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. 28, 2014

Financial information regarding reportable operating segments

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



In millions	Engine		Components		Power Generation		Distribution			Non-segment Items ⁽¹⁾			Total
Three months ended September 28, 2014
External sales	$	2,181	$	946	$	481	$	1,282		$	—		$	4,890
Intersegment sales	635		341		273		10			(1,259		)	—
Total sales	2,816		1,287		754		1,292			(1,259		)	4,890
Depreciation and amortization⁽²⁾	50		27		13		22			—			112
Research, development and engineering expenses	114		64		18		2			—			198
Equity, royalty and interest income from investees	40		9		13		37			—			99
Interest income	3		1		1		1			—			6
Segment EBIT	330		172		60		131		⁽³⁾	(9		)	684

Three months ended September 29, 2013
External sales	$	2,045	$	784	$	499	$	938		$	—		$	4,266
Intersegment sales	447		288		213		6			(954		)	—
Total sales	2,492		1,072		712		944			(954		)	4,266
Depreciation and amortization⁽²⁾	53		24		13		15			—			105
Research, development and engineering expenses	103		51		18		1			—			173
Equity, royalty and interest income from investees	31		5		13		42			—			91
Interest income	4		1		1		—			—			6
Segment EBIT	272		132		45		86		⁽³⁾	1			536

Nine months ended September 28, 2014
External sales	$	6,449	$	2,821	$	1,408	$	3,453		$	—		$	14,131
Intersegment sales	1,674		976		728		27			(3,405		)	—
Total sales	8,123		3,797		2,136		3,480			(3,405		)	14,131
Depreciation and amortization⁽²⁾	153		79		38		58			—			328
Research, development and engineering expenses	335		170		55		7			—			567
Equity, royalty and interest income from investees	117		27		30		120			—			294
Interest income	9		3		3		2			—			17
Segment EBIT	910		524		146		333		⁽³⁾	(44		)	1,869

Nine months ended September 29, 2013
External sales	$	6,139	$	2,292	$	1,621	$	2,661		$	—		$	12,713
Intersegment sales	1,312		915		651		15			(2,893		)	—
Total sales	7,451		3,207		2,272		2,676			(2,893		)	12,713
Depreciation and amortization⁽²⁾	156		71		37		40			—			304
Research, development and engineering expenses	310		165		53		4			—			532
Equity, royalty and interest income from investees	106		21		30		124			—			281
Interest income	13		2		5		1			—			21
Segment EBIT	806		387		172		281		⁽³⁾	(52		)	1,594

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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 nine months ended September 28, 2014 and September 29, 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 $2 million and $8 million for the nine months ended September 28, 2014 and September 29, 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				Nine months ended
In millions	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
Eastern Canada	$	18	$	—	$	18	$	—
Southern Plains	—		—		13		—
Mid-South	—		—		7		—
Rocky Mountain	—		—		—		5
Northwest	—		—		—		7
Total gains included in EBIT	$	18	$	—	$	38	$	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				Nine months ended
In millions	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
Total EBIT	$	684	$	536	$	1,869	$	1,594
Less: Interest expense	15		8		47		22
Income before income taxes	$	669	$	528	$	1,822	$	1,572

- 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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