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 $5.0 billion in EBITDA since 2003
Improved debt to capital from 60% in 2003 to 17% today
Actively repurchased 5 million shares in 2 years
Exceeded both ROANA and ROE targets for over three
years
Grew revenue over 20% per year in the emerging markets
of China and India
3
4. Cummins Inc.
Where We’ve Been
Who We Are Historical Performance
Joint Venture Sales
Geographic Segment Consolidated Sales ($B) Unconsolidated ($B)
Components
Africa/Middle East
Canada 18%
6% R $11.4 $4.2
CAG R
5%
AG
United States
22%
Engine
%C
$9.9
48%
17
Mexico/Latin 53%
America $3.2
$8.4
Distribution
8%
10% $2.6 $2.6
$6.3
Asia/Australia
17%
Power Gen
Europe/CIS 19%
16%
Q307 LTM 2003 2004 2005 2006
2003 2004 2005 2006
Sales: $12.6B
Where We’re Headed
How We’re Getting There
Future Performance
Consolidated Sales ($B) Joint Venture Sales
Unconsolidated ($B)
Macro growth trends play to
AGR $20.0
12% C
$9.6
Cummins’ strengths
GR
CA
18%
Disciplined growth model
$11.4
$4.2
Demonstrated technology leadership
4
2006 2011
2006 2011
5. Demand for Energy and Fuel Efficiency
Energy independence and fuel economy
Dependence on reliable electric supply
Higher fuel costs and electricity consumption
5
6. Tougher Global Emission Standards
Off-
highway
2011-14
Europe
2009 China
US /
2010
Canada
2010
Australia
2008
India
Mexico Brazil
2010
2008 2009
6
7. Cultivating the Emerging Markets
CIS
Turkey GDP 6-7%
GDP 5%
China
GDP 9-11%
Nigeria
Vietnam
GDP 7%
GDP 7-8%
India
GDP 8%
7
8. Disciplined Growth Model
Earnings
Growth
Sales growth 12%
Debt/EBITDA 1.25-1.50
EBIT 10%
Liquidity $2B
R&D 3%
Creating
Capital exp. 3- 4%
Shareholder
Value
ROANA 25%
ROE 20% Managing
Disciplined Cash
Risk
Management
Cash on hand $300 to $500M
Working capital 16.5 to 17.5%
8
9. The Right Technology
Engines for EPA 2010
Mid-Range Heavy-Duty
Customer
Diverse applications Uptime
Needs
Power range Operational efficiency
Best value Low cost of ownership
Evolution of 2007 technology Evolution of 2007 technology
Proven SCR aftertreatment No NOx aftertreatment
HD XPI fuel system
9
10. Business Performance Targets
Sales Growth EBIT %
13% 8.5%
Engine Business
15% 10%
Power Generation
15% 11%
Distribution
20% 9%
Components
12% 10%
Cummins Inc.
10
11. Engine Segment
Where We’ve Been
Who We Are Historical Performance
Joint Venture Sales
Geographic
Market Application Consolidated Sales ($B) Unconsolidated ($B)
India 3%
Stationary $7.5
R GR
South Pacific 1% G
SE/NE Asia 5% $1.5
CA
Power 11% Heavy-duty
CA $6.7
23 %
truck 26% East Asia 4%
Mining/Rail $1.3
%
28
$1.2
Govt/O&G
US/Canada $5.4
Marine 14%
56%
Latin
America &
Mexico $0.8
$3.6
15%
EMEA
Medium-duty 16%
Construction
Truck & bus 14%
& Ag 17%
Light-duty
Q307 LTM
Automotive
& RV 18% 2003 2004 2005 2006 2003 2004 2005 2006
Sales: $8.0B
Where We’re Headed How We’re Getting There
Future Performance
Joint Venture Sales
Consolidated Sales ($B) Unconsolidated ($B) Emission regulations
$3.7
$13.3
GR Emerging markets
CA R
G
3% CA
1
Strategic OEM partnerships
%
20
$7.5
New engine platforms
$1.5
Steady aftermarket revenue growth
11
2006 2011 2006 2011
13. How We’re Getting There
New Engine Platforms
1,800
Engine Production (Thousands)
1,600
1,400
1,200
1,000
800
600
400
200
0
2006 Organic New 2011
Growth Platforms
13
14. How We’re Getting There
Global Engine Production
EMEA
2006: 63,000 China
North America 2011: 110,000 2006: 122,000
2006: 397,000 2011: 423,000
2011: 708,000
India
2006: 97,000
2011: 201,000
Rest of World
2006: 154,000
2006 Total = 833,000
2011: 193,000
2011 Total = 1,635,000
14
15. Earnings Growth
Engine Segment
GR
$1,400
CA
$1,200
2%
1
Segment EBIT ($ M)
$1,000
$800
$600
$400
$200
$0
2003 2006 2011
15
16. Power Generation
Segment
Who We Are Where We’ve Been
Historical Performance
Market Application Geographic Consolidated Sales ($B)
EMEA
34%
R
CA G $2.4
23%
Distributed
Standby
Generation
Power $2.0
32% Latin America
56% $1.8
8%
$1.3
North America India
36% 10%
China
Mobile Power 5%
Asia Pacific
12%
7%
Q307 LTM 2003 2004 2005 2006
Sales: $2.9B
Where We’re Going
How We’re Getting There
Future Performance
Consolidated Sales ($B)
Capitalize on industry growth
GR $4.8
CA
Leverage existing market leadership
%
15
Establish leadership in all major markets
$2.4
Expand into new and adjacent markets
2006 2011
16
17. How We’re Getting There
Establish Leadership in All Major Markets
Cummins Leadership Positions
Top 8 regions
92% of total
35%
Market leader (#1 or #2)
30%
Leader in some segments
25%
Not a market leader
20%
15%
10%
5%
0%
North Western China Middle India Southeast Latin Africa
America Europe East Asia America
17
19. Earnings Growth
Power Generation Segment
GR
$600
CA
$500
7%
1
Segment EBIT ($ M)
$400
$300
$200
$100
$0
-$100
2003 2006 2011
19
20. Components Segment
Who We Are Where We’ve Been
Historical Performance
Market Application Geographic
Specialty
Consolidated Sales ($B)
Asia Pac
Filtration
Air Intake 11%
6%
AGR
Systems $2.3
LA
C
Turbocharger
10%
21%
5% $2.0
28%
$1.8
Acoustic
Exhaust
10% $1.3
Engine EMEA
Fuel
Filtration 23%
Systems
18% N America
15%
61%
Catalytic
Exhaust
Q307 LTM
13%
2003 2004 2005 2006
Sales: $2.8B
Where We’re Going
How We’re Getting There
Future Performance
Consolidated Sales ($B)
$6.0
Emissions
GR
CA
%
20
Fuel Economy
$2.3
Engine Performance
2006 2011
20
21. How We’re Getting There
Emission Solutions
Evolving Global Emission Standards
Successful 2007 Accelerates Market Growth for Diesel
product launches Catalytic Exhaust
$6
Significant growth $5
Global Market Size ($B)
opportunity
$4
Capacity expansion $3
$1.5B Revenues We have 30%
$2
of the market
in 2011 today
$1
$0
2006 2010
21
22. How We’re Getting There
Filtration
Most profitable business in the segment
Profit margins improving
Emissions creating new growth opportunities
$2B Revenues in 2011
22
23. How We’re Getting There
Fuel Systems
Critical to engine performance and emissions
Industry leading common rail fuel system
Scania partnership
Increasing demand
$0.5B Revenues in 2011
23
24. How We’re Getting There
Turbo Technologies
Critical to emissions, Turbo Unit Volumes
fuel economy and 4.5
engine performance 3.9
GR
4
CA
3.5
Cummins has the 2%
2
3
leading technology
Millions
2.5
Demand driving significant 2
capacity expansion 1.5
1.5
1.2
$2B Revenues in 2011 1
0.5
0
2011
2005 2006
24
25. Earnings Growth
Components Segment
GR
Increasing capacity $600
CA
%
38
Focus on operating $500
Segment EBIT ($ M)
efficiencies $400
Pricing actions $300
$200
Divesting unprofitable
businesses $100
$0
2003 2006 2011
25
26. Distribution Segment
Who We Are
Where We’ve Been
Historical Performance
Market Application Geographic
Joint Venture Sales
LA
Africa
3% Consolidated Sales ($B) Unconsolidated ($B)
5%
Parts and North
Consumables America
Engine Europe
36% 3%
20% 32%
R
AG $1.4
China
C $2.2
GR
27%
6%
CA
$1.2
%
40
India
$1.0
8%
$1.3
$0.7 $1.1
M.E.
Power Gen 14% $0.8
26%
Service
Asia Pacific
18%
29%
Q307 LTM
Sales: $1.5B
2003 2004 2005 2006
2003 2004 2005 2006
Where We’re Headed
How We’re Getting There
Future Performance
Joint Venture Sales
Consolidated Sales ($B) Unconsolidated ($B)
$2.8
Acquisitions and Consolidations
$5.0
GR
CA GR
15% CA Grow Organically
%
18
Build Capabilities
$1.4
$2.2
26
2006 2011 2006 2011
27. Where We’re Headed
2011
2006
2001
$3.2B $5.4B $8.9B
Cummins participation
$3.2B @ 28% = $0.9B Cummins participation
$5.4B @ 67% = $3.6B
Cummins participation
$8.9B @ 88% = $7.8B
Independent
Consolidated Joint Venture
In 2011, 88% of revenue will flow through fully or partially owned distributors.
27
28. Earnings Growth
Distribution Segment
GR
$350
CA
$300
7%
1
Segment EBIT ($ M)
$250
$200
$150
$100
$50
$0
2003 2006 2011
28
31. Joint Venture Sales Unconsolidated
Engines Distribution
$1,600 $3,000
$1,474
$1,316 $2,497
$1,400
$1,285 $2,500
$1,232
$1,200
$2,000
$529
$1,000 $1,715
$ Millions
$ Millions
$800 $1,500
$1,204
$1,029
$600
$1,000
$400
$500
$200
$0 $0
2003 2004 2005 2006 2003 2004 2005 2006
In 2003, sales from certain JVs (colored red above) were treated
31
as unconsolidated; adoption of FIN 46R in 2004 required the
company to consolidate the results of certain JVs.
34. Non-GAAP Reconciliation – EBIT
Years Ended
Millions 2003 2004 2005 2006
EBIT $ 181 $ 543 $ 907 $ 1,179
Less: Interest Expense $ 90 $ 111 $ 109 $ 96
Earnings before income taxes and minority $ 91 $ 432 $ 798 $ 1,083
interests
We define EBIT as earnings before interest expense, provision for income taxes and minority interests in earnings of
consolidated subsidiaries. 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.
We believe EBIT is a useful measure of our operating performance for the periods presented as it illustrates our operating
performance without regard to financing methods, capital structure or income taxes. This measure is not in accordance with,
or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and may not be
34
consistent with measures used by other companies. It should be considered supplemental data.
35. Non-GAAP Reconciliation – EBIT
Quarters Ended
Millions Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 LTM
EBIT $ 303 $ 243 $ 354 $ 306 $ 1,206
Less: Interest Expense $ 20 $ 16 $ 14 $ 14 $ 64
Earnings before income taxes and $ 283 $ 227 $ 340 $ 292 $ 1,142
minority interests
We define EBIT as earnings before interest expense, provision for income taxes and minority interests in earnings of
consolidated subsidiaries. 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.
We believe EBIT is a useful measure of our operating performance for the periods presented as it illustrates our operating
performance without regard to financing methods, capital structure or income taxes. This measure is not in accordance with,
or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and may not be
35
consistent with measures used by other companies. It should be considered supplemental data.
