Cummins Completes Third Consecutive Year of Record Sales and Profits

Company Eclipses $3 Billion in Quarterly Sales; Power Generation and Distribution Segments Report Record Operating Profits in Fourth Quarter

COLUMBUS, Ind.--(BUSINESS WIRE)--

Cummins Inc. (NYSE:CMI) today reported record sales and earnings for the fourth quarter and all of 2006, marking the third consecutive year of record financial performance for the Company.

Cummins eclipsed $3 billion in quarterly sales for the first time during the fourth quarter. All four of the Company's operating segments posted record revenues, and Cummins' Power Generation and Distribution businesses reported record Segment EBIT in the fourth quarter, as well as for the entire year.

For the full year, Cummins reported sales of $11.36 billion, up 15 percent from $9.92 billion in 2005. Earnings Before Interest and Taxes (EBIT) of $1.18 billion (10.4 percent of sales) increased 30 percent over $907 million (9.1 percent of sales) in 2005.

Net earnings rose 30 percent to $715 million, or $14.21 per diluted share, from $550 million, or $11.01 per diluted share, the previous year.

In the fourth quarter, Cummins reported sales of $3.03 billion, a 10 percent increase from $2.75 billion in the same period in 2005. EBIT rose 13 percent to $303 million (10.0 percent of sales), from $269 million (9.8 percent of sales).

Net earnings in the fourth quarter increased 13 percent to $189 million, or $3.75 per diluted share, from $167 million, or $3.31 per diluted share, in the fourth quarter of 2005. Gross margin for the quarter was 22.1 percent, down slightly from 22.5 percent for the fourth quarter of 2005.

The Company's Power Generation and Distribution businesses performed at record levels in the fourth quarter -- and for the entire year -- while the Engine segment reported near-record EBIT on its best-ever quarterly sales performance in the fourth quarter. Segment EBIT at the Company's Components segment was essentially flat in the fourth quarter, compared to 2005.

The Distribution business continued its trend of growing earnings faster than sales, with the greatest growth coming in sales of power generation products in the Middle East and Europe. Joint venture income from the Company's North American distributors also rose significantly in the quarter.

Engine sales were a record in the fourth quarter, led by strong gains in North America for heavy- and medium-duty truck markets and in the international construction markets. Additionally, sales to the oil and gas engine markets more than doubled from the fourth quarter of 2005.

During the fourth quarter Cummins announced plans to enter the light-duty diesel market in both the United States and China. The Company announced that its Columbus (Indiana) Engine Plant will be the home of its U.S.-based light-duty program that will add at least 600 jobs by the end of the decade.

Cummins also announced a joint venture to make 2.8 and 3.8-liter engines in China with Beiqi Foton Motor Company in Beijing. The engines, scheduled to go into production in 2008, will be used in light-duty commercial trucks, pickups and sport utility vehicles and certain industrial applications.

Last week, Cummins announced that its new 6.7-liter turbo diesel engine for the 2007.5 model year Dodge Ram Heavy Duty pickup meets the 2010 standards for oxides of nitrogen emissions, a full three years ahead of schedule. The engine went into production at the Company's Midrange Engine Plant in Walesboro, Indiana, in January and the new Ram pickup truck is expected to be on the market in March.

"By almost every measure, 2006 was an outstanding year," said Cummins Chairman and Chief Executive Officer Tim Solso. "We continued to build on the success of the past two years even as we devoted significant time and resources to meeting the 2007 emissions changes in the United States.

"All of our business segments showed strong sales growth in 2006 and we gained share in key businesses and geographic markets around the world. At the same time, we invested in critical growth opportunities and developed cost-control strategies that will help us weather the temporary slowdown in the North American heavy-duty truck engine market in 2007 as a result of the U.S. emissions changes."

2007 outlook

The Company expects to earn between $11 and $11.50 a share in 2007, despite the forecasted emissions-related downturn in the North American heavy-duty truck engine market. As a result of a regular review of its disclosure and corporate governance practices, Cummins has decided to offer only annual earnings guidance starting in 2007.

The guidance reflects the Company's confidence in its ability to deliver strong earnings as a result of its continued product and geographic diversification, investment in key growth opportunities and ongoing efforts to control costs.

For example, Cummins expects strength in medium-duty and high-horsepower engine sales, power generation and distribution to help offset lower North American heavy-duty sales.

The Company also anticipates an increase in its turbocharger sales to other engine manufacturers and sees significant growth opportunities in the sale of advanced exhaust aftertreatment and filtration products to meet changing emissions standards around the world.

Additionally, Cummins is forecasting continued profitable growth in key emerging markets such as China and India, and international sales are expected to exceed U.S. sales in 2007.

"I am extremely excited about our prospects for 2007 and beyond," Solso said. "The Company is well-positioned to face the challenges of the changing emissions regulations in the near-term, and we're also working hard to identify and invest in the next generation of profitable growth opportunities."

    Fourth quarter 2006 details

    Engine segment

Sales of $1.95 billion were a quarterly record and 6 percent higher than $1.84 billion during the same period in 2005. Segment EBIT increased 16 percent to $181 million, or 9.3 percent of sales, from $156 million, or 8.5 percent of sales, a year ago.

North American heavy-duty truck engine shipments rose 14 percent and North American medium-duty engine shipments increased 57 percent in advance of the 2007 emissions changes, offsetting a 15 percent drop in shipments to Chrysler during the quarter. Shipments to the international construction markets rose 18 percent from the same period in 2005.

Power Generation segment

Segment sales of $658 million rose 14 percent from $575 million, while Segment EBIT increased 27 percent to $62 million, or 9.4 percent of sales, from $49 million or 8.5 percent of sales.

Commercial sales rose 18 percent and alternator sales jumped 30 percent, more than offsetting a drop in consumer sales.

Distribution segment

Segment sales of $386 million rose 12 percent from $346 million in the same period in 2005. Segment EBIT increased 18 percent to $39 million, or 10.1 percent of sales, from $33 million, or 9.5 percent of sales in 2005.

Sales of power generation products were strong, most notably in the Middle East and Europe. Joint venture income rose 45 percent in the quarter, led by improved performance at North American distributors.

Components segment

Sales in the segment -- which consists of the Company's filtration, turbocharger, exhaust aftertreatment and fuel systems businesses -- rose 12 percent to $599 million, from $535 million for the same period in 2005. Segment EBIT fell slightly to $23 million, or 3.8 percent of sales, from $24 million, or 4.5 percent of sales, in the fourth quarter of 2005.

The Segment's performance was led by the Filtration and Fuel System businesses, which reported improved sales and gross margin. The Company's turbocharger and Emission Solutions businesses were adversely affected by costs associated with introducing new products, and manufacturing and logistics challenges caused by rapidly increasing demand.

Cash flow, pension funding and debt reduction

The Company's strong cash flow in the fourth quarter allowed it to continue to fund its pension above required levels and to reduce debt. Cummins reduced its long-term debt by half during 2006, lowering its debt-to-capital ratio to 22.4 percent at year's end.

For the year, Cummins paid $266 million into its pension funds, well in excess of the required payments. The Company's full-year cash flow was a record $840 million. Excluding the pension payments, cash flow from operations was $1.1 billion -- a 21 percent improvement from 2005.

Taxes

During the fourth quarter, tax legislation was signed that retroactively extended the incremental research tax credit to tax years 2006 and 2007. This favorably affected the Company's quarterly and full-year tax provision by $10.3 million, or $0.20 per share, in the quarter and $0.21 per share for the full year.

Presentation of Non-GAAP Financial Information

EBIT and cash flow from operations excluding pension contributions are non-GAAP measures used in this release. Each 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. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

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 more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $715 million on sales of $11.4 billion in 2006. Press releases can be found on the Web at www.cummins.com.

Forward-looking statements disclosure

Information provided in this release and on the webcast 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 CONSOLIDATED SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                           (Unaudited) (a)

                           Three months ended     For the years ended
                        ------------------------- -------------------
                        Dec. 31, Dec. 31, Oct. 1,  Dec. 31,  Dec. 31,
                          2006     2005    2006      2006      2005
                        -------- -------- ------- ---------- --------
                                          Millions
                                 (except per share amounts)
Net sales               $ 3,033  $ 2,753  $2,809  $  11,362  $ 9,918
Cost of sales             2,363    2,134   2,155      8,767    7,732
                        -------- -------- ------- ---------- --------
Gross margin                670      619     654      2,595    2,186

Operating expenses and
 income
  Selling and
   administrative
   expenses                 334      313     328      1,283    1,145
  Research and
   engineering expenses      78       71      81        321      278
  Investee equity,
   royalty and other
   income                   (35)     (28)    (37)      (140)    (131)
  Other operating
   (income) expenses,
   net                       (3)      --       4         --       --
                        -------- -------- ------- ---------- --------

Operating earnings          296      263     278      1,131      894

Interest income             (14)      (9)    (14)       (47)     (24)
Interest expense             20       26      23         96      109
Other expenses
 (income), net                7        3      (4)        (1)      11
                        -------- -------- ------- ---------- --------
Earnings before income
 taxes and minority
 interests                  283      243     273      1,083      798

Provision for income
 taxes                       80       63      92        324      216
Minority interests in
 earnings of
 consolidated
 subsidiaries                14       13      10         44       32
                        -------- -------- ------- ---------- --------
Net earnings            $   189  $   167  $  171  $     715  $   550
                        ======== ======== ======= ========== ========

Earnings per share
  Basic                 $  3.78  $  3.75  $ 3.40  $   15.02  $ 12.43
  Diluted               $  3.75  $  3.31  $ 3.37  $   14.21  $ 11.01

Cash dividends declared
 per share              $  0.36  $  0.30  $ 0.36  $    1.32  $  1.20

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

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

                                            December 31, December 31,
                                                2006         2005
                                            ------------ ------------
                                                    Millions
                                               (except par value)
ASSETS
Current assets
  Cash and cash equivalents                 $       840  $       779
  Marketable securities                              95           61
  Receivables, net                                1,767        1,423
  Inventories                                     1,393        1,174
  Other current assets                              393          479
                                            ------------ ------------
   Total current assets                           4,488        3,916
Long-term assets
  Property, plant and equipment, net              1,574        1,557
  Investments in and advances to equity
   investees                                        345          278
  Goodwill                                          356          358
  Other intangible assets, net                      128          100
  Other assets                                      574          676
                                            ------------ ------------
   Total assets                             $     7,465  $     6,885
                                            ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Short-term borrowings                     $       164  $       154
  Accounts payable                                1,104          904
  Other accrued expenses                          1,131        1,160
                                            ------------ ------------
   Total current liabilities                      2,399        2,218
Long-term liabilities
  Long-term debt                                    647        1,213
  Other liabilities                               1,363        1,365
                                            ------------ ------------
   Total liabilities                              4,409        4,796
                                            ------------ ------------

Minority interests                                  254          225
                                            ------------ ------------
Shareholders' equity
  Common stock, $2.50 par value, 150 shares
   authorized, 55.0 and 48.5 shares issued          137          121
  Additional contributed capital                  1,500        1,201
  Retained earnings                               2,009        1,360
  Accumulated other comprehensive loss             (526)        (603)
  Common stock in treasury, at cost, 2.9
   and 2.0 shares                                  (212)        (101)
  Common stock held in trust for employee
   benefit plans, 1.9 and 2.0 shares                (92)         (97)
  Unearned compensation                             (14)         (17)
                                            ------------ ------------
   Total shareholders' equity                     2,802        1,864
                                            ------------ ------------
Total liabilities and shareholders' equity  $     7,465  $     6,885
                                            ============ ============

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

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

                                               For the years ended
                                            -------------------------
                                            December 31, December 31,
                                                2006         2005
                                            ------------ ------------
                                                    Millions

Net cash provided by operating activities   $       840  $       760
                                            ------------ ------------

Cash flows from investing activities
 Capital expenditures                              (249)        (186)
 Investments in marketable securities--
  acquisitions                                     (303)        (123)
 Investments in marketable securities--
  liquidations                                      273          126
 Other, net                                           2          (29)
                                            ------------ ------------
Net cash used in investing activities              (277)        (212)
                                            ------------ ------------
Cash flows from financing activities
 Proceeds from borrowings                            94           84
 Payments on borrowings and capital lease
  obligations                                      (400)        (378)
 Dividend payments on common stock                  (66)         (56)
 Proceeds from issuing common stock                   9           30
 Repurchases of common stock                       (121)         (38)
 Other, net                                         (24)         (14)
                                            ------------ ------------
Net cash used in financing activities              (508)        (372)
                                            ------------ ------------
Effect of exchange rate changes on cash and
 cash equivalents                                     6           (8)
                                            ------------ ------------
Net increase in cash and cash equivalents            61          168
Cash and cash equivalents at beginning of
 year                                               779          611
                                            ------------ ------------
Cash and cash equivalents at end of period  $       840  $       779
                                            ============ ============

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

               CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
                         SEGMENT INFORMATION
                             (Unaudited)

                                                 Power
                                        Engine Generation Components
                                        ------ ---------- ----------
                                                   Millions
Three months ended December 31, 2006
Net sales                               $1,952 $      658 $      599
Investee equity, royalty and other
 income                                     16          2          1
Segment EBIT                               181         62         23

Three months ended December 31, 2005
Net sales                               $1,838 $      575 $      535
Investee equity, royalty and other
 income                                     13          3          1
Segment EBIT                               156         49         24

Three months ended October 1, 2006
Net sales                               $1,842 $      624 $      564
Investee equity, royalty and other
 income                                     16          4          2
Segment EBIT                               183         57         19

For the year ended December 31, 2006
Net sales                               $7,511 $    2,416 $    2,281
Investee equity, royalty and other
 income                                     67         12          7
Segment EBIT                               733        220        107

For the year ended December 31, 2005
Net sales                               $6,657 $    1,999 $    2,000
Investee equity, royalty and other
 income                                     80          9          8
Segment EBIT                               582        145         89

               CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
                         SEGMENT INFORMATION
                             (Unaudited)

                                                   Non-segment
                                      Distribution  items (1)   Total
                                     ------------- ----------- -------
                                                  Millions
Three months ended December 31, 2006
Net sales                             $        386 $     (562) $ 3,033
Investee equity, royalty and other
 income                                         16          --      35
Segment EBIT                                    39         (2)     303

Three months ended December 31, 2005
Net sales                             $        346 $     (541) $ 2,753
Investee equity, royalty and other
 income                                         11          --      28
Segment EBIT                                    33           7     269

Three months ended October 1, 2006
Net sales                             $        346 $     (567) $ 2,809
Investee equity, royalty and other
 income                                         15          --      37
Segment EBIT                                    38         (1)     296

For the year ended December 31, 2006
Net sales                             $      1,385 $   (2,231) $11,362
Investee equity, royalty and other
 income                                         54          --     140
Segment EBIT                                   144        (25)   1,179

For the year ended December 31, 2005
Net sales                             $      1,191 $   (1,929) $ 9,918
Investee equity, royalty and other
 income                                         34          --     131
Segment EBIT                                   107        (16)     907

(1) Includes intercompany eliminations and unallocated corporate expenses.

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

                            Three months ended     For the years ended
                         ------------------------- -------------------
                         Dec. 31, Dec. 31, Oct. 1,  Dec. 31,  Dec. 31,
                           2006     2005    2006      2006      2005
                         -------- -------- ------- ---------- --------
                                           Millions
Segment EBIT             $   303  $   269  $  296  $   1,179  $   907
Less:
  Interest expense            20       26      23         96      109
                         -------- -------- ------- ---------- --------
Earnings before income
 taxes and minority
 interests               $   283  $   243  $  273  $   1,083  $   798
                         ======== ======== ======= ========== ========
              CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
               FINANCIAL MEASURES THAT SUPPLEMENT GAAP
                             (Unaudited)

  Earnings before interest, taxes and minority interests (EBIT)

  We define EBIT as earnings before interest expense, provision for
   income taxes and minority interests in earnings of consolidated
   subsidiaries.  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 our consolidated net earnings, for
   each of the applicable periods:

                            Three Months Ended     For the years ended
                         ------------------------- -------------------
                         Dec. 31, Dec. 31, Oct. 1,  Dec. 31,  Dec. 31,
                           2006     2005    2006      2006      2005
                         -------- -------- ------- ---------- --------
                                           Millions
Earnings before
 interest, income taxes
 and minority interests  $   303  $   269  $  296  $   1,179  $   907

EBIT as a percentage of
 net sales                  10.0%     9.8%   10.5%      10.4%     9.1%

Less:
  Interest expense            20       26      23         96      109
  Provision for income
   taxes                      80       63      92        324      216
  Minority interests in
   earnings of
   consolidated
   subsidiaries               14       13      10         44       32
                         -------- -------- ------- ---------- --------
Net earnings             $   189  $   167  $  171  $     715  $   550
                         ======== ======== ======= ========== ========

Net earnings as a
 percentage of net sales     6.2%     6.1%    6.1%       6.3%     5.5%
We believe EBIT is a useful measure of our operating performance for
 the periods presented as it illustrates our operating performance
 without regard to financing methods, capital structure or income
 taxes.  This measure is not in accordance with, or an alternative
 for, accounting principles generally accepted in the United States of
 America (GAAP) and may not be consistent with measures used by other
 companies.  It should be considered supplemental data.

Cash from operations excluding pension contributions

                                                For the years ended
                                             -------------------------
                                             December 31, December 31,
                                                 2006         2005
                                             ------------ ------------
   Cash provided by operations               $       840  $       760
   Add back: pension contributions                   266          151
                                             ------------ ------------
   Cash provided by operations excluding
    pension contributions                    $     1,106  $       911
                                             ============ ============

We believe cash provided by operations excluding pension contributions
 is a useful measure of our operating performance for the periods
 presented as it illustrates our operating performance without regard
 to funding decisions.  This measure is not in accordance with, or an
 alternative for, GAAP and may not be consistent with measures used by
 other companies.  It should be considered supplemental data.
              CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
                        SELECTED FOOTNOTE DATA
                             (Unaudited)

NOTE 1.  EARNINGS PER SHARE

The following is a reconciliation of net earnings and weighted-average
 common shares outstanding for purposes of calculating basic and
 diluted net earnings per share:

                            Three months ended     For the years ended
                         ------------------------- -------------------
                         Dec. 31, Dec. 31, Oct. 1,  Dec. 31,  Dec. 31,
                           2006     2005    2006      2006      2005
                         -------- -------- ------- ---------- --------
                                           Millions
                                  (except per share amounts)
Net earnings for basic
 EPS                     $ 189.4  $ 166.8  $171.3  $   715.4  $ 549.8
  Interest on junior
   convertible
   subordinated
   debentures, net of
   tax                        --      3.2      --        5.9     12.9
                         -------- -------- ------- ---------- --------
Net earnings for diluted
 EPS                     $ 189.4  $ 170.0  $171.3  $   721.3    562.7
                         ======== ======== ======= ========== ========
Weighted-average common
 shares outstanding:
  Basic                     50.1     44.5    50.3       47.6     44.2
  Dilutive effect of
   stock compensation
   awards                    0.4      0.5     0.4        0.4      0.6
  Dilutive effect of
   junior convertible
   subordinated
   debentures                 --      6.3      --        2.8      6.3
                         -------- -------- ------- ---------- --------
  Diluted                   50.5     51.3    50.7       50.8     51.1
                         ======== ======== ======= ========== ========
Earnings per share:
  Basic                  $  3.78  $  3.75  $ 3.40  $   15.02  $ 12.43
  Diluted                $  3.75  $  3.31  $ 3.37  $   14.21  $ 11.01
NOTE 2. INVESTEE EQUITY, ROYALTY AND OTHER INCOME

Investee equity, royalty and other income included in our Condensed
 Consolidated Statements of Earnings was as follows:

                            Three months ended     For the years ended
                         ------------------------- -------------------
                         Dec. 31, Dec. 31, Oct. 1,  Dec. 31,  Dec. 31,
                           2006     2005    2006      2006      2005
                         -------- -------- ------- ---------- --------
                                           Millions
Dongfeng Cummins Engine
 Company, Ltd.           $     3  $     3  $    4  $      19  $    36
North American
 distributors                 14       10      13         48       30
Cummins Mercruiser             2        2      --          6       10
Chongqing Cummins              2        2       6         15       12
Tata Cummins                   3        2       2         11        5
Fleetguard Shanghai            1        1       2          5        4
All others                     5        4       2         15       12
                         -------- -------- ------- ---------- --------
Cummins share of net
 earnings                     30       24      29        119      109
Royalty and other income       5        4       8         21       22
                         -------- -------- ------- ---------- --------
Investee equity, royalty
 and other income        $    35  $    28  $   37  $     140  $   131
                         ======== ======== ======= ========== ========

NOTE 3. PROVISION FOR INCOME TAXES

Our tax rates are generally less than the 35 percent U.S. income tax rate primarily because of lower taxes on foreign earnings, export tax benefits and research tax credits.

Our effective tax rate for the three and twelve months ended December 31, 2006, was 28.3 percent and 29.9 percent, respectively. Our provision for the three months ended December 31, 2006, was favorably impacted by $10 million, or $0.20 per share, due to the retroactive reinstatement of the U.S. research tax credit. Our provision for the twelve months ended December 31, 2006, was impacted by a $12 million, or $0.23 per share, increase in the first quarter for the effect of new Indiana tax legislation, a $28 million, or $0.55 per share, reduction in the second quarter due to the favorable resolution of tax uncertainties related to prior years and $10 million, or $0.21 per share, due to the U.S. research tax credit. Our effective tax rate for the three and twelve months ended December 31, 2005, was 25.9 percent and 27.1 percent, respectively. Our 2005 provision was reduced by $16 million ($6 million in the first quarter, $4 million in the second quarter, $1 million in the third quarter and $5 million in the fourth quarter) for the tax benefits of foreign dividend distributions which qualified for a special 85-percent deduction under The American Jobs Creation Act of 2004.

NOTE 4. DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense included in operating activities of the Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2006 and 2005 was $296 million and $295 million, respectively.

NOTE 5. SHORT-TERM BORROWINGS & LONG-TERM DEBT

Holders of our $120 million 6.75% debentures due 2027, could elect to be repaid on February 15, 2007, at par value together with accrued interest. The election was irrevocable and required to be made between December 15, 2006 and January 16, 2007. As a result, $62 million of the debt was presented for repayment during this period. Therefore, our balance sheet at December 31, 2006, reflects $62 million in short-term borrowings and $58 million in long-term debt.

Supplemental Data - Q4 2006
----------------------------------------------------------------------

Sales
 $Millions                       Q1      Q2      Q3      Q4      YTD
                               ------- ------- ------- ------- -------

 2006
   Engine Business
                 Heavy-Duty
                  Truck            608     618     632     640   2,498
                 Medium Duty
                  Truck+Bus        215     247     253     256     971
                 Light Duty
                  Auto+RV          331     341     267     322   1,261
                 Industrial        481     516     507     559   2,063
                 Stationary
                  Power            186     174     183     175     718
                               ---------------------------------------
                 TOTAL ENGINE
                  BUSINESS       1,821   1,896   1,842   1,952   7,511
   Power Generation                536     598     624     658   2,416
   Components                      555     563     564     599   2,281
   Distributors                    317     336     346     386   1,385
   Eliminations                  (551)   (551)   (567)   (562) (2,231)
                               ---------------------------------------
                 TOTAL           2,678   2,842   2,809   3,033  11,362
                               =======================================


 2005
   Engine Business
                 Heavy-Duty
                  Truck            494     553     524     568   2,139
                 Medium Duty
                  Truck+Bus        191     228     238     247     904
                 Light Duty
                  Auto+RV          255     269     314     340   1,178
                 Industrial        399     458     427     507   1,791
                 Stationary
                  Power            141     159     169     176     645
                               ---------------------------------------
                 TOTAL ENGINE
                  BUSINESS       1,480   1,667   1,672   1,838   6,657
   Power Generation                427     493     504     575   1,999
   Components                      473     511     481     535   2,000
   Distributors                    253     297     295     346   1,191
   Eliminations                  (425)   (478)   (485)   (541) (1,929)
                               ---------------------------------------
                 TOTAL           2,208   2,490   2,467   2,753   9,918
                               =======================================

Engine Shipments
 Units                           Q1      Q2      Q3      Q4      YTD
                               ------- ------- ------- ------- -------

 2006
                 Midrange      114,500 121,800 104,800 118,800 459,900
                 Heavy-duty     30,100  31,400  31,000  30,900 123,400
                 High
                  Horsepower     3,700   4,000   4,100   4,500  16,300
                               ---------------------------------------
 TOTAL                         148,300 157,200 139,900 154,200 599,600
                               =======================================

 2005
                 Midrange       90,900 101,800 106,100 120,400 419,200
                 Heavy-duty     24,900  27,500  26,300  28,900 107,600
                 High
                  Horsepower     3,100   3,800   3,300   4,200  14,400
                               ---------------------------------------
 TOTAL                         118,900 133,100 135,700 153,500 541,200
                               =======================================

Source: Cummins Inc.