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. 28, 2015

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		Distribution			Components		Power Generation		Non-segment Items ⁽¹⁾			Total
Three months ended June 28, 2015
External sales	$	2,058	$	1,487		$	1,017	$	453	$	—		$	5,015
Intersegment sales	739		8			380		294		(1,421		)	—
Total sales	2,797		1,495			1,397		747		(1,421		)	5,015
Depreciation and amortization⁽²⁾	60		25			28		13		—			126
Research, development and engineering expenses	91		3			57		15		—			166
Equity, royalty and interest income from investees	57		21			8		8		—			94
Interest income	3		1			1		1		—			6
Segment EBIT	341		113			223		57		(13		)	721

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

Six months ended June 28, 2015
External sales	$	3,947	$	2,956		$	1,948	$	873	$	—		$	9,724
Intersegment sales	1,446		15			748		554		(2,763		)	—
Total sales	5,393		2,971			2,696		1,427		(2,763		)	9,724
Depreciation and amortization⁽²⁾	118		52			54		29		—			253
Research, development and engineering expenses	205		6			118		32		—			361
Equity, royalty and interest income from investees	87		41			17		17		—			162
Interest income	5		2			2		2		—			11
Segment EBIT	594		201			418		106		(36		)	1,283

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

____________________________________

⁽¹⁾Includes inter-segment 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 28, 2015 and June 29, 2014.

⁽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 June 28, 2015 and June 29, 2014, respectively.

⁽³⁾Distribution segment EBIT included gains of $14 million and $20 million on the fair value adjustments resulting from the acquisition of the controlling interests in North American distributors for the three and six month periods ended June 29, 2014.

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 28, 2015		June 29, 2014		June 28, 2015		June 29, 2014
Total EBIT	$	721	$	657	$	1,283	$	1,185
Less: Interest expense	17		15		31		32
Income before income taxes	$	704	$	642	$	1,252	$	1,153