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Press release from Business Wire

Cummins Announces Record Revenue and Profits for 2011, with Revenue Growth of 36 Percent and EBIT Increasing by 54 Percent

<ul> <li class='bwlistitemmargb'> <b>Strong fourth quarter results as revenue grows 19 percent and EBIT increases 25 percent</b> </li> <li class='bwlistitemmargb'> <b>Expects 10 percent revenue growth in 2012 and EBIT to improve to a range of 14.5 to 15 percent of sales</b> </li> </ul>

Thursday, February 02, 2012

Cummins Announces Record Revenue and Profits for 2011, with Revenue Growth of 36 Percent and EBIT Increasing by 54 Percent07:30 EST Thursday, February 02, 2012 COLUMBUS, Ind. (Business Wire) -- Cummins Inc. (NYSE: CMI) today reported record sales, profits and cash flow from operations for all of 2011 as well as strong results for the fourth quarter. Fourth quarter revenue of $4.9 billion increased 19 percent from the same quarter in 2010 and set a new quarterly record for the Company. The increase year-over-year was driven by higher demand in truck, construction, power generation and oil and gas markets in North America. The Company also experienced strong growth in global mining markets. Growth in these markets offset weaker demand in the construction market in China and power generation in India. Net income attributable to Cummins in the fourth quarter was $548 million ($2.86 per diluted share). Excluding the gain from the disposition of the light duty filtration business ($0.17 per diluted share) and the previously announced insurance settlement related to the 2008 flood in Indiana ($0.13 per diluted share), the Company reported net income of $491 million ($2.56 per diluted share) with a tax rate of 22.8 percent for the quarter. Earnings before interest and taxes (EBIT) was $768 million for the fourth quarter. Excluding the special items noted above, EBIT was $677 million or 13.8 percent of sales. This represents a 25 percent growth in earnings year-over-year. Revenue for the full year was $18 billion, up 36 percent from 2010, with strong growth in most geographic regions. Net income attributable to Cummins for the full year was $1.85 billion ($9.55 per diluted share), up from $1.04 billion ($5.28 per diluted share) in 2010. Excluding the benefit from the gains on divestiture of two businesses within the Components segment ($0.36 per diluted share), and the flood insurance settlement ($0.12 per diluted share), the Company reported full year net income of $1.75 billion ($9.07 per diluted share) with a tax rate of 26.3 percent for the year. EBIT for the year, excluding special items, was $2.56 billion or 14.2% of sales, compared to $1.66 billion or 12.5% of sales in 2010. “Cummins had its best year ever in 2011, despite economic uncertainty in a number of regions. We continue to benefit from our leading position in a number of end markets and geographies,” said Tom Linebarger, Chairman and Chief Executive Officer. “Revenue in the United States grew 53 percent and international revenue grew 27 percent year-over-year. In fact, we experienced record full year revenues in North America, Brazil, China, India and a number of other important markets.” Based on the current forecast, Cummins anticipates that total Company revenues will increase 10 percent in 2012, with EBIT in the range of 14.5 to 15 percent of sales. “Our 2011 results and our forecast for 2012 reaffirms our confidence in reaching our goal of achieving $30 billion in sales and 18 percent EBIT in 2015,” Linebarger said. Other highlights from 2011: Cash flow from operations more than doubled to $2.1 billion. Cummins unveiled a new high horsepower engine, the QSK95, in Seymour, Ind., that will be the world's most powerful high-speed diesel engine. The Company increased its dividend by 52 percent and repurchased 6.4 million shares. Cummins' performance was recognized by the three major credit rating agencies, all of which upgraded the Company's ratings. Fourth quarter detail (all comparisons to same period in 2010)Engine Segment Sales – $3.1 billion, up 23 percent Segment EBIT – $368 million, or 12.0 percent of sales, compared to $256 million or 10.3 percent of sales Improved demand for North American on-highway heavy duty, midrange and light duty engines Strong demand for oil and gas engines in North America and mining engines globally Components Sales - $1.1 billion, an increase of 19 percent Segment EBIT - $132 million, or 12.1 percent of sales, compared to $83 million or 9.0 percent of sales Record quarter driven by increased demand in North America Europe, India and Brazil showed year-over-year growth offsetting weaker demand in China Power Generation Sales – $920 million, up 2 percent Segment EBIT – $87 million, or 9.5 percent of sales, compared to $92 million or 10.2 percent of sales Commercial products business sales increase because of stronger demand in most regions Improved demand in North America, China and Europe Distribution Sales – $834 million, up 19 percent Segment EBIT – $87 million, or 10.4 percent of sales, compared to $82 million or 11.7 percent of sales Revenue increase driven by strong growth in Asia Pacific region, power generation demand in North America and oil and gas and mining markets About CumminsCummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service 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 statementInformation 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, expectations, hopes, beliefs and intentions on strategies regarding the future. 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 2010 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 InformationEBIT is a non-GAAP measure used in this release, and is 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 informationCummins management will host a teleconference to discuss these results today at 10 a.m. EST. 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited) (a)               Three months endedDecember 31,September 25,December 31,In millions, except per share amounts201120112010NET SALES$4,921 $ 4,626 $ 4,139 Cost of sales   3,680   3,438   3,155 GROSS MARGIN1,241 1,188 984   OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 496 489 423 Research, development and engineering expenses 179 164 123 Equity, royalty and interest income from investees (Note 1) 101 102 90 Gain on sale of businesses (Note 2) 53 - - Other operating (expense) income, net (Note 3)   25   2   (3) OPERATING INCOME745 639 525   Interest income 9 9 7 Interest expense 10 11 11 Other income (expense), net   14   (8)   9 INCOME BEFORE INCOME TAXES758 629 530   Income tax expense (Note 4)   186   157   139 CONSOLIDATED NET INCOME572 472 391   Less: Net income attributable to noncontrolling interests   24   20   29 NET INCOME ATTRIBUTABLE TO CUMMINS INC.$548 $ 452 $ 362   EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $2.87 $ 2.35 $ 1.85 Diluted $2.86 $ 2.35 $ 1.84   WEIGHTED AVERAGE SHARES OUTSANDING Basic 190.9 192.1 195.8 Diluted 191.5 192.7 196.4   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 (GAAP).       CUMMINS INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOMEUnaudited (a)             For the years endedDecember 31,December 31,In millions, except per share amounts20112010NET SALES$18,048 $ 13,226 Cost of sales   13,459   10,058 GROSS MARGIN4,589 3,168   OPERATING EXPENSES AND INCOME Selling, general and administrative expenses 1,837 1,487 Research, development and engineering expenses 629 414 Equity, royalty and interest income from investees (Note 1) 416 351 Gain on sale of businesses (Note 2) 121 - Other operating (expense) income, net (Note 3)   21   (16) OPERATING INCOME2,681 1,602   Interest income 34 21 Interest expense 44 40 Other income (expense), net   -   34 INCOME BEFORE INCOME TAXES2,671 1,617   Income tax expense (Note 4)   725   477 CONSOLIDATED NET INCOME1,946 1,140   Less: Net income attributable to noncontrolling interests   98   100 NET INCOME ATTRIBUTABLE TO CUMMINS INC.$1,848 $ 1,040   EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. Basic $9.58 $ 5.29 Diluted $9.55 $ 5.28   WEIGHTED AVERAGE SHARES OUTSTANDING Basic 193.0 196.7 Diluted 193.6 197.1   CASH DIVIDENDS DECLARED PER COMMON SHARE$1.325 $ 0.875   (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America (GAAP).       CUMMINS INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (a)                   December 31,December 31,In millions, except par value20112010ASSETS Current assets Cash and cash equivalents $1,484 $ 1,023 Marketable securities   277   339 Total cash, cash equivalents and marketable securities 1,761 1,362 Accounts and notes receivable, net 2,526 2,243 Inventories 2,141 1,977 Deferred income taxes 268 314 Prepaid expenses and other current assets   395   393 Total current assets   7,091   6,289 Long-term assets Property, plant and equipment, net 2,288 2,041 Investments and advances related to equity method investees 838 734 Goodwill and other intangibles, net 566 589 Other assets   885   749 Total assets $11,668 $ 10,402   LIABILITIES Current liabilities Loans payable $28 $ 82 Accounts payable (principally trade) 1,546 1,362 Accrued expenses   2,083   1,816 Total current liabilities   3,657   3,260 Long-term liabilities Long-term debt 658 709 Other liabilities   1,522   1,437 Total liabilities   5,837   5,406   EQUITY Cummins Inc. shareholders' equity Common stock, $2.50 par value, 500 shares authorized, 222.2 and 221.8 shares issued 2,001 1,934 Retained earnings 6,038 4,445 Treasury stock, at cost, 30.2 and 24.0 shares (1,587) (964) Common stock held by employee benefits trust, at cost, 1.8 and 2.1 shares (22) (25) Accumulated other comprehensive loss   (938)   (720) Total Cummins Inc. shareholders' equity 5,492 4,670 Noncontrolling interests   339   326 Total equity   5,831   4,996 Total liabilities and equity $11,668 $ 10,402   (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America (GAAP).       CUMMINS INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (a)             For the years endedDecember 31,December 31,In millions20112010NET CASH PROVIDED BY OPERATING ACTIVITIES$2,073 $ 1,006   CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (622) (364) Investments in internal use software (60) (43) Proceeds from disposals of property, plant and equipment 8 55 Investments in and advances to equity investees (81) (2) Proceeds from sale of businesses, net of cash sold 199 - Acquisition of business, net of cash acquired - (104) Investments in marketable securities-acquisitions (729) (823) Investments in marketable securities-liquidations 750 690 Purchases of other investments - (62) Cash flows from derivatives not designated as hedges (18) 2 Other, net   1   - Net cash used in investing activities   (552)   (651)   CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 127 214 Payments on borrowings and capital lease obligations (237) (143) Net borrowings (payments) under short-term credit agreements 6 9 Distributions to noncontrolling interests (56) (28) Dividend payments on common stock (255) (172) Proceeds from sale of common stock held by employee benefit trust - 58 Repurchases of common stock (629) (241) Excess tax benefits (deficiencies) on stock-based awards 5 10 Other, net   14   26 Net cash used in financing activities   (1,025)   (267) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS   (35)   5 Net increase (decrease) in cash and cash equivalents 461 93 Cash and cash equivalents at beginning of year   1,023   930 CASH AND CASH EQUIVALENTS AT END OF PERIOD$1,484 $ 1,023   (a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America (GAAP).                       CUMMINS INC. AND SUBSIDIARIESSEGMENT INFORMATION(Unaudited)   In millionsEngineComponentsPowerGenerationDistributionNon-segmentItems(1)Total   Three months ended December 31, 2011 External sales $2,628$781$682$830$-$4,921 Intersegment sales   433   311   238   4   (986)   -   Total sales 3,0611,092920834(986)4,921 Depreciation and amortization(2)4618108-82 Research, development and engineering expenses 11249171-179 Equity, royalty and interest income from investees 4071044-101 Interest income 4221-9 Segment EBIT 368132878794768   Three months ended September 25, 2011 External sales $ 2,539 $ 704 $ 604 $ 779 $ - $ 4,626 Intersegment sales   416   311   270   4   (1,001)   - Total sales 2,955 1,015 874 783 (1,001) 4,626 Depreciation and amortization(2) 46 19 11 6 - 82 Research, development and engineering expenses 103 46 14 1 - 164 Equity, royalty and interest income from investees 35 7 16 44 - 102 Interest income 5 1 2 1 - 9 Segment EBIT 349 113 92 104 (18) 640   Three months ended December 31, 2010 External sales $ 2,099 $ 656 $ 690 $ 694 $ - $ 4,139 Intersegment sales   398   262   213   5   (878)   - Total sales 2,497 918 903 699 (878) 4,139 Depreciation and amortization(2) 46 18 10 6 - 80 Research, development and engineering expenses 76 33 13 1 - 123 Equity, royalty and interest income from investees 37 6 8 39 - 90 Interest income 5 1 1 - - 7 Segment EBIT 256 83 92 82 28 541   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 11,3074,0633,4983,044(3,864)18,048 Depreciation and amortization(2)181734225-321 Research, development and engineering expenses 397175543-629 Equity, royalty and interest income from investees 1663147172-416 Interest income 18583-34 Segment EBIT 1,3844703733861022,715   For the year ended December 31, 2010 External sales $ 6,594 $ 2,171 $ 2,150 $ 2,311 $ - $ 13,226 Intersegment sales   1,294   875   769   13   (2,951)   - Total sales 7,888 3,046 2,919 2,324 (2,951) 13,226 Depreciation and amortization(2) 171 79 41 25 - 316 Research, development and engineering expenses 263 114 36 1 - 414 Equity, royalty and interest income from investees 161 23 35 132 - 351 Interest income 12 2 5 2 - 21 Segment EBIT 809 278 299 297 (26) 1,657   (1)   Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. For the three months ended December 31, 2011 unallocated corporate expenses includes a $53 million gain ($33 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. There were no significant unallocated corporate expenses for the three months ended September 25, 2011 and the three months ended December 31, 2010. 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 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 by management in its evaluation of operating results for the year ended December 31, 2011. For the year ended December 31, 2010 unallocated corporate expenses included $32 million in Brazil tax recoveries ($21 million after-tax) and $2 million in flood damage expenses. This tax recovery has been excluded from segment results as it was not considered by management in its evaluation of operating results for the year ended December 31, 2010.   (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.”       CUMMINS INC. AND SUBSIDIARIESRECONCILIATION 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 endedDecember 31,   September 25,   December 31,December 31,   December 31,In millions20112011201020112010 Segment EBIT $768 $ 640 $ 541 $2,715 $ 1,657 Less: Interest expense   10   11   11   44   40 Income before income taxes $758 $ 629 $ 530 $2,671 $ 1,617       CUMMINS INC. AND SUBSIDIARIESSELECTED 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 endedDecember 31,   September 25,   December 31,December 31,   December 31,In millions20112011201020112010Distribution Entities North American distributors $34 $ 35 $ 29 $134 $ 101 Komatsu Cummins Chile, Ltda 6 6 5 22 16 All other distributors 1 1 1 4 3   Manufacturing Entities Chongqing Cummins Engine Company, Ltd. 17 20 11 68 46 Dongfeng Cummins Engine Company, Ltd. 16 15 23 80 99 Cummins Westport, Inc. 6 4 3 14 10 Tata Cummins, Ltd. 5 2 3 14 14 Shanghai Fleetguard Filter Co., Ltd. 3 4 3 15 12 Komatsu manufacturing alliances 2 - 4 3 11 Valvoline Cummins, Ltd. 1 2 1 7 8 Beijing Foton Cummins Engine Co., Ltd. (2) (2) (4) (7) (16) Cummins MerCruiser Diesel Marine, LLC (3) - (2) (3) (3) All other manufacturers   5   7   5   24   20 Cummins share of net income 91 94 82 375 321 Royalty and interest income   10   8   8   41   30 Equity, royalty and interest income from investees $101 $ 102 $ 90 $416 $ 351   NOTE 2.SALE OF BUSINESSES In the second quarter of 2011, we sold certain assets and liabilities of our exhaust business which manufactures exhaust products and select components for emission systems for a variety of applications not core to our other product offerings. This business was historically included in our Components segment. The sales price was $123 million. We recognized a gain on the sale of $68 million ($37 million after-tax), which included an allocation of goodwill of $19 million. The gain was excluded from segment results as it was not considered by management in its evaluation of operating results for the year ended December 31, 2011. Sales for this business were $62 million, $171 million and $126 million in 2011 (through closing), 2010 and 2009, respectively. EBIT for this business was approximately $9 million, $22 million and $11 million in 2011 (through closing), 2010 and 2009, respectively. During the fourth quarter of 2011, we sold certain assets and liabilities of our light-duty filtration business which manufactures light-duty automotive and industrial filtration solutions. The sales price was $90 million and included a note receivable from the buyer of approximately $1 million. There are no earnouts or other contingencies associated with the sales price. We recognized a gain on the sale of $53 million ($33 million after-tax), which included an allocation of goodwill of $6 million. The gain was excluded from segment results as it was not considered by management in its evaluation of operating results for the year ended December 31, 2011. Sales for this business were $64 million, $74 million and $54 million in 2011 (through closing), 2010 and 2009, respectively. EBIT for this business was approximately $13 million, $9 million and $2 million in 2011 (through closing), 2010 and 2009, respectively. We will enter into supply and other agreements with the operations that will represent ongoing involvement and as such, the results of these operations will not be presented as discontinued operations.       CUMMINS INC. AND SUBSIDIARIESSELECTED FOOTNOTE DATA(Unaudited)   NOTE 3.FLOOD INSURANCE RECOVERY In June 2008, four of our sites in Southern Indiana, including our Technical Center, experienced extensive flood damage. In October 2011, we received $40 million from our insurance carriers to settle all outstanding 2008 flood claims. As a result, we recognized a gain of approximately $38 million ($24 million after-tax), net of any remaining flood related expenses, in “Other operating (expense) income, net” in our Condensed Consolidated Statements of Income. NOTE 4.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 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. The tax rate for the fourth quarter and full year includes discrete tax items that total a benefit of $56 million ($0.29 per share) and $85 million ($0.44 per share), respectively. The discrete tax items for the fourth quarter and full year related primarily to additional research credits claimed on amended tax returns for prior periods, the settlement of uncertain tax positions and restructuring of our foreign operations. Our effective tax rate for the fourth quarter and full year of 2010 was 26.2 percent and 29.5 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 31,2011   2010 U.S. federal statutory rate 35.0% 35.0 % State income tax, net of federal effect 0.4 0.6 Research tax credits (4.7) (1.3) Differences in rates and taxability of foreign subsidiaries and joint ventures (4.6) (4.7) Other, net 1.0 (0.1) Effective tax rate 27.1% 29.5 %   We expect our 2012 effective tax rate to be 29 percent excluding any discrete items that may arise. The research tax credit expired December 31, 2011 and has not yet been renewed by Congress. If the research credit is reinstated, we would anticipate the 2012 effective tax rate to be 28 percent. NOTE 5.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, 2011 and 2010, was $325 million and $320 million, respectively.       CUMMINS INC. AND SUBSIDIARIESFINANCIAL 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 the sale of certain assets and liabilities of our exhaust business and our filtration business and 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 quarter and year ended December 31, 2011.             Three months ended       Year ended   December 31, 2011   December 31, 2011In millions   Net Income     Diluted EPS   Net Income     Diluted EPS Net income attributable to Cummins Inc. $ 548 $ 2.86 $ 1,848 $ 9.55 Subtract: Gain on sale of businesses(1) 33 0.17 70 0.36 Flood insurance recovery(1) 24 0.13 24 0.12 Net income attributable to Cummins Inc. excluding                 special items $ 491 $ 2.56 $ 1,754 $ 9.07   (1)   The gains have been excluded from operating results as they were not considered by management in its evaluation of performance for the year ended December 31, 2011. .       CUMMINS INC. AND SUBSIDIARIESFINANCIAL MEASURES THAT SUPPLEMENT GAAP(Unaudited)   Earnings before interest expense, income taxes and noncontrolling interests 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, a non-GAAP financial measure, to “Net income attributable to Cummins Inc.,” for each of the applicable periods:           Three months ended     For the years endedDecember 31,   September 25,   December 31,December 31,   December 31,In millions20112011201020112010 Earnings before interest expense, income taxes and special items $677 $ 640 $ 541 $2,556 $ 1,657   Earnings before interest expense, income taxes and special items as a percentage of net sales13.8%13.8%13.1%14.2%12.5%   Add: Gain on sale of businesses 53 - - 121 - Flood insurance recovery   38   -   -   38   -   Earnings before interest expense and income taxes $768 $ 640 $ 541 $2,715 $ 1,657   EBIT as a percentage of net sales15.6%13.8%13.1%15.0%12.5%   Less: Interest expense 10 11 11 44 40 Income tax expense   186   157   139   725   477 Consolidated net income   572   472   391   1,946   1,140   Less: Net income attributable to noncontrolling interests   24   20   29   98   100 Net income attributable to Cummins Inc. $548 $ 452 $ 362 $1,848 $ 1,040   Net income attributable to Cummins Inc. as a percentage of net sales11.1%9.8%8.7%10.2%7.9%       CUMMINS INC. AND SUBSIDIARIESBUSINESS UNIT SALES DATA(Unaudited)   Engine segment net sales by market 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   2010In millions   Q1   Q2   Q3   Q4   YTD Heavy-duty truck $ 252 $ 340 $ 395 $ 516 $ 1,503 Medium-duty truck and bus 217 352 430 436 1,435 Light-duty automotive and RV 207 296 239 280 1,022 Industrial 577 656 700 956 2,889 Stationary power   170   255   305   309   1,039 Total sales $ 1,423 $ 1,899 $ 2,069 $ 2,497 $ 7,888   Unit shipments by engine classification (including unit shipments to Power Generation) 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   2010Units   Q1   Q2   Q3   Q4   YTD Mid-range 69,100 90,500 93,500 115,800 368,900 Heavy-duty 8,700 14,500 15,200 22,800 61,200 High horsepower   3,400   4,800   4,900   5,400   18,500 Total units   81,200   109,800   113,600   144,000   448,600       CUMMINS INC. AND SUBSIDIARIESBUSINESS UNIT SALES DATA(Unaudited)   Component segment sales by business 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   2010In millions   Q1   Q2   Q3   Q4   YTD Emission solutions $ 137 $ 170 $ 192 $ 251 $ 750 Turbo technologies 200 226 239 283 948 Filtration 228 250 248 285 1,011 Fuel systems   65   83   90   99   337 Total sales $ 630 $ 729 $ 769 $ 918 $ 3,046   Power generation segment sales by business 2011                 In millions   Q1   Q2   Q3   Q4   YTD Commercial products $ 505 $ 568 $ 579 $578 $ 2,230 Generator technologies 153 190 166 164 673 Commercial projects 55 58 46 84 243 Consumer 50 53 48 49 200 Power electronics   32   40   35   45   152   Total sales $ 795 $ 909 $ 874 $920 $ 3,498   2010In millions   Q1   Q2   Q3   Q4   YTD Commercial products $ 307 $ 436 $ 519 $ 569 $ 1,831 Generator technologies 107 135 140 167 549 Commercial projects 33 57 49 83 222 Consumer 43 49 49 45 186 Power electronics   27   31   34   39   131 Total sales $ 517 $ 708 $ 791 $ 903 $ 2,919   Distribution segment sales by business 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   2010In millions   Q1   Q2   Q3   Q4   YTD Parts and filtration $ 193 $ 221 $ 220 $ 248 $ 882 Power generation 99 135 125 157 516 Engines 83 109 112 162 466 Service   101   111   116   132   460 Total sales $ 476 $ 576 $ 573 $ 699 $ 2,324   Cummins Inc.Janet Williams, 317-610-2488Director - Corporate Communicationsjanet.williams@cummins.com