Note 11 – Preproduction Costs Related to Long-Term Supply Arrangements

We incur preproduction engineering and tooling costs related to the products produced for our customers under long-term supply agreements. We expense all preproduction engineering costs for which reimbursement is not contractually guaranteed by the customer or which are in excess of the contractually guaranteed reimbursement amount. We amortize the cost of the customer-owned tooling over the expected life of the wheel program on a straight-line basis. Also, we defer any reimbursements made to us by our customers and recognize the tooling reimbursement revenue over the same period in which the tooling is in use. Changes in the facts and circumstances of individual wheel programs may accelerate the amortization of both the cost of customer-owned tooling and the deferred tooling reimbursement revenues. Tooling reimbursement revenues for the three and nine-month periods ended September 30, 2018 were $1.9 million and $5.6 million, respectively, while the corresponding amounts for the three and nine months ended October 1, 2017 were $2.2 million and $5.7 million, respectively. Tooling reimbursement revenues are included in net sales in the condensed consolidated statements of operations (refer to Note 4, “Revenue” for further information regarding revenue recognition and accounting for contract assets, pre-production costs and customer reimbursement).

The following tables summarize the unamortized customer-owned tooling costs included in our non-current assets, and the deferred tooling revenues included in accrued expenses and other non-current liabilities:


	September 30, 2018			December 31, 2017
(Dollars in thousands)
Customer-Owned Tooling Costs
Preproduction costs	$	97,410		$	84,198
Accumulated amortization		(78,149	)		(71,409	)

Net preproduction costs	$	19,261		$	12,789

Deferred Tooling Revenues
Accrued expenses	$	5,318		$	4,654
Other non-current liabilities		6,598			1,974

Total deferred tooling revenues	$	11,916		$	6,628