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A New Cummins
                         Tim Solso
Chairman and Chief Executive Officer

  Baird’s 2005 Industrial Conferenc...
Disclosure Regarding Forward-Looking
Statements & non-GAAP Financial Measures

This presentation contains certain forward-...
Delivering on Commitments
                          Target    2005LTM
Revenue Growth           8% -10%    12.8%
EBIT Margi...
Delivering on Commitments

                                                          er
                                  ...
Delivering on Commitments

• Six Sigma
• Market share gains
• Best products
• Recognition
Key Strategic Principles
                      • Increase Profitability
• Leverage
  Complementary         and Cash Flow
 ...
P/E Valuation – Opportunity
                 20
                                                 18
                      ...
Investment Community Perception

• Cyclicality
• Volatility in performance
• Cash management
• OEM vertical integration
• ...
N. America Heavy-duty Truck
Total Revenue

        1999                                    2005LTM


                     ...
Heavy Duty Engine Business
                          Low Point                 2005LTM
Revenue                     $1.18B ...
Heavy Duty Engine Business
                          Low Point                 2005LTM
Revenue                     $1.18B ...
Growing Stable Diversified Earnings

                    1999*                                    LTM
                    ...
Distribution Ownership – 1999




 Company-owned

 Joint Venture

 Independent
Distribution Ownership – Today




 Company-owned

 Joint Venture

 Independent
Growing Total China Sales to $3B
         by 2010
                                                              • Well Pos...
Growing Total India Sales to $2B
         by 2010
               700
                                                     ...
Profitable Joint Venture Growth
      Number of JV's            Earnings from JV's
40                        140
35       ...
Growth in Chrysler Shipments
180,000

160,000

140,000
                                        GR
                        ...
Generating More Cash
from Operations
                                Operating Cash Flow
               $700
             ...
Reducing Debt Levels
                                         Total Debt- 2005
                       $1,800              ...
Using Capital Wisely
                                               Capital Expenditures
                        $450     ...
Returning value to shareholders



• Dividends
• Share repurchase
Living With Vertical Integration

• Cost
• Brand
• Global presence
• Technology
Ready For 2007
Emissions Change

 • No major change in product platform
 • No degradation of fuel economy
 • Proactively a...
This is the New Cummins

                         Profitable
    Restructured
                         Power-Gen
  Engine ...
A New Cummins
Appendix
Non-GAAP Reconciliation – EBIT

      $ Millions                                                                          ...
Non-GAAP Reconciliation – Net
Assets
$ Millions                                           September    September
         ...
Non-GAAP Reconciliation – ROANA

$ Millions                                                     LTM
                      ...
Additional Disclosures
As previously announced, effective May 2, 2005, CMI
made certain leadership changes within its mana...
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cmi_051109

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cmi_051109

  1. 1. A New Cummins Tim Solso Chairman and Chief Executive Officer Baird’s 2005 Industrial Conference November 8, 2005
  2. 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 59 of our 2004 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. 3. Delivering on Commitments Target 2005LTM Revenue Growth 8% -10% 12.8% EBIT Margin 7% - 10% 8.5% Cap Ex < D&A 67% of D&A Debt to Capital Ratio 30% - 40% 43% Investment Grade 2005 S&P BBB- Moody Ba1 ROE 18% 24% ROANA 22% 26%
  4. 4. Delivering on Commitments er ol d 400 ar eh 4 h t al S 003/ 0 To r 2 ge 350 o a ver eturn f A . 4% R 77 300 Stock Price Index 250 200 150 100 50 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 CMI S&P 500 Peer Avg.
  5. 5. Delivering on Commitments • Six Sigma • Market share gains • Best products • Recognition
  6. 6. Key Strategic Principles • Increase Profitability • Leverage Complementary and Cash Flow Businesses • Reduce Debt and • Create Invest in Growth Shareholder Value • Low-Cost Producer • Create Shareholder Value • Grow in Related Markets • Performance Ethic
  7. 7. P/E Valuation – Opportunity 20 18 15 14 15 13 P/E Multiplier 10 9 10 5 0 1999 2004 2005 CMI Peer Group
  8. 8. Investment Community Perception • Cyclicality • Volatility in performance • Cash management • OEM vertical integration • ’07 emission impact
  9. 9. N. America Heavy-duty Truck Total Revenue 1999 2005LTM 14% 19% 81% 86% NA HD Truck Original Equipment Sales Sales to All Other Markets
  10. 10. Heavy Duty Engine Business Low Point 2005LTM Revenue $1.18B $2.3B EBIT From loss to significant contribution NA Market Share 21% 26% Build Rate 135/day 405/day PED 8.6 3.8 Inventory Turns 30.2 37.0 Consolidation Savings > $30M annually
  11. 11. Heavy Duty Engine Business Low Point 2005LTM Revenue $1.18B $2.3B EBIT From loss to significant contribution NA Market Share 21% 26% Build Rate 135/day 405/day PED 8.6 3.8 Inventory Turns 30.2 37.0 Consolidation Savings > $30M annually Reduced Break Even more than 50%
  12. 12. Growing Stable Diversified Earnings 1999* LTM 2005 $316M $810M Stable & Diversified EBIT Cyclical EBIT * Excludes restructuring charges
  13. 13. Distribution Ownership – 1999 Company-owned Joint Venture Independent
  14. 14. Distribution Ownership – Today Company-owned Joint Venture Independent
  15. 15. Growing Total China Sales to $3B by 2010 • Well Positioned 1,200 GR for Future Growth CA 1,000 % 35 – East Asia R&D Center 800 US$ Millions – Medium duty 600 electronic products 400 – Heavy duty entry 200 – Expanded component manufacturing 0 2000 2001 2002 2003 2004 Consolidated Unconsolidated Net Sales JV Net Sales
  16. 16. Growing Total India Sales to $2B by 2010 700 • Well Positioned GR for Future Growth CA 600 % 14 – Increased exports 500 US$ Millions – Local electronic 400 products 300 – Major capacity increases 200 • Turbochargers 46% 100 • KV Engines 70% 0 • Valvoline 50% 2000 2001 2002 2003 2004 Consolidated Unconsolidated Net Sales JV Net Sales
  17. 17. Profitable Joint Venture Growth Number of JV's Earnings from JV's 40 140 35 120 30 100 25 80 20 60 15 40 10 20 5 0 0 1999 2005 LTM 1999 2005 -20 -40
  18. 18. Growth in Chrysler Shipments 180,000 160,000 140,000 GR CA 120,000 2 4% 100,000 80,000 60,000 40,000 20,000 0 1988 1990 1992 1994 1996 1998 2000 2002 2004
  19. 19. Generating More Cash from Operations Operating Cash Flow $700 $631 $614 $600 $472 $500 Millions USD $400 $307 $300 $193 $200 $158 $152 $100 $0 LTM 1999 2000 2001 2002 2003 2004 2005
  20. 20. Reducing Debt Levels Total Debt- 2005 $1,800 80% $1,626 $1,600 70% $1,429 $1,352 $1,400 60% Debt in millions USD Debt to Capital Ratio $1,215 $1,197 $1,137 $1,200 50% $945 $1,000 40% $800 30% $600 20% $400 10% $200 $0 0% 2005 * 1999 2000 2001 2002 2003 2004 * As of September ’05
  21. 21. Using Capital Wisely Capital Expenditures $450 300% $405 $400 250% $304 $350 Capex in millions USD Capex as % of D&A $271 $300 200% $223 $228 $250 $215 $206 150% $194 $200 $151 $150 100% $90 $111 $100 50% $50 $0 0% LTM 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
  22. 22. Returning value to shareholders • Dividends • Share repurchase
  23. 23. Living With Vertical Integration • Cost • Brand • Global presence • Technology
  24. 24. Ready For 2007 Emissions Change • No major change in product platform • No degradation of fuel economy • Proactively assuring customers of reliability • Field testing with end-users well underway • Limited OEM capacity to support pre-buy
  25. 25. This is the New Cummins Profitable Restructured Power-Gen Engine Business Business Growing Strong Footprint in Components Emerging Markets and Distribution
  26. 26. A New Cummins
  27. 27. Appendix
  28. 28. Non-GAAP Reconciliation – EBIT $ Millions Year ended LTM 12/31/99 12/31/04 9/30/05 Earnings before interest, income taxes, minority interest and restructuring charges $ 316 $ 543 $ 810 Restructuring, asset impairment and other (56) - - Earnings before interest, income taxes and $ 260 $ 543 $ 810 minority interest Interest Expense (75) (111) (113) Provision for income taxes (47) (56) (165) Minority Interests in earnings of unconsolidated (6) (26) (30) subsidiaries Net Earnings $ 132 $ 350 $ 502 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 net earnings, for each of the applicable periods.
  29. 29. Non-GAAP Reconciliation – Net Assets $ Millions September September 25, 2005 26, 2004 Net assets for operating segments $ 3,312 $ 2,876 Liabilities deducted in computing net assets 3,421 3,040 (826) (698) Minimum pension liability excluded from net assets Deferred tax assets not allocated to segments 928 903 Debt-related costs not allocated to segments 27 28 Total assets $ 6,862 $ 6,149
  30. 30. Non-GAAP Reconciliation – ROANA $ Millions LTM 9/30/05 Earnings before interest, income taxes and minority interest $ 810 Net Assets for operating segments at beginning of period 2,876 (September 26, 2004) Net Assets for operating segments at end of period 3,312 (September 25, 2005) Average Net Assets for operating segments for period 3,094 ROANA 26%
  31. 31. Additional Disclosures As previously announced, effective May 2, 2005, CMI made certain leadership changes within its management team and subsequently on July 21, 2005 in Form 8-K, restated operating segment data for the periods of 2003 to the present. Operating segment data used in these presentations for the periods of 1999 through 2002 has not been adjusted for the changes in segment reporting. The segment EBIT used in these presentations excludes restructuring, asset impairment and other charges, minority interest and preferred dividends.

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