Cummins Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS (Tables)

OPERATING SEGMENTS (Tables)

12 Months Ended

Dec. 31, 2016

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments at December 31, is shown in the table below:



In millions	Engine		Distribution			Components		Power Systems			Intersegment Eliminations			Total
2016
External sales	$	5,774	$	6,157		$	3,514	$	2,064		$	—		$	17,509
Intersegment sales	2,030		24			1,322		1,453			(4,829		)	—
Total sales	7,804		6,181			4,836		3,517			(4,829		)	17,509
Depreciation and amortization ⁽¹⁾	163		116			133		115			—			527
Research, development and engineering expenses	226		13			208		189			—			636
Equity, royalty and interest income from investees	148		70			41		42			—			301
Interest income	10		4			4		5			—			23
Loss contingency charges ⁽²⁾	138		—			—		—			—			138
Segment EBIT	686		392		⁽³⁾	641		263		⁽⁴⁾	17			1,999
Net assets	1,620		2,604			1,868		2,629			—			8,721
Investments and advances to equity investees	427		204			176		139			—			946
Capital expenditures	200		96			143		92			—			531
2015
External sales	$	6,733	$	6,198		$	3,745	$	2,434		$	—		$	19,110
Intersegment sales	1,937		31			1,427		1,633			(5,028		)	—
Total sales	8,670		6,229			5,172		4,067			(5,028		)	19,110
Depreciation and amortization ⁽¹⁾	187		105			109		110			—			511
Research, development and engineering expenses	263		10			236		226			—			735
Equity, royalty and interest income from investees	146		78			35		56			—			315
Interest income	11		4			4		5			—			24
Loss contingency charge ⁽²⁾	60		—			—		—			—			60
Impairment of light-duty diesel assets ⁽⁵⁾	202		—			9		—			—			211
Restructuring actions and other charges ⁽⁶⁾	17		23			13		26			11			90
Segment EBIT	636		412		⁽³⁾	727		335			(20		)	2,090
Net assets	2,107		2,330			1,891		2,736			—			9,064
Investments and advances to equity investees	445		192			150		188			—			975
Capital expenditures	345		125			137		137			—			744
2014
External sales	$	7,462	$	5,135		$	3,791	$	2,833		$	—		$	19,221
Intersegment sales	1,505		39			1,327		1,581			(4,452		)	—
Total sales	8,967		5,174			5,118		4,414			(4,452		)	19,221
Depreciation and amortization ⁽¹⁾	163		86			106		97			—			452
Research, development and engineering expenses	265		9			230		250			—			754
Equity, royalty and interest income from investees	118		148			36		68			—			370
Interest income	9		4			4		6			—			23
Segment EBIT	1,031		491		⁽³⁾	684		361		⁽⁷⁾	(69		)	2,498
Net assets	2,401		2,441			2,152		2,743			—			9,737
Investments and advances to equity investees	415		209			164		193			—			981
Capital expenditures	268		89			162		224			—			743

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⁽¹⁾	Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount and deferred costs that are included in the Consolidated Statements of Income as "Interest expense." The amortization of debt discount and deferred costs were $3 million, $3 million and $3 million for the years ended December 31, 2016, 2015 and 2014, respectively.


⁽²⁾	See Note 12, "COMMITMENTS AND CONTINGENCIES," for additional information.


⁽³⁾	Distribution segment EBIT included gains on the fair value adjustment resulting from the acquisition of controlling interests in North American distributors of $15 million, $18 million and $73 million for the years ended December 31, 2016, 2015 and 2014, respectively. See Note 18, "ACQUISITIONS," for additional information.


⁽⁴⁾	Power Systems segment EBIT included a $17 million gain on the sale of an equity investee.


⁽⁵⁾	See Note 19, "IMPAIRMENT OF LIGHT-DUTY DIESEL ASSETS," for additional information.


⁽⁶⁾	See Note 20, "RESTRUCTURING ACTIONS AND OTHER CHARGES," for additional information.


⁽⁷⁾	Power Systems segment EBIT included $32 million of restructuring charges primarily related to the closure of a plant in Germany.

Reconciliation of segment information

A reconciliation of our segment information to the corresponding amounts in the Consolidated Statements of Income is shown in the table below:



	Years ended December 31,
In millions	2016		2015		2014
Total segment EBIT	$	1,999	$	2,090	$	2,498
Less: Interest expense	69		65		64
Income before income taxes	$	1,930	$	2,025	$	2,434

Reconciliation of segment information from net assets to total assets



	December 31,
In millions	2016			2015			2014
Net assets for operating segments	$	8,721		$	9,064		$	9,737
Liabilities deducted in arriving at net assets	6,152			5,920			6,009
Pension and other postretirement benefit adjustments excluded from net assets	(284		)	(242		)	(319		)
Deferred tax assets not allocated to segments	420			390			314
Deferred debt costs not allocated to segments	2			2			23
Total assets	$	15,011		$	15,134		$	15,764

Net sales attributed to geographic areas based on the location of the customer

The tables below present certain segment information by geographic area. Net sales attributed to geographic areas were based on the location of the customer.



In millions	Years ended December 31,
Net Sales	2016		2015		2014
United States	$	9,476	$	10,757	$	10,058
International	8,033		8,353		9,163
Total net sales	$	17,509	$	19,110	$	19,221

Long-lived assets attributed to geographic areas

Long-lived assets include property, plant and equipment, net of depreciation, investments and advances to equity investees and other assets, excluding deferred tax assets, refundable taxes and deferred debt expenses.



In millions	December 31,
Long-lived assets	2016		2015		2014
United States	$	3,092	$	2,968	$	2,949
China	652		668		692
India	475		450		391
United Kingdom	254		349		339
Netherlands	197		172		156
Brazil	149		124		161
Canada	132		133		126
Mexico	131		108		96
Other international countries	236		261		274
Total long-lived assets	$	5,318	$	5,233	$	5,184