2. Participants
Tim Solso Chairman and Chief Executive Officer
Jean Blackwell Chief Financial Officer
Joe Loughrey Chief Operating Officer
Tom Linebarger President – Cummins Power Generation
Dean Cantrell Director – Investor Relations
2
3. 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 those measures to GAAP
financial measures.
3
4. Long-term Targets*
Power Generation Sales growth: 8-10%
EBIT margin: 7-9%
Segment
Selected Financial Data
Change Change
$ Millions Q207 Q206 Amount Percent
Sales 769 598 171 29%
EBIT 88 56 32 57%
% of Sales 11.4% 9.4%
Commercial generator sets and alternator equipment strength in North
America, India, the Middle East, and Europe
Consumer growth as portables, commercial mobile, recreational marine,
and auxiliary power units offset softness in recreational vehicles
Energy Solutions business sales growth in Europe
Strong price realization for commercial generator sets and alternators
*Targets represent averages across the economic cycle 4
5. Long-term Targets*
Engine Segment Sales growth: 6-8%
EBIT margin: 7-10%
Selected Financial Data
Change Change
$ Millions Q207 Q206 Amount Percent
Sales 2,109 1,896 213 11%
EBIT 186 190 (4) (2%)
% of Sales 8.8% 10.0%
On-highway revenue flat as medium-duty truck & bus and light-duty
automotive offset the North American heavy-duty truck market decline
Industrial revenue up 29% with growth in nearly all markets
Lower gross margins due to higher initial new product costs and higher
warranty accrual typical for new product introductions
Investing in new growth opportunities and additional capacity
*Targets represent averages across the economic cycle 5
6. Engine Segment
Sales by Market – On-highway
Change Change
$ Millions Q207 Q206 Amount Percent
Heavy-duty truck 473 618 (145) (24%)
Medium-duty truck and bus 320 247 73 30%
Light-duty automotive/RV 418 341 77 22%
Total on-highway 1,211 1,206 5 1%
Global heavy-duty truck shipments down 32%; the decrease was limited by a
strong export market and market share gains in North America
Medium-duty truck shipments up 22% with strength in North America, Brazil, and
Europe
Bus shipments up 69% on strength in Europe, India, and North America
Light-duty automotive/RV shipments up slightly with strong revenue growth on
new engine technology; shipments increased to the North American pick-up truck
market; market share gains in RV
6
7. Engine Segment
Sales by Market – Industrial
Change Change
$ Millions Q207 Q206 Amount Percent
Total Industrial 665 516 149 29%
Total shipments up 9% with double-digit growth in nearly all markets
Construction equipment shipments up 9% from strength in international
markets
Shipments for mining up 26% with growth in China, India, Latin America, and
Australia
Oil & Gas revenue growing faster than volume with growth in high-
horsepower engines
Increasing high-horsepower capacity 15% by mid 2008
7
8. Long-term Targets*
Distribution Segment Sales growth: 10%
EBIT margin: 8-10%
Selected Financial Data
Change Change
$ Millions Q207 Q206 Amount Percent
Sales 368 336 32 10%
EBIT 46 36 10 28%
% of Sales 12.5% 10.7%
Sales up 24%, excluding the reporting change of a North American
distributor, driven primarily by Europe and the Middle East
Earnings from joint ventures accounted for more than 50% of segment EBIT
on strength of sales of power generation equipment in North America
Positive trends in key end markets will drive strong year over year growth in
revenue and keep EBIT margins about targeted range
*Targets represent averages across the economic cycle 8
9. Long-term Targets*
Components Segment Sales growth: 8-10%
EBIT margin: 7-9%
Selected Financial Data
Change Change
$ Millions Q207 Q206 Amount Percent
Sales 757 563 194 34%
EBIT 48 34 14 41%
% of Sales 6.3% 6.0%
Growth in all businesses, particularly Emission Solutions (up $88M) and Turbo
Technologies (up $69M) on sales of new products to meet emission standards
Filtration revenue up $30M on OE sales in Europe, Middle East, and Africa, and
sales of 2007 emission-related products in North America
New product introduction, metal market cost increases, and aggressive
production ramp provided challenges for each of the businesses
*Targets represent averages across the economic cycle 9
10. Cummins Inc.
Selected Income Statement Data
Q207 Q206
Net Earnings ($M) 214 220
Earnings Per Share $2.13 $2.19
Product Coverage (% of Net Sales) 3.1% 2.9%
Gross Margin (% of Net Sales) 20.0% 22.7%
SAR (% of Net Sales) 11.6% 13.2%
Earnings before interest and taxes (EBIT) at 10.6% of sales, above our targeted range
of 7 to 10 percent
Q206 results included a $28 million credit for the resolution of prior year tax
uncertainties
Gross margins lower due to initial new product costs, partially offset by higher pricing for
new products
Company leveraged slower growth in SAR to improve profitability.
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11. Joint Venture Income
$ Millions Q207 Q206
Engine 25 18
On-highway 16 12
Off-highway 5 4
Rec. Marine 4 2
Power Generation 4 3
Distribution 24 14
Components (1) 2
Total JV Income 52 37
Engine joint venture income up primarily due to seasonal strengthening in
the Chinese on-highway truck market
Distribution increased 71% on strength of power generation equipment sales
in North America
11
12. Cash Flow
Q207 Q206
Operating Cash Flow ($M) 269 337
Capital Expenditures ($M) 60 50
Pension Funding ($M) 41 42
Share Repurchase ($M) 23 26
Working Capital (% of Net Sales) 17.9% 17.1%
Cash flow strategy to maintain a strong balance sheet, including funding our
liabilities; investing in profitable growth; and returning value to our shareholders
Working capital net cash outflow of $116 million in Q207 compared to net cash
outflow of $66 million in Q206
Operating cash flow in Q207 includes $97 million higher cash expenditures for
income taxes than in Q206
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13. Guidance for 2007
Consolidated Results
Item Full Year Guidance
Earning per Share $7.15 to $7.65
Revenue Up 12 to 15%
Joint Venture Earnings Up 20 to 25%
Effective Tax Rate 33%
Capital Expenditures ($M) $320 to $350
Global Pension Funding ($M) $230 to $240
13
14. Guidance for 2007
Segment Results
Power
Item Engine Generation Components Distribution
Revenue Up 5-7% Up 21-26% Up 22-27% Up 17-22%
Joint Venture
Up 9% Up ~17% Slight loss Up ~60%
Earnings
EBIT Relative Solidly Above top Above top
In target
to Target within target end of target end of target
range in Q4
Range range range range
14
15. Confident in our ability to perform in
2007 and beyond
Global and end-market revenue
diversification
Longer-term trends that are not cyclical
Infrastructure investments around the world
15
16. Revenue from International Markets
offset Decline in US & Canada
6,400
6,160
+244
6,200
6,000 +111
Revenue ($ M)
+383
5,800
5,600 5,520 (98)
5,400
5,200
Q2 '06 YTD US & EMEA Latin Asia & Q2 '07 YTD
Canada America & Australia
Mexico
16
17. Global adoption of known emission
regulations in On-highway markets
Euro V Europe Beijing
Beijing China
Euro IV Brazil
Mexico
India – metro
Australia
Euro III China India
2007 2008 2009 2010
Mexico
EPA ’04 Australia
EPA ’07 US / Canada
EPA ‘10 US / Canada
17
18. Thank You for Your Interest in
Cummins
We will now take your questions.
Contact Information:
Dean Cantrell
Director – Investor Relations
(812) 377-3121
Investor_Relations@Cummins.com
www.cummins.com
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20. Long-term Targets*
Sales growth: 8-10%
Cummins Inc. EBIT margin: 7-10%
ROANA: 22%
Selected Financial Data ROE: 18%
Change Change
$ Millions Q207 Q206 Amount Percent
Sales 3,343 2,842 501 18%
EBIT 354 325 29 9%
% of Sales 10.6% 11.4%
ROANA 29% 31%
ROE 21% 26%
Global customer demand leading to growth in nearly every market
Improved cost structure results in all profitability targets met or
exceeded
Investing in profitable growth opportunities in each operating
segment, and in domestic and international markets
*Targets represent averages across the economic cycle 20
21. Cummins Inc.
Q2 2007 LTM Revenue by Segment
Components
Q2 2007 – Great Quarter Segment 18%
Strong global demand Engine
for our product Segment 53%
Distribution
Year-over-year Segment 10%
growth in revenue
and earnings
Investing in profitable
growth opportunities
Power Gen
Segment 19%
Q2 2007 LTM Data
Sales: $12.0 billion
EBIT: $1,196 million
EBIT Margin: 10.0% (Target: 7-10%)
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22. Cummins Inc.
Q2 2007 LTM Revenue by Marketing Territory
Africa/Middle East
International revenue Canada 6%
5%
is 53% of year-to-date
consolidated revenue Mexico/Latin
America
in 2007 8%
Most international
areas growing at
United States
double digit rate 48%
Demonstrates our Asia/Australia
17%
geographic diversity
Europe/CIS
16%
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34. Non-GAAP Reconciliation – EBIT
Three Months Ended
Millions July 1, July 2, April 1,
2007 2006 2007
Segment EBIT $ 354 $ 325 $ 243
Less: Interest Expense $ 14 $ 26 $ 16
Earnings before income taxes and minority interests $ 340 $ 299 $ 227
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
consistent with measures used by other companies. It should be considered supplemental data.
34
35. Non-GAAP Reconciliation – EBITDA
Three Months Ended
Millions July 1, July 2, April 1,
2007 2006 2007
Segment EBIT $ 354 $ 325 $ 243
Less: Depreciation & Amortization $ 74 $ 74 $ 68
EBITDA $ 428 $ 399 $ 311
We define EBITDA as earnings before interest expense, provision for income taxes, minority interests in earnings of
consolidated subsidiaries and depreciation and amortization expense. 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, income taxes or depreciation methods. 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 consistent with measures used by
other companies. It should be considered supplemental data.
35
36. Non-GAAP Reconciliation – Cash From
Operations Excluding Pension Contributions
Three Months Ended
Millions July 1, 2007 July 2, 2006
Cash provided by operations $ 269 $ 337
Add back: pension contributions $ 41 $ 42
Cash provided by operations
$ 310 $ 379
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.
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37. Non-GAAP Reconciliation – Net
Assets
July 1, July 2,
Millions
2007 2006
Net assets for operating segments $ 4,285 $ 3,857
Liabilities deducted in computing net assets 3,695 3,515
Minimum pension liability excluded from net assets - (837)
Pension and other postretirement liabilities (824) -
Deferred tax assets not allocated to segments 662 777
Debt-related costs not allocated to segments 26 25
Total assets $ 7,844 $ 7,337
A reconciliation of net assets for operating segments to total assets in our Consolidated Financial Statements is shown in the
table above.
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38. Non-GAAP Reconciliation – Equity Used for
Return on Equity Calculation
July 1, July 2,
Millions
2007 2006
Equity used for return on equity calculation $ 3,695 $ 3,026
less Defined other postretirement benefits 9 -
less Defined benefit pension plans 527 -
less Minimum pension liability adjustment - 523
Total shareholder’s equity $ 3,159 $ 2,503
A reconciliation of equity used for return on equity calculation to total shareholder’s equity in our Consolidated Financial
Statements is shown in the table above.
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