Annual report pursuant to Section 13 and 15(d)

SHAREHOLDERS' EQUITY

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SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 15. CUMMINS INC. SHAREHOLDERS' EQUITY
Preferred and Preference Stock
We are authorized to issue one million shares of zero par value preferred and one million shares of preference stock with preferred shares being senior to preference shares. We can determine the number of shares of each series, and the rights, preferences and limitations of each series. At December 31, 2020, there was no preferred or preference stock outstanding.
Common Stock
Changes in shares of common stock, treasury stock and common stock held in trust for employee benefit plans were as follows:
In millions Common
Stock		 Treasury
Stock		 Common Stock
Held in Trust
Balance at December 31, 2017 222.4  56.7  0.5 
Shares acquired —  7.9  — 
Shares issued —  (0.2) (0.1)
Balance at December 31, 2018 222.4  64.4  0.4 
Shares acquired —  8.1  — 
Shares issued —  (0.8) (0.2)
Balance at December 31, 2019 222.4  71.7  0.2 
Shares acquired —  3.9  — 
Shares issued —  (0.8) (0.2)
Balance at December 31, 2020 222.4  74.8  — 
Treasury Stock
Shares of common stock repurchased by us are recorded at cost as treasury stock and result in a reduction of shareholders' equity in our Consolidated Balance Sheets. Treasury shares may be reissued as part of our stock-based compensation programs. When shares are reissued, we use the weighted-average cost method for determining cost. The gains between the cost of the shares and the issuance price are added to additional paid-in-capital. The losses are deducted from additional paid-in capital to the extent of the gains. Thereafter, the losses are deducted from retained earnings. Treasury stock activity for the three-year period ended December 31, 2020, consisting of shares issued and repurchased is presented in our Consolidated Statements of Changes in Equity.
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 October 2018, the Board authorized the acquisition of up to $2.0 billion of additional common stock upon completion of the 2016 repurchase plan. For the year ended December 31, 2020, we made the following purchases under the stock repurchase programs:
In millions (except per share amounts)
For each quarter ended		 2020 Shares Purchased Average Cost
Per Share		 Total Cost of
Repurchases
Remaining
Authorized
Capacity (1)
October 2018, $2 billion repurchase program
March 29 3.5  $ 156.92  $ 550  $ 85 
June 28 —  —  —  85 
September 27 —  —  —  85 
December 31 0.4  219.15  85  — 
Subtotal 3.9  163.11  635  — 
December 2019, $2 billion repurchase program
December 31 0.0 
(2)
 218.97  6  1,994 
Total 3.9  163.50  $ 641 
(1) The remaining authorized capacity under these plans was calculated based on the cost to purchase the shares but excludes commission expenses in accordance with the authorized plan.
(2) The shares purchased under the 2019 repurchase program rounded to zero.
In 2018, we entered into an accelerated share repurchase agreement with Goldman, Sachs & Co. LLC to repurchase $500 million of our common stock under our previously announced share repurchase plans and received 3.5 million shares at an average price of $144.02 per share.
We repurchased $641 million, $1,271 million and $1,140 million of our common stock in the years ended December 31, 2020, 2019 and 2018, respectively.
Dividends
Total dividends paid to common shareholders in 2020, 2019 and 2018 were $782 million, $761 million and $718 million, respectively. Declaration and payment of dividends in the future depends upon our income and liquidity position, among other factors, and is subject to declaration by the Board, who meet quarterly to consider our dividend payment. We expect to fund dividend payments with cash from operations.
In October 2020, the Board authorized an increase to our quarterly dividend of 3.0 percent from $1.311 per share to $1.35 per share. In July 2019, the Board authorized a 15.0 percent increase to our quarterly cash dividend on our common stock from $1.14 per share to $1.311 per share. In July 2018, the Board approved a 5.6 percent increase to our quarterly dividend on our common stock from $1.08 per share to $1.14 per share. Cash dividends per share paid to common shareholders for the last three years were as follows:
  Quarterly Dividends
  2020 2019 2018
First quarter $ 1.311  $ 1.14  $ 1.08 
Second quarter 1.311  1.14  1.08 
Third quarter 1.311  1.311  1.14 
Fourth quarter 1.35  1.311  1.14 
Total $ 5.28  $ 4.90  $ 4.44 
Employee Benefits Trust
In 1997, we established the Employee Benefits Trust (EBT) funded with common stock for use in meeting our future obligations under employee benefit and compensation plans. The primary sources of cash for the EBT were dividends received on unallocated shares of our common stock held by the EBT. Shares of Cummins stock and cash in the EBT were used to fund the accounts of participants in the Cummins Retirement and Savings Plan who elected to receive company matching funds in Cummins stock. In addition, at times we directed the trustee to sell shares in the EBT on the open market and swept cash from the EBT to fund other employee benefit plans. Matching contributions charged to income for the years ended December 31, 2020, 2019 and 2018 were $2 million, $10 million and $12 million, respectively. At December 31, 2020, the EBT was fully depleted.