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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, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission file number 001-39221
____________________________________ 

https://cdn.kscope.io/ee9c46899159859a3090dab29d9f97a8-otis-20220331_g1.jpg
OTIS WORLDWIDE CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________ 
Delaware 83-3789412
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
One Carrier Place, Farmington, Connecticut 06032
(Address of principal executive offices, including zip code)

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

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

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

At April 15, 2022 there were 422,794,427 shares of Common Stock outstanding.
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OTIS WORLDWIDE CORPORATION
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended March 31, 2022
 
 Page

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

Item 1.    Financial Statements

OTIS WORLDWIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 

 Quarter Ended March 31,
(amounts in millions, except per share amounts)20222021
Net sales:
Product sales$1,422 $1,458 
Service sales1,992 1,950 
3,414 3,408 
Costs and expenses:
Cost of products sold1,190 1,187 
Cost of services sold1,218 1,202 
Research and development37 35 
Selling, general and administrative459 482 
2,904 2,906 
Other income (expense), net16 7 
Operating profit526 509 
Non-service pension cost (benefit) 2 
Interest expense (income), net37 32 
Net income before income taxes489 475 
Income tax expense136 123 
Net income353 352 
Less: Noncontrolling interest in subsidiaries' earnings42 44 
Net income attributable to Otis Worldwide Corporation$311 $308 
Earnings per share (Note 2):
Basic$0.73 $0.71 
Diluted$0.73 $0.71 
Weighted average number of shares outstanding
     Basic shares424.2431.6
     Diluted shares427.7433.7

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

Quarter Ended March 31,
(dollars in millions)20222021
Net income$353 $352 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (22)
Pension and postretirement benefit plan adjustments2 4 
Change in unrealized cash flow hedging (4)
Other comprehensive income (loss), net of tax2 (22)
Comprehensive income (loss), net of tax355 330 
Less: Comprehensive (income) loss attributable to noncontrolling interest23 (30)
Comprehensive income attributable to Otis Worldwide Corporation$378 $300 

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

(dollars in millions)March 31, 2022December 31, 2021
Assets
Cash and cash equivalents$1,235 $1,565 
Restricted cash1,841 1,910 
Accounts receivable (net of allowance for expected credit losses of $188 and $175)
3,262 3,232 
Contract assets538 550 
Inventories, net626 622 
Other current assets342 382 
Total Current Assets7,844 8,261 
Future income tax benefits311 335 
Fixed assets (net of accumulated depreciation of $1,144 and $1,156)
757 774 
Operating lease right-of-use assets542 526 
Intangible assets, net397 419 
Goodwill1,636 1,667 
Other assets308 297 
Total Assets$11,795 $12,279 
Liabilities and Equity (Deficit)
Short-term borrowings$51 $24 
Accounts payable1,507 1,556 
Accrued liabilities1,754 1,993 
Contract liabilities2,930 2,674 
Total Current Liabilities6,242 6,247 
Long-term debt6,694 7,249 
Future pension and postretirement benefit obligations547 558 
Operating lease liabilities386 336 
Future income tax obligations 261 267 
Other long-term liabilities606 606 
Total Liabilities14,736 15,263 
Commitments and contingent liabilities (Note 16)
Redeemable noncontrolling interest1,981 160 
Shareholders' Equity (Deficit):
Common Stock and additional paid-in capital121 119 
Treasury Stock(925)(725)
Accumulated deficit(3,529)(2,256)
Accumulated other comprehensive income (loss)(696)(763)
Total Shareholders' Equity (Deficit)(5,029)(3,625)
Noncontrolling interest107 481 
Total Equity (Deficit)(4,922)(3,144)
Total Liabilities and Equity (Deficit)$11,795 $12,279 

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

Common Stock and Additional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Shareholders'
(Deficit) Equity
Noncontrolling InterestTotal (Deficit) EquityRedeemable Noncontrolling Interest
(dollars in millions, except per share amounts)
Quarter Ended March 31, 2022
Balance as of December 31, 2021$119 $(725)$(2,256)$(763)$(3,625)$481 $(3,144)$160 
Net income  311  311 33 344 9 
Other comprehensive income (loss), net of tax   67 67 (1)66 (64)
Stock-based compensation and Common Stock issued under employee plans5    5  5  
Cash dividends declared ($0.24 per Common Share)
  (102) (102) (102) 
Repurchase of Common Shares (200)  (200) (200) 
Dividends attributable to noncontrolling interest     (3)(3)(10)
Reclassification of noncontrolling interest to redeemable noncontrolling interest (Note 1)  (1,482) (1,482)(403)(1,885)1,885 
Acquisitions, disposals and other changes(3)   (3) (3)1 
Balance as of March 31, 2022$121 $(925)$(3,529)$(696)$(5,029)$107 $(4,922)$1,981 
Quarter Ended March 31, 2021
Balance as of December 31, 2020$59 $ $(3,106)$(815)$(3,862)$467 $(3,395)$194 
Net income— — 308 — 308 41 349 3 
Other comprehensive income (loss), net of tax— — — (8)(8)(7)(15)(7)
Stock-based compensation and Common Stock issued under employee plans9 — — — 9 — 9 — 
Cash dividends declared ($0.20 per Common Share)
— — (87)— (87)(87)— 
Repurchase of Common Shares— (300)— — (300)— (300)— 
Dividends attributable to noncontrolling interest— — — — — (22)(22)(10)
Acquisition, disposal and other changes— — — — — 12 12 (17)
Balance as of March 31, 2021$68 $(300)$(2,885)$(823)$(3,940)$491 $(3,449)$163 

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

 Quarter Ended March 31,
(dollars in millions)20222021
Operating Activities:
Net income$353 $352 
Adjustments to reconcile net income to net cash flows provided by operating activities, net of acquisitions:
Depreciation and amortization48 51 
Deferred income tax expense (benefit)17 (28)
Stock compensation cost13 14 
Change in operating assets and liabilities:
Accounts receivable, net(51)(14)
Contract assets and liabilities, current278 328 
Inventories, net(14)(39)
Other current assets56 61 
Accounts payable(36)29 
Accrued liabilities(178)(160)
Pension contributions(12)(13)
Other operating activities, net30 4 
Net cash flows provided by operating activities504 585 
Investing Activities:
Capital expenditures(30)(44)
Investments in businesses and intangible assets, net of cash acquired (Note 6)(8)(24)
Proceeds from the sale of (investments in) marketable securities(7)(18)
Receipts (payments) on settlements of derivative contracts28 8 
Other investing activities, net 28 
Net cash flows used in investing activities(17)(50)
Financing Activities:
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)26 (244)
Proceeds from borrowings (maturities longer than 90 days) 152 
Repayments of borrowings (maturities longer than 90 days) (250)
Proceeds from issuance of long-term debt 199 
Payment of debt issuance costs (2)
Repayment of long-term debt(500) 
Dividends paid on Common Stock(102)(87)
Repurchases of Common Stock(200)(300)
Dividends paid to noncontrolling interest(33)(32)
Other financing activities, net(14)(10)
Net cash flows provided by (used in) financing activities(823)(574)
Effect of foreign exchange rate changes on cash and cash equivalents(63)(17)
Net increase (decrease) in cash, cash equivalents and restricted cash(399)(56)
Cash, cash equivalents and restricted cash, beginning of year3,477 1,801 
Cash, cash equivalents and restricted cash, end of period3,078 1,745 
Less: Restricted cash1,843 20 
Cash and cash equivalents, end of period$1,235 $1,725 

See accompanying Notes to Condensed Consolidated Financial Statements.
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OTIS WORLDWIDE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: General

The Condensed Consolidated Financial Statements as of March 31, 2022 and for the quarters ended March 31, 2022 and 2021 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States ("U.S."). The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for fiscal year 2021 ("2021 Form 10-K" or "Form 10-K").

There have been no changes to the Company's significant accounting policies described in the Company's Form 10-K that have a material impact on the Company's Condensed Consolidated Financial Statements and the related notes. The Company adjusted a missclassification between noncontrolling interest and redeemable noncontrolling interest in the Condensed Consolidated Balance sheet as of March 31, 2021, resulting in an increase to Redeemable noncontrolling interest of $98 million, a decrease to Noncontrolling interest of $68 million and a decrease to Accumulated deficit of $30 million. Refer to Note 2 of the Company’s audited consolidated financial statements and notes thereto included in the our 2021 Form 10-K.

On April 3, 2020, the Company became an independent publicly-traded company (the "Separation") through a pro-rata distribution of 0.5 shares of Common Stock for every share of United Technologies Corporation, subsequently renamed to Raytheon Technologies Corporation ("UTC" or "RTX", as applicable), common stock held at the close of business on the record date of March 19, 2020. Otis began to trade as a separate public company (New York Stock Exchange: OTIS) on April 3, 2020. Unless the context otherwise requires, references to "Otis", "we", "us", "our" and "the Company" refer to Otis Worldwide Corporation and its subsidiaries.

Zardoya Otis Tender Offer

The Company previously announced a tender offer to acquire all of the issued and outstanding shares of Zardoya Otis, S.A. ("Zardoya Otis") not owned by the Company in cash (the "Tender Offer"), and its intention to delist the shares of Zardoya Otis from the Spanish stock exchanges subsequent to the Tender Offer. The price per share of the Tender Offer was €7.07 in cash as of March 31, 2022, after adjustments for dividends paid. The Tender Offer was approved by the Spanish regulator on February 28, 2022. As a result of the Tender Offer approval, the issued and outstanding shares of Zardoya Otis not owned by the Company were deemed redeemable at the option of the other shareholders and were reclassified from Noncontrolling interest to Redeemable noncontrolling interest on our Condensed Consolidated Balance Sheet, with the difference between the historical noncontrolling interest carrying value in the balance sheet and the fair value of the Tender Offer recorded to Accumulated deficit. The value of the issued and outstanding shares of Zardoya Otis not owned by the Company as of March 31, 2022 is €1.66 billion based on the adjusted tender price of €7.07 per share. See Note 19, "Subsequent Events" for additional information regarding the outcome of the Tender Offer.

The Company owned a controlling interest and had operational control of Zardoya Otis as of and for the periods ended March 31, 2022 and 2021, and therefore its financial results are included in our Condensed Consolidated Financial Statements. As of March 31, 2022, the Company owned 50.02% of Zardoya Otis.

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

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We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available to us and the unknown future impacts of COVID-19 as of March 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, financial assets and revenue recognition. While there was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2022 and for the quarters ended March 31, 2022 and 2021, respectively, resulting from our assessments of these matters, future assessment of our current expectations at that time of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our Condensed Consolidated Financial Statements in future reporting periods.

We also assessed certain accounting matters as they relate to the current crisis in Ukraine and Russia, including, but not limited to our allowance for credit losses, the carrying value of long-lived assets, revenue recognition and the classification of assets. There was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2022 and for the quarter ended March 31, 2022 resulting from our assessment of this matter. We continue to assess the impact on our results of operations, financial position and overall performance as the situation develops and any broader implications it may have on the global economy.

Note 2: Earnings per Share

 Quarter Ended March 31,
(dollars in millions, except per share amounts; shares in millions)20222021
Net income attributable to Otis Worldwide Corporation$311 $308 
Impact of redeemable noncontrolling interest  
Net income attributable to common shareholders$311 $308 
Basic weighted average number of shares outstanding424.2 431.6 
Stock awards and equity units (share equivalent)3.5 2.1 
Diluted weighted average number of shares outstanding427.7 433.7 
Earnings Per Share of Common Stock:
Basic$0.73 $0.71 
Diluted$0.73 $0.71 

The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the Common Stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards' assumed proceeds exceed the average market price of the common shares during the period. There were 2.6 million and 5.1 million of anti-dilutive stock awards excluded from the computation for the quarters ended March 31, 2022 and 2021, respectively.

Note 3: Revenue Recognition

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

Contract Assets and Liabilities. Contract assets reflect revenue recognized in advance of customer billing. Contract liabilities are recognized when a customer pays consideration, or we have a right to receive an amount of unconditional consideration, in advance of the satisfaction of performance obligations under the contract. We typically receive progress payments from our customers as we perform our work over time.
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Total Contract assets and Contract liabilities as of March 31, 2022 and December 31, 2021 are as follows:

(dollars in millions)March 31, 2022December 31, 2021
Contract assets, current$538 $550 
Total contract assets538 550 
Contract liabilities, current2,930 2,674 
Contract liabilities, non-current (included within Other long-term liabilities)52 52 
Total contract liabilities 2,982 2,726 
Net contract liabilities$2,444 $2,176 

Contract assets decreased by $12 million during the quarter ended March 31, 2022 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $256 million during the quarter ended March 31, 2022 primarily due to contract billings in excess of revenue earned. In the quarters ended March 31, 2022 and 2021, we recognized revenue of $1.0 billion and $1.1 billion related to contract liabilities as of January 1, 2022 and 2021, respectively.

Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of March 31, 2022, our total RPO was $17.5 billion. Of the total RPO as of March 31, 2022, we expect 90% will be recognized as sales over the following 24 months.

Note 4: Accounts Receivable, Net

Accounts receivable, net consisted of the following as of March 31, 2022 and December 31, 2021:

(dollars in millions)March 31, 2022December 31, 2021
Trade receivables$3,140 $3,117 
Unbilled receivables123 109 
Miscellaneous receivables95 88 
Customer financing notes receivable92 93 
3,450 3,407 
Less: allowance for expected credit losses188 175 
Accounts receivable, net$3,262 $3,232 

The changes in allowance for expected credit losses related to Accounts receivable, net for the quarters ended March 31, 2022 and 2021, respectively, are as follows:
Quarter Ended March 31,
(dollars in millions)20222021
Balance as of January 1$175 $161 
Provision for expected credit losses7 16 
Write-offs charged against the allowance for expected credit losses(2)(2)
Foreign exchange and other8 (3)
Balance as of March 31$188 $172 

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Note 5: Inventories, net

(dollars in millions)March 31, 2022December 31, 2021
Raw materials and work-in-process$136 $140 
Finished goods490 482 
Total$626 $622 

Raw materials, work-in-process and finished goods are net of valuation reserves of $104 million and $99 million as of March 31, 2022 and December 31, 2021, respectively.

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

Business Acquisitions. Our investments in businesses and intangibles assets, net of cash acquired, totaled $8 million and $24 million in the quarters ended March 31, 2022 and 2021, respectively. The acquisitions and investments consisted of a number of acquisitions primarily in our Service segment. Transaction costs incurred were not considered significant.

Goodwill. Changes in our Goodwill balances during the quarter ended March 31, 2022 were as follows:

(dollars in millions)
Balance as of January 1, 2022
Goodwill Resulting
From Business Combinations
Foreign Currency
Translation 
and Other
Balance as of
March 31, 2022
New Equipment$336 $ $(7)$329 
Service1,331  (24)1,307 
Total$1,667 $ $(31)$1,636 

Intangible Assets. Intangible assets cost and accumulated amortization were $2,088 million and $1,691 million, respectively, as of March 31, 2022, and $2,117 million and $1,698 million, respectively, as of December 31, 2021.

Amortization of intangible assets for the quarters ended March 31, 2022 and 2021 was $19 million and $23 million, respectively. Excluding the impact of currency translation adjustments, there were no other significant changes in our Intangible Assets during the quarters ended March 31, 2022 and 2021.

Note 7: Borrowings and Lines of Credit

(dollars in millions)March 31, 2022December 31, 2021
Commercial paper$22 $ 
Other borrowings29 24 
Total short-term borrowings$51 $24 

Commercial Paper. As of March 31, 2022, there were $22 million in borrowings outstanding under the Company's $1.5 billion commercial paper programs. We use our commercial paper borrowings for general corporate purposes including to finance acquisitions, pay dividends, repurchase shares and for debt refinancing. The need for commercial paper borrowings may arise if the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.

For details regarding the Company's short-term borrowings activity in 2021, refer to Note 10 of the Company's financial statements as of and for the year ended December 31, 2021.

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Long-term debt. As of March 31, 2022, we have a credit agreement, as amended, with various banks providing for a $1.5 billion unsecured, unsubordinated, 5-year revolving credit facility, with an interest rate of LIBOR plus 125 basis points and a commitment fee rate of 12.5 basis points, that matures in April 2025. As of March 31, 2022, there were no borrowings under the Company's revolving credit facility.

As of March 31, 2022, the Company is in compliance with all covenants in the revolving credit agreement and the indentures governing all outstanding long-term debt. Long-term debt consisted of the following:

(dollars in millions)March 31, 2022December 31, 2021
LIBOR plus 45 bps floating rate notes due 2023 1,2,3
$ $500 
0.000% notes due 2023 (€500 million principal value) 2
550 565 
2.056% notes due 2025 2
1,300 1,300 
0.37% notes due 2026 (¥21.5 billion principal value) 2
177 189 
0.318% notes due 2026 (€600 million principal value) 2
660 677 
2.293% notes due 2027 2
500 500 
2.565% notes due 2030 2
1,500 1,500 
0.934% notes due 2031 (€500 million principal value) 2
550 565 
3.112% notes due 2040 2
750 750 
3.362% notes due 2050 2
750 750 
Other (including finance leases)4 4 
Total principal long-term debt6,741 7,300 
Other (discounts and debt issuance costs)(47)(51)
Total long-term debt6,694 7,249 
Less: current portion  
Long-term debt, net of current portion$6,694 $7,249 

1    The three-month LIBOR rate as of December 31, 2021 was approximately 0.21%.
2    We may redeem these notes at our option pursuant to certain terms.
3    The Company redeemed its $500 million floating rate notes due in 2023, at par, using cash on hand in January 2022.

For additional details regarding the Company's debt in 2021, refer to Note 10 of the Company's financial statements as of and for the year ended December 31, 2021.

Debt discounts and debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Condensed Consolidated Statements of Operations for the quarters ended March 31, 2022 and 2021 reflects the following:

Quarter Ended March 31,
(dollars in millions)20222021
Debt issuance costs amortization$3 $1 
Total interest expense on external debt36 33 

The unamortized debt issuance costs as of March 31, 2022 and December 31, 2021 were $47 million and $51 million, respectively.

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The average maturity of our long-term debt as of March 31, 2022 is approximately 9.3 years. The average interest expense rate on our borrowings outstanding as of March 31, 2022 and December 31, 2021 was as follows:

March 31, 2022December 31, 2021
Short-term borrowings0.6 % %
Total long-term debt1.9 %1.9 %

The average interest expense rate on our borrowings during the quarters ended March 31, 2022 and 2021 was as follows:

Quarter Ended March 31,
20222021
Short-term borrowings0.4 %(0.3)%
Total long-term debt2.0 %2.4 %

Note 8: Employee Benefit Plans

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

 Quarter Ended March 31,
(dollars in millions)20222021
Defined benefit plans$12 $13 
Defined contribution plans20 19 
Multi-employer pension and postretirement plans23 38 

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

 Quarter Ended March 31,
(dollars in millions)20222021
Service cost$10 $11 
Interest cost4 3 
Expected return on plan assets(6)(6)
Recognized actuarial net loss3 5 
Total net periodic benefit cost$11 $13 

Postretirement Benefit Plans. The Company sponsors postretirement benefit plans that provide health benefits to eligible retirees. The postretirement plans are unfunded. The net periodic benefit cost was less than $1 million for the quarters ended March 31, 2022 and 2021, respectively.

Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of March 31, 2022, approximately 24 million shares remain available for awards under the Plan.

Stock-based Compensation Expense

The Company measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the Condensed Consolidated Statements of Operations. A forfeiture rate assumption is applied on grant date to adjust the expense recognition for awards that are not expected to vest.
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Stock-based compensation expense and the resulting tax benefits were as follows:

Quarter Ended March 31,
(dollars in millions)
20222021
Stock-based compensation expense (Share Based)$13 $14 
Stock-based compensation expense (income) (Liability Awards)(1) 
Total gross stock-based compensation expense12 14 
Less: future tax benefit1 2 
Stock-based compensation expense, net of tax$11 $12 

As of March 31, 2022, there was approximately $94 million of total unrecognized compensation cost related to non-vested equity awards granted under the Plan. This cost is expected to be recognized ratably over a weighted-average period of 2.2 years.

Note 9: Stock

Preferred Stock. There are 125 million shares of $0.01 par value authorized Preferred Stock, of which none were issued or outstanding as of March 31, 2022 and December 31, 2021.

Common Stock. There are 2 billion shares of $0.01 par value Common Stock authorized. As of March 31, 2022, 435.1 million shares of Common Stock were issued, which includes 12.3 million shares of treasury stock. As of December 31, 2021, 434.7 million shares of Common Stock were issued, which included 9.7 million shares of treasury stock.

Share Repurchase Program. As of December 31, 2021, the Company was authorized by the Board of Directors to purchase up to $1 billion of Common Stock under a share repurchase program, of which $275 million was remaining at such time.

As a result of the increased debt incurred in 2021 to fund the Tender Offer, we temporarily suspended our share repurchases as we focused on deleveraging. During the quarter ended March 31, 2022, we repaid certain debt and resumed our share repurchases. During the quarters ended March 31, 2022 and 2021, the Company repurchased 2.6 million and 4.7 million shares, respectively, for approximately $200 million and $300 million, respectively.

On March 9, 2022, our Board of Directors revoked any remaining share repurchase authority under the prior share repurchase program and approved a new share repurchase program for up to $1 billion of Common Stock, of which none had been utilized as of March 31, 2022.

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

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Note 10: Accumulated Other Comprehensive Income (Loss)

A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax, for the quarters ended March 31, 2022 and 2021 is provided below:

(dollars in millions)Foreign
Currency
Translation
Defined Benefit
Pension and
Postretirement
Plans
Unrealized
Hedging Gains
(Losses)
Accumulated
Other
Comprehensive
Income (Loss)
Quarter Ended March 31, 2022
Balance as of December 31, 2021$(642)$(128)$7 $(763)
Other comprehensive income (loss) before
reclassifications, net
65  4 69 
Amounts reclassified, pre-tax 3 (4)(1)
Tax benefit reclassified (1) (1)
Balance as of March 31, 2022$(577)$(126)$7 $(696)

(dollars in millions)Foreign
Currency
Translation
Defined Benefit
Pension and
Postretirement
Plans
Unrealized
Hedging Gains
(Losses)
Accumulated
Other
Comprehensive
Income (Loss)
Quarter Ended March 31, 2021
Balance as of December 31, 2020$(616)$(203)$4 $(815)
Other comprehensive income (loss) before
reclassifications, net
(8) (9)(17)
Amounts reclassified, pre-tax 5 5 10 
Tax benefit reclassified (1) (1)
Balance as of March 31, 2021$(624)$(199)$ $(823)

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

Note 11: Income Taxes

The increase in the effective tax rate for the quarter ended March 31, 2022 is primarily due to the absence of a reduction in the deferred tax liability related to repatriation of foreign earnings recorded in the quarter ended March 31, 2021.

The Company conducts business globally and, as a result, the Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Austria, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Netherlands, Portugal, Russia, South Korea, Spain, Switzerland, the United Kingdom and the United States. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2010.

In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The evaluation considers any additional worldwide uncertain tax positions, the closure of tax statutes or the re-valuation of current uncertain tax positions arising from the issuance of legislation, regulatory or other guidance or developments in examinations, in appeals, or in the courts. Based on the preceding factors, it is reasonably possible that within the next 12 months unrecognized tax benefits could change within the range of a $20 million increase to a $340 million decrease and associated interest could change within the range of a $5 million increase to a $150 million decrease.

See Note 16, “Contingent Liabilities” for discussion regarding uncertain tax positions, included in the above range, related to pending litigation with respect to certain deductions claimed in Germany.
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Note 12: Restructuring Costs

During the quarters ended March 31, 2022 and 2021, we recorded restructuring costs totaling $14 million and $15 million, respectively, for new and ongoing restructuring actions. We recorded these charges as follows:

Quarter Ended March 31,
(dollars in millions)20222021
Cost of products and services sold$3 $4 
Selling, general and administrative11 11 
Total $14 $15 

Restructuring Actions. During the quarter ended March 31, 2022, we recorded restructuring costs of $13 million for restructuring actions initiated in 2022, consisting of $3 million in Cost of products and services sold and $10 million in Selling, general and administrative expenses. During the quarter ended March 31, 2022, we recorded restructuring costs totaling $1 million for restructuring actions initiated in 2021 in Selling, general and administrative expenses.

We are targeting to complete in 2022 the majority of remaining restructuring actions initiated in 2022 and 2021, with certain utilization beyond 2022.

The following table summarizes expected, incurred and remaining costs for the 2022 and 2021 restructuring actions:

(dollars in millions)Expected CostsCosts Incurred During 2021Costs Incurred Quarter Ended March 31, 2022Remaining Costs as of March 31, 2022
Total 2022 Actions$42