Quarterly report pursuant to Section 13 or 15(d)

PRODUCT WARRANTY LIABILITY

v3.21.2
PRODUCT WARRANTY LIABILITY
 6 Months Ended
Jul. 04, 2021
Product Warranties Disclosures [Abstract]  
PRODUCT WARRANTY LIABILITY
NOTE 10. PRODUCT WARRANTY LIABILITY
A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued product campaigns, was as follows:
Six months ended
In millions July 4,
2021		 June 28,
2020
Balance, beginning of year $ 2,307  $ 2,389 
Provision for base warranties issued 302  161 
Deferred revenue on extended warranty contracts sold 136  121 
Provision for product campaigns issued 46  18 
Payments made during period (283) (280)
Amortization of deferred revenue on extended warranty contracts (124) (115)
Changes in estimates for pre-existing product warranties (74) (20)
Foreign currency translation and other (6) (11)
Balance, end of period $ 2,304  $ 2,263 
We recognized supplier recoveries of $5 million and $9 million for the three and six months ended July 4, 2021, compared with $2 million and $11 million for the comparable periods in 2020.
Warranty related deferred revenues and warranty liabilities on our Condensed Consolidated Balance Sheets were as follows:
In millions July 4,
2021		 December 31,
2020		 Balance Sheet Location
Deferred revenue related to extended coverage programs    
Current portion $ 279  $ 261  Current portion of deferred revenue
Long-term portion 690  700  Deferred revenue
Total $ 969  $ 961   
Product warranty    
Current portion $ 661  $ 674  Current portion of accrued product warranty
Long-term portion 674  672  Accrued product warranty
Total $ 1,335  $ 1,346   
Total warranty accrual $ 2,304  $ 2,307 
Engine System Campaign Accrual
During 2017, the California Air Resources Board (CARB) and the U.S. Environmental Protection Agency (EPA) selected certain of our pre-2013 model year engine systems for additional emissions testing. Some of these engine systems failed CARB and EPA tests as a result of degradation of an aftertreatment component. In the second quarter of 2018, we reached agreement with the CARB and EPA regarding our plans to address the affected populations. From the fourth quarter of 2017 through the second quarter of 2018, we recorded charges for the expected costs of field campaigns to repair these engine systems.

The campaigns launched in the third quarter of 2018 are being completed in phases across the affected population. The total engine system campaign charge, excluding supplier recoveries, was $410 million. In the fourth quarter of 2020, we recorded an additional $20 million charge related to this campaign, as a change in estimate, to bring the total campaign, excluding supplier recoveries, to $430 million. At July 4, 2021, the remaining accrual balance was $109 million.