Cummins and Wartsila to Divide Joint Venture

16 December 1999

Cummins and Wartsila to Divide Joint Venture; Cummins Completes Sale of Atlas Crankshaft Corporation

    COLUMBUS, Ind.--Dec. 16, 1999--Cummins Engine Co. Inc. today announced it has agreed with Wartsila NSD of Finland to divide the operations and assets of their European joint venture, Cummins Wartsila. The joint venture, created in 1995, was set up to design, develop, and manufacture a new generation of heavy-duty high-speed diesel and natural gas engines. The scope of the joint venture was expanded in 1997 to include marketing, sales, engineering and service. Cummins will take a pretax charge of approximately $60 million in the fourth quarter for costs associated with the split.
    "Cummins and Wartsila continue to believe in these products and their potential in the marketplace. However, future growth can best be achieved by focusing each of our existing sales and distribution networks on the engines that have the best opportunities for each partner," said Cummins Chairman and CEO Jim Henderson. "For Cummins, that means the CW 170/180, and for Wartsila, the CW 200/220."
    Cummins will take over the manufacture, global sales, and service of the CW 170/180 product line, including the operations and assets of the factory in Daventry, England. Cummins' facility in Ramsgate, England, will upfit the engines for power generation customers. Cummins will also provide support to all the joint venture customers who purchased the CW 170/180 engines. Wartsila NSD will assume responsibility for the CW 200/220 engines, as well as the factory in Mulhouse, France, which produces them.
    Cummins' share of the loss from the joint venture is expected to be $35 million in 1999. It anticipates that the restructured business will be operating at break even by the end of 2000.
    Cummins also announced that it had completed the sale of Atlas Crankshaft Corporation to ThyssenKrupp Automotive. Cummins and Krupp announced in the first quarter that they had entered into a letter of intent with regard to Atlas. Atlas, located in Fostoria, Ohio, and owned by Cummins since 1958, manufactures crankshafts and camshafts for Cummins' heavy-duty engine products. The new company, known as TKA Atlas, Inc. will continue to supply Cummins with crankshafts and camshafts as well as to TKA's other customers in North America. "The sale of Atlas is part of our ongoing efforts to streamline and focus our manufacturing operations," said Henderson. "ThyssenKrupp has been a Cummins supplier and partner for many years, and we know the employees of Atlas will deliver the same quality products as they have as members of the Cummins family."
    Henderson noted that these actions would have no impact on Cummins' expected operating results for the fourth quarter.
    Cummins Engine Company, Inc., headquartered in Columbus, Indiana, USA, is the world's largest producer of diesel engines above 200 horsepower. The company provides products and services for customers in markets worldwide for engines, power generation and filtration. Cummins reported record sales of $6.3 billion in 1998. 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.
    Certain information included in this press release is forward-looking and involves risks and uncertainties, including general economic and competitive conditions that could significantly affect expected results.