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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2006 OR [ ]
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 1-4949 CUMMINS INC. AND AFFILIATES CUMMINS INC.
CUMMINS INC. AND
AFFILIATES
FINANCIAL
STATEMENTS
December 31, 2006 AND 2005
CUMMINS INC. AND AFFILIATES
TABLE OF
CONTENTS
* As the Plan is a member of the Cummins Inc. and
Affiliates Retirement and Savings Plans Master Trust ("Master Trust"),
the schedules of assets (held at end of year), at December 31, 2006 and
of reportable transactions for the year ended December 31, 2006 of the
Master Trust have been certified by the Master Trustee and have been
separately filed with the Department of Labor. Other Supplemental
Schedules not filed herewith are omitted because of the absence of the
conditions under which they are required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
REPORT OF INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM To the
Benefits Policy Committee and We have
audited the accompanying statements of net assets available for benefits of the
Cummins Inc. and Affiliates Retirement and Savings Plan for Onan Corporation
Employees (the "Plan") as of December 31, 2006 and 2005, and the related
statement of changes in net assets available for benefits for the year ended December
31, 2006. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We
conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan as of December
31, 2006 and 2005, and the changes in net assets available for benefits for the
year ended December 31, 2006, in conformity with accounting principles
generally accepted in the United States of America. June 15,
2007 CUMMINS INC. AND AFFILIATES
STATEMENTS OF
NET ASSETS AVAILABLE FOR BENEFITS
CUMMINS INC. AND AFFILIATES
STATEMENT OF
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION
OF THE PLAN The following description of the Cummins Inc. and Affiliates
Retirement and Savings Plan for Onan Corporation Employees (the "Plan")
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan designed to provide
participants with a systematic method of savings and at the same time enable
such participants to benefit from contributions made to the Plan by Cummins
Inc. and Affiliates (collectively, the "Company"). Eligible employees are
employees of Onan Corporation. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Master Trust The Cummins Inc. and Affiliates Retirement and Savings Plans
Master Trust ("Master Trust") holds the assets of the Plan and the following
Company-sponsored plans: Cummins Inc. and
Affiliates Retirement and Savings Plan for Salaried and Non-Bargaining Hourly
Employees; Cummins Inc. and
Affiliates Retirement and Savings Plan for Bargaining Unit Employees; Cummins Inc. and
Affiliates Retirement and Savings Plan for Lubricant Consultants, Inc.
Employees; Cummins Inc. and
Affiliates Retirement and Savings Plan for Consolidated Diesel Company, Inc. Employees;
and Nelson
Retirement and Savings Plan The trustee for the Master Trust was The Vanguard Group
until July 2005 when State Street Corporation was appointed as trustee. As
participants transfer between different locations within the Company, their
related Plan account transfers to the appropriate Plan, if applicable. Such
transfers are reflected in the accompanying financial statements as "Fund
transfers with Affiliate Plans". CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS Contributions Participants may contribute up to 50% of their eligible pay
through a combination of pre-tax and after-tax contributions. Participants may
direct their contributions in any of seventeen investment options, including
Cummins Inc. common stock. Matching Contributions The Company matches participant contributions in amounts
ranging from 100% of the first $250, 75% of the next $250, 50% of the next
$1,000 and 25% of the next $1,000 of participant wages contributed to $1,188.
The matching contribution is made in the form of cash or Company stock, based
on the participant's employing company, as defined. Prior to May 1, 2002, Company
matching contributions in the form of Company stock could not be reinvested
into other investment options until the participant was 55 years of age. On
May 1, 2002, the Company started removing restrictions on the reinvestment of Company
stock received as a match. At December 31, 2002, 80% of Company stock received
as a match was available for diversification. Subsequent to February 1, 2003,
the entire amount of Company stock received as a match is available for
diversification. Participant Accounts Each participant's account is credited with the
participant's contributions, the Company's contributions and an allocation of Plan
earnings. Allocations of Plan earnings are made daily and are based upon the
participant's weighted average account balance for the day, as described in the
Plan document. Vesting Participants are fully vested in all employee and employer
contributions and earnings thereon at all times. Benefit Payments Upon termination of employment or retirement, account
balances are paid either as a lump-sum distribution or annual installments not
to exceed the lesser of 15 years or the life expectancy of the participant
and/or joint life expectancy of the participant and beneficiary, and commence
no later than the participant reaching age 70-1/2. The Plan also permits
hardship withdrawals from participant pre-tax contributions and actual earnings
thereon. Participants may also withdraw their after-tax contributions. CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS Voting Rights Each participant is entitled to exercise voting rights
attributable to the Company shares allocated to his or her account. The
Trustee shall vote all Company shares for which no voting instructions were
received in the same manner and proportion as the shares for which voting
instructions were received. Participant Loans A participant can obtain a loan up to a maximum of the
lesser of $50,000 or 50% of the participant's account balance. Loans are
secured by the participant's account balance and bear interest at the prime
rate plus one percent, and mature no later than 4½ years from the date of the
loan. Plan Termination Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements of the Plan have been prepared on the
accrual basis of accounting. Investments CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS Allocation of Master Trust Assets and Transactions The investment income and expenses of the Master Trust are
allocated to each plan based on the relationship of the Plan's investment
balances to the total Master Trust investment balances. Use of Estimates The preparation of financial statements, in accordance with
accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, and changes therein, and disclosure of contingent
assets and liabilities. Actual results could differ from those estimates. Risks and Uncertainties The Master Trust invests in various securities. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit, and overall market volatility. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the financial
statements. Payment of Benefits Benefit payments are recorded when paid. Administrative Expenses Substantially all costs of administering the Plan are paid
by the Company. Reclassifications Certain prior year amounts have been reclassified herein to
conform to the current method of presentation. CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
3.
INVESTMENTS IN
MASTER TRUST The Plan's investments are held in the Master Trust. At December
31, 2006 and 2005, the Plan's interest in the net assets of the Master Trust
was 10.1% and 10.3%, respectively. The following investments are held by the
Master Trust as of December 31: The fixed income fund portion of the Master Trust comprises
several fully benefit-responsive insurance and investment contracts. This fund
includes both open-ended, security-backed investments as well as closed-ended,
general account investments maturing through 2009. The contracts have varying
yields which averaged 4.87 percent and 4.75 percent during the years ended December
31, 2006 and 2005, respectively. The contracts have varying crediting interest
rates which averaged 4.93 percent and 4.66 percent during the years ended December
31, 2006 and 2005, respectively. The crediting interest rates adjust on
varying intervals by contract. There are no reserves against contract value
for credit risk of the contract issuer or otherwise. The fixed income fund's key objectives are to provide
preservation of principal, maintain a stable interest rate, and provide daily
liquidity at contract value for participant withdrawals and transfers in
accordance with the provision of the Plans. To accomplish these objectives,
the fixed income fund invests primarily in investment contracts such as
traditional guaranteed investment contracts (GICs) and wrapper contracts (also
known as synthetic GICs). In a traditional GIC, the issuer takes a deposit
from the fixed income fund and purchases investments that are held in the
issuer's general account. The issuer is contractually obligated to repay the
principal and a specified rate of interest guaranteed to the fixed income fund. CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS In a wrapper contract structure, the underlying investments
are owned by the fixed income fund and held in trust for participants. The
fixed income fund purchases a wrapper contract from an insurance company or
bank. The wrapper contract amortizes the realized and unrealized gains and
losses on the underlying fixed income investments, typically over the duration
of the investments, through adjustments to the future interest crediting rate
(which is the rate earned by participants in the fixed income fund for the
underlying investments). The issuer of the wrapper contract provides assurance
that the adjustments to the interest crediting rate do not result in a future
interest crediting rate that is less than zero. An interest crediting rate
less than zero would result in a loss of principal or accrued interest. The key factors that influence future interest crediting
rates for a wrapper contract include the level of market interest rates, the
amount and timing of participant contributions, transfers, and withdrawals into
and out of the wrapper contract, the investment returns generated by the fixed
income investments that back the wrapper contract and the duration of the
underlying investments backing the wrapper contract. Wrapper contracts'
interest crediting rates are typically reset on a monthly or quarterly basis.
While there may be slight variations from one contract to another, most wrapper
contracts use a formula to determine the interest crediting rate that is based
on the specific factors as aforementioned. Over time, the crediting rate
formula amortizes the fixed income fund's realized and unrealized market value
gains and losses over the duration of the underlying investments. Because changes in market interest rates affect the yield to
maturity and the market value of the underlying investments, they can have a
material impact on the wrapper contract's interest crediting rate. In
addition, participant withdrawals and transfers from the fixed income fund are
paid at contract value but funded through the market value liquidation of the
underlying investments, which also impacts the interest crediting rate. The
resulting gains and losses in the market value of the underlying investments
relative to the wrapper contract values are represented in the Statements of
Net Assets Available for Benefits as "Adjustment from fair value to contract
value". If the adjustment from fair value to contract value is positive for a
given contract, this indicates that the wrapper contract value is greater than
the market value of the underlying investments. The embedded market value
losses will be amortized in the future through a lower interest crediting rate
than would otherwise be the case. If the adjustment from fair value to
contract value is negative, this indicates that the wrapper contract value is
less than the market value of the underlying investments. The amortization of
the embedded market value gains will cause the future interest crediting rate
to be higher than it otherwise would have been. CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS All wrapper contracts provide for a minimum interest
crediting rate of zero percent. In the event that the interest crediting rate
should fall to zero and the requirements of the wrapper contract are satisfied,
the wrapper issuers will pay to the Plans the shortfall needed to maintain the
interest crediting rate at zero. This helps to ensure that participants'
principal and accrued interest will be protected. In certain circumstances, the amount withdrawn from the
wrapper contract would be payable at fair value rather than at contract value.
These events include termination of the Plans, a material adverse change to the
provisions of the Plans, if the employer elects to withdraw from a wrapper
contract in order to switch to a different investment provider, or if the terms
of a successor plan (in the event of the spin-off or sale of a division) do not
meet the wrapper contract issuer's underwriting criteria for issuance of a
clone wrapper contract. These events described herein that could result in the
payment of benefits at market value rather than contract value are not probable
of occurring in the foreseeable future. Examples of events that would permit a wrapper contract
issuer to terminate a wrapper contract upon short notice include the Plans'
loss of its qualified status, uncured material breaches of responsibilities, or
material and adverse changes to the provisions of the Plans. If one of these
events was to occur, the wrapper contract issuer could terminate the wrapper
contract at the market value of the underlying investments (or in the case of a
traditional GIC, at the hypothetical market value based upon a contractual
formula). CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS Following
is a summary of the fixed income fund's investments at December 31, 2006: CUMMINS INC. AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS Following
is a summary of the fixed income fund's investments at December 31, 2005:
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
(Full title of the plan)
500 Jackson Street
P. O. Box 3005
Columbus, IN 47202-3005
(Name of Issuer of Securities Held Pursuant to the
Plan and
the Address of its Principal Executive Office)
RETIREMENT AND
SAVINGS PLAN
FOR ONAN
CORPORATION EMPLOYEES
AND
SUPPLEMENTARY
INFORMATION
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 AND 2005
Page
Report of Independent Registered Public Accounting Firm
1
Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2006 and 2005
3
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 2006
4
Notes to Financial Statements
5
Supplemental Schedules*
Schedule H, line 4i Schedule of Assets (Held at End of Year)
17
Participants of the Cummins Inc. and
Affiliates Retirement and Savings Plan for
Onan Corporation
Employees
Columbus, Indiana
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December 31,
2006 AND 2005
2005
2006
As Restated
Assets
Investments:
Investment in Cummins Inc. and Affiliates
Retirement and Savings Plans Master
Trust, at fair value
$
143,836,855
$
129,716,759
Participant loans
1,457,496
1,531,126
Total investments
145,294,351
131,247,885
Employer contributions receivable
1,688,577
1,096,580
Net assets available for benefits
Net assets reflecting all investments
at fair value
146,982,928
132,344,465
Adjustment from fair value to contract
value for fully benefit-responsive
investment contracts
410,099
325,789
Net assets available for benefits
$
147,393,027
$
132,670,254
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
YEAR ENDED December
31, 2006
Additions
Contributions:
Employer
$
1,711,319
Employee
7,526,200
Plan interest in Cummins Inc. and Affiliates Retirement
and Savings Plans Master Trust investment income
20,102,330
Interest income
99,358
Total additions
29,439,207
Deductions
Benefits paid to participants
14,768,940
Other deductions
6,739
Total deductions
14,775,679
Fund transfers with Affiliate Plans
59,245
Net change in net assets available for benefits
14,722,773
Net assets available for benefits, beginning of year
132,670,254
Net assets available for benefits, end of year
$
147,393,027
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
2005
2006
As Restated
Cummins Inc. Common Stock Fund
$
149,069,879
$
153,650,988
Cummins Inc. common stock - ESOP fund
(non-participant directed)
67,973,065
57,940,244
Fixed income fund
346,161,583
331,851,578
Common / collective trust fund
172,121,130
158,108,788
Registered investment companies
690,909,492
563,836,920
Total
$
1,426,235,149
$
1,265,388,518
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
Investments
Wrap
Adjustment
Contract
Contract
Issuer
at
Contracts at
to Contract
Issuer
Number
Security Name
Ratings
Fair Value
Fair Value
Value
Traditional GICs
Genworth Life
GS-3841
AA-/Aa3
$
5,412,492
$
167,678
Genworth Life
GS-3841-2
AA-/Aa3
5,536,012
124,538
Mass Mutual
35109
AAA/Aa1
5,070,833
35,993
Mass Mutual
GICO-35118
AAA/Aa1
7,594,867
178,559
New York Life
GA-31907
AA+/Aaa
2,958,902
79,800
Principal Life
GA-4-15203-8
AA/Aa2
3,209,601
46,221
Principal Life
GA-4-15203-7
AA/Aa2
1,994,013
26,029
Principal Life
GA-4-15203-6
AA/Aa2
4,068,079
13,885
Principal Life
GA-4-15203-5
AA/Aa2
3,056,626
5,385
Travelers Insurance
GR-18788
AA/Aa2
6,925,299
263,350
Travelers Insurance
GR-18736
AA/Aa2
4,923,319
84,586
Wrapped Portfolios
Bank of America
05-046
Wrapper
/Aa1
IGT AAA Asset-Backed
Securities Fund
40,661,438
-0-
107,916
IXIS Financial
1926
Wrapper
AAA/Aaa
IGT INVESCO Multi-Manager
Intermediate
62,838,309
-0-
1,846,520
Monumental
MDA-00705TR
Wrapper
AA/Aa3
IGT INVESCO Short-Term
Bond Fund
26,396,214
-0-
175,024
Rabobank Nederland
CUM070501
Wrapper
AAA/Aaa
IGT INVESCO Multi-Manager
Intermediate
62,351,529
-0-
809,554
State Street Bank
105021
Wrapper
AA/Aa2
IGT INVESCO Multi-Manager
Core Fixed
58,259,552
-0-
1,714,380
UBS AG
5207
Wrapper
AA+/Aa2
IGT INVESCO Short-Term
Bond Fund
26,298,639
-0-
213,189
UBS AG
5208
Wrapper
AA+/Aa2
Cash on hand
1,196,054
US Treasury Note 3.125 4-09
9,518,793
10,714,847
-0-
(124,823)
Short-term investments
State Street
AATA
State Street Bank & Trust STIF
NR/NR
7,891,012
-0-
$
346,161,583
$
-0-
$
5,767,784
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
December
31, 2006 and 2005
Investments
Wrap
Adjustment
Contract
Contract
Issuer
at
Contracts at
to Contract
Issuer
Number
Security Name
Ratings
Fair Value
Fair Value
Value
Traditional GICs
Genworth Life
GS-3841
AA-/Aa3
$
5,172,065
$
236,125
Genworth Life
GS-3841-2
AA-/Aa3
5,292,228
153,750
Mass Mutual
35109
AAA/Aa1
4,986,104
120,722
Mass Mutual
GICO-35118
AAA/Aa1
7,299,032
153,203
MetLife
28463
AA/Aa2
12,594,992
(59,527)
Monumental
SV04427Q
AA/Aa3
1,557,798
13,510
New York Life
GA-31907
AA+/Aaa
2,948,245
90,457
Principal Life
GA-4-15203-8
AA/Aa2
3,070,425
37,165
Principal Life
GA-4-15203-7
AA/Aa2
1,969,856
50,187
Principal Life
GA-4-15203-6
AA/Aa2
4,026,467
55,497
Principal Life
GA-4-15203-5
AA/Aa2
3,021,278
40,734
Travelers Insurance
GR-18788
AA/Aa2
6,861,578
327,071
Travelers Insurance
GR-18736
AA/Aa2
4,864,404
143,501
Wrapped Portfolios
Bank of America
05-046-T
Wrapper
/Aa1
IGT AAA Asset-Backed
Securities Fund
32,336,933
-0-
256,703
IXIS Financial
1926
Wrapper
AAA/Aaa
IGT INVESCO Multi-Manager
Intermediate
59,016,764
-0-
1,405,325
Monumental
MDA-00705TR
Wrapper
AA/Aa3
IGT INVESCO Short-Term
Bond Fund
25,284,673
-0-
138,154
Rabobank Nederland
CUM070501
Wrapper
AAA/Aaa
IGT INVESCO Multi-Manager
Intermediate
60,539,506
-0-
94,098
State Street Bank
105021
Wrapper
AA/Aa2
IGT INVESCO Multi-Manager
Core Fixed
50,005,457
-0-
1,236,699
UBS AG
5207
Wrapper
AA+/Aa2
IGT INVESCO Short-Term
Bond Fund
20,657,776
-0-
223,340
UBS AG
5208
Wrapper
AA+/Aa2
Cash on hand
582,090
US Treasury Note 3.75 05-08
9,708,367
10,290,457
-0-
(252,785)
Short-term investments
State Street
AATA
State Street Bank & Trust STIF
NR/NR
10,055,540
-0-
$
331,851,578
$
-0-
$
4,463,929
CUMMINS INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
December
31, 2006 and 2005
The contracts' aggregate fair values were approximately $5,770,000 and $4,465,000 lower than the reported contract values at December 31, 2006 and 2005, respectively.
I
Investments that represent 5% or more of the Master Trust's assets are separately identified as follows:
2005 | |||||
2006 | As Restated | ||||
American Funds Growth Fund of America | $ | 103,839,262 | $ | 88,915,804 | |
Cummins Inc. Common Stock Fund | 217,042,944 | 211,591,232 | |||
NTGI S & P 500 Index Fund | 172,121,130 | 158,108,788 | |||
Vanguard International Fund | 72,459,503 | 40,040,454 | |||
Vanguard Target Retirement 2025 | 68,924,256 | 67,936,463 | |||
Vanguard Wellington Admiral Shares Fund | 242,371,382 | 205,841,975 | |||
Other | 549,476,672 | 492,953,802 | |||
Total | $ | 1,426,235,149 | $ | 1,265,388,518 |
Investment income for the Master Trust for the year ended December 31, 2006 is as follows:
Net appreciation in fair value of investments: | ||
Cummins Inc. Common Stock Fund | $ | 49,083,464 |
Cummins Inc. common stock - ESOP fund | ||
(non-participant directed) | 17,114,266 | |
Common / collective trust fund | 23,989,896 | |
Registered investment companies | 86,962,639 | |
Interest | 15,602,524 | |
Dividends | 1,976,117 | |
Dividends from Cummins Inc. common stock - | ||
ESOP fund (non-participant directed) | 1,449,781 |
Additional changes in net assets related to non-participant directed investments in the Master Trust for the year ended December 31, 2006 include transfers of Cummins Inc. common stock from unallocated status to allocated status totaling $7,139,453.
CUMMINS INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
December
31, 2006 and 2005
4. TAX STATUS
The Plan received a favorable determination letter dated June 10, 1996 in which the Internal Revenue Service ("IRS") stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code (the "Code"). The Plan has been amended since receiving that determination letter. The Plan submitted a request to the IRS for a new determination letter, but has not yet received a reply. The Company and its counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements.
5. RELATED PARTY TRANSACTIONS
Certain Master Trust investments are or were shares of mutual funds managed by The Vanguard Group, State Street Corporation and shares of Cummins Inc. The Vanguard Group was the trustee of the Master Trust through early July 2005 and then State Street Corporation became the Master Trust trustee. Cummins Inc. is the Plan Sponsor. Hewitt Associates, LLC serves as the Plans' third party administrator. Blue & Co., LLC serves as the Plans' auditor. INVESCO Institutional (N.A.), Inc. serves as the investment manager of the Plan's fixed income fund. Transactions with these parties qualify as party-in-interest transactions.
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
2005 | |||||
2006 | As Restated | ||||
As reported per the financial statements | $ | 147,393,027 | $ | 132,670,254 | |
Adjustment from fair value to contract value | |||||
for fully benefit-responsive investment | |||||
contracts | (410,099) | (325,789) | |||
As reported per the Form 5500 | $ | 146,982,928 | $ | 132,344,465 |
CUMMINS INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
December
31, 2006 and 2005
The following is a reconciliation of plan interest in Cummins Inc. and Affiliates Retirement and Savings Plans Master Trust investment income per the financial statements to the Form 5500 for the year ended December 31, 2006:
As reported per the financial statements | $ | 20,102,330 |
Less: Adjustment from fair value to contract | ||
value for fully benefit-responsive investment | ||
contracts at December 31, 2006 | (410,099) | |
Add: Adjustment from fair value to contract | ||
value for fully benefit-responsive investment | ||
contracts at December 31, 2005 | 325,789 | |
As reported per the Form 5500 | $ | 20,018,020 |
7. ADOPTION OF ACCOUNTING STANDARD
In December 2005, the FASB issued FASB Staff Position (FSP) AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans, which affects defined contribution pension plans that hold fully benefit-responsive investment contracts. The Plan has adopted the FSP as of January 1, 2006 and has restated its Statement of Net Assets Available for Benefits as of December 31, 2005 as prescribed in the implementation guidance of the FSP. The effect of this restatement was to segregate for presentation purposes a portion of net assets available for benefits related to the adjustment from fair value to contract value for fully benefit-responsive investment contracts.
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CUMMINS INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLAN
FOR ONAN CORPORATION EMPLOYEES
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS | |||||||
(HELD AT END OF YEAR) | EIN 41-0965373 | ||||||
DECEMBER 31, 2006 | Plan Number: 025 | ||||||
(a) (b) | (c) | (d) | (e) | ||||
Description of | Current | ||||||
Identity of Issue | Investment | Cost | Value | ||||
Participant Loans | 1 - 4 1/2 year maturity | ||||||
5.0% to 10.5% | $ | -0- | $ | 1,457,496 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
CUMMINS INC. AND AFFILIATES |
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By: Benefits Policy Committee of Cummins Inc. |
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Date: June 28 , 2007 |
By: S/ DAVID C. WRIGHT |
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David C. Wright |
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Secretary |
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement No. 033-46097 on Form S-8 of Cummins Inc. of our report dated June 15, 2007, with respect to the statements of net assets available for benefits of Cummins Inc. and Affiliates Retirement and Savings Plan for ONAN Corporation Employees as of December 31, 2006 and 2005, the related statements of changes in net assets available for benefits for the year ended December 31, 2006, and the related supplemental schedule of Schedule H, line 4i-schedule of assets (held at end of year) as of December 31, 2006, which report appears in the December 31, 2006 annual report on Form 11-K of Cummins Inc. and Affiliates Retirement and Savings Plan for ONAN Corporation Employees.
/s/ BLUE & CO., LLC
Blue & CO., LLC
Seymour, Indiana
June 28, 2007