EXHIBIT 12
 
CUMMINS INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
 
 
 
Years ended December 31,
In millions
 
2015
 
2014
 
2013
 
2012
 
2011
Earnings
 
 

 
 

 
 
 
 
 
 
Income before income taxes (1)
 
$
2,025

 
$
2,434

 
$
2,119

 
$
2,271

 
$
2,671

Add
 
 

 
 

 
 
 
 
 
 
Fixed charges
 
140

 
138

 
112

 
104

 
106

Amortization of capitalized interest
 
2

 
1

 
1

 
2

 
2

Distributed income of equity investees
 
248

 
228

 
271

 
329

 
341

Less
 
 

 
 

 
 
 
 
 
 
Equity in earnings of investees
 
273

 
330

 
325

 
347

 
375

Capitalized interest
 
3

 
7

 
7

 
7

 
4

Earnings before fixed charges
 
$
2,139

 
$
2,464

 
$
2,171

 
$
2,352

 
$
2,741

 
 
 
 
 
 
 
 
 
 
 
Fixed charges
 
 

 
 
 
 
 
 
 
 
Interest expense (2)
 
$
65

 
$
64

 
$
41

 
$
32

 
$
44

Capitalized interest
 
3

 
7

 
7

 
7

 
4

Amortization of debt discount and deferred costs
 
3

 
3

 
2

 
6

 
2

Interest portion of rental expense (3)
 
69

 
64

 
62

 
59

 
56

Total fixed charges
 
$
140

 
$
138

 
$
112

 
$
104

 
$
106

 
 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges (4)
 
15.3

 
17.9

 
19.4

 
22.6

 
25.9

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(1) For the year ended December 31, 2015, income before income taxes included a $211 million charge related to impairment of light-duty diesel assets, $90 million of restructuring actions and other charges and a $60 million charge related to a loss contingency. 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.
(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.