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

Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION DISAGGREGATION OF REVENUES

REVENUE RECOGNITION DISAGGREGATION OF REVENUES

6 Months Ended

Jun. 30, 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 June 30, 2019, was $703 million. We expect to recognize the related revenue of $147 million over the next 12 months and $556 million over periods up to 10 years. See NOTE 11, "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	June 30, 2019		December 31, 2018
Unbilled revenue	$	65	$	64
Deferred revenue, primarily extended warranty	1,231		1,156

We recognized revenue of $94 million and $203 million and $78 million and $206 million for the three and six months ended June 30, 2019 and July 1, 2018, respectively, 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 and six months ended June 30, 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				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
United States	$	3,611	$	3,384	$	7,047	$	6,422
China	644		644		1,217		1,194
India	234		247		458		482
Other international	1,732		1,857		3,503		3,604
Total net sales	$	6,221	$	6,132	$	12,225	$	11,702

Segment Revenue

Engine segment external sales by market were as follows:



	Three months ended				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Heavy-duty truck	$	754	$	730	$	1,477	$	1,344
Medium-duty truck and bus	630		714		1,240		1,341
Light-duty automotive	435		330		765		653
Total on-highway	1,819		1,774		3,482		3,338
Off-highway	254		276		575		525
Total sales	$	2,073	$	2,050	$	4,057	$	3,863

Distribution segment external sales by region were as follows:



	Three months ended				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
North America	$	1,374	$	1,349	$	2,766	$	2,623
Asia Pacific	223		211		443		398
Europe	122		143		245		274
China	101		84		182		161
Africa and Middle East	55		62		110		123
India	49		49		96		93
Latin America	46		45		86		83
Russia	45		45		80		80
Total sales	$	2,015	$	1,988	$	4,008	$	3,835

Distribution segment external sales by product line were as follows:



	Three months ended				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Parts	$	827	$	815	$	1,668	$	1,618
Power generation	425		345		826		670
Engines	392		460		781		828
Service	371		368		733		719
Total sales	$	2,015	$	1,988	$	4,008	$	3,835

Components segment external sales by business were as follows:



	Three months ended				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Emission solutions	$	735	$	735	$	1,484	$	1,419
Filtration	263		257		522		514
Turbo technologies	181		201		371		398
Automated transmissions	156		141		305		258
Electronics and fuel systems	66		68		120		126
Total sales	$	1,401	$	1,402	$	2,802	$	2,715

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



	Three months ended				Six months ended
In millions	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
Power generation	$	380	$	390	$	688	$	700
Industrial	246		208		477		409
Generator technologies	98		93		182		177
Total sales	$	724	$	691	$	1,347	$	1,286