Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF INCOME

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CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
NET SALES $ 17,334 [1] $ 18,048 [1] $ 13,226 [1]
Cost of sales 12,826 13,459 10,058
GROSS MARGIN 4,508 4,589 3,168
OPERATING EXPENSES AND INCOME      
Selling, general and administrative expenses 1,900 1,837 1,487
Research, development and engineering expenses (Note 1) 728 629 414
Equity, royalty and interest income from investees (Note 3) 384 416 351
Gain on sale of businesses (Note 2) 6 121  
Other operating income (expense), net (16) 21 (16)
OPERATING INCOME 2,254 2,681 1,602
Interest income 25 34 21
Interest expense (Note 10) 32 44 40
Other income (expense), net 24   34
INCOME BEFORE INCOME TAXES 2,271 2,671 1,617
Income tax expense (Note 4) 533 725 477
CONSOLIDATED NET INCOME 1,738 1,946 1,140
Less: Net income attributable to noncontrolling interests 93 98 100
NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 1,645 $ 1,848 $ 1,040
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC. (Note 20)      
Basic (in dollars per share) $ 8.69 $ 9.58 $ 5.29
Diluted (in dollars per share) $ 8.67 $ 9.55 $ 5.28
[1] Includes sales to nonconsolidated equity investees of $2,427 million, $2,594 million and $2,210 million for the years ended December 31, 2012, 2011 and 2010, respectively.