Worldwide revenues increased 12 percent in the nine months ended September 30, 2022, compared to the same period in 2021, due to Meritor sales of $737 million since the date of acquisition, favorable pricing and higher demand in most operating segments and most geographic regions except for China and Russia. Net sales in the U.S. and Canada improved 19 percent, primarily due to favorable pricing and increased demand in North American on-highway markets, which positively impacted all components businesses, and all distribution product lines, as well as incremental sales of brakes and axles in North America since the acquisition of Meritor. International demand (excludes the U.S. and Canada) improved by 3 percent, with lower sales in China (due to a sharp slowdown in truck and construction markets, exacerbated by COVID lockdowns) more than offset by higher sales in most other geographic regions. The increase in international sales was principally due to incremental sales of brakes and axles in Western Europe and Latin America since the acquisition of Meritor, favorable pricing and higher demand for power generation and industrial equipment (especially oil and gas) and most distribution product lines. Unfavorable foreign currency fluctuations impacted international sales by 4 percent (primarily the Euro, British pound and Indian rupee).

The following tables contain sales and EBITDA ~~(defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests)~~ by operating segment, including adjusted prior year balances for the NPROXX changes noted above, for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021.~~2022. See NOTE 17, "OPERATING SEGMENTS," to the Condensed Consolidated Financial Statements for additional information and a reconciliation of our segment information to the corresponding amounts in our Condensed Consolidated Statements of Net Income.

Three months ended
Operating Segments September 30,
2022 October 3,
2021 Percent change
Percent Percent 2022 vs. 2021
In millions Sales of Total EBITDA Sales of Total EBITDA Sales EBITDA
Engine $ 2,779 38 % $ 363 $ 2,578 43 % $ 391 8 % (7) %
Distribution 2,239 30 % 225 1,959 33 % 192 14 % 17 %
Components 2,703 37 % 297 1,793 30 % 253 51 % 17 %
Power Systems 1,349 18 % 193 1,164 20 % 134 16 % 44 %
New Power 50 1 % (96) 23 — % (58) NM (66) %
Intersegment eliminations (1,787) (24) % (98) (1,549) (26) % (50) 15 % 96 %
Total $ 7,333 100 % $ 884 (1) $ 5,968 100 % $ 862 23 % 3 %
"NM" - not meaningful information
(1) EBITDA includes $45 million of costs related to the acquisition and integration of Meritor, $16 million of costs associated with the planned separation of our Filtration business and $1 million of costs associated with the suspension of our Russian operations.

~~Table of Contents~~


	Three months ended September 30,
Operating Segments	2023							2022							Percent change
			Percent							Percent					2023 vs. 2022
In millions	Sales		of Total		EBITDA			Sales		of Total		EBITDA			Sales		EBITDA
Components	$	3,236	38	%	$	441		$	2,703	37	%	$	297		20	%	48	%
Engine	2,931		35	%	395			2,779		38	%	362			5	%	9	%
Distribution	2,535		30	%	306			2,239		30	%	225			13	%	36	%
Power Systems	1,444		17	%	234			1,349		18	%	193			7	%	21	%
Accelera	103		1	%	(114)			50		1	%	(95)			NM		(20)	%
Intersegment eliminations	(1,818)		(21)	%	(32)			(1,787)		(24)	%	(98)			2	%	(67)	%

Total	$	8,431	100	%	$	1,230	(1)	$	7,333	100	%	$	884	(2)	15	%	39	%


(1) EBITDA includes $26 million of costs associated with the separation of Atmus for the three months ended September 30, 2023. See NOTE 15, "FORMATION OF ATMUS AND IPO," to our Condensed Consolidated Financial Statements for additional information.
(2) EBITDA includes $45 million of costs related to the acquisition and integration of Meritor, $16 million of costs associated with the planned separation of Atmus and $1 million of costs associated with the suspension of our Russian operations for the three months ended September 30, 2022. See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.

Net income attributable to Cummins Inc. was ~~$0.4 billion,~~$656 million, or ~~$2.82~~$4.59 per diluted share, on sales of ~~$7.3~~$8.4 billion for the three months ended September 30, ~~2022,~~2023, versus the comparable prior year period net income attributable to Cummins Inc. of ~~$0.53 billion,~~$400 million, or ~~$3.69~~$2.82 per diluted share, on sales of ~~$6.0~~$7.3 billion. The ~~decreases~~increases in net income attributable to Cummins Inc. and earnings per diluted share were driven by ~~unfavorable discrete tax items, Meritor acquisition and integration costs, one-time employee recognition expenses,~~ higher ~~interest expense related to new borrowings, losses in corporate owned life insurance, lower equity, royalty and interest income from investees (principally in China)~~net sales, improved gross margins and a ~~higher~~lower effective tax rate, partially offset by increased compensation costs, higher interest expense related to increased floating interest rates and new borrowings, increased net ~~sales~~income attributable to noncontrolling interests and ~~lower variable compensation.~~higher consulting expenses. The increase in gross margin was primarily due to favorable pricing, lower freight costs, higher volumes (including a full quarter of axles and ~~lower variable compensation expenses,~~brakes from the Meritor acquisition) and favorable mix, partially offset by higher ~~material costs, increased freight costs and one-time employee recognition~~compensation expenses. The 1.3 percentage point decrease in gross margin as a percentage of net sales was principally due to the addition of Meritor activity since the date of acquisition which had a lower gross margin percentage than our legacy business.

Nine months ended
Operating Segments September 30,
2022 October 3,
2021 Percent change
Percent Percent 2022 vs. 2021
In millions Sales of Total EBITDA Sales of Total EBITDA Sales EBITDA
Engine $ 8,307 41 % $ 1,177 $ 7,528 41 % $ 1,147 10 % 3 %
Distribution 6,609 32 % 632 5,714 31 % 553 16 % 14 %
Components 6,641 33 % 969 5,939 33 % 975 12 % (1) %
Power Systems 3,712 18 % 411 3,329 18 % 399 12 % 3 %
New Power 123 1 % (243) 82 1 % (169) 50 % (44) %
Intersegment eliminations (5,088) (25) % (252) (4,421) (24) % (89) 15 % NM
Total $ 20,304 100 % $ 2,694 (1) $ 18,171 100 % $ 2,816 12 % (4) %
"NM" - not meaningful information
(1) EBITDA includes $112 million of costs associated with the suspension of our Russian operations, $62 million of costs associated with the planned separation of our Filtration business and $56 million of costs related to the acquisition and integration of Meritor.



	Nine months ended September 30,
Operating Segments	2023							2022							Percent change
			Percent							Percent					2023 vs. 2022
In millions	Sales		of Total		EBITDA			Sales		of Total		EBITDA			Sales		EBITDA
Components	$	10,218	40	%	$	1,434		$	6,641	33	%	$	969		54	%	48	%
Engine	8,905		35	%	1,277			8,307		41	%	1,173			7	%	9	%
Distribution	7,536		29	%	940			6,609		32	%	632			14	%	49	%
Power Systems	4,244		17	%	654			3,712		18	%	411			14	%	59	%
Accelera	273		1	%	(322)			123		1	%	(239)			NM		(35)	%
Intersegment eliminations	(5,654)		(22)	%	(88)			(5,088)		(25)	%	(252)			11	%	(65)	%

Total	$	25,522	100	%	$	3,895	(1)	$	20,304	100	%	$	2,694	(2)	26	%	45	%


(1) EBITDA includes $67 million of costs associated with the IPO and separation of Atmus for the nine months ended September 30, 2023. See NOTE 15, "FORMATION OF ATMUS AND IPO," to our Condensed Consolidated Financial Statements for additional information.
(2) EBITDA includes $112 million of costs associated with the indefinite suspension of our Russian operations, $62 million of costs associated with the planned separation of Atmus and $56 million of costs related to the acquisition and integration of Meritor for the nine months ended September 30, 2022. See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.

Net income attributable to Cummins Inc. was ~~$1.52~~$2.2 billion, or ~~$10.68~~$15.19 per diluted share, on sales of ~~$20.3~~$25.5 billion for the nine months ended September 30, ~~2022,~~2023, versus the comparable prior year period net income attributable to Cummins Inc. of ~~$1.74~~$1.5 billion, or ~~$11.86~~$10.68 per diluted share, on sales of ~~$18.2~~$20.3 billion. The ~~decreases~~increases in net income attributable to Cummins Inc. and earnings per diluted share were driven by ~~lower equity, royalty~~higher net sales and interest income from investees (primarily in China), losses in corporate owned life insurance, costs associated with the suspension of our Russian operations, costs associated with the planned separation of our filtration business, Meritor acquisition and integration costs, one-time employee recognition expenses, unfavorable discrete tax items, higher consultingimproved gross margins, partially offset by increased compensation expenses and ~~increased~~higher interest expense related to increased floating interest rates and new ~~borrowings, partially offset by higher net sales and increased gross margin. See NOTE 3, "RUSSIAN OPERATIONS," to our~~ ~~Condensed Consolidated Financial Statements~~ ~~for additional information.~~borrowings. The increase in gross margin was primarily due to higher volumes (including sales of axles and brakes from the Meritor acquisition) and favorable pricing, ~~increased volumes and lower variable compensation expenses,~~ partially offset by higher ~~material costs, increased freight costs due to supply chain constraints and one-time employee recognition~~compensation expenses. ~~Diluted earnings per common share for the nine months ended September 30, 2022, benefited $0.10 from fewer weighted-average shares outstanding due to the stock repurchase program.~~

Table of Contents

We generated ~~$1.15~~$2.5 billion of cash from operations for the nine months ended September 30, ~~2022,~~2023, compared to ~~$1.52~~$1.1 billion for the comparable period in ~~2021.~~2022. See the section titled "Cash Flows" in the "LIQUIDITY AND CAPITAL RESOURCES" section for a discussion of items impacting cash flows.

Our debt to capital ratio (total capital defined as debt plus equity) at September 30, ~~2022,~~2023, was ~~46.4~~39.0 percent, compared to ~~31.5~~44.1 percent at December 31, ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~higher debt balances~~the increased equity balance from strong earnings since December 31, ~~2021, resulting from funding the acquisition of Meritor, Inc. (Meritor).~~2022 and lower debt. At September 30, ~~2022,~~2023, we had ~~$3.0~~$3.1 billion in cash and marketable securities on hand and access to our $4.0 billion credit facilities, if necessary, to meet acquisition, working capital, investment and funding needs.

~~In the first nine months~~On October 2, 2023, we repaid our $500 million senior notes, due 2023, using a combination of ~~2022,~~cash on hand and additional commercial paper borrowings.

On October 2, 2023, we purchased ~~$370 million, or 1.9 million shares, of our common stock.~~

On September 30, 2022, certain of our subsidiaries entered into a $1.0 billion credit agreement, consisting of a $400 million revolving credit facility and a $600 million term loan facility, in anticipationall of the ~~separation~~equity ownership of ~~our filtration business.~~Faurecia's U.S. and Europe commercial vehicle exhaust business from the Forvia Group for approximately €199 million, subject to certain adjustments set forth in the agreement. See NOTE ~~11, "DEBT,~~19, "SUBSEQUENT EVENTS," to ~~our~~the Condensed Consolidated Financial Statements for additional information.

On August 17, 2022, we entered into an amended and restated 364-day credit agreement and an incremental 364-day credit agreement, which allow us to borrow up to $1.5 billion and $500 million, respectively, of unsecured funds at any time prior to August 16, 2023.

~~Table of Contents~~

On July 13, 2022, we entered into a loan agreement under which we may obtain delayed-draw loans in an amount up to $2.0 billion in the aggregate prior to October 13, 2022. We drew down the entire $2.0 billion balance on August 2, 2022, to fund the acquisition of Meritor.

In July ~~2022,~~2023, the Board authorized an increase to our quarterly dividend of approximately 87 percent from ~~$1.45~~$1.57 per share to ~~$1.57~~$1.68 per share.

In the first nine months of ~~2022,~~2023, the investment ~~loss~~gain on our U.S. pension ~~trust~~trusts was ~~5.1~~2.32 percent, while our U.K. pension ~~trust~~trusts' loss was ~~21.7~~10.69 percent. To better hedge its liabilities, our U.K. pension plan sold a substantial portion of its private markets assets at a discount at the end of the second quarter, which fully settled in the third quarter and detracted from investment performance for the period. We anticipate making additional defined benefit pension contributions during the remainder of ~~2022~~2023 of $7$13 million for our U.S. and U.K. qualified and non-qualified pension plans. We expect our ~~2022~~2023 annual net periodic pension cost to ~~approximate $20 million.~~be near zero.

As of the date of this filing, our credit ratings and outlooks from the credit rating agencies remain unchanged.

3938

Table of Contents

RESULTS OF OPERATIONS

Three months ended Favorable/ Nine months ended Favorable/
September 30,
2022 October 3,
2021 (Unfavorable) September 30,
2022 October 3,
2021 (Unfavorable)
In millions, except per share amounts Amount Percent Amount Percent
NET SALES $ 7,333 $ 5,968 $ 1,365 23 % $ 20,304 $ 18,171 $ 2,133 12 %
Cost of sales 5,691 4,554 (1,137) (25) % 15,404 13,793 (1,611) (12) %
GROSS MARGIN 1,642 1,414 228 16 % 4,900 4,378 522 12 %
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses 708 571 (137) (24) % 1,945 1,745 (200) (11) %
Research, development and engineering expenses 348 266 (82) (31) % 945 802 (143) (18) %
Equity, royalty and interest income from investees 70 94 (24) (26) % 261 397 (136) (34) %
Other operating expense, net 30 5 (25) NM 144 17 (127) NM
OPERATING INCOME 626 666 (40) (6) % 2,127 2,211 (84) (4) %
Interest expense 61 28 (33) NM 112 85 (27) (32) %
Other income, net 43 37 6 16 % 26 111 (85) (77) %
INCOME BEFORE INCOME TAXES 608 675 (67) (10) % 2,041 2,237 (196) (9) %
Income tax expense 199 134 (65) (49) % 502 473 (29) (6) %
CONSOLIDATED NET INCOME 409 541 (132) (24) % 1,539 1,764 (225) (13) %
Less: Net income attributable to noncontrolling interests 9 7 (2) (29) % 19 27 8 30 %
NET INCOME ATTRIBUTABLE TO CUMMINS INC. $ 400 $ 534 $ (134) (25) % $ 1,520 $ 1,737 $ (217) (12) %
Diluted Earnings Per Common Share Attributable to Cummins Inc. $ 2.82 $ 3.69 $ (0.87) (24) % $ 10.68 $ 11.86 $ (1.18) (10) %
"NM" - not meaningful information



	Three months ended				Favorable/				Nine months ended				Favorable/
	September 30,				(Unfavorable)				September 30,				(Unfavorable)
In millions, except per share amounts	2023		2022		Amount		Percent		2023		2022		Amount		Percent
NET SALES	$	8,431	$	7,333	$	1,098	15	%	$	25,522	$	20,304	$	5,218	26	%
Cost of sales	6,360		5,691		(669)		(12)	%	19,274		15,404		(3,870)		(25)	%
GROSS MARGIN	2,071		1,642		429		26	%	6,248		4,900		1,348		28	%
OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	831		708		(123)		(17)	%	2,457		1,945		(512)		(26)	%
Research, development and engineering expenses	376		348		(28)		(8)	%	1,110		945		(165)		(17)	%
Equity, royalty and interest income from investees	118		70		48		69	%	370		261		109		42	%

Other operating expense, net	32		30		(2)		(7)	%	78		144		66		46	%
OPERATING INCOME	950		626		324		52	%	2,973		2,127		846		40	%

Interest expense	97		61		(36)		(59)	%	283		112		(171)		NM
Other income, net	25		43		(18)		(42)	%	166		26		140		NM
INCOME BEFORE INCOME TAXES	878		608		270		44	%	2,856		2,041		815		40	%
Income tax expense	188		199		11		6	%	623		502		(121)		(24)	%
CONSOLIDATED NET INCOME	690		409		281		69	%	2,233		1,539		694		45	%
Less: Net income attributable to noncontrolling interests	34		9		(25)		NM		67		19		(48)		NM
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	656	$	400	$	256	64	%	$	2,166	$	1,520	$	646	43	%
Diluted Earnings Per Common Share Attributable to Cummins Inc.	$	4.59	$	2.82	$	1.77	63	%	$	15.19	$	10.68	$	4.51	42	%

"NM" - not meaningful information

Three months ended Favorable/
(Unfavorable) Nine months ended Favorable/
(Unfavorable)
September 30,
2022 October 3,
2021 September 30,
2022 October 3,
2021
Percent of sales Percentage Points Percentage Points
Gross margin 22.4 % 23.7 % (1.3) 24.1 % 24.1 % —
Selling, general and administrative expenses 9.7 % 9.6 % (0.1) 9.6 % 9.6 % —
Research, development and engineering expenses 4.7 % 4.5 % (0.2) 4.7 % 4.4 % (0.3)

~~Meritor Acquisition~~

~~On August 3, 2022, we completed the acquisition of Meritor. Our results of operations include all activity of Meritor since the acquisition date.~~


	Three months ended				Favorable/ (Unfavorable)	Nine months ended				Favorable/ (Unfavorable)
	September 30,					September 30,
Percent of sales	2023		2022		Percentage Points	2023		2022		Percentage Points
Gross margin	24.6	%	22.4	%	2.2	24.5	%	24.1	%	0.4
Selling, general and administrative expenses	9.9	%	9.7	%	(0.2)	9.6	%	9.6	%	—
Research, development and engineering expenses	4.5	%	4.7	%	0.2	4.3	%	4.7	%	0.4

Net Sales

Net sales for the three months ended September 30, ~~2022,~~2023, increased by ~~$1,365 million~~$1.1 billion versus the comparable period in ~~2021.~~2022. The primary drivers were as follows:

•Components segment sales increased 5120 percent largely due to a full quarter of axles and brakes sales from the Meritor acquisition versus two months of sales in the comparable period in 2022.

•Distribution segment sales increased 13 percent due to higher demand across all product lines, especially in North America.

•Engine segment sales increased 5 percent principally due to strong heavy-duty and medium-duty truck demand in North America.

•Power Systems segment sales increased 7 percent primarily due to higher demand in power generation markets.

Table of Contents

Net sales for the nine months ended September 30, 2023, increased $5.2 billionversus the comparable period in 2022. The primary drivers were as follows:

•Components segment sales increased 54 percent largely due to axles and brakes sales ~~since the completion of~~from the Meritor acquisition.

•Distribution segment sales increased 14 percent ~~principally~~ due to higher demand across ~~most~~all product lines, especially in North ~~America~~.America.

•Engine segment sales increased 87 percent principally due to ~~favorable pricing~~strong heavy-duty and ~~stronger on-highway~~medium-duty truck demand ~~(including higher aftermarket sales)~~ in North America.

•Power Systems segment sales increased 1614 percent primarily due to ~~favorable pricing and~~ higher demand in power generation ~~markets and stronger demand in industrial markets with higher aftermarket sales and increased oil and gas demand in North America.~~

~~Table of Contents~~

~~These increases were partially offset by unfavorable foreign currency fluctuations of 3 percent of total sales, primarily in the Euro, British pound, Chinese renminbi and Indian rupee.~~

~~Net sales for the nine months ended September 30, 2022, increased $2,133 millionversus the comparable period in 2021. The primary drivers were as follows:~~

•~~Distribution segment sales increased 16 percent principally due to higher demand across most product lines in North America.~~

•~~Engine segment sales increased 10 percent due to favorable pricing and stronger on-highway demand (including higher aftermarket sales) in North America.~~

•~~Components segment sales increased 12 percent largely due to axles and brakes sales since the completion of the Meritor acquisition.~~

•Power Systems segment sales increased 12 percent primarily due to stronger demand in industrial markets with higher aftermarket sales and increased oil and gas demand in North America and China and favorable pricing and higher demand in power generation markets in Latin America, India and China.markets.

These increases were partially offset by unfavorable foreign currency fluctuations of 21 percent of total sales, primarily in the ~~Euro, British pound~~Chinese renminbi and Indian rupee.

Sales to international markets (excluding the U.S. and Canada), based on location of customers, for the three and nine months ended September 30, ~~2022,~~2023, were 4038 percent and 4039 percent of total net sales compared with 4339 percent and 4440 percent of total net sales for the comparable periods in ~~2021.~~2022. A more detailed discussion of sales by segment is presented in the “OPERATING SEGMENT RESULTS” section.

Cost of Sales

The types of expenses included in cost of sales are the following: parts and material consumption, including direct and indirect materials; compensation and related expenses including variable compensation, salaries ~~wages~~ and fringe benefits; depreciation on production equipment and facilities and amortization of technology intangibles; estimated costs of warranty programs and campaigns; production utilities; production-related purchasing; warehousing, including receiving and inspection; freight costs; engineering support costs; repairs and maintenance; production and warehousing facility property insurance; rent for production facilities; charges for the write-downs of inventories in Russia and other production overhead.

Gross Margin

Gross margin increased ~~$228~~$429 million for the three months ended September 30, ~~2022~~2023, and ~~decreased 1.3~~increased 2.2 points as a percentage of net sales versus the comparable period in ~~2021.~~2022. The increase in gross margin and gross margin as a percentage of sales was primarily due to favorable pricing, lower freight costs, higher volumes (including a full quarter of axles and ~~lower variable compensation expenses,~~brakes from the Meritor acquisition) and favorable mix, partially offset by higher ~~material costs, increased freight costs~~compensation expenses. Compensation and one-time employee recognition expenses. The 1.3 percentage point decrease in gross margin as a percentage of net sales was principally due to the addition of Meritor activity since the date of acquisition which had a lower gross margin percentage than our legacy business.related expenses include variable compensation, salaries and fringe benefits.

Gross margin increased ~~$522 million~~$1.3 billion for the nine months ended September 30, ~~2022~~2023, and ~~remained flat at 24.1~~increased 0.4 points as a percentage of sales versus the comparable period in ~~2021.~~2022. The increase in gross margin and gross margin as a percentage of sales was primarily due to higher volumes (including sales of axles and brakes from the Meritor acquisition) and favorable pricing, ~~increased volumes and lower variable compensation expenses,~~ partially offset by higher ~~material costs, increased freight costs due to supply chain constraints and one-time employee recognition~~compensation expenses.

The provision for base warranties issued as a percent of sales for the three and nine months ended September 30, ~~2022,~~2023, was 1.9 percent and 1.8 percent, respectively, compared to 1.7 percent and 1.9 ~~percent, respectively, compared to 2.2 percent and 2.4~~ percent for the comparable periods in ~~2021.~~2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$137~~$123 million for the three months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, primarily due to ~~Meritor acquisition and integration costs,~~ higher ~~consulting expenses driven by acquisitions and the work towards separation of the filtration business, increased travel~~variable compensation expenses and ~~one-time employee recognition expenses, partially offset by lower variable compensation~~higher consulting expenses. Overall, selling, general and administrative expenses as a percentage of net sales increased to ~~9.7~~9.9 percent in the three months ended September 30, ~~2022,~~2023, from ~~9.6~~9.7 percent in the comparable period in ~~2021.~~

~~Table of Contents~~

2022, as selling, general and administrative expenses increased at a faster rate than net sales.

Selling, general and administrative expenses increased ~~$200~~$512 million for the nine months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, primarily due to higher ~~consulting~~compensation expenses. Compensation and related expenses ~~driven by acquisitions, integration and the work towards the separation of the filtration business, increased travel expenses and one-time employee recognition expenses, partially offset by lower~~include variable compensation, ~~expenses.~~salaries and fringe benefits. Overall, selling, general and administrative expenses, as a percentage of sales, remained flat at 9.6 ~~percent versus the comparable period in 2021.~~percent.

Research, Development and Engineering Expenses

Research, development and engineering expenses increased ~~$82~~$28 million for the three months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, primarily due to ~~increased~~higher variable compensation ~~costs including one-time employee recognition expenses, Meritor expenses since the date of acquisition, higher spending on prototypes and testing, and increased consulting~~ expenses. Overall, research, development and engineering expenses as a percentage of net sales ~~increased~~decreased to ~~4.7~~4.5 percent in the three months ended September 30, ~~2022,~~2023, from ~~4.5~~4.7 percent in the comparable period in ~~2021.~~2022, as research, development and engineering expenses increased at a slower rate than net sales.

Table of Contents

Research, development and engineering expenses increased ~~$143~~$165 million for the nine months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, primarily due to higher compensation costs ~~including one-time employee recognition~~and lower expense recovery. Compensation and related expenses ~~increased consulting expenses, Meritor expenses since the date of acquisition~~include variable compensation, salaries and ~~higher spending on prototypes, testing and supplies.~~fringe benefits. Overall, research, development and engineering expenses as a percentage of sales ~~increased~~decreased to ~~4.7~~4.3 percent in the nine months ended September 30, ~~2022,~~2023, from ~~4.4~~4.7 percent in the comparable period in ~~2021.~~2022, as research, development and engineering expenses increased at a slower rate than net sales.

Research activities continue to focus on development of new products to meet future emission standards around the world, improvements in fuel economy performance of diesel and natural ~~gas powered~~gas-powered engines and related components as well as development activities around hydrogen engine solutions, battery electric, fuel cell electric and hydrogen ~~engine solutions.~~production technologies.

Equity, Royalty and Interest Income from Investees

Equity, royalty and interest income from investees ~~decreased $24~~increased $48 million for the three months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, primarily due ~~to decreased~~higher royalty and interest income from investees and increased earnings at ~~Beijing Foton~~Dongfeng Cummins Engine Co., Ltd. ~~and the February 7, 2022, purchase of Westport Fuel System Inc.'s stake in Cummins Westport Joint Venture. See NOTE 16, "ACQUISITIONS," to our~~ ~~Condensed Consolidated Financial Statements~~ ~~for additional information.~~

Equity, royalty and interest income from investees ~~decreased $136~~increased $109 million for the nine months ended September 30, ~~2022,~~2023, versus the comparable period in ~~2021,~~2022, mainly due to ~~decreased earnings at Beijing Foton Cummins Engine Co., Ltd.,~~the absence of the $28 million impairment of our Russian joint venture with KAMAZ, ~~lower~~higher royalty and interest income from investees, joint venture earnings from the Meritor acquisition and higher earnings at Dongfeng Cummins Engine Co., Ltd. ~~and the February 7, 2022 purchase of Westport Fuel System Inc.'s stake in Cummins Westport Joint Venture.~~ See NOTE 3,14, "RUSSIAN OPERATIONS,~~" and NOTE 16, "ACQUISITIONS,~~" to our Condensed Consolidated Financial Statements for additional information.

Other Operating Expense, Net

Other operating (expense) income, net was as follows:


													Three months ended				Nine months ended
		Three months ended					Nine months ended						September 30,				September 30,
In millions	In millions	September 30, 2022			October 3, 2021		September 30, 2022			October 3, 2021		In millions	2023		2022		2023		2022
Amortization of intangible assets	Amortization of intangible assets	$	(25)		$	(6)	$	(39)		$	(17)	Amortization of intangible assets	$	(34)	$	(25)	$	(100)	$	(39)
Russian suspension costs		(3)		(1)	—		(64)		(1)	—
Loss on write-off of assets												Loss on write-off of assets	(1)		—		(3)		(8)
Royalty income, net												Royalty income, net	1		1		12		6
Russian suspension costs (1)												Russian suspension costs (1)	—		(3)		—		(64)
Asset impairments and other charges	Asset impairments and other charges	—			—		(36)			—		Asset impairments and other charges	—		—		—		(36)
Loss on write-off of assets		—			(3)		(8)			(7)
Gain on sale of assets, net		—			2		1			1
Royalty income, net		1			2		6			7

Other, net	Other, net	(3)			—		(4)			(1)		Other, net	2		(3)		13		(3)
Total other operating expense, net	Total other operating expense, net	$	(30)		$	(5)	$	(144)		$	(17)	Total other operating expense, net	$	(32)	$	(30)	$	(78)	$	(144)

(1) See NOTE 3, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.
(1) See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.												(1) See NOTE 14, "RUSSIAN OPERATIONS," to our Condensed Consolidated Financial Statements for additional information.

Interest Expense

Interest expense ~~increased $33~~was $97 million and ~~$27~~$283 million for the three and nine months ended September 30, ~~2022,~~2023, versus $61 million and $112 million for the comparable periods in ~~2021. The overall increase in debt in the third quarter was primarily related to the Meritor acquisition. The three~~2022. Interest expense increased $36 million and ~~nine month increases were~~$171 million primarily due to the overall increase in floating interest rates ~~new~~and higher average term loan borrowings ~~and higher short-term borrowings, including commercial paper.~~outstanding for the respective periods in 2023.

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Other Income, Net

Other income (expense) ~~income,~~, net was as follows:


													Three months ended				Nine months ended
		Three months ended				Nine months ended					September 30,				September 30,
In millions	In millions	September 30, 2022		October 3, 2021			September 30, 2022		October 3, 2021			In millions	2023		2022			2023		2022
Non-service pension and OPEB credit		$	37	$	23		$	102	$	72
Foreign currency gain, net		20		7			7		5
Non-service pension and OPEB income												Non-service pension and OPEB income	$	32	$	37		$	94	$	102
Interest income	Interest income	14		7			29		18			Interest income	24		14			67		29
Foreign currency (loss) gain, net												Foreign currency (loss) gain, net	(5)		20			(4)		7
Loss on corporate owned life insurance												Loss on corporate owned life insurance	(28)		(29)			(8)		(114)
(Loss) gain on marketable securities, net	(Loss) gain on marketable securities, net	(3)		2			(12)		5			(Loss) gain on marketable securities, net	—		(3)			8		(12)
(Loss) gain on corporate owned life insurance		(29)		1			(114)		(11)

Other, net	Other, net	4		(3)			14		22			Other, net	2		4			9		14
Total other income, net	Total other income, net	$	43	$	37		$	26	$	111		Total other income, net	$	25	$	43		$	166	$	26

Table of 2021. The cessation date for submission and publication of rates for certain tenors of LIBOR has since been extended until mid-2023. Various central bank committees and working groups continue to discuss replacement of benchmark rates, the process for amending existing LIBOR-based contracts and the potential economic impacts of different alternatives. The Alternative Reference Rates Committee has identified the SOFR as its preferred alternative rate for U.S. dollar LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. We have evaluated the potential impact of the replacement of the LIBOR benchmark interest rate including risk management, internal operational readiness and monitoring the Financial Accounting Standards Board standard-setting process to address financial reporting issues that might arise in connection with transition from LIBOR to a new benchmark rate. While we do not believe the change will materially impact us due to our operational and system readiness coupled with relevant contractual fallback language, we continue to evaluate all eventual transition risks. In anticipation of LIBOR's phase out, our most recent revolving credit agreements include a well-documented transition mechanism for selecting a benchmark replacement rate for LIBOR, subject to our agreement. Additionally, with respect to our $1.3 billion in LIBOR-based fixed to variable rate swaps maturing in 2025 and 2030, we reviewed and believe our adherence to the 2020 LIBOR fallback protocol will allow for a smooth transition to the designated replacement rate when that transition occurs.Contents

On September 30, 2022, certain of our subsidiaries entered into a $1.0 billion credit agreement (Credit Agreement), consisting of a $400 million revolving credit facility and a $600 million term loan facility (Facilities), in anticipation of the separation of our filtration business. Borrowings under the Credit Agreement will not become available under the Credit Agreement unless and until, among other things, there is a sale to the public of shares in our subsidiary that holds the filtration business (Parent Borrower). The Credit Agreement will automatically terminate if no such public sale of shares of Parent Borrower occurs on or prior to March 30, 2023. Borrowings under the Credit Agreement would be available to Parent Borrower and one or more of its subsidiaries (Borrower). If borrowings become available under the Credit Agreement, the Facilities would mature on September 30, 2027.

Borrowings under the Credit Agreement would bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the applicable Borrower’s election. Generally, U.S. dollar-denominated loans would bear interest at adjusted term SOFR (which includes a 0.10 percent credit spread adjustment to term SOFR) for the applicable interest period plus a rate ranging from 1.125 percent to 1.75 percent depending on Parent Borrower's net leverage ratio.

Supply Chain Financing

We currently have supply chain financing programs with financial intermediaries, which provide certain vendors the option to be paid by financial intermediaries earlier than the due date on the applicable invoice. When a vendor utilizes the program and receives an early payment from a financial intermediary, they take a discount on the invoice. We then pay the financial intermediary the face amount of the invoice on the ~~regularly scheduled~~original due ~~date.~~date, which generally have 60 to 90 day payment terms. The maximum amount that we ~~may~~could have outstanding under the program ~~is $495~~was $482 million. We do not reimburse vendors for any costs they incur for participation in the program, ~~and~~ their participation is completely ~~voluntary.~~voluntary and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary. As a result, all amounts owed to the financial intermediaries are presented as ~~Accounts~~accounts payable in our Condensed Consolidated Balance Sheets. Amounts due to the financial intermediaries reflected in accounts payable at September 30, ~~2022,~~2023, were ~~$227~~$220 million.

~~Accounts Receivable Factoring Arrangements~~

We assumed an accounts receivable factoring program from the acquisition of Meritor with a total amount utilized at September 30, 2022, of $235 million, of which $215 million was attributable to committed factoring facilities. The remaining amount of $20 million was related to factoring by certain of Meritor's European subsidiaries under uncommitted factoring facilities with financial institutions. The receivables under all of these programs are sold at face value and are excluded from the ~~Condensed Consolidated Balance Sheets.~~ ~~Total facility size, utilized amounts, readily available amounts and expiration dates for each of these programs are shown in the table below.~~

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Current Expiration Total Facility Size at September 30, 2022 Utilized at September 30, 2022
In millions EUR USD EUR USD
Off-balance sheet arrangements
Committed Swedish factoring facility(1)(2)
March 2024 € 155 $ 151 € 144 $ 139
Committed U.S. factoring facility(1)
February 2023 N/A 75 — 76
Uncommitted U.K. factoring facility(3)
February 2025 25 24 2 2
Uncommitted Italy factoring facility June 2025 30 29 11 11
Other uncommitted factoring facilities(4)
None N/A N/A 7 7
Total off-balance sheet arrangements € 210 $ 279 € 164 $ 235
(1) Actual amounts may exceed the bank's commitment at the bank's discretion.
(2) The factoring program is supported by a 364-day committed credit facility through June 22, 2023.
(3) The U.K. factoring facility enables the factoring of British pound and Euro denominated accounts receivable.
(4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches as its discretion.

The Swedish facility is backed by a 364-day liquidity commitment, which was renewed through June 22, 2023. Commitments under all of Meritor's factoring facilities are subject to standard terms and conditions for these types of arrangements (including, in the case of the U.K. and Italy commitments, a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the respective programs).

We received $108 million of proceeds from receivables sold, and costs associated with all of the off-balance sheet arrangements described above were $1 million since the August 3, 2022, acquisition date.

~~We intend to wind down existing Meritor factoring programs into 2023.~~

Uses of Cash

~~Meritor Acquisition~~Dividends

We paid dividends of $683 million during the nine months ended September 30, 2023. In July 2023, the Board authorized an increase to our quarterly dividend of approximately 7 percent from $1.57 per share to $1.68 per share.

Capital Expenditures

Capital expenditures for the nine months ended September 30, 2023, were $694 million versus $453 million in the comparable period in 2022. We continue to invest in new product lines and targeted capacity expansions. We plan to spend an estimated $1.2 billion to $1.3 billion in 2023 on capital expenditures with over 60 percent of these expenditures expected to be invested in North America.

Acquisitions

Acquisitions for the nine months ended September 30, 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

Hydrogenics Corporation (Hydrogenics)	06/29/23	19%	$	287	$	48	$	335	(1)
Teksid Hierro de Mexico, S.A. de C.V. (Teksid MX)	04/03/23	100%	143		—		143		(2)




















(1) Hydrogenics entered into three non-interest-bearing promissory notes with $175 million paid on July 31, 2023, and the remaining $160 million due in three installments through 2025.
(2) Total purchase consideration included $32 million for the settlement of accounts payable.

On August 3, 2022, we completed the acquisition of Meritor, Inc. (Meritor). The total purchase price, including debt that was retired on the closing date, was $2.9 billion. 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. See NOTE 16, "ACQUISITIONS," to our Condensed Consolidated Financial Statements for additional information.

~~Dividends~~

We paid dividends of $633 million during the nine months ended September 30, 2022. In July 2022, the Board authorized an increase to our quarterly dividend of approximately 8 percent from $1.45 per share to $1.57 per share.

~~Stock Repurchases~~

In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the 2019 repurchase plan. In December 2019, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the 2018 repurchase plan. In the first nine months of 2022, we made the following purchases under the 2019 stock repurchase program:

In millions, except per share amounts Shares
Purchased Average Cost
Per Share Total Cost of
Repurchases
Remaining
Authorized
Capacity (1)
March 31 1.6 $ 199.27 $ 311 $ 2,281
June 30 0.1 194.00 36 2,245
September 30 0.2 197.72 23 2,222
Total 1.9 198.65 $ 370
(1) The remaining $222 million authorized capacity under the 2019 plan was calculated based on the cost to purchase the shares, but excludes commission expenses in accordance with the authorized plan.

~~We intend to repurchase outstanding shares from time to time during 2022 to enhance shareholder value.~~

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~~Capital Expenditures~~

Capital expenditures, including spending on internal use software, for the nine months ended September 30, 2022, were $497 million versus $398 million in the comparable period in 2021. We plan to spend an estimated $850 million to $900 million in 2022 on capital expenditures related to our legacy Cummins businesses and an additional $40 million to $50 million for Meritor, excluding internal use software, with over 60 percent of these expenditures expected to be invested in North America. In addition, we plan to spend an estimated $55 million to $65 million on internal use software in 2022.

Current Maturities of Short and Long-Term Debt

We had ~~$2.4~~$1.7 billion of commercial paper outstanding at September 30, ~~2022,~~2023, that matures in less than one year. The maturity schedule of our existing long-term debt ~~does not require~~requires significant cash outflows ~~until~~in the fourth quarter of 2023 when our 3.65 percent senior notes are due and in 2025 when our term loan and 0.75 percent senior notes are due. Required annual long-term debt principal payments range from ~~$13~~$50 million to ~~$2.5~~$2.0 billion over the next five years (including the remainder of ~~2022)~~2023). In 2023, we intend to have a greater emphasis on the repayment of debt to maintain our strong credit ratings. See NOTE ~~11,~~9, "DEBT," to the Condensed Consolidated Financial Statements for additional information.

On October 2, 2023, we repaid our $500 million senior notes, due 2023, using a combination of cash on hand and additional commercial paper borrowings. On October 31, 2023, we repaid $150 million of our term loan, due 2025, using cash on hand.

Pensions

Our global pension plans, including our unfunded and non-qualified plans, were ~~121~~120 percent funded at December 31, ~~2021.~~2022. Our U.S. defined benefit ~~plan,~~plans (qualified and non-qualified), which represented approximately 5269 percent of the worldwide pension obligation, ~~was 138~~were 121 percent funded, and our U.K. defined benefit ~~plan was 127~~plans were 119 percent funded at December 31, ~~2021. As part of the Meritor acquisition, we recorded assets of $147 million and liabilities of $105 million on our~~ ~~Condensed Consolidated Balance Sheets~~ ~~related to Meritor's postretirement benefit plans.~~2022. The funded status of our pension plans is dependent upon a variety of variables and assumptions including return on invested assets, market interest rates and levels of voluntary contributions to the plans. In the first nine months of ~~2022,~~2023, the investment ~~loss~~gain on our U.S. pension ~~trust~~trusts was ~~5.1~~2.32 percent, while our U.K. pension ~~trust~~trusts' loss was ~~21.7~~10.69 percent. To better hedge its liabilities, our U.K. pension plan sold a substantial portion of its private markets assets at a discount at the end of the second quarter, which fully settled in the third quarter and detracted from investment performance for the period. We anticipate making additional defined benefit pension contributions during the remainder of ~~2022~~2023 of $7$13 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made

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from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our ~~2022~~2023 annual net periodic pension cost to ~~approximate $20 million.~~be near zero.

~~Redeemable Noncontrolling Interests~~Stock Repurchases

~~A .19 minority shareholder in one~~In December 2021, the Board authorized the acquisition of our businesses, Hydrogenics Corporation (Hydrogenics), has, among other rights and subject to related obligations and restrictive covenants, rights that are exercisable between September 2022 and September 2026 to require us to (1) purchase such shareholder's shares (Put Option) at an amount up to $2.0 billion of additional common stock upon completion of the ~~fair market value (calculated pursuant to a process outlined~~$2.0 billion repurchase plan authorized in 2019. We did not make any repurchases of common stock in the ~~shareholders' agreement) and (2) sell to such shareholder Hydrogenics' electrolyzer business at an amount up to the fair market value~~first nine months of the electrolyzer business (calculated pursuant to a process outlined in the shareholders’ agreement). We recorded the estimated fair value of the Put Option as redeemable noncontrolling interests in our ~~Condensed Consolidated Financial Statements~~ ~~with an offset to additional paid-in capital. At September 30, 2022, the redeemable noncontrolling interest balance was $252 million.~~2023.

Credit Ratings

Our rating and outlook from each of the credit rating agencies as of the date of filing are shown in the table below:

Long-Term

Short-Term

Credit Rating Agency (1)

Senior Debt Rating

Debt Rating

Outlook

Standard and Poor’s Rating Services

A+

Stable

Moody’s Investors Service, Inc.

Stable

(1) Credit ratings are not recommendations to buy, are subject to change, and each rating should be evaluated independently of any other rating. In addition, we undertake no obligation to update disclosures concerning our credit ratings, whether as a result of new information, future events or otherwise.

Management's Assessment of Liquidity

Our financial condition and liquidity remain strong. Our solid balance sheet and credit ratings enable us to have ready access to credit and the capital markets. We assess our liquidity in terms of our ability to generate adequate cash to fund our operating, investing and financing activities. We believe our access to capital markets, our existing cash and marketable securities, operating cash flow and revolving credit facilities provide us with the financial flexibility needed to fund repayment of debt obligations, dividend payments, acquisitions, targeted capital expenditures, common stock repurchases, ~~dividend payments, targeted capital expenditures,~~ projected pension obligations, working capital and ~~debt service obligations~~equity injections for our subsidiaries through ~~2022~~2023 and beyond. We continue to generate significant cash from operations and maintain access to our revolving credit facilities and commercial paper programs as noted above.

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APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

A summary of our significant accounting policies is included in NOTE 1, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” of the Notes to the Consolidated Financial Statements of our ~~2021~~2022 Form 10-K, which discusses accounting policies that we have selected from acceptable alternatives.

Our Condensed Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles that often require management to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts presented and disclosed in the financial statements. Management reviews these estimates and assumptions based on historical experience, changes in business conditions and other relevant factors they believe to be reasonable under the circumstances. In any given reporting period, our actual results may differ from the estimates and assumptions used in preparing our Condensed Consolidated Financial Statements.

Critical accounting estimates are defined as follows: the estimate requires management to make assumptions about matters that were highly uncertain at the time the estimate was made; different estimates reasonably could have been used; or if changes in the estimate are reasonably likely to occur from period to period and the change would have a material impact on our financial condition or results of operations. Our senior management has discussed the development and selection of our accounting policies, related accounting estimates and the disclosures set forth below with the Audit Committee of the Board. Our critical accounting estimates disclosed in the Form 10-K address estimating liabilities for warranty programs, fair value of intangible assets, assessing goodwill impairment, accounting for income taxes and pension benefits.

A discussion of our critical accounting estimates may be found in the “Management’s Discussion and Analysis” section of our ~~2021~~2022 Form 10-K under the caption “APPLICATION OF CRITICAL ACCOUNTING ESTIMATES.” Within the context of these critical accounting estimates, ~~other than noted below~~ we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported in the first nine months of ~~2022.~~2023 other than the critical accounting estimate relating to goodwill impairment to update our impairment sensitivity analysis.

~~Fair Value~~

Table of ~~Intangible Assets~~Contents

Goodwill Impairment

We are required to make ~~strategic acquisitions that may have~~certain subjective and complex judgments in assessing whether a ~~material impact on our consolidated results of operations or financial position. We allocate the purchase price of acquired businesses~~goodwill impairment event has occurred, including assumptions and estimates used to ~~the assets acquired and liabilities assumed in the transaction at their estimated fair values. The determination of~~determine the fair value of ~~intangible assets,~~our reporting units. We test for goodwill impairment at the reporting unit level and our reporting units are the operating segments or the components of operating segments that constitute businesses for which ~~represent a significant portion of~~discrete financial information is available and is regularly reviewed by management.

We have the ~~purchase price in many of our acquisitions can be complex and requires the use of significant judgment with regard~~option to ~~(i)~~first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform an annual quantitative goodwill impairment test. We have elected this option on certain reporting units. The following events and ~~(ii)~~circumstances are considered when evaluating whether it is more likely than not that the ~~period~~fair value of a reporting unit is less than its carrying amount:

•Macroeconomic conditions, such as a deterioration in general economic conditions, fluctuations in foreign exchange rates and/or other developments in equity and credit markets;

•Industry and market considerations, such as a deterioration in the environment in which an entity operates, material loss in market share and significant declines in product pricing;

•Cost factors, such as an increase in raw materials, labor or other costs;

•Overall financial performance, such as negative or declining cash flows or a decline in actual or forecasted revenue;

•Other relevant entity-specific events, such as material changes in management or key personnel and

•Events affecting a reporting unit, such as a change in the composition or carrying amount of its net assets including acquisitions and dispositions.

The examples noted above are not all-inclusive, and we consider other relevant events and circumstances that affect the fair value of a reporting unit in determining whether to perform the quantitative goodwill impairment test.

Our goodwill recoverability assessment is based on our annual strategic planning process. This process includes an extensive review of expectations for the long-term growth of our businesses and forecasted future cash flows. In order to determine the valuation of our reporting units, we use either the market approach or the income approach using a discounted cash flow model. Our income approach method byuses a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the ~~intangible asset will be amortized. We use~~end of that time horizon, are discounted to their present value using an appropriate rate of return. Our estimates are based upon our historical experience, our current knowledge from our commercial relationships and available external information ~~available to~~about future trends.

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. Additionally, management must estimate a weighted-average cost of capital, which reflects a market rate, for each reporting unit for use as a discount rate. The discounted cash flows are compared to the carrying value of the reporting unit and, if less than the carrying value, the difference is recorded as a goodwill impairment loss. In addition, we also perform sensitivity analyses to determine how much our forecasts can fluctuate before the fair value ~~determinations~~of a reporting unit would be lower than its carrying amount. Future changes in the judgments, assumptions and ~~engage independent~~estimates that are used in our goodwill impairment testing, including discount rates or future operating results and related cash flow projections, could result in significantly different estimates of the fair values in the future. 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. We perform the goodwill impairment assessment as of the end of our fiscal third quarter.

While none of our reporting units recorded a goodwill impairment in 2023, we have two reporting units with material goodwill balances where the estimated fair value does not significantly exceed the carrying value, both of which are in our Components segment. Our automated transmissions reporting unit (consisting solely of our joint venture with Eaton) has an estimated fair value that exceeds its carrying amount of $1.1 billion by approximately 7 percent. Total goodwill in this reporting unit is $544 million. We valued this reporting unit using an income approach based on its expected future cash flows. The critical assumptions that factored into the valuation ~~specialists, when necessary,~~are the projected future revenues and gross margins of the business as well as the discount rate used to ~~assist~~present value these future cash flows. A 50 basis point increase in the discount rate would result in a 5 percent decline in the fair value ~~determination~~ of ~~significant~~the reporting unit. Our axles and brakes reporting unit, which consists of the legacy business acquired ~~intangibles.~~from Meritor in August 2022, has an estimated fair value that exceeds its carrying amount of $4.2 billion by approximately 12 percent. Total goodwill in this reporting unit is $745 million. We ~~estimate~~valued this reporting unit using an income approach based on future cash flows. The critical assumptions that factored into the valuation are the projected future revenues and gross margins of the business as well as the discount rate used to present value these future cash flows. A 50 basis point increase in the discount rate would result in a 5 percent decline in the fair value of ~~acquisition-related intangible assets principally based on projections~~the reporting unit.

Table of cash flows that will arise from identifiable intangible assets of acquired businesses, which includes estimates of discount rates, revenue growth rates, EBITDA, royalty rates, customer attrition rates and technology obsolesce rates. The projected cash flows are discounted to determine the present value of the assets at the dates of acquisition. Although we believe the projections, assumptions and estimates made were reasonable and appropriate, these estimates require significant judgment by management, are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments subsequent to the measurement period are recorded to our consolidated statements of income. Contents

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

See NOTE ~~16, "ACQUISITIONS,~~18, "RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS," in the Notes to ~~our~~ Condensed Consolidated Financial Statementsfor additional ~~information~~ ~~about our recent business combinations.~~information.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

A discussion of quantitative and qualitative disclosures about market risk may be found in Item 7A of our ~~2021~~2022 Form 10-K. There have been no material changes in this information since the filing of our ~~2021~~2022 Form 10-K.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). As permitted by SEC guidance for newly acquired businesses, the evaluation did not include an assessment of those disclosure controls and procedures that are subsumed by and did not include an assessment of internal control over financial reporting as it relates to Meritor, Inc. (Meritor), which was acquired on August 3, 2022. Based upon that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting

~~Except as described below, there has been~~There were no ~~change~~changes in our internal control over financial reporting during the quarter ended September 30, ~~2022,~~2023, that ~~has~~ materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On August 3, 2022, we completed the acquisition of Meritor. As part of our ongoing integration of the Meritor business, we are continuing to incorporate our controls and procedures into Meritor and to augment our company-wide controls to reflect the risks inherent in an acquisition of this type. As permitted by the SEC guidance for newly acquired businesses, our report on our internal control over financial reporting in the Annual Report on Form 10-K for the year ending December 31, 2022, will include a scope exception that excludes the acquired Meritor business in order for management to have sufficient time to evaluate and implement our internal control structure over the operations of the Meritor business.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The matters described under "Legal Proceedings" in NOTE ~~13,~~11, "COMMITMENTS AND CONTINGENCIES," to the Condensed Consolidated Financial Statements are incorporated herein by reference.

ITEM 1A. Risk Factors

In addition to other information set forth in this report and the risk ~~factors~~factor noted below, you should consider other risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022, which could materially affect our business, financial condition or future results. Other than noted below, there have been no material changes to our risks described in our ~~2021~~2022 Annual Report on Form 10-K or the "CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION" in this Quarterly report. Additional risks and uncertainties not currently known to us or that we currently judge to be immaterial also may materially adversely affect our business, financial condition or operating results.

GOVERNMENT REGULATION

We are conducting a formal internal review of our emission certification process and compliance with emission standards with respect to our pick-up truck applications and are working with the ~~EPA~~Environmental Protection Agency (EPA) and ~~CARB~~California Air Resources Board (CARB) to address their questions about these applications. Due to the continuing nature of our formal internal review and on-going discussions with the EPA and CARB, we cannot predict the final results of this formal review and these regulatory processes, nor ~~whether, or~~ the extent to which, they ~~could~~likely will have a material adverse impact on ~~our~~the results of operations and cash flows.

We previously announced that we are conducting a formal internal review of our emissions certification process and compliance with emission standards with respect to all of our pick-up truck applications, following conversations with the EPA and CARB regarding certification of our engines for model year 2019 RAM 2500 and 3500 trucks. During conversations with the EPA and CARB about the effectiveness of our pick-up truck applications, the regulators raised concerns that certain aspects of our emissions systems may reduce the effectiveness of our emissions control systems and thereby act as defeat devices. As a result, our internal review focuses, in part, on the regulators’ concerns. We are working closely with the regulators to enhance our emissions systems to improve the effectiveness of all of our pick-up truck applications and to fully address the regulators’ requirements. Based on discussions with the regulators, we have developed a new calibration for the engines in model year 2019 RAM 2500 and 3500 trucks that has been included in all engines shipped since September 2019. During our ongoing discussions, the regulators turned their attention to other model years and other engines, most notably our pick-up truck applications for RAM 2500 and 3500 trucks for model years 2013 through 2018 and Titan trucks for model years 2016 through 2019. Most recently, the regulators have also raised concerns regarding the completeness of our disclosures in our certification applications for RAM 2500 and 3500 trucks for model years 2013 through 2023. We have also been in communication with Environmental and Climate Change Canada regarding similar issues relating to some of these very same platforms. In connection with these and other ongoing discussions with the EPA and CARB, we are developing a new software calibration and will recall model years 2013 through 2018 RAM 2500 and 3500 trucks. We accrued $30 million for the RAM recall during the first quarter of 2022, an amount that reflected our current estimate of the cost of that recall. We are also developing a new software calibration and hardware fix and will recall model years 2016 through 2019 Titan trucks. We accrued $29 million for the Titan recall during the third quarter of 2022, an amount that reflected our current estimate of the cost of that recall.

We will continue to work together closely with the relevant regulators to develop and implement recommendations for ~~improvement~~improvements and seek to reach further resolutions as part of our ongoing commitment to compliance. Based upon our discussions to date with the regulators which are continuing, such resolutions may involve our agreeing to one or more consent decrees and paying civil penalties. Due to the presence of many unknown facts and circumstances, we are not yet able to estimate any further financial impact of these matters. ~~It is possible that the~~The consequences resulting from our formal review and these regulatory processes ~~could~~likely will have a material adverse impact on our results of operations and cash ~~flows.~~

~~BUSINESS CONDITIONS / DISRUPTIONS~~

~~The ongoing conflict between Russia and Ukraine, and the global response (including government bans~~flows, however we cannot yet reasonably estimate a loss or ~~restrictions on doing business in Russia), could have a material adverse impact on our results~~range of ~~operations, financial condition and cash flows.~~

Given the nature of our business and our global operations, political, economic, and other conditions in foreign countries and regions, including geopolitical risks such as the current conflict between Russia and Ukraine, may adversely affect our results of operations, financial condition and cash flows. We have suspended our commercial operations in Russia indefinitely, which resulted in a $158 million charge in the first quarter of 2022. In the second quarter, we recovered certain inventory and other expense amounts reserved in the first quarter and incurred some small additional charges resulting in a net recovery of $47 million. In the third quarter, we incurred $4 million of additional contract termination charges, and we recovered certain bad debt expenses and inventory amounts reserved in the first quarter for a net charge of $1 million. We may incur additional charges as conditions continue to evolve including with respect to our planned extrication from our relationship with KAMAZ Publicly Traded Company and its subsidiaries, including the unconsolidated joint venture. In addition, we have experienced, and expect to continue to experience, an inability to collect customer receivables and may be the subject of litigation in connection with our suspension of commercial operations in Russia. Theloss.

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broader consequences of this conflict, which may include further sanctions, embargoes, regional instability, and geopolitical shifts; potential retaliatory action by the Russian government against companies, including possible nationalization of foreign businesses in Russia; increased tensions between the United States and countries in which we operate; and the extent of the conflict’s effect on our business and results of operations as well as the global economy, cannot be predicted. To the extent the current conflict between Russia and Ukraine adversely affects our business, it may also have the effect of heightening many other risks disclosed in our ~~Annual Report on Form 10-K for the year ended December 31, 2021~~, any of which could materially and adversely affect our business and results of operations. Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation, particularly with regard to raw material, transportation and labor price fluctuations; disruptions to our information technology environment, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; disruptions in global supply chains; and our exposure to foreign currency exchange rate changes.

~~Failure to successfully integrate the acquisition of Meritor, Inc. (Meritor) could have a material adverse impact on our results of operations, financial condition and cash flows.~~

The acquisition of Meritor will involve the integration of Meritor’s operations with our existing operations, and there are uncertainties inherent in such an integration. We will be required to devote significant management attention and resources to integrating Meritor’s operations. A delay in the integration of Meritor could cause us to fail to realize some or all of the anticipated benefits within a reasonable period of time or at all, which could result in additional transaction costs or in other negative effects.

~~We may fail to fully realize all of the anticipated benefits, including enhanced revenue, earnings, and cash flow from our acquisition of Meritor.~~

Our ability to fully realize all of the anticipated benefits, including enhanced revenue, earnings, and cash flow, from our acquisition of Meritor will depend, in substantial part, on our ability to successfully integrate the products into our segments, launch the Meritor products around the world and achieve our projected sales goals. While we believe we will ultimately achieve these objectives, it is possible that we will be unable to achieve all of these objectives within our anticipated time frame or in the anticipated amounts. If we are not able to successfully complete the integration of the Meritor business or implement our Meritor strategy, we may not fully realize the anticipated benefits, including enhanced revenue, earnings, and cash flows, from this acquisition or such anticipated benefits may take longer to realize than expected. As part of the purchase accounting associated with the acquisition, significant goodwill and intangible asset balances were recorded on the consolidated balance sheet. If cash flows from the acquisition fall short of our anticipated amounts, these assets could be subject to non-cash impairment charges, negatively impacting our earnings.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following information is provided pursuant to Item 703 of Regulation S-K:

Issuer Purchases of Equity Securities
Period
Total
Number of
Shares
Purchased (1)
Average
Price Paid
per Share Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or Programs
Approximate
Dollar Value of Shares
that May Yet Be
Purchased Under the
Plans or Programs
(in millions) (2)
July 1 - July 31 73,856 $ 193.02 73,856 $ 2,231
August 1 - August 31 — — — 2,231
September 1 - September 30 42,589 205.86 42,589 2,222
Total 116,445 197.72 116,445
(1) Shares purchased represent shares under the Board authorized share repurchase program.
(2) Shares repurchased under our Key Employee Stock Investment Plan only occur in the event of a participant default, which cannot be predicted, and were excluded from this column.


	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
July 1 - July 31	—	$	—	—	$	2,218
August 1 - August 31	—	—		—	2,218
September 1 - September 30	—	—		—	2,218
Total	—	—		—


(1) Shares repurchased under our Key Employee Stock Investment Plan only occur in the event of a participant default, which cannot be predicted, and were excluded from this column.

In December 2021, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the ~~2019 repurchase plan. In December 2019, the Board authorized the acquisition of up to~~ $2.0 billion ~~of additional common stock upon completion of the 2018~~ repurchase ~~plan.~~plan authorized in 2019. During the three months ended September 30, ~~2022,~~2023, we ~~repurchased $23 million~~did not make any repurchases of common ~~stock under the 2019 authorization.~~stock. The dollar value remaining available for future purchases under the 2019 program at September 30, ~~2022,~~2023, was ~~$222~~$218 million.

Our Key Employee Stock Investment Plan allows certain employees, other than officers, to purchase shares of common stock on an installment basis up to an established credit limit. We hold participants’ shares as security for the loans and would, in effect,

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repurchase shares only if the participant defaulted in repayment of the loan. Shares associated with participants' sales are sold as open-market transactions via a third-party broker.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

~~Not applicable.~~ (c) During the third quarter of 2023, none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

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ITEM 6. Exhibits

The exhibits listed in the following Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

CUMMINS INC.

EXHIBIT INDEX


Exhibit No.						Description of Exhibit








~~10.1~~						Fourth Amended and Restated 364-Day Credit Agreement, dated as of August 17, 2022, by and among Cummins Inc., the subsidiary borrowers referred to therein, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent .~~(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on~~ ~~August~~ ~~19, 2022 (File No. 001-04949)).~~
~~10.2~~						Incremental 364-Day Credit Agreement, dated as of August 17, 2022, by and among Cummins Inc., the subsidiary borrowers referred to therein, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on August 19, 2022 (File No. 001-04949)).









~~10.~~310						Amendment No. 1 to Amended and Restated Credit Agreement, dated as of August 17, 2022, by and among Cummins Inc., the subsidiary borrowers referred to therein, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on August 19, 2022 (File No.001-04949)).

~~10.4~~						Credit Agreement, dated as of September 30, 2022, among FILT Red, Inc., Cummins Filtration Inc., the lenders party thereto, and Bank of America, N.A., as administrative agent. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on September 30, 2022 (File No.001-04949)).
~~10.5~~						Guaranty, dated as of September 30, 2022, by Cummins Inc. in favor of Bank of America, N.A., as administrative agent for the lenders party to the Credit Agreement. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Cummins Inc. with the Securities and Exchange Commission on September 30, 2022 (File No.001-04949))Key Employee Stock Investment Plan (filed herewith).
31(a)						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed with this quarterly report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Net Income for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021,~~September 30, 2022, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021,~~September 30, 2022, (iii) the Condensed Consolidated Balance Sheets at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and September 30, 2022 ~~and~~

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~~October 3, 2021,~~, (v) the Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Equity for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021~~September 30, 2022 and (vi) Notes to Condensed Consolidated Financial ~~Statements.~~Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Cummins Inc.

Date:

November ~~4, 2022~~2, 2023

By:

/s/ MARK A. SMITH

By:

/s/ LUTHER E. PETERS

Mark A. Smith

Luther E. Peters

Vice President and Chief Financial Officer

Vice President-Controller

(Principal Financial Officer)

(Principal Accounting Officer)

6462


Indiana						35-0257090
(State of Incorporation)						(IRS Employer Identification No.)


In millions, except par value	In millions, except par value	September 30, 2022		December 31, 2021		In millions, except par value	September 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	2,499	$	2,592	Cash and cash equivalents	$	2,387	$	2,020
Restricted cash						Restricted cash	225		81
Marketable securities (Note 6)						Marketable securities (Note 6)	452		472
Total cash, cash equivalents, restricted cash and marketable securities						Total cash, cash equivalents, restricted cash and marketable securities	3,064		2,573
Accounts and notes receivable, net						Accounts and notes receivable, net	5,662		5,202

Marketable securities (Note 7)		466		595
Total cash, cash equivalents and marketable securities		2,965		3,187
Accounts and notes receivable, net
Trade and other		4,450		3,565
Nonconsolidated equity investees		349		425
Inventories (Note 8)		5,543		4,355

Inventories (Note 7)						Inventories (Note 7)	5,906		5,603
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,091		777		Prepaid expenses and other current assets	1,280		1,073
Total current assets	Total current assets	14,398		12,309		Total current assets	15,912		14,451
Long-term assets	Long-term assets					Long-term assets
Property, plant and equipment	Property, plant and equipment	10,231		9,358		Property, plant and equipment	11,098		10,507
Accumulated depreciation	Accumulated depreciation	(5,030)		(4,936)		Accumulated depreciation	(5,297)		(4,986)
Property, plant and equipment, net	Property, plant and equipment, net	5,201		4,422		Property, plant and equipment, net	5,801		5,521
Investments and advances related to equity method investees	Investments and advances related to equity method investees	1,826		1,538		Investments and advances related to equity method investees	1,785		1,759
Goodwill (Note 9)		2,229		1,287
Other intangible assets, net (Note 9)		2,602		900
Pension assets (Note 4)		1,536		1,488
Other assets (Note 10)		1,977		1,766
Goodwill						Goodwill	2,379		2,343
Other intangible assets, net						Other intangible assets, net	2,518		2,687
Pension assets (Note 3)						Pension assets (Note 3)	1,500		1,398
Other assets (Note 8)						Other assets (Note 8)	2,202		2,140
Total assets	Total assets	$	29,769	$	23,710	Total assets	$	32,097	$	30,299

LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities	Current liabilities					Current liabilities
Accounts payable (principally trade)	Accounts payable (principally trade)	$	4,000	$	3,021	Accounts payable (principally trade)	$	4,262	$	4,252
Loans payable (Note 11)		217		208
Commercial paper (Note 11)		2,393		313
Loans payable (Note 9)						Loans payable (Note 9)	231		210
Commercial paper (Note 9)						Commercial paper (Note 9)	1,710		2,574
Current maturities of long-term debt (Note 9)						Current maturities of long-term debt (Note 9)	573		573
Accrued compensation, benefits and retirement costs	Accrued compensation, benefits and retirement costs	575		683		Accrued compensation, benefits and retirement costs	884		617
Current portion of accrued product warranty (Note 12)		801		755
Current portion of accrued product warranty (Note 10)						Current portion of accrued product warranty (Note 10)	731		726
Current portion of deferred revenue (Note 2)	Current portion of deferred revenue (Note 2)	921		855		Current portion of deferred revenue (Note 2)	1,029		1,004

Other accrued expenses (Note 10)		1,568		1,190
Current maturities of long-term debt (Note 11)		55		59
Other accrued expenses (Note 8)						Other accrued expenses (Note 8)	1,706		1,465
Total current liabilities	Total current liabilities	10,530		7,084		Total current liabilities	11,126		11,421
Long-term liabilities	Long-term liabilities					Long-term liabilities
Long-term debt (Note 11)		5,450		3,579
Pensions and other postretirement benefits (Note 4)		678		604
Accrued product warranty (Note 12)		742		684
Long-term debt (Note 9)						Long-term debt (Note 9)	4,950		4,498

Deferred revenue (Note 2)	Deferred revenue (Note 2)	867		850		Deferred revenue (Note 2)	1,011		844
Other liabilities (Note 10)		1,892		1,508
Other liabilities (Note 8)						Other liabilities (Note 8)	3,332		3,311
Total liabilities	Total liabilities	$	20,159	$	14,309	Total liabilities	$	20,419	$	20,074

Commitments and contingencies (Note 13)
Redeemable noncontrolling interests (Notes 1 and 14)		$	252	$	366
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)

Redeemable noncontrolling interests (Note 16)						Redeemable noncontrolling interests (Note 16)	$	—	$	258

EQUITY	EQUITY					EQUITY
Cummins Inc. shareholders’ equity	Cummins Inc. shareholders’ equity					Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued	Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued	$	2,214	$	2,099	Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.5 shares issued	$	2,558	$	2,243
Retained earnings	Retained earnings	17,628		16,741		Retained earnings	19,520		18,037
Treasury stock, at cost, 81.5 and 80.0 shares		(9,449)		(9,123)
Treasury stock, at cost, 80.8 and 81.2 shares						Treasury stock, at cost, 80.8 and 81.2 shares	(9,369)		(9,415)

Accumulated other comprehensive loss (Note 15)		(2,013)		(1,571)
Accumulated other comprehensive loss (Note 12)						Accumulated other comprehensive loss (Note 12)	(2,051)		(1,890)

Total Cummins Inc. shareholders’ equity	Total Cummins Inc. shareholders’ equity	8,380		8,146		Total Cummins Inc. shareholders’ equity	10,658		8,975
Noncontrolling interests	Noncontrolling interests	978		889		Noncontrolling interests	1,020		992
Total equity	Total equity	$	9,358	$	9,035	Total equity	$	11,678	$	9,967
Total liabilities, redeemable noncontrolling interests and equity	Total liabilities, redeemable noncontrolling interests and equity	$	29,769	$	23,710	Total liabilities, redeemable noncontrolling interests and equity	$	32,097	$	30,299


							Nine months ended
		Nine months ended					September 30,
In millions	In millions	September 30, 2022		October 3, 2021		In millions	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	Consolidated net income	$	1,539	$	1,764	Consolidated net income	$	2,233	$	1,539
Adjustments to reconcile consolidated net income to net cash provided by operating activities	Adjustments to reconcile consolidated net income to net cash provided by operating activities					Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	544		497		Depreciation and amortization	760		544

Deferred income taxes	Deferred income taxes	(194)		44		Deferred income taxes	(238)		(194)
Equity in income of investees, net of dividends	Equity in income of investees, net of dividends	(30)		(150)		Equity in income of investees, net of dividends	(100)		(30)
Pension and OPEB expense (Note 4)		23		62
Pension contributions and OPEB payments (Note 4)		(71)		(86)
Share-based compensation expense		24		25
Pension and OPEB expense (Note 3)						Pension and OPEB expense (Note 3)	4		23
Pension contributions and OPEB payments (Note 3)						Pension contributions and OPEB payments (Note 3)	(115)		(71)

Russian suspension costs, net of recoveries (Note 3)		112		—
Asset impairments and other charges		36		—
Loss on corporate owned life insurance		114		11

Foreign currency remeasurement and transaction exposure		(136)		27
Russian suspension costs, net of recoveries (Note 14)						Russian suspension costs, net of recoveries (Note 14)	—		112

Changes in current assets and liabilities, net of acquisitions	Changes in current assets and liabilities, net of acquisitions					Changes in current assets and liabilities, net of acquisitions
Accounts and notes receivable	Accounts and notes receivable	(333)		(353)		Accounts and notes receivable	(447)		(333)
Inventories	Inventories	(597)		(919)		Inventories	(318)		(597)
Other current assets	Other current assets	(18)		(45)		Other current assets	(191)		(18)
Accounts payable	Accounts payable	353		416		Accounts payable	43		353
Accrued expenses	Accrued expenses	(124)		435		Accrued expenses	543		(124)
Changes in other liabilities		(41)		(59)

Other, net	Other, net	(56)		(145)		Other, net	333		(59)
Net cash provided by operating activities	Net cash provided by operating activities	1,145		1,524		Net cash provided by operating activities	2,507		1,145

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(453)		(362)		Capital expenditures	(694)		(453)
Investments in internal use software		(44)		(36)

Proceeds from sale of land		—		20
Investments in and net advances from (to) equity investees		(50)		3

Acquisitions of businesses, net of cash acquired (Note 16)	Acquisitions of businesses, net of cash acquired (Note 16)	(3,008)		—		Acquisitions of businesses, net of cash acquired (Note 16)	(127)		(3,008)

Investments in marketable securities—acquisitions	Investments in marketable securities—acquisitions	(738)		(569)		Investments in marketable securities—acquisitions	(976)		(738)
Investments in marketable securities—liquidations (Note 7)		819		602
Investments in marketable securities—liquidations (Note 6)						Investments in marketable securities—liquidations (Note 6)	1,002		819

Cash flows from derivatives not designated as hedges		(29)		19

Other, net	Other, net	7		45		Other, net	(65)		(116)
Net cash used in investing activities	Net cash used in investing activities	(3,496)		(278)		Net cash used in investing activities	(860)		(3,496)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings (Notes 11 and 16)		2,076		35
Net borrowings (payments) of commercial paper		2,080		(123)
Proceeds from borrowings						Proceeds from borrowings	779		2,076
Net (payments) borrowings of commercial paper						Net (payments) borrowings of commercial paper	(566)		2,080
Payments on borrowings and finance lease obligations	Payments on borrowings and finance lease obligations	(1,070)		(57)		Payments on borrowings and finance lease obligations	(391)		(1,070)
Net borrowings (payments) under short-term credit agreements		21		(93)
Distributions to noncontrolling interests		(38)		(28)

Dividend payments on common stock	Dividend payments on common stock	(633)		(601)		Dividend payments on common stock	(683)		(633)
Repurchases of common stock	Repurchases of common stock	(370)		(1,228)		Repurchases of common stock	—		(370)
Proceeds from issuing common stock		36		27

Payments for purchase of redeemable noncontrolling interests (Note 16)						Payments for purchase of redeemable noncontrolling interests (Note 16)	(175)		—
Other, net	Other, net	9		(11)		Other, net	(33)		28
Net cash provided by (used in) financing activities		2,111		(2,079)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		147		20
Net decrease in cash and cash equivalents		(93)		(813)
Cash and cash equivalents at beginning of year		2,592		3,401
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	2,499	$	2,588
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(1,069)		2,111
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH						EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(67)		147
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	511		(93)
Cash, cash equivalents and restricted cash at beginning of year						Cash, cash equivalents and restricted cash at beginning of year	2,101		2,592
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD						CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	2,612	$	2,499


		Three months ended																		Three months ended
In millions, except per share amounts	In millions, except per share amounts	Redeemable Noncontrolling Interests		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity			In millions, except per share amounts	Redeemable Noncontrolling Interests		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE AT JUNE 30, 2023																					BALANCE AT JUNE 30, 2023	$	—	$	556	$	1,976	$	19,102	$	(9,380)	$	(1,917)	$	10,337	$	1,019	$	11,356

Net income																					Net income							656						656		34		690
Other comprehensive loss, net of tax (Note 12)																					Other comprehensive loss, net of tax (Note 12)											(134)		(134)		(7)		(141)
Issuance of common stock																					Issuance of common stock					1								1		—		1

Cash dividends on common stock, $1.68 per share																					Cash dividends on common stock, $1.68 per share							(238)						(238)		—		(238)
Distributions to noncontrolling interests																					Distributions to noncontrolling interests													—		(26)		(26)
Share-based awards																					Share-based awards					3				10				13		—		13

Other shareholder transactions																					Other shareholder transactions					22				1				23		—		23
BALANCE AT SEPTEMBER 30, 2023																					BALANCE AT SEPTEMBER 30, 2023	$	—	$	556	$	2,002	$	19,520	$	(9,369)	$	(2,051)	$	10,658	$	1,020	$	11,678

BALANCE AT JUNE 30, 2022	BALANCE AT JUNE 30, 2022	$	226	$	556	$	1,668	$	17,450	$	(9,439)	$	(1,696)	$	8,539	$	890	$	9,429		BALANCE AT JUNE 30, 2022	$	226	$	556	$	1,668	$	17,450	$	(9,439)	$	(1,696)	$	8,539	$	890	$	9,429

Net income	Net income	(7)						400						400		16		416			Net income	(7)						400						400		16		416
Other comprehensive loss, net of tax (Note 15)												(317)		(317)		(15)		(332)
Other comprehensive loss, net of tax (Note 12)																					Other comprehensive loss, net of tax (Note 12)											(317)		(317)		(15)		(332)
Issuance of common stock	Issuance of common stock					7								7		—		7			Issuance of common stock					7								7		—		7

Repurchases of common stock	Repurchases of common stock									(23)				(23)		—		(23)			Repurchases of common stock									(23)				(23)		—		(23)
Cash dividends on common stock, $1.57 per share	Cash dividends on common stock, $1.57 per share							(222)						(222)		—		(222)			Cash dividends on common stock, $1.57 per share							(222)						(222)		—		(222)
Distributions to noncontrolling interests	Distributions to noncontrolling interests													—		(24)		(24)			Distributions to noncontrolling interests													—		(24)		(24)
Share-based awards	Share-based awards					4				13				17		—		17			Share-based awards					4				13				17		—		17
Acquisition of business	Acquisition of business													—		111		111			Acquisition of business													—		111		111
Fair value adjustment of redeemable noncontrolling interests	Fair value adjustment of redeemable noncontrolling interests	33				(33)								(33)		—		(33)			Fair value adjustment of redeemable noncontrolling interests	33				(33)								(33)		—		(33)
Other shareholder transactions	Other shareholder transactions					12								12		—		12			Other shareholder transactions					12								12		—		12
BALANCE AT SEPTEMBER 30, 2022	BALANCE AT SEPTEMBER 30, 2022	$	252	$	556	$	1,658	$	17,628	$	(9,449)	$	(2,013)	$	8,380	$	978	$	9,358		BALANCE AT SEPTEMBER 30, 2022	$	252	$	556	$	1,658	$	17,628	$	(9,449)	$	(2,013)	$	8,380	$	978	$	9,358

BALANCE AT JULY 4, 2021		$	346	$	556	$	1,548	$	16,228	$	(8,838)	$	(1,929)	$	7,565	$	882	$	8,447

Net income		(3)						534						534		10		544
Other comprehensive income, net of tax (Note 15)												18		18		2		20

Repurchases of common stock										(138)				(138)		—		(138)
Cash dividends on common stock, $1.45 per share								(207)						(207)		—		(207)
Distributions to noncontrolling interests														—		(15)		(15)
Share-based awards										1				1		—		1

Fair value adjustment of redeemable noncontrolling interests		(42)				42								42		—		42
Other shareholder transactions						7				1				8		—		8
BALANCE AT OCTOBER 3, 2021		$	301	$	556	$	1,597	$	16,555	$	(8,974)	$	(1,911)	$	7,823	$	879	$	8,702



	Nine months ended
In millions, except per share amounts	Redeemable Noncontrolling Interests		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE AT DECEMBER 31, 2021	$	366	$	556	$	1,543	$	16,741	$	(9,123)	$	(1,571)	$	8,146	$	889	$	9,035

Net income	(18)						1,520						1,520		37		1,557
Other comprehensive loss, net of tax (Note 15)											(442)		(442)		(38)		(480)
Issuance of common stock					8								8		—		8

Repurchases of common stock									(370)				(370)		—		(370)
Cash dividends on common stock, $4.47 per share							(633)						(633)		—		(633)
Distributions to noncontrolling interests													—		(38)		(38)
Share-based awards					(3)				39				36		—		36
Acquisition of business													—		111		111
Fair value adjustment of redeemable noncontrolling interests	(96)				96								96		—		96
Other shareholder transactions					14				5				19		17		36
BALANCE AT SEPTEMBER 30, 2022	$	252	$	556	$	1,658	$	17,628	$	(9,449)	$	(2,013)	$	8,380	$	978	$	9,358

BALANCE AT DECEMBER 31, 2020	$	282	$	556	$	1,617	$	15,419	$	(7,779)	$	(1,982)	$	7,831	$	876	$	8,707

Net income	(9)						1,737						1,737		36		1,773
Other comprehensive income (loss), net of tax (Note 15)											71		71		(5)		66
Issuance of common stock					1								1		—		1

Repurchases of common stock									(1,228)				(1,228)		—		(1,228)
Cash dividends on common stock, $4.15 per share							(601)						(601)		—		(601)
Distributions to noncontrolling interests													—		(28)		(28)
Share-based awards					(4)				31				27		—		27

Fair value adjustment of redeemable noncontrolling interests	28				(28)								(28)		—		(28)
Other shareholder transactions					11				2				13		—		13
BALANCE AT OCTOBER 3, 2021	$	301	$	556	$	1,597	$	16,555	$	(8,974)	$	(1,911)	$	7,823	$	879	$	8,702


		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Net Income for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021~~September 30, 2022	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021~~September 30, 2022	4

	Condensed Consolidated Balance Sheets at September 30, ~~2022~~2023 and December 31, ~~2021~~2022	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021~~September 30, 2022	6
	Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Equity for the three and nine months ended September 30, ~~2022~~2023 and ~~October 3, 2021~~September 30, 2022	7
	Notes to Condensed Consolidated Financial Statements	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	58
ITEM 4.	Controls and Procedures	58
	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	6059
ITEM 1A.	Risk Factors	6059
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6160
ITEM 3.	Defaults Upon Senior Securities	6260
ITEM 4.	Mine Safety Disclosures	6260
ITEM 5.	Other Information	6260
ITEM 6.	Exhibits	6261
	Signatures	6462


	Pension
	U.S. Plans				U.K. Plans				OPEB
	Three months ended September 30,
In millions	2023		2022		2023		2022		2023		2022
Service cost	$	29	$	35	$	4	$	7	$	—	$	—
Interest cost	42		27		18		10		2		2
Expected return on plan assets	(69)		(60)		(27)		(22)		—		—
Amortization of prior service cost	—		1		1		—		—		—
Recognized net actuarial loss (gain)	2		5		—		1		(1)		—
Net periodic benefit expense (income)	$	4	$	8	$	(4)	$	(4)	$	1	$	2


In millions	Components		New Power		Distribution		Power Systems		Engine		Total




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

Acquisitions(1)	799		159		—		—		—		958
Translation and other	(15)		—		—		(1)		—		(16)

Balance at September 30, 2022	$	1,718	$	416	$	79	$	10	$	6	$	2,229



(1)See NOTE 16, "ACQUISITIONS," for additional information on acquisition goodwill.


In millions	Interest Rate	September 30, 2022		December 31, 2021
Long-term debt
Senior notes, due 2023	3.65%	$	500	$	500
Term loan, due 2025	Variable	2,000		—
Senior notes, due 2025(1)	0.75%	500		500
Debentures, due 2027	6.75%	58		58
Debentures, due 2028	7.125%	250		250
Senior notes, due 2030(1)	1.50%	850		850
Senior notes, due 2043	4.875%	500		500
Senior notes, due 2050	2.60%	650		650
Debentures, due 2098(2)	5.65%	165		165

Other debt		121		110

Unamortized discount and deferred issuance costs		(65)		(68)
Fair value adjustments due to hedge on indebtedness		(133)		34
Finance leases		109		89
Total long-term debt		5,505		3,638
Less: Current maturities of long-term debt		55		59
Long-term debt		$	5,450	$	3,579

(1) In 2021, we entered into a series of interest rate swaps to effectively convert from a fixed rate to floating rate. See "Interest Rate Risk" below for additional information.
(2) The effective interest rate is 7.48 percent.



In millions	2023			2024		2025		2026		2027
Principal payments	$	523	(1)	$	106	$	1,989	$	50	$	604

(1) On October 2, 2023, we repaid our $500 million senior notes, due 2023. See NOTE 19, "SUBSEQUENT EVENTS," to our Condensed Consolidated Financial Statements for additional information.


	Current Expiration	Total Facility Size at September 30, 2022				Utilized at September 30, 2022
In millions		EUR		USD		EUR		USD



Off-balance sheet arrangements
Committed Swedish factoring facility(1)(2)	March 2024	€	155	$	151	€	144	$	139
Committed U.S. factoring facility(1)	February 2023	N/A		75		—		76
Uncommitted U.K. factoring facility(3)	February 2025	25		24		2		2
Uncommitted Italy factoring facility	June 2025	30		29		11		11
Other uncommitted factoring facilities(4)	None	N/A		N/A		7		7
Total off-balance sheet arrangements		€	210	$	279	€	164	$	235


(1) Actual amounts may exceed the bank's commitment at the bank's discretion.
(2) The factoring program is supported by a 364-day committed credit facility through June 22, 2023.
(3) The U.K. factoring facility enables the factoring of British pound and Euro denominated accounts receivable.
(4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches as its discretion.



In millions	Change in pension and OPEB plans		Foreign currency translation adjustment		Unrealized gain (loss) on derivatives		Total attributable to Cummins Inc.		Noncontrolling interests		Total
Balance at June 30, 2023	$	(434)	$	(1,581)	$	98	$	(1,917)
Other comprehensive income (loss) before reclassifications
Before-tax amount	1		(154)		34		(119)		$	(7)	$	(126)
Tax expense	—		(2)		(9)		(11)		—		(11)
After-tax amount	1		(156)		25		(130)		(7)		(137)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	2		—		(6)		(4)		—		(4)

Net current period other comprehensive income (loss)	3		(156)		19		(134)		$	(7)	$	(141)
Balance at September 30, 2023	$	(431)	$	(1,737)	$	117	$	(2,051)

Balance at June 30, 2022	$	(324)	$	(1,426)	$	54	$	(1,696)
Other comprehensive income (loss) before reclassifications
Before-tax amount	—		(365)		51		(314)		$	(15)	$	(329)
Tax benefit (expense)	—		1		(13)		(12)		—		(12)
After-tax amount	—		(364)		38		(326)		(15)		(341)
Amounts reclassified from accumulated other comprehensive income (1)	6		—		3		9		—		9
Net current period other comprehensive income (loss)	6		(364)		41		(317)		$	(15)	$	(332)
Balance at September 30, 2022	$	(318)	$	(1,790)	$	95	$	(2,013)

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


	Derivatives Designated as Hedging Instruments				Derivatives Not Designated as Hedging Instruments
In millions	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Notional amount	$	2,824	$	3,051	$	3,968	$	2,900

Derivative assets
Prepaid expenses and other current assets	$	42	$	18	$	5	$	27

Other assets	—		80		—		—
Total derivative assets (1)	$	42	$	98	$	5	$	27

Derivative liabilities
Other accrued expenses	$	5	$	19	$	21	$	3
Other liabilities	155		151		—		—
Total derivative liabilities (1)	$	160	$	170	$	21	$	3

(1) Estimates of the fair value of all derivative assets and liabilities above are derived from Level 2 inputs, which are estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 input measures and there were no transfers into or out of Level 2 or 3 during the nine months ended September 30, 2023, or the year ended December 31, 2022.



In millions	Change in pensions and other postretirement defined benefit plans		Foreign currency translation adjustment		Unrealized gain (loss) on derivatives		Total attributable to Cummins Inc.		Noncontrolling interests		Total
Balance at June 30, 2022	$	(324)	$	(1,426)	$	54	$	(1,696)
Other comprehensive income (loss) before reclassifications
Before-tax amount	—		(365)		51		(314)		$	(15)	$	(329)
Tax benefit (expense)			1		(13)		(12)		—		(12)
After-tax amount	—		(364)		38		(326)		(15)		(341)
Amounts reclassified from accumulated other comprehensive income (loss)(1)	6		—		3		9		—		9

Net current period other comprehensive income (loss)	6		(364)		41		(317)		$	(15)	$	(332)
Balance at September 30, 2022	$	(318)	$	(1,790)	$	95	$	(2,013)

Balance at July 4, 2021	$	(689)	$	(1,231)	$	(9)	$	(1,929)
Other comprehensive income (loss) before reclassifications
Before-tax amount	1		(2)		5		4		$	2	$	6
Tax expense	(1)		—		(3)		(4)		—		(4)
After-tax amount	—		(2)		2		—		2		2
Amounts reclassified from accumulated other comprehensive income (loss)(1)	17		—		1		18		—		18
Net current period other comprehensive income (loss)	17		(2)		3		18		$	2	$	20
Balance at October 3, 2021	$	(672)	$	(1,233)	$	(6)	$	(1,911)

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


~~In millions~~our Condensed Consolidated Financial Statements.
~~Cash and cash equivalents~~	$	98
~~Accounts and notes receivable, net~~	~~640~~
~~Inventories~~	~~752~~
~~Property, plant and equipment~~	~~846~~
~~Intangible assets~~	~~1,610~~



~~Investments and advances related to equity method investees~~	~~382~~
~~Goodwill~~	~~850~~
~~Pension assets~~	~~147~~
~~Other current and long-term assets~~	~~364~~
~~Accounts payable (principally trade)~~	~~(711)~~
~~Net deferred taxes~~	~~(325)~~
~~Pensions and other postretirement benefits~~	~~(129)~~
~~Long-term debt~~	~~(962)~~
~~Other current and long-term liabilities~~	~~(590)~~
~~Noncontrolling interests~~	~~(111)~~
~~Total purchase price~~	$	~~2,861~~


	Three months ended				Nine months ended
	September 30,				September 30,
In millions	2023		2022		2023		2022
Axles and brakes	$	1,177	$	732	$	3,698	$	732
Emission solutions	803		748		2,584		2,323
Atmus	324		322		1,007		949
Engine components	263		239		838		702
Automated transmissions	187		159		545		436
Software and electronics	26		20		75		72
Total sales	$	2,780	$	2,220	$	8,747	$	5,214


											Three months ended				Nine months ended
		Three months ended				Nine months ended					September 30,				September 30,
In millions	In millions	September 30, 2022		October 3, 2021		September 30, 2022		October 3, 2021		In millions	2023		2022		2023		2022
Heavy-duty truck	Heavy-duty truck	$	751	$	662	$	2,232	$	1,941	Heavy-duty truck	$	885	$	751	$	2,601	$	2,232
Medium-duty truck and bus	Medium-duty truck and bus	583		501		1,794		1,461		Medium-duty truck and bus	656		583		1,960		1,794
Light-duty automotive	Light-duty automotive	465		492		1,377		1,432		Light-duty automotive	451		465		1,336		1,377
Total on-highway	Total on-highway	1,799		1,655		5,403		4,834		Total on-highway	1,992		1,799		5,897		5,403
Off-highway	Off-highway	264		306		801		942		Off-highway	244		264		854		801
Total sales	Total sales	$	2,063	$	1,961	$	6,204	$	5,776	Total sales	$	2,236	$	2,063	$	6,751	$	6,204


	Three months ended				Nine months ended
	September 30,				September 30,
In millions	2023		2022		2023		2022
Parts	$	991	$	942	$	3,054	$	2,855
Power generation	601		428		1,701		1,266
Engines	507		449		1,490		1,315
Service	420		413		1,249		1,154
Total sales	$	2,519	$	2,232	$	7,494	$	6,590


(Unaudited)	(Unaudited)	Three months ended				Nine months ended				(Unaudited)	Three months ended		Nine months ended
In millions	In millions	September 30, 2022		October 3, 2021		September 30, 2022		October 3, 2021		In millions	September 30, 2022		September 30, 2022
Net sales	Net sales	$	7,734	$	6,913	$	23,071	$	21,115	Net sales	$	7,734	$	23,071
Net income	Net income	397		544		1,565		1,662		Net income	397		1,565


~~In millions~~
~~Cash and cash equivalents~~	$	18
~~Accounts and notes receivable, net~~	24
~~Inventories~~	15
~~Property, plant and equipment~~	70
~~Intangible assets~~	~~164~~



~~Goodwill~~	~~108~~
~~Accounts payable (principally trade)~~	~~(21)~~
~~Net deferred taxes~~	~~(27)~~
~~Other, net~~	~~(5)~~
~~Total purchase price~~	$	~~346~~


Dollars in millions	Dollars in millions	September 30, 2022			December 31, 2021			Dollars in millions	September 30, 2023			December 31, 2022
Working capital (1)	Working capital (1)	$	3,868		$	5,225		Working capital (1)	$	4,786		$	3,030
Current ratio	Current ratio	1.37			1.74			Current ratio	1.43			1.27
Accounts and notes receivable, net	Accounts and notes receivable, net	$	4,799		$	3,990		Accounts and notes receivable, net	$	5,662		$	5,202
Days' sales in receivables	Days' sales in receivables	59			59			Days' sales in receivables	58			60
Inventories	Inventories	$	5,543		$	4,355		Inventories	$	5,906		$	5,603
Inventory turnover	Inventory turnover	4.0			4.6			Inventory turnover	4.4			4.2
Accounts payable (principally trade)	Accounts payable (principally trade)	$	4,000		$	3,021		Accounts payable (principally trade)	$	4,262		$	4,252
Days' payable outstanding	Days' payable outstanding	59			57			Days' payable outstanding	61			60
Total debt	Total debt	$	8,115		$	4,159		Total debt	$	7,464		$	7,855
Total debt as a percent of total capital	Total debt as a percent of total capital	46.4		%	31.5		%	Total debt as a percent of total capital	39.0		%	44.1		%

(1) Working capital includes cash and cash equivalents.
(1) Working capital includes cash, cash equivalents and restricted cash.								(1) Working capital includes cash, cash equivalents and restricted cash.


		September 30, 2022								September 30, 2023
In millions	In millions	Total		U.S.		International		Primary location of international balances	In millions	Total		U.S.		International		Primary location of international balances
Cash and cash equivalents		$	2,499	$	866	$	1,633	China, Singapore, Belgium, Australia, Mexico, Canada
Cash, cash equivalents and restricted cash									Cash, cash equivalents and restricted cash	$	2,612	$	1,270	$	1,342	Belgium, China, Australia, Canada, Mexico, Singapore, India

Marketable securities (1)	Marketable securities (1)	466		96		370		India	Marketable securities (1)	452		87		365		India
Total	Total	$	2,965	$	962	$	2,003		Total	$	3,064	$	1,357	$	1,707
Available credit capacity	Available credit capacity								Available credit capacity
Revolving credit facilities (2)	Revolving credit facilities (2)	$	1,607						Revolving credit facilities (2)	$	2,290
Atmus revolving credit facility (3)									Atmus revolving credit facility (3)	$	400
International and other uncommitted domestic credit facilities	International and other uncommitted domestic credit facilities	$	230						International and other uncommitted domestic credit facilities	$	356

(1) The majority of marketable securities could be liquidated into cash within a few days.	(1) The majority of marketable securities could be liquidated into cash within a few days.								(1) The majority of marketable securities could be liquidated into cash within a few days.
(2) The five-year credit facility for $2.0 billion, the 364-day credit facility for $1.5 billion and the $500 million incremental 364-day credit facility, maturing August 2026 and August 2023, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At September 30, 2022, we had $2,393 million of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $1.6 billion.
(2) The five-year credit facility for $2.0 billion and the 364-day credit facility for $2.0 billion, maturing August 2026 and June 2024, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At September 30, 2023, we had $1.7 billion of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $2.3 billion.									(2) The five-year credit facility for $2.0 billion and the 364-day credit facility for $2.0 billion, maturing August 2026 and June 2024, respectively, are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. At September 30, 2023, we had $1.7 billion of commercial paper outstanding, which effectively reduced our available capacity under our revolving credit facilities to $2.3 billion.
(3) In February 2023, Atmus entered into a $400 million revolving credit facility and at September 30, 2023, they had no outstanding borrowings under this facility.									(3) In February 2023, Atmus entered into a $400 million revolving credit facility and at September 30, 2023, they had no outstanding borrowings under this facility.


In millions, except per share amounts	Shares Purchased	Average Cost Per Share		Total Cost of Repurchases		Remaining Authorized Capacity (1)

March 31	1.6	$	199.27	$	311	$	2,281
June 30	0.1	194.00		36		2,245
September 30	0.2	197.72		23		2,222

Total	1.9	198.65		$	370

(1) The remaining $222 million authorized capacity under the 2019 plan was calculated based on the cost to purchase the shares, but excludes commission expenses in accordance with the authorized plan.


	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (2)
July 1 - July 31	73,856	$	193.02	73,856	$	2,231
August 1 - August 31	—	—		—	2,231
September 1 - September 30	42,589	205.86		42,589	2,222
Total	116,445	197.72		116,445

(1) Shares purchased represent shares under the Board authorized share repurchase program.
(2) Shares repurchased under our Key Employee Stock Investment Plan only occur in the event of a participant default, which cannot be predicted, and were excluded from this column.