Every Promise. Delivered. Mid-America Truck Show March 27, 2008 - - PowerPoint PPT Presentation

Every Promise. Delivered.

Mid-America Truck Show March 27, 2008

2

Welcome and Introductions

• David Geraghty – Commercial Vehicle Engine

Business

• Dan Davis – Emission Solutions – Global OEM

Business

• Shawn Wasson – Auxiliary Power Unit Business,

Power Generation

3

Engine Segment

Gaining market share in

• n-highway markets

Industrial markets

supported by non- residential construction and commodity markets

Expanding capacity to

meet growing demand

Light-duty Automotive & RV 16% Heavy-duty truck 24% Medium-duty Truck & bus 16% Stationary Power 11%

2007 Revenue by Market Application

Construction & Ag 18% Mining/Rail Govt/O&G Marine 15%

2007 Segment Data Sales: $8.2 billion EBIT: $589 million EBIT Margin: 7.2%

4

Cummins Delivers the Right Technology – On Time, Every Time –

• We developed the best solutions in the market for the

EPA07 emissions regulations

• We were ready to go when the new rules demanded –

Again!

• Customers prefer Cummins’ power

5

5 10 15 20 25 30 35 40 45 50

1998 Total 1999 Total 2000 Total 2001 Total 2002 Total 2003 Total 2004 Total 2005 Total 2006 Total Jan- 07 Feb- 07 Mar- 07 Apr- 07 May- 07 Jun- 07 Jul- 07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 Dec- 07 Jan- 08 Percent Share Cummins DDC Cat Mack Volvo MBE

North American Heavy-Duty Truck Shipments Engine Market Share*, January 2008

* Wards NA Heavy Duty (Class 8 Group 2) Market Share

CMI Jan ‘08 44.0%

2007-2008 1998-2006 Annual Share

6

10 20 30 40 50 60 70

2000 2001 2002 2003 2004 2005 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08

Market Share

Cummins Caterpillar Hino MBE ITEC

2006 2007

Class 7 MDT Engine Market Share* January 2008

2000 – 2005

*Ward’s Class 7 NAFTA truck shipments

7

Designing For Medium-Duty Customers

Reliability Total cost of ownership Low maintenance Power density Sociability Safe operation Weight/space Minimal driver training Ease of operation Information systems Emissions compliance

Overall Best Value

8

Lowest Cost of Ownership

Designing Engines For The Heavy-Duty Market

High uptime Low fuel consumption Operational efficiency High residual value High performance Safe operation Ease of operation Driver satisfaction Information systems Sociability Emissions compliance

9

Complementing Proprietary Offerings

We won’t compete with our OEMs – we help them sell more trucks

10

Heavy Heavy Heavy Heavy-

• Duty

Duty Duty Duty Engines Engines Engines Engines Mid Mid Mid Mid-

• Range

Range Range Range Engines Engines Engines Engines

The Right Technology

Integrated Technology to Meet EPA 2010

Customer Customer Customer Customer Needs Needs Needs Needs Diverse applications Power range Best value Evolution of 2007 technology Proven SCR aftertreatment Uptime Operational efficiency Low cost of ownership Evolution of 2007 technology No NOx aftertreatment HD XPI fuel system

11

Cummins Emission Solutions

12

Components Segment

New products launched Industry leading

technology

Capacity expansion Grow with CMI and non-

CMI engine volumes

Leverage global

distribution to grow aftermarket

Specialty Filtration 6% Air Intake Systems 9% Turbocharger 29% Fuel Systems 14% Engine Filtration 17% Acoustic Exhaust 10%

2007 Segment Data Sales: $2.9 billion EBIT: $153 million EBIT Margin: 5.2%

2007 Revenue by Product

Catalytic Exhaust 15%

13

What We Do For Customers

with Cost Effectively Solve Their Emissions Challenges World-Class Aftertreatment Technology And Service

14

Vehicle, engine and aftertreatment . . . a single system designed to optimize performance, reliability, cost and emissions

System Integration is Critical

Controls I ntegration Environment

15

Why Are Customers Responding?

• The task is daunting
• Functionality in ALL applications
• Reliability
• Durability
• Serviceability
• Integration with controls,

engines and vehicles

• Noise
• Safety

16

CES Capabilities

• Design
• Controls – hardware and software
• Components – dosing systems
• Reliability
• Sourcing scale

17

Success For EPA2007 – Euro IV

– 10 engine platforms – More than 100 vehicle manufacturers – Capacity for 200,000+ units for medium-duty/heavy-duty in North America – Capacity for 150,000+ units in Europe – China, Brazil expansion

18

Leadership Position in Medium-duty / Heavy-duty Truck Aftertreatment

EPA 2007 Market Share Euro 4 Market Share

CES 45%

22% 12% 16% 5%

CES 27%

19% 15% 7% 8% 10% 10% 4%

19

Investing For The Future

– On-highway

• 2010
• Euro V / Euro VI
• Euro IV in Brazil, India, China

– Off-highway

• Tier 4 – North America,

Western Europe, Japan

20

Cummins Pow er Generation Auxiliary Pow er Units

21

Pow er Generation Segment

Commercial 58% Alternators 20% Rental 2% Consumer 11% Power Electronics 4% Energy Solutions 5%

2007 Revenue by Product

Capitalize on industry

growth

Leverage existing

market leadership

Establish leadership in

all major markets

Expand into new and

adjacent markets

2007 Segment Data Sales: $3.1 billion EBIT: $334 million EBIT Margin: 10.9%

22

Expand Into New and Adjacent Markets

23

ComfortGuard APU System

Integrated system which eliminates the

need to idle the main vehicle engine

Reduces fuel consumption up to 80%,

compared to idling the main engine

Payback period of 1-2 years Utilize proven small kw diesel platform

used in all Consumer markets

Successfully launched in 2007

– Considered among the market leaders by end of first year – Secured first fit availability with Volvo Trucks N.A.

24

Cummins Poised for Grow th, Even in Dow n Market

5 10 15 20 25 30 35 2003 2006 2008E Units (Thousands)

APU Business connected to

North America Truck Market

Cummins channel more

capable today

First fit sales with Volvo CARB approval for Integrated

DPF solution, first approved system

ComfortGuard is one part of

a portfolio of Cummins solutions to address idling

APU Market Size

25

Cummins Delivers the Right Technology – On Time, Every Time –

• We have developed the best solutions in the

market for the EPA ’07 and ‘10 emissions regulations

• Customers recognize Cummins for our technology

leadership and dependability

• We are investing in the next generation of

profitable growth opportunities in global on- highway markets

26

Thank You for Your Interest in

For Additional Information Contact: Dean Cantrell, Director – Investor Relations (812) 377-3121 Dean.A.Cantrell@Cummins.com www.Cummins.com

Appendix

28

Cummins Inc.

Macro growth trends

play to Cummins’ strengths

Disciplined

investment for growth

Demonstrated

technology leadership

Components Segment 19% Engine Segment 52% Power Gen Segment 19% Distribution Segment 10%

2007 Data Sales: $13.0 billion EBIT: $1,227 million EBIT Margin: 9.4%

2007 Revenue by Segment

29

Cummins Inc.

Mexico/Latin America 9% Africa/Middle East 5% Canada 3% United States 46% Asia/Australia 19% Europe/CIS 18%

2007 Revenue by Marketing Territory

International revenue

is 54% of consolidated revenue in 2007

Most international

areas growing at double digit rate

Demonstrates our

geographic diversity

30

Cummins – Historical Performance

$181 $543 $907 $1,179 $1,227 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2003 2004 2005 2006 2007 $ Millons $6,296 $8,438 $9,918 $11,362 $13,048 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 2003 2004 2005 2006 2007 $ Millons

EBIT Sales

31

Engine Segment

Emission regulations

create opportunities

Emerging markets Strategic OEM

partnerships

New engine platforms Aftermarket revenue

creates stable earnings

High Horsepower (19-91L) 17% Midrange (3-9L) 40% Heavy-Duty (10-15L) 22% Parts and Service 21%

2007 Revenue by Product

2007 Segment Data Sales: $8.2 billion EBIT: $589 million EBIT Margin: 7.2%

32

Engine Segment

Gaining market share in

• n-highway markets

Industrial markets

supported by non- residential construction and commodity markets

Expanding capacity to

meet growing demand

Light-duty Automotive & RV 16% Heavy-duty truck 24% Medium-duty Truck & bus 16% Stationary Power 11%

2007 Revenue by Market Application

Construction & Ag 18% Mining/Rail Govt/O&G Marine 15%

2007 Segment Data Sales: $8.2 billion EBIT: $589 million EBIT Margin: 7.2%

33

Engines – Historical Performance

$62 $328 $582 $733 $589 $0 $100 $200 $300 $400 $500 $600 $700 $800 2003 2004 2005 2006 2007 $ M $3,582 $5,424 $6,657 $7,511 $8,182 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 2003 2004 2005 2006 2007 $ M

Segment EBIT Sales

34

Pow er Generation Segment

Commercial 58% Alternators 20% Rental 2% Consumer 11% Power Electronics 4% Energy Solutions 5%

2007 Revenue by Product

Capitalize on industry

growth

Leverage existing

market leadership

Establish leadership in

all major markets

Expand into new and

adjacent markets

2007 Segment Data Sales: $3.1 billion EBIT: $334 million EBIT Margin: 10.9%

35

Pow er Generation – Historical Performance

($19) $60 $145 $220 $334 ($50) $0 $50 $100 $150 $200 $250 $300 $350 $400 2003 2004 2005 2006 2007 $ M $1,329 $1,842 $1,999 $2,416 $3,060 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2003 2004 2005 2006 2007 $ M

Segment EBIT Sales

36

Components Segment

New products launched Industry leading

technology

Capacity expansion Grow with CMI and non-

CMI engine volumes

Leverage global

distribution to grow aftermarket

Specialty Filtration 6% Air Intake Systems 9% Turbocharger 29% Fuel Systems 14% Engine Filtration 17% Acoustic Exhaust 10%

2007 Segment Data Sales: $2.9 billion EBIT: $153 million EBIT Margin: 5.2%

2007 Revenue by Product

Catalytic Exhaust 15%

37

Components – Historical Performance

$86 $84 $89 $107 $153 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2003 2004 2005 2006 2007 $ M $1,292 $1,783 $2,000 $2,281 $2,932 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2003 2004 2005 2006 2007 $ M

Segment EBIT Sales

38

Distribution Segment Continue acquisitions,

consolidations and integrations

Leverage Cummins

equipment growth

World-class

customer support

Build capabilities – invest

in growing regions

Parts, Filters, & Consumables 37% Service 17% Engines 21% Power Generation 25%

2007 Revenue by Product

2007 Segment Data Sales: $1.5 billion EBIT: $187 million EBIT Margin: 12.1%

39

Distribution – Historical Performance

$51 $79 $107 $144 $187 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2003 2004 2005 2006 2007 $ M $669 $973 $1,191 $1,385 $1,540 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2003 2004 2005 2006 2007 $ M

Segment EBIT Sales

40

Joint Venture Sales Unconsolidated

$529 $1,474 $1,285 $1,232 $1,940 $0 $500 $1,000 $1,500 $2,000 $2,500 2003 2004 2005 2006 2007 $ Millions $1,316 $1,029 $1,204 $1,715 $2,497 $3,435 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2003 2004 2005 2006 2007 $ Millions

Engines Distribution

In 2003, sales from certain JVs (colored red above) were treated as unconsolidated; adoption of FIN 46R in 2004 required the company to consolidate the results of certain JVs.

41 $162 $72 $105 $130 $166 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2003 2004 2005 2006 2007 $ Millions $72 $94 $110 $123 $175 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2003 2004 2005 2006 2007 $ Millions

Joint Venture Sales Unconsolidated

Power Generation Components

Non-GAAP Reconciliations

43

Non-GAAP Reconciliation – EBIT

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,

• r 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.

$ 1,169 $ 58 $ 1,227 2007 $ 91 $ 90 $ 181 2003 $ 1,083 $ 798 $ 432 Earnings before income taxes and minority interests $ 96 $ 109 $ 111 Less: Interest Expense $ 1,179 $ 907 $ 543 EBIT 2006 2005 2004 Millions Years Ended