Cummins Announces 2002 Outlook

    COLUMBUS, Ind.--Nov. 29, 2001--Cummins Inc. today released its expectation for improved profitability despite essentially flat revenues for 2002. Cummins Chairman and CEO, Tim Solso, said, "continuing efforts to reduce costs will enable Cummins to achieve a profitability improvement over 2001 with little to no improvement in revenue."
    During the October 11th teleconference on third quarter earnings Solso noted that rapid market changes in the U.S. and around the world following the September 11th terrorist attacks caused Cummins to revisit its 2002 planning process. Solso stated that, "a public outlook on 2002 would be delayed until the end of November when market visibility and economic direction may be clearer."
    Based on recently completed plans, the company is forecasting a 2002 PBIT in the range of $155 to $165 million, with net earnings of $35 to $45 million, resulting in diluted earnings per share of approximately $1 per share. Solso stated, "The completion of our restructuring actions combined with indirect and direct material cost initiatives and Six Sigma improvement projects will result in a net savings of $75 million.
    "Despite depressed market conditions around the world, Cummins expects to be modestly profitable in the fourth quarter of 2001. We expect to deliver a profit in three out of four quarters during terrible market conditions," said Solso. "Cummins will continue to do what it takes to cut costs, improve performance and maintain profitability."

    Power Generation

    Power Generation revenues are expected to grow 5 to 10 percent despite weak markets. The growth will come in distributed generation and in selling energy solutions and maintaining a strong market position in standby power applications. Power Generation sales across the world are expected to be level with or slightly above 2001 levels, with the exception of India. Sales to consumer markets continue to be weak due to declining consumer confidence.

    Engine Business

    Engine Business revenues for 2002 are anticipated to be near 2001 levels. The North American heavy-duty truck market build is expected to be in the 150,000 unit range. Chrysler volumes for the full year will be similar to 2001, with lower shipments in the first half of 2002, due to the mid-year model changeover.

    Filtration and Other

    Sales in the filtration business are expected to be approximately level with 2001. Due to gains in small engine sales for consumer markets a slight increase is expected in North America. A projected drop in sales to European OEM's is expected to be partially offset by sales growth in Latin America and Asia.
    Sales of our international distributors are expected to be up slightly from 2001 due to growth in East Asia and Latin America.

    First Quarter 2002 Outlook

    The company is anticipating revenues for the first quarter of 2002 to be level with the Q1 2001 levels. However, cost reduction efforts will improve PBIT by approximately $25 million over Q1 2001 to a range of $15 to $20 million, resulting in a loss of approximately $.20 per share. The remainder of the year is expected to be profitable.

    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. In 2000, Cummins reported sales of $6.6 billion. Press releases by fax may be requested by calling News on Demand at 888-329-2305. Cummins home page on the Internet may be found at www.cummins.com.

    Information provided and statements made in this release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including but not limited to general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility, and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.