|CUMMINS INC filed this Form 10-K on 02/11/2019|
Equity, Royalty and Interest Income From Investees
Equity, royalty and interest income from investees increased $37 million, primarily due to a $39 million unfavorable deferred tax adjustment recognized in 2017 in conjunction with the adoption of the 2017 Tax Legislation that did not repeat in 2018. The primary equity, royalty and interest income fluctuations by equity investee were higher earnings at Tata Cummins Ltd., Cummins Westport, Chongqing Cummins Engine Company, Ltd. and higher royalty and interest income, partially offset by lower earnings at Beijing Foton Cummins Engine Company, Ltd. and Dongfeng Cummins Engine Company, Ltd. See Note 3, "INVESTMENTS IN EQUITY INVESTEES, " to our Consolidated Financial Statements for additional information on the deferred tax adjustments by investee.
Other Operating Income (Expense), Net
Other operating income (expense), net was as follows:
Interest income increased $17 million, primarily due to higher interest rates on cash and marketable security balances.
Interest expense increased $33 million, primarily due to higher weighted-average debt outstanding and higher interest rates.
Other Income, Net
Other income, net was as follows:
Income Tax Expense
Our effective tax rate for 2018 was 20.6 percent compared to 58.0 percent for 2017.
The year ended December 31, 2018, contained $14 million, or $0.09 per share, of favorable net discrete tax items, primarily due to $26 million of other favorable discrete tax items, partially offset by $12 million of unfavorable discrete tax items related to the 2017 Tax Legislation.