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

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 29, 2013

Summary of financial instruments recorded at fair value

The following table summarizes our financial instruments recorded at fair value in our Condensed Consolidated Balance Sheets at September 29, 2013:



	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	$	61	$	31	$	—	$	92
Bank debentures	—		9		—		9
Certificates of deposit	—		36		—		36
Government debt securities-non-U.S.	—		3		—		3

Available-for-sale equity securities
Information technology industry	22		—		—		22

Derivative assets
Interest rate contracts	—		54		—		54
Foreign currency forward contracts	—		5		—		5
Commodity call option contracts	—		1		—		1
Total assets	$	83	$	139	$	—	$	222

Derivative liabilities
Commodity swap contracts	—		5		—		5
Foreign currency forward contracts	—		2		—		2
Commodity put option contracts	—		1		—		1
Total liabilities	$	—	$	8	$	—	$	8

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

Fair value and carrying value of total debt

Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair value and carrying value of total debt, including current maturities, at September 29, 2013 and December 31, 2012, are set forth in the table below. The carrying values of all other receivables and liabilities approximated fair values. The fair value of financial instruments is derived from Level 2 inputs.



In millions	September 29, 2013		December 31, 2012
Fair value of total debt	$	1,952	$	926
Carrying value of total debt	1,793		775