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. 27, 2015

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		Distribution			Components		Power Generation		Non-segment Items ⁽¹⁾			Total
Three months ended September 27, 2015
External sales	$	1,800	$	1,543		$	891	$	386	$	—		$	4,620
Intersegment sales	728		8			349		273		(1,358		)	—
Total sales	2,528		1,551			1,240		659		(1,358		)	4,620
Depreciation and amortization⁽²⁾	60		26			28		14		—			128
Research, development and engineering expenses	116		2			65		14		—			197
Equity, royalty and interest income from investees	40		19			9		10		—			78
Interest income	6		1			1		1		—			9
Segment EBIT	252		123		⁽³⁾	156		42		4			577

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

Nine months ended September 27, 2015
External sales	$	5,747	$	4,499		$	2,839	$	1,259	$	—		$	14,344
Intersegment sales	2,174		23			1,097		827		(4,121		)	—
Total sales	7,921		4,522			3,936		2,086		(4,121		)	14,344
Depreciation and amortization⁽²⁾	178		78			82		43		—			381
Research, development and engineering expenses	321		8			183		46		—			558
Equity, royalty and interest income from investees	127		60			26		27		—			240
Interest income	11		3			3		3		—			20
Segment EBIT	846		324		⁽³⁾	574		148		(32		)	1,860

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

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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 and nine months ended September 27, 2015 and September 28, 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 $2 million and $2 million for the nine months ended September 27, 2015 and September 28, 2014, respectively.

⁽³⁾Distribution segment EBIT included gains of $17 million for both the three and nine month periods ended September 27, 2015 and $18 million and $38 million for the three and nine month periods ended September 28, 2014, respectively, on the fair value adjustments resulting from the acquisition of the controlling interests in North American distributors. See Note 3, "ACQUISITIONS," for additional information.

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 27, 2015		September 28, 2014		September 27, 2015		September 28, 2014
Total EBIT	$	577	$	684	$	1,860	$	1,869
Less: Interest expense	16		15		47		47
Income before income taxes	$	561	$	669	$	1,813	$	1,822