UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] |
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2014
OR
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from _______ to _______
Commission File Number 1-4949
CUMMINS RETIREMENT AND SAVINGS PLAN FOR NON-BARGAINING EMPLOYEES
(Full title of the plan)
CUMMINS INC.
500 Jackson Street
P. O. Box 3005
Columbus, IN 47202-3005
(Name of Issuer of Securities Held Pursuant to the Plan and
the Address of its Principal Executive Office)
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
INFORMATION
DECEMBER
31, 2014 AND 2013
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
TABLE OF
CONTENTS
DECEMBER
31, 2014 AND 2013
*
As the Plan is a
member of the Cummins Inc. and Affiliates Retirement and Savings Plans Master Trust
(Master Trust), the schedules of assets (held at end of year), at
December
31, 2014 and of reportable transactions for the year ended December 31, 2014 of
the Master Trust have been certified by the Master Trustee and have been
separately filed with the Department of Labor. Other Supplemental Schedules not
filed herewith are omitted because of the absence of the conditions under which
they are required by the Department of Labors Rules and Regulations for
Reporting and
Disclosure
under the Employee Retirement Income Security Act of 1974.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Benefits Policy Committee and
Participants of the
Cummins Retirement and
Savings Plan for
Non-Bargaining Employees
Columbus,
Indiana
We have audited the accompanying statements of net assets
available for benefits of the Cummins Retirement and Savings Plan for
Non-Bargaining Employees (the Plan) as of December 31, 2014 and 2013, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2014. These financial statements are the responsibility of
the Plans management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
The Plan is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Plans internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the net assets available for
benefits of the Plan as of December 31, 2014 and 2013, and the changes in net
assets available for benefits for the year ended December 31, 2014, in
conformity with accounting principles generally accepted in the United States
of America.
The supplemental information in the accompanying Schedule
H, line 4i Schedule of Assets (Held at End of Year) has been subjected to
audit procedures performed in conjunction with the audit of the Plans
financial statements. The supplemental information is presented for the purpose
of additional analysis and is not a required part of the financial statements
but includes supplemental information required by the
1
Department of Labors Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental information is the responsibility of the Plans management. Our
audit procedures included determining whether the supplemental information
reconciles to the financial statements or the underlying accounting and other
records, as applicable, and performing procedures to test the completeness and
accuracy of the information presented in the supplemental information. In
forming our opinion on the supplemental information in the accompanying
schedules, we evaluated whether the supplemental information, including its
form and content, is presented in conformity with the Department of Labors Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. In
our opinion, the supplemental information in the accompanying schedules is
fairly stated in all material respects in relation to the financial statements
as a whole.
/S/ BLUE & CO., LLC
BLUE & CO., LLC
Seymour,
Indiana
June 25,
2015
2
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER
31, 2014 AND 2013
|
|
2014
|
|
|
|
2013
|
Assets
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Investment
in Cummins Inc. and Affiliates
|
|
|
|
|
|
|
Retirement
and Savings Plans Master
|
|
|
|
|
|
|
Trust,
at fair value:
|
|
|
|
|
|
|
Cummins
Inc. common stock fund
|
$
|
586,165,813
|
|
|
$
|
566,234,981
|
Other
investments
|
|
1,601,170,784
|
|
|
|
1,504,187,866
|
Total
investments
|
|
2,187,336,597
|
|
|
|
2,070,422,847
|
Employee
contributions receivable
|
|
2,603,773
|
|
|
|
-0-
|
Employer
contributions receivable
|
|
7,152,556
|
|
|
|
5,359,073
|
Contributions
receivable from outside plans
|
|
28,903,329
|
|
|
|
-0-
|
Notes
receivable from participants
|
|
28,592,378
|
|
|
|
25,542,524
|
Net assets available for benefits
|
|
|
|
|
|
|
Net
assets reflecting all investments
|
|
|
|
|
|
|
at fair
value
|
|
2,254,588,633
|
|
|
|
2,101,324,444
|
Adjustment
from fair value to contract
|
|
|
|
|
|
|
value
for fully benefit-responsive
|
|
|
|
|
|
|
investment
contracts
|
|
1,455,940
|
|
|
|
(1,481,070)
|
Net
assets available for benefits
|
$
|
2,256,044,573
|
|
|
$
|
2,099,843,374
|
See
accompanying notes to financial statements.
3
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
STATEMENT
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR
ENDED DECEMBER 31, 2014
Additions
|
|
|
Contributions:
|
|
|
Employer
|
$
|
42,499,851
|
Employee
|
|
97,126,056
|
Plan
interest in Cummins Inc. and Affiliates Retirement
|
|
|
and
Savings Plans Master Trust investment income
|
|
122,367,756
|
Interest
on notes receivable from participants
|
|
1,115,245
|
Total
additions
|
|
263,108,908
|
Deductions
|
|
|
Benefits
paid to participants
|
|
136,064,338
|
Administrative
expenses
|
|
976,315
|
Total
deductions
|
|
137,040,653
|
Fund transfers with affiliate plans
|
|
1,229,615
|
Fund transfers with outside plans
|
|
28,903,329
|
Net
change in net assets available for benefits
|
|
156,201,199
|
Net assets available for benefits, beginning of year
|
|
2,099,843,374
|
Net assets available for benefits, end of year
|
$
|
2,256,044,573
|
See
accompanying notes to financial statements.
4
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
1. DESCRIPTION OF THE PLAN
The
following description of the Cummins Retirement and Savings Plan for
Non-Bargaining Employees (the Plan) provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plans provisions.
General
The
Plan is a defined contribution plan designed to provide participants with a
systematic method of savings and at the same time enable such participants to
benefit from contributions made to the Plan by Cummins Inc. and Affiliates
(collectively, the Company). Eligible employees are salaried and
non-bargaining hourly employees of the Company. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
An
amendment effective December 31, 2014 merged employees not subject to any
collective bargaining agreement included in the Cummins Northwest Retirement Savings Plan (the
CNW Plan) into the Cummins Retirement and Savings Plan for Non-Bargaining
Employees. The transfer of these assets was $28,903,329 and is reflected in the
accompanying financial statements as Fund transfers with outside plans in the
Statement of Changes in Net Assets Available for Benefits and included as
Contributions receivable from outside plans in the Statements of Net Assets
Available for Benefits.
Master Trust
The Cummins Inc.
and Affiliates Retirement and Savings Plans Master Trust (Master
Trust) holds the assets of the Plan and the Cummins Retirement and Savings
Plan for Collectively Bargained Employees.
The
trustee for the Master Trust is State Street Corporation (Trustee). As
participants transfer between different locations within the Company, their
related Plan account transfers to the appropriate Plan, if applicable. Such
transfers are reflected in the accompanying financial statements as Fund
transfers with affiliate plans.
Contributions
Participants
may contribute up to 50% of their eligible pay through a combination of pre-tax
and after-tax contributions. Participants may direct their contributions in any
of twenty-five investment options, including the Cummins Inc. Common Stock
Fund.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Matching
Contribution
The Company contributes to the Plan by matching 100% of
the first 1% contributed plus 50% of the next 5% contributed. The matching
contribution is made in the form of cash or Company stock, based on the
participants employing company, as defined. The entire amount of Company stock
received as a match is available for diversification.
Participant
Accounts
Each participants account is credited with the
participants contributions, the Companys contributions and an allocation of
Plan earnings. Allocations of Plan earnings are made daily and are based upon
the participants weighted average account balance for the day, as described in
the Plan document.
Vesting
Participants
are fully vested in all employee and employer contributions and earnings
thereon at all times.
Benefit
Payments
Upon termination of employment or retirement, account
balances are paid either as a lump-sum distribution or annual installments not
to exceed the lesser of 15 years or the life expectancy of the participant
and/or joint life expectancy of the participant and beneficiary, and commence
no later than the participant reaching age 70-1/2. The Plan also permits
hardship withdrawals from participant pre-tax contributions and actual earnings
thereon. Participants may also withdraw their after-tax contributions.
Voting
Rights
Each participant is entitled to exercise voting rights
attributable to the Company shares allocated to his or her account. The Trustee
shall vote all Company shares for which no voting instructions were received in
the same manner and proportion as the shares for which voting instructions were
received.
Notes
Receivable from Participants
A participant can obtain a loan up to a maximum of the
lesser of $50,000 or 50% of the participants account balance. Loans are
secured by the participants account balance and bear interest at the prime
rate plus one percent, and mature no later than 4½ years from the date of the
loan. Principal and interest is paid ratably through payroll deductions.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Plan Termination
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The
financial statements of the Plan have been prepared on an accrual basis of
accounting.
Investment
contracts held by a defined contribution plan are required to be reported at
fair value. However, contract value is the relevant measurement attribute for
that portion of the net assets available for benefits of a defined contribution
plan attributable to fully benefit-responsive investment contracts because
contract value is the amount participants would receive if they were to initiate
permitted transactions under the terms of the plan. The Statement of Net Assets
Available for Benefits presents the fair value of the investment contracts as
well as the adjustment of the fully benefit-responsive investment contracts
from fair value to contract value. The Statement of Changes in Net Assets
Available for Benefits is prepared on a contract value basis.
Investments
The
Plans investment in the Master Trust is stated at fair value based on the fair
value of the underlying investments of the Master Trust, determined primarily
by quoted market prices, except for the Stable Value fund and common/collective
trust investments. The Stable Value fund consists primarily of insurance
contracts and bank investment contracts with various companies. Insurance
contracts and bank contracts are nontransferable, but provide for
benefit-responsive withdrawals by plan participants at contract value.
Alternative investment contracts consist of investments together with contracts
under which a bank or other institution provides for benefit-responsive
withdrawals by plan participants at contract value. Contract value represents
contributions made to investment contracts, plus earnings, less participant
withdrawals and administrative expenses. Fair value is determined using a
discounted cash flow method by considering such factors as the
benefit-responsiveness of the investment contracts, the ability of the parties
to perform in accordance with the terms of the contracts, and the likelihood
that plan-directed withdrawals would cause payment to plan participants to be
at amounts other than contract value. There are no limitations on liquidity
guarantees and no valuation reserves are being recorded to adjust contract
amounts.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
The common/collective trust investments are public
investment securities valued using the net asset value (NAV) provided by fund
managers. The NAV is quoted on a private market that is not active; however,
the unit price is based on underlying investments which are traded on an active
market.
Notes
Receivable from Participants
Notes receivable from participants are measured at their
unpaid principal balance plus any accrued but unpaid interest. Delinquent notes
receivable from participants are recorded as a distribution based upon the
terms of the Plan document.
Allocation of Master Trust Assets and
Transactions
The investment income and expenses of the Master Trust
are allocated to each plan based on the relationship of the Plans investment
balances to the total Master Trust investment balances.
Use
of Estimates
The preparation of financial statements, in accordance
with accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates.
Risks
and Uncertainties
The Master Trust invests in various securities.
Investment securities, in general, are exposed to various risks, such as
interest rate, credit, and overall market volatility. Due to the level of risk
associated with certain investment securities, it is reasonably possible that
changes in the values of investment securities will occur in the near term and
such changes could materially affect the amounts reported in the financial
statements.
Payment
of Benefits
Benefit
payments are recorded when paid.
Administrative
Expenses
Substantially all costs of administering the Plan are
paid by the Company. However, a portion of administrative fees are charged to
participants accounts (a monthly fee of 0.05% of the participants account
balance up to a maximum of $5).
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Reclassifications
Certain
prior year amounts have been reclassified herein to conform to the current
method of presentation.
3. INVESTMENTS IN MASTER TRUST
The
Plans investments are held in the Master Trust. At December 31, 2014 and 2013,
the Plans interest in the net assets of the Master Trust was 88.7% and 88.3%,
respectively.
The following
investments are held by the Master Trust as of December 31:
|
|
2014
|
|
|
|
2013
|
Cummins
Inc. Common Stock Fund
|
$
|
599,200,268
|
|
|
$
|
577,454,007
|
Stable
Value fund wrapped
|
|
|
|
|
|
|
investment contracts
|
|
339,594,881
|
|
|
|
374,315,607
|
Stable
Value fund wrapper contracts
|
|
85,501
|
|
|
|
100,476
|
Common
/ collective trusts
|
|
699,666,086
|
|
|
|
583,325,514
|
Registered
investment companies
|
|
827,178,198
|
|
|
|
808,973,111
|
Total
|
$
|
2,465,724,934
|
|
|
$
|
2,344,168,715
|
The
Plans percentage of each investment classification held by the Master Trust as
of December 31 is as follows:
|
2014
|
|
2013
|
Cummins
Inc. Common Stock Fund
|
|
97.8%
|
98.1%
|
Stable
Value fund
|
69.7%
|
70.0%
|
Common
/ collective trusts
|
90.1%
|
90.0%
|
Registered
investment companies
|
88.7%
|
88.7%
|
|
|
|
|
|
The
Stable Value fund portion of the Master Trust comprises several fully
benefit-responsive insurance and investment contracts. This fund includes
open-ended, security-backed investments. The contracts have varying yields
which averaged
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
1.66 percent and 1.38 percent during the years ended
December 31, 2014 and 2013, respectively. The contracts have varying crediting
interest rates which averaged 2.01 percent and 1.87 percent during the years
ended December 31, 2014 and 2013, respectively. The crediting interest rates
adjust on varying intervals by contract. There are no reserves against contract
value for credit risk of the contract issuer or otherwise.
The Stable Value funds key objectives are to provide
preservation of principal, maintain a stable interest rate, and provide daily
liquidity at contract value for participant withdrawals and transfers in
accordance with the provision of the Plans. To accomplish these objectives, the
Stable Value fund invests primarily in investment contracts such as traditional
guaranteed investment contracts (GICs) and wrapper contracts (also known as
synthetic GICs). In a traditional GIC, the issuer takes a deposit from the
Stable Value fund and purchases investments that are held in the issuers general
account. The issuer is contractually obligated to repay the principal and a
specified rate of interest guaranteed to the Stable Value fund. A synthetic
investment contract, or wrapper contract, is an investment contract issued by
an insurance company or other financial institution, designed to provide a
contract value wrapper around a portfolio of bonds or other fixed income
securities that are owned by the Stable Value fund.
In a wrapper contract structure, the underlying
investments are owned by the Stable Value fund and held in trust for
participants. The Stable Value fund purchases a wrapper contract from an
insurance company or bank. The wrapper contract amortizes the realized and
unrealized gains and losses on the underlying fixed income investments,
typically over the duration of the investments, through adjustments to the
future interest crediting rate (which is the rate earned by participants in the
Stable Value fund for the underlying investments). The issuer of the wrapper
contract provides assurance that the adjustments to the interest crediting rate
do not result in a future interest crediting rate that is less than zero. An
interest crediting rate less than zero would result in a loss of principal or
accrued interest.
The key factors that influence future interest crediting
rates for a wrapper contract include the level of market interest rates, the
amount and timing of participant contributions, transfers, and withdrawals into
and out of the wrapper contract, the investment returns generated by the fixed
income investments that back the wrapper contract and the duration of the
underlying investments backing the wrapper contract. Wrapper contracts
interest crediting rates are typically reset on a monthly or quarterly basis.
While there may be slight variations from one contract to another, most wrapper
contracts use a formula to determine the interest crediting rate that is based
on the specific factors as aforementioned. Over time, the crediting rate
formula amortizes the Stable Value funds realized and unrealized market value
gains and losses over the duration of the underlying investments.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Because changes in market interest rates affect the yield
to maturity and the market value of the underlying investments, they can have a
material impact on the wrapper contracts interest crediting rate. In addition,
participant withdrawals and transfers from the Stable Value fund are paid at
contract value but funded through the market value liquidation of the
underlying investments, which also impacts the interest crediting rate. The
resulting gains and losses in the market value of the underlying investments
relative to the wrapper contract values are represented in the Statements of Net Assets Available for Benefits as
Adjustment from fair value to contract value. If the adjustment from fair value
to contract value is positive for a given contract, this indicates that the
wrapper contract value is greater than the market value of the underlying
investments. The embedded market value losses will be amortized in the future
through a lower interest crediting rate than would otherwise be the case. If
the adjustment from fair value to contract value is negative, this indicates
that the wrapper contract value is less than the market value of the underlying
investments. The amortization of the embedded market value gains will cause the
future interest crediting rate to be higher than it otherwise would have been.
All wrapper contracts provide for a minimum interest
crediting rate of zero percent. In the event that the interest crediting rate
should fall to zero and the requirements of the wrapper contract are satisfied,
the wrapper issuers will pay to the Plans the shortfall needed to maintain the
interest crediting rate at zero. This helps to ensure that participants
principal and accrued interest will be protected.
In certain circumstances, the amount withdrawn from the
wrapper contract would be payable at fair value rather than at contract value.
These events include termination of the Plans, a material adverse change to the
provisions of the Plans, if the employer elects to withdraw from a wrapper
contract in order to switch to a different investment provider, or if the terms
of a successor plan (in the event of the spin-off or sale of a division) do not
meet the wrapper contract issuers underwriting criteria for issuance of a
clone wrapper contract. These events described herein that could result in the
payment of benefits at market value rather than contract value are not probable
of occurring in the foreseeable future.
Examples of events that would permit a wrapper contract
issuer to terminate a wrapper contract upon short notice include the Plans
loss of their qualified status, uncured material breaches of responsibilities,
or material and adverse changes to the provisions of the Plans. If one of these
events was to occur, the wrapper contract issuer could terminate the wrapper contract
at the market value of the underlying investments (or in the case of a
traditional GIC, at the hypothetical market value based upon a contractual
formula).
Synthetic investment contracts generally impose
conditions on both the Plan and the issuer. If an event of default occurs and
is not cured, the non-defaulting party may
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
terminate the contract. The following may cause the Plan
to be in default: a breach of material obligation under the contract; a
material misrepresentation; or a material amendment to the Plan agreement. The
issuer may be in default if it breaches a material obligation under the
investment contract; makes a material misrepresentation; is acquired or
reorganized. If, in the event of default of an issuer, the Plan were unable to
obtain a replacement the Plan could seek to add additional issuers over time to
diversify the Plans exposure to such risk, but there is no assurance the Plan
may be able to do so. The combination of the default of an issuer and an
inability to obtain a replacement agreement could render the Plan unable to achieve
its objective of maintaining a stable contract value. The terms of an
investment contract generally provide for settlement of payments only upon
termination of the contract or total liquidation of the covered investments.
Generally, payments will be made pro-rata, based on the percentage of
investments covered by each issuer. Contract termination occurs whenever the
contract value or market value of the covered investments reaches zero or upon
certain events of default. If the contract terminates due to issuer default,
the issuer will generally be required to pay to the Plan the excess, if any, of
contract value over market value on the date of termination. If the contract
terminates when the market value equals zero, the issuer will pay the excess of
contract value over market value to the Plan to the extent necessary for the
Plan to satisfy outstanding contract value withdrawal requests. Contract
termination also may occur by either party upon election and notice.
The contracts aggregate fair values were approximately
$(2,100,000) and $2,100,000 higher(less) than the reported contract values at
December 31, 2014 and 2013, respectively.
The Master Trust contains multiple common/collective
trusts which invest in a variety of investments and each has its own investment
strategy as follows:
Vanguard Target Retirement Trusts
The Vanguard Target Retirement Trusts use an asset
allocation glide path to offer an appropriate level of exposure to risk and
return as investors progress along the path to retirement. The year in the
trust name refers to the approximate year (the target date) when an investor in
the fund would retire and leave the workforce. The fund will gradually shift
its emphasis from more aggressive investments to more conservative ones based
on its target date. The trusts use a simple fund of funds structure which seeks
to build appropriate asset allocation from preselected stock, bond, and money
market portfolios. All of the assets are invested in index funds.
NT Collective S&P 500 Index Fund Lending
The primary objective of this fund is to approximate the
risk and return characterized by the S&P 500 Index. This index is commonly
used to represent the large cap
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
segment of the U.S. equity market. To achieve its
objective, the fund employs a replication technique, which generally seeks to
hold each index constituent in its proportional index weight. The fund may make
limited use of futures and/or options for the purpose of maintaining equity
exposure. This fund may participate in securities lending.
NT Collective Aggregate Bond Index Fund Lending
The primary objective of this fund is to provide
investment results that approximate the overall performance of the Barclays
Capital Aggregate Bond Index. The fund may hold units of participation in any
fixed income collective fund established and maintained by Northern Trust or
any of its affiliates. The fund may make limited use of interest rate futures
and/or options for the purpose of maintaining market exposure. This fund may
participate in securities lending.
NT Collective All Country World Ex-US Index Fund
Lending
The primary objective of this fund is to approximate the
risk and return characterized by the MSCI All Country World ex-US Index. This
index is commonly used to represent the global non-U.S. equity markets. To
achieve its objective, the fund employs a replication technique, which
generally seeks to hold each index constituent in its proportional index
weight. The fund may make limited use of futures and/or options for the purpose
of maintaining equity exposure. This fund participates in securities lending.
There
are no redemption restrictions on any of these common/collective trusts.
Investments that represent 5% or more of the Master
Trusts assets in either year are separately identified as follows:
|
|
2014
|
|
|
|
|
2013
|
American
Funds Growth Fund of America
|
$
|
159,606,626
|
|
|
$ |
148,589,193
|
Cummins
Inc. Common Stock Fund
|
|
599,200,268
|
|
|
|
|
577,454,007
|
NTGI
S&P 500 Index Fund
|
|
218,103,614
|
|
|
|
|
185,745,632
|
Vanguard
Wellington Admiral Shares Fund
|
|
295,213,883
|
|
|
|
|
270,121,899
|
Aegon
Wrapped Investment Contract
|
|
108,984,663
|
|
|
|
|
120,943,549
|
Royal
Bank of Canada Wrapped
|
|
|
|
|
|
|
|
Investment
Contract
|
|
110,216,771
|
|
|
|
|
121,272,026
|
MetLife
Wrapped Investment Contract
|
|
109,528,606
|
|
|
|
|
119,648,610
|
Other
|
|
864,870,503
|
|
|
|
|
800,393,799
|
Total
|
$
|
2,465,724,934
|
|
|
|
$ |
2,344,168,715
|
13
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Investment
income for the Master Trust for the year ended December 31, 2014 is as follows:
Net
appreciation in fair value of investments:
|
|
|
Cummins
Inc. Common Stock Fund
|
$
|
16,804,643
|
Common
/ collective trusts
|
|
54,663,669
|
Registered
investment companies
|
|
49,246,384
|
Interest
|
|
6,719,677
|
Dividends
paid on Cummins Inc. common stock
|
|
9,361,330
|
4.
CUMMINS STOCK FUND
The
following is the Master Trusts investment in Cummins Inc. common stock
(excluding cash) at December 31:
|
2014
|
|
|
2013
|
Number
of shares
|
|
4,139,096
|
|
|
|
4,076,913
|
Cost
|
$
|
234,405,059
|
|
|
$
|
185,434,458
|
Market
|
$
|
596,733,470
|
|
|
$
|
574,722,425
|
5. TAX STATUS
The
Internal Revenue Service has determined by an opinion letter for the Plan dated
July 19, 2002, that the Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code (IRC). Although the Plan has
been amended subsequent to July 19, 2002, the Plan administrator believes that
the Plan is designed and is currently operated in compliance with the
applicable requirements of the IRC.
Accounting
principles generally accepted in the United States of America require management
to evaluate tax positions taken by the Plan and recognize a tax liability if
the Plan has taken an uncertain position that more likely than not would not be
sustained upon examination by various federal and state taxing authorities.
Management has concluded that as of December 31, 2014 and 2013, there are no
uncertain positions taken or expected to be taken that would require
recognition of a liability or disclosure in the accompanying financial
statements.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
The
Plan is subject to routine audits by taxing jurisdictions. However, as of the
date the financial statements were available to be issued, there were no audits
for any tax periods in progress. Management believes it is no longer subject to
income tax examinations for years prior to 2011.
6. RELATED PARTY TRANSACTIONS
Certain
Master Trust investments are shares of mutual funds managed by State Street
Corporation and shares of Cummins Inc. State Street Corporation is the Master
Trust trustee. Cummins Inc. is the Plan Sponsor. Hewitt Associates, LLC serves
as the Plans third party administrator. Blue & Co., LLC serves as the
Plans auditor. JPMorgan Asset Management serves as the Plans investment
manager of the Stable Value fund. Transactions with these parties qualify as
party-in-interest transactions.
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
|
|
2014
|
|
|
2013
|
As
reported per the financial statements
|
$ |
2,256,044,573
|
|
$
|
2,099,843,374
|
Adjustment
from fair value to contract value
|
|
|
|
|
|
for
fully benefit-responsive investment
|
|
|
|
|
|
contracts
|
|
(1,455,940)
|
|
|
1,481,070
|
As
reported per the Form 5500
|
$ |
2,254,588,633
|
|
$
|
2,101,324,444
|
15
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
The
following is a reconciliation of plan interest in Cummins Inc. and Affiliates
Retirement and Savings Plans Master Trust investment income per the financial
statements to the Form 5500 for the year ended December 31, 2014:
As
reported per the financial statements
|
$
|
122,367,756
|
Adjustment
from fair value to contract value
|
|
|
for
fully benefit-responsive investment
|
|
|
contracts
at December 31, 2014
|
|
(1,455,940)
|
Adjustment
from fair value to contract value
|
|
|
for
fully benefit-responsive investment
|
|
|
contracts
at December 31, 2013
|
|
(1,481,070)
|
As
reported per the Form 5500
|
$
|
119,430,746
|
8.
FAIR VALUE
MEASUREMENTS
The
framework for measuring fair value provides a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (level 1) and the lowest priority
to unobservable inputs (level 3). The three levels of the fair value hierarchy
are described as follows:
-
Level
1: Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Plan has the ability
to access.
-
Level
2: Inputs to the valuation methodology include quoted prices for similar assets
or liabilities in active markets; quoted prices for identical or similar assets
or liabilities in inactive markets; inputs other than quoted prices that are
observable for the asset or liability; inputs that are derived principally from
or corroborated by observable market data by correlation or other means. If the
asset or liability has a specified (contractual) term, the level 2 input must
be observable for substantially the full term of the asset or liability.
-
Level
3: Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
The
asset or liabilitys fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the
fair value measurement. Valuation techniques maximize the use of relevant
observable inputs and minimize the use of unobservable inputs.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
Following is a description of the valuation methodologies
used for assets measured at fair value. There have been no changes in the
methodologies used at December 31, 2014 and 2013.
-
Registered investment companies and common stock:
Valued at the closing price reported on the active market on which the
individual securities are traded.
-
Common/collective trusts:
Valued at the net asset value (NAV) of units of a collective trust. The
NAV, as provided by the trustee, is used as a practical expedient to estimate
fair value. The NAV is based on the fair value of the underlying investments
held by the fund less its liabilities. This practical expedient is not used
when it is determined to be probable that the fund will sell the investment for
an amount different than the reported NAV. Participant transactions (purchases
and sales) may occur daily. Were the Plan to initiate a full redemption of the
collective trust, the investment advisor reserves the right to temporarily
delay withdrawal from the trust in order to ensure that securities liquidations
will be carried out in an orderly business manner.
-
Guaranteed investment contract (Stable Value fund):
Guaranteed investment contracts are valued at fair value by JPMorgan
Asset Management by discounting the related cash flows based on current yields
of similar instruments with comparable durations considering the
creditworthiness of the issuer. Reasonableness of the methodology is evaluated
through a variety of factors including review of existing contracts, economic
conditions, industry and market developments, and overall credit ratings.
Certain unobservable inputs are assessed through review of contract terms while
others are substantiated utilizing available market data.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
The following table sets
forth by level, within the hierarchy, the Plans assets measured at fair value
on a recurring basis as of December 31, 2014 and 2013:
|
2014
|
|
Fair
|
|
|
|
|
|
|
Value
|
|
Level
1
|
|
|
Level
2
|
Master
Trust level assets
|
|
|
|
|
|
|
Registered investment
|
|
|
|
|
|
|
companies:
|
|
|
|
|
|
|
Bond funds
|
$
70,914,000
|
$
70,914,000
|
$
|
-0-
|
Balanced funds
|
295,213,883
|
295,213,883
|
|
|
-0-
|
Growth funds
|
247,310,394
|
247,310,394
|
|
|
-0-
|
Value funds
|
109,945,945
|
109,945,945
|
|
|
-0-
|
Other
|
103,793,976
|
103,793,976
|
|
|
-0-
|
Common stocks:
|
|
|
|
|
|
|
Cummins Inc. fund
|
599,200,268
|
599,200,268
|
|
|
-0-
|
Common/collective
trusts:
|
|
|
|
|
|
|
Equity index funds
|
224,059,962
|
-0-
|
|
|
224,059,962
|
Bond index funds
|
15,212,145
|
-0-
|
|
|
15,212,145
|
Target funds
|
460,393,979
|
-0-
|
|
|
460,393,979
|
Stable Value fund:
|
|
|
|
|
|
|
Cash equivalents
|
10,950,342
|
10,950,342
|
|
|
-0-
|
Wrapped investment
|
|
|
|
|
|
|
contracts
|
328,644,539
|
-0-
|
|
|
328,644,539
|
Wrapper contracts
|
85,501
|
-0-
|
|
|
85,501
|
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2014 AND 2013
|
2013
|
|
Fair
|
|
|
|
|
|
Value
|
|
Level
1
|
|
Level
2
|
Master
Trust level assets
|
|
|
|
|
|
Registered investment
|
|
|
|
|
|
companies:
|
|
|
|
|
|
Bond funds
|
$
75,986,210
|
$
75,986,210
|
-0-
|
Balanced funds
|
270,121,899
|
270,121,899
|
-0-
|
Growth funds
|
244,917,049
|
244,917,049
|
-0-
|
Value funds
|
119,481,154
|
119,481,154
|
-0-
|
Other
|
98,466,799
|
98,466,799
|
-0-
|
Common stocks:
|
|
|
|
|
|
Cummins Inc. fund
|
577,454,007
|
577,454,007
|
-0-
|
Common/collective
trusts:
|
|
|
|
|
|
Equity index funds
|
190,432,064
|
-0-
|
190,432,064
|
Bond index funds
|
8,720,989
|
-0-
|
8,720,989
|
Target funds
|
384,172,461
|
-0-
|
384,172,461
|
Stable Value fund:
|
|
|
|
|
|
Cash equivalents
|
12,551,898
|
12,551,898
|
-0-
|
Wrapped investment
|
|
|
|
|
|
contracts
|
361,763,709
|
-0-
|
361,763,709
|
Wrapper contracts
|
100,476
|
-0-
|
100,476
|
The Plans policy is to recognize transfers between
levels as of the end of the reporting period. There were no significant
transfers between Levels 1 and 2 during 2014 or 2013.
CUMMINS RETIREMENT AND
SAVINGS PLAN
FOR NON-BARGAINING EMPLOYEES
(a)
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
Description of
|
|
|
|
|
|
Current
|
|
Identity of Issue
|
|
Investment
|
|
|
Cost
|
|
|
Value
|
*
|
Participant
Loans
|
|
1 - 4
1/2 year maturity
|
|
|
|
|
|
|
|
|
4.25% |
$ |
-0- |
|
$ |
28,592,378 |
*
Party-in-interest
See
report of independent registered public accounting firm.
20
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustees (or
other persons who administer the Plan) have duly caused this annual report to
be signed on its behalf by the undersigned hereunto duly authorized.
|
CUMMINS
RETIREMENT AND SAVINGS PLAN
FOR
NON-BARGAINING EMPLOYEES
|
|
|
|
By:
Benefits Policy Committee of Cummins Inc.
|
|
|
Date:
June 25, 2015
|
By:
/s/ Donald G. Jackson
|
|
Donald
G. Jackson
|
|
Vice
President Treasurer
|
|
|
|
CONSENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in the Registration Statement No.
033-46097 on Form S-8 of Cummins Inc. of our report dated June 25, 2015, with
respect to the statements of net assets available for benefits of Cummins
Retirement and Savings Plan for Non-Bargaining Employees as of December 31,
2014 and 2013, the related statements of changes in net assets available for
benefits for the year ended December 31, 2014, and the related supplemental
schedule of Schedule H, line 4i-schedule of assets (held at end of year) as of December
31, 2014, which report appears in the December 31, 2014 annual report on Form
11-K of Cummins Retirement and Savings Plan for Non-Bargaining Employees.
/S/ BLUE &
CO., LLC
BLUE &
CO., LLC
Seymour, Indiana
June 25,
2015
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