SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
Entire Document
 

Light-duty automotive sales increased $146 million, primarily due to higher sales to Chrysler and higher sales of light commercial vehicles, partially offset by lower sales to Nissan.
Total on-highway-related sales for 2017 were 79 percent of total engine segment sales, compared to 81 percent in 2016.
Segment EBITDA
Engine segment EBITDA increased $294 million, primarily due to improved gross margin, lower loss contingency charges and increased equity, royalty and interest income from investees, partially offset by higher selling, general and administrative expenses and higher research, development and engineering expenses. The increase in gross margin was primarily due to higher volumes, partially offset by increased warranty costs for campaigns, changes in estimates and higher variable compensation expense.

Gross margin as a percentage of sales declined primarily due to the increased warranty costs and increased variable compensation expense. An increase in selling, general and administrative expenses was primarily due to higher compensation expense, especially variable compensation expense, and higher consulting expense. The increase in research, development and engineering expenses was primarily due to higher compensation expense, especially higher variable compensation expense, and higher consulting expense. The increase in equity, royalty and interest income from investees was primarily due to higher earnings at Beijing Foton Cummins Engine Co. and Dongfeng Cummins Engine Company, Ltd., despite unfavorable impacts from Tax Legislation related to withholding taxes on foreign earnings and remeasurement of deferred taxes of $23 million.
 
Distribution Segment Results
Financial data for the Distribution segment was as follows:
 
 
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
Years ended December 31,
 
2018 vs. 2017
 
2017 vs. 2016
In millions
 
2018
 
2017
 
2016
 
Amount
 
Percent
 
Amount
 
Percent
External sales
 
$
7,807

 
$
7,029

 
$
6,157

 
$
778

 
11
 %
 
$
872

 
14
 %
Intersegment sales
 
21

 
29

 
24

 
(8
)
 
(28
)%
 
5

 
21
 %
Total sales
 
7,828


7,058


6,181

 
770

 
11
 %
 
877

 
14
 %
Research, development and engineering expenses
 
20

 
19

 
13

 
(1
)
 
(5
)%
 
(6
)
 
(46
)%
Equity, royalty and interest income from investees
 
46

 
44

 
70

 
2

 
5
 %
 
(26
)
 
(37
)%
Interest income
 
13

 
6

 
4

 
7

 
NM

 
2

 
50
 %
Segment EBITDA (1)
 
563

 
500

 
508

 
63

 
13
 %
 
(8
)
 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage Points
 
Percentage Points
Segment EBITDA as a percentage of total sales
 
7.2
%
 
7.1
%
 
8.2
%
 
 
 
0.1

 
 
 
(1.1
)
____________________________________
(1) 
Segment EBITDA for 2016 included a gain of $15 million resulting from the acquisition of a controlling interest in a North American distributor. See Note 19, "ACQUISITIONS," to the Consolidated Financial Statements for additional information.

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