Cummins (CMI) 10-K risk factor changes: FY2021 vs FY2020

[removed: The results] [added: It is possible that the consequences] of [removed: this] [added: any remediation plans resulting from our] formal review and [added: these] regulatory [removed: processes, or the discovery of any noncompliance issues,] [added: processes] could have a material adverse impact on our results of operations and cash [removed: flows.][added: flows.]

We operate our business on a global basis and [removed: policy] changes [added: in international, national and regional trade laws, regulations and policies] affecting [added: and/or restricting] international trade could adversely impact the demand for our products and our competitive position.

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

Our business benefits from free trade agreements, such as the [removed: new] United States-Mexico-Canada Agreement and the U.S. trade relationship with China, Brazil and France and efforts to withdraw from, or substantially modify such agreements or arrangements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs (including, but not limited to, additional tariffs on the import of steel or [removed: aluminum),] [added: aluminum and imposition of new or retaliatory tariffs against certain countries, including based on developments in U.S., China and Russia relations),] import or export licensing [removed: requirements,] [added: requirements and] exchange controls or new barriers to entry, could [added: limit our ability to capitalize on current and future growth opportunities in international markets, impair our ability to expand the business by offering new technologies, products and services, and could] adversely impact our production costs, customer demand and our relationships with customers and suppliers.

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

Our income tax provision and cash tax liability in the future could be adversely affected by [added: the adoption of new tax legislation,] changes in earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and [removed: liabilities, changes in tax laws] [added: liabilities] and the discovery of new information in the course of our tax return preparation process.

[removed: Recent years have seen an increase in the development and enforcement of laws regarding trade compliance and anti-corruption,] [added: corruption,] such as the U.S. Foreign Corrupt Practices Act and similar laws from other countries, as well as new regulatory requirements regarding data privacy, such as the European Union General Data Protection Regulation.

Our plants and operations are subject to increasingly stringent environmental laws and regulations in all of the countries in which we operate, including laws and regulations governing air emission, discharges to water and the generation, handling, storage, [added: transportation, treatment and disposal of waste materials.]

In addition, California government officials have called for the state to phase out sales of [removed: diesel-powered] certain [added: diesel-powered] vehicles by 2035.

Our markets are cyclical in nature and we face periods when demand fluctuates significantly higher or lower than our normal operating levels, including [removed: COVID-19 related shut-downs.][added: variability driven by supply chain inconsistency.]

Accurately forecasting our expected volumes and appropriately adjusting [added: our capacity are important factors in determining our results of operations and cash flows.]

Our truck manufacturers and OEM customers discontinuing outsourcing their engine supply needs, financial distress, particularly related to [removed: the COVID-19 pandemic or bankruptcy,] [added: bankruptcy] or a change-in-control of one of our large truck OEM [removed: customers] [added: customers,] could have a material adverse impact on our results of operations, financial condition and cash flows.

Any significant reduction in the level of engine production outsourcing from our truck manufacturer or OEM customers, financial distress of one of our large truck OEM customers due to [removed: the COVID-19 pandemic or] bankruptcy or a change-in-control, could likely lead to significant reductions in our sales volumes, commercial disputes, receivable collection issues, and other negative consequences that could have a material adverse impact on our results of operations, financial condition and cash flows.

For [removed: 2020,] [added: 2021,] we recognized [removed: $452] [added: $506] million of equity, royalty and interest income from investees, compared to [removed: $330] [added: $452] million in [removed: 2019.][added: 2020.]

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

See Note [removed: 12,] [added: 13,] "PRODUCT WARRANTY LIABILITY" to the *Consolidated Financial Statements* for additional information.

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

[removed: The COVID-19 pandemic created disruptions and turmoil in global credit and financial markets and ongoing impacts] [added: The impact of a significant information technology event on either our information technology environment or our products] could have a material adverse effect on our [added: competitive position, reputation,] results of operations, financial condition and cash [removed: flows.][added: flows.]

At December 31, [removed: 2020,] [added: 2021,] we employed approximately [removed: 57,825] [added: 59,900] persons worldwide.

Approximately [removed: 20,279] [added: 21,200] of our employees worldwide were represented by various unions under collective bargaining agreements that expire between [removed: 2021] [added: 2022] and [removed: 2025.][added: 2026.]

Work stoppages or slowdowns experienced by us, our customers or [removed: suppliers, including any work stoppages or slowdowns related to the COVID-19 pandemic,] [added: suppliers] could result in slowdowns or closures that would have a material adverse effect on our results of operations, financial condition and cash flow.

We depend on the skills, institutional knowledge, working relationships, and continued services and contributions of key personnel, including our [removed: executive] leadership team [added: and others at all levels of the company,] as a critical part of our human capital resources.

We compete with other companies both within and outside of our industry for talented personnel and we may lose key personnel or fail to [removed: attract, train and retain] [added: attract] other talented personnel.

Increased input costs, such as [removed: fuel and electricity,] [added: fuel, utility, transportation] and compliance-related costs could [removed: also] [added: increase our operating costs and negatively] impact customer operations and demand for our products.

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

We rely on the capacity, reliability and security of our information technology [removed: systems] [added: environment] and data security infrastructure in connection with various aspects of our business activities.

We also rely on our ability to expand and continually update these [removed: systems] [added: technologies] and related infrastructure in response to the changing needs of our business.

As we implement new [removed: systems,] [added: technologies,] they may not perform as expected.

We face the challenge of supporting our older [removed: systems] [added: technologies] and implementing necessary upgrades.

[removed: In] addition, some of these [removed: systems] [added: technologies] are managed by third-party service providers and are not under our direct control.

If we experience a problem with an important [removed: information technology system,] [added: technology,] including during [removed: system] upgrades and/or new [removed: system implementations,] [added: implementations of technologies,] the resulting disruptions could have an adverse effect on our business and reputation.

The data handled by our [removed: information technology systems] [added: technologies] is vulnerable to security threats.

While we continually work to safeguard our [removed: systems] [added: information technology environment] 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, [removed: computer viruses] [added: ransomware attacks] and other "cyber attacks," which are increasing in both frequency and sophistication, along with power outages or hardware failures.

This remote working environment may pose a heightened risk for security breaches or other disruptions of our information technology [removed: systems.][added: environment.]

In addition, our products, including our engines, contain interconnected and increasingly complex [removed: systems] [added: technologies] that control various processes and these [removed: systems] [added: technologies] are potentially subject to "cyber attacks" and disruption.

We are exposed to political, economic and other risks that arise from operating a multinational [removed: business.][added: business.]

- changes in general economic and political [removed: conditions] [added: conditions, including changes] in [added: relationship with the U.S., in] countries where we operate, particularly in [added: China, Russia and] emerging markets.

As we continue to operate [added: and grow] our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other related risks.

We primarily compete with diesel engines and related diesel products; however, new technologies continue to be developed for gasoline, natural gas, [added: hydrogen,] electrification and other [removed: technologies] [added: technologies,] and we will continue to face new competition from these expanding technologies.

We also face competitors in some emerging regions who have established local practices and long standing relationships with participants in these [removed: markets.]

Due to the continuing nature of our formal internal review and on-going discussions with the EPA and CARB, we cannot predict the final results of this formal review and these regulatory processes, nor whether, or the extent to which, they could have a material adverse impact on our results of operations and cash flows.

During our discussions, the regulators turned their attention to other model years and other engines, most notably our pick-up truck applications for RAM 2500 and 3500 trucks for model years 2013 through 2018.

Embargoes, sanctions and export controls imposed by the U.S. and other governments restricting or prohibiting transactions with certain persons or entities, including financial institutions, to certain countries or regions, or involving certain products, limit the sales of our products.

Embargoes, sanctions and export control laws are changing rapidly for certain geographies, including with respect to China and Russia.

In particular, changing U.S. export controls and sanctions on China, as well as other restrictions affecting transactions involving China and Chinese parties and Russian and Russian parties, could affect our ability to collect receivables, provide aftermarket and warranty support for our products, sell products and otherwise impact our reputation and business, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.

The U.S. government’s pending rules and regulations concerning mandatory COVID-19 vaccination of U.S.-based employees of companies that work on or in support of federal contracts could materially and adversely affect our results of operations, financial condition and cash flows.

On September 9, 2021, President Biden issued an executive order requiring all employers with U.S. government contracts to ensure that their U.S.-based employees, contractors and subcontractors, that work on or in support of U.S. government contracts, are fully vaccinated against COVID-19 as required by the executive order.

The executive order includes on-site and remote U.S.-based employees, contractors and subcontractors and provides for limited medical and religious exceptions.

As of December 2021, the executive order has been put on hold by numerous federal courts, pending a final outcome by one or more federal appellate courts and possibly the U.S. Supreme Court.

In the meantime, we continue to track the status of our federal contracts and otherwise prepare for the possible implementation of the order.

It is currently not possible to predict with certainty the impact the executive order will have on our workforce if it survives the legal challenges.

Additional vaccine mandates may be announced in jurisdictions in which our businesses operate.

Our implementation of these requirements may result in attrition, including attrition of critically skilled labor, and difficulty securing future labor needs, which could materially and adversely affect our results of operations, financial condition and cash flows.

Recent years have seen an increase in the development and enforcement of laws regarding trade compliance and anti-

We are vulnerable to raw material, transportation and labor price fluctuations and supply shortages, which impacted and could continue to impact our results of operations, financial condition and cash flows.

We are experiencing supply chain disruptions and related challenges throughout the supply chain.

In addition, the current economic environment has resulted, and may continue to result, in price volatility and inflation of many of our raw material, transportation and other costs.

Further, the labor market for skilled manufacturing remains tight as the U.S. economy recovers after the COVID-19 pandemic shutdowns, and our labor costs have increased as a result.

Material, transportation, labor and other cost inflation has impacted and could continue to impact our results of operations, financial condition and cash flows.

Furthermore, it is possible that we may not be successful in developing segment-leading electrified or alternate fuel powertrains and some of our existing customers

We may not complete the separation of our filtration business within the time frame we anticipate or at all.

The separation may present difficulties that could have an adverse effect on us and/or the independent business resulting from the separation and/or costs associated with the separation may be higher than anticipated.

Additionally, if we complete the separation, we may not realize some or all of the expected benefits of the separation.

In August 2021, we announced our exploration of strategic alternatives for our filtration business unit, including the potential separation of the business into a stand-alone company (the “separation”).

Any separation would be complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment and market conditions or regulatory or political conditions may affect our ability to complete the separation, within the anticipated time frame or at all.

Whether or not the separation is completed, our businesses may face material challenges in connection with this transaction, including, without limitation:

- the diversion of management’s attention from ongoing business concerns and impact on our businesses as a result of the devotion of management’s attention to strategic alternatives for the filtration business, including the separation;

- maintaining employee morale and retaining key management and other employees;

- retaining existing business and operational relationships, including with customers, suppliers, employees and other counterparties, and attracting new business and operational relationships;

- execution and related risks in connection with financing transactions undertaken in connection with the separation;

- foreseen and unforeseen dis-synergy costs, costs of restructuring transactions (including taxes) and other significant costs and expenses; and

- any potential negative reactions from the financial markets resulting from the separation.

In addition, if the separation is completed, the new independent company will incur ongoing costs, including costs of operating as an independent company, that the separated business will no longer be able to share.

Those costs may exceed our estimates or could diminish the benefits we expect to realize from the separation.

We operate in challenging markets for talent and may fail to attract, develop and retain key personnel.

In

As a result of the COVID-19 pandemic a large percentage of our salaried employees continue to work remotely full or part-time.

Greater political, economic and social uncertainty and the evolving globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings and impact our growth globally.

In addition, there continues to be significant uncertainty about the future relationships between the U.S. and China and the U.S. and Russia, including with respect to trade policies, treaties, government regulations and tariffs.

Any increased trade barriers or restrictions on global trade, especially trade with China or Russia, could adversely impact our competitive position, results of operations, financial condition and cash flows.

During our discussions, the regulators have asked us to look at other model years and other engines.

It is possible that the consequences of any remediation plans resulting from our formal review and these regulatory 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.

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

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

Additionally, the results of the U.K.’s BREXIT caused, and may continue to cause, volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

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

The effects of BREXIT will depend on any agreements the U.K. makes to retain access to EU markets either during a transitional period or on a permanent basis.

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

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

transportation, treatment and disposal of waste materials.

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

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

The COVID-19 pandemic triggered a significant downturn in our markets globally and these challenging market conditions could continue for an extended period of time.

Most global economies slowed and there is still much uncertainty as to when these global markets will fully recover.

If any or all of these major markets were to endure a sustained slowdown or recession due to the impacts of the COVID-19 pandemic, other public health crises, epidemics or pandemics or otherwise decline, it could have a material adverse effect on our results of operations, financial condition and cash flows.

Our manufacturing and supply chain abilities may be materially and adversely impacted by an extended shutdown or disruption of our operations due to the COVID-19 pandemic which could materially and adversely affect our results of operations, financial condition and cash flows.

The outbreak of COVID-19 spread throughout the world and became a global pandemic with the resultant economic impacts evolving into a worldwide recession.

The pandemic triggered a significant downturn in our markets globally, which continued to unfavorably impact market conditions throughout 2020 and these challenging market conditions could continue for an extended period of time.

In an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, match the reduced demand from our customers and in accordance with governmental requirements, we closed or partially shut down certain office, manufacturing, distribution and technical center facilities around the world in March 2020.

Although most of our manufacturing, distribution and technical center facilities re-opened early in the second quarter of 2020, some operated at reduced capacities, most of our global office buildings remained closed through the remainder of 2020.

Despite many of our markets recovering in the second half of 2020, the ongoing spread of the virus prior to widespread vaccination presents several risks to our business, especially in the first half of 2021.

While the impacts of the pandemic and the resulting global recession are expected to be temporary, the duration of the production and supply chain disruptions, and related financial impacts, cannot be estimated at this time.

Should the reduced manufacturing and distribution capacities continue for an extended period of time or worsen, the impact on our production and supply chain could have a material adverse effect on our results of operations, financial condition and cash flows.

our capacity are important factors in determining our results of operations and cash flows.

In addition, the COVID-19 pandemic and related reductions in demand forced certain of our customer’s facilities around the world to close or partially shut down operations, inhibiting our ability to forecast demand and caused related closures and partial shut-downs of certain of our manufacturing facilities.

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

Infrastructure development and strong commodity prices have been significant drivers of our historical growth, but as the pace of investment in infrastructure slowed in recent years (especially in China and Brazil), commodity prices were significantly lower and demand for our products in off-highway markets was weak.

Weakness in commodity prices, including any negative impacts on commodity prices such as oil, gas and coal, adversely impacted mining industry participants’ demand for vehicles and equipment that contain our engines and other products over the past several years.

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

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

A significant component of our investment in the Eaton Cummins Automated Transmission Technologies joint venture related to the expected growth in automated transmission products in North America and China.

While we believe we will ultimately achieve these objectives, it is possible that we will be unable to achieve our original expectations within our anticipated time frame or in the anticipated amounts.

As part of the purchase accounting associated with the formation of the joint venture, significant goodwill and intangible asset balances were recorded on the consolidated balance sheet.

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

The COVID-19 pandemic created disruptions and turmoil in the global credit and financial markets and made it more difficult and costly for us to access capital on favorable terms to meet our liquidity needs.

The disruptions to the global credit and financial markets could also have material negative impacts on business operations and financial positions of our customers and suppliers, which may negatively impact our orders, sales and supply chain.

If the impacts of the COVID-19 pandemic on global credit and financial markets continue, or worsen, it could negatively impact our business, along with the financial condition of our customers and suppliers, and it could have a material adverse impact on our results of operations, financial condition and cash flows.

We rely on our executive leadership team and other key personnel as a critical part of our human capital resources.

In particular, our continued success will depend in part on our ability to retain the talents and dedication of key employees.

If key employees terminate their employment or become ill as a result of the COVID-19 pandemic or otherwise, our business activities may be adversely affected and our management team’s attention may be diverted.

[removed: - CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS][added: A summary of our contractual obligations and other commercial commitments at December 31, 2021, are as follows:]

The following is the discussion and analysis of changes in the financial condition and results of operations for fiscal year [removed: 2020] [added: 2021] compared to fiscal year [removed: 2019.][added: 2020.]

The discussion and analysis of fiscal year [removed: 2018] [added: 2019] and changes in the financial condition and results of operations for fiscal year [removed: 2019] [added: 2020] compared to fiscal year [removed: 2018] [added: 2019] 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, [removed: 2019,] [added: 2020,] filed with the Securities and Exchange Commission (SEC) on February [removed: 11, 2020.][added: 10, 2021.]

We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc, Navistar International Corporation, Daimler Trucks North America and Stellantis N.V. [removed: (Chrysler).][added: We serve our customers through a service network of approximately 500 wholly-owned, joint venture and independent distributor locations and more than 10,000 Cummins certified dealer locations in approximately 190 countries and territories.]

Our sales may also be impacted by OEM inventory levels, production [removed: schedules] [added: schedules, stoppages] and [removed: stoppages.][added: supply chain challenges.]

The outbreak of COVID-19 [removed: spread throughout the world and] [added: in early 2020] became a global pandemic with the resultant economic impacts evolving into a worldwide recession.

Should the [removed: reduced manufacturing and distribution capacities] [added: supply chain issues] continue for an extended period of time or worsen, the impact on our production and supply chain could have a material adverse effect on our results of operations, financial condition and cash flows.

Our Board of Directors (the Board) continues to monitor and evaluate all of these factors [removed: along with] [added: and] the [removed: continuing] [added: related] impacts [removed: of the COVID-19 pandemic] on our business and [removed: operations.][added: operations, and we are diligently working to minimize the supply chain impacts to our business and to our customers.]

| In millions, except per share amounts | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | | | | | | | | | | |

| Net sales | | | | | | $ | [removed: 19,811] [added: 24,021] | | | | | $ | [removed: 23,571] [added: 19,811] | | | | | $ | [removed: 23,771] [added: 23,571] | | | | | | | | | | | | | |

| Net income attributable to Cummins Inc. | | | | | | [removed: 1,789] [added: 2,131] | | | | | | [removed: 2,260] [added: 1,789] | | | | | | [removed: 2,141] [added: 2,260] | | | | | | | | | | | | | | |

| Basic | | | | | | $ | [removed: 12.07] [added: 14.74] | | | | | $ | [removed: 14.54] [added: 12.07] | | | | | $ | [removed: 13.20] [added: 14.54] | | | | | | | | | | | | | |

| Diluted | | | | | | [removed: 12.01] [added: 14.61] | | | | | | [removed: 14.48] [added: 12.01] | | | | | | [removed: 13.15] [added: 14.48] | | | | | | | | | | | | | | |

Worldwide revenues [removed: decreased 16] [added: improved 21] percent in [removed: 2020] [added: 2021] compared to [removed: 2019,] [added: 2020,] as we experienced [removed: lower] [added: higher] demand in all [removed: major] operating segments and [removed: most] [added: all] geographic regions due to [removed: the] [added: an improved] economic [removed: impacts of COVID-19] [added: environment] and [added: fewer effects from] the [removed: anticipated 2020 down cycle in most of our markets.][added: COVID-19 pandemic.]

International demand (excludes the U.S. and Canada) [removed: declined] [added: improved] by [removed: 7] [added: 27] percent compared to [removed: 2019,] [added: 2020,] with [removed: lower] [added: higher] sales in all geographic [removed: regions except China.][added: regions.]

The following table contains sales and EBITDA (defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests) by operating segment for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

| | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | | | | | | | Percent change | | | | | | | | |

| | | | | | | | | | | | | Percent of Total | | | | | | | | | | | | | | | | | | Percent of Total | | | | | | | | | | | | [removed: 2020] [added: 2021] vs. [removed: 2019] [added: 2020] | | | | | | | | |

| Engine | | | | | | $ | [removed: 8,022] [added: 9,954] | | | | | [removed: 41] [added: 42] | | % | | | | $ | [removed: 1,235] [added: 1,411] | | | | | $ | [removed: 10,056] [added: 8,022] | | | | | [removed: 43] [added: 41] | | % | | | | $ | [removed: 1,454] [added: 1,235] | | | | | [removed: (20)] [added: 24] | | % | | | | [removed: (15)] [added: 14] | | % |

| Distribution | | | | | | [removed: 7,136] [added: 7,772] | | | | | | [removed: 36] [added: 32] | | % | | | | [removed: 665] [added: 731] | | | | | | [removed: 8,071] [added: 7,136] | | | | | | [removed: 34] [added: 36] | | % | | | | [removed: 656] [added: 665] | | | | | | [removed: (12)] [added: 9] | | % | | | | [removed: 1] [added: 10] | | % |

| Components | | | | | | [removed: 6,024] [added: 7,665] | | | | | | [removed: 31] [added: 32] | | % | | | | [removed: 961] [added: 1,180] | | | | | | [removed: 6,914] [added: 6,024] | | | | | | [removed: 29] [added: 31] | | % | | | | [removed: 1,097] [added: 961] | | | | | | [removed: (13)] [added: 27] | | % | | | | [removed: (12)] [added: 23] | | % |

| Power Systems | | | | | | [removed: 3,631] [added: 4,415] | | | | | | 18 | | % | | | | [removed: 343] [added: 496] | | | | | | [removed: 4,460] [added: 3,631] | | | | | | [removed: 19] [added: 18] | | % | | | | [removed: 512] [added: 343] | | | | | | [removed: (19)] [added: 22] | | % | | | | [removed: (33)] [added: 45] | | % |

| New Power | | | | | | [removed: 72] [added: 116] | | | | | | [removed: —] [added: 1] | | % | | | | [removed: (172)] [added: (223)] | | | | | | [removed: 38] [added: 72] | | | | | | — | | % | | | | [removed: (149)] [added: (172)] | | | | | | [removed: 89] [added: 61] | | % | | | | [removed: (15)] [added: (30)] | | % |

| Intersegment eliminations | | | | | | [removed: (5,074)] [added: (5,901)] | | | | | | [removed: (26)] [added: (25)] | | % | | | | [removed: 76] [added: (74)] | | | | | | [removed: (5,968)] [added: (5,074)] | | | | | | [removed: (25)] [added: (26)] | | % | | | | [removed: 42] [added: 76] | | | | | | [removed: (15)] [added: 16] | | % | | | | [removed: 81] [added: NM] | | [removed: %] |

| Total | | | | | | $ | [removed: 19,811] [added: 24,021] | | | | | 100 | | % | | | | $ | [removed: 3,108] [added: 3,521] | | | | | $ | [removed: 23,571] [added: 19,811] | | | | | 100 | | % | | | | $ | [removed: 3,612] [added: 3,108] | | | | | [removed: (16)] [added: 21] | | % | | | | [removed: (14)] [added: 13] | | % |

Net income attributable to Cummins Inc. for [removed: 2020] [added: 2021] was [removed: $1.8] [added: $2.1] billion, or [removed: $12.01] [added: $14.61] per diluted share, on sales of [removed: $19.8] [added: $24.0] billion, compared to [removed: 2019] [added: 2020] net income attributable to Cummins Inc. of [removed: $2.3] [added: $1.8] billion, or [removed: $14.48] [added: $12.01] per diluted share, on sales of [removed: $23.6] [added: $19.8] billion.

The [removed: decrease] [added: increases] in net income attributable to Cummins Inc. and earnings per diluted share was driven by [removed: lower] [added: higher] net sales, [removed: decreased] [added: increased] gross margin, [removed: a] higher [removed: effective tax rate and unfavorable foreign currency fluctuations (primarily the Brazilian real), partially offset by prior restructuring actions, temporary salary reductions and reduced variable compensation resulting in lower overall compensation expenses, increased] equity, royalty and interest income from investees [removed: primarily] [added: (primarily] in China [removed: (due] [added: due] to stronger demand for [added: trucks and] construction equipment [added: in the first half of the year), favorable foreign currency fluctuations (principally the Chinese renminbi] and [removed: trucks)] [added: Australian dollar, partially offset by the Brazilian real] and [removed: favorable adjustments related to India Tax Law Changes in March 2020.][added: British pound) and a lower effective tax rate, partially offset by higher compensation expenses and incremental costs associated with supply chain constraints.]

The [removed: decrease] [added: increase] in gross margin [removed: and gross margin percentage] was mainly due to [removed: lower volumes,] [added: higher volumes and favorable pricing,] partially offset by [removed: prior restructuring actions, temporary salary reductions and lower variable compensation resulting in decreased] [added: higher] compensation [removed: expenses] [added: expenses, increased freight costs] and [removed: lower] [added: higher] material costs.

Diluted earnings per common share for [removed: 2020] [added: 2021] benefited [removed: $0.24] [added: $0.34] per share from fewer weighted-average shares outstanding, primarily due to the stock repurchase program.

We generated [removed: $2.7] [added: $2.3] billion of operating cash flows in [removed: 2020,] [added: 2021,] compared to [removed: $3.2] [added: $2.7] billion in [removed: 2019.][added: 2020.]

Our debt to capital ratio (total capital defined as debt plus equity) at December 31, [removed: 2020,] [added: 2021,] was [removed: 31.7] [added: 30.7] percent, compared to [removed: 21.9] [added: 31.7] percent at December 31, [removed: 2019.][added: 2020.]

At December 31, [removed: 2020,] [added: 2021,] we had [removed: $3.9] [added: $3.2] billion in cash and marketable securities on hand and access to our $3.5 billion credit facilities, if necessary, to meet currently anticipated working capital, investment and funding needs.

In [removed: 2020,] [added: 2021,] we repurchased [removed: $641 million] [added: $1.4 billion] or [removed: 3.9] [added: 5.7] million shares of common stock.

On August [removed: 19, 2020,] [added: 18, 2021,] we [added: also] entered into an amended and restated 364-day credit [removed: agreement that] [added: agreement, which] allows us to borrow up to $1.5 billion of unsecured funds at any time prior to August [removed: 18, 2021.][added: 17, 2022.]

This credit agreement amended and restated the prior $1.5 [removed: billion-day] [added: billion 364-day] credit facility that matured on August [removed: 19, 2020.][added: 18, 2021.]

In [removed: October 2020,] [added: July 2021,] the Board authorized an increase to our quarterly dividend of [removed: 3] [added: 7.4] percent from [removed: $1.311] [added: $1.35] per share to [removed: $1.35] [added: $1.45] per share.

In [removed: 2020,] [added: 2021,] the investment gain on our U.S. pension trust was [removed: 8.9] [added: 8.1] percent while our U.K. pension trust gain was [removed: 13.7] [added: 5.1] percent.

Our global pension plans, including our unfunded and non-qualified plans, were [removed: 112] [added: 121] percent funded at December 31, [removed: 2020.][added: 2021.]

Our U.S. defined benefit plan, which [removed: represents] [added: represented] approximately 52 percent of the worldwide pension obligation, was [removed: 128] [added: 138] percent funded, and our U.K. defined benefit plan was [removed: 114] [added: 127] percent [removed: funded.][added: funded at December 31, 2021.]

We expect to contribute approximately [removed: $75] [added: $47] million in cash to our global pension plans in [removed: 2021.][added: 2022.]

- 2022 OUTLOOK

The pandemic triggered a significant downturn in our markets globally, which negatively impacted our sales and results of operations during 2020.

While the majority of the negative impacts to demand largely subsided in 2021, we are still experiencing supply chain disruptions and related financial impacts reflected as increased cost of sales.

Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages across multiple components categories and limiting our collective ability to meet end-user demand.

Our customers are also experiencing other supply chain issues and slowing production.

2021 Results

The increase in international sales was principally due to higher demand in all components businesses (primarily emission solutions in India and Western Europe), industrial (especially mining) and power generation equipment (mainly in China and India), most distribution product lines and most off-highway markets (principally construction markets in Europe, Asia Pacific and China).

Favorable foreign currency fluctuations impacted international sales by 3 percent (mainly the Chinese renminbi, Euro and Australian dollar).

Net sales in the U.S. and Canada improved by 17 percent primarily due to increased demand in North American on-highway markets, which positively impacted all components businesses.

Cost of sales, selling, general and administrative and research, development and engineering expenses increased due to higher compensation costs (primarily driven by the restoration of 2020 salary reductions, higher variable compensation and 2020 salary increases deferred until 2021), which impacted the variances in gross margin and net income as well as all of our operating segments for the year ended December 31, 2021.

The 1.0 percentage point decrease in gross margin as a percentage of net sales was primarily due to higher compensation expenses and increased freight costs due to supply chain constraints, which increased at a faster rate than the increase in net sales.

The decrease was primarily due to a $412 million higher equity balance driven by strong returns on pension assets.

On August 18, 2021, we entered into an amended and restated five-year revolving credit agreement, which allows us to borrow up to $2 billion of unsecured funds at any time prior to August 18, 2026.

On August 3, 2021, we announced our exploration of strategic alternatives for our filtration business.

Potential strategic alternatives to be explored include the separation of our filtration business into a stand-alone company.

The execution of this exploration process is dependent upon business and market conditions, along with a number of other factors and considerations.

2021 vs. 2020

Cost of sales, selling, general and administrative and research, development and engineering expenses increased due to higher compensation costs (primarily driven by the restoration of 2020 salary reductions, higher variable compensation and 2020 salary increases deferred until 2021), which impacted the variances in gross margin and net income as well as all of our operating segments for the year ended December 31, 2021.

- Engine segment sales increased 24 percent principally due to higher volumes in global medium-duty truck markets and the North American heavy-duty truck and pick-up truck markets.

- Distribution segment sales increased 9 percent mainly due to higher demand across all product lines in North America and improved demand in Russia, Asia Pacific, Africa and India.

- Favorable foreign currency fluctuations of 2 percent of total sales, primarily in the Chinese renminbi, Euro and Australian dollar.

- New Power segment sales increased 61 percent principally due to higher sales in North America.

The increase in gross margin was mainly due to higher volumes and favorable pricing, partially offset by higher compensation expenses, increased freight costs and higher material costs.

The 1.0 percentage point decrease in gross margin as a percentage of net sales was primarily due to higher compensation expenses and increased freight costs due to supply chain constraints, which increased at a faster rate than the increase in net sales.

Selling, general and administrative expenses increased $249 million, primarily due to higher compensation expenses.

Research, development and engineering expenses increased $184 million, primarily due to higher compensation expenses and increased spending on consulting.

Our joint venture agreement for Cummins Westport, Inc. expired on December 31, 2021, and will not be renewed.

Beginning in January 2022, engines previously sold through the joint venture will now be included in our consolidated results.

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | |

| Gain on sale of land | | | | | | 18 | | | | | | — | | | | | |

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

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

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

of India Tax Law Changes passed in March 2020.

Diluted earnings per common share for 2021 benefited $0.34 per share from fewer weighted-average shares outstanding, primarily due to the stock repurchase program.

| | | | | | | 2021 | | | | | | | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | |

The outbreak of COVID-19 in early 2020 became a global pandemic with the resultant economic impacts evolving into a worldwide recession.

The pandemic triggered a significant downturn in our markets globally, which negatively impacted our sales and results of operations during 2020.

While the majority of the negative impacts to demand largely subsided in 2021, we are still experiencing supply chain disruptions and related financial impacts reflected as increased cost of sales.

Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages across multiple components categories and limiting our collective ability to meet end-user demand.

- 2021 OUTLOOK

- RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

We serve our customers through a network of over 500 wholly-owned, joint venture and independent distributor locations and over 9,000 Cummins certified dealer locations with service to approximately 190 countries and territories.

The pandemic triggered a significant downturn in our markets globally, which continued to unfavorably impact market conditions throughout 2020 and these challenging market conditions could continue for an extended period of time.

In an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, match the reduced demand from our customers and in accordance with governmental requirements, we closed or partially shut down certain office, manufacturing, distribution and technical center facilities around the world in March 2020.

Although most of our manufacturing, distribution and technical center facilities re-opened early in the second quarter of 2020, some operated at reduced capacities, most of our global office buildings remained closed through the remainder of 2020.

Despite many of our markets recovering in the second half of 2020, the ongoing spread of the virus prior to widespread vaccination presents several risks to our business, especially in the first half of 2021.

COVID-19 vaccines are currently being administered around the world with the hope that the majority of the population will have access to the vaccine by the middle of 2021.

If the distribution and the effectiveness of the vaccine are consistent with current government and health organization estimates, we anticipate the vaccine will mitigate the spread of the virus by the end of 2021 and allow a return to more normal operations in the second half of the year.

While the impacts of the pandemic and the resulting global recession are expected to be temporary, the duration of the production and supply chain disruptions, and related financial impacts, cannot be estimated at this time.

2020 Results

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

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

Net sales in the U.S. and Canada declined by 21 percent primarily due to COVID-19 impacts resulting in decreased demand in the North American on-highway markets, which also negatively impacted our emission solutions, automated transmissions and turbo technologies businesses, reduced sales in all distribution product lines, decreased demand for power generation equipment and lower demand in off-highway markets (especially construction).

The decrease in international sales was principally due to COVID-19 impacts resulting in lower demand for industrial products (primarily international mining markets), decreased demand for power generation equipment, lower volumes in on-highway markets (mainly medium-duty truck markets), reduced demand in all distribution product lines and unfavorable foreign currency impacts of 2 percent of international sales (primarily the

Brazilian real and Indian rupee), partially offset by higher demand in our emission solutions business in China and India and our electronics and fuel systems business in China.

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

The increase was primarily due to a $1,797 million higher total debt balance as the result of our August 2020 debt issuance.

In the first half of 2020, we entered into additional interest rate lock agreements to reduce the variability of the cash flows of the interest payments on a total of $500 million of fixed rate debt forecast to be issued in 2023 to replace our senior notes at maturity.

In June and July of 2020, we settled our February 2014 interest rate swaps, which previously converted our $500 million debt issue, due in 2023, from fixed rate to floating rate based on a LIBOR spread.

We will amortize the $24 million gain realized upon settlement over the remaining three-year term of the related debt.

On August 24, 2020, we issued $2 billion aggregate principal amount of senior unsecured notes consisting of $500 million aggregate principal amount of 0.75% senior unsecured notes due in 2025, $850 million aggregate principal amount of 1.50% senior unsecured notes due in 2030 and $650 million aggregate principal amount of 2.60% senior unsecured notes due in 2050.

We received net proceeds of $1.98 billion.

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 California Air Resources Board regarding certification of our engines in 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 (DOJ) and the SEC.

We fully cooperated with the DOJ’s and the SEC’s information requests and inquiries and, based on recent communications with these agencies, we do not expect further inquiries.

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

- Engine segment sales decreased 20 percent due to lower volumes in all North American on-highway markets.

- Unfavorable foreign currency impacts of 1 percent of total sales, mainly the Brazilian real and Indian rupee.

The decrease in gross margin and gross margin as a percentage of sales were mainly due to lower volumes, partially offset by prior restructuring actions, temporary salary reductions and lower variable compensation resulting in decreased compensation expenses and lower material costs.

A more detailed discussion of margin by segment is presented in the "OPERATING SEGMENT RESULTS" section.

Selling, general and administrative expenses decreased $329 million, primarily due to prior restructuring actions, temporary salary reductions and lower variable compensation resulting in decreased compensation expenses and reduced travel expenses.

Research, development and engineering expenses decreased $95 million, primarily due to prior restructuring actions, temporary salary reductions and lower variable compensation resulting in decreased compensation expenses and reduced consulting expenses.

See NOTE 4, "INCOME TAXES" to the *Consolidated Financial Statements* for additional information on India Tax Law Changes.

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

To the extent these programs involved voluntary separations, a liability was recorded at the time offers to employees were accepted.

To the extent these programs provided separation benefits in accordance with pre-existing agreements or policies, a liability was recorded once the amount was probable and reasonably estimable.

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 involuntary actions were completed by June 28, 2020.

| (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. | | | | | | | | | | | | | | | | | |

This risk is closely monitored and managed through the use of [added: physical forward contracts (which are not considered derivatives), and] financial derivative instruments including foreign currency forward contracts, [removed: interest rate swaps,] commodity swap [removed: contracts, zero-cost collars] [added: contracts] and [removed: physical forward contracts.][added: interest rate swaps.]

The following describes our risk exposures and provides the results of a sensitivity analysis performed at December 31, [removed: 2020.][added: 2021.]

Foreign [added: Currency] Exchange Rate Risk

For the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] there were no circumstances that resulted in the discontinuance of a foreign currency cash flow hedge.

[removed: The] objective is to offset the gain or loss from remeasurement with the gain or loss from the fair market valuation of the forward contract.

At December 31, [removed: 2020,] [added: 2021,] 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: $10] [added: $103] million.

We manage our exposure to interest rate fluctuations through the use of interest rate [removed: swaps.][added: swaps and interest rate locks.]

See [removed: Note 11, "DEBT,"] "Interest Rate Risk" section [added: in Note 12, "DEBT," to our *Consolidated Financial Statements*] for additional information.

In order to protect ourselves against future price volatility and, consequently, fluctuations in gross margins, we periodically enter into commodity [removed: swap, forward] [added: swap] and [removed: zero-cost collar] [added: forward] contracts with designated banks 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: Commencing in 2019, these] [added: These] commodity swaps are designated and qualify as cash flow hedges.

At December 31, [removed: 2020,] [added: 2021,] realized and unrealized gains and losses related to these hedges were not material to our financial statements.

[removed: The] [added: We also enter into] physical forward [removed: contracts] [added: contracts, which] qualify for the normal purchases scope exceptions and are treated as purchase commitments.

The

At any time, a change in interest rates could have an adverse impact on the fair value of our portfolios.

Assuming a hypothetical adverse movement in interest rates of one percentage point, the combined value of our interest rate derivatives portfolios would be reduced by $64 million, as calculated as of December 31, 2021.

However, this does not take into consideration an offset in the underlying hedged items.

While these are our best estimates of the impact of the specified interest rate scenario, actual results could differ from those projected.

The sensitivity analysis presented assumes interest rate changes are instantaneous, parallel shifts in the yield curve.

These instruments, as further described below, are accounted for as cash flow or fair value hedges or as economic hedges not designated as hedges for accounting purposes.

The commodity zero-cost collar contracts that represent an economic hedge, but are not designated for hedge accounting, are marked to market through earnings.

At December 31, 2020, 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 $1 million.

The sensitivity analysis of the effects of changes in commodity prices assumes the notional value to remain constant for the next 12 months.

The analysis ignores the impact of commodity price movements on our competitive position and potential changes in sales levels.

Any change in the value of the zero-cost collar contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items.

We serve our customers through a [added: service] network of [removed: over] [added: approximately] 500 wholly-owned, joint venture and independent distributor locations and [removed: over 9,000] [added: more than 10,000] Cummins certified dealer locations [removed: with service to] [added: in] approximately 190 countries and territories.

The outbreak of [removed: the coronavirus disease of 2019 (COVID-19) spread throughout the world and] [added: COVID-19 in early 2020] became a global pandemic with the resultant economic impacts evolving into a worldwide recession.

| | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Percent of consolidated net sales(1) | | | | | | [removed: 32] [added: 33] | | % | | | | [removed: 34] [added: 32] | | % | | | | [removed: 35] [added: 34] | | % |

| Percent of consolidated EBITDA(1) | | | | | | [removed: 41] [added: 39] | | % | | | | 41 | | % | | | | 41 | | % |

- 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 Stellantis N.V. [removed: (Chrysler)] [added: (Stellantis)] in North America and LCV markets in [removed: China,] Russia, Latin America and [removed: Korea.][added: China.]

The principal customer of our pick-up on-highway engines is [removed: Chrysler.][added: Stellantis.]

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

Truck OEMs may also elect to produce their own [removed: engines] [added: engines,] and we must provide competitive products to win and keep their business.

Truck OEMs that currently produce some or all of their own engines include Daimler, PACCAR, TRATON AG, Volvo Powertrain, Ford Motor Company, Navistar, [removed: Hino Power,] China First Auto Works, Dongfeng Motor Corporation, CNH Industrial and Isuzu.

| Percent of consolidated net sales(1) | | | | | | [removed: 29] [added: 26] | | % | | | | [removed: 27] [added: 29] | | % | | | | [removed: 26] [added: 27] | | % |

| Percent of consolidated EBITDA(1) | | | | | | [removed: 22] [added: 20] | | % | | | | [removed: 18] [added: 22] | | % | | | | [removed: 16] [added: 18] | | % |

Our familiarity with [removed: our customers and our markets] [added: a wide range of market applications] allows us to [removed: provide] [added: tailor] sales, service and support to meet [removed: our customers'] [added: customer-specific] needs.

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

| Percent of consolidated net sales(1) | | | | | | [removed: 24] [added: 26] | | % | | | | 24 | | % | | | | 24 | | % |

| Percent of consolidated EBITDA(1) | | | | | | [removed: 32] [added: 33] | | % | | | | [removed: 31] [added: 32] | | % | | | | [removed: 29] [added: 31] | | % |

Our emission solutions business primarily serves markets in North America, [removed: Europe,] China, [added: Europe,] India, Brazil, [removed: Russia] [added: Asia Pacific] and [removed: Australia.][added: Russia.]

- [removed: Turbo] [added: Turbo] technologies - We design, manufacture and market turbochargers for light-duty, medium-duty, heavy-duty and high-horsepower diesel markets with worldwide sales and distribution.

We primarily serve markets in North America, Europe, China, India, [removed: Brazil, Russia] [added: Asia Pacific, Brazil] and [removed: Australia.][added: Russia.]

- [removed: Filtration] [added: Filtration] - We design, manufacture and sell filters, coolant and chemical products.

We produce and sell globally recognized Fleetguard® branded products [removed: in over 130 countries] [added: globally] including [removed: countries] in North America, Europe, [added: Asia Pacific, China,] South America, [removed: Asia] [added: Russia, Africa] and [removed: Africa.][added: Middle East.]

- [removed: Electronics] [added: Electronics] and fuel systems - We design, develop and supply electronic control [removed: modules (ECMs),] [added: modules,] sensors and supporting software for on-highway, off-highway and power generation applications.

[removed: Formed in 2017, the] [added: The] Eaton Cummins Automated Transmission Technologies [added: (ECJV)] joint venture is a consolidated 50/50 joint venture between Cummins Inc. and Eaton Corporation Plc.

Customers of the Components segment generally include the Engine, Distribution and Power Systems segments, joint ventures including [added: Tata Cummins Ltd. and] Beijing Foton Cummins Engine Co., Ltd., [removed: Dongfeng Cummins Emission Solutions Co., Ltd. and Tata Cummins Ltd.,] truck manufacturers and other OEMs, many of which are also customers of the Engine segment, such as PACCAR, [removed: Daimler,] Navistar, [added: Daimler, Beiqi Foton Motor Company,] Volvo, [added: Stellantis,] Komatsu, [removed: Scania, Chrysler] [added: Scania] 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, Garrett Motion, Inc., Borg-Warner Inc., Tenneco Inc., Eberspacher Holding GmbH & Co. KG, Denso Corporation, Allison [removed: Transmission and] [added: Transmission,] Aisin Seiki Co., Ltd. [added: and ZF Friedrichshafen AG.]

| Percent of consolidated EBITDA(1) | | | | | | [removed: 11] [added: 14] | | % | | | | [removed: 14] [added: 11] | | % | | | | [removed: 17] [added: 14] | | % |

- Industrial - We design, manufacture, sell and support diesel and natural gas high-speed, high-horsepower engines up to [removed: 5,500] [added: 4,400] horsepower for a wide variety of equipment in [removed: the] mining, rail, defense, oil and [removed: gas,] [added: gas] and [removed: commercial] marine applications throughout the world.

Our products are sold under the [removed: Stamford] [added: Stamford, Newage] and AVK brands and range in output from [removed: 3] [added: 7.5] kilovolt-amperes (kVA) to [removed: 12,000] [added: 11,200] kVA.

[removed: India,] China, Europe, [added: India, Asia Pacific,] Latin [removed: America and] [added: America, Russia,] the Middle East [added: and Africa] are our largest geographic markets outside of North America.

We will continue to pursue [removed: additional] relationships in markets as they adopt hydrogen and electric solutions.

In the markets served by the New Power segment, we compete with [removed: electric start-ups,] [added: emerging fuel cell and battery companies,] powertrain component manufacturers, vertically integrated OEMs and entities providing hydrogen production solutions.

Our primary competitors include [removed: Proterra,] [added: Proterra Inc, Romeo Power,] Inc., Daimler, PACCAR, Volvo, Navistar, TRATON AG, BYD Company Limited, Dana Incorporated, [removed: Akasol AG,] [added: BorgWarner Inc.,] Ballard Power Systems, Inc. and Nel ASA.

| In millions | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | [removed: 2018] [added: 2019] | | | | | | | | |

| Beijing Foton Cummins Engine Co., Ltd. | | | | | | $ | [removed: 113] [added: 112] | | | | | [removed: 30] [added: 26] | | % | | | | $ | [removed: 60] [added: 113] | | | | | [removed: 22] [added: 30] | | % | | | | $ | [removed: 72] [added: 60] | | | | | [removed: 21] [added: 22] | | % |

| Dongfeng Cummins Engine Company, Ltd. | | | | | | [removed: 63] [added: 82] | | | | | | [removed: 17] [added: 19] | | % | | | | [removed: 52] [added: 63] | | | | | | [removed: 19] [added: 17] | | % | | | | [removed: 58] [added: 52] | | | | | | [removed: 17] [added: 19] | | % |

| Chongqing Cummins Engine Company, Ltd. | | | | | | [removed: 35] [added: 39] | | | | | | 9 | | % | | | | [removed: 41] [added: 35] | | | | | | [removed: 15] [added: 9] | | % | | | | [removed: 51] [added: 41] | | | | | | 15 | | % |

| All other manufacturers | | | | | | [removed: 134] [added: 149] | | | [removed: (1)(2)] | | | [removed: 35] [added: 36] | | % | | | | [removed: 88] [added: 134] | | | [added: (1)(2)] | | | [removed: 33] [added: 35] | | % | | | | [removed: 129] [added: 88] | | | | | | [removed: 39] [added: 33] | | % |

| Komatsu Cummins Chile, Ltda. | | | | | | [removed: 31] [added: 32] | | | | | | 8 | | % | | | | [removed: 28] [added: 31] | | | | | | [removed: 10] [added: 8] | | % | | | | [removed: 26] [added: 28] | | | | | | [removed: 8] [added: 10] | | % |

| All other distributors | | | | | | [removed: 2] [added: 10] | | | | | | [removed: 1] [added: 2] | | % | | | | 2 | | | | | | 1 | | % | | | | [removed: —] [added: 2] | | | | | | [removed: —] [added: 1] | | % |

| Cummins share of net income(3) | | | | | | $ | [removed: 378] [added: 424] | | | | | 100 | | % | | | | $ | [removed: 271] [added: 378] | | | | | 100 | | % | | | | $ | [removed: 336] [added: 271] | | | | | 100 | | % |

The pandemic triggered a significant downturn in our markets globally, which negatively impacted our sales and results of operations during 2020.

While the majority of the negative impacts to demand largely subsided in 2021, we are still experiencing supply chain disruptions and related financial impacts reflected as increased cost of sales.

Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages across multiple components categories and limiting our collective ability to meet end-user demand.

Our customers are also experiencing other supply chain issues and slowing production.

| | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

We also provide selected sales and aftermarket support for the New Power business.

| | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

The New Power segment is currently in the development phase with a primary focus on research and development activities for our power systems, components and subsystems.

Our joint venture agreement for Cummins Westport, Inc. expired on December 31, 2021, and will not be renewed.

Beginning in January 2022, engines previously sold through the joint venture will now be included in our consolidated results.

We have a controlling interest in Hydrogenics Corporation (Hydrogenics), which is consolidated in the New Power segment.

Hydrogenics is a developer and manufacturer of proton exchange membrane fuel cell products as well as alkaline and proton exchange membrane electrolyzer solutions.

As we adjust to the recovery from the COVID-19 pandemic and the rapid return of demand in many manufacturing industries, we are experiencing supply chain disruptions, incremental costs and related challenges throughout the supply chain.

We continue to monitor the supply chain disruptions utilizing early detection technology complemented by structured supplier risk and resiliency assessments.

We increased frequency of formal and informal supplier engagement to address potentially impactful supply base constraints and enhanced collaboration to develop specific countermeasures to mitigate risks.

Our global team, located in different regions of the world, uses various approaches to identify and resolve threats to supply continuity.

As we adjust to the recovery from the COVID-19 pandemic and the rapid return of demand in many manufacturing industries, we are experiencing supply chain disruptions, incremental costs and related challenges throughout the supply chain.

The supply chain disruptions are impacting our business as well as our suppliers and customers resulting in longer lead times in some of our businesses.

We are working closely with our suppliers as discussed in the Supply section above as well as with customers to meet the demand and work through backlogs as efficiently as possible.

Additional commitments followed in 2021 with Cummins Water Works, which is our multi-million dollar program for strengthening communities through sustainable water and addressing the global water crisis.

Key areas of focus in 2021 included product decarbonization pathways, customer sustainability collaboration and circular economy efforts such as incorporating expanded lifecycle analysis tools.

The nine PLANET 2050 goals for 2030 are as follows:

- Reduce absolute greenhouse gas (GHG) emissions from facilities and operations by 50 percent.

- Reduce scope three absolute lifetime GHG emissions from newly sold products by 25 percent.

- Partner with customers to reduce scope three GHG emissions from products in the field by 55 million metric tons.

- Reduce volatile organic compounds emissions from paint and coating operations by 50 percent.

- Create a circular lifecycle plan for every part to use less, use better, use again.

- Generate 25 percent less waste in facilities and operations as percent of revenue.

- Reuse or responsibly recycle 100 percent of packaging plastics and eliminate single-use plastics in dining facilities, employee amenities and events.

- Reduce absolute water consumption in facilities and operations by 30 percent.

- Produce net water benefits that exceed our annual water use in all our regions.

We are actively engaged around the world to promote science-based climate policies by working with regulatory, industry and other stakeholders, including joining advocacy groups and testifying before legislators and regulators.

We will continue to work in partnership with others to advocate for tough, clear and enforceable regulations around the globe to address air and GHG emissions.

In 2021, we were named to the S&P Dow Jones World and North American Sustainability Indices.

It was the sixteenth consecutive time we were named to the North American index and the first time we were named to the world index since 2013.

We were also named one of the inaugural recipients of the Prince Charles' Terra Carta Seal, recognizing companies for their leadership in climate action and sustainability.

We were named to Investor Business Daily's Best ESG Companies list for performance on environmental, social and governance matters, ranking number 37.

We were also ranked number 84 among Barron's Top 100 Most Sustainable Companies.

Our ability to comply with these and future

The pandemic triggered a significant downturn in our markets globally, which continued to unfavorably impact market conditions throughout 2020 and these challenging market conditions could continue for an extended period of time.

In an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, match the reduced demand from our customers and in accordance with governmental requirements, we closed or partially shut down certain office, manufacturing, distribution and technical center facilities around the world in March 2020.

Although most of our manufacturing, distribution and technical center facilities re-opened early in the second quarter of 2020, some operated at reduced capacities, most of our global office buildings remained closed through the remainder of 2020.

Despite many of our markets recovering in the second half of 2020, the ongoing spread of the virus prior to widespread vaccination presents several risks to our business, especially in the first half of 2021.

COVID-19 vaccines are currently being administered around the world with the hope that the majority of the population will have access to the vaccine by the middle of 2021.

If the distribution and the effectiveness of the vaccine are consistent with current government and health organization estimates, we anticipate the vaccine will mitigate the spread of the virus by the end of 2021 and allow a return to more normal operations in the second half of the year.

As part of our ongoing work to optimize marketplace coverage, we make regular operational and managerial changes to the number of outlets that provide sales, service and support to our customers.

The current count of distribution and dealer locations is the result of recategorization that includes customer facing product and service operations and excludes non-customer facing locations that provide internal operational support.

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 the New Power segment.

See Note 20 "ACQUISITIONS," to the *Consolidated Financial Statements* for additional information.

We 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 production.

Certain types of small

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.

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

See Note 20, "ACQUISITIONS", to the *Consolidated Financial Statements* for additional information.

- working with suppliers to measure and improve their environmental footprint;

At December 31, 2020, we did not have any significant backlogs.

Our Sustainability Progress Report for 2019/2020 reports on environmental sustainability goals and commitments from our 2014 plan as well as other key environmental and climate metrics and targets.

The 2014 plan goals were as follows:

- partnering with customers to improve the fuel efficiency of our products in use, targeting an annual run-rate reduction of 3.5 million metric tons of carbon dioxide;

- achieving a 32 percent energy intensity reduction from company facilities by the end of 2020 (using a baseline year of 2010) and increasing the portion of electricity we use derived from renewable sources;

- reducing direct water use by 50 percent adjusted for hours worked and achieving water neutrality at 15 sites by the end of 2020;

- increasing our recycling rate from 88 percent to 95 percent and achieving zero disposal at 30 sites by the end of 2020 and

- utilizing the most efficient methods and modes to move goods across our network to reduce carbon dioxide per kilogram of goods moved by 10 percent by the end of 2020.

Our progress through the end of 2020 will be summarized in our Sustainability Progress Report to be published later in 2021.

This report is not incorporated by reference into this filing.

We are actively engaged with regulatory, industry and other stakeholder groups around the world as greenhouse gases (GHG) and fuel efficiency standards become more prevalent globally.

We were named number 24 in Newsweek's Most Responsible Companies ranking, number 50 among Barron's Top 100 Most Sustainable Companies as well as named to the Dow Jones North American Sustainability Index for the fifteenth consecutive year in 2020.

The organization also works to enhance our collaboration with

In addition, we voluntarily disclosed our formal internal review to the regulators and to other government agencies, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), and worked cooperatively with them to ensure a complete and thorough review.

We fully cooperated with the DOJ's and the SEC's information requests and inquiries and, based on recent communications with these agencies, we do not expect further inquiries.

and investments on our engineering and production facilities.

- Mandatory health screenings at our plants and facilities;

- Personal protective equipment for frontline employees;

- Enhanced cleaning protocols before, during and after shifts;

| Peter W. Anderson (54) | | | | | | Vice President—Global Supply Chain and Manufacturing (2017) | | | | | | Principal/Partner—Ernst & Young LLP (2006-2017) | | |

| Thaddeus B. Ewald (53) | | | | | | Vice President—Corporate Strategy and Business Development (2010) | | | | | | | | |

| Mark J. Osowick (53) | | | | | | Vice President—Human Resources Operations (2014) | | | | | | | | |

| Marya M. Rose (58) | | | | | | Vice President—Chief Administrative Officer (2011) | | | | | | | | |

[removed: ][added: ]

For the Fiscal Year Ended December 31, [removed: 2020][added: 2021]

See the [removed: definition] [added: definitions] of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

The aggregate market value of the voting stock held by non-affiliates was approximately [removed: $24.9] [added: $34.7] billion at [removed: June 28, 2020.][added: July 2, 2021.]

As of [removed: December] [added: January] 31, [removed: 2020,] [added: 2022,] there were [removed: 147,657,584] [added: 142,426,735] shares outstanding of $2.50 par value common stock.

Portions of the registrant's definitive Proxy Statement for its [removed: 2021] [added: 2022] 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: 2020,] [added: 2021,] will be incorporated by reference in Part III of this Form 10-K to the extent indicated therein upon such filing.

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| | | | | | | [removed: [12](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_325)] [added: [12](#ibe993b31b57241639698c21c3fd95691_322)] | | | | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_325)] [added: Matters](#ibe993b31b57241639698c21c3fd95691_322)] | | | | | | [removed: [115](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_325)] [added: [113](#ibe993b31b57241639698c21c3fd95691_322)] | | |

| | | | | | | [removed: [13](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_328)] [added: [13](#ibe993b31b57241639698c21c3fd95691_325)] | | | | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_328)] [added: Independence](#ibe993b31b57241639698c21c3fd95691_325)] | | | | | | [removed: [116](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_328)] [added: [113](#ibe993b31b57241639698c21c3fd95691_325)] | | |

| | | | | | | [removed: [14](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_331)] [added: [14](#ibe993b31b57241639698c21c3fd95691_328)] | | | | | | [Principal Accounting Fees and [removed: Services](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_331)] [added: Services](#ibe993b31b57241639698c21c3fd95691_328)] | | | | | | [removed: [116](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_331)] [added: [113](#ibe993b31b57241639698c21c3fd95691_328)] | | |

| [removed: [IV](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_334)] [added: [IV](#ibe993b31b57241639698c21c3fd95691_331)] | | | | | | [removed: [15](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_337)] [added: [15](#ibe993b31b57241639698c21c3fd95691_334)] | | | | | | [Exhibits, Financial Statement [removed: Schedules](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_337)] [added: Schedules](#ibe993b31b57241639698c21c3fd95691_334)] | | | | | | [removed: [116](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_337)] [added: [113](#ibe993b31b57241639698c21c3fd95691_334)] | | |

Forward-looking statements are generally accompanied by words such as "anticipates," "expects," "forecasts," "intends," "plans," "believes," "seeks," "estimates," "could," [removed: "should"] [added: "should," "may"] or words of similar meaning.

- aligning our capacity and production with our [removed: demand, including impacts of COVID-19;][added: demand;]

- large truck [removed: manufacturers] [added: manufacturers'] and original equipment [removed: manufacturers (OEMs)] [added: manufacturers'] customers discontinuing outsourcing their engine supply needs or experiencing financial distress, [removed: particularly related to the COVID-19 pandemic,] bankruptcy or change in control;

| [I](#ibe993b31b57241639698c21c3fd95691_13) | | | | | | [1](#ibe993b31b57241639698c21c3fd95691_16) | | | | | | [Business](#ibe993b31b57241639698c21c3fd95691_16) | | | | | | [5](#ibe993b31b57241639698c21c3fd95691_13) | | |

| | | | | | | | | | | | | [Overview](#ibe993b31b57241639698c21c3fd95691_19) | | | | | | [5](#ibe993b31b57241639698c21c3fd95691_19) | | |

| | | | | | | | | | | | | [Supply](#ibe993b31b57241639698c21c3fd95691_43) | | | | | | [10](#ibe993b31b57241639698c21c3fd95691_43) | | |

| | | | | | | | | | | | | [Seasonality](#ibe993b31b57241639698c21c3fd95691_49) | | | | | | [11](#ibe993b31b57241639698c21c3fd95691_49) | | |

| | | | | | | | | | | | | [Backlog](#ibe993b31b57241639698c21c3fd95691_55) | | | | | | [11](#ibe993b31b57241639698c21c3fd95691_55) | | |

| | | | | | | [2](#ibe993b31b57241639698c21c3fd95691_82) | | | | | | [Properties](#ibe993b31b57241639698c21c3fd95691_82) | | | | | | [27](#ibe993b31b57241639698c21c3fd95691_82) | | |

| | | | | | | [6](#ibe993b31b57241639698c21c3fd95691_97) | | | | | | [\[Reserved\]](#ibe993b31b57241639698c21c3fd95691_97) | | | | | | [30](#ibe993b31b57241639698c21c3fd95691_97) | | |

| | | | | | | [9A](#ibe993b31b57241639698c21c3fd95691_307) | | | | | | [Controls and Procedures](#ibe993b31b57241639698c21c3fd95691_307) | | | | | | [112](#ibe993b31b57241639698c21c3fd95691_307) | | |

| | | | | | | [9B](#ibe993b31b57241639698c21c3fd95691_310) | | | | | | [Other Information](#ibe993b31b57241639698c21c3fd95691_310) | | | | | | [112](#ibe993b31b57241639698c21c3fd95691_310) | | |

| | | | | | | [9C](#ibe993b31b57241639698c21c3fd95691_3265) | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ibe993b31b57241639698c21c3fd95691_3265) | | | | | | [112](#ibe993b31b57241639698c21c3fd95691_3265) | | |

| | | | | | | [11](#ibe993b31b57241639698c21c3fd95691_319) | | | | | | [Executive Compensation](#ibe993b31b57241639698c21c3fd95691_319) | | | | | | [112](#ibe993b31b57241639698c21c3fd95691_319) | | |

| | | | | | | [16](#ibe993b31b57241639698c21c3fd95691_337) | | | | | | [Form 10-K Summary (optional)](#ibe993b31b57241639698c21c3fd95691_337) | | | | | | [115](#ibe993b31b57241639698c21c3fd95691_337) | | |

| | | | | | | | | | | | | [Signatures](#ibe993b31b57241639698c21c3fd95691_340) | | | | | | [116](#ibe993b31b57241639698c21c3fd95691_340) | | |

- changes in international, national and regional trade laws, regulations and policies;

- any adverse effects of the U.S. government's COVID-19 vaccine mandates;

- raw material, transportation and labor price fluctuations and supply shortages;

- failure to complete, adverse results from or failure to realize the expected benefits of the separation of our filtration business;

- challenging markets for talent and ability to attract, develop and retain key personnel;

| [I](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_13) | | | | | | [1](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_16) | | | | | | [Business](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_16) | | | | | | [5](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_13) | | |

| | | | | | | | | | | | | [Overview](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_19) | | | | | | [5](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_19) | | |

| | | | | | | | | | | | | [Supply](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_43) | | | | | | [10](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_43) | | |

| | | | | | | | | | | | | [Seasonality](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_49) | | | | | | [11](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_49) | | |

| | | | | | | | | | | | | [Backlog](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_55) | | | | | | [11](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_55) | | |

| | | | | | | [2](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_82) | | | | | | [Properties](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_82) | | | | | | [26](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_82) | | |

| | | | | | | [6](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_97) | | | | | | [Selected Financial Dat](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_97)[a](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_97) | | | | | | [29](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_97) | | |

| | | | | | | [9A](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_310) | | | | | | [Controls and Procedures](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_310) | | | | | | [115](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_310) | | |

| | | | | | | [9B](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_313) | | | | | | [Other Information](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_313) | | | | | | [115](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_313) | | |

| | | | | | | [11](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_322) | | | | | | [Executive Compensation](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_322) | | | | | | [115](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_322) | | |

| | | | | | | [16](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_340) | | | | | | [Form 10-K Summary (optional)](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_340) | | | | | | [118](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_340) | | |

| | | | | | | | | | | | | [Signatures](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_343) | | | | | | [119](#i95f6a4aa079d46e2b5a6c7fa1b7e9940_343) | | |

- policy changes in international trade;

- the U.K.'s exit from the European Union (EU);

- supply shortages and supplier financial risk, particularly from any of our single-sourced suppliers, including suppliers that may be impacted by the COVID-19 pandemic;

- market slowdown due to the impacts from the COVID-19 pandemic, other public health crises, epidemics or pandemics;

- impacts to manufacturing and supply chain abilities from an extended shutdown or disruption of our operations due to the COVID-19 pandemic;

- a slowdown in infrastructure development and/or depressed commodity prices;

- failure to realize expected results from our investment in Eaton Cummins Automated Transmission Technologies joint venture;

- protection and validity of our patent and other intellectual property rights;

- disruptions in global credit and financial markets as the result of the COVID-19 pandemic;

- reliance on our executive leadership team and other key personnel;

- the outcome of pending and future litigation and governmental proceedings;

| | | | | | | New Mexico: Clovis | | | | | | India: Pune, [removed: Ahmendnagar,] [added: Ahmednagar,] Ranjangaon, Phaltan | | |

| | | | | | | [added: Pennsylvania: Harrisburg] | | | | | | Mexico: San Luis Potosi | | |

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

| | | | | | | Minnesota: White Bear Lake | | | | | | [removed: Germany: Gross-Gerau] [added: South Africa: Johannesburg] | | |

| | | | | | | Tennessee: Memphis | | | | | | [removed: Holland: Dordrecht] | | |

| | | | | | | [added: Texas: Dallas] | | | | | | U.K.: Wellingborough | | |

| | | | | | | [removed: Kentucky: Walton] [added: Indiana: Columbus, Indianapolis] | | | | | | China: Beijing, Shanghai, Wuhan | | |

| | | | | | | [removed: Tennessee: Memphis] [added: Kentucky: Walton] | | | | | | India: Phaltan, Pithampur, Pune | | |

| | | | | | | | | | | | | Canada: Mississauga | | |

| | | | | | | | | | | | | Germany: Herten | | |

| | | | | | | Arizona: Avondale | | | | | | Australia: Mackay, Perth | | |

| | | | | | | Colorado: Henderson | | | | | | China: Beijing | | |

| | | | | | | Utah: West Valley City | | | | | | | | |

| | | | | | | Georgia: Atlanta | | | | | | Belgium: Rumst | | |

| | | | | | | South Carolina: Charleston | | | | | | U.K.: Daventry | | |

| | | | | | | Texas: Arlington | | | | | | | | |

| | | | | | | | | | | | | Belgium: Oevel | | |

| | | | | | | California: Irvine | | | | | | Australia: Scoresby | | |

| | | | | | | Colorado: Henderson | | | | | | Belgium: Mechelen | | |

| | | | | | | Georgia: Atlanta | | | | | | Canada: Montreal, Vancouver | | |

| | | | | | | Michigan: New Hudson | | | | | | China: Beijing | | |

| | | | | | | Texas: Dallas | | | | | | India: Pune | | |

| | | | | | | | | | | | | Japan: Tokyo | | |

| | | | | | | | | | | | | Russia: Moscow | | |

| | | | | | | | | | | | | South Africa: Johannesburg | | |

| | | | | | | Indiana: Columbus | | | | | | Belgium: Rumst | | |

In [removed: October 2018,] [added: December 2021,] the Board [added: of Directors (the Board)] authorized the acquisition of up to $2.0 billion of additional common [removed: stock.][added: stock upon completion of the 2019 repurchase plan.]

During the three months ended December 31, [removed: 2020,] [added: 2021,] we repurchased [removed: $85 million of common stock under the 2018 authorization, completing this program, and repurchased $6] [added: $174] million of common stock under the 2019 authorization.

The dollar value remaining available for future purchases under the 2019 program at December 31, [removed: 2020,] [added: 2021,] was [removed: $1,994] [added: $592] million.

Shares associated with participants' sales are sold as open-market transactions via a third-party [removed: broker as of May 1, 2020.][added: broker.]

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., [removed: Navistar,] PACCAR, Parker-Hannifin Corporation, Textron Inc. and Volvo [removed: AB (Fortive Corporation is excluded from the peer index in the following graph as the company was founded after December 31, 2015).][added: AB.]

[removed: ][added: ]

ASSUMES $100 INVESTED ON DECEMBER 31, [removed: 2015][added: 2016]

FISCAL YEAR ENDING DECEMBER 31, [removed: 2020][added: 2021]

At December 31, 2021, there were approximately 2,525 holders of record of Cummins Inc.'s $2.50 par value common stock.

| October 4 - November 7 | | | | | | 263,999 | | | | | | $ | 232.40 | | | | | 263,999 | | | | | | $ | 704 | |

| November 8 - December 5 | | | | | | 91,173 | | | | | | 221.23 | | | | | | 91,173 | | | | | | 684 | | |

| December 6 - December 31 | | | | | | 426,672 | | | | | | 215.99 | | | | | | 426,672 | | | | | | 2,592 | | |

| Total | | | | | | 781,844 | | | | | | 222.14 | | | | | | 781,844 | | | | | | | | |

| September 28 - November 1 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 2,085 | |

| November 2 - November 29 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,085 | | |

| November 30 - December 31 | | | | | | 414,120 | | | | | | 219.14 | | | | | | 414,120 | | | | | | 1,994 | | |

| Total | | | | | | 414,120 | | | | | | 219.14 | | | | | | 414,120 | | | | | | | | |

The selected financial information presented below for each of the last five years ended December 31, beginning with 2020, was derived from our *Consolidated Financial Statements*.

This information should be read in conjunction with our *Consolidated Financial Statements* and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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

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

| In millions, except per share amounts | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| For the years ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net sales | | | | | | $ | 19,811 | | | | | $ | 23,571 | | | | | $ | 23,771 | | | | | $ | 20,428 | | | | | $ | 17,509 | |

| Net income attributable to Cummins Inc.(1) | | | | | | 1,789 | | | | | | 2,260 | | | | | | 2,141 | | | | | | 999 | | | | | | 1,394 | | |

| Earnings per common share attributable to Cummins Inc.(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic | | | | | | $ | 12.07 | | | | | $ | 14.54 | | | | | $ | 13.20 | | | | | $ | 5.99 | | | | | $ | 8.25 | |

| Diluted | | | | | | 12.01 | | | | | | 14.48 | | | | | | 13.15 | | | | | | 5.97 | | | | | | 8.23 | | |

| Cash dividends declared per share | | | | | | 5.28 | | | | | | 4.90 | | | | | | 4.44 | | | | | | 4.21 | | | | | | 4.00 | | |

| At December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | | | | 22,624 | | | | | | 19,737 | | | | | | 19,062 | | | | | | 18,075 | | | | | | 15,011 | | |

| Long-term debt | | | | | | 3,610 | | | | | | 1,576 | | | | | | 1,597 | | | | | | 1,588 | | | | | | 1,568 | | |

| (1) For the year ended December 31, 2019, net income attributable to Cummins Inc. was reduced by $119 million due to restructuring actions ($90 million after-tax). 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, 2017, net income attributable to Cummins Inc. was reduced by $777 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 after-tax). | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (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, 2018, results for basic and diluted earnings per share were reduced by $0.24 per share due to Tax Legislation. For the year ended December 31, 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. 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. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

- Report of Independent Registered Public Accounting [removed: Firm][added: Firm (PCAOB ID 238)]

- Consolidated Statements of Net Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Balance Sheets at December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

- Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

| NOTE | | | | | | [removed: 10] [added: 11] | | | | | | SUPPLEMENTAL BALANCE SHEET DATA | | |

| NOTE | | | | | | [removed: 11] [added: 12] | | | | | | DEBT | | |

| NOTE | | | | | | [removed: 12] [added: 13] | | | | | | PRODUCT WARRANTY LIABILITY | | |

| NOTE | | | | | | [removed: 13] [added: 10] | | | | | | PENSIONS AND OTHER POSTRETIREMENT BENEFITS | | |

| [removed: NOTE] [added: Acquisitions] | | | | | | [removed: 20] [added: —] | | | | | | [removed: ACQUISITIONS] [added: —] | | | [added: | | | — | | | | | | 2 | | | | | | — | | | | | | | | | | | | | | | | | | 2 | | |]

Management assessed the effectiveness of our internal control over financial reporting and concluded it was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

We have audited the accompanying consolidated balance sheets of Cummins Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of net income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] 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: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (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: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] 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: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

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 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 [added: 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.]

*Goodwill Impairment [removed: Assessment] [added: Test] - Automated Transmission Reporting Unit*

As described in Notes 1 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was [removed: $1,293] [added: $1,287] million, and the goodwill associated with the Automated Transmission reporting unit was $544 million as of December 31, [removed: 2020.][added: 2021.]

Management performs the annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying [removed: value.][added: amount.]

The principal considerations for our determination that performing procedures relating to the goodwill impairment [removed: assessment] [added: test] for the Automated Transmission reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value [removed: measurement] of the [added: Automated Transmission] reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and [removed: in] evaluating [removed: audit evidence relating to management’s cash flow projections and] [added: the] significant assumptions related to [removed: projected revenue, projected gross margin,] [added: projections of revenue] and [removed: the discount rate;] [added: projections of gross margin;] and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment [removed: assessment,] [added: test,] 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 [removed: estimate.][added: of the Automated Transmission reporting unit.]

This included evaluating the appropriateness of the discounted cash flow model, testing the [removed: completeness, accuracy,] [added: completeness] and [removed: relevance] [added: accuracy] of underlying data used in the [added: discounted cash flow] model, and evaluating the reasonableness of significant assumptions used by management related to [removed: projected revenue, projected gross margin,] [added: projections of revenue] and [removed: the discount rate.][added: projections of gross margin.]

Evaluating [removed: management] [added: management’s] assumptions related to [removed: projected] [added: projections of] revenue and [removed: projected] [added: projections of] gross margin involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Automated Transmission reporting [removed: unit,] [added: unit] and (ii) the consistency with external market and industry data.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s discounted cash flow [removed: model and reasonableness of the discount rate assumption.][added: model.]

*Base Product [removed: Warranty*][added: Warranty Liability*]

As described in Notes 1 and [removed: 12] [added: 13] 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, [removed: 2020,] [added: 2021,] the accrued liability for base product warranty programs was [removed: $1,346] [added: $1,439] million.

[removed: As disclosed by management, the] [added: 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 [added: the] 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 (i) the significant judgment by management when determining the estimate for the base product warranty liability; and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures [added: and evaluating the significant assumptions related] to [removed: evaluate management’s][added: component failure rates, repair costs, and the point of failure within the product life cycle.]

[removed: estimate] [added: testing the completeness] and [added: accuracy of underlying data used in the warranty estimate, and evaluating the reasonableness of] significant assumptions [added: used by management] related to [added: the] component failure rates, repair costs, and the point of failure within the product life cycle.

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

Evaluating management’s assumptions [removed: relating] [added: related] to the component failure rates, repair costs, and the point of failure within the product life cycle involved evaluating whether the assumptions [added: used by management] were reasonable considering [added: the] historical product experience of the Company.

| In millions, except per share amounts | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| NET SALES (a) (Note 2) | | | | | | $ | [removed: 19,811] [added: 24,021] | | | | | $ | [removed: 23,571] [added: 19,811] | | | | | $ | [removed: 23,771] [added: 23,571] | |

| Cost of sales | | | | | | [removed: 14,917] [added: 18,326] | | | | | | [removed: 17,591] [added: 14,917] | | | | | | [removed: 18,034] [added: 17,591] | | |

| GROSS MARGIN | | | | | | [removed: 4,894] [added: 5,695] | | | | | | [removed: 5,980] [added: 4,894] | | | | | | [removed: 5,737] [added: 5,980] | | |

| NOTE | | | | | | 20 | | | | | | ACQUISITION | | |

This included evaluating the appropriateness of the method used by management,

February 8, 2022

| Proceeds from sale of land | | | | | | 20 | | | | | | — | | | | | | — | | |

| Net income | | | | | | | | | | | | | | | | | | 2,131 | | | | | | | | | | | | | | | | | | | | | | | | 2,131 | | | | | | 33 | | | | | | 2,164 | | |

| BALANCE AT DECEMBER 31, 2021 | | | | | | $ | 556 | | | | | $ | 1,871 | | | | | $ | 16,741 | | | | | $ | (9,123) | | | | | $ | — | | | | | $ | (1,571) | | | | | $ | 8,474 | | | | | $ | 927 | | | | | $ | 9,401 | |

The pandemic triggered a significant downturn in our markets globally, which negatively impacted our sales and results of operations during 2020.

While the majority of the negative impacts to demand largely subsided in 2021, we are still experiencing supply chain disruptions and related financial impacts reflected as increased cost of sales.

Our industry continues to be unfavorably impacted by supply chain constraints leading to shortages across multiple components categories and limiting our collective ability to meet end-user demand.

Our customers are also experiencing other supply chain issues and slowing production.

billings on genset deliveries until commissioning occurs.

For more detail on our interest rate swaps, see Note 12, "DEBT."

Additional information on the physical forwards is included in Note 14, "COMMITMENTS AND CONTINGENCIES."

Any changes to the assumptions and estimates resulting

Leases

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | | | | |

| Total sales | | | | | | $ | 7,742 | | | | | $ | 7,110 | | | | | $ | 8,040 | |

| Dollars in millions | | | | | | percentage | | | | | | 2021 | | | | | | 2020 | | |

Our joint venture agreement for Cummins Westport, Inc. expired on December 31, 2021, and will not be renewed.

Beginning in January 2022, engines previously sold through the joint venture will now be included in our consolidated results.

| Long-term assets | | | | | | 1,850 | | | | | | 1,673 | | | | | | | | |

| Long-term liabilities | | | | | | (288) | | | | | | (251) | | | | | | | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | |

| Long-term income tax | | | | | | 263 | | | | | | 289 | | |

| | | | | | | 2021 | | | | | | | | | | | | | | | | | | 2020 | | | | | | | | | | | | | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | | | |

| | | | | | | 2021 | | | | | | 2020 | | | | | | | | |

| 2022 | | | | | | $ | 17 | | | | | $ | 138 | |

| 2026 | | | | | | 8 | | | | | | 39 | | |

| After 2026 | | | | | | 48 | | | | | | 73 | | |

| Balance at December 31, 2021 | | | | | | $ | 934 | | | | | $ | 257 | | | | | $ | 79 | | | | | $ | 11 | | | | | $ | 6 | | | | | | | | | | | | | | | | | $ | 1,287 | |

| In millions | | | | | | 2021 | | | | | | 2020 | | |

| Projected amortization expense | | | | | | $ | 139 | | | | | $ | 128 | | | | | $ | 109 | | | | | $ | 76 | | | | | $ | 53 | |

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | | 2021 | | | | | | 2020 | | | | | |

| Benefits paid from fund | | | | | | (178) | | | | | | (224) | | | | | | (63) | | | | | | (72) | | | | | |

| In millions | | | | | | 2021 | | | | | | 2020 | | | | | | 2021 | | | | | | 2020 | | |

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

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

- Selected Quarterly Financial Data (Unaudited)

| | | | | | | | | |

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

*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.

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.

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 related to the component failure rates, repair costs, and the point of failure within the product life cycle.

February 10, 2021

| Common stock held by employee benefits trust, at cost, — and 0.2 shares | | | | | | — | | | | | | (2) | | |

| BALANCE AT DECEMBER 31, 2017 | | | | | | $ | 556 | | | | | $ | 1,654 | | | | | $ | 11,464 | | | | | $ | (4,905) | | | | | $ | (7) | | | | | $ | (1,503) | | | | | $ | 7,259 | | | | | $ | 905 | | | | | $ | 8,164 | |

| Net income | | | | | | | | | | | | | | | | | | 2,141 | | | | | | | | | | | | | | | | | | | | | | | | 2,141 | | | | | | 46 | | | | | | 2,187 | | |

| Adoption of new accounting standards (Note 1) | | | | | | | | | | | | | | | | | | (4) | | | | | | | | | | | | | | | | | | | | | | | | (4) | | | | | | — | | | | | | (4) | | |

| Employee benefits trust activity | | | | | | | | | | | | 32 | | | | | | | | | | | | | | | | | | 2 | | | | | | | | | | | | 34 | | | | | | — | | | | | | 34 | | |

The pandemic triggered a significant downturn in our markets globally, which continued to unfavorably impact market conditions throughout 2020 and these challenging market conditions could continue for an extended period of time.

In an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, match the reduced demand from our customers and in accordance with governmental requirements, we closed or partially shut down certain office, manufacturing, distribution and technical center facilities around the world in March 2020.

Although most of our manufacturing, distribution and technical center facilities re-opened early in the second quarter of 2020, some operated at reduced capacities, most of our global office buildings remained closed through the remainder of 2020.

When there is uncertainty

Additional information on the physical forwards is included in Note 14, "COMMITMENTS AND CONTINGENCIES." The commodity zero-cost collar contracts that represent an economic hedge, but are not designated for hedge accounting, are marked to market through earnings.

which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Lease Policies

We adopted the new standard on January 1, 2019, using a modified retrospective approach and as a result did not adjust prior periods.

Adoption of the standard resulted in the recording of $450 million of operating lease ROU assets and operating lease liabilities, but did not have a material impact on our net income or cash flows.

While none of our reporting units recorded a goodwill impairment in 2020, we determined the automated transmission business is our only reporting unit with material goodwill where the estimated fair value does not substantially exceed the carrying value.

The estimated fair value of the reporting unit exceeds its carrying amount of $1.1 billion by approximately 18 percent.

Total goodwill in this reporting unit is $544 million.

Since this reporting unit is made up of only one business, our joint venture with Eaton Corporation plc (Eaton Cummins Automated Transmission Technologies), acquired in 2017, we did not expect the estimated fair value would exceed the carrying value by a significant amount.

From

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In August 2018, the Financial Accounting Standards Board (FASB) issued a new standard that aligns the accounting for implementation costs incurred in a cloud computing arrangement accounted for as a service contract with the model currently used for internal use software costs.

Under the new standard, costs that meet certain criteria will be required to be capitalized on the balance sheet and subsequently amortized over the term of the hosting arrangement.

We adopted the standard on January 1, 2020, on a prospective basis as allowed by the standard.

The adoption did not have a material impact on our *Consolidated Financial Statements*.

On January 1, 2020, we adopted the new FASB standard related to accounting for credit losses on financial instruments.

This standard introduced new guidance for accounting for credit losses on instruments including trade receivables and held-to-maturity debt securities.

The standard required entities to record a cumulative effect adjustment to the statement of financial position.

We recorded a net decrease to opening retained earnings of $4 million, net of tax, as of January 1, 2020, due to the cumulative impact of adopting the new standard.

The impact to any individual financial statement line item as a result of applying the new standard, as compared to the old standard, was not material for the year ended December 31, 2020.

In March 2020, the FASB amended its standard to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

There has been no change in our internal control over financial reporting during the quarter ended December 31, [removed: 2020,] [added: 2021,] that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

Not Applicable.

PART III

The information required by Item 10 is incorporated by reference to the relevant information under the captions "Corporate Governance," "Election of Directors" in our [removed: 2021] [added: 2022] Proxy Statement, which will be filed within 120 days after the end of [removed: 2020.][added: 2021.]

The information required by Item 11 is incorporated by reference to the relevant information under the caption "Executive Compensation" in our [removed: 2021] [added: 2022] Proxy Statement, which will be filed within 120 days after the end of [removed: 2020.][added: 2021.]

Information concerning our equity compensation plans at December 31, [removed: 2020,] [added: 2021,] was as follows:

| (1) The number is comprised of [removed: 3,175,530] [added: 2,743,098] stock options, [removed: 376,954] [added: 440,149] performance shares and [removed: 3,704] [added: 29,928] restricted shares. See Note 18, "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: 3,175,530] [added: 2,743,098] 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: 2021] [added: 2022] Proxy Statement, which will be filed within 120 days after the end of [removed: 2020.][added: 2021.]

| Equity compensation plans approved by security holders | | | | | | 3,213,175 | | | | | | $ | 143.51 | | | | | 5,309,472 | | |

| Equity compensation plans approved by security holders | | | | | | 3,556,188 | | | | | | $ | 142.63 | | | | | 5,733,380 | | |

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: 2021] [added: 2022] Proxy Statement, which will be filed within 120 days after the end of [removed: 2020.][added: 2021.]

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: 2021] [added: 2022] Proxy Statement, which will be filed within 120 days after the end of [removed: 2020.][added: 2021.]

- Consolidated Statements of Net Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Balance Sheets at December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

- Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

- Consolidated Statements of Changes in Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

[removed: (b)The] [added: (c)The] exhibits listed in the following Exhibit Index are filed as part of this Annual Report on Form 10-K.

| [removed: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm)] [added: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103ex32.htm)] | | | [removed: [(a)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103.htm)] [added: [(a)](http://www.sec.gov/Archives/edgar/data/26172/000089706918000338/cg1103ex32.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/cg1103ex32.htm).] | | |

| [removed: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] [added: [3](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61b.htm)] | | | [removed: [(b)](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] [added: [(b)](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61b.htm)] | | | | | | [By-Laws, as amended and restated, effective as of February 12, 2019 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on February 13, 2019 (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000089706919000135/cmw61b.htm)] | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] | | | [removed: [(d)#](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm)] [added: [(](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)[g](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)[)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] | | | | | | [removed: [Deferred Compensation] [added: [Excess Benefit Retirement] Plan, as amended (incorporated by reference to Exhibit [removed: 10(c)] [added: 10(g)] to Cummins [removed: Inc.’s] [added: Inc.'s] Quarterly Report on Form 10-Q for the quarter ended September [removed: 27, 2015] [added: 28, 2014] (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617215000027/cmi2015finalq3exhibit10c.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617221000050/ex102august182021.htm)] | | | [removed: [(f)](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm)] [added: [(](http://www.sec.gov/Archives/edgar/data/26172/000002617221000050/ex102august182021.htm)[s](http://www.sec.gov/Archives/edgar/data/26172/000002617221000050/ex102august182021.htm)[)#](http://www.sec.gov/Archives/edgar/data/26172/000002617221000050/ex102august182021.htm)] | | | | | | [removed: [Credit] [added: [Amended and Restated Credit] Agreement, dated as of August [removed: 22, 2018,] [added: 18, 2021,] by and among Cummins Inc., the subsidiary borrowers referred to [removed: therein and] [added: therein,] the Lenders [added: and Agents] party thereto [added: and JPMorgan Chase Bank, N.A., as Administrative Agent.] (incorporated by reference to Exhibit 10.2 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: 18, 2021] (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000110465918053555/a18-21057_1ex10d2.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617221000050/ex102august182021.htm)] | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] | | | [removed: [(g)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm)] [added: [(](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)[h](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)[)#](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] | | | | | | [removed: [Deferred Compensation Plan for Non-Employee Directors,] [added: [Cummins Inc. Employee Stock Purchase Plan,] as amended (incorporated by reference to Exhibit [removed: 10(f)] [added: 10(i)] to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, [removed: 2013] [added: 2019] (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000008/ex10f12-31x13.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)] | | | [removed: [(h)#](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] [added: [(d)#](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)] | | | | | | [removed: [Excess Benefit Retirement] [added: [Deferred Compensation] Plan, as [removed: amended (incorporated] [added: amended](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm) [and restated](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm) [February 15, 2021](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm) [(incorporated] by reference to Exhibit [removed: 10(g)] [added: 10(](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)[a](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)[)] to Cummins [removed: Inc.'s] [added: Inc.’s] Quarterly Report on Form 10-Q for the quarter [removed: ended September 28, 2014 (File] [added: ended](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm) [April 4](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)[, 20](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)[21](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm) [(File] No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617214000034/ex-10g92814.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617221000027/cmi2021q110-qex10a.htm)] | | |

| [removed: [10](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] [added: [10](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)] | | | [removed: [(i)#](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] [added: [(](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)[j](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)[)#](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)] | | | | | | [removed: [Cummins Inc. Employee Stock Purchase] [added: [2006 Executive Retention] Plan, as amended (incorporated by reference to Exhibit [removed: 10(i)] [added: 10(j)] to Cummins Inc.'s Annual Report on Form 10-K for the year ended December 31, [removed: 2019] [added: 2011] (File No. [removed: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000002617220000009/cmi2019ex10i.htm)] [added: 001-04949)).](http://www.sec.gov/Archives/edgar/data/26172/000104746912001182/a2206691zex-10_j.htm)] | | |