Cummins First Quarter Loss Due to Global Uncertainty and Soft Markets.Business Editors/Automotive Writers COLUMBUS Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. .--(BUSINESS WIRE)--April 17, 2003 Cummins This article is about the diesel engine manufacturer. For other uses, see Cummins (disambiguation). Cummins Inc. (NYSE: CMI) is a maker of diesel and natural gas engines whose corporate headquarters is located in Columbus, Indiana. Inc. (NYSE NYSE See: New York Stock Exchange :CUM) today reported a loss for the first quarter 2003 of $34 million, or $0.86 per share, on sales of $1.39 billion. This compares to a loss of $26 million, or $0.68 per share, on sales of $1.33 billion for the first quarter of 2002. Excluding the cumulative effect of a change in accounting principle in the first quarter of 2002, the loss was $29 million, or $0.75 per share. "These financial results reflect the continued downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in many of our markets that began in the second half of 2000. However, I remain confident that we are providing the products that are right for our customers and that position us well in the marketplace," said Tim Solso, Chairman and Chief Executive Officer. "As we gain production efficiencies with our new products and as the markets recover, we will see our financial returns improve." The Company normally experiences seasonal weakness in the first quarter, with March being the strongest month. As a result of global uncertainty, normal gains in March were not realized. However, the Company expects to see increased earnings throughout the remainder of the year. A breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of results by business units, as well as a number of operational successes in the quarter, are detailed below. Engine Business Total Sales for the Engine Business in the first quarter were $816 million, a 5 percent increase from sales of $776 million a year ago. Revenues in automotive markets were 13 percent higher than the first quarter last year, primarily due to increases in light-duty adj. 1. not designed for heavy or demanding work; as, a light-duty detergent s>. Opposite of heavy-duty nt>. Adj. 1. light-duty - not designed for heavy work; "a light-duty detergent" automotive sales. Overall revenue from industrial markets was down 10 percent year-over-year, with softness across most segments. The Engine Business is experiencing a very successful launch of the Company's new emissions-compliant products. This complete line of new heavy-duty heav·y-dut·y adj. Made to withstand hard use or wear. heavy-duty Adjective made to withstand hard wear, bad weather, etc. Adj. 1. engines is performing well for our customers and end users. More than 8,000 engines have been shipped and order rates continue to improve. The Cummins turbo TURBO A clinical trial–The Ultrasound Removal of Blood Clots in Vein Grafts diesel engine for the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" Dodge Ram
The Ram is a full-size pickup truck from Chrysler LLC's Dodge brand. The name was first used in 1981 on the redesigned Ram and Power Ram, though it came from the hood ornament used on pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their is also performing well and continues to have strong acceptance in the marketplace. Engine shipments to DaimlerChrysler for the Dodge Ram were up 12,000 units, an increase of 60 percent from the first quarter of last year, resulting from the launch of Chrysler's new model pickup. Power Generation Sales in the Power Generation Business for the first quarter were $267 million, down 6 percent from the first quarter of 2002. In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , revenues were down 9 percent compared to a year ago, with continued weak demand in the commercial generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. set business. This decrease was partially offset by a 4 percent increase in recreational vehicle and marine business revenue compared to the first quarter of 2002. Outside North America, revenues decreased 4 percent in total, with decreases in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and parts of Asia partially offset by increases in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . Filtration filtration: see sewerage; water supply. Filtration The separation of solid particles from a fluidsolids suspension of which they are a part by passage of most of the fluid through a septum or membrane that retains most of the solids and Other Revenues for the Filtration and Other segment were $254 million for the quarter, an 11 percent increase compared to the first quarter of 2002. This reflects higher Filtration Business sales, with some improvement in demand as well as increased market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" . The Filtration Business has continued to make progress in securing long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. supply agreements with major Original Equipment Manufacturers to achieve future growth. The Fleetguard Emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c. 2. Solutions division is also providing profitable growth as it positions itself as the leader in the growing segment of aftertreatment technology. International Distributor Sales for the International Distributor Business were $136 million in the quarter, an increase of 10 percent compared to sales of $124 million dollars last year, with modest improvement across most regions. The International Distributor Business delivered strong results, despite a seasonally weak quarter. The Filtration and International Distributor Business Units continue to generate increasing profits and solid growth in revenue. These businesses are more stable, less cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. and less capital intensive than our other businesses. Guidance In light of the current market conditions and first-quarter performance, guidance is being lowered for the year to $1.20 to $1.40 per share. Cummins expects second quarter results to be a profit in the range of $.10 to $.20 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Cash flow guidance for 2003 remains at around $70 million dollars aided by lower capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and working capital. The Company expects to generate sufficient cash to fund the dividend and provide modest debt reduction in 2003. "We remain confident that we have taken the right actions to position us for success going forward. We will continue to tightly manage spending and take additional actions where needed," said Solso. "From the depressed market Depressed market Market in which supply overwhelms demand, leading to weak and lower prices. conditions we are operating in today, the long term outlook remains very promising. We believe the worst is behind us, and we continue to be positioned for the upturn as a result of the two and a half years of relentless cost reduction." Accounts Payable Adjustment On April 14th, the Company also announced that it will restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state prior period financial statements. The restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. relates to the previously announced need for an accounts payable adjustment primarily associated with the implementation of a new enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. system in one of its plants. This restatement will require a re-audit of the 2000 and 2001 financial statements by the Company's new auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , PricewaterhouseCoopers, LLP LLP - Lower Layer Protocol (PwC) since Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see . Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing , LLP was Cummins auditors for those periods and is no longer providing auditing services. Cummins will file its 2002 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. as soon as practicable practicable adj. when something can be done or performed. following the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the re-audit. The Company also intends to release unaudited financial statements for 2002. The 2000 and 2001 financial statements, as previously reported, are subject to change as a result of the re-audit. 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 Columbus (IPA: [kəˈlʌm.bəs]) is the county seat of Bartholomew County, Indiana. The population was 39,059 at the 2000 census. The current mayor is Fred Armstrong. , (USA) Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 23,700 employees worldwide, Cummins reported sales of $5.9 billion in 2002. Press releases by fax can be requested by calling News On Demand (toll free) at 888-329-2305. The Cummins home page can be found at www.cummins.com. Information provided in this release that is not purely historical is considered to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.
CUMMINS INC.
(Millions, except per share amounts)
Unaudited
For The First Quarter Ended Mar. 30, 2003 Mar. 31, 2002
Net sales $1,387 $1,333
Before cumulative effect of change
in accounting principle
Earnings (loss) before interest
and income taxes - (15)
Net earnings (loss) - (29)
Basic earnings (loss) per share - $(.75)
Diluted earnings (loss)
per share - (.75)
As reported
Earnings (loss) before interest
and income taxes (14) (15)
Net earnings (loss) (34) (26)
Basic earnings (loss) per share $(.86) $(.68)
Diluted earnings (loss)
per share (.86) (.68)
Weighted-average number of
shares for EPS
Basic 38.9 38.5
Diluted 38.9 38.5
Cummins Inc.
Consolidated Statement of Earnings
Unaudited
Fourth
First Quarter Quarter
Millions, except per share amounts 2003 2002 2002
Net sales $1,387 $1,333 $1,414
Cost of goods sold 1,173 1,107 1,191
Gross margin 214 226 223
Selling and administrative expenses 195 186 173
Research and engineering expenses 46 56 39
Joint ventures and alliances (income)
expense (7) - (6)
Restructuring, asset impairment and
other charges - - (13)
Interest expense 20 14 17
Loss on early retirement of debt - - 8
Other (income) expense, net (6) (1) 3
Earnings (loss) before income
taxes, minority interest, dividends
on preferred securities of subsidiary
trust and cumulative effect of change
in accounting principle (34) (29) 2
Provision (benefit) for income taxes
(10) (9) (54)
Minority interest 4 3 5
Dividends on preferred securities of
subsidiary trust 6 6 5
Net earnings (loss) before cumulative
effect of change in accounting
principle. (34) (29) 46
Cumulative effect of change in
accounting principle, net of
$1 tax - 3 -
Net earnings (loss) $(34) $(26) $46
Earnings Per Share
Basic
Net earnings (loss) before
cumulative effect of change
in accounting principle $ (.86) $ (.75) $ 1.19
Cumulative effect of change
in accounting principle, net
of tax - .07 -
Net earnings (loss) (.86) (.68) $1.19
Diluted
Net earnings (loss) before
cumulative effect of change
in accounting principle $ (.86) $ (.75) $ 1.10
Cumulative effect of change
in accounting principle, net
of tax - .07 -
Net earnings (loss) (.86) (.68) 1.10
Average number of shares:
Basic EPS 38.9 38.5 38.9
Diluted EPS 38.9 38.5 45.2
Cash dividends declared per share $.30 $.30 $.30
Cummins Inc.
Consolidated Statement of Financial Position
Unaudited
Millions Mar. 30, 2003 Dec. 31, 2002
Assets
Current assets
Cash and cash equivalents $66 $217
Marketable securities 73 74
Receivables, net of allowance
of $13 and $13 863 813
Inventories 699 642
Other current assets 261 236
1,962 1,982
Property, plant and equipment
Land and buildings 577 579
Machinery, equipment and fixtures 2,257 2,299
Construction in process 58 69
2,892 2,947
Less accumulated depreciation 1,623 1,642
1,269 1,305
Investments in and advances to joint
ventures and alliances 278 265
Goodwill, net of amortization of $51 and
$51 344 344
Other intangible assets 92 95
Deferred income taxes 640 640
Other noncurrent assets 202 202
Total assets $4,787 $4,833
Liabilities and shareholders' investment
Current liabilities
Loans payable $24 $19
Current maturities of
long-term debt 4 119
Accounts payable 520 425
Accrued product coverage and
marketing expenses 226 232
Other current liabilities 463 525
1,237 1,320
Long-term debt 1,067 999
Other liabilities 1,296 1,285
Minority interest 95 91
Cummins obligated mandatorily
redeemable convertible preferred
securities of subsidiary trust
holding solely convertible
subordinated debentures of Cummins 291 291
Shareholders' investment
Common stock, $2.50 par value,
48.5 and 48.6 shares issued 121 121
Additional contributed capital 1,113 1,115
Retained earnings 530 576
Accumulated other comprehensive
income (530) (528)
Common stock in treasury, at
cost, 7.0 and 7.0 million shares (280) (280)
Common stock held in trust for
employee benefit plans 2.6 and
2.6 million shares (124) (128)
Unearned compensation (ESOP) (29) (29)
801 847
Total liabilities and shareholders'
investment $ 4,787 $ 4,833
Cummins Inc.
Consolidated Statement of Cash Flows
Unaudited
First Quarter Ended
Millions Mar. 30, 2003 Mar. 31, 2002
Cash flows from operating activities
Net earnings (loss) $(34) $(26)
Adjustments to reconcile net
earnings (loss) to net cash
from operating activities:
Cumulative effect of change
in accounting principle - (3)
Depreciation and amortization 55 54
Restructuring and other non-
recurring actions - (7)
Equity in (income) losses of joint
ventures and alliances (6) 7
Minority interest 4 2
Translation and hedging
activities (2) 5
Changes in assets and liabilities:
Receivables (50) (105)
Proceeds (repayments) from sale
of receivables - 35
Inventories (58) (31)
Accounts payable and accrued
expenses 15 25
Total adjustments (42) (18)
Net cash used in operating
activities (76) (44)
Cash flows provided by (used in) investing
activities
Property, plant and equipment:
Capital expenditures (16) (18)
Proceeds from disposals 3 2
Investments in and advances to
joint ventures and alliances (6) (7)
Purchases of marketable securities (29) (22)
Proceeds from sale of marketable
securities 28 19
Net cash used in investing
activities (20) (26)
Net cash used in operating and investing
activities (96) (70)
Cash flows provided by (used in) financing
activities
Proceeds from borrowings 1 -
Payments on borrowings (117) (1)
Net borrowings under short term
credit agreements 75 81
Dividend payments on common stock (12) (12)
Other (3) (1)
Net cash provided by financing
activities (56) 67
Effect of exchange rate changes
on cash and cash equivalents 1 (1)
Net change in cash and cash equivalents
(151) (4)
Cash and cash equivalents at the beginning
of the year 217 52
Cash and cash equivalents at the end of
the quarter $ 66 $ 48
Cummins Inc.
Segment Information
Unaudited
Power Filtration
Millions Engine Generation And Other
First Quarter Ended
March 30, 2003
Net sales $816 $267 $254
Earnings (loss) before interest and
income taxes
(23) (17) 20
Net assets 813 476 659
First Quarter Ended
March 31, 2002
Net sales $776 $283 $228
Earnings (loss) before interest and
income taxes
(19) (15) 18
Net assets 882 424 643
International
Millions Distributor Eliminations Total
First Quarter Ended
March 30, 2003
Net sales $136 $(86) $1,387
Earnings (loss) before interest
and income taxes
6 - (14)
Net assets 180 - 2,128
First Quarter Ended
March 31, 2002
Net sales $124 $(78) $1,333
Earnings (loss) before interest
and income taxes
1 - (15)
Net assets 169 - 2,118
Product Revenues as Percent of Total Sales
----------------------------------------------------------------------
% of Consolidated Sales Q1 Q2 Q3 Q4 YTD
----------------------------------------------------------------------
2003:
----------------------------------------------------------------------
Engines 45 45
----------------------------------------------------------------------
Non-Engine Products 55 55
----------------------------------------------------------------------
2002:
----------------------------------------------------------------------
Engines 44 46 51 41 46
----------------------------------------------------------------------
Non-Engine Products 56 54 49 59 54
----------------------------------------------------------------------
Sales
----------------------------------------------------------------------
$Millions Q1 Q2 Q3 Q4 YTD
------------------------------------------ ------ ------ ------ ------
2003:
------------------------------------------ ------ ------ ------ ------
Engine Business
------------------------------------------ ------ ------ ------ ------
Heavy-Duty Truck 236 236
------------------------------------------ ------ ------ ------ ------
Medium Duty Truck+Bus 122 122
------------------------------------------ ------ ------ ------ ------
Light Duty Auto+RV 222 222
------------------------------------------ ------ ------ ------ ------
Industrial 236 236
------------------------------------------ ------ ------ ------ ------
Total Engine Business 816 816
------------------------------------------ ------ ------ ------ ------
Power Generation 267 267
------------------------------------------ ------ ------ ------ ------
Int'l. Distributors 136 136
------------------------------------------ ------ ------ ------ ------
Filtration / Other 254 254
------------------------------------------ ------ ------ ------ ------
Eliminations (86) (86)
------------------------------------------ ------ ------ ------ ------
TOTAL 1,387 1,387
------------------------------------------ ------ ------ ------ ------
2002:
------------------------------------------ ------ ------ ------ ------
Engine Business
------------------------------------------ ------ ------ ------ ------
Heavy-Duty Truck 219 265 378 207 1,069
------------------------------------------ ------ ------ ------ ------
Medium Duty Truck+Bus 138 157 191 113 599
------------------------------------------ ------ ------ ------ ------
Light Duty Auto+RV 157 179 236 209 781
------------------------------------------ ------ ------ ------ ------
Industrial 262 249 228 247 986
------------------------------------------ ------ ------ ------ ------
Total Engine Business 776 850 1,033 776 3,435
------------------------------------------ ------ ------ ------ ------
Power Generation 283 304 315 324 1,226
------------------------------------------ ------ ------ ------ ------
Int'l. Distributors 124 145 152 153 574
------------------------------------------ ------ ------ ------ ------
Filtration / Other 228 243 236 244 951
------------------------------------------ ------ ------ ------ ------
Eliminations (78) (84) (88) (83) (333)
------------------------------------------ ------ ------ ------ ------
TOTAL 1,333 1,458 1,648 1,414 5,853
------------------------------------------ ------ ------ ------ ------
Engine Shipments
----------------------------------------------------------------------
Units Q1 Q2 Q3 Q4 YTD
------------------------------------- ------- ------- ------- --------
2003:
------------------------------------- ------- ------- ------- --------
Midrange 66,200 66,200
------------------------------------- ------- ------- ------- --------
Heavy-duty 10,700 10,700
------------------------------------- ------- ------- ------- --------
High Horsepower 1,900 1,900
------------------------------------- ------- ------- ------- --------
TOTAL 78,800 78,800
------------------------------------- ------- ------- ------- --------
2002:
------------------------------------- ------- ------- ------- --------
Midrange 60,500 67,000 71,800 65,800 265,100
------------------------------------- ------- ------- ------- --------
Heavy-duty 11,200 14,700 22,700 9,300 57,900
------------------------------------- ------- ------- ------- --------
High Horsepower 2,100 2,100 2,200 2,500 8,900
------------------------------------- ------- ------- ------- --------
TOTAL 73,800 83,800 96,700 77,600 331,900
------------------------------------- ------- ------- ------- --------
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