cmi-20210404

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 4, 2021

Commission File Number 1-4949

CUMMINS INC.

(Exact name of registrant as specified in its charter)


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

500 Jackson Street

Box 3005

Columbus, Indiana 47202-3005

(Address of principal executive offices)

Telephone (812) 377-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $2.50 par value

CMI

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of April 4, 2021, there were 146,202,578 shares of common stock outstanding with a par value of $2.50 per share.

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CUMMINS INC. AND SUBSIDIARIES

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q


		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Net Income for the three months ended April 4, 2021 and March 29, 2020	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended April 4, 2021 and March 29, 2020	4

	Condensed Consolidated Balance Sheets at April 4, 2021 and December 31, 2020	5
	Condensed Consolidated Statements of Cash Flows for the three months ended April 4, 2021 and March 29, 2020	6
	Condensed Consolidated Statements of Changes in Equity for the three months ended April 4, 2021 and March 29, 2020	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	42
ITEM 4.	Controls and Procedures	42
	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	43
ITEM 1A.	Risk Factors	43
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
ITEM 3.	Defaults Upon Senior Securities	43
ITEM 4.	Mine Safety Disclosures	43
ITEM 5.	Other Information	44
ITEM 6.	Exhibits	44
	Signatures	45

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PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)



	Three months ended
In millions, except per share amounts	April 4, 2021		March 29, 2020
NET SALES (a) (Note 2)	$	6,092	$	5,011
Cost of sales	4,606		3,717
GROSS MARGIN	1,486		1,294

OPERATING EXPENSES AND INCOME
Selling, general and administrative expenses	574		546
Research, development and engineering expenses	260		238
Equity, royalty and interest income from investees (Note 4)	166		129



Other operating expense, net	(8)		(5)
OPERATING INCOME	810		634


Interest expense	28		23
Other income, net	1		44
INCOME BEFORE INCOME TAXES	783		655

Income tax expense	172		127
CONSOLIDATED NET INCOME	611		528

Less: Net income attributable to noncontrolling interests	8		17
NET INCOME ATTRIBUTABLE TO CUMMINS INC.	$	603	$	511

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
Basic	$	4.10	$	3.42
Diluted	$	4.07	$	3.41

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
Basic	147.0		149.3
Dilutive effect of stock compensation awards	1.3		0.4
Diluted	148.3		149.7



(a) Includes sales to nonconsolidated equity investees of $478 million for the three months ended April 4, 2021, compared with $257 million for the comparable period in 2020.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three months ended
In millions	April 4, 2021		March 29, 2020
CONSOLIDATED NET INCOME	$	611	$	528
Other comprehensive income (loss), net of tax (Note 11)
Change in pension and other postretirement defined benefit plans	29		2
Foreign currency translation adjustments	(56)		(162)

Unrealized gain (loss) on derivatives	72		(79)
Total other comprehensive income (loss), net of tax	45		(239)
COMPREHENSIVE INCOME	656		289
Less: Comprehensive income attributable to noncontrolling interests	8		—
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC.	$	648	$	289

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In millions, except par value	April 4, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	2,958	$	3,401

Marketable securities (Note 5)	397		461
Total cash, cash equivalents and marketable securities	3,355		3,862
Accounts and notes receivable, net
Trade and other	3,698		3,440
Nonconsolidated equity investees	511		380
Inventories (Note 6)	3,753		3,425
Prepaid expenses and other current assets	805		790
Total current assets	12,122		11,897
Long-term assets
Property, plant and equipment	9,044		9,011
Accumulated depreciation	(4,848)		(4,756)
Property, plant and equipment, net	4,196		4,255
Investments and advances related to equity method investees	1,592		1,441
Goodwill	1,290		1,293
Other intangible assets, net	964		963
Pension assets	1,085		1,042
Other assets (Note 7)	1,713		1,733
Total assets	$	22,962	$	22,624

LIABILITIES
Current liabilities
Accounts payable (principally trade)	$	3,279	$	2,820
Loans payable (Note 8)	93		169
Commercial paper (Note 8)	317		323
Accrued compensation, benefits and retirement costs	393		484
Current portion of accrued product warranty (Note 9)	623		674
Current portion of deferred revenue (Note 2)	773		691

Other accrued expenses (Note 7)	1,121		1,112
Current maturities of long-term debt (Note 8)	61		62
Total current liabilities	6,660		6,335
Long-term liabilities
Long-term debt (Note 8)	3,620		3,610
Pensions and other postretirement benefits	621		630
Accrued product warranty (Note 9)	692		672
Deferred revenue (Note 2)	828		840
Other liabilities (Note 7)	1,510		1,548
Total liabilities	$	13,931	$	13,635

Commitments and contingencies (Note 10)

EQUITY
Cummins Inc. shareholders’ equity
Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued	$	2,393	$	2,404
Retained earnings	15,825		15,419
Treasury stock, at cost, 76.2 and 74.8 shares	(8,172)		(7,779)

Accumulated other comprehensive loss (Note 11)	(1,937)		(1,982)



Total Cummins Inc. shareholders’ equity	8,109		8,062
Noncontrolling interests	922		927
Total equity	$	9,031	$	8,989
Total liabilities and equity	$	22,962	$	22,624

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended
In millions	April 4, 2021		March 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	611	$	528
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization	170		168



Deferred income taxes	8		(11)
Equity in income of investees, net of dividends	(136)		(78)
Pension and OPEB expense (Note 3)	20		27
Pension contributions and OPEB payments (Note 3)	(51)		(60)
Share-based compensation expense	8		4

Restructuring payments	—		(48)


Loss (gain) on corporate owned life insurance	32		(17)

Foreign currency remeasurement and transaction exposure	1		3
Changes in current assets and liabilities
Accounts and notes receivable	(374)		107
Inventories	(336)		(171)
Other current assets	(24)		79
Accounts payable	465		171
Accrued expenses	(24)		(321)
Changes in other liabilities	—		28

Other, net	(31)		(30)
Net cash provided by operating activities	339		379

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(87)		(75)
Investments in internal use software	(11)		(8)

Investments in and advances to equity investees	(24)		(7)


Investments in marketable securities—acquisitions	(143)		(116)
Investments in marketable securities—liquidations (Note 5)	207		95


Cash flows from derivatives not designated as hedges	14		6
Other, net	19		6
Net cash used in investing activities	(25)		(99)

CASH FLOWS FROM FINANCING ACTIVITIES

Net (payments) borrowings of commercial paper	(6)		957
Payments on borrowings and finance lease obligations	(16)		(10)
Net (payments) borrowings under short-term credit agreements	(102)		25
Distributions to noncontrolling interests	(13)		(13)
Dividend payments on common stock	(197)		(195)
Repurchases of common stock	(418)		(550)
Proceeds from issuing common stock	18		13

Other, net	(11)		7
Net cash (used in) provided by financing activities	(745)		234
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(12)		48
Net (decrease) increase in cash and cash equivalents	(443)		562
Cash and cash equivalents at beginning of year	3,401		1,129
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,958	$	1,691

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Three months ended
In millions, except per share amounts	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Common Stock Held in Trust		Accumulated Other Comprehensive Loss		Total Cummins Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE AT DECEMBER 31, 2020	$	556	$	1,848	$	15,419	$	(7,779)	$	—	$	(1,982)	$	8,062	$	927	$	8,989

Net income					603								603		8		611
Other comprehensive income, net of tax (Note 11)											45		45		—		45


Repurchases of common stock							(418)						(418)		—		(418)
Cash dividends on common stock, $1.35 per share					(197)								(197)		—		(197)
Distributions to noncontrolling interests													—		(13)		(13)
Share-based awards			(6)				24						18		—		18

Other shareholder transactions			(5)				1						(4)		—		(4)
BALANCE AT APRIL 4, 2021	$	556	$	1,837	$	15,825	$	(8,172)	$	—	$	(1,937)	$	8,109	$	922	$	9,031

BALANCE AT DECEMBER 31, 2019	$	556	$	1,790	$	14,416	$	(7,225)	$	(2)	$	(2,028)	$	7,507	$	958	$	8,465
Adoption of new accounting standards					(4)								(4)		—		(4)
Net income					511								511		17		528
Other comprehensive loss, net of tax (Note 11)											(222)		(222)		(17)		(239)
Issuance of common stock			9										9		—		9
Employee benefits trust activity			17						1				18		—		18
Repurchases of common stock							(550)						(550)		—		(550)
Cash dividends on common stock, $1.311 per share					(195)								(195)		—		(195)
Distributions to noncontrolling interests													—		(13)		(13)
Share-based awards			(18)				31						13		—		13

Other shareholder transactions			(19)										(19)		5		(14)
BALANCE AT MARCH 29, 2020	$	556	$	1,779	$	14,728	$	(7,744)	$	(1)	$	(2,250)	$	7,068	$	950	$	8,018

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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CUMMINS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Overview

Cummins Inc. (“Cummins,” “we,” “our” or “us”) was founded in 1919 as Cummins Engine Company, a corporation in Columbus, Indiana, and one of the first diesel engine manufacturers. In 2001, we changed our name to Cummins Inc. We are a global power leader that designs, manufactures, distributes and services diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen production and fuel cell products. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We serve our customers through a network of over 500 wholly-owned, joint venture and independent distributor locations and over 9,000 Cummins certified dealer locations with service to approximately 190 countries and territories.

Interim Condensed Financial Statements

The unaudited Condensed Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows. All such adjustments are of a normal recurring nature. The Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations.

These interim condensed financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Our interim period financial results for the three month periods presented are not necessarily indicative of results to be expected for any other interim period or for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all required annual disclosures.

Reclassifications

Certain amounts for prior year periods were reclassified to conform to the current year presentation.

Use of Estimates in Preparation of Financial Statements

Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our Condensed Consolidated Financial Statements. Significant estimates and assumptions in these Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

Reporting Period

Our reporting period usually ends on the Sunday closest to the last day of the quarterly calendar period. The first quarters of 2021 and 2020 ended on April 4 and March 29, respectively. Our fiscal year ends on December 31, regardless of the day of the week on which December 31 falls.

Weighted-Average Diluted Shares Outstanding

The weighted-average diluted common shares outstanding exclude the anti-dilutive effect of certain stock options. The options excluded from diluted earnings per share were as follows:

Three months ended

April 4,
2021

March 29,
2020

Options excluded

2,780

1,234,188

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NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Long-term Contracts

The majority of our contracts are for a period of less than one year. We have certain long-term maintenance agreements, construction contracts and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for long-term maintenance agreements and construction contracts allocated to performance obligations that were not satisfied as of April 4, 2021, was $847 million. We expect to recognize the related revenue of $152 million over the next 12 months and $695 million over periods up to 10 years. See Note 9, "PRODUCT WARRANTY LIABILITY," for additional disclosures on extended warranty coverage arrangements. Our other contracts generally are for a duration of less than one year, include payment terms that correspond to the timing of costs incurred when providing goods and services to our customers or represent sales-based royalties.

Deferred and Unbilled Revenue

The following is a summary of our unbilled and deferred revenue and related activity:


In millions	April 4, 2021		December 31, 2020
Unbilled revenue	$	153	$	114
Deferred revenue, primarily extended warranty	1,601		1,531

We recognized revenue of $154 million for the three months ended April 4, 2021, compared with $112 million for the comparable period in 2020, that was included in the deferred revenue balance at the beginning of each year. We did not record any impairment losses on our unbilled revenues during the three months ended April 4, 2021 or March 29, 2020.

Disaggregation of Revenue

Consolidated Revenue

The table below presents our consolidated sales by geographic area. Net sales attributed to geographic areas were based on the location of the customer.


	Three months ended
In millions	April 4, 2021		March 29, 2020
United States	$	3,060	$	2,852

China	957		522


India	330		170

Other international	1,745		1,467
Total net sales	$	6,092	$	5,011

Segment Revenue

Engine segment external sales by market were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
Heavy-duty truck	$	613	$	519
Medium-duty truck and bus	483		490
Light-duty automotive	474		327
Total on-highway	1,570		1,336
Off-highway	325		243
Total sales	$	1,895	$	1,579

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Distribution segment external sales by region were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
North America	$	1,166	$	1,245
Asia Pacific	213		192
Europe	163		135
China	85		68
Russia	57		41
Africa and Middle East	54		51
India	49		36
Latin America	40		39
Total sales	$	1,827	$	1,807

Distribution segment external sales by product line were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
Parts	$	754	$	783
Power generation	416		375
Engines	333		322
Service	324		327
Total sales	$	1,827	$	1,807

Components segment external sales by business were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
Emission solutions	$	966	$	570
Filtration	301		249
Turbo technologies	225		158
Electronics and fuel systems	117		56
Automated transmissions	115		82
Total sales	$	1,724	$	1,115

Power Systems segment external sales by product line were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
Power generation	$	351	$	269
Industrial	179		165
Generator technologies	82		66
Total sales	$	612	$	500

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NOTE 3. PENSIONS AND OTHER POSTRETIREMENT BENEFITS

We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit (OPEB) plans. Contributions to these plans were as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020



Defined benefit pension contributions	$	42	$	56


OPEB payments, net	9		4


Defined contribution pension plans	35		34

During the remainder of 2021, we anticipate making $17 million in additional defined benefit pension contributions in the U.K. and $12 million in contributions to our U.S. non-qualified benefit plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 2021 annual net periodic pension cost to approximate $79 million.

The components of net periodic pension and OPEB costs under our plans were as follows:


	Pension
	U.S. Plans				U.K. Plans				OPEB
	Three months ended
In millions	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020
Service cost	$	35	$	34	$	8	$	7	$	—	$	—
Interest cost	19		24		8		9		1		2
Expected return on plan assets	(50)		(49)		(21)		(19)		—		—
Amortization of prior service cost	—		—		—		1		—		—
Recognized net actuarial loss	12		10		8		8		—		—
Net periodic benefit cost	$	16	$	19	$	3	$	6	$	1	$	2

NOTE 4. EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting period was as follows:


	Three months ended
In millions	April 4, 2021		March 29, 2020
Manufacturing entities
Beijing Foton Cummins Engine Co., Ltd.	$	39	$	17
Dongfeng Cummins Engine Company, Ltd.	31		8
Chongqing Cummins Engine Company, Ltd.	10		9
All other manufacturers	61		55		(1)



Distribution entities
Komatsu Cummins Chile, Ltda.	6		10
All other distributors	3		—


Cummins share of net income	150		99
Royalty and interest income	16		30
Equity, royalty and interest income from investees	$	166	$	129



(1) Includes $37 million in favorable adjustments related to tax changes within India's 2020-2021 Union Budget of India (India Tax Law Change) passed in March 2020.

NOTE 5. MARKETABLE SECURITIES

A summary of marketable securities, all of which were classified as current, was as follows:


	April 4, 2021						December 31, 2020
In millions	Cost		Gross unrealized gains/(losses)(1)		Estimated fair value		Cost		Gross unrealized gains/(losses)(1)		Estimated fair value

Equity securities





Debt mutual funds	$	188	$	3	$	191	$	267	$	5	$	272
Certificates of deposit	179		—		179		164		—		164

Equity mutual funds	20		6		26		19		5		24

Debt securities	1		—		1		1		—		1







Total marketable securities	$	388	$	9	$	397	$	451	$	10	$	461

(1) Unrealized gains and losses for debt securities are recorded in other comprehensive income while unrealized gains and losses for equity securities are recorded in "Other income, net" in our Condensed Consolidated Statements of Net Income.

All debt securities are classified as available-for-sale. All marketable securities presented use a Level 2 fair value measure. The fair value of Level 2 securities is 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 securities, and there were no transfers between Level 2 or 3 during the three months ended April 4, 2021 or the year ended December 31, 2020.

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

•Debt mutual funds — The fair value measures for the vast majority of these investments are the daily net asset values published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input measure.

•Certificates of deposit — These investments provide us with a contractual rate of return and generally range in maturity from three months to five years. The counterparties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institution's month-end statement.

•Equity mutual funds — The fair value measures for these investments are the net asset values published by the issuing brokerage. Daily quoted prices are available from reputable third-party pricing services and are used on a test basis to corroborate this Level 2 input measure.

•Debt securities — The fair value measures for these securities are broker quotes received from reputable firms. These securities are infrequently traded on a national exchange and these values are used on a test basis to corroborate our Level 2 input measure.

The proceeds from sales and maturities of marketable securities were as follows:


	Three months ended
In millions		April 4, 2021		March 29, 2020
Proceeds from sales of marketable securities		$	163	$	53
Proceeds from maturities of marketable securities		44		42
Investments in marketable securities - liquidations		$	207	$	95

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NOTE 6. INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Inventories included the following:


In millions	April 4, 2021		December 31, 2020
Finished products	$	2,320	$	2,216
Work-in-process and raw materials	1,585		1,346
Inventories at FIFO cost	3,905		3,562
Excess of FIFO over LIFO	(152)		(137)
Total inventories	$	3,753	$	3,425

NOTE 7. SUPPLEMENTAL BALANCE SHEET DATA

Other assets included the following:



In millions	April 4, 2021		December 31, 2020
Operating lease assets	$	466	$	438
Corporate owned life insurance	462		508
Deferred income taxes	439		479
Mark-to-market valuation on interest rate locks	38		—
Other	308		308
Other assets	$	1,713	$	1,733

Other accrued expenses included the following:



In millions	April 4, 2021		December 31, 2020
Marketing accruals	$	279	$	242
Other taxes payable	242		256
Current portion of operating lease liabilities	125		128
Income taxes payable	94		82
Other	381		404
Other accrued expenses	$	1,121	$	1,112

Other liabilities included the following:



In millions	April 4, 2021		December 31, 2020

Operating lease liabilities	$	343	$	325
Deferred income taxes	322		325
One-time transition tax	289		289
Accrued compensation	192		203
Mark-to-market valuation on interest rate locks	—		41
Other long-term liabilities	364		365
Other liabilities	$	1,510	$	1,548

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NOTE 8. DEBT

Loans Payable and Commercial Paper

Loans payable, commercial paper and the related weighted-average interest rates were as follows:

In millions

April 4,
2021

December 31,
2020

Loans payable (1)