CUMMINS ENGINE COMPANY, INC

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: 
October 27, 2010

 

  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.

 

On October 26, 2010, Cummins Inc. issued a press release regarding its release of third quarter results. 
 

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 October 26, 2010, Cummins Inc. (“Cummins,” “the Company,” “the registrant,” “we,” “our,” or, “us”) issued the attached press release reporting its financial results for the third quarter of 2010.  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 October 26, 2010


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: October 27, 2010



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

 

 

 

September 26,

 

June 27,

 

September 27,

 

In millions, except per share amounts

 

2010

 

2010

 

2009

 

               

NET SALES

 

$

3,401

 

$

3,208

 

$

2,530

 

Cost of sales

 

2,571

 

2,455

 

2,027

 

GROSS MARGIN

 

830

 

753

 

503

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

375

 

354

 

304

 

Research, development and engineering expenses

 

103

 

96

 

90

 

Equity, royalty and interest income from investees (Note 1)

 

88

 

97

 

57

 

Restructuring and other charges

 

 

 

22

 

Other operating (expense) income, net

 

(5)

 

(4)

 

3

 

OPERATING INCOME

 

435

 

396

 

147

 

 

 

 

 

 

 

 

 

Interest income

 

6

 

5

 

2

 

Interest expense

 

11

 

9

 

9

 

Other income (expense), net (Note 2)

 

8

 

 

6

 

INCOME BEFORE INCOME TAXES

 

438

 

392

 

146

 

                   

 

 

 

 

 

 

 

Income tax expense (Note 3)

 

129

 

122

 

36

 

CONSOLIDATED NET INCOME

 

309

 

270

 

110

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

26

 

24

 

15

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

283

 

$

246

 

$

95

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

 

 

 

 

 

Basic

 

$

1.45

 

$

1.25

 

$

0.48

 

Diluted

 

$

1.44

 

$

1.25

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

$

195.8

 

$

196.9

 

$

197.4

 

Diluted

 

$

196.3

 

$

197.3

 

$

197.8

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.2625

 

$

0.175

 

$

0.175

 

 

(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 STATEMENTS OF INCOME

(Unaudited) (a)

 

 

 

Nine months ended

 

 

 

September 26,

 

September 27,

 

In millions, except per share amounts

 

2010

 

2009

 

           

NET SALES

 

$

9,087

 

$

7,400

 

Cost of sales

 

6,903

 

6,004

 

GROSS MARGIN

 

2,184

 

1,396

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

Selling, general and administrative expenses

 

1,064

 

891

 

Research, development and engineering expenses

 

291

 

254

 

Equity, royalty and interest income from investees (Note 1)

 

261

 

147

 

Restructuring and other charges

 

 

95

 

Other operating (expense) income, net

 

(13)

 

(6

)

OPERATING INCOME

 

1,077

 

297

 

 

 

 

 

 

 

Interest income

 

14

 

5

 

Interest expense

 

29

 

26

 

Other income (expense), net (Note 2)

 

25

 

(10

)

INCOME BEFORE INCOME TAXES

 

1,087

 

266

 

                   

 

 

 

 

 

Income tax expense (Note 3)

 

338

 

72

 

CONSOLIDATED NET INCOME

 

749

 

194

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

71

 

36

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

678

 

$

158

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

 

 

Basic

 

$

3.44

 

$

0.80

 

Diluted

 

$

3.43

 

$

0.80

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

 

$

197.0

 

$

197.1

 

Diluted

 

$

197.4

 

$

197.4

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.6125

 

$

0.525

 

 

(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)

 

 

 

September 26,

 

December 31,

 

In millions, except par value

 

2010

 

2009

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

937

 

 

$

930

 

 

Marketable securities

 

 

308

 

 

 

190

 

 

Accounts and notes receivable, net

 

 

2,235

 

 

 

2,004

 

 

Inventories

 

 

1,910

 

 

 

1,341

 

 

Deferred income taxes

 

 

328

 

 

 

295

 

 

Prepaid expenses and other current assets

 

 

260

 

 

 

243

 

 

Total current assets

 

 

5,978

 

 

 

5,003

 

 

Long-term assets

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

4,838

 

 

 

4,765

 

 

     Accumulated depreciation

 

 

(2,947

)

 

 

(2,879

)

 

     Property, plant and equipment, net

 

 

1,891

 

 

 

1,886

 

 

Investments and advances related to equity method investees

 

 

689

 

 

 

574

 

 

Goodwill

 

 

365

 

 

 

364

 

 

Other intangible assets, net

 

 

219

 

 

 

228

 

 

Deferred income taxes

 

 

313

 

 

 

436

 

 

Other assets

 

 

417

 

 

 

325

 

 

Total assets

 

$

9,872

 

 

$

8,816

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Loans payable

 

$

98

 

 

$

37

 

 

Accounts payable (principally trade)

 

 

1,339

 

 

 

957

 

 

Current portion of accrued product warranty

 

 

396

 

 

 

426

 

 

Accrued compensation, benefits and retirement costs

 

 

452

 

 

 

366

 

 

Deferred revenue

 

 

166

 

 

 

128

 

 

Other accrued expenses

 

 

620

 

 

 

518

 

 

Total current liabilities

 

 

3,071

 

 

 

2,432

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

732

 

 

 

637

 

 

Pensions

 

 

362

 

 

 

514

 

 

Postretirement benefits other than pensions

 

 

448

 

 

 

453

 

 

Other liabilities and deferred revenue

 

 

765

 

 

 

760

 

 

Total liabilities

 

 

5,378

 

 

 

4,796

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 221.8 and 222.0 shares issued

 

 

1,922

 

 

 

1,860

 

 

Retained earnings

 

 

4,135

 

 

 

3,575

 

 

Treasury stock, at cost, 24.0 and 20.7 shares

 

 

(967

)

 

 

(731

)

 

Common stock held by employee benefits trust, at cost, 2.2 and 3.0 shares

 

 

(27

)

 

 

(36

)

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

 

Defined benefit postretirement plans

 

 

(778

)

 

 

(788

)

 

Other

 

 

(86

)

 

 

(107

)

 

Total accumulated other comprehensive loss

 

 

(864

)

 

 

(895

)

 

Total Cummins Inc. shareholders’ equity

 

 

4,199

 

 

 

3,773

 

 

Noncontrolling interests

 

 

295

 

 

 

247

 

 

Total equity

 

 

4,494

 

 

 

4,020

 

 

Total liabilities and equity

 

$

9,872

 

 

$

8,816

 

 

 

(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)

 

 

 

Nine months ended

 

 

 

September 26,

 

September 27,

 

In millions

 

2010

 

2009

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Consolidated net income

 

$

749

 

$

194

 

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

 

 

 

 

 

Restructuring and other charges, net of cash payments

 

 

21

 

Depreciation and amortization

 

239

 

238

 

Gain on fair value adjustment for consolidated investee

 

(12

)

 

Deferred income taxes                               

 

83

 

(11

)

Equity in income of investees, net of dividends

 

(95

)

56

 

Pension contributions in excess of expense

 

(114

)

(49

)

Other post-retirement benefits payments in excess of expense

 

(22

)

(18

)

Stock-based compensation expense

 

17

 

16

 

Translation and hedging activities

 

10

 

33

 

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

 

 

 

 

 

Accounts and notes receivable

 

(198

)

89

 

Inventories

 

(524

)

360

 

Other current assets

 

(16)

 

32

 

Accounts payable

 

336

 

(155

)

Accrued expenses

 

102

 

(185

)

Changes in long-term liabilities

 

97

 

103

 

Other, net

 

(33

)

6

 

Net cash provided by operating activities

 

619

 

730

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Capital expenditures

 

(170

)

(204

)

Investments in internal use software

 

(28

)

(24

)

Proceeds from disposals of property, plant and equipment

 

46

 

8

 

Investments in and advances to equity investees

 

(17

)

(5

)

Acquisition of businesses, net of cash acquired

 

(77

)

(2

)

Investments in marketable securities—acquisitions

 

(560

)

(234

)

Investments in marketable securities—liquidations

 

452

 

171

 

Purchases of other investments

 

(54

)

(54

)

Cash flows from derivatives not designated as hedges

 

2

 

(21

)

Other, net

 

 

1

 

Net cash used in investing activities

 

(406

)

(364

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from borrowings

 

163

 

11

 

Payments on borrowings and capital lease obligations

 

(64

)

(60

)

Net borrowings under short-term credit agreements

 

(4

)

(4

)

Distributions to noncontrolling interests

 

(21

)

(16

)

Dividend payments on common stock

 

(120

)

(106

)

Proceeds from sale of common stock held by employee benefit trust

 

52

 

54

 

Repurchases of common stock

 

(241

)

 

Other, net

 

25

 

1

 

Net cash used in financing activities

 

(210

)

(120

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

4

 

14

 

Net increase in cash and cash equivalents

 

7

 

260

 

Cash and cash equivalents at beginning of year

 

930

 

426

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

937

 

$

686

 

 

(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)
 

 

 

  

 

Engine

 

Power
Generation

 

Components

 

Distribution

 

Non-segment
Items(1)

 

Total

 

In millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended September 26, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 1,727 

 

$

 564 

 

$

 540 

 

$

 570 

 

$

 - 

 

$

 3,401 

 

Intersegment sales

 

 342 

 

 227 

 

 229 

 

 3 

 

 (801)

 

 - 

 

 

   Total sales

 

 

 2,069 

 

 

 791 

 

 

 769 

 

 

 573 

 

 

 (801)

 

 

 3,401 

 

Depreciation and amortization(2)

 

 

 42 

 

 

 10 

 

 

 20 

 

 

 5 

 

 

 - 

 

 

 77 

 

Research, development and engineering expenses

 

 

 65 

 

 

 8 

 

 

 30 

 

 

 - 

 

 

 

 

 103 

 

Equity, royalty and interest income from investees

 

 

 37 

 

 

 12 

 

 

 6 

 

 

 33 

 

 

 - 

 

 

 88 

 

Interest income

 

 

 3 

 

 

 2 

 

 

 - 

 

 

 1 

 

 

 - 

 

 

 6 

 

Segment EBIT

 

 

 223 

 

 

 97 

 

 

 63 

 

 

 74 

 

 

 (8)

 

 

 449 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended June 27, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

 

$

1,595

 

$

518

 

$

522

 

$

573

 

$

-

 

$

3,208

 

Intersegment sales

 

 

304

 

 

190

 

 

207

 

 

3

 

 

(704)

 

 

-

 

 

Total sales

 

 

1,899

 

 

708

 

 

729

 

 

576

 

 

(704)

 

 

3,208

 

Depreciation and amortization(2)

 

 

42

 

 

11

 

 

21

 

 

7

 

 

-

 

 

81

 

Research, development and engineering expenses

 

 

62

 

 

8

 

 

26

 

 

-

 

 

-

 

 

96

 

Equity, royalty and interest income from investees

 

 

52

 

 

9

 

 

6

 

 

30

 

 

-

 

 

97

 

Interest income

 

 

2

 

 

1

 

 

1

 

 

1

 

 

-

 

 

5

 

Segment EBIT

 

 

197

 

 

76

 

 

75

 

 

69

 

 

(16)

 

 

401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 27, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 1,270 

 

$

 444 

 

$

 395 

 

$

 421 

 

$

 - 

 

$

 2,530 

 

Intersegment sales

 

 169 

 

 105 

 

 196 

 

 1 

 

 (471)

 

 - 

 

 

   Total sales

 

 

 1,439 

 

 

 549 

 

 

 591 

 

 

 422 

 

 

 (471)

 

 

 2,530 

 

Depreciation and amortization(2)

 

 

 49 

 

 

 13 

 

 

 18 

 

 

 5 

 

 

 - 

 

 

 85 

 

Research, development and engineering expenses

 

 

 59 

 

 

 9 

 

 

 22 

 

 

 - 

 

 

 - 

 

 

 90 

 

Equity, royalty and interest income from investees

 

 

 16 

 

 

 5 

 

 

 4 

 

 

 32 

 

 

 - 

 

 

 57 

 

Restructuring and other charges

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 22 

 

 

 22 

 

Interest income

 

 

 1 

 

 

 - 

 

 

 1 

 

 

 - 

 

 

 - 

 

 

 2 

 

Segment EBIT

 

 

 61 

 

 

 23 

 

 

 31 

 

 

 55 

 

 

 (15)

 

 

 155 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Nine months ended September 26, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 4,495 

 

$

 1,460 

 

$

 1,515 

 

$

 1,617 

 

$

 - 

 

$

 9,087 

 

Intersegment sales

 

 896 

 

 556 

 

 613 

 

 8 

 

 (2,073)

 

 - 

 

 

   Total sales

 

 

 5,391 

 

 

 2,016 

 

 

 2,128 

 

 

 1,625 

 

 

 (2,073)

 

 

 9,087 

 

Depreciation and amortization(2)

 

 

 125 

 

 

 31 

 

 

 61 

 

 

 19 

 

 

 - 

 

 

 236 

 

Research, development and engineering expenses

 

 

 187 

 

 

 23 

 

 

 81 

 

 

 - 

 

 

 

 

 291 

 

Equity, royalty and interest income from investees

 

 

 124 

 

 

 27 

 

 

 17 

 

 

 93 

 

 

 - 

 

 

 261 

 

Interest income

 

 

 7 

 

 

 4 

 

 

 1 

 

 

 2 

 

 

 - 

 

 

 14 

 

Segment EBIT

 

 

 553 

 

 

 207 

 

 

 195 

 

 

 215 

 

 

 (54)

 

 

 1,116 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Nine months ended  September 27, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 3,608 

 

$

 1,402 

 

$

 1,096 

 

$

 1,294 

 

$

 - 

 

$

 7,400 

 

Intersegment sales

 

 629 

 

 414 

 

 527 

 

 4 

 

 (1,574)

 

 

 - 

 

 

   Total sales

 

 

 4,237 

 

 

 1,816 

 

 

 1,623 

 

 

 1,298 

 

 

 (1,574)

 

 

 7,400 

 

Depreciation and amortization(2)

 

 

 135 

 

 

 35 

 

 

 53 

 

 

 14 

 

 

 - 

 

 

 237 

 

Research, development and engineering expenses

 

 

 168 

 

 

 25 

 

 

 61 

 

 

 - 

 

 

 - 

 

 

 254 

 

Equity, royalty and interest income from investees

 

 

 30 

 

 

 16 

 

 

 9 

 

 

 92 

 

 

 - 

 

 

 147 

 

Restructuring and other charges

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 95 

 

 

 95 

 

Interest income

 

 

 2 

 

 

 1 

 

 

 1 

 

 

 1 

 

 

 - 

 

 

 5 

 

Segment EBIT

 

 

 41 

 

 

 133 

 

 

 22 

 

 

 168 

 

 

 (72)

 

 

 292 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 (1)

Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses.  For the three and nine months ended September 26, 2010, unallocated corporate expenses included $32 million in Brazil tax recoveries ($21 million after-tax) and $2 million in flood damage expenses.  In the third quarter of 2010, it was determined that we overpaid a Brazilian revenue based tax during the period of 2004-2008.  Our results include a pre-tax recovery related to tax credits on imported products arising from this overpayment.  This recovery has been excluded from segment results as it was not considered by management in its evaluation of operating results for the quarter.  For the three and nine months ended September 27, 2009, unallocated corporate expenses included $22 million and $95 million of restructuring and other charges and an $8 million and $5 million gain related to flood damage expenses, respectively.

 (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

 

Nine months ended

 

 

 

September 26,

 

June 27,

 

September  27,

 

September 26,

 

September 27,

 

In millions

 

2010

 

2010

 

2009

 

2010

 

2009

 

Segment EBIT

 

$

449

 

$

401

 

$

155

 

$

1,116

 

$

292

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

11

 

9

 

9

 

29

 

26

 

Income before income taxes

 

$

438

 

$

392

 

$

146

 

$

1,087

 

$

266

 

 

 

 

Earnings before interest, taxes, noncontrolling interests and restructuring and other charges

 

We define EBIT as earnings or loss before interest expense, income tax expense, noncontrolling interests in income of consolidated subsidiaries and restructuring and other charges (EBIT).  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 “Net income attributable to Cummins Inc.,” for each of the applicable periods:

 

 

 

Three months ended

 

Nine months ended

 

 

 

 

September 26,

 

June 27,

 

September 27,

 

September 26,

 

September 27,

 

In millions

 

2010

 

2010

 

2009

 

2010

 

2009

 

Earnings before interest expense, income taxes and
restructuring and other charges

 

$

449

 

$

401

 

$

177

 

$

1,116

 

$

387

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before interest expense, income taxes and
restructuring and other charges as a percentage of
sales

 

13.2

%

12.5

%

7.0

%

12.3

%

5.2

%

Less:

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other charges

 

 

 

22

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before interest and income taxes

 

$

449

 

$

401

 

$

155

 

$

1,116

 

$

292

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT as a percentage of net sales

 

13.2

%

12.5

%

6.1

%

12.3

%

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

11

 

9

 

9

 

29

 

26

 

Income tax expense

 

129

 

122

 

36

 

338

 

72

 

Consolidated net income

 

309

 

270

 

110

 

749

 

194

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

26

 

24

 

15

 

71

 

36

 

Net income attributable to Cummins Inc.

 

$

283

 

$

246

 

$

95

 

$

678

 

$

158

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8.3

%

7.7

%

3.8

%

7.5

%

2.1

%

 

 



 CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

 

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding restructuring and other charges

 

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to restructuring.  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.  The following table reconciles net income attributable to Cummins Inc. excluding restructuring and other charges to “Net income attributable to Cummins Inc.” for the three and nine months ended September 27, 2009.  There were no restructuring actions taken in the three or nine months ended September 26, 2010 or three months ended June 27, 2010.

 

 

Three months ended

 

Nine months ended

 

 

September 27, 2009

 

September 27, 2009

 

In millions

Net
Income

 

Diluted
EPS

 

Net
Income

 

Diluted
EPS

 

Net income attributable to Cummins Inc. excluding restructuring and other charges

$

110

 

$

0.56

 

$

221

 

$

1.12

 

Less:

 

 

 

 

 

 

 

 

Restructuring and other charges, net(1)

15

 

0.08

 

63

 

0.32

 

Net income attributable to Cummins Inc.

$

95

 

$

0.48

 

$

158

 

$

0.80

 

 

(1) During the three and nine months ended September 27, 2009, management approved and committed to undertake actions, which resulted in a pretax charge of $22 million and $95 million, respectively.  These charges included employee-related liabilities for severance and benefits of approximately $10 million and $76 million, net of changes in estimate and exit costs of approximately zero and $7 million, and pension and other post retirement benefit curtailment charges of $12 million and $12 million, for the three and nine months ended, respectively.

 

 

 

 

 



CUMMINS INC. AND SUBSIDIARIES

SELECTED FOOTNOTE DATA

(Unaudited)

 

NOTE 1.  EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

 

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the interim reporting periods was as follows:

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 26,

 

 

June 27,

 

 

September 27,

 

 

September 26,

 

 

September 27,

In millions

 

2010 

 

 

2010

 

 

2009 

 

 

2010 

 

 

2009 

Distribution Entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North American distributors

$

 26 

 

$

23

 

$

 25 

 

$

 72 

 

$

 74 

All other distributors

 

 5 

 

 

4

 

 

 4 

 

 

 13 

 

 

 11 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing Entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dongfeng Cummins Engine Company, Ltd.

 

 24 

 

 

34

 

 

 11 

 

 

 76 

 

 

 18 

Chongqing Cummins Engine Company, Ltd.

 

 12 

 

 

13

 

 

 8 

 

 

 35 

 

 

 28 

All other manufacturers

 

 14 

 

 

15

 

 

 

 

 43 

 

 

 

Cummins share of net income

 

 81 

 

 

89

 

 

 53 

 

 

 239 

 

 

 136 

Royalty and interest income

 

 7 

 

 

8

 

 

 4 

 

 

 22 

 

 

 11 

Equity, royalty and interest income from investees

$

 88 

 

$

97

 

$

 57 

 

$

 261 

 

$

 147 

 

 

NOTE 2.  OTHER INCOME (EXPENSE)

 

Other income (expense) included the following:

 

 

 

Three months ended

 

Nine months ended

 

September  26,

 

 

June 27,

 

September 27,

 

September 26,

 

September 27,

In millions

2010

 

 

2010

 

2009

 

2010

 

2009

Change in cash surrender value of corporate owned life insurance

$

 11 

 

$

1

 

$

 3 

 

$

 11 

 

$

 1 

Dividend income

 

 2 

 

 

2

 

 

 1 

 

 

 5 

 

 

 3 

Gain on acquisition of Cummins Western Canada (CWC)

 

 - 

 

 

-

 

 

 - 

 

 

 12 

 

 

 - 

Bank charges

 

 (4)

 

 

(4)

 

 

 (3)

 

 

 (11)

 

 

 (10)

Foreign currency (losses) gains, net

 

 (5)

 

 

2

 

 

 (1)

 

 

 4 

 

 

 (18)

Other, net

 

 4 

 

 

(1)

 

 

 6 

 

 

 4