Quarterly report pursuant to Section 13 or 15(d)

PRODUCT WARRANTY LIABILITY

v2.4.0.6
PRODUCT WARRANTY LIABILITY
3 Months Ended
Mar. 31, 2013
PRODUCT WARRANTY LIABILITY  
PRODUCT WARRANTY LIABILITY

NOTE 10.  PRODUCT WARRANTY LIABILITY

 

We charge the estimated costs of warranty programs, other than product recalls, to income at the time products are shipped to customers.  We use historical claims experience to develop the estimated liability.  We review product recall programs on a quarterly basis and, if necessary, record a liability when we commit to an action, or when they become probable and estimable, which is reflected in the provision for warranties issued line.  We also sell extended warranty coverage on several engines.  The following is a tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs:

 

 

 

Three months ended

 

In millions 

 

March 31, 2013

 

April 1, 2012

 

Balance, beginning of year

 

$

1,088

 

$

1,014

 

Provision for warranties issued

 

116

 

116

 

Deferred revenue on extended warranty contracts sold

 

49

 

46

 

Payments

 

(102

)

(103

)

Amortization of deferred revenue on extended warranty contracts

 

(27

)

(26

)

Changes in estimates for pre-existing warranties

 

(9

)

(14

)

Foreign currency translation

 

(5

)

4

 

Balance, end of period

 

$

1,110

 

$

1,037

 

 

Warranty related deferred revenue, supplier recovery receivables and the long-term portion of the warranty liability on our March 31, 2013, balance sheet were as follows:

 

In millions 

 

March 31, 2013

 

Balance Sheet Location

 

Deferred revenue related to extended coverage programs

 

 

 

 

 

Current portion

 

$

117

 

Deferred revenue

 

Long-term portion

 

325

 

Other liabilities and deferred revenue

 

Total

 

$

442

 

 

 

 

 

 

 

 

 

Receivables related to estimated supplier recoveries

 

 

 

 

 

Current portion

 

$

6

 

Trade and other receivables

 

Long-term portion

 

5

 

Other assets

 

Total

 

$

11

 

 

 

 

 

 

 

 

 

Long-term portion of warranty liability

 

$

272

 

Other liabilities and deferred revenue