,899		(7,716		)	6,616

Property, plant and equipment - net	—		930		750		1,885		—			3,565

Other noncurrent assets
Goodwill	—		1,355		6,264		5,860		—			13,479
Other intangible assets	—		182		3,624		2,208		—			6,014
Deferred income taxes	—		1,016		—		218		(872		)	362
Investment in subsidiaries	29,627		13,001		60,139		10,163		(112,930		)	—
Intercompany loans receivable	—		8,641		1,573		44,835		(55,049		)	—
Other assets	—		527		122		346		—			995
Total assets	$	29,628	$	27,466	$	78,090	$	72,414	$	(176,567	)	$	31,031

Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	—	$	408	$	—	$	18	$	—		$	426
Current portion of long-term debt	—		1		240		1		—			242
Accounts payable	—		392		260		1,106		—			1,758
Intercompany accounts payable	219		4,009		2,248		1,183		(7,659		)	—
Accrued compensation	—		77		53		236		—			366
Other current liabilities	1		644		318		875		(5		)	1,833
Total current liabilities	220		5,531		3,119		3,419		(7,664		)	4,625

Noncurrent liabilities
Long-term debt	—		7,088		675		17		1			7,781
Pension liabilities	—		639		165		782		—			1,586
Other postretirement benefits liabilities	—		245		118		77		—			440
Deferred income taxes	—		—		815		447		(872		)	390
Intercompany loans payable	14,222		2,962		36,432		1,433		(55,049		)	—
Other noncurrent liabilities	—		346		200		432		—			978
Total noncurrent liabilities	14,222		11,280		38,405		3,188		(55,920		)	11,175

Shareholders’ equity
Eaton shareholders' equity	15,186		10,655		36,566		65,770		(112,991		)	15,186
Noncontrolling interests	—		—		—		37		8			45
Total equity	15,186		10,655		36,566		65,807		(112,983		)	15,231
Total liabilities and equity	$	29,628	$	27,466	$	78,090	$	72,414	$	(176,567	)	$	31,031

CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2014

	Eaton Corporation plc		Eaton Corporation		Guarantors		Other subsidiaries		Consolidating adjustments			Total
Assets
Current assets
Cash	$	1	$	173	$	13	$	594	$	—		$	781
Short-term investments	—		—		1		244		—			245
Accounts receivable - net	—		500		955		2,212		—			3,667
Intercompany accounts receivable	2		759		3,822		4,101		(8,684		)	—
Inventory	—		397		637		1,445		(51		)	2,428
Prepaid expenses and other current assets	—		464		171		340		4			979
Total current assets	3		2,293		5,599		8,936		(8,731		)	8,100

Property, plant and equipment - net	—		972		756		2,022		—			3,750

Other noncurrent assets
Goodwill	—		1,355		6,263		6,275		—			13,893
Other intangible assets	—		196		3,811		2,549		—			6,556
Deferred income taxes	—		889		10		137		(808		)	228
Investment in subsidiaries	26,612		12,238		58,684		9,185		(106,719		)	—
Intercompany loans receivable	—		7,542		2,249		40,635		(50,426		)	—
Other assets	—		473		142		387		—			1,002
Total assets	$	26,615	$	25,958	$	77,514	$	70,126	$	(166,684	)	$	33,529

Liabilities and shareholders’ equity
Current liabilities
Short-term debt	$	—	$	—	$	—	$	2	$	—		$	2
Current portion of long-term debt	—		702		304		2		—			1,008
Accounts payable	—		475		340		1,125		—			1,940
Intercompany accounts payable	117		4,087		3,443		1,037		(8,684		)	—
Accrued compensation	—		112		59		249		—			420
Other current liabilities	1		674		343		981		(14		)	1,985
Total current liabilities	118		6,050		4,489		3,396		(8,698		)	5,355

Noncurrent liabilities
Long-term debt	—		7,079		932		13		—			8,024
Pension liabilities	—		726		183		903		—			1,812
Other postretirement benefits liabilities	—		283		136		94		—			513
Deferred income taxes	—		—		1,160		549		(808		)	901
Intercompany loans payable	10,711		2,723		36,162		830		(50,426		)	—
Other noncurrent liabilities	—		457		186		442		—			1,085
Total noncurrent liabilities	10,711		11,268		38,759		2,831		(51,234		)	12,335

Shareholders’ equity
Eaton shareholders' equity	15,786		8,640		34,266		63,854		(106,760		)	15,786
Noncontrolling interests	—		—		—		45		8			53
Total equity	15,786		8,640		34,266		63,899		(106,752		)	15,839
Total liabilities and equity	$	26,615	$	25,958	$	77,514	$	70,126	$	(166,684	)	$	33,529

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2015

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(137	)	$	(46	)	$	(283	)	$	2,841		$	(4	)	$	2,371

Investing activities
Capital expenditures for property, plant and equipment	—			(94		)	(146		)	(266		)	—			(506		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			(36		)	(36		)	—			(72		)
Sales (purchases) of short-term investment - net	—			—			(2		)	39			—			37
Investments in affiliates	(1,482		)	—			(1,176		)	(1,482		)	4,140			—
Loans to affiliates	—			(1,235		)	(39		)	(10,608		)	11,882			—
Repayments of loans from affiliates	—			342			359			7,148			(7,849		)	—
Proceeds from the sales of businesses	—			—			—			1			—			1
Other - net	—			(50		)	47			(32		)	—			(35		)
Net cash provided by (used in) investing activities	(1,482		)	(1,037		)	(993		)	(5,236		)	8,173			(575		)

Financing activities
Proceeds from borrowings	—			408			—			17			—			425
Payments on borrowings	—			(724		)	(301		)	(2		)	—			(1,027		)
Proceeds from borrowings from affiliates	3,322			6,885			997			678			(11,882		)	—
Payments on borrowings from affiliates	(48		)	(6,122		)	(1,282		)	(397		)	7,849			—
Capital contribution from affiliates	—			1,176			1,482			1,482			(4,140		)	—
Other intercompany financing activities	—			(688		)	374			314			—			—
Cash dividends paid	(1,026		)	—			—			—			—			(1,026		)
Cash dividends paid to affiliates	—			—			—			(4		)	4			—
Exercise of employee stock options	52			—			—			—			—			52
Repurchase of shares	(682		)	—			—			—			—			(682		)
Excess tax benefit from equity-based compensation	—			1			—			—			—			1
Other - net	—			—			—			(10		)	—			(10		)
Net cash provided by (used in) financing activities	1,618			936			1,270			2,078			(8,169		)	(2,267		)

Effect of currency on cash	—			—			—			(42		)	—			(42		)
Total increase (decrease) in cash	(1		)	(147		)	(6		)	(359		)	—			(513		)
Cash at the beginning of the period	1			173			13			594			—			781
Cash at the end of the period	$	—		$	26		$	7		$	235		$	—		$	268

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2014

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(93	)	$	(411	)	$	(218	)	$	2,568		$	32		$	1,878

Investing activities
Capital expenditures for property, plant and equipment	—			(127		)	(168		)	(337		)	—			(632		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			—			2			—			2
Sales (purchases) of short-term investments - net	—			—			133			389			—			522
Investments in affiliates	(753		)	—			—			(753		)	1,506			—
Loans to affiliates	—			(354		)	(162		)	(10,546		)	11,062			—
Repayments of loans from affiliates	—			978			212			8,451			(9,641		)	—
Proceeds from the sales of businesses	—			93			175			14			—			282
Other - net	—			(47		)	44			(28		)	—			(31		)
Net cash provided by (used in) investing activities	(753		)	543			234			(2,808		)	2,927			143

Financing activities
Payments on borrowings	—			(553		)	(1		)	(28		)	—			(582		)
Proceeds from borrowings from affiliates	2,628			7,599			808			27			(11,062		)	—
Payments on borrowings from affiliates	(476		)	(6,907		)	(1,875		)	(383		)	9,641			—
Capital contribution from affiliates	—			—			753			753			(1,506		)	—
Other intercompany financing activities	217			(169		)	302			(350		)	—			—
Cash dividends paid	(929		)	—			—			—			—			(929		)
Cash dividends received from affiliates	—			—			—			32			(32		)	—
Exercise of employee stock options	54			—			—			—			—			54
Repurchase of shares	(650		)	—			—			—			—			(650		)
Excess tax benefit from equity-based compensation	—			20			—			—			—			20
Other - net	—			—			—			(43		)	—			(43		)
Net cash provided by (used in) financing activities	844			(10		)	(13		)	8			(2,959		)	(2,130		)

Effect of currency on cash	—			—			—			(25		)	—			(25		)
Total increase (decrease) in cash	(2		)	122			3			(257		)	—			(134		)
Cash at the beginning of the period	3			51			10			851			—			915
Cash at the end of the period	$	1		$	173		$	13		$	594		$	—		$	781

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS DECEMBER 31, 2013

	Eaton Corporation plc			Eaton Corporation			Guarantors			Other subsidiaries			Consolidating adjustments			Total
Net cash provided by (used in) operating activities	$	(17	)	$	860		$	428		$	1,067		$	(53	)	$	2,285

Investing activities
Capital expenditures for property, plant and equipment	—			(171		)	(119		)	(324		)	—			(614		)
Cash received from (paid for) acquisitions of businesses, net of cash acquired	—			—			—			(9		)	—			(9		)
Sales (purchases) of short-term investments - net	—			25			(95		)	(218		)	—			(288		)
Loans to affiliates	—			(535		)	(545		)	(6,215		)	7,295			—
Repayments of loans from affiliates	—			36			626			5,795			(6,457		)	—
Proceeds from the sales of businesses	—			—			—			777			—			777
Other - net	—			(41		)	(12		)	(15		)	—			(68		)
Net cash provided by (used in) investing activities	—			(686		)	(145		)	(209		)	838			(202		)

Financing activities
Proceeds from borrowings	—			—			—			9			—			9
Payments on borrowings	—			(1,048		)	(43		)	(5		)	—			(1,096		)
Proceeds from borrowings from affiliates	—			2,395			4,260			640			(7,295		)	—
Payments on borrowings from affiliates	—			(2,921		)	(2,874		)	(662		)	6,457			—
Other intercompany financing activities	688			1,365			(1,630		)	(423		)	—			—
Cash dividends paid	(796		)	—			—			—			—			(796		)
Cash dividends paid to affiliates	—			—			—			(53		)	53			—
Exercise of employee stock options	121			—			—			—			—			121
Excess tax benefit from equity-based compensation	—			32			—			—			—			32
Other - net	—			—			—			(6		)	—			(6		)
Net cash provided by (used in) financing activities	13			(177		)	(287		)	(500		)	(785		)	(1,736		)

Effect of currency on cash	—			—			—			(9		)	—			(9		)
Total increase (decrease) in cash	(4		)	(3		)	(4		)	349			—			338
Cash at the beginning of the period	7			54			14			502			—			577
Cash at the end of the period	$	3		$	51		$	10		$	851		$	—		$	915