Cummins Inc. Reports Earnings for the Third Quarter 2001
Business Editors
COLUMBUS, Ind.--Oct. 11, 2001--Cummins Inc.
today reported profit after taxes of $3 million, or
$.08 per share, on revenues of $1.41 billion for the third quarter of
2001, despite a continuing economic downturn.
Earnings for the quarter were down from a year ago, when the
company earned $25 million profit after taxes on sales of $1.57
billion.
"I'm pleased that we met our objectives for the quarter and
remained profitable despite the worst market deterioration I've
experienced, in virtually every one of our North American end
markets," said Chairman and Chief Executive Officer, Tim Solso. "Our
Engine Business continues to be particularly hard hit with revenues
down 20 percent from the third quarter of 2000. However, we continue
to realize the benefits from our aggressive cost reduction efforts
across all of our businesses, including the benefits of our
restructuring actions and Six Sigma programs."
Power Generation
Sales in the Power Generation Business for the third quarter were
$371 million, up 11 percent from the third quarter of 2000. Earnings
before interest and taxes were $29 million, up from $25 million a year
ago. A joint project with General Electric to sell gensets in Sri
Lanka as well as increased demand resulting from the Brazilian power
crisis and higher utilization rates in our North American rental
business helped drive the higher sales and profits.
Filtration Business and Other
Revenues for the filtration and other products were $270 million
for the quarter, down 2 percent compared to the third quarter of 2000.
For the group, earnings before interest and taxes for the quarter were
$19 million versus $30 million last year.
Filtration business demand was down 4 percent from a year ago, due
to the slowdown in virtually all North American and European OEM
markets. Third quarter sales at company-owned distributors were down
year over year, reflecting weakening economic conditions in Australia
and Southeast Asia. Sales for the Holset turbocharger business
increased from a year ago.
Engine Business
Total sales for the Engine Business in the third quarter were
$767 million, compared to $962 million a year ago -- a drop of
20 percent. Earnings before interest and taxes were a loss of
$18 million versus a profit of $6 million in the third quarter last
year, due primarily to volume decreases and the resulting
under-absorption of overhead costs.
Worldwide heavy-duty truck sales of $222 million were down
27 percent compared to the third quarter of 2000, with a 45 percent
decrease in unit shipments to the North American heavy-duty truck
market. Unit shipments to international markets were down 31 percent,
primarily due to a reduction in shipments to OEMs in Mexico. In the
medium-duty truck and bus market, sales of $135 million were
23 percent lower than a year ago, with a 35 percent drop in North
American shipments. International shipments were down 20 percent due
to lower demand in China and Latin America.
Sales to light-duty automotive and recreational vehicle markets
were $165 million, down 22 percent from the year-ago level, due to a
decrease in shipments to DaimlerChrysler of 29 percent from the third
quarter of last year. Sales to agricultural, construction, mining,
marine and other industrial equipment markets were down 9 percent.
Outlook
Cummins noted that the continuing deterioration across its markets
makes a fourth quarter improvement unlikely. Instead, the Company now
expects fourth quarter results to be level with its second and third
quarter performance. Said Solso, "We expect reduced revenues from some
of our more profitable businesses like the Dodge Ram pickup truck and
some segments of the Power Generation business. However, our cost
reduction efforts will permit us to remain profitable despite further
weakening of our markets. I believe we are well positioned to improve
our earnings when our end markets begin to improve."
*T
Product Revenues as Percent of Total Sales
% of Consolidated
Sales Q1 Q2 Q3 Q4 YTD
2001:
Engines 47 46 44 46
Non-Engine Products 53 54 50 54
2000:
Engines 55 54 51 49 52
Non-Engine Products 45 46 49 51 48
Sales
$Millions Q1 Q2 Q3 Q4 YTD
2001:
Engine Business
Heavy-Duty Truck 236 235 222 693
Medium Duty
Truck+Bus 144 147 135 426
Light Duty Auto+RV 121 151 165 437
Industrial 267 253 245 765
Total Engine
Business 768 786 767 2,321
Power Generation
Business 309 384 371 1,064
Filtration / Other 272 291 270 833
TOTAL 1,349 1,461 1,408 4,218
2000:
Engine Business
Heavy-Duty Truck 415 401 306 322 1,444
Medium Duty
Truck+Bus 150 183 176 148 657
Light Duty Auto+RV 211 226 211 187 835
Industrial 269 297 269 279 1,114
Total Engine
Business 1,045 1,107 962 936 4,050
Power Generation
Business 329 368 334 364 1,395
Filtration / Other 274 294 276 308 1,152
TOTAL 1,648 1,769 1,572 1,608 6,597
Engine Shipments
Units Q1 Q2 Q3 Q4 YTD
2001:
Midrange 58,300 66,500 61,500 186,300
Heavy-duty 14,600 14,400 14,000 43,000
High Horsepower 2,800 2,800 2,800 8,400
TOTAL 75,700 83,700 78,300 237,700
2000:
Midrange 78,900 89,100 79,000 71,200 318,200
Heavy-duty 27,400 25,800 19,600 19,100 91,900
High Horsepower 2,500 3,000 2,800 3,400 11,700
TOTAL 108,800 117,900 101,400 93,700 421,800
CUMMINS INC.
------------
(Millions, except per share amounts)
----------------------------------
FOR THE THIRD QUARTER ENDED September 23, September 24,
2001 2000
--------------------------- -------------- -----------
Net sales $ 1,408 $ 1,572
Earnings before interest and taxes 30 61
Net earnings 3 25
Basic earnings per share $ .08 $ .66
Diluted earnings per share .08 .66
Weighted-average number of shares for EPS:
Basic 38.2 38.2
Diluted 38.5 38.2
FOR THE NINE MONTHS ENDED September 23, September 24,
2001 2000
--------------------------- -------------- ------------
Net Sales $ 4,218 $ 4,989
Before special charges
Earnings before interest and taxes $ 55
Net earnings (loss) (21)
Basic earnings (loss) per share $ (.54)
Diluted earnings (loss) per share (.54)
As reported
Earnings (loss) before interest and taxes $ (70) $ 249
Net earnings (loss) (105) 128
Basic earnings (loss) per share $ (2.74) $ 3.36
Diluted earnings (loss) per share (2.74) 3.36
Weighted-average number of shares for EPS:
Basic 38.2 38.2
Diluted 38.2 38.2
CUMMINS INC.
-----------
CONSOLIDATED STATEMENT OF EARNINGS
----------------------------------
Unaudited
---------
Third Quarter Nine Months Second
Millions, except Quarter
per share amounts 2001 2000 2001 2000 2001
----------------- ---- ---- ---- ---- ----
Net sales $ 1,408 $ 1,572 $ 4,218 $ 4,989 $ 1,461
Cost of
goods sold 1,153 1,262 3,462 3,993 1,192
------- ------- ------- ------- -------
Gross profit 255 310 756 996 269
Selling and
administrative 177 195 543 579 183
expenses
Research and
engineering expenses 53 62 164 180 58
Net (income)
expense from
joint ventures
and alliances (2) (3) (7) (7) (3)
Interest expense 15 22 61 62 23
Other (income)
expense, net (3) (5) 1 (5) --
------- ------- ------- ------- -------
Restructuring, asset
impairment and other
special charges -- -- 125 -- 125
Earnings (loss) before
income taxes 15 39 (131) 187 (117)
Provision (benefits)
for income taxes 2 9 (44) 48 (39)
Minority interest 4 5 12 11 4
Preferred dividend
on mandatorily
redeemable preferred
securities 6 -- 6 -- --
------- ------- ------- ------- -------
Net earnings $ 3 $ 25 $ (105) $ 128 $ (82)
======= ======= ======= ======= =======
Basic earnings
per share $ .08 $ .66 $ (2.74) $ 3.36 $(2.14)
Diluted earnings
per share .08 .66 (2.74) 3.36 (2.14)
Average number
of shares:
Basic EPS 38.2 38.2 38.2 38.2 38.2
Diluted EPS 38.5 38.2 38.2 38.2 38.2
Cash dividends
declared per
share $ .30 $ .30 $ .90 $ .90 $ .30
CUMMINS INC.
------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
--------------------------------------------
Unaudited
---------
Millions, except Sept. 23, 2001 Dec. 31, 2000
per share amounts -------------- -------------
------------------
Assets
Current assets:
Cash and cash equivalents $ 115 $ 62
Receivables, net of allowance of $8 778 724
Inventories 743 770
Other current assets 319 274
------- -------
1,955 1,830
Investments and other assets 336 338
Property, plant and equipment
less accumulated
depreciation of $1,649 and $1,598 1,416 1,598
Goodwill, net of amortization
of $49 and $42 345 354
Other intangibles, deferred taxes
and deferred charges 376 380
------- -------
Total assets $ 4,428 $ 4,500
======= =======
Liabilities and shareholders' investment
Current liabilities:
Loans payable $ 54 $ 156
Current maturities of long-term debt 8 8
Accounts payable 423 388
Other current liabilities 632 671
------- -------
1,117 1,223
------- -------
Long-term debt 920 1,032
------- -------
Other liabilities 837 837
------- -------
Minority interest 81 72
------- -------
Company-obligated mandatorily
redeemable convertible
preferred securities of
subsidiary trust holding solely
convertible subordinated
debentures of the parent 291 --
------- -------
Shareholders' investment:
Common stock, $2.50 par value,
48.5 and 48.6 shares issued 121 122
Additional contributed capital 1,132 1,137
Retained earnings 577 718
Accumulated other
comprehensive income (186) (167)
Common stock in treasury,
at cost, 7.2 shares (289) (290)
Common stock held in trust for
employee benefit plans,
3.0 and 3.1 shares (143) (151)
Unearned compensation (ESOP) (30) (33)
------- -------
1,182 1,336
------- -------
Total liabilities and
shareholders' investment $ 4,428 $ 4,500
======= =======
CUMMINS INC.
------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
Unaudited
---------
Nine Months Ended
-----------------
Millions Sept. 23, 2001 Sept. 24, 2000
-------- -------------- --------------
Cash flows from operating activities:
Net earnings $ (105) $ 128
------ ------
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization 175 180
Restructuring and other non-recurring
actions 68 (16)
Accounts receivable 6 (115)
Decrease in sale of receivables program (76) -
Inventories 8 (28)
Accounts payable and accrued expenses 13 (47)
Income taxes payable (63) (24)
Equity in losses of joint ventures and
alliances 5 7
Other 26 (11)
------ ------
Total adjustments 162 (54)
------ ------
Net cash provided by operating
activities 57 74
------ ------
Cash flows from investing activities:
Property, plant and equipment:
Additions (158) (130)
Disposals 140 10
Investments in joint ventures and
alliances (22) (76)
Acquisition and disposition of businesses 14 (42)
Other 1 -
------ ------
Net cash used in investing activities (25) (238)
------ ------
Net cash flows (used in) provided by
operating and investing activities 32 (164)
------ ------
Cash flows from financing activities:
Proceeds from borrowings - 226
Payments on borrowings (7) (8)
Net borrowings under credit agreements (215) 22
Repurchase of common stock - (16)
Dividend payments (37) (37)
Issuance of mandatorily redeemable
preferred securities 291 -
Other (10) (1)
------ ------
Net cash provided by (used in) financing
activities 22 186
------ ------
Effect of exchange rate changes on cash (1) (2)
------ ------
Net change in cash and cash equivalents 53 20
Cash and cash equivalents at the beginning
of the year 62 74
------ ------
Cash and cash equivalents at the end of
the quarter $ 115 $ 94
====== ======
CUMMINS INC.
------------
SEGMENT INFORMATION
-------------------
Unaudited
---------
Operating segment information is as follows:
Power Filtration
Millions Engine Generation And Other Total
-------- ------ ---------- ---------- -----
Third Quarter Ended
September 23, 2001
-------------------
Net sales $ 767 $ 371 $ 270 $1,408
Earnings (loss)before
interest and income taxes (18) 29 19 30
Net assets 1,132 433 840 2,405
Third Quarter Ended
September 24, 2000
-------------------
Net sales $ 962 $ 334 $ 276 $1,572
Earnings before interest
and income taxes 6 25 30 61
Net assets 1,213 576 866 2,655
Nine Months Ended
September 23, 2001
-------------------
Net sales $2,321 $1,064 $ 833 $4,218
Earnings (loss) before
interest, income taxes
and special charges (76) 69 62 55
Special Charges 118 5 2 125
Earnings before interest
and income taxes (194) 64 60 (70)
Nine Months Ended
September 24, 2000
-------------------
Net sales $3,114 $1,031 $ 844 $4,989
Earnings before interest
and income taxes 76 78 95 249
