Cummins (CMI) 10-Q 31 Oct 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Oct. 01, 2017shares
Document and Entity Information
Entity Registrant Name	CUMMINS INC.
Entity Central Index Key	26,172
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Oct. 1, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding	165,967,528
Entity Current Reporting Status	Yes

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions		3 Months Ended			9 Months Ended
		Oct. 01, 2017	Oct. 02, 2016		Oct. 01, 2017	Oct. 02, 2016
Income Statement [Abstract]
NET SALES	[1]	$ 5,285	$ 4,187		$ 14,952	$ 13,006
Cost of sales		3,946	3,108		11,236	9,674
GROSS MARGIN		1,339	1,079		3,716	3,332
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses		624	513		1,757	1,527
Research, development and engineering expenses		213	157		545	478
Equity, royalty and interest income from investees (Note 4)		95	74		301	234
Loss contingency (Note 9)		0	99	[2]	0	138	[2]
Other operating income (expense), net		32	0		55	(2)
OPERATING INCOME		629	384		1,770	1,421
Interest income		4	6		11	18
Interest expense (Note 7)		18	16		57	51
Other income (expense), net		7	8		45	34
INCOME BEFORE INCOME TAXES		622	382		1,769	1,422
Income tax expense		165	82		466	362
CONSOLIDATED NET INCOME		457	300		1,303	1,060
Less: Net income attributable to noncontrolling interests		4	11		30	44
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$ 453	$ 289		$ 1,273	$ 1,016
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic (in dollars per share)		$ 2.72	$ 1.72		$ 7.62	$ 5.99
Diluted (in dollars per share)		$ 2.71	$ 1.72		$ 7.60	$ 5.99
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)		166.3	167.8		167	169.5
Dilutive effect of stock compensation awards (in shares)		0.7	0.4		0.6	0.2
Diluted (in shares)		167	168.2		167.6	169.7
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)		$ 1.08	$ 1.025		$ 3.13	$ 2.975
Sales to nonconsolidated equity investees		$ 285	$ 275		$ 835	$ 793
[1]	Includes sales to nonconsolidated equity investees of $285 million and $835 million and $275 million and $793 million for the three and nine months ended October 1, 2017 and October 2, 2016
[2]	See Note 9 , " COMMITMENTS AND CONTINGENCIES ,"

CONDENSED CONSOLIDATED STATEME3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Statement of Comprehensive Income [Abstract]
CONSOLIDATED NET INCOME	$ 457	$ 300	$ 1,303	$ 1,060
Other comprehensive income (loss), net of tax (Note 10)
Change in pension and other postretirement defined benefit plans	16	13	52	31
Foreign currency translation adjustments	94	(29)	276	(299)
Unrealized gain (loss) on marketable securities	0	0	1	1
Unrealized gain (loss) on derivatives	(1)	7	0	(20)
Total other comprehensive income (loss), net of tax	109	(9)	329	(287)
COMPREHENSIVE INCOME	566	291	1,632	773
Less: Comprehensive income attributable to noncontrolling interests	2	14	42	41
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$ 564	$ 277	$ 1,590	$ 732

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions		Oct. 01, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents		$ 1,290	$ 1,120
Marketable securities (Note 5)		154	260
Total cash, cash equivalents and marketable securities		1,444	1,380
Accounts and notes receivable, net
Trade and other		3,532	2,803
Nonconsolidated equity investees		278	222
Inventories (Note 6)		3,146	2,675
Prepaid expenses and other current assets		656	627
Total current assets		9,056	7,707
Long-term assets
Property, plant and equipment		7,901	7,635
Accumulated depreciation		(4,085)	(3,835)
Property, plant and equipment, net		3,816	3,800
Investments and advances related to equity method investees		1,213	946
Goodwill		1,036	480
Other intangible assets, net		964	332
Pension assets		912	731
Other assets		995	1,015
Total assets		17,992	15,011
Current liabilities
Accounts payable (principally trade)		2,486	1,854
Loans payable (Note 7)	[1]	64	41
Commercial paper (Note 7)	[2]	514	212
Accrued compensation, benefits and retirement costs		674	412
Current portion of accrued product warranty (Note 8)		462	333
Current portion of deferred revenue		528	468
Other accrued expenses		968	970
Current maturities of long-term debt (Note 7)		62	35
Total current liabilities		5,758	4,325
Long-term liabilities
Long-term debt (Note 7)		1,615	1,568
Postretirement benefits other than pensions		319	329
Pensions		328	326
Other liabilities and deferred revenue		1,411	1,289
Total liabilities		9,431	7,837
Commitments and contingencies (Note 9)
Cummins Inc. shareholders' equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued		2,198	2,153
Retained earnings		11,791	11,040
Treasury stock, at cost, 56.4 and 54.2 shares		(4,849)	(4,489)
Common stock held by employee benefits trust, at cost, 0.6 and 0.7 shares		(7)	(8)
Accumulated other comprehensive loss (Note 10)		(1,504)	(1,821)
Total Cummins Inc. shareholders' equity		7,629	6,875
Noncontrolling interests		932	299
Total equity		8,561	7,174
Total liabilities and equity		$ 17,992	$ 15,011
[1]	Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practical to aggregate these notes and calculate a quarterly weighted-average interest rate.
[2]	The weighted average interest rate, inclusive of all brokerage fees, was 1.22 percent and 0.79 percent at October 1, 2017 and December 31, 2016

CONDENSED CONSOLIDATED BALANCE5

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	Oct. 01, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 2.50	$ 2.50
Common stock, shares authorized	500	500
Common stock, shares issued	222.4	222.4
Treasury stock, shares	56.4	54.2
Common stock held by employee benefits trust, shares	0.6	0.7

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions		9 Months Ended
		Oct. 01, 2017	Oct. 02, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income		$ 1,303	$ 1,060
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization		433	391
Deferred income taxes		26	60
Equity in income of investees, net of dividends		(166)	(94)
Pension contributions in excess of expense (Note 3)		(63)	(92)
Other post retirement benefits payments in excess of expense (Note 3)		(4)	(16)
Stock-based compensation expense		34	28
Restructuring payments		0	(53)
Loss contingency (Note 9)		0	138
Translation and hedging activities		61	(39)
Changes in current assets and liabilities, net of acquisitions
Accounts and notes receivable		(722)	(112)
Inventories		(401)	(150)
Other current assets		(28)	138
Accounts payable		567	101
Accrued expenses		369	(279)
Changes in other liabilities and deferred revenue		177	188
Other, net		(115)	45
Net cash provided by operating activities		1,471	1,314
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(282)	(312)
Investments in internal use software		(59)	(42)
Proceeds from disposals of property, plant and equipment		104	11
Investments in and advances to equity investees		(71)	(29)
Acquisitions of businesses, net of cash acquired (Note 11)		(600)	(1)
Investments in marketable securities—acquisitions (Note 5)		(106)	(447)
Investments in marketable securities—liquidations (Note 5)	[1]	218	291
Cash flows from derivatives not designated as hedges		9	(64)
Other, net		1	3
Net cash used in investing activities		(786)	(590)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		4	111
Net borrowings of commercial paper		302	273
Payments on borrowings and capital lease obligations		(38)	(156)
Net borrowings under short-term credit agreements		19	25
Distributions to noncontrolling interests		(29)	(42)
Dividend payments on common stock		(522)	(505)
Repurchases of common stock		(391)	(745)
Other, net		55	(6)
Net cash used in financing activities		(600)	(1,045)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		85	(139)
Net increase (decrease) in cash and cash equivalents		170	(460)
Cash and cash equivalents at beginning of year		1,120	1,711
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$ 1,290	$ 1,251
[1]	Gross realized gains and losses from the sale of available-for-sale securities were immaterial.

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Common Stock Held in Trust	Accumulated Other Comprehensive Loss	Total Cummins Inc. Shareholders' Equity	Noncontrolling Interests
BALANCE at Dec. 31, 2015	$ 7,750	$ 556	$ 1,622	$ 10,322	$ (3,735)	$ (11)	$ (1,348)	$ 7,406	$ 344
Increase (Decrease) in Shareholders' Equity
Net income	1,060			1,016				1,016	44
Other comprehensive income (loss), net of tax (Note 10)	(287)						(284)	(284)	(3)
Issuance of common stock	5		5					5
Employee benefits trust activity	22		19			3		22
Repurchases of common stock	(745)				(745)			(745)
Cash dividends on common stock	(505)			(505)				(505)
Distributions to noncontrolling interests	(49)								(49)
Stock based awards, net	5		(7)		12			5
Other shareholder transactions	8		14					14	(6)
BALANCE at Oct. 02, 2016	7,264	556	1,653	10,833	(4,468)	(8)	(1,632)	6,934	330
BALANCE at Dec. 31, 2016	7,174	556	1,597	11,040	(4,489)	(8)	(1,821)	6,875	299
Increase (Decrease) in Shareholders' Equity
Net income	1,303			1,273				1,273	30
Other comprehensive income (loss), net of tax (Note 10)	329						317	317	12
Issuance of common stock	5		5					5
Employee benefits trust activity	15		14			1		15
Repurchases of common stock	(391)				(391)			(391)
Cash dividends on common stock	(522)			(522)				(522)
Distributions to noncontrolling interests	(29)								(29)
Stock based awards, net	33		2		31			33
Acquisition of business	600								600
Other shareholder transactions	44		24					24	20
BALANCE at Oct. 01, 2017	$ 8,561	$ 556	$ 1,642	$ 11,791	$ (4,849)	$ (7)	$ (1,504)	$ 7,629	$ 932

NATURE OF OPERATIONS

NATURE OF OPERATIONS	9 Months Ended
	Oct. 01, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF OPERATIONS	NOTE 1. NATURE OF OPERATIONS Cummins Inc. (“Cummins,” “we,” “our” or “us”) was founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, as one of the first diesel engine manufacturers. We changed our name to Cummins Inc. in 2001. We are a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products, including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, transmissions and electric power generation systems. We sell our products to original equipment manufacturers (OEMs), distributors and other customers worldwide. We serve our customers through a network of approximately 600 wholly-owned and independent distributor locations and over 7,400 dealer locations in more than 190 countries and territories.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Oct. 01, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	NOTE 2. BASIS OF PRESENTATION 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 have been 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 for interim financial information. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations. These interim condensed financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 . Our interim period financial results for the three and nine 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 disclosures required by GAAP. Reclassifications Certain amounts for prior year periods have been reclassified to conform to the presentation of the current year. Use of Estimates in Preparation of Financial Statements Preparation of financial statements in conformity with GAAP 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 and are used for, but not limited to, allowance for doubtful accounts, estimates of future cash flows and other assumptions associated with goodwill and long-lived asset impairment tests, useful lives for depreciation and amortization, warranty programs, determination of discount rate and other assumptions for pension and other postretirement benefit costs, income taxes and deferred tax valuation allowances, lease classification and contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates. Reporting Period Our reporting period usually ends on the Sunday closest to the last day of the quarterly calendar period. The third quarters of 2017 and 2016 ended on October 1 and October 2, respectively. Our fiscal year ends on December 31, regardless of the day of the week on which December 31 falls. Weighted-average Diluted Shares Outstanding The weighted-average diluted common shares outstanding excludes the anti-dilutive effect of certain stock options since such options had an exercise price in excess of the monthly average market value of our common stock. The options excluded from diluted earnings per share were as follows: Three months ended Nine months ended October 1, October 2, October 1, October 2, Options excluded 3,728 936,857 42,139 1,295,664

PENSION AND OTHER POSTRETIREMEN

PENSION AND OTHER POSTRETIREMENT BENEFITS	9 Months Ended
	Oct. 01, 2017
Retirement Benefits [Abstract]
PENSION AND OTHER POSTRETIREMENT BENEFITS	NOTE 3. PENSION AND OTHER POSTRETIREMENT BENEFITS We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement plans. Contributions to these plans were as follows: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Defined benefit pension plans Voluntary contribution $ 41 $ 16 $ 125 $ 101 Mandatory contribution — 5 — 23 Defined benefit pension contributions $ 41 $ 21 $ 125 $ 124 Other postretirement plans $ 1 $ 4 $ 19 $ 32 Defined contribution pension plans $ 19 $ 17 $ 67 $ 53 We anticipate making additional defined benefit pension contributions during the remainder of 2017 of $10 million for our U.S. and U.K. pension plans. Approximately $134 million of the estimated $135 million of pension contributions for the full year are voluntary. 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 2017 net periodic pension cost to approximate $83 million . The components of net periodic pension and other postretirement benefit costs under our plans were as follows: Pension U.S. Plans U.K. Plans Other Postretirement Benefits Three months ended In millions October 1, October 2, October 1, October 2, October 1, October 2, Service cost $ 27 $ 22 $ 7 $ 5 $ — $ — Interest cost 26 26 10 13 3 4 Expected return on plan assets (50 ) (50 ) (18 ) (17 ) — — Recognized net actuarial loss 10 9 10 3 2 1 Net periodic benefit cost $ 13 $ 7 $ 9 $ 4 $ 5 $ 5 Pension U.S. Plans U.K. Plans Other Postretirement Benefits Nine months ended In millions October 1, October 2, October 1, October 2, October 1, October 2, Service cost $ 80 $ 68 $ 20 $ 16 $ — $ — Interest cost 79 82 30 39 10 12 Expected return on plan assets (153 ) (152 ) (52 ) (55 ) — — Recognized net actuarial loss 28 23 30 11 5 4 Net periodic benefit cost $ 34 $ 21 $ 28 $ 11 $ 15 $ 16

EQUITY, ROYALTY AND INTEREST IN

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES	9 Months Ended
	Oct. 01, 2017
Equity Method Investments and Joint Ventures [Abstract]
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES	NOTE 4. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the reporting periods was as follows: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Distribution entities Komatsu Cummins Chile, Ltda. $ 8 $ 8 $ 23 $ 26 North American distributors — 7 — 18 All other distributors (1 ) 1 (1 ) 2 Manufacturing entities Beijing Foton Cummins Engine Co., Ltd. 24 19 79 59 Dongfeng Cummins Engine Company, Ltd. 15 10 56 32 Chongqing Cummins Engine Company, Ltd. 11 11 30 28 All other manufacturers 27 8 78 40 Cummins share of net income 84 64 265 205 Royalty and interest income 11 10 36 29 Equity, royalty and interest income from investees $ 95 $ 74 $ 301 $ 234

MARKETABLE SECURITIES

MARKETABLE SECURITIES	9 Months Ended
	Oct. 01, 2017
Investments, Debt and Equity Securities [Abstract]
MARKETABLE SECURITIES	NOTE 5. MARKETABLE SECURITIES A summary of marketable securities, all of which are classified as current, was as follows: October 1, 2017 December 31, 2016 In millions Cost Gross unrealized Estimated Cost Gross unrealized Estimated Available-for-sale (1) Debt mutual funds $ 139 $ — $ 139 $ 132 $ — $ 132 Bank debentures — — — 114 — 114 Equity mutual funds 12 2 14 12 — 12 Government debt securities 1 — 1 2 — 2 Total marketable securities $ 152 $ 2 $ 154 $ 260 $ — $ 260 ____________________________________ (1) All marketable securities are classified as Level 2 securities. 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 first nine months of 2017 and for the year ended 2016. A description of the valuation techniques and inputs used for our Level 2 fair value measures was as follows: • Debt mutual funds — The fair value measure for the vast majority of these investments is the daily net asset value 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. • Bank debentures — 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 institutions’ month-end statement. • Equity mutual funds — The fair value measure for these investments is the net asset value 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. • Government debt securities — The fair value measure for these securities is broker quotes received from reputable firms. These securities are infrequently traded on a national stock exchange and these values are used on a test basis to corroborate our Level 2 input measure. The proceeds from sales and maturities of marketable securities and gross realized gains and losses from the sale of available-for-sale securities were as follows: Nine months ended In millions October 1, October 2, Proceeds from sales and maturities of marketable securities (1) $ 218 $ 291 ____________________________________ (1) Gross realized gains and losses from the sale of available-for-sale securities were immaterial. The fair value of available-for-sale investments in debt securities that utilize a Level 2 fair value measure is shown by contractual maturity below: Contractual Maturity (In millions) October 1, 1 year or less $ 139 1 - 5 years 1 Total $ 140

INVENTORIES

INVENTORIES	9 Months Ended
	Oct. 01, 2017
Inventory Disclosure [Abstract]
INVENTORIES	NOTE 6. INVENTORIES Inventories are stated at the lower of cost or market. Inventories included the following: In millions October 1, December 31, Finished products $ 2,027 $ 1,779 Work-in-process and raw materials 1,243 1,005 Inventories at FIFO cost 3,270 2,784 Excess of FIFO over LIFO (124 ) (109 ) Total inventories $ 3,146 $ 2,675

DEBT

DEBT	9 Months Ended
	Oct. 01, 2017
Debt Disclosure [Abstract]
DEBT	NOTE 7. DEBT Loans Payable and Commercial Paper Loans payable, commercial paper and the related weighted-average interest rates were as follows: In millions October 1, 2017 December 31, 2016 Loans payable (1) $ 64 $ 41 Commercial paper (2) 514 212 ____________________________________ (1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practical to aggregate these notes and calculate a quarterly weighted-average interest rate. (2) The weighted average interest rate, inclusive of all brokerage fees, was 1.22 percent and 0.79 percent at October 1, 2017 and December 31, 2016 , respectively. Revolving Credit Facility On September 5, 2017, we entered into a 364-day credit facility that allows us to borrow up to $1 billion of additional unsecured funds at any time through September 2018. We have access to credit facilities that total $2.75 billion , including the new 364-day facility and the $1.75 billion facility that expires on November 13, 2020. We intend to maintain credit facilities of a similar aggregate amount by renewing or replacing these facilities before expiration. Revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings, letters of credit and general corporate purposes. Long-term Debt A summary of long-term debt was as follows: In millions October 1, December 31, Long-term debt Senior notes, 3.65%, due 2023 $ 500 $ 500 Debentures, 6.75%, due 2027 58 58 Debentures, 7.125%, due 2028 250 250 Senior notes, 4.875%, due 2043 500 500 Debentures, 5.65%, due 2098 (effective interest rate 7.48%) 165 165 Other debt 91 51 Unamortized discount (54 ) (56 ) Fair value adjustments due to hedge on indebtedness 42 47 Capital leases 125 88 Total long-term debt 1,677 1,603 Less: Current maturities of long-term debt 62 35 Long-term debt $ 1,615 $ 1,568 Principal payments required on long-term debt during the next five years are as follows: In millions 2017 2018 2019 2020 2021 Principal payments $ 23 $ 59 $ 51 $ 12 $ 6 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 millions October 1, December 31, Fair value of total debt (1) $ 2,528 $ 2,077 Carrying value of total debt 2,255 1,856 _________________________________________________ (1) The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY

PRODUCT WARRANTY LIABILITY	9 Months Ended
	Oct. 01, 2017
Product Warranties Disclosures [Abstract]
PRODUCT WARRANTY LIABILITY	NOTE 8. PRODUCT WARRANTY LIABILITY A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs was as follows: In millions October 1, October 2, Balance, beginning of year $ 1,414 $ 1,404 Provision for warranties issued 446 256 Deferred revenue on extended warranty contracts sold 164 179 Payments (296 ) (291 ) Amortization of deferred revenue on extended warranty contracts (161 ) (148 ) Changes in estimates for pre-existing warranties 71 22 Foreign currency translation 5 (6 ) Balance, end of period $ 1,643 $ 1,416 Warranty related deferred revenues and the long-term portion of the warranty liabilities on our October 1, 2017, balance sheet were as follows: In millions October 1, Balance Sheet Location Deferred revenue related to extended coverage programs Current portion $ 229 Current portion of deferred revenue Long-term portion 519 Other liabilities and deferred revenue Total $ 748 Long-term portion of warranty liability $ 433 Other liabilities and deferred revenue

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Oct. 01, 2017
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 9. COMMITMENTS AND CONTINGENCIES 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; and environmental matters. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals pursuant to GAAP 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. Loss Contingencies Third Party Aftertreatment Engine systems sold in the U.S. must be certified to comply with the Environmental Protection Agency (EPA) and California Air Resources Board (CARB) emission standards. EPA and CARB regulations require that in-use testing be performed on vehicles by the emission certificate holder and reported to the EPA and CARB in order to ensure ongoing compliance with these emission standards. We are the holder of this emission certificate for our engines, including engines installed in certain vehicles with one customer for which we did not also manufacture or sell the emission aftertreatment system. During 2015, a quality issue in certain of these third party aftertreatment systems caused some of our inter-related engines to fail in-use emission testing. In the fourth quarter of 2015, the vehicle manufacturer made a request that we assist in the design and bear the financial cost of a field campaign (Campaign) to address the technical issue purportedly causing some vehicles to fail the in-use testing. While we are not responsible for the warranty issues related to a component that we did not manufacture or sell, as the emission compliance certificate holder, we are responsible for proposing a remedy to the EPA and CARB. As a result, we have proposed actions to the agencies that we believe will address the emission failures. As the certificate holder, we expect to participate in the cost of the proposed voluntary Campaign and recorded a charge of $60 million in 2015. The Campaign design was finalized with our OEM customer, reviewed with the EPA and submitted for final approval in 2016. We concluded based upon additional in-use emission testing performed in 2016 that the Campaign should be expanded to include a larger population of vehicles manufactured by this one OEM. We recorded additional charges of $39 million and $99 million in the second and third quarter, respectively, in 2016 to reflect the estimated cost of our overall participation in the Campaign. This charge is reflected in a separate line item on our Condensed Consolidated Statements of Income . We continue to work with our OEM customer to resolve the allocation of costs for the Campaign, including pending litigation between the parties. The Campaign is not expected to be completed for some time and our final cost could differ from the amount we have recorded. We do not currently expect any fines or penalties from the EPA or CARB related to this matter. We are currently reimbursing our customer for 50 percent of the campaign expenses pending final resolution in the litigation or pre-suit settlement. This began in the fourth quarter of 2016 with a combination of cash and credit memos. The remaining accrual of $148 million is included in ''Other accrued expenses'' in our Condensed Consolidated Balance Sheets. Engine System During 2017, the CARB and U.S. EPA began selecting certain of our pre-2013 model year engine systems for additional emissions testing. We have been notified that a portion of the CARB and EPA selected engine systems have failed emissions testing due to the unexpected degradation of an aftertreatment component. Although we have no official notice from the CARB or EPA on these engine systems to date, we are working with the agencies on a resolution of these matters. We are developing and testing solutions to address the technical issues, which could include a combination of calibration changes, service practices and hardware changes. We recorded a charge of $29 million to "cost of sales" in our Condensed Consolidated Statements of Income in the third quarter of 2017 for the expected cost of field campaigns to repair some of these engine systems. In addition, we are currently evaluating other engine systems for model years 2010 through 2015 that could potentially be subject to similar degradation issues. At this point in time, we have not yet determined the impact to other model years and engine systems or the percentage of the engine system populations affected. Because this remains under review with a number of yet unresolved variables, we are not yet able to estimate the outcome for these matters. It is possible, however, that they could have a material effect on our results of operations in the periods in which the uncertainties are resolved. We do not currently expect any fines or penalties from the EPA or CARB related to this matter. 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 October 1, 2017, the maximum potential loss related to these guarantees was $50 million . We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At October 1, 2017, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $101 million , of which $29 million relates to a contract with a components supplier that extends to 2018 and $28 million relates to a contract with a power systems supplier that extends to 2019. Most of these arrangements enable us to secure critical components. We do not currently anticipate paying any penalties under these contracts. We enter into physical forward contracts with suppliers of platinum, palladium and copper to purchase minimum volumes of the commodities at contractually stated prices for various periods, not to exceed 2 years . At October 1, 2017, the total commitments under these contracts were $23 million . These arrangements enable us to fix the prices of these commodities, which otherwise are subject to market volatility. 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 $104 million at October 1, 2017 . 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.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	9 Months Ended
	Oct. 01, 2017
Equity [Abstract]
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	NOTE 10. ACCUMULATED OTHER COMPREHENSIVE LOSS Following are the changes in accumulated other comprehensive income (loss) by component for the three months ended: Three months ended In millions Change in Foreign Unrealized gain Unrealized gain Total Noncontrolling Total other comprehensive income (loss) Balance at July 3, 2016 $ (636 ) $ (960 ) $ (1 ) $ (23 ) $ (1,620 ) Other comprehensive income before reclassifications Before tax amount 5 (51 ) — (4 ) (50 ) $ 3 $ (47 ) Tax benefit (expense) (1 ) 19 — 1 19 — 19 After tax amount 4 (32 ) — (3 ) (31 ) 3 (28 ) Amounts reclassified from accumulated other comprehensive loss (1)(2) 9 — — 10 19 — 19 Net current period other comprehensive income (loss) 13 (32 ) — 7 (12 ) $ 3 $ (9 ) Balance at October 2, 2016 $ (623 ) $ (992 ) $ (1 ) $ (16 ) $ (1,632 ) Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Other comprehensive income before reclassifications Before tax amount — 106 — (6 ) 100 $ (2 ) $ 98 Tax benefit (expense) — (10 ) 1 2 (7 ) — (7 ) After tax amount — 96 1 (4 ) 93 (2 ) 91 Amounts reclassified from accumulated other comprehensive loss (1)(2) 16 — (1 ) 3 18 — 18 Net current period other comprehensive income (loss) 16 96 — (1 ) 111 $ (2 ) $ 109 Balance at October 1, 2017 $ (633 ) $ (863 ) $ — $ (8 ) $ (1,504 ) ____________________________________ (1) Amounts are net of tax. (2) Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure. Following are the changes in accumulated other comprehensive income (loss) by component for the nine months ended: Nine months ended In millions Change in Foreign Unrealized gain Unrealized gain Total Noncontrolling Total other comprehensive income (loss) Balance at December 31, 2015 $ (654 ) $ (696 ) $ (2 ) $ 4 $ (1,348 ) Other comprehensive income before reclassifications Before tax amount 5 (316 ) 1 (40 ) (350 ) $ (3 ) $ (353 ) Tax benefit (expense) (1 ) 20 — 7 26 — 26 After tax amount 4 (296 ) 1 (33 ) (324 ) (3 ) (327 ) Amounts reclassified from accumulated other comprehensive loss (1)(2) 27 — — 13 40 — 40 Net current period other comprehensive income (loss) 31 (296 ) 1 (20 ) (284 ) $ (3 ) $ (287 ) Balance at October 2, 2016 $ (623 ) $ (992 ) $ (1 ) $ (16 ) $ (1,632 ) Balance at December 31, 2016 $ (685 ) $ (1,127 ) $ (1 ) $ (8 ) $ (1,821 ) Other comprehensive income before reclassifications Before tax amount 8 286 2 (14 ) 282 $ 12 $ 294 Tax benefit (expense) (3 ) (22 ) — 5 (20 ) — (20 ) After tax amount 5 264 2 (9 ) 262 12 274 Amounts reclassified from accumulated other comprehensive loss (1)(2) 47 — (1 ) 9 55 — 55 Net current period other comprehensive income (loss) 52 264 1 — 317 $ 12 $ 329 Balance at October 1, 2017 $ (633 ) $ (863 ) $ — $ (8 ) $ (1,504 ) ____________________________________ (1) Amounts are net of tax. (2) Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

ACQUISITION

ACQUISITION	9 Months Ended
	Oct. 01, 2017
Business Combinations [Abstract]
Business Combination Disclosure [Text Block]	NOTE 11. ACQUISITION In April 2017, we entered into an agreement to form a joint venture with Eaton Corporation PLC (Eaton), which closed on July 31, 2017 (the acquisition date). We purchased a 50 percent interest in the new venture named Eaton Cummins Automated Transmission Technologies for $600 million in cash. In addition, each partner contributed $20 million for working capital. The joint venture will design, assemble, sell and support medium-duty and heavy-duty automated transmissions for the commercial vehicle market, including new product launches. The new generation products (Procision and Endurant) were launched in 2016 and 2017, respectively, and are owned by the joint venture. Eaton will continue to manufacture and sell the old generation products to the joint venture which will be marked up and sold to end customers. Eaton will also sell certain transmission components to the joint venture at prices approximating market rates. In addition, Eaton will provide certain manufacturing and administrative services to the joint venture, including but not limited to manufacturing labor in Mexico, information technology services, accounting services and purchasing services, at prices approximating market rates. Pro forma financial information was not provided as historical activity related to the products contributed to the joint venture was not material. We consolidated the results of the joint venture in our Components segment as we have a majority voting interest in the venture by virtue of a tie-breaking vote on the joint venture's board of directors. The joint venture had an enterprise value at inception of $1.2 billion . Due to the structure of the joint venture and equal sharing of economic benefits, we did not apply a discount for lack of control to the noncontrolling interests. The preliminary purchase price allocation was as follows: In millions Inventory 3 Fixed assets 57 Intangible assets Customer relationships 424 Technology 172 Goodwill 545 Liabilities (1 ) Total business valuation 1,200 Less: Noncontrolling interest 600 Total purchase consideration $ 600 Customer relationship assets represent the value of the long-term strategic relationship the business has with its significant customers, which we are amortizing over 25 years. The assets were valued using an income approach, specifically the "multi-period excess earnings" method, which identifies an estimated stream of revenues and expenses for a particular group of assets from which deductions of portions of the projected economic benefits, attributable to assets other than the subject asset (contributory assets), are deducted in order to isolate the prospective earnings of the subject asset. This value is considered a level 3 measurement under the GAAP fair value hierarchy. Key assumptions used in the valuation of customer relationships include: (1) a rate of return of 10 percent and (2) an attrition rate of 3 percent . Technology assets primarily represent the associated patents and know how related to the Endurant and Procision next generation automated transmissions, which we are amortizing over 15 years. These assets were valued using the "relief-from-royalty" method, which is a combination of both the income approach and market approach that values a subject asset based on an estimate of the "relief" from the royalty expense that would be incurred if the subject asset were licensed from a third party. Key assumptions impacting this value include: (1) a market royalty rate of 5 percent , (2) a rate of return of 10 percent and (3) an economic depreciation rate of 7.5 percent . This value is considered a level 3 measurement under GAAP fair value hierarchy. Annual amortization of the intangible assets for the next 5 years is expected to approximate $28 million . Goodwill was determined based on the residual difference between the fair value of consideration transferred and the value assigned to tangible and intangible assets and liabilities. Approximately $31 million of the goodwill is deductible for tax purposes. Among the factors contributing to a purchase price resulting in the recognition of goodwill is the ability to integrate and optimize the engine and transmission development to deliver the world’s best power train, to realize synergies in service and aftermarket growth and to utilize our strength in international markets where automated transmission adoption rates are very low. Included in our third quarter results were revenues of $69 million and a net loss of $5 million

OPERATING SEGMENTS

OPERATING SEGMENTS	9 Months Ended
	Oct. 01, 2017
Segment Reporting [Abstract]
OPERATING SEGMENTS	NOTE 12. 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 President and Chief Operating Officer. Our reportable operating segments consist of Engine, Distribution, Components and Power Systems. This reporting structure is organized according to the products and markets each segment serves . The Engine segment produces engines (15 liters and less in size) 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 Components segment sells filtration products, aftertreatment systems, turbochargers, fuel systems and transmissions. 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. We use EBIT (defined as earnings before interest expense, income taxes and noncontrolling interests) as a primary basis for the CODM to evaluate the performance of each of our operating segments. 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 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 debt-related items, actuarial gains or losses, prior service costs or credits, changes in cash surrender value of corporate owned life insurance or income taxes to individual segments. EBIT may not be consistent with measures used by other companies. Summarized financial information regarding our reportable operating segments is shown in the table below: In millions Engine Distribution Components (1) Power Systems Total Segment Intersegment Eliminations (2) Total Three months ended October 1, 2017 External sales $ 1,783 $ 1,748 $ 1,139 $ 615 $ 5,285 $ — $ 5,285 Intersegment sales 553 5 394 441 1,393 (1,393 ) — Total sales 2,336 1,753 1,533 1,056 6,678 (1,393 ) 5,285 Depreciation and amortization (3) 47 29 42 30 148 — 148 Research, development and engineering expenses 83 6 63 61 213 — 213 Equity, royalty and interest income from investees 58 11 12 14 95 — 95 Interest income 1 2 — 1 4 — 4 EBIT 229 91 217 81 618 22 640 Three months ended October 2, 2016 External sales $ 1,357 $ 1,497 $ 824 $ 509 $ 4,187 $ — $ 4,187 Intersegment sales 502 7 319 347 1,175 (1,175 ) — Total sales 1,859 1,504 1,143 856 5,362 (1,175 ) 4,187 Depreciation and amortization (3) 42 28 32 29 131 — 131 Research, development and engineering expenses 56 3 54 44 157 — 157 Equity, royalty and interest income from investees 38 19 9 8 74 — 74 Loss contingency (4) 99 — — — 99 — 99 Interest income 3 1 1 1 6 — 6 EBIT 89 96 148 59 392 6 398 Nine months ended October 1, 2017 External sales $ 4,951 $ 5,101 $ 3,183 $ 1,717 $ 14,952 $ — $ 14,952 Intersegment sales 1,715 19 1,148 1,238 4,120 (4,120 ) — Total sales 6,666 5,120 4,331 2,955 19,072 (4,120 ) 14,952 Depreciation and amortization (3) 137 90 117 87 431 — 431 Research, development and engineering expenses 200 14 170 161 545 — 545 Equity, royalty and interest income from investees 186 35 40 40 301 — 301 Interest income 4 4 1 2 11 — 11 EBIT 735 287 586 199 1,807 19 1,826 Nine months ended October 2, 2016 External sales $ 4,350 $ 4,493 $ 2,654 $ 1,509 $ 13,006 $ — $ 13,006 Intersegment sales 1,487 18 1,005 1,076 3,586 (3,586 ) — Total sales 5,837 4,511 3,659 2,585 16,592 (3,586 ) 13,006 Depreciation and amortization (3) 122 85 95 87 389 — 389 Research, development and engineering expenses 166 10 161 141 478 — 478 Equity, royalty and interest income from investees 120 56 29 29 234 — 234 Loss contingency (4) 138 — — — 138 — 138 Interest income 8 3 3 4 18 — 18 EBIT 492 270 501 195 1,458 15 1,473 ____________________________________ (1) The 2017 disclosures include Eaton Cummins Automated Transmission Technologies joint venture results consolidated during the third quarter of 2017. See Note 11 , " ACQUISITION ," for additional information. (2) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and nine months ended October 1, 2017 and October 2, 2016 . (3) 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 Income as "Interest expense." The amortization of debt discount and deferred costs were $2 million and $2 million for the nine months ended October 1, 2017 and October 2, 2016, respectively. (4) See Note 9 , " COMMITMENTS AND CONTINGENCIES ," for additional information. A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Income is shown in the table below: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Total EBIT $ 640 $ 398 $ 1,826 $ 1,473 Less: Interest expense 18 16 57 51 Income before income taxes $ 622 $ 382 $ 1,769 $ 1,422

RECENTLY ADOPTED AND RECENTLY I

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Oct. 01, 2017
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	NOTE 13. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board (FASB) amended its standards related to accounting for stock compensation, which became effective for us beginning January 1, 2017. The amendment replaced the requirement to record excess tax benefits and certain tax deficiencies in additional paid-in capital by recording all excess tax benefits and tax deficiencies as income tax expense / benefit in the Condensed Consolidated Statements of Income and was adopted prospectively. Excess tax benefits and deficiencies are required to be recorded as discrete items in the period in which they occur and were not material for the three and nine months ended October 1, 2017. In addition, the standard impacted our Condensed Consolidated Statements of Cash Flows retrospectively, as excess tax benefits are now required to be presented as an operating activity and the cash paid to tax authorities is required to be presented as a financing activity. This resulted in a net reclassification of $4 million from operating to financing activities for the nine months ended October 2, 2016. Finally, in accordance with the standard, we elected to continue our historical approach of estimating forfeitures during the award's vesting period and adjusting our estimate when it is no longer probable that the employee will fulfill the service condition. The adoption of the standard was not material to our diluted earnings per common share. Accounting Pronouncements Issued But Not Yet Effective In August 2017, the FASB amended its standards related to accounting for derivatives and hedging. These amendments allow the initial hedge effectiveness assessment to be performed by the end of the first quarter in which the hedge is designated rather than concurrently with entering into the hedge transaction. The changes also expand the use of a periodic qualitative hedge effectiveness assessment in lieu of an ongoing quantitative assessment performed throughout the life of the hedge. The revision removes the requirement to record ineffectiveness on cash flow hedges through the income statement when a hedge is considered highly effective, instead deferring all related hedge gains and losses in "Other comprehensive income" until the hedged item impacts earnings. The modifications permit hedging the contractually-specified price of a component of a commodity purchase and revises certain disclosure requirements. The amendments are effective January 1, 2019 and early adoption is permitted in any interim period or fiscal year prior to the effective date. The revised standard is required to be adopted on a modified retrospective basis for any cash flow or net investment hedge relationships that exist on the date of adoption and prospectively for disclosures. We do not expect the amendments to have a material effect on our Consolidated Financial Statements and are still evaluating early adoption. In March 2017, the FASB amended its standards related to the presentation of pension and other postretirement benefit costs in the financial statements. Under the new standard, we will be required to separate service costs from all other elements of pension costs and reflect the other elements of pension costs outside of operating income in our Consolidated Statements of Income . In addition, the standard will limit the amount eligible for capitalization (into inventory or self-constructed assets) to the amount of service cost. This portion of the standard will be applied on a prospective basis. The remainder of the new standard is effective for us on a retrospective basis beginning January 1, 2018. While we are still evaluating the impact of this standard, the change in presentation will likely result in a decrease in operating income primarily due to the requirement to present the expected return on plan assets outside of operating income. In August 2016, the FASB amended its standards related to the classification of certain cash receipts and cash payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. We do not expect adoption of this standard to have a material impact on our Consolidated Statements of Cash Flows. In June 2016, the FASB amended its standards related to accounting for credit losses on financial instruments. This amendment introduces new guidance for accounting for credit losses on instruments including trade receivables and held-to-maturity debt securities. The new rules are effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We do not expect adoption of this standard to have a material impact on our Consolidated Financial Statements. In February 2016, the FASB amended its standards related to the accounting for leases. Under the new standard, lessees will now be required to recognize substantially all leases on the balance sheet as both a right-of-use-asset and a liability. The standard will continue to have two types of leases for income statement recognition purposes: operating leases and finance leases. Operating leases will result in the recognition of a single lease expense on a straight-line basis over the lease term similar to the treatment for operating leases under today's standards. Finance leases will result in an accelerated expense similar to the accounting for capital leases under today's standards. The determination of a lease classification as operating or finance will occur in a manner similar to today's standard. The new standard also contains amended guidance regarding the identification of embedded leases in service contracts and the identification of lease and non-lease components of an arrangement. The new standard is effective on January 1, 2019, with early adoption permitted. We are still evaluating the impact the standard could have on our Consolidated Financial Statements , including our internal controls over financial reporting. While we have not yet quantified the amount, we do expect the standard will have a material impact on our Consolidated Balance Sheets due to the recognition of additional assets and liabilities for operating leases. In January 2016, the FASB amended its standards related to the accounting for certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The new rules will become effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. We are in the process of evaluating the impact the amendment will have on our Consolidated Financial Statements . In May 2014, the FASB amended its standards related to revenue recognition which replaces all existing revenue recognition guidance and provides a single, comprehensive model for all contracts with customers. The revised standard contains principles to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that we will recognize revenue to depict the transfer of goods or services to customers at an amount that we expect to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price and allowing estimation of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in those judgments as well as assets recognized from costs incurred to fulfill these contracts. We will adopt the standard using the modified retrospective approach. $30 million and $35 million for the licensing change. We do not expect a material impact on any individual year from this change. Consolidated Financial Statements, including our internal controls over financial reporting. The revenue recognition disclosures will significantly expand under the new standard, specifically around the quantitative and qualitative information about performance obligations, changes in contract assets and liabilities and disaggregation of revenue.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Oct. 01, 2017
Subsequent Events [Abstract]
Subsequent Events	NOTE 14. SUBSEQUENT EVENT On October 12, 2017, we entered into an asset purchase agreement with Brammo Inc., an engineer and manufacturer of lithium ion batteries primarily related to the utility vehicle markets, for approximately $70 million to be paid in cash at closing. In addition to the closing consideration, the agreement contains an earnout based on future results of the acquired business, which could result in a maximum additional $100 million payment to the former owners. The majority of the purchase price will likely be assigned to intangible assets and goodwill. We expect the transaction to close in the fourth quarter of 2017.

BASIS OF PRESENTATION (Tables)

BASIS OF PRESENTATION (Tables)	9 Months Ended
	Oct. 01, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Options excluded from diluted earnings per share	The options excluded from diluted earnings per share were as follows: Three months ended Nine months ended October 1, October 2, October 1, October 2, Options excluded 3,728 936,857 42,139 1,295,664

PENSION AND OTHER POSTRETIREM23

PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)	9 Months Ended
	Oct. 01, 2017
Retirement Benefits [Abstract]
Schedule of Defined Benefit Plans Disclosures Cash Contributions	Contributions to these plans were as follows: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Defined benefit pension plans Voluntary contribution $ 41 $ 16 $ 125 $ 101 Mandatory contribution — 5 — 23 Defined benefit pension contributions $ 41 $ 21 $ 125 $ 124 Other postretirement plans $ 1 $ 4 $ 19 $ 32 Defined contribution pension plans $ 19 $ 17 $ 67 $ 53
Components of net periodic pension and other postretirement benefit cost	The components of net periodic pension and other postretirement benefit costs under our plans were as follows: Pension U.S. Plans U.K. Plans Other Postretirement Benefits Three months ended In millions October 1, October 2, October 1, October 2, October 1, October 2, Service cost $ 27 $ 22 $ 7 $ 5 $ — $ — Interest cost 26 26 10 13 3 4 Expected return on plan assets (50 ) (50 ) (18 ) (17 ) — — Recognized net actuarial loss 10 9 10 3 2 1 Net periodic benefit cost $ 13 $ 7 $ 9 $ 4 $ 5 $ 5 Pension U.S. Plans U.K. Plans Other Postretirement Benefits Nine months ended In millions October 1, October 2, October 1, October 2, October 1, October 2, Service cost $ 80 $ 68 $ 20 $ 16 $ — $ — Interest cost 79 82 30 39 10 12 Expected return on plan assets (153 ) (152 ) (52 ) (55 ) — — Recognized net actuarial loss 28 23 30 11 5 4 Net periodic benefit cost $ 34 $ 21 $ 28 $ 11 $ 15 $ 16

EQUITY, ROYALTY AND INTEREST 24

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Tables)	9 Months Ended
	Oct. 01, 2017
Equity Method Investments and Joint Ventures [Abstract]
Equity, royalty and interest income from investees	Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Income for the reporting periods was as follows: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Distribution entities Komatsu Cummins Chile, Ltda. $ 8 $ 8 $ 23 $ 26 North American distributors — 7 — 18 All other distributors (1 ) 1 (1 ) 2 Manufacturing entities Beijing Foton Cummins Engine Co., Ltd. 24 19 79 59 Dongfeng Cummins Engine Company, Ltd. 15 10 56 32 Chongqing Cummins Engine Company, Ltd. 11 11 30 28 All other manufacturers 27 8 78 40 Cummins share of net income 84 64 265 205 Royalty and interest income 11 10 36 29 Equity, royalty and interest income from investees $ 95 $ 74 $ 301 $ 234

MARKETABLE SECURITIES (Tables)

MARKETABLE SECURITIES (Tables)	9 Months Ended
	Oct. 01, 2017
Investments, Debt and Equity Securities [Abstract]
Summary of marketable securities	A summary of marketable securities, all of which are classified as current, was as follows: October 1, 2017 December 31, 2016 In millions Cost Gross unrealized Estimated Cost Gross unrealized Estimated Available-for-sale (1) Debt mutual funds $ 139 $ — $ 139 $ 132 $ — $ 132 Bank debentures — — — 114 — 114 Equity mutual funds 12 2 14 12 — 12 Government debt securities 1 — 1 2 — 2 Total marketable securities $ 152 $ 2 $ 154 $ 260 $ — $ 260 ____________________________________ (1) All marketable securities are classified as Level 2 securities. 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 first nine months of 2017 and for the year ended 2016.
Schedule of proceeds from sales and maturities and gross realized gains and losses	The proceeds from sales and maturities of marketable securities and gross realized gains and losses from the sale of available-for-sale securities were as follows: Nine months ended In millions October 1, October 2, Proceeds from sales and maturities of marketable securities (1) $ 218 $ 291 ____________________________________ (1)
Summary of fair value of available-for-sale investments with contractual maturities	The fair value of available-for-sale investments in debt securities that utilize a Level 2 fair value measure is shown by contractual maturity below: Contractual Maturity (In millions) October 1, 1 year or less $ 139 1 - 5 years 1 Total $ 140

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Oct. 01, 2017
Inventory Disclosure [Abstract]
Inventories	Inventories are stated at the lower of cost or market. Inventories included the following: In millions October 1, December 31, Finished products $ 2,027 $ 1,779 Work-in-process and raw materials 1,243 1,005 Inventories at FIFO cost 3,270 2,784 Excess of FIFO over LIFO (124 ) (109 ) Total inventories $ 3,146 $ 2,675

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Oct. 01, 2017
Debt Disclosure [Abstract]
Schedule of Short-term Debt	Loans payable, commercial paper and the related weighted-average interest rates were as follows: In millions October 1, 2017 December 31, 2016 Loans payable (1) $ 64 $ 41 Commercial paper (2) 514 212 ____________________________________ (1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practical to aggregate these notes and calculate a quarterly weighted-average interest rate. (2) The weighted average interest rate, inclusive of all brokerage fees, was 1.22 percent and 0.79 percent at October 1, 2017 and December 31, 2016
Summary of long-term debt	A summary of long-term debt was as follows: In millions October 1, December 31, Long-term debt Senior notes, 3.65%, due 2023 $ 500 $ 500 Debentures, 6.75%, due 2027 58 58 Debentures, 7.125%, due 2028 250 250 Senior notes, 4.875%, due 2043 500 500 Debentures, 5.65%, due 2098 (effective interest rate 7.48%) 165 165 Other debt 91 51 Unamortized discount (54 ) (56 ) Fair value adjustments due to hedge on indebtedness 42 47 Capital leases 125 88 Total long-term debt 1,677 1,603 Less: Current maturities of long-term debt 62 35 Long-term debt $ 1,615 $ 1,568
Principal repayments on long-term debt	Principal payments required on long-term debt during the next five years are as follows: In millions 2017 2018 2019 2020 2021 Principal payments $ 23 $ 59 $ 51 $ 12 $ 6
Fair value and carrying value of total 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 millions October 1, December 31, Fair value of total debt (1) $ 2,528 $ 2,077 Carrying value of total debt 2,255 1,856 _________________________________________________ (1) The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY (Tab

PRODUCT WARRANTY LIABILITY (Tables)	9 Months Ended
	Oct. 01, 2017
Product Warranties Disclosures [Abstract]
Summary of activity in the product warranty account	A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs was as follows: In millions October 1, October 2, Balance, beginning of year $ 1,414 $ 1,404 Provision for warranties issued 446 256 Deferred revenue on extended warranty contracts sold 164 179 Payments (296 ) (291 ) Amortization of deferred revenue on extended warranty contracts (161 ) (148 ) Changes in estimates for pre-existing warranties 71 22 Foreign currency translation 5 (6 ) Balance, end of period $ 1,643 $ 1,416
Warranty related deferred revenue and the long-term portion of the warranty liability	Warranty related deferred revenues and the long-term portion of the warranty liabilities on our October 1, 2017, balance sheet were as follows: In millions October 1, Balance Sheet Location Deferred revenue related to extended coverage programs Current portion $ 229 Current portion of deferred revenue Long-term portion 519 Other liabilities and deferred revenue Total $ 748 Long-term portion of warranty liability $ 433 Other liabilities and deferred revenue

ACCUMULATED OTHER COMPREHENSI29

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	9 Months Ended
	Oct. 01, 2017
Equity [Abstract]
Changes in accumulated other comprehensive income (loss) by component	Following are the changes in accumulated other comprehensive income (loss) by component for the three months ended: Three months ended In millions Change in Foreign Unrealized gain Unrealized gain Total Noncontrolling Total other comprehensive income (loss) Balance at July 3, 2016 $ (636 ) $ (960 ) $ (1 ) $ (23 ) $ (1,620 ) Other comprehensive income before reclassifications Before tax amount 5 (51 ) — (4 ) (50 ) $ 3 $ (47 ) Tax benefit (expense) (1 ) 19 — 1 19 — 19 After tax amount 4 (32 ) — (3 ) (31 ) 3 (28 ) Amounts reclassified from accumulated other comprehensive loss (1)(2) 9 — — 10 19 — 19 Net current period other comprehensive income (loss) 13 (32 ) — 7 (12 ) $ 3 $ (9 ) Balance at October 2, 2016 $ (623 ) $ (992 ) $ (1 ) $ (16 ) $ (1,632 ) Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Other comprehensive income before reclassifications Before tax amount — 106 — (6 ) 100 $ (2 ) $ 98 Tax benefit (expense) — (10 ) 1 2 (7 ) — (7 ) After tax amount — 96 1 (4 ) 93 (2 ) 91 Amounts reclassified from accumulated other comprehensive loss (1)(2) 16 — (1 ) 3 18 — 18 Net current period other comprehensive income (loss) 16 96 — (1 ) 111 $ (2 ) $ 109 Balance at October 1, 2017 $ (633 ) $ (863 ) $ — $ (8 ) $ (1,504 ) ____________________________________ (1) Amounts are net of tax. (2) Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure. Following are the changes in accumulated other comprehensive income (loss) by component for the nine months ended: Nine months ended In millions Change in Foreign Unrealized gain Unrealized gain Total Noncontrolling Total other comprehensive income (loss) Balance at December 31, 2015 $ (654 ) $ (696 ) $ (2 ) $ 4 $ (1,348 ) Other comprehensive income before reclassifications Before tax amount 5 (316 ) 1 (40 ) (350 ) $ (3 ) $ (353 ) Tax benefit (expense) (1 ) 20 — 7 26 — 26 After tax amount 4 (296 ) 1 (33 ) (324 ) (3 ) (327 ) Amounts reclassified from accumulated other comprehensive loss (1)(2) 27 — — 13 40 — 40 Net current period other comprehensive income (loss) 31 (296 ) 1 (20 ) (284 ) $ (3 ) $ (287 ) Balance at October 2, 2016 $ (623 ) $ (992 ) $ (1 ) $ (16 ) $ (1,632 ) Balance at December 31, 2016 $ (685 ) $ (1,127 ) $ (1 ) $ (8 ) $ (1,821 ) Other comprehensive income before reclassifications Before tax amount 8 286 2 (14 ) 282 $ 12 $ 294 Tax benefit (expense) (3 ) (22 ) — 5 (20 ) — (20 ) After tax amount 5 264 2 (9 ) 262 12 274 Amounts reclassified from accumulated other comprehensive loss (1)(2) 47 — (1 ) 9 55 — 55 Net current period other comprehensive income (loss) 52 264 1 — 317 $ 12 $ 329 Balance at October 1, 2017 $ (633 ) $ (863 ) $ — $ (8 ) $ (1,504 ) ____________________________________ (1) Amounts are net of tax. (2) Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

ACQUISITION (Tables)

ACQUISITION (Tables)	9 Months Ended
	Oct. 01, 2017
Business Combinations [Abstract]
Schedule of Business Acquisitions, by Acquisition [Table Text Block]	The joint venture had an enterprise value at inception of $1.2 billion . Due to the structure of the joint venture and equal sharing of economic benefits, we did not apply a discount for lack of control to the noncontrolling interests. The preliminary purchase price allocation was as follows: In millions Inventory 3 Fixed assets 57 Intangible assets Customer relationships 424 Technology 172 Goodwill 545 Liabilities (1 ) Total business valuation 1,200 Less: Noncontrolling interest 600 Total purchase consideration $ 600

OPERATING SEGMENTS (Tables)

OPERATING SEGMENTS (Tables)	9 Months Ended
	Oct. 01, 2017
Segment Reporting [Abstract]
Financial information regarding reportable operating segments	Summarized financial information regarding our reportable operating segments is shown in the table below: In millions Engine Distribution Components (1) Power Systems Total Segment Intersegment Eliminations (2) Total Three months ended October 1, 2017 External sales $ 1,783 $ 1,748 $ 1,139 $ 615 $ 5,285 $ — $ 5,285 Intersegment sales 553 5 394 441 1,393 (1,393 ) — Total sales 2,336 1,753 1,533 1,056 6,678 (1,393 ) 5,285 Depreciation and amortization (3) 47 29 42 30 148 — 148 Research, development and engineering expenses 83 6 63 61 213 — 213 Equity, royalty and interest income from investees 58 11 12 14 95 — 95 Interest income 1 2 — 1 4 — 4 EBIT 229 91 217 81 618 22 640 Three months ended October 2, 2016 External sales $ 1,357 $ 1,497 $ 824 $ 509 $ 4,187 $ — $ 4,187 Intersegment sales 502 7 319 347 1,175 (1,175 ) — Total sales 1,859 1,504 1,143 856 5,362 (1,175 ) 4,187 Depreciation and amortization (3) 42 28 32 29 131 — 131 Research, development and engineering expenses 56 3 54 44 157 — 157 Equity, royalty and interest income from investees 38 19 9 8 74 — 74 Loss contingency (4) 99 — — — 99 — 99 Interest income 3 1 1 1 6 — 6 EBIT 89 96 148 59 392 6 398 Nine months ended October 1, 2017 External sales $ 4,951 $ 5,101 $ 3,183 $ 1,717 $ 14,952 $ — $ 14,952 Intersegment sales 1,715 19 1,148 1,238 4,120 (4,120 ) — Total sales 6,666 5,120 4,331 2,955 19,072 (4,120 ) 14,952 Depreciation and amortization (3) 137 90 117 87 431 — 431 Research, development and engineering expenses 200 14 170 161 545 — 545 Equity, royalty and interest income from investees 186 35 40 40 301 — 301 Interest income 4 4 1 2 11 — 11 EBIT 735 287 586 199 1,807 19 1,826 Nine months ended October 2, 2016 External sales $ 4,350 $ 4,493 $ 2,654 $ 1,509 $ 13,006 $ — $ 13,006 Intersegment sales 1,487 18 1,005 1,076 3,586 (3,586 ) — Total sales 5,837 4,511 3,659 2,585 16,592 (3,586 ) 13,006 Depreciation and amortization (3) 122 85 95 87 389 — 389 Research, development and engineering expenses 166 10 161 141 478 — 478 Equity, royalty and interest income from investees 120 56 29 29 234 — 234 Loss contingency (4) 138 — — — 138 — 138 Interest income 8 3 3 4 18 — 18 EBIT 492 270 501 195 1,458 15 1,473 ____________________________________ (1) The 2017 disclosures include Eaton Cummins Automated Transmission Technologies joint venture results consolidated during the third quarter of 2017. See Note 11 , " ACQUISITION ," for additional information. (2) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and nine months ended October 1, 2017 and October 2, 2016 . (3) 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 Income as "Interest expense." The amortization of debt discount and deferred costs were $2 million and $2 million for the nine months ended October 1, 2017 and October 2, 2016, respectively. (4) See Note 9 , " COMMITMENTS AND CONTINGENCIES ," for additional information.
Reconciliation of segment information	A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Income is shown in the table below: Three months ended Nine months ended In millions October 1, October 2, October 1, October 2, Total EBIT $ 640 $ 398 $ 1,826 $ 1,473 Less: Interest expense 18 16 57 51 Income before income taxes $ 622 $ 382 $ 1,769 $ 1,422

NATURE OF OPERATIONS (Details)

NATURE OF OPERATIONS (Details)	9 Months Ended
	Oct. 01, 2017countrylocation
Nature of Operations
Company Owned and Independent Distributor Locations Number	600
Dealer Locations Number	7,400
Countries and Territories Number | country	190

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - shares	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Options excluded (in shares)	3,728	936,857	42,139	1,295,664

PENSION AND OTHER POSTRETIREM34

PENSION AND OTHER POSTRETIREMENT BENEFITS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016	Oct. 02, 2017
Pension Plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 41	$ 21	$ 125	$ 124
Pension Plan | Voluntary
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	41	16	125	101
Pension Plan | Mandatory
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	0	5	0	23
Other Postretirement Benefits Plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	1	4	19	32
Components of Net Periodic Benefit Cost
Service cost	0	0	0	0
Interest cost	3	4	10	12
Expected return on plan assets	0	0	0	0
Recognized net actuarial loss	2	1	5	4
Net periodic benefit cost	5	5	15	16
Defined contribution pension plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	19	17	67	53
Estimate | Pension Plan
Pension and other postretirement benefits
Defined Benefit Plan, Expected Future Employer Contributions, Remainder of Fiscal Year					$ 10
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year					135
Defined Benefit Plan, Expected Amortization of Gain (Loss), Next Fiscal Year					83
Estimate | Pension Plan | Voluntary
Pension and other postretirement benefits
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year					$ 134
UNITED STATES | Pension Plan
Components of Net Periodic Benefit Cost
Service cost	27	22	80	68
Interest cost	26	26	79	82
Expected return on plan assets	(50)	(50)	(153)	(152)
Recognized net actuarial loss	10	9	28	23
Net periodic benefit cost	13	7	34	21
UNITED KINGDOM | Pension Plan
Components of Net Periodic Benefit Cost
Service cost	7	5	20	16
Interest cost	10	13	30	39
Expected return on plan assets	(18)	(17)	(52)	(55)
Recognized net actuarial loss	10	3	30	11
Net periodic benefit cost	$ 9	$ 4	$ 28	$ 11

EQUITY, ROYALTY AND INTEREST 35

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Equity, royalty and interest income from investees
Cummins share of net income	$ 84	$ 64	$ 265	$ 205
Royalty and interest income	11	10	36	29
Equity, royalty and interest income from investees	95	74	301	234
Distribution - Komatsu Cummins Chile, Ltda.
Equity, royalty and interest income from investees
Cummins share of net income	8	8	23	26
Distribution - North American distributors
Equity, royalty and interest income from investees
Cummins share of net income	0	7	0	18
Distribution - All Other
Equity, royalty and interest income from investees
Cummins share of net income	(1)	1	(1)	2
Manufacturing - Beijing Foton Cummins Engine Company
Equity, royalty and interest income from investees
Cummins share of net income	24	19	79	59
Manufacturing - Dongfeng Cummins Engine Company Ltd
Equity, royalty and interest income from investees
Cummins share of net income	15	10	56	32
Manufacturing - Chongqing Cummins Engine Company, Ltd.
Equity, royalty and interest income from investees
Cummins share of net income	11	11	30	28
Manufacturing - All other manufacturers
Equity, royalty and interest income from investees
Cummins share of net income	$ 27	$ 8	$ 78	$ 40

MARKETABLE SECURITIES (Details)

MARKETABLE SECURITIES (Details) - USD ($) $ in Millions		9 Months Ended
		Oct. 01, 2017	Oct. 02, 2016	Dec. 31, 2016
Schedule of Available-for-sale Securities
Cost		$ 152		$ 260
Gross unrealized gains/(losses)		2		0
Estimated fair value		154		260
Proceeds from sales and maturities of marketable securities	[1]	218	$ 291
Fair value of available-for-sale investments by contractual maturity
1 year or less		139
1 - 5 years		1
Total		140
Debt mutual funds
Schedule of Available-for-sale Securities
Cost		139		132
Gross unrealized gains/(losses)		0		0
Bank debentures
Schedule of Available-for-sale Securities
Cost		0		114
Gross unrealized gains/(losses)		0		0
Equity mutual funds
Schedule of Available-for-sale Securities
Cost		12		12
Gross unrealized gains/(losses)		2		0
Government debt securities
Schedule of Available-for-sale Securities
Cost		1		2
Gross unrealized gains/(losses)		0		0
Significant other observable inputs (Level 2) | Debt mutual funds
Schedule of Available-for-sale Securities
Estimated fair value	[2]	139		132
Significant other observable inputs (Level 2) | Bank debentures
Schedule of Available-for-sale Securities
Estimated fair value	[2]	0		114
Significant other observable inputs (Level 2) | Equity mutual funds
Schedule of Available-for-sale Securities
Estimated fair value	[2]	14		12
Significant other observable inputs (Level 2) | Government debt securities
Schedule of Available-for-sale Securities
Estimated fair value	[2]	$ 1		$ 2
Minimum | Bank debentures
Schedule of Available-for-sale Securities
Maturities of Bank Debentures Description		P3M
Maximum | Bank debentures
Schedule of Available-for-sale Securities
Maturities of Bank Debentures Description		P5Y
[1]	Gross realized gains and losses from the sale of available-for-sale securities were immaterial.
[2]	All marketable securities are classified as Level 2 securities. 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 first nine months of 2017 and for the year ended 2016.

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Millions	Oct. 01, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Finished products	$ 2,027	$ 1,779
Work-in-process and raw materials	1,243	1,005
Inventories at FIFO cost	3,270	2,784
Excess of FIFO over LIFO	(124)	(109)
Total inventories	$ 3,146	$ 2,675

DEBT (Details)

DEBT (Details) - USD ($) $ in Millions		Oct. 01, 2017	Sep. 05, 2017	Dec. 31, 2016	Nov. 13, 2015
Short-term Debt [Line Items]
Loans payable	[1]	$ 64		$ 41
Commercial paper	[2]	514		212
Line of Credit Facility, Maximum Borrowing Capacity		2,750
Long-term debt
Unamortized discount		(54)		(56)
Fair value adjustment due to hedge on indebtedness		42		47
Capital leases		125		88
Total long-term debt		1,677		1,603
Current maturities of long-term debt		62		35
Long-term debt		1,615		1,568
Principal payments
2,017		23
2,018		59
2,019		51
2,020		12
2,021		6
Fair value
Fair value of total debt	[3]	2,528		2,077
Carrying value of total debt		$ 2,255		$ 1,856
Commercial Paper
Short-term Debt [Line Items]
Short-term Debt, Weighted Average Interest Rate, at Point in Time	[2]	1.22%		0.79%
5-Year Revolver
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity					$ 1,750
364-Day Revolver
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 1,000
Senior notes, 3.65%, due 2023
Long-term debt
Unsecured Debt		$ 500		$ 500
Debt instrument interest rate (as a percent)		3.65%
Debentures, 6.75%, due 2027
Long-term debt
Unsecured Debt		$ 58		58
Debt instrument interest rate (as a percent)		6.75%
Debentures, 7.125%, due 2028
Long-term debt
Unsecured Debt		$ 250		250
Debt instrument interest rate (as a percent)		7.125%
Senior notes, 4.875%, due 2043
Long-term debt
Unsecured Debt		$ 500		500
Debt instrument interest rate (as a percent)		4.875%
Debentures, 5.65%, due 2098 (effective interest rate 7.48%)
Long-term debt
Unsecured Debt		$ 165		165
Debt instrument interest rate (as a percent)		5.65%
Effective interest rate (as a percent)		7.48%
Other debt
Long-term debt
Other Long-term Debt		$ 91		$ 51
[1]	Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practical to aggregate these notes and calculate a quarterly weighted-average interest rate.
[2]	The weighted average interest rate, inclusive of all brokerage fees, was 1.22 percent and 0.79 percent at October 1, 2017 and December 31, 2016
[3]	The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY (Det

PRODUCT WARRANTY LIABILITY (Details) - USD ($) $ in Millions	9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	Dec. 31, 2016
Product Warranty Liability:
Balance, beginning of year	$ 1,414	$ 1,404
Provision for warranties issued	446	256
Deferred revenue on extended warranty contracts sold	164	179
Payments	(296)	(291)
Amortization of deferred revenue on extended warranty contracts	(161)	(148)
Changes in estimates for pre-existing warranties	71	22
Foreign currency translation	5	(6)
Balance, end of period	1,643	$ 1,416
Product Warranty Liability
Current portion of deferred revenue	528		$ 468
Deferred Revenue Related to extended coverage, Total	748
Current portion of deferred revenue
Product Warranty Liability
Current portion of deferred revenue	229
Other liabilities and deferred revenue
Product Warranty Liability
Deferred Revenue, Noncurrent	519
Long-term portion of warranty liability	$ 433

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	3 Months Ended						9 Months Ended
	Oct. 01, 2017	Oct. 02, 2016	[1]	Jul. 03, 2016	[1]	Dec. 31, 2015	Oct. 01, 2017	Oct. 02, 2016
Guarantee Obligations
Loss contingency	$ 0	$ 99					$ 0	$ 138	[1]
Estimated Campaign Warranty Charge							446	$ 256
Guarantor obligations, maximum potential loss	50						50
Long-term purchase commitment, penalty exposure	101						101
Total commitments under commodity contracts	23						23
Performance Bonds and Other Performance Guarantees	$ 104						$ 104
Maximum
Guarantee Obligations
Forward Contract, Term							P2Y
Engines
Guarantee Obligations
Loss contingency		$ 99		$ 39		$ 60
Current Percentage Reimbursed	50.00%						50.00%
Loss Contingency Accrual	$ 148						$ 148
Components
Guarantee Obligations
Estimated Campaign Warranty Charge	29
Long-term purchase commitment, penalty exposure	29						29
Power Systems
Guarantee Obligations
Long-term purchase commitment, penalty exposure	$ 28						$ 28
[1]	See Note 9 , " COMMITMENTS AND CONTINGENCIES ,"

ACCUMULATED OTHER COMPREHENSI41

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period				$ (1,821)
Before tax amount		$ 98	$ (47)	294	$ (353)
Tax benefit (expense)		(7)	19	(20)	26
After tax amount		91	(28)	274	(327)
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	18	19	55	40
Net current period other comprehensive income (loss)		109	(9)	329	(287)
Balance at the end of the period		(1,504)		(1,504)
Change in pensions and other postretirement defined benefit plans
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period		(649)	(636)	(685)	(654)
Before tax amount		0	5	8	5
Tax benefit (expense)		0	(1)	(3)	(1)
After tax amount		0	4	5	4
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	16	9	47	27
Net current period other comprehensive income (loss)		16	13	52	31
Balance at the end of the period		(633)	(623)	(633)	(623)
Foreign currency translation adjustment
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period		(959)	(960)	(1,127)	(696)
Before tax amount		106	(51)	286	(316)
Tax benefit (expense)		(10)	19	(22)	20
After tax amount		96	(32)	264	(296)
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	0	0
Net current period other comprehensive income (loss)		96	(32)	264	(296)
Balance at the end of the period		(863)	(992)	(863)	(992)
Unrealized gain (loss) on marketable securities
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period		0	(1)	(1)	(2)
Before tax amount		0	0	2	1
Tax benefit (expense)		1	0	0
After tax amount		1	0	2	1
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	(1)	0	(1)
Net current period other comprehensive income (loss)		0	0	1	1
Balance at the end of the period		0	(1)	0	(1)
Unrealized gain (loss) on derivatives
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period		(7)	(23)	(8)	4
Before tax amount		(6)	(4)	(14)	(40)
Tax benefit (expense)		2	1	5	7
After tax amount		(4)	(3)	(9)	(33)
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	3	10	9	13
Net current period other comprehensive income (loss)		(1)	7	0	(20)
Balance at the end of the period		(8)	(16)	(8)	(16)
Total attributable to Cummins Inc.
Changes in accumulated other comprehensive income (loss) by component:
Balance at the beginning of the period		(1,615)	(1,620)	(1,821)	(1,348)
Before tax amount		100	(50)	282	(350)
Tax benefit (expense)		(7)	19	(20)	26
After tax amount		93	(31)	262	(324)
Amounts reclassified from accumulated other comprehensive loss	[1],[2]	18	19	55	40
Net current period other comprehensive income (loss)		111	(12)	317	(284)
Balance at the end of the period		(1,504)	(1,632)	(1,504)	(1,632)
Noncontrolling interests
Changes in accumulated other comprehensive income (loss) by component:
Before tax amount		(2)	3	12	(3)
After tax amount		(2)	3	12	(3)
Amounts reclassified from accumulated other comprehensive loss	[1],[2]		0	0
Net current period other comprehensive income (loss)		$ (2)	$ 3	$ 12	$ (3)
[1]	Amounts are net of tax.
[2]	Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

ACQUISITION (Details)

ACQUISITION (Details) - USD ($) $ in Millions		Oct. 02, 2017	Jul. 31, 2017	Oct. 01, 2017	Oct. 02, 2016	Oct. 01, 2017	Oct. 02, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill				$ 1,036		$ 1,036		$ 480
Total sales	[1]			5,285	$ 4,187	$ 14,952	$ 13,006
Eaton Cummins Automated Transmission Technologies
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired			50.00%
Payments to Acquire Businesses, Gross			$ 600
Advances to Affiliate			20
Enterprise Value/Total business valuation			1,200
Inventory			3
Fixed Assets			57
Goodwill			545
Liabilities			(1)
Non-controlling interest			600
Business Combination, Consideration Transferred			600
Business Acquisition, Goodwill, Expected Tax Deductible Amount			31
Total sales				69
Income (Loss) from Subsidiaries, Net of Tax				$ 5
Customer Relationships | Eaton Cummins Automated Transmission Technologies
Business Acquisition [Line Items]
Intangible Assets			$ 424
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			25 years
Rate of Return			10.00%
Customer Attrition Rate			3.00%
Technology-Based Intangible Assets | Eaton Cummins Automated Transmission Technologies
Business Acquisition [Line Items]
Intangible Assets			$ 172
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			15 years
Rate of Return			10.00%
Market Royalty Rate			5.00%
Economic Depreciation Rate			7.50%
Estimate | Eaton Cummins Automated Transmission Technologies
Business Acquisition [Line Items]
Finite-Lived Intangible Asset, Period of Amortization		5 years
Estimate | Maximum | Eaton Cummins Automated Transmission Technologies
Business Acquisition [Line Items]
Finite-Lived Intangible Assets, Amortization Expense, Annually over the amortization period		$ 28
[1]	Includes sales to nonconsolidated equity investees of $285 million and $835 million and $275 million and $793 million for the three and nine months ended October 1, 2017 and October 2, 2016

OPERATING SEGMENTS (Details)

OPERATING SEGMENTS (Details) - USD ($) $ in Millions		3 Months Ended			9 Months Ended
		Oct. 01, 2017	Oct. 02, 2016		Oct. 01, 2017	Oct. 02, 2016
Operating results:
Total sales	[1]	$ 5,285	$ 4,187		$ 14,952	$ 13,006
Depreciation and amortization	[2]	148	131		431	389
Research, development and engineering expenses		213	157		545	478
Equity, royalty and interest income from investees		95	74		301	234
Loss contingency		0	99	[3]	0	138	[3]
Interest income		4	6		11	18
Segment EBIT		640	398		1,826	1,473
Less: Interest expense		18	16		57	51
INCOME BEFORE INCOME TAXES		622	382		1,769	1,422
Amortization of Debt Discount (Premium)					2	2
Engine
Operating results:
Total sales		2,336	1,859		6,666	5,837
Depreciation and amortization	[2]	47	42		137	122
Research, development and engineering expenses		83	56		200	166
Equity, royalty and interest income from investees		58	38		186	120
Loss contingency	[3]					138
Interest income		1	3		4	8
Segment EBIT		229	89		735	492
Distribution
Operating results:
Total sales		1,753	1,504		5,120	4,511
Depreciation and amortization	[2]	29	28		90	85
Research, development and engineering expenses		6	3		14	10
Equity, royalty and interest income from investees		11	19		35	56
Interest income		2	1		4	3
Segment EBIT		91	96		287	270
Components
Operating results:
Total sales	[4]	1,533	1,143		4,331	3,659
Depreciation and amortization	[2],[4]	42	32		117	95
Research, development and engineering expenses	[4]	63	54		170	161
Equity, royalty and interest income from investees	[4]	12	9		40	29
Interest income	[4]	0	1		1	3
Segment EBIT	[4]	217	148		586	501
Power Systems
Operating results:
Total sales		1,056	856		2,955	2,585
Depreciation and amortization	[2]	30	29		87	87
Research, development and engineering expenses		61	44		161	141
Equity, royalty and interest income from investees		14	8		40	29
Interest income		1	1		2	4
Segment EBIT		81	59		199	195
Total Segment
Operating results:
Total sales		6,678	5,362		19,072	16,592
Depreciation and amortization	[2]	148	131		431	389
Research, development and engineering expenses		213	157		545	478
Equity, royalty and interest income from investees		95	74		301	234
Loss contingency	[3]		99			138
Interest income		4	6		11	18
Segment EBIT		618	392		1,807	1,458
Intersegment Eliminations
Operating results:
Total sales	[5]	(1,393)	(1,175)		(4,120)	(3,586)
Non-segment items
Operating results:
Segment EBIT	[5]	22	6		19	15
External Sales
Operating results:
Total sales		5,285	4,187		14,952	13,006
External Sales | Engine
Operating results:
Total sales		1,783	1,357		4,951	4,350
External Sales | Distribution
Operating results:
Total sales		1,748	1,497		5,101	4,493
External Sales | Components
Operating results:
Total sales	[4]	1,139	824		3,183	2,654
External Sales | Power Systems
Operating results:
Total sales		615	509		1,717	1,509
External Sales | Total Segment
Operating results:
Total sales		5,285	4,187		14,952	13,006
Intersegment sales | Engine
Operating results:
Total sales		553	502		1,715	1,487
Intersegment sales | Distribution
Operating results:
Total sales		5	7		19	18
Intersegment sales | Components
Operating results:
Total sales	[4]	394	319		1,148	1,005
Intersegment sales | Power Systems
Operating results:
Total sales		441	347		1,238	1,076
Intersegment sales | Total Segment
Operating results:
Total sales		1,393	1,175		4,120	3,586
Intersegment sales | Intersegment Eliminations
Operating results:
Total sales	[5]	$ (1,393)	$ (1,175)		$ (4,120)	$ (3,586)
[1]	Includes sales to nonconsolidated equity investees of $285 million and $835 million and $275 million and $793 million for the three and nine months ended October 1, 2017 and October 2, 2016
[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 Income as "Interest expense." The amortization of debt discount and deferred costs were $2 million and $2 million for the nine months ended October 1, 2017 and October 2, 2016, respectively.
[3]	See Note 9 , " COMMITMENTS AND CONTINGENCIES ,"
[4]	The 2017 disclosures include Eaton Cummins Automated Transmission Technologies joint venture results consolidated during the third quarter of 2017. See Note 11 , " ACQUISITION
[5]	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three and nine months ended October 1, 2017 and October 2, 2016

RECENTLY ADOPTED AND RECENTLY44

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions	Oct. 02, 2017	Oct. 01, 2017
ASU 2016-09 Stock Compensation
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In March 2016, the Financial Accounting Standards Board (FASB) amended its standards related to accounting for stock compensation, which became effective for us beginning January 1, 2017. The amendment replaced the requirement to record excess tax benefits and certain tax deficiencies in additional paid-in capital by recording all excess tax benefits and tax deficiencies as income tax expense / benefit in the Condensed Consolidated Statements of Income and was adopted prospectively. Excess tax benefits and deficiencies are required to be recorded as discrete items in the period in which they occur and were not material for the three and nine months ended October 1, 2017. In addition, the standard impacted our Condensed Consolidated Statements of Cash Flows retrospectively, as excess tax benefits are now required to be presented as an operating activity and the cash paid to tax authorities is required to be presented as a financing activity. This resulted in a net reclassification of $4 million from operating to financing activities for the nine months ended October 2, 2016. Finally, in accordance with the standard, we elected to continue our historical approach of estimating forfeitures during the award's vesting period and adjusting our estimate when it is no longer probable that the employee will fulfill the service condition. The adoption of the standard was not material to our diluted earnings per common share.
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		$ 4
ASU 2017-12 Derivatives and Hedging
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In August 2017, the FASB amended its standards related to accounting for derivatives and hedging. These amendments allow the initial hedge effectiveness assessment to be performed by the end of the first quarter in which the hedge is designated rather than concurrently with entering into the hedge transaction. The changes also expand the use of a periodic qualitative hedge effectiveness assessment in lieu of an ongoing quantitative assessment performed throughout the life of the hedge. The revision removes the requirement to record ineffectiveness on cash flow hedges through the income statement when a hedge is considered highly effective, instead deferring all related hedge gains and losses in "Other comprehensive income" until the hedged item impacts earnings. The modifications permit hedging the contractually-specified price of a component of a commodity purchase and revises certain disclosure requirements. The amendments are effective January 1, 2019 and early adoption is permitted in any interim period or fiscal year prior to the effective date. The revised standard is required to be adopted on a modified retrospective basis for any cash flow or net investment hedge relationships that exist on the date of adoption and prospectively for disclosures. We do not expect the amendments to have a material effect on our Consolidated Financial Statements and are still evaluating early adoption.
ASU 2017-07 Presentation of Net Periodic Pension and Post-retirement Benefit Costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In March 2017, the FASB amended its standards related to the presentation of pension and other postretirement benefit costs in the financial statements. Under the new standard, we will be required to separate service costs from all other elements of pension costs and reflect the other elements of pension costs outside of operating income in our Consolidated Statements of Income. In addition, the standard will limit the amount eligible for capitalization (into inventory or self-constructed assets) to the amount of service cost. This portion of the standard will be applied on a prospective basis. The remainder of the new standard is effective for us on a retrospective basis beginning January 1, 2018. While we are still evaluating the impact of this standard, the change in presentation will likely result in a decrease in operating income primarily due to the requirement to present the expected return on plan assets outside of operating income.
ASU 2016-15 Classification of Cash Receipts and Cash Payments
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In August 2016, the FASB amended its standards related to the classification of certain cash receipts and cash payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. We do not expect adoption of this standard to have a material impact on our Consolidated Statements of Cash Flows.
ASU 2016-13 Measurement of Credit Losses on Financial Instruments
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In June 2016, the FASB amended its standards related to accounting for credit losses on financial instruments. This amendment introduces new guidance for accounting for credit losses on instruments including trade receivables and held-to-maturity debt securities. The new rules are effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We do not expect adoption of this standard to have a material impact on our Consolidated Financial Statements.
ASU 2016-02 Leases
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In February 2016, the FASB amended its standards related to the accounting for leases. Under the new standard, lessees will now be required to recognize substantially all leases on the balance sheet as both a right-of-use-asset and a liability. The standard will continue to have two types of leases for income statement recognition purposes: operating leases and finance leases. Operating leases will result in the recognition of a single lease expense on a straight-line basis over the lease term similar to the treatment for operating leases under today's standards. Finance leases will result in an accelerated expense similar to the accounting for capital leases under today's standards. The determination of a lease classification as operating or finance will occur in a manner similar to today's standard. The new standard also contains amended guidance regarding the identification of embedded leases in service contracts and the identification of lease and non-lease components of an arrangement. The new standard is effective on January 1, 2019, with early adoption permitted. We are still evaluating the impact the standard could have on our Consolidated Financial Statements, including our internal controls over financial reporting. While we have not yet quantified the amount, we do expect the standard will have a material impact on our Consolidated Balance Sheets due to the recognition of additional assets and liabilities for operating leases.
ASU 2016-01 Recognition and Measurement of Financial Assets and Liabilities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In January 2016, the FASB amended its standards related to the accounting for certain financial instruments. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The new rules will become effective for annual and interim periods beginning after December 15, 2017. Early adoption is not permitted. We are in the process of evaluating the impact the amendment will have on our Consolidated Financial Statements.
ASU 2014-09 Revenue Recognition
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Description		In May 2014, the FASB amended its standards related to revenue recognition which replaces all existing revenue recognition guidance and provides a single, comprehensive model for all contracts with customers. The revised standard contains principles to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that we will recognize revenue to depict the transfer of goods or services to customers at an amount that we expect to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price and allowing estimation of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in those judgments as well as assets recognized from costs incurred to fulfill these contracts. The standard allows either full or modified retrospective adoption effective for annual and interim periods beginning January 1, 2018. We will adopt the standard using the modified retrospective approach. We identified a change in the manner in which we will account for certain license income. We license certain technology to our unconsolidated joint ventures that meet the definition of functional under the standard, which requires that revenue be recognized at a point in time rather than the current requirement of recognizing it over the license term. Using the modified retrospective adoption method, we will record an adjustment to our opening equity balance at January 1, 2018, to account for the differences between existing revenue recorded and what would have been recorded under the new standard for contracts which we started recognizing revenue prior to the adoption date. We are still quantifying the potential amount of this adjustment, but we expect to record a credit to equity of between $30 million and $35 million for the licensing change. We do not expect a material impact on any individual year from this change. We also identified transactions where revenue recognition is currently limited to the amount of billings not contingent on our future performance. With the allocation provisions of the new model, we expect to accelerate the timing of revenue recognition for amounts related to satisfied performance obligations that would be delayed under the current guidance. We do not expect the impact of this change to be material, but we are still quantifying the impact which will depend on the contracts in progress at the time of adoption. We are still in the process of evaluating the impact the amendment will have on our Consolidated Financial Statements, including our internal controls over financial reporting. The revenue recognition disclosures will significantly expand under the new standard, specifically around the quantitative and qualitative information about performance obligations, changes in contract assets and liabilities and disaggregation of revenue.
Estimate | Minimum | ASU 2014-09 Revenue Recognition
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 30
Estimate | Maximum | ASU 2014-09 Revenue Recognition
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 35

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Millions	Oct. 12, 2017USD ($)
Subsequent Event [Line Items]
Payments to Acquire Businesses, Gross	$ 70
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	$ 100