Cummins Power GenerationInvestor ConferenceSeptember, 2006

2

Welcome and Introductions

Tom Linebarger – PresidentTony Satterthwaite – Generator SetsKaren Battin – Finance leaderThad Ewald – Power ElectronicsElizabeth Carey – EngineeringFiona Devan – Human ResourcesChar Niemczura – Customer SupportLisa Yoder – ITRichard Eikill – ConsumerClaire Roper – Cummins Generator Technologies

3

Other People of Importance

Scott Schneider – Fridley Plant ManagerDenise Goffinet – Staff AssistantInvestor Relations Staff

Dean CantrellTroy DewarLea Cain

4

Disclosure Regarding Forward-Looking Statements and non-GAAP Financial Measures

This presentation contains certain forward-looking information. Any forward-looking statement involves risk and uncertainty. The Company’s future results may be affected by changes in general economic conditions and by the actions of customers and competitors. Actual outcomes may differ materially from what is expressed in any forward-looking statement. A more complete disclosure about forward-looking statements begins on page 60 of our 2005 Form 10-K, and it applies to this presentation.

This presentation contains certain non-GAAP financial measures such as earnings before interest and taxes (EBIT). Please refer to our website (www.cummins.com) for the reconciliation of EBIT to GAAP financial measures.

5

Agenda

Market overviewFinancial performanceSustainability of performance

GrowthBuilding blocks

Reducing volatility

6

EnginesEngines Power Power GenerationGeneration

ComponentsComponents DistributionDistribution

Cummins Inc.

7

Cummins Inc.

Leverage complementary businessesCreate shareholder valueLow cost producerGrow in related marketsDemonstrate a performance ethic

Increase profitability and cash flowMaintain strong balance sheet and invest in growthMaximize shareholder value

2005: $9.9B

Key Strategic Principles

Engines56%

Power Generation

17%

Components17%

Distribution10%

8

Agenda

Market overviewFinancial performanceSustainability of performance

GrowthBuilding blocks

Reducing volatility

9

Centralized Power (Utilities):105 gigawatts

Standby Power: 26 gigawatts

Mobile Power: 15 gigawatts

Distributed Generation: 25 gigawatts

Where Does Cummins Compete?

Source: EIA, Parkinson

Sales of Power Generation Equipment2005 Total = 171 gigawatts

10

Standby Power

UsesCodes and standardsEmergency responseAvoid economic loss

CustomersCommercial buildingsDatacentersSewage treatment plants

Natural gas or diesel fueledDrivers

Non-residential constructionUtility power reliabilityEconomic dependence

CMI Share 33%

11

Distributed GenerationUses

Grid substitution and supplementOff-grid useSelf generationPeaking

CustomersIndustrial and commercial users in developing countriesOil and gas, mining, ski resortsUniversities, hospitals, agri-business

Natural gas, bio gas, or dieselDrivers

Utility investment in generation and distributionDemand in specific industries with remote applications (e.g. mining, oil and gas)Economics of self-generation

• Incentives• Price dislocation• Relative fuel price

CMI Share 15%

12

Mobile PowerUses

Auxiliary power on the movePortable power

CustomersRecreational vehicle ownersPleasure boat ownersSpecialty vehiclesConstruction contractors

Gasoline, propane or dieselDrivers

Recreational vehicle trends• More uses for electricity on the road

Recreational marine trends• More uses for electricity on the water

Portable• More uses for electricity everywhere

CMI Share 15%

13

0

5 0 0 0 0

1 0 0 0 0 0

1 5 0 0 0 0

2 0 0 0 0 0

2 5 0 0 0 0

3 0 0 0 0 0

1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6

Standby and Distributed Generation Market Trends

Market was constrained by engine capacity in 2004-2005Industry has been expanding capacity through productivity gainsIndustry is adding physical capacity for 2007 – 2008 CMI has been adding engine capacity since 2004

Mar

ket u

nit s

ales CAGR 8%

CAGR 5%

Source: Parkinson and company estimates

14

We Have a Strong Market Position

Cummins21%

Kohler / SDMO

7%

Aksa2%

Others29%

Caterpillar41%

Market Share of Standby, Mobile and Distributed Generation

Source: Company estimates

15

Strong Market Positions in the Segments in Which We Compete

Distributed Generation

Emergency Standby Power

Rental Power

Mobile Power- RV- Marine- Adjacencies

Turbines

Caterpillar Power GenerationCummins Power Generation

Engines

Components- Alternators- Electronics

16

Strong Market Positions in the Segments in Which We Compete

MobilePower

DistributedGeneration

Standby Power

High-spec Standby

40%

Recreational Marine

33%

Commercial Mobile

40%

Motorized RV

85%

25%

Basic Power

30%

Alternators

Source: Parkinson and company estimates

17

Power Generation Value Chain

Components Products Solutions Operations and Service

Market Size: $6.2B Market Size: $9.2B (includes components)

Market Size: $8.8B Market Size: $10B

EnginesAlternatorsControls

Generator SetsAutomatic Transfer Switches

Power system design and installationCustom Application DevelopmentSwitchgear

Rental RevenuesIPP RevenuesOperation and MaintenanceRepair and Planned Maintenance

John DeerePerkinsEmerson

CaterpillarKohlerEmerson

CAT DealersPackagers

Product DealersIndependent Power ProducersRental Companies

18

From Whom Customers Are Buying

Still covers thebroad market

From a customer’s perspective, where is value provided?

• Brand value

• To whom do they go for service

• Whom do they specify

Past Present Future

Low

Hig

h

Perc

ent o

f Val

ue In

fluen

ced

Consolidation ofsuppliers and assemblers

____ Component suppliers; ____ Assemblers; ____ Solution providers

19

Cummins Power Generation

59%16%

25%Distributed Generation

StandbyPower

MobilePower

Global Lines of Businesses (LOB)

Commercial

Alternators

Rental

Consumer

Power Electronics

Three Major Markets

2005 Sales Breakdown 100% = $2 B

54%

18%

3%

16%

6%3%

EnergySolutions

20

Agenda

Market overviewFinancial performanceSustainability of performance

GrowthBuilding blocks

Reducing volatility

21

Power Generation – Historical Performance

$74

($25) ($19)

$60

$145

$196

-50

0

50

100

150

200

250

2001 2002 2003 2004 2005 Q2 '06

$ M

$1,422

$1,226$1,329

$1,842$1,999

$2,213

0

500

1000

1500

2000

2500

2001 2002 2003 2004 2005 Q2 '06

$ M

Segment EBITSales

LTM LTM

22

Cummins Power Generation Turnaround

Restructured and reorganized the BusinessImplemented aggressive turnaround planFocused on cost reductionImplemented a new strategy

Cost reductionPricingBring all businesses to target returnsMoving resources to opportunities

23

Power Generation BusinessObjectives

Achieve financial goalsRevenue growth: 8%-10%EBIT margin: 7%-9%Return on Average Net Assets: 20%-25%

Be the first choice of customersDemonstrate a performance ethic

24

Power Generation BusinessStrategy

Defend and establish strong market positionsConsumer growthGrow distributed generationLow cost producerLeverage our global presence

25

2006 – 2007 Outlook

Markets will continue to show strengthGrowth is limited by capacity

Pricing environment remains generally favorableCost inflation, especially on commodities

Continued progress on strategic initiatives should help Cummins Power Generation achieve above market performance

26

Sustainability of Performance

Markets are strongWe are growing faster than the market

Share growthAdjacencies

We have the building blocks required to establish and maintain leadership positions across a wide range of markets

27

Agenda

Market overviewFinancial performanceSustainability of performance

GrowthBuilding blocks

Reducing volatility

28

Target of 8% - 10% Annual Revenue Growth

Market growthElectricity demandDependence on electricityDeveloping economiesLow investment in generation and distribution

Share increasesGrow faster than the marketGrow in markets in which we are strongExpand in big markets

Adjacency growthComplementary lines of products, technologies and customers

29

Electricity Consumption Driving Power Generation Growth

Source: Energy Information Administration (DOE)

World Electricity Consumption

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Bill

ion

Kilo

wat

thou

rs

Consumption

CAGR = 3.1%

CAGR = 2.9%

History Forecast

30

Growth in Developing Economies

Year-on-year increases in electricity consumption in developing economies is acceleratingElectricity consumption in developing countries expected to overtake OECD countries by 2015Highest growth will be in Asia

OECD: Organization for Economic Cooperation and Development (Developed Economies)

31

Increasing Dependence on Electricity and Security of Supply

Recent incidents highlighting criticality of electricity supply

Terrorism, blackouts, severe weather

Economic loss calculations for power outages becoming more widespread

Website interruptions, data centers, warehouses

National security and disaster preparedness becoming more important

32

Capacity is Not Keeping Up with Demand

Generation not keeping up with demand; transmission and distribution is worseAging infrastructure in North America receiving a lot of attention (but little investment)

Recent issues in California (heat) and East Coast (weather)

Population growth in developing areas (India, China, Africa) pushing capacity of networks

33

Market Outlook Shows Sustained Growth of 5% - 7%

Global electricity consumption growing at 3% 3%

Developing economies adopting electricity usage 1% - 2%

Increasing dependency on electricity 1% - 2%

Investments in generation and transmission capacity growing at 1% less than consumption

1% - 2%

Impact on the Market

5% - 7%

34

We Will Grow Faster Than the Market

Further penetrate where we have a leadership positionEstablish leadership position where we are not a leader todayAdjacencies and natural extensions of what we already do

35

Growing From a Leadership Position

Re-segment, redefine and expand accessible market Leverage technology, market position, customer relationships and distribution

Find low penetration opportunities to serveExpand presence in marketIncrease share of wallet

36

RV Towable Market has Shown Significant Increase in Generator Set Penetration

0

50000

100000

150000

200000

250000

300000

350000

400000

2003 2004 2005 2006 FCST

Uni

ts

0%

2%

4%

6%

8%

10%

12%

14%

16%

Motorized* Towable** Towable penetration Source: RVIA, Company estimates

37

Further Penetration of Leadership Position in India

In 2001, Cummins was market leader in the diesel commercial generator set business with a share near 50%

Dominant above 100 kW, no presence below 100 kWWe expanded presence in the small product range

Gained share of 25% below 100 kWSales have increased at a CAGR of 23% from 2003 to 2005

38

Share Opportunities

Significant opportunities exist to grow share in under-served segmentsNew emission regulations offer the opportunity to pick up share from lower-spec competitorsCombination of right product and low cost has strong impact in markets

39

Establish Strong Market Positions GloballyGeographic Segmentation – Generator Sets and Systems

Approx. $7 B global market

Share of Global Generator Set Consumption (Total Output, Parkinson 1998-2004)

0%

5%

10%

15%

20%

25%

30%

35%

North A

merica

Wes

tern E

urope

China

Middle

East

India

Africa

Asean

Rest o

f Asia

E&C Euro

peSou

th Pac

ific

Brazil

South

America

Japa

n

Centra

l Ameri

ca

Mexico

Russia

& C

IS

8 Target Territories = 81% of Global Market

Brazil is largest market in LAO

Russia has large potential

Market Leader (# 1 or # 2)

Leader in some segments of the market

Not a market leader

40

Cummins Generator Set Sales Market Share Gains in Europe

2001 2002 2003 2004 2005 FC06

Mill

ions

of D

olla

rs

+80%

European market grew 2.5% from 2002-2006; Cummins Power Generation grew 34% over the same period

41

Adjacencies

Consumer marketsLeverage product technologies – size and noiseLeverage distribution strengths• Service network and focus

Leverage Onan and Cummins brandsLeverage global presence

42

Commercial Mobile

Consumer Products Adjacencies

TruckOEMs

RVOEMs

Consumers ProfessionalsHome

Standby

Recreational Vehicles

Aux. Power Unit

Portables

Trailers

43

We Have the Building Blocks for Leadership

Channel capabilitiesLow cost producerGlobal presenceTechnical leadership

44

Building Distribution Capabilities

Historically an engine business channelGlobal reach

Large presenceFinancially strongComplementary products

Building power generation capabilities in certain markets

EuropeNigeriaIndonesiaMiddle East

45

Low Cost ProducerDesign

Purchasing

Manufacturing Logistics

46

Achieve Low Cost Producer Position Example of Commercial Generator Set Cost Reductions

Average reduction over 10 models - 14%

Average reduction over 10 models - 30%

14%25%Manufacturing

18%25%Sourcing

42%15%Design

26%35%Specification

Enclosed SetOpen SetSavings Area

14%25%Manufacturing

18%25%Sourcing

42%15%Design

26%35%Specification

Enclosed SetOpen SetSavings Area

Source of Savings

47

Stamford, UK San Luis Potosi, Mexico Kempen, Germany Ingolstadt, Germany Craiova, Romania Wuxi, China Ahmednagar, India Oahkham, UK Karlshuld, Germany

Fridley, MNRamsgate, UKSingaporeBeijing, ChinaSao Paulo, BrazilColumbus, INDaman, IndiaPune, India

Manufacturing Footprint

48

Low Cost Global Sourcing

21%

35%

43%53%

2003 2004 2005 2006

Alternators Percent Product from China and India

49

Using Technology to Deliver Marketplace Advantage

Increased Power Density Reduce Costs

Emissions Leadership Increase Share

Integration Customer Preference

50

Leverage Strength in Technological Capabilities

Power Unit Inverter/Charger

Boost

Power Source Power Source

Seamless

3.0kW7.5kW House Batteries

10.0kW

10.0kWSine WaveMax Power

3.0kWSine WaveQuiet Time

HQD810 Example

120V ACPure Sine Wave

12V DCVariable AC

Customer BenefitsNoise Reduction – 50% reduction (4-6dB)Generator Fuel Consumption – ~15-20% ReductionSystem Automation – Simplify electrical operation300 lb Weight Savings – More cargo carrying capacitySimpler Service• (One stop electrical service; Use entire Onan service network)

51

Value Comparison

Today’s 7.5 QD System

7.5 QD Generator set

New 8/10 HQD System

7.5 QD Generator set2kW Sine wave inverterTransfer switchDisplays and controls

40% more content

52

Target of 8% - 10% Annual Revenue Growth

Market growthElectricity demandDependence on electricityDeveloping economiesLow investment in generation and distribution

Share increasesGrow faster than the marketGrow in markets in which we are strongExpand in big markets

Adjacency growthComplementary lines of products, technologies and customers

53

Agenda

Market overviewFinancial performanceSustainability of performance

GrowthBuilding blocks

Reducing volatility

54

Sustainability of Performance

Effective organization and leadership teamTurned the business around

Now hitting financial targetsSustainability

Strong marketsGood growthHave the building blocks for continued success

We have taken the steps to reduce volatility

55

Power Generation BusinessObjectives

Achieve financial goalsRevenue growth 8%-10%EBIT margin 7%-9%Return on Average Net Assets 20%-25%

Be the first choice of customersDemonstrate a performance ethic

Last Twelve Months

• Sales growth 14.5%

• EBIT margin 8.9%

• Return on Net Assets 26%

56

Reducing Volatility

Broader, diversified marketsIncreased market penetrationGross margin improvementLow fixed cost structureSpending control

57

Increases in Geographic Diversity

North America

37%

EMEA30%

Latin America

7%

India8%

China8%

Asia Pacific10%

North America

44%

EMEA21%

Latin America

10%

India8%

China7%

Asia Pacific10%

2003: $1.3B 2005: $2.0B

CAGR 2003 – 2005: 24%

58

Increased Market Penetration

Growth in non-RV consumer markets Increased share in EuropeIncreased penetration in IndiaIncreased share in the stable basic protection

segment

59

Reducing Volatility

Broader, diversified marketsIncreased market penetrationGross margin improvementLow fixed cost structureSpending control

60

Sales and EBIT% - Quarterly Trend

460493

520

427

493 504

575598

369

536

9.4%

8.4%8.5%

9.1%

7.1%

3.5%

4.2%

3.0%

3.9%

1.4%

0

100

200

300

400

500

600

700

800

Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06

$ in

Mill

ions

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Sales EBIT%

Cummins Power GenerationInvestor ConferenceSeptember, 2006