8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: October 30, 2018

  CUMMINS INC.

(Exact name of registrant as specified in its charter)

Indiana (State or other Jurisdiction of Incorporation) 1-4949 (Commission File Number) 35-0257090 (I.R.S. Employer Identification No.)

500 Jackson Street

P. O. Box 3005

Columbus, IN  47202-3005

(Principal Executive Office)  (Zip Code)

Registrant's telephone number, including area code:  (812) 377-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)

Emerging growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

1

Item 2.02. Results of Operations and Financial Condition.

On October 30, 2018, Cummins Inc. (“Cummins,” “the Company,” “the registrant,” “we,” “our,” or “us”) issued the attached press release reporting its financial results for the third quarterof 2018, which is furnished herewith as Exhibit 99.

The information furnished pursuant to this Item 2.02, including Exhibit 99, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

(d) The following exhibit is furnished pursuant to Item 2.02 herewith: 

99-Press Release dated October 30, 2018

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 30, 2018

CUMMINS INC.

 /s/ CHRISTOPHER C. CLULOW

Christopher C. Clulow

Vice President - Corporate Controller
(Principal Accounting Officer)

2

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

	Three months ended
In millions, except per share amounts	September 30, 2018			October 1, 2017
NET SALES	$	5,943		$	5,285
Cost of sales	4,392			3,944
GROSS MARGIN	1,551			1,341
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	604			633
Research, development and engineering expenses	229			213
Equity, royalty and interest income from investees	90			95
Other operating income (expense), net	(5		)	32
OPERATING INCOME	803			622
Interest income	9			4
Interest expense	30			18
Other income, net	23			14
INCOME BEFORE INCOME TAXES	805			622
Income tax expense	107			165
CONSOLIDATED NET INCOME	698			457
Less: Net income attributable to noncontrolling interests	6			4
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	692		$	453
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	4.29		$	2.72
Diluted	$	4.28		$	2.71
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	161.3			166.3
Diluted	161.8			167.0
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	1.14		$	1.08
(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

3

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

	Nine months ended
In millions, except per share amounts	September 30, 2018		October 1, 2017
NET SALES	$	17,645	$	14,952
Cost of sales	13,454		11,228
GROSS MARGIN	4,191		3,724
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	1,794		1,786
Research, development and engineering expenses	658		546
Equity, royalty and interest income from investees	315		301
Other operating income (expense), net	1		55
OPERATING INCOME	2,055		1,748
Interest income	26		11
Interest expense	82		57
Other income, net	44		67
INCOME BEFORE INCOME TAXES	2,043		1,769
Income tax expense	466		466
CONSOLIDATED NET INCOME	1,577		1,303
Less: Net income attributable to noncontrolling interests	15		30
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	1,562	$	1,273
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	9.57	$	7.62
Diluted	$	9.53	$	7.60
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	163.3		167.0
Diluted	163.9		167.6
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	3.30	$	3.13
(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

4

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (a)

In millions, except par value	September 30, 2018			December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	1,222		$	1,369
Marketable securities	185			198
Total cash, cash equivalents and marketable securities	1,407			1,567
Accounts and notes receivable, net	3,929			3,618
Inventories	3,831			3,166
Prepaid expenses and other current assets	696			577
Total current assets	9,863			8,928
Long-term assets
Property, plant and equipment, net	3,870			3,927
Investments and advances related to equity method investees	1,255			1,156
Goodwill	1,110			1,082
Other intangible assets, net	950			973
Pension assets	1,022			1,043
Other assets	922			966
Total assets	$	18,992		$	18,075
LIABILITIES
Current liabilities
Accounts payable (principally trade)	$	2,980		$	2,579
Loans payable	61			57
Commercial paper	800			298
Accrued compensation, benefits and retirement costs	576			811
Current portion of accrued product warranty	624			454
Current portion of deferred revenue	500			500
Other accrued expenses	834			915
Current maturities of long-term debt	41			63
Total current liabilities	6,416			5,677
Long-term liabilities
Long-term debt	1,563			1,588
Postretirement benefits other than pensions	281			289
Pensions	331			330
Other liabilities and deferred revenue	2,341			2,027
Total liabilities	$	10,932		$	9,911
EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued	$	2,151		$	2,210
Retained earnings	12,519			11,464
Treasury stock, at cost, 61.9 and 56.7 shares	(5,674		)	(4,905		)
Common stock held by employee benefits trust, at cost, 0.5 and 0.5 shares	(6		)	(7		)
Accumulated other comprehensive loss	(1,799		)	(1,503		)
Total Cummins Inc. shareholders’ equity	7,191			7,259
Noncontrolling interests	869			905
Total equity	$	8,060		$	8,164
Total liabilities and equity	$	18,992		$	18,075
(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

5

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

	Nine months ended
In millions	September 30, 2018			October 1, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	1,577		$	1,303
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization	456			433
Deferred income taxes	(167		)	26
Equity in income of investees, net of dividends	(156		)	(166		)
Pension contributions under (in excess of) expense, net	36			(63		)
Other post retirement benefits payments in excess of expense, net	(8		)	(4		)
Stock-based compensation expense	38			34
Loss contingency payments	(65		)	—
Translation and hedging activities	(27		)	61
Changes in current assets and liabilities, net of acquisitions
Accounts and notes receivable	(429		)	(722		)
Inventories	(773		)	(401		)
Other current assets	(100		)	(28		)
Accounts payable	467			567
Accrued expenses	341			369
Changes in other liabilities and deferred revenue	118			177
Other, net	80			(115		)
Net cash provided by operating activities	1,388			1,471
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(361		)	(282		)
Investments in internal use software	(55		)	(59		)
Proceeds from disposals of property, plant and equipment	14			104
Investments in and advances to equity investees	(9		)	(71		)
Acquisitions of businesses, net of cash acquired	(70		)	(600		)
Investments in marketable securities—acquisitions	(316		)	(106		)
Investments in marketable securities—liquidations	298			218
Cash flows from derivatives not designated as hedges	(56		)	9
Other, net	36			1
Net cash used in investing activities	(519		)	(786		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings of commercial paper	502			302
Payments on borrowings and capital lease obligations	(54		)	(38		)
Net borrowings under short-term credit agreements	9			19
Distributions to noncontrolling interests	(30		)	(29		)
Dividend payments on common stock	(537		)	(522		)
Repurchases of common stock	(879		)	(391		)
Other, net	29			59
Net cash used in financing activities	(960		)	(600		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(56		)	85
Net (decrease) increase in cash and cash equivalents	(147		)	170
Cash and cash equivalents at beginning of year	1,369			1,120
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,222		$	1,290
(a)  Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

6

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

		In millions	Engine			Distribution			Components			Power Systems			Electrified Power (1)			Total Segments			Intersegment Eliminations (2)			Total
		Three months ended September 30, 2018
		External sales	$	2,082		$	1,927		$	1,297		$	636		$	1		$	5,943		$	—		$	5,943
		Intersegment sales	644			4			457			471			1			1,577			(1,577		)	—
		Total sales	2,726			1,931			1,754			1,107			2			7,520			(1,577		)	5,943
		Research, development and engineering expenses	74			5			71			57			22			229			—			229
		Equity, royalty and interest income from investees	55			9			12			14			—			90			—			90
		Interest income	3			4			1			1			—			9			—			9
		Segment EBITDA	405			155			288			163			(30		)	981			2			983
		Depreciation and amortization (3)	46			27			44			29			2			148			—			148
		EBITDA as a percentage of total sales	14.9		%	8.0		%	16.4		%	14.7		%	NM			13.0		%				16.5		%
		Three months ended October 1, 2017
		External sales	$	1,783		$	1,748		$	1,139		$	615		$	—		$	5,285		$	—		$	5,285
		Intersegment sales	553			5			394			441			—			1,393			(1,393		)	—
		Total sales	2,336			1,753			1,533			1,056			—			6,678			(1,393		)	5,285
		Research, development and engineering expenses	83			6			63			61			—			213			—			213
		Equity, royalty and interest income from investees	58			11			12			14			—			95			—			95
		Interest income	1			2			—			1			—			4			—			4
		Segment EBITDA	276			120			259			111			—			766			22			788
		Depreciation and amortization (3)	47			29			42			30			—			148			—			148
		EBITDA as a percentage of total sales	11.8		%	6.8		%	16.9		%	10.5		%	—		%	11.5		%				14.9		%
"NM" - not meaningful information
(1	)	We formed the Electrified Power Segment effective January 1, 2018. Our Electrified Power segment provides fully electric and hybrid powertrain solutions along with innovative components and subsystems to serve all our markets as they adopt electrification, meeting the needs of our original equipment manufacturer partners and end customers.
(2	)	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended September 30, 2018 and October 1, 2017.
(3	)	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." A portion of depreciation expense is included in "Research, development and engineering expenses."

7

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

		In millions	Engine			Distribution			Components			Power Systems			Electrified Power (1)			Total Segments			Intersegment Eliminations (2)			Total
		Nine months ended September 30, 2018
		External sales	$	5,945		$	5,762		$	4,012		$	1,922		$	4		$	17,645		$	—		$	17,645
		Intersegment sales	1,923			16			1,382			1,505			1			4,827			(4,827		)	—
		Total sales	7,868			5,778			5,394			3,427			5			22,472			(4,827		)	17,645
		Research, development and engineering expenses	229			15			195			174			45			658			—			658
		Equity, royalty and interest income from investees	189			33			42			51			—			315			—			315
		Interest income	8			9			4			5			—			26			—			26
		Segment EBITDA	1,053			423			752			491			(61		)	2,658			(78		)	2,580
		Depreciation and amortization (3)	142			81			137			91			4			455			—			455
		EBITDA as a percentage of total sales	13.4		%	7.3		%	13.9		%	14.3		%	NM			11.8		%				14.6		%
		Nine months ended October 1, 2017
		External sales	$	4,951		$	5,101		$	3,183		$	1,717		$	—		$	14,952		$	—		$	14,952
		Intersegment sales	1,715			19			1,148			1,238			—			4,120			(4,120		)	—
		Total sales	6,666			5,120			4,331			2,955			—			19,072			(4,120		)	14,952
		Research, development and engineering expenses	200			14			171			161			—			546			—			546
		Equity, royalty and interest income from investees	186			35			40			40			—			301			—			301
		Interest income	4			4			1			2			—			11			—			11
		Segment EBITDA	872			377			703			286			—			2,238			19			2,257
		Depreciation and amortization (3)	137			90			117			87			—			431			—			431
		EBITDA as a percentage of total sales	13.1		%	7.4		%	16.2		%	9.7		%	—		%	11.7		%				15.1		%
"NM" - not meaningful information
(1	)	We formed the Electrified Power Segment effective January 1, 2018. Our Electrified Power segment provides fully electric and hybrid powertrain solutions along with innovative components and subsystems to serve all our markets as they adopt electrification, meeting the needs of our original equipment manufacturer partners and end customers.
(2	)	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the nine months ended September 30, 2018 and October 1, 2017.
(3	)	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 was $1 million and $2 million for the nine months ended September 30, 2018 and October 1, 2017. A portion of depreciation expense is included in "Research, development and engineering expense."

8

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				Nine months ended
In millions	September 30, 2018		October 1, 2017		September 30, 2018		October 1, 2017
Total EBITDA	$	983	$	788	$	2,580	$	2,257
Less:
Depreciation and amortization	148		148		455		431
Interest expense	30		18		82		57
Income before income taxes	$	805	$	622	$	2,043	$	1,769

9

CUMMINS INC. AND SUBSIDIARIES

SELECT FOOTNOTE DATA

(Unaudited)

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					Nine months ended
In millions	September 30, 2018		October 1, 2017			September 30, 2018		October 1, 2017
Manufacturing entities
Beijing Foton Cummins Engine Co., Ltd.	$	18	$	24		$	63	$	79
Dongfeng Cummins Engine Company, Ltd.	13		15			47		56
Chongqing Cummins Engine Company, Ltd.	11		11			43		30
Cummins Westport, Inc.	8		4			20		9
Dongfeng Cummins Emission Solutions Co., Ltd.	2		3			11		10
All other manufacturers	20		20			69		59
Distribution entities
Komatsu Cummins Chile, Ltda.	5		8			18		23
All other distributors	—		(1		)	—		(1		)
Cummins share of net income	77		84			271		265
Royalty and interest income	13		11			44		36
Equity, royalty and interest income from investees	$	90	$	95		$	315	$	301

PENSIONS AND OTHER POSTRETIREMENT BENEFITS

On January 1, 2018, we retroactively adopted the new accounting standard related to the presentation of pension and other postretirement benefit costs, which resulted in the adjustment of prior period balances in the Condensed Consolidated Statements of Income by the following amounts:

	Favorable / (Unfavorable)
	2017															2016
In millions	Q1			Q2			Q3			Q4			Total			Total
Cost of sales	$	4		$	2		$	2		$	2		$	10		$	6
Selling, general and administrative expenses	(10		)	(10		)	(9		)	(10		)	(39		)	(53		)
Research, development and engineering expenses (1)	—			(1		)	—			(1		)	(2		)	(1		)
Total change in operating income	(6		)	(9		)	(7		)	(9		)	(31		)	(48		)
Other non operating income, net	6			9			7			9			31			48
Total change in income before income taxes	$	—		$	—		$	—		$	—		$	—		$	—

INCOME TAXES

Our effective tax rate for the year is expected to approximate 21.0 percent, excluding any discrete tax items that may arise. Our effective tax rates for the three and nine months ended September 30, 2018, were 13.3 percent and 22.8 percent, respectively.

The three months ended September 30, 2018, contained $37 million, or $0.23 per share, of favorable net discrete tax items, primarily due to $34 million of favorable discrete items related to the 2017 Tax Cuts and Jobs Act (Tax Legislation) and $3 million of other favorable discrete items.

The three month effective tax rate of 13.3 percent includes the nine month adjustment for decreasing our expected full year effective tax rate to 21.0 percent and diluted earnings per share benefited $0.26.

10

CUMMINS INC. AND SUBSIDIARIES

SELECT FOOTNOTE DATA

(Unaudited)

The nine months ended September 30, 2018, contained $37 million, or $0.23 per share, of unfavorable net discrete tax items, primarily due to $48 million of unfavorable discrete items related to the Tax Legislation, partially offset by $11 million of other favorable discrete items.

Our effective tax rates for the three and nine months ended October 1, 2017, were 26.5 percent and 26.3 percent, respectively and contained only immaterial discrete tax items.

The change in the effective tax rate for the three months ended September 30, 2018, versus the comparable period in 2017, was primarily due to lower U.S. tax rates and favorable discrete changes associated with the Tax Legislation. The change in the effective tax rate for the nine months ended September 30, 2018, versus the comparable period in 2017, was primarily due to lower U.S. tax rates associated with Tax Legislation.

11

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Reconciliation of Non GAAP measures - Earnings before interest, income taxes, noncontrolling interests, depreciation and amortization (EBITDA)

Effective January 1, 2018, we use EBITDA as a primary basis for the Chief Operating Decision Maker to evaluate the performance of each of our operating segments and our consolidated results. It is also a component in measuring our variable compensation programs. We believe EBITDA is a useful measure for our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard for financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Our 2017 and 2016 EBITDA measures, as restated, were as follows:

In millions	Engine		Distribution		Components		Power Systems		Total Segment		Intersegment Eliminations			Total
2017
Q1	$	273	$	130	$	216	$	85	$	704	$	1		$	705
Q2	323		127		228		90		768		(4		)	764
Q3	276		120		259		111		766		22			788
Q4	271		123		214		125		733		36			769
2017 Total	$	1,143	$	500	$	917	$	411	$	2,971	$	55		$	3,026
2016 Total	$	849	$	508	$	774	$	378	$	2,509	$	17		$	2,526

EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Income. Below is a reconciliation of “Net income attributable to Cummins Inc.” to EBITDA for each of the applicable periods:

	Three months ended						Nine months ended
In millions	September 30, 2018			October 1, 2017			September 30, 2018			October 1, 2017
Net income attributable to Cummins Inc.	$	692		$	453		$	1,562		$	1,273
Net income attributable to Cummins Inc. as a percentage of net sales	11.6		%	8.6		%	8.9		%	8.5		%
Add:
Net income attributable to noncontrolling interests	6			4			15			30
Consolidated net income	698			457			1,577			1,303
Add:
Interest expense	30			18			82			57
Income tax expense	107			165			466			466
Depreciation and amortization	148			148			455			431
EBITDA	$	983		$	788		$	2,580		$	2,257
EBITDA as a percentage of net sales	16.5		%	14.9		%	14.6		%	15.1		%
Add: Engine system campaign charge	—			—			368			—
EBITDA, excluding engine system campaign charge	$	983		$	788		$	2,948		$	2,257
EBITDA, excluding engine system campaign charge, as a percentage of net sales	16.5		%	14.9		%	16.7		%	15.1		%

12

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

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

We believe these are useful measures of our operating performance for the periods presented as they illustrate our operating performance without regard to discrete tax adjustments. These measures are not in accordance with, or an alternative for GAAP and may not be consistent with measures used by other companies. This should be considered supplemental data. The following table reconciles net income attributable to Cummins Inc. to net income attributable to Cummins Inc. excluding discrete tax items for the following periods:

	Three months ended
	September 30, 2018						October 1, 2017
In millions	Net Income			Diluted EPS			Net Income		Diluted EPS
Net income attributable to Cummins Inc.	$	692		$	4.28		$	453	$	2.71
Tax Legislation	(34		)	(0.21		)	—		—
Discrete tax items	(3		)	(0.02		)
Net income attributable to Cummins Inc. excluding discrete tax items	$	655		$	4.05		$	453	$	2.71

	Nine months ended
	September 30, 2018						October 1, 2017
In millions	Net Income			Diluted EPS			Net Income		Diluted EPS
Net income attributable to Cummins Inc.	$	1,562		$	9.53		$	1,273	$	7.60
Tax Legislation	48			0.29			—		—
Discrete tax items	(11		)	(0.06		)
Net income attributable to Cummins Inc. excluding discrete tax items	$	1,599		$	9.76		$	1,273	$	7.60

13

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

Engine Segment Sales by Market and Unit Shipments by Engine Classification

Sales for our Engine segment by market were as follows:

2018
In millions	Q1		Q2		Q3		Q4		YTD
Heavy-duty truck	$	815	$	920	$	958	$	—	$	2,693
Medium-duty truck and bus	692		777		699		—		2,168
Light-duty automotive	402		444		517		—		1,363
Off-highway	537		555		552		—		1,644
Total sales	$	2,446	$	2,696	$	2,726	$	—	$	7,868
2017
In millions	Q1		Q2		Q3		Q4		YTD
Heavy-duty truck	$	620	$	714	$	776	$	730	$	2,840
Medium-duty truck and bus	544		701		625		643		2,513
Light-duty automotive	423		429		452		423		1,727
Off-highway	436		463		483		491		1,873
Total sales	$	2,023	$	2,307	$	2,336	$	2,287	$	8,953

Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:

2018
Units	Q1	Q2	Q3	Q4	YTD
Heavy-duty	26,600	32,000	34,600		93,200
Medium-duty	74,000	83,500	76,000		233,500
Light-duty	61,900	68,500	76,800		207,200
Total units	162,500	184,000	187,400	—	533,900
2017
Units	Q1	Q2	Q3	Q4	YTD
Heavy-duty	19,200	24,100	28,100	24,500	95,900
Medium-duty	60,300	71,600	68,500	67,700	268,100
Light-duty	63,100	65,600	66,300	62,500	257,500
Total units	142,600	161,300	162,900	154,700	621,500

14

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

Distribution Segment Sales by Product Line

Sales for our Distribution segment by product line were as follows:

2018
In millions	Q1		Q2		Q3		Q4		YTD
Parts	$	808	$	817	$	800	$	—	$	2,425
Engines	367		461		400		—		1,228
Service	352		370		372		—		1,094
Power generation	326		346		359		—		1,031
Total sales	$	1,853	$	1,994	$	1,931	$	—	$	5,778
2017
In millions	Q1		Q2		Q3		Q4		YTD
Parts	$	745	$	759	$	768	$	768	$	3,040
Engines	275		314		342		438		1,369
Service	319		320		326		347		1,312
Power generation	306		329		317		385		1,337
Total sales	$	1,645	$	1,722	$	1,753	$	1,938	$	7,058

Component Segment Sales by Business

Sales for our Components segment by product line were as follows:

2018
In millions	Q1		Q2		Q3		Q4		YTD
Emission solutions	$	775	$	841	$	769	$	—	$	2,385
Turbo technologies	340		355		317		—		1,012
Filtration	320		324		308		—		952
Electronics and fuel systems	201		226		210		—		637
Automated transmissions	117		141		150		—		408
Total sales	$	1,753	$	1,887	$	1,754	$	—	$	5,394
2017
In millions	Q1		Q2		Q3		Q4		YTD
Emission solutions	$	616	$	674	$	696	$	689	$	2,675
Turbo technologies	287		307		297		288		1,179
Filtration	277		291		287		298		1,153
Electronics and fuel systems	164		182		184		188		718
Automated transmissions	—		—		69		95		164
Total sales	$	1,344	$	1,454	$	1,533	$	1,558	$	5,889

15

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

Power Systems Segment Sales by Product Line

Sales for our Power Systems segment by product line were as follows:

2018
In millions	Q1		Q2		Q3		Q4		YTD
Power generation	$	571	$	666	$	636	$	—	$	1,873
Industrial	414		483		380		—		1,277
Generator technologies	89		97		91		—		277
Total sales	$	1,074	$	1,246	$	1,107	$	—	$	3,427
2017
In millions	Q1		Q2		Q3		Q4		YTD
Power generation	$	526	$	570	$	580	$	629	$	2,305
Industrial	275		353		385		386		1,399
Generator technologies	81		94		91		88		354
Total sales	$	882	$	1,017	$	1,056	$	1,103	$	4,058

High-horsepower unit shipments by engine classification were as follows: 

2018
Units	Q1	Q2	Q3	Q4	YTD
Power generation	2,100	2,300	2,400		6,800
Industrial	1,700	2,100	1,900		5,700
Total units	3,800	4,400	4,300	—	12,500
2017
Units	Q1	Q2	Q3	Q4	YTD
Power generation	1,900	2,100	2,200	2,000	8,200
Industrial	1,300	1,700	1,600	1,800	6,400
Total units	3,200	3,800	3,800	3,800	14,600

16

EX-99

For Immediate Release

October 30, 2018

Cummins Announces Third Quarter Results; Maintains Outlook for 2018

• Third quarter revenues of $5.9 billion

• GAAP¹ Net Income of $692 million and Diluted EPS of $4.28

• Record EBITDA of $983 million or 16.5 percent of sales

• Full year revenues expected to increase 15 to 17percent

• Full year EBITDA is expected to be 14.8 to 15.2 percent of sales

COLUMBUS, IND. - Cummins Inc. (NYSE: CMI) today reported results for the third quarter of 2018.

Third quarter revenues of $5.9 billion increased 12 percent from the same quarter in 2017. The Company delivered growth in most major markets as demand for trucks, construction, and power generation equipment all improved. Currency negatively impacted revenues by 1 percent, primarily due to a weaker Brazilian Real.

Sales in North America improved by 17 percent while international revenues increased by 6 percent led by growth in India, China, Latin America, and Europe.

“We delivered record earnings this quarter due to increased demand in a number of key markets, growth in our market share and the benefits of cost reduction initiatives,” said Chairman and CEO Tom Linebarger. “We have completed our previously announced $500 million accelerated share repurchase plan and our Board of Directors recently authorized a new $2 billion share repurchase plan, which reflects our confidence in our long-term performance. Year to date, we have returned $1.4 billion to shareholders in the form of dividends and share repurchase, consistent with our plan to return 75 percent of Operating Cash Flow in 2018.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter were $983 million, or 16.5 percent of sales, up from $788 million or 14.9 percent of sales a year ago.

Net income attributable to Cummins in the third quarter was $692 million ($4.28 per diluted share), compared to net income of $453 million ($2.71 per diluted share). Third quarter results were positively impacted by $37 million in discrete tax items, of which $34 million was related to U.S. tax reform. Excluding these items, net income attributable to Cummins in the third quarter was $655 million ($4.05 per diluted share). The company now expects its 2018 effective tax rate to be 21 percent, excluding discrete items, compared to the prior guidance of 23 percent.

Based on the current forecast, Cummins expects full year 2018 revenues to be up 15 to 17 percent and EBITDA of 14.8 to 15.2 percent of sales, unchanged from prior guidance.

Recent Highlights:

• Cummins was named to the Dow Jones Sustainability North American Index for a 13th consecutive year. The index is considered one of the most prestigious sustainability rankings.

• The Cummins PowerDrive, an advanced suite of plug-in hybrid electric powertrain solutions spanning light, medium and heavy-duty applications, was unveiled at the 2018 IAA Commercial Vehicle Show.

• The Company returned $682 million to shareholders in the form of dividends and share repurchases in the third quarter, including the recently completed the $500 million accelerated share repurchase announced in August.

Third quarter 2018 detail (all comparisons to same period in 2017)

Engine Segment

• Sales - $2.7 billion, up 17 percent

• Segment EBITDA - $405 million, or 14.9 percent of sales, compared to $276 million or 11.8 percent of sales

• Revenues increased by 18 percent in North America and 14 percent in international markets

• On-highway revenues increased 17 percent primarily due to increased truck production in North America

Distribution Segment

• Sales - $1.9 billion, up 10 percent

• Segment EBITDA - $155 million, or 8.0 percent of sales, compared to $120 million or 6.8 percent of sales

• Revenues in North America increased by 12 percent and international sales grew by 6 percent

• Strong demand for power generation equipment, oil and gas engines, and growth in parts and service drove the increase

Components Segment

• Sales - $1.8 billion, up 14 percent

• Segment EBITDA - $288 million, or 16.4 percent of sales, compared to $259 million or 16.9 percent of sales

• The Eaton Cummins Automated Transmission joint venture recorded sales of $150 million and was breakeven on an EBITDA basis

• Revenues in North America increased by 25 percent, and international sales grew by 2 percent

Power Systems Segment

• Sales - $1.1 billion, up 5 percent

• Segment EBITDA - $163 million, or 14.7 percent of sales, compared to $111 million, or 10.5 percent of sales

• Revenues in North America increased by 7 percent and international sales grew 3 percent

• Increased demand in power generation and oil and gas markets was partially offset by lower demand in commercial marine markets

Electrified Power Segment

• Sales - $2 million

• Segment EBITDA loss - $30 million

¹ Generally Accepted Accounting Principles

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel and natural gas engines to hybrid and electric platforms, as well as related technologies, including battery systems, fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins employed 58,600 people committed to powering a more

prosperous world as of December 31, 2017. Cummins serves customers in approximately 190 countries and territories through a network of approximately 500 company-owned and independent distributor locations and over 7,500 dealer locations. Cummins earned about $1 billion on sales of $20.4 billion in 2017. 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/cumminsinc.

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

and EBITDA percentage for the full year of 2018. 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 (i) a sustained slowdown or significant downturn in our markets; (ii)

our truck manufacturing and OEM customers discontinuing outsourcing their engine needs; (iii) the development of

new technologies; (iv) the discovery of any significant additional problems with our engine platforms or

aftertreatment systems in North America; (v) performance or safety-related recalls; (vi) lower than anticipated

market acceptance of our new or existing products or services; (vii) a slowdown in infrastructure development

and/or depressed commodity prices; (viii) unpredictability in the adoption, implementation and enforcement of

increasingly stringent emissions standards around the world; (ix) our reliance on significant earnings from

investees that we do not directly control; (x) the adoption and impact of new tax legislation; (xi) potential security

breaches or other disruptions to our information technology systems and data security; (xii) financial distress or a

change-in-control of one of our large truck OEM customers; (xiii) our pursuit of strategic acquisitions and

divestitures; and (xiv) other risks detailed from time to time in our Securities and Exchange Commission filings,

including particularly in the Risk Factors section of our 2017 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

EBITDA 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 EBITDA is a measure used internally to assess the performance of the operating units.

We believe net income and diluted earnings per share attributable to Cummins Inc. excluding discrete tax items is a useful measure of our operating performance without regard to discrete tax adjustments. These measures are not in accordance with, or an alternative for GAAP and may not be consistent with measures used by other companies.

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.