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

___________________________________________________
(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.