Cummins (CMI) 10-Q 31 Jul 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	6 Months Ended
	Jul. 01, 2018shares
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	Jul. 1, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding	163,311,209
Entity Current Reporting Status	Yes

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions		3 Months Ended		6 Months Ended
		Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Income Statement [Abstract]
NET SALES (a) (Note 3)	[1]	$ 6,132	$ 5,078	$ 11,702	$ 9,667
Cost of sales		4,692	3,827	9,062	7,284
GROSS MARGIN		1,440	1,251	2,640	2,383
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses		613	606	1,190	1,153
Research, development and engineering expenses		219	175	429	333
Equity, royalty and interest income from investees (Note 5)		110	98	225	206
Other operating income (expense), net		4	18	6	23
OPERATING INCOME		722	586	1,252	1,126
Interest income		10	5	17	7
Interest expense		28	21	52	39
Other income, net		11	29	21	53
INCOME BEFORE INCOME TAXES		715	599	1,238	1,147
Income tax expense (Note 6)		161	158	359	301
CONSOLIDATED NET INCOME		554	441	879	846
Less: Net income attributable to noncontrolling interests		9	17	9	26
NET INCOME ATTRIBUTABLE TO CUMMINS INC.		$ 545	$ 424	$ 870	$ 820
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic (in dollars per share)		$ 3.33	$ 2.53	$ 5.30	$ 4.90
Diluted (in dollars per share)		$ 3.32	$ 2.53	$ 5.27	$ 4.88
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)		163.8	167.3	164.3	167.4
Dilutive effect of stock compensation awards (in shares)		0.5	0.5	0.7	0.5
Diluted (in shares)		164.3	167.8	165	167.9
CASH DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share)		$ 1.08	$ 1.025	$ 2.16	$ 2.05
Sales to nonconsolidated equity investees		$ 340	$ 283	$ 637	$ 550
[1]	Includes sales to nonconsolidated equity investees of $340 million and $637 million and $283 million and $550 million for the three and six months ended July 1, 2018 and July 2, 2017

CONDENSED CONSOLIDATED STATEME3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Statement of Comprehensive Income [Abstract]
CONSOLIDATED NET INCOME	$ 554	$ 441	$ 879	$ 846
Other comprehensive income (loss), net of tax (Note 13)
Change in pension and other postretirement defined benefit plans	13	15	21	36
Foreign currency translation adjustments	(299)	102	(215)	182
Unrealized gain on marketable securities	0	1	0	1
Unrealized gain on derivatives	0	0	7	1
Total other comprehensive income (loss), net of tax	(286)	118	(187)	220
COMPREHENSIVE INCOME	268	559	692	1,066
Less: Comprehensive (loss) income attributable to noncontrolling interests	(7)	18	(14)	40
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$ 275	$ 541	$ 706	$ 1,026

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions		Jul. 01, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents		$ 1,318	$ 1,369
Marketable securities (Note 7)		214	198
Total cash, cash equivalents and marketable securities		1,532	1,567
Accounts and notes receivable, net
Trade and other		3,794	3,311
Nonconsolidated equity investees		301	307
Inventories (Note 8)		3,559	3,166
Prepaid expenses and other current assets		649	577
Total current assets		9,835	8,928
Long-term assets
Property, plant and equipment		7,982	8,058
Accumulated depreciation		(4,158)	(4,131)
Property, plant and equipment, net		3,824	3,927
Investments and advances related to equity method investees		1,303	1,156
Goodwill		1,079	1,082
Other intangible assets, net		940	973
Pension assets		1,022	1,043
Other assets		912	966
Total assets		18,915	18,075
Current liabilities
Accounts payable (principally trade)		2,981	2,579
Loans payable (Note 9)	[1]	55	57
Commercial paper (Note 9)	[2]	802	298
Accrued compensation, benefits and retirement costs		468	811
Current portion of accrued product warranty (Note 10)		464	454
Current portion of deferred revenue		479	500
Other accrued expenses (Note 11)		806	915
Current maturities of long-term debt (Note 9)		49	63
Total current liabilities		6,104	5,677
Long-term liabilities
Long-term debt (Note 9)		1,556	1,588
Postretirement benefits other than pensions		289	289
Pensions		331	330
Other liabilities and deferred revenue (Note 11)		2,441	2,027
Total liabilities		10,721	9,911
Commitments and contingencies (Note 12)
Cummins Inc. shareholders' equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued		2,239	2,210
Retained earnings		12,009	11,464
Treasury stock, at cost, 59.1 and 56.7 shares		(5,276)	(4,905)
Common stock held by employee benefits trust, at cost, 0.5 and 0.5 shares		(6)	(7)
Accumulated other comprehensive loss (Note 13)		(1,667)	(1,503)
Total Cummins Inc. shareholders' equity		7,299	7,259
Noncontrolling interests		895	905
Total equity		8,194	8,164
Total liabilities and equity		$ 18,915	$ 18,075
[1]	Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
[2]	The weighted average interest rate, inclusive of all brokerage fees, was 2.08 percent and 1.56 percent at July 1, 2018 and December 31, 2017

CONDENSED CONSOLIDATED BALANCE5

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	Jul. 01, 2018	Dec. 31, 2017
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	59.1	56.7
Common stock held by employee benefits trust, shares	0.5	0.5

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jul. 01, 2018	Jul. 02, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$ 879	$ 846
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization	308	284
Deferred income taxes	(21)	0
Equity in income of investees, net of dividends	(163)	(132)
Pension contributions under (in excess of) expense, net (Note 4)	25	(44)
Other post retirement benefits payments in excess of expense, net (Note 4)	0	(8)
Stock-based compensation expense	28	23
Loss contingency payments	(65)	0
Translation and hedging activities	(21)	31
Changes in current assets and liabilities
Accounts and notes receivable	(555)	(488)
Inventories	(475)	(264)
Other current assets	(42)	21
Accounts payable	442	403
Accrued expenses	94	132
Changes in other liabilities and deferred revenue	5	103
Other, net	34	(81)
Net cash provided by operating activities	473	826
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(186)	(182)
Investments in internal use software	(35)	(40)
Investments in and advances to equity investees	(15)	(64)
Investments in marketable securities—acquisitions (Note 7)	(143)	(69)
Investments in marketable securities—liquidations (Note 7)	116	162
Cash flows from derivatives not designated as hedges	(9)	19
Other, net	36	14
Net cash used in investing activities	(236)	(160)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) of commercial paper (Note 9)	504	(78)
Payments on borrowings and capital lease obligations	(33)	(29)
Distributions to noncontrolling interests	(11)	(10)
Dividend payments on common stock	(355)	(343)
Repurchases of common stock	(379)	(120)
Other, net	21	36
Net cash used in financing activities	(253)	(544)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(35)	51
Net (decrease) increase in cash and cash equivalents	(51)	173
Cash and cash equivalents at beginning of year	1,369	1,120
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 1,318	$ 1,293

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 BEGINNING OF PERIOD 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	846			820				820	26
Other comprehensive income (loss), net of tax (Note 13)	220						206	206	14
Issuance of common stock	3		3					3
Employee benefits trust activity	13		12			1		13
Repurchases of common stock	(120)				(120)			(120)
Cash dividends on common stock	(343)			(343)				(343)
Distributions to noncontrolling interests	(10)								(10)
Stock based awards, net	23				23			23
Other shareholder transactions	16		16					16	0
BALANCE AT END OF PERIOD at Jul. 02, 2017	7,822	556	1,628	11,517	(4,586)	(7)	(1,615)	7,493	329
BALANCE AT BEGINNING OF PERIOD at Dec. 31, 2017	8,164	556	1,654	11,464	(4,905)	(7)	(1,503)	7,259	905
Increase (Decrease) in Shareholders' Equity
Impact of adopting accounting standards (Notes 3 and 14)	30			30				30
Net income	879			870				870	9
Other comprehensive income (loss), net of tax (Note 13)	(187)						(164)	(164)	(23)
Issuance of common stock	8		8					8
Employee benefits trust activity	9		8			1		9
Repurchases of common stock	(379)				(379)			(379)
Cash dividends on common stock	(355)			(355)				(355)
Distributions to noncontrolling interests	(11)								(11)
Stock based awards, net	4		(4)		8			4
Other shareholder transactions	32		17					17	15
BALANCE AT END OF PERIOD at Jul. 01, 2018	$ 8,194	$ 556	$ 1,683	$ 12,009	$ (5,276)	$ (6)	$ (1,667)	$ 7,299	$ 895

NATURE OF OPERATIONS

NATURE OF OPERATIONS	6 Months Ended
	Jul. 01, 2018
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, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc. We are a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products, including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, transmissions, electric power generation systems, batteries and electrified power systems. We sell our products to original equipment manufacturers (OEMs), distributors and other customers worldwide. We serve our customers through a network of approximately 500 wholly-owned and independent distributor locations and over 7,500 dealer locations in more than 190 countries and territories.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
	Jul. 01, 2018
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 (SEC) 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, 2017 . Our interim period financial results for the three and six month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all 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 second quarters of 2018 and 2017 ended on July 1 and July 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 Six months ended July 1, July 2, July 1, July 2, Options excluded 909,394 6,155 458,130 61,345

REVENUE RECOGNITION RECENTLY AD

REVENUE RECOGNITION RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT	6 Months Ended
	Jul. 01, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	Revenue Recognition Accounting Pronouncement Adoption In May 2014, the Financial Accounting Standards Board (FASB) amended its standards related to revenue recognition to replace all existing revenue recognition guidance and provide 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 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 adopted the standard using the modified retrospective approach. We elected to apply this guidance retrospectively only to contracts that were not completed at January 1, 2018. We identified a change in the manner in which we account for certain license income. We license certain technology to our unconsolidated joint ventures that meets the definition of functional under the standard, which requires that revenue be recognized at a point in time rather than the previous requirement of recognizing it over the license term. Using the modified retrospective adoption method, we recorded an adjustment to our opening equity balance at January 1, 2018, to account for the differences between existing license income recorded and what would have been recorded under the new standard for contracts for which we started recognizing revenue prior to the adoption date. There was not a material impact on any individual year from this change. We also identified transactions where revenue recognition was historically limited to the amount of billings not contingent on our future performance. With the allocation provisions of the new model, we accelerated the timing of revenue recognition for amounts related to satisfied performance obligations that would be delayed under the historical guidance. The impact of this change was not material. On an ongoing basis, this amendment is not expected to have a material impact on our Condensed Consolidated Financial Statements, including our internal controls over financial reporting, but will result in expanded disclosures in the Notes to our Condensed Consolidated Financial Statements. We recorded a net increase to opening retained earnings of $28 million , net of tax, as of January 1, 2018, due to the cumulative impact of adopting the new revenue standard, with the impact primarily related to our technology licenses that now qualify for point in time recognition rather than over time. The impact to any individual financial statement line item as a result of applying the new standard, as compared to the old standard, was not material for the six months ended July 1, 2018. NOTE 15. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Accounting Pronouncements Recently Adopted On January 1, 2018, we adopted the new revenue recognition standard in accordance with GAAP. See NOTE 3 , " REVENUE RECOGNITION ," for detailed information about the adoption of this standard. In March 2017, the FASB amended its standards related to the presentation of pension and other postretirement benefit costs in the financial statements beginning January 1, 2018. Under the new standard, we are 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 Condensed Consolidated Statements of Income . In addition, the standard limits the amount eligible for capitalization (into inventory or self-constructed assets) to the amount of service cost. This portion of the standard was applied on a prospective basis. The remainder of the new standard was applied on a retrospective basis using a practical expedient as the estimation basis for the reclassification of prior period non-service cost components of net periodic benefit cost from operating income to non-operating income. As a result, we revised our Condensed Consolidated Statements of Income by the following amounts: Favorable / (Unfavorable) 2017 In millions Q1 Q2 Cost of sales $ 4 $ 2 Selling, general and administrative expenses (10 ) (10 ) Research, development and engineering expenses — (1 ) Total change in operating income (6 ) (9 ) Other non operating income, net 6 9 Total change in income before income taxes $ — $ — In August 2016, the FASB amended its standards related to the classification of certain cash receipts and cash payments which became effective for us beginning January 1, 2018. The new standard made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. Adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements . In January 2016, the FASB amended its standards related to the accounting for certain financial instruments which became effective for us beginning January 1, 2018. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The standard resulted in a cumulative effect increase to opening retained earnings of $2 million in our Condensed Consolidated Financial Statements . 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 i s 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 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. The standard currently requires adoption on a full retrospective basis; however, the FASB has recently approved an amendment to allow adoption on a modified retrospective basis. While the amendment is not yet published, we would expect to adopt on a modified retrospective basis assuming the amendment is published as approved. 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.

REVENUE RECOGNITION SUMMARY OF

REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jul. 01, 2018
Accounting Policies [Abstract]
Significant Accounting Policies	Revenue Recognition Policies Revenue Recognition Sales of Products We sell to customers either through long-term arrangements or standalone purchase orders. Our long-term arrangements generally do not include committed volumes until underlying purchase orders are issued. Our performance obligations vary by contract, but may include diesel and natural gas engines and engine-related component products, including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, transmissions, electric power generation systems, batteries, parts, maintenance services and extended coverage. Typically, we recognize revenue on the products we sell at a point in time, generally in accordance with shipping terms, which reflects the transfer of control to the customer. Since control of construction projects transfer to the customer as the work is performed, revenue on these projects is recognized based on the percentage of inputs incurred to date compared to the total expected cost of inputs, which is reflective of the value transferred to the customer. Revenue is recognized under long-term maintenance and other service agreements over the term of the agreement as underlying services are performed based on the percentage of the cost of services provided to date compared to the total expected cost of services to be provided under the contract. Sales of extended coverage are recognized based on the pattern of expected costs over the extended coverage period or, if such a pattern is unknown, on a straight-line basis over the coverage period as the customer is considered to benefit from our stand ready obligation over the coverage period. In all cases, we believe cost incurred is the most representative depiction of the extent of service performed to date on a particular contract. Our arrangements may include the act of shipping products to our customers after the performance obligation related to that product has been satisfied. We have elected to account for shipping and handling as activities to fulfill the promise to transfer goods and have not allocated revenue to the shipping activity. All related shipping and handling costs are accrued at the time of shipment. Our sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. We have elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue. We grant credit limits and terms to customers based upon traditional practices and competitive conditions. Typical terms vary by market, but payments are generally due in 90 days or less from invoicing for most of our product and service sales, while payments on construction and other similar arrangements may be due on an installment basis. For contracts where the time between cash collection and performance is less than one year, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract. For contracts where this time period exceeds one year, generally the timing difference is the result of business concerns other than financing. We do have a limited amount of customer financing for which we charge or impute interest, but such amounts are immaterial to our Condensed Consolidated Statements of Income. Sales Incentives We provide various sales incentives to both our distribution network and OEM customers. These programs are designed to promote the sale of our products in the channel or encourage the usage of our products by OEM customers. When there is uncertainty surrounding these sales incentives, we may limit the amount of revenue we recognize under a contract until the uncertainty has been resolved. Sales incentives primarily fall into three categories: • Volume rebates; • Market share rebates; and • Aftermarket rebates. For volume rebates, we provide certain customers with rebate opportunities for attaining specified volumes during a particular quarter or year. We consider the expected amount of these rebates at the time of the original sale as we determine the overall transaction price. We update our assessment of the amount of rebates that will be earned quarterly based on our best estimate of the volume levels the customer will reach during the measurement period. For market share rebates, we provide certain customers with rebate opportunities based on the percentage of their production that utilizes our product. These rebates are typically measured either quarterly or annually and we assess them at least quarterly to determine our current estimates of amounts expected to be earned. These estimates are considered in the determination of transaction price at the time of the original sale based on the current market shares, with adjustments made as the level changes. For aftermarket rebates, we provide incentives to promote sales to certain dealers and end-markets. These rebates are typically paid on a quarterly, or more frequent basis. At the time of the sales, we consider the expected amount of these rebates when determining the overall transaction price. Estimates are adjusted at the end of each quarter based on the amounts yet to be paid. These estimates are based on historical experience with the particular program. Sales Returns The initial determination of the transaction price may also be impacted by expected product returns. Rights of return do not exist for the majority of our sales other than for quality issues. We do offer certain return rights in our aftermarket business, where some aftermarket customers are permitted to return small amounts of parts and filters each year, and in our power generation business, which sells portable generators to retail customers. An estimate of future returns is accounted for at the time of sale as a reduction in the overall contract transaction price based on historical return rates. Multiple Performance Obligations Our sales arrangements may include multiple performance obligations. We identify each of the material performance obligations in these arrangements and allocate the total transaction price to each performance obligation based on its relative selling price. In most cases, the individual performance obligations are also sold separately and we use that price as the basis for allocating revenue to the included performance obligations. When an arrangement includes multiple performance obligations and invoicing to the customer does not match the allocated portion of the transaction price, unbilled revenue or deferred revenue is recorded reflecting that difference. Unbilled and deferred revenue are discussed in more detail below. Long-term Contracts Our long-term maintenance agreements often include a variable component of the transaction price. We are generally compensated under such arrangements on a cost per hour of usage basis. We typically can estimate the expected usage over the life of the contract, but reassess the transaction price each quarter and adjust our recognized revenue accordingly. Certain maintenance agreements apply to generators used to provide standby power, which have limited expectations of usage. These agreements may include monthly minimum payments, providing some certainty to the total transaction price. For these particular contracts that relate to standby power, we limit revenue recognized to date to an amount representing the total minimums earned to date under the contract plus any cumulative billings earned in excess of the minimums. We reassess the estimates of progress and transaction price on a quarterly basis. For prime power arrangements, revenue is not subject to such a constraint and is generally equal to the current estimate on a percentage of completion basis times the total expected revenue under the contract. Most of our contracts are for a period of less than one year. We have certain long-term maintenance agreements, construction contracts and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and construction contracts allocated to performance obligations that have not been satisfied as of July 1, 2018, was $676 million . We expect to recognize the related revenue of $247 million over the next 12 months and $429 million over periods up to 10 years . See NOTE 10 ," PRODUCT WARRANTY LIABILITY ," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year or include payment terms that correspond to the value we are providing our customers. Deferred and Unbilled Revenue The timing of our billing does not always match the timing of our revenue recognition. We record deferred revenue when we are entitled to bill a customer in advance of when we are permitted to recognize revenue. Deferred revenue may arise in construction contracts, where billings may occur in advance of performance or in accordance with specific milestones. Deferred revenue may also occur in long-term maintenance contracts, where billings are often based on usage of the underlying equipment, which generally follows a predictable pattern that often will result in the accumulation of collections in advance of our performance of the related maintenance services. Finally, deferred revenue exists in our extended coverage contracts, where the cash is collected prior to the commencement of the coverage period. Deferred revenue is included in our Condensed Consolidated Balance Sheets as a component of current liabilities for those expected to be recognized in revenue in a period of less than one year and long-term liabilities for those expected to be recognized as revenue in a period beyond one year. Deferred revenue is recognized as revenue as (or when) control of the underlying product, project or service passes to the customer under the related contract. We recognize unbilled revenue when the revenue has been earned, but not yet billed. Unbilled revenue is included in our Condensed Consolidated Balance Sheets as a component of current assets for those expected to be collected in a period of less than one year and long-term assets for those expected to be collected in a period beyond one year. Unbilled revenue relates to our right to consideration for our completed performance under a contract. Unbilled revenue generally arises from contractual provisions that delay a portion of the billings on genset deliveries until commissioning occurs. Unbilled revenue may also occur when billings trail the provision of service in construction and long-term maintenance contracts. We periodically assess our unbilled revenue for impairment. The following is a summary of our unbilled and deferred revenue and related activity: In millions July 1, January 1, Unbilled revenue $ 56 $ 6 Deferred revenue, primarily extended warranty 1,101 1,052 Revenue recognized (1) (206 ) — ____________________________________ (1) Relates to year-to-date revenues recognized from amounts included in contract liabilities at the beginning of the period. Revenue recognized in the period from performance obligations satisfied in previous periods was immaterial. We did not record any impairment losses on our unbilled revenues during the three and six months ended July 1, 2018 . Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable represent amounts billed to customers and not yet collected or amounts that have been earned, but may not be billed until the passage of time, and are recorded when the right to consideration becomes unconditional. Trade accounts receivable are recorded at the invoiced amount, which approximates net realizable value, and generally do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on our historical collection experience and by performing an analysis of our accounts receivable in light of the current economic environment. We review our allowance for doubtful accounts on a regular basis. In addition, when necessary, we provide an allowance for the full amount of specific accounts deemed to be uncollectible. Account balances are charged off against the allowance in the period in which we determine that it is probable the receivable will not be recovered. The allowance for doubtful accounts balances for the periods ended July 1, 2018 and December 31, 2017 , were $16 million and $16 million , respectively, and bad debt write-offs were not material. Contract Costs We are required to record an asset for the incremental costs of obtaining a contract with a customer and other costs to fulfill a contract not otherwise required to be immediately expensed when we expect to recover those costs. The only material incremental cost we incur is commission expense, which is generally incurred in the same period as the underlying revenue. Costs to fulfill a contract are generally limited to customer-specific engineering expenses that do not meet the definition of research and development expenses. As a practical expedient, we have elected to recognize these costs of obtaining a contract as an expense when the related contract period is less than one year. When the period exceeds one year, this asset is amortized over the life of the contract. We did not have any material capitalized balances at July 1, 2018 . Extended Warranty In addition, we sell extended warranty coverage on most of our engines and on certain components. We consider a warranty to be extended coverage in any of the following situations: • When a warranty is sold separately or is optional (extended coverage contracts, for example) or • When a warranty provides additional services. The consideration collected is initially deferred and is recognized as revenue in proportion to the costs expected to be incurred in performing services over the contract period. We compare the remaining deferred revenue balance quarterly to the estimated amount of future claims under extended warranty programs and provide an additional accrual when the deferred revenue balance is less than expected future costs.

REVENUE RECOGNITION DISAGGREGAT

REVENUE RECOGNITION DISAGGREGATION OF REVENUES REVENUE RECOGNITION DISAGGREGATION OF REVENUES	6 Months Ended
	Jul. 01, 2018
Revenue from Contract with Customer [Abstract]
REVENUE FROM CONTRACT WITH CUSTOMER	Disaggregation of Revenue Consolidated Revenue The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer. Three months ended Six months ended In millions July 1, July 1, United States $ 3,384 $ 6,422 China 644 1,194 India 247 482 Other International 1,857 3,604 Total net sales $ 6,132 $ 11,702 Segment Revenue Engine segment external sales by market were as follows: Three months ended Six months ended In millions July 1, July 1, Heavy-duty truck $ 730 $ 1,344 Medium-duty truck and bus 714 1,341 Light-duty automotive 330 653 Total on-highway 1,774 3,338 Off-highway 276 525 Total sales $ 2,050 $ 3,863 Distribution segment external sales by region were as follows: Three months ended Six months ended In millions July 1, July 1, North America $ 1,349 $ 2,623 Asia Pacific 211 398 Europe 143 274 China 84 161 Africa and Middle East 62 123 India 49 93 Latin America 45 83 Russia 45 80 Total sales $ 1,988 $ 3,835 Distribution segment external sales by product line were as follows: Three months ended Six months ended In millions July 1, July 1, Parts $ 815 $ 1,618 Engines 460 828 Service 368 719 Power generation 345 670 Total sales $ 1,988 $ 3,835 Components segment external sales by business were as follows: Three months ended Six months ended In millions July 1, July 1, Emission solutions $ 735 $ 1,419 Turbo technologies 201 398 Filtration 257 514 Automated transmissions 141 258 Electronics and fuel systems 68 126 Total sales $ 1,402 $ 2,715 Power Systems segment external sales by product line were as follows: Three months ended Six months ended In millions July 1, July 1, Power generation $ 390 $ 700 Industrial 208 409 Generator technologies 93 177 Total sales $ 691 $ 1,286

PENSION AND OTHER POSTRETIREMEN

PENSION AND OTHER POSTRETIREMENT BENEFITS	6 Months Ended
	Jul. 01, 2018
Retirement Benefits [Abstract]
PENSION AND OTHER POSTRETIREMENT BENEFITS	NOTE 4. 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 Six months ended In millions July 1, July 2, July 1, July 2, Defined benefit pension plans Voluntary contribution $ 4 $ 41 $ 7 $ 84 Mandatory contribution 5 — 11 — Defined benefit pension contributions $ 9 $ 41 $ 18 $ 84 Other postretirement benefit plans Benefit payments (rebates), net $ (2 ) $ 3 $ 5 $ 18 Defined contribution pension plans $ 21 $ 19 $ 61 $ 48 We anticipate making additional defined benefit pension contributions during the remainder of 2018 of $20 million for our U.S. and U.K. pension plans. Approximately $14 million of the estimated $38 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 2018 net periodic pension cost to approximate $86 million . On January 1, 2018, we adopted the new accounting standard related to the presentation of pension and other postretirement benefit costs. See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ," for detailed information about the adoption of this standard. 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 July 1, July 2, July 1, July 2, July 1, July 2, Service cost $ 30 $ 26 $ 7 $ 7 $ — $ — Interest cost 24 27 10 10 3 4 Expected return on plan assets (49 ) (52 ) (18 ) (17 ) — — Recognized net actuarial loss 9 9 8 10 — 1 Net periodic benefit cost $ 14 $ 10 $ 7 $ 10 $ 3 $ 5 Pension U.S. Plans U.K. Plans Other Postretirement Benefits Six months ended In millions July 1, July 2, July 1, July 2, July 1, July 2, Service cost $ 60 $ 53 $ 15 $ 13 $ — $ — Interest cost 49 53 21 20 5 7 Expected return on plan assets (98 ) (103 ) (36 ) (34 ) — — Recognized net actuarial loss 17 18 15 20 — 3 Net periodic benefit cost $ 28 $ 21 $ 15 $ 19 $ 5 $ 10

EQUITY, ROYALTY AND INTEREST IN

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES	6 Months Ended
	Jul. 01, 2018
Equity Method Investments and Joint Ventures [Abstract]
EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES	NOTE 5. 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 Six months ended In millions July 1, July 2, July 1, July 2, Manufacturing entities Beijing Foton Cummins Engine Co., Ltd. $ 24 $ 22 $ 45 $ 55 Dongfeng Cummins Engine Company, Ltd. 17 19 34 41 Chongqing Cummins Engine Company, Ltd. 15 10 32 19 Cummins Westport, Inc. 6 4 12 5 Dongfeng Cummins Emission Solutions Co., Ltd. 4 4 9 7 All other manufacturers 24 19 49 39 Distribution entities Komatsu Cummins Chile, Ltda. 6 8 13 15 Cummins share of net income 96 86 194 181 Royalty and interest income 14 12 31 25 Equity, royalty and interest income from investees $ 110 $ 98 $ 225 $ 206

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jul. 01, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 6. INCOME TAXES Our effective tax rate for the year is expected to approximate 23.0 percent , excluding any discrete tax items that may arise. Our effective tax rates for the three and six months ended July 1, 2018 , were 22.5 percent and 29.0 percent , respectively. The three months ended July 1, 2018, contained only immaterial discrete items. The six months ended July 1, 2018, contained $74 million , or $0.45 per share, of unfavorable net discrete tax items, primarily due to $80 million of discrete items related to the 2017 Tax Cuts and Jobs Act (Tax Legislation). This includes $45 million associated with changes related to the Tax Legislation measurement period adjustment, detailed below, and $35 million associated with the one-time recognition of deferred tax charges at historical tax rates on intercompany profit in inventory. Our effective tax rates for the three and six months ended July 2, 2017 , were 26.4 percent and 26.2 percent , respectively and contained only immaterial discrete tax items. The SEC issued guidance which addressed the uncertainty in the application of GAAP to the Tax Legislation where certain income tax effects could not be finalized at December 31, 2017. This guidance allows entities to record provisional amounts based on current estimates that are updated on a quarterly basis. As a result, our accounting for the effects of the Tax Legislation is not considered complete at this time. The final transition impacts of the Tax Legislation may differ from our estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Legislation, any legislative action to address questions that arise because of the Tax Legislation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Legislation, or any updates or changes to estimates we have utilized to calculate the transition impacts. The SEC requires final calculations to be completed within the one-year measurement period ending December 22, 2018, and reflect any additional guidance issued throughout the year. Any adjustments of provisional amounts will be reported in the period in which the estimates change. We have made provisional estimates of the effects of the Tax Legislation in three primary areas: (1) the one-time transition tax; (2) the withholding tax accrued on those earnings no longer considered permanently reinvested at December 31, 2017 and (3) our existing deferred tax balances. The Internal Revenue Service (IRS) continues to issue guidance, which required adjustment of the one-time transition tax as shown in the table below. The changes during the one-year measurement period for the six months ended July 1, 2018 , for each group consisted of the following: In millions Tax Valuation Adjustments as of July 1, 2018 One-time transition tax $ 40 Withholding tax accrued 5 Net impact of measurement period changes $ 45

MARKETABLE SECURITIES

MARKETABLE SECURITIES	6 Months Ended
	Jul. 01, 2018
Investments, Debt and Equity Securities [Abstract]
MARKETABLE SECURITIES	NOTE 7. MARKETABLE SECURITIES A summary of marketable securities, all of which are classified as current, was as follows: July 1, 2018 December 31, 2017 In millions Cost Gross unrealized (1) Estimated Cost Gross unrealized (1) Estimated Equity securities Debt mutual funds $ 163 $ — $ 163 $ 170 $ — $ 170 Certificates of deposit 34 — 34 12 — 12 Equity mutual funds 14 2 16 12 3 15 Available-for-sale debt securities 1 — 1 1 — 1 Total marketable securities $ 212 $ 2 $ 214 $ 195 $ 3 $ 198 ____________________________________ (1) Unrealized gains and losses for available-for-sale debt securities are recorded in other comprehensive income (See NOTE 13 , " ACCUMULATED OTHER COMPREHENSIVE LOSS ," to our Condensed Consolidated Financial Statements for more information). Effective January 1, 2018, with the adoption of the FASB standard, all unrealized gains and losses for equity securities are recorded in other income, net in the Condensed Consolidated Statements of Income . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ," for detailed information about the adoption of this standard. 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 half of 2018 and for the year ended December 31, 2017. A description of the valuation techniques and inputs used for our Level 2 fair value measures is 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. • Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years . The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement. • 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. • Available-for-sale 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 were as follows: Three months ended Six months ended In millions July 1, July 2, July 1, July 2, Proceeds from sales of marketable securities $ 12 $ 12 $ 81 $ 44 Proceeds from maturities of marketable securities 22 3 35 118 Investments in marketable securities - liquidations $ 34 $ 15 $ 116 $ 162

INVENTORIES

INVENTORIES	6 Months Ended
	Jul. 01, 2018
Inventory Disclosure [Abstract]
INVENTORIES	NOTE 8. INVENTORIES Inventories are stated at the lower of cost or market. Inventories included the following: In millions July 1, December 31, Finished products $ 2,329 $ 2,078 Work-in-process and raw materials 1,355 1,216 Inventories at FIFO cost 3,684 3,294 Excess of FIFO over LIFO (125 ) (128 ) Total inventories $ 3,559 $ 3,166

DEBT

DEBT	6 Months Ended
	Jul. 01, 2018
Debt Disclosure [Abstract]
DEBT	NOTE 9. DEBT Loans Payable and Commercial Paper Loans payable, commercial paper and the related weighted-average interest rates were as follows: In millions July 1, 2018 December 31, Loans payable (1) $ 55 $ 57 Commercial paper (2) 802 298 ____________________________________ (1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate. (2) The weighted average interest rate, inclusive of all brokerage fees, was 2.08 percent and 1.56 percent at July 1, 2018 and December 31, 2017 , respectively. We can issue up to $2.75 billion of unsecured, short-term promissory notes ("commercial paper") pursuant to our board authorized commercial paper programs. The programs facilitate the private placement of unsecured short-term debt through third party brokers. We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes. Revolving Credit Facilities We have access to committed credit facilities that total $2.75 billion , including a $1.0 billion , 364-day facility that expires September 14, 2018 and a $1.75 billion , 5-year 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 July 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 55 76 Unamortized discount (53 ) (54 ) Fair value adjustments due to hedge on indebtedness 18 35 Capital leases 112 121 Total long-term debt 1,605 1,651 Less: Current maturities of long-term debt 49 63 Long-term debt $ 1,556 $ 1,588 Principal payments required on long-term debt during the next five years are as follows: In millions 2018 2019 2020 2021 2022 Principal payments $ 30 $ 50 $ 12 $ 8 $ 8 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 July 1, December 31, Fair value of total debt (1) $ 2,668 $ 2,301 Carrying values of total debt 2,462 2,006 _________________________________________________ (1) The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY

PRODUCT WARRANTY LIABILITY	6 Months Ended
	Jul. 01, 2018
Product Warranties Disclosures [Abstract]
PRODUCT WARRANTY LIABILITY	NOTE 10. PRODUCT WARRANTY LIABILITY A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs was as follows: In millions July 1, July 2, Balance, beginning of year $ 1,687 $ 1,414 Provision for warranties issued 222 182 Deferred revenue on extended warranty contracts sold 139 101 Campaigns (1) 403 57 Payments (212 ) (199 ) Amortization of deferred revenue on extended warranty contracts (118 ) (109 ) Changes in estimates for pre-existing warranties 10 74 Foreign currency translation (6 ) 1 Other 5 — Balance, end of period $ 2,130 $ 1,521 ____________________________________ (1) See NOTE 12 , " COMMITMENTS AND CONTINGENCIES ," for additional information on campaigns. Warranty related deferred revenues and the long-term portion of the warranty liabilities on our Condensed Consolidated Balance Sheets were as follows: In millions July 1, December 31, Balance Sheet Location Deferred revenue related to extended coverage programs Current portion $ 228 $ 231 Current portion of deferred revenue Long-term portion 558 536 Other liabilities and deferred revenue Total $ 786 $ 767 Long-term portion of warranty liability $ 880 $ 466 Other liabilities and deferred revenue

ACCRUED EXPENSES, OTHER LIABILI

ACCRUED EXPENSES, OTHER LIABILITIES AND DEFERRED REVENUES	6 Months Ended
	Jul. 01, 2018
Accrued Liabilities and Other Liabilities [Abstract]
ACCRUED EXPENSES, OTHER LIABILITIES AND DEFERRED REVENUES	NOTE 11. OTHER ACCRUED EXPENSES AND OTHER LIABILITIES AND DEFERRED REVENUE Other accrued expenses included the following: In millions July 1, 2018 December 31, 2017 Other taxes payable $ 178 $ 197 Marketing accruals 169 146 Income taxes payable 102 77 Other 357 495 Other accrued expenses $ 806 $ 915 Other liabilities and deferred revenue included the following: In millions July 1, December 31, Accrued warranty $ 880 $ 466 Deferred revenue 622 604 Deferred income taxes 400 391 Income taxes payable (1) 252 281 Accrued compensation 152 151 Other long-term liabilities 135 134 Other liabilities and deferred revenue $ 2,441 $ 2,027 ____________________________________________________ (1) Long-term income taxes payable are the result of the 2017 Tax Legislation and relate to the non-current portion of

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jul. 01, 2018
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 12. 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. Engine System Campaign Accrual During 2017, the California Air Resources Board (CARB) and the U.S. Environmental Protection Agency (EPA) selected certain of our pre-2013 model year engine systems for additional emissions testing. Some of these engine systems failed CARB and EPA tests as a result of degradation of an aftertreatment component. We recorded charges of $36 million to cost of sales in our Consolidated Statements of Income during 2017 for the then expected cost of field campaigns to repair some of these engine systems. We concluded based upon additional emission testing performed, and further discussions with the EPA and CARB in the first quarter of 2018, that the field campaigns should be expanded to include a larger population of our engine systems that are subject to the aftertreatment component degradation, including our model years 2010 through 2015. As a result, we recorded an additional charge of $187 million , or $0.87 per share, to cost of sales in our Condensed Consolidated Statements of Income ( $94 million recorded in the Components segment and $93 million in the Engine segment) in the first quarter of 2018. In the second quarter of 2018, we reached agreement with the CARB and EPA regarding our plans to address the affected populations. In finalizing our plans, we have increased the number of systems to be addressed through hardware replacement compared to our assumptions last quarter. As a result of this agreement and considering that the hardware replacement solution is a higher cost approach than that previously assumed on some of the engine systems, we recorded an additional charge of $181 million , or $0.85 per share, to cost of sales in our Condensed Consolidated Statements of Income ( $91 million recorded in the Engine segment and $90 million in the Components segment) in the second quarter of 2018. With the additional charge in the second quarter of 2018, the total accrual related to this matter is $404 million , which represents our best estimate of the cost to execute the campaigns. The campaigns will launch in phases across the affected population and are expected to begin in the third quarter of 2018 with a projection to be substantially completed by December 31, 2020. 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 July 1, 2018, the maximum potential loss related to these guarantees was $56 million . We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At July 1, 2018, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $82 million . 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 two years . At July 1, 2018, the total commitments under these contracts were $62 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 $110 million at July 1, 2018 . 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)	6 Months Ended
	Jul. 01, 2018
Equity [Abstract]
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	NOTE 13. 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 Balance at April 2, 2017 $ (664 ) $ (1,060 ) $ (1 ) $ (7 ) $ (1,732 ) Other comprehensive income before reclassifications Before tax amount — 105 1 (2 ) 104 $ 1 $ 105 Tax benefit (expense) — (4 ) (1 ) 1 (4 ) — (4 ) After tax amount — 101 — (1 ) 100 1 101 Amounts reclassified from accumulated other comprehensive loss (1) 15 — 1 1 17 — 17 Net current period other comprehensive income (loss) 15 101 1 — 117 $ 1 $ 118 Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Balance at April 1, 2018 $ (681 ) $ (720 ) $ — $ 4 $ (1,397 ) Other comprehensive income before reclassifications Before tax amount — (328 ) — 4 (324 ) $ (17 ) $ (341 ) Tax benefit (expense) — 45 — (2 ) 43 — 43 After tax amount — (283 ) — 2 (281 ) (17 ) (298 ) Amounts reclassified from accumulated other comprehensive loss (1) 13 — — (2 ) 11 1 12 Net current period other comprehensive income (loss) 13 (283 ) — — (270 ) $ (16 ) $ (286 ) Balance at July 1, 2018 $ (668 ) $ (1,003 ) $ — $ 4 $ (1,667 ) ____________________________________ (1) Amounts are net of tax. 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 six months ended: Six months ended In millions Change in Foreign Unrealized gain (1) Unrealized gain Total Noncontrolling Total Balance at December 31, 2016 $ (685 ) $ (1,127 ) $ (1 ) $ (8 ) $ (1,821 ) Other comprehensive income before reclassifications Before tax amount 8 180 2 (8 ) 182 $ 14 $ 196 Tax benefit (expense) (3 ) (12 ) (1 ) 3 (13 ) — (13 ) After tax amount 5 168 1 (5 ) 169 14 183 Amounts reclassified from accumulated other comprehensive loss (2) 31 — — 6 37 — 37 Net current period other comprehensive income (loss) 36 168 1 1 206 $ 14 $ 220 Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Balance at December 31, 2017 $ (689 ) $ (812 ) $ 1 $ (3 ) $ (1,503 ) Other comprehensive income before reclassifications Before tax amount (8 ) (203 ) — 15 (196 ) $ (24 ) $ (220 ) Tax benefit (expense) 2 12 — (6 ) 8 — 8 After tax amount (6 ) (191 ) — 9 (188 ) (24 ) (212 ) Amounts reclassified from accumulated other comprehensive loss (2) 27 — (1 ) (2 ) 24 1 25 Net current period other comprehensive income (loss) 21 (191 ) (1 ) 7 (164 ) $ (23 ) $ (187 ) Balance at July 1, 2018 $ (668 ) $ (1,003 ) $ — $ 4 $ (1,667 ) ____________________________________ (1) We adopted the new accounting pronouncement "Accounting for Certain Financial Instruments" on January 1, 2018, which moved the treatment of unrealized gains and losses for non-debt securities directly to the Condensed Consolidated Statements of Income on a prospective basis. The impact of adopting this standard includes a one-time cumulative effect adjustment to opening retained earnings of $2 million . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ," to our Condensed Consolidated Financial Statements for more information. (2) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

OPERATING SEGMENTS

OPERATING SEGMENTS	6 Months Ended
	Jul. 01, 2018
Segment Reporting [Abstract]
OPERATING SEGMENTS	NOTE 14. 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, Power Systems and Electrified Power. 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 formed the Electrified Power segment, effective January 1, 2018, which will provide fully electric and hybrid powertrain solutions along with innovative components and subsystems to serve all our markets as they adopt electrification, meeting the needs of our OEM partners and end customers. Our Electrified Power segment will design, manufacture, sell and support electrified power systems ranging from fully electric to hybrid. We are currently developing the Cummins Electric Power Battery and the Cummins Hybrid Plug-In systems for urban bus, which are expected to launch in 2019 and 2020, respectively. We also design and manufacture battery modules, packs and systems for commercial, industrial and material handling applications. We use a range of cell chemistries which are suitable for pure electric, hybrid and plug-in hybrid applications. In addition to electrified powertrains for urban bus, we intend to deliver product offerings to future markets, including pick-up and delivery applications and other markets as they adopt electric solutions. We invest in and utilize our internal research and development capabilities, along with strategic acquisitions and partnerships to meet our objectives. Effective January 1, 2018, we changed our measure to EBITDA (defined as earnings before interest expense, income taxes, noncontrolling interests, depreciation and amortization) as the primary basis for the CODM to evaluate the performance of each of our reportable operating segments. EBITDA assists investors and debt holders in comparing our performance on a consistent basis without regard for depreciation and amortization, which can vary significantly depending upon many factors. Prior periods have been revised to reflect the current presentation. 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 changes in cash surrender value of corporate owned life insurance to individual segments. EBITDA may not be consistent with measures used by other companies. Summarized financial information regarding our reportable operating segments for the three months ended is shown in the table below: In millions Engine Distribution Components Power Systems Electrified Power Total Segment Intersegment Eliminations (1) Total Three months ended July 1, 2018 External sales $ 2,050 $ 1,988 $ 1,402 $ 691 $ 1 $ 6,132 $ — $ 6,132 Intersegment sales 646 6 485 555 — 1,692 (1,692 ) — Total sales 2,696 1,994 1,887 1,246 1 7,824 (1,692 ) 6,132 Research, development and engineering expenses 76 5 62 60 16 219 — 219 Equity, royalty and interest income from investees 67 11 14 18 — 110 — 110 Interest income 3 3 2 2 — 10 — 10 Segment EBITDA 362 145 237 186 (21 ) 909 (12 ) 897 Depreciation and amortization (2) 47 27 47 32 1 154 — 154 Three months ended July 2, 2017 External sales $ 1,711 $ 1,716 $ 1,064 $ 587 $ — $ 5,078 $ — $ 5,078 Intersegment sales 596 6 390 430 — 1,422 (1,422 ) — Total sales 2,307 1,722 1,454 1,017 — 6,500 (1,422 ) 5,078 Research, development and engineering expenses 63 4 58 50 — 175 — 175 Equity, royalty and interest income from investees 56 13 15 14 — 98 — 98 Interest income 2 1 1 1 — 5 — 5 Segment EBITDA 323 127 228 90 — 768 (4 ) 764 Depreciation and amortization (2) 46 31 38 29 — 144 — 144 ____________________________________ (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended July 1, 2018 and July 2, 2017 . (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. A portion of depreciation expense is included in "Research, development and engineering expenses" above. Summarized financial information regarding our reportable operating segments for the six months ended is shown in the table below: In millions Engine Distribution Components Power Systems Electrified Power Total Segment Intersegment Eliminations (1) Total Six months ended July 1, 2018 External sales $ 3,863 $ 3,835 $ 2,715 $ 1,286 $ 3 $ 11,702 $ — $ 11,702 Intersegment sales 1,279 12 925 1,034 — 3,250 (3,250 ) — Total sales 5,142 3,847 3,640 2,320 3 14,952 (3,250 ) 11,702 Research, development and engineering expenses 155 10 124 117 23 429 — 429 Equity, royalty and interest income from investees 134 24 30 37 — 225 — 225 Interest income 5 5 3 4 — 17 — 17 Segment EBITDA 648 268 464 328 (31 ) 1,677 (80 ) 1,597 Depreciation and amortization (2) 96 54 93 62 2 307 — 307 Six months ended July 2, 2017 External sales $ 3,168 $ 3,353 $ 2,044 $ 1,102 $ — $ 9,667 $ — $ 9,667 Intersegment sales 1,162 14 754 797 — 2,727 (2,727 ) — Total sales 4,330 3,367 2,798 1,899 — 12,394 (2,727 ) 9,667 Research, development and engineering expenses 117 8 108 100 — 333 — 333 Equity, royalty and interest income from investees 128 24 28 26 — 206 — 206 Interest income 3 2 1 1 — 7 — 7 Segment EBITDA 596 257 444 175 — 1,472 (3 ) 1,469 Depreciation and amortization (2) 90 61 75 57 — 283 — 283 ____________________________________ (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended July 1, 2018 and July 2, 2017 . (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 was $1 million and $1 million for the six month periods ended July 1, 2018 and July 2, 2017, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses" above. 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 Six months ended In millions July 1, July 2, July 1, July 2, Total EBITDA $ 897 $ 764 $ 1,597 $ 1,469 Less: Depreciation and amortization 154 144 307 283 Interest expense 28 21 52 39 Income before income taxes $ 715 $ 599 $ 1,238 $ 1,147

RECENTLY ADOPTED AND RECENTLY I

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	6 Months Ended
	Jul. 01, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	Revenue Recognition Accounting Pronouncement Adoption In May 2014, the Financial Accounting Standards Board (FASB) amended its standards related to revenue recognition to replace all existing revenue recognition guidance and provide 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 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 adopted the standard using the modified retrospective approach. We elected to apply this guidance retrospectively only to contracts that were not completed at January 1, 2018. We identified a change in the manner in which we account for certain license income. We license certain technology to our unconsolidated joint ventures that meets the definition of functional under the standard, which requires that revenue be recognized at a point in time rather than the previous requirement of recognizing it over the license term. Using the modified retrospective adoption method, we recorded an adjustment to our opening equity balance at January 1, 2018, to account for the differences between existing license income recorded and what would have been recorded under the new standard for contracts for which we started recognizing revenue prior to the adoption date. There was not a material impact on any individual year from this change. We also identified transactions where revenue recognition was historically limited to the amount of billings not contingent on our future performance. With the allocation provisions of the new model, we accelerated the timing of revenue recognition for amounts related to satisfied performance obligations that would be delayed under the historical guidance. The impact of this change was not material. On an ongoing basis, this amendment is not expected to have a material impact on our Condensed Consolidated Financial Statements, including our internal controls over financial reporting, but will result in expanded disclosures in the Notes to our Condensed Consolidated Financial Statements. We recorded a net increase to opening retained earnings of $28 million , net of tax, as of January 1, 2018, due to the cumulative impact of adopting the new revenue standard, with the impact primarily related to our technology licenses that now qualify for point in time recognition rather than over time. The impact to any individual financial statement line item as a result of applying the new standard, as compared to the old standard, was not material for the six months ended July 1, 2018. NOTE 15. RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Accounting Pronouncements Recently Adopted On January 1, 2018, we adopted the new revenue recognition standard in accordance with GAAP. See NOTE 3 , " REVENUE RECOGNITION ," for detailed information about the adoption of this standard. In March 2017, the FASB amended its standards related to the presentation of pension and other postretirement benefit costs in the financial statements beginning January 1, 2018. Under the new standard, we are 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 Condensed Consolidated Statements of Income . In addition, the standard limits the amount eligible for capitalization (into inventory or self-constructed assets) to the amount of service cost. This portion of the standard was applied on a prospective basis. The remainder of the new standard was applied on a retrospective basis using a practical expedient as the estimation basis for the reclassification of prior period non-service cost components of net periodic benefit cost from operating income to non-operating income. As a result, we revised our Condensed Consolidated Statements of Income by the following amounts: Favorable / (Unfavorable) 2017 In millions Q1 Q2 Cost of sales $ 4 $ 2 Selling, general and administrative expenses (10 ) (10 ) Research, development and engineering expenses — (1 ) Total change in operating income (6 ) (9 ) Other non operating income, net 6 9 Total change in income before income taxes $ — $ — In August 2016, the FASB amended its standards related to the classification of certain cash receipts and cash payments which became effective for us beginning January 1, 2018. The new standard made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. Adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements . In January 2016, the FASB amended its standards related to the accounting for certain financial instruments which became effective for us beginning January 1, 2018. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The standard resulted in a cumulative effect increase to opening retained earnings of $2 million in our Condensed Consolidated Financial Statements . 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 i s 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 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. The standard currently requires adoption on a full retrospective basis; however, the FASB has recently approved an amendment to allow adoption on a modified retrospective basis. While the amendment is not yet published, we would expect to adopt on a modified retrospective basis assuming the amendment is published as approved. 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.

REVENUE RECOGNITION SUMMARY O25

REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jul. 01, 2018
Accounting Policies [Abstract]
Revenue Recognition, Sales of Goods	Revenue Recognition Sales of Products We sell to customers either through long-term arrangements or standalone purchase orders. Our long-term arrangements generally do not include committed volumes until underlying purchase orders are issued. Our performance obligations vary by contract, but may include diesel and natural gas engines and engine-related component products, including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, transmissions, electric power generation systems, batteries, parts, maintenance services and extended coverage. Typically, we recognize revenue on the products we sell at a point in time, generally in accordance with shipping terms, which reflects the transfer of control to the customer. Since control of construction projects transfer to the customer as the work is performed, revenue on these projects is recognized based on the percentage of inputs incurred to date compared to the total expected cost of inputs, which is reflective of the value transferred to the customer. Revenue is recognized under long-term maintenance and other service agreements over the term of the agreement as underlying services are performed based on the percentage of the cost of services provided to date compared to the total expected cost of services to be provided under the contract. Sales of extended coverage are recognized based on the pattern of expected costs over the extended coverage period or, if such a pattern is unknown, on a straight-line basis over the coverage period as the customer is considered to benefit from our stand ready obligation over the coverage period. In all cases, we believe cost incurred is the most representative depiction of the extent of service performed to date on a particular contract. Our arrangements may include the act of shipping products to our customers after the performance obligation related to that product has been satisfied. We have elected to account for shipping and handling as activities to fulfill the promise to transfer goods and have not allocated revenue to the shipping activity. All related shipping and handling costs are accrued at the time of shipment. Our sales arrangements may include the collection of sales and other similar taxes that are then remitted to the related taxing authority. We have elected to present the amounts collected for these taxes net of the related tax expense rather than presenting them as additional revenue. We grant credit limits and terms to customers based upon traditional practices and competitive conditions. Typical terms vary by market, but payments are generally due in 90 days or less from invoicing for most of our product and service sales, while payments on construction and other similar arrangements may be due on an installment basis. For contracts where the time between cash collection and performance is less than one year, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract. For contracts where this time period exceeds one year, generally the timing difference is the result of business concerns other than financing. We do have a limited amount of customer financing for which we charge or impute interest, but such amounts are immaterial to our
Revenue Recognition, Incentives	Sales Incentives We provide various sales incentives to both our distribution network and OEM customers. These programs are designed to promote the sale of our products in the channel or encourage the usage of our products by OEM customers. When there is uncertainty surrounding these sales incentives, we may limit the amount of revenue we recognize under a contract until the uncertainty has been resolved. Sales incentives primarily fall into three categories: • Volume rebates; • Market share rebates; and • Aftermarket rebates. For volume rebates, we provide certain customers with rebate opportunities for attaining specified volumes during a particular quarter or year. We consider the expected amount of these rebates at the time of the original sale as we determine the overall transaction price. We update our assessment of the amount of rebates that will be earned quarterly based on our best estimate of the volume levels the customer will reach during the measurement period. For market share rebates, we provide certain customers with rebate opportunities based on the percentage of their production that utilizes our product. These rebates are typically measured either quarterly or annually and we assess them at least quarterly to determine our current estimates of amounts expected to be earned. These estimates are considered in the determination of transaction price at the time of the original sale based on the current market shares, with adjustments made as the level changes. For aftermarket rebates, we provide incentives to promote sales to certain dealers and end-markets. These rebates are typically paid on a quarterly, or more frequent basis. At the time of the sales, we consider the expected amount of these rebates when determining the overall transaction price. Estimates are adjusted at the end of each quarter based on the amounts yet to be paid. These estimates are based on historical experience with the particular program.
Revenue Recognition, Sales Returns	Sales Returns The initial determination of the transaction price may also be impacted by expected product returns. Rights of return do not exist for the majority of our sales other than for quality issues. We do offer certain return rights in our aftermarket business, where some aftermarket customers are permitted to return small amounts of parts and filters each year, and in our power generation business, which sells portable generators to retail customers. An estimate of future returns is accounted for at the time of sale as a reduction in the overall contract transaction price based on historical return rates.
Revenue Recognition, Multiple-deliverable Arrangements, Determination of Selling Price, Amount	Multiple Performance Obligations Our sales arrangements may include multiple performance obligations. We identify each of the material performance obligations in these arrangements and allocate the total transaction price to each performance obligation based on its relative selling price. In most cases, the individual performance obligations are also sold separately and we use that price as the basis for allocating revenue to the included performance obligations. When an arrangement includes multiple performance obligations and invoicing to the customer does not match the allocated portion of the transaction price, unbilled revenue or deferred revenue is recorded reflecting that difference. Unbilled and deferred revenue are discussed in more detail below.
Revenue Recognition, Long-term Contracts	Long-term Contracts Our long-term maintenance agreements often include a variable component of the transaction price. We are generally compensated under such arrangements on a cost per hour of usage basis. We typically can estimate the expected usage over the life of the contract, but reassess the transaction price each quarter and adjust our recognized revenue accordingly. Certain maintenance agreements apply to generators used to provide standby power, which have limited expectations of usage. These agreements may include monthly minimum payments, providing some certainty to the total transaction price. For these particular contracts that relate to standby power, we limit revenue recognized to date to an amount representing the total minimums earned to date under the contract plus any cumulative billings earned in excess of the minimums. We reassess the estimates of progress and transaction price on a quarterly basis. For prime power arrangements, revenue is not subject to such a constraint and is generally equal to the current estimate on a percentage of completion basis times the total expected revenue under the contract. Most of our contracts are for a period of less than one year. We have certain long-term maintenance agreements, construction contracts and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and construction contracts allocated to performance obligations that have not been satisfied as of July 1, 2018, was $676 million . We expect to recognize the related revenue of $247 million over the next 12 months and $429 million over periods up to 10 years . See NOTE 10 ," PRODUCT WARRANTY LIABILITY ," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year or include payment terms that correspond to the value we are providing our customers.
Revenue Recognition, Deferred Revenue	Deferred and Unbilled Revenue The timing of our billing does not always match the timing of our revenue recognition. We record deferred revenue when we are entitled to bill a customer in advance of when we are permitted to recognize revenue. Deferred revenue may arise in construction contracts, where billings may occur in advance of performance or in accordance with specific milestones. Deferred revenue may also occur in long-term maintenance contracts, where billings are often based on usage of the underlying equipment, which generally follows a predictable pattern that often will result in the accumulation of collections in advance of our performance of the related maintenance services. Finally, deferred revenue exists in our extended coverage contracts, where the cash is collected prior to the commencement of the coverage period. Deferred revenue is included in our Condensed Consolidated Balance Sheets as a component of current liabilities for those expected to be recognized in revenue in a period of less than one year and long-term liabilities for those expected to be recognized as revenue in a period beyond one year. Deferred revenue is recognized as revenue as (or when) control of the underlying product, project or service passes to the customer under the related contract.
Revenue Recognition, Unbilled Revenue	We recognize unbilled revenue when the revenue has been earned, but not yet billed. Unbilled revenue is included in our Condensed Consolidated Balance Sheets as a component of current assets for those expected to be collected in a period of less than one year and long-term assets for those expected to be collected in a period beyond one year. Unbilled revenue relates to our right to consideration for our completed performance under a contract. Unbilled revenue generally arises from contractual provisions that delay a portion of the billings on genset deliveries until commissioning occurs. Unbilled revenue may also occur when billings trail the provision of service in construction and long-term maintenance contracts. We periodically assess our unbilled revenue for impairment.
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy	Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable represent amounts billed to customers and not yet collected or amounts that have been earned, but may not be billed until the passage of time, and are recorded when the right to consideration becomes unconditional. Trade accounts receivable are recorded at the invoiced amount, which approximates net realizable value, and generally do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on our historical collection experience and by performing an analysis of our accounts receivable in light of the current economic environment. We review our allowance for doubtful accounts on a regular basis. In addition, when necessary, we provide an allowance for the full amount of specific accounts deemed to be uncollectible. Account balances are charged off against the allowance in the period in which we determine that it is probable the receivable will not be recovered. The allowance for doubtful accounts balances for the periods ended July 1, 2018 and December 31, 2017 , were $16 million and $16 million , respectively, and bad debt write-offs were not material.
Precontract Costs, Policy	Contract Costs We are required to record an asset for the incremental costs of obtaining a contract with a customer and other costs to fulfill a contract not otherwise required to be immediately expensed when we expect to recover those costs. The only material incremental cost we incur is commission expense, which is generally incurred in the same period as the underlying revenue. Costs to fulfill a contract are generally limited to customer-specific engineering expenses that do not meet the definition of research and development expenses. As a practical expedient, we have elected to recognize these costs of obtaining a contract as an expense when the related contract period is less than one year. When the period exceeds one year, this asset is amortized over the life of the contract. We did not have any material capitalized balances at July 1, 2018 .
Extended Product Warranty, Policy	Extended Warranty In addition, we sell extended warranty coverage on most of our engines and on certain components. We consider a warranty to be extended coverage in any of the following situations: • When a warranty is sold separately or is optional (extended coverage contracts, for example) or • When a warranty provides additional services. The consideration collected is initially deferred and is recognized as revenue in proportion to the costs expected to be incurred in performing services over the contract period. We compare the remaining deferred revenue balance quarterly to the estimated amount of future claims under extended warranty programs and provide an additional accrual when the deferred revenue balance is less than expected future costs.

BASIS OF PRESENTATION (Tables)

BASIS OF PRESENTATION (Tables)	6 Months Ended
	Jul. 01, 2018
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 Six months ended July 1, July 2, July 1, July 2, Options excluded 909,394 6,155 458,130 61,345

REVENUE RECOGNITION SUMMARY O27

REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jul. 01, 2018
Accounting Policies [Abstract]
Contract with Customer, Asset and Liability	The following is a summary of our unbilled and deferred revenue and related activity: In millions July 1, January 1, Unbilled revenue $ 56 $ 6 Deferred revenue, primarily extended warranty 1,101 1,052 Revenue recognized (1) (206 ) — ____________________________________ (1) Relates to year-to-date revenues recognized from amounts included in contract liabilities at the beginning of the period.

REVENUE RECOGNITION DISAGGREG28

REVENUE RECOGNITION DISAGGREGATION OF REVENUES REVENUE RECOGNITION DISAGGREGATION OF REVENUES (Tables)	6 Months Ended
	Jul. 01, 2018
Disaggregation of Revenue [Line Items]
Revenue from External Customers by Geographic Areas	The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer. Three months ended Six months ended In millions July 1, July 1, United States $ 3,384 $ 6,422 China 644 1,194 India 247 482 Other International 1,857 3,604 Total net sales $ 6,132 $ 11,702
Engine
Disaggregation of Revenue [Line Items]
Revenue from External Customers by Market	Engine segment external sales by market were as follows: Three months ended Six months ended In millions July 1, July 1, Heavy-duty truck $ 730 $ 1,344 Medium-duty truck and bus 714 1,341 Light-duty automotive 330 653 Total on-highway 1,774 3,338 Off-highway 276 525 Total sales $ 2,050 $ 3,863
Distribution
Disaggregation of Revenue [Line Items]
Revenue from External Customers by Geographic Areas	Distribution segment external sales by region were as follows: Three months ended Six months ended In millions July 1, July 1, North America $ 1,349 $ 2,623 Asia Pacific 211 398 Europe 143 274 China 84 161 Africa and Middle East 62 123 India 49 93 Latin America 45 83 Russia 45 80 Total sales $ 1,988 $ 3,835
Revenue from External Customers by Products and Services	Distribution segment external sales by product line were as follows: Three months ended Six months ended In millions July 1, July 1, Parts $ 815 $ 1,618 Engines 460 828 Service 368 719 Power generation 345 670 Total sales $ 1,988 $ 3,835
Components
Disaggregation of Revenue [Line Items]
Revenue from External Customers by Products and Services	Components segment external sales by business were as follows: Three months ended Six months ended In millions July 1, July 1, Emission solutions $ 735 $ 1,419 Turbo technologies 201 398 Filtration 257 514 Automated transmissions 141 258 Electronics and fuel systems 68 126 Total sales $ 1,402 $ 2,715
Power Systems
Disaggregation of Revenue [Line Items]
Revenue from External Customers by Products and Services	Power Systems segment external sales by product line were as follows: Three months ended Six months ended In millions July 1, July 1, Power generation $ 390 $ 700 Industrial 208 409 Generator technologies 93 177 Total sales $ 691 $ 1,286

PENSION AND OTHER POSTRETIREM29

PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)	6 Months Ended
	Jul. 01, 2018
Retirement Benefits [Abstract]
Schedule of Defined Benefit Plans Disclosures Cash Contributions	Contributions to these plans were as follows: Three months ended Six months ended In millions July 1, July 2, July 1, July 2, Defined benefit pension plans Voluntary contribution $ 4 $ 41 $ 7 $ 84 Mandatory contribution 5 — 11 — Defined benefit pension contributions $ 9 $ 41 $ 18 $ 84 Other postretirement benefit plans Benefit payments (rebates), net $ (2 ) $ 3 $ 5 $ 18 Defined contribution pension plans $ 21 $ 19 $ 61 $ 48
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 July 1, July 2, July 1, July 2, July 1, July 2, Service cost $ 30 $ 26 $ 7 $ 7 $ — $ — Interest cost 24 27 10 10 3 4 Expected return on plan assets (49 ) (52 ) (18 ) (17 ) — — Recognized net actuarial loss 9 9 8 10 — 1 Net periodic benefit cost $ 14 $ 10 $ 7 $ 10 $ 3 $ 5 Pension U.S. Plans U.K. Plans Other Postretirement Benefits Six months ended In millions July 1, July 2, July 1, July 2, July 1, July 2, Service cost $ 60 $ 53 $ 15 $ 13 $ — $ — Interest cost 49 53 21 20 5 7 Expected return on plan assets (98 ) (103 ) (36 ) (34 ) — — Recognized net actuarial loss 17 18 15 20 — 3 Net periodic benefit cost $ 28 $ 21 $ 15 $ 19 $ 5 $ 10

EQUITY, ROYALTY AND INTEREST 30

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Tables)	6 Months Ended
	Jul. 01, 2018
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 Six months ended In millions July 1, July 2, July 1, July 2, Manufacturing entities Beijing Foton Cummins Engine Co., Ltd. $ 24 $ 22 $ 45 $ 55 Dongfeng Cummins Engine Company, Ltd. 17 19 34 41 Chongqing Cummins Engine Company, Ltd. 15 10 32 19 Cummins Westport, Inc. 6 4 12 5 Dongfeng Cummins Emission Solutions Co., Ltd. 4 4 9 7 All other manufacturers 24 19 49 39 Distribution entities Komatsu Cummins Chile, Ltda. 6 8 13 15 Cummins share of net income 96 86 194 181 Royalty and interest income 14 12 31 25 Equity, royalty and interest income from investees $ 110 $ 98 $ 225 $ 206

INCOME TAXES Tax Valuation Adju

INCOME TAXES Tax Valuation Adjustments (Tables)	6 Months Ended
	Jul. 01, 2018
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Tax Valuation Adjustments [Abstract]
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]	The changes during the one-year measurement period for the six months ended July 1, 2018 , for each group consisted of the following: In millions Tax Valuation Adjustments as of July 1, 2018 One-time transition tax $ 40 Withholding tax accrued 5 Net impact of measurement period changes $ 45

MARKETABLE SECURITIES (Tables)

MARKETABLE SECURITIES (Tables)	6 Months Ended
	Jul. 01, 2018
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: July 1, 2018 December 31, 2017 In millions Cost Gross unrealized (1) Estimated Cost Gross unrealized (1) Estimated Equity securities Debt mutual funds $ 163 $ — $ 163 $ 170 $ — $ 170 Certificates of deposit 34 — 34 12 — 12 Equity mutual funds 14 2 16 12 3 15 Available-for-sale debt securities 1 — 1 1 — 1 Total marketable securities $ 212 $ 2 $ 214 $ 195 $ 3 $ 198 ____________________________________ (1) Unrealized gains and losses for available-for-sale debt securities are recorded in other comprehensive income (See NOTE 13 , " ACCUMULATED OTHER COMPREHENSIVE LOSS ," to our Condensed Consolidated Financial Statements for more information). Effective January 1, 2018, with the adoption of the FASB standard, all unrealized gains and losses for equity securities are recorded in other income, net in the Condensed Consolidated Statements of Income . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Schedule of proceeds from sales and maturities	The proceeds from sales and maturities of marketable securities were as follows: Three months ended Six months ended In millions July 1, July 2, July 1, July 2, Proceeds from sales of marketable securities $ 12 $ 12 $ 81 $ 44 Proceeds from maturities of marketable securities 22 3 35 118 Investments in marketable securities - liquidations $ 34 $ 15 $ 116 $ 162

INVENTORIES (Tables)

INVENTORIES (Tables)	6 Months Ended
	Jul. 01, 2018
Inventory Disclosure [Abstract]
Inventories	Inventories are stated at the lower of cost or market. Inventories included the following: In millions July 1, December 31, Finished products $ 2,329 $ 2,078 Work-in-process and raw materials 1,355 1,216 Inventories at FIFO cost 3,684 3,294 Excess of FIFO over LIFO (125 ) (128 ) Total inventories $ 3,559 $ 3,166

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Jul. 01, 2018
Debt Disclosure [Abstract]
Schedule of Short-term Debt	Loans payable, commercial paper and the related weighted-average interest rates were as follows: In millions July 1, 2018 December 31, Loans payable (1) $ 55 $ 57 Commercial paper (2) 802 298 ____________________________________ (1) Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate. (2) The weighted average interest rate, inclusive of all brokerage fees, was 2.08 percent and 1.56 percent at July 1, 2018 and December 31, 2017
Summary of long-term debt	A summary of long-term debt was as follows: In millions July 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 55 76 Unamortized discount (53 ) (54 ) Fair value adjustments due to hedge on indebtedness 18 35 Capital leases 112 121 Total long-term debt 1,605 1,651 Less: Current maturities of long-term debt 49 63 Long-term debt $ 1,556 $ 1,588
Principal repayments on long-term debt	Principal payments required on long-term debt during the next five years are as follows: In millions 2018 2019 2020 2021 2022 Principal payments $ 30 $ 50 $ 12 $ 8 $ 8
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 July 1, December 31, Fair value of total debt (1) $ 2,668 $ 2,301 Carrying values of total debt 2,462 2,006 _________________________________________________ (1) The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY (Tab

PRODUCT WARRANTY LIABILITY (Tables)	6 Months Ended
	Jul. 01, 2018
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 July 1, July 2, Balance, beginning of year $ 1,687 $ 1,414 Provision for warranties issued 222 182 Deferred revenue on extended warranty contracts sold 139 101 Campaigns (1) 403 57 Payments (212 ) (199 ) Amortization of deferred revenue on extended warranty contracts (118 ) (109 ) Changes in estimates for pre-existing warranties 10 74 Foreign currency translation (6 ) 1 Other 5 — Balance, end of period $ 2,130 $ 1,521
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 Condensed Consolidated Balance Sheets were as follows: In millions July 1, December 31, Balance Sheet Location Deferred revenue related to extended coverage programs Current portion $ 228 $ 231 Current portion of deferred revenue Long-term portion 558 536 Other liabilities and deferred revenue Total $ 786 $ 767 Long-term portion of warranty liability $ 880 $ 466 Other liabilities and deferred revenue

ACCRUED EXPENSES, OTHER LIABI36

ACCRUED EXPENSES, OTHER LIABILITIES AND DEFERRED REVENUES (Tables)	6 Months Ended
	Jul. 01, 2018
Accrued Liabilities and Other Liabilities [Abstract]
Accrued Expenses	Other accrued expenses included the following: In millions July 1, 2018 December 31, 2017 Other taxes payable $ 178 $ 197 Marketing accruals 169 146 Income taxes payable 102 77 Other 357 495 Other accrued expenses $ 806 $ 915
Other Liabilities and Deferred Revenues	Other liabilities and deferred revenue included the following: In millions July 1, December 31, Accrued warranty $ 880 $ 466 Deferred revenue 622 604 Deferred income taxes 400 391 Income taxes payable (1) 252 281 Accrued compensation 152 151 Other long-term liabilities 135 134 Other liabilities and deferred revenue $ 2,441 $ 2,027 ____________________________________________________ (1) Long-term income taxes payable are the result of the 2017 Tax Legislation and relate to the non-current portion of

ACCUMULATED OTHER COMPREHENSI37

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	6 Months Ended
	Jul. 01, 2018
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 Balance at April 2, 2017 $ (664 ) $ (1,060 ) $ (1 ) $ (7 ) $ (1,732 ) Other comprehensive income before reclassifications Before tax amount — 105 1 (2 ) 104 $ 1 $ 105 Tax benefit (expense) — (4 ) (1 ) 1 (4 ) — (4 ) After tax amount — 101 — (1 ) 100 1 101 Amounts reclassified from accumulated other comprehensive loss (1) 15 — 1 1 17 — 17 Net current period other comprehensive income (loss) 15 101 1 — 117 $ 1 $ 118 Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Balance at April 1, 2018 $ (681 ) $ (720 ) $ — $ 4 $ (1,397 ) Other comprehensive income before reclassifications Before tax amount — (328 ) — 4 (324 ) $ (17 ) $ (341 ) Tax benefit (expense) — 45 — (2 ) 43 — 43 After tax amount — (283 ) — 2 (281 ) (17 ) (298 ) Amounts reclassified from accumulated other comprehensive loss (1) 13 — — (2 ) 11 1 12 Net current period other comprehensive income (loss) 13 (283 ) — — (270 ) $ (16 ) $ (286 ) Balance at July 1, 2018 $ (668 ) $ (1,003 ) $ — $ 4 $ (1,667 ) ____________________________________ (1) Amounts are net of tax. 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 six months ended: Six months ended In millions Change in Foreign Unrealized gain (1) Unrealized gain Total Noncontrolling Total Balance at December 31, 2016 $ (685 ) $ (1,127 ) $ (1 ) $ (8 ) $ (1,821 ) Other comprehensive income before reclassifications Before tax amount 8 180 2 (8 ) 182 $ 14 $ 196 Tax benefit (expense) (3 ) (12 ) (1 ) 3 (13 ) — (13 ) After tax amount 5 168 1 (5 ) 169 14 183 Amounts reclassified from accumulated other comprehensive loss (2) 31 — — 6 37 — 37 Net current period other comprehensive income (loss) 36 168 1 1 206 $ 14 $ 220 Balance at July 2, 2017 $ (649 ) $ (959 ) $ — $ (7 ) $ (1,615 ) Balance at December 31, 2017 $ (689 ) $ (812 ) $ 1 $ (3 ) $ (1,503 ) Other comprehensive income before reclassifications Before tax amount (8 ) (203 ) — 15 (196 ) $ (24 ) $ (220 ) Tax benefit (expense) 2 12 — (6 ) 8 — 8 After tax amount (6 ) (191 ) — 9 (188 ) (24 ) (212 ) Amounts reclassified from accumulated other comprehensive loss (2) 27 — (1 ) (2 ) 24 1 25 Net current period other comprehensive income (loss) 21 (191 ) (1 ) 7 (164 ) $ (23 ) $ (187 ) Balance at July 1, 2018 $ (668 ) $ (1,003 ) $ — $ 4 $ (1,667 ) ____________________________________ (1) We adopted the new accounting pronouncement "Accounting for Certain Financial Instruments" on January 1, 2018, which moved the treatment of unrealized gains and losses for non-debt securities directly to the Condensed Consolidated Statements of Income on a prospective basis. The impact of adopting this standard includes a one-time cumulative effect adjustment to opening retained earnings of $2 million . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ," to our Condensed Consolidated Financial Statements for more information. (2) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

OPERATING SEGMENTS (Tables)

OPERATING SEGMENTS (Tables)	6 Months Ended
	Jul. 01, 2018
Segment Reporting [Abstract]
Financial information regarding reportable operating segments	Summarized financial information regarding our reportable operating segments for the three months ended is shown in the table below: In millions Engine Distribution Components Power Systems Electrified Power Total Segment Intersegment Eliminations (1) Total Three months ended July 1, 2018 External sales $ 2,050 $ 1,988 $ 1,402 $ 691 $ 1 $ 6,132 $ — $ 6,132 Intersegment sales 646 6 485 555 — 1,692 (1,692 ) — Total sales 2,696 1,994 1,887 1,246 1 7,824 (1,692 ) 6,132 Research, development and engineering expenses 76 5 62 60 16 219 — 219 Equity, royalty and interest income from investees 67 11 14 18 — 110 — 110 Interest income 3 3 2 2 — 10 — 10 Segment EBITDA 362 145 237 186 (21 ) 909 (12 ) 897 Depreciation and amortization (2) 47 27 47 32 1 154 — 154 Three months ended July 2, 2017 External sales $ 1,711 $ 1,716 $ 1,064 $ 587 $ — $ 5,078 $ — $ 5,078 Intersegment sales 596 6 390 430 — 1,422 (1,422 ) — Total sales 2,307 1,722 1,454 1,017 — 6,500 (1,422 ) 5,078 Research, development and engineering expenses 63 4 58 50 — 175 — 175 Equity, royalty and interest income from investees 56 13 15 14 — 98 — 98 Interest income 2 1 1 1 — 5 — 5 Segment EBITDA 323 127 228 90 — 768 (4 ) 764 Depreciation and amortization (2) 46 31 38 29 — 144 — 144 ____________________________________ (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended July 1, 2018 and July 2, 2017 . (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. A portion of depreciation expense is included in "Research, development and engineering expenses" above. Summarized financial information regarding our reportable operating segments for the six months ended is shown in the table below: In millions Engine Distribution Components Power Systems Electrified Power Total Segment Intersegment Eliminations (1) Total Six months ended July 1, 2018 External sales $ 3,863 $ 3,835 $ 2,715 $ 1,286 $ 3 $ 11,702 $ — $ 11,702 Intersegment sales 1,279 12 925 1,034 — 3,250 (3,250 ) — Total sales 5,142 3,847 3,640 2,320 3 14,952 (3,250 ) 11,702 Research, development and engineering expenses 155 10 124 117 23 429 — 429 Equity, royalty and interest income from investees 134 24 30 37 — 225 — 225 Interest income 5 5 3 4 — 17 — 17 Segment EBITDA 648 268 464 328 (31 ) 1,677 (80 ) 1,597 Depreciation and amortization (2) 96 54 93 62 2 307 — 307 Six months ended July 2, 2017 External sales $ 3,168 $ 3,353 $ 2,044 $ 1,102 $ — $ 9,667 $ — $ 9,667 Intersegment sales 1,162 14 754 797 — 2,727 (2,727 ) — Total sales 4,330 3,367 2,798 1,899 — 12,394 (2,727 ) 9,667 Research, development and engineering expenses 117 8 108 100 — 333 — 333 Equity, royalty and interest income from investees 128 24 28 26 — 206 — 206 Interest income 3 2 1 1 — 7 — 7 Segment EBITDA 596 257 444 175 — 1,472 (3 ) 1,469 Depreciation and amortization (2) 90 61 75 57 — 283 — 283 ____________________________________ (1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended July 1, 2018 and July 2, 2017 . (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 was $1 million and $1 million for the six month periods ended July 1, 2018 and July 2, 2017, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses" above.
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 Six months ended In millions July 1, July 2, July 1, July 2, Total EBITDA $ 897 $ 764 $ 1,597 $ 1,469 Less: Depreciation and amortization 154 144 307 283 Interest expense 28 21 52 39 Income before income taxes $ 715 $ 599 $ 1,238 $ 1,147

RECENTLY ADOPTED AND RECENTLY39

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Tables)	6 Months Ended
	Jul. 01, 2018
ASU 2017-07 Presentation of Net Periodic Pension and Post-retirement Benefit Costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Schedule of New Accounting Pronouncements and Changes in Accounting Principles	As a result, we revised our Condensed Consolidated Statements of Income by the following amounts: Favorable / (Unfavorable) 2017 In millions Q1 Q2 Cost of sales $ 4 $ 2 Selling, general and administrative expenses (10 ) (10 ) Research, development and engineering expenses — (1 ) Total change in operating income (6 ) (9 ) Other non operating income, net 6 9 Total change in income before income taxes $ — $ —

NATURE OF OPERATIONS (Details)

NATURE OF OPERATIONS (Details)	6 Months Ended
	Jul. 01, 2018countrylocation
Nature of Operations
Company Owned and Independent Distributor Locations Number	500
Dealer Locations Number	7,500
Countries and Territories Number | country	190

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - shares	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Options excluded (in shares)	909,394	6,155	458,130	61,345

REVENUE RECOGNITION RECENTLY 42

REVENUE RECOGNITION RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT (Details) - USD ($) $ in Millions	Jan. 01, 2018	Jul. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		$ 30
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 Financial Accounting Standards Board (FASB) amended its standards related to revenue recognition to replace all existing revenue recognition guidance and provide 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 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 adopted the standard using the modified retrospective approach. We elected to apply this guidance retrospectively only to contracts that were not completed at January 1, 2018.We identified a change in the manner in which we account for certain license income. We license certain technology to our unconsolidated joint ventures that meets the definition of functional under the standard, which requires that revenue be recognized at a point in time rather than the previous requirement of recognizing it over the license term. Using the modified retrospective adoption method, we recorded an adjustment to our opening equity balance at January 1, 2018, to account for the differences between existing license income recorded and what would have been recorded under the new standard for contracts for which we started recognizing revenue prior to the adoption date. There was not a material impact on any individual year from this change.We also identified transactions where revenue recognition was historically limited to the amount of billings not contingent on our future performance. With the allocation provisions of the new model, we accelerated the timing of revenue recognition for amounts related to satisfied performance obligations that would be delayed under the historical guidance. The impact of this change was not material.On an ongoing basis, this amendment is not expected to have a material impact on our Condensed Consolidated Financial Statements, including our internal controls over financial reporting, but will result in expanded disclosures in the Notes to our Condensed Consolidated Financial Statements.We recorded a net increase to opening retained earnings of $28 million, net of tax, as of January 1, 2018, due to the cumulative impact of adopting the new revenue standard, with the impact primarily related to our technology licenses that now qualify for point in time recognition rather than over time. The impact to any individual financial statement line item as a result of applying the new standard, as compared to the old standard, was not material for the six months ended July 1, 2018.On January 1, 2018, we adopted the new revenue recognition standard in accordance with GAAP. See NOTE 3, "REVENUE RECOGNITION," for detailed information about the adoption of this standard.
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 28

REVENUE RECOGNITION SUMMARY O43

REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PERFORMANCE OBLIGATIONS (Details 1) $ in Millions	6 Months Ended
	Jul. 01, 2018USD ($)
Accounting Policies [Abstract]
Revenue, Remaining Performance Obligation	$ 676
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-02
Accounting Policies [Abstract]
Revenue, Remaining Performance Obligation	$ 247
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-02
Accounting Policies [Abstract]
Revenue, Remaining Performance Obligation	$ 429
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	10 years

REVENUE RECOGNITION SUMMARY O44

REVENUE RECOGNITION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ADDITIONAL INFORMATION (Details 2) - USD ($) $ in Millions		Jan. 01, 2018	Jul. 01, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Contract with Customer, Asset, Gross		$ 6	$ 56
Contract with Customer, Liability		1,052	1,101
Contract with Customer, Liability, Revenue Recognized	[1]	$ 0	(206)
Allowance for Doubtful Accounts Receivable			$ 16	$ 16
[1]	Relates to year-to-date revenues recognized from amounts included in contract liabilities at the beginning of the period. Revenue recognized in the period from performance obligations satisfied in previous periods was immaterial.

REVENUE RECOGNITION DISAGGREG45

REVENUE RECOGNITION DISAGGREGATION OF REVENUES (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Disaggregation of Revenue [Line Items]
Total sales	[1]	$ 6,132	$ 5,078	$ 11,702	$ 9,667
United States
Disaggregation of Revenue [Line Items]
Total sales		3,384		6,422
CHINA
Disaggregation of Revenue [Line Items]
Total sales		644		1,194
INDIA
Disaggregation of Revenue [Line Items]
Total sales		247		482
Other International
Disaggregation of Revenue [Line Items]
Total sales		1,857		3,604
Heavy-duty truck
Disaggregation of Revenue [Line Items]
Total sales		730		1,344
Medium-duty truck and bus
Disaggregation of Revenue [Line Items]
Total sales		714		1,341
Light-duty automotive
Disaggregation of Revenue [Line Items]
Total sales		330		653
On-highway
Disaggregation of Revenue [Line Items]
Total sales		1,774		3,338
Off-highway
Disaggregation of Revenue [Line Items]
Total sales		276		525
Parts
Disaggregation of Revenue [Line Items]
Total sales		815		1,618
Engine Product Line
Disaggregation of Revenue [Line Items]
Total sales		460		828
Service
Disaggregation of Revenue [Line Items]
Total sales		368		719
DBU - Power Generation
Disaggregation of Revenue [Line Items]
Total sales		345		670
Emission solutions
Disaggregation of Revenue [Line Items]
Total sales		735		1,419
Turbo technologies
Disaggregation of Revenue [Line Items]
Total sales		201		398
Filtration
Disaggregation of Revenue [Line Items]
Total sales		257		514
Automated Transmissions
Disaggregation of Revenue [Line Items]
Total sales		141		258
Electronics and Fuel systems
Disaggregation of Revenue [Line Items]
Total sales		68		126
PSBU - Power Generation
Disaggregation of Revenue [Line Items]
Total sales		390		700
Industrial
Disaggregation of Revenue [Line Items]
Total sales		208		409
Generator technologies
Disaggregation of Revenue [Line Items]
Total sales		93		177
Engine
Disaggregation of Revenue [Line Items]
Total sales		2,696	2,307	5,142	4,330
Distribution
Disaggregation of Revenue [Line Items]
Total sales		1,994	1,722	3,847	3,367
Distribution | CHINA
Disaggregation of Revenue [Line Items]
Total sales		84		161
Distribution | INDIA
Disaggregation of Revenue [Line Items]
Total sales		49		93
Distribution | NORTH AMERICA
Disaggregation of Revenue [Line Items]
Total sales		1,349		2,623
Distribution | ASIA PACIFIC
Disaggregation of Revenue [Line Items]
Total sales		211		398
Distribution | EUROPE
Disaggregation of Revenue [Line Items]
Total sales		143		274
Distribution | AFRICA
Disaggregation of Revenue [Line Items]
Total sales		62		123
Distribution | LATIN AMERICA
Disaggregation of Revenue [Line Items]
Total sales		45		83
Distribution | RUSSIA
Disaggregation of Revenue [Line Items]
Total sales		45		80
Components
Disaggregation of Revenue [Line Items]
Total sales		1,887	1,454	3,640	2,798
Power Systems
Disaggregation of Revenue [Line Items]
Total sales		1,246	1,017	2,320	1,899
External Sales
Disaggregation of Revenue [Line Items]
Total sales		6,132	5,078	11,702	9,667
External Sales | Engine
Disaggregation of Revenue [Line Items]
Total sales		2,050	1,711	3,863	3,168
External Sales | Distribution
Disaggregation of Revenue [Line Items]
Total sales		1,988	1,716	3,835	3,353
External Sales | Components
Disaggregation of Revenue [Line Items]
Total sales		1,402	1,064	2,715	2,044
External Sales | Power Systems
Disaggregation of Revenue [Line Items]
Total sales		$ 691	$ 587	$ 1,286	$ 1,102
[1]	Includes sales to nonconsolidated equity investees of $340 million and $637 million and $283 million and $550 million for the three and six months ended July 1, 2018 and July 2, 2017

PENSION AND OTHER POSTRETIREM46

PENSION AND OTHER POSTRETIREMENT BENEFITS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017	Jul. 02, 2018
Pension Plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 9	$ 41	$ 18	$ 84
Pension Plan | Voluntary
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	4	41	7	84
Pension Plan | Mandatory
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	5	0	11	0
Other Postretirement Benefits Plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	(2)	3	5	18
Components of Net Periodic Benefit Cost
Service cost	0	0	0	0
Interest cost	3	4	5	7
Expected return on plan assets	0	0	0	0
Recognized net actuarial loss	0	1	0	3
Net periodic benefit cost	3	5	5	10
Defined contribution pension plan
Pension and other postretirement benefits
Defined Benefit Plan, Plan Assets, Contributions by Employer	21	19	61	48
Estimate | Pension Plan
Pension and other postretirement benefits
Defined Benefit Plan, Expected Future Employer Contributions, Remainder of Fiscal Year					$ 20
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year					38
Defined Benefit Plan, Expected Amortization of Gain (Loss), Current (10Q) or Next (10K) Fiscal Year					86
Estimate | Pension Plan | Voluntary
Pension and other postretirement benefits
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year					$ 14
United States | Pension Plan
Components of Net Periodic Benefit Cost
Service cost	30	26	60	53
Interest cost	24	27	49	53
Expected return on plan assets	(49)	(52)	(98)	(103)
Recognized net actuarial loss	9	9	17	18
Net periodic benefit cost	14	10	28	21
UNITED KINGDOM | Pension Plan
Components of Net Periodic Benefit Cost
Service cost	7	7	15	13
Interest cost	10	10	21	20
Expected return on plan assets	(18)	(17)	(36)	(34)
Recognized net actuarial loss	8	10	15	20
Net periodic benefit cost	$ 7	$ 10	$ 15	$ 19

EQUITY, ROYALTY AND INTEREST 47

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Equity, royalty and interest income from investees
Cummins share of net income	$ 96	$ 86	$ 194	$ 181
Royalty and interest income	14	12	31	25
Equity, royalty and interest income from investees	110	98	225	206
Manufacturing - Beijing Foton Cummins Engine Company
Equity, royalty and interest income from investees
Cummins share of net income	24	22	45	55
Manufacturing - Dongfeng Cummins Engine Company Ltd
Equity, royalty and interest income from investees
Cummins share of net income	17	19	34	41
Manufacturing - Chongqing Cummins Engine Company, Ltd.
Equity, royalty and interest income from investees
Cummins share of net income	15	10	32	19
Manufacturing - Cummins Westport, Inc.
Equity, royalty and interest income from investees
Cummins share of net income	6	4	12	5
Manufacturing - Dongfeng Cummins Emission Solutions Co. Ltd.
Equity, royalty and interest income from investees
Cummins share of net income	4	4	9	7
Manufacturing - All other manufacturers
Equity, royalty and interest income from investees
Cummins share of net income	24	19	49	39
Distribution - Komatsu Cummins Chile, Ltda.
Equity, royalty and interest income from investees
Cummins share of net income	$ 6	$ 8	$ 13	$ 15

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ / shares in Units, $ in Millions	Jul. 02, 2018	Jul. 01, 2018	Apr. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017
Income Tax [Line Items]
Effective tax rate (as a percent)		22.50%		26.40%	29.00%	26.20%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability					$ 74
Income (Loss) from Continuing Operations, Per Diluted Share		$ 0.85	$ 0.87		$ 0.45
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense, Gross					$ 80
Current Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense		$ 45			45
Deferred Other Tax Expense (Benefit)		$ 35
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense					40
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Withholding Taxes on Earnings for Possible Future Distribution, Provisional Income Tax Expense					$ 5
Estimate
Income Tax [Line Items]
Effective tax rate (as a percent)	23.00%

MARKETABLE SECURITIES (Details)

MARKETABLE SECURITIES (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jul. 01, 2018	Jul. 02, 2017	Jul. 01, 2018	Jul. 02, 2017	Dec. 31, 2017
Schedule of Available-for-sale Securities
Cost		$ 212		$ 212		$ 195
Gross unrealized gains/(losses)	[1]	2		2		3
Estimated fair value		214		214		198
Proceeds from Sale of Marketable Securities		12	$ 12	81	$ 44
Proceeds from Maturity of Marketable Securities		22	3	35	118
Proceeds from sales and maturities of marketable securities		34	$ 15	116	$ 162
Debt mutual funds
Schedule of Available-for-sale Securities
Cost		163		163		170
Gross unrealized gains/(losses)	[1]	0		0		0
Estimated fair value		163		163		170
Certificates of Deposit
Schedule of Available-for-sale Securities
Cost		34		34		12
Gross unrealized gains/(losses)	[1]	0		0		0
Estimated fair value		34		34		12
Equity mutual funds
Schedule of Available-for-sale Securities
Cost		14		14		12
Gross unrealized gains/(losses)	[1]	2		2		3
Estimated fair value		16		16		15
Available-for-sale debt securities
Schedule of Available-for-sale Securities
Cost		1		1		1
Gross unrealized gains/(losses)	[1]	0		0		0
Estimated fair value		$ 1		$ 1		$ 1
Minimum | Certificates of Deposit
Schedule of Available-for-sale Securities
Maturities of Bank Debentures Description				P3M
Maximum | Certificates of Deposit
Schedule of Available-for-sale Securities
Maturities of Bank Debentures Description				P5Y
[1]	Unrealized gains and losses for available-for-sale debt securities are recorded in other comprehensive income (See NOTE 13 , " ACCUMULATED OTHER COMPREHENSIVE LOSS ," to our Condensed Consolidated Financial Statements for more information). Effective January 1, 2018, with the adoption of the FASB standard, all unrealized gains and losses for equity securities are recorded in other income, net in the Condensed Consolidated Statements of Income . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Millions	Jul. 01, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Finished products	$ 2,329	$ 2,078
Work-in-process and raw materials	1,355	1,216
Inventories at FIFO cost	3,684	3,294
Excess of FIFO over LIFO	(125)	(128)
Total inventories	$ 3,559	$ 3,166

DEBT (Details)

DEBT (Details) - USD ($) $ in Millions		Jul. 01, 2018	Dec. 31, 2017	Sep. 05, 2017	Nov. 13, 2015
Short-term Debt [Line Items]
Loans payable	[1]	$ 55	$ 57
Commercial paper	[2]	802	298
Line of Credit Facility, Maximum Borrowing Capacity		2,750
Long-term debt
Unamortized discount		(53)	(54)
Fair value adjustment due to hedge on indebtedness		18	35
Capital leases		112	121
Total long-term debt		1,605	1,651
Current maturities of long-term debt		49	63
Long-term debt		1,556	1,588
Principal payments
2,018		30
2,019		50
2,020		12
2,021		8
2,022		8
Fair value
Fair value of total debt	[3]	2,668	2,301
Carrying value of total debt		$ 2,462	$ 2,006
Commercial Paper
Short-term Debt [Line Items]
Short-term Debt, Weighted Average Interest Rate, at Point in Time	[2]	2.08%	1.56%
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		$ 55	$ 76
1-year revolving credit agreement
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 1,000
5-year revolving credit facility
Short-term Debt [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity					$ 1,750
[1]	Loans payable consist primarily of notes payable to various domestic and international financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
[2]	The weighted average interest rate, inclusive of all brokerage fees, was 2.08 percent and 1.56 percent at July 1, 2018 and December 31, 2017
[3]	The fair value of debt is derived from Level 2 inputs.

PRODUCT WARRANTY LIABILITY (Det

PRODUCT WARRANTY LIABILITY (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended			12 Months Ended
	Jul. 01, 2018	Apr. 01, 2018	Jul. 01, 2018		Jul. 02, 2017	Dec. 31, 2017
Product Warranty Liability:
Balance, beginning of year		$ 1,687	$ 1,687		$ 1,414	$ 1,414
Provision for warranties issued			222		182
Deferred revenue on extended warranty contracts sold			139		101
Campaigns (1)	$ 181	$ 187	403	[1]	57	36
Payments			(212)		(199)
Amortization of deferred revenue on extended warranty contracts			(118)		(109)
Changes in estimates for pre-existing warranties			10		74
Foreign currency translation			(6)		1
Other			5		0
Balance, end of period	2,130		2,130		$ 1,521	1,687
Product Warranty Liability
Current portion of warranty related deferred revenue	479		479			500
Long term portion of warranty related deferred revenue	880		880			466
Deferred Revenue Related to extended coverage, Total	786		786			767
Deferred revenue	622		622			604
Current portion of deferred revenue
Product Warranty Liability
Current portion of warranty related deferred revenue	228		228			231
Other liabilities and deferred revenue
Product Warranty Liability
Long term portion of warranty related deferred revenue	558		558			536
Deferred revenue	$ 880		$ 880			$ 466
[1]	See NOTE 12 , " COMMITMENTS AND CONTINGENCIES

ACCRUED EXPENSES, OTHER LIABI53

ACCRUED EXPENSES, OTHER LIABILITIES AND DEFERRED REVENUES (Details) - USD ($) $ in Millions	Jul. 01, 2018	Dec. 31, 2017
Accrued Liabilities and Other Liabilities [Abstract]
Other taxes payable	$ 178	$ 197
Marketing accruals	169	146
Income taxes payable	102	77
Other	357	495
Other accrued expenses	806	915
Accrued warranty	880	466
Deferred revenue	622	604
Deferred income taxes	400	391
Income taxes payable(1)	252	281
Accrued compensation	152	151
Other long-term liabilities	135	134
Other liabilities and deferred revenue	$ 2,441	$ 2,027

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended			12 Months Ended
	Jul. 01, 2018	Apr. 01, 2018	Jul. 01, 2018		Jul. 02, 2017	Dec. 31, 2017
Guarantee Obligations
Product Liability Accrual, Period Expense	$ 181	$ 187	$ 403	[1]	$ 57	$ 36
Income (Loss) from Continuing Operations, Per Diluted Share	$ 0.85	$ 0.87	$ 0.45
Product Liability Contingency, Accrual, Present Value	$ 404		$ 404
Guarantor obligations, maximum potential loss	56		56
Long-term purchase commitment, penalty exposure	82		82
Total commitments under commodity contracts	62		62
Performance Bonds and Other Performance Guarantees	110		$ 110
Maximum
Guarantee Obligations
Forward Contract, Term			P2Y
Components
Guarantee Obligations
Product Liability Accrual, Period Expense	90	$ 94
Engine
Guarantee Obligations
Product Liability Accrual, Period Expense	$ 91	$ 93
[1]	See NOTE 12 , " COMMITMENTS AND CONTINGENCIES

ACCUMULATED OTHER COMPREHENSI55

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions		3 Months Ended								6 Months Ended
		Jul. 01, 2018		Apr. 01, 2018		Jul. 02, 2017		Apr. 02, 2017		Jul. 01, 2018		Jul. 02, 2017
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period				$ (1,503)						$ (1,503)
Before tax amount		$ (341)				$ 105				(220)		$ 196
Tax benefit (expense)		43				(4)				8		(13)
After tax amount		(298)				101				(212)		183
Amounts reclassified from accumulated other comprehensive loss(1)		12	[1]			17	[1]			25	[2]	37	[2]
Net current period other comprehensive income (loss)		(286)				118				(187)		220
Balance at the end of the period		(1,667)								(1,667)
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification										30
Change in pensions and other postretirement defined benefit plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period		(681)		(689)		(664)		$ (685)		(689)		(685)
Before tax amount		0				0				(8)		8
Tax benefit (expense)		0				0				2		(3)
After tax amount		0				0				(6)		5
Amounts reclassified from accumulated other comprehensive loss(1)		13	[1]			15	[1]			27	[2]	31	[2]
Net current period other comprehensive income (loss)		13				15				21		36
Balance at the end of the period		(668)		(681)		(649)		(664)		(668)		(649)
Foreign currency translation adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period		(720)		(812)		(1,060)		(1,127)		(812)		(1,127)
Before tax amount		(328)				105				(203)		180
Tax benefit (expense)		45				(4)				12		(12)
After tax amount		(283)				101				(191)		168
Amounts reclassified from accumulated other comprehensive loss(1)	[1]	0				0
Net current period other comprehensive income (loss)		(283)				101				(191)		168
Balance at the end of the period		(1,003)		(720)		(959)		(1,060)		(1,003)		(959)
Unrealized gain (loss) on marketable securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period		0		1	[3]	(1)		(1)	[3]	1	[3]	(1)	[3]
Before tax amount		0				1						2	[3]
Tax benefit (expense)		0				(1)				0	[3]	(1)	[3]
After tax amount		0				0				0	[3]	1	[3]
Amounts reclassified from accumulated other comprehensive loss(1)		0	[1]			1	[1]			(1)	[2],[3]
Net current period other comprehensive income (loss)		0				1				(1)	[3]	1	[3]
Balance at the end of the period		0	[3]	0		0	[3]	(1)		0	[3]	0	[3]
Unrealized gain (loss) on derivatives
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period		4		(3)		(7)		(8)		(3)		(8)
Before tax amount		4				(2)				15		(8)
Tax benefit (expense)		(2)				1				(6)		3
After tax amount		2				(1)				9		(5)
Amounts reclassified from accumulated other comprehensive loss(1)		(2)	[1]			1	[1]			(2)	[2]	6	[2]
Net current period other comprehensive income (loss)		0				0				7		1
Balance at the end of the period		4		4		(7)		(7)		4		(7)
Total attributable to Cummins Inc.
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the period		(1,397)		(1,503)		(1,732)		(1,821)		(1,503)		(1,821)
Before tax amount		(324)				104				(196)		182
Tax benefit (expense)		43				(4)				8		(13)
After tax amount		(281)				100				(188)		169
Amounts reclassified from accumulated other comprehensive loss(1)		11	[1]			17	[1]			24	[2]	37	[2]
Net current period other comprehensive income (loss)		(270)				117				(164)		206
Balance at the end of the period		(1,667)		(1,397)		(1,615)		$ (1,732)		(1,667)		(1,615)
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification										30
Noncontrolling interests
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Before tax amount		(17)				1				(24)		14
After tax amount		(17)				1				(24)		14
Amounts reclassified from accumulated other comprehensive loss(1)		1	[1]			0	[1]			1	[2]
Net current period other comprehensive income (loss)		$ (16)				$ 1				(23)		$ 14
ASU 2016-01 Recognition and Measurement of Financial Assets and Liabilities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification				$ 2						$ 2
[1]	Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
[2]	Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
[3]	We adopted the new accounting pronouncement "Accounting for Certain Financial Instruments" on January 1, 2018, which moved the treatment of unrealized gains and losses for non-debt securities directly to the Condensed Consolidated Statements of Income on a prospective basis. The impact of adopting this standard includes a one-time cumulative effect adjustment to opening retained earnings of $2 million . See NOTE 15 , " RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ," to our Condensed Consolidated Financial Statements for more information.

OPERATING SEGMENTS (Details)

OPERATING SEGMENTS (Details) - USD ($) $ in Millions		3 Months Ended				6 Months Ended
		Jul. 01, 2018		Jul. 02, 2017		Jul. 01, 2018		Jul. 02, 2017
Operating results:
Total sales	[1]	$ 6,132		$ 5,078		$ 11,702		$ 9,667
Research, development and engineering expenses		219		175		429		333
Equity, royalty and interest income from investees		110		98		225		206
Interest income		10		5		17		7
Segment EBITDA		897		764		1,597		1,469
Depreciation and amortization (2)		154	[2]	144	[2]	307	[3]	283	[3]
Less: Interest expense		28		21		52		39
INCOME BEFORE INCOME TAXES		715		599		1,238		1,147
Amortization of Debt Discount (Premium)						1		1
Engine
Operating results:
Total sales		2,696		2,307		5,142		4,330
Research, development and engineering expenses		76		63		155		117
Equity, royalty and interest income from investees		67		56		134		128
Interest income		3		2		5		3
Segment EBITDA		362		323		648		596
Depreciation and amortization (2)		47	[2]	46	[2]	96	[3]	90	[3]
Distribution
Operating results:
Total sales		1,994		1,722		3,847		3,367
Research, development and engineering expenses		5		4		10		8
Equity, royalty and interest income from investees		11		13		24		24
Interest income		3		1		5		2
Segment EBITDA		145		127		268		257
Depreciation and amortization (2)		27	[2]	31	[2]	54	[3]	61	[3]
Components
Operating results:
Total sales		1,887		1,454		3,640		2,798
Research, development and engineering expenses		62		58		124		108
Equity, royalty and interest income from investees		14		15		30		28
Interest income		2		1		3		1
Segment EBITDA		237		228		464		444
Depreciation and amortization (2)		47	[2]	38	[2]	93	[3]	75	[3]
Power Systems
Operating results:
Total sales		1,246		1,017		2,320		1,899
Research, development and engineering expenses		60		50		117		100
Equity, royalty and interest income from investees		18		14		37		26
Interest income		2		1		4		1
Segment EBITDA		186		90		328		175
Depreciation and amortization (2)		32	[2]	29	[2]	62	[3]	57	[3]
Electrified Power
Operating results:
Total sales		1		0		3		0
Research, development and engineering expenses		16		0		23		0
Equity, royalty and interest income from investees		0		0		0		0
Interest income		0		0		0		0
Segment EBITDA		(21)		0		(31)		0
Depreciation and amortization (2)		1	[2]			2	[3]
Total Segment
Operating results:
Total sales		7,824		6,500		14,952		12,394
Research, development and engineering expenses		219		175		429		333
Equity, royalty and interest income from investees		110		98		225		206
Interest income		10		5		17		7
Segment EBITDA		909		768		1,677		1,472
Depreciation and amortization (2)	[2]	154		144
Intersegment Eliminations
Operating results:
Total sales		(1,692)	[4]	(1,422)	[4]	(3,250)	[5]	(2,727)	[5]
Non-segment items
Operating results:
Segment EBITDA		(12)	[4]	(4)	[4]	(80)	[5]	(3)	[5]
External Sales
Operating results:
Total sales		6,132		5,078		11,702		9,667
External Sales | Engine
Operating results:
Total sales		2,050		1,711		3,863		3,168
External Sales | Distribution
Operating results:
Total sales		1,988		1,716		3,835		3,353
External Sales | Components
Operating results:
Total sales		1,402		1,064		2,715		2,044
External Sales | Power Systems
Operating results:
Total sales		691		587		1,286		1,102
External Sales | Electrified Power
Operating results:
Total sales		1		0		3		0
External Sales | Total Segment
Operating results:
Total sales		6,132		5,078		11,702		9,667
Intersegment sales | Engine
Operating results:
Total sales		646		596		1,279		1,162
Intersegment sales | Distribution
Operating results:
Total sales		6		6		12		14
Intersegment sales | Components
Operating results:
Total sales		485		390		925		754
Intersegment sales | Power Systems
Operating results:
Total sales		555		430		1,034		797
Intersegment sales | Electrified Power
Operating results:
Total sales		0		0		0		0
Intersegment sales | Total Segment
Operating results:
Total sales		1,692		1,422		3,250		2,727
Intersegment sales | Intersegment Eliminations
Operating results:
Total sales		$ (1,692)	[4]	$ (1,422)	[4]	$ (3,250)	[5]	$ (2,727)	[5]
[1]	Includes sales to nonconsolidated equity investees of $340 million and $637 million and $283 million and $550 million for the three and six months ended July 1, 2018 and July 2, 2017
[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. A portion of depreciation expense is included in "Research, development and engineering expenses" above.
[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 was $1 million and $1 million for the six month periods ended July 1, 2018 and July 2, 2017, respectively. A portion of depreciation expense is included in "Research, development and engineering expenses" above.
[4]	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended July 1, 2018 and July 2, 2017
[5]	Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the six months ended July 1, 2018 and July 2, 2017

RECENTLY ADOPTED AND RECENTLY57

RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions	Jan. 01, 2018	Apr. 01, 2018	Jul. 02, 2017	Apr. 02, 2017	Jul. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification					$ 30
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 Financial Accounting Standards Board (FASB) amended its standards related to revenue recognition to replace all existing revenue recognition guidance and provide 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 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 adopted the standard using the modified retrospective approach. We elected to apply this guidance retrospectively only to contracts that were not completed at January 1, 2018.We identified a change in the manner in which we account for certain license income. We license certain technology to our unconsolidated joint ventures that meets the definition of functional under the standard, which requires that revenue be recognized at a point in time rather than the previous requirement of recognizing it over the license term. Using the modified retrospective adoption method, we recorded an adjustment to our opening equity balance at January 1, 2018, to account for the differences between existing license income recorded and what would have been recorded under the new standard for contracts for which we started recognizing revenue prior to the adoption date. There was not a material impact on any individual year from this change.We also identified transactions where revenue recognition was historically limited to the amount of billings not contingent on our future performance. With the allocation provisions of the new model, we accelerated the timing of revenue recognition for amounts related to satisfied performance obligations that would be delayed under the historical guidance. The impact of this change was not material.On an ongoing basis, this amendment is not expected to have a material impact on our Condensed Consolidated Financial Statements, including our internal controls over financial reporting, but will result in expanded disclosures in the Notes to our Condensed Consolidated Financial Statements.We recorded a net increase to opening retained earnings of $28 million, net of tax, as of January 1, 2018, due to the cumulative impact of adopting the new revenue standard, with the impact primarily related to our technology licenses that now qualify for point in time recognition rather than over time. The impact to any individual financial statement line item as a result of applying the new standard, as compared to the old standard, was not material for the six months ended July 1, 2018.On January 1, 2018, we adopted the new revenue recognition standard in accordance with GAAP. See NOTE 3, "REVENUE RECOGNITION," for detailed information about the adoption of this standard.
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 28
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 beginning January 1, 2018. Under the new standard, we are 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 Condensed Consolidated Statements of Income. In addition, the standard limits the amount eligible for capitalization (into inventory or self-constructed assets) to the amount of service cost. This portion of the standard was applied on a prospective basis. The remainder of the new standard was applied on a retrospective basis using a practical expedient as the estimation basis for the reclassification of prior period non-service cost components of net periodic benefit cost from operating income to non-operating income. As a result, we revised our Condensed Consolidated Statements of Income by the following amounts:  Favorable / (Unfavorable)  2017 In millionsQ1 Q2 Cost of sales$4 $2 Selling, general and administrative expenses(10) (10) Research, development and engineering expenses— (1) Total change in operating income(6) (9) Other non operating income, net6 9 Total change in income before income taxes$— $—
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 which became effective for us beginning January 1, 2018. The new standard made eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. Adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements
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 which became effective for us beginning January 1, 2018. This amendment addresses certain aspects of recognition, measurement, presentation and disclosure. The standard resulted in a cumulative effect increase to opening retained earnings of $2 million in our Condensed Consolidated Financial Statements.
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		$ 2			$ 2
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 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. The standard currently requires adoption on a full retrospective basis; however, the FASB has recently approved an amendment to allow adoption on a modified retrospective basis.  While the amendment is not yet published, we would expect to adopt on a modified retrospective basis assuming the amendment is published as approved. 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.
Cost of Sales | 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, Effect of Adoption, Quantification			$ 2	$ 4
Selling, General and Administrative Expenses | 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, Effect of Adoption, Quantification			(10)	(10)
Research and Development Expense | 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, Effect of Adoption, Quantification			(1)	0
Operating Income (Loss) | 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, Effect of Adoption, Quantification			(9)	(6)
Other Nonoperating Income, net | 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, Effect of Adoption, Quantification			9	6
Income Before Income Tax | 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, Effect of Adoption, Quantification			$ 0	$ 0