Cummins Holds Annual Meeting

    COLUMBUS, Ind.--April 3, 2001--Speaking at the annual shareholders meeting today, Cummins Chairman and Chief Executive Officer Tim Solso, reviewed Cummins business results for 2000 and strategies for 2001.
    "Cummins, and our entire customer base and industry, are in a period of rapid change. This includes both OEM consolidation and globalization," said Solso. "This is happening at a greater pace and during one of the most severe downturns in memory."
    Cummins said that sales revenue in 2000 remained level with 1999, at 6.6 billion dollars. Sales were strong in the first half but fell seven percent in the second half. The drop was due to several markets including: North American heavy-duty trucks, Dodge Ram pick up trucks, North American Construction, Recreational Vehicles and Nelson's OEM and Consumer Markets. International sales were up 10 percent, partially offsetting the effects of the economic slowdown in North America. Profits for 2000 were 249 million dollars, excluding the special charge.
    Solso reviewed each of Cummins' four businesses. Power Generation had sales of 1.4 billion dollars. Profits for Power Generation were 103 million dollars, nearly double that of 1999. "Power Generation is a healthy and growing business with a bright future. High tech companies, like telecommunication and internet, and the electrical shortages in North America provide good growth opportunities," says Solso.
    The Filtration and Other business unit, which includes Fleetguard, Holset and the International Distribution group, had combined sales of 1.2 billion dollars. Together this business group accounted for 18 percent of Cummins sales revenues and 49 percent of its profits. "Our filtration business continued to grow and remain profitable, even in a declining economy. We expect our filtration business to grow 8% per year," said Solso.
    The Engine Business Unit sales dropped four percent from 1999 to 4.0 billion dollars. Four of the five market segments in the Engine Business have solid operating performance: Construction, Agriculture and Marine, High Horsepower and Mining, Powercare and Light-duty Automotive.
    Light-duty automotive includes engine sales to Chrysler for the Dodge Ram pick-up truck. In the fourth quarter of 2000, Chrysler dropped its requirements for engines dramatically. Cummins said shipments will remain at low levels during 2001 but it expects a strong rebound in mid-2002 when the new Dodge pick-up truck is introduced. Chrysler has told Cummins it is the exclusive engine supplier for the new truck.
    "Cummins' challenge is to fix the heavy-duty truck market. The North American economic slowdown is hiding the real issues in the heavy-duty business. Cummins is pursuing steps to re-engineer how it participates in that market. Those steps including forming innovative relationships with truck manufacturers where Cummins behaves like the internal engine division for a number of Truck OEMs. This arrangement would reduce front-end marketing costs while also enabling development of a better product due to closer working relationships," said Solso.
    "The company has never been better positioned to lead in our markets, and provide profitable growth over the long-term. However, we must focus on the short-term challenge of lowering our costs in line with the current business downturn. We will continue to reduce all costs, improve quality, implement the restructuring activities and especially manage cash.
    "I am confident about the future of Cummins," added Solso, "because 88 percent of our business is profitable. We are taking steps to fix the rest. Cummins has the best products, geographic and market diversification, worldwide distribution system, technology, worldwide partnerships and alliances and the best people."
    Cummins, headquartered in Columbus, Ind., is the world's largest producer of commercial diesel engines above 50 horsepower. The company provides products and services for customers in markets worldwide for engines, power generation and filtration. Cummins reported record sales of $6.6 billion in 2000. Press releases by fax may be requested by calling News on Demand (toll free) at 888-329-2305. Cummins' home page on the Internet can be found at http://www.cummins.com.