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LEASES | 12 Months Ended
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Dec. 31, 2022
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. 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) | 2022 |  | 2021 |  | 2020 |  |
Operating lease cost | $ | 179 |  |  | $ | 164 |  |  | $ | 184 |  |  |
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | 11 |  |  | 12 |  |  | 6 |  |  |
Interest on lease liabilities | 1 |  |  | 2 |  |  | 1 |  |  |
Short-term lease cost | 17 |  |  | 15 |  |  | 18 |  |  |
Variable lease cost | 27 |  |  | 16 |  |  | 3 |  |  |
Sublease income | (1) |  |  | (2) |  |  | (2) |  |  |
Total lease cost | $ | 234 |  |  | $ | 207 |  |  | $ | 210 |  |  |
During 2022, Eaton entered into sale leaseback transactions primarily for certain office and distribution facilities and recorded gains of $81 million in Other expense (income) - net. The terms of the new operating leases ranged from 15 to 20 years. There were no sale leaseback transactions for the year ended December 31, 2021 and gains recorded on sale leaseback transactions were $9 million for the year ended December 31, 2020. Supplemental cash flow information related to leases is as follows:
(In millions) | 2022 |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash outflows - payments on operating leases | $ | (159) |  |  | $ | (158) |  |  | $ | (144) |
Operating cash outflows - interest payments on finance leases | (2) |  |  | (2) |  |  | (1) |
Financing cash outflows - payments on finance lease obligations | (11) |  |  | (11) |  |  | (8) |
Lease assets obtained in exchange for new lease obligations, including leases acquired: |  |  |  |  |
Operating leases | $ | 245 |  |  | $ | 145 |  |  | $ | 144 |
Finance leases | 10 |  |  | 14 |  |  | 16 |
Supplemental balance sheet information related to leases is as follows:
| December 31
(In millions) | 2022 |  | 2021
Operating Leases |  |  |
Operating lease assets | $ | 570 |  |  | $ | 442 |
Other current liabilities | 127 |  |  | 120 |
Operating lease liabilities | 459 |  |  | 337 |
Total operating lease liabilities | $ | 586 |  |  | $ | 457 |
Finance Leases |  |  |
Land and buildings | $ | 6 |  |  | $ | 6 |
Machinery and equipment | 40 |  |  | 47 |
Accumulated depreciation | (20) |  |  | (19) |
Net property, plant and equipment | $ | 26 |  |  | $ | 34 |
Current portion of long-term debt | $ | 10 |  |  | $ | 15 |
Long-term debt | 18 |  |  | 23 |
Total finance lease liabilities | $ | 28 |  |  | $ | 38 |
| December 31
| 2022 |  | 2021
Weighted-average remaining lease term |  |  |
Operating leases | 7.6 years |  | 5.4 years
Finance leases | 4.9 years |  | 5.3 years
Weighted-average discount rate |  |  |
Operating leases | 3.3 | % |  | 2.6 | %
Finance leases | 3.0 | % |  | 3.3 | %
Maturities of lease liabilities at December 31, 2022 are as follows:
(In millions) | Operating Leases |  | Finance Leases
2023 | $ | 145 |  |  | $ | 10 |
2024 | 118 |  |  | 7 |
2025 | 86 |  |  | 4 |
2026 | 69 |  |  | 3 |
2027 | 54 |  |  | 2 |
Thereafter | 209 |  |  | 4 |
Total lease payments | 681 |  |  | 30 |
Less imputed interest | 95 |  |  | 2 |
Total present value of lease liabilities | $ | 586 |  |  | $ | 28 |
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. 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) | 2022 |  | 2021 |  | 2020 |  |
Operating lease cost | $ | 179 |  |  | $ | 164 |  |  | $ | 184 |  |  |
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | 11 |  |  | 12 |  |  | 6 |  |  |
Interest on lease liabilities | 1 |  |  | 2 |  |  | 1 |  |  |
Short-term lease cost | 17 |  |  | 15 |  |  | 18 |  |  |
Variable lease cost | 27 |  |  | 16 |  |  | 3 |  |  |
Sublease income | (1) |  |  | (2) |  |  | (2) |  |  |
Total lease cost | $ | 234 |  |  | $ | 207 |  |  | $ | 210 |  |  |
During 2022, Eaton entered into sale leaseback transactions primarily for certain office and distribution facilities and recorded gains of $81 million in Other expense (income) - net. The terms of the new operating leases ranged from 15 to 20 years. There were no sale leaseback transactions for the year ended December 31, 2021 and gains recorded on sale leaseback transactions were $9 million for the year ended December 31, 2020. Supplemental cash flow information related to leases is as follows:
(In millions) | 2022 |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash outflows - payments on operating leases | $ | (159) |  |  | $ | (158) |  |  | $ | (144) |
Operating cash outflows - interest payments on finance leases | (2) |  |  | (2) |  |  | (1) |
Financing cash outflows - payments on finance lease obligations | (11) |  |  | (11) |  |  | (8) |
Lease assets obtained in exchange for new lease obligations, including leases acquired: |  |  |  |  |
Operating leases | $ | 245 |  |  | $ | 145 |  |  | $ | 144 |
Finance leases | 10 |  |  | 14 |  |  | 16 |
Supplemental balance sheet information related to leases is as follows:
| December 31
(In millions) | 2022 |  | 2021
Operating Leases |  |  |
Operating lease assets | $ | 570 |  |  | $ | 442 |
Other current liabilities | 127 |  |  | 120 |
Operating lease liabilities | 459 |  |  | 337 |
Total operating lease liabilities | $ | 586 |  |  | $ | 457 |
Finance Leases |  |  |
Land and buildings | $ | 6 |  |  | $ | 6 |
Machinery and equipment | 40 |  |  | 47 |
Accumulated depreciation | (20) |  |  | (19) |
Net property, plant and equipment | $ | 26 |  |  | $ | 34 |
Current portion of long-term debt | $ | 10 |  |  | $ | 15 |
Long-term debt | 18 |  |  | 23 |
Total finance lease liabilities | $ | 28 |  |  | $ | 38 |
| December 31
| 2022 |  | 2021
Weighted-average remaining lease term |  |  |
Operating leases | 7.6 years |  | 5.4 years
Finance leases | 4.9 years |  | 5.3 years
Weighted-average discount rate |  |  |
Operating leases | 3.3 | % |  | 2.6 | %
Finance leases | 3.0 | % |  | 3.3 | %
Maturities of lease liabilities at December 31, 2022 are as follows:
(In millions) | Operating Leases |  | Finance Leases
2023 | $ | 145 |  |  | $ | 10 |
2024 | 118 |  |  | 7 |
2025 | 86 |  |  | 4 |
2026 | 69 |  |  | 3 |
2027 | 54 |  |  | 2 |
Thereafter | 209 |  |  | 4 |
Total lease payments | 681 |  |  | 30 |
Less imputed interest | 95 |  |  | 2 |
Total present value of lease liabilities | $ | 586 |  |  | $ | 28 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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