Cummins Engine to Acquire Nelson Industries; Acquisition Will Expand Cummins' Filtration Group, Generate Profitable Growth and Open Global Markets to Nelson Products.

COLUMBUS, Indiana, USA--(BUSINESS WIRE)--Dec. 4, 1997--

Substantial Synergies Anticipated in

Sales, Technology Development and Operating Efficiencies

Cummins Engine Co. Inc. (NYSE:CUM) today announced that it will acquire Nelson Industries Inc., a major, privately held supplier of air and liquid filtration products, exhaust and emissions control systems, industrial silencers, and electronic sound and vibration control technology. Cummins will acquire the stock of Nelson for $450 million in cash and assume debt of $38 million. Nelson, which is based in Stoughton, Wisc., will become part of Cummins' filtration group and will substantially expand the group's product line and open up the company's global markets and joint ventures to Nelson's products.

Cummins Chairman and Chief Executive Officer James A. Henderson said, "This transaction creates a $750 million business that will be one of the leading competitors in its industry. The acquisition will be neutral to Cummins' earnings next year and is expected to be accretive to earnings in 1999. Nelson's management team, under the leadership of Rockne Flowers, has built a growing, profitable company focused on delivering innovative solutions for its customers. When Nelson takes its place alongside Fleetguard, our very successful filtration company, the combined product offering made available to customers worldwide will provide the group the capability to become number one or number two in every market in which we compete."

Nelson, whose annual growth rate has exceeded 15 percent over the past five years, is North America's leading producer of exhaust systems and the number two supplier of air filtration systems for diesel-powered equipment. Sales this year are expected to exceed $290 million. Fleetguard Inc., based in Nashville, Tenn., is the leading supplier of heavy-duty diesel filtration in the world. The company has a compound annual growth rate of 10 percent, with half its sales coming from outside the United States. Sales are expected to exceed $460 million in 1997.

"With Nelson, we have an exceptional fit of complementary product lines, diversified equipment markets and global distribution channels," said M. David Jones, vice president - filtration group and president, Fleetguard Inc. "With many of today's customers seeking to reduce the number of vendors they deal with, business will flow to full-system suppliers who can offer the broadest range of quality products and deliver them anywhere in the world. With the addition of Nelson, we are very well positioned to capitalize on this trend."

Nelson Chairman and Chief Executive Officer Rockne G. Flowers, who will be named executive vice president of the filtration group, commented, "Having studied this business combination thoroughly, we are supremely confident that Nelson and Fleetguard are a winning combination for the customers, employees, communities and shareholders of both companies. The timing too is just right, because it serves our mutual and immediate need to tap developing market opportunities and accelerate growth at an investment level that makes sound business sense for both companies."

Jones continued, "Synergies produced by this combination will be substantial, coming largely from sales, technology development and operating efficiencies. We plan to take the best practices from both companies and standardize them across the business. What makes this combination exciting is the very real opportunity the business unit will have to bring a far wider range of products and technologies to new and existing customers in markets here and around the world."

Jones and Flowers also indicated that products made by Nelson and Fleetguard will continue to be sold under their existing brand names. Jones added, "With the new company's sales expected to continue growing at double-digit rates, our most immediate concern will be managing capacity and keeping up with demand."

The acquisition is subject to Nelson shareholder approval and customary government and regulatory review. Cummins initially will fund the acquisition of Nelson through short-term bank financing that will be replaced through an issuance of long-term debt.

Fleetguard is a major international producer of a variety of advanced-technology filtration products. Founded in 1958, it operates plants and distribution centers in 13 countries. Nelson, founded in 1939, has 10 production facilities in the United States - all in Wisconsin - and others in Canada, the United Kingdom and Mexico.

Cummins, headquartered in Columbus, Ind., is the world's largest producer of diesel engines above 200 horsepower. The company provides products for customers in its key markets: automotive, power generation, industrial and filtration. In 1996, Cummins reported record sales of $5.3 billion and employed 23,500 people worldwide. Forty-four percent of its sales were to markets outside the United States. The company has manufacturing, assembly, research and engineering facilities in more than one dozen countries and has a network of distributors in 110 countries. The company was founded in 1919. The company's press releases are available by fax and may be requested by calling News on Demand at 888-329-2305. Cummins' home page on the Internet can be found at http://www.cummins.com.

Certain information included in this press release is forward-looking and involves risks and uncertainties, including general economic and competitive conditions that could significantly affect expected results.

CONTACT: Cummins Engine Co. Inc.

Ann C. Smith

Public Relations Director

812/377-3524

or

Nelson Industries Inc.

George R. Kamperschroer

Vice President - Corporate Affairs

608/873-4378