SEC Filings


10-Q
CUMMINS INC filed this Form 10-Q on 10/31/2017
Entire Document
 

OPERATING SEGMENT RESULTS
Our reportable operating segments consist of the Engine, Distribution, Components and Power Systems segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBIT as a primary basis for the Chief Operating Decision Maker to evaluate the performance of each of our operating segments. Segment amounts exclude certain expenses not specifically identifiable to segments. See Note 12, "OPERATING SEGMENTS," to the Condensed Consolidated Financial Statements for additional information.
Following is a discussion of results for each of our operating segments.
Engine Segment Results
Financial data for the Engine segment was as follows:
 
 
Three months ended
 
Favorable/
 
Nine months ended
 
Favorable/
 
 
October 1,
 
October 2,
 
(Unfavorable)
 
October 1,
 
October 2,
 
(Unfavorable)
In millions
 
2017
 
2016
 
Amount
 
Percent
 
2017
 
2016
 
Amount
 
Percent
External sales (1)
 
$
1,783

 
$
1,357

 
$
426

 
31
 %
 
$
4,951

 
$
4,350

 
$
601

 
14
 %
Intersegment sales (1)
 
553

 
502

 
51

 
10
 %
 
1,715

 
1,487

 
228

 
15
 %
Total sales
 
2,336

 
1,859

 
477

 
26
 %
 
6,666

 
5,837

 
829

 
14
 %
Depreciation and amortization
 
47

 
42

 
(5
)
 
(12
)%
 
137

 
122

 
(15
)
 
(12
)%
Research, development and engineering expenses
 
83

 
56

 
(27
)
 
(48
)%
 
200

 
166

 
(34
)
 
(20
)%
Equity, royalty and interest income from investees
 
58

 
38

 
20

 
53
 %
 
186

 
120

 
66

 
55
 %
Loss contingency
 

 
99

 
99

 
100
 %
 

 
138

 
138

 
100
 %
Interest income
 
1

 
3

 
(2
)
 
(67
)%
 
4

 
8

 
(4
)
 
(50
)%
EBIT
 
229

 
89

 
140

 
NM

 
735

 
492

 
243

 
49
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

 
Percentage Points
 
 

 
 

 
Percentage Points
EBIT as a percentage of total sales
 
9.8
%
 
4.8
%
 
 

 
5.0

 
11.0
%
 
8.4
%
 
 

 
2.6

____________________________________
"NM" - not meaningful information
(1) Due to the acquisitions of North American distributors, sales previously recognized as external sales are now included in intersegment sales.


Sales for our Engine segment by market were as follows:
 
 
Three months ended
 
Favorable/
 
Nine months ended
 
Favorable/
 
 
October 1,
 
October 2,
 
(Unfavorable)
 
October 1,
 
October 2,
 
(Unfavorable)
In millions
 
2017
 
2016
 
Amount
 
Percent
 
2017
 
2016
 
Amount
 
Percent
Heavy-duty truck
 
$
776

 
$
625

 
$
151

 
24
%
 
$
2,110

 
$
1,878

 
$
232

 
12
%
Medium-duty truck and bus
 
625

 
517

 
108

 
21
%
 
1,870

 
1,666

 
204

 
12
%
Light-duty automotive
 
452

 
345

 
107

 
31
%
 
1,304

 
1,172

 
132

 
11
%
Total on-highway
 
1,853

 
1,487

 
366

 
25
%
 
5,284

 
4,716

 
568

 
12
%
Off-highway
 
483

 
372

 
111

 
30
%
 
1,382

 
1,121

 
261

 
23
%
Total sales
 
$
2,336

 
$
1,859

 
$
477

 
26
%
 
$
6,666

 
$
5,837

 
$
829

 
14
%

36