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

Annual report pursuant to Section 13 and 15(d)

MARKETABLE SECURITIES (Tables)

MARKETABLE SECURITIES (Tables)

12 Months Ended

Dec. 31, 2014

A summary of marketable securities, all of which are classified as current, was as follows:



	December 31,
	2014						2013
In millions	Cost		Gross unrealized gains/(losses)		Estimated fair value		Cost		Gross unrealized gains/(losses)			Estimated fair value
Available-for-sale
Level 1^{(1) (2)}
Equity securities⁽³⁾	$	—	$	—	$	—	$	10	$	13		$	23
Total Level 1	—		—		—		10		13			23
Level 2^{(2) (4)}
Debt mutual funds	75		1		76		99		2			101
Equity mutual funds	9		—		9		—		—			—
Bank debentures	6		—		6		2		—			2
Certificates of deposit	—		—		—		22		—			22
Government debt securities	2		—		2		3		(1		)	2
Total Level 2	92		1		93		126		1			127
Total marketable securities	$	92	$	1	$	93	$	136	$	14		$	150

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⁽¹⁾ The fair value of Level 1 securities is estimated primarily by referencing quoted prices in active markets for identical assets.

⁽²⁾We revised 2013 balances to classify $72 million as Level 2 assets instead of Level 1.

⁽³⁾In the first quarter of 2013, we realized a $9 million gain on the sale of equity securities.

⁽⁴⁾The fair value of Level 2 securities is estimated primarily using actively quoted prices for similar instruments from brokers and observable inputs, including market transactions and third-party pricing services. We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during 2014 and 2013.

Schedule of proceeds from sales and maturities and gross realized gains and losses

The proceeds from sales and maturities of marketable securities and gross realized gains from the sale of AFS securities were as follows:



	Years ended December 31,
In millions	2014		2013		2012
Proceeds from sales and maturities of marketable securities	$	336	$	525	$	585
Gross realized gains from the sale of available-for-sale securities⁽¹⁾	14		14		3

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⁽¹⁾ Gross realized losses from the sale of available-for-sale securities were immaterial.

Summary of fair value of AFS investments in debt securities by contractual maturity

At December 31, 2014, the fair value of available-for-sale investments in debt securities that utilize a Level 2 fair value measure is shown by contractual maturity below:



Maturity date	(in millions)
1 year or less	$	77
1 - 5 years	6
5 - 10 years	1
Total	$	84

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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