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What changed in Cummins's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Cummins's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+407 added−370 removedSource: 10-K (2026-02-10) vs 10-K (2025-02-11)

Top changes in Cummins's 2025 10-K

407 paragraphs added · 370 removed · 309 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+13 added−18 removed51 unchanged
Biggest changeThe nine goals for 2030 are as follows: • Reduce absolute GHG emissions from facilities and operations by 50 percent. • Reduce scope three absolute lifetime GHG emissions from newly sold products by 25 percent. • Partner with customers to reduce scope three GHG emissions from products in the field by 55 million metric tons. • Reduce volatile organic compounds emissions from paint and coating operations by 50 percent. • Create a circular lifecycle plan for every part to use less, use better, use again. • Generate 25 percent less waste in facilities and operations as percent of revenue. • Reuse or responsibly recycle 100 percent of packaging plastics and eliminate single-use plastics in dining facilities, employee amenities and events. • Reduce absolute water consumption in facilities and operations by 30 percent. • Produce net water benefits that exceed our annual water use in all our regions.
Biggest changeThe updated 2030 environmental sustainability goals are as follows: • Reduce absolute GHG emissions from facilities and operations by 50 percent. • Reduce scope three absolute lifetime GHG emissions from newly sold products by 25 percent. • Reduce upstream scope three GHG emissions by engaging with key suppliers while continuing to deliver on customers’ commitments. • Achieve zero waste growth and minimize single-use plastics in our facilities and operations. • Create lifecycle plans for new products capable of ninety percent material circularity. • Reduce volatile organic compounds emissions from paint and coating operations by 50 percent. • Reduce absolute water consumption in facilities and operations by 30 percent. • Produce net water benefits that exceed our annual water use in all our regions.
We use segment earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable operating segments.
We use segment earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable segments.
Our familiarity with a wide range of market applications allows us to tailor sales, service and support to meet customer-specific needs. The Distribution segment is organized and managed as seven geographic regions, including North America, Asia Pacific, Europe, China, India, Africa and Middle East and Latin America.
Our familiarity with a wide range of market applications allows us to tailor sales, service and support to meet customer-specific needs. The Distribution segment is organized and managed as seven geographic regions, including North America, Europe, Asia Pacific, China, India, Latin America and Africa and Middle East.
For externally purchased items, the strategies also identify the suppliers we should consider for long-term supply agreements to provide the best technology, the lowest total cost and highest supply chain performance. We design and/or manufacture our strategic components used in or with our engines, power generation units, drivetrain and braking systems and Accelera products.
We design and/or manufacture our strategic components used in or with our engines, power generation units, drivetrain and braking systems and Accelera products. For externally purchased items, the strategies also identify the suppliers we should consider for long-term supply agreements to provide the best technology, the lowest total cost and highest supply chain performance.
Throughout our more than 100-year history, we have always recognized that people drive the strength of our business and our ability to effectively serve our customers and sustain our competitive position. We are focused on harmonizing our approach to talent to provide seamless opportunities and better experiences to our employees around the world.
Throughout our more than 100-year history, we always have recognized that people drive the strength of our business and our ability to effectively serve our customers and sustain our competitive position. We are focused on harmonizing our approach to talent to provide seamless opportunities and better experiences to our employees around the world.
We also provide an array of benefits as part of our total rewards program that are aligned with our values and focused on supporting employees and their families based on their unique needs, some of which include the following: healthcare plans that are tiered by salary, to ensure affordability to all of our employees; paid parental leave for primary and secondary caregivers; travel benefits and advanced medical services to support complex health care needs; global employee assistance programs; and a global mental health program, all designed to support employees on the journey to well-being.
We also provide an array of benefits as part of our total rewards program that are aligned with our values and focused on supporting employees and their families based on their unique needs, some of which include the following: healthcare plans that are tiered by salary, to ensure affordability to all of our employees; paid parental leave for primary and secondary caregivers; travel benefits and advanced medical services to support complex healthcare needs; global employee assistance programs; and a global mental health program, all designed to support employees and their families on the journey to well-being.
The Engine segment is organized by engine displacement size and serves these end-user markets: • Heavy-duty truck - We manufacture diesel and natural gas engines that range from 310 to 615 horsepower serving global heavy-duty truck customers worldwide, primarily in North America, China and Australia. • Medium-duty truck and bus - We manufacture diesel and natural gas engines ranging from 130 to 450 horsepower serving medium-duty truck and bus customers worldwide, with key markets including North America, Europe, Latin America, China, Australia and India.
The Engine segment is organized by engine displacement size and serves these end-user markets: • Heavy-duty truck - We manufacture diesel and natural gas engines that range from 310 to 615 horsepower serving global heavy-duty truck customers worldwide, primarily in North America, China and Australia. • Medium-duty truck and bus - We manufacture diesel, natural gas and gasoline engines ranging from 130 to 450 horsepower serving medium-duty truck and bus customers worldwide, with key markets including North America, Europe, Latin America, China, Australia and India.
When we indulge ourselves in such irrational prejudices, we damage ourselves most of all and ultimately assure ourselves of failure in competition with those more open and less biased." Our long-standing commitment to diversity and inclusion is consistent with our commitment to follow the law everywhere, including, without limitation, complying with U.S. and global laws and regulations related to civil rights and anti-discrimination.
When we indulge ourselves in such irrational prejudices, we damage ourselves most of all and ultimately assure ourselves of failure in competition with those more open and less biased.” Our long-standing commitment to diversity and inclusion is consistent with our commitment to follow the law everywhere, including, without limitation, complying with U.S. and global laws and regulations related to civil rights and anti-discrimination.
As climate-related risks affect all aspects of the business, the enterprise risks incorporate, where relevant, climate-related aspects, with a separate stand-alone enterprise risk on climate change. The Safety, Environment and Technology (SET) committee provides overall guidance and insight on major environmental sustainability initiatives such as our environmental sustainability strategy, as well as environmental management at our facilities and operations.
As climate-related risks affect all aspects of the business, the enterprise risks incorporate, where relevant, climate-related aspects, with a separate stand-alone enterprise risk on climate change. The Board’s Safety, Environment and Technology (SET) committee provides overall guidance and insight on major environmental sustainability initiatives such as our environmental sustainability strategy, as well as environmental management at our facilities and operations.
Our products are sold under the Stamford and AVK brands and range in output from 7.5 kilovolt-amperes (kVA) to 11,200 kVA. Our customer base for Power Systems offerings is highly diversified, with customer groups varying based on their power needs.
Our alternator products are sold under the Stamford and AVK brands and range in output from 7.5 kilovolt-amperes (kVA) to 11,200 kVA. Our customer base for Power Systems offerings is highly diversified, with customer groups varying based on their power needs.
AVAILABLE INFORMATION We file annual, quarterly and current reports, proxy statements and other information electronically with the Securities and Exchange Commission (SEC). The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that Cummins files electronically with the SEC. The SEC's internet site is www.sec.gov. Our internet site is www.cummins.com.
AVAILABLE INFORMATION We file annual, quarterly and current reports, proxy statements and other information electronically with the Securities and Exchange Commission (SEC). The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that Cummins files electronically with the SEC. The SEC's internet site is https://www.sec.gov. Our internet site is https://www.cummins.com.
This commitment starts at the top with our Board and permeates throughout our organization as everyone plays a role in nurturing inclusive environments where all employees can reach their full potential and thrive. Our strong focus on cultivating an inclusive culture underscores our belief that a diverse and inclusive workforce is a core value and competitive advantage for Cummins.
This commitment starts at the top with our Board and permeates throughout our organization as everyone plays a role in nurturing inclusive environments where all employees can reach their full potential and thrive. Our strong focus on cultivating an inclusive culture underscores our belief that a diverse and inclusive workforce is a core value and competitive advantage for us.
We will continue to make investments to develop new products and improve our current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas-powered engines and related components, as well as development activities around electrified power systems with innovative components and systems including battery and electric power technologies and hydrogen production technologies.
We will continue to make investments to develop new products and improve our current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas-powered engines and related components, as well as development activities around electrified power systems with innovative components and systems including battery and electric power technologies.
This focus dates back to the early 1970s as reflected in a public statement made by our former Chairman, J. Irwin Miller: "Character, ability and intelligence are not concentrated in one sex over the other, nor in persons with certain accents or in certain races or in persons holding degrees from universities over others.
This focus dates back to the early 1970s as reflected in a public statement made by our former Chairman, J. Irwin Miller: “Character, ability and intelligence are not concentrated in one sex over the other, nor in persons with certain accents or in certain races or in persons holding degrees from universities over others.
In the second quarter of 2024, we made $1.9 billion of payments required by the Settlement Agreements. See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” to our Consolidated Financial Statements for additional information. OPERATING SEGMENTS We have five complementary operating segments: Engine, Components, Distribution, Power Systems and Accelera.
In the second quarter of 2024, we made $1.9 billion of payments required by the Settlement Agreements. See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” to our Consolidated Financial Statements for additional information. REPORTABLE SEGMENTS We have five complementary reportable segments: Engine, Components, Distribution, Power Systems and Accelera.
While a significant number of our sales to PACCAR are under long-term supply agreements, these agreements provide for particular engine requirements for specific vehicle models and not a specific volume of engines or aftertreatment systems. PACCAR is our only customer accounting for more than 10 percent of our net sales in 2024.
While a significant number of our sales to PACCAR are under long-term supply agreements, these agreements provide for particular engine requirements for specific vehicle models and not a specific volume of engines or aftertreatment systems. PACCAR is our only customer accounting for more than 10 percent of our net sales in 2025.
Other Environmental Statutes and Regulations Expenditures for environmental control activities and environmental remediation projects at our facilities in the U.S. were not a substantial portion of our annual expenses and are not expected to be material in 2025. We believe we are in compliance in all material respects with laws and regulations applicable to our plants and operations.
Other Environmental Statutes and Regulations Expenditures for environmental control activities and environmental remediation projects at our facilities in the U.S. were not a substantial portion of our annual expenses and are not expected to be material in 2026. We believe we are in compliance in all material respects with laws and regulations applicable to our plants and operations.
As part of this effort, we provide remote ergonomic evaluations and support to help employees create off-site workspaces that are safe. 15 Table of Contents • Provided high-quality clinical services at onsite and near-site medical clinics at several locations across the globe to support employee health and well-being. • Launched a global mental health campaign to destigmatize and normalize conversations about mental health, promote mental well-being, encourage employees and their families to seek help when needed and promote company-provided resources.
As part of this effort, we provide remote ergonomic evaluations and support to help employees create off-site workspaces that are safe. • Provided high-quality clinical services at onsite and near-site medical clinics at several locations across the globe to support employee health and well-being. • Launched a global mental health campaign to destigmatize and normalize conversations about mental health, promote mental well-being, encourage employees and their families to seek help when needed and promote company-provided resources.
The principal customers of our light-duty automotive engines are Stellantis, Anhui Jianghuai Automobile Group Co., Ltd., Volkswagen Caminhões e Ônibus and China National Heavy Duty Truck Group. We sell our industrial engines to manufacturers of construction and agricultural equipment including Hyundai Heavy Industries, Komatsu Ltd.
The principal customers of our light-duty automotive engines are Stellantis, Anhui Jianghuai Automobile Group Co., Ltd., Volkswagen Caminhões e Ônibus and China National Heavy Duty Truck Group. We sell our industrial engines to manufacturers of construction and agricultural equipment including Hyundai Heavy Industries, Komatsu Ltd. (Komatsu), J.C.
These segments share technology, customers, strategic partners, brand recognition and our distribution network in order to compete more efficiently and effectively in their respective markets. In each of our operating segments, we compete worldwide with a number of other manufacturers and distributors that produce and sell similar products.
These segments share technology, customers, strategic partners, brand recognition and our distribution network in order to compete more efficiently and effectively in their respective markets. In each of our reportable segments, we compete worldwide with a number of other manufacturers and distributors that produce and sell similar products.
The segment serves our customers and certified dealers through a worldwide network of wholly-owned, joint venture and independent distribution locations. Wholly-owned locations operate and serve markets in the seven geographic regions noted below. Joint venture locations serve markets in South America, Southeast Asia and India while independent distribution locations serve markets in these and other geographies.
The segment serves our customers and certified dealers through a worldwide network of wholly-owned, joint venture and independent distribution locations. Wholly-owned locations operate and serve markets in the seven geographic regions noted below. Joint venture locations serve markets in South America, Southeast Asia, Middle East and India while independent distribution locations serve markets in these and other geographies.
Power Systems Segment Power Systems segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2024 2023 2022 Percent of consolidated net sales (1) 16 % 14 % 14 % Percent of consolidated EBITDA (1) 23 % 16 % 15 % (1) Measured before intersegment eliminations The Power Systems segment is organized around the following product lines: • Power generation - We are a global OEM offering standby and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as controls, paralleling systems and transfer switches, for customers with consumer, data center, commercial, industrial, health care, prime rental fleet and defense applications.
Power Systems Segment Power Systems segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2025 2024 2023 Percent of consolidated net sales (1) 18 % 16 % 14 % Percent of consolidated EBITDA (1) 31 % 23 % 16 % (1) Measured before intersegment eliminations The Power Systems segment is organized around the following product lines: • Power generation - We are a global OEM offering standby and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as controls, paralleling systems and transfer switches, for customers with data center, consumer, commercial, industrial, health care, prime rental fleet and defense applications.
This campaign has been extended to include physical, emotional, financial and social pillars of well-being. Diversity and Inclusion At Cummins, our commitment to inclusion dates back more than a half-century and continues to be core to our fabric and continued success.
This campaign has been extended to include physical, emotional, financial and social pillars of well-being. Diversity and Inclusion Our commitment to inclusion dates back more than a half-century and continues to be core to our fabric and continued success.
We also provide turnkey solutions for distributed generation and energy management applications using natural gas, diesel and newer alternative sustainable fuels such as hydrotreated vegetable oil and renewable natural gas. • Industrial - We design, manufacture, sell and support diesel and natural gas high-speed, high-horsepower engines up to 4,400 horsepower for a wide variety of equipment in mining, oil and gas, marine, rail and defense applications throughout the world. • Generator technologies - We design, manufacture, sell and support A/C generator/alternator products for internal consumption and for external generator set assemblers.
We also provide turnkey solutions for distributed generation and energy management applications using diesel, natural gas, battery energy storage systems and newer alternative sustainable fuels such as hydrotreated vegetable oil and renewable natural gas. • Industrial - We design, manufacture, sell and support diesel and natural gas high-speed, high-horsepower engines up to 4,400 horsepower for a wide variety of equipment in mining, oil and gas, marine, rail and defense applications throughout the world. • Generator technologies - We design, manufacture, sell and support A/C generator/alternator products and components for internal consumption and for external generator set assemblers.
In addition to our agreement with PACCAR, we have long-term heavy-duty and medium-duty engine and aftertreatment system supply agreements with Traton and Daimler. We also have an agreement with Stellantis to supply engines and aftertreatment products for its pick-up truck applications.
In addition to our agreement with PACCAR, we have heavy-duty and medium-duty engine and aftertreatment system supply agreements with Traton and Daimler. We also have an agreement with Stellantis to supply engines and aftertreatment products for its pick-up truck applications.
Employee Safety and Wellness Cummins is committed to being world-class in health and safety. We are committed to removing conditions that cause personal injury or occupational illness, and we make decisions and promote behaviors that protect employees from risk of injury.
Employee Safety and Wellness We are committed to being world-class in health and safety. We are committed to removing conditions that cause personal injury or occupational illness, and we make decisions and promote behaviors that protect employees from risk of injury.
(Stellantis) in North America and LCV markets in Latin America and China. • Off-highway (industrial engines) - We manufacture diesel engines that range from 48 to 715 horsepower serving key global markets including construction, mining, marine, rail, oil and gas, defense and agriculture and also the power generation business for standby, mobile and distributed power generation solutions throughout the world.
(Stellantis) in North America and LCV markets in Latin America and China. • Off-highway (industrial engines) - We manufacture diesel engines that range from 48 to 715 horsepower serving key global markets including construction, agriculture, mining, marine, rail, oil and gas and defense as well as the power generation business for standby, mobile and distributed power generation solutions throughout the world.
That prosperity includes strong communities, robust business and environmental sustainability. Our Board of Directors (the Board) and the senior management team oversee our top risks, while the Enterprise Risk Management program gives the Board and senior management a framework to help them understand, identify, assess, manage and monitor risks so we can meet our strategic objectives.
That prosperity includes strong communities, robust business and environmental sustainability. 12 Table of Contents Our Board of Directors (the Board) and the senior management team oversee our top risks, while the Enterprise Risk Management program gives the Board and senior management a framework to help them understand, identify, assess, manage and monitor risks so we can meet our strategic objectives.
Our emission solutions business primarily serves markets in North America, Europe, China, India, Brazil and Asia Pacific. We serve both OEM first fit and retrofit customers. • Components and software - We design, manufacture and market turbocharger, fuel system and valvetrain technologies for light-duty, mid-range, heavy-duty and high-horsepower markets.
Our emission solutions business primarily serves markets in North America, Europe, China, India, Brazil and Asia Pacific. We serve both OEM first fit and retrofit customers. • Components and software - We design, manufacture and market turbocharger, fuel system and valvetrain technologies for light-duty, medium-duty, heavy-duty and high-horsepower markets.
Our research and development programs are focused on product improvements, product extensions, innovations and cost reductions for our customers. Research and development expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT expenses, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred.
Our research, development and engineering (RD&E) programs are focused on product improvements, product extensions, innovations and cost reductions for our customers. RD&E expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT expenses, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred.
In connection with our announcement of our entry into the agreement in principle, we became subject to shareholder, consumer and third-party litigation regarding the matters covered by the Settlement Agreements, and we may become subject to additional litigation in connection with these matters. See NOTE 14, "COMMITMENTS AND CONTINGENCIES," to our Consolidated Financial Statements.
In connection with our announcement of our entry into the agreement in principle, we became subject to shareholder, consumer and third-party litigation regarding the matters covered by the Settlement Agreements, and we may become subject to additional litigation in connection with these matters. See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” to our Consolidated Financial Statements.
We also market and sell truck, trailer, on- and off-highway and other products principally for OEM dealers and other independent distributors and service garages within the aftermarket industry.
We also market and sell on-highway, off-highway and other products principally for OEM dealers and other independent distributors and service garages within the aftermarket industry.
The loss of this customer or a significant decline in the production level of PACCAR vehicles that use our engines would have an adverse effect on our results of operations and financial condition. We have supplied engines to PACCAR for 80 years. A summary of principal customers for each operating segment is included in our segment discussion.
The loss of this customer or a significant decline in the production level of PACCAR vehicles that use our engines would have an adverse effect on our results of operations and financial condition. We have supplied engines to PACCAR for 81 years. A summary of principal customers for each reportable segment is included in our segment discussion.
Excluding PACCAR, net sales to any single customer were less than 9 percent of our consolidated net sales in 2024, less than 9 percent in 2023 and less than 8 percent in 2022. These agreements contain standard purchase and sale agreement terms covering engine, aftertreatment and engine parts pricing, quality and delivery commitments, as well as engineering product support obligations.
Excluding PACCAR, net sales to any single customer were less than 7 percent of our consolidated net sales in 2025, less than 9 percent in 2024 and less than 9 percent in 2023. These agreements contain standard purchase and sale agreement terms covering engine, aftertreatment and engine parts pricing, quality and delivery commitments, as well as engineering product support obligations.
In the event of a change of control of either party to certain of these joint ventures and other strategic alliances, certain consequences may result including automatic termination and liquidation of the venture, exercise of "put" or "call" rights of ownership by the non-acquired partner, termination or transfer of technology license rights to the non-acquired partner and increases in component transfer prices to the acquired partner.
In the event of a change of control of either party to certain of these joint ventures and other strategic alliances, certain consequences may result including automatic termination and liquidation of the venture, exercise of “put” or “call” rights of ownership by the non-acquired partner, termination or transfer of technology license rights to the non-acquired partner and increases in component transfer prices to the acquired partner.
Some examples include base and variable pay, healthcare programs, paid time off, flexible work, retirement saving plans and employee stock purchase plans. When designing our base pay ranges, we conduct market analyses to ensure our ranges are competitive and our employees are advancing their earning potential.
Some examples include base and variable pay, healthcare programs, global mental health support, paid time off, flexible work, retirement saving plans and employee stock purchase plans. When designing our base pay ranges, we conduct market analyses to ensure our ranges are competitive and our employees are advancing their earning potential.
Through our talent strategy, our goal is to provide all employees with equitable access to the development and career opportunities that a global company, like Cummins, enables. Competitive Pay and Benefits To attract and retain the best employees, we focus on providing progressive, competitive pay and benefits.
Through our talent strategy, our goal is to provide all employees with equitable access to the development and career opportunities that a global company, like Cummins, enables. Competitive Pay, Benefits and Well-Being To attract and retain the best talent, we focus on providing progressive, market-competitive pay, benefits and rewards.
From time to time, we enter into agreements with customers and government agencies to fund a portion of the research and development costs of a particular project. When not associated with a sales contract, we generally account for these reimbursements as an offset to the related research and development expenditure.
From time to time, we enter into agreements with customers and government agencies to fund a portion of the RD&E costs of a particular project. When not associated with a sales contract, we generally account for these reimbursements as an offset to the related RD&E expenditure.
To see how this amount reconciles to equity, royalty and interest income from investees in our Consolidated Statements of Net Income , see NOTE 3, "INVESTMENTS IN EQUITY INVESTEES," to our Consolidated Financial Statements for additional information .
To see how this amount reconciles to equity, royalty and interest income from investees in our Consolidated Statements of Net Income , see NOTE 3, “INVESTMENTS IN EQUITY INVESTEES,” to our Consolidated Financial Statements for additional information .
Bush (50) Vice President and President—Power Systems (2022) Vice President—Cummins Sales & Service North America (2017-2022) Amy R.
Bush (51) Vice President and President—Power Systems (2022) Vice President—Cummins Sales & Service North America (2017-2022) Amy R.
See NOTE 25, "OPERATING SEGMENTS," to our Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income . 5 Table of Contents Engine Segment Engine segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2024 2023 2022 Percent of consolidated net sales (1) 28 % 28 % 31 % Percent of consolidated EBITDA (1) 33 % 32 % 38 % (1) Measured before intersegment eliminations The Engine segment manufactures and markets a broad range of diesel and natural gas-powered engines under the Cummins brand name, as well as certain customer brand names, for the heavy-duty truck, medium-duty truck and bus, light-duty automotive and off-highway markets.
See NOTE 24, “REPORTABLE SEGMENTS,” to our Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income . 5 Table of Contents Engine Segment Engine segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2025 2024 2023 Percent of consolidated net sales (1) 26 % 28 % 28 % Percent of consolidated EBITDA (1) 26 % 33 % 32 % (1) Measured before intersegment eliminations The Engine segment manufactures and markets a broad range of diesel, natural gas and gasoline-powered engines under the Cummins brand name, as well as certain customer brand names, for the heavy-duty truck, medium-duty truck and bus, light-duty automotive and off-highway markets.
Truck OEMs that currently produce some or all of their own engines include Daimler, PACCAR, Traton, Volvo Powertrain, Ford Motor Company, China First Auto Works, Dongfeng Motor Corporation, CNH Industrial and Isuzu. 6 Table of Contents Components Segment Components segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2024 2023 2022 Percent of consolidated net sales (1) 28 % 32 % 28 % Percent of consolidated EBITDA (1) 32 % 36 % 33 % (1) Measured before intersegment eliminations The Components segment designs, manufactures and supplies products which complement the Engine and Power Systems segments, including axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics.
Truck OEMs that currently produce some or all of their own engines include Daimler, PACCAR, Traton, Volvo Powertrain, Ford Motor Company, China First Auto Works, Dongfeng Motor Corporation, CNH Industrial and Isuzu. 6 Table of Contents Components Segment Components segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2025 2024 2023 Percent of consolidated net sales (1) 25 % 28 % 32 % Percent of consolidated EBITDA (1) 26 % 32 % 36 % (1) Measured before intersegment eliminations The Components segment designs, manufactures and supplies products which complement the Engine and Power Systems segments, including drivetrain and braking systems for commercial diesel, gasoline and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics.
Collectively, our net sales to these four customers, including PACCAR, were 36 percent of our consolidated net sales in 2024, 37 percent in 2023 and 36 percent in 2022.
Collectively, our net sales to these four customers, including PACCAR, were 31 percent of our consolidated net sales in 2025, 36 percent in 2024 and 37 percent in 2023.
We also design, develop and supply electronic control modules, sensors and supporting software for on-highway, off-highway and power generation applications. We primarily serve markets in North America, Europe, China and India. • Automated transmissions - We develop and supply automated transmissions for the heavy-duty commercial vehicle market.
We also design, develop and supply electronic control modules, sensors and supporting software for on-highway, off-highway and power generation applications. We primarily serve markets in North America, China, Europe and India. • Automated transmissions - We develop and supply automated transmissions for the heavy-duty commercial vehicle market. Automated transmissions include automated manual transmissions and automatic transmissions for internal combustion engines.
PACCAR is our largest customer, accounting for 16 percent of our consolidated net sales in 2024, 16 percent in 2023 and 16 percent in 2022. We have long-term supply agreements with PACCAR for our heavy-duty and medium-duty engines and aftertreatment systems.
PACCAR is our largest customer, accounting for 13 percent of our consolidated net sales in 2025, 16 percent in 2024 and 16 percent in 2023. We have long-term supply agreements with PACCAR for our heavy-duty and medium-duty engines and aftertreatment, driveline and brake systems.
Smith (57) Vice President—Chief Financial Officer (2019) Nathan R. Stoner (47) Vice President—China ABO (2020) General Manager—Partnerships and EBU China Joint Venture Business (2018-2020) Jeffrey T.
Smith (58) Vice President—Chief Financial Officer (2019) Nathan R. Stoner (48) Vice President—China ABO (2020) General Manager—Partnerships and EBU China Joint Venture Business (2018-2020) Jeffrey T.
Our Components segment joint ventures and wholly-owned entities provide axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics that are used with our engines as well as some competitors' products.
Our Components segment joint ventures and wholly-owned entities provide drivetrain and braking systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics that are used with our engines as well as some competitors' products.
We believe that we are in compliance with such laws and regulations in all material respects. For more information on the topics above and our management of our human capital resources, please go to sustainability.cummins.com. Information from our sustainability report and sustainability webpage is not incorporated by reference into this filing.
We believe that we are in compliance with such laws and regulations in all material respects. For more information on the topics above, please go to https://www.sustainability.cummins.com. Information from our sustainability report and sustainability webpage is not incorporated by reference into this filing.
The results and investments in our joint ventures in which we have 50 percent or less ownership interest (except for ECJV, which is consolidated due to our majority voting interest) discussed below are included in equity, royalty and interest income from investees and investments and advances related to equity method investees in our Consolidated Statements of Net Income and Consolidated Balance Sheets , respectively. • Dongfeng Cummins Engine Company, Ltd. - Dongfeng Cummins Engine Company, Ltd.
The results and investments in our joint ventures in which we have 50 percent or less ownership interest (except for ECJV, which is consolidated due to our majority voting interest) discussed below are included in equity, royalty and interest income from investees and investments and advances related to equity method investees in our Consolidated Statements of Net Income and Consolidated Balance Sheets , respectively. • Chongqing Cummins Engine Company, Ltd. - Chongqing Cummins Engine Company, Ltd. is a joint venture in China with Chongqing Machinery and Electric Co.
The costs for these remediation projects are not expected to be material. 14 Table of Contents HUMAN CAPITAL RESOURCES At December 31, 2024, we employed approximately 69,600 persons worldwide. Approximately 22,000 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2025 and 2029.
The costs for these remediation projects are not expected to be material. 14 Table of Contents HUMAN CAPITAL RESOURCES At December 31, 2025, we employed approximately 67,400 persons worldwide. Approximately 20,000 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2026 and 2030.
Although these patents and trademarks are generally considered beneficial to our operations, we do not believe any patent, group of patents or trademark (other than our leading brand house trademarks) is significant to our business.
These patents and trademarks were granted and registered over a period of years. Although these patents and trademarks are generally considered beneficial to our operations, we do not believe any patent, group of patents or trademark (other than our leading brand house trademarks) is significant to our business.
Financial information about our investments in joint ventures and alliances is incorporated by reference from NOTE 3, "INVESTMENTS IN EQUITY INVESTEES," to our Consolidated Financial Statements. 9 Table of Contents Our equity income from these investees was as follows: Years ended December 31, In millions 2024 2023 2022 Manufacturing entities Dongfeng Cummins Engine Company, Ltd. $ 66 22 % $ 65 19 % $ 45 20 % Chongqing Cummins Engine Company, Ltd. 60 20 % 36 11 % 32 14 % Beijing Foton Cummins Engine Co., Ltd. 42 14 % 47 14 % 37 17 % Tata Cummins, Ltd. 31 10 % 29 9 % 27 12 % All other manufacturers 25 (1) 9 % 91 27 % 28 (2) 12 % Distribution entities Komatsu Cummins Chile, Ltda. 55 19 % 55 16 % 44 20 % All other distributors 17 6 % 16 4 % 11 5 % Cummins share of net income (3) $ 296 100 % $ 339 100 % $ 224 100 % (1) Included a $17 million impairment of our joint ventures in the fourth quarter of 2024 related to our Accelera strategic reorganization actions.
Financial information about our investments in joint ventures and alliances is incorporated by reference from NOTE 3, “INVESTMENTS IN EQUITY INVESTEES,” to our Consolidated Financial Statements. 9 Table of Contents Our equity income from these investees was as follows: Years ended December 31, In millions 2025 2024 2023 Manufacturing entities Chongqing Cummins Engine Company, Ltd. $ 89 24 % $ 60 20 % $ 36 11 % Dongfeng Cummins Engine Company, Ltd. 70 19 % 66 22 % 65 19 % Beijing Foton Cummins Engine Co., Ltd. 64 18 % 42 14 % 47 14 % Tata Cummins, Ltd. 33 9 % 31 10 % 29 9 % All other manufacturers 29 8 % 25 (1) 9 % 91 27 % Distribution entities Komatsu Cummins Chile, Ltda. 54 15 % 55 19 % 55 16 % All other distributors 25 7 % 17 6 % 16 4 % Cummins share of net income (2) $ 364 100 % $ 296 100 % $ 339 100 % (1) Included a $17 million impairment of our joint ventures in the fourth quarter of 2024 related to our Accelera strategic reorganization actions.
KG, Denso Corporation, Allison Transmission, Aisin Corporation, Knorr-Bremse AG, ZF Friedrichshafen AG and Dana Incorporated. 7 Table of Contents Distribution Segment Distribution segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2024 2023 2022 Percent of consolidated net sales (1) 27 % 25 % 26 % Percent of consolidated EBITDA (1) 27 % 24 % 22 % (1) Measured before intersegment eliminations The Distribution segment is our primary sales, service and support channel.
KG, Allison Transmission, Knorr-Bremse AG and ZF Friedrichshafen AG. 7 Table of Contents Distribution Segment Distribution segment sales and EBITDA as a percentage of consolidated results were: Years ended December 31, 2025 2024 2023 Percent of consolidated net sales (1) 30 % 27 % 25 % Percent of consolidated EBITDA (1) 34 % 27 % 24 % (1) Measured before intersegment eliminations The Distribution segment is our primary sales, service and support channel.
The information on our internet site is not incorporated by reference into this report. 16 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Following are the names and ages of our executive officers, their positions with us at January 31, 2025, and summaries of their backgrounds and business experience: Name and Age Present Cummins Inc. position and year appointed to position Principal position during the past five years other than Cummins Inc. position currently held Jennifer Rumsey (51) Chair and Chief Executive Officer (2023) President and Chief Executive Officer (2022-2023) President and Chief Operating Officer (2021-2022) Vice President and President—Components (2019-2020) Sharon R.
The information on our internet site is not incorporated by reference into this report. 16 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Following are the names and ages of our executive officers, their positions with us at January 31, 2026, and summaries of their backgrounds and business experience: Name and Age Present Cummins Inc. position and year appointed to position Principal position during the past five years other than Cummins Inc. position currently held Jennifer Rumsey (52) Chair and Chief Executive Officer (2023) President and Chief Executive Officer (2022-2023) President and Chief Operating Officer (2021-2022) Vice President and President—Components (2019-2020) Marvin Boakye (52) Vice President—Chief Human Resources Officer (2022) Chief People and Diversity Officer—Papa John's International (2019-2022) Jenny M.
Customers of the Components segment generally include the Engine, Distribution, Power Systems and Accelera segments, joint ventures including Tata Cummins Ltd., Dongfeng Cummins Engine Co., Ltd. and Beijing Foton Cummins Engine Co., Ltd., truck manufacturers and other OEMs, many of which are also customers of the Engine segment, such as PACCAR, Daimler, Volvo, Traton, Tata Motors Ltd.
Customers of the Components segment generally include the Engine, Distribution, Power Systems and Accelera segments, joint ventures including Tata Cummins Ltd., Dongfeng Cummins Engine Co., Ltd. and Beijing Foton Cummins Engine Co., Ltd., truck manufacturers and other OEMs, many of which are also customers of the Engine segment, such as PACCAR, Daimler, AB Volvo, Traton, Stellantis and other manufacturers that use our components in their product platforms.
The environmental sustainability strategy includes nine specific goals to achieve by 2030, including science-based greenhouse gas (GHG) reduction targets for newly sold products and facilities, as well as aspirational targets for 2050. We started reporting progress on these nine goals, most of which have a baseline year of 2018, in 2022.
The environmental sustainability strategy includes specific goals to achieve by 2030, including science-based greenhouse gas (GHG) reduction targets for facilities and newly sold products. We started reporting progress on these goals, most of which have a baseline year of 2018, in 2022. In 2025, we completed a planned midpoint review of our 2030 environmental sustainability goals.
(DCEC) is a joint venture in China with Dongfeng Automotive Co. Ltd., a subsidiary of Dongfeng Motor Corporation and one of the largest medium-duty and heavy-duty truck manufacturers in China. DCEC produces 3.9 liter to 14.5 liter diesel engines with a power range from 80 to 760 horsepower, natural gas engines and automated transmissions.
Ltd., a subsidiary of Dongfeng Motor Corporation and one of the largest medium-duty and heavy-duty truck manufacturers in China. DCEC produces 2.5 liter to 14.5 liter diesel engines with a power range from 80 to 770 horsepower, natural gas engines and automated transmissions.
(Komatsu), Zoomlion Heavy Industry Science & Technology Co., Ltd, Xuzhou Construction Machinery Group, Guangxi LiuGong Machinery Co., Ltd, JLG Industries, Inc. and Sany Group. In the Engine segment, our competitors vary from country to country, with local manufacturers generally predominant in each geography. Other independent engine manufacturers include Weichai Power Co. Ltd. and Deutz AG.
Bamford Excavators Ltd., Zoomlion Heavy Industry Science & Technology Co., Ltd, Xuzhou Construction Machinery Group, Guangxi LiuGong Machinery Co., Ltd, JLG Industries, Inc. and SANY Heavy Industry Co., Ltd. In the Engine segment, our competitors vary from country to country, with local manufacturers generally predominant in each geography.
(Tata Motors) and other manufacturers that use our components in their product platforms. The Components segment competes with other manufacturers of aftertreatment systems, turbochargers, fuel systems, drivetrain systems and transmissions. Our primary competitors in these markets include Robert Bosch GmbH, Parker-Hannifin Corporation, Garrett Motion, Inc., Borg-Warner Inc., Tenneco Inc., Eberspacher Holding GmbH & Co.
The Components segment competes with other manufacturers of aftertreatment systems, turbochargers, fuel systems, drivetrain systems and transmissions. Our primary competitors in these markets include Robert Bosch GmbH, Garrett Motion, Inc., Borg-Warner Inc., Tenneco Inc., Eberspacher Holding GmbH & Co.
We will post any amendments to the Code of Conduct and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE, on our internet site.
It also applies to the employees of any entity owned or controlled by us. We will post any amendments to the Code of Conduct and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE, on our internet site.
ITEM 1. Business OVERVIEW We were founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc.
ITEM 1. Business OVERVIEW We were founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc. We are a global power leader committed to powering a more prosperous world.
We primarily serve markets in North America, Europe, South America, India, Asia Pacific and China. • Emission solutions - We are a global leader in designing, manufacturing and integrating aftertreatment technology and solutions for the commercial on- and off-highway light-duty, medium-duty, heavy-duty and high-horsepower engine markets.
We primarily serve markets in North America, Europe, South America, Asia Pacific, China and India. • Emission solutions - We design, manufacture and integrate aftertreatment technology and solutions for the commercial on- and off-highway light-duty, medium-duty, heavy-duty and high-horsepower engine markets.
Lamb-Hale (58) Vice President—Chief Legal Officer and Corporate Secretary (2023) Vice President—Chief Legal Officer (2022-2023) Vice President—General Counsel (2021-2022) Managing Director and Washington, DC City Leader—Kroll (2020-2021) Managing Director—Kroll (2016-2020) Brett Merritt (48) Vice President and President—Engine Business (2024) Vice President—On-Highway Engine Business and Vice President of Strategic Customer Relations (2023) Vice President—On-Highway Engine Business (2017-2023) Srikanth Padmanabhan (60) Executive Vice President and President—Operations (2024) Vice President and President—Engine Business (2016-2023) Mark A.
Lamb-Hale (59) Vice President—Chief Administrative Officer and Corporate Secretary (2025) Vice President—Chief Legal Officer and Corporate Secretary (2023-2025) Vice President—Chief Legal Officer (2022-2023) Vice President—General Counsel (2021-2022) Managing Director and Washington, DC City Leader—Kroll (2020-2021) Brett Merritt (49) Vice President and President—Engine Business (2024) Vice President—On-Highway Engine Business and Vice President of Strategic Customer Relations (2023) Vice President—On-Highway Engine Business (2017-2023) Mark A.
We will continue to work in partnership with others to advocate for tough, clear and enforceable regulations around the globe to address air and GHG emissions. 13 Table of Contents ENVIRONMENTAL COMPLIANCE Settlement Agreements In December 2023, we announced that we reached an agreement in principle with the EPA, CARB, DOJ and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements).
ENVIRONMENTAL COMPLIANCE Settlement Agreements In December 2023, we announced that we reached an agreement in principle with the EPA, CARB, DOJ and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements).
Department of Justice (DOJ) and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements).
Settlement Agreements In December 2023, we announced that we reached an agreement in principle with the EPA, CARB, the DOJ and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements).
See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," to our Consolidated Financial Statements for additional information.
See NOTE 21, "ATMUS DIVESTITURE," to our Consolidated Financial Statements for additional information.
Wiltrout (44) Vice President—Corporate Strategy (2022) Executive Director—Corporate Development (2021-2022) Strategy Director—Power Systems Business Unit (2018-2021) Jonathan Wood (54) Vice President—Chief Technical Offer (2023) Vice President—New Power Engineering (2021-2023) Vice President—Components Engineering (2018-2021) Our Chair and CEO is elected annually by the Board and holds office until the meeting of the Board at which her election is next considered.
Wiltrout (45) Vice President—Corporate Strategy (2022) Executive Director—Corporate Development (2021-2022) Strategy Director—Power Systems Business Unit (2018-2021) Jonathan Wood (55) Vice President—Chief Technical Officer (2023) Vice President—New Power Engineering (2021-2023) Vice President—Components Engineering (2018-2021) Shon Wright (51) Vice President and President—Distribution Business (2025) Vice President—Cummins Engine Components (2022-2024) Vice President and President - Cummins Turbo Technologies (2017-2022) Our Chair and CEO is elected annually by the Board and holds office until the meeting of the Board at which her election is next considered.
The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing. These engines are used in light-duty and medium-duty commercial trucks, pick-up trucks, buses, multipurpose and sport utility vehicles with main markets in China and Brazil.
The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing, which are used in light-duty and medium-duty commercial trucks, pick-up trucks, buses, multipurpose and sport utility vehicles with the main market in China. Certain types of small construction equipment and industrial applications are also served by these engine families.
Other important elements of our sourcing strategy include the following: • expanding risk management scope to include sub-tier value chain suppliers for critical components; • broadening dual and multi-sourcing where applicable; • selecting and managing suppliers to comply with our Supplier Code of Conduct; and • assuring our suppliers comply with our prohibited and restricted materials policy. 11 Table of Contents Disruption risk in certain categories of our supply chains exist and could negatively impact our ability to meet customer demand.
Other important elements of our sourcing strategy include the following: • expanding risk management scope to include sub-tier value chain suppliers for critical components; • broadening dual and multi-sourcing where applicable; • selecting and managing suppliers to comply with our Supplier Code of Conduct; and • assuring our suppliers comply with our prohibited and restricted materials policy.
Research and development expenses, net of contract reimbursements, 12 Table of Contents were $1.4 billion in 2024, $1.4 billion in 2023 and $1.2 billion in 2022. Contract reimbursements were $72 million, $81 million and $110 million in 2024, 2023 and 2022, respectively. ENVIRONMENTAL SUSTAINABILITY We are committed to making people's lives better by powering a more prosperous world.
RD&E expenses, net of contract reimbursements, were $1.4 billion each year in 2025, 2024 and 2023. Contract reimbursements were $54 million, $72 million and $81 million in 2025, 2024 and 2023, respectively. ENVIRONMENTAL SUSTAINABILITY We are committed to making people's lives better by powering a more prosperous world.
You can access our Investors and Media webpage through our internet site, by hovering on the heading "Company" and selecting "Investor Relations" link under the "About Us" section.
You can access our Investors and Media webpage through our internet site, by hovering on the heading “Company” and selecting “Investor Relations” link under the “About Us” section or directly at https://www.cummins.com/company/investor-relations.
Truck OEMs may also elect to produce their own engines, and we must provide competitive products to win and keep their business.
Other independent engine manufacturers include Weichai Power Co., Ltd., Yuchai and Deutz AG. Truck OEMs may also elect to produce their own engines, and we must provide competitive products to win and keep their business.
This joint venture manufactures several models of our heavy-duty and high-horsepower diesel engines primarily serving the industrial and stationary power markets in China. • Beijing Foton Cummins Engine Co., Ltd. - Beijing Foton Cummins Engine Co., Ltd. is a joint venture in China with Beiqi Foton Motor Co., Ltd., a commercial vehicle manufacturer, which has two distinct lines of business - a light-duty business and a heavy-duty business.
Ltd. This joint venture manufactures several models of our heavy-duty and high-horsepower diesel engines primarily serving the industrial and power generation markets in China. • Dongfeng Cummins Engine Company, Ltd. - Dongfeng Cummins Engine Company, Ltd. (DCEC) is a joint venture in China with Dongfeng Automotive Co.
JOINT VENTURES, ALLIANCES AND NON-WHOLLY-OWNED SUBSIDIARIES We entered into a number of joint venture agreements and alliances with business partners around the world. Our joint ventures are either distribution or manufacturing entities. We also own controlling interests in non-wholly-owned manufacturing and distribution subsidiaries.
Our joint ventures are either distribution or manufacturing entities. We also own controlling interests in non-wholly-owned manufacturing and distribution subsidiaries.
The change had no impact on our consolidated results. The Components segment is organized around the following businesses: • Drivetrain and braking systems - We design, manufacture and supply drivetrain systems, including axles, drivelines, brakes and suspension systems primarily for commercial vehicle and industrial applications.
We design and develop these products and systems to meet increasingly stringent emission and fuel economy standards. The Components segment is organized around the following businesses: • Drivetrain and braking systems - We design, manufacture and supply drivetrain systems, including axles, drivelines, brakes and suspension systems primarily for commercial vehicle and industrial applications.
Davis (55) Vice President and President—Accelera and Components (2023) Vice President and President—Accelera (2020-2023) Vice President—Cummins Filtration (2018-2020) Bonnie Fetch (54) Vice President and President—Distribution Business (2024) Vice President—Global Supply Chain and Manufacturing (2022-2023) Vice President—DBU Supply Chain Services (2020-2022) Executive Director, Supply Chain—DBU (2018-2020) Nicole Y.
Davis (56) Vice President and President—Accelera by Cummins and Components (2023) Vice President and President—Accelera by Cummins (2020-2023) Vice President—Cummins Filtration (2018-2020) Bonnie Fetch (55) Executive Vice President and President—Operations (2025) Vice President and President—Distribution Business (2024) Vice President—Global Supply Chain and Manufacturing (2022-2023) Vice President—DBU Supply Chain Services (2020-2022) Executive Director, Supply Chain—DBU (2018-2020) John Gaidoo (50) Vice President—Chief Legal Officer (2025) Vice President - Senior Deputy Counsel (2023-2025) Deputy General Counsel (2021-2023) Lead Lawyer - Employment and Labor Relations (2018-2021) Nicole Y.
Code of Conduct, Committee Charters and other governance documents are included at this site. Our Code of Conduct applies to all employees, regardless of their position or the country in which they work. It also applies to the employees of any entity owned or controlled by us.
We also have a Corporate Governance webpage. You can access our Governance Documents webpage through our internet site, https://investor.cummins.com/board-esg/governance/governance-documents. Code of Conduct, Committee Charters and other governance documents are included at this site. Our Code of Conduct applies to all employees, regardless of their position or the country in which they work.
Off-highway engines are used in a variety of construction, power generation, marine and agriculture markets in China. • Chongqing Cummins Engine Company, Ltd. - Chongqing Cummins Engine Company, Ltd. is a joint venture in China with Chongqing Machinery and Electric Co. Ltd.
Off-highway engines are used in a variety of construction, power generation, marine and agriculture markets in China. • Beijing Foton Cummins Engine Co., Ltd. - Beijing Foton Cummins Engine Co., Ltd. is a joint venture in China with Beiqi Foton Motor Co., Ltd., a commercial vehicle manufacturer, which has two distinct lines of business - a light-duty business and a heavy-duty business.
Since 2020, we have taken many steps in the employee safety and wellness area including the following: • Executed robust safety protocols for essential on-site personnel. • Implemented remote and hybrid work environments, where possible, to give employees flexibility to work off-site.
Since 2020, we have taken many steps in the employee safety and wellness area including the following: • Executed robust safety protocols for essential on-site personnel. 15 Table of Contents • Implemented employee role classifications and an in-person time policy.
Divestiture of Atmus On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc. (Atmus) common stock through a tax-free split-off. The exchange resulted in a reduction of shares of our common stock outstanding by 5.6 million shares and a gain of approximately $1.3 billion.
(Atmus) common stock through a tax-free split-off. The exchange resulted in a reduction of shares of our common stock outstanding by 5.6 million shares and a gain of approximately $1.3 billion. See NOTE 21, “ATMUS DIVESTITURE,” to our Consolidated Financial Statements for additional information.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we do not accurately align our manufacturing capabilities with demand it could have a material adverse effect on our results of operations, financial condition and cash flows. 20 Table of Contents We derive significant earnings from investees that we do not directly control, with more than 50 percent of these earnings from our China-based investees.
Biggest changeHowever, if we overestimate our demand and overbuild our capacity, we may have significantly underutilized assets and we may experience reduced margins. If we do not accurately align our manufacturing capabilities with demand, it could have a material adverse effect on our results of operations, financial condition and cash flows.
Our products are subject to extensive statutory and regulatory requirements that can significantly increase our costs and, along with increased scrutiny from regulatory agencies and unpredictability in the adoption, implementation and enforcement of increasingly stringent and fragmented emission standards by multiple jurisdictions around the world, could have a material adverse impact on our results of operations, financial condition and cash flows.
Our products are subject to extensive and evolving statutory and regulatory requirements that can significantly increase our costs and, along with increased scrutiny from regulatory agencies and unpredictability in the adoption, implementation and enforcement of increasingly stringent and fragmented emission standards by multiple jurisdictions around the world, could have a material adverse impact on our results of operations, financial condition and cash flows.
Our engines are subject to extensive statutory and regulatory requirements governing emissions and noise, including standards imposed by the EPA, the EU, state regulatory agencies (such as the CARB) and other regulatory agencies around the world.
Our engines are subject to extensive and evolving statutory and regulatory requirements governing emissions and noise, including standards imposed by the EPA, the EU, state regulatory agencies (such as the CARB) and other regulatory agencies around the world.
These risk factors should be considered in addition to our cautionary comments concerning forward-looking statements in this Report, including statements related to markets for our products and trends in our business that involve a number of risks and uncertainties. Our separate section above, "CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION," should be considered in addition to the following statements.
These risk factors should be considered in addition to our cautionary comments concerning forward-looking statements in this Report, including statements related to markets for our products and trends in our business that involve a number of risks and uncertainties. Our separate section above, “CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION,” should be considered in addition to the following statements.
The amounts ultimately paid upon resolution of these or subsequent tax audits could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our tax provision. 19 Table of Contents Our global operations are subject to laws and regulations that impose significant compliance costs and create reputational and legal risk.
The amounts ultimately paid upon resolution of these or subsequent tax audits could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our tax provision. Our global operations are subject to laws and regulations that impose significant compliance costs and create reputational and legal risk.
The rapid evolution of artificial intelligence, including the regulation of artificial intelligence by government or other regulatory agencies, will require significant resources to develop, test and maintain our platforms, offerings, services, and features to implement artificial intelligence ethically and minimize any unintended harmful impacts. We are exposed to political, economic and other risks that arise from operating a multinational business.
The rapid evolution of AI, including the regulation of AI by government or other regulatory agencies, will require significant resources to develop, test and maintain our platforms, offerings, services and features to implement AI ethically and minimize any unintended harmful impacts. We are exposed to political, economic and other risks that arise from operating a multinational business.
In addition, since our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on our results of operations, financial condition and cash flows. 25 Table of Contents We also face risks arising from the imposition of foreign exchange controls and currency devaluations.
In addition, since our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on our results of operations, financial condition and cash flows. We also face risks arising from the imposition of foreign exchange controls and currency devaluations.
Increasing use of artificial intelligence may increase these risks. These threats could result in unauthorized public disclosures of information, create financial liability, subject us to legal or regulatory sanctions, disrupt our ability to conduct our business, result in the loss of intellectual property or damage our reputation with customers, dealers, suppliers and other stakeholders.
Increasing use of AI may increase these risks. These threats could result in unauthorized public disclosures of information, create financial liability, subject us to legal or regulatory sanctions, disrupt our ability to conduct our business, result in the loss of intellectual property or damage our reputation with customers, dealers, suppliers and other stakeholders.
Our products primarily compete on the basis of performance, price, total cost of ownership, fuel economy, emissions compliance, speed of delivery, quality and customer support. We also face competitors in some emerging regions who have established local practices and long standing relationships with participants in these markets.
Our products primarily compete on the basis of performance, price, total cost of ownership, fuel economy, emissions compliance, speed of delivery, quality and customer support. We also face competitors in some emerging regions who have established local practices and long standing relationships with participants in these 25 Table of Contents markets.
Despite their own engine manufacturing abilities, these customers have historically chosen to outsource certain types of engine production to us due to the quality of our engine products, our emission compliance capabilities, our systems integration, their customers' preferences, their desire for cost reductions, their desire for eliminating production risks and their desire to maintain company focus.
Despite their own engine manufacturing abilities, these customers have historically chosen to outsource certain types of engine production to us due to the quality of our engine products, our emission compliance capabilities, our systems 21 Table of Contents integration, their customers' preferences, their desire for cost reductions, their desire for eliminating production risks and their desire to maintain company focus.
In an effort to limit GHG emissions and combat climate change, multiple countries and cities have announced that they plan to implement a ban on the use in their countries or cities of diesel-powered products in the near or distant future. These countries include China, India and Germany.
In an effort to limit GHG emissions and combat climate change, multiple countries and cities have announced that they plan to implement a ban on the use in their countries or cities of diesel-powered products in the near or distant future. These countries include 20 Table of Contents China, India and Germany.
Offering engines and services that customers desire and value can mitigate the risks of increasing competition and declining demand, but products and services that are perceived to be less than desirable (whether in terms of price, quality, overall value, fuel efficiency or other attributes) can exacerbate these risks.
Offering engines and 22 Table of Contents services that customers desire and value can mitigate the risks of increasing competition and declining demand, but products and services that are perceived to be less than desirable (whether in terms of price, quality, overall value, fuel efficiency or other attributes) can exacerbate these risks.
Our business benefits from free trade agreements, such as the United States-Mexico-Canada Agreement and the U.S. trade relationships including those with China, Brazil, E.U. and the U.K.
Our business benefits from international trade agreements, such as the United States-Mexico-Canada Agreement and the U.S. trade relationships including those with China, Brazil, E.U. and the U.K.
Greater political, economic and social uncertainty and the evolving globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings and impact our growth globally. Our business is subject to the political, economic and other risks that are inherent in operating in numerous countries.
Greater political, economic and social uncertainty, among, between and within countries, and the evolving globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings and impact our growth globally. Our business is subject to the political, economic and other risks that are inherent in operating in numerous countries.
Our competitors or other third parties may incorporate artificial intelligence into their products or operational processes more quickly or more successfully than us, which could have a material adverse effect on our competitive position, reputation and results of operations.
Our competitors or other third parties may incorporate AI into their products or operational processes more quickly or more successfully than us, which could have a material adverse effect on our competitive position, reputation and results of operations.
We conduct operations in many areas of the world involving transactions denominated in a variety of currencies. We are subject to foreign currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenues.
We conduct operations in many areas of the world involving transactions denominated in a variety of currencies. We are subject to foreign currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn 26 Table of Contents revenues.
In addition, if an acquisition results in any additional goodwill or increase in other intangible assets on our balance sheet and subsequently becomes impaired, we would be required to record a non-cash impairment charge, which could result in a material adverse effect on our financial condition.
In addition, if an 23 Table of Contents acquisition results in any additional goodwill or increase in other intangible assets on our balance sheet and subsequently becomes impaired, we would be required to record a non-cash impairment charge, which could result in a material adverse effect on our financial condition.
In addition, there are significant risks involved in developing and deploying artificial intelligence and there can be no assurance that the usage of artificial intelligence will enhance our products or services or be beneficial to our business, including our efficiency or profitability.
In addition, there are significant risks involved in developing and deploying AI, and there can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability.
Due to the international scope of our operations, we are subject to additional regulatory frameworks, including a complex system of commercial and trade regulations, around the world. In some cases, foreign regulatory frameworks are more stringent or complex than similar regimes in the United States.
Due to the international scope of our operations, we are subject to additional regulatory frameworks, including a complex system of commercial and trade regulations, around the world. In some cases, foreign regulatory frameworks are more stringent or complex than similar regimes in the U.S.
Any failure, or perceived failure, to meet evolving stakeholder expectations and industry standards or achieve our sustainability goals, commitments and targets could have a material adverse effect on our business, results of operations and financial condition. We may be adversely impacted by work stoppages and other labor matters. At December 31, 2024, we employed approximately 69,600 persons worldwide.
Any failure, or perceived failure, to meet evolving stakeholder expectations and industry standards or achieve our sustainability goals, commitments and targets could have a material adverse effect on our business, results of operations and financial condition. We may be adversely impacted by work stoppages and other labor matters. At December 31, 2025, we employed approximately 67,400 persons worldwide.
BUSINESS CONDITIONS / DISRUPTIONS We are vulnerable to raw material, transportation and labor price fluctuations and supply shortages, which impacted and could continue to impact our results of operations, financial condition and cash flows. We continue to experience pockets of supply chain disruptions and related challenges throughout the supply chain.
BUSINESS CONDITIONS / DISRUPTIONS We are vulnerable to raw material, transportation and labor price fluctuations and supply shortages, which impacted and could continue to impact our results of operations, financial condition and cash flows. We continue to experience pockets of supply chain disruptions and related challenges throughout the supply chain which are further impacted by the current global tariff environment.
Our income tax provision and cash tax liability in the future could be adversely affected by the adoption of new tax legislation, changes in earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and the discovery of new information in the course of our tax return preparation process.
Our income tax provision and cash tax liability in the future could be adversely affected by changes in tax laws or their interpretations, changes in earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and the discovery of new information in the course of our tax return preparation process.
Delays may be caused by factors affecting our suppliers (including, but not limited to, raw material availability, capacity constraints, port congestion, labor disputes or unrest, shortages of labor, economic downturns, availability of credit, impaired financial condition, sanctions/tariffs, energy inflation/availability, suppliers' allocations to other purchasers, weather emergencies, natural disasters, acts of government or acts of war or terrorism).
Delays may be caused by factors affecting our suppliers (including, but not limited to, raw material availability, capacity constraints, port congestion, labor disputes or unrest, shortages of labor, economic downturns, availability of credit, impaired financial condition, sanctions/tariffs, restrictions on the sale or distribution of critical rare earth metals, energy inflation/availability, suppliers' allocations to other purchasers, weather emergencies, natural disasters, acts of government or acts of war or terrorism).
In particular, changing U.S. export controls and sanctions on China, as well as other restrictions affecting transactions involving China and Chinese parties, could affect our ability to collect receivables, access cash generated in China, provide aftermarket and warranty support for our products, sell products and otherwise impact our reputation and business, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.
In particular, changing U.S. export controls and sanctions on China, as well as other restrictions affecting transactions involving China and Chinese parties, could affect our ability to collect receivables, access cash generated in China, provide aftermarket and warranty support for our products, sell products and otherwise impact our reputation and business, any of which could have a material adverse effect on our results of operations, financial condition and cash flows. 19 Table of Contents Deregulation could impair our investments in future products and negatively impact our long-term growth and competitiveness.
Any acquisition may not be accretive to us for a significant period of time following the completion of such acquisition. Also, our ability to effectively integrate any potential acquisition into our existing business and culture may not be successful, which could jeopardize future financial and operational performance for the combined businesses.
Also, our ability to effectively integrate any potential acquisition into our existing business and culture may not be successful, which could jeopardize future financial and operational performance for the combined businesses.
In 2024, more than forty percent of our equity, royalty and interest income from investees is from three of our 50 percent owned joint ventures in China - Beijing Foton Cummins Engine Co., Ltd., Dongfeng Cummins Engine Company, Ltd. and Chongqing Cummins Engine Company, Ltd.
In 2025, nearly fifty percent of our equity, royalty and interest income from investees was from three of our 50 percent-owned joint ventures in China - Chongqing Cummins Engine Company, Ltd., Dongfeng Cummins Engine Company, Ltd. and Beijing Foton Cummins Engine Co., Ltd.
While we have no reason to believe that we will be materially impacted by work stoppages or other labor matters, there can be no assurance that future issues with our labor unions will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of conflicts with labor unions or our employees.
Approximately 20,000 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2026 and 2030.While we have no reason to believe that we will be materially impacted by work stoppages or other labor matters, there can be no assurance that future issues with our labor unions will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of conflicts with labor unions or our employees.
The development of new technologies may materially reduce the demand for our current products and services. We are investing in new products and technologies, including electrolyzers for hydrogen production and electrified power systems and related components and subsystems.
The development of new technologies may materially reduce the demand for our current products and services, and we may not be successful in developing new technologies and products in order to effectively address the energy transition. We are investing in new products and technologies, including electrified power systems and related components and subsystems.
Strategic transactions also may have adverse effects on our existing business relationships with suppliers and customers. 22 Table of Contents If required, the financing for strategic acquisitions could result in an increase in our indebtedness, dilute the interests of our shareholders or both.
Strategic transactions also may have adverse effects on our existing business relationships with suppliers and customers. If required, the financing for strategic acquisitions could result in an increase in our indebtedness, dilute the interests of our shareholders or both. Any acquisition may not be accretive to us for a significant period of time following the completion of such acquisition.
The discovery of noncompliance issues could have a material adverse impact on our results of operations, financial condition and cash flows.
Any of these consequences could have a material adverse effect on our results of operations, financial condition and cash flows.
We may use artificial intelligence in our business and in our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. 23 Table of Contents We may incorporate artificial intelligence solutions into our products, services and features, and we may leverage artificial intelligence, including generative artificial intelligence and machine learning, in our product development, operations and software programming.
We are using AI in our business and in our products, services and features, and challenges with properly managing its use could result in reputational harm, competitive harm and legal liability, and adversely affect our results of operations.
As our customers in emerging markets continue to grow in size and scope, they are increasingly seeking to export their products to other countries.
Increasing global competition among our customers may affect our existing customer relationships and restrict our ability to benefit from some of our customers' growth. As our customers in emerging markets continue to grow in size and scope, they are increasingly seeking to export their products to other countries.
Furthermore, it is possible that we may not be successful in developing segment-leading electrified or alternate fuel powertrains and some of our existing customers could choose to develop their own, or source from other manufacturers, and any of these factors could have a material adverse impact on our results of operations, financial condition and cash flows. 21 Table of Contents Lower-than-anticipated market acceptance of our new or existing products or services could have a material adverse impact on our results of operations, financial condition and cash flows.
Any of these factors could have a material adverse impact on our results of operations, financial condition and cash flows. Lower-than-anticipated market acceptance of our new or existing products or services could have a material adverse impact on our results of operations, financial condition and cash flows.
There can be no assurance that our products will be able to compete successfully with the products of other companies and in other markets. 24 Table of Contents Increasing global competition among our customers may affect our existing customer relationships and restrict our ability to benefit from some of our customers' growth.
Additionally, we face increasing competition to develop innovative products that result in lower emissions. There can be no assurance that our products will be able to compete successfully with the products of other companies and in other markets.
For 2024, we recognized $395 million of equity, royalty and interest income from investees, compared to $483 million in 2023.
We derive significant earnings from investees that we do not directly control, with more than 50 percent of these earnings from our China-based investees. For 2025, we recognized $469 million of equity, royalty and interest income from investees, compared to $395 million in 2024.
Regulatory agencies are making certification and compliance with emissions and noise standards more stringent and subjecting diesel engine products to an increasing level of scrutiny. In addition, failure to comply with the terms and conditions of the Settlement Agreements will subject us to stipulated penalties.
Regulatory agencies are making certification and compliance with emissions and noise standards more stringent and subjecting diesel engine products to an increasing level of scrutiny. The discovery of noncompliance issues could have a material adverse impact on our results of operations, financial condition and cash flows.
Removed
We may become subject to additional evolving regulations related to the cleanup of contaminated property, such as the EPA's proposal to designate two widely used PFAS as hazardous substances.
Added
We operate our business on a global basis and changes in tariffs and other trade disruptions could adversely impact the demand for our products and our competitive position. We manufacture, sell and service products globally and rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products.
Removed
Additionally, we face increasing competition to develop innovative products that result in lower emissions.
Added
There is currently significant uncertainty about the future relationship between the U.S. and various other countries with respect to tariffs and other trade disruptions (such as embargoes, sanctions and export controls).
Removed
Approximately 22,000 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2025 and 2029.
Added
The uncertain tariff environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts.
Added
The extent to which tariffs and/or other trade disruptions will be enacted and the duration for which enacted tariffs and/or other trade disruptions will be in place remain uncertain and could adversely impact our production costs, customer demand and our relationships with customers and suppliers.
Added
In addition, our compliance with any such newly enacted tariffs and/or other trade disruptions is likely to require significant resources and data management systems and could increase our cost of doing business, restrict our ability to operate our business or execute our strategies, and could result in fines and penalties or reputational harm if we are found to not be in full compliance.
Added
Our strategy includes significant investments in the development of new products and technologies, particularly those designed to meet or exceed current and anticipated regulatory requirements related to emissions, safety and environmental performance.
Added
Any significant reduction, delay, or elimination of, or failure to adopt or enforce, such regulatory requirements in key markets could reduce or delay demand for our products and services, increase our costs of producing or delay the introduction of new or modified products and services or restrict our existing activities, products, and services.
Added
In addition, any discontinuation or reduction of incentives or benefits for the development of technologies limiting the impact of climate change, or significant uncertainty regarding such efforts, may cause demand for certain of our future products to be less than we anticipate.
Added
Any such change in regulatory requirements or incentives may ultimately weaken or render obsolete the business case for certain research and development initiatives or capital investments.
Added
As a result, we may be required to reassess, scale back or discontinue investments in future products that were originally intended to address more stringent regulatory standards, and may fail to realize the intended benefits of, or recover the investments we have already made in, developing new products and technologies.
Added
In addition, the adoption of new regulations or industry standards which our products and services are not positioned to address, could adversely affect demand for our products and services.
Added
Deregulation or reduction in incentives may also lead to reduced industry-wide innovation, as both we and our competitors could deprioritize or delay the introduction of advanced technologies that are no longer mandated.
Added
This could limit our ability to differentiate our products, respond to evolving customer expectations or maintain leadership in markets where regulatory requirements remain in place or are later reinstated.
Added
Furthermore, if we have already made substantial investments in anticipation of future regulations that are subsequently rolled back, we may not be able to recover those costs, which could result in asset impairments or reduced returns on investment. Any of these outcomes could adversely affect our long-term growth prospects, competitive position and financial results.
Added
For products where we are manufacturing at capacity, we cannot guarantee that we will be able to increase manufacturing capacity to a level that meets demand for our products and services, which could prevent us from meeting increased customer demand and could harm our business.
Added
Furthermore, it is possible that we may not be successful in developing segment-leading electrified powertrains. We may face technological challenges and evolving government and customer requirements, and we may not succeed in anticipating them and developing the desired technologies and products on a timely basis.
Added
Some of our existing customers could choose to develop their own or source from other manufacturers. Additionally, competitors may develop these technologies and products before we do, and they may be viewed by our customers to be superior to technologies and products we may develop.
Added
If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our products and services, as well as our relationships with various stakeholders, could be adversely affected.
Added
Alternatively, if the energy transition occurs more slowly than anticipated, demand for our new products and technologies may be lower than expected or we may need to reassess, scale back or discontinue investments in future products, and as a result, we may fail to realize the anticipated benefits of our investments in new products and technologies.
Added
Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted.
Added
We are incorporating AI solutions into our business, products, services and features, and we are leveraging AI, including generative AI, machine learning and similar tools and technologies, in our product development, operations and software programming. There is inherent risk and uncertainty involved in using AI.
Added
The use of AI in the development of our products and services could cause loss or theft of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity.
Added
The use of AI by us, our vendors or our suppliers can lead to unintended consequences, including 24 Table of Contents generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our stakeholders, our reputation and our business and expose us to risks related to inaccuracies or errors in the output of such technologies.
Added
If the AI tools that we use are deficient, inaccurate or controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results.
Added
If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, data privacy, or other rights or contracts to which we are a party.
Added
In addition, our personnel could, unbeknownst to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities. If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+1 added−1 removed11 unchanged
Biggest changeTo govern the ERM program, we established an Executive Risk Council that meets regularly to review and monitor our most significant enterprise risks, and our prevention, detection and mitigation plans, including with respect to cybersecurity. The Executive Risk Council is comprised of senior leaders with cross-functional experience and responsibilities.
Biggest changeOur processes for oversight of cybersecurity risks are integrated into our Enterprise Risk Management (ERM) program, which is led by the Executive Director, Global Risk. To govern the ERM program, we established an Executive Risk Council that meets regularly to review and monitor our most significant enterprise risks, and our prevention, detection and mitigation plans, including with respect to cybersecurity.
The Chief Information Security Officer reports to our Chief Information Officer. These leaders provide regular updates to the Audit Committee of the Board on cybersecurity risks. Through these updates, the Audit Committee receives a cybersecurity dashboard illustrating cybersecurity priorities and the status of key initiatives.
The Chief Information Security Officer reports to our Chief Information Officer. These leaders provide regular updates, at least quarterly, to the Audit Committee of the Board on cybersecurity risks. Through these updates, the Audit Committee receives a cybersecurity dashboard illustrating cybersecurity priorities and the status of key initiatives.
We will continue to develop and mature our cybersecurity operations to respond to the dynamic cybersecurity landscape. 27 Table of Contents
We will continue to develop and mature our cybersecurity operations to respond to the dynamic cybersecurity landscape. 28 Table of Contents
ITEM 1C. Cybersecurity Material Cybersecurity Risks, Threats and Incidents To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
The risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A "Risk Factors" under the heading "General," which should be read in conjunction with the foregoing information. Cybersecurity Governance We are committed to protecting our IT assets and the data stored within these assets.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A “Risk Factors” under the heading “General,” which should be read in conjunction with the foregoing information. Cybersecurity Governance We are committed to protecting our IT assets and the data stored within these assets.
Our Board and its committees are engaged in the oversight of our most significant enterprise risks, including cybersecurity risks. We assign a member of our executive management team to report material information to our Board regarding these risks. The Audit Committee, working with the Chief Information Officer, provides oversight of the enterprise cybersecurity program.
The Executive Risk Council is comprised of senior leaders with cross-functional experience and responsibilities. Our Board and its committees are engaged in the oversight of our most significant enterprise risks, including cybersecurity risks. We assign a member of our executive management team to report material information to our Board regarding these risks.
The Product Cybersecurity function, which is responsible for the administration of our product cybersecurity program, is led by the Principal Engineer – Product Cybersecurity, who has more than 35 years of embedded electronic systems design experience. The Principal Engineer – Product Cybersecurity works directly with the Chief Technical Officer.
The Product Cybersecurity function, which is responsible for the administration of our product cybersecurity program, is led by the Principal Engineer – Product Cybersecurity, who is a Cybersecurity Certified Automotive Engineer (CSCAE) and has more than 40 27 Table of Contents years of embedded electronic systems design experience.
These leaders meet with the committees on a regular basis and provide dashboards or reports, which summarize cybersecurity risks and action plans. The committees elevate matters to the Board as appropriate.
Our Board, Audit Committee and SET Committee receive reports and information from our senior leaders who have functional responsibility for the mitigation of enterprise cybersecurity and product cybersecurity risks. These leaders meet with the committees on a regular basis and provide dashboards or reports, which summarize cybersecurity risks and action plans. The committees elevate matters to the Board as appropriate.
The SET Committee, working with the Chief Technical Officer, provides oversight of the product cybersecurity program. Our Board, Audit Committee and SET Committee receive reports and information from our senior leaders who have functional responsibility for the mitigation of enterprise cybersecurity and product cybersecurity risks.
The Audit Committee, working with the Chief Information Officer, provides oversight of the enterprise cybersecurity program. The SET Committee, working with the Chief Technical Officer, provides oversight of the product cybersecurity program.
These leaders provide regular updates to the SET Committee of the Board on product related cybersecurity risks.
The Principal Engineer – Product Cybersecurity works directly with the Chief Technical Officer. These leaders provide regular updates to the SET Committee of the Board on product-related cybersecurity risks. Through these updates, the SET Committee receives a report discussing product-level vulnerability management, product-level incident management and the status of relevant product cybersecurity activities.
Removed
Through these updates, the SET Committee receives a report discussing product level vulnerability management, product level incident management and the status of relevant product cybersecurity activities. 26 Table of Contents Our processes for oversight of cybersecurity risks are integrated into our Enterprise Risk Management (ERM) program, which is led by the Executive Director, Global Risk.
Added
ITEM 1C. Cybersecurity Material Cybersecurity Risks, Threats and Incidents To date, we have not experienced a cybersecurity incident that has materially impacted our business.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeGeorgia: Atlanta Belgium: Rumst Indiana: Columbus, Indianapolis Brazil: Guarulhos Kentucky: Walton China: Beijing, Shanghai, Wuhan North Carolina: Enfield India: Phaltan, Pithampur, Pune Oregon: Portland Mexico: Juarez, San Luis Potosi Pennsylvania: Harrisburg Singapore: Pandan Avenue South Carolina: Charleston U.K.: Darlington, Daventry Tennessee: Memphis Texas: Dallas Other Facilities We operate numerous management, research and development, marketing and administrative facilities globally.
Biggest changeFacilities Facilities Outside the U.S. Georgia: Atlanta Belgium: Rumst Indiana: Columbus, Indianapolis, Whiteland Brazil: Guarulhos Nevada: Las Vegas China: Beijing, Shanghai, Wuhan Oregon: Portland India: Phaltan, Pithampur Pennsylvania: Harrisburg Mexico: San Luis Potosi Tennessee: Memphis Singapore: Pandan Avenue Texas: Dallas South Africa: Johannesburg U.K.: Daventry Other Facilities We operate numerous management, research and development, marketing and administrative facilities globally.
Engine Indiana: Columbus Brazil: Sao Paulo New York: Lakewood India: Phaltan North Carolina: Whitakers Mexico: San Luis Potosi U.K.: Darlington Components Indiana: Columbus Brazil: Sao Paulo North Carolina: Fletcher, Laurinburg China: Wuxi South Carolina: Charleston, York India: Phaltan Wisconsin: Mineral Point Italy: Cameri Mexico: Ciudad Juarez, Monterrey, San Luis Potosi Netherlands: Roermond Sweden: Lindesberg U.K.: Darlington, Huddersfield Power Systems Indiana: Elkhart, Seymour Brazil: Sao Paulo Minnesota: Fridley China: Wuhan, Wuxi New Mexico: Clovis India: Ahmednagar, Phaltan, Pune, Ranjangaon Wisconsin: Kenosha Mexico: San Luis Potosi Romania: Craiova U.K.: Daventry Accelera Indiana: Columbus Belgium: Oevel Minnesota: Fridley Canada: Mississauga North Carolina: Asheville, Forest City China: Shanghai, Tianjin Germany: Herten Spain: Guadalajara In addition, engines and engine components are manufactured by joint ventures or independent licensees at manufacturing plants in the U.S., China, India, Japan, Sweden, U.K. and Mexico. 28 Table of Contents Distribution Facilities The principal distribution facilities that serve our segments are as follows: U.S.
Engine Indiana: Columbus Brazil: Sao Paulo New York: Lakewood India: Phaltan North Carolina: Whitakers Mexico: San Luis Potosi U.K.: Darlington Components Indiana: Columbus Brazil: Sao Paulo North Carolina: Fletcher, Laurinburg China: Wuxi South Carolina: Charleston, York India: Phaltan Wisconsin: Mineral Point Italy: Cameri Mexico: Ciudad Juarez, Monterrey, San Luis Potosi Netherlands: Roermond Sweden: Lindesberg U.K.: Darlington, Huddersfield Power Systems Indiana: Elkhart, Seymour Brazil: Sao Paulo Minnesota: Fridley China: Wuhan, Wuxi New Mexico: Clovis India: Ahmednagar, Phaltan, Pune, Ranjangaon Wisconsin: Kenosha Mexico: San Luis Potosi Romania: Craiova U.K.: Daventry Accelera Indiana: Columbus Belgium: Oevel Minnesota: Fridley Canada: Mississauga North Carolina: Fletcher, Forest City China: Tianjin Germany: Herten Spain: Guadalajara In addition, engines and engine components are manufactured by joint ventures or independent licensees at manufacturing plants in the U.S., China, India, Japan, Sweden, U.K. and Mexico. 29 Table of Contents Distribution Facilities The principal distribution facilities that serve our segments are as follows: U.S.
Facilities Facilities Outside the U.S. Arizona: Avondale Australia: Mackay, Perth Colorado: Henderson Canada: Fort McMurray AB Kentucky: Florence (1) China: Beijing New Jersey: Kearny India: Pune Texas: Dallas South Africa: Johannesburg Utah: West Valley City U.K.: Wellingborough (1) Florence is a Components distribution facility. Supply Chain Facilities The principal supply chain facilities that serve our segments are as follows: U.S.
Facilities Facilities Outside the U.S. Arizona: Avondale Australia: Mackay, Perth Colorado: Henderson Canada: Fort McMurray, Sparwood Kentucky: Florence (1) China: Beijing New Jersey: Kearny India: Pune Utah: West Valley City South Africa: Johannesburg U.K.: Wellingborough (1) Florence is a Components distribution facility. Supply Chain Facilities The principal supply chain facilities that serve our segments are as follows: U.S.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−1 removed3 unchanged
Biggest changeThe dollar value remaining available for future purchases under the 2019 program at December 31, 2024, was $218 million. Our Key Employee Stock Investment Plan allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit.
Biggest changeThe dollar value remaining available for future purchases under the 2019 program at December 31, 2025, was $218 million, leaving a total of $2.2 billion available under all plans. Our Key Employee Stock Investment Plan allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit.
Our peer group includes BorgWarner Inc., Caterpillar, Inc., Daimler Truck Holding AG, Dana Inc., Deere & Company, Eaton Corporation, Emerson Electric Co., Honeywell International, Illinois Tool Works Inc., PACCAR, Parker-Hannifin Corporation, Textron Inc. and Volvo AB.
Our peer group includes AB Volvo, BorgWarner Inc., Caterpillar, Inc., Daimler Truck Holding AG, Dana Inc., Deere & Company, Eaton Corporation, Emerson Electric Co., Honeywell International, Illinois Tool Works Inc., PACCAR, Parker-Hannifin Corporation and Textron Inc.
At December 31, 2024, there were 2,253 holders of record of Cummins Inc.'s $2.50 par value common stock. 29 Table of Contents The following information is provided pursuant to Item 703 of Regulation S-K: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1 - October 31 — $ — — $ 2,218 November 1 - November 30 — — — 2,218 December 1 - December 31 — — — 2,218 Total — — — (1) Shares repurchased under our Key Employee Stock Investment Plan only occur in the event of a participant default, which cannot be predicted, and were excluded from this column.
At December 31, 2025, there were 2,136 holders of record of Cummins Inc.'s $2.50 par value common stock. 30 Table of Contents The following information is provided pursuant to Item 703 of Regulation S-K: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1 - October 31 — $ — — $ 2,218 November 1 - November 30 — — — 2,218 December 1 - December 31 — — — 2,218 Total — — — (1) Shares repurchased under our Key Employee Stock Investment Plan only occur in the event of a participant default, which cannot be predicted, and were excluded from this column.
In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. During the three months ended December 31, 2024, we did not make any repurchases of common stock.
In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. During the three months ended December 31, 2025, we did not make any repurchases of common stock.
The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our stock. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG CUMMINS INC., S&P 500 INDEX AND CUSTOM PEER GROUP ASSUMES $100 INVESTED ON DECEMBER 31, 2019 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDING DECEMBER 31, 2024
The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our stock. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG CUMMINS INC., S&P 500 INDEX AND CUSTOM PEER GROUP ASSUMES $100 INVESTED ON DECEMBER 31, 2020 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDING DECEMBER 31, 2025
Shares associated with participants' sales are sold as open-market transactions via a third-party broker. 30 Table of Contents Performance Graph (Unaudited) The following Performance Graph and related information shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any of our future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
Shares associated with participants' sales are sold as open-market transactions via a third-party broker. 31 Table of Contents Performance Graph (Unaudited) The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any of our future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NYSE under the symbol "CMI." For other matters related to our common stock and shareholders' equity, see NOTE 15, "CUMMINS INC. SHAREHOLDERS' EQUITY," to our Consolidated Financial Statements .
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NYSE under the symbol “CMI.” For other matters related to our common stock and shareholders’ equity, see NOTE 15, “CUMMINS INC. SHAREHOLDERS' EQUITY,” to our Consolidated Financial Statements .
Removed
In 2024, we re-evaluated our peer group that the Board benchmarks against and chose to remove companies that we no longer believe participate in similar end-markets or are strongly aligned with our businesses. We removed W.W. Grainger since they are primarily U.S. focused and Fortive Corporation due to a spin-off transaction that shrank the size of their business.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

146 edited+55 added−38 removed48 unchanged
Biggest changeSales for our Engine segment by market were as follows: Favorable/(Unfavorable) Years ended December 31, 2024 vs. 2023 2023 vs. 2022 In millions 2024 2023 2022 Amount Percent Amount Percent Heavy-duty truck $ 4,244 $ 4,399 $ 3,847 $ (155) (4) % $ 552 14 % Medium-duty truck and bus 4,166 3,670 3,460 496 14 % 210 6 % Light-duty automotive 1,595 1,762 1,738 (167) (9) % 24 1 % Total on-highway 10,005 9,831 9,045 174 2 % 786 9 % Off-highway 1,707 1,853 1,900 (146) (8) % (47) (2) % Total sales $ 11,712 $ 11,684 $ 10,945 $ 28 — % $ 739 7 % Percentage Points Percentage Points On-highway sales as percentage of total sales 85 % 84 % 83 % 1 1 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: Favorable/(Unfavorable) Years ended December 31, 2024 vs. 2023 2023 vs. 2022 2024 2023 2022 Amount Percent Amount Percent Heavy-duty 132,900 141,900 120,700 (9,000) (6) % 21,200 18 % Medium-duty 310,300 294,100 283,600 16,200 6 % 10,500 4 % Light-duty 189,400 211,500 227,600 (22,100) (10) % (16,100) (7) % Total unit shipments 632,600 647,500 631,900 (14,900) (2) % 15,600 2 % 40 Table of Contents 2024 vs. 2023 Sales Engine segment sales increased $28 million.
Biggest changeFor all prior year segment results comparisons to 2023 see the Results of Operations section of our 2024 Form 10-K . 41 Table of Contents Engine Segment Results Financial data for the Engine segment was as follows: Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 In millions 2025 2024 2023 Amount Percent Amount Percent External sales $ 8,104 $ 8,987 $ 8,874 $ (883) (10) % $ 113 1 % Intersegment sales 2,771 2,725 2,810 46 2 % (85) (3) % Total sales 10,875 11,712 11,684 (837) (7) % 28 — % Research, development and engineering expenses 624 616 614 (8) (1) % (2) — % Equity, royalty and interest income from investees 254 212 251 42 20 % (39) (16) % Interest income 37 17 19 20 NM (2) (11) % Segment EBITDA 1,382 1,653 1,630 (271) (16) % 23 1 % Percentage Points Percentage Points Segment EBITDA as a percentage of total sales 12.7 % 14.1 % 14.0 % (1.4) 0.1 "NM" - not meaningful information Sales for our Engine segment by market were as follows: Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 In millions 2025 2024 2023 Amount Percent Amount Percent Heavy-duty truck $ 3,489 $ 4,244 $ 4,399 $ (755) (18) % $ (155) (4) % Medium-duty truck and bus 3,613 4,166 3,670 (553) (13) % 496 14 % Light-duty automotive 1,930 1,595 1,762 335 21 % (167) (9) % Total on-highway 9,032 10,005 9,831 (973) (10) % 174 2 % Off-highway 1,843 1,707 1,853 136 8 % (146) (8) % Total sales $ 10,875 $ 11,712 $ 11,684 $ (837) (7) % $ 28 — % Percentage Points Percentage Points On-highway sales as percentage of total sales 83 % 85 % 84 % (2) 1 Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows: Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 2025 2024 2023 Amount Percent Amount Percent Heavy-duty 101,900 132,900 141,900 (31,000) (23) % (9,000) (6) % Medium-duty 280,500 310,300 294,100 (29,800) (10) % 16,200 6 % Light-duty 171,800 189,400 211,500 (17,600) (9) % (22,100) (10) % Total unit shipments 554,200 632,600 647,500 (78,400) (12) % (14,900) (2) % 2025 vs. 2024 Sales Engine segment sales decreased $837 million.
At the same time, our geographic diversity and broad product and service offerings have helped limit the impact from a drop in demand in any one industry, region, the economy of any single country or customer on our consolidated results.
At the same time, our geographic diversity and broad product and service offerings have helped limit the impact from a drop in demand in any one industry, region, customer or the economy of any single country on our consolidated results.
OPERATING SEGMENT RESULTS Our reportable operating segments consist of the Engine, Components, Distribution, Power Systems and Accelera segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBITDA as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable operating segments.
REPORTABLE SEGMENT RESULTS Our reportable segments consist of the Engine, Components, Distribution, Power Systems and Accelera segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBITDA as the basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable segments.
Accounts Receivable Sales Program In May 2024, we entered into an accounts receivable sales agreement with Wells Fargo Bank, N.A., to sell certain accounts receivable up to the Board approved limit of $500 million. There was no activity under the program during the year ended December 31, 2024.
Accounts Receivable Sales Program In May 2024, we entered into an accounts receivable sales agreement with Wells Fargo Bank, N.A., to sell certain accounts receivable up to the Board approved limit of $500 million. There was no activity under the program during the year ended December 31, 2025.
If we adopted the immediate recognition approach, we would record a loss of $1.1 billion ($0.9 billion after-tax) from cumulative actuarial net losses for our U.S. and U.K. pension plans.
If we adopted the immediate recognition approach, we would record a loss of $1.2 billion ($0.9 billion after-tax) from cumulative actuarial net losses for our U.S. and U.K. pension plans.
We believe our access to capital markets, our existing cash and marketable securities, operating cash flow and revolving credit facilities provide us with the financial flexibility needed to fund targeted capital expenditures, dividend payments, debt service obligations, projected pension obligations, common stock repurchases, joint venture contributions and acquisitions through 2025 and beyond.
We believe our access to the capital markets, our existing cash and marketable securities, operating cash flow and revolving credit facilities provide us with the financial flexibility needed to fund targeted capital expenditures, dividend payments, debt service obligations, projected pension obligations, common stock repurchases, joint venture contributions and acquisitions through 2026 and beyond.
Research activities continue to focus on development of new products and improvements of current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas-powered engines and related components, as well as development activities around electrified power systems with innovative components and systems including battery and electric power technologies and hydrogen production technologies.
Research activities continue to focus on development of new products and improvements of current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas-powered engines and related components, as well as development activities around electrified power systems with innovative components and systems including battery and electric power technologies.
A more complete description of our income taxes and the future benefits of our net operating loss and credit carryforwards is disclosed in NOTE 4, "INCOME TAXES," to our Consolidated Financial Statements . Pension Benefits We sponsor a number of pension plans globally, with the majority of assets in the U.S. and the U.K.
A more complete description of our income taxes and the future benefits of our net operating loss and credit carryforwards is disclosed in NOTE 4, “INCOME TAXES,” to our Consolidated Financial Statements . Pension Benefits We sponsor a number of pension plans globally, with the majority of assets in the U.S. and the U.K.
The resulting discount rate is reflective of both the current interest rate environment and the plan's distinct liability characteristics. The table below sets forth the estimated impact on our 2025 net periodic pension cost relative to a change in the discount rate and a change in the expected rate of return on plan assets.
The resulting discount rate is reflective of both the current interest rate environment and the plan’s distinct liability characteristics. The table below sets forth the estimated impact on our 2026 net periodic pension cost relative to a change in the discount rate and a change in the expected rate of return on plan assets.
Stock Repurchases In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. For the year ended December 31, 2024, we did not make any repurchases of common stock.
Stock Repurchases In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. For the year ended December 31, 2025, we did not make any repurchases of common stock.
We test for goodwill impairment at the reporting unit level and our reporting units are the operating segments or the components of operating segments that constitute businesses for which discrete financial information is available and is regularly reviewed by management.
We test for goodwill impairment at the reporting unit level and our reporting units are the reportable segments or the components of reportable segments that constitute businesses for which discrete financial information is available and is regularly reviewed by management.
As a result of these actions, we recorded several charges in the fourth quarter related to inventory write-downs, intangible and fixed asset impairments and joint venture impairments. Total charges for these strategic reorganization actions were $312 million. See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," to our Consolidated Financial Statements for additional information.
As a result of these actions, we recorded several charges in the fourth quarter related to inventory write-downs, intangible and fixed asset impairments and joint venture impairments. Total charges for these strategic reorganization actions were $312 million. See NOTE 22, “ACCELERA ACTIONS,” to our Consolidated Financial Statements for additional information.
Department of Justice (DOJ) and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements).
Department of Justice (DOJ) and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in 34 Table of Contents April 2024 (collectively, the Settlement Agreements).
The examples noted above are not all-inclusive, and we consider other relevant events and circumstances that affect the fair value of a reporting unit in determining whether to perform the quantitative goodwill impairment test. Our goodwill recoverability assessment is based on our annual strategic planning process.
The examples noted above are not all-inclusive, and we consider other relevant events and circumstances that affect the fair value of a reporting unit in determining whether to perform the quantitative goodwill impairment test. 53 Table of Contents Our goodwill recoverability assessment is based on our annual strategic planning process.
The long-term rate of return considers historical returns and expected returns on current and projected asset allocations. Projected returns are based primarily on broad, publicly traded passive fixed income and equity indices and forward-looking estimates of the value added by active investment management.
The long-term rate of return considers historical returns and expected returns on 54 Table of Contents current and projected asset allocations. Projected returns are based primarily on broad, publicly traded passive fixed income and equity indices and forward-looking estimates of the value added by active investment management.
The discussion and analysis of fiscal year 2022 and changes in the financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022, that are not included in this Form 10-K, may be found in Part II, ITEM 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (SEC) on February 12, 2024.
The discussion and analysis of fiscal year 2023 and changes in the financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 , that are not included in this Form 10-K, may be found in Part II, ITEM 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (SEC) on February 11, 2025.
This review resulted in decisions to consolidate certain manufacturing efforts, focus internal development efforts towards areas of differentiation while continuing to leverage partners and reduce our investments in certain technologies, joint ventures and markets. In addition, declining customer demand in certain key product lines caused us to re-evaluate the recoverability of certain inventory items.
This review resulted in strategic reorganization actions, including decisions to consolidate certain manufacturing efforts, focus internal development efforts towards areas of differentiation while continuing to leverage partners and reduce our investments in certain technologies, joint ventures and markets. In addition, declining customer demand in certain key product lines caused us to re-evaluate the recoverability of certain inventory items.
A more detailed discussion of sales by segment is presented in the "OPERATING SEGMENT RESULTS" section. 36 Table of Contents Cost of Sales The types of expenses included in cost of sales are the following: parts and material consumption, including direct and indirect materials; compensation and related expenses, including variable compensation, salaries and fringe benefits; depreciation on production equipment and facilities and amortization of technology intangibles; estimated costs of warranty programs and campaigns; production utilities; production-related purchasing; warehousing, including receiving and inspection; freight costs; engineering support costs; repairs and maintenance; production and warehousing facility property insurance and rent for production facilities and other production overhead.
A more detailed discussion of sales by segment is presented in the “REPORTABLE SEGMENT RESULTS” section. 38 Table of Contents Cost of Sales The types of expenses included in cost of sales are the following: parts and material consumption, including direct and indirect materials; compensation and related expenses, including variable compensation, salaries and fringe benefits; depreciation on production equipment and facilities and amortization of technology intangibles; estimated costs of warranty programs and campaigns; production utilities; production-related purchasing; warehousing, including receiving and inspection; freight costs; engineering support costs; repairs and maintenance; production and warehousing facility property insurance and rent for production facilities and other production overhead.
The details were as follows: Years ended December 31, 2024 2023 In millions Translation adjustment Primary currency driver vs. U.S. dollar Translation adjustment Primary currency driver vs.
The details were as follows: Years ended December 31, 2025 2024 In millions Translation adjustment Primary currency driver vs. U.S. dollar Translation adjustment Primary currency driver vs.
Our MD&A is presented in the following sections: • EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS • RESULTS OF OPERATIONS • OPERATING SEGMENT RESULTS • 2025 OUTLOOK • LIQUIDITY AND CAPITAL RESOURCES • APPLICATION OF CRITICAL ACCOUNTING ESTIMATES • RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023.
Our MD&A is presented in the following sections: • EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS • RESULTS OF OPERATIONS • REPORTABLE SEGMENT RESULTS • 2026 OUTLOOK • LIQUIDITY AND CAPITAL RESOURCES • APPLICATION OF CRITICAL ACCOUNTING ESTIMATES • RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year 2025 compared to fiscal year 2024.
We continue to serve all our markets as they adopt electrification and alternative power technologies, meeting the needs of our OEM partners and end customers. 32 Table of Contents Our financial performance depends, in large part, on varying conditions in the markets we serve, particularly the on-highway, off-highway, power generation and general industrial markets.
We continue to serve all our markets as they adopt electrification, meeting the needs of our OEM partners and end customers. 33 Table of Contents Our financial performance depends, in large part, on varying conditions in the markets we serve, particularly the on-highway, off-highway, power generation and general industrial markets.
Our senior management has discussed the development and selection of our accounting policies, related accounting estimates and the disclosures set forth below with the Audit Committee of the Board. We believe our critical accounting estimates include estimating liabilities for warranty programs, fair value of intangible assets, assessing goodwill impairments, accounting for income taxes and pension benefits.
Our senior management has discussed the development and selection of our accounting policies, related accounting estimates and the disclosures set forth below with the Audit Committee of the Board. We believe our critical accounting estimates include estimating liabilities for warranty programs, assessing goodwill impairments and accounting for income taxes and pension benefits.
We then pay the financial intermediary the face amount of the invoice on the original due date, which generally have 60 to 90 day payment terms. The maximum amount that we could have outstanding under these programs was $551 million at December 31, 2024.
We then pay the financial intermediary the face amount of the invoice on the original due date, which generally have 60 to 90 day payment terms. The maximum amount that we could have outstanding under these programs was $574 million at December 31, 2025.
Accelera Strategic Reorganization Actions In the fourth quarter of 2024, our Accelera segment underwent a strategic review to better streamline operations as well as pace and re-focus investments on the most promising paths as the adoption of certain zero emission solutions slows.
In the fourth quarter of 2024, our Accelera segment underwent a strategic review to better streamline operations as well as pace and re-focus investments on the most promising paths as the adoption of certain zero emission solutions slow.
Contributions to the U.S. and U.K. plans were as follows: Years ended December 31, In millions 2024 2023 2022 Defined benefit pension contributions $ 71 $ 115 $ 53 Defined contribution pension plans 126 130 110 These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants.
Contributions to the U.S. and U.K. plans were as follows: Years ended December 31, In millions 2025 2024 2023 Defined benefit pension contributions $ 50 $ 71 $ 115 Defined contribution pension plans 125 126 130 These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants.
Selling, General and Administrative Expenses Selling, general and administrative expenses decreased $58 million and decreased 0.2 points as a percentage of sales. The decreases were primarily due to lower compensation expenses. Compensation and related expenses include salaries, fringe benefits and variable compensation.
Selling, General and Administrative Expenses Selling, general and administrative expenses decreased $150 million and decreased 0.3 points as a percentage of sales. The decreases were primarily due to lower compensation expenses. Compensation and related expenses include salaries, fringe benefits and variable compensation.
Debt Facilities and Other Sources of Liquidity On June 3, 2024, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 3, 2029.
Debt Facilities and Other Sources of Liquidity On June 2, 2025, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2030.
Long-term Expected Return Assumptions 2025 2024 2023 2022 U.S. plans 7.00 % 7.25 % 7.00 % 6.50 % U.K. plans 5.00 % 5.00 % 5.00 % 4.01 % Pension accounting offers various acceptable alternatives to account for the differences that eventually arise between the estimates used in the actuarial valuations and the actual results.
Long-term Expected Return Assumptions 2026 2025 2024 2023 U.S. plans 7.50 % 7.00 % 7.25 % 7.00 % U.K. plans 5.60 % 5.00 % 5.00 % 5.00 % Pension accounting offers various acceptable alternatives to account for the differences that eventually arise between the estimates used in the actuarial valuations and the actual results.
We anticipate making total contributions of approximately $52 million to our global defined benefit pension plans in 2025. Expected contributions to our defined benefit pension plans in 2025 will meet or exceed the current funding requirements.
We anticipate making total contributions of approximately $51 million to our global defined benefit pension plans in 2026. Expected contributions to our defined benefit pension plans in 2026 will meet or exceed the current funding requirements.
See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," to our Consolidated Financial Statements for additional information. Settlement Agreements In December 2023, we announced that we reached an agreement in principle with the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environmental and Natural Resources Division of the U.S.
See NOTE 21, “ATMUS DIVESTITURE,” to our Consolidated Financial Statements for additional information. Settlement Agreements In December 2023, we announced that we reached an agreement in principle with the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environmental and Natural Resources Division of the U.S.
See NOTE 14, "COMMITMENTS AND CONTINGENCIES," to our Consolidated Financial Statements for additional information. 2024 Results A summary of our results is as follows: Years ended December 31, In millions, except per share amounts 2024 (1) 2023 (2) 2022 Net sales $ 34,102 $ 34,065 $ 28,074 Net income attributable to Cummins Inc. 3,946 735 2,151 Earnings per common share attributable to Cummins Inc.
See NOTE 14, COMMITMENTS AND CONTINGENCIES,” to our Consolidated Financial Statements for additional information. 2025 Results A summary of our results is as follows: Years ended December 31, In millions, except per share amounts 2025 (1) 2024 (2) 2023 (3) Net sales $ 33,670 $ 34,102 $ 34,065 Net income attributable to Cummins Inc. 2,843 3,946 735 Earnings per common share attributable to Cummins Inc.
The guidelines for setting this rate suggest the use of a high-quality corporate bond rate. We used bond information provided by Moody's Investor Services, Inc. and Standard & Poor's Rating Services.
The guidelines for setting this rate suggest the use of a high-quality corporate bond rate. We used bond information provided by Moody's Investor Services, Inc. and Standard & Poor's Rating Services. The bond data is collected from Bloomberg.
U.S. dollar Wholly-owned subsidiaries $ (245) Brazilian real, Chinese renminbi, Euro and Indian rupee $ 118 British pound and Brazilian real, partially offset by Chinese renminbi Equity method investments (15) Chinese renminbi and Brazilian real, partially offset by Indian rupee (23) Chinese renminbi, partially offset by Brazilian real Consolidated subsidiaries with a noncontrolling interest (16) Indian rupee (3) Chinese renminbi Total $ (276) $ 92 For all prior year foreign currency translation adjustment results comparisons to 2022 see the Results of Operations section of our 2023 Form 10-K .
U.S. dollar Wholly-owned subsidiaries $ 227 Euro, British pound and Brazilian real $ (245) Brazilian real, Chinese renminbi, Euro and Indian rupee Equity method investments 30 Chinese renminbi, partially offset by Indian rupee (15) Chinese renminbi and Brazilian real, partially offset by Indian rupee Consolidated subsidiaries with a noncontrolling interest (13) Indian rupee, partially offset by Euro (16) Indian rupee Total $ 244 $ (276) For all prior year foreign currency translation adjustment results comparisons to 2023 see the Results of Operations section of our 2024 Form 10-K .
The table below sets forth our expected rate of return for 2025 and the expected return assumptions used to develop our pension cost for the period 2022-2024.
The table below sets forth our expected rate of return for 2026 and the expected return assumptions used to develop our pension cost for the period 2023-2025.
The contractual obligations reported above exclude our unrecognized tax benefits of $304 million as of December 31, 2024, which includes $187 million of current tax liabilities and $117 million of long-term deferred tax liabilities. We are not able to reasonably estimate the period in which cash outflows relating to uncertain tax contingencies could occur.
The contractual obligations reported above exclude our unrecognized tax benefits of $272 million as of December 31, 2025, which includes $180 million of current tax liabilities and $92 million of long-term deferred tax liabilities. We are not able to reasonably estimate the period in which cash outflows relating to uncertain tax contingencies could occur.
See NOTE 3, "INVESTMENTS IN EQUITY INVESTEES," to our Consolidated Financial Statements for additional information.
See NOTE 3, “INVESTMENTS IN EQUITY INVESTEES,” to our Consolidated Financial Statements for additional information.
Discount Rates 2025 2024 2023 2022 U.S. plans 5.69 % 5.15 % 5.55 % 3.31 % U.K. plans 5.62 % 4.72 % 4.99 % 2.26 % The discount rate enables us to state expected future cash payments for benefits as a present value on the measurement date.
Discount Rates 2026 2025 2024 2023 U.S. plans 5.60 % 5.69 % 5.15 % 5.55 % U.K. plans 5.58 % 5.62 % 4.72 % 4.99 % The discount rate enables us to state expected future cash payments for benefits as a present value on the measurement date.
See NOTE 25, "OPERATING SEGMENTS," to our Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income .
See NOTE 24, “REPORTABLE SEGMENTS,” to our Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income .
Cash dividends per share paid to common shareholders and the Board authorized increases for the last three years were as follows: Quarterly Dividends 2024 2023 2022 First quarter $ 1.68 $ 1.57 $ 1.45 Second quarter 1.68 1.57 1.45 Third quarter 1.82 1.68 1.57 Fourth quarter 1.82 1.68 1.57 Total $ 7.00 $ 6.50 $ 6.04 Capital Expenditures Capital expenditures were $1.2 billion, $1.2 billion and $916 million in 2024, 2023 and 2022, respectively.
Cash dividends per share paid to common shareholders and the Board authorized increases for the last three years were as follows: Quarterly Dividends 2025 2024 2023 First quarter $ 1.82 $ 1.68 $ 1.57 Second quarter 1.82 1.68 1.57 Third quarter 2.00 1.82 1.68 Fourth quarter 2.00 1.82 1.68 Total $ 7.64 $ 7.00 $ 6.50 Capital Expenditures Capital expenditures were $1.2 billion each year in 2025, 2024 and 2023.
Our U.S. defined benefit plans (qualified and non-qualified), which represented approximately 70 percent of the worldwide pension obligation, were 117 percent funded, and our U.K. defined benefit plans were 109 percent funded at December 31, 2024.
Our U.S. defined benefit plans (qualified and non-qualified), which represented approximately 70 percent of the worldwide pension obligation, were 115 percent funded, and our U.K. defined benefit plans were 105 percent funded at December 31, 2025.
Research, Development and Engineering Expenses Research, development and engineering expenses decreased $37 million and decreased 0.1 points as a percentage of sales. The decreases were mainly due to lower spending on prototypes and decreased compensation expenses. Compensation and related expenses include salaries, fringe benefits and variable compensation.
Research, Development and Engineering Expenses Research, development and engineering expenses decreased $67 million and decreased 0.2 points as a percentage of sales. The decreases were mainly due to lower compensation expenses. Compensation and related expenses include salaries, fringe benefits and variable compensation.
(2) The 5-year credit facility for $2.0 billion and the 364-day credit facility for $2.0 billion, maturing June 2029 and June 2025, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes.
(2) The 5-year credit facility for $2.0 billion and the 3-year credit facility for $2.0 billion, maturing June 2030 and June 2028, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes.
Plan Target Allocation Percentage of Plan Assets at December 31, Target Allocation Percentage of Plan Assets at December 31, Investment description 2025 2024 2023 2025 2024 2023 Liability matching 71.0 % 69.5 % 71.0 % 80.0 % 79.4 % 80.8 % Risk seeking 29.0 % 30.5 % 29.0 % 20.0 % 20.6 % 19.2 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % The differences between the actual return on plan assets and expected long-term return on plan assets are recognized in the asset value used to calculate net periodic cost over five years.
Plan Target Allocation Percentage of Plan Assets at December 31, Target Allocation Percentage of Plan Assets at December 31, Investment description 2026 2025 2024 2026 2025 2024 Liability matching 60.0 % 60.2 % 69.5 % 83.0 % 82.9 % 79.4 % Risk seeking 40.0 % 39.8 % 30.5 % 17.0 % 17.1 % 20.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % The differences between the actual return on plan assets and expected long-term return on plan assets are recognized in the asset value used to calculate net periodic cost over five years.
On June 3, 2024, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 3, 2029. The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on August 18, 2026.
The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on June 3, 2029. We also entered into a new 3-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2028.
As a result, all amounts owed 48 Table of Contents to the financial intermediaries are presented as accounts payable in our Consolidated Balance Sheets . Amounts due to the financial intermediaries reflected in accounts payable at December 31, 2024, were $142 million. See NOTE 1, "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES," to our Consolidated Financial Statements for additional information.
As a result, all amounts owed to the financial intermediaries are presented as accounts payable in our Consolidated Balance Sheets . Amounts due to the financial intermediaries reflected in accounts payable at December 31, 2025, were $153 million. See NOTE 1, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” to our Consolidated Financial Statements for additional information.
The one-year return for our U.S. plans was a 5.5 percent gain for 2024. Our U.S. plan assets averaged annualized returns of 5.74 percent over the prior ten years and resulted in approximately $473 million of actuarial losses in accumulated other comprehensive loss (AOCL) in the same period.
The one-year return for our U.S. plans was a 10.1 percent gain for 2025. Our U.S. plan assets averaged annualized returns of 6.8 percent over the prior ten years and resulted in approximately $213 million of actuarial losses in accumulated other comprehensive loss (AOCL) in the same period.
As a worldwide business, our operations are also affected by geopolitical risks, currency fluctuations, political and economic uncertainty, public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards, in the countries we serve.
As a worldwide business, our operations are also affected by geopolitical risks, currency fluctuations, political and economic uncertainty, tariffs and related trade disruptions, public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards.
Our debt to capital ratio (total capital defined as debt plus equity) at December 31, 2024, was 38.4 percent, compared to 40.3 percent at December 31, 2023. The decrease was primarily due to the increased equity balance from stronger earnings since December 31, 2023, partially offset by higher debt balances at December 31, 2024.
Our debt to capital ratio (total capital defined as debt plus equity) at December 31, 2025, was 36.0 percent, compared to 38.4 percent at December 31, 2024. The decrease was primarily due to increased equity balances from strong earnings since December 31, 2024, partially offset by higher debt balances at December 31, 2025.
At December 31, 2024, we recorded a net deferred tax asset of $730 million. The net deferred tax assets included $907 million for the value of net operating loss and credit carryforwards. A valuation allowance of $872 million was recorded to reduce the tax assets to the net value management believed was more likely than not to be realized.
At December 31, 2025, we recorded a net deferred tax asset of $675 million. The net deferred tax assets included $1.0 billion for the value of net operating loss and credit carryforwards. A valuation allowance of $954 million was recorded to reduce the tax assets to the net value management believed was more likely than not to be realized.
At December 31, 2024, based upon our target asset allocations, it is anticipated that our U.K. investment policy will generate an average annual return over the 20-year projection period equal to or in excess of 5 percent. The one-year return for our U.K. plans was a 9.6 percent loss for 2024.
Based upon our target asset allocations and forward-looking return expectations, it is anticipated that our U.K. investment policy will generate an average annual return over the 20-year projection period equal to or in excess of 5.6 percent. The one-year return for our U.K. plans was a 0.8 percent loss for 2025.
At December 31, 2024, we had $1.3 billion of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $2.7 billion. 47 Table of Contents Cash, Cash Equivalents and Marketable Securities A significant portion of our cash flows are generated outside the U.S.
At December 31, 2025, we had $353 million of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $3.6 billion. Cash, Cash Equivalents and Marketable Securities A significant portion of our cash flows are generated outside the U.S.
All bonds used to develop our hypothetical portfolio in the U.S. and U.K. were deemed high-quality, non-callable bonds (Aa or better) at December 31, 2024, by at least one of the bond rating agencies. Our model called for projected payments until near extinction for the U.S. and the U.K.
All bonds used to develop our hypothetical portfolio in the U.S. and U.K. were deemed high-quality, non-callable bonds (Aa or better) at December 31, 2025, by at least one of the bond rating agencies.
At December 31, 2024, based upon our target asset allocations, it is anticipated that our U.S. investment policy will generate an average annual return over the 30-year projection period equal to or in excess of 7 percent, including the additional positive returns expected from active investment management.
Based upon our target asset allocations, historical returns and forward-looking return expectations for capital markets, it is anticipated that our U.S. investment policy will generate an average annual return over the 30-year projection period equal to or in excess of 7.5 percent, including the additional positive returns expected from active investment management.
In millions 2025 2024 2023 2022 Net periodic pension cost $ 76 $ 34 $ 1 $ 19 We expect 2025 net periodic pension cost to increase compared to 2024, primarily due to unfavorable asset returns in the U.K. and a lower expected rate of return in the U.S., partially offset by higher discount rates in the U.S. and U.K.
The increase in net periodic pension cost in 2025 compared to 2024 was primarily due to unfavorable asset returns in the U.K. and a lower expected rate of return in the U.S., partially offset by higher discount rates in the U.S. and U.K.
An increase in discount rates, a reduction in projected 52 Table of Contents cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year.
An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year. We perform the annual goodwill impairment assessment as of October 31 each year.
In July 2024, the Board of Directors (Board) authorized an increase to our quarterly dividend of approximately 8 percent from $1.68 per share to $1.82 per share.
In July 2025, the Board of Directors (Board) authorized an increase to our quarterly dividend of approximately 10 percent from $1.82 per share to $2.00 per share.
Other Income, Net Other income, net was as follows: Years ended December 31, In millions 2024 2023 Gain related to divestiture of Atmus (1) $ 1,333 $ — Non-service pension and OPEB income 112 125 Interest income 87 95 Gain on sale of marketable securities, net 8 15 Gain on corporate-owned life insurance 6 26 Foreign currency loss, net (41) (30) Other, net 18 9 Total other income, net $ 1,523 $ 240 (1) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," to our Consolidated Financial Statements for additional information.
Other Income, Net Other income, net was as follows: Years ended December 31, In millions 2025 2024 Interest income $ 106 $ 87 Non-service pension and OPEB income 66 112 Gain on corporate owned life insurance 38 6 Gain on sale of marketable securities, net 22 8 Foreign currency gain (loss), net 5 (41) Gain related to divestiture of Atmus (1) — 1,333 Other, net 30 18 Total other income, net $ 267 $ 1,523 (1) See NOTE 21, “ATMUS DIVESTITURE,” to our Consolidated Financial Statements for additional information.
See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," and NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS" to our Consolidated Financial Statements for additional information.
See NOTE 21, "ATMUS DIVESTITURE," and NOTE 22, "ACCELERA ACTIONS" to our Consolidated Financial Statements for additional information.
In July 2024, the Board authorized an increase to our quarterly dividend of approximately 8 percent from $1.68 per share to $1.82 per share.
In July 2025, the Board authorized an increase to our quarterly dividend of approximately 10 percent from $1.82 per share to $2.00 per share.
Noncontrolling interests in income of consolidated subsidiaries increased $17 million principally due to higher earnings at Cummins India Limited and the absence of losses at Hydrogenics Corporation resulting from the June 2023 acquisition, partially offset by lower earnings at Eaton Cummins Joint Venture and the divestiture of Atmus. 2023 vs. 2022 For all prior year segment results comparisons to 2022 see the Results of Operations section of our 2023 Form 10-K . 38 Table of Contents Comprehensive Income - Foreign Currency Translation Adjustment The foreign currency translation adjustment was a net loss of $276 million and net gain of $92 million for the years ended December 31, 2024 and 2023, respectively.
Noncontrolling interests in income of consolidated subsidiaries decreased $8 million primarily due to losses from a former joint venture consolidated in the first quarter of 2025, the divestiture of Atmus and lower earnings at our other joint ventures, partially offset by higher earnings at Cummins India Limited. 2024 vs. 2023 For all prior year segment results comparisons to 2023 see the Results of Operations section of our 2024 Form 10-K . 40 Table of Contents Comprehensive Income - Foreign Currency Translation Adjustment The foreign currency translation adjustment was a net gain of $244 million and net loss of $276 million for the years ended December 31, 2025 and 2024, respectively.
See NOTE 4, "INCOME TAXES," to our Consolidated Financial Statements for additional information. 50 Table of Contents Credit Ratings Our rating and outlook from each of the credit rating agencies as of the date of filing are shown in the table below: Long-Term Short-Term Credit Rating Agency (1) Senior Debt Rating Debt Rating Outlook Standard & Poor’s Rating Services A A1 Stable Moody’s Investors Service, Inc.
Credit Ratings Our rating and outlook from each of the credit rating agencies as of the date of filing are shown in the table below: Long-Term Short-Term Credit Rating Agency (1) Senior Debt Rating Debt Rating Outlook Standard & Poor’s Rating Services A A1 Stable Moody’s Investors Service, Inc.
The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on August 18, 2026. On June 3, 2024, we entered into an amended and restated 364-day credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2025.
The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on June 3, 2029. We also entered into a new 3-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2028.
Cost of sales in 2024 included $112 million of inventory write-downs and severance in our Accelera segment. See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," to our Consolidated Financial Statements for additional information. Gross Margin Gross margin increased $190 million and increased 0.5 points as a percentage of sales.
Cost of sales in 2025 and 2024 included $157 million and $112 million, respectively of inventory write-downs, contract termination costs and severance in our Accelera segment. See NOTE 22, “ACCELERA ACTIONS,” to our Consolidated Financial Statements for additional information. Gross Margin Gross margin increased $77 million and increased 0.6 points as a percentage of sales.
This process includes an extensive review of expectations for the long-term growth of our businesses and forecasted future cash flows. In order to determine the valuation of our reporting units, we use either the income approach using a discounted cash flow model or the market approach.
This process includes an extensive review of expectations for the long-term growth of our businesses and forecasted future cash flows. In order to determine the fair value of our reporting units, we primarily use the income approach.
See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," to our Consolidated Financial Statements for additional information.
See NOTE 22, “ACCELERA ACTIONS,” to our Consolidated Financial Statements for additional information.
Net actuarial losses decreased our shareholders' equity by $34 million after-tax in 2024. The loss is primarily due to unfavorable asset returns, partially offset by a favorable change in discount rates. The table below sets forth the net periodic pension cost for the years ended December 31 and our expected cost for 2025.
Net actuarial losses incurred in 2025 decreased our shareholders' equity by $90 million after-tax, primarily due to unfavorable changes in discount rates. The table below sets forth the net periodic pension cost for the years ended December 31 and our expected cost for 2026.
See NOTE 23, "ACQUISITIONS," to our Consolidated Financial Statements for additional information about our recent business combinations. Goodwill Impairment We are required to make certain subjective and complex judgments in assessing whether a goodwill impairment event has occurred, including assumptions and estimates used to determine the fair value of our reporting units.
Goodwill Impairment We are required to make certain subjective and complex judgments in assessing whether a goodwill impairment event has occurred, including assumptions and estimates used to determine the fair value of our reporting units.
At December 31, 2024, we had $2.3 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $1.3 billion commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs.
At December 31, 2025, we had $3.6 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of $353 million of commercial paper outstanding), if necessary, to meet working capital, investment, acquisition and funding needs. In the second half of 2025, we recorded $458 million of charges for Accelera actions.
International sales (excludes the U.S. and Canada) declined by 1 percent, primarily due to lower sales in China and Europe which were mostly offset with higher sales in Latin America and India.
International sales (excludes the U.S. and Canada) improved by 2 percent, primarily due to higher sales in China and Europe, partially offset by lower sales in Latin America.
In addition, we expect our 2025 net periodic pension cost to approximate $76 million. See "APPLICATION OF CRITICAL ACCOUNTING ESTIMATES" and NOTE 10, "PENSIONS AND OTHER POSTRETIREMENT BENEFITS," to our Consolidated Financial Statements for additional information concerning our pension and other postretirement benefit plans.
We expect to contribute approximately $51 million in cash to our global pension plans in 2026. In addition, we expect our 2026 net periodic pension cost to approximate $73 million. See “APPLICATION OF CRITICAL ACCOUNTING ESTIMATES” and NOTE 10, “PENSIONS AND OTHER POSTRETIREMENT BENEFITS,” to our Consolidated Financial Statements for additional information concerning our pension and other postretirement benefit plans.
Income Tax Expense Our effective tax rate for 2024 was 17.0 percent compared to 48.3 percent for 2023. The year ended December 31, 2024, contained net favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off.
The year ended December 31, 2024, contained net favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off.
The effect of exchange rate changes on cash and cash equivalents increased $28 million, primarily due to favorable fluctuations in the British pound, partially offset by the Brazilian real. 2023 vs. 2022 For prior year liquidity comparisons see the Liquidity and Capital Resources section of our 2023 Form 10-K . Sources of Liquidity We generate significant ongoing operating cash flow.
The effect of exchange rate changes on cash and cash equivalents increased $96 million, primarily due to favorable fluctuations in the Chinese renminbi, Euro and British pound. 2024 vs. 2023 For prior year liquidity comparisons see the Liquidity and Capital Resources section of our 2024 Form 10-K . 48 Table of Contents Sources of Liquidity We typically generate significant ongoing cash flow and cash provided by operations is generally our principal source of liquidity.
(2) Net income and earnings per common share included a $2.0 billion charge related to the Settlement Agreements for the year ended December 31, 2023.
(3) Net income and earnings per common share included a $2.0 billion charge related to the Settlement Agreements for the year ended December 31, 2023. See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” to our Consolidated Financial Statements for additional information.
Financial data for the Accelera segment was as follows: Favorable/(Unfavorable) Favorable/(Unfavorable) Years ended December 31, 2024 vs. 2023 2023 vs. 2022 In millions 2024 2023 2022 Amount Percent Amount Percent External sales $ 369 $ 336 $ 176 $ 33 10 % $ 160 91 % Intersegment sales 45 18 22 27 NM (4) (18) % Total sales 414 354 198 60 17 % 156 79 % Research, development and engineering expenses 226 (1) 203 171 (23) (11) % (32) (19) % Equity, royalty and interest loss from investees (50) (1) (15) (2) (35) NM (13) NM Interest income 1 2 — (1) (50) % 2 NM Segment EBITDA (764) (1) (443) (334) (321) (72) % (109) (33) % "NM" - not meaningful information (1) Included $2 million of charges in research, development and engineering expenses, $17 million of charges in equity, royalty and interest loss from investees and $312 million of charges in EBITDA, all related to strategic reorganization actions in the fourth quarter of 2024.
Financial data for the Accelera segment was as follows: Favorable/(Unfavorable) Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 In millions 2025 2024 2023 Amount Percent Amount Percent External sales $ 423 $ 369 $ 336 $ 54 15 % $ 33 10 % Intersegment sales 37 45 18 (8) (18) % 27 NM Total sales 460 414 354 46 11 % 60 17 % Research, development and engineering expenses 186 (1) 226 (2) 203 40 18 % (23) (11) % Equity, royalty and interest loss from investees (30) (50) (2) (15) 20 40 % (35) NM Interest income 1 1 2 — — % (1) (50) % Segment EBITDA (896) (1) (764) (2) (443) (132) (17) % (321) (72) % “NM” - not meaningful information (1) Included $7 million of charges in research, development and engineering expenses and $458 million of charges in EBITDA for 2025 Accelera actions.
Management's Assessment of Liquidity Our financial condition and liquidity remain strong. Our solid balance sheet and credit ratings enable us to have ready access to credit and the capital markets. We assess our liquidity in terms of our ability to generate adequate cash to fund our operating, investing and financing activities.
Management's Assessment of Liquidity Our financial condition and liquidity remain strong. Our solid balance sheet and credit ratings enable us to have ready access to credit and the capital markets.
Our committed credit facilities also provide access up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes.
There were no outstanding borrowings under these facilities at December 31, 2025. Our committed credit facilities also provide access up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers.
LIQUIDITY AND CAPITAL RESOURCES Key Working Capital and Balance Sheet Data We fund our working capital with cash from operations and short-term borrowings, including commercial paper, when necessary. Various assets and liabilities, including short-term debt, can fluctuate significantly from month-to-month depending on short-term liquidity needs. As a result, working capital is a prime focus of management's attention.
Various assets and liabilities, including short-term debt, can fluctuate significantly from month-to-month depending on short-term liquidity needs. As a result, working capital is a prime focus of management's attention.
The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems and our electrolyzers for hydrogen production.
The Accelera segment designs, manufactures, sells and supports electrified power systems with innovative components and subsystems, including battery and electric powertrain technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems.
The change had no impact on our consolidated results. 41 Table of Contents Sales for our Components segment by business were as follows: Favorable/(Unfavorable) Years ended December 31, 2024 vs. 2023 2023 vs. 2022 In millions 2024 2023 2022 Amount Percent Amount Percent Drivetrain and braking systems $ 4,733 $ 4,822 $ 1,879 $ (89) (2) % $ 2,943 NM Emission solutions 3,601 3,835 3,494 (234) (6) % 341 10 % Components and software 2,404 2,409 2,213 (5) — % 196 9 % Automated transmissions 588 714 593 (126) (18) % 121 20 % Atmus 353 (1) 1,629 1,557 (1,276) (78) % 72 5 % Total sales $ 11,679 $ 13,409 $ 9,736 $ (1,730) (13) % $ 3,673 38 % "NM" - not meaningful information (1) Included sales through the March 18, 2024, divestiture. 2024 vs. 2023 Sales Components segment sales decreased $1.7 billion across all businesses.
Sales for our Components segment by business were as follows: Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 In millions 2025 2024 2023 Amount Percent Amount Percent Drivetrain and braking systems $ 3,986 $ 4,733 $ 4,822 $ (747) (16) % $ (89) (2) % Emission solutions 3,457 3,601 3,835 (144) (4) % (234) (6) % Components and software 2,283 2,404 2,409 (121) (5) % (5) — % Automated transmissions 423 588 714 (165) (28) % (126) (18) % Atmus — 353 (1) 1,629 (353) (100) % (1,276) (78) % Total sales $ 10,149 $ 11,679 $ 13,409 $ (1,530) (13) % $ (1,730) (13) % (1) Included sales through the March 18, 2024 divestiture. 43 Table of Contents 2025 vs. 2024 Sales Components segment sales decreased $1.5 billion across all businesses.
This credit agreement amended and restated the prior $2.0 billion 364-day credit facility that matured on June 3, 2024.
The credit agreement replaced the prior $2.0 billion 364-day credit facility that matured on June 2, 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2024, the potential gain or loss in the fair value of our outstanding foreign currency contracts, assuming a hypothetical 10 percent fluctuation in the currencies of such contracts, would be approximately $25 million.
Biggest changeAt December 31, 2025, the potential gain or loss in the fair value of our outstanding foreign currency contracts, assuming a hypothetical 10 percent fluctuation in the currencies of such contracts, would be approximately $64 million. The sensitivity analysis of the effects of changes in foreign currency exchange rates assumes the notional value remains constant for the next 12 months.
This risk is closely monitored and managed through the use of physical forward contracts (which are not considered derivatives) and financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps. Financial derivatives are used expressly for hedging purposes and under no circumstances are they used for speculative purposes.
This risk is closely monitored and managed through the use of physical forward contracts (which are not considered derivatives) and financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps and locks. Financial derivatives are used expressly for hedging purposes and under no circumstances are they used for speculative purposes.
The sensitivity analysis assumes instantaneous, parallel shifts in foreign currency exchange rates and commodity prices. See NOTE 20, "DERIVATIVES," to our Consolidated Financial Statements for additional information. Foreign Currency Exchange Rate Risk As a result of our international business presence, we are exposed to foreign currency exchange rate risks.
The sensitivity analysis assumes instantaneous, parallel shifts in foreign currency exchange rates and commodity prices. See NOTE 20, “DERIVATIVES,” to our Consolidated Financial Statements for additional information. Foreign Currency Exchange Rate Risk As a result of our international business presence, we are exposed to foreign currency exchange rate risks.
These commodity swaps are designated and qualify as cash flow hedges. At December 31, 2024, realized and unrealized gains and losses related to these hedges were not material to our financial statements.
These commodity swaps are designated and qualify as cash flow hedges. At December 31, 2025, realized and unrealized gains and losses related to these hedges were not material to our financial statements.
Any change in the value of the contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items. Interest Rate Risk We are exposed to market risk from fluctuations in interest rates. We manage our exposure to interest rate fluctuations through the use of interest rate swaps.
Any change in the value of the contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items. 57 Table of Contents Interest Rate Risk We are exposed to market risk from fluctuations in interest rates. We manage our exposure to interest rate fluctuations through the use of interest rate swaps.
We are further exposed to foreign currency exchange risk as many of our subsidiaries are subject to fluctuations as the functional currencies of the underlying entities are not our U.S. dollar reporting currency. In order to minimize movements in certain investments, in 2022 we began entering into foreign exchange forwards designated as net investment hedges.
We are further exposed to foreign currency exchange risk as many of our subsidiaries are subject to fluctuations as the functional currencies of the underlying entities are not our U.S. dollar reporting currency. In order to minimize movements in certain investments, we enter into foreign exchange forwards designated as net investment hedges.
At any time, a change in interest rates could have an adverse impact on the fair value of our portfolios. Assuming a hypothetical adverse movement in interest rates of one percentage point, the combined value of our interest rate derivatives portfolios would be reduced by $29 million, as calculated as of December 31, 2024.
At any time, a change in interest rates could have an adverse impact on the fair value of our portfolios. Assuming a hypothetical adverse movement in interest rates of one percentage point, the combined value of our interest rate derivatives portfolios would be reduced by $40 million, as calculated as of December 31, 2025.
These arrangements, as further described below, enable us to fix the prices of portions of our normal purchases of these commodities, which otherwise are subject to market volatility. 55 Table of Contents The following describes our risk exposures and provides the results of a sensitivity analysis performed at December 31, 2024.
These arrangements, as further described below, enable us to fix the prices of portions of our normal purchases of these commodities, which otherwise are subject to market volatility. The following describes our risk exposures and provides the results of a sensitivity analysis performed at December 31, 2025.
Our foreign currency cash flow hedges generally mature within two years. These foreign currency forward contracts are designated and qualify as foreign currency cash flow hedges. For the years ended December 31, 2024, and 2023, there were no circumstances that resulted in the discontinuance of a foreign currency cash flow hedge.
These foreign currency forward contracts are designated and qualify as foreign currency cash flow hedges and generally mature withing two years. For the years ended December 31, 2025, and 2024, there were no circumstances that resulted in the discontinuance of a foreign currency cash flow hedge.
We also enter into physical forward contracts, which qualify for the normal purchases scope exception and are treated as purchase commitments. 56 Table of Contents We also limit our exposure to commodity price risk by entering into purchasing arrangements to fix the price of certain volumes of platinum, palladium and iridium expected to be used in our products.
We also limit our exposure to commodity price risk by entering into purchasing arrangements to fix the price of certain volumes of platinum, palladium and iridium expected to be used in our products.
The sensitivity analysis of the effects of changes in foreign currency exchange rates assumes the notional value to remain constant for the next 12 months. The analysis ignores the impact of foreign exchange movements on our competitive position and potential changes in sales levels.
The analysis ignores the impact of foreign exchange movements on our competitive position and potential changes in sales levels.
Additional information on the physical forwards is included in NOTE 14, "COMMITMENTS AND CONTINGENCIES." 57 Table of Contents
These physical forward contracts qualify for the normal purchases scope exception and are treated as purchase commitments. Additional information on the physical forwards is included in NOTE 14, “COMMITMENTS AND CONTINGENCIES.” 58 Table of Contents
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In the second quarter of 2025, we began entering into cross-currency interest rate swaps designated as net investment hedges for certain of our investments to help reduce volatility in the equity value of our subsidiaries.
Added
Under the current terms of our cross-currency interest rate swaps, we generally pay fixed-rate interest in Euros or Chinese renminbi and receive fixed-rate interest in U.S. dollars. These swaps are utilized to hedge portions of our net investments denominated in these currencies against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar.
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The fixed-rate interest payments on the swaps are recorded as interest income. The change in fair value of the swaps is deferred and reported as components of AOCL. The unrealized gain or loss is classified into income in the same period when the foreign subsidiary is sold or substantially liquidated.

Other CMI 10-K year-over-year comparisons