UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549


FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report:  July 28, 2015
 
  CUMMINS INC.
(Exact name of registrant as specified in its charter)
Indiana
(State or other Jurisdiction of
Incorporation)
1-4949
 (Commission File Number)
35-0257090
 (I.R.S. Employer Identification No.)

500 Jackson Street
P. O. Box 3005
Columbus, IN  47202-3005
(Principal Executive Office)  (Zip Code)

Registrant's telephone number, including area code:  (812) 377-5000
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
  
 



Item 2.02. Results of Operations and Financial Condition.
 
On July 28, 2015, Cummins Inc. (“Cummins,” “the Company,” “the registrant,” “we,” “our,” or “us”) issued the attached press release reporting its financial results for the second quarter of 2015, which is furnished herewith as Exhibit 99.

The information furnished pursuant to this Item 2.02, including Exhibit 99, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.


Item 9.01. Financial Statements and Exhibits.
 
(d)
The following exhibit is furnished pursuant to Item 2.02 herewith: 
99-Press Release dated July 28, 2015


SIGNATURE

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: July 28, 2015
 
CUMMINS INC.
 /s/ Marsha L. Hunt
Marsha L. Hunt
Vice President - Corporate Controller
(Principal Accounting Officer)

 


CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)



 
 
Three months ended
In millions, except per share amounts
 
June 28,
2015
 
June 29,
2014
NET SALES
 
$
5,015

 
$
4,835

Cost of sales
 
3,683

 
3,630

GROSS MARGIN
 
1,332

 
1,205

 
 
 
 
 
OPERATING EXPENSES AND INCOME
 
 
 
 
Selling, general and administrative expenses
 
537

 
513

Research, development and engineering expenses
 
166

 
179

Equity, royalty and interest income from investees
 
94

 
105

Other operating (expense) income, net
 
—

 
(6
)
OPERATING INCOME
 
723

 
612

 
 
 
 
 
Interest income
 
6

 
6

Interest expense
 
17

 
15

Other (expense) income, net
 
(8
)
 
39

INCOME BEFORE INCOME TAXES
 
704

 
642

 
 
 
 
 
Income tax expense
 
208

 
170

CONSOLIDATED NET INCOME
 
496

 
472

 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
25

 
26

NET INCOME ATTRIBUTABLE TO CUMMINS INC.
 
$
471

 
$
446

 
 
 
 
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
 
 
 
 
Basic
 
$
2.63

 
$
2.44

Diluted
 
$
2.62

 
$
2.43

 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
 
 

 
 
Basic
 
179.2

 
182.8

Diluted
 
179.6

 
183.2

 
 
 
 
 
CASH DIVIDENDS DECLARED PER COMMON SHARE
 
$
0.78

 
$
0.625

___________________________________________________________
(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 INCOME
(Unaudited) (a)


 
 
Six months ended
In millions, except per share amounts
 
June 28,
2015
 
June 29,
2014
NET SALES
 
$
9,724

 
$
9,241

Cost of sales
 
7,197

 
6,937

GROSS MARGIN
 
2,527

 
2,304

 
 
 
 
 
OPERATING EXPENSES AND INCOME
 
 
 
 
Selling, general and administrative expenses
 
1,054

 
998

Research, development and engineering expenses
 
361

 
369

Equity, royalty and interest income from investees
 
162

 
195

Other operating (expense) income, net
 
(3
)
 
(7
)
OPERATING INCOME
 
1,271

 
1,125

 
 
 
 
 
Interest income
 
11

 
11

Interest expense
 
31

 
32

Other income, net
 
1

 
49

INCOME BEFORE INCOME TAXES
 
1,252

 
1,153

 
 
 
 
 
Income tax expense
 
352

 
323

CONSOLIDATED NET INCOME
 
900

 
830

 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
42

 
46

NET INCOME ATTRIBUTABLE TO CUMMINS INC.
 
$
858

 
$
784

 
 
 
 
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
 
 
 
 
Basic
 
$
4.77

 
$
4.27

Diluted
 
$
4.76

 
$
4.26

 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
Basic
 
179.9

 
183.5

Diluted
 
180.3

 
183.9

 
 
 
 
 
CASH DIVIDENDS DECLARED PER COMMON SHARE
 
$
1.56

 
$
1.25

___________________________________________________________
(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)


In millions, except par value
 
June 28,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
1,760

 
$
2,301

Marketable securities
 
89

 
93

Total cash, cash equivalents and marketable securities
 
1,849

 
2,394

Accounts and notes receivable, net
 
3,422

 
2,946

Inventories
 
2,986

 
2,866

Prepaid expenses and other current assets
 
746

 
849

Total current assets
 
9,003

 
9,055

Long-term assets
 
 
 
 
Property, plant and equipment
 
7,151

 
7,123

Accumulated depreciation
 
(3,498
)
 
(3,437
)
Property, plant and equipment, net
 
3,653

 
3,686

Investments and advances related to equity method investees
 
995

 
981

Goodwill
 
473

 
479

Other intangible assets, net
 
339

 
343

Prepaid pensions
 
784

 
637

Other assets
 
631

 
595

Total assets
 
$
15,878

 
$
15,776

 
 
 
 
 
LIABILITIES
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable (principally trade)
 
$
1,974

 
$
1,881

Loans payable
 
70

 
86

Current portion of accrued product warranty
 
405

 
363

Accrued compensation, benefits and retirement costs
 
432

 
508

Deferred revenue
 
402

 
401

Other accrued expenses
 
739

 
759

Current maturities of long-term debt
 
31

 
23

Total current liabilities
 
4,053

 
4,021

Long-term liabilities
 
 
 
 
Long-term debt
 
1,576

 
1,589

Postretirement benefits other than pensions
 
351

 
369

Pensions
 
291

 
289

Other liabilities and deferred revenue
 
1,393

 
1,415

Total liabilities
 
$
7,664

 
$
7,683

 
 
 
 
 
EQUITY
 
 
 
 
Cummins Inc. shareholders’ equity
 
 
 
 
Common stock, $2.50 par value, 500 shares authorized, 222.3 and 222.3 shares issued
 
$
2,164

 
$
2,139

Retained earnings
 
10,123

 
9,545

Treasury stock, at cost, 43.7 and 40.1 shares
 
(3,350
)
 
(2,844
)
Common stock held by employee benefits trust, at cost, 1.0 and 1.1 shares
 
(12
)
 
(13
)
Accumulated other comprehensive loss
 
(1,071
)
 
(1,078
)
Total Cummins Inc. shareholders’ equity
 
7,854

 
7,749

Noncontrolling interests
 
360

 
344

Total equity
 
$
8,214

 
$
8,093

Total liabilities and equity
 
$
15,878

 
$
15,776

___________________________________________________________
(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
In millions
 
June 28,
2015
 
June 29,
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Consolidated net income
 
$
900

 
$
830

Adjustments to reconcile consolidated net income to net cash provided by operating activities
 
 
 
 
Depreciation and amortization
 
254

 
217

Deferred income taxes
 
(63
)
 
(88
)
Equity in income of investees, net of dividends
 
(68
)
 
(108
)
Pension contributions in excess of expense
 
(122
)
 
(127
)
Other post-retirement benefits payments in excess of expense
 
(15
)
 
(14
)
Stock-based compensation expense
 
17

 
21

Translation and hedging activities
 
27

 
(9
)
Changes in current assets and liabilities, net of acquisitions
 
 
 
 
Accounts and notes receivable
 
(426
)
 
(321
)
Inventories
 
(127
)
 
(223
)
Other current assets
 
18

 
4

Accounts payable
 
97

 
289

Accrued expenses
 
(21
)
 
120

Changes in other liabilities and deferred revenue
 
133

 
116

Other, net
 
(35
)
 
(6
)
Net cash provided by operating activities
 
569

 
701

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
 
(247
)
 
(245
)
Investments in internal use software
 
(22
)
 
(26
)
Investments in and advances to equity investees
 
(17
)
 
(11
)
Acquisitions of businesses, net of cash acquired
 
(15
)
 
(193
)
Investments in marketable securities—acquisitions
 
(173
)
 
(179
)
Investments in marketable securities—liquidations
 
155

 
179

Cash flows from derivatives not designated as hedges
 
5

 
4

Other, net
 
14

 
8

Net cash used in investing activities
 
(300
)
 
(463
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Proceeds from borrowings
 
12

 
17

Payments on borrowings and capital lease obligations
 
(31
)
 
(39
)
Net payments under short-term credit agreements
 
(10
)
 
(48
)
Distributions to noncontrolling interests
 
(14
)
 
(32
)
Dividend payments on common stock
 
(280
)
 
(229
)
Repurchases of common stock
 
(514
)
 
(430
)
Other, net
 
8

 
5

Net cash used in financing activities
 
(829
)
 
(756
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
19

 
38

Net decrease in cash and cash equivalents
 
(541
)
 
(480
)
Cash and cash equivalents at beginning of year
 
2,301

 
2,699

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
1,760

 
$
2,219

___________________________________________________________
(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
 
Distribution
 
Components
 
Power Generation
 
Non-segment
Items (1)
 
Total
 
Three months ended June 28, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
2,058

 
$
1,487

 
$
1,017

 
$
453

 
$
—

 
$
5,015

 
Intersegment sales
 
739

 
8

 
380

 
294

 
(1,421
)
 
—

 
Total sales
 
2,797

 
1,495

 
1,397

 
747

 
(1,421
)
 
5,015

 
Depreciation and amortization(2)
 
60

 
25

 
28

 
13

 
—

 
126

 
Research, development and engineering expenses
 
91

 
3

 
57

 
15

 
—

 
166

 
Equity, royalty and interest income from investees
 
57

 
21

 
8

 
8

 
—

 
94

 
Interest income
 
3

 
1

 
1

 
1

 
—

 
6

 
Segment EBIT
 
341

 
113

 
223

 
57

 
(13
)
 
721

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBIT as a percentage of total sales
 
12.2
%
 
7.6
%
 
16.0
%
 
7.6
%
 
 
 
14.4
%
 
 
 

 
 
 
 
 
 
 
 
 
 
 
Three months ended June 29, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
2,178

 
$
1,229

 
$
953

 
$
475

 
$
—

 
$
4,835

 
Intersegment sales
 
566

 
9

 
327

 
268

 
(1,170
)
 
—

 
Total sales
 
2,744

 
1,238

 
1,280

 
743

 
(1,170
)
 
4,835

 
Depreciation and amortization(2)
 
52

 
20

 
26

 
13

 
—

 
111

 
Research, development and engineering expenses
 
105

 
3

 
53

 
18

 
—

 
179

 
Equity, royalty and interest income from investees
 
45

 
42

 
9

 
9

 
—

 
105

 
Interest income
 
4

 
—

 
1

 
1

 
—

 
6

 
Segment EBIT
 
311

 
126

(3) 
185

 
61

 
(26
)
 
657

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBIT as a percentage of total sales
 
11.3
%
 
10.2
%
 
14.5
%
 
8.2
%
 
 
 
13.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended June 28, 2015 and June 29, 2014.
(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 Income as "Interest expense."
(3
)
Distribution segment EBIT included gains of $14 million on the fair value adjustments resulting from the acquisitions of the controlling interests in North American distributors for the three months ended June 29, 2014.

CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)

 
In millions
 
Engine
 
Distribution
 
Components
 
Power Generation
 
Non-segment Items (1)
 
Total
 
Six months ended June 28, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
3,947

 
$
2,956

 
$
1,948

 
$
873

 
$
—

 
$
9,724

 
Intersegment sales
 
1,446

 
15

 
748

 
554

 
(2,763
)
 
—

 
Total sales
 
5,393

 
2,971

 
2,696

 
1,427

 
(2,763
)
 
9,724

 
Depreciation and amortization(2)
 
118

 
52

 
54

 
29

 
—

 
253

 
Research, development and engineering expenses
 
205

 
6

 
118

 
32

 
—

 
361

 
Equity, royalty and interest income from investees
 
87

 
41

 
17

 
17

 
—

 
162

 
Interest income
 
5

 
2

 
2

 
2

 
—

 
11

 
Segment EBIT
 
594

 
201

 
418

 
106

 
(36
)
 
1,283

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBIT as a percentage of total sales
 
11.0
%
 
6.8
%
 
15.5
%
 
7.4
%
 
 
 
13.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 29, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
External sales
 
$
4,268

 
$
2,171

 
$
1,875

 
$
927

 
$
—

 
$
9,241

 
Intersegment sales
 
1,039

 
17

 
635

 
455

 
(2,146
)
 
—

 
Total sales
 
5,307

 
2,188

 
2,510

 
1,382

 
(2,146
)
 
9,241

 
Depreciation and amortization(2)
 
103

 
36

 
52

 
25

 
—

 
216

 
Research, development and engineering expenses
 
221

 
5

 
106

 
37

 
—

 
369

 
Equity, royalty and interest income from investees
 
77

 
83

 
18

 
17

 
—

 
195

 
Interest income
 
6

 
1

 
2

 
2

 
—

 
11

 
Segment EBIT
 
580

 
202

(3) 
352

 
86

 
(35
)
 
1,185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBIT as a percentage of total sales
 
10.9
%
 
9.2
%
 
14.0
%
 
6.2
%
 
 
 
12.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended June 28, 2015 and June 29, 2014.
(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 Income as "Interest expense." The amortization of debt discount and deferred costs were $1 million and $1 million for the six months ended June 28, 2015 and June 29, 2014, respectively.
(3
)
Distribution segment EBIT included gains of $20 million on the fair value adjustments resulting from the acquisitions of the controlling interests in North American distributors for the six months ended June 29, 2014.

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
In millions
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
Total EBIT
 
$
721

 
$
657

 
$
1,283

 
$
1,185

Less: Interest expense
 
17

 
15

 
31

 
32

Income before income taxes
 
$
704

 
$
642

 
$
1,252

 
$
1,153



CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)




NOTE 1.  EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the reporting periods was as follows:
 
 
Three months ended
 
Six months ended
In millions
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
Distribution Entities
 
 
 
 
 
 
 
 
North American distributors
 
$
8

 
$
30

 
$
18

 
$
62

Komatsu Cummins Chile, Ltda.
 
8

 
8

 
15

 
14

All other distributors
 
—

 
1

 
1

 
2

Manufacturing Entities
 
 

 
 
 
 

 
 
Dongfeng Cummins Engine Company, Ltd.
 
15

 
22

 
29

 
36

Beijing Foton Cummins Engine Co., Ltd. (Light-duty)
 
15

 
8

 
23

 
14

Chongqing Cummins Engine Company, Ltd.
 
11

 
15

 
23

 
26

Beijing Foton Cummins Engine Co., Ltd. (Heavy-duty)
 
7

 
(7
)
 
6

 
(13
)
All other manufacturers
 
21

 
19

 
28

 
34

Cummins share of net income
 
85

 
96

 
143

 
175

Royalty and interest income
 
9

 
9

 
19

 
20

Equity, royalty and interest income from investees
 
$
94

 
$
105

 
$
162

 
$
195

 
NOTE 2.  INCOME TAXES

The effective tax rate for the three and six month periods ended June 28, 2015, was 29.5 percent and 28.1 percent, respectively. The six month tax rate included an $18 million discrete tax benefit to reflect the release of reserves for uncertain tax positions related to a favorable federal audit settlement.


CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding special items

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to special items including tax adjustments. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data. The following table reconciles net income attributable to Cummins Inc. to net income attributable to Cummins Inc. excluding special items for the following periods:
 
 
 
Six months ended
 
 
 
June 28, 2015
 
June 29, 2014
In millions
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
Net income attributable to Cummins Inc.
 
$
858

 
$
4.76

 
$
784

 
$
4.26

Less
 
 

 
 

 
 

 
 

Tax items
 
18

 
0.10

 
—

 
—

Net income attributable to Cummins Inc. excluding special items
 
$
840

 
$
4.66

 
$
784

 
$
4.26




CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)

Earnings before interest, taxes and noncontrolling interests
 
We define EBIT as earnings 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. This measure is not in accordance with, or an alternative for, GAAP and may not be consistent with measures used by other companies. It should be considered supplemental data. Below is a reconciliation of EBIT to “Net income attributable to Cummins Inc.,” for each of the applicable periods:
 
 
Three months ended
 
Six months ended
In millions
 
June 28, 2015
 
June 29, 2014
 
June 28, 2015
 
June 29, 2014
Earnings before interest expense and income taxes
 
$
721

 
$
657

 
$
1,283

 
$
1,185

 
 
 
 
 
 
 
 
 
EBIT as a percentage of net sales
 
14.4
%
 
13.6
%
 
13.2
%
 
12.8
%
 
 
 
 
 
 
 
 
 
Less
 
 
 
 
 
 
 
 
Interest expense
 
17

 
15

 
31

 
32

Income tax expense
 
208

 
170

 
352

 
323

Consolidated net income
 
496

 
472

 
900

 
830

 
 
 
 
 
 
 
 
 
Less
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
25

 
26

 
42

 
46

Net income attributable to Cummins Inc.
 
$
471

 
$
446

 
$
858

 
$
784

 
 
 
 
 
 
 
 
 
Net income attributable to Cummins Inc. as a percentage of net sales
 
9.4
%
 
9.2
%
 
8.8
%
 
8.5
%



CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)


Engine Segment Net Sales by Market
In the first quarter of 2015, our Engine segment reorganized its reporting structure to include the following markets: heavy-duty truck, medium-duty truck and bus, light-duty automotive (pickup and light commercial vehicle), industrial and stationary power. Sales by market for our Engine segment by business (including 2014 and 2013 reorganized balances) were as follows:
2015
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Heavy-duty truck
 
$
757

 
$
875

 
$
—

 
$
—

 
$
1,632

Medium-duty truck and bus
 
608

 
674

 
—

 
—

 
1,282

Light-duty automotive
 
381

 
354

 
—

 
—

 
735

Industrial
 
616

 
624

 
—

 
—

 
1,240

Stationary power
 
234

 
270

 
—

 
—

 
504

Total sales
 
$
2,596

 
$
2,797

 
$
—

 
$
—

 
$
5,393

 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Heavy-duty truck
 
$
718

 
$
769

 
$
801

 
$
784

 
$
3,072

Medium-duty truck and bus
 
575

 
605

 
599

 
652

 
2,431

Light-duty automotive
 
391

 
392

 
396

 
388

 
1,567

Industrial
 
669

 
739

 
768

 
775

 
2,951

Stationary power
 
210

 
239

 
252

 
240

 
941

Total sales
 
$
2,563

 
$
2,744

 
$
2,816

 
$
2,839

 
$
10,962

 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
 
 
In millions
 
YTD
 
 
 
 
 
 
 
 
Heavy-duty truck
 
$
2,618

 
 
 
 
 
 
 
 
Medium-duty truck and bus
 
2,064

 
 
 
 
 
 
 
 
Light-duty automotive
 
1,465

 
 
 
 
 
 
 
 
Industrial
 
2,921

 
 
 
 
 
 
 
 
Stationary power
 
945

 
 
 
 
 
 
 
 
Total sales
 
$
10,013

 
 
 
 
 
 
 
 
 
Unit shipments by engine classification (including unit shipments to Power Generation):
2015
 
 
 
 
 
 
 
 
 
 
Units
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Mid-range
 
112,400

 
120,000

 
—

 
—

 
232,400

Heavy-duty
 
28,700

 
32,800

 
—

 
—

 
61,500

High-horsepower
 
3,500

 
3,700

 
—

 
—

 
7,200

Total units
 
144,600

 
156,500

 
—

 
—

 
301,100

 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
Units
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Mid-range
 
118,900

 
118,700

 
117,700

 
115,900

 
471,200

Heavy-duty
 
28,800

 
30,300

 
32,300

 
30,700

 
122,100

High-horsepower
 
3,400

 
3,900

 
3,900

 
3,600

 
14,800

Total units
 
151,100

 
152,900

 
153,900

 
150,200

 
608,100










CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)


Distribution Segment Sales by Business
2015
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Parts and filtration
 
$
573

 
$
598

 
$
—

 
$
—

 
$
1,171

Engines
 
321

 
318

 
—

 
—

 
639

Power generation
 
298

 
272

 
—

 
—

 
570

Service
 
284

 
307

 
—

 
—

 
591

Total sales
 
$
1,476

 
$
1,495

 
$
—

 
$
—

 
$
2,971

 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Parts and filtration
 
$
382

 
$
461

 
$
491

 
$
590

 
$
1,924

Engines
 
174

 
249

 
270

 
368

 
1,061

Power generation
 
193

 
278

 
279

 
413

 
1,163

Service
 
201

 
250

 
252

 
323

 
1,026

Total sales
 
$
950

 
$
1,238

 
$
1,292

 
$
1,694

 
$
5,174


Component Segment Sales by Business
2015
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Emission Solutions
 
$
613

 
$
679

 
$
—

 
$
—

 
$
1,292

Turbo Technologies
 
301

 
307

 
—

 
—

 
608

Filtration
 
255

 
266

 
—

 
—

 
521

Fuel systems
 
130

 
145

 
—

 
—

 
275

Total sales
 
$
1,299

 
$
1,397

 
$
—

 
$
—

 
$
2,696

 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Emission Solutions
 
$
543

 
$
582

 
$
598

 
$
620

 
$
2,343

Turbo Technologies
 
313

 
307

 
297

 
305

 
1,222

Filtration
 
265

 
275

 
268

 
267

 
1,075

Fuel systems
 
109

 
116

 
124

 
129

 
478

Total sales
 
$
1,230

 
$
1,280

 
$
1,287

 
$
1,321

 
$
5,118




CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)


Power Generation Segment Sales by Business
In the first quarter of 2015, our Power Generation segment reorganized its reporting structure to include the following businesses: power systems, alternators and power solutions. Sales for our Power Generation segment by business (including 2014 and 2013 reorganized balances) were as follows:
2015
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Power systems
 
$
543

 
$
611

 
$
—

 
$
—

 
$
1,154

Alternators
 
98

 
92

 
—

 
—

 
190

Power solutions
 
39

 
44

 
—

 
—

 
83

Total sales
 
$
680

 
$
747

 
$
—

 
$
—

 
$
1,427

 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
In millions
 
Q1
 
Q2
 
Q3
 
Q4
 
YTD
Power systems
 
$
510

 
$
586

 
$
598

 
$
606

 
$
2,300

Alternators
 
105

 
126

 
115

 
103

 
449

Power solutions
 
24

 
31

 
41

 
51

 
147

Total sales
 
$
639

 
$
743

 
$
754

 
$
760

 
$
2,896

 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
 
 
In millions
 
YTD
 
 
 
 
 
 
 
 
Power systems
 
$
2,381

 
 
 
 
 
 
 
 
Alternators
 
496

 
 
 
 
 
 
 
 
Power solutions
 
154

 
 
 
 
 
 
 
 
Total sales
 
$
3,031

 
 
 
 
 
 
 
 

 







Contact:
Carole Casto
Executive Director - Corporate Communications
(317) 610-2480
carole.casto@cummins.com

For Immediate Release

July 28, 2015

Cummins Announces Second Quarter 2015 Results

•
Second quarter revenues of $5.0 billion, EBIT of 14.4 percent of sales
•
Full year revenue expected to grow between 2 and 4 percent and EBIT to be in the range of 13.5 to 14.0 percent of sales

COLUMBUS, IND. - Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2015. Second quarter revenue of $5.0 billion increased 4 percent from the same quarter in 2014. The increase year-over-year was driven by stronger demand in on-highway markets and distributor acquisitions in North America. Currency negatively impacted revenues by 4 percent compared to last year, primarily due to a stronger US dollar.

Revenues in North America increased 12 percent while international sales declined by 6 percent. Within international markets, sales in Brazil fell the most due to the weak economy.

Earnings before interest and taxes (EBIT) increased to $721 million for the second quarter or 14.4 percent of sales, up from $657 million or 13.6 percent of sales a year ago

Net income attributable to Cummins grew 6 percent in the second quarter to $471 million ($2.62 per diluted share), compared to $446 million ($2.43 per diluted share) in the second quarter of 2014. The tax rate in the second quarter of 2015, including discrete items, was 29.5 percent.

“We delivered strong results in the second quarter, despite challenging economic conditions in a number of international markets, and we increased cash returned to shareholders,” said Cummins Chairman and CEO Tom Linebarger. “Earnings improved as a result of good performance by our manufacturing and supply chain organizations and solid execution on material cost reduction initiatives. We returned $517 million to shareholders in the form of dividends and share repurchases in the second quarter and we recently announced a 25 percent increase in our quarterly dividend.”

Based on the current forecast, Cummins expects full year 2015 revenues to grow between 2 and 4 percent, and EBIT to be in the range of 13.5 to 14.0 percent of sales.

Other recent highlights:

•
For the ninth consecutive year, Cummins was named one of the Top 50 Companies for Diversity by Diversity Inc.





•
The Company announced new environmental sustainability goals and pledged to reach an annual reduction of 3.5 million metric tons of carbon dioxide (CO2) by 2020, which equates to 350 million gallons of fuel.

•
John Wall, Cummins’ Vice President - Chief Technical Officer, was honored by the California Air Resources Board with the Haagen-Smit Clean Air Award, which recognizes outstanding lifetime achievement in air-quality research, science and technology.

•
For the fourth consecutive year, Cummins was recognized as a Top 25 Supply Chain company by Gartner.

•
Cummins announced that John Wall, Vice President - Chief Technical Officer, will be retiring after nearly 30 years with the Company and that Jennifer Rumsey, Vice President of Engineering for Cummins’ Engine Business, will take Wall’s place.

•
The Company announced a 25 percent increase in its quarterly dividend.

Second quarter 2015 detail (all comparisons to same period in 2014)

Engine Segment

•
Sales - $2.8 billion, up 2 percent.
•
Segment EBIT - $341 million, or 12.2 percent of sales, compared to $311 million or 11.3 percent of sales.
•
Strong demand in North American truck and bus markets was partially offset by weaker demand in global industrial markets and lower truck demand in Brazil.

Distribution Segment

•
Sales - $1.5 billion, up 21 percent, down 6 percent excluding acquisitions.
•
Segment EBIT - $113 million, or 7.6 percent of sales, compared to $126 million or 10.2 percent of sales.
•
Currency movements negatively impacted sales by 6 percent.
•
Results in the second quarter of 2014 included a gain of $14 million related to the acquisition of distributors in North America.

Components Segment

•
Sales - $1.4 billion, up 9 percent.
•
Segment EBIT - $223 million, or 16.0 percent of sales, compared to $185 million or 14.5 percent of sales.
•
Stronger demand in on-highway markets in North America, Europe, and China more than offset weakness in Brazil.

Power Generation Segment

•
Sales - $747 million, up 1 percent.
•
Segment EBIT - $57 million, or 7.6 percent of sales, compared to $61 million, or 8.2 percent of sales.
•
Increased international sales in the Middle East, Asia Pacific and India more than offset lower sales in North America and a 4 percent reduction in revenues due to currency movements.






About Cummins
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 54,600 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 7,200 dealer locations. Cummins earned $1.65 billion on sales of $19.2 billion in 2014. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at www.twittter.com/cummins and on YouTube at www.youtube.com/cummininc.

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 our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward looking statements include, without limitation, statements relating to our plans and expectations for our revenues for the full year of 2015. Our 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: the adoption and implementation of global emission standards; the price and availability of energy; the pace of infrastructure development; increasing global competition among our customers; general economic, business and financing conditions; governmental action; changes in our customers’ business strategies; competitor pricing activity; expense volatility; labor relations; and other risks detailed from time to time in our Securities and Exchange Commission filings, including particularly in the Risk Factors section of our 2014 Annual Report on Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release, and 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. EST. 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.




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