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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
cmi-20220630_g1.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 June 30, 2022
 
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 June 30, 2022, there were 140,992,323 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 and six months ended June 30, 2022 and July 4, 2021
 Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and July 4, 2021
 Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021
 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and July 4, 2021
 Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2022 and July 4, 2021
 
  
 

2

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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
 Three months endedSix months ended
In millions, except per share amounts June 30,
2022
July 4,
2021
June 30,
2022
July 4,
2021
NET SALES (a) (Note 2)
$6,586 $6,111 $12,971 $12,203 
Cost of sales (Note 3)4,860 4,633 9,713 9,239 
GROSS MARGIN 1,726 1,478 3,258 2,964 
OPERATING EXPENSES AND INCOME     
Selling, general and administrative expenses 622 600 1,237 1,174 
Research, development and engineering expenses 299 276 597 536 
Equity, royalty and interest income from investees (Notes 3 and 5)95 137 191 303 
Other operating expense, net (Note 3)3 4 114 12 
OPERATING INCOME 897 735 1,501 1,545 
Interest expense 34 29 51 57 
Other (expense) income, net (8)73 (17)74 
INCOME BEFORE INCOME TAXES 855 779 1,433 1,562 
Income tax expense (Note 6)148 167 303 339 
CONSOLIDATED NET INCOME 707 612 1,130 1,223 
Less: Net income attributable to noncontrolling interests5 12 10 20 
NET INCOME ATTRIBUTABLE TO CUMMINS INC. $702 $600 $1,120 $1,203 
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.     
Basic $4.97 $4.14 $7.90 $8.24 
Diluted $4.94 $4.10 $7.86 $8.16 
 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING     
Basic 141.2 145.1 141.7 146.0 
Dilutive effect of stock compensation awards 0.8 1.4 0.8 1.4 
Diluted 142.0 146.5 142.5 147.4 
(a) Includes sales to nonconsolidated equity investees of $281 million and $625 million for the three and six months ended June 30, 2022, compared with $423 million and $901 million for the comparable periods in 2021.

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 endedSix months ended
In millions June 30,
2022
July 4,
2021
June 30,
2022
July 4,
2021
CONSOLIDATED NET INCOME $707 $612 $1,130 $1,223 
Other comprehensive income (loss), net of tax (Note 13)    
Change in pension and other postretirement defined benefit plans 6 17 22 46 
Foreign currency translation adjustments (245)22 (241)(34)
Unrealized gain (loss) on derivatives 43 (38)71 34 
Total other comprehensive (loss) income, net of tax (196)1 (148)46 
COMPREHENSIVE INCOME 511 613 982 1,269 
Less: Comprehensive (loss) income attributable to noncontrolling interests (10)5 (13)13 
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC. $521 $608 $995 $1,256 
 
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 valueJune 30,
2022
December 31,
2021
ASSETS  
Current assets   
Cash and cash equivalents $2,462 $2,592 
Marketable securities (Note 7)536 595 
Total cash, cash equivalents and marketable securities 2,998 3,187 
Accounts and notes receivable, net
Trade and other 3,869 3,565 
Nonconsolidated equity investees 287 425 
Inventories (Note 8)4,765 4,355 
Prepaid expenses and other current assets 843 777 
Total current assets 12,762 12,309 
Long-term assets   
Property, plant and equipment 9,374 9,358 
Accumulated depreciation (4,985)(4,936)
Property, plant and equipment, net 4,389 4,422 
Investments and advances related to equity method investees 1,544 1,538 
Goodwill 1,391 1,287 
Other intangible assets, net 1,054 900 
Pension assets (Note 4)1,461 1,488 
Other assets (Note 9)1,876 1,766 
Total assets $24,477 $23,710 
LIABILITIES  
Current liabilities   
Accounts payable (principally trade) $3,405 $3,021 
Loans payable (Note 10)165 208 
Commercial paper (Note 10)705 313 
Accrued compensation, benefits and retirement costs 443 683 
Current portion of accrued product warranty (Note 11)796 755 
Current portion of deferred revenue (Note 2)871 855 
Other accrued expenses (Note 9)1,221 1,190 
Current maturities of long-term debt (Note 10)65 59 
Total current liabilities 7,671 7,084 
Long-term liabilities   
Long-term debt (Note 10)3,490 3,579 
Pensions and other postretirement benefits (Note 4)589 604 
Accrued product warranty (Note 11)714 684 
Deferred revenue (Note 2)852 850 
Other liabilities (Note 9)1,506 1,508 
Total liabilities $14,822 $14,309 
Commitments and contingencies (Note 12)
 
EQUITY
Cummins Inc. shareholders’ equity   
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued
$2,423 $2,427 
Retained earnings 17,450 16,741 
Treasury stock, at cost, 81.5 and 80.0 shares
(9,439)(9,123)
Accumulated other comprehensive loss (Note 13)(1,696)(1,571)
Total Cummins Inc. shareholders’ equity 8,738 8,474 
Noncontrolling interests 917 927 
Total equity $9,655 $9,401 
Total liabilities and equity $24,477 $23,710 
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)
 Six months ended
In millionsJune 30,
2022
July 4,
2021
CASH FLOWS FROM OPERATING ACTIVITIES  
Consolidated net income $1,130 $1,223 
Adjustments to reconcile consolidated net income to net cash provided by operating activities   
Depreciation and amortization328 337 
Deferred income taxes(112)17 
Equity in income of investees, net of dividends (62)(114)
Pension and OPEB expense (Note 4)17 41 
Pension contributions and OPEB payments (Note 4)(55)(68)
Share-based compensation expense 14 18 
Russian suspension costs, net of recoveries (Note 3)111  
Asset impairments and other charges 36  
Loss on corporate owned life insurance 85 12 
Foreign currency remeasurement and transaction exposure (10)10 
Changes in current assets and liabilities, net of acquisitions  
Accounts and notes receivable (252)(331)
Inventories (498)(628)
Other current assets (65)(18)
Accounts payable 426 377 
Accrued expenses (281)169 
Changes in other liabilities (11)(34)
Other, net (38)(56)
Net cash provided by operating activities 763 955 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures (251)(212)
Investments in internal use software (24)(22)
Proceeds from sale of land 20 
Investments in and net advances (to) from equity investees (53)10 
Acquisitions of businesses, net of cash acquired (Note 14)(245) 
Investments in marketable securities—acquisitions (433)(362)
Investments in marketable securities—liquidations (Note 7)461 381 
Cash flows from derivatives not designated as hedges (32)12 
Other, net 1 27 
Net cash used in investing activities (576)(146)
CASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from borrowings56 20 
Net borrowings (payments) of commercial paper 392 (123)
Payments on borrowings and finance lease obligations (71)(33)
Net payments under short-term credit agreements (24)(102)
Distributions to noncontrolling interests (14)(13)
Dividend payments on common stock (411)(394)
Repurchases of common stock (347)(1,090)
Proceeds from issuing common stock 19 26 
Other, net 9 (13)
Net cash used in financing activities (391)(1,722)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 74 (7)
Net decrease in cash and cash equivalents(130)(920)
Cash and cash equivalents at beginning of year 2,592 3,401 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,462 $2,481 
 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
6

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
 
Three months ended
In millions, except per share amountsCommon StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Cummins Inc. Shareholders’ EquityNoncontrolling InterestsTotal Equity
BALANCE AT MARCH 31, 2022$556 $1,855 $16,952 $(9,412)$(1,515)$8,436 $927 $9,363 
Net income 702 702 5 707 
Other comprehensive loss, net of tax (Note 13)(181)(181)(15)(196)
Issuance of common stock 1 1  1 
Repurchases of common stock(36)(36) (36)
Cash dividends on common stock, $1.45 per share
(204)(204) (204)
Share-based awards 2 8 10  10 
Other shareholder transactions 9 1 10  10 
BALANCE AT JUNE 30, 2022$556 $1,867 $17,450 $(9,439)$(1,696)$8,738 $917 $9,655 
BALANCE AT APRIL 4, 2021$556 $1,837 $15,825 $(8,172)$(1,937)$8,109 $922 $9,031 
Net income600 600 12 612 
Other comprehensive income (loss), net of tax (Note 13)8 8 (7)1 
Issuance of common stock1 1 — 1 
Repurchases of common stock(672)(672)— (672)
Cash dividends on common stock, $1.35 per share
(197)(197)— (197)
Share-based awards2 6 8 — 8 
Other shareholder transactions9 9 — 9 
BALANCE AT JULY 4, 2021$556 $1,849 $16,228 $(8,838)$(1,929)$7,866 $927 $8,793 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.











7

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Six months ended
In millions, except per share amountsCommon
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Cummins Inc.
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
BALANCE AT DECEMBER 31, 2021$556 $1,871 $16,741 $(9,123)$(1,571)$8,474 $927 $9,401 
Net income 1,120 1,120 10 1,130 
Other comprehensive loss, net of tax (Note 13)(125)(125)(23)(148)
Issuance of common stock 1 1  1 
Repurchases of common stock(347)(347) (347)
Cash dividends on common stock, $2.90 per share
(411)(411) (411)
Distributions to noncontrolling interests  (14)(14)
Share-based awards (7)26 19  19 
Other shareholder transactions 2 5 7 17 24 
BALANCE AT JUNE 30, 2022$556 $1,867 $17,450 $(9,439)$(1,696)$8,738 $917 $9,655 
BALANCE AT DECEMBER 31, 2020$556 $1,848 $15,419 $(7,779)$(1,982)$8,062 $927 $8,989 
Net income 1,203 1,203 20 1,223 
Other comprehensive income (loss), net of tax (Note 13)53 53 (7)46 
Issuance of common stock 1 1 — 1 
Repurchases of common stock(1,090)(1,090)— (1,090)
Cash dividends on common stock, $2.70 per share
(394)(394)— (394)
Distributions to noncontrolling interests — (13)(13)
Share-based awards (4)30 26 — 26 
Other shareholder transactions 4 1 5  5 
BALANCE AT JULY 4, 2021$556 $1,849 $16,228 $(8,838)$(1,929)$7,866 $927 $8,793 

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

8

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 leader that designs, manufactures, distributes and services diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen production 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 500 wholly-owned, joint venture and independent distributor locations and more than 10,000 Cummins certified dealer locations in approximately 190 countries and territories.
Reporting Period
Beginning in 2022, we transitioned to a Gregorian calendar with our reporting period ending on the last day of the quarterly calendar period. In 2021 and prior, our reporting period ended on the Sunday closest to the last day of the quarterly calendar period. The second quarters of 2022 and 2021 ended on June 30 and July 4, respectively. Our fiscal year ends on December 31, regardless of the day of the week on which December 31 falls.
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 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, 2021. Our interim period financial results for the three and six 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.
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 endedSix months ended
 June 30,
2022
July 4,
2021
June 30,
2022
July 4,
2021
Options excluded33,100 3,137 26,782 2,958 

9

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
The majority of our contracts are for a period of less than one year. We have certain long-term maintenance agreements, construction contracts and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and construction contracts allocated to performance obligations that were not satisfied as of June 30, 2022, was $723 million. We expect to recognize the related revenue of $128 million over the next 12 months and $595 million over periods up to 10 years. See NOTE 11, "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.
Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
In millionsJune 30,
2022
December 31,
2021
Unbilled revenue$128 $100 
Deferred revenue, primarily extended warranty1,723 1,705 
We recognized revenue of $176 million and $416 million for the three and six months ended June 30, 2022, compared with $133 million and $302 million for the comparable periods in 2021, 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 and six months ended June 30, 2022 or July 4, 2021.
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 endedSix months ended
In millionsJune 30,
2022
July 4,
2021
June 30,
2022
July 4,
2021
United States$3,788 $3,263 $7,245 $6,323 
China520 832 1,173 1,789 
India311 217 620 547 
Other international1,967 1,799 3,933 3,544 
Total net sales$6,586 $6,111 $12,971 $12,203 
Segment Revenue
Engine segment external sales by market were as follows:
Three months endedSix months ended
In millionsJune 30,
2022
July 4,
2021
June 30,
2022
July 4,
2021
Heavy-duty truck$797 $666 $1,481 $1,279 
Medium-duty truck and bus620 477 1,211 960 
Light-duty automotive425 466 912 940 
Total on-highway1,842 1,609 3,604 3,179 
Off-highway250 311 537 636 
Total sales$