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 INC.

     For the Quarter Ended June 24,September 23, 2001            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                                   47202-3005
                     Columbus, Indiana                                               (Zip Code)
       (Address of Principal Executive Offices)                  

                                                                   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:

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TABLE OF CONTENTS

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CUMMINS INC.
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SECONDTHIRD QUARTER AND FIRST HALFNINE MONTHS
ENDED JUNE 24,SEPTEMBER 23, 2001 AND JUNE 25,SEPTEMBER 24, 2000
Uaudited

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CUMMINS INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION *

*Unaudited except for December 31, 2000 amounts

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CUMMINS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited

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CUMMINS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 1.  Accounting Policies:  The Consolidated Financial Statementsfor the interim periods ended June 24,September 23, 2001 and June 25,September 24, 2000 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 takingannual 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 ofis based upon 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 and conversion of mandatorily redeemable preferred securities when the effect of their exercise is dilutive.  Shares of stock held by the employee benefits trust are not included in outstanding shares for EPS computation until distributed from the trust.

Note 4.  Comprehensive Income:  Comprehensive income, net of tax, which includes net incomeearnings (loss) and all other non-owner changes in equity, during a period, is as follows:

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

Reconciliation to Consolidated Financial Statements:

Note 6.  Restructuring, Asset Impairment and Other Special Charges:  TheIn the second quarter of 2001 results includedthe company recorded charges of $125 million ($84 million after tax, or $2.20 per share) reflecting restructuring actions, asset impairments and other activities largely focused in the Engine Business.  These actions were taken in response to the downturn in the North American heavy-duty truck market and related conditions.  The charges includeincluded $110 million attributable to the termination of the development of a new engine platform, $14 million attributable to employee severanceworkforce reduction actions and $1 million attributed to the divestiture of a small business operation.

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Of the $125 million charge,in charges, $118 million was associated with the Engine Business, $5 million to the Power Generation Business and $2 million to the Filtration Business and Other.

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The asset impairment charge of $110 million, calculated in accordance with SFAS No. 121, was for equipment, tooling and related investment supporting an engine development program cancelled during the quarter.  The charge includesincluded the investment in equipment in house as well aspreviously capitalized and cancellation charges with equipment suppliers for equipment on order.outstanding purchase commitments.  The expected recovery value for equipment to be disposed of was based upon the estimated salvage value and was netted againstreduced the amount of the charge.

Workforce reduction actions included overall cutbacksreductions in staffing levels plus the impact of divesting of a small business operation.  Restructuring charges for workforce reductions included the severance costs and related benefits of terminating 400 salaried employees and 150 hourly employees.  Costs for workforce reductions were based on amounts pursuant to benefit programs or statutory requirements of the affected operations.

The restructuring actions will be completed in 2001 and 2002, with the majority of the cash outlaysoutflow in 2001.  Of the totalsecond quarter 2001 charges associated with the restructuring activities, net cash outlaysoutflow will approximate $50 million.  The associated annual savings are estimated at $35 million upon completion of the actions.  Approximately $56$86 million, primarily related to the write-down of the impaired equipment, has been charged to the restructuring liabilities as of June 24,September 23, 2001.

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

In the fourth quarter of 2000, the Company recorded charges of $160 million reflecting restructuring actions, asset impairments and other activities largely focused in the Engine Business.  The actions included $42 million to reduce the worldwide workforce by 600 salaried employees and 830 hourly employees, $72 million for impairment of equipment and other assets, $30 million for impairment of software developed for internal use where the software programs were cancelled prior to implementation and $16 million associated with exit costs to close or consolidate a number of smallersmall business operations.

The Company is continuing the restructuring plan implemented in the fourth quarter of 2000.  As of June 24,September 23, 2001, approximately $93$96 million has been charged against the restructuring provisions.

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

The Company is concluding the restructuring plan implemented in the third quarter of 1998.  As of June 24,September 23, 2001, the remaining balance associated with the 1998 restructuring plan is $12$2 million.  The remaining actions to be completed consist primarily of theseverance payment of severance commitments to terminated employees in 2001 and the remaining payment to the Environmental Protection Agency of $8 million in July 2001.

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Note 7.  Goodwill:  Effective January 1, 2002, the Company will adopt SFAS No. 142, a new accounting pronouncement on goodwill and other intangible assets.  Under this rule, amortization of goodwill will cease, and the Company will conduct benchmark assessments of existing goodwill for impairment using a fair-value-based approach within six months of adoption.  Goodwill amortization of $3 million and $6 million was recorded in the second quarter and the first half ended June 24, 2001, respectively, in advance of implementing the new accounting rule.  The Company cannot anticipate the conclusions from the benchmark assessment at this time.

Note 8.  Sale and Leaseback:  In the second quarter of 2001, the Company entered into a sale and leaseback transaction for certain heavy-duty engine manufacturing equipment.  Proceeds from the transaction were $119 million, compared to the equipment net book value of $104 million.  The $15 million gain will behas been deferred for the entire lease term due to a residual value guarantee by the Company.

Note 9.8.  Company-Obligated Mandatorily Redeemable Convertible Preferred Securities of Subsidiary Trust Holding Solely Convertible Subordinated Debentures of the Parent:  In June 2001, Cummins Capital Trust I (the "Trust"), a wholly-owned subsidiary trust of the Company, issued 6 million shares of 7% convertible quarterly income preferred securities (the "Preferred Securities"), with a liquidation preference of $50 per share (for a total liquidation value of $300 million).  The Preferred Securities represent an undivided beneficial ownership interest in the assets of the Trust.  The payment of distributions out of assets held by the Trust and payments on liquidation of the Trust or the redemption of the Preferred Securities are guaranteed by the Company to the extent the Trust has assets available therefor.  This guarantee, when taken together with the Company's obligations under the indenture pursuant to which the Debentures (defined below) were iss ued,issued, the Debentures, and the Company's obligations under the Trust Agreement, provides a full, irrevocable and unconditional guarantee of all of the Trust's obligations under the Preferred Securities.

Proceeds from the issuance of the Preferred Securities were invested in 7% Convertible Subordinated Debentures (the "Debentures") due June 15, 2031 issued by the Company.  The Trust exists solely to issue the Preferred Securities and its own common securities and to invest the proceeds therefrom in the Debentures, which is its sole asset.

Each of the Preferred Securities and the related Debentures are convertible at the option of the holder into shares of the Company's common stock at the rate of 1.0519 shares per Preferred Security (equivalent to a conversion price of $47.53 per share of Company common stock).  The Trust will only convert Debentures pursuant to a notice of conversion by a holder of Preferred Securities.

Holders of the Preferred Securities are entitled to receive preferential cumulative cash distributions at an annual rate of 7% accruing from the date of original issue, commencing September 15, 2001, and payable quarterly in arrears thereafter.  The distribution rate and the distribution dates for the Preferred Securities will correspond to the interest rate and interest payment dates on the Debentures.  The Company may defer interest payments on the Debentures for a period not to exceed 20 consecutive quarters.  If the Company defers interest payments on the Debentures, the Trust will defer distributions on the Preferred Securities for a corresponding period.  In this case, distributions on the Preferred Securities will continue to accrue, and the Company will not be permitted to declare or pay any cash distributions with respect to its capital stock or debt securities that rank equally with or junior to the Debentures.

Subject to certain restrictions, the Preferred Securities are redeemable at par value at the Trust's option upon any redemption by the Company of the Debentures after June 15, 2006.  Upon repayment at maturity of the Debentures or as a result of the acceleration of the Debentures upon the occurrence of a default, the Preferred Securities are subject to mandatory redemption.

Note 9.  Recently Issued Accounting Standards:  In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations" and SFAS 142 "Goodwill and Other Intangible Assets." SFAS 141 is effective June 30, 2001 and requires the purchase method of accounting be used for all business combinations. The Company does not believe this statement will have a material effect on its financial statements. SFAS 142 requires that goodwill and intangible assets with indefinite lives will no longer be subject to amortization but will be subject to annual assessment for impairment. As required, the Company will adopt this new standard January 1, 2002. In 2000, the Company recorded $11 million in goodwill amortization. In the third quarter and the first nine months of 2001, the Company recorded goodwill amortization of $3 million and $8 million, respectively. The Company is currently reviewing the provisions of SFAS 142 and has not yet determined the impact of the new standard on its financial statements.

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SFAS 143 "Accounting for Asset Retirement Obligations" was also issued in June 2001. This statement requires obligations associated with retirement of long-lived assets to be capitalized as part of the carrying value of the related asset. The Company does not believe this statement will have a material effect on its financial statements. In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 sets forth a single accounting model for the accounting and reporting for the impairment or disposal of long-lived assets and is effective January 1, 2002 for the Company. The Company is currently reviewing the provisions of SFAS 144 to determine the effect, if any, on the Company's financial statements.

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CUMMINS INCINC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, CASH FLOW AND FINANCIAL CONDITION

Overview

Net sales were $1.46$1.41 billion in the secondthird quarter of 2001, a decrease of 1710 percent from the secondthird quarter of 2000.  Earnings before interest and taxes in the secondthird quarter of 2001 were $31$30 million, or 2.1 percent of sales, excluding a $125 million pretax charge in connection with certain restructuring actions and asset impairment write-downs.sales.  This compares to earnings before interest and taxes of $107$61 million, or 6.03.9 percent of sales, in the secondthird quarter of 2000.  As reported, netNet earnings were a loss of $82$3 million, or $(2.14)$.08 per share, compared to net earnings of $61 million, or $1.62$.66 per share, in the secondthird quarter of 2000.  Net earnings for the first halfnine months of 2001, excluding the charge,second quarter restructuring charges, were a loss of $24$21 million, or $(.62)$(.54) per share.  As reported, netNet earnings for the first halfnine months of 2001 were a loss of $108$105 million, or $(2.82)$(2.74) per share, compared to earnings of $103$128 million, or $2.70$3.36 per share, in the first halfnine months of 2000.2000.

Results of Operations

          Net Sales:

The Engine Business hadsales were $195 million lower sales in the secondthird quarter of 2001 than incompared to the year-ago quarter.  Thethird quarter of 2000.  Power Generation Business sales were modestly higher.increased $37 million compared to a year ago.  The Filtration Business and Other sales were virtually flat compared to a year ago.  The Company's salesSales for each of itsthe Company's key businesses during the comparative periods were:were as follows:

          Engine Business:

In the secondthird quarter of 2001, Engine Business revenues of $786 million decreased 2920 percent as compared to the secondthird quarter of 2000, primarily due to declines in the North American automotive markets.  Engine unit shipments for the comparative periods were as follows:

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          Automotive Markets:

Sales of $533 million in the second quarter of 2001 for automotive markets were 34 percent lower than$522 million in the secondthird quarter of 2000.  Heavy-duty truck revenues as a whole were2001, down 41$171 million, or 25 percent, compared to the secondthird quarter of 2000.  Sales to the heavy-duty truck market were down 27 percent compared to the third quarter of 2000, with engine unit shipments in North America down 5745 percent while unit shipments to the rest of the world were down 36other markets declined 31 percent.

Medium-duty truck and bus revenues decreased 1923 percent from the secondthird quarter of 2000.  Medium-duty truck engine shipments were down 3135 percent in North America, while international shipments were down 1620 percent due to market weakness in TurkeyChina and Latin America.  Bus engine shipments were down 173 percent, with a 39 percent drop in North America offset by strong international demand in India and up 31 percent in international markets, with significant growth in India.China.

Revenues of the light-duty automotive and recreational vehicle business were 3422 percent lower than the secondthird quarter of 2000.  In the secondthird quarter of 2001, Cummins shipped 21,00022,000 engines to DaimlerChrysler, 3529 percent lower than in the secondthird quarter of 2000.  ShipmentsEngine shipments for the recreational vehicle markets were down 29up 10 percent, reflecting weaknessmanufacturer inventory corrections in the U. S. economy.a weak market.

          Industrial and Other Markets:

Sales to mining and rail markets were flatincreased 14 percent compared to the second quarter of 2000.  Revenues in the mining segment were down 2 percent from the secondthird quarter of 2000, reflecting further market share gains in a weak market.  SecondThird quarter sales to the rail sector were up 1860 percent from the secondthird quarter of 2000, primarily as a result of strong sales in China and Europe.

Sales to the construction, marine and agriculture markets were 1926 percent lower than in the secondthird quarter of 2000.  Worldwide sales in the construction equipment market were down 2219 percent from the secondthird quarter of 2000 with unit shipments of engines in North America down 3632 percent, and shipments of engines to international markets down 1424 percent.  Revenues in the marine markets were down 169 percent, while sales to the agricultural equipment market were up 13 percent.down 19 percent compared to the third quarter of 2000.

          Power Generation Business:

In the secondthird quarter of 2001, sales for the Company's Power Generation Business of $384$371 million increased 411 percent compared to the secondthird quarter of 2000.  The higher revenues resulted from growth in North and SouthAmerica, Latin America and Europe.  The power shortage in Brazil has produced increased demand for power generation equipment.  The North American rental business was strong in the secondthird quarter of 2001, which helped offset the continued impact of the North American economic slowdown on the recreational vehicle market and the telecommunications sector.  Genset revenues were up 919 percent from a year ago as the change in genset mix to higher kW units offset volume declines.  Alternator revenues were updown 7 percent from a year ago, while mobile/recreational vehicle revenues were down 10 percent.  Salessales of engines to other genset original equipment manufacturers were essentially flatup 12 percent compared to the secondthird quarter of 2000.

         Filtration Business and Other:

FiltrationBusiness and Other sales of $291$270 million in the secondthird quarter of 2001 were essentially unchangeddown 2 percent compared to the secondthird quarter of 2000.  Within the filtration business, sales decreased 64 percent compared to the secondthird quarter of 2000 due to reductions in demand from North American on-highway and off-highway original equipment manufacturers.  Sales to European original equipment manufacturers were also down compared to a year over year.  Secondago.  Third quarter sales at company-owned distributors were up 7 percent, resulting largely from sales at international distributors acquired since second quarter 2000.down primarily in Australia and Southeast Asia.  Sales at the Holset turbocharger business also increased slightly from a year ago, with significant market share gains in Europe and China.

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          International Markets:

In total, international markets represented 4647 percent of the Company's revenues in the secondthird quarter of 2001.  International sales in total were down 73 percent from the secondthird quarter of 2000.  The predominant reason for the decline in international sales from a year ago was fromlower heavy-duty truck production in Canada and Mexico.  All other international markets remain relatively stable to modestly lower compared to a year ago.  Sales to Europe and the CIS, representing 15 percent of the Company's sales in the secondthird quarter of 2001, were 3 percent lower than the prior year's quarter.  Business in Mexico, Brazil and Latin America represented 8 percent of sales in the secondthird quarter of 2001, with revenues 8 percent lower than the year-ago levels.  Asia and Australian markets, in total, represented 15 percent of sales in the secondthird quarter of 2001, decreasing 3 percent from the prior year's quarter.  Sales to Canada, representing 6 percent of sales in the secondthird quarter of 2001, were 25 percent lower than the secondthird quarter of 2000.

          Gross Margin:

The Company's gross margin percentage was 18.418.1 percent in the secondthird quarter of 2001, compared to 19.819.7 percent in the prior year's quarter.  The decreaseddecrease in gross margin in 2001percentage was due to unabsorbed manufacturing costs due to the lower volumes and the impact of exchange rates from foreign currencies, in whichprimarily the Company had significant sales.  Most significant wasAustralian dollar and the Brazilian Real which depreciated over 20 percent from a year ago.partially offset by the British Pound.

          Operating Expenses:

Selling and administrative expenses as awere 12.6 percent of sales were 12.5 percent in the secondthird quarter of 2001, compared to 10.712.4 percent in the secondthird quarter of 2000, while total expenses in absolute dollars decreased $7$18 million.  Research and engineering expenses were 4.03.8 percent of sales in the secondthird quarter of 2001 compared to 3.33.9 percent in the secondthird quarter of 2000, while total expenses in absolute dollars decreased $1$9 million.

The Company's income from joint ventures and alliances was $2 million in the third quarter of 2001 as compared to $3 million in the second quarter of 2001 equaled income of $3 million in the secondthird quarter of 2000.

          Other:

Interest expense was $23$15 million in the secondthird quarter of 2001, compared to $21$22 million in the secondthird quarter of 2000,2000. The decrease in interest expense is primarily due to increased levels of borrowings.  Other expense increased $2 million from last year's quarter, as a one-time gain from the second quarter of 2000 was not repeateddecline in the secondweighted average interest rate of short-term borrowings and the use of other financing alternatives. Other income was $3 million in the third quarter of 2001.2001, compared to $5 million in the third quarter 2000.

          Restructuring, Asset Impairment and Other Special Charges:

The second quarter 2001 results included charges of $125 million ($84 million after tax, or $2.20 per share) reflecting restructuring actions, asset impairments and other activities largely focused in the Engine Business.  These actions were taken in response to the downturn in the North American heavy-duty truck market and related conditions.  The charges include $110 million attributable to the termination of the development of a new engine platform, $14 million attributable to employee severance actions and $1 million attributed to the divestiture of a small business operation.

Of the $125 million charge,in charges, $118 million was assignedattributable to the Engine Business, $5 million to the Power Generation Business and $2 million to the Filtration Business and Other.

The asset impairment charge of $110 million, calculated in accordance with SFAS No. 121, was for equipment, tooling and related investment supporting an engine development program cancelled during the quarter.  The charge includes theincluded investment in equipment in house as well aspreviously capitalized and cancellation charges with equipment suppliers for equipment on order.outstanding purchase commitments.  The expected recovery value for equipment to be disposed of was based upon the estimated salvage value and was netted againstreduced the amount of the charge.

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14

Workforce reduction actions included overall cutbacks in staffing levels plus the impacts of divesting of a smaller operation.  Restructuring charges for workforce reductions included the severance costs and related benefits of terminating 400 salaried employees and 150 hourly employees.  Costs for workforce reductions were based on amounts pursuant to benefit programs or statutory requirements of the affected operations.

The restructuring actions will be completed in 2001 and 2002 with the majority of the cash outlaysoutflow in 2001.  Of the total charges associated with the restructuring activities, cash outlaysoutflows will approximate $50 million.  The associated annual savings are estimated at $35 million upon completion of the actions.  Approximately $56$86 million, primarily related to the write-down of the impaired equipment, has been charged to the restructuring liabilities as of June 24,September 23, 2001.

    Provision for Income Taxes:

The Company's income tax provision in the secondthird quarter of 2001 was a benefit of $39$2 million, reflecting an estimated effective tax rate of 25 percent for the year from operations and an effective tax rate of 33 percent from special charges.

Cash Flow and Financial Condition

Key elements of cash flows were:

In the first halfnine months of 2001, net cash provided by operating activities was $57 million.  The Company's losses were offset by the non-cash effect of depreciation and amortization.  Increases in accounts receivable and decreases in income taxes payable were partially offset by decreases in inventory and increases in accounts payable and accrued expenses.  The Company is funding the cash requirements for restructuring actions using cash generated from operations, with the majority of the cash requirement expected to occur in 2001.  Net cash used in investing activities included $122$158 million of planned capital expenditures and $19$22 million related to investments and advances in joint ventures and alliances, offset by $140 million inflow from disposals, including $119 million inflow related to a sale/leaseback of manufacturing equipment.  Net cash provided by financing activities in the first halfnine months of 2001 included net proceeds from the issue of mandatorily redeemable preferred securities of $292$291 million used primarily to reduce short-term credit agreements of $247$215 million and for dividend payments of $25$37 million.

It is the Company's opinion that current and forecasted cash flows from operations as well as benefits from previously announced restructuring actions and other financing arrangements will be sufficient to meet current debt service requirements and fund anticipated capital expenditures

     Environmental Compliance:Compliance:

The Company's products are subject to extensive global statutory and regulatory requirements that directly or indirectly impose standards with respect to emissions.  The Company's engines comply with emissions standards established by all regulatory agencies around the world where the Company sells its products.  Emissions standards imposed in the U.S. by the Environmental Protection Agency (EPA) are among the more significant standards to which the Company is subject.  In 1998, the Company and other heavy-duty diesel engine manufacturers entered into a Consent Decree with the EPA, the U.S. Department of Justice (DOJ) and the California Air Resources Board regarding diesel engine emissions, imposing standards for lower emissions beginning in October 2002.  In June 2001, the EPA and DOJ reaffirmed the U.S. government's intention to enforce the terms of the Consent Decrees entered into in 1998.  The Company confirmed that it would meet the Consen tConsent Decree deadlines.requirements.  In addition, the Company expects to meet emissions standards for all markets in which the Company chooseselects to participate.  In the event that the Company failedfails to comply with suchthese standards, it could result in adverse effects on future financial results.results could be adversely affected.

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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.

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PART II.  OTHER INFORMATION

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

(a)    See the Index to Exhibits on page 16 for a list ofNo exhibits filed herewith.are included in this filing.

(b)    The Company filed aNo reports on Form 8-K Other Event on June 4, 2001, to reportwere filed during the
        Company's plan to issue mandatorily redeemable convertible preferred securities. third quarter of 2001.

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 INC.

By:    /s/Robert C. Crane
          Robert C. Crane
          Vice President - Corporate Controller
          (Chief Accounting Officer)                                                       August 6,November 5, 2001

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CUMMINS INC.
INDEX TO EXHIBITS