Cummins Reports Sharply Higher Second Quarter Sales and Profitability, Increases Full-Year Guidance

Published on Tuesday, 27 July 2010 07:35 Written by TradersHuddle Staff

COLUMBUS, Ind.-( Business Wire )-

Cummins Inc. (NYSE: CMI) today reported for the second quarter its highest quarterly earnings as a percentage of sales in more than 25 years. Continued productivity improvements in the Company’s manufacturing operations, as well as strong performance in international markets, drove significant year-over-year gains across all the Company’s business segments.

Earnings Before Interest and Taxes (EBIT) was $401 million, or 12.5 percent of sales, up from $109 million or 4.5 percent of sales in the second quarter of 2009. EBIT also improved from 10.7 percent in the first quarter of 2010. For the first time ever, all four segments posted quarterly EBIT in excess of 10 percent of sales.

Sales of $3.21 billion in the second quarter were 32 percent higher than $2.43 billion in the same quarter in 2009. Net income attributable to Cummins Inc. in the second quarter more than quadrupled to $246 million, or $1.25 a share, compared to $56 million, or $0.28 a share, in the same period a year ago.

The sales gains were led by the Company’s Engine and Components segments, which each reported 45 percent sales improvements compared to the same period in 2009. Power Generation sales increased 16 percent, while Distribution sales rose 24 percent. The Company delivered these strong results even though the North American heavy duty truck market remains weak as result of the transition to new on-highway emissions standards at the beginning of the year.

Based on the Company’s performance in the first half of 2010 and its forecast for the rest of the year, Cummins today increased its financial guidance for 2010. The Company now expects to generate EBIT of 12 percent of sales on revenues of $13 billion.

“We had an outstanding quarter,” said Cummins Chairman and Chief Executive Officer Tim Solso. “The work we have done to strengthen our manufacturing operations during the downturn has resulted in significant productivity gains, and we continue to benefit from our leadership position in large and growing international markets such as China, India and Brazil.”

The Company’s non- U.S. markets continued to perform well, with sales up 51 percent outside the United States in the second quarter compared to a year ago. Sales outside the U.S. accounted for 64 percent of the Company’s revenue in the quarter.

The Company continued to return value to shareholders by repurchasing $123 million of its shares during the second quarter. The Company has now repurchased $310 million worth of stock under its current $500 million authorization.

Even with the stock repurchase, the Company improved its cash position from the first quarter of the year. The Company generated $301 million in cash from operations in the second quarter, compared to $245 million in the same period last year and $126 million in the first quarter.

“Our strong performance during the downturn has allowed us to make the investments necessary to position the Company for a period of long-term profitable growth as our markets continue to improve,” said Cummins President and Chief Operating Officer Tom Linebarger. “We are working hard to prepare for future growth, even as we continue to concentrate on managing the business through this challenging economic period.”

In other recent news:

• In early July, Cummins announced a $100 million expansion of the High-Horsepower Technical Center and high-horsepower engine product line in Seymour, Ind. The investment in the newly renamed Seymour Engine Plant is expected to add about 200 engineering and manufacturing jobs over the next five years.
• The Company increased the quarterly cash dividend on its common stock by 50 percent to 26.25 cents per share from 17.5 cents per share. The dividend is payable on Sept. 1, 2010 to shareholders of record on Aug. 23, 2010. Cummins last raised its dividend in July 2008.
• Cummins negotiated a $1.24 billion, four-year credit facility to replace its previous $1.1 billion line of credit, which was set to expire in 2011. The revolver, combined with the Company’s strong cash balance, ensures that Cummins will have adequate liquidity over the next several years.
• Moody’s Investor Service raised the Company’s senior unsecured debt rating from Baa3 to Baa2 and said the rating outlook remains “stable.” In raising its investment grade rating, Moody’s cited Cummins’ ability to “maintain solid debt protection measures despite the most severe downturn in the North American medium and heavy-duty truck industry, and the broader weakening in the global economy.”
• Cummins also was recognized for its long-term return to shareholders recently by Bloomberg BusinessWeek magazine, which ranked Cummins’ stock performance 12^th among the Standard & Poor’s 500 companies from March 2005- March 2010.

Second quarter details (all comparisons to same period in 2009)

Engine Segment

• Sales - $1.9 billion, up 45 percent
• Segment EBIT – $197 million, or 10.4 percent of sales, compared to a loss of $4 million. EBIT percentage is a quarterly record for the Engine segment.
• Total on-highway sales increased 36 percent
  • Global heavy-duty truck engine sales declined 14 percent as result of transition to 2010 EPA-compliant engines in North America, where unit sales declined 58 percent.
  • Medium-duty truck and bus sales increased 47 percent on strength of international markets and North American share gains
  • Light-duty auto and RV sales more than tripled from very low base in 2009 when Chrysler ceased truck production for several weeks as part of its reorganization efforts
• Industrial sales increased 49 percent
  • Construction sales increased 111 percent led by infrastructure investments in emerging markets such as China
  • Mining sales increased 32 percent

Power Generation

• Sales – $708 million, up 16 percent
• Segment EBIT – $76 million, or 10.7 percent of sales, compared to $41 million or 6.7 percent of sales
• Commercial Products sales rose 20 percent; Commercial Projects up 24 percent; Consumer sales increased 48 percent; Generator Technologies sales were flat; and Power Electronics down 6 percent
• Sales gains led by India, China, Latin America and Russia. North American sales declined 16 percent

Components

• Sales – $729 million up 45 percent
• Segment EBIT – $75 million, or 10.3 percent of sales, compared to a loss of $10 million. EBIT percentage was a quarterly record for the Components segment.
• Turbo Technologies sales increased by 69 percent; Emission Solutions rose 53 percent, Fuel Systems up 41 percent, Filtration up 26 percent
• Higher volumes, increased product content on the aftertreatment product and manufacturing productivity improvements contributed to EBIT gain

Distribution

• Sales – $576 million, an increase of 24 percent
• Segment EBIT – $69 million, or 12 percent of sales, compared to $55 million, or 11.9 percent of sales
• Consolidation of Western Canada distributor contributed 13 percent growth in revenue
• Organic growth of 7.5 percent from global aftermarket and industrial engine sales and service in support of construction and mining markets

Presentation of Non-GAAP Financial Information

EBIT is a non-GAAP measures used in this release. EBIT 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. EDT. 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.

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. The Company reported net income attributable to Cummins Inc. of $428 million on sales of $10.8 billion in 2009. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at http://twitter.com/cummins.

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 the company’s expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company’s 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, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
			Three months ended
			June 27,			March 28,			June 28,
In millions, except per share amounts			2010			2010			2009
NET SALES			$	3,208		$	2,478		$	2,431
Cost of sales			2,455			1,877			1,983
GROSS MARGIN			753			601			448
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses			354			335			287
Research, development and engineering expenses			96			92			79
Equity, royalty and interest income from investees			97			76			57
Restructuring charges			―			―			7
Other operating expense, net			4			4			11
OPERATING INCOME			396			246			121
Interest income			5			3			1
Interest expense			9			9			10
Other income (expense), net			―			17			(13		)
INCOME BEFORE INCOME TAXES			392			257			99
Income tax expense			122			87			29
CONSOLIDATED NET INCOME			270			170			70
Less: net income attributable to noncontrolling interests			24			21			14
NET INCOME ATTRIBUTABLE TO CUMMINS INC.			$	246		$	149		$	56
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic			$	1.25		$	0.75		$	0.28
Diluted			$	1.25		$	0.75		$	0.28
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic				196.9			198.4			197.1
Diluted				197.3			198.7			197.4
CASH DIVIDENDS DECLARED PER COMMON SHARE			$	0.175		$	0.175		$	0.175

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
			Six months ended
			June 27,			June 28,
In millions, except per share amounts			2010			2009
NET SALES			$	5,686		$	4,870
Cost of sales			4,332			3,977
GROSS MARGIN			1,354			893
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses			689			587
Research, development and engineering expenses			188			164
Equity, royalty and interest income from investees			173			90
Restructuring charges			―			73
Other operating expense, net			8			9
OPERATING INCOME			642			150
Interest income			8			3
Interest expense			18			17
Other income (expense), net			17			(16		)
INCOME BEFORE INCOME TAXES			649			120
Income tax expense			209			36
CONSOLIDATED NET INCOME			440			84
Less: net income attributable to noncontrolling interests			45			21
NET INCOME ATTRIBUTABLE TO CUMMINS INC.			$	395		$	63
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic			$	2.00		$	0.32
Diluted			$	2.00		$	0.32
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic				197.6			197.0
Diluted				197.9			197.2
CASH DIVIDENDS DECLARED PER COMMON SHARE			$	0.35		$	0.35

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)
			June 27,				December 31,
In millions, except par value			2010				2009
ASSETS
Current assets
Cash and cash equivalents			$	924			$	930
Marketable securities				269				190
Accounts and notes receivable, net				2,052				2,004
Inventories				1,652				1,341
Deferred income taxes				312				295
Prepaid expenses and other current assets				236				243
Total current assets				5,445				5,003
Long-term assets
Property, plant and equipment				4,705				4,765
Accumulated depreciation				(2,867	)			(2,879	)
Property, plant and equipment, net				1,838				1,886
Investments and advances related to equity method investees				622				574
Goodwill				363				364
Other intangible assets, net				225				228
Deferred income taxes				377				436
Other assets				340				325
Total assets			$	9,210			$	8,816
LIABILITIES
Current liabilities
Loans payable			$	87			$	37
Accounts payable (principally trade)				1,213				957
Current portion of accrued product warranty				407				426
Accrued compensation, benefits and retirement costs				346				366
Deferred revenue				142				128
Other accrued expenses				612				518
Total current liabilities				2,807				2,432
Long-term liabilities
Long-term debt				669				637
Pensions				370				514
Postretirement benefits other than pensions				461				453
Other liabilities and deferred revenue				743				760
Total liabilities				5,050				4,796
EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 221.9 and 222.0 shares issued				1,868				1,860
Retained earnings				3,900				3,575
Treasury stock, at cost, 23.1 and 20.7 shares				(890	)			(731	)
Common stock held by employee benefits trust, at cost, 2.9 and 3.0 shares				(35	)			(36	)
Accumulated other comprehensive loss
Defined benefit postretirement plans				(786	)			(788	)
Other				(174	)			(107	)
Total accumulated other comprehensive loss				(960				(895	)
Total Cummins Inc. shareholders’ equity				3,883				3,773
Noncontrolling interests				277				247
Total equity				4,160				4,020
Total liabilities and equity			$	9,210			$	8,816

	(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)
			Six months ended
			June 27,			June 28,
In millions			2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income			$	440		$	84
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Restructuring charges, net of cash payments			―			20
Depreciation and amortization			161			154
Gain on fair value adjustment for consolidated investee			(12		)	―
Deferred income taxes			43			20
Equity in income of investees, net of dividends			(49		)	60
Pension expense, net of pension contributions			(116		)	(15		)
Other post-retirement benefits expense, net of cash payments			(7		)	(16		)
Stock-based compensation expense			11			12
Translation and hedging activities			3			51
Changes in current assets and liabilities, net of acquisitions and divestitures:
Accounts and notes receivable			(57		)	86
Inventories			(301		)	282
Other current assets			1			22
Accounts payable			239			(253		)
Accrued expenses			(14		)	(242		)
Changes in long-term liabilities			66			73
Other, net			19			(17		)
Net cash provided by operating activities			427			321
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures			(91		)	(139		)
Investments in internal use software			(22		)	(19		)
Proceeds from disposals of property, plant and equipment			42			7
Investments in and advances (to) from equity investees			(1		)	1
Acquisition of businesses, net of cash acquired			(71		)	(2		)
Investments in marketable securities—acquisitions			(358		)	(69		)
Investments in marketable securities—liquidations			278			133
Cash flows from derivatives not designated as hedges			(18		)	(21		)
Other, net			(2		)	-
Net cash used in investing activities			(243		)	(109		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings			85			10
Payments on borrowings and capital lease obligations			(37		)	(44		)
Net borrowings under short-term credit agreements			(1		)	(5		)
Distributions to noncontrolling interests			(4		)	(10		)
Dividend payments on common stock			(70		)	(71		)
Repurchases of common stock			(162		)	-
Other, net			16			1
Net cash used in financing activities			(173		)	(119		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			(17		)	15
Net (decrease) increase in cash and cash equivalents			(6		)	108
Cash and cash equivalents at beginning of year			930			426
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	924		$	534

	(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				Power Generation				Components				Distribution				Non-segment items(1)				Total
Three months ended June 27, 2010
External sales			$	1,595			$	518			$	522			$	573			$	―			$	3,208
Intersegment sales			304				190				207				3				(704		)		―
Total sales			1,899				708				729				576				(704		)		3,208
Depreciation and amortization(2)			42				11				21				7				―				81
Research, development and engineering expense			62				8				26				―				―				96
Equity, royalty and interest income from investees			52				9				6				30				―				97
Interest income			2				1				1				1				―				5
Segment EBIT			197				76				75				69				(16		)		401
Three months ended March 28, 2010
External sales			$	1,173			$	378			$	453			$	474			$	―			$	2,478
Intersegment sales			250				139				177				2				(568		)		―
Total sales			1,423				517				630				476				(568		)		2,478
Depreciation and amortization(2)			41				10				20				7				―				78
Research, development and engineering expense			60				7				25				―				―				92
Equity, royalty and interest income from investees			35				6				5				30				―				76
Interest income			2				1				―				―				―				3
Segment EBIT			133				34				57				72				(30		)		266
Three months ended June 28, 2009
External sales			$	1,133			$	481			$	355			$	462			$	―			$	2,431
Intersegment sales			173				129				147				1				(450		)		―
Total sales			1,306				610				502				463				(450		)		2,431
Depreciation and amortization(2)			45				11				17				4				—				77
Research, development and engineering expense			51				8				20				―				—				79
Equity, royalty and interest income from investees			17				6				4				30				—				57
Restructuring charges			―				―				―				―				7				7
Interest income			―				―				―				1				―				1
Segment EBIT			(4		)		41				(10		)		55				27				109
Six months ended June 27, 2010
External sales			$	2,768			$	896			$	975			$	1,047			$	―			$	5,686
Intersegment sales			554				329				384				5				(1,272		)		―
Total sales			3,322				1,225				1,359				1,052				(1,272		)		5,686
Depreciation and amortization(2)			83				21				41				14				―				159
Research, development and engineering expense			122				15				51				―				―				188
Equity, royalty and interest income from investees			87				15				11				60				―				173
Interest income			4				2				1				1				―				8
Segment EBIT			330				110				132				141				(46		)		667
Six months ended June 28, 2009
External sales			$	2,338			$	958			$	701			$	873			$	-			$	4,870
Intersegment sales			460				309				331				3				(1,103		)		―
Total sales			2,798				1,267				1,032				876				(1,103		)		4,870
Depreciation and amortization(2)			86				22				35				9				―				152
Research, development and engineering expense			109				16				39				―				―				164
Equity, royalty and interest income from investees			14				11				5				60				―				90
Restructuring charges			―				―				―				―				73				73
Interest income			1				1				―				1				―				3
Segment EBIT			(20		)		110				(9		)		113				(57		)		137

(1)		Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and six months ended June 27, 2010 or the three months ended March 28, 2010. For the three and six months ended June 28, 2009, unallocated corporate expenses included restructuring charges of $7 million and $73 million and losses of $9 million and $3 million related to flood damages, respectively.
(2)		Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as Interest expense.

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										Six months ended
			June 27,			March 28,			June 28,				June 27,			June 28,
In millions			2010			2010			2009				2010			2009
Segment EBIT			$	401		$	266		$	109			$	667		$	137
Less:
Interest expense			9			9			10				18			17
Income before income taxes			$	392		$	257		$	99			$	649		$	120

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Earnings before interest, taxes, noncontrolling interests and restructuring and other charges

We define EBIT as earnings or loss 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. Below is a reconciliation of EBIT, a non-GAAP financial measure, to “Net income attributable to Cummins Inc.,” for each of the applicable periods:

			Three months ended										Six months ended
			June 27,			March 28,			June 28,				June 27,			June 28,
In millions			2010			2010			2009				2010			2009
Earnings before interest expense, income taxes and restructuring charges			$	401		$	266		$	116			$	667		$	210
Earnings before interest expense, income taxes and restructuring and other charges as a percentage of sales			12.5		%	10.7		%	4.8		%		11.7		%	4.3		%
Less:
Restructuring charges			―			―			7				―			73
Earnings before interest and income taxes			$	401		$	266		$	109			$	667		$	137
EBIT as a percentage of net sales			12.5		%	10.7		%	4.5		%		11.7		%	2.8		%
Less:
Interest expense			9			9			10				18			17
Income tax expense			122			87			29				209			36
Consolidated net income			270			170			70				440			84
Less:
Net income attributable to noncontrolling interests			24			21			14				45			21
Net income attributable to Cummins Inc.			$	246		$	149		$	56			$	395		$	63
Net income attributable to Cummins Inc. as a percentage of net sales			7.7		%	6.0		%	2.3		%		6.9		%	1.3		%

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

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

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to restructuring. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America 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. excluding restructuring and other charges to “Net income attributable to Cummins Inc.” for the three and six months ended June 28, 2009. There were no restructuring actions taken in the three or six months ended June 27, 2010 or three months ended March 28, 2010.

				Three months ended							Six months ended
				June 28, 2009							June 28, 2009
	In millions			Net Income			Diluted EPS				Net Income			Diluted EPS
	Net income attributable to Cummins Inc. excluding restructuring charges			$	60		$	0.30			$	111		$	0.56
	Less:
	Restructuring charges, net(1)			4			0.02				48			0.24
	Net income attributable to Cummins Inc.			$	56		$	0.28			$	63		$	0.32

	(1)		During the three and six months ended June 28, 2009, management approved and committed to undertake actions, which resulted in a pretax charge of $7 million and $73 million, respectively. These charges included employee-related liabilities for severance and benefits of approximately $8 million and $68 million, net of changes in estimate and exit costs of approximately zero and $6 million, for the three and six months ended, respectively.

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 interim reporting periods was as follows:

			Three months ended										Six months ended
			June 27,			March 28,			June 28,				June 27,			June 28,
In millions			2010			2010			2009				2010			2009
Distribution Entities
North American distributors			$	23		$	23		$	23			$	46		$	49
All other distributors			4			4			4				8			7
Manufacturing Entities
Dongfeng Cummins Engine Company, Ltd.			34			18			7				52			7
Chongqing Cummins Engine Company, Ltd.			13			10			12				23			20
All other manufacturers			15			14			7				29			―
Cummins share of net income			89			69			53				158			83
Royalty and interest income			8			7			4				15			7
Equity, royalty and interest income from investees			$	97		$	76		$	57			$	173		$	90

NOTE 2. OTHER INCOME (EXPENSE)

Other income (expense) included the following:

			Three months ended										Six months ended
In millions			June 27, 2010			March 28, 2010			June 28, 2009				June 27, 2010			June 28, 2009
Foreign currency gains (losses), net			$	2		$	7		$	(10)			$	9		$	(18	)
Gain on acquisition of Cummins Western Canada			―			12			―				12			―
Other, net			(2		)	(2		)	(3)				(4		)	2
Total other income (expense), net			$	―		$	17		$	(13)			$	17		$	(16	)

NOTE 3. INCOME TAXES

Our effective tax rate for the year is expected to approximate 31 percent, absent any additional discrete period activity. Our tax rate is generally less than the 35 percent U.S. income tax rate primarily due to lower tax rates on foreign income. The tax rates for the three and six month periods ended June 27, 2010, were 31 percent and 32 percent. The tax rate for the six month period includes a discrete tax charge of $7 million (one percent) related to the enactment of the “Patient Protection and Affordable Care Act.” The tax rate for the three month period ended March 28, 2010, was 34 percent and also included a discrete charge of $7 million (3 percent) related to the enactment of the “Patient Protection and Affordable Care Act.’

Our effective tax rates for the comparable prior year periods were 29 percent and 30 percent, respectively. These rates were less than the 35 percent U.S. income tax rate primarily due to lower tax rates on foreign income.

SUPPLEMENTAL INFORMATION
Sales
	$Millions				Q1		Q2		Q3		Q4		YTD
	2010
	Engine Business
		Heavy-Duty Truck			252		340						592
		Medium Duty Truck+Bus			217		352						569
		Light Duty Auto+RV			207		296						503
		Industrial			577		656						1,233
		Stationary Power			170		255						425
		TOTAL ENGINE BUSINESS			1,423		1,899						3,322
	Power Generation				517		708						1,225
	Components				630		729						1,359
	Distributors				476		576						1,052
	Eliminations				(568)		(704)						(1,272)
		TOTAL			2,478		3,208		0		0		5,686
	2009
	Engine Business
		Heavy-Duty Truck			394		395		493		714		1,996
		Medium Duty Truck+Bus			229		240		294		469		1,232
		Light Duty Auto+RV			156		94		120		318		688
		Industrial			467		440		407		507		1,821
		Stationary Power			246		137		125		160		668
		TOTAL ENGINE BUSINESS			1,492		1,306		1,439		2,168		6,405
	Power Generation				657		610		549		601		2,417
	Components				530		502		591		732		2,355
	Distributors				413		463		422		486		1,784
	Eliminations				(653)		(450)		(471)		(587)		(2,161)
		TOTAL			2,439		2,431		2,530		3,400		10,800
Engine Shipments
	Units				Q1		Q2		Q3		Q4		YTD
	2010
		Midrange			69,100		90,500						159,600
		Heavy-duty			8,700		14,500						23,200
		High Horsepower			3,400		4,800						8,200
	TOTAL				81,200		109,800		0		0		191,000
	2009
		Midrange			60,600		49,200		58,800		100,600		269,200
		Heavy-duty			16,600		16,400		20,600		32,300		85,900
		High Horsepower			3,900		3,200		2,600		3,700		13,400
	TOTAL				81,100		68,800		82,000		136,600		368,500
	2008
		Midrange			114,200		114,800		102,400		86,900		418,300
		Heavy-duty			24,700		31,700		29,400		22,500		108,300
		High Horsepower			4,600		5,500		5,300		5,200		20,600
	TOTAL				143,500		152,000		137,100		114,600		547,200

Cummins Inc.Mark Land, 317-610-2456Executive Director - Corporate This e-mail address is being protected from spambots. You need JavaScript enabled to view it.