10-Q 1 cmi-20240331.htm 10-Q cmi-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
cumminslogoa02.jpg
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2024
 
Commission File Number 1-4949
CUMMINS INC.
(Exact name of registrant as specified in its charter)
Indiana35-0257090
(State of Incorporation)  (IRS Employer Identification No.)
500 Jackson Street
Box 3005
Columbus, Indiana 47202-3005
(Address of principal executive offices)
 
Telephone (812377-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $2.50 par valueCMINew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files). Yes x No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated FilerxAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
As of March 31, 2024, there were 136,779,875 shares of common stock outstanding with a par value of $2.50 per share.

1

CUMMINS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
 
  Page
  
 Condensed Consolidated Statements of Net Income for the three months ended March 31, 2024 and 2023
 Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023
 Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023
 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023
 Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Equity for the three months ended March 31, 2024 and 2023
 
  
 



2

PART I.  FINANCIAL INFORMATION 
ITEM 1.  Condensed Consolidated Financial Statements 

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
Three months ended
 March 31,
In millions, except per share amounts 20242023
NET SALES (Notes 1 and 2)
$8,403 $8,453 
Cost of sales 6,362 6,424 
GROSS MARGIN 2,041 2,029 
OPERATING EXPENSES AND INCOME   
Selling, general and administrative expenses 839 753 
Research, development and engineering expenses 369 350 
Equity, royalty and interest income from investees (Note 4)123 119 
Other operating expense, net33 19 
OPERATING INCOME 923 1,026 
Interest expense 89 87 
Other income, net (Note 14)1,387 90 
INCOME BEFORE INCOME TAXES 2,221 1,029 
Income tax expense (Note 5)193 223 
CONSOLIDATED NET INCOME 2,028 806 
Less: Net income attributable to noncontrolling interests35 16 
NET INCOME ATTRIBUTABLE TO CUMMINS INC. $1,993 $790 
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.  
Basic $14.10 $5.58 
Diluted $14.03 $5.55 
 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING   
Basic 141.3 141.5 
Dilutive effect of stock compensation awards 0.8 0.9 
Diluted 142.1 142.4 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
3

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended
 March 31,
In millions 20242023
CONSOLIDATED NET INCOME $2,028 $806 
Other comprehensive (loss) income, net of tax (Note 12)  
Change in pension and other postretirement defined benefit plans (13)(9)
Foreign currency translation adjustments (60)82 
Unrealized gain (loss) on derivatives 12 (3)
Total other comprehensive (loss) income, net of tax (61)70 
COMPREHENSIVE INCOME 1,967 876 
Less: Comprehensive income attributable to noncontrolling interests 32 19 
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC. $1,935 $857 
 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
4

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except par valueMarch 31,
2024
December 31,
2023
ASSETS  
Current assets   
Cash and cash equivalents $2,541 $2,179 
Marketable securities (Note 6)510 562 
Total cash, cash equivalents and marketable securities 3,051 2,741 
Accounts and notes receivable, net 5,463 5,583 
Inventories (Note 7)5,758 5,677 
Prepaid expenses and other current assets 1,348 1,197 
Total current assets 15,620 15,198 
Long-term assets   
Property, plant and equipment 11,253 11,674 
Accumulated depreciation (5,242)(5,425)
Property, plant and equipment, net6,011 6,249 
Investments and advances related to equity method investees 1,774 1,800 
Goodwill2,406 2,499 
Other intangible assets, net2,455 2,519 
Pension assets (Note 3)1,187 1,197 
Other assets (Note 8)2,374 2,543 
Total assets $31,827 $32,005 
LIABILITIES  
Current liabilities   
Accounts payable (principally trade) $4,476 $4,260 
Loans payable (Note 9)342 280 
Commercial paper (Note 9)609 1,496 
Current maturities of long-term debt (Note 9)113 118 
Accrued compensation, benefits and retirement costs 561 1,108 
Current portion of accrued product warranty (Note 10)652 667 
Current portion of deferred revenue (Note 2)1,236 1,220 
Other accrued expenses (Note 8)3,697 3,754 
Total current liabilities 11,686 12,903 
Long-term liabilities   
Long-term debt (Note 9)5,771 4,802 
Deferred revenue (Note 2)1,061 966 
Other liabilities (Note 8)3,208 3,430 
Total liabilities $21,726 $22,101 
Commitments and contingencies (Note 11)
EQUITY
Cummins Inc. shareholders’ equity  
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued
$2,557 $2,564 
Retained earnings 19,605 17,851 
Treasury stock, at cost, 85.7 and 80.7 shares
(10,831)(9,359)
Accumulated other comprehensive loss (Note 12)(2,264)(2,206)
Total Cummins Inc. shareholders’ equity 9,067 8,850 
Noncontrolling interests1,034 1,054 
Total equity $10,101 $9,904 
Total liabilities and equity $31,827 $32,005 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
5

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
 March 31,
In millions20242023
CASH FLOWS FROM OPERATING ACTIVITIES  
Consolidated net income $2,028 $806 
Adjustments to reconcile consolidated net income to net cash provided by operating activities   
Gain related to divestiture of Atmus (Note 14)(1,333) 
Depreciation and amortization265 246 
Deferred income taxes(38)(38)
Equity in income of investees, net of dividends (78)(67)
Pension and OPEB expense (Note 3)9 1 
Pension contributions and OPEB payments (Note 3)(48)(92)
Changes in current assets and liabilities, net of acquisitions and divestitures  
Accounts and notes receivable (11)(621)
Inventories (354)(263)
Other current assets (175)(142)
Accounts payable 327 381 
Accrued expenses(393)151 
Other, net 77 133 
Net cash provided by operating activities 276 495 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures (169)(193)
Acquisition of business, net of cash acquired (59) 
Investments in marketable securities—acquisitions (379)(326)
Investments in marketable securities—liquidations (Note 6)431 345 
Cash associated with Atmus divestiture (174) 
Other, net (56)(54)
Net cash used in investing activities (406)(228)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from borrowings 2,398 43 
Net payments of commercial paper (887)(29)
Payments on borrowings and finance lease obligations (748)(142)
Dividend payments on common stock(239)(222)
Other, net (25)(13)
Net cash provided by (used in) financing activities 499 (363)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7)(25)
Net increase (decrease) in cash and cash equivalents362 (121)
Cash and cash equivalents at beginning of year 2,179 2,101 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,541 $1,980 
 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
6

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
(Unaudited)
 
Three months ended
In millions, except per share amountsRedeemable Noncontrolling InterestsCommon StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Cummins Inc. Shareholders’ EquityNoncontrolling InterestsTotal Equity
BALANCE AT DECEMBER 31, 2023$ $556 $2,008 $17,851 $(9,359)$(2,206)$8,850 $1,054 $9,904 
Net income 1,993 1,993 35 2,028 
Other comprehensive loss, net of tax (Note 12)(119)(119)(3)(122)
Cash dividends on common stock, $1.68 per share
(239)(239) (239)
Distributions to noncontrolling interests  (33)(33)
Share-based awards (6)60 54  54 
Divestiture of Atmus (Note 14)(1,532)61 (1,471)(19)(1,490)
Other shareholder transactions (1)(1) (1)
BALANCE AT MARCH 31, 2024$ $556 $2,001 $19,605 $(10,831)$(2,264)$9,067 $1,034 $10,101 
BALANCE AT DECEMBER 31, 2022$258 $556 $1,687 $18,037 $(9,415)$(1,890)$8,975 $992 $9,967 
Net income(8)790 790 24 814 
Other comprehensive income, net of tax (Note 12)67 67 3 70 
Cash dividends on common stock, $1.57 per share
(222)(222)— (222)
Distributions to noncontrolling interests— (22)(22)
Share-based awards(5)25 20 — 20 
Fair value adjustment of redeemable noncontrolling interests11 (11)(11)— (11)
Other shareholder transactions3 1 4 — 4 
BALANCE AT MARCH 31, 2023$261 $556 $1,674 $18,605 $(9,389)$(1,823)$9,623 $997 $10,620 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

7

CUMMINS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Overview
Cummins Inc. (“Cummins,” “we,” “our” or “us”) was 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 solutions leader comprised of five business segments - Components, Engine, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, hydrogen production technologies and fuel cell products. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We serve our customers through a service network of approximately 450 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.
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. See NOTE 14, "ATMUS DIVESTITURE," 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. Department of Justice 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 11, “COMMITMENTS AND CONTINGENCIES,” for additional information.
Interim Condensed Financial Statements
The unaudited Condensed Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows. All such adjustments are of a normal recurring nature. The Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations.
These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. Our interim period financial results for the three month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all required annual disclosures.
Reclassifications
Certain amounts for prior year periods were reclassified to conform to the current year presentation.
Use of Estimates in Preparation of Financial Statements
Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our Condensed Consolidated Financial Statements. Significant estimates and assumptions in these Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.
8

Weighted-Average Diluted Shares Outstanding
The weighted-average diluted common shares outstanding exclude the anti-dilutive effect of certain stock options. The options excluded from diluted earnings per share were as follows:
 
Three months ended
 March 31,
 20242023
Options excluded3,600 4,833 
Related Party Transactions
In accordance with the provisions of various joint venture agreements, we may purchase products and components from our joint ventures, sell products and components to our joint ventures and our joint ventures may sell products and components to unrelated parties.
The following is a summary of sales to and purchases from nonconsolidated equity investees:
Three months ended
 March 31,
In millions20242023
Sales to nonconsolidated equity investees$351 $376 
Purchases from nonconsolidated equity investees653 704 
The following is a summary of accounts receivable from and accounts payable to nonconsolidated equity investees:
In millionsMarch 31,
2024
December 31,
2023
Balance Sheet Location
Accounts receivable from nonconsolidated equity investees$425 $530 Accounts and notes receivable, net
Accounts payable to nonconsolidated equity investees325 324 Accounts payable (principally trade)
Supply Chain Financing
We currently have supply chain financing programs with financial intermediaries, which provide certain vendors the option to be paid by financial intermediaries earlier than the due date on the applicable invoice. When a vendor utilizes the program and receives an early payment from a financial intermediary, they take a discount on the invoice. 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 the program was $512 million at March 31, 2024. We do not reimburse vendors for any costs they incur for participation in the program, their participation is completely voluntary and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. As a result, all amounts owed to the financial intermediaries are presented as accounts payable in our Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in accounts payable at March 31, 2024, and December 31, 2023, were $193 million and $199 million, respectively.
NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, as of March 31, 2024, was $3.1 billion. We expect to recognize the related revenue of $1.4 billion over the next 12 months and $1.7 billion over periods up to 10 years. See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.
9

Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
In millionsMarch 31,
2024
December 31,
2023
Unbilled revenue$330 $303 
Deferred revenue2,297 2,186 
We recognized revenue of $248 million for the three months ended March 31, 2024, compared with $206 million for the comparable period in 2023, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three months ended March 31, 2024 or 2023.
Disaggregation of Revenue
Consolidated Revenue
The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.
Three months ended
 March 31,
In millions20242023
United States$4,785 $4,802 
China723 790 
India444 411 
Other international2,451 2,450 
Total net sales$8,403 $8,453 
Segment Revenue
Components segment external sales by business were as follows:
Three months ended
March 31,
In millions20242023
Axles and brakes$1,232 $1,272 
Emission solutions856 939 
Atmus289 
(1)
342 
Engine components271 292 
Automated transmissions165 178 
Software and electronics29 20 
Total sales$2,842 $3,043 
 (1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
10

Engine segment external sales by market were as follows:
Three months ended
March 31,
In millions20242023
Heavy-duty truck$811 $860 
Medium-duty truck and bus738 617 
Light-duty automotive438 441 
Total on-highway1,987 1,918 
Off-highway253 334 
Total sales$2,240 $2,252 
Distribution segment external sales by region were as follows:
Three months ended
March 31,
In millions20242023
North America$1,722 $1,693 
Asia Pacific285 239 
Europe240 194 
China100 101 
India69 57 
Latin America59 53 
Africa and Middle East54 62 
Total sales$2,529 $2,399 
Distribution segment external sales by product line were as follows:
Three months ended
March 31,
In millions20242023
Parts$997 $1,052 
Power generation705 491 
Engines422 456 
Service405 400 
Total sales$2,529 $2,399 
Power Systems segment external sales by product line were as follows:
Three months ended
March 31,
In millions20242023
Power generation$360 $380 
Industrial238 189 
Generator technologies110 110 
Total sales$708 $679 
11

NOTE 3. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit (OPEB) plans. Contributions to these plans were as follows:
Three months ended
 March 31,
In millions20242023
Defined benefit pension contributions$39 $88 
OPEB payments, net9 4 
Defined contribution pension plans48 43 
We anticipate making additional defined benefit pension contributions during the remainder of 2024 of $29 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 2024 annual net periodic pension cost to approximate $34 million.
The components of net periodic pension and OPEB expense (income) under our plans were as follows:
 Pension  
 U.S. PlansU.K. PlansOPEB
 Three months ended March 31,
In millions202420232024202320242023
Service cost$35 $29 $4 $4 $ $ 
Interest cost42 42 18 17 2 2 
Expected return on plan assets(72)(69)(25)(25)  
Recognized net actuarial loss (gain)3 2 3  (1)(1)
Net periodic benefit expense (income)$8 $4 $ $(4)$1 $1 
NOTE 4. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES
Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting period was as follows:
Three months ended
 March 31,
In millions20242023
Manufacturing entities
Dongfeng Cummins Engine Company, Ltd.$22 $19 
Chongqing Cummins Engine Company, Ltd.15 9 
Beijing Foton Cummins Engine Co., Ltd.13 16 
Tata Cummins, Ltd.9 8 
All other manufacturers23 19 
Distribution entities
Komatsu Cummins Chile, Ltda.13 14 
All other distributors5 3 
Cummins share of net income100 88 
Royalty and interest income23 31 
Equity, royalty and interest income from investees$123 $119 
12

In September 2023, our Accelera business signed an agreement to form a joint venture with Daimler Trucks and Buses US Holding LLC (Daimler Truck), PACCAR Inc. (PACCAR) and EVE Energy to accelerate and localize battery cell production and the battery supply chain in the U.S., including building a 21-gigawatt hour battery production facility in Marshall County, Mississippi. The joint venture will manufacture battery cells for electric commercial vehicles and industrial applications. Accelera, Daimler Truck and PACCAR will each own 30 percent of the joint venture, while EVE Energy will own 10 percent. Total investment by the partners is expected to be in the range of $2 billion to $3 billion for the 21-gigawatt hour facility. The transaction received all applicable merger control and regulatory approvals during or prior to April 2024, and the joint venture formation and initial funding are expected to be finalized in the second quarter of 2024.
NOTE 5. INCOME TAXES
Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 21.7 percent, respectively.
The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements.
The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits.
NOTE 6. MARKETABLE SECURITIES
A summary of marketable securities, all of which were classified as current, was as follows:
 March 31,
2024
December 31,
2023
In millionsCost
Gross unrealized gains/(losses) (1)
Estimated
fair value
Cost
Gross unrealized gains/(losses) (1)
Estimated
fair value
Equity securities      
Certificates of deposit$245 $ $245 $246 $ $246 
Debt mutual funds225 (1)224 272  272 
Equity mutual funds21 7 28 22 6 28 
Debt securities13  13 16  16 
Marketable securities$504 $6 $510 $556 $6 $562 
(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in our Condensed Consolidated Statements of Net Income.
All debt securities are classified as available-for-sale. All marketable securities presented use a Level 2 fair value measure. The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during the three months ended March 31, 2024, or the year ended December 31, 2023.

A description of the valuation techniques and inputs used for our Level 2 fair value measures is as follows:
Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.
Debt mutual funds — The fair value measures for the vast majority of these investments are the daily net asset values published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input measure.
Equity mutual funds — The fair value measures for these investments are the net asset values published by the issuing brokerage. Daily quoted prices are available from reputable third-party pricing services and are used on a test basis to corroborate this Level 2 input measure.
Debt securities — The fair value measures for these securities are broker quotes received from reputable firms. These securities are infrequently traded on a national exchange and these values are used on a test basis to corroborate our Level 2 input measure.
13

The proceeds from sales and maturities of marketable securities were as follows:
Three months ended
March 31,
In millions20242023
Proceeds from sales of marketable securities$426 $276 
Proceeds from maturities of marketable securities5 69 
Investments in marketable securities - liquidations$431 $345 
NOTE 7. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Inventories included the following:
 
In millionsMarch 31,
2024
December 31,
2023
Finished products$2,931 $2,770 
Work-in-process and raw materials3,049 3,156 
Inventories at FIFO cost5,980 5,926 
Excess of FIFO over LIFO(222)(249)
Inventories$5,758 $5,677 
NOTE 8. SUPPLEMENTAL BALANCE SHEET DATA
Other assets included the following:
In millionsMarch 31,
2024
December 31,
2023
Deferred income taxes$950 $1,082 
Operating lease assets455 501 
Corporate owned life insurance419 417 
Other550 543 
Other assets$2,374 $2,543 
Other accrued expenses included the following:
In millionsMarch 31,
2024
December 31,
2023
Settlement Agreements (1)
$1,938 $1,938 
Income taxes payable361 242 
Marketing accruals340 399 
Other taxes payable222 296 
Current portion of operating lease liabilities129 138 
Other707 741 
Other accrued expenses$3,697 $3,754 
(1) See NOTE 11, "COMMITMENTS AND CONTINGENCIES," for additional information.
14

Other liabilities included the following:
In millionsMarch 31,
2024
December 31,
2023
Accrued product warranty (1)
$816 $777 
Pensions495 530 
Deferred income taxes355 530 
Operating lease liabilities332 374 
Accrued compensation186 213 
Mark-to-market valuation on interest rate derivatives124 117 
Other postretirement benefits123 131 
Long-term income taxes111 111 
Other666 647 
Other liabilities$3,208 $3,430 
(1) See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional information.
NOTE 9. DEBT
Loans Payable and Commercial Paper
Loans payable, commercial paper and the related weighted-average interest rates were as follows:
In millionsMarch 31,
2024
December 31,
2023
Loans payable (1)
$342 $280 
Commercial paper (2)
609 1,496 
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 5.23 percent and 5.43 percent at March 31, 2024, and December 31, 2023, respectively.
We can issue up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board of Directors 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.
Revolving Credit Facilities
Our committed credit facilities provide access up to $4.0 billion, including our $2.0 billion 364-day facility that expires June 3, 2024, and our $2.0 billion five-year facility that expires on August 18, 2026. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. There were no outstanding borrowings under these facilities at March 31, 2024, and December 31, 2023. At March 31, 2024, the $609 million of outstanding commercial paper effectively reduced the $4.0 billion of revolving credit capacity to $3.4 billion.
At March 31, 2024, we also had an additional $396 million available for borrowings under our international and other domestic credit facilities.
15

Long-term Debt
A summary of long-term debt was as follows:
In millionsInterest RateMarch 31,
2024
December 31,
2023
Long-term debt  
Hydrogenics promissory notes, due 2024 and 2025—%$160 $160 
Term loan, due 2025 (1) (2)
Variable500 1,150 
Senior notes, due 2025 (3)
0.75%500 500 
Atmus term loan, due 2027 (4)
Variable 600 
Debentures, due 20276.75%58 58 
Debentures, due 20287.125%250 250 
Senior notes, due 20294.90%500  
Senior notes, due 2030 (3)
1.50%850 850 
Senior notes, due 20345.15%750  
Senior notes, due 20434.875%500 500 
Senior notes, due 20502.60%650 650 
Senior notes, due 20545.45%1,000  
Debentures, due 2098 (5)
5.65%165 165 
Other debt90 94 
Unamortized discount and deferred issuance costs(100)(72)
Fair value adjustments due to hedge on indebtedness(111)(96)
Finance leases122 111 
Total long-term debt5,884 4,920 
Less: Current maturities of long-term debt113 118 
Long-term debt$5,771 $4,802 
(1) During the first three months of 2024, we paid down $650 million of the term loan.
(2) In 2023, we entered into a series of interest rate swaps in order to trade a portion of the floating rate debt into fixed rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(3) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(4) See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(5) The effective interest rate is 7.48 percent.
On February 20, 2024, we issued $2.25 billion aggregate principal amount of senior unsecured notes consisting of $500 million aggregate principal amount of 4.90 percent senior unsecured notes due in 2029, $750 million aggregate principal amount of 5.15 percent senior unsecured notes due in 2034 and $1.0 billion aggregate principal amount of 5.45 percent senior unsecured notes due in 2054. We received net proceeds of $2.2 billion. The senior unsecured notes pay interest semi-annually on February 20 and August 20, commencing on August 20, 2024. The indenture governing the senior unsecured notes contains covenants that, among other matters, limit (i) our ability to consolidate or merge into, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our and our subsidiaries' assets to another person, (ii) our and certain of our subsidiaries' ability to create or assume liens and (iii) our and certain of our subsidiaries' ability to engage in sale and leaseback transactions.
Principal payments required on long-term debt during the next five years are as follows:
In millions20242025202620272028
Principal payments$101 

$1,128 $41 $76 $267 
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Fair Value of Debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
 
In millionsMarch 31,
2024
December 31,
2023
Fair value of total debt (1)
$6,491 $6,375 
Carrying value of total debt6,835 6,696 
(1) The fair value of debt is derived from Level 2 input measures.
NOTE 10. PRODUCT WARRANTY LIABILITY
A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued product campaigns, was as follows:
Three months ended
March 31,
In millions20242023
Balance at beginning of year$2,497 $2,477 
Provision for base warranties issued160 146 
Deferred revenue on extended warranty contracts sold96 102 
Provision for product campaigns issued6 6 
Payments made during period(176)(143)
Amortization of deferred revenue on extended warranty contracts(77)(75)
Changes in estimates for pre-existing product warranties and campaigns51 10 
Foreign currency translation adjustments and other(18)7 
Balance at end of period$2,539 $2,530 
We recognized supplier recoveries of $22 million for the three months ended March 31, 2024, compared with $10 million for the comparable period in 2023.
Warranty related deferred revenues and warranty liabilities on our Condensed Consolidated Balance Sheets were as follows:
In millionsMarch 31,
2024
December 31,
2023
Balance Sheet Location
Deferred revenue related to extended coverage programs  
Current portion$274 $279 Current portion of deferred revenue
Long-term portion797 774 Deferred revenue
Total$1,071 $1,053  
Product warranty  
Current portion$652 $667 Current portion of accrued product warranty
Long-term portion816 777 Other liabilities
Total$1,468 $1,444  
Total warranty accrual$2,539 $2,497 
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NOTE 11. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are subject to numerous lawsuits and claims arising out of the ordinary course of our business, including actions related to product liability; personal injury; the use and performance of our products; warranty matters; product recalls; patent, trademark or other intellectual property infringement; contractual liability; the conduct of our business; tax reporting in foreign jurisdictions; distributor termination; workplace safety; environmental and regulatory matters, including the enforcement of environmental and emissions standards; and asbestos claims. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based upon then presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
We conduct significant business operations in Brazil that are subject to the Brazilian federal, state and local labor, social security, tax and customs laws. While we believe we comply with such laws, they are complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.
In December 2023, we announced that we reached an agreement in principle with the EPA, CARB, the Environmental and Natural Resources Division of the U.S. Department of Justice 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). As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make other payments. Failure to comply with the Settlement Agreements will subject us to stipulated penalties. We recorded a charge of $2.0 billion in the fourth quarter of 2023 to resolve the matters addressed by the Settlement Agreements involving approximately one million of our pick-up truck applications in the U.S. This charge was in addition to the previously announced charges of $59 million for the recalls of model years 2013 through 2018 RAM 2500 and 3500 trucks and model years 2016 through 2019 Titan trucks. We began making payments on certain of the Settlement Agreements in April 2024; however, the majority of the Settlement Agreement payments will be made in May 2024.
We have also been in communication with other non-U.S. regulators regarding matters related to the emission systems in our engines and may also become subject to additional regulatory review in connection with these matters.
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.
The consequences resulting from the resolution of the foregoing matters are uncertain and the related expenses and reputational damage could have a material adverse impact on our results of operations, financial condition and cash flows.
Guarantees and Commitments
Periodically, we enter into guarantee arrangements, including guarantees of non-U.S. distributor financings, residual value guarantees on equipment under operating leases and other miscellaneous guarantees of joint ventures or third-party obligations. At March 31, 2024, the maximum potential loss related to these guarantees was $39 million.
We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At March 31, 2024, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $584 million. These arrangements enable us to secure supplies of critical components and IT services. We do not currently anticipate paying any penalties under these contracts.
We enter into physical forward contracts with suppliers of platinum, palladium and iridium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years. At March 31, 2024, the total commitments under these contracts were $64 million. These arrangements enable us to guarantee the prices of these commodities, which otherwise are subject to market volatility.
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We have guarantees with certain customers that require us to satisfactorily honor contractual or regulatory obligations, or compensate for monetary losses related to nonperformance. These performance bonds and other performance-related guarantees were $192 million at March 31, 2024.
Indemnifications
Periodically, we enter into various contractual arrangements where we agree to indemnify a third-party against certain types of losses. Common types of indemnities include:
product liability and license, patent or trademark indemnifications;
asset sale agreements where we agree to indemnify the purchaser against future environmental exposures related to the asset sold; and
any contractual agreement where we agree to indemnify the counterparty for losses suffered as a result of a misrepresentation in the contract.
We regularly evaluate the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities and due to their uncertain nature, we are unable to estimate the maximum amount of the potential loss associated with these indemnifications.
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NOTE 12. ACCUMULATED OTHER COMPREHENSIVE LOSS
Following are the changes in accumulated other comprehensive income (loss) by component for the three months ended:
In millionsChange in pension and OPEB plansForeign currency
translation
adjustment
Unrealized gain
(loss) on
derivatives
Total
attributable to
Cummins Inc.
Noncontrolling
interests
Total
Balance at December 31, 2023$(848)$(1,457)$99 $(2,206)  
Other comprehensive income (loss) before reclassifications      
Before-tax amount(21)(116)22 (115)$(3)$(118)
Tax expense3 (2)(5)(4) (4)
After-tax amount(18)(118)17 (119)(3)(122)
Amounts reclassified from accumulated other comprehensive income (loss) (1)
5 61 
(2)
(5)61  61 
Net current period other comprehensive (loss) income(13)(57)12 (58)$(3)$(61)
Balance at March 31, 2024$(861)$(1,514)$111 $(2,264)  
Balance at December 31, 2022$(427)$(1,552)$89 $(1,890)  
Other comprehensive income (loss) before reclassifications      
Before-tax amount(13)75 (3)59 $3 $62 
Tax benefit2 4 1 7  7 
After-tax amount(11)79 (2)66 3 69 
Amounts reclassified from accumulated other comprehensive income (loss) (1)
2