Cummins Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

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 December 31, 2019, was $890 million. We expect to recognize the related revenue of $241 million over the next 12 months and $649 million over periods up to 10 years. See Note 12,"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:



	Years ended December 31,
In millions	2019		2018
Unbilled revenue	$	68	$	64
Deferred revenue, primarily extended warranty	1,354		1,156

We recognized revenue of $365 million and $361 million in 2019 and 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 2019 or 2018.

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.



	Years ended December 31,
In millions	2019		2018		2017
United States	$	13,519	$	13,218	$	11,010
China	2,331		2,324		2,137
India	848		965		805
Other international	6,873		7,264		6,476
Total net sales	$	23,571	$	23,771	$	20,428

Segment Revenue

Engine segment external sales by market were as follows:



	Years ended December 31,
In millions	2019		2018
Heavy-duty truck	$	2,626	$	2,885
Medium-duty truck and bus	2,244		2,536
Light-duty automotive	1,656		1,501
Total on-highway	6,526		6,922
Off-highway	1,044		1,080
Total sales	$	7,570	$	8,002

Distribution segment external sales by region were as follows:



	Years ended December 31,
In millions	2019		2018
North America	$	5,513	$	5,331
Asia Pacific	875		851
Europe	528		536
China	356		317
Africa and Middle East	235		242
India	200		192
Latin America	176		169
Russia	157		169
Total sales	$	8,040	$	7,807

Distribution segment external sales by product line were as follows:



	Years ended December 31,
In millions	2019		2018
Parts	$	3,278	$	3,222
Power generation	1,777		1,482
Engines	1,511		1,632
Service	1,474		1,471
Total sales	$	8,040	$	7,807

Components segment external sales by business were as follows:



	Years ended December 31,
In millions	2019		2018
Emission solutions	$	2,763	$	2,780
Filtration	1,024		1,010
Turbo technologies	696		761
Automated transmissions	534		543
Electronics and fuel systems	236		237
Total sales	$	5,253	$	5,331

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



	Years ended December 31,
In millions	2019		2018
Power generation	$	1,414	$	1,467
Industrial	908		801
Generator technologies	348		357
Total sales	$	2,670	$	2,625