Mon, Jan 31, 2000 Cummins Income Up on Generator Sales 3.40 p.m. ET (2040 GMT) January 28, 2000 CHICAGO  Cummins Engine Co. (CUM.N) on Friday said that its fourth quarter net income before a one-time item rose 141 percent as sales of backup generators helped one of the world's largest makers of diesel engines post record sales.

Net income was $70 million or $1.82 a share before a $60 million pretax charge for costs associated with the dissolution of a joint venture. That beat the First Call/Thomson Financial consensus analysts' estimate of $1.59 a share. But 22 cents of fourth quarter earnings per share came from a lower tax rate, which was not factored into estimates, the company said.

Cummins shares were down 1-5/16 at 38-1/2 Friday.

Excluding the charge, net income was $25 million or 65 cents a share. In the 1998 fourth quarter, the company reported net income of $29 million or 75 cents a share.

Sales rose 13 percent to a record $1.84 billion, helped by a 36-percent increase in sales to the power generation market. Sales of generators boomed nationwide in anticipation of Y2K-related power outages.

Y2K-related factors added about $40 million to full year 1999 revenues, with about half of that in the fourth quarter, Tim Solso, Cummins chairman and chief executive, said in an interview.

"They had success in the portable power generation market, which is what you and I would buy as power generation in our homes,'' Lisa Shalett, analyst at Sanford Bernstein, said. But she noted that much of that was due to Y2K-related sales which were the result of a one-time event.

Aside from Y2K-related sales, the company said that strong demand in the rental market helped sales.

Cummins, the world's No. 1 maker of diesel engines larger than 200 horsepower, has benefited in recent quarters from a booming North American truck market and aggressive cost cutting. As expected, the company saw some slowing in the North American truck market in the fourth quarter as incoming order rates slowed.

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-- Martin Thompson (mthom1927@aol.com), January 31, 2000

Answers

Martin, profits jumped 141% ?? Egads, I'm in the wrong candle-making business!

-- Lee Maloney (leemaloney@hotmail.com), January 31, 2000.