Annual report pursuant to Section 13 and 15(d)

EARNINGS PER SHARE

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EARNINGS PER SHARE
 12 Months Ended
Dec. 31, 2012
EARNINGS PER SHARE  
EARNINGS PER SHARE

NOTE 20. EARNINGS PER SHARE

        We calculate basic earnings per share (EPS) of common stock by dividing net income attributable to Cummins Inc. by the weighted-average number of common shares outstanding for the period. The calculation of diluted EPS assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. We exclude shares of common stock held in the EBT (see Note 15, "SHAREHOLDERS' EQUITY") from the calculation of the weighted-average common shares outstanding until those shares are distributed from the EBT to the RSP. Following are the computations for basic and diluted earnings per share:

 
   Years ended December 31,  
Dollars in millions, except per share amounts
   2012   2011   2010  

Net income attributable to Cummins Inc. 

   $ 1,645   $ 1,848   $ 1,040  
               

Weighted-average common shares outstanding

                    

Basic

     189,286,821     192,972,211     196,699,155  

Dilutive effect of stock compensation awards

     381,883     625,667     449,252  
               

Diluted

     189,668,704     193,597,878     197,148,407  
               

Earnings per common share attributable to Cummins Inc.

                    

Basic

   $ 8.69   $ 9.58   $ 5.29  

Diluted

     8.67     9.55     5.28  

        The weighted-average diluted common shares outstanding for 2012, 2011 and 2010 excludes the effect of 453,893, 177,460 and 7,795 weighted-average shares, respectively, of common stock options, since such options had an exercise price in excess of the monthly average market value of our common stock during that year.