Financial Overview

(in million dollars)

	FY2011	FY2010	Rate of change (%)	Factors
Overall	18,048	13,226	36.5	1)
Sales by Segment
Engine segment	11,307	7,888	43.3	2)
Components segment	4,063	3,046	33.4	3)

Factors
1)
-Sales in FY2011increased in all segments primarily due to increased demand from most markets including recovery of the North American on-highway markets.
2)
-Engine segment sales in FY2011 increased by 43 percent due to increased demand in all lines of business led by heavy-duty truck, industrial and medium-duty truck and bus businesses.
3)
-Components segment sales in FY2011 increased by 33 percent due to increased demand in all lines of business led by emission solutions and turbo technologies businesses.

Divestitures

-The Company announced that it has entered into an agreement to sell its light duty filtration operations to Industrial Opportunity Partners, LLC, (IOP) an investment firm based in Evanston, Illinois, U.S.. The sale affects Cummins' Kuss Filtration business in Findlay, Ohio, and the Filtration business at Bloomer, Wisconsin; and Kuss operations in Sao Paulo, Brazil and Shanghai, China. Kuss, the Bloomer plant and the other facilities produce filtration products used in gasoline applications, including in-tank fuel filters. (From a press release on September 8, 2011)

-The Company announced that the sale of its exhaust business to U.S.-based Global Tube has closed. The sale was announced earlier this year and includes what were formerly Cummins exhaust operations in Stoughton, Arcadia, Black River Falls and Viroqua, all in Wisconsin, U.S., and in Scoresby, Australia and Daman, India. (From a press release on April 29, 2011)

-The Company announced that it has entered into an agreement to sell its exhaust business to Global Tube, a U.S.-based manufacturer of tubes used in exhaust systems for heavy and medium duty trucks. Cummins' exhaust business, which is a part of the Cummins Emission Solutions, manufactures bent tubes, small mufflers and others. The sale to Global Tube affects Cummins' operations in Stoughton, Arcadia, Black River Falls and Viroqua, all in Wisconsin, as well as in Scoresby, Australia and Daman, India. After the sale, Cummins will focus on its core business of providing aftertreatment systems such as Diesel Particulate Filters (DPF) and Selective Catalytic Reduction systems. The exhaust business is expected to transfer to Global Tube by the end of March, 2011. Terms of the deal were not disclosed. (From a press release on January 25, 2011)

Contracts

-The Company announced the release of its 6.7L turbo diesel engine for the Chrysler Dodge Ram heavy duty pickup truck. This engine produces peak torque of 800 lb-ft (1,085 Nm). Cummins will begin producing its 6.7L turbo diesel engines at its Columbus MidRange Engine Plant (CMEP), Indiana, U.S. in the second quarter of 2011. (From a press release on February 14, 2011)

R&D Expenditure

(in million dollars)

	FY2011	FY2010	FY2009
Overall	629	414	362
Engine	397	263	241
Components	175	114	88

R&D Structure

-The Company operates 19 technical centers around the world.

-The Company announced an investment of 24 million USD over three years to expand the research and development capabilities at its technical center in North Charleston, South Carolina, U.S. The expansion nearly doubles capacity at this site with facilities to enable testing on diesel, natural gas and biofuel engines. (From a press release on November 16, 2011)

Product Development

-Cummins Emission Solutions, a division of Cummins Inc., announced that it is developing a new urea dosing system, the EcoFit(TM) Urea Dosing System for use in Light-duty, MidRange and Heavy-duty commercial vehicles. The EcoFit(TM) Urea Dosing System will easily integrate into existing engine and aftertreatment systems, while improving system robustness and fuel economy. This new aftertreatment product is designed to meet upcoming emission regulations in China, India, and Russia. The EcoFit(TM) Urea Dosing System will be manufactured at the Cummins Emission Solutions facility in Beijing, China. (From a press release on November 8, 2011)

-The Company announced that its lineup of North American on-highway engines, from the ISB6.7 to the ISX15, will be certified to meet new onboard diagnostic (OBD) requirements in January 2013. For 2010 and later highway vehicles over 14,000 pounds, The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Transportation (DOT) proposed the regulation that beginning in 2013, all highway engines for all manufacturers would have to be certified to the proposed OBD requirements. (From a press release on August 9, 2011)

Capital Expenditure

(in million dollars)

	FY2011	FY2010	FY2009
Engine	339	197	207
Power Generation	87	53	34
Components	141	78	59
Distribution	55	36	10
Total	622	364	310

Investment Activities

-Capital expenditures were 622 million dollars compared to 364 million dollars in the comparable period in 2010. The Company continues to invest in the development of new products and the Company plans to spend approximately 800 million dollars to 850 million dollars in 2012 as we continue with product launches and facility improvements and prepare for future emission standards. Approximately 50 percent of our capital expenditures will be invested outside of the U.S. in 2012.