Cummins Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DEBT

DEBT

9 Months Ended

Sep. 29, 2013

NOTE 10. DEBT

As a well-known seasoned issuer, we filed an automatic shelf registration for an undetermined amount of debt and equity securities with the SEC on September 16, 2013. Under this shelf registration we may offer, from time to time, debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

In September 2013, we issued $1 billion aggregate principal amount of senior notes consisting of $500 million aggregate principal amount of 3.65% senior unsecured notes due in 2023 and $500 million aggregate principal amount of 4.875% senior unsecured notes due in 2043. We received net proceeds of $979 million. The senior notes pay interest semi-annually on April 1 and October 1, commencing on April 1, 2014. The indenture governing the senior notes contains covenants that, among other matters, limit (i) our ability to consolidate or merge into, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our and our subsidiaries' assets to another person, (ii) our and certain of our subsidiaries' ability to create or assume liens and (iii) our and certain of our subsidiaries' ability to engage in sale and leaseback transactions.

A summary of long-term debt was as follows:



In millions	September 29, 2013			December 31, 2012
Long-term debt
Export financing loan, 4.5%, due 2013	$	—		$	23
Senior notes, 3.65%, due 2023	500			—
Debentures, 6.75%, due 2027	58			58
Debentures, 7.125%, due 2028 ⁽¹⁾	250			250
Senior notes, 4.875%, due 2043	500			—
Debentures, 5.65%, due 2098 (effective interest rate 7.48%)	165			165
Credit facilities related to consolidated joint ventures	129			88
Other	73			69
	1,675			653
Unamortized discount	(48		)	(35		)
Fair value adjustments due to hedge on indebtedness	54			88
Capital leases	97			53
Total long-term debt	1,778			759
Less: Current maturities of long-term debt	(47		)	(61		)
Long-term debt	$	1,731		$	698

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⁽¹⁾In November 2005, we entered into an interest rate swap to effectively convert our $250 million debt issue, due in 2028, from a fixed rate of 7.125 percent to a floating rate based on a LIBOR spread (see Note 13).

Principal payments required on long-term debt during the next five years are as follows:



	Required Principal Payments
In millions	2013		2014		2015		2016		2017
Payment	$	16	$	45	$	85	$	63	$	14

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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