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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.
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Earnings Growth
Strong balance sheet and cash flows
Technical leadership
Global presence
Cummins Inc. - 2007 Investor Conference Joe Loughrey
Cummins Inc.Joe LoughreyChief Operating Officer
2
Agenda
Macro trends moving our way
Well positioned to take advantage
Sustained profitable growth
Cummins Inc. - 2007 Investor Conference Joe Loughrey
3
Tougher Emission Standards
Mexico2008
Mexico2008
Australia2008
Australia2008
Brazil2009
Brazil2009
Europe2009
Europe2009US /
Canada2010
US / Canada
2010
India2010India2010
China2010
China2010
Off-highway2011-14
Off-highway2011-14
4
Demand for Energy and Fuel Efficiency
Higher fuel costs and electricity consumption
Energy independence and fuel economy
Dependence on reliable electric supply
Cummins Inc. - 2007 Investor Conference Joe Loughrey
5
Emerging Markets
IndiaGDP 8%
ChinaGDP 9-11%
VietnamGDP 7-8%
NigeriaGDP 7%
TurkeyGDP 5%
CISGDP 6-7%
6
Global diesel engine market growth 6 - 7% CAGR
Gasoline engine markets shifting to diesel
Clean diesel engine markets growing faster
Real Growth Opportunity
2003
Global Use of Clean Diesel
2014
Cummins Inc. - 2007 Investor Conference Joe Loughrey
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Well Positioned for Growth
Deep technology capability
Strong global network
Major strategic partnerships
New products
Capacity expansion
Global market leadership
Continuous improvement and change
8
Deep Technology Capability
Investing in the right technology
Great partners
World class methods and tools
Reflected in results
Cummins Inc. - 2007 Investor Conference Joe Loughrey
9
Strong Global NetworkTechnical Centers
10
Strong Global NetworkManufacturing
Cummins Inc. - 2007 Investor Conference Joe Loughrey
11
Company-owned
Joint Venture
Independent
Strong Global NetworkDistribution
12
Major Strategic Partnerships
Daimler
MerCruiser
Cummins Inc. - 2007 Investor Conference Joe Loughrey
13
New Products
Light-duty engines Comfort Guard Filtration
Tier 2 HHPXPI fuel system
14
Capacity Expansion
EnginesGensetsAlternatorsTurbochargersFuel systemsCatalytic exhaust systems
Cummins Inc. - 2007 Investor Conference Joe Loughrey
15
Global Market Leadership
MD Truck
MD Truck Power GenIndustrialFiltrationTurbos
TurbosAlternators
SCR SystemsMD Truck
MiningExcavators
Bus
Power Gen
HD TruckHD pick-up
Bus, RVMarineTurbos
Catalytic ExhaustFiltration
Power Gen
Power GenFiltration
16
Continuous Improvement and Change
Cummins Operating System
Global sourcing
Expansion of Six Sigma
Partnering to ensure customer success
Global recruiting and development
Cummins Inc. - 2007 Investor Conference Joe Loughrey
Common ProcessesProduct Line ArchitectureEngineering Standard WorkAnalysis Led DesignSix Sigma
Technical Productivity
Cummins Inc. - 2007 Investor Conference John Wall
99
Common ProcessesProduct Line ArchitectureEngineering Standard WorkAnalysis Led DesignSix Sigma
Technical Productivity
1010
Diversity - Applications
Cummins Inc. - 2007 Investor Conference John Wall
1111
Global Emission Requirements - 2010
5
3
3
3
44
2
2
2
2
3
UnregulatedGroup 1Group 2Group 3Group 4Group 5
Stringency
1212
Diversity – Engine Technology
3500 hp
31 hp
Cummins Inc. - 2007 Investor Conference John Wall
1313
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 IndiaMatch technology to application
Cummins Research & Cummins Research & Technology India Technology India • CRTI opened January 2004
• Pure analysis and design • 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: $10 million savings 2007
2828
Process
Six Sigma
Process Improvement
Product Design
Technology Development
Six Sigma in Technology and Product Development
Design For
Six Sigma
Technology
Development
For Six Sigma
Six Sigma Tools and Methodologies
Higher Quality Products and Processes
Cummins Inc. - 2007 Investor Conference John Wall
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Our Products Must Meet Customer Requirements
3030
Our Products Must Meet Customer Requirements
Low Maintenance
Reliable and Durable
High Performance
Low Initial Cost
Fuel Efficient
High Qualityand Aesthetics
Low Emissions
Connected and Integrated
SystemsHighly
Sociable
Cummins Inc. - 2007 Investor Conference John Wall
3131
Emission technology best in world Invested in right technologies across all our businessesMatch right technology to applicationBetter quality through stable architectureSystem integration builds on Cummins synergies
Innovation
3232
50% CMI50% Other 70% CMI
30% Other
70% CMI30% Other
20% CMI80% Other
Innovation in Critical ComponentTechnologies
Cummins Inc. - 2007 Investor Conference John Wall
3333
Innovation in Critical ComponentTechnologies
3434
50% CMI50% Other 70% CMI
30% Other
70% CMI30% Other
#1 US DPF#1 Euro SCR
20% CMI80% Other
Closed Crankcase Ventilation100% US Light Duty Diesel 2010
Cummins Inc. - 2007 Investor Conference Steve Chapman
1313
Earnings Growth
Strong position headed into Euro III and IV emission standard changes
High localization of content minimizes currency impact
Increased share of wallet with key OEM partners
Joint Venture income increasing dramatically
China EBIT
($ M
illio
ns)
22% CAGR
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2003 2006 2011
1414
Growth in JV Income
Growth from new JVs: Foton Cummins and Xi’an Cummins
Increased contribution: Dongfeng Cummins
Expanded role: Chongqing Cummins
($ M
illio
ns)
14% CAGR
$0
$20
$40
$60
$80
$100
$120
$140
$160
2003 2006 2011
China JV Income
Cummins Inc. - 2007 Investor Conference Steve Chapman
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Earnings Growth
China strategically important to CMI– Great domestic market
– Multiple, strong OEM partnerships
– Fantastic infrastructure
Well positioned for growth
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
Emerging Markets IndiaAnant TalaulicarVice President
2
Evolution of Cummins in India
ComponentInvestments
Tata Partnership Services
Joint Venture
1960s-1970s
Late1980s
Mid1990s
Early2000s
KirloskarCummins
andCDSS
Filtrationand
GeneratorTechnologies
Tata CumminsAnd
Tata Holset
KPITCummins
andCRTI
MajorityPosition
1997
CumminsIndiaLtd.
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
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Who We Are
Valvoline Cummins
Tata CumminsFleetguard Filters
Cummins Generator Technologies
Fleetguard Filters
Cummins India Ltd.Cummins Sales & Service KPIT CumminsCummins Business ServicesInternational Purchasing Office Fleetguard FiltersCummins Research & Technology India
New Delhi
JamshedpurDewas
Daman
Pune
Ahmednagar
Hosur
DewasCummins Turbo Technologies
New Delhi
Jamshedpur
Ahmednagar
GeneratorsCummins Exhaust
Daman
Pune
Hosur
4
Who We Are
15 plants, 2 technical centers1 service center, 1 PDC, 75 dealers6500+ employees in wholly-owned and JV entities$275M investment from 2004 through 2010
Consolidated > $650MUnconsolidated > $500MStrong profitability and returnsOver 763,000 engines in operation
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
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Engine71%Distribution
17%
PowerGeneration
44%
Components7%
Engine32%
Components11%
Distribution18%
Who We Are
Joint Venture Sales Unconsolidated
Consolidated Sales
LTM Sales - $650M LTM Sales - $500M
6
Where We’ve BeenIndia – Historical Performance
$267
$354
$432
$518
$691
$0
$100
$200
$300
$400
$500
$600
$700
$800
2003 2004 2005 2006 LTM
$ M
illion
s
Domestic Export
$192
$284$335
$486$516
$0
$100
$200
$300
$400
$500
$600
$700
$800
2003 2004 2005 2006 LTM
$ M
illion
s
Domestic Export
27% CAGR
28% CAGR
Joint Venture Sales Unconsolidated
Consolidated Sales
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
7
$518
$691
$1,350
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2006 LTM 2011
$ M
illio
ns
$486 $516
$1,200
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2006 LTM 2011
$ M
illio
ns
Where We’re HeadedIndia – Future Performance
21% CAGR
20% CAGR
Joint Venture Sales Unconsolidated
Consolidated Sales
8
GDP growthSignificant infrastructure developmentRegulations converging to international standards12% peak power deficitLeveraging low cost products/services globally
How We’re Getting ThereKey Growth Drivers
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
9
How We’re Getting ThereWell Positioned for Growth
Market leadership– Dominance in heavy commercial vehicles, generators
Strong network– Complementary businesses
Long-term partnershipsContinuous improvement and change– People – Six Sigma and Zero Defect
New productsLocal technology capabilityCapacity growth – new campus near Pune
10
($ M
illio
ns)
Earnings Growth
Strong position headed into Euro III and IV emission standard changes
High localization of content minimizes currency impact
Manufacturing scale
Increasing share of wallet with key OEM partners
Strong distribution and customer support
Joint Venture earnings $0
$50
$100
$150
$200
$250
$300
2003 2006 2011
India EBIT
Cummins Inc. - 2007 Investor Conference Anant Talaulicar
11
Growth in JV Income
Tata Cummins capacity to more than double
$0
$10
$20
$30
$40
$50
$60
2003 2006 2011
India JV Income
($ M
illio
ns) 42% CAGR
12
Earnings Growth
India strategically important to CMI– Great domestic market
– Low cost producer leverage
– Fantastic infrastructure
Well positioned for growth
Cummins Inc. - 2007 Investor Conference Jean Blackwell
Cummins Inc.
Jean Blackwell, CFO
2
Joint Venture Sales Unconsolidated
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2003 2004 2005 2006
Mill
ions
$
Who We AreGrowing Sales Across the Business
Consolidated Sales
0
2,000
4,000
6,000
8,000
10,000
12,000
2003 2004 2005 2006
Mill
ions
$
Cummins Inc. - 2007 Investor Conference Jean Blackwell
3
Who We AreGrowing Earnings Faster Than Sales
Total Sales and Net Earnings
$6.3B
2003
$8.4B
2004
$9.9B
2005
$11.4B
2006$0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.7
$0.8
Total Sales Net Earnings
$0
$2
$4
$6
$8
$10
$12
$14
$16
In B
illio
ns
4
Who We AreGenerating Strong Cash Flow
Ope
ratin
g C
ash
Flow
(M$)
158
2003
614
2004
760
2005
840
20060
100
200
300
400
500
600
700
800
900
Cummins Inc. - 2007 Investor Conference Jean Blackwell