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目录
美国
证券交易委员会
华盛顿特区20549
 ____________________________________ 
表格 10-Q
____________________________________ 
☒根据1934年《证券交易法》第13条或第15（d）条提交的季度报告
截至季度结束日期的财务报告2024年9月30日
或者
☐根据1934年证券交易法第13或15(d)节的转型报告书
过渡期从                至                
佣金文件号 001-39221
____________________________________ 

logo_otis (2).jpg
奥的斯全球公司
(根据其章程规定的注册人准确名称)
____________________________________ 
特拉华州 83-3789412
（合并的）主权或其他管辖区（纳税人识别号码）
Farmington, Ct 06032一家运营在Farmington，Ct 06032的公司。, 法明顿, 康涅狄格州 06032
（总部地址，包括邮政编码）

(860) 674-3000
（注册人的电话号码，包括区号）
____________________________________ 
每个交易所的名称
每一类的名称交易标志每个交易所的名称
ANNX
普通股（每股面值0.01美元）OTIS（奥的斯）请使用moomoo账号登录查看New York Stock Exchange
2026年到期的0.318%票据OTIS/26请使用moomoo账号登录查看New York Stock Exchange
2031年到期的0.934%票据OTIS/31请使用moomoo账号登录查看New York Stock Exchange

请勾选以下内容。申报人是否（1）在过去12个月内（或申报人需要报告这些报告的时间较短的期间内）已提交证券交易法规定的第13或15（d）条要求提交的所有报告；以及（2）过去90天内已被要求提交此类报告。    是  ý。¨.
请在勾选方框内表明，是否注册人已根据规定S-t条例（§232.405）第405条的规定，在过去12个月内（或注册人要求提交并发布此类文件的较短期间内）已经提交了每个互动数据文件。是  ý。¨.
1
目录
勾选表示注册人是大型规模加速报告人、加速报告人、非加速报告人、小型报告公司或新兴成长公司。请参阅证交所法规120亿.2中“大型规模加速报告人”、“加速报告人”、“小型报告公司”和“新兴成长公司”的定义。
大型加速存取器ý加速存取器¨
非加速申报人¨较小的报告公司☐
新兴成长公司☐
如果是新兴成长型公司，请用复选标记指示注册公司是否选择不使用根据《交易所法》第13(a)条规定提供的任何新的或修订的财务会计准则的延期过渡期。¨

请勾选以下内容。申报人是否是外壳公司（根据证券交易法规则12b-2定义）。    是  ☐.    不  ý.

截至2024年10月15日，有 399,460,52415,404,569股。

2
目录
奥的斯全球公司
第10-Q表格季度报告内容
2024年9月30日季度结束
 
 

奥的斯全球公司及其子公司的名称、缩写、标识、产品和服务名称均为奥的斯全球公司及其子公司的注册商标或未注册商标。其他公司的名称、简称、标识、产品和服务名称均为其各自所有者的注册商标或未注册商标。如本文所用，“我们”、“我们的”、“公司”或“奥的斯”（除非上下文另有要求）指的是奥的斯全球公司及其子公司。本表格10-Q中提到的互联网网站纯属方便。这些网站提供的信息并不能构成本表格10-Q的参考。
3
目录
第一部分 - 财务信息

项目1。财务报表

奥的斯全球公司
简明合并利润表
(未经审计) 

 截至9月30日的季度
(金额以百万美元计，每股金额除外；股数以百万计)20242023
净销售额：
产品销售$1,309 $1,435 
服务销售额2,239 2,088 
3,548 3,523 
成本和费用：
销售产品成本1,089 1,195 
(t)1,381 1,282 
研发40 36 
销售、一般及行政费用455 452 
2,965 2,965 
其他收入（费用）净额(220)13 
营业利润363 571 
非服务性养老金成本（收益）1 — 
利息支出（收入），净额(150)39 
所得税前净利润512 532 
所得税费用（收益）(45)137 
净收入557 395 
少数股东损益17 19 
归属奥的斯的净利润$540 $376 
每股收益（注释2）：
基本$1.35 $0.92 
稀释$1.34 $0.91 
加权平均股本：
基本股份400.2410.8
稀释后股份402.7413.7

请参阅附注的基本财务报表。
4
目录


奥的斯全球公司
简明合并利润表
(未经审计) 

 截至9月30日的九个月内，
（金额以百万美元计；每股金额以百万美元计; 股数以百万股计）20242023
净销售额：
产品销售$4,010 $4,346 
服务销售额6,576 6,243 
10,586 10,589 
成本和费用：
销售产品成本3,324 3,621 
(t)4,077 3,843 
研发115 107 
销售、一般及行政费用1,366 1,386 
8,882 8,957 
其他收入（费用）净额(227)32 
营业利润1,477 1,664 
非服务性养老金成本（益）— 1 
利息支出（收入），净额(79)109 
所得税前净利润1,556 1,554 
所得税费用（收益）175 400 
净收入1,381 1,154 
少数股东在子公司收益中的份额73 71 
归属于奥的斯全球公司的净利润$1,308 $1,083 
每股收益(注2):
基本$3.25 $2.62 
稀释$3.23 $2.60 
加权平均股本：
Basic股份402.7412.6
稀释股份405.4415.8

见附带的基本报表附注。
5
目录
奥的斯全球公司
浓缩合并综合收益表
（未经审计）

截至9月30日的季度截至9月30日的九个月
(以百万美元计)2024202320242023
净利润$557 $395 $1,381 $1,154 
其他综合损益（税后净额）：
外币翻译调整(40)33 (65)(71)
养老金和退休后福利计划调整— — 9 — 
未实现现金流对冲的变动(6)2 (3)(1)
其他全面收入（损失），税后净额(46)35 (59)(72)
综合收益（损失），净税后511 430 1,322 1,082 
减：归属于非控股权益的综合（收益）损失(24)(13)(68)(55)
归属于奥的斯全球公司的综合收益$487 $417 $1,254 $1,027 

见附带的基本报表附注。
6
目录
奥的斯全球公司
简 condensed consolidated balance sheets
（未经审计）

(以百万美元计)2024年9月30日2023年12月31日
资产
现金及现金等价物$827 $1,274 
应收账款（减去预计信用损失准备金的$132 和$130)
3,604 3,538 
合同资产776 717 
存货625 612 
其他流动资产663 259 
所有流动资产总额6,495 6,400 
未来的所得税收益315 323 
固定资产（扣除$的累计折旧后）1,265 和$1,232)
721 727 
经营租赁使用权资产409 416 
无形资产，净值330 335 
商誉1,630 1,588 
其他资产361 328 
总资产$10,261 $10,117 
负债和权益（赤字）
短期借款和长期债务的当前部分$1,667 $32 
应付账款1,779 1,878 
应计负债1,864 1,873 
合同负债2,787 2,696 
总流动负债8,097 6,479 
长期债务5,596 6,866 
未来养老金和退休后福利义务462 462 
经营租赁负债286 292 
未来所得税义务 215 245 
其他长期负债385 493 
总负债15,041 14,837 
承诺和或有负债（注16）
可赎回非控股权益55 135 
股东权益（赤字）：
普通股及额外实收资本245 213 
库存股(3,189)(2,382)
累计负债(1,153)(2,005)
累计其他综合收益（或损失）(804)(750)
股东权益总额（赤字）(4,901)(4,924)
非控制性权益66 69 
总股本（赤字）(4,835)(4,855)
总负债和股本（赤字）$10,261 $10,117 

见附带的基本报表附注。
7
目录
奥的斯全球公司
综合财务状况变动的简明合并报表
（未经审计）

（以百万美元计，除每股金额外）普通股及额外实收资本库存股累计亏损累积其他全面收益（损失）股东权益总额
(赤字)		非控股权益总股本（赤字） 可赎回非控制性权益
截至2024年9月30日的季度
截至2024年6月30日的余额$230 $(2,987)$(1,538)$(751)$(5,046)$112 $(4,934)$52 
净利润— — 540 — 540 17 557 — 
其他全面收入（损失），税后净额— — — (53)(53)4 (49)3 
股票奖励和依据员工计划发行的普通股15 — (1)— 14 — 14 — 
宣告的现金分红（$0.39 每普通股)
— — (155)— (155)— (155)— 
回购普通股— (202)— — (202)— (202)— 
归属于非控制权益的分红派息— — — — — (67)(67)— 
收购、处置及其他变动— — 1 — 1 — 1 — 
截至2024年9月30日的余额$245 $(3,189)$(1,153)$(804)$(4,901)$66 $(4,835)$55 
截至2023年9月30日的季度
截至2023年6月30日的余额$183 $(1,927)$(2,419)$(689)$(4,852)$101 $(4,751)$126 
净利润— — 376 — 376 17 393 2 
其他全面收入（损失），税后净额— — — 41 41 (2)39 (4)
基于股票的补偿和员工计划下发行的普通股15 — — — 15 — 15 — 
宣告的现金分红（$0.34 每普通股)
— — (139)— (139)— (139)— 
回购普通股— (228)— — (228)— (228)— 
归属于非控制权益的分红派息— — — — — (61)(61)— 
收购、处置及其他变动— — (1)— (1)— (1)(1)
截至2023年9月30日的余额$198 $(2,155)$(2,183)$(648)$(4,788)$55 $(4,733)$123 

见附带的基本报表附注。
8
目录
奥的斯全球公司
综合财务状况变动的简明合并报表
（未经审计）

(以百万美元计，每股金额除外)普通股及额外实收资本库存股累计亏损累积其他全面收益（损失）总股东权益
(赤字)		非控股权益总股本（赤字） 可赎回的非控股权益
截至2024年9月30日的九个月
截至2023年12月31日的余额$213 $(2,382)$(2,005)$(750)$(4,924)$69 $(4,855)$135 
净利润— — 1,308 — 1,308 68 1,376 5 
其他全面收入（损失），税后净额— — — (54)(54)1 (53)(6)
基于股票的薪酬和根据员工计划发行的普通股33 — (3)— 30 — 30 — 
宣告的现金分红（$1.12 每普通股)
— — (450)— (450)— (450)— 
回购普通股— (807)— — (807)— (807)— 
归属于非控制权益的分红派息— — — — — (71)(71)(9)
收购、处置及其他变更(1)— (3)— (4)(1)(5)(70)
截至2024年9月30日的余额$245 $(3,189)$(1,153)$(804)$(4,901)$66 $(4,835)$55 
截至2023年9月30日的九个月
截至2022年12月31日的余额$162 $(1,575)$(2,865)$(592)$(4,870)$71 $(4,799)$135 
净利润— — 1,083 — 1,083 64 1,147 7 
其他全面收入（损失），税后净额— — — (56)(56)(7)(63)(9)
基于股票的补偿和员工计划下发行的普通股36 — (1)— 35 — 35 — 
宣告的现金分红（$0.97 每普通股)
— — (400)— (400)— (400)— 
回购普通股— (580)— — (580)— (580)— 
归属于非控制权益的分红派息— — — — — (70)(70)(9)
收购、处置及其他变动— — — — — (3)(3)(1)
截至2023年9月30日的余额$198 $(2,155)$(2,183)$(648)$(4,788)$55 $(4,733)$123 


见附带的基本报表附注。
9
目录
奥的斯全球公司
压缩合并现金流量表
（未经审计）
 截至9月30日的九个月
(以百万美元计)20242023
经营活动：
净利润$1,381 $1,154 
对净利润与通过经营活动提供的净现金流进行调整，不包括收购和处置：
折旧和摊销133 145 
递延所得税费用（利益）(26)(34)
股票薪酬成本52 49 
德国税务诉讼利息计提的逆转收益（注1）(50)— 
经营资产和负债变动：
应收账款，净额(93)(214)
合同资产和负债，当前23 68 
存货(14)(8)
其他流动资产(373)(4)
应付账款(115)(35)
应计负债2 (66)
养老金缴款(34)(32)
其他经营活动，净额(13)7 
经营活动提供的（使用的）净现金流873 1,030 
投资活动：
资本支出(87)(96)
企业及无形资产收购，扣除现金（注6）(70)(27)
出售（投资于）可交易证券的收益(9)(2)
衍生合同结算的收付款(47)(21)
其他投资活动，净额3 14 
投资活动提供的（使用的）净现金流量(210)(132)
融资活动：
来自（偿还）借款的净收入（到期日为90天或更短）325 (90)
长期债务发行的收入— 747 
支付债务发行成本— (6)
普通股股息支付(450)(400)
回购普通股(800)(575)
获得非控股权益股份(75)— 
支付给非控股利息的分红派息(81)(76)
其他筹资活动，净额(21)(18)
融资活动所提供（使用）的净现金流(1,102)(418)
汇率变动对现金及现金等价物的影响(9)(34)
现金、现金等价物及受限现金的净增加（减少）(448)446 
现金、现金等价物及受限现金，年初余额1,280 1,195 
现金、现金等价物及限制性现金，期末余额832 1,641 
减：受限现金5 5 
期末的现金及现金等价物$827 $1,636 

见附带的基本报表附注。
10
目录
奥的斯全球公司
简明合并财务报表附注
（未经审计）

注释 1： 一般

截至2024年9月30日的简明合并基本报表以及截至2024年9月30日和2023年9月30日的季度和九个月的报表未经审计，但管理层认为包含所有必要的调整（仅包括正常的经常性调整），以公平地反映临时期间的结果。截止2023年12月31日的简明合并资产负债表来源于经审计的基本报表，但不包括美国通用会计原则（"GAAP"）所要求的所有披露。这里报告的结果不应被视为全年可能预期结果的指示。这些财务信息应与我们年度报告中包含的公司的年度合并基本报表及其附注一起阅读。 表格10-K 用于2023财年的（"2023年10-K表格"或"10-K表格"）。

除非上下文另有要求，否则对「奥的斯」、「我们」、「我们」，「我们的」和「公司」的引用均指奥的斯全球公司及其子公司。

截至2023年10月，公司在2023年10-K表格中描述的重大会计政策未发生变化，这些变化对公司的简明合并基本报表及相关附注没有重大影响。

使用估计。 根据美国通用会计原则编制这些压缩合并基本报表及其附注，管理层需要做出估计和假设，这些估计和假设会影响报告金额。实际结果可能与这些估计存在重大差异。

我们评估了某些会计事项，这些事项通常需要在合理可获得的信息的背景下考虑预测的基本报表信息，以及宏观经济发展（包括通货膨胀压力、较高的利率期货和更紧缩的信贷条件）对未来未知影响，截止到2024年9月30日及本报告日期。所评估的会计事项包括但不限于我们的信贷损失准备、商誉和其他长期资产的账面价值、金融资产和营业收入确认。虽然截至2024年9月30日以及截至2024年和2023年9月30日的季度及九个月的浓缩合并基本报表没有受到这些事项评估的重大影响，但未来对我们对这些宏观经济发展的规模和持续时间预期的评估，以及其他因素，可能在未来报告期间对我们的浓缩合并基本报表产生重大影响。

我们还评估了某些会计事项，因为它们涉及俄罗斯与乌克兰之间的持续冲突以及中东的冲突，包括但不限于我们的信用损失准备金、长期资产的账面价值、营业收入确认和资产分类。根据我们对这些事项的评估，截至2024年9月30日的简明合并基本报表以及截至2024年和2023年9月30日的季度和九个月，没有对其产生重大影响。随着局势的发展，我们会继续评估对我们经营财报、财务状况和整体表现的影响，以及它们对全球货币经济可能产生的更广泛影响。

德国税务诉讼。 2024 年 8 月，我们收到了关于德国税务诉讼的有利裁决。因此，所得税优惠为 $185百万美元和相关利息收入 $200在截至2024年9月30日的季度和九个月的简明合并运营报表中，所得税支出（收益）和利息支出（收入）分别包含在净额中，百万美元。截至2024年9月30日，所得税优惠在简明合并资产负债表中作为其他流动资产的应收所得税入账。利息收入包括美元应计利息的逆转50百万美元和确认约美元的应收利息150百万美元分别反映在截至2024年9月30日的简明合并资产负债表中的应计负债和其他流动资产中。

根据与RTX公司（"RTX"，我们的前母公司）签署的税务事项协议（"TMA"），公司为德国这一税务诉讼的结果录入了对RTX的补偿费用金额为$194 百万。这项费用包含在截至2024年9月30日的季度和九个月的简明合并运营报表中的其他费用（收入），并且应付RTX的金额包含在截至2024年9月30日的简明合并资产负债表中的应计负债中。

11
目录
参见注释11，"所得税"和注释16，"或有事项" 以获取更多信息。

收购非控制权股份。 我们在2024年第二季度以大约$的价格从非控制股东手中购买了我们在日本的全资子公司的所有流通股。70 百万。

供应商融资计划。 某些奥的斯子公司参与供应商融资计划，根据该计划，我们同意在发票的原到期日向第三方金融机构支付确认的发票金额，而参与的供应商通常可以将其从公司获得的应收款出售或以其他方式作为抵押品质押给参与的金融机构。根据我们的供应商融资计划，公司确认的对金融机构有效的未偿还义务为$653 百万和$627 百万美元，截至2024年9月30日和2023年12月31日，分别为$32 百万美元，截至2024年9月30日，与付款期限为发票日期后 240 天的新的计划相关。这些义务包含在紧凑合并资产负债表的应付账款中，与这些义务相关的所有活动在紧凑合并现金流量表中以运营活动呈现。

请参阅公司审计合并基本报表及其附注中的第2条，了解关于公司供应商融资计划的详细信息，付款条款为供应商发票的支付期限介于 表格10-K 和 30 和 120 天，从发票日期起。

注释 2： 每股盈利

 截至9月30日的季度截至9月30日的九个月
(以百万美元为单位，单位为每股金额；以百万股为单位)2024202320242023
归属于普通股股东的净利润$540 $376 $1,308 $1,083 
基本加权平均流通股数400.2 410.8 402.7 412.6 
股票奖励和股权单位（股票等值）2.5 2.9 2.7 3.2 
摊薄加权平均流通股数402.7 413.7 405.4 415.8 
普通股每股收益：
基本$1.35$0.92$3.25$2.62
稀释$1.34$0.91$3.23$2.60

稀释后每股收益的计算不包括潜在的股票奖励行使的影响，包括股票增值权和期权，当普通股的平均市场价格低于相关股票奖励的行使价格时，因为这种影响将是反稀释的。此外，当奖励的假定收入超过普通股在该期间的平均市场价格时，稀释后每股收益的计算也不包括潜在的股票奖励行使的影响。 1.1 在截至2024年9月30日的季度和九个月的计算中，有 百万反稀释股票奖励被排除在外， 1.0 与2023年同期的 百万相比。

可赎回非控股权益对归属于普通股东的净利润的影响在截至2024年和2023年9月30日的季度和九个月内是微不足道的。

注释 3： 营业收入确认

我们根据会计准则汇编（"ASC"）第606章的规定计算营业收入： 来自客户的合同的营业收入。

合同资产和负债。 合同资产反映了在客户开票之前已确认的营业收入。当客户支付对价，或者我们有权在履行合同的义务之前收到一笔无条件对价时，合同负债被确认。我们根据合同中规定的条款向客户收取款项，这些款项是在进行工作之前的预付款、随着履行合同工作而逐步付款，或者在某些情况下，工作完成后付款。

12
Table of Contents
Total Contract assets and Contract liabilities as of September 30, 2024 and December 31, 2023 are as follows:

(dollars in millions)September 30, 2024December 31, 2023
Contract assets, current$776 $717 
Total contract assets776 717 
Contract liabilities, current2,787 2,696 
Contract liabilities, non-current (included within Other long-term liabilities)41 48 
Total contract liabilities 2,828 2,744 
Net contract liabilities$2,052 $2,027 

Contract assets increased by $59 million during the nine months ended September 30, 2024 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $84 million during the nine months ended September 30, 2024 primarily due to billings on contracts in excess of revenue earned.

In the nine months ended September 30, 2024 and 2023, we recognized revenue of approximately $1.9 billion and $1.8 billion related to contract liabilities as of January 1, 2024 and 2023, respectively.

Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of September 30, 2024, our total RPO was approximately $18.6 billion. Of the total RPO as of September 30, 2024, we expect approximately 90% will be recognized as sales over the following 24 months.

Note 4: Accounts Receivable, Net

Accounts receivable, net consisted of the following as of September 30, 2024 and December 31, 2023:

(dollars in millions)September 30, 2024December 31, 2023
Trade receivables$3,431 $3,390 
Unbilled receivables152 119 
Miscellaneous receivables95 96 
Customer financing notes receivable58 63 
3,736 3,668 
Less: allowance for expected credit losses(132)(130)
Accounts receivable, net$3,604 $3,538 

The changes in allowance for expected credit losses related to Accounts receivable, net for the nine months ended September 30, 2024 and 2023, respectively, are as follows:

Nine Months Ended September 30,
(dollars in millions)20242023
Balance as of January 1$130 $152 
Provision for expected credit losses19 21 
Write-offs charged against the allowance for expected credit losses(18)(42)
Foreign exchange and other1 (5)
Balance as of September 30$132 $126 

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Note 5: Inventories

Inventories consisted of the following as of September 30, 2024 and December 31, 2023:

(dollars in millions)September 30, 2024December 31, 2023
Raw materials and work-in-process$143 $154 
Finished goods482 458 
Total$625 $612 

Raw materials, work-in-process and finished goods are net of valuation write-downs of $89 million and $87 million as of September 30, 2024 and December 31, 2023, respectively.

Note 6: Business Acquisitions, Dispositions, Goodwill and Intangible Assets

Business Acquisitions. Our acquisitions of businesses and intangible assets, net of cash, totaled $70 million (including debt assumed) and $27 million in the nine months ended September 30, 2024 and 2023, respectively, and were primarily in our Service segment. Transaction costs incurred were not considered significant.

Goodwill. Changes in our Goodwill balance during the nine months ended September 30, 2024 were as follows:

(dollars in millions)Balance as of December 31, 2023Goodwill Resulting
from Business Combinations		Foreign Currency
Translation 
and Other
Balance as of
September 30, 2024
New Equipment$295$—$1$296
Service1,2933561,334
Total$1,588$35$7$1,630

Intangible Assets. Intangible assets cost and accumulated amortization were $2,113 million and $1,783 million, respectively, as of September 30, 2024, and $2,072 million and $1,737 million, respectively, as of December 31, 2023.

Amortization of intangible assets for the quarter and nine months ended September 30, 2024 was $15 million and $46 million, respectively, compared to $17 million and $51 million for the same periods in 2023. Excluding the impact of acquisitions, currency translation adjustments and the reclassification of $16 million of intangibles assets, net to assets held for sale during the third quarter of 2024, there were no other significant changes in our Intangible assets during the quarters and nine months ended September 30, 2024 and 2023.

Held For Sale Assets and Liabilities. As of September 30, 2024, assets and liabilities held for sale were $38 million and $9 million, respectively, and are included in Other current assets and Accrued liabilities, respectively, in the Condensed Consolidated Balance Sheets. As of December 31, 2023, assets held for sale were $11 million.

As of September 30, 2024, the operations of one of our non-U.S.subsidiaries, primarily in the Service segment, are classified as assets and liabilities held for sale. It is the Company's intention to complete the sale of these assets and liabilities within the next 12 months. These operations included assets held for sale of $25 million and liabilities held for sale of $9 million, respectively, as of September 30, 2024. The Company recorded an impairment loss of $18 million related to the net assets held for sale in Other expense (income), net in the Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2024.
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Note 7: Borrowings and Lines of Credit

(dollars in millions)September 30, 2024December 31, 2023
Commercial paper$316$—
Other borrowings5132
Total short-term borrowings$367$32

Commercial Paper. As of September 30, 2024, there were $316 million borrowings outstanding under the Company's $1.5 billion commercial paper programs. We use our commercial paper borrowings for general corporate purposes including to finance acquisitions, pay dividends, repurchase shares and for debt refinancing. The need for commercial paper borrowings may arise if the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.

For details regarding the Company's short-term borrowing activity in 2023, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2023 Form 10-K.

Long-term debt.

As of September 30, 2024, we had a revolving credit agreement with various banks providing for a $1.5 billion unsecured, unsubordinated five-year revolving credit facility, maturing March 10, 2028. As of September 30, 2024, there were no borrowings under the revolving credit agreement. As of September 30, 2024, the Company is in compliance with all covenants in the revolving credit agreement and the indentures governing all outstanding long-term debt. Long-term debt consisted of the following:

(dollars in millions)September 30, 2024December 31, 2023
2.056% notes due 2025
$1,300 $1,300 
0.37% notes due 2026 (¥21.5 billion principal value)
149 150 
0.318% notes due 2026 (€600 million principal value)
672 658 
2.293% notes due 2027
500 500 
5.250% notes due 2028
750 750 
2.565% notes due 2030
1,500 1,500 
0.934% notes due 2031 (€500 million principal value)
560 548 
3.112% notes due 2040
750 750 
3.362% notes due 2050
750 750 
Other (including finance leases)3 4 
Total principal long-term debt6,934 6,910 
Other (discounts and debt issuance costs)(38)(44)
Total long-term debt6,896 6,866 
Less: current portion1,300 — 
Long-term debt, net of current portion$5,596 $6,866 

We may redeem any series of notes at our option pursuant to certain terms. For additional details regarding the Company's debt activity in 2023, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2023 Form 10-K.

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Debt discounts and debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Condensed Consolidated Statements of Operations for the quarters and nine months ended September 30, 2024 and 2023 reflects the following:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Debt issuance costs amortization$2 $2 $6 $5 
Total interest expense on external debt43 38 129 105 

The unamortized debt issuance costs as of September 30, 2024 and December 31, 2023 were $35 million and $42 million, respectively.

The weighted average maturity of our long-term debt as of September 30, 2024 is approximately 7.1 years. The weighted average interest expense rate on our borrowings outstanding as of September 30, 2024 and December 31, 2023 was as follows:

September 30, 2024December 31, 2023
Short-term commercial paper4.9%—%
Total long-term debt2.5%2.5%

The weighted average interest expense rate on our borrowings during the quarters and nine months ended September 30, 2024 and 2023 was as follows:

Quarter Ended September 30,Nine Months Ended September 30,
2024202320242023
Short-term commercial paper5.5%5.4%5.5%5.0%
Total long-term debt2.5%2.1%2.5%2.0%

Note 8: Employee Benefit Plans

Pension and Postretirement Plans. The Company sponsors both funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit plans, and defined contribution plans. Contributions to our plans were as follows:

 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Defined benefit plans$10 $8 $34 $32 
Defined contribution plans16 16 52 50 
Multi-employer pension and postretirement plans41 42 123 117 

The following table illustrates the components of net periodic benefit cost for the Company's defined benefit pension plans:

 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Service cost$8 $7 $24 $22 
Interest cost9 8 24 24 
Expected return on plan assets(9)(8)(25)(24)
Net settlement and curtailment (gain) loss1 — 1 — 
Total net periodic benefit cost$9 $7 $24 $22 

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Postretirement Benefit Plans. The Company sponsors postretirement benefit plans that provide health benefits to eligible retirees. The postretirement plans are unfunded. The net periodic benefit cost was less than $1 million for the quarters and nine months ended September 30, 2024 and 2023.

Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of September 30, 2024, approximately 19 million shares remain available for awards under the Plan.

The Company measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the Condensed Consolidated Statements of Operations over the award's applicable vesting period. A forfeiture rate assumption is applied on grant date to adjust the expense recognition for awards that are not expected to vest.

Stock-based compensation expense and the resulting tax benefits were as follows:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Stock-based compensation expense (Share Based)$16 $15 $52 $49 
Less: future tax benefit(2)(2)(6)(6)
Stock-based compensation expense, net of tax$14 $13 $46 $43 

As of September 30, 2024, following our annual grant issuance on February 7, 2024, there was approximately $115 million of total unrecognized compensation cost related to non-vested equity awards granted under the Plan. This cost is expected to be recognized ratably over a weighted-average period of 2.1 years.

Note 9: Stock

Preferred Stock. There are 125 million shares of $0.01 par value Preferred Stock authorized, of which none were issued as of September 30, 2024 and December 31, 2023.

Common Stock. There are 2 billion shares of $0.01 par value Common Stock authorized. As of September 30, 2024 and December 31, 2023, 438.4 million and 437.0 million shares of Common Stock were issued, respectively, which includes 39.0 million and 30.4 million shares of treasury stock, respectively.

Treasury Stock. As of September 30, 2024, the Company was authorized by the Board of Directors to purchase up to $2.0 billion of Common Stock under a share repurchase program, of which approximately $400 million was remaining at such time.

During the quarter and nine months ended September 30, 2024, the Company repurchased 2.1 million and 8.6 million shares, respectively, for $200 million and $800 million, respectively, compared to the 2.6 million and 6.8 million shares, respectively, in the same periods of 2023 for $225 million and $575 million, respectively. Share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired in Treasury Stock on the Condensed Consolidated Balance Sheets.

The Company's share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be purchased in the open market, in privately negotiated transactions, under accelerated share repurchase programs or under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

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Note 10: Accumulated Other Comprehensive Income (Loss)

A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax, for the quarters and nine months ended September 30, 2024 and 2023 is provided below:

(dollars in millions)Foreign
Currency
Translation		Defined Benefit
Pension and
Postretirement
Plans		Unrealized
Hedging Gains
(Losses)		Accumulated
Other
Comprehensive
Income (Loss)
Quarter Ended September 30, 2024
Balance as of June 30, 2024$(686)$(69)$4 $(751)
Other comprehensive income (loss) before reclassifications, net(47)— (6)(53)
Amounts reclassified, pre-tax— — — — 
Tax benefit reclassified— — — — 
Balance as of September 30, 2024$(733)$(69)$(2)$(804)
Nine Months Ended September 30, 2024
Balance as of December 31, 2023$(673)$(78)$1 $(750)
Other comprehensive income (loss) before reclassifications, net(60)9 (18)(69)
Amounts reclassified, pre-tax— — 15 15 
Tax benefit reclassified— — — — 
Balance as of September 30, 2024$(733)$(69)$(2)$(804)

(dollars in millions)Foreign
Currency
Translation		Defined Benefit
Pension and
Postretirement
Plans		Unrealized
Hedging Gains
(Losses)		Accumulated
Other
Comprehensive
Income (Loss)
Quarter Ended September 30, 2023
Balance as of June 30, 2023$(681)$(8)$— $(689)
Other comprehensive income (loss) before reclassifications, net39 — 1 40 
Amounts reclassified, pre-tax— — 1 1 
Tax benefit reclassified— — — — 
Balance as of September 30, 2023$(642)$(8)$2 $(648)
Nine Months Ended September 30, 2023
Balance as of December 31, 2022$(587)$(8)$3 $(592)
Other comprehensive income (loss) before reclassifications, net(56)— (7)(63)
Amounts reclassified, pre-tax1 — 8 9 
Tax benefit reclassified— — (2)(2)
Balance as of September 30, 2023$(642)$(8)$2 $(648)

Amounts reclassified that relate to defined benefit pension and postretirement plans include amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented. See Note 8, "Employee Benefit Plans" for additional information.

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Note 11: Income Taxes

The decrease in the effective tax rate for the quarter and nine months ended September 30, 2024 is primarily due to recognition of estimated tax benefits arising as a result of the resolution of the German tax litigation. The effective tax rate for the nine months ended September 30, 2024 was also impacted by the reduction of a deferred tax liability related to the mitigation of future repatriation costs.

Otis conducts business globally and, as a result, Otis or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the ordinary course of business, Otis could be subject to examination by taxing authorities throughout the world, including such major jurisdictions as Austria, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Netherlands, Portugal, South Korea, Spain, Switzerland, the United Kingdom, and the United States. With a few exceptions, Otis is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2015.

A subsidiary of Otis engaged in tax-related litigation in Belgium received a favorable appellate court decision in 2018. The Belgian tax authorities appealed the decision to the Court of Cassation (the equivalent of the Supreme Court in Belgium). On December 4, 2020, the Court of Cassation overturned the decision of the appellate court and remanded the case to the appellate court for reconsideration. Following a hearing on March 20, 2023, the Antwerp Appellate Court ruled against the Company. Otis has decided not to appeal the decision, which marks the end of this litigation. Otis expects to receive the assessment for tax and interest in 2024 or 2025. The associated tax and interest have been fully reserved and are included in the range below.

In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record 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 evaluation considers any additional worldwide uncertain tax positions, the closure of tax statutes or the re-valuation of current uncertain tax positions arising from the issuance of legislation, regulatory or other guidance or developments in examinations, in appeals, or in the courts. Based on the preceding factors, it is reasonably possible that within the next 12 months unrecognized tax benefits could change within the range of a $10 million increase to a $95 million decrease and associated interest could change within the range of a $10 million increase to a $80 million decrease.

The decrease in unrecognized tax benefits and associated interest for the quarter and nine months ended September 30, 2024, is primarily due to the resolution of the German tax litigation. See Note 16, “Contingent Liabilities” for discussion regarding the German tax litigation.

Note 12: Restructuring and Transformation Costs

We initiate restructuring actions to keep our cost structure competitive. Charges generally arise from severance related to workforce reductions, as well as facility exit and lease termination costs associated with the consolidation of office and manufacturing operations. Due to the size, nature and frequency of these discrete actions, they are fundamentally different from the Company's ongoing productivity initiatives.

During the quarters and nine months ended September 30, 2024 and 2023, we recorded restructuring costs for new and ongoing restructuring actions, including UpLift actions beginning in 2023, as follows:

Quarter Ended September 30, 2024Quarter Ended September 30, 2023
(dollars in millions)UpLiftOtherTotalUpLiftOtherTotal
Cost of products and services sold$— $3 $3 $— $9 $9 
Selling, general and administrative4 2 6 — 12 12 
Total $4 $5 $9 $— $21 $21 
Nine Months Ended September 30, 2024Nine Months Ended September 30, 2023
(dollars in millions)UpLiftOtherTotalUpLiftOtherTotal
Cost of products and services sold$2 $12 $14 $— $11 $11 
Selling, general and administrative9 17 26 — 25 25 
Total$11 $29 $40 $— $36 $36 
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Restructuring costs incurred and expected, unless otherwise indicated, are approximately 30% New Equipment and 70% Service. Although this reflects the segments to which the restructuring costs relate, refer to Note 17 for more information about our measure of segment performance (segment operating profit), which no longer includes restructuring costs, among other items, beginning in the first quarter of 2024.

UpLift Restructuring Actions and Transformation Costs. During the third quarter of 2023, we announced UpLift to transform our operating model. UpLift includes, among other aspects, the standardization of our processes and improvement of our supply chain procurement, as well as organizational changes which result in restructuring actions.

UpLift restructuring actions of up to $55 million were approved in 2023, with additional actions initiated in 2024. These costs are primarily severance related costs. We expect these actions initiated during 2024 and 2023 to be substantially completed and cash to be paid by the end of 2024, with payments for certain actions to be completed in 2025. Expected total costs and remaining costs to incur for the actions initiated are approximately $55 million and $19 million, respectively.

In the quarter and nine months ended September 30, 2024, we incurred $18 million and $45 million, respectively, of incremental, non-restructuring costs associated with transforming our operating model as a part of UpLift ("UpLift transformation costs"), including consulting and personnel costs, which are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations. We incurred $4 million of UpLift transformation costs in the quarter and nine months ended September 30, 2023.

Other Restructuring Actions. The other restructuring expenses incurred during the quarters and nine months ended September 30, 2024 and 2023, were primarily the result of restructuring programs initiated during 2024 and 2023 related to severance and facility exit costs. We are targeting to complete by the end of 2025 the majority of remaining other restructuring actions initiated in the quarter and nine months ended September 30, 2024 and the full year 2023, with certain utilization beyond 2025 due to contractual obligations or legal requirements in the applicable jurisdictions. Expected total costs and remaining costs to incur for the other restructuring actions initiated are $98 million and $28 million, respectively. Remaining costs are expected to be approximately 75% New Equipment and 25% Service.

Restructuring Accruals. The following table summarizes the accrual balance and utilization for restructuring actions, which are primarily for severance costs and most will require cash payment:

(dollars in millions)UpLift ActionsOther ActionsTotal Restructuring Actions
Restructuring accruals as of December 31, 2023$13 $35 $48 
Net restructuring costs11 29 40 
Utilization, foreign exchange and other costs(21)(34)(55)
Restructuring accruals as of September 30, 2024$3 $30 $33 

Note 13: Financial Instruments

We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under ASC 815, Derivatives and Hedging. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, commodity prices and foreign exchange rates. These fluctuations can increase the costs of financing, investing in and operating the business. We may use derivative instruments, including swaps, forward contracts and options, to manage certain foreign currency, commodity price and interest rate exposures.

The four-quarter average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $5.3 billion and $4.6 billion as of September 30, 2024 and December 31, 2023, respectively, including net investment hedges. The four-quarter average of the notional amount of contracts hedging commodity purchases was $14 million and $21 million as of September 30, 2024 and December 31, 2023, respectively.

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The following table summarizes the fair value and presentation on the Condensed Consolidated Balance Sheets for derivative instruments as of September 30, 2024 and December 31, 2023:

(dollars in millions)Balance Sheet ClassificationSeptember 30, 2024December 31, 2023
Derivatives designated as Cash flow hedging instruments:
Asset Derivatives:
Foreign exchange contractsOther current assets$3 $2 
Commodity contractsOther current assets— 1 
Foreign exchange contractsOther assets2 2 
Total asset derivatives$5 $5 
Liability Derivatives:
Foreign exchange contractsAccrued liabilities$(6)$(4)
Foreign exchange contractsOther long-term liabilities(2)(1)
Total liability derivatives$(8)$(5)
Derivatives not designated as Cash flow hedging instruments:
Asset Derivatives:
Foreign exchange contractsOther current assets$16 $20 
Foreign exchange contractsOther assets2 4 
Total asset derivatives$18 $24 
Liability Derivatives:
Foreign exchange contractsAccrued liabilities$(24)$(34)
Foreign exchange contractsOther long-term liabilities(3)(7)
Total liability derivatives$(27)$(41)

Derivatives designated as Cash flow hedging instruments. The gains or (losses) attributable to foreign exchange and commodity contract activity reclassified from Accumulated other comprehensive income (loss) for the quarters and nine months ended September 30, 2024 and 2023 are described in Note 10, "Accumulated Other Comprehensive Income (Loss)".

The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) as of September 30, 2024 and December 31, 2023 are presented in the table below:

(dollars in millions)September 30, 2024December 31, 2023
Gain (loss) recorded in Accumulated other comprehensive income (loss)$(2)$1 

The Company utilizes the critical terms match method in assessing firm commitment derivatives and regression testing in assessing commodity derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective.

Assuming current market conditions continue, pre-tax losses of $3 million are expected to be reclassified from Accumulated other comprehensive income (loss) into Cost of products sold to reflect the fixed prices obtained from foreign exchange and commodity hedging within the next 12 months. All derivative contracts accounted for as cash flow hedges as of September 30, 2024 will mature by December 2028.

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Net Investment Hedges. We may use non-derivative instruments (foreign currency denominated borrowings) and derivative instruments (foreign exchange forward contracts) to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. For instruments that are designated and qualify as a hedge of net investment in foreign operations and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in foreign currency translation within Other comprehensive income (loss) on the Condensed Consolidated Statements of Comprehensive Income, and will remain in Accumulated other comprehensive income (loss) until the hedged investment is sold or substantially liquidated. The remainder of the change in value of such instruments is recorded in earnings, including to the extent foreign currency denominated borrowings are not designated in, or are de-designated from, a net investment hedge relationship.

Our use of derivative instruments designated as hedges of the Company's net investment in foreign subsidiaries can vary depending on the Company's desired foreign exchange risk coverage.

We have ¥21.5 billion of Japanese Yen denominated long-term debt that qualifies as a net investment hedge against our investments in Japanese businesses, as well as derivative instruments that qualify as net investment hedges against our investments in certain European businesses (notional amount of €150 million) and Asian businesses (notional amounts of HK$1.6 billion and ¥2.1 billion). The net investment hedges are deemed to be effective. The maturity dates of the current non-derivative and derivative instruments designated in net investment hedges range from 2024 to 2026.

During the quarter ended September 30, 2024, we de-designated a derivative instrument that qualified as a net investment hedge in certain Asian businesses with a notional amount of HK$1.2 billion, which was deemed to be effective until de-designation.

Additionally, we had derivative instruments with notional amounts of €95 million that matured during the second quarter of 2023. These contracts qualified as net investment hedges which were deemed to be effective until maturity.

The following table summarizes the amounts of gains (losses) recognized in other comprehensive income (loss) related to non-derivative and derivative instruments designated as net investment hedges:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Foreign currency denominated long-term debt$(14)$6 $1 $18 
Foreign currency forward contracts6 2 4 3 
Total$(8)$8 $5 $21 

Derivatives not designated as Cash flow hedging instruments. The net effect of derivatives not designated as Cash flow hedging instruments within Other income (expense) net, on the Condensed Consolidated Statements of Operations was as follows:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Foreign exchange contracts$4 $4 $6 $16 

The effects of derivatives not designated as Cash flow hedge instruments within Cost of products sold on the Condensed Consolidated Statements of Operations were gains of $2 million and less than $1 million in the quarter and nine months ended September 30, 2024, respectively, compared to gains of $1 million and losses of $8 million in the same periods of 2023, respectively.

Note 14: Fair Value Measurements

Valuation Techniques. Our marketable securities include investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. The fair value gains or losses related to our marketable securities are recorded through net income. Our derivative assets and liabilities include foreign exchange and commodity contracts that are measured at fair value using internal and third party models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks.

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As of September 30, 2024, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks.

Due to their short-term nature, the carrying value approximated fair value for the current portion of the Company’s financial instruments not carried at fair value. The fair value of receivables, including customer financing notes receivable, net, that were issued long-term are based on the discounted values of their related cash flows at interest rates reflecting the attributes of the counterparties, including geographic location. Customer-specific risk, including credit risk, is already considered in the carrying value of those receivables. Our long-term debt, as described in Note 7, "Borrowings and Lines of Credit", is measured at fair value using closing bond prices from active markets.

Recurring Fair Value Measurements. In accordance with the provisions of ASC 820: Fair Value Measurements, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and non-recurring basis in our Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023: 

September 30, 2024
(dollars in millions)TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Marketable securities$45 $45 $— $— 
Derivative assets23 — 23 — 
Derivative liabilities(35)— (35)— 

December 31, 2023
(dollars in millions)TotalLevel 1Level 2Level 3
Recurring fair value measurements:
Marketable securities$28 $28 $— $— 
Derivative assets29 — 29 — 
Derivative liabilities(46)— (46)— 

Fair Value of Financial Instruments. The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value as of September 30, 2024 and December 31, 2023:

 September 30, 2024December 31, 2023
(dollars in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Long-term receivables, net$47 $46 $55 $54 
Customer financing notes receivable, net21 19 26 23 
Short-term borrowings(367)(367)(32)(32)
Long-term debt, including current portion (excluding leases and other)(6,931)(6,347)(6,906)(6,224)
Long-term liabilities, including current portion(132)(123)(197)(185)

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The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023:

September 30, 2024
(dollars in millions)TotalLevel 1Level 2Level 3
Long-term receivables, net$46 $— $46 $— 
Customer financing notes receivable, net19 — 19 — 
Short-term borrowings(367)— (367)— 
Long-term debt, including current portion (excluding leases and other)(6,347)— (6,347)— 
Long-term liabilities, including current portion(123)— (123)— 
December 31, 2023
(dollars in millions)TotalLevel 1Level 2Level 3
Long-term receivables, net$54 $— $54 $— 
Customer financing notes receivable, net23 — 23 — 
Short-term borrowings(32)— (32)— 
Long-term debt, including current portion (excluding leases and other)(6,224)— (6,224)— 
Long-term liabilities, including current portion(185)— (185)— 


Note 15: Guarantees

The Company provides service and warranty on its products beyond normal service and warranty policies. The carrying amount of service and product guarantees were $13 million and $12 million as of September 30, 2024 and December 31, 2023, respectively.
The Company provides certain financial guarantees to third parties. As of September 30, 2024, Otis has stand-by letters of credit with maximum potential payment totaling $139 million. We accrue costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with ASC Topic 460: Guarantees, we record these liabilities at fair value. As of September 30, 2024, Otis has determined there are no estimated costs probable under these guarantees.

Note 16: Contingent Liabilities

Except as otherwise noted, while we are unable to predict the final outcome, based on information currently available, we do not believe that resolution of any of the following matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. In addition to the specific amounts noted below, where we have recorded loss contingency accruals for the below and other matters, the amounts in aggregate are not material. Legal costs generally are expensed when incurred.

For details regarding the Company's outstanding liability for environmental obligations, refer to Note 21 of the Company's audited consolidated financial statements and notes thereto included in our 2023 Form 10-K.

Legal Proceedings.

German Tax Litigation

We have been involved in administrative review proceedings with the German Tax Office, which concern approximately €215 million (approximately $239 million as of September 30, 2024) of tax benefits that we have claimed related to a 1998 reorganization of the corporate structure of our operations in Germany. Upon audit, these tax benefits were disallowed by the German Tax Office. We estimate interest associated with the aforementioned tax benefits is an additional approximately €118 million (approximately $131 million as of September 30, 2024).
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In August 2012, a suit was filed in the local German Tax Court (Berlin-Brandenburg). In 2015, before our separation from our former parent United Technologies Corporation ("UTC"), now RTX Corporation ("RTX"), we made tax and interest payments to German tax authorities of €275 million (approximately $300 million) in order to avoid additional interest accruals pending final resolution of this matter. In March 2016, the local German Tax Court dismissed the suit, and we appealed this decision to the German Federal Tax Court. Following a hearing in July 2018, the German Federal Tax Court remanded the matter to the local German Tax Court for further proceedings. In December 2020, the local German Tax Court ruled against the Company.

On January 26, 2021, the Company filed an appeal with the German Federal Tax Court. On February 8, 2022, the Company received the decision of the German Federal Tax Court, in which the Court remanded the case for reconsideration by the local German Tax Court. The local German Tax Court held a hearing on June 12, 2023, and issued a decision in favor of Otis on July 21, 2023. On September 14, 2023, the German tax authorities filed an appeal to the German Federal Tax Court. On August 13, 2024, the German Federal Tax Court rejected the appeal, concluding the litigation in favor of the Company.

As a result of the court's decision, the Company expects to receive a refund of prepaid tax, prepaid interest, overpayment interest, and court fees of approximately €305 million net of tax (approximately $335 million as of September 30, 2024). We expect the refund will be paid to the Company over several quarters, starting in the fourth quarter of 2024 and continuing through the end of 2025, by which time the Company expects to receive substantially all of the refund. The Company has also released the liability associated with the remaining interest of €45 million (approximately $50 million) during the quarter ended September 30, 2024.

Any recoveries related to this matter would be allocated between RTX and the Company pursuant to the terms of the TMA with our former parent, UTC, by way of indemnification payments. Based on its understanding of the facts and contractual provisions as of this date, and taking into account its limited access to information to support the calculation, the Company has estimated the additional tax and interest to be paid by RTX as a result of this recovery to be $194 million and has recorded this amount in its financial statements. The parties are still in process of resolving the scope of the indemnity obligation and the final indemnity amount.

See Note 1, "General" for additional information on the impacts of the litigation and TMA activity to the Condensed Consolidated Financial Statements as of and for the quarter and year ended September 30, 2024.

Asbestos Matters

We have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos. While we have never manufactured any asbestos-containing component parts, and no longer incorporate asbestos in any current products, certain of our historical products have contained components manufactured by third parties incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or were 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 as of and for the periods ended September 30, 2024 and December 31, 2023.

The estimated range of total liabilities to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $11 million to $21 million as of September 30, 2024, and approximately $20 million to $43 million as of December 31, 2023. Since no amount within the range of estimates is more likely to occur than any other, we have recorded the minimum amounts of $11 million and $20 million as of September 30, 2024 and December 31, 2023, respectively, which are principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheets. Amounts are on a pre-tax basis, not discounted, and exclude the Company's legal fees to defend the asbestos claims (which will continue to be expensed as they are incurred). In addition, the Company has an insurance recovery receivable for probable asbestos-related recoveries of approximately $3 million and $5 million as of September 30, 2024 and December 31, 2023, respectively, which are principally included in Other assets on our Condensed Consolidated Balance Sheets.

Other. We have commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the normal course of business. We accrue contingencies based on a range of possible outcomes. If no amount within this range is a better estimate than any other, we accrue the minimum amount. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, we expect that the outcome of such claims, individually or in the aggregate, will not have a material adverse effect on our business, financial condition, cash flows or results of operations.
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As previously disclosed, in certain European countries, claims for overcharges on elevators and escalators related to civil cartel cases have been made, which we have accrued for based on our evaluation of the claims. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, historical settlement experience of these cases has not been material to the business, financial condition, cash flows or results of operations. However, the future outcome of these cases cannot be determined.

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 its subsidiaries and could result in fines, penalties, compensatory or treble damages or non-monetary relief. We do not believe that these matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition.

Refer to Note 17 for information about litigation-related settlement costs recognized in the nine months ended September 30, 2024 for certain legal matters that are outside of the ordinary course of business.

Note 17: Segment Financial Data

Our operations are classified into two operating segments: New Equipment and Service. Through the New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators as well as escalators and moving walkways in the residential and commercial building and infrastructure projects. The Service segment provides maintenance and repair services for both our products and those of other manufacturers, and provides modernization services to upgrade elevators and escalators. The operating segments are generally based on the management structure of the Company, how management allocates resources, assesses performance and makes strategic and operational decisions.

Segment Information. Otis discloses segment operating profit as its measure of segment performance, reconciled to total Otis operating profit. Segment operating profit excludes certain expenses and income that are not allocated to segments (as described below in "Corporate and Unallocated").

Effective in the first quarter of 2024, the measure of segment performance used by Otis' Chief Operating Decision Maker ("CODM") changed and, as a result, Otis' disclosed measure of segment performance (segment operating profit) was updated. The change to segment operating profit aligns with the update to how the CODM assesses performance and allocates resources for the Company's segments, and therefore is our measure of segment profitability in accordance with GAAP under ASC 280, Segment Reporting.

As a result of the change, restructuring costs and other items not allocated to the operating segments are presented as part of Corporate and Unallocated. The financial information presented herein reflects the impact of the measure of segment performance change for all periods presented.

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Segment information for the quarters and nine months ended September 30, 2024 and 2023 are as follows:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Net Sales
New Equipment$1,309 $1,435 $4,010 $4,346 
Service2,239 2,088 6,576 6,243 
Total$3,548 $3,523 $10,586 $10,589 
Operating Performance
New Equipment operating profit$84 $104 $265 $292 
Service operating profit555 518 1,616 1,496 
Total segment operating profit639 622 1,881 1,788 
Corporate and Unallocated
General corporate expenses and other(40)(27)(108)(85)
UpLift restructuring (4)— (11)— 
Other restructuring (5)(21)(29)(36)
UpLift transformation costs(18)(4)(45)(4)
Separation-related adjustments(193)— (177)— 
Litigation-related settlement costs— — (18)— 
Held for sale impairment(18)— (18)— 
Other, net2 1 2 1 
Total company operating profit363 571 1,477 1,664 
Non-service pension cost (benefit)1 — — 1 
Interest expense (income), net(150)39 (79)109 
Net income before income taxes$512 $532 $1,556 $1,554 

Corporate and Unallocated includes adjustments related to the separation of Otis from RTX Corporation (previously United Technologies Corporation, "RTX") (the "Separation"), Litigation-related settlement costs, impairment loss for held for sale net assets, restructuring costs and UpLift transformation costs.

Separation-related adjustments represent net adjustments of amounts due to and from RTX in accordance with the TMA. Separation-related adjustments in the quarter and nine months ended September 30, 2024 represents amounts due to RTX related to a favorable ruling received in August 2024 regarding the German tax litigation. Separation-related adjustments in the nine months ended September 30, 2024 also include a reduction of our contractual indemnity obligation payable to RTX that resulted from the TMA and receipts from RTX in accordance with the TMA. These adjustments are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations during the quarter and nine months ended September 30, 2024. See Note 11, "Income Taxes" and Note 16, "Contingencies" for additional information about the German tax litigation.

Litigation-related settlement costs in the nine months ended September 30, 2024 represent the aggregate amount of settlement costs and increase in loss contingency accruals, excluding legal costs, for certain legal matters that are outside of the ordinary course of business due to the size, complexity and unique facts of these matters.

Impairment loss related to net assets held for sale is recorded in Other expense (income), net in the Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2024. See Note 6, "Business Acquisitions, Dispositions, Goodwill and Intangible Assets" for additional information about the held for sale assets and liabilities.

Refer to Note 12, "Restructuring and Transformation Costs" for more information about restructuring and UpLift transformation costs.

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Total assets are not presented for each segment as they are not presented to, or reviewed by, the Chief Operating Decision Maker.

Geographic Sales. Geographic Net sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. and China, there were no individually significant countries with sales exceeding 10% of Net sales during the quarters and nine months ended September 30, 2024 and 2023.

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
United States Operations$1,058 $1,004 $3,187 $3,015 
International Operations
  China469 596 1,436 1,832 
  Other 2,021 1,923 5,963 5,742 
Total$3,548 $3,523 $10,586 $10,589 

Disaggregated Sales by Type. Segment Net sales disaggregated by product and service type for the quarters and nine months ended September 30, 2024 and 2023 are as follows:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
New Equipment$1,309 $1,435 $4,010 $4,346 
Maintenance and Repair1,821 1,715 5,360 5,116 
Modernization418 373 1,216 1,127 
Total Service2,239 2,088 6,576 6,243 
Total$3,548 $3,523 $10,586 $10,589 

Major Customers. There were no customers that individually accounted for 10% or more of the Company's consolidated Net sales for the quarters and nine months ended September 30, 2024 and 2023.

Note 18: Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which allows ASU 2020-04 to be adopted and applied prospectively to contract modifications made on or before December 31, 2024. We do not expect the adoption of this standard to have a material impact on our Condensed Consolidated Financial Statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early application permitted. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements.

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In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations, which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements, as disclosed in Note 1, "General".

In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Ventures Formations (Subtopic 805-60): Recognition and initial measurement ("ASU 2023-05"), which requires that joint ventures, upon formation, apply a new basis of accounting by initially measuring assets and liabilities at fair value. The amendments in ASU 2023-05 are effective for joint ventures that are formed on or after January 1, 2025. Early adoption is permitted. We are currently evaluating the impact of this standard, however we do not expect it to have a material impact on our Condensed Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. Adoption of this ASU will result in additional disclosure, but will not impact our condensed consolidated financial position, results of operations, or cash flows.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Adoption of this ASU will result in additional disclosure, but will not impact our condensed consolidated financial position, results of operations, or cash flows.

Other new accounting pronouncements issued but not effective until after September 30, 2024 did not and are not expected to have a material impact on our financial position, results of operations or liquidity.

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With respect to the unaudited condensed consolidated financial information of Otis Worldwide Corporation for the quarters and nine months ended September 30, 2024 and 2023, 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 October 31, 2024, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information. PricewaterhouseCoopers has not carried out any significant or additional review procedures 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 Act") for its report on the unaudited condensed consolidated financial information 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 Act.

Report of Independent Registered Public Accounting Firm


To the Board of Directors and Shareholders of Otis Worldwide Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Otis Worldwide Corporation and its subsidiaries (the “Company”) as of September 30, 2024, and the related condensed consolidated statements of operations, of comprehensive income, and of changes in equity for the three-month and nine-month periods ended September 30, 2024 and 2023 and of cash flows for the nine-month periods ended September 30, 2024 and 2023, 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, 2023, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated February 2, 2024, 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, 2023, 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

Hartford, Connecticut
October 31, 2024
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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Business Summary

We are the world’s leading elevator and escalator manufacturing, installation and service company. Our Company is organized into two segments, New Equipment and Service. Through our New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings and infrastructure projects. Our New Equipment customers include real-estate and building developers and general contractors who develop and/or design buildings for residential, commercial, retail or mixed-use activity. We sell our New Equipment directly to customers, as well as through agents and distributors.

Through our Service segment, we perform maintenance and repair services for both our own products and those of other manufacturers and provide modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services to address equipment and component wear and tear and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics to complex upgrades of larger components and sub-systems. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

We serve our customers through a global network of employees. These include sales personnel, field technicians with separate skills in performing installation and service, as well as engineers driving our continued product development and innovation. We function under a centralized operating model whereby a global strategy is set around New Equipment and Service because we seek to grow our maintenance portfolio, in part, through the conversion of new elevator and escalator installations into service contracts. Accordingly, we benefit from an integrated global strategy, which sets priorities and establishes accountability across the full product life cycle.

The current status of significant factors affecting our business environment in 2024 is discussed below. For additional discussion, refer to the "Business Overview" section in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K.

For discussion of Otis’ ESG goals and risks associated therewith, see the discussion under “Environmental, Social and Governance (“ESG”)” in Item 1 and under Item 1A. "Risk Factors" in our 2023 Form 10-K.

UpLift

Announced in July 2023, UpLift is a program with the goal of transforming our operating model. UpLift will include the standardization of our processes and improvement of our supply chain procurement, among other aspects of the program, as well as restructuring actions. We expect UpLift to generate approximately $175 million in annual savings by mid-year 2025, with restructuring and other incremental costs to complete the transformation ("UpLift transformation costs") over that period of at least the same amount.

UpLift costs incurred in the quarters and nine months ended September 30, 2024 and 2023 are as follows:

Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
UpLift restructuring cost$4$—$11$—
UpLift transformation cost184454
Total UpLift costs$22$4$56$4

Total UpLift costs incurred to date are $97 million, including $36 million of restructuring costs and $61 million of transformation costs.

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UpLift restructuring costs are primarily severance costs, and are recorded primarily in Selling, general and administrative in the Condensed Consolidated Statements of Operations. UpLift transformation costs are primarily consulting and incremental personnel costs, and are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

For further details, refer to the discussion on restructuring costs in the "Results of Operations," as well as Note 12 to the Condensed Consolidated Financial Statements.

German Tax Litigation

In August 2024, we received a favorable ruling regarding a German tax litigation. As a result, we recorded income tax benefits of $185 million and related interest income of $200 million, which are included in Income tax expense (benefit), net and Interest expense (income), net, respectively, in the Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2024. Additionally, pursuant to the Tax Matters Agreement ("TMA") with RTX Corporation ("RTX", our former parent), the Company recorded indemnification expense of $194 million for amounts due to RTX resulting from the outcome of the German tax litigation. This expense is included in Other expense (income), net in the Condensed Consolidated Statements of Operations for the quarter and nine months ended September 30, 2024.

For further details, refer to Note 11 and Note 16 to the Condensed Consolidated Financial Statements.

Impact of Global Macroeconomic Developments on Our Company

Global macroeconomic developments have impacted, and continue to impact, aspects of the Company's operations and overall financial performance during the quarters and nine months ended September 30, 2024 and 2023. These macroeconomic developments include, among others, inflationary pressures, high interest rates and tighter credit conditions. These macroeconomic trends could continue to impact our business, including impacts to overall financial performance during the remainder of 2024, as a result of the following, among other things:

•Supplier liquidity, as well as supplier and raw material capacity constraints, delays and related costs;
•Customer demand impacting our new equipment, maintenance and repair, and modernization businesses;
•Customer liquidity constraints and related credit reserves; and
•Cancellations or delays of customer orders.

We currently do not expect any significant impact to our capital and financial resources from these macroeconomic developments, including to our overall liquidity position based on our available cash and cash equivalents and our access to credit facilities and the capital markets.

See the "Liquidity and Financial Condition" section in this Form 10-Q for further detail and Item 1A. "Risk Factors" in our 2023 Form 10-K for macroeconomic risks related to our business.

Risks Associated with Ongoing Conflicts

The ongoing conflict between Russia and Ukraine has resulted in worldwide geopolitical and macroeconomic uncertainty, including volatile commodity markets, foreign exchange fluctuations, supply chain disruptions, increased risk of cyber-security incidents, reputational risk, increased operating costs (including fuel and other input costs), environmental, health and safety risks related to securing and maintaining facilities, additional sanctions and other regulations (including restrictions on the transfer of funds to and from Russia). We do not have operations in Russia.

To the extent possible, we continue to operate our business in Ukraine, which represented less than 1% of our revenue and operating profit for the nine months ended September 30, 2024 and year ended December 31, 2023.

Additionally, we do not have operations or material net sales in Israel or Gaza. Although we have operations in the Middle East and transport products through the Red Sea, we currently do not expect the recent conflicts in that region to have a material impact on our business.

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We cannot predict how the events described above will evolve. Depending on the ultimate outcomes of these conflicts, which remain uncertain, they could heighten certain risks disclosed in Item 1A. "Risk Factors" in our 2023 Form 10-K, including but not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; cyber-incidents; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

CRITICAL ACCOUNTING ESTIMATES

Preparation of our Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the Condensed Consolidated Financial Statements, or are the most sensitive to change due to outside factors, are discussed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates" included in our 2023 Form 10-K. Except as disclosed in Note 18 to our Condensed Consolidated Financial Statements in this Form 10-Q, pertaining to adoption of new accounting pronouncements, there have been no material changes in these policies.

RESULTS OF OPERATIONS

Net Sales
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Net sales$3,548$3,523$10,586 $10,589 
Percentage change year-over-year0.7 %— %

The factors contributing to the total percentage change year-over-year in total Net sales for the quarter and nine months ended September 30, 2024 are as follows:

Components of Net sales change:Quarter Ended September 30, 2024Nine Months Ended September 30, 2024
Organic volume 1.2 %1.2 %
Foreign currency translation(0.8)%(1.4)%
Acquisitions and divestitures, net0.3 %0.2 %
Total % change0.7 %— %

The Organic volume increase of 1.2% for the quarter ended September 30, 2024 was driven by an increase of 7.7% in Service, partially offset by a decrease of (8.2)% in New Equipment. The Organic volume increase of 1.2% for the nine months ended September 30, 2024 was driven by an increase of 6.4% in Service, partially offset by a decrease of (6.3)% in New Equipment.

See the "Segment Review" section for a discussion of Net sales by segment.

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Cost of Products and Services Sold
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Total cost of products and services sold$2,470$2,477$7,401$7,464
Percentage change year-over-year(0.3)%(0.8)%

The factors contributing to the percentage change year-over-year for the quarter and nine months ended September 30, 2024 in total cost of products and services sold are as follows:

Components of Cost of Products and Services Sold change:Quarter Ended September 30, 2024Nine Months Ended September 30, 2024
Organic volume 0.7 %0.5 %
Foreign currency translation(0.9)%(1.4)%
Acquisitions and divestitures, net and other(0.1)%0.1 %
Total % change(0.3)%(0.8)%

The organic increase in total cost of products and services sold for the quarter and nine months ended September 30, 2024 was primarily driven by the organic sales changes noted above. Productivity and lower commodity prices, primarily steel, were partially offset by inflationary pressures, including annual wage increases and higher Service-related material costs.

Gross Margin
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Gross margin$1,078 $1,046 $3,185 $3,125 
Gross margin percentage30.4 %29.7 %30.1 %29.5 %

Gross margin percentage increased 70 and 60 basis points for the quarter and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, due to Service sales growing faster than New Equipment sales, the benefits from productivity and lower commodity prices, partially offset by the inflationary pressures described above.

See the "Segment Review" section below for discussion of operating results by segment.

Research and Development
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Research and development$40 $36 $115 $107 
Percentage of Net sales1.1 %1.0 %1.1 %1.0 %

Research and development was relatively flat for the quarter and nine months ended September 30, 2024, when compared to the same periods in 2023.

Selling, General and Administrative
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Selling, general and administrative$455 $452 $1,366 $1,386 
Percentage of Net sales12.8 %12.8 %12.9 %13.1 %

Selling, general and administrative expenses increased $3 million for the quarter ended September 30, 2024, when compared to the same period in 2023, driven by annual wage increases, higher other employment-related costs, and higher credit loss reserves, partially offset by savings resulting from UpLift, lower restructuring costs and favorable foreign exchange impacts.
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Selling, general and administrative expenses decreased $(20) million for the nine months ended September 30, 2024, when compared to the same period in 2023, driven by savings resulting from UpLift, cost containment actions and favorable foreign exchange impacts, partially offset by annual wage increases.

Selling, general and administrative expenses as a percentage of Net sales were flat and decreased (20) basis points for the quarter and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023.

Restructuring Costs
 Nine Months Ended September 30,
(dollars in millions)20242023
UpLift restructuring $11$—
Other restructuring 2936
Total restructuring costs$40$36

We initiate restructuring actions to keep our cost structure competitive. Charges generally arise from severance related to workforce reductions, and facility exit and lease termination costs associated with the consolidation of office and manufacturing operations. We continue to closely monitor the economic environment and may undertake further restructuring actions to keep our cost structure aligned with the demands of the prevailing market conditions.

There were $11 million of UpLift restructuring costs for the nine months ended September 30, 2024. We also incurred $45 million of UpLift transformation costs in the nine months ended September 30, 2024, primarily consulting and incremental personnel costs, which are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

Other restructuring costs were $29 million for the nine months ended September 30, 2024 and included $17 million of costs related to 2024 actions and $12 million of costs related to 2023 actions.

Most of the expected charges will require cash payments, which we have funded and expect to continue to fund with cash generated from operations. The table below presents approximate cash outflows related to the restructuring actions during the nine months ended September 30, 2024, and the expected cash payments to complete the actions announced:

(dollars in millions)UpLift ActionsOther ActionsTotal Restructuring
Cash outflows during the nine months ended September 30, 2024$20 $25 $45 
Expected cash payments remaining to complete actions announced22 58 80 

The approved UpLift restructuring actions are expected to generate approximately $55 million in annual recurring savings by 2025, primarily in Selling, general and administrative expenses, and of which approximately $26 million was realized during the nine months ended September 30, 2024.

For other restructuring actions, we generally expect to achieve annual recurring savings within the two-year period subsequent to initiating the actions, including $12 million for the 2024 actions and $42 million for the 2023 actions, split evenly in Cost of Products and Services Sold and in Selling, general and administrative expenses. Approximately $34 million of savings was realized for the 2024 and 2023 actions during the nine months ended September 30, 2024.

For additional discussion of restructuring, see Note 12 to the Condensed Consolidated Financial Statements.

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Other Income (Expense), Net
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Other income (expense), net$(220)$13$(227)$32

The changes in Other income (expense), net, of $(233) million and $(259) million for the quarter and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, were primarily driven by Separation-related adjustments of $193 million and $177 million, respectively, UpLift transformation costs of $18 million and $45 million, respectively, $18 million of impairment loss related to net assets held for sale and foreign currency mark-to-market adjustments. The nine months ended September 30, 2024 was also impacted by non-recurring litigation-related settlement costs, including $18 million in the second quarter of 2024.

For additional discussion of the Separation-related adjustments, litigation-related settlement costs and held for sale impairment, see Note 17 to the Condensed Consolidated Financial Statements. For additional discussion of the restructuring and UpLift transformation costs, see the Note 12 to the Condensed Consolidated Financial Statements.

Interest Expense (Income), Net
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Interest expense (income), net$(150)$39$(79)$109

The changes in Interest expense (income), net of $(189) million and $(188) million for the quarter and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, were primarily driven by $200 million related to a favorable ruling received in August 2024 regarding a tax litigation in Germany, partially offset by higher interest expense related to the $750 million unsecured, unsubordinated debt issued in August 2023. The nine months ended September 30, 2024 was also impacted by interest reserve adjustments related to non-recurring tax items, when compared to the same period in 2023.

The average interest rate on our long-term debt for the quarters and nine months ended September 30, 2024 and 2023, was 2.5% and 2.1%, respectively. For additional discussion of borrowings, see Note 7 to the Condensed Consolidated Financial Statements.

Income Taxes
 Quarter Ended September 30,Nine Months Ended September 30,
 2024202320242023
Effective tax rate(8.8)%25.8 %11.2 %25.7 %

The decrease in the effective tax rate for the quarter and nine months ended September 30, 2024 is primarily due to recognition of estimated tax benefits arising as a result of the resolution of the German tax litigation. The effective tax rate for the nine months ended September 30, 2024 was also impacted by the reduction in a deferred tax liability related to the mitigation of future repatriation costs.

We anticipate some variability in the tax rate quarter to quarter from potential discrete items.

For additional discussion of income taxes and the effective income tax rate, see Note 11 to the Condensed Consolidated Financial Statements.

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Noncontrolling Interest in Subsidiaries' Earnings and Net Income Attributable to Otis Worldwide Corporation

 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
Noncontrolling interest in subsidiaries' earnings$17$19$73$71
Net income attributable to Otis Worldwide Corporation$540$376$1,308$1,083

Noncontrolling interest in subsidiaries' earnings were relatively flat for the quarter and nine months ended September 30, 2024, compared to the same periods in 2023. Other than our acquisition of the noncontrolling shares of our subsidiary in Japan during the second quarter of 2024, ownership interest in the underlying non-wholly owned subsidiaries has remained generally consistent year-over-year. See Note 1 to the Condensed Consolidated Financial Statements for further discussion of the noncontrolling interest acquisition.

Net income attributable to Otis Worldwide Corporation increased for the quarter and nine months ended September 30, 2024, compared to the same periods in 2023, due to a lower effective tax rate and lower interest expense, partially offset by lower operating profit (including the impact of foreign exchange rates).
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Segment Review

During the quarter ended March 31, 2024, we updated our measure of segment performance (segment operating profit) used to evaluate financial performance of the operating segments and allocate resources. The financial information presented herein reflects the impact of the measure of segment performance changes for all periods presented. See Note 17 to the Condensed Consolidated Financial Statements for additional information.

Summary performance for our operating segments, reconciled to total operating profit, for the quarters ended September 30, 2024 and 2023 was as follows:

Net SalesOperating ProfitOperating Profit Margin
(dollars in millions)202420232024202320242023
New Equipment$1,309 $1,435 $84 $104 6.4%7.2%
Service2,239 2,088 555 518 24.8%24.8%
Total segment$3,548 $3,523 639 622 18.0%17.7%
Corporate and Unallocated
General corporate expenses and other(40)(27)
UpLift restructuring (4)— 
Other restructuring (5)(21)
UpLift transformation costs(18)(4)
Separation-related adjustments(193)— 
Held for sale impairment(18)— 
Other, net2 1 
Consolidated Operating Profit$363 $571 10.2%16.2%

Summary performance for our operating segments, reconciled to total operating profit, for the nine months ended September 30, 2024 and 2023 was as follows:

Net SalesOperating ProfitOperating Profit Margin
(dollars in millions)202420232024202320242023
New Equipment$4,010 $4,346 $265 $292 6.6%6.7%
Service6,576 6,243 1,616 1,496 24.6%24.0%
Total segment$10,586 $10,589 $1,881 $1,788 17.8%16.9%
Corporate and Unallocated
General corporate expenses and other(108)(85)
UpLift restructuring (11)— 
Other restructuring (29)(36)
UpLift transformation costs (45)(4)
Separation-related adjustments(177)— 
Litigation-related settlement costs(18)— 
Held for sale impairment(18)— 
Other, net2 1 
Consolidated Operating Profit$1,477$1,66414.0%15.7%

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New Equipment

The New Equipment segment designs, manufactures, sells and installs a wide range of passenger and freight elevators, as well as escalators and moving walkways in residential and commercial buildings and infrastructure projects. Our New Equipment customers include real-estate and building developers and general contractors that develop and/or design buildings for residential, infrastructure, commercial, retail or mixed-use activity. We sell directly to customers as well as through agents and distributors. We also sell New Equipment to government agencies to support infrastructure projects, such as airports, railways or metros.

Summary performance for New Equipment for the quarters and nine months ended September 30, 2024 and 2023 was as follows:

 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)20242023ChangeChange20242023ChangeChange
Net sales$1,309$1,435$(126)(8.8)%$4,010$4,346$(336)(7.7)%
Cost of sales1,0881,188(100)(8.4)%3,3173,613(296)(8.2)%
221247(26)(10.5)%693733(40)(5.5)%
Operating expenses137143(6)(4.2)%428441(13)(2.9)%
Operating profit$84$104$(20)(19.2)%$265$292$(27)(9.2)%
Operating profit margin6.4 %7.2 %6.6 %6.7 %

Summary analysis of the Net sales change for New Equipment for the quarter and nine months ended September 30, 2024 compared with the same periods in 2023 was as follows:

Components of Net sales change:
Quarter Ended September 30, 2024
Nine Months Ended September 30, 2024
Organic volume (8.2)%(6.3)%
Foreign currency translation(0.7)%(1.5)%
Acquisitions and divestitures, net and other0.1 %0.1 %
Total % change(8.8)%(7.7)%

Quarter Ended September 30, 2024

Net sales

The organic sales decrease of (8.2)% was primarily driven by a greater than 20% decline in China, partially offset by low single-digit organic sales growth in Americas and Asia Pacific.

Operating profit

New Equipment operating profit decreased $(20) million. The impacts of lower volume and unfavorable regional and product mix were partially offset by favorable price, productivity, and commodity tailwinds. Operating margin decreased 80 basis points.

Nine Months Ended September 30, 2024

Net sales

The organic sales decrease of (6.3)% was driven by a greater than 20% decline in China, partially offset by mid single-digit organic sales growth in Americas and Asia Pacific.

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Operating profit

New Equipment operating profit decreased $(27) million including foreign exchange headwinds of $(7) million. The impacts of lower volume and unfavorable regional and product mix were partially offset by favorable price, productivity, and commodity tailwinds. Operating margin decreased 10 basis points.

Service

The Service segment performs maintenance and repair services for both our products, and those of other manufacturers, and provides modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services that address equipment and component wear and tear, and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics, to complex upgrades of larger components and sub-systems. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

Summary performance for Service for the quarters and nine months ended September 30, 2024 and 2023 was as follows:

 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)20242023ChangeChange20242023ChangeChange
Net sales$2,239$2,088$151 7.2 %$6,576$6,243$333 5.3 %
Cost of sales1,3791,28099 7.7 %4,0703,840230 6.0 %
86080852 6.4 %2,5062,403103 4.3 %
Operating expenses30529015 5.2 %890907(17)(1.9)%
Operating profit$555$518$37 7.1 %$1,616$1,496$120 8.0 %
Operating profit margin24.8 %24.8 %24.6 %24.0 %

Summary analysis of Service Net sales change for the quarter and nine months ended September 30, 2024 compared with the same periods in 2023 was as follows:

Components of Net sales change:
Quarter Ended September 30, 2024
Nine Months Ended September 30, 2024
Organic volume 7.7 %6.4 %
Foreign currency translation(0.8)%(1.3)%
Acquisitions and divestitures, net0.3 %0.2 %
Total % change7.2 %5.3 %

Quarter Ended September 30, 2024

Net sales

The organic sales increase of 7.7% is due to organic sales increases in maintenance and repair of 6.4% and in modernization of 13.7%.

Components of Net sales change:Maintenance and RepairModernization
Organic volume 6.4 %13.7 %
Foreign currency translation(0.7)%(1.1)%
Acquisitions and divestitures, net0.4 %— %
Total % change6.1 %12.6 %

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Operating profit

Service operating profit increased $37 million including foreign exchange headwinds of ($3) million. Higher volume, improved pricing on maintenance contracts, and productivity were partially offset by inflationary pressures, including annual wage increases and higher material costs. Operating margin was flat.

Nine Months Ended September 30, 2024

Net sales

The organic sales increase of 6.4% is due to organic sales increases in maintenance and repair of 5.7% and in modernization of 9.7%.

Components of Net sales change:Maintenance and RepairModernization
Organic volume5.7 %9.7 %
Foreign currency translation(1.3)%(1.8)%
Acquisitions and divestitures, net0.3 %0.1 %
Total % change4.7 %8.0 %
Operating profit

Service operating profit increased $120 million including foreign exchange headwinds of ($18) million. Higher volume, improved pricing on maintenance contracts, and productivity were partially offset by inflationary pressures, including annual wage increases and higher material costs. Operating margin increased 60 basis points.

Corporate and Unallocated
Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2024202320242023
General corporate expenses and other$(40)$(27)$(108)$(85)
UpLift restructuring (4)— (11)— 
Other restructuring (5)(21)(29)(36)
UpLift transformation costs(18)(4)(45)(4)
Separation-related adjustments(193)— (177)— 
Litigation-related settlement costs— — (18)— 
Held for sale impairment(18)— (18)— 
Other, net2 1 2 1 
Total Corporate and Unallocated$(276)$(51)$(404)$(124)

General corporate expenses and other for the quarter and nine months ended September 30, 2024 increased $13 million and $23 million, respectively, compared to the same periods in 2023, primarily due to the impact of foreign currency mark-to-market adjustments and higher corporate costs.

For additional discussion of the Separation-related adjustments, litigation-related settlement costs and held for sale impairment, see Note 17 to the Condensed Consolidated Financial Statements. For additional discussion of the restructuring and UpLift transformation costs, see the Note 12 to the Condensed Consolidated Financial Statements.

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LIQUIDITY AND FINANCIAL CONDITION

We expect to fund our ongoing operating, investing and financing requirements mainly through cash flows from operations, available liquidity through cash on hand and available bank lines of credit and access to capital markets.

As of September 30, 2024, we had cash and cash equivalents of $827 million, of which approximately 95% was held by the Company's foreign subsidiaries. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct our business and the cost-effectiveness with which those funds can be accessed. On occasion, we are required to maintain cash deposits with certain banks with respect to contractual obligations related to acquisitions and divestitures or other legal obligations. As of September 30, 2024 and December 31, 2023, the amount of such restricted cash was approximately $5 million and $6 million, respectively.

From time-to-time we may need to access the capital markets to obtain financing. We may incur indebtedness or issue equity as needed. Although we believe that the arrangements in place as of September 30, 2024 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 could be impacted by many factors, including (1) our credit ratings or absence of a credit rating, (2) the liquidity of the overall capital markets and (3) the current state of the economy, including tighter credit conditions. There can be no assurance that we will continue to have access to the capital markets on terms acceptable to us.

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

(dollars in millions)September 30, 2024December 31, 2023
Cash and cash equivalents$827 $1,274 
Total debt7,263 6,898 
Net debt (total debt less cash and cash equivalents)6,436 5,624 
Total equity(4,835)(4,855)
Total capitalization (total debt plus total equity)2,428 2,043 
Net capitalization (total debt plus total equity less cash and cash equivalents)1,601 769 
Total debt to total capitalization299 %338 %
Net debt to net capitalization402 %731 %

The Company does not intend to reinvest certain undistributed earnings of our international subsidiaries that have been previously taxed in the U.S. For the remainder of the Company’s undistributed international earnings, unless tax effective to repatriate, we will continue to permanently reinvest these earnings.

Borrowings and Lines of Credit

As of September 30, 2024, we had a revolving credit agreement with various banks providing for a $1.5 billion unsecured, unsubordinated five-year revolving credit facility. As of September 30, 2024, there were no borrowings under the revolving credit agreement. The undrawn portion of the revolving credit agreement serves as a backstop for the issuance of commercial paper.

There was $316 million of commercial paper outstanding as of September 30, 2024. For additional discussion of borrowings, see Note 7 to the Condensed Consolidated Financial Statements.

Share Repurchase Program

On December 1, 2022, our Board of Directors approved a share repurchase program for up to $2.0 billion of Common Stock, of which approximately $400 million was remaining as of September 30, 2024. Under this program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs or under plans complying with rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

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Discussion of Cash Flows

The following table reflects the major categories of cash flows. For additional details, see the Condensed Consolidated Statements of Cash Flows.
 Nine Months Ended September 30,
(dollars in millions)20242023
Net cash flows provided by (used in):
Operating activities$873 $1,030 
Investing activities(210)(132)
Financing activities(1,102)(418)
Effect of foreign exchange rate changes on cash and cash equivalents(9)(34)
Net increase (decrease) in cash and cash equivalents and restricted cash$(448)$446 

Operating activities

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 decrease in net cash provided by operating activities was primarily driven by working capital balances during the periods, including a larger decrease in Accounts payable in the nine months ended September 30, 2024 compared to the decrease the same period in 2023 due to the timing of payments to suppliers, as well as the timing of income tax payments and the related income tax expense in the nine months ended September 30, 2024 compared to the same period in 2023. Additionally, Separation-related and UpLift-related net payments were approximately $49 million and $54 million, respectively, in the nine months ended September 30, 2024, compared to net payments of approximately $25 million and $2 million, respectively, in the same period in 2023. These were partially offset by a smaller increase in Accounts receivable, net, in the nine months ended September 30, 2024 compared to the increase the same period in 2023 due to the timing of billings and collections.

During the nine months ended September 30, 2024, net cash provided by operating activities was $873 million. Net income of $1.4 billion includes $185 million of income taxes benefits, $200 million of interest income and $194 million of indemnification expense resulting from the outcome of the German tax litigation during the third quarter of 2024, none of which resulted in cash flow activity during the nine months ended September 30, 2024. Net income was also partially offset by a decrease in Accounts payable due to the timing of payments to suppliers, an increase in Accounts receivable, net, due to the timing of billings and collections, a decrease in Accrued liabilities and an increase in Other current assets due to the timing of payments, including employee-related benefits, income taxes and supplier payments. For additional discussion of the German tax litigation, see Note 1 and Note 16 to the Condensed Consolidated Financial Statements.

During the nine months ended September 30, 2023, net cash provided by operating activities was $1.0 billion. The primary drivers of the inflow related to $1.2 billion of net income and changes in Contract assets and liabilities, net, due to the timing of billings on contracts compared to the progression on current contracts. These were partially offset by an increase in Accounts receivable, net, due to the timing of billings.

Investing activities

Cash flows from investing activities primarily represent inflows and outflows associated with long-term assets, including capital expenditures, investments in businesses and securities, proceeds from the sale of fixed assets and the settlement of derivative contracts.

During the nine months ended September 30, 2024, net cash used in investing activities was $210 million. The primary drivers of the outflow related to $87 million of capital expenditures, $70 million of acquisitions of businesses and intangible assets and $47 million of net cash payments from the settlement of derivative instruments.

During the nine months ended September 30, 2023, net cash used in investing activities was $132 million. The primary drivers of the outflow related to $96 million of capital expenditures, $27 million of acquisitions of businesses and intangible assets and $21 million of net cash payments from the settlement of derivative instruments.
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As discussed in Note 13 to the Condensed Consolidated Financial Statements, we enter into derivative instruments for risk management purposes. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We use derivative instruments, including forward contracts and options to manage certain foreign currency and commodity price exposures.

Financing activities

Cash flows from financing activities primarily represent inflows and outflows associated with equity and borrowings. Primary activities include short-term and long-term borrowing activity, paying dividends to shareholders, the repurchase of our Common Stock and dividends or other payments to noncontrolling interests.

During the nine months ended September 30, 2024, net cash used in financing activities was $1.1 billion. The primary drivers of the outflow were the repurchases of our Common Stock of $800 million, dividends paid on our Common Stock and to noncontrolling shareholders of $450 million and $81 million, respectively, and acquisitions of noncontrolling interest shares of $75 million, including approximately $70 million for our subsidiary in Japan. These were partially offset by short term borrowings of $325 million.

During the nine months ended September 30, 2023, net cash used in financing activities was $418 million. The primary drivers of the outflow were repurchases of our Common Stock of $575 million, dividends paid on our Common Stock and to noncontrolling shareholders of $400 million and $76 million, respectively, and net repayments of short-term borrowings of $90 million. These were partially offset by $741 million of net proceeds from the issuance of long-term debt, a portion of which was used to fund the repayment at maturity of the €500 million 0.000% notes due November 12, 2023.
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Guaranteed Securities: Summarized Financial Information

The following information is provided in compliance with Rule 13-01 of Regulation S-X under the Securities Exchange Act of 1934, as amended, with respect to the 2026 Euro Notes and the 2031 Euro Notes (together the "Euro Notes"), in each case issued by Highland Holdings S.à r.l. (“Highland”), a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg ("Luxembourg"). The Euro Notes are fully and unconditionally guaranteed by Otis Worldwide Corporation ("OWC") on an unsecured, unsubordinated basis. Refer to "Note 9: Borrowings and Lines of Credit" in Item 8 in our 2023 Form 10-K, for additional information.

Highland is a wholly-owned, indirect consolidated subsidiary of OWC. OWC is incorporated under the laws of Delaware. As a company incorporated and existing under the laws of Luxembourg, and with its registered office in Luxembourg, Highland is subject to Luxembourg insolvency and bankruptcy laws in the event any insolvency proceedings are initiated against it. Luxembourg bankruptcy law is significantly different from, and may be less favorable to creditors than, the bankruptcy law in effect in the United States and may make it more difficult for creditors to recover the amount they could expect to recover in liquidation under U.S. insolvency and bankruptcy rules.

The Euro Notes are not guaranteed by any of OWC's or Highland's subsidiaries (all OWC subsidiaries other than Highland are referred to herein as "non-guarantor subsidiaries"). Holders of the Euro Notes will have a direct claim only against Highland, as issuer, and OWC, as guarantor.

The following tables set forth the summarized financial information as of and for the nine months ended September 30, 2024 and as of December 31, 2023 of each of OWC and Highland on a standalone basis, which does not include the consolidated impact of the assets, liabilities, and financial results of their subsidiaries except as noted on the tables below, nor does it include any impact of intercompany eliminations as there were no intercompany transactions between OWC and Highland. This summarized financial information is not intended to present the financial position or results of operations of OWC or Highland in accordance with U.S. GAAP.

(dollars in millions)Nine Months Ended September 30, 2024
OWC Statement of Operations - Standalone and Unconsolidated
Revenue$— 
Cost of revenue— 
Operating expenses10 
Income from consolidated subsidiaries49 
Income (loss) from operations excluding income from consolidated subsidiaries(228)
Net income (loss) excluding income from consolidated subsidiaries(330)

(dollars in millions)September 30, 2024December 31, 2023
OWC Balance Sheet - Standalone and Unconsolidated
Current assets (intercompany receivables from non-guarantor subsidiaries)$— $— 
Current assets (excluding intercompany receivables from non-guarantor subsidiaries)106 63 
Noncurrent assets (investments in consolidated subsidiaries)1,241 1,236 
Noncurrent assets (excluding investments in consolidated subsidiaries)37 43 
Current liabilities (intercompany payables to non-guarantor subsidiaries)4,825 3,753 
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries)1,962 119 
Noncurrent liabilities (intercompany payables to non-guarantor subsidiaries)— — 
Noncurrent liabilities (excluding intercompany payables to non-guarantor subsidiaries)4,510 5,880 

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(dollars in millions)Nine Months Ended September 30, 2024
Highland Statement of Operations - Standalone and Unconsolidated
Revenue$— 
Cost of revenue— 
Operating expenses— 
Income from consolidated subsidiaries365 
Income (loss) from operations excluding income from consolidated subsidiaries— 
Net income (loss) excluding income from consolidated subsidiaries(187)

(dollars in millions)September 30, 2024December 31, 2023
Highland Balance Sheet - Standalone and Unconsolidated
Current assets (intercompany receivables from non-guarantor subsidiaries)$33 $75 
Current assets (excluding intercompany receivables from non-guarantor subsidiaries)— — 
Noncurrent assets (investments in consolidated subsidiaries)15,711 15,711 
Noncurrent assets (intercompany receivables from non-guarantor subsidiaries)496 518 
Noncurrent assets (excluding investments in consolidated subsidiaries)— — 
Current liabilities (intercompany payables to non-guarantor subsidiaries)— — 
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries)6 1 
Noncurrent liabilities (intercompany payables to non-guarantor subsidiaries)3,721 3,467 
Noncurrent liabilities (excluding intercompany payables to non-guarantor subsidiaries)1,226 1,199 

Off-Balance Sheet Arrangements and Contractual Obligations

Item 5 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Form 10-K discloses our off-balance sheet arrangements and contractual obligations. As of September 30, 2024, there have been no material changes to these off-balance sheet arrangements and contractual obligations, outside the ordinary course of business except for those disclosed in "Note 7, Borrowings and Lines of Credit" within Item 1 of this Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the quarter and nine months ended September 30, 2024. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our 2023 Form 10-K.

Item 4.    Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation under the supervision and with the participation of our management, including the President and Chief Executive Officer ("CEO"), the Executive Vice President and Chief Financial Officer ("CFO") and the Senior Vice President and Chief Accounting Officer ("CAO"), of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. 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, our CFO and our CAO have concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to 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, our CFO and our CAO, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Cautionary Note Concerning Factors That May Affect Future Results

This Form 10-Q contains 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 Otis’ 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,” “medium-term,” “near-term,” “confident,” “goals” and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, dividends, share repurchases, tax rates, R&D spend, restructuring actions (including UpLift), credit ratings, net indebtedness and other measures of financial performance or potential future plans, strategies or transactions, or statements that relate to climate change and our intent to achieve certain ESG targets or goals, including operational impacts and costs associated therewith, 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 those statements, Otis claims the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation:

•the effect of economic conditions in the industries and markets in which Otis and its businesses operate and any changes therein, including financial market conditions, fluctuations in commodity prices, and other inflationary pressures, interest rates and foreign currency exchange rates, levels of end market demand in construction, pandemic health issues, natural disasters, whether as a result of climate change or otherwise, and the financial condition of Otis’ customers and suppliers;
•the effect of changes in political conditions in the U.S., including in connection with the results of the 2024 election or otherwise, and other countries in which Otis and its businesses operate, including the effects of the conflict between Russia and Ukraine, the conflicts in the Middle East, and tensions between the U.S. and China, on general market conditions, commodity costs, global trade policies and related sanctions and export controls, and currency exchange rates in the near term and beyond;
•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 or costs thereof, including credit market conditions and Otis’ capital structure;
•the timing and scope of future repurchases of Otis’ common stock ("Common Stock"), which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash;
•fluctuations in prices and delays and disruption in delivery of materials and services from suppliers, whether as a result of changes in general economic conditions, geopolitical conflicts or otherwise;
•cost reduction or containment actions, restructuring costs and related savings and other consequences thereof, including with respect to UpLift;
•new business and investment opportunities;
•the outcome of legal proceedings, investigations and other contingencies;
•pension plan assumptions and future contributions;
•the impact of the negotiation of collective bargaining agreements and labor disputes and labor inflation in the markets in which Otis and its businesses operate globally;
•the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S., including in connection with the results of the 2024 election, and other countries in which Otis and its businesses operate;
•the ability of Otis to retain and hire key personnel;
•the scope, nature, impact or timing of acquisition and divestiture activity, the integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs;
•the determination by the Internal Revenue Service (the "IRS") and other tax authorities that the distribution or certain related transactions in connection with the Separation should be treated as taxable transactions; and
•our obligations and our disputes that have or may hereafter arise under the agreements we entered into with RTX and Carrier in connection with the Separation.

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These and other factors are more fully discussed in the "Notes to Condensed Consolidated Financial Statements" under the headings "Note 1: General" and "Note 16: Contingent Liabilities" and in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q and in our 2023 Form 10-K under the headings "Item 1. Business," "Item 1A. Risk Factors," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 8. Financial Statements and Supplementary Data" under the headings "Note 1: Business Overview" and "Note 21: Contingent Liabilities" and elsewhere in each of these filings. 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 disclosed from time to time in our other filings with the SEC.
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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 16, "Contingent Liabilities to the Condensed Consolidated Financial Statements" for discussion regarding material legal proceedings.

Except as otherwise noted above, there have been no material developments in legal proceedings. For previously reported information about legal proceedings refer to "Part II - Other Information, Item 1. Legal Proceedings" in our Forms 10-Q for the quarters ended June 30, 2024 and March 31, 2024 and Item 3 "Legal Proceedings" in our 2023 Form 10-K.

Item 1A. Risk Factors

Additional information regarding risk factors can be found under "Recent Developments" in the "Business Overview" and "Cautionary Note Concerning Factors That May Affect Future Results" sections of Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

Except as otherwise noted above, there have been no material changes in the Company's risk factors from those disclosed in Item 1A "Risk Factors," in our 2023 Form 10-K

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 quarter ended September 30, 2024 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.

2024Total Number of Shares Purchased
(thousands)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of a Publicly Announced Program
(thousands)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(dollars in millions)
July 1 - July 311,282$96.701,282$476
August 1 - August 3181193.72811$400
September 1 - September 30———$400
Total2,093$95.552,093

(1)     Average price paid per share includes any broker commissions associated with the repurchases.

On December 1, 2022, our Board of Directors ("the Board") approved a share repurchase program for up to $2.0 billion of Common Stock. As of September 30, 2024, the maximum dollar value of shares that may yet be purchased under this current program was approximately $400 million. Under this program, shares may be purchased on the open market, in privately negotiated transactions, under accelerated share repurchase programs or under plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act.

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Item 5. Other Information

Insider Adoption or Termination of Trading Arrangements

During the fiscal quarter ended September 30, 2024, except for Ms. Marks, our Chair, President and Chief Executive Officer, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K. On July 30, 2024, Ms. Marks adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Under the trading plan, the shares received by Ms. Marks upon the vesting of the performance stock units (PSUs) granted to her by the Company on February 3, 2022 (after giving effect to tax withholding and a previous election to defer 50% of the PSU shares earned) and 24,000 shares that Ms. Marks previously received upon the vesting of other awards she received will be sold if a limit price is achieved. In addition, the trading plan provides for Ms. Marks to exercise and then sell, if limit prices are achieved, shares received (after giving effect to tax withholding) upon the exercise of 101,096 stock appreciation rights granted to her in 2018 and 191,799 stock appreciation rights granted to her in 2019. The number of shares that could be sold in respect of the stock appreciation rights will depend on the Company’s stock price and applicable tax rates. The trading plan will terminate on February 10, 2025.

The number of shares that may be sold by Ms. Marks upon vesting of the PSUs will depend upon the Company’s achievement of the underlying financial performance goals and the application of a multiplier factor based on our relative total shareowner return over the 2022-2024 performance period, and can range from 0 to 200% of the sum of the target PSUs granted plus additional PSUs credited for dividend equivalents. Ms. Marks was granted 59,404 “target” PSUs on February 3, 2022. However, because Ms. Marks previously elected to defer receipt of 50% of the PSUs to be earned under our PSU Deferral Plan, the number of shares delivered to her at vesting and available for sale will be accordingly reduced. Assuming the limit price required is achieved, we estimate, based on our projected performance against the underlying financial goals, our relative total shareholder return through September 30, 2024, current tax withholding rates, future crediting of dividend equivalents assuming our current dividend remains unchanged and a stock price of $103.94 (the closing price of our stock on September 30, 2024), and Ms. Marks election to defer 50% of the PSUs, that 13,960 shares could be sold under the trading plan in respect of the PSUs.
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Item 6. Exhibits

Exhibit
Number		Exhibit Description
10.1
10.2
15
31.1
31.2
31.3
32
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*
101.SCHXBRL Taxonomy Extension Schema Document.*
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.*
101.LABXBRL Taxonomy Extension Label Linkbase Document.*
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.*
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

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 Statements of Operations for the quarters and nine months ended September 30, 2024 and 2023, (ii) Condensed Consolidated Statements of Comprehensive Income for the quarters and nine months ended September 30, 2024 and 2023, (iii) Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023, (v) Condensed Consolidated Statements of Changes in Equity for the quarters and nine months ended September 30, 2024 and 2023 and (vi) Notes to Condensed Consolidated Financial Statements.
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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.

OTIS WORLDWIDE CORPORATION
(Registrant)
Dated:October 31, 2024by:/s/ CRISTINA MÉNDEZ
Cristina Méndez
Executive Vice President and Chief Financial Officer
(on behalf of the Registrant and as the Registrant's Principal Financial Officer)
Dated:October 31, 2024by:/s/ MICHAEL P. RYAN
Michael P. Ryan
Senior Vice President and Chief Accounting Officer
(on behalf of the Registrant and as the Registrant's Principal Accounting Officer)

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