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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 ____________________________________ 
FORM 10-Q
____________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission file number 001-39221
____________________________________ 

logo_otis (2).jpg
OTIS WORLDWIDE CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________ 
Delaware 83-3789412
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
One Carrier Place, Farmington, Connecticut 06032
(Address of principal executive offices, including zip code)

(860) 674-3000
(Registrant's telephone number, including area code)
____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange
on which registered
Common Stock ($0.01 par value)OTISNew York Stock Exchange
0.000% Notes due 2023OTIS/23New York Stock Exchange
0.318% Notes due 2026OTIS/26New York Stock Exchange
0.934% Notes due 2031OTIS/31New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý.    No  ¨.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý.    No  ¨.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerýAccelerated Filer¨
Non-accelerated Filer¨Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  .    No  ý.

As of July 14, 2023 there were 411,744,999 shares of Common Stock outstanding.

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OTIS WORLDWIDE CORPORATION
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended June 30, 2023
 
 Page

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

Item 1.    Financial Statements

OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 

 Quarter Ended June 30,
(dollars in millions, except per share amounts; shares in millions)20232022
Net sales:
Product sales$1,604 $1,534 
Service sales2,116 1,954 
3,720 3,488 
Costs and expenses:
Cost of products sold1,328 1,291 
Cost of services sold1,309 1,214 
Research and development36 38 
Selling, general and administrative479 439 
3,152 2,982 
Other income (expense), net12 (19)
Operating profit580 487 
Non-service pension cost (benefit)1 1 
Interest expense (income), net37 35 
Net income before income taxes542 451 
Income tax expense135 103 
Net income407 348 
Less: Noncontrolling interest in subsidiaries' earnings31 27 
Net income attributable to Otis Worldwide Corporation$376 $321 
Earnings per share (Note 2):
Basic$0.91 $0.76 
Diluted$0.90 $0.76 
Weighted average number of shares outstanding:
     Basic shares412.7421.4
     Diluted shares416.0424.2

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 

 Six Months Ended June 30,
(dollars in millions, except per share amounts; shares in millions)20232022
Net sales:
Product sales$2,911 $2,956 
Service sales4,155 3,946 
7,066 6,902 
Costs and expenses:
Cost of products sold2,426 2,481 
Cost of services sold2,561 2,432 
Research and development71 75 
Selling, general and administrative934 898 
5,992 5,886 
Other income (expense), net19 (3)
Operating profit1,093 1,013 
Non-service pension cost (benefit)1 1 
Interest expense (income), net70 72 
Net income before income taxes1,022 940 
Income tax expense263 239 
Net income759 701 
Less: Noncontrolling interest in subsidiaries' earnings52 69 
Net income attributable to Otis Worldwide Corporation$707 $632 
Earnings per share (Note 2):
Basic$1.71 $1.49 
Diluted$1.70 $1.48 
Weighted average number of shares outstanding:
Basic shares413.5422.8
Diluted shares416.9425.9

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Quarter Ended June 30,Six Months Ended June 30,
(dollars in millions)2023202220232022
Net income$407 $348 $759 $701 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(70)(95)(104)(95)
Pension and postretirement benefit plan adjustments 2  4 
Change in unrealized cash flow hedging(6) (3) 
Other comprehensive income (loss), net of tax(76)(93)(107)(91)
Comprehensive income (loss), net of tax331 255 652 610 
Less: Comprehensive (income) loss attributable to noncontrolling interest(18)14 (42)37 
Comprehensive income attributable to Otis Worldwide Corporation$313 $269 $610 $647 

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(dollars in millions)June 30, 2023December 31, 2022
Assets
Cash and cash equivalents$1,219 $1,189 
Accounts receivable (net of allowance for expected credit losses of $143 and $152)
3,497 3,357 
Contract assets735 664 
Inventories640 617 
Other current assets326 316 
Total Current Assets6,417 6,143 
Future income tax benefits284 285 
Fixed assets (net of accumulated depreciation of $1,205 and $1,151)
715 719 
Operating lease right-of-use assets438 449 
Intangible assets, net355 369 
Goodwill1,579 1,567 
Other assets347 287 
Total Assets$10,135 $9,819 
Liabilities and Equity (Deficit)
Short-term borrowings and current portion of long-term debt$746 $670 
Accounts payable1,744 1,717 
Accrued liabilities1,779 1,794 
Contract liabilities2,889 2,662 
Total Current Liabilities7,158 6,843 
Long-term debt6,117 6,098 
Future pension and postretirement benefit obligations398 392 
Operating lease liabilities308 315 
Future income tax obligations 278 279 
Other long-term liabilities501 556 
Total Liabilities14,760 14,483 
Commitments and contingent liabilities (Note 16)
Redeemable noncontrolling interest126 135 
Shareholders' Equity (Deficit):
Common Stock and additional paid-in capital183 162 
Treasury Stock(1,927)(1,575)
Accumulated deficit(2,419)(2,865)
Accumulated other comprehensive income (loss)(689)(592)
Total Shareholders' Equity (Deficit)(4,852)(4,870)
Noncontrolling interest101 71 
Total Equity (Deficit)(4,751)(4,799)
Total Liabilities and Equity (Deficit)$10,135 $9,819 

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

Common Stock and Additional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Shareholders'
(Deficit) Equity
Noncontrolling InterestTotal (Deficit) EquityRedeemable Noncontrolling Interest
(dollars in millions, except per share amounts)
Quarter Ended June 30, 2023
Balance as of March 31, 2023$172 $(1,750)$(2,653)$(626)$(4,857)$90 $(4,767)$129 
Net income  376  376 29 405 2 
Other comprehensive income (loss), net of tax   (63)(63)(7)(70)(6)
Stock-based compensation and Common Stock issued under employee plans11  (1) 10  10  
Cash dividends declared ($0.34 per common share)
  (141) (141) (141) 
Repurchase of Common Shares (177)  (177) (177) 
Dividends attributable to noncontrolling interest     (8)(8)(1)
Acquisitions, disposals and other changes    — (3)(3)2 
Balance as of June 30, 2023$183 $(1,927)$(2,419)$(689)$(4,852)$101 $(4,751)$126 
Quarter Ended June 30, 2022
Balance as of March 31, 2022$121 $(925)$(3,529)$(696)$(5,029)$107 $(4,922)$1,572 
Net income— — 321 — 321 25 346 2 
Other comprehensive income (loss), net of tax, and foreign currency reclassifications (Note 10)— — — (52)(52)(7)(59)(34)
Stock-based compensation and Common Stock issued under employee plans14 — (1)— 13 — 13 — 
Cash dividends declared ($0.29 per common share)
— — (122)— (122)— (122)— 
Repurchase of Common Shares— (200)— — (200)— (200)— 
Dividends attributable to noncontrolling interest— — — — — (9)(9)(1)
Acquisitions, disposals and other changes(14)— 86 — 72 (7)65 (1,403)
Balance as of June 30, 2022$121 $(1,125)$(3,245)$(748)$(4,997)$109 $(4,888)$136 

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

Common Stock and Additional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Shareholders'
(Deficit) Equity
Noncontrolling InterestTotal (Deficit) EquityRedeemable Noncontrolling Interest
(dollars in millions, except per share amounts)
Six Months Ended June 30, 2023
Balance as of December 31, 2022$162 $(1,575)$(2,865)$(592)$(4,870)$71 $(4,799)$135 
Net income  707  707 47 754 5 
Other comprehensive income (loss), net of tax   (97)(97)(5)(102)(5)
Stock-based compensation and Common Stock issued under employee plans21  (1) 20  20  
Common Stock issued under employee plans        
Cash dividends declared ($0.63 per common share)
  (261) (261) (261) 
Repurchase of Common Shares (352)  (352) (352) 
Dividends attributable to noncontrolling interest     (9)(9)(9)
Acquisitions, disposals and other changes  1  1 (3)(2) 
Balance as of June 30, 2023$183 $(1,927)$(2,419)$(689)$(4,852)$101 $(4,751)$126 
Six Months Ended June 30, 2022
Balance as of December 31, 2021$119 $(725)$(2,256)$(763)$(3,625)$481 $(3,144)$160 
Net income— — 632 — 632 58 690 11 
Other comprehensive income (loss), net of tax, and foreign currency reclassifications (Note 10)— — — 15 15 (8)7 (98)
Stock-based compensation and Common Stock issued under employee plans19 — (1)— 18 — 18 — 
Cash dividends declared ($0.53 per common share)
— — (224)— (224)— (224)— 
Repurchase of Common Shares— (400)— — (400)— (400)— 
Dividends attributable to noncontrolling interest— — — — — (12)(12)(11)
Reclassification of noncontrolling interest to redeemable noncontrolling interest— — (1,482)— (1,482)(403)(1,885)1,476 
Acquisitions, disposals and other changes(17)— 86 — 69 (7)62 (1,402)
Balance as of June 30, 2022$121 $(1,125)$(3,245)$(748)$(4,997)$109 $(4,888)$136 


See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended June 30,
(dollars in millions)20232022
Operating Activities:
Net income$759 $701 
Adjustments to reconcile net income to net cash flows provided by operating activities, net of acquisitions and dispositions:
Depreciation and amortization99 97 
Deferred income tax expense (benefit)(16)6 
Stock compensation cost34 28 
Change in operating assets and liabilities:
Accounts receivable, net(204)(104)
Contract assets and liabilities, current154 134 
Inventories(21)(39)
Other current assets(38) 
Accounts payable43 135 
Accrued liabilities(85)(140)
Pension contributions(24)(21)
Other operating activities, net23 60 
Net cash flows provided by operating activities724 857 
Investing Activities:
Capital expenditures(62)(57)
Acquisitions of businesses and intangible assets, net of cash (Note 6)(20)(28)
Proceeds from the sale of (investments in) marketable securities (7)
Receipts (payments) on settlements of derivative contracts(13)78 
Other investing activities, net4 4 
Net cash flows provided by (used in) investing activities(91)(10)
Financing Activities:
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)57 57 
Repayment of long-term debt (500)
Dividends paid on Common Stock(261)(224)
Repurchases of Common Stock(350)(400)
Dividends paid to noncontrolling interest(15)(41)
Acquisition of Zardoya Otis shares  (1,802)
Other financing activities, net(16)(27)
Net cash flows provided by (used in) financing activities(585)(2,937)
Effect of exchange rate changes on cash and cash equivalents(16)(122)
Net increase (decrease) in cash, cash equivalents and restricted cash32 (2,212)
Cash, cash equivalents and restricted cash, beginning of year1,195 3,477 
Cash, cash equivalents and restricted cash, end of period1,227 1,265 
Less: Restricted cash8 13 
Less: Cash and cash equivalents held for sale included in Other current assets (Note 6) 34 
Cash and cash equivalents, end of period$1,219 $1,218 
See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: General

The Condensed Consolidated Financial Statements as of June 30, 2023 and for the quarters and six months ended June 30, 2023 and 2022 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States ("U.S."). The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for fiscal year 2022 ("2022 Form 10-K" or "Form 10-K").

Unless the context otherwise requires, references to "Otis," "we," "us," "our" and "the Company" refer to Otis Worldwide Corporation and its subsidiaries.

There have been no changes to the Company's significant accounting policies described in the Company's 2022 Form 10-K that have a material impact on the Company's Condensed Consolidated Financial Statements and the related notes. Certain amounts presented in the prior period have been reclassified to conform to the current period presentation, which are immaterial.

Use of Estimates. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates.

We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available to us and the unknown future impacts of macroeconomic developments, including inflationary pressures, higher interest rates and tighter credit conditions, as of June 30, 2023 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, financial assets and revenue recognition. While there was not a material impact to our Condensed Consolidated Financial Statements as of June 30, 2023 and for the quarters and six months ended June 30, 2023 and 2022, respectively, resulting from our assessments of these matters, future assessment of our expectations of the magnitude and duration of these macroeconomic developments, as well as other factors, could result in material impacts to our Condensed Consolidated Financial Statements in future reporting periods.

We also assessed certain accounting matters as they relate to the ongoing conflict between Russia and Ukraine, including, but not limited to our allowance for credit losses, the carrying value of long-lived assets, revenue recognition and the classification of assets. There was not a material impact to our Condensed Consolidated Financial Statements as of June 30, 2023 and for the quarters and six months ended June 30, 2023 and 2022, respectively, resulting from our assessment of these matters. We continue to assess the impact on our results of operations, financial position and overall performance as the situation develops and any broader implications it may have on the global economy.

Supplier Finance Programs. On January 1, 2023, we adopted ASU No. 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations that 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.

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Certain Otis subsidiaries participate in supplier finance programs, under which we agree to pay third-party financial institutions the stated amounts of confirmed invoices from suppliers on the original maturity dates of the invoices, while the participating suppliers generally have the ability to sell, or otherwise pledge as collateral, their receivables from the Company to the participating financial institutions. Our obligations to suppliers, including the amounts due and scheduled payment dates, are not impacted by the suppliers' decisions to sell their receivables to the financial institutions, or otherwise pledge their receivables as collateral, under these arrangements. The Company is not a party to the arrangements between the suppliers and the financial institutions, and the Company's payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices. Based on the applicable supplier agreements, the maturity dates of these supplier invoices can range between 30 and 105 days from the invoice date.

The outstanding obligations confirmed by the Company as valid to the financial institutions under our supplier finance programs were $577 million and $564 million as of June 30, 2023 and December 31, 2022, respectively. These obligations are included in Accounts payable in the Condensed Consolidated Balance Sheets, and all activity related to the obligations is presented within operating activities on the Consolidated Statements of Cash Flows.

The Company or the finance institutions may terminate the agreements with advanced notice. Otis has pledged no assets in connection with its supplier finance programs.

Note 2: Earnings per Share

 Quarter Ended June 30,Six Months Ended June 30,
(dollars in millions, except per share amounts; shares in millions)2023202220232022
Net income attributable to Otis Worldwide Corporation$376 $321 $707 $632 
Impact of redeemable noncontrolling interest    
Net income attributable to common shareholders$376 $321 $707 $632 
Basic weighted average number of shares outstanding412.7 421.4 413.5 422.8 
Stock awards and equity units (share equivalent)3.3 2.8 3.4 3.1 
Diluted weighted average number of shares outstanding416.0 424.2 416.9 425.9 
Earnings Per Share of Common Stock:
Basic$0.91$0.76$1.71$1.49
Diluted$0.90$0.76$1.70$1.48

The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the Common Stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards' assumed proceeds exceed the average market price of the common shares during the period. There were 1.1 million and 2.7 million of anti-dilutive stock awards excluded from the computation for the quarters ended June 30, 2023 and 2022, respectively, and 1.1 million and 2.5 million for the six months ended June 30, 2023 and 2022, respectively.

Note 3: Revenue Recognition

We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606: Revenue from Contracts with Customers.

Contract Assets and Liabilities. Contract assets reflect revenue recognized in advance of customer billing. Contract liabilities are recognized when a customer pays consideration, or we have a right to receive an amount of unconditional consideration, in advance of the satisfaction of performance obligations under the contract. We typically receive progress payments from our customers as we perform our work over time.

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Total Contract assets and Contract liabilities as of June 30, 2023 and December 31, 2022 are as follows:

(dollars in millions)June 30, 2023December 31, 2022
Contract assets, current$735 $664 
Total contract assets735 664 
Contract liabilities, current2,889 2,662 
Contract liabilities, non-current (included within Other long-term liabilities)45 52 
Total contract liabilities 2,934 2,714 
Net contract liabilities$2,199 $2,050 

Contract assets increased by $71 million during the six months ended June 30, 2023 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $220 million during the six months ended June 30, 2023 primarily due to contract billings in excess of revenue earned.

In the six months ended June 30, 2023 and 2022, we recognized revenue of $1.5 billion and $1.6 billion related to contract liabilities as of January 1, 2023 and 2022, respectively.

Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of June 30, 2023, our total RPO was $18.3 billion. Of the total RPO as of June 30, 2023, 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 June 30, 2023 and December 31, 2022:

(dollars in millions)June 30, 2023December 31, 2022
Trade receivables$3,353 $3,231 
Unbilled receivables129 103 
Miscellaneous receivables91 91 
Customer financing notes receivable67 84 
3,640 3,509 
Less: allowance for expected credit losses143 152 
Accounts receivable, net$3,497 $3,357 

The changes in allowance for expected credit losses related to Accounts receivable, net for the six months ended June 30, 2023 and 2022, respectively, are as follows:

Six Months Ended June 30,
(dollars in millions)20232022
Balance as of January 1$152 $175 
Provision for expected credit losses18 4 
Write-offs charged against the allowance for expected credit losses(25)(13)
Foreign exchange and other(2) 
Balance as of June 30$143 $166 

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Note 5: Inventories

(dollars in millions)June 30, 2023December 31, 2022
Raw materials and work-in-process$168 $166 
Finished goods472 451 
Total$640 $617 

Raw materials, work-in-process and finished goods are net of valuation write-downs of $95 million and $96 million as of June 30, 2023 and December 31, 2022, respectively.

Note 6: Business Acquisitions, Goodwill and Intangible Assets

Business Acquisitions. Our acquisitions of businesses and intangible assets, net of cash, totaled $20 million and $28 million in the six months ended June 30, 2023 and 2022, respectively. The acquisitions consisted of a number of acquisitions primarily in our Service segment. Transaction costs incurred were not considered significant.

Goodwill. Changes in our Goodwill balances during the six months ended June 30, 2023 were as follows:

(dollars in millions)Balance as of December 31, 2022Goodwill Resulting
from Business Combinations
Foreign Currency
Translation 
and Other
Balance as of
June 30, 2023
New Equipment$292 $ $1 $293 
Service1,275 5 6 1,286 
Total$1,567 $5 $7 $1,579 

Intangible Assets. Intangible assets cost and accumulated amortization were $2,052 million and $1,697 million, respectively, as of June 30, 2023, and $2,026 million and $1,657 million, respectively, as of December 31, 2022.

Amortization of intangible assets for the quarter and six months ended June 30, 2023 was $17 million and $34 million, respectively, compared to $18 million and $37 million for the same periods in 2022. Excluding the impact of currency translation adjustments, there were no other significant changes in our Intangible assets during the quarters and six months ended June 30, 2023 and 2022.

Held For Sale Assets and Liabilities. As of June 30, 2023 and December 31, 2022, assets held for sale were $11 million and $9 million, respectively, and are included in Other current assets in the Condensed Consolidated Balance Sheets.

In June 2022, we entered into an agreement to sell our business in Russia to a third party. As of June 30, 2022, our operations in Russia were classified as assets and liabilities held for sale, and the Company recorded an impairment loss of $18 million related to the net assets in Other expense (income), net in the Condensed Consolidated Statements of Operations for the quarter and six months ended June 30, 2022.

Note 7: Borrowings and Lines of Credit

(dollars in millions)June 30, 2023December 31, 2022
Commercial paper$156 $94 
Other borrowings44 45 
Total short-term borrowings$200 $139 

Commercial Paper. As of June 30, 2023, there were $156 million in borrowings outstanding under the Company's $1.5 billion commercial paper programs, including €30 million of Euro denominated commercial paper. 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.

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For details regarding the Company's short-term borrowing activity in 2022, refer to Note 10 of the Company's audited consolidated financial statements and notes thereto included in our 2022 Form 10-K.

Long-term debt. On March 10, 2023, the Company entered into a new credit agreement ("Credit Agreement") with various banks providing for a $1.5 billion unsecured, unsubordinated 5-year revolving credit facility, with an interest rate on US Dollar denominated borrowings at Otis' option of the Term Secured Overnight Financing Rate ("SOFR") plus 0.10% or a base rate, and an interest rate on Euro denominated borrowings at Otis' option of the EURIBO rate or a daily simple Euro Short Term Rate ("ESTR"), plus, in each case, an applicable margin. The applicable margin initially is 1.25% for Term SOFR rate, EURIBO rate and daily simple ESTR rate borrowings, and 0.25% for base rate borrowings, and can fluctuate determined by reference to Otis' public debt ratings, as specified in the Credit Agreement. As of June 30, 2023, there were no borrowings under the Credit Agreement. The undrawn portion of the Credit Agreement serves as a backstop for the issuance of commercial paper. On March 10, 2023, we also terminated all commitments outstanding under the previous existing credit agreement, which was scheduled to expire on April 3, 2025.

As of June 30, 2023, 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)June 30, 2023December 31, 2022
0.000% notes due 2023 (€500 million principal value)
$546 $531 
2.056% notes due 2025
1,300 1,300 
0.37% notes due 2026 (¥21.5 billion principal value)
150 163 
0.318% notes due 2026 (€600 million principal value)
655 638 
2.293% notes due 2027
500 500 
2.565% notes due 2030
1,500 1,500 
0.934% notes due 2031 (€500 million principal value)
546 531 
3.112% notes due 2040
750 750 
3.362% notes due 2050
750 750 
Other (including finance leases)4 8 
Total principal long-term debt6,701 6,671 
Other (discounts and debt issuance costs)(38)(42)
Total long-term debt6,663 6,629 
Less: current portion546 531 
Long-term debt, net of current portion$6,117 $6,098 

We may redeem the notes at our option pursuant to certain terms. For additional details regarding the Company's debt activity in 2022, refer to Note 10 of the Company's audited consolidated financial statements and notes thereto included in our 2022 Form 10-K.

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 six months ended June 30, 2023 and 2022 reflects the following:

Quarter Ended June 30,Six Months Ended June 30,
(dollars in millions)2023202220232022
Debt issuance costs amortization$2 $2 $4 $5 
Total interest expense on external debt34 35 67 71 

The unamortized debt issuance costs as of June 30, 2023 and December 31, 2022 were $38 million and $42 million, respectively.

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The weighted average maturity of our long-term debt as of June 30, 2023 is approximately 8.1 years. The weighted average interest expense rate on our borrowings outstanding as of June 30, 2023 and December 31, 2022 was as follows:

June 30, 2023December 31, 2022
Short-term borrowings5.0%4.7%
Total long-term debt2.0%2.0%

The weighted average interest expense rate on our borrowings during the quarters and six months ended June 30, 2023 and 2022 was as follows:

Quarter Ended June 30,Six Months Ended June 30,
2023202220232022
Short-term borrowings4.9%1.1%4.9%0.7%
Total long-term debt2.0%2.0%2.0%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 June 30,Six Months Ended June 30,
(dollars in millions)2023202220232022
Defined benefit plans$10 $9 $24 $21 
Defined contribution plans15 15 34 35 
Multi-employer pension and postretirement plans41 38 75 61 

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

 Quarter Ended June 30,Six Months Ended June 30,
(dollars in millions)2023202220232022
Service cost$8 $10 $15 $20 
Interest cost8 5 16 9 
Expected return on plan assets(8)(7)(16)(13)
Recognized actuarial net loss 2  5 
Total net periodic benefit cost$8 $10 $15 $21 

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 six months ended June 30, 2023 and 2022, respectively.

Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of June 30, 2023, approximately 23 million shares remain available for awards under the Plan.

Stock-based Compensation Expense

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.

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