SEC Filings


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

Turbo technologies sales increased $164 million, primarily due to higher demand in North America and Western Europe.
Electronics and fuel systems sales increased $120 million, primarily due to higher demand in North America.
Filtration sales increased $112 million, primarily due to higher demand in North America and Western Europe.
Segment EBITDA
Components segment EBITDA increased $113 million, as higher gross margin and increased equity, royalty and interest income from investees was partially offset by increased research, development and engineering expenses and higher selling, general and administrative expenses. The increase in gross margin was primarily due to higher volumes, improved mix and lower material costs, partially offset by increased warranty costs (primarily $184 million for an Engine System Campaign) and higher compensation expense driven by the acquisition of the automated transmission business in the third quarter of 2017. See Note 9, "PRODUCT WARRANTY LIABILITY," to the Consolidated Financial Statements for additional information on the Engine System Campaign. The increase in selling, general and administrative expenses was primarily due to higher administrative expenses for the automated transmission business, partially offset by lower variable compensation expense. The increase in research, development and engineering expenses was primarily due to higher compensation and administrative expenses due to the addition of the automated transmission business and increased consulting expense. The increase in equity, royalty and interest income from investees was primarily due to higher earnings at Fleetguard Filtration Systems India Pvt. as the result of unfavorable Tax Legislation adjustments in 2017.
 
2017 vs. 2016
Sales
Components segment sales increased $1.1 billion across all lines of business. The following were the primary drivers by business:
Emission solutions sales increased $437 million, primarily due to increased sales of products to meet new emission standards in India and stronger market demand for trucks in North America and China.
Electronics and fuel systems sales increased $166 million, primarily due to higher demand in China, Mexico and India.
Automated transmissions contributed North American sales of $164 million following the consolidation of the business during the third quarter of 2017.
Turbo technologies sales increased $143 million, primarily due to higher demand in China and North America.
Filtration sales increased $143 million, primarily due to higher demand in North America, Australia and China.
Segment EBITDA
Components segment EBITDA increased $143 million, as higher gross margin was partially offset by increased selling, general and administrative expenses. The increase in gross margin was primarily due to higher volumes, lower material costs and improved leverage, partially offset by higher warranty costs driven by campaigns and changes in estimates, unfavorable pricing and increased variable compensation expense. The increase in selling, general and administrative expenses was primarily due to higher compensation expense, especially variable compensation expense and expenses related to the addition of the automated transmission business. Decreased equity, royalty and interest income from investees due to unfavorable impacts from Tax Legislation related to withholding taxes on foreign earnings of $12 million was mostly offset by increased earnings at Dongfeng Cummins Emission Solutions Co., Ltd. and Shanghai Fleetguard Filter Co.
 

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