OPERATING SEGMENTS (Tables)

9 Months Ended

Sep. 27, 2020

Financial information regarding reportable operating segments

Summarized financial information regarding our reportable operating segments for the three months ended is shown in the table below:


In millions	Engine		Distribution		Components		Power Systems		New Power		Total Segments		Intersegment Eliminations ⁽¹⁾		Total
Three months ended September 27, 2020
External sales	$	1,617	$	1,715	$	1,201	$	567	$	18	$	5,118	$	—	$	5,118
Intersegment sales	495		6		340		414		—		1,255		(1,255)		—
Total sales	2,112		1,721		1,541		981		18		6,373		(1,255)		5,118
Research, development and engineering expenses	72		9		64		53		26		224		—		224
Equity, royalty and interest income (loss) from investees	74		13		13		—		(2)		98		—		98

Interest income	1		1		1		1		—		4		—		4
EBITDA	382		182		261		101		(40)		886		(10)		876
Depreciation and amortization ⁽²⁾	51		30		47		32		5		165		—		165



Three months ended September 29, 2019
External sales	$	1,822	$	2,001	$	1,253	$	683	$	9	$	5,768	$	—	$	5,768
Intersegment sales	594		3		397		443		—		1,437		(1,437)		—
Total sales	2,416		2,004		1,650		1,126		9		7,205		(1,437)		5,768
Research, development and engineering expenses	79		7		73		58		25		242		—		242
Equity, royalty and interest income from investees	34		12		9		13		—		68		—		68

Interest income	5		4		2		3		—		14		—		14
EBITDA	341		186		286		158		(36)		935		23		958
Depreciation and amortization ⁽²⁾	50		29		67		29		2		177		—		177



⁽¹⁾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 27, 2020 and September 29, 2019.

⁽²⁾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 Net Income as "Interest expense." A portion of depreciation expense is included in "Research, development and engineering expenses."

Summarized financial information regarding our reportable operating segments for the nine months ended is shown in the table below:



In millions	Engine		Distribution		Components		Power Systems		New Power		Total Segments		Intersegment Eliminations ⁽¹⁾		Total
Nine months ended September 27, 2020
External sales	$	4,133	$	5,123	$	3,192	$	1,495	$	38	$	13,981	$	—	$	13,981
Intersegment sales	1,560		17		1,001		1,147		—		3,725		(3,725)		—
Total sales	5,693		5,140		4,193		2,642		38		17,706		(3,725)		13,981
Research, development and engineering expenses	217		20		187		148		79		651		—		651
Equity, royalty and interest income (loss) from investees	236		45		46		18		(3)		342		—		342

Interest income	6		3		3		3		—		15		—		15
EBITDA	897		500		681		269		(121)		2,226		45		2,271
Depreciation and amortization⁽²⁾	155		91		142		96		13		497		—		497


Nine months ended September 29, 2019
External sales	$	5,879	$	6,009	$	4,055	$	2,030	$	20	$	17,993	$	—	$	17,993
Intersegment sales	1,893		24		1,302		1,376		—		4,595		(4,595)		—
Total sales	7,772		6,033		5,357		3,406		20		22,588		(4,595)		17,993
Research, development and engineering expenses	245		21		223		171		70		730		—		730
Equity, royalty and interest income from investees	152		35		30		39		—		256		—		256

Interest income	13		12		6		7		—		38		—		38
EBITDA	1,195		529		908		469		(98)		3,003		46		3,049
Depreciation and amortization⁽²⁾	151		86		160		88		6		491		—		491

⁽¹⁾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 27, 2020 and September 29, 2019.
⁽²⁾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 Net Income as "Interest expense." The amortization of debt discount and deferred costs was $2 million and $2 million for the nine months ended September 27, 2020 and September 29, 2019, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses."

Reconciliation of segment information

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:


	Three months ended						Nine months ended
In millions	September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019
Total EBITDA	$	876	$	958	$	2,271	$	3,049
Less:
Depreciation and amortization	165		177		497		491
Interest expense	25		26		71		87
Income before income taxes	$	686	$	755	$	1,703	$	2,471