UNITED STATES

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 WASHINGTON, DC  20549

  

FORM 8-K

  

CURRENT REPORT

  

PURSUANT TO SECTION 13 OR 15(d) OF THE

  SECURITIES EXCHANGE ACT OF 1934

  

Date of Report: April 30, 2009

 

  CUMMINS INC.

 (Exact name of registrant as specified in its charter)

  

Indiana

 (State or other Jurisdiction of

 Incorporation)

1-4949

 (Commission File Number)

35-0257090

 (I.R.S. Employer Identification

  No.)

 

500 Jackson Street

 P. O. Box 3005

 Columbus, IN  47202-3005

 (Principal Executive Office)  (Zip Code)

Registrant's telephone number, including area code:  (812) 377-5000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

  

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 


Item 2.02.  Results of Operations and Financial Condition.

Item 7.01.  Regulation FD Disclosure

The following information is furnished pursuant to Item 2.02, "Results of Operations

and Financial Condition" and Item 7.01, "Regulation FD Disclosure."

 

On April 30, 2009, Cummins Inc. ("Cummins," "the Company," "the registrant," "we," "our," or "us") issued the attached press release reporting its financial results for the first quarter of 2009.  A copy of Cummins' press release is attached hereto as Exhibit 99 and hereby incorporated by reference.

  

Item 9.01. Financial Statements and Exhibits.

 

 

(d)

The following exhibit is furnished herewith:

  

99-Press Release dated April 30, 2009

 

 


 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 30, 2009

  

CUMMINS INC.

 

 

 

 /s/ Marsha L. Hunt

 ______________________________

Marsha L. Hunt

 Vice President - Corporate Controller

 (Principal Accounting Officer)

 

 



 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

 

 

 

Three months ended

 

 

 

March 29,

 

December 31,

 

March 30,

 

In millions (except per share amounts)

 

2009

 

2008

 

2008

 

NET SALES

 

$

2,439

 

$

3,288

 

$

3,474

 

Cost of sales

 

1,994

 

2,754

 

2,767

 

GROSS MARGIN

 

445

 

534

 

707

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

300

 

341

 

351

 

Research, development and engineering expenses

 

85

 

102

 

103

 

Equity, royalty and interest income from investees

 

33

 

51

 

67

 

Restructuring charges (Note 1)

 

66

 

37

 

 

Other operating income (expense), net

 

2

 

(3

)

(1

)

 

 

 

 

 

 

 

 

OPERATING INCOME

 

29

 

102

 

319

 

Interest income

 

2

 

4

 

6

 

Interest expense

 

7

 

9

 

11

 

Other (expense) income, net

 

(3

)

(50

)

(10

)

INCOME BEFORE INCOME TAXES

 

21

 

47

 

304

 

                    

 

 

 

 

 

 

 

Income tax expense (benefit)

 

7

 

(12

)

102

 

NET INCOME

 

14

 

59

 

202

 

 

 

 

 

 

 

 

 

Less: net income attributable to noncontrolling interests

 

7

 

16

 

12

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

7

 

$

43

 

$

190

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE
  TO CUMMINS INC.

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.22

 

$

0.97

 

Diluted

 

$

0.04

 

$

0.22

 

$

0.97

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

196.8

 

 

194.7

 

 

195.1

 

Diluted

 

 

197.0

 

 

196.6

 

 

196.4

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER SHARE

 

$

0.175

 

$

0.175

 

$

0.125

 

 

(a)     Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America (GAAP).

 



 CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (a)

 

 

 

March 29,

 

December 31,

 

 In millions (except par value)

 

2009

 

2008

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

353

 

 

$

426

 

 

Marketable securities

 

 

65

 

 

 

77

 

 

Accounts and notes receivable, net

 

 

1,729

 

 

 

1,782

 

 

Inventories

 

 

1,738

 

 

 

1,783

 

 

Deferred income taxes

 

 

353

 

 

 

347

 

 

Prepaid expenses and other current assets

 

 

196

 

 

 

298

 

 

Total current assets

 

 

4,434

 

 

 

4,713

 

 

Long-term assets

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

4,574

 

 

 

4,539

 

 

     Accumulated depreciation

 

 

(2,741

)

 

 

(2,698

)

 

     Property, plant and equipment, net

 

 

1,833

 

 

 

1,841

 

 

Investments and advances related to equity method investees

 

 

526

 

 

 

588

 

 

Goodwill and other intangible assets, net

 

 

607

 

 

 

585

 

 

Deferred income taxes

 

 

507

 

 

 

491

 

 

Other assets

 

 

271

 

 

 

301

 

 

Total assets

 

$

8,178

 

 

$

8,519

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Current portion of long-term debt and loans payable

 

$

76

 

 

$

69

 

 

Accounts payable (principally trade)

 

 

912

 

 

 

1,009

 

 

Current portion of accrued product warranty

 

 

382

 

 

 

434

 

 

Accrued compensation, benefits and retirement costs

 

 

251

 

 

 

364

 

 

Other accrued expenses

 

 

660

 

 

 

763

 

 

Total current liabilities

 

 

2,281

 

 

 

2,639

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

651

 

 

 

629

 

 

Pensions

 

 

590

 

 

 

574

 

 

Postretirement benefits other than pensions

 

 

448

 

 

 

452

 

 

Other liabilities and deferred revenue

 

 

781

 

 

 

745

 

 

Total liabilities

 

 

4,751

 

 

 

5,039

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.1 and 221.7 shares issued

 

 

1,790

 

 

 

1,793

 

 

Retained earnings

 

 

3,260

 

 

 

3,288

 

 

Treasury stock, at cost, 20.3 and 20.4 shares

 

 

(714

)

 

 

(715

)

 

Common stock held by employee benefits trust, at cost, 4.8 and 5.1 shares

 

 

(58

)

 

 

(61

)

 

Unearned compensation

 

 

(3

)

 

 

(5

)

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

Defined benefit postretirement plans

 

 

(801

)

 

 

(798

)

 

Other

 

 

(251

)

 

 

(268

)

 

Total accumulated other comprehensive loss

 

 

(1,052

)

 

 

(1,066

)

 

Total Cummins Inc. shareholders’ equity

 

 

3,223

 

 

 

3,234

 

 

Noncontrolling interests

 

 

204

 

 

 

246

 

 

Total equity

 

 

3,427

 

 

 

3,480

 

 

Total liabilities and equity

 

$

8,178

 

 

$

8,519

 

 

 

(a)     Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.



CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

 

 

 

Three months ended

 

 

 

March 29,

 

March 30,

 

In millions

 

2009

 

2008

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net income

 

$

14

 

$

202

 

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

 

 

 

 

 

Restructuring charges, net

 

48

 

 

Depreciation and amortization

 

76

 

75

 

Deferred income taxes                                   

 

(21

)

(7

)

Equity in income of investees, net of dividends

 

52

 

(39

)

Pension expense, net of pension contributions

 

15

 

1

 

Other post-retirement benefits expense, net of cash payments

 

(8

)

(6

)

Stock-based compensation expense

 

6

 

8

 

Excess tax (benefits) deficiencies on stock-based awards

 

3

 

(10

)

Translation and hedging activities

 

19

 

6

 

Changes in current assets and liabilities, net of acquisitions and dispositions:

 

 

 

 

 

Accounts and notes receivable

 

49

 

(193

)

Inventories

 

44

 

(165

)

Other current assets

 

9

 

(5

)

Accounts payable

 

(103

)

164

 

Accrued expenses

 

(173

)

(23

)

Changes in long-term liabilities

 

36

 

25

 

Other, net

 

10

 

4

 

Net cash provided by operating activities

 

76

 

37

 

           

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Capital expenditures

 

(64

)

(90

)

Investments in internal use software

 

(11

)

(14

)

Proceeds from disposals of property, plant and equipment

 

6

 

1

 

Investments in and advances (to) from equity investees

 

5

 

(20

)

Acquisition of businesses, net of cash acquired

 

(2

)

(29

)

Investments in marketable securities—acquisitions

 

(69

)

(60

)

Investments in marketable securities—liquidations

 

78

 

69

 

Cash flows from derivatives not designated as hedges

 

(33

)

(12

)

Other, net

 

 

3

 

Net cash used in investing activities

 

(90

)

(152

)

           

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from borrowings

 

7

 

42

 

Payments on borrowings and capital lease obligations

 

(19

)

(47

)

Net borrowings under short-term credit agreements

 

4

 

14

 

Distributions to noncontrolling interests

 

(9

)

(6

)

Dividend payments on common stock

 

(35

)

(25

)

Repurchases of common stock

 

 

(11

)

Excess tax benefits (deficiencies) on stock-based awards

 

(3

)

10

 

Other, net

 

2

 

1

 

Net cash used in financing activities

 

(53

)

(22

)

           

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(6

)

6

 

Net decrease in cash and cash equivalents

 

(73

)

(131

)

Cash and cash equivalents at beginning of year

 

426

 

577

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

353

 

$

446

 

 

(a)     Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America. 



CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

In millions 

Engine

 

Power Generation

 

Components

 

Distribution

 

Non-segment items (1)

 

Total

 

Three months ended March 29, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

$

1,205

 

 

$

477

 

 

$

346

 

 

$

411

 

 

$

 

 

$

2,439

 

Intersegment sales

287

 

 

180

 

 

184

 

 

2

 

 

(653

)

 

 

Total sales

1,492

 

 

657

 

 

530

 

 

413

 

 

(653

)

 

2,439

 

Depreciation and amortization(2)

41

 

 

11

 

 

18

 

 

5

 

 

 

 

75

 

Research, development and engineering
  expense

58

 

 

8

 

 

19

 

 

 

 

 

 

85

 

Equity, royalty and interest (loss) income from investees

(3

)

 

5

 

 

1

 

 

30

 

 

 

 

33

 

Restructuring charges

 

 

 

 

 

 

 

 

66

 

 

66

 

Interest income

1

 

 

1

 

 

 

 

 

 

 

 

2

 

Segment EBIT

(16

)

 

69

 

 

1

 

 

58

 

 

(84

)

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

$

1,590

 

 

$

675

 

 

$

468

 

 

$

555

 

 

$

 

 

$

3,288

 

Intersegment sales

346

 

 

212

 

 

208

 

 

2

 

 

(768

)

 

 

Total sales

1,936

 

 

887

 

 

676

 

 

557

 

 

(768

)

 

3,288

 

Depreciation and amortization(2)

47

 

 

10

 

 

16

 

 

8

 

 

 

 

81

 

Research, development and engineering
  expense

71

 

 

10

 

 

21

 

 

 

 

 

 

102

 

Equity, royalty and interest income from
  investees

8

 

 

6

 

 

4

 

 

33

 

 

 

 

51

 

Restructuring charges

 

 

 

 

 

 

 

 

37

 

 

37

 

Interest income

3

 

 

 

 

 

 

1

 

 

 

 

4

 

Segment EBIT

(40

)

 

75

 

 

(6

)

 

64

 

 

(37

)

 

56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 30, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

$

1,885

 

 

$

581

 

 

$

567

 

 

$

441

 

 

$

 

 

$

3,474

 

Intersegment sales

324

 

 

206

 

 

253

 

 

4

 

 

(787

)

 

 

Total sales

2,209

 

 

787

 

 

820

 

 

445

 

 

(787

)

 

3,474

 

Depreciation and amortization(2)

44

 

 

11

 

 

15

 

 

4

 

 

 

 

74

 

Research, development and engineering
  expense

70

 

 

10

 

 

23

 

 

 

 

 

 

103

 

Equity, royalty and interest income from
  investees

33

 

 

5

 

 

4

 

 

25

 

 

 

 

67

 

Interest income

3

 

 

1

 

 

1

 

 

1

 

 

 

 

6

 

Segment EBIT

194

 

 

78

 

 

37

 

 

49

 

 

(43

)

 

315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses.  For the three months ended March 29, 2009, unallocated corporate expenses include restructuring charges of $66 million and a $6 million gain related to flood damage insurance recoveries.  For the three months ended December 31, 2008, unallocated corporate expenses include restructuring charges of $37 million and a $36 million decrease in cash surrender value in corporate owned life insurance.  There were no significant unallocated corporate expenses for the three months ended March 30, 2008.

 (2) Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as Interest expense.

 



CUMMINS INC. AND SUBSIDIARIES

RECONCILIATION OF SEGMENT INFORMATION

(Unaudited)

 

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Income is shown in the table below:

 

 

Three months ended

 

 

 

March 29,

 

December 31,

 

March 30,

 

In millions

 

2009

 

2008

 

2008

 

Segment EBIT

 

$

28

 

$

56

 

$

315

 

Less:

 

 

 

 

 

 

 

Interest expense

 

7

 

9

 

11

 

Income before income taxes

 

$

21

 

$

47

 

$

304

 

 

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Earnings before interest, taxes and noncontrolling interests (EBIT)

We define EBIT as earnings or loss before interest expense, income tax expense and noncontrolling interests.  We use EBIT to assess and measure the performance of our operating segments and also as a component in measuring our variable compensation programs.  Below is a reconciliation of EBIT, a non-GAAP financial measure, to consolidated net income attributable to Cummins Inc., for each of the applicable periods:

 

 

Three Months Ended

 

 

 

March 29,

 

December 31,

 

March 30,

 

In millions

 

2009

 

2008

 

2008

 

Earnings before interest and income taxes

 

$

28

 

$

56

 

$

315

 

 

 

 

 

 

 

 

 

EBIT as a percentage of net sales

 

1.1

%

1.7

%

9.1

%

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

Interest expense

 

7

 

9

 

11

 

Income tax expense (benefit)

 

7

 

(12

)

102

 

Net income

 

14

 

59

 

202

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

Income attributable to noncontrolling interests

 

7

 

16

 

12

 

Net income attributable to Cummins Inc.

 

$

7

 

$

43

 

$

190

 

 

 

 

 

 

 

 

 

Net income attributable to Cummins Inc.
  as a percentage of net sales

 

0.3

%

1.3

%

5.5

%

 

 

 

 

 

 

 

 

We believe EBIT is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to financing methods, capital structure or income taxes.  This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America and may not be consistent with measures used by other companies.  It should be considered supplemental data.

 



 CUMMINS INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

 

In 2009, the Power Generation segment reorganized and its reporting structure to include the following businesses: Commercial Products, Alternators, Commercial Projects, Power Electronics and Consumer.  Sales by quarter for our Power Generation segment by business for the years 2008 and 2007 were as follows:

 

 2008

 

Three months ended

 

Year ended

 

In millions

 

March 30, 2008

 

June 29, 2008

 

September 28, 2008

 

December 31, 2008

 

December 31, 2008

 

Commercial Products

 

$

444

 

$

555

 

$

559

 

$

558

 

$

2,116

 

Alternator

 

156

 

178

 

174

 

178

 

686

 

Commercial Projects

 

86

 

111

 

63

 

68

 

328

 

Power Electronics

 

27

 

31

 

35

 

39

 

132

 

Consumer

 

74

 

63

 

57

 

44

 

238

 

   Total sales

 

$

787

 

$

938

 

$

888

 

$

887

 

$

3,500

 

 

 2007

 

Three months ended

 

Year ended

 

In millions

 

April 1, 2007

 

July 1, 2007

 

September 30, 2007

 

December 31, 2007

 

December 31, 2007

 

Commercial Products

 

$

383

 

$

448

 

$

449

 

$

481

 

$

1,761

 

Alternator

 

132

 

156

 

163

 

172

 

623

 

Commercial Projects

 

45

 

44

 

49

 

81

 

219

 

Power Electronics

 

26

 

26

 

28

 

28

 

108

 

Consumer

 

89

 

95

 

87

 

78

 

349

 

   Total sales

 

$

675

 

$

769

 

$

776

 

$

840

 

$

3,060