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)

9 Months Ended

Sep. 29, 2019

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments for the three months ended is shown in the table below:



In millions	Engine		Distribution		Components		Power Systems		Electrified Power			Total Segments		Intersegment Eliminations ⁽¹⁾			Total
Three months ended September 29, 2019
External sales	$	1,822	$	2,001	$	1,253	$	683	$	9		$	5,768	$	—		$	5,768
Intersegment sales	594		3		397		443		—			1,437		(1,437		)	—
Total sales	2,416		2,004		1,650		1,126		9			7,205		(1,437		)	5,768
Research, development and engineering expenses	79		7		73		58		25			242		—			242
Equity, royalty and interest income from investees	34		12		9		13		—			68		—			68
Interest income	5		4		2		3		—			14		—			14
Segment EBITDA	341		186		286		158		(36		)	935		23			958
Depreciation and amortization ⁽²⁾	50		29		67		29		2			177		—			177

Three months ended September 30, 2018
External sales	$	2,082	$	1,927	$	1,297	$	636	$	1		$	5,943	$	—		$	5,943
Intersegment sales	644		4		457		471		1			1,577		(1,577		)	—
Total sales	2,726		1,931		1,754		1,107		2			7,520		(1,577		)	5,943
Research, development and engineering expenses	74		5		71		57		22			229		—			229
Equity, royalty and interest income from investees	55		9		12		14		—			90		—			90
Interest income	3		4		1		1		—			9		—			9
Segment EBITDA	405		155		288		163		(30		)	981		2			983
Depreciation and amortization ⁽²⁾	46		27		44		29		2			148		—			148

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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 months ended September 29, 2019 and September 30, 2018.

Summarized financial information regarding our reportable operating segments for the nine months ended is shown in the table below:



In millions	Engine		Distribution		Components		Power Systems		Electrified Power			Total Segments		Intersegment Eliminations ⁽¹⁾			Total
Nine months ended September 29, 2019
External sales	$	5,879	$	6,009	$	4,055	$	2,030	$	20		$	17,993	$	—		$	17,993
Intersegment sales	1,893		24		1,302		1,376		—			4,595		(4,595		)	—
Total sales	7,772		6,033		5,357		3,406		20			22,588		(4,595		)	17,993
Research, development and engineering expenses	245		21		223		171		70			730		—			730
Equity, royalty and interest income from investees	152		35		30		39		—			256		—			256
Interest income	13		12		6		7		—			38		—			38
Segment EBITDA	1,195		529		908		469		(98		)	3,003		46			3,049
Depreciation and amortization⁽²⁾	151		86		160		88		6			491		—			491

Nine months ended September 30, 2018
External sales	$	5,945	$	5,762	$	4,012	$	1,922	$	4		$	17,645	$	—		$	17,645
Intersegment sales	1,923		16		1,382		1,505		1			4,827		(4,827		)	—
Total sales	7,868		5,778		5,394		3,427		5			22,472		(4,827		)	17,645
Research, development and engineering expenses	229		15		195		174		45			658		—			658
Equity, royalty and interest income from investees	189		33		42		51		—			315		—			315
Interest income	8		9		4		5		—			26		—			26
Segment EBITDA	1,053		423		752		491		(61		)	2,658		(78		)	2,580
Depreciation and amortization⁽²⁾	142		81		137		91		4			455		—			455

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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 nine months ended September 29, 2019 and September 30, 2018.

⁽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 Net Income as "Interest expense." The amortization of debt discount and deferred costs was $2 million and $1 million for the nine months ended September 29, 2019 and September 30, 2018, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses."

Reconciliation of segment information

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



	Three months ended				Nine months ended
In millions	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Total EBITDA	$	958	$	983	$	3,049	$	2,580
Less:
Depreciation and amortization	177		148		491		455
Interest expense	26		30		87		82
Income before income taxes	$	755	$	805	$	2,471	$	2,043