Cummins Inc. Annual report pursuant to Section 13 and 15(d)

DERIVATIVES (Tables)

DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

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


	Years ended December 31,
In millions	2024		2023
Type of Derivative	Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Earnings		Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Earnings

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

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


	Year ended December 31,
In millions	2024		2023				2022
Type of Swap	Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Interest Expense		Gain (Loss) Recognized in AOCL			Gain (Loss) Reclassified from AOCL into Interest Expense		Gain (Loss) Recognized in AOCL		Gain (Loss) Reclassified from AOCL into Interest Expense

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

Schedule of Interest Rate Derivatives

The following table summarizes the gains and losses:


	Years ended December 31,
In millions	2024				2023			2022
Type of Swap	Gain (Loss) on Swaps		Gain (Loss) on Borrowings			Gain (Loss) on Swaps		Gain (Loss) on Borrowings		Gain (Loss) on Swaps		Gain (Loss) on Borrowings
Interest rate swaps (1)	$	12	$	(11)		$	31	$	(32)	$	(148)	$	145

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

Derivatives Not Designated as Hedging Instruments

The following table summarizes the effect on our Consolidated Statements of Net Income for derivative instruments not designated as hedging instruments:


	Years ended December 31,
In millions	2024		2023		2022
Gain (loss) recognized in income - Cost of sales (1)	$	3	$	(3)	$	2
Loss recognized in income - Other expense, net (1)	(65)		(21)		(5)


(1) Includes foreign currency forward contracts.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table summarizes the location and fair value of derivative instruments on our Consolidated Balance Sheets:


	Derivatives Designated as Hedging Instruments				Derivatives Not Designated as Hedging Instruments
	December 31,				December 31,
In millions	2024		2023		2024		2023
Notional amount	$	3,512	$	2,997	$	2,713	$	3,610

Derivative assets
Prepaid expenses and other current assets	$	60	$	14	$	6	$	16

Other assets	6		—		—		—
Total derivative assets (1)	$	66	$	14	$	6	$	16

Derivative liabilities
Other accrued expenses	$	10	$	43	$	67	$	14
Other liabilities	89		117		—		—
Total derivative liabilities (1)	$	99	$	160	$	67	$	14

(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 2024 or 2023.