What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-14 compared with 2022-02-08 · 163 added, 150 removed, 322 unchanged (49% of the section changed)

1 unchanged sentence

In 2001, we changed our name to Cummins Inc.

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

We are a global power leader that designs, manufactures, distributes and services diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, hydrogen production and fuel cell products.

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 460 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.

Meritor Acquisition

On August 3, 2022, we completed the acquisition of Meritor with a purchase price of $2.9 billion (including debt repaid concurrent with the acquisition).

Our consolidated results and segment results include Meritor's activity since the date of acquisition.

Meritor was split into the newly formed axles and brakes business and electric powertrain.

The results for the axles and brakes business are included in our Components segment while the electric powertrain portion is included in our New Power segment.

See NOTE 2, "ACQUISITIONS," to the Consolidated Financial Statements for additional information.

Supply Chain Disruptions

We continue to experience supply chain disruptions, increased price levels and related financial impacts reflected as increased cost of sales and inventory holdings.

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

Our customers are also experiencing supply chain issues.

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

OPERATING SEGMENTS

We have five complementary operating segments:

Engine, Distribution, Components, Power Systems and New Power.

Engine, Components, Distribution, Power Systems and New Power.

These segments share technology, customers, strategic partners, brand recognition and our distribution network in order to compete more efficiently and effectively in their respective markets.

23 unchanged sentences

• 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.

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

(Stellantis) in North America and LCV markets in 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.

The principal customers of our heavy-duty truck engines include truck manufacturers such as PACCAR Inc.

(PACCAR), Navistar International Corporation (Navistar) and Daimler Trucks North America (Daimler).

The principal customers of our medium-duty truck engines include truck manufacturers such as Daimler, Navistar and PACCAR.

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.

(PACCAR), Traton Group (Traton, formerly Navistar International Corporation) and Daimler Trucks North America (Daimler).

The principal customers of our medium-duty truck engines include truck manufacturers such as Daimler, Traton and PACCAR.

The principal customers of our light-duty on-highway engines are 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 Stellantis.

3 unchanged sentences

Other independent engine manufacturers include Weichai Power Co.

Ltd., Caterpillar Inc.

(CAT) and Deutz AG.

and Deutz AG.

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, China First Auto Works, Dongfeng Motor Corporation, CNH Industrial and Isuzu.

Distribution Segment

Distribution segment sales and EBITDA as a percentage of consolidated results were:

Years ended December 31,

2021 2020 2019

Percent of consolidated net sales (1)

26 % 29 % 27 %

Percent of consolidated EBITDA (1)

20 % 22 % 18 %

(1) Measured before intersegment eliminations

The Distribution segment is our primary sales, service and support channel.

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

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

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

Distribution’s mission encompasses the sales and support of a wide range of products and services, including power generation systems, high-horsepower engines, heavy-duty and 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.

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.

In many cases, these competing distributors or dealers are owned by, or affiliated with the companies that are listed as competitors of the Engine, Components or Power Systems segments.

These competitors vary by geographical location and application market.

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

Components Segment

7 unchanged sentences

(1) Measured before intersegment eliminations

The Components segment supplies products which complement the Engine and Power Systems segments, including aftertreatment systems, turbochargers, transmissions, filtration products, electronics and fuel systems for commercial diesel and natural gas applications.

We develop aftertreatment systems, turbochargers, fuel systems, transmissions and electronics to meet increasingly stringent emission and fuel economy standards.

The Components segment supplies products which complement the Engine and Power Systems segments, including aftertreatment systems, turbochargers, transmissions, filtration products, electronics, fuel systems, axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications.

We develop aftertreatment systems, turbochargers, fuel systems, drivetrain systems, transmissions and electronics to meet increasingly stringent emission and fuel economy standards.

We manufacture filtration systems for on- and off-highway heavy-duty and medium-duty equipment, and we are a supplier of filtration products for industrial vehicle applications.

3 unchanged sentences

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, China, Europe, India, Brazil, Asia Pacific and Russia.

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

We serve both OEM first fit and retrofit customers.

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

We 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, Asia Pacific, Brazil and Russia.

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

• Axles and brakes - We design, manufacture and supply drivetrain systems, including axles, drivelines, brakes and suspension systems primarily for commercial vehicle and industrial applications.

We also market and sell truck, trailer, on- and off-highway and other products principally for OEM dealers and other independent distributors and service garages within the aftermarket industry.

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

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

Our filtration business offers over 8,800 products for first fit and aftermarket applications including air filters, fuel filters, fuel water separators, lube filters, hydraulic filters, coolants, fuel additives and other filtration systems to OEMs, dealers/distributors and end-users.

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 globally including in North America, Europe, Asia Pacific, China, South America, Russia, Africa and Middle East.

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

Fleetguard products are available through thousands of distribution points worldwide.

• Turbo technologies - We design, manufacture and market turbochargers and engine brakes for light-duty, medium-duty, heavy-duty and high-horsepower markets with worldwide sales and distribution.

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

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

• 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.

2 unchanged sentences

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

Automated transmissions include automated manual transmissions, dual-clutch transmissions and automatic transmissions for internal combustion engines.

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

2 unchanged sentences

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.

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, Traton, Daimler, Beiqi Foton Motor Company, Volvo, Stellantis, Komatsu 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, drivetrain 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, Aisin Seiki Co., Ltd.

and ZF Friedrichshafen AG.

KG, Denso Corporation, Allison Transmission, Aisin Seiki Co., Ltd., ZF Friedrichshafen AG and Dana Incorporated.

Distribution Segment

Distribution segment sales and EBITDA as a percentage of consolidated results were:

Years ended December 31,

2022 2021 2020

Percent of consolidated net sales (1)

26 % 26 % 29 %

Percent of consolidated EBITDA (1)

22 % 20 % 22 %

(1) Measured before intersegment eliminations

The Distribution segment is our primary sales, service and support channel.

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

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

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

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 was historically organized and managed as eight geographic regions, including North America, Asia Pacific, Europe, China, Commonwealth of Independent States (CIS and historically mostly Russia), Africa and Middle East, India and Latin America.

As the result of the indefinite suspension of our Russian operations due to the conflict in Ukraine in 2022, we are re-evaluating our regional structure for the remaining operations, excluding Russia, for 2023 and future years.

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

In many cases, these competing distributors or dealers are owned by, or affiliated with the companies that are listed as competitors of the Engine, Components or Power Systems segments.

These competitors vary by geographical location and application market.

Power Systems Segment

8 unchanged sentences

The Power Systems segment is organized around the following product lines:

• Power generation - We design, manufacture, sell and support standby and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as controls, paralleling systems and transfer switches, for applications such as consumer, commercial, industrial, data centers, health care, global rental business, telecommunications and waste water treatment plants.

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

• Power generation - We are a global OEM offering standby and prime power generators ranging from 2 kilowatts to 3.5 megawatts, as well as controls, paralleling systems and transfer switches, for customers with consumer, commercial, industrial, data center, health care, prime rental fleet and defense applications.

We also provide turnkey solutions for distributed generation and energy management applications using natural gas, diesel and newer alternative sustainable fuels such as hydrotreated vegetable oil and renewable natural gas.

• 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.

2 unchanged sentences

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

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

China, India, Europe, Asia Pacific, Latin America, 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.

2 unchanged sentences

New Power Segment

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.

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.

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

The New Power segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of our electrolyzers for hydrogen production and electrified power systems and related 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.

This includes new markets, like the growing green hydrogen market, which we serve with our leading electrolyzer technologies.

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.

Our primary competitors include Proterra Inc, Daimler, PACCAR, Volvo, Traton, BYD Company Limited, Dana Incorporated, BorgWarner Inc., Ballard Power Systems, Inc., Nel ASA and Plug Power Inc.

JOINT VENTURES, ALLIANCES AND NON-WHOLLY-OWNED SUBSIDIARIES

9 unchanged sentences

Manufacturing entities

Beijing Foton Cummins Engine Co., Ltd.

$ 112 26 % $ 113 30 % $ 60 22 %

Dongfeng Cummins Engine Company, Ltd.

$ 45 20 % $ 82 19 % $ 63 17 %

Beijing Foton Cummins Engine Co., Ltd.

37 17 % 112 26 % 113 30 %

Chongqing Cummins Engine Company, Ltd.

32 14 % 39 9 % 35 9 %

Tata Cummins, Ltd.

27 12 % 18 4 % 19 (1)

All other manufacturers 28 (2)

12 % 131 32 % 115 (3)

Distribution entities

6 unchanged sentences

See NOTE 5, "INCOME TAXES," to our Consolidated Financial Statements for additional information on India Tax Law Change.

(2) Includes impairment charges of $13 million and loss on sale of business of $8 million for a joint venture in the Power Systems segment.

(2) Includes a $28 million impairment of our joint venture with KAMAZ and $3 million of royalty charges as part of our costs associated with the suspension of our Russian operations.

In addition, on February 7, 2022, we purchased Westport Fuel System Inc.'s stake in Cummins Westport, Inc.

(Westport JV).

See NOTE 2, "ACQUISITIONS," and NOTE 23, "RUSSIAN OPERATIONS," to our Consolidated Financial Statements for additional information.

(3) Includes $19 million in favorable adjustments related to India Tax Law Change, impairment charges of $13 million and loss on sale of business of $8 million for a joint venture in the Power Systems segment.

See NOTE 5, "INCOME TAXES," to our Consolidated Financial Statements for additional information on India Tax Law Change.

(4) This total represents our share of net income of our equity investees and is exclusive of royalties and interest income from our equity investees.

4 unchanged sentences

Our engine manufacturing joint ventures are supplied by our Components segment in the same manner as it supplies our wholly-owned Engine segment and Power Systems segment manufacturing facilities.

Our Components segment joint ventures and wholly-owned entities provide electronics, fuel systems, filtration, aftertreatment systems, turbocharger products and automated transmissions that are used with our engines as well as some competitors' products.

Our Components segment joint ventures and wholly-owned entities provide electronics, fuel systems, filtration, aftertreatment systems, turbocharger products, axles, drivelines, braking systems and automated transmissions that are used with our engines as well as some competitors' products.

The results and investments in our joint ventures in which we have 50 percent or less ownership interest (except for Eaton Cummins Automated Transmission Technologies joint venture, which is consolidated due to our majority voting interest) discussed below are included in equity, royalty and interest income from investees and investments and advances related to equity method investees in our Consolidated Statements of Net Income and Consolidated Balance Sheets , respectively.

• Beijing Foton Cummins Engine Co., Ltd.

- Beijing Foton Cummins Engine Co., Ltd.

is a joint venture in China with Beiqi Foton Motor Co., Ltd., a commercial vehicle manufacturer, which has two distinct lines of business - a light-duty business and a heavy-duty business.

The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing.

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, 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.

• Dongfeng Cummins Engine Company, Ltd.

5 unchanged sentences

Off-highway engines are used in a variety of construction, power generation, marine and agriculture markets in China.

• Beijing Foton Cummins Engine Co., Ltd.

- Beijing Foton Cummins Engine Co., Ltd.

is a joint venture in China with Beiqi Foton Motor Co., Ltd., a commercial vehicle manufacturer, which has two distinct lines of business - a light-duty business and a heavy-duty business.

The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing.

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 and Brazil.

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.

• Chongqing Cummins Engine Company, Ltd.

2 unchanged sentences

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.

• Tata Cummins, Ltd.

- Tata Cummins, Ltd.

is a joint venture in India with Tata Motors Ltd., the largest automotive company in India and a member of the Tata group of companies.

This joint venture manufactures Cummins' 3.80 to 8.9-liter diesel and natural gas engines in India with a power range from 75 to 400 horsepower for use in trucks manufactured by Tata Motors, as well as for various industrial and power generation applications for Cummins.

Distribution Entity

6 unchanged sentences

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.

ECJV develops and supplies automated transmissions for the heavy-duty commercial vehicle markets in North America and China.

We have a controlling interest in Cummins India Ltd.

8 unchanged sentences

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.

Our category strategy process (a process designed to create the most value for the company) supports the review of our long-term needs and guides decisions on what we make internally and what we purchase externally.

For the items we decide to purchase externally, the strategies also identify the suppliers we should partner with long-term to provide the best technology, the lowest total cost and highest supply chain performance.

Our category strategy process supports the review of our long-term needs and guides decisions on what we make internally and what we purchase externally.

For the items we decide to purchase externally, the strategies also identify the suppliers we should enter into long-term supply agreements to provide the best technology, the lowest total cost and highest supply chain performance.

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 agreements that secure capacity, delivery, quality and cost requirements are met over an extended period.

Other important elements of our sourcing strategy include:

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

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

Other important elements of our sourcing strategy include the following:

• expanding risk management scope to include sub-tier value chain suppliers for critical components;

• broadening dual and multi-sourcing where applicable;

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

• 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.

As we adjust to the current global supply chain challenges, global inflationary pressures and other global macroeconomic forces, 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.

15 unchanged sentences

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.

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

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

2 unchanged sentences

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 prove for 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 provide 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.

4 unchanged sentences

In 2022, we continued to invest in future critical technologies and products.

We will continue to make investments to develop new products and improve our current technologies to meet future emission requirements around the world and improve fuel economy performance of diesel and natural gas-powered engines and related components as well as development activities around fully electric, hybrid and hydrogen power solutions and hydrogen production.

We will continue to make investments to develop new products and improve our current technologies to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural gas powered engines and related components as well as development activities around battery electric, fuel cell electric and hydrogen engine solutions.

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

2 unchanged sentences

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 $1.1 billion in 2021, $903 million in 2020 and $998 million in 2019.

Research and development expenses, net of contract reimbursements, were $1.2 billion in 2022, $1.1 billion in 2021 and $903 million in 2020.

Contract reimbursements were $110 million, $104 million and $86 million in 2022, 2021 and 2020, respectively.

3 unchanged sentences

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 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:

The internal Action Committee for Environmental Sustainability meets monthly and reports to the Chief Executive Officer (CEO) and to the SET Committee at least annually.

In 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.

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.

Additional commitments followed including Cummins Water Works, our program for strengthening communities through sustainable water and addressing the global water crisis, and Destination Zero, our long-term product decarbonization strategy.

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.

We started reporting progress in 2022.

Key areas of focus in 2022 included product decarbonization pathways, customer sustainability collaboration and circular economy efforts such as incorporating expanded lifecycle analysis tools.

12 unchanged sentences

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.

We also published reports in accordance with the Sustainability Accounting Standards Board as well as 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.

3 unchanged sentences

In 2022, 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.

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

In 2021, we were named one of the inaugural recipients of the Terra Carta Seal by the Sustainable Markets Initiative, the effort founded by King Charles III while the Prince of Wales to recognize industry leaders in environmental sustainability.

In addition, in 2022 we were awarded a gold medal for sustainability performance by EcoVadis, a globally collaborative platform for trading partners to share sustainability performance information.

We were named to Investor Business Daily's Best ESG Companies list for performance on environmental, social and governance matters, ranking number 27.

3 unchanged sentences

Our engines are subject to extensive statutory and regulatory requirements that directly or indirectly impose standards governing emissions and noise.

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

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 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 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.

Announced in late 2019 and launched in early 2020, the Product Compliance and Regulatory Affairs team leads both engine emissions certification and compliance and regulatory affairs initiatives and reports to the SET Committee of the Board at least annually.

This organization is led by the Vice President - Product Compliance and Regulatory Affairs.

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.

2 unchanged sentences

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 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.

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

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

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

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

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

During our discussions, the regulators 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.

During our ongoing 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 and Titan trucks for model years 2016 through 2019.

We have also been in communication with Environmental and Climate Change Canada regarding similar issues relating to some of these very same platforms.

In connection with these and other ongoing discussions with the EPA and CARB, we are developing a new software calibration and will recall model years 2013 through 2018 RAM 2500 and 3500 trucks.

We are also developing a new software calibration and hardware fix and will recall model years 2016 through 2019 Titan trucks.

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.

7 unchanged sentences

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.

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

We believe that our experience in meeting the EU and EPA emission standards leaves us well positioned to take advantage of opportunities in these markets as the need for emission control capability grows.

6 unchanged sentences

Our off-highway engines designed for Tier 4 / Stage V standards were based on our extensive on-highway experience developing SCR, high pressure fuel systems, DPF and VGT TM .

Our products offer low fuel consumption, high torque rise and power output, extended maintenance intervals, reliable and durable operation and a long life to overhaul period, all while meeting the most stringent emission standards in the industrial market.

emission standards in the industrial market.

Our off-highway products power multiple applications including construction, mining, marine, agriculture, rail, defense and oil and gas and serve a global customer base.

11 unchanged sentences

HUMAN CAPITAL RESOURCES

At December 31, 2021, we employed approximately 59,900 persons worldwide.

At December 31, 2022, we employed approximately 73,600 persons worldwide, which includes the addition of more than 10,000 employees to our organization through acquisitions completed in 2022.

Approximately 23,400 of our employees worldwide are represented by various unions under collective bargaining agreements that expire between 2023 and 2027.

Throughout our company’s 100-year history, we always recognized that people drive the strength of our business and our ability to effectively serve our clients and sustain our competitive position.

Throughout our more than 100-year history, we always recognized that people drive the strength of our business and our ability to effectively serve our clients and sustain our competitive position.

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 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;

Our workforce strategy cultivates an environment where all employees, regardless of employee type and location, know what is expected of them, are rewarded based on performance and have access to differentiated experiences, tools and leadership coaching to help them develop.

This strategy has several key focus areas:

creating a diverse, accessible, equitable and inclusive work environment;

engaging employees and their families in improving wellness;

developing self-aware and effective leaders;

and extending our talent management philosophies in performance management, compensation management, competency building, and access to development opportunities to all employees.

developing self-aware and effective leaders and extending our talent development programs to our workforce at every level and job type.

Leadership and Talent Management

3 unchanged sentences

We encourage leaders to connect our people and their work to our mission, vision, values, brand promise and strategies of the company, motivating and giving them a higher sense of purpose.

We have developed leadership and employee development programs for employees ranging from the manufacturing floor and technicians through middle management and executive development.

We have designed leadership and talent development programs for employees ranging from the manufacturing floor and technicians through middle management and executives.

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.

3 unchanged sentences

Our programs target the market for competitiveness and sustainability while ensuring that we honor our core values.

We provide benefit programs with the goal of improving physical, mental and financial wellness of our employees throughout their lifetime.

We provide benefit programs with the goal of improving the physical, mental and financial wellness of our employees throughout their lifetime.

Some examples include base and variable pay, medical, paid time off, retirement saving plans and employee stock purchase plans.

When designing our base pay compensation ranges, we do market analysis to be sure ranges are current and our employees are advancing their earning potential.

When designing our base pay compensation ranges, we do market analyses to be sure ranges are current and our employees are advancing their earning potential.

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

As an example, during 2022, to recognize extraordinary efforts by employees during the challenges over the last several years, as well as to promote retention in a period of tight labor markets, a one-time employee recognition bonus was provided.

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:

tiered health care cost so that more junior employees pay less for their premiums;

tiered health care costs so that more junior employees pay less for their premiums;

paid parental leave for primary and secondary caregivers;

5 unchanged sentences

We publicly disclose metrics on our rate of recordable injuries, our rate of lost workdays due to injury and the rate of injuries involving contractors.

Our response to the COVID-19 global pandemic illustrated our commitment to safety.

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 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:

• Masks required inside open plants and facilities.

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

• 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.

Since 2020, we have taken many steps in the employee safety and wellness area including the following:

• Executed robust safety protocols for essential on-site personnel.

• Implemented a remote work environment where possible for employees who prefer working off-site.

• Launched a global mental health awareness campaign to destigmatize conditions such as depression and encourage employees to seek support offered by us.

• Launched an aggressive global effort to acquire vaccines and provide them on-site 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.

2 unchanged sentences

Diversity, equity and inclusion at all levels of the company are critical to our ability to innovate, to win in the marketplace and to create sustainable success.

Having diverse, equitable and inclusive workplaces allows us to attract and retain the best employees to deliver results for our shareholders.

Having diverse, accessible, equitable and inclusive workplaces allows us to attract and retain the best employees to deliver results for our shareholders.

This is exemplified by the composition of the Board of which 5 of 13 directors are female and 3 of 13 directors are ethnically diverse.

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

In addition, 47 percent of our leadership team is female including our Chief Executive Officer (CEO).

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

1 unchanged sentence

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.

We developed and piloted a diversity, equity and inclusion learning curriculum with a focus on awareness of privilege and unconscious bias.

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.

12 unchanged sentences

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.

Investor Website" then "Board & ESG" and select "Governance Documents" from the drop-down menu.

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

6 unchanged sentences

Name and Age Present Cummins Inc.

year appointed to position Principal position during the past

five years other than Cummins Inc.

year appointed to position Principal position during the past five years

other than Cummins Inc.

position currently held

Thomas Linebarger (59) Chairman of the Board of Directors and Chief Executive Officer (2012)

Livingston L.

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)

Thomas Linebarger (60) Chairman of the Board of Directors and Executive Chairman (2022) Chairman of the Board of Directors and Chief Executive Officer (2012-2022)

Jennifer Rumsey (49) President and Chief Executive Officer (2022) President and Chief Operating Officer (2021-2022)

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

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

Marvin Boakye (49) Vice President—Chief Human Resources Officer (2022) Chief People and Diversity Officer—Papa John's International (2019-2022)

Chief People Officer—Papa John's International (2019)

Vice President, Human Resources—Andeavor (2017-2019)

Bush (48) Vice President and President—Power Systems (2022) Vice President—Cummins Sales & Service North America (2017-2022)

Davis (53) Vice President and President—New Power (2020) Vice President—Cummins Filtration (2018-2020)

1 unchanged sentence

Embree (49) Vice President and President— Distribution Business (2019) Vice President and President— Components (2015-2019)

Bonnie Fetch (52) Vice President—Global Supply Chain and Manufacturing (2022) Vice President—DBU Supply Chain Services (2020-2022)

Executive Director, Supply Chain—DBU (2018-2020)

Fier (58) Vice President—Chief Technical Officer (2019) Vice President—Engineering, Engine Business (2015-2019)

Jackson (53) Vice President—Treasury and Tax (2020) Vice President—Treasurer (2015-2020)

Kennedy (52) Vice President—Product Compliance and Regulatory Affairs (2019) Executive Director—Pick-up Truck, Engine Business (2018-2019)

Executive Director—Rail & Defense (2017-2018)

General Manager—Rail & Defense (2014-2017)

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

Lamb-Hale (56) Vice President—Chief Legal Officer (2022) Vice President—General Counsel (2021-2022)

Managing Director and Washington, DC City Leader—Kroll (2020-2021)

Managing Director—Kroll (2016-2020)

Narang (47) 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 (58) Vice President and President—Engine Business (2016)

Peters (50) Vice President—Controller (2022) Vice President—Controller, Components (2017-2022)

Livingston L.

Satterthwaite (62) Senior Vice President (2022) Vice Chairman (2021-2022)

President and Chief Operating Officer (2019-2021)

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

Smith (55) Vice President—Chief Financial Officer (2019) Vice President—Financial Operations (2016-2019)

4 unchanged sentences

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.

Other officers are appointed by the Chairman and CEO, are ratified by the Board and hold office for such period as the Chairman and CEO or the Board may prescribe.

Our CEO is elected annually by the Board and holds office until the meeting of the Board at which her election is next considered.

Other officers are appointed by the CEO, are ratified by the Board and hold office for such period as the CEO or the Board may prescribe.

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