Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE

v3.19.3
REVENUE RECOGNITION LONG-TERM CONTRACTS AND DEFERRED AND UNBILLED REVENUE
9 Months Ended
Sep. 29, 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 September 29, 2019, was $809 million. We expect to recognize the related revenue of $180 million over the next 12 months and $629 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
 
September 29,
2019
 
December 31,
2018
Unbilled revenue
 
$
75

 
$
64

Deferred revenue, primarily extended warranty
 
1,314

 
1,156

 
We recognized revenue of $79 million and $282 million for the three and nine months ended September 29, 2019, compared with $71 million and $277 million for the comparable periods in 2018, 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 nine months ended September 29, 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
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
United States
 
$
3,414

 
$
3,407

 
$
10,461

 
$
9,829

China
 
481

 
559

 
1,698

 
1,753

India
 
185

 
240

 
643

 
722

Other international
 
1,688

 
1,737

 
5,191

 
5,341

Total net sales
 
$
5,768

 
$
5,943

 
$
17,993

 
$
17,645


Segment Revenue
Engine segment external sales by market were as follows:
 
 
Three months ended
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Heavy-duty truck
 
$
635

 
$
769

 
$
2,112

 
$
2,113

Medium-duty truck and bus
 
525

 
613

 
1,765

 
1,954

Light-duty automotive
 
451

 
446

 
1,216

 
1,099

Total on-highway
 
1,611

 
1,828

 
5,093

 
5,166

Off-highway
 
211

 
254

 
786

 
779

Total sales
 
$
1,822

 
$
2,082

 
$
5,879

 
$
5,945


Distribution segment external sales by region were as follows:
 
 
Three months ended
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
North America
 
$
1,373

 
$
1,331

 
$
4,139

 
$
3,954

Asia Pacific
 
224

 
223

 
667

 
621

Europe
 
135

 
113

 
380

 
387

China
 
82

 
77

 
264

 
238

Africa and Middle East
 
60

 
55

 
170

 
178

Latin America
 
48

 
42

 
134

 
125

India
 
46

 
49

 
142

 
142

Russia
 
33

 
37

 
113

 
117

Total sales
 
$
2,001

 
$
1,927

 
$
6,009

 
$
5,762


Distribution segment external sales by product line were as follows:
 
 
Three months ended
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Parts
 
$
796

 
$
797

 
$
2,464

 
$
2,415

Power generation
 
466

 
359

 
1,292

 
1,029

Service
 
376

 
372

 
1,109

 
1,091

Engines
 
363

 
399

 
1,144

 
1,227

Total sales
 
$
2,001

 
$
1,927

 
$
6,009

 
$
5,762


Components segment external sales by business were as follows:
 
 
Three months ended
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Emission solutions
 
$
660

 
$
677

 
$
2,144

 
$
2,096

Filtration
 
249

 
242

 
771

 
756

Turbo technologies
 
151

 
173

 
522

 
571

Automated transmissions
 
146

 
150

 
451

 
408

Electronics and fuel systems
 
47

 
55

 
167

 
181

Total sales
 
$
1,253

 
$
1,297

 
$
4,055

 
$
4,012


Power Systems segment external sales by product line were as follows:
 
 
Three months ended
 
Nine months ended
In millions
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Power generation
 
$
372

 
$
366

 
$
1,060

 
$
1,066

Industrial
 
227

 
184

 
704

 
593

Generator technologies
 
84

 
86

 
266

 
263

Total sales
 
$
683

 
$
636

 
$
2,030

 
$
1,922