CUMMINS INC. AND CONSOLIDATED SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES (Unaudited)

Earnings before interest, taxes and minority interests (EBIT)

We define EBIT as earnings before interest expense, provision for income t axes and minority interests in earnings o f 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. Below is a reconciliation of EBIT, a non-GAAP financi al measure, to our consolidated net earnings, 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 operati ng

performance without regard to financing methods, capital structure or income taxes. This measure is not in accordance with, or 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.

Three Months Ended Six Months Ended June 26, June 27, March 27, June 26, June 27, Millions 2005 2004 2005 2005 2004 Earnings before interest, income taxes and minority interests. $ 235 $ 148 $ 163 $ 398 $ 226 EBIT as a percentage of net sales..................................... 9.4% 7.0% 7.4% 8.5% 5.8% Less: Interest expense.......................................................... 28 27 28 56 54 Provision for income taxes ........................................... 58 34 34 92 48 Minority interests in earnings of consolidated subsidiaries . 8 5 4 12 9 Net earnings ................................................................. $ 141 $ 82 $ 97 $ 238 $ 115

Net earnings as a percentage of net sales........................... 5.7% 3.9% 4.4% 5.1% 3.0%