Meritor Acquisition and 2022 Financial Results
Table of Contents
The following table presents the supplemental consolidated results of the Company for the years ended December 31, 2022 and 2021, on an unaudited pro-forma basis as if the
acquisition had been consummated on January 1, 2021. The primary adjustments reflected in the pro-forma results related to (1) increase in interest expense for debt used to
fund the acquisition, (2) removal of acquisition related costs from 2022 (and included in 2021) and (3) changes related to purchase accounting primarily related to amortization
of intangibles, fixed assets and joint ventures. The unaudited pro forma financial information presented below does not purport to represent the actual results of operations that
Cummins and Meritor would have achieved had the companies been combined during the periods presented and was not intended to project the future results of operations that
the combined company could achieve after the acquisition. The unaudited pro forma financial information does not reflect any potential cost savings, operating efficiencies,
long-term debt pay down estimates, financial synergies or other strategic benefits as a result of the acquisition or any restructuring costs to achieve those benefits.
(Unaudited)
In millions
Years ended
December 31,
2022
December 31,
2021
Net sales
Net income
$
30,841
2,196
$
27,949
2,058
The Meritor acquisition increased net assets in the Components segment by $3.8 billion and New Power segment by $0.3 billion.
Jacobs Vehicle Systems
On April 8, 2022, we completed the acquisition of Jacobs Vehicle Systems business (Jacobs) from Altra Industrial Motion Corp. The purchase price was $45 million in cash,
subject to typical adjustments related to closing working capital and other amounts and does not contain any contingent consideration. Jacobs is a supplier of engine braking,
cylinder deactivation and start and stop thermal management technologies. The acquisition furthers our investment in key technologies and capabilities to drive growth, while
securing our supply base.
The final purchase price allocation was as follows:
In millions
Cash and cash equivalents
Accounts and notes receivable, net
Inventories
Property, plant and equipment
Intangible assets
Goodwill
Accounts payable (principally trade)
Net deferred taxes
Other, net
Total purchase price
༤ཟླཝ༤ཎྜཎྜ
$
18
24
15
70
164
108
(21)
(27)
(6)
$
345
The estimated fair values (all considered Level 3 measurements) of the identifiable intangible assets acquired, their weighted-average useful lives, the related valuation
methodology and key assumptions are as follows:
Fair Value (in
millions)
Weighted-Average
Useful Life (in years)
Valuation Methodology
Customer relationships
$
108
9 Multi-period excess earnings
Technology
31
7 Relief-from-royalty
Trade name
25
14 Relief-from-royalty
82
Key Assumptions
Discount rate, customer renewal rates.
Royalty rate, rate of return, obsolescence
factor
Royalty rate, discountView entire presentation