What changed in this filing

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Item 1. Business

2022-02-08 compared with 2021-02-10 · 139 added, 118 removed, 333 unchanged (44% of the section changed)

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We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide.

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 outbreak of the coronavirus disease of 2019 (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.

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.

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.

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.

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

OPERATING SEGMENTS

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• 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.

(Chrysler) in North America and LCV markets in China, Russia, Latin America and Korea.

(Stellantis) in North America and LCV markets in Russia, Latin America and China.

• Off-highway - We manufacture diesel engines that range from 48 to 715 horsepower serving key global markets including construction, mining, marine, rail, oil and gas, defense and agriculture and also the power generation business for standby, mobile and distributed power generation solutions throughout the world.

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

The principal customer of our pick-up on-highway engines is Chrysler.

The principal customer of our pick-up on-highway engines is Stellantis.

We sell our industrial engines to manufacturers of construction and agricultural equipment including Hyundai Heavy Industries, Xuzhou Construction Machinery Group, Komatsu, John Deere, JLG Industries, Inc.

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Truck OEMs may also elect to produce their own 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, Hino Power, China First Auto Works, Dongfeng Motor Corporation, CNH Industrial and Isuzu.

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

Distribution Segment

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

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

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

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

Our familiarity with a wide range of market applications allows us to tailor sales, service and support to meet customer-specific needs.

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

Across these regions, our locations compete with distributors or dealers that offer similar products.

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These competitors vary by geographical location and application market.

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.

Components Segment

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Our products include custom engineering systems and integrated controls, oxidation catalysts, particulate filters, selective catalytic reduction systems and engineered components, including dosers.

Our emission solutions business primarily serves markets in North America, Europe, China, India, Brazil, Russia and Australia.

Our emission solutions business primarily serves markets in North America, China, Europe, India, Brazil, Asia Pacific and Russia.

We serve both OEM first fit and retrofit customers.

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We provide critical air handling technologies for engines to meet challenging performance requirements and worldwide emission standards.

We primarily serve markets in North America, Europe, China, India, Brazil, Russia and Australia.

We primarily serve markets in North America, Europe, China, India, Asia Pacific, Brazil and Russia.

• Filtration - We design, manufacture and sell filters, coolant and chemical products.

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We support a wide customer base in a diverse range of markets including on and off-highway segments such as oil and gas, agriculture, mining, construction, power generation and marine.

We produce and sell globally recognized Fleetguard® branded products in over 130 countries including countries in North America, Europe, South America, Asia and Africa.

We produce and sell globally recognized Fleetguard® branded products globally including in North America, Europe, Asia Pacific, China, South America, Russia, Africa and Middle East.

Fleetguard products are available through thousands of distribution points worldwide.

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

• Electronics and fuel systems - We design, develop and supply electronic control modules, sensors and supporting software for on-highway, off-highway and power generation applications.

We also design and manufacture new, replacement and remanufactured fuel systems for medium-duty, heavy-duty and high-horsepower diesel engine markets.

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• Automated transmissions - We develop and supply automated transmissions for the heavy-duty commercial vehicle market.

Formed in 2017, the Eaton Cummins Automated Transmission Technologies joint venture is a consolidated 50/50 joint venture between Cummins Inc.

The Eaton Cummins Automated Transmission Technologies (ECJV) joint venture is a consolidated 50/50 joint venture between Cummins Inc.

and Eaton Corporation Plc.

and serves markets in North America and China.

Customers of the Components segment generally include the Engine, Distribution and Power Systems segments, joint ventures including Beijing Foton Cummins Engine Co., Ltd., Dongfeng Cummins Emission Solutions Co., Ltd.

and Tata Cummins Ltd., truck manufacturers and other OEMs, many of which are also customers of the Engine segment, such as PACCAR, Daimler, Navistar, Volvo, Komatsu, Scania, Chrysler and other manufacturers that use our components in their product platforms.

Customers of the Components segment generally include the Engine, Distribution and Power Systems segments, joint ventures including Tata Cummins Ltd.

and Beijing Foton Cummins Engine Co., Ltd., truck manufacturers and other OEMs, many of which are also customers of the Engine segment, such as PACCAR, Navistar, Daimler, Beiqi Foton Motor Company, Volvo, Stellantis, Komatsu, Scania and other manufacturers that use our components in their product platforms.

The Components segment competes with other manufacturers of aftertreatment systems, filtration, turbochargers, fuel systems and transmissions.

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 Transmission and Aisin Seiki Co., Ltd.

KG, Denso Corporation, Allison Transmission, Aisin Seiki Co., Ltd.

and ZF Friedrichshafen AG.

Power Systems Segment

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We also provide turnkey solutions for distributed generation and energy management applications using natural gas, diesel or biogas as a fuel.

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

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

• Generator technologies - We design, manufacture, sell and support A/C generator/alternator products for internal consumption and for external generator set assemblers.

Our products are sold under the Stamford and AVK brands and range in output from 3 kilovolt-amperes (kVA) to 12,000 kVA.

Our products are sold under the Stamford, Newage and AVK brands and range in output from 7.5 kilovolt-amperes (kVA) to 11,200 kVA.

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

India, China, Europe, Latin America and the Middle East are our largest geographic markets outside of North America.

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

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

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

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.

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.

We anticipate our customer base for New Power offerings will be highly diversified, representing multiple end markets with a broad range of application requirements.

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.

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

In the markets served by the New Power segment, we compete with electric start-ups, powertrain component manufacturers, vertically integrated OEMs and entities providing hydrogen production solutions.

Our primary competitors include Proterra, Inc., Daimler, PACCAR, Volvo, Navistar, TRATON AG, BYD Company Limited, Dana Incorporated, Akasol AG, Ballard Power Systems, Inc.

We will continue to pursue relationships in markets as they adopt hydrogen and electric solutions.

In the markets served by the New Power segment, we compete with emerging fuel cell and battery companies, powertrain component manufacturers, vertically integrated OEMs and entities providing hydrogen production solutions.

Our primary competitors include Proterra Inc, Romeo Power, Inc., Daimler, PACCAR, Volvo, Navistar, TRATON AG, BYD Company Limited, Dana Incorporated, BorgWarner Inc., Ballard Power Systems, Inc.

JOINT VENTURES, ALLIANCES AND NON-WHOLLY-OWNED SUBSIDIARIES

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All other manufacturers 149 36 % 134 (1)(2)

35 % 88 33 % 129

Distribution entities

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Manufacturing Entities

Our manufacturing joint ventures have generally been formed with customers and are primarily intended to allow us to increase our market penetration in geographic regions, reduce capital spending, streamline our supply chain management and develop technologies.

Our manufacturing joint ventures were generally formed with customers and are primarily intended to allow us to increase our market penetration in geographic regions, reduce capital spending, streamline our supply chain management and develop technologies.

Our largest manufacturing joint ventures are based in China and are included in the list below.

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These engines are used in light-duty and medium-duty commercial trucks, pick-up trucks, buses, multipurpose and sport utility vehicles with main markets in China, Brazil and Russia.

Certain types of small

construction equipment and industrial applications are also served by these engine families.

The heavy-duty business produces the X11, X12 and X13, ranging from 10.5 liter to 12.9 liter, high performance heavy-duty diesel engines in Beijing.

Certain types of small construction equipment and industrial applications are also served by these engine families.

The heavy-duty business produces the X11, X12, X13 and X15, ranging from 10.5 liter to 14.5 liter, high performance heavy-duty diesel engines and natural gas engines in Beijing.

Certain types of construction equipment and industrial applications are also served by these engine families.

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Ltd., a subsidiary of Dongfeng Motor Corporation and one of the largest medium-duty and heavy-duty truck manufacturers in China.

DCEC produces 3.9 liter to 14 liter diesel engines with a power range from 80 to 680 horsepower and natural gas engines.

DCEC produces 3.9 liter to 14.5 liter diesel engines with a power range from 80 to 760 horsepower, natural gas engines and automated transmissions.

On-highway engines are used in multiple applications in light-duty and medium-duty trucks, special purpose vehicles, buses and heavy-duty trucks with a main market in China.

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This joint venture manufactures several models of our heavy-duty and high-horsepower diesel engines primarily serving the industrial and stationary power markets in China.

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.

Distribution Entity

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Non-Wholly-Owned Subsidiaries

We have a majority voting interest in Eaton Cummins Automated Transmission Technologies (ECJV) by virtue of a tie-breaking vote on the joint venture’s board of directors.

We have a majority voting interest in ECJV by virtue of a tie-breaking vote on the joint venture’s board of directors.

ECJV develops and supplies automated transmissions for the heavy-duty commercial vehicle market.

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CIL also has distribution and power generation operations.

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.

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.

The performance of the end-to-end supply chain, extending through to our suppliers, is foundational to our ability to meet customers' expectations and support long-term growth.

We are committed to having a robust strategy for how we select and manage our suppliers to enable a market focused supply chain.

This requires us to continuously evaluate and upgrade our supply base, as necessary, to ensure we are meeting the needs of our customers.

This requires us to continuously evaluate and upgrade our supply base, as necessary, as we strive to ensure we are meeting the needs of our customers.

We use a combination of proactive and reactive methodologies to enhance our understanding of supply base risks, which guide the development of risk monitoring and sourcing strategies.

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We design and/or manufacture our strategic components used in or with our engines and power generation units and New Power products.

Key suppliers are managed through long-term supply and cost sharing agreements that assure capacity, delivery, quality and cost requirements are met over an extended period.

Key suppliers are managed through long-term supply agreements that secure capacity, delivery, quality and cost requirements are met over an extended period.

Other important elements of our sourcing strategy include:

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

• selecting and managing suppliers to comply with our supplier code of conduct;

• selecting and managing suppliers to comply with our Supplier Code of Conduct and

• assuring our suppliers comply with our prohibited and restricted materials policy.

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.

PATENTS AND TRADEMARKS

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The loss of this customer or a significant decline in the production level of PACCAR vehicles that use our engines would have an adverse effect on our results of operations and financial condition.

We have been an engine supplier to PACCAR for 76 years.

We have supplied engines to PACCAR for 77 years.

A summary of principal customers for each operating segment is included in our segment discussion.

In addition to our agreement with PACCAR, we have long-term heavy-duty and medium-duty engine and aftertreatment system supply agreements with Navistar and Daimler.

We also have an agreement with Chrysler to supply engines for its Ram trucks.

We also have an agreement with Stellantis to supply engines for its Ram trucks.

Collectively, our net sales to these four customers, including PACCAR, were 33 percent of our consolidated net sales in 2021, 32 percent in 2020 and 37 percent in 2019.

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These agreements contain standard purchase and sale agreement terms covering engine, aftertreatment and engine parts pricing, quality and delivery commitments, as well as engineering product support obligations.

The basic nature of our agreements with OEM customers is that they are long-term price and operations agreements that help assure the availability of our products to each customer through the duration of the respective agreements.

The basic nature of our agreements with OEM customers is that they are long-term price and operations agreements that help prove for the availability of our products to each customer through the duration of the respective agreements.

Agreements with most OEMs contain bilateral termination provisions giving either party the right to terminate in the event of a material breach, change of control or insolvency or bankruptcy of the other party.

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 have supply agreements with some truck and off-highway equipment OEMs, however most of our business is transacted through open purchase orders.

These open orders are historically subject to month-to-month releases and are subject to cancellation on reasonable notice without cancellation charges and therefore are not considered firm.

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

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.

RESEARCH AND DEVELOPMENT

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Our research and development programs are focused on product improvements, product extensions, innovations and cost reductions for our customers.

Research and development expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred.

Research and development expenditures include salaries, contractor fees, building costs, utilities, testing, technical information technology expenses, administrative expenses and allocation of corporate costs and are expensed, net of contract reimbursements, when incurred.

From time to time, we enter into agreements with customers and government agencies to fund a portion of the research and development costs of a particular project.

When not associated with a sales contract, we generally account for these reimbursements as an offset to the related research and development expenditure.

Research and development expenses, net of contract reimbursements, were $903 million in 2020, $998 million in 2019 and $894 million in 2018.

Research and development expenses, net of contract reimbursements, were $1.1 billion in 2021, $903 million in 2020 and $998 million in 2019.

Contract reimbursements were $104 million, $86 million and $90 million in 2021, 2020 and 2019, respectively.

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The highest level of accountability for our climate-related risks and opportunities is with the Safety, Environment and Technology (SET) Committee of the Board of Directors (the Board).

The Action Committee for Environmental Sustainability meets monthly and reports to the Chairman and to the SET Committee at least annually.

The internal Action Committee for Environmental Sustainability meets monthly and reports to the Chairman and to the SET Committee at least annually.

In late 2019, we introduced PLANET 2050, a sustainability strategy focused on three priority areas:

addressing climate change and air emissions, using natural resources in the most sustainable way and improving communities.

The strategy includes eight specific goals to achieve by 2030, including science-based carbon dioxide reduction targets for newly sold products and facilities, as well as aspirational targets for 2050.

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.

The PLANET 2050 strategy includes nine specific goals to achieve by 2030, including science-based carbon dioxide reduction targets for newly sold products and facilities, as well as aspirational targets for 2050.

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

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.

The most recent Sustainability Progress Report and prior reports, as well as a Data Book of more detailed environmental data in accordance with the Global Reporting Initiative's Standard core compliance designation, are available on our website at www.cummins.com.

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.

The most recent Sustainability Progress Report, prior reports and a Data Book of more detailed environmental data in accordance with the Global Reporting Initiative's Standard core compliance designation is available on our website at www.cummins.com.

Our annual submission to the Carbon Disclosure Project (CDP) for climate change and water are also available on the website.

The climate submission provides information on our scenario planning exercise for climate and other risks as requested by CDP.

We also published our first report in accordance with the Sustainability Accounting Standards Board in 2020.

The climate submission provides information on our scenario planning for climate and other risks and detailed facility emissions data as requested by CDP.

In 2021, we published our second report in accordance with the Sustainability Accounting Standards Board as well as our first report following the framework of the Task Force on Climate-Related Financial Disclosures.

These reports and data book are not incorporated into this Form 10-K by reference.

We continue to articulate our positions on key public policy issues and on a wide range of environmental issues.

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.

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.

ENVIRONMENTAL COMPLIANCE

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Over the past several years we have increased our global environmental compliance presence and expertise to understand and meet emerging product environmental regulations around the world.

Our ability to comply with these and future emission standards is an essential element in maintaining our leadership position in regulated markets.

We have made, and will continue to make, significant capital and research expenditures to comply with these standards.

Our ability to comply with these and future

emission standards is an essential element in maintaining our leadership position in regulated markets.

We made, and will continue to make, significant capital and research expenditures to comply with these standards.

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

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

Formed in 2019, the Product Compliance and Regulatory Affairs team leads both engine emissions certification and compliance and regulatory affairs initiatives.

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

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

The organization also works to enhance our collaboration with

the agencies setting the direction and regulations of emissions to best ensure we are meeting every expectation today while planning for future changes.

Formed in 2019, the Product Compliance and Regulatory Affairs team leads both engine emissions certification and compliance and regulatory affairs initiatives and is overseen and reports directly to the SET Committee of the Board at least annually.

This organization is led by the Vice President - Product Compliance and Regulatory Affairs who reports directly to the Chief Executive Officer.

The Vice President is a member of both the Cummins Executive Team and Cummins Leadership Team.

The focus of this organization is to strengthen our ability to design great products that help our customers win while complying with increasingly challenging global emission regulations.

The organization also works to enhance our collaboration with the agencies setting the direction and regulations of emissions as we strive to meet every expectation today while planning for future changes.

Following conversations with the U.S.

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

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

In addition, we voluntarily disclosed our formal internal review to 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.

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

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

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

During our discussions, the regulators 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.

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

See Note 14, "COMMITMENTS AND CONTINGENCIES," to the Consolidated Financial Statements for additional information.

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Our engines are certified globally through various categories within on-highway and off-highway applications.

Regulations in these categories typically control nitrous oxides (NOx), particulate matter (PM) and GHG.

The current on-highway NOx and PM emission standards came into effect in India on April 1, 2020, (BS VI), China on July 1, 2019, (NS VI), the EU on January 1, 2013, (Euro VI) and on January 1, 2010, for the EPA.

Regulations in these categories typically control nitrogen oxides (NOx), particulate matter (PM) and GHG.

The current on-highway NOx and PM emission standards came into effect in India on April 1, 2020, (Bharat Stage VI), China on July 1, 2019, (National Standard NS VI), the European Union (EU) on January 1, 2013, (Euro VI) and on January 1, 2010, for the EPA.

To meet these regulations, mid-range and heavy-duty engines for India, China, EU and EPA require NOx aftertreatment.

NOx reduction is achieved by an integrated technology solution comprised of the XPI High Pressure Common Rail fuel system, SCR technology (in some cases), next-generation cooled EGR, advanced electronic controls, proven air handling and the Cummins Diesel Particulate Filter (DPF).

The Ministry of Road Transport and Highways, Ministry of Ecology and Environment, EU, EPA and CARB have certified that our engines meet the current emission requirements.

The Ministry of Road Transport and Highways, Ministry of Ecology and Environment, EU, EPA and CARB certified that our engines meet the current emission requirements.

Emission standards in international markets, including Japan, Mexico, Australia, Brazil and Russia are becoming more stringent.

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In 2013, we certified to EPA's first ever GHG regulations for on-highway medium and heavy-duty engines.

Additionally, the EPA 2013 regulations added the requirement of on-board diagnostics, which were introduced on the ISX 15 in 2010, across the full on-highway product line while maintaining the same near-zero emission levels of NOx and PM required in 2010.

Additionally, the EPA's 2013 regulations added the requirement of on-board diagnostics, which were introduced on the ISX 15 in 2010, across the full on-highway product line while maintaining the same near-zero emission levels of NOx and PM required in 2010.

On-board diagnostics provide enhanced service capability with standardized diagnostic trouble codes, service tool interface, in-cab warning lamp and service information availability.

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Expenditures for environmental control activities and environmental remediation projects at our facilities in the U.S.

have not been a substantial portion of our annual expenses and are not expected to be material in 2021.

were not a substantial portion of our annual expenses and are not expected to be material in 2022.

We believe we are in compliance in all material respects with laws and regulations applicable to our plants and operations.

In the U.S., pursuant to notices received from federal and state agencies and/or defendant parties in site environmental contribution actions, we have been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended or similar state laws, at fewer than 20 waste disposal sites.

In the U.S., pursuant to notices received from federal and state agencies and/or defendant parties in site environmental contribution actions, we were identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended or similar state laws, at fewer than 20 waste disposal sites.

Based upon our experiences at similar sites we believe that our aggregate future remediation costs will not be material.

7 unchanged sentences

We are focused on harmonizing our approach to talent to provide seamless opportunities and better experiences to our employees around the world.

The disruptive events of 2020 gave even greater importance for us to complete the strategic work in Human Resources that calls for our company to “Inspire and Encourage All Employees to Reach Their Full Potential.” This strategy has key focus areas:

The disruptive events in 2020 and 2021 highlighted the importance for us to complete the strategic work in Human Resources to encourage all employees to reach their full potential.

This strategy has key focus areas:

creating a diverse and inclusive work environment;

9 unchanged sentences

When an individual joins Cummins, we are committed to providing both that employee and their manager with the tools and resources to manage their career and navigate in a large global organization.

Through our Talent Management strategy our goal is to ensure all employees have access to the development and career opportunities that a global company enables.

Through our Talent Management strategy our goal is to provide all employees access to the development and career opportunities that a global company enables.

Competitive Pay and Benefits

5 unchanged sentences

We also do annual compensation studies to assess market movement, pay equity and living wages.

For example, in 2018, we conducted a living wage analysis globally to ensure our employees were making a living wage in the countries they live and work.

We incorporated this living wage assessment into our annual compensation structure to ensure that current and new hires never fall below this threshold.

For example, in 2018, we conducted a living wage analysis globally as we strive to ensure our employees were making a living wage in the countries they live and work.

We incorporated this living wage assessment into our annual compensation structure to work to ensure that current and new hires never fall below this threshold.

for example, the living wage in 2019 was $15 per hour, although most positions pay more than that.

We continually review wages globally to ensure we are fair, equitable, competitive and can attract and retain the best talent.

We review wages globally as we continuously work to ensure we are fair, equitable, competitive and can attract and retain the best talent.

We also provide diverse benefit programs that are aligned with our values and focused on supporting employees and their families based on their unique needs, some of which are:

9 unchanged sentences

To support both our customers and communities, we made keeping employees safe our top priority.

Most of our employees who can work from home have been doing so since the outbreak of the pandemic and we have provided them with the tools and support to do so.

This allowed us to focus resources

and investments on our engineering and production facilities.

Most of our employees who can work from home have done so since the outbreak of the pandemic and we provided them with the tools and support to do so.

This allowed us to focus resources and investments on our engineering and production facilities.

In those facilities, we have taken many steps to protect the health and safety of our people, including:

• Mandatory health screenings at our plants and facilities;

• Personal protective equipment for frontline employees;

• Masks required inside open plants and facilities.

• Redesigned exits, entrances and production lines to encourage social distancing.

• Enhanced cleaning protocols before, during and after shifts;

• Expanded healthcare and leave programs to support employees and their families.

• Manufacturing our own face masks to provide to our employees free of charge.

• In 2021, we launched an aggressive global effort to acquire vaccines and provide them onsite or near-site to our employees, their families and other stakeholders.

By partnering with governments and health care providers, we facilitated the delivery of over 45,000 doses of approved vaccines to employees at or near the workplace.

This includes over 5,000 shots in the U.S., over 30,000 shots in India and over 10,000 shots in Mexico.

Diversity, Equity and Inclusion

2 unchanged sentences

This is exemplified by the composition of the Board of which 5 of 13 directors are female and 5 of 13 directors are ethnically diverse.

In addition, 50 percent of our executive team is female and 40 percent of our leadership team is female.

In addition, over 50 percent of our executive team is female, and 45 percent of our leadership team is female.

We disclose publicly the percentage of women in supervisory roles and the overall workforce.

We also launched several initiatives to increase representation of minorities in the workplace.

We have created a Global Inclusion Leadership Council to oversee more than 100 employee resource groups around the world to provide opportunities to employees from all backgrounds for leadership training, cross cultural learning and professional development.

We created a Global Inclusion Leadership Council to oversee more than 100 employee resource groups around the world to provide opportunities to employees from all backgrounds for leadership training, cross cultural learning and professional development.

In 2020, we launched Cummins Advocating for Racial Equity (CARE), which seeks to drive a sustainable impact in dismantling institutional racism and creating systemic equity.

CARE now has hundreds of employees engaged and has deployed over $20 million in funding to fight racial injustice in the U.S.

For more information on the topics above and our management of our human capital resources, please go to sustainability.cummins.com.

1 unchanged sentence

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information electronically with the SEC.

We file annual, quarterly and current reports, proxy statements and other information electronically with the Securities and Exchange Commission (SEC).

The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and information statements and other information that Cummins files electronically with the SEC.

5 unchanged sentences

We also have a Corporate Governance webpage.

You can access our Governance Documents webpage through our internet site, www.cummins.com, by clicking on the heading "About" followed by "Corporate Governance" and then the "Cummins Governance Documents" link.

You can access our Governance Documents webpage through our internet site, www.cummins.com, by clicking on the heading "About" followed by "Cummins Inc.

Investor Website" then "Board & ESG" and finally the "Governance Documents" link.

Code of Conduct, Committee Charters and other governance documents are included at this site.

11 unchanged sentences

Livingston L.

Satterthwaite (60) President and Chief Operating Officer (2019) Vice President and President—Distribution Business (2015-2019)

Aaholm (58) Vice President—Chief Information Officer (2013)

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

Barner (63) Vice President—General Counsel and Corporate Secretary (2020) Vice President—General Counsel (2012-2020)

Satterthwaite (61) Vice Chairman (2021) President and Chief Operating Officer (2019-2021)

Vice President and President—Distribution Business (2015-2019)

Jennifer Rumsey (48) President and Chief Operating Officer (2021) Vice President and President—Components (2019-2020)

Vice President—Chief Technical Officer (2015-2019)

Aaholm (59) Vice President—Chief Digital Officer (2021) Vice President—Chief Information Officer (2013-2021)

Barner (64) Vice President—Chief Administrative Officer and Corporate Secretary (2021) Vice President—General Counsel and Corporate Secretary (2020-2021)

Vice President—General Counsel (2012-2020)

Brockhaus (47) Vice President—Human Resources Operations (2021) Vice President—Human Resources Technology and Strategy (2020-2021)

Executive Director—Human Resources Strategy (2017-2020)

Executive Director—Broad Based and Executive Compensation (2014-2017)

Chandler (61) Vice President—Community Relations and Corporate Responsibility (2016) Chief Executive Officer—The Cummins Foundation Inc.

(2015-present)

Christopher C.

Clulow (49) Vice President—Corporate Controller (2017) Controller—Components Segment (2015-2017)

Clulow (50) Vice President—Controller (2017) Controller—Components (2015-2017)

Cook (58) Vice President—Chief Human Resources Officer (2003)

Davis (51) Vice President and President—New Power Segment (2020) Vice President—Cummins Filtration (2018-2020)

Davis (52) Vice President and President—New Power (2020) Vice President—Cummins Filtration (2018-2020)

General Manager—Filtration Business (2015-2018)

Embree (47) Vice President and President— Distribution Business (2019) Vice President and President— Components Group (2015-2019)

Ewald (53) Vice President—Corporate Strategy and Business Development (2010)

Embree (48) Vice President and President— Distribution Business (2019) Vice President and President— Components (2015-2019)

Fier (57) Vice President—Chief Technical Officer (2019) Vice President—Engineering, Engine Business (2015-2019)

3 unchanged sentences

General Manager—Rail & Defense (2014-2017)

Norbert Nusterer (52) Vice President and President—Power Systems (2016) Vice President—New and ReCon Parts (2011-2016)

Osowick (53) Vice President—Human Resources Operations (2014)

Srikanth Padmanabhan (56) Vice President and President—Engine Business (2016) Vice President—Engine Business (2014-2016)

Rose (58) Vice President—Chief Administrative Officer (2011)

Jennifer Rumsey (47) Vice President and President—Components Group (2019) Vice President—Chief Technical Officer (2015-2019)

Lamb-Hale (55) Vice President—General Counsel (2021) Managing Director and Washington, DC City Leader—Kroll (2020-2021)

Managing Director—Kroll (2016-2020)

Narang (46) Vice President and President—Components (2021) Vice President and President—Cummins Emissions Solutions (2017-2021)

Vice President and General Manager—Cummins Turbo Technologies (2015-2017)

Earl Newsome (59) Vice President—Chief Information Officer (2021) Chief Information Officer, Americas IT—Linde (2019-2021)

Global Chief Information Officer and Vice President—Praxair, Inc.

Norbert Nusterer (53) Vice President and President—Power Systems (2016)

Srikanth Padmanabhan (57) Vice President and President—Engine Business (2016)

Smith (54) Vice President—Chief Financial Officer (2019) Vice President—Financial Operations (2016-2019)

Vice President—Investor Relations and Business Planning and Analysis (2014-2016)

Stoner (44) Vice President—China ABO (2020) General Manager—Partnerships and EBU China Joint Venture Business (2018-2020)

General Manager—Power Systems Business, China (2016-2018)

Executive Director—Corporate Business Development (2013-2016)

Wiltrout (41) Vice President—Corporate Strategy (2022) Executive Director—Corporate Development (2021-2022)

Strategy Director—Power Systems Business Unit (2018-2021)

Corporate Strategy Director (2016-2018)

Our Chairman and Chief Executive Officer (CEO) is elected annually by the Board and holds office until the meeting of the Board at which his election is next considered.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business