10-K 0000026172-26-000009 (2026-02-10) vs 10-K 0000026172-25-000007 (2025-02-11)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 8,116 |
17.8% |
| MD&A | Item 7 | 11,477 |
29.9% |
| Legal Proceedings | Item 3, via Note 14 – COMMITMENTS AND CONTINGENCIES | 1,096 |
1.1% |
| Accounting Policies | Item 8, Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 8,233 |
9.6% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 258 words changed in this paragraph; it is 36% similar to last year's version.
We manufacture, sell and service products globally and rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products. Changes in laws, regulations There is currently significant uncertainty about the future relationship between the U.S. and government policies various other countries with respect to tariffs and other trade disruptions (such as embargoes, sanctions and export controls). The uncertain tariff environment, marked by the U.S. imposition of tariffs on foreign certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. The extent to which tariffs and/or other trade and investment can affect the demand for our products and services, cause non-U.S. customers to shift preferences toward domestically manufactured or branded products and impact the competitive position of our products or prevent us from being able to sell products in certain countries. Our business benefits from free trade agreements, such as the United States-Mexico-Canada Agreement disruptions will be enacted and the U.S. duration for which enacted tariffs and/or other trade relationships including those with China, Brazil, E.U. disruptions will be in place remain uncertain and the U.K. More restrictive trade policies, such as efforts to withdraw from or substantially modify such agreements or arrangements, including, without limitation, higher tariffs or new barriers to entry could adversely impact our production costs, customer demand and our relationships with customers and suppliers. Any of these consequences could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, our compliance with any such newly enacted tariffs and/or other trade disruptions is likely to require significant resources and data management systems and could increase our cost of doing business, restrict our ability to operate our business or execute our strategies, and could result in fines and penalties or reputational harm if we are found to not be in full compliance.
Source: Item 1A, 10-K 0000026172-26-000009 vs Item 1A, 10-K 0000026172-25-000007
MD&A 148 words changed in this paragraph; it is 58% similar to last year's version.
We are a global power leader committed to powering a more prosperous world. Since 1919, we have delivered innovative solutions leader comprised of that move people, goods and economies forward. Our five business reportable segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from offer a broad portfolio, including advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related powertrains; integrated power generation systems; critical components including such as aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated controls, transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components axles and subsystems, including battery, fuel cell brakes; and zero emissions technologies like battery and electric power technologies powertrain systems. With a global footprint, deep technical expertise and hydrogen production technologies. an extensive service network, we deliver dependable, cutting-edge solutions tailored to our customers' needs, supporting them through the energy transition with our Destination Zero strategy. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We have long-standing relationships with many of the leading manufacturers in the markets we serve, including PACCAR Inc, Inc., Traton Group, Daimler Trucks North America AG and Stellantis N.V. We serve our customers through a service network of approximately 650 640 wholly-owned, joint venture and independent distributor locations and more than 19,000 13,000 Cummins certified dealer locations in approximately 190 countries and territories.
Source: Item 7, 10-K 0000026172-26-000009 vs Item 7, 10-K 0000026172-25-000007
Accounting Policies 143 words changed in this paragraph; it is 61% similar to last year's version.
We were 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 committed to powering a more prosperous world. Since 1919, we have delivered innovative solutions leader comprised of that move people, goods and economies forward. Our five business reportable segments - Engine, Components, Distribution, Power Systems and Accelera - supported by our global manufacturing and extensive service and support network, skilled workforce and vast technical expertise. Our products range from offer a broad portfolio, including advanced diesel, natural gas, electric and hybrid powertrains and powertrain-related powertrains; integrated power generation systems; critical components including such as aftertreatment, turbochargers, fuel systems, valvetrain technologies, controls systems, air handling systems, automated controls, transmissions, axles, drivelines, brakes, suspension systems, electric power generation systems, electrified power systems with innovative components axles and subsystems, including battery, fuel cell brakes; and zero emissions technologies like battery and electric power technologies powertrain systems. With a global footprint, deep technical expertise and hydrogen production technologies. an extensive service network, we deliver dependable, cutting-edge solutions tailored to our customers' needs, supporting them through the energy transition with our Destination Zero strategy. We sell our products to original equipment manufacturers (OEMs), distributors, dealers and other customers worldwide. We serve our customers through a service network of approximately 650 640 wholly-owned, joint venture and independent distributor locations and more than 19,000 13,000 Cummins certified dealer locations in approximately 190 countries and territories.
Source: Item 8, Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000026172-26-000009 vs Item 8, Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000026172-25-000007
Legal Proceedings 17 words changed in this paragraph; it is 97% similar to last year's version.
In December 2023, we announced that we reached the agreement in principle with EPA, CARB, the U.S. Environmental Protection Agency, the California Air Resources Board, the Environmental and Natural Resources Division of the DOJ Department of Justice (DOJ) and the California Attorney General's Office to resolve certain regulatory civil claims regarding our emissions certification and compliance process for certain engines primarily used in pick-up truck applications in the U.S., which became final and effective in April 2024, (collectively, the Settlement Agreements). As part of the Settlement Agreements, among other things, we agreed to pay civil penalties, complete recall requirements, undertake mitigation projects, provide extended warranties, undertake certain testing, take certain corporate compliance measures and make other payments. Failure to comply with the terms and conditions of the Settlement Agreements will subject us to further stipulated penalties. We recorded a charge of $2.0 billion in the fourth quarter of 2023, in other operating expense, net in our Consolidated Statements of Income, to resolve the matters addressed by the Settlement Agreements involving approximately one million of our pick-up truck applications in the U.S. Of the $2.0 billion charge, $1.7 billion (primarily related to penalties) was non-deductible for U.S. federal income tax purposes. The remaining amount, related to emissions mitigation projects and payments, extended warranties and other related compliance expenses was deductible for U.S. federal income tax purposes. This charge was in addition to the previously announced charges of $59 million for the recalls of model years 2013 through 2018 RAM 2500 and 3500 trucks and model years 2016 through 2019 Titan trucks. We made $1.9 billion of payments required by the Settlement Agreements in the second quarter of 2024. Subsequent to the second quarter of 2024, we have recorded immaterial amounts related to stipulated penalties we determined to be probable and estimable. Any further non-compliance with the Settlement Agreements will likely subject us to further stipulated penalties and other adverse consequences.
Source: Item 3, via Note 14 – COMMITMENTS AND CONTINGENCIES, 10-K 0000026172-26-000009 vs Item 3, via Note 14 – COMMITMENTS AND CONTINGENCIES, 10-K 0000026172-25-000007
Every change, by type
Sentences and paragraphs of CMI's Risk Factors and MD&A, 10-K 2026-02-10 against 10-K 2025-02-11.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
We manufacture, sell and service products globally and rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products. There is currently significant uncertainty about the future relationship between the U.S. and various other countries with respect to tariffs and other trade disruptions (such as embargoes, sanctions and export controls). The uncertain tariff environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs on U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. The extent to which tariffs and/or other trade disruptions will be enacted and the duration for which enacted tariffs and/or other trade disruptions will be in place remain uncertain and could adversely impact our production costs, customer demand and our relationships with customers and suppliers. Any of these consequences could have a material adverse effect on our results of operations, financial condition and cash flows. In addition, our compliance with any such newly enacted tariffs and/or other trade disruptions is likely to require significant resources and data management systems and could increase our cost of doing business, restrict our ability to operate our business or execute our strategies, and could result in fines and penalties or reputational harm if we are found to not be in full compliance.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
Deregulation could impair our investments in future products and negatively impact our long-term growth and competitiveness.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
Our strategy includes significant investments in the development of new products and technologies, particularly those designed to meet or exceed current and anticipated regulatory requirements related to emissions, safety and environmental performance. Any significant reduction, delay, or elimination of, or failure to adopt or enforce, such regulatory requirements in key markets could reduce or delay demand for our products and services, increase our costs of producing or delay the introduction of new or modified products and services or restrict our existing activities, products, and services. In addition, any discontinuation or reduction of incentives or benefits for the development of technologies limiting the impact of climate change, or significant uncertainty regarding such efforts, may cause demand for certain of our future products to be less than we anticipate. Any such change in regulatory requirements or incentives may ultimately weaken or render obsolete the business case for certain research and development initiatives or capital investments. As a result, we may be required to reassess, scale back or discontinue investments in future products that were originally intended to address more stringent regulatory standards, and may fail to realize the intended benefits of, or recover the investments we have already made in, developing new products and technologies. In addition, the adoption of new regulations or industry standards which our products and services are not positioned to address, could adversely affect demand for our products and services.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
Deregulation or reduction in incentives may also lead to reduced industry-wide innovation, as both we and our competitors could deprioritize or delay the introduction of advanced technologies that are no longer mandated. This could limit our ability to differentiate our products, respond to evolving customer expectations or maintain leadership in markets where regulatory requirements remain in place or are later reinstated. Furthermore, if we have already made substantial investments in anticipation of future regulations that are subsequently rolled back, we may not be able to recover those costs, which could result in asset impairments or reduced returns on investment.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
Any of these outcomes could adversely affect our long-term growth prospects, competitive position and financial results.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our products and services, as well as our relationships with various stakeholders, could be adversely affected. Alternatively, if the energy transition occurs more slowly than anticipated, demand for our new products and technologies may be lower than expected or we may need to reassess, scale back or discontinue investments in future products, and as a result, we may fail to realize the anticipated benefits of our investments in new products and technologies. Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
We are incorporating AI solutions into our business, products, services and features, and we are leveraging AI, including generative AI, machine learning and similar tools and technologies, in our product development, operations and software programming. There is inherent risk and uncertainty involved in using AI. The use of AI in the development of our products and services could cause loss or theft of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity. The use of AI by us, our vendors or our suppliers can lead to unintended consequences, including
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our stakeholders, our reputation and our business and expose us to risks related to inaccuracies or errors in the output of such technologies. If the AI tools that we use are deficient, inaccurate or controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, data privacy, or other rights or contracts to which we are a party. In addition, our personnel could, unbeknownst to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedRisk Factors
markets. Additionally, we face increasing competition to develop innovative products that result in lower emissions. There can be no assurance that our products will be able to compete successfully with the products of other companies and in other markets.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
In 2024, more than forty 2025, nearly fifty percent of our equity, royalty and interest income from investees is was from three of our 50 percent owned percent-owned joint ventures in China - Beijing Foton Chongqing Cummins Engine Co., Company, Ltd., Dongfeng Cummins Engine Company, Ltd. and Chongqing Beijing Foton Cummins Engine Company, Co., Ltd.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
Despite their own engine manufacturing abilities, these customers have historically chosen to outsource certain types of engine production to us due to the quality of our engine products, our emission compliance capabilities, our systems integration, their customers' preferences, their desire for cost reductions, their desire for eliminating production risks and their desire to maintain company focus.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
The development of new technologies may materially reduce the demand for our current products and services. services, and we may not be successful in developing new technologies and products in order to effectively address the energy transition.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
While Approximately 20,000 of our employees worldwide were represented by various unions under collective bargaining agreements that expire between 2026 and 2030.While we have no reason to believe that we will be materially impacted by work stoppages or other labor matters, there can be no assurance that future issues with our labor unions will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of conflicts with labor unions or our employees.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
We operate our business on a global basis and changes in international, national tariffs and regional other trade laws, regulations and policies affecting and/or restricting international trade disruptions could adversely impact the demand for our products and our competitive position.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
We continue to experience pockets of supply chain disruptions and related challenges throughout the supply chain. chain which are further impacted by the current global tariff environment.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
We may use artificial intelligence are using AI in our business and in our products, services and features, and challenges with properly managing its use could result in reputational harm, competitive harm, harm and legal liability, and adversely affect our results of operations.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
Our income tax provision and cash tax liability in the future could be adversely affected by the adoption of new changes in tax legislation, laws or their interpretations, changes in earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and the discovery of new information in the course of our tax return preparation process.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
Delays may be caused by factors affecting our suppliers (including, but not limited to, raw material availability, capacity constraints, port congestion, labor disputes or unrest, shortages of labor, economic downturns, availability of credit, impaired financial condition, sanctions/tariffs, restrictions on the sale or distribution of critical rare earth metals, energy inflation/availability, suppliers' allocations to other purchasers, weather emergencies, natural disasters, acts of government or acts of war or terrorism).
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
The rapid evolution of artificial intelligence, AI, including the regulation of artificial intelligence AI by government or other regulatory agencies, will require significant resources to develop, test and maintain our platforms, offerings, services, services and features to implement artificial intelligence AI ethically and minimize any unintended harmful impacts.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
For 2024, 2025, we recognized $395 $469 million of equity, royalty and interest income from investees, compared to $483 $395 million in 2023. 2024.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedRisk Factors
Greater political, economic and social uncertainty uncertainty, among, between and within countries, and the evolving globalization of businesses could significantly change the dynamics of our competition, customer base and product offerings and impact our growth globally.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
We operate our business on a global basis and changes in international, national and regional trade laws, regulations and policies affecting and/or restricting international trade, including higher tariffs, trade disruptions (such as embargoes, sanctions and export controls) and broader geopolitical tensions, could adversely impact the demand for our products and our competitive position. The uncertain global trade environment, marked by the U.S. imposition of tariffs on certain countries, followed by the imposition of retaliatory tariffs and other actions against U.S. goods and services by certain countries has introduced significant market volatility and raised concerns about potential economic impacts. Our primary risks include reduced global movement of goods impacting freight activity, increased costs for suppliers and end-users and uncertainty around the availability of supply, all of which could contribute to a decline in business confidence, a reduction in demand for our products and increased product costs. We have and continue to look for ways to mitigate these costs including discussions with our suppliers, sourcing alternatives and agreements with our customers to recover these costs. The financial impact of tariffs, net of mitigation actions, was immaterial to our profitability and operating cash flows during 2025. Continued and increasing tariff costs, the effectiveness of our mitigation efforts and the resulting market volatility could materially and adversely affect our results of operations, financial condition and cash flows in the future. We will continue work to minimize the related impacts to our business to the extent possible. See the "OUTLOOK" section for a discussion of the potential tariff impacts for 2026.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
During 2025, due to the continued rapid deterioration in our electrolyzer markets and overall hydrogen markets, along with significant uncertainty in the alternative power markets resulting from reductions in government incentives, we fully impaired all of the goodwill for our electrolyzer business and wrote off certain inventory in the third quarter of 2025, totaling $240 million. These conditions prompted a further strategic review of this business in the fourth quarter of 2025. As a result of market conditions and the current business outlook, we intend to stop new commercial activity in the electrolyzer space, subject to information and consultation in accordance with local legal requirements. We will continue to fulfill existing customer commitments. As a result of these actions, we recorded several additional charges in the fourth quarter of 2025 related to inventory write-downs, intangible and fixed asset impairments, lease impairments, contract terminations and severance, totaling $218 million. Total charges for all Accelera actions in 2025 were $458 million.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
In December 2025, we entered into a series of interest rate swaps to effectively convert $150 million of our senior notes, due in 2054, from a fixed rate of 5.45 percent to a floating rate equal to the daily United States Dollar Secured Overnight Financing Rate (USD SOFR) plus a spread through February 2041. See NOTE 20, “DERIVATIVES,” to our Consolidated Financial Statements for additional information.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
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. See NOTE 4, “INCOME TAXES,” to our Consolidated Financial Statements for additional information.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
On July 4, 2025, 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 the second half of 2025, primarily due to a reduction in the foreign income deduction and changes to the research and development tax credit. Additionally, certain provisions of The Act resulted in lower U.S. tax-related cash payments in 2025 and should result in lower U.S. tax-related payments for the next several fiscal years.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
Tariff related costs and recoveries in 2025 were evaluated independently of all other drivers included in the disclosures below and all references to "price" and "material cost" variances exclude these separately evaluated tariff costs and recoveries. The net impact of tariff costs and related recoveries were immaterial to each reportable segment's EBITDA, unless specifically noted.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
•Light-duty automotive sales increased $335 million primarily due to non-tariff pricing mainly related to the launch of updated engine products.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
During 2025, due to the continued rapid deterioration in our electrolyzer markets and overall hydrogen markets, along with significant uncertainty in the alternative power markets resulting from reductions in government incentives, we fully impaired all of the goodwill for our electrolyzer business and wrote off certain inventory in the third quarter of 2025, totaling $240 million. These conditions prompted a further strategic review of this business in the fourth quarter of 2025. As a result of market conditions and the current business outlook, we intend to stop new commercial activity in the electrolyzer space, subject to information and consultation in accordance with local legal requirements. We will continue to fulfill existing customer commitments. As a result of these actions, we recorded several additional charges in the fourth quarter of 2025, totaling $218 million. Total charges for all Accelera actions in 2025 were $458 million. See NOTE 22, “ACCELERA ACTIONS,” to our Consolidated Financial Statements for additional information.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
The uncertain global trade environment, characterized by tariffs, export controls and broader geopolitical tensions, has created significant market volatility while introducing uncertainty around future demand for capital goods as well as potential impacts to our supply chain and our related product costs. Given the breadth, severity and uncertain duration of these global trade measures, our outlook presented below could be negatively impacted by policy-driven volatility. We are proactively taking steps in our supply chain to mitigate impacts where possible and we are working with our customers to pass through incremental costs.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
•The slower adoption of zero-emission solutions reduced Accelera’s near-term revenue outlook, prompting significant restructuring actions and a refined strategic investment approach. While we anticipate these actions will gradually improve the cost structure, we expect ongoing investments in priority technologies to result in continued near-term operating losses.
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
•Changes in government policies (such as reduced incentives, delayed infrastructure mandates or revised emissions standards) may impact Accelera’s ability to compete, scale or recover investments in zero-emission technologies including:
Read it in 10-K 2026-02-10 at sec.gov ↗
AddedMD&A
◦The reduction of government incentives in the U.S. to support the adoption of hydrogen fuel, along with slower than expected market development in some international markets, has contributed to lower expectations for demand for our electrolyzer products. In the third quarter, we recorded non-cash charges for goodwill impairment and inventory write-downs related to the electrolyzer business, and in the fourth quarter of 2025 we recorded an additional $218 million of charges for Accelera actions. See NOTE 22, “ACCELERA ACTIONS,” to our Consolidated Financial Statements for additional information.
Read it in 10-K 2026-02-10 at sec.gov ↗
RemovedMD&A
These increases were partially offset by decreased Components segment sales of 13 percent mainly due to the divestiture of Atmus on March 18, 2024.
Read it in 10-K 2025-02-11 at sec.gov ↗
RemovedMD&A
Beginning in the second quarter of 2024, we realigned certain businesses within our Components segment to be consistent with how our segment leader now monitors performance. We reorganized the businesses to combine the engine components and software and electronics businesses into the newly formed components and software business. In addition, we rebranded our axles and brakes business as drivetrain and braking systems. We began reporting results for these changes within our Components segment effective April 1, 2024, and reflected these changes in the historical periods presented. The change had no impact on our consolidated results.
Read it in 10-K 2025-02-11 at sec.gov ↗
RemovedMD&A
We make strategic acquisitions that may have a material impact on our consolidated results of operations or financial position. We allocate the purchase price of acquired businesses to the assets acquired and liabilities assumed in the transaction at their estimated fair values. The determination of the fair value of intangible assets, which represent a significant portion of the purchase price in many of our acquisitions can be complex and requires the use of significant judgment with regard to (i) the fair value and (ii) the period and the method by which the intangible asset will be amortized. We use information available to us to make fair value determinations and engage independent valuation specialists, when necessary, to assist in the fair value determination of significant acquired intangibles. We estimate the fair value of acquisition-related intangible assets principally based on projections of cash flows that will arise from identifiable intangible assets of acquired businesses, which includes estimates of discount rates, revenue growth rates, EBITDA, royalty rates, customer attrition rates, customer renewal rates and technology obsolesce rates. The projected cash flows are discounted to determine the present value of the assets at the dates of acquisition. Although we believe the projections, assumptions and estimates made were reasonable and appropriate, these estimates require significant judgment by management, are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments subsequent to the measurement period are recorded to our Consolidated Statements of Net Income. See NOTE 23, "ACQUISITIONS," to our Consolidated Financial Statements for additional information about our recent business combinations.
Read it in 10-K 2025-02-11 at sec.gov ↗
RemovedMD&A
cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year.
Read it in 10-K 2025-02-11 at sec.gov ↗
RemovedMD&A
Effective October 31, 2024, we changed our annual goodwill impairment testing date for all reporting units from the last day of our fiscal third quarter to October 31 to better align with the timing of our annual long-term planning process. Accordingly, management determined that the change in accounting principle is preferable. This change was applied prospectively from October 31, 2024. We determined that it is impracticable to objectively ascertain projected cash flows and related valuation estimates that would have been used as of each October 31 of prior reporting periods without the use of hindsight. This change was not material to our Consolidated Financial Statements as it did not delay, accelerate or avoid any potential goodwill impairment charges. To ensure that no lapse greater than twelve months occurred, we performed an impairment test, for all reporting units, as of the end of our 2024 fiscal third quarter and noted no impairment. We completed our annual impairment testing as of October 31, 2024, and noted no impairment.
Read it in 10-K 2025-02-11 at sec.gov ↗
RemovedMD&A
with respect to our investments in pension plan assets is to be invested with a long-term outlook. Based on the historical returns and forward-looking return expectations, we believe that an investment return assumption of 5.00 percent in 2025 for U.K. pension assets is reasonable and attainable.
Read it in 10-K 2025-02-11 at sec.gov ↗
RewordedMD&A
Operating Reportable Segments 2025 2024 2023 Percent change Percent Percent 2025 vs. 2024 vs. 2023 of Total of Total In millions Sales EBITDA Sales EBITDA Sales EBITDA Engine $ 10,875 26% $ 1,382 $ 11,712 28% $ 1,653 $ 11,684 28% $ 1,630 —% 1% (7)% (16)% Components 10,149 25% 1,398 11,679 28% 1,591 13,409 32% 1,840 (13)% (14)% (12)% Distribution 12,405 30% 1,808 11,384 27% 1,378 10,249 25% 1,209 11% 14% 9% 31% Power Systems 7,463 18% 1,694 6,408 16% 1,180 5,673 14% 836 13% 41% 16% 44% Accelera 460 1% (896) (1) 414 1% (764) (1) 354 1% (443) 17% (72)% (2) 11% (17)% Total segments 41,352 100% 5,386 41,597 100% 5,038 41,369 100% 5,072 1% (1)% 7% Intersegment eliminations (7,682) (1) (7,495) 1,288 (2) (7,304) (2,055) (3) 3% 2% NM Total $ 33,670 $ 5,385 $ 34,102 $ 6,326 (2) $ 34,065 $ 3,017 (3) —% NM "NM" (1)% (15)% “NM” - not meaningful information (1) Accelera EBITDA included $312 $458 million of strategic reorganization action charges in for Accelera actions for the fourth quarter of 2024. year ended December 31, 2025.
Read it in 10-K 2026-02-10 at sec.gov ↗
RewordedMD&A
Favorable/(Unfavorable) Favorable/(Unfavorable) Years ended December 31, 2025 vs. 2024 2024 vs. 2023 2023 vs. 2022 In millions 2025 2024 2023 2022 Amount Percent Amount Percent External sales $ 423 $ 369 $ 336 $ 176 54 15% $ 33 10% $ 160 91% Intersegment sales 37 45 18 22 (8) (18)% 27 NM (4) (18)% Total sales 460 414 354 198 46 11% 60 17% 156 79% Research, development and engineering expenses 186 (1) 226 (1) (2) 203 171 40 18% (23) (11)% (32) (19)% Equity, royalty and interest loss from investees (30) (50) (1) (2) (15) (2) 20 40% (35) NM (13) NM Interest income 1 1 2 — —% (1) (50)% 2 NM Segment EBITDA (896) (1) (764) (1) (2) (443) (334) (132) (17)% (321) (72)% (109) (33)% "NM" “NM” - not meaningful information (1) Included $2 $7 million of charges in research, development and engineering expenses, $17 expenses and $458 million of charges in equity, royalty and interest loss from investees and $312 million of charges in EBITDA, all related to strategic reorganization actions in the fourth quarter of 2024. EBITDA for 2025 Accelera actions.
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RewordedMD&A
The year ended December 31, 2023, 2025, contained unfavorable net favorable discrete tax items of $397 $75 million, primarily due to $398 million in the fourth quarter related to the $2.0 billion charge from the Settlement Agreements, $22 $51 million of unfavorable favorable adjustments for uncertain tax positions and $3 positions, $15 million of net unfavorable other discrete favorable adjustments for share-based compensation tax items, partially offset by $21 benefits, $7 million of favorable return to provision adjustments and $5 $2 million of other favorable share-based compensation tax benefits. adjustments.
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RewordedMD&A
U.S. dollar Wholly-owned subsidiaries $ 227 Euro, British pound and Brazilian real $ (245) Brazilian real, Chinese renminbi, Euro and Indian rupee $ 118 British pound and Brazilian real, Equity method investments 30 Chinese renminbi, partially offset by Chinese renminbi Equity method investments Indian rupee (15) Chinese renminbi and Brazilian real, partially offset by Indian rupee (23) Chinese renminbi, partially offset by Brazilian real Consolidated subsidiaries with a noncontrolling interest (13) Indian rupee, partially offset by Euro (16) Indian rupee (3) Chinese renminbi Total $ 244 $ (276) $ 92
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RewordedMD&A
Contractual Cash Obligations Payments Due by Period In millions Current Long-Term Long-term debt and finance lease obligations (1) $ 887 411 $ 8,492 10,822 Operating leases (1) 150 472 163 486 Capital expenditures 667 639 — Purchase commitments for inventory 1,107 — 989 20 Other purchase commitments 622 372 Transitional tax liability 103 — 581 331 Other postretirement benefits 16 101 14 90 International and other domestic letters of credit 67 40 76 59 Performance and excise bonds 74 167 100 121 Guarantees and other commitments 13 28 18 Total $ 3,706 3,001 $ 9,672 11,947 (1) Included principal payments and expected interest payments based on the terms of the obligations.
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RewordedMD&A
International Primary location of international balances Cash and cash equivalents $1,671 $604 $1,067 $2,845 $1,280 $1,565 Singapore, China, Australia, Mexico, China, United Kingdom, Belgium Belgium, Romania, France, Germany Marketable securities (1) 593 78 515 764 85 679 India Total $2,264 $682 $1,582 $3,609 $1,365 $2,244 Available credit capacity Revolving credit facilities (2) $2,741 $3,647 International and other uncommitted domestic credit facilities $628 $798 (1) The majority of marketable securities could be liquidated into cash within a few days.
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RewordedMD&A
The higher lower working capital requirements resulted in a cash outflow of $2.2 $0.9 billion compared to a cash inflow outflow of $2.4 $2.2 billion in the comparable period in 2023, 2024, mainly due to the absence of $1.9 billion of payments in 2024 required by the Settlement Agreements which were accrued Agreements, partially offset by unfavorable changes in 2023. accounts and notes receivable.
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RewordedMD&A
Net cash used in investing activities increased $139 decreased $51 million, primarily due to higher investments in equity investees the absence of $228 million and cash associated with the Atmus divestiture of $174 million, million partially offset by lower acquisition activity higher net investments in marketable securities of $234 $137 million.
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RewordedMD&A
Distribution segment EBITDA increased $169 $430 million, primarily due to increased power generation volumes in North America, improved mix, favorable pricing, partially offset by higher decreased compensation expenses. expenses, lower material costs and improved operational leverage.
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RewordedMD&A
Basic $ 20.62 $ 28.55 $ 5.19 $ 15.20 Diluted 20.50 28.37 5.15 15.12 (1) Net income and earnings per common share included the $1.3 billion non-taxable gain associated with the divestiture $458 million of Atmus charges for Accelera actions for the year ended December 31, 2024. 2025.
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RewordedMD&A
Basic $ 28.55 $ 5.19 $ 15.20 Diluted 28.37 5.15 15.12 (1) (2) Net income and earnings per common share included the $1.3 billion non-taxable gain associated with the divestiture of Atmus and $312 million of charges related to the Accelera strategic reorganization for the year ended December 31, 2024.
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RewordedMD&A
On February 20, 2024, May 9, 2025, we issued $2.25 $2.0 billion aggregate principal amount of senior unsecured notes consisting of $500 $300 million aggregate principal amount of 4.90 4.25 percent senior unsecured notes due in 2029, $750 2028, $700 million aggregate principal amount of 5.15 4.70 percent senior unsecured notes due in 2034 2031 and $1.0 billion aggregate principal amount of 5.45 5.30 percent senior unsecured notes due in 2054. 2035.
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