SEC Filings


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

Power Systems Segment Results
Financial data for the Power Systems 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)
 
$
615

 
$
509

 
$
106

 
21
 %
 
$
1,717

 
$
1,509

 
$
208

 
14
 %
Intersegment sales (1)
 
441

 
347

 
94

 
27
 %
 
1,238

 
1,076

 
162

 
15
 %
Total sales
 
1,056

 
856

 
200

 
23
 %
 
2,955

 
2,585

 
370

 
14
 %
Depreciation and amortization
 
30

 
29

 
(1
)
 
(3
)%
 
87

 
87

 

 
 %
Research, development and engineering expenses
 
61

 
44

 
(17
)
 
(39
)%
 
161

 
141

 
(20
)
 
(14
)%
Equity, royalty and interest income from investees
 
14

 
8

 
6

 
75
 %
 
40

 
29

 
11

 
38
 %
Interest income
 
1

 
1

 

 
 %
 
2

 
4

 
(2
)
 
(50
)%
EBIT
 
81

 
59

 
22

 
37
 %
 
199

 
195

 
4

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage Points
 
 
 
 
 
Percentage Points
EBIT as a percentage of total sales
 
7.7
%
 
6.9
%
 
 

 
0.8

 
6.7
%
 
7.5
%
 
 

 
(0.8
)
____________________________________
(1) Due to the acquisitions of North American distributors, sales previously recognized as external sales are now included in intersegment sales.
In the first quarter of 2017, our Power Systems segment reorganized its product lines to better reflect how the segment is managed. Prior year sales were reclassified to reflect these changes. Sales for our Power Systems segment by product line 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
Power generation
 
$
580

 
$
543

 
$
37

 
7
%
 
$
1,676

 
$
1,663

 
$
13

 
1
%
Industrial
 
385

 
235

 
150

 
64
%
 
1,013

 
686

 
327

 
48
%
Generator technologies
 
91

 
78

 
13

 
17
%
 
266

 
236

 
30

 
13
%
Total sales
 
$
1,056

 
$
856

 
$
200

 
23
%
 
$
2,955

 
$
2,585

 
$
370

 
14
%
High-horsepower unit shipments by engine classification were as follows:
 
 
Three months ended
 
Favorable/
 
Nine months ended
 
Favorable/
 
 
October 1,
 
October 2,
 
(Unfavorable)
 
October 1,
 
October 2,
 
(Unfavorable)
Units
 
2017
 
2016
 
Amount
 
Percent
 
2017
 
2016
 
Amount
 
Percent
Power generation
 
2,200

 
2,000

 
200

 
10
%
 
6,200

 
6,000

 
200

 
3
%
Industrial
 
1,600

 
1,000

 
600

 
60
%
 
4,600

 
3,100

 
1,500

 
48
%
Total engine shipments
 
3,800

 
3,000

 
800

 
27
%
 
10,800

 
9,100

 
1,700

 
19
%
Sales
Power Systems segment sales for the three months ended October 1, 2017, increased $200 million versus the comparable period in 2016. The following were the primary drivers:
Industrial sales increased $150 million principally due to higher demand in global mining markets, especially in North America, Europe and China, oil and gas markets in North America and marine markets in North America.
Power generation sales increased $37 million primarily due to higher demand in Western Europe, China and North America, partially offset by lower demand in the Middle East and Africa.
Power Systems segment sales for the nine months ended October 1, 2017, increased $370 million versus the comparable period in 2016. The following were the primary drivers:
Industrial sales increased $327 million primarily due to higher demand in global mining markets in Europe, North America and China and oil and gas markets in North America.

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