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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
cmi-20210704_g1.jpg
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 4, 2021
 
Commission File Number 1-4949
CUMMINS INC.
(Exact name of registrant as specified in its charter)
Indiana35-0257090
(State of Incorporation)  (IRS Employer Identification No.)
500 Jackson Street
Box 3005
Columbus, Indiana 47202-3005
(Address of principal executive offices)
 
Telephone (812377-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $2.50 par valueCMINew 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 FilerxAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging 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 July 4, 2021, there were 143,607,162 shares of common stock outstanding with a par value of $2.50 per share.

1

Table of Contents
CUMMINS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
 
  Page
  
 Condensed Consolidated Statements of Net Income for the three and six months ended July 4, 2021 and June 28, 2020
 Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 4, 2021 and June 28, 2020
 Condensed Consolidated Balance Sheets at July 4, 2021 and December 31, 2020
 Condensed Consolidated Statements of Cash Flows for the six months ended July 4, 2021 and June 28, 2020
 Condensed Consolidated Statements of Changes in Equity for the three and six months ended July 4, 2021 and June 28, 2020
 
  
 

2

Table of Contents
PART I.  FINANCIAL INFORMATION 
ITEM 1.  Condensed Consolidated Financial Statements 

CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
 Three months endedSix months ended
In millions, except per share amounts July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
NET SALES (a) (Note 2)
$6,111 $3,852 $12,203 $8,863 
Cost of sales 4,633 2,962 9,239 6,679 
GROSS MARGIN 1,478 890 2,964 2,184 
OPERATING EXPENSES AND INCOME     
Selling, general and administrative expenses 600 470 1,174 1,016 
Research, development and engineering expenses 276 189 536 427 
Equity, royalty and interest income from investees (Note 4)137 115 303 244 
Other operating expense, net (4)(10)(12)(15)
OPERATING INCOME 735 336 1,545 970 
Interest expense 29 23 57 46 
Other income, net 73 49 74 93 
INCOME BEFORE INCOME TAXES 779 362 1,562 1,017 
Income tax expense (Note 5)167 93 339 220 
CONSOLIDATED NET INCOME 612 269 1,223 797 
Less: Net income (loss) attributable to noncontrolling interests12 (7)20 10 
NET INCOME ATTRIBUTABLE TO CUMMINS INC. $600 $276 $1,203 $787 
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.     
Basic $4.14 $1.87 $8.24 $5.30 
Diluted $4.10 $1.86 $8.16 $5.29 
 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING     
Basic 145.1 147.6 146.0 148.4 
Dilutive effect of stock compensation awards 1.4 0.4 1.4 0.4 
Diluted 146.5 148.0 147.4 148.8 
(a) Includes sales to nonconsolidated equity investees of $423 million and $901 million for the three and six months ended July 4, 2021, compared with $338 million and $595 million for the comparable periods in 2020.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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Table of Contents
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 Three months endedSix months ended
In millions July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
CONSOLIDATED NET INCOME $612 $269 $1,223 $797 
Other comprehensive income (loss), net of tax (Note 12)    
Change in pension and other postretirement defined benefit plans 17 16 46 18 
Foreign currency translation adjustments 22 (11)(34)(173)
Unrealized (loss) gain on derivatives (38)(2)34 (81)
Total other comprehensive income (loss), net of tax 1 3 46 (236)
COMPREHENSIVE INCOME 613 272 1,269 561 
Less: Comprehensive income (loss) attributable to noncontrolling interests 5 (12)13 (12)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CUMMINS INC. $608 $284 $1,256 $573 
 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
4

Table of Contents
CUMMINS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except par valueJuly 4,
2021
December 31,
2020
ASSETS  
Current assets   
Cash and cash equivalents $2,481 $3,401 
Marketable securities (Note 6)438 461 
Total cash, cash equivalents and marketable securities 2,919 3,862 
Accounts and notes receivable, net
Trade and other 3,670 3,440 
Nonconsolidated equity investees 462 380 
Inventories (Note 7)4,076 3,425 
Prepaid expenses and other current assets 804 790 
Total current assets 11,931 11,897 
Long-term assets   
Property, plant and equipment 9,109 9,011 
Accumulated depreciation (4,935)(4,756)
Property, plant and equipment, net 4,174 4,255 
Investments and advances related to equity method investees1,494 1,441 
Goodwill 1,291 1,293 
Other intangible assets, net 942 963 
Pension assets1,096 1,042 
Other assets (Note 8)1,680 1,733 
Total assets $22,608 $22,624 
LIABILITIES  
Current liabilities   
Accounts payable (principally trade) $3,172 $2,820 
Loans payable (Note 9)54 169 
Commercial paper (Note 9)200 323 
Accrued compensation, benefits and retirement costs 569 484 
Current portion of accrued product warranty (Note 10)661 674 
Current portion of deferred revenue (Note 2)805 691 
Other accrued expenses (Note 8)1,086 1,112 
Current maturities of long-term debt (Note 9)57 62 
Total current liabilities 6,604 6,335 
Long-term liabilities   
Long-term debt (Note 9)3,620 3,610 
Pensions and other postretirement benefits617 630 
Accrued product warranty (Note 10)674 672 
Deferred revenue (Note 2)828 840 
Other liabilities (Note 8)1,472 1,548 
Total liabilities $13,815 $13,635 
Commitments and contingencies (Note 11)
 
EQUITY
Cummins Inc. shareholders’ equity   
Common stock, $2.50 par value, 500 shares authorized, 222.5 and 222.4 shares issued
$2,405 $2,404 
Retained earnings 16,228 15,419 
Treasury stock, at cost, 78.8 and 74.8 shares
(8,838)(7,779)
Accumulated other comprehensive loss (Note 12)(1,929)(1,982)
Total Cummins Inc. shareholders’ equity 7,866 8,062 
Noncontrolling interests 927 927 
Total equity $8,793 $8,989 
Total liabilities and equity $22,608 $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)
 Six months ended
In millionsJuly 4,
2021
June 28,
2020
CASH FLOWS FROM OPERATING ACTIVITIES  
Consolidated net income $1,223 $797 
Adjustments to reconcile consolidated net income to net cash provided by operating activities   
Depreciation and amortization337 333 
Deferred income taxes17 (11)
Equity in income of investees, net of dividends (114)(124)
Pension and OPEB expense (Note 3)41 54 
Pension contributions and OPEB payments (Note 3)(68)(82)
Share-based compensation expense 18 12 
Restructuring payments (1)(81)
Loss (gain) on corporate owned life insurance 12 (38)
Foreign currency remeasurement and transaction exposure 10 (2)
Changes in current assets and liabilities  
Accounts and notes receivable (331)170 
Inventories (628)(224)
Other current assets (18)95 
Accounts payable 377 (220)
Accrued expenses 169 (422)
Changes in other liabilities (34)199 
Other, net (55)(99)
Net cash provided by operating activities 955 357 
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital expenditures (212)(152)
Investments in internal use software (22)(21)
Proceeds from sale of land20  
Investments in and advances to equity investees 10 (17)
Investments in marketable securities—acquisitions (362)(285)
Investments in marketable securities—liquidations (Note 6)381 254 
Cash flows from derivatives not designated as hedges 12 (22)
Other, net 27 9 
Net cash used in investing activities (146)(234)
CASH FLOWS FROM FINANCING ACTIVITIES   
Net (payments) borrowings of commercial paper (123)1,367 
Payments on borrowings and finance lease obligations (33)(25)
Net (payments) borrowings under short-term credit agreements (102)4 
Distributions to noncontrolling interests (13)(13)
Dividend payments on common stock (394)(388)
Repurchases of common stock (1,090)(550)
Proceeds from issuing common stock 26 32 
Other, net 7 33 
Net cash (used in) provided by financing activities (1,722)460 
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7)39 
Net (decrease) increase in cash and cash equivalents(920)622 
Cash and cash equivalents at beginning of year 3,401 1,129 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,481 $1,751 

 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 amountsCommon StockAdditional Paid-in CapitalRetained EarningsTreasury StockCommon Stock Held in TrustAccumulated Other Comprehensive LossTotal Cummins Inc. Shareholders’ EquityNoncontrolling InterestsTotal Equity
BALANCE AT APRIL 4, 2021$556 $1,837 $15,825 $(8,172)$ $(1,937)$8,109 $922 $9,031 
Net income 600 600 12 612 
Other comprehensive income (loss), net of tax (Note 12)8 8 (7)1 
Issuance of common stock 1 1  1 
Repurchases of common stock(672)(672) (672)
Cash dividends on common stock, $1.35 per share
(197)(197) (197)
Share-based awards 2 6 8  8 
Other shareholder transactions 9 9  9 
BALANCE AT JULY 4, 2021$556 $1,849 $16,228 $(8,838)$ $(1,929)$7,866 $927 $8,793 
BALANCE AT MARCH 29, 2020$556 $1,779 $14,728 $(7,744)$(1)$(2,250)$7,068 $950 $8,018 
Net income276 276 (7)269 
Other comprehensive income (loss), net of tax (Note 12)8 8 (5)3 
Issuance of common stock1 1 — 1 
Employee benefits trust activity5 5 — 5 
Cash dividends on common stock, $1.311 per share
(193)(193)— (193)
Share-based awards4 15 19 — 19 
Other shareholder transactions8 8 — 8 
BALANCE AT JUNE 28, 2020$556 $1,797 $14,811 $(7,729)$(1)$(2,242)$7,192 $938 $8,130 
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)
Six months ended
In millions, except per share amountsCommon
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 1,203 1,203 20 1,223 
Other comprehensive income (loss), net of tax (Note 12)53 53 (7)46 
Issuance of common stock 1 1  1 
Repurchases of common stock(1,090)(1,090) (1,090)
Cash dividends on common stock, $2.70 per share
(394)(394) (394)
Distributions to noncontrolling interests  (13)(13)
Share-based awards (4)30 26  26 
Other shareholder transactions 4 1 5 5 
BALANCE AT JULY 4, 2021$556 $1,849 $16,228 $(8,838)$ $(1,929)$7,866 $927 $8,793 
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 787 787 10 797 
Other comprehensive loss, net of tax (Note 12)(214)(214)(22)(236)
Issuance of common stock 10 10 — 10 
Employee benefits trust activity22 1 23 — 23 
Repurchases of common stock(550)(550)— (550)
Cash dividends on common stock, $2.622 per share
(388)(388)— (388)
Distributions to noncontrolling interests — (13)(13)
Share-based awards (14)46 32 — 32 
Other shareholder transactions (11)(11)5 (6)
BALANCE AT JUNE 28, 2020$556 $1,797 $14,811 $(7,729)$(1)$(2,242)$7,192 $938 $8,130 

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 and six 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 second quarters of 2021 and 2020 ended on July 4 and June 28, 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 endedSix months ended
 July 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
Options excluded3,137 1,339,359 2,958 1,286,774 

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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 July 4, 2021, was $812 million. We expect to recognize the related revenue of $164 million over the next 12 months and $648 million over periods up to 10 years. See Note 10, "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 millionsJuly 4,
2021
December 31,
2020
Unbilled revenue$109 $114 
Deferred revenue, primarily extended warranty1,633 1,531 
We recognized revenue of $126 million and $280 million for the three and six months ended July 4, 2021, compared with $94 million and $206 million for the comparable periods 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 and six months ended July 4, 2021 or June 28, 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 endedSix months ended
In millionsJuly 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
United States$3,263 $1,865 $6,323 $4,717 
China832 810 1,789 1,332 
India217 70 547 240 
Other international1,799 1,107 3,544 2,574 
Total net sales$6,111 $3,852 $12,203 $8,863 
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Segment Revenue
Engine segment external sales by market were as follows:
Three months endedSix months ended
In millionsJuly 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
Heavy-duty truck$666 $221 $1,279 $740 
Medium-duty truck and bus477 298 960 788 
Light-duty automotive466 146 940 473 
Total on-highway1,609 665 3,179 2,001 
Off-highway311 272 636 515 
Total sales$1,920 $937 $3,815 $2,516 
Distribution segment external sales by region were as follows:
Three months endedSix months ended
In millionsJuly 4,
2021
June 28,
2020
July 4,
2021
June 28,
2020
North America$1,228 $1,038 $2,394 $2,283 
Asia Pacific226 190 439 382 
Europe161 136 324