-- Company Reaffirms Its Sales and Profit Guidance for 2009 –-
Cummins Inc. (NYSE: CMI) today reported lower sales and profit in the
second quarter 2009 compared to its record performance during the same
period in 2008 as the global recession continued to dampen demand around
the world. Compared to the first quarter, the Company increased its
profit and improved cash flow on essentially flat sales, as a result of
its ongoing efforts to reduce costs and align manufacturing capacity to
the lower demand.
Sales for the quarter were $2.43 billion, 37 percent lower than $3.89
billion in the second quarter of 2008. Earnings Before Interest and
Taxes were $109 million, or 4.5 percent of sales, compared to $469
million, or 12.1 percent of sales, in the second quarter 2008. Net
income attributable to Cummins Inc. was $56 million, or $0.28 a share,
down from $293 million, or $1.49 a share, a year ago.
The second quarter results include a $7 million charge associated with
the cost of job-reduction actions taken at several Company manufacturing
facilities during the quarter. Excluding the charge, EBIT was $116
million, or 4.8 percent of sales, and net income attributable to Cummins
Inc. was $60 million, or $0.30 a share.
“The economic climate continues to be extremely challenging, and we are
managing our business under the assumption that we won’t see any
recovery in our markets in 2009,” said Cummins Chairman and Chief
Executive Officer Tim Solso. “Still, our aggressive efforts to reduce
costs and align manufacturing capacity with demand have allowed us to
perform well under the circumstances and to position ourselves to emerge
from the downturn an even stronger company.”
The decline in profitability was primarily due to the sharply lower
volumes. The Engine and Components segments continue to see the most
severe reductions in demand, while the pace of the sales decline in the
Power Generation segment increased rapidly in the quarter. Profitability
in all three segments was significantly affected by the lower volumes.
Despite significant weakness in almost all end-markets and geographic
regions, the Company improved its profitability from the first quarter,
which – along with a significant reduction in inventory - contributed to
the positive cash flow of $181 million in the quarter.
The Company continued to make capital expenditures on the most critical
projects, especially those associated with the launch of new
emission-compliant products in 2010 and with fuel economy improvements.
“Cash management remains a top priority for the Company this year,” said
Pat Ward, Chief Financial Officer. “And, despite the challenging
economic conditions, the Company generated significant positive cash
flow and did not need to use any of its $1.1 billion credit facility.”
At the end of the second quarter the Company had $534 million in
available cash and cash equivalents, compared to $353 million at the end
of the first quarter and $426 million at the beginning of 2009.
Based on the second quarter results and Company forecasts for the
remainder of the year, Cummins today reaffirmed its sales and profit
guidance for 2009. The Company still expects 2009 sales to be slightly
more than 30 percent lower than 2008 and anticipates EBIT of 5 percent
of sales for the year, excluding the restructuring charges.
Second quarter details (all
comparisons are to same period in 2008)
Engine Segment
-
Sales - $1.31 billion, down 45 percent
-
Segment EBIT - $4 million loss (negative 0.3 percent of sales),
compared to a $221 million profit (9.3 percent of sales)
-
Heavy-duty sales down 41 percent; medium-duty down 43 percent;
light-duty/RV down 54 percent; industrial down 45 percent
-
Sales declined sharply in nearly every geographic market due to the
global recession
Power Generation
-
Sales - $610 million, down 35 percent
-
Segment EBIT - $41 million (6.7 percent of sales), down 64 percent
from $115 million (12.3 percent of sales)
-
Commercial product sales down 35 percent; commercial projects down 59
percent; Consumer products down 48 percent; Alternators down 24 percent
-
Commercial markets most affected by economic slowdown in Europe,
Middle East and Latin America; Consumer decline led by continued
weakness in the North American marine and RV markets
Components
-
Sales - $502 million, down 41 percent
-
Segment EBIT - $10 million loss (negative 2.0 percent of sales),
compared to a $77 million profit (9.0 percent of sales)
-
Turbochargers down 50 percent; Filtration down 37 percent; Emission
Solutions down 22 percent; Fuel Systems down 54 percent
-
Sales and profit decline driven primarily by large volume drop from
OEM customers in North America and Europe
Distribution
-
Sales - $463 million, down 20 percent
-
Segment EBIT - $55 million (11.9 percent of sales), down 19 percent
from $68 million (11.7 percent of sales)
-
Unfavorable foreign currency movements had a significant impact on
sales – 9 percentage points
-
Improved Segment EBIT margin from 7 percent increase in joint venture
earnings
Joint Ventures
-
Total income - $57 million, down 17 percent from second quarter 2008,
but up $24 million (73 percent) from the first quarter 2009
-
Engine JV income down $15 million (47 percent) primarily as a result
of large demand declines in on-highway markets in China
-
All other segment JVs reported flat or modestly higher profits
compared to second quarter 2008
Presentation of Non-GAAP Financial Information
EBIT and Net income and diluted earnings per share (EPS) attributable to
Cummins Inc. excluding restructuring charges are non-GAAP measure used
in this release. Each is defined and reconciled to what management
believes to be the most comparable GAAP measure in a schedule attached
to this release. Cummins presents this information as it believes it is
useful to understanding the Company's operating performance, and because
EBIT is a measure used internally to assess the performance of the
operating units.
Webcast information
Cummins management will host a teleconference to discuss these results
today at 10 a.m. EDT. This teleconference will be webcast and available
on the Investor Relations section of the Cummins website at www.cummins.com.
Participants wishing to view the visuals available with the audio are
encouraged to sign-in a few minutes prior to the start of the
teleconference.
About Cummins
Cummins Inc., a global power leader, is a corporation of complementary
business units that design, manufacture, distribute and service engines
and related technologies, including fuel systems, controls, air
handling, filtration, emission solutions and electrical power generation
systems. Headquartered in Columbus, Indiana, (USA) Cummins serves
customers in approximately 190 countries and territories through a
network of more than 500 company-owned and independent distributor
locations and approximately 5,200 dealer locations. Cummins reported net
income of $755 million on sales of $14.3 billion in 2008. Press releases
can be found on the Web at www.cummins.com.
Forward-looking disclosure statement
Information provided in this release that is not purely historical are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding the
company’s expectations, hopes, beliefs and intentions on strategies
regarding the future. It is important to note that the company’s actual
future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including,
but not limited to, general economic, business and financing conditions,
labor relations, governmental action, competitor pricing activity,
expense volatility and other risks detailed from time to time in Cummins
Securities and Exchange Commission filings.
|
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
June 28,
|
|
March 29,
|
|
June 29,
|
|
|
In millions (except per share amounts)
|
|
2009
|
|
2009
|
|
2008
|
|
|
NET SALES
|
|
$
|
2,431
|
|
$
|
2,439
|
|
$
|
3,887
|
|
|
Cost of sales
|
|
1,983
|
|
1,994
|
|
3,008
|
|
|
GROSS MARGIN
|
|
448
|
|
445
|
|
879
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES AND INCOME
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
287
|
|
300
|
|
370
|
|
|
Research, development and engineering expenses
|
|
79
|
|
85
|
|
104
|
|
|
Equity, royalty and interest income from investees
|
|
57
|
|
33
|
|
69
|
|
|
Restructuring charges
|
|
7
|
|
66
|
|
―
|
|
|
Other operating (expense) income, net
|
|
(11
|
)
|
2
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
121
|
|
29
|
|
468
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
1
|
|
2
|
|
4
|
|
|
Interest expense
|
|
10
|
|
7
|
|
12
|
|
|
Other (expense) income, net
|
|
(13
|
)
|
(3
|
)
|
(3
|
)
|
|
INCOME BEFORE INCOME TAXES
|
|
99
|
|
21
|
|
457
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
29
|
|
7
|
|
147
|
|
|
NET INCOME
|
|
70
|
|
14
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to noncontrolling interests
|
|
14
|
|
7
|
|
17
|
|
|
NET INCOME ATTRIBUTABLE TO CUMMINS INC.
|
|
$
|
56
|
|
$
|
7
|
|
$
|
293
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.28
|
|
$
|
0.04
|
|
$
|
1.50
|
|
|
Diluted
|
|
$
|
0.28
|
|
$
|
0.04
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
197.1
|
|
|
196.8
|
|
|
195.2
|
|
|
Diluted
|
|
|
197.4
|
|
|
197.0
|
|
|
196.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
|
$
|
0.175
|
|
$
|
0.175
|
|
$
|
0.125
|
|
|
(a)
|
|
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America
(GAAP).
|
|
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
June 28,
|
|
June 29,
|
|
|
In millions (except per share amounts)
|
|
2009
|
|
2008
|
|
|
NET SALES
|
|
$
|
4,870
|
|
$
|
7,361
|
|
|
Cost of sales
|
|
3,977
|
|
5,775
|
|
|
GROSS MARGIN
|
|
893
|
|
1,586
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES AND INCOME
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
587
|
|
721
|
|
|
Research, development and engineering expenses
|
|
164
|
|
207
|
|
|
Equity, royalty and interest income from investees
|
|
90
|
|
136
|
|
|
Restructuring charges
|
|
73
|
|
―
|
|
|
Other operating (expense) income, net
|
|
(9
|
)
|
(7
|
)
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
150
|
|
787
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
3
|
|
10
|
|
|
Interest expense
|
|
17
|
|
23
|
|
|
Other (expense) income, net
|
|
(16
|
)
|
(13
|
)
|
|
INCOME BEFORE INCOME TAXES
|
|
120
|
|
761
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
36
|
|
249
|
|
|
NET INCOME
|
|
84
|
|
512
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to noncontrolling interests
|
|
21
|
|
29
|
|
|
NET INCOME ATTRIBUTABLE TO CUMMINS INC.
|
|
$
|
63
|
|
$
|
483
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
$
|
2.47
|
|
|
Diluted
|
|
$
|
0.32
|
|
$
|
2.46
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
|
197.0
|
|
|
195.1
|
|
|
Diluted
|
|
|
197.2
|
|
|
196.5
|
|
|
|
|
|
|
|
|
|
|
|
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
|
$
|
0.35
|
|
$
|
0.25
|
|
|
(a)
|
|
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
|
|
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)
|
|
|
|
|
|
|
|
|
|
June 28,
|
|
December 31,
|
|
In millions (except par value)
|
|
2009
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
534
|
|
|
$
|
426
|
|
|
Marketable securities
|
|
|
17
|
|
|
|
77
|
|
|
Accounts and notes receivable, net
|
|
|
1,725
|
|
|
|
1,782
|
|
|
Inventories
|
|
|
1,535
|
|
|
|
1,783
|
|
|
Deferred income taxes
|
|
|
364
|
|
|
|
347
|
|
|
Prepaid expenses and other current assets
|
|
|
198
|
|
|
|
298
|
|
|
Total current assets
|
|
|
4,373
|
|
|
|
4,713
|
|
|
Long-term assets
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
4,681
|
|
|
|
4,539
|
|
|
Accumulated depreciation
|
|
|
(2,821
|
)
|
|
|
(2,698
|
)
|
|
Property, plant and equipment, net
|
|
|
1,860
|
|
|
|
1,841
|
|
|
Investments and advances related to equity method investees
|
|
|
527
|
|
|
|
588
|
|
|
Goodwill
|
|
|
362
|
|
|
|
362
|
|
|
Other intangible assets, net
|
|
|
241
|
|
|
|
223
|
|
|
Deferred income taxes
|
|
|
499
|
|
|
|
491
|
|
|
Other assets
|
|
|
259
|
|
|
|
301
|
|
|
Total assets
|
|
$
|
8,121
|
|
|
$
|
8,519
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt and loans payable
|
|
$
|
63
|
|
|
$
|
69
|
|
|
Accounts payable (principally trade)
|
|
|
773
|
|
|
|
1,009
|
|
|
Current portion of accrued product warranty
|
|
|
373
|
|
|
|
434
|
|
|
Accrued compensation, benefits and retirement costs
|
|
|
283
|
|
|
|
364
|
|
|
Other accrued expenses
|
|
|
622
|
|
|
|
763
|
|
|
Total current liabilities
|
|
|
2,114
|
|
|
|
2,639
|
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
617
|
|
|
|
629
|
|
|
Pensions
|
|
|
561
|
|
|
|
574
|
|
|
Postretirement benefits other than pensions
|
|
|
442
|
|
|
|
452
|
|
|
Other liabilities and deferred revenue
|
|
|
792
|
|
|
|
745
|
|
|
Total liabilities
|
|
|
4,526
|
|
|
|
5,039
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
Cummins Inc. shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Common stock, $2.50 par value, 500 shares authorized, 222.1 and
221.7 shares issued
|
|
|
1,796
|
|
|
|
1,793
|
|
|
Retained earnings
|
|
|
3,280
|
|
|
|
3,288
|
|
|
Treasury stock, at cost, 20.3 and 20.4 shares
|
|
|
(714
|
)
|
|
|
(715
|
)
|
|
Common stock held by employee benefits trust, at cost, 4.8 and 5.1
shares
|
|
|
(58
|
)
|
|
|
(61
|
)
|
|
Unearned compensation
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|
|
Defined benefit postretirement plans
|
|
|
(794
|
)
|
|
|
(798
|
)
|
|
Other
|
|
|
(137
|
)
|
|
|
(268
|
)
|
|
Total accumulated other comprehensive loss
|
|
|
(931
|
)
|
|
|
(1,066
|
)
|
|
Total Cummins Inc. shareholders’ equity
|
|
|
3,372
|
|
|
|
3,234
|
|
|
Noncontrolling interests
|
|
|
223
|
|
|
|
246
|
|
|
Total equity
|
|
|
3,595
|
|
|
|
3,480
|
|
|
Total liabilities and equity
|
|
$
|
8,121
|
|
|
$
|
8,519
|
|
|
(a)
|
|
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
|
|
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
|
June 28,
|
|
|
June 29,
|
|
|
In millions
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
84
|
|
|
$
|
512
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Restructuring charges, net of cash payments
|
|
20
|
|
|
―
|
|
|
Depreciation and amortization
|
|
154
|
|
|
158
|
|
|
Deferred income taxes
|
|
20
|
|
|
14
|
|
|
Equity in income of investees, net of dividends
|
|
60
|
|
|
(62
|
)
|
|
Pension expense, net of pension contributions
|
|
(15
|
)
|
|
(3
|
)
|
|
Other post-retirement benefits expense, net of cash payments
|
|
(16
|
)
|
|
(5
|
)
|
|
Stock-based compensation expense
|
|
12
|
|
|
17
|
|
|
Excess tax deficiencies (benefits) on stock-based awards
|
|
2
|
|
|
(12
|
)
|
|
Translation and hedging activities
|
|
51
|
|
|
8
|
|
|
Changes in current assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
|
86
|
|
|
(316
|
)
|
|
Inventories
|
|
282
|
|
|
(202
|
)
|
|
Other current assets
|
|
22
|
|
|
(16
|
)
|
|
Accounts payable
|
|
(253
|
)
|
|
172
|
|
|
Accrued expenses
|
|
(242
|
)
|
|
102
|
|
|
Changes in long-term liabilities
|
|
73
|
|
|
47
|
|
|
Other, net
|
|
(19
|
)
|
|
(8
|
)
|
|
Net cash provided by operating activities
|
|
321
|
|
|
406
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(139
|
)
|
|
(201
|
)
|
|
Investments in internal use software
|
|
(19
|
)
|
|
(36
|
)
|
|
Proceeds from disposals of property, plant and equipment
|
|
7
|
|
|
10
|
|
|
Investments in and advances (to) from equity investees
|
|
1
|
|
|
(41
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
(2
|
)
|
|
(76
|
)
|
|
Investments in marketable securities—acquisitions
|
|
(69
|
)
|
|
(158
|
)
|
|
Investments in marketable securities—liquidations
|
|
133
|
|
|
159
|
|
|
Cash flows from derivatives not designated as hedges
|
|
(21
|
)
|
|
(18
|
)
|
|
Other, net
|
|
―
|
|
|
5
|
|
|
Net cash used in investing activities
|
|
(109
|
)
|
|
(356
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
10
|
|
|
77
|
|
|
Payments on borrowings and capital lease obligations
|
|
(44
|
)
|
|
(101
|
)
|
|
Net borrowings under short-term credit agreements
|
|
(5
|
)
|
|
1
|
|
|
Distributions to noncontrolling interests
|
|
(10
|
)
|
|
(6
|
)
|
|
Dividend payments on common stock
|
|
(71
|
)
|
|
(51
|
)
|
|
Repurchases of common stock
|
|
―
|
|
|
(45
|
)
|
|
Excess tax (deficiencies) benefits on stock-based awards
|
|
(2
|
)
|
|
12
|
|
|
Other, net
|
|
3
|
|
|
2
|
|
|
Net cash used in financing activities
|
|
(119
|
)
|
|
(111
|
)
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
15
|
|
|
6
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
108
|
|
|
(55
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
426
|
|
|
577
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
534
|
|
|
$
|
522
|
|
|
(a)
|
|
Prepared on an unaudited basis in accordance with accounting
principles generally accepted in the United States of America.
|
|
CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions
|
|
Engine
|
|
Power Generation
|
|
Components
|
|
Distribution
|
|
Non-segment items(1)
|
|
Total
|
|
Three months ended June 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
$
|
1,133
|
|
|
$
|
481
|
|
|
$
|
355
|
|
|
$
|
462
|
|
|
$
|
—
|
|
|
$
|
2,431
|
|
Intersegment sales
|
|
173
|
|
|
129
|
|
|
147
|
|
|
1
|
|
|
(450
|
)
|
|
―
|
|
Total sales
|
|
1,306
|
|
|
610
|
|
|
502
|
|
|
463
|
|
|
(450
|
)
|
|
2,431
|
|
Depreciation and amortization(2)
|
|
45
|
|
|
11
|
|
|
17
|
|
|
4
|
|
|
—
|
|
|
77
|
|
Research, development and engineering expense
|
|
51
|
|
|
8
|
|
|
20
|
|
|
―
|
|
|
—
|
|
|
79
|
|
Equity, royalty and interest income from investees
|
|
17
|
|
|
6
|
|
|
4
|
|
|
30
|
|
|
—
|
|
|
57
|
|
Restructuring charges
|
|
―
|
|
|
―
|
|
|
―
|
|
|
―
|
|
|
7
|
|
|
7
|
|
Interest income
|
|
―
|
|
|
―
|
|
|
―
|
|
|
1
|
|
|
―
|
|
|
1
|
|
Segment EBIT
|
|
(4
|
)
|
|
41
|
|
|
(10
|
)
|
|
55
|
|
|
27
|
|
|
109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 29, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
$
|
1,205
|
|
|
$
|
477
|
|
|
$
|
346
|
|
|
$
|
411
|
|
|
$
|
—
|
|
|
$
|
2,439
|
|
Intersegment sales
|
|
287
|
|
|
180
|
|
|
184
|
|
|
2
|
|
|
(653
|
)
|
|
―
|
|
Total sales
|
|
1,492
|
|
|
657
|
|
|
530
|
|
|
413
|
|
|
(653
|
)
|
|
2,439
|
|
Depreciation and amortization(2)
|
|
41
|
|
|
11
|
|
|
18
|
|
|
5
|
|
|
—
|
|
|
75
|
|
Research, development and engineering expense
|
|
58
|
|
|
8
|
|
|
19
|
|
|
―
|
|
|
—
|
|
|
85
|
|
Equity, royalty and interest (loss) income from investees
|
|
(3
|
)
|
|
5
|
|
|
1
|
|
|
30
|
|
|
—
|
|
|
33
|
|
Restructuring charges
|
|
―
|
|
|
―
|
|
|
―
|
|
|
―
|
|
|
66
|
|
|
66
|
|
Interest income
|
|
1
|
|
|
1
|
|
|
―
|
|
|
―
|
|
|
―
|
|
|
2
|
|
Segment EBIT
|
|
(16
|
)
|
|
69
|
|
|
1
|
|
|
58
|
|
|
(84
|
)
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 29, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
$
|
2,030
|
|
|
$
|
692
|
|
|
$
|
584
|
|
|
$
|
581
|
|
|
$
|
—
|
|
|
$
|
3,887
|
|
Intersegment sales
|
|
356
|
|
|
246
|
|
|
271
|
|
|
―
|
|
|
(873
|
)
|
|
―
|
|
Total sales
|
|
2,386
|
|
|
938
|
|
|
855
|
|
|
581
|
|
|
(873
|
)
|
|
3,887
|
|
Depreciation and amortization(2)
|
|
46
|
|
|
11
|
|
|
18
|
|
|
7
|
|
|
―
|
|
|
82
|
|
Research, development and engineering expense
|
|
70
|
|
|
10
|
|
|
24
|
|
|
―
|
|
|
―
|
|
|
104
|
|
Equity, royalty and interest income from investees
|
|
32
|
|
|
6
|
|
|
3
|
|
|
28
|
|
|
—
|
|
|
69
|
|
Interest income
|
|
2
|
|
|
1
|
|
|
1
|
|
|
―
|
|
|
—
|
|
|
4
|
|
Segment EBIT
|
|
221
|
|
|
115
|
|
|
77
|
|
|
68
|
|
|
(12
|
)
|
|
469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
$
|
2,338
|
|
|
$
|
958
|
|
|
$
|
701
|
|
|
$
|
873
|
|
|
$
|
―
|
|
|
$
|
4,870
|
|
Intersegment sales
|
|
460
|
|
|
309
|
|
|
331
|
|
|
3
|
|
|
(1,103
|
)
|
|
―
|
|
Total sales
|
|
2,798
|
|
|
1,267
|
|
|
1,032
|
|
|
876
|
|
|
(1,103
|
)
|
|
4,870
|
|
Depreciation and amortization(2)
|
|
86
|
|
|
22
|
|
|
35
|
|
|
9
|
|
|
―
|
|
|
152
|
|
Research, development and engineering expense
|
|
109
|
|
|
16
|
|
|
39
|
|
|
―
|
|
|
―
|
|
|
164
|
|
Equity, royalty and interest income from investees
|
|
14
|
|
|
11
|
|
|
5
|
|
|
60
|
|
|
―
|
|
|
90
|
|
Restructuring charges
|
|
―
|
|
|
―
|
|
|
―
|
|
|
―
|
|
|
73
|
|
|
73
|
|
Interest income
|
|
1
|
|
|
1
|
|
|
―
|
|
|
1
|
|
|
―
|
|
|
3
|
|
Segment EBIT
|
|
(20
|
)
|
|
110
|
|
|
(9
|
)
|
|
113
|
|
|
(57
|
)
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 29, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sales
|
|
$
|
3,915
|
|
|
$
|
1,273
|
|
|
$
|
1,151
|
|
|
$
|
1,022
|
|
|
$
|
—
|
|
|
$
|
7,361
|
|
Intersegment sales
|
|
680
|
|
|
452
|
|
|
524
|
|
|
4
|
|
|
(1,660
|
)
|
|
―
|
|
Total sales
|
|
4,595
|
|
|
1,725
|
|
|
1,675
|
|
|
1,026
|
|
|
(1,660
|
)
|
|
7,361
|
|
Depreciation and amortization(2)
|
|
90
|
|
|
22
|
|
|
33
|
|
|
11
|
|
|
―
|
|
|
156
|
|
Research, development and engineering expense
|
|
140
|
|
|
20
|
|
|
47
|
|
|
―
|
|
|
―
|
|
|
207
|
|
Equity, royalty and interest income from investees
|
|
65
|
|
|
11
|
|
|
7
|
|
|
53
|
|
|
―
|
|
|
136
|
|
Interest income
|
|
5
|
|
|
2
|
|
|
2
|
|
|
1
|
|
|
―
|
|
|
10
|
|
Segment EBIT
|
|
415
|
|
|
193
|
|
|
114
|
|
|
117
|
|
|
(55
|
)
|
|
784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes intersegment sales and profit in inventory
eliminations and unallocated corporate expenses. For the three and
six months ended June 28, 2009, unallocated corporate expenses
included restructuring charges of $7 million and $73 million and
losses of $9 million and $3 million related to flood damages. For
the three months ended March 29, 2009, unallocated corporate
expenses include restructuring charges of $66 million and a $6
million gain related to flood damage insurance recoveries. For
both the three and six months ended June 29, 2008, unallocated
corporate expenses included losses of $6 million related to flood
damages.
|
|
(2) Depreciation and amortization as shown on a segment
basis excludes the amortization of debt discount that is included
in the Condensed Consolidated Statements of Income as
Interest expense.
|
|
CUMMINS INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT INFORMATION
(Unaudited)
|
|
|
|
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
|
|
Six months ended
|
|
|
|
June 28,
|
|
March 29,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
In millions
|
|
2009
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Segment EBIT
|
|
$
|
109
|
|
$
|
28
|
|
$
|
469
|
|
$
|
137
|
|
$
|
784
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
10
|
|
7
|
|
12
|
|
17
|
|
23
|
|
Income before income taxes
|
|
$
|
99
|
|
$
|
21
|
|
$
|
457
|
|
$
|
120
|
|
$
|
761
|
|
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)
|
|
|
|
|
|
|
|
|
Earnings before interest, taxes, noncontrolling interests and
restructuring charges
|
|
|
|
|
|
|
|
|
We define EBIT as earnings or loss before interest expense, income
tax expense and noncontrolling interests in income of consolidated
subsidiaries (EBIT). We use EBIT to assess and measure the
performance of our operating segments and also as a component in
measuring our variable compensation programs. Below is a
reconciliation of EBIT, a non-GAAP financial measure, to
consolidated net income attributable to Cummins Inc., for each of
the applicable periods:
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
|
|
June 28,
|
|
March 29,
|
|
June 29,
|
|
June 28,
|
|
June 29,
|
|
|
In millions
|
|
2009
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
Earnings before interest expense, income taxes and restructuring
charges
|
|
$
|
116
|
|
$
|
94
|
|
$
|
469
|
|
$
|
210
|
|
$
|
784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest expense, income taxes and
restructuring charges as a percentage of net sales
|
|
4.8
|
%
|
3.9
|
%
|
12.1
|
%
|
4.3
|
%
|
10.7
|
%
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
7
|
|
66
|
|
―
|
|
73
|
|
―
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest and income taxes
|
|
$
|
109
|
|
$
|
28
|
|
$
|
469
|
|
$
|
137
|
|
$
|
784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT as a percentage of net sales
|
|
4.5
|
%
|
1.1
|
%
|
12.1
|
%
|
2.8
|
%
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
10
|
|
7
|
|
12
|
|
17
|
|
23
|
|
|
Income tax expense
|
|
29
|
|
7
|
|
147
|
|
36
|
|
249
|
|
|
Net income
|
|
70
|
|
14
|
|
310
|
|
84
|
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests
|
|
14
|
|
7
|
|
17
|
|
21
|
|
29
|
|
|
Net income attributable to Cummins Inc.
|
|
$
|
56
|
|
$
|
7
|
|
$
|
293
|
|
$
|
63
|
|
$
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Cummins Inc. as a percentage of net
sales
|
|
2.3
|
%
|
0.3
|
%
|
7.5
|
%
|
1.3
|
%
|
6.6
|
%
|
|
CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)
|
|
|
|
|
|
|
Net income and diluted earnings per share (EPS) attributable to
Cummins Inc. excluding restructuring charges
|
|
|
|
|
|
|
We believe this is a useful measure of our operating performance
for the period presented as it illustrates our operating
performance without regard to restructuring. This measure is not
in accordance with, or an alternative for, accounting principles
generally accepted in the United States of America and may not be
consistent with measures used by other companies. It should be
considered supplemental data.
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
June 28, 2009
|
|
June 28, 2009
|
|
In millions
|
Net Income
|
|
Diluted EPS
|
|
Net Income
|
|
Diluted EPS
|
|
Net income attributable to Cummins Inc. excluding restructuring
charges
|
$
|
60
|
|
$
|
0.30
|
|
$
|
111
|
|
$
|
0.56
|
|
Less:
|
|
|
|
|
|
|
|
|
Restructuring charges, net(1)
|
4
|
|
0.02
|
|
48
|
|
0.24
|
|
Net income attributable to Cummins Inc.
|
$
|
56
|
|
$
|
0.28
|
|
$
|
63
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the three and six months ended June 28, 2009,
management approved and committed to undertake certain restructuring
actions, which resulted in a pretax charge of $7 and $73 million,
respectively. These charges included employee-related liabilities
for severance and benefits of approximately $8 million and $68
million and exit costs of approximately zero and $6 million,
respectively.
|
|
SUPPLEMENTAL INFORMATION
|
|
|
|
|
|
|
|
In 2009, the Power Generation segment reorganized its reporting
structure to include the following businesses: Commercial
Products, Alternators, Commercial Projects, Power Electronics and
Consumer. Sales by quarter for our Power Generation segment by
business for the years 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
2008
|
|
Three months ended
|
|
Year ended
|
|
In millions
|
|
March 30, 2008
|
|
June 29, 2008
|
|
September 28, 2008
|
|
December 31, 2008
|
|
December 31, 2008
|
|
Commercial Products
|
|
$
|
444
|
|
$
|
555
|
|
$
|
559
|
|
$
|
558
|
|
$
|
2,116
|
|
Alternator
|
|
156
|
|
178
|
|
174
|
|
178
|
|
686
|
|
Commercial Projects
|
|
86
|
|
111
|
|
63
|
|
68
|
|
328
|
|
Power Electronics
|
|
27
|
|
31
|
|
35
|
|
39
|
|
132
|
|
Consumer
|
|
74
|
|
63
|
|
57
|
|
44
|
|
238
|
|
Total sales
|
|
$
|
787
|
|
$
|
938
|
|
$
|
888
|
|
$
|
887
|
|
$
|
3,500
|
|
2007
|
|
Three months ended
|
|
Year ended
|
|
In millions
|
|
April 1, 2007
|
|
July 1, 2007
|
|
September 30, 2007
|
|
December 31, 2007
|
|
December 31, 2007
|
|
Commercial Products
|
|
$
|
383
|
|
$
|
448
|
|
$
|
449
|
|
$
|
481
|
|
$
|
1,761
|
|
Alternator
|
|
132
|
|
156
|
|
163
|
|
172
|
|
623
|
|
Commercial Projects
|
|
45
|
|
44
|
|
49
|
|
81
|
|
219
|
|
Power Electronics
|
|
26
|
|
26
|
|
28
|
|
28
|
|
108
|
|
Consumer
|
|
89
|
|
95
|
|
87
|
|
78
|
|
349
|
|
Total sales
|
|
$
|
675
|
|
$
|
769
|
|
$
|
776
|
|
$
|
840
|
|
$
|
3,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
In millions
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
Engine Business
|
|
|
|
|
|
|
|
|
Heavy-Duty Truck
|
394
|
|
395
|
|
|
|
789
|
|
|
|
|
Medium Duty Truck+Bus
|
229
|
|
240
|
|
|
|
469
|
|
|
|
|
Light Duty Auto+RV
|
156
|
|
94
|
|
|
|
250
|
|
|
|
|
Industrial
|
467
|
|
440
|
|
|
|
907
|
|
|
|
|
Stationary Power
|
246
|
|
137
|
|
|
|
383
|
|
|
|
|
TOTAL ENGINE BUSINESS
|
1,492
|
|
1,306
|
|
|
|
2,798
|
|
|
|
Power Generation
|
657
|
|
610
|
|
|
|
1,267
|
|
|
|
Components
|
|
530
|
|
502
|
|
|
|
1,032
|
|
|
|
Distributors
|
|
413
|
|
463
|
|
|
|
876
|
|
|
|
Eliminations
|
|
(653
|
)
|
(450
|
)
|
|
|
(1,103
|
)
|
|
|
|
TOTAL
|
2,439
|
|
2,431
|
|
|
|
4,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
Engine Business
|
|
|
|
|
|
|
|
|
Heavy-Duty Truck
|
536
|
|
672
|
|
630
|
|
470
|
|
2,308
|
|
|
|
|
Medium Duty Truck+Bus
|
397
|
|
422
|
|
406
|
|
325
|
|
1,550
|
|
|
|
|
Light Duty Auto+RV
|
275
|
|
205
|
|
170
|
|
154
|
|
804
|
|
|
|
|
Industrial
|
733
|
|
804
|
|
788
|
|
704
|
|
3,029
|
|
|
|
|
Stationary Power
|
268
|
|
283
|
|
285
|
|
283
|
|
1,119
|
|
|
|
|
TOTAL ENGINE BUSINESS
|
2,209
|
|
2,386
|
|
2,279
|
|
1,936
|
|
8,810
|
|
|
|
Power Generation
|
787
|
|
938
|
|
888
|
|
887
|
|
3,500
|
|
|
|
Components
|
|
820
|
|
855
|
|
801
|
|
676
|
|
3,152
|
|
|
|
Distributors
|
|
445
|
|
581
|
|
581
|
|
557
|
|
2,164
|
|
|
|
Eliminations
|
|
(787
|
)
|
(873
|
)
|
(856
|
)
|
(768
|
)
|
(3,284
|
)
|
|
|
|
TOTAL
|
3,474
|
|
3,887
|
|
3,693
|
|
3,288
|
|
14,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine Shipments
|
|
|
|
|
|
|
|
|
Units
|
|
Q1
|
Q2
|
Q3
|
Q4
|
YTD
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
Midrange
|
60,600
|
|
49,200
|
|
|
|
109,800
|
|
|
|
|
Heavy-duty
|
16,600
|
|
16,400
|
|
|
|
33,000
|
|
|
|
|
High Horsepower
|
3,900
|
|
3,200
|
|
|
|
7,100
|
|
|
|
TOTAL
|
|
81,100
|
|
68,800
|
|
|
|
|
|
149,900
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
Midrange
|
114,200
|
|
114,800
|
|
102,400
|
|
86,900
|
|
418,300
|
|
|
|
|
Heavy-duty
|
24,700
|
|
31,700
|
|
29,400
|
|
22,500
|
|
108,300
|
|
|
|
|
High Horsepower
|
4,600
|
|
5,500
|
|
5,300
|
|
5,200
|
|
20,600
|
|
|
|
TOTAL
|
|
143,500
|
|
152,000
|
|
137,100
|
|
114,600
|
|
547,200
|
|
Cummins Inc.
Mark Land, Executive Director - Corporate
Communications, 317-610-2456
mark.d.land@cummins.com
