Cummins Reports Strong Sales and Profits in Fourth Quarter 2009

-- 2010 Forecast of $11 Billion in Sales and 7 Percent EBIT in Line With 2009 Performance

COLUMBUS, Ind.--(BUSINESS WIRE)-- Cummins Inc. (NYSE: CMI) today reported that the fourth quarter 2009 was the most profitable fourth quarter in Company history, eclipsing the previous mark set in 2007.

Sales of $3.40 billion grew 3 percent from $3.29 billion in the fourth quarter 2008, while net income attributable to Cummins Inc. increased to $270 million, or $1.36 a share, from $43 million, or 22 cents a share, a year ago.

Earnings Before Interest and Taxes (EBIT) was $383 million or 11.3 percent of sales, compared to $56 million, or 1.7 percent of sales in the fourth quarter 2008. The fourth quarter 2009 results include a pre-tax charge of $4 million to cover the costs associated with restructuring, while the 2008 results included a $37 million pre-tax charge for similar actions. Excluding these charges, fourth quarter 2009 EBIT was $387 million, or 11.4 percent of sales, compared to $93 million, or 2.8 percent of sales in the same period in 2008.

For all of 2009, the Company reported revenues of $10.8 billion, down 25 percent from $14.3 billion in 2008 as a result of the deep global recession that reduced demand in most markets throughout the year. Despite the downturn, Cummins reported solid profit and significant positive cash flow in 2009 as the Company's results improved on a quarter-to-quarter basis throughout 2009.

EBIT before restructuring and other charges was $774 million, or 7.2 percent of sales - compared to EBIT before restructuring and other charges of $1.26 billion, or 8.8 percent of sales in 2008. Net income attributable to Cummins Inc. in 2009 declined by 43 percent to $428 million, or $2.16 a share, compared to $755 million, or $3.84 a share in 2008. Excluding the restructuring and other charges, full year 2009 earnings per share was $2.49.

The Company reported an increase in cash of $244 million in the fourth quarter and approximately $500 million for all of 2009, driven by broad-based efforts to lower costs, align manufacturing capacity with demand and reduce inventory levels across all its businesses. The Company had $930 million in cash at the end of 2009.

"Given the extraordinarily challenging economic climate throughout much of the year, we are extremely pleased with our financial results for both the fourth quarter and all of 2009," said Cummins Chairman and Chief Executive Officer Tim Solso. "By taking decisive action early in the recession to bring our costs in line with real demand for our products, and through the hard work of all our people worldwide, we delivered as we promised in 2009: We earned a solid profit during the deepest recession in decades and generated a significant amount of cash while continuing to invest in technologies and programs critical to our success."

In addition to its strong financial performance, the Company invested significantly in new products in 2009, delivering engines and components that will allow Cummins to meet the most stringent emissions standards in the world and enter new product markets in China and other growing regions.

The Company's fourth quarter results were driven by continued strength in China, India and Brazil, along with a significant increase for on-highway truck engines and components in North America in advance of new emissions standards that took effect at the beginning of 2010.

Engine segment sales in the fourth quarter jumped by 12 percent compared to the same period in 2008, while Components sales - which are closely tied to engine volumes - grew 8 percent. When compared to the third quarter of 2009, the gains were even more dramatic: Engine sales increased 51 percent and Components sales were up 24 percent.

At the same time, Cummins' strong presence in China, India and Brazil continued to play an important role in the Company's performance in the fourth quarter. The economies in all three countries have rebounded from the recession much more quickly than more mature markets such as the United States and Western Europe. The Company expects revenue in China and India to return to pre-recession levels in 2010, with solid growth also expected in Brazil.

As a result of its fourth quarter performance, Cummins continued its trend of quarter-to-quarter profit gains in 2009, as reflected in the significant increase in EBIT as a percentage of sales over the course of the year. EBIT, excluding restructuring and other charges, has increased each of the past four quarters, growing from 2.8 percent of sales in the fourth quarter 2008 to 11.4 percent of sales in the fourth quarter 2009.

Despite the strong fourth quarter results and the expected continued improvement in large emerging markets, Cummins expects the first half of 2010 to be extremely challenging, especially in the United States and Europe. The increase in truck engine and components sales in the United States during the fourth quarter was largely the result of OEM customers buying 2009 engines in advance of the EPA emissions regulations, which took effect on Jan. 1, 2010.

Based on current orders and forecasts for the first part of this year, North American truck and bus engine shipments could fall by as much as 80 percent in the first half of 2010, compared to the second half of 2009. This translates into a 50 percent drop in externally reported revenue for heavy-duty truck and medium-duty truck and bus in the first half of 2010 compared to the second half of 2009

That weakness also will affect the Company's components businesses, although higher Cummins component content on the 2010 engines and improved truck sales in emerging markets will partially offset this drop in demand.

In addition, the Company is expecting its Power Generation business to perform at levels consistent with 2009. This late-cycle segment bottomed out in the third quarter of 2009 but has yet to resume strong growth.

The weakness in these segments will be offset by continued strong growth in the Company's distribution business and further improvement in China, India and Brazil. Cummins also expects to see growth across all its business segments in the second half of the year, compared to the first six months.

"In many ways, the first half of 2010 will be more challenging than the environment we faced in the early part of the recession," said Cummins President and Chief Operating Officer Tom Linebarger. "We will continue to manage our business very conservatively to ensure that we stay focused on our priorities of earning a solid profit throughout the entire downturn, investing in our future and demonstrating that we care about our customers more than anyone else in the industry."

Based on its current forecasts, Cummins expects 2010 sales and earnings to be similar to its 2009 performance. The Company's current full-year guidance calls for sales of $11 billion for the year, with an EBIT of 7 percent of sales.

The Company also expects to continue to generate positive cash flow, and intends to significantly increase its capital investment in 2010. Cummins is forecasting capital spending of approximately $400 million in 2010, an increase of nearly 30 percent from 2009, to fund projects critical to the Company's long-term growth.

The Company will share more details of its long-term growth strategy at a half-day meeting with investment analysts in New York City on March 16.

"We have worked hard to position Cummins to emerge from the current downturn an even stronger company," Solso said. "The Company is in the best financial condition in its history. I am confident we have the plans and the people in place to resume our strong growth in 2011 and sustain it well into the future."

Fourth quarter details (all comparisons are to same period in 2008 unless otherwise noted)

Engine Segment

    --  Sales - $2.17 billion, up 12 percent
    --  Segment EBIT - $211 million (9.7 percent of sales), compared to a loss
        of $40 million
    --  Total on-highway sales increased 58 percent
        o Revenues in worldwide heavy-duty truck rose 52 percent; medium-duty
          truck and bus grew 44 percent; sales to the light-duty automotive and
          RV markets increased 106 percent on the launch of 2010 model year
          Dodge Ram pickup
    --  Sales down significantly in most off-highway markets
        o Construction sales down 24 percent; commercial marine down 37 percent;
          Mining down 12 percent; stationary power down 43 percent;

Power Generation

    --  Sales - $601 million, down 32 percent
    --  Segment EBIT - $34 million (5.7 percent of sales), down 55 percent from
        $75 million (8.5 percent of sales)
    --  Commercial product sales down 36 percent; commercial projects down 26
        percent; Consumer products down 11 percent; Alternators down 34 percent;
        Power Electronics down 8 percent
    --  All major geographic markets declined from previous year, except India,
        where sales increased 19 percent
    --  Despite continued weakness compared to previous year, sales increased 9
        percent and segment EBIT improved from 4.2 percent of sales to 5.7
        compared to third quarter

Components

    --  Sales - $732 million, up 8 percent
    --  Segment EBIT - $73 million (10 percent of sales), up from a loss of $6
        million
    --  Turbocharger sales up 25 percent; Filtration down 12 percent; Emission
        Solutions up 14 percent; Fuel Systems up 26 percent
    --  Drop in Filtration sales almost entirely result of shift of exhaust
        business to Emission Solutions
    --  Fuel systems and Turbocharger sales led by large increases in volumes in
        North America as result of on-highway engine purchase in advance of 2010
        EPA emissions changes

Distribution

    --  Sales - $486 million, down 13 percent
    --  Segment EBIT - $67 million (13.8 percent of sales), up 5 percent from
        $64 million (11.5 percent of sales)
    --  Stable JV Income, favorable foreign currency movements and lower
        spending helped lead to improved segment EBIT, despite lower sales.

Joint Ventures

    --  Total income - $67 million, up 31 percent from $51 million
    --  Engine JVs accounted for all the gain from previous year, led by China
        JVs
    --  China heavy- and medium-duty truck engine end market sales increased a
        combined 136 percent in the fourth quarter.

Presentation of Non-GAAP Financial Information

EBIT and net income attributable to Cummins Inc. excluding restructuring and other charges 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 approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. Cummins reported net income of $428 million on sales of $10.8 billion in 2009. Press releases can be found on the Web at www.cummins.com.

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

                                    December 31,   September 27,  December 31,

In millions (except per share       2009           2009           2008
amounts)

NET SALES                           $ 3,400        $ 2,530        $ 3,288

Cost of sales                       2,627          2,027          2,754

GROSS MARGIN                        773            503            534

OPERATING EXPENSES AND INCOME

Selling, general and                348            304            341
administrative expenses

Research, development and           108            90             102
engineering expenses

Equity, royalty and interest        67             57             51
income from investees (Note 1)

Restructuring and other charges     4              22             37

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

OPERATING INCOME                    385            147            102

Interest income                     3              2              4

Interest expense                    9              9              9

Other (expense) income, net (Note   (5           ) 6              (50          )
2)

INCOME BEFORE INCOME TAXES          374            146            47

Income tax expense (benefit) (Note  84             36             (12          )
3)

NET INCOME                          290            110            59

Less: net income attributable to    20             15             16
noncontrolling interests

NET INCOME ATTRIBUTABLE TO CUMMINS  $ 270          $ 95           $ 43
INC.

EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO CUMMINS INC.

Basic                               $ 1.36         $ 0.48         $ 0.22

Diluted                             $ 1.36         $ 0.48         $ 0.22

WEIGHTED AVERAGE SHARES
OUTSTANDING

Basic                               198.4          197.4          194.7

Diluted                             198.7          197.8          196.6

CASH DIVIDENDS DECLARED PER COMMON  $ 0.175        $ 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)

                                                   For the years ended

                                                   December 31,   December 31,

In millions (except per share amounts)             2009           2008

NET SALES                                          $ 10,800       $ 14,342

Cost of sales                                      8,631          11,402

GROSS MARGIN                                       2,169          2,940

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses       1,239          1,450

Research, development and engineering expenses     362            422

Equity, royalty and interest income from           214            253
investees (Note 1)

Restructuring and other charges                    99             37

Other operating (expense) income, net              (1           ) (12          )

OPERATING INCOME                                   682            1,272

Interest income                                    8              18

Interest expense                                   35             42

Other (expense) income, net (Note 2)               (15          ) (70          )

INCOME BEFORE INCOME TAXES                         640            1,178

Income tax expense (Note 3)                        156            360

NET INCOME                                         484            818

Less: net income attributable to noncontrolling    56             63
interests

NET INCOME ATTRIBUTABLE TO CUMMINS INC.            $ 428          $ 755

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS
INC.

Basic                                              $ 2.17         $ 3.87

Diluted                                            $ 2.16         $ 3.84

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic                                                197.4          195.0

Diluted                                              197.7          196.5

CASH DIVIDENDS DECLARED PER COMMON SHARE           $ 0.70         $ 0.60




(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)

                                                   December 31,  December 31,

In millions (except par value)                     2009          2008

ASSETS

Current assets

Cash and cash equivalents                           $ 930         $ 426

Marketable securities                               190           77

Accounts and notes receivable, net                  2,004         1,782

Inventories                                         1,341         1,783

Prepaid expenses and other current assets           538           645

Total current assets                                5,003         4,713

Long-term assets

Property, plant and equipment, net                  1,886         1,841

Investments and advances related to equity method   574           588
investees

Goodwill and other intangible assets, net           592           585

Other assets                                        761           792

Total assets                                        $ 8,816       $ 8,519

LIABILITIES

Current liabilities

Loans payable                                       $ 37          $ 39

Accounts payable (principally trade)                957           1,009

Accrued expenses                                    1,438         1,591

Total current liabilities                           2,432         2,639

Long-term liabilities

Long-term debt                                      637           629

Other liabilities                                   1,727         1,771

Total liabilities                                   4,796         5,039

EQUITY

Cummins Inc. shareholders' equity

Common stock, $2.50 par value, 500 shares           1,861         1,793
authorized, 222.0 and 221.7 shares issued

Retained earnings                                   3,575         3,288

Treasury stock, at cost, 20.7 and 20.4 shares       (731    )     (715    )

Common stock held by employee benefits trust, at    (36     )     (61     )
cost, 3.0 and 5.1 shares

Unearned compensation                               (1      )     (5      )

Accumulated other comprehensive loss                (895    )     (1,066  )

Total Cummins Inc. shareholders' equity             3,773         3,234

Noncontrolling interests                            247           246

Total equity                                        4,020         3,480

Total liabilities and equity                        $ 8,816       $ 8,519




(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)

                                                   For the years ended

                                                   December 31,   December 31,

In millions                                        2009           2008

NET CASH PROVIDED BY OPERATING ACTIVITIES (Note    $ 1,137        $ 987
5)

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures                               (310         ) (543         )

Investments in internal use software               (35          ) (82          )

Investments in and advances to equity investees    (3           ) (89          )

Acquisition of businesses, net of cash acquired    (2           ) (142         )

Proceeds from the sale of an equity investment                    64

Investments in marketable                          (431         ) (390         )
securities--acquisitions

Investments in marketable                          335            409
securities--liquidations

Cash flows from derivatives not designated as      (18          ) (53          )
hedges

Purchases of other investments                     (62          ) (62          )

Other, net                                         17             40

Net cash used in investing activities              (509         ) (848         )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings                           76             76

Payments on borrowings and capital lease           (97          ) (152         )
obligations

Net borrowings under short-term credit agreements  (2           ) 33

Distributions to noncontrolling interests          (34          ) (24          )

Dividend payments on common stock                  (141         ) (122         )

Proceeds from sale of common stock held by         72             63
employee benefit trust

Repurchases of common stock                        (20          ) (128         )

Other, net                                         5              17

Net cash used in financing activities              (141         ) (237         )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH   17             (53          )
EQUIVALENTS

Net increase (decrease) in cash and cash           504            (151         )
equivalents

Cash and cash equivalents at beginning of year     426            577

CASH AND CASH EQUIVALENTS AT END OF PERIOD         $ 930          $ 426




(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)

In millions   Engine     Power       Components  Distribution  Non-segment  Total
                         Generation                            items(1)

Three months
ended
December 31,
2009

External      $ 1,974    $ 477       $ 466       $ 483         $ --         $ 3,400
sales

Intersegment    194        124         266         3             (587   )     --
sales

Total sales     2,168      601         732         486           (587   )     3,400

Depreciation
and           50         14          20          3                          87
amortization
(2)

Research,
development
and           73         8           27                                     108
engineering
expense

Equity,
royalty and
interest      24         6           4           33            --           67
income from
investees

Restructuring
and other                                                      4            4
charges

Interest      1          2                                     --           3
income

Segment EBIT  211        34          73          67            (2       )   383

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
expense

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

Three months
ended
December 31,
2008

External      $ 1,590    $ 675       $ 468       $ 555         $ --         $ 3,288
sales

Intersegment    346        212         208         2             (768   )     --
sales

Total sales     1,936      887         676         557           (768   )     3,288

Depreciation
and           47         10          16          8                          81
amortization
(2)

Research,
development
and           71         10          21                                     102
engineering
expense

Equity,
royalty and
interest      8          6           4           33            --           51
income from
investees

Restructuring
and other                                                      37           37
charges

Interest      3                                  1             --           4
income

Segment EBIT  (40     )  75          (6      )   64            (37      )   56

For the year
ended
December 31,
2009

External      $ 5,582    $ 1,879     $ 1,562     $ 1,777       $ --         $ 10,800
sales

Intersegment    823        538         793         7             (2,161 )     --
sales

Total sales     6,405      2,417       2,355       1,784         (2,161 )     10,800

Depreciation
and           185        49          73          17                         324
amortization
(2)

Research,
development
and           241        33          88                                     362
engineering
expense

Equity,
royalty and
interest      54         22          13          125           --           214
income from
investees

Restructuring
and other                                                      99           99
charges

Interest      3          3           1           1             --           8
income

Segment EBIT  252        167         95          235           (74      )   675

For the year
ended
December 31,
2008

External      $ 7,432    $ 2,601     $ 2,154     $ 2,155       $ --         $ 14,342
sales

Intersegment    1,378      899         998         9             (3,284 )     --
sales

Total sales     8,810      3,500       3,152       2,164         (3,284 )     14,342

Depreciation
and           180        41          65          25                         311
amortization
(2)

Research,
development
and           286        41          95                                     422
engineering
expense

Equity,
royalty and
interest      99         23          14          117           --           253
income from
investees

Restructuring
and other                                                      37           37
charges

Interest      10         3           3           2             --           18
income

Segment EBIT  535        376         169         242           (102     )   1,220




     Includes intercompany eliminations and unallocated corporate expenses. For
     the three months and the year ended December 31, 2009, unallocated
     corporate expenses include $4 million and $99 million of restructuring and
     other charges and gains of $7 million and $12 million related to flood
     damages, respectively. For both the three months and the year ended
(1)  December 31, 2008, unallocated corporate expenses include $37 million of
     restructuring and other charges and a $36 million decrease in cash
     surrender value in corporate owned life insurance (COLI). For the year
     ended December 31, 2008, unallocated corporate expenses also included $5
     million related to flood damages. For the three months ended September 27,
     2009, unallocated corporate expenses included restructuring and other
     charges of $22 million and a gain of $8 million related to flood damages.

     Depreciation and amortization as shown on a segment basis excludes the
(2)  amortization of debt discount that is included in our 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 Financial Statements is shown in the table below:

          Three months ended                         For the years ended

          December 31,  September 27,  December 31,  December 31,  December 31,

In        2009          2009           2008          2009          2008
millions

Segment   $ 383         $ 155          $ 56          $ 675         $ 1,220
EBIT

Less:

Interest  9             9              9             35            42
expense

Income
before    $ 374         $ 146          $ 47          $ 640         $ 1,178
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
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 consolidated net
income attributable to Cummins Inc., for each of the applicable periods:

                Three months ended                For the years ended

                December   September   December   December 31,   December 31,
                31,        27,         31,

In millions     2009       2009        2008       2009           2008

Earnings
before
interest,
income taxes    $ 387      $ 177       $ 93       $ 774          $ 1,257
and
restructuring
and other
charges

Earnings
before
interest
expense,
income taxes
and             11.4     % 7.0       % 2.8      % 7.2          % 8.8          %
restructuring
and other
charges as a
percentage of
net sales

Less:

Restructuring
and other       4          22          37         99             37
charges

Earnings
before          $ 383      $ 155       $ 56       $ 675          $ 1,220
interest and
income taxes

EBIT as a
percentage of   11.3     % 6.1       % 1.7      % 6.3          % 8.5          %
net sales

Less:

Interest        9          9           9          35             42
expense

Income tax
expense         84         36          (12      ) 156            360
(benefit)

Net income      290        110         59         484            818

Less:

Net income
attributable
to              20         15          16         56             63
noncontrolling
interests

Net income
attributable    $ 270      $ 95        $ 43       $ 428          $ 755
to Cummins
Inc.

Net income
attributable
to Cummins      7.9      % 3.8       % 1.3      % 4.0          % 5.3          %
Inc. as a
percentage of
net sales





CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

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 period 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 months and the year ended December 31, 2009, the three months and year ended December 31,
2008, and the three months ended September 27, 2009.

              Three months ended                                 For the years ended

              December 31,     September 27,    December 31,     December 31,     December 31,
              2009             2009             2008             2009             2008

In millions   Net     Diluted  Net     Diluted  Net     Diluted  Net     Diluted  Net     Diluted
              Income  EPS      Income  EPS      Income  EPS      Income  EPS      Income  EPS

Net income
attributable
to Cummins
Inc.          $ 272   $ 1.37   $ 110   $ 0.56   $ 69    $ 0.35   $ 493   $ 2.49   $ 781   $ 3.97
excluding
restructuring
and other
charges

Less:

Restructuring
and other     2       0.01     15      0.08     26      0.13     65      0.33     26      0.13
charges, net
(1)

Net income
attributable  $ 270   $ 1.36   $ 95    $ 0.48   $ 43    $ 0.22   $ 428   $ 2.16   $ 755   $ 3.84
to Cummins
Inc.




     During the three months ended December 31, 2009, September 27, 2009, and
     December 31, 2008, management approved and committed to undertake
     restructuring actions. These actions resulted in pretax restructuring and
     other charges of $4 million, $22 million and $37 million, respectively. For
(1)  the years ended December 31, 2009 and 2008, the total pretax restructuring
     and other charges were $99 million and $37 million, respectively. These
     charges included employee-related liabilities for severance and benefits,
     exit costs and pension and other postretirement benefit curtailment
     charges.




SUPPLEMENTAL INFORMATION

In 2009, the Power Generation segment reorganized its reporting structure to
include the following businesses: Commercial Products, Alternators, Commercial
Projects, Power Electronics and Consumer. Sales by quarter for our Power
Generation segment by business for the years 2008 and 2007 were as follows:

2008         Three months ended                                     Year ended

In millions  March 30,  June 29, 2008  September 28,  December 31,  December 31,
             2008                      2008           2008          2008

Commercial   $ 444      $ 555          $ 559          $ 558         $ 2,116
Products

Alternator   156        178            174            178           686

Commercial   86         111            63             68            328
Projects

Power        27         31             35             39            132
Electronics

Consumer     74         63             57             44            238

Total sales  $ 787      $ 938          $ 888          $ 887         $ 3,500

2007         Three months ended                                     Year ended

In millions  April 1,   July 1, 2007   September 30,  December 31,  December 31,
             2007                      2007           2007          2007

Commercial   $ 383      $ 448          $ 449          $ 481         $ 1,761
Products

Alternator   132        156            163            172           623

Commercial   45         44             49             81            219
Projects

Power        26         26             28             28            108
Electronics

Consumer     89         95             87             78            349

Total sales  $ 675      $ 769          $ 776          $ 840         $ 3,060




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 was as follows:

               Three months ended                        For the years ended

               December 31,   September   December 31,   December   December
                              27,                        31,        31,

In millions    2009           2009        2008           2009       2008

Distribution
Entities

North
American       $  26          $ 25        $  28          $ 100      $ 100
distributors

Komatsu
Cummins        3              3           2              12         7
Chile, Ltda.

All others     1              1           2              3          5

Manufacturing
Entities

Dongfeng
Cummins        15             11          5              33         55
Engine
Company, Ltd.

Chongqing
Cummins        8              8           7              36         30
Engine
Company, Ltd.

Tata Cummins   3              2                          5          7
Ltd.

Valvoline      2              3                          7          2
Cummins, Ltd.

Shanghai
Fleetguard     2              2           1              7          8
Filter Co.
Ltd.

Cummins
MerCruiser     (5           ) (2        ) (2           ) (10      ) 3
Diesel Marine
LLC

All others     5                          2              3          14

Cummins share  60             53          45             196        231
of net income

Royalty and
interest       7              4           6              18         22
income

Equity,
royalty and
interest       $  67          $ 57        $  51          $ 214      $ 253
income from
investees

NOTE 2. OTHER (EXPENSE) INCOME

Other (expense) income included the following:

               Three months ended                        For the years ended

               December 31,   September   December 31,   December   December
                              27,                        31,        31,

In millions    2009           2009        2008           2009       2008

Other
(expense)
income:

Change in
cash
surrender
value of       $ (5         ) $ 3         $ (36        ) $ (4     ) $ (36    )
corporate
owned life
insurance

Foreign
currency       (2           ) (1        ) (23          ) (20      ) (46      )
(losses)
gains

Other, net     2              4           9              9          12

Total other
(expense)      $  (5        ) $ 6         $  (50       ) $ (15    ) $ (70    )
income, net



NOTE 3. INCOME TAXES

Our effective tax rate for the fourth quarter and full year of 2009 was 22.5 percent and 24.4 percent, respectively. Our income tax provision for the fourth quarter includes benefits totaling $29 million related to adjustments to deferred tax accounts. Absent these benefits, the effective tax rate for the quarter is 30 percent and the year is 29 percent. We released $19 million of deferred tax liabilities on foreign earnings now considered to be permanently reinvested outside of the United States and recorded a deferred tax asset of $10 million related to prior period matters.

NOTE 4. NONCONTROLLING INTERESTS

On January 1, 2009, we adopted changes issued by the Financial Accounting Standards Board to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests and a company present a consolidated net income measure that includes the amount attributable to such noncontrolling interests for all periods presented.

CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)

NOTE 5. DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense included in operating activities of the Condensed Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008, was $326 million and $314 million, respectively.


CUMMINS INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Unaudited)

Sales

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  156         94          120         318         688
RV

Industrial           467         440         407         507         1,821

Stationary power     246         137         125         160         668

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

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

2008

In millions          Q1          Q2          Q3          Q4          YTD

Engine business:

Heavy-duty truck     $ 536       $ 672       $ 630       $ 470       $ 2,308

Medium-duty bus and  397         422         406         325         1,550
truck

Light-duty auto and  275         205         170         154         804
RV

Industrial           733         804         788         704         3,029

Stationary power     268         283         285         283         1,119

Total Engine         2,209       2,386       2,279       1,936       8,810
business

Power Generation     787         938         888         887         3,500

Components           820         855         801         676         3,152

Distribution         445         581         581         557         2,164

Eliminations         (787      ) (873      ) (856      ) (768      ) (3,284    )

Total                $ 3,474     $ 3,887     $ 3,693     $ 3,288     $ 14,342

Engine Shipments

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

2008

Units                Q1          Q2          Q3          Q4          YTD

Mid-range            $ 114,200   $ 114,800   $ 102,400   $ 86,900    $ 418,300

Heavy-duty           24,700      31,700      29,400      22,500      108,300

High horsepower      4,600       5,500       5,300       5,200       20,600

Total                $ 143,500   $ 152,000   $ 137,100   $ 114,600   $ 547,200




    Source: Cummins Inc.