Cummins Inc. Reports Earnings For The Second Quarter 2002.Business Editors 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)--July 19, 2002 Today 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) reported second quarter earnings of $.33 per share, or $13 million profit after taxes, on sales of $1.46 billion. This compares to a loss of $2.14 per share, or an $82 million loss after taxes in the second quarter of 2001 on flat sales of $1.46 billion. The loss in 2001 was inclusive of inclusive of prep. Taking into consideration or account; including. a $125 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge associated with restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions. "Our earnings this quarter reflect the beginning of a slow recovery in our industry and the continued success of our Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. , cost reduction, and quality improvement programs at Cummins," said Chairman and Chief Executive Officer Tim Solso. "Despite flat sales from a year ago, we were able to deliver higher operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and considerable improvement in earnings per share for the quarter." "The majority of our end markets remain at very low levels; however, we believe we reached the bottom in most of these markets in the first quarter of this year and are now seeing moderate improvement. We expect this trend to continue." The Company experienced particular strength in its 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 and recreational vehicle businesses. Higher order rates for heavy duty-duty trucks and continued growth in several markets segments in China also positively impacted earnings in the quarter. 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 for Cummins four business units is listed below. Engine Business Total sales in the Engine Business in the second quarter were $850 million, an 8 percent increase over sales of $786 million a year ago. Revenues in the automotive markets, which as a whole were up 13 percent year-over-year, reflected increases across all segments. Overall revenue from industrial markets was down slightly year-over-year, with decreases in mining and construction sales, partially offset by increased sales in agricultural and rail markets. In April, Cummins became the first engine manufacturer to receive EPA EPA eicosapentaenoic acid. EPA abbr. eicosapentaenoic acid EPA, n.pr See acid, eicosapentaenoic. EPA, n. certification of its engines for the October October: see month. 2002 emissions emissions npl → émissions fpl emissions npl → Emissionen pl standard. By October, the certified See certification. ISX ISX InstallShield Express (Setup software) ISX Internet Service Exchange (Abovenet) ISX Insoluble Starch Xanthate ISX Information Superiority Experiments ISX Infrastructure ISX Incisive Software Extensions engine will have over 6 million miles of field-testing completed by customers running these engines. The Engine Business is well positioned for a continued market upturn and stands to grow share as well as improve profitability. Power Generation Revenues of $304 million in Power Generation were down 21 percent from the second quarter of 2001. 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 26 percent compared to a year ago, with lower demand in our commercial genset For the corporation, see Genset Corporation. A genset (short for "generator setup") is the term used for a self-contained and dedicated electrical generation system, usually portable or mounted on a vehicle such as a boat. business due to lower economic activity generally, reduced emergency power needs, and high inventory levels in the marketplace. This decrease was partially offset by increased demand in our consumer business, primarily recreational vehicle sales. Consumer business revenues increased 23 percent compared to the second quarter of 2001. Outside North America, revenues declined in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 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
China compared to the second quarter of 2001 due to lower demand.
Revenues increased 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. by 17 percent year-over-year, due to
the continued effects of the energy crisis.
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 Business and Other Revenues for the Filtration and Other segment of $243 million improved 8 percent compared to the second quarter of 2001. Filtration business revenue increased in North America, primarily due to higher OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and sales where Cummins has higher 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" . Revenues at the Holset Holset may refer to:
n. See turbosupercharger. tur  bo·charged adj. business increased from a year ago, helped in part
by continued strong sales in China.
International Distributor Business Sales for the International Distributor Business were $145 million in the quarter, an increase of $2 million from last year. Increased sales in 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. and Asia were partially offset by sales declines in Europe. Outlook For the remainder of 2002, the Company expects some improvement in the majority of it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have markets, with the exception of the 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. truck segment, which is expected to see 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 in the remaining two quarters of 2002. The heavy-duty truck segment will provide stronger earnings in the third quarter than previously forecasted, with lower earnings in the fourth quarter. "As demonstrated in this quarter's earnings, we continued to make progress on our cost reduction efforts, allowing us to substantially lower our breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations point," said Solso. "This, combined with strength in our Chrysler Chrys·ler , Walter Percy 1875-1940. American automobile manufacturer who founded the Chrysler Corporation (1925). and RV business, will permit us to maintain profitability, despite a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. fall-off in the heavy-duty market." Guidance for the full year 2002 remains in the previously announced range of $.70 to $.80 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. . The Company expects to deliver profit in the range of $.90 to $1.00 per share in the third quarter. Total company sales for the year are still expected to be flat to up 5% compared to 2001. The Company now expects Power Generation sales to be down at least 10%, with Engine Business sales up nearly 10% compared to last year. The International Distributor Business and the Filtration and Other Business are expected to deliver modest increases in sales. Continued emphasis on cost reduction in all business units will also contribute toward the Company's expectations of full year profitability. A global power leader, Cummins Inc., is a corporation of complementary business units that design, manufacture, distribute, and service electrical power generation systems, engines, and related technologies, including fuel systems, controls, air handling, filtration, and emissions solutions. 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 24,900 employees worldwide, Cummins reported sales of $5.7 billion in 2001. Press releases by fax can be requested by calling News On Demand (toll free) at 888-329-2305. Cummins home page can be found at www.cummins.com. Information provided and statements made on the webcast and in this release that are nor purely historical are 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. Its 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.
(Millions, except per share amounts)
Unaudited
For The Second Quarter Ended June 30, 2002 June 24, 2001
Net Sales $ 1,458 $ 1,461
Before special charges
Earnings before interest and taxes $ 45 $ 31
Net earnings 12 2
Basic earnings per share $ .31 $ .06
Diluted earnings per share .31 .06
Weighted-average number of shares for EPS:
Basic 38.5 38.2
Diluted 39.0 38.4
As reported
Earnings (loss) before interest and taxes $ 46 $ (94)
Net earnings (loss) 13 (82)
Basic earnings (loss) per share $ .33 $ (2.14)
Diluted earnings (loss) per share .33 (2.14)
Weighted-average number of shares for EPS:
Basic 38.5 38.2
Diluted 39.0 38.2
For The First Half Ended June 30, 2002 June 24, 2001
Net Sales $ 2,791 $ 2,810
Before special charges
Earnings before interest and taxes $ 30 $ 25
Net loss (17) (24)
Basic loss per share $ (.44) $ (.62)
Diluted loss per share (.44) (.62)
As reported
Earnings (loss) before interest and taxes $ 31 $ (100)
Net loss (16) (108)
Basic loss per share $ (.42) $ (2.82)
Diluted loss per share (.42) (2.82)
Weighted-average number of shares for EPS:
Basic 38.5 38.2
Diluted 38.5 38.2
Cummins Inc.
Consolidated Statement of Earnings
for the Second Quarter and First Half
Ended June 30, 2002 and June 24, 2001
Unaudited
Second Quarter First Half First Quarter
Millions, except per
share amounts 2002 2001 2002 2001 2002
Net sales $1,458 $1,461 $2,791 $2,810 $1,333
Cost of goods sold 1,184 1,192 2,291 2,309 1,107
Gross margin 274 269 500 501 226
Selling and
administrative expenses 186 183 372 366 186
Research and engineering
expenses 55 58 111 111 56
Joint ventures and
alliances income (7) (3) (7) (5) -
Interest expense 17 23 31 46 14
Other (income) expense,
net (5) - (6) 4 (1)
Restructuring, asset
impairment and other
non-recurring charges (1) 125 (1) 125 -
Earnings (loss) before
income taxes 29 (117) - (146) (29)
Provision (benefit) for
income taxes 6 (39) (3) (46) (9)
Minority interest 5 4 8 8 3
Dividends on preferred
securities of subsidiary
trust 5 - 11 - 6
Net earnings (loss) $ 13 $ (82) $ (16) $ (108) $ (29)
Basic earnings (loss)
per share $ .33 $ (2.14) $ (.42) $ (2.82) $ (.75)
Diluted earnings (loss)
per share .33 (2.14) (.42) (2.82) (.75)
Average number of shares:
Basic EPS 38.5 38.2 38.5 38.2 38.5
Diluted EPS 39.0 38.2 38.5 38.2 38.5
Cash dividends declared
per share $ .30 $ .30 $ .60 $ .60 $ .30
Cummins Inc.
Consolidated Statement of Financial Position
Unaudited
Millions June 30, 2002 Dec. 31, 2001
Assets
Current assets:
Cash and cash equivalents $ 101 $ 92
Receivables, net of allowance of $11
and $9 843 656
Inventories 721 688
Other current assets 221 199
1,886 1,635
Investment in and advances to joint
ventures and alliances 248 216
Property, plant and equipment 2,959 3,008
Less accumulated depreciation 1,614 1,603
1,345 1,405
Goodwill 344 343
Other intangibles 99 109
Deferred income taxes 422 422
Other assets 189 205
Total assets $4,533 $4,335
Liabilities and shareholders' investment
Current liabilities:
Loans payable $ 68 $ 21
Current maturities of long-term debt 134 9
Accounts payable 498 366
Other accrued expenses 590 574
1,290 970
Long-term debt 789 915
Other liabilities 1,050 1,051
Minority interest 87 83
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, 150
million shares authorized, 48.3 and
48.6 shares issued... 121 121
Additional contributed capital 1,123 1,131
Retained earnings 526 567
Accumulated other comprehensive income (297) (326)
Common stock in treasury, at cost, 7.0
and 7.2 shares (280) (289)
Common stock held in trust for
employee benefit plans, 2.8 and 2.9
shares (135) (140)
Unearned compensation (32) (39)
1,026 1,025
Total liabilities and shareholders'
investment $4,533 $4,335
Cummins Inc.
Consolidated Statement of Cash Flows
Unaudited
First Half Ended
Millions June 30, 2002 June 24, 2001
Cash flows from operating activities:
Net loss $ (16) $ (108)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization 108 118
Restructuring and other
non-recurring actions (8) 111
Equity in losses of joint ventures
and alliances 3 3
Changes in assets and liabilities:
Receivables (193) (42)
Net proceeds (reductions) from
receivables sold 15 (103)
Inventories (38) 37
Accounts payable and accrued expenses 148 80
Income taxes payable (16) (50)
Other 21 11
Total adjustments 40 165
Net cash provided by operating activities 24 57
Cash flows provided by (used in) investing
activities:
Property, plant and equipment:
Additions (34) (122)
Disposals 3 2
Proceeds from sale-leaseback - 119
Investments in and advances to joint
ventures and alliances (38) (19)
Acquisition of businesses (5) -
Disposition of businesses 38 1
Other - 1
Net cash used in investing activities (36) (18)
Net cash provided by (used in) operating
and investing activities (12) 39
Cash flows provided by (used in) financing
activities:
Proceeds from borrowings 3 -
Payments on borrowings (12) (6)
Net payments (borrowings) under
short-term credit agreements 53 (247)
Dividend payments on common stock (25) (25)
Issuance of mandatorily redeemable
preferred securities - 292
Other 1 (10)
Net cash provided by financing activities 20 4
Effect of exchange rate changes on cash
and cash equivalents 1 (1)
Net change in cash and cash equivalents 9 42
Cash and cash equivalents at the
beginning of the year 92 62
Cash and cash equivalents at the end of
the first half $ 101 $ 104
Cummins Inc.
Segment Information
Unaudited
Power Filt- Inter- Elimin-
Millions Engine Genera- ration national ations Total
tion And Other Distributor
Second Quarter
Ended June 30,
2002
Net sales $ 850 $ 304 $ 243 $ 145 $ (84) $1,458
Earnings (loss)
before interest,
income taxes
and special
charges 14 (2) 23 10 45
Special charges (6) 1 - 4 (1)
Earnings (loss)
before interest
and income
taxes 20 (3) 23 6 46
Net assets 772 311 637 185 1,905
Second Quarter
Ended June 24,
2001
Net sales $ 786 $ 384 $ 225 $ 143 $ (77) $1,461
Earnings (loss)
before interest,
income taxes
and special
charges (24) 32 16 7 31
Special charges 118 5 1 1 125
Earnings (loss)
before interest
and income
taxes (142) 27 15 6 (94)
Net assets 1,050 421 664 190 2,325
First Half Ended
June 30, 2002
Net sales $1,626 $ 587 $ 471 $ 269 $ (162) $2,791
Earnings (loss)
before interest,
income taxes
and special
charges (5) (17) 41 11 30
Special charges (6) 1 - 4 (1)
Earnings (loss)
before interest
and income taxes 1 (18) 41 7 31
First Half Ended
June 24, 2001
Net sales $1,554 $ 693 $ 440 $ 276 $ (153) $2,810
Earnings (loss)
before interest,
income taxes
and special
charges (58) 40 32 11 25
Special charges 118 5 1 1 125
Earnings (loss)
before interest
and income
taxes (176) 35 31 10 (100)
Product Revenues as Percent of Total Sales
------------------------------------------
% of Consolidated Sales Q1 Q2 Q3 Q4 YTD
2002:
Engines 44 46 45
Non-Engine Products 56 54 55
2001:
Engines 47 44 45 43 45
Non-Engine Products 53 56 55 57 55
Sales
-----
$Millions Q1 Q2 Q3 Q4 YTD
2002:
Engine Business
Heavy-Duty Truck 219 265 484
Medium Duty Truck+Bus 138 157 295
Light Duty Auto+RV 157 179 336
Industrial 262 249 511
TOTAL ENGINE BUSINESS 776 850 1,626
Power Generation 283 304 587
Int'l. Distributors 124 145 269
Filtration / Other 228 243 471
Eliminations (78) (84) (162)
TOTAL 1,333 1,458 2,791
2001:
Engine Business
Heavy-Duty Truck 236 235 222 247 940
Medium Duty Truck+Bus 144 147 135 151 577
Light Duty Auto+RV 121 151 165 139 576
Industrial 267 253 245 263 1,028
TOTAL ENGINE BUSINESS 768 786 767 800 3,121
Power Generation 309 384 371 358 1,422
Int'l. Distributors 133 143 136 150 562
Filtration / Other 215 225 211 238 889
Eliminations (76) (77) (77) (83) (313)
TOTAL 1,349 1,461 1,408 1,463 5,681
Engine Shipments
----------------
Units Q1 Q2 Q3 Q4 YTD
----- -- -- -- -- ---
2002:
Midrange 60,500 67,000 127,500
Heavy-duty 11,200 14,700 25,900
High Horsepower 2,100 2,100 4,200
TOTAL 73,800 83,800 157,600
2001:
Midrange 58,300 66,500 61,500 57,200 243,500
Heavy-duty 14,600 14,400 14,000 14,400 57,400
High Horsepower 2,800 2,800 2,800 2,600 11,000
TOTAL 75,700 83,700 78,300 74,200 311,900
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