Table of ~~Short and Long-Term Debt~~Contents

We had $2.0 billion of commercial paper outstanding at June 28, 2020, that matures in less than one year. The maturity schedule of our existing long-term debt does not require significant cash outflows until 2023 when our 3.65% senior notes are due. Required annual long-term debt principal payments range from $22 million to $524 million over the next five years (including the remainder of 2020). See Note 9, "DEBT," to the ~~Condensed Consolidated Financial Statements~~ ~~for additional information.~~

Credit Ratings

~~In June of 2020, Moody's Investors Service, Inc. reviewed and reaffirmed our credit~~Our rating ~~and stable outlook. Our ratings~~ 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 and Poor’s Rating Services

A+

Stable

Moody’s Investors Service, Inc.

Stable

⁽¹⁾Credit ratings are not recommendations to buy, are subject to change, and each rating should be evaluated independently of any other rating. In addition, we undertake no obligation to update disclosures concerning our credit ratings, whether as a result of new information, future events or otherwise.

Management's Assessment of Liquidity

~~Despite the global recession and volatility in the capital markets due to the pandemic, our~~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. We believe our existing cash and marketable securities, operating cash flow and ~~increased~~ revolving credit facilities provide us with the financial flexibility needed to fund ~~working capital,~~common stock repurchases, dividend payments, targeted capital expenditures, ~~dividend payments,~~ projected pension obligations, acquisitions, working capital and debt service obligations through ~~2020~~2021 and beyond. We continue to generate significant cash from operations ~~on a year-to-date basis~~ and maintain access to our expanded revolving credit facilities and commercial paper programs as noted above.

~~Table of Contents~~

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

A summary of our significant accounting policies is included in Note 1, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” of the Notes to the Consolidated Financial Statements of our ~~2019~~2020 Form 10-K, which discusses accounting policies that we have selected from acceptable alternatives.

Our Condensed Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles that often require management to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts presented and disclosed in the financial statements. Management reviews these estimates and assumptions based on historical experience, changes in business conditions including the impacts of COVID-19 and other relevant factors they believe to be reasonable under the circumstances. In any given reporting period, our actual results may differ from the estimates and assumptions used in preparing our Condensed Consolidated Financial Statements.

Critical accounting estimates are defined as follows: the estimate requires management to make assumptions about matters that were highly uncertain at the time the estimate was made; different estimates reasonably could have been used; or if changes in the estimate are reasonably likely to occur from period to period and the change would have a material impact on our financial condition or results of operations. 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 ~~our Board of Directors.~~the Board. Our critical accounting estimates disclosed in the Form 10-K address ~~the estimation of~~estimating liabilities for warranty programs, assessing goodwill impairment, accounting for income taxes and pension ~~benefits and goodwill impairment.~~benefits.

A discussion of our critical accounting estimates may be found in the “Management’s Discussion and Analysis” section of our ~~2019~~2020 Form 10-K under the caption “APPLICATION OF CRITICAL ACCOUNTING ESTIMATES.” Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported in the first ~~six~~three months of ~~2020.~~2021.

~~RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS~~

~~See Note 16, "RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS," in the~~ ~~Notes to Condensed Consolidated Financial Statements~~ ~~for additional information.~~

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

A discussion of quantitative and qualitative disclosures about market risk may be found in Item 7A of our ~~2019~~2020 Form 10-K. There have been no material changes in this information since the filing of our ~~2019~~2020 Form 10-K.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of

Table of Contents

1934 is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended ~~June 28, 2020,~~April 4, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

ITEM 1. 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 reportingThe matters described under "Legal Proceedings" in foreign jurisdictions; distributor termination; workplace safety; and environmental matters. 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 pursuant to U.S. generally accepted accounting principles 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~~Note 10, "COMMITMENTS AND CONTINGENCIES," to the ~~Brazilian federal, state and local labor, social security, tax and customs laws. While we believe we comply with such laws, they~~ Condensed Consolidated Financial Statements are ~~complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.~~

On April 29, 2019, we announced that we were conducting a formal internal review of our emissions certification process and compliance with emission standards for our pick-up truck applications, following conversations with the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) regarding certification of our engines in model year 2019 RAM 2500 and 3500 trucks. This review is being conducted with external advisors to ensure the certification and compliance processes for all of our pick-up truck applications are consistent with our internal policies, engineering standards and applicable laws. In addition, we voluntarily disclosed our formal internal review to the regulators and to other government agencies, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), and have been working cooperatively with them to ensure a complete and thorough review. During conversations with the EPA and CARB about the effectiveness of our pick-up truck applications, the regulators raised concerns that certain aspects of our emissions systems may reduce the effectiveness of our emissions control systems and thereby act as defeat devices. As a result, our internal review focuses, in part, on the regulators’ concerns. We are working closely with the regulators to enhance our emissions systems to improve the effectiveness of all of our pick-up truck applications and to fully address the regulators’ requirements. Based on discussions with the regulators, we have developed a new calibration for the engines in model year 2019 RAM 2500 and 3500 trucks that has been included in all engines shipped since September 2019. During our discussions, the regulators have asked us to look at other model years and other engines, though the primary focus of our review has been the model year 2019 RAM. We are also fully cooperating with the DOJ's and the SEC's information requests and inquiries. Due to the continuing nature of our formal review, our ongoing cooperation with our regulators and other government agencies, and the presence of many unknown facts and circumstances, we cannot predict the final outcome of this review and these regulatory and agency processes, and we cannot provide assurance that the matter will not have a materially adverse impact on our results of operations and cash flows.incorporated herein by reference.

ITEM 1A. Risk Factors

~~Set~~In addition to other information set forth ~~below and elsewhere~~ in this Quarterly Report on Form 10-Q are some of the principal risks and uncertainties that could cause our actual business results to differ materially from any forward-looking statements contained in this Report and could individually, or in combination, have a material adverse effect on our results of operations, financial position and cash flows. Thesereport, you should consider other 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 risk factors below amend and supersede the risk factors previously discloseddiscussed in ~~Item 1A to the~~Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K ~~of Cummins Inc.~~ for the year ended December 31, ~~2019~~20 20.

~~Table of Contents~~

A sustained market slowdown due to the impacts from the COVID-19 pandemic, other public health crises, epidemics or pandemics or otherwise, could have a material and adverse effect on our results of operations, financial condition and cash flows.

The coronavirus disease of 2019 (COVID-19) pandemic has triggered a significant downturn in our markets globally and these challenging market conditions could continue for an extended period of time. Most global economies have slowed, with much uncertainty as to when these markets will recover. If any or all of these major markets were to endure a sustained slowdown or recession due to the impacts of the COVID-19 pandemic, other public health crises, epidemics or pandemics or otherwise decline, it could have a material adverse effect on our results of operations, financial condition and cash flows.

~~Our manufacturing and supply chain abilities may be materially and adversely impacted by an extended shutdown or disruption of our operations due to the COVID-19 pandemic~~, which could materially affect our business, financial condition or future results. The risks described in our 20 20 Annual Report on Form 10-K or the "CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION" in this Quarterly report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently judge to be immaterial also may materially adversely affect our ~~results of operations,~~business, financial condition ~~and cash flows.~~

The outbreak of COVID-19 spread throughout the world and became a global pandemic with the resultant economic impacts evolving into a worldwide recession. The pandemic triggered a significant downturn in our markets globally and these challenging market conditions could continue for an extended period of time. In an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, match the reduced demand from our customers and in accordance with governmental requirements, we closed or partially shut down certain office, manufacturing and distribution facilities around the world in March 2020. These closures expanded and continued into the second quarter of 2020. Most of our manufacturing and distribution facilities were open early in the second quarter of 2020, although operating at reduced capacities, while many of our global office buildings remained closed throughout the second quarter. While the impacts of the pandemic and the resulting global recession are expected to be temporary, the duration of the production and supply chain disruptions, and related financial impacts, cannot be estimated at this time. Should the reduced manufacturing and distribution capacities continue for an extended period of time or worsen, the impact on our production and supply chain could have a material adverse effect on our results of operations, financial condition and cash flows.

We are vulnerable to supply shortages from single-sourced suppliers, including suppliers that may be impacted by the COVID-19 pandemic, and any delay in receiving critical supplies could have a material adverse effect on our results of operations, financial condition and cash flows.

During 2019, we single sourced approximately 19 percent of the total types of parts in our product designs, compared to approximately 20 percent in 2018. Any delay in our suppliers' deliveries may adversely affect our operations at multiple manufacturing locations, forcing us to seek alternative supply sources to avoid serious disruptions. Delays may be caused by factors affecting our suppliers (including the COVID-19 pandemic, capacity constraints, labor disputes, economic downturns, availability of credit or impaired financial condition), suppliers' allocations to other purchasers, weather emergencies, natural disasters, or acts of war or terrorism. In particular, if the COVID-19 pandemic continues and results in extended periods of travel, commercial and other restrictions, we could continue to incur global supply disruptions. Any extended delay in receiving critical supplies could impair our ability to deliver products to our customers and have a material adverse effect on our results of operations, financial condition and cash flows.

~~We face the challenge of accurately aligning our capacity with our demand.~~

Our markets are cyclical in nature and we face periods when demand fluctuates significantly higher or lower than our normal operating levels, including COVID-19 related shut-downs. Accurately forecasting our expected volumes and appropriately adjusting our capacity are important factors in determining our results of operations and cash flows. We manage our capacity by adjusting our manufacturing workforce, capital expenditures and purchases from suppliers. In periods of weak demand we may face under-utilized capacity and un-recovered overhead costs, while in periods of strong demand we may experience unplanned costs and could fail to meet customer demand. We cannot guarantee that we will be able to adequately adjust our manufacturing capacity in response to significant changes in customer demand, which could harm our business. In addition, the COVID-19 pandemic and related reductions in demand forced certain of our customer’s facilities around the world to close or partially shut down operations, inhibiting our ability to forecast demand and caused related closures and partial shut-downs of certain of our manufacturing facilities. 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.

Financial distress, particularly related to the COVID-19 pandemic, or a change-in-control of one of our large truck OEM customers could have a material adverse impact on our results of operations, financial condition and cash flows.

We recognize significant sales of engines and components to a few large on-highway truck OEM customers in North America which have been an integral part of our positive business results for several years. If one of our large truck OEM customers experiences financial distress due to the COVID-19 pandemic, bankruptcy or a change-in-control, such circumstance could

~~Table of Contents~~

likely lead to significant reductions in our sales volumes, commercial disputes, receivable collection issues, and other negative consequences that could have a material adverse impact on our results of operations, financial condition and cash flows.

We are conducting a formal internal review of our emission certification process and compliance with emission standards with respect to our pick-up truck applications and are working with the EPA and CARB, as well as the Department of Justice (DOJ) and SEC, to address their questions about these applications. The results of this formal review and regulatory and government agency processes, or the discovery of any noncompliance issues, could have a material adverse impact on our results of operations and cash flows.

We previously announced that we are conducting a formal internal review of our emissions certification process and compliance with emission standards with respect to all of our pick-up truck applications, following conversations with the EPA and CARB regarding certification of our engines for model year 2019 RAM 2500 and 3500 trucks. During conversations with the EPA and CARB about the effectiveness of our pick-up truck applications, the regulators raised concerns that certain aspects of our emissions systems may reduce the effectiveness of our emissions control systems and thereby act as defeat devices. As a result, our internal review focuses, in part, on the regulators’ concerns. We are working closely with the regulators to enhance our emissions systems to improve the effectiveness of all of our pick-up truck applications and to fully address the regulators’ requirements. Based on discussions with the regulators, we have developed a new calibration for the engines in model year 2019 RAM 2500 and 3500 trucks that has been included in all engines shipped since September 2019. During our discussions, the regulators have asked us to look at other model years and other engines, though the primary focus of our review has been the model year 2019 RAM. We will continue to work together closely with the relevant regulators to develop and implement recommendations for improvement as part of our ongoing commitment to compliance. We are also fully cooperating with the DOJ's and the SEC's information requests and inquiries.Due to the continuing nature of the formal review, our ongoing cooperation with the regulators and other government agencies, and the presence of many unknown facts and circumstances, we are not yet able to estimate the financial impact of these matters. It is possible that the consequences of any remediation plans resulting from our formal review and these regulatory and agency processes could have a material adverse impact on our results of operations and cash flows in the periods in which these emissions certification issues are addressed.

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 emission standards by multiple jurisdictions around the world, could have a material adverse impact on our results of operations, financial condition and cash flows.results.

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. 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.

Developing engines and components to meet more stringent and changing regulatory requirements, with different implementation timelines and emission requirements, makes developing engines efficiently for multiple markets complicated and could result in substantial additional costs that may be difficult to recover in certain markets. While we have met previous deadlines, our ability to comply with existing and future regulatory standards will be essential for us to maintain our competitive advantage in the engine markets we serve. The successful development and introduction of new and enhanced products in order to comply with new regulatory requirements are subject to other risks, such as delays in product development, cost over-runs and unanticipated technical and manufacturing difficulties.

In addition to these risks, the nature and timing of government implementation and enforcement of increasingly stringent emission standards in our worldwide markets are unpredictable and subject to change. Any delays in implementation or enforcement could result in a loss of our competitive advantage and could have a material adverse impact on our results of operations, financial condition and cash flows.

The COVID-19 pandemic created disruptions and turmoil in global credit and financial markets and ongoing impacts could have a material adverse effect on our results of operations, financial condition and cash flows.

The COVID-19 pandemic created disruptions and turmoil in the global credit and financial markets and made it more difficult and costly for us to access capital on favorable terms to meet our liquidity needs. The disruptions to the global credit and financial markets could also have material negative impacts on business operations and financial positions of our customers and suppliers, which may negatively impact our orders, sales and supply chain. If the impacts of the COVID-19 pandemic on global credit and financial markets continue, or worsen, it could negatively impact our business, along with the financial condition of

~~Table of Contents~~

~~our customers and suppliers, and it could have a material adverse impact on our results of operations, financial condition and cash flows.~~

~~Government actions to stabilize credit markets and financial institutions or other industries may not be effective.~~

The U.S. government recently enacted legislation, and created several programs, to help preserve and stabilize credit markets and financial institutions and restore liquidity, including the Emergency Economic Stabilization Act of 2008, the Federal Reserve’s Commercial Paper Funding Facility (CPFF) and Money Market Investor Funding Facility and the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program. There is no assurance that these programs will have beneficial effects in the credit markets or on general economic conditions, will address credit or liquidity issues of companies that participate in the programs or will reduce volatility or uncertainty in the financial markets. The failure of these programs to have their intended effects could have a material adverse effect on the financial markets and economies in general, which in turn could have a material adverse effect on our financial condition and cash flows. To the extent that we participate in these programs or other programs, there is no assurance that we will continue to be eligible or qualify to participate or that such programs will remain available for sufficient periods of time or on acceptable terms to benefit us, and the expiration of such programs could have unintended material adverse effects on us. Further, as a condition to participating in any such program, we may need to accept terms and limitations that could adversely affect us in other ways.

~~Our products are subject to recall for performance or safety-related issues.~~

Our products are subject to recall for performance or safety-related issues. Product recalls subject us to reputational risk, loss of current and future customers, reduced revenue and product recall costs. Product recall costs are incurred when we decide, either voluntarily or involuntarily, to recall a product through a formal campaign to solicit the return of specific products due to known or suspected performance or safety issues. Any significant product recalls could have material adverse effects on our results of operations, financial condition and cash flows. See Note 10, "PRODUCT WARRANTY LIABILITY" to the ~~Condensed Consolidated Financial Statements~~ ~~for additional information.~~

~~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 electrified powertrains, hydrogen generation and fuel cells, for planned introduction into certain existing and new markets. Given the early stages of development of some of these new products and technologies, there can be no guarantee of the future market acceptance and investment returns with respect to these planned products. The increased adoption of electrified powertrains in some market segments could result in lower demand for current diesel or natural gas engines and components and, over time, reduce the demand for related parts and service revenues from diesel or natural gas powertrains. Furthermore, it is possible that we may not be successful in developing segment-leading electrified powertrains and some of our existing customers could choose to develop their own electrified or alternate fuel powertrains, 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.

~~We operate our business on a global basis and policy changes affecting international trade 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. Changes in government policies on foreign trade and investment can affect the demand for our products and services, cause non-U.S. customers to shift preferences toward domestically manufactured or branded products and impact the competitive position of our products or prevent us from being able to sell products in certain countries. Our business benefits from free trade agreements, such as the new United States-Mexico-Canada Agreement and the U.S. trade relationship with China, Brazil and France and efforts to withdraw from, or substantially modify such agreements or arrangements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs (including, but not limited to, additional tariffs on the import of steel or aluminum), import or export licensing requirements, exchange controls or new barriers to entry, could adversely impact our production costs, customer demand and our relationships with customers and suppliers. Any of these consequences could have a material adverse effect on our results of operations, financial condition and cash flows.

~~A slowdown in infrastructure development and/or depressed commodity prices could adversely affect our business.~~

Infrastructure development and strong commodity prices have been significant drivers of our historical growth, but as the pace of investment in infrastructure slowed in recent years (especially in China and Brazil), commodity prices were significantly lower and demand for our products in off-highway markets was weak. Weakness in commodity prices, including any negative impacts on commodity prices such as oil, gas and coal, adversely impacted mining industry participants’ demand for vehicles and equipment that contain our engines and other products over the past several years. Continued deterioration in infrastructure

~~Table of Contents~~

~~and commodities markets, including the impacts from COVID-19, could adversely affect our customers’ demand for vehicles and equipment and, as a result, could adversely affect our business.~~

~~The U.K.’s exit from the European Union (EU) could materially and adversely impact our results of operations, financial condition and cash flows.~~

On January 31, 2020, the U.K. exited from the EU (BREXIT). Additionally, the results of the U.K.’s BREXIT has caused, and may continue to cause, volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty. Although it is unknown what the terms of the U.K.’s future relationship with the EU will be, it is possible that there will be higher tariffs or greater restrictions on imports and exports between the U.K. and the EU and increased regulatory complexities. The effects of BREXIT will depend on any agreements the U.K. makes to retain access to EU markets either during a transitional period or on a permanent basis. These measures could potentially disrupt our supply chain, including delays of imports and exports, limited access to human capital within some of the target markets and jurisdictions in which we operate and adverse changes to tax benefits or liabilities in these or other jurisdictions. In addition, BREXIT could lead to legal uncertainty and potentially divergent national laws and regulations, including with respect to emissions and similar certifications granted to us by the EU, as the U.K. determines which EU laws to replace or replicate. Any of these effects of BREXIT, among others, could have a material adverse impact on our results of operations, financial condition and cash flows.

~~We may be adversely impacted by work stoppages and other labor matters.~~

At December 31, 2019, we employed approximately 61,615 persons worldwide. Approximately 19,048 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2020 and 2024. 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. Any of these consequences may have an adverse effect on us or may limit our flexibility in dealing with our workforce. In addition, many of our customers and suppliers have unionized work forces. Work stoppages or slowdowns experienced by us, our customers or suppliers, including any work stoppages or slowdowns related to the COVID-19 pandemic, could result in slowdowns or closures that would have a material adverse effect on our results of operations, financial condition and cash flow.

~~We rely on our executive leadership team and other key personnel.~~

We depend on the skills, institutional knowledge, working relationships, and continued services and contributions of key personnel, including our executive leadership team. In addition, our ability to achieve our operating and strategic goals depends on our ability to identify, hire, train and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel and we may lose key personnel or fail to attract, train and retain other talented personnel. Any such loss or failure could have material adverse effects on our results of operations, financial condition and cash flows.

In particular, our continued success will depend in part on our ability to retain the talents and dedication of key employees. If key employees terminate their employment or become ill as a result of the COVID-19 pandemic or otherwise, our business activities may be adversely affected and our management team’s attention may be diverted. In addition, we may not be able to locate suitable replacements for any key employees who leave.

Lower-than-anticipated market acceptance of our new or existing products or services, including reductions in demand for diesel engines, could have a material adverse impact on our results of operations, financial condition and cash flows.

Although we conduct market research before launching new or refreshed engines and introducing new services, many factors both within and outside our control affect the success of new or existing products and services in the marketplace. Offering engines and services that customers desire and value can mitigate the risks of increasing price 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. With increased consumer interconnectedness through the internet, social media and other media, mere allegations relating to poor quality, safety, fuel efficiency, corporate responsibility or other key attributes can negatively impact our reputation or market acceptance of our products or services, even if such allegations prove to be inaccurate or unfounded.

~~Our truck manufacturers and OEM customers may discontinue outsourcing their engine supply needs.~~

Several of our engine customers, including PACCAR, Volvo, Navistar, Chrysler, Daimler, Dongfeng and Tata, are truck manufacturers or OEMs that manufacture engines for some of their own vehicles. 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. However, there can be

~~Table of Contents~~

no assurance that these customers will continue to outsource, or outsource as much of, their engine production in the future. In addition, increased levels of OEM vertical integration could result from a number of factors, such as shifts in our customers' business strategies, acquisition by a customer of another engine manufacturer, the inability of third-party suppliers to meet product specifications and the emergence of low-cost production opportunities in foreign countries. Any significant reduction in the level of engine production outsourcing from our truck manufacturer or OEM customers could have a material adverse effect on our results of operations, financial condition and cash flows.

~~Our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures may expose us to additional costs and risks.~~

Part of our strategic plan is to improve our revenue growth, gross margins and earnings by exploring the repositioning of our portfolio of product line offerings through the pursuit of potential strategic acquisitions and/or divestitures to provide future strategic, financial and operational benefits and improve shareholder value. There can be no assurance that we will be able to identify suitable candidates or consummate these transactions on favorable terms. The successful identification and completion of any strategic transaction depends on a number of factors that are not entirely within our control, including the availability of suitable candidates and our ability to negotiate terms acceptable to all parties involved, conclude satisfactory agreements and obtain all necessary regulatory approvals. Accordingly, we may not be able to successfully negotiate and complete specific transactions. The exploration, negotiation and consummation of strategic transactions may involve significant expenditures by us, which may adversely affect our results of operations at the time such expenses are incurred, and may divert management’s attention from our existing business. 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. 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 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.Similarly, any strategic divestiture of a product line or business may reduce our revenue and earnings, reduce the diversity of our business, result in substantial costs and expenses and cause disruption to our employees, customers, vendors and communities in which we operate.

Our information technology systems and our products are exposed to potential security breaches or other disruptions which may adversely impact our competitive position, reputation, results of operations, financial condition and cash flows.

We rely on the capacity, reliability and security of our information technology systems and data security infrastructure in connection with various aspects of our business activities. We also rely on our ability to expand and continually update these systems and related infrastructure in response to the changing needs of our business. As we implement new systems, they may not perform as expected. We face the challenge of supporting our older systems and implementing necessary upgrades. In addition, some of these systems are managed by third-party service providers and are not under our direct control. If we experience a problem with an important information technology system, including during system upgrades and/or new system implementations, the resulting disruptions could have an adverse effect on our business and reputation. As customers adopt and rely on cloud-based digital technologies and services we offer, any disruption of the confidentiality, integrity or availability of those services could have an adverse effect on our business and reputation.

The data handled by our information technology systems is vulnerable to security threats. Our operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to our business, customers, dealers, suppliers, employees and other sensitive matters. While we continually work to safeguard our systems and mitigate potential risks, there is no assurance that these actions will be sufficient to prevent information technology security threats, such as security breaches, computer malware, computer viruses and other "cyber attacks," which are increasing in both frequency and sophistication, along with power outages or hardware failures. 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. As a result of the COVID-19 pandemic and resulting government actions to restrict movement, a large percentage of our salaried employees are working remotely. This remote working environment may pose a heightened risk for security breaches or other disruptions of our information technology systems.

In addition, our products, including our engines, contain interconnected and increasingly complex systems that control various processes and these systems are potentially subject to "cyber attacks" and disruption. The impact of a significant information

~~Table of Contents~~

technology event on either of our information technology systems or our products could have a material adverse effect on our competitive position, reputation, results of operations, financial condition and cash flows.

We may experience difficulties and delays or unexpected costs in completing our cost reduction actions and announced restructuring initiatives, including achieving any anticipated savings and other benefits of these initiatives.

During the fourth quarter of 2019 and continuing into 2020 we are undertaking cost reduction actions and announced restructuring initiatives to respond to the slowdown in our global markets. As we implement these initiatives, we may not realize anticipated savings or other benefits from one or more of the initiatives in the amounts or within the time periods we expect. Other events or circumstances, such as implementation difficulties and delays or unexpected costs, may occur which could result in us not realizing our targeted cost reductions. We are also subject to the risks of negative publicity and business disruption in connection with our restructuring and other cost reduction initiatives. If we are unable to realize the expected savings or benefits from these initiatives, certain aspects of our business may be adversely affected. If we experience any of these circumstances or otherwise fail to realize the anticipated savings or benefits from our restructuring and cost reduction initiatives, our results of operations could be materially and adversely affected.

~~We may fail to realize all of the expected enhanced revenue, earnings and cash flow from our investment in the Eaton Cummins Automated Transmission Technologies joint venture.~~

Our ability to realize all of the expected enhanced revenue, earnings, and cash flow from our 2017 investment in the Eaton Cummins Automated Transmission Technologies joint venture will depend, in substantial part, on our ability to successfully launch the automated transmission products in North America and China and achieve our projected market penetration in those regions. While we believe we will ultimately achieve these objectives, it is possible that we will be unable to achieve all of the goals within our anticipated time frame or in the anticipated amounts. If we are not able to successfully complete our automated transmission strategy, the anticipated enhanced revenue, earnings, and cash flows resulting from this joint venture may not be realized fully or may take longer to realize than expected. As part of the purchase accounting associated with the formation of the joint venture, significant goodwill and intangible asset balances were recorded on the consolidated balance sheet. If cash flows from the joint venture fall short of our anticipated amounts, these assets could be subject to non-cash impairment charges, negatively impacting our earnings.

~~We are exposed to political, economic and other risks that arise from operating a multinational business.~~

~~Our business is subject to the political, economic and other risks that are inherent in operating in numerous countries. These risks include:~~

•~~public health crises, including the spread of a contagious disease, such as COVID-19, and other catastrophic events;~~

•~~the difficulty of enforcing agreements and collecting receivables through foreign legal systems;~~

•~~trade protection measures and import or export licensing requirements;~~

•~~the imposition of taxes on foreign income and tax rates in certain foreign countries that exceed those in the U.S.;~~

•~~the imposition of tariffs, exchange controls or other restrictions;~~

•~~difficulty in staffing and managing widespread operations and the application of foreign labor regulations;~~

•~~required compliance with a variety of foreign laws and regulations; and~~

•~~changes in general economic and political conditions in countries where we operate, particularly in emerging markets.~~

As we continue to operate our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other related risks. There can be no assurance that the consequences of these and other factors relating to our multinational operations will not have a material adverse effect upon us.

~~We face significant competition in the markets we serve.~~

The markets in which we operate are highly competitive. We compete worldwide with a number of other manufacturers and distributors that produce and sell similar products. We primarily compete in the market with diesel engines and related diesel products; however, new technologies continue to be developed for gasoline, natural gas, electrification and other technologies and we will continue to face new competition from these expanding technologies. Our products primarily compete on the basis of price, performance, fuel economy, emissions compliance, speed of delivery, quality and customer support. We also face competitors in some emerging markets who have established local practices and long standing relationships with participants in

~~Table of Contents~~

~~these markets. There can be no assurance that our products will be able to compete successfully with the products of other companies and in other markets.~~

~~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. This has meant greater demand for our advanced engine technologies to help these customers meet the more stringent emissions requirements of developed markets, as well as greater demand for access to our distribution systems for purposes of equipment servicing. As these emerging market customers enter into, and begin to compete in more developed markets, they may increasingly begin to compete with our existing customers in these markets. Our further aid to emerging market customers could adversely affect our relationships with developed market customers. In addition, to the extent the competition does not correspond to overall growth in demand, we may see little or no benefit from this type of expansion by our emerging market customers.

~~We are subject to foreign currency exchange rate and other related risks.~~

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. 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. The U.S. dollar strengthened in recent years resulting in material unfavorable impacts on our revenues in those years. If the U.S. dollar continues strengthening against other currencies, we will experience additional volatility in our financial statements.While we customarily enter into financial transactions that attempt to address these risks and many of our supply agreements with customers include foreign currency exchange rate adjustment provisions, there can be no assurance that foreign currency exchange rate fluctuations will not adversely affect our future results of operations and cash flows. In addition, while the use of currency hedging instruments may provide us with some protection from adverse fluctuations in foreign currency exchange rates, by utilizing these instruments we potentially forego the benefits that might result from favorable fluctuations in foreign currency exchange rates.We also face risks arising from the imposition of foreign exchange controls and currency devaluations. Foreign exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation. See Management's Discussion and Analysis for additional information.

~~Our products are exposed to variability in material and commodity costs.~~

Our businesses establish prices with our customers in accordance with contractual time frames; however, the timing of material and commodity market price increases may prevent us from passing these additional costs on to our customers through timely pricing actions. Additionally, higher material and commodity costs around the world may offset our efforts to reduce our cost structure. While we customarily enter into financial transactions and contractual pricing adjustment provisions with our customers that attempt to address some of these risks (notably with respect to copper, platinum and palladium), there can be no assurance that commodity price fluctuations will not adversely affect our results of operations and cash flows. In addition, while the use of commodity price hedging instruments and contractual pricing adjustments may provide us with some protection from adverse fluctuations in commodity prices, by utilizing these instruments, we potentially forego the benefits that might result from favorable fluctuations in price. As a result, higher material and commodity costs, as well as hedging these commodity costs during periods of decreasing prices, could result in declining margins.

~~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 2019, we recognized $330 million of equity, royalty and interest income from investees, compared to $394 million in 2018. Approximately half of our equity, royalty and interest income from investees is from four of our 50 percent owned joint ventures in China - Beijing Foton Cummins Engine Co., Ltd., Dongfeng Cummins Engine Company, Ltd., Chongqing Cummins Engine Company, Ltd. and Dongfeng Cummins Emission Solutions Co. Ltd. As a result, although a significant percentage of our net income is derived from these unconsolidated entities, we do not unilaterally control their management or their operations, which puts a substantial portion of our net income at risk from the actions or inactions of these entities. A

~~Table of Contents~~

~~significant reduction in the level of contribution by these entities to our net income would likely have a material adverse effect on our results of operations and cash flows.~~

~~Unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability.~~

We are subject to income taxes in the U.S. and numerous international jurisdictions. Our income tax provision and cash tax liability in the future could be adversely affected by changes in earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of new information in the course of our tax return preparation process. The carrying value of deferred tax assets, which are predominantly in the U.S., is dependent on our ability to generate future taxable income in the U.S. We are also subject to ongoing tax audits. These audits can involve complex issues, which may require an extended period of time to resolve and can be highly judgmental. Tax authorities may disagree with certain tax reporting positions taken by us and, as a result, assess additional taxes against us. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. 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.~~

Due to the international scope of our operations, we are subject to a complex system of commercial and trade regulations around the world. Recent years have seen an increase in the development and enforcement of laws regarding trade compliance and anti-corruption, such as the U.S. Foreign Corrupt Practices Act and similar laws from other countries, as well as new regulatory requirements regarding data privacy, such as the European Union General Data Protection Regulation. Our numerous foreign subsidiaries, affiliates and joint venture partners are governed by laws, rules and business practices that differ from those of the U.S. The activities of these entities may not comply with U.S. laws or business practices or our Code of Business Conduct. Violations of these laws may result in severe criminal or civil sanctions, could disrupt our business and result in an adverse effect on our reputation, business and results of operations, financial condition and cash flows. We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing laws might be administered or interpreted.

~~Our business is exposed to potential product liability claims.~~

We face an inherent business risk of exposure to product liability claims in the event that our products' failure to perform to specification results, or is alleged to result, in property damage, bodily injury and/or death. At any given time, we are subject to various and multiple product liability claims, any one of which, if decided adversely to us, may have a material adverse effect on our reported results of operation in the period in which our liability with respect to any such claim is recognized. While we maintain insurance coverage with respect to certain product liability claims, we may not be able to obtain such insurance on acceptable terms in the future, if at all, and any such insurance may not provide adequate coverage against product liability claims. In addition, product liability claims can be expensive to defend and can divert the attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. Furthermore, even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and us.

~~Our operations are subject to increasingly stringent environmental laws and regulations.~~

Our plants and operations are subject to increasingly stringent environmental laws and regulations in all of the countries in which we operate, including laws and regulations governing air emission, discharges to water and the generation, handling, storage, transportation, treatment and disposal of waste materials. While we believe that we are in compliance in all material respects with these environmental laws and regulations, there can be no assurance that we will not be adversely impacted by costs, liabilities or claims with respect to existing or subsequently acquired operations, under either present laws and regulations or those that may be adopted or imposed in the future. We are also subject to laws requiring the cleanup of contaminated property. If a release of hazardous substances occurs at or from any of our current or former properties or at a landfill or another location where we have disposed of hazardous materials, we may be held liable for the contamination and the amount of such liability could be material.

Significant declines in future financial and stock market conditions, particularly those related to the global recession due to the COVID-19 pandemic, could diminish our pension plan asset performance and adversely impact our results of operations, financial condition and cash flow.

We sponsor both funded and unfunded domestic and foreign defined benefit pension and other retirement plans. Our pension cost and the required contributions to our pension plans are directly affected by the value of plan assets, the projected and actual

~~Table of Contents~~

rates of return on plan assets and the actuarial assumptions we use to measure our defined benefit pension plan obligations, including the discount rate at which future projected and accumulated pension obligations are discounted to a present value. We could experience increased pension cost due to a combination of factors, including the decreased investment performance of pension plan assets, decreases in the discount rate and changes in our assumptions relating to the expected return on plan assets.Significant declines in current and future financial and stock market conditions related to the COVID-19 pandemic could cause material losses in our pension plan assets, which could result in increased pension cost in future years and adversely impact our results of operations, financial condition and cash flow. Depending upon the severity and length of market declines and government regulatory changes, we may be legally obligated to make pension payments in the U.S. and perhaps other countries and these contributions could be material.

~~Future bans or limitations on the use of diesel-powered vehicles or other applications could have a material adverse impact on our business over the long term.~~

In an effort to limit greenhouse gas emissions and combat climate change, multiple countries and cities have announced that they plan to implement a ban on the use in their cities or countries of diesel-powered products in the near or distant future. These countries include China, India and Germany. In addition, California government officials have called for the state to phase out sales of diesel-powered vehicles by 2040. To the extent that these types of bans are actually implemented in the future on a broad basis, or in one or more of our key markets, our business over the long-term could experience material adverse impacts.

~~We are exposed to risks arising from the price and availability of energy.~~

The level of demand for our products and services is influenced in multiple ways by the price and availability of energy. High energy costs generally drive greater demand for better fuel economy in almost all countries in which we operate. Some of our engine products have been developed with a primary purpose of offering fuel economy improvements, and if energy costs decrease or increase less than expected, demand for these products may likewise decrease. The relative unavailability of electricity in some emerging market countries also influences demand for our electricity generating products, such as our diesel generators. If these countries add energy capacity by expanding their power grids at a rate equal to or faster than the growth in demand for energy, the demand for our generating products could also decrease or increase less than would otherwise be the case.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following information is provided pursuant to Item 703 of Regulation S-K:

~~Issuer Purchases of Equity Securities~~

~~Period~~

~~Total~~

~~Number of~~

~~Shares~~

~~Purchased~~ ⁽¹⁾

Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or Programs

~~Maximum~~

~~Number of Shares~~

~~that May Yet Be~~

~~Purchased Under the~~

~~Plans or Programs~~ ⁽²⁾

~~March 30 - May 3~~

—

~~88,555~~

~~May 4 - May 31~~

—

~~87,933~~

~~June 1 - June 28~~

—

~~84,503~~

~~Total~~

—

⁽¹⁾ ~~Shares purchased represent shares under the Board authorized share repurchase program.~~

⁽²⁾ These values reflect the sum of shares held in loan status under our Key Employee Stock Investment Plan. The repurchase program authorized by the Board does not limit the number of shares that may be purchased and was excluded from this column. The dollar value remaining available for future purchases under the 2018 program at June 28, 2020, was $85 million.


	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased (1)	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) (2)
January 1 - February 7	647,390	$	237.88	647,390	$	1,840
February 8 - March 7	654,074	246.15		654,074	1,679
March 8 - April 4	388,437	265.17		388,437	1,576
Total	1,689,901	247.35		1,689,901

(1) Shares purchased represent shares under the Board authorized share repurchase program.
(2) 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 2019, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the 2018 repurchase plan. ~~In October 2018, the Board authorized the acquisition of up to $2.0 billion of additional common stock.~~ During the three months ended ~~June 28, 2020,~~April 4, 2021, we ~~did not repurchase any~~repurchased $418 million of common stock under the ~~2018~~2019 authorization. The dollar value remaining available for future purchases under the 2019 program at April 4, 2021, was $1,576 million.

~~During the three months ended June 28, 2020, we did not repurchase any shares of common stock from employees in connection with the~~Our Key Employee Stock Investment Plan ~~which~~ allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit. Loans are issued for five-year terms at a fixed interest rate established at the date of purchase and may be refinanced after their initial five-year period for an additional five-year period. Participants must hold shares for a minimum of six months from date of purchase. If the shares are sold before the loan is paid off, the employee must wait six months before another share purchase may be made. We hold participants’ shares

~~Table of Contents~~

as security for the loans and would, in effect, repurchase shares only if the participant defaulted in repayment of the loan. ~~There is no maximum amount of shares that we may purchase under this plan. Effective May 1, 2020, we no longer repurchase shares of common stock~~Shares associated with participants' ~~sales. Shares~~sales are ~~now~~ sold as open-market transactions via a third-party broker.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

Table of Contents

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits

The exhibits listed in the following Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

CUMMINS INC.

EXHIBIT INDEX


Exhibit No.						Description of Exhibit





~~10.1~~10(a)						~~364-Day Credit Agreement, dated~~Deferred Compensation Plan, as of ~~May 1, 20~~20 ~~, by~~amended and ~~among Cummins Inc., the subsidiary borrowers~~ restated February 15, 2021.
~~party thereto,~~ 10(b)						~~the~~ l ~~enders~~ ~~party thereto~~Deferred Compensation Plan for Non-Employee Directors, as amended and ~~JPMorgan Chase Bank, N.A., as~~ a ~~dministrative~~ a ~~gent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on~~ ~~May 4, 20~~20 ~~(File No. 001-04949)).~~restated February 15, 2021.





31(a)						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed with this quarterly report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Net Income for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020, ~~and June 30, 2019,~~ (ii) the Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020, ~~and June 30, 2019,~~ (iii) the Condensed Consolidated Balance Sheets at ~~June 28, 2020~~April 4, 2021 and December 31, ~~2019,~~2020, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 28,~~April 4, 2021 and March 29, 2020, ~~and June 30, 2019,~~ (v) the Condensed Consolidated Statements of Changes in Equity for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020 ~~and June 30, 2019~~ and (vi) Notes to Condensed Consolidated Financial Statements.

6244

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Cummins Inc.

Date:

~~July 28, 2020~~May 4, 2021

By:

/s/ MARK A. SMITH

By:

/s/ CHRISTOPHER C. CLULOW

Mark A. Smith

Christopher C. Clulow

Vice President and Chief Financial Officer

Vice President-Corporate Controller

(Principal Financial Officer)

(Principal Accounting Officer)

6345


Indiana						35-0257090
(State of Incorporation)						(IRS Employer Identification No.)


		Three months ended						Six months ended							Three months ended
In millions, except per share amounts	In millions, except per share amounts	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019		In millions, except per share amounts	April 4, 2021		March 29, 2020
NET SALES ^(a)(Note 3)		$	3,852	$	6,221	$	8,863	$	12,225
NET SALES (a) (Note 2)										NET SALES (a) (Note 2)	$	6,092	$	5,011
Cost of sales	Cost of sales	2,962		4,580		6,679		9,052		Cost of sales	4,606		3,717
GROSS MARGIN	GROSS MARGIN	890		1,641		2,184		3,173		GROSS MARGIN	1,486		1,294

OPERATING EXPENSES AND INCOME	OPERATING EXPENSES AND INCOME									OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	Selling, general and administrative expenses	470		629		1,016		1,222		Selling, general and administrative expenses	574		546
Research, development and engineering expenses	Research, development and engineering expenses	189		251		427		488		Research, development and engineering expenses	260		238
Equity, royalty and interest income from investees (Note 5)		115		96		244		188
Equity, royalty and interest income from investees (Note 4)										Equity, royalty and interest income from investees (Note 4)	166		129

Other operating expense, net	Other operating expense, net	(10)		(9)		(15)		(4)		Other operating expense, net	(8)		(5)
OPERATING INCOME	OPERATING INCOME	336		848		970		1,647		OPERATING INCOME	810		634

Interest income		4		12		11		24

Interest expense	Interest expense	23		29		46		61		Interest expense	28		23
Other income, net	Other income, net	45		40		82		106		Other income, net	1		44
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	362		871		1,017		1,716		INCOME BEFORE INCOME TAXES	783		655

Income tax expense (Note 6)		93		186		220		362
Income tax expense										Income tax expense	172		127
CONSOLIDATED NET INCOME	CONSOLIDATED NET INCOME	269		685		797		1,354		CONSOLIDATED NET INCOME	611		528

Less: Net (loss) income attributable to noncontrolling interests		(7)		10		10		16
Less: Net income attributable to noncontrolling interests										Less: Net income attributable to noncontrolling interests	8		17
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	276	$	675	$	787	$	1,338	NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	603	$	511

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.	EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.									EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	Basic	$	1.87	$	4.29	$	5.30	$	8.51	Basic	$	4.10	$	3.42
Diluted	Diluted	$	1.86	$	4.27	$	5.29	$	8.47	Diluted	$	4.07	$	3.41

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING	WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING									WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic	Basic	147.6		157.4		148.4		157.3		Basic	147.0		149.3
Dilutive effect of stock compensation awards	Dilutive effect of stock compensation awards	0.4		0.6		0.4		0.6		Dilutive effect of stock compensation awards	1.3		0.4
Diluted	Diluted	148.0		158.0		148.8		157.9		Diluted	148.3		149.7

^(a)Includes sales to nonconsolidated equity investees of $338 million and $595 million for the three and six months ended June 28, 2020, compared with $317 million and $602 million for the comparable periods in 2019.
(a) Includes sales to nonconsolidated equity investees of $478 million for the three months ended April 4, 2021, compared with $257 million for the comparable period in 2020.										(a) Includes sales to nonconsolidated equity investees of $478 million for the three months ended April 4, 2021, compared with $257 million for the comparable period in 2020.



	Three months ended						Six months ended
In millions	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
CONSOLIDATED NET INCOME	$	269	$	685	$	797	$	1,354
Other comprehensive income (loss), net of tax (Note 13)
Change in pension and other postretirement defined benefit plans	16		7		18		(4)
Foreign currency translation adjustments	(11)		(99)		(173)		(15)
Unrealized gain on debt securities	—		1		—		—
Unrealized loss on derivatives	(2)		(10)		(81)		(11)
Total other comprehensive income (loss), net of tax	3		(101)		(236)		(30)
COMPREHENSIVE INCOME	272		584		561		1,324
Less: Comprehensive (loss) income attributable to noncontrolling interests	(12)		10		(12)		19
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$	284	$	574	$	573	$	1,305



	Three months ended
In millions	April 4, 2021		March 29, 2020
CONSOLIDATED NET INCOME	$	611	$	528
Other comprehensive income (loss), net of tax (Note 11)
Change in pension and other postretirement defined benefit plans	29		2
Foreign currency translation adjustments	(56)		(162)

Unrealized gain (loss) on derivatives	72		(79)
Total other comprehensive income (loss), net of tax	45		(239)
COMPREHENSIVE INCOME	656		289
Less: Comprehensive income attributable to noncontrolling interests	8		0
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$	648	$	289


In millions, except par value	In millions, except par value	June 28, 2020		December 31, 2019		In millions, except par value	April 4, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	1,751	$	1,129	Cash and cash equivalents	$	2,958	$	3,401

Marketable securities (Note 7)		353		341
Marketable securities (Note 5)						Marketable securities (Note 5)	397		461
Total cash, cash equivalents and marketable securities	Total cash, cash equivalents and marketable securities	2,104		1,470		Total cash, cash equivalents and marketable securities	3,355		3,862
Accounts and notes receivable, net	Accounts and notes receivable, net					Accounts and notes receivable, net
Trade and other	Trade and other	3,069		3,387		Trade and other	3,698		3,440
Nonconsolidated equity investees	Nonconsolidated equity investees	372		283		Nonconsolidated equity investees	511		380
Inventories (Note 8)		3,655		3,486
Inventories (Note 6)						Inventories (Note 6)	3,753		3,425
Prepaid expenses and other current assets	Prepaid expenses and other current assets	634		761		Prepaid expenses and other current assets	805		790
Total current assets	Total current assets	9,834		9,387		Total current assets	12,122		11,897
Long-term assets	Long-term assets					Long-term assets
Property, plant and equipment	Property, plant and equipment	8,620		8,699		Property, plant and equipment	9,044		9,011
Accumulated depreciation	Accumulated depreciation	(4,553)		(4,454)		Accumulated depreciation	(4,848)		(4,756)
Property, plant and equipment, net	Property, plant and equipment, net	4,067		4,245		Property, plant and equipment, net	4,196		4,255
Investments and advances related to equity method investees	Investments and advances related to equity method investees	1,362		1,237		Investments and advances related to equity method investees	1,592		1,441
Goodwill	Goodwill	1,284		1,286		Goodwill	1,290		1,293
Other intangible assets, net	Other intangible assets, net	1,017		1,003		Other intangible assets, net	964		963
Pension assets	Pension assets	998		1,001		Pension assets	1,085		1,042
Other assets		1,752		1,578
Other assets (Note 7)						Other assets (Note 7)	1,713		1,733
Total assets	Total assets	$	20,314	$	19,737	Total assets	$	22,962	$	22,624

LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities	Current liabilities					Current liabilities
Accounts payable (principally trade)	Accounts payable (principally trade)	$	2,281	$	2,534	Accounts payable (principally trade)	$	3,279	$	2,820
Loans payable (Note 9)		109		100
Commercial paper (Note 9)		2,027		660
Loans payable (Note 8)						Loans payable (Note 8)	93		169
Commercial paper (Note 8)						Commercial paper (Note 8)	317		323
Accrued compensation, benefits and retirement costs	Accrued compensation, benefits and retirement costs	309		560		Accrued compensation, benefits and retirement costs	393		484
Current portion of accrued product warranty (Note 10)		681		803
Current portion of deferred revenue (Note 3)		523		533
Current portion of accrued product warranty (Note 9)						Current portion of accrued product warranty (Note 9)	623		674
Current portion of deferred revenue (Note 2)						Current portion of deferred revenue (Note 2)	773		691

Other accrued expenses (Note 11)		920		1,039
Current maturities of long-term debt (Note 9)		66		31
Other accrued expenses (Note 7)						Other accrued expenses (Note 7)	1,121		1,112
Current maturities of long-term debt (Note 8)						Current maturities of long-term debt (Note 8)	61		62
Total current liabilities	Total current liabilities	6,916		6,260		Total current liabilities	6,660		6,335
Long-term liabilities	Long-term liabilities					Long-term liabilities
Long-term debt (Note 9)		1,639		1,576
Long-term debt (Note 8)						Long-term debt (Note 8)	3,620		3,610
Pensions and other postretirement benefits	Pensions and other postretirement benefits	578		591		Pensions and other postretirement benefits	621		630
Accrued product warranty (Note 10)		636		645
Deferred revenue (Note 3)		829		821
Other liabilities (Note 11)		1,586		1,379
Accrued product warranty (Note 9)						Accrued product warranty (Note 9)	692		672
Deferred revenue (Note 2)						Deferred revenue (Note 2)	828		840
Other liabilities (Note 7)						Other liabilities (Note 7)	1,510		1,548
Total liabilities	Total liabilities	$	12,184	$	11,272	Total liabilities	$	13,931	$	13,635

Commitments and contingencies (Note 12)
Commitments and contingencies (Note 10)						Commitments and contingencies (Note 10)	0		0

EQUITY	EQUITY					EQUITY
Cummins Inc. shareholders’ equity	Cummins Inc. shareholders’ equity					Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued	Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued	$	2,353	$	2,346	Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued	$	2,393	$	2,404
Retained earnings	Retained earnings	14,811		14,416		Retained earnings	15,825		15,419
Treasury stock, at cost, 74.8 and 71.7 shares		(7,729)		(7,225)
Common stock held by employee benefits trust, at cost, 0.1 and 0.2 shares		(1)		(2)
Accumulated other comprehensive loss (Note 13)		(2,242)		(2,028)
Treasury stock, at cost, 76.2 and 74.8 shares						Treasury stock, at cost, 76.2 and 74.8 shares	(8,172)		(7,779)

Accumulated other comprehensive loss (Note 11)						Accumulated other comprehensive loss (Note 11)	(1,937)		(1,982)

Total Cummins Inc. shareholders’ equity	Total Cummins Inc. shareholders’ equity	7,192		7,507		Total Cummins Inc. shareholders’ equity	8,109		8,062
Noncontrolling interests	Noncontrolling interests	938		958		Noncontrolling interests	922		927
Total equity	Total equity	$	8,130	$	8,465	Total equity	$	9,031	$	8,989
Total liabilities and equity	Total liabilities and equity	$	20,314	$	19,737	Total liabilities and equity	$	22,962	$	22,624


		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Net Income for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020 ~~and June 30, 2019~~	3
	Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020 ~~and June 30, 2019~~	4

	Condensed Consolidated Balance Sheets at ~~June 28, 2020~~April 4, 2021 and December 31, ~~2019~~2020	5
	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 28,~~April 4, 2021 and March 29, 2020 ~~and June 30, 2019~~	6
	Condensed Consolidated Statements of Changes in Equity for the three ~~and six~~ months ended ~~June 28,~~April 4, 2021 and March 29, 2020 ~~and June 30, 2019~~	7
	Notes to Condensed Consolidated Financial Statements	98
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2623
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	5142
ITEM 4.	Controls and Procedures	5142
	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	5243
ITEM 1A.	Risk Factors	5243
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6143
ITEM 3.	Defaults Upon Senior Securities	6243
ITEM 4.	Mine Safety Disclosures	6243
ITEM 5.	Other Information	6244
ITEM 6.	Exhibits	6244
	Signatures	6345



	Six months ended
In millions, except per share amounts	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Common Stock Held in Trust		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE AT DECEMBER 31, 2019	$	556	$	1,790	$	14,416	$	(7,225)	$	(2)	$	(2,028)	$	7,507	$	958	$	8,465
Adoption of new accounting standards (Note 16)					(4)								(4)		—		(4)
Net income					787								787		10		797
Other comprehensive loss, net of tax (Note 13)											(214)		(214)		(22)		(236)
Issuance of common stock			10										10		—		10
Employee benefits trust activity			22						1				23		—		23
Repurchases of common stock							(550)						(550)		—		(550)
Cash dividends on common stock, $2.622 per share					(388)								(388)		—		(388)
Distributions to noncontrolling interests													—		(13)		(13)
Stock-based awards			(14)				46						32		—		32

Other shareholder transactions			(11)										(11)		5		(6)
BALANCE AT JUNE 28, 2020	$	556	$	1,797	$	14,811	$	(7,729)	$	(1)	$	(2,242)	$	7,192	$	938	$	8,130

BALANCE AT DECEMBER 31, 2018	$	556	$	1,715	$	12,917	$	(6,028)	$	(5)	$	(1,807)	$	7,348	$	911	$	8,259

Net income					1,338								1,338		16		1,354
Other comprehensive (loss) income, net of tax (Note 13)											(33)		(33)		3		(30)
Issuance of common stock			2										2		—		2
Employee benefits trust activity			20						1				21		—		21
Repurchases of common stock							(100)						(100)		—		(100)
Cash dividends on common stock, $2.28 per share					(358)								(358)		—		(358)
Distributions to noncontrolling interests													—		(13)		(13)
Stock-based awards			(3)				46						43		—		43

Other shareholder transactions			17										17		1		18
BALANCE AT JUNE 30, 2019	$	556	$	1,751	$	13,897	$	(6,082)	$	(4)	$	(1,840)	$	8,278	$	918	$	9,196


		Pension																				Pension
		U.S. Plans						U.K. Plans							OPEB							U.S. Plans				U.K. Plans		OPEB
		Three months ended																								Three months ended
In millions	In millions	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019		In millions		April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Service cost	Service cost	$	33	$	29	$	7	$	6	$	—	$	—	Service cost		$	35	$	34	$	8	$	7	$	0	$	0
Interest cost	Interest cost	23		27		9		11		1		3		Interest cost		19		24		8		9		1		2
Expected return on plan assets	Expected return on plan assets	(48)		(48)		(18)		(18)		—		—		Expected return on plan assets		(50)		(49)		(21)		(19)		0		0
Amortization of prior service cost	Amortization of prior service cost	1		1		—		1		—		—		Amortization of prior service cost		0		0		0		1		0		0
Recognized net actuarial loss	Recognized net actuarial loss	10		4		9		3		—		—		Recognized net actuarial loss		12		10		8		8		0		0
Net periodic benefit cost	Net periodic benefit cost	$	19	$	13	$	7	$	3	$	1	$	3	Net periodic benefit cost		$	16	$	19	$	3	$	6	$	1	$	2


		June 28, 2020										December 31, 2019											April 4, 2021				December 31, 2020
In millions	In millions	Cost		Gross unrealized gains/(losses)⁽¹⁾		Estimated fair value		Cost		Gross unrealized gains/(losses)⁽¹⁾		Estimated fair value		In millions	Cost		Gross unrealized gains/(losses)(1)		Estimated fair value		Cost		Gross unrealized gains/(losses)(1)		Estimated fair value

Equity securities	Equity securities													Equity securities

Debt mutual funds	Debt mutual funds	$	221	$	5	$	226	$	180	$	3	$	183	Debt mutual funds	$	188	$	3	$	191	$	267	$	5	$	272
Certificates of deposit	Certificates of deposit	104		—		104		133		—		133		Certificates of deposit	179		0		179		164		0		164

Equity mutual funds	Equity mutual funds	18		3		21		19		4		23		Equity mutual funds	20		6		26		19		5		24
Bank debentures		1		—		1		1		—		1

Debt securities	Debt securities	1		—		1		1		—		1		Debt securities	1		0		1		1		0		1

Total marketable securities	Total marketable securities	$	345	$	8	$	353	$	334	$	7	$	341	Total marketable securities	$	388	$	9	$	397	$	451	$	10	$	461

⁽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 "Other income, net" in our Condensed Consolidated Statements of Net Income.	⁽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 "Other income, net" in our Condensed Consolidated Statements of Net Income.																									(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 "Other income, net" in our Condensed Consolidated Statements of Net Income.


In millions	In millions	Interest Rate	June 28, 2020		December 31, 2019		In millions	Interest Rate	April 4, 2021		December 31, 2020
Long-term debt	Long-term debt						Long-term debt
Senior notes, due 2023⁽¹⁾	Senior notes, due 2023⁽¹⁾	3.65%	$	500	$	500	Senior notes, due 2023⁽¹⁾	3.65%	$	500	$	500
Senior notes, due 2025							Senior notes, due 2025	0.75%	500		500
Debentures, due 2027	Debentures, due 2027	6.75%	58		58		Debentures, due 2027	6.75%	58		58
Debentures, due 2028	Debentures, due 2028	7.125%	250		250		Debentures, due 2028	7.125%	250		250
Senior notes, due 2030							Senior notes, due 2030	1.50%	850		850
Senior notes, due 2043	Senior notes, due 2043	4.875%	500		500		Senior notes, due 2043	4.875%	500		500
Debentures, due 2098⁽²⁾		5.65%	165		165
Senior notes, due 2050							Senior notes, due 2050	2.60%	650		650
Debentures, due 2098(1)							Debentures, due 2098(1)	5.65%	165		165

Other debt	Other debt		140		59		Other debt		146		132

Unamortized discount			(49)		(50)
Unamortized discount and deferred issuance costs							Unamortized discount and deferred issuance costs		(71)		(72)
Fair value adjustments due to hedge on indebtedness	Fair value adjustments due to hedge on indebtedness		53		35		Fair value adjustments due to hedge on indebtedness		44		48
Finance leases	Finance leases		88		90		Finance leases		89		91
Total long-term debt	Total long-term debt		1,705		1,607		Total long-term debt		3,681		3,672
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt		66		31		Less: Current maturities of long-term debt		61		62
Long-term debt	Long-term debt		$	1,639	$	1,576	Long-term debt		$	3,620	$	3,610

⁽¹⁾ In June 2020, we settled a portion of our February 2014 interest rate swap. See "Interest Rate Risk" below for additional information.
⁽²⁾ The effective interest rate on this debt is 7.48%.

(1) The effective interest rate is 7.48%.							(1) The effective interest rate is 7.48%.


In millions	In millions	2020		2021		2022		2023		2024		In millions	2021		2022		2023		2024		2025
Principal payments	Principal payments	$	44	$	59	$	29	$	524	$	22	Principal payments	$	51	$	57	$	534	$	30	$	506



In millions	June 28, 2020		December 31, 2019
Other taxes payable	$	199	$	228
Marketing accruals	181		176
Current portion of operating lease liabilities	136		131
Income taxes payable	90		52
Other	314		452
Other accrued expenses	$	920	$	1,039



In millions	Change in pensions and other postretirement defined benefit plans		Foreign currency translation adjustment		Unrealized gain (loss) on debt securities		Unrealized gain (loss) on derivatives		Total attributable to Cummins Inc.		Noncontrolling interests		Total
Balance at March 29, 2020	$	(732)	$	(1,430)	$	—	$	(88)	$	(2,250)
Other comprehensive income before reclassifications
Before-tax amount	—		(7)		—		(3)		(10)		$	(5)	$	(15)
Tax benefit (expense)	—		1		—		3		4		—		4
After-tax amount	—		(6)		—		—		(6)		(5)		(11)
Amounts reclassified from accumulated other comprehensive income (loss)⁽¹⁾	16		—		—		(2)		14		—		14

Net current period other comprehensive income (loss)	16		(6)		—		(2)		8		$	(5)	$	3
Balance at June 28, 2020	$	(716)	$	(1,436)	$	—	$	(90)	$	(2,242)

Balance at March 31, 2019	$	(682)	$	(1,057)	$	(1)	$	1	$	(1,739)
Other comprehensive income before reclassifications
Before-tax amount	1		(97)		1		(11)		(106)		$	—	$	(106)
Tax benefit (expense)	—		(2)		—		4		2		—		2
After-tax amount	1		(99)		1		(7)		(104)		—		(104)
Amounts reclassified from accumulated other comprehensive income (loss)⁽¹⁾	6		—		—		(3)		3		—		3
Net current period other comprehensive income (loss)	7		(99)		1		(10)		(101)		$	—	$	(101)
Balance at June 30, 2019	$	(675)	$	(1,156)	$	—	$	(9)	$	(1,840)

⁽¹⁾ Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.


~~In millions~~	~~Restructuring Accrual~~
~~Balance at December 31, 2019~~	$	~~116~~

~~Cash payments~~	~~(81)~~
~~Change in estimate~~	~~(5)~~
~~Foreign currency translation~~	~~(1)~~
~~Balance at June 28, 2020~~	$	29


In millions	Engine		Distribution		Components		Power Systems		New Power		Total Segments		Intersegment Eliminations ⁽¹⁾		Total
Three months ended June 28, 2020
External sales	$	937	$	1,601	$	876	$	428	$	10	$	3,852	$	—	$	3,852
Intersegment sales	486		4		274		349		—		1,113		(1,113)		—
Total sales	1,423		1,605		1,150		777		10		4,965		(1,113)		3,852
Research, development and engineering expenses	65		4		55		41		24		189		—		189
Equity, royalty and interest income from investees	84		11		12		9		(1)		115		—		115

Interest income	1		1		1		1		—		4		—		4
Segment EBITDA	150		160		141		91		(38)		504		45		549
Depreciation and amortization ⁽²⁾	51		30		47		32		4		164		—		164



Three months ended June 30, 2019
External sales	$	2,073	$	2,015	$	1,401	$	724	$	8	$	6,221	$	—	$	6,221
Intersegment sales	630		13		445		479		—		1,567		(1,567)		—
Total sales	2,703		2,028		1,846		1,203		8		7,788		(1,567)		6,221
Research, development and engineering expenses	88		7		75		57		24		251		—		251
Equity, royalty and interest income from investees	62		12		11		11		—		96		—		96

Interest income	4		4		2		2		—		12		—		12
Segment EBITDA	416		172		297		173		(33)		1,025		33		1,058
Depreciation and amortization ⁽²⁾	51		28		47		30		2		158		—		158



⁽¹⁾Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended June 28, 2020 and June 30, 2019.

⁽²⁾Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as "Interest expense." A portion of depreciation expense is included in "Research, development and engineering expenses."


In millions	April 4, 2021		December 31, 2020
Finished products	$	2,320	$	2,216
Work-in-process and raw materials	1,585		1,346
Inventories at FIFO cost	3,905		3,562
Excess of FIFO over LIFO	(152)		(137)
Total inventories	$	3,753	$	3,425


In millions	June 28, 2020		December 31, 2019
Finished products	$	2,268	$	2,214
Work-in-process and raw materials	1,519		1,395
Inventories at FIFO cost	3,787		3,609
Excess of FIFO over LIFO	(132)		(123)
Total inventories	$	3,655	$	3,486


		Three months ended																																	Three months ended
Operating Segments	Operating Segments	June 28, 2020										June 30, 2019											Percent change						Operating Segments		April 4, 2021						March 29, 2020	Percent change
				Percent						Percent				2020 vs. 2019										Percent							Percent				2021 vs. 2020
In millions	In millions	Sales		of Total		EBITDA		Sales		of Total		EBITDA		Sales		EBITDA		In millions	Sales		of Total			EBITDA		Sales		of Total			EBITDA		Sales		EBITDA
Engine	Engine	$	1,423	37	%	$	150	$	2,703	43	%	$	416	(47)	%	(64)	%	Engine	$	2,459	40	%		$	354	$	2,158	43		%	$	365	14	%	(3)	%
Distribution	Distribution	1,605		42	%	160		2,028		33	%	172		(21)	%	(7)	%	Distribution	1,835		30	%		160		1,814		36		%	158		1	%	1	%
Components	Components	1,150		30	%	141		1,846		30	%	297		(38)	%	(53)	%	Components	2,152		35	%		421		1,502		30		%	279		43	%	51	%
Power Systems	Power Systems	777		20	%	91		1,203		19	%	173		(35)	%	(47)	%	Power Systems	1,022		17	%		126		884		18		%	77		16	%	64	%
New Power	New Power	10		—	%	(38)		8		—	%	(33)		25	%	(15)	%	New Power	35		1	%		(51)		10		—		%	(43)		NM		(19)	%
Intersegment eliminations	Intersegment eliminations	(1,113)		(29)	%	45		(1,567)		(25)	%	33		(29)	%	36	%	Intersegment eliminations	(1,411)		(23)	%		(30)		(1,357)		(27)		%	10		4	%	NM

Total	Total	$	3,852	100	%	$	549	$	6,221	100	%	$	1,058	(38)	%	(48)	%	Total	$	6,092	100	%		$	980	$	5,011	100		%	$	846	22	%	16	%

"NM" - not meaningful information																		"NM" - not meaningful information



	Three months ended									Favorable/								Six months ended							Favorable/
	June 28, 2020			June 30, 2019			(Unfavorable)								June 28, 2020			June 30, 2019			(Unfavorable)
In millions, except per share amounts											Amount		Percent											Amount		Percent
NET SALES		$	3,852		$	6,221		$	(2,369)		(38)	%	$	8,863		$	12,225		$	(3,362)		(28)	%
Cost of sales		2,962			4,580			1,618			35	%	6,679			9,052			2,373			26	%
GROSS MARGIN		890			1,641			(751)			(46)	%	2,184			3,173			(989)			(31)	%
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses		470			629			159			25	%	1,016			1,222			206			17	%
Research, development and engineering expenses		189			251			62			25	%	427			488			61			13	%
Equity, royalty and interest income from investees		115			96			19			20	%	244			188			56			30	%

Other operating expense, net		(10)			(9)			(1)			11	%	(15)			(4)			(11)			NM
OPERATING INCOME		336			848			(512)			(60)	%	970			1,647			(677)			(41)	%
Interest income		4			12			(8)			(67)	%	11			24			(13)			(54)	%
Interest expense		23			29			6			21	%	46			61			15			25	%
Other income, net		45			40			5			13	%	82			106			(24)			(23)	%
INCOME BEFORE INCOME TAXES		362			871			(509)			(58)	%	1,017			1,716			(699)			(41)	%
Income tax expense		93			186			93			50	%	220			362			142			39	%
CONSOLIDATED NET INCOME		269			685			(416)			(61)	%	797			1,354			(557)			(41)	%
Less: Net (loss) income attributable to noncontrolling interests		(7)			10			17			NM		10			16			6			38	%
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$	276		$	675		$	(399)		(59)	%	$	787		$	1,338		$	(551)		(41)	%
Diluted Earnings Per Common Share Attributable to Cummins Inc.		$	1.86		$	4.27		$	(2.41)		(56)	%	$	5.29		$	8.47		$	(3.18)		(38)	%

"NM" - not meaningful information


	Three months ended					Favorable/ (Unfavorable)			Six months ended				Favorable/ (Unfavorable)
	June 28, 2020		June 30, 2019					June 28, 2020			June 30, 2019
Percent of sales						Percentage Points							Percentage Points
Gross margin	23.1	%	26.4	%	(3.3)	24.6	%		26.0	%		(1.4)
Selling, general and administrative expenses	12.2	%	10.1	%	(2.1)	11.5	%		10.0	%		(1.5)
Research, development and engineering expenses	4.9	%	4.0	%	(0.9)	4.8	%		4.0	%		(0.8)


	Three months ended				Favorable/
	April 4,		March 29,		(Unfavorable)
In millions	2021		2020		Amount		Percent
North America	$	1,171	$	1,246	$	(75)	(6)	%
Asia Pacific	214		196		18		9	%
Europe	163		136		27		20	%
China	87		68		19		28	%
Russia	57		42		15		36	%
Africa and Middle East	54		51		3		6	%
India	49		36		13		36	%
Latin America	40		39		1		3	%
Total sales	$	1,835	$	1,814	$	21	1	%


Dollars in millions	Dollars in millions	June 28, 2020			December 31, 2019			Dollars in millions	April 4, 2021			December 31, 2020
Working capital ⁽¹⁾	Working capital ⁽¹⁾	$	2,918		$	3,127		Working capital (1)	$	5,462		$	5,562
Current ratio	Current ratio	1.42			1.50			Current ratio	1.82			1.88
Accounts and notes receivable, net	Accounts and notes receivable, net	$	3,441		$	3,670		Accounts and notes receivable, net	$	4,209		$	3,820
Days' sales in receivables	Days' sales in receivables	73			58			Days' sales in receivables	60			69
Inventories	Inventories	$	3,655		$	3,486		Inventories	$	3,753		$	3,425
Inventory turnover	Inventory turnover	3.7			4.7			Inventory turnover	5.0			4.2
Accounts payable (principally trade)	Accounts payable (principally trade)	$	2,281		$	2,534		Accounts payable (principally trade)	$	3,279		$	2,820
Days' payable outstanding	Days' payable outstanding	66			58			Days' payable outstanding	58			68
Total debt	Total debt	$	3,841		$	2,367		Total debt	$	4,091		$	4,164
Total debt as a percent of total capital	Total debt as a percent of total capital	32.1		%	21.9		%	Total debt as a percent of total capital	31.2		%	31.7		%

⁽¹⁾Working capital includes cash and cash equivalents.	⁽¹⁾Working capital includes cash and cash equivalents.							(1) Working capital includes cash and cash equivalents.


In millions, except per share amounts	Shares Purchased	Average Cost Per Share		Total Cost of Repurchases		Remaining Authorized Capacity ⁽¹⁾

March 29	3.5	$	156.90	$	550	$	85
June 28	—	—		—		85


Total	3.5	156.90		$	550

⁽¹⁾ The remaining authorized capacity under these plans was calculated based on the cost to purchase the shares but excludes commission expenses in accordance with the authorized plan.