CMI Cummins Inc

• Second quarter revenues of $4.5 billion, EBIT of 13.1 percent of sales
• GAAP profit before tax of 12.7 percent of sales, Diluted EPS of $2.40
• Expects full year 2016 revenues to be down 8 to 10 percent, lower than previous guidance of down 5 to 9 percent
• Full year 2016 EBIT expected to be in the range of 11.6 to 12.2 percent, unchanged
• Returned more than $1 billion to shareholders year to date through dividends and share repurchases

Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2016.

Second quarter revenues of $4.5 billion decreased 10 percent from the same quarter in 2015. Lower truck production in North America and weak global demand for off-highway and power generation equipment were the most significant drivers of the decline in sales. Currency negatively impacted revenues by approximately 1 percent compared to last year, primarily due to a stronger US dollar.

Revenues in North America decreased 13 percent while international sales declined by 4 percent. Within international markets, revenues in the Middle East, Mexico and Brazil declined the most.

Earnings before interest and taxes (EBIT) in the second quarter were $591 million, or 13.1 percent of sales, down from $721 million or 14.4 percent of sales a year ago.

Net income attributable to Cummins was $406 million ($2.40 per diluted share), compared to $471 million ($2.62 per diluted share) in the second quarter of 2015. The tax rate in the second quarter of 2016 was 25.7 percent.

“We made strong progress in our cost reduction initiatives in the second quarter, while continuing to invest in and launch new products that will drive profitable growth in the future,” said Tom Linebarger, Cummins Chairman and CEO. “Benefits from restructuring actions, material cost reduction initiatives, and improvements in product quality helped to mitigate the impact of weak demand in a number of our largest markets and will position the Company for stronger performance when markets improve. We have returned more than $1 billion to shareholders so far this year, through a combination of dividends and share repurchases. Our Board of Directors recently approved an increase in our quarterly dividend of 5.1 percent, consistent with our plans to return 75 percent of operating cash flow to shareholders in 2016,” concluded Linebarger.

Based on the current forecast, Cummins expects full year 2016 revenues to be down 8 to 10 percent, lower than our previous guidance of down 5 to 9 percent primarily due to a lower outlook for North America truck production and weaker demand in global off-highway markets. EBIT is expected to be in the range of 11.6 to 12.2 percent of sales, unchanged from three months ago.

Other recent highlights:

• Cummins won the 2016 Award of Excellence in Energy Management from the Clean Energy Ministerial (CEM), a high-level global forum that promotes policies and programs to advance clean energy
• The Board of Directors approved an increase in the Company's quarterly cash dividend from 97.5 cents per share to $1.025 per share
• Cummins was recently named as one of the Top 50 Companies for Diversity by DiversityInc for the tenth consecutive year
• The Company repurchased 1.8 million shares in the second quarter

Second quarter 2016 detail (all comparisons to same period in 2015)

Engine Segment

• Sales - $2.0 billion, down 14 percent
• Segment EBIT - $206 million, or 10.3 percent of sales, compared to $278 million or 12.0 percent of sales
• Segment EBIT reflects a $39 million charge to increase our estimate for the loss contingency recorded in the fourth quarter of 2015
• On-highway revenues declined 15 percent primarily due to weaker truck production in North America

Distribution Segment

• Sales - $1.5 billion, up 3 percent
• Segment EBIT - $87 million, or 5.6 percent of sales, compared to $113 million or 7.6 percent of sales
• Increased revenue from acquisitions was partially offset by a decline in organic sales in North America and the Middle East and the negative impact from a stronger US dollar

Components Segment

• Sales - $1.3 billion, down 8 percent
• Segment EBIT - $190 million, or 14.9 percent of sales, compared to $223 million or 16.0 percent of sales
• Revenues declined in North America due to lower industry truck production, partially offset by growth in China

Power Systems Segment

• Sales - $921 million, down 16 percent
• Segment EBIT - $90 million, or 9.8 percent of sales, compared to $127 million, or 11.6 percent of sales
• Revenues declined in most major markets due to weak demand for power generation equipment and industrial engines

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 55,000 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 $1.4 billion on sales of $19.1 billion in 2015. 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 2016. 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 2015 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 generally accepted accounting principles (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.

  CUMMINS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (a)   Three months ended July 3,   June 28, In millions, except per share amounts 2016 2015 NET SALES $ 4,528 $ 5,015 Cost of sales 3,331   3,683   GROSS MARGIN 1,197 1,332 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 524 537 Research, development and engineering expenses 155 166 Equity, royalty and interest income from investees 88 94 Other operating expense, net (39 ) —   OPERATING INCOME 567 723 Interest income 6 6 Interest expense 16 17 Other income (expense), net 18   (8 ) INCOME BEFORE INCOME TAXES 575 704 Income tax expense 148   208   CONSOLIDATED NET INCOME 427 496 Less: Net income attributable to noncontrolling interests 21   25   NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 406   $ 471     EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 2.41 $ 2.63 Diluted $ 2.40 $ 2.62   WEIGHTED AVERAGE SHARES OUTSTANDING Basic 168.8 179.2 Diluted 169.0 179.6   CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.975 $ 0.78

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

    Six months ended July 3,   June 28, In millions, except per share amounts 2016 2015 NET SALES $ 8,819 $ 9,724 Cost of sales 6,566   7,197   GROSS MARGIN 2,253 2,527 OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 1,014 1,054 Research, development and engineering expenses 321 361 Equity, royalty and interest income from investees 160 162 Other operating expense, net (41 ) (3 ) OPERATING INCOME 1,037 1,271 Interest income 12 11 Interest expense 35 31 Other income, net 26   1   INCOME BEFORE INCOME TAXES 1,040 1,252 Income tax expense 280   352   CONSOLIDATED NET INCOME 760 900 Less: Net income attributable to noncontrolling interests 33   42   NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 727   $ 858     EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $ 4.27 $ 4.77 Diluted $ 4.26 $ 4.76   WEIGHTED AVERAGE SHARES OUTSTANDING Basic 170.3 179.9 Diluted 170.5 180.3   CASH DIVIDENDS DECLARED PER COMMON SHARE $ 1.95 $ 1.56   (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)     July 3,   December 31, In millions, except par value 2016 2015 ASSETS Current assets Cash and cash equivalents $ 1,045 $ 1,711 Marketable securities 235   100   Total cash, cash equivalents and marketable securities 1,280 1,811 Accounts and notes receivable, net 3,023 2,820 Inventories 2,778 2,707 Prepaid expenses and other current assets 549   609   Total current assets 7,630   7,947   Long-term assets Property, plant and equipment 7,432 7,322 Accumulated depreciation (3,729 ) (3,577 ) Property, plant and equipment, net 3,703 3,745 Investments and advances related to equity method investees 1,073 975 Goodwill 481 482 Other intangible assets, net 328 328 Pension assets 764 735 Other assets 1,041   922   Total assets $ 15,020   $ 15,134     LIABILITIES Current liabilities Accounts payable (principally trade) $ 1,825 $ 1,706 Loans payable 19 24 Commercial paper 200 — Accrued compensation, benefits and retirement costs 353 409 Current portion of accrued product warranty 335 359 Current portion of deferred revenue 433 403 Other accrued expenses 947 863 Current maturities of long-term debt 38   39   Total current liabilities 4,150   3,803   Long-term liabilities Long-term debt 1,614 1,576 Postretirement benefits other than pensions 328 349 Pensions 299 298 Other liabilities and deferred revenue 1,434   1,358   Total liabilities $ 7,825   $ 7,384     EQUITY Cummins Inc. shareholders’ equity Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued $ 2,196 $ 2,178 Retained earnings 10,716 10,322 Treasury stock, at cost, 53.7 and 47.2 shares (4,422 ) (3,735 ) Common stock held by employee benefits trust, at cost, 0.7 and 0.9 shares (9 ) (11 ) Accumulated other comprehensive loss (1,620 ) (1,348 ) Total Cummins Inc. shareholders’ equity 6,861 7,406 Noncontrolling interests 334   344   Total equity $ 7,195   $ 7,750   Total liabilities and equity $ 15,020   $ 15,134     (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 July 3,   June 28, In millions 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income $ 760 $ 900 Adjustments to reconcile consolidated net income to net cash provided by operating activities Restructuring payments (42 ) — Loss contingency 39 — Depreciation and amortization 259 254 Deferred income taxes 2 (63 ) Equity in income of investees, net of dividends (87 ) (68 ) Pension contributions in excess of expense (82 ) (122 ) Other post-retirement benefits payments in excess of expense (17 ) (15 ) Stock-based compensation expense 20 17 Translation and hedging activities (45 ) 27 Changes in current assets and liabilities, net of acquisitions Accounts and notes receivable (252 ) (426 ) Inventories (101 ) (127 ) Other current assets 189 18 Accounts payable 139 97 Accrued expenses (209 ) (21 ) Changes in other liabilities and deferred revenue 129 133 Other, net 32   (35 ) Net cash provided by operating activities 734   569     CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (189 ) (247 ) Investments in internal use software (27 ) (22 ) Investments in and advances to equity investees (17 ) (17 ) Acquisitions of businesses, net of cash acquired (1 ) (15 ) Investments in marketable securities—acquisitions (379 ) (173 ) Investments in marketable securities—liquidations 237 155 Cash flows from derivatives not designated as hedges (21 ) 5 Other, net 6   14   Net cash used in investing activities (391 ) (300 )   CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 109 12 Net borrowings of commercial paper 200 — Payments on borrowings and capital lease obligations (133 ) (31 ) Distributions to noncontrolling interests (24 ) (14 ) Dividend payments on common stock (333 ) (280 ) Repurchases of common stock (695 ) (514 ) Other, net (16 ) (2 ) Net cash used in financing activities (892 ) (829 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (117 ) 19   Net decrease in cash and cash equivalents (666 ) (541 ) Cash and cash equivalents at beginning of year 1,711   2,301   CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,045   $ 1,760     (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.  

CUMMINS INC. AND SUBSIDIARIESSEGMENT INFORMATION(Unaudited)

As previously announced, beginning with the second quarter of 2016, we realigned certain of our reportable segments to be consistent with changes to our organizational structure and how the Chief Operating Decision Maker monitors the performance of our segments. We reorganized our business to combine our Power Generation segment and our high horsepower engine business to create the new Power Systems segment. Our reportable operating segments consist of: Engine, Distribution, Components and Power Systems. We began to report results for our new reporting structure in the second quarter of 2016 and also reflected this change for historical periods.

We allocate certain common costs and expenses, primarily corporate functions, among segments. These include certain costs and expenses of shared services, such as information technology, human resources, legal, finance and supply chain management. In addition to the reorganization noted above, we reevaluated the allocation of these costs, considering the new segment structure created in April 2016 and adjusted our allocation methodology accordingly. The revised methodology, which is based on a combination of relative segment sales and relative service usage levels, is effective for the periods beginning after January 1, 2016 and resulted in the revision of our segment operating results, including segment earnings before interest, income taxes and noncontrolling interests (EBIT), for all four segments for the first quarter of 2016 with a greater share of costs allocated to the Distribution and Components segments than in previous years. Prior periods were not revised for the new allocation methodology. These changes had no impact on our consolidated results.

        Power   Non-segment   In millions Engine Distribution Components Systems

Items (1)

Total Three months ended July 3, 2016 External sales $ 1,504 $ 1,538 $ 933 $ 553 $ — $ 4,528 Intersegment sales 498   6   346   368   (1,218 ) —   Total sales 2,002 1,544 1,279 921 (1,218 ) 4,528 Depreciation and amortization(2) 41 29 32 29 — 131 Research, development and engineering expenses 53 3 51 48 — 155 Equity, royalty and interest income from investees 46 19 12 11 — 88 Interest income 3 1 1 1 — 6 Segment EBIT 206 87 190 90 18 591   Segment EBIT as a percentage of total sales 10.3 % 5.6 % 14.9 % 9.8 % 13.1 %   Three months ended June 28, 2015 External sales $ 1,834 $ 1,487 $ 1,017 $ 677 $ — $ 5,015 Intersegment sales 491   8   380   420   (1,299 ) —   Total sales 2,325 1,495 1,397 1,097 (1,299 ) 5,015 Depreciation and amortization(2) 47 25 28 26 — 126 Research, development and engineering expenses 53 3 57 53 — 166 Equity, royalty and interest income from investees 51 21 8 14 — 94 Interest income 2 1 1 2 — 6 Segment EBIT 278 113 223 127 (20 ) 721   Segment EBIT as a percentage of total sales 12.0 % 7.6 % 16.0 % 11.6 % 14.4 %                           (1)   Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended July 3, 2016 and June 28, 2015. (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."

              Power Non-segment In millions Engine Distribution Components Systems

Items (1)

Total Six months ended July 3, 2016 External sales $ 2,993 $ 2,996 $ 1,830 $ 1,000 $ — $ 8,819 Intersegment sales 985   11   686   729   (2,411 ) —   Total sales 3,978 3,007 2,516 1,729 (2,411 ) 8,819 Depreciation and amortization(2) 80 57 63 58 — 258 Research, development and engineering expenses 110 7 107 97 — 321 Equity, royalty and interest income from investees 82 37 20 21 — 160 Interest income 5 2 2 3 — 12 Segment EBIT 403 174 353 136 9 1,075   Segment EBIT as a percentage of total sales 10.1 % 5.8 % 14.0 % 7.9 % 12.2 %   Six months ended June 28, 2015 External sales $ 3,523 $ 2,956 $ 1,948 $ 1,297 $ — $ 9,724 Intersegment sales 947   15   748   802   (2,512 ) —   Total sales 4,470 2,971 2,696 2,099 (2,512 ) 9,724 Depreciation and amortization(2) 93 52 54 54 — 253 Research, development and engineering expenses 122 6 118 115 — 361 Equity, royalty and interest income from investees 74 41 17 30 — 162 Interest income 4 2 2 3 — 11 Segment EBIT 478 201 418 228 (42 ) 1,283   Segment EBIT as a percentage of total sales 10.7 % 6.8 % 15.5 % 10.9 % 13.2 %                           (1)   Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended July 3, 2016 and June 28, 2015. (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 was $1 million for both of the six months ended July 3, 2016 and June 28, 2015.

 

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 July 3,   June 28, July 3,   June 28, In millions 2016 2015 2016 2015 Total segment EBIT $ 591 $ 721 $ 1,075 $ 1,283 Less: Interest expense 16   17   35   31   Income before income taxes $ 575   $ 704   $ 1,040   $ 1,252     Income before income taxes as a percentage of net sales 12.7 % 14.0 % 11.8 % 12.9 %  

CUMMINS INC. AND SUBSIDIARIESEQUITY INVESTEES DATA(Unaudited)

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 July 3,   June 28, July 3,   June 28, In millions 2016 2015 2016 2015 Distribution Entities Komatsu Cummins Chile, Ltda. $ 8 $ 8 $ 18 $ 15 North American distributors 6 8 11 18 All other distributors 1 — 1 1 Manufacturing Entities Beijing Foton Cummins Engine Co., Ltd. 22 22 40 29 Dongfeng Cummins Engine Company, Ltd. 15 15 22 29 Chongqing Cummins Engine Company, Ltd. 9 11 17 23 All other manufacturers 16   21   32   28 Cummins share of net income 77 85 141 143 Royalty and interest income 11   9   19   19 Equity, royalty and interest income from investees $ 88   $ 94   $ 160   $ 162  

CUMMINS INC. AND SUBSIDIARIESFINANCIAL MEASURES THAT SUPPLEMENT GAAP(Unaudited)

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

We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to special items including tax adjustments. These measures are 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 July 3, 2016   June 28, 2015 In millions Net Income   Diluted EPS Net Income   Diluted EPS Net income attributable to Cummins Inc. $ 727 $ 4.26 $ 858 $ 4.76 Less Tax benefit —   —   18   0.10 Net income attributable to Cummins Inc. excluding special items $ 727   $ 4.26   $ 840   $ 4.66  

Earnings before interest, income 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 July 3, 2016   June 28, 2015 July 3, 2016   June 28, 2015 Earnings before interest expense and income taxes $ 591   $ 721   $ 1,075   $ 1,283     EBIT as a percentage of net sales 13.1 % 14.4 % 12.2 % 13.2 %   Less Interest expense 16 17 35 31 Income tax expense 148   208   280   352   Consolidated net income 427   496   760   900     Less Net income attributable to noncontrolling interests 21   25   33   42   Net income attributable to Cummins Inc. $ 406   $ 471   $ 727   $ 858     Net income attributable to Cummins Inc. as a percentage of net sales 9.0 % 9.4 % 8.2 % 8.8 %  

CUMMINS INC. AND SUBSIDIARIESBUSINESS UNIT SALES DATA(Unaudited)

Engine Segment Sales by Market and Unit Shipments by Engine Classification

In the second quarter of 2016, in conjunction with the reorganization of our segments, our Engine segment reorganized its reporting structure as follows:

• Heavy-duty truck - We manufacture diesel engines that range from 310 to 600 horsepower serving global heavy-duty truck customers worldwide, primarily in North America.
• Medium-duty truck and bus - We manufacture diesel engines ranging from 200 to 450 horsepower serving medium-duty truck and bus customers worldwide, with key markets including North America, Latin America, Europe and Mexico. We also provide diesel and natural gas engines for school buses, transit buses and shuttle buses worldwide, with key markets including North America, Europe, Latin America and Asia, and diesel engines for Class A motor homes (RVs), primarily in North America.
• Light-duty automotive (Pickup and Light Commercial Vehicle (LCV)) - We manufacture 105 to 385 horsepower diesel engines, including engines for the pickup truck market for Chrysler and Nissan in North America, and LCV markets in Europe, Latin America and Asia.
• Off-highway - We provide diesel engines that range from 60 to 755 horsepower to key global markets including construction, mining, rail, defense, agriculture, marine, and oil and gas equipment and also to the power generation business for standby, mobile and distributed power generation solutions throughout the world.

Sales for our Engine segment by market (including 2016, 2015 and 2014 revised balances) were as follows:

2016           In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 631 $ 622 $ — $ — $ 1,253 Medium-duty truck and bus 549 600 — — 1,149 Light-duty automotive 433 394 — — 827 Off-highway 363   386   —   —   749 Total sales $ 1,976   $ 2,002   $ —   $ —   $ 3,978   2015 In millions Q1 Q2 Q3 Q4 YTD Heavy-duty truck $ 757 $ 875 $ 784 $ 700 $ 3,116 Medium-duty truck and bus 608 674 585 640 2,507 Light-duty automotive 381 354 339 401 1,475 Off-highway 399   422   394   357   1,572 Total sales $ 2,145   $ 2,325   $ 2,102   $ 2,098   $ 8,670   2014 In millions YTD Heavy-duty truck $ 3,072 Medium-duty truck and bus 2,431 Light-duty automotive 1,567 Off-highway 1,897   Total sales $ 8,967  

Revised unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:

2016           Units Q1 Q2 Q3 Q4 YTD Heavy-duty 19,700 20,700 — — 40,400 Mid-range 55,400 62,300 — — 117,700 Light-duty 61,700   57,100   —   —   118,800 Total units 136,800   140,100   —   —   276,900   2015 Units Q1 Q2 Q3 Q4 YTD Heavy-duty 28,700 32,800 28,600 24,300 114,400 Mid-range 61,200 66,600 59,600 59,700 247,100 Light-duty 51,200   53,400   47,800   56,900   209,300 Total units 141,100   152,800   136,000   140,900   570,800   2014 Units YTD Heavy-duty 122,100 Mid-range 266,800 Light-duty 204,400   Total units 593,300  

Distribution Segment Sales by Product Line

2016           In millions Q1 Q2 Q3 Q4 YTD Parts $ 648 $ 642 $ — $ — $ 1,290 Service 299 297 — — 596 Power generation 275 326 — — 601 Engines 241   279   —   —   520 Total sales $ 1,463   $ 1,544   $ —   $ —   $ 3,007   2015 In millions Q1 Q2 Q3 Q4 YTD Parts $ 573 $ 598 $ 604 $ 648 $ 2,423 Service 284 307 301 330 1,222 Power generation 298 272 323 397 1,290 Engines 321   318   323   332   1,294 Total sales $ 1,476   $ 1,495   $ 1,551   $ 1,707   $ 6,229

Component Segment Sales by Business

2016           In millions Q1 Q2 Q3 Q4 YTD Emission solutions $ 607 $ 624 $ — $ — $ 1,231 Turbo technologies 265 276 — — 541 Filtration 252 262 — — 514 Fuel systems 113   117   —   —   230 Total sales $ 1,237   $ 1,279   $ —   $ —   $ 2,516   2015 In millions Q1 Q2 Q3 Q4 YTD Emission solutions $ 613 $ 679 $ 607 $ 600 $ 2,499 Turbo technologies 301 307 266 267 1,141 Filtration 255 266 240 249 1,010 Fuel systems 130   145   127   120   522 Total sales $ 1,299   $ 1,397   $ 1,240   $ 1,236   $ 5,172

Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification

In the second quarter of 2016, in conjunction with the reorganization of our segments, our Power Systems segment reorganized its reporting structure as follows:

• Power generation - We design, manufacture, sell and support generators ranging from 2 kilowatts to 3.5 megawatts, as well as paralleling systems and transfer switches, for applications such as residential, commercial, industrial, data centers, health care, telecommunications and waste water treatment plants. We also provide turnkey solutions for distributed generation and energy management applications using natural gas or biogas as a fuel. We also serve global rental accounts for diesel and gas generator sets.
• Industrial - We design, manufacture, sell and support diesel and natural gas high-horsepower engines up to 5,500 horsepower for a wide variety of equipment in the mining, rail, defense, oil and gas, and commercial marine applications throughout the world. Across these markets, we have major customers in North America, Europe, Middle East, Africa, China, Korea, Japan, Latin America, India, Russia, Southeast Asia, South Pacific and Mexico.
• Generator technologies - We design, manufacture, sell and support A/C generator/alternator products for internal consumption and for external generator set assemblers. Our products are sold under the Stamford, AVK and Markon brands and range in output from 3 kilovolt-amperes (kVA) to 12,000 kVA.

Sales for our Power Systems segment by product line (including 2016, 2015 and 2014 revised balances) were as follows:

2016           In millions Q1 Q2 Q3 Q4 YTD Power generation $ 520 $ 597 $ — $ — $ 1,117 Industrial 215 240 — — 455 Generator technologies 73   84   —   —   157 Total sales $ 808   $ 921   $ —   $ —   $ 1,729   2015 In millions Q1 Q2 Q3 Q4 YTD Power generation $ 624 $ 710 $ 621 $ 615 $ 2,570 Industrial 280 295 275 287 1,137 Generator technologies 98   92   86   84   360 Total sales $ 1,002   $ 1,097   $ 982   $ 986   $ 4,067   2014 In millions YTD Power generation $ 2,633 Industrial 1,331 Generator technologies 450   Total sales $ 4,414  

High-horsepower unit shipments by engine classification (including 2016, 2015 and 2014 revised units) were as follows:

2016           Units Q1 Q2 Q3 Q4 YTD Power generation 1,800 2,200 — — 4,000 Industrial 1,000   1,100   —   —   2,100 Total units 2,800   3,300   —   —   6,100   2015 Units Q1 Q2 Q3 Q4 YTD Power generation 2,200 2,500 2,000 1,900 8,600 Industrial 1,300   1,200   1,200   1,500   5,200 Total units 3,500   3,700   3,200   3,400   13,800   2014 Units YTD Power generation 8,700 Industrial 6,100   Total units 14,800  

View source version on businesswire.com: http://www.businesswire.com/news/home/20160802005271/en/

Cummins Inc.Carole Casto, 317-610-2480Executive Director - Corporate Communicationscarole.casto@cummins.com