|CUMMINS INC filed this Form 10-K on 02/11/2019|
LIQUIDITY AND CAPITAL RESOURCES
Key Working Capital and Balance Sheet Data
We fund our working capital with cash from operations and short-term borrowings, including commercial paper, when necessary. Various assets and liabilities, including short-term debt, can fluctuate significantly from month to month depending on short-term liquidity needs. As a result, working capital is a prime focus of management attention. Working capital and balance sheet measures are provided in the following table:
(1) Working capital includes cash and cash equivalents.
Cash and cash equivalents were impacted as follows:
2018 vs. 2017
Net cash provided by operating activities increased $101 million, primarily due to higher earnings of $388 million, excluding the net change in the non-cash impact of 2017 Tax Legislation of $805 million, lower net pension contributions of $210 million, higher non-cash losses on corporate owned life insurance of $78 million and increased equity earnings (net of dividends) of $30 million, partially offset by higher working capital requirements of $575 million and a decrease in deferred tax expense of $43 million. During 2018, higher working capital requirements resulted in a cash outflow of $485 million compared to a cash inflow of $90 million in 2017, primarily due to higher accounts payable and inventory levels in 2018 to support business growth.
Net cash used in investing activities decreased $78 million, primarily due to the absence of the acquisition of Eaton Cummins Automated Transmission Technologies for $600 million in the third quarter of 2017, partially offset by higher capital expenditures of $203 million, lower cash flows from derivatives not designated as hedges of $178 million and higher net investments in marketable securities of $109 million.
Net cash used in financing activities increased $326 million, primarily due to higher repurchases of common stock of $689 million, partially offset by increased borrowings of commercial paper of $396 million.
The effect of exchange rate changes on cash and cash equivalents increased $168 million, primarily due to unfavorable fluctuations in the British pound of $123 million.