SEC Filings


10-Q
CUMMINS INC filed this Form 10-Q on 10/31/2017
Entire Document
 

Fair Value of Debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
 
In millions
 
October 1,
2017
 
December 31,
2016
Fair value of total debt (1)
 
$
2,528

 
$
2,077

Carrying value of total debt
 
2,255

 
1,856

_________________________________________________
(1) The fair value of debt is derived from Level 2 inputs.
NOTE 8. PRODUCT WARRANTY LIABILITY
A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs was as follows:
 
In millions 
 
October 1,
2017
 
October 2,
2016
Balance, beginning of year
 
$
1,414

 
$
1,404

Provision for warranties issued
 
446

 
256

Deferred revenue on extended warranty contracts sold
 
164

 
179

Payments
 
(296
)
 
(291
)
Amortization of deferred revenue on extended warranty contracts
 
(161
)
 
(148
)
Changes in estimates for pre-existing warranties
 
71

 
22

Foreign currency translation
 
5

 
(6
)
Balance, end of period
 
$
1,643

 
$
1,416


Warranty related deferred revenues and the long-term portion of the warranty liabilities on our October 1, 2017, balance sheet were as follows:
In millions
 
October 1,
2017
 
Balance Sheet Location
Deferred revenue related to extended coverage programs
 
 

 
 
Current portion
 
$
229

 
Current portion of deferred revenue
Long-term portion
 
519

 
Other liabilities and deferred revenue
Total
 
$
748

 
 
 
 
 
 
 
Long-term portion of warranty liability
 
$
433

 
Other liabilities and deferred revenue

NOTE 9. COMMITMENTS AND CONTINGENCIES
We are subject to numerous lawsuits and claims arising out of the ordinary course of our business, including actions related to product liability; personal injury; the use and performance of our products; warranty matters; product recalls; patent, trademark or other intellectual property infringement; contractual liability; the conduct of our business; tax reporting in foreign jurisdictions; distributor termination; workplace safety; and environmental matters. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals pursuant to GAAP for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based upon then presently available information, there can be no assurance that the final resolution of any

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