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

Oct. 02, 2016

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 Systems		Non-segment Items ⁽¹⁾			Total
Three months ended October 2, 2016
External sales	$	1,357		$	1,497	$	824	$	509	$	—		$	4,187
Intersegment sales	502			7		319		347		(1,175		)	—
Total sales	1,859			1,504		1,143		856		(1,175		)	4,187
Depreciation and amortization⁽²⁾	42			28		32		29		—			131
Research, development and engineering expenses	56			3		54		44		—			157
Equity, royalty and interest income from investees	38			19		9		8		—			74
Loss contingency	99		⁽³⁾	—		—		—		—			99
Interest income	3			1		1		1		—			6
Segment EBIT	89			96		148		59		6			398

Three months ended September 27, 2015
External sales	$	1,627		$	1,543	$	891	$	559	$	—		$	4,620
Intersegment sales	475			8		349		423		(1,255		)	—
Total sales	2,102			1,551		1,240		982		(1,255		)	4,620
Depreciation and amortization⁽²⁾	47			26		28		27		—			128
Research, development and engineering expenses	73			2		65		57		—			197
Equity, royalty and interest income from investees	33			19		9		17		—			78
Interest income	6			1		1		1		—			9
Segment EBIT	217			123		156		74		7			577

Nine months ended October 2, 2016
External sales	$	4,350		$	4,493	$	2,654	$	1,509	$	—		$	13,006
Intersegment sales	1,487			18		1,005		1,076		(3,586		)	—
Total sales	5,837			4,511		3,659		2,585		(3,586		)	13,006
Depreciation and amortization⁽²⁾	121			86		95		87		—			389
Research, development and engineering expenses	166			10		161		141		—			478
Equity, royalty and interest income from investees	120			56		29		29		—			234
Loss contingency	138		⁽³⁾	—		—		—		—			138
Interest income	8			3		3		4		—			18
Segment EBIT	492			270		501		195		15			1,473

Nine months ended September 27, 2015
External sales	$	5,150		$	4,499	$	2,839	$	1,856	$	—		$	14,344
Intersegment sales	1,422			23		1,097		1,225		(3,767		)	—
Total sales	6,572			4,522		3,936		3,081		(3,767		)	14,344
Depreciation and amortization⁽²⁾	140			78		82		81		—			381
Research, development and engineering expenses	195			8		183		172		—			558
Equity, royalty and interest income from investees	107			60		26		47		—			240
Interest income	10			3		3		4		—			20
Segment EBIT	695			324		574		302		(35		)	1,860

____________________________________

⁽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 October 2, 2016 and September 27, 2015.

⁽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 was $2 million for the nine months ended October 2, 2016 and September 27, 2015.

⁽³⁾See Note 10, "COMMITMENTS AND CONTINGENCIES," 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	October 2, 2016		September 27, 2015		October 2, 2016		September 27, 2015
Total segment EBIT	$	398	$	577	$	1,473	$	1,860
Less: Interest expense	16		16		51		47
Income before income taxes	$	382	$	561	$	1,422	$	1,813