Cummins Reports Fourth Consecutive Year of Record Sales and Profits
- Company Forecasts Accelerating EBIT Growth in 2008 -
COLUMBUS, Ind.--(BUSINESS WIRE)--
Cummins Inc. (NYSE: CMI) today released results for 2007, completing a year of record sales and earnings - the fourth straight year of record financial performance for the Company. Cummins' sales rose 15 percent to $13.05 billion, from $11.36 billion in 2006.
Net income rose to $739 million, or $3.70 cents a share, a 3 percent increase compared to $715 million, or $3.55 a share, in 2006. Earnings Before Interest and Taxes (EBIT) of $1.23 billion, or 9.4 percent of sales, represent a 4 percent increase from 2006 when the Company earned $1.18 billion, or 10.4 percent of sales.
The record results came despite the expected significant drop in the North American heavy-duty truck market as a result of emissions changes that took effect Jan. 1, 2007. Industry-wide sales in that market declined nearly 50 percent in 2007, but Cummins' increased share in that market as well as strong growth across most of the rest of the Company's businesses and regions more than offset the decrease.
"2007 was an outstanding year for Cummins," said Chairman and Chief Executive Officer Tim Solso. "This record-setting performance in the face of significant challenges validates our message that Cummins truly has become a more diversified, global power leader. Most importantly, our efforts continue to benefit our shareholders, who have enjoyed an average annual return of over 55 percent on their investment over the past five years."
Cummins' fourth quarter sales of $3.5 billion also were a quarterly best for the Company, and were 16 percent higher than the same period in 2006. Net earnings for the quarter increased 5 percent to $198 million ($1.00 per share), from $189 million (94 cents a share) during the same period in 2006. EBIT increased 7 percent to $324 million (9.2 percent of sales), compared to $303 million, or 10 percent of sales.
The Company's strong performance in the fourth quarter was led by gains in the Power Generation and Distribution segments, although all four of the Company's operating segments - Engine, Power Generation, Distribution and Components - reported record sales for the fourth quarter and for all of 2007.
Global Power Generation sales increased 28 percent in the fourth quarter to $840 million, while Segment EBIT of $86 million was 39 percent higher than the same period in 2006. Strong gains around most of the world in commercial generator sales and significant growth in alternator sales in Europe and China were key drivers for the segment in the fourth quarter.
The Company's Distribution segment reported sales of $468 million in the fourth quarter, a 21 percent improvement from the same period in 2006. Record Segment EBIT of $56 million was 44 percent higher than during the fourth quarter of 2006.
Sales and Segment EBIT also improved in the Components segment, despite some operational issues associated with rapid growth that affected profitability in two of the segment's businesses - Emission Solutions and Turbo Technologies. The Company is aggressively managing these issues, and expects improved profit performance from both businesses in 2008.
Still, Components sales in the fourth quarter rose 30 percent from the same period in 2006 to $777 million, while Segment EBIT more than doubled to $47 million in the quarter.
Although revenues were higher in the Engine segment, profits were lower for both the fourth quarter and the full year due to costs associated with the release of new products in North America to meet the 2007 EPA emissions regulations.
The engine business also invested heavily around the globe for capacity expansion and new products. Notable investments include the light duty diesel engine program in Columbus, Indiana, and the two light commercial vehicle engine platforms for the Chinese truck market. These two new platforms for this rapidly growing 1.1 million unit market in China will be manufactured as part of our joint venture partnership with Foton.
At the same time, Cummins also gained significant share in key engine markets during 2007 - especially in the North American heavy-duty truck engine market, where the Company's market share exceeded 40 percent for the last nine months of the year. The Company's 2007 product, which is based on Cummins' proven cooled Exhaust Gas Recirculation technology, has performed as well as expected and has been well-received by customers.
In the fourth quarter, the Company received significant recognition from two leading industry organizations: J.D. Power and Associates awarded Cummins one of its prestigious customer satisfaction awards for the performance and cost of ownership of the Company's new heavy-duty truck engine. Diesel Progress magazine named Cummins its "Newsmaker of the Year" for 2007, primarily for work around meeting the 2007 EPA emissions standards.
2008 outlook
The Company expects to extend its record financial performance to a fifth straight year in 2008. Sales are forecast to increase 12 percent from 2007 levels and the Company expects to generate EBIT of 10 percent of sales in 2008.
The Company's financial performance over the last four years has resulted in a strong balance sheet, which has given Cummins the flexibility to invest in the people, products, facilities and technologies necessary to take advantage of growth opportunities around the world. Cummins expects to spend between $550 million and $600 million on capital projects in 2008.
The Company expects the North American truck engine markets to rebound somewhat from 2007, despite the uncertainty that exists in the U.S. economy. Additionally, Cummins expects to maintain its market share gains from 2007 in key segments such as heavy-duty and medium-duty truck and bus.
The Distribution segment continues to grow to provide support for the increasing number of Cummins' products around the globe. The Company's Power Generation business is forecast to remain extremely strong in 2008, with demand being driven by global infrastructure needs, while the Components segment is forecasting improved profit performance - especially in its two fastest-growing businesses, Turbo Technologies and Emission Solutions.
"We are extremely pleased with our 2007 performance and are excited about the prospects for 2008," Solso said. "All the pieces are in place for Cummins to take advantage of the many profitable growth opportunities in front of us - now and in the years to come."
Fourth quarter 2007 details
Engine segment
Sales of $2.16 billion were a quarterly record and 10 percent higher than $1.95 billion during the same period in 2006. Segment EBIT decreased 34 percent to $120 million, or 5.6 percent of sales, from $181 million, or 9.3 percent of sales, a year ago.
North American heavy-duty truck engine shipments fell 38 percent, while light-duty automotive shipments decreased 47 percent due to softness in the heavy-duty pickup truck market during the quarter. However, global medium-duty truck engine shipments increased 21 percent, led by strong growth in Latin America, and construction market shipments rose 17 percent compared to the same period in 2006.
Power Generation segment
Segment sales of $840 million rose 28 percent from $658 million. Segment EBIT increased 39 percent to $86 million, or 10.2 percent of sales, from $62 million or 9.4 percent of sales. The segment saw strong sales gains in virtually every line of business, led by a 31 percent increase in commercial sales and a 34 percent rise in alternator sales.
Distribution segment
Segment sales of $468 million rose 21 percent from $386 million in the same period in 2006. Segment EBIT increased 44 percent to $56 million, or 12.0 percent of sales, from $39 million, or 10.1 percent of sales in 2006. Sales of engines and power generation products were sharply higher - especially in Europe, the Middle East and Africa - and the segment reported record earnings from its joint ventures.
Components segment
Sales in the segment - which consists of the Company's filtration, turbocharger, exhaust aftertreatment and fuel systems businesses - rose 30 percent to $777 million, from $599 million for the same period in 2006. Segment EBIT rose 104 percent to $47 million, or 6.0 percent of sales, from $23 million, or 3.8 percent of sales, in the fourth quarter of 2006.
The segment's performance was led by the Filtration business, which reported improved sales and stronger return on sales. The Company's turbocharger and Emission Solutions businesses continued to experience significant sales growth for their products, but their profitability was adversely affected by costs and operational issues related to meeting that demand.
Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release. Each is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBIT is a measure used internally to assess the performance of the operating units.
Webcast information Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.
Forward-looking statements disclosure
Information provided in this release and on the webcast that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.
About Cummins
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $739 million on sales of $13.0 billion in 2007. Press releases can be found on the Web at www.cummins.com.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (a)
Three months ended For the years ended
--------------------------- -------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2007 2006 2007 2007 2006
-------- -------- --------- ---------- --------
Millions
(except per share amounts)
Net sales $3,516 $3,033 $3,372 $13,048 $11,362
Cost of sales 2,834 2,397 2,720 10,492 8,897
-------- -------- --------- ---------- --------
Gross margin 682 636 652 2,556 2,465
Operating expenses and
income
Selling and
administrative
expenses 359 300 340 1,296 1,153
Research and
engineering
expenses 93 78 82 329 321
Investee equity,
royalty and other
income 59 35 58 205 140
Other operating
income, net 13 3 4 22 --
-------- -------- --------- ---------- --------
Operating earnings 302 296 292 1,158 1,131
Interest income 9 14 9 36 47
Interest expense 14 20 14 58 96
Other income
(expenses), net 13 (7) 5 33 1
-------- -------- --------- ---------- --------
Earnings before income
taxes and minority
interests 310 283 292 1,169 1,083
Provision for income
taxes 97 80 97 381 324
Minority interests in
earnings of
consolidated
subsidiaries 15 14 11 49 44
-------- -------- --------- ---------- --------
Net earnings $ 198 $ 189 $ 184 $ 739 $ 715
======== ======== ========= ========== ========
Earnings per common
share (b)
Basic $ 1.01 $ 0.95 $ 0.93 $ 3.72 $ 3.76
Diluted $ 1.00 $ 0.94 $ 0.92 $ 3.70 $ 3.55
Cash dividends
declared per share $0.125 $ 0.09 $0.125 $ 0.43 $ 0.33
(a) Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
(b) All per share amounts reflect the two-for-one stock splits
distributed April 9, 2007 and January 2, 2008, respectively.
Certain reclassifications have been made to 2006 and September 30,
2007 amounts to conform to the 2007 presentation.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)
December 31, December 31,
2007 2006
------------ ------------
Millions
(except par value)
ASSETS
Current assets
Cash and cash equivalents $ 577 $ 840
Marketable securities 120 95
Receivables, net 1,998 1,767
Inventories 1,692 1,393
Other current assets 428 393
------------ ------------
Total current assets 4,815 4,488
Long-term assets
Property, plant and equipment, net 1,645 1,574
Investments in and advances to equity
investees 514 345
Goodwill 365 356
Other intangible assets, net 173 128
Other assets 683 574
------------ ------------
Total assets $8,195 $7,465
============ ============
LIABILITIES
Current liabilities
Short-term borrowings $ 119 $ 164
Accounts payable 1,263 1,104
Other accrued expenses 1,329 1,131
------------ ------------
Total current liabilities 2,711 2,399
Long-term liabilities
Long-term debt 555 647
Other liabilities 1,227 1,363
------------ ------------
Total liabilities 4,493 4,409
------------ ------------
MINORITY INTERESTS 293 254
------------ ------------
SHAREHOLDERS' EQUITY (b)
Common stock, $2.50 par value, 300 shares
authorized, 220.4 and 220.0 shares
issued 551 137
Additional paid-in capital 1,168 1,500
Retained earnings 2,660 2,009
Treasury stock, at cost, 18.2 and 11.6
shares (593) (212)
Common stock held in trust for employee
benefit plans, 6.5 and 7.7 shares (79) (92)
Unearned compensation (11) (14)
Accumulated other comprehensive loss (287) (526)
------------ ------------
Total shareholders' equity 3,409 2,802
------------ ------------
Total liabilities, minority interests and
shareholders' equity $8,195 $7,465
============ ============
(a) Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
(b) All share amounts reflect the two-for-one stock splits distributed
April 9, 2007 and January 2, 2008, respectively.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)
For the years ended
-------------------------
December 31, December 31,
2007 2006
------------ ------------
Millions
Net cash provided by operating activities $810 $840
------------ ------------
Cash flows from investing activities
Capital expenditures (353) (249)
Investments in internal use software (67) (52)
Proceeds from the disposal of property,
plant and equipment 44 49
Investments in and advances to equity
investees (66) (18)
Acquisition of businesses, net of cash
acquired (20) (2)
Proceeds from the sale of businesses 35 24
Investments in marketable securities--
acquisitions (405) (303)
Investments in marketable securities--
liquidations 395 273
Purchases of other investments (57) --
Other, net (21) 1
------------ ------------
Net cash used in investing activities (515) (277)
------------ ------------
Cash flows from financing activities
Proceeds from borrowings 15 94
Payments on borrowings and capital lease
obligations (144) (400)
Dividend payments on common stock (89) (66)
Proceeds from issuing common stock 4 9
Repurchases of common stock (335) (121)
Other, net (27) (24)
------------ ------------
Net cash used in financing activities (576) (508)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 18 6
------------ ------------
Net (decrease) increase in cash and cash
equivalents (263) 61
Cash and cash equivalents at beginning of
year 840 779
------------ ------------
Cash and cash equivalents at end of period $577 $840
============ ============
(a) Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Non-
Power segment
Engine Generation Components Distribution items(1) Total
------ ---------- ---------- ------------- --------- -------
Millions
Three
months
ended
December
31, 2007
External
sales $1,862 $ 645 $ 542 $ 467 $ -- $ 3,516
Inter-
segment
sales 293 195 235 1 (724) --
------ ------ ------ ------ ------- -------
Net
sales 2,155 840 777 468 (724) 3,516
Investee
equity,
royalty
and other
income 26 5 3 25 -- 59
Interest
income 6 2 1 -- -- 9
Segment
EBIT 120 86 47 56 15 324
Three
months
ended
December
31, 2006
External
sales $ 1742 $ 515 $ 394 $ 382 $ -- $ 3,033
Inter-
segment
sales 210 143 205 4 (562) --
------ ------ ------ ------ ------- -------
Net
sales 1,952 658 599 386 (562) 3,033
Investee
equity,
royalty
and other
income 16 2 1 16 -- 35
Interest
income 11 2 1 -- -- 14
Segment
EBIT 181 62 23 39 (2) 303
Three
months
ended
September
30, 2007
External
sales $1,890 $ 594 $ 494 $ 394 $ -- $ 3,372
Inter-
segment
sales 263 182 247 1 (693) --
------ ------ ------ ------ ------- -------
Net
sales 2,153 776 741 395 (693) 3,372
Investee
equity,
royalty
and other
income 24 5 3 26 -- 58
Interest
income 6 1 1 1 -- 9
Segment
EBIT 155 83 34 46 (12) 306
For the
year
ended
December
31, 2007
External
sales $7,129 $2,375 $2,007 $1,537 $ -- $13,048
Inter-
segment
sales 1,053 685 925 3 (2,666) --
------ ------ ------ ------ ------- -------
Net
sales 8,182 3,060 2,932 1,540 (2,666) 13,048
Investee
equity,
royalty
and other
income 92 17 4 92 -- 205
Interest
income 26 6 3 1 -- 36
Segment
EBIT 589 334 153 187 (36) 1,227
For the
year
ended
December
31, 2006
External
sales $6,640 $1,880 $1,473 $1,369 $ -- $11,362
Inter-
segment
sales 871 536 808 16 (2,231) --
------ ------ ------ ------ ------- -------
Net
sales 7,511 2,416 2,281 1,385 (2,231) 11,362
Investee
equity,
royalty
and other
income 67 12 7 54 -- 140
Interest
income 36 7 2 2 -- 47
Segment
EBIT 733 220 107 144 (25) 1,179
(1) Includes intercompany eliminations and unallocated corporate
expenses.
A reconciliation of our segment information to the corresponding amounts in the Consolidated Financial Statements is shown in the table below:
Three months ended For the years ended
--------------------------- -------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2007 2006 2007 2007 2006
-------- -------- --------- ---------- --------
Millions
Segment EBIT $324 $303 $306 $1,227 $1,179
Less:
Interest expense 14 20 14 58 96
-------- -------- --------- ---------- --------
Earnings before income
taxes and minority
interests $310 $283 $292 $1,169 $1,083
======== ======== ========= ========== ========
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)
Earnings before interest, taxes and minority interests (EBIT)
We define EBIT as earnings before interest expense, provision for
income taxes and minority interests in earnings of consolidated
subsidiaries. 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 our consolidated net earnings, for
each of the applicable periods:
Three Months Ended For the years ended
--------------------------- -------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2007 2006 2007 2007 2006
-------- -------- --------- ---------- --------
Millions
Earnings before
interest, income
taxes and minority
interests $324 $303 $306 $1,227 $1,179
EBIT as a percentage
of net sales 9.2% 10.0% 9.1% 9.4% 10.4%
Less:
Interest expense 14 20 14 58 96
Provision for
income taxes 97 80 97 381 324
Minority interests
in earnings of
consolidated
subsidiaries 15 14 11 49 44
-------- -------- --------- ---------- --------
Net earnings $198 $189 $184 $ 739 $ 715
======== ======== ========= ========== ========
Net earnings as a
percentage of net
sales 5.6% 6.2% 5.5% 5.7% 6.3%
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 (GAAP) and may not be consistent with measure used by other
companies. It should be considered supplemental data.
Cash from operations excluding pension contributions
For the years ended
-------------------------
December 31, December 31,
2007 2006
------------ ------------
Cash provided by operations $ 810 $ 840
Add back: pension contributions 250 266
------------ ------------
Cash provided by operations excluding
pension contributions $1,060 $1,106
============ ============
We believe cash provided by operations excluding pension contributions
is a useful measure of our operating performance for the periods
presented as it illustrates our operating performance without regard
to funding decisions. This measure is not in accordance with, or an
alternative for, GAAP and may not be consistent with measures used by
other companies. It should be considered supplemental data.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)
NOTE 1. EARNINGS PER SHARE
The following is a reconciliation of net earnings and weighted-average
common shares outstanding for purposes of calculating basic and
diluted net earnings per share:
Three months ended For the years ended
--------------------------- -------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2007 2006 2007 2007 2006
-------- -------- --------- ---------- --------
Millions
(except per share amounts)
Net earnings for basic
EPS $198.0 $189.4 $184.0 $739.0 $715.4
Interest on junior
convertible
subordinated
debentures, net of
tax -- -- -- -- 5.9
-------- -------- --------- ---------- --------
Net earnings for
diluted EPS $198.0 $189.4 $184.0 $739.0 721.3
======== ======== ========= ========== ========
Weighted-average
common shares
outstanding:
Basic 195.7 200.4 198.2 198.4 190.5
Dilutive effect of
stock compensation
awards 1.8 1.7 1.6 1.5 1.6
Dilutive effect of
junior convertible
subordinated
debentures -- -- -- -- 11.0
-------- -------- --------- ---------- --------
Diluted 197.5 202.1 199.8 199.9 203.1
======== ======== ========= ========== ========
Earnings per common
share:
Basic $ 1.01 $ 0.95 $ 0.93 $ 3.72 $ 3.76
Diluted $ 1.00 $ 0.94 $ 0.92 $ 3.70 $ 3.55
The Board of Directors authorized a two-for-one split of Cummins stock on March 8, 2007, which was distributed on April 9, 2007, to shareholders of record as of March 26, 2007. The Board of Directors authorized an additional two-for-one split of Cummins stock on December 11, 2007, which was distributed on January 2, 2008, to shareholders of record as of December 21, 2007. All share and per share amounts have been adjusted to reflect both two-for-one stock splits.
See attached schedule for historical presentation of earnings per share adjusted for latest stock split.
NOTE 2. INVESTEE EQUITY, ROYALTY AND OTHER INCOME
Investee equity, royalty and other income included in our Condensed
Consolidated Statements of Earnings was as follows:
Three months ended For the years ended
--------------------------- -------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2007 2006 2007 2007 2006
-------- -------- --------- ---------- --------
Millions
North American
distributors $24 $14 $22 $ 83 $ 48
Dongfeng Cummins
Engine Company, Ltd. 12 3 12 41 19
Chongqing Cummins
Engine Company, Ltd. 7 2 5 22 15
Cummins MerCruiser
Diesel Marine LLC 2 2 2 11 6
Tata Cummins Limited 4 3 3 13 11
Fleetguard Shanghai
Filter Co. Ltd. 2 1 1 6 5
All others 4 5 9 16 15
-------- -------- --------- ---------- --------
Cummins share of net
earnings 55 30 54 192 119
Royalty and other
income 4 5 4 13 21
-------- -------- --------- ---------- --------
Investee equity,
royalty and other
income $59 $35 $58 $205 $140
======== ======== ========= ========== ========
NOTE 3. PROVISION FOR INCOME TAXES
Our tax rates are generally less than the 35 percent U.S. income tax rate primarily because of lower taxes on foreign earnings and research tax credits.
Our effective tax rate for the three and twelve months ended December 31, 2007, was 31.3 percent and 32.6 percent, respectively. Our effective tax rate for the three and twelve months ended December 31, 2006, was 28.3 percent and 29.9 percent, respectively. Our provision for the three months ended December 31, 2006, was favorably impacted by $10 million, or $0.05 per share, due to the retroactive reinstatement of the U.S. research tax credit. In addition to the research credit, our provision for the twelve months ended December 31, 2006, was impacted by a $12 million, or $0.06 per share, increase in the first quarter for the effect of new Indiana tax legislation, and a $28 million, or $0.14 per share, reduction in the second quarter due to the favorable resolution of tax uncertainties related to prior years.
NOTE 4. DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense included in operating activities of the Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2007 and 2006 was $290 million and $296 million, respectively.
NOTE 5. SHIPPING AND HANDLING COSTS
Our shipping and handling costs are expensed as incurred. Those shipping and handling costs associated with operations of our inventory distribution centers and warehouse facilities were previously classified as "Selling and administrative expenses" in our Condensed Consolidated Statements of Earnings. In accordance with Emerging Issues Task Force (EITF) Issue No. 00-10 "Accounting for Shipping and Handling Fees and Costs," we previously disclosed the amount of shipping and handling costs included as "Selling and administrative expenses" in the notes to our consolidated financial statements. Beginning January 1, 2007, we revised our accounting policy and all shipping and handling costs are now classified as "Cost of sales." This presentation is more consistent with current industry practice. For purposes of comparability, the $34 million and $130 million previously classified as "Selling and administrative expenses" in the three and twelve months ended December 31, 2006, has been adjusted retrospectively to apply the new method. This change had no impact on operating earnings, EBIT, net earnings, or earnings per share.
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
EARNINGS PER SHARE
Following is the historical basic and diluted weighted-average common
shares outstanding and the historical basic and diluted earnings per
share as adjusted to give effect to the January 2, 2008 two-for-one
stock split:
Years ended December 31,
-----------------------------
2007 2006 2005 2004 2003
----- ----- ----- ----- -----
Shares in millions
Weighted-average common shares
outstanding:
Basic 198.4 190.5 177.0 168.9 157.2
Diluted 199.9 203.1 204.4 196.8 158.0
Earnings per share before cumulative
effect of change in accounting
principles:
Basic $3.72 $3.76 $3.11 $2.07 $0.34
Diluted 3.70 3.55 2.75 1.85 0.34
Earnings per share:
Basic $3.72 $3.76 $3.11 $2.07 $0.32
Diluted 3.70 3.55 2.75 1.85 0.32
2007
-------------------------------------
Q1 Q2 Q2 YTD Q3 Q3 YTD Q4
----- ----- ------ ----- ------ -----
Shares in millions
Weighted-average common shares
outstanding:
Basic 200.0 199.9 200.0 198.2 199.4 195.7
Diluted 201.1 201.3 201.2 199.8 200.7 197.5
Earnings per share:
Basic $0.72 $1.07 $1.79 $0.93 $2.71 $1.01
Diluted 0.71 1.06 1.77 0.92 2.70 1.00
2006
-------------------------------------
Q1 Q2 Q2 YTD Q3 Q3 YTD Q4
----- ----- ------ ----- ------ -----
Shares in millions
Weighted-average common shares
outstanding:
Basic 177.3 183.1 180.2 201.4 187.2 200.4
Diluted 204.0 203.3 203.7 203.0 203.4 202.1
Earnings per share:
Basic $0.76 $1.20 $1.97 $0.85 $2.81 $0.95
Diluted 0.68 1.10 1.77 0.84 2.62 0.94
----------------------------------------------------------------------
Sales
$Millions Q1 Q2 Q3 Q4 YTD
---------------------------------------
2007
Engine Business
Heavy-Duty Truck 424 473 520 531 1,948
Medium Duty
Truck+Bus 206 320 359 398 1,283
Light Duty
Auto+RV 288 418 388 247 1,341
Industrial 617 665 661 733 2,676
Stationary Power 230 233 225 246 934
---------------------------------------
TOTAL ENGINE
BUSINESS 1,765 2,109 2,153 2,155 8,182
Power Generation 675 769 776 840 3,060
Components 657 757 741 777 2,932
Distributors 309 368 395 468 1,540
Eliminations (589) (660) (693) (724) (2,666)
---------------------------------------
TOTAL 2,817 3,343 3,372 3,516 13,048
=======================================
2006
Engine Business
Heavy-Duty Truck 608 618 632 640 2,498
Medium Duty
Truck+Bus 215 247 253 256 971
Light Duty
Auto+RV 331 341 267 322 1,261
Industrial 481 516 507 559 2,063
Stationary Power 186 174 183 175 718
---------------------------------------
TOTAL ENGINE
BUSINESS 1,821 1,896 1,842 1,952 7,511
Power Generation 536 598 624 658 2,416
Components 555 563 564 599 2,281
Distributors 317 336 346 386 1,385
Eliminations (551) (551) (567) (562) (2,231)
---------------------------------------
TOTAL 2,678 2,842 2,809 3,033 11,362
=======================================
----------------------------------------------------------------------
----------------------------------------------------------------------
Engine Shipments
Units Q1 Q2 Q3 Q4 YTD
---------------------------------------
2007
Midrange 107,200 133,500 130,500 115,600 486,800
Heavy-duty 19,000 23,800 24,800 23,800 91,400
High Horsepower 4,300 4,700 4,600 4,900 18,500
---------------------------------------
TOTAL 130,500 162,000 159,900 144,300 596,700
=======================================
2006
Midrange 114,500 121,800 104,800 118,800 459,900
Heavy-duty 30,100 31,400 31,000 30,900 123,400
High Horsepower 3,700 4,000 4,100 4,500 16,300
---------------------------------------
TOTAL 148,300 157,200 139,900 154,200 599,600
=======================================
Source: Cummins Inc.
Released February 1, 2008