Item 1. Condensed Consolidated Financial Statements

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Item 1. Condensed Consolidated Financial Statements

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)



	Three months ended
	March 31,
In millions, except per share amounts	2025		2024
NET SALES (Notes 1 and 2)	$	8,174	$	8,403
Cost of sales	6,019		6,362
GROSS MARGIN	2,155		2,041

OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	771		839
Research, development and engineering expenses	344		369
Equity, royalty and interest income from investees (Note 4)	131		123



Other operating expense, net	37		33
OPERATING INCOME	1,134		923


Interest expense	77		89
Other income, net (Note 14)	60		1,387
INCOME BEFORE INCOME TAXES	1,117		2,221

Income tax expense (Note 5)	267		193
CONSOLIDATED NET INCOME	850		2,028

Less: Net income attributable to noncontrolling interests	26		35
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	824	$	1,993

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	5.99	$	14.10
Diluted	$	5.96	$	14.03

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic	137.6		141.3
Dilutive effect of stock compensation awards	0.7		0.8
Diluted	138.3		142.1

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three months ended
	March 31,
In millions	2025		2024
CONSOLIDATED NET INCOME	$	850	$	2,028
Other comprehensive income (loss), net of tax (Note 12)
Change in pension and other postretirement defined benefit plans	(27)		(13)
Foreign currency translation adjustments	117		(60)

Unrealized (loss) gain on derivatives	(9)		12
Total other comprehensive income (loss), net of tax	81		(61)
COMPREHENSIVE INCOME	931		1,967
Less: Comprehensive income attributable to noncontrolling interests	28		32
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$	903	$	1,935

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In millions, except par value	March 31, 2025		December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	1,532	$	1,671

Marketable securities (Note 6)	626		593
Total cash, cash equivalents and marketable securities	2,158		2,264
Accounts and notes receivable, net	5,680		5,181


Inventories (Note 7)	6,123		5,742
Prepaid expenses and other current assets	1,579		1,565
Total current assets	15,540		14,752
Long-term assets
Property, plant and equipment	12,007		11,796
Accumulated depreciation	(5,600)		(5,440)
Property, plant and equipment, net	6,407		6,356
Investments and advances related to equity method investees	1,990		1,889
Goodwill	2,397		2,370
Other intangible assets, net	2,401		2,351
Pension assets	1,150		1,189
Other assets (Note 8)	2,646		2,633
Total assets	$	32,531	$	31,540

LIABILITIES
Current liabilities
Accounts payable (principally trade)	$	4,311	$	3,951
Loans payable (Note 9)	291		356
Commercial paper (Note 9)	1,740		1,259
Current maturities of long-term debt (Note 9)	661		660
Accrued compensation, benefits and retirement costs	523		1,084
Current portion of accrued product warranty (Note 10)	685		679
Current portion of deferred revenue (Note 2)	1,506		1,347

Other accrued expenses (Note 8)	1,858		1,898
Total current liabilities	11,575		11,234
Long-term liabilities
Long-term debt (Note 9)	4,796		4,784


Deferred revenue (Note 2)	1,053		1,065
Other liabilities (Note 8)	3,136		3,149
Total liabilities	$	20,560	$	20,232

Commitments and contingencies (Note 11)



EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued	$	2,600	$	2,636
Retained earnings	21,401		20,828
Treasury stock, at cost, 84.8 and 85.1 shares	(10,711)		(10,748)

Accumulated other comprehensive loss (Note 12)	(2,366)		(2,445)



Total Cummins Inc. shareholders’ equity	10,924		10,271
Noncontrolling interests	1,047		1,037
Total equity	$	11,971	$	11,308
Total liabilities and equity	$	32,531	$	31,540

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended
	March 31,
In millions	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	850	$	2,028
Adjustments to reconcile consolidated net income to net cash (used in) provided by operating activities
Gain related to divestiture of Atmus (Note 14)	—		(1,333)
Depreciation and amortization	269		265



Deferred income taxes	(25)		(38)
Equity in income of investees, net of dividends	(70)		(78)
Pension and OPEB expense (Note 3)	19		9
Pension contributions and OPEB payments (Note 3)	(13)		(48)









Changes in current assets and liabilities, net of acquisitions and divestiture
Accounts and notes receivable	(457)		(11)
Inventories	(331)		(354)
Other current assets	(36)		(175)
Accounts payable	330		327
Accrued expenses	(487)		(393)


Other, net	(52)		77
Net cash (used in) provided by operating activities	(3)		276

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(162)		(169)



Investments in and net advances to equity investees	(60)		(3)
Acquisition of businesses, net of cash acquired	(12)		(59)

Investments in marketable securities—acquisitions	(457)		(379)
Investments in marketable securities—liquidations (Note 6)	432		431

Cash associated with Atmus divestiture	—		(174)

Other, net	13		(53)
Net cash used in investing activities	(246)		(406)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings	52		2,398
Net borrowings (payments) of commercial paper	481		(887)
Payments on borrowings and finance lease obligations	(144)		(748)


Dividend payments on common stock	(251)		(239)





Other, net	(46)		(25)
Net cash provided by financing activities	92		499
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	18		(7)
Net (decrease) increase in cash and cash equivalents	(139)		362
Cash and cash equivalents at beginning of year	1,671		2,179
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,532	$	2,541

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Three months ended
In millions, except per share amounts	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE AT DECEMBER 31, 2024	$	556	$	2,080	$	20,828	$	(10,748)	$	(2,445)	$	10,271	$	1,037	$	11,308

Net income					824						824		26		850
Other comprehensive income, net of tax (Note 12)									79		79		2		81



Cash dividends on common stock, $1.82 per share					(251)						(251)		—		(251)

Distributions to noncontrolling interests											—		(31)		(31)
Share-based awards			(19)				35				16		—		16





Other shareholder transactions			(17)				2				(15)		13		(2)
BALANCE AT MARCH 31, 2025	$	556	$	2,044	$	21,401	$	(10,711)	$	(2,366)	$	10,924	$	1,047	$	11,971

BALANCE AT DECEMBER 31, 2023	$	556	$	2,008	$	17,851	$	(9,359)	$	(2,206)	$	8,850	$	1,054	$	9,904

Net income					1,993						1,993		35		2,028
Other comprehensive loss, net of tax (Note 12)									(119)		(119)		(3)		(122)


Cash dividends on common stock, $1.68 per share					(239)						(239)		—		(239)
Distributions to noncontrolling interests											—		(33)		(33)
Share-based awards			(6)				60				54		—		54




Divestiture of Atmus (Note 14)							(1,532)		61		(1,471)		(19)		(1,490)
Other shareholder transactions			(1)								(1)		—		(1)
BALANCE AT MARCH 31, 2024	$	556	$	2,001	$	19,605	$	(10,831)	$	(2,264)	$	9,067	$	1,034	$	10,101

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

INDEX TO THE NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Footnote		Page
NOTE 1	NATURE OF OPERATIONS AND BASIS OF PRESENTATION	9
NOTE 2	REVENUE FROM CONTRACTS WITH CUSTOMERS	10
NOTE 3	PENSIONS AND OTHER POSTRETIREMENT BENEFITS	12
NOTE 4	EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES	13
NOTE 5	INCOME TAXES	13
NOTE 6	MARKETABLE SECURITIES	14
NOTE 7	INVENTORIES	15
NOTE 8	SUPPLEMENTAL BALANCE SHEET DATA	15
NOTE 9	DEBT	16
NOTE 10	PRODUCT WARRANTY LIABILITY	18
NOTE 11	COMMITMENTS AND CONTINGENCIES	19
NOTE 12	ACCUMULATED OTHER COMPREHENSIVE LOSS	21
NOTE 13	DERIVATIVES	22
NOTE 14	ATMUS DIVESTITURE	24
NOTE 15	OPERATING SEGMENTS	24
NOTE 16	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	27

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NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Overview

Cummins Inc. (“Cummins,” “we,” “our” or “us”) was founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc. We are a global power solutions leader comprised of five business segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems, including battery, fuel cell and electric power technologies and hydrogen production technologies. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We serve our customers through a service network of approximately 650 wholly-owned, joint venture and independent distributor locations and more than 19,000 Cummins certified dealer locations in approximately 190 countries and territories.

Divestiture of Atmus

On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc. (Atmus) common stock through a tax-free split-off. See NOTE 14, "ATMUS DIVESTITURE," for additional information.

Interim Condensed Financial Statements

The unaudited Condensed Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows. All such adjustments are of a normal recurring nature. The Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations.

These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. Our interim period financial results for the three month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all required annual disclosures.

Reclassifications

Certain amounts for prior year periods were reclassified to conform to the current year presentation.

Use of Estimates in Preparation of Financial Statements

Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our Condensed Consolidated Financial Statements. Significant estimates and assumptions in these Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

Weighted-Average Diluted Shares Outstanding

The weighted-average diluted common shares outstanding exclude the anti-dilutive effect of certain stock options. The options excluded from diluted earnings per share were as follows:


	Three months ended
	March 31,
	2025	2024
Options excluded	2,650	3,600

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Related Party Transactions

In accordance with the provisions of various joint venture agreements, we may purchase products and components from our joint ventures, sell products and components to our joint ventures and our joint ventures may sell products and components to unrelated parties.

The following is a summary of sales to and purchases from nonconsolidated equity investees:


	Three months ended
	March 31,
In millions	2025		2024
Sales to nonconsolidated equity investees	$	388	$	351
Purchases from nonconsolidated equity investees	600		653

The following is a summary of accounts receivable from and accounts payable to nonconsolidated equity investees:


In millions	March 31, 2025		December 31, 2024		Balance Sheet Location
Accounts receivable from nonconsolidated equity investees	$	501	$	432	Accounts and notes receivable, net
Accounts payable to nonconsolidated equity investees	305		281		Accounts payable (principally trade)

Supply Chain Financing

We currently have supply chain financing programs with financial intermediaries, which provide certain vendors the option to be paid by financial intermediaries earlier than the due date on the applicable invoice. When a vendor utilizes the program and receives an early payment from a financial intermediary, they take a discount on the invoice. We then pay the financial intermediary the face amount of the invoice on the original due date, which generally have 60 to 90 day payment terms. The maximum amount that we could have outstanding under these programs was $551 million at March 31, 2025. We do not reimburse vendors for any costs they incur for participation in the program, their participation is completely voluntary and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. As a result, all amounts owed to the financial intermediaries are presented as accounts payable in our Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in accounts payable at March 31, 2025 and December 31, 2024, were $164 million and $142 million, respectively.

Accounts Receivable Sales Program

In May 2024, we entered into an accounts receivable sales agreement with Wells Fargo Bank, N.A., to sell certain accounts receivable up to the Board of Directors (Board) approved limit of $500 million. We will classify proceeds received from the sales of accounts receivable as an operating cash flow in our Condensed Consolidated Statements of Cash Flows, and we will record the discount in other income, net in our Condensed Consolidated Statements of Net Income. There was no activity under the program during the three months ended March 31, 2025.

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Long-term Maintenance Agreements

We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at March 31, 2025, was $5.8 billion. We expect to recognize the related revenue of $3.2 billion over the next 12 months and $2.6 billion over periods up to 10 years. See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.

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Deferred and Unbilled Revenue

The following is a summary of our unbilled and deferred revenue and related activity:


In millions	March 31, 2025		December 31, 2024
Unbilled revenue	$	423	$	403
Deferred revenue	2,559		2,412

We recognized revenue of $350 million for the three months ended March 31, 2025, compared with $248 million for the comparable period in 2024, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three months ended March 31, 2025 or 2024.

Disaggregation of Revenue

Consolidated Revenue

The table below presents our consolidated net sales by geographic area based on the location of the customer:


	Three months ended
	March 31,
In millions	2025		2024
United States	$	4,750	$	4,785

China	779		723


India	426		444

Other international	2,219		2,451
Total net sales	$	8,174	$	8,403

Segment Revenue

Engine segment external sales by market were as follows:


	Three months ended
	March 31,
In millions	2025		2024
Heavy-duty truck	$	654	$	811
Medium-duty truck and bus	700		738
Light-duty automotive	425		438
Total on-highway	1,779		1,987
Off-highway	261		253
Total sales	$	2,040	$	2,240

Components segment external sales by business were as follows:


	Three months ended
	March 31,
In millions	2025		2024
Drivetrain and braking systems	$	1,056	$	1,232
Emission solutions	791		856
Components and software	306		300
Automated transmissions	117		165
Atmus	—		289		(1)
Total sales	$	2,270	$	2,842

(1) Included sales through the March 18, 2024, divestiture. See NOTE 14, "ATMUS DIVESTITURE," for additional information.

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Distribution segment external sales by region were as follows:


	Three months ended
	March 31,
In millions	2025		2024
North America	$	2,099	$	1,722
Europe	269		240
Asia Pacific	240		285
China	113		100
India	72		69
Africa and Middle East	59		54
Latin America	50		59
Total sales	$	2,902	$	2,529

Distribution segment external sales by product line were as follows:


	Three months ended
	March 31,
In millions	2025		2024
Power generation	$	1,090	$	705
Parts	1,026		997
Service	416		405
Engines	370		422
Total sales	$	2,902	$	2,529

Power Systems segment external sales by product line were as follows:


	Three months ended
	March 31,
In millions	2025		2024
Power generation	$	445	$	360
Industrial	284		238
Generator technologies	143		110
Total sales	$	872	$	708

NOTE 3. PENSIONS AND OTHER POSTRETIREMENT BENEFITS

We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit (OPEB) plans. Contributions to these plans were as follows:


	Three months ended
	March 31,
In millions	2025		2024



Defined benefit pension contributions	$	12	$	39


OPEB payments, net	1		9


Defined contribution pension plans	49		48

We anticipate making additional defined benefit pension contributions during the remainder of 2025 of $39 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 2025 annual net periodic pension cost to approximate $79 million.

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The components of net periodic pension and OPEB expense (income) under our plans were as follows:


	Pension
	U.S. Plans				U.K. Plans				OPEB
	Three months ended March 31,
In millions	2025		2024		2025		2024		2025		2024
Service cost	$	33	$	35	$	4	$	4	$	—	$	—
Interest cost	43		42		18		18		1		2
Expected return on plan assets	(67)		(72)		(22)		(25)		—		—
Amortization of prior service cost	1		—		—		—		—		—
Recognized net actuarial loss (gain)	2		3		7		3		(1)		(1)
Net periodic benefit expense	$	12	$	8	$	7	$	—	$	—	$	1

NOTE 4. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees, net of applicable taxes, was as follows:


	Three months ended
	March 31,
In millions	2025		2024
Manufacturing entities
Chongqing Cummins Engine Company, Ltd.	$	23	$	15
Dongfeng Cummins Engine Company, Ltd.	20		22
Beijing Foton Cummins Engine Co., Ltd.	15		13
Tata Cummins, Ltd.	10		9
All other manufacturers	7		23


Distribution entities
Komatsu Cummins Chile, Ltda.	14		13
All other distributors	8		5


Cummins share of net income	97		100
Royalty and interest income	34		23
Equity, royalty and interest income from investees	$	131	$	123

Our Amplify Cell Technologies LLC (Amplify) joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture. Accelera, Daimler Truck and US Holding LLC and PACCAR, Inc. each own 30 percent of the joint venture and have two board positions, while EVE Energy owns 10 percent and has one board position. All significant decisions require majority or super-majority approval of the board. As a result, we are not the primary beneficiary of the joint venture, and it is not consolidated. We account for the joint venture using the equity method. Our Amplify joint venture will manufacture battery cells for electric commercial vehicles and industrial applications. The joint venture began operations in May 2024, but is not expected to begin production until 2027. As of March 31, 2025, we contributed $255 million and our maximum remaining required contribution to the joint venture was $551 million, which could be reduced by future government incentives received by the joint venture. Our investment balance at March 31, 2025, net of operating losses, was $225 million.

NOTE 5. INCOME TAXES

Our effective tax rates for the three months ended March 31, 2025 and 2024, were 23.9 percent and 8.7 percent, respectively.

The three months ended March 31, 2025, contained net favorable discrete tax items of $7 million, primarily due to $8 million of favorable share-based compensation tax benefits, partially offset by $1 million of other unfavorable tax items.

The three months ended March 31, 2024, contained favorable discrete tax items primarily due to the $1.3 billion non-taxable gain on the Atmus split-off. Other discrete tax items were $21 million favorable primarily due to adjustments related to audit settlements.

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NOTE 6. MARKETABLE SECURITIES

A summary of marketable securities, all of which were classified as current, was as follows:


	March 31, 2025						December 31, 2024
In millions	Cost		Gross unrealized gains/(losses) (1)		Estimated fair value		Cost		Gross unrealized gains/(losses) (1)		Estimated fair value

Equity securities
Level 1

Publicly-traded shares	$	7	$	(6)	$	1	$	7	$	(6)	$	1

Level 2
Certificates of deposit	294		—		294		262		—		262
Debt mutual funds	265		2		267		262		1		263


Equity mutual funds	15		8		23		19		7		26

Debt securities	41		—		41		41		—		41







Marketable securities	$	622	$	4	$	626	$	591	$	2	$	593

(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in our Condensed Consolidated Statements of Net Income.

The fair value of Level 1 securities is derived from the market price at the end of the period. The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities, and there were no transfers between levels during the three months ended March 31, 2025, or the year ended December 31, 2024. All debt securities are classified as available-for-sale.

A description of the valuation techniques and inputs used for our Level 2 fair value measures is as follows:

*•*Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.

*•*Debt mutual funds — The fair value measures for the vast majority of these investments are the daily net asset values published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input measure.

Equity mutual funds — The fair value measures for these investments are the net asset values published by the issuing brokerage. Daily quoted prices are available from reputable third-party pricing services and are used on a test basis to corroborate this Level 2 input measure.

*•*Debt securities — The fair value measures for these securities are broker quotes received from reputable firms. These securities are infrequently traded on a national exchange and these values are used on a test basis to corroborate our Level 2 input measure.

The proceeds from sales and maturities of marketable securities were as follows:


	Three months ended
	March 31,
In millions		2025		2024
Proceeds from sales of marketable securities		$	420	$	426
Proceeds from maturities of marketable securities		12		5
Investments in marketable securities - liquidations		$	432	$	431

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NOTE 7. INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Inventories included the following:


In millions	March 31, 2025		December 31, 2024
Finished products	$	2,982	$	2,875
Work-in-process and raw materials	3,354		3,086
Inventories at FIFO cost	6,336		5,961
Excess of FIFO over LIFO	(213)		(219)
Inventories	$	6,123	$	5,742

NOTE 8. SUPPLEMENTAL BALANCE SHEET DATA

Other assets included the following:



In millions	March 31, 2025		December 31, 2024
Deferred income taxes	$	1,159	$	1,119
Operating lease assets	535		532
Corporate-owned life insurance	429		423

Other	523		559
Other assets	$	2,646	$	2,633

Other accrued expenses included the following:



In millions	March 31, 2025		December 31, 2024
Income taxes payable	$	367	$	244
Marketing accruals	328		335
Other taxes payable	242		249
Current portion of operating lease liabilities	133		130
Other	788		940
Other accrued expenses	$	1,858	$	1,898

Other liabilities included the following:



In millions	March 31, 2025		December 31, 2024

Accrued product warranty (1)	$	839	$	843
Pensions	500		503
Operating lease liabilities	414		409
Deferred income taxes	395		389
Accrued compensation	179		193
Other postretirement benefits	104		104
Mark-to-market valuation on interest rate derivatives	80		89
Other	625		619
Other liabilities	$	3,136	$	3,149

(1) See NOTE 10, "PRODUCT WARRANTY LIABILITY," for additional information.

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NOTE 9. DEBT

Loans Payable and Commercial Paper

Loans payable, commercial paper and the related weighted-average interest rates were as follows:


In millions	March 31, 2025		December 31, 2024


Loans payable (1)	$	291	$	356

Commercial paper (2)	1,740		1,259




(1) Loans payable consist primarily of loans payable to various international and domestic financial institutions. It is not practicable to aggregate these notes and calculate a quarterly weighted-average interest rate.
(2) The weighted-average interest rate, inclusive of all brokerage fees, was 4.32 percent and 4.49 percent at March 31, 2025 and December 31, 2024, respectively.

We can issue up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes.

Revolving Credit Facilities

Our committed credit facilities provide access up to $4.0 billion from our $2.0 billion 364-day credit facility that expires on June 2, 2025 and our $2.0 billion 5-year facility that expires on June 3, 2029. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. There were no outstanding borrowings under these facilities at March 31, 2025 and December 31, 2024. At March 31, 2025, the $1.7 billion of outstanding commercial paper effectively reduced the $4.0 billion of revolving credit capacity to $2.3 billion.

At March 31, 2025, we also had an additional $718 million available for borrowings under our uncommitted international and other domestic credit facilities.

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Long-term Debt

A summary of long-term debt was as follows:


In millions	Interest Rate	March 31, 2025		December 31, 2024
Long-term debt

Hydrogenics promissory notes, due 2025	—%	$	110	$	110

Senior notes, due 2025 (1)	0.75%	500		500


Debentures, due 2027	6.75%	58		58
Debentures, due 2028	7.125%	250		250
Senior notes, due 2029	4.90%	500		500
Senior notes, due 2030 (1)	1.50%	850		850
Senior notes, due 2034	5.15%	750		750
Senior notes, due 2043	4.875%	500		500
Senior notes, due 2050	2.60%	650		650
Senior notes, due 2054	5.45%	1,000		1,000
Debentures, due 2098 (2)	5.65%	165		165

Other debt		149		160

Unamortized discount and deferred issuance costs		(82)		(89)
Fair value adjustments due to hedge on indebtedness		(70)		(85)
Finance leases		127		125
Total long-term debt		5,457		5,444
Less: Current maturities of long-term debt		661		660
Long-term debt		$	4,796	$	4,784

(1) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. In March of 2025, we settled the remainder of the interest rate swaps on our debt due in 2025. See "Interest Rate Risk" in NOTE 13, "DERIVATIVES," for additional information.
(2) The effective interest rate is 7.48 percent.

Principal payments required on long-term debt during the next five years are as follows:



In millions	2025		2026		2027		2028		2029
Principal payments	$	649	$	72	$	106	$	293	$	534

Shelf Registration

As a well-known seasoned issuer, we filed an automatic shelf registration for an undetermined amount of debt and equity securities with the SEC on February 13, 2025. Under this shelf registration we may offer, from time-to-time, debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

Fair Value of Debt

Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:


In millions	March 31, 2025		December 31, 2024
Fair value of total debt (1)	$	7,143	$	6,651
Carrying value of total debt	7,488		7,059

(1) The fair value of debt is derived from Level 2 input measures.

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NOTE 10. PRODUCT WARRANTY LIABILITY

A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued product campaigns, was as follows:


	Three months ended
	March 31,
In millions	2025		2024
Balance at beginning of year	$	2,623	$	2,497
Provision for base warranties issued	154		160
Deferred revenue on extended warranty contracts sold	124		96
Provision for product campaigns issued	11		6
Payments made during period	(168)		(176)

Amortization of deferred revenue on extended warranty contracts	(71)		(77)
Changes in estimates for pre-existing product warranties and campaigns	(2)		51

Foreign currency translation adjustments and other	8		(18)

Balance at end of period	$	2,679	$	2,539

We recognized supplier recoveries of $6 million for the three months ended March 31, 2025, compared with $22 million for the comparable period in 2024.

Warranty related deferred revenues and warranty liabilities on our Condensed Consolidated Balance Sheets were as follows:


In millions	March 31, 2025		December 31, 2024		Balance Sheet Location
Deferred revenue related to extended coverage programs
Current portion	$	290	$	286	Current portion of deferred revenue
Long-term portion	865		815		Deferred revenue
Total	$	1,155	$	1,101

Product warranty
Current portion	$	685	$	679	Current portion of accrued product warranty
Long-term portion	839		843		Other liabilities
Total	$	1,524	$	1,522

Total warranty accrual	$	2,679	$	2,623

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NOTE 11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are subject to numerous lawsuits and claims arising out of the ordinary course of our business, including actions related to product liability; personal injury; the use and performance of our products; warranty matters; product recalls; patent, trademark or other intellectual property infringement; contractual liability; the conduct of our business; tax reporting in foreign jurisdictions; distributor termination; workplace safety; environmental and regulatory matters, including the enforcement of environmental and emissions standards; and asbestos claims. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability is probable and can be reasonably estimated based upon presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition or cash flows.

We conduct significant business operations in Brazil that are subject to the Brazilian federal, state and local labor, social security, tax and customs laws. While we believe we comply with such laws, they are complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.

In December 2023, we announced that we reached the agreement in principle with U.S. Environmental Protection Agency, the California Air Resources Board, the Environmental and Natural Resources Division of the DOJ and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements). As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make other payments. Failure to comply with the terms and conditions of the Settlement Agreements will subject us to further stipulated penalties. We recorded a charge of $2.0 billion in the fourth quarter of 2023, in other operating expense, net in our Consolidated Statements of Income, to resolve the matters addressed by the Settlement Agreements involving approximately one million of our pick-up truck applications in the U.S. Of the $2.0 billion charge, $1.7 billion (primarily related to penalties) was non-deductible for U.S. federal income tax purposes. The remaining amount, related to emissions mitigation projects and payments, extended warranties and other related compliance expenses was deductible for U.S. federal income tax purposes. This charge was in addition to the previously announced charges of $59 million for the recalls of model years 2013 through 2018 RAM 2500 and 3500 trucks and model years 2016 through 2019 Titan trucks. We made $1.9 billion of payments required by the Settlement Agreements in the second quarter of 2024. Subsequent to the second quarter of 2024, we have recorded immaterial amounts related to stipulated penalties we determined to be probable and estimable. Any further non-compliance with the Settlement Agreements will likely subject us to further stipulated penalties and other adverse consequences.

We have also been in communication with other non-U.S. regulators regarding matters related to the emission systems in our engines and may also become subject to additional regulatory review in connection with these matters.

In connection with our announcement of our entry into the agreement in principle, we became subject to shareholder, consumer and third-party litigation regarding the matters covered by the Settlement Agreements, and we may become subject to additional litigation in connection with these matters.

The consequences resulting from the resolution of the foregoing matters are uncertain and the related expenses and reputational damage could have a material adverse impact on our results of operations, financial condition and cash flows.

Guarantees and Commitments

Periodically, we enter into guarantee arrangements, including guarantees of non-U.S. distributor financings, residual value guarantees on equipment under operating leases and other miscellaneous guarantees of joint ventures or third-party obligations. At March 31, 2025, the maximum potential loss related to these guarantees was $45 million.

We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At March 31, 2025, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $677 million. These arrangements enable us to secure supplies of critical components and IT services. We do not currently anticipate paying any penalties under these contracts.

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We enter into physical forward contracts with suppliers of platinum and palladium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years. At March 31, 2025, the total commitments under these contracts were $41 million. These arrangements enable us to guarantee the prices of these commodities, which otherwise are subject to market volatility.

We have guarantees with certain customers that require us to satisfactorily honor contractual or regulatory obligations, or compensate for monetary losses related to nonperformance. These performance bonds and other performance-related guarantees were $260 million at March 31, 2025.

Indemnifications

Periodically, we enter into various contractual arrangements where we agree to indemnify a third-party against certain types of losses. Common types of indemnities include:

product liability and license, patent or trademark indemnifications;
asset sale agreements where we agree to indemnify the purchaser against future environmental exposures related to the asset sold; and
any contractual agreement where we agree to indemnify the counterparty for losses suffered as a result of a misrepresentation in the contract.

We regularly evaluate the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities and due to their uncertain nature, we are unable to estimate the maximum amount of the potential loss associated with these indemnifications.

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NOTE 12. ACCUMULATED OTHER COMPREHENSIVE LOSS

Following are the changes in accumulated other comprehensive income (loss) by component for the three months ended:



In millions	Change in pension and OPEB plans		Foreign currency translation adjustment			Unrealized gain (loss) on derivatives		Total attributable to Cummins Inc.		Noncontrolling interests		Total
Balance at December 31, 2024	$	(843)	$	(1,717)		$	115	$	(2,445)
Other comprehensive income (loss) before reclassifications
Before-tax amount	(44)		104			(2)		58		$	2	$	60
Tax benefit	10		11			1		22		—		22
After-tax amount	(34)		115			(1)		80		2		82
Amounts reclassified from accumulated other comprehensive income (loss) (1)	7		—			(8)		(1)		—		(1)

Net current period other comprehensive (loss) income	(27)		115			(9)		79		$	2	$	81
Balance at March 31, 2025	$	(870)	$	(1,602)		$	106	$	(2,366)

Balance at December 31, 2023	$	(848)	$	(1,457)		$	99	$	(2,206)
Other comprehensive income (loss) before reclassifications
Before-tax amount	(21)		(116)			22		(115)		$	(3)	$	(118)
Tax benefit (expense)	3		(2)			(5)		(4)		—		(4)
After-tax amount	(18)		(118)			17		(119)		(3)		(122)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	5		61		(2)	(5)		61		—		61
Net current period other comprehensive (loss) income	(13)		(57)			12		(58)		$	(3)	$	(61)
Balance at March 31, 2024	$	(861)	$	(1,514)		$	111	$	(2,264)

(1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.
(2) Primarily related to the divestiture of Atmus. See NOTE 14, "ATMUS DIVESTITURE," for additional information.

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NOTE 13. DERIVATIVES

We are exposed to financial risk resulting from volatility in foreign exchange rates, interest rates and commodity prices. This risk is closely monitored and managed through the use of physical forward contracts (which are not considered derivatives) and financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps and locks. Financial derivatives are used expressly for hedging purposes and under no circumstances are they used for speculative purposes. When material, we adjust the estimated fair value of our derivative contracts for counterparty or our credit risk. None of our derivative instruments are subject to collateral requirements. Substantially all of our derivative contracts are subject to master netting arrangements, which provide us with the option to settle certain contracts on a net basis when they settle on the same day with the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event.

Foreign Currency Exchange Rate Risk

We had foreign currency forward contracts with notional amounts of $4.4 billion at March 31, 2025, with the following currencies comprising 86 percent of outstanding foreign currency forward contracts: British pound, Chinese renminbi, Australian dollar, Euro and Canadian dollar. We had foreign currency forward contracts with notional amounts of $3.6 billion at December 31, 2024, with the following currencies comprising 86 percent of outstanding foreign currency forward contracts: British pound, Chinese renminbi, Australian dollar, Canadian dollar and Euro.

We are further exposed to foreign currency exchange risk as many of our subsidiaries are subject to fluctuations as the functional currencies of the underlying entities are not our U.S. dollar reporting currency. To help reduce volatility in the equity value of our subsidiaries, we enter into foreign exchange forwards designated as net investment hedges for certain of our investments. Under the current terms of our foreign exchange forwards, we agreed with third parties to sell British pounds, Chinese renminbi and Euros in exchange for U.S. dollar currency at a specified rate at the maturity of the contract. The notional amount of these hedges at March 31, 2025, was $1.6 billion.

The following table summarizes the net investment hedge activity in accumulated other comprehensive loss (AOCL):


	Three months ended
	March 31,
In millions	2025				2024
Type of Derivative	Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Earnings			Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Earnings

Foreign exchange forwards	$	(24)	$	—		$	6	$	—

Interest Rate Risk

In 2021, we entered into a series of interest rate swaps to effectively convert our $500 million senior notes, due in 2025, from a fixed rate of 0.75 percent to a floating rate equal to the three-month London Interbank Offered Rate (LIBOR) plus a spread (subsequently adjusted to Secured Overnight Financing Rate (SOFR) under a fallback protocol in our derivative agreements). We also entered into a series of interest rate swaps to effectively convert $765 million of our $850 million senior notes, due in 2030, from a fixed rate of 1.50 percent to a floating rate equal to the three-month LIBOR plus a spread (also similarly adjusted to SOFR). We designated the swaps as fair value hedges. The gain or loss on these derivative instruments, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current income as interest expense. The net swap settlements that accrue each period are also reported in our Condensed Consolidated Financial Statements as interest expense. In 2023 and 2024, we settled a portion of these swaps with the immaterial losses amortized over the remaining term of the related debt. In the first quarter of 2025, we settled the remainder of the $350 million interest rate swaps, at their expiration date, on our debt due in 2025 . The interest rate swaps on our 2030 debt had $680 million of the notional amounts outstanding at March 31, 2025.

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The following table summarizes the gains and losses:


	Three months ended
	March 31,
In millions	2025				2024
Type of Swap	Gain (Loss) on Swaps		Gain (Loss) on Borrowings		Gain (Loss) on Swaps		Gain (Loss) on Borrowings
Interest rate swaps (1)	$	17	$	(14)	$	(10)	$	14

(1) The difference between the gain (loss) on swaps and borrowings represents hedge ineffectiveness.

In the first quarter of 2025, we entered into a series of interest rate lock agreements including 5-year and 10-year locks, with notional amounts totaling $200 million and $400 million, respectively, to reduce variability of cash flows of interest payments on total fixed rate debt forecast to be issued in 2025 to replace our senior notes at maturity and for other general purposes. The terms of the rate locks mirrored the time period of the expected fixed rate debt issuances and the expected timing of interest payments on planned debt issuances. The gains and losses on these derivative instruments were initially recorded in other comprehensive income and will be released to earnings in interest expense in future periods to reflect the difference in (1) the fixed rates economically locked in at the inception of the hedge and (2) the actual fixed rates established in the debt instrument at issuance. The interest rate lock activity in AOCL was immaterial for the three months ended March 31, 2025.

Derivatives Not Designated as Hedging Instruments

The following table summarizes the effect on our Condensed Consolidated Statements of Net Income for derivative instruments not designated as hedging instruments:


	Three months ended
	March 31,
In millions	2025		2024
Loss recognized in income - Cost of sales (1)	$	(3)	$	—
Gain (loss) recognized in income - Other income (expense), net (1)	61		(40)


(1) Includes foreign currency forward contracts.

Fair Value Amount and Location of Derivative Instruments

The following table summarizes the location and fair value of derivative instruments on our Condensed Consolidated Balance Sheets:


	Derivatives Designated as Hedging Instruments				Derivatives Not Designated as Hedging Instruments
In millions	March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Notional amount	$	3,717	$	3,512	$	3,604	$	2,713

Derivative assets
Prepaid expenses and other current assets (1)	$	33	$	60	$	3	$	6

Other assets	3		6		—		—
Total derivative assets (1)	$	36	$	66	$	3	$	6

Derivative liabilities
Other accrued expenses	$	11	$	10	$	15	$	67
Other liabilities	80		89		—		—
Total derivative liabilities (1)	$	91	$	99	$	15	$	67

(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the three months ended March 31, 2025, or the year ended December 31, 2024.

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We elected to present our derivative contracts on a gross basis in our Condensed Consolidated Balance Sheets. Had we chosen to present on a net basis, we would have derivatives in a net asset position of $19 million and $37 million and derivatives in a net liability position of $86 million and $131 million at March 31, 2025 and December 31, 2024, respectively.

NOTE 14. ATMUS DIVESTITURE

On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off. The transaction involved the exchange of our shares in Atmus for shares of Cummins stock with a 7.0 percent discount on the exchange ratio for Atmus shares. The exchange ratio was determined based on each entity's respective stock price using the daily volume weighted-average stock price for three days preceding the final exchange offer date. Based on the final exchange ratio, we exchanged all 67 million of our Atmus shares for 5.6 million shares of Cummins stock, which was recorded as treasury stock based on the fair value of the Cummins shares obtained.

We evaluated the full divestiture of Atmus and determined the transaction did not qualify for discontinued operation presentation. We recognized a gain related to the divestiture of approximately $1.3 billion (based on the difference between the fair value of the Cummins shares obtained less the carrying value of our Atmus investment), which was recorded in other income, net in our Condensed Consolidated Statements of Net Income for the three months ended March 31, 2024. Approximately $114 million of goodwill was included in the carrying value of the Atmus investment for purposes of calculating the gain. The operating results of Atmus were reported in our Condensed Consolidated Financial Statements through March 18, 2024, the date of divestiture.

As part of the divestiture, the $600 million term loan remained with Atmus after the split. In addition, a net $61 million of other comprehensive income and $19 million of noncontrolling interests related to Atmus were written-off and netted against the gain recognized upon the split.

We entered into a transitional services agreement (TSA) with Atmus that is designed to facilitate the orderly transfer of various services to Atmus. The TSA relates primarily to administrative services, which are generally to be provided over the next 2 years after the divestiture date. This agreement is not material and does not confer upon us the ability to influence the operating and/or financial policies of Atmus subsequent to March 18, 2024.

NOTE 15. OPERATING SEGMENTS

Operating segments under GAAP are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.

Our reportable operating segments consist of Engine, Components, Distribution, Power Systems and Accelera. This reporting structure is organized according to the products and markets each segment serves. The Engine segment produces engines (15 liters and smaller) and associated parts for sale to customers in on-highway and various off-highway markets. Our engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, agriculture, power generation systems and other off-highway applications. The Components segment sells axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics. The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products, maintaining relationships with various OEMs throughout the world and providing selected sales and aftermarket support for our Accelera business. The Power Systems segment is an integrated power provider, which designs, manufactures and sells standby and prime power generators, engines (16 liters and larger) for standby and prime power generator sets and industrial applications (including mining, oil and gas, marine, rail and defense), alternators and other power components. The Accelera segment designs, manufactures, sells and supports electrified power systems with innovative components and subsystems, including battery, fuel cell and electric powertrain technologies as well as hydrogen production technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems and our electrolyzers for hydrogen production. We continue to serve all our markets as they adopt electrification and alternative power technologies, meeting the needs of our OEM partners and end customers.

Our CODM uses segment earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) as the basis for the CODM to evaluate the performance of each of our reportable operating segments. EBITDA provides our CODM with a full picture of the profitability of a segment to drive decisions and resource allocation. EBITDA is used as the key profitability measure when we set our annual operating plan, is the metric with which our CODM assesses results and is a key component of our annual variable compensation plans. Segment amounts exclude certain expenses not specifically identifiable to segments.

The accounting policies of our operating segments are the same as those applied in our Condensed Consolidated Financial Statements. We prepared the financial results of our operating segments on a basis that is consistent with the manner in which we internally

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disaggregate financial information to assist in making internal operating decisions. We allocate certain common costs and expenses, primarily corporate functions, among segments differently than we would for stand-alone financial information prepared in accordance with GAAP. These include certain costs and expenses of shared services, such as IT, human resources, legal, finance and supply chain management. We do not allocate gains or losses of corporate-owned life insurance and the gain and certain costs related to the divestiture of Atmus. See NOTE 14, "ATMUS DIVESTITURE," for additional information. EBITDA may not be consistent with measures used by other companies.

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Summarized financial information regarding our reportable operating segments for the three months ended March 31, 2025 and 2024 is shown in the table below:


In millions	Engine		Components			Distribution		Power Systems		Accelera		Total Segments
Three months ended March 31, 2025
External sales	$	2,040	$	2,270		$	2,902	$	872	$	90	$	8,174
Intersegment sales	731		400			5		777		13		1,926
Total sales	2,771		2,670			2,907		1,649		103		10,100
Cost of goods sold (excluding warranty expenses)	2,036		2,139			2,332		1,090		121		7,718
Warranty expenses	85		26			6		32		8		157
Selling expenses	59		41			157		46		7		310
Administrative expenses	138		119			91		100		13		461
Research, development and engineering expenses	155		75			14		57		43		344
Equity, royalty and interest income (loss) from investees	73		7			28		29		(6)		131
Other income (expense) (1)	20		(17)			9		3		(3)		12
Add back: Depreciation and amortization (2)	67		122			32		33		12		266
Segment EBITDA	$	458	$	382		$	376	$	389	$	(86)	$	1,519

Interest income (3)	$	10	$	7		$	5	$	4	$	—	$	26

Three months ended March 31, 2024
External sales	$	2,240	$	2,842		$	2,529	$	708	$	84	$	8,403
Intersegment sales	688		490			6		681		9		1,874
Total sales	2,928		3,332			2,535		1,389		93		10,277
Cost of goods sold (excluding warranty expenses)	2,190		2,636			2,046		997		120		7,989
Warranty expenses	105		62			5		15		8		195
Selling expenses	52		55			153		40		8		308
Administrative expenses	144		158			91		99		13		505
Research, development and engineering expenses	154		84			14		60		55		367
Equity, royalty and interest income (loss) from investees	57		26			24		19		(3)		123
Other income (expense) (1)	16		(15)			13		6		(1)		19
Add back: Depreciation and amortization (2)	58		125			31		34		14		262
Segment EBITDA	$	414	$	473	(4)	$	294	$	237	$	(101)	$	1,317

Interest income (3)	$	7	$	8		$	11	$	3	$	—	$	29


































(1) Other income (expense) includes other operating expense, net and other income, net from our Condensed Consolidated Statements of Net Income.
(2) Depreciation and amortization are not considered significant segment expenses but are presented here to reconcile to EBITDA, the measure used by our CODM. Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in our Condensed Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs was $3 million and $3 million for the three months ended March 31, 2025 and March 31, 2024, respectively. A portion of depreciation expense is included in research, development and engineering expenses.
(3) Interest income is a component of other income (expense).
(4) Included $21 million of costs associated with the divestiture of Atmus for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," for additional information.

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A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:


	Three months ended
	March 31,
In millions	2025		2024
TOTAL SEGMENT EBITDA	$	1,519	$	1,317

Intersegment eliminations and other (1)	(59)		1,255		(2)

Less:
Interest expense	77		89
Depreciation and amortization	266		262
INCOME BEFORE INCOME TAXES	$	1,117	$	2,221





(1) Included intersegment sales, intersegment profit in inventory and unallocated corporate expenses.
(2) Included a $1.3 billion gain related the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus (included in corporate expenses) for the three months ended March 31, 2024. See NOTE 14, "ATMUS DIVESTITURE," for additional information.

NOTE 16. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, "Income Taxes (Topic 740): Improvements in Income Tax Disclosures," to enhance the transparency and decision usefulness of income tax disclosures. This amendment requires public companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, under the amendment, entities are required to disclose the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as disaggregated by material individual jurisdictions. Finally, the amendment requires entities to disclose income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state and foreign. The new rules are effective for annual periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on our Condensed Consolidated Financial Statements**.**

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)", which requires public business entities to disclose in the notes to the financial statements more detailed information about the types of expenses included in certain expense captions in the consolidated financial statements, including purchases of inventory, employee compensation, and depreciation and amortization. The amendments are effective for us beginning with our 2027 annual period and in interim periods beginning in 2028. Early adoption is permitted. The ASU may be adopted prospectively or retrospectively. We are currently evaluating the impact of ASU 2024-03 on our Condensed Consolidated Financial Statements and related disclosures.

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