Cummins Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

NOTE 3. REVENUE RECOGNITION

Long-term Contracts

Most 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 have not been satisfied as of March 31, 2019, was $705 million. We expect to recognize the related revenue of $205 million over the next 12 months and $500 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 cost incurred when providing goods and services to our customers or represent sale-based royalties.

Deferred and Unbilled Revenue

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



In millions	March 31, 2019		December 31, 2018
Unbilled revenue	$	46	$	64
Deferred revenue, primarily extended warranty	1,206		1,156

Revenue recognized was $109 million and $128 million for the three months ended March 31, 2019 and April 1, 2018, respectively. These amounts relate to year-to-date revenues recognized from amounts included in deferred revenue at the beginning of the year. We did not record any impairment losses on our unbilled revenues during the three months ended March 31, 2019.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
In millions	March 31, 2019		April 1, 2018
United States	$	3,436	$	3,038
China	573		550
India	224		235
Other international	1,771		1,747
Total net sales	$	6,004	$	5,570

Segment Revenue

Engine segment external sales by market were as follows:



	Three months ended
In millions	March 31, 2019		April 1, 2018
Heavy-duty truck	$	723	$	614
Medium-duty truck and bus	610		627
Light-duty automotive	330		323
Total on-highway	1,663		1,564
Off-highway	321		249
Total sales	$	1,984	$	1,813

Distribution segment external sales by region were as follows:



	Three months ended
In millions	March 31, 2019		April 1, 2018
North America	$	1,392	$	1,274
Asia Pacific	220		187
Europe	123		131
China	81		77
Africa and Middle East	55		61
India	47		44
Latin America	40		38
Russia	35		35
Total sales	$	1,993	$	1,847

Distribution segment external sales by product line were as follows:



	Three months ended
In millions	March 31, 2019		April 1, 2018
Parts	$	841	$	803
Power generation	401		325
Engines	389		368
Service	362		351
Total sales	$	1,993	$	1,847

Components segment external sales by business were as follows:



	Three months ended
In millions	March 31, 2019		April 1, 2018
Emission solutions	$	749	$	684
Filtration	259		257
Turbo technologies	190		197
Automated transmissions	149		117
Electronics and fuel systems	54		58
Total sales	$	1,401	$	1,313

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



	Three months ended
In millions	March 31, 2019		April 1, 2018
Power generation	$	308	$	310
Industrial	231		201
Generator technologies	84		84
Total sales	$	623	$	595