Meritor Acquisition and 2022 Financial Results
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Annual amortization of the intangible assets for the next five years is expected to approximate $8 million per year.
Goodwill was determined based on the residual difference between the fair value of consideration transferred and the value assigned to tangible and intangible assets and
liabilities. Approximately $9 million of the goodwill is deductible for tax purposes. Among the factors contributing to a purchase price resulting in the recognition of goodwill
are Jacob's expected future customers, new versions of technologies, an acquired workforce and other economic benefits that are anticipated to arise from future product sales
and operational synergies from combining the business with Cummins.
Included in our results for the year ended December 31, 2022, were revenues of $18 million and loss of $1 million related to this business. The results of this business were
reported in our Components segment. Pro forma financial information for the acquisition was not presented as the effects are not material to our Consolidated Financial
Statements.
Westport JV
On February 7, 2022, we purchased Westport Fuel System Inc.'s stake in Westport JV. We will continue to operate the business as the sole owner. The purchase price was
$42 million and was allocated primarily to cash, warranty and deferred revenue related to extended coverage contracts. The results of the business were reported in our Engine
segment. Pro forma financial information for the acquisition was not presented as the effects are not material to our Consolidated Financial Statements.
Pending Acquisition
In October 2022, we signed an agreement to purchase all of the equity ownership interest of Teksid Hierro de Mexico, S.A. de C.V. (Teksid MX) and Teksid, Inc. from
Stellantis N.V. for approximately €115 million, subject to certain adjustments set forth in the agreement. Teksid MX operates a cast iron foundry located in Monclova, Mexico,
which primarily forges blocks and heads used in our and other manufacturers' engines. Teksid, Inc. facilitates the commercialization of Teksid MX products in North America.
The transaction, which is subject to customary closing conditions and receipt of applicable regulatory approvals, is expected to close in early 2023. Since we are the primary
customer of the foundry, the acquisition is not expected to result in material incremental sales to our business. The acquisition will be included in our Engine segment.
NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
The majority 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 were not satisfied as of December 31, 2022, was $663 million. We expect to recognize the related revenue of $123 million over the next 12
months and $540 million over periods up to 10 years. See NOTE 14,"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 costs incurred when providing goods
and services to our customers or represent sales-based royalties.
Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
In millions
Unbilled revenue
Deferred revenue, primarily extended warranty
Years ended December 31,
2022
2021
$
257
1,848
100
1,705
We recognized revenue of $639 million and $509 million in 2022 and 2021, respectively, 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 2022 or 2021.
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