-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HrdFcxgWDM/gLD3zTp/BNFDxAH3WmB8KuRc7hgF9xq/7Zsn2u7nhgSJpoVZtHovz Wfuns94ev28RbgJDj6DvIw== 0000026172-97-000005.txt : 19970428 0000026172-97-000005.hdr.sgml : 19970428 ACCESSION NUMBER: 0000026172-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970425 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CUMMINS ENGINE CO INC CENTRAL INDEX KEY: 0000026172 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 350257090 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04949 FILM NUMBER: 97587056 BUSINESS ADDRESS: STREET 1: 500 JACKSON ST STREET 2: BOX 3005 MAIL CODE 60701 CITY: COLUMBUS STATE: IN ZIP: 47202-3005 BUSINESS PHONE: 8123775000 MAIL ADDRESS: STREET 1: BOX 3005 MAIL CODE 60701 CITY: COLUMBUS STATE: IN ZIP: 47202-3005 10-Q 1 QTR 1 1997 10-Q FILING UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 CUMMINS ENGINE COMPANY, INC. ____________________________ For the Quarter Ended March 30, 1997 Commission File Number 1-4949 ______________ ______ Indiana 35-0257090 _______ __________ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 500 Jackson Street, Box 3005 ____________________________ Columbus, Indiana 47202-3005 _________________ __________ (Address of Principal Executive Offices) (Zip Code) 812-377-5000 ____________ (Registrant's Telephone Number) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months and (2) has been subject to such filing requirements for the past 90 days: Yes [x] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: As of March 30, 1997, the number of shares outstanding of the registrant's only class of common stock was 42.0 million. TABLE OF CONTENTS _________________ Page No. ________ PART I. FINANCIAL INFORMATION ______________________________ Item 1. Financial Statements Consolidated Statement of Earnings for the First 3 Quarter Ended March 30, 1997 and March 31, 1996 Consolidated Statement of Financial Position at 4 March 30, 1997 and December 31, 1996 Consolidated Statement of Cash Flows for the First 5 Quarter Ended March 30, 1997 and March 31, 1996 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of 7 Operations, Cash Flows and Financial Condition PART II. OTHER INFORMATION ___________________________ Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 12 Index to Exhibits 13 CUMMINS ENGINE COMPANY, INC. CONSOLIDATED STATEMENT OF EARNINGS Unaudited __________________________________ First Quarter Ended Millions, Except per Share Amounts 3/30/97 3/31/96 __________________________________ _______ _______ Net sales $1,304 $1,316 Cost of goods sold 1,018 1,000 ______ ______ Gross profit 286 316 Selling & administrative expenses 178 180 Research & engineering expenses 61 62 Net (income) expense from joint ventures and alliances (7) 2 Interest expense 5 4 Other income, net (7) (3) ______ ______ Earnings before income taxes 56 71 Provision for income taxes 15 22 ______ ______ Net earnings $ 41 $ 49 ______ ______ Earnings per share $ 1.06 $ 1.21 Cash dividends declared per share .25 .25 CUMMINS ENGINE COMPANY, INC. CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited ____________________________________________ Millions, Except per Share Amounts 3/30/97 12/31/96 __________________________________ _______ ________ Assets Current assets: Cash and cash equivalents $ 81 $ 108 Receivables 730 669 Inventories 615 587 Other current assets 196 189 ______ ______ 1,622 1,553 Investments and other assets 302 326 Property, plant & equipment less accumulated depreciation of $1,375 1,337 1,286 Intangibles, deferred taxes & deferred charges 205 204 ______ ______ Total assets $3,466 $3,369 ______ ______ Liabilities and shareholders' investment Current liabilities: Loans payable $ 23 $ 93 Current maturities of long-term debt 39 39 Accounts payable 378 380 Other current liabilities 543 509 ______ ______ 983 1,021 ______ ______ Long-term debt 459 283 ______ ______ Other liabilities 753 753 ______ ______ Shareholders' investment: Common stock, $2.50 par value, 47.8 and 43.9 shares issued 119 110 Additional contributed capital 1,103 929 Retained earnings 565 535 Common stock in treasury, at cost, 5.8 & 4.5 shares (227) (169) Common stock held in trust for employee benefit plans (181) - Unearned compensation (ESOP) ( 42) ( 46) Cumulative translation adjustments ( 66) ( 47) ______ _______ 1,271 1,312 ______ ______ Total liabilities & shareholders' investment $3,466 $3,369 ______ ______ CUMMINS ENGINE COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited ____________________________________ First Quarter Ended Millions 3/30/97 3/31/96 ________ _______ _______ Cash flows from operating activities: Net earnings $ 41 $ 49 _____ _____ Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 39 38 Restructuring actions ( 4) (18) Accounts receivable ( 71) (13) Inventories ( 31) (35) Accounts payable and accrued expenses 44 ( 3) Income taxes payable 4 13 Other 8 ( 6) ______ ______ Total adjustments ( 11) (24) _____ _____ Net cash provided by operating activities 30 25 _____ _____ Cash flows from investing activities: Property, plant and equipment: Additions (104) (36) Disposals 7 2 Investments in joint ventures and alliances 3 26 Other ( 2) 20 ______ ____ Net cash (used in) provided from investing activities ( 96) 12 ______ _____ Net cash (used for) provided from operating and investing activities ( 66) 37 ______ _____ Cash flows from financing activities: Proceeds from borrowings 189 109 Payments on borrowings ( 9) ( 7) Net borrowings under credit agreements ( 70) (30) Repurchases of common stock ( 58) ( 4) Payments of dividends ( 10) (10) Other ( 2) ( 1) ______ ______ Net cash provided from financing activities 40 57 ______ ______ Effect of exchange rate changes on cash ( 1) ( 1) ______ ______ Net change in cash and cash equivalents ( 27) 93 Cash & cash equivalents at beginning of the year 108 60 _____ _____ Cash & cash equivalents at the end of the quarter $ 81 $ 153 _____ _____ CUMMINS ENGINE COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unaudited ______________________________________________ Note 1. Accounting Policies: The Consolidated Financial Statements for the interim periods ended March 30, 1997 and March 31, 1996 have been prepared in accordance with the accounting policies described in the Company's Annual Report to Shareholders and Form 10-K. Management believes the statements include all adjustments of a normal recurring nature necessary to present fairly the results of operations for the interim periods. Inventory values at interim reporting dates are based upon estimates of the annual adjustments for taking physical inventory and for the change in cost of LIFO inventories. Note 2. Income Taxes: Income tax expense is reported during the interim reporting periods on the basis of the estimated annual effective tax rate for the taxable jurisdictions in which the Company operates. Note 3. Long-term Debt: In February 1997, the Company issued $120 million of 6.75 percent debentures that mature in 2027. Net proceeds were used principally to repay commercial paper indebtedness incurred to repurchase shares of common stock. Holders of the debentures have a 1-time option in 2007 to redeem the debentures. The Company also has a recall right after ten years. Note 4. Common Stock: In January 1997, the Company issued 3.75 million shares of its common stock to an employee benefits trust to fund obligations of employee benefit and compensation plans, principally retirement savings plans. Shares of the common stock held by this trust are not used in the calculation of the Company's earnings per share until distributed from the trust and allocated to a benefit plan. The Company also repurchased 1.3 million shares of its common stock from Ford Motor Company in January 1997 and was authorized by the Board of Directors to repurchase an additional 1.7 million shares from time-to-time in the open market. On April 1, 1997, the Company announced an increase in its quarterly common stock dividend from 25 cents per share to 27.5 cents, effective with the dividend payment in June 1997. Note 5. Earnings Per Share: Earnings per share are computed by dividing net earnings by the weighted-average number of common shares outstanding during the period. The weighted-average number of shares, which excludes shares of stock held by the employee benefits trust until distributed and allocated to a benefit plan, was 38.4 million in the first quarter of 1997 and 40.3 million in the first quarter of 1996. The Financial Accountings Standard Board recently released a new accounting rule on the calculation of earnings per share that is effective at year-end 1997. This rule, which does not permit early adoption, is not expected to have a material effect on the Company's reported earnings per share. CUMMINS ENGINE COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, CASH FLOWS AND FINANCIAL CONDITION _____________________________________________________________ OVERVIEW ________ Sales of $1.3 billion in the first quarter of 1997 were 1 percent lower, or nearly level, with the first quarter of 1996. However, the Company experienced a shift in sales mix from automotive to power generation and industrial markets. Automotive sales were down $86 million, primarily as a result of lower demand in North American heavy- and medium-duty truck markets. This decline in revenues was nearly offset by increased sales in other markets, with sales of power generation $23 million higher than the first quarter of 1996 and industrial sales $55 million higher than the year-ago period. The Company shipped 86,200 engines in the first quarter of 1997, compared to 89,200 in the first quarter of 1996: First Quarter Engine Shipments 1997 1996 ________________ ______ ______ Midrange 63,100 62,600 Heavy-duty 20,800 24,600 High-horsepower 2,300 2,000 ______ ______ Total 86,200 89,200 ______ ______ Net earnings in the first quarter of 1997 were $41 million ($1.06 per share), compared to $49 million ($1.21 per share) in the first quarter 1996. RESULTS OF OPERATIONS _____________________ The percentage relationships between net sales and other elements of the Company's Consolidated Statement of Earnings for the comparative reporting periods were: First Quarter Percent of Net Sales 1997 1996 ____________________ _____ _____ Net sales 100.0 100.0 Cost of goods sold 78.1 76.0 _____ _____ Gross profit 21.9 24.0 Selling and administrative expenses 13.7 13.7 Research and engineering expenses 4.7 4.7 Net (income) expense from joint ventures & alliances (.6) .1 Interest expense .4 .3 Other income, net (.6) (.2) _____ _____ Earnings before income taxes 4.3 5.4 Provision for income taxes 1.2 1.7 _____ _____ Net earnings 3.1 3.7 _____ _____ Sales by Market _______________ Sales for each of the Company's markets for the comparative reporting periods were: First Quarter 1997 First Quarter 1996 Dollars in Millions Dollars Percent Dollars Percent ___________________ _______ _______ _______ _______ Automotive: Heavy-duty truck 295 23 364 28 Midrange truck 132 10 161 12 Bus and light commercial vehicles 171 13 159 12 Power generation 275 21 252 19 Industrial 257 20 202 15 Filtration and other 174 13 178 14 _____ ___ _____ ___ Net sales 1,304 100 1,316 100 _____ ___ _____ ___ Automotive __________ Sales of $295 million to the heavy-duty truck market were $69 million (almost 20 percent) lower than a year ago. Performance in this market is dominated by the North American market. Compared to the first quarter of 1996, North American shipments were 27 percent lower, due to the lower market size. There are, however, signs that the North American heavy-duty truck market has strengthened. First-quarter 1997 engine shipments to this market were 13 percent higher than in the fourth quarter of 1996. In international markets, engine shipments in the first quarter of 1997 were 26 percent higher than the first quarter of 1996, primarily due to strong demand in Mexico. Compared to the first quarter of 1996, engine shipments for midrange trucks were 22 percent lower, primarily due to decreased demand in North America. Midrange truck engines for international markets were 12 percent higher than the first quarter of 1996. This increase was primarily in Brazil. In the bus and light commercial vehicles market, sales of $171 million were 8 percent higher than the first quarter of 1996. First-quarter 1997 engine shipments to Chrysler were another record. In addition, demand for bus markets in the first quarter of 1997 was stronger, 5 percent higher than the first quarter of 1996. Power Generation ________________ Sales of $275 million to power generation markets represented 21 percent of the Company's net sales in the first quarter of 1997. This was $23 million higher than the first quarter of 1996. Strong genset sales in Asia and Mexico accounted for this 9-percent increase. Industrial __________ Record quarterly sales of $257 million to industrial markets were 27 percent higher than first-quarter 1996, reflecting strong sales for construction equipment in North America and international agricultural markets. Engine shipments for marine markets also were 12 percent higher than the prior year. Filtration and Other ____________________ Sales of $174 million for filtration and other products were 2 percent lower than the first quarter of 1996, due primarily to the lower level of demand in North American heavy-duty and midrange truck markets. Gross Profit ____________ Compared to the first quarter of 1996, the Company's gross margin of 21.9 percent of net sales was affected by several factors, the most significant of which was the lower level of heavy-duty truck engine production that resulted in lower fixed cost absorption. Gross profit also was affected by the softer market for midrange truck engines, higher sales of lower margin power generation products and product coverage expense, which at 2.7 percent of net sales was $2 million higher than the first quarter of 1996. Operating Expenses __________________ Selling and administrative expenses in the first quarter of 1997 were $178 million. This was $2 million lower than the first quarter of 1996 due to the effect of lower restructuring expense and benefits from completed restructuring actions. Research and engineering expenses of $61 million in the first quarter were $1 million lower than the prior year. The first-quarter reduction in costs was due primarily to lower costs for new products that are nearing production. Net income from joint ventures and alliances was $9 million higher than the first quarter of 1996 due to higher earnings from Kirloskar Cummins and the Company's joint venture with Komatsu and annual royalties and fees from the new joint venture with Dongfeng. Interest and Other Income and Expense _____________________________________ Interest expense of $5 million in the first quarter of 1997 was $1 million higher than a year ago due to the higher level of long-term debt. Other income and expense includes a variety of items, such as foreign currency translation gains and losses, royalty and technical fees of licensees, interest income, and gains or losses associated with fixed asset dispositions. In the first quarter of 1997, other income was $7 million, which was $4 million higher than the first quarter of 1996 due to no longer having the fees associated with selling receivables, a net translation gain of $1 million (compared to a loss in the first quarter of 1996) and higher royalties from licensees. Provision For Income Taxes __________________________ The estimated effective tax rate (ETR) is 28 percent for 1997. The ETR is lower than the US statutory rate of 35 percent because of lower taxes on US export income and the incremental research tax credit that expires May 31, 1997. CASH FLOW AND FINANCIAL CONDITION _________________________________ Key elements of the Consolidated Statement of Cash Flows were: First Quarter Dollars in Millions 1997 1996 ___________________ ____ ____ Net cash provided by operating activities $ 30 $ 25 Net cash (used in) provided from investing activities (96) 12 _____ ____ Net cash (used for) provided from operating and investing activities (66) 37 Net cash provided from financing activities 40 57 Effect of exchange rate changes on cash ( 1) ( 1) _____ ____ Net change in cash and cash equivalents $(27) $ 93 _____ _____ Net cash used for operating and investing activities was $66 million in the first quarter of 1997. In the second quarter of 1996, the Company elected not to renew an agreement for the sale of up to $110 million in accounts receivable, which resulted in an increase in receivables. Days sales outstanding were 50 at the end of the first quarter of 1997, compared to 49 in the first quarter of 1996, adjusted for discontinuing the receivables sale program. Investing activities required net cash resources of $96 million in the first quarter of 1996. Capital expenditures were $104 million, compared to $36 million in the first quarter of 1996. The increased level of expenditures in 1997 was related to continued investments for new products. Net cash provided from financing activities was $40 million in the first quarter of 1997. As disclosed in Note 3 to the Consolidated Financial Statements, the Company issued $120 million in debentures under its shelf registration statement in February 1997. In January 1997, the Company repurchased 1.3 million shares of its common stock from Ford Motor Company and was authorized by the Board of Directors to repurchase an additional 1.7 million shares in the open market. In January 1997, the Company also issued 3.75 million shares of its common stock to an employee benefits trust. On April 1, 1997, the Company announced a 10-percent increase in its quarterly common stock dividend from 25 cents per share to 27.5 cents, effective with the dividend payment in June 1997. Forward-looking Statements __________________________ The Company has included certain forward-looking statements in this Management's Discussion and Analysis of Results of Operations, Cash Flows and Financial Condition. These statements are based on current expectations, estimates and projections about the industries in which the Company operates, management's beliefs and various assumptions made by management which are difficult to predict. Among the factors that could affect the outcome of the statements are general industry and market conditions and growth rates. Therefore, actual outcomes and their impact on the Company may differ materially from what is expressed or forecasted. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. PART II. OTHER INFORMATION ___________________________ Item 4. Submission of Matters to a Vote of Security Holders ____________________________________________________________ The Company held its annual meeting of security holders on April 1, 1997 at which security holders elected 12 directors of the Company for the ensuing year and ratified the appointment of Arthur Andersen LLP as auditors for the year 1997. Results of the voting in connection with each of the items were as follows: Voting on Directors: ____________________ For Withheld __________ ________ H. Brown 34,563,096 528,586 R. Darnall 34,569,086 522,596 W. Y. Elisha 34,569,374 522,308 H. H. Gray 34,514,238 577,444 J. A. Henderson 34,562,667 529,015 W. I. Miller 34,578,197 513,485 D. S. Perkins 34,567,033 524,649 W. D. Ruckelshaus 34,568,116 523,566 H. B. Schacht 34,562,402 529,280 T. M. Solso 34,539,676 552,006 F. A. Thomas 34,572,809 518,873 J. L. Wilson 34,573,758 517,924 Ratify Appointment of Auditors: _______________________________ For Against Abstain __________ _______ _______ 34,710,312 251,389 129,981 With regard to the election of directors, votes were cast in favor of or withheld from each nominee; votes that were withheld were excluded entirely from the vote and had no effect. Abstentions on the ratification of the appointment of Arthur Andersen LLP were counted as present for purposes of determining the existence of a quorum. Under the rules of the New York Stock Exchange, brokers who held shares in street names had the authority to vote on certain items when they did not receive instructions from beneficial owners. Brokers that did not receive instructions were entitled to vote on the election of directors. Under applicable Indiana law, a broker non-vote had no effect on the outcome of the election of directors. Item 6. Exhibits and Reports on Form 8-K: __________________________________________ (a) See the Index to Exhibits on Page 13 for a list of exhibits filed herewith. (b) On February 14, 1997, the Company filed a Form 8-K Other Event to define the calculation of the ratio of earnings to fixed charges disclosed in the Company's Prospectus Supplement dated February 14, 1997 to the Prospectus dated November 17, 1993 relating to issuance of 6.75 percent debentures, due February 15, 2027. Signatures __________ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CUMMINS ENGINE COMPANY, INC. By: /s/Rick J. Mills April 21, 1997 ________________ Rick J. Mills Vice President - Corporate Controller (Chief Accounting Officer) CUMMINS ENGINE COMPANY, INC. ____________________________ INDEX TO EXHIBITS _________________ 10(k) Retirement Plan for Non-employee Directors of Cummins Engine Company, Inc., as amended February 1997 (filed herewith) 10(m) Three Year Performance Plan, as amended February 1997 (filed herewith) 10(p) Restricted Stock Plan for Non-employee Directors, as amended February 11, 1997 (filed herewith) 10(t) Senior Executive Three Year Performance Plan, as amended February 11, 1997 (filed herewith) 11 Schedule of Computation of Per Share Earnings for the First Quarter Ended March 30, 1997 and March 31, 1996 (filed herewith) 27 Financial Data Schedule (filed herewith) EX-10 2 EXHIBIT 10(K) EXHIBIT 10(k) RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS OF CUMMINS ENGINE COMPANY, INC. ------------------------------------------ (As Amended February 11, 1997) 1. Purpose. The Retirement Plan for Non-Employee Directors ("the Plan") was originally established to provide term-certain pension payments, as set forth more fully herein, to eligible non- employee Directors of Cummins Engine Company, Inc. ("the Company"). It was modified on February 11, 1997 to cease future benefit accruals and to permit the conversion of existing accrued benefits into an equivalent value of phantom shares of Company Common Stock. The Plan is intended to enhance the Company's ability to retain as Directors individuals with the highest caliber of experience, ability and judgment. 2. Eligibility. Each Director of the Company who was not an employee or former employee of the Company with vested rights under a pension plan sponsored by the Company, its subsidiaries or affiliates is eligible to participate in the Plan as set forth below. 3. Participation. An eligible Director became a Participant in the Plan commencing with the sixth (6th) year of service as a Director of the Company. No person who becomes a Director after February 11, 1997 shall be eligible to participate in the Plan. 4. Vesting. Each eligible Director was fully vested in benefits accrued under the Plan immediately upon becoming a Participant. 5. Pension Benefit Amount. Each Participant shall be entitled to receive an annual pension benefit, payable annually, equal to the fees (excluding Committee fees) paid or payable to such Participant for services rendered as a Director of the Company during the one-year period immediately preceding February 11, 1997. 6. Benefit Conversion Election. In lieu of the pension benefits described in paragraph 5, each Participant may elect to convert the present value of his or her accrued pension benefits under the Plan into an equivalent value of phantom units of the Company's Common Stock ("Stock Units"), with each unit equal in value to one share of Common Stock. The present value of accrued benefits shall be determined assuming (a) the interest rate used by the Pension Benefit Guaranty Corporation in determining the value of immediate benefits as of the January 1 immediately preceding the election and (b) the mortality tables incorporated by reference into the Cummins Engine Company, Inc. and Affiliates Cash Balance Retirement Plan, or any successor plan thereto. The number of Stock Units into which the present value will be converted shall be based on the average of closing prices of the Common Stock on the New York Stock Exchange for the 180 trading days immediately preceding the date of conversion. The Stock Units, including any additional Stock Units credited thereon as dividend equivalents (using the same 180 trading day trailing average methodology), will be evidenced only by bookkeeping entries. A Participant making the conversion election shall have no share voting or investment power with respect to the Stock Units. The value of an electing Participant's Stock Units shall be payable only in cash in a lump-sum upon the Participant ceasing to be a Director, provided, however, that payment or the stock units may be deferred pursuant to the Company's Deferred Compensation Plan for Non-Employee Directors ("the Deferral Plan"). 7. Commencement of Pension Benefits. The annual pension benefits described in paragraph 5 shall be payable on the first business day in the month of May each year, commencing with the May next following the later of (i) the date the Participant ceases to be a Director or (ii) the Participant's 65th birthday. 8. Duration of Pension Benefits. Once begun, the annual pension benefit shall be payable for the lesser of (i) the number of completed full years the Participant served as a Director prior to February 11, 1997 or (ii) twenty (20) years. 9. Payments Upon Death of Participant. a) In the event of the death of a Participant who had not made the election described in paragraph 6, the Participant's surviving spouse, if any, shall continue to receive annual benefit payments equal to fifty percent (50%) of the pension benefit payable to the Participant. If death occurs prior to commencement of pension benefits, such spousal benefit payments shall continue for the greater of (i) ten (10) years or (ii) the number of years the Participant would have been entitled to payments under paragraph 8. If death occurs following commencement of pension benefits, but prior to receiving the number of payments described in paragraph 8, such spousal benefits shall continue for the remaining number of payments. In the event there is no surviving spouse at the time of a Participant's death, the Participant's estate or designated beneficiary shall receive a lump-sum payment equal to the present value of annual pension benefits that otherwise would have been payable to a spouse in accordance with this paragraph. In the event of a surviving spouse's death prior to receiving all payments otherwise due in accordance with this paragraph, the estate or designated beneficiary of such spouse shall receive a lump-sum payment equal to the present value of the remainder of all such payments. The amount of any lump-sum payment made pursuant to this paragraph shall be calculated assuming (a) the interest rate used by the Pension Benefit Guaranty Corporation in determining the value of immediate benefits as of January 1 immediately preceding the date of payment and (b) the mortality table incorporated by reference into the Cummins Engine Company, Inc. and Affiliates Cash Balance Retirement Plan. b) In the event a Participant who had made an election under paragraph 6 dies prior to the value of the Stock Units being paid to the Participant or deferred under the Deferral Plan, such value shall be paid to the Participant's surviving spouse. In the event there is no surviving spouse at the time of the Participant's death, the Participant's estate or designated beneficiary shall receive such value. 10. Payments upon Change of Control. Notwithstanding anything contained in paragraphs 7, 8 or 9 to the contrary, following a Change of Control (as hereinafter defined), each Participant (or beneficiary, if appropriate) shall be entitled to receive a lump- sum payment of the actuarial equivalent of pension benefits accrued and remaining unpaid or, in the case of a Participant who has made an election described in paragraph 6, the cash value of the Participant's Stock Units as of the date of the Change of Control. The lump-sum equivalent of pension benefits shall be calculated assuming (a) the interest rate used by the Pension Benefit Guaranty Corporation in determining the value of immediate benefits as of the immediately preceding January 1 and (b) the mortality tables incorporated by reference into the Cummins Engine Company, Inc. and Affiliates Cash Balance Retirement Plan, or any successor plan thereto. For purposes of this Plan, a "Change of Control" means the occurrence of any of the following: (i) there shall be consummated (A) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted in whole or in part into cash, other securities or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all the assets or the Company, or (ii) the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any "person" (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended ("the Exchange Act")), other than the Company or a subsidiary thereof or any employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, shall become the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 25 percent or more of the combined voting power of the company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors ("Voting Shares"), as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, or (iv) at any time during a period of two consecutive years, individuals who, at the beginning of such period constituted the Board of Directors of the Company, shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's stockholders of each new director during such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period, or (v) any other event shall occur that would be required to be reported in response to Item 6(e) (or any successor provision) of Schedule 14A promulgated under the Exchange Act. 11. Funding of Pension Benefits. The Company shall set aside funds to satisfy its obligations to pay the pension benefits described in paragraph 5 by making deposits to the grantor trust created under agreement dated February 1, 1988 ("the Trust") by and between the Company and Wachovia Bank and Trust Company, N.A. ("the Trustee") or any successor trust thereto. Deposits to the Trust to fund such obligations shall be calculated on a sound actuarial basis. Benefit payments will be made from the Trust by the Trustee to the extent not paid by the Company. 12 Miscellaneous. a) Participation in the Plan shall not confer any rights concerning nomination for re-election to the Board of Directors of the Company. b) The Board of Directors of the Company shall be responsible for the administration of the Plan. Any decisions by the Board of Directors (as reflected in its approved minutes) shall be final. c) The Plan shall continue in force with respect to any Participant until completion of any payments due hereunder. The Company may, however, at any time, amend or terminate the Plan, provided, however, that no such termination or amendment shall deprive any Participant or surviving spouse of any benefits accrued under the Plan prior to such amendment. d) No right or interest of a Participant or surviving spouse under the Plan shall be subject to voluntary or involuntary alienation, assignment or transfer of any kind. EX-10 3 EXHIBIT 10(M) EXHIBIT 10(m) CUMMINS ENGINE COMPANY, INC. THREE YEAR PERFORMANCE PLAN ---------------------------- (As Amended February 11, 1997) 1. Objectives. The objectives of the Plan are to: (i) serve as a balance against the short-term compensation provided by base salary and bonus payments of the Company, (ii) emphasize the medium-term performance of the Company as compared to its industry competitors, (iii) strengthen the relationship between Company management and shareholder interests, and (iv) encourage participants to remain with the Company through important business cycles. The size of grants under the Plan are intended to reflect the degrees of influence participating officers and key employees have in their functional positions on the medium-term (three year) performance of the Company. The calculation of payments from the Plan is intended to reflect the Company's performance against certain performance measures designated by the Compensation Committee. 2. Definitions. a) "Award Cycle" means the three-year period upon which a particular year's payout is calculated. A new Award Cycle commences with the beginning of each of the Company's fiscal years. Payments, if any, under the Plan to Participants during a fiscal year are based upon the Company's performance during the most recently completed Award Cycle. b) "Change of Control" means the occurrence of any of the following: (i) there shall be consummated (A) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted in whole or in part into cash, other securities or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company, or (ii) the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any "person" (as such term is used in Sections 13(d) (3) and 14(d) (2) of the Securities Exchange Act of 1934, as amended ("the Exchange Act")), other than the Company or a subsidiary thereof or any employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, shall become the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 25 percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors ("Voting Shares"), as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, or (iv) at any time during a period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's stockholders of each new director during such two-year period was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such two-year period, or (v) any other event shall occur that would be required to be reported in response to Item 6(e) (or any successor provision) of Schedule 14A or Regulation 14A promulgated under the Exchange Act. c) "Committee" means the Compensation Committee of the Board of Directors of the Company. d) "Company" means Cummins Engine Company, Inc. e) "Participants" means the Company's officers and key employees designated annually by the Committee to participate in the Plan for the ensuing Award Cycle. f) "Payout Factor" means the percentage determined by the Committee and applied to a Target Award to determine the amount of an award to be paid as described in Section 4 of the Plan. g) "Peer Group" means the group of companies selected by the Committee whose primary industry is similar to that of the Company. As of the effective date of the Plan, the Peer Group consists of the following companies: (i) Arvin Industries, Inc., (ii) Caterpillar, Inc., (iii) Dana Corporation, (iv) Deere & Company, (v) Dresser Industries, Inc., (vi) Eaton Corporation, (vii) Ford Motor Company, (viii) General Motors Corporation, (ix) Ingersoll-Rand Company, (x) Navistar International Corporation, and (xi) Paccar, Inc. h) "Performance Measures" means the Company's return on equity, return on sales, net income, sales growth, return on assets, total shareholder return, or any combination thereof. i) "Plan" means the Three Year Performance Plan described herein. j) "Target Award" means the amount of targeted compensation described in Section 3 of the Plan. 3. Target Award. The Committee shall assign each Participant a Target Award for each Award Cycle, in its discretion, based upon, but not limited to, the scope and breadth of the Participant's position, ability to affect the Company's medium-term financial performance, and his or her working relationships within the Company. The Target Award for an Award Cycle shall be expressed in terms of a threshold, target, and maximum dollar amount or, in the discretion of the Committee, as a threshold, target and maximum number of award units ("Award Units") with each Award Unit being equal to one share of the Company's common stock (including any restrictions thereon) or having a cash value determined with reference to the value or trading prices of the common stock, as designated by the Committee at the time the Target Award is made. The Target Award for each Award Cycle shall be assigned and communicated to each Participant as soon as practicable thereafter. Target Awards may be changed during the course of an Award Cycle based on the Committee's re-evaluation of the criteria described in the preceding paragraph. 4. Payout Schedule. The Committee shall establish the Performance Measures to be used in determining a Payout Factor applicable to the Award Cycle. The Committee may determine the Payout Factor based upon the attainment of one or more different Performance Measures, provided the measures, when established, are stated as alternatives to one another. Under the Payout Factor schedule, the targeted dollar amount or number of Award Units (collectively, the "Targeted Amount") of a Target Award will be earned by a Participant if the Company's performance against the Performance Measures equals the median of the performance of the Peer Group during the same period against the same measures. The threshold dollar amount or number of Award Units will be earned if performance is fifty percent (50%) and the maximum dollar amount or number of Award Units will be earned if performance is two hundred percent (200%) of the median performance of the Peer Group. 5. Change in Accounting Standards. For purposes of determining the Payout Factor, the Company's actual performance under the Performance Measures will exclude extraordinary charges and credits which result from a change in accounting standards of the Company. 6. Plan Payments. Any payout under the Plan will be made as soon as practicable following audits of the Company's financial statements applicable to all fiscal years of the Award Cycle. Payments under the Plan may be deferred pursuant to the Company's Deferred Compensation Plan. 7. Administration. The Plan shall be administered by the Compensation Committee. No member of the Committee shall be eligible for a Target Award while serving on the Committee. The Committee shall have authority to interpret the Plan and to establish, amend and rescind rules and regulations for the administration of the Plan, and all such interpretations, rules and regulations shall be conclusive and binding on all persons. Notwithstanding any other provision of the Plan to the contrary, the Committee may impose such conditions on participation in awards under and payments from the Plan as it deems appropriate. 8. Termination of Employment. If a Participant's employment with the Company terminates during the first year of an Award Cycle, other than by reason of retirement, death or disability, the Participant will not receive any payout for that Award Cycle. If a Participant's employment so terminates during the second or third years of an Award Cycle, the Committee, in its discretion, shall determine whether the Participant will receive a proportionate payout of any payment with respect to the Award Cycle based on the period of employment during the cycle. If a Participant retires, dies or becomes disabled during an Award Cycle, the Participant or such Participant's estate, as the case may be, shall receive a proportionate share of any payment with respect to the Award Cycle based on the period of employment during the cycle, regardless of the length of time of such employment. 9. Change of Control. Notwithstanding any other provision herein to the contrary, in the event of a Change of Control, an amount shall be immediately payable from the Plan to each Participant equal to the Targeted Amount (the Target Award assuming a 1.0 Payout Factor). The full Targeted Amount shall be paid notwithstanding the fact that only a portion of the Award Cycle may have elapsed prior to the Change of Control. 10. Effective Date. The Plan shall be effective for the Award Cycle beginning January 1, 1996. 11. Amendment and Termination. The Board of Directors of the Company may at any time amend, modify, alter or terminate this Plan. 12. Governing Law. This Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Indiana and construed accordingly. EX-10 4 EXHIBIT 10(P) EXHIBIT 10(p) RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS -------------------------- (As Amended February 11, 1997) 1. Purpose. This Restricted Stock Plan for Non-Employee Directors ("the Plan") is intended to attract and retain the services of experienced and knowledgeable independent directors of Cummins Engine Company, Inc. ("the Company") for the benefit of the Company and its stockholders and to provide additional incentive for such Directors to continue to work for the best interests of the Company and its stockholders. 2. Stock Available for Awards. No additional shares of the Company's common stock ("Common Stock") shall be reserved for issuance under the Plan. Instead, the number of shares available under the Plan shall be integrated with the number available for awards pursuant to the Company's 1992 Stock Incentive Plan ("the SIP"). Awards made under this Plan shall reduce the number of shares of Common Stock available for awards under the SIP. 3. Administration. The Plan shall be administered by the Board of Directors of the Company ("the Board"). Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the restrictions on Common Stock awards (which shall comply with and be subject to the terms and conditions of the Plan) and to make all other determinations necessary or advisable for the administration of the Plan. The Board's determinations of the matters referred to in this Paragraph 3 shall be conclusive. 4. Participation in the Plan. Persons who are now or shall become incumbent Directors of the Company who are not at the respective times employees of the Company or any subsidiary of the Company shall be eligible to participate in the Plan ("an Eligible Director"). A Director of the Company shall not be deemed to be an employee of the Company solely by reason of the existence of a consulting contract or arrangement between such Director and the Company or any subsidiary thereof pursuant to which the Director agrees to provide consulting services as an independent consultant on a regular or occasional basis for a stated consideration. 5. Awards. Each Eligible Director shall automatically receive, in payment of a portion of his or her annual Board retainer fee, an annual award of Common Stock, restricted as to transfer for a period of six (6) months following the date of the award. In the case of an initial award, the restriction period shall end six (6) months following the date of stockholder approval of the Plan. The number of shares in each such annual award shall be equal to $18,000 divided by the average of the closing prices of Common Stock as reported on the composite tape of the New York Stock Exchange for the twenty (20) consecutive trading days immediately preceding the date of the award. An initial automatic award to each Eligible Director shall be effective as of July 13, 1993, subject to stockholder approval of the Plan. Following the initial award, each Eligible Director shall automatically receive the award on the date of each Annual Meeting of Shareholders of the Company. The Company reserves the right to legend the share certificates for an appropriate period of time and to take other actions designed to assure compliance with applicable securities laws. 6. Changes in Present Common Stock. In the event of any merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure or capitalization affecting the Company's present Common Stock, appropriate adjustment shall be made by the Board in the number and kind of shares which are or may be awarded hereunder. 7. Effective Date and Duration of the Plan. The Plan became effective as of July 13, 1993, the date of its adoption by the Board. The Plan shall terminate on December 31, 2002 (unless earlier discontinued by the Board) but such termination shall not affect the rights of the holder of any Common Stock subject to restriction on such date of termination. 8. Amendment of the Plan. The Board may suspend or discontinue the Plan or revise or amend it in any respect whatsoever, provided, however, that without approval of the stockholders, no revision or amendment shall increase the number of shares subject to the Plan (except as provided in Section 6), that cannot be funded with treasury shares of Common Stock that were previously outstanding and listed on the New York Stock Exchange. 9. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by securities laws of the United States, shall be governed by the laws of the State of Indiana and construed accordingly. EX-10 5 EXHIBIT 10(T) EXHIBIT 10(t) CUMMINS ENGINE COMPANY, INC. SENIOR EXECUTIVE THREE YEAR PERFORMANCE PLAN -------------------------------------------- (As Amended February 11, 1997) 1. Objectives. The objectives of the Plan are to: (i) serve as a balance against the short-term compensation provided by base salary and bonus payments of the Company, (ii) emphasize the medium-term performance of the Company as compared to its industry competitors, (iii) strengthen the relationship between Company management and shareholder interests, and (iv) encourage participants to remain with the Company through important business cycles. The size of grants under the Plan are intended to reflect the degrees of influence participating executive officers have in their functional positions on the medium-term (three year) performance of the Company. The calculation of payments from the Plan is intended to reflect the Company's performance against certain performance measures designated by the Compensation Committee. 2. Definitions. a) "Award Cycle" means the three-year period upon which a particular year's payout is calculated. A new Award Cycle commences with the beginning of each of the Company's fiscal years. Payments, if any, under the Plan to Participants during a fiscal year are based upon the Company's performance during the most recently completed Award Cycle. b) "Change of Control" means the occurrence of any of the following : (i) there shall be consummated (A) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted in whole or in part into cash, other securities or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company, or (ii) the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any "person" (as such term is used in Sections 13(d) (3) and 14(d) (2) of the Securities Exchange Act of 1934, as amended ("the Exchange Act")), other than the Company or a subsidiary thereof or any employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, shall become the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 25 percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors ("Voting Shares"), as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, or (iv) at any time during a period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's stockholders of each new director during such two-year period was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such two-year period, or (v) any other event shall occur that would be required to be reported in response to Item 6(e) (or any successor provision) of Schedule 14A or Regulation 14A promulgated under the Exchange Act. c) "Committee" means the Compensation Committee of the Board of Directors of the Company. d) "Company" means Cummins Engine Company, Inc. e) "Participants" means the Company's Chief Executive Officer and other executive officers designated annually by the Committee to participate in the Plan for the ensuing Award Cycle. f) "Payout Factor" means the percentage determined by the Committee and applied to a Target Award to determine the amount of an award to be paid as described in Section 4 of the Plan. g) "Peer Group" means the group of companies selected by the Committee whose primary industry is similar to that of the Company. As of the effective date of the Plan, the Peer Group consists of the following companies: (i) Arvin Industries, Inc., (ii) Caterpillar, Inc., (iii) Dana Corporation, (iv) Deere & Company, (v) Dresser Industries, Inc., (vi) Eaton Corporation, (vii) Ford Motor Company, (viii) General Motors Corporation, (ix) Ingersoll-Rand Company, (x) Navistar International Corporation, and (xi) Paccar, Inc. h) "Performance Measures" means the Company's return on equity, return on sales, net income, sales growth, return on assets, total shareholder return, or any combination thereof. i) "Plan" means the Senior Executive Three Year Performance Plan described herein. j) "Target Award" means the amount of targeted compensation described in Section 3 of the Plan. 3. Target Award. The Committee shall assign each Participant a Target Award for each Award Cycle, in its discretion, based upon, but not limited to, the scope and breadth of the Participant's position, ability to affect the Company's medium-term financial performance, and his or her working relationships within the Company. The Target Award for an Award Cycle shall be expressed in terms of a threshold, target and maximum dollar amount or, in the discretion of the Committee, as a threshold, target and maximum number of award units ("Award Units") with each Award Unit having a cash value equal to the average of closing prices of the Company's common stock on the New York Stock Exchange during the 180 days preceding the payout date as described in Section 6 or Section 9 of the Plan. The Target Award for each Award Cycle shall be assigned and communicated to each Participant as soon as practicable thereafter, but in no event later than the 270th day of that Award Cycle. Target Awards may be changed during the course of an Award Cycle based on the Committee's re-evaluation of the criteria described in the preceding paragraph, provided however, a Target Award shall not be increased following commencement of the Award Cycle. 4. Payout Schedule. On or before the 270th day of each Award Cycle, the Committee shall establish the Performance Measures to be used in determining a Payout Factor applicable to the Award Cycle. The Committee may determine the Payout Factor based upon the attainment of one or more different Performance Measures, provided the measures, when established, are stated as alternatives to one another. Under the Payout Factor schedule, the targeted dollar amount or number of Award Units (collectively, "the Targeted Amount") of a Target Award will be earned by a Participant if the Company's performance against the Performance Measures equals the median of the performance of the Peer Group during the same period against the same measures. The threshold dollar amount or number of Award Units will be earned if performance is fifty percent (50%) and the maximum dollar amount or number of Award Units will be earned if performance is two hundred percent (200%) of the median performance of the Peer Group. The maximum dollar amount or value of Award Units that may be paid by the Plan with respect to any Award Cycle is $2,000,000. 5. Change in Accounting Standards. For purposes of determining the Payout Factor, the Company's actual performance under the Performance Measures will exclude extraordinary charges and credits which result from a change in accounting standards of the Company. 6. Plan Payments. Any payout under the Plan will be made as soon as practicable following audits of the Company's financial statements applicable to all fiscal years of the Award Cycle and written certification by the Committee of attainment of the applicable Performance Measures and corresponding Payout Factor. Payments under the Plan may be deferred pursuant to the Company's Deferred Compensation Plan. 7. Administration. The Plan shall be administered by the Compensation Committee. No member of the Committee shall be eligible for a Target Award while serving on the Committee. The Committee shall have authority to interpret the Plan and to establish, amend and rescind rules and regulations for the administration of the Plan, and all such interpretations, rules and regulations shall be conclusive and binding on all persons. Notwithstanding any other provision of the Plan to the contrary, the Committee may impose such conditions on participation in, awards under and payments from the Plan as it deems appropriate. 8. Termination of Employment. If a Participant's employment with the Company terminates during the first year of an Award Cycle, other than by reason of retirement, death or disability, the Participant will not receive any payout for that Award Cycle. If a Participant's employment so terminates during the second or third years of an Award Cycle, the Committee, in its discretion, shall determine whether the Participant will receive a proportionate payout of any payment with respect to the Award Cycle based on the period of employment during the cycle. If a Participant retires, dies or becomes disabled during an Award Cycle, the Participant or such Participant's estate, as the case may be, shall receive a proportionate share of any payment with respect to the Award Cycle based on the period of employment during the cycle, regardless of the length of time of such employment. 9. Change of Control. Notwithstanding any other provision herein to the contrary, in the event of a Change of Control, an amount shall be immediately payable from the Plan to each Participant equal to the Targeted Amount (the Target Award assuming a 1.0 Payout Factor). The full Targeted Amount shall be paid notwithstanding the fact that only a portion of the Award Cycle may have elapsed prior to the Change of Control. 10. Effective Date. The Plan shall be effective for the Award Cycle beginning January 1, 1996, subject to its approval by the Company's shareholders. 11. Amendment and Termination. The Board of Directors of the Company may at any time amend, modify, alter or terminate this Plan. 12. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, shall be governed by the laws of the State of Indiana and construed accordingly. EX-11 6 EXHIBIT 11 EXHIBIT 11 __________ CUMMINS ENGINE COMPANY, INC. SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS FOR THE FIRST QUARTER ENDED MARCH 30, 1997 and MARCH 31, 1996 Unaudited _____________________________________________________________ Weighted Average Net Calculated Millions, Except per Share Amounts Shares Earnings Per Share __________________________________ ________ ________ __________ 1997 ____ Basic earnings per share 38.3 $41 $1.07 Options .1 - ____ ___ Primary and fully diluted earnings per common share 38.4 $41 $1.06 ____ ___ 1996 ____ Basic earnings per share 40.2 $49 $1.21 Options .1 - ____ ___ Primary and fully diluted earnings per common share 40.3 $49 $1.21 ____ ___ EX-27 7 EXHIBIT 27
5 1,000,000 3-MOS DEC-31-1997 MAR-30-1997 81 0 730 0 615 1,622 2,712 1,375 3,466 983 459 0 0 119 1,152 3,466 1,304 1,304 1,018 239 0 0 5 56 15 41 0 0 0 41 1.06 1.06
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