UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
CUMMINS ENGINE COMPANY, INC.
____________________________
For the Quarter Ended March 30, 1997 Commission File Number 1-4949
______________ ______
Indiana 35-0257090
_______ __________
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
500 Jackson Street, Box 3005
____________________________
Columbus, Indiana 47202-3005
_________________ __________
(Address of Principal Executive Offices) (Zip Code)
812-377-5000
____________
(Registrant's Telephone Number)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the proceeding 12 months and (2) has been
subject to such filing requirements for the past 90 days:
Yes [x]
No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:
As of March 30, 1997, the number of shares outstanding of the
registrant's only class of common stock was 42.0 million.
<PAGE>
TABLE OF CONTENTS
_________________
Page No.
________
PART I. FINANCIAL INFORMATION
______________________________
Item 1. Financial Statements
Consolidated Statement of Earnings for the First 3
Quarter Ended March 30, 1997 and March 31, 1996
Consolidated Statement of Financial Position at 4
March 30, 1997 and December 31, 1996
Consolidated Statement of Cash Flows for the First 5
Quarter Ended March 30, 1997 and March 31, 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of 7
Operations, Cash Flows and Financial Condition
PART II. OTHER INFORMATION
___________________________
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Index to Exhibits 13
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF EARNINGS
Unaudited
__________________________________
First Quarter Ended
Millions, Except per Share Amounts 3/30/97 3/31/96
__________________________________ _______ _______
Net sales $1,304 $1,316
Cost of goods sold 1,018 1,000
______ ______
Gross profit 286 316
Selling & administrative expenses 178 180
Research & engineering expenses 61 62
Net (income) expense from joint ventures and
alliances (7) 2
Interest expense 5 4
Other income, net (7) (3)
______ ______
Earnings before income taxes 56 71
Provision for income taxes 15 22
______ ______
Net earnings $ 41 $ 49
______ ______
Earnings per share $ 1.06 $ 1.21
Cash dividends declared per share .25 .25
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
____________________________________________
Millions, Except per Share Amounts 3/30/97 12/31/96
__________________________________ _______ ________
Assets
Current assets:
Cash and cash equivalents $ 81 $ 108
Receivables 730 669
Inventories 615 587
Other current assets 196 189
______ ______
1,622 1,553
Investments and other assets 302 326
Property, plant & equipment less accumulated
depreciation of $1,375 1,337 1,286
Intangibles, deferred taxes & deferred charges 205 204
______ ______
Total assets $3,466 $3,369
______ ______
Liabilities and shareholders' investment
Current liabilities:
Loans payable $ 23 $ 93
Current maturities of long-term debt 39 39
Accounts payable 378 380
Other current liabilities 543 509
______ ______
983 1,021
______ ______
Long-term debt 459 283
______ ______
Other liabilities 753 753
______ ______
Shareholders' investment:
Common stock, $2.50 par value, 47.8 and 43.9
shares issued 119 110
Additional contributed capital 1,103 929
Retained earnings 565 535
Common stock in treasury, at cost, 5.8 & 4.5 shares (227) (169)
Common stock held in trust for employee benefit plans (181) -
Unearned compensation (ESOP) ( 42) ( 46)
Cumulative translation adjustments ( 66) ( 47)
______ _______
1,271 1,312
______ ______
Total liabilities & shareholders' investment $3,466 $3,369
______ ______
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
____________________________________
First Quarter Ended
Millions 3/30/97 3/31/96
________ _______ _______
Cash flows from operating activities:
Net earnings $ 41 $ 49
_____ _____
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization 39 38
Restructuring actions ( 4) (18)
Accounts receivable ( 71) (13)
Inventories ( 31) (35)
Accounts payable and accrued expenses 44 ( 3)
Income taxes payable 4 13
Other 8 ( 6)
______ ______
Total adjustments ( 11) (24)
_____ _____
Net cash provided by operating activities 30 25
_____ _____
Cash flows from investing activities:
Property, plant and equipment:
Additions (104) (36)
Disposals 7 2
Investments in joint ventures and alliances 3 26
Other ( 2) 20
______ ____
Net cash (used in) provided from investing
activities ( 96) 12
______ _____
Net cash (used for) provided from operating
and investing activities ( 66) 37
______ _____
Cash flows from financing activities:
Proceeds from borrowings 189 109
Payments on borrowings ( 9) ( 7)
Net borrowings under credit agreements ( 70) (30)
Repurchases of common stock ( 58) ( 4)
Payments of dividends ( 10) (10)
Other ( 2) ( 1)
______ ______
Net cash provided from financing activities
40 57
______ ______
Effect of exchange rate changes on cash ( 1) ( 1)
______ ______
Net change in cash and cash equivalents ( 27) 93
Cash & cash equivalents at beginning of the year 108 60
_____ _____
Cash & cash equivalents at the end of the quarter $ 81 $ 153
_____ _____
<PAGE>
CUMMINS ENGINE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
______________________________________________
Note 1. Accounting Policies: The Consolidated Financial Statements
for the interim periods ended March 30, 1997 and March 31, 1996 have
been prepared in accordance with the accounting policies described in
the Company's Annual Report to Shareholders and Form 10-K. Management
believes the statements include all adjustments of a normal recurring
nature necessary to present fairly the results of operations for the
interim periods. Inventory values at interim reporting dates are based
upon estimates of the annual adjustments for taking physical inventory
and for the change in cost of LIFO inventories.
Note 2. Income Taxes: Income tax expense is reported during the
interim reporting periods on the basis of the estimated annual
effective tax rate for the taxable jurisdictions in which the Company
operates.
Note 3. Long-term Debt: In February 1997, the Company issued $120
million of 6.75 percent debentures that mature in 2027. Net proceeds
were used principally to repay commercial paper indebtedness incurred
to repurchase shares of common stock. Holders of the debentures have a
1-time option in 2007 to redeem the debentures. The Company also has a
recall right after ten years.
Note 4. Common Stock: In January 1997, the Company issued 3.75
million shares of its common stock to an employee benefits trust to
fund obligations of employee benefit and compensation plans,
principally retirement savings plans. Shares of the common stock held
by this trust are not used in the calculation of the Company's earnings
per share until distributed from the trust and allocated to a benefit
plan. The Company also repurchased 1.3 million shares of its common
stock from Ford Motor Company in January 1997 and was authorized by the
Board of Directors to repurchase an additional 1.7 million shares from
time-to-time in the open market.
On April 1, 1997, the Company announced an increase in its quarterly
common stock dividend from 25 cents per share to 27.5 cents, effective
with the dividend payment in June 1997.
Note 5. Earnings Per Share: Earnings per share are computed by
dividing net earnings by the weighted-average number of common shares
outstanding during the period. The weighted-average number of shares,
which excludes shares of stock held by the employee benefits trust
until distributed and allocated to a benefit plan, was 38.4 million in
the first quarter of 1997 and 40.3 million in the first quarter of
1996. The Financial Accountings Standard Board recently released a new
accounting rule on the calculation of earnings per share that is
effective at year-end 1997. This rule, which does not permit early
adoption, is not expected to have a material effect on the Company's
reported earnings per share.
<PAGE>
CUMMINS ENGINE COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS,
CASH FLOWS AND FINANCIAL CONDITION
_____________________________________________________________
OVERVIEW
________
Sales of $1.3 billion in the first quarter of 1997 were 1 percent
lower, or nearly level, with the first quarter of 1996. However, the
Company experienced a shift in sales mix from automotive to power
generation and industrial markets. Automotive sales were down $86
million, primarily as a result of lower demand in North American heavy-
and medium-duty truck markets. This decline in revenues was nearly
offset by increased sales in other markets, with sales of power
generation $23 million higher than the first quarter of 1996 and
industrial sales $55 million higher than the year-ago period.
The Company shipped 86,200 engines in the first quarter of 1997,
compared to 89,200 in the first quarter of 1996:
First Quarter
Engine Shipments 1997 1996
________________ ______ ______
Midrange 63,100 62,600
Heavy-duty 20,800 24,600
High-horsepower 2,300 2,000
______ ______
Total 86,200 89,200
______ ______
Net earnings in the first quarter of 1997 were $41 million ($1.06 per
share), compared to $49 million ($1.21 per share) in the first quarter
1996.
RESULTS OF OPERATIONS
_____________________
The percentage relationships between net sales and other elements of
the Company's Consolidated Statement of Earnings for the comparative
reporting periods were:
First Quarter
Percent of Net Sales 1997 1996
____________________ _____ _____
Net sales 100.0 100.0
Cost of goods sold 78.1 76.0
_____ _____
Gross profit 21.9 24.0
Selling and administrative expenses 13.7 13.7
Research and engineering expenses 4.7 4.7
Net (income) expense from joint ventures & alliances (.6) .1
Interest expense .4 .3
Other income, net (.6) (.2)
_____ _____
Earnings before income taxes 4.3 5.4
Provision for income taxes 1.2 1.7
_____ _____
Net earnings 3.1 3.7
_____ _____
Sales by Market
_______________
Sales for each of the Company's markets for the comparative reporting
periods were:
First Quarter 1997 First Quarter 1996
Dollars in Millions Dollars Percent Dollars Percent
___________________ _______ _______ _______ _______
Automotive:
Heavy-duty truck 295 23 364 28
Midrange truck 132 10 161 12
Bus and light commercial vehicles 171 13 159 12
Power generation 275 21 252 19
Industrial 257 20 202 15
Filtration and other 174 13 178 14
_____ ___ _____ ___
Net sales 1,304 100 1,316 100
_____ ___ _____ ___
Automotive
__________
Sales of $295 million to the heavy-duty truck market were $69 million
(almost 20 percent) lower than a year ago. Performance in this market
is dominated by the North American market. Compared to the first
quarter of 1996, North American shipments were 27 percent lower, due to
the lower market size. There are, however, signs that the North
American heavy-duty truck market has strengthened. First-quarter 1997
engine shipments to this market were 13 percent higher than in the
fourth quarter of 1996. In international markets, engine shipments in
the first quarter of 1997 were 26 percent higher than the first quarter
of 1996, primarily due to strong demand in Mexico.
Compared to the first quarter of 1996, engine shipments for midrange
trucks were 22 percent lower, primarily due to decreased demand in
North America. Midrange truck engines for international markets were
12 percent higher than the first quarter of 1996. This increase was
primarily in Brazil.
In the bus and light commercial vehicles market, sales of $171 million
were 8 percent higher than the first quarter of 1996. First-quarter
1997 engine shipments to Chrysler were another record. In addition,
demand for bus markets in the first quarter of 1997 was stronger, 5
percent higher than the first quarter of 1996.
Power Generation
________________
Sales of $275 million to power generation markets represented 21
percent of the Company's net sales in the first quarter of 1997. This
was $23 million higher than the first quarter of 1996. Strong genset
sales in Asia and Mexico accounted for this 9-percent increase.
Industrial
__________
Record quarterly sales of $257 million to industrial markets were 27
percent higher than first-quarter 1996, reflecting strong sales for
construction equipment in North America and international agricultural
markets. Engine shipments for marine markets also were 12 percent
higher than the prior year.
Filtration and Other
____________________
Sales of $174 million for filtration and other products were 2 percent
lower than the first quarter of 1996, due primarily to the lower level
of demand in North American heavy-duty and midrange truck markets.
Gross Profit
____________
Compared to the first quarter of 1996, the Company's gross margin of
21.9 percent of net sales was affected by several factors, the most
significant of which was the lower level of heavy-duty truck engine
production that resulted in lower fixed cost absorption. Gross profit
also was affected by the softer market for midrange truck engines,
higher sales of lower margin power generation products and product
coverage expense, which at 2.7 percent of net sales was $2 million
higher than the first quarter of 1996.
Operating Expenses
__________________
Selling and administrative expenses in the first quarter of 1997 were
$178 million. This was $2 million lower than the first quarter of 1996
due to the effect of lower restructuring expense and benefits from
completed restructuring actions.
Research and engineering expenses of $61 million in the first quarter
were $1 million lower than the prior year. The first-quarter reduction
in costs was due primarily to lower costs for new products that are
nearing production.
Net income from joint ventures and alliances was $9 million higher than
the first quarter of 1996 due to higher earnings from Kirloskar Cummins
and the Company's joint venture with Komatsu and annual royalties and
fees from the new joint venture with Dongfeng.
Interest and Other Income and Expense
_____________________________________
Interest expense of $5 million in the first quarter of 1997 was $1
million higher than a year ago due to the higher level of long-term
debt. Other income and expense includes a variety of items, such as
foreign currency translation gains and losses, royalty and technical
fees of licensees, interest income, and gains or losses associated with
fixed asset dispositions. In the first quarter of 1997, other income
was $7 million, which was $4 million higher than the first quarter of
1996 due to no longer having the fees associated with selling
receivables, a net translation gain of $1 million (compared to a loss
in the first quarter of 1996) and higher royalties from licensees.
Provision For Income Taxes
__________________________
The estimated effective tax rate (ETR) is 28 percent for 1997. The ETR is
lower than the US statutory rate of 35 percent because of lower taxes on
US export income and the incremental research tax credit that expires May
31, 1997.
CASH FLOW AND FINANCIAL CONDITION
_________________________________
Key elements of the Consolidated Statement of Cash Flows were:
First Quarter
Dollars in Millions 1997 1996
___________________ ____ ____
Net cash provided by operating activities $ 30 $ 25
Net cash (used in) provided from investing activities (96) 12
_____ ____
Net cash (used for) provided from operating and
investing activities (66) 37
Net cash provided from financing activities 40 57
Effect of exchange rate changes on cash ( 1) ( 1)
_____ ____
Net change in cash and cash equivalents $(27) $ 93
_____ _____
Net cash used for operating and investing activities was $66 million in
the first quarter of 1997. In the second quarter of 1996, the Company
elected not to renew an agreement for the sale of up to $110 million in
accounts receivable, which resulted in an increase in receivables.
Days sales outstanding were 50 at the end of the first quarter of 1997,
compared to 49 in the first quarter of 1996, adjusted for discontinuing
the receivables sale program. Investing activities required net cash
resources of $96 million in the first quarter of 1996. Capital
expenditures were $104 million, compared to $36 million in the first
quarter of 1996. The increased level of expenditures in 1997 was
related to continued investments for new products.
Net cash provided from financing activities was $40 million in the
first quarter of 1997. As disclosed in Note 3 to the Consolidated
Financial Statements, the Company issued $120 million in debentures
under its shelf registration statement in February 1997.
In January 1997, the Company repurchased 1.3 million shares of its
common stock from Ford Motor Company and was authorized by the Board of
Directors to repurchase an additional 1.7 million shares in the open
market. In January 1997, the Company also issued 3.75 million shares
of its common stock to an employee benefits trust.
On April 1, 1997, the Company announced a 10-percent increase in its
quarterly common stock dividend from 25 cents per share to 27.5 cents,
effective with the dividend payment in June 1997.
Forward-looking Statements
__________________________
The Company has included certain forward-looking statements in this
Management's Discussion and Analysis of Results of Operations, Cash
Flows and Financial Condition. These statements are based on current
expectations, estimates and projections about the industries in which
the Company operates, management's beliefs and various assumptions made
by management which are difficult to predict. Among the factors that
could affect the outcome of the statements are general industry and
market conditions and growth rates. Therefore, actual outcomes and
their impact on the Company may differ materially from what is
expressed or forecasted. The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
<PAGE>
PART II. OTHER INFORMATION
___________________________
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________________
The Company held its annual meeting of security holders on April 1,
1997 at which security holders elected 12 directors of the Company for
the ensuing year and ratified the appointment of Arthur Andersen LLP as
auditors for the year 1997.
Results of the voting in connection with each of the items were as
follows:
Voting on Directors:
____________________
For Withheld
__________ ________
H. Brown 34,563,096 528,586
R. Darnall 34,569,086 522,596
W. Y. Elisha 34,569,374 522,308
H. H. Gray 34,514,238 577,444
J. A. Henderson 34,562,667 529,015
W. I. Miller 34,578,197 513,485
D. S. Perkins 34,567,033 524,649
W. D. Ruckelshaus 34,568,116 523,566
H. B. Schacht 34,562,402 529,280
T. M. Solso 34,539,676 552,006
F. A. Thomas 34,572,809 518,873
J. L. Wilson 34,573,758 517,924
Ratify Appointment of Auditors:
_______________________________
For Against Abstain
__________ _______ _______
34,710,312 251,389 129,981
With regard to the election of directors, votes were cast in favor of
or withheld from each nominee; votes that were withheld were excluded
entirely from the vote and had no effect. Abstentions on the
ratification of the appointment of Arthur Andersen LLP were counted as
present for purposes of determining the existence of a quorum. Under
the rules of the New York Stock Exchange, brokers who held shares in
street names had the authority to vote on certain items when they did
not receive instructions from beneficial owners. Brokers that did not
receive instructions were entitled to vote on the election of
directors. Under applicable Indiana law, a broker non-vote had no
effect on the outcome of the election of directors.
Item 6. Exhibits and Reports on Form 8-K:
__________________________________________
(a) See the Index to Exhibits on Page 13 for a list of exhibits filed
herewith.
(b) On February 14, 1997, the Company filed a Form 8-K Other Event to
define the calculation of the ratio of earnings to fixed charges
disclosed in the Company's Prospectus Supplement dated February
14, 1997 to the Prospectus dated November 17, 1993 relating to
issuance of 6.75 percent debentures, due February 15, 2027.
Signatures
__________
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CUMMINS ENGINE COMPANY, INC.
By: /s/Rick J. Mills April 21, 1997
________________
Rick J. Mills
Vice President - Corporate Controller
(Chief Accounting Officer)
<PAGE>
CUMMINS ENGINE COMPANY, INC.
____________________________
INDEX TO EXHIBITS
_________________
10(k) Retirement Plan for Non-employee Directors of Cummins Engine
Company, Inc., as amended February 1997 (filed herewith)
10(m) Three Year Performance Plan, as amended February 1997
(filed herewith)
10(p) Restricted Stock Plan for Non-employee Directors, as amended
February 11, 1997 (filed herewith)
10(t) Senior Executive Three Year Performance Plan, as amended
February 11, 1997 (filed herewith)
11 Schedule of Computation of Per Share Earnings for the First
Quarter Ended March 30, 1997 and March 31, 1996
(filed herewith)
27 Financial Data Schedule (filed herewith)
EXHIBIT 10(k)
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
OF CUMMINS ENGINE COMPANY, INC.
------------------------------------------
(As Amended February 11, 1997)
1. Purpose. The Retirement Plan for Non-Employee Directors
("the Plan") was originally established to provide term-certain
pension payments, as set forth more fully herein, to eligible non-
employee Directors of Cummins Engine Company, Inc. ("the
Company"). It was modified on February 11, 1997 to cease future
benefit accruals and to permit the conversion of existing accrued
benefits into an equivalent value of phantom shares of Company
Common Stock. The Plan is intended to enhance the Company's
ability to retain as Directors individuals with the highest
caliber of experience, ability and judgment.
2. Eligibility. Each Director of the Company who was not an
employee or former employee of the Company with vested rights
under a pension plan sponsored by the Company, its subsidiaries
or affiliates is eligible to participate in the Plan as set forth
below.
3. Participation. An eligible Director became a Participant in
the Plan commencing with the sixth (6th) year of service as a
Director of the Company. No person who becomes a Director after
February 11, 1997 shall be eligible to participate in the Plan.
4. Vesting. Each eligible Director was fully vested in benefits
accrued under the Plan immediately upon becoming a Participant.
5. Pension Benefit Amount. Each Participant shall be entitled
to receive an annual pension benefit, payable annually, equal to
the fees (excluding Committee fees) paid or payable to such
Participant for services rendered as a Director of the Company
during the one-year period immediately preceding February 11,
1997.
6. Benefit Conversion Election. In lieu of the pension benefits
described in paragraph 5, each Participant may elect to convert
the present value of his or her accrued pension benefits under
the Plan into an equivalent value of phantom units of the
Company's Common Stock ("Stock Units"), with each unit equal in
value to one share of Common Stock. The present value of accrued
benefits shall be determined assuming (a) the interest rate used
by the Pension Benefit Guaranty Corporation in determining the
value of immediate benefits as of the January 1 immediately
preceding the election and (b) the mortality tables incorporated
by reference into the Cummins Engine Company, Inc. and Affiliates
Cash Balance Retirement Plan, or any successor plan thereto. The
number of Stock Units into which the present value will be
converted shall be based on the average of closing prices of the
Common Stock on the New York Stock Exchange for the 180 trading
days immediately preceding the date of conversion.
The Stock Units, including any additional Stock Units credited
thereon as dividend equivalents (using the same 180 trading day
trailing average methodology), will be evidenced only by
bookkeeping entries. A Participant making the conversion
election shall have no share voting or investment power with
respect to the Stock Units.
The value of an electing Participant's Stock Units shall be
payable only in cash in a lump-sum upon the Participant ceasing
to be a Director, provided, however, that payment or the stock
units may be deferred pursuant to the Company's Deferred
Compensation Plan for Non-Employee Directors ("the Deferral
Plan").
7. Commencement of Pension Benefits. The annual pension
benefits described in paragraph 5 shall be payable on the first
business day in the month of May each year, commencing with the
May next following the later of (i) the date the Participant
ceases to be a Director or (ii) the Participant's 65th birthday.
8. Duration of Pension Benefits. Once begun, the annual pension
benefit shall be payable for the lesser of (i) the number of
completed full years the Participant served as a Director prior
to February 11, 1997 or (ii) twenty (20) years.
9. Payments Upon Death of Participant.
a) In the event of the death of a Participant who had not made
the election described in paragraph 6, the Participant's
surviving spouse, if any, shall continue to receive annual
benefit payments equal to fifty percent (50%) of the pension
benefit payable to the Participant. If death occurs prior to
commencement of pension benefits, such spousal benefit payments
shall continue for the greater of (i) ten (10) years or (ii) the
number of years the Participant would have been entitled to
payments under paragraph 8. If death occurs following
commencement of pension benefits, but prior to receiving the
number of payments described in paragraph 8, such spousal
benefits shall continue for the remaining number of payments. In
the event there is no surviving spouse at the time of a
Participant's death, the Participant's estate or designated
beneficiary shall receive a lump-sum payment equal to the present
value of annual pension benefits that otherwise would have been
payable to a spouse in accordance with this paragraph. In the
event of a surviving spouse's death prior to receiving all
payments otherwise due in accordance with this paragraph, the
estate or designated beneficiary of such spouse shall receive a
lump-sum payment equal to the present value of the remainder of
all such payments. The amount of any lump-sum payment made
pursuant to this paragraph shall be calculated assuming (a) the
interest rate used by the Pension Benefit Guaranty Corporation in
determining the value of immediate benefits as of January 1
immediately preceding the date of payment and (b) the mortality
table incorporated by reference into the Cummins Engine Company,
Inc. and Affiliates Cash Balance Retirement Plan.
b) In the event a Participant who had made an election under
paragraph 6 dies prior to the value of the Stock Units being
paid to the Participant or deferred under the Deferral Plan, such
value shall be paid to the Participant's surviving spouse. In
the event there is no surviving spouse at the time of the
Participant's death, the Participant's estate or designated
beneficiary shall receive such value.
10. Payments upon Change of Control. Notwithstanding anything
contained in paragraphs 7, 8 or 9 to the contrary, following a
Change of Control (as hereinafter defined), each Participant (or
beneficiary, if appropriate) shall be entitled to receive a lump-
sum payment of the actuarial equivalent of pension benefits
accrued and remaining unpaid or, in the case of a Participant who
has made an election described in paragraph 6, the cash value of
the Participant's Stock Units as of the date of the Change of
Control. The lump-sum equivalent of pension benefits shall be
calculated assuming (a) the interest rate used by the Pension
Benefit Guaranty Corporation in determining the value of
immediate benefits as of the immediately preceding January 1 and
(b) the mortality tables incorporated by reference into the
Cummins Engine Company, Inc. and Affiliates Cash Balance
Retirement Plan, or any successor plan thereto.
For purposes of this Plan, a "Change of Control" means the
occurrence of any of the following: (i) there shall be
consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's common stock would
be converted in whole or in part into cash, other securities or
other property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to the
merger have substantially the same proportionate ownership of
common stock of the surviving corporation immediately after the
merger or (B) any sale, lease, exchange or transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets or the Company, or (ii) the
stockholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company, or (iii) any
"person" (as such term is used in Sections 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended ("the Exchange
Act")), other than the Company or a subsidiary thereof or any
employee benefit plan sponsored by the Company or a subsidiary
thereof or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company, shall become the
beneficial owners (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing 25
percent or more of the combined voting power of the company's
then outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors ("Voting Shares"), as a result of a
tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a
period of two consecutive years, individuals who, at the
beginning of such period constituted the Board of Directors of
the Company, shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for
election by the Company's stockholders of each new director
during such two-year period was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of such two-year period, or (v) any
other event shall occur that would be required to be reported in
response to Item 6(e) (or any successor provision) of Schedule
14A promulgated under the Exchange Act.
11. Funding of Pension Benefits. The Company shall set aside
funds to satisfy its obligations to pay the pension benefits
described in paragraph 5 by making deposits to the grantor trust
created under agreement dated February 1, 1988 ("the Trust") by
and between the Company and Wachovia Bank and Trust Company, N.A.
("the Trustee") or any successor trust thereto. Deposits to the
Trust to fund such obligations shall be calculated on a sound
actuarial basis. Benefit payments will be made from the Trust by
the Trustee to the extent not paid by the Company.
12 Miscellaneous.
a) Participation in the Plan shall not confer any rights
concerning nomination for re-election to the Board of Directors
of the Company.
b) The Board of Directors of the Company shall be responsible
for the administration of the Plan. Any decisions by the Board
of Directors (as reflected in its approved minutes) shall be
final.
c) The Plan shall continue in force with respect to any
Participant until completion of any payments due hereunder. The
Company may, however, at any time, amend or terminate the Plan,
provided, however, that no such termination or amendment shall
deprive any Participant or surviving spouse of any benefits
accrued under the Plan prior to such amendment.
d) No right or interest of a Participant or surviving spouse
under the Plan shall be subject to voluntary or involuntary
alienation, assignment or transfer of any kind.
EXHIBIT 10(m)
CUMMINS ENGINE COMPANY, INC.
THREE YEAR PERFORMANCE PLAN
----------------------------
(As Amended February 11, 1997)
1. Objectives. The objectives of the Plan are to: (i) serve as
a balance against the short-term compensation provided by base
salary and bonus payments of the Company, (ii) emphasize the
medium-term performance of the Company as compared to its
industry competitors, (iii) strengthen the relationship between
Company management and shareholder interests, and (iv) encourage
participants to remain with the Company through important
business cycles.
The size of grants under the Plan are intended to reflect the
degrees of influence participating officers and key employees
have in their functional positions on the medium-term (three
year) performance of the Company. The calculation of payments
from the Plan is intended to reflect the Company's performance
against certain performance measures designated by the
Compensation Committee.
2. Definitions.
a) "Award Cycle" means the three-year period upon which a
particular year's payout is calculated. A new Award Cycle
commences with the beginning of each of the Company's fiscal
years. Payments, if any, under the Plan to Participants during a
fiscal year are based upon the Company's performance during the
most recently completed Award Cycle.
b) "Change of Control" means the occurrence of any of the
following: (i) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares
of the Company's common stock would be converted in whole or in
part into cash, other securities or other property, other than a
merger of the Company in which the holders of the Company's
common stock immediately prior to the merger have substantially
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease,
exchange or transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company, or (ii) the stockholders of the Company shall approve
any plan or proposal for the liquidation or dissolution of the
Company, or (iii) any "person" (as such term is used in Sections
13(d) (3) and 14(d) (2) of the Securities Exchange Act of 1934,
as amended ("the Exchange Act")), other than the Company or a
subsidiary thereof or any employee benefit plan sponsored by the
Company or a subsidiary thereof or a corporation owned, directly
or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company, shall become the beneficial owners (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing 25 percent or more of the combined
voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors ("Voting Shares"), as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, or (iv) at any time during a period of two (2)
consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company shall
cease for any reason to constitute at least a majority thereof,
unless the election or the nomination for election by the
Company's stockholders of each new director during such two-year
period was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the
beginning of such two-year period, or (v) any other event shall
occur that would be required to be reported in response to Item
6(e) (or any successor provision) of Schedule 14A or Regulation
14A promulgated under the Exchange Act.
c) "Committee" means the Compensation Committee of the Board of
Directors of the Company.
d) "Company" means Cummins Engine Company, Inc.
e) "Participants" means the Company's officers and key
employees designated annually by the Committee to participate in
the Plan for the ensuing Award Cycle.
f) "Payout Factor" means the percentage determined by the
Committee and applied to a Target Award to determine the amount
of an award to be paid as described in Section 4 of the Plan.
g) "Peer Group" means the group of companies selected by the
Committee whose primary industry is similar to that of the
Company. As of the effective date of the Plan, the Peer Group
consists of the following companies: (i) Arvin Industries,
Inc., (ii) Caterpillar, Inc., (iii) Dana Corporation, (iv) Deere
& Company, (v) Dresser Industries, Inc., (vi) Eaton Corporation,
(vii) Ford Motor Company, (viii) General Motors Corporation, (ix)
Ingersoll-Rand Company, (x) Navistar International Corporation,
and (xi) Paccar, Inc.
h) "Performance Measures" means the Company's return on equity,
return on sales, net income, sales growth, return on assets,
total shareholder return, or any combination thereof.
i) "Plan" means the Three Year Performance Plan described
herein.
j) "Target Award" means the amount of targeted compensation
described in Section 3 of the Plan.
3. Target Award. The Committee shall assign each Participant a
Target Award for each Award Cycle, in its discretion, based upon,
but not limited to, the scope and breadth of the Participant's
position, ability to affect the Company's medium-term financial
performance, and his or her working relationships within the
Company. The Target Award for an Award Cycle shall be expressed
in terms of a threshold, target, and maximum dollar amount or, in
the discretion of the Committee, as a threshold, target and
maximum number of award units ("Award Units") with each Award
Unit being equal to one share of the Company's common stock
(including any restrictions thereon) or having a cash value
determined with reference to the value or trading prices of the
common stock, as designated by the Committee at the time the
Target Award is made.
The Target Award for each Award Cycle shall be assigned and
communicated to each Participant as soon as practicable
thereafter. Target Awards may be changed during the course of an
Award Cycle based on the Committee's re-evaluation of the
criteria described in the preceding paragraph.
4. Payout Schedule. The Committee shall establish the
Performance Measures to be used in determining a Payout Factor
applicable to the Award Cycle. The Committee may determine the
Payout Factor based upon the attainment of one or more different
Performance Measures, provided the measures, when established,
are stated as alternatives to one another.
Under the Payout Factor schedule, the targeted dollar amount or
number of Award Units (collectively, the "Targeted Amount") of a
Target Award will be earned by a Participant if the Company's
performance against the Performance Measures equals the median of
the performance of the Peer Group during the same period against
the same measures. The threshold dollar amount or number of
Award Units will be earned if performance is fifty percent (50%)
and the maximum dollar amount or number of Award Units will be
earned if performance is two hundred percent (200%) of the median
performance of the Peer Group.
5. Change in Accounting Standards. For purposes of determining
the Payout Factor, the Company's actual performance under the
Performance Measures will exclude extraordinary charges and
credits which result from a change in accounting standards of the
Company.
6. Plan Payments. Any payout under the Plan will be made as
soon as practicable following audits of the Company's financial
statements applicable to all fiscal years of the Award Cycle.
Payments under the Plan may be deferred pursuant to the Company's
Deferred Compensation Plan.
7. Administration. The Plan shall be administered by the
Compensation Committee. No member of the Committee shall be
eligible for a Target Award while serving on the Committee. The
Committee shall have authority to interpret the Plan and to
establish, amend and rescind rules and regulations for the
administration of the Plan, and all such interpretations, rules
and regulations shall be conclusive and binding on all persons.
Notwithstanding any other provision of the Plan to the contrary,
the Committee may impose such conditions on participation in
awards under and payments from the Plan as it deems appropriate.
8. Termination of Employment. If a Participant's employment
with the Company terminates during the first year of an Award
Cycle, other than by reason of retirement, death or disability,
the Participant will not receive any payout for that Award Cycle.
If a Participant's employment so terminates during the second or
third years of an Award Cycle, the Committee, in its discretion,
shall determine whether the Participant will receive a
proportionate payout of any payment with respect to the Award
Cycle based on the period of employment during the cycle.
If a Participant retires, dies or becomes disabled during an
Award Cycle, the Participant or such Participant's estate, as the
case may be, shall receive a proportionate share of any payment
with respect to the Award Cycle based on the period of employment
during the cycle, regardless of the length of time of such
employment.
9. Change of Control. Notwithstanding any other provision
herein to the contrary, in the event of a Change of Control, an
amount shall be immediately payable from the Plan to each
Participant equal to the Targeted Amount (the Target Award
assuming a 1.0 Payout Factor). The full Targeted Amount shall be
paid notwithstanding the fact that only a portion of the Award
Cycle may have elapsed prior to the Change of Control.
10. Effective Date. The Plan shall be effective for the Award
Cycle beginning January 1, 1996.
11. Amendment and Termination. The Board of Directors of the
Company may at any time amend, modify, alter or terminate this
Plan.
12. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of
the State of Indiana and construed accordingly.
EXHIBIT 10(p)
RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
--------------------------
(As Amended February 11, 1997)
1. Purpose. This Restricted Stock Plan for Non-Employee
Directors ("the Plan") is intended to attract and retain the
services of experienced and knowledgeable independent directors
of Cummins Engine Company, Inc. ("the Company") for the benefit
of the Company and its stockholders and to provide additional
incentive for such Directors to continue to work for the best
interests of the Company and its stockholders.
2. Stock Available for Awards. No additional shares of the
Company's common stock ("Common Stock") shall be reserved for
issuance under the Plan. Instead, the number of shares available
under the Plan shall be integrated with the number available for
awards pursuant to the Company's 1992 Stock Incentive Plan ("the
SIP"). Awards made under this Plan shall reduce the number of
shares of Common Stock available for awards under the SIP.
3. Administration. The Plan shall be administered by the Board
of Directors of the Company ("the Board"). Subject to the
express provisions of the Plan, the Board shall have plenary
authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and
provisions of the restrictions on Common Stock awards (which
shall comply with and be subject to the terms and conditions of
the Plan) and to make all other determinations necessary or
advisable for the administration of the Plan. The Board's
determinations of the matters referred to in this Paragraph 3
shall be conclusive.
4. Participation in the Plan. Persons who are now or shall
become incumbent Directors of the Company who are not at the
respective times employees of the Company or any subsidiary of
the Company shall be eligible to participate in the Plan ("an
Eligible Director"). A Director of the Company shall not be
deemed to be an employee of the Company solely by reason of the
existence of a consulting contract or arrangement between such
Director and the Company or any subsidiary thereof pursuant to
which the Director agrees to provide consulting services as an
independent consultant on a regular or occasional basis for a
stated consideration.
5. Awards. Each Eligible Director shall automatically receive,
in payment of a portion of his or her annual Board retainer fee,
an annual award of Common Stock, restricted as to transfer for a
period of six (6) months following the date of the award. In the
case of an initial award, the restriction period shall end six
(6) months following the date of stockholder approval of the
Plan. The number of shares in each such annual award shall be
equal to $18,000 divided by the average of the closing prices of
Common Stock as reported on the composite tape of the New York
Stock Exchange for the twenty (20) consecutive trading days
immediately preceding the date of the award. An initial
automatic award to each Eligible Director shall be effective as
of July 13, 1993, subject to stockholder approval of the Plan.
Following the initial award, each Eligible Director shall
automatically receive the award on the date of each Annual
Meeting of Shareholders of the Company. The Company reserves the
right to legend the share certificates for an appropriate period
of time and to take other actions designed to assure compliance
with applicable securities laws.
6. Changes in Present Common Stock. In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure or
capitalization affecting the Company's present Common Stock,
appropriate adjustment shall be made by the Board in the number
and kind of shares which are or may be awarded hereunder.
7. Effective Date and Duration of the Plan. The Plan became
effective as of July 13, 1993, the date of its adoption by the
Board. The Plan shall terminate on December 31, 2002 (unless
earlier discontinued by the Board) but such termination shall not
affect the rights of the holder of any Common Stock subject to
restriction on such date of termination.
8. Amendment of the Plan. The Board may suspend or discontinue
the Plan or revise or amend it in any respect whatsoever,
provided, however, that without approval of the stockholders, no
revision or amendment shall increase the number of shares subject
to the Plan (except as provided in Section 6), that cannot be
funded with treasury shares of Common Stock that were previously
outstanding and listed on the New York Stock Exchange.
9. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise
governed by securities laws of the United States, shall be
governed by the laws of the State of Indiana and construed
accordingly.
EXHIBIT 10(t)
CUMMINS ENGINE COMPANY, INC.
SENIOR EXECUTIVE THREE YEAR PERFORMANCE PLAN
--------------------------------------------
(As Amended February 11, 1997)
1. Objectives. The objectives of the Plan are to: (i) serve as
a balance against the short-term compensation provided by base
salary and bonus payments of the Company, (ii) emphasize the
medium-term performance of the Company as compared to its
industry competitors, (iii) strengthen the relationship between
Company management and shareholder interests, and (iv) encourage
participants to remain with the Company through important
business cycles.
The size of grants under the Plan are intended to reflect the
degrees of influence participating executive officers have in
their functional positions on the medium-term (three year)
performance of the Company. The calculation of payments from the
Plan is intended to reflect the Company's performance against
certain performance measures designated by the Compensation
Committee.
2. Definitions.
a) "Award Cycle" means the three-year period upon which a
particular year's payout is calculated. A new Award Cycle
commences with the beginning of each of the Company's fiscal
years. Payments, if any, under the Plan to Participants during a
fiscal year are based upon the Company's performance during the
most recently completed Award Cycle.
b) "Change of Control" means the occurrence of any of the
following : (i) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares
of the Company's common stock would be converted in whole or in
part into cash, other securities or other property, other than a
merger of the Company in which the holders of the Company's
common stock immediately prior to the merger have substantially
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger or (B) any sale, lease,
exchange or transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company, or (ii) the stockholders of the Company shall approve
any plan or proposal for the liquidation or dissolution of the
Company, or (iii) any "person" (as such term is used in Sections
13(d) (3) and 14(d) (2) of the Securities Exchange Act of 1934,
as amended ("the Exchange Act")), other than the Company or a
subsidiary thereof or any employee benefit plan sponsored by the
Company or a subsidiary thereof or a corporation owned, directly
or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company, shall become the beneficial owners (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing 25 percent or more of the combined
voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors ("Voting Shares"), as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, or (iv) at any time during a period of two (2)
consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company shall
cease for any reason to constitute at least a majority thereof,
unless the election or the nomination for election by the
Company's stockholders of each new director during such two-year
period was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the
beginning of such two-year period, or (v) any other event shall
occur that would be required to be reported in response to Item
6(e) (or any successor provision) of Schedule 14A or Regulation
14A promulgated under the Exchange Act.
c) "Committee" means the Compensation Committee of the Board of
Directors of the Company.
d) "Company" means Cummins Engine Company, Inc.
e) "Participants" means the Company's Chief Executive Officer
and other executive officers designated annually by the Committee
to participate in the Plan for the ensuing Award Cycle.
f) "Payout Factor" means the percentage determined by the
Committee and applied to a Target Award to determine the amount
of an award to be paid as described in Section 4 of the Plan.
g) "Peer Group" means the group of companies selected by the
Committee whose primary industry is similar to that of the
Company. As of the effective date of the Plan, the Peer Group
consists of the following companies: (i) Arvin Industries,
Inc., (ii) Caterpillar, Inc., (iii) Dana Corporation, (iv) Deere
& Company, (v) Dresser Industries, Inc., (vi) Eaton Corporation,
(vii) Ford Motor Company, (viii) General Motors Corporation, (ix)
Ingersoll-Rand Company, (x) Navistar International Corporation,
and (xi) Paccar, Inc.
h) "Performance Measures" means the Company's return on equity,
return on sales, net income, sales growth, return on assets,
total shareholder return, or any combination thereof.
i) "Plan" means the Senior Executive Three Year Performance
Plan described herein.
j) "Target Award" means the amount of targeted compensation
described in Section 3 of the Plan.
3. Target Award. The Committee shall assign each Participant a
Target Award for each Award Cycle, in its discretion, based upon,
but not limited to, the scope and breadth of the Participant's
position, ability to affect the Company's medium-term financial
performance, and his or her working relationships within the
Company. The Target Award for an Award Cycle shall be expressed
in terms of a threshold, target and maximum dollar amount or, in
the discretion of the Committee, as a threshold, target and
maximum number of award units ("Award Units") with each Award
Unit having a cash value equal to the average of closing prices
of the Company's common stock on the New York Stock Exchange
during the 180 days preceding the payout date as described in
Section 6 or Section 9 of the Plan.
The Target Award for each Award Cycle shall be assigned and
communicated to each Participant as soon as practicable
thereafter, but in no event later than the 270th day of that
Award Cycle. Target Awards may be changed during the course of
an Award Cycle based on the Committee's re-evaluation of the
criteria described in the preceding paragraph, provided however,
a Target Award shall not be increased following commencement of
the Award Cycle.
4. Payout Schedule. On or before the 270th day of each Award
Cycle, the Committee shall establish the Performance Measures to
be used in determining a Payout Factor applicable to the Award
Cycle. The Committee may determine the Payout Factor based upon
the attainment of one or more different Performance Measures,
provided the measures, when established, are stated as
alternatives to one another.
Under the Payout Factor schedule, the targeted dollar amount or
number of Award Units (collectively, "the Targeted Amount") of a
Target Award will be earned by a Participant if the Company's
performance against the Performance Measures equals the median of
the performance of the Peer Group during the same period against
the same measures. The threshold dollar amount or number of
Award Units will be earned if performance is fifty percent (50%)
and the maximum dollar amount or number of Award Units will be
earned if performance is two hundred percent (200%) of the median
performance of the Peer Group. The maximum dollar amount or
value of Award Units that may be paid by the Plan with respect to
any Award Cycle is $2,000,000.
5. Change in Accounting Standards. For purposes of determining
the Payout Factor, the Company's actual performance under the
Performance Measures will exclude extraordinary charges and
credits which result from a change in accounting standards of the
Company.
6. Plan Payments. Any payout under the Plan will be made as
soon as practicable following audits of the Company's financial
statements applicable to all fiscal years of the Award Cycle and
written certification by the Committee of attainment of the
applicable Performance Measures and corresponding Payout Factor.
Payments under the Plan may be deferred pursuant to the Company's
Deferred Compensation Plan.
7. Administration. The Plan shall be administered by the
Compensation Committee. No member of the Committee shall be
eligible for a Target Award while serving on the Committee. The
Committee shall have authority to interpret the Plan and to
establish, amend and rescind rules and regulations for the
administration of the Plan, and all such interpretations, rules
and regulations shall be conclusive and binding on all persons.
Notwithstanding any other provision of the Plan to the contrary,
the Committee may impose such conditions on participation in,
awards under and payments from the Plan as it deems appropriate.
8. Termination of Employment. If a Participant's employment
with the Company terminates during the first year of an Award
Cycle, other than by reason of retirement, death or disability,
the Participant will not receive any payout for that Award Cycle.
If a Participant's employment so terminates during the second or
third years of an Award Cycle, the Committee, in its discretion,
shall determine whether the Participant will receive a
proportionate payout of any payment with respect to the Award
Cycle based on the period of employment during the cycle.
If a Participant retires, dies or becomes disabled during an
Award Cycle, the Participant or such Participant's estate, as the
case may be, shall receive a proportionate share of any payment
with respect to the Award Cycle based on the period of employment
during the cycle, regardless of the length of time of such
employment.
9. Change of Control. Notwithstanding any other provision
herein to the contrary, in the event of a Change of Control, an
amount shall be immediately payable from the Plan to each
Participant equal to the Targeted Amount (the Target Award
assuming a 1.0 Payout Factor). The full Targeted Amount shall be
paid notwithstanding the fact that only a portion of the Award
Cycle may have elapsed prior to the Change of Control.
10. Effective Date. The Plan shall be effective for the Award
Cycle beginning January 1, 1996, subject to its approval by the
Company's shareholders.
11. Amendment and Termination. The Board of Directors of the
Company may at any time amend, modify, alter or terminate this
Plan.
12. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto, shall be governed by the laws of
the State of Indiana and construed accordingly.
EXHIBIT 11
__________
CUMMINS ENGINE COMPANY, INC.
SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS
FOR THE FIRST QUARTER ENDED MARCH 30, 1997 and MARCH 31, 1996
Unaudited
_____________________________________________________________
Weighted
Average Net Calculated
Millions, Except per Share Amounts Shares Earnings Per Share
__________________________________ ________ ________ __________
1997
____
Basic earnings per share 38.3 $41 $1.07
Options .1 -
____ ___
Primary and fully diluted earnings
per common share 38.4 $41 $1.06
____ ___
1996
____
Basic earnings per share 40.2 $49 $1.21
Options .1 -
____ ___
Primary and fully diluted earnings
per common share 40.3 $49 $1.21
____ ___
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 81
<SECURITIES> 0
<RECEIVABLES> 730
<ALLOWANCES> 0
<INVENTORY> 615
<CURRENT-ASSETS> 1,622
<PP&E> 2,712
<DEPRECIATION> 1,375
<TOTAL-ASSETS> 3,466
<CURRENT-LIABILITIES> 983
<BONDS> 459
0
0
<COMMON> 119
<OTHER-SE> 1,152
<TOTAL-LIABILITY-AND-EQUITY> 3,466
<SALES> 1,304
<TOTAL-REVENUES> 1,304
<CGS> 1,018
<TOTAL-COSTS> 239
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 56
<INCOME-TAX> 15
<INCOME-CONTINUING> 41
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
