Quarterly report pursuant to Section 13 or 15(d)

OPERATING SEGMENTS (Tables)

v3.23.2
OPERATING SEGMENTS (Tables)
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Financial information regarding reportable operating segments
Summarized financial information regarding our reportable operating segments for the three and six months ended June 30, 2023 and 2022 is shown in the table below:
In millions Components Engine Distribution Power Systems Accelera Total Segments
Three months ended June 30, 2023
External sales $ 2,924  $ 2,263  $ 2,576  $ 794  $ 81  $ 8,638 
Intersegment sales 501  725  19  663  4  1,912 
Total sales 3,425  2,988  2,595  1,457  85  10,550 
Research, development and engineering expenses 103  148  15  66  52  384 
Equity, royalty and interest income (loss) from investees 24  71  24  18  (4) 133 
Interest income 7  7  8  2  1  25 
Segment EBITDA 486 
(1)
 425  299  201  (114) 1,297 
Depreciation and amortization (2)
125  56  28  32  15  256 
Three months ended June 30, 2022
External sales $ 1,477  $ 2,092  $ 2,247  $ 734  $ 36  $ 6,586 
Intersegment sales 473  683  6  469  6  1,637 
Total sales 1,950  2,775  2,253  1,203  42  8,223 
Research, development and engineering expenses 73  116  13  58  39  299 
Equity, royalty and interest income (loss) from investees 9  58  21  10  (3) 95 
Interest income 2  1  3  1  —  7 
Russian suspension (recoveries) costs (3)
(2) 1  (45) (1) —  (47)
Segment EBITDA 352  421  297  128  (79) 1,119 
Depreciation and amortization (2)
49  49  29  31  8  166 
Six months ended June 30, 2023    
External sales $ 5,967  $ 4,515  $ 4,975  $ 1,473  $ 161  $ 17,091 
Intersegment sales 1,015  1,459  26  1,327  9  3,836 
Total sales 6,982  5,974  5,001  2,800  170  20,927 
Research, development and engineering expenses 194  282  29  129  100  734 
Equity, royalty and interest income (loss) from investees 45  136  48  31  (8) 252 
Interest income 13  10  15  4  1  43 
Segment EBITDA 993 
(1)
 882  634  420  (208) 2,721 
Depreciation and amortization (2)
248  107  56  61  29  501 
Six months ended June 30, 2022    
External sales $ 2,994  $ 4,141  $ 4,358  $ 1,417  $ 61  $ 12,971 
Intersegment sales 944  1,387  12  946  12  3,301 
Total sales 3,938  5,528  4,370  2,363  73  16,272 
Research, development and engineering expenses 149  225  26  122  75  597 
Equity, royalty and interest income (loss) from investees 37  100 
(4)
 37  21  (4) 191 
Interest income 3  5  5  2  —  15 
Russian suspension costs (3)
4  33 
(5)
 55  19  —  111 
Segment EBITDA 672  811  407  218  (144) 1,964 
Depreciation and amortization (2)
92  100  57  62  15  326 
(1) Includes $18 million and $30 million of costs associated with the IPO and separation of Atmus for the three and six months ended June 30, 2023, respectively. See NOTE 15, "FORMATION OF ATMUS AND IPO," to our Condensed Consolidated Financial Statements for additional information.
(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 Net Income as interest expense. The amortization of debt discount and deferred costs was $2 million and $2 million for the six months ended June 30, 2023 and June 30, 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses.
(3) See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(4) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the indefinite suspension of our Russian operations. See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(5) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above.
Reconciliation of segment information
A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:
Three months ended Six months ended
  June 30, June 30,
In millions 2023 2022 2023 2022
TOTAL SEGMENT EBITDA $ 1,297  $ 1,119  $ 2,721  $ 1,964 
Intersegment eliminations and other (1)
7  (64) (56) (154)
Less:
Interest expense 99  34  186  51 
Depreciation and amortization 256  166  501  326 
INCOME BEFORE INCOME TAXES $ 949  $ 855  1,978  1,433 
(1) Intersegment eliminations and other included $5 million and $11 million of costs associated with the IPO and separation of Atmus for the three and six month periods ended June 30, 2023, respectively and $24 million and $41 million for the comparable periods in 2022, respectively. See NOTE 15, "FORMATION OF ATMUS AND IPO," to our Condensed Consolidated Financial Statements for additional information.