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Content analysis
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8th grade Avg
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EXHIBIT 12
CUMMINS INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
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| For the years ended December 31, |
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| 2008 |
| 2007 |
| 2006 |
| 2005 |
| 2004 |
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| in millions |
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Earnings |
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Earnings before income taxes and minority interests |
| $ | 1,178 |
| $ | 1,169 |
| $ | 1,083 |
| $ | 798 |
| $ | 432 |
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Add: |
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Fixed charges |
| 94 |
| 98 |
| 134 |
| 144 |
| 142 |
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Amortization of capitalized interest |
| 3 |
| 6 |
| 5 |
| 5 |
| 4 |
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Distributed income of equity investees |
| 186 |
| 107 |
| 75 |
| 110 |
| 60 |
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Less: |
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Equity in earnings of investees |
| (231 | ) | (192 | ) | (119 | ) | (109 | ) | (99 | ) | |||||
Capitalized interest |
| (6 | ) | (1 | ) | (4 | ) | (2 | ) | — |
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Earnings before fixed charges |
| $ | 1,224 |
| $ | 1,187 |
| $ | 1,174 |
| $ | 946 |
| $ | 539 |
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Fixed charges |
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Interest expense |
| $ | 42 |
| $ | 58 |
| $ | 96 |
| $ | 109 |
| $ | 111 |
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Capitalized interest |
| 6 |
| 1 |
| 4 |
| 2 |
| — |
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Amortization of debt discount |
| 2 |
| 1 |
| 1 |
| 2 |
| 4 |
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Interest portion of rental expense(1) |
| 44 |
| 38 |
| 33 |
| 31 |
| 27 |
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Total fixed charges |
| $ | 94 |
| $ | 98 |
| $ | 134 |
| $ | 144 |
| $ | 142 |
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Ratio of earnings to fixed charges |
| 13.0 |
| 12.1 |
| 8.8 |
| 6.6 |
| 3.8 |
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(1) Amounts represent those portions of rent expense that are reasonable approximations of interest costs.