EXHIBIT 12
 
CUMMINS INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
 
 
 
Six months ended
In millions
 
July 1,
2018
 
July 2,
2017
Earnings
 
 

 
 

Income before income taxes
 
$
1,238

 
$
1,147

Add
 
 

 
 

Fixed charges
 
91

 
78

Amortization of capitalized interest
 
1

 
1

Distributed income of equity investees
 
31

 
49

Less
 
 

 
 

Equity in earnings of investees
 
194

 
181

Capitalized interest
 
1

 
3

Noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges
 
4

 
—

Earnings before fixed charges
 
$
1,162


$
1,091

 
 
 
 
 
Fixed charges
 
 

 
 
Interest expense(1)
 
$
52

 
$
39

Capitalized interest
 
1

 
3

Amortization of debt discount and deferred costs
 
1

 
1

Interest portion of rental expense(2)
 
37

 
35

Total fixed charges
 
$
91

 
$
78

 
 
 
 
 
Ratio of earnings to fixed charges(3)
 
12.8

 
14.0

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(1) The interest amount in the table above does not include interest expense associated with uncertain tax positions.
(2) Amounts represent those portions of rent expense that are reasonable approximations of interest costs.
(3) We have not issued preferred stock. Therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above.