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LEASES | 12 Months Ended
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Dec. 31, 2025
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, with the exception of the non-cancellable synthetic lease discussed below. 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) | 2025 |  | 2024 |  | 2023 |  |
Operating lease cost | $ | 251 |  |  | $ | 227 |  |  | $ | 200 |  |  |
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | 9 |  |  | 12 |  |  | 15 |  |  |
Interest on lease liabilities | 1 |  |  | 1 |  |  | 1 |  |  |
Short-term lease cost | 23 |  |  | 19 |  |  | 18 |  |  |
Variable lease cost | 26 |  |  | 29 |  |  | 28 |  |  |
Sublease income | (1) |  |  | (1) |  |  | (1) |  |  |
Total lease cost | $ | 309 |  |  | $ | 287 |  |  | $ | 261 |  |  |
During 2025, 2024 and 2023, Eaton entered into sale leaseback transactions primarily for certain non-production facilities and recorded gains of $38 million, $56 million and $53 million, respectively, in Other expense (income) - net. The terms of the new operating leases ranged from 2 to 15 years. In March 2025, Eaton entered into a non-cancellable synthetic lease for a manufacturing facility, for which the Company is the construction agent. Construction costs are expected to be approximately $185 million. The lease will commence upon completion of construction of the facility which is expected to be in the first half of 2027. The term of the lease is five years after commencement. At the end of the lease term, Eaton will be required to either negotiate a renewal of the lease, purchase the facility, or sell the facility. Upon lease commencement, the lease classification will be determined and the lease asset and lease liability recognized. The lease arrangement contains a residual value guarantee of approximately 85% of the total construction cost. Supplemental cash flow information related to leases is as follows:
(In millions) | 2025 |  | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash outflows - payments on operating leases | $ | (198) |  |  | $ | (200) |  |  | $ | (180) |
Operating cash outflows - interest payments on finance leases | (1) |  |  | (1) |  |  | (1) |
Financing cash outflows - payments on finance lease obligations | (9) |  |  | (14) |  |  | (18) |
Lease assets obtained in exchange for new lease obligations, including leases acquired: |  |  |  |  |
Operating leases | $ | 193 |  |  | $ | 268 |  |  | $ | 183 |
Finance leases | 6 |  |  | 13 |  |  | 38 |
Supplemental balance sheet information related to leases is as follows:
| December 31
(In millions) | 2025 |  | 2024
Operating Leases |  |  |
Operating lease assets | $ | 768 |  |  | $ | 806 |
Other current liabilities | 152 |  |  | 163 |
Operating lease liabilities | 637 |  |  | 669 |
Total operating lease liabilities | $ | 789 |  |  | $ | 832 |
Finance Leases |  |  |
Land and buildings | $ | 9 |  |  | $ | 5 |
Machinery and equipment | 47 |  |  | 61 |
Accumulated depreciation | (31) |  |  | (37) |
Net property, plant and equipment | $ | 25 |  |  | $ | 29 |
Current portion of long-term debt | $ | 7 |  |  | $ | 9 |
Long-term debt | 18 |  |  | 19 |
Total finance lease liabilities | $ | 25 |  |  | $ | 28 |
| December 31
| 2025 |  | 2024
Weighted-average remaining lease term |  |  |
Operating leases | 8.0 years |  | 7.1 years
Finance leases | 4.7 years |  | 4.2 years
Weighted-average discount rate |  |  |
Operating leases | 4.7 | % |  | 4.4 | %
Finance leases | 3.8 | % |  | 3.7 | %
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) | Operating Leases |  | Finance Leases
2026 | $ | 183 |  |  | $ | 8 |
2027 | 150 |  |  | 7 |
2028 | 122 |  |  | 4 |
2029 | 97 |  |  | 3 |
2030 | 72 |  |  | 2 |
Thereafter | 332 |  |  | 3 |
Total lease payments | 957 |  |  | 27 |
Less imputed interest | 168 |  |  | 2 |
Total present value of lease liabilities | $ | 789 |  |  | $ | 25 |
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, with the exception of the non-cancellable synthetic lease discussed below. 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) | 2025 |  | 2024 |  | 2023 |  |
Operating lease cost | $ | 251 |  |  | $ | 227 |  |  | $ | 200 |  |  |
Finance lease cost: |  |  |  |  |  |  |
Amortization of lease assets | 9 |  |  | 12 |  |  | 15 |  |  |
Interest on lease liabilities | 1 |  |  | 1 |  |  | 1 |  |  |
Short-term lease cost | 23 |  |  | 19 |  |  | 18 |  |  |
Variable lease cost | 26 |  |  | 29 |  |  | 28 |  |  |
Sublease income | (1) |  |  | (1) |  |  | (1) |  |  |
Total lease cost | $ | 309 |  |  | $ | 287 |  |  | $ | 261 |  |  |
During 2025, 2024 and 2023, Eaton entered into sale leaseback transactions primarily for certain non-production facilities and recorded gains of $38 million, $56 million and $53 million, respectively, in Other expense (income) - net. The terms of the new operating leases ranged from 2 to 15 years. In March 2025, Eaton entered into a non-cancellable synthetic lease for a manufacturing facility, for which the Company is the construction agent. Construction costs are expected to be approximately $185 million. The lease will commence upon completion of construction of the facility which is expected to be in the first half of 2027. The term of the lease is five years after commencement. At the end of the lease term, Eaton will be required to either negotiate a renewal of the lease, purchase the facility, or sell the facility. Upon lease commencement, the lease classification will be determined and the lease asset and lease liability recognized. The lease arrangement contains a residual value guarantee of approximately 85% of the total construction cost. Supplemental cash flow information related to leases is as follows:
(In millions) | 2025 |  | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash outflows - payments on operating leases | $ | (198) |  |  | $ | (200) |  |  | $ | (180) |
Operating cash outflows - interest payments on finance leases | (1) |  |  | (1) |  |  | (1) |
Financing cash outflows - payments on finance lease obligations | (9) |  |  | (14) |  |  | (18) |
Lease assets obtained in exchange for new lease obligations, including leases acquired: |  |  |  |  |
Operating leases | $ | 193 |  |  | $ | 268 |  |  | $ | 183 |
Finance leases | 6 |  |  | 13 |  |  | 38 |
Supplemental balance sheet information related to leases is as follows:
| December 31
(In millions) | 2025 |  | 2024
Operating Leases |  |  |
Operating lease assets | $ | 768 |  |  | $ | 806 |
Other current liabilities | 152 |  |  | 163 |
Operating lease liabilities | 637 |  |  | 669 |
Total operating lease liabilities | $ | 789 |  |  | $ | 832 |
Finance Leases |  |  |
Land and buildings | $ | 9 |  |  | $ | 5 |
Machinery and equipment | 47 |  |  | 61 |
Accumulated depreciation | (31) |  |  | (37) |
Net property, plant and equipment | $ | 25 |  |  | $ | 29 |
Current portion of long-term debt | $ | 7 |  |  | $ | 9 |
Long-term debt | 18 |  |  | 19 |
Total finance lease liabilities | $ | 25 |  |  | $ | 28 |
| December 31
| 2025 |  | 2024
Weighted-average remaining lease term |  |  |
Operating leases | 8.0 years |  | 7.1 years
Finance leases | 4.7 years |  | 4.2 years
Weighted-average discount rate |  |  |
Operating leases | 4.7 | % |  | 4.4 | %
Finance leases | 3.8 | % |  | 3.7 | %
Maturities of lease liabilities at December 31, 2025 are as follows:
(In millions) | Operating Leases |  | Finance Leases
2026 | $ | 183 |  |  | $ | 8 |
2027 | 150 |  |  | 7 |
2028 | 122 |  |  | 4 |
2029 | 97 |  |  | 3 |
2030 | 72 |  |  | 2 |
Thereafter | 332 |  |  | 3 |
Total lease payments | 957 |  |  | 27 |
Less imputed interest | 168 |  |  | 2 |
Total present value of lease liabilities | $ | 789 |  |  | $ | 25 |

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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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + 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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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