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

Jun. 29, 2014

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments for the three and six month periods is shown in the table below:



In millions	Engine		Components		Power Generation		Distribution			Non-segment Items ⁽¹⁾			Total
Three months ended June 29, 2014
External sales	$	2,178	$	953	$	475	$	1,229		$	—		$	4,835
Intersegment sales	566		327		268		9			(1,170		)	—
Total sales	2,744		1,280		743		1,238			(1,170		)	4,835
Depreciation and amortization⁽²⁾	52		26		13		20			—			111
Research, development and engineering expenses	105		53		18		3			—			179
Equity, royalty and interest income from investees	45		9		9		42			—			105
Interest income	4		1		1		—			—			6
Segment EBIT	311		185		61		126		⁽³⁾	(26		)	657

Three months ended June 30, 2013
External sales	$	2,209	$	786	$	583	$	947		$	—		$	4,525
Intersegment sales	447		331		231		7			(1,016		)	—
Total sales	2,656		1,117		814		954			(1,016		)	4,525
Depreciation and amortization⁽²⁾	51		23		12		15			—			101
Research, development and engineering expenses	102		57		17		1			—			177
Equity, royalty and interest income from investees	52		9		10		37			—			108
Interest income	7		—		2		1			—			10
Segment EBIT	339		136		76		100		⁽³⁾	(30		)	621

Six months ended June 29, 2014
External sales	$	4,268	$	1,875	$	927	$	2,171		$	—		$	9,241
Intersegment sales	1,039		635		455		17			(2,146		)	—
Total sales	5,307		2,510		1,382		2,188			(2,146		)	9,241
Depreciation and amortization⁽²⁾	103		52		25		36			—			216
Research, development and engineering expenses	221		106		37		5			—			369
Equity, royalty and interest income from investees	77		18		17		83			—			195
Interest income	6		2		2		1			—			11
Segment EBIT	580		352		86		202		⁽³⁾	(35		)	1,185

Six months ended June 30, 2013
External sales	$	4,094	$	1,508	$	1,122	$	1,723		$	—		$	8,447
Intersegment sales	865		627		438		9			(1,939		)	—
Total sales	4,959		2,135		1,560		1,732			(1,939		)	8,447
Depreciation and amortization⁽²⁾	103		47		24		25			—			199
Research, development and engineering expenses	207		114		35		3			—			359
Equity, royalty and interest income from investees	75		16		17		82			—			190
Interest income	9		1		4		1			—			15
Segment EBIT	534		255		127		195		⁽³⁾	(53		)	1,058

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⁽¹⁾Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and six months ended June 29, 2014 and June 30, 2013.

⁽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 $5 million for the six months ended June 29, 2014 and June 30, 2013, respectively.

⁽³⁾Distribution segment EBIT included gains as disclosed in the table below. See Note 3, "ACQUISITIONS" for additional information.

Schedule of fair value adjustment gains resulting from the acquisition of controlling interests in North American Distributors included in EBIT

Distribution segment EBIT included gains on the fair value adjustment resulting from the acquisition of controlling interests in North American distributors in the periods presented below:



	Three months ended				Six months ended
In millions	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Southern Plains	$	13	$	—	$	13	$	—
Mid-South	1		—		7		—
Rocky Mountain	—		5		—		5
Northwest	—		—		—		7
Total gains included in EBIT	$	14	$	5	$	20	$	12

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	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Total EBIT	$	657	$	621	$	1,185	$	1,058
Less: Interest expense	15		8		32		14
Income before income taxes	$	642	$	613	$	1,153	$	1,044

- Definition

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

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