Quarterly report pursuant to Section 13 or 15(d)

Contract Liabilities

v3.10.0.1
Contract Liabilities
 9 Months Ended
Sep. 29, 2018
Revenue from Contract with Customer [Abstract]  
Contract Liabilities [Text Block]
NOTE 5: CONTRACT LIABILITIES
(In Millions)
 
Sep 29,
2018
 
Opening Balance as of Dec 31, 2017
Contract liabilities from prepaid supply agreements
 
$
2,692

 
$
105

Contract liabilities from software, services and other
 
93

 
195

Total contract liabilities
 
$
2,785

 
$
300


Contract liabilities are primarily related to partial prepayments received from customers on long-term supply agreements towards future NSG product delivery. As new prepaid supply agreements are entered into and performance obligations are negotiated, this component of the contract liability balance will increase, and as customers purchase product and utilize their prepaid balances, the balance will decrease. The short-term portion of prepayments from supply agreements is reported on the consolidated condensed balance sheets within other accrued liabilities.
The following table shows the changes in contract liability balances relating to prepaid supply agreements during the first nine months of 2018:
(In Millions)
 
 
Prepaid supply agreements balance as of December 31, 2017
 
$
105

Additions and adjustments
 
2,753

Revenue recognized
 
(166
)
Prepaid supply agreements balance as of September 29, 2018
 
$
2,692


Additions and adjustments in the first nine months of 2018 include a $1.0 billion reclassification from customer deposits previously included in other long-term liabilities. The long-term supply agreements represent $4.8 billion in future anticipated revenues with 2% expected to be recognized during the fourth quarter of the year and the remainder ratably over the next five years.