News Release


Cummins Announces First Quarter 2015 Results
First quarter revenues of $4.7 billion, EBIT of 11.9 percent of sales; Full year revenue expected to grow between 2 and 4 percent and EBIT to be in the range of 13.5 to 14.0 percent of sales

Columbus, IND., April 28, 2015 (GLOBE NEWSWIRE) -- Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2015.

First quarter revenue of $4.7 billion increased 7 percent from the same quarter in 2014. The increase year-over-year was driven by stronger demand in on-highway markets and distributor acquisitions in North America.  Currency negatively impacted revenues by 3 percent compared to last year, primarily due to a stronger US dollar.

Revenues in North America increased 17 percent while international sales declined by 6 percent. Within international markets, lower revenues in Europe and Brazil more than offset growth in China.

Earnings before interest and taxes (EBIT) increased to $562 million for the first quarter or 11.9 percent of sales, up from $528 million or 12.0 percent of sales a year ago. 

Net income attributable to Cummins grew 14 percent in the first quarter to $387 million ($2.14 per diluted share), compared to $338 million ($1.83 per diluted share) in the first quarter of 2014. The tax rate in the first quarter of 2015, including discrete items, was 26.3 percent.

"Record profitability in our Components Segment, execution of our distributor acquisition strategy, the successful launch of new products in China and improved results in our Power Generation Business all contributed to earnings growth in the first quarter.  Strong performance in these areas more than offset the impact of weak demand in a number of international markets." said Cummins Chairman and CEO Tom Linebarger. "We expect profitability for the remainder of the year to increase from first quarter levels as revenues improve and we capture more benefits from cost reduction activities. During the quarter, we returned $277 million to shareholders in the form of dividends and share repurchase, consistent with our plans to return 50 percent of full year operating cash flow."

Based on the current forecast, Cummins expects full year 2015 revenues to grow between 2 and 4 percent, and EBIT to be in the range of 13.5 to 14.0 percent of sales. 

Other recent highlights:

  • For the eighth consecutive year, Cummins was named one of the world's most ethical companies by The Ethisphere Institute
  • Forbes magazine named Cummins 21st in its Top 25 Employers in America list
  • Cummins was selected by Halliburton as the engine supplier for the first EPA Tier 4 Final-compliant fracking spread in North America
  • The Company repurchased one million shares in the first quarter

First quarter 2015 detail (all comparisons to same period in 2014)

Engine Segment

  • Sales - $2.6 billion, up 1 percent
  • Segment EBIT - $253 million, or 9.7 percent of sales, compared to $269 million or 10.5 percent of sales
  • Increased demand in on-highway markets in North America and power generation offset weaker demand in construction, marine and mining markets

Distribution Segment

  • Sales - $1.5 billion, up 55 percent overall and down 2 percent excluding acquisitions
  • Segment EBIT - $88 million, or 6.0 percent of sales, compared to $76 million or 8.0 percent of sales
  • Higher revenues were primarily driven by acquisitions and stronger demand in Asia Pacific, partially offset by the negative impact of currency movements
  • Segment EBIT included $8m of amortization of intangibles related to prior year acquisitions

Components Segment

  • Sales - $1.3 billion, up 6 percent
  • Segment EBIT - $195 million, or 15.0 percent of sales, compared to $167 million or 13.6 percent of sales
  • Stronger demand in on-highway markets in North America and China

Power Generation Segment

  • Sales - $680 million, up 6 percent
  • Segment EBIT - $49 million, or  7.2 percent of sales, compared to $25 million or 3.9 percent of sales
  • Higher revenues in Asia, Africa and the Middle East more than offset weaker demand in Eastern Europe

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 54,600 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 7,200 dealer locations. Cummins earned $1.65 billion on sales of $19.2 billion in 2014. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at www.twittter.com/cummins and on YouTube at www.youtube.com/cummininc.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future.  These forward looking statements include, without limitation, statements relating to our plans and expectations for our revenues for the full year of 2015.  Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: the adoption and implementation of global emission standards; the price and availability of energy; the pace of infrastructure development; increasing global competition among our customers; general economic, business and financing conditions; governmental action; changes in our customers' business strategies; competitor pricing activity; expense volatility; labor relations; and other risks detailed from time to time in our Securities and Exchange Commission filings, including particularly in the Risk Factors section of our 2014 Annual Report on Form 10-K.  Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.  More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release, and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBIT is a measure used internally to assess the performance of the operating units.

Webcast information
Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at 
www.cummins.com . Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

                                               CUMMINS INC. AND SUBSIDIARIES

                        CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                                   (Unaudited) (a)

    Three months ended
In millions, except per share amounts   March 29, 2015   March 30, 2014
NET SALES     $4,709       $4,406  
Cost of sales   3,514     3,307  
GROSS MARGIN   1,195     1,099  
         
OPERATING EXPENSES AND INCOME        
Selling, general and administrative expenses   517     485  
Research, development and engineering expenses   195     190  
Equity, royalty and interest income from investees   68     90  
Other operating income (expense), net   (3)     (1)  
OPERATING INCOME   548     513  
         
Interest income   5     5  
Interest expense   14     17  
Other income, net   9     10  
INCOME BEFORE INCOME TAXES   548     511  
         
Income tax expense   144     153  
CONSOLIDATED NET INCOME   404     358  
         
Less: Net income attributable to noncontrolling interests   17     20  
NET INCOME ATTRIBUTABLE TO CUMMINS INC.     $387       $338  
         
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.        
Basic     $2.14       $1.83  
Diluted     $2.14       $1.83  
         
WEIGHTED AVERAGE SHARES OUTSTANDING        
Basic   180.6     184.3  
Diluted   181.0     184.7  
         
CASH DIVIDENDS DECLARED PER COMMON SHARE     $0.78       $0.625  

___________________________________________________________

(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

                                                         CUMMINS INC. AND SUBSIDIARIES

                                           CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                              (Unaudited) (a)

In millions, except par value   March 29, 2015   December 31, 2014
ASSETS        
Current assets        
Cash and cash equivalents     $1,997       $2,301  
Marketable securities   115     93  
Total cash, cash equivalents and marketable securities   2,112     2,394  
Accounts and notes receivable, net   3,240     2,946  
Inventories   2,936     2,866  
Prepaid expenses and other current assets   712     849  
Total current assets   9,000     9,055  
Long-term assets        
Property, plant and equipment   7,046     7,123  
Accumulated depreciation   (3,409)     (3,437)  
Property, plant and equipment, net   3,637     3,686  
Investments and advances related to equity method investees   968     981  
Goodwill   470     479  
Other intangible assets, net   340     343  
Prepaid pensions   714     637  
Other assets   607     595  
Total assets     $15,736       $15,776  
         
LIABILITIES        
Current liabilities        
Loans payable     $71       $86  
Accounts payable (principally trade)   2,013     1,881  
Current maturities of long-term debt   33     23  
Current portion of accrued product warranty   379     363  
Accrued compensation, benefits and retirement costs   390     508  
Deferred revenue   393     401  
Other accrued expenses   778     759  
Total current liabilities   4,057     4,021  
Long-term liabilities        
Long-term debt   1,602     1,589  
Pensions   290     289  
Postretirement benefits other than pensions   359     369  
Other liabilities and deferred revenue     1,359     1,415  
Total liabilities     $7,667       $7,683  
         
EQUITY        
Cummins Inc. shareholders' equity        
Common stock, $2.50 par value, 500 shares authorized, 222.3 and 222.3 shares issued     $2,146       $2,139  
Retained earnings   9,792     9,545  
Treasury stock, at cost, 41.0 and 40.1 shares   (2,975)     (2,844)  
Common stock held by employee benefits trust, at cost, 1.0 and 1.1 shares   (12)     (13)  
Accumulated other comprehensive loss   (1,245)     (1,078)  
Total Cummins Inc. shareholders' equity   7,706     7,749  
Noncontrolling interests   363     344  
Total equity     $8,069       $8,093  
Total liabilities and equity     $15,736       $15,776  

___________________________________________________________

(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

                                                            CUMMINS INC. AND SUBSIDIARIES

                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                 (Unaudited) (a)

    Three months ended
In millions   March 29, 2015   March 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES        
Consolidated net income     $404       $358  
Adjustments to reconcile consolidated net income to net cash provided by operating activities        
Depreciation and amortization   128     105  
Deferred income taxes   (1)     22  
Equity in income of investees, net of dividends   (53)     (52)  
Pension contributions in excess of expense   (96)     (100)  
Other post-retirement benefits payments in excess of expense   (8)     (8)  
Stock-based compensation expense   5     10  
Translation and hedging activities   7     (3)  
Changes in current assets and liabilities, net of acquisitions        
Accounts and notes receivable   (276)     (232)  
Inventories   (98)     (135)  
Other current assets   20     2  
Accounts payable   147     302  
Accrued expenses   (35)     (95)  
Changes in other liabilities and deferred revenue   59     50  
Other, net   (30)     39  
Net cash provided by operating activities   173     263  
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Capital expenditures   (100)     (107)  
Investments in internal use software   (8)     (14)  
Investments in and advances to equity investees   10     (6)  
Acquisitions of businesses, net of cash acquired   (11)     (90)  
Investments in marketable securities--acquisitions   (95)     (84)  
Investments in marketable securities--liquidations   71     108  
Cash flows from derivatives not designated as hedges   4     5  
Other, net   4     1  
Net cash used in investing activities   (125)     (187)  
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from borrowings   2     7  
Payments on borrowings and capital lease obligations   (18)     (25)  
Distributions to noncontrolling interests   (1)     (13)  
Dividend payments on common stock   (140)     (115)  
Repurchases of common stock   (137)     (419)  
Other, net   (2)     (37)  
Net cash used in financing activities   (296)     (602)  
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS   (56)     5  
Net decrease in cash and cash equivalents   (304)     (521)  
Cash and cash equivalents at beginning of year   2,301     2,699  
CASH AND CASH EQUIVALENTS AT END OF PERIOD     $1,997       2,178  

___________________________________________________________

(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

                                                                CUMMINS INC. AND SUBSIDIARIES

                                                                         SEGMENT INFORMATION

                                                                                       (Unaudited)


  In millions   Engine   Distribution   Components   Power Generation   Non-segment
Items (1)
  Total
  Three months ended March 29, 2015                        
  External sales     $1,889       $1,469       $931       $420       $--       $4,709  
  Intersegment sales   707     7     368     260     (1,342)     --  
  Total sales   2,596     1,476     1,299     680     (1,342)     4,709  
  Depreciation and amortization(2)   58     27     26     16     --     127  
  Research, development and engineering expenses   114     3     61     17     --     195  
  Equity, royalty and interest income from investees   30     20     9     9     --     68  
  Interest income   2     1     1     1     --     5  
  Segment EBIT   253     88     195     49     (23)     562  
                           
  Segment EBIT as a percentage of total sales   9.7%     6.0%     15.0%     7.2%         11.9%  
                           
  Three months ended March 30, 2014                        
  External sales     $2,090       $942       $922       $452       $--       $4,406  
  Intersegment sales   473     8     308     187     (976)     --  
  Total sales   2,563     950     1,230     639     (976)     4,406  
  Depreciation and amortization(2)   51     16     26     12     --     105  
  Research, development and engineering expenses   116     2     53     19     --     190  
  Equity, royalty and interest income from investees   32     41     9     8     --     90  
  Interest income   2     1     1     1     --     5  
  Segment EBIT   269     76   (3) 167     25     (9)     528  
                           
  Segment EBIT as a percentage of total sales   10.5%     8.0%     13.6%     3.9%         12.0%  
                           
(1)   Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended March 29, 2015 and March 30, 2014.
(2)   Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Income as "Interest expense." The amortization of debt discount and deferred costs were $1 million and less than a million for the three months ended March 29, 2015 and March 30, 2014, respectively.
(3)   Distribution segment EBIT included a gain of $6 million on the fair value adjustment resulting from the acquisition of a controlling interest in a North American distributor for the three months ended March 30, 2014.
                           

                                                               CUMMINS INC. AND SUBSIDIARIES

                                                    RECONCILIATION OF SEGMENT INFORMATION

                                                                                       (Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Income is shown in the table below:

    Three months ended
In millions   March 29, 2015   March 30, 2014
Total EBIT     $562       $528  
Less:  Interest expense   14     17  
Income before income taxes     $548       $511  

                                                              CUMMINS INC. AND SUBSIDIARIES

                                                                    SELECTED FOOTNOTE DATA

                                                                                       (Unaudited)

NOTE 1.  EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the reporting periods was as follows:

    Three months ended
In millions   March 29, 2015   March 30, 2014
Distribution Entities        
North American distributors     $10       $32  
Komatsu Cummins Chile, Ltda.   7     6  
All other distributors   1     1  
Manufacturing Entities        
Dongfeng Cummins Engine Company, Ltd.   14     14  
Chongqing Cummins Engine Company, Ltd.   12     11  
Beijing Foton Cummins Engine Co., Ltd. (Light-duty)   8     6  
Beijing Foton Cummins Engine Co., Ltd. (Heavy-duty)   (1)     (6)  
All other manufacturers   7     15  
Cummins share of net income   58     79  
Royalty and interest income   10     11  
Equity, royalty and interest income from investees     $68       $90  

NOTE 2.  INCOME TAXES

The effective tax rate for the three month period ended March 29, 2015, was 26.3 percent. This tax rate included an $18 million discrete tax benefit to reflect the release of reserves for uncertain tax positions related to a favorable federal audit settlement.

                                                            CUMMINS INC. AND SUBSIDIARIES

                                                FINANCIAL MEASURES THAT SUPPLEMENT GAAP

                                                                                       (Unaudited)

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding special items

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to special items including tax adjustments. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data. The following table reconciles net income attributable to Cummins Inc. to net income attributable to Cummins Inc. excluding special items for the following periods:

      Three months ended
      March 29, 2015   March 30, 2014
In millions   Net Income   Diluted EPS   Net Income   Diluted EPS
Net income attributable to Cummins Inc.     $387       $2.14       $338       $1.83  
Less                
Tax benefit   18     0.10     --     --  
Net income attributable to Cummins Inc. excluding special items     $369       $2.04       $338       $1.83  

                                                               CUMMINS INC. AND SUBSIDIARIES

                                                  FINANCIAL MEASURES THAT SUPPLEMENT GAAP

                                                                                       (Unaudited)

Earnings before interest, taxes and noncontrolling interests

We define EBIT as earnings before interest expense, income tax expense and noncontrolling interests in income of consolidated subsidiaries (EBIT). We use EBIT to assess and measure the performance of our operating segments and also as a component in measuring our variable compensation programs. This measure is not in accordance with, or an alternative for, GAAP and may not be consistent with measures used by other companies. It should be considered supplemental data. Below is a reconciliation of EBIT to "Net income attributable to Cummins Inc.," for each of the applicable periods:

    Three months ended
In millions   March 29, 2015   March 30, 2014
Earnings before interest expense and income taxes     $562       $528  
         
EBIT as a percentage of net sales   11.9%     12.0%  
         
Less        
Interest expense   14     17  
Income tax expense   144     153  
Consolidated net income   404     358  
         
Less        
Net income attributable to noncontrolling interests   17     20  
Net income attributable to Cummins Inc.     $387       $338  
         
Net income attributable to Cummins Inc. as a percentage of net sales   8.2%     7.7%  

                                                              CUMMINS INC. AND SUBSIDIARIES

                                                                    BUSINESS UNIT SALES DATA

                                                                                       (Unaudited)

Engine Segment Net Sales by Market

In the first quarter of 2015, our Engine segment reorganized its reporting structure to include the following markets: heavy-duty truck, medium-duty truck and bus, light-duty automotive (pickup and light commercial vehicle), industrial and stationary power. Sales by market for our Engine segment by business (including 2014 and 2013 reorganized balances) were as follows:

2015                    
In millions   Q1   Q2   Q3   Q4   YTD
Heavy-duty truck     $757       $--       $--       $--       $757  
Medium-duty truck and bus   608     --     --     --     608  
Light-duty automotive   381     --     --     --     381  
Industrial   616     --     --     --     616  
Stationary power   234     --     --     --     234  
Total sales     $2,596       $--       $--       $--       $2,596  
                     
2014                    
In millions   Q1   Q2   Q3   Q4   YTD
Heavy-duty truck     $718       $769       $801       $784       $3,072  
Medium-duty truck and bus   575     605     599     652     2,431  
Light-duty automotive   391     392     396     388     1,567  
Industrial   669     739     768     775     2,951  
Stationary power   210     239     252     240     941  
Total sales     $2,563       $2,744       $2,816       $2,839       $10,962  
                     
2013                    
In millions   YTD                
Heavy-duty truck     $2,618                  
Medium-duty truck and bus   2,064                  
Light-duty automotive   1,465                  
Industrial   2,921                  
Stationary power   945                  
Total sales     $10,013                  

Unit shipments by engine classification (including unit shipments to Power Generation):

2015                    
Units   Q1   Q2   Q3   Q4   YTD
Midrange   112,400     --     --     --     112,400  
Heavy-duty   28,700     --     --     --     28,700  
High-horsepower   3,500     --     --     --     3,500  
Total units   144,600     --     --     --     144,600  
                     
2014                    
Units   Q1   Q2   Q3   Q4   YTD
Midrange   118,900     118,700     117,700     115,900     471,200  
Heavy-duty   28,800     30,300     32,300     30,700     122,100  
High-horsepower   3,400     3,900     3,900     3,600     14,800  
Total units   151,100     152,900     153,900     150,200     608,100  

Distribution Segment Sales by Business

2015                    
In millions   Q1   Q2   Q3   Q4   YTD
Parts and filtration     $573       $--       $--       $--       $573  
Engines   321     --     --     --     321  
Power generation   298     --     --     --     298  
Service   284     --     --     --     284  
Total sales     $1,476       $--       $--     $ $--       $1,476  
                     
2014                    
In millions   Q1   Q2   Q3   Q4   YTD
Parts and filtration     $382       $461       $4491       $590       $1,924  
Engines   174     249     270     368     1,061  
Power generation   193     278     279     413     1,163  
Service   201     250     252     323     1,026  
Total sales     $950       $1,238       $1,292       $1,694       $5,174  

Component Segment Sales by Business

2015                    
In millions   Q1   Q2   Q3   Q4   YTD
Emission solutions     $613       $--       $--       $--       $613  
Turbo technologies   301     --     --     --     301  
Filtration   255     --     --     --     255  
Fuel systems   130     --     --     --     130  
Total sales     $1,299       $--       $--       $--       $1,299  
                     
2014                    
In millions   Q1   Q2   Q3   Q4   YTD
Emission solutions     $543       $582       $598       $620       $2,343  
Turbo technologies   313     307     297     305     1,222  
Filtration   265     275     268     267     1,075  
Fuel systems   109     116     124     129     478  
Total sales     $1,230       $1,280       $1,287       $1,321       $5,118  

Power Generation Segment Sales by Business

In the first quarter of 2015, our Power Generation segment reorganized its reporting structure to include the following businesses: power systems, alternators and power solutions. Sales for our Power Generation segment by business (including 2014 and 2013 reorganized balances) were as follows:

2015                    
In millions   Q1   Q2   Q3   Q4   YTD
Power systems     $543       $--       $--       $--       $543  
Alternators   98     --     --     --     98  
Power solutions   39     --     --     --     39  
Total sales     $680       $--       $--       $--       $680  
                     
2014                    
In millions   Q1   Q2   Q3   Q4   YTD
Power systems     $510       $586       $598       $606       $2,300  
Alternators   105     126     115     103     449  
Power solutions   24     31     41     51     147  
Total sales     $639       $743       $754       $760       $2,896  
                     
2013                    
In millions   YTD                
Power systems     $2,381                  
Alternators   496                  
Power solutions   154                  
Total sales     $3,031                  
CONTACT: Carole Casto
         Executive Director - Corporate Communications
         (317) 610-2480
         carole.casto@cummins.com
Cummins, Inc.