The Cummins board of directors last week declared a two-for-one split of Cummins Inc. stock, payable April 9, to shareholders of record as of March 26, 2007.
As a result of the stock split, each Cummins’ shareholder will receive one additional share of stock for each share owned on the record date. Since there will be twice as many shares after the split, each share will be worth half of what it was worth immediately prior to the split, while the overall value of a stockholder's investment remains the same.
The total amount of cash dividend payments with respect to the shares will remain unchanged as a result of the split, but the dividend will be proportionately adjusted to half the pre-split amount on a per-share basis.
“Cummins is a stronger, more diversified and more global company than at any time in our history, and we have set the stage for a period of sustained growth,” said Tim Solso, Cummins chairman and CEO. “This action today reflects our confidence in the future operating results of the company, as well as our continued commitment to creating value for our shareholders. We are also reaffirming our annual EPS guidance of $11 to $11.50 per share announced on Jan. 29.
“The board of directors also decided to split the common stock to bring the company's share price back into a trading range comparable with its peers and to make Cummins stock more accessible to a broader range of investors.”
In 2006, the company increased its quarterly dividend by 20 percent, and continued to repurchase its stock, with more than one million shares being repurchased.
Cummins had approximately 52 million shares of common stock outstanding as of Feb. 4. Upon completion of the split, the Company will have approximately 104 million shares of common stock outstanding.