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

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2012

The following table summarizes our financial instruments recorded at fair value in our Condensed Consolidated Balance Sheets at September 30, 2012:

	Fair Value Measurements Using
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
In millions	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale debt securities
Debt mutual funds	$	78	$	65	$	—	$	143
Bank debentures	—		50		—		50
Certificates of deposit	—		32		—		32
Government debt securities-non-U.S.	—		3		—		3
Corporate debt securities	—		2		—		2

Available-for-sale equity securities
Financial services industry	9		—		—		9

Derivative assets
Interest rate contracts	—		88		—		88
Commodity swap contracts	—		6		—		6
Foreign currency forward contracts	—		5		—		5
Commodity call option contracts	—		1		—		1
Total assets	$	87	$	252	$	—	$	339

Derivative liabilities
Foreign currency forward contracts	—		1		—		1
Total liabilities	$	—	$	1	$	—	$	1

The following table summarizes our financial instruments recorded at fair value in our Condensed Consolidated Balance Sheets at December 31, 2011:

	Fair Value Measurements Using
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
In millions	(Level 1)		(Level 2)		(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