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. 01, 2017

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments is shown in the table below:



In millions	Engine		Distribution		Components⁽¹⁾		Power Systems		Total Segment		Intersegment Eliminations ⁽²⁾			Total
Three months ended October 1, 2017
External sales	$	1,783	$	1,748	$	1,139	$	615	$	5,285	$	—		$	5,285
Intersegment sales	553		5		394		441		1,393		(1,393		)	—
Total sales	2,336		1,753		1,533		1,056		6,678		(1,393		)	5,285
Depreciation and amortization ⁽³⁾	47		29		42		30		148		—			148
Research, development and engineering expenses	83		6		63		61		213		—			213
Equity, royalty and interest income from investees	58		11		12		14		95		—			95
Interest income	1		2		—		1		4		—			4
EBIT	229		91		217		81		618		22			640

Three months ended October 2, 2016
External sales	$	1,357	$	1,497	$	824	$	509	$	4,187	$	—		$	4,187
Intersegment sales	502		7		319		347		1,175		(1,175		)	—
Total sales	1,859		1,504		1,143		856		5,362		(1,175		)	4,187
Depreciation and amortization ⁽³⁾	42		28		32		29		131		—			131
Research, development and engineering expenses	56		3		54		44		157		—			157
Equity, royalty and interest income from investees	38		19		9		8		74		—			74
Loss contingency⁽⁴⁾	99		—		—		—		99		—			99
Interest income	3		1		1		1		6		—			6
EBIT	89		96		148		59		392		6			398

Nine months ended October 1, 2017
External sales	$	4,951	$	5,101	$	3,183	$	1,717	$	14,952	$	—		$	14,952
Intersegment sales	1,715		19		1,148		1,238		4,120		(4,120		)	—
Total sales	6,666		5,120		4,331		2,955		19,072		(4,120		)	14,952
Depreciation and amortization⁽³⁾	137		90		117		87		431		—			431
Research, development and engineering expenses	200		14		170		161		545		—			545
Equity, royalty and interest income from investees	186		35		40		40		301		—			301
Interest income	4		4		1		2		11		—			11
EBIT	735		287		586		199		1,807		19			1,826

Nine months ended October 2, 2016
External sales	$	4,350	$	4,493	$	2,654	$	1,509	$	13,006	$	—		$	13,006
Intersegment sales	1,487		18		1,005		1,076		3,586		(3,586		)	—
Total sales	5,837		4,511		3,659		2,585		16,592		(3,586		)	13,006
Depreciation and amortization⁽³⁾	122		85		95		87		389		—			389
Research, development and engineering expenses	166		10		161		141		478		—			478
Equity, royalty and interest income from investees	120		56		29		29		234		—			234
Loss contingency ⁽⁴⁾	138		—		—		—		138		—			138
Interest income	8		3		3		4		18		—			18
EBIT	492		270		501		195		1,458		15			1,473

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⁽¹⁾The 2017 disclosures include Eaton Cummins Automated Transmission Technologies joint venture results consolidated during the third quarter of 2017. See Note 11 , "ACQUISITION," for additional information.

⁽²⁾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 1, 2017 and October 2, 2016.

⁽³⁾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 October 1, 2017 and October 2, 2016, respectively.

⁽⁴⁾See Note 9, "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 1, 2017		October 2, 2016		October 1, 2017		October 2, 2016
Total EBIT	$	640	$	398	$	1,826	$	1,473
Less: Interest expense	18		16		57		51
Income before income taxes	$	622	$	382	$	1,769	$	1,422