Meritor Acquisition and 2022 Financial Results
CUMMINS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
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 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, axles, drivelines, brakes,
suspension systems, electric power generation systems, batteries, electrified power systems, electric powertrains, 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 service network of
approximately 460 wholly-owned, joint venture and independent distributor locations and more than 10,000 Cummins certified dealer locations in approximately 190 countries
and territories.
Meritor Acquisition
On August 3, 2022, we completed the acquisition of Meritor, Inc. (Meritor) with a purchase price of $2.9 billion (including debt repaid concurrent with the acquisition). Our
consolidated results and segment results include Meritor's activity since the date of acquisition. Meritor was split into the newly formed axles and brakes business and electric
powertrain. The results for the axles and brakes business are included in our Components segment while the electric powertrain portion is included in our New Power segment.
See NOTE 2, "ACQUISITIONS," for additional information.
Reporting Period
Beginning in 2022, we transitioned to a Gregorian calendar with our reporting period ending on the last day of the quarterly calendar period. In 2021 and prior, our reporting
period ended on the Sunday closest to the last day of the quarterly calendar period. Our fiscal year ends on December 31, regardless of the day of the week on which
December 31 falls.
Principles of Consolidation
Our Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) All intercompany
balances and transactions are eliminated in consolidation.
We include the accounts of all wholly-owned and majority-owned domestic and foreign subsidiaries where our ownership is more than 50 percent of outstanding equity
interests except for majority-owned subsidiaries that are considered variable interest entities (VIES) where we are not deemed to have a controlling financial interest. In
addition, we also consolidate, regardless of our ownership percentage, VIES or joint ventures for which we are deemed to have a controlling financial interest. We have variable
interests in several businesses accounted for under the equity method of accounting, however most of these VIES are unconsolidated.
For consolidated entities where our ownership interest is less than 100 percent, the noncontrolling ownership interests are reported in ourConsolidated Balance Sheets. The
noncontrolling ownership interest in our income, net of tax, is classified as "Net income attributable to noncontrolling interests" in our Consolidated Statements of Net Income.
Reclassifications
Certain amounts for 2021 and 2020 were reclassified to conform to the current year presentation.
70
70View entire presentation