2. Disclosure Regarding Forward-Looking Statements
& non-GAAP Financial Measures
This presentation contains certain forward-looking information.
Any forward-looking statement involves risk and uncertainty.
The Company’s future results may be affected by changes in general
economic conditions and by the actions of customers and competitors.
Actual outcomes may differ materially from what is expressed in any
forward-looking statement. A more complete disclosure about forward-
looking statements begins on page 61 of our 2006 Form 10-K, and it applies
to this presentation.
This presentation contains certain non-GAAP financial measures such as
earnings before interest and taxes (EBIT). Please refer to our website
(www.cummins.com) for the reconciliation of EBIT to GAAP financial
measures.
3. 2006 – The Best Year in Our History
Revenue $11.4B
EBIT $ 1.2B
Net earnings $715M
EPS $ 7.10
Cash flow $840M
Debt to capital 22%
Return on Average Net Assets 31%
Return on Equity 26%
4. Outperforming Peer Group
137% Growing net income
CAGR Since 2003
faster than revenue
75% Converting more
income into cash
37%
22% 18%
13%
Revenue Net Income Operating Cash
Flow
CMI Peer Group Median
5. 2007 and Beyond –
Building on Our Strategic Principles
Complementary Businesses
Low Cost Producer
Create Shareholder Value
Profitable Growth
Create the Right Environment
6. Diversified Global Power Leader
Four Complementary Businesses
Engines Power Distribution Components
Generation
7. Low Cost Producer
Drive for Productivity
Manufacturing
Technical
Shared Services
Six Sigma
Global Sourcing
9. Profitable Growth – Engine Business
1.4
Light Duty Diesel in
1.2
Engine Production (Millions)
U.S. and China 1.0
13- and 11-liter 0.8
0.6
Engines in China
0.4
Market Share Gains 0.2
0.0
Midrange Engine 2006 Organic New 2010
Growth Platforms
Capacity
In 2010, 25% of our engine volume
will come from new engine platforms.
10. Profitable Growth – Power Generation
35% Global Generator Set Consumption (Total Output)
Pursuing market Approximate $7 Billion Annual Global Market
30%
leadership in Top 8 regions
92% of total
commercial 25%
Market Leader (# 1 or # 2)
generators 20%
Leader in some segments
Not a market leader
Expanding into 15%
adjacent consumer 10%
markets 5%
0%
North Western China Middle India Southeast Latin Africa All Others
America Europe East Asia America
11. Profitable Growth – Distribution
2011
2006
2001
$3.2B $5.4B $8B
Joint Venture Company Owned Independent
Revenues through our distribution channel are growing 10% CAGR.
In 2011, nearly 90% of revenue will flow through fully or partially
owned distributors.
12. Profitable Growth – Components
Evolving Global Emission Standards
Strategic advantage in Accelerates Market Growth for
Diesel Catalytic Exhaust
emissions compliance $6
Significant future $5
Global Market Size ($B)
growth in revenue and
$4
earnings
$3
Multiple new product
introductions $2
We have 30% of
Winning non-CMI the market today
$1
business
$0
2006 2010
17. Cummins Inc.
Q1 2007 LTM Revenue by Segment
Components
Q1 2007 – Great Segment 17%
Quarter
Engine
Strong global demand Segment 54%
Distribution
for our product Segment 10%
Year-over-year
growth in revenue
and earnings
Investing in profitable
growth opportunities Power Gen
Segment 19%
Q1 2007 LTM Data
Sales: $11.5 billion
EBIT: $1,167 million
EBIT Margin: 10.1% (Target: 7-10%)
18. Cummins Inc.
Q1 2007 LTM Revenue by Marketing Territory
Africa/Middle East
International revenue Canada 5%
6%
is 51% of consolidated
revenue Mexico/Latin
America
International revenue 8%
was 54% in the first
quarter
United States
Most international 49%
areas growing at Asia/Australia
17%
double digit rate
Europe/CIS
15%
30. Non-GAAP Reconciliation – EBIT
Three Months Ended
Millions April 1, April 2, December 31,
2007 2006 2006
Segment EBIT $ 243 $ 255 $ 303
Less: Interest Expense $ 16 $ 27 $ 20
Earnings before income taxes and minority $ 227 $ 228 $ 283
interests
EBIT = Earnings before interest, taxes, and minority interests.
We use EBIT to assess and measure the performance of our operating segments and also as a component in measuring our
variable compensation programs. The table above reconciles EBIT, a non-GAAP financial measure, to our consolidated
earnings before income taxes and minority interests, for each of the applicable periods.
31. Non-GAAP Reconciliation – EBITDA
Three Months Ended
Millions April 1, April 2, December 31,
2007 2006 2006
Segment EBIT $ 243 $ 255 $ 303
Depreciation & Amortization $ 68 $ 74 $ 74
EBITDA $ 311 $ 329 $ 377
EBITDA = Earnings before interest, taxes, minority interests, depreciation, and amortization.
32. Non-GAAP Reconciliation – Cash From
Operations Excluding Pension Contributions
Three Months Ended
Millions April 1, 2007 April 2, 2006
Cash provided by operations $ (113) $ 18
Add back: pension contributions $ 61 $ 41
Cash provided by operations
$ (52) $ 59
excluding pension contributions
We believe cash provided by operations excluding pension contributions is a useful measure of our operating performance for
the periods presented as it illustrates our operating performance without regard to funding decisions. This measure is not in
accordance with, or an alternative for, GAAP and may not be consistent with measures used by other companies. It should
be considered supplemental data.
33. Non-GAAP Reconciliation – Net
Assets
April 1, April 2,
Millions
2007 2006
Net assets for operating segments $ 4,041 $ 3,609
Liabilities deducted in computing net assets 3,516 3,385
Minimum pension liability excluded from net assets - (837)
Pension and other postretirement liabilities (824) -
Deferred tax assets not allocated to segments 689 814
Debt-related costs not allocated to segments 26 26
Total assets $ 7,448 $ 6,997
34. Non-GAAP Reconciliation – Equity Used for
Return on Equity Calculation
April 1, April 2,
Millions
2007 2006
Equity used for return on equity calculation $ 3,480 $ 2,501
less Defined other postretirement benefits 5 -
less Defined benefit pension plans 538 -
less Minimum pension liability adjustment - 523
Total shareholder’s equity $ 2,937 $ 1,978
