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, 1994 _________________ 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 (Full title of the plan) CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS INDEX TO FINANCIAL STATEMENTS Pages _____ Report of Independent Public Accountants 3 Combining Statements of Net Assets by Plan 4-7 Combining Statements of Changes in Net Assets by Plan 8-11 Combining Statements of Net Assets by Fund 12-17 Combining Statements of Changes in Net Assets by Fund 18-23 Notes to Financial Statements 24-29 Signature 37 Schedules _________ Schedule I - Assets Held for Investment Purposes 30-32 Schedule II - Reportable Transactions 33 Schedule III - Matching Contribution Formulas 34-36 Exhibit _______ 23 - Consent of Independent Public Accountants REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ________________________________________ To the Pension Policy Committee of Cummins Engine Company, Inc.: We have audited the accompanying combining statements of net assets by plan and by fund, of the CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS as of December 31, 1994 and 1993, and the related statements of changes in net assets by plan and by fund, for the years ended December 31, 1994 and 1993. 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 generally accepted auditing standards. 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 of the Plans as of December 31, 1994 and 1993, and the changes in the net assets for the years ended December 31, 1994 and 1993, in conformity with generally accepted accounting principles. Our audits were performed 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, reportable transactions and matching contribution formulas 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 9, 1995. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY PLAN DECEMBER 31, 1994 Salaried Bargaining Onan ____________ ____________ ____________ Assets ______ Cash and investments: The Northern Trust Company Short-Term Investment Fund $ 864,862 $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 83,459,484 105,127,676 17,531,029 Vanguard Wellington Fund 49,907,017 29,285,706 15,810,805 Vanguard U.S. Growth Fund 18,623,556 5,619,719 5,915,367 Vanguard Index Trust Fund 24,002,785 9,948,550 7,764,266 Vanguard Explorer Fund 2,692,444 712,074 458,268 Vanguard International Fund 6,524,522 1,922,256 1,432,810 Cummins Engine Company, Inc. Common Stock 114,494,782 7,868,558 2,749,142 Participant Loans 5,130,460 3,772,332 1,582,428 ___________ ___________ __________ Total cash & investments 305,699,912 164,256,871 53,244,115 ___________ ___________ __________ Receivables: Employer contributions 3,644,360 1,486,954 293,845 Employee contributions 1,690,559 1,263,478 608,717 Employee loan repayments 245,107 213,310 115,543 Accrued interest 2,918 - - ___________ __________ __________ Total receivables 5,582,944 2,963,742 1,018,105 ___________ ___________ __________ Total assets 311,282,856 167,220,613 54,262,220 ___________ ___________ __________ Liabilities ____________ Interest payable 2,935,151 - - Note payable - ESOP 69,450,000 - - ___________ ___________ __________ Total liabilities 72,385,151 - - ___________ ___________ __________ Net Assets $238,897,705 $167,220,613 $ 54,262,220 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY PLAN DECEMBER 31, 1994 Lubricon CDC Total ____________ ____________ ____________ Assets ______ Cash and investments: The Northern Trust Company Short-Term Investment Fund $ - $ - $ 864,862 Cummins Engine Company, Inc. Fixed Income Fund 87,659 5,658,121 211,863,969 Vanguard Wellington Fund 67,539 2,653,124 97,724,191 Vanguard U.S. Growth Fund 30,240 1,114,166 31,303,048 Vanguard Index Trust Fund 45,034 1,517,919 43,278,554 Vanguard Explorer Fund 9,878 148,461 4,021,125 Vanguard International Fund 64,833 321,374 10,265,795 Cummins Engine Company, Inc. Common Stock 13,153 825,247 125,950,882 Participant Loans 24,285 858,952 11,368,457 ___________ ___________ __________ Total cash & investments 342,621 13,097,364 536,640,883 ___________ ___________ ___________ Receivables: Employer contributions 20,182 516,902 5,962,243 Employee contributions 4,578 213,246 3,780,578 Employee loan repayments 1,270 65,509 640,739 Accrued interest - - 2,918 ___________ __________ __________ Total receivables 26,030 795,657 10,386,478 ___________ __________ ___________ Total assets 368,651 13,893,021 547,027,361 ___________ ___________ ___________ Liabilities ___________ Interest payable - - 2,935,151 Note payable - ESOP - - 69,450,000 ___________ ___________ __________ Total liabilities - - 72,385,151 ___________ ___________ __________ Net Assets $ 368,651 $ 13,893,021 $474,642,210 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY PLAN DECEMBER 31, 1993 Salaried Bargaining Onan ____________ ____________ ____________ Assets ______ Cash and investments: The Northern Trust Company Short-Term Investment Fund $ 328,685 $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 72,788,095 93,361,040 15,691,005 Vanguard Wellington Fund 55,003,648 32,495,620 15,820,919 Vanguard U.S. Growth Fund 17,586,368 5,620,077 5,283,722 Vanguard Index Trust Fund 24,009,361 10,301,987 7,058,607 Vanguard Explorer Fund - - - Vanguard International Fund - - - Cummins Engine Company, Inc. Common Stock 131,980,775 6,035,210 1,543,540 Participant Loans 5,130,161 3,517,829 1,599,264 ___________ ___________ __________ Total cash & investments 306,827,093 151,331,763 46,997,057 ___________ ___________ ___________ Receivables: Employer contributions 4,097,201 1,457,591 265,993 Employee contributions 1,516,057 1,230,214 535,889 Employee loan repayments 214,921 147,118 82,807 Accrued interest 523 - - ___________ __________ __________ Total receivables 5,828,702 2,834,923 884,689 ___________ ___________ __________ Total assets 312,655,795 154,166,686 47,881,746 ___________ ___________ __________ Liabilities ___________ Interest payable 3,094,470 - - Note payable - ESOP 70,650,000 - - ___________ ___________ __________ Total liabilities 73,744,470 - - ___________ ___________ __________ Net Assets $238,911,325 $154,166,686 $ 47,881,746 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY PLAN DECEMBER 31, 1993 Lubricon CDC Total ____________ ____________ ____________ Assets ______ Cash and investments: The Northern Trust Company Short-Term Investment Fund $ - $ - $ 328,685 Cummins Engine Company, Inc. Fixed Income Fund 103,310 4,950,119 186,893,569 Vanguard Wellington Fund 161,980 2,769,269 106,251,436 Vanguard U.S. Growth Fund 48,042 1,050,410 29,588,619 Vanguard Index Trust Fund 38,593 1,616,380 43,024,928 Vanguard Explorer Fund - - - Vanguard International Fund - - - Cummins Engine Company, Inc. Common Stock 9,669 610,445 140,179,639 Participant Loans 12,143 746,443 11,005,840 ___________ __________ ___________ Total cash & investments 373,737 11,743,066 517,272,716 ___________ __________ ___________ Receivables: Employer contributions 18,216 563,986 6,402,987 Employee contributions 1,568 153,169 3,436,897 Employee loan repayments 227 30,371 475,444 Accrued interest - - 523 ___________ __________ ___________ Total receivables 20,011 747,526 10,315,851 ___________ __________ ___________ Total assets 393,748 12,490,592 527,588,567 ___________ ___________ ___________ Liabilities ___________ Interest payable - - 3,094,470 Note payable - ESOP - - 70,650,000 ___________ ___________ ___________ Total liabilities - - 73,744,470 ___________ ___________ ___________ Net Assets $ 393,748 $ 12,490,592 $453,844,097 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY PLAN DECEMBER 31, 1994 Salaried Bargaining Onan ____________ ____________ ____________ Net assets-beginning of year $238,911,325 $154,166,686 $ 47,881,746 ____________ ____________ ____________ Investment income: Fund investment income (loss) 5,234,515 6,033,655 1,167,475 Interest income 12,658 - - Dividend income 1,439,965 - - Net realized & unrealized appreciation in the value of investments (19,687,908) - - ___________ ___________ __________ Total investment income (13,000,770) 6,033,655 1,167,475 Less: administrative expense 86,300 44,753 7,463 interest expense 5,969,352 - - ___________ ___________ __________ Net investment income (19,056,422) 5,988,902 1,160,012 ___________ ___________ __________ Contributions: Employer 6,389,432 1,533,717 298,407 Employee 20,708,446 13,125,606 6,390,058 Rollover 821,614 206,436 273,847 ___________ ___________ __________ Total contributions 27,919,492 14,865,759 6,962,312 ___________ ___________ __________ Participant withdrawals 8,887,419 7,640,655 2,058,325 Inter-plan transfers 10,729 (160,079) 316,475 ___________ ____________ __________ Net assets - end of year $238,897,705 $167,220,613 $54,262,220 ____________ ____________ ___________ ____________ ____________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY PLAN DECEMBER 31, 1994 Lubricon CDC Total ____________ ____________ ____________ Net assets-beginning of year $ 393,748 $ 12,490,592 $453,844,097 ___________ ___________ ___________ Investment income: Fund investment income (loss) (25,674) 257,872 12,667,843 Interest income - - 12,658 Dividend income - - 1,439,965 Net realized & unrealized appreciation in the value of investments - - (19,687,908) ___________ __________ __________ Total investment income (25,674) 257,872 (5,567,442) Less: administrative expense 37 2,409 140,962 interest expense - - 5,969,352 ___________ __________ __________ Net investment income (25,711) 255,463 (11,677,756) ___________ __________ ___________ Contributions: Employer 21,228 523,398 8,766,182 Employee 100,535 2,221,367 42,546,012 Rollover 893 17,082 1,319,872 ___________ __________ __________ Total contributions 122,656 2,761,847 52,632,066 ___________ __________ __________ Participant withdrawals 125,975 1,443,823 20,156,197 Inter-plan transfers 3,933 (171,058) - ____________ __________ ___________ Net assets - end of year $ 368,651 $ 13,893,021 $474,642,210 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY PLAN DECEMBER 31, 1993 Salaried Bargaining Onan ____________ ____________ ____________ Net assets-beginning of year $174,602,862 $135,224,648 $ 39,627,555 ____________ ____________ ____________ Investment income: Fund investment income (loss) 14,731,470 12,860,279 3,761,103 Interest income 1,875 - - Dividend income 465,492 - - Net realized & unrealized appreciation in the value of investments 34,332,392 - - ___________ ___________ __________ Total investment income 49,531,229 12,860,279 3,761,103 Less: administrative expense 116,787 86,905 15,075 interest expense 6,188,940 - - ___________ ___________ __________ Net investment income 43,225,502 12,773,374 3,746,028 ___________ ___________ __________ Contributions: Employer 7,086,975 1,457,590 265,992 Employee 19,346,598 13,716,542 5,981,731 Rollover 927,680 17,157 26,321 ___________ __________ __________ Total contributions 27,361,253 15,191,289 6,274,044 ___________ __________ __________ Participant withdrawals 6,743,662 8,871,882 1,588,030 Inter-plan transfers 465,370 (150,743) (177,851) ____________ _____________ ____________ Net assets - end of year $238,911,325 $154,166,686 $47,881,746 ____________ ____________ ___________ ____________ ____________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY PLAN DECEMBER 31, 1993 Lubricon CDC Total ____________ ____________ ____________ Net assets-beginning of year $ 261,394 $ 10,389,747 $360,106,206 ____________ ____________ ____________ Investment income: Fund investment income (loss) 28,466 952,019 32,333,337 Interest income - - 1,875 Dividend income - - 465,492 Net realized & unrealized appreciation in the value of investments - - 34,332,392 ___________ __________ __________ Total investment income 28,466 952,019 67,133,096 Less: administrative expense 95 4,887 223,749 interest expense - - 6,188,940 ___________ __________ __________ Net investment income 28,371 947,132 60,720,407 ___________ __________ __________ Contributions: Employer 18,215 563,985 9,392,757 Employee 63,057 1,985,430 41,093,358 Rollover 1,100 3,076 975,334 ___________ __________ __________ Total contributions 82,372 2,552,491 51,461,449 ___________ __________ __________ Participant withdrawals 20,228 1,220,163 18,443,965 Inter-plan transfers 41,839 (178,615) - ____________ __________ ___________ Net assets - end of year $ 393,748 $ 12,490,592 $453,844,097 ____________ ____________ ____________ ____________ ____________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1994 Fixed Income Wellington U.S. Growth Index Fund ____________ ___________ ___________ ___________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ - $ - $ - $ - Cummins Engine Co.,Inc. Fixed Income Fund 211,863,969 - - - Vanguard Wellington Fund - 97,724,191 - - Vanguard U.S. Growth Fund - - 31,303,048 - Vanguard Index Trust Fund - - - 43,278,554 Vanguard Explorer Fund - - - - Vanguard Intl. Fund - - - - Cummins Engine Co., Inc. Common Stock - - - - Participant Loans - - - - ___________ __________ __________ __________ Total cash & investments 211,863,969 97,724,191 31,303,048 43,278,554 ___________ __________ __________ __________ Receivables: Employer contributions 1,348,208 490,978 194,415 245,236 Employee contributions 1,487,969 917,808 418,519 525,527 Employee loan repayments 251,037 171,833 68,190 85,413 Accrued interest - - - - ___________ __________ __________ __________ Total receivables 3,087,214 1,580,619 681,124 856,176 ___________ __________ __________ __________ Total assets 214,951,183 99,304,810 31,984,172 44,134,730 ___________ __________ __________ __________ Liabilities ___________ Interest payable - - - - Note payable-ESOP - - - - ___________ __________ __________ __________ Total liabilities - - - - ___________ __________ __________ __________ Net Assets $214,951,183 $99,304,810 $31,984,172 $44,134,730 ____________ ___________ ___________ ___________ ____________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1994 Explorer Fund International Cummins Stock _____________ _____________ _____________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ - $ - $ - Cummins Engine Co.,Inc. Fixed Income Fund - - - Vanguard Wellington Fund - - - Vanguard U.S. Growth Fund - - - Vanguard Index Trust Fund - - - Vanguard Explorer Fund 4,021,125 - - Vanguard Intl. Fund - 10,265,795 - Cummins Engine Co., Inc. Common Stock - - 21,946,924 Participant Loans - - - _________ __________ __________ Total cash & investments 4,021,125 10,265,795 21,946,924 _________ __________ __________ Receivables: Employer contributions 27,353 63,821 124,927 Employee contributions 77,512 163,456 189,787 Employee loan repayments 8,710 18,601 36,955 Accrued interest - - - _________ __________ __________ Total receivables 113,575 245,878 351,669 _________ __________ __________ Total assets 4,134,700 10,511,673 22,298,593 _________ __________ __________ Liabilities ___________ Interest payable - - - Note payable-ESOP - - - _________ __________ __________ Total liabilities - - - _________ __________ __________ Net Assets $4,134,700 $10,511,673 $22,298,593 __________ ___________ ___________ __________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1994 ESOP Loan Fund Total ___________ ___________ ____________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ 864,862 $ - $ 864,862 Cummins Engine Co.,Inc. Fixed Income Fund - - 211,863,969 Vanguard Wellington Fund - - 97,724,191 Vanguard U.S. Growth Fund - - 31,303,048 Vanguard Index Trust Fund - - 43,278,554 Vanguard Explorer Fund - - 4,021,125 Vanguard Intl. Fund - - 10,265,795 Cummins Engine Co., Inc. Common Stock 104,003,958 - 125,950,882 Participant Loans - 11,368,457 11,368,457 ___________ __________ ___________ Total cash & investments 104,868,820 11,368,457 536,640,883 ___________ __________ ___________ Receivables: Employer contributions 3,467,305 - 5,962,243 Employee contributions - - 3,780,578 Employee loan repayments - - 640,739 Accrued interest 2,918 - 2,918 ___________ __________ ___________ Total receivables 3,470,223 - 10,386,478 ___________ __________ ___________ Total assets 108,339,043 11,368,457 547,027,361 ___________ __________ ___________ Liabilities ___________ Interest payable 2,935,151 - 2,935,151 Note payable-ESOP 69,450,000 - 69,450,000 ___________ __________ ___________ Total liabilities 72,385,151 - 72,385,151 ___________ __________ ___________ Net Assets $35,953,892 $11,368,457 $474,642,210 ___________ ___________ ___________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1993 Fixed Income Wellington U.S. Growth Index Fund ____________ ___________ ___________ ___________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ - $ - $ - $ - Cummins Engine Co.,Inc. Fixed Income Fund 186,893,569 - - - Vanguard Wellington Fund - 106,251,436 - - Vanguard U.S. Growth Fund - - 29,588,619 - Vanguard Index Trust Fund - - - 43,024,928 Vanguard Explorer Fund - - - - Vanguard Intl. Fund - - - - Cummins Engine Co., Inc. Common Stock - - - - Participant Loans - - - - ___________ ___________ __________ __________ Total cash & investments 186,893,569 106,251,436 29,588,619 43,024,928 ___________ ___________ __________ __________ Receivables: Employer contributions 1,190,247 588,278 231,420 281,703 Employee contributions 1,236,581 1,023,772 483,362 536,243 Employee loan repayments 177,061 134,471 66,545 68,818 Accrued interest - - - - ___________ __________ __________ __________ Total receivables 2,603,889 1,746,521 781,327 886,764 ___________ __________ __________ __________ Total assets 189,497,458 107,997,957 30,369,946 43,911,692 ___________ ___________ __________ __________ Liabilities ___________ Interest payable - - - - Note payable-ESOP - - - - ___________ ___________ __________ __________ Total liabilities - - - - ___________ ___________ __________ __________ Net Assets $189,497,458 $107,997,957 $30,369,946 $43,911,692 ____________ ___________ ___________ ___________ ____________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1993 Explorer Fund International Cummins Stock _____________ _____________ _____________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ - $ - $ - Cummins Engine Co.,Inc. Fixed Income Fund - - - Vanguard Wellington Fund - - - Vanguard U.S. Growth Fund - - - Vanguard Index Trust Fund - - - Vanguard Explorer Fund - - - Vanguard Intl. Fund - - - Cummins Engine Co., Inc. Common Stock - - 15,200,731 Participant Loans - - - _________ __________ __________ Total cash & investments - - 15,200,731 _________ __________ __________ Receivables: Employer contributions - - 116,869 Employee contributions - - 156,939 Employee loan repayments - - 28,549 Accrued interest - - - _________ __________ _________ Total receivables - - 302,357 _________ __________ __________ Total assets - - 15,503,088 _________ __________ __________ Liabilities ___________ Interest payable - - - Note payable-ESOP - - - _________ __________ __________ Total liabilities - - - _________ __________ __________ Net Assets $ - $ - $15,503,088 __________ ___________ ___________ __________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF NET ASSETS BY FUND DECEMBER 31, 1993 ESOP Loan Fund Total ___________ ___________ ____________ Assets ______ Cash and investments: The Northern Trust Co. Short-Term Invest. Fund $ 328,685 $ - $ 328,685 Cummins Engine Co.,Inc. Fixed Income Fund - - 186,893,569 Vanguard Wellington Fund - - 106,251,436 Vanguard U.S. Growth Fund - - 29,588,619 Vanguard Index Trust Fund - - 43,024,928 Vanguard Explorer Fund - - - Vanguard Intl. Fund - - - Cummins Engine Co., Inc. Common Stock 124,978,908 - 140,179,639 Participant Loans - 11,005,840 11,005,840 ___________ __________ ___________ Total cash & investments 125,307,593 11,005,840 517,272,716 ___________ __________ ___________ Receivables: Employer contributions 3,994,470 - 6,402,987 Employee contributions - - 3,436,897 Employee loan repayments - - 475,444 Accrued interest 523 - 523 ___________ __________ ___________ Total receivables 3,994,993 - 10,315,851 ___________ __________ ___________ Total assets 129,302,586 11,005,840 527,588,567 ___________ __________ ___________ Liabilities ___________ Interest payable 3,094,470 - 3,094,470 Note payable-ESOP 70,650,000 - 70,650,000 __________ __________ ___________ Total liabilities 73,744,470 - 73,744,470 __________ __________ ___________ Net Assets $55,558,116 $11,005,840 $453,844,097 ___________ ___________ ___________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1994 Fixed Income Wellington U.S. Growth Index ____________ ___________ ___________ ___________ Net Assets - beginning of year $189,497,458 $107,997,957 $30,369,946 $43,911,692 ____________ ____________ ___________ ___________ Investment income: Fund investment income (loss) 13,985,080 (644,090) 1,114,263 440,071 Interest income - - - - Dividend income - - - - Net realized & unrealized appreciation in the value of investments - - - - ___________ ___________ __________ __________ Total investment income 13,985,080 (644,090) 1,114,263 440,071 Less: admin. expense 90,191 - - - interest expense - - - - ___________ ___________ __________ __________ Net investment income 13,894,889 (644,090) 1,114,263 440,071 ___________ ___________ __________ __________ Contributions: Employer 1,552,288 547,696 213,021 272,326 Employee 15,224,068 11,562,925 4,976,097 6,388,363 Rollover 303,713 282,269 171,042 198,830 ___________ __________ __________ __________ Total contributions 17,080,069 12,392,890 5,360,160 6,859,519 ___________ __________ __________ __________ Participant loan repayments 2,587,469 1,673,280 718,515 890,849 ___________ __________ __________ __________ Inter-fund transfers 6,124,784 (16,307,770) (3,840,873) (5,691,398) ___________ __________ __________ __________ Payments: Participant withdrawals 11,348,094 4,001,881 1,084,249 1,385,829 Participant loan withdrawals 2,885,392 1,805,576 653,590 890,174 __________ __________ __________ __________ Total payments 14,233,486 5,807,457 1,737,839 2,276,003 ___________ __________ __________ __________ Net assets - end of year $214,951,183 $99,304,810 $31,984,172 $44,134,730 ____________ ___________ ___________ ___________ ____________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1994 Explorer International Cummins Stock __________ _____________ _____________ Net Assets - beginning of year $ 0 $ 0 $15,503,088 __________ ___________ ___________ Investment income: Fund investment income (loss) 2,595 (59,464) (2,170,612) Interest income - - - Dividend income - - - Net realized & unrealized appreciation in the value of investments - - - __________ ____________ ____________ Total investment income 2,595 (59,464) (2,170,612) Less: admin. expense - - - interest expense - - - __________ ____________ ____________ Net investment income 2,595 (59,464) (2,170,612) __________ ____________ ____________ Contributions: Employer 28,786 66,478 133,691 Employee 646,563 1,615,587 2,132,409 Rollover 70,492 110,793 182,733 __________ ___________ ___________ Total contributions 745,841 1,792,858 2,448,833 __________ ___________ ___________ Participant loan repayments 69,998 181,036 400,109 __________ ___________ ___________ Inter-fund transfers 3,432,807 8,913,648 7,368,802 __________ ___________ ___________ Payments: Participant withdrawals 52,131 158,850 824,451 Participant loan withdrawals 64,410 157,555 427,176 __________ ___________ ___________ Total payments 116,541 316,405 1,251,627 __________ ___________ ___________ Net assets - end of year $4,134,700 $10,511,673 $22,298,593 __________ ___________ ___________ __________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1994 ESOP Loan Fund Total ___________ ___________ ____________ Net Assets - beginning of year $55,558,116 $11,005,840 $453,844,097 ___________ ___________ ____________ Investment income: Fund investment income (loss) - - 12,667,843 Interest income 12,658 - 12,658 Dividend income 1,439,965 - 1,439,965 Net realized & unrealized appreciation in the value of investments (19,687,908) - (19,687,908) ____________ ___________ _____________ Total investment income (18,235,285) - ( 5,567,442) Less: admin. expense 50,771 - 140,962 interest expense 5,969,352 - 5,969,352 ___________ ___________ _____________ Net investment income (24,255,408) - (11,677,756) ____________ ___________ ____________ Contributions: Employer 5,951,896 - 8,766,182 Employee - - 42,546,012 Rollover - - 1,319,872 ___________ ___________ ____________ Total contributions 5,951,896 - 52,632,066 ___________ ___________ ____________ Participant loan repayments - (6,521,256) - ___________ ____________ ____________ Inter-fund transfers - - - ___________ ___________ ____________ Payments: Participant withdrawals 1,300,712 - 20,156,197 Participant loan withdrawals - (6,883,873) - ___________ ____________ ____________ Total payments 1,300,712 (6,883,873) 20,156,197 ___________ ____________ ____________ Net assets - end of year $35,953,892 $11,368,457 $474,642,210 ___________ ___________ ____________ ___________ ___________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1993 Fixed Income Wellington U.S. Growth Index ____________ ___________ ___________ ___________ Net Assets - beginning of year $177,783,735 $ 78,997,524 $29,626,817 $32,861,220 ____________ ____________ ___________ ___________ Investment income: Fund investment income (loss) 13,689,198 11,418,610 (458,290) 3,570,736 Interest income - - - - Dividend income - - - - Net realized & unrealized appreciation in the value of investments - - - - ___________ __________ ___________ __________ Total investment income 13,689,198 11,418,610 (458,290) 3,570,736 Less: admin. expense 150,447 - - - interest expense - - - - ___________ __________ ___________ __________ Net investment income 13,538,751 11,418,610 (458,290) 3,570,736 ___________ __________ ___________ __________ Contributions: Employer 1,190,239 588,279 231,420 281,703 Employee 14,923,408 12,038,643 6,065,512 6,653,884 Rollover 172,588 309,952 191,510 217,193 ___________ __________ __________ __________ Total contributions 16,286,235 12,936,874 6,488,442 7,152,780 ___________ __________ __________ __________ Participant loan repayments 1,840,057 1,305,821 655,318 704,539 ___________ __________ __________ __________ Inter-fund transfers (4,953,834) 8,501,670 (4,261,772) 1,616,795 ____________ __________ ___________ __________ Payments: Participant withdrawals 12,120,414 3,245,402 995,362 1,140,196 Participant loan withdrawals 2,877,072 1,917,140 685,207 854,182 ___________ __________ __________ __________ Total payments 14,997,486 5,162,542 1,680,569 1,994,378 ___________ ___________ __________ __________ Net assets - end of year $189,497,458 $107,997,957 $30,369,946 $43,911,692 ____________ ___________ ___________ ___________ ____________ ___________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1993 Explorer International Cummins Stock __________ _____________ _____________ Net Assets - beginning of year $ - $ - $11,295,812 __________ ___________ ___________ Investment income: Fund investment income (loss) - - 4,113,083 Interest income - - - Dividend income - - - Net realized & unrealized appreciation in the value of investments - - - __________ ___________ ___________ Total investment income - - 4,113,083 Less: admin. expense - - 26,761 interest expense - - - __________ ___________ ___________ Net investment income - - 4,086,322 __________ ___________ ___________ Contributions: Employer - - 116,867 Employee - - 1,411,911 Rollover - - 84,091 __________ ___________ ___________ Total contributions - - 1,612,869 __________ ___________ ___________ Participant loan repayments - - 222,594 __________ ___________ ___________ Inter-fund transfers - - (902,859) __________ ___________ ____________ Payments: Participant withdrawals - - 555,065 Participant loan withdrawals - - 256,585 __________ ___________ ___________ Total payments - - 811,650 __________ ___________ ___________ Net assets - end of year - - $15,503,088 __________ ___________ ___________ __________ ___________ ___________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS COMBINING STATEMENTS OF CHANGES IN NET ASSETS BY FUND DECEMBER 31, 1993 ESOP Loan Fund Total ___________ ___________ ____________ Net Assets - beginning of year $20,397,115 $ 9,143,983 $360,106,206 ___________ ___________ ____________ Investment income: Fund investment income (loss) - - 32,333,337 Interest income 1,875 - 1,875 Dividend income 465,492 - 465,492 Net realized & unrealized appreciation in the value of investments 34,332,392 - 34,332,392 ___________ ___________ ____________ Total investment income 34,799,759 - 67,133,096 Less: admin. expense 46,541 - 223,749 interest expense 6,188,940 - 6,188,940 ___________ ___________ ____________ Net investment income 28,564,278 - 60,720,407 ___________ ___________ ____________ Contributions: Employer 6,984,249 - 9,392,757 Employee - - 41,093,358 Rollover - - 975,334 ___________ ___________ ____________ Total contributions 6,984,249 - 51,461,449 ___________ ___________ ____________ Participant loan repayments - (4,728,329) - ___________ ____________ ____________ Inter-fund transfers - - - ___________ ___________ ____________ Payments: Participant withdrawals 387,526 - 18,443,965 Participant loan withdrawals - (6,590,186) - ___________ ____________ ____________ Total payments 387,526 (6,590,186) 18,443,965 ___________ ____________ ____________ Net assets - end of year $55,558,116 $11,005,840 $453,844,097 ___________ ___________ ____________ ___________ ___________ ____________ The accompanying notes are an integral part of these statements. CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 1. SUMMARY OF THE PLAN ___________________ The Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plans are defined contribution plans that cover five employee groups (as described in Note 2). Participants have the opportunity to make pre-tax and after-tax contributions to the plan and can choose from seven different investment options (investment options and details of the plans are described in Note 2 and Note 3, respectively). 2. SUMMARY OF ACCOUNTING POLICIES ______________________________ Basis of Combination ____________________ The Combining Statements of Net Assets and Changes in Net Assets 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) Certain reclassifications have been made in the prior year financial statements. These reclassifications were made to conform with current year presentations and have no impact on previously reported net assets. Trust Arrangements __________________ A single trust arrangement is maintained with the Trustee for the administration of the primary investments in the Plans; however, a separate trust arrangement is maintained with The Northern Trust Company for the Employee Stock Ownership ("ESOP") portion of the Plans (as described in Note 3). 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. All investments included in the Combining Statements of Net Assets and Schedule I, and the investment related income included in the Combining Statements of Changes in Net Assets reflect amounts obtained from and certified by the respective trustees as being complete and accurate. Investments ___________ Investments held by the Trust are stated at market value and changes in market value are reflected in Fund investment income (loss). Quoted market prices are used to value investments. Assets of the Trust are segregated into seven investment funds: the Fixed Income Fund, the Wellington Fund, the Vanguard U.S. Growth Fund, the Index 500 Trust Fund, the Explorer Fund, the International Fund, and the Cummins Common Stock Fund. Maintenance of separate funds provides investment alternatives to participants in the Plans; the allocation of investments between the funds is at the direction of participants. The assets of the Fixed Income Fund consist primarily of insurance and bank investment contracts. The Wellington Fund consists primarily of equity, fixed income, and cash equivalent marketable securities. The Vanguard U.S. Growth Fund consists primarily of long-term domestic and foreign capital growth stock. The Vanguard Index 500 Trust Fund consists primarily of equity and cash equivalent marketable securities whose investment results should correspond to the performance of the Standard & Poor's 500 Composite Stock Price (S & P 500) Index. The Explorer Fund consists of common stocks of small companies with favorable prospects for above-average growth in market value. The International Fund consists of a broadly diversified portfolio of non-U.S. equity securities selected on the basis of relative value. The Cummins Common Stock Fund consists of investments in Company common stock. The ESOP Fund consists of matching contributions in the form of common stock for certain plans. 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. Participant Loan Receivable ___________________________ 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 $50,000 or 50 percent of the present value of their accounts (excluding ESOP 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. Participant loan activity is reported in the Combining Statements of Net Assets and Changes in Net Assets by Fund in the Loan Fund. 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 are paid directly from the fund. The trust agreement entitles the Trustee to receive reasonable compensation for services rendered and expenses incurred in the administration and execution of the Plans. 3. 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 no later than the first day of the month following the 60th day after date of employment. 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. At the end of each Plan year, 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. The formulas for these matches, as set forth in the Plans, vary for each Company (see Schedule III). Certain groups of participants receive cash matches and other groups participate in the ESOP (as described below) and receive matching contributions in the form of Company common stock. All matching cash contributions, ESOP shares, and earnings thereon are immediately vested and nonforfeitable. 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 million 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 $72,750,000 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. For the 1994 plan year, 565,059 shares were allocated and 1,733,371 remain unallocated in the ESOP Trust. On October 12, 1993, the Company announced a two-for-one common stock split that was distributed on November 11, 1993, to shareholders of record on October 25, 1993. All references to the number of shares have been adjusted to reflect the stock split on a retroactive basis. 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. Investment direction can be changed daily. Common stock account balances in the ESOP account cannot be redirected. Investment experience is allocated to participant accounts on a daily basis. Plan 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 2). In the event of financial hardship, participants are permitted to withdraw pre-tax contributions and accumulated earnings thereon. Each hardship withdrawal request, including proof of financial hardship, is reviewed individually by the Plans' Administrator. In-service withdrawals from the ESOP account are prohibited under any circumstance. Plan Payouts ____________ Upon termination of employment, immediate distribution is made to those participants with account balances less than or equal to $3,500. Terminating participants with account balances greater than $3,500 must consent to any payment prior to the attainment of age 65. 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 portion 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. 4. PLAN AMENDMENTS _______________ Effective January 1, 1995, the after-tax match for DWU-CMEP employees (Bargaining Plan) was replaced by a pre-tax match of $1 for every $1 contributed up to 2% of gross pay and $.25 for every $1 contributed up to the next 4% of gross pay. 5. TAX STATUS __________ The Company has filed a request for the Internal Revenue Service to issue favorable determination letters for the Cummins Engine Company, Inc. and Affiliates Retirement and Savings Plans. The Plans' Administrator and the Plans' Tax Counsel believe that the Plans are currently designed and being operated in compliance with applicable requirements of the Internal Revenue Code. Therefore they believe that the Plans are qualified and the related trusts are tax exempt. 6. LONG-TERM DEBT ______________ The ESOP Trust has issued $72,750,000 of ESOP Notes due in 1998 with an annual interest rate of 8.76 percent payable semi-annually to the Note holders (see Note 3). Effective January 1, 1993, the interest rate on the notes was reduced to 8.68 percent due to a tax law change. Principal payments of $1.4 million, $1.5 million, $1.6 million and $1.7 million are due in 1995, 1996, 1997, and 1998 respectively. The final principal payment, $63.3 million, is due on July 15, 1998. 7. PARTIES-IN-INTEREST TRANSACTIONS ________________________________ There were no transactions with parties-in-interest (as defined in ERISA Section 3(14) and regulations under that section) during the Plan years ended December 31, 1994 and 1993. SCHEDULE I CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS EIN 35-0257090 ITEM 27 A: SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1994 ISSUER/DESCRIPTION SHARES COST MARKET VALUE _______________________________ _________ ___________ ____________ Salaried: The Northern Trust Company Short-Term Investment Fund $ 864,862 $ 864,862 Cummins Engine Company, Inc. Fixed Income Fund 83,459,484 83,459,484 Vanguard Wellington Fund 52,303,978 49,907,017 Vanguard U.S. Growth Fund 18,198,789 18,623,556 Vanguard Index Trust Fund 24,447,877 24,002,785 Vanguard Explorer Fund 2,812,897 2,692,444 Vanguard International Fund 6,785,218 6,524,522 Cummins Engine Company, Inc. Common Stock 3,485,177 87,250,596 114,494,782 Participant Loans (7.0%-9.5%) 5,130,460 5,130,460 _________ ___________ ___________ 3,485,177 $281,254,161 $305,699,912 _________ ___________ ___________ Bargaining: The Northern Trust Company Short-Term Investment Fund $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 105,127,676 105,127,676 Vanguard Wellington Fund 30,692,256 29,285,706 Vanguard U.S. Growth Fund 5,491,544 5,619,719 Vanguard Index Trust Fund 10,133,030 9,948,550 Vanguard Explorer Fund 743,930 712,074 Vanguard International Fund 1,999,062 1,922,256 Cummins Engine Company, Inc. Common Stock 890,109 5,996,224 7,868,558 Participant Loans (7.0%-9.5%) 3,772,332 3,772,332 _________ ___________ ___________ 890,109 $163,956,054 $164,256,871 _________ ___________ ___________ Onan: The Northern Trust Company Short-Term Investment Fund $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 17,531,029 17,531,029 Vanguard Wellington Fund 16,570,174 15,810,805 Vanguard U.S. Growth Fund 5,780,449 5,915,367 Vanguard Index Trust Fund 7,908,242 7,764,266 Vanguard Explorer Fund 478,770 458,268 Vanguard International Fund 1,490,060 1,432,810 Cummins Engine Company, Inc. Common Stock 310,990 2,094,980 2,749,142 Participant Loans (7.0%-9.5%) 1,582,428 1,582,428 _________ ___________ ___________ 310,990 $ 53,436,132 $ 53,244,115 _________ ___________ ___________ Lubricon: The Northern Trust Company Short-Term Investment Fund $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 87,659 87,659 Vanguard Wellington Fund 70,783 67,539 Vanguard U.S. Growth Fund 29,550 30,240 Vanguard Index Trust Fund 45,869 45,034 Vanguard Explorer Fund 10,320 9,878 Vanguard International Fund 67,424 64,833 Cummins Engine Company, Inc. Common Stock 1,492 10,023 13,153 Participant Loans (7.0%-9.5%) 24,285 24,285 _________ ___________ ___________ 1,492 $ 345,913 $ 342,621 _________ ___________ ___________ CDC: The Northern Trust Company Short-Term Investment Fund $ - $ - Cummins Engine Company, Inc. Fixed Income Fund 5,658,121 5,658,121 Vanguard Wellington Fund 2,780,550 2,653,124 Vanguard U.S. Growth Fund 1,088,754 1,114,166 Vanguard Index Trust Fund 1,546,066 1,517,919 Vanguard Explorer Fund 155,103 148,461 Vanguard International Fund 334,215 321,374 Cummins Engine Company, Inc. Common Stock 93,354 628,878 825,247 Participant Loans (7.0%-9.5%) 858,952 858,952 _________ ___________ ___________ 93,354 $ 13,050,639 $ 13,097,364 _________ ___________ ___________ Total: The Northern Trust Company Short-Term Investment Fund $ 864,862 $ 864,862 Cummins Engine Company, Inc. Fixed Income Fund 211,863,969 211,863,969 Vanguard Wellington Fund 102,417,741 97,724,191 Vanguard U.S. Growth Fund 30,589,086 31,303,048 Vanguard Index Trust Fund 44,081,084 43,278,554 Vanguard Explorer Fund 4,201,020 4,021,125 Vanguard International Fund 10,675,979 10,265,795 Cummins Engine Company, Inc. Common Stock 4,781,122 95,980,701 125,950,882 Participant Loans (7.0%-9.5%) 11,368,457 11,368,457 _________ ___________ ___________ 4,781,122 $512,042,899 $536,640,883 _________ ___________ ___________ ___________ CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1994 Number of Par Value or Description of Issue Transactions Principal Amount Purchased Cost ____________________ ____________ ________________ ______________ Fixed Income Fund 263 N/A $51,197,817 Fixed Income Fund 241 N/A 26,192,630 Wellington Fund 170 N/A 20,841,393 Wellington Fund 357 N/A 24,675,090 Description of Issue Sales Proceeds Current Value Gain or (Loss) ____________________ ______________ _____________ ______________ Fixed Income Fund - $51,197,817 $ - Fixed Income Fund $26,192,630 - - Wellington Fund - 20,841,393 - Wellington Fund 24,129,372 - (545,718) Schedule III ____________ CUMMINS ENGINE COMPANY, INC. AND AFFILIATES RETIREMENT AND SAVINGS PLANS SCHEDULE OF MATCHING CONTRIBUTION FORMULAS AS OF DECEMBER 31, 1994 LOC CASH ESOP STOCK EMPLOYING COMPANY CODE LOCATION NAME CONTRIBUTIONS CONTRIBUTION _________________ ____ _____________ _____________ ____________ Cummins Engine Company 110 Columbus Exempt No Yes(1)(2) " 120 Columbus DWU Yes(3)(4) No " 121 Walesboro DWU Yes(5)(6) No " 130 Columbus OCU Yes(3)(4) No " 131 OCU New Hires Yes(5) No OCU Levels 4 & 5 Yes(17) No " 132 Walesboro OCU Yes(5)(6) No " 135 Cols. Security No Yes(1)(2) " 136 Cols Sec.New Hires Yes(4)(5) No Cummins Electronics 150 CELCO Union Yes(13)(6) No " 160 CELCO Exempt No Yes(1)(7) Cum.Military Systems 170 Cummins Military No No CADEC 190 CADEC Yes(13) No Cummins Engine Company 200 Charleston No Yes(1)(2) Combustion Technologies 210 CTI Georgia No Yes(1)(2) " 220 CTI Charleston No Yes(1)(2) Cummins Engine Company 240 CHS Headline No Yes(1)(2) " 250 CHS Recon No Yes(1)(2) " 260 CHS Engr. Svcs. No Yes(1)(2) Cummins Engine Company 280 Precision Gear No Yes(1)(2) " 290 Fuel Systems No Yes(1)(2) " 291 Cummins Marine No Yes(1)(2) " 292 Quality Custom Comp No Yes(1)(2) " 300 Jamestown Yes(16) Yes(1)(2) " 301 JEP New Hires Yes(5)(6)(16) No Cummins Natural Gas 390 Cummins Natural Yes(15)(16 No Engines Gas Cummins Americas, Inc. 400 Miami PDC No Yes(1)(2) Atlas Crankshaft 500 Atlas Salaried No Yes(1)(2) " 510 Atlas Union Yes(4) No Onan Corporation 550 Onan-Multiple Loc. Yes(11) Yes(10) " 551 Onan Huntsville Yes(11) Yes(10) " 552 Onan OPE St. Peter Yes(11) Yes(10) Fleetguard, Inc. 600 Fleetguard TN No Yes(1)(2) Salaried " 610 Fleetguard Lake No Yes(1)(2) Mills Salaried " 620 Fleetguard Lake No Yes(1)(2) Mills Hourly " 630 Fleetguard TN Hr Yes(12) No Lubricant Consultants 640 Lubricon Yes(14) No Kuss 650 Kuss Salaried No Yes(1)(2) Kuss 651 Kuss Union No Yes(1)(2) Fleetguard, Inc. 655 Separation Tech. No Yes(1)(2) Cummins Engine Company 700 DRC Salaried No Yes(1)(2) " * 720 DRC TN Union Yes(13) No " * 730 DRC LA Union Yes(15) No " * 740 DRC LA Union Yes(15) No Cummins Diesel Intl. 810 CDIL No Yes(1)(2) Consolidated Diesel Co. 900 Consol. Diesel Co. Yes(13)(9) No Holset Engr. Company 950 Holset MI No Yes(1)(2) " 951 Holset CHS No Yes(1)(2) *Participants at locations 720, 730 and 740 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 maximum 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 $325 per year to Pre-Tax Contribution account, regardless of % of pay contributed. ( 6) Cash Contribution of 100% on 1st $450 of pay contributed as a Basic Savings Contribution. ( 7) ESOP Stock Contribution based on 100% of 1st $900 of pay contributed as a Basic Savings Contribution. ( 8) ESOP Stock Contribution based on 100% of the 1st 2.5% of pay contributed as a Pre-Tax Contribution. ( 9) Cash Contribution based on 50% (up to a maximum of $900) on 1st $1,800 of pay contributed as a Basic Savings Contribution. (10) ESOP Stock Contribution based on 100% of 1st $250, 75% of next $250, 50% of next $1,000, and 25% of next $1,000 (maximum stock match = $1,187.50). NOTE: Applies to Pre-Tax Contributions. (11) Cash Contribution of 25% of the 1st $1,000 of pay contributed as a Basic Savings Contribution. (12) Cash Contribution of 50% of the 1st 2% of pay contributed as a Pre-Tax Contribution with a minimum of $200 if at least 2% is contributed. (13) Cash Contribution of 50% of 1st 2% of pay contributed as a Pre-Tax Contribution. (14) Cash Contribution of 100% of 1st 2.5% of pay contributed as a Pre-Tax Contribution. (15) Cash Contribution of 50% of 1st 4% of pay contributed as a Pre-Tax Contribution. (16) Discretionary Cash Contribution. (17) Cash Contribution of $400 per year to Pre-Tax Contribution account, regardless of % of pay contributed. SIGNATURES __________ 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/ Carol K. Smalley ____________________ Carol K. Smalley Secretary - Pension Policy Committee