Cummins Annual Report Table of Contents Highlights Letter to the Shareholders Cummins' Worldwide Business Management Discussion and Analysis Statement of Earnings Statement of Financial Position Statement of Cash Flows Statement of Shareholders Investment Notes to Consolidated Financial Statements Responsibility for Financial Statements Report of Independant Public Accountants Five-Year Supplemental Data Officers and Executives Cummins Worldwide Locations Shareholder Information Cummins Web Site Home Page

Officers and Executives Table of Contents: Executive Officers - Senior Management Policy Committee Engine Business Power Generation Business International Technology and Operations Support Corporate Support t Discussion and Analysis Statement of Earnings Statement of Financial Position Statement of Cash Flows Statement of Shareholders Investment Notes to Consolidated Financial Statements Responsibility for Financial Statements Report of Independant Public Accountants Five-Year Suppliment Data Board of Directors Officers and Executives Cummins Worldwide Locations Shareholder Information

Board of Directors The Cummins Board of Directors is pictured outside the new Signature 600 Plant entrance where customer service for high-horsepower users has shaped a new approach to engine manufacturing. Directors and Committees Key to Photo 1 Franklin A. Thomas 2 Donald S. Perkins (retiring) 3 Henry B. Schacht 4 Walter Y. Elisha 5 J. Lawrence Wilson 6 Robert J. Darnall 7 Theodore M. Solso 8 Hanna H. Gray 9 James A. Henderson 10 William D. Ruckelshaus 11 Harold Brown 12 John Deutch 13 William I. Miller Not pictured: James A. Johnson Directors James A. Henderson Chairman and Chief Executive Officer of Cummins Theodore M. Solso President and Chief Operating Officer of Cummins Harold Brown d,e Counselor, Center for Strategic & International Studies; Partner, Warburg,Pincus & Co., venture banking firm Robert J. Darnalla a,e President and Chief Executive Officer of ISPAT North America Inc. John M. Deutch a,e Institute Professor, Massachusetts Institute of Technology Walter Y. Elisha d,e Retired Chairman, Springs Industries, Inc., manufacturer of home furnishings, industrial and specialty fabrics Hanna H. Gray c,e President Emeritus and Professor of History, University of Chicago James A. Johnson a,e Chairman of the Executive Committee of the Board of Directors of the Federal National Mortgage Association (FNMA) William I. Miller b,e Chairman, Irwin Financial Corporation, financial services company Donald S. Perkins a,e Retired Chairman, Jewel Companies, Inc., diversified retailing William D. Ruckelshaus c,e Principal, Madrona Investment Group, l.l.c. Henry B. Schacht b,e Former Chairman, Lucent Technologies, Inc., communication industry products Franklin A. Thomas c,e,f Consultant, tff Study Group, non-profit initiative to assist the development process in South Africa J. Lawrence Wilson b,e Chairman and Chief Executive Officer, Rohm and Haas Company, chemicals and plastics manufacturing J. Irwin Miller Honorary Chairman a Audit Committee d Technology Committee b Finance Committee e Nominating and Organization Committee c Compensation Committee f Lead Director Top of page Officers and Executives Executive Officers - Senior Management James A. Henderson Chairman and Chief Executive Officer Theodore M. Solso President and Chief Operating Officer Policy Committee Jean S. Blackwell Vice President - Human Resources Pamela F. Carter Vice President, General Counsel and Secretary C. Roberto Cordaro Executive Vice President, Group President - Automotive John K. Edwards Executive Vice President, Group President - Power Generation Mark R. Gerstle Vice President - Cummins Business Services M. David Jones Vice President - Filtration Business, President - Fleetguard, Inc. F. Joseph Loughrey Executive Vice President, Group President - Industrial Kiran M. Patel Vice President and Chief Financial Officer Top of page Engine Business Martha F. Brooks Vice President Worldwide Marketing for Medium-Duty and Heavy-Duty Trucks Charles J. Bumb Vice President National Accounts Keith E. Chambers Vice President Heavy-Duty Engine Program Pedro N. Ferro Vice President Automotive Information Business Richard M. Gold Vice President PowerCare Business Dale F. Good Vice President North American Automotive Sales and Service Jeffrey D. Jones Vice President National Accounts James D. Kelly Vice President Industrial Marketing Frank J. McDonald Vice President Worldwide Midrange Operations Peter V. McDowell Vice President European Automotive Business Larry O. Moore Vice President Worldwide Operations, Automotive Business John H. Stang Vice President Automotive Engineering Bryan W. Swank Vice President Worldwide Midrange Engineering Bharat S. Vedak Vice President Industrial Customer Engineering Christine M. Vujovich Vice President Worldwide Marketing for Bus and Light Commercial Automotive, and Environmental Management Robert J. Weimer Vice President PowerCare Customer Support William H. Wolpert General Manager Worldwide Marine Business Top of page Power Generation Business R. Siisi Adu-Gyamfi Vice President Marketing, Power Generation Iain M. Barrowman President and Director General Cummins Wartsila SAS Samuel D. Hires Vice President High-Horsepower Engine Development Jerry E. Johnson Vice President and General Manager Power Generation Americas Michael F. Mitchell Vice President, Operations Power Generation Tony Satterthwaite Executive Director Power Generation, Asia Pacific Steven L. Zeller Vice President and Managing Director Newage International Ltd. Top of page International Mark A. Levett Vice President International Derek Boulton General Manager Japan Steven M. Chapman Vice President China and Southeast Asia Ricardo Chuahy General Manager, President Latin America Cummins Brasil J. Thompson Dewing Vice President and Managing Director Central Area Business Organization Michael Green Managing Director South Pacific Jong S. Kim Managing Director Korea Steven P. Knaebel Vice President President Mexico CUMMSA S.C. Ronald L. Moore Vice President and General Manager India Top of page Technology and Operations Support John M. Crowther Vice President Information Technology and Chief Information Officer Alan R. Dohner Vice President Fuel Systems Steven M. Chapman Vice President China and Southeast Asia Patrick F. Flynn Vice President Research Jeffrey C. Hamilton Vice President Advanced Engineering and Design Tom Linebarger Vice President Supply Chain Management David S. Moorhouse Managing Director Holset Engineering Company, Ltd. George L. Muntean Vice President Fuel Systems Engineering Richard B. Stoner, Jr. Group Vice President Technology Businesses Ronald H. Temple Vice President Electronic Technology John C. Wall Vice President Research and Development Top of page Corporate Support George Fauerbach Vice President Business Development Rick J. Mills Vice President Corporate Controller Brenda S. Pitts Vice President Corporate Responsibility and Diversity John A. Swaim Vice President Quality Donald W. Trapp Vice President Treasurer Top of page Shareholder Value Shareholder Information Annual Meeting: Shareholders are invited to attend the Company's Annual Meeting on April 6, 1999 at 10:30 a.m. (Eastern Standard Time) in Columbus, Indiana. The meeting will be held in the Robbins Auditorium of Columbus East High School. Stock Transfer Agent, Registrar and Dividend Disbursing Agent: The First Chicago Trust Company, a division of EquiServe, is the Company's common stock transfer agent and registrar. The bank maintains the Company's shareholder records and is responsible for disbursing dividend checks. Changes of address and questions should be addressed as follows: General Shareholder Correspondence First Chicago Trust Company P. O. Box 2500, Jersey City, NJ 07303-2500 Questions concerning transfers of stock ownership should be directed to The First Chicago Trust Company of New York, P. O. Box 2506, Jersey City, NJ 07303-25060. Cummins' Shareholder Representatives at the bank may be called at 800-446-2617 from inside the U.S., or at 201-324-0498 from outside the U.S. They also are available on the Internet at http://www.equiserve.com and for the hearing impaired at tdd @ 201-222-4955. Dividend Distribution: Common stock dividends are payable quarterly, upon authorization of the Board of Directors, on or about the fifteenth of March, June, September and December. Dividend Reinvestment: As an added service to shareholders, Cummins has a Dividend Reinvestment Plan, administered by First Chicago Trust Company of New York. This plan gives shareholders of record the option of having their cash dividends and optional cash payments applied toward the purchase of additional shares. Commissions and other expenses of the plan are paid by Cummins so that participants' funds are used solely for the purchase of additional shares. Shareholders wishing information about this plan may call 800-446-2617 or write to: First Chicago Trust Company of New York P. O. Box 2598, Jersey City, NJ 07303-259 Exchange Listings: The common stock of Cummins Engine Company, Inc., was listed on the New York Stock Exchange in 1964 and the Pacific Stock Exchange in 1988. The stock is listed under the symbol cum. Inquiries: Shareholders or others desiring a copy of the Company's 1998 Form 10-K filed with the Securities and Exchange Commission, quarterly results or other information about the Company may contact: Chip Wochomurka Executive Director- Investor Relations and Strategic Planning Cummins Engine Company, Inc. Box 3005 (Mail Code 60118) Columbus, IN 47202-3005 investor_relations@cummins.com Phone: 812-377-3121 Fax: 812-377-4937 General information, the Annual Report, quarterly results and other financial information also are available on Cummins' home page on the Internet.http://www.cummins.com The Company's press releases by fax may be requested by calling News on Demand at 888-329-2305. Corporate Headquarters Cummins Engine Company, Inc. Columbus, Indiana 47202-3005 Top of page