REVENUE RECOGNITION DISAGGREGATION OF REVENUES

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Long-term Contracts

The majority of our contracts are for a period of less than one year. We have certain long-term maintenance agreements, construction contracts and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and construction contracts allocated to performance obligations that were not satisfied as of March 31, 2023, was $649 million. We expect to recognize the related revenue of $126 million over the next 12 months and $523 million over periods up to 10 years. See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.

Deferred and Unbilled Revenue

The following is a summary of our unbilled and deferred revenue and related activity:

In millions	March 31, 2023		December 31, 2022
Unbilled revenue	$	332	$	257
Deferred revenue	1,977		1,848

We recognized revenue of $206 million for the three months ended March 31, 2023, compared with $240 million for the comparable period in 2022, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three months ended March 31, 2023 or March 31, 2022.

Disaggregation of Revenue

Consolidated Revenue

The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.

	Three months ended
	March 31,
In millions	2023		2022
United States	$	4,802	$	3,457
China	790		653
India	411		309
Other international	2,450		1,966
Total net sales	$	8,453	$	6,385

Segment Revenue

As previously announced, our Components segment reorganized its reporting structure to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuels systems businesses into the newly formed engine components business. We started reporting results for the reorganized business in the first quarter of 2023 and reflected these changes for prior periods.

Components segment external sales by business were as follows:

	Three months ended
	March 31,
In millions	2023		2022
Axles and brakes	$	1,272	$	—
Emission solutions	939		808
Filtration	342		308
Engine components	292		240
Automated transmissions	178		134
Software and electronics	20		27
Total sales	$	3,043	$	1,517

Engine segment external sales by market were as follows:

	Three months ended
	March 31,
In millions	2023		2022
Heavy-duty truck	$	860	$	684
Medium-duty truck and bus	617		591
Light-duty automotive	441		487
Total on-highway	1,918		1,762
Off-highway	334		287
Total sales	$	2,252	$	2,049

As previously announced, due to the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. We started to report results for our new regional management structure in the first quarter of 2023 and reflected these changes for historical periods.

Distribution segment external sales by region were as follows:

	Three months ended
	March 31,
In millions	2023		2022
North America	$	1,693	$	1,371
Asia Pacific	239		244
Europe	194		275
China	101		82
Africa and Middle East	62		50
India	57		48
Latin America	53		41
Total sales	$	2,399	$	2,111

Distribution segment external sales by product line were as follows:

	Three months ended
	March 31,
In millions	2023		2022
Parts	$	1,052	$	926
Power generation	491		398
Engines	456		438
Service	400		349
Total sales	$	2,399	$	2,111

Power Systems segment external sales by product line were as follows:

	Three months ended
	March 31,
In millions	2023		2022
Power generation	$	380	$	399
Industrial	189		188
Generator technologies	110		96
Total sales	$	679	$	683