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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

____________________________________

FORM 10-Q

____________________________________


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

For the quarterly period ended June 30, 2021


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

Commission file number 001-39220

____________________________________

CARRIER GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________


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

13995 Pasteur Boulevard, Palm Beach Gardens, Florida 33418

(Address of principal executive offices, including zip code)

(561) 365-2000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock ($0.01 par value)

CARR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of July 15, 2021, there were 867,701,396 shares of Common Stock outstanding.

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CARRIER GLOBAL CORPORATION

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

Three and Six Months Ended June 30, 2021


			Page

PART I – FINANCIAL INFORMATION			3

Item 1. Financial Statements:			3

Condensed Consolidated Statement of Operations (Unaudited)			3



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

Condensed Consolidated Balance Sheet (Unaudited)			5

Condensed Consolidated Statement of Changes in Equity (Unaudited)			6

Condensed Consolidated Statement of Cash Flows (Unaudited)			7

Notes to Condensed Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			25

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			26

Item 3. Quantitative and Qualitative Disclosures About Market Risk			40

Item 4. Controls and Procedures			40

PART II – OTHER INFORMATION			42

Item 1. Legal Proceedings			42

Item 1A. Risk Factors			42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43



Item 6. Exhibits			44

SIGNATURES			45

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









Net income attributable to common shareowners	$	487	$	261	$	871	$	357

Earnings per share
Basic	$	0.56	$	0.30	$	1.00	$	0.41
Diluted	$	0.55	$	0.30	$	0.98	$	0.41

Weighted-average number of shares outstanding
Basic	868.7		866.2		869.0		866.2
Diluted	890.9		870.9		890.4		870.9

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 June 30,				For the Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Net income from operations	$	497	$	269	$	889	$	371


Other comprehensive income (loss), net of tax




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








Pension and post-retirement benefit plan adjustments	6		7		13		12












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

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)	June 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	2,630	$	3,115
Accounts receivable, net	3,128		2,781
Contract assets, current	695		656
Inventories, net	1,885		1,629
Other assets, current	416		343
Total current assets	8,754		8,524
Future income tax benefits	461		449
Fixed assets, net	1,837		1,810
Operating lease right-of-use assets	786		788
Intangible assets, net	1,071		1,037
Goodwill	10,279		10,139
Pension and post-retirement assets	635		554
Equity method investments	1,572		1,513
Other assets	343		279
Total Assets	$	25,738	$	25,093

Liabilities and Equity
Accounts payable	$	2,362	$	1,936
Accrued liabilities	2,541		2,471
Contract liabilities, current	576		512
Current portion of long-term debt	125		191
Total current liabilities	5,604		5,110
Long-term debt	9,600		10,036
Future pension and post-retirement obligations	511		524
Future income tax obligations	556		479
Operating lease liabilities	635		642
Other long-term liabilities	1,712		1,724
Total Liabilities	18,618		18,515
Commitments and contingent liabilities (Note 18)
Equity
Common stock	9		9
Treasury stock	(130)		—
Additional paid-in capital	5,366		5,345
Retained earnings	2,305		1,643
Accumulated other comprehensive loss	(794)		(745)
Non-controlling interest	364		326
Total Equity	7,120		6,578
Total Liabilities and Equity	$	25,738	$	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 Investment		Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2019	$	15,355	$	(1,253)	$	—	$	—	$	—	$	—	$	333	$	14,435
Net income	96		—		—		—		—		—		6		102
Other comprehensive income (loss), net of tax	—		(483)		—		—		—		—		(2)		(485)


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

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

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

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

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




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

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














(In millions)	UTC Net Investment		Accumulated Other Comprehensive Income (Loss)		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interest		Total Equity
Balance as of December 31, 2020	$	—	$	(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

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

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

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

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













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

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 Six Months Ended June 30,
(In millions)	2021		2020
Operating Activities
Net income from operations	$	889	$	371
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	168		159
Deferred income tax provision	33		135
Stock-based compensation costs	40		35
Equity method investment net earnings	(125)		(86)
Distributions from equity method investments	42		49
Impairment charge on minority-owned joint venture investments	—		72

Changes in operating assets and liabilities
Accounts receivable, net	(288)		27
Contract assets, current	(41)		(140)
Inventories, net	(210)		(325)
Other assets, current	(27)		32
Accounts payable and accrued liabilities	368		152
Contract liabilities, current	42		37
Defined benefit plan contributions	(27)		(27)
Other operating activities, net	(119)		65
Net cash flows provided by (used in) operating activities	745		556

Investing Activities
Capital expenditures	(132)		(94)
Investment in businesses, net of cash acquired	(167)		—
Dispositions of businesses	1		—

Settlement of derivative contracts, net	(6)		(23)
Other investing activities, net	3		14
Net cash flows provided by (used in) investing activities	(301)		(103)

Financing Activities
Increase (decrease) in short-term borrowings, net	(13)		(17)
Issuance of long-term debt	74		11,734
Repayment of long-term debt	(605)		(36)
Repurchases of common stock	(130)		—
Dividends paid on common stock	(209)		—
Dividends paid to non-controlling interest	(30)		(8)
Net transfers to UTC	—		(10,359)
Other financing activities, net	15		1
Net cash flows provided by (used in) financing activities	(898)		1,315





Effect of foreign exchange rate changes on cash and cash equivalents	(2)		(17)
Net increase (decrease) in cash and cash equivalents and restricted cash	(456)		1,751
Cash, cash equivalents and restricted cash, beginning of period	3,120		957
Cash, cash equivalents and restricted cash, end of period	2,664		2,708
Less: restricted cash	34		4
Cash and cash equivalents, end of period	$	2,630	$	2,704

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. On April 1, 2020 and April 2, 2020, the Company received cash contributions totaling $590 million from UTC related to the Separation.

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

Impact of the COVID-19 Pandemic

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

The Company continues to focus its efforts on preserving 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 any continuing impact cannot be estimated with certainty at this time.

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NOTE 2: BASIS OF PRESENTATION

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

The Company's financial statements for the periods prior to the Separation and the Distribution are prepared on a "carve-out" basis and include all amounts directly attributable to the Company. Net cash transfers and other property transferred between UTC 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, Income Taxes ("ASC 740") reducing the complexity of its application while maintaining or improving the usefulness of the information required to be reported. The ASU eliminates certain exceptions from ASC 740 including: intra-period tax allocation, deferred tax liabilities related to outside basis differences and year-to-date loss in interim periods, among others. ASU 2019-12 was effective for periods beginning after December 15, 2020, including interim periods therein with early adoption permitted. The Company adopted this ASU on January 1, 2021 with no material impact on the Unaudited Condensed Consolidated Financial Statements.

NOTE 3: INVENTORIES, NET

Inventories are stated at the lower of cost or estimated 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)	June 30, 2021		December 31, 2020
Raw materials	$	478	$	363
Work-in-process	190		143
Finished goods	1,217		1,123

Inventories, net	$	1,885	$	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 $189 million and $183 million as of June 30, 2021 and December 31, 2020, respectively.

NOTE 4: GOODWILL AND INTANGIBLE ASSETS

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

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


(In millions)		HVAC		Refrigeration		Fire & Security		Total
Balance as of December 31, 2020		$	5,489	$	1,251	$	3,399	$	10,139
Goodwill resulting from business combinations	(1)	175		—		—		175
Foreign currency translation		(19)		(4)		(12)		(35)
Balance as of June 30, 2021		$	5,645	$	1,247	$	3,387	$	10,279

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

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 over their estimated useful lives.

Identifiable intangible assets are comprised of the following:


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

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

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NOTE 5: BORROWINGS AND LINES OF CREDIT

Long-term debt consisted of the following:


(In millions, except percentages)	June 30, 2021			December 31, 2020

1.923% Notes due February 15, 2023	$	—	(1)	$	500
2.242% Notes due February 15, 2025	2,000			2,000
2.493% Notes due February 15, 2027	1,250			1,250
2.722% Notes due February 15, 2030	2,000			2,000
2.700% Notes due February 15, 2031	750			750
3.377% Notes due April 5, 2040	1,500			1,500
3.577% Notes due April 5, 2050	2,000			2,000


Total long-term Notes	9,500			10,000
Other debt (including project financing obligations and finance leases)	300			308
Discounts and debt issuance costs	(75)			(81)
Total debt	9,725			10,227
Less: current portion of long-term debt	125			191
Long-term debt, net of current portion	$	9,600		$	10,036

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

Revolving Credit Facility

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

Commercial Paper Program

As of June 30, 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 June 30, 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 $71 million and $75 million of debt during the six months ended June 30, 2021 and 2020, respectively. Long-term debt repayments associated with these financing arrangements during the six months ended June 30, 2021 and 2020 were $83 million and $36 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 deferred testing of the Company's consolidated total net leverage ratio financial covenant until June 30, 2021 and increases the consolidated total net leverage ratio limit until December 31, 2021. The amendment also required the Company to maintain

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

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors, including foreign currency and commodity price risk. These exposures are managed through operational strategies and the use of undesignated hedging contracts. The Company's derivative assets and liabilities are measured at fair value on a recurring basis using internal models based on observable market inputs, such as forward, interest, contract and discount rates. 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)	Total			Level 1		Level 2		Level 3
June 30, 2021


Derivative assets	$	3	(1)	$	—	$	3	$	—
Derivative liabilities	$	(3)	(2)	$	—	$	(3)	$	—

December 31, 2020


Derivative assets	$	17	(1)	$	—	$	17	$	—
Derivative liabilities	$	(5)	(2)	$	—	$	(5)	$	—

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


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



Total Long-term Notes (1)	$	9,500	$	9,930	$	10,000	$	10,811

(1) Excludes debt discount and issuance costs

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate

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fair value due to the short-term nature of these accounts and would be classified as Level 1 in the fair value hierarchy. The Company's financing leases and project financing obligations, included in Long-term debt, approximate fair value and are classified as Level 3 in the fair value hierarchy.

NOTE 7: EMPLOYEE BENEFIT PLANS

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

Contributions to the plans were as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Defined benefit plans	$	3	$	2	$	27	$	27
Defined contribution plans	$	30	$	25	$	67	$	55
Multi-employer pension plans	$	7	$	5	$	12