Cummins Reports Sharply Higher Sales and Profits in the Third Quarter Led by Continued Strength in International Markets

    --  Company Raises Full-Year Guidance to 12.5 Percent EBIT on $13 Billion in
        Sales in 2010

COLUMBUS, Ind.--(BUSINESS WIRE)-- Cummins Inc. (NYSE: CMI) today reported that both third quarter sales and profits increased sharply from the same period a year ago. The Company's continued strong performance in international markets was a primary driver of the improved results.

Sales of $3.40 billion in the third quarter rose 34 percent from $2.53 billion in the same quarter in 2009. Net income attributable to Cummins Inc. in the third quarter tripled to $283 million, or $1.44 a share, compared to $95 million, or $0.48 a share, in the same period a year ago.

Earnings Before Interest and Taxes (EBIT) was $449 million, or 13.2 percent of sales, up from $177 million or 7.0 percent of sales, excluding restructuring charges, in the third quarter of 2009.

The Company's third quarter results include a pre-tax benefit of $32 million ($21 million after-tax, or $0.11 share) related to a favorable legal ruling in Brazil on the tax treatment of imports during the period 2004-2008.

The sales gains were led by the Company's Engine and Power Generation segments, which each reported 44 percent sales improvements compared to the same period in 2009. Distribution sales increased 36 percent, while Components sales rose 30 percent.

The Engine segment reported its best EBIT percentage in Company history at 10.8 percent of sales, despite continued weakness in the North American truck engine markets related to EPA emissions changes and slow economic recovery in the United States.

Power Generation matched its quarterly best EBIT percentage at 12.3 percent, while the $74 million in EBIT reported by the Distribution segment was a record for a single quarter. EBIT for the Components segment doubled from the same period last year.

"Our products continue to perform well in the market and our 2010 engine launch in North America has gone extremely well," said Cummins President and Chief Operating Officer Tom Linebarger. "We have sold nearly 37,000 medium- and heavy-duty engines in North America this year, and the customer feedback we have received indicates that the engines are delivering on our promise of reliability and improved fuel economy."

Based on the Company's performance so far this year and its forecast for the fourth quarter, Cummins raised its full-year financial guidance to an EBIT of 12.5 percent of sales on revenues of $13 billion.

"We continued to build on our strong performance this year with an outstanding third quarter," said Cummins Chairman and Chief Executive Officer Tim Solso. "Our strength in large international markets provided significant benefits to the Company and we continue to see productivity improvements in our manufacturing operations."

Sales in the Company's non- U.S. markets increased 56 percent from the third quarter 2009 and accounted for 63 percent of Cummins' consolidated revenues, consistent with the first two quarters of the year.

Cummins' operating performance enabled its cash position to remain strong in the quarter and allowed the Company to continue to invest in the business to meet the increasing demands for our products.

The Company also continued to return value to shareholders by repurchasing $79 million of its shares during the second quarter. The Company has now repurchased $389 million in stock under its current $500 million authorization.

In other highlights from the quarter:

    --  Cummins increased the quarterly cash dividend on its common stock by 50
        percent to 26.25 cents per share from 17.5 cents per share.
    --  Standard & Poor's increased its long-term credit rating on Cummins to
        BBB+ from BBB. In increasing its investment grade rating, S&P cited the
        company's "improved performance" and "conservative financial policy."
    --  Cummins was named to the Dow Jones World Sustainability Index for the
        sixth consecutive year. The index recognizes the top 10 percent of the
        world's largest public companies for their economic, environmental and
        corporate responsibility leadership.

Third quarter details (all comparisons to same period in 2009)

Engine Segment

    --  Sales - $2.1 billion, up 44 percent
    --  Segment EBIT - $223 million, or 10.8 percent of sales, compared $61
        million or 4.2 percent of sales.
    --  Total on-highway sales increased 17 percent
        o Medium-duty truck and bus sales increased 46 percent on strength of
          Brazilian truck market.
        o Light-duty auto and RV doubled from 2009 when Chrysler ceased truck
          production for several weeks as part of its reorganization efforts.
        o Global heavy-duty truck engine sales declined 20 percent as result of
          transition to 2010 EPA-compliant engines in North America, where unit
          sales declined 54 percent.
    --  Industrial sales increased 72 percent
        o International sales increased 96 percent, led by construction engine
          demand in emerging markets.
        o Mining sales doubled due to increased demand for coal and other
          commodities.
    --  Stationary power engine sales increased by 144 percent, primarily due to
        increased power generation demand, especially for high horsepower
        engines.

Power Generation

    --  Sales - $791 million, up 44 percent
    --  Segment EBIT - $97 million, or 12.3 percent of sales, compared to $23
        million or 4.2 percent of sales. Third quarter of 2009 represented the
        low point of the current economic cycle for Power Generation segment.
    --  Commercial Products sales rose 64 percent; Commercial Projects up 26
        percent; Consumer sales increased 32 percent; Generator Technologies
        rose 13 percent; and Power Electronics increased 3 percent.
    --  Sales outside of North American increased 69 percent, led by the India,
        Latin America, South Pacific and the U.K. North American sales declined
        3 percent.

Components

    --  Sales - $769 million up 30 percent
    --  Segment EBIT - $63 million, or 8.2 percent of sales, compared to $31
        million, or 5.2 percent of sales
    --  Emission Solutions sales increased by 47 percent; Turbo Technologies
        rose 38 percent; Filtration up 18 percent; Fuel Systems increased 17
        percent.
    --  Increased aftertreatment content on 2010 North American truck engines
        led Emission Solutions sales gains; Filtration sales increased in all
        regions; Turbo Technologies and Fuel Systems benefited from improved
        aftermarket sales and stronger sales in China.

Distribution

    --  Sales - $573 million, an increase of 36 percent
    --  Segment EBIT - $74 million, or 12.9 percent of sales, compared to $55
        million, or 13.0 percent of sales
    --  Consolidation of Western Canada distributor in first quarter 2010
        accounted for $68 million in sales and $5 million in EBIT during
        quarter.
    --  Sales increased in all regions and product/service segments (engines,
        power generation, parts, and service) compared to 2009.

Presentation of Non-GAAP Financial Information

EBIT is a non-GAAP measures used in this release. EBIT 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.

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. The Company reported net income attributable to Cummins Inc. of $428 million on sales of $10.8 billion in 2009. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at http://twitter.com/cummins.

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 the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's 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, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.


CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

                                         Three months ended

                                         September 26,  June 27,   September 27,

In millions, except per share amounts    2010           2010       2009

NET SALES                                $ 3,401        $ 3,208    $ 2,530

Cost of sales                            2,571          2,455      2,027

GROSS MARGIN                             830            753        503

OPERATING EXPENSES AND INCOME

Selling, general and administrative      375            354        304
expenses

Research, development and engineering    103            96         90
expenses

Equity, royalty and interest income      88             97         57
from investees (Note 1)

Restructuring and other charges                                    22

Other operating (expense) income, net    (5       )     (4      )  3

OPERATING INCOME                         435            396        147

Interest income                          6              5          2

Interest expense                         11             9          9

Other income (expense), net (Note 2)     8                         6

INCOME BEFORE INCOME TAXES               438            392        146

Income tax expense (Note 3)              129            122        36

CONSOLIDATED NET INCOME                  309            270        110

Less: Net income attributable to         26             24         15
noncontrolling interests

NET INCOME ATTRIBUTABLE TO CUMMINS INC.  $ 283          $ 246      $ 95

EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO CUMMINS INC.

Basic                                    $ 1.45         $ 1.25     $ 0.48

Diluted                                  $ 1.44         $ 1.25     $ 0.48

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic                                    $ 195.8        $ 196.9    $ 197.4

Diluted                                  $ 196.3        $ 197.3    $ 197.8

CASH DIVIDENDS DECLARED PER COMMON       $ 0.2625       $ 0.175    $ 0.175
SHARE




(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)

                                                 Nine months ended

                                                 September 26,  September 27,

In millions, except per share amounts            2010           2009

NET SALES                                        $ 9,087        $ 7,400

Cost of sales                                    6,903          6,004

GROSS MARGIN                                     2,184          1,396

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses     1,064          891

Research, development and engineering expenses   291            254

Equity, royalty and interest income from         261            147
investees (Note 1)

Restructuring and other charges                                 95

Other operating (expense) income, net            (13      )     (6            )

OPERATING INCOME                                 1,077          297

Interest income                                  14             5

Interest expense                                 29             26

Other income (expense), net (Note 2)             25             (10           )

INCOME BEFORE INCOME TAXES                       1,087          266

Income tax expense (Note 3)                      338            72

CONSOLIDATED NET INCOME                          749            194

Less: Net income attributable to noncontrolling  71             36
interests

NET INCOME ATTRIBUTABLE TO CUMMINS INC.          $ 678          $ 158

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO
CUMMINS INC.

Basic                                            $ 3.44         $ 0.80

Diluted                                          $ 3.43         $ 0.80

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic                                            $ 197.0        $ 197.1

Diluted                                          $ 197.4        $ 197.4

CASH DIVIDENDS DECLARED PER COMMON SHARE         $ 0.6125       $ 0.525




(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)

                                                     September 26,  December 31,

In millions, except par value                        2010           2009

ASSETS

Current assets

Cash and cash equivalents                            $ 937          $ 930

Marketable securities                                  308            190

Accounts and notes receivable, net                     2,235          2,004

Inventories                                            1,910          1,341

Deferred income taxes                                  328            295

Prepaid expenses and other current assets              260            243

Total current assets                                   5,978          5,003

Long-term assets

Property, plant and equipment                          4,838          4,765

Accumulated depreciation                               (2,947 )       (2,879 )

Property, plant and equipment, net                     1,891          1,886

Investments and advances related to equity method      689            574
investees

Goodwill                                               365            364

Other intangible assets, net                           219            228

Deferred income taxes                                  313            436

Other assets                                           417            325

Total assets                                         $ 9,872        $ 8,816

LIABILITIES

Current liabilities

Loans payable                                        $ 98           $ 37

Accounts payable (principally trade)                   1,339          957

Current portion of accrued product warranty            396            426

Accrued compensation, benefits and retirement costs    452            366

Deferred revenue                                       166            128

Other accrued expenses                                 620            518

Total current liabilities                              3,071          2,432

Long-term liabilities

Long-term debt                                         732            637

Pensions                                               362            514

Postretirement benefits other than pensions            448            453

Other liabilities and deferred revenue                 765            760

Total liabilities                                      5,378          4,796

EQUITY

Cummins Inc. shareholders' equity

Common stock, $2.50 par value, 500 shares              1,922          1,860
authorized, 221.8 and 222.0 shares issued

Retained earnings                                      4,135          3,575

Treasury stock, at cost, 24.0 and 20.7 shares          (967   )       (731   )

Common stock held by employee benefits trust, at       (27    )       (36    )
cost, 2.2 and 3.0 shares

Accumulated other comprehensive loss

Defined benefit postretirement plans                   (778   )       (788   )

Other                                                  (86    )       (107   )

Total accumulated other comprehensive loss             (864   )       (895   )

Total Cummins Inc. shareholders' equity                4,199          3,773

Noncontrolling interests                               295            247

Total equity                                           4,494          4,020

Total liabilities and equity                         $ 9,872        $ 8,816




(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)

                                                 Nine months ended

                                                 September 26,   September 27,

In millions                                      2010            2009

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income                          $ 749           $ 194

Adjustments to reconcile consolidated net
income to net cash provided by operating
activities:

Restructuring and other charges, net of cash                     21
payments

Depreciation and amortization                    239             238

Gain on fair value adjustment for consolidated   (12           )
investee

Deferred income taxes                            83              (11           )

Equity in income of investees, net of dividends  (95           ) 56

Pension contributions in excess of expense       (114          ) (49           )

Other post-retirement benefits payments in       (22           ) (18           )
excess of expense

Stock-based compensation expense                 17              16

Translation and hedging activities               10              33

Changes in current assets and liabilities, net
of acquisitions and divestitures:

Accounts and notes receivable                    (198          ) 89

Inventories                                      (524          ) 360

Other current assets                             (16)            32

Accounts payable                                 336             (155          )

Accrued expenses                                 102             (185          )

Changes in long-term liabilities                 97              103

Other, net                                       (33           ) 6

Net cash provided by operating activities        619             730

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures                             (170          ) (204          )

Investments in internal use software             (28           ) (24           )

Proceeds from disposals of property, plant and   46              8
equipment

Investments in and advances to equity investees  (17           ) (5            )

Acquisition of businesses, net of cash acquired  (77           ) (2            )

Investments in marketable                        (560          ) (234          )
securities--acquisitions

Investments in marketable                        452             171
securities--liquidations

Purchases of other investments                   (54           ) (54           )

Cash flows from derivatives not designated as    2               (21           )
hedges

Other, net                                                       1

Net cash used in investing activities            (406          ) (364          )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings                         163             11

Payments on borrowings and capital lease         (64           ) (60           )
obligations

Net borrowings under short-term credit           (4            ) (4            )
agreements

Distributions to noncontrolling interests        (21           ) (16           )

Dividend payments on common stock                (120          ) (106          )

Proceeds from sale of common stock held by       52              54
employee benefit trust

Repurchases of common stock                      (241          )

Other, net                                       25              1

Net cash used in financing activities            (210          ) (120          )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND      4               14
CASH EQUIVALENTS

Net increase in cash and cash equivalents        7               260

Cash and cash equivalents at beginning of year   930             426

CASH AND CASH EQUIVALENTS AT END OF PERIOD       $ 937           $ 686




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





CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

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

 In millions

 Three months
 ended
 September 26,
 2010

 External       $ 1,727  $ 564       $ 540       $ 570         $ -          $ 3,401
 sales

 Intersegment   342      227         229         3             (801     )   -
 sales

 Total sales      2,069    791         769         573           (801   )     3,401

 Depreciation
 and              42       10          20          5             -            77
 amortization
 (2)

 Research,
 development
 and              65       8           30          -             -            103
 engineering
 expenses

 Equity,
 royalty and
 interest         37       12          6           33            -            88
 income from
 investees

 Interest         3        2           -           1             -            6
 income

 Segment EBIT     223      97          63          74            (8     )     449

 Three months
 ended June
 27, 2010

 External       $ 1,595  $ 518       $ 522       $ 573         $ -          $ 3,208
 sales

 Intersegment     304      190         207         3             (704   )     -
 sales

 Total sales      1,899    708         729         576           (704   )     3,208

 Depreciation
 and              42       11          21          7             -            81
 amortization
 (2)

 Research,
 development
 and              62       8           26          -             -            96
 engineering
 expenses

 Equity,
 royalty and
 interest         52       9           6           30            -            97
 income from
 investees

 Interest         2        1           1           1             -            5
 income

 Segment EBIT     197      76          75          69            (16    )     401

 Three months
 ended
 September 27,
 2009

 External       $ 1,270  $ 444       $ 395       $ 421         $ -          $ 2,530
 sales

 Intersegment   169      105         196         1             (471     )   -
 sales

 Total sales      1,439    549         591         422           (471   )     2,530

 Depreciation
 and              49       13          18          5             -            85
 amortization
 (2)

 Research,
 development
 and              59       9           22          -             -            90
 engineering
 expenses

 Equity,
 royalty and
 interest         16       5           4           32            -            57
 income from
 investees

 Restructuring
 and other        -        -           -           -             22           22
 charges

 Interest         1        -           1           -             -            2
 income

 Segment EBIT     61       23          31          55            (15    )     155

 Nine months
 ended
 September 26,
 2010

 External       $ 4,495  $ 1,460     $ 1,515     $ 1,617       $ -          $ 9,087
 sales

 Intersegment   896      556         613         8             (2,073   )   -
 sales

 Total sales      5,391    2,016       2,128       1,625         (2,073 )     9,087

 Depreciation
 and              125      31          61          19            -            236
 amortization
 (2)

 Research,
 development
 and              187      23          81          -             -            291
 engineering
 expenses

 Equity,
 royalty and
 interest         124      27          17          93            -            261
 income from
 investees

 Interest         7        4           1           2             -            14
 income

 Segment EBIT     553      207         195         215           (54    )     1,116

 Nine months
 ended
 September 27,
 2009

 External       $ 3,608  $ 1,402     $ 1,096     $ 1,294       $ -          $ 7,400
 sales

 Intersegment   629      414         527         4             (1,574   )     -
 sales

 Total sales      4,237    1,816       1,623       1,298         (1,574 )     7,400

 Depreciation
 and              135      35          53          14            -            237
 amortization
 (2)

 Research,
 development
 and              168      25          61          -             -            254
 engineering
 expenses

 Equity,
 royalty and
 interest         30       16          9           92            -            147
 income from
 investees

 Restructuring
 and other        -        -           -           -             95           95
 charges

 Interest         2        1           1           1             -            5
 income

 Segment EBIT     41       133         22          168           (72    )     292




     Includes intersegment sales and profit in inventory eliminations and
     unallocated corporate expenses. For the three and nine months ended
     September 26, 2010, unallocated corporate expenses included $32 million in
     Brazil tax recoveries ($21 million after-tax) and $2 million in flood
     damage expenses. In the third quarter of 2010, it was determined that we
     overpaid a Brazilian revenue based tax during the period of 2004-2008. Our
(1)  results include a pre-tax recovery related to tax credits on imported
     products arising from this overpayment. This recovery has been excluded
     from segment results as it was not considered by management in its
     evaluation of operating results for the quarter. For the three and nine
     months ended September 27, 2009, unallocated corporate expenses included
     $22 million and $95 million of restructuring and other charges and an $8
     million and $5 million gain related to flood damage expenses, respectively.

     Depreciation and amortization as shown on a segment basis excludes the
(2)  amortization of debt discount that is included in the Condensed
     Consolidated Statements of Income as "interest expense."



CUMMINS INC. AND SUBSIDIARIES

RECONCILIATION OF SEGMENT INFORMATION

(Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Income is shown in the table below:


          Three months ended                      Nine months ended

          September 26,  June 27,  September 27,  September 26,  September 27,

In        2010           2010      2009           2010           2009
millions

Segment   $ 449          $ 401     $ 155          $ 1,116        $ 292
EBIT

Less:

Interest  11             9         9              29             26
expense

Income
before    $ 438          $ 392     $ 146          $ 1,087        $ 266
income
taxes



FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Earnings before interest, taxes, noncontrolling interests and restructuring and other charges

We define EBIT as earnings or loss before interest expense, income tax expense, noncontrolling interests in income of consolidated subsidiaries and restructuring and other charges (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                 Nine months ended

                 September   June 27,   September   September   September 27,
                 26,                    27,         26,

 In millions     2010        2010       2009        2010        2009

 Earnings
 before
 interest
 expense,
 income taxes    $ 449       $ 401      $ 177       $ 1,116     $ 387
 and
 restructuring
 and other
 charges

 Earnings
 before
 interest
 expense,
 income taxes
 and             13.2      % 12.5     % 7.0       % 12.3      % 5.2           %
 restructuring
 and other
 charges as a
 percentage of
 sales

 Less:

 Restructuring
 and other                              22                      95
 charges

 Earnings
 before          $ 449       $ 401      $ 155       $ 1,116     $ 292
 interest and
 income taxes

 EBIT as a
 percentage of   13.2      % 12.5     % 6.1       % 12.3      % 3.9           %
 net sales

 Less:

 Interest        11          9          9           29          26
 expense

 Income tax      129         122        36          338         72
 expense

 Consolidated    309         270        110         749         194
 net income

 Less:

 Net income
 attributable
 to              26          24         15          71          36
 noncontrolling
 interests

 Net income
 attributable    $ 283       $ 246      $ 95        $ 678       $ 158
 to Cummins
 Inc.

 Net income
 attributable
 to Cummins      8.3       % 7.7      % 3.8       % 7.5       % 2.1           %
 Inc. as a
 percentage of
 net sales



Net income and diluted earnings per share (EPS) attributable to Cummins Inc. excluding restructuring and other charges

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to restructuring. 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. excluding restructuring and other charges to "Net income attributable to Cummins Inc." for the three and nine months ended September 27, 2009. There were no restructuring actions taken in the three or nine months ended September 26, 2010 or three months ended June 27, 2010.


                                          Three months ended  Nine months ended

                                          September 27, 2009  September 27, 2009

 In millions                              Net     Diluted     Net     Diluted
                                          Income  EPS         Income  EPS

 Net income attributable to Cummins Inc.
 excluding restructuring and other        $ 110   $ 0.56      $ 221   $ 1.12
 charges

 Less:

 Restructuring and other charges, net(1)  15      0.08        63      0.32

 Net income attributable to Cummins Inc.  $ 95    $ 0.48      $ 158   $ 0.80




 (1) During the three and nine months ended September 27, 2009, management
 approved and committed to undertake actions, which resulted in a pretax charge
 of $22 million and $95 million, respectively. These charges included
 employee-related liabilities for severance and benefits of approximately $10
 million and $76 million, net of changes in estimate and exit costs of
 approximately zero and $7 million, and pension and other post retirement
 benefit curtailment charges of $12 million and $12 million, for the three and
 nine months ended, respectively.



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                    Nine months ended

                September    June 27,    September    September    September 27,
                26,                      27,          26,

In millions     2010         2010        2009         2010         2009

Distribution
Entities

North
American      $ 26         $ 23        $ 25         $ 72         $ 74
distributors

All other       5            4           4            13           11
distributors

Manufacturing
Entities

Dongfeng
Cummins         24           34          11           76           18
Engine
Company, Ltd.

Chongqing
Cummins         12           13          8            35           28
Engine
Company, Ltd.

All other       14           15          5            43           5
manufacturers

 Cummins
 share of net   81           89          53           239          136
 income

Royalty and
interest        7            8           4            22           11
income

Equity,
royalty and
interest      $ 88         $ 97        $ 57         $ 261        $ 147
income from
investees



NOTE 2. OTHER INCOME (EXPENSE)

Other income (expense) included the following:


            Three months ended                    Nine months ended

            September    June 27,  September 27,  September 26,  September 27,
            26,

In millions 2010         2010      2009           2010           2009

Change in
cash
surrender
value of    $ 11       $ 1         $ 3            $ 11           $ 1
corporate
owned life
insurance

Dividend      2          2           1              5              3
income

Gain on
acquisition
of Cummins    -          -           -              12             -
Western
Canada
(CWC)

Bank          (4 )       (4 )        (3 )           (11 )          (10 )
charges

Foreign
currency      (5 )       2           (1 )           4              (18 )
(losses)
gains, net

Other, net    4          (1 )        6              4              14

Total other
income      $ 8        $ -         $ 6            $ 25           $ (10 )
(expense),
net



NOTE 3. INCOME TAXES

Our effective tax rate for the year is expected to approximate 30 percent, absent any additional discrete period activity. Our tax rate is generally less than the 35 percent U.S. income tax rate primarily due to lower tax rates on foreign income. The tax rates for the three and nine month periods ended September 26, 2010, were 30 percent and 31 percent. In July 2010, the United Kingdom passed tax legislation which reduces our U.K. tax rate from 28 percent to 27 percent beginning in 2011. While the reduced tax rate will benefit future operations, we had an additional charge to our third quarter tax provision of approximately $2 million to reduce the value of our U.K. deferred tax assets. The tax rate for the nine month period includes a discrete tax charge of $7 million related to the enactment of the "Patient Protection and Affordable Care Act."

In August 2010, the U.S. passed the "Education Jobs and Medicaid Assistance Act" containing a number of international tax provisions which limit the foreign tax credits that can be claimed by U.S. corporations. In the third quarter, we also considered the unremitted earnings of certain German and Indian subsidiaries of our U.K. group to be permanently reinvested. Neither of these items had a material impact to our tax rate.

Our effective tax rates for the comparable prior year periods were 25 percent and 27 percent, respectively. These rates were less than the 35 percent U.S. income tax rate primarily due to lower tax rates on foreign income.


SUPPLEMENTAL INFORMATION

Sales

 2010

 In millions             Q1         Q2         Q3           Q4        YTD

 Engine business

 Heavy-duty truck        $ 252      $ 340      $  395       $         $ 987

 Medium-duty bus and     217        352        430                    999
 truck

 Light-duty auto and RV  207        296        239                    742

 Industrial              577        656        700                    1,933

 Stationary power        170        255        305                    730

 Total Engine business   1,423      1,899      2,069                  5,391

 Power Generation        517        708        791                    2,016

 Components              630        729        769                    2,128

 Distribution            476        576        573                    1,625

 Eliminations            (568     ) (704     ) (801     )             (2,073   )

 Total                   $ 2,478    $  3,208   $  3,401     $         $ 9,087

 2009

 In millions             Q1         Q2         Q3          Q4         YTD

 Engine business

 Heavy-duty truck        $  394     $ 395      $  493      $  714     $ 1,996

 Medium-duty bus and     229        240        294         469        1,232
 truck

 Light-duty auto and RV  156        94         120         318        688

 Industrial              467        440        407         507        1,821

 Stationary power        246        137        125         160        668

 Total Engine business   1,492      1,306      1,439       2,168      6,405

 Power Generation        657        610        549         601        2,417

 Components              530        502        591         732        2,355

 Distribution            413        463        422         486        1,784

 Eliminations            (653     ) (450     ) (471     )  (587     ) (2,161   )

 Total                   $  2,439   $  2,431   $ 2,530     $  3,400   $ 10,800




Engine Shipments

 2010

 Units              Q1      Q2       Q3       Q4       YTD

 Mid-range          69,100  90,500   93,500            253,100

 Heavy-duty         8,700   14,500   15,200            38,400

 High horsepower    3,400   4,800    4,900             13,100

 Total              81,200  109,800  113,600           304,600

 2009

 Units              Q1      Q2       Q3       Q4       YTD

 Mid-range          60,600  49,200   58,800   100,600  269,200

 Heavy-duty         16,600  16,400   20,600   32,300   85,900

 High horsepower    3,900   3,200    2,600    3,700    13,400

 Total              81,100  68,800   82,000   136,600  368,500




    Source: Cummins Inc.