COLUMBUS, Ind. — Cummins Inc. reported for the second quarter its highest quarterly earnings as a percentage of sales in more than 25 years. Continued productivity improvements in the company's manufacturing operations, as well as strong performance in international markets, drove significant year-over-year gains across all the company's business segments.

Earnings Before Interest and Taxes (EBIT) was $401 million, or 12.5 percent of sales, up from $109 million or 4.5 percent of sales in the second quarter of 2009. EBIT also improved from 10.7 percent in the first quarter of 2010. For the first time ever, all four segments posted quarterly EBIT in excess of 10 percent of sales.

Sales of $3.21 billion in the second quarter were 32 percent higher than $2.43 billion in the same quarter in 2009. Net income attributable to Cummins Inc. in the second quarter more than quadrupled to $246 million, or $1.25 a share, compared to $56 million, or $0.28 a share, in the same period a year ago.

The sales gains were led by the company's Engine and Components segments, which each reported 45 percent sales improvements compared to the same period in 2009. Power Generation sales increased 16 percent, while Distribution sales rose 24 percent. The company delivered these strong results even though the North American heavy duty truck market remains weak as result of the transition to new on-highway emissions standards at the beginning of the year, the company said.

Based on the company's performance in the first half of 2010 and its forecast for the rest of the year, Cummins today increased its financial guidance for 2010. The company now expects to generate EBIT of 12 percent of sales on revenues of $13 billion.

"We had an outstanding quarter," said Cummins Chairman and CEO Tim Solso. "The work we have done to strengthen our manufacturing operations during the downturn has resulted in significant productivity gains, and we continue to benefit from our leadership position in large and growing international markets such as China, India and Brazil."

The company's non-U.S. markets continued to perform well, with sales up 51 percent outside the United States in the second quarter compared to a year ago. Sales outside the U.S. accounted for 64 percent of the company's revenue in the quarter.

The company continued to return value to shareholders by repurchasing $123 million of its shares during the second quarter. The company has now repurchased $310 million worth of stock under its current $500 million authorization.

Even with the stock repurchase, the company improved its cash position from the first quarter of the year. The company generated $301 million in cash from operations in the second quarter, compared to $245 million in the same period last year and $126 million in the first quarter.

"Our strong performance during the downturn has allowed us to make the investments necessary to position the company for a period of long-term profitable growth as our markets continue to improve," said Cummins President and Chief Operating Officer Tom Linebarger. "We are working hard to prepare for future growth, even as we continue to concentrate on managing the business through this challenging economic period."

In other recent news:

• In early July, Cummins announced a $100 million expansion of the High-Horsepower Technical Center and high-horsepower engine product line in Seymour, Ind. The investment in the newly renamed Seymour Engine Plant is expected to add about 200 engineering and manufacturing jobs over the next five years.

• The company increased the quarterly cash dividend on its common stock by 50 percent to 26.25 cents per share from 17.5 cents per share. The dividend is payable on Sept. 1, 2010 to shareholders of record on Aug. 23, 2010. Cummins last raised its dividend in July 2008.

• Cummins negotiated a $1.24 billion, four-year credit facility to replace its previous $1.1 billion line of credit, which was set to expire in 2011. The revolver, combined with the company's strong cash balance, ensures that Cummins will have adequate liquidity over the next several years.

• Moody's Investor Service raised the company's senior unsecured debt rating from Baa3 to Baa2 and said the rating outlook remains "stable." In raising its investment grade rating, Moody's cited Cummins' ability to "maintain solid debt protection measures despite the most severe downturn in the North American medium and heavy-duty truck industry, and the broader weakening in the global economy."

• Cummins also was recognized for its long-term return to shareholders recently by Bloomberg BusinessWeek magazine, which ranked Cummins' stock performance 12th among the Standard & Poor's 500 companies from March 2005 to March 2010.