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Cummins Reports Strong Second Quarter Profits


Attachment:

  Cummins Reports Strong Second Quarter Profits

  * Continues to deliver strong margins despite challenging economic
    environment
  * Expects full-year revenues of $18 billion, EBIT of 14.25 to 14.75 percent

Business Wire

COLUMBUS, Ind. -- July 31, 2012

Cummins Inc. (NYSE: CMI) today reported strong profits for the second quarter
of 2012.

Second quarter revenue of $4.45 billion decreased 4 percent from the same
quarter in 2011. Excluding the impact of divestitures and currency movements,
revenues were flat year over year. Growth in North America offset weakness in
international markets, particularly China and Brazil.

Earnings before interest and taxes (EBIT) was $669 million or 15.0 percent of
sales. Excluding gains from divestitures, EBIT was $663 million or 14.9
percent of sales compared to $707 million or 15.2 percent of sales in the
second quarter of 2011.

Net income attributable to Cummins in the second quarter of 2012 was $469
million ($2.47 per diluted share) compared to $505 million in the same period
a year ago ($2.60 per diluted share). Excluding gains from divestitures, the
Company reported earnings of $2.45 per share compared to $2.41 in the second
quarter of 2011.

“The Company continued to deliver strong profits despite the weakening global
economic conditions,” said Tom Linebarger, Chairman and Chief Executive
Officer. “Second quarter gross margins were at record levels as we continue to
drive improvements in productivity and quality. Looking forward, as the global
economy improves, our growth opportunities remain strong.”

Based on the current forecast, Cummins expects full year revenues to be $18
billion, with EBIT in the range of 14.25 to 14.75 percent of sales.

Other recent highlights:

  * Cummins increased its dividend by 25 percent.
  * The Company repurchased 1.8 million shares of common stock.
  * Cummins Emission Solutions and Cummins Parts business each recently
    received supplier Quality Achievement awards from PACCAR for 2011
    performance.
  * The Company was recognized by Chrysler Group LLC as the 2012
    Sustainability Supplier of the Year.
  * The Company completed the acquisition of the emission control assets of
    Hilite International.

Second quarter 2012 detail (all comparisons to same period in 2011)

Engine Segment

  * Sales – $2.8 billion, down 2 percent
  * Segment EBIT – $376 million, or 13.2 percent of sales, compared to $377
    million or 13.0 percent of sales
  * Improved demand in North American heavy duty truck, medium duty truck and
    light duty truck and construction markets offset by lower sales to China
    construction, Brazilian truck and North American oil and gas markets

Components

  * Sales - $1.0 billion, flat
  * Segment EBIT - $116 million, or 11.2 percent of sales, compared to $120
    million or 11.6 percent of sales
  * Increased demand in North American on-highway markets and higher product
    content in Brazil offset by lower demand in Europe and China and the
    impact of divestitures completed in 2011

Power Generation

  * Sales – $909 million, flat
  * Segment EBIT – $94 million, or 10.3 percent of sales, compared to $105
    million or 11.6 percent of sales
  * Higher revenues in North America offsetting lower demand in Europe, China
    and Latin America

Distribution

  * Sales – $794 million, up 1 percent
  * Segment EBIT – $92 million, or 11.6 percent of sales, compared to $106
    million or 13.5 percent of sales
  * Revenue increase driven by strong parts and service growth in several
    regions offsetting weaker demand in North American oil and gas market and
    power generation in the Middle East

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary
business units that design, manufacture, distribute and service diesel and
natural gas engines and related technologies, including fuel systems,
controls, air handling, filtration, emission solutions and electrical power
generation systems. Headquartered in Columbus, Indiana, (USA) Cummins employs
approximately 44,000 people worldwide and serves customers in approximately
190 countries and territories through a network of more than 600 company-owned
and independent distributor locations and approximately 6,500 dealer
locations. Cummins earned $1.85 billion on sales of $18.0 billion in 2011.
Press releases can be found on the Web at www.cummins.com.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding our forecasts,
guidance, preliminary results, expectations, hopes, beliefs and intentions on
strategies regarding the future. These forward looking statements include,
without limitation, statements relating to our plans and expectations for our
revenues for the second quarter of 2012, as well as the full year. Our actual
future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including, but not
limited to: the adoption and implementation of global emission standards; the
price and availability of energy; the pace of infrastructure development;
increasing global competition among our customers; general economic, business
and financing conditions; governmental action; changes in our customers’
business strategies; competitor pricing activity; expense volatility; labor
relations; and other risks detailed from time to time in our Securities and
Exchange Commission filings, including particularly in the Risk Factors
section of our 2011 Annual Report on Form 10-K. Shareholders, potential
investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements
made herein are made only as of the date of this press release and we
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. More
detailed information about factors that may affect our performance may be
found in our filings with the Securities and Exchange Commission, which are
available at http://www.sec.gov or at http://www.cummins.com in the Investor
Relations section of our website.

Presentation of Non-GAAP Financial Information

Net income attributable to Cummins excluding gain on divestitures and EBIT are
non-GAAP measures used in this release, and are defined and reconciled to what
management believes to be the most comparable GAAP measure in a schedule
attached to this release. Cummins presents this information as it believes it
is useful to understanding the Company's operating performance, and because
EBIT is a measure used internally to assess the performance of the operating
units.

Webcast information

Cummins management will host a teleconference to discuss these results today
at 10 a.m. EDT. This teleconference will be webcast and available on the
Investor Relations section of the Cummins website at www.cummins.com .
Participants wishing to view the visuals available with the audio are
encouraged to sign-in a few minutes prior to the start of the teleconference.

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
                                                                   
                                           Three months ended
                                           July 1,     April 1,     June 26,
In millions, except per share amounts      2012        2012         2011
NET SALES                                  $ 4,452     $  4,472     $ 4,641
  Cost of sales                              3,242        3,274       3,438   
GROSS MARGIN                                 1,210        1,198       1,203
                                                                       
OPERATING EXPENSES AND INCOME
  Selling, general and administrative        487          475         463
  expenses
  Research, development and engineering      187          181         157
  expenses
  Equity, royalty and interest income        104          104         117
  from investees (Note 1)
  Gain on sale of businesses                 6            -           68
  Other operating income (expense), net      2            2           -       
OPERATING INCOME                             648          648         768
                                                                       
  Interest income                            7            8           10
  Interest expense                           8            8           13
  Other income (expense), net                14           2           (3     )
INCOME BEFORE INCOME TAXES                   661          650         762
                                                                       
  Income tax expense (Note 2)                166          175         225     
CONSOLIDATED NET INCOME                      495          475         537
                                                                       
  Less: Net income attributable to           26           20          32      
  noncontrolling interests
NET INCOME ATTRIBUTABLE TO CUMMINS INC.    $ 469       $  455       $ 505     
                                                                       
EARNINGS PER COMMON SHARE ATTRIBUTABLE
  TO CUMMINS INC.
  Basic                                    $ 2.47      $  2.39      $ 2.61
  Diluted                                  $ 2.47      $  2.38      $ 2.60
                                                                       
WEIGHTED AVERAGE SHARES OUTSTANDING
  Basic                                      189.8        190.4       193.8
  Diluted                                    190.1        190.8       194.4
                                                                       
CASH DIVIDENDS DECLARED PER COMMON SHARE   $ 0.40      $  0.40      $ 0.2625

(a) Prepared on an unaudited basis in accordance with accounting principles
generally accepted in the United States of America.

 
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)
                                                                
                                                Six months ended
In millions, except per share amounts           July 1, 2012     June 26, 2011
NET SALES                                       $    8,924       $   8,501
  Cost of sales                                      6,516           6,341   
GROSS MARGIN                                         2,408           2,160
                                                                      
OPERATING EXPENSES AND INCOME
  Selling, general and administrative                962             852
  expenses
  Research, development and engineering              368             286
  expenses
  Equity, royalty and interest income from           208             213
  investees (Note 1)
  Gain on sale of businesses                         6               68
  Other operating income (expense), net              4               (6     )
OPERATING INCOME                                     1,296           1,297
                                                                      
  Interest income                                    15              16
  Interest expense                                   16              23
  Other income (expense), net                        16              (6     )
INCOME BEFORE INCOME TAXES                           1,311           1,284
                                                                      
  Income tax expense (Note 2)                        341             382     
CONSOLIDATED NET INCOME                              970             902
                                                                      
  Less: Net income attributable to                   46              54      
  noncontrolling interests
NET INCOME ATTRIBUTABLE TO CUMMINS INC.         $    924         $   848     
                                                                      
EARNINGS PER COMMON SHARE ATTRIBUTABLE
  TO CUMMINS INC.
  Basic                                         $    4.86        $   4.36
  Diluted                                       $    4.85        $   4.34
                                                                      
WEIGHTED AVERAGE SHARES OUTSTANDING
  Basic                                              190.1           194.6
  Diluted                                            190.5           195.2
                                                                      
CASH DIVIDENDS DECLARED PER COMMON SHARE        $    0.80        $   0.525

(a) Prepared on an unaudited basis in accordance with accounting principles
generally accepted in the United States of America.

 
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)
In millions, except par value               July 1, 2012     December 31, 2011
ASSETS
Current assets
  Cash and cash equivalents                 $  1,145         $    1,484
  Marketable securities                        261                277       
      Total cash, cash equivalents and         1,406              1,761
      marketable securities
  Accounts and notes receivable, net           2,620              2,526
  Inventories                                  2,581              2,141
  Prepaid expenses and other current           639                663       
  assets
            Total current assets               7,246              7,091     
Long-term assets
  Property, plant and equipment                5,475              5,245
      Accumulated depreciation                 (3,051  )          (2,957   )
      Property, plant and equipment, net       2,424              2,288     
  Investments and advances related to          890                838
  equity method investees
  Goodwill                                     345                339
  Other intangible assets, net                 268                227
  Other assets                                 996                885       
                  Total assets              $  12,169        $    11,668    
                   
LIABILITIES
Current liabilities
  Loans payable                             $  58            $    28
  Accounts payable (principally trade)         1,634              1,546
  Current portion of accrued product           407                422
  warranty
  Accrued compensation, benefits and           340                511
  retirement costs
  Deferred revenue                             208                208
  Taxes payable (including taxes on            258                282
  income)
  Other accrued expenses                       665                660       
            Total current liabilities          3,570              3,657     
Long-term liabilities
  Long-term debt                               653                658
  Pensions                                     118                205
  Postretirement benefits other than           425                432
  pensions
  Other liabilities and deferred revenue       966                885       
                  Total liabilities            5,732              5,837     
                                                                   
EQUITY
Cummins Inc. shareholders’ equity
  Common stock, $2.50 par value, 500
  shares authorized, 222.4 and 222.2           2,036              2,001
  shares issued
  Retained earnings                            6,810              6,038
  Treasury stock, at cost, 32.0 and 30.2       (1,777  )          (1,587   )
  shares
  Common stock held by employee benefits       (20     )          (22      )
  trust, at cost, 1.6 and 1.8 shares
  Accumulated other comprehensive loss
      Defined benefit postretirement           (703    )          (724     )
      plans
      Other                                    (243    )          (214     )
      Total accumulated other                  (946    )          (938     )
      comprehensive loss
            Total Cummins Inc.                 6,103              5,492
            shareholders’ equity
  Noncontrolling interests                     334                339       
                  Total equity                 6,437              5,831     
                       Total liabilities    $  12,169        $    11,668    
                       and equity

(a) Prepared on an unaudited basis in accordance with accounting principles
generally accepted in the United States of America.

 
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)
                                                Six months ended
In millions                                     July 1, 2012     June 26, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
  Consolidated net income                       $  970           $   902
  Adjustments to reconcile consolidated net
  income to net cash provided by operating
  activities
           Depreciation and amortization           171               159
           Gain on sale of businesses              (6     )          (68    )
           Deferred income taxes                   (39    )          87
           Equity in income of investees, net      (25    )          2
           of dividends
           Pension contributions in excess of      (52    )          (47    )
           expense
           Other post-retirement benefits          (7     )          (10    )
           payments in excess of expense
           Stock-based compensation expense        21                18
           Excess tax benefits on stock-based      (11    )          (4     )
           awards
           Translation and hedging activities      7                 (6     )
  Changes in current assets and liabilities,
  net of acquisitions and divestitures:
           Accounts and notes receivable           (116   )          (513   )
           Inventories                             (439   )          (290   )
           Other current assets                    (47    )          11
           Accounts payable                        61                307
           Accrued expenses                        (173   )          169
  Changes in other liabilities and deferred        103               58
  revenue
  Other, net                                       (21    )          (31    )
Net cash provided by operating activities          397               744     
                                                                      
CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                             (266   )          (215   )
  Investments in internal use software             (40    )          (22    )
  Investments in and advances to equity            (40    )          (20    )
  investees
  Proceeds from sale of business, net of cash      -                 111
  sold
  Acquisition of businesses, net of cash           (12    )          -
  acquired
  Investments in marketable                        (276   )          (361   )
  securities—acquisitions
  Investments in marketable                        280               343
  securities—liquidations
  Cash flows from derivatives not designated       1                 6
  as hedges
  Other, net                                       3                 7       
Net cash used in investing activities              (350   )          (151   )
                                                                      
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings                         46                60
  Payments on borrowings and capital lease         (75    )          (94    )
  obligations
  Net borrowings under short-term credit           3                 11
  agreements
  Distributions to noncontrolling interests        (32    )          (26    )
  Dividend payments on common stock                (152   )          (102   )
  Repurchases of common stock                      (196   )          (373   )
  Excess tax benefits on stock-based awards        11                4
  Other, net                                       9                 7       
Net cash used in financing activities              (386   )          (513   )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND        -                 8       
CASH EQUIVALENTS
Net increase (decrease) in cash and cash           (339   )          88
equivalents
Cash and cash equivalents at beginning of          1,484             1,023   
year
CASH AND CASH EQUIVALENTS AT END OF PERIOD      $  1,145         $   1,111   

(a) Prepared on an unaudited basis in accordance with accounting principles
generally accepted in the United States of America.

 
CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
                  Engine    Components   Power        Distribution   Non-segment   Total
                                         Generation                  Items^(1)
In millions
Three months
ended July 1,
2012
External sales    $ 2,381   $   710      $   572      $    789       $  -          $ 4,452
Intersegment      460       326          337          5              (1,128    )     -
sales
        Total       2,841       1,036        909           794          (1,128 )     4,452
        sales
Depreciation and    47          19           11            8            -            85
amortization^(2)
Research,
development and     115         51           19            2            -            187
engineering
expenses
Equity, royalty
and interest        37          8            10            49           -            104
income from
investees
Interest income     3           1            3             -            -            7
Segment EBIT        376         116          94            92           (9     )     669
                                                                                      
Three months
ended April 1,
2012
External sales    $ 2,412   $   774      $   516      $    770       $  -          $ 4,472
Intersegment      447           325          264           5            (1,041 )     -
sales
        Total       2,859       1,099        780           775          (1,041 )     4,472
        sales
Depreciation and    47          19           11            7            -            84
amortization^(2)
Research,
development and     111         51           18            1            -            181
engineering
expenses
Equity, royalty
and interest        38          8            10            48           -            104
income from
investees
Interest income     4           1            2             1            -            8
Segment EBIT        381         143          76            94           (36    )     658
                                                                                      
Three months
ended June 26,
2011
External sales    $ 2,476   $   741      $   649      $    775       $  -          $ 4,641
Intersegment      424       291          260          10             (985      )     -
sales
        Total       2,900       1,032        909           785          (985   )     4,641
        sales
Depreciation and    44          18           11            5            -            78
amortization^(2)
Research,
development and     102         43           12            -            -            157
engineering
expenses
Equity, royalty
and interest        49          9            13            46           -            117
income from
investees
Interest income     6           1            3             -            -            10
Segment EBIT        377         120          105           106          67           775
                                                                                      
Six months ended
July 1, 2012
External sales    $ 4,793   $   1,484    $   1,088    $    1,559     $  -          $ 8,924
Intersegment      907       651          601          10             (2,169    )     -
sales
        Total       5,700       2,135        1,689         1,569        (2,169 )     8,924
        sales
Depreciation and    94          38           22            15           -            169
amortization^(2)
Research,
development and     226         102          37            3            -            368
engineering
expenses
Equity, royalty
and interest        75          16           20            97           -            208
income from
investees
Interest income     7           2            5             1            -            15
Segment EBIT        757         259          170           186          (45    )     1,327
                                                                                      
Six months ended
June 26, 2011
External sales    $ 4,482   $   1,401    $   1,206    $    1,412     $  -          $ 8,501
Intersegment      809       555          498          15             (1,877    )     -
sales
        Total       5,291       1,956        1,704         1,427        (1,877 )     8,501
        sales
Depreciation and    89          36           21            11           -            157
amortization^(2)
Research,
development and     182         80           23            1            -            286
engineering
expenses
Equity, royalty
and interest        91          17           21            84           -            213
income from
investees
Interest income     9           2            4             1            -            16
Segment EBIT        667         225          194           195          26           1,307

       Includes intersegment sales and profit in inventory eliminations and
       unallocated corporate expenses. The three and six months ended July 1,
       2012, include a $6 million gain ($4 million after-tax) related to
       adjustments from our 2011 divestitures. There were no significant
       unallocated corporate expenses for the three months ended April 1,
       2012. The three and six months ended June 26, 2011, include a $68
^(1)   million gain ($37 million after-tax) related to the sale of certain
       assets and liabilities of our exhaust business from the Components
       segment. The gains have been excluded from segment results as they were
       not considered in our evaluation of operating results for the three and
       six months ended July 1, 2012 and June 26, 2011. There were no other
       significant unallocated corporate expenses for the three and six months
       ended July 1, 2012 and June 26, 2011.
       Depreciation and amortization as shown on a segment basis excludes the
^(2)   amortization of debt discount that is included in the Condensed
       Consolidated Statements of Income as “Interest expense.”
        

                                                           
CUMMINS INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT INFORMATION
(Unaudited)
 
A reconciliation of our segment information to the corresponding amounts in
the
Condensed Consolidated Statements of Income is shown in the table below:
                                                             
                          Three months ended                Six months ended
                          July 1,   April 1,   June 26,     July 1,   June 26,
In millions               2012      2012       2011         2012      2011
Segment EBIT              $  669    $   658    $   775      $ 1,327   $  1,307
Less
   Interest expense          8          8          13         16         23
Income before income      $  661    $   650    $   762      $ 1,311   $  1,284
taxes
                                                                          

                                                           
CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)
 
NOTE 1. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES
 
Equity, royalty and interest income from investees included in our Condensed
Consolidated Statements
of Income for the interim reporting periods was as follows:
                                                             
                          Three months ended                Six months ended
                          July 1,   April 1,   June 26,     July 1,   June 26,
In millions               2012      2012       2011         2012      2011
Distribution Entities
North American            $ 38      $  40      $  35        $  78     $  65
distributors
Komatsu Cummins Chile,      6          5          6            11        10
Ltda.
All other distributors      2          1          1            3         2
Manufacturing Entities
Chongqing Cummins           17         18         19           35        31
Engine Company, Ltd.
Dongfeng Cummins Engine     17         16         26           33        49
Company, Ltd.
Cummins Westport, Inc.      4          5          3            9         4
Shanghai Fleetguard         4          3          4            7         8
Filter Co., Ltd.
Tata Cummins, Ltd.          3          4          3            7         7
Beijing Foton Cummins       2          (2  )      (1  )        -         (3  )
Engine Co., Ltd.
Valvoline Cummins, Ltd.     2          2          2            4         4
Komatsu manufacturing       1          (1  )      (1  )        -         1
alliances
All other manufacturers     (1  )      1          6            -         12   
  Cummins share of net    $ 95      $  92      $  103       $  187    $  190
  income
Royalty and interest        9          12         14           21        23   
income
    Equity, royalty and
    interest income       $ 104     $  104     $  117       $  208    $  213  
    from investees
                                                                              

NOTE 2. INCOME TAXES

Our effective tax rate for the year is expected to approximate 26 percent,
absent any discrete period activity. Our tax rate is generally less than the
35 percent U.S. income tax rate primarily due to lower tax rates on foreign
income. The tax rates for the three and six month periods ended July 1, 2012,
were 25.1 percent and 26.0 percent, respectively.

The tax rates for the three and six month periods ended June 26, 2011, were
29.5 percent and 29.8 percent, respectively, and included a discrete tax
charge of $4 million related to the enactment of state law changes in Indiana.
The decrease in the 2012 effective tax rates versus the comparable periods in
2011 is due primarily to our assertion that income earned after 2011 by our
China operations is permanently reinvested, as well as certain tax planning
strategies implemented in our U.K. subsidiaries.

 
CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)
 
Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding
special items
 
We believe this is a useful measure of our operating performance for the periods presented
as it illustrates our operating performance without regard to special items including the
gains related to the sale of certain assets and liabilities. This measure is not in
accordance with, or an alternative for, accounting principles generally accepted in the
United States of America (GAAP) and may not be consistent with measures used by other
companies. It should be considered supplemental data. The following table reconciles net
income attributable to Cummins Inc. to net income attributable to Cummins Inc. excluding
special items for the three and six month periods ended July 1, 2012 and June 26, 2011.
                                                      
                 Three months ended                    Six months ended
                 July 1, 2012       June 26, 2011      July 1, 2012       June 26, 2011
In millions      Net      Diluted   Net      Diluted   Net      Diluted   Net      Diluted
                 Income   EPS       Income   EPS       Income   EPS       Income   EPS
Net income
attributable     $  469   $  2.47   $  505   $  2.60   $  924   $  4.85   $  848   $  4.34
to Cummins
Inc.
Subtract
Gain on sale
of                  4        0.02      37       0.19      4        0.02      37       0.19
businesses^(1)
Net income
attributable
to Cummins       $  465   $  2.45   $  468   $  2.41   $  920   $  4.83   $  811   $  4.15
Inc. excluding
special items
                                                                                       
(1) The gains have been excluded from operating results as they were not considered in our
evaluation of performance for the three and six months ended July 1, 2012 and June 26,
2011.
             

                                                            
CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)
 
Earnings before interest, taxes and noncontrolling interests
 
We define EBIT as earnings before interest expense, income tax expense and
noncontrolling interests in income of consolidated subsidiaries (EBIT). We use
EBIT to assess and measure the performance of our operating segments and also
as a component in measuring our variable compensation programs. Below is a
reconciliation of EBIT, a non-GAAP financial measure, to “Net income
attributable to Cummins Inc.,” for each of the applicable periods:
 
                       Three months ended                    Six months ended
                       July 1,      April 1,     June        July 1,   June
                                                 26,                   26,
In millions            2012         2012         2011        2012      2011
Earnings before
interest expense,      $  663       $  658       $ 707       $ 1,321   $ 1,239
income taxes and
special items
                                                                          
Earnings before
interest expense,
income taxes and          14.9%        14.7%       15.2%       14.8%     14.6%
special items as a
percentage of net
sales
                                                                          
Add
   Gain on sale of        6            -           68          6         68
   businesses
                                                                          
Earnings before
interest expense       $  669       $  658       $ 775       $ 1,327   $ 1,307
and income taxes
                                                                          
EBIT as a
percentage of net         15.0%        14.7%       16.7%       14.9%     15.4%
sales
                                                                          
Less
   Interest expense       8            8           13          16        23
   Income tax             166          175         225         341       382
   expense
Consolidated net          495          475         537         970       902
income
                                                                          
Less
   Net income
   attributable to        26           20          32          46        54
   noncontrolling
   interests
       Net income
       attributable    $  469       $  455       $ 505       $ 924     $ 848
       to Cummins
       Inc.
                                                                          
Net income
attributable to
Cummins Inc. as a         10.5%        10.2%       10.9%       10.4%     10.0%
percentage of net
sales
                                                                          

   
CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)
 
Engine segment net sales by market
     
    2012                                                            
    In millions     Q1           Q2          Q3          Q4          YTD
    Heavy-duty      $ 892        $ 807       $ -         $ -         $ 1,699
    truck
    Medium-duty       526          512         -           -           1,038
    bus and truck
    Light-duty
    automotive        286          297         -           -           583
    and RV
    Industrial        861          859         -           -           1,720
    Stationary        294          366         -           -           660
    power
          Total     $ 2,859      $ 2,841     $ -         $ -         $ 5,700
          sales
                                                                        
    2011
    In millions     Q1           Q2          Q3          Q4          YTD
    Heavy-duty      $ 485        $ 693       $ 748       $ 865       $ 2,791
    truck
    Medium-duty       474          608         640         598         2,320
    bus and truck
    Light-duty
    automotive        296          310         271         299         1,176
    and RV
    Industrial        855          988         977         1,030       3,850
    Stationary        281          301         319         269         1,170
    power
          Total     $ 2,391      $ 2,900     $ 2,955     $ 3,061     $ 11,307
          sales
                               
Unit shipments by engine classification (including unit shipments to Power
Generation)
                                                                        
    2012
    Units           Q1          Q2           Q3          Q4          YTD
    Midrange          109,000      110,000     -           -           219,000
    Heavy-duty        36,000       33,000      -           -           69,000
    High              5,500        5,800       -           -           11,300
    horsepower
          Total       150,500      148,800     -           -           299,300
          units
                                                                        
    2011
    Units           Q1          Q2           Q3          Q4          YTD
    Midrange          109,400      131,300     130,600     138,100     509,400
    Heavy-duty        20,000       29,900      31,100      35,300      116,300
    High              4,900        5,700       5,600       5,400       21,600
    horsepower
          Total       134,300      166,900     167,300     178,800     647,300
          units
                                                                        

   
CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)
     
Component segment sales by business
     
    2012                                                            
    In millions              Q1        Q2        Q3        Q4        YTD
    Emission solutions       $ 404     $ 349     $ -       $ -       $ 753
    Turbo technologies         298       297       -         -         595
    Filtration                 270       266       -         -         536
    Fuel systems               127       124       -         -         251
            Total sales      $ 1,099   $ 1,036   $ -       $ -       $ 2,135
                                                                        
    2011
    In millions              Q1        Q2        Q3        Q4        YTD
    Emission solutions       $ 273     $ 311     $ 306     $ 372     $ 1,262
    Turbo technologies         297       314       298       314       1,223
    Filtration                 255       287       288       283       1,113
    Fuel systems               99        120       123       123       465
            Total sales      $ 924     $ 1,032   $ 1,015   $ 1,092   $ 4,063
                                                                        
In the first quarter of 2012, our Power Generation segment reorganized its
reporting structure to include the following businesses: power products,
power systems, generator technologies and power solutions. Sales for our
Power Generation segment by business (including 2011 and 2010 reorganized
balances) were as follows:
                                                                        
    2012
    In millions              Q1        Q2        Q3        Q4        YTD
    Power products           $ 375     $ 459     $ -       $ -       $ 834
    Power systems              188       217       -         -         405
    Generator technologies     141       160       -         -         301
    Power solutions            76        73        -         -         149
            Total sales      $ 780     $ 909     $ -       $ -       $ 1,689
                                                                        
    2011
    In millions              Q1        Q2        Q3        Q4        YTD
    Power products           $ 377     $ 415     $ 433     $ 411     $ 1,636
    Power systems              189       210       188       228       815
    Generator technologies     154       189       166       164       673
    Power solutions            75        95        87        117       374
            Total sales      $ 795     $ 909     $ 874     $ 920     $ 3,498
                                                                        
    2010
    In millions              YTD
    Power products           $ 1,465
    Power systems              616
    Generator technologies     550
    Power solutions            288
            Total sales      $ 2,919
                                                                        

   
CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)
 
Distribution segment sales by product
     
    2012                                                              
    In millions        Q1          Q2          Q3          Q4          YTD
    Parts and          $ 288       $ 302       $ -         $ -         $ 590
    filtration
    Power                186         201         -           -           387
    generation
    Engines              166         147         -           -           313
    Service              135         144         -           -           279
         Total         $ 775       $ 794       $ -         $ -         $ 1,569
         sales
                                                                          
    2011
    In millions        Q1          Q2          Q3          Q4          YTD
    Parts and          $ 235       $ 271       $ 283       $ 296       $ 1,085
    filtration
    Power                145         195         191         191         722
    generation
    Engines              140         186         171         206         703
    Service              122         133         138         141         534
         Total         $ 642       $ 785       $ 783       $ 834       $ 3,044
         sales

Contact:

Cummins Inc.
Carole Casto, Executive Director - Corporate Communications, 317-610-2480
carole.casto@cummins.com

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