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What changed in Carrier Global's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Carrier Global's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+215 added−227 removedSource: 10-K (2026-02-05) vs 10-K (2025-02-11)

Top changes in Carrier Global's 2025 10-K

215 paragraphs added · 227 removed · 161 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBusiness Strategy Our vision is to be a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to our customers. To achieve our vision, our core business strategy is to create innovative, differentiated products and solutions to provide a fully-integrated customer experience in order to be our customer’s preferred provider.
Biggest changeTo achieve our vision, our core business strategy is to create innovative, differentiated products and solutions to provide a fully-integrated customer experience in order to be our customer’s preferred provider. We believe our strategy is supported by significant favorable secular trends, our industry-leading brands and track record of innovation.
Through our performance-driven culture, we anticipate creating long-term shareowner value by investing strategically to strengthen our product position in homes, buildings and across the cold chain in order to drive profitable growth.
Through our performance-driven culture, we anticipate creating long-term shareowner value by investing strategically to strengthen our product position in homes, buildings and across the cold chain to drive profitable growth.
In addition, our Lynx digital platform, developed in collaboration with Amazon Web Services (“AWS”), allows customers to leverage data to enhance visibility, resiliency, agility and efficiency in the cold chain to reduce loss of cargo, lower operations costs and support real-time decisions. 6 Table of Contents Expand Portfolio with Energy Management Solutions As power grids and transportation infrastructure shift from fossil fuels to renewables, we will continue to position ourselves as a leader in innovative solutions that reduce emissions and energy consumption and promote power grid stability.
In addition, our Lynx digital platform, developed in collaboration with Amazon Web Services (“AWS”), allows customers to leverage data to enhance visibility, resiliency, agility and efficiency in the cold chain to reduce loss of cargo, lower operations costs and support real-time decisions. 6 Table of Contents Expand Portfolio with Systems Solutions As power grids and transportation infrastructure shift from fossil fuels to renewables, we will continue to position ourselves a s a leader in innovative solutions that reduce emissions and energy consumption and promote power grid stability.
Our portfolio includes environmentally friendly refrigerants, high temperature heat pumps for use in industrial and commercial applications, natural refrigerant heat pumps for residential buildings and a connected ecosystem for homes including solar PV, batteries and a differentiated digital platform, all supported by extensive service and aftermarket offerings.
Our portfolio includes environmentally friendly refrigerants, high temperature heat pumps for use in industrial and commercial applications, natural refrigerant heat pumps for residential buildings and a connected ecosystem for homes including solar photovoltaic, batteries and a differentiated digital platform, all supported by extensive service and aftermarket offerings.
In addition, we entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship among us, UTC and Otis following the Separation and Distribution. As of December 31, 2024, only certain portions of the Tax Matters Agreement ("TMA") remain in effect.
In addition, we entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship among us, UTC and Otis following the Separation and Distribution. As of December 31, 2025, only certain portions of the Tax Matters Agreement ("TMA") remain in effect.
Intellectual Property We maintain a broad portfolio of patents, trademarks, copyrights, trade secrets, licenses and franchises related to our business to protect our research and development investments and to maintain our competitive advantages. We hold approximately 12,000 active patents and pending patent applications worldwide.
Intellectual Property We maintain a broad portfolio of patents, trademarks, copyrights, trade secrets, licenses and franchises related to our business to protect our research and development investments and to maintain our competitive advantages. We hold approximately 11,000 active patents and pending patent applications worldwide.
Sales by Segment * Net Sales by Region Sales by Type * Segment sales include inter-company sales. 4 Table of Contents Separation from United Technologies Corporation On April 3, 2020 (the "Distribution Date"), United Technologies Corporation, ("UTC"), since renamed RTX Corporation ("Raytheon Technologies Corporation" or "RTX") completed the spin-off of Carrier into an independent publicly traded company (the "Separation") through a pro rata distribution (the "Distribution") on a one-for-one basis of all of the outstanding shares of common stock of Carrier to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution.
Sales by Segment Sales by Type 4 Table of Contents Separation from United Technologies Corporation On April 3, 2020 (the "Distribution Date"), United Technologies Corporation, ("UTC"), since renamed RTX Corporation ("Raytheon Technologies Corporation" or "RTX") completed the spin-off of Carrier into an independent publicly traded company (the "Separation") through a pro rata distribution (the "Distribution") on a one-for-one basis of all of the outstanding shares of common stock of Carrier to UTC shareowners who held shares of UTC common stock as of the close of business on March 19, 2020, the record date of the Distribution.
Our total rewards philosophy is designed to align the compensation of our employees with individual and company performance and to provide the appropriate market-competitive incentives to attract, retain and motivate employees to achieve superior results.
Our total rewards philosophy is designed to align the compensation of our employees with individual and company performance and to provide market-competitive total rewards to attract, retain and motivate employees to achieve superior results.
Leading People The Carrier Way sets expectations for people leaders and how we build the best teams. Carrier Excellence is our continuous improvement operating system, a mindset that focuses the organization on enhancing efficiency, and delivering high-quality outcomes across all facets of our business. Our employees collaborate as one team across more than 50 countries.
Leading People The Carrier Way sets expectations for people leaders and how we build the best teams. Carrier Excellence is our continuous improvement operating system, a mindset that focuses the organization on problem-solving, enhancing efficiency, and delivering high-quality outcomes across all facets of our business. Our employees collaborate as one team across more than 52 countries.
ITEM 1. BUSINESS General Carrier Global Corporation ("we" or "our" or the "Company") is a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to our customers.
ITEM 1. BUSINESS General Carrier Global Corporation ("we" or "our" or the "Company") is a global leader in intelligent climate and energy solutions, focused on providing differentiated, digitally enabled lifecycle solutions to our customers.
We maintain an Internet website at www.corporate.carrier.com .
We maintain an Internet website at www.carrier.com .
For 2024, our total recordable incident rate ("TRIR"), based upon the number of employee injuries per 200,000 hours worked, was 0.32 and our lost time incident rate ("LTIR") was 0.15. Our global well-being programs support employees’ physical, mental and financial health, offering flexible benefits, mental health resources, hybrid-work and financial planning tools.
For 2025, our total recordable incident rate ("TRIR"), based upon the number of employee injuries per 200,000 hours worked, was 0.35 and our lost time incident rate ("LTIR") was 0.13. Our global well-being programs support employees’ physical, mental and financial health, offering flexible benefits, mental health resources, hybrid-work and financial planning tools.
In Europe, approximately 16,200 employees are represented by a European Works Council and, at national and local levels, we inform and consult with 49 local works councils and with unions representing employees at approximately 40 sites.
In Europe, approximately 16,500 employees are represented by a European Works Council and, at national and local levels, we inform and consult with 42 local works councils and with unions representing employees at approximately 40 sites.
Our solutions range from residential home energy management to sustainable solutions for commercial and industrial buildings to optimized low noise and low gas emission transport solutions. With the addition of the VCS Business on January 2, 2024, we are well positioned to provide complete energy solutions globally.
Our solutions range from residential home energy management to sustainable solutions for commercial and industrial buildings to optimized low noise and low gas emission transport solutions. With the integration of the VCS Business, we believe we are well-positioned to provide complete energy solutions globally.
This new business model is also expected to provide a digital connection between the end-customers and Carrier, providing us with opportunities to offer services and aftermarket parts and components over the life of a product. For the year ended December 31, 2024, our net sales were $22.5 billion and our operating profit was $2.6 billion.
This new business model is also expected to enhance the digital connection between the end-customers and Carrier, providing us with opportunities to offer services and aftermarket parts and components over the life of the product. For the year ended December 31, 2025, our net sales were $21.7 billion and our operating profit was $2.2 billion.
We believe our business segments are well positioned to benefit from favorable secular trends, including the mega-trends of urbanization, population growth and demographic shifts, food security and safety, digitalization, global connectivity and energy efficiency. Coupled with our industry-leading brands and track record of innovation, we continue to provide market-leading solutions for our customers.
We believe our business segments are well positioned to benefit from favorable secular trends, including the mega-trends of urbanization, population growth and demographic shifts, food security and safety, electrification, increasing demand for climate control and accelerated digitalization. Coupled with our industry-leading brands and track record of innovation, we continue to provide market-leading solutions for our customers.
We develop and deploy best-in-class programs and practices, provide enriching career opportunities, listen to employee feedback and always challenge ourselves to do better. As of December 31, 2024, we had approximately 48,000 employees worldwide, of which 35% are located in the Americas, 36% are located in EMEA and 29% are located in Asia Pacific.
We develop and deploy best-in-class programs and practices, provide enriching career opportunities, listen to employee feedback and always challenge ourselves to do better. As of December 31, 2025, we had approximately 47,000 employees worldwide, of which 34% are located in the Americas, 36% are located in Europe and 30% are located in Asia Pacific, Middle East & Africa.
As of December 31, 2024, in the U.S., 90% of our approximately 4,000 production and maintenance employees were covered under six collective bargaining agreements with expiration dates ranging from 2025 to 2027.
As of December 31, 2025, in the U.S., 78% of our approximately 3,800 production and maintenance employees were covered under six collective bargaining agreements with expiration dates ranging from 2026 to 2029.
Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold that offer innovative heating, ventilating and air conditioning ("HVAC"), refrigeration and cold chain transportation solutions to help make the world safer and more comfortable. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.
Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold, among others, that offer innovative heating, cooling and cold chain solutions to enhance the lives we live and the world we share. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.
Portfolio Transformation In 2023, we began the journey to further simplify our company and accelerate our business strategy. Our actions transformed our business portfolio in an effort to establish us as a pure-play, global leader in intelligent climate and energy solutions.
Our actions transformed our business portfolio in an effort to establish us as a pure-play, global leader in intelligent climate and energy solutions.
These products, in addition to the markets they serve, provide future service opportunities including replacement components, preventative and on-demand contractual maintenance and repair, digital monitoring and modifications/upgrades. The Refrigeration segment provides products, services and monitoring for reliable transport and preservation of food, medicine and other perishable cargo.
These products and controls, services and systems, in addition to the markets they serve, provide future service opportunities including replacement components, preventative and on-demand contractual maintenance and repair, digital monitoring and modifications/upgrades. The Climate Solutions Transportation segment provides climate and energy solutions for customers globally.
We believe that our greater focus on breakthrough innovation, electrification, energy-efficient solutions, the use of environmentally friendly refrigerants and connected ecosystems will further strengthen our global leadership position in our end-markets and provide responsible solutions for our customers.
We believe that our greater focus on breakthrough innovation, electrification, energy-efficient solutions, the use of environmentally friendly refrigerants and connected ecosystems will further strengthen our global leadership position in our end-markets and provide responsible solutions for our customers. 5 Table of Contents During 2024, we completed several activities designed to simplify our business portfolio, transforming us into a pure-play climate and energy solutions provider.
Business Segments We globally manage our business operations through two segments: HVAC and Refrigeration. Each respective segment's major products, services and distribution methods are as follows: The HVAC segment provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of our customers while enhancing building performance, health and energy efficiency.
Each respective segment's major products, services and distribution methods are as follows: The Climate Solutions Americas, Climate Solutions Europe and Climate Solutions Asia Pacific, Middle East & Africa segments provide products and controls, services, and system solutions to meet the heating, cooling and ventilation needs of our customers while enhancing building performance, health and energy efficiency on a regional basis.
Our net sales for 2024 were derived from the Americas (52%), Europe, Middle East and Africa ("EMEA") (31%) and Asia-Pacific (17%). Our international operations, including U.S. export sales, represented approximately 50% of our net sales for 2024. During the same period, new equipment comprised 75% and parts and service comprised 25% of our net sales.
Our international operations, including U.S. export sales, represented approximately 52% of our net sales for 2025. During the same period, new equipment comprised 72% and parts and service comprised 28% of our net sales.
As a result, rapid changes in legislation, regulations and government policies affect our operations and business in the countries, regions and localities in which we operate and sell our products.
As a result, rapid changes in legislation, regulations and government policies affect our operations and business in the countries, regions and localities in which we operate and sell our products. While international frameworks like the Paris Agreement continue to shape climate policies abroad, the U.S. withdrawal from the accord creates a divergent regulatory environment.
We hold direct ownership interests in approximately 55 joint ventures, the financial results of which are accounted for by the equity method of accounting or the cost basis of accounting, of which 97% of such investments are in our HVAC segment.
We hold direct ownership interests in approximately 58 joint ventures, the financial results of which are accounted for by the equity method of accounting or the cost basis of accounting, of which 52% relates to Climate Solutions Americas and 38% relates to Climate Solutions Asia Pacific, Middle East & Africa.
Such changes, which can render our products and technologies non-compliant, involve refrigerants, noise levels, product and fire safety, hydrofluorocarbon emissions, fluorinated gases, hazardous substances and electric and electronic equipment waste.
The resulting differences in international mandates, coupled with varying U.S. federal and local regulations aimed at reducing fossil fuel use, have the potential to impact our products and service offerings. Such changes, which can render our products and technologies non-compliant, involve refrigerants, noise levels, product and fire safety, hydrofluorocarbon emissions, fluorinated gases, hazardous substances and electric and electronic equipment waste.
Products and solutions are sold directly to building contractors and owners and indirectly through joint ventures, independent sales representatives, distributors, wholesalers, dealers and retail outlets. Our established brands include Carrier, Viessmann, Toshiba, Automated Logic, Bryant, CIAT, Day & Night, Heil, NORESCO and Riello which offer an innovative and complete portfolio of products that provide numerous solutions for our customers.
Our established brands include Carrier, Viessmann, Toshiba, Automated Logic, Bryant, CIAT, Day & Night, Heil, and NORESCO which offer innovative solutions and a complete portfolio of products to our customers.
Products and services are sold under established brand names, including Carrier Transicold and Sensitech. We provide customers the flexibility to select solutions from a very broad range of technologies including fossil fuel applications and electric solutions to best adhere to their objectives and preferences as well as regulatory requirements.
We provide customers the flexibility to select solutions from a very broad range of technologies, including fossil fuel applications and electric solutions, to best adhere to their objectives and preferences as well as regulatory requirements. In addition, our focus on digitalization and innovation is expanding our offering of service and aftermarket solutions, including on-demand and subscription-based monitoring of customer cargo.
In addition, our focus on digitalization and innovation is expanding our offering of service and aftermarket solutions, including on-demand and subscription-based monitoring of customer cargo. Through the lifecycle of the product, we also offer modifications and upgrades to the current installed base, improving energy efficiency, noise or other customer requirements.
Through the lifecycle of the product, we also offer modifications and upgrades to the current installed base, improving energy efficiency, noise or other customer requirements. Portfolio Transformation In 2023, we began the journey to further simplify our company and accelerate our business strategy.
Products and services include air conditioners, heating systems, heat pumps, building automation systems, aftermarket components, repair and maintenance services and rentals as well as modernization and upgrades through the product lifecycle. Our products and services cover a wide range of customers, including in the residential, commercial, education, healthcare, technology, retail, hospitality, data center, and infrastructure markets, among others.
Products and controls, services, and systems include air conditioners, heat pumps, heating systems, home and building energy management systems, aftermarket components, repair and maintenance services and rentals as well as modernization and upgrades through the product lifecycle.
Products include trucks, trailers, shipping containers and intermodal applications to meet customer needs for both ground transport and ocean freight, while services include maintenance, repair, and monitoring. Products and services are sold directly to transportation companies and indirectly through joint ventures, independent sales representatives, distributors, wholesalers and dealers.
Our products, services, systems and monitoring solutions offer reliable transport and preservation of food, medicine and other perishable cargo. Products include trucks, trailers, shipping containers and intermodal applications to meet customer needs for both ground transport and ocean freight, while services include maintenance, repair, and monitoring.
We measure the Pulse of our workforce three times per year through company-wide employee surveys to help us understand how employees feel about working at Carrier and what we can do to improve their experience.
We measure employee engagement through three company-wide Pulse surveys each year, which assess employee sentiment related to company priorities, leadership practices, and inclusion, and what we can do to improve the overall employee experience.
On April 25, 2023, we announced that we entered into a Share Purchase Agreement (the “Agreement”) to acquire the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (“Viessmann”), a privately-held company.
On January 2, 2024, we acquired the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (together with its affiliates, “Viessmann”).
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In addition, we continue to invest in product and technology innovation within our offerings as well as invest in new business models including Carrier Energy, our solution to reduce demands on power grids and energy infrastructure by better managing energy consumption and reducing end-customer energy costs.
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In addition, we continue to invest in product and technology innovation within our core offerings and in new business models. Carrier Energy, our business offering new energy management solutions, is developing intelligent climate and energy solutions to meet future energy needs by optimizing home energy management, providing grid flexibility and unlocking energy capacity to support economic growth.
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The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe.
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Business Segments In May 2025, we announced changes to our reportable segments to better align our reporting structure with our business strategy, resource allocation and performance assessment.
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The acquisition was completed on January 2, 2024 and reported within our HVAC segment. 5 Table of Contents On June 2, 2024, we completed the sale of our Access Solutions business ("Access Solutions") to Honeywell International Inc. ("Honeywell") for cash proceeds of $5.0 billion.
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Under the revised segment structure, we globally manage our business operations through four segments: Climate Solutions Americas ("CSA"), Climate Solutions Europe ("CSE"), Climate Solutions Asia Pacific, Middle East & Africa ("CSAME") and Climate Solutions Transportation ("CST").
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Access Solutions, historically reported in our Fire & Security segment, is a global supplier of physical security and digital access solutions supporting the hospitality, commercial, education and military markets. We recognized a net gain on the sale of $1.8 billion.
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We serve a wide range of customers, including in the residential, commercial, education, healthcare, technology, retail, hospitality, data center, and infrastructure markets, among others. Products and controls, services and systems are sold directly to building contractors and owners and indirectly through joint ventures, independent sales representatives, distributors, wholesalers, dealers and retail outlets.
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On July 1, 2024, we completed the sale of our Industrial Fire business ("Industrial Fire") for cash proceeds of $1.4 billion.
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Products and services are sold directly to transportation companies and indirectly through joint ventures, independent sales representatives, distributors, wholesalers and dealers. Products and services are sold under established brand names, including Carrier Transicold and Sensitech.
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Industrial Fire, historically reported in our Fire & Security segment, is a leading manufacturer of a full spectrum of fire detection and suppression solutions and services in critical high-hazard environments, including oil and gas, power generation, marine and offshore facilities, automotive, data centers and aircraft hangars. We recognized a net gain on the sale of $319 million.
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The VCS Business, primarily reported in the Climate Solutions Europe segment, is a premier residential and light commercial heating, ventilating and air conditioning ("HVAC") provider in Europe that expanded our portfolio to offer a global, comprehensive suite of sustainable and innovative building and energy management solutions.
Removed
On October 1, 2024, we completed the sale of our Commercial Refrigeration business ("CCR") for cash proceeds of $679 million. CCR, historically reported in our Refrigeration segment, is a global supplier of turnkey solutions for commercial refrigeration systems and services, with a primary focus on serving food retail customers, cold storage facilities and warehouses.
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In addition, we divested our Commercial and Residential Fire, Access Solutions and Industrial Fire businesses which were historically reported in our Fire & Security segment. The transactions represented a single disposal plan to separately divest multiple businesses over different reporting periods and met the criteria to be presented as discontinued operations.
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We recognized a net gain on the sale of $292 million. The net proceeds received are subject to working capital and other adjustments provided in the stock purchase agreement. On December 2, 2024, we completed the sale of our Commercial and Residential Fire business ("CRF Business") for cash proceeds of $2.9 billion.
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We also divested our Commercial Refrigeration business (“CCR”) during 2024. CCR, which was historically reported in the Climate Solutions Transportation segment (previously named Refrigeration), did not meet the criteria to be presented as discontinued operations.
Removed
The CRF Business, historically reported in our Fire & Security segment, is a leading manufacturer of fire detection and alarm solutions for both commercial and residential applications. We recognized a net gain on the sale of $1.4 billion. The net proceeds received are subject to working capital and other adjustments provided in the stock purchase agreement.
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Sale of Riello Business On December 16, 2025, we entered into a purchase agreement to sell our Riello business ("Riello") to Ariston Group with expected gross proceeds of approximately $430 million.
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We believe our strategy is supported by significant favorable secular trends, our industry-leading brands and track record of innovation.
Added
Riello, predominantly reported in our Climate Solutions Europe segment, is a leading international manufacturer that designs, produces and integrates a comprehensive portfolio of thermal solutions including burners, boilers, heat pumps, cooling systems and aftermarket services for residential, commercial and industrial applications. The business has a strong focus on energy efficiency, innovation and a global distribution network.
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International accords such as the Paris Agreement and the subsequent U.S. climate policies to meet its nationally determined contributions as well as local regulations in the U.S. reducing the use of fossil fuels in buildings all have the potential to impact our products and service offerings.
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This transaction is expected to close in the first half of 2026 and is subject to customary closing conditions and regulatory approvals. Business Strategy Our vision is to be a global leader in intelligent climate and energy solutions with a focus on providing differentiated, digitally-enabled lifecycle solutions to our customers.
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In addition, to address the cooling demands from the growth in data centers and the increasing intensity of performance requirements, we developed Carrier QuantumLeap TM , an integrated solution that combines traditional and liquid cooling with advanced building and server management systems. This approach delivers an efficient, differentiated offering to enhance data center performance for our customers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, our financial performance may be influenced by the production and utilization of transport equipment, including truck production cycles in North America and Europe. Our business success depends on attracting and retaining key personnel and other talent throughout the Company.
Biggest changeIn addition, our financial performance may be influenced by the production and utilization of transport equipment, including truck production cycles in North America and Europe. Significant changes in these factors have in the past and may in the future have materially adverse impacts on our results of operations or financial condition.
If we are required to pay UTC and/or Otis under these indemnities, our financial results could be negatively impacted.
If we are required to pay UTC and/or Otis under these indemnities, our financial results could be negatively impacted.
RISK FACTORS RISK FACTOR SUMMARY Risks Related to Our Business • Risks associated with our international operations could adversely affect our competitive position, results of operations, cash flows or financial condition. • We are party to joint ventures and other strategic relationships, which may not be successful and may expose us to unique risks and restrictions. • Risks associated with climate events, government regulations and incentives associated with climate events and mitigation efforts could adversely affect our business. • Demand for our HVAC products and services is influenced by weather conditions and seasonality. • Our business and financial performance depend on continued and substantial investments in our information and operational technology infrastructure, which may not yield anticipated benefits and which may be vulnerable to cyber-attacks. • Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations. • We engage in acquisitions and divestitures and may encounter difficulties integrating acquired businesses with, or disposing of businesses from, our current operations; therefore, we may not realize the anticipated benefits of these acquisitions and divestitures. • We incurred debt obligations, and we may incur additional debt in the future, which could adversely affect our business and profitability and our ability to meet other obligations. • We depend on our intellectual property and have access to certain intellectual property and information of our customers and suppliers.
RISK FACTORS RISK FACTOR SUMMARY Risks Related to Our Business • Risks associated with our international operations could adversely affect our competitive position, results of operations, cash flows or financial condition. • We are party to joint ventures and other strategic relationships, which may not be successful and may expose us to unique risks and restrictions. • Risks associated with climate events, government regulations and incentives associated with climate events and mitigation efforts could adversely affect our business. • Demand for our HVAC products and services is influenced by weather conditions, seasonality, macroeconomic conditions and other factors. • Our business and financial performance depend on continued and substantial investments in our information and operational technology infrastructure, which may not yield anticipated benefits and which may be vulnerable to cyber-attacks. • Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations. • We engage in acquisitions and divestitures and may encounter difficulties integrating acquired businesses with, or disposing of businesses from, our current operations; therefore, we may not realize the anticipated benefits of these acquisitions and divestitures. • We incurred debt obligations, and we may incur additional debt in the future, which could adversely affect our business and profitability and our ability to meet other obligations. • We depend on our intellectual property and have access to certain intellectual property and information of our customers and suppliers.
Global chemical use restrictions related to protection of human health and the environment as well as climate event directives may require additional investments in product designs, resulting in increased manufacturing, production and sourcing costs as well as updates to product safety assessments. These restrictions may also increase our legal obligations regarding remediation of our current and legacy operational sites.
Global chemical use restrictions related to human health and the environment as well as climate event directives may require additional investments in product designs, resulting in increased manufacturing, production and sourcing costs as well as updates to product safety assessments. These restrictions may also increase our legal obligations regarding remediation of our current and legacy operational sites.
Any of these events or factors could subject us to judgments, penalties and significant litigation costs or temporarily or permanently disrupt our sales and marketing of the affected products or services and could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. 17 Table of Contents We use a variety of raw materials, supplier-provided parts, and third-party service providers in our business.
Any of these events or factors could subject us to judgments, penalties and significant litigation costs or temporarily or permanently disrupt our sales and marketing of the affected products or services and could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. 17 Table of Contents We use a variety of raw materials, supplier-provided parts, finished goods, and third-party service providers in our business.
Our operations and those of our suppliers are subject to disruption for a variety of reasons, including epidemics, pandemics, supplier plant shutdowns or slowdowns, transportation delays, work stoppages, labor relations, changes in laws or regulations, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as a supplier bankruptcy, Technology failures and hazards such as fire, earthquakes, flooding or other natural disasters.
Our operations and those of our suppliers are subject to disruption for a variety of reasons, including epidemics, pandemics, supplier plant shutdowns or slowdowns, transportation delays, work stoppages, utility outages, labor relations, changes in laws or regulations, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as a supplier bankruptcy, Technology failures and hazards such as fire, earthquakes, flooding or other natural disasters.
From time to time customers and others may seek to become suppliers of products and services that compete with our own or pursue other strategies to disrupt our business model.
From time to time customers and others may seek to become suppliers or integrators of products and services that compete with our own or pursue other strategies to disrupt our business model.
If found responsible in connection with such matters, we could be subject to significant fines, penalties, repayments and other damages (in certain cases, treble damages) and experience reputational harm. 20 Table of Contents As a global business, we are subject to complex laws and regulations in the U.S. and other countries in which we operate.
If found responsible in connection with such matters, we could be subject to significant fines, penalties, repayments and other damages (in certain cases, multiple damages) and experience reputational harm. 20 Table of Contents As a global business, we are subject to complex laws and regulations in the U.S. and other countries in which we operate.
Demand for our HVAC products and services, representing our largest segment by sales, is seasonal and affected by the weather. Cooler than normal summers depress sales of our replacement air conditioning products and services and warmer than normal winters have the same effect on our heating products.
Demand for our HVAC products and services, representing our largest segments by sales, is seasonal and affected by the weather. Cooler than normal summers depress sales of our replacement air conditioning products and services and warmer than normal winters have the same effect on our heating products.
Even in litigation where we believe our liability is remote, there is a risk that a negative finding or decision could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition, in particular with respect to environmental claims in regions where we have, or previously had, significant operations or where certain of our products have been manufactured and used.
Even in litigation where we believe our liability is remote, there is a risk that a negative outcome could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition, in particular with respect to environmental claims in regions where we have, or previously had, significant operations or where certain of our products have been manufactured and used.
If we are not successful in maintaining our strategic distribution relationships, our financial condition, results of operations and cash flows may be adversely affected. In addition, our ability to apply our internal controls and governance and compliance policies to our minority-held joint ventures is limited and can expose us to additional financial and reputational risks.
If we are not successful in maintaining our strategic distribution relationships, our financial condition, results of operations and cash flows may be adversely affected. 12 Table of Contents In addition, our ability to apply our internal controls and governance and compliance policies to our minority-held joint ventures is limited and can expose us to additional financial and reputational risks.
We have been issued an investment grade credit rating by each of Moody’s Investors Services, Inc. ("Moody's"), Standard & Poor’s ("S&P") and Fitch Ratings Inc. ("Fitch Ratings"). Nonetheless, any future downgrades could increase our borrowing costs, reduce market capacity for our commercial paper or require the posting of collateral under our derivative contracts.
We have been issued an investment grade credit rating by each of Moody’s Investors Services, Inc. ("Moody's") and Standard & Poor’s ("S&P"). Any future downgrades could increase our borrowing costs, reduce market capacity for our commercial paper or require the posting of collateral under our derivative contracts.
Increased public awareness and concern about climate events may continue to: (1) generate more international, regional and/or national requirements to curtail the use of high global warming potential refrigerants (e.g., the Kigali Amendment to the Montreal Protocol and the American Innovation and Manufacturing ("AIM") Act of 2020, which are essential to many of our products); (2) increase building energy and cold chain efficiency; (3) cause a shift away from the use of fossil fuels as an energy source, including natural gas prohibitions; and (4) lead to the adoption of additional rules and regulations surrounding public disclosures relating to greenhouse gas emissions, including those adopted in California and the European Union.
Increased public awareness and concern about climate events may continue to: (1) generate more international, regional and/or national requirements to curtail the use of high global warming potential refrigerants (e.g., the Kigali Amendment to the Montreal Protocol and the American Innovation and Manufacturing ("AIM") Act of 2020, which are essential to many of our products); (2) increase building energy and cold chain efficiency; (3) cause a shift away from the use of fossil fuels as an energy source, including natural gas prohibitions; and (4) lead to the adoption of additional rules and regulations surrounding public disclosures relating to greenhouse gas emissions, including those adopted in California and the European Union as well as in other jurisdictions, which may vary by jurisdiction.
See Note 7 – Borrowings and Lines of Credit in the accompanying Notes to the Consolidated Financial Statements and the section entitled "Liquidity and Financial Condition" in this Annual Report for additional information. We may also incur additional indebtedness in the future, including via issuance of commercial paper, under our Revolving Credit Facility.
See Note 7 – Borrowings and Lines of Credit in the accompanying Notes to the Consolidated Financial Statements and the section entitled "Liquidity and Financial Condition" in this Annual Report for additional information. We may also incur additional indebtedness in the future, including via issuance of commercial paper, under our Revolving Credit Facility or by issuing additional notes.
We use a wide range of materials and components in the global production of our products, which come from numerous suppliers around the world. Because some key parts may be available only from a single supplier or a limited group of suppliers, we are subject to supply and pricing risk.
We use a wide range of materials, finished goods, and components in the global production and distribution of our products, which come from numerous suppliers around the world. Because some key parts and finished goods may be available only from a single supplier or a limited group of suppliers, we are subject to supply and pricing risk.
In addition, other issues with suppliers (such as capacity constraints, quality issues, consolidations, closings or bankruptcies), price increases, raw material/component shortages, regulatory limitations, or the decreased availability of trucks and other delivery services could also have a material adverse effect on our ability to meet our commitments to customers or increase our operating costs.
In addition, other issues with suppliers (such as capacity constraints, quality issues, consolidations, closings or bankruptcies), price increases, raw material/component/finished good shortages, regulatory limitations, government actions, or the decreased availability of trucks and other delivery services could also have a material adverse effect on our ability to meet our commitments to customers or increase our operating costs.
Moreover, government regulations and policies regarding international trade, such as import quotas, punitive taxes or tariffs or similar trade barriers, whether imposed by individual governments or regional trade blocs, can affect demand for our products and services, impact the competitive position of our products or services or encumber our ability to manufacture or sell or procure products in certain countries.
Moreover, government regulations and policies regarding international trade, such as import quotas, punitive taxes or tariffs or similar trade barriers, including counter-tariffs and other retaliatory trade policies, whether imposed by individual governments or regional trade blocs, can affect demand for our products and services, impact the competitive position of our products or services or encumber our ability to manufacture or sell or procure products in certain countries.
Significant shortages, supplier capacity constraints or production disruptions, price increases, duties, tariffs or other government actions could increase our operating costs, disrupt our operations and adversely impact the competitive positions of our products.
Significant shortages, supplier capacity constraints, supplier disputes, supplier quality issues, or production disruptions, price increases, duties, tariffs or other government actions could increase our operating costs, disrupt our operations and adversely impact the competitive positions of our products.
Risks Related to Our Business Risks associated with our international operations could adversely affect our competitive position, results of operations, cash flows or financial condition. Approximately 50% of our net sales for the year ended December 31, 2024, are derived from international operations, including U.S. export sales.
Risks Related to Our Business Risks associated with our international operations could adversely affect our competitive position, results of operations, cash flows or financial condition. Approximately 52% of our net sales for the year ended December 31, 2025, are derived from international operations, including U.S. export sales.
In connection with the Separation (including the internal reorganization described previously), UTC completed several corporate reorganization transactions involving its subsidiaries which, along with the Distribution, may be subject to various fraudulent conveyance and transfer laws.
In connection with the Separation (including the internal reorganization described in our previously-filed periodic reports), UTC completed several corporate reorganization transactions involving its subsidiaries which, along with the Distribution, may be subject to various fraudulent conveyance and transfer laws.
In some instances, these requirements may render our existing technology, particularly some of our HVAC and refrigeration products, non-compliant or obsolete and we may be required to make increased capital expenditures to meet new regulations and standards, changing interpretations and stricter enforcement of current laws and regulations.
In some instances, these requirements may render our existing technology, particularly some of our HVAC and refrigeration products, non-compliant or obsolete and we may be required to make increased capital expenditures to meet new regulations and standards, changing interpretations and stricter enforcement of current laws and regulations, or divergent requirements across jurisdictions in which we operate.
If certain of our product and service offerings do not meet applicable safety standards – which has been the case – or our customers’ expectations regarding safety or quality, we can experience, and have experienced previously, lost sales and increased costs and we can be exposed, and have previously been exposed, to legal, financial and reputational risks.
If certain of our product and service offerings do not meet applicable safety standards, as has previously occurred, or our customers’ expectations regarding safety or quality, we can experience, and have experienced previously, lost sales and increased costs and we can be exposed, and have previously been exposed, to legal, financial and reputational risks.
The ability of suppliers to deliver materials, parts, components and manufacturing equipment to our manufacturing facilities, and our ability to manufacture without disruption, could affect our business performance.
The ability of suppliers to deliver materials, parts, components, finished goods, and manufacturing equipment to our manufacturing facilities, and our ability to manufacture and distribute without disruption, could affect our business performance.
We seek to take proactive steps to mitigate these concerns, including through audits and similar reviews. 12 Table of Contents Joint ventures and strategic relationships inherently involve certain other risks.
We seek to take proactive steps to mitigate these concerns, including through audits and similar reviews. Joint ventures and strategic relationships inherently involve certain other risks.
However, the military conflict between the two countries and attendant geopolitical environment may continue to negatively impact the global economy and major financial markets, and may result in additional increases in commodity prices and supply-chain disruptions, including shortages of materials, higher costs for fuel and freight and increased transportation delays.
However, the military conflict between the two countries, as well as other global conflicts such as the conflict in the Middle East, and attendant geopolitical environment may continue to negatively impact the global economy and major financial markets, and may result in additional increases in commodity prices and supply-chain disruptions, including shortages of materials, higher costs for fuel and freight and increased transportation delays.
These economic and political conditions affect our business in a number of ways. For example, because we have a number of factories and suppliers in foreign countries, the imposition of tariffs or additional sanctions or unusually restrictive border crossing rules could adversely affect our supply chain, operations and overall business.
These economic and political conditions affect our business in a number of ways. For example, because we have a number of factories and suppliers in foreign countries, the imposition of tariffs or additional sanctions, which we continue to monitor and mitigate, as necessary, or unusually restrictive border crossing rules could adversely affect our supply chain, operations and overall business.
The implementation of more restrictive trade policies, including tariffs, by the U.S. or by other countries, such as China and Mexico, where we sell or produce our products and services or procure materials, including as a result of trade conflict between the U.S. and other countries, could negatively impact our business, results of operations and financial condition.
The implementation of more restrictive trade policies, including tariffs, by the U.S. or by other countries, such as China and Mexico, where we sell or produce our products and services or procure materials, or unpredictability or rapid shifts in trade policies, including as a result of trade conflict between the U.S. and other countries, have in the past negatively impacted, and could in the future negatively impact, our business, results of operations and financial condition.
We use various tactical and strategic actions to mitigate our raw material and supply chain risks and challenges, including consolidating commodity purchases, locking in prices of expected purchases of certain raw materials, dual sourcing, increasing regionalization, proactive engagement with suppliers and our workforce and dynamic management of freight costs and availability.
We use various tactical and strategic actions to mitigate our raw material, finished good, and supply chain risks and challenges, including consolidating commodity purchases, locking in prices of expected purchases of certain raw materials, finished goods and components, dual sourcing, increasing regionalization, requirements as to safety stock, proactive engagement with suppliers and our workforce and dynamic management of freight costs and availability.
At the same time, U.S. energy and climate policy may not align with the above trends. Inconsistent international, regional and/or national requirements associated with climate regulations, such as U.S. participation in the Paris Climate Agreement, also create economic and regulatory uncertainty.
At the same time, U.S. energy and climate policy may not align with the above trends. Inconsistent international, regional and/or national requirements associated with climate regulations, including the withdrawal by the U.S. from the Paris Climate Agreement, also create economic and regulatory uncertainty.
Our reliance on suppliers and commodity markets to secure components (such as motors and valves) and raw materials (such as copper, aluminum and steel), and on service providers to deliver our products, exposes us to volatility in the prices and availability of these materials and services.
Our reliance on suppliers and commodity markets to secure components (such as motors and valves), finished goods (including products purchased directly from suppliers for resale), and raw materials (such as copper, aluminum and steel), as well as on service providers to deliver our products, exposes us to volatility in the prices and availability of these materials, products, and services.
Although we intend to meet these goals, we may be required to expend significant resources to do so, which could increase our operational costs.
Although we intend to meet these goals, we have expended and may be required to continue to expend significant resources to do so, which has increased and could continue to increase our operational costs.
As of December 31, 2024, the net carrying value of our goodwill and intangible assets totaled $14.6 billion and $6.4 billion, respectively. Our intangible assets primarily consist of customer relationships, patents, service portfolios and trademarks. We periodically assess these assets to determine if they are impaired.
As of December 31, 2025, the net carrying value of our goodwill and intangible assets totaled $15.5 billion and $6.3 billion, respectively. Our intangible assets primarily consist of customer relationships, patents, trademarks and technology. We periodically assess these assets to determine if they are impaired.
In addition, we may be the target of competitor or other third-party patent enforcement actions seeking substantial monetary damages or seeking to prevent the sale and marketing of certain of our products.
In addition, we may be the target of competitor or other third-party patent enforcement actions (for example, brought by owners of Standard Essential Patents or other relevant patents) seeking substantial monetary damages or seeking to prevent the sale and marketing of certain of our products.
Our future success and ability to execute our strategic plan depends on our ability to hire, retain and develop a high performance, customer-centric executive management team and its ability to provide consistent leadership and direction.
Our business success depends on attracting and retaining key personnel and other talent throughout the Company. Our future success and ability to execute our strategic plan depends on our ability to hire, retain and develop a high performance, customer-centric executive management team and its ability to provide consistent leadership and direction.
We incurred debt obligations, and we may incur additional debt in the future, which could adversely affect our business and profitability and our ability to meet other obligations. As of December 31, 2024, we had approximately $12.3 billion in aggregate principal amount of outstanding indebtedness, including debt incurred to close the acquisition of the VCS Business on January 2, 2024.
We incurred debt obligations, and we may incur additional debt in the future, which could adversely affect our business and profitability and our ability to meet other obligations. As of December 31, 2025, we had approximately $11.5 billion in aggregate principal amount of outstanding indebtedness.
We also make strategic divestitures from time to time, including the dispositions during 2024 of Access Solutions, Industrial Fire, CCR and the CRF Business.
We also make strategic divestitures from time to time, including the dispositions during 2024 of Access Solutions, Industrial Fire, CCR and the CRF Business, as well as the pending disposition of the Riello business which is subject to customary closing conditions and regulatory approvals..
Our business operations, particularly in our HVAC segment, depend on various strategic relationships, namely, joint ventures and non-wholly owned subsidiaries.
Our business operations, particularly in our Climate Solutions Americas and Climate Solutions Asia Pacific, Middle East & Africa segments, depend on various strategic relationships, namely, joint ventures and non-wholly owned subsidiaries.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity risks deemed to be critical are reviewed by a Critical Threat Committee, which is comprised of members of our senior leadership team including our Chief Financial Officer, Chief Legal Officer, Chief Digital Officer, Senior Vice President of Operations, Chief Technology Officer, Chief Product Officer and Controller/Chief Accounting Officer.
Biggest changeCybersecurity risks deemed to be critical are reviewed by a Critical Threat Committee, which is comprised of members of our senior leadership team including our Executive Vice President, Chief Financial & Strategy Officer; Senior Vice President, Chief Legal Officer; Senior Vice President, Chief Digital Officer; Senior Vice President, Operations; Senior Vice President, Engineering; and Vice President, Controller & Chief Accounting Officer.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeApproximately 80% and 9% of these significant properties are associated with our HVAC and Refrigeration segments, respectively, with approximately 11% not associated with a particular segment. Approximately 35% of these significant properties are leased and the remainder are owned. Approximately 30% of these significant properties are located in the U.S.
Biggest changeApproximately 34%, 22%, 26% and 10% of these significant properties are associated with our Climate Solutions Americas, Climate Solutions Europe, Climate Solutions Asia Pacific, Middle East & Africa and Climate Solutions Transportation segments, respectively, with approximately 8% not associated with a particular segment. Approximately 34% of these significant properties are leased and the remainder are owned.
ITEM 2. PROPERTIES We operate approximately 900 sites, which comprise approximately 36 million square feet of productive space. Of these, our facilities and key manufacturing sites greater than 100,000 square feet comprise approximately 27 million square feet of productive space.
ITEM 2. PROPERTIES We operate approximately 850 sites, which comprise approximately 36 million square feet of productive space. Of these, our facilities and key manufacturing sites greater than 100,000 square feet comprise approximately 27 million square feet of productive space.
The facilities, warehouses, machinery and equipment in use as of December 31, 2024, are in good operating condition, are well-maintained and substantially all are in regular use.
The facilities, warehouses, machinery and equipment in use as of December 31, 2025, are in good operating condition, are well-maintained and substantially all are in regular use.
Our fixed assets as of December 31, 2024, include manufacturing facilities and non-manufacturing facilities, such as warehouses and machinery and equipment, most of which is general purpose machinery and equipment that use special jigs, tools and fixtures and that, in many instances, have automatic control features and special adaptations.
Approximately 29% of these significant properties are located in the U.S. Our fixed assets as of December 31, 2025, include manufacturing facilities and non-manufacturing facilities, such as warehouses and machinery and equipment, most of which is general purpose machinery and equipment that use special jigs, tools and fixtures and that, in many instances, have automatic control features and special adaptations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeA hearing to approve the Disclosure Statement, its ancillary documents and establish a Chapter 11 Plan confirmation timeline in the Bankruptcy Court is expected to be held in March 2025. Other We have commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the ordinary course of business.
Biggest changeFollowing that hearing, the Bankruptcy Court ordered that the revised and supplemented Disclosure Statement be modified further in two areas, which the parties are addressing. Other We have commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the ordinary course of business.
("KFI") and others have been named as defendants in more than 9,000 lawsuits filed in United States state or federal courts and a single case in Canada alleging that the historic use of Aqueous Film Forming Foam ("AFFF") caused personal injuries and damage to property and water supplies. In December 2018, the U.S.
("KFI") and others have been named as defendants in more than 17,000 lawsuits filed in United States state or federal courts and a single case in Canada alleging that the historic use of Aqueous Film Forming Foam ("AFFF") caused personal injuries and damage to property and water supplies. In December 2018, the U.S.
The amount recognized is in addition to liabilities of $50 million that the Company recorded upon the deconsolidation of KFI on May 14, 2023. As of December 31, 2024, the Company has not recorded any amounts associated with expected insurance proceeds. The Company and KFI believe that they have meritorious defenses to the remaining AFFF claims.
The amount recognized is in addition to liabilities of $50 million that the Company recorded upon the deconsolidation of KFI on May 14, 2023. As of December 31, 2025, the Company has not recorded any amounts associated with expected insurance proceeds. The Company and KFI believe that they have meritorious defenses to the remaining AFFF claims.
These amounts are undiscounted and exclude the Company’s legal fees to defend the asbestos claims, which are expensed as incurred. In addition, the Company has recorded insurance recovery receivables for probable asbestos-related recoveries. Aqueous Film Forming Foam Litigation As of December 31, 2024, the Company, Kidde-Fenwal, Inc.
These amounts are undiscounted and exclude the Company’s legal fees to defend the asbestos claims, which are expensed as incurred. In addition, the Company has recorded insurance recovery receivables for probable asbestos-related recoveries. Aqueous Film Forming Foam Litigation As of December 31, 2025, the Company, Kidde-Fenwal, Inc.
Added
A hearing to approve the Disclosure Statement was held in June 2025. A revised and supplemented Disclosure Statement was filed on August 15, 2025. The Bankruptcy Court held a hearing on that statement on October 6, 2025.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data 48 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 48 Consolidated Statement of Operations 51 Consolidated Statement of Comprehensive Income (Loss) 52 Consolidated Balance Sheet 53 Consolidated Statement of Changes in Equity 54 Consolidated Statement of Cash Flows 55 Notes to Consolidated Financial Statements 56
Biggest changeFinancial Statements and Supplementary Data 48 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 48 Consolidated Statement of Operations 50 Consolidated Statement of Comprehensive Income (Loss) 51 Consolidated Balance Sheet 52 Consolidated Statement of Changes in Equity 53 Consolidated Statement of Cash Flows 54 Notes to Consolidated Financial Statements 55
Item 4. Mine Safety Disclosures 31 PART II 32 Item 5. Market for Registrant's Common Equity, Related Shareowner Matters and Issuer Purchases of Equity Securities 32 Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8.
Item 4. Mine Safety Disclosures 31 PART II 32 Item 5. Market for Registrant's Common Equity, Related Shareowner Matters and Issuer Purchases of Equity Securities 32 Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Cumulative Total Return The cumulative total returns on our common stock and each index as of each April 3, 2020 through December 31, 2024, plotted in the above graph are as follows: Company / Index April 3, 2020 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Carrier Global Corporation $ 100.00 $ 225.02 $ 326.97 $ 252.80 $ 357.66 $ 430.12 S&P 500 Index $ 100.00 $ 152.88 $ 196.73 $ 161.07 $ 203.37 $ 254.20 Dow Jones Industrial Index $ 100.00 $ 147.76 $ 178.71 $ 166.45 $ 193.38 $ 222.37 32 Table of Contents Issuer Purchases of Equity Securities The following table provides information about our purchases during the three months ended December 31, 2024, of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.
Biggest changeComparison of Cumulative Total Return The cumulative total returns on our common stock and each index as of each December 31, 2020, through December 31, 2025, plotted in the above graph are as follows: Company / Index December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 Carrier Global Corporation $ 100.00 $ 145.30 $ 112.33 $ 158.93 $ 191.11 $ 149.39 S&P 500 Index $ 100.00 $ 128.68 $ 105.36 $ 133.03 $ 166.28 $ 195.98 Dow Jones Industrial Index $ 100.00 $ 120.95 $ 112.65 $ 130.87 $ 150.49 $ 172.95 32 Table of Contents Issuer Purchases of Equity Securities The following table provides information about our purchases during the three months ended December 31, 2025, of equity securities that are registered by us pursuant to Section 12 of the Exchange Act.
Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $7.1 billion of the Company's outstanding common stock. Equity Compensation Plan Information See Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Shareowner Matters, of this Annual Report.
Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $12.1 billion of the Company's outstanding common stock. Equity Compensation Plan Information See Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Shareowner Matters, of this Annual Report.
These figures assume that all dividends paid over the period were reinvested and that the starting value of each index and the investment in our common stock was $100 on April 3, 2020.
These figures assume that all dividends paid over the period were reinvested and that the starting value of each index and the investment in our common stock was $100 on December 31, 2020.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREOWNER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed on the NYSE under the ticker symbol "CARR." As of December 31, 2024, the approximate number of common stock shareowners of record was 19,648.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREOWNER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed on the NYSE under the ticker symbol "CARR." As of December 31, 2025, the approximate number of common stock shareowners of record was 18,212.
The following graph presents the cumulative total shareowner return from the Distribution Date through December 31, 2024, for our common stock, as compared with the S&P 500 Index and the Dow Jones Industrial Index. Our common stock is a component of the S&P 500 Index.
The following graph presents the cumulative total shareowner return for the five years ended December 31, 2025, for our common stock, as compared with the S&P 500 Index and the Dow Jones Industrial Index. Our common stock is a component of the S&P 500 Index.
Total Number of Shares Purchased (in 000's) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of a Publicly Announced Program (in 000's) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) 2024 October 1 - October 31 2,636 $77.14 2,636 $ 4,494 November 1 - November 30 11,446 $75.65 11,446 $ 3,628 December 1 - December 31 6,352 $69.68 6,352 $ 3,186 Total 20,434 $73.96 20,434 (1) Excludes broker commissions.
Total Number of Shares Purchased (in 000's) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of a Publicly Announced Program (in 000's) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) 2025 October 1 - October 31 4,385 $58.33 4,385 $ 5,555 November 1 - November 30 2,139 $54.27 2,139 $ 5,439 December 1 - December 31 1,976 $54.20 1,976 $ 5,332 Total 8,500 $56.35 8,500 (1) Excludes broker commissions.
Removed
On April 3, 2020, UTC completed the Separation of Carrier into a stand-alone company. As a result of the Separation and the Distribution, Carrier became an independent public company.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2024 Compared with Year Ended December 31, 2023 The following represents our consolidated net sales and operating results: (In millions) 2024 2023 Period Change % Change Net sales $ 22,486 $ 18,951 $ 3,535 19 % Cost of products and services sold (16,505) (13,789) (2,716) 20 % Gross margin 5,981 5,162 819 16 % Operating expenses (3,335) (3,002) (333) 11 % Operating profit 2,646 2,160 486 23 % Non-operating income (expense), net (372) (161) (211) 131 % Earnings (loss) before income taxes 2,274 1,999 275 14 % Income tax expense (1,062) (521) (541) 104 % Earnings (loss) from continuing operations 1,212 1,478 (266) (18) % Discontinued operations, net of income taxes 4,496 (38) 4,534 (11932) % Net earnings (loss) 5,708 1,440 4,268 296 % Less: Non-controlling interest in subsidiaries' earnings from operations 104 91 13 14 % Net earnings (loss) attributable to common shareowners $ 5,604 $ 1,349 $ 4,255 315 % Net Sales For the year ended December 31, 2024, Net sales was $22.5 billion, an 19% increase compared with the same period of 2023.
Biggest changeA detailed discussion of the year ended December 31, 2024, compared with December 31, 2023, is not included herein and can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in the recast of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, included within Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on July 29, 2025, under the heading "Results of Operations," which is incorporated herein by reference. 34 Table of Contents Year Ended December 31, 2025 Compared with Year Ended December 31, 2024 The following represents our consolidated net sales and operating results: (In millions) 2025 2024 Period Change % Change Net sales $ 21,747 $ 22,486 $ (739) (3) % Cost of products and services sold (16,123) (16,505) 382 (2) % Gross margin 5,624 5,981 (357) (6) % Operating expenses (3,452) (3,335) (117) 4 % Operating profit 2,172 2,646 (474) (18) % Non-operating income (expense), net (374) (372) (2) 1 % Earnings (loss) before income taxes 1,798 2,274 (476) (21) % Income tax expense (240) (1,062) 822 (77) % Earnings (loss) from continuing operations 1,558 1,212 346 29 % Discontinued operations, net of income taxes 29 4,496 (4,467) (99) % Net earnings (loss) 1,587 5,708 (4,121) (72) % Less: Non-controlling interest in subsidiaries' earnings from operations 103 104 (1) (1) % Net earnings (loss) attributable to common shareowners $ 1,484 $ 5,604 $ (4,120) (74) % Net Sales For the year ended December 31, 2025, Net sales was $21.7 billion, a 3% decrease compared with the same period of 2024.
A significant increase in the discount rate, decrease in the long-term growth rate or substantial reductions in our end markets and volume assumptions could have a negative impact on the estimated fair value of this reporting unit. 44 Table of Contents Revenue Recognition from Contracts with Customers Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer.
A significant increase in the discount rate, decrease in the long-term growth rate or substantial reductions in our end markets and volume assumptions could have a negative impact on the estimated fair value of this reporting unit. 45 Table of Contents Revenue Recognition from Contracts with Customers Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Consolidated Financial Statements. 45 Table of Contents Contingent Liabilities We are involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Consolidated Financial Statements. 46 Table of Contents Contingent Liabilities We are involved in various litigation, claims and administrative proceedings, including those related to environmental (including asbestos) and legal matters.
See Note 10 - Employee Benefit Plans, Note 17 - Income Taxes, and Note 23 - Commitments and Contingent Liabilities in the accompanying Notes to the Consolidated Financial Statements in this Annual Report for additional information. 43 Table of Contents CRITICAL ACCOUNTING ESTIMATES Our financial statements are prepared in accordance with accounting principles generally accepted in the United States.
See Note 10 - Employee Benefit Plans, Note 17 - Income Taxes, and Note 23 - Commitments and Contingent Liabilities in the accompanying Notes to the Consolidated Financial Statements in this Annual Report for additional information. 44 Table of Contents CRITICAL ACCOUNTING ESTIMATES Our financial statements are prepared in accordance with accounting principles generally accepted in the United States.
The preparation of financial statements in conformity with those accounting principles requires management to use judgement in making estimates and assumptions based on the relevant information available at the end of each period.
The preparation of financial statements in conformity with those accounting principles requires management to use judgment in making estimates and assumptions based on the relevant information available at the end of each period.
Cash flows from continuing financing activities primarily represent inflows and outflows associated with equity or borrowings. Primary activities include debt transactions, paying dividends to shareowners and the repurchase of our common stock. During the year ended December 31, 2024, net cash used in continuing financing activities was $4.6 billion.
Cash flows from continuing financing activities primarily represent inflows and outflows associated with equity or borrowings. Primary activities include debt transactions, paying dividends to shareowners and the repurchase of our common stock. During the year ended December 31, 2025, net cash used in continuing financing activities was $4.7 billion.
Interest payments related to long-term notes are expected to approximate $420 million per year, reflecting an approximate weighted-average interest rate of 3.5%. Any borrowings from the Revolving Credit Facility are subject to variable interest rates.
Interest payments related to long-term notes are expected to approximate $408 million per year, reflecting an approximate weighted-average interest rate of 3.7%. Any borrowings from the Revolving Credit Facility are subject to variable interest rates.
This discussion should be read in conjunction with Item 8, the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements in this Annual Report.
This discussion should be read in conjunct ion with Item 8, the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements in this Annual Report.
In addition to these macroeconomic factors, among other things, we considered the reporting units’ current results and forecasts, changes in the nature of each business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry and competitive environment, changes in the composition or carrying amount of net assets and any intention to sell or dispose of a reporting unit or cease the use of any indefinite-lived intangible assets.
In addition to these macroeconomic factors, among other things, we considered the reporting units’ current results and forecasts, changes in the nature of each business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry and competitive environment, changes in the composition or carrying value of net assets and any intention to sell or dispose of a reporting unit or a significant portion of a reporting unit.
We rely on operating cash flows as our primary source of liquidity. In addition, we have access to other sources of capital to finance our strategic initiatives and fund growth. As of December 31, 2024 , we had Cash and cash equivalents of $4.0 billion, of which approximately 44% was held by our foreign subsidiaries.
We rely on operating cash flows as our primary source of liquidity. In addition, we have access to other sources of capital to finance our strategic initiatives and fund growth. As of December 31, 2025 , we had Cash and cash equivalents of $1.6 billion, of which approximately 94% was held by our foreign subsidiaries.
As of December 31, 2024, we had no borrowings outstanding under our commercial paper program or our Revolving Credit Facility. Our short-term obligations primarily consist of current maturities of long-term debt. Our long-term obligations primarily consist of long-term notes with maturity dates ranging between 2025 and 2054.
As of December 31, 2025, we had $325 million and zero borrowings outstanding under our commercial paper program and our Revolving Credit Facility, respectively. Our short-term obligations primarily consist of current maturities of long-term debt. Our long-term obligations primarily consist of long-term notes with maturity dates ranging between 2027 and 2054.
We believe our business segments are well positioned to benefit from favorable secular trends, including the mega-trends of urbanization, population growth and demographic shifts, food security and safety, digitalization, global connectivity and energy efficiency. Coupled with our industry-leading brands and track record of innovation, we continue to provide market-leading solutions for our customers.
We believe our business segments are well positioned to benefit from favorable secular trends, including the mega-trends of urbanization, population growth and demographic shifts, food security and safety, electrification, increasing demand for climate control and accelerated digitalization. Coupled with our industry-leading brands and track record of innovation, we continue to provide market-leading solutions for our customers.
As of December 31, 2024 and 2023, the amount of such restricted cash was $3 million and $1 million, respectively. We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our customers.
As of December 31, 2025 and 2024, the amount of such restricted cash was $2 million and $3 million, respectively. 41 Table of Contents We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our customers.
Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $7.1 billion of our outstanding common stock which includes a $3 billion increase approved in October 2024. As of December 31, 2024, the Company repurchased 70.1 million shares of common stock for an aggregate purchase price of $3.9 billion.
Since the initial authorization in February 2021, the Company's Board of Directors authorized the repurchase of up to $12.1 billion of our outstanding common stock which includes a $5 billion increase approved in October 2025. As of December 31, 2025, the Company repurchased 114.9 million shares of common stock for an aggregate purchase price of $6.8 billion.
As a result, the Company has approximately $3.2 billion remaining under the current authorization at December 31, 2024. Dividends We paid dividends on our common stock of $0.76 per share during the year ended December 31, 2024, totaling $670 million.
As a result, the Company has approximately $5.3 billion remaining under the current authorization at December 31, 2025. Dividends We paid dividends on our common stock of $0.90 per share during the year ended December 31, 2025, totaling $772 million.
On December 6, 2024, the Board of Directors declared a dividend of $0.225 per share payable on February 7, 2025, to shareowners of record at the close of business on December 20, 2024. 42 Table of Contents Discussion of Cash Flows The following table reflects the major categories of cash flows for the following periods: For the Years Ended December 31, (In millions) 2024 2023 Net cash provided by (used in): Continuing operating activities $ 1,571 $ 2,252 Continuing investing activities (11,025) (504) Continuing financing activities (4,611) 4,632 Cash flows from continuing operating activities primarily represent inflows and outflows associated with our continuing operations.
On December 3, 2025, the Board of Directors declared a dividend of $0.24 per share payable on February 9, 2026, to shareowners of record at the close of business on January 20, 2026. 43 Table of Contents Discussion of Cash Flows The following table reflects the major categories of cash flows for the following periods: For the Years Ended December 31, (In millions) 2025 2024 Net cash provided by (used in): Continuing operating activities $ 2,089 $ 1,571 Continuing investing activities (343) (11,025) Continuing financing activities (4,672) (4,611) Cash flows from continuing operating activities primarily represent inflows and outflows associated with our continuing operations.
The components were as follows: For the Year Ended December 31, (In millions) 2024 2023 Non-service pension benefit (expense) $ (1) $ (1) Interest expense (580) (306) Interest income 209 146 Interest (expense) income, net (371) (160) Non-operating income (expense), net $ (372) $ (161) Non-operating income (expense), net includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations.
The components were as follows: For the Year Ended December 31, (In millions) 2025 2024 Non-service pension benefit (expense) $ (10) $ (1) Interest expense (458) (580) Interest income 94 209 Interest (expense) income, net (364) (371) Non-operating income (expense), net $ (374) $ (372) Non-operating income (expense), net includes the results from activities other than normal business operations such as interest expense, interest income and the non-service components of pension and post-retirement obligations.
On October 1, 2024, we divested CCR, a global supplier of turnkey solutions for commercial refrigeration systems and services. The results of CCR are excluded from our Consolidated Financial Statements subsequent to the divestiture date. The transaction reduced Net Sales by 8% for the year ended December 31, 2024, and is included in Acquisitions and divestitures, net.
On October 1, 2024, we divested CCR, a global supplier of turnkey solutions for commercial refrigeration systems and services. The results of CCR are excluded from our Consolidated Financial Statements subsequent to the divestiture date. The transaction is included in Acquisitions and divestitures, net as part of the year-over-year change.
We are committed to comply with these regulations and to environmental stewardship. As a result, we have set goals to invest over $4 billion by 2030 to develop intelligent climate and energy solutions that reduce environmental impacts.
As a result, we have set goals to invest over $4 billion by 2030 to develop intelligent climate and energy solutions that reduce environmental impacts.
Interest expense is affected by the amount of debt outstanding and the interest rates on that debt. For the year ended December 31, 2024, interest expense was $580 million, a 90% increase compared with the same period of 2023.
Interest expense is affected by the amount of debt outstanding and the interest rates on that debt. For the year ended December 31, 2025, interest expense was $458 million, a 21% decrease compared with the same period of 2024.
The components of the year-over-year change were as follows: Net sales Organic / Operational (1) % Acquisitions and divestitures, net (8) % Total % change (9) % The organic decrease in Net sales of 1% was primarily driven by volume reductions within certain end-markets compared with the prior year.
The components of the year-over-year change were as follows: Net sales Organic / Operational (1) % Foreign currency translation — % Total % change (1) % The organic decrease in Net sales of 1% was driven by volume reductions within certain end-markets compared with the prior year.
During the year ended December 31, 2024, we completed the sale of CCR and recognized a gain on the sale of $318 million. In addition, we recognized a $46 million gain associated with our share of United Technologies Corporation's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the Internal Revenue Service ("IRS").
In addition, we recognized a $46 million gain associated with our share of United Technologies Corporation's conclusion of certain income tax matters from their 2017 and 2018 tax audit with the Internal Revenue Service ("IRS").
The components of the year-over-year change were as follows: 2024 Organic / Operational 3 % Acquisitions and divestitures, net 16 % Total % change 19 % Organic sales for the year ended December 31, 2024, increased by 3% compared with the same period of 2023.
The components of the year-over-year change were as follows: 2025 Organic / Operational (1) % Foreign currency translation 1 % Acquisitions and divestitures, net (3) % Total % change (3) % Organic sales for the year ended December 31, 2025, decreased by 1% compared with the same period of 2024.
Refer to "Segment Review" below for a discussion of Net sales by segment. 35 Table of Contents Gross Margin For the year ended December 31, 2024, gross margin was $6.0 billion, a 16% increase compared with the same period of 2023.
Refer to "Segment Review" below for a discussion of Net sales by segment. Gross Margin For the year ended December 31, 2025, gross margin was $5.6 billion, a 6% decrease compared with the same period of 2024.
The components were as follows: For the Year Ended December 31, (In millions) 2024 2023 Selling, general and administrative $ (3,197) $ (2,607) Research and development (686) (493) Equity method investment net earnings 231 211 Other income (expense), net 317 (113) Operating expenses $ (3,335) $ (3,002) Percentage of net sales 14.8 % 15.8 % For the year ended December 31, 2024, Selling, general and administrative expenses were $3.2 billion, a 23% increase compared with the same period of 2023.
The components were as follows: For the Year Ended December 31, (In millions) 2025 2024 Selling, general and administrative $ (3,092) $ (3,197) Research and development (625) (686) Equity method investment net earnings 229 231 Other income (expense), net 36 317 Operating expenses $ (3,452) $ (3,335) Percentage of net sales 15.9 % 14.8 % For the year ended December 31, 2025, Selling, general and administrative expenses were $3.1 billion, a 3% decrease compared with the same period of 2024.
Our operations are classified into two segments: HVAC and Refrigeration. Through our performance-driven culture, we anticipate creating long-term shareowner value by investing strategically to strengthen our product position in homes, buildings and across the cold chain in order to drive profitable growth.
Our operations are classified into four segments: Climate Solutions Americas, Climate Solutions Europe, Climate Solutions Asia Pacific, Middle East & Africa and Climate Solutions Transportation. Through our performance-driven culture, we anticipate creating long-term shareowner value by investing strategically to strengthen our product position in homes, buildings and across the cold chain in order to drive profitable growth.
Income Taxes 2024 2023 Effective tax rate 46.7 % 26.1 % The effective tax rate for the year ended December 31, 2024, was higher than the statutory U.S. federal income tax rate.
The effective tax rate for the year ended December 31, 2024 was higher than the Company's statutory U.S. federal income tax rate.
Portfolio Transformation On June 2, 2024, we completed the divestiture of Access Solutions for cash proceeds of $5.0 billion. On July 1, 2024, we completed the divestiture of Industrial Fire for cash proceeds of $1.4 billion. On October 1, 2024, we completed the divestiture of CCR for cash proceeds of $679 million, subject to customary working capital and other adjustments.
Baa1 P-2 Positive Portfolio Transformation On June 2, 2024, we completed the divestiture of Access Solutions for cash proceeds of $5.0 billion. On July 1, 2024, we completed the divestiture of Industrial Fire for cash proceeds of $1.4 billion. On October 1, 2024, we completed the divestiture of CCR for cash proceeds of $679 million.
In addition, we paid $62 million to repurchase shares of our common stock. Summary of Other Sources and Uses of Cash Rapid changes in legislation, regulations and government policies, including with respect to regulations intended to combat climate events, affect our operations and business in the countries, regions and localities in which we operate and sell our products.
Summary of Other Sources and Uses of Cash Rapid changes in legislation, regulations and government policies, including with respect to regulations intended to combat climate events, affect our operations and business in the countries, regions and localities in which we operate and sell our products. We are committed to comply with these regulations and to environmental stewardship.
Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold that offer innovative heating, ventilating and air conditioning ("HVAC"), refrigeration and cold chain transportation solutions to help make the world safer and more comfortable. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.
Our portfolio includes industry-leading brands such as Carrier, Viessmann, Toshiba, Automated Logic and Carrier Transicold, among others, that offer innovative heating, cooling and cold chain solutions to enhance the lives we live and the world we share. We also provide a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring.
Based upon our qualitative analysis, we determined that our goodwill and indefinite-lived intangible assets were not impaired. For the remaining goodwill test, we elected to perform a quantitative test to determine if it was more likely than not that the fair value of our Refrigeration reporting unit was below carrying value.
Based upon our qualitative analysis, we determined that our goodwill was not impaired. For the remaining goodwill test, we elected to perform a quantitative test to determine if the fair value of our Climate Solutions Europe reporting unit was below carrying value.
We considered macroeconomic factors including global economic growth, general macroeconomic trends for the markets in which our reporting units operate and where the intangible assets are utilized and the forecasted growth of the global industrial products industry.
This constitutes the entire Climate Solutions Europe segment. We considered macroeconomic factors including global economic growth, general macroeconomic trends for the markets in which our reporting units operate and the forecasted growth of the global industrial products industry.
Goodwill and Indefinite-Lived Intangible Assets In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other ("ASC 350"), goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment or whenever there is a material change in events or circumstances that indicate that the fair value of the asset is more likely than not less than the carrying amount of the asset.
Goodwill In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other ("ASC 350"), goodwill is tested and reviewed annually for impairment on July 1 or whenever there is a material change in events or circumstances that indicates that the fair value of the reporting unit may be less than its carrying value.
Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act.
Share Repurchase Program We may purchase our outstanding common stock from time to time subject to market conditions and at our discretion. Repurchases occur in the open market or through one or more other public or private transactions pursuant to plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act.
Combined, we incurred make-whole premiums of $14 million in Interest expense, wrote off $17 million of unamortized deferred financing costs in Interest expense and recognized a net gain of $97 million in Interest income . During 2023, we entered into several financing arrangements in connection with the acquisition of the VCS Business and capitalized $105 million of deferred financing costs.
During 2024, we incurred make-whole premiums of $14 million in Interest expense, wrote off $17 million of unamortized deferred financing costs in Interest expense and recognized a net gain of $97 million in Interest income .
Segment Review We conduct our operations through two reportable segments: • The HVAC segment provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers while enhancing building performance, health, energy efficiency and sustainability. • The Refrigeration segment includes transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail.
Segment Review We have four operating segments: • Climate Solutions Americas provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in North and South America while enhancing building performance, health, energy efficiency and sustainability. • Climate Solutions Europe provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Europe while enhancing building performance, health, energy efficiency and sustainability. • Climate Solutions Asia Pacific, Middle East & Africa provides products, controls, services and solutions to meet the heating, cooling and ventilation needs of residential and commercial customers in Asia Pacific, the Middle East and Africa while enhancing building performance, health, energy efficiency and sustainability. • Climate Solutions Transportation includes global transport refrigeration and monitoring products, services and digital solutions for trucks, trailers, shipping containers, intermodal and rail.
Primary activities include net earnings from continuing 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 continuing operating activities was primarily driven by an increase in working capital balances compared with the prior period.
Primary activities include net earnings from continuing operations adjusted for non-cash transactions, working capital changes and changes in other assets and liabilities. The year-over-year increase in net cash provided by continuing operating activities was primarily driven by an increase in net earnings and distributions from equity method investments. In addition, cash conversion on long-term contracts further benefited operating cash flow.
In addition, prior year results include a $16 million benefit recognized in connection with a favorable tax ruling at a minority owned joint venture. 36 Table of Contents Other income (expense), net primarily includes the impact of gains and losses related to the sale of businesses or interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an entity's functional currency and hedging-related activities.
Other income (expense), net primarily includes the impact of gains and losses related to the sale of businesses or interests in our equity method investments, foreign currency gains and losses on transactions that are denominated in a currency other than an entity's functional currency and hedging-related activities.
For the year ended December 31, 2024, Operating profit in our Refrigeration segment was $715 million, a 67% increase compared with the same period of 2023.
For the year ended December 31, 2025, Segment operating profit was $444 million, a 5% decrease compared with the same period of 2024.
As a result, gross margin as a percentage of Net sales decreased by 60 basis points compared with the same period of 2023. Operating Expenses For the year ended December 31, 2024, operating expenses, including Equity method investment net earnings , was $3.3 billion, a 11% increase compared with the same period of 2023.
These costs had a 130 basis point unfavorable impact on the prior period gross margin as a percentage of Net sales . Operating Expenses For the year ended December 31, 2025, operating expenses, including Equity method investment net earnings , was $3.5 billion, a 4% increase compared with the same period of 2024.
Improved inventory levels and lower customer receivable balances were more than offset by lower accounts payable balances. Cash flows from continuing investing activities primarily represent inflows and outflows associated with long-term assets. Primary activities include capital expenditures, acquisitions, divestitures and proceeds from the sale of fixed assets.
These increases were partially offset by changes in working capital balances compared with the prior period. Cash flows from continuing investing activities primarily represent inflows and outflows associated with long-term assets. Primary activities include capital expenditures, acquisitions, divestitures and proceeds from the sale of fixed assets.
During the year ended December 31, 2024, net cash used in continuing investing activities was $11.0 billion. The primary driver of the outflow related to the acquisition of the VCS Business, which totaled $10.8 billion, net of cash acquired. Additional investing outflows include $264 million related to settlement of derivatives and $519 million of capital expenditures.
The primary driver of the outflow related to the acquisition of the VCS Business, which totaled $10.8 billion, net of cash acquired. Additional investing outflows include $264 million related to settlement of derivatives and $519 million of capital expenditures. These outflows were partially offset by net proceeds of $634 million related to divestitures.
These outflows were partially offset by net proceeds of $634 million related to divestitures. During the year ended December 31, 2023, net cash used in continuing investing activities was $504 million. The primary driver of the outflow related to $439 million of capital expenditures.
During the year ended December 31, 2025, net cash used in continuing investing activities was $343 million. The primary driver of the outflow related to $392 million of capital expenditures offset by $105 million related to settlement of derivatives. During the year ended December 31, 2024, net cash used in continuing investing activities was $11 billion.
In connection with the acquisition of the VCS Business, we recognized an $86 million loss on the mark-to-market valuation of our window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price.
In connection with the acquisition of the VCS Business, we recognized an $86 million loss on the mark-to-market valuation of our window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price. 36 Table of Contents Non-Operating Income (Expense), net For the year ended December 31, 2025 , Non-operating income (expense), net was $374 million, a 1% increase co mpared with the same period of 2024.
Refrigeration Segment For the year ended December 31, 2024, Net sales in our Refrigeration segment was $3.5 billion, a 9% decrease compared with the same period of 2023.
For the year ended December 31, 2025, Segment operating profit was $2.2 billion, a 7% decrease compared with the same period of 2024.
The increase was primarily driven by a net tax charge of $650 million related to a re-organization of the VCS Business and a non-deductible loss of $86 million on the mark-to-market valuation of our window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price of the VCS Business, partially offset by the lower effective tax rate on the $318 million gain on the sale of CCR and $44 million of foreign tax credits generated and utilized in the current year. 37 Table of Contents The effective tax rate for the year ended December 31, 2023, was higher than the statutory U.S. federal income tax rate.
The increase was primarily driven by a net tax charge of $650 million related to a re-organization of the VCS Business and a non-deductible loss of $86 million on the mark-to-market valuation of the Company's window forward contracts associated with the expected cash outflows of the Euro-denominated purchase price of the VCS Business.
The components of the year-over-year change were as follows: Operating profit Organic / Operational 2 % Foreign currency translation (1) % Acquisitions and divestitures, net (4) % Restructuring 3 % CCR gain on sale 74 % Other (7) % Total % change 67 % 39 Table of Contents The increase in operational profit of 2% was primarily driven by favorable productivity initiatives and price improvements compared with the prior year.
The components of the year-over-year change were as follows: Segment operating profit Organic / Operational (7) % Foreign currency translation 1 % Acquisitions and divestitures, net (2) % Other 1 % Total % change (7) % The segment decrease in operational profit of 7% was primarily driven by volume reductions in certain end-markets.
We continue to invest in our business, take pricing actions to mitigate supply chain and inflationary pressures, develop new products and services in order to remain competitive in our markets and use risk management strategies to mitigate various exposures. 33 Table of Contents We are actively monitoring recent trade policy and tariff announcements including the three executive orders issued by the President in February 2025 directing the United States to impose new tariffs on imports from Canada, Mexico and China and the subsequent announcement that the Administration intended to pause tariffs on Canada and Mexico for a month.
We continue to invest in our business, take pricing actions to mitigate supply chain and inflationary pressures, develop new products and services in order to remain competitive in our markets and use risk management strategies to mitigate various exposures. 33 Table of Contents We continue to actively monitor evolving macroeconomic conditions and recent trade policy announcements.
We test our reporting units and indefinite-lived intangible assets for impairment annually as of the first day of our third quarter, or more frequently if events or circumstances occur. ASC 350 provides entities with an option to perform a qualitative assessment (commonly referred to as “step zero”) to determine whether a quantitative analysis for impairment is necessary.
ASC 350 provides entities with an option to perform a qualitative assessment (commonly referred to as “step zero”) to determine whether a quantitative analysis for impairment is necessary.
We recognized a gross gain on the sale of $318 million, which is included in Other income (expense), net on the accompanying Consolidated Statement of Operations during the year ended December 31, 2024. The net proceeds received are subject to working capital and other adjustments provided in the stock purchase agreement.
During the year ended December 31, 2025, we finalized the working capital and other adjustments provided in the stock purchase agreement governing the sale of CCR and recognized gains on sale of several equity method investments. During the year ended December 31, 2024, we completed the sale of CCR and recognized a gain on the sale of $318 million.
See Note 7 - Borrowings and Lines of Credit in the accompanying Notes to the Consolidated Financial Statements for additional information regarding the terms of our long-term debt obligations. 41 Table of Contents Scheduled maturities of long-term debt, excluding amortization of discount, are as follows: (In millions) 2025 $ 1,252 2026 $ 70 2027 $ 1,284 2028 $ 803 2029 $ 19 Thereafter $ 8,938 The following table presents our credit ratings and outlook as of December 31, 2024: Rating Agency Long-term Rating (1) Short-term Rating (2) Outlook (2) (3) S&P BBB A2 Positive Moody's Baa2 P2 Positive Fitch Ratings BBB+ F1 Stable (1) The long-term rating was upgraded by Moody's to Baa2 on May 13, 2024.
See Note 7 - Borrowings and Lines of Credit in the accompanying Notes to the Consolidated Financial Statements for additional information regarding the terms of our long-term debt obligations. 42 Table of Contents Scheduled maturities of long-term debt, excluding amortization of discount, are as follows: (In millions) 2026 $ 108 2027 $ 1,309 2028 $ 903 2029 $ 43 2030 $ 2,019 Thereafter $ 7,169 Our credit ratings are periodically reviewed by the major independent debt-rating agencies.
Consistent with our capital allocation strategy, the net proceeds will be used to fund repayment of debt, investments in organic and inorganic growth initiatives and capital returns to shareowners as well as for general corporate purposes. Share Repurchase Program We may purchase our outstanding common stock from time to time subject to market conditions and at our discretion.
On December 2, 2024, we completed the divestiture of the CRF Business for cash proceeds of $2.9 billion. Consistent with our capital allocation strategy, the net proceeds were to fund repayment of debt, investments in organic and inorganic growth initiatives and capital returns to shareowners as well as for general corporate purposes.
However, the results of the VCS Business included inventory step-up, backlog amortization and intangible asset amortization resulting from the recognition of acquired assets at fair value. These costs had a 260 basis point unfavorable impact on gross margin as a percentage of Net sales .
As a result, gross margin as a percentage of Net sales decreased by 70 basis points compared with the same period of 2024. The prior period included inventory step-up and backlog amortization resulting from the recognition of acquired assets of the VCS Business at fair value which are now fully amortized.
For our 2024 goodwill and indefinite-lived intangible assets impairment tests, we elected to perform qualitative step zero assessments for all tests (except one) to determine if it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were below carrying value.
If impairment indicators are present after performing step zero, we would perform a quantitative impairment analysis to estimate fair value. For our 2025 goodwill impairment tests, we elected to perform qualitative step zero assessments for all tests, except for our Climate Solutions Europe reporting unit, to determine if the fair values of our reporting units were below carrying value.
The components were as follows: (In millions) 2024 2023 Net sales $ 22,486 $ 18,951 Cost of products and services sold (16,505) (13,789) Gross margin $ 5,981 $ 5,162 Percentage of net sales 26.6 % 27.2 % Gross margin increased by $819 million compared with the year ended December 31, 2023.
The components were as follows: (In millions) 2025 2024 Net sales $ 21,747 $ 22,486 Cost of products and services sold (16,123) (16,505) Gross margin $ 5,624 $ 5,981 Percentage of net sales 25.9 % 26.6 % 35 Table of Contents Gross margin decreased by $357 million compared with the year ended December 31, 2024, primarily due to lower volumes in certain end-markets partially offset by our continued focus on productivity initiatives.
The components of the year-over-year change were as follows: Net sales Organic / Operational 5 % Acquisitions and divestitures, net 21 % Total % change 26 % The organic increase in Net sales of 5% was driven by continued strong results in the segment.
The components of the year-over-year change were as follows: Net sales Organic / Operational 4 % Foreign currency translation 1 % Acquisitions and divestitures, net (22) % Total % change (17) % The organic increase in Net sales of 4% was primarily driven by volume growth within certain end-markets compared with the prior year.
The components of the year-over-year change were as follows: Operating profit Organic / Operational 23 % Acquisitions and divestitures, net 3 % Amortization of acquired intangibles (24) % Restructuring (2) % Other 1 % Total % change 1 % The operational profit increase of 23% was primarily attributable to ongoing customer demand and pricing improvements in certain end-markets compared with the prior year.
The components of the year-over-year change were as follows: Segment operating profit Organic / Operational (7) % Foreign currency translation — % Total % change (7) % The operational profit decrease of 7% was primarily attributable to volume reductions in certain end-markets compared with prior year.
Non-Operating Income (Expense), net For the year ended December 31, 2024 , Non-operating income (expense), net was $372 million, a 131% increase co mpared with the same period of 2023.
For the year ended December 31, 2025, Segment operating profit was $448 million, a 4% decrease compared with the same period of 2024.
Research and development costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate. In addition, we continue to invest to prepare for future energy efficiency and refrigerant regulation changes and in digital controls technologies.
In addition, the current year also included $56 million of acquisition and divestiture-related costs compared with $95 million during the year ended December 31, 2024. Research and development costs relate to new product development and new technology innovation. Due to the variable nature of program development schedules, year-over-year spending levels can fluctuate.
As of the petition date, KFI was deconsolidated and its respective assets and liabilities were derecognized from our Consolidated Financial Statements. 34 Table of Contents RESULTS OF OPERATIONS This discussion summarizes the significant factors affecting our consolidated results of operations, financial condition and liquidity for the year ended December 31, 2024, compared with December 31, 2023 .
All prior period comparative information has been recast to reflect the revised segment structure. RESULTS OF OPERATIONS This discussion summarizes the significant factors affecting our consolidated results of operations, financial condition and liquidity for the year ended December 31, 2025, compared with December 31, 2024.
During the year ended December 31, 2023, net cash provided by continuing financing activities was $4.6 billion. The primary driver of the inflow related to the issuance of the USD Notes and the Euro Notes related to the acquisition of the VCS Business. The inflow was partially offset by the payment of $620 million in dividends to our common shareowners.
The primary driver of the outflow was related to repurchases of our common stock totaling $2.9 billion. In addition, we made long-term debt repayments of $1.2 billion and dividend payments of $772 million to our common shareowners. During the year ended December 31, 2024, net cash used in continuing financing activities was $4.6 billion.
In addition, we made payments totaling $1.9 billion to repurchase shares of our common stock and dividend payments of $670 million to our common shareowners. These outflows were partially offset by the proceeds of borrowings used to fund the cash portion of the acquisition of the VCS Business and the November 2024 issuance of our 3.625% notes due 2037.
The primary driver of the outflow was due to repayments of long-term debt of $5.3 billion. In addition, we made payments totaling $1.9 billion to repurchase common stock and dividend payments of $670 million to our common shareowners.
In addition, volume growth in certain end-markets further benefited the segment. These amounts were partially offset by volume reductions in certain other end-markets. Amounts reported in Other represent $10 million of divestiture-related costs associated with the sale of CCR. In addition, the prior year includes a $24 million gain on the sale of a business within the Transport business.
In addition, costs associated with warranty-related issues further impacted the segment. These amounts were partially offset by favorable productivity initiatives, lower selling, general and administrative costs and higher volumes in certain end-markets. However, the higher volumes led to an unfavorable mix in the segment. Amounts reported in other represent a gain on the sale of equity method investments.
Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting. For the year ended December 31, 2024, Equity method investment net earnings were $231 million, a 9% increase compared with the same period of 2023.
In addition, we continue to invest to prepare for future product innovations and digital controls technologies. Investments over which we do not exercise control, but have significant influence, are accounted for using the equity method of accounting.
Transport results decreased (down 8%) compared to the prior year primarily due to lower end-market demand in North America. The reduction was partially offset by higher volumes in Asia and Europe. Results in the Container business (up 24%) was primarily driven by strong end-market demand and improved pricing.
Container results increased (up 31%) due to ongoing end-market demand and improved price. These results were partially offset by our global truck and trailer business (down 3%) as lower end-market demand in Asia and Europe more than offset modest growth in North America.
We utilized a discounted cash flow method under the income approach to estimate the fair value of the reporting unit. The approach relies on our estimates of future cash flows, long-term growth rates, discount rates and income tax rates and explicitly addressed factors such as timing, growth and margins with due consideration given to forecasting, market and geographic risk.
We utilized a discounted cash flow method under the income approach to estimate the fair value of the reporting unit.
Growth in the Americas (up 9%) was primarily driven by our Commercial and Residential businesses which benefited from ongoing customer demand and pricing improvements. Moderate growth in our Light Commercial business was due to improved pricing compared with the prior year. EMEA (down 1%) continues to be impacted by reduced volumes in residential markets.
Lower volume in our residential business (down 9%) was primarily due to reduced end-market demand and distributor destocking. In addition, lower volume in our light commercial business (down 20%) further impacted segment results. These results were partially offset by growth in our commercial business (up 23%) primarily driven by ongoing customer demand and improved price.
The organic increase was primarily driven by our HVAC segment due to improved end-markets in the Americas, which more than offset reduced end-markets in EMEA and Asia. Results in our Refrigeration segment were down compared to the prior year as each of the segment's businesses experienced challenges in certain end-markets.
The organic decrease was primarily due to our Climate Solutions Americas segment as reduced demand in certain end-markets resulted in lower volumes. In addition, lower end-market demand in both Climate Solutions Europe and Climate Solutions Asia Pacific, Middle East & Africa further impacted results. These amounts were partially offset by improved end-market demand in our Climate Solutions Transportation segment.
The following table contains several key measures of our financial condition and liquidity: As of December 31, (In millions) 2024 2023 Cash and cash equivalents $ 3,969 $ 9,852 Total debt $ 12,278 $ 14,293 Total equity $ 14,395 $ 9,005 Net debt (total debt less cash and cash equivalents) $ 8,309 $ 4,441 Total capitalization (total debt plus total equity) $ 26,673 $ 23,298 Net capitalization (total debt plus total equity less cash and cash equivalents) $ 22,704 $ 13,446 Total debt to total capitalization 46 % 61 % Net debt to net capitalization 37 % 33 % 40 Table of Contents Acquisition of VCS Business On April 25, 2023, we announced that we entered into an Agreement to acquire the VCS Business.
The following table contains several key measures of our financial condition and liquidity: As of December 31, (In millions) 2025 2024 Cash and cash equivalents $ 1,555 $ 3,969 Total debt $ 11,833 $ 12,362 Total equity $ 14,128 $ 14,395 Net debt (total debt less cash and cash equivalents) $ 10,278 $ 8,393 Total capitalization (total debt plus total equity) $ 25,961 $ 26,757 Net capitalization (total debt plus total equity less cash and cash equivalents) $ 24,406 $ 22,788 Total debt to total capitalization 46 % 46 % Net debt to net capitalization 42 % 37 % Borrowings and Lines of Credit We maintain a $2.0 billion USD-denominated facility and a $500 million Euro-denominated facility as part of an unsecured, unsubordinated commercial paper program which we can use for general corporate purposes, including the funding of working capital and potential acquisitions.
Removed
We are currently evaluating the potential impact of the announced tariffs on our business and financial condition and actions we may take to mitigate the impact. In addition, we are currently monitoring the potential impact, if any, of actions taken by these countries in response to the announced tariffs.
Added
Based on our updated analysis, we fully mitigated the impact of tariffs during 2025 through a combination of supply-chain adjustments, productivity initiatives and approximately $200 million of incremental product pricing actions.
Removed
There can be no assurance that the future imposition of any tariffs, changes thereto or potential actions taken by countries in response to the tariffs will not have a material adverse effect upon our results of operations, financial condition or liquidity in any period or that any actions we take to mitigate the impact of the tariffs will be effective.
Added
To date, tariffs have not had a material impact on our business and we are deploying additional strategies, including cost containment measures, to limit future exposure in the current market environment.
Removed
Significant Events Acquisition of Viessmann Climate Solutions On April 25, 2023, we announced that we entered into a Share Purchase Agreement (the “Agreement”) to acquire the climate solutions business (the "VCS Business") of Viessmann Group GmbH & Co. KG (“Viessmann”), a privately-held company.
Added
Significant Events Sale of Riello Business On December 16, 2025, we entered into a purchase agreement to sell our Riello business ("Riello") to Ariston Group with expected gross proceeds of approximately $430 million.
Removed
The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe. The acquisition was completed on January 2, 2024.
Added
Riello, predominantly reported in our Climate Solutions Europe segment, is a leading international manufacturer that designs, produces and integrates a comprehensive portfolio of thermal solutions including burners, boilers, heat pumps, cooling systems and aftermarket services for residential, commercial and industrial applications, with a strong focus on energy efficiency, innovation and a global distribution network.
Removed
As a result, the assets, liabilities and results of operations of the VCS Business are consolidated in the accompanying Consolidated Financial Statements as of the date of acquisition and reported within our HVAC segment. Portfolio Transformation On June 2, 2024, we completed the sale of our Access Solutions business ("Access Solutions") for cash proceeds of $5.0 billion.
Added
This transaction is expected to close in the first half of 2026 and is subject to customary closing conditions and regulatory approvals. Portfolio Transformation During 2024, we completed several activities designed to simplify our business portfolio, transforming it into a pure-play climate and energy solutions provider.
Removed
Access Solutions, historically reported in our Fire & Security segment, is a global supplier of physical security and digital access solutions supporting the hospitality, commercial, education and military markets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring 2024, we entered into cross currency swaps in order to manage foreign currency translation risk on Euro-denominated assets. We designated the cross currency swaps as a partial hedge of our investment in certain subsidiaries whose functional currency is the Euro.
Biggest changeWe enter into cross currency swaps in order to manage foreign currency translation risk on assets denominated in a functional currency other than the U.S. Dollar.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk and Risk Management We are exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices which could impact our results of operations and financial condition. There has been no significant change in our exposure to market risk for the year ended December 31, 2024.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk and Risk Management We are exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices which could impact our results of operations and financial condition. There has been no significant change in our exposure to market risk for the year ended December 31, 2025.
We are exposed to volatility in the prices of commodities used in some of our products and when appropriate, we use fixed price contracts with suppliers to manage this exposure. In addition, we are exposed to fuel costs to ship our products and materials. We do not have commodity hedge contracts in place at December 31, 2024. Interest Rate Exposures.
We are exposed to volatility in the prices of commodities used in some of our products and when appropriate, we use fixed price contracts with suppliers to manage this exposure. In addition, we are exposed to fuel costs to ship our products and materials. We do not have commodity hedge contracts in place at December 31, 2025. Interest Rate Exposures.
As a result, changes in the fair value of the cross currency swaps are recorded in Equity in the Consolidated Balance Sheet. To the extent that any hedge is not fully effective at offsetting changes in the underlying hedged item, the ineffective portion of the hedge would impact net earnings.
As a result, changes in the fair value of the cross currency swaps are recorded in Equity in the Consolidated Balance Sheet. To the extent that any hedge is not fully effective at offsetting changes in the underlying hedged item, the ineffective portion of the hedge would impact net earnings. Commodity Price Exposures.
Removed
In connection with the TCC acquisition, we entered into cross currency swaps and the Japanese Term Loan Facility to fund the Yen-denominated purchase price. We designated the cross currency swaps and the Japanese Term Loan Facility as a hedge of our investment in certain subsidiaries whose functional currency is the Japanese Yen in order to manage foreign currency translation risk.
Added
The swaps are measured at fair value on a recurring basis using observable market inputs, such as forward, discount and interest rates and are designated as a partial hedge of our investment in certain subsidiaries whose functional currency is not the U.S. Dollar.
Removed
As a result, changes in the fair value of the cross currency swaps and the carrying value of the Japanese Term Loan Facility associated with foreign exchange rate movements are recorded in Equity in the Consolidated Balance Sheet.
Removed
To the extent that any hedge is not fully effective at offsetting changes in the underlying hedged item, the ineffective portion of the hedge would impact net earnings. 46 Table of Contents Commodity Price Exposures.

Other CARR 10-K year-over-year comparisons