Full Press Release

January 29, 2007  COLUMBUS, IND. - Cummins Inc. (NYSE: CMI) today reported record sales and earnings for the fourth quarter and all of 2006, marking the third consecutive year of record financial performance for the Company.

Cummins eclipsed $3 billion in quarterly sales for the first time during the fourth quarter. All four of the Company's operating segments posted record revenues, and Cummins' Power Generation and Distribution businesses reported record Segment EBIT in the fourth quarter, as well as for the entire year.

For the full year, Cummins reported sales of $11.36 billion, up 15 percent from $9.92 billion in 2005. Earnings Before Interest and Taxes (EBIT) of $1.18 billion (10.4 percent of sales) increased 30 percent over $907 million (9.1 percent of sales) in 2005.

Net earnings rose 30 percent to $715 million, or $14.21 per diluted share, from $550 million, or $11.01 per diluted share, the previous year.

In the fourth quarter, Cummins reported sales of $3.03 billion, a 10 percent increase from $2.75 billion in the same period in 2005. EBIT rose 13 percent to $303 million (10.0 percent of sales), from $269 million (9.8 percent of sales).

Net earnings in the fourth quarter increased 13 percent to $189 million, or $3.75 per diluted share, from $167 million, or $3.31 per diluted share, in the fourth quarter of 2005. Gross margin for the quarter was 22.1 percent, down slightly from 22.5 percent for the fourth quarter of 2005.

The Company's Power Generation and Distribution businesses performed at record levels in the fourth quarter - and for the entire year - while the Engine segment reported near-record EBIT on its best-ever quarterly sales performance in the fourth quarter. Segment EBIT at the Company's Components segment was essentially flat in the fourth quarter, compared to 2005.

The Distribution business continued its trend of growing earnings faster than sales, with the greatest growth coming in sales of power generation products in the Middle East and Europe. Joint venture income from the Company's North American distributors also rose significantly in the quarter.

Engine sales were a record in the fourth quarter, led by strong gains in North America for heavy- and medium-duty truck markets and in the international construction markets. Additionally, sales to the oil and gas engine markets more than doubled from the fourth quarter of 2005.

During the fourth quarter Cummins announced plans to enter the light-duty diesel market in both the United States and China. The Company announced that its Columbus (Indiana) Engine Plant will be the home of its U.S. - based light-duty program that will add at least 600 jobs by the end of the decade.

Cummins also announced a joint venture to make 2.8 and 3.8-liter engines in China with Beiqi Foton Motor Company in Beijing. The engines, scheduled to go into production in 2008, will be used in light-duty commercial trucks, pickups and sport utility vehicles and certain industrial applications.

Last week, Cummins announced that its new 6.7-liter turbo diesel engine for the 2007.5 model year Dodge Ram Heavy Duty pickup meets the 2010 standards for oxides of nitrogen emissions, a full three years ahead of schedule. The engine went into production at the Company's Midrange Engine Plant in Walesboro, Indiana, in January and the new Ram pickup truck is expected to be on the market in March.

"By almost every measure, 2006 was an outstanding year," said Cummins Chairman and Chief Executive Officer Tim Solso. "We continued to build on the success of the past two years even as we devoted significant time and resources to meeting the 2007 emissions changes in the United States.

"All of our business segments showed strong sales growth in 2006 and we gained share in key businesses and geographic markets around the world. At the same time, we invested in critical growth opportunities and developed cost-control strategies that will help us weather the temporary slowdown in the North American heavy-duty truck engine market in 2007 as a result of the U.S. emissions changes."

2007 outlook
The Company expects to earn between $11 and $11.50 a share in 2007, despite the forecasted emissions-related downturn in the North American heavy-duty truck engine market. As a result of a regular review of its disclosure and corporate governance practices, Cummins has decided to offer only annual earnings guidance starting in 2007.

The guidance reflects the Company's confidence in its ability to deliver strong earnings as a result of its continued product and geographic diversification, investment in key growth opportunities and ongoing efforts to control costs.

For example, Cummins expects strength in medium-duty and high-horsepower engine sales, power generation and distribution to help offset lower North American heavy-duty sales.

The Company also anticipates an increase in its turbocharger sales to other engine manufacturers and sees significant growth opportunities in the sale of advanced exhaust aftertreatment and filtration products to meet changing emissions standards around the world.

Additionally, Cummins is forecasting continued profitable growth in key emerging markets such as China and India, and international sales are expected to exceed U.S. sales in 2007.

"I am extremely excited about our prospects for 2007 and beyond," Solso said. "The Company is well-positioned to face the challenges of the changing emissions regulations in the near-term, and we're also working hard to identify and invest in the next generation of profitable growth opportunities."

Fourth quarter 2006 details

Engine segment
Sales of $1.95 billion were a quarterly record and 6 percent higher than $1.84 billion during the same period in 2005. Segment EBIT increased 16 percent to $181 million, or 9.3 percent of sales, from $156 million, or 8.5 percent of sales, a year ago.

North American heavy-duty truck engine shipments rose 14 percent and North American medium-duty engine shipments increased 57 percent in advance of the 2007 emissions changes, offsetting a 15 percent drop in shipments to Chrysler during the quarter. Shipments to the international construction markets rose 18 percent from the same period in 2005.

Power Generation segment
Segment sales of $658 million rose 14 percent from $575 million, while Segment EBIT increased 27 percent to $62 million, or 9.4 percent of sales, from $49 million or 8.5 percent of sales.

Commercial sales rose 18 percent and alternator sales jumped 30 percent, more than offsetting a drop in consumer sales.

Distribution segment
Segment sales of $386 million rose 12 percent from $346 million in the same period in 2005. Segment EBIT increased 18 percent to $39 million, or 10.1 percent of sales, from $33 million, or 9.5 percent of sales in 2005.

Sales of power generation products were strong, most notably in the Middle East and Europe. Joint venture income rose 45 percent in the quarter, led by improved performance at North American distributors.

Components segment
Sales in the segment - which consists of the Company's filtration, turbocharger, exhaust aftertreatment and fuel systems businesses - rose 12 percent to $599 million, from $535 million for the same period in 2005. Segment EBIT fell slightly to $23 million, or 3.8 percent of sales, from $24 million, or 4.5 percent of sales, in the fourth quarter of 2005.

The Segment's performance was led by the Filtration and Fuel System businesses, which reported improved sales and gross margin. The Company's turbocharger and Emission Solutions businesses were adversely affected by costs associated with introducing new products, and manufacturing and logistics challenges caused by rapidly increasing demand.

Cash flow,  pension funding and debt reduction
The Company's strong cash flow in the fourth quarter allowed it to continue to fund its pension above required levels and to reduce debt. Cummins reduced its long-term debt by half during 2006, lowering its debt-to-capital ratio to 22.4 percent at year's end.

For the year, Cummins paid $266 million into its pension funds, well in excess of the required payments. The Company's full-year cash flow was a record $840 million. Excluding the pension payments, cash flow from operations was $1.1 billion - a 21 percent improvement from 2005.

Taxes
During the fourth quarter, tax legislation was signed that retroactively extended the incremental research tax credit to tax years 2006 and 2007. This favorably affected the Company's quarterly and full-year tax provision by $10.3 million, or $0.20 per share, in the quarter and $0.21 per share for the full year.

Presentation of Non-GAAP Financial Information
EBIT and cash flow from operations excluding pension contributions are non-GAAP measures used in this release.  Click here to view the financial schedules and supplemental data.  Each is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBIT is a measure used internally to assess the performance of the operating units.

Webcast information Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

About Cummins
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $715 million on sales of $11.4 billion in 2006. Press releases can be found on the Web at www.cummins.com.

Forward-looking statements disclosure
Information provided in this release and on the webcast that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.