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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
 ____________________________________ 
FORM 10-Q
____________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-39220
____________________________________ 
CARRIER GLOBAL CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________ 
Delaware 83-4051582
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
13995 Pasteur Boulevard, Palm Beach Gardens, Florida 33418
(Address of principal executive offices, including zip code)
(561) 365-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)CARRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filerSmaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of April 21, 2021, there were 868,998,500 shares of Common Stock outstanding.
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CARRIER GLOBAL CORPORATION
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Three Months Ended March 31, 2021

Page

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









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PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements

CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended March 31,
(In millions, except per share amounts)20212020
Net sales
Product sales$3,864 $3,147 
Service sales835 741 
Total Net sales4,699 3,888 
Costs and expenses
Cost of products sold(2,724)(2,237)
Cost of services sold(581)(529)
Research and development(121)(98)
Selling, general and administrative(743)(692)
Total Costs and expenses(4,169)(3,556)
Equity method investment net earnings38 29 
Other income (expense), net3 (46)
Operating profit571 315 
Non-service pension (expense) benefit 18 17 
Interest (expense) income, net(93)(37)
Income from operations before income taxes496 295 
Income tax (expense) benefit(104)(193)
Net income from operations392 102 
Less: Non-controlling interest in subsidiaries' earnings from operations8 6 
Net income attributable to common shareowners$384 $96 
Earnings per share
Basic$0.44 $0.11 
Diluted $0.43 $0.11 
Weighted-average number of shares outstanding
Basic869.3 866.2 
Diluted889.8 866.2 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Three Months Ended March 31,
(In millions)20212020
Net income from operations$392 $102 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments arising during period(121)(490)
Pension and post-retirement benefit plan adjustments7 5 
Other comprehensive income (loss), net of tax(114)(485)
Comprehensive income (loss)278 (383)
Less: Comprehensive income (loss) attributable to non-controlling interest8 4 
Comprehensive income (loss) attributable to common shareowners$270 $(387)
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

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CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
As of
(In millions)March 31, 2021December 31, 2020
Assets
Cash and cash equivalents$2,599 $3,115 
Accounts receivable, net2,831 2,781 
Contract assets, current694 656 
Inventories, net1,854 1,629 
Other assets, current350 343 
Total current assets8,328 8,524 
Future income tax benefits461 449 
Fixed assets, net1,777 1,810 
Operating lease right-of-use assets770 788 
Intangible assets, net1,002 1,037 
Goodwill10,077 10,139 
Pension and post-retirement assets607 554 
Equity method investments1,530 1,513 
Other assets316 279 
Total Assets$24,868 $25,093 
Liabilities and Equity
Accounts payable$2,175 $1,936 
Accrued liabilities2,265 2,471 
Contract liabilities, current545 512 
Current portion of long-term debt153 191 
Total current liabilities5,138 5,110 
Long-term debt9,577 10,036 
Future pension and post-retirement obligations507 524 
Future income tax obligations477 479 
Operating lease liabilities621 642 
Other long-term liabilities1,730 1,724 
Total Liabilities18,050 18,515 
Commitments and contingent liabilities (Note 16)
Equity
Common stock 9 9 
Treasury stock(38) 
Additional paid-in capital5,350 5,345 
Retained earnings2,027 1,643 
Accumulated other comprehensive loss(859)(745)
Non-controlling interest329 326 
Total Equity6,818 6,578 
Total Liabilities and Equity$24,868 $25,093 
The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

(In millions)UTC Net InvestmentAccumulated Other Comprehensive Income (Loss)Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsNon-Controlling InterestTotal Equity
Balance as of December 31, 2019$15,355 $(1,253)$ $ $ $ $333 $14,435 
Net income96 — — — — — 6 102 
Other comprehensive income (loss), net of tax— (483)— — — — (2)(485)
Dividends attributable to non-controlling interest— — — — — — (8)(8)
Net transfers to UTC(11,014)— — — — — — (11,014)
Adoption impact of ASU 2016-13(4)— — — — — — (4)
Balance as of March 31, 2020$4,433 $(1,736)$ $ $ $ $329 $3,026 
(In millions)UTC Net InvestmentAccumulated Other Comprehensive Income (Loss)Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsNon-Controlling InterestTotal Equity
Balance as of December 31, 2020$ $(745)$9 $ $5,345 $1,643 $326 $6,578 
Net income— — — — — 384 8 392 
Other comprehensive income (loss), net of tax— (114)— — — — — (114)
Shares issued under incentive plans, net— — — — (14)— — (14)
Stock-based compensation— — — — 19 — — 19 
Dividends attributable to non-controlling interest— — — — — — (5)(5)
Treasury stock repurchase— — — (38)— — — (38)
Balance as of March 31, 2021$ $(859)$9 $(38)$5,350 $2,027 $329 $6,818 


The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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CARRIER GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 For the Three Months Ended March 31,
(In millions)20212020
Operating Activities
Net income from operations$392 $102 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization83 81 
Deferred income tax provision(2)135 
Stock-based compensation costs19 13 
Equity method investment net earnings(38)(29)
Distributions from equity method investments12 10 
Impairment charge on minority-owned joint venture investments 71 
Changes in operating assets and liabilities
Accounts receivable, net(83)(19)
Contract assets, current(44)(39)
Inventories, net(248)(264)
Other assets, current(23)(10)
Accounts payable and accrued liabilities151 (24)
Contract liabilities, current39 51 
Defined benefit plan contributions(24)(25)
Other operating activities, net(50)(6)
Net cash flows provided by (used in) operating activities184 47 
Investing Activities
Capital expenditures(53)(48)
Investment in businesses, net of cash acquired (6) 
Settlement of derivative contracts, net8 (95)
Other investing activities, net2 15 
Net cash flows provided by (used in) investing activities(49)(128)
Financing Activities
Increase (decrease) in short-term borrowings, net28 (44)
Issuance of long-term debt51 10,961 
Repayment of long-term debt(570)(34)
Repurchases of common stock(36) 
Dividends paid on common stock(104) 
Dividends paid to non-controlling interest(5)(8)
Net transfers to UTC (10,948)
Other financing activities, net(7)(3)
Net cash flows provided by (used in) financing activities(643)(76)
Effect of foreign exchange rate changes on cash and cash equivalents(9)(28)
Net increase (decrease) in cash and cash equivalents and restricted cash(517)(185)
Cash, cash equivalents and restricted cash, beginning of period3,120 957 
Cash, cash equivalents and restricted cash, end of period2,603 772 
Less: restricted cash4 4 
Cash and cash equivalents, end of period$2,599 $768 

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

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CARRIER GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1: DESCRIPTION OF THE BUSINESS

Carrier Global Corporation is a leading global provider of heating, ventilating, air conditioning ("HVAC"), refrigeration and fire and security solutions. The Company also provides a broad array of related building services, including audit, design, installation, system integration, repair, maintenance and monitoring. In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for 2020 filed with the SEC on February 9, 2021 (the "2020 Form 10-K").

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

In connection with the Separation, the Company entered into several agreements with UTC and Otis Worldwide Corporation ("Otis") that govern various aspects of the relationship between the Company, UTC and Otis following the Separation and the Distribution, including a transition services agreement ("TSA"), a tax matters agreement ("TMA"), an employee matters agreement and an intellectual property agreement that cover services such as information technology, tax, finance and human resources. In addition, the Company incurred separation-related costs including employee-related costs, costs to establish certain stand-alone functions, information technology systems, professional service fees and other costs associated with becoming an independent, publicly traded company. These costs are primarily recorded in Selling, general and administrative in the Unaudited Condensed Consolidated Statement of Operations and totaled $16 million and $45 million for the three months ended March 31, 2021 and 2020, respectively. The TSA expired on March 31, 2021.

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

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


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NOTE 2: BASIS OF PRESENTATION

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

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

Recently Adopted Accounting Pronouncements

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

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

NOTE 3: INVENTORIES, NET

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

The major classes of inventory are as follows:
(In millions)March 31, 2021December 31, 2020
Raw materials$407 $363 
Work-in-process171 143 
Finished goods1,276 1,123 
Inventories, net$1,854 $1,629 

The Company performs periodic assessments to determine the existence of excess and obsolete inventory and records necessary provisions to reduce such inventories to estimated realizable value. Raw materials, work-in-process and finished goods are net of valuation reserves of $182 million and $183 million as of March 31, 2021 and December 31, 2020, respectively.
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NOTE 4: GOODWILL AND INTANGIBLE ASSETS

The Company records goodwill as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is tested and reviewed annually for impairment during the third quarter 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.

The changes in the carrying amount of goodwill are as follows:
(In millions)HVACRefrigerationFire & SecurityTotal
Balance as of December 31, 2020$5,489 $1,251 $3,399 $10,139 
Goodwill resulting from business combinations5   5 
Foreign currency translation(37)(8)(22)(67)
Balance as of March 31, 2021$5,457 $1,243 $3,377 $10,077 

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

Identifiable intangible assets are comprised of the following:

March 31, 2021December 31, 2020
(In millions)Gross AmountAccumulated AmortizationGross AmountAccumulated Amortization
Amortized:
Customer relationships$1,538 $(1,284)$1,558 $(1,285)
Patents and trademarks298 (222)301 (222)
Monitoring lines71 (60)71 (59)
Service portfolios and other638 (541)644 (542)
2,545 (2,107)2,574 (2,108)
Unamortized:
Trademarks and other564  571 — 
Intangible assets, net$3,109 $(2,107)$3,145 $(2,108)

Amortization of Intangible assets was $24 million and $25 million for the three months ended March 31, 2021 and 2020, respectively.
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NOTE 5: BORROWINGS AND LINES OF CREDIT

Long-term debt consisted of the following:

(In millions, except percentages)March 31, 2021December 31, 2020
1.923% Notes due February 15, 2023
$ (1)$500 
2.242% Notes due February 15, 2025
2,000 2,000 
2.493% Notes due February 15, 2027
1,250 1,250 
2.722% Notes due February 15, 2030
2,000 2,000 
2.700% Notes due February 15, 2031
750 750 
3.377% Notes due April 5, 2040
1,500 1,500 
3.577% Notes due April 5, 2050
2,000 2,000 
Other (including project financing obligations and finance leases)307 308 
Total principal long-term debt9,807 10,308 
Other (discounts and debt issuance costs) (1)
(77)(81)
Total debt9,730 10,227 
Less: current portion of long-term debt153 191 
Long-term debt, net of current portion$9,577 $10,036 

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

Revolving Credit Facility

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

Commercial Paper Program

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

Project Financing Arrangements

The Company is involved in several long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued $46 million and $40 million of debt during the three months ended March 31, 2021 and 2020, respectively. Long-term debt repayments associated with these financing arrangements during the three months ended March 31, 2021 and 2020 were $53 million and $34 million, respectively.

Debt Covenants

The Revolving Credit Facility and the indenture for the long-term notes contain affirmative and negative covenants customary for financings of these types, which among other things, limit the Company's ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. On June 2, 2020, the Company entered into an amendment of the Revolving Credit Facility, under which certain terms of the facility were amended for a period beginning on June 2, 2020 and ending on December 30, 2021 (the "Covenant Modification Period"). The Company may terminate the Covenant Modification Period prior to December 30, 2021, subject to the satisfaction of certain conditions. The amendment
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defers testing of the Company's consolidated total net leverage ratio financial covenant until June 30, 2021 and increases the consolidated total net leverage ratio limit until December 31, 2021. The amendment also requires the Company to maintain liquidity at a certain level until the earlier of (1) June 29, 2021 and (2) the last day of the Covenant Modification Period. Additionally, during the Covenant Modification Period, the Company is subject to: (a) limitations on the incurrence of subsidiary indebtedness, (b) limitations on the making of restricted payments, including purchases by the Company of shares of its common stock and the amount of dividends the Company may pay and (c) a "most favored nations" provision related to certain terms of any committed credit facility in an amount greater than $100 million. As of March 31, 2021, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.

NOTE 6: FAIR VALUE MEASUREMENTS

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

Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

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

The Company invests a portion of its Cash and cash equivalents in money market mutual funds with original maturities of three months or less. Foreign currency transaction exposures are managed through operational strategies and the use of foreign currency hedging contracts. The following tables provide the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the Company's Unaudited Condensed Consolidated Balance Sheet:

(In millions)TotalLevel 1Level 2Level 3
March 31, 2021
Recurring fair value measurement:
Money market mutual funds$38 (1)$ $38 $ 
Derivative assets $6 (2)$ $6 $ 
Derivative liabilities $(20)(3)$ $(20)$ 
December 31, 2020
Recurring fair value measurement:
Money market mutual funds$38 (1)$ $38 $ 
Derivative assets$17 (2)$ $17 $ 
Derivative liabilities$(5)(3)$ $(5)$ 

(1) Included in Cash and cash equivalents on the accompanying Unaudited Condensed Consolidated Balance Sheet
(2) Included in Other assets, current on the accompanying Unaudited Condensed Consolidated Balance Sheet
(3) Included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet

The following table provides the carrying amounts and fair values of financial instruments that are not recorded at fair value in the Company's Unaudited Condensed Consolidated Balance Sheet:

March 31, 2021December 31, 2020
(In millions)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Current and long-term debt (excluding finance leases)$9,720 $9,884 $10,221 $11,115 

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The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Company's Unaudited Condensed Consolidated Balance Sheet:

March 31, 2021
(In millions)TotalLevel 1Level 2Level 3
Current and long-term debt (excluding finance leases)$9,884 $9,587 $ $297 

December 31, 2020
(In millions)TotalLevel 1Level 2Level 3
Current and long-term debt (excluding finance leases)$11,115 $10,811 $ $304 

Valuation Techniques

The Company's derivative assets and liabilities are measured at fair value using internal models based on observable market inputs, such as forward, interest, contract and discount rates. As of March 31, 2021 and 2020, the project financing obligations included in Long-term debt approximate fair value.

NOTE 7: EMPLOYEE BENEFIT PLANS

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

Contributions to the plans were as follows:
For the Three Months Ended March 31,
(In millions)20212020
Defined benefit plans$24 $25 
Defined contribution plans$37 $30 
Multi-employer pension plans$5 $5 

The following table illustrates the components of net periodic pension benefits for the defined benefit pension and post-retirement benefit plans:
For the Three Months Ended March 31,
(In millions)20212020
Service cost$7 $8 
Interest cost9 13 
Expected return on plan assets(36)(35)
Amortization of prior service credit1 1 
Recognized actuarial net (gain) loss8 5 
Net settlement, curtailment and special termination benefit (gain) loss 1 
Net periodic pension expense (benefit)$(11)$(7)


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NOTE 8: GUARANTEES

The Company provides service and warranty coverage on its products and extends performance and operating cost guarantees beyond normal service and warranty coverage on certain products. In addition, the Company incurs discretionary costs to service its products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability and are largely estimated based upon historical experience. Adjustments are recorded to accruals based on claims data and historical experience. The changes in the carrying amount of service and product warranties and product performance guarantees, included in Accrued liabilities on the accompanying Unaudited Condensed Consolidated Balance Sheet, for the three months ended March 31, 2021 and 2020 are as follows:
For the Three Months Ended March 31,
(In millions)20212020
Balance as of January 1,$514 $488 
Warranties, performance guarantees issued and changes in estimated liability39 35 
Settlements made(38)(39)
Other(1)(3)
Balance as of March 31,$514 $481 

NOTE 9: EQUITY

The authorized number of shares of common stock of Carrier is 4,000,000,000 shares of $0.01 par value. As of March 31, 2021, 869,789,967 shares of common stock were issued, which includes 976,374 shares of treasury stock.

Share Repurchase Program

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

For the three months ended March 31, 2021, the Company repurchased 976,374 shares of common stock for an aggregate purchase price of $38 million, which are held in Treasury stock as of March 31, 2021 as reflected on its Unaudited Condensed Consolidated Balance Sheet.

Accumulated Other Comprehensive Income (Loss)

A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax is as follows:

(In millions)Foreign Currency TranslationDefined Benefit Pension and Post-retirement PlansAccumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2020$(191)$(554)$(745)
Other comprehensive income (loss) before reclassifications, net(121)— (121)
Amounts reclassified, pre-tax— 9 9 
Tax expense (benefit) reclassified— (2)(2)
Balance as of March 31, 2021$(312)$(547)$(859)

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(In millions)Foreign Currency TranslationDefined Benefit Pension and Post-retirement PlansAccumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2019$(780)$(473)$(1,253)
Other comprehensive income (loss) before reclassifications, net(488)— (488)
Amounts reclassified, pre-tax— 6 6 
Tax expense (benefit) reclassified— (1)(1)
Balance as of March 31, 2020$(1,268)$(468)$(1,736)


NOTE 10: REVENUE RECOGNITION

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

Sales disaggregated by product and service are as follows:

For the Three Months Ended March 31,
(In millions)20212020
Sales Type
Product$2,147 $1,657 
Service339 302 
HVAC sales2,486 1,959 
Product892 713 
Service113 95 
Refrigeration sales1,005 808 
Product919 860 
Service385 346 
Fire & Security sales1,304 1,206 
Total segment sales4,795 3,973 
Eliminations and other(96)(85)
Net sales$4,699 $3,888 

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Contract Balances
Total contract assets and liabilities arising from contracts with customers are as follows:
(In millions)March 31, 2021December 31, 2020
Contract assets, current$694 $656 
Contract assets, non-current (included within Other assets)137 98 
Total contract assets831 754 
Contract liabilities, current(545)(512)
Contract liabilities, non-current (included within Other long-term liabilities)(170)(165)
Total contract liabilities (715)(677)
Net contract assets$116 $77 

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under the contract or when the Company has a right to consideration that is unconditional before it transfers a good or service to the customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. The Company recognized revenue of $189 million during the three months ended March 31, 2021 that related to the contract liabilities balance as of January 1, 2021. The Company expects a majority of its contract liability balance at the end of the period to be recognized as revenue in the next 12 months.

NOTE 11: RESTRUCTURING COSTS

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

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

For the Three Months Ended March 31,
(In millions)20212020
HVAC$4 $2 
Refrigeration2  
Fire & Security11 3 
Total Segment17 5 
General corporate expenses1  
Total restructuring costs$18 $5 
Cost of sales$5 $1 
Selling, general and administrative13 4