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A New Cummins:
Sustainable Performance
Jim Kelly
President, Engine Business
JPMorgan Basics & Industrials Conference
June 12, 2007
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.



                                                                             2
Creating Greater Shareholder Value


  Doubled our revenue in 5 years
  Highest period of net earnings as a percent of
  sales in over 40 years
  Generated $4.2 billion in EBITDA since 2003
  Improved debt to capital from 60% in 2003 to 19%
  today
  Actively repurchased 3.2 million shares in 2 years
  Exceeded both ROANA and ROE targets for over
  three years
                                                       3
We Have Outperformed Our Peer
Group
                                               Growing net income
                                      137%
                                               faster than revenue
 CAGR Since 2003




                                                                     Converting
                                                           75%       more income
                                                                     into cash
                                             37%
                   22%                                           18%
                         13%


                   Revenue            Net Income         Operating Cash
                                                             Flow

                               CMI   Peer Group Median                             4
Confident in Our Ability to Perform in
2007 and Beyond

  We are executing on our Strategic
  Principles

  Our customers recognize Cummins for our
  technology leadership

  We are investing in the next generation of
  profitable growth opportunities

                                               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       Components     Distribution
              Generation
                                                         7
Low Cost Producer

 Drive for Productivity
  Manufacturing
  Technical
  Shared Services

 Six Sigma
 Global Sourcing


                          8
Building Stable Diversified Earnings
 Base

        Significant contributor to total EBIT

China                                     Distribution




India                                     Aftermarket


                                                         9
Our Customers Recognize Cummins
for Our Technology Leadership


  Virtually integrating through OEM partnerships
  Global technology leader in constantly
  changing emissions environment




                                                   10
Virtually Integrating Through
OEM Partnerships
 Low Cost
 Strong Brand
 Global Presence
 Customer Support Excellence
 Technology Leadership



                                11
Unique Technology Integration

 Fuel Systems
 Electronic Controls
 Air Handling Systems
 Filtration and Aftertreatment
 Combustion Technologies



                                 12
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.


                                                                                                          13
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




                                                                                                                 14
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.
                                                                        15
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
                                                                                         16
Confident in Our Ability to Perform in
2007 and Beyond

  We are executing on our Strategic
  Principles

  Our customers recognize Cummins for our
  technology leadership

  We are investing in the next generation of
  profitable growth opportunities

                                               17
18
Appendix
Cummins Inc.
                                     Q1 2007 LTM Revenue by Segment
                                               Components
      Q1 2007 – Great Quarter                  Segment 17%
       Strong global demand                                     Engine
       for our product                                       Segment 54%
                                Distribution
       Year-over-year          Segment 10%
       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                                                       20
EBIT Margin: 10.1% (Target: 7-10%)
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%
                                                                             21
Cummins – Historical Performance

                                  Sales                                                         EBIT
            $14,000                                                          $1,400
                                                       $11,501
                                                                                                           $1,179 $1,167
            $12,000                                                          $1,200
                                                 $11,362

                                        $9,918
            $10,000                                                          $1,000                 $907
                               $8,438
$ Millons




                                                                 $ Millons
             $8,000                                                           $800
                      $6,296
                                                                                             $543
             $6,000                                                           $600

             $4,000                                                           $400

                                                                                      $181
             $2,000                                                           $200

                $0                                                              $0
                       2003     2004     2005     2006 Q1 '07                         2003   2004   2005    2006 Q1 '07
                                                        LTM                                                       LTM

                                                                                                                           22
Engine Segment
                                    Q1 2007 LTM Revenue by Product
         Emission regulations                       Parts and
                                                   Service 21%
         create opportunities                                               Midrange
                                                                           (3-9L) 37%
         Aftermarket revenue
         creates stable earnings
         Emerging markets
         Strategic OEM
         partnerships                   High
                                     Horsepower
                                    (19-91L) 15%


Q1 2007 LTM Segment Data
                                                                  Heavy-Duty
Sales: $7.5 billion                                              (10-15L) 27%
EBIT: $682 million                                                                      23
EBIT Margin: 9.1% (Target: 7-10%)
Engine Segment
                      Q1 2007 LTM Revenue by Market Application
         Heavy-duty Truck                               Stationary
                                                        Power 10%
         demand remains strong          Mining/Rail                     Heavy-duty
                                        Govt/O&G                        truck 31%
         Share gains in Medium-         Marine 14%
         duty Truck & Bus
         Off-highway markets
         supported by non-          Construction
         residential construction    & Ag 16%
         and commodity markets
                                                                       Medium-duty
                                                   Light-duty        Truck & bus 13%
Q1 2007 LTM Segment Data
                                                   Automotive
Sales: $7.5 billion                                & RV 16%
EBIT: $682 million                                                                     24
EBIT Margin: 9.1% (Target: 7-10%)
Engines – Historical Performance

                     Sales                                                Segment EBIT
     $8,000                                                 $800
                                       $7,511 $7,455                                     $733
                                                                                                $682
                              $6,657
     $7,000                                                 $700

                                                                                  $582
     $6,000                                                 $600
                     $5,424

     $5,000                                                 $500
$M




                                                       $M
     $4,000 $3,582                                          $400
                                                                           $328
     $3,000                                                 $300

     $2,000                                                 $200

                                                                   $62
     $1,000                                                 $100

        $0                                                    $0
              2003    2004     2005     2006 Q1 '07                2003    2004   2005   2006   Q1 '07
                                              LTM                                                LTM

                                                                                                         25
Power Generation Segment
                                   Q1 2007 LTM Revenue by Product
         Turnaround complete                            Alternators
                                        Commercial
                                                           19%
                                          56%
         Strengthening markets
         Expanding market share                                       Rental
                                                                       2%
         Consumer growth
         opportunities
         Growing project business                                     Consumer
                                                                        13%
         capability
                                                                    Power
                                                                  Electronics
                                                                      6%
Q1 2007 LTM Segment Data                              Energy
Sales: $2.6 billion                                  Solutions
                                                        4%
EBIT: $252 million                                                               26
EBIT Margin: 9.9% (Target: 7-9%)
Power Generation – Historical Performance

                         Sales                                              Segment EBIT
       $3,000                                                   $300
                                                                                                     $252
                                                  $2,555
                                                                $250
                                         $2,416
       $2,500                                                                                 $220

                                                                $200
                                $1,999
       $2,000          $1,842
                                                                                       $145
                                                                $150
  $M




                                                           $M
       $1,500 $1,329
                                                                $100
                                                                                $60
       $1,000
                                                                 $50

        $500
                                                                  $0

                                                                        ($19)
          $0                                                    ($50)
                2003    2004     2005     2006 Q1 '07                   2003    2004   2005   2006   Q1 '07
                                                LTM                                                   LTM

                                                                                                              27
Components Segment
                                   Q1 2007 LTM Revenue by Product
                                                       Specialty
         Strategic advantage in                        Filtration
                                                          6%
                                       Air Intake
         emissions compliance          Systems
                                                                            Turbocharger
                                          11%
         Significant future growth                                              27%
         in revenue and earnings
         Multiple new product
                                   Acoustic
         introductions             Exhaust
                                    12%
         Winning non-CMI                                                      Fuel
         business                                                           Systems
                                                                             16%
                                           Engine
                                          Filtration
Q1 2007 LTM Segment Data                                        Catalytic
                                            20%
Sales: $2.4 billion                                             Exhaust
EBIT: $100 million                                                8%                       28
EBIT Margin: 4.2% (Target: 7-9%)
Components – Historical Performance

                      Sales                                                 Segment EBIT
                                                              $120
     $3,000
                                                                                          $107
                                                                                                 $100
                                                $2,383        $100
     $2,500
                                       $2,281                                      $89
                                                                     $86    $84
                              $2,000
                                                               $80
     $2,000
                     $1,783




                                                         $M
$M




                                                               $60
     $1,500 $1,292


                                                               $40
     $1,000


                                                               $20
      $500


                                                                $0
        $0
                                                                     2003   2004   2005   2006   Q1 '07
              2003    2004     2005     2006 Q1 '07
                                                                                                  LTM
                                              LTM

                                                                                                          29
Distribution Segment
                                     Q1 2007 LTM Revenue by Product
                                                     Service
         Broadening product                           18%
         offering                                                Engines
                                                                  20%
         Expanding global
         coverage
         Increasing equity
         ownership
         Excelling in customer           Parts,
         support                        Filters, &
                                      Consumables
                                                                Power
                                           37%
                                                               Generation
Q1 2007 LTM Segment Data                                         25%
Sales: $1.4 billion
EBIT: $152 million                                                          30
EBIT Margin: 11.0% (Target: 8-10%)
Distribution – Historical Performance

                        Sales                                           Segment EBIT
     $1,600                                               $160                               $152
                                                                                      $144
                                     $1,385 $1,377
     $1,400                                               $140
                            $1,191
     $1,200                                               $120
                                                                               $107
                     $973
     $1,000                                               $100
                                                                        $79
$M




                                                     $M
      $800                                                 $80
              $669
      $600                                                 $60   $51

      $400                                                 $40

      $200                                                 $20

        $0                                                  $0
              2003   2004    2005     2006 Q1 '07                2003   2004   2005   2006   Q1 '07
                                            LTM                                               LTM

                                                                                                      31
Non-GAAP
Reconciliations
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.
                                                                                                                       33
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.
                                                                                                                     34
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.
                                                                                                                            35
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



                                                                                     36
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




                                                                             37

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cmi_070612_jpm

  • 1. A New Cummins: Sustainable Performance Jim Kelly President, Engine Business JPMorgan Basics & Industrials Conference June 12, 2007
  • 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. 2
  • 3. Creating Greater Shareholder Value Doubled our revenue in 5 years Highest period of net earnings as a percent of sales in over 40 years Generated $4.2 billion in EBITDA since 2003 Improved debt to capital from 60% in 2003 to 19% today Actively repurchased 3.2 million shares in 2 years Exceeded both ROANA and ROE targets for over three years 3
  • 4. We Have Outperformed Our Peer Group Growing net income 137% faster than revenue CAGR Since 2003 Converting 75% more income into cash 37% 22% 18% 13% Revenue Net Income Operating Cash Flow CMI Peer Group Median 4
  • 5. Confident in Our Ability to Perform in 2007 and Beyond We are executing on our Strategic Principles Our customers recognize Cummins for our technology leadership We are investing in the next generation of profitable growth opportunities 5
  • 6. 2007 and Beyond – Building on Our Strategic Principles Complementary Businesses Low Cost Producer Create Shareholder Value Profitable Growth Create the Right Environment 6
  • 7. Diversified Global Power Leader Four Complementary Businesses Engines Power Components Distribution Generation 7
  • 8. Low Cost Producer Drive for Productivity Manufacturing Technical Shared Services Six Sigma Global Sourcing 8
  • 9. Building Stable Diversified Earnings Base Significant contributor to total EBIT China Distribution India Aftermarket 9
  • 10. Our Customers Recognize Cummins for Our Technology Leadership Virtually integrating through OEM partnerships Global technology leader in constantly changing emissions environment 10
  • 11. Virtually Integrating Through OEM Partnerships Low Cost Strong Brand Global Presence Customer Support Excellence Technology Leadership 11
  • 12. Unique Technology Integration Fuel Systems Electronic Controls Air Handling Systems Filtration and Aftertreatment Combustion Technologies 12
  • 13. 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. 13
  • 14. 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 14
  • 15. 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. 15
  • 16. 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 16
  • 17. Confident in Our Ability to Perform in 2007 and Beyond We are executing on our Strategic Principles Our customers recognize Cummins for our technology leadership We are investing in the next generation of profitable growth opportunities 17
  • 18. 18
  • 20. Cummins Inc. Q1 2007 LTM Revenue by Segment Components Q1 2007 – Great Quarter Segment 17% Strong global demand Engine for our product Segment 54% Distribution Year-over-year Segment 10% 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 20 EBIT Margin: 10.1% (Target: 7-10%)
  • 21. 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% 21
  • 22. Cummins – Historical Performance Sales EBIT $14,000 $1,400 $11,501 $1,179 $1,167 $12,000 $1,200 $11,362 $9,918 $10,000 $1,000 $907 $8,438 $ Millons $ Millons $8,000 $800 $6,296 $543 $6,000 $600 $4,000 $400 $181 $2,000 $200 $0 $0 2003 2004 2005 2006 Q1 '07 2003 2004 2005 2006 Q1 '07 LTM LTM 22
  • 23. Engine Segment Q1 2007 LTM Revenue by Product Emission regulations Parts and Service 21% create opportunities Midrange (3-9L) 37% Aftermarket revenue creates stable earnings Emerging markets Strategic OEM partnerships High Horsepower (19-91L) 15% Q1 2007 LTM Segment Data Heavy-Duty Sales: $7.5 billion (10-15L) 27% EBIT: $682 million 23 EBIT Margin: 9.1% (Target: 7-10%)
  • 24. Engine Segment Q1 2007 LTM Revenue by Market Application Heavy-duty Truck Stationary Power 10% demand remains strong Mining/Rail Heavy-duty Govt/O&G truck 31% Share gains in Medium- Marine 14% duty Truck & Bus Off-highway markets supported by non- Construction residential construction & Ag 16% and commodity markets Medium-duty Light-duty Truck & bus 13% Q1 2007 LTM Segment Data Automotive Sales: $7.5 billion & RV 16% EBIT: $682 million 24 EBIT Margin: 9.1% (Target: 7-10%)
  • 25. Engines – Historical Performance Sales Segment EBIT $8,000 $800 $7,511 $7,455 $733 $682 $6,657 $7,000 $700 $582 $6,000 $600 $5,424 $5,000 $500 $M $M $4,000 $3,582 $400 $328 $3,000 $300 $2,000 $200 $62 $1,000 $100 $0 $0 2003 2004 2005 2006 Q1 '07 2003 2004 2005 2006 Q1 '07 LTM LTM 25
  • 26. Power Generation Segment Q1 2007 LTM Revenue by Product Turnaround complete Alternators Commercial 19% 56% Strengthening markets Expanding market share Rental 2% Consumer growth opportunities Growing project business Consumer 13% capability Power Electronics 6% Q1 2007 LTM Segment Data Energy Sales: $2.6 billion Solutions 4% EBIT: $252 million 26 EBIT Margin: 9.9% (Target: 7-9%)
  • 27. Power Generation – Historical Performance Sales Segment EBIT $3,000 $300 $252 $2,555 $250 $2,416 $2,500 $220 $200 $1,999 $2,000 $1,842 $145 $150 $M $M $1,500 $1,329 $100 $60 $1,000 $50 $500 $0 ($19) $0 ($50) 2003 2004 2005 2006 Q1 '07 2003 2004 2005 2006 Q1 '07 LTM LTM 27
  • 28. Components Segment Q1 2007 LTM Revenue by Product Specialty Strategic advantage in Filtration 6% Air Intake emissions compliance Systems Turbocharger 11% Significant future growth 27% in revenue and earnings Multiple new product Acoustic introductions Exhaust 12% Winning non-CMI Fuel business Systems 16% Engine Filtration Q1 2007 LTM Segment Data Catalytic 20% Sales: $2.4 billion Exhaust EBIT: $100 million 8% 28 EBIT Margin: 4.2% (Target: 7-9%)
  • 29. Components – Historical Performance Sales Segment EBIT $120 $3,000 $107 $100 $2,383 $100 $2,500 $2,281 $89 $86 $84 $2,000 $80 $2,000 $1,783 $M $M $60 $1,500 $1,292 $40 $1,000 $20 $500 $0 $0 2003 2004 2005 2006 Q1 '07 2003 2004 2005 2006 Q1 '07 LTM LTM 29
  • 30. Distribution Segment Q1 2007 LTM Revenue by Product Service Broadening product 18% offering Engines 20% Expanding global coverage Increasing equity ownership Excelling in customer Parts, support Filters, & Consumables Power 37% Generation Q1 2007 LTM Segment Data 25% Sales: $1.4 billion EBIT: $152 million 30 EBIT Margin: 11.0% (Target: 8-10%)
  • 31. Distribution – Historical Performance Sales Segment EBIT $1,600 $160 $152 $144 $1,385 $1,377 $1,400 $140 $1,191 $1,200 $120 $107 $973 $1,000 $100 $79 $M $M $800 $80 $669 $600 $60 $51 $400 $40 $200 $20 $0 $0 2003 2004 2005 2006 Q1 '07 2003 2004 2005 2006 Q1 '07 LTM LTM 31
  • 33. 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. 33
  • 34. 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. 34
  • 35. 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. 35
  • 36. 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 36
  • 37. 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 37