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Cummins Holds Annual Meeting

5 April 2000

Cummins Holds Annual Meeting; Expects First Quarter Earnings to Beat Analysts' Estimates

    COLUMBUS, Ind.--April 4, 2000--Speaking at the annual shareholders meeting today, Cummins Chairman and Chief Executive Officer Tim Solso said that Cummins expects to report first-quarter earnings on April 13 approaching $1.09 per share, beating the estimate of $1.03 per share as reported by First Call.
    Cummins said that it expects revenues for the year to remain even with 1999. Lower revenues from the expected downturn in the North American heavy-duty truck market should be offset from increased demand in Cummins' power generation and filtration markets, demand in its pickup truck market, as well as higher demand in its industrial and international markets.
    "Our goal this year is to deliver profit improvement in the face of a downturn in the North American heavy-duty truck market", said Solso. "Our profitability initiatives and growth in other markets should do just that."

    1999 Shareholders Meeting

    "1999 was a good year for Cummins, with record sales of $6.6 billion, record profit before interest and taxes of $356 million before special charges, and record engine shipments of 488,000 units, securing Cummins' position as the world's largest producer of diesel engines above 50 horsepower," Solso told shareholders.
    1999 sales were up 13 percent in North America primarily on the strength of the North American heavy-duty truck market and a record 102,000 engines shipped for the pickup truck market. International sales accounted for $2.6 billion, or 39 percent of Cummins' total revenues. The engine business, the largest of Cummins' business units, had sales of $4.2 billion in 1999, an increase of 6 percent from 1998, with profit up 34 percent. Sales of $1.1 billion in the filtration business were flat, although sales to the lawn and garden equipment and recreational vehicle markets increased 27 percent. Cummins' power generation business was very strong in 1999, with sales of $1.3 billion, up 10 percent from 1998, and up 28 percent in the second half of the year. Profitability in that segment improved as a result of significant restructuring, cost reductions, and higher volumes.
    "We continued our relentless focus on cost reduction in 1999, reducing our selling, administrative and research costs to 15.5 percent of sales, down from 16.6 percent of sales in 1998, which is lower than our target of 16 percent", said Solso.
    Solso said that Cummins will continue to focus on reducing product coverage and new product introduction costs, and on further reducing the costs of purchased materials and services. "We saw results in 1999. Our cost saving efforts have netted Cummins nearly $100 million in savings; the costs of our new products are continuing to decline every quarter as we ramp up production; our cash flow is improved; we have captured the benefits of the 1998 restructuring actions; and we have improved our joint venture results," said Solso. "We will focus on these and other initiatives to improve profitability and increase shareholder value."

    Board of Directors elected, Auditors appointed

    At the meeting today, shareholders elected the following directors: Tim Solso, Robert J. Darnall, John M. Deutch, Walter Y. Elisha, Hanna H. Gray, James A. Johnson, William I. Miller, William D. Ruckelshaus, Franklin A. Thomas and J. Lawrence Wilson. Harold Brown, Henry B. Schacht and James A. Henderson, all of whom did not stand for reelection, were honored during the meeting. Shareholders also approved the appointment of Arthur Andersen LLP as the company's auditors.
    Cummins, headquartered in Columbus, Ind., is the world's largest producer of 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 1999. Press releases by fax may be requested by calling (toll free) News on Demand 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.