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 ~~June 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-39220

____________________________________

CARRIER GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________


Delaware						83-4051582
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

13995 Pasteur Boulevard, Palm Beach Gardens, Florida 33418

(Address of principal executive offices, including zip code)

(561) 365-2000

(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 ($0.01 par value)

CARR

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 ☒ 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) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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.

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 ☒

As of ~~July~~April 15, ~~2021,~~2022, there were ~~867,701,396~~848,241,752 shares of Common Stock outstanding.

Table of Contents

CARRIER GLOBAL CORPORATION

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022


			Page

PART I – FINANCIAL INFORMATION			3

Item 1. Financial Statements:			3

Condensed Consolidated Statement of Operations (Unaudited)			3



Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)			4

Condensed Consolidated Balance Sheet (Unaudited)			5

Condensed Consolidated Statement of Changes in Equity (Unaudited)			6

Condensed Consolidated Statement of Cash Flows (Unaudited)			7

Notes to Condensed Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			2524

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2625

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4034

Item 4. Controls and Procedures			4034

PART II – OTHER INFORMATION			4234

Item 1. Legal Proceedings			4234

Item 1A. Risk Factors			4235

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4335



Item 6. Exhibits			4436

SIGNATURES			4538

Carrier Global Corporation and its subsidiaries' names, abbreviations thereof, logos and product and service designators are all either the registered or unregistered trademarks or trade names of Carrier Global Corporation and its subsidiaries. Names, abbreviations of names, logos and products and service designators of other companies are either the registered or unregistered trademarks or trade names of their respective owners. As used herein, the terms "we," "us," "our," "the Company" or "Carrier," unless the context otherwise requires, mean Carrier Global Corporation and its subsidiaries. References to internet websites in this Form 10-Q are provided for convenience only. Information available through these websites is not incorporated by reference into this Form 10-Q.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions, except per share amounts)	(In millions, except per share amounts)	2021		2020		2021		2020		(In millions, except per share amounts)		2022		2021
Net sales	Net sales									Net sales
Product sales	Product sales	$	4,584	$	3,275	$	8,448	$	6,422	Product sales		$	4,170	$	3,864
Service sales	Service sales	856		697		1,691		1,438		Service sales		484		835
Total Net sales	Total Net sales	5,440		3,972		10,139		7,860		Total Net sales		4,654		4,699
Costs and expenses	Costs and expenses									Costs and expenses
Cost of products sold	Cost of products sold	(3,235)		(2,343)		(5,959)		(4,580)		Cost of products sold		(2,998)		(2,724)
Cost of services sold	Cost of services sold	(586)		(488)		(1,167)		(1,017)		Cost of services sold		(363)		(581)
Research and development	Research and development	(125)		(94)		(246)		(192)		Research and development		(125)		(121)
Selling, general and administrative	Selling, general and administrative	(813)		(637)		(1,556)		(1,329)		Selling, general and administrative		(601)		(743)
Total Costs and expenses	Total Costs and expenses	(4,759)		(3,562)		(8,928)		(7,118)		Total Costs and expenses		(4,087)		(4,169)
Equity method investment net earnings	Equity method investment net earnings	87		57		125		86		Equity method investment net earnings		58		38
Other income (expense), net	Other income (expense), net	15		(25)		18		(71)		Other income (expense), net		1,112		3
Operating profit	Operating profit	783		442		1,354		757		Operating profit		1,737		571
Non-service pension (expense) benefit	Non-service pension (expense) benefit	19		14		37		31		Non-service pension (expense) benefit		(1)		18
Interest (expense) income, net	Interest (expense) income, net	(71)		(81)		(164)		(118)		Interest (expense) income, net		(48)		(93)
Income from operations before income taxes	Income from operations before income taxes	731		375		1,227		670		Income from operations before income taxes		1,688		496
Income tax (expense) benefit	Income tax (expense) benefit	(234)		(106)		(338)		(299)		Income tax (expense) benefit		(301)		(104)
Net income from operations	Net income from operations	497		269		889		371		Net income from operations		1,387		392
Less: Non-controlling interest in subsidiaries' earnings from operations	Less: Non-controlling interest in subsidiaries' earnings from operations	10		8		18		14		Less: Non-controlling interest in subsidiaries' earnings from operations		8		8

Net income attributable to common shareowners	Net income attributable to common shareowners	$	487	$	261	$	871	$	357	Net income attributable to common shareowners		$	1,379	$	384

Earnings per share	Earnings per share									Earnings per share
Basic	Basic	$	0.56	$	0.30	$	1.00	$	0.41	Basic		$	1.62	$	0.44
Diluted	Diluted	$	0.55	$	0.30	$	0.98	$	0.41	Diluted		$	1.58	$	0.43

Weighted-average number of shares outstanding	Weighted-average number of shares outstanding									Weighted-average number of shares outstanding
Basic	Basic	868.7		866.2		869.0		866.2		Basic		853.3		869.3
Diluted	Diluted	890.9		870.9		890.4		870.9		Diluted		874.1		889.8

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

Table of Contents

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022		2021
Net income from operations	Net income from operations	$	497	$	269	$	889	$	371	Net income from operations		$	1,387	$	392

Other comprehensive income (loss), net of tax
Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments arising during period	Foreign currency translation adjustments arising during period	59		251		(62)		(239)		Foreign currency translation adjustments arising during period		(61)		(121)

Pension and post-retirement benefit plan adjustments	Pension and post-retirement benefit plan adjustments	6		7		13		12		Pension and post-retirement benefit plan adjustments		(2)		7
Chubb divestiture										Chubb divestiture		(245)		—

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	65		258		(49)		(227)		Other comprehensive income (loss), net of tax		(308)		(114)
Comprehensive income (loss)	Comprehensive income (loss)	562		527		840		144		Comprehensive income (loss)		1,079		278
Less: Comprehensive income (loss) attributable to non-controlling interest	Less: Comprehensive income (loss) attributable to non-controlling interest	10		9		18		13		Less: Comprehensive income (loss) attributable to non-controlling interest		8		8
Comprehensive income (loss) attributable to common shareowners	Comprehensive income (loss) attributable to common shareowners	$	552	$	518	$	822	$	131	Comprehensive income (loss) attributable to common shareowners		$	1,071	$	270

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

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CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


		As of					As of
(In millions)	(In millions)	June 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	2,630	$	3,115	Cash and cash equivalents	$	3,604	$	2,987
Accounts receivable, net	Accounts receivable, net	3,128		2,781		Accounts receivable, net	2,599		2,403
Contract assets, current	Contract assets, current	695		656		Contract assets, current	655		503
Inventories, net	Inventories, net	1,885		1,629		Inventories, net	2,358		1,970
Assets held for sale						Assets held for sale	—		3,168
Other assets, current	Other assets, current	416		343		Other assets, current	386		376
Total current assets	Total current assets	8,754		8,524		Total current assets	9,602		11,407
Future income tax benefits	Future income tax benefits	461		449		Future income tax benefits	517		563
Fixed assets, net	Fixed assets, net	1,837		1,810		Fixed assets, net	1,825		1,826
Operating lease right-of-use assets	Operating lease right-of-use assets	786		788		Operating lease right-of-use assets	596		640
Intangible assets, net	Intangible assets, net	1,071		1,037		Intangible assets, net	488		509
Goodwill	Goodwill	10,279		10,139		Goodwill	9,288		9,349
Pension and post-retirement assets	Pension and post-retirement assets	635		554		Pension and post-retirement assets	37		43
Equity method investments	Equity method investments	1,572		1,513		Equity method investments	1,638		1,593

Other assets	Other assets	343		279		Other assets	202		242
Total Assets	Total Assets	$	25,738	$	25,093	Total Assets	$	24,193	$	26,172

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Accounts payable	Accounts payable	$	2,362	$	1,936	Accounts payable	$	2,519	$	2,334
Accrued liabilities	Accrued liabilities	2,541		2,471		Accrued liabilities	2,330		2,561
Contract liabilities, current	Contract liabilities, current	576		512		Contract liabilities, current	426		415
Liabilities held for sale						Liabilities held for sale	—		1,134
Current portion of long-term debt	Current portion of long-term debt	125		191		Current portion of long-term debt	256		183
Total current liabilities	Total current liabilities	5,604		5,110		Total current liabilities	5,531		6,627
Long-term debt	Long-term debt	9,600		10,036		Long-term debt	8,305		9,513
Future pension and post-retirement obligations	Future pension and post-retirement obligations	511		524		Future pension and post-retirement obligations	376		380
Future income tax obligations	Future income tax obligations	556		479		Future income tax obligations	366		354
Operating lease liabilities	Operating lease liabilities	635		642		Operating lease liabilities	491		527

Other long-term liabilities	Other long-term liabilities	1,712		1,724		Other long-term liabilities	1,694		1,677
Total Liabilities	Total Liabilities	18,618		18,515		Total Liabilities	16,763		19,078
Commitments and contingent liabilities (Note 18)		0		0
Commitments and contingent liabilities (Note 19)						Commitments and contingent liabilities (Note 19)	0		0
Equity	Equity					Equity
Common stock	Common stock	9		9		Common stock	9		9
Treasury stock	Treasury stock	(130)		0		Treasury stock	(1,270)		(529)
Additional paid-in capital	Additional paid-in capital	5,366		5,345		Additional paid-in capital	5,415		5,411
Retained earnings	Retained earnings	2,305		1,643		Retained earnings	4,244		2,865
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(794)		(745)		Accumulated other comprehensive loss	(1,297)		(989)
Non-controlling interest	Non-controlling interest	364		326		Non-controlling interest	329		327
Total Equity	Total Equity	7,120		6,578		Total Equity	7,430		7,094
Total Liabilities and Equity	Total Liabilities and Equity	$	25,738	$	25,093	Total Liabilities and Equity	$	24,193	$	26,172

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

Table of Contents

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

(In millions) UTC Net Investment Accumulated Other Comprehensive Income (Loss) Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Non-Controlling Interest Total Equity
Balance as of December 31, 2019 $ 15,355 $ (1,253) $ 0 $ 0 $ 0 $ 0 $ 333 $ 14,435
Net income 96 — — — — — 6 102
Other comprehensive income (loss), net of tax — (483) — — — — (2) (485)
Dividends attributable to non-controlling interest — — — — — — (8) (8)
Net transfers to UTC (11,014) — — — — — — (11,014)
Adoption impact of ASU 2016-13 (4) — — — — — — (4)
Balance as of March 31, 2020 $ 4,433 $ (1,736) $ 0 $ 0 $ 0 $ 0 $ 329 $ 3,026
Net income — — — — — 261 8 269
Other comprehensive income (loss), net of tax — 257 — — — — 1 258
Dividends declared on common stock (1)
— — — — — (70) — (70)
Shares issued under incentive plans, net — — — — 24 — — 24
Net transfers from UTC 859 — — — — — — 859
Reclassification of UTC Net investment to Common stock and Additional paid-in capital (5,292) — 9 — 5,283 — — —
Balance as of June 30, 2020 $ 0 $ (1,479) $ 9 $ 0 $ 5,307 $ 191 $ 338 $ 4,366
(In millions) UTC Net Investment Accumulated Other Comprehensive Income (Loss) Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Non-Controlling Interest Total Equity
Balance as of December 31, 2020 $ 0 $ (745) $ 9 $ 0 $ 5,345 $ 1,643 $ 326 $ 6,578
Net income — — — — — 384 8 392
Other comprehensive income (loss), net of tax — (114) — — — — — (114)
Shares issued under incentive plans, net — — — — (14) — — (14)
Stock-based compensation — — — — 19 — — 19
Dividends attributable to non-controlling interest — — — — — — (5) (5)
Treasury stock repurchase — — — (38) — — — (38)
Balance as of March 31, 2021 $ 0 $ (859) $ 9 $ (38) $ 5,350 $ 2,027 $ 329 $ 6,818
Net income — — — — — 487 10 497
Other comprehensive income (loss), net of tax — 65 — — — — — 65
Dividends declared on common stock (2)
— — — — — (209) — (209)
Shares issued under incentive plans, net — — — — (4) — — (4)
Stock-based compensation — — — — 20 — — 20
Dividends attributable to non-controlling interest — — — — — — (21) (21)
Acquisition of non-controlling interest — — — — — — 46 46
Treasury stock repurchase — — — (92) — — — (92)
Balance as of June 30, 2021 $ 0 $ (794) $ 9 $ (130) $ 5,366 $ 2,305 $ 364 $ 7,120
(1) Cash dividends declared were $0.08 per share for the three months ended June 30, 2020.
(2) Cash dividends declared were $0.24 per share for the three months ended June 30, 2021.


(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2021	$	(989)	$	9	$	(529)	$	5,411	$	2,865	$	327	$	7,094
Net income	—		—		—		—		1,379		8		1,387
Other comprehensive income (loss), net of tax	(308)		—		—		—		—		—		(308)

Shares issued under incentive plans, net	—		—		—		(17)		—		—		(17)
Stock-based compensation	—		—		—		21		—		—		21
Dividends attributable to non-controlling interest	—		—		—		—		—		(1)		(1)

Sale of non-controlling interest	—		—		—		—		—		(5)		(5)
Treasury stock repurchase	—		—		(741)		—		—		—		(741)


Balance as of March 31, 2022	$	(1,297)	$	9	$	(1,270)	$	5,415	$	4,244	$	329	$	7,430





















































(In millions)	Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2020	$	(745)	$	9	$	—	$	5,345	$	1,643	$	326	$	6,578
Net income	—		—		—		—		384		8		392
Other comprehensive income (loss), net of tax	(114)		—		—		—		—		—		(114)

Shares issued under incentive plans, net	—		—		—		(14)		—		—		(14)
Stock-based compensation	—		—		—		19		—		—		19
Dividends attributable to non-controlling interest	—		—		—		—		—		(5)		(5)



Treasury stock repurchase	—		—		(38)		—		—		—		(38)
Balance as of March 31, 2021	$	(859)	$	9	$	(38)	$	5,350	$	2,027	$	329	$	6,818

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

Table of Contents

CARRIER GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)
For the Six Months Ended June 30,
(In millions) 2021 2020
Operating Activities
Net income from operations $ 889 $ 371
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 168 159
Deferred income tax provision 33 135
Stock-based compensation costs 40 35
Equity method investment net earnings (125) (86)
Distributions from equity method investments 42 49
Impairment charge on minority-owned joint venture investments 0 72
Changes in operating assets and liabilities
Accounts receivable, net (288) 27
Contract assets, current (41) (140)
Inventories, net (210) (325)
Other assets, current (27) 32
Accounts payable and accrued liabilities 368 152
Contract liabilities, current 42 37
Defined benefit plan contributions (27) (27)
Other operating activities, net (119) 65
Net cash flows provided by (used in) operating activities 745 556
Investing Activities
Capital expenditures (132) (94)
Investment in businesses, net of cash acquired (167) 0
Dispositions of businesses 1 0
Settlement of derivative contracts, net (6) (23)
Other investing activities, net 3 14
Net cash flows provided by (used in) investing activities (301) (103)
Financing Activities
Increase (decrease) in short-term borrowings, net (13) (17)
Issuance of long-term debt 74 11,734
Repayment of long-term debt (605) (36)
Repurchases of common stock (130) 0
Dividends paid on common stock (209) 0
Dividends paid to non-controlling interest (30) (8)
Net transfers to UTC 0 (10,359)
Other financing activities, net 15 1
Net cash flows provided by (used in) financing activities (898) 1,315
Effect of foreign exchange rate changes on cash and cash equivalents (2) (17)
Net increase (decrease) in cash and cash equivalents and restricted cash (456) 1,751
Cash, cash equivalents and restricted cash, beginning of period 3,120 957
Cash, cash equivalents and restricted cash, end of period 2,664 2,708
Less: restricted cash 34 4
Cash and cash equivalents, end of period $ 2,630 $ 2,704


	For the Three Months Ended March 31,
(In millions)	2022		2021
Operating Activities
Net income from operations	$	1,387	$	392
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	79		83
Deferred income tax provision	48		(2)
Stock-based compensation costs	21		19
Equity method investment net earnings	(58)		(38)

(Gain) loss on extinguishment of debt	(36)		—
(Gain) loss on sale of investments	(1,112)		—
Changes in operating assets and liabilities
Accounts receivable, net	(207)		(83)
Contract assets, current	(154)		(44)
Inventories, net	(390)		(248)
Other assets, current	(15)		(23)
Accounts payable and accrued liabilities	132		151
Contract liabilities, current	13		39
Defined benefit plan contributions	(4)		(24)
Distributions from equity method investments	11		12
Other operating activities, net	83		(50)
Net cash flows provided by (used in) operating activities	(202)		184

Investing Activities
Capital expenditures	(56)		(53)
Investment in businesses, net of cash acquired	(9)		(6)
Dispositions of businesses	2,935		—

Settlement of derivative contracts, net	(32)		8
Other investing activities, net	(18)		2
Net cash flows provided by (used in) investing activities	2,820		(49)

Financing Activities
Increase (decrease) in short-term borrowings, net	(33)		28
Issuance of long-term debt	14		51
Repayment of long-term debt	(1,123)		(570)
Repurchases of common stock	(734)		(36)
Dividends paid on common stock	(129)		(104)
Dividends paid to non-controlling interest	—		(5)

Other financing activities, net	(15)		(7)
Net cash flows provided by (used in) financing activities	(2,020)		(643)





Effect of foreign exchange rate changes on cash and cash equivalents	(1)		(9)
Net increase (decrease) in cash and cash equivalents and restricted cash	597		(517)

Cash, cash equivalents and restricted cash, beginning of period	3,025		3,120
Cash, cash equivalents and restricted cash, end of period	3,622		2,603
Less: restricted cash	18		4
Cash and cash equivalents, end of period	$	3,604	$	2,599

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

Table of Contents

CARRIER GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: DESCRIPTION OF THE BUSINESS

Carrier Global Corporation is a leading global provider of healthy, safe, sustainable and intelligent building and cold chain solutions. The Company's portfolio includes industry-leading brands such as Carrier, Automated Logic, Carrier Transicold, Kidde, Edwards and LenelS2 that offer innovative heating, ventilating, air conditioning ("HVAC"), refrigeration, fire, security and ~~fire~~building automation technologies to help make the world safer and ~~security solutions.~~more comfortable. The Company also provides a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.

In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for ~~2020~~2021 filed with the SEC on February ~~9, 2021~~8, 2022 (the ~~"2020~~"2021 Form 10-K").

On April 3, 2020 (the "Distribution Date"), United Technologies Corporation, since renamed Raytheon Technologies Corporation ("UTC"), completed the spin-off of the Company into an independent, publicly traded company (the "Separation") through a pro-rata distribution (the "Distribution") on a 1-for-one basis of all of the outstanding shares of common stock of the Company to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution. In connection with the Separation, the Company issued an aggregate principal balance of $11.0 billion of debt and transferred approximately $10.9 billion of cash to UTC on February 27, 2020 and March 27, 2020. On April 1, 2020 and April 2, 2020, the Company received cash contributions totaling $590 million from UTC related to the Separation.

In connection with the Separation, the Company entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship among the Company, UTC and Otis following the Separation and the Distribution, including a transition services agreement ("TSA"), a tax matters agreement ("TMA"), an employee matters agreement and an intellectual property agreement that cover services such as information technology, tax, finance and human resources. In addition, the Company incurred separation-related costs including employee-related costs, costs to establish certain stand-alone functions, information technology systems, professional service fees and other costs associated with becoming an independent, publicly traded company. These costs are primarily recorded in ~~Selling, general and administrative~~ in the Unaudited Condensed Consolidated Statement of Operations and totaled $3 million and $23 million for the three months ended June 30, 2021 and 2020, respectively. Costs for the six months ended June 30, 2021 and 2020 were $19 million and $68 million, respectively. The TSA expired on March 31, 2021.

Impact of the COVID-19 Pandemic

In early 2020, the World Health Organization declared the outbreak of a respiratory disease known as COVID-19 as a global pandemic. In response, many countries implemented containment and mitigation measures to combat the outbreak, which severely restricted the level of economic activity and caused a significant contraction in the global economy. As a result, the Company ~~temporarily closed or reduced production at manufacturing facilities across the globe to ensure employee safety and instructed non-essential employees to work from home. In addition, the Company~~ took several preemptive actions ~~during 2020~~ to manage liquidity, as demand for its products decreased. Despite the adverse impacts of the pandemic on the Company’s results beginning in the first quarter of 2020, manufacturing operations resumed and several restorative actions were completed during 2020, including the reinstatement of annual merit-based salary increases and continued investment to support the Company's core strategy.

~~The Company continues to focus its efforts on preserving~~preserve the health and safety of its employees and customers as well as ~~maintaining~~maintain the continuity of its operations. ~~In addition, the~~ ~~Company continues to actively monitor its liquidity position and working capital needs and believes that its overall capital resources and liquidity position are adequate.~~ The preparation of financial statements requires management to use judgments in making estimates and assumptions based on the relevant information available at the end of each period, which can have a significant effect on reported amounts. However, due to significant uncertainty surrounding the pandemic, including a resurgence in cases and the spread of COVID-19 variants, management's judgments could change. While the Company's results of operations, cash flows and financial condition could be negatively impacted, the extent of any continuing impact cannot be estimated with certainty at this time.

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NOTE 2: BASIS OF PRESENTATION

The Unaudited Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and majority-owned subsidiaries in which it has control. All intra-company accounts and transactions have been eliminated. Related party transactions between the Company and its equity method investees have not been eliminated. Non-controlling interest represents a non-controlling investor's interests in the results of subsidiaries that the Company controls and consolidates.

The Company's financial statements for the periods prior to the Separation and the Distribution are prepared on a "carve-out" basis and include all amounts directly attributable to the Company. Net cash transfers and other property transferred between UTC andSale of Chubb Fire & Security Business

On July 26, 2021, the Company ~~including related party receivables~~entered into a stock purchase agreement to sell its Chubb Fire and ~~payables between~~Security business ("Chubb") to APi Group Corporation ("APi"). As a result, the ~~Company~~assets and ~~other UTC affiliates,~~liabilities of Chubb are presented as ~~Net transfers~~held for sale on the accompanying Unaudited Condensed Consolidated Balance Sheet as of December 31, 2021 and recorded at the lower of their carrying value or fair value less estimated cost to ~~UTC~~sell. The sale of Chubb was completed on January 3, 2022 (the "Chubb Sale"). ~~In addition,~~See Note 16 - Divestitures for additional information.

Separation from United Technologies

On April 3, 2020, United Technologies Corporation, since renamed Raytheon Technologies Corporation ("UTC"), completed the ~~financial statements include allocations of costs for administrative functions and services performed on behalf~~spin-off of the Company ~~by centralized groups within UTC. All allocations~~into an independent, publicly traded company (the "Separation") through a pro-rata distribution (the "Distribution") on a 1-for-one basis of all of the outstanding shares of common stock of the Company to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution. The Company incurred separation-related costs including employee-related costs, costs to establish certain stand-alone functions, information technology systems, professional service fees and ~~estimates~~ other costs associated with becoming an independent, publicly traded company. These costs are primarily recorded in Selling, general and administrative in the Unaudited Condensed Consolidated ~~Financial Statements are based on assumptions that management believes are reasonable. The Company's financial statements~~Statement of Operations and totaled $16 million for the ~~periods subsequent to April 3, 2020 are consolidated financial statements based on the reported results of Carrier as a stand-alone company.~~three months ended March 31, 2021.

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Recently Issued and Adopted Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the sole source of authoritative U.S. GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. ASUs ~~not referenced below~~pending adoption were assessed and determined to be either not applicable or ~~are~~ not expected to have a material impact on the Unaudited Condensed Consolidated Financial Statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ ("~~ASU 2019-12"),which simplifies certain aspects of income tax accounting guidance in ASC 740,~~ ~~Income Taxes~~ ("ASC 740") reducing the complexity of its application while maintaining or improving the usefulness of the information required to be reported. The ASU eliminates certain exceptions from ASC 740 including: intra-period tax allocation, deferred tax liabilities related to outside basis differences and year-to-date loss in interim periods, among others. ASU 2019-12 was effective for periods beginning after December 15, 2020, including interim periods therein with early adoption permitted. The Company adopted this ASU on January 1, 2021 with no material impact on the Unaudited Condensed Consolidated Financial Statements.

NOTE 3: INVENTORIES, NET

Inventories are stated at the lower of cost or estimated net realizable value. Cost is primarily determined based on the first-in, first-out inventory method ("FIFO") or average cost methods, which approximates current replacement cost. However, certain subsidiaries use the last-in, first-out inventory method ("LIFO").

~~The major classes~~Inventories, net consisted of ~~inventory are as follows:~~the following:


(In millions)	(In millions)	June 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	478	$	363	Raw materials	$	670	$	559
Work-in-process	Work-in-process	190		143		Work-in-process	260		197
Finished goods	Finished goods	1,217		1,123		Finished goods	1,428		1,214

Inventories, net	Inventories, net	$	1,885	$	1,629	Inventories, net	$	2,358	$	1,970

The Company performs periodic assessments utilizing customer demand, production requirements and historical usage rates to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to the lower of cost or estimated net realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of ~~$189~~$160 million and ~~$183~~$154 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

NOTE 4: GOODWILL AND INTANGIBLE ASSETS

The Company records goodwill as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is tested and reviewed annually for impairment ~~during the third quarter~~on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the reporting unit may be less than its carrying value.

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The changes in the carrying amount of goodwill ~~are~~were as follows:


(In millions)	(In millions)		HVAC		Refrigeration		Fire & Security		Total		(In millions)	HVAC		Refrigeration		Fire & Security		Total
Balance as of December 31, 2020			$	5,489	$	1,251	$	3,399	$	10,139
Balance as of December 31, 2021											Balance as of December 31, 2021	$	5,658	$	1,228	$	2,463	$	9,349
Goodwill resulting from business combinations(1)	Goodwill resulting from business combinations(1)	(1)	175		0		0		175		Goodwill resulting from business combinations(1)	3		—		1		4

Foreign currency translation	Foreign currency translation		(19)		(4)		(12)		(35)		Foreign currency translation	(36)		(8)		(21)		(65)
Balance as of June 30, 2021			$	5,645	$	1,247	$	3,387	$	10,279
Balance as of March 31, 2022											Balance as of March 31, 2022	$	5,625	$	1,220	$	2,443	$	9,288

(1) See Note 15 - ~~Business~~ Acquisitions ~~and Dispositions~~ for ~~more~~additional information.

Indefinite-lived intangible assets are tested and reviewed annually for impairment ~~during the third quarter~~on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite useful lives are amortized over their estimated useful lives.

~~Identifiable intangible assets are comprised of the following:~~

June 30, 2021 December 31, 2020
(In millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount
Amortized:
Customer relationships $ 1,593 $ (1,302) $ 291 $ 1,558 $ (1,285) $ 273
Patents and trademarks 300 (227) 73 301 (222) 79
Monitoring lines 72 (61) 11 71 (59) 12
Service portfolios and other 683 (550) 133 644 (542) 102
2,648 (2,140) 508 2,574 (2,108) 466
Unamortized:
Trademarks and other 563 — 563 571 — 571
Intangible assets, net $ 3,211 $ (2,140) $ 1,071 $ 3,145 $ (2,108) $ 1,037

Amortization of intangible assets was $25 million and $25 million for the three months ended June 30, 2021 and 2020, respectively, and $49 million and $50 million for the six months ended June 30, 2021 and 2020, respectively.

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Identifiable intangible assets consisted of the following:


	March 31, 2022						December 31, 2021
(In millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Amortized:
Customer relationships	$	940	$	(705)	$	235	$	945	$	(699)	$	246
Patents and trademarks	231		(183)		48		232		(182)		50

Service portfolios and other	683		(542)		141		688		(539)		149
	1,854		(1,430)		424		1,865		(1,420)		445
Unamortized:
Trademarks and other	64		—		64		64		—		64
Intangible assets, net	$	1,918	$	(1,430)	$	488	$	1,929	$	(1,420)	$	509

Amortization of intangible assets was $21 million and $24 million for the three months ended March 31, 2022 and 2021, respectively.

NOTE 5: BORROWINGS AND LINES OF CREDIT

Long-term debt consisted of the following:

(In millions, except percentages) June 30,
2021 December 31,
2020
1.923% Notes due February 15, 2023 $ 0 (1) $ 500
2.242% Notes due February 15, 2025 2,000 2,000
2.493% Notes due February 15, 2027 1,250 1,250
2.722% Notes due February 15, 2030 2,000 2,000
2.700% Notes due February 15, 2031 750 750
3.377% Notes due April 5, 2040 1,500 1,500
3.577% Notes due April 5, 2050 2,000 2,000
Total long-term Notes 9,500 10,000
Other debt (including project financing obligations and finance leases) 300 308
Discounts and debt issuance costs (75) (81)
Total debt 9,725 10,227
Less: current portion of long-term debt 125 191
Long-term debt, net of current portion $ 9,600 $ 10,036

~~(1)~~ In February 2021, the Company prepaid the 1.923% Notes due in February 2023 and incurred a $17 million make-whole premium upon prepayment and wrote-off $2 million of the remaining unamortized deferred financing costs.


(In millions)	March 31, 2022		December 31, 2021


2.242% Notes due February 15, 2025	$	1,200	$	2,000
2.493% Notes due February 15, 2027	900		1,250
2.722% Notes due February 15, 2030	2,000		2,000
2.700% Notes due February 15, 2031	750		750
3.377% Notes due April 5, 2040	1,500		1,500
3.577% Notes due April 5, 2050	2,000		2,000


Total Long-term notes	8,350		9,500
Other debt (including project financing obligations and finance leases)	275		267
Discounts and debt issuance costs	(64)		(71)
Total debt	8,561		9,696
Less: current portion of long-term debt	256		183
Long-term debt, net of current portion	$	8,305	$	9,513

Revolving Credit Facility

On February 10, 2020, the Company entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures on April 3, 2025 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and cash requirements of the Company. A commitment fee of 0.125% is charged on unused commitments. Borrowings under the Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling and bear interest at a variable interest rate ~~based on LIBOR~~ plus a ratings-based margin, which was 125 basis points as of ~~June 30, 2021~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, there were 0no borrowings outstanding under the Revolving Credit Facility.

Commercial Paper Program

~~As of June 30, 2021, the~~The Company ~~had~~has a $2.0 billion unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes, including the funding of working capital and potential acquisitions. As of ~~June 30, 2021,~~March 31, 2022, there were 0no borrowings outstanding under the commercial paper program.

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Project Financing Arrangements

The Company is involved in several long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued ~~$71~~$14 million and ~~$75~~$46 million of debt during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Long-term debt repayments associated with these financing arrangements during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$83~~$8 million and ~~$36~~$53 million, respectively.

Debt Covenants

The Revolving Credit Facility and the indenture for the ~~long-term~~Long-term notes contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. On June 2, 2020, the Company entered into an amendment of the Revolving Credit Facility, under which certain terms of the facility were amended for a period beginning on June 2, 2020 and ending on December 30, 2021 (the "Covenant Modification Period"). The Company may terminate the Covenant Modification Period prior to December 30, 2021, subject to the satisfaction of certain conditions. The amendment deferred testing of the Company's consolidated total net leverage ratio financial covenant until June 30, 2021 and increases the consolidated total net leverage ratio limit until December 31, 2021. The amendment also required the Company to maintain

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~~liquidity at a certain level until the earlier of (1) June 29, 2021 and (2) the last day of the Covenant Modification Period.~~ As of June 30, 2021 the requirement to test the Company's consolidated total net leverage ratio was reinstated, and there is no remaining requirement to maintain liquidity at a certain level. Additionally, during the Covenant Modification Period, the Company is subject to: (a) limitations on the incurrence of subsidiary indebtedness, (b) limitations on the making of restricted payments, including purchases by the Company of shares of its common stock and the amount of dividends the Company may pay and (c) a "most favored nations" provision related to certain terms of any committed credit facility in an amount greater than $100 million. As of June 30, 2021,March 31, 2022, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.

Tender Offers

On March 15, 2022, the Company commenced tender offers to purchase up to $1.15 billion ("Aggregate Tender Cap") aggregate principal of the Company's 2.242% Notes due 2025 and 2.493% Notes due 2027 (together, the "Senior Notes"). The tender offers included payment of applicable accrued and unpaid interest up to the settlement date, along with a fixed spread for early repayment. Based on participation, the Company elected to settle the tender offers on March 30, 2022. The aggregate principal amount of Senior Notes validly tendered and accepted was approximately $1.15 billion, which included $800 million of Notes due 2025 and $350 million of Notes due 2027. Upon settlement, the Company recognized a net gain of $33 million and wrote off $5 million of unamortized deferred financing costs within Interest (expense) income, net on the accompanying Unaudited Condensed Consolidated Statement of Operations.

NOTE 6: FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement ("ASC 820"), defines fair value as the price that would be received if an asset is sold or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

•Level 1: Observable inputs such as quoted prices in active markets;

•Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal models based on observable market inputs, such as forward, interest, contract and discount ~~rates.~~ rates with changes in fair value reported directly in earnings.

The following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and

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measured on a recurring basis in the Company's Unaudited Condensed Consolidated Balance Sheet:

(In millions) Total Level 1 Level 2 Level 3
June 30, 2021
Derivative assets $ 3 (1) $ 0 $ 3 $ 0
Derivative liabilities $ (3) (2) $ 0 $ (3) $ 0
December 31, 2020
Derivative assets $ 17 (1) $ 0 $ 17 $ 0
Derivative liabilities $ (5) (2) $ 0 $ (5) $ 0


(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2022


Derivative assets (1)	$	19	$	—	$	19	$	—
Derivative liabilities (2)	$	(9)	$	—	$	(9)	$	—

December 31, 2021


Derivative assets (1)	$	8	$	—	$	8	$	—
Derivative liabilities (2)	$	(35)	$	—	$	(35)	$	—

~~(2)~~(1) Included in Other assets, current on the accompanying Unaudited Condensed Consolidated Balance ~~Sheet~~Sheet.

~~(3)~~(2) Included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance ~~Sheet~~Sheet.

~~The Company's long-term debt is measured at fair value based on observable market inputs which are considered Level 1 within the fair value hierarchy.~~ The following table provides the carrying amounts and fair values of ~~financial instruments~~the Company's Long-term notes that are not recorded at fair value in the ~~Company's~~ Unaudited Condensed Consolidated Balance Sheet:


		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(In millions)	(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Total Long-term Notes (1)	Total Long-term Notes (1)	$	9,500	$	9,930	$	10,000	$	10,811	Total Long-term Notes (1)	$	8,350	$	7,812	$	9,500	$	9,842

(1) Excludes debt discount and issuance ~~costs~~costs.

The fair value of the Company's Long-term debt is measured based on observable market inputs which are considered Level 1 within the fair value hierarchy. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate

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fair value due to the short-term nature of these accounts and would be classified as Level 1 in the fair value hierarchy. The Company's financing leases and project financing obligations, included in Long-term debtand Current portion of long-term debt on the accompanying Unaudited Condensed Consolidated Balance Sheet, approximate fair value and are classified as Level 3 in the fair value hierarchy.

NOTE 7: EMPLOYEE BENEFIT PLANS

The Company sponsors both funded and unfunded domestic and international defined benefit pension and defined contribution ~~plans as well as other post-retirement benefit~~ plans. In addition, the Company contributes to various domestic and international multi-employer ~~defined benefit~~ pension ~~and other post-retirement benefit~~ plans.

Contributions to the plans were as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022 (1)		2021
Defined benefit plans	Defined benefit plans	$	3	$	2	$	27	$	27	Defined benefit plans		$	4	$	24
Defined contribution plans	Defined contribution plans	$	30	$	25	$	67	$	55	Defined contribution plans		$	38	$	37
Multi-employer pension plans	Multi-employer pension plans	$	7	$	5	$	12	$	10	Multi-employer pension plans		$	3	$	5

(1) See Note 16 - Divestitures for additional information.

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The ~~following table illustrates the~~ components of net periodic pension ~~benefits~~expense (benefit) for the defined benefit pension ~~and post-retirement benefit plans:~~plans are as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022 (1)		2021
Service cost	Service cost	$	7	$	7	$	14	$	15	Service cost		$	5	$	7
Interest cost	Interest cost	10		13		19		26		Interest cost		4		9
Expected return on plan assets	Expected return on plan assets	(37)		(34)		(73)		(69)		Expected return on plan assets		(7)		(36)
Amortization of prior service credit	Amortization of prior service credit	0		0		1		1		Amortization of prior service credit		1		1
Recognized actuarial net (gain) loss	Recognized actuarial net (gain) loss	8		5		16		10		Recognized actuarial net (gain) loss		2		8
Net settlement, curtailment and special termination benefit (gain) loss		0		0		0		1

Net periodic pension expense (benefit)	Net periodic pension expense (benefit)	$	(12)	$	(9)	$	(23)	$	(16)	Net periodic pension expense (benefit)		$	5	$	(11)

(1) See Note 16 - Divestitures for additional information.

NOTE 8: STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation - Stock Compensation, which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured ~~once~~ at the date of grant and is generally not adjusted for subsequent changes. The Company's stock-based compensation plans include programs for stock appreciation rights, restricted stock units and performance share units.

Stock-based compensation expense, net of estimated forfeitures, is included inCost of products sold, Selling, general and administrative and Research and development in the accompanying Unaudited Condensed Consolidated Statements of Operations. ~~The expense recognized was as follows:~~

For the Three Months Ended June 30, For the Six Months Ended June 30,
(in millions) 2021 2020 2021 2020
Equity settled $ 21 $ 22 $ 40 $ 35
Cash settled 6 4 10 (1)
Total stock-based compensation expense $ 27 $ 26 $ 50 $ 34
Stock-based compensation cost by award type was as follows:


	For the Three Months Ended March 31,
(In millions)		2022		2021





Equity compensation costs - equity settled		$	21	$	19
Equity compensation costs - cash settled (1)		(6)		4
Total stock-based compensation expense		$	15	$	23

(1)

~~Prior to the Separation~~ The cash settled awards are classified as liability awards and the Distribution, the Company participated in UTC's long-term incentive plans, which authorized various types of market and performance-based incentive awards. For these periods, stock-based compensation expense was allocated to the Company from UTC based upon direct employee headcount. In connection with the Separation and the

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~~Distribution, all awards were converted into Carrier stock-based awards with unvested awards converted to preserve their intrinsic~~are measured at fair value ~~immediately before and after the Separation.~~at each balance sheet date.

NOTE 9: ~~GUARANTEES~~PRODUCT WARRANTIES

~~The~~In the ordinary course of business, the Company provides ~~service and~~standard warranty coverage on its ~~products~~products. Provisions for these amounts are established at the time of sale and ~~extends performance~~estimated primarily based on product warranty terms and ~~operating cost guarantees beyond normal service and warranty coverage on certain products.~~historical claims experience. In addition, the Company incurs discretionary costs to service its products in connection with specific product performance issues. ~~Liabilities~~Provisions for ~~performance~~these amounts are established when they are known and ~~operating cost guarantees are based upon future product performance~~estimable. The Company assesses the adequacy of its initial provisions and ~~durability and are estimated based upon historical experience. Adjustments are recorded to accruals~~will make adjustments as necessary based on known or anticipated claims ~~data and historical experience. The changes in the carrying amount of service and product warranties and product performance guarantees, included in~~ ~~Accrued liabilities~~or as new information becomes available that suggests it is probable that future costs will be different than estimated amounts. Amounts associated with these provisions are classified on the accompanying Unaudited Condensed Consolidated Balance Sheet ~~are~~ as ~~follows:~~Accrued liabilities or Other long-term liabilities based on their anticipated settlement date.

For the Six Months Ended June 30,
(In millions) 2021 2020
Balance as of January 1, $ 514 $ 488
Warranties, performance guarantees issued and changes in estimated liability 89 105
Settlements made (80) (92)
Balance as of June 30, $ 523 $ 501
The changes in the carrying amount of warranty related provisions are as follows:


	For the Three Months Ended March 31,
(In millions)	2022		2021
Balance as of January 1,	$	524	$	514
Warranties, performance guarantees issued and changes in estimated liability	45		39
Settlements made	(43)		(38)
Other	—		(1)
Balance as of March 31,	$	526	$	514

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NOTE 10: EQUITY

The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of ~~June 30,~~March 31, 2022 and December 31, 2021, ~~870,754,214~~874,460,201 and 873,064,219 shares of common stock were issued, respectively, which includes ~~3,053,847~~26,043,023 and 10,375,654 shares of treasury ~~stock.~~stock, respectively.

Share Repurchase Program

On ~~February 4,~~July 27, 2021, the Company's Board of Directors approved a ~~stock~~share repurchase program authorizing the repurchase of up to ~~$350 million~~$2.1 billion of the Company's outstanding common stock. The Company may repurchase ~~shares~~its outstanding common stock from time to time subject to market conditions and at the Company's discretion in the open market or through one or more other public or private transactions and subject to compliance with the Company's obligations under ~~the TMA and the Revolving Credit Facility.~~certain tax agreements. The Company records repurchases under the cost method whereby the entire cost of the acquired stock is recorded as Treasury stock as a reduction to equity. ~~The reissuance of treasury stock uses the first-in, first-out method of accounting.~~

On December 14, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") to repurchase $500 million of its common stock pursuant to the Company's existing share repurchase program. In accordance with the ASR Agreement, the Company received initial delivery of 7.6 million shares on January 4, 2022, representing approximately 80% of the expected share repurchases. The final number of shares under the ASR Agreement was based on the daily average of the volume-weighted average share price of the Company's common stock over the term of the ASR Agreement. Upon final settlement, the Company received an additional 2.7 million shares on February 8, 2022 and recognized $500 million in Treasury stock as a reduction in equity.

During the three months ended March 31, 2022, the Company repurchased ~~2.1 million~~15,667,369 shares ~~and 3.1 million~~of common stock, which included shares repurchased under the ASR Agreement. The total aggregate purchase price was $741 million. During the three months ended March 31, 2021, the Company repurchased 976,374 shares of common stock for an aggregate purchase price of ~~$92 million and $130 million for the three and six months ended June 30, 2021, respectively, which are held in~~ ~~Treasury stock~~ ~~as of June 30, 2021 as reflected on its Unaudited Condensed Consolidated Balance Sheet.~~$38 million.

Accumulated Other Comprehensive Income (Loss)

A summary of changes in the components of Accumulated other comprehensive income (loss) for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is as follows:


(In millions)	(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Accumulated Other Comprehensive Income (Loss)		(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Accumulated Other Comprehensive Income (Loss)

Balance as of March 31, 2021		$	(312)	$	(547)	$	(859)
Balance as of December 31, 2021								Balance as of December 31, 2021	$	(505)	$	(484)	$	(989)
Other comprehensive income (loss) before reclassifications, net	Other comprehensive income (loss) before reclassifications, net	59		—		59		Other comprehensive income (loss) before reclassifications, net	(61)		(4)		(65)
Amounts reclassified, pre-tax	Amounts reclassified, pre-tax	—		8		8		Amounts reclassified, pre-tax	—		3		3
Tax expense (benefit) reclassified	Tax expense (benefit) reclassified	—		(2)		(2)		Tax expense (benefit) reclassified	—		(1)		(1)

Balance as of June 30, 2021		$	(253)	$	(541)	$	(794)
Divestitures, net								Divestitures, net	(574)		329		(245)
Balance as of March 31, 2022								Balance as of March 31, 2022	$	(1,140)	$	(157)	$	(1,297)


(In millions)	Foreign Currency Translation		Defined Benefit Pension and Post-retirement Plans		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2020	$	(191)	$	(554)	$	(745)
Other comprehensive income (loss) before reclassifications, net	(121)		—		(121)
Amounts reclassified, pre-tax	—		9		9
Tax expense (benefit) reclassified	—		(2)		(2)

Balance as of March 31, 2021	$	(312)	$	(547)	$	(859)

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(In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive Income (Loss)
Balance as of March 31, 2020 $ (1,268) $ (468) $ (1,736)
Other comprehensive income (loss) before reclassifications, net 250 2 252
Amounts reclassified, pre-tax — 6 6
Tax expense (benefit) reclassified — (1) (1)
Balance as of June 30, 2020 $ (1,018) $ (461) $ (1,479)

~~A summary of changes in the components of~~ ~~Accumulated other comprehensive income (loss)~~ ~~for the six months ended June 30, 2021 and 2020 is as follows:~~

(In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2020 $ (191) $ (554) $ (745)
Other comprehensive income (loss) before reclassifications, net (62) — (62)
Amounts reclassified, pre-tax — 17 17
Tax benefit reclassified — (4) (4)
Balance as of June 30, 2021 $ (253) $ (541) $ (794)

(In millions) Foreign Currency Translation Defined Benefit Pension and Post-retirement Plans Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2019 $ (780) $ (473) $ (1,253)
Other comprehensive income (loss) before reclassifications, net (238) 2 (236)
Amounts reclassified, pre-tax — 12 12
Tax benefit reclassified — (2) (2)
Balance as of June 30, 2020 $ (1,018) $ (461) $ (1,479)

NOTE 11: REVENUE RECOGNITION

The Company ~~recognizes~~accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers. Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining ~~benefit~~benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the ~~Company's~~Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment.

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Sales disaggregated by product and service are as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022		2021
Sales Type	Sales Type									Sales Type
Product	Product	$	2,757	$	1,976	$	4,904	$	3,633	Product		$	2,639	$	2,147
Service	Service	363		315		702		617		Service		331		339
HVAC sales	HVAC sales	3,120		2,291		5,606		4,250		HVAC sales		2,970		2,486

Product	Product	915		609		1,807		1,322		Product		867		892
Service	Service	106		91		219		186		Service		109		113
Refrigeration sales	Refrigeration sales	1,021		700		2,026		1,508		Refrigeration sales		976		1,005

Product	Product	1,012		762		1,931		1,622		Product		771		919
Service	Service	391		295		776		641		Service		47		385
Fire & Security sales	Fire & Security sales	1,403		1,057		2,707		2,263		Fire & Security sales		818		1,304

Total segment sales	Total segment sales	5,544		4,048		10,339		8,021		Total segment sales		4,764		4,795
Eliminations and other	Eliminations and other	(104)		(76)		(200)		(161)		Eliminations and other		(110)		(96)
Net sales	Net sales	$	5,440	$	3,972	$	10,139	$	7,860	Net sales		$	4,654	$	4,699

Contract Balances

Total contract assets and contract liabilities ~~arising from contracts with customers are as follows:~~consisted of the following:


(In millions)	(In millions)	June 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Contract assets, current	Contract assets, current	$	695	$	656	Contract assets, current	$	655	$	503
Contract assets, non-current (included within Other assets)		166		98
Contract assets, non-current (included within Other assets)						Contract assets, non-current (included within Other assets)	15		70
Total contract assets	Total contract assets	$	861	$	754	Total contract assets	670		573

Contract liabilities, current	Contract liabilities, current	(576)		(512)		Contract liabilities, current	(426)		(415)
Contract liabilities, non-current (included within Other long-term liabilities)		(171)		(165)
Contract liabilities, non-current (included within Other long-term liabilities)						Contract liabilities, non-current (included within Other long-term liabilities)	(169)		(165)
Total contract liabilities	Total contract liabilities	(747)		(677)		Total contract liabilities	(595)		(580)
Net contract assets	Net contract assets	$	114	$	77	Net contract assets	$	75	$	(7)

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under ~~the~~a contract or when the Company has a right to consideration that is conditioned upon transfer of a good or service to ~~the~~a customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

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The Company recognized revenue of ~~$100~~$157 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 that related to contract liabilities as of January 1, ~~2021.~~2022. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months.

NOTE 12: RESTRUCTURING COSTS

The Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and working capital levels. Actions associated with these initiatives may include improving productivity, workforce reductions and the consolidation of facilities.

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The Company recorded net pre-tax restructuring costs for new and ongoing restructuring initiatives as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022		2021
HVAC	HVAC	$	7	$	1	$	11	$	3	HVAC		$	4	$	4
Refrigeration	Refrigeration	3		3		5		3		Refrigeration		—		2
Fire & Security	Fire & Security	9		6		20		9		Fire & Security		6		11
Total Segment	Total Segment	19		10		36		15		Total Segment		10		17
General corporate expenses	General corporate expenses	2		1		3		1		General corporate expenses		—		1
Total restructuring costs	Total restructuring costs	$	21	$	11	$	39	$	16	Total restructuring costs		$	10	$	18

Cost of sales	Cost of sales	$	6	$	5	$	11	$	6	Cost of sales		$	2	$	5
Selling, general and administrative	Selling, general and administrative	15		6		28		10		Selling, general and administrative		8		13

Total restructuring costs	Total restructuring costs	$	21	$	11	$	39	$	16	Total restructuring costs		$	10	$	18

The following table summarizes the ~~reserves~~reserve and charges ~~related~~relating to the restructuring ~~actions:~~reserve, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet:


		For the Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Balance as of January 1,	Balance as of January 1,	$	49	$	66	Balance as of January 1,	$	54	$	49
Net pre-tax restructuring costs	Net pre-tax restructuring costs	39		16		Net pre-tax restructuring costs	10		18
Utilization, foreign exchange and other	Utilization, foreign exchange and other	(40)		(35)		Utilization, foreign exchange and other	(21)		(18)
Balance as of June 30,		$	48	$	47

Balance as of March 31,						Balance as of March 31,	$	43	$	49

During the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, charges associated with restructuring initiatives related to cost reduction efforts. Amounts recognized primarily related to severance due to workforce reductions and exit costs due to the consolidation of field operations. As of ~~June 30, 2021,~~March 31, 2022, the Company had ~~$48~~$43 million accrued for costs associated with its announced restructuring initiatives, all of which is expected to be paid within one year.

NOTE 13: INCOME TAXES

The Company accounts for income tax expense in accordance with ASC 740, Income Taxes ("ASC 740"), which requires ~~that~~ an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. The effective tax rate was 17.8% for the three months ended ~~June 30, 2021 was 32.0%~~March 31, 2022 compared with ~~28.2%~~21.0% for the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~period-over-period increase is~~year-over-year decrease was primarily ~~due to~~driven by a ~~$43 million deferred tax charge as a result of a tax rate increase enacted on June 10, 2021, with an effective date of April 2023, from 19% to 25% in the United Kingdom.~~

~~The~~lower effective tax rate ~~for~~on the ~~six months ended June 30, 2021 was 27.5%~~Chubb gain compared with 44.6% for the six months ended June 30, 2020. The year-over-year decrease is primarily due to the absence of a prior year charge of $51 million related to a valuation allowance recorded against a United Kingdom tax loss and credit carryforward and a $46 million charge resulting from the Company's ~~decision to no longer permanently reinvest certain pre-2018 unremitted non-U.S. earnings. The six months ended June 30, 2021 included a $43 million deferred tax charge as a result of the tax~~U.S. statutory rate ~~increase from 19% to 25% in the United Kingdom, partially offset by the recognition of~~ and a favorable tax adjustment of ~~$21~~$32 million ~~resulting from a re-organization~~associated with foreign tax credits generated and expected to be utilized in ~~our German subsidiaries.~~

~~Income taxes through March 31, 2020 were recorded based on a "carve-out" and separate company basis. Prior to~~ the ~~Separation and the Distribution, the Company’s portion of income taxes for domestic and certain foreign jurisdictions were~~current

1716

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~~deemed settled in~~year. The three months ended March 31, 2021 included a favorable tax adjustment of $21 million resulting from the ~~period the related tax expense was recorded. After the Separation and the Distribution, the Company’s income taxes are prepared on~~re-organization of a ~~stand-alone basis.~~German subsidiary.

The Company assesses the realizability of its deferred tax assets on a quarterly basis through an analysis of potential sources of future taxable income, including prior year taxable income that may be available to absorb a carryback of tax losses, reversals of existing taxable temporary differences, tax planning strategies and forecasts of taxable income. The Company considers all negative and positive evidence, including the weight of the evidence, to determine whether valuation allowances against deferred tax assets are required. The Company maintains valuation allowances against certain deferred tax assets.

The Company conducts business globally and files income tax returns in U.S. federal, state and foreign jurisdictions. In certain jurisdictions, the Company's operations were included in UTC's combined tax returns for the periods through the ~~Distribution.~~Distribution. The U.S. Internal Revenue Service ("IRS") ~~commenced an audit of~~is currently auditing UTC's tax years 2017 and ~~2018 in the second quarter of 2020.~~2018. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including Australia, Belgium, Canada, China, Czech Republic, France, Germany, Hong Kong, India, Italy, Mexico, the Netherlands, Singapore, the United Kingdom and the United States. The Company is no longer subject to U.S. federal income tax examination for years prior to 2017 and, with few exceptions, is no longer subject to state, local and foreign income tax examinations for tax years prior to 2013.

In the ordinary course of business, there is inherent uncertainty in quantifying the Company's income tax positions. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. The Company believes that it is reasonably possible that a net decrease in unrecognized tax benefits of between ~~$20~~$10 million and ~~$35~~$65 million may occur within 12 months as a result of additional uncertain tax positions, the Separation, the revaluation of uncertain tax positions arising from examinations, appeals, court decisions and/or the expiration of tax statutes.

NOTE 14: EARNINGS PER SHARE

Earnings per share is computed by dividing Net income attributable to common shareowners by the weighted-average number of shares of common stock outstanding during the period (excluding treasury stock). Diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, including stock appreciation rights and stock options, when the effect of the potential exercise would be anti-dilutive.

Three Months Ended June 30, Six Months Ended June 30,
(In millions, except per share amounts) 2021 2020 2021 2020
Net income attributable to common shareowners $ 487 $ 261 $ 871 $ 357
Basic weighted-average number of shares outstanding 868.7 866.2 869.0 866.2
Stock awards and equity units (share equivalent) 22.2 4.7 21.4 4.7
Diluted weighted-average number of shares outstanding 890.9 870.9 890.4 870.9
Antidilutive shares excluded from computation of diluted earnings per share 3.1 30.9 3.1 30.9
Earnings Per Share
Basic $ 0.56 $ 0.30 $ 1.00 $ 0.41
Diluted $ 0.55 $ 0.30 $ 0.98 $ 0.41

OnThe following table summarizes the ~~Distribution Date, 866,158,910~~weighted-average number of shares of ~~the Company’s~~ common stock ~~par value $0.01 per share, were distributed to UTC shareowners of record as of March 19, 2020. This share amount is utilized~~outstanding for ~~the calculation of~~ basic and diluted earnings per share for all periods presented prior to the Separation and the Distribution and such shares are treated as issued and outstanding for purposes of calculating historical earnings per share. It is assumed that there are 0 dilutive equity instruments for the periods prior to the Separation and Distribution because there were no Carrier stock-based awards outstanding prior to the Separation and the Distribution.calculations:


	For the Three Months Ended March 31,
(In millions, except per share amounts)		2022		2021
Net income attributable to common shareowners		$	1,379	$	384

Basic weighted-average number of shares outstanding		853.3		869.3
Stock awards and equity units (share equivalent)		20.8		20.5
Diluted weighted-average number of shares outstanding		874.1		889.8

Antidilutive shares excluded from computation of diluted earnings per share		3.2		3.3

Earnings Per Share
Basic		$	1.62	$	0.44
Diluted		$	1.58	$	0.43

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NOTE 15: ~~BUSINESS~~ ACQUISITIONS ~~AND DISPOSITIONS~~

During the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, the Company acquired consolidated businesses and minority-owned businesses. The aggregate cash paid, net of cash acquired, totaled ~~$167~~$9 million and $6 million, respectively, and was funded through cash on hand. Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805,

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Business Combinations ~~("ASC 805")~~. As a result, the aggregate purchase price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. ~~Intangible assets associated with these transactions totaled $94 million and primarily related to customer relationships, technology assets and a non-compete agreement.~~ The excess purchase price over the estimated fair value of net assets acquired during the three months ended March 31, 2022 and 2021 was recognized as goodwill and totaled ~~$175 million.~~$4 million and $5 million, respectively.

Toshiba Carrier Corporation Acquisition Agreement

On February 6, 2022, the Company entered into a binding agreement to acquire a majority ownership stake in Toshiba Carrier Corporation (“TCC”) for approximately $900 million. TCC, a variable refrigerant flow ("VRF") and light commercial HVAC joint venture between Carrier and Toshiba Corporation, designs and manufactures flexible, energy-efficient and high-performance VRF and light commercial HVAC systems as well as commercial products, compressors and heat pumps. The acquisition will include all of ~~Giwee Group Co.~~TCC’s advanced research and development centers and global manufacturing operations, product pipeline and the long-term use of Toshiba’s iconic brand. The transaction is expected to close by the end of the third quarter of 2022, subject to customary closing conditions, including regulatory approvals. Upon closing, Toshiba Corporation will retain a 5% ownership interest in TCC.

NOTE 16: DIVESTITURES

Sale of Chubb Fire & Security Business

On ~~June 1, 2021,~~January 3, 2022, the Company ~~acquired a 70% controlling stake in Guangdong Giwee Group and its subsidiaries ("Giwee"). Giwee is a China-based manufacturer~~completed the Chubb Sale for net proceeds of ~~HVAC products, offering a portfolio of products including variable refrigerant flow, modular chillers and light commercial air conditioners.~~ ~~The results of Giwee are~~$2.9 billion. Chubb, reported within the ~~HVAC~~Company’s Fire & Security segment, ~~as of~~delivers essential fire safety and security solutions from design and installation to monitoring, service and maintenance across more than 17 countries around the ~~date of acquisition.~~globe. The Company ~~has not~~recognized a net gain on the sale of $1.1 billion, which is included ~~pro forma financial information required under ASC 805~~in Other income (expense), net on the accompanying Unaudited Condensed Consolidated Statement of Operations. The net proceeds received are subject to working capital and other adjustments as provided in the ~~pro forma impact was not deemed significant.~~sale agreement.

The excess of the purchase price over the estimated fair value of the net assets acquired was recognized as goodwill and totaled $168 million, which is not deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of thesefollowing table summarizes Chubb's assets and ~~liabilities. The estimate of fair value~~liabilities classified as held for ~~inventory and property, plant and equipment was based on an assessment of the acquired assets' condition as well as an evaluation of the current market value of such assets.~~sale:

~~The Company recorded intangible assets based on its preliminary estimate of fair value, which consisted of the following:~~


(In millions)	December 31, 2021
Cash and cash equivalents	$	60
Accounts receivable, net	445
Inventories, net	73
Contract assets, current	184
Other assets, current	27
Fixed assets, net	67
Intangible assets, net	545
Goodwill	940
Operating lease right-of-use assets	193
Pension and post-retirement assets	614
Other assets	20
Total assets disposed	$	3,168

Accounts payable	$	(190)
Accrued liabilities	(248)
Contract liabilities, current	(162)


Future pension and post-retirement obligations	(69)
Future income tax obligations	(273)
Operating lease liabilities	(175)
Other long-term liabilities	(17)
Total liabilities disposed	$	(1,134)

(in millions) Estimated Useful Life (in years) Intangible Assets Acquired
Customer relationships
14 $ 52
Technology 10 34
Non-compete agreement
5 8
Total intangible assets acquired $ 94

The valuation of intangible assets was determined using an income approach methodology including the multi-period excess earnings method and the relief from royalty method. Key assumptions used in estimating future cash flows included projected revenue growth rate, customer attrition rates and royalty rates. The projected future cash flows are discounted to present value using an appropriate discount rate. As of June 30, 2021, the Company has not finalized the process of allocating the purchase price and valuing the acquired assets and liabilities for the Giwee acquisition.

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NOTE ~~16:~~17: SEGMENT FINANCIAL DATA

The Company ~~has~~conducts its operations through 3 reportable operating segments: HVAC, Refrigeration and Fire & Security. In accordance with ASC 280 - Segment Reporting, the Company's segments maintain separate financial information for which results of operations are evaluated on a regular basis by the Company's Chief Operating Decision Maker in deciding how to allocate resources and in assessing performance.

•The HVAC segment provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers while enhancing building performance, health, energy efficiency and sustainability.

•The Refrigeration segment includes transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail, as well as commercial refrigeration products.

•The Fire & Security segment provides a wide range of residential, commercial and industrial technologies ~~and systems, and service solutions~~designed to help protect people and property.

~~Our~~The customers of Carrier are in both the public and private sectors and ~~our~~the Company's businesses reflect extensive geographic diversification. Inter-company sales between segments are immaterial.

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Net sales and Operating profit by segment are as follows:


		Net Sales				Operating Profit					Net Sales				Operating Profit
		For the Three Months Ended June 30,				For the Three Months Ended June 30,					For the Three Months Ended March 31,				For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021		2022		2021
HVAC	HVAC	$	3,120	$	2,291	$	573	$	358	HVAC	$	2,970	$	2,486	$	470	$	365
Refrigeration	Refrigeration	1,021		700		123		61		Refrigeration	976		1,005		107		127
Fire & Security	Fire & Security	1,403		1,057		148		106		Fire & Security	818		1,304		1,218		150
Total segment	Total segment	5,544		4,048		844		525		Total segment	4,764		4,795		1,795		642
Eliminations and other	Eliminations and other	(104)		(76)		(23)		(56)		Eliminations and other	(110)		(96)		(24)		(40)
General corporate expenses	General corporate expenses	0		0		(38)		(27)		General corporate expenses	—		—		(34)		(31)
Total Consolidated	Total Consolidated	$	5,440	$	3,972	$	783	$	442	Total Consolidated	$	4,654	$	4,699	$	1,737	$	571

Net Sales Operating Profit
For the Six Months Ended June 30, For the Six Months Ended June 30,
(In millions) 2021 2020 2021 2020
HVAC $ 5,606 $ 4,250 $ 938 $ 525
Refrigeration 2,026 1,508 250 160
Fire & Security 2,707 2,263 298 226
Total segment 10,339 8,021 1,486 911
Eliminations and other (200) (161) (63) (91)
General corporate expenses 0 0 (69) (63)
Total Consolidated $ 10,139 $ 7,860 $ 1,354 $ 757

Geographic external sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. presented in the table below, there were no individually significant countries with sales exceeding 10% of total sales during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

For the Three Months Ended June 30, For the Six Months Ended June 30,
(In millions) 2021 2020 2021 2020
United States $ 2,848 $ 2,192 $ 5,201 $ 4,203
International:
Europe 1,459 969 2,857 2,148
Asia Pacific 907 645 1,649 1,164
Other 226 166 432 345
Net sales $ 5,440 $ 3,972 $ 10,139 $ 7,860



	For the Three Months Ended March 31,
(In millions)		2022		2021
United States		$	2,784	$	2,353
International:
Europe		1,045		1,398
Asia Pacific		652		742
Other		173		206
Net sales		$	4,654	$	4,699

2019

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NOTE ~~17:~~18: RELATED PARTIES

Equity Method Investments

The Company sells products to and purchases products from unconsolidated entities accounted for under the equity method and, therefore, these entities are considered to be related parties. Amounts attributable to equity method investees are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)		2022		2021
Sales to equity method investees included in Product sales	Sales to equity method investees included in Product sales	$	652	$	434	$	1,120	$	778	Sales to equity method investees included in Product sales		$	624	$	468
Purchases from equity method investees included in Cost of products sold	Purchases from equity method investees included in Cost of products sold	$	98	$	66	$	174	$	143	Purchases from equity method investees included in Cost of products sold		$	110	$	75

The Company had receivables from and payables to equity method investees as follows:


(In millions)	(In millions)	June 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Receivables from equity method investees included in Accounts receivable, net	Receivables from equity method investees included in Accounts receivable, net	$	243	$	161	Receivables from equity method investees included in Accounts receivable, net	$	228	$	150
Payables to equity method investees included in Accounts payable	Payables to equity method investees included in Accounts payable	$	59	$	38	Payables to equity method investees included in Accounts payable	$	49	$	51

The Company periodically reviews the carrying value of its equity method investments to determine if there has been an other-than-temporary decline in fair value. During the three months ended March 31, 2020, the Company determined that indicators of impairment existed for a minority owned joint venture investment and performed a valuation of this investment using a discounted cash flow method. The Company determined that the loss in value was other-than-temporary due to a reduction in sales and earnings that were primarily driven by a deterioration in the oil and gas industry (the joint venture's primary market) and by the impact of the COVID-19 pandemic. As a result, the Company recorded a non-cash, other-than-temporary impairment charge of $71 million on this investment during the three months ended March 31, 2020, which is included in ~~Other income (expense), net~~ ~~on the accompanying Unaudited Condensed Consolidated Statement of Operations.~~

NOTE ~~18:~~19: COMMITMENTS AND CONTINGENT LIABILITIES

The Company is involved in various litigation, claims and administrative proceedings, including those related to environmental ~~(including asbestos)~~ and legal ~~matters.~~matters (including asbestos). In accordance with ASC 450, Contingencies ~~("ASC 450")~~, the Company records accruals for loss contingencies when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. These accruals are generally based upon a range of possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount. In addition, these estimates are reviewed periodically and adjusted to reflect additional information when it becomes available. The Company is unable to predict the final outcome of the following matters based on the information currently available, except as otherwise noted. However, the Company does not believe that the resolution of any of these matters will have a material adverse effect upon the Company's competitive position, results of operations, cash flows or financial condition.

Environmental Matters

The Company’s operations are subject to environmental regulation by various authorities. The Company has accrued for the costs of environmental remediation activities, including but not limited to investigatory, remediation, operating and maintenance costs and performance ~~guarantees,~~guarantees. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to individual sites, including technology required to remediate, current laws and ~~the Company periodically reassesses these amounts. Management believes that the likelihood of incurring losses materially in excess of the amounts accrued is remote.~~ regulations and prior remediation experience.

The outstanding liabilities for environmental obligations are as follows:


(In millions)	March 31, 2022		December 31, 2021
Environmental reserves included in Accrued liabilities	$	29	$	29
Environmental reserves included in Other long-term liabilities	189		191
Total Environmental reserves	$	218	$	220

(In millions) June 30,
2021 December 31, 2020
Environmental reserves included in Accrued liabilities
$ 25 $ 26
Environmental reserves included in Other long-term liabilities
209 213
Total Environmental reserves $ 234 $ 239
For sites with multiple responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of other parties to fulfill their obligations in establishing a provision for these costs. Accrued environmental liabilities are not reduced by potential insurance reimbursements and are undiscounted.

Asbestos Matters

The Company ~~and its consolidated subsidiaries have~~has been named as ~~defendants~~a defendant in lawsuits alleging personal injury as a result of exposure to asbestos allegedly integrated into certain Carrier products or business premises. While the Company has never manufactured asbestos and no longer incorporates it into any currently-manufactured products, certain products that the Company no longer manufactures

contained components incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or have been covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos-related claims were not material individually or in the aggregate in any period.

The Company had asbestos liabilities and related insurance recoveries as follows:


(In millions)	(In millions)	June 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Asbestos liabilities included in Accrued liabilities	Asbestos liabilities included in Accrued liabilities	$	18	$	17	Asbestos liabilities included in Accrued liabilities	$	17	$	17
Asbestos liabilities included in Other long-term liabilities	Asbestos liabilities included in Other long-term liabilities	222		228		Asbestos liabilities included in Other long-term liabilities	219		220
Total Asbestos liabilities	Total Asbestos liabilities	$	240	$	245	Total Asbestos liabilities	$	236	$	237

Asbestos-related recoveries included in Other assets, current	Asbestos-related recoveries included in Other assets, current	$	6	$	6	Asbestos-related recoveries included in Other assets, current	$	5	$	5
Asbestos-related recoveries included in Other assets	Asbestos-related recoveries included in Other assets	95		97		Asbestos-related recoveries included in Other assets	92		93
Total Asbestos-related recoveries	Total Asbestos-related recoveries	$	101	$	103	Total Asbestos-related recoveries	$	97	$	98

The amounts recorded for asbestos-related liabilities are based on currently available information and assumptions that the Company believes are reasonable and are made with input from outside actuarial experts.~~Where no amount within a range of estimates is more likely, the minimum is accrued.~~ These amounts are undiscounted and exclude the Company’s legal fees to defend the asbestos claims, which are expensed as incurred. In addition, the Company has recorded an insurance recovery ~~receivable~~receivables for probable asbestos-related recoveries.

UTC Equity Awards Conversion Litigation

On August 12, 2020, several former employees of UTC or its subsidiaries filed a putative class action complaint (the "Complaint") in the United States District Court for the District of Connecticut against Raytheon Technologies Corporation, Carrier, Otis, the former members of the UTC Board of Directors and the members of the Carrier and Otis Boards of Directors (Geraud Darnis, et al. v. Raytheon Technologies Corporation, et ~~al.~~al.). The Complaint challenges the method by which UTC equity awards were converted to UTC, Carrier and Otis equity awards following the Separation and the Distribution. Defendants moved to dismiss the Complaint. Plaintiffs amended their Complaint on September 13, 2021 ("the Amended Complaint"). The Amended Complaint, ~~asserted~~now with Raytheon, Carrier and Otis as the only defendants, asserts that the defendants are liable for breach of certain equity compensation plans and for breach of ~~fiduciary duty~~the implied covenant of good faith and fair dealing. The Amended Complaint also asserted claims under certain provisions of the Employee Retirement Income Security Act of 1974, as amended. Plaintiffs have withdrawn, with prejudice, their claims against Otis's and Carrier's current Boards of Directors.seeks specific performance. Carrier believes that the ~~remaining~~ claims against the Company are without merit. Defendants moved to dismiss the Amended Complaint on October 13, 2021. The motion was fully briefed as of December 3, 2021. The court has not scheduled arguments or decided the motion.

Aqueous Film Forming Foam Litigation

As of March 31, 2022, the Company has been named as a defendant in more than 2,200 lawsuits filed by individuals in or removed to the federal courts of the United States alleging that the historic use of Aqueous Film Forming Foam ("AFFF") is a firefighting foam developed in the 1970s pursuant to U.S. military specification and used to extinguish certain types of fires primarily at airports and military bases. AFFF was manufactured by several companies, including National Foam and Angus Fire. UTC acquired the National Foam and Angus Fire businesses in 2005 as part of the acquisition of Kidde, which had been operated by Carrier. In 2013, UTC divested the National Foam and Angus Fire businesses to a third party.

caused personal injuries and/or property damage. The Company ~~and many other parties, including the third-party buyer of the National Foam and Angus Fire businesses, have~~has also been named as ~~defendants~~a defendant in ~~over 1,300 cases, including putative class actions~~more than 160 lawsuits filed by several U.S. states, municipalities and ~~other lawsuits,~~water utilities in or removed to U.S. federal courts alleging that the historic use of AFFF caused ~~personal injuries and~~contamination of property ~~damage. Additionally, several state, municipal~~ and water ~~utility plaintiffs have commenced litigation against the same defendants to recover remediation costs related to historic use of AFFF.~~supplies. In December 2018, the U.S. Judicial Panel on Multidistrict Litigation ~~("MDL")~~ transferred and consolidated all ~~of the~~ AFFF cases pending in the U.S. federal courts against the Company and others to the U.S. District Court for the District of South Carolina ("MDL Court") for pre-trial ~~proceedings.~~

~~Plaintiffs in the~~ proceedings ("MDL ~~allege that a chemical ingredient in AFFF contains, or breaks down into, compounds known as perflourooctane sulfonate ("PFOS"~~Proceedings") and perflourooctane acid ("PFOA") that were released into the environment and, in some instances, ultimately leached into drinking water supplies. National Foam and Angus Fire purchased these perflourinated chemical ingredients from third-party chemical manufacturers to manufacture AFFF. Chemicals containing PFOS and PFOA (or their precursors) have also been used for decades by many third parties to manufacture carpets, clothing, fabrics, cookware and other consumer products.. The individual plaintiffs in the MDL Proceedings generally seek ~~compensatory~~ damages for alleged personal injuries, medical monitoring and diminution in property value and injunctive relief to remediate alleged contamination of water supplies. The U.S., state, municipal and water utility plaintiffs in the MDL Proceedings generally seek damages and costs related to the remediation of public property and water supplies.

AFFF is a firefighting foam, developed beginning in the late 1960s pursuant to U.S. military specification, used to extinguish certain types of hydrocarbon-fueled fires primarily at military bases and airports. AFFF was manufactured by several companies, including National Foam and Angus Fire. UTC first entered the AFFF business with the acquisition of National Foam and Angus Fire in 2005 as part of the acquisition of Kidde. In 2013, Kidde divested the National Foam and Angus Fire businesses to a third party. The Company acquired Kidde as part of its separation from UTC in April 2020. During the eight-year period of its operation by Kidde, National Foam manufactured AFFF for sale to government (including the U.S. federal government) and non-government customers in the U.S. at a single facility located in West Chester, Pennsylvania

("Pennsylvania Site"). During the same period, Angus Fire manufactured AFFF for sale outside the United States at a single facility located in Bentham, England.

The key components of AFFF that contribute to its fire-extinguishing capabilities are known as fluorosurfactants. National Foam and Angus Fire did not manufacture fluorosurfactants but instead purchased these substances from unrelated third parties. Plaintiffs in the MDL Proceedings allege that the fluorosurfactants used by various manufacturers in producing AFFF contained, or over time degraded into, compounds known as perflourooctane sulfonate ("PFOS") and/or perflourooctane acid ("PFOA"). Plaintiffs further allege that, as a result of the use of AFFF, PFOS and PFOA were released into the environment and, in some instances, ultimately reached drinking water supplies.

Plaintiffs in the MDL Proceedings allege that PFOS and PFOA contamination has resulted from the use of AFFF containing fluorosurfactants manufactured using a process known as ECF. They also allege that PFOA contamination has resulted from the use of AFFF containing fluorosurfactants manufactured using a different process, known as telomerization. Plaintiffs further allege that 3M was the only AFFF manufacturer that used fluorosurfactants relying on the ECF process and that all other foam manufacturers (including National Foam and Angus Fire) relied solely on fluorosurfactants produced via telomerization. Compounds containing PFOS and PFOA (as well as many other per- and polyfluoroalkyl substances known collectively as "PFAS") have also been used for decades by many third parties in a number of different industries to manufacture carpets, clothing, fabrics, cookware, food packaging, personal care products, cleaning products, paints, varnishes and other consumer and industrial products.

Plaintiffs in the MDL Proceedings have named multiple defendants, including 4 suppliers of chemicals and raw materials used to manufacture fluorosurfactants, 4 fluorosurfactant manufacturers, 2 toll manufacturers of fluorosurfactants and 7 current (including National Foam and Angus Fire) and former (including the Company) AFFF manufacturers.

General liability discovery in the MDL Proceedings continues. Preliminary stage discovery in 10 "bellwether" water provider cases was concluded and 3 of these cases were selected for tier two site-specific discovery. That discovery is ongoing. The MDL Court previously established a briefing schedule with respect to certain aspects of the government contractor defense, potentially applicable to AFFF sold to or used by the U.S. government or other customers requiring product manufactured to meet military specification, with briefing to conclude at the end of January 2022 with a hearing to follow in late March. In late March the MDL Court postponed the planned hearing and called for briefing on additional elements of the government contractor defense. Briefing will continue through July 1, 2022.

Outside of the MDL Proceedings, the Company and other defendants are also party to ~~fewer than 10 cases~~6 lawsuits in U.S. state ~~court~~courts brought by oil refining companies ~~in the U.S.~~ alleging product liability claims related to legacy sales of AFFF and seeking damages for the costs to replace the product and for property damage.

~~The~~ In addition, the Company and other defendants are ~~also~~ party to ~~an action~~two actions related to the ~~AFFF manufacturing facility that was operated by National Foam and Angus Fire~~Pennsylvania Site in which the plaintiff water utility company seeks remediation costs related to the alleged contamination of the local water supply.

The Company believes that it has meritorious defenses to ~~these~~the claims in the MDL Proceedings and the other AFFF lawsuits. Based on the 2013 agreement for the sale of National Foam and Angus Fire, the Company is pursuing indemnification against these claims from the purchaser and current owner of National Foam and Angus Fire. The Company also ~~seeking~~is pursuing insurance coverage for these claims. At this time, however, given the numerous factual, scientific and legal issues to be resolved relating to these claims, the Company is unable to assess the probability of liability or to reasonably estimate the damages, if any, to be allocated to the Company, if one or more plaintiffs were to prevail in these ~~cases, and there~~cases. There can be no assurance that any such future exposure will not be material in any period.

Income Taxes

Under the ~~TMA,~~Tax Matters Agreement relating to the Separation, the Company is responsible to UTC for its share of the Tax Cuts and Jobs Act ("TCJA") transition tax associated with foreign undistributed earnings as of December 31, 2017. As a result, a liability of ~~$453~~$417 million is included within the accompanying Unaudited Condensed Consolidated Balance Sheet atwithin ~~June 30, 2021~~Other Long-Term Liabilities. as of March 31, 2022. This obligation is expected to be settled in annual installments ending in April 2026 with the next installment of ~~$36~~$34 million ~~included within~~ ~~Accrued Liabilities~~.due in 2023. The Company believes that the likelihood of incurring losses materially in excess of this amount is remote.

Other

The Company has other commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising in the ordinary course of business. The Company accrues for contingencies generally based upon a range of

possible outcomes. If no amount within the range is a better estimate than any other, the Company accrues the minimum amount.

In the ordinary course of business, the Company is also routinely a defendant in, party to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some of these proceedings, claims for substantial monetary damages are asserted against the Company and could result in fines, penalties, compensatory or treble damages or non-monetary relief. The Company does not believe that these matters will have a material adverse effect upon its competitive position, results of operations, cash flows or financial condition.

~~NOTE 19~~: ~~SUBSEQUENT EVENTS~~

~~Sale of Chubb Fire & Security Business~~

On July 26, 2021, the Company entered into an agreement to sell its Chubb Fire and Security business (Chubb) to APi Group Corporation (APi) for an enterprise value of $3.1 billion (the “Agreement”). The purchase price is subject to working capital and other adjustments as provided in the Agreement. Chubb, reported within the Company’s Fire & Security segment, delivers essential fire safety and security solutions from design and installation to monitoring, service and maintenance across more than 17 countries around the globe. At June 30, 2021, Chubb did not meet the criteria for assets held for sale in the Unaudited Condensed Consolidated Balance Sheet. On a prospective basis, the net assets of Chubb will be classified as held for sale until the divestiture is completed. This transaction is expected to close late in the fourth quarter of 2021 or early in the first quarter of 2022, subject to regulatory approvals, required works council consultation in France and customary closing conditions. Based on the carrying amount of Chubb’s net assets, foreign currency translation rates and other assumptions at June 30, 2021, the Company expects to recover the carrying value of the disposal group upon completion of the transaction. In conjunction with the Agreement, the Company has agreed to provide APi, and APi has agreed to provide the Company, certain transitional services for varying periods after the closing.

~~Share Repurchase Program~~

On July 27, 2021, the Company's Board of Directors approved a $1.75 billion increase to the Company's existing $350 million stock repurchase program authorized in February 2021. Share repurchases may take place from time to time subject to market conditions and at the Company's discretion in the open market or through one or more other public or private transactions.

With respect to the Unaudited Condensed Consolidated Financial Statements of Carrier for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") reported that it has applied limited procedures in accordance with professional standards for a review of such information. However, its report dated ~~July 29, 2021,~~April 28, 2022, appearing below, states that the firm did not audit and does not express an opinion on the Unaudited Condensed Consolidated Financial Statements. PricewaterhouseCoopers has not carried out any significant or additional audit tests beyond those that would have been necessary if their report had not been included. Accordingly, the degree of reliance on its report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Securities Act"), for its report on the Unaudited Condensed Consolidated Financial Statements because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers within the meaning of Sections 7 and 11 of the Securities Act.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareowners of Carrier Global Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Carrier Global Corporation and its subsidiaries (the “Company”) as of ~~June 30, 2021,~~March 31, 2022, and the related condensed consolidated statements of operations, of comprehensive income (loss), of changes in equity ~~for the three-month~~ and ~~six-month periods ended June 30, 2021 and 2020 and the condensed consolidated statement~~ of cash flows for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ including the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, ~~2020,~~2021, and the related consolidated statements of operations, of comprehensive income (loss), of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated February ~~9, 2021, which included a paragraph describing a change in the manner of accounting for leases in the 2019 financial statements,~~8, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2020,~~2021 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ PricewaterhouseCoopers LLP

Hallandale Beach, Florida

~~July 29, 2021~~April 28, 2022

2524

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Business Summary

Carrier is a leading global provider of healthy, safe, sustainable and ~~sustainable~~intelligent building and cold chain solutions. ~~We operate three business segments, HVAC, Refrigeration and Fire & Security, each with strong brands and innovative products which we expect to drive future growth. Today, our~~Our portfolio includes industry-leading brands such as Carrier, Automated Logic, Carrier Transicold, Kidde, Edwards ~~LenelS2, Carrier Transicold~~ and ~~Automated Logic~~LenelS2 that offer innovative HVAC, refrigeration, fire, security and building automation technologies to help make the world safer and more comfortable. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. Our operations are classified into three segments: HVAC, Refrigeration and Fire & Security.

Our worldwide operations are affected by global and regional industrial, economic and political factors and trends. These include the mega-trends of urbanization, climate change and increasing requirements for food safety driven by the food needs of our growing global population and the rising standards of living in emerging markets. We believe that our business segments are well positioned to benefit from favorable secular trends, including these mega-trends and from the strength of our industry-leading brands and track record of innovation. In addition, we regularly review our markets to proactively ~~detect~~identify trends and adapt our strategies accordingly.

Our business is also affected by changes in the general level of economic activity, such as changes in business and consumer spending, construction and shipping activity as well as short-term economic factors such as currency fluctuations, commodity price volatility and supply disruptions. However, we continue to invest in our business, take pricing actions to mitigate supply chain and inflationary pressures, develop new products and services in order to remain competitive in our markets and use risk management strategies to mitigate various exposures. We believe that we have industry-leading global brands, which form the foundation of our business strategy. Coupled with our focus on growth, innovation and operational efficiency, we expect to drive long-term future growth and increased ~~value~~value for our shareowners.

Recent Developments

Russia's Invasion of Ukraine

In February 2022, Russian forces launched a military action against Ukraine. As a result, the European Union, United States, the United Kingdom and other countries have imposed sanctions that have increased global economic and political uncertainty. We operate in Russia through a Russia-based subsidiary and a joint venture which represent less than 1% of our total assets and revenue. On March 10, 2022, we announced that we were suspending business operations in Russia. We will honor existing contractual obligations, where possible, in a manner that fully complies with all sanctions and trade controls that have been imposed, but we will not pursue new business opportunities. While neither Russia nor Ukraine constitute a material portion of our business, the conflict could lead to disruption, instability and volatility in global markets and industries that could negatively impact our results of operations. We continue to monitor the evolving impacts of this conflict and its effect on the global economy and geopolitical landscape.

Supply Chain Challenges

The ongoing global economic recovery from the COVID-19 pandemic has caused significant challenges for global supply chains resulting in inflationary cost pressures, component shortages and transportation delays. As a result, we have incurred incremental costs for commodities and components used in our products as well as component shortages that have negatively impacted our sales and results of operations. We expect that these challenges will continue to have an impact on our businesses for the foreseeable future.

We continue to take proactive steps to limit the impact of these challenges and are working closely with our suppliers to ensure availability of products and implement other cost savings initiatives. In addition, we continue to invest in our supply chain to improve its resilience with a focus on automation, dual sourcing of critical components and localized manufacturing when feasible. To date, there has been limited disruption to the availability of our products, though it is possible that more significant disruptions could occur if these supply chain challenges continue.

Sale of Chubb Fire & Security Business

On ~~July 26, 2021,~~January 3, 2022, we ~~entered into an agreement to sell our~~completed the Chubb ~~business to APi~~Sale for ~~an enterprise value~~net proceeds of ~~$3.1~~$2.9 billion. ~~The purchase price is subject to working capital and other adjustments as provided in the Agreement.~~ Chubb, reported within our Fire & Security segment, delivers essential fire safety and security solutions from design and installation to monitoring, service and

maintenance across more than 17 countries around the globe. ~~At June 30, 2021, Chubb did not meet~~We recognized a gain on the ~~criteria for assets held for~~ sale of $1.1 billion which is subject to working capital and other adjustments as provided in the ~~Unaudited Condensed Consolidated Balance Sheet. On a prospective basis, the net assets of Chubb will be classified as held for~~ sale until the divestiture is completed. This transaction is expected to close late in the fourth quarter of 2021 or early in the first quarter of 2022, subject to regulatory approvals, required works council consultation in France and customary closing conditions. Based on the carrying amount of Chubb’s net assets, foreign currency translation rates and other assumptions at June 30, 2021, we expect to recover the carrying value of the disposal group upon completion of the transaction. In conjunction with the Agreement, we have agreed to provide APi, and APi has agreed to provide the Company, certain transitional services for varying periods after the closing.

~~Share Repurchase Program~~

On July 27, 2021, our Board of Directors approved a $1.75 billion increase to our existing $350 million stock repurchase program authorized in February 2021. Share repurchases may take place from time to time subject to market conditions and at our discretion in the open market or through one or more other public or private transactions.

~~Separation from United Technologies Corporation~~

On April 3, 2020, UTC completed the Separation of Carrier into an independent, publicly traded company. In connection with the Separation, we issued an aggregate principal balance of $11.0 billion of debt and transferred approximately $10.9 billion of cash to UTC on February 27, 2020 and March 27, 2020. In addition, we entered into several agreements with UTC and Otis that govern various aspects of the relationship among us, UTC and Otis following the Separation and the Distribution including the TSA (which expired on March 31, 2021), the TMA, an employee matters agreement and an intellectual property agreement. ~~Income and expense under these agreements are not material.~~

Our financial statements for periods prior to the Separation and the Distribution are prepared on a "carve-out" basis and include all amounts directly attributable to Carrier. Net cash transfers and other property transferred between UTC and us, including related party receivables and payables between us and other UTC affiliates, are presented as ~~Net transfers to UTC~~. In addition, the financial statements include allocations of costs for administrative functions and services performed on our behalf by centralized groups within UTC. All allocations and estimates in the Unaudited Condensed Consolidated Financial Statements are based on assumptions that management believes are reasonable. Our financial statements for the periods subsequent to April 3, 2020 are consolidated financial statements based on the reported results of Carrier as a stand-alone company.

Impact of the COVID-19 Pandemic

In early 2020, the World Health Organization declared the outbreak of a respiratory disease known as COVID-19 as a global pandemic. In response, many countries implemented containment and mitigation measures to combat the outbreak, which severely restricted the level of economic activity and caused a significant contraction in the ~~global~~global economy. As a result, we ~~temporarily closed or reduced production at manufacturing facilities across the globe to ensure employee safety and instructed non-essential employees to work from home. In addition, we~~ took several preemptive actions ~~during 2020~~ to manage liquidity, ~~as demand for our products decreased. Despite~~preserve the adverse impacts of the pandemic on our results beginning in the first quarter of 2020, manufacturing operations resumed and several restorative actions were completed during 2020 including the reinstatement of annual merit-based salary increases and continued investment to support our core strategy.he

~~We continue to focus our efforts on preserving the health~~alth and safety of our employees and customers as well as ~~maintaining~~maintain the continuity of our operations. ~~In addition, we~~ ~~continue to actively monitor our liquidity position and working capital needs and believe that our overall capital resources and liquidity position are adequate.~~ The preparation of financial statements requires management to use judgments in making estimates and assumptions based on the relevant information available at the end of each period, which can have a significant effect on reported amounts. However, due to significant uncertainty surrounding the pandemic, including a resurgence in cases and the spread of COVID-19 variants, management's judgments could change. While our results of operations, cash flows and financial condition could be negatively impacted, the extent of any continuing impact cannot be estimated with certainty at this time.

CRITICAL ACCOUNTING ESTIMATES

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses. We believe that the most complex and sensitive judgments, because of their potential significance to the Unaudited Condensed Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. In "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our ~~2020~~2021 Form 10-K, we describe the significant accounting estimates and policies used in the preparation of the Unaudited Condensed Consolidated Financial Statements. There have been no significant changes in our critical accounting estimates.

RESULTS OF OPERATIONS

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three Months Ended ~~June 30, 2020~~March 31, 2021

As a result of the Chubb Sale, we do not beneficially own any shares of Chubb common stock and no longer consolidate Chubb in our financial statements as of January 3, 2022. Therefore, this Management’s Discussion and Analysis of Financial Condition and Results of Operations only includes the financial results of Chubb in periods prior to the date of sale. As a result, prior period results may not be comparable to the current period. See Note 16 - Divestitures in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

For the Three Months Ended June 30,
(In millions) 2021 2020 Period Change % Change
Net sales $ 5,440 $ 3,972 $ 1,468 37 %
Cost of products and services sold (3,821) (2,831) (990) 35 %
Gross margin 1,619 1,141 478 42 %
Operating expenses (836) (699) (137) 20 %
Operating profit 783 442 341 77 %
Non-operating income (expenses), net (52) (67) 15 (22) %
Income from operations before income taxes 731 375 356 95 %
Income tax expense (234) (106) (128) 121 %
Net income from operations 497 269 228 85 %
Less: Non-controlling interest in subsidiaries' earnings from operations 10 8 2 25 %
Net income attributable to common shareowners $ 487 $ 261 $ 226 87 %
The following represents our consolidated net sales and operating results:


	For the Three Months Ended March 31,
(In millions)	2022		2021		Period Change		% Change
Net sales	$	4,654	$	4,699	$	(45)	(1)	%
Cost of products and services sold	(3,361)		(3,305)		(56)		2	%
Gross margin	1,293		1,394		(101)		(7)	%
Operating expenses	444		(823)		1,267		(154)	%
Operating profit	1,737		571		1,166		204	%
Non-operating income (expenses), net	(49)		(75)		26		(35)	%
Income from operations before income taxes	1,688		496		1,192		240	%
Income tax expense	(301)		(104)		(197)		189	%
Net income from operations	1,387		392		995		254	%
Less: Non-controlling interest in subsidiaries' earnings from operations	8		8		—		—	%
Net income attributable to common shareowners	$	1,379	$	384	$	995	259	%

Net Sales

For the three months ended ~~June 30, 2021,~~March 31, 2022, Net sales were ~~$5.4~~$4.7 billion, a ~~37% increase~~1% decrease compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	For the Three Months Ended ~~June 30, 2021~~March 31, 2022
Organic	3110	%
Foreign currency translation	5 (1)	%
Acquisitions and divestitures, net	1 (10)	%

Total % change	37(1)	%

~~As the global economy continues to recover from the impact of the COVID-19 pandemic, we~~We continue to ~~see improvement across our global business.~~benefit from strong demand for energy-efficient, digitalized products and healthy building solutions. During the three months ended ~~June 30, 2021,~~March 31, 2022, pricing improvements and higher ~~volume in each of our segments~~volumes increased organic sales by ~~31%~~10% compared with the same period of ~~2020.~~2021. The organic increase was primarily driven by our HVAC segment with continued strong ~~results~~demand in ~~the~~our North America residential and light commercial business and improved global end-markets in our Commercial HVAC business. ~~Strong results~~Pricing improvements in ~~both~~ our ~~Refrigeration and~~ Fire & Security ~~segments~~segment were ~~driven by improved global end-markets~~the primary driver of growth compared with the prior ~~period.~~year while supply chain and logistic constraints continue to be challenging. Refrigeration results were flat as certain supply chain and logistic constraints impacted sales. Refer to "Segment Review" below for a discussion of Net sales by segment.

Gross Margin

For the three months ended ~~June 30, 2021,~~March 31, 2022, grossmargin was ~~$1.6~~$1.3 billion, a ~~42% increase~~7% decrease compared with the same period of ~~2020.~~ 2021. The components were as follows:


		For the Three Months Ended June 30,							For the Three Months Ended March 31,
(In millions)	(In millions)	2021			2020			(In millions)		2022			2021
Net sales	Net sales	$	5,440		$	3,972		Net sales		$	4,654		$	4,699
Cost of products and services sold	Cost of products and services sold	(3,821)			(2,831)			Cost of products and services sold		(3,361)			(3,305)
Gross margin	Gross margin	$	1,619		$	1,141		Gross margin		$	1,293		$	1,394
Percentage of net sales	Percentage of net sales	29.8		%	28.7		%	Percentage of net sales		27.8		%	29.7		%

The ~~increase~~decrease in grossmargin~~for~~ was primarily driven by the Chubb Sale which contributed $170 million of gross margin during the three months ended ~~June 30, 2021 was primarily driven by strong operational performance and continued improvement in the global economic climate during the current period. Higher volume in~~March 31, 2021. In addition, each of our segments ~~outpaced operational costs as we~~ continued to ~~focus on Carrier 700 cost containment actions. These improvements were partially offset~~be impacted by the rising cost for commodities and components used in our products, certain supply chain ~~inefficiencies~~constraints and higher freight costs. These impacts were offset by strong demand, price improvements and our continued focus on productivity initiatives. As a result, gross margin as a percentage of Net sales ~~increased~~decreased by ~~110~~190 basis points compared with the same period of ~~2020.~~2021, which included a 20 basis point impact on gross margin as a percentage of Net sales due to the Chubb Sale.

Operating Expenses

For the three months ended ~~June 30, 2021~~,March 31, 2022, operating expenses, includingEquity method investment net ~~earnings~~earning,s, were ~~$836~~$444 million, a ~~20% increase~~154% decrease compared with the same period of 2021. ~~2020~~. The components were as follows:


		For the Three Months Ended June 30,							For the Three Months Ended March 31,
(In millions)	(In millions)	2021			2020			(In millions)		2022			2021
Selling, general and administrative	Selling, general and administrative	$	(813)		$	(637)		Selling, general and administrative		$	(601)		$	(743)
Research and development	Research and development	(125)			(94)			Research and development		(125)			(121)
Equity method investment net earnings	Equity method investment net earnings	87			57			Equity method investment net earnings		58			38
Other income (expense), net	Other income (expense), net	15			(25)			Other income (expense), net		1,112			3
Total operating expenses	Total operating expenses	$	(836)		$	(699)		Total operating expenses		$	444		$	(823)
Percentage of net sales	Percentage of net sales	15.4		%	17.6		%	Percentage of net sales		(9.5)		%	17.5		%

For the three months ended ~~June 30, 2021,~~March 31, 2022, Selling, general and administrative expenses ~~expenses~~ were ~~$813~~$601 million, a ~~28% increase~~ 19% decrease

compared with the same period of 2020. At the onset of the COVID-19 pandemic, we initiated various cost containment initiatives in order to help mitigate the impacts on our business, which included reducing discretionary spending, employee furloughs and temporarily closing or limiting the presence of our workforce in our facilities. As a result, the increase in ~~Selling, general and administrative~~ ~~expense in the current period reflects the gradual return to our operational spending levels prior~~2021. The decrease is primarily due to the ~~COVID-19 pandemic.~~Chubb Sale on January 3, 2022. In addition, ~~higher compensation costs,~~lower restructuring charges and ~~unfavorable foreign currency movements along with transaction costs associated with~~ the ~~planned divestiture~~benefit provided by changes in the fair value of ~~our Chubb business~~cash-settled equity awards further contributed to the ~~year-over-year increase . Costs associated with the Separation were $3 million during~~decrease. In addition, the three months ended ~~June 30,~~March 31, 2021 ~~compared with $23~~included $16 million ~~for~~of costs related to the ~~same period in 2020.~~Separation.

Research and development costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate. In addition, we continue to invest to prepare for future energy efficiency and refrigerant regulation changes as well as digital controls technologies.

Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting. For the three months ended ~~June 30, 2021,~~March 31, 2022, Equity method investment net earnings were ~~$87~~$58 million, a 53% increase compared with the same period of ~~2020.~~2021. The increase was primarily related to higher earnings in HVAC joint ventures in Asia and North America and Asia as end-markets improved compared with the prior period. These amounts were partially offset by the reduction in earnings resulting from the sale of our investment in Beijer REF AB in 2020.America.

Other income (expense), net primarily includes the impact of gains and losses related to the sale of businesses or interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an entity's functional currency and hedging-related activities. ~~The year-over-year change of $40 million for~~During the three months ended ~~June 30, 2021 is primarily driven by higher gains~~March 31, 2022, we completed the Chubb Sale and recognized ~~on hedging activities, the absence of an unfavorable impact of~~ a ~~change in the estimate of certain long-term liabilities and the unfavorable impact of a product recall matter in 2020.~~

~~Non-Operating Income (Expenses), net~~

~~For the~~ ~~three months ended June 30, 2021~~, ~~Non-operating income (expenses), net~~ ~~was $52 million, a 22% increase compared with the same period of~~ ~~2020. The components were as follows:~~

For the Three Months Ended June 30,
(In millions) 2021 2020
Non-service pension (expense) benefit $ 19 $ 14
Interest expense $ (75) $ (85)
Interest income 4 4
Interest (expense) income, net $ (71) $ (81)
Non-operating income (expenses), net $ (52) $ (67)

~~Non-operating income (expenses), net~~ includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations. Interest expense is affected by the amount of debt outstanding and the interest rates on that debt. For the three months ended June 30, 2021, ~~Interest expense~~ was $75 million, a 12% decrease compared with the same period in 2020. The decrease was primarily driven by the repayment of our $1.75 billion Term Loan Credit Facility in 2020 and the prepayment of the $500 million 1.923% Notes in February 2021.

~~Income Taxes~~

For the Three Months Ended June 30,
2021 2020
Effective tax rate 32.0 % 28.2 %

The increase in the effective tax rate for the three months ended June 30, 2021 compared with the same period in 2020 is primarily due to a $43 million deferred tax charge as a result of an enacted tax rate increase from 19% to 25% in the United Kingdom.

~~Six Months Ended June 30, 2021 Compared with the Six Months Ended June 30, 2020~~

For the Six Months Ended June 30,
(In millions) 2021 2020 Period Change % Change
Net sales $ 10,139 $ 7,860 $ 2,279 29 %
Cost of products and services sold (7,126) (5,597) (1,529) 27 %
Gross margin 3,013 2,263 750 33 %
Operating expenses (1,659) (1,506) (153) 10 %
Operating profit 1,354 757 597 79 %
Non-operating income (expenses), net (127) (87) (40) 46 %
Income from operations before income taxes 1,227 670 557 83 %
Income tax expense (338) (299) (39) 13 %
Net income from operations 889 371 518 140 %
Less: Non-controlling interest in subsidiaries' earnings from operations 18 14 4 29 %
Net income attributable to common shareowners $ 871 $ 357 $ 514 144 %

~~Net Sales~~

~~For the six months ended June 30, 2021,~~ ~~Net sales~~ ~~were $10.1 billion, a 29% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~For the Six Months Ended June 30, 2021~~
~~Organic~~	24	%
~~Foreign currency translation~~	5	%


~~Total % change~~	29	%

As the global economy continues to recover from the impact of the COVID-19 pandemic, we continue to see improvement across our global business. During the six months ended June 30, 2021, higher volume in each of our segments increased organic sales by 24% compared with the same period in 2020. The organic increase was primarily driven by our HVAC segment with continued strong results for North America residential and light commercial business and improved global end-markets in our Commercial HVAC business. Strong results in both our Refrigeration and Fire & Security segments were driven by improved global end-markets compared with the prior period. Refer to "Segment Review" below for a discussion of ~~Net sales~~ ~~by segment.~~

~~Gross Margin~~

~~For the six months ended June 30, 2021, grossmargin was $3.0 billion, a 33% increase compared with the same period of 2020.~~ ~~The components were as follows:~~

For the Six Months Ended June 30,
(In millions) 2021 2020
Net sales $ 10,139 $ 7,860
Cost of products and services sold (7,126) (5,597)
Gross margin $ 3,013 $ 2,263
Percentage of net sales 29.7 % 28.8 %

~~The increase in grossmargin~~for the six months ended June 30, 2021 was primarily driven by strong operational performance and continued improvement in the global economic climate during the current period. Higher volume in each of our segments outpaced operational costs as we continued to focus on Carrier 700 cost containment actions. These improvements were partially offset by the rising cost for commodities and components used in our products, certain supply chain inefficiencies and freight costs. As a result, gross margin as a percentage of ~~Net sales~~ ~~increased by 90 basis points compared with the same period of 2020.~~

~~Operating Expenses~~

~~For the six months ended June 30, 2021, operating expenses, including~~ ~~Equity method investment~~ net ~~earnings, were $1.7 billion, a 10% increase compared with the same period in 2020.~~ ~~The components were as follows:~~

For the Six Months Ended June 30,
(In millions) 2021 2020
Selling, general and administrative $ (1,556) $ (1,329)
Research and development (246) (192)
Equity method investment net earnings 125 86
Other income (expense), net 18 (71)
Total operating expenses $ (1,659) $ (1,506)
Percentage of net sales 16.4 % 19.2 %

~~For the six months ended June 30, 2021,~~ ~~Selling, general and administrative expenses~~ ~~were $1.6 billion, a 17% increase compared with the same period of 2020. At the onset of the COVID-19 pandemic, we initiated various cost containment initiatives in order to help mitigate the impacts~~gain on ~~our business, which included reducing discretionary spending, employee furloughs and temporarily closing or limiting the presence of our workforce in our facilities. As a result, the increase in~~ ~~Selling, general and administrative~~ expense in the current period reflects the gradual return to our operational spending levels prior to the COVID-19 pandemic. In addition, higher compensation costs and restructuring charges in the current period along with transaction costs associated with the planned divestiture of our Chubb business further contributed to the year-over-year increase. Costs associated with the Separation were $19 million during the six months ended June 30, 2021 compared with $68 million for the same period in 2020.

~~Research and development~~ costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate. In addition, we continue to invest to prepare for future energy efficiency and refrigerant regulation changes as well as digital controls technologies.

~~Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting. For the six months ended June 30, 2021,~~ ~~Equity method investment net earnings~~ were $125 million, a 45% increase compared with the same period of 2020. The increase was primarily related to higher earnings in HVAC joint ventures in Asia, the Middle East and North America as end-markets improved compared with the prior period. These amounts were partially offset by a change in the estimated cost of a product recall matter and the reduction in earnings resulting from the sale of ~~our investment in Beijer REF AB in 2020.~~

~~Other income (expense), net~~ primarily includes the impact of gains and losses related to the sale of interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an entity's functional currency and hedging-related activities. The year-over-year change of $89 million for the six months ended June 30, 2021 is primarily driven by the absence of an other-than-temporary impairment charge of $71 million on a minority-owned joint venture investment in 2020. In addition, higher gains on hedging activities were partially offset by higher deferred compensation costs in the current period.$1.1 billion.

Non-Operating Income (Expenses), net

For the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022, ~~Non-operating~~Non-operating income (expenses), net ~~was $127~~were $49 million, a ~~46% decrease~~35% increase compared with the same period of ~~2020.~~2021. The components were as follows:


		For the Six Months Ended June 30,						For the Three Months Ended March 31,
(In millions)	(In millions)		2021		2020		(In millions)		2022		2021
Non-service pension (expense) benefit	Non-service pension (expense) benefit		$	37	$	31	Non-service pension (expense) benefit		$	(1)	$	18

Interest expense	Interest expense		$	(171)	$	(123)	Interest expense		$	(87)	$	(96)
Interest income	Interest income		7		5		Interest income		39		3
Interest (expense) income, net	Interest (expense) income, net		$	(164)	$	(118)	Interest (expense) income, net		$	(48)	$	(93)

Non-operating income (expenses), net	Non-operating income (expenses), net		$	(127)	$	(87)	Non-operating income (expenses), net		$	(49)	$	(75)

Non-operating income (expenses), net includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations. For the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022, Interest expense was ~~$171~~$87 million, a ~~39% increase~~9% decrease compared with the same period ~~in 2020.~~ I~~n connection with~~of 2021. During the ~~Separation and the Distribution, we issued $11.0 billion of long-term debt in February 2020. As a result, interest expense during the~~ ~~six~~three months ended ~~June 30, 2020 only included interest~~March 31, 2022, we completed tender offers to repurchase approximately $1.15 billion aggregate principal of our 2.242% Notes due 2025 and 2.493% Notes due 2027. Upon settlement, we wrote off $5 million of unamortized deferred financing costs in Interest expense ~~incurred on such debt after~~ and recognizeda net gain of $33 million in Interest income. During the ~~issuance date. In addition, during the~~ ~~six~~three months ended ~~June 30,~~March 31, 2021, we incurred a make-whole premium of $17 million and wrote-off $2 million of unamortized deferred financing costs in Interest expense as a result of the redemption of our $500 million 1.923% Notes originally due in February 2023.

Income Taxes


	For the Three Months Ended March 31,
		2022		2021
Effective tax rate		17.8	%	21.0	%

The Company accounts for income tax expense in accordance with ASC 740, which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. The effective tax rate was 17.8% for the three months ended March 31, 2022 compared with 21.0% for the three months ended March 31, 2021. The year-over-year decrease was primarily driven by a lower effective tax rate on the Chubb gain compared with our U.S. statutory rate and a favorable tax adjustment of $32 million associated with

For the Six Months Ended June 30,
2021 2020
Effective tax rate 27.5 % 44.6 %

~~The decrease~~foreign tax credits generated and expected to be utilized in the ~~effective tax rate for the six~~current year. The three months ended ~~June 30,~~March 31, 2021 compared with the same period in 2020 is primarily due to the absence of a prior year charge of $51 million related to a valuation allowance recorded against a United Kingdom tax loss and credit carry forward and a $46 million charge resulting from our decision to no longer permanently reinvest certain pre-2018 unremitted non-U.S. earnings. The six months ended June 30, 2021 included ~~a $43 million deferred tax charge as a result of an enacted tax rate increase from 19% to 25% in the United Kingdom, partially offset by the recognition of~~ a favorable tax adjustment of $21 million resulting from athe re-organization of ~~our~~a German ~~subsidiaries.~~subsidiary.

SEGMENT REVIEW

~~We have three operating segments:~~

•~~The Fire & Security segment provides a wide range of residential, commercial and industrial technologies and systems and services solutions to protect people and property.~~

We determine our segments based on how our Chief Executive Officer, who is the Chief Operating Decision Maker (the "CODM"), allocates resources, assesses performance and makes operational decisions. The CODM allocates resources and evaluates the financial performance of each of our segments based on ~~Net sales~~ ~~and~~ ~~Operating profit. Adjustments to reconcile segment reporting to the consolidated results are included in Note 16 - Segment Financial Data.~~

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared with Three Months Ended ~~June 30, 2020~~March 31, 2021

~~Summary performance for each of our segments for the three months ended June 30, 2021 and 2020 is as follows:~~


Summary performance for each of our segments is as follows:														Summary performance for each of our segments is as follows:
		Net Sales				Operating Profit				Operating Profit Margin					Net Sales				Operating Profit				Operating Profit Margin
		For the Three Months Ended June 30,				For the Three Months Ended June 30,				For the Three Months Ended June 30,					For the Three Months Ended March 31,				For the Three Months Ended March 31,				For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		2021		2020		(In millions)	2022		2021		2022		2021		2022		2021
HVAC	HVAC	$	3,120	$	2,291	$	573	$	358	18.4	%	15.6	%	HVAC	$	2,970	$	2,486	$	470	$	365	15.8	%	14.7	%
Refrigeration	Refrigeration	1,021		700		123		61		12.0	%	8.7	%	Refrigeration	976		1,005		107		127		11.0	%	12.6	%
Fire & Security	Fire & Security	1,403		1,057		148		106		10.5	%	10.0	%	Fire & Security	818		1,304		1,218		150		148.9	%	11.5	%
Total segment	Total segment	$	5,544	$	4,048	$	844	$	525	15.2	%	13.0	%	Total segment	$	4,764	$	4,795	$	1,795	$	642	37.7	%	13.4	%

HVAC Segment

For the three months ended ~~June 30, 2021,~~March 31, 2022, Net sales in our HVAC segment were ~~$3.1~~$3.0 billion, a ~~36%~~19% increase compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	Net Sales
Organic	3218	%
Foreign currency translation	3 (2)	%
Acquisitions and divestitures, net	13	%


Total % change in Net sales	3619	%

The organic increase in Net sales of ~~32%~~18% was driven by strong results across each of the segment's ~~businesses.~~businesses compared with the prior year. Increased sales in our North America residential and light commercial ~~HVAC~~ business ~~(40%~~(26%) were driven by ~~new construction, the ongoing stay-at-home workforce~~pricing improvements and ~~higher distributor stocking levels.~~strong end-market demand. Increased sales in our Commercial HVAC business ~~(22%~~(9%) benefited from ~~the gradual improvement in the global economic environment~~pricing improvements and ongoing customer demand as our ~~end markets~~end-markets continue to improve from the ~~prior year impacts~~COVID-19 pandemic. The business saw growth in each region, although sales in China were tempered by additional restrictions as a result of a resurgence of COVID-19 cases. While current demand remains strong, supply chain and logistics constraints continue to be challenging, negatively impacting our sales and results of operations. In addition, results for 2021 reflected a significant rebound in demand after initial weakness associated with the COVID-19 pandemic. ~~Volume growth in North America, Europe and Asia were the primary drivers of improved results during the period.~~

~~In addition,~~On June 1, 2021, the Commercial HVAC business ~~completed~~acquired a 70% controlling stake in Guangdong Giwee Group and its subsidiaries ("Giwee") and subsequently acquired the ~~acquisition of Giwee~~remaining 30% ownership interest on ~~June 1,~~September 7, 2021. Giwee is a China-based manufacturer ~~of HVAC products,~~ offering a portfolio of HVAC products including variable refrigerant flow, modular chillers and light commercial air conditioners. The results of Giwee has been included in our Unaudited Condensed Consolidated Financial Statements since the date of acquisition. The transaction added 1%2% to Net sales during the three months ended ~~June 30, 2021. Refer to Note 15 - Business Acquisitions and Dispositions for additional information.~~March 31, 2022.

For the three months ended ~~June 30, 2021,~~March 31, 2022, Operating profit in our HVAC segment was ~~$573~~$470 million, a ~~60%~~29% increase compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


		Operating Profit
Operational		6130	%
~~Foreign currency translation~~	2	%
Acquisitions and divestitures, net		(1)	%
~~Restructuring~~	~~(2)~~	%

Total % change in Operating profit		6029	%

The ~~increase in~~ operational profit increase of ~~61%~~30% was primarily attributable to pricing improvements and higher sales volumes ~~in each of the segment's businesses~~ compared with the prior ~~period. In addition, favorable product mix, productivity initiatives and higher income~~year. Higher earnings from equity method investments in North America and Asia also benefited operational profit. These amounts were partially offset by ~~the rising cost~~higher costs for commodities and components used in our products and higher freight and logistic costs. ~~Higher~~In addition, higher selling, general and administrative costs ~~and research and development~~ further impacted operational profit as our businesses return to normal spending levels as compared with the prior period. The segment was also impacted by transaction costs, inventory step-up and backlog amortization associated with the acquisition of Giwee.operating profit.

Refrigeration Segment

For the three months ended ~~June 30, 2021,~~March 31, 2022, Net sales in our Refrigeration segment were ~~$1.0 billion,~~$976 million, a ~~46% increase~~3% decrease compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	Net Sales
Organic	381	%
Foreign currency translation	8 (4)	%



Total % change in Net sales	46(3)	%

~~The organic increase in~~ ~~Net~~Organic sales ~~of 38% was driven by strong results across each of~~ increased 1% during the ~~segment's businesses reflecting the gradual improvement in the global economic environment as our end markets significantly improved from~~three months ended March 31, 2022 compared with the prior ~~year impacts of the COVID-19 pandemic.~~year. Commercial refrigeration sales increased (5%) primarily due to pricing improvements and strong demand. These amounts were partially offset by continued supply chain constraints. Transport refrigeration sales ~~(42%~~decreased (1%) ~~benefited from~~compared with the ~~continued recovery~~prior year. The three months ended March 31, 2021 reflected a significant rebound in demand associated with the cyclical decline that began in late 2019 as well as ~~a rebound in~~ the demand for global ~~transportation. Commercial refrigeration~~transportation and COVID-19 vaccine-related cargo monitoring. While current demand remains strong, supply chain and logistics constraints continue to be challenging, negatively impacting our sales ~~(30%) also increased due to a rebound in demand.~~and results of operations.

For the three months ended ~~June 30, 2021,~~March 31, 2022, Operating profit in our Refrigeration segment was ~~$123~~$107 million, a ~~102% increase~~16% decrease compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	Operating Profit
Operational	87 (10)	%
Foreign currency translation	12 (4)	%

Restructuring	2	%
Other	3 (4)	%
Total % change in Operating profit	~~102~~(16)	%

The ~~increase~~decrease in operational profit of ~~87%~~10% was primarily attributable to higher sales volumes compared with the prior period which was impacted by the COVID-19 pandemic. In addition, favorable productivity initiatives benefited factory costs. These amounts were partially offset by the rising costcosts for commodities and components used in our products and ~~logistics~~higher freight and logistic costs compared with the prior year. These amounts were partially offset by pricing improvements and favorable productivity initiatives that benefited factory costs. Higher selling ~~general and administrative~~ costs and research and development activities further impacted operational profit as ~~our businesses return to normal spending levels compared with~~ the ~~prior period.~~segment had incremental investments in expanding its sales force and product development.

Fire & Security Segment

For the three months ended ~~June 30, 2021,~~March 31, 2022, Net sales in our Fire & Security segment were ~~$1.4 billion,~~$818 million, a ~~33% increase~~37% decrease compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	Net Sales
Organic	254	%
Foreign currency translation	8	%



~~Total % change in Net sales~~	33	%

~~The organic increase in~~ ~~Net sales~~ of 25% was driven by strong results across each of our businesses reflecting the gradual improvement in the global economic environment as our end markets improved from the prior year impacts of the COVID-19 pandemic. Field service sales (27%) benefited from improved end-markets impacted by COVID-19 in the prior period. All regions benefited from increased volumes compared with the prior period. An increase in product sales (24%) was primarily driven by stronger residential and commercial sales in the Americas. In addition, volume increases in Europe and Asia benefited the period as lockdowns continue to be lifted.

~~For the three months ended June 30, 2021,~~ ~~Operating profit~~ ~~in our Fire & Security segment was $148 million, a 40% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Operating Profit~~
~~Operational~~	53	%
~~Foreign currency translation~~	8	%

~~Restructuring~~	~~(3)~~	%
~~Other~~	~~(18)~~	%
~~Total % change in Operating profit~~	40	%

The increase in operational profit of 53% was primarily attributable to higher sales volumes compared with the prior period which was heavily impacted by the COVID-19 pandemic. These amounts were partially offset by the rising cost for commodities and components used in our products, certain supply chain inefficiencies and freight costs. In addition, higher selling, general and administrative costs and research and development further impacted operational profit as our businesses return to normal spending levels as compared with the prior period. Amounts reported in Other represent transaction costs associated with the planned divestiture of our Chubb business as well as the absence of a favorable adjustment related to a product recall matter in the prior period.

~~Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020~~

Summary performance for each of our segments for the six months ended June 30, 2021 and 2020 is as follows:
Net Sales Operating Profit Operating Profit Margin
(dollars in millions) 2021 2020 2021 2020 2021 2020
HVAC $ 5,606 $ 4,250 $ 938 $ 525 16.7 % 12.4 %
Refrigeration 2,026 1,508 250 160 12.3 % 10.6 %
Fire & Security 2,707 2,263 298 226 11.0 % 10.0 %
Total segment $ 10,339 $ 8,021 $ 1,486 $ 911 14.4 % 11.4 %

~~HVAC Segment~~

~~For the six months ended June 30, 2021,~~ ~~Net sales~~ ~~in our HVAC segment were $5.6 billion, a 32% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Net Sales~~
~~Organic~~	28	%
~~Foreign currency translation~~	3 (1)	%
Acquisitions and divestitures, net	1 (40)	%


Total % change in Net sales	32(37)	%

The organic increase in Net salesof ~~28%~~4% was primarily driven by pricing improvements and continued strong ~~results~~demand across ~~each of the segment's~~our businesses. Increased sales in our North America residential and light commercial HVAC business (37%) were driven by new construction, the ongoing stay-at-home workforce and higher distributor stocking levels. Increased sales in our Commercial HVAC business (19%) benefited from the gradual improvement in the global economic environment as our end markets continue to improve from the prior year impacts of the COVID-19 pandemic. VolumeThe segment primarily saw growth in Europe and the Americas as sales in Asia were tempered by additional restrictions as a result of a resurgence of COVID-19 cases. While current demand remains strong, supply chain constraints continue to be challenging, negatively impacting our sales and results of operations.

Acquisitions and divestitures, net primarily relates to the ~~primary drivers~~Chubb Sale completed on January 3, 2022. During the three months ended March 31, 2021, Net sales in our Fire & Security segment were $1.3 billion, which included $548 million from our Chubb business. Absent the results of ~~improved results during the period.~~Chubb, Net sales increased 8% from $755 million to $818 million.

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, Operating profit in our ~~HVAC~~Fire & Security segment was ~~$938 million,~~$1.2 billion, a ~~79%~~712% increase compared with the same period of ~~2020.~~2021. The components of the year-over-year change were as follows:


	Operating Profit
Operational	69 (7)	%
~~Foreign currency translation~~	2		%
Acquisitions and divestitures, net	~~(2)~~(25)	%
Restructuring	~~(2)~~3	%
Other	12741	%
Total % change in Operating profit	79712	%

The decrease in operational profit ~~increase~~ of ~~69%~~7% was primarily attributable to higher ~~sales volumes~~costs for commodities and components used in ~~each of the segment's businesses~~our products and higher freight and logistics costs. In addition, unfavorable mix further impacted results compared with the prior ~~period. In addition, favorable product mix, productivity initiatives and higher income from equity method investments benefited operational profit.~~year. These amounts were partially offset by ~~higher selling, general and administrative costs and research and development as our businesses return to normal spending levels as compared with the prior period.~~

The increase in Other of 12% primarily reflects the absence of a prior period non-cash, other-than-temporary impairment charge of $71 million on a minority-owned joint venture investment due to a reduction in sales and earnings that were driven by a deterioration in the oil and gas industry (the joint venture's primary market) and the impact of the COVID-19 pandemic. In addition, amounts reported in Other reflects the absence of a gain on sale of an interest in a joint venture in the prior period.

~~Refrigeration Segment~~

~~For the six months ended June 30, 2021,~~ ~~Net sales~~ ~~in our Refrigeration segment were $2.0 billion, a 34% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Net Sales~~
~~Organic~~	28	%
~~Foreign currency translation~~	6	%



~~Total % change in Net sales~~	34	%

~~The organic increase in~~ ~~Net sales~~ of 28% was driven by strong results across each of the segment's businesses reflecting the gradual improvement in the global economic environment as our end markets significantly improved from the prior year impacts of the COVID-19 pandemic. Transport refrigeration sales (32%) benefited from the continued recovery associated with the cyclical decline that began in late 2019 as well as a rebound in the demand for global transportation and COVID-19 vaccine-related cargo monitoring. Commercial refrigeration sales (21%) also increased due to a rebound in demand.

~~For the six months ended June 30, 2021,~~ ~~Operating profit~~ ~~in our Refrigeration segment was $250 million, a 56% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Operating Profit~~
~~Operational~~	49	%
~~Foreign currency translation~~	7	%

~~Restructuring~~	~~(1)~~	%
~~Other~~	1	%
~~Total % change~~	56	%

The increase in operational profit of 49% was primarily attributable to higher sales volumes compared with the prior period which was heavily impacted by the COVID-19 pandemic. In addition, favorable productivity initiatives benefited material and factory costs. These amounts were partially offset by inflation and increased logistics costs. Higher selling, general and administrative costs and research and development further impacted operational profit as our businesses return to normal spending levels as compared with the prior period.

pricing improvements.

~~Fire & Security Segment~~

~~For the six months ended June 30, 2021,~~ ~~Net sales~~ ~~in our Fire & Security segment were $2.7 billion, a 20% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Net Sales~~
~~Organic~~	13	%
~~Foreign currency translation~~	7	%



~~Total % change in Net sales~~	20	%

~~The organic increase in~~ ~~Net sales~~ of 13% was driven by strong results across each of the segment's businesses reflecting the gradual improvement in the global economic environment as our end markets improved from the prior year impacts of the COVID-19 pandemic. Field service sales (14%) benefited from improved end-markets in regions that were previously impacted by COVID-19, including Europe and Asia. An increase in product sales (13%) was primarily driven by improvements in the Americas, Asia and Europe which were impacted by shutdowns related to COVID-19 in the prior period.

~~For the six months ended June 30, 2021,~~ ~~Operating profit~~ ~~in our Fire & Security segment was $298 million, a 32% increase compared with the same period of 2020. The components of the year-over-year change were as follows:~~


	~~Operating Profit~~
~~Operational~~	40	%
~~Foreign currency translation~~	6	%

~~Restructuring~~	~~(5)~~	%
~~Other~~	~~(9)~~	%
~~Total % change~~	32	%

The increase in operational profit of 40% was primarily attributable to higher sales volumes and favorable mix compared with the prior period which was heavily impacted by the COVID-19 pandemic. These operational increases were partially offset by unfavorable component costs and higher freight. In addition, higher selling, general and administrative costs and research and development further impacted operational profit as our businesses return to normal spending levels as compared with the prior period. Amounts reported in Other represent the net gain on the Chubb Sale of $1.1 billion completed on January 3, 2022. The gain was partially offset by transaction costs associated with ~~the planned divestiture of our Chubb business as well as the absence of a favorable adjustment related to a product recall matter in the prior period.~~this divestiture.

LIQUIDITY AND FINANCIAL CONDITION

We assess liquidity in terms of our ability to generate adequate amounts of cash necessary to fund our current and future cash ~~requirements~~requirements to support our business and strategic initiatives. In doing so, we review and analyze our cash on hand, working capital, debt service requirements and capital expenditures. We rely on operating cash flows as our primary source of liquidity. In addition, we have access to other sources of capital to finance our strategic initiatives and fund growth.

As of ~~June 30, 2021~~March 31, 2022, we had cash and cash equivalents of ~~$2.6~~$3.6 billion, of which approximately ~~38%~~23% was held by our foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds and the cost effectiveness with which we can access funds held by foreign subsidiaries. On occasion, we are required to maintain cash deposits in connection with contractual obligations related to acquisitions, divestitures or other legal obligations. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the amount of such restricted cash was approximately ~~$34~~$18 million and $4$39 million, respectively.

We maintain a $2.0 billion unsecured, unsubordinated commercial paper program which can be used for general corporate purposes, including working capital and potential acquisitions. In addition, we maintain our $2.0 billion Revolving Credit Facility that matures on April 3, 2025 which supports our commercial paper borrowing program and cash requirements. ~~This~~The Revolving Credit Facility has a commitment fee of 0.125% that is charged on unused commitments. Borrowings under the Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling and bear interest at a variable interest rate ~~based on LIBOR~~ plus a ratings-based margin,~~(or customary LIBOR replacement provisions),~~ which was 125 basis points as of ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, we had no borrowings outstanding under our commercial paper program and our Revolving Credit Facility.

We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our customers. This is accomplished through research and development activities with a focus on new product development and new technology innovation as well as sustaining activities with a focus on improving existing products and reducing production costs. We also pursue potential acquisitions to ~~compliment~~complement existing products and services to enhance our product portfolio. In addition, we routinely conduct discussions, evaluate targets and enter into agreements regarding possible acquisitions, divestitures, joint ventures and equity investments to manage our business portfolio.

We believe that our available cash and operating cash flows will be sufficient to meet our future operating cash needs. Our committed credit facilities and access to the debt and equity markets provide additional sources of short-term and long-term capital to fund current operations, debt maturities and future investment opportunities. Although we believe that the arrangements currently in place permit us to finance our operations on acceptable terms and conditions, our access to and the availability of financing on acceptable terms and conditions in the future will be impacted by many factors, including: (1) our credit ratings or absence of credit ratings, (2) the liquidity of the overall capital markets and (3) the state of the economy, including the impact of the COVID-19 pandemic. There can be no assurance that we will be able to obtain additional financing on terms favorable to us, if at all.

3831

The Revolving Credit Facility and the indentures for the ~~long-term~~Long-term notes contain affirmative and negative covenants customary for financings of these types, which among other things, limit our ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with the covenants under the agreements governing our outstanding indebtedness.

The following table presents our credit ratings and outlook as of ~~June 30, 2021:~~March 31, 2022:

Rating Agency

Long-term Rating (1)

Short-term Rating

Outlook (2)

Standards & Poor's ("S&P")

BBB

Stable

Moody's Investor Services, Inc. ("Moody's")

Baa3

Stable

Fitch Ratings ("Fitch")

BBB-

Stable

(1) The long-term rating for S&P was affirmed on May 14, 2021, and for Moody's on ~~June 16, 2020.~~March 30, 2022. Fitch's long-term rating was affirmed on June 3, 2021.

(2) S&P revised its outlook to stable from negative on May 14, 2021.

The following table contains several key measures of our financial condition and liquidity:


(In millions, except percentages)		June 30, 2021			December 31, 2020
(In millions)								(In millions)	March 31, 2022			December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	2,630		$	3,115		Cash and cash equivalents	$	3,604		$	2,987
Total debt	Total debt	$	9,725		$	10,227		Total debt	$	8,561		$	9,696
Total equity	Total equity	$	7,120		$	6,578		Total equity	$	7,430		$	7,094

Net debt (total debt less cash and cash equivalents)	Net debt (total debt less cash and cash equivalents)	$	7,095		$	7,112		Net debt (total debt less cash and cash equivalents)	$	4,957		$	6,709
Total capitalization (total debt plus total equity)	Total capitalization (total debt plus total equity)	$	16,845		$	16,805		Total capitalization (total debt plus total equity)	$	15,991		$	16,790
Net capitalization (total debt plus total equity less cash and cash equivalents)	Net capitalization (total debt plus total equity less cash and cash equivalents)	$	14,215		$	13,690		Net capitalization (total debt plus total equity less cash and cash equivalents)	$	12,387		$	13,803
Total debt to total capitalization	Total debt to total capitalization	58		%	61		%	Total debt to total capitalization	54		%	58		%
Net debt to net capitalization	Net debt to net capitalization	50		%	52		%	Net debt to net capitalization	40		%	49		%

Borrowings and Lines of Credit

Our short-term obligations primarily consist of current maturities of long-term debt. Our long-term obligations primarily consist of long-term notes with maturity dates ranging between 2025 and 2050. Interest payments related to ~~indebtedness~~Long-term Notes are expected to approximate ~~$282~~$247 million per year, reflecting an approximate weighted-average interest rate of ~~2.89%~~2.95%. Any borrowings from the Revolving Credit Facility are subject to variable interest rates. See Note 5 – Borrowings and Lines of Credit in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding the terms of our long-term debt obligations.

On March 15, 2022, we commenced tender offers to repurchase up to $1.15 billion aggregate principal of our 2.242% Notes due 2025 and 2.493% Notes due 2027. The tender offers included payment of applicable accrued and unpaid interest up to the settlement date, along with a fixed spread for early repayment. Based on participation, we elected to settle the tender offers on March 30, 2022. The aggregate principal amount of Senior Notes validly tendered and accepted was approximately $1.15 billion and included $800 million of Notes due 2025 and $350 million of Notes due 2027. Upon settlement, we recognized a net gain of $33 million and wrote off $5 million of unamortized deferred financing costs.

Acquisitions and Divestitures

On January 3, 2022, we completed the Chubb Sale for net proceeds of $2.9 billion, subject to customary working capital and other adjustments. Consistent with our capital allocation strategy, the net proceeds will be used to fund investments in organic and inorganic growth initiatives and capital returns to shareowners as well as for general corporate purposes.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we acquired consolidated businesses and minority-owned ~~businesses, including a 70% controlling stake in Giwee. We plan to complete the acquisition of the remaining 30% stake in Giwee in 2021.~~businesses. The aggregate cash paid for acquisitions, net of cash acquired, totaled ~~$167~~$9 million and was funded through cash on hand. See Note 15 ~~- Business~~– Acquisitions ~~and Dispositions~~ for additional information.

On February 4,6, 2022, we entered into a binding agreement to acquire a majority ownership stake in TCC for approximately $900 million. The transaction is expected to close by the end of the third quarter of 2022, subject to customary closing conditions, including regulatory approvals. Upon closing, Toshiba Corporation will retain a 5% ownership interest in TCC. The acquisition is expected to be funded through a combination of cash on hand and a $400 million Yen denominated term loan.

Share Repurchase Program

On July 27, 2021, our Board of Directors approved a ~~stock~~share repurchase program authorizing the repurchase of up to ~~$350 million~~$2.1 billion of our outstanding common stock. ~~Share repurchases may take place~~The share repurchase program allows us to repurchase shares from time to time subject to market conditions and at our discretion in the open market or through one or more other public or private transactions and subject to compliance with certain tax obligations.

On December 14, 2021, we entered into the ASR Agreement to repurchase $500 million of our ~~obligations~~common stock pursuant to our existing share repurchase program. In accordance with the ASR Agreement, we received initial delivery of 7.6 million shares on January 4, 2022, representing approximately 80% of the expected share repurchases. The final number of shares under the ~~TMA~~ASR Agreement was based on the daily average of the volume-weighted average share price of our common stock over the term of the ASR Agreement. Upon final settlement, we received an additional 2.7 million shares on February 8, 2022 and ~~our Revolving Credit Facility.~~ recognized $500 million in Treasury stock as a reduction in equity.

During the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, we repurchased ~~2.1 million and 3.1~~15.7 million shares of our common stock ~~respectively, for an~~which included shares repurchased under the ASR Agreement. The total aggregate purchase price ~~of $130 million for the six months ended June 30, 2021, which~~was $741 million. Shares repurchased are held in Treasury stock ~~as of June 30, 2021~~ in the Unaudited Condensed Consolidated Balance Sheet.

Dividends

We paid dividends on common stock ~~of $0.12 per share~~ during the three months ended ~~June 30, 2021,~~March 31, 2022, totaling ~~$104~~$129 million. On ~~June 9, 2021,~~April 14, 2022, the Board of Directors declared a dividend of ~~$0.12~~$0.15 per share of common stock payable on ~~August 10, 2021~~May 19, 2022 to shareowners of record at the close of business on ~~June 24, 2021.~~April 29, 2022.

Discussion of Cash Flows

The following table reflects the major categories of cash flows. For additional details, see the Unaudited Condensed Consolidated Statement of Cash Flows in the Unaudited Condensed Consolidated Financial Statements.


		Six Months Ended June 30,					For the Three Months Ended March 31,
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Net cash flows provided by (used in):	Net cash flows provided by (used in):					Net cash flows provided by (used in):
Operating activities	Operating activities	$	745	$	556	Operating activities	$	(202)	$	184
Investing activities	Investing activities	(301)		(103)		Investing activities	2,820		(49)
Financing activities	Financing activities	(898)		1,315		Financing activities	(2,020)		(643)
Effect of foreign exchange rate changes on cash and cash equivalents	Effect of foreign exchange rate changes on cash and cash equivalents	(2)		(17)		Effect of foreign exchange rate changes on cash and cash equivalents	(1)		(9)
Net increase (decrease) in cash and cash equivalents and restricted cash	Net increase (decrease) in cash and cash equivalents and restricted cash	$	(456)	$	1,751	Net increase (decrease) in cash and cash equivalents and restricted cash	$	597	$	(517)

Cash flows from operating activities primarily represent inflows and outflows associated with our operations. Primary activities include net income from operations adjusted for non-cash transactions, working capital changes and changes in other assets and liabilities. The year-over-year ~~increase~~decrease in net cash provided by operating activities was primarily driven by higher ~~net income from operations in~~working capital balances during the current ~~period~~period. Continued strong demand and ~~improved working capital~~an increase of safety stock due to supply chain constraints led to higher inventory balances. ~~Higher outstanding accounts payable balances driven by the timing of raw material purchases and vendor payments more than offset the seasonal increase in inventory,~~In addition, higher accounts receivable balances ~~increase in tax payments and interest payments.~~due to increased sales more than offset higher accounts payable balances.

Cash flows from investing activities primarily represent inflows and outflows associated with long-term assets. Primary activities include capital expenditures, acquisitions, divestitures and proceeds from the sale of fixed assets. During the ~~six~~three months ended ~~June 30,~~March 31, 2022, net cash provided by investing activities was $2.8 billion. The primary driver of the inflow related to the net proceeds from the Chubb Sale. This amount was partially offset by the acquisition of several businesses and minority-owned businesses, which totaled $9 million, net of cash acquired and $56 million of capital expenditures. During the three months ended March 31, 2021, net cash ~~used in~~provided by investing activities was ~~$301~~$49 million. The primary driver of the outflow related to the acquisition of several businesses and a joint venture, which totaled $167 million, net of cash acquired and $132 million of capital expenditures. During the six months ended June 30, 2020, net cash used by investing activities was $103 million with the primary drivers of the outflow relating to capital expenditures of ~~$94 million and~~$53 million. This amount was partially offset by the settlement of derivative contracts of ~~$23~~$8 million.

Cash flows from financing activities primarily represent inflows and outflows associated with equity or borrowings. ~~Primary~~During the three months ended March 31, 2022, net cash used in financing activities ~~include debt transactions, paying~~was $2.0 billion. The primary driver of the outflow related to the settlement of our tender offers for $1.15 billion. In addition, we paid $129 million in dividends to our common shareowners and ~~the~~paid $734 million to repurchase shares of our common stock. During the ~~six~~three months ended ~~June 30,~~March 31, 2021, net cash used in financing activities was ~~$898~~$643 million. The primary driver of the outflow related to the redemption of ~~long-term Notes~~Long-term notes of $500 million. In addition, we paid ~~$209~~$104 million in dividends to our common shareowners and paid ~~$130~~$36 million to repurchase shares of our common stock. During the six months ended June 30, 2020, net cash provided by financing activities was $1.3 billion with the primary drivers of the increase relating to the issuance of $750 million of long-term debt and a $590 million cash contribution from UTC in connection with the Separation.

~~Off-Balance Sheet Arrangements and Contractual Obligations~~

~~The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations~~ – Off-Balance Sheet Arrangements and Contractual Obligations" in our 2020 Form 10-K provided a table summarizing our contractual obligations and commercial commitments at the end of 2020. There have been no material changes for the three and six months ended June 30, 2021 to our off-balance sheet arrangements and contractual obligations disclosed in our 2020 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022. For discussion of our exposure to market risk, refer to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations – ~~Marketing~~Market Risk and Risk Management" in our ~~2020~~2021 Form 10-K.

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we carried out an evaluation under the supervision and with the participation of our management, including the Chairman and Chief Executive Officer ("CEO"), the Senior Vice President and Chief Financial Officer ("CFO") and the Vice President, Controller

("Controller") of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June 30, 2021.~~March 31, 2022. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our CEO, CFO and Controller have concluded that, as of ~~June 30, 2021,~~March 31, 2022, our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our CEO, CFO and Controller, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the three months ended ~~June 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This Form 10-Q and other materials Carrier has filed or will file with the SEC contain or incorporate by reference statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "scenario" and other words of similar meaning in connection with a discussion of future operating or financial performance or the Separation. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flows, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, our strategies or transactions, the estimated costs associated with the Separation, our plans with respect to our indebtedness and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. ~~For~~These risks and uncertainties include, but are not limited to, those ~~statements, we claim the protection~~described above under Part I, Item 2. Management’s Discussion and Analysis of ~~the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act~~Financial Condition and Results of ~~1995. Such risks, uncertainties~~Operations, below Part II, Item 1A. Risk Factors and other ~~factors include, without limitation:~~

•~~the effect of economic conditions in the industries~~risks and markets in which we and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on production and on global supply, demand and distribution as the outbreak continues and results in a prolonged period of travel, commercial and other restrictions and limitations), natural disasters and the financial condition of our customers and suppliers;

•~~challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services;~~

•~~future levels of indebtedness, capital spending and research and development spending;~~

•~~future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure and credit ratings;~~

•~~the timing and scope of future repurchases of our common stock, including market conditions and the level of other investing activities and uses of cash;~~

•~~delays and disruption in the delivery of materials and services from suppliers;~~

•~~cost reduction efforts and restructuring costs and savings and other consequences thereof;~~

•~~new business and investment opportunities;~~

•~~risks resulting from being a smaller, less diversified company than prior to the Separation;~~

•~~the outcome of legal proceedings, investigations and other contingencies;~~

•~~the impact of pension plan assumptions on future cash contributions and earnings;~~

•~~the impact of the negotiation of collective bargaining agreements and labor disputes;~~

•the effect of changes in political conditions in the U.S. (including in connection with the Biden administration in Washington, D.C.) and other countries in which we and our businesses operate, including the effect of changes in

~~U.S. trade policies or the United Kingdom’s withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond;~~

•the effect of changes (including potentially as a result of the Biden administration in Washington, D.C.) in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate;

•~~our ability to retain and hire key personnel;~~

•the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs;

•~~the expected benefits of the Separation;~~

•~~a determination by the IRS and other tax authorities that the Distribution or certain related transactions should be treated as taxable transactions;~~

•risks associated with indebtedness, including that incurred as a result of financing transactions undertaken in connection with the Separation, as well as our ability to reduce indebtedness and the timing thereof;

•~~the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed our estimates; and~~

•the impact of the Separation on our business and our resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

~~The above list of factors is not exhaustive or necessarily in order of importance. In addition, this Form 10-Q includes important information as to risks,~~ uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See Note 18 – Commitments and Contingent Liabilities, in the "Notes to Unaudited Condensed Consolidated Financial Statements" and "Critical Accounting Estimates," "Results of Operations," and "Liquidity and Financial Condition," in this Form 10-Q and the sections titled "Legal Proceedings" and "Risk Factors" in ~~our 2020 Form 10-K~~. The forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosedlisted from time to time in our ~~other~~ filings with the SEC.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 1819 – Commitments and Contingent Liabilities in the Notes to the "Unaudited Condensed Consolidated Financial Statements" for information regarding legal proceedings.

Except as otherwise noted previously, there have been no material developments in legal proceedings. For previously reported information about legal proceedings refer to "Business – Legal Proceedings" in our ~~2020~~2021 Form 10-K.

Item 1A. Risk Factors

~~There~~Except as noted below, there have been no material changes in the Company’s r~~isk~~risk factors from those disclosed in "Risk Factors" in our ~~2020~~2021 Form 10-K.

42We may be affected by global economic, capital market and geopolitical conditions, and conditions in the construction, transportation and infrastructure industries in particular.

Our business, operating results, cash flows and financial condition may be adversely affected by changes in global economic conditions and geopolitical risks and conditions, including credit market conditions, levels of consumer and business confidence, fluctuations in residential, commercial and industrial construction activity, pandemic health issues (including COVID-19 and its effects), natural disasters, commodity prices, energy costs, interest rates, inflation, foreign exchange rates, levels of government spending and deficits, trade policies (including tariffs, boycotts and sanctions), military conflicts, acts of terrorism, regulatory changes, actual or anticipated defaults on sovereign debt and other challenges that could affect the global economy.

These economic and political conditions affect our business in a number of ways. In March 2022, we suspended business operations in Russia by ceasing to pursue new business opportunities while continuing to fulfill existing contracts for equipment, service and parts, where possible, in a manner that fully complies with applicable sanctions and trade controls. Our sales, operations and supply chain in Russia and Ukraine are not material to Carrier. However, the military conflict between the two countries and attendant geopolitical environment may continue to negatively impact the global economy and major financial markets, and may result in additional increases in commodity prices and supply-chain disruptions, including shortages of materials, higher costs for fuel and freight and increased transportation delays. In addition, the extent to which COVID-19 will continue to impact the global economy remains uncertain. This military conflict and COVID-19 and the potential for an increase of their impact on global or regional economies, and the perception that such events may occur, could have a material adverse effect on our business, results of operations, cash flows and financial condition. Furthermore, the tightening of credit in the capital markets could adversely affect the ability of our customers, including individual end-customers and businesses, to obtain financing for significant purchases and operations, which could result in a decrease in or cancellation of orders for our products and services. Similarly, tightening credit may adversely affect our supply base and increase the potential for one or more of our suppliers to experience financial distress or bankruptcy. Additionally, because we have a number of factories and suppliers in foreign countries, the imposition of tariffs or additional sanctions or unusually restrictive border crossing rules could adversely affect our supply chain, operations and overall business.

Our business and financial performance is also adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending and construction (both residential and commercial as well as remodeling). In addition, our financial performance may be influenced by the production and utilization of transport equipment, including truck production cycles in North America and Europe.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our purchases during the three months ended ~~June 30, 2021~~March 31, 2022 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.

Total Number of Shares Purchased
(in 000's)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of a Publicly Announced Program
(in 000's) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions)
2021
April 1 - April 30 131 $43.07 131 $306.8
May 1 - May 31 1,506 $43.88 1,506 $240.7
June 1 - June 30 441 $46.14 441 $220.4
Total 2,078 $44.33 2,078


	Total Number of Shares Purchased (in 000's)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of a Publicly Announced Program (in 000's)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
2022
January 1 - January 31	7,616	$	48.52	7,616	$	1,201.6
February 1 - February 28	5,067	$	46.70	5,067	$	964.9
March 1 - March 31	2,984	$	45.00	2,984	$	830.6
Total	15,667	$	47.26	15,667

(1) Excludes broker commissions.

On ~~February 4,~~July 27, 2021, our Board of Directors ~~approved~~authorized a $2.1 billion stock repurchase program. This program ~~authorizing the~~allows us to repurchase ~~of up to $350 million of Carrier's outstanding common stock. Share repurchases under the program may take place~~shares from time to time, subject to market conditions and at our discretion in the open market or through one or more other public or private transactions and subject to compliance with ~~our obligations under the TMA and our Revolving Credit Facility.~~certain tax obligations.

On December 14, 2021, we entered into the ASR Agreement to repurchase $500 million of our common stock pursuant to our existing share repurchase program. In accordance with the ASR Agreement, we received initial delivery of 7.6 million shares on January 4, 2022, representing approximately 80% of the expected share repurchases. Upon final settlement, we received an additional 2.7 million shares on February 8, 2022.

Item 6. Exhibits


Exhibit Number						Exhibit Description
10.1						Schedule of Terms for Performance Share Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (re v. February 1 , 2022)*
10.2						Schedule of Terms for Restricted Stock Unit Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1 , 2022)*
10.3						Schedule of Terms for Stock Appreciation Right Awards (annual) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1 , 2022)*
10.4						Schedule of Terms for Restricted Stock Unit Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1 , 2022)*
10.5						Schedule of Terms for Stock Appreciation Right Awards (off-cycle) granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan (February 1 , 2022)*
10.6						Form of Award Agreement for 2022 Performance Share Unit Awards granted under the Carrier Global Corporation 2020 Long-Term Incentive Plan*
10.7						Letter Agreement, dated July 12 , 2021, by and between Carrier Corporation and Timo thy N. White*
15						Letter Re: Unaudited Interim Financial Information*
31.1						Rule 13a-14(a)/15d-14(a) Certification*
31.2						Rule 13a-14(a)/15d-14(a) Certification*
31.3						Rule 13a-14(a)/15d-14(a) Certification*
32						Section 1350 Certifications*
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* (File name: ~~carr-20210331.xml)~~carr-20220331.xml)
101.SCH						XBRL Taxonomy Extension Schema Document.* (File name: ~~carr-20210331.xsd)~~carr-20220331.xsd)
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.* (File name: ~~carr-20210331_cal.xml)~~carr-20220331_cal.xml)
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.* (File name: ~~carr-20210331_def.xml)~~carr-20220331_def.xml)
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.* (File name: ~~carr-20210331_lab.xml)~~carr-20220331_lab.xml)
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.* (File name: ~~carr-20210331_pre.xml)~~carr-20220331_pre.xml)
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101

Notes to Exhibits List:

* Submitted electronically herewith.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (ii) Condensed Consolidated Statement of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iii) Condensed Consolidated Balance Sheet as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (iv) Condensed Consolidated Statement of Cash

Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (v) Condensed Consolidated Statement of Changes in Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ and (vi) Notes to Condensed Consolidated Financial Statements.

4437

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CARRIER GLOBAL CORPORATION (Registrant)

Dated:	~~July 29, 2021~~April 28, 2022	by:	/s/PATRICK GORIS
			Patrick Goris
			Senior Vice President and Chief Financial Officer

			(on behalf of the Registrant and as the Registrant's Principal Financial Officer)

Dated:	~~July 29, 2021~~April 28, 2022	by:	/s/KYLE CROCKETT
			Kyle Crockett
			Vice President, Controller

			(on behalf of the Registrant and as the Registrant's Principal Accounting Officer)

4538


(In millions)	UTC Net Investment		Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2019	$	15,355	$	(1,253)	$	0	$	0	$	0	$	0	$	333	$	14,435
Net income	96		—		—		—		—		—		6		102
Other comprehensive income (loss), net of tax	—		(483)		—		—		—		—		(2)		(485)


Dividends attributable to non-controlling interest	—		—		—		—		—		—		(8)		(8)

Net transfers to UTC	(11,014)		—		—		—		—		—		—		(11,014)

Adoption impact of ASU 2016-13	(4)		—		—		—		—		—		—		(4)

Balance as of March 31, 2020	$	4,433	$	(1,736)	$	0	$	0	$	0	$	0	$	329	$	3,026

Net income	—		—		—		—		—		261		8		269
Other comprehensive income (loss), net of tax	—		257		—		—		—		—		1		258
Dividends declared on common stock (1)	—		—		—		—		—		(70)		—		(70)
Shares issued under incentive plans, net	—		—		—		—		24		—		—		24




Net transfers from UTC	859		—		—		—		—		—		—		859
Reclassification of UTC Net investment to Common stock and Additional paid-in capital	(5,292)		—		9		—		5,283		—		—		—

Balance as of June 30, 2020	$	0	$	(1,479)	$	9	$	0	$	5,307	$	191	$	338	$	4,366














(In millions)	UTC Net Investment		Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2020	$	0	$	(745)	$	9	$	0	$	5,345	$	1,643	$	326	$	6,578
Net income	—		—		—		—		—		384		8		392
Other comprehensive income (loss), net of tax	—		(114)		—		—		—		—		—		(114)

Shares issued under incentive plans, net	—		—		—		—		(14)		—		—		(14)
Stock-based compensation	—		—		—		—		19		—		—		19
Dividends attributable to non-controlling interest	—		—		—		—		—		—		(5)		(5)


Treasury stock repurchase	—		—		—		(38)		—		—		—		(38)



Balance as of March 31, 2021	$	0	$	(859)	$	9	$	(38)	$	5,350	$	2,027	$	329	$	6,818

Net income	—		—		—		—		—		487		10		497
Other comprehensive income (loss), net of tax	—		65		—		—		—		—		—		65
Dividends declared on common stock (2)	—		—		—		—		—		(209)		—		(209)
Shares issued under incentive plans, net	—		—		—		—		(4)		—		—		(4)
Stock-based compensation	—		—		—		—		20		—		—		20

Dividends attributable to non-controlling interest	—		—		—		—		—		—		(21)		(21)

Acquisition of non-controlling interest	—		—		—		—		—		—		46		46
Treasury stock repurchase	—		—		—		(92)		—		—		—		(92)

Balance as of June 30, 2021	$	0	$	(794)	$	9	$	(130)	$	5,366	$	2,305	$	364	$	7,120













(1) Cash dividends declared were $0.08 per share for the three months ended June 30, 2020.
(2) Cash dividends declared were $0.24 per share for the three months ended June 30, 2021.


(in millions)	Estimated Useful Life (in years)	Intangible Assets Acquired
Customer relationships	14	$	52
Technology	10	34
Non-compete agreement	5	8
Total intangible assets acquired		$	94