Cummins Inc. Annual report pursuant to Section 13 and 15(d)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2012

The following table summarizes our financial instruments recorded at fair value in our Consolidated Balance Sheets at December 31, 2012:

	Fair Value Measurements Using

In millions	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Available-for-sale debt securities
Debt mutual funds	$	100	$	42	$	—	$	142
Bank debentures		—		45		—		45
Certificates of deposit		—		47		—		47
Government debt securities-non-U.S.		—		3		—		3
Corporate debt securities		—		1		—		1
Available-for-sale equity securities
Financial services industry		9		—		—		9
Derivative assets
Interest rate contracts		—		88		—		88
Foreign currency forward contracts		—		3		—		3
Commodity swap contracts		—		1		—		1
Commodity call option contracts		—		1		—		1

Total assets	$	109	$	231	$	—	$	340

Derivative liabilities
Commodity swap contracts		—		2		—		2
Commodity put option contracts		—		1		—		1

Total liabilities	$	—	$	3	$	—	$	3

The following tables summarize our financial instruments recorded at fair value in our Consolidated Balance Sheets at December 31, 2011:

	Fair Value Measurements Using

In millions	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Available-for-sale debt securities
Debt mutual funds	$	53	$	64	$	—	$	117
Bank debentures		—		82		—		82
Certificates of deposit		—		66		—		66
Government debt securities-non-U.S.		—		3		—		3
Corporate debt securities		—		2		—		2
Available-for-sale equity securities
Financial services industry		7		—		—		7
Derivative assets
Interest rate contracts		—		82		—		82

Total assets	$	60	$	299	$	—	$	359

Derivative liabilities
Commodity swap contracts		—		22		—		22
Foreign currency forward contracts		—		8		—		8

Total liabilities	$	—	$	30	$	—	$	30