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Columbus, Ind.-based Cummins Inc., which makes power generators and engines for large trucks and motorhomes, halved its reported fourth-quarter earnings to reflect higher warranty liability on costs related to product repair.
Reuters reported that the warranty liability increased by $82 million to reflect a change in estimated costs primarily for mid-range engine products launched in 2007, the company said in a statement.
The company reduced net income for the quarter to $43 million. Earlier this month, Cummins reported a fourth-quarter profit of $89 million, or 45 cents a share, down from $198 million, or $1 a share, a year earlier. It, however, maintained its 2009 forecast of a 20% decline in sales.
The company said it has made modifications that have reduced the failure rate of these products.
Separately, the company announced that its is proceeding with the previously announced layoffs of hundreds of employees worldwide, including 460 in Indiana.
The company said last month it planned to cut at least 800 people by the end of February.
The company revised that number upward to 985, including 225 salaried and 235 hourly workers in Indiana.