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

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

COLUMBUS, IN -- (Marketwired) -- 07/30/13 -- Cummins Inc. (NYSE: CMI) today reported results for the second quarter of 2013.

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

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

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

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

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

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

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

Recent highlights include:

Cummins increased its dividend by 25%

The Company repurchased 2.6 million shares of common stock

Cummins was one of only two industrial companies to be ranked among Gartner's Top 25 Supply Chain companies

Cummins was named one of the Top 50 companies for diversity by DiversityInc for the seventh consecutive year

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

Engine Segment

Sales - $2.7 billion, down 7 percent

Segment EBIT - $339 million, or 12.8 percent of sales, compared to $376 million or 13.2 percent of sales

Lower demand in stationary power, global mining and the heavy-duty truck market in North America were the most significant drivers of the lower revenues

Demand increased for medium duty truck engines in North America and Brazil

Components

Sales - $1.1 billion, an increase of 8 percent

Segment EBIT - $136 million, or 12.2 percent of sales, compared to $116 million or 11.2 percent of sales

Higher revenues primarily related to higher on-highway demand in Brazil, China and North America

Power Generation

Sales - $814 million, down 10 percent

Segment EBIT - $76 million, or 9.3 percent of sales, compared to $94 million or 10.3 percent of sales

Weaker demand in most international markets offsetting stronger revenues in North America

Distribution

Sales - $954 million, up 1% excluding acquisitions

Segment EBIT - $100 million, or 10.5 percent of sales, compared to $92 million or 11.6 percent of sales

Higher power generation and parts sales in North America offset by lower power generation sales in Europe and the Middle East

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 46,000 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 6,500 dealer locations. Cummins earned $1.65 billion on sales of $17.3 billion in 2012. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at @Cummins and on YouTube at CumminsInc.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward looking statements include, without limitation, statements relating to our plans and expectations for our revenues for the full year of 2013. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: the adoption and implementation of global emission standards; the price and availability of energy; the pace of infrastructure development; increasing global competition among our customers; general economic, business and financing conditions; governmental action; changes in our customers' business strategies; competitor pricing activity; expense volatility; labor relations; and other risks detailed from time to time in our Securities and Exchange Commission filings, including particularly in the Risk Factors section of our 2012 Annual Report on Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information
EBIT is a non-GAAP measure used in this release, and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBIT is a measure used internally to assess the performance of the operating units.

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

The following files are available for download:



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

		Three months ended
		June 30,		March 31,		July 1,
In millions, except per share amounts		2013		2013		2012
NET SALES		$	4,525	$	3,922	$	4,452
	Cost of sales		3,372		2,965		3,242
GROSS MARGIN			1,153		957		1,210

OPERATING EXPENSES AND INCOME
	Selling, general and administrative expenses		484		444		487
	Research, development and engineering expenses		177		182		187
	Equity, royalty and interest income from investees (Note 1)		108		82		104
	Other operating income (expense), net		10		1		8
OPERATING INCOME			610		414		648

	Interest income		10		5		7
	Interest expense		8		6		8
	Other income (expense), net		1		18		14
INCOME BEFORE INCOME TAXES			613		431		661

	Income tax expense (Note 2)		172		119		166
CONSOLIDATED NET INCOME			441		312		495

	Less: Net income attributable to noncontrolling interests		27		30		26
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$	414	$	282	$	469

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
	Basic	$	2.20	$	1.50	$	2.47
	Diluted	$	2.20	$	1.49	$	2.47

WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic		187.8		188.4		189.8
	Diluted		188.2		188.8		190.1

CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.50	$	0.50	$	0.40


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



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

		Six months ended
In millions, except per share amounts		June 30, 2013		July 1, 2012
NET SALES		$	8,447	$	8,924
	Cost of sales		6,337		6,516
GROSS MARGIN			2,110		2,408

OPERATING EXPENSES AND INCOME
	Selling, general and administrative expenses		928		962
	Research, development and engineering expenses		359		368
	Equity, royalty and interest income from investees (Note 1)		190		208
	Other operating income (expense), net		11		10
OPERATING INCOME			1,024		1,296

	Interest income		15		15
	Interest expense		14		16
	Other income (expense), net		19		16
INCOME BEFORE INCOME TAXES			1,044		1,311

	Income tax expense (Note 2)		291		341
CONSOLIDATED NET INCOME			753		970

	Less: Net income attributable to noncontrolling interests		57		46
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$	696	$	924

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
	Basic	$	3.70	$	4.86
	Diluted	$	3.69	$	4.85

WEIGHTED AVERAGE SHARES OUTSTANDING
	Basic		188.1		190.1
	Diluted		188.5		190.5

CASH DIVIDENDS DECLARED PER COMMON SHARE		$	1.00	$	0.80


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



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

In millions, except par value						June 30, 2013			December 31, 2012
ASSETS
Current assets
	Cash and cash equivalents					$	1,382		$	1,369
	Marketable securities						205			247
		Total cash, cash equivalents and marketable securities					1,587			1,616
	Accounts and notes receivable, net						2,745			2,475
	Inventories						2,475			2,221
	Prepaid expenses and other current assets						597			855
			Total current assets				7,404			7,167
Long-term assets
	Property, plant and equipment						6,077			5,876
		Accumulated depreciation					(3,195	)		(3,152	)
		Property, plant and equipment, net					2,882			2,724
	Investments and advances related to equity method investees						924			897
	Goodwill						450			445
	Other intangible assets, net						360			369
	Other assets						1,028			946
				Total assets		$	13,048		$	12,548

LIABILITIES
Current liabilities
	Loans payable					$	40		$	16
	Accounts payable (principally trade)						1,669			1,339
	Current maturities of long-term debt						43			61
	Current portion of accrued product warranty						393			386
	Accrued compensation, benefits and retirement costs						348			400
	Deferred revenue						243			215
	Taxes payable (including taxes on income)						159			173
	Other accrued expenses						567			546
			Total current liabilities				3,462			3,136
Long-term liabilities
	Long-term debt						754			698
	Postretirement benefits other than pensions						414			432
	Other liabilities and deferred revenue						1,325			1,308
				Total liabilities			5,955			5,574

EQUITY
Cummins Inc. shareholders' equity
	Common stock, $2.50 par value, 500 shares authorized, 222.3 and 222.4 shares issued						2,082			2,058
	Retained earnings						7,850			7,343
	Treasury stock, at cost, 35.0 and 32.6 shares						(2,112	)		(1,830	)
	Common stock held by employee benefits trust, at cost, 1.4 and 1.5 shares						(17	)		(18	)
	Accumulated other comprehensive loss
		Defined benefit postretirement plans					(754	)		(794	)
		Other					(345	)		(156	)
		Total accumulated other comprehensive loss					(1,099	)		(950	)
			Total Cummins Inc. shareholders' equity				6,704			6,603
	Noncontrolling interests						389			371
				Total equity			7,093			6,974
					Total liabilities and equity	$	13,048		$	12,548

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



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

			Six months ended
In millions			June 30, 2013			July 1, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
	Consolidated net income		$	753		$	970
	Adjustments to reconcile consolidated net income to net cash provided by operating activities
		Restructuring payments, net		(23	)		-
		Depreciation and amortization		200			171
		Gain on sale of businesses		-			(6	)
		Gain on fair value adjustment for consolidated investees		(12	)		-
		Deferred income taxes		20			(39	)
		Equity in income of investees, net of dividends		(57	)		(25	)
		Pension contributions in excess of expense		(78	)		(52	)
		Other post-retirement benefits payments in excess of expense		(15	)		(7	)
		Stock-based compensation expense		19			21
		Excess tax benefits on stock-based awards		(8	)		(11	)
		Translation and hedging activities		3			7
	Changes in current assets and liabilities, net of acquisitions:
		Accounts and notes receivable		(265	)		(116	)
		Inventories		(184	)		(439	)
		Other current assets		214			(47	)
		Accounts payable		310			61
		Accrued expenses		(87	)		(173	)
	Changes in other liabilities and deferred revenue			100			103
	Other, net			70			(21	)
Net cash provided by operating activities				960			397

CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures			(275	)		(266	)
	Investments in internal use software			(24	)		(40	)
	Investments in and advances to equity investees			(4	)		(40	)
	Acquisition of businesses, net of cash acquired			(134	)		(12	)
	Investments in marketable securities-acquisitions			(243	)		(276	)
	Investments in marketable securities-liquidations			280			280
	Cash flows from derivatives not designated as hedges			(23	)		1
	Other, net			12			3
Net cash used in investing activities				(411	)		(350	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings				2			46
Payments on borrowings and capital lease obligations				(51	)		(75	)
Net borrowings under short-term credit agreements				56			3
Distributions to noncontrolling interests				(28	)		(32	)
Dividend payments on common stock				(189	)		(152	)
Repurchases of common stock				(289	)		(196	)
Excess tax benefits on stock-based awards				8			11
Other, net				18			9
Net cash used in financing activities				(473	)		(386	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				(63	)		-
Net increase (decrease) in cash and cash equivalents				13			(339	)
Cash and cash equivalents at beginning of year				1,369			1,484
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	1,382		$	1,145


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



CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)

		Engine			Components			Power Generation			Distribution			Non-segment Items ⁽¹⁾			Total
In millions
Three months ended June 30, 2013
External sales		$	2,209		$	786		$	583		$	947		$	-		$	4,525
Intersegment sales			447			331			231			7			(1,016	)		-
	Total sales		2,656			1,117			814			954			(1,016	)		4,525
Depreciation and amortization⁽²⁾			51			23			12			15			-			101
Research, development and engineering expenses			102			57			17			1			-			177
Equity, royalty and interest income from investees			52			9			10			37			-			108
Interest income			7			-			2			1			-			10
Segment EBIT			339			136			76			100 ⁽³⁾			(30	)		621

Segment EBIT as a percentage of total sales			12.8	%		12.2	%		9.3	%		10.5	%					13.7	%

Three months ended March 31, 2013
External sales		$	1,885		$	722		$	539		$	776		$	-		$	3,922
Intersegment sales			418			296			207			2			(923	)		-
	Total sales		2,303			1,018			746			778			(923	)		3,922
Depreciation and amortization⁽²⁾			52			24			12			10			-			98
Research, development and engineering expenses			105			57			18			2			-			182
Equity, royalty and interest income from investees			23			7			7			45			-			82
Interest income			2			1			2			-			-			5
Segment EBIT			195			119			51			95⁽³⁾			(23	)		437

Segment EBIT as a percentage of total sales			8.5	%		11.7	%		6.8	%		12.2	%					11.1	%

Three months ended July 1, 2012
External sales		$	2,381		$	710		$	572		$	789		$	-		$	4,452
Intersegment sales			460			326			337			5			(1,128	)		-
	Total sales		2,841			1,036			909			794			(1,128	)		4,452
Depreciation and amortization⁽²⁾			47			19			11			8			-			85
Research, development and engineering expenses			115			51			19			2			-			187
Equity, royalty and interest income from investees			37			8			10			49			-			104
Interest income			3			1			3			-			-			7
Segment EBIT			376			116			94			92			(9	)		669

Segment EBIT as a percentage of total sales			13.2	%		11.2	%		10.3	%		11.6	%					15.0	%


(1)	Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended June 30, 2013 and March 31, 2013. The three months ended July 1, 2012, include a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures within the Components segment. The gain has been excluded from segment results as it was not considered in our evaluation of operating results for the corresponding periods. There were no other significant unallocated corporate expenses.
(2)	Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as "Interest expense."
(3)	Distribution segment EBIT includes a $7 million gain on the fair value adjustment resulting from the acquisition of a controlling interest in Cummins Northwest LLC for the three months ended March 31, 2013 and a $5 million gain on the fair value adjustment resulting from the acquisition of a controlling interest in Cummins Rocky Mountain LLC for the three months ended June 30, 2013.



CUMMINS INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)

		Engine			Components			Power Generation			Distribution			Non-segment Items ⁽¹⁾			Total
In millions
Six months ended June 30, 2013
External sales		$	4,094		$	1,508		$	1,122		$	1,723		$	-		$	8,447
Intersegment sales			865			627			438			9			(1,939	)		-
	Total sales		4,959			2,135			1,560			1,732			(1,939	)		8,447
Depreciation and amortization⁽²⁾			103			47			24			25			-			199
Research, development and engineering expenses			207			114			35			3			-			359
Equity, royalty and interest income from investees			75			16			17			82			-			190
Interest income			9			1			4			1			-			15
Segment EBIT			534			255			127			195 ⁽³	⁾		(53	)		1,058

Segment EBIT as a percentage of total sales			10.8	%		11.9	%		8.1	%		11.3	%					12.5	%

Six months ended July 1, 2012
External sales		$	4,793		$	1,484		$	1,088		$	1,559		$	-		$	8,924
Intersegment sales			907			651			601			10			(2,169	)		-
	Total sales		5,700			2,135			1,689			1,569			(2,169	)		8,924
Depreciation and amortization⁽²⁾			94			38			22			15			-			169
Research, development and engineering expenses			226			102			37			3			-			368
Equity, royalty and interest income from investees			75			16			20			97			-			208
Interest income			7			2			5			1			-			15
Segment EBIT			757			259			170			186			(45	)		1,327

Segment EBIT as a percentage of total sales			13.3	%		12.1	%		10.1	%		11.9	%					14.9	%


(1)	Includes intersegment sales and profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended June 30, 2013. The six months ended July 1, 2012, includes a $6 million gain ($4 million after-tax) related to adjustments from our 2011 divestitures within the Components segment. The gain has been excluded from segment results as it was not considered in our evaluation of operating results for the corresponding periods. There were no other significant unallocated corporate expenses.
(2)	Depreciation and amortization as shown on a segment basis excludes the amortization of debt discount that is included in the Condensed Consolidated Statements of Income as "Interest expense."
(3)	Distribution segment EBIT for the six months ended June 30, 2013, includes a $7 million gain and a $5 million gain on the fair value adjustments resulting from the acquisitions of a controlling interest in Cummins Northwest LLC and Cummins Rocky Mountain LLC, respectively.



CUMMINS INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT INFORMATION
(Unaudited)

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

		Three months ended						Six months ended
		June 30,		March 31,		July 1,		June 30,		July 1,
In millions		2013		2013		2012		2013		2012
Segment EBIT		$	621	$	437	$	669	$	1,058	$	1,327
Less: Interest expense			8		6		8		14		16
	Income before income taxes	$	613	$	431	$	661	$	1,044	$	1,311

CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)

NOTE 1. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

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


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

NOTE 2. INCOME TAXES

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

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

CUMMINS INC. AND SUBSIDIARIES
SELECTED FOOTNOTE DATA
(Unaudited)

NOTE 3. ACQUISITIONS

Cummins Rocky Mountain LLC

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

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

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

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

Cummins Northwest LLC

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

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

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

We believe this is a useful measure of our operating performance for the periods presented as it illustrates our operating performance without regard to special items including the one-time tax benefits and gain related to the sale of certain assets and liabilities. This measure is not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America and may not be consistent with measures used by other companies. It should be considered supplemental data. The following table reconciles net income attributable to Cummins Inc. to net income attributable to Cummins Inc. excluding special items for the quarters ended June 30, 2013, March 31, 2013 and July 1, 2012.


		Three months ended
		June 30, 2013				March 31, 2013				July 1, 2012
In millions		Net Income		Diluted EPS		Net Income		Diluted EPS		Net Income		Diluted EPS
Net income attributable to Cummins Inc.		$	414	$	2.20	$	282	$	1.49	$	469	$	2.47
Less
	One-time tax benefits⁽¹⁾		-		-		11		0.05		-		-
	Gain on sale of businesses⁽²⁾		-		-		-		-		4		0.02
Net income attributable to Cummins Inc. excluding special items		$	414	$	2.20	$	271	$	1.44	$	465	$	2.45

				Six months ended
				June 30, 2013				July 1, 2012
In millions				Net Income		Diluted EPS		Net Income		Diluted EPS
Net income attributable to Cummins Inc.				$	696	$	3.69	$	924	$	4.85
Less
	One-time tax benefits⁽¹⁾				11		0.06		-		-
	Gain on sale of businesses⁽²⁾				-		-		4		0.02
Net income attributable to Cummins Inc. excluding special items				$	685	$	3.63	$	920	$	4.83

(1)		The one-time tax items for the three months ended March 31, 2013 and six months ended June 30, 2013, included a discrete tax benefit of $28 million attributable to the 2012 research credit as well as a discrete tax expense of $17 million, which relates to the write-off of a deferred tax asset deemed unrecoverable.
(2)		The gain has been excluded from operating results as it was not considered in our evaluation of performance for the three and six months ended July 1, 2012.

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

Earnings before interest, taxes and noncontrolling interests

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



			Three months ended									Six months ended
			June 30,			March 31,			July 1,			June 30,			July 1,
In millions			2013			2013			2012			2013			2012
Earnings before interest expense, income taxes and special items			$	621		$	437		$	663		$	1,058		$	1,321

Earnings before interest expense, income taxes and special items as a percentage of net sales				13.7	%		11.1	%		14.9	%		12.5	%		14.8	%

Add
	Gain on sale of businesses			-			-			6			-			6

Earnings before interest expense and income taxes			$	621		$	437		$	669		$	1,058		$	1,327

EBIT as a percentage of net sales				13.7	%		11.1	%		15.0	%		12.5	%		14.9	%

Less
	Interest expense			8			6			8			14			16
	Income tax expense			172			119			166			291			341
Consolidated net income				441			312			495			753			970

Less
	Net income attributable to noncontrolling interests			27			30			26			57			46
		Net income attributable to Cummins Inc.	$	414		$	282		$	469		$	696		$	924

Net income attributable to Cummins Inc. as a percentage of net sales				9.1	%		7.2	%		10.5	%		8.2	%		10.4	%



CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)

Engine segment net sales by market

2013
In millions		Q1		Q2		Q3		Q4		YTD
Heavy-duty truck		$	654	$	723	$	-	$	-	$	1,377
Medium-duty truck and bus			448		595		-		-		1,043
Light-duty automotive and RV			260		345		-		-		605
Industrial			714		762		-		-		1,476
Stationary power			227		231		-		-		458
	Total sales	$	2,303	$	2,656	$	-	$	-	$	4,959

2012
In millions		Q1		Q2		Q3		Q4		YTD
Heavy-duty truck		$	892	$	807	$	656	$	609	$	2,964
Medium-duty truck and bus			526		512		478		575		2,091
Light-duty automotive and RV			286		297		353		343		1,279
Industrial			861		859		766		747		3,233
Stationary power			294		366		274		232		1,166
	Total sales	$	2,859	$	2,841	$	2,527	$	2,506	$	10,733

Unit shipments by engine classification (including unit shipments to Power Generation)

2013
Units		Q1		Q2		Q3		Q4		YTD
Midrange			94,600		121,900		-		-		216,500
Heavy-duty			24,900		28,300		-		-		53,200
High horsepower			4,200		3,600		-		-		7,800
	Total units		123,700		153,800		-		-		277,500

2012
Units		Q1		Q2		Q3		Q4		YTD
Midrange			109,000		110,000		113,000		108,500		440,500
Heavy-duty			36,000		33,000		26,000		24,100		119,100
High horsepower			5,500		5,800		4,600		3,900		19,800
	Total units		150,500		148,800		143,600		136,500		579,400



CUMMINS INC. AND SUBSIDIARIES
BUSINESS UNIT SALES DATA
(Unaudited)

Component segment sales by business

2013
In millions		Q1		Q2		Q3		Q4		YTD
Emission solutions		$	400	$	444	$	-	$	-	$	844
Turbo technologies			266		294		-		-		560
Filtration			255		271		-		-		526
Fuel systems			97		108		-		-		205
	Total sales	$	1,018	$	1,117	$	-	$	-	$	2,135

2012
In millions		Q1		Q2		Q3		Q4		YTD
Emission solutions		$	404	$	349	$	325	$	337	$	1,415
Turbo technologies			298		297		257		254		1,106
Filtration			270		266		260		252		1,048
Fuel systems			127		124		96		96		443
	Total sales	$	1,099	$	1,036	$	938	$	939	$	4,012

Power Generation segment sales by business

2013
In millions		Q1		Q2		Q3		Q4		YTD
Power products		$	409	$	474	$	-	$	-	$	883
Power systems			179		187		-		-		366
Generator technologies			126		125		-		-		251
Power solutions			32		28		-		-		60
	Total sales	$	746	$	814	$	-	$	-	$	1,560

2012
In millions		Q1		Q2		Q3		Q4		YTD
Power products		$	375	$	459	$	425	$	395	$	1,654
Power systems			188		217		174		178		757
Generator technologies			141		160		138		127		566
Power solutions			76		73		77		65		291
	Total sales	$	780	$	909	$	814	$	765	$	3,268

Distribution segment sales by business

2013
In millions		Q1		Q2		Q3		Q4		YTD
Parts and filtration		$	322	$	369	$	-	$	-	$	691
Power generation			163		241		-		-		404
Engines			152		183		-		-		335
Service			141		161		-		-		302
	Total sales	$	778	$	954	$	-	$	-	$	1,732

2012
In millions		Q1		Q2		Q3		Q4		YTD
Parts and filtration		$	288	$	302	$	326	$	319	$	1,235
Power generation			186		201		178		242		807
Engines			166		147		157		195		665
Service			135		144		140		151		570
	Total sales	$	775	$	794	$	801	$	907	$	3,277

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

Source: Cummins Inc.

Released July 30, 2013

News

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

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

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News

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

Related Documents

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