2010 Sustainability Report - Cummins.com

Pat Ward, Vice President – Chief Financial Officer at Cummins, meets with Richard Harris, Vice President – Chief Investment Officer
and Dean Cantrell, Director – Investor Relations.
Decisive action
The severity of the global recession and the speed
at which it spread caused Cummins to take decisive
action in 2009 to meet its financial commitments.
The Company reduced its global workforce by
15 percent from late 2008 through the middle of last
year, froze merit pay, instituted salary cuts for officers
and directors and reduced expenses in every category
across every part of the Company.
These actions, while painful in many respects,
reduced the Company’s costs in line with demand
and contributed significantly to profitability in 2009.
Cummins also lowered our inventory level by more
than $400 million last year, which improved our cash
position by more than $500 million over the course
of 2009. The Company ended the year with just over
$1 billion in cash and marketable securities.
Despite the recession, Cummins continued to invest
significantly in the business with capital expenditures
of $310 million in 2009. Most of the investments were
for critical technologies and programs designed to
help the Company meet new emissions standards and
to enter new product markets in emerging regions.
The Company continued to return significant value to
its shareholders in 2009: Cummins’ stock appreciated
75 percent in 2009 and the Company ranked in the top
25 among the Fortune 500 companies for total return
to shareholders for the five-year period of 2005–2009.
Cummins manufacturing operations faced extreme
volatility in demand over the past year. In the first half
of 2009, demand was very weak. It then surged to
near-record levels in the United States during
the fourth quarter as customers ordered engines
in advance of federal emissions regulation changes,
which took effect Jan. 1, 2010.
Financial
105