Cummins (CMI) 10-K risk factor changes: FY2019 vs FY2018

[removed: Although in 2018 we experienced demand growth in most of our North American on-highway and certain off-highway markets and continued strong demand in Chinese markets, as well as growth in many of our other international markets, if] [added: If] the North American or Chinese markets suffer a significant downturn or if a slower pace of economic growth and weaker demand in our other significant international markets were to occur, depending upon the length, duration and severity of the slowdown, [added: it could have a material adverse impact on] our results of operations, financial condition and cash [removed: flows would likely have a materially adverse impact.][added: flows.]

Several of our engine customers, including PACCAR, Volvo, Navistar, [removed: Fiat] Chrysler, Daimler, Dongfeng and Tata, are truck manufacturers or OEMs that manufacture engines for some of their own vehicles.

[removed: Any significant reduction in] the level of engine production outsourcing from our truck manufacturer or OEM customers could have a material adverse effect on our results of operations, financial condition and cash flows.

We are investing in new products and technologies, including electrified powertrains, [added: hydrogen generation and fuel cells,] for planned introduction into certain existing and new markets.

Furthermore, it is possible that we may not be successful in developing segment-leading electrified powertrains and some of our existing customers could choose to develop their own electrified or alternate fuel powertrains, or source from other manufacturers, and any of these factors could have a [removed: materially] [added: material] adverse impact [added: on] our results of operations, financial condition and cash flows.

Our products are subject to extensive statutory and regulatory requirements that can significantly increase our costs and, along with increased scrutiny from regulatory agencies and unpredictability in the adoption, implementation and enforcement of increasingly stringent emission standards by multiple jurisdictions around the world, could have a [removed: materially] [added: material] adverse impact on our results of operations, financial condition and cash flows.

The discovery of noncompliance issues could have a [removed: materially] [added: material] adverse impact on our results of operations, financial condition and cash flows.

While we have met previous deadlines, our ability to comply with existing and future regulatory standards will be essential for us to maintain our [added: competitive advantage in the engine markets we serve.]

Any delays in implementation or enforcement could result in a loss of our competitive advantage and could have a [removed: materially] [added: material] adverse impact on our results of operations, financial condition and cash flows.

Product recall costs are incurred when we decide, either voluntarily or involuntarily, to recall a product through a formal campaign to solicit the return of specific products due to [removed: a] known or suspected performance [removed: issue.][added: or safety issues.]

See Note [removed: 9,] [added: 12,] "PRODUCT WARRANTY LIABILITY" to the *Consolidated Financial Statements* for additional information.

Changes in government policies on foreign trade and investment can affect the demand for our products and services, cause non-U.S. [removed: nationals] [added: customers] to shift preferences toward domestically manufactured or branded products and impact the competitive position of our products or prevent us from being able to sell products in certain countries.

Our business benefits from free trade agreements, such as the new United States-Mexico-Canada Agreement and the U.S. trade relationship with China, [added: Brazil] and [added: France and] efforts to withdraw from, or substantially modify such agreements or arrangements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs (including, but not limited to, additional tariffs on the import of steel or aluminum) import or export licensing requirements, exchange controls or new barriers to entry, could adversely impact our [removed: production costs, customer demand and our relationships with customers and suppliers.]

The [removed: United Kingdom’s decision to end its membership in] [added: U.K.’s exit from] the European Union [added: (EU)] could materially and adversely impact our results of operations, financial condition and cash flows.

Additionally, the results of the [removed: United Kingdom’s] [added: U.K.’s] BREXIT has caused, and may continue to cause, volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

Although it is unknown what the terms of the [removed: United Kingdom’s] [added: U.K.’s] future relationship with the EU will be, it is possible that there will be higher tariffs or greater restrictions on imports and exports between the [removed: United Kingdom] [added: U. K.] and the EU and increased regulatory complexities.

The effects of BREXIT will depend on any agreements the [removed: United Kingdom] [added: U.K.] makes to retain access to EU markets either during a transitional period or on a permanent basis.

These measures could potentially disrupt our supply chain, [added: including delays of imports and exports, limited] access to human capital [removed: and] [added: within] some of [removed: our] [added: the] target markets and jurisdictions in which we [removed: operate,] [added: operate] and [removed: adversely change] [added: adverse changes to] tax benefits or liabilities in these or other jurisdictions.

In addition, BREXIT could lead to legal uncertainty and potentially divergent national laws and regulations, including with respect to emissions and similar certifications granted to us by the EU, as the [removed: United Kingdom] [added: U.K.] determines which EU laws to replace or replicate.

Any of these effects of BREXIT, among others, could have a [removed: materially] [added: material] adverse impact on our results of operations, financial condition and cash flows.

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

With increased consumer interconnectedness through the internet, social media and other media, mere allegations relating to poor quality, safety, fuel efficiency, corporate responsibility or other key attributes can negatively impact our reputation or market acceptance of our products or services, [removed: including with respect to the demand for diesel engines,] even if such allegations prove to be inaccurate or unfounded.

[removed: Although many of our off-highway markets began to recover in 2017 and 2018, additional deterioration,] [added: Deterioration,] or renewed weakness, in infrastructure and commodities markets could adversely affect our customers’ demand for vehicles and equipment and, as a result, could adversely affect our business.

During [removed: 2018,] [added: 2019,] we single sourced approximately [removed: 20] [added: 19] percent of the total types of parts in our product designs, compared to approximately 20 percent in [removed: 2017.][added: 2018.]

[removed: Information technology security threats, such as security breaches, computer malware, computer viruses and other "cyber attacks," which are increasing in both frequency and sophistication, along with power outages or hardware failures,] [added: These threats] could result in unauthorized public disclosures of [removed: information and] [added: information,] create financial liability, subject us to legal or regulatory sanctions, disrupt our ability to conduct our [removed: business] [added: business, result in the loss of intellectual property] or damage our reputation with customers, dealers, suppliers and other stakeholders.

Financial distress or a change-in-control of one of our large truck OEM customers could have a [removed: materially] [added: material] adverse impact on our results of operations, financial condition and cash flows.

For [removed: 2018,] [added: 2019,] we recognized [removed: $394] [added: $330] million of equity, royalty and interest income from investees, compared to [removed: $357] [added: $394] million in [removed: 2017.][added: 2018.]

Approximately half of our equity, royalty and interest income from investees is from four of our 50 percent owned joint ventures in China - Beijing Foton Cummins Engine Co., Ltd., Dongfeng Cummins Engine Company, Ltd., Chongqing Cummins Engine Company, [removed: Ltd.and] [added: Ltd. and] Dongfeng Cummins Emission Solutions Co. Ltd. As a result, although a significant percentage of our net income is derived from these unconsolidated entities, we do not unilaterally control their management or [added: their operations, which puts a substantial portion of our net income at risk from the actions or inactions of these entities.]

Our ability to realize all of the expected enhanced revenue, earnings, and cash flow from our 2017 investment in the Eaton Cummins Automated Transmission Technologies joint venture will depend, in substantial part, on our ability to successfully launch the automated transmission products in North America and [added: China and] achieve our projected market [removed: penetration.][added: penetration in those regions.]

If cash flows from the joint venture fall short of our anticipated amounts, these assets could be subject to [added: non-cash] impairment charges, negatively impacting our earnings.

In addition, while the use of commodity price hedging instruments and contractual pricing adjustments may provide us with some protection from adverse fluctuations in commodity prices, by utilizing these instruments we potentially forego the benefits that [removed: might result from favorable fluctuations in price.]

[removed: The] [added: Unanticipated changes in our effective tax rate, the] adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability.

Violations of these laws may result in severe criminal or civil sanctions, could disrupt our [removed: business,] [added: business] and result in an adverse effect on our reputation, business and results of operations, financial condition and cash flows.

We can experience [added: idle] capacity [removed: constraints and longer lead times] [added: as economies slow or demand] for certain products [removed: in times of growing demand] [added: decline,] while we can also experience [removed: idle] capacity [removed: as economies slow or demand] [added: constraints and longer lead times] for certain products [removed: decline.][added: in times of growing demand.]

Accurately forecasting our expected volumes and appropriately adjusting our capacity have been, and will continue to be, important factors in determining [removed: our results of operations and cash flows.]

We cannot guarantee that we will be able to [added: decrease our manufacturing capacity during market troughs, which could result in under-utilized manufacturing assets and unnecessary overhead costs or that we will be able to] increase [added: our] manufacturing capacity to a level that meets demand for our [removed: products,] [added: products during market peaks,] which could prevent us from meeting increased customer demand and could harm our business.

[removed: However, if] [added: If] we overestimate our demand and overbuild our capacity, we may have significantly underutilized assets and we may experience reduced margins.

[added: Furthermore, even if we are successful in] defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and us.

[removed: While we believe that we are in compliance in all material respects with these environmental laws and regulations, there can be no assurance that we will not be adversely impacted by] costs, liabilities or claims with respect to existing or subsequently acquired operations, under either present laws and regulations or those that may be adopted or imposed in the future.

Future bans or limitations on the use of diesel-powered vehicles or other applications could have a [removed: materially] [added: material] adverse impact on our business over the long term.

We are conducting a formal internal review of our emission certification process and compliance with emission standards with respect to our pick-up truck applications and working with the EPA and CARB, as well as the Department of Justice (DOJ) and SEC, to address their questions about these applications.

The results of this formal review and regulatory and government agency processes, or the discovery of any noncompliance issues, could have a material adverse impact on our results of operations and cash flows.

We previously announced that we are conducting a formal internal review of our emissions certification process and compliance with emission standards with respect to all of our pick-up truck applications, following conversations with the EPA and CARB regarding certification of our engines for model year 2019 RAM 2500 and 3500 trucks.

During conversations with the EPA and CARB about the effectiveness of our pick-up truck applications, the regulators raised concerns that certain aspects of our emissions systems may reduce the effectiveness of our emissions control systems and thereby act as defeat devices.

As a result, our internal review focuses, in part, on the regulators’ concerns.

We are working closely with the regulators to enhance our emissions systems to improve the effectiveness of all of our pick-up truck applications and to fully address the regulators’ requirements.

Based on discussions with the regulators, we have developed a new calibration for the engines in model year 2019 RAM 2500 and 3500 trucks that has been included in all engines shipped since September 2019.

During our discussions, the regulators have asked us to look at other model years and other engines, though the primary focus of our review has been the model year 2019 RAM.

We will continue to work together closely with the relevant regulators to develop and implement recommendations for improvement as part of our ongoing commitment to compliance.

We are also fully cooperating with the DOJ's and the SEC's information requests and inquiries.

Due to the continuing nature of the formal review, our ongoing cooperation with the regulators and other government agencies, and the presence of many unknown facts and circumstances, we are not yet able to estimate the financial impact of these matters.

It is possible that the consequences of any remediation plans resulting from our formal review and these regulatory and agency processes could have a material adverse impact on our results of operations and cash flows in the periods in which these emissions certification issues are addressed.

In the second half of 2019 we experienced slowing of demand growth in most of our North American on-highway and certain off-highway markets, while international sales declined in most markets, including China.

Our manufacturing and supply chain abilities may be adversely impacted by an extended shutdown of our operations in China due to the recent coronavirus outbreak.

In December 2019, a novel strain of coronavirus began to impact the population of Wuhan, China, where several of our manufacturing and distribution facilities are located.

In late January 2020, in an effort to contain the spread of the virus, maintain the wellbeing of our employees and in accordance with governmental requirements, we closed several production and distribution facilities in the Hubei Provence of China.

We rely upon these facilities to support our business in China, as well as to export components for use in products in other parts of the world.

While the closures and limitations on movement in the region are expected to be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.

Should the production and distribution closures continue for an extended period of time, the impact on our supply chain in China and globally could have a material adverse effect on our results of operations and cash flows.

production costs, customer demand and our relationships with customers and suppliers.

On January 31, 2020, the U.K. exited from the EU (BREXIT).

Any significant reduction in

While we continually work to safeguard our systems and mitigate potential risks, there is no assurance that these actions will be sufficient to prevent information technology security threats, such as security breaches, computer malware, computer viruses and other "cyber attacks," which are increasing in both frequency and sophistication, along with power outages or hardware failures.

our results of operations and cash flows.

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

During the fourth quarter of 2019 and the first quarter of 2020 we are undertaking cost reduction actions and announced restructuring initiatives to respond to the slowdown in our global markets.

As we implement these initiatives, we may not realize anticipated savings or other benefits from one or more of the initiatives in the amounts or within the time periods we expect.

Other events or circumstances, such as implementation difficulties and delays or unexpected costs, may occur which could result in us not realizing our targeted cost reductions.

We are also subject to the risks of negative publicity and business disruption in connection with our restructuring and other cost reduction initiatives.

If we are unable to realize the expected savings or benefits from these initiatives, certain aspects of our business may be adversely affected.

If we experience any of these circumstances or otherwise fail to realize the anticipated savings or benefits from our restructuring and cost reduction initiatives, our results of operations could be materially and adversely affected.

might result from favorable fluctuations in price.

While we believe that we are in compliance in all material respects with these environmental laws and regulations, there can be no assurance that we will not be adversely impacted by

In fact, several of these customers have expressed their intention to significantly increase their own engine production and to decrease engine purchases from us.

competitive advantage in the engine markets we serve.

In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European Union (EU) in a national referendum (BREXIT).

their operations, which puts a substantial portion of our net income at risk from the actions or inactions of these entities.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (Tax Legislation) and all adjustments to the 2017 estimates were incorporated into our financial results in 2018.

There continues to be a risk that states or foreign jurisdictions may amend their tax laws in response to the Tax Legislation, which could have a material impact on our future results.

Furthermore, even if we are successful in

Our financial statements are subject to changes in accounting standards that could adversely impact our profitability or financial position.

Our financial statements are subject to the application of generally accepted accounting principles (GAAP) in the United States of America, which are periodically revised and/or expanded.

Accordingly, from time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board.

Recently, accounting standard setters issued new guidance which further interprets or seeks to revise accounting pronouncements related to lease accounting as well as to issue new standards expanding disclosures.

The impact of accounting pronouncements that have been issued but not yet implemented is disclosed in our annual and quarterly reports on Form 10-K and Form 10-Q.

An assessment of proposed standards is not provided, as such proposals are subject to change through the exposure process and, therefore, their effects on our financial statements cannot be meaningfully assessed.

It is possible that future accounting standards we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have a material adverse effect on our reported results of operations and financial position.

We are a global power leader that designs, manufactures, distributes and services [removed: diesel and] [added: diesel,] natural [removed: gas engines] [added: gas, electric] and [added: hybrid powertrains and] powertrain-related [removed: component products,] [added: components] including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, [added: automated] transmissions, electric power generation systems, [removed: batteries and] [added: batteries,] electrified power [removed: systems.][added: systems, hydrogen generation and fuel cell products.]

We serve our customers through a network of approximately 600 [removed: wholly-owned] [added: wholly-owned, joint venture] and independent distributor locations and over 7,600 [added: Cummins certified] dealer locations in more than 190 countries and territories.

Our reportable operating segments consist of Engine, Distribution, Components, Power Systems and [removed: Electrified] [added: New] Power.

The Engine segment produces engines (15 liters and [removed: less in size)] [added: smaller)] and associated parts for sale to customers in on-highway and various off-highway markets.

The Components segment sells filtration products, aftertreatment systems, turbochargers, electronics, fuel systems and [added: automated] transmissions.

Net sales in the [removed: United States (U.S.)] [added: U.S.] and Canada improved by [removed: 19] [added: 3] percent primarily due to increased demand in the [removed: North American on-highway markets (primarily in the heavy-] [added: pick-up truck] and medium-duty truck [removed: markets),] [added: markets and] increased demand in [removed: all] [added: most] of our distribution product [removed: lines, sales from the automated transmission business acquired during the third quarter of 2017] [added: lines (largely related to power generation equipment for data center customers), partially offset by lower demand in heavy-duty truck] and [removed: increased] [added: bus markets and decreased] industrial demand (especially in [added: the] oil and gas [removed: and construction markets).][added: market).]

International demand [removed: growth] (excludes the U.S. and Canada) [removed: in 2018 improved international net sales] [added: declined] by [removed: 12] [added: 6] percent compared to [removed: 2017,] [added: 2018,] with [added: lower] sales [removed: up] in most [removed: of our markets, especially] [added: regions (especially] in Europe, [added: India, Russia,] Asia [removed: Pacific, Latin America, China] [added: Pacific] and [removed: India.][added: Latin America).]

[removed: Effective January 1, 2018, we changed our] [added: We use] segment [removed: measure of profitability to] EBITDA [removed: (defined] as [removed: earnings before interest expense, income taxes, noncontrolling interests, depreciation and amortization) as a] [added: the] primary basis for the Chief Operating Decision Maker to evaluate the performance of each of our [added: reportable] operating segments.

[added: We believe] EBITDA [added: is a useful measure of our operating performance as it] assists investors and debt holders in comparing our performance on a consistent basis without regard [removed: for] [added: to financing methods, capital structure, income taxes or] depreciation and [removed: amortization,] [added: amortization methods,] which can vary significantly depending upon many factors.

The following [removed: tables contain] [added: table contains] sales and EBITDA by operating segment for the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017.][added: 2018.]

| | | [removed: 2018] [added: 2019] | | | | | | | | | | | [removed: 2017] [added: 2018] | | | | | | | | | | | Percent change | | | | |

| | | | | | | Percent of Total | | | | | | | | | | | Percent of Total | | | | | | | [removed: 2018] [added: 2019] vs. [removed: 2017] [added: 2018] | | | | |

| Engine | | $ | [removed: 10,566] [added: 10,056] | | | [removed: 44] [added: 43] | % | | $ | [removed: 1,446] [added: 1,454] | | | $ | [removed: 8,953] [added: 10,566] | | | 44 | % | | $ | [removed: 1,143] [added: 1,446] | | | [removed: 18] [added: (5] | [removed: %] [added: )%] | | [removed: 27] [added: 1] | % |

| Distribution | | [removed: 7,828] [added: 8,071] | | | | [removed: 33] [added: 34] | % | | [removed: 563] [added: 656] | | | | [removed: 7,058] [added: 7,828] | | | | [removed: 34] [added: 33] | % | | [removed: 500] [added: 563] | | | | [removed: 11] [added: 3] | % | | [removed: 13] [added: 17] | % |

| Components | | [removed: 7,166] [added: 6,914] | | | | [removed: 30] [added: 29] | % | | [removed: 1,030] [added: 1,097] | | | | [removed: 5,889] [added: 7,166] | | | | [removed: 29] [added: 30] | % | | [removed: 917] [added: 1,030] | | | | [removed: 22] [added: (4] | [removed: %] [added: )%] | | [removed: 12] [added: 7] | % |

| Power Systems | | [removed: 4,626] [added: 4,460] | | | | [removed: 20] [added: 19] | % | | [removed: 614] [added: 512] | | | | [removed: 4,058] [added: 4,626] | | | | 20 | % | | [removed: 411] [added: 614] | | | | [removed: 14] [added: (4] | [removed: %] [added: )%] | | [removed: 49] [added: (17] | [removed: %] [added: )%] |

| Intersegment eliminations | | [removed: (6,422] [added: (5,968] | | ) | | [removed: (27] [added: (25] | )% | | [removed: (87] [added: 42] | | [removed: )] | | [removed: (5,530] [added: (6,422] | | ) | | (27 | )% | | [removed: 55] [added: (87] | | [added: )] | | [removed: 16] [added: (7] | [removed: %] [added: )%] | | NM | |

| Total | | $ | [removed: 23,771] [added: 23,571] | | | 100 | % | | $ | [removed: 3,476] [added: 3,612] | | | $ | [removed: 20,428] [added: 23,771] | | | 100 | % | | $ | [removed: 3,026] [added: 3,476] | | | [removed: 16] [added: (1] | [removed: %] [added: )%] | | [removed: 15] [added: 4] | % |

Net income attributable to Cummins Inc. for [removed: 2018] [added: 2019] was [removed: $2.1] [added: $2.3] billion, or [removed: $13.15] [added: $14.48] per diluted share, on sales of [removed: $23.8] [added: $23.6] billion, compared to [removed: 2017] [added: 2018] net income attributable to Cummins Inc. of [removed: $1.0] [added: $2.1] billion, or [removed: $5.97] [added: $13.15] per diluted share, on sales of [removed: $20.4] [added: $23.8] billion.

The increase in net income attributable to Cummins Inc. and earnings per diluted share was driven by [removed: significantly higher net sales, the 2017 Tax Cuts and Jobs Act (Tax Legislation), higher] [added: increased] gross [removed: margin] [added: margin, lower variable compensation expenses] and [removed: increased equity earnings from investees,] [added: gains on corporate owned life insurance,] partially offset by [removed: $368 million for an Engine System Campaign,] [added: restructuring actions,] higher research, development and engineering [removed: expenses, unfavorable foreign currency impacts (primarily the British pound, Brazilian real] [added: expenses] and [removed: Angolan kwanza partially offset by the Euro)] [added: lower equity, royalty] and [removed: higher] interest [removed: expense.][added: income from investees.]

See Note [removed: 4, "INCOME TAXES," and Note 9,] [added: 12,] "PRODUCT WARRANTY LIABILITY," to the *Consolidated Financial Statements* for additional information on the [removed: Tax Legislation adjustments during the one year measurement period and the] Engine System [removed: Campaign, respectively.][added: Campaign.]

The increase in gross margin was [removed: primarily] [added: mainly] due to [removed: higher volumes, improved mix and favorable pricing, partially offset by increased] [added: lower] warranty costs [removed: (primarily] [added: (due to the absence of the] $368 million [removed: for an Engine System Campaign), higher compensation costs (driven by headcount growth to support increased sales)] [added: engine system charge recorded in 2018), favorable pricing] and [added: lower material costs, partially offset by lower volumes,] unfavorable impacts from [removed: Chinese tariffs.][added: tariffs and unfavorable foreign currency impacts (primarily Australian dollar, Euro, Canadian dollar and Brazilian real).]

Diluted earnings per [added: common] share for [removed: 2018] [added: 2019] benefited $0.25 per share from fewer [removed: weighted average] [added: weighted-average] shares outstanding, primarily due to the stock repurchase [removed: programs, including shares acquired under the accelerated share repurchase agreement.][added: program.]

| | | [removed: |] Years ended December 31, | | | | | | | | | | | [removed: | | | |]

| | | [removed: | 2018] [added: 2019] | | | | [added: 2018] | | | | 2017 | | | [removed: | | | |]

| [removed: Net income and diluted EPS attributable to Cummins Inc. | | | $ | 2,141 |] [added: NET INCOME ATTRIBUTABLE TO CUMMINS INC.] | | $ | [removed: 13.15] [added: 2,260] | | | $ | [removed: 999] [added: 2,141] | | | $ | [removed: 5.97] [added: 999] | |

[removed: (1)] See Note [removed: 4,] [added: 5,] "INCOME TAXES," to [removed: our] [added: the] *Consolidated Financial Statements* for additional [removed: information*.*][added: information.]

We generated [removed: $2.4] [added: $3.2] billion of operating cash flows in [removed: 2018,] [added: 2019,] compared to [removed: $2.3] [added: $2.4] billion in [removed: 2017.][added: 2018.]

In [removed: October 2018, our] [added: December 2019, the] Board [removed: of Directors] authorized the acquisition of up to [removed: $2] [added: $2.0] billion of additional common stock upon completion of the [removed: 2016] [added: 2018] repurchase plan.

See Note [removed: 14 "SHAREHOLDERS' EQUITY,"] [added: 11, "DEBT,"] to [added: the] *Consolidated Financial Statements* for additional information*.*

[removed: These new credit facilities replace our previous] [added: (2) The] five-year [removed: $1.75] [added: credit facility for $2.0] billion and [added: the] 364-day [removed: $1.0 billion facilities] [added: credit facility for $1.5 billion, maturing August 2023] and [removed: will be used] [added: August 2020, respectively, are maintained] primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes.

See Note [removed: 10] [added: 11,] "DEBT," to [added: our] *Consolidated Financial Statements* for additional [removed: information*.*][added: information.]

Our debt to capital ratio (total capital defined as debt plus equity) at December 31, [removed: 2018,] [added: 2019,] was [removed: 23.1] [added: 21.9] percent, compared to [removed: 19.7] [added: 23.1] percent at December 31, [removed: 2017.][added: 2018.]

The [removed: increase] [added: decrease] was primarily due to [removed: an increase] [added: a decline] in outstanding commercial paper.

At December 31, [removed: 2018,] [added: 2019,] we had $1.5 billion in cash and marketable securities on hand and access to our $3.5 billion credit facilities, if necessary, to meet currently anticipated investment and funding needs.

[added: | • |] In July 2018, [removed: our] [added: the] Board [removed: of Directors] authorized an increase to our quarterly dividend of 5.6 percent from $1.08 per share to $1.14 per share. [added: |]

Our global pension plans, including our unfunded and non-qualified plans, were [removed: 115] [added: 113] percent funded at December 31, [removed: 2018.][added: 2019.]

Our U.S. [removed: qualified] [added: defined benefit] plan, which represents approximately [removed: 54] [added: 53] percent of the worldwide pension obligation, was [removed: 131] [added: 133] percent [removed: funded] [added: funded,] and our [removed: United Kingdom (U.K.)] [added: U.K. defined benefit] plan was [removed: 115] [added: 109] percent funded.

We expect to contribute approximately [removed: $123] [added: $100] million [added: in cash] to our global pension plans in [removed: 2019.][added: 2020.]

In addition, we expect our [removed: 2019] [added: 2020] net periodic pension cost to approximate [removed: $56] [added: $100] million.

| • | 2020 OUTLOOK |

The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year 2019 compared to fiscal year 2018.

The discussion and analysis of fiscal year 2017 and changes in the financial condition and results of operations for fiscal year 2018 compared to fiscal year 2017 that are not included in this Form 10-K may be found in Part II, ITEM 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission (SEC) on February 11, 2019.

In November 2019, we renamed our Electrified Power segment as "New Power" in order to better represent the incorporation of fuel cell and hydrogen production technologies resulting from our acquisition of Hydrogenics Corporation.

The New Power segment includes our electrified power, fuel cell and hydrogen production technologies.

The New Power segment designs, manufactures, sells and supports electrified power systems ranging from fully electric to hybrid along with innovative components and subsystems, including battery, fuel cell and hydrogen production technologies.

We continue to serve all our markets as they adopt electrification and alternative power technologies, meeting the needs of our OEM partners and end customers.

Worldwide revenues decreased 1 percent in 2019 compared to 2018, as higher sales in the Distribution and New Power segments were more than offset by lower sales in all other operating segments.

The decrease in international sales was driven by lower on-highway demand (mainly in the light-commercial vehicle (LCV) market in China and Russia, truck markets in Western Europe and India, which negatively impacted our emission solutions and turbo technologies businesses, the medium-duty truck market in Brazil and the bus market in Europe), unfavorable foreign currency impacts of 4 percent of international sales (primarily the Chinese renminbi, Euro, British pound, Australian dollar, Brazilian real and Indian rupee) and decreased demand in industrial markets (especially construction markets in China, Asia Pacific and India and most international mining markets).

These decreases were partially offset by increased demand in China for both engines for oil and gas customers and power generation equipment for data center customers.

| New Power | | 38 | | | | — | % | | (149 | | ) | | 7 | | | | — | % | | (90 | | ) | | NM | | | (66 | )% |

The increase in gross margin and gross margin percentage was mainly due to lower warranty costs (due to the absence of the $368 million engine system charge recorded in 2018), favorable pricing and lower material costs, partially offset by lower volumes, unfavorable impacts from tariffs and unfavorable foreign currency impacts (primarily Australian dollar, Euro, Canadian dollar and Brazilian real).

On April 29, 2019, we announced that we were conducting a formal internal review of our emissions certification process and compliance with emission standards for our pick-up truck applications, following conversations with the U.S. Environmental Protection Agency and the California Air Resources Board regarding certification of our engines in the model year 2019 RAM 2500 and 3500 trucks.

We voluntarily disclosed our formal internal review to the regulators and to other government agencies, the Department of Justice and the SEC.

We are also fully cooperating with the government agencies’ information requests and inquiries.

Due to the continuing nature of our formal review, our ongoing cooperation with the regulators and other government agencies, and the presence of many unknown facts and circumstances, we cannot predict the final outcome of this review and these regulatory and agency processes, and we cannot provide assurance that the matter will not have a materially adverse impact on our results of operations and cash flows.

This credit agreement amends and restates the prior $1.5 billion 364-day credit facility that matured on August 21, 2019.

On September 9, 2019, we acquired an 81 percent interest in Hydrogenics Corporation for total consideration of $235 million.

The Hydrogen Company, a wholly-owned subsidiary of L’Air Liquide, S.A., will maintain a 19 percent noncontrolling interest in Hydrogenics Corporation.

In November 2019, we announced our intentions to reduce our global workforce in response to the continued deterioration in our global markets in the second half of 2019, as well as expected reductions in orders in most U.S. and international markets in 2020.

In the fourth quarter of 2019, we began executing restructuring actions, primarily in the form of voluntary and involuntary employee separation programs.

We incurred a charge of $119 million ($90 million after-tax) in the fourth quarter of 2019 for these actions which impacted approximately 2,300 employees.

In 2019, we repurchased $1,271 million or 8.1 million shares of common stock under the 2018 authorization.

| Restructuring actions | | 119 | | | | — | | | | — | | | | (119 | | ) | | NM | | | — | | | | — | % |

2019 vs. 2018

| • | Unfavorable foreign currency impacts of 1 percent, mainly the Chinese renminbi, Euro, British pound, Australian dollar, Brazilian real and Indian rupee. |

| • | Components segment sales decreased 4 percent, primarily due to lower demand in Western Europe and India. |

Equity, royalty and interest income from investees decreased $64 million, mainly due to lower earnings in China and India, especially at Tata Cummins Ltd., Beijing Foton Cummins Engine Co., Ltd., Chongqing Cummins Engine Co., Ltd. and Dongfeng Cummins Emission Solutions Co., Ltd. and an impairment of a joint venture in our Power Systems segment.

Restructuring Actions

In November 2019, we announced our intentions to reduce our global workforce in response to the continued deterioration in our global markets in the second half of 2019, as well as expected reductions in orders in most U.S. and international markets in 2020.

In the fourth quarter of 2019, we began executing restructuring actions, primarily in the form of voluntary and involuntary employee separation programs.

We incurred a charge of $119 million ($90 million after-tax) in the fourth quarter of 2019 for these actions which impacted approximately 2,300 employees.

The voluntary actions were completed by December 31, 2019 and the majority of the involuntary actions were executed prior to January 31, 2020, with expected completion by March 31, 2020.

Due to the inherent uncertainty involved, actual amounts paid for such activities may differ from amounts initially recorded and we may need to revise previous estimates.

We expect to realize annualized savings from the restructuring and other actions of $250 million to $300 million.

Approximately 55 percent of the savings from our restructuring actions will be realized in cost of sales, 30 percent in selling, general and administrative expenses and 15 percent in research, development and engineering expenses.

We expect the severance to be paid in cash which will be funded from operations.

(1) Includes $19 million of the total $33 million charge related to ending production of the 5 liter ISV engine for the U.S. pick-up truck market during 2019.

Interest expense decreased $5 million, primarily due to lower average short-term borrowings.

| In millions | | 2019 | | | | 2018 | | |

| | |

| --- | --- |

| • | 2019 OUTLOOK |

We formed the Electrified Power segment, effective January 1, 2018, which designs, manufactures, sells and supports electrified power systems ranging from fully electric to hybrid 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.We currently offer the Cummins PowerDrive series of fully electric and hybrid powertrain systems targeting various applications in the Class 4-8 commercial vehicle markets and are developing the Cummins Battery Electric System and the Cummins Hybrid Power Plug-In System for the urban bus market, 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 buses, we intend to deliver product offerings to other markets as they adopt electric solutions, including, but not limited to, pick-up and delivery applications and industrial markets.

We invest in and utilize our internal research and development capabilities, along with strategic acquisitions and partnerships, to meet our objectives.

Worldwide revenues improved 16 percent in 2018 compared to 2017, with all operating segments reporting higher sales.

The increase in international sales was primarily due to increased demand in industrial markets (especially construction and mining markets in China and Europe), increased on-highway demand (especially in Brazil, Europe and India), increased demand in our distribution business (especially in Western Europe, Asia Pacific and China) and increased demand for power generation equipment (primarily in the Middle East, Asia Pacific and China).

Prior periods have been revised to reflect the current presentation.

Segment amounts exclude certain expenses not specifically identifiable to segments.

| Electrified Power | | 7 | | | | — | % | | (90 | | ) | | — | | | | — | % | | — | | | | NM | | | NM | |

_____________________________________________________

Tax Legislation resulted in the U.S. statutory rate decreasing from 35 percent to 21 percent, added incremental income tax expense in 2017 of $781 million to our tax provision (excluding the noncontrolling interest and equity investee adjustments) with a net impact of $777 million unfavorable to net income.

Net income and diluted earnings per share attributable to Cummins Inc., excluding Tax Legislation, were as follows:

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| In millions, except per share amounts | | | Net Income | | | | Diluted EPS | | | | Net Income | | | | Diluted EPS | | |

| Net impact of Tax Legislation(1) | | | 39 | | | | 0.24 | | | | 777 | | | | 4.65 | | |

| Net income and diluted EPS attributable to Cummins Inc. excluding Tax Legislation (2) | | | $ | 2,180 | | | $ | 13.39 | | | $ | 1,776 | | | $ | 10.62 | |

____________________________________________________

(2) These measures are not in accordance with, or an alternative for, accounting principles generally accepted in the United States of America (GAAP) and

may not be consistent with measures used by other companies.

It should be considered supplemental data.

During 2018, we repurchased $1.1 billion, or 7.9 million shares of common stock, including 3.5 million shares repurchased under the $500 million accelerated share repurchase program.

On August 22, 2018, we entered into a new five-year $2.0 billion revolving credit agreement and a 364-day $1.5 billion credit agreement that expire on August 22, 2023 and August 21, 2019, respectively.

2019 OUTLOOK

| • | We anticipate North American medium-duty truck and heavy-duty truck demand will remain strong. |

| • | We expect demand for pick-up trucks in North America will remain strong. |

| • | We anticipate power generation markets will remain strong, with increased demand in global data center markets. |

| • | We expect construction markets will remain strong in North America and Europe. |

| • | We expect demand in mining markets to stabilize. |

| • | Improving economic conditions in Brazil could positively impact demand across our business. |

| • | We are experiencing cost increases as a result of trade tariffs recently imposed by the U.S. and some of its trading partners, especially China. |

| • | Prolonged trade disputes could negatively impact demand and trigger additional costs. |

| • | Marine markets are expected to remain weak. |

In summary, we expect demand to remain strong in many of our most important markets, but also face headwinds in China and with Brexit.

| Loss contingency | | — | | | | 5 | | | | 138 | | | | 5 | | | | 100 | % | | 133 | | | | 96 | % |

Net Sales

This risk is closely monitored and managed through the use of financial derivative instruments including foreign currency forward contracts, interest rate swaps, commodity [added: swap contracts and] zero-cost collars and physical forward contracts.

Substantially all of our derivative contracts are subject to master netting [removed: arrangements] [added: arrangements,] which provide us with the option to settle certain contracts on a net basis when they settle on the same day with the same currency.

The following describes our risk exposures and provides the results of a sensitivity analysis performed at December 31, [removed: 2018.][added: 2019.]

For the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] there were no circumstances that resulted in the discontinuance of a foreign currency cash flow hedge.

At December 31, [removed: 2018,] [added: 2019,] the potential gain or loss in the fair value of our outstanding foreign currency contracts, assuming a hypothetical 10 percent fluctuation in the currencies of such contracts, would be approximately [removed: $91] [added: $4] million.

See Note [removed: 10,] [added: 11,] "DEBT," "Interest Rate Risk" section for additional information.

In order to protect ourselves against future price volatility and, consequently, fluctuations in gross margins, we periodically enter into commodity [added: swap, forward and] zero-cost collar contracts with designated banks [added: and other counterparties] to fix the cost of certain raw material purchases with the objective of minimizing changes in inventory cost due to market price fluctuations.

[removed: These] [added: The] commodity zero-cost collar contracts [added: that] represent an economic hedge, but are not designated for hedge [removed: accounting and] [added: accounting,] are marked to market through earnings.

At December 31, [removed: 2018,] [added: 2019,] the potential gain or loss related to the outstanding commodity zero-cost collar contracts, assuming a hypothetical 10 percent fluctuation in the price of such commodities, would be approximately [removed: $2] [added: $1] million.

Commencing in 2019, these commodity swaps are designated and qualify as cash flow hedges under GAAP.

At December 31, 2019, realized and unrealized gains and losses related to these hedges were not material to our financial statements.

The physical forward contracts qualify for the normal purchases scope exceptions and are treated as purchase commitments.

Our cash flow hedges generally mature within two years.

In 2001, we changed our name to Cummins Inc. We are a global power leader that designs, manufactures, distributes and services [removed: diesel and] [added: diesel,] natural [removed: gas engines] [added: gas, electric] and [added: hybrid powertrains and] powertrain-related [removed: component products,] [added: components] including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, [added: automated] transmissions, electric power generation systems, [removed: batteries and] [added: batteries,] electrified power [removed: systems.][added: systems, hydrogen generation and fuel cell products.]

We serve our customers through a network of approximately 600 [removed: wholly-owned] [added: wholly-owned, joint venture] and independent distributor locations and over 7,600 [added: Cummins certified] dealer locations in more than 190 countries and territories.

We have five complementary operating segments: Engine, Distribution, Components, Power Systems and [removed: Electrified] [added: New] Power.

Engine segment sales and [removed: earnings before interest expense, income taxes, noncontrolling interests, depreciation and amortization (EBITDA)] [added: EBITDA] as a percentage of consolidated results were:

| | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | |

| Percent of consolidated net sales(1) | | [removed: 35] [added: 34] | % | | [removed: 34] [added: 35] | % | | [removed: 35] [added: 34] | % |

| Percent of consolidated EBITDA(1) | | 41 | % | | [removed: 38] [added: 41] | % | | [removed: 34] [added: 38] | % |

Our Engine segment manufactures and markets a broad range of diesel and natural [removed: gas powered] [added: gas-powered] engines under the Cummins brand name, as well as certain customer brand names, for the [removed: heavy-] [added: heavy] and medium-duty truck, bus, recreational vehicle (RV), light-duty automotive, construction, mining, marine, rail, oil and gas, defense and agricultural markets.

| • | Engines with a displacement range of 2.8 to 15 liters and horsepower ranging from 48 to [removed: 715] [added: 715;] and |

| • | New parts and service, as well as remanufactured parts and engines, [added: primarily] through our extensive distribution network. |

| • | Light-duty automotive (Pick-up and Light Commercial Vehicle (LCV)) - We manufacture 105 to 400 horsepower diesel engines, including engines for the pick-up truck market for Fiat Chrysler Automobiles [removed: (Fiat Chrysler) and Nissan] [added: (Chrysler)] in North [removed: America,] [added: America] and LCV markets in China, Europe and Latin America. |

We sell our industrial engines to manufacturers of construction, agricultural and marine equipment, including [removed: Hyundai,] [added: Hyundai Heavy Industries,] Xuzhou Construction Machinery Group, Komatsu, John Deere, JLG Industries, Inc. and LiuGong.

The principal customers of our light-duty on-highway engines are [added: Volkswagen Caminhões e Ônibus, Gorkovsky Avtomobilny Zavod,] Anhui Jianghuai Automobile Co., [removed: Ltd.,] [added: Ltd. and] China National Heavy Duty Truck [removed: Group and Gorkovsky Avtomobilny Zavod.][added: Group.]

The principal [removed: customers] [added: customer] of our pick-up on-highway engines [removed: are Fiat Chrysler and Nissan.][added: is Chrysler.]

| Percent of consolidated net sales(1) | | [removed: 26] [added: 27] | % | | [removed: 27] [added: 26] | % | | [removed: 28] [added: 27] | % |

| Percent of consolidated EBITDA(1) | | [removed: 16] [added: 18] | % | | [removed: 17] [added: 16] | % | | [removed: 20] [added: 17] | % |

[removed: The] [added: Our] Distribution segment is organized [removed: into] [added: and managed as] eight [removed: primary] geographic regions, including North America, Asia Pacific, Europe, China, Africa and Middle East, India, [removed: Latin America] [added: Russia] and [removed: Russia.][added: Latin America.]

[removed: Our distributors] [added: Across these regions, our locations] compete with distributors or dealers that offer similar products.

These competitors vary by geographical [removed: location.][added: location and application market.]

| Percent of consolidated net sales(1) | | 24 | % | | [removed: 23] [added: 24] | % | | [removed: 21] [added: 23] | % |

| Percent of consolidated EBITDA(1) | | [removed: 29] [added: 31] | % | | [removed: 31] [added: 29] | % | | 31 | % |

We develop aftertreatment systems, turbochargers, fuel [removed: systems] [added: systems, transmissions] and electronics to meet increasingly stringent [removed: emissions] [added: emission] and fuel economy standards.

See Note [removed: 19, "ACQUISITIONS", in the Notes] [added: 21 "ACQUISITIONS,"] to [removed: our] [added: the] *Consolidated Financial Statements* for additional information.

| • | Emission solutions - We are a global leader in designing, manufacturing and integrating aftertreatment technology and solutions for the commercial [removed: on-] [added: on] and off-highway light, medium, heavy-duty and high-horsepower engine markets. Aftertreatment is the mechanism used to convert engine emissions of criteria pollutants, such as particulate matter, nitrogen oxides (NOx), carbon monoxide and unburned hydrocarbons into harmless emissions. Our products include custom engineering systems and integrated controls, oxidation catalysts, particulate filters, selective catalytic reduction systems and engineered components, including dosers. Our emission solutions business primarily serves markets in North America, Europe, China, India, Brazil, Russia and Australia. We serve both OEM first fit and retrofit customers. |

| • | Filtration - We design, manufacture and sell filters, coolant and chemical products. Our filtration business offers over 8,300 products for first fit and aftermarket applications including air filters, fuel filters, fuel water separators, lube filters, hydraulic filters, coolants, fuel additives and other filtration systems to OEMs, dealers/distributors and [removed: end users.] [added: end-users.] We support a wide customer base in a diverse range of markets including [removed: on-] [added: on] and off-highway segments such as oil and gas, agriculture, mining, construction, power generation and marine. We produce and sell globally recognized Fleetguard® branded products in over 130 countries including countries in North America, Europe, South America, Asia and Africa. Fleetguard products are available through thousands of distribution points worldwide. |

| • | Electronics and fuel systems - We design and manufacture new, replacement and remanufactured fuel systems primarily for heavy-duty on-highway diesel engine applications, as well as develop and supply electronic control modules (ECMs), sensors and harnesses for the on-highway, off-highway and power generation [removed: applications.We] [added: applications. We] primarily serve markets in North America, China, India and Europe. |

| • | Automated transmissions - We develop and supply automated transmissions for the heavy-duty [removed: and medium-duty] commercial vehicle [removed: markets.] [added: market.] Formed in 2017, the Eaton Cummins Automated Transmission Technologies joint venture is a consolidated 50/50 joint venture between Cummins Inc. and Eaton Corporation Plc. and primarily serves the North American market. |

Customers of our Components segment generally include our Engine, Distribution and Power Systems segments, joint ventures including Beijing Foton Cummins Engine Co., Ltd., Dongfeng Cummins Emission Solutions Co., Ltd. and Tata Cummins Ltd., truck manufacturers and other OEMs, many of which are also customers of our Engine segment, such as PACCAR, Daimler, Navistar, Volvo, Komatsu, Scania, [removed: Fiat] Chrysler and other manufacturers that use our components in their product platforms.

Our primary competitors in these markets include Robert Bosch GmbH, Donaldson Company, Inc., Parker Hannifin Corporation, Mann+Hummel Group, [removed: Honeywell International,] [added: Garrett Motion, Inc.,] Borg-Warner Inc., Tenneco Inc., Eberspacher Holding GmbH & Co. KG, Denso Corporation, Allison Transmission and Aisin Seiki Co., Ltd.

| Percent of consolidated net sales(1) | | 15 | % | | [removed: 16] [added: 15] | % | | 16 | % |

| Percent of consolidated EBITDA(1) | | [removed: 17] [added: 14] | % | | [removed: 14] [added: 17] | % | | [removed: 15] [added: 14] | % |

| • | Power generation - We design, manufacture, sell and support [removed: back-up] [added: standby] and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as controls, paralleling systems and transfer switches, for applications such as consumer, commercial, industrial, data centers, health care, [added: global rental business,] telecommunications and waste water treatment plants. We also provide turnkey solutions for distributed generation and energy management applications using natural gas, diesel or biogas as a fuel. [removed: We also serve global rental accounts for diesel and gas generator sets.] |

| • | Industrial - We design, manufacture, sell and support diesel and natural gas [added: high-speed,] high-horsepower engines up to 5,500 horsepower for a wide variety of equipment in the mining, rail, defense, oil and gas, and commercial marine applications throughout the world. [removed: Across these markets, we have major customers in North America, Europe, China and the South Pacific.] |

| • | Generator technologies - We design, manufacture, sell and support A/C generator/alternator products for internal consumption and for external generator set assemblers. Our products are sold under the [removed: Stamford, AVK] [added: Stamford] and [removed: Markon] [added: AVK] brands and range in output from 3 kilovolt-amperes (kVA) to 12,000 kVA. |

Our customer base for [removed: our] Power Systems offerings is highly diversified, with customer groups varying based on their power needs.

In the markets served by our Power Systems segment, we compete with [added: a variety of] independent engine manufacturers [added: and generator set assemblers] as well as OEMs who manufacture engines for their own [removed: products.][added: products around the world.]

Our primary competitors are CAT, MTU (Rolls Royce Power Systems Group) and Kohler/SDMO (Kohler Group), but we also compete with INNIO, [removed: FG Wilson (CAT group),] Generac, Mitsubishi (MHI) and numerous regional generator set assemblers.

Our alternator business competes globally with [added: Leroy Somer (NIDEC),] Marathon Electric and Meccalte, among others.

[removed: Electrified] [added: New] Power Segment

[removed: Our Electrified] [added: The New] Power segment designs, manufactures, sells and supports electrified power systems ranging from fully electric to [removed: hybrid.][added: hybrid along with innovative components and subsystems, including battery, fuel cell and hydrogen production technologies.]

In November 2019, we renamed our Electrified Power segment as "New Power" in order to better represent the incorporation of fuel cell and hydrogen production technologies resulting from our acquisition of Hydrogenics Corporation.

The New Power segment includes our electrified power, fuel cell and hydrogen production technologies.

We use segment earnings before interest expense, income taxes, noncontrolling interests, depreciation and amortization (EBITDA) as the primary basis for the Chief Operating Decision Maker to evaluate the performance of each of our reportable operating segments.

We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors.

| | | 2019 | | | 2018 | | | 2017 | |

Our Distribution segment is the company’s primary sales, service, and support channel.

The segment serves Cummins customers and certified dealers through a worldwide network of wholly owned, joint venture, and independent distribution locations.

Wholly owned locations operate and serve markets in the eight geographic regions noted below.

Joint venture locations serve markets in South America, Southeast Asia, India, Middle East and Africa; while independent distribution locations serve markets in these and other geographies.

Distribution’s mission encompasses the sales and support of a wide range of products and services, including power generation systems, high-horsepower engines, heavy-duty and mid-range engines designed for on- and off-highway use, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services.

Our familiarity with our customers and our markets allows us to provide sales, service and support to meet our customers' needs.

| | | 2019 | | | 2018 | | | 2017 | |

| | | 2019 | | | 2018 | | | 2017 | |

In the third quarter of 2019, we formed a joint venture with L'Air Liquide, S.A. via the purchase of Hydrogenics Corporation, which was consolidated and included in our New Power segment.

We have established relationships with Gillig for the urban bus market in North America, Blue Bird for the school bus market in North America, Alstom Transport in Europe for PEM fuel cell powered regional commuter trains and L'Air Liquide S.A. for on-site hydrogen generation.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | |

In the third quarter of 2019, we formed a joint venture with L'Air Liquide S.A. via the purchase of Hydrogenics Corporation, which was consolidated and included in our New Power segment.

See Note 21, "ACQUISITIONS", to the *Consolidated Financial Statements* for additional information.

In late 2019, Cummins introduced PLANET 2050, a sustainability strategy focused on three priority areas: addressing climate change and air emissions, using natural resources in the most sustainable way and improving communities.

It includes eight specific goals to achieve by 2030, as well as aspirational targets for 2050.

Cummins is currently evaluating how the new goals will be integrated into business planning and will report on progress beginning in 2022.

Following conversations with the U.S. Environmental Protection Agency (EPA) and California Air Resources Board (CARB) regarding certification for the engines in the 2019 RAM 2500 and 3500 trucks, we made the decision to review our certification process and compliance with emission standards.

This review is being conducted with external advisers to ensure the certification and all of our processes for our pick-up truck applications are consistent with our internal policies, engineering standards and applicable laws.

In addition, we voluntarily disclosed our formal internal review to our regulators and other agencies and have been working cooperatively with them to ensure a complete and thorough review.

We strive to be a leader in developing and implementing technologies that provide customers with the highest performing products that also have the least impact on the environment and have a long history of working with governments and regulators to achieve these goals.

We remain committed to ensuring that our products meet all current and future emission standards and delivering value to our customers.

On October 17, 2019, the Board approved the creation of a new Product Compliance and Regulatory Affairs Organization to lead engine emission certification and compliance and regulatory affairs.

This new organization is led by the Vice President - Product Compliance and Regulatory Affairs who reports directly to the Chief Executive Officer, and the new Vice President joins the Cummins Executive Team and Cummins Leadership Team.

The focus of this new organization will be to strengthen our ability to design great products that help our customers win while ensuring compliance with increasingly challenging global emission regulations.

The organization will also work to enhance our collaboration with the agencies that set the direction and regulations of emissions to best ensure we are meeting every expectation today while planning ahead for future changes.

The current EU Stage V off-highway emission standards became effective in 2019 for certain power categories and are expected to be completely effective by January 2021 for all remaining categories.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| Walter J. Fier (55) | | Vice President—Chief Technical Officer (2019) | | Vice President—Engineering, Engine Business (2015-2019) |

| Melina M. Kennedy (50) | | Vice President—Product Compliance and Regulatory Affairs (2019) | | Executive Director—Pick-up Truck, Engine Business (2018-2019) Executive Director—Rail & Defense (2017-2018) General Manager—Rail & Defense (2014-2017) |

| | |

| --- | --- |

Our Distribution segment consists of 28 wholly-owned and 10 joint venture distributors that service and distribute the full range of our products and services to end-users at approximately 450 locations in over 90 distribution territories.

Our wholly-owned distributors are located in key markets, including North America, Australia, Europe, China, Africa, Russia, Japan, Brazil, Singapore and Central America, while our joint venture distributors are located in key markets, including South America, the Middle East, India, Thailand and Singapore.

The Distribution segment consists of product lines which service and/or distribute the full range of our products and services, including Parts, Engines, Power generation and Service.

Asia Pacific is composed of six smaller regional distributor organizations (South Pacific, Korea, Japan, Philippines, Malaysia and Singapore) which allow us to better manage these vast geographic territories.

Our distribution network consists of independent, partially-owned and wholly-owned distributors which provide parts and full service to our customers.

These solutions include maintenance contracts, engineering services and integrated products, where we customize our products to cater to specific needs of end-users.

Our distributors also serve and develop dealers, predominantly OEM dealers, in their territories by providing new products, technical support, tools, training, parts and product information.

The distribution segment is responsible for managing the operations of our wholly-owned and partially owned distributors as well as our relationships with independent distributors.

Our Distribution segment serves a highly diverse customer base with approximately 40 percent and 38 percent of its 2018 and 2017 sales, respectively, being generated from new engines and power generation equipment, with its remaining sales generated by parts and service revenue.

In the third quarter of 2017, we formed the Eaton Cummins Automated Transmission Technologies joint venture, which was consolidated and included in our Components segment as the automated transmissions business.

This segment continuously explores emerging technologies and provides integrated power generation products.

We use our own research and development capabilities as well as those of our business partnerships to develop cost-effective and environmentally sound power solutions.

We compete with a variety of engine manufacturers and generator set assemblers across the world.

We currently offer the Cummins PowerDrive series of fully electric and hybrid powertrain systems targeting various applications in the Class 4-8 commercial vehicle markets and are developing the Cummins Battery Electric System and the Cummins Hybrid Power Plug-In System for the urban bus market, 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.

We invest in and utilize our internal research and development capabilities, along with strategic acquisitions and partnerships, to meet our objectives.

We have secured a partnership with Gillig for our urban bus electrified powertrain in North America.

Outside of North America, our largest anticipated geographic markets are Europe and China.

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| Cummins Westport, Inc. | 28 | | | | 8 | % | | 9 | | | (1) | 3 | % | | 11 | | | | 4 | % |

| Dongfeng Cummins Emission Solutions Co., Ltd. | 14 | | | | 4 | % | | 13 | | | | 4 | % | | 9 | | | | 3 | % |

| Tata Cummins, Ltd. | 14 | | | | 4 | % | | (7 | | ) | (1) | (2 | )% | | 6 | | | | 2 | % |

| North American distributors | — | | | | — | % | | — | | | | — | % | | 21 | | | (2) | 8 | % |

(2) During 2016, we acquired the remaining interests in the final unconsolidated North American Distributor joint venture.

| • | Cummins Westport, Inc. - Cummins Westport, Inc. is a joint venture in Canada with Westport Innovations Inc. to market and sell automotive spark-ignited natural gas engines worldwide and to participate in joint technology projects on low-emission technologies. |

| • | Dongfeng Cummins Emission Solutions Co., Ltd. - Dongfeng Cummins Emission Solutions Co. Ltd. is a joint venture in China with Dongfeng Industrial Company, a subsidiary of Dongfeng Motor Group Company Limited, a manufacturer of numerous on-highway vehicles. This joint venture produces, purchases and sells advanced diesel engine aftertreatment solutions to support the full line of Dongfeng's commercial vehicles. |

| • | Tata Cummins, Ltd. - Tata Cummins, Ltd. is a joint venture in India with Tata Motors Ltd., the largest automotive company in India and a member of the Tata group of companies. This joint venture manufactures Cummins' 3.8 to 8.9\-liter diesel engines in India with a power range from 75 to 400 horsepower for use in trucks manufactured by Tata Motors, as well as for various industrial and power generation applications. |

sales in 2018, less than 7 percent in 2017 and less than 7 percent in 2016.

We strive to have robust certification and compliance processes, adhering to all emissions regulations worldwide, including prohibiting the use of defeat devices in all of our products.

We are transparent with all governing bodies in these processes, from disclosure of the design and operation of the emission control system, to test processes and results, and later to any necessary reporting and corrective action processes if required.

We work collaboratively and proactively with emission regulators globally to ensure emission standards are clear, appropriately stringent and enforceable, in an effort to ensure our products deliver on our commitments to our customers and the environment in real world use every day.

Our failure to comply with these standards could result in adverse effects on our future financial results.

The current EU Stage V off-highway emission standards will come into effect between the 2019 - 2020 time frame for all power categories.

meeting the most stringent emission standards in the industrial market.

EXECUTIVE OFFICERS OF THE REGISTRANT

| Richard J. Freeland (61) | | Director, President and Chief Operating Officer (2014) | | Vice President and President— Engine Business (2010-2014) |

The matters described under "Loss Contingency" in Note [removed: 9,] [added: 12,] "PRODUCT WARRANTY LIABILITY," to the *Consolidated Financial Statements* are incorporated herein by reference.

On April 29, 2019, we announced that we were conducting a formal internal review of our emissions certification process and compliance with emission standards for our pick-up truck applications, following conversations with the EPA and the CARB regarding certification of our engines in model year 2019 RAM 2500 and 3500 trucks.

This review is being conducted with external advisors to ensure the certification and compliance processes for all of our pick-up truck applications are consistent with our internal policies, engineering standards and applicable laws.

In addition, we voluntarily disclosed our formal internal review to our regulators and to other government agencies, the DOJ and the SEC, and have been working cooperatively with them to ensure a complete and thorough review.

During conversations with the EPA and CARB about the effectiveness of our pick-up truck applications, the regulators raised concerns that certain aspects of our emissions systems may reduce the effectiveness of our emissions control systems and thereby act as defeat devices.

As a result, our internal review focuses, in part, on the regulators’ concerns.

We are working closely with the regulators to enhance our emissions systems to improve the effectiveness of all of our pick-up truck applications and to fully address the regulators’ requirements.

Based on discussions with the regulators, we have developed a new calibration for the engines in model year 2019 RAM 2500 and 3500 trucks that has been included in all engines shipped since September 2019.

During our discussions, the regulators have asked us to look at other model years and other engines, though the primary focus of our review has been the model year 2019 RAM.

We are also fully cooperating with the DOJ's and the SEC's information requests and inquiries.

Due to the continuing nature of our formal review, our ongoing cooperation with our regulators and other government agencies, and the presence of many unknown facts and circumstances, we cannot predict the final outcome of this review and these regulatory and agency processes, and we cannot provide assurance that the matter will not have a materially adverse impact on our results of operations and cash flows.

[removed: ][added: ]

For the Fiscal Year Ended December 31, [removed: 2018][added: 2019]

Commission File [removed: Number 1-4949][added: Number 1-4949]

| [removed: Indiana] (State of Incorporation) | | [removed: 35-0257090] (IRS Employer Identification No.) |

[removed: Columbus, Indiana 47202-3005][added: Columbus, Indiana 47202-3005]

Telephone [removed: (812) 377-5000][added: (812) 377-5000]

| Title of each class | | [added: Trading Symbol(s) | |] Name of each exchange on which registered |

| Common [removed: Stock,] [added: stock,] $2.50 par value | | [added: CMI | |] New York Stock Exchange |

Yes [removed: o] [added: ☐] No x

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ [removed: 229.405] [added: 232.405] of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| Large accelerated filer [added: |] x | | Accelerated filer [removed: o] | [added: ☐] | [added: |] Non-accelerated filer [removed: o] | [removed: | Smaller reporting company o] [added: ☐] |

| [removed: Emerging growth] [added: Smaller reporting] company [removed: o] | [added: ☐] | | [added: Emerging growth company] | [added: ☐] | | | [added: |]

The aggregate market value of the voting stock held by non-affiliates was approximately [removed: $21.7] [added: $27.0] billion at [removed: July 1, 2018.][added: June 28, 2019.]

As of [removed: February 1, 2019,] [added: January 31, 2020,] there were [removed: 157,338,874] [added: 150,269,665] shares outstanding of $2.50 par value common stock.

Portions of the registrant's definitive Proxy Statement for its [removed: 2019] [added: 2020] annual meeting of shareholders, which will be filed with the Securities and Exchange Commission on Schedule 14A within 120 days after the end of [removed: 2018,] [added: 2019,] will be incorporated by reference in Part III of this Form 10-K to the extent indicated therein upon such filing.

| | | | | [Cautionary Statements Regarding Forward-Looking [removed: Information](#sB4E408A0CC635CB6AE646BD23C16185D)] [added: Information](#s004AAFA069D252C087C974B0BFF1BE7A)] | | [removed: [3](#sB4E408A0CC635CB6AE646BD23C16185D)] [added: [3](#s004AAFA069D252C087C974B0BFF1BE7A)] |

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| Indiana | | 35-0257090 |

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| [I](#s781905C43566536C8615571793BF6130) | | [1](#sCEF69F781DF25D549FB7B56CD4A5D671) | | [Business](#sCEF69F781DF25D549FB7B56CD4A5D671) | | [5](#s781905C43566536C8615571793BF6130) |

| | | | | [Overview](#sEB57063500FA595E85FA49AD32476A89) | | [5](#sEB57063500FA595E85FA49AD32476A89) |

| | | | | [New Power Segment](#sFDC5847D38F85EF5BB772F38D941D650) | | [8](#sFDC5847D38F85EF5BB772F38D941D650) |

| | | | | [Supply](#s90101EA50CD25A60B49E375F1394DBAB) | | [10](#s90101EA50CD25A60B49E375F1394DBAB) |

| | | | | [Seasonality](#s78D8E3DDA38A59C7821469F79FE295BA) | | [11](#s78D8E3DDA38A59C7821469F79FE295BA) |

| | | | | [Backlog](#s44DFE78209775914A3F9CF7484864A06) | | [11](#s44DFE78209775914A3F9CF7484864A06) |

| | | | | [Employees](#sF3C5EBCD2CBE51FEA561ED51736AEA09) | | [14](#sF3C5EBCD2CBE51FEA561ED51736AEA09) |

| | | | | [Information About Our Executive Officers](#s32A213FDDDD15B39B6F0F663224A22FD) | | [15](#s32A213FDDDD15B39B6F0F663224A22FD) |

| | | [2](#sC28C150C1C9F5AD6ABC17AF6C3302244) | | [Properties](#sC28C150C1C9F5AD6ABC17AF6C3302244) | | [25](#sC28C150C1C9F5AD6ABC17AF6C3302244) |

| | | [9B](#sDD9F9105DD5152A6BD8FEA612F90BF05) | | [Other Information](#sDD9F9105DD5152A6BD8FEA612F90BF05) | | [117](#sDD9F9105DD5152A6BD8FEA612F90BF05) |

| | | [11](#sC41332E84CE75BB48E2E730577A86828) | | [Executive Compensation](#sC41332E84CE75BB48E2E730577A86828) | | [117](#sC41332E84CE75BB48E2E730577A86828) |

| [IV](#s351F949BA402567C9182A99B7AE5C8C6) | | [15](#s2ADF7688FE0155E88F222514C14B2406) | | [Exhibits, Financial Statement Schedules](#s2ADF7688FE0155E88F222514C14B2406) | | [118](#s2ADF7688FE0155E88F222514C14B2406) |

| | | | | [Signatures](#sB8E50D5CE1DF53EEA6765C0965FBAC68) | | [122](#sB8E50D5CE1DF53EEA6765C0965FBAC68) |

| • | any adverse results of our internal review into our emissions certification process and compliance with emission standards; |

| • | an extended shutdown of our operations in China due to the coronavirus outbreak; |

| • | challenges or unexpected costs in completing cost reduction actions and restructuring initiatives; |

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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| [I](#s59E1E77F9DD65B2FB23382375F365A6A) | | [1](#s7547FA91CEE75293B84CAC5BD5E9C451) | | [Business](#s7547FA91CEE75293B84CAC5BD5E9C451) | | [5](#s59E1E77F9DD65B2FB23382375F365A6A) |

| | | | | [Overview](#s0F0E4926D1AC530B88C55B20BB8598BC) | | [5](#s0F0E4926D1AC530B88C55B20BB8598BC) |

| | | | | [Electrified Power Segment](#sB88EB71DE8D55A66B59589D32751F6BC) | | [8](#sB88EB71DE8D55A66B59589D32751F6BC) |

| | | | | [Supply](#s5AED0C626B9C5841BED869E601950356) | | [11](#s5AED0C626B9C5841BED869E601950356) |

| | | | | [Seasonality](#sA42B613BD0255867B81EFE6494D30AA4) | | [11](#sA42B613BD0255867B81EFE6494D30AA4) |

| | | | | [Backlog](#s880EE6E88AA650BE87756EE6E23DD594) | | [12](#s880EE6E88AA650BE87756EE6E23DD594) |

| | | | | [Employees](#s77BBC6118EC556CFAB8EC615ED16EBF3) | | [14](#s77BBC6118EC556CFAB8EC615ED16EBF3) |

| | | | | [Executive Officers of the Registrant](#s8A140166B10D51E6B712B674EC415261) | | [15](#s8A140166B10D51E6B712B674EC415261) |

| | | [2](#s17F2B42DF2645E01AE9AB1A238ADA9B2) | | [Properties](#s17F2B42DF2645E01AE9AB1A238ADA9B2) | | [25](#s17F2B42DF2645E01AE9AB1A238ADA9B2) |

| | | [9B](#s4CDA3820E5F857BCA70FBD94C1D71BD4) | | [Other Information](#s4CDA3820E5F857BCA70FBD94C1D71BD4) | | [118](#s7520D1510C2351CD8F465A2C7DC41B18) |

| | | [11](#s9879D36DCAFE59769CF15BF2A96E85C2) | | [Executive Compensation](#s9879D36DCAFE59769CF15BF2A96E85C2) | | [118](#s9879D36DCAFE59769CF15BF2A96E85C2) |

| [IV](#sF2927368ACA95B1F9321C0E6420CAA89) | | [15](#s4EDE260177745D82B64FFB0564FCE99A) | | [Exhibits and Financial Statement Schedules](#s4EDE260177745D82B64FFB0564FCE99A) | | [119](#s4EDE260177745D82B64FFB0564FCE99A) |

| | | | | [Signatures](#sA0552E5A8056519DA062D94E33AFE33A) | | [123](#sA0552E5A8056519DA062D94E33AFE33A) |

| • | changes in accounting standards; |

| | | | | U.K.: [removed: Daventry, Stamford] [added: Daventry] |

| [removed: Electrified] [added: New] Power | | Indiana: Columbus | | [added: Canada: Mississauga] |

In addition, engines and engine components are manufactured by joint ventures or independent licensees at manufacturing plants in the U.S., China, India, [removed: Russia,] Japan, [removed: Sweden] [added: Sweden, Germany, U.K., Mexico] and [removed: Mexico.][added: Canada.]

The principal distribution facilities that serve all of our segments are [removed: located in the following locations:][added: as follows:]

| Georgia: Atlanta | | Canada: [removed: Montreal,Vancouver] [added: Montreal, Vancouver] |

Our Corporate Headquarters [removed: are] [added: is] located in Columbus, Indiana.

| Indiana: [removed: Columbus, Indianapolis] [added: Columbus] | | Belgium: Rumst |

| [removed: Tennessee: Memphis, Nashville] [added: Kentucky: Walton] | | China: Beijing, Shanghai, Wuhan |

| [added: Texas: Houston] | | Mexico: San Luis Potosi |

| | | U.K.: [removed: London,] [added: Cumbernauld,] Stockton |

Our principal manufacturing facilities by segments are as follows:

| | | | | Belgium: Oevel |

Supply Chain Facilities

The principal supply chain facilities that serve all of our segments are as follows:

| Tennessee: Memphis | | India: Phaltan, Pithampur, Pune |

Additionally, we operate numerous ancillary marketing, operational headquarters and administrative facilities globally.

Our principal manufacturing facilities include our plants used by the following segments in the following locations:

| | | Russia: Moscow |

| | | South Africa: Johannesburg |

Additional marketing, operational headquarters and supply chain facilities are in the following locations:

| Kentucky: Walton | | Brazil: Guarulhos |

| Washington, D.C. | | India: Pune |

| | | Singapore: Singapore |

| | | Turkey: Izmir |

| | | United Arab Emirates: Dubai |

(a) Our common stock is listed on the NYSE under the symbol "CMI." For other matters related to our common stock and shareholders' equity, see Note [removed: 14, "SHAREHOLDERS'] [added: 16, "CUMMINS INC. SHAREHOLDERS'] EQUITY," to the *Consolidated Financial Statements*.

(1) Shares purchased represent shares under our Key Employee Stock Investment Plan established in 1969 (there is no maximum repurchase limitation in this plan) and [removed: our] [added: the] Board [removed: of Directors] authorized share repurchase program.

The repurchase program authorized by the Board [removed: of Directors] does not limit the number of shares that may be purchased and [removed: were] [added: was] excluded from this column.

The dollar value remaining available for future purchases under the 2018 program [removed: as of] [added: at] December 31, [removed: 2018,] [added: 2019,] was [removed: $1.9 billion.][added: $635 million.]

In [removed: October 2018, our] [added: December 2019, the] Board [removed: of Directors] authorized the acquisition of up to [removed: $2] [added: $2.0] billion of additional common stock upon completion of the [removed: 2016] [added: 2018] repurchase plan.

During the three months ended December 31, [removed: 2018,] [added: 2019,] we repurchased [removed: $167 million of common stock under the 2016 Board of Directors authorized plan, completing this program, and repurchased $94] [added: $465] million of common stock under the 2018 authorization.

During the three months ended December 31, [removed: 2018,] [added: 2019,] we repurchased [removed: 5,782] [added: 12,325] shares of common stock from employees in connection with the Key Employee Stock Investment Plan which allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit.

Our peer group includes BorgWarner Inc., Caterpillar, Inc., Daimler AG, Deere & Company, Donaldson Company Inc., Eaton Corporation, Emerson Electric Co., Fortive Corporation, W.W. Grainger Inc., Honeywell International, Illinois Tool Works Inc., Navistar, PACCAR, Parker-Hannifin Corporation, Textron Inc. and Volvo [removed: AB.][added: AB (Fortive Corporation is excluded from the peer index in the following graph as the company was founded after December 31, 2014).]

[removed: ][added: ]

ASSUMES $100 INVESTED ON DECEMBER 31, [removed: 2013][added: 2014]

FISCAL YEAR ENDING DECEMBER 31, [removed: 2018][added: 2019]

| September 30 - November 3 | | 1,621,817 | | | $ | 158.11 | | | 1,618,527 | | | 31,370 | |

| November 4 - December 1 | | 254,661 | | | 181.51 | | | | 247,913 | | | 25,208 | |

| December 2 - December 31 | | 911,293 | | | 181.41 | | | | 909,006 | | | 23,185 | |

| Total | | 2,787,771 | | | 167.87 | | | | 2,775,446 | | | | |

In October 2018, the Board authorized the acquisition of up to $2.0 billion of additional common stock.

| October 1 - November 4 | | 1,441,542 | | | $ | 137.97 | | | 1,441,542 | | | 80,751 | |

| November 5 - December 2 | | 740,384 | | | 145.34 | | | | 735,907 | | | 78,448 | |

| December 3 - December 31 | | 406,164 | | | 135.90 | | | | 404,859 | | | 85,313 | |

| Total | | 2,588,090 | | | 139.75 | | | | 2,582,308 | | | | |

In December 2016, our Board of Directors authorized the acquisition of up to $1 billion of additional common stock upon completion of the 2015 repurchase plan.

The selected financial information presented below for each of the last five years ended December 31, beginning with [removed: 2018,] [added: 2019,] was derived from our *Consolidated Financial Statements*.

| In millions, except per share amounts | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net sales | | $ | [removed: 23,771] [added: 23,571] | | | $ | [removed: 20,428] [added: 23,771] | | | $ | [removed: 17,509] [added: 20,428] | | | $ | [removed: 19,110] [added: 17,509] | | | $ | [removed: 19,221] [added: 19,110] | |

| Net income attributable to Cummins [removed: Inc.(2)] [added: Inc.(1)] | | [removed: 2,141] [added: 2,260] | | | | [removed: 999] [added: 2,141] | | | | [removed: 1,394] [added: 999] | | | | [removed: 1,399] [added: 1,394] | | | | [removed: 1,651] [added: 1,399] | | |

| Earnings per common share attributable to Cummins [removed: Inc.(3)] [added: Inc.(2)] | | | | | | | | | | | | | | | | | | | | |

| Basic | | $ | [removed: 13.20] [added: 14.54] | | | $ | [removed: 5.99] [added: 13.20] | | | $ | [removed: 8.25] [added: 5.99] | | | $ | [removed: 7.86] [added: 8.25] | | | $ | [removed: 9.04] [added: 7.86] | |

| Diluted | | [removed: 13.15] [added: 14.48] | | | | [removed: 5.97] [added: 13.15] | | | | [removed: 8.23] [added: 5.97] | | | | [removed: 7.84] [added: 8.23] | | | | [removed: 9.02] [added: 7.84] | | |

| Cash dividends declared per share | | [removed: 4.44] [added: 4.90] | | | | [removed: 4.21] [added: 4.44] | | | | [removed: 4.00] [added: 4.21] | | | | [removed: 3.51] [added: 4.00] | | | | [removed: 2.81] [added: 3.51] | | |

| Total assets | | [removed: 19,062] [added: 19,737] | | | | [removed: 18,075] [added: 19,062] | | | | [removed: 15,011] [added: 18,075] | | | | [removed: 15,134] [added: 15,011] | | | | [removed: 15,764] [added: 15,134] | | |

| Long-term [removed: debt(5)] [added: debt] | | [removed: 1,597] [added: 1,576] | | | | [removed: 1,588] [added: 1,597] | | | | [removed: 1,568] [added: 1,588] | | | | [removed: 1,576] [added: 1,568] | | | | [removed: 1,577] [added: 1,576] | | |

[removed: (2)] For the year ended December 31, 2018, net income attributable to Cummins Inc. was reduced by $39 million due to Tax Legislation.

For the year ended December 31, 2016, net income attributable to Cummins Inc. included a $138 million charge for a loss contingency ($74 million net of favorable variable compensation impact [removed: and] after-tax).

[added: (1)] For the year ended December 31, [removed: 2014,] [added: 2019,] net income attributable to Cummins Inc. [removed: included $32] [added: was reduced by $119] million [removed: of] [added: due to] restructuring [removed: and other charges ($21 million after-tax) for operating] actions [removed: related to the Power Systems segment.][added: ($90 million after-tax).]

[removed: (3)] For the year ended December 31, [removed: 2018] [added: 2018,] results for basic and diluted earnings per share were reduced by $0.24 [added: per share] due to Tax Legislation.

For the year ended December 31, [removed: 2017] [added: 2017,] results for basic and diluted earnings per share were reduced by $4.66 per share and $4.65 per share, respectively, due to Tax Legislation.

(2) For the year ended December 31, 2019, results for basic and diluted earnings per share were reduced by $0.58 per share and $0.57 per share, respectively, due to restructuring actions.

For the year ended December 31, 2016, results for basic and diluted earnings per share were reduced by $0.44 per share due to a loss contingency charge.

For the year ended December 31, 2015, results for basic and diluted earnings per share were reduced by $0.75 per share due to an impairment of light-duty diesel, $0.34 per share due to restructuring actions and other charges and $0.20 and $0.21 per share, respectively, due to a loss contingency charge.

| *U.S. percentage of sales* | | 56 | | % | | 54 | | % | | 54 | | % | | 56 | | % | | 52 | | % |

| *Non-U.S. percentage of sales* | | 44 | | % | | 46 | | % | | 46 | | % | | 44 | | % | | 48 | | % |

| Gross margin (1) | | 5,737 | | | | 5,100 | | | | 4,458 | | | | 4,947 | | | | 4,861 | | |

| Research, development and engineering expenses(1) | | 902 | | | | 754 | | | | 637 | | | | 735 | | | | 754 | | |

| Equity, royalty and interest income from investees | | 394 | | | | 357 | | | | 301 | | | | 315 | | | | 370 | | |

| Interest expense | | 114 | | | | 81 | | | | 69 | | | | 65 | | | | 64 | | |

| Net cash provided by operating activities(4) | | $ | 2,378 | | | $ | 2,277 | | | $ | 1,939 | | | $ | 2,065 | | | $ | 2,283 | |

| Capital expenditures | | 709 | | | | 506 | | | | 531 | | | | 744 | | | | 743 | | |

| Cash and cash equivalents | | $ | 1,303 | | | $ | 1,369 | | | $ | 1,120 | | | $ | 1,711 | | | $ | 2,301 | |

| Total equity(6) | | 8,259 | | | | 8,164 | | | | 7,174 | | | | 7,750 | | | | 8,093 | | |

(1) In 2018, we adopted the standard related to pension and other postretirement benefit costs resulting in reclassification of balances between *Cost of sales,* *Selling, general and administrative expenses,* *Research, development and engineering expenses* and *Other income, net*.

Reclassifications resulted in an increase in gross margin of $10 million and $6 million and an increase in *Research, development and engineering expenses* of $2 million and $1 million for the years ended December 31, 2017 and 2016, respectively.

Reclassifications were not made for the years ended December 31, 2015 and 2014 as the changes were immaterial.

(4) In 2017, we adopted new rules related to accounting for stock compensation which resulted in a net reclassification of $4 million, $6 million and $17 million of compensation payments from operating to financing activities for the years ended December 31, 2016, 2015 and 2014, respectively.

(5) In 2015, we adopted new rules related to balance sheet debt issuance costs, which resulted in the reclassification of our December 31, 2014, debt balance, reducing our long-term debt by $12 million.

(6) For the years ended December 31, 2018, 2017, 2016, 2015 and 2014, we recorded non-cash charges (credits) to equity of ($74) million, ($28) million, $65 million, $63 million and $78 million, respectively, to record net actuarial losses (gains) associated with the valuation of our pension plans.

These losses (gains) include the effects of market conditions on our pension trust assets and the effects of economic factors on the valuation of the pension liability.

For the years ended December 31, 2018, 2017, 2016, 2015 and 2014, we recorded non-cash charges (credits) to equity of $326 million, ($315) million, $431 million, $290 million and $227 million, respectively, to record unrealized losses (gains) associated with the foreign currency translation adjustments.

| • | Consolidated Statements of [added: Net] Income for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Balance Sheets at December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] |

| • | Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Notes to [added: the] Consolidated Financial Statements |

[removed: | NOTE | | 2 | | DISAGGREGATION OF REVENUE |][added: Disaggregation of Revenue]

| NOTE | | [removed: 4] [added: 5] | | INCOME TAXES |

| NOTE | | [removed: 5] [added: 6] | | MARKETABLE SECURITIES |

| NOTE | | [removed: 6] [added: 7] | | INVENTORIES |

| NOTE | | [removed: 7] [added: 8] | | PROPERTY, PLANT AND EQUIPMENT |

| NOTE | | [removed: 8] [added: 10] | | GOODWILL AND OTHER INTANGIBLE ASSETS |

| NOTE | | [removed: 9] [added: 12] | | PRODUCT WARRANTY LIABILITY |

| NOTE | | [removed: 10] [added: 11] | | DEBT |

| NOTE | | [removed: 11] [added: 13] | | PENSIONS AND OTHER POSTRETIREMENT BENEFITS |

| [removed: NOTE] [added: Other accrued expenses (Note 14)] | | [removed: 12] [added: 1,039] | | [removed: OTHER ACCRUED EXPENSES AND OTHER LIABILITIES] | [added: | 852 | | |]

| NOTE | | [removed: 13] [added: 15] | | COMMITMENTS AND CONTINGENCIES |

| NOTE | | [removed: 14] [added: 16] | | [added: CUMMINS INC.] SHAREHOLDERS' EQUITY |

| NOTE | | [removed: 15] [added: 17] | | ACCUMULATED OTHER COMPREHENSIVE LOSS |

| NOTE | | [removed: 16] [added: 19] | | STOCK INCENTIVE AND STOCK OPTION PLANS |

| NOTE | | [removed: 17] [added: 18] | | NONCONTROLLING INTERESTS |

| NOTE | | [removed: 18] [added: 20] | | EARNINGS PER [added: COMMON] SHARE [added: ATTRIBUTABLE TO CUMMINS INC.] |

| NOTE | | [removed: 19] [added: 21] | | ACQUISITIONS |

| NOTE | | [removed: 20] [added: 22] | | OPERATING SEGMENTS |

Management assessed the effectiveness of our internal control over financial reporting and concluded it was effective as of December 31, [removed: 2018.][added: 2019.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

To the Board of Directors and Shareholders of Cummins [removed: Inc.:][added: Inc.]

We have audited the accompanying consolidated balance sheets of Cummins Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of [added: net] income, comprehensive income, [removed: cash flows, and] changes in [removed: equity] [added: equity, and cash flows] for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (“COSO”).][added: (COSO).]

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”)] [added: (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and [removed: expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

[removed: /s/ PricewaterhouseCoopers] [added: /s/PricewaterhouseCoopers] LLP

Indianapolis, [removed: IN][added: Indiana]

CONSOLIDATED STATEMENTS OF [added: NET] INCOME

| | | Years ended December 31, | | | | | | | [removed: | | | |]

| In millions, except per share amounts | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| NET SALES (a) (Note 2) | | $ | [removed: 23,771] [added: 23,571] | | | $ | [removed: 20,428] [added: 23,771] | | | $ | [removed: 17,509] [added: 20,428] | |

| Cost of sales | | [removed: 18,034] [added: 17,591] | | | | [removed: 15,328] [added: 18,034] | | | | [removed: 13,051] [added: 15,328] | | |

| NOTE | | 2 | | REVENUE RECOGNITION |

| NOTE | | 4 | | RESTRUCTURING ACTIONS |

| NOTE | | 9 | | LEASES |

| NOTE | | 14 | | SUPPLEMENTAL BALANCE SHEET DATA |

| /s/ N. THOMAS LINEBARGER | | /s/ MARK A. SMITH |

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

*Goodwill Impairment Assessment - Automated Transmission Reporting Unit*

As described in Notes 1 and 10 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1,286 million, and the goodwill associated with the Automated Transmission reporting unit was $544 million as of December 31, 2019.

Management performs an impairment test as of the end of the fiscal third quarter each year, or more frequently if events or circumstances indicate the fair value of a reporting unit is less than its carrying amount.

Management performs the annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value.

Management’s valuation method is an income approach using a discounted cash flow model.

The discounted cash flow model requires projections of revenue, gross margin, operating expenses, working capital investment and fixed asset additions for the Automated Transmission reporting unit over a multi-year period, and a discount rate based upon a weighted-average cost of capital.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for the Automated Transmission reporting unit is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence relating to management’s cash flow projections and significant assumptions, including projected revenue, projected gross margin, and the discount rate.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Automated Transmission reporting unit.

These procedures also included, among others, testing management’s process for developing the fair value estimate.

This included evaluating the appropriateness of the discounted cash flow model, testing the completeness, accuracy, and relevance of underlying data used in the model, and evaluating the reasonableness of significant assumptions used by management, including projected revenue, projected gross margin, and the discount rate.

Evaluating management assumptions related to projected revenue and gross margin involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Automated Transmission reporting unit, (ii) the consistency with external market and industry data, and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s discounted cash flow model and reasonableness of certain significant assumptions, including the discount rate.

As described in Notes 1 and 12 to the consolidated financial statements, management estimates and records a liability for base product warranty programs at the time products are sold.

As of December 31, 2019, the accrued liability for base product warranty programs was $1,448 million.

As disclosed by management, the estimate for one of the base product warranty programs is based on historical experience and reflects management's best estimates of expected costs at the time products are sold and subsequent adjustment to those expected costs when actual costs differ.

Management’s estimate of base product

warranty liability is generally affected by component failure rates, repair costs, and the point of failure within the product life cycle.

The principal considerations for our determination that performing procedures relating to the base product warranty liability is a critical audit matter are there was significant judgment by management when determining the estimate for the base product warranty liability.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimate and significant assumptions, including component failure rates, repair costs, and the point of failure within the product life cycle.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s estimate for the base product warranty liability, including the determination of component failure rates, repair costs, and the point of failure within the product life cycle.

These procedures also included, among others, testing management’s process for determining the base product warranty liability.

Procedures related to management’s estimate included evaluating the appropriateness of the method used by management, the completeness, accuracy, and relevance of underlying data used in the warranty estimate, and the reasonableness of significant assumptions used by management in estimating the base product warranty liability, including the component failure rates, repair costs, and the point of failure within the product life cycle.

Evaluating management’s assumptions relating to the component failure rates, repair costs, and the point of failure within the product life cycle involved evaluating whether the assumptions were reasonable considering historical product experience of the Company.

February 11, 2020

| Restructuring actions (Note 4) | | 119 | | | | — | | | | — | | |

| | |

| --- | --- |

| | | | | |

| --- | --- | --- | --- | --- |

| /s/ N. THOMAS LINEBARGER | | /s/ PATRICK J. WARD |

February 11, 2019

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Loss contingency (Note 9) | | — | | | | 5 | | | | 138 | | |

| Pension contributions under (in excess of) expense, net (Note 11) | | 49 | | | | (161 | | ) | | (92 | | ) |

| Other post retirement benefits payments in excess of expense, net (Note 11) | | (19 | | ) | | (5 | | ) | | (25 | | ) |

| Loss contingency charges, net of payments (Note 9) | | (62 | | ) | | 5 | | | | 122 | | |

| Proceeds from sale of equity investees (Note 3) | | — | | | | — | | | | 60 | | |

| Proceeds from borrowings | | 36 | | | | 6 | | | | 111 | | |

| BALANCE AT DECEMBER 31, 2015 | | $ | 556 | | | $ | 1,622 | | | $ | 10,322 | | | $ | (3,735 | ) | | $ | (11 | ) | | $ | (1,348 | ) | | $ | 7,406 | | | $ | 344 | | | $ | 7,750 | |

| Net income | | | | | | | | | | 1,394 | | | | | | | | | | | | | | | | 1,394 | | | | 62 | | | | 1,456 | | |

| Impact of adopting accounting standards (Note 1) | | | | | | | | | | 30 | | | | | | | | | | | | | | | | 30 | | | | — | | | | 30 | | |

| Distributions to noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | (30 | | ) | | (30 | | ) |

and other postretirement benefit costs, income taxes and deferred tax valuation allowances, lease classification and contingencies.

our performance of the related maintenance services.

| Revenue recognized (1) | | (361 | | ) | | — | | |

(1) Relates to year-to-date revenues recognized from amounts included in deferred revenue at the beginning of the year.

Revenue recognized in the period from performance obligations satisfied in previous periods was immaterial.

allowance will be needed to further reduce the deferred tax assets.

Effective January 1, 2018 and forward, with the adoption of the new Financial Accounting Standards Board (FASB) standard, only debt securities are classified as "held-to-maturity," "available-for-sale" or "trading".

We adopted the FASB's revised rules for goodwill impairment testing in 2018, which simplified the subsequent measurement of goodwill by removing the second step of the two-step impairment test.

We charge the estimated costs of warranty programs, other than product campaigns, to cost of sales at the time products are sold and revenue is recognized.

We use historical experience to develop the estimated liability for our various warranty programs.

In May 2014, the 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 allowed for either full or modified retrospective adoption effective for annual and interim periods beginning January 1, 2018 and we adopted 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.

There has been no change in our internal control over financial reporting during the quarter ended December 31, [removed: 2018,] [added: 2019,] that [removed: has] materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The information required by Item 10 is incorporated by reference to the relevant information under the captions "Corporate Governance," "Election of Directors" [removed: and "Other Information—Section 16(a) Beneficial Ownership Reporting Compliance"] in our [removed: 2019] [added: 2020] Proxy Statement, which will be filed within 120 days after the end of [removed: 2018.][added: 2019.]

Information regarding our executive officers may be found in Part 1 of this annual report under the caption [removed: "Executive Officers of the Registrant."] [added: "Information About Our Executive Officers."] Except as otherwise specifically incorporated by reference, our Proxy Statement is not deemed to be filed as part of this annual report.

The information required by Item 11 is incorporated by reference to the relevant information under the caption "Executive Compensation" in our [removed: 2019] [added: 2020] Proxy Statement, which will be filed within 120 days after the end of [removed: 2018.][added: 2019.]

Information concerning our equity compensation plans at December 31, [removed: 2018,] [added: 2019,] was as follows:

| (1) | The number is comprised of [removed: 3,243,662] [added: 3,237,570] stock options, [removed: 410,350] [added: 395,931] performance shares and [removed: 5,393] [added: 2,697] restricted shares. See [removed: NOTE 16,] [added: Note 19,] "STOCK INCENTIVE AND STOCK OPTION PLANS," to the *Consolidated Financial Statements* for a description of how options and shares are awarded. |

| (2) | The weighted-average exercise price relates only to the [removed: 3,243,662] [added: 3,237,570] stock options. Performance and restricted shares do not have an exercise price and, therefore, are not included in this calculation. |

The remaining information required by Item 12 is incorporated by reference to the relevant information under the caption "Stock Ownership of Directors, Management and Others" in our [removed: 2019] [added: 2020] Proxy Statement, which will be filed within 120 days after the end of [removed: 2018.][added: 2019.]

| Equity compensation plans approved by security holders | | 3,636,198 | | | $ | 140.36 | | | 6,860,002 | |

| Equity compensation plans approved by security holders | | 3,659,405 | | | $ | 130.55 | | | 7,849,044 | |

The information required by Item 13 is incorporated by reference to the relevant information under the captions "Corporate Governance" and "Other Information-Related Party Transactions" in our [removed: 2019] [added: 2020] Proxy Statement, which will be filed within 120 days after the end of [removed: 2018.][added: 2019.]

The information required by Item 14 is incorporated by reference to the relevant information under the caption "Selection of Independent Public Accountants" in our [removed: 2019] [added: 2020] Proxy Statement, which will be filed within 120 days after the end of [removed: 2018.][added: 2019.]

| • | Consolidated Statements of [added: Net] Income for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Balance Sheets at December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] |

| • | Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] |

| • | Notes to [added: the] Consolidated Financial Statements |

| [3](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm) | [(a)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm) | | [Restated Articles of Incorporation, as amended and restated, effective as of May 8, 2018 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 9, 2018 (File No. [removed: 001-04949)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm)).] [added: 001-04949)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm).] |

| [removed: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706918000442/cg1133.htm)] [added: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] | [removed: [(b)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000442/cg1133.htm)] [added: [(b)](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] | | [By-Laws, as amended and restated, effective as of [removed: July 10, 2018] [added: February 12, 2019] (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed [added: by Cummins Inc.] with the Securities and Exchange Commission on [removed: July 11, 2018] [added: February 13, 2019] (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000089706918000442/cg1133.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] |

| [removed: [10](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] | [removed: [(c)#](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] [added: [(c)#](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] | | [Amendment to the Cummins Inc. Deferred Compensation Plan [removed: (filed herewith).](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] [added: (incorporated by reference to Exhibit 10(c) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2018).](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10c.htm)] |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm) | [removed: [(c)#](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm)] [added: [(d)#](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm)] | | [Deferred Compensation Plan, as amended (incorporated by reference to Exhibit 10(c) to Cummins Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2015).](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm) |

| [removed: [10](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] | [removed: [(d)#](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] [added: [(e)#](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] | | [Supplemental Life Insurance and Deferred Income Plan, as amended and restated effective as of December 10, 2018 [removed: (filed herewith).](https://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] [added: (incorporated by reference to Exhibit 10(d) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2018).](http://www.sec.gov/Archives/edgar/data/26172/000002617219000009/cmi201810-kex10d.htm)] |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm) | [removed: [(e)](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm)] [added: [(f)](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm)] | | [Credit Agreement, dated as of August 22, 2018, by and among Cummins Inc., the subsidiary borrowers referred to therein and the Lenders party thereto (incorporated by reference to Exhibit 10.2 to Cummins Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 2018) (File No. 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm) | [removed: [(f)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm)] [added: [(g)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm)] | | [Deferred Compensation Plan for Non-Employee Directors, as amended (incorporated by reference to Exhibit 10(f) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm) | [removed: [(g)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] [added: [(h)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] | | [Excess Benefit Retirement Plan, as amended (incorporated by reference to Exhibit 10(g) to Cummins Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 28, 2014).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_i.htm) | [removed: [(i)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_i.htm)] [added: [(j)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_i.htm)] | | [Longer Term Performance Plan (incorporated by reference to Exhibit 10(i) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009).](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_i.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm) | [removed: [(j)#](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)] [added: [(k)#](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)] | | [2006 Executive Retention Plan, as amended (incorporated by reference to Exhibit 10(j) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011).](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_k.htm) | [removed: [(k)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_k.htm)] [added: [(l)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_k.htm)] | | [Senior Executive Target Bonus Plan (incorporated by reference to Exhibit 10(k) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009).](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_k.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_l.htm) | [removed: [(l)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_l.htm)] [added: [(m)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_l.htm)] | | [Senior Executive Longer Term Performance Plan (incorporated by reference to Exhibit 10(l) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009).](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_l.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_m.htm) | [removed: [(m)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_m.htm)] [added: [(n)#](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_m.htm)] | | [Form of Stock Option Agreement under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10(m) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009).](http://www.sec.gov/Archives/edgar/data/26172/000104746910001435/a2196405zex-10_m.htm) |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617215000014/cmi2015currentq1exhibit10n.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617219000031/cmi2019q210-qex102.htm)] | [removed: [(n)#](http://www.sec.gov/Archives/edgar/data/26172/000002617215000014/cmi2015currentq1exhibit10n.htm)] [added: [(o)#](http://www.sec.gov/Archives/edgar/data/26172/000002617219000031/cmi2019q210-qex102.htm)] | | [Form of Long-Term Grant Notice under the 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit [removed: 10(n)] [added: 10.2] to Cummins Inc.'s Quarterly Report on Form 10-Q for the quarter ended [removed: March 29, 2015).](http://www.sec.gov/Archives/edgar/data/26172/000002617215000014/cmi2015currentq1exhibit10n.htm)] [added: June 30, 2019).](http://www.sec.gov/Archives/edgar/data/26172/000002617219000031/cmi2019q210-qex102.htm)] |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617218000039/cmi2018q210-qex10.htm) | [removed: [(o)#](http://www.sec.gov/Archives/edgar/data/26172/000002617218000039/cmi2018q210-qex10.htm)] [added: [(p)#](http://www.sec.gov/Archives/edgar/data/26172/000002617218000039/cmi2018q210-qex10.htm)] | | [2012 Omnibus Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10 to Cummins Inc.'s Quarterly Report on Form 10-Q for the quarter ended July 1, 2018 (File No. 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617218000039/cmi2018q210-qex10.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex-10p12x31x13.htm) | [removed: [(p)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex-10p12x31x13.htm)] [added: [(q)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex-10p12x31x13.htm)] | | [Form of Stock Option Agreement under the 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10(p) to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex-10p12x31x13.htm) |

| [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10q92814.htm) | [removed: [(q)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10q92814.htm)] [added: [(r)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10q92814.htm)] | | [Key Employee Stock Investment Plan (incorporated by reference to Exhibit 10(q) to Cummins Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2014).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10q92814.htm) |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d1.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000141057819000867/tv528075_ex10-1.htm)] | [removed: [(r)#](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d1.htm)] [added: [(s)#](http://www.sec.gov/Archives/edgar/data/26172/000141057819000867/tv528075_ex10-1.htm)] | | [removed: [364-Day] [added: [Amended and Restated 364-Day] Credit Agreement, dated as of August [removed: 22, 2018,] [added: 21, 2019,] by and among Cummins Inc., the subsidiary borrowers referred to therein, the [removed: Lenders and Agents] [added: lenders] party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to [removed: Cummins Inc.’s] [added: the] Current Report on Form 8-K filed [added: by Cummins Inc.] with the Securities and Exchange Commission on August [removed: 24, 2018] [added: 21, 2019] (File [removed: No.001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d1.htm)] [added: No.001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000141057819000867/tv528075_ex10-1.htm)] |