Welcome. Cummins Investor Conference Jamestown Engine Plant. September 2007

Transcription

1 Welcome Cummins Investor Conference Jamestown Engine Plant September 2007

2 Agenda Welcome 9:15 a.m. to 10:40 a.m. Presentations 10:40 a.m. to 10:55 a.m. Break 10:55 a.m. to noon Presentations Noon to 1 p.m. Q and A 1 p.m. to 3 p.m. Lunch, plant tours, exhibits 2

3 Presenters Tim Solso, Chairman and CEO Joe Loughrey, President and COO John Wall, Chief Technical Officer Jim Kelly, President, Engine Business Tom Linebarger, President, Power Generation Rich Freeland, President, Distribution Rick Mills, President, Components Steve Chapman, Group Vice President, Emerging Markets Anant Talaulicar, Vice President, Cummins India Jean Blackwell, Chief Financial Officer 5

4 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 forwardlooking 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 ( for the reconciliation of those measures to GAAP financial measures. 3

5 Earnings Growth Strong balance sheet and cash flows Technical leadership Global presence 4

6 Cummins Inc. Joe Loughrey Chief Operating Officer

7 Agenda Macro trends moving our way Well positioned to take advantage Sustained profitable growth 7

8 Tougher Emission Standards Offhighway US / Canada 2010 Europe 2009 China 2010 Mexico 2008 Brazil 2009 India 2010 Australia

9 Demand for Energy and Fuel Efficiency Higher fuel costs and electricity consumption Energy independence and fuel economy Dependence on reliable electric supply 9

10 Emerging Markets Turkey GDP 5% CIS GDP 6-7% China GDP 9-11% Nigeria GDP 7% India GDP 8% Vietnam GDP 7-8% 10

11 Real Growth Opportunity Global diesel engine market growth 6-7% CAGR Gasoline engine markets shifting to diesel Clean diesel engine markets growing faster Global Use of Clean Diesel

12 Well Positioned for Growth Deep technology capability Strong global network Major strategic partnerships New products Capacity expansion Global market leadership Continuous improvement and change 12

13 Deep Technology Capability Investing in the right technology Great partners World class methods and tools Reflected in results 13

14 14 Strong Global Network Technical Centers

15 15 Strong Global Network Manufacturing

16 Strong Global Network Distribution Company-owned Joint Venture Independent 16

17 Major Strategic Partnerships MerCruiser Daimler 17

18 New Products Tier 2 HHP XPI fuel system Light-duty engines Comfort Guard Filtration 18

19 Capacity Expansion Engines Gensets Alternators Turbochargers Fuel systems Catalytic exhaust systems 19

20 Global Market Leadership Turbos Alternators SCR Systems MD Truck Mining Excavators Bus HD Truck HD pick-up Bus, RV Marine Turbos Catalytic Exhaust Filtration Power Gen MD Truck Power Gen MD Truck Power Gen Industrial Filtration Turbos Power Gen Filtration 20

21 Continuous Improvement and Change Cummins Operating System Global sourcing Expansion of Six Sigma Partnering to ensure customer success Global recruiting and development 21

22 Profitable Growth $25 Sales $2.5 EBIT $ Billions $20 $15 $10 $11 12% CAGR $20 $ Billions $2.0 $1.5 $1.0 $1.2 12% CAGR $2.1 $5 $0.5 $ $

23 Technology Leadership Dr. John Wall Chief Technical Officer

24 UK Darlington Daventry Ramsgate Stamford Huddersfield France Quimper USA Rocky Mount Jamestown Cookeville Stoughton Fridley Charleston Seymour Columbus Mexico San Luis Potosi Brazil Sao Paulo India Pune Indore Jamshedpur China Chongqing Xiangfan Wuhan Beijing Wuxi Japan Oyama Cummins Major Engineering Centers including Joint Ventures 24

25 Global Engineering Workforce China 207 Brazil 37 Mexico Engineers worldwide 2500 US Growth in India and China India 506 UK Mechanical Eng Materials Eng Electrical Eng Chemical Eng Chemistry US 2, Engineering Technicians 25

26 Technical Testing Laboratories USA CPG-Fridley 31 Gen Test Cells 2 Cold Cell 24 End Gen Test Cells USA Plant Engr 2 CVS Cells 21Test Cells 27 Test Stands UK 2 CVS Cells 19 Test Cells 1 Cold Cell 6 Gen Set Cells CES/CF-Stoughton 9 Test Cells 22 Test Stands Columbus- 2 Chassis Rolls 17 CVS Cells 81 Perf/End Test Cells 2 Altitude 2 Cold Cells 3 Noise Cells 3 Single Cylinder Cells 4 Gen Set Cells 237 Test Cells 21 Emission cells 63 Test stands 2 vehicle chassis cells Brazil 6 Test Cells Europe Quimper 10 Test Stands India 11 Test Cells China 1 Gen Test Cell 11 Test Cells 4 Turbo Test Stands 26

27 UK Darlington Daventry Ramsgate Stamford Huddersfield France Quimper USA Rocky Mount Jamestown Cookeville Stoughton Fridley Charleston Seymour Columbus Mexico San Luis Potosi Brazil Sao Paulo India Pune Indore Jamshedpur Global Integration China Chongqing Xiangfan Wuhan Beijing Wuxi Japan Oyama 27

28 Common Technical Objectives Worldwide Innovation + Productivity 28

29 Technical Productivity $12, % $11,000 $10,000 $9,000 5% R/E % 4.5% $ Millions $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 Sales 3% 3.5% 2.5% 1.5% $2,000 $1, % $ Sales R/E % Sales 29

30 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 30

31 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 31

32 32 Diversity - Applications

33 Global Emission Requirements Stringency Unregulated Group 1 Group Group 3 Group 4 33 Group 5

34 Diversity Engine Technology 3500 hp 31 hp 34

35 Product Line Architecture Principles: Standardization, Modularity, Reuse Develop broad range of modular technical building blocks Product hardware and software Simulation tools Leverage capability to create integrated products tailored to meet customer needs worldwide Low cost High feature content On-highway Off-highway North America India Match technology to application 35

36 Stable Emissions Architecture Particulate Filter R&D Since Late 1980 s 36 EGR R&D Since Early 1990 s Requires a Long Term View

37 2010 Products Another Evolutionary Step 2010 Key Enablers Advanced Combustion Technology Next-Generation Cooled EGR Flexible Common-Rail Fuel System Cummins Aftertreatment Cummins VG Turbocharger Electronic Controls Capable Base Engine Design 37

38 Stable Emissions Architecture Tier 2 Tier 3 In-Cylinder. No EGR. No Aftertreatment 38

39 OptiAir Filter Product Architecture 39 Patented features

40 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 40

41 Engineering Standard Work Current best practices uniformly applied. - Structured approach to product design - Critical for global collaboration 41

42 Base Engine Component Warranty $60 Warranty Cost (Millions) $50 $40 $30 $20 50% Reduction $10 $

43 Warranty Expense Percent of Sales 5% 4% 3% 2% 1% EGR DPF

44 Technical Productivity Common Processes Product Line Architecture Engineering Standard Work Analysis Led Design Six Sigma 44

45 Analysis Led Design Use computer analysis and simulation to eliminate expensive prototypes and testing More designs evaluated in shorter time Virtual product build Complex system optimization Implemented through Engineering Standard Work Added 2500 hours analysis Eliminated 5500 hours testing / prototypes Better Designs Faster at Lower Cost 45

46 Analysis Led Design Better Designs Faster at Lower Cost 46

47 Analysis Led Design Better Designs Faster at Lower Cost 2007 Heavy Duty Engine Program 100% more analysis hours 20% lower total program cost 2007 Midrange Engine Programs 200% analysis hours 29% lower total program cost 47

48 USA Rocky Mount Jamestown Cookeville Stoughton Fridley Charleston Columbus 48 Mexico San Luis Potosi Brazil Sao Paulo UK CRTI opened January 2004 Pure analysis and design Darlington Daventry Ramsgate Stamford Huddersfield India Pune Indore France Quimper Cummins Research & Technology India CFD: #1 India, Top 2 CMI Structural Analysis: Top 5 India, #1 CMI 160 engineers today 250 engineers YE 2008 $25/hr vs. $60/hr: $10 million savings 2007 China Chongqing Xiangfan Wuhan Beijing Wuxi Japan Oyama

49 Six Sigma in Technology and Product Development Technology Development Product Design Process Improvement Higher Quality Products and Processes Technology Development For Six Sigma Design For Six Sigma Process Six Sigma Six Sigma Tools and Methodologies 49

50 Our Products Must Meet Customer Requirements High Performance Fuel Efficient Reliable and Durable Highly Low Emissions Sociable Connected and Integrated Systems Low Initial Cost Low Maintenance High Quality and Aesthetics 50

51 Innovation Emission technology best in world Invested in right technologies across all our businesses Match right technology to application Better quality through stable architecture System integration builds on Cummins synergies 51

52 Innovation in Critical Component Technologies #170% US CMI DPF #130% Euro Other SCR Closed 20% Crankcase CMI Ventilation 100% 80% US Other Light Duty Diesel % CMI #1 US HD VGT 50% Other 70% CMI 30% Other 52

53 53 Hybrid Powertrain 100kW Cummins Power Module Cummins is No. 1 in diesel power for hybrids today

54 2007 And Beyond... Integrating Engine and Aftertreatment Active Particulate Filter NOx Control Using Urea SCR Urea (NH 3 ) Ash NOx Adsorber Periodic Fuel Injection 1 st introduction in US NOx Adsorber Catalyst Soot Ash Soot 54

55 Cummins Powered Dodge Ram video This is how it all comes together: Cummins components Including the most complex and effective diesel exhaust aftertreatment system in production today Integrated into a power system with our OEM partner Chrysler to deliver - More power 50% less noise 2010 emission levels 55

56 Technical Capability and Global Presence Fuel Future Growth 4 New Engines: 2.8L, 3.8L, LDD, Mid-bore HD New Fuel System 3 New Turbocharger Platforms New Integrated Filter Modules New Aftertreatment 56

57 57

58 Engine Business Jim Kelly, President

59 Who We Are Market Application Power Generation 11% Mining/Rail Govt/O&G Marine 14% Heavy-duty truck 28% Marketing Territory India, 3% SE/NE Asia, 4% South Pacific,1% East Asia, 5% Latin America & Mexico, 13% Construction & Ag 16% 59 Light-duty Automotive & RV 17% Medium-duty Truck & bus 14% EMEA, 12% Engine Sales LTM $7.7B US/Canada 63%

60 Where We ve Been Engine Business Historical Performance $9.0 $8.0 $7.0 $6.0 Consolidated Sales $7.7 $7.5 $6.7 $5.4 $1.8 $1.6 $1.4 $1.2 Joint Venture Sales Unconsolidated $1.2 $1.3 $1.5 $1.6 $ Billions $5.0 $4.0 $3.6 $ Billions $1.0 $0.8 $0.8 $3.0 $0.6 $2.0 $0.4 $1.0 $0.2 $ LTM $ LTM 60

61 Where We re Headed Engine Business Future Performance $ Billions $14.0 $12.0 Consolidated Sales $10.0 $8.0 $7.5 $7.7 $6.0 $4.0 $2.0 13% CAGR $13.3 $ Billions $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 Joint Venture Sales Unconsolidated $1.6 $1.5 20% CAGR $3.7 $ LTM 2011 $ LTM

62 Engine Business Sales Volume Growth North America 2006: 397, : 708,000 Rest of World 2006: 154, : 193,000 EMEA 2006: 63, : 110,000 India 2006: 97, : 201,000 China 2006: 122, : 423, Total = 833, Total = 1,635,000 62

63 How We re Getting There Growth drivers Emission regulations Emerging markets Strategic OEM partnerships New engine platforms Steady aftermarket revenue growth 63

64 How We re Getting There Emission Regulations Competitive advantage Right technology Growing market share Expect regulatory changes to continue On board diagnostics Global emissions alignment Carbon regulations Industrial segments: global presence / partnerships 64

65 How We re Getting There Emerging Markets China Medium Duty Truck Heavy Duty Truck Light Commercial Vehicle Construction Russia Medium Duty Truck India Medium Duty Truck Light Commercial Vehicle Brazil Medium Duty Truck Construction/Agriculture 65

66 How We re Getting There Strategic OEM Partnerships MerCruiser 66

67 How We re Getting There New Engine Platforms 1,800 Engine Production (Thousands) 1,600 1,400 1,200 1, Organic Growth New Platforms

68 How We Are Getting There Steady Aftermarket Revenue Growth $2B sales by 2011 Strong margins create solid earnings platform Growth opportunities Increasing engine population in all platforms, territories Remanufactured product growth Leverage outstanding distribution 68

69 Growing Margin Dollars Engines Segment EBIT ($ M) $1,400 $1,200 $1,000 $800 $600 12% CAGR $400 $200 $

70 Growth in JV Income Key Joint Ventures Dong Feng Cummins Foton Cummins Tata Cummins Cummins Mercruiser Segment JV Income ($ M) $160 $140 $120 $100 $80 $60 $40 $20 $

71 Earnings Growth Global Growth Opportunities Positioned Well Technology Partners Revenue Growth Old Targets 8 10% New Targets 13% Leveraging Revenue Growth To Earnings Segment EBIT % 7 10% 8.5% 71

72 Power Generation Tom Linebarger, President

73 Who We Are Market Application Marketing Territory Standby Power 56% Distributed Generation 32% EMEA 34% Latin America 8% Mobile Power 12% North America 36% Asia Pacific 7% China 5% India 10% Power Generation Sales LTM $2.7B 73

74 Where We ve Been Power Generation Historical Performance Consolidated Sales Segment EBIT $3,000 $2,500 $2,000 23% CAGR $1.8 $2.0 $2.4 $2.7 $300 $250 $ % CAGR $220 $284 $ Billions $1,500 $1,000 $1.3 $ Millions $150 $100 $145 $500 $50 $60 $ LTM $0 -$50 ($19) LTM 74

75 Where We re Going Power Generation Future Performance Consolidated Sales Segment EBIT $6,000 $5,000 $4,000 15% CAGR $4.8 $600 $500 $400 17% CAGR $480 $ Billions $3,000 $2,000 $2.4 $2.7 $ Millions $300 $200 $220 $284 $1,000 $100 $ LTM 2011 $ LTM

76 How We re Getting There Capitalize on industry growth Leverage existing market leadership Establish leadership in all major markets Expand into new and adjacent markets 76

77 How We re Getting There Capitalize on Industry Growth Electricity demand Dependence on electricity Developing economies Low investment in generation and distribution 77

78 How We re Getting There Leverage Existing Market Leadership Mobile Power Distributed Generation Standby Power 85% 30% 40% Motorized RV Basic Power High-spec Standby 40% 33% Alternators 25% Commercial Mobile Recreational Marine 78 Source: Parkinson and company estimates

79 How We re Getting There Establish Leadership in All Major Markets 35% 30% 25% 20% 15% 10% 5% Cummins Leadership Positions Top 8 regions 92% of total Market leader (#1 or #2) Leader in some segments Not a market leader 0% North America Western Europe China Middle East India Southeast Asia Latin America Africa 79

80 80 How We re Getting There Expand Into New and Adjacent Markets

81 Earnings Growth Strong growth opportunities Solid leadership team Low cost producer Old Targets New Targets Increased value-add Revenue Growth 8 10% 15% Segment EBIT % 7 9% 10% 81

82 Distribution Business Rich Freeland, President

83 Who We Are Historical strength of Cummins Global reach Independent franchises Strategy changed in 2002 Consolidate into fewer, larger distributors Cummins takes equity stake Favorable markets Diversified / growing / profitable Counter cyclical Outstanding customer support consistent 83

84 Who We Are Market Application Market Territory Parts and Consumables 36% Engine 20% North America 6% China 6% Africa 5% LA 3% Europe 30% India 8% Service 18% Power Gen 26% M.E. 13% Asia Pacific 29% Distribution LTM Sales $1.4B 84

85 Where We ve Been $3.2B Cummins participation $0.9B $5.4B Cummins participation $3.6B Consolidated Joint Venture Independent CMI ownership increased from 28% to 67% of total revenues 85

86 Where We ve Been Distribution Historical Performance $2.5 Consolidated Sales $2.5 Joint Venture Sales Unconsolidated $2.2 $2.0 $2.0 $ Billions $1.5 $1.0 $0.7 $1.0 $1.2 $1.4 $ Billions $1.5 $1.0 $0.8 $1.1 $1.3 $0.5 $0.5 $ $

87 Where We ve Been Sales EBIT $ Billions $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 $0.7 27% CAGR $1.0 $1.2 $1.4 $ Millions $160 $140 $120 $100 $80 $60 $51 41% CAGR $79 $107 $144 $0.4 $40 $0.2 $20 $ $

88 Where We re Headed 2006 $5.4B 2011 $8.9B Consolidated Joint Venture Independent Cummins participation $3.6B Cummins participation $7.8B 88 In 2011, 88% of revenue will flow through fully or partially owned distributors.

89 Where We re Headed Distribution Future Performance Consolidated Sales Joint Venture Sales Unconsolidated $5.0 $5.0 18% CAGR $5.0 $ Billions $4.0 $3.0 $2.0 $1.4 15% CAGR $2.8 $ Billions $4.0 $3.0 $2.0 $2.2 $1.0 $1.0 $ $

90 How We re Getting There Acquisitions and Consolidations North America Equity in 14 of 16 Distributors Latin America Formation of new Joint Ventures Africa Grow/expand West Africa JV Asia Grow/expand Thailand/Vietnam JV 90

91 How We re Getting There Grow Organically Parts and Service Growing engine population worldwide Complexity of products increasing Adding service outlets in emerging markets Power Generation: Building sales capabilities Engines: Small OEMs 91

92 How We re Getting There Build Capabilities Common processes Enterprise resource planning Distributor and BU synergies Customer Support Excellence Proactive and predictive services Re-engineer customer contact centers 92

93 New Targets Consolidation and acquisitions All distributors/regions to profit target $350 $300 $250 Segment EBIT 17% CAGR $310 Leveraging sales volume Build capabilities invest in growing regions ($ Millions) $200 $150 $100 $51 $144 $50 $

94 Growth in JV Income Almost half of profits by 2011 coming from the JV Income line Leverage North America JVs act as one Continue acquisitions and consolidations and expand markets in newly formed JVs around the globe ($ Millions) $160 $140 $120 $100 $80 $60 $40 $20 $0 Segment JV Income $134 $54 $ % CAGR 94

95 Earnings Growth Leverage Cummins equipment growth Old Targets New Targets Continue acquisitions, consolidations and integrations Revenue Growth 10% 15% World-class customer support Make best Distribution System even better Segment EBIT % 8 10% 11% Cannot be duplicated 95

96 Break

97 Components Rick Mills, President

98 Who We Are Four distinct business units Emission Solutions Filtration Fuel Systems Turbo Technologies 2

99 Who We Are Market Application Marketing Territory Air Intake 11% Specialty 6% Engine Filtration 20% LA 5% AsiaPac 11% Catalytic Exhaust 11% Acoustic Exhaust 11% Fuel Systems 14% Turbos 28% EMEA 23% N America 61% Components Revenue Q2 LTM $2.6B 3

100 Where We ve Been Components Historical Performance Consolidated Sales $3.0 $2.5 $2.0 $1.8 $2.0 $2.3 $2.6 $ Billions $1.5 $1.0 $1.3 $0.5 $ LTM 4

101 Where We re Going Components Future Performance $6.5 $5.5 $4.5 Consolidated Sales 20% CAGR 6.0 $ Billions $3.5 $ $1.5 $ LTM

102 How We re Getting There Growth Focus Emissions Fuel Economy Engine Performance 6

103 How We re Getting There Emission Solutions Successful 2007 product launches Significant growth opportunity Capacity expansion $1.5B Revenues in 2011 Global Market Size ($B) Evolving Global Emission Standards Accelerates Market Growth for Diesel Catalytic Exhaust $6 $5 $4 $3 $2 $1 We have 30% of the market today $

104 How We re Getting There Filtration Most profitable business in the segment Profit margins improving Emissions creating new growth opportunities $2B Revenues in

105 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

106 How We re Getting There Turbo Technologies Critical to emissions, fuel economy and engine performance Cummins has the leading technology Demand driving significant capacity expansion $2B Revenues in 2011 Millions Turbo Unit Volumes % CAGR

107 How We re Getting There Leverage Cummins Strengths Grow with Cummins engines Grow with Cummins OEM partners Leverage global distribution to grow aftermarket 11

108 How We re Getting There Growth With Cummins OEM Partners Aftertreatment Filtration Fuel Systems Turbos Navistar CNH Volvo Scania Paccar Daimler Komatsu 12

109 Business Challenges New plant/product launches High demand causing capacity constraints High start-up costs Escalating metal costs Underperforming businesses 13

110 Actions Increasing capacity Focus on operating efficiencies Pricing actions Divesting unprofitable businesses 14

111 Transitioning New products launched Industry leading technology Capacity expansion Divesting of non-strategic businesses New target margin of 9% Segment EBIT ($ M) $600 $500 $400 $300 $200 $100 $0 Components

112 Earnings Growth Old Targets New Targets Revenue Growth 8 10% 20% Segment EBIT % 7 9% 9% 16

113 Emerging Markets China Steve Chapman, Group Vice President

114 Emerging Markets How Cummins Does It Cummins has succeeded in nations renowned for being tough on foreign investors Cummins figured it out well before the competition. (BusinessWeek, August 22/29, 2005) Partnerships local production and minimized capital Empowered local management and employees Global sourcing and exporting Local engineering potential 18

115 Evolution of Cummins in China Imported Products Licensee Manufacturing Joint Ventures Local IP and Support Today $25M $200M Consolidated > $650M Unconsolidated > $650M Growth 19

116 Who We Are Xi an XCEC JV Engine Plant Xi an Distributor Shenyang Shenyang Distributor Beijing China Headquarters Genset Assembly Plant BFCEC JV Engine Plant (under construction) Beijing Distributor Emissions Solutions Plant (under construction) Wuxi CTT JV Plant Vanewheel JV Plant CGT Plant Chongqing CCEC JV Engine Plant Urumqi Urumqi Distributor Chengdu Chengdu Distributor Kunming Kunming Distributor Guangdong area Hong Kong Distributor Guangzhou Distributor Shenzhen JV Distributor Urumqi Chengdu Xi an Chongqing Kunming Beijing Wuhan Guangdong Shenyang Wuxi Shanghai Taiwan Shanghai Filtration Campus Filtration JV Plant IPO & Marine Offices China PDC Valvoline JV Shanghai Distributor Wuhan DCEC JV Engine Plant Nelson Exhaust JV Plant Fuel Systems Plant (under construction) EA R&D Center Wuhan Distributor Taiwan Taiwan Distributor 20

117 Who We Are 12 plants, 1 technical center 12 service centers, 1 PDC, 240+ dealers employees in wholly-owned and JV entities $140M investment, over $200M committed Consolidated > $650M Unconsolidated > $650M Strong profitability and returns Over 1 million engines in operation 21

118 Who We Are Engine 43% Consolidated Sales Power Generation 28% Joint Venture Sales Unconsolidated Power Generation 13% Distribution 5% Components 17% Distribution 12% Engine 75% Components 7% LTM Sales - $669M LTM Sales - $691M 22

119 Where We ve Been China Historical Performance Consolidated Sales Joint Venture Sales Unconsolidated $ Millions $800 $700 $600 $500 $400 $300 $286 24% CAGR $580 $572 $454 $669 $ Millions $800 $700 $600 $500 $400 $300 $357 $643 18% CAGR $488 $579 $691 $200 $200 $100 $100 $ LTM $ LTM 23

120 Where We re Headed China Future Performance Consolidated Sales Joint Venture Sales Unconsolidated $Millions $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 20% CAGR $669 $572 $1,450 $ Millions $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $579 27% CAGR $691 $1,900 $400 $400 $200 $200 $ LTM 2011 $ LTM

121 How We re Getting There Key Growth Drivers GDP growth Significant infrastructure development Regulations converging to international standards Strong market growth 25

122 How We re Getting There Well Positioned for Growth Long-term partnerships Strong network Complementary businesses Market leadership Capacity growth Continuous improvement and change People Local technology capability New products 26

123 How We re Getting There New Product Platforms Joint Venture Engine Products 2.8L and 3.8L 13L Power Generation Sub Systems & Components Filtration Air Handling Fuel Systems Emissions Solutions 27

124 How We re Getting There 2011 JV Engine Products Engine JVs Product Liters HP range BFCEC DCEC XCEC CCEC ISE ISF B C L ISD ISL ISZ ISM M11 NT QSK19 QSK / /

125 Earnings Growth Strong position headed into Euro III and IV emission standard changes High localization of content minimizes currency impact Increased share of wallet with key OEM partners Joint Venture income increasing dramatically ($ Millions) $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 China EBIT 16% CAGR

126 Growth in JV Income Growth from new JVs: Foton Cummins and Xi an Cummins Increased contribution: Dongfeng Cummins Expanded role: Chongqing Cummins ($ Millions) $160 $140 $120 $100 $80 $60 $40 China JV Income 21% CAGR $20 $

127 Earnings Growth China strategically important to CMI Great domestic market Multiple, strong OEM partnerships Fantastic infrastructure Well positioned for growth 31

128 Emerging Markets India Anant Talaulicar Vice President

129 Evolution of Cummins in India Joint Venture Component Investments Tata Partnership Majority Position Services 1960s -1970s Late 1980s Mid 1990s 1997 Early 2000s Kirloskar Cummins and CDSS Filtration and Generator Technologies Tata Cummins And Tata Holset Cummins India Ltd. KPIT Cummins and CRTI 33

130 Who We Are Dewas Cummins Turbo Technologies New Delhi New Delhi Valvoline Cummins Daman Generators Cummins Exhaust Pune Pune Cummins India Ltd. Cummins Sales & Service KPIT Cummins Cummins Business Services International Purchasing Office Fleetguard Filters Cummins Research & Technology India Dewas Hosur Daman Jamshedpur Ahmednagar Ahmednagar Cummins Generator Technologies Hosur Fleetguard Filters Jamshedpur Tata Cummins Fleetguard Filters 34

131 Who We Are 15 plants, 2 technical centers 1 service center, 1 PDC, 75 dealers employees in wholly-owned and JV entities $275M investment from 2004 through 2010 Consolidated > $650M Unconsolidated > $500M Strong profitability and returns Over 763,000 engines in operation 35

132 Who We Are Consolidated Sales Joint Venture Sales Unconsolidated Engine 32% Power Generation 44% Components 11% Distribution 18% Components 7% Distribution 17% Engine 71% LTM Sales - $650M LTM Sales - $500M 36

133 Where We ve Been India Historical Performance $ Millions $800 $700 $600 $500 $400 $300 $200 Consolidated Sales Domestic Export $691 $518 $432 $354 $267 27% CAGR $ Millions $800 $700 $600 $500 $400 $300 $200 Joint Venture Sales Unconsolidated $192 Domestic 28% CAGR $284 $335 Export $486 $516 $100 $100 $ LTM $ LTM 37

134 Where We re Headed India Future Performance $ Millions $1,600 Consolidated Sales $1,400 $1,350 $1,200 $1,000 $800 $691 $600 $518 $400 21% CAGR $ Millions $1,600 $1,400 $1,200 $1,000 $800 $600 $400 Joint Venture Sales Unconsolidated $486 20% CAGR $516 $1,200 $200 $200 $ LTM 2011 $ LTM

135 How We re Getting There Key Growth Drivers GDP growth Significant infrastructure development Regulations converging to international standards 12% peak power deficit Leveraging low cost products/services globally 39

136 How We re Getting There Well Positioned for Growth Market leadership Dominance in heavy commercial vehicles, generators Strong network Complementary businesses Long-term partnerships Continuous improvement and change People Six Sigma and Zero Defect New products Local technology capability Capacity growth new campus near Pune 40

137 Earnings Growth Strong position headed into Euro III and IV emission standard changes High localization of content minimizes currency impact $300 $250 $200 India EBIT Manufacturing scale Increasing share of wallet with key OEM partners ($ Millions) $150 $100 Strong distribution and customer support $50 Joint Venture earnings $

138 Growth in JV Income Tata Cummins capacity to more than double $60 India JV Income ($ Millions) $50 $40 $30 $20 42% CAGR $10 $

139 Earnings Growth India strategically important to CMI Great domestic market Low cost producer leverage Fantastic infrastructure Well positioned for growth 43

140 Cummins Inc. Jean Blackwell, CFO

141 Who We Are Growing Sales Across the Business 12,000 Consolidated Sales 4,500 Joint Venture Sales Unconsolidated 10,000 4,000 3,500 8,000 3,000 Millions $ 6,000 Millions $ 2,500 2,000 4,000 1,500 2,000 1,

142 Who We Are Growing Earnings Faster Than Sales $16 $14 Total Sales and Net Earnings $11.4B $0.8 $0.7 $12 $9.9B $0.6 In Billions $10 $8 $6 $4 $6.3B $8.4B $0.5 $0.4 $0.3 $0.2 $2 $0.1 $0 $ Total Sales Net Earnings 46

143 Who We Are Generating Strong Cash Flow Operating Cash Flow (M$)

144 Who We Are Delivering on Commitments Strong balance sheet Reduced debt Funded our liabilities Grew our business Invested for the future Returned value to shareholders Return on equity Share appreciation Dividends Share repurchase $815M debt reduction $800M global pension funding $787M cap ex exceeding target 50% CAGR since % dividend increase $370M 48

145 Where We re Headed Consolidated Sales Joint Venture Sales Unconsolidated 20,000 18,000 16,000 12% CAGR 10,000 9,000 8,000 18% CAGR Millions $ 14,000 12,000 10,000 Millions $ 7,000 6,000 5,000 8,000 4,000 6,000 3,000 4,000 2,000 2,000 1,

146 Where We re Headed Geographic Diversity % 61% 50% 50% 53% 47% US Consolidated Net Sales ROW Consolidated Net Sales 50

147 Where We re Headed Delivering on Commitments Strong balance sheet Liquidity Funding commitments Growing our business Investing for the future Returning value to shareholders Share appreciation Dividends Share repurchase 51

148 Where We re Headed Business Performance Targets Sales Growth EBIT % Engine Business 13% 8.5% Power Generation 15% 10% Distribution 15% 11% Components 20% 9% 52

149 Where We re Headed Cummins Inc. Performance Targets Sales growth 12% EBIT 10% ROANA 25% ROE 20% 53

150 How We re Getting There Continued Focus on Strategic Principles Leverage complementary businesses Create shareholder value Low cost producer Grow in related markets Create the right environment for success 54

151 How We re Getting There A Disciplined Growth Model Earnings Growth Creating Shareholder Value Disciplined Cash Management Managing Risk 55

152 How We re Getting There Sales growth 12% EBIT 10% R&D 3% Capital exp. 3-4% Disciplined Cash Management Earnings Growth Creating Shareholder Value ROANA 25% ROE 20% Cash on hand $300 to $500M Working capital 16.5 to 17.5% Debt/EBITDA Liquidity $2B Managing Risk 57

153 How We re Getting There Cash $ M Liquidity $2B Investment Opportunities $3.5B Dividends Stable and Growing Share Repurchase Continuing 59

154 Cummins Inc. Tim Solso, CEO

155 Thank You for Your Interest in Cummins We will now take your questions. Contact Information: Dean Cantrell Director Investor Relations (812)

156 Thank You Cummins Investor Conference Jamestown Engine Plant September 2007