Cummins Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

OPERATING SEGMENTS (Tables)

OPERATING SEGMENTS (Tables)

6 Months Ended

Jul. 02, 2017

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments is shown in the table below:



In millions	Engine		Distribution		Components		Power Systems		Intersegment Eliminations ⁽¹⁾			Total
Three months ended July 2, 2017
External sales	$	1,711	$	1,716	$	1,064	$	587	$	—		$	5,078
Intersegment sales	596		6		390		430		(1,422		)	—
Total sales	2,307		1,722		1,454		1,017		(1,422		)	5,078
Depreciation and amortization ⁽²⁾	46		31		38		29		—			144
Research, development and engineering expenses	63		4		57		50		—			174
Equity, royalty and interest income from investees	56		13		15		14		—			98
Interest income	2		1		1		1		—			5
Segment EBIT	277		96		190		61		(4		)	620

Three months ended July 3, 2016
External sales	$	1,504	$	1,538	$	933	$	553	$	—		$	4,528
Intersegment sales	498		6		346		368		(1,218		)	—
Total sales	2,002		1,544		1,279		921		(1,218		)	4,528
Depreciation and amortization ⁽²⁾	41		29		32		29		—			131
Research, development and engineering expenses	53		3		51		48		—			155
Equity, royalty and interest income from investees	46		19		12		11		—			88
Loss contingency⁽³⁾	39		—		—		—		—			39
Interest income	3		1		1		1		—			6
Segment EBIT	206		87		190		90		18			591

Six months ended July 2, 2017
External sales	$	3,168	$	3,353	$	2,044	$	1,102	$	—		$	9,667
Intersegment sales	1,162		14		754		797		(2,727		)	—
Total sales	4,330		3,367		2,798		1,899		(2,727		)	9,667
Depreciation and amortization⁽²⁾	90		61		75		57		—			283
Research, development and engineering expenses	117		8		107		100		—			332
Equity, royalty and interest income from investees	128		24		28		26		—			206
Interest income	3		2		1		1		—			7
Segment EBIT	506		196		369		118		(3		)	1,186

Six months ended July 3, 2016
External sales	$	2,993	$	2,996	$	1,830	$	1,000	$	—		$	8,819
Intersegment sales	985		11		686		729		(2,411		)	—
Total sales	3,978		3,007		2,516		1,729		(2,411		)	8,819
Depreciation and amortization⁽²⁾	80		57		63		58		—			258
Research, development and engineering expenses	110		7		107		97		—			321
Equity, royalty and interest income from investees	82		37		20		21		—			160
Loss contingency ⁽³⁾	39		—		—		—		—			39
Interest income	5		2		2		3		—			12
Segment EBIT	403		174		353		136		9			1,075

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⁽¹⁾Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and six months ended July 2, 2017 and July 3, 2016.

⁽²⁾Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Income as "Interest expense." The amortization of debt discount and deferred costs were $1 million and $1 million for the six months ended July 2, 2017 and July 3, 2016, respectively.

⁽³⁾See Note 9, "COMMITMENTS AND CONTINGENCIES," for additional information.

Reconciliation of segment information

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
In millions	July 2, 2017		July 3, 2016		July 2, 2017		July 3, 2016
Total segment EBIT	$	620	$	591	$	1,186	$	1,075
Less: Interest expense	21		16		39		35
Income before income taxes	$	599	$	575	$	1,147	$	1,040