Annual report [Section 13 and 15(d), not S-K Item 405]

OPERATING SEGMENTS (Tables)

v3.25.4
OPERATING SEGMENTS (Tables)
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment
Summarized financial information regarding our reportable segments at December 31, is shown in the table below:
In millions Engine Components Distribution Power Systems Accelera Total Segments
2025  
External sales $ 8,104  $ 8,643  $ 12,386  $ 4,114  $ 423  $ 33,670 
Intersegment sales 2,771  1,506  19  3,349  37  7,682 
Total sales 10,875  10,149  12,405  7,463  460  41,352 
Cost of goods sold (excluding warranty expenses) 8,260  8,138  9,842  5,081  701 
(1)
 32,022 
Warranty expenses 408  120  23  126  95  772 
Selling expenses 231  163  613  170  29 
(1)
 1,206 
Administrative expenses 570  505  365  410  69 
(1)
 1,919 
Research, development and engineering expenses 624  280  53  253  186 
(1)
 1,396 
Equity, royalty and interest income (loss) from investees 254  31  105  109  (30) 469 
Other income (expense) (2)
70  (72) 65  22  (298)
(1)
 (213)
Add back: Depreciation and amortization (3)
276  496  129  140  52  1,093 
Segment EBITDA $ 1,382  $ 1,398  $ 1,808  $ 1,694  $ (896)
(1)
 $ 5,386 
Interest income (4)
$ 37  $ 29  $ 23  $ 16  $ 1  $ 106 
Net assets 2,520  6,820  3,602  2,695  944  16,581 
Investments and advances to equity investees 697  494  409  168  359  2,127 
Capital expenditures 518  336  127  222  32  1,235 
2024  
External sales $ 8,987  $ 9,894  $ 11,352  $ 3,500  $ 369  $ 34,102 
Intersegment sales 2,725  1,785  32  2,908  45  7,495 
Total sales 11,712  11,679  11,384  6,408  414  41,597 
Cost of goods sold (excluding warranty expenses) 8,707  9,346  9,185  4,506  643 
(5)
 32,387 
Warranty expenses 420  173  23  101  34  751 
Selling expenses 214  184  628  174  33 
(5)
 1,233 
Administrative expenses 582  555  382  421  70 
(5)
 2,010 
Research, development and engineering expenses 616  328  55  236  226 
(5)
 1,461 
Equity, royalty and interest income (loss) from investees 212  64  90  79  (50)
(5)
 395 
Other income (expense) (2)
23  (59) 54  —  (183)
(5)
 (165)
Add back: Depreciation and amortization (3)
245  493  123  131  61  1,053 
Segment EBITDA $ 1,653  $ 1,591 
(6)
 $ 1,378  $ 1,180  $ (764)
(5)
 $ 5,038 
Interest income (4)
$ 17  $ 25  $ 37  $ 7  $ 1  $ 87 
Net assets 2,076  6,433  3,151  2,350  1,234  15,244 
Investments and advances to equity investees 653  504  394  145  187  1,883 
Capital expenditures 556  339  111  143  59  1,208 
(Table continues on next page)
In millions Engine Components Distribution Power Systems Accelera Total Segments
2023
External sales $ 8,874  $ 11,531  $ 10,199  $ 3,125  $ 336  $ 34,065 
Intersegment sales 2,810  1,878  50  2,548  18  7,304 
Total sales 11,684  13,409  10,249  5,673  354  41,369 
Cost of goods sold (excluding warranty expenses) 8,825  10,717  8,239  4,173  524  32,478 
Warranty expenses 377  138  16  71  29  631 
Selling expenses 199  227  642  168  33  1,269 
Administrative expenses 587  634  354  399  57  2,031 
Research, development and engineering expenses 614  387  57  237  203  1,498 
Equity, royalty and interest income (loss) from investees 251  97  97  53  (15) 483 
Other income (expense) (2)
72  (54) 56  36  1  111 
Add back: Depreciation and amortization (3)
225  491  115  122  63  1,016 
Segment EBITDA $ 1,630  $ 1,840 
(7)
 $ 1,209  $ 836  $ (443) $ 5,072 
Interest income (4)
$ 19  $ 31  $ 34  $ 9  $ 2  $ 95 
Net assets 930  6,965  2,348  1,938  1,159  13,340 
Investments and advances to equity investees 660  582  396  132  25  1,795 
Capital expenditures 538  373  103  115  84  1,213 
(1) Included $157 million of charges in cost of goods sold, $2 million of charges in selling, general and administrative expenses, $7 million of charges in research, development and engineering expenses, $292 million of charges in other operating expenses and $458 million of charges in EBITDA, all related to Accelera actions in 2025. See NOTE 22, “ACCELERA ACTIONS,” for additional information.
(2) Other income (expense) includes other operating expense, net and other income, net from our Consolidated Statements of Net Income.
(3) Depreciation and amortization are not considered significant segment expenses but are presented here to reconcile to EBITDA, the measure used by our CODM. Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in our Consolidated Statements of Net Income as interest expense. The amortization of debt discount and deferred costs were $12 million, $12 million and $8 million for the years ended 2025, 2024 and 2023, respectively. A portion of depreciation expense is included in research, development and engineering expense.
(4) Interest income is a component of other income (expense).
(5) Included $112 million of charges in cost of sales, $10 million of charges in selling, general and administrative expenses, $2 million of charges in research, development and engineering expenses, $17 million of charges in equity, royalty and interest income (loss) from investees, $171 million of charges in other operating expenses and $312 million of charges in EBITDA, all related to Accelera strategic reorganization actions in the fourth quarter of 2024. See NOTE 22, “ACCELERA ACTIONS,” for additional information.
(6) Included $21 million of costs associated with the divestiture of Atmus for the year ended December 31, 2024.
(7) Included $78 million of costs associated with the divestiture of Atmus for the year ended December 31, 2023.
Reconciliation of segment information
A reconciliation of our segment information to the corresponding amounts in our Consolidated Statements of Net Income is shown in the table below:
  Years ended December 31,
In millions 2025 2024 2023
TOTAL SEGMENT EBITDA $ 5,386  $ 5,038  $ 5,072 
Intersegment eliminations and other (1)
(1) 1,288  (2,055)
Less:
Interest expense 329  370  375 
Depreciation and amortization 1,093  1,053  1,016 
INCOME BEFORE INCOME TAXES $ 3,963  $ 4,903  $ 1,626 
(1) Intersegment eliminations and other included a $1.3 billion gain related to the divestiture of Atmus and $14 million of costs associated with the divestiture of Atmus for the year ended December 31, 2024. The year ended December 31, 2023, included $2.0 billion related to the Settlement Agreements charge, $22 million of costs associated with the divestiture of Atmus and $21 million of voluntary retirement and voluntary separation charges. See NOTE 14, “COMMITMENTS AND CONTINGENCIES,” and NOTE 21, “ATMUS DIVESTITURE,” for additional information.
Reconciliation of segment information from net assets to total assets
A reconciliation of our segment net assets to the corresponding amounts in the Consolidated Balance Sheets is shown in the table below:
  December 31,
In millions 2025 2024
Net assets for reportable segments $ 16,581  $ 15,244 
Cash, cash equivalents and marketable securities 3,609  2,264 
Net liabilities deducted in arriving at net segment assets (1)
12,597  12,556 
Pension and OPEB adjustments excluded from net segment assets 136  352 
Deferred tax assets not allocated to segments 1,063  1,119 
Deferred debt costs not allocated to segments 6  5 
Total assets $ 33,992  $ 31,540 
(1) Liabilities deducted in arriving at net segment assets include certain accounts payable, accrued expenses, long-term liabilities and other items.
Long-lived assets attributed to geographic areas Long-lived segment assets by country were as follows:
December 31,
In millions 2025 2024
United States $ 6,317  $ 5,751 
China 1,010  968 
India 598  566 
United Kingdom 580  494 
Other countries 2,054  1,932 
Total long-lived assets $ 10,559  $ 9,711