Cummins Reports Strong Results for the Second Quarter of 2013, Expects Full Year Revenues to Be in Line With 2012

Second Quarter Revenues of $4.5 Billion and EBIT of 13.7 Percent of Sales; Maintains Full Year EBIT Guidance to Be in the Range of 13 to 14 Percent of Sales


COLUMBUS, IN--(Marketwired - July 30, 2013) -  Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2013.

Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2013.

Second quarter revenues of $4.5 billion increased 2 percent from the second quarter of 2012. Revenues in North America increased by 7 percent and international revenues declined by 4 percent. Within international markets, growth in Brazil and China was offset by weaker demand in Europe, India and Mexico.

Earnings before interest and taxes (EBIT) were $621 million or 13.7 percent of sales, compared to $663 million or 14.9 percent of sales a year ago, excluding special items.

Net income attributable to Cummins in the second quarter was $414 million ($2.20 per diluted share), compared to $465 million ($2.45 per diluted share) in the second quarter of 2012 excluding special items.

Second quarter revenues increased 15 percent from the first quarter of 2013 and EBIT improved to 13.7 percent of sales from 11.1 percent.

"Revenues increased primarily due to higher demand in North America, helped by market share gains in the medium duty truck market," said Chairman and CEO Tom Linebarger. "I am pleased with our execution this quarter and profitability improved significantly from first quarter levels. The recent increase in our dividend, coupled with our ongoing share repurchase program, underscore our confidence in the Company's future."

Based on the current forecast, the Company expects full year revenues to be flat compared to 2012 and EBIT to be in the range of 13 to 14 percent of sales.

Recent highlights include:

  • Cummins increased its dividend by 25%
  • The Company repurchased 2.6 million shares of common stock
  • Cummins was one of only two industrial companies to be ranked among Gartner's Top 25 Supply Chain companies
  • Cummins was named one of the Top 50 companies for diversity by DiversityInc for the seventh consecutive year

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

Engine Segment

  • Sales - $2.7 billion, down 7 percent
  • Segment EBIT - $339 million, or 12.8 percent of sales, compared to $376 million or 13.2 percent of sales
  • Lower demand in stationary power, global mining and the heavy-duty truck market in North America were the most significant drivers of the lower revenues
  • Demand increased for medium duty truck engines in North America and Brazil

Components

  • Sales - $1.1 billion, an increase of 8 percent
  • Segment EBIT - $136 million, or 12.2 percent of sales, compared to $116 million or 11.2 percent of sales
  • Higher revenues primarily related to higher on-highway demand in Brazil, China and North America

Power Generation

  • Sales - $814 million, down 10 percent
  • Segment EBIT - $76 million, or 9.3 percent of sales, compared to $94 million or 10.3 percent of sales
  • Weaker demand in most international markets offsetting stronger revenues in North America

Distribution

  • Sales - $954 million, up 1% excluding acquisitions
  • Segment EBIT - $100 million, or 10.5 percent of sales, compared to $92 million or 11.6 percent of sales
  • Higher power generation and parts sales in North America offset by lower power generation sales in Europe and the Middle East

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins 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 2012 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.

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

The following files are available for download:

                                                                            
                                                                            
                        CUMMINS INC. AND SUBSIDIARIES                       
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                               (Unaudited) (a)                              
                                                                            
                                                     Three months ended     
                                               -----------------------------
                                                June 30, March 31,  July 1, 
In millions, except per share amounts             2013      2013      2012  
                                               --------- --------- ---------
NET SALES                                      $   4,525 $   3,922 $   4,452
  Cost of sales                                    3,372     2,965     3,242
                                               --------- --------- ---------
GROSS MARGIN                                       1,153       957     1,210
                                                                            
OPERATING EXPENSES AND INCOME                                               
  Selling, general and administrative expenses       484       444       487
  Research, development and engineering                                     
   expenses                                          177       182       187
  Equity, royalty and interest income from                                  
   investees (Note 1)                                108        82       104
  Other operating income (expense), net               10         1         8
                                               --------- --------- ---------
OPERATING INCOME                                     610       414       648
                                                                            
  Interest income                                     10         5         7
  Interest expense                                     8         6         8
  Other income (expense), net                          1        18        14
                                               --------- --------- ---------
INCOME BEFORE INCOME TAXES                           613       431       661
                                                                            
  Income tax expense (Note 2)                        172       119       166
                                               --------- --------- ---------
CONSOLIDATED NET INCOME                              441       312       495
                                                                            
  Less: Net income attributable to                                          
   noncontrolling interests                           27        30        26
                                               --------- --------- ---------
NET INCOME ATTRIBUTABLE TO CUMMINS INC.        $     414 $     282 $     469
                                               ========= ========= =========
                                                                            
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO                                   
 CUMMINS INC.                                                               
  Basic                                        $    2.20 $    1.50 $    2.47
  Diluted                                      $    2.20 $    1.49 $    2.47
                                                                            
WEIGHTED AVERAGE SHARES OUTSTANDING                                         
  Basic                                            187.8     188.4     189.8
  Diluted                                          188.2     188.8     190.1
                                                                            
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.         
                                                                            
                                                                            
                                                                            
                                                                            
                        CUMMINS INC. AND SUBSIDIARIES                       
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                               (Unaudited) (a)                              
                                                                            
                                                       Six months ended     
                                                 ---------------------------
In millions, except per share amounts            June 30, 2013  July 1, 2012
                                                 ------------- -------------
NET SALES                                        $       8,447 $       8,924
  Cost of sales                                          6,337         6,516
                                                 ------------- -------------
GROSS MARGIN                                             2,110         2,408
                                                                            
OPERATING EXPENSES AND INCOME                                               
  Selling, general and administrative expenses             928           962
  Research, development and engineering expenses           359           368
  Equity, royalty and interest income from                                  
   investees (Note 1)                                      190           208
  Other operating income (expense), net                     11            10
                                                 ------------- -------------
OPERATING INCOME                                         1,024         1,296
                                                                            
  Interest income                                           15            15
  Interest expense                                          14            16
  Other income (expense), net                               19            16
                                                 ------------- -------------
INCOME BEFORE INCOME TAXES                               1,044         1,311
                                                                            
  Income tax expense (Note 2)                              291           341
                                                 ------------- -------------
CONSOLIDATED NET INCOME                                    753           970
                                                                            
  Less: Net income attributable to                                          
   noncontrolling interests                                 57            46
                                                 ------------- -------------
NET INCOME ATTRIBUTABLE TO CUMMINS INC.          $         696 $         924
                                                 ============= =============
                                                                            
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO                                   
 CUMMINS INC.                                                               
  Basic                                          $        3.70 $        4.86
  Diluted                                        $        3.69 $        4.85
                                                                            
WEIGHTED AVERAGE SHARES OUTSTANDING                                         
  Basic                                                  188.1         190.1
  Diluted                                                188.5         190.5
                                                                            
CASH DIVIDENDS DECLARED PER COMMON SHARE         $        1.00 $        0.80
                                                                            
(a)  Prepared on an unaudited basis in accordance with accounting principles
     generally accepted in the United States of America.                    
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                              (Unaudited) (a)                               
                                                                            
                                                   June 30,    December 31, 
In millions, except par value                        2013          2012     
                                                 ------------  ------------ 
ASSETS                                                                      
Current assets                                                              
  Cash and cash equivalents                      $      1,382  $      1,369 
  Marketable securities                                   205           247 
                                                 ------------  ------------ 
    Total cash, cash equivalents and marketable                             
     securities                                         1,587         1,616 
  Accounts and notes receivable, net                    2,745         2,475 
  Inventories                                           2,475         2,221 
  Prepaid expenses and other current assets               597           855 
                                                 ------------  ------------ 
      Total current assets                              7,404         7,167 
                                                 ------------  ------------ 
Long-term assets                                                            
  Property, plant and equipment                         6,077         5,876 
    Accumulated depreciation                           (3,195)       (3,152)
                                                 ------------  ------------ 
    Property, plant and equipment, net                  2,882         2,724 
                                                 ------------  ------------ 
  Investments and advances related to equity                                
   method investees                                       924           897 
  Goodwill                                                450           445 
  Other intangible assets, net                            360           369 
  Other assets                                          1,028           946 
                                                 ------------  ------------ 
        Total assets                             $     13,048  $     12,548 
                                                 ============  ============ 
                                                                            
LIABILITIES                                                                 
Current liabilities                                                         
  Loans payable                                  $         40  $         16 
  Accounts payable (principally trade)                  1,669         1,339 
  Current maturities of long-term debt                     43            61 
  Current portion of accrued product warranty             393           386 
  Accrued compensation, benefits and retirement                             
   costs                                                  348           400 
  Deferred revenue                                        243           215 
  Taxes payable (including taxes on income)               159           173 
  Other accrued expenses                                  567           546 
                                                 ------------  ------------ 
      Total current liabilities                         3,462         3,136 
                                                 ------------  ------------ 
Long-term liabilities                                                       
  Long-term debt                                          754           698 
  Postretirement benefits other than pensions             414           432 
  Other liabilities and deferred revenue                1,325         1,308 
                                                 ------------  ------------ 
        Total liabilities                               5,955         5,574 
                                                 ------------  ------------ 
                                                                            
EQUITY                                                                      
Cummins Inc. shareholders' equity                                           
  Common stock, $2.50 par value, 500 shares                                 
   authorized, 222.3 and 222.4 shares issued            2,082         2,058 
  Retained earnings                                     7,850         7,343 
  Treasury stock, at cost, 35.0 and 32.6 shares        (2,112)       (1,830)
  Common stock held by employee benefits trust,                             
   at cost, 1.4 and 1.5 shares                            (17)          (18)
  Accumulated other comprehensive loss                                      
    Defined benefit postretirement plans                 (754)         (794)
    Other                                                (345)         (156)
                                                 ------------  ------------ 
    Total accumulated other comprehensive loss         (1,099)         (950)
                                                 ------------  ------------ 
      Total Cummins Inc. shareholders' equity           6,704         6,603 
  Noncontrolling interests                                389           371 
                                                 ------------  ------------ 
        Total equity                                    7,093         6,974 
                                                 ------------  ------------ 
          Total liabilities and equity           $     13,048  $     12,548 
                                                 ============  ============ 
 (a)  Prepared on an unaudited basis in accordance with accounting          
     principles generally accepted in the United States of America.         
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                              (Unaudited) (a)                               
                                                                            
                                                      Six months ended      
                                                --------------------------- 
In millions                                     June 30, 2013  July 1, 2012 
                                                -------------  ------------ 
CASH FLOWS FROM OPERATING ACTIVITIES                                        
  Consolidated net income                       $         753  $        970 
  Adjustments to reconcile consolidated net                                 
   income to net cash provided by operating                                 
   activities                                                               
    Restructuring payments, net                           (23)            - 
    Depreciation and amortization                         200           171 
    Gain on sale of businesses                              -            (6)
    Gain on fair value adjustment for                                       
     consolidated investees                               (12)            - 
    Deferred income taxes                                  20           (39)
    Equity in income of investees, net of                                   
     dividends                                            (57)          (25)
    Pension contributions in excess of expense            (78)          (52)
    Other post-retirement benefits payments in                              
     excess of expense                                    (15)           (7)
    Stock-based compensation expense                       19            21 
    Excess tax benefits on stock-based awards              (8)          (11)
    Translation and hedging activities                      3             7 
  Changes in current assets and liabilities,                                
   net of acquisitions:                                                     
    Accounts and notes receivable                        (265)         (116)
    Inventories                                          (184)         (439)
    Other current assets                                  214           (47)
    Accounts payable                                      310            61 
    Accrued expenses                                      (87)         (173)
  Changes in other liabilities and deferred                                 
   revenue                                                100           103 
  Other, net                                               70           (21)
                                                -------------  ------------ 
Net cash provided by operating activities                 960           397 
                                                -------------  ------------ 
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES                                        
  Capital expenditures                                   (275)         (266)
  Investments in internal use software                    (24)          (40)
  Investments in and advances to equity                                     
   investees                                               (4)          (40)
  Acquisition of businesses, net of cash                                    
   acquired                                              (134)          (12)
  Investments in marketable securities-                                     
   acquisitions                                          (243)         (276)
  Investments in marketable securities-                                     
   liquidations                                           280           280 
  Cash flows from derivatives not designated as                             
   hedges                                                 (23)            1 
  Other, net                                               12             3 
                                                -------------  ------------ 
Net cash used in investing activities                    (411)         (350)
                                                -------------  ------------ 
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES                                        
Proceeds from borrowings                                    2            46 
Payments on borrowings and capital lease                                    
 obligations                                              (51)          (75)
Net borrowings under short-term credit                                      
 agreements                                                56             3 
Distributions to noncontrolling interests                 (28)          (32)
Dividend payments on common stock                        (189)         (152)
Repurchases of common stock                              (289)         (196)
Excess tax benefits on stock-based awards                   8            11 
Other, net                                                 18             9 
                                                -------------  ------------ 
Net cash used in financing activities                    (473)         (386)
                                                -------------  ------------ 
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND                                 
 CASH EQUIVALENTS                                         (63)            - 
                                                -------------  ------------ 
Net increase (decrease) in cash and cash                                    
 equivalents                                               13          (339)
Cash and cash equivalents at beginning of year          1,369         1,484 
                                                -------------  ------------ 
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  
                                                $       1,382  $      1,145 
                                                =============  ============ 
                                                                            
 (a) Prepared on an unaudited basis in accordance with accounting principles
     generally accepted in the United States of America.                    
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                                                                            
                                                              Non-          
                                                            segment         
                                     Power                   Items          
              Engine  Components  Generation  Distribution    (1)     Total 
              ------  ----------  ----------  ------------  -------  ------ 
In millions                                                                 
Three months                                                                
 ended June                                                                 
 30, 2013                                                                   
External                                                                    
 sales        $2,209  $      786  $      583  $        947  $     -  $4,525 
Intersegment                                                                
 sales           447         331         231             7   (1,016)      - 
              ------  ----------  ----------  ------------  -------  ------ 
 Total sales   2,656       1,117         814           954   (1,016)  4,525 
Depreciation                                                                
 and                                                                        
 amortization                                                               
 (2)              51          23          12            15        -     101 
Research,                                                                   
 development                                                                
 and                                                                        
 engineering                                                                
 expenses        102          57          17             1        -     177 
Equity,                                                                     
 royalty and                                                                
 interest                                                                   
 income from                                                                
 investees        52           9          10            37        -     108 
Interest                                                                    
 income            7           -           2             1        -      10 
Segment EBIT     339         136          76        100(3)      (30)    621 
                                                                            
Segment EBIT                                                                
 as a                                                                       
 percentage                                                                 
 of total                                                                   
 sales          12.8%       12.2%        9.3%         10.5%            13.7%
                                                                            
Three months                                                                
 ended March                                                                
 31, 2013                                                                   
External                                                                    
 sales        $1,885  $      722  $      539  $        776  $     -  $3,922 
Intersegment                                                                
 sales           418         296         207             2     (923)      - 
              ------  ----------  ----------  ------------  -------  ------ 
 Total sales   2,303       1,018         746           778     (923)  3,922 
Depreciation                                                                
 and                                                                        
 amortization                                                               
 (2)              52          24          12            10        -      98 
Research,                                                                   
 development                                                                
 and                                                                        
 engineering                                                                
 expenses        105          57          18             2        -     182 
Equity,                                                                     
 royalty and                                                                
 interest                                                                   
 income from                                                                
 investees        23           7           7            45        -      82 
Interest                                                                    
 income            2           1           2             -        -       5 
Segment EBIT     195         119          51         95(3)      (23)    437 
                                                                            
Segment EBIT                                                                
 as a                                                                       
 percentage                                                                 
 of total                                                                   
 sales           8.5%       11.7%        6.8%         12.2%            11.1%
                                                                            
Three months                                                                
 ended July                                                                 
 1, 2012                                                                    
External                                                                    
 sales        $2,381  $      710  $      572  $        789  $     -  $4,452 
Intersegment                                                                
 sales           460         326         337             5   (1,128)      - 
              ------  ----------  ----------  ------------  -------  ------ 
 Total sales   2,841       1,036         909           794   (1,128)  4,452 
Depreciation                                                                
 and                                                                        
 amortization                                                               
 (2)              47          19          11             8        -      85 
Research,                                                                   
 development                                                                
 and                                                                        
 engineering                                                                
 expenses        115          51          19             2        -     187 
Equity,                                                                     
 royalty and                                                                
 interest                                                                   
 income from                                                                
 investees        37           8          10            49        -     104 
Interest                                                                    
 income            3           1           3             -        -       7 
Segment EBIT     376         116          94            92       (9)    669 
                                                                            
Segment EBIT                                                                
 as a                                                                       
 percentage                                                                 
 of total                                                                   
 sales          13.2%       11.2%       10.3%         11.6%            15.0%
                                                                            

 

                                                                            
(1) Includes intersegment sales and profit in inventory eliminations and    
    unallocated corporate expenses. There were no significant unallocated   
    corporate expenses for the three months ended June 30, 2013 and March   
    31, 2013. The three months ended July 1, 2012, include a $6 million gain
    ($4 million after-tax) related to adjustments from our 2011 divestitures
    within the Components segment. The gain has been excluded from segment  
    results as it was 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) Distribution segment EBIT includes a $7 million gain on the fair value  
    adjustment resulting from the acquisition of a controlling interest in  
    Cummins Northwest LLC for the three months ended March 31, 2013 and a $5
    million gain on the fair value adjustment resulting from the acquisition
    of a controlling interest in Cummins Rocky Mountain LLC for the three   
    months ended June 30, 2013.                                             
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                            SEGMENT INFORMATION                             
                                (Unaudited)                                 
                                                                            
                                                              Non-          
                                                            segment         
                                     Power                   Items          
              Engine  Components  Generation  Distribution    (1)     Total 
              ------  ----------  ----------  ------------  -------  ------ 
In millions                                                                 
Six months                                                                  
 ended June                                                                 
 30, 2013                                                                   
External                                                                    
 sales        $4,094  $    1,508  $    1,122  $      1,723  $     -  $8,447 
Intersegment                                                                
 sales           865         627         438             9   (1,939)      - 
              ------  ----------  ----------  ------------  -------  ------ 
  Total sales  4,959       2,135       1,560         1,732   (1,939)  8,447 
Depreciation                                                                
 and                                                                        
 amortization                                                               
 (2)             103          47          24            25        -     199 
Research,                                                                   
 development                                                                
 and                                                                        
 engineering                                                                
 expenses        207         114          35             3        -     359 
Equity,                                                                     
 royalty and                                                                
 interest                                                                   
 income from                                                                
 investees        75          16          17            82        -     190 
Interest                                                                    
 income            9           1           4             1        -      15 
Segment EBIT     534         255         127         195(3)     (53)  1,058 
                                                                            
Segment EBIT                                                                
 as a                                                                       
 percentage                                                                 
 of total                                                                   
 sales          10.8%       11.9%        8.1%         11.3%            12.5%
                                                                            
Six months                                                                  
 ended July                                                                 
 1, 2012                                                                    
External                                                                    
 sales        $4,793  $    1,484  $    1,088  $      1,559  $     -  $8,924 
Intersegment                                                                
 sales           907         651         601            10   (2,169)      - 
              ------  ----------  ----------  ------------  -------  ------ 
  Total sales  5,700       2,135       1,689         1,569   (2,169)  8,924 
Depreciation                                                                
 and                                                                        
 amortization                                                               
 (2)              94          38          22            15        -     169 
Research,                                                                   
 development                                                                
 and                                                                        
 engineering                                                                
 expenses        226         102          37             3        -     368 
Equity,                                                                     
 royalty and                                                                
 interest                                                                   
 income from                                                                
 investees        75          16          20            97        -     208 
Interest                                                                    
 income            7           2           5             1        -      15 
Segment EBIT     757         259         170           186      (45)  1,327 
                                                                            
Segment EBIT                                                                
 as a                                                                       
 percentage                                                                 
 of total                                                                   
 sales          13.3%       12.1%       10.1%         11.9%            14.9%

 

                                                                            
(1) Includes intersegment sales and profit in inventory eliminations and    
    unallocated corporate expenses. There were no significant unallocated   
    corporate expenses for the six months ended June 30, 2013. The six      
    months ended July 1, 2012, includes a $6 million gain ($4 million after-
    tax) related to adjustments from our 2011 divestitures within the       
    Components segment. The gain has been excluded from segment results as  
    it was 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) Distribution segment EBIT for the six months ended June 30, 2013,       
    includes a $7 million gain and a $5 million gain on the fair value      
    adjustments resulting from the acquisitions of a controlling interest in
    Cummins Northwest LLC and Cummins Rocky Mountain LLC, respectively.     
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                   RECONCILIATION OF SEGMENT INFORMATION                    
                                (Unaudited)                                 
                                                                            
A reconciliation of our segment information to the corresponding amounts in 
 the Condensed Consolidated Statements of Income is shown in the table      
 below:                                                                     
                                                                            
                                 Three months ended        Six months ended 
                           ----------------------------- -------------------
                            June 30, March 31,  July 1,   June 30,  July 1, 
In millions                   2013      2013      2012      2013      2012  
                           --------- --------- --------- --------- ---------
Segment EBIT               $     621 $     437 $     669 $   1,058 $   1,327
Less: Interest expense             8         6         8        14        16
                           --------- --------- --------- --------- ---------
  Income before income                                                      
   taxes                   $     613 $     431 $     661 $   1,044 $   1,311
                           ========= ========= ========= ========= =========
                                                                            
                                                                            

CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)

NOTE 1. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the interim reporting periods was as follows:

                                                                            
                              Three months ended          Six months ended  
                        ------------------------------  ------------------- 
                         June 30, March 31,   July 1,    June 30,  July 1,  
In millions                2013      2013       2012       2013      2012   
                        --------- ---------  ---------  --------- --------- 
Distribution Entities                                                       
North American                                                              
 distributors           $      29 $      35  $      38  $      64 $      78 
Komatsu Cummins Chile,                                                      
 Ltda.                          6         5          6         11        11 
All other distributors          -         -          2          -         3 
Manufacturing Entities                                                      
Dongfeng Cummins Engine                                                     
 Company, Ltd.                 20        12         17         32        33 
Chongqing Cummins                                                           
 Engine Company, Ltd.          17        12         17         29        35 
Beijing Foton Cummins                                                       
 Engine Co., Ltd.               9         1          2         10         - 
Shanghai Fleetguard                                                         
 Filter Co., Ltd.               4         3          4          7         7 
Komatsu manufacturing                                                       
 alliances                      4        (1)         1          3         - 
Cummins Westport, Inc.          3         -          4          3         9 
Valvoline Cummins, Ltd.         2         3          2          5         4 
Tata Cummins, Ltd.              2         1          3          3         7 
Xian Cummins Engine                                                         
 Company Ltd.                   1         -         (5)         1        (6)
All other manufacturers         1         2          4          3         6 
                        --------- ---------  ---------  --------- --------- 
  Cummins share of net                                                      
   income                      98        73         95        171       187 
Royalty and interest                                                        
 income                        10         9          9         19        21 
                        --------- ---------  ---------  --------- --------- 
    Equity, royalty and                                                     
     interest income                                                        
     from investees     $     108 $      82  $     104  $     190 $     208 
                        ========= =========  =========  ========= ========= 
                                                                            
                                                                            

NOTE 2. INCOME TAXES

Our effective tax rate for the year is expected to approximate 29.1 percent, excluding any one-time items that may arise. Our tax rate is generally less than the 35 percent U.S. statutory income tax rate primarily due to lower tax rates on foreign income and research tax credits. The tax rates for the three and six month periods ended June 30, 2013, were 28.1 percent and 27.9 percent, respectively. These tax rates include a discrete tax benefit in the first quarter of 2013 of $28 million attributable to the reinstatement of the research credit back to 2012 as well as a discrete tax expense in the first quarter of 2013 of $17 million, which primarily relates to the write-off of a deferred tax asset deemed unrecoverable. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law and reinstated the research tax credit. As tax law changes are accounted for in the period of enactment, we recognized the discrete tax benefit in the first quarter of 2013.

Our tax rates for the three and six month periods ended July 1, 2012, were 25.1 percent and 26.0 percent, respectively. The increase in the 2013 effective tax rates compared to 2012 is due primarily to an unfavorable change in the pre-tax mix of income taxed in higher rate jurisdictions, partially offset by $11 million of net discrete tax benefits in the first quarter of 2013.

CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)

NOTE 3. ACQUISITIONS

Cummins Rocky Mountain LLC

 In May 2013, we acquired the remaining 67 percent interest in Cummins Rocky Mountain LLC (Rocky Mountain) from the former principal for consideration of approximately $62 million in cash and an additional $74 million in cash paid to creditors to eliminate all debt related to the entity. The purchase price was approximately $136 million as presented below. The intangible assets are primarily customer related and are being amortized over periods ranging from 1 to 4 years. The acquisition was accounted for as a business combination, with the results of the acquired entity included in the Distribution operating segment in the second quarter of 2013. 

Distribution segment results also included a $5 million gain, as we were required to re-measure our pre-existing 33 percent ownership interest in Rocky Mountain to fair value in accordance with GAAP. Net sales for Rocky Mountain were $384 million for the 12 months ended December 31, 2012. This amount is not fully incremental to Cummins Inc. as the amount would be reduced by the elimination of sales to the previously unconsolidated entity. Approximately $14 million of the purchase price will be distributed in future quarters.

The preliminary purchase price allocation, subject to finalization, was as follows:

In millions                                          
Accounts receivable                          $    48 
Inventory                                         99 
Fixed assets                                      34 
Intangible assets                                  7 
Goodwill                                           6 
Other assets                                       9 
Current liabilities                              (36)
                                             ------- 
  Total business valuation                       167 
Fair value of pre-existing 33 percent                
 interest                                        (31)
                                             ------- 
    Purchase price                           $   136 
                                             ======= 
                                                     

Cummins Northwest LLC

In January 2013, we acquired an additional 50 percent interest in Cummins Northwest LLC (Northwest) from the former principal for consideration of approximately $18 million. We formed a new partnership with a new distributor principal. We own 79.99 percent of Northwest and the new distributor principal owns 20.01 percent. The acquisition was accounted for as a business combination, with the results of the acquired entity included in the Distribution operating segment in the first quarter of 2013. Distribution segment results also included a $7 million gain, as we were required to re-measure our pre-existing 50 percent ownership interest in Northwest to fair value in accordance with GAAP. The transaction generated $3 million of goodwill. Net sales for Northwest were $137 million for the 12 months ended December 31, 2012. This amount is not fully incremental to Cummins Inc. as the amount would be reduced by the elimination of sales to the previously unconsolidated entity.

CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)

Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding special items

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to special items including the one-time tax benefits and gain related to the sale of certain assets and liabilities. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America 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 June 30, 2013, March 31, 2013 and July 1, 2012. 

                                                                            
                                            Three months ended              
                                                                            
                             -----------------------------------------------
                              June 30, 2013   March 31, 2013   July 1, 2012 
                                                                            
                             --------------- --------------- ---------------
In millions                    Net   Diluted   Net   Diluted   Net   Diluted
                             Income    EPS   Income    EPS   Income    EPS  
                             ------- ------- ------- ------- ------- -------
Net income attributable to                                                  
 Cummins Inc.                $  414  $ 2.20  $   282 $  1.49 $   469 $  2.47
Less                                                                        
  One-time tax benefits(1)        -       -       11    0.05       -       -
  Gain on sale of                                                           
   businesses(2)                  -       -        -       -       4    0.02
                             ------- ------- ------- ------- ------- -------
Net income attributable to                                                  
 Cummins Inc. excluding                                                     
 special items               $  414  $ 2.20  $   271 $  1.44 $   465 $  2.45
                             ======= ======= ======= ======= ======= =======
                                                                            
                                             Six months ended               
                                                                            
                                     -------------------------------        
                                      June 30, 2013    July 1, 2012         
                                                                            
                                     --------------- ---------------        
In millions                            Net   Diluted   Net   Diluted        
                                     Income    EPS   Income    EPS          
                                     ------- ------- ------- -------        
Net income attributable to                                                  
 Cummins Inc.                        $  696  $ 3.69  $   924 $  4.85        
Less                                                                        
  One-time tax benefits(1)               11    0.06        -       -        
  Gain on sale of                                                           
   businesses(2)                          -       -        4    0.02        
                                     ------- ------- ------- -------        
Net income attributable to                                                  
 Cummins Inc. excluding                                                     
 special items                       $  685  $ 3.63  $   920 $  4.83        
                                     ======= ======= ======= =======        
                                                                            
(1)  The one-time tax items for the three months ended March 31, 2013 and   
     six months ended June 30, 2013, included a discrete tax benefit of $28 
     million attributable to the 2012 research credit as well as a discrete 
     tax expense of $17 million, which relates to the write-off of a        
     deferred tax asset deemed unrecoverable.                               
(2)  The gain has been excluded from operating results as it was not        
     considered in our evaluation of performance for the three and six      
     months ended July 1, 2012.                                             
                                                                            
                                                                            

CUMMINS INC. AND SUBSIDIARIES
FINANCIAL MEASURES THAT SUPPLEMENT GAAP
(Unaudited)

Earnings before interest, taxes and noncontrolling interests

We define EBIT as earnings before interest expense, income tax expense and noncontrolling interests in income of consolidated subsidiaries (EBIT). We use EBIT to assess and measure the performance of our operating segments and also as a component in measuring our variable compensation programs. Below is a reconciliation of EBIT, a non-GAAP financial measure, to "Net income attributable to Cummins Inc.," for each of the applicable periods:

                                                                            
                                                                            
                            Three months ended           Six months ended   
                     --------------------------------  -------------------- 
                      June 30,   March 31,   July 1,    June 30,   July 1,  
In millions             2013       2013        2012       2013       2012   
                     ---------  ----------  ---------  ---------  --------- 
Earnings before                                                             
 interest expense,                                                          
 income taxes and                                                           
 special items       $     621  $      437  $     663  $   1,058  $   1,321 
                                                                            
Earnings before                                                             
 interest expense,                                                          
 income taxes and                                                           
 special items as a                                                         
 percentage of net                                                          
 sales                    13.7%       11.1%      14.9%      12.5%      14.8%
                                                                            
Add                                                                         
  Gain on sale of                                                           
   businesses                -           -          6          -          6 
                                                                            
                     ---------  ----------  ---------  ---------  --------- 
Earnings before                                                             
 interest expense                                                           
 and income taxes    $     621  $      437  $     669  $   1,058  $   1,327 
                     ---------  ----------  ---------  ---------  --------- 
                                                                            
EBIT as a percentage                                                        
 of net sales             13.7%       11.1%      15.0%      12.5%      14.9%
                                                                            
Less                                                                        
  Interest expense           8           6          8         14         16 
  Income tax expense       172         119        166        291        341 
                     ---------  ----------  ---------  ---------  --------- 
Consolidated net                                                            
 income                    441         312        495        753        970 
                     ---------  ----------  ---------  ---------  --------- 
                                                                            
Less                                                                        
  Net income                                                                
   attributable to                                                          
   noncontrolling                                                           
   interests                27          30         26         57         46 
                     ---------  ----------  ---------  ---------  --------- 
    Net income                                                              
     attributable to                                                        
     Cummins Inc.    $     414  $      282  $     469  $     696  $     924 
                     =========  ==========  =========  =========  ========= 
                                                                            
Net income                                                                  
 attributable to                                                            
 Cummins Inc. as a                                                          
 percentage of net                                                          
 sales                     9.1%        7.2%      10.5%       8.2%      10.4%
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                          BUSINESS UNIT SALES DATA                          
                                (Unaudited)                                 
                                                                            
Engine segment net sales by market                                          
                                                                            
2013                                                                        
In millions                    Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Heavy-duty truck           $     654 $     723 $       - $       - $   1,377
Medium-duty truck and bus        448       595         -         -     1,043
Light-duty automotive and                                                   
 RV                              260       345         -         -       605
Industrial                       714       762         -         -     1,476
Stationary power                 227       231         -         -       458
                           --------- --------- --------- --------- ---------
  Total sales              $   2,303 $   2,656 $       - $       - $   4,959
                           ========= ========= ========= ========= =========
                                                                            
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
                           ========= ========= ========= ========= =========
                                                                            
Unit shipments by engine classification (including unit shipments to Power  
 Generation)                                                                
                                                                            
2013                                                                        
Units                          Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Midrange                      94,600   121,900         -         -   216,500
Heavy-duty                    24,900    28,300         -         -    53,200
High horsepower                4,200     3,600         -         -     7,800
                           --------- --------- --------- --------- ---------
  Total units                123,700   153,800         -         -   277,500
                           ========= ========= ========= ========= =========
                                                                            
2012                                                                        
Units                          Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Midrange                     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
                           ========= ========= ========= ========= =========
                                                                            
                                                                            
                                                                            
                                                                            
                       CUMMINS INC. AND SUBSIDIARIES                        
                          BUSINESS UNIT SALES DATA                          
                                (Unaudited)                                 
                                                                            
Component segment sales by business                                         
                                                                            
2013                                                                        
In millions                    Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Emission solutions         $     400 $     444 $       - $       - $     844
Turbo technologies               266       294         -         -       560
Filtration                       255       271         -         -       526
Fuel systems                      97       108         -         -       205
                           --------- --------- --------- --------- ---------
  Total sales              $   1,018 $   1,117 $       - $       - $   2,135
                           ========= ========= ========= ========= =========
                                                                            
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
                           ========= ========= ========= ========= =========
                                                                            
Power Generation segment sales by business                                  
                                                                            
2013                                                                        
In millions                    Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Power products             $     409 $     474 $       - $       - $     883
Power systems                    179       187         -         -       366
Generator technologies           126       125         -         -       251
Power solutions                   32        28         -         -        60
                           --------- --------- --------- --------- ---------
  Total sales              $     746 $     814 $       - $       - $   1,560
                           ========= ========= ========= ========= =========
                                                                            
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
                           ========= ========= ========= ========= =========
                                                                            
Distribution segment sales by business                                      
                                                                            
2013                                                                        
In millions                    Q1        Q2        Q3        Q4       YTD   
                           --------- --------- --------- --------- ---------
Parts and filtration       $     322 $     369 $       - $       - $     691
Power generation                 163       241         -         -       404
Engines                          152       183         -         -       335
Service                          141       161         -         -       302
                           --------- --------- --------- --------- ---------
  Total sales              $     778 $     954 $       - $       - $   1,732
                           ========= ========= ========= ========= =========
                                                                            
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
                           ========= ========= ========= ========= =========
                                                                            

Contact:
Carole Casto
Executive Director - Corporate Communications
(317) 610-2480