What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-10 compared with 2025-02-11 · 324 added, 371 removed, 1869 unchanged (27% of the section changed)

29 unchanged sentences

NOTE 20 DERIVATIVES

NOTE 21 ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE

NOTE 22 ACCELERA STRATEGIC REORGANIZATION ACTIONS

NOTE 21 ATMUS DIVESTITURE

NOTE 22 ACCELERA ACTIONS

NOTE 23 ACQUISITIONS

NOTE 24 RUSSIAN OPERATIONS

NOTE 25 OPERATING SEGMENTS

NOTE 24 REPORTABLE SEGMENTS

MANAGEMENT'S REPORT TO SHAREHOLDERS

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

Goodwill Impairment Test as of the End of the Fiscal Third Quarter – Drivetrain and Braking Systems Reporting Unit

Annual Goodwill Impairment Test – Drivetrain and Braking Systems Reporting Unit

As described in Notes 1 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $ 2,224 million as of December 31, 2025, of which 34 percent relates to the drivetrain and braking systems reporting unit.

Effective October 31, 2024, management changed the annual goodwill impairment testing date for all reporting units from the last day of the fiscal third quarter to October 31.

To ensure that no lapse greater than twelve months occurred, management performed an impairment test as of the end of the fiscal third quarter.

Management performs the annual goodwill impairment test as of October 31, or on an interim basis in certain circumstances where impairment may be indicated.

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

1 unchanged sentence

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

The principal considerations for our determination that performing procedures relating to the goodwill impairment test as of the end of the fiscal third quarter for the drivetrain and braking systems reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment test for the drivetrain and braking systems reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projections of revenue and gross margin;

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Foreign currency translation adjustments 244 ( 276 ) 92

Unrealized gain on derivatives 16 10 106

Total other comprehensive loss, net of tax ( 255 ) ( 319 ) ( 359 )

Unrealized (loss) gain on derivatives ( 21 ) 16 10

Total other comprehensive income (loss), net of tax 154 ( 255 ) ( 319 )

COMPREHENSIVE INCOME 3,111 3,813 521

Comprehensive income (loss) attributable to noncontrolling interests 106 102 ( 8 )

Comprehensive income attributable to noncontrolling interests 101 106 102

COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.

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Pension contributions and OPEB payments (Note 10) ( 55 ) ( 90 ) ( 134 )

Russian suspension costs, net of recoveries (Note 24) — — 111

Changes in current assets and liabilities, net of acquisitions and divestiture

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Proceeds from borrowings 2,335 2,720 861

Net (payments) borrowings of commercial paper ( 237 ) ( 779 ) 2,261

Net payments of commercial paper ( 906 ) ( 237 ) ( 779 )

Payments on borrowings and finance lease obligations ( 975 ) ( 1,568 ) ( 1,136 )

Dividend payments on common stock (Note 15) ( 1,055 ) ( 969 ) ( 921 )

Repurchases of common stock (Note 15) — — ( 374 )

Payments for purchase of redeemable noncontrolling interests (Note 23) ( 50 ) ( 175 ) —

Payments for purchase of redeemable noncontrolling interests ( 110 ) ( 50 ) ( 175 )

Other, net ( 61 ) ( 69 ) ( 27 )

Net cash (used in) provided by financing activities ( 173 ) ( 2,177 ) 1,669

Net cash used in financing activities ( 772 ) ( 173 ) ( 2,177 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 56 ( 40 ) ( 68 )

Net (decrease) increase in cash and cash equivalents ( 508 ) 78 ( 491 )

Net increase (decrease) in cash and cash equivalents 1,174 ( 508 ) 78

Cash and cash equivalents at beginning of year 1,671 2,179 2,101

16 unchanged sentences

Issuance of common stock 3 3 — 3

Repurchases of common stock (Note 15) ( 374 ) ( 374 ) — ( 374 )

Cash dividends on common stock (Note 15) ( 921 ) ( 921 ) — ( 921 )

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Share-based awards ( 4 ) 52 48 — 48

Acquisition of business (Note 23) — 111 111

Fair value adjustment of redeemable noncontrolling interests 33 ( 33 ) ( 33 ) — ( 33 )

Acquisition of redeemable noncontrolling interests ( 271 ) — — —

Sale of Atmus stock (Note 21) 285 285 ( 3 ) 282

Other shareholder transactions 70 4 74 — 74

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Issuance of common stock 7 7 — 7

Divestiture of Atmus (Note 21) ( 1,532 ) 61 ( 1,471 ) ( 19 ) ( 1,490 )

Cash dividends on common stock (Note 15) ( 969 ) ( 969 ) — ( 969 )

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Share-based awards ( 7 ) 140 133 — 133

Fair value adjustment of redeemable noncontrolling interests 33 ( 33 ) ( 33 ) — ( 33 )

Acquisition of redeemable noncontrolling interests (Note 23) ( 271 ) — — —

Sale of Atmus stock (Note 21) 285 285 ( 3 ) 282

Other shareholder transactions 72 3 75 ( 33 ) 42

1 unchanged sentence

Net income 2,843 2,843 114 2,957

Other comprehensive loss, net of tax (Note 16) ( 300 ) ( 300 ) ( 16 ) ( 316 )

Other comprehensive income (loss), net of tax (Note 16) 167 167 ( 13 ) 154

Issuance of common stock 2 2 — 2

Divestiture of Atmus (Note 21) ( 1,532 ) 61 ( 1,471 ) ( 19 ) ( 1,490 )

Cash dividends on common stock (Note 15) ( 1,055 ) ( 1,055 ) — ( 1,055 )

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In 2001, we changed our name to Cummins Inc.

We are a global power solutions leader comprised of five business segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise.

Our products range from advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems, including battery, fuel cell and electric power technologies and hydrogen production technologies.

We are a global power leader committed to powering a more prosperous world.

Since 1919, we have delivered innovative solutions that move people, goods and economies forward.

Our five reportable segments - Engine, Components, Distribution, Power Systems and Accelera - offer a broad portfolio, including advanced diesel, electric and hybrid powertrains;

integrated power generation systems;

critical components such as aftertreatment, turbochargers, fuel systems, controls, transmissions, axles and brakes;

and zero emissions technologies like battery and electric powertrain systems.

With a global footprint, deep technical expertise and an extensive service network, we deliver dependable, cutting-edge solutions tailored to our customers' needs, supporting them through the energy transition with our Destination Zero strategy.

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

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(Atmus) common stock through a tax-free split-off.

See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

Settlement Agreements

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See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” for additional information.

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 drivetrain and braking systems business and electric powertrain.

The results for the drivetrain and braking systems are included in our Components segment while the electric powertrain portion is included in our Accelera segment.

See NOTE 23, "ACQUISITIONS," for additional information.

Principles of Consolidation

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Revenue From Contracts with Customers

Revenue Recognition Sales of Products

Revenue Recognition

We sell to customers either through long-term arrangements or standalone purchase orders.

Our long-term arrangements generally do not include committed volumes until underlying purchase orders are issued.

Our performance obligations vary by contract, but may include advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems including battery, fuel cell, electric power technologies and parts, hydrogen production technologies, construction related projects, maintenance services, commissioning and installation services and extended warranty coverage.

Our performance obligations vary by contract, but may include advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related components including aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components and subsystems including battery, electric power technologies and parts, construction related projects, maintenance services, commissioning and installation services and extended warranty coverage.

Typically, we recognize revenue on the products we sell at a point in time, generally in accordance with shipping terms, which reflects the transfer of control to the customer.

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We grant credit limits and terms to customers based upon traditional practices and competitive conditions.

Typical terms vary by market, but payments are generally due in 90 days or less from invoicing for most of our product and service sales, while payments on construction, electrolyzer and certain power generation contracts may be due on an installment basis.

Typical terms vary by market, but payments are generally due in 90 days or less from invoicing for most of our product and service sales, while payments on construction and certain power generation contracts may be due on an installment basis.

For contracts where the time between cash collection and performance is less than one year, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract.

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We record deferred revenue when we are entitled to bill a customer in advance of when we are permitted to recognize revenue.

Deferred revenue may arise in construction and other power generation systems and electrolyzer contracts, where billings may occur in advance of performance or in accordance with specific milestones.

Deferred revenue may arise in construction and other power generation systems, where billings may occur in advance of performance or in accordance with specific milestones.

Deferred revenue may also occur in long-term maintenance contracts, where billings are often based on usage of the underlying equipment, which generally follows a predictable pattern that often will result in the accumulation of collections in advance of our performance of the related maintenance services.

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dollar is the functional currency, including those operating in highly inflationary economies when applicable, we remeasure non-monetary balances and the related income statement amounts using historical exchange rates.

We include the resulting gains and losses in income, including the effect of derivatives in our Consolidated Statements of Net Income , which combined with transaction gains and losses amounted to net losses of $ 41 million, $ 30 million and $ 8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

We include the resulting gains and losses in income, including the effect of derivatives in our Consolidated Statements of Net Income , which combined with transaction gains and losses amounted to a net gain of $ 5 million for the year ended December 31, 2025, and net losses of $ 41 million and $ 30 million for the years ended December 31, 2024 and 2023, respectively.

Fair Value Measurements

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We make use of derivative instruments in foreign exchange, commodity price and interest rate hedging programs.

Derivatives currently in use are foreign currency forward contracts, commodity swaps and interest rate swaps.

Derivatives currently in use are foreign currency forward contracts, commodity swaps and interest rate swaps and locks.

These contracts are used strictly for hedging and not for speculative purposes.

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These commodity swaps are designated and qualify as cash flow hedges.

At December 31, 2024, realized and unrealized gains and losses related to these hedges were not material to our financial statements.

At December 31, 2025, 2024 and 2023 realized and unrealized gains and losses related to these hedges were not material to our financial statements.

We also enter into physical forward contracts, which qualify for the normal purchases scope exception and are treated as purchase commitments.

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Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in a future impairment charge.

We impaired $ 47 million and $ 61 million of property, plant and equipment in our Accelera segment in 2025 and 2024, respectively.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

We determine if an arrangement contains a lease in whole or in part at the inception of the contract.

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We have elected this option on certain reporting units.

The quantitative impairment test is only required if an entity determines through this qualitative analysis that it is more likely than not that the fair value of the reporting unit is less than its

carrying value.

The quantitative impairment test is only required if an entity

determines through this qualitative analysis that it is more likely than not that the fair value of the reporting unit is less than its carrying value or if we otherwise elect to perform the analysis.

In addition, the carrying value of goodwill must be tested for impairment on an interim basis in certain circumstances where impairment may be indicated.

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An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

When we are required or opt to perform the quantitative impairment test, the fair value of each reporting unit is estimated with either the income approach or the market approach.

When we are required or opt to perform the quantitative impairment test, the fair value of each reporting unit is estimated using the income approach.

Our income approach method uses a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return.

Our reporting units are generally defined as one level below an operating segment.

However, there are two situations where we have aggregated two or more reporting units which share similar economic characteristics and thus are aggregated into a single reporting unit for testing purposes.

These two situations are described further below:

• Within our Accelera segment, our fuel cell and electrolyzer businesses were aggregated into a single reporting unit and

• Our Distribution segment is considered a single reporting unit as it is managed geographically and all regions share similar economic characteristics and provide similar products and services.

Our reporting units are generally defined as one level below a reportable segment.

However, our Distribution segment is considered a single reporting unit as it is managed geographically and all regions share similar economic characteristics and provide similar products and services.

The discounted cash flow model requires us to make projections of revenue, gross margin, operating expenses, working capital investment and fixed asset additions for the reporting units over a multi-year period.

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An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year.

Effective October 31, 2024, we changed our annual goodwill impairment testing date for all reporting units from the last day of our fiscal third quarter to October 31 to better align with the timing of our annual long-term planning process.

Accordingly, management determined that the change in accounting principle is preferable.

This change was applied prospectively from October 31, 2024.

We determined that it is impracticable to objectively ascertain projected cash flows and related valuation estimates that would have been used as of each October 31 of prior reporting periods without the use of hindsight.

This change was not material to our Consolidated Financial Statements as it did not delay, accelerate or avoid any potential goodwill impairment charges.

To ensure that no lapse greater than twelve months occurred, we performed an impairment test, for all reporting units, as of the end of our 2024 fiscal third quarter and noted no impairment.

We completed our annual impairment testing as of October 31, 2024, and noted no impairment.

We perform the annual goodwill impairment assessment as of October 31 each year.

During the third quarter of 2025, in our Accelera segment, we observed the rapidly deteriorating conditions in our electrolyzer markets and overall hydrogen markets, along with significant uncertainty in the alternative power markets resulting from reductions in government incentives.

As a result, we determined that a triggering event occurred for our electrolyzer reporting unit, warranting an interim impairment test of goodwill resulting in a charge of $ 210 million.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

We completed our annual goodwill impairment assessment on October 31, 2025, and noted no additional impairments.

At December 31, 2025, our recorded goodwill was $ 2.2 billion, of which approximately 34 percent resided in the drivetrain and braking systems reporting unit.

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Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets.

See NOTE 9, "GOODWILL AND OTHER INTANGIBLE ASSETS," for additional information.

We impaired $ 27 million and $ 84 million of other intangible assets in our Accelera segment in 2025 and 2024, respectively.

See NOTE 9, “GOODWILL AND OTHER INTANGIBLE ASSETS,” and NOTE 22, “ACCELERA ACTIONS,” for additional information.

We capitalize software that is developed or obtained for internal use.

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We estimate and record a liability for base warranty programs at the time our products are sold.

Our estimates are based on historical experience and reflect management's best estimates of expected costs at the time products are sold and subsequent adjustment to those

expected costs when actual costs differ.

Our estimates are based on historical experience and reflect management's best estimates of expected costs at the time products are sold and subsequent adjustment to those expected costs when actual costs differ.

Factors considered in developing these estimates included component failure rates, repair costs and the point of failure within the product life cycle.

As a result of the uncertainty surrounding the nature and frequency of product campaigns, the liability for such campaigns is recorded when we commit to a recall action or when a recall becomes probable and estimable, which generally occurs when it is announced.

As a result of the uncertainty surrounding the nature and frequency of

product campaigns, the liability for such campaigns is recorded when we commit to a recall action or when a recall becomes probable and estimable, which generally occurs when it is announced.

The liability for these campaigns is reflected in the provision for product campaigns.

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As of December 31, 2025, we had $ 127 million of credits of which $ 105 million was recorded in other current assets and $ 22 million was recorded in other intangible assets, net in our Consolidated Balance Sheets.

Research and Development

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 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 $ 1.4 billion, $ 1.4 billion and $ 1.2 billion for the years ended December 31, 2024, 2023 and 2022, respectively.

Our engines are subject to extensive statutory and regulatory requirements governing emissions, including greenhouse gas (GHG) standards set by the EPA and fuel consumption standards set by the National Highway Traffic Safety Administration (NHTSA).

To comply with these regulations, we utilize banking and trading of regulatory compliance credits.

In June 2025, NHTSA published an interpretive rule questioning the current regulatory framework of allowing credits as a compliance vehicle.

In July 2025, the EPA published a proposed rule that would repeal GHG emissions standards and thus remove the requirement for vehicle and engine manufacturers to measure, control and report these emissions from vehicles.

If both regulatory agencies finalize their indicated proposals, we will no longer utilize emission compliance credits on future engines sales and the credits would have minimal, if any, value to us.

While the rules will likely be subject to legal challenges, in the period the rule is finalized, we could be required to incur a non-cash expense up to the value of our existing credits.

Research, Development and Engineering

Our research, development and engineering (RD&E) programs are focused on product improvements, product extensions, innovations and cost reductions for our customers.

RD&E expenditures include salaries, contractor fees, building costs, utilities, testing, technical IT 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 RD&E costs of a particular project.

When not associated with a sales contract, we generally account for these reimbursements as an offset to the related RD&E expenditure.

RD&E expenses, net of contract reimbursements, were $ 1.4 billion, $ 1.4 billion and $ 1.4 billion for the years ended December 31, 2025, 2024 and 2023, respectively.

Contract reimbursements were $ 54 million, $ 72 million and $ 81 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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In May 2024, we entered into an accounts receivable sales agreement with Wells Fargo Bank, N.A., to sell certain accounts receivable up to the Board of Directors (Board) approved limit of $ 500 million.

We will classify proceeds received from the sales of accounts receivable as an operating cash flow in our Consolidated Statements of Cash Flows , and will we record the discount in other income, net in our Consolidated Statements of Net Income when the program is active .

There was no activity under the program during the year ended December 31, 2024.

We will classify proceeds received from the sales of accounts receivable as an operating cash flow in our Consolidated Statements of Cash Flows , and we will record the discount in other income, net in our Consolidated Statements of Net Income when the program is active .

There was no activity under the program during the years ended December 31, 2025 and 2024.

Government Assistance

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Accounting Pronouncements Recently Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," to enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280.

The standard did not change the definition of a segment, the method for determining segments or the criteria for aggregating operating segments into reportable segments.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Retrospective adoption is required for all prior periods presented in the financial statements.

We adopted the new standard in the fourth quarter of 2024.

The new required disclosures are included in NOTE 25, "OPERATING SEGMENTS."

Accounting Pronouncements Issued But Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740):

Improvements in Income Tax Disclosures,” to enhance the transparency and decision usefulness of income tax disclosures.

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Finally, the amendment requires entities to disclose income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state and foreign.

The new rules are effective for annual periods beginning after December 15, 2024.

The adoption of this standard is not expected to have a material impact on our Consolidated Financial Statements.

We adopted this standard prospectively in the fourth quarter of 2025.

The new required disclosures are included in NOTE 4, “INCOME TAXES.”

Accounting Pronouncements Issued But Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)", which requires public business entities to disclose in the notes to the financial statements more detailed information about the types of expenses included in certain expense captions in the consolidated financial statements, including purchases of inventory, employee compensation, and depreciation and amortization.

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We are currently evaluating the impact of ASU 2024-03 on our Consolidated Financial Statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)”, to modernize the accounting guidance for costs to develop software for internal use.

The new guidance amends the existing standard to remove references to various stages of a software development project to better align with current software development methods such as agile programming.

The types of costs required to be capitalized has not significantly changed.

In addition, the new standard requires the capitalization of costs when (1) management has authorized and committed to funding the project and (2) it is probable that the project will be completed and the software will be used to perform its intended function.

The new standard is effective for us beginning January 1, 2028, with early adoption permitted.

The adoption of this standard is not expected to have a material impact on our Consolidated Financial Statements.

In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities (Topic 832)”, which establishes accounting requirements for grants received by a business entity.

A government grant is defined as a transfer of a monetary asset or a tangible non-monetary asset, other than in an exchange transaction.

The scope does not include income taxes or guarantees.

The amendments are effective for us beginning January 1, 2029.

Early adoption is permitted.

The ASU may be adopted prospectively or retrospectively.

As the standard is largely consistent with our current policy on accounting for government grants (disclosed earlier in this note), we do not expect implementation of the new standard to have a material impact on our Consolidated Financial Statements .

REVENUE FROM CONTRACTS WITH CUSTOMERS

Long-term Maintenance Agreements

Long-term Contracts

We have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year.

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Deferred revenue 2,660 2,412

We recognized revenue of $ 850 million and $ 733 million in 2024 and 2023, respectively, that was included in the deferred revenue balance at the beginning of each year.

We recognized revenue of $ 1.1 billion and $ 850 million in 2025 and 2024, respectively, that was included in the deferred revenue balance at the beginning of each year.

Disaggregation of Revenue

Consolidated Revenue

The table below presents our consolidated sales by geographic area.

Net sales attributed to geographic areas were based on the location of the customer.

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

Years ended December 31,

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(1) Included sales through the March 18, 2024, divestiture.

See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

Beginning in the second quarter of 2024, we realigned certain businesses within our Components segment to be consistent with how our segment leader now monitors performance.

We reorganized the businesses to combine the engine components and software and electronics businesses into the newly formed components and software business.

In addition, we rebranded our axles and brakes business as drivetrain and braking systems.

We began reporting results for these changes within our Components segment effective April 1, 2024, and reflected these changes in the historical periods presented.

The change had no impact on our consolidated results.

See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

Distribution segment external sales by region were as follows:

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North America $ 8,619 $ 7,617 $ 7,054

Asia Pacific 1,243 1,091 1,011

Europe 1,186 1,179 848

Asia Pacific 1,150 1,243 1,091

China 509 469 424

India 363 310 264

Africa and Middle East 268 294 250

Latin America 293 266 224

Africa and Middle East 266 268 294

Total sales $ 12,386 $ 11,352 $ 10,199

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In millions 2025 2024 2023

Parts $ 3,966 $ 4,052 $ 3,809

Power generation $ 4,928 $ 3,961 $ 2,496

Parts 4,073 3,966 4,052

Service 1,798 1,747 1,664

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Dollars in millions percentage 2025 2024

Komatsu alliances 20 - 50 %

Amplify Cell Technologies, LLC 30 % $ 359 $ 187

Komatsu alliances 20 - 50 %

Beijing Foton Cummins Engine Co., Ltd.

Sistemas Automotrices de Mexico S.A.

Dongfeng Cummins Engine Company, Ltd.

Automotive Axles Limited 36 % 123 125

Chongqing Cummins Engine Company, Ltd.

Sistemas Automotrices de Mexico S.A.

Automotive Axles Limited 36 % 120 123

Tata Cummins, Ltd.

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Manufacturing entities

Dongfeng Cummins Engine Company, Ltd.

$ 66 $ 65 $ 45

Chongqing Cummins Engine Company, Ltd.

$ 89 $ 60 $ 36

Dongfeng Cummins Engine Company, Ltd.

Beijing Foton Cummins Engine Co., Ltd.

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(1) Included a $ 17 million impairment of our joint ventures in the fourth quarter of 2024 related to Accelera strategic reorganization actions.

See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information

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

See NOTE 24, "RUSSIAN OPERATIONS," for additional information.

See NOTE 22, “ACCELERA ACTIONS,” for additional information

Manufacturing Entities

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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 axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics that are used with our engines as well as some competitors' products.

Our Components segment joint ventures and wholly-owned entities provide drivetrain and braking systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics 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) 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.

• Chongqing Cummins Engine Company, Ltd.

- Chongqing Cummins Engine Company, Ltd.

is a joint venture in China with Chongqing Machinery and Electric Co.

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

• Dongfeng Cummins Engine Company, Ltd.

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

• Chongqing Cummins Engine Company, Ltd.

- Chongqing Cummins Engine Company, Ltd.

is a joint venture in China with Chongqing Machinery and Electric Co.

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.

• Beijing Foton Cummins Engine Co., Ltd.

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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.

The light-duty business produces our families of ISF 2.5 liter to 4.5 liter high performance light-duty diesel engines in Beijing, which are used in light-duty and medium-duty commercial trucks, pick-up trucks, buses, multipurpose and sport utility vehicles with the main market in China.

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

The heavy-duty business produces 7.0 liter to 14.5 liter high performance heavy-duty diesel and natural gas engines in Beijing.

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

The heavy-duty business produces 7.0 liter to 14.5 liter high performance medium-duty and heavy-duty diesel and natural gas engines, which are used in commercial trucks, certain types of construction equipment and industrial applications.

• Tata Cummins, Ltd.

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This joint venture manufactures Cummins' 3.8 to 8.9 liter diesel and natural gas engines in India with a power range from 75 to 400 horsepower for use in trucks and buses manufactured by Tata Motors, as well as for various on-highway, industrial and power generation applications for Cummins.

In September 2023, our Accelera business signed an agreement to form a joint venture, Amplify Cell Technologies LLC, with Daimler Trucks and Buses US Holding LLC (Daimler Truck), PACCAR Inc.

(PACCAR) and EVE Energy to accelerate and localize battery cell production and the battery supply chain in the U.S., including building a 21-gigawatt hour battery production facility in Marshall County, Mississippi.

The joint venture will manufacture battery cells for electric commercial vehicles and industrial applications.

The joint venture received all government approvals and began operations in May 2024, but is not expected to begin production until 2027.

The joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture.

Accelera, Daimler Truck and PACCAR each own 30 percent of the joint venture and have two board positions, while EVE Energy owns 10 percent and has one board position.

Our Amplify Cell Technologies LLC (Amplify) joint venture meets the definition of a variable interest entity since the equity-at-risk is not currently sufficient to support the future operations of the joint venture.

Accelera, Daimler Truck and US Holding LLC and PACCAR, Inc.

each own 30 percent of the joint venture and have two board positions, while EVE Energy owns 10 percent and has one board position.

All significant decisions require majority or super-majority approval of the board.

As a result, we are not the primary beneficiary of the joint venture, and the joint venture is not consolidated.

As a result, we are not the primary beneficiary of the joint venture, and it is not consolidated.

We account for the joint venture using the equity method.

As of December 31, 2024, we had contributed $ 211 million, and our maximum remaining required contribution to the joint venture was $ 619 million, which could be reduced by future government incentives received by the joint venture.

In addition, we are required to purchase 33 percent of the joint venture's output in the future or be subject to certain penalties.

Our Amplify joint venture will manufacture battery cells for electric commercial vehicles and industrial applications.

The joint venture was formed in May 2024, but is not expected to begin production until 2028.

As of December 31, 2025, we contributed $ 412 million and our maximum remaining required contribution to the joint venture was $ 418 million, which could be reduced by future government incentives received by the joint venture.

Distribution Entities

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Income before income taxes $ 3,963 $ 4,903 $ 1,626

Effective December 31, 2025, we adopted ASU 2023-09 on a prospective basis.

See NOTE 1, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” for additional details on the adoption of this standard.

The tables below provide the prospective disclosures required by ASU 2023-09.

Income tax expense (benefit) consisted of the following:

Year ended December 31,

In millions 2025

federal $ 130

state and local 18

Total current income tax expense 920

state and local 8

Foreign ( 8 )

Total deferred income tax expense 86

Income tax expense $ 1,006

On July 4, 2025, the One Big Beautiful Bill Act (The Act) was signed into law, enacting significant changes to U.S.

federal income tax rules affecting corporations, such as the ability to immediately deduct domestic research and development costs, restoration of elective 100 percent bonus depreciation for qualified property and changes to the international tax provisions.

Implementation of The Act resulted in an increase to tax expense of $ 39 million in 2025, primarily due to a reduction in the foreign income deduction and changes to the research and development tax credit.

During 2025, we responded to rapidly deteriorating conditions in our electrolyzer markets and overall hydrogen market in our Accelera segment by recording $ 458 million in charges related to inventory write-downs, asset impairments, severance and contract termination costs.

These actions resulted in an increase in the effective tax rate of 2.6 percent in 2025.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

Reconciliations of the statutory U.S.

federal income tax expense and tax rate to the net expense and effective tax rate were as follows:

In millions Year ended December 31, 2025

federal statutory tax expense/rate $ 832 21.0 %

Domestic federal

Effect of cross-border tax laws

Foreign derived intangible income ( 42 ) ( 1.1 )

Research tax credits ( 69 ) ( 1.7 )

Other ( 36 ) ( 0.9 )

Nontaxable or nondeductible items 1 —

Effect of changes in tax laws or rates enacted in the current period 14 0.3

Domestic state and local taxes, net of federal income tax effect (1)

Foreign tax effects

Valuation allowance 63 1.6

Withholding tax 55 1.4

Equity income or loss ( 49 ) ( 1.2 )

Other ( 7 ) ( 0.2 )

Nontaxable or nondeductible items 44 1.1

Other ( 8 ) ( 0.2 )

United Kingdom

Tax incentives ( 44 ) ( 1.1 )

Other foreign jurisdictions 105 2.6

Worldwide changes in unrecognized tax benefits ( 34 ) ( 0.9 )

Total tax expense/rate $ 1,006 25.4 %

(1) State and local taxes in California, Illinois, Pennsylvania, Georgia, Tennessee, Michigan, North Carolina, Wisconsin and Iowa comprise the majority of this category.

The year ended December 31, 2025 contained net favorable discrete tax items of $ 75 million, primarily due to $ 51 million of favorable adjustments for uncertain tax positions, $ 15 million of favorable adjustments for share-based compensation tax benefits, $ 7 million of favorable return to provision adjustments and $ 2 million of other favorable adjustments.

Income taxes paid, net of refunds received, consisted of the following:

Year ended December 31,

In millions 2025

federal $ 328

state and local 32

Total income taxes paid $ 1,074

The tables below provide the historical disclosures for the years ended December 31, 2024 and 2023.

Income tax expense (benefit) under the previous standard was as follows:

Years ended December 31,

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Years ended December 31,

2024 2023 2022

Statutory U.S.

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(2) See NOTE 14, "COMMITMENTS AND CONTINGENCIES," for additional information.

(3) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

(3) See NOTE 21, "ATMUS DIVESTITURE," for additional information.

The year ended December 31, 2024, contained net favorable discrete tax items primarily due to the $ 1.3 billion non-taxable gain on the Atmus split-off.

Other discrete tax items were net favorable by $ 59 million, primarily due to $ 52 million of favorable return to provision adjustments, $ 22 million of favorable share-based compensation tax benefits, $ 21 million of favorable adjustments related to audit settlements and $ 20 million of favorable adjustments from tax return amendments, partially offset by $ 50 million of unfavorable adjustments related to Accelera strategic reorganization actions and net $ 6 million of other unfavorable adjustments.

See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," and NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information.

The year ended December 31, 2023, contained unfavorable net discrete items of $ 397 million, primarily due to $ 398 million in the fourth quarter related to the $ 2.0 billion charge from the Settlement Agreements, $ 22 million of unfavorable adjustments for uncertain tax positions and $ 3 million of net unfavorable other discrete tax items, partially offset by $ 21 million of favorable return to provision adjustments and $ 5 million of favorable share-based compensation tax benefits .

See NOTE 21, “ATMUS DIVESTITURE,” and NOTE 22, “ACCELERA ACTIONS,” for additional information.

The year ended December 31, 2023, contained unfavorable net discrete tax items of $ 397 million, primarily due to $ 398 million in the fourth quarter related to the $ 2.0 billion charge from the Settlement Agreements, $ 22 million of unfavorable adjustments for uncertain tax positions and $ 3 million of net unfavorable other discrete tax items, partially offset by $ 21 million of favorable return to provision adjustments and $ 5 million of favorable share-based compensation tax benefits .

See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” for additional information.

The year ended December 31, 2022, contained discrete tax items that netted to zero , primarily due to $ 31 million of favorable changes in accrued withholding taxes, $ 29 million of favorable changes in tax reserves, $ 15 million of favorable valuation allowance adjustments and $ 9 million of favorable other net discrete items, offset by $ 69 million of unfavorable tax costs associated with internal restructuring ahead of the planned separation of Atmus and $ 15 million of unfavorable return to provision adjustments related to the 2021 filed tax returns.

At December 31, 2024, $ 5.6 billion of non-U.S.

At December 31, 2025, certain non-U.S.

earnings are considered indefinitely reinvested in operations outside the U.S.

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Accrued expenses 230 207

Other 209 139

Gross deferred tax assets 3,068 3,020

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The valuation allowance at December 31, 2024 was $ 872 million and increased by a net $ 83 million.

The valuation allowance at December 31, 2022 was $ 704 million and increased by a net $ 344 million, primarily due to the Meritor acquisition.

The valuation allowance at December 31, 2023 was $ 789 million and increased by a net $ 85 million.

The valuation allowance is primarily attributable to the uncertainty regarding the realization of a portion of the U.S.

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We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

Although we believe that adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on our earnings.

Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings.

As a result of our global operations, we file income tax returns in various jurisdictions including U.S.

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federal, major state and foreign jurisdictions are no longer subject to income tax assessments for years before 2021.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

Although we believe that adequate provision has been made , there is the possibility that the ultimate resolution of any issues could have an adverse effect on our earnings.

Conversely, if any issues are resolved favorably in the future, the related provision would be reduced, thus having a positive impact on earnings.

MARKETABLE SECURITIES

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We do not currently have any Level 3 securities, and there were no transfers between Level 2 or 3 during 2025 or 2024.

All debt securities are classified as available-for-sale.

All debt securities are Level 2 and classified as available-for-sale.

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

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Inventories $ 5,822 $ 5,742

In the fourth quarter of 2024, we wrote-off $ 107 million of inventory in our Accelera segment, mostly in work-in-process and raw materials.

See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information.

We wrote down $ 119 million and $ 107 million of inventory in our Accelera segment in 2025 and 2024, respectively, mostly in work-in-process and raw materials.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

PROPERTY, PLANT AND EQUIPMENT

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Property, plant and equipment, net $ 6,958 $ 6,356

In the fourth quarter of 2024, we impaired $ 61 million of long-lived assets in our Accelera segment.

See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information.

We impaired $ 47 million and $ 61 million of property, plant and equipment in our Accelera segment in 2025 and 2024, respectively.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

Our lease portfolio consists primarily of real estate and equipment leases.

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Our equipment lease portfolio consists primarily of vehicles (including service vehicles), fork trucks and IT equipment.

These leases typically range in term from two to three years and may contain renewal options.

These leases typically range in term from two to four years and may contain renewal options.

Our leases generally do not contain variable lease payments other than (1) certain foreign real estate leases which have payments indexed to inflation and (2) certain real estate executory costs (such as taxes, insurance and maintenance), which are paid based on actual expenses incurred by the lessor during the year.

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Foreign currency translation and other ( 48 ) ( 2 ) — — — ( 50 )

Divestiture (1)

( 114 ) — — — — ( 114 )

Balance at December 31, 2024 1,724 494 83 44 25 2,370

1 unchanged sentence

Foreign currency translation and other 50 4 — 1 — 55

Divestiture (1)

Impairment (2)

— ( 210 ) — — — ( 210 )

Balance at December 31, 2025 $ 1,774 $ 288 $ 83 $ 45 $ 34 $ 2,224

(1) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

(1) See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

(2) See NOTE 22, “ACCELERA ACTIONS,” for additional information.

Intangible assets that have finite useful lives are amortized over their estimated useful lives.

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Projected amortization expense $ 312 $ 303 $ 280 $ 246 $ 204

In the fourth quarter of 2024, we impaired $ 84 million of other intangible assets in our Accelera segment.

See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information.

We impaired $ 27 million and $ 84 million of other intangible assets in our Accelera segment in 2025 and 2024, respectively.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

PENSIONS AND OTHER POSTRETIREMENT BENEFITS

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Interest cost 173 167 77 71

Actuarial (gain) loss ( 163 ) 172 ( 133 ) 47

Actuarial loss (gain) 105 ( 163 ) 4 ( 133 )

Benefits paid from fund ( 247 ) ( 328 ) ( 98 ) ( 108 )

Benefits paid directly by employer ( 31 ) ( 32 ) — —

Plan amendment — 1 — —

Foreign currency translation adjustments — — 100 ( 23 )

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In 2025 and 2024, we made $ 23 million and $ 21 million of contributions to these plans, respectively.

The following table summarizes the total accumulated benefit obligation (ABO), the ABO for defined benefit pension plans with ABO in excess of plan assets and the PBO for defined benefit pension plans with PBO in excess of plan assets:

The following table summarizes the total accumulated benefit obligation (ABO), the ABO and the fair value of plan assets for defined benefit pension plans with ABO in excess of plan assets and the PBO and fair value of plan assets for defined benefit pension plans with PBO in excess of plan assets:

Qualified and Non-Qualified Pension Plans

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ABO 444 1,007 — —

Fair value of plan assets 6 510 — —

Plans with PBO in excess of plan assets

PBO 480 1,042 — —

Fair value of plan assets 6 510 — —

Components of Net Periodic Pension Cost (Income)

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Asset Class Plan Target

equities 10 %

Global equities 13 %

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Asset Class Plan Target

Property/secure income assets 6 %

Credit/bank loans 8 %

Diversified strategies 1 %

Equities 10 %

Private equity 7 %

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Corporate Debt ($ 912 million and $ 912 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

Equities ($ 809 million and $ 260 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

• Asset/Mortgage Backed Securities ($ 338 million and $ 327 million at December 31, 2025 and 2024, respectively) - This asset type represents investments in fixed- and floating-rate loans.

These funds are valued using NAVs and allow quarterly or more frequent redemptions.

Equities ($ 260 million and $ 222 million at December 31, 2024 and 2023, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

• Government Debt ($ 282 million and $ 235 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

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Actual return on plan assets

Unrealized gains (losses) on assets still held at the reporting date 6 ( 13 ) ( 7 )

Unrealized losses on assets still held at the reporting date ( 3 ) ( 6 ) ( 9 )

Purchases, sales and settlements, net ( 93 ) ( 2 ) ( 95 )

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Actual return on plan assets

Unrealized losses on assets still held at the reporting date ( 3 ) ( 6 ) ( 9 )

Unrealized gains on assets still held at the reporting date 24 4 28

Purchases, sales and settlements, net ( 63 ) ( 3 ) ( 66 )

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Net cash equivalents (1)

Derivative instruments (2)

— ( 2 ) — ( 2 )

Repurchase agreements — ( 666 ) — ( 666 )

Insurance annuity — — 698 698

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Net plan assets subject to leveling $ 26 $ 480 $ 797 $ 1,303

Pending trade/purchases/sales 1

Investments measured at net asset value 212

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(Level 3) Total

$ 12 $ — $ — $ 12

Government debt $ — $ 204 $ — $ 204

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(1) Cash equivalents include commercial paper, short-term government/agency, mortgage and credit instruments.

(2) Derivative instruments include central counterparty swaps.

(3) The instruments in private markets and real assets, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by audited financial statements of the funds.

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The fair value of each such investment category was as follows:

• Government Debt ($ 434 million and $ 572 million at December 31, 2024 and 2023, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

Equities ($ 141 million and $ 0 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

Corporate Debt ($ 70 million and $ 96 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

• Re-insurance ($ 1 million and $ 4 million at December 31, 2025 and 2024, respectively) - This commingled fund has a NAV that is determined on a monthly basis and the investment may be sold at that value.

• Government Debt ($ 0 million and $ 434 million at December 31, 2025 and 2024, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.

• Asset/Mortgage Backed Securities ($ 0 million and $ 92 million at December 31, 2025 and 2024, respectively) - This asset type represents investments in fixed- and floating-rate loans.

These funds are valued using NAVs and allow quarterly or more frequent redemptions.

• Re-insurance ($ 4 million and $ 6 million at December 31, 2024 and 2023, respectively) - This commingled fund has a NAV that is determined on a monthly basis and the investment may be sold at that value.

The reconciliation of Level 3 assets was as follows:

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Actual return on plan assets

Unrealized gains (losses) on assets still held at the reporting date 8 — ( 35 ) ( 27 )

Unrealized (losses) gains on assets still held at the reporting date ( 53 ) — 1 ( 52 )

Purchases, sales and settlements, net — ( 1 ) ( 1 ) ( 2 )

1 unchanged sentence

Actual return on plan assets

Unrealized (losses) gains on assets still held at the reporting date ( 53 ) — 1 ( 52 )

Unrealized losses on assets still held at the reporting date ( 5 ) ( 1 ) — ( 6 )

Purchases, sales and settlements, net 320 — ( 2 ) 318

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Current portion of operating lease liabilities 138 130

Settlement Agreements (1)

Other 968 940

Other accrued expenses $ 1,926 $ 1,898

(1) See NOTE 14, "COMMITMENTS AND CONTINGENCIES," for additional information.

Other liabilities included the following:

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Other postretirement benefits 94 104

Mark-to-market valuation on interest rate derivatives 89 117

Long-term income taxes 5 111

Long-term derivative liabilities 72 89

Other 610 619

Other liabilities $ 3,128 $ 3,149

(1) See NOTE 13, "PRODUCT WARRANTY LIABILITY," for additional information.

Loans Payable

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We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes.

We had $ 1.3 billion and $ 1.5 billion in outstanding borrowings under our commercial paper programs at December 31, 2024 and 2023, respectively.

We had $ 353 million and $ 1.3 billion in outstanding borrowings under our commercial paper programs at December 31, 2025 and 2024, respectively.

The weighted-average interest rate for commercial paper at December 31 was as follows:

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On June 2, 2025, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $ 2.0 billion of unsecured funds at any time prior to June 2, 2030.

The credit agreement amended and restated the prior $ 2.0 billion 5 -year credit agreement that would have matured on August 18, 2026.

We also entered into an amended and restated 364 -day credit agreement that allows us to borrow up to $ 2.0 billion of unsecured funds at any time prior to June 2, 2025.

This credit agreement amended and restated the prior $ 2.0 billion 364 -day credit facility that matured on June 3, 2024.

Our committed credit facilities provide access up to $ 4.0 billion from our $ 2.0 billion 364 -day credit facility that expires on June 2, 2025 and our $ 2.0 billion 5 -year facility that expires on June 3, 2029.

The credit agreement amended and restated the prior $ 2.0 billion 5 -year credit agreement that would have matured on June 3, 2029.

We also entered into a new 3 -year credit agreement that allows us to borrow up to $ 2.0 billion of unsecured funds at any time prior to June 2, 2028.

The credit agreement replaced the prior $ 2.0 billion 364 -day credit facility that matured on June 2, 2025.

Our committed credit facilities provide access up to $ 4.0 billion from our $ 2.0 billion 3 -year credit facility and our $ 2.0 billion 5-year facility.

We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration.

Amounts payable under our revolving credit facility rank pro rata with all of our unsecured, unsubordinated indebtedness.

Up to $ 300 million under this credit facility is available for swingline loans.

Based on our current long-term debt ratings, the applicable margin on Secured Overnight Financing Rate ( SOFR ) rate loans for the 364 -day facility was 0.85 percent per annum and 0.975 percent for the 5 -year facility.

Up to $ 300 million under each committed credit facility is available for swingline loans.

Based on our current long-term debt ratings, the applicable margin on Secured Overnight Financing Rate ( SOFR ) rate loans for the 3 -year facility was 0.75 percent per annum and 0.75 percent for the 5 -year facility.

Advances under the facility may be prepaid without premium or penalty, subject to customary breakage costs.

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The total combined borrowing capacity under the revolving credit facilities and commercial programs should not exceed $ 4.0 billion.

At December 31, 2024, our $ 1.3 billion of commercial paper outstanding effectively reduced the $ 4.0 billion available capacity under our revolving credit facilities to $ 2.7 billion.

At December 31, 2025, our $ 353 million of commercial paper outstanding effectively reduced the $ 4.0 billion available capacity under our revolving credit facilities to $ 3.6 billion.

At December 31, 2025, we also had an additional $ 798 million available for borrowings under our uncommitted international and other domestic credit facilities.

3 unchanged sentences

Long-term debt

Hydrogenics promissory notes, due 2024 and 2025 — % 110 160

Term loan, due 2025 (1)(2)

Variable — 1,150

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

Senior notes, due 2025 (1)

0.75 % 500 500

Atmus term loan, due 2027 (4)

Variable — 600

Debentures, due 2027 6.75 % 58 58

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Senior notes, due 2029 4.90 % 500 500

Senior notes, due 2030 (1)

1.50 % 850 850

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Senior notes, due 2043 4.875 % 500 500

Senior notes, due 2050 2.60 % 650 650

Senior notes, due 2054 5.45 % 1,000 1,000

Debentures, due 2098 (2)

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Long-term debt $ 6,792 $ 4,784

(1) During 2024, we repaid the outstanding balance of the term loan.

(2) In September 2023, we entered into a series of interest rate swaps in order to trade a portion of the floating rate into fixed rate.

See "Interest Rate Risk" in NOTE 20, "DERIVATIVES," for additional information.

(3) In 2021, we entered into a series of interest rate swaps to effectively convert from a fixed rate to floating rate.

(1) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate.

In March of 2025, we settled the remainder of the interest rate swaps on our debt due in 2025.

See "Interest Rate Risk" in NOTE 20, "DERIVATIVES," for additional information.

(4) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

During the third quarter of 2025, we repaid the outstanding balance of the senior notes due in 2025.

(2) The effective interest rate is 7.48 percent.

(3) The weighted-average interest rates for the years ended December 31, 2025 and 2024, were 5.19 percent and 1.01 percent, respectively.

On February 20, 2024, we issued $ 2.25 billion aggregate principal amount of senior unsecured notes consisting of $ 500 million aggregate principal amount of 4.90 percent senior unsecured notes due in 2029, $ 750 million aggregate principal amount of 5.15 percent senior unsecured notes due in 2034 and $ 1.0 billion aggregate principal amount of 5.45 percent senior unsecured notes due in 2054.

We received net proceeds of $ 2.2 billion.

The senior unsecured notes pay interest semi-annually on February 20 and August 20, commencing on August 20, 2024.

On May 9, 2025, we issued $ 2.0 billion aggregate principal amount of senior unsecured notes consisting of $ 300 million aggregate principal amount of 4.25 percent senior unsecured notes due in 2028, $ 700 million aggregate principal amount of 4.70 percent senior unsecured notes due in 2031 and $ 1.0 billion aggregate principal amount of 5.30 percent senior unsecured notes due in 2035.

Net of the discount and underwriter fees, we received net proceeds of $ 1.99 billion.

The senior unsecured notes due in 2028 and 2035 pay interest semi-annually on May 9 and November 9, commencing on November 9, 2025.

The senior unsecured notes due in 2031 pay interest semi-annually on February 15 and August 15, commencing on February 15, 2026.

The indenture governing the senior unsecured notes contains covenants that, among other matters, limit (i) our ability to consolidate or merge into, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our and our subsidiaries' assets to another person, (ii) our and certain of our subsidiaries' ability to create or assume liens and (iii) our and certain of our subsidiaries' ability to engage in sale and leaseback transactions.

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Shelf Registration

As a well-known seasoned issuer, we filed an automatic shelf registration for an undetermined amount of debt and equity securities with the Securities and Exchange Commission (SEC) on February 8, 2022, which expired on February 9, 2025.

Under this shelf registration we were able to offer debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

We plan to file a new shelf registration statement shortly after the filing of this annual report on Form 10-K to replace the expired automatic shelf registration statement.

As a well-known seasoned issuer, we filed an automatic shelf registration for an undetermined amount of debt and equity securities with the SEC on February 13, 2025.

Under this shelf registration we may offer, from time-to-time, debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

Interest Expense

For the years ended December 31, 2025, 2024 and 2023, total interest incurred was $ 360 million, $ 387 million and $ 383 million, respectively, and interest capitalized was $ 31 million, $ 17 million and $ 8 million, respectively.

Interest Rate Risk

In December 2025, we entered into a series of interest rate swaps to effectively convert $ 150 million of our senior notes, due in 2054, from a fixed rate of 5.45 percent to a floating rate equal to the daily United States Dollar Secured Overnight Financing Rate (USD SOFR) plus a spread through February 2041.

See NOTE 20, “DERIVATIVES,” for additional information.

Fair Value of Debt

15 unchanged sentences

Changes in estimates for pre-existing product warranties and campaigns 120 99 37

Acquisitions (1)

Foreign currency translation adjustments and other ( 5 ) ( 21 ) 8

Balance at end of period $ 2,778 $ 2,623 $ 2,497

(1) See NOTE 23, "ACQUISITIONS," for additional information.

We recognized supplier recoveries of $ 24 million, $ 54 million and $ 36 million for the years ended December 31, 2025, 2024 and 2023, respectively.

34 unchanged sentences

While we believe we comply with such laws, they are complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.

In December 2023, we announced that we reached the agreement in principle with EPA, CARB, the Environmental and Natural Resources Division of the DOJ and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements).

In December 2023, we announced that we reached the agreement in principle with the U.S.

Environmental Protection Agency, the California Air Resources Board, the Environmental and Natural Resources Division of the Department of Justice (DOJ) and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements).

As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make other payments.

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We do not currently anticipate paying any penalties under these contracts.

We enter into physical forward contracts with suppliers of platinum, palladium and iridium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years .

We enter into physical forward contracts with suppliers of platinum and palladium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years .

At December 31, 2025, the total commitments under these contracts were $ 65 million.

These arrangements enable us to guarantee the prices of these commodities, which otherwise are subject to market volatility.

These arrangements enable us to guarantee the purchase prices of these commodities, which otherwise are subject to market volatility.

We have guarantees with certain customers that require us to satisfactorily honor contractual or regulatory obligations, or compensate for monetary losses related to nonperformance.

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We can determine the number of shares of each series, and the rights, preferences and limitations of each series.

At December 31, 2024 and 2023, there was no preferred or preference stock outstanding.

At December 31, 2025 and 2024, there were no preferred or preference stock outstanding.

Changes in shares of common stock and treasury stock were as follows:

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Balance at December 31, 2022 222.5 81.2

Shares acquired — 1.9

Shares issued — ( 0.5 )

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Shares issued — ( 1.2 )

Atmus divestiture share exchange (1)

Balance at December 31, 2024 222.5 85.1

Shares issued — ( 0.7 )

Atmus divestiture share exchange (1)

Balance at December 31, 2025 222.5 84.4

(1) On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc.

(Atmus) common stock through a tax-free split-off.

(1) On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off.

The exchange resulted in a reduction of shares of our common stock outstanding by 5.6 million shares.

See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

Treasury Stock

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In December 2021, the Board authorized the acquisition of up to $ 2.0 billion of additional common stock upon completion of the $ 2.0 billion repurchase plan authorized in 2019.

The dollar value remaining available for future purchases under the 2019 program at December 31, 2024, was $ 218 million.

On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus Filtration Technologies Inc.

(Atmus) common stock through a tax-free split-off.

The dollar value remaining available for future purchases under the 2019 program at December 31, 2025, was $ 218 million, leaving a total of $ 2.2 billion available under all plans.

On March 18, 2024, we completed the divestiture of our remaining 80.5 percent ownership of Atmus common stock through a tax-free split-off.

The exchange resulted in a reduction of shares of our common stock outstanding by 5.6 million shares.

See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

We did not make any repurchases of common stock during 2025, 2024 or 2023.

We repurchased $ 374 million of our common stock in the year ended December 31, 2022.

Total dividends paid to common shareholders in 2025, 2024 and 2023 were $ 1,055 million, $ 969 million and $ 921 million, respectively.

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In July 2025, the Board authorized an increase to our quarterly dividend of 9.9 percent from $ 1.82 per share to $ 2.00 per share.

In July 2023, the Board authorized a 7.0 percent increase to our quarterly cash dividend on our common stock from $ 1.57 per share to $ 1.68 per share.

In July 2022, the Board approved an 8.3 percent increase to our quarterly dividend on our common stock from $ 1.45 per share to $ 1.57 per share.

In July 2024, the Board authorized an 8.3 percent increase to our quarterly cash dividend on our common stock from $ 1.68 per share to $ 1.82 per share.

In July 2023, the Board approved a 7.0 percent increase to our quarterly dividend on our common stock from $ 1.57 per share to $ 1.68 per share.

Cash dividends per share paid to common shareholders for the last three years were as follows:

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After-tax amount ( 428 ) 95 28 ( 305 ) ( 3 ) ( 308 )

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive income (loss) (1)

7 — ( 18 ) ( 11 ) — ( 11 )

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Before-tax amount ( 14 ) ( 313 ) 47 ( 280 ) $ ( 16 ) $ ( 296 )

Tax benefit (expense) 113 ( 1 ) ( 7 ) 105 — 105

Tax expense ( 2 ) ( 8 ) ( 12 ) ( 22 ) — ( 22 )

After-tax amount ( 16 ) ( 321 ) 35 ( 302 ) ( 16 ) ( 318 )

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive income (loss) (1)

( 19 ) 63 — 63

Net current period other comprehensive (loss) income ( 421 ) 95 10 ( 316 ) $ ( 3 ) $ ( 319 )

Net current period other comprehensive income (loss) 5 ( 260 ) 16 ( 239 ) $ ( 16 ) $ ( 255 )

Balance at December 31, 2024 $ ( 843 ) $ ( 1,717 ) $ 115 $ ( 2,445 )

Other comprehensive income (loss) before reclassifications

Other comprehensive (loss) income before reclassifications

Before-tax amount ( 122 ) 222 3 103 $ ( 13 ) $ 90

Tax expense ( 2 ) ( 8 ) ( 12 ) ( 22 ) — ( 22 )

Tax benefit (expense) 26 35 ( 1 ) 60 — 60

After-tax amount ( 96 ) 257 2 163 ( 13 ) 150

Amounts reclassified from accumulated other comprehensive income (1)

Amounts reclassified from accumulated other comprehensive income (loss) (1)

27 — ( 23 ) 4 — 4

Net current period other comprehensive income (loss) 5 ( 260 ) 16 ( 239 ) $ ( 16 ) $ ( 255 )

Net current period other comprehensive (loss) income ( 69 ) 257 ( 21 ) 167 $ ( 13 ) $ 154

Balance at December 31, 2025 $ ( 912 ) $ ( 1,460 ) $ 94 $ ( 2,278 )

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Reclassifications out of accumulated other comprehensive income (loss) and the related tax effects are immaterial for separate disclosure.

(2) See NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

(2) See NOTE 21, “ATMUS DIVESTITURE,” for additional information.

NONCONTROLLING INTERESTS

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The total unrecognized compensation expense (net of estimated forfeitures) related to nonvested awards for our employee share-based plans was approximately $ 87 million at December 31, 2025, and is expected to be recognized over a weighted-average period of approximately two years .

Cash received from share-based payment arrangements for the years ended December 31, 2025, 2024 and 2023, was $ 69 million, $ 133 million and $ 48 million, respectively.

The table below summarizes the employee share-based activity in the Plan:

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The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023, was approximately $ 106 million, $ 160 million and $ 35 million, respectively.

Cash received from option exercises under share-based payment arrangements for the years ended December 31, 2024, 2023 and 2022, was $ 133 million, $ 48 million and $ 80 million, respectively.

The share-based activity and weighted-average grant date fair value of performance and restricted shares was as follows:

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We are exposed to financial risk resulting from volatility in foreign exchange rates, interest rates and commodity prices.

This risk is closely monitored and managed through the use of physical forward contracts (which are not considered derivatives) and financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps.

Financial derivatives are used expressly for hedging purposes and under no circumstances are they used for speculative purposes.

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We had foreign currency forward contracts with notional amounts of $ 5.2 billion at December 31, 2025, with the following currencies comprising 82 percent of outstanding foreign currency forward contracts:

British pound, Chinese renminbi, Australian dollar, Canadian dollar and Euro.

British pound, Chinese renminbi, Euro, Australian dollar and Canadian dollar.

We had foreign currency forward contracts with notional amounts of $ 3.6 billion at December 31, 2024, with the following currencies comprising 86 percent of outstanding foreign currency forward contracts:

British pound, Chinese renminbi, Canadian dollar, Australian dollar and Swedish krona.

British pound, Chinese renminbi, Australian dollar, Canadian dollar and Euro.

We are further exposed to foreign currency exchange risk as many of our subsidiaries are subject to fluctuations as the functional currencies of the underlying entities are not our U.S.

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dollar currency at a specified rate at the maturity of the contract.

The notional amount of these hedges at December 31, 2024, was $ 1.5 billion.

The notional amount of these hedges at December 31, 2025, was $ 989 million.

In the second quarter of 2025, we began entering into cross-currency interest rate swaps designated as net investment hedges for certain of our investments to help reduce volatility in the equity value of our subsidiaries.

Under the current terms of our cross-currency interest rate swaps, we generally pay fixed-rate interest in Euros or Chinese renminbi and receive fixed-rate interest in U.S.

The notional amount of these hedges at December 31, 2025, was $ 500 million.

The following table summarizes the net investment hedge activity in AOCL:

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Recognized in AOCL Gain (Loss) Reclassified from AOCL into Earnings Gain (Loss)

Recognized in AOCL Gain (Loss) Reclassified from AOCL into Earnings

Foreign exchange forwards $ ( 73 ) $ — $ 32 $ — ( 30 ) —

Cross-currency interest rate swaps ( 9 ) — — — — —

Interest Rate Risk

In September 2023, we entered into a series of interest rate swaps with a total notional value of $ 500 million in order to trade a portion of the floating rate into a fixed rate on our term loan, due in 2025.

The weighted-average interest rate of the interest rate swaps was 5.72 percent.

We designated the swaps as cash flow hedges.

The gains and losses on these derivative instruments were initially recorded in other comprehensive income and reclassified into earnings as interest expense in the Consolidated Financial Statements as each interest payment was accrued.

In 2024, we settled all $ 500 million of these interest rate swaps.

The losses recognized on settlements were immaterial.

The interest rate swap activity in AOCL was immaterial for these swaps for the years ended December 31, 2024 and 2023.

In 2021, we entered into a series of interest rate swaps to effectively convert our $ 500 million senior notes, due in 2025, from a fixed rate of 0.75 percent to a floating rate equal to the three-month London Interbank Offered Rate ( LIBOR ) plus a spread (subsequently adjusted to SOFR under a fallback protocol in our derivative agreements).

We also entered into a series of interest rate swaps to effectively convert $ 765 million of our $ 850 million senior notes, due in 2030, from a fixed rate of 1.50 percent to a floating rate equal to the three-month LIBOR plus a spread (also similarly adjusted to SOFR ).

We designated the swaps as fair value hedges.

The gain or loss on these derivative instruments, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current income as interest expense.

The net swap settlements that accrue each period are also reported in the Consolidated Financial Statements as interest expense.

In March 2023, we settled a portion of our 2021 interest rate swaps with a notional amount of $ 100 million.

The $ 7 million loss on settlement is being amortized over the remaining term of the related debt.

In November 2024, we settled a portion of our interest rate swaps related to our 2025 and 2030 bonds with a combined notional amount of $ 135 million.

The $ 12 million loss on settlement is being amortized over the remaining term of the related debt.

The interest rate swaps on our 2025 and 2030 debt had $ 350 million and $ 680 million, respectively, of notional amounts outstanding at December 31, 2024.

The gain or loss on these derivative instruments, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, were recognized in current income as interest expense.

The net swap settlements that accrue each period were also reported in our Consolidated Financial Statements as interest expense.

In 2023 and 2024, we settled a portion of these swaps with the immaterial losses amortized over the remaining term of the related debt.

In the first quarter of 2025, we settled the remainder of the interest rate swaps on our 2025 debt.

The interest rate swaps on our 2030 debt and 2054 debt had notional amounts outstanding at December 31, 2025 of $ 680 million and $ 150 million, respectively.

The following table summarizes the gains and losses:

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

In 2019, we entered into $ 350 million of interest rate lock agreements, and in 2020 we entered into an additional $ 150 million of lock agreements to reduce the variability of the cash flows of the interest payments on a total of $ 500 million of fixed rate debt originally forecast to be issued in 2023 to replace our senior notes at maturity.

The terms of the rate locks mirrored the time period of the expected fixed rate debt issuance and the expected timing of interest payments on that debt.

In the first quarter of 2025, we entered into a series of interest rate lock agreements including 5 -year and 10 -year locks, with notional amounts totaling $ 200 million and $ 400 million, respectively, to reduce variability of cash flows of interest payments on total fixed rate debt forecasted to be issued in 2025 to replace our senior notes at maturity and for other general purposes.

In the second quarter of 2025, we entered into additional 10 -year interest rate lock agreements with notional amounts totaling $ 100 million.

The terms of the rate locks mirrored the time period of the expected fixed rate debt issuances and the expected timing of interest payments on planned debt issuances.

The gains and losses on these derivative instruments were initially recorded in other comprehensive income and will be released to earnings in interest expense in future periods to reflect the difference in (1) the fixed rates economically locked in at the inception of the hedge and (2) the actual fixed rates established in the debt instrument at issuance.

In 2022, we settled certain rate lock agreements with notional amounts totaling $ 150 million for $ 49 million in cash.

In 2023, we settled all remaining rate lock agreements with notional amounts totaling $ 350 million for $ 101 million.

The majority of the $ 150 million of gains on settlements remained in other comprehensive income and is being amortized over the remaining term of the related debt issued in early 2024.

The following table summarizes the interest rate lock activity in AOCL:

Year ended December 31,

In millions 2024 2023 2022

Type of Swap Gain (Loss)

Recognized in AOCL Gain (Loss) Reclassified from AOCL into Interest Expense Gain (Loss)

Recognized in AOCL Gain (Loss) Reclassified from AOCL into Interest Expense

Interest rate locks $ ( 4 ) $ 4 $ 14 $ 2 $ 112 $ —

In the second quarter of 2025, with the issuance of senior unsecured notes, we settled all interest rate lock agreements with a notional amount of $ 700 million.

The immaterial net losses from settlement will be amortized over the remaining term of the related debt.

Amortization of net losses were immaterial for the year ended December 31, 2025.

Derivatives Not Designated as Hedging Instruments

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In millions 2025 2024 2023

Gain (loss) recognized in income - Cost of sales (1)

(Loss) gain recognized in income - Cost of sales (1)

$ ( 4 ) $ 3 $ ( 3 )

Loss recognized in income - Other expense, net (1)

Gain (loss) recognized in income - Other expense, net (1)

85 ( 65 ) ( 21 )

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Had we chosen to present on a net basis, we would have derivatives in a net asset position of $ 20 million and $ 37 million and derivatives in a net liability position of $ 69 million and $ 131 million at December 31, 2025, and 2024, respectively.

ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE

ATMUS DIVESTITURE

Initial Public Offering (IPO)

On May 23, 2023, in connection with the Atmus IPO, Cummins issued approximately $ 350 million of commercial paper with certain lenders.

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Approximately $ 114 million of goodwill was included in the carrying value of the Atmus investment for purposes of calculating the gain.

The operating results of Atmus were reported in the Consolidated Financial Statements through March 18, 2024, the date of divestiture.

The operating results of Atmus were reported in our Consolidated Financial Statements through March 18, 2024, the date of divestiture.

As part of the divestiture, the $ 600 million term loan remained with Atmus after the split.

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This agreement is not material and does not confer upon us the ability to influence the operating and/or financial policies of Atmus subsequent to March 18, 2024 .

ACCELERA STRATEGIC REORGANIZATION ACTIONS

ACCELERA ACTIONS

During the third quarter of 2025, in our Accelera segment, we observed rapidly deteriorating conditions in our electrolyzer markets and overall hydrogen markets, along with significant uncertainty in the alternative power markets resulting from reductions in government incentives.

As a result, we determined that a triggering event occurred for our electrolyzer reporting unit, warranting an interim impairment test of goodwill and the related asset group.

We also re-evaluated the recoverability of certain inventory in this business due to the declining customer demand, resulting in a $ 30 million excess and obsolete inventory write-down.

We concluded that the undiscounted cash flows exceeded the carrying value of the related asset group and thus an impairment did not exist for the related long-lived assets.

However, we determined that on a fair value basis our goodwill was fully impaired and recorded a charge of $ 210 million.

The fair value of this reporting unit was determined using primarily a discounted cash flow model (a form of the income approach).

This model incorporated a number of assumptions and judgements surrounding current market and economic conditions, internal forecasts of future business performance including short and long-term growth rates, earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) margins and discount rates.

The continuing deterioration in the electrolyzer markets in the fourth quarter of 2025, prompted a strategic review of this business.

a result of these market conditions and the current business outlook, we intend to stop new commercial activity in the electrolyzer space, subject to information and consultation in accordance with local legal requirements.

We will continue to fulfill existing customer commitments.

As a result of this shift, we recorded several non-cash charges in the fourth quarter related to inventory write-downs along with intangible and fixed asset impairments.

We also recorded severance of approximately $ 13 million and contract termination costs of $ 34 million.

Total charges for the fourth quarter actions were $ 218 million.

The following table presents the full impact of these 2025 actions on our Consolidated Statements of Net Income:

In millions December 31,

2025 Statement of Net Income Location

Impairment of goodwill $ 210 Other operating expense, net

Inventory write-downs 119 Cost of sales

Impairment of property, plant and equipment and leases 55 Other operating expense, net

Contract termination costs 34 Cost of sales

Impairment of other intangible assets 27 Other operating expense, net

Severance 13 Cost of sales, selling, general and administrative expenses and research, development and engineering expenses

The majority of the $ 458 million is reflected in net cash provided by operating activities, as a change in inventory of $ 119 million and other, net of $ 292 million.

Of the $ 458 million, $ 415 million were non-cash charges and the majority of the remaining $ 43 million cash charge will be paid during 2026.

Of the total charges, approximately $ 445 million occurred in jurisdictions where we receive no tax benefits because of valuation allowances or the charges are attributable to nondeductible goodwill.

In the fourth quarter of 2024, our Accelera segment underwent a strategic review to better streamline operations as well as pace and re-focus investments on the most promising paths as the adoption of certain zero emission solutions slows.

This review resulted in decisions to consolidate certain manufacturing efforts, focus internal development efforts towards areas of differentiation while continuing to leverage partners and reduce our investments in certain technologies, joint ventures and markets.

This review resulted in strategic reorganization actions including decisions to consolidate certain manufacturing efforts, focus internal development efforts towards areas of differentiation while continuing to leverage partners and reduce our investments in certain technologies, joint ventures and markets.

In addition, declining customer demand in certain key product lines caused us to re-evaluate the recoverability of certain inventory items.

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In addition, these actions were considered a triggering event under GAAP which required us to perform an interim impairment test of our fuel cell and electrolyzer reporting unit.

The results of this testing indicated that goodwill of this reporting unit was not impaired.

Acquisitions for the for the years ended December 31, 2024, 2023 and 2022, were as follows:

The results of this testing indicated that goodwill of this reporting unit was not impaired at that time.

Acquisitions for the years ended December 31, 2025, 2024 and 2023, were as follows:

Entity Acquired (Dollars in millions) Date of Acquisition Additional Percent Interest Acquired Payments to Former Owners Acquisition Related Debt Retirements Total Purchase Consideration Type of Acquisition (1)

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04/03/23 100 % 143 — 143 (5)

Siemens Commercial Vehicles Propulsion 11/30/22 100 % $ 187 $ — $ 187 COMB $ 70 $ 106

Meritor, Inc.

08/03/22 100 % 2,613 248 2,861 COMB 926 1,610

Jacobs Vehicle Systems 04/08/22 100 % 345 — 345 COMB 108 164

Cummins Westport, Inc.

02/07/22 50 % 42 — 42 COMB — 20

(1) All results from acquired entities were included in segment results subsequent to the acquisition date.

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(3) Total purchase consideration included $ 30 million for the settlement of accounts payable that were treated as an operating cash outflow.

(4) Hydrogenics entered into three non-interest-bearing promissory notes with $ 175 million paid on July 31, 2023, $ 50 million paid on December 31, 2024 and the remaining $ 110 million due in two installments in 2025.

(4) Hydrogenics entered into three non-interest-bearing promissory notes with $ 175 million paid on July 31, 2023, $ 50 million paid on December 31, 2024 and the remaining $ 110 million paid in 2025.

(5) Total purchase consideration included $ 32 million for the settlement of accounts payable that was treated as an operating cash outflow.

On October 2, 2023, we purchased, from the Forvia Group, all of the equity ownership of Faurecia's U.S.

and Europe commercial vehicle exhaust business for $ 208 million, subject to certain working capital and other customary adjustments, and does not contain any contingent consideration.

The acquisition provides canning and assembly operations for full exhaust systems primarily for on-highway applications, ensures the long-term supply of aftertreatment components, minimizes opportunities for supply disruptions, adds significant technical and manufacturing resources and enhances our existing portfolio.

In the third quarter of 2024, we finalized the purchase accounting and made certain other adjustments.

The primary adjustments were to reduce property, plant and equipment by $ 3 million, offset by the finalization of purchase price, with a net increase to goodwill of $ 2 million.

The final purchase price allocation has been updated as follows:

Cash and cash equivalents $ 8

Accounts and notes receivable, net (1)

Inventories 32

Property, plant and equipment 90

Other current and long-term assets 50

Accounts payable (principally trade) ( 66 )

Other current and long-term liabilities ( 50 )

Total purchase price $ 208

(1) Included $ 30 million of Cummins receivables that were eliminated against payables at other Cummins entities.

Goodwill was determined based on the residual difference between the fair value of consideration transferred and the value assigned to tangible assets and liabilities.

All of the goodwill is expected to be deductible for tax purposes.

Among the factors contributing to a purchase price resulting in the recognition of goodwill are an acquired workforce and other economic benefits that are anticipated to arise from operational synergies from combining the business with Cummins.

The results of this business were reported in our Components segment within the emission solutions business.

Since we are the primary customer of this business, the acquisition is not expected to result in material incremental sales to our business.

Pro forma financial information for the acquisition was not presented as the effects were not material to our Consolidated Financial Statements.

Hydrogenics Corporation - Redeemable Noncontrolling Interest

On June 29, 2023, a share purchase agreement was executed with a 19 percent minority shareholder in one of our businesses, Hydrogenics Corporation (Hydrogenics), whereby we agreed to pay the minority shareholder $ 335 million for their 19 percent ownership, including the settlement of shareholder loans of $ 48 million.

As part of the share purchase agreement, Hydrogenics entered into three non-interest-bearing promissory notes with $ 175 million paid in 2023, $ 50 million paid in 2024 and the remaining $ 110 million due in two installments in 2025.

We recorded the non-interest-bearing promissory notes at their present value in our Consolidated Financial Statements.

Prior to the execution of this transaction, the minority shareholder had, among other rights and subject to related obligations and restrictive covenants, rights that were exercisable between September 2022 and September 2026 to require us to (1) purchase such shareholder's shares (put option) at an amount up to the fair market value (calculated pursuant to a process outlined in the shareholders' agreement) and (2) sell to such shareholder Hydrogenics' electrolyzer business at an amount up to the fair market value of the electrolyzer business (calculated pursuant to a process outlined in the shareholders’ agreement).

The estimated fair value of the put option was recorded as redeemable noncontrolling interests in our Consolidated Financial Statements with an offset to additional paid-in capital, and at December 31, 2022, the balance was $ 258 million.

The redeemable noncontrolling interest balance was reduced to zero as of the acquisition date.

Meritor, Inc.

On August 3, 2022, we completed the acquisition of Meritor whereby we paid $ 36.50 per share for each outstanding share of Meritor, a global leader of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets.

The total purchase price was $ 2.9 billion, including debt that was retired on the closing date of $ 248 million.

In addition, we assumed $ 1.0 billion of additional debt, of which $ 0.9 billion was retired prior to the end of the third quarter of 2022.

The acquisition was funded with a combination of $ 2.0 billion in new debt (see NOTE 12, "DEBT" for additional details), cash on hand and additional commercial paper borrowings.

The integration of Meritor’s people, technology and capabilities position us as one of the few companies able to provide integrated powertrain solutions across combustion and electric power applications at a time when demand for decarbonized solutions is continuing to accelerate.

The majority of this business was included within our Components segment with the exception of the electric powertrain business, which was included in our Accelera segment.

The final purchase price allocation was as follows:

Cash and cash equivalents $ 98

Accounts and notes receivable, net 640

Inventories 750

Property, plant and equipment 841

Intangible assets 1,610

Investments and advances related to equity method investees 382

Pension assets 147

Other current and long-term assets 322

Accounts payable (principally trade) ( 711 )

Net deferred taxes ( 277 )

Other liabilities (pensions and other postretirement benefits) ( 129 )

Long-term debt ( 962 )

Other current and long-term liabilities ( 665 )

Noncontrolling interests ( 111 )

Total purchase price $ 2,861

The estimated fair values (all considered Level 3 measurements) of the identifiable intangible assets acquired, their weighted-average useful lives, the related valuation methodology and key assumptions are as follows:

Fair Value (in millions) Weighted-Average Useful Life (in years) Valuation Methodology Key Assumptions

Customer relationships $ 960 12 Multi-period excess earnings Revenue, EBITDA (1) , discount rate, customer renewal rates, customer attrition rates

Technology 345 8 Relief-from-royalty Royalty rate, discount rate, obsolescence factor

Trade name 305 21 Relief-from-royalty Royalty rate, discount rate

(1) Earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests.

Annual amortization of the intangible assets for the next five years is expected to approximate $ 142 million per year.

Goodwill was determined based on the residual difference between the fair value of consideration transferred and the value assigned to tangible and intangible assets and liabilities.

Goodwill was allocated to the Components segment ($ 759 million) and the Accelera segment ($ 167 million) based on the relative value of those businesses compared to the assets and liabilities assigned to them.

We do not expect any of the goodwill to be deductible for tax purposes.

Among the factors contributing to a purchase price resulting in the recognition of goodwill are Meritor’s expected future customers, new versions of technologies, an acquired workforce, other economic benefits that are anticipated to arise from future product sales and operational synergies from combining the business with Cummins.

Included in our results for the year ended December 31, 2022, were revenues of $ 1.9 billion and net loss of $ 43 million related to this business.

In addition, in 2022 we incurred acquisition related costs of $ 30 million included in selling, general and administrative expenses in our Consolidated Statements of Net Income .

The following table presents the supplemental consolidated results of the company for the year ended December 2022, on an unaudited pro-forma basis, as if the acquisition had been consummated on January 1, 2021.

The primary adjustments reflected in the pro-forma results related to (1) increase in interest expense for debt used to fund the acquisition, (2) removal of acquisition related costs from 2022 and (3) changes related to purchase accounting primarily related to amortization of intangibles, fixed assets and joint ventures.

The unaudited pro forma financial information presented below does not purport to represent the actual results of operations that Cummins and Meritor would have achieved had the companies been combined during the period presented and was not intended to project the future results of operations that the combined company could achieve after the acquisition.

The unaudited pro forma financial information does not reflect any potential cost savings, operating efficiencies, long-term debt pay down estimates, financial synergies or other strategic benefits as a result of the acquisition or any restructuring costs to achieve those benefits.

(Unaudited) Year ended December 31,

In millions 2022

Net sales $ 30,841

Net income 2,196

The Meritor acquisition increased net assets in the Components segment by $ 3.8 billion and Accelera segment by $ 0.3 billion in 2022.

RUSSIAN OPERATIONS

On March 17, 2022, the Board indefinitely suspended our operations in Russia due to the ongoing conflict in Ukraine.

At the time of suspension, our Russian operations included a wholly-owned distributor in Russia, an unconsolidated joint venture with KAMAZ (a Russian truck manufacturer) and direct sales into Russia from our other business segments.

As a result of the indefinite suspension of operations, we evaluated the recoverability of assets in Russia and assessed other potential liabilities.

The following summarizes the costs associated with the suspension of our Russian operations in our Consolidated Statements of Net Income:

In millions December 31,

2022 Statement of Net Income Location

Inventory write-downs $ 17 Cost of sales

Accounts receivable reserves 41 Other operating expense, net

Impairment and other joint venture costs 31 Equity, royalty and interest income from investees

Other 22 Other operating expense, net

Russian suspension costs, net of recoveries $ 111

For the years ended December 31, 2024 and 2023, there were no material additional costs.

OPERATING SEGMENTS

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

REPORTABLE SEGMENTS

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

Our CODM is the Chief Executive Officer.

Our reportable operating segments consist of Engine, Components, Distribution, Power Systems and Accelera.

Our reportable segments consist of Engine, Components, Distribution, Power Systems and Accelera.

This reporting structure is organized according to the products and markets each segment serves.

4 unchanged sentences

The Power Systems segment is an integrated power provider, which designs, manufactures and sells standby and prime power generators, engines (16 liters and larger) for standby and prime power generator sets and industrial applications (including mining, oil and gas, marine, rail and defense), alternators and other power components.

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

The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and

related components and subsystems and our electrolyzers for hydrogen production.

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

Our CODM uses segment earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests (EBITDA) as the basis for the CODM to evaluate the performance of each of our reportable operating segments.

The Accelera segment designs, manufactures, sells and supports electrified power systems with innovative components and subsystems, including battery and electric powertrain technologies.

The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems.

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

Our CODM uses segment EBITDA as the basis to evaluate the performance of each of our reportable segments.

EBITDA provides our CODM with a full picture of the profitability of a segment to drive decisions and resource allocation.

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Segment amounts exclude certain expenses not specifically identifiable to segments.

The accounting policies of our operating segments are the same as those applied in our Consolidated Financial Statements .

We prepared the financial results of our operating segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions.

The accounting policies of our reportable segments are the same as those applied in our Consolidated Financial Statements .

We prepared the financial results of our reportable segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions.

We allocate certain common costs and expenses, primarily corporate functions, among segments differently than we would for stand-alone financial information prepared in accordance with GAAP.

These include certain costs and expenses of shared services, such as IT, human resources, legal, finance and supply chain management.

We do not allocate gains or losses of corporate-owned life insurance, the Settlement Agreements charge and the gain and certain costs related to the divestiture of Atmus.

We do not allocate gains or losses of corporate-owned life insurance and the gain and certain costs related to the divestiture of Atmus.

EBITDA may not be consistent with measures used by other companies.

Summarized financial information regarding our reportable operating segments at December 31, is shown in the table below:

Summarized financial information regarding our reportable segments at December 31, is shown in the table below:

In millions Engine Components Distribution Power Systems Accelera Total Segments

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Segment EBITDA $ 1,382 $ 1,398 $ 1,808 $ 1,694 $ ( 896 ) (1)

$ 1,378 $ 1,180 $ ( 764 ) (1)

Interest income (4)

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Equity, royalty and interest income (loss) from investees 251 97 97 53 ( 15 ) 483

71 77 43 ( 2 ) 349

Other income (expense) (2)

72 ( 54 ) 56 36 1 111

Russian suspension costs (8)

5 54 19 — 111

Depreciation and amortization (3)

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Capital expenditures 538 373 103 115 84 1,213

(1) Included $ 112 million of charges in cost of sales, $ 10 million of charges in selling, general and administrative expenses, $ 2 million of charges in research and development expenses, $ 17 million of charges in equity, royalty and interest income (loss) from investees, $ 171 million of charges in other operating expenses and $ 312 million of charges in EBITDA, all related to Accelera strategic reorganization actions in the fourth quarter of 2024.

See NOTE 22, "ACCELERA STRATEGIC REORGANIZATION ACTIONS," for additional information.

(1) Included $ 157 million of charges in cost of goods sold, $ 2 million of charges in selling, general and administrative expenses, $ 7 million of charges in research, development and engineering expenses, $ 292 million of charges in other operating expenses and $ 458 million of charges in EBITDA, all related to Accelera actions in 2025.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

(2) Other income (expense) includes other operating expense, net and other income, net from our Consolidated Statements of Net Income.

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A portion of depreciation expense is included in research, development and engineering expense.

(4) Included $ 21 million of costs associated with the divestiture of Atmus for the year ended December 31, 2024.

(4) Interest income is a component of other income (expense).

(5) Included $ 112 million of charges in cost of sales, $ 10 million of charges in selling, general and administrative expenses, $ 2 million of charges in research, development and engineering expenses, $ 17 million of charges in equity, royalty and interest income (loss) from investees, $ 171 million of charges in other operating expenses and $ 312 million of charges in EBITDA, all related to Accelera strategic reorganization actions in the fourth quarter of 2024.

See NOTE 22, “ACCELERA ACTIONS,” for additional information.

(6) Included $ 21 million of costs associated with the divestiture of Atmus for the year ended December 31, 2024.

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

See NOTE 24, "RUSSIAN OPERATIONS," for additional information.

(8) See NOTE 24, "RUSSIAN OPERATIONS," for additional information.

(9) Included $ 31 million of Russian suspension costs reflected in the equity, royalty and interest income (loss) from investees line above.

(10) Included $ 83 million of costs related to the acquisition and integration of Meritor and $ 28 million of costs associated with the divestiture of Atmus.

(7) Included $ 78 million of costs associated with the divestiture of Atmus for the year ended December 31, 2023.

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

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The year ended December 31, 2023, included $ 2.0 billion related to the Settlement Agreements charge, $ 22 million of costs associated with the divestiture of Atmus and $ 21 million of voluntary retirement and voluntary separation charges.

The year ended December 31, 2022, included $ 53 million of costs associated with the divestiture of Atmus.

See NOTE 14, "COMMITMENTS AND CONTINGENCIES," and NOTE 21, "ATMUS INITIAL PUBLIC OFFERING (IPO) AND DIVESTITURE," for additional information.

See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” and NOTE 21, “ATMUS DIVESTITURE,” for additional information.

A reconciliation of our segment net assets to the corresponding amounts in the Consolidated Balance Sheets is shown in the table below:

In millions 2025 2024

Net assets for operating segments $ 15,244 $ 13,340

Net assets for reportable segments $ 16,581 $ 15,244

Cash, cash equivalents and marketable securities 3,609 2,264

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(1) Liabilities deducted in arriving at net segment assets include certain accounts payable, accrued expenses, long-term liabilities and other items.

See NOTE 2, "REVENUE FROM CONTRACTS WITH CUSTOMERS," for segment net sales by geographic area.

See NOTE 2, “REVENUE FROM CONTRACTS WITH CUSTOMERS,” for segment net sales by country.

Long-lived assets include property, plant and equipment, net of depreciation, investments and advances to equity investees and other assets, excluding deferred tax assets, refundable taxes and deferred debt expenses.

Long-lived segment assets by geographic area were as follows:

Long-lived segment assets by country were as follows:

In millions 2025 2024

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India 598 566

United Kingdom 580 494

Other countries 2,054 1,932

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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 8. Financial Statements and Supplementary Data