Cummins Revises Previously Announced 2012 Pre-Tax Earnings Results by $20 Million

Wed Feb 20, 2013 8:00am EST

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-- Reduces fourth quarter and full year earnings per diluted share by 7 cents --
COLUMBUS, Ind.--(Business Wire)--
Cummins Inc. (NYSE: CMI) announced today that it has revised its previously
announced fourth quarter and full year 2012 operating results to reflect
information learned in February related to certain legal matters. The revisions
were made to reflect a post-period increase to the Company`s contingent legal
reserves for a recent adverse court ruling in a commercial contract dispute. 

As a result of the new information, Earnings Before Interest and Taxes (EBIT)
for the fourth quarter and the full year decreased by $20 million, while net
income attributable to Cummins was reduced by $12 million, or $0.07 per diluted
share. This matter does not alter operating segment results as previously
reported. 

The Company`s revised fourth quarter EBIT was $532 million excluding $52 million
of restructuring costs. Net income attributable to Cummins was $369 million, or
$1.95 cents per diluted share, including $0.19 per diluted share of
restructuring costs and one-time tax benefits of $0.21 per diluted share. 

For the full year, the Company`s revised EBIT, excluding special items, was
$2.35 billion or 13.6% of sales compared to $2.6 billion or 14.2% of sales in
2011. 

Net income for the full year 2012 was $1.65 billion ($8.67 per diluted share)
down from $1.85 billion ($9.55 per diluted share) in 2011. Excluding the costs
of restructuring ($0.18 per diluted share), and the gain on the sale of the
exhaust business ($0.02 per diluted share), the Company reported Net Income for
2012 of $1.68 billion ($8.83 per diluted share). 

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 currently employs
approximately 46,000 people worldwide and serves customers in approximately 190
countries and territories through a network of approximately 600 company-owned
and independent distributor locations and approximately 6,500 dealer locations.
Cummins earned $1.65 billion on sales of $17.3 billion in 2012. Press releases
can be found on the Web at www.cummins.com. Follow Cummins on Twitter at
@Cummins and on YouTube at CumminsInc. 

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 full year of 2013. 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

EBIT 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.

 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                                   (19)                   (1)                    25       
 OPERATING INCOME                                                                               465                    493                    745      
                                                                                                                                                       
                        Interest income                                                         5                      5                      9        
                        Interest expense                                                        7                      9                      10       
                        Other income (expense), net                                             10                     (2)                    14       
 INCOME BEFORE INCOME TAXES                                                                     473                    487                    758      
                                                                                                                                                       
                        Income tax expense (Note 3)                                             75                     117                    186      
 CONSOLIDATED NET INCOME                                                                        398                    370                    572      
                                                                                                                                                       
                        Less: Net income attributable to noncontrolling interests               29                     18                     24       
 NET INCOME ATTRIBUTABLE TO CUMMINS INC.                                               $        369           $        352           $        548      
                                                                                                                                                       
 EARNINGS PER COMMON SHARE ATTRIBUTABLE                                                                                                                
                        TO CUMMINS INC.                                                                                                                
                        Basic                                                          $        1.96          $        1.87          $        2.87     
                        Diluted                                                        $        1.95          $        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                                             (16)                    21       
 OPERATING INCOME                                                                               2,254                   2,681    
                                                                                                                                 
                        Interest income                                                         25                      34       
                        Interest expense                                                        32                      44       
                        Other income, net                                                       24                      -        
 INCOME BEFORE INCOME TAXES                                                                     2,271                   2,671    
                                                                                                                                 
                        Income tax expense (Note 3)                                             533                     725      
 CONSOLIDATED NET INCOME                                                                        1,738                   1,946    
                                                                                                                                 
                        Less: Net income attributable to noncontrolling interests               93                      98       
 NET INCOME ATTRIBUTABLE TO CUMMINS INC.                                               $        1,645          $        1,848    
                                                                                                                                 
 EARNINGS PER COMMON SHARE ATTRIBUTABLE                                                                                          
                        TO CUMMINS INC.                                                                                          
                        Basic                                                          $        8.69           $        9.58     
                        Diluted                                                        $        8.67           $        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                                                                                                         946                 885      
                                                                  Total assets                                       $        12,548     $        11,668   
                                                                                                                                                           
 LIABILITIES                                                                                                                                               
 Current liabilities                                                                                                                                       
         Loans payable                                                                                               $        16         $        28       
         Accounts payable (principally trade)                                                                                 1,339               1,546    
         Accrued expenses                                                                                                     1,781               2,083    
                                               Total current liabilities                                                      3,136               3,657    
 Long-term liabilities                                                                                                                                     
         Long-term debt                                                                                                       698                 658      
         Other liabilities                                                                                                    1,740               1,522    
                                                                  Total liabilities                                           5,574               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                                                                                                    7,343               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                                        6,603               5,492    
 Noncontrolling interests                                                                                                     371                 339      
                                                                  Total equity                                                6,974               5,831    
                                                                                     Total liabilities and equity    $        12,548     $        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             Distribution        Non-segment       Total       
                                                                                                                          Generation                            Items(1)                      
                                                                                                                                                                                              
 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                 24             480    
 Add back restructuring charges(3)                                                             20               6                 12                 14                 -              52     
                                         Segment EBIT excluding restructuring charges          272              84                54                 98                 24             532    
                                                                                                                                                                                              
 Segment EBIT as a percentage of total sales                                                   10.1%            8.3%              5.5%               9.3%                              11.2%  
 Segment EBIT excluding restructuring charges as a percentage of total sales                   10.9%            8.9%              7.1%               10.8%                             12.4%  
                                                                                                                                                                                              
 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. The three months ended December 31, 2012 includes a $20 million      
        reserve ($12 million after-tax) related to legal matters. There were no significant unallocated corporate expenses for the three months ended 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             Distribution        Non-segment        Total        
                                                                                                                           Generation                            Items(1)                        
                                                                                                                                                                                                 
 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                (25)            2,303   
 Add back restructuring charges(3)                                                             20                6                 12                 14                 -               52      
                                         Segment EBIT excluding restructuring charges          1,268             432               297                383                (25)            2,355   
                                                                                                                                                                                                 
 Segment EBIT as a percentage of total sales                                                   11.6%             10.6%             8.7%               11.3%                              13.3%   
 Segment EBIT excluding restructuring charges as a percentage of total sales                   11.8%             10.8%             9.1%               11.7%                              13.6%   
                                                                                                                                                                                                 
 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 and a $20 million reserve ($12 million after-tax) related to legal matters. 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                    $        532           $        496           $        768        $        2,355          $        2,715    
                  Add: Restructuring charges                              (52)                   -                      -                   (52)                    -        
 Segment EBIT                                                             480                    496                    768                 2,303                   2,715    
                  Less: Interest expense                                  7                      9                      10                  32                      44       
                                   Income before income taxes    $        473           $        487           $        758        $        2,271          $        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 a $1 million charge for lease terminations and a $2 million charge
for asset impairments and other non-cash charges. During 2012, we recorded
restructuring and other charges of $52 million ($35 million after-tax). These
restructuring actions included:

                                                        Year ended            
 In millions                                            December 31, 2012     
 Workforce reductions                                   $          49         
 Exit activities                                                   1          
 Other                                                             2          
          Restructuring and other 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          
                           Restructuring and other 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 16.1
percent and 23.5 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      (12.1)                       (4.6)         
 Other, net                                                                          -                            1.0           
                                           Effective tax rate                        23.5    %                    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.                               $       369           $       1.95          $       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       $       365           $       1.93          $       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.                                                     $       1,645         $       8.67          $       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                             $       1,621         $       8.54          $       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                                        $        532           $        496           $        677        $        2,349          $        2,556    
                                                                                                                                                                                                                     
 Earnings before interest expense, income taxes and special items as a percentage of net sales                    12.4%                  12.0%                  13.8%               13.6%                   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                                                       $        480           $        496           $        768        $        2,303          $        2,715    
                                                                                                                                                                                                                     
 EBIT as a percentage of net sales                                                                                11.2%                  12.0%                  15.6%               13.3%                   15.0%    
                                                                                                                                                                                                                     
 Less                                                                                                                                                                                                                
                                                  Interest expense                                                7                      9                      10                  32                      44       
                                                  Income tax expense                                              75                     117                    186                 533                     725      
 Consolidated net income                                                                                          398                    370                    572                 1,738                   1,946    
                                                                                                                                                                                                                     
 Less                                                                                                                                                                                                                
                                                  Net income attributable to noncontrolling interests             29                     18                     24                  93                      98       
 Net income attributable to Cummins Inc.                                                                 $        369           $        352           $        548        $        1,645          $        1,848    
                                                                                                                                                                                                                     
 Net income attributable to Cummins Inc. as a percentage of net sales                                             8.6%                   8.5%                   11.1%               9.5%                    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  
                                                                                    


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

Copyright Business Wire 2013

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