8-KEarnings & ResultsRegulation FDExhibits & Filings

CUMMINS INC 8-K Report, Financial Results (Feb 2, 2012)

Filed February 2, 2012For Securities:CMI

Summary

Cummins Inc. (CMI) filed an 8-K on February 2, 2012, to report its fourth quarter and full-year 2011 financial results. The company demonstrated significant year-over-year growth in both revenue and profitability. For the full year 2011, net sales reached $18.05 billion, a substantial increase from $13.23 billion in 2010, driven by strong performance across its segments, particularly Engines and Components. Net income attributable to Cummins Inc. more than doubled from $1.04 billion in 2010 to $1.85 billion in 2011. The report also highlighted non-recurring items, including gains from the sale of the exhaust and light-duty filtration businesses, and a significant insurance recovery from flood damage. Excluding these special items, the company's operating performance remained robust, with adjusted net income also showing considerable improvement. The company's financial position remained strong, with increased cash and cash equivalents and a healthy balance sheet, positioning it well for future operations and potential market opportunities.

Key Highlights

  • 1Full-year 2011 net sales increased to $18.05 billion, up from $13.23 billion in 2010.
  • 2Full-year 2011 net income attributable to Cummins Inc. rose to $1.85 billion, a significant increase from $1.04 billion in 2010.
  • 3Diluted EPS for the full year 2011 was $9.55, a substantial improvement from $5.28 in 2010.
  • 4The company recorded gains from the sale of its exhaust and light-duty filtration businesses, contributing to 'Other operating income'.
  • 5A significant flood insurance recovery of $38 million ($24 million after-tax) was recognized due to a 2008 flood claim settlement.
  • 6The company's effective tax rate for 2011 was 27.1%, lower than the U.S. federal statutory rate due to foreign earnings and tax credits.
  • 7Cash and cash equivalents increased to $1.48 billion by the end of 2011, up from $1.02 billion at the end of 2010.

Frequently Asked Questions

For the full year 2011, Cummins reported net sales of $18.05 billion and net income attributable to Cummins Inc. of $1.85 billion. Diluted earnings per share (EPS) were $9.55. This represents significant growth compared to 2010, where net sales were $13.23 billion and net income was $1.04 billion with a diluted EPS of $5.28.

Yes, the 2011 results included significant non-recurring items. These included gains from the sale of the company's exhaust and light-duty filtration businesses, and a substantial flood insurance recovery related to a 2008 event. These items are detailed in Notes 2 and 3 of the financial statements.

Cummins' cash position strengthened significantly in 2011. Cash and cash equivalents increased from $1.02 billion at the end of 2010 to $1.48 billion at the end of 2011. This increase was primarily driven by strong operating cash flows.

Cummins projected its 2012 effective tax rate to be approximately 29%, excluding any discrete items. However, this forecast was dependent on the renewal of the research tax credit, which had expired at the end of 2011. If reinstated, the projected rate would be 28%.