Company Quick10K Filing
Allison Transmission
Price46.65 EPS5
Shares124 P/E9
MCap5,785 P/FCF9
Net Debt2,474 EBIT781
TEV8,259 TEV/EBIT11
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-04-29
10-K 2020-12-31 Filed 2021-02-18
10-Q 2020-09-30 Filed 2020-10-29
10-Q 2020-06-30 Filed 2020-08-05
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-04-23
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-10-30
10-Q 2018-06-30 Filed 2018-07-31
10-Q 2018-03-31 Filed 2018-05-01
10-K 2017-12-31 Filed 2018-02-15
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-08-01
10-Q 2017-03-31 Filed 2017-04-27
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-10-25
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-26
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-30 Filed 2015-10-27
10-Q 2015-06-30 Filed 2015-07-28
10-Q 2015-03-31 Filed 2015-04-28
10-K 2014-12-31 Filed 2015-02-20
10-Q 2014-09-30 Filed 2014-10-28
10-Q 2014-06-30 Filed 2014-07-25
10-Q 2014-03-31 Filed 2014-04-30
10-K 2013-12-31 Filed 2014-02-24
10-Q 2013-09-30 Filed 2013-10-29
10-Q 2013-06-30 Filed 2013-07-30
10-Q 2013-03-31 Filed 2013-04-30
10-Q 2012-09-30 Filed 2012-10-31
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-04-26
8-K 2021-02-17 Earnings, Exhibits
8-K 2021-02-11 Officers, Exhibits
8-K 2020-11-19
8-K 2020-11-09
8-K 2020-11-09
8-K 2020-10-28
8-K 2020-08-04
8-K 2020-05-06
8-K 2020-05-04
8-K 2020-03-27
8-K 2020-02-19
8-K 2019-10-30
8-K 2019-10-11
8-K 2019-09-09
8-K 2019-07-31
8-K 2019-05-09
8-K 2019-05-08
8-K 2019-05-07
8-K 2019-04-12
8-K 2019-03-29
8-K 2019-03-26
8-K 2019-03-26
8-K 2019-03-19
8-K 2019-02-25
8-K 2019-02-19
8-K 2018-11-01
8-K 2018-10-29
8-K 2018-07-30
8-K 2018-06-29
8-K 2018-05-29
8-K 2018-05-10
8-K 2018-05-09
8-K 2018-04-30
8-K 2018-03-23
8-K 2018-03-21
8-K 2018-03-16
8-K 2018-03-06
8-K 2018-02-14
8-K 2018-02-07

ALSN 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 alsn-ex311_28.htm
EX-31.2 alsn-ex312_29.htm
EX-32.1 alsn-ex321_30.htm

Allison Transmission Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
5.04.03.02.01.00.02012201420172020
Assets, Equity
0.80.60.50.30.20.02012201420172020
Rev, G Profit, Net Income
0.40.20.0-0.1-0.3-0.52012201420172020
Ops, Inv, Fin

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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 001-35456

ALLISON TRANSMISSION HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

26-0414014

(State or Other Jurisdiction of Incorporation or

Organization)

(I.R.S. Employer

Identification Number)

One Allison Way

 

Indianapolis, IN

46222

(Address of Principal Executive Offices)

(Zip Code)

 

(317) 242-5000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange

on which Registered

Common stock, $0.01 par value

 

ALSN

 

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No   

As of April 15, 2021, there were 109,544,816 shares of Common Stock outstanding.

 

 


Table of Contents

 

 

INDEX

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

3 – 6

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows

5

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7 – 21

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22 – 32

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

 

 

 

Item 4.

Controls and Procedures

34

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

35

 

 

 

Item 1A.

Risk Factors

35

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

 

 

 

Item 6.

Exhibits

36

 

 

 

 

Signatures

37

 

 

 

 

2


Table of Contents

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Allison Transmission Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited, dollars in millions, except share and per share data)

 

  

 

March 31,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

295

 

 

$

310

 

Accounts receivable – net of allowances for doubtful accounts of $1

 

 

292

 

 

 

228

 

Inventories

 

 

193

 

 

 

181

 

Other current assets

 

 

40

 

 

 

37

 

Total Current Assets

 

 

820

 

 

 

756

 

Property, plant and equipment, net

 

 

644

 

 

 

638

 

Intangible assets, net

 

 

951

 

 

 

963

 

Goodwill

 

 

2,064

 

 

 

2,064

 

Other non-current assets

 

 

55

 

 

 

56

 

TOTAL ASSETS

 

$

4,534

 

 

$

4,477

 

LIABILITIES

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

167

 

 

$

157

 

Product warranty liability

 

 

32

 

 

 

36

 

Current portion of long-term debt

 

 

6

 

 

 

6

 

Deferred revenue

 

 

35

 

 

 

34

 

Other current liabilities

 

 

178

 

 

 

140

 

Total Current Liabilities

 

 

418

 

 

 

373

 

Product warranty liability

 

 

30

 

 

 

30

 

Deferred revenue

 

 

107

 

 

 

109

 

Long-term debt

 

 

2,506

 

 

 

2,507

 

Deferred income taxes

 

 

459

 

 

 

442

 

Other non-current liabilities

 

 

250

 

 

 

260

 

TOTAL LIABILITIES

 

 

3,770

 

 

 

3,721

 

Commitments and contingencies (see NOTE P)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 1,880,000,000 shares authorized, 110,164,720 shares issued and outstanding and 112,033,477 shares issued and outstanding, respectively

 

 

1

 

 

 

1

 

Non-voting common stock, $0.01 par value, 20,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Paid in capital

 

 

1,820

 

 

 

1,818

 

Accumulated deficit

 

 

(971

)

 

 

(974

)

Accumulated other comprehensive loss, net of tax

 

 

(86

)

 

 

(89

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

764

 

 

 

756

 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

 

$

4,534

 

 

$

4,477

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3


Table of Contents

 

Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited, dollars in millions, except per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net sales

 

$

588

 

 

$

637

 

Cost of sales

 

 

297

 

 

 

311

 

Gross profit

 

 

291

 

 

 

326

 

Selling, general and administrative

 

 

73

 

 

 

75

 

Engineering — research and development

 

 

38

 

 

 

36

 

Operating income

 

 

180

 

 

 

215

 

Interest expense, net

 

 

(29

)

 

 

(33

)

Other income (expense), net

 

 

3

 

 

 

(1

)

Income before income taxes

 

 

154

 

 

 

181

 

Income tax expense

 

 

(34

)

 

 

(42

)

Net income

 

$

120

 

 

$

139

 

Basic earnings per share attributable to common stockholders

 

$

1.08

 

 

$

1.20

 

Diluted earnings per share attributable to common stockholders

 

$

1.07

 

 

$

1.20

 

Comprehensive income, net of tax

 

$

123

 

 

$

110

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited, dollars in millions)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

120

 

 

$

139

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

25

 

 

 

22

 

Deferred income taxes

 

 

14

 

 

 

35

 

Amortization of intangible assets

 

 

12

 

 

 

16

 

Stock-based compensation

 

 

3

 

 

 

3

 

Amortization of deferred financing costs

 

 

1

 

 

 

1

 

Other

 

 

(1

)

 

 

3

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(66

)

 

 

(51

)

Inventories

 

 

(14

)

 

 

(9

)

Accounts payable

 

 

 

 

 

21

 

Other assets and liabilities

 

 

34

 

 

 

(32

)

Net cash provided by operating activities

 

 

128

 

 

 

148

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Additions of long-lived assets

 

 

(21

)

 

 

(21

)

Net cash used for investing activities

 

 

(21

)

 

 

(21

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

(96

)

 

 

(180

)

Dividend payments

 

 

(21

)

 

 

(20

)

Taxes paid related to net share settlement of equity awards

 

 

(3

)

 

 

(2

)

Payments on long-term debt

 

 

(2

)

 

 

(2

)

Proceeds from exercise of stock options

 

 

1

 

 

 

1

 

Borrowings on revolving credit facility

 

 

 

 

 

300

 

Payments on revolving credit facility

 

 

 

 

 

(300

)

Net cash used for financing activities

 

 

(121

)

 

 

(203

)

Effect of exchange rate changes on cash

 

 

(1

)

 

 

(2

)

Net decrease in cash and cash equivalents

 

 

(15

)

 

 

(78

)

Cash and cash equivalents at beginning of period

 

 

310

 

 

 

192

 

Cash and cash equivalents at end of period

 

$

295

 

 

$

114

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$

7

 

 

$

8

 

Income taxes paid

 

$

1

 

 

$

6

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Allison Transmission Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited, dollars in millions)

 

 

 

Common Stock

 

 

Non-voting Common Stock

 

 

Preferred Stock

 

 

Paid-in Capital

 

 

Accumulated (Deficit) Income

 

 

Accumulated Other Comprehensive (Loss) Income, net of tax

 

 

Stockholders' Equity

 

Balance at December 31, 2019

 

$

1

 

 

$

 

 

$

 

 

$

1,802

 

 

$

(970

)

 

$

(52

)

 

$

781

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Pension and OPEB liability adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23

)

 

 

(23

)

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(180

)

 

 

 

 

 

(180

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

139

 

 

 

 

 

 

139

 

Balance at March 31, 2020

 

$

1

 

 

$

 

 

$

 

 

$

1,804

 

 

$

(1,031

)

 

$

(81

)

 

$

693

 

Balance at December 31, 2020

 

$

1

 

 

$

 

 

$

 

 

$

1,818

 

 

$

(974

)

 

$

(89

)

 

$

756

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Pension and OPEB liability adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

(6

)

Interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

11

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96

)

 

 

 

 

 

(96

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

(21

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

120

 

 

 

 

 

 

120

 

Balance at March 31, 2021

 

$

1

 

 

$

 

 

$

 

 

$

1,820

 

 

$

(971

)

 

$

(86

)

 

$

764

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

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Table of Contents

 

Allison Transmission Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(UNAUDITED)

NOTE A. OVERVIEW

Overview

Allison Transmission Holdings, Inc. and its subsidiaries (“Allison,” or the “Company”) design and manufacture vehicle propulsion solutions, including commercial-duty on-highway, off-highway and defense fully automatic transmissions and electric hybrid and fully electric systems. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison was an operating unit of General Motors Corporation from 1929 until 2007, when Allison once again became a stand-alone company. In March 2012, Allison began trading on the New York Stock Exchange under the symbol, “ALSN”.

Although approximately 79% of revenues were generated in North America in 2020, the Company has a global presence by serving customers in Europe, Asia, South America and Africa. The Company serves customers through an independent network of approximately 1,400 independent distributor and dealer locations worldwide.

In March 2020, the World Health Organization categorized the novel coronavirus ("COVID-19") as a pandemic. In the first quarter of 2021, the COVID-19 pandemic continued to create volatility in the Company’s business performance and impact global markets and supply chains.

To limit the spread of COVID-19, governments continue to take various actions including the administration of vaccinations, travel bans and restrictions, quarantines, curfews, stay-at-home orders, social distancing guidelines and business shutdowns and closures. The Company is also continuing to take a variety of measures to promote the safety and security of its employees and to maintain operations with as minimal impact as possible to its stakeholders, including increased frequency of cleaning and disinfecting of facilities, social distancing, occupancy limits, mask wearing requirements, onsite testing, remote working, travel restrictions, limitations on visitor access to facilities and, most recently, administration of vaccinations at the Company’s corporate headquarters. As a result, the Company has been able to continue its manufacturing operations and deliver its products to customers with minimal disruptions.

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for the fair statement of the results for the periods presented. The condensed consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated.

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Table of Contents

 

These condensed consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of stockholders’ equity of the Company. Certain immaterial reclassifications have been made in the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications had no impact on previously reported net income, total stockholders’ equity or cash flows. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 18, 2021. The interim period financial results for the three-month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, definite life intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, environmental liabilities, determination of discount rate and other assumptions for pension and other post-retirement benefit expense, determination of discount rate and period for leases, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Due to the continued uncertainty related to the ongoing COVID-19 pandemic, actual results could differ materially from the estimates and assumptions used in preparation of the financial statements including, but not limited to, future cash flows associated with goodwill, indefinite life intangibles, definite life intangibles, long-lived impairment tests, determination of discount rate and other assumptions for pension and other post-retirement benefit expense and income taxes. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued authoritative accounting guidance regarding highly effective cash flow hedges affected by reference rate reform, which guidance was subsequently amended. The guidance allows the Company to continue to classify its interest rate hedges as highly effective subsequent to reference rate reform under certain circumstances. The Company adopted this guidance effective January 1, 2021 and will apply the guidance prospectively on all applicable transactions through December 31, 2022. Management expects to be able to elect the optional expedient within this guidance upon the Company’s transition from the London Interbank Offered Rate (“LIBOR”) to an alternative reference rate. The election of the optional expedient is expected to allow for the continuation of the existing contract with no impact on the Company’s condensed consolidated financial statements.

In December 2019, the FASB issued authoritative accounting guidance to simplify the accounting for income taxes. The guidance identifies specific exceptions to be removed from the calculation and reporting of income taxes. The Company adopted this guidance effective January 1, 2021. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements.

 

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Table of Contents

 

 

NOTE C. REVENUE

Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return.

Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and Extended Transmission Coverage ("ETC"). The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract.

The Company may also use volume-based discounts and rebates as marketing incentives in the sales of both transmissions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded no material adjustments based on variable consideration during the three months ended March 31, 2021 and 2020.

Net sales are made on credit terms, generally 30 days, based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current Deferred revenue as of March 31, 2021 and December 31, 2020. See Note J, “Deferred Revenue” for more information, including the amount of revenue earned during the three months ended March 31, 2021 and 2020 that had been previously deferred. The Company had no material contract assets as of March 31, 2021 and December 31, 2020.

The Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

North America On-Highway

 

$

319

 

 

$

352

 

North America Off-Highway

 

 

2

 

 

 

8

 

Defense

 

 

45

 

 

 

40

 

Outside North America On-Highway

 

 

84

 

 

 

72

 

Outside North America Off-Highway

 

 

16

 

 

 

27

 

Service Parts, Support Equipment and Other

 

 

122

 

 

 

138

 

Total Net Sales

 

$

588

 

 

$

637

 

 

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NOTE D. INVENTORIES

Inventories consisted of the following components (dollars in millions):

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Purchased parts and raw materials

 

$

91

 

 

$

88

 

Work in progress

 

 

14

 

 

 

15

 

Service parts

 

 

41

 

 

 

43

 

Finished goods

 

 

47

 

 

 

35

 

Total inventories

 

$

193

 

 

$

181

 

 

Inventory components shipped to third parties, primarily cores, parts to re-manufacturers, and parts to contract manufacturers, which the Company has an obligation to buy back, are included in purchased parts and raw materials, with an offsetting liability in Other current liabilities. See NOTE L, “Other Current Liabilities” for more information.

NOTE E. GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 31, 2021 and December 31, 2020, the carrying value of the Company’s Goodwill was $2,064 million.

The following presents a summary of other intangible assets (dollars in millions):

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Intangible

assets, gross

 

 

Accumulated

amortization

 

 

Intangible

assets, net

 

 

Intangible

assets, gross

 

 

Accumulated

amortization

 

 

Intangible

assets, net

 

Other intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade name

 

$

791

 

 

$

 

 

$

791

 

 

$

791

 

 

$

 

 

$

791

 

In-process research and development

 

 

25

 

 

 

 

 

 

25

 

 

 

25

 

 

 

 

 

 

25

 

Customer relationships — commercial

 

 

839

 

 

 

(719

)

 

 

120

 

 

 

839

 

 

 

(708

)

 

 

131

 

Proprietary technology

 

 

478

 

 

 

(477

)

 

 

1

 

 

 

478

 

 

 

(477

)

 

 

1

 

Customer relationships — defense

 

 

62

 

 

 

(48

)

 

 

14

 

 

 

62

 

 

 

(47

)

 

 

15

 

Total

 

$

2,195

 

 

$

(1,244

)

 

$

951

 

 

$

2,195

 

 

$