EXHIBIT 12
CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
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| For the years ended December 31, |
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| 2006 |
| 2005 |
| 2004 |
| 2003 |
| 2002 |
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| Millions |
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Earnings |
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Earnings before income taxes, minority interests, dividends on preferred securities of subsidiary trust and cumulative effect of change in accounting principles |
| $ | 1,083 |
| $ | 798 |
| $ | 432 |
| $ | 91 |
| $ | 78 |
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Add: |
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Fixed charges |
| 134 |
| 144 |
| 142 |
| 134 |
| 113 |
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Amortization of capitalized interest |
| 5 |
| 5 |
| 4 |
| 3 |
| 6 |
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Distributed income of equity investees |
| 75 |
| 110 |
| 60 |
| 17 |
| 10 |
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Less: |
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Equity in earnings of investees |
| (119 | ) | (109 | ) | (99 | ) | (66 | ) | (20 | ) | |||||
Capitalized interest |
| (4 | ) | (2 | ) | — |
| (1 | ) | (1 | ) | |||||
Preferred dividends of consolidated subsidiaries |
| — |
| — |
| — |
| (11 | ) | (21 | ) | |||||
Earnings before fixed charges |
| $ | 1,174 |
| $ | 946 |
| $ | 539 |
| $ | 167 |
| $ | 165 |
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Fixed charges |
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Interest expense |
| $ | 96 |
| $ | 109 |
| $ | 111 |
| $ | 90 |
| $ | 61 |
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Capitalized interest |
| 4 |
| 2 |
| — |
| 1 |
| 1 |
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Amortization of premiums, discounts, and capitalized expenses related to indebtedness |
| 1 |
| 2 |
| 4 |
| 2 |
| 1 |
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Interest portion of rental expense(1) |
| 33 |
| 31 |
| 27 |
| 30 |
| 29 |
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Preferred dividends of consolidated subsidiaries |
| — |
| — |
| — |
| 11 |
| 21 |
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Total fixed charges |
| $ | 134 |
| $ | 144 |
| $ | 142 |
| $ | 134 |
| $ | 113 |
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Ratio of earnings to fixed charges |
| 8.8 |
| 6.6 |
| 3.8 |
| 1.2 |
| 1.5 |
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(1) Amounts represent those portions of rent expense that are reasonable approximations of interest costs.