SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
_________________
CUMMINS ENGINE COMPANY, INC.
(Name of issuer of the securities held pursuant to the plan)
Commission File Number 1-4949.
_______
Incorporated in the State of Indiana I.R.S. Employer Identification
No. 35-0257090
500 Jackson Street, Box 3005, Columbus, Indiana 47202-3005
(Address of Principal Executive Office)
Telephone Number: (812) 377-5000
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Full title of the plan)
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
INDEX TO FINANCIAL STATEMENTS
Page
____
Report of Independent Public Accountants 3
Combining Statements of Net Assets Available for 4-5
Benefits as of December 31, 1999 and 1998
Combining Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1999 and 1998 6-7
Notes to Financial Statements 8-20
Schedule
________
Item 27a - Schedule of Assets Held for Investment I - Page 21
Purposes as of December 31, 1999
Item 27a - Schedule of Assets Held for Investment I-A - Page 22
Purposes as of December 31, 1999
Schedule of Matching Contribution Formulas II - Page 23
as of December 31, 1999
Schedule of Employing Locations by Plan III - Page 24
as of December 31, 1999
Item 27b - Schedule of Loans or Fixed Income IV - Page 25
Obligations as of December 31, 1999
Exhibit
_______
Consent of Independent Public Accountants 23
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________
To the Benefits Policy Committee
Of Cummins Engine Company, Inc.:
We have audited the accompanying combining statements of net assets
available for benefits, of the CUMMINS ENGINE COMPANY, INC. AND
AFFILIATES RETIREMENT AND SAVINGS PLANS (the Plans) as of December
31, 1999 and 1998, and the related statements of changes in net
assets available for benefits, for the years ended December 31, 1999
and 1998. These financial statements and the schedules referred to
below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
benefits of the Plans as of December 31, 1999 and 1998, and the
changes in the net assets available for benefits for the years ended
December 31, 1999 and 1998, in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes, matching
contribution formulas, employing locations by plan, and loans or
fixed income obligations are presented for the purpose of additional
analysis and are not a required part of the basic financial
statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 23, 2000
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
COMBINING STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999
(stated in OOO's)
Salaried Bargaining Onan Lubricon
CDC Total
________ __________ ________ ________
_______ __________
Assets
______
Cash and investments:
Cash & Cash Equivalents $ 1,120 $ - $ - $ -
$ - $ 1,120
Cummins Engine Company, Inc.
Fixed Income Fund at contract
value (Note 3) 109,446 131,415 21,473 10
10,135 272,479
Investments at market value
(Note 3) 484,983 170,778 98,515 551
26,066 780,893
Participant Loans 4,430 3,594 1,015 27
1,218 10,284
________ ________ _______ ____
_______ _________
Total cash and investments 599,979 305,787 121,003 588
37,419 1,064,776
________ ________ _______ ____
_______ _________
Receivables:
Employer contributions 7,552 1,527 113 -
674 9,866
Employee contributions 1,704 1,472 368 -
224 3,768
Employee loan repayments 280 218 64 -
42 604
Accrued interest 1 - - -
- - 1
________ ________ _______ ____
_______ _________
Total receivables 9,537 3,217 545 -
940 14,239
________ ________ _______ ____
_______ _________
Total assets 609,516 309,004 121,548 588
38,359 1,079,015
________ ________ _______ ____
_______ _________
Liabilities
___________
Interest payable 1,710 - - -
- - 1,710
Note payable - ESOP 60,950 - - -
- - 60,950
Administrative Fees Payable 4 5 1 -
- - 10
________ ________ ________ ____
_______ __________
Total liabilities 62,664 5 1 -
- - 62,670
________ ________ ________ ____
_______ __________
Net Assets $546,852 $308,999 $121,547 $588
$38,359 $1,016,345
________ ________ ________ ____
_______ __________
________ ________ ________ ____
_______ __________
The accompanying notes and schedules are an integral part of these statements.
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
COMBINING STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998
(stated in OOO's)
Salaried Bargaining Onan Lubricon
CDC Total
________ __________ _______ ________
_______ ________
Assets
______
Cash and investments:
Cash and Cash Equivalents $ 1,290 $ - $ - $ -
$ - $ 1,290
Cummins Engine Company, Inc.
Fixed Income Fund at contract
value (Note 3) 95,344 116,675 19,721 23
7,077 238,840
Investments at market value
(Note 3) 404,826 156,962 86,689 501
23,872 672,850
Participant Loans 5,148 3,808 1,121 27
1,118 11,222
________ ________ _______ ____
_______ ________
Total cash and investments 506,608 277,445 107,531 551
32,067 924,202
________ ________ _______ ____
_______ ________
Receivables:
Employer contributions 6,394 1,538 149 -
681 8,762
Employee contributions 1,605 1,378 358 -
305 3,646
Employee loan repayments 275 233 66 -
87 661
Accrued interest 1 - - -
- - 1
________ ________ _______ ____
_______ ________
Total receivables 8,275 3,149 573 -
1,073 13,070
________ ________ _______ ____
_______ ________
Total assets 514,883 280,594 108,104 551
33,140 937,272
________ ________ _______ ____
_______ ________
Liabilities
___________
Interest payable 1,856 - - -
- - 1,856
Note payable - ESOP 63,250 - - -
- - 63,250
Administrative Fees Payable 4 4 1 -
- - 9
________ ________ _______ ____
_______ ________
Total liabilities 65,110 4 1 -
- - 65,115
________ ________ _______ ____
_______ ________
Net Assets $449,773 $280,590 $108,103 $551
$33,140 $872,157
________ ________ ________ ____
_______ ________
________ ________ ________ ____
_______ ________
The accompanying notes and schedules are an integral part of these statements.
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
COMBINING STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
(stated in OOO's)
Salaried Bargaining Onan
Lubricon CDC Total
________ __________ ________
________ _______ __________
Net Assets - beginning of year $449,773 $280,590 $108,103
$551 $33,140 $ 872,157
________ ________ ________
____ _______ __________
Investment income:
Fund investment income 67,676 36,006 17,326
98 5,134 126,240
Interest income 333 - -
- - - 333
Dividend income 2,296 - -
- - - 2,296
Net realized & unrealized appreciation
in the value of investments 29,866 - -
- - - 29,866
________ ________ _______
____ _______ _________
Total investment income 100,171 36,006 17,326
98 5,134 158,735
Less: investment advisory expense 5 - -
- - - 5
interest expense 3,419 - -
- - - 3,419
________ ________ _______
____ _______ _________
Net investment income 96,747 36,006 17,326
98 5,134 155,311
________ ________ _______
____ _______ _________
Contributions:
Employer 15,685 1,473 73
- - 1,346 18,577
Employee 25,321 14,234 5,253
- - 2,706 47,514
Rollover 1,088 142 139
- - 38 1,407
________ ________ _______
____ _______ _________
Total contributions 42,094 15,849 5,465
- - 4,090 67,498
________ ________ _______
____ _______ _________
Participant withdrawals (40,880) (23,154) (10,574)
(61) (3,952) (78,621)
Inter-plan transfers (882) (292) 1,227
- - (53) -
________ ________ ________
____ _______ __________
Net assets - end of year $546,852 $308,999 $121,547
$588 $38,359 $1,016,345
________ ________ ________
____ _______ __________
________ ________ ________
____ _______ __________
The accompanying notes and schedules are an integral part of these statements.
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
COMBINING STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
(stated in OOO's)
Salaried Bargaining Onan
Lubricon CDC Total
________ __________ _______
________ _______ ________
Net Assets - beginning of year $435,523 $252,188 $98,395
$613 $26,355 $813,074
________ ________ _______
____ _______ ________
Investment income:
Fund investment income 58,052 28,316 15,696
91 4,197 106,352
Interest income 157 - -
- - - 157
Dividend income 2,093 - -
- - - 2,093
Net realized & unrealized depreciation
in the value of investments (52,861) - -
- - - (52,861)
________ ________ _______
____ _______ ________
Total investment income 7,441 28,316 15,696
91 4,197 55,741
Less: investment advisory expense 5 - -
- - - 5
interest expense 4,523 - -
- - - 4,523
________ ________ _______
____ _______ ________
Net investment income 2,913 28,316 15,696
91 4,197 51,213
________ ________ _______
____ _______ ________
Contributions:
Employer 15,355 1,421 231
6 1,318 18,331
Employee 23,995 13,912 5,466
(1) 2,843 46,215
Rollover 3,338 279 185
- - 228 4,030
________ ________ _______
____ _______ ________
Total contributions 42,688 15,612 5,882
5 4,389 68,576
________ ________ _______
____ _______ ________
Participant withdrawals (31,724) (15,228) (11,806)
(119) (1,829) (60,706)
Inter-plan transfers 373 (298) (64)
(39) 28 -
________ ________ _______
____ _______ ________
Net assets - end of year $449,773 $280,590 $108,103
$551 $33,140 $872,157
________ ________ ________
____ _______ ________
________ ________ ________
____ _______ ________
The accompanying notes and schedules are an integral part of these statements.
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(Dollar amounts stated in 000's, except share and per share amounts)
1. SUMMARY OF THE PLAN
___________________
The Cummins Engine Company, Inc. (the Company or the Companies) and
Affiliates Retirement and Savings Plans (the Plan or the Plans) are defined
contribution plans that cover five employee groups, as described in Note 3.
Participants have the opportunity to make pre-tax and after-tax
contributions to the plan. Details of the plans are described in Note 2
and Note 3.
2. DESCRIPTION OF THE PLANS
________________________
Participation
_____________
Substantially all full-time, domestic employees of the Company and
designated subsidiaries are eligible to participate in one of the Plans as
soon as administratively possible. Nonresident aliens employed by the
Company or a foreign subsidiary are eligible to participate if the Company
owns at least 80 percent of the foreign subsidiary's common stock.
The Plans encourage voluntary savings through regular payroll
deductions. Subject to limitations contained in the Internal Revenue Code
and Regulations, participants may contribute up to 15 percent of gross pay
(10 percent with respect to certain highly compensated participants) as pre-
tax contributions, and 10 percent of gross pay as after-tax contributions
(not to exceed 20% in total). In addition, participants are permitted to
make voluntary additional after-tax contributions once each year.
Either at the end of each Plan year or on a monthly basis, the
Companies make matching contributions for each participant's pre-tax and
after-tax contributions that remain in the Plans at the end of the Plan
year or month. The formulas for these matches, as set forth in the Plans,
vary for each Company (see Schedule II). Certain groups of participants
receive cash matches and other groups participate in the ESOP and Flexi
Trust (as described below) and receive matching contributions in the form
of Company common stock.
In July 1989, the Company established the ESOP Trust and sold
2,362,206 shares of its common stock at $31.75 per share (amounts reflect
two-for-one common stock split) to the ESOP Trust in exchange for a $75,000
promissory note (the Note) secured by the shares. In December 1990, the
ESOP Trust prepaid its then-current indebtedness to the Company with
proceeds from the issuance of $72,750 of 8.76 percent ESOP Notes due 1998
and guaranteed by the Company (see Note 6). The arrangement requires the
Companies to contribute an aggregate annual amount to the ESOP Trust equal
to the annual principal and interest payable under the terms of the Note
after application of dividends paid on shares held in the ESOP Trust. As
the ESOP Trust's indebtedness is repaid from these sources of funds, shares
are allocated to the accounts of participants in the ESOP in relative
proportion to each participant's contributions to the Plans as well as
dividends received on shares previously allocated to the participant's
account in the ESOP Trust. Effective July, 1998 the ESOP Notes were
refinanced at 6.96 percent due 2010 and guaranteed by the Company (see Note
6). As of December 31, 1999, 1,256,618 shares were allocated and 1,105,588
remain unallocated in the ESOP Trust.
In January 1997, the Company established the Flexi Trust and sold
3,750,000 shares of its common stock at $48.25 per share to the Flexi Trust
in exchange for a $180,938 promissory note at 7.65 percent due 2012 secured
by the shares. In the event contributions to, and earnings of, the Trust
are insufficient to satisfy any installment of principal and interest on
the due date thereof, the Company (acting through the Trust Committee) may,
in its discretion, forgive such installment to the extent of the
insufficiency.
Participant and Company cash matching contributions are
deposited in the Trust and then invested in the seven investment
funds in accordance with participant elections. Account balances and
contributions can be invested in one or more of the seven investment
funds in multiples of 1 percent. Fund reallocations can be changed
daily with a limit of four times per month. Common stock account
balances in the ESOP and Flexi Trust accounts can not be redirected
into the other RSP investment options unless participants are 55
years of age or older. Investment income is allocated to participant
accounts on a daily basis.
Participant Withdrawals
_______________________
Participants are permitted to withdraw their after-tax contributions,
the Company cash matching contributions (after remaining in the account for
two full plan years) and accumulated earnings thereon. Participants are
also permitted to take out loans (see Note 3). In the event of financial
hardship, participants are permitted to withdraw pre-tax contributions and
accumulated earnings thereon. In-service withdrawals from the ESOP account
are prohibited.
Plan Payouts
____________
Upon termination of employment, immediate distribution is made to
those participants with account balances less than or equal to $5.
Terminating participants with account balances greater than $5 must consent
to any payment prior to the attainment of age 70 1/2. Participants who do
not consent to immediate distribution may subsequently elect in writing to
begin receiving benefits as soon as is practical, provided that in any
event the distribution commences no later than April 1 of the Plan year
following the Plan year in which age 70 1/2 occurs. Account balances
remaining in the Plans will continue to share in the earnings of the
investments prior to distribution. Distributions from the ESOP and Flexi
Trust portions of the Plans are in whole shares of stock allocated to
participant accounts, with cash for partial shares unless participants
elect to receive the entire distribution in cash at current market value.
Plan Termination
________________
While it has not expressed any intention to do so, the Company has the
right to terminate the Plan subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Upon partial or total
termination of the Plan, the participants' accounts shall become fully
vested and nonforfeitable.
3. SUMMARY OF ACCOUNTING POLICIES
______________________________
Basis of Combination
____________________
The Combining Statements of Net Assets Available for Benefits and
Changes in Net Assets Available for Benefits reflect the financial activity
of the Retirement and Savings Plans of Cummins Engine Company, Inc. (the
Company) and certain subsidiary companies (the Companies). These Plans
include:
. Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plan
for Salaried and Non-Bargaining Hourly Employees (Salaried Plan)
. Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plan
for Bargaining Unit Employees (Bargaining Plan)
. Cummins Engine Company, Inc. Retirement and Savings Plan for Onan
Corporation Employees (Onan Plan)
. Cummins Engine Company, Inc. Retirement and Savings Plan for Lubricant
Consultants, Inc. Employees (Lubricon Plan)
. Cummins Engine Company, Inc. Retirement and Savings Plan for
Consolidated Diesel Company Employees (CDC Plan)
Trust Arrangements
__________________
A single trust arrangement is maintained with The Vanguard Group (the
Trustee) for the administration of all the investments in the Plans.
Accounting Method
_________________
Accounting records are maintained by the Trustee on a modified cash
basis. All material adjustments have been made to present the financial
statements under the accrual basis of accounting as required by generally
accepted accounting principles.
Use of Estimates
________________
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of net assets available for
benefits and changes therein. Actual results could differ from those
estimates.
Adoption of Statement of Position 99-3
______________________________________
The Accounting Standards Executive Committee issued Statement of
Position ("SOP") 99-3, "Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters," which
eliminates the requirement for a defined contribution plan to disclose
participant-directed investment programs. SOP 99-3 was adopted for the
1999 financial statements and, as such, the 1998 financial statements have
been reclassified to eliminate the participant-directed fund investment
program disclosures. There was no effect on the previously reported
changes in net assets.
Investments
___________
Investments held by the Trust are stated at market value except for
the investment contracts, within the Fixed Income Fund, which are stated at
contract value. Changes in market value of the investment contracts are
reflected in Fund investment income (loss) on the Combining Statements of
Changes in Net Assets Available for Benefits. Quoted market prices are
used to value investments.
The following presents investments that represent 5% or more of the
Plan's net assets at December 31:
Salaried Plan 1999 1998
_____________ ________ ________
Cummins Engine Company, Inc. Fixed Income Fund $109,446 $ 95,344
Vanguard Wellington Fund 91,719 99,607
Vanguard U.S. Growth Fund 97,454 79,025
Vanguard Index Trust Fund 121,498 97,714
Cummins Engine Company, Inc. Common Stock Fund 146,539 109,977
*Cummins Engine Company, Inc. ESOP Fund 98,088 74,745
Bargaining Plan
_______________
Cummins Engine Company, Inc. Fixed Income Fund $131,415 $116,675
Vanguard Wellington Fund 56,541 62,609
Vanguard U.S. Growth Fund 34,876 29,491
Vanguard Index Trust Fund 49,017 41,462
Cummins Engine Company, Inc. Common Stock Fund 24,845 20,319
Onan Plan
_________
Cummins Engine Company, Inc. Fixed Income Fund $ 21,473 $ 19,721
Vanguard Wellington Fund 29,073 29,501
Vanguard U.S. Growth Fund 26,746 21,470
Vanguard Index Trust Fund 31,327 26,094
Cummins Engine Company, Inc. Common Stock Fund - 5,994
Lubricon Plan
_____________
Vanguard Wellington Fund $ 50 $ 88
Vanguard U.S. Growth Fund 197 144
Vanguard Index Trust Fund 206 149
Vanguard Explorer Fund 47 80
Vanguard International Fund 40 31
CDC Plan
________
Cummins Engine Company, Inc. Fixed Income Fund $ 10,135 $ 77
Vanguard Wellington Fund 6,015 6,436
Vanguard U.S. Growth Fund 8,192 6,823
Vanguard Index Trust Fund 8,667 7,640
Cummins Engine Company, Inc. Common Stock Fund - 2,129
* Non-participant directed
During 1999 and 1998, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value as follows:
Salaried Plan 1999 1998
_____________ ________ ________
Mutual funds $ 49,063 $ 2,096
Common stock 41,393 (5,292)
Fixed income fund 6,291 6,109
________ ________
Total $ 96,747 $ 2,913
________ ________
________ ________
Bargaining Plan
_______________
Mutual funds $ 19,431 $ 24,640
Common stock 8,985 (3,654)
Fixed income fund 7,590 7,330
________ ________
Total $ 36,006 $ 28,316
________ ________
________ ________
Onan Plan
_________
Mutual funds $ 1,318 $ 15,906
Common stock 12,827 (1,458)
Fixed income fund 3,181 1,248
________ ________
Total $ 17,326 $ 15,696
________ ________
________ ________
Lubricon Plan
_____________
Mutual funds $ 94 $ 95
Common stock 3 (6)
Fixed income fund 1 2
________ ________
Total $ 98 $ 91
________ ________
________ ________
CDC Plan
________
Mutual funds $ 3,710 $ 4,288
Common stock 889 (533)
Fixed income fund 535 442
________ ________
Total $ 5,134 $ 4,197
________ ________
________ ________
The Cummins Engine Company, Inc. ESOP and the Cummins Engine Company, Inc.
FlexiFund, which are included on the Investments at market value in the
Combining Statements of Net Assets Available for Benefits in the Salaried
Plan only, are non-participant directed. Information about the net assets
and changes in net assets for those funds for the year ended and ending
December 31 is as follows:
1999 1998
Unallocated Allocated Unallocated Allocated
___________ _________ ___________ _________
Net Assets:
Cummins Engine
Company, Inc. ESOP $ (5,062) $ 49,055 $ (21,579) $ 38,500
Cummins Engine
Company, Inc.
Flexifund 17,089 - 7,360 -
Changes in Net Assets:
Company contributions $ 10,917 $ 4,606 $ 9,100 $ 7,076
Interest & Dividends 1,577 - 1,499 751
Net (depreciation)/
appreciation 17,974 12,944 (24,305) (28,551)
Benefits paid to
participants (625) (6,091) (222) (2,237)
Other (3,596) (905) (62) (571)
_________ _________ _________ _________
$ 26,247 $ 10,554 $ (13,990) $ (23,532)
_________ _________ _________ _________
_________ _________ _________ _________
The Plan's investments in non-participant directed funds, at December 31,
are presented in the following table:
1999 1998
Unallocated Allocated Unallocated Allocated
___________ _________ ___________ _________
Cummins Engine Company, Inc. ESOP
__________________________________
Number of Units 1,105,588 1,256,618 1,198,026 1,164,180
Cost $ 35,102 $ 39,898 $ 38,037 $ 36,963
Market Value $ 53,411 $ 60,707 $ 42,530 $ 41,328
Cummins Engine Company, Inc. FlexiFund
_______________________________________
Number of Units 1,892,424 - 1,108,511 -
Cost $ 6,660 $ - $ 10,088 $ -
Market Value $ 16,983 $ - $ 7,046 $ -
The Fixed Income Fund consists primarily of insurance contracts and
bank investment contracts with various insurance companies. The insurance
companies maintain investment accounts for each contract. The accounts are
credited with earnings on the underlying investments at interest rates
ranging from 5.50% to 7.88% for 1999 and 5.48% to 7.88% for 1998 and
charged for withdrawals and administrative expenses by the insurance
companies. The contracts are included in the financial statements at
contract value, as reported to the Plan by the investment administrator.
Contract values represent contributions made under the contracts, plus
earnings, less Plan withdrawals and administrative expenses. The crediting
interest rate is based on an agreed upon formula with the issuer.
Like all the other investment alternatives, the Cummins Common Stock
Fund is valued in units. The net asset value per unit fluctuates on a
daily basis with the change in the price of Cummins Stock. At December 31,
1999 there were a total of 6,729,000 units and a net asset value of
$63,854.
Net investment income (loss) of each fund is allocated to each Plan
based on the relationship of each Plan's investment in the fund to the
total investment in the fund. Net investment income (loss) is likewise
allocated to participants based on the relationship of participant account
balances in each fund to the total balance in each fund.
Vesting
_______
The interest of a participant or a former participant in his or her
tax-deferred and after-tax contribution account, including the Company
matching cash contributions, ESOP shares, Flexi Trust shares, and earnings
thereon shall at all times be nonforfeitable and fully vested.
Participant Loans
_________________
The Plans permit participants to borrow portions of their accounts
subject to Department of Labor regulations. Participants may take out
loans limited to the lessor of $50 or 50 percent of the present value of
their accounts (excluding ESOP and Flexi Trust accounts) over a period not
to exceed 54 months. The annual interest rate is the Prime Rate, as quoted
in the Wall Street Journal, plus 1 percent. The amount used to secure a
loan is 50 percent of the participant's account balance. The interest
rates on the outstanding loans range from 7.75% to 8.50%.
Administrative Expenses and Investment Advisory Fees
____________________________________________________
Administrative expenses such as record keeping fees are paid by the
Companies. Investment advisory fees for portfolio management of Vanguard
Funds are paid directly from fund earnings. Investment advisory fees for
the Fixed Income Fund and ESOP Fund are paid directly from the fund, which
are included in fund investment income on the Combining Statement of
Changes in Net Assets Available for Benefits. The trust agreement entitles
the Trustee to receive reasonable compensation for services rendered and
expenses incurred in the administration and execution of the Plans.
4. TAX STATUS
__________
The Internal Revenue Service issued determination letters stating that
the Plans were qualified in accordance with applicable plan design
requirements as of their dates. In the opinion of the Plan Administrator
and Internal Tax Counsel, the Plans are currently designed and continue to
operate in a manner that qualifies them under Internal Revenue Code (IRC)
Section 401(a) and, therefore, are exempt from income taxes under the
provisions of IRC Section 501(a). Accordingly, no provision for Federal
income taxes has been made.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
___________________________________________________
The following is a reconciliation of net assets available for plan
participants as indicated in the financial statements to the federal tax
Form 5500.
Year Ended December 31,
______________________
Salaried Plan 1999 1998
_____________ ________ ________
Net assets available for plan participants
as indicated in the financial statements $546,852 $ -
Amounts allocated to withdrawing
participants (332) -
________ ________
Net assets available for plan participants
as indicated in the Form 5500 $546,520 $ -
________ ________
________ ________
Bargaining Plan
_______________
Net assets available for plan participants
as indicated in the financial statements $308,999 $ -
Amounts allocated to withdrawing
participants (33) -
________ ________
Net assets available for plan participants
as indicated in the Form 5500 $308,966 $ -
________ ________
________ ________
Onan Plan
_________
Net assets available for plan participants
as indicated in the financial statements $127,547 $ -
Amounts allocated to withdrawing
participants (105) -
________ ________
Net assets available for plan participants
as indicated in the Form 5500 $121,442 $ -
________ ________
________ ________
Year Ended December 31,
______________________
CDC Plan 1999 1998
________ ________ ________
Net assets available for plan participants
as indicated in the financial statements $ 38,359 $ -
Amounts allocated to withdrawing
participants (16) -
________ ________
Net assets available for plan participants
as indicated in the Form 5500 $ 38,343 $ -
________ ________
________ ________
The following is a reconciliation of benefits paid to participants as
indicated in the financial statements to the Form 5500.
Salaried Plan 1999 1998
_____________ ________ ________
Participant benefit payments as indicated
in the financial statements $ 40,880 $ -
Amounts allocated to withdrawing
participants 332 -
________ ________
Participant benefit payments as indicated
in the Form 5500 $ 41,212 $ -
________ ________
________ ________
Bargaining Plan
_______________
Participant benefit payments as indicated
in the financial statements $ 23,154 $ -
Amounts allocated to withdrawing
participants 33 -
________ ________
Participant benefit payments as indicated
in the Form 5500 $ 23,187 $ -
________ ________
________ ________
Onan Plan
_________
Participant benefit payments as indicated
in the financial statements $ 10,574 $ -
Amounts allocated to withdrawing
participants 105 -
________ ________
Participant benefit payments as indicated
in the Form 5500 $ 10,679 $ -
________ ________
________ ________
CDC Plan 1999 1998
________ ________ ________
Participant benefit payments as indicated
in the financial statements $ 3,952 $ -
Amounts allocated to withdrawing
participants 16 -
________ ________
Participant benefit payments as indicated
in the Form 5500 $ 3,968 $ -
________ ________
________ ________
6. LONG-TERM DEBT
______________
The ESOP Trust issued $72,750 of ESOP Notes due in 1998 with an annual
interest rate of 8.76 percent payable semi-annually to the Note holders
(see Note 2). Effective July 1998 the ESOP Notes were refinanced at 6.96
percent due 2010 and guaranteed by the Company. The final principal
payment, $3,150, is due on January 4, 2010.
7. PARTIES-IN-INTEREST AND REPORTABLE TRANSACTIONS
_______________________________________________
Party-in-interest transactions during the plan year ended December 31,
1999 are included in Schedule I of these statements.
There are no reportable transactions during the plan year ended
December 31, 1999.
SCHEDULE I
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
EIN 35-0257090
ITEM 27A: SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
(000's)
ISSUER/DESCRIPTION MARKET VALUE
_______________________________ ____________
Salaried:
Vanguard VMMR Prime Portfolio $ 1,120
Cummins Engine Company, Inc.
Fixed Income Fund**** 109,446
Vanguard Wellington Fund*** 91,719
Vanguard U.S. Growth Fund*** 97,454
Vanguard Index Trust Fund*** 121,498
Vanguard Explorer Fund*** 16,793
Vanguard International Fund*** 10,980
Cummins Engine Company, Inc.
Common Stock*** 146,539
Participant Loans (7.75%-8.50%) 4,430
________
$599,979
________
Bargaining:
Cummins Engine Company, Inc.
Fixed Income Fund**** $131,415
Vanguard Wellington Fund*** 56,541
Vanguard U.S. Growth Fund*** 34,876
Vanguard Index Trust Fund*** 49,017
Vanguard Explorer Fund*** 3,723
Vanguard International Fund*** 1,776
Cummins Engine Company, Inc.
Common Stock*** 24,845
Participant Loans (7.75%-8.50%) 3,594
________
$305,787
________
Onan:
Cummins Engine Company, Inc.
Fixed Income Fund**** $21,473
Vanguard Wellington Fund*** 29,073
Vanguard U.S. Growth Fund*** 26,746
Vanguard Index Trust Fund*** 31,327
Vanguard Explorer Fund*** 3,395
Vanguard International Fund*** 2,322
Cummins Engine Company, Inc.
Common Stock*** 5,652
Participant Loans (7.75%-8.50%) 1,015
________
$121,003
________
Lubricon:
Cummins Engine Company, Inc.
Fixed Income Fund**** $ 10
Vanguard Wellington Fund*** 50
Vanguard U.S. Growth Fund*** 197
Vanguard Index Trust Fund*** 206
Vanguard Explorer Fund*** 47
Vanguard International Fund*** 40
Cummins Engine Company, Inc.
Common Stock*** 11
Participant Loans (7.75%-8.50%) 27
________
$ 588
________
CDC:
Cummins Engine Company, Inc.
Fixed Income Fund**** $ 10,135
Vanguard Wellington Fund*** 6,015
Vanguard U.S. Growth Fund*** 8,192
Vanguard Index Trust Fund*** 8,667
Vanguard Explorer Fund*** 676
Vanguard International Fund*** 633
Cummins Engine Company, Inc.
Common Stock*** 1,883
Participant Loans (7.75%-8.50%) 1,218
________
$ 37,419
________
Total:
Vanguard VMMR Prime Portfolio $ 1,120
Cummins Engine Company, Inc.
Fixed Income Fund**** 272,479
Vanguard Wellington Fund*** 183,398
Vanguard U.S. Growth Fund*** 167,465
Vanguard Index Trust Fund*** 210,715
Vanguard Explorer Fund*** 24,634
Vanguard International Fund*** 15,751
Cummins Engine Company, Inc.
Common Stock*** 178,930
Participant Loans (7.75%-8.50%) 10,284
__________
$1,064,776
__________
*** Identifies known party-in-interest to the plan
****See detail of Cummins Engine Company, Inc. Fixed Income Fund
following Schedule I.
Schedule I-A
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
EIN 35-0257090
ITEM 27A: SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
(000's)
SECURITY NAME
UNDERLYING ASSET RATE CONTRACT VALUE
__________________________ _____ ______________
AIG 1035 5.50% $ 12,692
AIG 1085 7.05% 5,035
Allstate GA-6165 6.25% 12,471
Allstate GA-6174 6.82% 5,176
Bayerische 99-016 6.98% 10,262
Canada Life P46010 6.17% 10,099
GE Life & Annuity GS-3258 5.97% 10,506
John Hancock 8760 6.48% 7,400
John Hancock 9729 6.23% 11,157
Life of Virginia 3144 6.18% 5,502
Mass Mutual 35027 7.05% 6,019
Metropolitan Life 25192 6.63% 5,123
New York Life GA-30196 7.88% 6,433
New York Life GA-30196-002 7.35% 6,351
Principal 4-15203-3 7.30% 8,412
Principal 4-15203-4 7.32% 10,118
VGI Prime Money Market 5.61% 16,210
FAIR VALUE
__________
AIG Financial 129128 7.23%
Vanguard Targeted Return Trust (2-01) 10,243
Wrapper (38)
Caisse Des Depots 317-01 6.78%
FNR 1997-7 PM 10,097
Wrapper (43)
Caisse Des Depots 317-02 5.75%
CONHE 1999-2 A6 8,104
Wrapper 896
Caisse Des Depots 317-03 6.63%
RFMS2 1999-H14 A4 4,873
Wrapper 159
Deutsche Bank VG-CUM-1 6.48%
Vanguard Targeted Return Trust (3-00) 10,048
Vanguard Targeted Return Trust (4-00) 10,094
Wrapper 56
Deutsche Bank VG-CUM-2 7.13%
Vanguard Targeted Return Trust (3-01) 4,818
Vanguard Targeted Return Trust (1-02) 4,824
Wrapper (21)
Rabobank CUM-119601 6.36%
Vanguard Short Term Corporate Bond 5 618
Vanguard Total Bond Market 7,235
Wrapper 232
Rabobank CUM-089501 6.43%
Vanguard Total Bond Market Institutional 12,475
Wrapper 213
Rabobank CUM-049601 6.76%
Vanguard Short Term Corporate Bond 2,880
Vanguard Total Bond Market 8,870
Wrapper 296
Union Bank of Switzerland 2112 6.40%
Vanguard Total Bond Market 7,134
Vanguard Short Term Corporate Bond 8,454
Wrapper 301
West Landesbank 4001 6.32%
Vanguard Targeted Return Trust (2-02) 2,795
Vanguard Targeted Return Trust (3-02) 2,796
Wrapper 104
________
Total Cummins Engine Company, Inc.
Fixed Income Fund $272,479
________
________
Schedule II
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
SCHEDULE OF MATCHING CONTRIBUTION FORMULAS
AS OF DECEMBER 31, 1999
Loc Cash ESOP Stock
Employing Company Code Location Name Contribution Contribution
_________________ ____ _____________ ____________ ____________
Cummins Engine Company 110 Columbus Salary No Yes(11)
" 111 CBS-Nashville No Yes(11)
" 120 Columbus DWU Yes(3)(4) No
" 121 CMEP DWU Yes(12) No
" 122 DWU New Hires Yes(12) No
" 130 Columbus OCU Yes(3)(4) No
" 131 OCU New Hires Yes(12) No
" 132 CMEP OCU Yes(12) No
" 135 Columbus Security No Yes(11)
CADEC 190 CADEC No Yes(11)
Cummins Engine Company 200(O) CHS Mgmt. Services No Yes(1)(2)
" 200(N) CHS Mgmt. Services No Yes(11)
Cummins Engine Company 240(O) CHS Cylinder Head No Yes(1)(2)
" 240(N) CHS Cylinder Head No Yes(11)
" 250(O) CHS Recon No Yes(1)(2)
" 250(N) CHS Recon No Yes(11)
" 260(O) CHS Engr.Test Svcs. No Yes(1)(2)
" 260(N) CHS Engr.Test Svcs. No Yes(11)
" 291(O) Cummins Marine No Yes(1)(2)
" 291(N) Cummins Marine No Yes(11)
" 300(O) Jamestown No Yes(1)(2)
" 300(N) Jamestown No Yes(11)
" 301 JEP New Hires No Yes(11)
Cummins Natural Gas 390 Cummins Natural Gas No Yes(11)
Engines
Cummins Americas, Inc. 400 Miami PDC No Yes(11)
Atlas Crankshaft 500 Atlas Salary No Yes(11)
" 510 Atlas Union Yes(13) No
Onan Corporation 550 Onan-Multiple Loc. Yes(8) Yes(7)
" 551 Onan Huntsville Yes(8) Yes(7)
" 552 Onan OPE St. Peter Yes(8) Yes(7)
Fleetguard, Inc. 600 Fleetguard TN No Yes(11)
Salary
" 610 Fleetguard Lake No Yes(11)
Mills Salary
" 620 Fleetguard Lake No Yes(11)
Mills Hourly
Fleetguard, Inc. 621 L-M Hrly. New Hires No Yes(11)
Fleetguard, Inc. 630 Fleetguard TN Hrly. Yes(9) No
Kuss 650 Kuss Salary No Yes(1)(2)
Kuss 651 Kuss Union No Yes(1)(2)
Cummins Engine Company 700 DRC Salary No Yes(11)
" * 720 DRC TN Union Yes(10) No
Cummins Diesel Intl. 810 CDIL No Yes(11)
Consolidated Diesel Co. 900(O) Consol. Diesel Co. Yes(10)(6) No
" 900(N) Consol. Diesel Co. Yes(5) No
Holset Engr. Company 950 Holset Memphis No Yes(11)
" 951 Holset Charleston No Yes(11)
" 952 Holset Air
Compressors No Yes(11)
*Participants at location 720 are not eligible to make Basic Savings
Contributions.
Matching Contribution Legend
____________________________
( 1) ESOP Stock Contribution based on 50% of 1st 2% of pay
contributed as a Pre-Tax Contribution
( 2) ESOP Stock Contribution based on 50% of 1st $900 of pay
contributed as a Basic Savings Contribution
( 3) Cash Contribution of 50% (up to a max of $325) of 1st 2%
of pay contributed as a Pre-Tax Contribution
( 4) Cash Contribution of 50% of the 1st $900 of pay contributed
as a Basic Savings Contribution
( 5) Cash Contribution of 50% on 1st 6% of pay contributed as a Pre-Tax
Contribution
( 6) Cash Contribution based on 50% (up to a max of $900) on
1st $1,800 of pay contributed as a Basic Savings Contribution
( 7) ESOP Stock Contribution based on 100% of 1st $250, 75% of next
$250, 50% of next $1,000, and 25% of next $1,000 (max
stock match = $1,187.50) NOTE: Applies to Pre-Tax
Contributions
( 8) Cash Contribution of 25% of the 1st $1,000 of pay contributed
as a Basic Savings Contribution
( 9) Cash Contribution of 50% of the 1st 3% of pay contributed as a
Pre-Tax Contribution
(10) Cash Contribution of 50% of 1st 2% of pay contributed as a
Pre-Tax Contribution
(11) ESOP Stock Contribution based on 50% of 1st 6% of pay contributed as
a Pre-Tax Contribution
(12) Cash Contribution of $1 for $1 up to 2% of gross pay; $.25
on dollar up to next 4% of gross pay for Pre-Tax
(13) Cash Contribution of $1 for $1 up to 2% of gross pay contributed
as a Pre-Tax Contribution
Schedule III
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
EMPLOYING LOCATIONS BY PLAN
AS OF DECEMBER 31, 1999
Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plan for
Salaried and Non-Bargaining Hourly Employees
EIN # 35-0257090
Plan 020
- ---------------------------------------------------------------------------
110 Columbus Salary 400 Miami PDC
111 CBS Nashville 500 Atlas Salary
135 Columbus Security 600 Fleetguard TN Salary
190 CADEC 610 Fleetguard Lake Mills Salary
200 Charleston Management Svcs. 620 Fleetguard Lake Mills Hourly
240 Cylinder Head 621 Fleetguard Lake Mills Hourly
New Hires
250 Charleston ReCon 650 Kuss Salary
260 Engineering Test 700 DRC Salary
291 Cummins Marine 810 CDIL
300 Jamestown 950 Holset Memphis
301 Jamestown New Hires 951 Holset Charleston
390 Cummins Natural Gas 952 Holset Air Compressors
Cummins Engine Company, Inc. Retirement and Savings Plan for
Onan Corporation Employees
EIN # 41-0965373
Plan 025
- --------------------------------------------------------------------------
550 Onan Multiple Locations 552 Onan OPE St. Peter
551 Onan Huntsville
Cummins Engine Company, Inc. Retirement and Savings Plan for
Consolidated Diesel Company Employees
EIN # 56-1896727
Plan 020
- -------------------------------------------------------------------------
900 Consolidated Diesel Company
Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plan for
Bargaining Unit Employees
EIN # 35-0257090
Plan 030
- -------------------------------------------------------------------------
120 Columbus DWU 132 CMEP OCU
121 CMEP DWU 510 Atlas Hourly
122 DWU New Hires 630 Fleetguard TN Hourly
130 Columbus OCU 651 Kuss Union
131 OCU New Hires 720 DRC TN Union
Schedule IV
CUMMINS ENGINE COMPANY, INC. AND AFFILIATES
RETIREMENT AND SAVINGS PLANS
EIN 35-0257090
ITEM 27B: SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
IN DEFAULT OR CLASSIFIED AS UNCOLLECTIBLE
AS OF DECEMBER 31, 1999
(stated in 000's)
PRINCIPAL
ORIGINAL RECEIVED UNPAID
AMOUNT OF DURING PRINCIPAL AMOUNT
PLAN LOAN THE YEAR AT 12/31/99 OVERDUE
__________ _________ _________ ___________ _______
Salaried $23 $ 4 $ 7 $ 2
Bargaining 9 - 7 4
CDC 2 - 2 1
Interest rates range from 7.75% through 8.50%.
SIGNATURE
_________
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
CUMMINS ENGINE COMPANY, INC.
RETIREMENT AND SAVINGS PLAN
____________________________
(Name of Plan)
By /s/ Dave C. Wright
___________________
Dave C. Wright
Secretary - Pension
Policy Committee