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 |
1-4949 |
35-0257090 |
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 |
|
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 |
|
|
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 securitiesacquisitions |
|
(560 |
) |
(234 |
) |
||
Investments in marketable securitiesliquidations |
|
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 |
|
Components |
|
Distribution |
|
Non-segment |
|
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
|
|
$ |
449 |
|
$ |
401 |
|
$ |
177 |
|
$ |
1,116 |
|
$ |
387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Earnings before interest expense, income taxes and
|
|
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. |
|
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
|
|
Diluted
|
|
Net
|
|
Diluted
|
|
|||||
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 |
|
|
5 |
|
|
43 |
|
|
5 |
||
|
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 |