Cummins Reports First-Quarter Earnings of 96 Cents Per Share Before Special Charge; 18 Cents Per Share After Charge.

COLUMBUS, Ind.--(BUSINESS WIRE)--April 16, 1998--

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                  CUMMINS ENGINE COMPANY, INC.
              (Millions, except per share amounts)


FOR THE FIRST QUARTER ENDED          March 29,    March 30,
                                       1998         1997
                                     ________     ________

NET SALES                            $  1,500     $  1,304

Before special charge
_____________________
     Earnings before income taxes    $     57         -
     Net earnings                          37         -

     Basic earnings per share        $    .97         -
     Diluted earnings per share           .96         -

As reported
___________
     Earnings before income taxes    $     14     $     56
     Net earnings                           7           41

     Basic earnings per share        $    .18     $   1.07
     Diluted earnings per share           .18         1.06

Weighted-average number of shares
for EPS:
     Basic                               38.5         38.2
     Diluted                             38.9         38.5

Cummins Engine Co. Inc. (NYSE:CUM) today reported first-quarter earnings of 96 cents per share, or $37 million profit after taxes, before a one-time pre-tax charge of $43 million, or 78 cents per share after taxes. Including the charge, earnings were $7 million, or 18 cents per share. The charge was for product coverage costs relating to previously produced engines, the company said. Sales for the quarter were $1.5 billion, 15 percent better than the year-ago quarter. The earnings per share are the same as those anticipated by the company last week at its annual shareholders meeting.

In the first quarter of 1997, Cummins reported earnings of $41 million, or $1.06 per share, on sales of $1.3 billion.

"We are pleased with the progress being made by our four business units, and we continue to expect that second-quarter earnings per share will approach those of the year-ago quarter," said Cummins Chairman and Chief Executive Officer Jim Henderson. "Looking further ahead in 1998, we expect to see strong market acceptance of the new Signature 600 heavy-duty truck engine, additional synergies between our Fleetguard subsidiary and the recently acquired Nelson Industries, benefits from the Power Generation Group restructuring, and continued growth of our Industrial Business Unit."

Automotive market sales of $684 million were 14 percent higher than the year-ago quarter. Heavy-duty truck market sales were $381 million, 29 percent higher than the first quarter of 1997 due to increased shipments in North America, where Cummins continues to lead the market, and in Mexico and Europe. In the medium-duty truck market, sales of $113 million were 14 percent less than the year-ago quarter as lower shipments in the United States were partially offset by higher sales in Latin America. Sales to the bus and light commercial vehicle market of $190 million were 11 percent higher than the prior first quarter primarily because of continuing strong engine sales for the Dodge Ram pickup truck.

Power Generation market sales, favorably impacted by the consolidation of Cummins India Limited in late 1997, were $291 million, 6 percent higher than the first quarter of 1997. This business continues to be affected by a slowdown in its Asian markets and slower-than-expected results from its intensive restructuring efforts.

Industrial market sales of $269 million were 5 percent higher than the year-ago quarter as a result of stronger sales to the construction market, offset by lower sales to international agricultural markets.

Sales of filtration and other products, favorably affected by the acquisition of Nelson Industries in early 1998, totaled $256 million, 47 percent higher than those of the prior first quarter.

Cummins said that U.S. Environmental Protection Agency (EPA) discussions are continuing with the company, other diesel engine manufacturers and the industry relating to the level of nitrogen oxide emissions in certain driving conditions. The company reiterated its January statement that it believes it is in full compliance with all EPA standards regarding emissions and is working closely with the EPA to improve emissions standards. Because of the complexity of the issues involved and the stage that the discussions are in at this time, Cummins said, it is not possible to predict the outcome of these discussions or whether the outcome will have a material effect on the company.

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. Cummins reported record sales of $5.6 billion in 1997. Press releases by fax may be requested by calling News on Demand (toll free) 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, 812/377-3524