SEC Filings


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

2017 vs. 2016
Net cash provided by operating activities increased $338 million, primarily due to improved earnings of $358 million, excluding the non-cash impact of Tax Legislation of $820 million and lower working capital levels of $352 million, partially offset by higher pension contributions of $109 million, a decrease in deferred tax expense of $104 million, lower loss contingency charges of $117 million and higher equity earnings (net of dividends) of $77 million. The lower working capital requirements in 2017 resulted in a cash inflow of $90 million compared to a cash outflow of $262 million in 2016.
Net cash used in investing activities increased $135 million, primarily due to the acquisition of Eaton Cummins Automated Transmission Technologies for $600 million in 2017 and the absence of $60 million in proceeds from the sale of of equity investees in 2016, partially offset by lower net investments in marketable securities of $244 million, higher cash flows from derivatives not designated as hedges of $178 million and higher proceeds from the disposal of property, plant and equipment of $96 million.
Net cash used in financing activities decreased $339 million versus 2016, primarily due to lower repurchases of common stock of $327 million.
The effect of exchange rate changes on cash and cash equivalents increased $298 million, primarily due to the British pound, which increased cash and cash equivalents $249 million.
Sources of Liquidity
We generate significant ongoing cash flow. Cash provided by operations is our principal source of liquidity with $2.4 billion provided in 2018. At December 31, 2018, our sources of liquidity included:
 
 
December 31, 2018
In millions
 
Total
 
U.S.
 
International
 
Primary location of international balances
Cash and cash equivalents
 
$
1,303

 
$
244

 
$
1,059

 
U.K., China, Singapore, Belgium, Mexico, Australia, Canada
Marketable securities (1)
 
222

 
58

 
164

 
India
Total
 
$
1,525

 
$
302

 
$
1,223

 
 
Available credit capacity
 
 
 
 
 
 
 
 
Revolving credit facilities (2)
 
$
2,720

 
 
 
 
 
 
International and other uncommitted domestic credit facilities
 
$
237

 
 
 
 
 
 
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(1) The majority of marketable securities could be liquidated into cash within a few days.
(2) The five-year credit facility for $2.0 billion and the 364-day credit facility for $1.5 billion, maturing August 2023 and August 2019, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At December 31, 2018, we had $780 million of commercial paper outstanding, which effectively reduced the available capacity under our revolving credit facilities to $2.7 billion.
Cash, Cash Equivalents and Marketable Securities
A significant portion of our cash flows is generated outside the U.S. We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. As a result, we do not anticipate any local liquidity restrictions to preclude us from funding our operating needs with local resources.
The Tax Legislation made significant changes to U.S. tax law, which included a one-time transition tax on accumulated foreign earnings of $409 million with a cash impact of $429 million as of December 31, 2018. The payments associated with this deemed repatriation will be paid over eight years. The unrepatriated foreign earnings at December 31, 2018, will be repatriated as needed to fund cash needs. The estimated accrued withholding taxes of $184 million on foreign earnings that we plan to repatriate in the foreseeable future will be paid as cash is repatriated. See Note 4, "INCOME TAXES," to our Consolidated Financial Statements for additional information.


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