Exhibit 99.1

                    

Jason Rawlings

Director- Public Relations

812-377-7719

For Immediate Release
October 28, 2003

Cummins Reports Third Quarter 2003 Earnings on Strong Sales

            COLUMBUS, Ind. -- Cummins Inc. (NYSE: CUM) today reported third-quarter 2003 sales of $1.63 billion and net earnings of $24 million or $0.60 per share.  Sales increased $95 million, or six percent, and earnings per share increased by $0.26 from the previous quarter.  Through the third quarter year-to-date, sales were $4.56 billion and profit was $0.18 per share.

            "Cummins improved performance this past quarter reflects our efforts to position the company for the emerging economic recovery," said Tim Solso, chairman and chief executive officer of Cummins Inc.  "We will continue our focus on reducing costs and delivering the right, clean products to the market for our customers."

            "Our customers want and value our quality products, as evidenced by the recent news that DaimlerChrysler has extended our agreement to be the exclusive diesel engine supplier for the award-winning Dodge Ram pickup truck.  Additionally, Volkswagen AG just announced it will purchase the engines from our San Luis Potosi, Mexico plant for the heavy-duty trucks and buses it will produce in its new plant in Mexico. And one year after introducing our 2002 emissions-compliant heavy-duty engines, we have 25,000 of them on our nation's highways, and they have logged more than one billion miles of reliable performance," Solso added.

Corporate Overview

            Engine sales for the Dodge Ram and industrial markets as well as sales in the other business segments experienced solid growth from the 2002 third quarter.  These increases substantially offset year-over-year revenue declines in other North American automotive markets.  While demand in these markets has not yet fully recovered, the businesses have shown sequential quarterly improvement in both volume and operating leverage.  Earnings before interest, income taxes, minority interest and preferred dividends (EBIT) for the quarter were $61 million, $22 million lower than the same quarter a year ago, but $15 million higher than the previous quarter. The Power Generation business broke even for the quarter, a significant achievement after losing $29 million during the first half of the year.  Joint venture income of $20 million was at its highest level and is expected to be $60 million for the year, more than double the income from 2002 as the company's joint ventures are positioned globally in high-growth areas. Cummins free cash flow for the quarter was $10 million, and the company expects to generate significant cash flow in the fourth quarter of this year, consistent with its typical seasonal pattern.


Business Unit Results

Engine

            Total sales for the Engine Business in the third quarter were $942 million, a nine percent decrease from sales of $1.03 billion a year ago.  Engine business EBIT was $36 million for the quarter versus $51 million in the third quarter a year ago.  Revenues in automotive markets were 15 percent lower than the third quarter last year, primarily due to last year's pre-buy ahead of the October 2002 emissions standards change.  This decrease was partially offset by increases in the light-duty automotive business.  International heavy-duty truck engine shipments were up nine percent from a year ago and 38 percent from the previous quarter. Overall revenue from Industrial markets was up 14 percent year-over-year, with increases in construction, mining and government sales.

            Cummins has continued its successful relationship with the Chrysler Group of DaimlerChrysler Corporation, and the recent extension of Cummins' exclusive agreement as diesel engine provider for the Dodge Ram pickup truck recognizes the value of the two companies' 15-year partnership.  Cummins engine shipments for the Dodge Ram were up 28 percent from the year-ago quarter and up 10 percent from the previous quarter; the truck itself has increased its share in the pickup truck market over the past 12 to 18 months. Customer experience indicates the performance quality of the new Ram engine introduced in mid-2002 has already surpassed its predecessor engine.


Power Generation

            Sales in the Power Generation Business for the third quarter were $363 million dollars, up 15 percent from third quarter of 2002.  In North America, revenues were up two percent compared with a year ago, with an increased demand in the commercial genset business partially offset by lower pricing.  Demand in the consumer business remained strong, with sales 10 percent higher than the third quarter of 2002.  Outside North America, revenues increased across most regions, with significant increases in the Middle East, Mexico, Australia and parts of Asia. 

            In the third quarter of 2003, Power Generation achieved breakeven results, down slightly from earnings before interest and taxes of $3 million last year but significantly improved when compared with the second quarter 2003 loss of $15 million.  Third quarter results were impacted by lower pricing; however, as inventory levels in the marketplace decrease and pricing improves, power generation profitability should continue to improve.

Filtration and Other

            The Filtration and Other segment had sales of $255 million for the quarter, an eight percent increase compared with the third quarter of 2002.  Sales in Emission Solutions accounted for over half of the sales increase, and currency contributed approximately $5 million dollars.

            This segment's earnings before interest and taxes for the quarter were $16 million versus $19 million in the third quarter last year.  The lower earnings were attributable to a number of factors:  incremental costs to fund the segment's targeted growth initiatives, including the Emission Solutions business and start-up costs associated with a new exhaust plant in Georgia; a shift in sales mix from aftermarket to original equipment manufacturers (OEMs) as the company has sought targeted growth with such manufacturers to secure long-term business; and other increases in costs including pension and healthcare and some one-time items.

International Distributors

            Sales for the International Distributor Business were $174 million dollars in the third quarter, an increase of 14 percent compared with sales of $152 million last year, with improvement across most regions.  Sales to the Middle East, particularly in power generation equipment, were also a significant contributor.


            Earnings before interest and taxes for the segment were $9 million this quarter, or 5.2 percent of sales, compared with earnings of $10 million, or 6.6 percent of sales last year.  The mix of sales, including a higher percentage of power generation equipment, was the primary driver of the lower profitability during the quarter.

Guidance

            The company has not changed its previously provided earnings per share guidance of $1.20 to $1.40 for 2003, but given uncertainty in the marketplace, it expects full-year earnings to be at the low end of the range.

Presentation of Non-GAAP Financial Information

            Non-GAAP financial measures used in this release include EBIT and Free Cash Flow.  These measures are defined and reconciliations to what management believes to be most comparable GAAP measure are included in a schedule to this release.  Cummins presents this information as it believes the data is useful to understanding the company's operating performance and they are measures used internally to assess the performance of the operating units.

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 23,700 employees worldwide, Cummins reported sales of $5.9 billion in 2002. Press releases can be found by accessing the Cummins home page at www.cummins.com.

Forward Looking Statement Disclosure

            Information provided in this release that is not purely historical is considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's expectations, hopes, beliefs and intentions on strategies regarding the future.  It is important to note that the Company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.

###


CUMMINS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THIRD QUARTER AND NINE MONTHS
ENDED SEPTEMBER 28, 2003 AND SEPTEMBER 29, 2002
Unaudited

 

Third Quarter

Nine Months

Second Quarter
 

 

Restated
*

Restated
*

Millions, except per share amounts

2003

2002

2003

2002

2003

 

Net sales........................................................................

$1,634

$1,648

$4,560

$4,439

$1,539

Cost of goods sold......................................................

   1,341

  1,335

  3,773

  3,616

  1,263

Gross margin...............................................................

     293

     313

     787

     823

     276

Selling and administrative expenses.........................

     208

     189

     603

     564

     200

Research and engineering expenses........................

       51

       53

     148

     164

       50

Joint ventures and alliances (income) expense.......

       (20)

        (9)

       (44)

       (16)

       (17)

Restructuring, asset impairment and other charges

         -

          -

         -

         2

         -

Interest expense..........................................................

       25

       15

       65

       44

       20

Other (income) expense, net......................................

         (7)

        (3)

        (17) 

        (10)

         (3)

Earnings (loss) before income taxes, minority interest,
dividends on preferred securities of subsidiary trust
and cumulative effect of change in accounting principles

       36

       68

      32

       75

       26

Provision for income taxes.......................................

         9

       16

        5

       15

         5

Minority interest........................................................

         3

         3

        9

       11

         2

Dividends on preferred securities of subsidiary trust...

         -

         5

       11

       16

         5

Earnings (loss) before cumulative effect of change in
 accounting principle................................................

      24

      44

        7

      33

      14

Cumulative effect of change in accounting
 principle, net of tax..................................................

         -

         -

        -

        3

       -

Net earnings (loss)..................................................

$     24

$     44

$       7

$    36

$     14 

 

Earning Per Share

   Basic

      Earnings (loss) before cumulative effect of change in
        accounting principle........................................

$     .62

$    1.13

$     .18

$     .85

$    .34

      Cumulative effect of change in accounting
        principle, net of tax..........................................

         -

           -

         -

       .07

         -

      Net earnings (loss)............................................

$     .62

$    1.13

$     .18

$     .92

$    .34

   Diluted

      Earnings (loss) before cumulative effect of change in
        accounting principle.......................................

$     .60

$    1.05

$     .18

$     .85

$    .34

      Cumulative effect of change in accounting
        principle, net of tax..........................................

         -

         -

         -

       .07

         -

      Net earnings (loss)............................................

$     .60

$    1.05

$     .18

$     .92

$    .34
 

Cash dividends declared per share.......................

$     .30

$      .30

$     .90

$     .90

$    .30
 

* 2002 amounts have been restated from our September 29, 2002 Form 10-Q on file for this period.  The nature of the  restatement adjustments are more fully discussed in Notes 2 and 20 of our 2002 Annual Report on Form 10-K.


CUMMINS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited

 

Millions

Sept. 28, 2003

Dec. 31, 2002

  

 

 

Assets

Current assets:

 

 

 Cash and cash equivalents...........................................................

$     80

$   224

  Marketable securities....................................................................

       88

       74

  Receivables, net ............................................................................

     953

     805

  Inventories......................................................................................

     733

      641

  Other current assets......................................................................

     271

     238

 2,125

  1,982
 

Property, plant and equipment less accumulated depreciation
 of $1,684 and $1,647.......................................................................

  1,249

  1,305

Investments in and advances to joint ventures and alliances.

     319

     264

Goodwill............................................................................................

     343

     343

Other intangibles and deferred charges......................................

       93

       96

Deferred income taxes....................................................................

     640

     640

Other non current assets...............................................................

     217

     207

Total assets......................................................................................

$4,986

$4,837
 

Liabilities and shareholders' investment

 

 

Current liabilities:

 

 

  Loans payable................................................................................

$     31

$     19

  Current maturities of long-term debt...........................................

         9

     119

 Accounts payable...........................................................................

     593

     427

  Accrued product coverage and marketing expenses...............

     252

     233

  Other accrued expenses................................................................

     461

     531

 1,346

   1,329
 

Long-term debt.................................................................................

   1,061

     999

Cummins-obligated mandatorily redeemable convertible
 preferred securities of subsidiary trust holding solely
 convertible subordinated debentures of Cummins....................

     292

     291

Other long-term liabilities................................................................

 1,299

  1,285

Minority interest...............................................................................

       95

       92

   

 

 

Shareholders' investment:

 

 

  Common stock, $2.50 par value, 48.4 and 48.6 shares issued...

     121

      121

  Additional contributed capital.......................................................

 1,108

  1,115

  Retained earnings............................................................................

     537

     569

  Accumulated other comprehensive income.................................

     (492)

     (527)

 Common stock in treasury, at cost, 6.0 and 7.0 shares................

     (241)

     (280)

    Common stock held in trust for
       employee benefit plans, 2.4 and 2.6 shares................................

     (115)

     (128)

  Unearned compensation.................................................................

      (25)

       (29)
 

     893

     841

Total liabilities and shareholders' investment.............................

$4,986

$4,837

 

 


CUMMINS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited

Nine Months Ended

Restated *

Millions

Sept. 28, 2003

Sept. 29, 2002

Cash flows from operating activities:

 

 

  Net earnings ...............................................................................

$      7

$    36

 Adjustments to reconcile net earnings to net cash
     from operating activities:

   

      Cumulative effect of change in accounting principle.........

       -

        (3)

      Depreciation and amortization...............................................

    165

    163

      Restructuring and other..........................................................

       -

      (17)

      Equity in earnings of joint ventures and alliances.............

     (31)

        (2)

      Minority interest......................................................................

      9

      12

      Non-cash compensation expense.........................................

    16

      12

      Amortization of gain on swap unwind.................................

      (5)

        (2)

      Translation and hedging activities.......................................

      (7)

        2

 Changes in assets and liabilities:

      Receivables...............................................................................

   (132)

    (286)

      Proceeds (repayments) from sale of receivables. ...............

       -

      (55)

      Inventories................................................................................

     (79)

      (12)

      Accounts payable and accrued expenses............................

    55

    181

      Other..........................................................................................

    15

      27

      Total adjustments....................................................................

      6

      20

  Net cash provided by operating activities...............................

    13

      56
 

Cash flows from investing activities:

 Property, plant and equipment:

    Capital expenditures....................................................................

     (70)

      (54)

    Investments in internal use software........................................

     (21)

      (14)

    Proceeds from disposals.............................................................

      7

      13

  Investments in and advances to joint ventures and alliances

      3

      (36)

  Acquisitions and dispositions of business activities, net.....

      -

      31

  Purchases of marketable securities.............................................

   (103)

      (62)

  Sales of marketable securities......................................................

      98

      53

  Net cash used in investing activities..........................................

     (86)

     (69)
 

Net cash used in operating and investing activities

     (73)

     (13)
 

Cash flows from financing activities:

  Proceeds from borrowings..........................................................

     16

        7

  Payments on borrowings............................................................

   (132)

      (15)

  Net borrowings under short-term credit agreements..............

     56

      56

  Issuance of common stock.........................................................

     37

      12

  Dividend payments on common stock.....................................

     (37)

      (37)

  Other..............................................................................................

    (14)

      (11)

  Net cash provided by (used in) financing activities..............

    (74)

      12

  Effect of exchange rate changes on cash and cash equivalents....

       3

        -
 

Net change in cash and cash equivalents....................................

   (144)

       (1)

Cash and cash equivalents at the beginning of the year...........

   224

     50

Cash and cash equivalents at the end of the nine months........

$   80  

$  49 

* 2002 amounts have been restated from our September 29, 2002 Form 10-Q on file for this period.  The nature of the  restatement adjustments are more fully discussed in Notes 2 and 20 of our 2002 Annual Report on Form 10-K.

  


CUMMINS INC.
SEGMENT INFORMATION
Unaudited

Millions

Engine

Power
Generation

Filtration
And Other

International
Distributor

Eliminations

Total

Third Quarter Ended Sept. 28, 2003

Net sales

$  942

$   363

$  255

$  174

$   (100)

$1,634

Earnings (loss) before interest and  income taxes

      36

        -

      16

         9

         -

        61

Net assets

    913

    474

    664

    174

         -

   2,225
 

Restated *

 

 

Third Quarter Ended Sept. 29, 2002

 

 

Net sales

$1,033

$   315

$  236

$  152

$   (88)

 $1,648

Earnings (loss) before interest and  income taxes

      51

         3

     19

      10

        -

        83

Net assets

    813

    477

    627

    160

        -

   2,077
 

Nine Months Ended Sept. 28, 2003

Net sales

$2,647

$   937

$  774

$  479

$  (277)

$4,560

Earnings (loss) before interest and  income taxes

      38

       (29)

      61

     27

        -

       97
 

Restated *

Nine Months Ended Sept. 29, 2002

Net sales

$2,659

$   902

$  707

$  421

$  (250)

$4,439

Earnings (loss) before interest and  income taxes

      50

      (14)

      66

     17

        -

      119 

* 2002 amounts have been restated from our September 29, 2002 Form 10-Q on file for this period.  The nature of the  restatement adjustments are more fully discussed in Notes 2 and 20 of our 2002 Annual Report on Form 10-K.


NON-GAAP FINANCIAL MEASURES

Earnings before interest, taxes, minority interests and preferred dividends (EBIT)

We define EBIT as earnings before interest, taxes, minority interest and preferred dividends, and believe it is an important non-GAAP financial measure of our operating performance.  We use EBIT to assess and measure the operating performance of our business segments and also as a component in measuring the variable compensation programs for each of our business segments.  As a result, we have included a consolidated EBIT measure to enable financial statement users to compare the relative performance of each business segment to consolidated performance.  The following table reconciles EBIT, a non-GAAP financial measure, to our consolidated net earnings, a GAAP measure, for each of the applicable periods:

Quarter Ended

Restated *

Sept. 28, 2003

Sept. 29, 2002

June 29, 2003

EBIT

$  61

$  83

$  46

Interest

    (25)

    (15)

    (20)

Taxes

      (9)

    (16)

      (5)

Minority interests

      (3)

      (3)

      (2)

Preferred dividends

      -

      (5)

      (5)

Net earnings

$  24

$  44

$  14

Free cash flow

We use free cash flow as a measure of our operating segments ability to generate cash.  In addition, we have provided guidance to the investment community regarding our expectations of free cash flow for 2003.  We define free cash flow as the sum of cash flows from operating and investing activities, both of which are GAAP measures from our Statements of Cash Flows, adjusted to exclude cash flows from the acquisition or disposition of certain business activities, receivable transactions, sales-leaseback transactions and transactions related to marketable securities, none of which we consider to be within the control of our business segment management.  The following table reconciles the non-GAAP measure of free cash flow to the sum of our cash flows provided by operating activities and cash flows used in investing activities that are included in our Statements of Cash Flows, which we believe are the most comparable GAAP measures.

Quarter Ended

Sept. 28, 2003
 

Cash flows provided by operating activities

$   50

Cash flows used in investing activities

     (60)

     Net cash used in operating and investing activities

     (10)

     Adjustments:

          Net sales of investments in marketable securities

     15

          Repayments on sale of receivables

       5

Free cash flow

     10
 
 

Cash flows provided by financing activities

$   31

* 2002 amounts have been restated from our September 29, 2002 Form 10-Q on file for this period.  The nature of the  restatement adjustments are more fully discussed in Notes 2 and 20 of our 2002 Annual Report on Form 10-K.


Product Revenues as Percent of Total Sales

% of Consolidated Sales

Q1

Q2

Q3

Q4

YTD

2003:

   Engines

45

44

45

45

   Non-Engine Products

55

56

55

55

2002:

   Engines

44

46

51

41

46

   Non-Engine Products

56

54

49

59

54

Sales

$Millions

Q1

Q2

Q3

Q4

YTD

2003:

          Engine Business

   Heavy-Duty Truck

 236

266

278

 780

   Medium Duty Truck+Bus

 122

141

140

 403

   Light Duty Auto+RV

 222

228

264

 714

   Industrial

 236

254

260

 750

         Total Engine Business

 816

889

942

2,647 

 Power Generation

 267

307

363

 937

 Int'l. Distributors

 136

169

174

 479

 Filtration / Other

 254

265

255

 774

 Eliminations

   (86)

  (91)

(100)

 (277)

   TOTAL

1,387  

 1,539    

1,634   

4,560 

2002:

        Engine Business

   Heavy-Duty Truck

 219

 265

 378

207

    1,069     

   Medium Duty Truck+Bus

 138

 157

 191

113

 599

   Light Duty Auto+RV

 157

 179

 236

209

 781

   Industrial

 262

 249

 228

247

 986

       Total Engine Business

 776

  850 

1,033  

776

    3,435     

 Power Generation

 283

 304

 315

324

    1,226     

 Int'l. Distributors

 124

 145

 152

153

   574 

 Filtration / Other

 228

 243

 236

244

    951 

 Eliminations

   (78)

   (84)

   (88)

   (83)

   (333)

   TOTAL

1,333  

1,458  

1,648  

 1,414   

 5,853 

 


Engine Shipments

Units

Q1

Q2

Q3

Q4

YTD

2003:

   Midrange

66,300

69,800

73,800

209,900

   Heavy-duty

10,700

12,800

13,200

  36,700

   High Horsepower

  1,900

  2,000

  2,400

    6,300

             TOTAL

78,900

84,600

89,400

252,900

2002:

   Midrange

60,500

67,000

71,800

65,800

265,100

   Heavy-duty

11,100

14,800

22,700

  9,300

  57,900

   High Horsepower

  2,100

  2,100

  2,200

  2,500

    8,900

             TOTAL

73,700

83,900

96,700

77,600

331,900