CUMMINS ENGINE COMPANY, INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: February 4, 2009

CUMMINS INC.
(Exact name of registrant as specified in its charter)

Indiana
(State or other Jurisdiction of
Incorporation)

1-4949
(Commission File Number)

35-0257090
(I.R.S. Employer Identification
No.)

500 Jackson Street
P. O. Box 3005
Columbus, IN 47202-3005
(Principal Executive Office) (Zip Code)

Registrant's telephone number, including area code: (812) 377-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Item 7.01. Regulation FD Disclosure

The following information is furnished pursuant to Item 2.02, "Results of Operations

and Financial Condition" and Item 7.01, "Regulation FD Disclosure."

On February 3, 2009, Cummins Inc. (“Cummins,” “the Company,” “our,” or “we”) issued the attached press release reporting its financial results for the fourth quarter of 2008. A copy of Cummins’ press release is attached hereto as Exhibit 99 and hereby incorporated by reference.

Item 9.01. Financial Statements and Exhibits.

(d)

The following exhibit is furnished herewith:

99-Press Release dated February 3, 2009

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 4, 2009

CUMMINS INC.

/s/ Marsha L. Hunt
______________________________

Marsha L. Hunt
Vice President - Corporate Controller
(Principal Accounting Officer)

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

	Three months ended
	December 31,			September 28,			December 31,
	2008			2008			2007
	in millions (except per share amounts)
NET SALES	$	3,288		$	3,693		$	3,516
Cost of sales	2,672			2,873			2,834
GROSS MARGIN	616			820			682

OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	350			388			359
Research, development and engineering expenses	102			113			93
Equity, royalty and interest income from investees (Note 1)	51			66			59
Restructuring charges (Note 2)	37			—			—
Other operating (expense) income, net	(3		)	(2		)	13

OPERATING INCOME	175			383			302

Interest income	4			4			9
Interest expense	9			10			14
Other (expense) income, net (Note 3)	(50		)	(7		)	13
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS	120			370			310

Income tax expense (Note 4)	15			123			97
Minority interests in income of consolidated subsidiaries	16			18			15
NET INCOME	$	89		$	229		$	198

EARNINGS PER COMMON SHARE
Basic	$	0.46		$	1.18		$	1.01
Diluted	$	0.45		$	1.17		$	1.00

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		194.7			194.9			195.7
Diluted		196.6			196.5			197.5

Cash dividends declared per share	$	0.175		$	0.175		$	0.125

(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)

	For the years ended
	December 31,			December 31,
	2008			2007
	in millions (except per share amounts)
NET SALES	$	14,342		$	13,048
Cost of sales	11,320			10,492
GROSS MARGIN	3,022			2,556

OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	1,459			1,296
Research, development and engineering expenses	422			329
Equity, royalty and interest income from investees (Note 1)	253			205
Restructuring charges (Note 2)	37			—
Other operating (expense) income, net	(12		)	22

OPERATING INCOME	1,345			1,158

Interest income	18			36
Interest expense	42			58
Other (expense) income, net (Note 3)	(70		)	33
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS	1,251			1,169

Income tax expense (Note 4)	387			381
Minority interests in income of consolidated subsidiaries	63			49
NET INCOME	$	801		$	739

EARNINGS PER COMMON SHARE
Basic	$	4.11		$	3.72
Diluted	$	4.08		$	3.70

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		195.0			198.4
Diluted		196.5			199.9

Cash dividends declared per share	$	0.60		$	0.43

(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,
	2008				2007
	in millions (except par value)
ASSETS
Current assets
Cash and cash equivalents		$	426			$	577
Marketable securities		77				120
Accounts and notes receivable, net		1,782				1,998
Inventories		1,783				1,692
Other current assets		639				428
Total current assets		4,707				4,815
Long-term assets
Property, plant and equipment, net		1,841				1,645
Investments and advances related to equity method investees		588				514
Goodwill and other intangible assets, net		585				538
Other assets		770				683
Total assets		$	8,491			$	8,195
LIABILITIES
Current liabilities
Short-term borrowings		$	69			$	119
Accounts payable (principally trade)		1,009				1,263
Accrued expenses		1,486				1,329
Total current liabilities		2,564				2,711
Long-term liabilities
Long-term debt		629				555
Other liabilities		1,771				1,227
Total liabilities		4,964				4,493
MINORITY INTERESTS		250				293
SHAREHOLDERS’ EQUITY
Common stock, $2.50 par value, 500 and 300 shares authorized, 221.7 and 220.4 shares issued		554				551
Additional paid-in capital		1,240				1,168
Retained earnings		3,334				2,660
Treasury stock, at cost, 20.4 and 18.2 shares		(715		)		(593		)
Common stock held by employee benefits trust, at cost, 5.1 and 6.5 shares		(61		)		(79		)
Unearned compensation		(5		)		(11		)
Accumulated other comprehensive loss		(1,070		)		(287		)
Total shareholders’ equity		3,277				3,409
Total liabilities, minority interests and shareholders’ equity		$	8,491			$	8,195

(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,
	2008			2007
	in millions
NET CASH PROVIDED BY OPERATING ACTIVITIES (Note 5)	$	987		$	810
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(543		)	(353		)
Investments in internal use software	(82		)	(67		)
Investments in and advances to equity investees	(89		)	(66		)
Acquisition of businesses, net of cash acquired	(142		)	(20		)
Proceeds from the sale of an equity investment	64			35
Investments in marketable securities—acquisitions	(390		)	(405		)
Investments in marketable securities—liquidations	409			395
Purchases of other investments	(62		)	(57		)
Other, net	(13		)	23
Net cash used in investing activities	(848		)	(515		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings	76			15
Payments on borrowings and capital lease obligations	(152		)	(144		)
Dividend payments on common stock	(122		)	(89		)
Proceeds from sale of common stock held by employee benefit trust	63			14
Repurchases of common stock	(128		)	(335		)
Other, net	26			(37		)
Net cash used in financing activities	(237		)	(576		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(53		)	18
Net decrease in cash and cash equivalents	(151		)	(263		)
Cash and cash equivalents at beginning of year	577			840
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	426		$	577

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

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

	Engine		Power Generation		Components		Distribution		Non-segment items (1)			Total
	in millions
Three months ended December 31, 2008
External sales	$	1,590	$	675	$	468	$	555	$	—		$	3,288
Intersegment sales		346		212		208		2		(768	)		—
Total sales		1,936		887		676		557		(768	)		3,288
Depreciation and amortization(2)	47		10		16		8		―			81
Research, development and engineering expense	71		10		21		―		―			102
Equity, royalty and interest income from investees	8		6		4		33		—			51
Restructuring charges	―		―		―		―		37			37
Interest income	3		―		―		1		—			4
Segment EBIT	25		75		2		64		(37		)	129

Three months ended September 28, 2008
External sales	$	1,927	$	653	$	535	$	578	$	—		$	3,693
Intersegment sales	352		235		266		3		(856		)	—
Total sales	2,279		888		801		581		(856		)	3,693
Depreciation and amortization(2)	43		9		16		6		—			74
Research, development and engineering expense	75		11		27		—		—			113
Equity, royalty and interest income from investees	26		6		3		31		—			66
Interest income	2		1		1		—		—			4
Segment EBIT	160		108		61		61		(10		)	380

Three months ended December 31, 2007
External sales	$	1,862	$	645	$	542	$	467	$	—		$	3,516
Intersegment sales		293		195		235		1		(724	)		—
Total sales		2,155		840		777		468		(724	)		3,516
Depreciation and amortization(2)	44		11		16		3		―			74
Research, development and engineering expense	63		9		21		―		―			93
Equity, royalty and interest income from investees	26		5		3		25		—			59
Interest income	6		2		1		—		—			9
Segment EBIT	120		86		47		56		15			324

For the year ended December 31, 2008
External sales	$	7,432	$	2,601	$	2,154	$	2,155	$	—		$	14,342
Intersegment sales		1,378		899		998		9		(3,284	)		—
Total sales		8,810		3,500		3,152		2,164		(3,284	)		14,342
Depreciation and amortization(2)	180		41		65		25		―			311
Research, development and engineering expense	286		41		95		―		―			422
Equity, royalty and interest income from investees	99		23		14		117		—			253
Restructuring charges	―		―		―		―		37			37
Interest income	10		3		3		2		—			18
Segment EBIT	600		376		177		242		(102		)	1,293

For the year ended December 31, 2007
External sales	$	7,129	$	2,375	$	2,007	$	1,537	$	—		$	13,048
Intersegment sales		1,053		685		925		3		(2,666	)		—
Total sales		8,182		3,060		2,932		1,540		(2,666	)		13,048
Depreciation and amortization(2)	176		42		59		11		―			288
Research, development and engineering expense	222		34		73		―		―			329
Equity, royalty and interest income from investees	92		17		4		92		—			205
Interest income	26		6		3		1		—			36
Segment EBIT	589		334		153		187		(36		)	1,227

(1) Includes intercompany eliminations and unallocated corporate expenses. For the three months ended and the year ended December 31, 2008, Non-segment includes a $36 million decrease in cash surrender value in corporate owned life insurance (COLI).

(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.

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 28,		December 31,		December 31,		December 31,
	2008			2008		2007		2008		2007
	in millions
Segment EBIT	$		129	$	380	$	324	$	1,293	$	1,227
Less:
Interest expense	9			10		14		42		58
Income before income taxes and minority interests	$	120		$	370	$	310	$	1,251	$	1,169

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Earnings before interest, taxes and minority interests (EBIT)

We define EBIT as earnings before interest expense, income tax expense and minority interests in income 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 income, for each of the applicable periods:

	Three Months Ended									For the years ended
	December 31,			September 28,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
	in millions
Earnings before interest, income taxes and minority interests	$	129		$	380		$	324		$	1,293		$	1,227

EBIT as a percentage of net sales	3.9		%	10.3		%	9.2		%	9.0		%	9.4		%

Less:
Interest expense	9			10			14			42			58
Income tax expense	15			123			97			387			381
Minority interests in income of consolidated subsidiaries	16			18			15			63			49
Net income	$	89		$	229		$	198		$	801		$	739

Net income as a percentage of net sales	2.7		%	6.2		%	5.6		%	5.6		%	5.7		%

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.

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 28,			December 31,		December 31,		December 31,
		2008			2008			2007		2008		2007
	in millions
North American distributors		$	28		$	26		$	24	$	100	$	83
Dongfeng Cummins Engine Company, Ltd.		5			16			12		55		41
Chongqing Cummins Engine Company, Ltd.		7			9			7		30		22
Shanghai Fleetguard Filter Co. Ltd.		1			2			2		8		6
Tata Cummins Ltd.		―			―			4		7		13
Cummins MerCruiser Diesel Marine LLC		(2		)	(1		)	2		3		11
All others		6			9			4		28		16
Cummins share of net income		45			61			55		231		192
Royalty and interest income		6			5			4		22		13
Equity, royalty and interest income from investees		$	51		$	66		$	59	$	253	$	205

NOTE 2. RESTRUCTURING CHARGES

We have executed restructuring actions primarily in the form of voluntary and involuntary separation programs in the fourth quarter of 2008. These actions were in response to the continued deterioration we saw in our U.S. businesses and most key markets around the world in the second half of 2008, as well as a reduction in orders in most U.S. and global markets for 2009. We reduced our worldwide professional workforce by approximately 650 employees. We offered a voluntary retirement package to certain active professional employees in the United States based on a clearly defined set of criteria. We also took involuntary actions which included certain hourly employees. The compensation packages contained salary and continuation of benefits, including health care, life insurance and outplacement services. The voluntary retirement package was accepted by approximately 150 employees. The remaining reductions of approximately 500 employees were involuntary. The expenses recorded during the year ended December 31, 2008 included severance costs related to both voluntary and involuntary terminations. During 2008, we incurred total pretax expenses related to the restructuring initiative of approximately $37 million.

Employee termination and severance costs were recorded based on approved plans developed by the businesses and corporate management which specified positions to be eliminated, benefits to be paid under existing severance plans or statutory requirements and the expected timetable for completion of the plan. Estimates of restructuring were made based on information available at the time charges were recorded. Due to the inherent uncertainty involved, actual amounts paid for such activities may differ from amounts initially recorded and we may need to revise previous estimates.

CUMMINS INC. AND SUBSIDIARIES

SELECTED FOOTNOTE DATA

(Unaudited)

NOTE 3. OTHER (EXPENSE) INCOME

Other (expense) income included the following:

		Three months ended											For the years ended
		December 31,				September 28,				December 31,			December 31,			December 31,
		2008				2008				2007			2008			2007
	in millions
Other (expense) income:
Change in cash surrender value of corporate owned life insurance		$	(36		)	$	―			$	―		$	(36	)	$		―
Foreign currency (losses) gains		(23			)	(10			)	12			(46		)	28
Other, net		9				3				1			12			5
Total other (expense) income, net		$		(50	)	$		(7	)	$		13	$	(70	)	$	33

NOTE 4. INCOME TAXES

Our effective tax rate in the fourth quarter of 2008 was 12.5 percent compared to 31.3 percent for 2007. The decrease is primarily due to greater foreign earnings in 2008, which are subject to lower tax rates. The fourth quarter effective tax rate also includes a $10 million (0.8 percent) reduction due to the legislative reinstatement of the U.S. research tax credit. The full-year 2008 effective tax rate was 30.9 percent and we expect our full-year 2009 effective tax rate to be sustained at approximately 31 percent.

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, 2008 and 2007 was $314 million and $290 million, respectively.