EXHIBIT 12

 

CUMMINS INC. AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

 

In millions		2013				2012				2011				2010				2009
Earnings
Income before income taxes (1)		$	2,119			$	2,271			$	2,671			$	1,617			$	640
Add
Fixed charges		112				104				106				95				87
Amortization of capitalized interest		1				2				2				3				5
Distributed income of equity investees		271				329				341				178				215
Less
Equity in earnings of investees		325				347				375				321				196
Capitalized interest		7				7				4				5				6
Earnings before fixed charges		$	2,171			$	2,352			$	2,741			$	1,567			$	745
Fixed charges
Interest expense (2)		$	41			$	32			$	44			$	40			$	35
Capitalized interest		7				7				4				5				6
Amortization of debt discount and deferred costs		2				6				2				1				2
Interest portion of rental expense (3)		62				59				56				49				44
Total fixed charges		$	112			$	104			$	106			$	95			$	87
Ratio of earnings to fixed charges (4)		19.4				22.6				25.9				16.5				8.6

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⁽¹⁾ For the year ended December 31, 2012, consolidated net income included $52 million of restructuring and other charges, a $6 million gain related to adjustments from our 2011 divestitures and a $20 million charge related to legal matters. For the year ended December 31, 2011, consolidated net income included a $68 million gain related to the disposition of certain assets and liabilities of our exhaust business and a $53 million gain recorded for the disposition of certain assets and liabilities of our light-duty filtration business, both from the Components segment, and a $38 million gain related to flood damage recoveries from the insurance settlement related to a June 2008 flood in Southern Indiana. For the year ended December 31, 2010, consolidated net income included $32 million in Brazil tax recoveries and $2 million in flood damage expenses. For the year ended December 31, 2009, consolidated net income included $99 million in restructuring and other charges and a gain of $12 million related to flood damage recoveries.

⁽²⁾ The interest amount in the table above does not include interest expense associated with uncertain tax positions. In September 2013, we issued $1 billion of senior unsecured debt.

⁽³⁾ Amounts represent those portions of rent expense that are reasonable approximations of interest costs.

⁽⁴⁾ We have not issued preferred stock. Therefore, the ratio of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above.