Contact:

 

Mark Land

Executive Director - Corporate Communications

(317) 610-2456

mark.d.land@cummins.com

 

April 26, 2011

 

Cummins reports strong sales and profits in first quarter

 

-   Company increases full-year guidance; now expects to earn 14% EBIT on $17 billion in sales

 

COLUMBUS, IN – Cummins Inc. (NYSE: CMI) today reported sharply higher sales and earnings compared to the first quarter of 2010 on continued strength in key international markets, a recovering North American truck market and productivity improvements.

 

First quarter sales of $3.9 billion were up 56 percent from $2.5 billion in the same period in 2010. Earnings before interest and taxes (EBIT) were $532 million or 13.8 percent of sales, double the Company’s earnings from the same period a year ago. EBIT as a percentage of sales in the first quarter was at its highest level in at least 25 years.

 

Net income attributable to Cummins Inc. was $343 million ($1.75 per share) compared to $149 million (75 cents per share) in the first quarter of 2010.

 

 “Our outstanding first quarter results demonstrate that we are well positioned to take advantage of our significant growth opportunities as markets around the world continue to recover,” said Tim Solso, Chairman and Chief Executive Officer. “The work we have done over the past two years to keep the Company strong during the global economic recession is paying off today.”

 

As a result of the Company’s performance in the first quarter and its forecast for the remainder of the year, Cummins today increased both its EBIT and sales guidance for 2011. The Company now expects to earn 14 percent EBIT on $17 billion in sales in 2011.

 

Engine segment sales of $2.4 billion were up 68 percent compared to the same quarter a year ago, which was artificially weak due to a change in emissions standards and the economic downturn. Segment EBIT of $290 million, or 12.1 percent of sales, was a quarterly record.

 

Engine shipments in the global heavy-duty truck market more than tripled year-over-year, while medium-duty truck engine shipments increased 114 percent. In addition, shipments to global industrial markets such as construction (up 60 percent) and mining (up 59 percent) also were strong.

 



 

Sales in the Components segment, propelled by recovery in Europe, growth in China and India, and higher content of emission controls products on engines in North America, were up 47 percent to a record $924 million. Segment EBIT of $105 million, or 11.4 percent, also was a quarterly record for the Components group.

 

Power Generation sales increased 54 percent to $795 million on the strength of improved sales in its commercial products. Total segment sales in Western Europe increased 88 percent; 81 percent in the Middle East and 47 percent in India. Segment EBIT was $89 million, or 11.2 percent of sales.

 

The Distribution segment saw a sales increase of 35 percent to $642 million due to growth in most major markets, especially Europe, North and Central America and Asia Pacific. Segment EBIT of $89 million, or 13.9 percent of sales, was a quarterly record.

 

The Company’s non- U.S. markets continued showing strong growth as sales were up in every major international region compared to the same period last year. Consolidated sales in China were up 66 percent; India 31 percent; Brazil 39 percent; Africa and Middle East 40 percent. Sales outside the United States accounted for 61 percent of the Company’s revenue in the quarter.

 

“Our first quarter results reflect strong growth in demand for our products across most of our markets,” said Cummins President and Chief Operating Officer Tom Linebarger. “We expect the growth to continue and are investing significantly in the additional capacity needed to serve our customers around the world.”

 

The Company’s guidance for 2011excludes any gains from the previously announced sale of two businesses, which are expected to close later in the year.

 

The Company continued to return value to shareholders by repurchasing $190 million worth of Company shares in the first quarter. Cummins also announced a new share repurchase program in February that authorizes the acquisition of up to $1 billion in stock.

 

First quarter details (all comparisons to the same period in 2010)

 

Engine Segment

 



 

Power Generation

 

Components

 

Distribution

 

Click  here  to read the financial statements from the first quarter.

Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release, and 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.

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 employs approximately 40,000 people worldwide and serves customers in approximately 190 countries and territories through a network of more than 600 company-owned and independent distributor locations and approximately 6,000 dealer locations. Cummins earned $1.0 billion on sales of $13.2 billion in 2010. Press releases can be found on the Web at
www.cummins.com. 

Forward-looking disclosure statement
Information provided in this release 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.

 

 

 



 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 27,

 

December 31,

 

March 28,

In millions, except per share amounts

 

2011 

 

2010 

 

2010 

NET SALES

 

$

 3,860 

 

$

 4,139 

 

$

 2,478 

Cost of  sales

 

 

 2,903 

 

 

 3,155 

 

 

 1,877 

GROSS MARGIN

 

 

 957 

 

 

 984 

 

 

 601 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES AND INCOME

 

 

 

 

 

 

 

 

 

   

Selling, general and administrative expenses

 

 

 389 

 

 

 423 

 

 

 335 

 

Research, development and engineering expenses

 

 

 129 

 

 

 123 

 

 

 92 

 

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

 

 

 96 

 

 

 90 

 

 

 76 

 

Other operating (expense) income, net

 

 

 (6)

 

 

 (3)

 

 

 (4)

OPERATING INCOME

 

 

 529 

 

 

 525 

 

 

 246 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 6 

 

 

 7 

 

 

 3 

Interest expense

 

 

 10 

 

 

 11 

 

 

 9 

Other (expense) income, net

 

 

 (3)

 

 

 9 

 

 

 17 

INCOME BEFORE INCOME TAXES

 

 

 522 

 

 

 530 

 

 

 257 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (Note 2)

 

 

 157 

 

 

 139 

 

 

 87 

CONSOLIDATED NET INCOME

 

 

 365 

 

 

 391 

 

 

 170 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

 22 

 

 

 29 

 

 

 21 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

 343 

 

$

 362 

 

$

 149 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE

 

 

 

 

 

 

 

 

 

 

TO CUMMINS INC.

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 1.75 

 

$

 1.85 

 

$

 0.75 

 

Diluted

 

$

 1.75 

 

$

 1.84 

 

$

 0.75 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 195.5 

 

 

 195.8 

 

 

 198.4 

 

Diluted

 

 

 196.1 

 

 

 196.4 

 

 

 198.7 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

 0.2625 

 

$

 0.2625 

 

$

 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 BALANCE SHEETS

(Unaudited) (a)

 

 

 

 

March 27,

 

December 31,

 In millions, except par value

2011 

 

2010 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

    

Cash and cash equivalents

$

 779 

 

$

 1,023 

 

Marketable securities

 

 307 

 

 

 339 

 

Accounts and notes receivable, net

 

 2,570 

 

 

 2,243 

 

Inventories

 

 2,202 

 

 

 1,977 

 

Deferred income taxes

 

 307 

 

 

 314 

 

Prepaid expenses and other current assets

 

 329 

 

 

 393 

 

 

 

Total current assets

 

 6,494 

 

 

 6,289 

Long-term assets

 

 

 

 

 

 

Property, plant and equipment

 

 5,026 

 

 

 4,927 

 

    

Accumulated depreciation

 

 (2,962)

 

 

 (2,886)

 

 

Property, plant and equipment, net

 

 2,064 

 

 

 2,041 

 

Investments and advances related to equity method investees

 

 822 

 

 

 734 

 

Goodwill

 

 368 

 

 

 367 

 

Other intangible assets, net

 

 217 

 

 

 222 

 

Deferred income taxes

 

 187 

 

 

 203 

 

Other assets

 

 574 

 

 

 546 

 

 

Total assets

$

 10,726 

 

$

 10,402 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Loans payable

$

 82 

 

$

 82 

 

Accounts payable (principally trade)

 

 1,626 

 

 

 1,362 

 

Current portion of accrued product warranty

 

 435 

 

 

 421 

 

Accrued compensation, benefits and retirement costs

 

 323 

 

 

 468 

 

Deferred revenue

 

 189 

 

 

 182 

 

Taxes payable (including taxes on income)

 

 224 

 

 

 202 

 

Other accrued expenses

 

 572 

 

 

 543 

 

 

Total current liabilities

 

 3,451 

 

 

 3,260 

Long-term liabilities

 

 

 

 

 

 

Long-term debt

 

 685 

 

 

 709 

 

Pensions

 

 146 

 

 

 195 

 

Postretirement benefits other than pensions

 

 435 

 

 

 439 

 

Other liabilities and deferred revenue

 

 810 

 

 

 803 

 

 

Total liabilities

 

 5,527 

 

 

 5,406 

 

 

    

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.1 and 221.8 shares issued

 

 1,949 

 

 

 1,934 

 

 

Retained earnings

 

 4,737 

 

 

 4,445 

 

 

Treasury stock, at cost, 25.8 and 24.0 shares

 

 (1,153)

 

 

 (964)

 

 

Common stock held by employee benefits trust, at cost, 2.0 and 2.1 shares

 

 (24)

 

 

 (25)

 

 

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

Defined benefit postretirement plans

 

 (620)

 

 

 (646)

 

 

 

Other

 

 (22)

 

 

 (74)

 

 

 

  Total accumulated other comprehensive loss

 

 (642)

 

 

 (720)

 

 

 

Total Cummins Inc. shareholders’ equity

 

 4,867 

 

 

 4,670 

 

Noncontrolling interests

 

 332 

 

 

 326 

 

 

 

Total equity

 

 5,199 

 

 

 4,996 

Total liabilities and equity

$

 10,726 

 

$

 10,402 

 

(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 CASH FLOWS

(Unaudited) (a)

 

 

 

Three months ended

 

 

 

March 27,

 

March 28,

In millions

2011 

 

2010 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

    

Consolidated net income

$

 365 

 

$

 170 

 

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

 

 

 

 

 

 

    

Depreciation and amortization

 

 79 

 

 

 79 

 

 

Gain on fair value adjustment for consolidated investee

 

 - 

 

 

 (12)

 

 

Deferred income taxes

 

 21 

 

 

 13 

 

 

Equity in income of investees, net of dividends

 

 (62)

 

 

 (53)

 

 

Pension contributions in excess of expense

 

 (24)

 

 

 (93)

 

 

Other post-retirement benefits payments in excess of expense

 

 (5)

 

 

 (1)

 

 

Stock-based compensation expense

 

 5 

 

 

 6 

 

 

Excess tax benefits on stock based awards

 

 (2)

 

 

 (6)

 

 

Translation and hedging activities

 

 4 

 

 

 (9)

 

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

 

 

 

 

 

 

 

Accounts and notes receivable

 

 (306)

 

 

 275 

 

 

Inventories

 

 (210)

 

 

 (189)

 

 

Other current assets

 

 (2)

 

 

 3 

 

 

Accounts payable

 

 251 

 

 

 54 

 

 

Accrued expenses

 

 (28)

 

 

 (154)

 

Changes in other liabilities and deferred revenue

 

 24 

 

 

 29 

 

Other, net

 

 (22)

 

 

 14 

Net cash provided by operating activities

 

 88 

 

 

 126 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Capital expenditures

 

 (91)

 

 

 (47)

 

Investments in internal use software

 

 (10)

 

 

 (17)

 

Proceeds from disposals of property, plant and equipment

 

 5 

 

 

 38 

 

Investments in and advances to equity investees

 

 (21)

 

 

 (11)

 

Acquisition of businesses, net of cash acquired

 

 - 

 

 

 (71)

 

Investments in marketable securities—acquisitions

 

 (101)

 

 

 (133)

 

Investments in marketable securities—liquidations

 

 134 

 

 

 108 

 

Cash flows from derivatives not designated as hedges

 

 4 

 

 

 (11)

 

Other, net

 

 2 

 

 

 - 

Net cash used in investing activities

 

 (78)

 

 

 (144)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from borrowings

 

 38 

 

 

 70 

 

Payments on borrowings and capital lease obligations

 

 (45)

 

 

 (20)

 

Net borrowings under short-term credit agreements

 

 1 

 

 

 5 

 

Distributions to noncontrolling interests

 

 (21)

 

 

 (1)

 

Dividend payments on common stock

 

 (51)

 

 

 (35)

 

Repurchases of common stock

 

 (190)

 

 

 (39)

 

Excess tax benefits on stock-based awards

 

 2 

 

 

 6 

 

Other, net

 

 4 

 

 

 7 

Net cash used in financing activities

 

 (262)

 

 

 (7)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 8 

 

 

 (20)

Net increase (decrease) in cash and cash equivalents

 

 (244)

 

 

 (45)

Cash and cash equivalents at beginning of year

 

 1,023 

 

 

 930 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

 779 

 

$

 885 

 

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



 

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

  

Engine

 

Power
Generation

 

Components

 

Distribution

 

Non-segment
Items(1)

Total

 

In millions

 

 

 

 

 

 

  

 

 

Three months ended March 27, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 2,006 

 

$

 557 

 

$

 660 

 

$

 637 

 

$

 - 

 

$

 3,860 

 

Intersegment sales

 

 385 

 

 238 

 

 264 

 

 5 

 

 (892)

 

 

 - 

 

 

   Total sales

 

 

 2,391 

 

 

 795 

 

 

 924 

 

 

 642 

 

 

 (892)

 

 

 3,860 

 

Depreciation and amortization(2)

 

 

 45 

 

 

 10 

 

 

 18 

 

 

 6 

 

 

 - 

 

 

 79 

 

Research, development and engineering expenses

 

 

 80 

 

 

 11 

 

 

 37 

 

 

 1 

 

 

 - 

 

 

 129 

 

Equity, royalty and interest income from investees

 

 

 42 

 

 

 8 

 

 

 8 

 

 

 38 

 

 

 - 

 

 

 96 

 

Interest income

 

 

 3 

 

 

 1 

 

 

 1 

 

 

 1 

 

 

 - 

 

 

 6 

 

Segment EBIT

 

 

 290 

 

 

 89 

 

 

 105 

 

 

 89 

 

 

 (41)

 

 

 532 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 2,099 

 

$

 690 

 

$

 656 

 

$

 694 

 

$

 - 

 

$

 4,139 

 

Intersegment sales

 

 398 

 

 

 213 

 

 

 262 

 

 

 5 

 

 

 (878)

 

 

 - 

 

 

   Total sales

 

 

 2,497 

 

 

 903 

 

 

 918 

 

 

 699 

 

 

 (878)

 

 

 4,139 

 

Depreciation and amortization(2)

 

 

 46 

 

 

 10 

 

 

 18 

 

 

 6 

 

 

 - 

 

 

 80 

 

Research, development and engineering expenses

 

 

 76 

 

 

 13 

 

 

 33 

 

 

 1 

 

 

 - 

 

 

 123 

 

Equity, royalty and interest income from investees

 

 

 37 

 

 

 8 

 

 

 6 

 

 

 39 

 

 

 - 

 

 

 90 

 

Interest income

 

 

 5 

 

 

 1 

 

 

 1 

 

 

 - 

 

 

 - 

 

 

 7 

 

Segment EBIT

 

 

 256 

 

 

 92 

 

 

 83 

 

 

 82 

 

 

 28 

 

 

 541 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

Three months ended March 28, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

External sales

 

$

 1,173 

 

$

 378 

 

$

 453 

 

$

 474 

 

$

 - 

 

$

 2,478 

 

Intersegment sales

 

 250 

 

 139 

 

 177 

 

 2 

 

 (568)

 

 

 - 

 

 

   Total sales

 

 

 1,423 

 

 

 517 

 

 

 630 

 

 

 476 

 

 

 (568)

 

 

 2,478 

 

Depreciation and amortization(2)

 

 

 41 

 

 

 10 

 

 

 20 

 

 

 7 

 

 

 - 

 

 

 78 

 

Research, development and engineering expenses

 

 

 60 

 

 

 7 

 

 

 25 

 

 

 - 

 

 

 - 

 

 

 92 

 

Equity, royalty and interest income from investees

 

 

 35 

 

 

 6 

 

 

 5 

 

 

 30 

 

 

 - 

 

 

 76 

 

Interest income

 

 

 2 

 

 

 1 

 

 

 - 

 

 

 - 

 

 

 - 

 

 

 3 

 

Segment EBIT

 

 

 133 

 

 

 34 

 

 

 57 

 

 

 72 

 

 

 (30)

 

 

 266 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 (1)

Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses.  There were no significant unallocated corporate expenses for the three month periods ended March 27, 2011, December 31, 2010 and March 28, 2010.

 (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.”

 

 

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

 

 

 

Three months ended

 

 

March 27,

 

December 31,

 

March 28,

In millions

2011 

 

2010 

 

2010 

Segment EBIT

$

 532 

 

$

 541 

 

$

 266 

Less:

 

 

 

 

 

 

 

 

 

Interest expense

 

 10 

 

 

 11 

 

 

 9 

Income before income taxes

$

 522 

 

$

 530 

 

$

 257 

 



 

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

Engine segment net sales by market

 

2011

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

$

485

 

$

  ―

 

$

   ―

 

$

   ―

 

$

485

Medium-duty bus and truck

474

 

 

 

 

474

Light-duty auto and RV

296

 

 

 

 

296

Industrial

855

 

 

 

 

855

Stationary power

281

 

 

 

 

281

Total sales

$

2,391

 

$

 

$

 

$

 

$

2,391

 

 

2010

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

$

252

 

$

340

 

$

395

 

$

516

 

$

1,503

Medium-duty bus and truck

217

 

352

 

430

 

436

 

1,435

Light-duty auto and RV

207

 

296

 

239

 

280

 

1,022

Industrial

577

 

656

 

700

 

956

 

2,889

Stationary power

170

 

255

 

305

 

309

 

1,039

Total sales

$

1,423

 

$

1,899

 

$

2,069

 

$

2,497

 

$

7,888

 

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

 

2011

 

 

 

 

 

 

 

 

 

Units

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Mid-range

109,400

 

   ―

 

   ―

 

     ―

 

109,400

Heavy-duty

20,000

 

 

 

 

20,000

High horsepower

4,900

 

 

 

 

4,900

Total units

134,300

 

 

 

 

134,300

 

 

2010

 

 

 

 

 

 

 

 

 

Units

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Mid-range

69,100

 

90,500

 

93,500

 

115,800

 

368,900

Heavy-duty

8,700

 

14,500

 

15,200

 

22,800

 

61,200

High horsepower

3,400

 

4,800

 

4,900

 

5,400

 

18,500

Total units

81,200

 

109,800

 

113,600

 

144,000

 

448,600

 

Power generation segment sales by business

 

2011

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Commercial products

$

505

 

$

   ―

 

$

   ―

 

$

   ―

 

$

505

Generator technologies

153

 

 

 

 

 

 

 

153

Commercial projects

55

 

 

 

 

55

Consumer

50

 

 

 

 

50

Power electronics

32

 

 

 

 

32

Total sales

$

795

 

$

 

$

 

$

 

$

795

 

 

2010

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Commercial products

$

307

 

$

436

 

$

519

 

$

569

 

$

1,831

Generator technologies

107

 

135

 

140

 

167

 

549

Commercial projects

33

 

57

 

49

 

83

 

222

Consumer

43

 

49

 

49

 

45

 

186

Power electronics

27

 

31

 

34

 

39

 

131

Total sales

$

517

 

$

708

 

$

791

 

$

903

 

$

2,919

 



CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

Component segment sales by business

 

2011

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Turbo technologies

$

297

 

$

  ―

 

$

  ―

 

$

  ―

 

$

297

Emission solutions

273

 

 

 

 

 

 

 

273

Filtration

255

 

 

 

 

255

Fuel systems

99

 

 

 

 

99

Total sales

$

924

 

$

 

$

 

$

 

$

924

 

 

2010

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

 

 

 

 

 

 

 

 

 

 

Turbo technologies

$

200

 

$

226

 

$

239

 

$

283

 

$

948

Emission solutions

137

 

170

 

192

 

251

 

750

Filtration

228

 

250

 

248

 

285

 

1,011

Fuel systems

65

 

83

 

90

 

99

 

337

Total sales

$

630

 

$

729

 

$

769

 

$

918

 

$

3,046

 

Distribution segment sales by product

 

2011

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts and filtration

$

235

 

$

  ―

 

$

  ―

 

$

  ―

 

$

235

Power generation

145

 

 

 

 

 

 

 

145

Engines

140

 

 

 

 

140

Service

122

 

 

 

 

122

Total sales

$

642

 

$

 

$

 

$

 

$

642

 

 

2010

 

 

 

 

 

 

 

 

 

In millions

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts and filtration

$

193

 

$

221

 

$

220

 

$

248

 

$

882

Power generation

99

 

135

 

125

 

157

 

516

Engines

83

 

109

 

112

 

162

 

466

Service

101

 

111

 

116

 

132

 

460

Total sales

$

476

 

$

576

 

$

573

 

$

699

 

$

2,324

 

 

 



 

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

 

Earnings before interest, taxes and noncontrolling interests

 

We define EBIT as earnings or loss 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

 

 

 

March 27,

 

December 31,

 

March 28,

 

In millions

2011 

 

2010 

 

2010 

 

Earnings before interest and income taxes

$

 532 

 

$

 541 

 

$

 266 

 

    

 

 

 

 

 

 

 

 

 

 

EBIT as a percentage of net sales

 

13.8%

 

 

13.1%

 

 

10.7%

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 10 

 

 

11 

 

 

 9 

 

 

Income tax expense

 

 157 

 

 

 139 

 

 

 87 

 

Consolidated net income

 

 365 

 

 

 391 

 

 

 170 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 22 

 

 

29 

 

 

 21 

 

Net income attributable to Cummins Inc.

$

 343 

 

$

 362 

 

$

 149 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Cummins Inc. as a

 

 

 

 

 

 

 

 

 

 

percentage of net sales

 

8.9%

 

 

8.7%

 

 

6.0%

 

 

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



 

CUMMINS INC. AND SUBSIDIARIES

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

 

    

 

 

March 27,

 

December 31,

 

March 28,

 

In millions

 

2011 

 

2010 

 

2010 

 

Distribution Entities

 

 

 

 

 

 

 

 

 

 

North American distributors

 

$

 30 

 

$

 29 

 

$

 23 

 

Komatsu Cummins Chile, Ltda

 

 

 4 

 

 

 5 

 

 

 3 

 

All other distributors

 

 

 1 

 

 

 1 

 

 

 1 

 

Manufacturing Entities

 

 

 

 

 

 

 

 

 

 

Dongfeng Cummins Engine Company, Ltd.

 

 

 23 

 

 

 23 

 

 

 18 

 

Chongqing Cummins Engine Company, Ltd.

 

 

 12 

 

 

 11 

 

 

 10 

 

Tata Cummins, Ltd.

 

 

 4 

 

 

 3 

 

 

 4 

 

Shanghai Fleetguard Filter Co., Ltd.

 

 

 4 

 

 

 3 

 

 

 2 

 

Komatsu manufacturing alliances

 

 

 2 

 

 

 4 

 

 

 2 

 

Cummins Westport, Inc.

 

 

 1 

 

 

 3 

 

 

 3 

 

Valvoline Cummins, Ltd.

 

 

 2 

 

 

 1 

 

 

 2 

 

Cummins MerCruiser Diesel Marine, LLC

 

 

 - 

 

 

 (2)

 

 

 - 

 

Beijing Foton Cummins Engine Co., Ltd.

 

 

 (2)

 

 

 (4)

 

 

 (2)

 

All other manufacturers

 

 

 6 

 

 

 

 

 3 

 

 

Cummins share of net income

 

 

 87 

 

 

 82 

 

 

 69 

 

Royalty and interest income

 

 

 9 

 

 

 

 

 7 

 

 

Equity, royalty and interest income from investees

 

$

 96 

 

$

 90 

 

$

 76 

 

 

NOTE 2.  INCOME TAXES

 

Our effective tax rate for the year is expected to approximate 30 percent, absent any discrete period activity.  Our tax rate is generally less than the 35 percent U.S. statutory income tax rate primarily due to lower tax rates on foreign income and research credits.  The tax rate for the three month period ended March 27, 2011, was 30 percent.

 

Our effective tax rate for the comparable prior year period was 34 percent and included a discrete tax charge of $7 million (three percent) related to the enactment of the “Patient Protection and Affordable Care Act”.  This rate was less than the 35 percent U.S. statutory income tax rate primarily due to lower tax rates on foreign income.