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

For the Quarterly Period Ended March 31, 20232024
 
Commission File Number 1-4949
CUMMINS INC.
(Exact name of registrant as specified in its charter)
Indiana35-0257090
(State of Incorporation)  (IRS Employer Identification No.)
500 Jackson Street
Box 3005
Columbus, Indiana 47202-3005
(Address of principal executive offices)
 
Telephone (812) 377-5000
(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
As of March 31, 2023,2024, there were 141,561,784136,779,875 shares of common stock outstanding with a par value of $2.50 per share.

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CUMMINS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
 
  Page
  
 Condensed Consolidated Statements of Net Income for the three months ended March 31, 20232024 and March 31, 20222023
 Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 20232024 and March 31, 20222023
 Condensed Consolidated Balance Sheets at March 31, 20232024 and December 31, 20222023
 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 20232024 and March 31, 20222023
 Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Equity for the three months ended March 31, 20232024 and March 31, 20222023
 
  
 



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

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millions, except per share amounts In millions, except per share amounts 20232022
In millions, except per share amounts
In millions, except per share amounts
NET SALES (Notes 1 and 2)
NET SALES (Notes 1 and 2)
NET SALES (Notes 1 and 2)
NET SALES (Notes 1 and 2)
$8,453 $6,385 
Cost of salesCost of sales6,424 4,853 
Cost of sales
Cost of sales
GROSS MARGIN
GROSS MARGIN
GROSS MARGINGROSS MARGIN2,029 1,532 
OPERATING EXPENSES AND INCOMEOPERATING EXPENSES AND INCOME  
OPERATING EXPENSES AND INCOME
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses
Selling, general and administrative expenses
Selling, general and administrative expensesSelling, general and administrative expenses753 615 
Research, development and engineering expensesResearch, development and engineering expenses350 298 
Research, development and engineering expenses
Research, development and engineering expenses
Equity, royalty and interest income from investees (Note 4)
Equity, royalty and interest income from investees (Note 4)
Equity, royalty and interest income from investees (Note 4)Equity, royalty and interest income from investees (Note 4)119 96 
Other operating expense, netOther operating expense, net19 111 
Other operating expense, net
Other operating expense, net
OPERATING INCOME
OPERATING INCOME
OPERATING INCOMEOPERATING INCOME1,026 604 
Interest expenseInterest expense87 17 
Other income (expense), net90 (9)
Interest expense
Interest expense
Other income, net (Note 14)
Other income, net (Note 14)
Other income, net (Note 14)
INCOME BEFORE INCOME TAXES
INCOME BEFORE INCOME TAXES
INCOME BEFORE INCOME TAXESINCOME BEFORE INCOME TAXES1,029 578 
Income tax expense (Note 5)Income tax expense (Note 5)223 155 
Income tax expense (Note 5)
Income tax expense (Note 5)
CONSOLIDATED NET INCOME
CONSOLIDATED NET INCOME
CONSOLIDATED NET INCOMECONSOLIDATED NET INCOME806 423 
Less: Net income attributable to noncontrolling interestsLess: Net income attributable to noncontrolling interests16 
Less: Net income attributable to noncontrolling interests
Less: Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO CUMMINS INC.
NET INCOME ATTRIBUTABLE TO CUMMINS INC.
NET INCOME ATTRIBUTABLE TO CUMMINS INC.NET INCOME ATTRIBUTABLE TO CUMMINS INC.$790 $418 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.  
BasicBasic$5.58 $2.94 
Basic
Basic
Diluted
Diluted
DilutedDiluted$5.55 $2.92 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDINGWEIGHTED-AVERAGE COMMON SHARES OUTSTANDING  
BasicBasic141.5 142.2 
Basic
Basic
Dilutive effect of stock compensation awardsDilutive effect of stock compensation awards0.9 0.9 
Dilutive effect of stock compensation awards
Dilutive effect of stock compensation awards
Diluted
Diluted
DilutedDiluted142.4 143.1 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended
 March 31,
In millions 20232022
CONSOLIDATED NET INCOME$806 $423 
Other comprehensive income (loss), net of tax (Note 13)  
Change in pension and other postretirement defined benefit plans(9)16 
Foreign currency translation adjustments82 
Unrealized (loss) gain on derivatives(3)28 
Total other comprehensive income, net of tax70 48 
COMPREHENSIVE INCOME876 471 
Less: Comprehensive income (loss) attributable to noncontrolling interests19 (3)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.$857 $474 
Three months ended
 March 31,
In millions 20242023
CONSOLIDATED NET INCOME$2,028 $806 
Other comprehensive (loss) income, net of tax (Note 12)  
Change in pension and other postretirement defined benefit plans(13)(9)
Foreign currency translation adjustments(60)82 
Unrealized gain (loss) on derivatives12 (3)
Total other comprehensive (loss) income, net of tax(61)70 
COMPREHENSIVE INCOME1,967 876 
Less: Comprehensive income attributable to noncontrolling interests32 19 
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.$1,935 $857 
 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except par valueIn millions, except par valueMarch 31,
2023
December 31,
2022
In millions, except par valueMarch 31,
2024
December 31,
2023
ASSETSASSETS  ASSETS 
Current assetsCurrent assets  Current assets 
Cash and cash equivalentsCash and cash equivalents$1,980 $2,101 
Marketable securities (Note 6)Marketable securities (Note 6)459 472 
Marketable securities (Note 6)
Marketable securities (Note 6)
Total cash, cash equivalents and marketable securitiesTotal cash, cash equivalents and marketable securities2,439 2,573 
Accounts and notes receivable, netAccounts and notes receivable, net5,834 5,202 
Inventories (Note 7)
Inventories (Note 7)
Inventories (Note 7)Inventories (Note 7)5,878 5,603 
Prepaid expenses and other current assetsPrepaid expenses and other current assets1,217 1,073 
Total current assetsTotal current assets15,368 14,451 
Long-term assetsLong-term assets  Long-term assets  
Property, plant and equipmentProperty, plant and equipment10,629 10,507 
Accumulated depreciationAccumulated depreciation(5,039)(4,986)
Property, plant and equipment, netProperty, plant and equipment, net5,590 5,521 
Investments and advances related to equity method investeesInvestments and advances related to equity method investees1,860 1,759 
GoodwillGoodwill2,365 2,343 
Other intangible assets, netOther intangible assets, net2,640 2,687 
Pension assets (Note 3)Pension assets (Note 3)1,496 1,398 
Other assets (Note 8)Other assets (Note 8)2,114 2,140 
Total assetsTotal assets$31,433 $30,299 
LIABILITIESLIABILITIES  
LIABILITIES
LIABILITIES  
Current liabilitiesCurrent liabilities  Current liabilities  
Accounts payable (principally trade)Accounts payable (principally trade)$4,636 $4,252 
Loans payable (Note 9)Loans payable (Note 9)229 210 
Commercial paper (Note 9)Commercial paper (Note 9)2,545 2,574 
Current maturities of long-term debt (Note 9)Current maturities of long-term debt (Note 9)569 573 
Accrued compensation, benefits and retirement costsAccrued compensation, benefits and retirement costs510 617 
Current portion of accrued product warranty (Note 10)Current portion of accrued product warranty (Note 10)746 726 
Current portion of deferred revenue (Note 2)Current portion of deferred revenue (Note 2)1,040 1,004 
Other accrued expenses (Note 8)Other accrued expenses (Note 8)1,648 1,465 
Other accrued expenses (Note 8)
Other accrued expenses (Note 8)
Total current liabilitiesTotal current liabilities11,923 11,421 
Long-term liabilitiesLong-term liabilities  Long-term liabilities  
Long-term debt (Note 9)Long-term debt (Note 9)4,409 4,498 
Deferred revenue (Note 2)Deferred revenue (Note 2)937 844 
Deferred revenue (Note 2)
Deferred revenue (Note 2)
Other liabilities (Note 8)Other liabilities (Note 8)3,283 3,311 
Total liabilitiesTotal liabilities$20,552 $20,074 
Commitments and contingencies (Note 11)Commitments and contingencies (Note 11)
Commitments and contingencies (Note 11)
Commitments and contingencies (Note 11)
Redeemable noncontrolling interests (Note 12)$261 $258 
EQUITY
EQUITY
 
EQUITYEQUITY
Cummins Inc. shareholders’ equityCummins Inc. shareholders’ equity  
Cummins Inc. shareholders’ equity
Cummins Inc. shareholders’ equity  
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issuedCommon stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued$2,230 $2,243 
Retained earningsRetained earnings18,605 18,037 
Treasury stock, at cost, 80.9 and 81.2 shares(9,389)(9,415)
Treasury stock, at cost, 85.7 and 80.7 shares
Accumulated other comprehensive loss (Note 13)(1,823)(1,890)
Accumulated other comprehensive loss (Note 12)
Accumulated other comprehensive loss (Note 12)
Accumulated other comprehensive loss (Note 12)
Total Cummins Inc. shareholders’ equity
Total Cummins Inc. shareholders’ equity
Total Cummins Inc. shareholders’ equityTotal Cummins Inc. shareholders’ equity9,623 8,975 
Noncontrolling interestsNoncontrolling interests997 992 
Total equityTotal equity$10,620 $9,967 
Total liabilities, redeemable noncontrolling interests and equity$31,433 $30,299 
Total liabilities and equity
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
Three months endedThree months ended
March 31, March 31,
In millionsIn millions20232022In millions20242023
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES  CASH FLOWS FROM OPERATING ACTIVITIES 
Consolidated net incomeConsolidated net income$806 $423 
Adjustments to reconcile consolidated net income to net cash provided by operating activitiesAdjustments to reconcile consolidated net income to net cash provided by operating activities  Adjustments to reconcile consolidated net income to net cash provided by operating activities  
Gain related to divestiture of Atmus (Note 14)
Depreciation and amortizationDepreciation and amortization246 161 
Deferred income taxes
Deferred income taxes
Deferred income taxesDeferred income taxes(38)(66)
Equity in income of investees, net of dividendsEquity in income of investees, net of dividends(67)(76)
Pension and OPEB expense (Note 3)Pension and OPEB expense (Note 3)1 
Pension contributions and OPEB payments (Note 3)Pension contributions and OPEB payments (Note 3)(92)(43)
Russian suspension costs (Note 15) 158 
(Gain) loss on corporate owned life insurance(19)37 
Foreign currency remeasurement and transaction exposure(11)(7)
Changes in current assets and liabilities, net of acquisitions 
Changes in current assets and liabilities, net of acquisitions and divestitures
Changes in current assets and liabilities, net of acquisitions and divestitures
Changes in current assets and liabilities, net of acquisitions and divestitures 
Accounts and notes receivableAccounts and notes receivable(621)(417)
InventoriesInventories(263)(289)
Other current assetsOther current assets(142)(57)
Accounts payableAccounts payable381 484 
Accrued expensesAccrued expenses151 (251)
Changes in other liabilities64 70 
Other, net
Other, net
Other, netOther, net99 28 
Net cash provided by operating activitiesNet cash provided by operating activities495 164 
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES   
Capital expendituresCapital expenditures(193)(104)
Acquisition of a business, net of cash acquired (Note 16) 83 
Acquisition of business, net of cash acquired
Acquisition of business, net of cash acquired
Acquisition of business, net of cash acquired
Investments in marketable securities—acquisitions
Investments in marketable securities—acquisitions
Investments in marketable securities—acquisitionsInvestments in marketable securities—acquisitions(326)(197)
Investments in marketable securities—liquidations (Note 6)Investments in marketable securities—liquidations (Note 6)345 254 
Cash associated with Atmus divestiture
Cash associated with Atmus divestiture
Cash associated with Atmus divestiture
Other, net
Other, net
Other, netOther, net(54)(46)
Net cash used in investing activitiesNet cash used in investing activities(228)(10)
CASH FLOWS FROM FINANCING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES   
Proceeds from borrowingsProceeds from borrowings43 14 
Net payments of commercial paperNet payments of commercial paper(29)(2)
Payments on borrowings and finance lease obligationsPayments on borrowings and finance lease obligations(142)(24)
Dividend payments on common stockDividend payments on common stock(222)(207)
Repurchases of common stock (311)
Dividend payments on common stock
Dividend payments on common stock
Other, netOther, net(13)33 
Net cash used in financing activities(363)(497)
Other, net
Other, net
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTSEFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(25)27 
Net decrease in cash and cash equivalents(121)(316)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of yearCash and cash equivalents at beginning of year2,101 2,592 
CASH AND CASH EQUIVALENTS AT END OF PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD$1,980 $2,276 
 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
(Unaudited)
 
Three months ended
Three months ended
Three months ended
In millions, except per share amountsIn millions, except per share amountsRedeemable Noncontrolling InterestsCommon StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Cummins Inc. Shareholders’ EquityNoncontrolling InterestsTotal Equity
BALANCE AT DECEMBER 31, 2023
Net income
Net income
Net income
Other comprehensive loss, net of tax (Note 12)
Three months ended
In millions, except per share amountsRedeemable Noncontrolling InterestsCommon StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Cummins Inc. Shareholders’ EquityNoncontrolling InterestsTotal Equity
Cash dividends on common stock, $1.68 per share
Cash dividends on common stock, $1.68 per share
Cash dividends on common stock, $1.68 per share
Distributions to noncontrolling interests
Share-based awards
Divestiture of Atmus (Note 14)
Divestiture of Atmus (Note 14)
Divestiture of Atmus (Note 14)
Other shareholder transactions
BALANCE AT MARCH 31, 2024
BALANCE AT DECEMBER 31, 2022
BALANCE AT DECEMBER 31, 2022
BALANCE AT DECEMBER 31, 2022BALANCE AT DECEMBER 31, 2022$258 $556 $1,687 $18,037 $(9,415)$(1,890)$8,975 $992 $9,967 
Net incomeNet income(8)790 790 24 814 
Other comprehensive income, net of tax (Note 13)67 67 3 70 
Net income
Net income
Other comprehensive income, net of tax (Note 12)
Cash dividends on common stock, $1.57 per share
Cash dividends on common stock, $1.57 per share
Cash dividends on common stock, $1.57 per shareCash dividends on common stock, $1.57 per share(222)(222) (222)
Distributions to noncontrolling interestsDistributions to noncontrolling interests (22)(22)
Share-based awardsShare-based awards(5)25 20  20 
Fair value adjustment of redeemable noncontrolling interestsFair value adjustment of redeemable noncontrolling interests11 (11)(11) (11)
Fair value adjustment of redeemable noncontrolling interests
Fair value adjustment of redeemable noncontrolling interests
Other shareholder transactionsOther shareholder transactions3 1 4  4 
BALANCE AT MARCH 31, 2023BALANCE AT MARCH 31, 2023$261 $556 $1,674 $18,605 $(9,389)$(1,823)$9,623 $997 $10,620 
BALANCE AT DECEMBER 31, 2021$366 $556 $1,543 $16,741 $(9,123)$(1,571)$8,146 $889 $9,035 
Net income(4)418 418 427 
Other comprehensive income (loss), net of tax (Note 13)56 56 (8)48 
Repurchases of common stock(311)(311)— (311)
Cash dividends on common stock, $1.45 per share(207)(207)— (207)
Distributions to noncontrolling interests— (14)(14)
Share-based awards(9)18 — 
Fair value adjustment of redeemable noncontrolling interests30 (30)(30)— (30)
Other shareholder transactions(7)(3)17 14 
BALANCE AT MARCH 31, 2022$392 $556 $1,497 $16,952 $(9,412)$(1,515)$8,078 $893 $8,971 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


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CUMMINS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Overview
Cummins Inc. (“Cummins,” “we,” “our” or “us”) was founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc. We are a global power solutions leader that designs, manufactures, distributescomprised of five business segments - Components, Engine, Distribution, Power Systems and servicesAccelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production technologies and fuel cell products. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We serve our customers through a service network of approximately 460450 wholly-owned, joint venture and independent distributor locations and more than 10,00019,000 Cummins certified dealer locations in approximately 190 countries and territories.
Divestiture of Atmus
On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc. (Atmus) common stock through a tax-free split-off. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
Settlement Agreements
In December 2023, we announced that we reached an agreement in principle with the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements). See NOTE 11, “COMMITMENTS AND CONTINGENCIES,” for additional information.
Interim Condensed Financial Statements
The unaudited Condensed Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows. All such adjustments are of a normal recurring nature. The Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations.
These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20222023. Our interim period financial results for the three month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all required annual disclosures.
Reclassifications
Certain amounts for prior year periods were reclassified to conform to the current year presentation.
Use of Estimates in Preparation of Financial Statements
Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our Condensed Consolidated Financial Statements. Significant estimates and assumptions in these Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.
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Weighted-Average Diluted Shares Outstanding
The weighted-average diluted common shares outstanding exclude the anti-dilutive effect of certain stock options. The options excluded from diluted earnings per share were as follows:
 
Three months ended
 March 31,
 20232022
Options excluded4,833 20,463 

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Three months ended
 March 31,
 20242023
Options excluded3,600 4,833 
Related Party Transactions
In accordance with the provisions of various joint venture agreements, we may purchase products and components from our joint ventures, sell products and components to our joint ventures and our joint ventures may sell products and components to unrelated parties.
The following is a summary of sales to and purchases from nonconsolidated equity investees:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
Sales to nonconsolidated equity investees
Sales to nonconsolidated equity investees
Sales to nonconsolidated equity investeesSales to nonconsolidated equity investees$376 $344 
Purchases from nonconsolidated equity investeesPurchases from nonconsolidated equity investees704 427 
Purchases from nonconsolidated equity investees
Purchases from nonconsolidated equity investees
The following is a summary of accounts receivable from and accounts payable to nonconsolidated equity investees:
In millionsIn millionsMarch 31,
2023
December 31,
2022
Balance Sheet LocationIn millionsMarch 31,
2024
December 31,
2023
Balance Sheet Location
Accounts receivable from nonconsolidated equity investeesAccounts receivable from nonconsolidated equity investees$469 $376 Accounts and notes receivable, netAccounts receivable from nonconsolidated equity investees$425 $$530 Accounts and notes receivable, netAccounts and notes receivable, net
Accounts payable to nonconsolidated equity investeesAccounts payable to nonconsolidated equity investees370 292 Accounts payable (principally trade)Accounts payable to nonconsolidated equity investees325 324 324 Accounts payable (principally trade)Accounts payable (principally trade)
Supply Chain Financing
We currently have supply chain financing programs with financial intermediaries, which provide certain vendors the option to be paid by financial intermediaries earlier than the due date on the applicable invoice. When a vendor utilizes the program and receives an early payment from a financial intermediary, they take a discount on the invoice. We then pay the financial intermediary the face amount of the invoice on the original due date.date, which generally have 60 to 90 day payment terms. The maximum amount that we maycould have outstanding under the program is $532was $512 million at March 31, 2023.2024. We do not reimburse vendors for any costs they incur for participation in the program, their participation is completely voluntary and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. As a result, all amounts owed to the financial intermediaries are presented as accounts payable in our Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in accounts payable at March 31, 20232024, and December 31, 2022,2023, were $253$193 million and $331$199 million, respectively.
NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Long-term Contracts
The majority of our contracts are for a period of less than one year. We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and constructionthese contracts, allocated to performance obligations that were not satisfiedexcluding extended warranty coverage arrangements, as of March 31, 2023,2024, was $649 million.$3.1 billion. We expect to recognize the related revenue of $126 million$1.4 billion over the next 12 months and $523 million$1.7 billion over periods up to 10 years. See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.
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Deferred and Unbilled Revenue
The following is a summary of our unbilled and deferred revenue and related activity:
In millionsIn millionsMarch 31,
2023
December 31,
2022
In millionsMarch 31,
2024
December 31,
2023
Unbilled revenueUnbilled revenue$332 $257 
Deferred revenueDeferred revenue1,977 1,848 
We recognized revenue of $206$248 million for the three months ended March 31, 2023,2024, compared with $240$206 million for the comparable period in 2022,2023, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three months ended March 31, 20232024 or March 31, 2022.2023.
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Disaggregation of Revenue
Consolidated Revenue
The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
United StatesUnited States$4,802 $3,457 
United States
United States
China
China
ChinaChina790 653 
IndiaIndia411 309 
India
India
Other internationalOther international2,450 1,966 
Other international
Other international
Total net sales
Total net sales
Total net salesTotal net sales$8,453 $6,385 
Segment Revenue
As previously announced, our Components segment reorganized its reporting structure to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuels systems businesses into the newly formed engine components business. We started reporting results for the reorganized business in the first quarter of 2023 and reflected these changes for prior periods.
Components segment external sales by business were as follows:
Three months ended
March 31,
In millions20232022
Axles and brakes$1,272 $— 
Emission solutions939 808 
Filtration342 308 
Engine components292 240 
Automated transmissions178 134 
Software and electronics20 27 
Total sales$3,043 $1,517 
Engine segment external sales by market were as follows:
Three months ended
March 31,
In millions20232022
Heavy-duty truck$860 $684 
Medium-duty truck and bus617 591 
Light-duty automotive441 487 
Total on-highway1,918 1,762 
Off-highway334 287 
Total sales$2,252 $2,049 
Three months ended
March 31,
In millions20242023
Axles and brakes$1,232 $1,272 
Emission solutions856 939 
Atmus289 (1)342 
Engine components271 292 
Automated transmissions165 178 
Software and electronics29 20 
Total sales$2,842 $3,043 
 (1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
10

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As previously announced, due to the indefinite suspension of operations in Russia, we reorganized the regional management structure of our DistributionEngine segment and moved all Commonwealth of Independent States (CIS)external sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. We started to report results for our new regional management structure in the first quarter of 2023 and reflected these changes for historical periods.by market were as follows:
Three months ended
March 31,
In millions20242023
Heavy-duty truck$811 $860 
Medium-duty truck and bus738 617 
Light-duty automotive438 441 
Total on-highway1,987 1,918 
Off-highway253 334 
Total sales$2,240 $2,252 
Distribution segment external sales by region were as follows:
Three months ended
March 31,
Three months ended
Three months ended
Three months ended
March 31,
March 31,
March 31,
In millions
In millions
In millionsIn millions20232022
North AmericaNorth America$1,693 $1,371 
North America
North America
Asia Pacific
Asia Pacific
Asia PacificAsia Pacific239 244 
EuropeEurope194 275 
Europe
Europe
ChinaChina101 82 
Africa and Middle East62 50 
China
China
India
India
IndiaIndia57 48 
Latin AmericaLatin America53 41 
Latin America
Latin America
Africa and Middle East
Africa and Middle East
Africa and Middle East
Total sales
Total sales
Total salesTotal sales$2,399 $2,111 
Distribution segment external sales by product line were as follows:
Three months ended
March 31,
Three months ended
Three months ended
Three months ended
March 31,
March 31,
March 31,
In millions
In millions
In millionsIn millions20232022
PartsParts$1,052 $926 
Parts
Parts
Power generation
Power generation
Power generationPower generation491 398 
EnginesEngines456 438 
Engines
Engines
Service
Service
ServiceService400 349 
Total salesTotal sales$2,399 $2,111 
Total sales
Total sales
Power Systems segment external sales by product line were as follows:
Three months ended
March 31,
Three months ended
Three months ended
Three months ended
March 31,
March 31,
March 31,
In millions
In millions
In millionsIn millions20232022
Power generationPower generation$380 $399 
Power generation
Power generation
Industrial
Industrial
IndustrialIndustrial189 188 
Generator technologiesGenerator technologies110 96 
Generator technologies
Generator technologies
Total sales
Total sales
Total salesTotal sales$679 $683 
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NOTE 3. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit (OPEB) plans. Contributions to these plans were as follows:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
Defined benefit pension contributions
Defined benefit pension contributions
Defined benefit pension contributionsDefined benefit pension contributions$88 $33 
OPEB payments, netOPEB payments, net4 10 
OPEB payments, net
OPEB payments, net
Defined contribution pension plansDefined contribution pension plans43 36 
Defined contribution pension plans
Defined contribution pension plans
We anticipate making additional defined benefit pension contributions during the remainder of 20232024 of $20$29 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 20232024 annual net periodic pension cost to be near zero.approximate $34 million.
The components of net periodic pension and OPEB expense (income) under our plans were as follows:
Pension   Pension 
U.S. PlansU.K. PlansOPEB U.S. PlansU.K. PlansOPEB
Three months ended March 31, Three months ended March 31,
In millionsIn millions202320222023202220232022In millions202420232024202320242023
Service costService cost$29 $34 $4 $$ $— 
Interest costInterest cost42 22 17 2 
Expected return on plan assetsExpected return on plan assets(69)(52)(25)(20) — 
Recognized net actuarial loss (gain)Recognized net actuarial loss (gain)2  (1)— 
Recognized net actuarial loss (gain)
Recognized net actuarial loss (gain)
Net periodic benefit expense (income)Net periodic benefit expense (income)$4 $10 $(4)$(2)$1 $
NOTE 4. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES
Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting period was as follows:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
Manufacturing entities
Manufacturing entities
Manufacturing entitiesManufacturing entities
Dongfeng Cummins Engine Company, Ltd.Dongfeng Cummins Engine Company, Ltd.$19 $16 
Dongfeng Cummins Engine Company, Ltd.
Dongfeng Cummins Engine Company, Ltd.
Chongqing Cummins Engine Company, Ltd.
Chongqing Cummins Engine Company, Ltd.
Chongqing Cummins Engine Company, Ltd.
Beijing Foton Cummins Engine Co., Ltd.Beijing Foton Cummins Engine Co., Ltd.16 14 
Chongqing Cummins Engine Company, Ltd.9 
Beijing Foton Cummins Engine Co., Ltd.
Beijing Foton Cummins Engine Co., Ltd.
Tata Cummins, Ltd.Tata Cummins, Ltd.8 
Tata Cummins, Ltd.
Tata Cummins, Ltd.
All other manufacturers
All other manufacturers
All other manufacturersAll other manufacturers19 (10)(1)
Distribution entitiesDistribution entities
Distribution entities
Distribution entities
Komatsu Cummins Chile, Ltda.Komatsu Cummins Chile, Ltda.14 
Komatsu Cummins Chile, Ltda.
Komatsu Cummins Chile, Ltda.
All other distributors
All other distributors
All other distributorsAll other distributors3 
Cummins share of net incomeCummins share of net income88 47 
Cummins share of net income
Cummins share of net income
Royalty and interest incomeRoyalty and interest income31 49 
Royalty and interest income
Royalty and interest income
Equity, royalty and interest income from investees
Equity, royalty and interest income from investees
Equity, royalty and interest income from investeesEquity, royalty and interest income from investees$119 $96 
(1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
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In September 2023, our Accelera business signed an agreement to form a joint venture with Daimler Trucks and Buses US Holding LLC (Daimler Truck), PACCAR Inc. (PACCAR) and EVE Energy to accelerate and localize battery cell production and the battery supply chain in the U.S., including building a 21-gigawatt hour battery production facility in Marshall County, Mississippi. The joint venture will manufacture battery cells for electric commercial vehicles and industrial applications. Accelera, Daimler Truck and PACCAR will each own 30 percent of the joint venture, while EVE Energy will own 10 percent. Total investment by the partners is expected to be in the range of $2 billion to $3 billion for the 21-gigawatt hour facility. The transaction received all applicable merger control and regulatory approvals during or prior to April 2024, and the joint venture formation and initial funding are expected to be finalized in the second quarter of 2024.
NOTE 5. INCOME TAXES
Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 2022, were 21.7 percent, and 26.8 percent, respectively.
The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements.
The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits.
The three months ended March 31, 2022, contained unfavorable discrete items of $31 million, primarily due to $18 million of unfavorable changes associated with the indefinite suspension of Russian operations, $9 million of net unfavorable changes in tax reserves and $4 million of net unfavorable other discrete tax items.
NOTE 6. MARKETABLE SECURITIES
A summary of marketable securities, all of which were classified as current, was as follows:
March 31,
2023
December 31,
2022
March 31,
2024
December 31,
2023
In millionsIn millionsCost
Gross unrealized gains/(losses)(1)
Estimated
fair value
Cost
Gross unrealized gains/(losses)(1)
Estimated
fair value
In millionsCost
Gross unrealized gains/(losses) (1)
Estimated
fair value
Cost
Gross unrealized gains/(losses) (1)
Estimated
fair value
Equity securitiesEquity securities      
Equity securities
Equity securities  
Certificates of deposit
Certificates of deposit
Certificates of depositCertificates of deposit$226 $ $226 $209 $— $209 
Debt mutual fundsDebt mutual funds206 (4)202 238 (5)233 
Equity mutual funds
Equity mutual fundsEquity mutual funds31 (2)29 25 28 
Equity mutual funds
Debt securities
Debt securities
Debt securitiesDebt securities1 1 2 — 
Marketable securitiesMarketable securities$464 $(5)$459 $474 $(2)$472 
Marketable securities
Marketable securities
(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in our Condensed Consolidated Statements of Net Income.
(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in our Condensed Consolidated Statements of Net Income.
(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in our Condensed Consolidated Statements of Net Income.
All debt securities are classified as available-for-sale. All marketable securities presented use a Level 2 fair value measure. The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during the three months ended March 31, 2023,2024, or the year ended December 31, 2022.2023.

A description of the valuation techniques and inputs used for our Level 2 fair value measures is as follows:
Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.
Debt mutual funds — The fair value measures for the vast majority of these investments are the daily net asset values published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input measure.
Equity mutual funds — The fair value measures for these investments are the net asset values published by the issuing brokerage. Daily quoted prices are available from reputable third-party pricing services and are used on a test basis to corroborate this Level 2 input measure.
Debt securities — The fair value measures for these securities are broker quotes received from reputable firms. These securities are infrequently traded on a national exchange and these values are used on a test basis to corroborate our Level 2 input measure.
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The proceeds from sales and maturities of marketable securities were as follows:
Three months ended
March 31,
Three months ended
Three months ended
Three months ended
March 31,March 31,
In millionsIn millions20232022In millions20242023
Proceeds from sales of marketable securitiesProceeds from sales of marketable securities$276 $195 
Proceeds from maturities of marketable securitiesProceeds from maturities of marketable securities69 59 
Investments in marketable securities - liquidationsInvestments in marketable securities - liquidations$345 $254 
NOTE 7. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Inventories included the following:
 
In millionsIn millionsMarch 31,
2023
December 31,
2022
In millionsMarch 31,
2024
December 31,
2023
Finished productsFinished products$3,089 $2,917 
Work-in-process and raw materialsWork-in-process and raw materials3,019 2,926 
Inventories at FIFO costInventories at FIFO cost6,108 5,843 
Excess of FIFO over LIFOExcess of FIFO over LIFO(230)(240)
InventoriesInventories$5,878 $5,603 
NOTE 8. SUPPLEMENTAL BALANCE SHEET DATA
Other assets included the following:
In millionsMarch 31,
2023
December 31,
2022
Deferred income taxes$688 $625 
Operating lease assets489 492 
Corporate owned life insurance409 390 
Other528 633 
Other assets$2,114 $2,140 
In millionsMarch 31,
2024
December 31,
2023
Deferred income taxes$950 $1,082 
Operating lease assets455 501 
Corporate owned life insurance419 417 
Other550 543 
Other assets$2,374 $2,543 
Other accrued expenses included the following:
In millionsIn millionsMarch 31,
2023
December 31,
2022
In millions
In millionsMarch 31,
2024
December 31,
2023
Settlement Agreements (1)
Income taxes payableIncome taxes payable$341 $173 
Marketing accrualsMarketing accruals339 316 
Other taxes payableOther taxes payable226 224 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities133 132 
OtherOther609 620 
Other accrued expensesOther accrued expenses$1,648 $1,465 
(1) See NOTE 11, "COMMITMENTS AND CONTINGENCIES," for additional information.
(1) See NOTE 11, "COMMITMENTS AND CONTINGENCIES," for additional information.
(1) See NOTE 11, "COMMITMENTS AND CONTINGENCIES," for additional information.
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Other liabilities included the following:
In millionsIn millionsMarch 31,
2023
December 31,
2022
In millions
In millionsMarch 31,
2024
December 31,
2023
Accrued product warranty$753 $744 
Accrued product warranty (1)
Accrued product warranty (1)
Accrued product warranty (1)
Pensions
Deferred income taxesDeferred income taxes662 649 
Pensions442 445 
Operating lease liabilitiesOperating lease liabilities364 368 
Accrued compensation
Mark-to-market valuation on interest rate derivatives
Other postretirement benefits
Long-term income taxesLong-term income taxes192 192 
Accrued compensation172 184 
Other postretirement benefits138 141 
Mark-to-market valuation on interest rate derivatives118 151 
Other long-term liabilities442 437 
Other
Other liabilitiesOther liabilities$3,283 $3,311 
(1) See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional information.
(1) See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional information.
(1) See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional information.
NOTE 9. DEBT
Loans Payable and Commercial Paper
Loans payable, commercial paper and the related weighted-average interest rates were as follows:
In millions
In millions
In millionsIn millionsMarch 31,
2023
December 31,
2022
Loans payable (1)
Loans payable (1)
$229 $210 
Loans payable (1)
Loans payable (1)
Commercial paper (2)
Commercial paper (2)
Commercial paper (2)
Commercial paper (2)
2,545 2,574 
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 4.82 percent and 4.27 percent at March 31, 2023 and December 31, 2022, respectively.
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 5.23 percent and 5.43 percent at March 31, 2024, and December 31, 2023, respectively.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 5.23 percent and 5.43 percent at March 31, 2024, and December 31, 2023, respectively.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 5.23 percent and 5.43 percent at March 31, 2024, and December 31, 2023, respectively.
We can issue up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board of Directors (the Board) authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for acquisitions and general corporate purposes.
Revolving Credit Facilities
We have access toOur committed credit facilities totalingprovide access up to $4.0 billion, including the $1.5our $2.0 billion 364-day facility that expires August 16, 2023, $500 million incremental 364-day facility that expires August 16, 2023,June 3, 2024, and our $2.0 billion five-year facility that expires on August 18, 2026. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. There were no outstanding borrowings under these facilities at March 31, 20232024, and December 31, 2022.2023. At March 31, 2023,2024, the $2.5 billion$609 million of outstanding commercial paper effectively reduced the $4.0 billion of revolving credit capacity to $1.5$3.4 billion.
At March 31, 2023,2024, we also had an additional $215$396 million available for borrowings under our international and other domestic credit facilities.
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Long-term Debt
A summary of long-term debt was as follows:
In millionsIn millionsInterest RateMarch 31,
2023
December 31,
2022
In millionsInterest RateMarch 31,
2024
December 31,
2023
Long-term debtLong-term debt  Long-term debt  
Senior notes, due 2023(1)
3.65%$500 $500 
Term loan, due 2025(2)
Variable1,450 1,550 
Hydrogenics promissory notes, due 2024 and 2025
Hydrogenics promissory notes, due 2024 and 2025
Hydrogenics promissory notes, due 2024 and 2025
Term loan, due 2025 (1) (2)
Senior notes, due 2025(3)
Senior notes, due 2025(3)
0.75%500 500 
Atmus term loan, due 2027 (4)
Atmus term loan, due 2027 (4)
Atmus term loan, due 2027 (4)
Debentures, due 2027Debentures, due 20276.75%58 58 
Debentures, due 2028Debentures, due 20287.125%250 250 
Senior notes, due 2029
Senior notes, due 2030(3)
Senior notes, due 2030(3)
1.50%850 850 
Senior notes, due 2034
Senior notes, due 2043Senior notes, due 20434.875%500 500 
Senior notes, due 2050Senior notes, due 20502.60%650 650 
Debentures, due 2098(4)
5.65%165 165 
Senior notes, due 2054
Debentures, due 2098 (5)
Other debtOther debt109 121 
Other debt
Other debt
Unamortized discount and deferred issuance costs
Unamortized discount and deferred issuance costs
Unamortized discount and deferred issuance costsUnamortized discount and deferred issuance costs(63)(64)
Fair value adjustments due to hedge on indebtednessFair value adjustments due to hedge on indebtedness(102)(122)
Finance leasesFinance leases111 113 
Total long-term debtTotal long-term debt4,978 5,071 
Less: Current maturities of long-term debtLess: Current maturities of long-term debt569 573 
Long-term debtLong-term debt$4,409 $4,498 
(1) Senior notes, due 2023, are classified as current maturities of long-term debt.
(2) During the first quarter of 2023, we paid down $100 million of the term loan.
(3) In 2021, we entered into a series of interest rate swaps to effectively convert from a fixed rate to floating rate. See "Interest Rate Risk" in NOTE 14, "DERIVATIVES," to our Condensed Consolidated Financial Statements for additional information.
(4) The effective interest rate is 7.48 percent.
(1) During the first three months of 2024, we paid down $650 million of the term loan.
(1) During the first three months of 2024, we paid down $650 million of the term loan.
(1) During the first three months of 2024, we paid down $650 million of the term loan.
(2) In 2023, we entered into a series of interest rate swaps in order to trade a portion of the floating rate debt into fixed rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(2) In 2023, we entered into a series of interest rate swaps in order to trade a portion of the floating rate debt into fixed rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(3) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(3) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(4) See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(4) See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(5) The effective interest rate is 7.48 percent.
(5) The effective interest rate is 7.48 percent.
On February 20, 2024, we issued $2.25 billion aggregate principal amount of senior unsecured notes consisting of $500 million aggregate principal amount of 4.90 percent senior unsecured notes due in 2029, $750 million aggregate principal amount of 5.15 percent senior unsecured notes due in 2034 and $1.0 billion aggregate principal amount of 5.45 percent senior unsecured notes due in 2054. We received net proceeds of $2.2 billion. The senior unsecured notes pay interest semi-annually on February 20 and August 20, commencing on August 20, 2024. The indenture governing the senior unsecured notes contains covenants that, among other matters, limit (i) our ability to consolidate or merge into, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our and our subsidiaries' assets to another person, (ii) our and certain of our subsidiaries' ability to create or assume liens and (iii) our and certain of our subsidiaries' ability to engage in sale and leaseback transactions.
Principal payments required on long-term debt during the next five years are as follows:
In millionsIn millions20232024202520262027
In millions
In millions20242025202620272028
Principal paymentsPrincipal payments$559 $46 $1,962 $56 $65 
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Fair Value of Debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
 
In millionsMarch 31,
2023
December 31,
2022
Fair value of total debt (1)
$7,386 $7,400 
Carrying value of total debt7,752 7,855 
(1) The fair value of debt is derived from Level 2 input measures.
16

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Filtration Contingent Debt Agreement
On February 15, 2023, certain of our subsidiaries entered into an amendment to the $1.0 billion credit agreement (Credit Agreement), consisting of a $400 million revolving credit facility and a $600 million term loan facility (Facilities), in anticipation of the separation of our filtration business, which extended the date on which the Credit Agreement terminates from March 30, 2023 to June 30, 2023. Borrowings under the Credit Agreement will not become available under the Credit Agreement unless and until, among other things, there is a sale to the public of shares in our subsidiary that holds the filtration business (Parent Borrower). The Credit Agreement will automatically terminate if no such public sale of shares of Parent Borrower occurs on or prior to June 30, 2023. Borrowings under the Credit Agreement would be available to Parent Borrower and one or more of its subsidiaries (Borrower). If borrowings become available under the Credit Agreement, the Facilities would mature on September 30, 2027.
Borrowings under the Credit Agreement would bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable Borrower’s election. Generally, U.S. dollar-denominated loans would bear interest at adjusted term Secured Overnight Financing Rate (SOFR) (which includes a 0.10 percent credit spread adjustment to term SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Parent Borrower's net leverage ratio.
In millionsMarch 31,
2024
December 31,
2023
Fair value of total debt (1)
$6,491 $6,375 
Carrying value of total debt6,835 6,696 
(1) The fair value of debt is derived from Level 2 input measures.
NOTE 10. PRODUCT WARRANTY LIABILITY
A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued product campaigns, was as follows:
Three months ended
March 31,
Three months endedThree months ended
March 31,March 31,
In millionsIn millions20232022In millions20242023
Balance, beginning of year$2,477 $2,425 
Balance at beginning of year
Provision for base warranties issuedProvision for base warranties issued146 123 
Deferred revenue on extended warranty contracts soldDeferred revenue on extended warranty contracts sold102 70 
Provision for product campaigns issuedProvision for product campaigns issued6 42 
Payments made during periodPayments made during period(143)(132)
Amortization of deferred revenue on extended warranty contractsAmortization of deferred revenue on extended warranty contracts(75)(73)
Amortization of deferred revenue on extended warranty contracts
Amortization of deferred revenue on extended warranty contracts
Changes in estimates for pre-existing product warranties and campaignsChanges in estimates for pre-existing product warranties and campaigns10 (26)
Acquisition(1)
 95 
Foreign currency translation adjustments and other
Foreign currency translation adjustments and other
Foreign currency translation adjustments and otherForeign currency translation adjustments and other7 (1)
Balance, end of period$2,530 $2,523 
(1) See NOTE 16, "ACQUISITION," to our Condensed Consolidated Financial Statements for additional information.
Balance at end of period
Balance at end of period
Balance at end of period
We recognized supplier recoveries of $10$22 million for the three months ended March 31, 2023,2024, compared with $13$10 million for the comparable period in 2022.
17

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2023.
Warranty related deferred revenues and warranty liabilities on our Condensed Consolidated Balance Sheets were as follows:
In millionsIn millionsMarch 31,
2023
December 31,
2022
Balance Sheet LocationIn millionsMarch 31,
2024
December 31,
2023
Balance Sheet Location
Deferred revenue related to extended coverage programsDeferred revenue related to extended coverage programs  Deferred revenue related to extended coverage programs  
Current portionCurrent portion$289 $290 Current portion of deferred revenueCurrent portion$274 $$279 Current portion of deferred revenueCurrent portion of deferred revenue
Long-term portionLong-term portion742 717 Deferred revenueLong-term portion797 774 774 Deferred revenueDeferred revenue
TotalTotal$1,031 $1,007  Total$1,071 $$1,053   
Product warrantyProduct warranty  
Product warranty
Product warranty  
Current portionCurrent portion$746 $726 Current portion of accrued product warrantyCurrent portion$652 $$667 Current portion of accrued product warrantyCurrent portion of accrued product warranty
Long-term portionLong-term portion753 744 Other liabilitiesLong-term portion816 777 777 Other liabilitiesOther liabilities
TotalTotal$1,499 $1,470  Total$1,468 $$1,444   
Total warranty accrual
Total warranty accrual
Total warranty accrualTotal warranty accrual$2,530 $2,477 
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NOTE 11. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are subject to numerous lawsuits and claims arising out of the ordinary course of our business, including actions related to product liability; personal injury; the use and performance of our products; warranty matters; product recalls; patent, trademark or other intellectual property infringement; contractual liability; the conduct of our business; tax reporting in foreign jurisdictions; distributor termination; workplace safety; environmental matters;and regulatory matters, including the enforcement of environmental and emissions standards; and asbestos claims. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based upon then presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
We conduct significant business operations in Brazil that are subject to the Brazilian federal, state and local labor, social security, tax and customs laws. While we believe we comply with such laws, they are complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.
On June 28, 2022, KAMAZ Publicly Traded Company (KAMAZ) was designated toIn December 2023, we announced that we reached an agreement in principle with the ListEPA, CARB, the Environmental and Natural Resources Division of Specially Designated Nationals and Blocked Persons by the U.S. Department of Justice and the Treasury’sCalifornia Attorney General’s Office of Foreign Assets Control. We filed blocked property reports for relevant assets and are seeking relevant authorizations to extricate ourselves from our relationship with KAMAZ and its subsidiaries, including our unconsolidated joint venture with KAMAZ, in compliance with U.S. law.
On April 29, 2019, we announced that we were conducting a formal internal review ofresolve certain regulatory civil claims regarding our emissions certification process and compliance with emission standardsprocess for ourcertain engines primarily used in pick-up truck applications following conversationsin the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements). As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make other payments. Failure to comply with the Environmental Protection Agency (EPA) and California Air Resources Board (CARB) regarding certificationSettlement Agreements will subject us to stipulated penalties. We recorded a charge of our engines$2.0 billion in model year 2019 RAM 2500 and 3500 trucks. This review is being conducted with external advisors as we strivethe fourth quarter of 2023 to ensureresolve the certification and compliance processes for allmatters addressed by the Settlement Agreements involving approximately one million of our pick-up truck applications are consistent with our internal policies, engineering standards and applicable laws. During conversations within the EPA and CARB aboutU.S. This charge was in addition to the effectivenesspreviously announced charges 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$59 million 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 ongoing discussions, the regulators turned their attention to other model years and other engines, most notably our pick-up truck applications for RAM 2500 and 3500 trucks for model years 2013 through 2018 and Titan trucks for model years 2016 through 2019. Most recently, the regulators
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have also raised concerns regarding the completeness of our disclosures in our certification applications for RAM 2500 and 3500 trucks for model years 2013 through 2023. We have also been in communication with Environmental and Climate Change Canada regarding similar issues relating to some of these very same platforms. In connection with these and other ongoing discussions with the EPA and CARB, we are developing a new software calibration and will recall model years 2013 through 2018 RAM 2500 and 3500 trucks. We accrued $30 million for the RAM recall during the first quarter of 2022, an amount that reflected our current estimate of the cost of that recall. We are also developing a new software calibrationtrucks and hardware fix and will recall model years 2016 through 2019 Titan trucks. We accrued $29 million for the Titan recall during the third quarter of 2022, an amount that reflected our current estimatebegan making payments on certain of the costSettlement Agreements in April 2024; however, the majority of that recall.the Settlement Agreement payments will be made in May 2024.
We will continuehave also been in communication with other non-U.S. regulators regarding matters related to work together closelythe emission systems in our engines and may also become subject to additional regulatory review in connection with the relevant regulators to develop and implement recommendations for improvements and seek to reach further resolutions as partthese matters.
In connection with our announcement of our ongoing commitmententry into the agreement in principle, we became subject to compliance. Based upon our discussionsshareholder, consumer and third-party litigation regarding the matters covered by the Settlement Agreements, and we may become subject to dateadditional litigation in connection with the regulators which are continuing, such resolutions may involve our agreeing to one or more consent decrees and paying civil penalties. Due to the presence of many unknown facts and circumstances, we are not yet able to estimate any further financial impact of these matters.
The consequences resulting from our formal reviewthe resolution of the foregoing matters are uncertain and these regulatory processes likely willthe related expenses and reputational damage could have a material adverse impact on our results of operations, financial condition and cash flows, however we cannot yet reasonably estimate a loss or range of loss.flows.
Guarantees and Commitments
Periodically, we enter into guarantee arrangements, including guarantees of non-U.S. distributor financings, residual value guarantees on equipment under operating leases and other miscellaneous guarantees of joint ventures or third-party obligations. At March 31, 2023,2024, the maximum potential loss related to these guarantees was $42$39 million.
We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At March 31, 2023,2024, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $161$584 million. These arrangements enable us to secure supplies of critical components and IT services. We do not currently anticipate paying any penalties under these contracts.
We enter into physical forward contracts with suppliers of platinum, palladium and palladiumiridium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years. At March 31, 2023,2024, the total commitments under these contracts were $38$64 million. These arrangements enable us to guarantee the prices of these commodities, which otherwise are subject to market volatility.
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We have guarantees with certain customers that require us to satisfactorily honor contractual or regulatory obligations, or compensate for monetary losses related to nonperformance. These performance bonds and other performance-related guarantees were $126$192 million at March 31, 2023.2024.
Indemnifications
Periodically, we enter into various contractual arrangements where we agree to indemnify a third-party against certain types of losses. Common types of indemnities include:
product liability and license, patent or trademark indemnifications;
asset sale agreements where we agree to indemnify the purchaser against future environmental exposures related to the asset sold; and
any contractual agreement where we agree to indemnify the counterparty for losses suffered as a result of a misrepresentation in the contract.
We regularly evaluate the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities and due to their uncertain nature, we are unable to estimate the maximum amount of the potential loss associated with these indemnifications.
NOTE 12. REDEEMABLE NONCONTROLLING INTERESTS
A 19 percent minority shareholder in one of our businesses, Hydrogenics Corporation (Hydrogenics), has, among other rights and subject to related obligations and restrictive covenants, rights that are exercisable between September 2022 and September 2026 to require us to (1) purchase such shareholder's shares (put option) at an amount up to the fair market value (calculated pursuant to a process outlined in the shareholders' agreement) and (2) sell to such shareholder Hydrogenics' electrolyzer business at an amount up to the fair market value of the electrolyzer business (calculated pursuant to a process outlined in the shareholders’ agreement). We recorded the estimated fair value of the put option as redeemable noncontrolling interests in our Condensed Consolidated Financial Statements with an offset to additional paid-in capital. The redeemable noncontrolling interest balance was $261 million and $258 million at March 31, 2023 and December 31, 2022, respectively.
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NOTE 13.12. ACCUMULATED OTHER COMPREHENSIVE LOSS
Following are the changes in accumulated other comprehensive income (loss) by component for the three months ended:
In millionsIn millionsChange in pensions
and other
postretirement
defined benefit plans
Foreign currency
translation
adjustment
Unrealized gain
(loss) on
derivatives
Total
attributable to
Cummins Inc.
Noncontrolling
interests
Total
In millions
In millionsChange in pension and OPEB plansForeign currency
translation
adjustment
Unrealized gain
(loss) on
derivatives
Total
attributable to
Cummins Inc.
Noncontrolling
interests
Total
Balance at December 31, 2023Balance at December 31, 2023$(848)$(1,457)$99 $(2,206) 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications   
Before-tax amount
Tax expense
After-tax amount
Amounts reclassified from accumulated other comprehensive income (loss) (1)
Net current period other comprehensive (loss) income
Net current period other comprehensive (loss) income
Net current period other comprehensive (loss) income
Balance at March 31, 2024Balance at March 31, 2024$(861)$(1,514)$111 $(2,264) 
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022Balance at December 31, 2022$(427)$(1,552)$89 $(1,890)  $(427)$$(1,552)$$89 $$(1,890)  
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications      Other comprehensive income (loss) before reclassifications   
Before-tax amountBefore-tax amount(13)75 (3)59 $3 $62 
Tax benefitTax benefit2 4 1 7  7 
After-tax amountAfter-tax amount(11)79 (2)66 3 69 
Amounts reclassified from accumulated other comprehensive income (loss)(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)
2  (1)1  1 
Net current period other comprehensive (loss) incomeNet current period other comprehensive (loss) income(9)79 (3)67 $3 $70 
Balance at March 31, 2023Balance at March 31, 2023$(436)$(1,473)$86 $(1,823)  Balance at March 31, 2023$(436)$$(1,473)$$86 $$(1,823)  
Balance at December 31, 2021$(346)$(1,208)$(17)$(1,571)  
Other comprehensive income (loss) before reclassifications      
Before-tax amount14 11 36 61 $(8)$53 
Tax (expense) benefit(4)(7)(10)— (10)
After-tax amount10 12 29 51 (8)43 
Amounts reclassified from accumulated other comprehensive income (loss)(1)
— (1)— 
Net current period other comprehensive income (loss)16 12 28 56 $(8)$48 
Balance at March 31, 2022$(330)$(1,196)$11 $(1,515)  
(1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
(1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
(1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
(2) Primarily related to the divestiture of Atmus. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(2) Primarily related to the divestiture of Atmus. See NOTE 14, "ATMUS DIVESTITURE," for additional information.







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NOTE 14.13. DERIVATIVES
We are exposed to financial risk resulting from volatility in foreign exchange rates, interest rates and commodity prices. This risk is closely monitored and managed through the use of physical forward contracts (which are not considered derivatives), and financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps and locks.swaps. Financial derivatives are used expressly for hedging purposes and under no circumstances are they used for speculative purposes. When material, we adjust the estimated fair value of our derivative contracts for counterparty or our credit risk. None of our derivative instruments are subject to collateral requirements. Substantially all of our derivative contracts are subject to master netting arrangements, which provide us with the option to settle certain contracts on a net basis when they settle on the same day with the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event.
Foreign Currency Exchange Rate Risk
We had foreign currency forward contracts with notional amounts of $4.4 billion and $3.6$5.0 billion at March 31, 2023 and December 31, 2022, respectively. The2024, with the following currencies comprisecomprising 86 percent and 88 percent of outstanding foreign currency forward contracts at March 31, 2023 and December 31, 2022, respectively:contracts: British pound, Chinese renminbi, Euro, Canadian dollar, Australian dollar and Euro. We had foreign currency forward contracts with notional amounts of $4.5 billion at December 31, 2023, with the following currencies comprising 85 percent of outstanding foreign currency forward contracts: British pound, Chinese renminbi, Canadian dollar, Australian dollar.dollar and Swedish kronor.
We are further exposed to foreign currency exchange risk as many of our subsidiaries are subject to fluctuations as the functional currencies of the underlying entities are not our U.S. dollar reporting currency. To help minimize movements for certain investments,reduce volatility in the third quarterequity value of 2022our subsidiaries, we began enteringenter into foreign exchange forwards designated as net investment hedges for certain of our investments. Under the current terms of our foreign exchange forwards, we agreed with third parties to sell British poundpounds and Chinese renminbi in exchange for U.S. dollar currency at a specified rate at the maturity of the contract. The notional amount of these hedges at March 31, 2023,2024, was $724 million.$1.0 billion.
The following table summarizes the net investment hedge activity in accumulated other comprehensive loss (AOCL):
Three months ended
March 31,
In millions20242023
Type of DerivativeGain (Loss) 
Recognized in AOCL
Gain (Loss) Reclassified from AOCL into EarningsGain (Loss) 
Recognized in AOCL
Gain (Loss) Reclassified from AOCL into Earnings
Foreign exchange forwards$6 $ $(15)$— 
Interest Rate Risk
In September 2023, we entered into a series of interest rate swaps with a total notional value of $500 million in order to trade a portion of the floating rate into a fixed rate on our term loan, due in 2025. The maturity date of the interest rate swaps is August 1, 2025. The weighted-average interest rate of the interest rate swaps is 5.72 percent. We designated the swaps as cash flow hedges. The gains and losses on these derivative instruments are initially recorded in other comprehensive income and reclassified into earnings as interest expense in the Condensed Consolidated Financial Statements as each interest payment is accrued.
The following table summarizes the interest rate swap activity in AOCL:
Three months ended
March 31,
In millions20232024
Type of DerivativeSwapGain (Loss) 
Recognized in AOCL
Gain (Loss) Reclassified from AOCL into EarningsInterest Expense
Foreign exchange forwardsInterest rate swaps$(15)3$ 
Interest Rate Risk
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In 2021, we entered into a series of interest rate swaps to effectively convert our $500 million senior notes, due in 2025, from a fixed rate of 0.75 percent to a floating rate equal to the three-month LIBORLondon Interbank Offered Rate (LIBOR) plus a spread.spread (subsequently adjusted to Secured Overnight Financing Rate (SOFR) under a fallback protocol in our derivative agreements in the third quarter of 2023), and $400 million of the notional amount remained unsettled at March 31, 2024. We also entered into a series of interest rate swaps to effectively convert $765 million of our $850 million senior notes, due in 2030, from a fixed rate of 1.50 percent to a floating rate equal to the three-month LIBOR plus a spread.spread (also similarly adjusted to SOFR). We designated the swaps as fair value hedges. The gain or loss on these derivative instruments, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current income as interest expense. The net swap settlements that accrue each period are also reported in the Condensed Consolidated Financial Statements as interest expense. In March 2023, we settled a portion of our 2021 interest rate swaps with a notional amount of $100 million. The $7 million loss on settlement will be amortized over the remaining term of the related debt.
The following table summarizes the gains and losses:
Three months ended
March 31,
In millions20232022
Type of SwapGain (Loss) 
on Swaps
Gain (Loss) on BorrowingsGain (Loss) 
on Swaps
Gain (Loss) on Borrowings
Interest rate swaps(1)
$27 $(22)$(72)$80 
(1) The difference between the gain (loss) on swaps and borrowings represents hedge ineffectiveness.
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In 2019, we entered into $350 million of interest rate lock agreements, and in 2020 we entered into an additional $150 million of lock agreements to reduce the variability of the cash flows of the interest payments on a total of $500 million of fixed rate debt forecast to be issued in 2023 to replace our senior notes at maturity. The terms of the rate locks mirror the time period of the expected fixed rate debt issuance and the expected timing of interest payments on that debt. The gains and losses on these derivative instruments are initially recorded in other comprehensive income and will be released to earnings in interest expense in future periods to reflect the difference in (1) the fixed rates economically locked in at the inception of the hedge and (2) the actual fixed rates established in the debt instrument at issuance. In December 2022, we settled certain rate lock agreements with notional amounts totaling $150 million for $49 million. In February 2023, we settled certain rate lock agreements with notional amounts totaling $100 million for $34 million. The $83 million of gains on settlements will remain in other comprehensive income and will be amortized over the term of the anticipated new debt as discussed above.
The following table summarizes the interest rate lock activity in AOCL:
Three months ended
March 31,
In millions20232022
Type of SwapGain (Loss) 
Recognized in AOCL
Gain (Loss) Reclassified from AOCL into Interest ExpenseGain (Loss) 
Recognized in AOCL
Gain (Loss) Reclassified from AOCL into Interest Expense
Interest rate locks$(9)$ $39 $— 
Cash Flow Hedging
The following table summarizes the effect on our Condensed Consolidated Statements of Net Income for derivative instruments classified as cash flow hedges. The table does not include amounts related to ineffectiveness as it was not material for the periods presented.
Three months ended
March 31,
In millions20232022
Gain reclassified from AOCL into income - Net sales(1)
$1 $3 
Loss reclassified from AOCL into income - Cost of sales(1)(2)
 (2)
(1) Includes foreign currency forward contracts.
(2) Includes commodity swap contracts.
Three months ended
March 31,
In millions20242023
Type of SwapGain (Loss) 
on Swaps
Gain (Loss) on BorrowingsGain (Loss) 
on Swaps
Gain (Loss) on Borrowings
Interest rate swaps (1)
$(10)$14 $27 $(22)
(1) The difference between the gain (loss) on swaps and borrowings represents hedge ineffectiveness.
Derivatives Not Designated as Hedging Instruments
The following table summarizes the effect on our Condensed Consolidated Statements of Net Income for derivative instruments not classifieddesignated as cash flow hedges:hedging instruments:
Three months ended
March 31,
In millions20232022
Loss recognized in income - Cost of sales(1)
$(2)$(1)
Gain recognized in income - Other income (expense), net(1)
27 
(1) Includes foreign currency forward contracts.
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Three months ended
March 31,
In millions20242023
Loss recognized in income - Cost of sales (1)
$ $(2)
(Loss) gain recognized in income - Other income (expense), net (1)
(40)27 
(1) Includes foreign currency forward contracts.
Fair Value Amount and Location of Derivative Instruments
The following table summarizes the location and fair value of derivative instruments on our Condensed Consolidated Balance Sheets:
Derivatives Designated as Hedging InstrumentsDerivatives Not Designated as Hedging Instruments
Derivatives Designated as Hedging InstrumentsDerivatives Designated as Hedging InstrumentsDerivatives Not Designated as Hedging Instruments
In millionsIn millionsMarch 31,
2023
December 31,
2022
March 31,
2023
December 31,
2022
In millionsMarch 31,
2024
December 31,
2023
March 31,
2024
December 31,
2023
Notional amountNotional amount$2,898 $3,051 $3,688 $2,900 
Derivative assetsDerivative assets
Prepaid expenses and other current assets$16 $18 $7 $27 
Derivative assets
Derivative assets
Prepaid expenses and other current assets (1)
Prepaid expenses and other current assets (1)
Prepaid expenses and other current assets (1)
Other assets35 80  — 
Total derivative assets(1)
$51 $98 $7 $27 
Derivative liabilitiesDerivative liabilities
Derivative liabilities
Derivative liabilities
Other accrued expenses
Other accrued expenses
Other accrued expensesOther accrued expenses$22 $19 $2 $
Other liabilitiesOther liabilities118 151  — 
Total derivative liabilities(1)
Total derivative liabilities(1)
$140 $170 $2 $
(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the three months ended March 31, 2023, or the year ended December 31, 2022.
(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the three months ended March 31, 2024, or the year ended December 31, 2023.
(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the three months ended March 31, 2024, or the year ended December 31, 2023.
(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the three months ended March 31, 2024, or the year ended December 31, 2023.
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We elected to present our derivative contracts on a gross basis in our Condensed Consolidated Balance Sheets. Had we chosen to present on a net basis, we would have derivatives in a net asset position of $29$13 million and $52$4 million and derivatives in a net liability position of $113$130 million and $100$148 million at March 31, 20232024, and December 31, 2022,2023, respectively.
NOTE 15. RUSSIAN OPERATIONS14. ATMUS DIVESTITURE
On March 17, 2022,18, 2024, we completed the Board indefinitely suspendeddivestiture of our operationsremaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. The transaction involved the exchange of our shares in Russia dueAtmus for shares of Cummins stock with a 7.0 percent discount on the exchange ratio for Atmus shares. The exchange ratio was determined based on each entity's respective stock price using the daily volume weighted-average stock price for three days preceding the final exchange offer date. Based on the final exchange ratio, we exchanged all 67 million of our Atmus shares for 5.6 million shares of Cummins stock, which was recorded as treasury stock based on the fair value of the Cummins shares obtained.
We evaluated the full divestiture of Atmus and determined the transaction did not qualify for discontinued operation presentation. We recognized a gain related to the ongoing conflict in Ukraine. Atdivestiture of approximately $1.3 billion (based on the time of suspension, our Russian operations included a wholly-owned distributor in Russia, an unconsolidated joint venture with KAMAZ (a Russian truck manufacturer) and direct sales into Russia from our other business segments. As a resultdifference between the fair value of the suspension of operations, we evaluatedCummins shares obtained less the recoverability of assets in Russia and assessed other potential liabilities. We experienced and expect to continue to experience an inability to collect customer receivables and may be the subject of litigation as a consequencecarrying value of our suspension of commercial operationsAtmus investment), which was recorded as other income in Russia. The following summarizes the costs associated with the suspension of our Russian operations in our Condensed Consolidated Statements of Net Income:Income
Three months ended
In millionsMarch 31,
2022
Statement of Net Income Location
Inventory write-downs$59 Cost of sales
Accounts receivable reserves43 Other operating expense, net
Impairment and other joint venture costs31 Equity, royalty and interest income from investees
Other25 Other operating expense, net
Total$158 
Forfor the three monthmonths ended March 31, 2023, there were no material additional costs. We will continue to evaluate2024. Approximately $114 million of goodwill was included in the situation as conditions evolve and may take additional actions as deemed necessary in future periods.
NOTE 16. ACQUISITION
On February 7, 2022, we purchased Westport Fuel System Inc.'s stake in Cummins Westport, Inc. We will continue to operatecarrying value of the business asAtmus investment for purposes of calculating the sole owner.gain. The purchase price was $42 million and was allocated primarily to cash, warranty and deferred revenue related to extended coverage contracts. Theoperating results of the businessAtmus were reported in our Engine segment. Pro forma financial information for the acquisition was not presented as the effects are not material to our Condensed Consolidated Financial Statements.Statements through March 18, 2024, the date of divestiture.
As part of the divestiture, the $600 million term loan remained with Atmus after the split. In addition, a net $61 million of other comprehensive income and $19 million of noncontrolling interests related to Atmus were written-off and netted against the gain recognized upon the split.
23
We entered into a transitional services agreement (TSA) with Atmus that is designed to facilitate the orderly transfer of various services to Atmus. The TSA relates primarily to administrative services, which are generally to be provided over the next 24 months. This agreement is not material and does not confer upon us the ability to influence the operating and/or financial policies of Atmus subsequent to March 18, 2024.

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NOTE 17.15. OPERATING SEGMENTS
Operating segments under GAAP are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.
Our reportable operating segments consist of Components, Engine, Distribution, Power Systems and Accelera. This reporting structure is organized according to the products and markets each segment serves. The Components segment sells filtration products, aftertreatment systems, turbochargers, electronics, fuel systems, automated transmissions, axles, drivelines, brakes and suspension systems.systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics. The Engine segment produces engines (15 liters and smaller) and associated parts for sale to customers in on-highway and various off-highway markets. Our engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, agriculture, power generation systems and other off-highway applications. The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products and maintaining relationships with various OEMs throughout the world. The Power Systems segment is an integrated power provider, which designs, manufactures and sells engines (16 liters and larger) for industrial applications (including mining, oil and gas, marine and rail), standby and prime power generator sets, alternators and other power components. The Accelera segment designs, manufactures, sells and supports hydrogen production solutionstechnologies as well as electrified power systems with innovative components and subsystems, including battery, fuel cell and electric powertrain technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of our electrolyzers for hydrogen production and electrified power systems and related components and subsystems. We continue to serve all our markets as they adopt electrification and alternative power technologies, meeting the needs of our OEM partners and end customers.
We use segment earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) as the primary basis for the CODM to evaluate the performance of each of our reportable operating segments. We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Segment amounts exclude certain expenses not specifically identifiable to segments.
The accounting policies of our operating segments are the same as those applied in our Condensed Consolidated Financial Statements. We prepared the financial results of our operating segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions. We allocate certain common costs and expenses, primarily corporate functions, among segments differently than we would for stand-alone financial information prepared in accordance
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with GAAP. These include certain costs and expenses of shared services, such as information technology, human resources, legal, finance and supply chain management. We do not allocate gains or losses of corporate owned life insurance and the gain and certain filtration separation costs related to individual segments.the divestiture of Atmus. See NOTE 14, "ATMUS DIVESTITURE," for additional information. EBITDA may not be consistent with measures used by other companies.
As previously announced, in March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented.
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Summarized financial information regarding our reportable operating segments for the three months ended is shown in the table below:
In millionsComponentsEngineDistributionPower SystemsAcceleraTotal Segments
Three months ended March 31, 2023  
External sales$3,043 $2,252 $2,399 $679 $80 $8,453 
Intersegment sales514 734 7 664 5 1,924 
Total sales3,557 2,986 2,406 1,343 85 10,377 
Research, development and engineering expenses91 134 14 63 48 350 
Equity, royalty and interest income (loss) from investees21 65 24 13 (4)119 
Interest income6 3 7 2  18 
Segment EBITDA507 (1)457 335 219 (94)1,424 
Depreciation and amortization(2)
123 51 28 29 14 245 
Three months ended March 31, 2022  
External sales$1,517 $2,049 $2,111 $683 $25 $6,385 
Intersegment sales471 704 477 1,664 
Total sales1,988 2,753 2,117 1,160 31 8,049 
Research, development and engineering expenses76 109 13 64 36 298 
Equity, royalty and interest income (loss) from investees28 42 (3)16 11 (1)96 
Interest income— 
Russian suspension costs(4)
32 (5)100 20 — 158 
Segment EBITDA320 390 110 90 (65)845 
Depreciation and amortization(2)
43 51 28 31 160 
(1) Includes $12 million of costs associated with the planned separation of our filtration business.
(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. The amortization of debt discount and deferred costs was $1 million and $1 million for the three months ended March 31, 2023 and March 31, 2022, respectively. A portion of depreciation expense is included in research, development and engineering expenses.
(3) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(4) See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(5) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above.
In millionsComponentsEngineDistributionPower SystemsAcceleraTotal Segments
Three months ended March 31, 2024  
External sales$2,842 $2,240 $2,529 $708 $84 $8,403 
Intersegment sales490 688 6 681 9 1,874 
Total sales3,332 2,928 2,535 1,389 93 10,277 
Research, development and engineering expenses84 154 14 60 55 367 
Equity, royalty and interest income (loss) from investees26 57 24 19 (3)123 
Interest income8 7 11 3  29 
Segment EBITDA473 (1)414 294 237 (101)1,317 
Depreciation and amortization (2)
125 58 31 34 14 262 
Three months ended March 31, 2023   
External sales$3,043 $2,252 $2,399 $679 $80 $8,453 
Intersegment sales514 734 664 1,924 
Total sales3,557 2,986 2,406 1,343 85 10,377 
Research, development and engineering expenses91 134 14 63 48 350 
Equity, royalty and interest income (loss) from investees21 65 24 13 (4)119 
Interest income— 18 
Segment EBITDA507 (3)457 335 219 (94)1,424 
Depreciation and amortization (2)
123 51 28 29 14 245 
(1) Included $21 million costs associated with the divestiture of Atmus for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(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. The amortization of debt discount and deferred costs was $3 million and $1 million for the three months ended March 31, 2024 and 2023, respectively. A portion of depreciation expense is included in research, development and engineering expenses.
(3) Included $12 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
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A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
TOTAL SEGMENT EBITDA
TOTAL SEGMENT EBITDA
TOTAL SEGMENT EBITDATOTAL SEGMENT EBITDA$1,424 $845 
Intersegment eliminations and other(1)
Intersegment eliminations and other(1)
(63)(90)
Intersegment eliminations and other (1)
Intersegment eliminations and other (1)
Less:
Less:
Less:Less:
Interest expenseInterest expense87 17 
Interest expense
Interest expense
Depreciation and amortizationDepreciation and amortization245 160 
Depreciation and amortization
Depreciation and amortization
INCOME BEFORE INCOME TAXES
INCOME BEFORE INCOME TAXES
INCOME BEFORE INCOME TAXESINCOME BEFORE INCOME TAXES$1,029 $578 
(1)Intersegment eliminations and other included $6 million and $17 million of costs associated with the planned separation of our filtration business for the three months ended March 31, 2023 and 2022.
(1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses.
(1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses.
(1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses.
(2) Included $1.3 billion of gain related the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus (included in corporate expenses) for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(2) Included $1.3 billion of gain related the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus (included in corporate expenses) for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," for additional information.
(3) Included $6 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
(3) Included $6 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
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NOTE 18.16. RECENTLY ADOPTEDISSUED ACCOUNTING PRONOUNCEMENTS
In September 2022,November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," to enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. The standard did not change the definition of a segment, the method for determining segments or the criteria for aggregating operating segments into reportable segments. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption is required for all prior periods presented in the financial statements. We plan to adopt the standard relatedbeginning with our 2024 Form 10-K. The adoption is not expected to have a material impact to our financial statements or disclosures.
In December 2023, the disclosureFASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements in Income Tax Disclosures," to enhance the transparency and decision usefulness of income tax disclosures. This amendment requires public companies to disclose specific categories in the rate reconciliation and provide additional information aboutfor reconciling items that meet a quantitative threshold. Additionally, under the use of supplier finance programs. Under the new standard,amendment entities are required to disclose (1) key terms of the programs, (2) the amount outstanding that remains unpaid as of the end of the period, including where amounts are recorded in the balance sheets and (3) an annual rollforward of those obligations, including the amount of obligations confirmedincome taxes paid disaggregated by federal, state and foreign taxes, as well as disaggregated by material individual jurisdictions. Finally, the amount of obligations subsequently paid.amendment requires entities to disclose income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state and foreign. The new rules are effective for annual periods beginning after December 15, 2024. We adopted the newwill adopt this standard on January 1, 2023, on a retrospective basis other than the rollforward, which we currently plan to early adopt on a prospective basis as allowed by the standard beginning with our 2023 annual financial statements.2025 Form 10-K. The adoption didof this standard is not expected to have a material impact on our financial statements. See "Supply Chain Financing" section in NOTE 1, "NATURE OF OPERATIONS AND BASIS OF PRESENTATION," for additional information.Condensed Consolidated Financial Statements.
NOTE 19.17. SUBSEQUENT EVENTEVENTS
OnEarly Settlement of Interest Rate Swaps and Early Debt Payments
In April 3,2024, we settled a portion of our 2023 interest rate swaps with a notional amount of $100 million in conjunction with repayment of $100 million of our term loan, due 2025. The loss on settlement recognized was immaterial.
Issuance of Commercial Paper
In April 2024, we purchased allissued approximately $1.0 billion of commercial paper in anticipation of paying the substantial majority of payments required under the Settlement Agreements in May 2024. See NOTE 11, “COMMITMENTS AND CONTINGENCIES,” for additional information on the Settlement Agreements.
Net Investment Hedge
In April 2024, we entered into additional net investments hedges with a notional amount of $250 million where we agreed with third parties to sell Chinese renminbi in exchange for U.S. dollar currency at a specified rate at the maturity of the equity ownership interest of Teksid Hierro de Mexico, S.A. de C.V. (Teksid MX) and Teksid, Inc. from Stellantis N.V. for approximately €138 million, subject to certain adjustments set forth in the agreement. Teksid MX operates a cast iron foundry located in Monclova, Mexico, which primarily forges blocks and heads used in our and other manufacturers’ engines. Teksid, Inc. facilitates the commercialization of Teksid MX products in North America. Since we are the primary customer of the foundry, the acquisition is not expected to result in material incremental sales to our business. The acquisition will be included in our Engine segment starting in the second quarter of 2023. Due to the timing of the acquisition, the initial purchase accounting is not yet complete and will follow in the second quarter Form 10-Q filing.contract.

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ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cummins Inc. and its consolidated subsidiaries are hereinafter sometimes referred to as “Cummins,” “we,” “our” or “us.”
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Certain parts of this quarterly report contain forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those that are based on current expectations, estimates and projections about the industries in which we operate and management’s beliefs and assumptions. Forward-looking statements are generally accompanied by words such as "anticipates," "expects," "forecasts," "intends," "plans," "believes," "seeks," "estimates," "could," "should," "may" or words of similar meaning. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which we refer to as "future factors," which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some future factors that could cause our results to differ materially from the results discussed in such forward-looking statements are discussed below and shareholders, potential investors and other readers are urged to consider these future factors carefully in evaluating forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Future factors that could affect the outcome of forward-looking statements include the following:
GOVERNMENT REGULATION
any adverse results of our internal reviewconsequences resulting from entering into our emissions certification processthe Settlement Agreements, including required additional mitigation projects, adverse reputational impacts and compliance with emission standards;potential resulting legal actions;
increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world;
evolving environmental and climate change legislation and regulatory initiatives;
changes in international, national and regional trade laws, regulations and policies;
changes in taxation;
global legal and ethical compliance costs and risks;
evolving environmental and climate change legislation and regulatory initiatives;
future bans or limitations on the use of diesel-powered products;
BUSINESS CONDITIONS / DISRUPTIONS
failure to successfully integrate and / or failure to fully realize all of the anticipated benefits of the acquisition of Meritor, Inc. (Meritor);
raw material, transportation and labor price fluctuations and supply shortages;
any adverse effects of the conflict between Russia and Ukraine and the global response (including government bans or restrictions on doing business in Russia);
aligning our capacity and production with our demand;
the actions of, and income from, joint ventures and other investees that we do not directly control;
large truck manufacturers' and original equipment manufacturers' customers discontinuing outsourcing their engine supply needs or experiencing financial distress, or change in control;
PRODUCTS AND TECHNOLOGY
product recalls;
variability in material and commodity costs;
the development of new technologies that reduce demand for our current products and services;
lower than expected acceptance of new or existing products or services;
product liability claims;
our sales mix of products;
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GENERAL
failureclimate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to complete, adverse results from or failure to realize the expected benefits of the separation of our filtration business;address climate change;
our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions;
increasing interest rates;
challenging markets for talent and ability to attract, develop and retain key personnel;
climate change, global warming, more stringent climate change regulations, accords, mitigation efforts, greenhouse gas regulations or other legislation designed to address climate change;
exposure to potential security breaches or other disruptions to our information technology environment and data security;
political, economic and other risks from operations in numerous countries including political, economic and social uncertainty and the evolving globalization of our business;
competitor activity;
increasing competition, including increased global competition among our customers in emerging markets;
failure to meet environmental, social and governance (ESG) expectations or standards, or achieve our ESG goals;
labor relations or work stoppages;
foreign currency exchange rate changes;
the performance of our pension plan assets and volatility of discount rates;
the price and availability of energy;
continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and
other risk factors described in Part II, Item 1A in this quarterly report and our 20222023 Form 10-K, Part I, Item 1A, both under the caption "Risk Factors."
Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this quarterly report and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
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ORGANIZATION OF INFORMATION 
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) was prepared to provide the reader with a view and perspective of our business through the eyes of management and should be read in conjunction with our Management's Discussion and Analysis of Financial Condition and Results of Operations section of our 20222023 Form 10-K. Our MD&A is presented in the following sections:
EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS
RESULTS OF OPERATIONS
OPERATING SEGMENT RESULTS
OUTLOOK
LIQUIDITY AND CAPITAL RESOURCES
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
RECENTLY ADOPTEDISSUED ACCOUNTING PRONOUNCEMENTS
EXECUTIVE SUMMARY AND FINANCIAL HIGHLIGHTS
Overview
We are a global power solutions leader that designs, manufactures, distributescomprised of five business segments - Components, Engine, Distribution, Power Systems and servicesAccelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production technologies and fuel cell products. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc, Traton Group, Daimler Trucks North America and Stellantis N.V. We serve our customers through a service network of approximately 460450 wholly-owned, joint venture and independent distributor locations and more than 10,00019,000 Cummins certified dealer locations in approximately 190 countries and territories.
As previously announced, beginning in the first quarter of 2023, we realigned certain businesses and regions within our reportable segments to be consistent with how ourOur segment managers monitor the performance of our segments. We reorganized the businesses within our Components segment to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuel systems businesses into the newly formed engine components business. Our Components segment now consists of the following businesses: axles and brakes, emission solutions, engine components, filtration, automated transmissions and software and electronics. As a result of the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. In March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented.
Our reportable operating segments consist of Components, Engine, Distribution, Power Systems and Accelera. This reporting structure is organized according to the products and markets each segment serves. The Components segment sells filtration products, aftertreatment systems, turbochargers, electronics, fuel systems, automated transmissions, axles, drivelines, brakes and suspension systems.systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics. The Engine segment produces engines (15 liters and smaller) and associated parts for sale to customers in on-highway and various off-highway markets. Our engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, agriculture, power generation systems and other off-highway applications. The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products and maintaining relationships with various OEMs throughout the world. The Power Systems segment is an integrated power provider, which designs, manufactures and sells engines (16 liters and larger) for industrial applications (including mining, oil and gas, marine and rail), standby and prime power generator sets, alternators and other power components. The Accelera segment designs, manufactures, sells and supports hydrogen production solutionstechnologies as well as electrified power systems with innovative components and subsystems, including battery, fuel cell and electric powertrain technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of our electrolyzers for hydrogen production and electrified power systems and related
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components and subsystems. We continue to serve all our markets as they adopt electrification and alternative power technologies, meeting the needs of our OEM partners and end customers.
Our financial performance depends, in large part, on varying conditions in the markets we serve, particularly the on-highway, constructionoff-highway, power generation and general industrial markets. Demand in these markets tends to fluctuate in response to overall economic conditions. Our sales may also be impacted by OEM inventory levels, production schedules, stoppages and supply chain challenges. Economic downturns in markets we serve generally result in reduced sales of our products and can result in price reductions in certain products and/or markets. As a worldwide business, our operations are also affected by geopolitical risks, (such as the conflict between Russia and Ukraine), currency fluctuations, political and economic uncertainty, public health crises (epidemics or pandemics) and regulatory matters, including adoption and enforcement of environmental and emission standards, in the countries we serve. As part of our growth strategy, we invest in businesses in certain countries that carry higher levels of these risks such as China, Brazil, India, Mexico and other countries in Europe, the Middle East and Africa. At the same time, our geographic diversity and broad product and service offerings have helped
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limit the impact from a drop in demand in any one industry, region, the economy of any single country or customer on our consolidated results.
Supply Chain DisruptionsDivestiture of Atmus
We continueOn March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc. (Atmus) common stock through a tax-free split-off. The exchange resulted in a reduction of shares of our common stock outstanding by 5.6 million shares. See NOTE 14, "ATMUS DIVESTITURE," to experience supply chain disruptions, increased price levelsthe Condensed Consolidated Financial Statements for additional information.
Settlement Agreements

In December 2023, we announced that we reached an agreement in principle with the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environmental and related financial impacts reflected as increased costNatural Resources Division of sales and inventory holdings. Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages and price increases across multiple component categories and limiting our collective ability to meet end-user demand. Our customers are also experiencing supply chain issues. The Board continues to monitor and evaluate allthe U.S. Department of these factorsJustice and the related impacts onCalifornia Attorney General’s Office to resolve certain regulatory civil claims regarding our businessemissions certification and operations,compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and we are diligently working to minimizeeffective in April 2024 (collectively, the supply chain impactsSettlement Agreements). See NOTE 11, “COMMITMENTS AND CONTINGENCIES,” to our business and to our customers.Condensed Consolidated Financial Statements for additional information.
20232024 First Quarter Results
A summary of our results is as follows:
Three months ended
March 31,
Three months ended
Three months ended
Three months ended
March 31,
March 31,
March 31,
In millions, except per share amounts
In millions, except per share amounts
In millions, except per share amountsIn millions, except per share amounts20232022
Net salesNet sales$8,453 $6,385 
Net sales
Net sales
Net income attributable to Cummins Inc.
Net income attributable to Cummins Inc.
Net income attributable to Cummins Inc.Net income attributable to Cummins Inc.790 418 
Earnings per common share attributable to Cummins Inc.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
BasicBasic$5.58 $2.94 
DilutedDiluted5.55 2.92 
Diluted
Diluted
Worldwide revenues increased 32decreased by 1 percent in the three months ended March 31, 2023,2024, compared to the same period in 2022,2023, due to axles and brakes sales in the Components segment of $1.3 billion from the Meritor acquisition and higherlower demand in all operating segments heavy-duty truck markets, which negatively impacted Components product demand, as well as weaker demand for construction engines and most geographic regions, partially offset by decreases in Russiadecreased sales due to the indefinite suspensiondivestiture of our Russian operations.Atmus, mostly offset by increased power generation demand. Net sales in the U.S. and Canada improved 39 percent, primarily due to incremental sales of axles and brakes in North America, increased demand in all Distribution product lines and strongerremained flat as lower demand in North American heavy-duty truck markets, which negatively impacted Components product demand, and lower demand in oil and gas markets in North America were offset by higher demand in power generation and medium-duty truck markets, which positively impacted most Components businesses.markets. International demand (excludes the U.S. and Canada) improved 24declined 1 percent, with lower sales in Russia more thanChina, Europe, Africa and the Middle East, partially offset by higher sales in most other geographic regions.Latin America and India. The increasedecrease in international sales was principallyprimarily due to incremental sales of axleslower demand in construction markets (especially in China and brakesWestern Europe) and weaker demand for emission solutions products (primarily in Western EuropeChina and Latin America. Unfavorable foreign currency fluctuations impacted international salesIndia), partially offset by 5 percent (primarily the Chinese renminbi, Indian rupee and Euro).higher demand across most Distribution product lines.
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The following table contains sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by operating segment including adjusted prior year balances for the NPROXX changes noted above, for the three months ended March 31, 20232024 and 2022.2023. See NOTE 17,15, "OPERATING SEGMENTS," to the Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.
Three months ended March 31, Three months ended March 31,
Operating SegmentsOperating Segments20232022Percent changeOperating Segments20242023Percent change
 Percent  Percent 2023 vs. 2022 Percent  Percent 2024 vs. 2023
In millionsIn millionsSalesof TotalEBITDASalesof TotalEBITDASalesEBITDAIn millionsSalesof TotalEBITDASalesof TotalEBITDASalesEBITDA
ComponentsComponents3,557 42 %507 1,988 31 %320 79 %58 %Components$3,332 40 40 %$473 $$3,557 42 42 %$507 (6)(6)%(7)%
EngineEngine2,986 36 %457 2,753 43 %390 %17 %Engine2,928 35 35 %414 2,986 2,986 36 36 %457 (2)(2)%(9)%
DistributionDistribution2,406 28 %335 2,117 33 %110 14 %NMDistribution2,535 30 30 %294 2,406 2,406 28 28 %335 %(12)%
Power SystemsPower Systems1,343 16 %219 1,160 18 %90 16 %NMPower Systems1,389 16 16 %237 1,343 1,343 16 16 %219 %%
AcceleraAccelera85 1 %(94)31 %(65)NM(45)%Accelera93 1 1 %(101)85 85 %(94)%(7)%
Intersegment eliminationsIntersegment eliminations(1,924)(23)%(63)(1,664)(26)%(90)16 %(30)%Intersegment eliminations(1,874)(22)(22)%1,255 (1,924)(1,924)(23)(23)%(63)(3)(3)%NM
TotalTotal$8,453 100 %$1,361 (1)$6,385 100 %$755 (2)32 %80 %
Total
Total$8,403 100 %$2,572 (1)$8,453 100 %$1,361 (2)(1)%89 %
"NM" - not meaningful information"NM" - not meaningful information
(1) EBITDA includes $18 million of costs associated with the planned separation of our filtration business.
(2) EBITDA includes $158 million of costs associated with the suspension of our Russian operations and $17 million of costs associated with the planned separation of our filtration business. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
"NM" - not meaningful information
"NM" - not meaningful information
(1) EBITDA included $1.3 billion of gain recognized on the divestiture of Atmus and $35 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
(1) EBITDA included $1.3 billion of gain recognized on the divestiture of Atmus and $35 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
(1) EBITDA included $1.3 billion of gain recognized on the divestiture of Atmus and $35 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
(2) EBITDA included $18 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
(2) EBITDA included $18 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
Net income attributable to Cummins Inc. was $790 million,$2.0 billion, or $5.55$14.03 per diluted share, on sales of $8.5$8.4 billion for the three months ended March 31, 2023,2024, versus the comparable prior year period net income attributable to Cummins Inc. of $418$790 million, or $2.92$5.55 per diluted share, on sales of $6.4$8.5 billion. The increases in net income attributable to Cummins Inc. and earnings per diluted share were driven by higher net sales and the absencegain recognized on the divestiture of costs associated with the suspension of our Russian operations,Atmus, partially offset by increasedhigher compensation costs, higher interest expense related to increased floating interest rates and new borrowings and higher amortization of intangible assets resulting from our acquisitions.consulting expenses. The increase in gross margin was primarily due to higher volumes (including sales of axles and brakes due to the Meritor acquisition) and favorable pricing, partially offset by higher compensation expenses.expenses and lower volumes. Diluted earnings per common share for the three months ended March 31, 2024, benefited $0.09 from fewer weighted-average shares outstanding due to treasury shares reacquired in the Atmus divestiture. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
We generated $495$276 million of cash from operations for the three months ended March 31, 2023,2024, compared to $164$495 million for the comparable period in 2022.2023. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows.
Our debt to capital ratio (total capital defined as debt plus equity) at March 31, 2023,2024, was 42.240.4 percent, compared to 44.140.3 percent at December 31, 2022.2023. The decreaseincrease was primarily due to the increased equity balance from strong first quarter earnings and lowerhigher debt balances since Decemberat March 31, 2022.2024. At March 31, 2023,2024, we had $2.4$3.1 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities (net of commercial paper outstanding), if necessary, to meet acquisition, working capital, investment and funding needs.
On February 15, 2023, certain20, 2024, we issued $2.25 billion aggregate principal amount of our subsidiaries entered into an amendmentsenior unsecured notes consisting of $500 million aggregate principal amount of 4.90 percent senior unsecured notes due in 2029, $750 million aggregate principal amount of 5.15 percent senior unsecured notes due in 2034 and $1.0 billion aggregate principal amount of 5.45 percent senior unsecured notes due in 2054. We received net proceeds of $2.2 billion. See NOTE 9, "DEBT," to the $1.0 billion credit agreement (Credit Agreement), consisting of a $400 million revolving credit facility and a $600 million term loan facility, in anticipation of the separation of our filtration business, which extended the date on which the Credit Agreement terminates from March 30, 2023 to June 30, 2023.Condensed Consolidated Financial Statements for additional information.
In the first three months of 2023,2024, the investment gain on our U.S. pension trusts was 1.491.2 percent, while our U.K. pension trusts' gainloss was 0.412.3 percent. We anticipate making additional defined benefit pension contributions during the remainder of 20232024 of $20$29 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our 20232024 annual net periodic pension cost to be near zero.approximate $34 million.
On April 3, 2023, we purchased all of the equity ownership interest of Teksid Hierro de Mexico, S.A. de C.V. and Teksid, Inc. from Stellantis N.V. for approximately €138 million, subject to certain adjustments set forth in the agreement. See NOTE 19, "SUBSEQUENT EVENT," to the Condensed Consolidated Financial Statements for additional information.
As of the date of this filing, our credit ratings and outlooks from the credit rating agencies remain unchanged.
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RESULTS OF OPERATIONS
 Three months endedFavorable/
March 31,(Unfavorable)
In millions, except per share amounts20232022AmountPercent
NET SALES$8,453 $6,385 $2,068 32 %
Cost of sales6,424 4,853 (1,571)(32)%
GROSS MARGIN2,029 1,532 497 32 %
OPERATING EXPENSES AND INCOME   
Selling, general and administrative expenses753 615 (138)(22)%
Research, development and engineering expenses350 298 (52)(17)%
Equity, royalty and interest income from investees119 96 23 24 %
Other operating expense, net19 111 92 83 %
OPERATING INCOME1,026 604 422 70 %
Interest expense87 17 (70)NM
Other income (expense), net90 (9)99 NM
INCOME BEFORE INCOME TAXES1,029 578 451 78 %
Income tax expense223 155 (68)(44)%
CONSOLIDATED NET INCOME806 423 383 91 %
Less: Net income attributable to noncontrolling interests16 (11)NM
NET INCOME ATTRIBUTABLE TO CUMMINS INC.$790 $418 $372 89 %
Diluted Earnings Per Common Share Attributable to Cummins Inc.$5.55 $2.92 $2.63 90 %
"NM" - not meaningful information
 Three months endedFavorable/
March 31,(Unfavorable)
In millions, except per share amounts20242023AmountPercent
NET SALES$8,403 $8,453 $(50)(1)%
Cost of sales6,362 6,424 62 %
GROSS MARGIN2,041 2,029 12 %
OPERATING EXPENSES AND INCOME   
Selling, general and administrative expenses839 753 (86)(11)%
Research, development and engineering expenses369 350 (19)(5)%
Equity, royalty and interest income from investees123 119 %
Other operating expense, net33 19 (14)(74)%
OPERATING INCOME923 1,026 (103)(10)%
Interest expense89 87 (2)(2)%
Other income, net1,387 90 1,297 NM
INCOME BEFORE INCOME TAXES2,221 1,029 1,192 NM
Income tax expense193 223 30 13 %
CONSOLIDATED NET INCOME2,028 806 1,222 NM
Less: Net income attributable to noncontrolling interests35 16 (19)NM
NET INCOME ATTRIBUTABLE TO CUMMINS INC.$1,993 $790 $1,203 NM
Diluted Earnings Per Common Share Attributable to Cummins Inc.$14.03 $5.55 $8.48 NM
"NM" - not meaningful information
Three months endedFavorable/
(Unfavorable)
March 31,
Percent of salesPercent of sales20232022Percentage Points
Percent of sales
Percent of sales
Gross margin
Gross margin
Gross marginGross margin24.0 %24.0 %— 
Selling, general and administrative expensesSelling, general and administrative expenses8.9 %9.6 %0.7 
Selling, general and administrative expenses
Selling, general and administrative expenses
Research, development and engineering expenses
Research, development and engineering expenses
Research, development and engineering expensesResearch, development and engineering expenses4.1 %4.7 %0.6 
Net Sales
Net sales for the three months ended March 31, 2023, increased2024, decreased by $2.1 billion$50 million versus the comparable period in 2022.2023. The primary drivers were as follows:
Components segment sales increased 79decreased 6 percent largely due to lower demand in our emission solutions and axles and brakes businesses and the divestiture of Atmus on March 18, 2024.
Engine segment sales fromdecreased 2 percent primarily due to lower demand in global construction markets and North American heavy-duty truck markets, partially offset by higher demand in North American medium-duty truck markets.
These decreases were partially offset by the Meritor acquisition.following:
Distribution segment sales increased 145 percent principally due to higher demand across all product lines in North America.
Engine segment sales increased 8 percent principally due to strong heavy-duty truck demand (including higher aftermarket sales) in North America.power generation markets.
Power Systems segment sales increased 163 percent primarily due to higher demand in power generation markets and industrial oil and gas markets in North America.markets.
These increases were partially offset by unfavorable foreign currency fluctuations of 2 percent of total sales, primarily in the Chinese renminbi, Indian rupee and Euro.
Sales to international markets (excluding the U.S. and Canada), based on location of customers, for the three months ended March 31, 2023,2024, were 39 percent of total net sales compared with 4239 percent of total net sales for the comparable period in 2022.2023. A more detailed discussion of sales by segment is presented in the “OPERATING SEGMENT RESULTS” section.
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Cost of Sales
The types of expenses included in cost of sales are the following: parts and material consumption, including direct and indirect materials; compensation and related expenses, including variable compensation, salaries wages and fringe benefits; depreciation on
31

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production equipment and facilities and amortization of technology intangibles; estimated costs of warranty programs and campaigns; production utilities; production-related purchasing; warehousing, including receiving and inspection; freight costs; engineering support costs; repairs and maintenance; production and warehousing facility property insurance;insurance and rent for production facilities; charges for the write-downs of inventories in Russiafacilities and other production overhead.
Gross Margin
Gross margin increased $497$12 million for the three months ended March 31, 20232024, and remained flatincreased 0.3 points as a percentage of net sales versus the comparable period in 2022.2023. The increase in gross margin and gross margin as a percentage of sales was primarily due to higher volumes (including sales of axles and brakes due to the Meritor acquisition) and favorable pricing, partially offset by higher compensation expenses.expenses and lower volumes. Compensation and related expenses included salaries, fringe benefits and variable compensation.
The provision for base warranties issued as a percent of sales for the three months ended March 31, 2023,2024, was 1.71.9 percent compared to 1.91.7 percent for the comparable period in 2022.2023.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $138$86 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to higher compensation expenses and higher consulting expenses. Compensation and related expenses includeincluded salaries, fringe benefits and variable compensation, salaries and fringe benefits.compensation. Overall, selling, general and administrative expenses as a percentage of net sales decreasedincreased to 8.910.0 percent in the three months ended March 31, 2023,2024, from 9.68.9 percent in the comparable period in 2022. The decrease in selling, general and administrative expenses as a percentage of net sales was due to net sales increasing at a faster rate than selling, general and administrative expenses.2023.
Research, Development and Engineering Expenses
Research, development and engineering expenses increased $52$19 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to higher compensation expenses and lower expense recovery.expenses. Compensation and related expenses includeincluded salaries, fringe benefits and variable compensation, salaries and fringe benefits.compensation. Overall, research, development and engineering expenses as a percentage of net sales decreasedincreased to 4.14.4 percent in the three months ended March 31, 2023,2024, from 4.74.1 percent in the comparable period in 2022. The decrease in research, development and engineering expenses as a percentage of net sales was due to net sales increasing at a faster rate than research, development and engineering expenses.2023.
Research activities continue to focus on development of new products and improvements of current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas-powered engines and related components, as well as development activities around hydrogen engine solutions, battery electric, fuel cell electric and hydrogen engine solutions.production technologies.
Equity, Royalty and Interest Income from Investees
Equity, royalty and interest income from investees increased $23$4 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to the absence of the $28 million impairment of our Russian joint venture with KAMAZ in the first quarter of 2022 and higher earnings at KomatsuChongqing Cummins Chile, Ltda.Engine Co., Ltd., Dongfeng Cummins Engine Co., Ltd. and Sisamex, partially offset by lower royalty and interest income from investees. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
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Other Operating Expense, Net
Other operating (expense) income, net was as follows:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
Amortization of intangible assetsAmortization of intangible assets$(32)$(5)

Loss on write-off of assets(1)(5)
Russian suspension costs (68)(1)
Asset impairments and other charges (36)
Amortization of intangible assets
Amortization of intangible assets
Other, net
Other, net
Other, netOther, net14 
Total other operating expense, netTotal other operating expense, net$(19)$(111)
Total other operating expense, net
Total other operating expense, net
(1) See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
Interest Expense
Interest expense increased $70was $89 million for the three months ended March 31, 2023,2024, versus $87 million for the comparable periodsperiod in 2022. The increase was2023. Interest expense increased $2 million primarily due to the overall increase in floatinghigher outstanding long-term borrowings related to the 2024 note issuance and higher weighted-average interest rates, higher short-term borrowings (includingpartially offset by lower commercial paper)paper and newdecreased average term loan borrowings.borrowings outstanding.
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Other Income, (Expense), Net
Other income (expense), net was as follows:
Three months ended
Three months ended
Three months ended
Three months ended
March 31,
In millionsIn millions20232022
In millions
In millions
Gain related to divestiture of Atmus (1)
Gain related to divestiture of Atmus (1)
Gain related to divestiture of Atmus (1)
Non-service pension and OPEB incomeNon-service pension and OPEB income$31 $33 
Gain (loss) on corporate owned life insurance19 (37)
Non-service pension and OPEB income
Non-service pension and OPEB income
Interest incomeInterest income18 
Foreign currency gain (loss), net12 (12)
Gain (loss) on marketable securities, net5 (4)
Interest income
Interest income
Gain on marketable securities, net
Gain on marketable securities, net
Gain on marketable securities, net
Gain on corporate owned life insurance
Gain on corporate owned life insurance
Gain on corporate owned life insurance
Foreign currency (loss) gain, net
Foreign currency (loss) gain, net
Foreign currency (loss) gain, net
Other, netOther, net5 
Total other income (expense), net$90 $(9)
Other, net
Other, net
Total other income, net
Total other income, net
Total other income, net
(1) See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.
(1) See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.
(1) See NOTE 14, "ATMUS DIVESTITURE," to our Condensed Consolidated Financial Statements for additional information.
Income Tax Expense
Our effective tax rate for 20232024 is expected to approximate 22.024.0 percent, excluding any discrete items that may arise.
Our effective tax rates for the three months ended March 31, 2024 and 2023, were 8.7 percent and 2022, were 21.7 percent, and 26.8 percent, respectively.
The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements.
The three months ended March 31, 2023, contained favorable discrete tax items of $3 million, primarily due to share-based compensation tax benefits.
The three months ended March 31, 2022, contained unfavorable discrete items of $31 million, primarily due to $18 million of unfavorable changes associated with the indefinite suspension of Russian operations, $9 million of net unfavorable changes in tax reserves and $4 million of net unfavorable other discrete tax items.
Noncontrolling Interests
Noncontrolling interests eliminate the income or loss attributable to non-Cummins ownership interests in our consolidated entities. Noncontrolling interests in income of consolidated subsidiaries for the three months ended March 31, 2023,2024, increased $11$19 million versus the comparable period in 20222023 primarily due to higher earnings at Cummins India Limited and the absence of losses at Hydrogenics Corporation resulting from the June 2023 acquisition, partially offset by lower earnings at Eaton Cummins Joint Venture and Cummins India Limited.
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TableVenture. The three months ended March 31, 2024, included the noncontrolling interest associated with Atmus through March 18, 2024, the date of Contents
divestiture.
Comprehensive Income - Foreign Currency Translation Adjustment
The foreign currency translation adjustment was a net loss of $60 million for the three months ended March 31, 2024, compared to a net gain of $82 million for the three months ended March 31, 2023, compared to a net gain of $4 million for the three months ended March 31, 2022, driven by the following:
Three months ended
March 31,
20232022
In millionsTranslation adjustmentPrimary currency driver vs. U.S. dollarTranslation adjustmentPrimary currency driver vs. U.S. dollar
Wholly-owned subsidiaries$73 British pound, Brazilian real, Euro$16 Brazilian real, partially offset by Indian rupee, British pound, Euro
Equity method investments6 Brazilian real, Chinese renminbi(4)Indian rupee
Consolidated subsidiaries with a noncontrolling interest3 Indian rupee(8)Indian rupee
Total$82 $












Three months ended
March 31,
20242023
In millionsTranslation adjustmentPrimary currency driver vs. U.S. dollarTranslation adjustmentPrimary currency driver vs. U.S. dollar
Wholly-owned subsidiaries$(54)Chinese renminbi, Euro$73 British pound, Brazilian real, Euro
Equity method investments(3)Chinese renminbi, partially offset by Indian rupeeBrazilian real, Chinese renminbi
Consolidated subsidiaries with a noncontrolling interest(3)Indian rupee, Chinese renminbi, EuroIndian rupee
Total$(60)$82 
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OPERATING SEGMENT RESULTS
As previously announced, beginning in the first quarter of 2023, we realigned certain businesses and regions within our reportable segments to be consistent with how our segment managers monitor the performance of our segments. We reorganized the businesses within our Components segment to carve out the electronics business into the newly formed software and electronics business and combined the turbo technologies and fuel systems businesses into the newly formed engine components business. Our Components segment now consists of the following businesses: axles and brakes, emission solutions, engine components, filtration, automated transmissions and software and electronics. As a result of the indefinite suspension of operations in Russia, we reorganized the regional management structure of our Distribution segment and moved all Commonwealth of Independent States (CIS) sales into the Europe and Africa and Middle East regions. The Russian portion of prior period CIS sales moved to the Europe region. In March 2023, we rebranded our New Power segment as "Accelera" to better represent our commitment to zero-emission technologies. In addition, we moved our NPROXX joint venture from the Accelera segment to the Engine segment, which adjusted both the equity, royalty and interest income from investees and segment EBITDA line items for the current and prior year. We started to report results for the changes within our operating segments effective January 1, 2023, and reflected these changes in the historical periods presented.
Our reportable operating segments consist of the Components, Engine, Distribution, Power Systems and Accelera segments. This reporting structure is organized according to the products and markets each segment serves. We use segment EBITDA as a primarythe basis for the CODMChief Operating Decision Maker to evaluate the performance of each of our reportable operating segments. We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors. Segment amounts exclude certain expenses not specifically identifiable to segments. See NOTE 17,15, "OPERATING SEGMENTS," to the Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.
Following is a discussion of results for each of our operating segments.
Components Segment Results
Financial data for the Components segment was as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20232022AmountPercent
External sales$3,043$1,517$1,526 NM
Intersegment sales51447143 %
Total sales3,5571,9881,569 79 %
Research, development and engineering expenses9176(15)(20)%
Equity, royalty and interest income from investees2128(7)(25)%
Interest income61NM
Russian suspension costs6(1)100 %
Segment EBITDA507(2)320187 58 %
   Percentage Points
Segment EBITDA as a percentage of total sales14.3 %16.1 % (1.8)
"NM" - not meaningful information
(1) See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(2) Includes $12 million of costs associated with the planned separation of our filtration business.
As noted above, the descriptions of the two new businesses are as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20242023AmountPercent
External sales$2,842$3,043$(201)(7)%
Intersegment sales490514(24)(5)%
Total sales3,3323,557(225)(6)%
Research, development and engineering expenses8491%
Equity, royalty and interest income from investees262124 %
Interest income8633 %
Segment EBITDA473(1)507(2)(34)(7)%
   Percentage Points
Segment EBITDA as a percentage of total sales14.2 %14.3 % (0.1)
(1) Included $21 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024.
(2) Included $12 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2023.
On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. See NOTE 14, "ATMUS DIVESTITURE," to the Engine components - Condensed Consolidated Financial StatementsWe design, manufacture and market turbocharger, valvetrain and fuel system technologies for light-duty, mid-range, heavy-duty and high-horsepower markets across North America, Europe, China and India.additional information.
Software and electronics - We develop, supply and remanufacture control units, specialty sensors, power electronics, actuators and software for on-highway, off-highway and power generation applications. We primarily serve markets in the Americas, China, India and Europe.
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Sales for our Components segment by business including adjusted prior year balances for the changes noted above, were as follows:
Three months endedFavorable/
March 31,(Unfavorable)
In millionsIn millions20232022AmountPercent
In millions
In millions
Axles and brakes
Axles and brakes
Axles and brakesAxles and brakes$1,272 $— $1,272 NM
Emission solutionsEmission solutions1,056 910 146 16 %
Emission solutions
Emission solutions
Engine componentsEngine components581 502 79 16 %
Filtration417 382 35 %
Engine components
Engine components
Atmus
Atmus
Atmus
Automated transmissions
Automated transmissions
Automated transmissionsAutomated transmissions179 134 45 34 %
Software and electronicsSoftware and electronics52 60 (8)(13)%
Software and electronics
Software and electronics
Total sales
Total sales
Total salesTotal sales$3,557 $1,988 $1,569 79 %
"NM" - not meaningful information
(1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
(1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
(1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," to the Condensed Consolidated Financial Statements for additional information.
Sales
Components segment sales for the three months ended March 31, 2023, increased $1.6 billion2024, decreased $225 million versus the comparable period in 2022.2023. The following were the primary drivers by business:
Emission solutions sales decreased $85 million primarily due to weaker demand in China and India.
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Atmus sales decreased $64 million due to the divestiture on March 18, 2024.
Axles and brakes sales added $1.3 billion in salesdecreased $40 million mainly due to the Meritor acquisition.
Emission solutions sales increased $146 million primarily due to strongerweaker demand in North America and China.
Engine components sales increased $79 million largely due to higher demand in North America and China.
These increases wereWestern Europe, partially offset by unfavorable foreign currency fluctuations primarilystronger demand in the Chinese renminbi, Euro and Indian rupee.Brazil.
Segment EBITDA
Components segment EBITDA for the three months ended March 31, 2023, increased $1872024, decreased $34 million versus the comparable period in 2022,2023, mainly due to higherlower volumes (including salesthe divestiture of axlesAtmus) and brakes due to the Meritor acquisition) and favorable pricing,higher compensation expenses, partially offset by higher compensation expenses.lower material costs and favorable mix.
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Engine Segment Results
Financial data for the Engine segment was as follows:
Three months endedFavorable/
March 31,(Unfavorable)
In millionsIn millions20232022AmountPercent
In millions
In millions
External sales
External sales
External salesExternal sales$2,252 $2,049$203 10 %
Intersegment salesIntersegment sales734 70430 %
Intersegment sales
Intersegment sales
Total sales
Total sales
Total salesTotal sales2,986 2,753233 %
Research, development and engineering expensesResearch, development and engineering expenses134 109(25)(23)%
Research, development and engineering expenses
Research, development and engineering expenses
Equity, royalty and interest income from investees
Equity, royalty and interest income from investees
Equity, royalty and interest income from investeesEquity, royalty and interest income from investees65 42(1)23 55 %
Interest incomeInterest income3 4(1)(25)%
Russian suspension costs 32(2)32 100 %
Interest income
Interest income
Segment EBITDASegment EBITDA457 39067 17 %
  Percentage Points
Segment EBITDA as a percentage of total sales15.3 %14.2 % 1.1 
Segment EBITDA
Segment EBITDA
(1) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(2) Includes $31 million of Russian suspension costs reflected in the equity, royalty and interest income from investees line above. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
Segment EBITDA as a percentage of total sales
Segment EBITDA as a percentage of total sales
Segment EBITDA as a percentage of total sales
"NM" - not meaningful information
"NM" - not meaningful information
"NM" - not meaningful information
Sales for our Engine segment by market were as follows:
Three months endedFavorable/
March 31,(Unfavorable)
March 31,
March 31,
March 31,
In millions
In millions
In millionsIn millions20232022AmountPercent
Heavy-duty truckHeavy-duty truck$1,114 $908$206 23 %
Heavy-duty truck
Heavy-duty truck
Medium-duty truck and bus
Medium-duty truck and bus
Medium-duty truck and busMedium-duty truck and bus903 84855 %
Light-duty automotiveLight-duty automotive439 498(59)(12)%
Light-duty automotive
Light-duty automotive
Total on-highway
Total on-highway
Total on-highwayTotal on-highway2,456 2,254202 %
Off-highwayOff-highway530 49931 %
Off-highway
Off-highway
Total sales
Total sales
Total salesTotal sales$2,986 $2,753$233 %
  Percentage Points
On-highway sales as percentage of total sales
On-highway sales as percentage of total sales
On-highway sales as percentage of total salesOn-highway sales as percentage of total sales82 %82 % — 
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Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
 20232022AmountPercent
Heavy-duty34,700 28,600 6,100 21 %
Medium-duty78,900 72,600 6,300 %
Light-duty55,000 66,500 (11,500)(17)%
Total unit shipments168,600 167,700 900 %
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 Three months endedFavorable/
 March 31,(Unfavorable)
 20242023AmountPercent
Heavy-duty33,600 34,700 (1,100)(3)%
Medium-duty75,800 78,900 (3,100)(4)%
Light-duty54,800 55,000 (200)— %
Total unit shipments164,200 168,600 (4,400)(3)%
Sales
Engine segment sales for the three months ended March 31, 2023, increased $2332024, decreased $58 million versus the comparable period in 2022.2023. The following were the primary drivers by market:
Off-highway sales decreased $94 million mainly due to lower demand in global construction markets, especially in China and Western Europe.
Heavy-duty truck sales increased $206decreased $55 million principally due to strongerweaker demand (including higher aftermarket sales) in North America with higher shipments of 26 percent.America.
Medium-dutyThese decreases were partially offset by increased medium-duty truck and bus sales increased $55of $92 million mainly due to higher demand (including higher aftermarket sales) especially in North America.
These increases were partially offset by decreased light-duty automotive salesAmerica with higher medium-duty truck shipments of $59 million primarily due to lower sales to Stellantis and our indefinite suspension of operations in Russia.20 percent.
Segment EBITDA
Engine segment EBITDA for the three months ended March 31, 2023, increased $672024, decreased $43 million versus the comparable period in 2022,2023, primarily due to favorable pricing, the absence oflower volumes, higher compensation expenses and unfavorable product coverage costs, related to asset impairments and other charges recorded in the first quarter of 2022 and the absence of costs associated with the suspension of our Russian operations (including impairment of our joint venture with KAMAZ), partially offset by higher compensation expenses, increased materials costs and unfavorable mix. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.favorable pricing.
Distribution Segment Results
Financial data for the Distribution segment was as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20232022AmountPercent
External sales$2,399$2,111$288 14 %
Intersegment sales7617 %
Total sales2,4062,117289 14 %
Research, development and engineering expenses1413(1)(8)%
Equity, royalty and interest income from investees241650 %
Interest income72NM
Russian suspension costs100(1)100 100 %
Segment EBITDA335110225 NM
   Percentage Points
Segment EBITDA as a percentage of total sales13.9 %5.2 % 8.7 
"NM" - not meaningful information
(1) See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
Sales for our Distribution segment by region, including adjusted prior year balances for the changes noted above, were as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20232022AmountPercent
North America$1,695 $1,367 $328 24 %
Asia Pacific240 246 (6)(2)%
Europe195 281 (86)(31)%
China102 83 19 23 %
Africa and Middle East62 50 12 24 %
India59 49 10 20 %
Latin America53 41 12 29 %
Total sales$2,406 $2,117 $289 14 %
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20242023AmountPercent
External sales$2,529$2,399$130 %
Intersegment sales67(1)(14)%
Total sales2,5352,406129 %
Research, development and engineering expenses1414— — %
Equity, royalty and interest income from investees2424— — %
Interest income11757 %
Segment EBITDA294335(41)(12)%
   Percentage Points
Segment EBITDA as a percentage of total sales11.6 %13.9 % (2.3)
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Sales for our Distribution segment by region were as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20242023AmountPercent
North America$1,723 $1,695 $28 %
Asia Pacific285 240 45 19 %
Europe240 195 45 23 %
China102 102 — — %
India71 59 12 20 %
Latin America60 53 13 %
Africa and Middle East54 62 (8)(13)%
Total sales$2,535 $2,406 $129 %
Sales for our Distribution segment by product line were as follows:
Three months endedFavorable/
March 31,(Unfavorable)
In millionsIn millions20232022AmountPercent
In millions
In millions
Parts
Parts
PartsParts$1,057 $924 $133 14 %
Power generationPower generation492 401 91 23 %
Power generation
Power generation
Engines
Engines
EnginesEngines456 441 15 %
ServiceService401 351 50 14 %
Service
Service
Total sales
Total sales
Total salesTotal sales$2,406 $2,117 $289 14 %
Sales
Distribution segment sales for the three months ended March 31, 2023,2024, increased $289$129 million versus the comparable period in 2022.2023. The following were the primary drivers by region:
Asia Pacific sales increased $45 million primarily due to higher demand in power generation, especially data center markets, and service.
European sales increased $45 million mainly due to favorable demand in power generation and parts.
North American sales increased $328$28 million principally due to higher demand across all product lines.
The increase wasin power generation, especially commercial and data center markets, partially offset by the following:
Europe sales decreased $86 million as a result of our indefinite suspension of operations in Russia.
Unfavorable foreign currency fluctuations, primarily in the Chinese renminbi, Canadian dollar, Indian rupee, Australian dollarlower demand for engines and Euro.aftermarket products.
Segment EBITDA
Distribution segment EBITDA for the three months ended March 31, 2023, increased $2252024, decreased $41 million versus the comparable period in 2022,2023, primarily due to the absencehigher compensation expenses, unfavorable inventory adjustments and unfavorable mix, partially offset by favorable pricing.
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Table of costs associated with the suspension of our Russian operations, favorable mix and increased volumes. See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.Contents
Power Systems Segment Results
Financial data for the Power Systems segment was as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20232022AmountPercent
External sales$679$683$(4)(1)%
Intersegment sales664477187 39 %
Total sales1,3431,160183 16 %
Research, development and engineering expenses6364%
Equity, royalty and interest income from investees131118 %
Interest income21100 %
Russian suspension costs20(1)20 100 %
Segment EBITDA21990129 NM
   Percentage Points
Segment EBITDA as a percentage of total sales16.3 %7.8 % 8.5 
"NM" - not meaningful information
(1) See NOTE 15, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
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 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20242023AmountPercent
External sales$708$679$29 %
Intersegment sales68166417 %
Total sales1,3891,34346 %
Research, development and engineering expenses6063%
Equity, royalty and interest income from investees191346 %
Interest income3250 %
Segment EBITDA23721918 %
   Percentage Points
Segment EBITDA as a percentage of total sales17.1 %16.3 % 0.8 
Sales for our Power Systems segment by product line were as follows:
 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20232022AmountPercent
Power generation$770 $664 $106 16 %
Industrial455 393 62 16 %
Generator technologies118 103 15 15 %
Total sales$1,343 $1,160 $183 16 %

 Three months endedFavorable/
 March 31,(Unfavorable)
In millions20242023AmountPercent
Power generation$853 $770 $83 11 %
Industrial420 455 (35)(8)%
Generator technologies116 118 (2)(2)%
Total sales$1,389 $1,343 $46 %
Sales
Power Systems segment sales for the three months ended March 31, 2023,2024, increased $183$46 million versus the comparable period in 2022.2023. The following were the primary drivers by product line:
driver was an Powerincrease in power generation sales increasedof $10683 million primarilymainly due to higher demand in North America, Asia Pacific, Western Europe, Latin America and India, partially offset by weaker demand in China.
IndustrialWestern Europe and Latin America. The increase was partially offset by a decrease in industrial sales increased $62of $35 million principallymainly due to improvedweaker demand in the oil and gas market demand in North America.
These increases wereAmerica, partially offset by unfavorable foreign currency fluctuations, primarilystronger demand in the Indian rupee, Chinese renminbi and British pound.global mining markets.
Segment EBITDA
Power Systems segment EBITDA for the three months ended March 31, 2023,2024, increased $129$18 million versus the comparable period in 2022,2023, mainly due to favorable pricing, increased volumes, favorable foreign currency fluctuations (principally in the British pound and Indian rupee) and the absence of costs associated with the suspension of our Russian operations, partially offset by unfavorable mix and higher compensation expenses. See NOTE 15, "RUSSIAN OPERATIONS," to our
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Condensed Consolidated Financial Statements for additional information.Table of Contents
Accelera Segment Results
Financial data for the Accelera segment was as follows:
Three months endedFavorable/
March 31,(Unfavorable)
In millionsIn millions20232022AmountPercent
In millions
In millions
External sales
External sales
External salesExternal sales$80$25$55 NM
Intersegment salesIntersegment sales56(1)(17)%
Intersegment sales
Intersegment sales
Total sales
Total sales
Total salesTotal sales853154 NM
Research, development and engineering expensesResearch, development and engineering expenses4836(12)(33)%
Research, development and engineering expenses
Research, development and engineering expenses
Equity, royalty and interest loss from investeesEquity, royalty and interest loss from investees(4)(1)(3)NM
Equity, royalty and interest loss from investees
Equity, royalty and interest loss from investees
Segment EBITDA
Segment EBITDA
Segment EBITDASegment EBITDA(94)(65)(29)(45)%
"NM" - not meaningful information
Accelera segment sales for the three months ended March 31, 2023,2024, increased $54$8 million versus the comparable period in 20222023 principally due to incrementalimproved sales of central drive systems, e-axles and accessory systems since the acquisitions of Siemens' Commercial Vehicles Propulsion business and Meritor as well as improved electrified components and fuel cell sales.

electrolyzers.
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OUTLOOK
Supply Chain Disruptions
We continue to experience supply chain disruptions, increased price levels and related financial impacts reflected as increased cost of sales and inventory holdings. Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages and price increases across multiple component categories and limiting our collective ability to meet end-user demand. Our customers are also experiencing supply chain issues. The Board continues to monitor and evaluate all of these factors and the related impacts on our business and operations, and we are diligently working to minimize the supply chain impacts to our business and to our customers.
Business Outlook
Our outlook reflects the following positive trends and challenges to our business that could impact our revenue and earnings potential for the remainder of 2023.2024.
Positive Trends
We expect demand for pick-up, medium-duty and heavy-duty trucks in North America to remain strong.
We believe market demand for trucks in India will continue to be strong.
We expect demand within our Power Systems business to remain strong, including the power generation mining, oil and gas and marinemining markets.
We anticipate demand in our aftermarket business will continue to be robust, driven primarily by truck utilization in North America and continued strong demand in our Engine and Power Systems business.businesses.
We expect demand for trucks in China to remain stable or improve from the low demand levels in 2022.2024.
Challenges
We expect demand for heavy-duty trucks in North America to weaken modestly, particularly in the second half of 2024.
Continued increases in material and labor costs, as well as other inflationary pressures, could negatively impact earnings.
Our industry's sales continue to be unfavorably impacted by supply chain constraints leading to shortages across multiple components categories and limitingThe financial implications resulting from our collective ability to meet end-user demand. Our customers are also experiencing other supply chain issues limiting full production capabilities.
The completion of the Meritor, Inc. acquisition in 2022 impactedSettlement Agreements will negatively impact our liquidity in 2024 and resultedwill result in incremental interest expense for debt utilized in funding the transaction and increased amortization of intangible assets, which will negatively impact net income.civil penalty.
Increasing interest rates could increase borrowing costs and negatively impact net income.
We expect the planned separation of our filtration business, into a stand-alone company, will continue to result in incremental expenses.

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LIQUIDITY AND CAPITAL RESOURCES
Key Working Capital and Balance Sheet Data
We fund our working capital with cash from operations and short-term borrowings, including commercial paper, when necessary. Various assets and liabilities, including short-term debt, can fluctuate significantly from month to month depending on short-term liquidity needs. As a result, working capital is a prime focus of management's attention. Working capital and balance sheet measures are provided in the following table:
Dollars in millionsDollars in millionsMarch 31,
2023
December 31,
2022
Dollars in millionsMarch 31,
2024
December 31,
2023
Working capital (1)
Working capital (1)
$3,445 $3,030 
Current ratioCurrent ratio1.29 1.27 
Accounts and notes receivable, netAccounts and notes receivable, net$5,834 $5,202 
Days' sales in receivablesDays' sales in receivables60 60 
InventoriesInventories$5,878 $5,603 
Inventory turnoverInventory turnover4.4 4.2 
Accounts payable (principally trade)Accounts payable (principally trade)$4,636 $4,252 
Days' payable outstandingDays' payable outstanding62 60 
Total debtTotal debt$7,752 $7,855 
Total debt as a percent of total capitalTotal debt as a percent of total capital42.2 %44.1 %Total debt as a percent of total capital40.4 %40.3 %
(1) Working capital includes cash and cash equivalents.
(1) Working capital included cash and cash equivalents
(1) Working capital included cash and cash equivalents
(1) Working capital included cash and cash equivalents
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Cash Flows
Cash and cash equivalents were impacted as follows:
Three months ended
Three months ended
March 31, March 31, 
In millionsIn millions20232022ChangeIn millions20242023Change
Net cash provided by operating activitiesNet cash provided by operating activities$495 $164 $331 
Net cash used in investing activitiesNet cash used in investing activities(228)(10)(218)
Net cash used in financing activities(363)(497)134 
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(25)27 (52)
Net decrease in cash and cash equivalents$(121)$(316)$195 
Net increase (decrease) in cash and cash equivalents
Net cash provided by operating activities increased $331decreased $219 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to higher net incomeworking capital requirements of $383$112 million and lower working capital requirementoperating income of $36 million, partially offset by the absence of Russian suspension costs in 2023.$103 million. The lowerhigher working capital requirements resulted in a cash outflow of $494$606 million compared to a cash outflow of $530$494 million in the comparable period of 2022,2023, mainly due to increased accrued expenses (from higher variable compensation accrualspayouts in 2023accrued expenses, increased inventories and higher variable compensation paymentsunfavorable changes in the first quarter of 2022 for the previous year),accounts payable, partially offset by increasedfavorable changes in accounts and notes receivable balances and lower accounts payable balances.receivable.
Net cash used in investing activities increased $218$178 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to cash associated with the Atmus divestiture of $174 million and higher acquisition activity of $59 million, partially offset by higher net liquidations of marketable securities of $33 million and lower capital expenditures of $89 million and the absence of $83 million of cash acquired from the acquisition of Cummins Westport Inc., net of purchase price, in the first quarter of 2022.$24 million.
Net cash used inprovided by financing activities decreased $134increased $862 million for the three months ended March 31, 2023,2024, versus the comparable period in 2022,2023, primarily due to the absenceproceeds from borrowings of repurchases of common stock of $311 million,$2.4 billion (principally related to our 2024 note issuance), partially offset by higher net payments of commercial paper of $858 million and payments on borrowings and finance lease obligations of $118 million and higher net payments of commercial paper of $27$606 million.
The effect of exchange rate changes on cash and cash equivalents for the three months ended March 31, 2023,2024, versus the comparable period in 2022, changed $522023, increased $18 million primarily due to unfavorable fluctuations in the British pound.
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pound, partially offset by the Chinese renminbi.
Sources of Liquidity
We generate significant ongoing cash flow. Cash provided by operations is our principal source of liquidity with $495$276 million generated in the three months ended March 31, 2023.2024. Our sources of liquidity include:
March 31, 2023
March 31, 2024March 31, 2024
In millionsIn millionsTotalU.S.InternationalPrimary location of international balancesIn millionsTotalU.S.InternationalPrimary location of international balances
Cash and cash equivalentsCash and cash equivalents$1,980 $658 $1,322 Singapore, China, Belgium, Canada, Australia, Mexico, IndiaCash and cash equivalents$2,541 $$1,617 $$924 Singapore, Australia, Belgium, Mexico, Canada, ChinaSingapore, Australia, Belgium, Mexico, Canada, China
Marketable securities (1)
Marketable securities (1)
459 89 370 India
Marketable securities (1)
Marketable securities (1)
510 85 425 India
TotalTotal$2,439 $747 $1,692 
Available credit capacityAvailable credit capacity
Available credit capacity
Available credit capacity
Revolving credit facilities (2)
Revolving credit facilities (2)
$1,455 
Revolving credit facilities (2)
Revolving credit facilities (2)
International and other uncommitted domestic credit facilities
International and other uncommitted domestic credit facilities
International and other uncommitted domestic credit facilitiesInternational and other uncommitted domestic credit facilities$215 
(1) The majority of marketable securities could be liquidated into cash within a few days.
(2) The five-year credit facility for $2.0 billion, the 364-day credit facility for $1.5 billion and the $500 million incremental 364-day credit facility, maturing August 2026 and August 2023, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At March 31, 2023, we had $2.5 billion of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $1.5 billion.
(1) The majority of marketable securities could be liquidated into cash within a few days.
(1) The majority of marketable securities could be liquidated into cash within a few days.
(2) The five-year credit facility for $2.0 billion and the 364-day credit facility for $2.0 billion, maturing August 2026 and June 2024, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At March 31, 2024, we had $609 million of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $3.4 billion.
(2) The five-year credit facility for $2.0 billion and the 364-day credit facility for $2.0 billion, maturing August 2026 and June 2024, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At March 31, 2024, we had $609 million of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $3.4 billion.
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Cash, Cash Equivalents and Marketable Securities
A significant portion of our cash flow is generated outside the U.S. We manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. As a result, we do not anticipate any local liquidity restrictions to preclude us from funding our operating needs with local resources.
If we distribute our foreign cash balances to the U.S. or to other foreign subsidiaries, we could be required to accrue and pay withholding taxes, for example, if we repatriated cash from certain foreign subsidiaries whose earnings we asserted are completely or partially permanently reinvested. Foreign earnings for which we assert permanent reinvestment outside the U.S. consist primarily of earnings of our China, India, Canada (including underlying subsidiaries) and Netherlands domiciled subsidiaries. At present, we do not foresee a need to repatriate any earnings for which we assert permanent reinvestment. However, to help fund cash needs of the U.S. or other international subsidiaries as they arise, we repatriate available cash from certain foreign subsidiaries whose earnings are not permanently reinvested when it is cost effective to do so.
Debt Facilities and Other Sources of Liquidity
In April 2024, we issued approximately $1.0 billion of commercial paper in anticipation of paying the substantial majority of payments required by the Settlement Agreements in May 2024. See NOTE 11, “COMMITMENTS AND CONTINGENCIES,” to the Condensed Consolidated Financial Statements for additional information on the Settlement Agreements.
On February 20, 2024, we issued $2.25 billion aggregate principal amount of senior unsecured notes consisting of $500 million aggregate principal amount of 4.90 percent senior unsecured notes due in 2029, $750 million aggregate principal amount of 5.15 percent senior unsecured notes due in 2034 and $1.0 billion aggregate principal amount of 5.45 percent senior unsecured notes due in 2054. We have accessreceived net proceeds of $2.2 billion. See NOTE 9, "DEBT," to the Condensed Consolidated Financial Statements for additional information.
Our committed credit facilities totalingprovide access up to $4.0 billion, including the $1.5our $2.0 billion 364-day facility that expires August 16, 2023, $500 million incremental 364-day facility that expires August 16, 2023,June 3, 2024, and our $2.0 billion five-year facility that expires on August 18, 2026. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. There were no outstanding borrowings under these facilities at March 31, 2023.2024.
We can issueOur committed credit facilities provide access up to$4.0 $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board of Directors (the Board) authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for acquisitions and general corporate purposes. The total combined borrowing capacity under the revolving credit facilities and commercial paper programs should not exceed $4.0 billion. At March 31, 2023,2024, we had $2.5 billion$609 million of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $1.5$3.4 billion.
In 2021, we entered into a series of interest rate swaps to effectively convert our $500 million senior notes, due in 2025, from a fixed rate of 0.75 percent to a floating rate equal See NOTE 9, "DEBT," to the three-month LIBOR plus a spread. We also entered into a series of interest rate swaps to effectively convert $765 million of our $850 million senior notes, due in 2030, from a fixed rate of 1.50 percent to a floating rate equal to the three-month LIBOR plus a spread. The swaps were designated and are accountedCondensed Consolidated Financial Statements for as fair value hedges. In March
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2023, we settled a portion of our 2021 interest rate swaps with a notional amount of $100 million. The $7 million loss on settlement will be amortized over the remaining term of the related debt.
In 2019 we entered into $350 million of interest rate lock agreements, and in 2020 we entered into an additional $150 million of lock agreements to reduce the variability of the cash flows of the interest payments on a total of $500 million of fixed rate debt forecast to be issued in 2023 to replace our senior notes at maturity. In December 2022, we settled certain rate lock agreements with notional amounts totaling $150 million for $49 million. In February 2023, we settled certain rate lock agreements with notional amounts totaling $100 million for $34 million. The $83 million of gains on settlements will remain in other comprehensive income and will be amortized over the term of the anticipated new debt.information.
As a well-known seasoned issuer, we filed an automatic shelf registration of an undetermined amount of debt and equity with the Securities and Exchange Commission (SEC) on February 8, 2022. Under this shelf registration we may offer, from time to time, debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.
In July 2017, the U.K.'s Financial Conduct Authority, which regulates the LIBOR, announced it intends to phase out LIBOR by the end of 2021. The cessation date for submission and publication of rates for certain tenors of LIBOR has since been extended until mid-2023. Various central bank committees and working groups continue to discuss replacement of benchmark rates, the process for amending existing LIBOR-based contracts and the potential economic impacts of different alternatives. The Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate (SOFR) as its preferred alternative rate for U.S. dollar LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. We have evaluated the potential impact of the replacement of the LIBOR benchmark interest rate including risk management, internal operational readiness and monitoring the Financial Accounting Standards Board standard-setting process to address financial reporting issues that might arise in connection with transition from LIBOR to a new benchmark rate. While we do not believe the change will materially impact us due to our operational and system readiness coupled with relevant contractual fallback language, we continue to evaluate all eventual transition risks. In anticipation of LIBOR's phase out, our revolving credit and term loan agreements incorporate the use of SOFR as a replacement for LIBOR. Our 5-year credit facility maturing August 18, 2026, as amended to date, also incorporates SOFR. Additionally, with respect to our $1.2 billion in LIBOR-based fixed to variable rate swaps maturing in 2025 and 2030, we reviewed and believe our adherence to the 2020 LIBOR fallback protocol will allow for a smooth transition to the designated replacement rate when that transition occurs.
On February 15, 2023, certain of our subsidiaries entered into an amendment to the $1.0 billion credit agreement (Credit Agreement), consisting of a $400 million revolving credit facility and a $600 million term loan facility (Facilities), in anticipation of the separation of our filtration business, which extended the date on which the Credit Agreement terminates from March 30, 2023 to June 30, 2023. Borrowings under the Credit Agreement will not become available under the Credit Agreement unless and until, among other things, there is a sale to the public of shares in our subsidiary that holds the filtration business (Parent Borrower). The Credit Agreement will automatically terminate if no such public sale of shares of Parent Borrower occurs on or prior to June 30, 2023. Borrowings under the Credit Agreement would be available to Parent Borrower and one or more of its subsidiaries (Borrower). If borrowings become available under the Credit Agreement, the Facilities would mature on September 30, 2027.
Borrowings under the Credit Agreement would bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable Borrower’s election. Generally, U.S. dollar-denominated loans would bear interest at adjusted term SOFR (which includes a 0.10 percent credit spread adjustment to term SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Parent Borrower's net leverage ratio.
Supply Chain Financing
We currently have supply chain financing programs with financial intermediaries, which provide certain vendors the option to be paid by financial intermediaries earlier than the due date on the applicable invoice. When a vendor utilizes the program and receives an early payment from a financial intermediary, they take a discount on the invoice. We then pay the financial intermediary the face amount of the invoice on the original due date.date, which generally have 60 to 90 day payment terms. The maximum amount that we maycould have outstanding under the program is $532was $512 million. We do not reimburse vendors for any costs they incur for participation in the program, their participation is completely voluntary and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. As a result, all amounts owed to the financial intermediaries are presented as accounts payable in our Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in accounts payable at March 31, 2023,2024, were $253$193 million.
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Uses of Cash
Settlement Agreements
In December 2023, we announced that we reached an agreement in principle with the EPA, CARB, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General’s Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024 (collectively, the Settlement Agreements). As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make certain payments. Failure to comply with the terms and conditions of the Settlement Agreements will subject us to stipulated penalties. We recorded a charge of $2.0 billion in the fourth quarter of 2023 to resolve the matters addressed by the Settlement Agreements involving approximately one million of our pick-up truck applications in the U.S. This charge was in addition to the previously announced charges of $59 million for the recalls of model years 2013 through 2018 RAM 2500 and 3500 trucks and model years 2016 through 2019 Titan trucks. Of this amount, $1.9 billion relates to payments that we began making in April 2024; however, the majority of these payments are expected to be made in May 2024. See NOTE 11, "COMMITMENTS AND CONTINGENCIES," to the Condensed Consolidated Financial Statements for additional information.
Repayment of Debt
We used a portion of the net proceeds of $2.2 billion from our February 2024 bond issuance to pay down $650 million of our term loan, due 2025, and commercial paper. We intend to use the remaining net proceeds for general corporate purposes.
In April 2024, we also repaid $100 million of our term loan, due 2025.
Dividends
We paid dividends of $222$239 million during the three months ended March 31, 2023.
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2024.
Capital Expenditures
Capital expenditures for the three months ended March 31, 2023,2024, were $193$169 million versus $104$193 million in the comparable period in 2022.2023. We continue to invest in new product lines and targeted capacity expansions. We plan to spend an estimated $1.2 billion to $1.3 billion in 20232024 on capital expenditures with over 6065 percent of these expenditures expected to be invested in North America.
Current Maturities of Short and Long-Term Debt
We had $2.5 billion$609 million of commercial paper outstanding at March 31, 2023,2024, that matures in less than one year. The maturity schedule of our existing long-term debt requires significant cash outflows in 2023 when our 3.65 percent senior notes are due and in 2025 when our term loan and 0.75 percent senior notes are due. Required annual long-term debt principal payments range from $46$41 million to $2.0$1.1 billion over the next five years (including the remainder of 2023)2024). In 2023, weWe intend to have a greater emphasis on the repayment of debt to maintainretain our strong investment credit ratings. See NOTE 9, "DEBT," to the Condensed Consolidated Financial Statements for additional information.
Pensions
Our global pension plans, including our unfunded and non-qualified plans, were 120113 percent funded at December 31, 2022.2023. Our U.S. defined benefit plans (qualified and non-qualified), which represented approximately 69 percent of the worldwide pension obligation, were 121113 percent funded, and our U.K. defined benefit plans were 119113 percent funded at December 31, 2022.2023. The funded status of our pension plans is dependent upon a variety of variables and assumptions including return on invested assets, market interest rates and levels of voluntary contributions to the plans. In the first three months of 2023,2024, the investment gain on our U.S. pension trusts was 1.491.2 percent, while our U.K. pension trusts' gainloss was 0.412.3 percent. We anticipate making additional defined benefit pension contributions during the remainder of 20232024 of $20$29 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 20232024 annual net periodic pension cost to be near zero.approximate $34 million.
Stock Repurchases
In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. We did not make any repurchases of common stock in the first three months of 2023.
Redeemable Noncontrolling Interests
A 19 percent minority shareholder in one of our businesses, Hydrogenics Corporation (Hydrogenics), has, among other rights and subject to related obligations and restrictive covenants, rights that are exercisable between September 2022 and September 2026 to require us to (1) purchase such shareholder's shares (put option)2024. The dollar value remaining available for future purchases under the 2019 program at an amount up to the fair market value (calculated pursuant to a process outlined in the shareholders' agreement) and (2) sell to such shareholder Hydrogenics' electrolyzer business at an amount up to the fair market value of the electrolyzer business (calculated pursuant to a process outlined in the shareholders’ agreement). We recorded the estimated fair value of the put option as redeemable noncontrolling interests in our Condensed Consolidated Financial Statements with an offset to additional paid-in capital. At March 31, 2023, the redeemable noncontrolling interest balance2024, was $261$218 million.
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Credit Ratings
Our rating and outlook from each of the credit rating agencies as of the date of filing are shown in the table below:
Long-TermShort-Term
Credit Rating Agency (1)
 Senior Debt RatingDebt RatingOutlook
Standard and Poor’s Rating Services A+AA1Stable
Moody’s Investors Service, Inc. A2P1Stable
(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.
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Management's Assessment of Liquidity
Our financial condition and liquidity remain strong. Our solid balance sheet and credit ratings enable us to have ready access to credit and the capital markets. We assess our liquidity in terms of our ability to generate adequate cash to fund our operating, investing and financing activities. We believe our access to capital markets, our existing cash and marketable securities, operating cash flow and revolving credit facilities provide us with the financial flexibility needed to fund repayment of debt obligations, dividendmake payments acquisitions,required by the Settlement Agreements, targeted capital expenditures, dividend payments, debt service obligations, projected pension obligations, common stock repurchases projected pension obligations and working capitalfund acquisitions through 20232024 and beyond. We continue to generate significant cash from operations and maintain access to our revolving credit facilities and commercial paper programs as noted above.
We anticipate making the substantial majority of payments required by the Settlement Agreements in May 2024 through the use of our existing liquidity and access to cash from commercial paper issued in April. See NOTE 17, "SUBSEQUENT EVENTS," to the Condensed Consolidated Financial Statements for additional information.
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 20222023 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 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 the Board. Our critical accounting estimates disclosed in the Form 10-K address estimating liabilities for warranty programs, fair value of intangible assets, assessing goodwill impairment, accounting for income taxes and pension benefits.
A discussion of our critical accounting estimates may be found in the “Management’s Discussion and Analysis” section of our 20222023 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 three months of 2023.2024.
RECENTLY ADOPTEDISSUED ACCOUNTING PRONOUNCEMENTS
See Note 18,NOTE 16, "RECENTLY ADOPTEDISSUED 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 20222023 Form 10-K. There have been no material changes in this information since the filing of our 20222023 Form 10-K
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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 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 were no changes in our internal control over financial reporting during the quarter ended March 31, 2023,2024, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II.  OTHER INFORMATION
ITEM 1.  Legal Proceedings
The matters described under "Legal Proceedings" in NOTE 11, "COMMITMENTS AND CONTINGENCIES," to the Condensed Consolidated Financial Statements are incorporated herein by reference.
ITEM 1A.  Risk Factors
In addition to other information set forth in this report and the risk factor noted below, you should consider other risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20222023, which could materially affect our business, financial condition or future results. Other than noted below, there have been no material changes to our risks described in our 20222023 Annual Report on Form 10-K or the "CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION" in this Quarterly report. Additional risks and uncertainties not currently known to us or that we currently judge to be immaterial also may materially adversely affect our business, financial condition or operating results.
GOVERNMENT REGULATION
We are conducting a formal internal reviewWhile we have reached Settlement Agreements with the EPA, CARB, the Environmental and Natural Resources Division of the U.S. Department of Justice and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissionemissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., we have incurred, and likely will incur, other additional claims, costs and expenses in connection with the matters covered by the Settlement Agreements and other matters related to our compliance with emission standards for our engines, including with respect to our pick-up truck applicationsadditional regulatory action and are working with the Environmental Protection Agency (EPA) and California Air Resources Board (CARB)collateral litigation related to address their questions about these applications. Due to the continuing nature of our formal internal review and on-going discussions with the EPA and CARB, we cannot predict the final results of this formal review and these regulatory processes, nor the extent to which, they likely will have a material adverse impact on the 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 ongoing discussions, the regulators turned their attention to other model years and other engines, most notably our pick-up truck applications for RAM 2500 and 3500 trucks for model years 2013 through 2018 and Titan trucks for model years 2016 through 2019. Most recently, the regulators have also raised concerns regarding the completeness of our disclosures in our certification applications for RAM 2500 and 3500 trucks for model years 2013 through 2023. We have also been in communication with Environmental and Climate Change Canada regarding similar issues relating to some of these very same platforms. In connection with these and other ongoing discussions with the EPA and CARB, we are developing a new software calibration and will recall model years 2013 through 2018 RAM 2500 and 3500 trucks. We accrued $30 million for the RAM recall during the first quarter of 2022, an amount that reflected our current estimate of the cost of that recall. We are also developing a new software calibration and hardware fix and will recall model years 2016 through 2019 Titan trucks. We accrued $29 million for the Titan recall during the third quarter of 2022, an amount that reflected our current estimate of the cost of that recall.

We will continue to work together closely with the relevant regulators to develop and implement recommendations for improvements and seek to reach further resolutions as part of our ongoing commitment to compliance. Based upon our discussions to date with the regulators which are continuing, such resolutions may involve our agreeing to one or more consent decrees and paying civil penalties. Due to the presence of many unknown facts and circumstances, we are not yet able to estimate any further financial impact of
these matters. The consequences resulting from our formal reviewThose and these regulatory processes likely willrelated expenses and reputational damage could have a material adverse impact on our results of operations, financial condition and cash flows, howeverflows.
In December 2023, we cannot yet reasonably estimateannounced that we reached the agreement in principle and recorded a loss or rangecharge of loss.$2.0 billion in the fourth quarter of 2023 to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024. This fourth quarter of 2023 charge was in addition to the previously announced charges of $59 million for the recalls of model years 2013 through 2018 RAM 2500 and 3500 trucks and model years 2016 through 2019 Titan trucks. Failure to comply with the terms and conditions of the Settlement Agreements will also subject us to stipulated penalties.
We have also been in communication with other non-U.S. regulators regarding matters related to the emission systems in our engines and may also become subject to additional regulatory review in connection with these matters.
In connection with our announcement of our entry into the agreement in principle, we became subject to shareholder, consumer and third-party litigation regarding the matters covered by the Settlement Agreements, and we may become subject to additional litigation in connection with these matters.
The consequences resulting from the resolution of the foregoing matters are uncertain and the related expenses and reputational damage could have a material adverse impact on our results of operations, financial condition and cash flows. See NOTE 11, “COMMITMENTS AND CONTINGENCIES,” to the Condensed Consolidated Financial Statements for additional information.
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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
Approximate
Dollar Value of Shares
that May Yet Be
Purchased Under the
Plans or Programs
(in millions) (2)(1)
January 1 - January 31— $— — $2,218 
February 1 - February 2829— — — 2,218 
March 1 - March 31— — — 2,218 
Total— — —  
(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 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the $2.0 billion repurchase plan authorized in 2019. During the three months ended March 31, 2023,2024, we did not make any repurchases of common stock. The dollar value remaining available for future purchases under the 2019 program at March 31, 2023,2024, was $218 million.
Our Key Employee Stock Investment Plan allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit. We hold participants’ shares as security for the loans and would, in effect, repurchase shares only if the participant defaulted in repayment of the loan. Shares associated with participants' sales are 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. 
ITEM 5.  Other Information
Not applicable. (c) During the first quarter of 2024, none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).
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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
 
 
 
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.
104Cover 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 months ended March 31, 20232024 and March 31, 20222023, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 20232024 and March 31, 20222023, (iii) the Condensed Consolidated Balance Sheets at March 31, 20232024 and December 31, 20222023, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 20232024 and March 31, 20222023, (v) the Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Equity for the three months ended March 31, 20232024 and March 31, 20222023, and (vi) Notes to Condensed Consolidated Financial Statements and (vii) the information included in Part II. Item 5(c)..
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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:May 2, 20232024 
  
By:/s/ MARK A. SMITH By:/s/ LUTHER E. PETERS
 Mark A. Smith  Luther E. Peters
 Vice President and Chief Financial Officer  Vice President-Controller
 (Principal Financial Officer)  (Principal Accounting Officer)

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