Edgar Filing: CUMMINS INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: February 6, 2013

CUMMINS INC.
(Exact name of registrant as specified in its charter)

Indiana
(State or other Jurisdiction of
Incorporation)

1-4949
(Commission File Number)

35-0257090
(I.R.S. Employer Identification
No.)

500 Jackson Street
P. O. Box 3005
Columbus, IN 47202-3005
(Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (812) 377-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 6, 2013, Cummins Inc. issued a press release regarding its release of fourth quarter and full year 2012 results.

Item 9.01. Financial Statements and Exhibits.

(d)

The following exhibit is furnished herewith:

99-Press Release dated February 6, 2013

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 6, 2013

CUMMINS INC.

/s/ Marsha L. Hunt
______________________________

Marsha L. Hunt
Vice President - Corporate Controller
(Principal Accounting Officer)

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (a)

		Three months ended
		December 31,		September 30,		December 31,
In millions, except per share amounts		2012		2012		2011
NET SALES		$	4,292	$	4,118	$	4,921
	Cost of sales		3,234		3,076		3,680
GROSS MARGIN			1,058		1,042		1,241

OPERATING EXPENSES AND INCOME
	Selling, general and administrative expenses		482		456		496
	Research, development and engineering expenses		174		186		179
	Equity, royalty and interest income from investees (Note 1)		82		94		101
	Gain on sale of businesses		-		-		53
	Other operating income (expense), net		1		(1)		25
OPERATING INCOME			485		493		745

	Interest income		5		5		9
	Interest expense		7		9		10
	Other income (expense), net		10		(2)		14
INCOME BEFORE INCOME TAXES			493		487		758

	Income tax expense (Note 3)		83		117		186
CONSOLIDATED NET INCOME			410		370		572

	Less: Net income attributable to noncontrolling interests		29		18		24
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$	381	$	352	$	548

EARNINGS PER COMMON SHARE ATTRIBUTABLE
	TO CUMMINS INC.
	Basic	$	2.02	$	1.87	$	2.87
	Diluted	$	2.02	$	1.86	$	2.86

WEIGHTED AVERAGE SHARES OUTSANDING
	Basic		188.4		188.6		190.9
	Diluted		188.8		189.0		191.5

CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.50	$	0.50	$	0.40

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (a)

		For the years ended
		December 31,		December 31,
In millions, except per share amounts		2012		2011
NET SALES		$	17,334	$	18,048
	Cost of sales		12,826		13,459
GROSS MARGIN			4,508		4,589

OPERATING EXPENSES AND INCOME
	Selling, general and administrative expenses		1,900		1,837
	Research, development and engineering expenses		728		629
	Equity, royalty and interest income from investees (Note 1)		384		416
	Gain on sale of businesses		6		121
	Other operating income, net		4		21
OPERATING INCOME			2,274		2,681

	Interest income		25		34
	Interest expense		32		44
	Other income, net		24		-
INCOME BEFORE INCOME TAXES			2,291		2,671

	Income tax expense (Note 3)		541		725
CONSOLIDATED NET INCOME			1,750		1,946

	Less: Net income attributable to noncontrolling interests		93		98
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$	1,657	$	1,848

EARNINGS PER COMMON SHARE ATTRIBUTABLE
	TO CUMMINS INC.
	Basic	$	8.75	$	9.58
	Diluted	$	8.74	$	9.55

WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic		189.3		193.0
	Diluted		189.7		193.6

CASH DIVIDENDS DECLARED PER COMMON SHARE		$	1.80	$	1.325

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (a)

						December 31,		December 31,
In millions, except par value						2012		2011
ASSETS
Current assets
	Cash and cash equivalents					$	1,369	$	1,484
	Marketable securities						247		277
		Total cash, cash equivalents and marketable securities					1,616		1,761
	Accounts and notes receivable, net						2,475		2,526
	Inventories						2,221		2,141
	Prepaid expenses and other current assets						855		663
			Total current assets				7,167		7,091
Long-term assets
	Property, plant and equipment, net						2,724		2,288
	Investments and advances related to equity method investees						897		838
	Goodwill and other intangibles, net						814		566
	Other assets						939		885
				Total assets		$	12,541	$	11,668

LIABILITIES
Current liabilities
	Loans payable					$	16	$	28
	Accounts payable (principally trade)						1,339		1,546
	Accrued expenses						1,761		2,083
			Total current liabilities				3,116		3,657
Long-term liabilities
	Long-term debt						698		658
	Other liabilities						1,741		1,522
				Total liabilities			5,555		5,837

EQUITY
Cummins Inc. shareholders’ equity
	Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.2 shares issued						2,058		2,001
	Retained earnings						7,355		6,038
	Treasury stock, at cost, 32.6 and 30.2 shares						(1,830)		(1,587)
	Common stock held by employee benefits trust, at cost, 1.5 and 1.8 shares						(18)		(22)
	Accumulated other comprehensive loss						(950)		(938)
			Total Cummins Inc. shareholders’ equity				6,615		5,492
Noncontrolling interests							371		339
				Total equity			6,986		5,831
					Total liabilities and equity	$	12,541	$	11,668

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (a)

		For the years ended
		December 31,		December 31,
In millions		2012		2011
NET CASH PROVIDED BY OPERATING ACTIVITIES		$	1,532	$	2,073

CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures		(690)		(622)
	Investments in internal use software		(87)		(60)
	Proceeds from disposals of property, plant and equipment		11		8
	Investments in and advances to equity investees		(70)		(81)
	Acquisition of businesses, net of cash acquired		(215)		-
	Proceeds from sale of businesses, net of cash sold		10		199
	Investments in marketable securities-acquisitions		(561)		(729)
	Investments in marketable securities-liquidations		585		750
	Proceeds from sale of equity investment		23		-
	Cash flows from derivatives not designated as hedges		12		(18)
	Other, net		-		1
Net cash used in investing activities			(982)		(552)

CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from borrowings		64		127
	Payments on borrowings and capital lease obligations		(145)		(237)
	Net borrowings under short-term credit agreements		11		6
	Distributions to noncontrolling interests		(62)		(56)
	Dividend payments on common stock		(340)		(255)
	Repurchases of common stock		(256)		(629)
	Excess tax benefits on stock-based awards		14		5
	Other, net		20		14
Net cash used in financing activities			(694)		(1,025)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			29		(35)
Net increase (decrease) in cash and cash equivalents			(115)		461
Cash and cash equivalents at beginning of year			1,484		1,023
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	1,369	$	1,484

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

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

In millions		Engine		Components		Power Generation		Distribution		Non-segment Items⁽¹⁾		Total

Three months ended December 31, 2012
External sales		$	2,177	$	662	$	549	$	904	$	-	$	4,292
Intersegment sales			329		277		216		3		(825)		-
	Total sales		2,506		939		765		907		(825)		4,292
Depreciation and amortization⁽²⁾			50		23		13		11		-		97
Research, development and engineering expenses			92		60		20		2		-		174
Equity, royalty and interest income from investees			27		6		8		41		-		82
Interest income			2		-		2		1		-		5
Segment EBIT			252		78		42		84		44		500
Add back restructuring charges⁽³⁾			20		6		12		14		-		52
	Segment EBIT excluding restructuring charges		272		84		54		98		44		552

Segment EBIT as a percentage of total sales			10.1%		8.3%		5.5%		9.3%				11.6%
Segment EBIT excluding restrucutring charges
	as a percentage of total sales		10.9%		8.9%		7.1%		10.8%				12.9%

Three months ended September 30, 2012
External sales		$	2,131	$	663	$	526	$	798	$	-	$	4,118
Intersegment sales			396		275		288		3		(962)		-
	Total sales		2,527		938		814		801		(962)		4,118
Depreciation and amortization⁽²⁾			48		21		12		8		-		89
Research, development and engineering expenses			115		51		19		1		-		186
Equity, royalty and interest income from investees			25		7		12		50		-		94
Interest income			2		1		2		-		-		5
Segment EBIT			239		89		73		99		(4)		496

Segment EBIT as a percentage of total sales			9.5%		9.5%		9.0%		12.4%				12.0%

Three months ended December 31, 2011
External sales		$	2,628	$	781	$	682	$	830	$	-	$	4,921
Intersegment sales			433		311		238		4		(986)		-
	Total sales		3,061		1,092		920		834		(986)		4,921
Depreciation and amortization⁽²⁾			46		18		10		8		-		82
Research, development and engineering expenses			112		49		17		1		-		179
Equity, royalty and interest income from investees			40		7		10		44		-		101
Interest income			4		2		2		1		-		9
Segment EBIT			368		132		87		87		94		768

Segment EBIT as a percentage of total sales			12.0%		12.1%		9.5%		10.4%				15.6%

(1)	Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended December 31, 2012 and September 30, 2012. The three months ended December 31, 2011 includes a $53 million gain ($33 million after-tax) recorded for the sale of certain assets and liabilities of our light-duty filtration business from the Components segment and a $38 million gain ($24 million after-tax) related to flood damage recoveries from the insurance settlement regarding a June 2008 flood in Southern Indiana. The gains have been excluded from segment results as they were not considered in our evaluation of operating results for the corresponding periods. There were no other significant unallocated corporate expenses.
(2)	Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as "Interest expense."
(3)	See Note 2, "RESTRUCTURING CHARGES," for more details.

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

In millions		Engine		Components		Power Generation		Distribution		Non-segment Items⁽¹⁾		Total

For the year ended December 31, 2012
External sales		$	9,101	$	2,809	$	2,163	$	3,261	$	-	$	17,334
Intersegment sales			1,632		1,203		1,105		16		(3,956)		-
	Total sales		10,733		4,012		3,268		3,277		(3,956)		17,334
Depreciation and amortization⁽²⁾			192		82		47		34		-		355
Research, development and engineering expenses			433		213		76		6		-		728
Equity, royalty and interest income from investees			127		29		40		188		-		384
Interest income			11		3		9		2		-		25
Segment EBIT			1,248		426		285		369		(5)		2,323
Add back restructuring charges⁽³⁾			20		6		12		14		-		52
	Segment EBIT excluding restructuring charges		1,268		432		297		383		(5)		2,375

Segment EBIT as a percentage of total sales			11.6%		10.6%		8.7%		11.3%				13.4%
Segment EBIT excluding restrucutring charges
	as a percentage of total sales		11.8%		10.8%		9.1%		11.7%				13.7%

For the year ended December 31, 2011
External sales		$	9,649	$	2,886	$	2,492	$	3,021	$	-	$	18,048
Intersegment sales			1,658		1,177		1,006		23		(3,864)		-
	Total sales		11,307		4,063		3,498		3,044		(3,864)		18,048
Depreciation and amortization⁽²⁾			181		73		42		25		-		321
Research, development and engineering expenses			397		175		54		3		-		629
Equity, royalty and interest income from investees			166		31		47		172		-		416
Interest income			18		5		8		3		-		34
Segment EBIT			1,384		470		373		386		102		2,715

Segment EBIT as a percentage of total sales			12.2%		11.6%		10.7%		12.7%				15.0%

(1)	Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. The year ended December 31, 2012 includes a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures. The year ended December 31, 2011, includes a $121 million gain ($70 million after-tax) related to the sale of certain assets and liabilities of our exhaust business and light-duty filtration business, both from the Components segment, and a $38 million gain ($24 million after-tax) related to flood damage recoveries from the insurance settlement regarding a June 2008 flood in Southern Indiana. The gains have been excluded from segment results as they were not considered in our evaluation of operating results for the corresponding periods. There were no other significant unallocated corporate expenses.
(2)	Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as "Interest expense."
(3)	See Note 2, "RESTRUCTURING CHARGES," for more details.

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						For the years ended
			December 31,		September 30,		December 31,		December 31,		December 31,
In millions			2012		2012		2011		2012		2011
Segment EBIT excluding restructuring charges			$	552	$	496	$	768	$	2,375	$	2,715
	Add: Restructuring charges			(52)		-		-		(52)		-
Segment EBIT				500		496		768		2,323		2,715
	Less: Interest expense			7		9		10		32		44
		Income before income taxes	$	493	$	487	$	758	$	2,291	$	2,671

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						For the years ended
			December 31,		September 30,		December 31,		December 31,		December 31,
In millions			2012		2012		2011		2012		2011
Distribution Entities
North American distributors			$	32	$	37	$	34	$	147	$	134
Komatsu Cummins Chile, Ltda.				6		9		6		26		22
All other distributors				1		-		1		4		4
Manufacturing Entities
Chongqing Cummins Engine Company, Ltd.				12		14		17		61		68
Dongfeng Cummins Engine Company, Ltd.				10		9		16		52		80
Tata Cummins, Ltd.				4		-		5		11		14
Cummins Westport, Inc.				3		2		6		14		14
Shanghai Fleetguard Filter Co., Ltd.				3		3		3		13		15
Valvoline Cummins, Ltd.				2		2		1		8		7
Beijing Foton Cummins Engine Co., Ltd.				2		3		(2)		5		(7)
Komatsu manufacturing alliances				(2)		(1)		2		(3)		3
All other manufacturers				2		7		2		9		21
	Cummins share of net income			75		85		91		347		375
Royalty and interest income				7		9		10		37		41
		Equity, royalty and interest income from investees	$	82	$	94	$	101	$	384	$	416

NOTE 2. RESTRUCTURING CHARGES

We have executed restructuring actions primarily in the form of involuntary separation programs in the fourth quarter of 2012. These actions were in response to deterioration in our U.S. businesses and most key markets around the world in the second half of 2012, as well as a reduction in orders in most U.S. and global markets for 2013. We reduced our worldwide professional workforce by approximately 650 employees, or 3 percent. We also reduced our hourly workforce by approximately 650 employees. During 2012, we incurred a pre-tax charge related to the professional and hourly workforce reductions of approximately $49 million.

Employee termination and severance costs were recorded based on approved plans developed by the businesses and corporate management which specified positions to be eliminated, benefits to be paid under existing severance plans or statutory requirements and the expected timetable for completion of the plan. Estimates of restructuring were made based on information available at the time charges were recorded. Due to the inherent uncertainty involved, actual amounts paid for such activities may differ from amounts initially recorded and we may need to revise previous estimates.

We incurred $1 million of restructuring expenses for lease terminations and $2 million of restructuring expenses for asset impairments and other non-cash charges. During 2012, we recorded a total pre-tax restructuring charge of $52 million. These restructuring actions included:

		Year ended
In millions		December 31, 2012
Workforce reductions		$	49
Exit activities			1
Other			2
	Total restructuring charges	$	52

If the 2012 restructuring actions are successfully implemented, we expect the annualized savings from the professional actions to be approximately $39 million.

At December 31, 2012, of the approximately 1,300 employees to be affected by this plan, 1,130 had been terminated.

Restructuring charges were included in each segment in our operating results.

The table below summarizes where the restructuring costs are located in our Condensed Consolidated Statements of Income for the year ended December 31, 2012.

		Year ended
In millions		December 31, 2012
Cost of sales		$	29
Selling, general and administrative expenses			20
Research, development and engineering expenses			3
	Total restructuring charges	$	52

NOTE 3. INCOME TAXES

Our income tax rates are generally less than the 35 percent U.S. income tax rate primarily because of lower taxes on foreign earnings and research tax credits. Our effective tax rate for the fourth quarter and full year of 2012 was 16.8 percent and 23.6 percent, respectively. The tax rate for the fourth quarter and full year includes one-time tax items that total a benefit of $39 million ($0.21 per diluted share) and $55 million ($0.29 per diluted share), respectively. The one-time tax items for the fourth quarter and full year related primarily to benefits resulting from transactions entered into and elections made with respect to our U.K. operations. Our effective tax rate for the fourth quarter and full year of 2011 was 24.5 percent and 27.1 percent, respectively. Excluding the gain on sale of certain assets and liabilities of the businesses and the flood insurance recovery, our effective tax rate for the fourth quarter and full year of 2011 was 22.8 percent and 26.3 percent, respectively.

A reconciliation of the U.S. federal income tax rate of 35 percent to the actual effective tax rate is as follows:

		Years ended December 31,
		2012		2011
U.S. federal statutory rate		35.0	%	35.0	%
State income tax, net of federal effect		1.0		0.4
Research tax credits		(0.4)		(4.7)
Differences in rates and taxability of foreign subsidiaries and joint ventures		(12.0)		(4.6)
Other, net		-		1.0
	Effective tax rate	23.6	%	27.1	%

On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted. This legislation retroactively extended the U.S. federal research credit for two years, from January 1, 2012 through December 31, 2013. We expect our 2013 effective tax rate, which will include an estimated 1 percent benefit for the 2013 research credit, to be 26 percent excluding any one-time tax items that may arise. Additionally, we anticipate that our first quarter 2013 results will include a one-time tax benefit of approximately $28 million representing the net benefit attributable to the 2012 research credit.

NOTE 4. DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense included in operating activities of the Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011, was $361 million and $325 million, respectively.

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 period presented as it illustrates our operating performance without regard to special items including the gains related to restructuring charges, one-time income tax items, the sale of certain assets and liabilities and a flood insurance recovery. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America 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 quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 and for the years ended December 31, 2012 and December 31, 2011.

		Three months ended
		December 31, 2012				September 30, 2012				December 31, 2011
In millions		Net Income		Diluted EPS		Net Income		Diluted EPS		Net Income		Diluted EPS
Net income attributable to Cummins Inc.		$	381	$	2.02	$	352	$	1.86	$	548	$	2.86
Add
	Restructuring charges		35		0.19		-		-		-		-
Less
	One-time tax benefits⁽¹⁾		39		0.21		16		0.08		-		-
	Gain on sale of business⁽²⁾		-		-		-		-		33		0.17
	Flood insurance recovery⁽³⁾		-		-		-		-		24		0.13
Net income attributable to Cummins Inc. excluding
	special items	$	377	$	2.00	$	336	$	1.78	$	491	$	2.56

				For the years ended
				December 31, 2012				December 31, 2011
In millions				Net Income		Diluted EPS		Net Income		Diluted EPS
Net income attributable to Cummins Inc.				$	1,657	$	8.74	$	1,848	$	9.55
Add
	Restructuring charges				35		0.18		-		-
Less
	One-time tax benefits⁽¹⁾				55		0.29		-		-
	Gain on sale of business⁽²⁾				4		0.02		70		0.36
	Flood insurance recovery⁽³⁾				-		-		24		0.12
Net income attributable to Cummins Inc. excluding
	special items			$	1,633	$	8.61	$	1,754	$	9.07

(1)	The one-time tax benefits for the three months ended December 31, 2012, and the year ended December 31, 2012, related primarily to benefits resulting from transactions entered into and elections made with respect to our U.K. operations. The three month period ended September 30, 2012, included a $16 million one-time tax benefit for third quarter 2012, $6 million of which related to a dividend distribution of accumulated foreign income earned in prior years. These one-time tax adjustments also included a one-time tax benefit of $13 million for prior year tax return true-up adjustments and a one-time tax charge of $3 million related to the third quarter enactment of U.K. tax law changes.
(2)	In the second and fourth quarter of 2011 we sold certain assets and liabilities of our exhaust business and our light-duty filtration business. In the second quarter of 2011 we recognized a gain on the sale of $68 million ($37 million after-tax). In the fourth quarter of 2011 we recognized a gain on the sale of $53 million ($33 million after-tax). In the second quarter of 2012 we recognized a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures.
(3)	In the fourth quarter of 2011 we recognized a gain of $38 million ($24 million after-tax) on a flood settlement with our insurance carriers to settle 2008 flood claims.

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Earnings before interest expense, income taxes, noncontrolling interests and restructuring charges

We define EBIT as earnings or loss 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 and EBIT excluding restructuring and other charges, non-GAAP financial measures, to “Net income attributable to Cummins Inc.,” for each of the applicable periods:

		Three months ended						For the years ended
		December 31,		September 30,		December 31,		December 31,		December 31,
In millions		2012		2012		2011		2012		2011
Earnings before interest expense, income taxes and
	special items	$	552	$	496	$	677	$	2,369	$	2,556

Earnings before interest expense, income taxes and
	special items as a percentage of net sales		*12.9%*		12.0%		13.8%		*13.7%*		14.2%

Less
	Restructuring charges		52		-		-		52		-
Add
	Gain on sale of businesses		-		-		53		6		121
	Flood insurance recovery		-		-		38		-		38

Earnings before interest expense and income taxes		$	500	$	496	$	768	$	2,323	$	2,715

EBIT as a percentage of net sales			*11.6%*		12.0%		15.6%		*13.4%*		15.0%

Less
	Interest expense		7		9		10		32		44
	Income tax expense		83		117		186		541		725
Consolidated net income			410		370		572		1,750		1,946

Less
	Net income attributable to noncontrolling interests		29		18		24		93		98
Net income attributable to Cummins Inc.		$	381	$	352	$	548	$	1,657	$	1,848

Net income attributable to Cummins Inc.
	as a percentage of net sales		*8.9%*		8.5%		11.1%		*9.6%*		10.2%

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 truck		$	892	$	807	$	656	$	609	$	2,964
Medium-duty truck and bus			526		512		478		575		2,091
Light-duty automotive and RV			286		297		353		343		1,279
Industrial			861		859		766		747		3,233
Stationary power			294		366		274		232		1,166
	Total sales	$	2,859	$	2,841	$	2,527	$	2,506	$	10,733

2011
In millions		Q1		Q2		Q3		Q4		YTD
Heavy-duty truck		$	485	$	693	$	748	$	865	$	2,791
Medium-duty truck and bus			474		608		640		598		2,320
Light-duty automotive and RV			296		310		271		299		1,176
Industrial			855		988		977		1,030		3,850
Stationary power			281		301		319		269		1,170
	Total sales	$	2,391	$	2,900	$	2,955	$	3,061	$	11,307

Unit shipments by engine classification (including unit shipments to Power Generation)

2012
Units		Q1		Q2		Q3		Q4		YTD
Mid-range			109,000		110,000		113,000		108,500		440,500
Heavy-duty			36,000		33,000		26,000		24,100		119,100
High horsepower			5,500		5,800		4,600		3,900		19,800
	Total units		150,500		148,800		143,600		136,500		579,400

2011
Units		Q1		Q2		Q3		Q4		YTD
Mid-range			109,400		131,300		130,600		138,100		509,400
Heavy-duty			20,000		29,900		31,100		35,300		116,300
High horsepower			4,900		5,700		5,600		5,400		21,600
	Total units		134,300		166,900		167,300		178,800		647,300

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	$	325	$	337	$	1,415
Turbo technologies			298		297		257		254		1,106
Filtration			270		266		260		252		1,048
Fuel systems			127		124		96		96		443
	Total sales	$	1,099	$	1,036	$	938	$	939	$	4,012

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 operating 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 reorganized balances) were as follows:

2012
In millions		Q1		Q2		Q3		Q4		YTD
Power products		$	375	$	459	$	425	$	395	$	1,654
Power systems			188		217		174		178		757
Generator technologies			141		160		138		127		566
Power solutions			76		73		77		65		291
	Total sales	$	780	$	909	$	814	$	765	$	3,268

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

Distribution segment sales by business

2012
In millions		Q1		Q2		Q3		Q4		YTD
Parts and filtration		$	288	$	302	$	326	$	319	$	1,235
Power generation			186		201		178		242		807
Engines			166		147		157		195		665
Service			135		144		140		151		570
	Total sales	$	775	$	794	$	801	$	907	$	3,277

2011
In millions		Q1		Q2		Q3		Q4		YTD
Parts and filtration		$	235	$	271	$	283	$	296	$	1,085
Power generation			145		195		191		191		722
Engines			140		186		171		206		703
Service			122		133		138		141		534
	Total sales	$	642	$	785	$	783	$	834	$	3,044