Cummins CMI · USD

NOTE 24. REPORTABLE SEGMENTSReportable segments under GAAP are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer. Our reportable segments consist of Engine, Components, Distribution, Power Systems and Accelera. This reporting structure is organized according to the products and markets each segment serves. The Engine segment produces engines (15 liters and smaller) and associated parts for sale to customers in on-highway and various off-highway markets. Our engines are used in trucks of all sizes, buses and recreational vehicles, as well as in various industrial applications, including construction, agriculture, power generation systems and other off-highway applications. The Components segment sells axles, drivelines, brakes and suspension systems for commercial diesel and natural gas applications, aftertreatment systems, turbochargers, fuel systems, valvetrain technologies, automated transmissions and electronics. The Distribution segment includes wholly-owned and partially-owned distributorships engaged in wholesaling engines, generator sets and service parts, as well as performing service and repair activities on our products, maintaining relationships with various OEMs throughout the world and providing selected sales and aftermarket support for our Accelera business. The Power Systems segment is an integrated power provider, which designs, manufactures and sells standby and prime power generators, engines (16 liters and larger) for standby and prime power generator sets and industrial applications (including mining, oil and gas, marine, rail and defense), alternators and other power components. The Accelera segment designs, manufactures, sells and supports electrified power systems with innovative components and subsystems, including battery and electric powertrain technologies. The Accelera segment is currently in the early stages of commercializing these technologies with efforts primarily focused on the development of electrified power systems and related components and subsystems. We continue to serve all our markets as they adopt electrification, meeting the needs of our OEM partners and end customers.

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS Long-term ContractsWe have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at December 31, 2025, was $6.3 billion. We expect to recognize the related revenue of $3.6 billion over the next 12 months and $2.7 billion over periods up to 10 years. See NOTE 13, “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 RevenueThe following is a summary of our unbilled and deferred revenue and related activity:December 31,In millions20252024Unbilled revenue$439 $403 Deferred revenue2,660 2,412 We recognized revenue of $1.1 billion and $850 million in 2025 and 2024, respectively, that was included in the deferred revenue balance at the beginning of each year.

NOTE 2. REVENUE FROM CONTRACTS WITH CUSTOMERS Long-term ContractsWe have certain arrangements, primarily long-term maintenance agreements, construction contracts, product sales with associated performance obligations extending beyond a year, product sales with lead times extending beyond one year that are non-cancellable or for which the customer incurs a penalty for cancellation and extended warranty coverage arrangements that span a period in excess of one year. The aggregate amount of the transaction price for these contracts, excluding extended warranty coverage arrangements, at December 31, 2025, was $6.3 billion. We expect to recognize the related revenue of $3.6 billion over the next 12 months and $2.7 billion over periods up to 10 years. See NOTE 13, “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 RevenueThe following is a summary of our unbilled and deferred revenue and related activity:December 31,In millions20252024Unbilled revenue$439 $403 Deferred revenue2,660 2,412 We recognized revenue of $1.1 billion and $850 million in 2025 and 2024, respectively, that was included in the deferred revenue balance at the beginning of each year.

NOTE 14. COMMITMENTS AND CONTINGENCIESLegal ProceedingsWe are subject to numerous lawsuits and claims arising out of the ordinary course of our business, including actions related to product liability; personal injury; the use and performance of our products; warranty matters; product recalls; patent, trademark or other intellectual property infringement; contractual liability; the conduct of our business; tax reporting in foreign jurisdictions; distributor termination; workplace safety; environmental and regulatory matters, including the enforcement of environmental and emissions standards; and asbestos claims. We also have been identified as a potentially responsible party at multiple waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. We have denied liability with respect to many of these lawsuits, claims and proceedings and are vigorously defending such lawsuits, claims and proceedings. We carry various forms of commercial, property and casualty, product liability and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against us with respect to these lawsuits, claims and proceedings. We do not believe that these lawsuits are material individually or in the aggregate. While we believe we have also established adequate accruals for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability is probable and can be reasonably estimated based upon presently available information, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition or cash flows. We conduct significant business operations in Brazil that are subject to the Brazilian federal, state and local labor, social security, tax and customs laws. While we believe we comply with such laws, they are complex, subject to varying interpretations and we are often engaged in litigation regarding the application of these laws to particular circumstances.In December 2023, we announced that we reached the agreement in principle with the U.S.

NOTE 12. DEBTLoans PayableLoans payable at December 31, 2025 and 2024 were $313 million and $356 million, respectively, and consisted primarily of loans payable to financial institutions. The weighted-average interest rate of loans payable at December 31 was as follows:20252024Weighted-average interest rate2.55 %2.85 %Commercial PaperOur committed credit facilities provide access up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes. We had $353 million and $1.3 billion in outstanding borrowings under our commercial paper programs at December 31, 2025 and 2024, respectively. The weighted-average interest rate for commercial paper at December 31 was as follows:20252024Weighted-average interest rate3.20 %4.49 %Revolving Credit FacilitiesOn June 2, 2025, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2030. The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on June 3, 2029. We also entered into a new 3-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2028. The credit agreement replaced the prior $2.0 billion 364-day credit facility that matured on June 2, 2025.Our committed credit facilities provide access up to $4.0 billion from our $2.0 billion 3-year credit facility and our $2.0 billion 5-year facility. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. Amounts payable under our revolving credit facility rank pro rata with all of our unsecured, unsubordinated indebtedness. Up to $300 million under each committed credit facility is available for swingline loans. Based on our current long-term debt ratings, the applicable margin on Secured Overnight Financing Rate (SOFR) rate loans for the 3-year facility was 0.75 percent per annum and 0.75 percent for the 5-year facility. Advances under the facility may be prepaid without premium or penalty, subject to customary breakage costs.

NOTE 4. INCOME TAXESThe following table summarizes income before income taxes: Years ended December 31,In millions202520242023U.S. income (loss)$1,781 $2,857 $(541)Foreign income2,182 2,046 2,167 Income before income taxes$3,963 $4,903 $1,626 Effective December 31, 2025, we adopted ASU 2023-09 on a prospective basis. See NOTE 1, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” for additional details on the adoption of this standard. The tables below provide the prospective disclosures required by ASU 2023-09. Income tax expense (benefit) consisted of the following: Year ended December 31,In millions2025Current U.S. federal $130 U.S. state and local18 Foreign772 Total current income tax expense920 Deferred U.S. federal86 U.S. state and local8 Foreign(8)Total deferred income tax expense86 Income tax expense$1,006 On July 4, 2025, the One Big Beautiful Bill Act (The Act) was signed into law, enacting significant changes to U.S. federal income tax rules affecting corporations, such as the ability to immediately deduct domestic research and development costs, restoration of elective 100 percent bonus depreciation for qualified property and changes to the international tax provisions. Implementation of The Act resulted in an increase to tax expense of $39 million in 2025, primarily due to a reduction in the foreign income deduction and changes to the research and development tax credit. During 2025, we responded to rapidly deteriorating conditions in our electrolyzer markets and overall hydrogen market in our Accelera segment by recording $458 million in charges related to inventory write-downs, asset impairments, severance and contract termination costs. These actions resulted in an increase in the effective tax rate of 2.6 percent in 2025. See NOTE 22, “ACCELERA ACTIONS,” for additional information.Reconciliations of the statutory U.S. federal income tax expense and tax rate to the net expense and effective tax rate were as follows:In millionsYear ended December 31, 2025U.S. federal statutory tax expense/rate$832 21.0 %Domestic federalEffect of cross-border tax lawsForeign derived intangible income(42)(1.1)Other15 0.4 Tax creditsResearch tax credits (69)(1.7)Other(36)(0.9)Nontaxable or nondeductible items1 — Effect of changes in tax laws or rates enacted in the current period14 0.3 Other26 0.7 Domestic state and local taxes, net of federal income tax effect (1)20 0.5 Foreign tax effectsCanadaValuation allowance63 1.6 Other54 1.4 ChinaWithholding tax55 1.

NOTE 8. LEASESOur lease portfolio consists primarily of real estate and equipment leases. Our real estate leases primarily consist of land, office, distribution, warehousing and manufacturing facilities. These leases typically range in term from 2 to 50 years and may contain renewal options for periods up to 10 years at our discretion. Our equipment lease portfolio consists primarily of vehicles (including service vehicles), fork trucks and IT equipment. These leases typically range in term from two to four years and may contain renewal options. Our leases generally do not contain variable lease payments other than (1) certain foreign real estate leases which have payments indexed to inflation and (2) certain real estate executory costs (such as taxes, insurance and maintenance), which are paid based on actual expenses incurred by the lessor during the year. Our leases generally do not include residual value guarantees other than our service vehicle fleet, which has a residual guarantee based on a percentage of the original cost declining over the lease term. The components of our lease cost were as follows:Years ended December 31,In millions202520242023Operating lease cost$184 $187 $165 Finance lease costAmortization of right-of-use asset29 26 20 Interest expense8 7 4 Short-term lease cost33 41 24 Variable lease cost18 17 14 Total lease cost$272 $278 $227 Supplemental balance sheet information related to leases: December 31,In millions20252024Balance Sheet LocationAssetsOperating lease assets$537 $532 Other assetsFinance lease assets (1)126 121 Property, plant and equipment, netTotal lease assets$663 $653 LiabilitiesCurrent Operating lease liabilities$138 $130 Other accrued expensesFinance lease liabilities25 20 Current maturities of long-term debtLong-termOperating lease liabilities424 409 Other liabilitiesFinance lease liabilities111 105 Long-term debtTotal lease liabilities$698 $664 (1) Finance lease assets were recorded net of accumulated amortization of $100 million and $80 million at December 31, 2025 and 2024.

NOTE 23. ACQUISITIONS Acquisitions for the years ended December 31, 2025, 2024 and 2023, were as follows: Entity Acquired (Dollars in millions)Date of AcquisitionAdditional Percent Interest AcquiredPayments to Former OwnersAcquisition Related Debt RetirementsTotal Purchase ConsiderationType of Acquisition(1)Goodwill AcquiredIntangibles Recognized(2)2024Engendren Corporation02/16/24100 %$65 $— $65 COMB$33 $8 2023Cummins France SA10/31/23100 %$25 $5 $30 COMB$4 $— Faurecia 10/02/23100 %208 — 208 (3)COMB92 — Hydrogenics Corporation06/29/2319 %287 48 335 (4)EQUITY— — Teksid Hierro de Mexico, S.A. de C.V.04/03/23100 %143 — 143 (5)COMB18 — (1) All results from acquired entities were included in segment results subsequent to the acquisition date. Previously consolidated entities were accounted for as equity transactions (EQUITY). Newly consolidated entities were accounted for as business combinations (COMB).(2) Intangible assets acquired in the business combination were mostly customer, technology and trade name related.(3) Total purchase consideration included $30 million for the settlement of accounts payable that were treated as an operating cash outflow.(4) Hydrogenics entered into three non-interest-bearing promissory notes with $175 million paid on July 31, 2023, $50 million paid on December 31, 2024 and the remaining $110 million paid in 2025. (5) Total purchase consideration included $32 million for the settlement of accounts payable that was treated as an operating cash outflow.