UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC  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 June 25,September 24, 2000     Commission File Number 1-4949
                      _______________________________                            ______

             Indiana                              35-0257090
             _______                              __________
(State or Other Jurisdiction of        (IRS 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 June 25,September 24, 2000 the number of shares outstanding of the
     registrant's only class of common stock was 41.5 million.


 2
                              TABLE OF CONTENTS
                              _________________

                                                                Page No.
                                                                ________

PART I.  FINANCIAL INFORMATION
______________________________

Item 1.  Financial Statements

         Consolidated Statement of Earnings for the SecondThird           3
         Quarter and First HalfNine Months Ended June 25,September 24, 2000
         and June 27,September 26, 1999

         Consolidated Statement of Financial Position at            4
         June 25,September 24, 2000 and December 31, 1999

         Consolidated Statement of Cash Flows for the FirstNine          5
         HalfMonths Ended June 25,September 24, 2000 and June 27,September 26, 1999

         Notes to Consolidated Financial Statements                 6


Item 2.  Management's Discussion and Analysis of Results of         9
         Operations, Cash Flow and Financial Condition


PART II.  OTHER INFORMATION
___________________________

Item 6.  Exhibits and Reports on Form 8-K                          13

         Index to Exhibits                                         14



 3
                         CUMMINS ENGINE COMPANY, INC.
                      CONSOLIDATED STATEMENT OF EARNINGS
                     FOR THE SECONDTHIRD QUARTER AND FIRST HALFNINE MONTHS
                ENDED JUNE 25,SEPTEMBER 24, 2000 AND JUNE 27,SEPTEMBER 26, 1999
                _______________________________________________
                                   Unaudited
                                   _____________________________________



                                        Second_________



                                        Third Quarter         First Half
                                       ________________    ________________Nine Months
Millions, except per share amounts      2000      1999       2000      1999
__________________________________     ______    ______     ______    ______

Net sales                              $1,769    $1,667    $3,417    $3,172$1,572    $1,631     $4,989    $4,803
Cost of goods sold                      1,418     1,296     2,731     2,5001,262     1,270      3,993     3,770
                                       ______    ______     ______    ______
Gross profit                              351       371       686       672310       361        996     1,033
Selling &and administrative expenses       190       200       384       378195       192        579       570
Research &and engineering expenses          59        60       118       11462        67        180       181
Net (income) expense from joint
 ventures and alliances                    (3)        5        (4)       128         (7)       20
Interest expense                           21        19        40        3822        18         62        56
Other (income) expense, net                (2)(5)        3         -        10(5)       13
                                        _____    ______      ______    ___________    ______
Earnings before income taxes               86        84       148       12039        73        187       193
Provision for income taxes                  22        25        39        359        19         48        54
Minority interest                           35         1         6         311         4
                                       ______    ______    ______    _____________   _______
Net earnings                           $   6125    $   5853    $   103128   $   82135
                                       ______    ______    _______   _______
                                       ______    ______    ______    ______    ______    _____________   _______

Basic earnings per share               $  1.62.66    $ 1.511.37    $  2.713.36   $  2.143.50
Diluted earnings per share                1.62      1.50      2.70      2.13.66      1.35       3.36      3.48
Cash dividends declared per share      $  .30    $ .275    .60       .55$   .90   $  .825



 4
                       CUMMINS ENGINE COMPANY, INC.
               CONSOLIDATED STATEMENT OF FINANCIAL POSITION
               ____________________________________________
                                Unaudited
                                _____________________________________________________



Millions, except per share amounts                   6/25/9/24/2000    12/31/1999
__________________________________                   _________    __________

Assets
Current assets:
  Cash and cash equivalents                            $   7494       $   74
  Receivables, net of allowance of $10 and $9           1,1381,097        1,026
  Inventories                                             822797          787
  Other current assets                                    294292          293
                                                       ______       ______
                                                        2,3282,280        2,180
Investments and other assets                              346375          274
Property, plant &and equipment less accumulated
 depreciation of $1,542$1,555 and $1,490                      1,6021,595        1,630
Goodwill, net of amortization of $33$36 and $28              359360          364
Other intangibles, deferred taxes and deferred
 charges                                                  258264          249
                                                       ______       ______
Total assets                                           $4,893$4,874       $4,697
                                                       ______       ______
                                                       ______       ______
Liabilities and shareholders' investment
Current liabilities:
  Loans payable                                        $  68125       $  113
  Current maturities of long-term debt                      9           10
  Accounts payable                                        463417          411
  Other current liabilities                               770681          780
                                                       ______       ______
                                                        1,3101,232        1,314
                                                       ______       ______
Long-term debt                                          1,2551,313        1,092
                                                       ______       ______
Other liabilities                                         788802          788
                                                       ______       ______
Minority interest                                          7968           74
                                                       ______       ______

Shareholders' investment:
 Common stock, $2.50 par value, 48.7 and 48.3
  shares issued                                           121122          121
 Additional contributed capital                         1,1401,139        1,129
 Retained earnings                                        839851          760
 Accumulated other comprehensive income                  (158)(176)        (109)
 Common stock in treasury, at cost, 7.2 and& 6.8 shares     (290)        (274)
 Common stock held in trust for employee
  benefit plans, 3.2 and 3.4 shares                      (158)(154)        (163)
 Unearned compensation (ESOP)                            ( 33)         ( 35)
                                                      _____        _____
                                                      1,461(35)
                                                       ______       ______
                                                        1,459        1,429
                                                       ______       ______
Total liabilities and& shareholders' investment           $4,893$4,874       $4,697
                                                       ______       ______
                                                       ______       ______


 5
                       CUMMINS ENGINE COMPANY, INC.
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                   ____________________________________
                               Unaudited
                               ____________________________________


                                                      First Half_________

                                                   Nine Months Ended
_______________________
Millions                                        6/25/9/24/2000      6/27/9/26/1999
________                                        _________      _________

Cash flows from operating activities:
 Net earnings                                     $103          $ 82
                                                     ____          ____128          $ 135
                                                  _____          _____
 Adjustments to reconcile net earnings
  to net cash from operating activities:
   Depreciation and amortization                    117           114180            172
   Restructuring & other non-recurring actions      (5)          (11)(16)           (23)
   Accounts receivable                             (144)         (188)(115)          (277)
   Inventories                                      (38)          (28)           (70)
   Accounts payable and accrued expenses            55           200(47)           216
   Income taxes payable                             (5)            8(24)            12
   Equity in losses of joint ventures and
    alliances                                         4            167             24
   Other                                            (28)          (10)
                                                     ____          ____(11)           (19)
                                                  _____          _____
   Total adjustments                                (44)          101
                                                     ____          ____(54)            35
                                                  _____          _____
 Net cash provided by operating activities           59           183
                                                     ____          ____74            170
                                                  _____          _____
Cash flows from investing activities:
 Property, plant and equipment:
  Additions                                        (84)          (80)(130)          (121)
  Disposals                                          16            2110             27
 Investments in joint ventures and& alliances          (36)          (37)(76)           (40)
 Acquisition and disposition of businesses          (35)(42)             3
 Other                                                -              2
                                                     ____          ____6
                                                  _____          _____
 Net cash used in investing activities             (139)          (91)
                                                     ____          ____(238)          (125)
                                                  _____          _____
Net cash flows (used in) provided by
 operating and investing activities                (80)           92
                                                     ____          ____(164)            45
                                                  _____          _____
Cash flows from financing activities:
 Proceeds from borrowings                           168             -226             53
 Payments on borrowings                              (7)          (17)(8)           (26)
 Net paymentsborrowings under short-term credit
   agreements                                        (40)          (10)
 Repurchases22             26
 Repurchase of common stock                         (16)           (10)(30)
 Dividend payments                                  (25)          (23)(37)           (35)
 Other                                               1            (3)
                                                     ____          ____(1)           (11)
                                                  _____          _____
 Net cash provided by (used in) financing
  activities                                        81           (63)
                                                     ____          ____186            (23)
                                                  _____          _____

Effect of exchange rate changes on cash              (1)(2)             -
                                                  ____          _________          _____
Net change in cash and cash equivalents              -            2920             22
Cash & cash equivalents at the beginning of the year     74             38
                                                  ____          _________          _____
Cash & cash equivalents at the end of the first halfquarter     $  7494          $  67
                                                     ____          ____
                                                     ____          ____60
                                                  _____          _____
                                                  _____          _____



 6
                        CUMMINS ENGINE COMPANY, INC.
                        ____________________________
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                __________________________________________
                                Unaudited
                                ___________________________________________________


Note 1.  Accounting Policies:  The Consolidated Financial Statements
for the interim periods ended June 25,September 24, 2000 and June 27,September 26, 1999
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.  Earnings per Share:  Basic earnings per share of common stock are
computed by dividing net earnings by the weighted-average number of common
shares outstanding during the period.  Diluted earnings per share are
computed by dividing net earnings by the weighted-average number of shares,
assuming the exercise of stock options.  Shares of stock held by the
employee benefits trust are not included in outstanding shares for EPS
until distributed from the trust.

                             SecondThird Quarter                  ________________________________Nine Months
                    _____________________________   ___________________________
                               Weighted    Per-               Weighted   Per-
Millions, except      Net       Average    Share      Millions, exceptNet      Average   Share
per share amounts   Earnings    Shares     Amount   __________________________________Earnings   Shares    Amount
_________________   ________    _______    ______   ________   _______   ______

2000
____
Basic                $61         38.1        $1.62$ 25        38.2      $ .66      $128      38.2     $ 3.36
Options                 -           -                    -         -
                      ___        ____                 Diluted                                     $61         38.1        $1.62
                                            ___         ____
                                            ___         ____
1999
____
Basic                                       $58         38.5        $1.51
Options                                       -           .2
                                            ___         ____
Diluted                                     $58         38.7        $1.50
                                            ___         ____
                                            ___         ____


                                                     First Half
                                         ________________________________
                                                      Weighted     Per-
                                            Net       Average      Share
Millions, except per share amounts        Earnings     Shares      Amount
__________________________________        ________    ________     ______

2000
____
Basic                                       $103        38.2        $2.71
Options                                        -           -
                                            ____      ____
Diluted              $103$ 25        38.2      $2.70$ .66      $128      38.2     $ 3.36
                     ____        ____                 ____      ____
                     ____        ____                 ____      ____
1999
____
Basic                $82         38.5        $2.14$ 53        38.3     $ 1.37      $135      38.4     $ 3.50
Options                 -          .2.6                    -        .4
                      ___        ____                 ____      ____
Diluted              $82         38.7        $2.13
                                            ___$ 53        38.9     $ 1.35      $135      38.8     $ 3.48
                     ____        _______                 ____      ____
                     ____        ____                 ____      ____


Note 4.  Comprehensive Income: Comprehensive income, which includes net
income and all other non-ownernonowner changes in equity during a period, is as
follows:

                                   SecondThird Quarter Ended     Nine Months Ended
Millions                          June 25, 9/24/2000   June 27, 9/26/1999   9/24/2000  9/26/1999
________                          _____________     ______________________   _________   _________  _________

Net income                          $ 6125        $ 5853        $128       $ 135
Unrealized (loss) gain on
 securities, net of tax               (1)          1          -(1)          2
Translation loss, net of tax         (35)                (7)(17)         (2)        (66)         (9)
                                    ____        ____        ____       _____
Comprehensive income                $  277        $ 5152        $ 61       $ 128
                                    ____        ____        ____       ____

                                               First Half Ended
Millions                               June 25, 2000     June 27, 1999
________                               _____________     _____________

Net income                                 $103               $ 82
Unrealized gain on securities                 -                  1
Translation loss, net of tax                (49)                (7)
                                           ____               ____
Comprehensive income                       $ 54               $ 76_____
                                    ____        ____        ____       _________

 7

Note 5.  Segment Information:  Operating segment information is as follows:

                                                Power      Filtration
Millions                             Engine   Generation   And Other    Total
________                             ______   __________   __________   ______

SecondThird Quarter Ended June 25,Sept. 24, 2000
__________________________________
Net sales                            $1,107      $368         $294      $1,769$  962     $  334       $ 276      $1,572
Earnings before interest and
 income taxes                             426         25          30          35         10761
Net assets                            1,160       578          845       2,583

Second1,213        576         866       2,655

Third Quarter Ended June 27,Sept. 26, 1999
__________________________________
Net sales                            $1,095      $305         $267      $1,667$1,032     $  352       $ 247      $1,631
Earnings before interest and
 income taxes                            59        11           33         10345         15          31          91
Net assets                              974       509          815       2,298

First Half996        557         830       2,383

Nine Months Ended June 25,Sept. 24, 2000
______________________________________________________________
Net sales                            $2,152      $697         $568      $3,417$3,114     $1,031       $ 844      $4,989
Earnings before interest and
 income taxes                            70        53           65         188

First Half76         78          95         249

Nine Months Ended June 27,Sept. 26, 1999
______________________________________________________________
Net sales                            $2,095      $556         $521      $3,172$3,127     $  908       $ 768      $4,803
Earnings before interest and
 income taxes                           86        13           59         158131         28          90         249


Reconciliation to Consolidated Financial Statements:

                                    SecondThird Quarter Ended     Nine Months Ended
Millions                           6/25/9/24/2000   6/27/9/26/1999   9/24/2000  9/26/1999
________                           _________   _________   _________  _________

Earnings before interest and& income
  taxes for reportable segments     $   10761      $   10391        $249       $249
Interest expense                        21           1922          18          62         56
Income tax expense                       22           259          19          48         54
Minority interest                        35           1          11          4
                                    ______      ______        ____       ____
Net earnings                        $   6125      $   5853        $128       $135
                                    ______      ______        ____       ____
                                    ______      ______        ____       ____

Net assets for reportable segments  $2,583       $2,298$2,655      $2,383
Liabilities deducted in arriving at
 net assets                          1,971        2,1161,880       2,139
Deferred tax assets not allocated
 to segments                           320         334
Debt-related costs not allocated
 to segments                            19          22
                                    ______      ______
Total assets                        $4,893       $4,770
                                                      ______       ______
                                                      ______       ______


                                                        First Half Ended
Millions                                             6/25/2000    6/27/1999
________                                             _________    _________

Earnings before interest and income taxes
 for reportable segments                              $  188       $  158
Interest expense                                          40           38
Income tax expense                                        39           35
Minority interest                                          6            3
                                                      ______       ______
Net earnings                                          $  103       $   82$4,874      $4,878
                                    ______      ______
                                    ______      ______

Note 6.  Restructuring and Other Non-Recurring Charges:  In the third
quarter of 1998, the Company recorded charges of $125 million,
comprised of $100 million for costs to reduce the worldwide workforce
by approximately 1,100 people, as well as costs associated with
streamlining certain majority-owned and international joint venture
operations and $25 million for a civil penalty to be paid by the
Company as a result of an agreement reached with the U.S. Environmental
Protection Agency (EPA) regarding diesel engine emissions.  In
addition, the Company recorded special charges of $14 million for
inventory write-downs associated with restructuring actions.

The Company is continuing the restructuring plan implemented in the
third quarter of 1998.  In the third quarter of 2000, the Company
reversed excess accruals of $7 million and recorded $7 million of
charges related to new actions committed to during the quarter.  As of
June 25,September 24, 2000, approximately $91$100 million has been charged against
the liabilities associated with theserestructuring actions.  The Company has
funded the restructuring actions using cash generated from operations.  The remaining
actions to be completed consist primarily of the outsourcing of certain
manufacturing operations and payment of severance commitments to
terminated employees.  The program is expected to be essentially complete in 2000, and the Company does
not currently anticipate any material changes in the original charges
recorded for these actions.early
2001.

 8

Activity in the major components of these charges is as follows:

                                       Charges      ________________________Reversal    Q3
                        Original   Q1    Q2________________   Of       2000     Balance
$ Millions              Provision  1998  1999  2000  2000  6/25/Excess  Provision  9/24/00
__________              _________  _____  _____  ____  ____  ____  ______  _________  _______
Restructuring of
 majority-
 ownedmajority-owned
 operations:
  Workforce reductions    $ 38    $(12) $(14)  $(3)  $(1)   $ 8(5)   $(4)     $ 2       $ 5
  Asset impairment loss     22       -    ( 7)   (2)   (1)    12(7)    (8)    (3)       3         7
  Facility consolidationsconsolida-
   tions and other          17      ( 8)   ( 4)   (2)   (1)(8)   (4)    (6)     -        2         1
                          ____     _______   ___   ____    ___      ___       ___
                            77     (20)  (25)   (19)    (7)       (3)    227        13
                          ____     ___   ___   ____    ___      ___       ___
Restructuring of joint
 venture operations:
  Workforce reductions      11       -   (10)     -      -        -         1
  Tax asset impairment
   loss                      7       -    (7)     -      -        -         -
   Facility & equipment-relatedand equip-
    ment-related costs       5       -    (5)     -      -        -         ____     ____-
                          ____     ___   _____    ___    ___      ___       ___
                            23       -   (22)     -      -        -         1
                          ____     ____   ____   ___   _____    ___    ___      ___       ___
Inventory write-downs
 associated with
 restructuring actions      14      (5)  (9)( 9)     -      -        -         -
                          ____     ____   ____   ___   _____    ___    ___      ___       ___
Total restructuring
 charges                   114     (25)  (56)   (19)    (7)       (3)    237        14

EPA penalty                 25       -    (8)    (9)     -        -         178
                          ____    ____  ____   ____    ___      ___       ___
Total                     $139    $(25) $(64)  $(28)   $(7)     $(3)   $40$ 7       $22
                          ____    ____  ____   ____    ___      ___       ___
                          ____    ____  ____   ____    ___      ___       ___

 9
                       CUMMINS ENGINE COMPANY, INC.
                       ____________________________
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS,
                   CASH FLOW AND FINANCIAL CONDITION
      _____________________________________________________________________________________________________________________



Overview
________

Net sales were $1.77$1.57 billion in the secondthird quarter of 2000, the second
highest sales quarter ever, and 64 percent
higherlower than the secondthird quarter of 1999.  Earnings before interest and
taxes in the secondthird quarter of 2000 matched an all-time record for the Company of $107were $61 million, or 6.03.9 percent of
sales.  This comparessales, compared to $103$91 million, or 6.2%5.6 percent of sales, in the secondthird
quarter of 1999.  Net earnings were $61$25 million, or $1.62$.66 per share,
compared to $58$53 million, or $1.50$1.35 per share, in the secondthird quarter of
1999.  Net earnings for the first halfnine months of 2000 were $103$128
million, or $2.70$3.36 per share, compared to $82$135 million, or $2.13$3.48 per
share, in the first halfnine months of 1999.

Results of Operations
_____________________

     Net Sales:
     __________

Revenues from sales of engines were 5451 percent of the Company's net
sales in the secondthird quarter of 2000, with engine revenues 29 percent
higherlower than second-quarterthird-quarter 1999 and unit shipments 8 percent higher.
Unit shipments increased more than revenueflat compared to the
year-ago quarter.  Revenue decreased due to lower heavy-duty engine
sales, primarily in the North American heavy-duty truck market.

                                     SecondThird Quarter         First Half
                                      _______________     ________________Nine Months
Unit Shipments                      2000      1999       2000      1999
______________                     _____________   ______     _______   _______
Midrange Engines                    89,100   76,600     168,000  150,30079,000   68,400     247,000   218,700
Heavy-duty Engines                  25,800   30,600      53,200   57,40019,600   30,500      72,800    87,900
High-horsepower Engines              3,000    2,200       5,500    4,2002,800    2,500       8,300     6,700
                                   _______  _______     _______   _______
                                   117,900  109,400     226,700  211,900101,400  101,400     328,100   313,300
                                   _______  _______     _______   _______
                                   _______  _______     _______   _______

Revenues from non-engine products, which were 4649 percent of net sales
in the secondthird quarter of 2000, were 123 percent higher than the secondthird
quarter of 1999.  The major increases included higher sales of gensets
and filtration products and revenues from
international distributors.distributors and parts sales, partially offset by a
decrease in genset sales.

The Company's sales for each of its key businesses during the
comparative periods were:

                                          SecondThird Quarter      First Half
                                  _______________       _______________Nine Months
$ Millions                                2000    1999       2000    1999
__________                               ______  ______     ______  ______
Automotive markets                       $  810693  $  820       $1,586   $1,580792     $2,279  $2,372
Industrial markets                          297      275          566      515269     240        835     755
                                         ______  ______     ______  ______
Engine Business                             1,107    1,095        2,152    2,095962   1,032      3,114   3,127
Power Generation Business                   368      305          697      556334     352      1,031     908
Filtration Business &and Other               294      267          568      521276     247        844     768
                                         ______  ______     ______  ______
                                         $1,769   $1,667       $3,417   $3,172$1,572  $1,631     $4,989  $4,803
                                         ______  ______     ______  ______
                                         ______  ______     ______  ______

In the secondthird quarter of 2000, engine business revenues of $1.1 billion
increased 1$962 million
decreased 7 percent as compared to the secondthird quarter of 1999, despitedue
primarily to a 28 percent49-percent decrease in shipments to the North American
heavy-duty truck market.

The Company expects a further decline in the North
American heavy-duty truck market during the second half of 2000 as
compared to the first half of the year.

 10

Sales of $810$693 million in the secondthird quarter of 2000 for automotive
markets were 113 percent lower than the secondthird quarter of 1999.  Heavy-
duty truck revenues decreased 1433 percent from the secondthird quarter of
1999, withdue to the market decline in North America partially offset by
increased demand in Mexican automotive markets.America.

Medium-duty truck revenues were essentially flat with4 percent higher than the secondthird quarter
of 1999 despite an 11 percenton a 2-percent increase in unit shipments.
This variance reflected a mix shift towards engines with a lower
selling price and margin.  Unit shipments to
North America declined 1923 percent, while international shipments
increased 3823 percent, primarily in Brazil.

Revenues of the bus and light commercial vehicle market were 2623 percent
higher than the secondthird quarter of 1999.  In the secondthird quarter of 2000,
Cummins shipped a record 32,10031,000 engines to DaimlerChrysler, 3635 percent higher
than the second-quarterthird-quarter 1999 level.  Shipments to the North
American bus and
recreational vehicle market were 119 percent higher than the year-ago
quarter, with a 31-percent increase in shipments to the North American
bus market and a 77-percent increase in shipments for international bus
markets, increased 92 percent fromprimarily in China, partially offset by a 31-percent decrease
in units for the second quarter of 1999, due to higher
sales into China and Mexico.recreational vehicle market.

Sales to industrial markets were 812 percent higher than the secondthird
quarter of 1999, due to increased volume and a shift in product mix.
Engine revenues for this market were up 916 percent on a 3-percentan 11-percent
increase in units.  Construction equipment business was flat4 percent
higher compared to secondthird quarter 1999, whileand agricultural equipment
demand declined 11increased 25 percent from the prior year's quarter.  Sales to
marine markets increased 1112 percent from secondthird quarter 1999, with growththe
recovery of business in Europe
and North America.Southeast Asia.  Mining market sales increased
3835 percent as compared to the secondthird quarter of 1999, reflecting higher
high-
horsepowerhigh-horsepower engine volumes.

In the secondthird quarter of 2000, sales for the Company's power generation
business increased 21decreased 5 percent compared to secondthird quarter 1999.  Sales of
the Company's generator sets were 376 percent above secondbelow third quarter last
year, with continued strength in North American markets.  Engineand engine and alternator sales to generator set assemblers were
up 24down 5 percent from the secondthird quarter of 1999, primarily in Europe and Turkey.1999.  Generator set sales for
the recreational vehicle marketand mobile markets in North America were essentially
flat withdown
6 percent compared to the year-ago quarter.

Filtration business and other sales were $294$276 million in the secondthird
quarter of 2000, an increase of 1012 percent from the secondthird quarter of
1999.  Sales of filtration products reflected gainswere up slightly compared to the
year-ago level due to higher sales in North America
and Europe and strong increases in Latin America, Mexico and Asia.America.  Sales of
international company-owned distributors were at record levels in the
third quarter and the Holset turbocharger business included in this
segment also increased compared to the secondthird quarter of 1999.

In total, international markets represented 4144 percent of the Company's
revenues in the secondthird quarter of 2000, with increases in most of the
international markets in which the Company participates.  Sales to
Europe and the CIS, representing 13 percent of the Company's sales in
the secondthird quarter of 2000, were 128 percent higher than the prior year's
quarter.  Business in Mexico, Brazil and Latin America represented 7
percent of sales in the secondthird quarter of 2000, with revenues 3213 percent
above the year-ago levels.  Asia and Australian markets, in total,
representing 1315 percent of sales in the secondthird quarter of 2000, were 2012
percent higher than the prior year's quarter.  Sales to Canada,
representing 6 percent of sales in the secondthird quarter of 2000, were 2513
percent lower than the secondthird quarter of 1999 due to the decline in the
heavy-duty truck market.

     Gross Margin:
     _____________

The Company's gross margin percentage was 19.819.7 percent in the secondthird
quarter of 2000, compared to 22.322.1 percent in the prior year's quarter.
The decreased margin in 2000 was due primarily to lower volume, higher
product coverage costs and changes in product mix.  Contributing to the increased product
coverage costs is the ISX engine family, which continues to have higher
coverage costs that the N14 product it replaces.  The Company currently
anticipates this increased level of product coverage expense to
continue for the next three to four quarters.  The impact on gross

 11

margin from changes in product mix resulted from the mix shift from the
N14 to the ISX engines, as well as mix changes in the power generation
business and inlower cost absorption at the Company's international distributor revenue.heavy-
duty engine plants.  For the first halfnine months of 2000, gross margin
percentage was 20.120.0 percent compared to 21.221.5 percent infor the first halfnine
months of 1999. 11

     Operating Expenses:
     ___________________

Selling and administrative expenses as a percent of sales were 10.812.4
percent in the secondthird quarter of 2000, compared to 12.011.8 percent in the
secondthird quarter of 1999, with total spending decreasing $10 million on a
6-percent increase in sales.increasing $3 million.
Research and engineering expenses declined from 3.64.1 percent of sales in
the secondthird quarter of 1999 to 3.33.9 percent in the secondthird quarter of 2000.  These improvements are
primarily a result of the Company's cost reduction initiatives.

The Company is continuing the restructuring plan implemented in the
third quarter of 1998.  During the secondthird quarter of 2000, $3the Company
reversed $7 million was charged againstin excess accruals and recorded $7 million of
charges related to new actions committed to during the liabilities associated with these actions.quarter.  The
Company expects to complete the restructuring in 2000 and does not
currently anticipate any material changes in the original charges
recorded for these actions.early 2001.

The Company's income from joint ventures and alliances was $3 million
in the secondthird quarter of 2000 as compared to losses of $5$8 million in the
secondthird quarter of 1999, due to the termination of the Company's joint
venture with Wartsila, which had losses of $7$11 million in the secondthird
quarter of 1999.

     Other:
     ______

Interest expense was $21$22 million in the secondthird quarter of 2000, compared
to $19$18 million in the prior year's quarter, due to increased levels of
borrowings and lower interest capitalization.borrowings.  Other income was $2$5 million in the secondthird quarter of 2000
compared to expense of $3 million in the secondthird quarter of 1999, with
the variance resulting primarily from increased earnings from distributorsinterest income on tax refunds
and from non-
recurringnon-recurring transactions recorded in the prior year.

     Provision for Income Taxes:
     ___________________________

In the secondthird quarter, the estimated effective tax rate for 2000 was
reduced to 2625.5 percent for the year.  The Company's tax rate for the
secondthird quarter was 2523.6 percent to reflect the year-to-date adjustment
to the lower 2000 effective tax rate.  The effective tax rate was 26
percent for the secondthird quarter and first half of 1999 was 29 percent.and 28 percent for the first nine
months of 1999.

Cash Flow and Financial Condition
_________________________________

Key elements of cash flows were:

                                                        First Half
                                                 _________________Nine Months
$ Millions                                            2000        1999
__________                                           _____       ___________      ______
Net cash provided by operating activities            $  59       $18374       $ 170
Net cash used in investing activities                 (139)       (91)(238)       (125)
Net cash provided by (used in) financing
 activities                                            81        (63)186         (23)
Effect of exchange rate changes on cash                 (1)(2)          -
                                                     _____       _________
Net change in cash and cash equivalents              $  -20       $  2922
                                                     _____       ____
                                                 _____
                                                     _________       _____

In the first halfnine months of 2000, net cash provided by operating
activities was $59$74 million, reflectingwith the Company's strong net earnings and the non-cashnon-
cash effect of depreciation and amortization, reduced by increases in
working capital.  Net cash requirements for investing activities of $139$238
million included capital expenditures of $84$130 million in the first halfnine
months of 2000, compared to capital expenditures of $80$121 million in the
first halfnine months of 1999.  Net cash provided by financing activities was
$81

 12$186 million in the first halfnine months of 2000.  This included proceeds
from increased borrowings, reduced by cash used for dividend payments and
repurchases of the Company's stock. 12

FORWARD-LOOKING STATEMENTS
__________________________

When used herein, the terms "expect, plan, anticipate, believe" or
similar expressions, as they relate to the Company or its management,
are intended to identify forward-looking statements.

The Company has included certain forward-looking statements in this
Management's Discussion and Analysis of Results of Operations, Cash
Flow and Financial Condition and in the Company's press releases,
teleconferences and other external communications.  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.


 13

                       PART II.  OTHER INFORMATION
                       ___________________________


Item 6.  Exhibits and Reports on Form 8-K:
__________________________________________

(a)  See the Index to Exhibits on page 14 for a list of exhibits filed
     herewith.

(b)  The Company was not required to file a Form 8-K during the secondthird
     quarter of 2000.


                               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/Robert C. Crane
     ___________________________________
     Robert C. Crane
     Vice President - Corporate Controller
     (Chief Accounting Officer)                        July 31,November 2, 2000


 14

                       CUMMINS ENGINE COMPANY, INC.
                       ____________________________

                            INDEX TO EXHIBITS
                            _________________







27       Financial Data Schedule (filed herewith)