Cummins Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

RESTRUCTURING AND OTHER CHARGES RESTRUCTURING AND OTHER CHARGES (Tables)

RESTRUCTURING AND OTHER CHARGES RESTRUCTURING AND OTHER CHARGES (Tables)

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Restructuring actions were included in our segment and non-segment operating results as follows:



In millions	Years ended December 31, 2019
Engine	$	18
Distribution	37
Components	20
Power Systems	12
New Power	1
Non-segment	31
Restructuring actions	$	119

Summarized financial information regarding our reportable operating segments at December 31, is shown in the table below:



In millions	Engine		Distribution		Components		Power Systems		New Power			Total Segments		Intersegment Eliminations ⁽¹⁾			Total
2019
External sales	$	7,570	$	8,040	$	5,253	$	2,670	$	38		$	23,571	$	—		$	23,571
Intersegment sales	2,486		31		1,661		1,790		—			5,968		(5,968		)	—
Total sales	10,056		8,071		6,914		4,460		38			29,539		(5,968		)	23,571
Research, development and engineering expenses	337		28		300		230		106			1,001		—			1,001
Equity, royalty and interest income from investees	200		52		40		38		—			330		—			330
Interest income	15		15		8		8		—			46		—			46
Segment EBITDA (excluding restructuring actions)	1,472		693		1,117		524		(148		)	3,658		73			3,731
Restructuring actions⁽²⁾	18		37		20		12		1			88		31			119
Segment EBITDA	1,454		656		1,097		512		(149		)	3,570		42			3,612
Depreciation and amortization ⁽³⁾	202		115		222		118		12			669		—			669
Net assets	1,094		2,536		2,911		2,245		472			9,258		—			9,258
Investments and advances to equity investees	575		296		193		171		2			1,237		—			1,237
Capital expenditures	240		136		191		107		26			700		—			700
2018
External sales	$	8,002	$	7,807	$	5,331	$	2,625	$	6		$	23,771	$	—		$	23,771
Intersegment sales	2,564		21		1,835		2,001		1			6,422		(6,422		)	—
Total sales	10,566		7,828		7,166		4,626		7			30,193		(6,422		)	23,771
Research, development and engineering expenses	311		20		272		230		69			902		—			902
Equity, royalty and interest income from investees	238		46		54		56		—			394		—			394
Interest income	11		13		5		6		—			35		—			35
Segment EBITDA	1,446		563		1,030		614		(90		)	3,563		(87		)	3,476
Depreciation and amortization ⁽³⁾	190		109		185		119		6			609		—			609
Net assets	1,265		2,677		2,878		2,262		138			9,220		—			9,220
Investments and advances to equity investees	561		278		206		177		—			1,222		—			1,222
Capital expenditures	254		133		182		129		11			709		—			709

(Table continued on next page)



In millions	Engine		Distribution		Components		Power Systems		New Power		Total Segments		Intersegment Eliminations ⁽¹⁾			Total
2017
External sales	$	6,661	$	7,029	$	4,363	$	2,375	$	—	$	20,428	$	—		$	20,428
Intersegment sales	2,292		29		1,526		1,683		—		5,530		(5,530		)	—
Total sales	8,953		7,058		5,889		4,058		—		25,958		(5,530		)	20,428
Research, development and engineering expenses	280		19		241		214		—		754		—			754
Equity, royalty and interest income from investees ⁽⁴⁾	219		44		40		54		—		357		—			357
Interest income	6		6		3		3		—		18		—			18
Segment EBITDA	1,143		500		917		411		—		2,971		55			3,026
Depreciation and amortization ⁽³⁾	184		116		163		117		—		580		—			580
Net assets	1,180		2,446		2,811		2,137		—		8,574		—			8,574
Investments and advances to equity investees	531		267		194		164		—		1,156		—			1,156
Capital expenditures	188		101		127		90		—		506		—			506

____________________________________________________


⁽¹⁾	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. The year ended December 31, 2019, includes a $31 million restructuring charge related to corporate functions. There were no significant unallocated corporate expenses for the years ended December 31, 2018 and 2017.


⁽²⁾	See Note 4 "RESTRUCTURING ACTIONS," for additional information.

⁽³⁾

Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Consolidated Statements of Net Income as "Interest expense." The amortization of debt discount and deferred costs were $3 million, $2 million and $3 million for the years ended 2019, 2018 and 2017, respectively. A portion of depreciation expense is included in "Research, development and engineering expense."


⁽⁴⁾	U.S. tax legislation passed in December 2017 decreased our equity earnings at certain equity investees, negatively impacting our "Equity, royalty and interest income from investees" by $23 million, $4 million and $12 million for the Engine, Distribution and Components segments, respectively. See Note 5, "INCOME TAXES," for additional information.

Schedule of Restructuring and Related Costs Accrual Rollforward [Table Text Block]

The table below summarizes the activity and balance of accrued restructuring, which is included in "Other accrued expenses" in our Consolidated Balance Sheets:



In millions	Restructuring Accrual
Workforce reductions	$	119
Cash payments	(4		)
Foreign currency loss	1
Balance at December 31, 2019	$	116