REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:

	Three months ended March 31
(In millions)	2023		2022
Electrical Americas
Products	$	716	$	603
Systems	1,578		1,288
Total	$	2,294	$	1,891
Electrical Global
Products	$	882	$	876
Systems	618		561
Total	$	1,500	$	1,437
Aerospace
Original Equipment Manufacturers	$	314	$	293
Aftermarket	264		221
Industrial and Other	225		204
Total	$	803	$	718
Vehicle
Commercial	$	448	$	402
Passenger and Light Duty	291		269
Total	$	739	$	671
eMobility	$	147	$	126
Total net sales	$	5,483	$	4,843

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $3,726 million and $3,581 million at March 31, 2023 and December 31, 2022, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $251 million and $233 million at March 31, 2023 and December 31, 2022, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in 2023.

Changes in the deferred revenue liabilities are as follows:

(In millions)	Deferred Revenue
Balance at January 1, 2023	$	508
Customer deposits and billings	514
Revenue recognized in the period	(421)
Translation	4
Balance at March 31, 2023	$	605

(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	342
Revenue recognized in the period	(334)
Translation	(2)
Balance at March 31, 2022	$	428

Deferred revenue liabilities of $586 million and $489 million as of March 31, 2023 and December 31, 2022, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities.

A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at March 31, 2023 was approximately $12.3 billion. At March 31, 2023, approximately 82% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.