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: 
July 31, 2012

 

  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 July 31, 2012, Cummins Inc. (“Cummins,” “the Company,” “the registrant,” “we,” “our,” or “us”) issued the attached press release reporting its financial results for the second quarter of 2012.  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 pursuant to Item 2.02 herewith:
 

99-Press Release dated July 31, 2012


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: July 31, 2012

 

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

 

 

 

July 1,

 

April 1,

 

June 26,

In millions, except per share amounts

 

2012

 

2012

 

2011

NET SALES

 

$

 4,452

 

$

 4,472

 

$

 4,641

 

Cost of  sales

 

 

 3,242

 

 

 3,274

 

 

 3,438

GROSS MARGIN

 

 

 1,210

 

 

 1,198

 

 

 1,203

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 487

 

 

 475

 

 

 463

 

Research, development and engineering expenses

 

 

 187

 

 

 181

 

 

 157

 

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

 

 

 104

 

 

 104

 

 

 117

 

Gain on sale of businesses

 

 

 6

 

 

 - 

 

 

 68

 

Other operating income (expense), net

 

 

 2

 

 

 2

 

 

 - 

OPERATING INCOME

 

 

 648

 

 

 648

 

 

 768

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 7

 

 

 8

 

 

 10

 

Interest expense

 

 

 8

 

 

 8

 

 

 13

 

Other income (expense), net

 

 

 14

 

 

 2

 

 

 (3)

INCOME BEFORE INCOME TAXES

 

 

 661

 

 

 650

 

 

 762

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense  (Note 2)

 

 

 166

 

 

 175

 

 

 225

CONSOLIDATED NET INCOME

 

 

 495

 

 

 475

 

 

 537

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

 26

 

 

 20

 

 

 32

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

 469

 

$

 455

 

$

 505

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE

 

 

 

 

 

 

 

 

 

 

TO CUMMINS INC.

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 2.47

 

$

 2.39

 

$

 2.61

 

Diluted

 

$

 2.47

 

$

 2.38

 

$

 2.60

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 189.8

 

 

 190.4

 

 

 193.8

 

Diluted

 

 

 190.1

 

 

 190.8

 

 

 194.4

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.40

 

$

 0.40

 

$

 0.2625

 

(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 INCOME

(Unaudited) (a)

 

 

 

 

 

 

 

 

 

Six months ended

In millions, except per share amounts

July 1, 2012

 

June 26, 2011

NET SALES

$

 8,924

 

$

 8,501

 

Cost of  sales

 

 6,516

 

 

 6,341

GROSS MARGIN

 

 2,408

 

 

 2,160

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

 

Selling, general and administrative expenses

 

 962

 

 

 852

 

Research, development and engineering expenses

 

 368

 

 

 286

 

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

 

 208

 

 

 213

 

Gain on sale of businesses

 

 6

 

 

 68

 

Other operating income (expense), net

 

 4

 

 

 (6)

OPERATING INCOME

 

 1,296

 

 

 1,297

 

 

 

 

 

 

 

 

Interest income

 

 15

 

 

 16

 

Interest expense

 

 16

 

 

 23

 

Other income (expense), net

 

 16

 

 

 (6)

INCOME BEFORE INCOME TAXES

 

 1,311

 

 

 1,284

 

 

 

 

 

 

 

 

Income tax expense  (Note 2)

 

 341

 

 

 382

CONSOLIDATED NET INCOME

 

 970

 

 

 902

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 46

 

 

 54

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

$

 924

 

$

 848

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE

 

 

 

 

 

 

TO CUMMINS INC.

 

 

 

 

 

 

Basic

$

 4.86

 

$

 4.36

 

Diluted

$

 4.85

 

$

 4.34

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

 190.1

 

 

 194.6

 

Diluted

 

 190.5

 

 

 195.2

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

 0.80

 

$

 0.525

 

(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 BALANCE SHEETS

(Unaudited) (a)

 In millions, except par value

 

July 1, 2012

 

December 31, 2011

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 1,145

 

$

 1,484

 

Marketable securities

 

 

 261

 

 

 277

 

 

Total cash, cash equivalents and marketable securities

 

 

 1,406

 

 

 1,761

 

Accounts and notes receivable, net

 

 

 2,620

 

 

 2,526

 

Inventories

 

 

 2,581

 

 

 2,141

 

Prepaid expenses and other current assets

 

 

 639

 

 

 663

 

 

 

Total current assets

 

 

 7,246

 

 

 7,091

Long-term assets

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 5,475

 

 

 5,245

 

 

Accumulated depreciation

 

 

 (3,051)

 

 

 (2,957)

 

 

Property, plant and equipment, net

 

 

 2,424

 

 

 2,288

 

Investments and advances related to equity method investees

 

 

 890

 

 

 838

 

Goodwill

 

 

 345

 

 

 339

 

Other intangible assets, net

 

 

 268

 

 

 227

 

Other assets

 

 

 996

 

 

 885

 

 

 

 

Total assets

 

$

 12,169

 

$

 11,668

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Loans payable

 

$

 58

 

$

 28

 

Accounts payable (principally trade)

 

 

 1,634

 

 

 1,546

 

Current portion of accrued product warranty

 

 

 407

 

 

 422

 

Accrued compensation, benefits and retirement costs

 

 

 340

 

 

 511

 

Deferred revenue

 

 

 208

 

 

 208

 

Taxes payable (including taxes on income)

 

 

 258

 

 

 282

 

Other accrued expenses

 

 

 665

 

 

 660

 

 

 

Total current liabilities

 

 

 3,570

 

 

 3,657

Long-term liabilities

 

 

 

 

 

 

 

Long-term debt

 

 

 653

 

 

 658

 

Pensions

 

 

 118

 

 

 205

 

Postretirement benefits other than pensions

 

 

 425

 

 

 432

 

Other liabilities and deferred revenue

 

 

 966

 

 

 885

 

 

 

 

Total liabilities

 

 

 5,732

 

 

 5,837

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.2 shares issued

 

 

 2,036

 

 

 2,001

 

Retained earnings

 

 

 6,810

 

 

 6,038

 

Treasury stock, at cost, 32.0 and 30.2 shares

 

 

 (1,777)

 

 

 (1,587)

 

Common stock held by employee benefits trust, at cost, 1.6 and 1.8 shares

 

 

 (20)

 

 

 (22)

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

Defined benefit postretirement plans

 

 

 (703)

 

 

 (724)

 

 

Other

 

 

 (243)

 

 

 (214)

 

 

Total accumulated other comprehensive loss

 

 

 (946)

 

 

 (938)

 

 

 

Total Cummins Inc. shareholders’ equity

 

 

 6,103

 

 

 5,492

 

Noncontrolling interests

 

 

 334

 

 

 339

 

 

 

 

Total equity

 

 

 6,437

 

 

 5,831

 

 

 

 

 

Total liabilities and equity

 

$

 12,169

 

$

 11,668

 

(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)

 

 

 

 

Six months ended

In millions

 

July 1, 2012

 

June 26, 2011

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Consolidated net income

 

$

 970

 

$

 902

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 171

 

 

 159

 

 

Gain on sale of businesses

 

 

 (6)

 

 

 (68)

 

 

Deferred income taxes

 

 

 (39)

 

 

 87

 

 

Equity in income of investees, net of dividends

 

 

 (25)

 

 

 2

 

 

Pension contributions in excess of expense

 

 

 (52)

 

 

 (47)

 

 

Other post-retirement benefits payments in excess of expense

 

 

 (7)

 

 

 (10)

 

 

Stock-based compensation expense

 

 

 21

 

 

 18

 

 

Excess tax benefits on stock-based awards

 

 

 (11)

 

 

 (4)

 

 

Translation and hedging activities

 

 

 7

 

 

 (6)

 

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

 

 

 

 

 

 

 

 

Accounts and notes receivable

 

 

 (116)

 

 

 (513)

 

 

Inventories

 

 

 (439)

 

 

 (290)

 

 

Other current assets

 

 

 (47)

 

 

 11

 

 

Accounts payable

 

 

 61

 

 

 307

 

 

Accrued expenses

 

 

 (173)

 

 

 169

 

Changes in other liabilities and deferred revenue

 

 

 103

 

 

 58

 

Other, net

 

 

 (21)

 

 

 (31)

Net cash provided by operating activities

 

 

 397

 

 

 744

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Capital expenditures

 

 

 (266)

 

 

 (215)

 

Investments in internal use software

 

 

 (40)

 

 

 (22)

 

Investments in and advances to equity investees

 

 

 (40)

 

 

 (20)

 

Proceeds from sale of business, net of cash sold

 

 

 - 

 

 

 111

 

Acquisition of businesses, net of cash acquired

 

 

 (12)

 

 

 - 

 

Investments in marketable securities—acquisitions

 

 

 (276)

 

 

 (361)

 

Investments in marketable securities—liquidations

 

 

 280

 

 

 343

 

Cash flows from derivatives not designated as hedges

 

 

 1

 

 

 6

 

Other, net

 

 

 3

 

 

 7

Net cash used in investing activities

 

 

 (350)

 

 

 (151)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

 46

 

 

 60

 

Payments on borrowings and capital lease obligations

 

 

 (75)

 

 

 (94)

 

Net borrowings under short-term credit agreements

 

 

 3

 

 

 11

 

Distributions to noncontrolling interests

 

 

 (32)

 

 

 (26)

 

Dividend payments on common stock

 

 

 (152)

 

 

 (102)

 

Repurchases of common stock

 

 

 (196)

 

 

 (373)

 

Excess tax benefits on stock-based awards

 

 

 11

 

 

 4

 

Other, net

 

 

 9

 

 

 7

Net cash used in financing activities

 

 

 (386)

 

 

 (513)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 

 - 

 

 

 8

Net increase (decrease) in cash and cash equivalents

 

 

 (339)

 

 

 88

Cash and cash equivalents at beginning of year

 

 

 1,484

 

 

 1,023

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

 1,145

 

$

 1,111

 

(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

 

Components

 

Power Generation

 

Distribution

 

Non-segment Items(1)

 

Total

 

In millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended July 1, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 2,381

 

$

 710

 

$

 572

 

$

 789

 

$

 - 

 

$

 4,452

 

Intersegment sales

 

 460

 

 326

 

 337

 

 5

 

 (1,128)

 

 

 - 

 

 

Total sales

 

 

 2,841

 

 

 1,036

 

 

 909

 

 

 794

 

 

 (1,128)

 

 

 4,452

 

Depreciation and amortization(2)

 

 

 47

 

 

 19

 

 

 11

 

 

 8

 

 

 - 

 

 

 85

 

Research, development and engineering expenses

 

 

 115

 

 

 51

 

 

 19

 

 

 2

 

 

 - 

 

 

 187

 

Equity, royalty and interest income from investees

 

 

 37

 

 

 8

 

 

 10

 

 

 49

 

 

 - 

 

 

 104

 

Interest income

 

 

 3

 

 

 1

 

 

 3

 

 

 - 

 

 

 - 

 

 

 7

 

Segment EBIT

 

 

 376

 

 

 116

 

 

 94

 

 

 92

 

 

 (9)

 

 

 669

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended April 1, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 2,412

 

$

 774

 

$

 516

 

$

 770

 

$

 - 

 

$

 4,472

 

Intersegment sales

 

 447

 

 

 325

 

 

 264

 

 

 5

 

 

 (1,041)

 

 

 - 

 

 

Total sales

 

 

 2,859

 

 

 1,099

 

 

 780

 

 

 775

 

 

 (1,041)

 

 

 4,472

 

Depreciation and amortization(2)

 

 

 47

 

 

 19

 

 

 11

 

 

 7

 

 

 - 

 

 

 84

 

Research, development and engineering expenses

 

 

 111

 

 

 51

 

 

 18

 

 

 1

 

 

 - 

 

 

 181

 

Equity, royalty and interest income from investees

 

 

 38

 

 

 8

 

 

 10

 

 

 48

 

 

 - 

 

 

 104

 

Interest income

 

 

 4

 

 

 1

 

 

 2

 

 

 1

 

 

 - 

 

 

 8

 

Segment EBIT

 

 

 381

 

 

 143

 

 

 76

 

 

 94

 

 

 (36)

 

 

 658

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended June 26, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 2,476

 

$

 741

 

$

 649

 

$

 775

 

$

 - 

 

$

 4,641

 

Intersegment sales

 

 424

 

 291

 

 260

 

 10

 

 (985)

 

 

 - 

 

 

Total sales

 

 

 2,900

 

 

 1,032

 

 

 909

 

 

 785

 

 

 (985)

 

 

 4,641

 

Depreciation and amortization(2)

 

 

 44

 

 

 18

 

 

 11

 

 

 5

 

 

 - 

 

 

 78

 

Research, development and engineering expenses

 

 

 102

 

 

 43

 

 

 12

 

 

 - 

 

 

 - 

 

 

 157

 

Equity, royalty and interest income from investees

 

 

 49

 

 

 9

 

 

 13

 

 

 46

 

 

 - 

 

 

 117

 

Interest income

 

 

 6

 

 

 1

 

 

 3

 

 

 - 

 

 

 - 

 

 

 10

 

Segment EBIT

 

 

 377

 

 

 120

 

 

 105

 

 

 106

 

 

 67

 

 

 775

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Six months ended July 1, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 4,793

 

$

 1,484

 

$

 1,088

 

$

 1,559

 

$

 - 

 

$

 8,924

 

Intersegment sales

 

 907

 

 651

 

 601

 

 10

 

 (2,169)

 

 

 - 

 

 

Total sales

 

 

 5,700

 

 

 2,135

 

 

 1,689

 

 

 1,569

 

 

 (2,169)

 

 

 8,924

 

Depreciation and amortization(2)

 

 

 94

 

 

 38

 

 

 22

 

 

 15

 

 

 - 

 

 

 169

 

Research, development and engineering expenses

 

 

 226

 

 

 102

 

 

 37

 

 

 3

 

 

 - 

 

 

 368

 

Equity, royalty and interest income from investees

 

 

 75

 

 

 16

 

 

 20

 

 

 97

 

 

 - 

 

 

 208

 

Interest income

 

 

 7

 

 

 2

 

 

 5

 

 

 1

 

 

 - 

 

 

 15

 

Segment EBIT

 

 

 757

 

 

 259

 

 

 170

 

 

 186

 

 

 (45)

 

 

 1,327

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Six months ended June 26, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 4,482

 

$

 1,401

 

$

 1,206

 

$

 1,412

 

$

 - 

 

$

 8,501

 

Intersegment sales

 

 809

 

 555

 

 498

 

 15

 

 (1,877)

 

 

 - 

 

 

Total sales

 

 

 5,291

 

 

 1,956

 

 

 1,704

 

 

 1,427

 

 

 (1,877)

 

 

 8,501

 

Depreciation and amortization(2)

 

 

 89

 

 

 36

 

 

 21

 

 

 11

 

 

 - 

 

 

 157

 

Research, development and engineering expenses

 

 

 182

 

 

 80

 

 

 23

 

 

 1

 

 

 - 

 

 

 286

 

Equity, royalty and interest income from investees

 

 

 91

 

 

 17

 

 

 21

 

 

 84

 

 

 - 

 

 

 213

 

Interest income

 

 

 9

 

 

 2

 

 

 4

 

 

 1

 

 

 - 

 

 

 16

 

Segment EBIT

 

 

 667

 

 

 225

 

 

 194

 

 

 195

 

 

 26

 

 

 1,307

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 (1)

Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses.  The three and six months ended July 1, 2012, include a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures.  There were no significant unallocated corporate expenses for the three months ended April 1, 2012.  The three and six months ended June 26, 2011, include a $68 million gain ($37 million after-tax) related to the sale of certain assets and liabilities of our exhaust business from the Components segment.  The gains have been excluded from segment results as they were not considered in our evaluation of operating results for the three and six months ended July 1, 2012 and June 26, 2011.   There were no other significant unallocated corporate expenses for the three and six months ended July 1, 2012 and June 26, 2011.

 (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

 

Six months ended

 

 

 

July 1,

 

April 1,

 

June 26,

 

July 1,

 

June 26,

In millions

 

2012

 

2012

 

2011

 

2012

 

2011

Segment EBIT

 

$

 669

 

$

 658

 

$

 775

 

$

 1,327

 

$

 1,307

Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 8

 

 

 8

 

 

 13

 

 

 16

 

 

 23

Income before income taxes

 

$

 661

 

$

 650

 

$

 762

 

$

 1,311

 

$

 1,284






 

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

 

Six months ended

 

 

 

 

July 1,

 

April 1,

 

June 26,

 

July 1,

 

June 26,

In millions

 

2012

 

2012

 

2011

 

2012

 

2011

Distribution Entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North American distributors

 

$

 38

 

$

 40

 

$

 35

 

$

 78

 

$

 65

Komatsu Cummins Chile, Ltda.

 

 

 6

 

 

 5

 

 

 6

 

 

 11

 

 

 10

All other distributors

 

 

 2

 

 

 1

 

 

 1

 

 

 3

 

 

 2

Manufacturing Entities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chongqing Cummins Engine Company, Ltd.

 

 

 17

 

 

 18

 

 

 19

 

 

 35

 

 

 31

Dongfeng Cummins Engine Company, Ltd.

 

 

 17

 

 

 16

 

 

 26

 

 

 33

 

 

 49

Cummins Westport, Inc.

 

 

 4

 

 

 5

 

 

 3

 

 

 9

 

 

 4

Shanghai Fleetguard Filter Co., Ltd.

 

 

 4

 

 

 3

 

 

 4

 

 

 7

 

 

 8

Tata Cummins, Ltd.

 

 

 3

 

 

 4

 

 

 3

 

 

 7

 

 

 7

Beijing Foton Cummins Engine Co., Ltd.

 

 

 2

 

 

 (2)

 

 

 (1)

 

 

 - 

 

 

 (3)

Valvoline Cummins, Ltd.

 

 

 2

 

 

 2

 

 

 2

 

 

 4

 

 

 4

Komatsu manufacturing alliances

 

 

 1

 

 

 (1)

 

 

 (1)

 

 

 - 

 

 

 1

All other manufacturers

 

 

 (1)

 

 

 1

 

 

 6

 

 

 - 

 

 

 12

 

Cummins share of net income

 

$

 95

 

$

 92

 

$

 103

 

$

 187

 

$

 190

Royalty and interest income

 

 

 9

 

 

 12

 

 

 14

 

 

 21

 

 

 23

 

 

Equity, royalty and interest income from investees

 

$

 104

 

$

 104

 

$

 117

 

$

 208

 

$

 213

 

NOTE 2.  INCOME TAXES

 

Our effective tax rate for the year is expected to approximate 26 percent, absent any discrete period activity.  Our tax rate is generally less than the 35 percent U.S. income tax rate primarily due to lower tax rates on foreign income.  The tax rates for the three and six month periods ended July 1, 2012, were 25.1 percent and 26.0 percent, respectively. 

 

The tax rates for the three and six month periods ended June 26, 2011, were 29.5 percent and 29.8 percent, respectively, and included a discrete tax charge of $4 million related to the enactment of state law changes in Indiana.  The decrease in the 2012 effective tax rates versus the comparable periods in 2011 is due primarily to our assertion that income earned after 2011 by our China operations is permanently reinvested, as well as certain tax planning strategies implemented in our U.K. subsidiaries.





 

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

 

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding special items

 

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to special items including the gains related to the sale of certain assets and liabilities.  This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America (GAAP) 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. to net income attributable to Cummins Inc. excluding special items for the three and six month periods ended July 1, 2012 and June 26, 2011. 

 

 

  

Three months ended

 

Six months ended

 

  

July 1, 2012

 

June 26, 2011

 

July 1, 2012

 

June 26, 2011

In millions

Net Income

 

Diluted EPS

 

Net Income

 

Diluted EPS

 

Net Income

 

Diluted EPS

 

Net Income

 

Diluted EPS

Net income attributable to Cummins Inc.

$

 469

 

$

2.47

 

$

 505

 

$

 2.60

 

$

 924

 

$

4.85

 

$

 848

 

$

 4.34

Subtract

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of businesses(1)

 

 4

 

 

 0.02

 

 

 37

 

 

 0.19

 

 

 4

 

 

 0.02

 

 

 37

 

 

 0.19

Net income attributable to Cummins Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

excluding special items

$

 465

 

$

 2.45

 

$

 468

 

$

 2.41

 

$

 920

 

$

 4.83

 

$

 811

 

$

 4.15

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The gains have been excluded from operating results as they were not considered in our evaluation of performance for the three and six months ended July 1, 2012 and June 26, 2011.






 

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

 

Earnings before interest, taxes and noncontrolling interests

 

We define EBIT as earnings before interest expense, income tax expense and noncontrolling interests in income of consolidated subsidiaries (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

 

Six months ended

 

 

 

 

July 1,

 

April 1,

 

June 26,

 

July 1,

 

June 26,

In millions

 

2012

 

2012

 

2011

 

2012

 

2011

Earnings before interest expense, income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and special items

 

$

 663

 

$

 658

 

$

 707

 

$

 1,321

 

$

 1,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before interest expense, income taxes and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

special items as a percentage of net sales

 

 

14.9%

 

 

14.7%

 

 

15.2%

 

 

14.8%

 

 

14.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of businesses

 

 

 6

 

 

 - 

 

 

 68

 

 

 6

 

 

 68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before interest expense and income taxes

 

$

 669

 

$

 658

 

$

 775

 

$

 1,327

 

$

 1,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT as a percentage of net sales

 

 

15.0%

 

 

14.7%

 

 

16.7%

 

 

14.9%

 

 

15.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 8

 

 

 8

 

 

 13

 

 

 16

 

 

 23

 

Income tax expense

 

 

 166

 

 

 175

 

 

 225

 

 

 341

 

 

 382

Consolidated net income

 

 

 495

 

 

 475

 

 

 537

 

 

 970

 

 

 902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

 26

 

 

 20

 

 

 32

 

 

 46

 

 

 54

 

 

Net income attributable to Cummins Inc.

 

$

 469

 

$

 455

 

$

 505

 

$

 924

 

$

 848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Cummins Inc. as a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

percentage of net sales

 

 

10.5%

 

 

10.2%

 

 

10.9%

 

 

10.4%

 

 

10.0%





 

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

 

Engine segment net sales by market

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

$

 892

 

$

 807

 

$

 - 

 

$

 - 

 

$

 1,699

Medium-duty truck and bus

 

 526

 

 

 512

 

 

 - 

 

 

 - 

 

 

 1,038

Light-duty automotive and RV

 

 286

 

 

 297

 

 

 - 

 

 

 - 

 

 

 583

Industrial

 

 861

 

 

 859

 

 

 - 

 

 

 - 

 

 

 1,720

Stationary power

 

 294

 

 

 366

 

 

 - 

 

 

 - 

 

 

 660

 

Total sales

$

 2,859

 

$

 2,841

 

$

 - 

 

$

 - 

 

$

 5,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

$

 485

 

$

 693

 

$

 748

 

$

 865

 

$

 2,791

Medium-duty truck and bus

 

 474

 

 

 608

 

 

 640

 

 

 598

 

 

 2,320

Light-duty automotive and RV

 

 296

 

 

 310

 

 

 271

 

 

 299

 

 

 1,176

Industrial

 

 855

 

 

 988

 

 

 977

 

 

 1,030

 

 

 3,850

Stationary power

 

 281

 

 

 301

 

 

 319

 

 

 269

 

 

 1,170

 

Total sales

$

 2,391

 

$

 2,900

 

$

 2,955

 

$

 3,061

 

$

 11,307

 

Unit shipments by engine classification (including unit shipments to Power Generation)

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Midrange

 

 109,000

 

 

 110,000

 

 

 - 

 

 

 - 

 

 

 219,000

Heavy-duty

 

 36,000

 

 

 33,000

 

 

 - 

 

 

 - 

 

 

 69,000

High horsepower

 

 5,500

 

 

 5,800

 

 

 - 

 

 

 - 

 

 

 11,300

 

Total units

 

 150,500

 

 

 148,800

 

 

 - 

 

 

 - 

 

 

 299,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Midrange

 

 109,400

 

 

 131,300

 

 

 130,600

 

 

 138,100

 

 

 509,400

Heavy-duty

 

 20,000

 

 

 29,900

 

 

 31,100

 

 

 35,300

 

 

 116,300

High horsepower

 

 4,900

 

 

 5,700

 

 

 5,600

 

 

 5,400

 

 

 21,600

 

Total units

 

 134,300

 

 

 166,900

 

 

 167,300

 

 

 178,800

 

 

 647,300





 

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

 

Component segment sales by business

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Emission solutions

$

 404

 

$

 349

 

$

 - 

 

$

 - 

 

$

 753

Turbo technologies

 

 298

 

 

 297

 

 

 - 

 

 

 - 

 

 

 595

Filtration

 

 270

 

 

 266

 

 

 - 

 

 

 - 

 

 

 536

Fuel systems

 

 127

 

 

 124

 

 

 - 

 

 

 - 

 

 

 251

 

Total sales

$

 1,099

 

$

 1,036

 

$

 - 

 

$

 - 

 

$

 2,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Emission solutions

$

 273

 

$

 311

 

$

 306

 

$

 372

 

$

 1,262

Turbo technologies

 

 297

 

 

 314

 

 

 298

 

 

 314

 

 

 1,223

Filtration

 

 255

 

 

 287

 

 

 288

 

 

 283

 

 

 1,113

Fuel systems

 

 99

 

 

 120

 

 

 123

 

 

 123

 

 

 465

 

Total sales

$

 924

 

$

 1,032

 

$

 1,015

 

$

 1,092

 

$

 4,063

 

In the first quarter of 2012, our Power Generation segment reorganized its reporting structure to include the following businesses:  power products, power systems, generator technologies and power solutions.  Sales for our Power Generation segment by business (including 2011 and 2010 reorganized balances) were as follows:

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power products

$

 375

 

$

 459

 

$

 - 

 

$

 - 

 

$

 834

Power systems

 

 188

 

 

 217

 

 

 - 

 

 

 - 

 

 

 405

Generator technologies

 

 141

 

 

 160

 

 

 - 

 

 

 - 

 

 

 301

Power solutions

 

 76

 

 

 73

 

 

 - 

 

 

 - 

 

 

 149

 

Total sales

$

 780

 

$

 909

 

$

 - 

 

$

 - 

 

$

 1,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power products

$

 377

 

$

 415

 

$

 433

 

$

 411

 

$

 1,636

Power systems

 

 189

 

 

 210

 

 

 188

 

 

 228

 

 

 815

Generator technologies

 

 154

 

 

 189

 

 

 166

 

 

 164

 

 

 673

Power solutions

 

 75

 

 

 95

 

 

 87

 

 

 117

 

 

 374

 

Total sales

$

 795

 

$

 909

 

$

 874

 

$

 920

 

$

 3,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

YTD

 

 

 

 

 

 

 

 

 

 

 

 

Power products

$

 1,465

 

 

 

 

 

 

 

 

 

 

 

 

Power systems

 

 616

 

 

 

 

 

 

 

 

 

 

 

 

Generator technologies

 

 550

 

 

 

 

 

 

 

 

 

 

 

 

Power solutions

 

 288

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

$

 2,919

 

 

 

 

 

 

 

 

 

 

 

 





 

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

 

Distribution segment sales by product

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts and filtration

$

 288

 

$

 302

 

$

 - 

 

$

 - 

 

$

 590

Power generation

 

 186

 

 

 201

 

 

 - 

 

 

 - 

 

 

 387

Engines

 

 166

 

 

 147

 

 

 - 

 

 

 - 

 

 

 313

Service

 

 135

 

 

 144

 

 

 - 

 

 

 - 

 

 

 279

 

Total sales

$

 775

 

$

 794

 

$

 - 

 

$

 - 

 

$

 1,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts and filtration

$

 235

 

$

 271

 

$

 283

 

$

 296

 

$

 1,085

Power generation

 

 145

 

 

 195

 

 

 191

 

 

 191

 

 

 722

Engines

 

 140

 

 

 186

 

 

 171

 

 

 206

 

 

 703

Service

 

 122

 

 

 133

 

 

 138

 

 

 141

 

 

 534

 

Total sales

$

 642

 

$

 785

 

$

 783

 

$

 834

 

$

 3,044