2017 Q2 Form 10-Q Financial Statement

#000003799617000068 Filed on July 26, 2017

View on sec.gov

Income Statement

Concept 2017 Q2 2016 Q2
Revenue $39.85B $39.49B
YoY Change 0.93% 0.0%
Cost Of Revenue $33.34B $32.52B
YoY Change 2.52% 7.24%
Gross Profit $6.511B $6.963B
YoY Change -6.49% -23.98%
Gross Profit Margin 16.34% 17.63%
Selling, General & Admin $2.756B $2.784B
YoY Change -1.01% 9.43%
% of Gross Profit 42.33% 39.98%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization
YoY Change
% of Gross Profit
Operating Expenses $2.756B $2.784B
YoY Change -1.01% 9.43%
Operating Profit $3.755B $4.179B
YoY Change -10.15% -36.83%
Interest Expense $277.0M $212.0M
YoY Change 30.66% 11.58%
% of Operating Profit 7.38% 5.07%
Other Income/Expense, Net $732.0M $540.0M
YoY Change 35.56% 110.12%
Pretax Income $2.266B $2.875B
YoY Change -21.18% 0.0%
Income Tax $211.0M $903.0M
% Of Pretax Income 9.31% 31.41%
Net Earnings $2.055B $1.970B
YoY Change 4.31% -8.8%
Net Earnings / Revenue 5.16% 4.99%
Basic Earnings Per Share $0.51 $0.50
Diluted Earnings Per Share $0.51 $0.49
COMMON SHARES
Basic Shares Outstanding 3.977B shares 3.973B shares
Diluted Shares Outstanding 3.996B shares 3.997B shares

Balance Sheet

Concept 2017 Q2 2016 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $39.11B $39.30B
YoY Change -0.48% 25.54%
Cash & Equivalents $16.22B $17.06B
Short-Term Investments $22.89B $22.23B
Other Short-Term Assets $3.291B $3.053B
YoY Change 7.8%
Inventory $11.09B $9.829B
Prepaid Expenses
Receivables $10.16B $10.73B
Other Receivables $49.89B $47.86B
Total Short-Term Assets $113.5B $110.8B
YoY Change 2.5% -31.78%
LONG-TERM ASSETS
Property, Plant & Equipment $33.79B $31.94B
YoY Change 5.8% 3.87%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $3.241B $3.349B
YoY Change -3.22% -3.46%
Other Assets $6.602B $6.905B
YoY Change -4.39% -64.5%
Total Long-Term Assets $134.5B $128.9B
YoY Change 4.33% 139.83%
TOTAL ASSETS
Total Short-Term Assets $113.5B $110.8B
Total Long-Term Assets $134.5B $128.9B
Total Assets $248.0B $239.7B
YoY Change 3.49% 10.9%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $23.57B $22.42B
YoY Change 5.13% 9.49%
Accrued Expenses $3.073B $3.052B
YoY Change 0.69% 54.69%
Deferred Revenue
YoY Change
Short-Term Debt $16.95B $12.73B
YoY Change 33.07% 8.65%
Long-Term Debt Due $33.83B $32.13B
YoY Change 5.29% 16.32%
Total Short-Term Liabilities $94.30B $89.41B
YoY Change 5.47% 12.87%
LONG-TERM LIABILITIES
Long-Term Debt $95.24B $95.05B
YoY Change 0.19% 12.91%
Other Long-Term Liabilities $24.84B $23.42B
YoY Change 6.08% -8.6%
Total Long-Term Liabilities $24.84B $23.42B
YoY Change 6.08% -78.68%
TOTAL LIABILITIES
Total Short-Term Liabilities $94.30B $89.41B
Total Long-Term Liabilities $24.84B $23.42B
Total Liabilities $215.1B $208.4B
YoY Change 3.21% 9.93%
SHAREHOLDERS EQUITY
Retained Earnings $18.44B $16.65B
YoY Change 10.72% -36.38%
Common Stock $21.74B $21.55B
YoY Change 0.88% 1.07%
Preferred Stock
YoY Change
Treasury Stock (at cost) $1.253B $1.122B
YoY Change 11.68% 19.49%
Treasury Stock Shares
Shareholders Equity $32.24B $31.14B
YoY Change
Total Liabilities & Shareholders Equity $247.5B $239.7B
YoY Change 3.25% 10.94%

Cashflow Statement

Concept 2017 Q2 2016 Q2
OPERATING ACTIVITIES
Net Income $2.055B $1.970B
YoY Change 4.31% -8.8%
Depreciation, Depletion And Amortization
YoY Change
Cash From Operating Activities $5.615B $7.742B
YoY Change -27.47% 48.6%
INVESTING ACTIVITIES
Capital Expenditures -$1.558B -$1.695B
YoY Change -8.08% -2.19%
Acquisitions
YoY Change
Other Investing Activities -$3.652B -$3.439B
YoY Change 6.19% 52.37%
Cash From Investing Activities -$5.210B -$5.134B
YoY Change 1.48% 28.67%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -2.158B -1.291B
YoY Change 67.16% 53.14%
NET CHANGE
Cash From Operating Activities 5.615B 7.742B
Cash From Investing Activities -5.210B -5.134B
Cash From Financing Activities -2.158B -1.291B
Net Change In Cash -1.753B 1.317B
YoY Change -233.11% 249.34%
FREE CASH FLOW
Cash From Operating Activities $5.615B $7.742B
Capital Expenditures -$1.558B -$1.695B
Free Cash Flow $7.173B $9.437B
YoY Change -23.99% 35.92%

Facts In Submission

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us-gaap Financing Receivable Allowance For Credit Losses Recovery
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us-gaap Financing Receivable Allowance For Credit Losses Recovery
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us-gaap Financing Receivable Allowance For Credit Losses Write Offs
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us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
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us-gaap Income Tax Expense Benefit
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us-gaap Net Cash Provided By Used In Investing Activities Continuing Operations
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us-gaap Net Cash Provided By Used In Operating Activities Continuing Operations
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us-gaap Net Cash Provided By Used In Operating Activities Continuing Operations
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us-gaap Net Income Loss Attributable To Noncontrolling Interest
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us-gaap Net Income Loss Attributable To Noncontrolling Interest
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us-gaap Net Income Loss Available To Common Stockholders Basic
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us-gaap Net Income Loss Available To Common Stockholders Diluted
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us-gaap Net Income Loss Available To Common Stockholders Diluted
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us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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CY2016Q2 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Net Of Tax
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CY2017Q2 us-gaap Other Comprehensive Income Loss Net Of Tax
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us-gaap Other Comprehensive Income Loss Net Of Tax
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us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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CY2017Q2 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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CY2017Q2 us-gaap Other Liabilities Noncurrent
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CY2017Q1 us-gaap Other Liabilities Noncurrent
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CY2016Q4 us-gaap Other Postretirement Defined Benefit Plan Liabilities Noncurrent
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CY2017Q2 us-gaap Other Postretirement Defined Benefit Plan Liabilities Noncurrent
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CY2016Q4 us-gaap Other Sundry Liabilities Current
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us-gaap Payments For Proceeds From Derivative Instrument Investing Activities
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us-gaap Payments For Proceeds From Derivative Instrument Investing Activities
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us-gaap Payments For Proceeds From Other Investing Activities
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us-gaap Payments For Proceeds From Other Investing Activities
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us-gaap Payments For Repurchase Of Common Stock
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us-gaap Payments For Repurchase Of Common Stock
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us-gaap Payments Of Dividends Common Stock
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us-gaap Payments Related To Tax Withholding For Share Based Compensation
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us-gaap Payments To Acquire Loans And Leases Held For Investment
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us-gaap Payments To Acquire Productive Assets
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us-gaap Payments To Acquire Productive Assets
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CY2016Q4 us-gaap Percentage Of Lifo Inventory
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CY2017Q2 us-gaap Percentage Of Lifo Inventory
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0.34
us-gaap Proceeds From Other Debt
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us-gaap Proceeds From Other Debt
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us-gaap Proceeds From Payments For Other Financing Activities
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us-gaap Proceeds From Payments For Other Financing Activities
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us-gaap Proceeds From Repayments Of Short Term Debt
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us-gaap Proceeds From Repayments Of Short Term Debt
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72000000 USD
CY2015Q4 us-gaap Product Warranty Accrual
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CY2016Q2 us-gaap Product Warranty Accrual
ProductWarrantyAccrual
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CY2016Q4 us-gaap Product Warranty Accrual
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CY2017Q2 us-gaap Product Warranty Accrual
ProductWarrantyAccrual
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us-gaap Product Warranty Accrual Payments
ProductWarrantyAccrualPayments
1593000000 USD
us-gaap Product Warranty Accrual Payments
ProductWarrantyAccrualPayments
1710000000 USD
us-gaap Product Warranty Accrual Preexisting Increase Decrease
ProductWarrantyAccrualPreexistingIncreaseDecrease
279000000 USD
us-gaap Product Warranty Accrual Preexisting Increase Decrease
ProductWarrantyAccrualPreexistingIncreaseDecrease
582000000 USD
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ProductWarrantyAccrualWarrantiesIssued
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us-gaap Product Warranty Accrual Warranties Issued
ProductWarrantyAccrualWarrantiesIssued
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CY2016Q2 us-gaap Profit Loss
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us-gaap Profit Loss
ProfitLoss
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CY2017Q2 us-gaap Profit Loss
ProfitLoss
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us-gaap Profit Loss
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CY2016Q4 us-gaap Property Plant And Equipment Net
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ProvisionForLoanLeaseAndOtherLosses
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us-gaap Provision For Loan Lease And Other Losses
ProvisionForLoanLeaseAndOtherLosses
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ProvisionForLoanLeaseAndOtherLosses
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us-gaap Provision For Loan Lease And Other Losses
ProvisionForLoanLeaseAndOtherLosses
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CY2016Q4 us-gaap Redeemable Noncontrolling Interest Equity Carrying Amount
RedeemableNoncontrollingInterestEquityCarryingAmount
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CY2017Q2 us-gaap Redeemable Noncontrolling Interest Equity Carrying Amount
RedeemableNoncontrollingInterestEquityCarryingAmount
97000000 USD
us-gaap Repayments Of Other Debt
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us-gaap Repayments Of Other Debt
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RetainedEarningsAccumulatedDeficit
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RetainedEarningsAccumulatedDeficit
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RetainedEarningsAccumulatedDeficit
16200000000 USD
CY2016Q2 us-gaap Revenues
Revenues
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us-gaap Revenues
Revenues
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CY2017Q2 us-gaap Revenues
Revenues
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us-gaap Revenues
Revenues
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CY2016Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
2784000000 USD
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
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CY2017Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
2756000000 USD
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
5520000000 USD
us-gaap Standard And Extended Product Warranty Accrual Foreign Currency Translation Gain Loss
StandardAndExtendedProductWarrantyAccrualForeignCurrencyTranslationGainLoss
45000000 USD
us-gaap Standard And Extended Product Warranty Accrual Foreign Currency Translation Gain Loss
StandardAndExtendedProductWarrantyAccrualForeignCurrencyTranslationGainLoss
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CY2016Q4 us-gaap Stockholders Equity
StockholdersEquity
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CY2017Q2 us-gaap Stockholders Equity
StockholdersEquity
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StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
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CY2016Q2 us-gaap Stockholders Equity Including Portion Attributable To Noncontrolling Interest
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
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CY2016Q4 us-gaap Stockholders Equity Including Portion Attributable To Noncontrolling Interest
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
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CY2017Q2 us-gaap Stockholders Equity Including Portion Attributable To Noncontrolling Interest
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest
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CY2016Q4 us-gaap Treasury Stock Value
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CY2017Q2 us-gaap Treasury Stock Value
TreasuryStockValue
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CY2016Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
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CY2017Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
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CY2016Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
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us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
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CY2017Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
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us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
3977000000 shares
us-gaap Comparability Of Prior Year Financial Data
ComparabilityOfPriorYearFinancialData
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.</font></div></div>
us-gaap Guarantees Indemnifications And Warranties Policies
GuaranteesIndemnificationsAndWarrantiesPolicies
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;">Warranty and Field Service Actions</font></div><div style="line-height:120%;text-align:left;font-size:8pt;"><font style="font-family:Arial;font-size:8pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We accrue obligations for warranty costs and field service actions (i.e., safety recalls, emission recalls, and other product campaigns) at the time of sale using a patterned estimation model that includes historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year. Warranty and field service action obligations are reported in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Other liabilities and deferred revenue</font><font style="font-family:Arial;font-size:10pt;">. We reevaluate the adequacy of our accruals on a regular basis. </font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We recognize the benefit from a recovery of the costs associated with our warranty and field service actions when specifics of the recovery have been agreed with our supplier and the amount of the recovery is virtually certain. Recoveries are reported in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Trade and other receivables</font><font style="font-family:Arial;font-size:10pt;"> and</font><font style="font-family:Arial;font-size:10pt;font-style:italic;"> Other assets.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Guarantees and indemnifications are recorded at fair value at their inception. We regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under guarantee or indemnity, the amount of probable payment is recorded.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We guarantee the resale value of vehicles sold in certain arrangements to daily rental companies. The maximum potential payment of </font><font style="font-family:Arial;font-size:10pt;">$1.5 billion</font><font style="font-family:Arial;font-size:10pt;"> as of </font><font style="font-family:Arial;font-size:10pt;">June&#160;30, 2017</font><font style="font-family:Arial;font-size:10pt;"> included in the table above represents the total proceeds we guarantee the rental company will receive on re-sale.&#160; Reflecting our present estimate of proceeds the rental companies will receive on resale from third parties, we have recorded </font><font style="font-family:Arial;font-size:10pt;">$459 million</font><font style="font-family:Arial;font-size:10pt;"> as our best estimate of the amount we will have to pay under the guarantee.&#160; See </font><font style="font-family:Arial;font-size:10pt;">Note 2</font><font style="font-family:Arial;font-size:10pt;"> for additional information on the adoption of the new revenue standard. </font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We also guarantee debt and lease obligations of certain joint ventures, as well as certain financial obligations of outside third parties, including suppliers, to support our business and economic growth. Expiration dates vary through 2033, and guarantees will terminate on payment and/or cancellation of the underlying obligation. A payment by us would be triggered by failure of the joint venture or other third party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee. However, our ability to enforce these rights is sometimes stayed until the guaranteed party is paid in full, and may be limited in the event of insolvency of the third party or other circumstances.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction, such as the sale of a business. These indemnifications might include and are not limited to claims relating to any of the following: environmental, tax, and shareholder matters; intellectual property rights; power generation contracts; governmental regulations and employment-related matters; dealer, supplier, and other commercial contractual relationships; and financial matters, such as securitizations. Performance under these indemnities generally would be triggered by a breach of terms of the contract or by a third-party claim. While some of these indemnifications are limited in nature, many of them do not limit potential payment. Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.</font></div></div>
us-gaap Revenue Recognition Leases Operating
RevenueRecognitionLeasesOperating
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Leasing Income. </font><font style="font-family:Arial;font-size:10pt;">We sell vehicles to daily rental companies with an obligation to repurchase the vehicles for a guaranteed amount, exercisable at the option of the customer. The transactions are accounted for as operating leases. Upon the transfer of vehicles to the daily rental companies, we record proceeds received in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Other liabilities and deferred revenue. </font><font style="font-family:Arial;font-size:10pt;">The difference between the proceeds received and the guaranteed repurchase amount is recorded in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Automotive revenues </font><font style="font-family:Arial;font-size:10pt;">over the term of the lease using a straight-line method. The cost of the vehicle is recorded in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Net investment in operating leases</font><font style="font-family:Arial;font-size:10pt;"> on our consolidated balance sheet and the difference between the cost of the vehicle and the estimated auction value is depreciated in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Cost of sales</font><font style="font-family:Arial;font-size:10pt;"> over the term of the lease. </font></div></div>
us-gaap Revenue Recognition Sales Of Services
RevenueRecognitionSalesOfServices
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Extended Service Contracts. </font><font style="font-family:Arial;font-size:10pt;">We sell separately-priced service contracts that extend mechanical and maintenance coverages beyond our base warranty agreements to vehicle owners. The separately priced service contracts range from </font><font style="font-family:Arial;font-size:10pt;">12 months</font><font style="font-family:Arial;font-size:10pt;"> to </font><font style="font-family:Arial;font-size:10pt;">120 months</font><font style="font-family:Arial;font-size:10pt;">. We receive payment at the inception of the contract and recognize revenue over the term of the agreement in proportion to the costs expected to be incurred in satisfying the obligations under the contract. At January 1, 2017, </font><font style="font-family:Arial;font-size:10pt;">$3.5 billion</font><font style="font-family:Arial;font-size:10pt;"> of unearned revenue associated with outstanding contracts was reported in </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Other Liabilities and deferred revenue, </font><font style="font-family:Arial;font-size:10pt;">$271 million</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">$541 million</font><font style="font-family:Arial;font-size:10pt;"> of this was recognized as revenue during the </font><font style="font-family:Arial;font-size:10pt;">second quarter</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">first half</font><font style="font-family:Arial;font-size:10pt;"> of </font><font style="font-family:Arial;font-size:10pt;">2017</font><font style="font-family:Arial;font-size:10pt;">, respectively. At </font><font style="font-family:Arial;font-size:10pt;">June&#160;30, 2017</font><font style="font-family:Arial;font-size:10pt;">, the unearned amount was </font><font style="font-family:Arial;font-size:10pt;">$3.7 billion</font><font style="font-family:Arial;font-size:10pt;font-style:italic;">.</font><font style="font-family:Arial;font-size:10pt;"> We expect to recognize approximately </font><font style="font-family:Arial;font-size:10pt;">$550&#160;million</font><font style="font-family:Arial;font-size:10pt;"> of the unearned amount in 2017, </font><font style="font-family:Arial;font-size:10pt;">$950 million</font><font style="font-family:Arial;font-size:10pt;"> in 2018, and </font><font style="font-family:Arial;font-size:10pt;">$2.2 billion</font><font style="font-family:Arial;font-size:10pt;"> thereafter. We record a premium deficiency reserve to the extent we estimate the future costs associated with these contracts exceed the unrecognized revenue. Amounts paid to dealers to obtain these contracts are deferred and recorded as </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Other assets</font><font style="font-family:Arial;font-size:10pt;">. These costs are amortized to expense consistent with how the related revenue is recognized. We had a balance of </font><font style="font-family:Arial;font-size:10pt;">$239&#160;million</font><font style="font-family:Arial;font-size:10pt;"> in deferred costs as of </font><font style="font-family:Arial;font-size:10pt;">June&#160;30, 2017</font><font style="font-family:Arial;font-size:10pt;"> and recognized </font><font style="font-family:Arial;font-size:10pt;">$14&#160;million</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">$29 million</font><font style="font-family:Arial;font-size:10pt;"> of amortization during the </font><font style="font-family:Arial;font-size:10pt;">second quarter</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">first half</font><font style="font-family:Arial;font-size:10pt;"> of </font><font style="font-family:Arial;font-size:10pt;">2017</font><font style="font-family:Arial;font-size:10pt;">, respectively.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:8pt;"><font style="font-family:Arial;font-size:8pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Other Revenue. </font><font style="font-family:Arial;font-size:10pt;">Other revenue consists primarily of net commissions received for serving as the agent in facilitating the sale of a third party&#8217;s products or services to our customers and payments for vehicle</font><font style="font-family:inherit;font-size:10pt;">-</font><font style="font-family:Arial;font-size:10pt;">related design and testing services we perform for others. We have applied the practical expedient to recognize </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Automotive revenues</font><font style="font-family:Arial;font-size:10pt;"> for vehicle-related design and testing services over the two to three year term of these agreements in proportion to the amount we have the right to invoice.</font></div></div>

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