Otis Worldwide CorpOTIS
Otis Worldwide Corp Fair Value Disclosure
Fair Value Measurements
In accordance with the provisions of ASC 820: Fair Value Measurements, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and non-recurring basis in our Consolidated Balance Sheets as of December 31, 2025 and 2024:
| December 31, 2025 | ||||||||||||||||||||||||||
| (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Recurring fair value measurements: | ||||||||||||||||||||||||||
| Marketable securities | $ | 55 | $ | 55 | $ | — | $ | — | ||||||||||||||||||
| 20 | — | 20 | — | |||||||||||||||||||||||
| (32) | — | (32) | — | |||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Recurring fair value measurements: | ||||||||||||||||||||||||||
| Marketable securities | $ | 44 | $ | 44 | $ | — | $ | — | ||||||||||||||||||
| 68 | — | 68 | — | |||||||||||||||||||||||
| (50) | — | (50) | — | |||||||||||||||||||||||
Valuation Techniques. Our marketable securities include investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. The fair value gains or losses related to our marketable securities are recorded through net income. Our derivative assets and liabilities include foreign exchange and commodity contracts that are measured at fair value using internal and third party models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks.
As of December 31, 2025, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks.
The fair values of the current portion of the Company's financial instruments not carried at fair value approximated their carrying values because of the short-term nature of the current portion. The fair value of receivables, including customer financing notes receivable, net, that were issued long-term are based on the discounted values of their related cash flows at interest rates reflecting the attributes of the counterparties, including geographic location. Customer-specific risk, including credit risk, is already considered in the carrying value of those receivables. Our long-term debt, as described in Note 8, "Borrowings and Lines of Credit", is measured at fair value using closing bond prices from active markets.
The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Consolidated Balance Sheets as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| (dollars in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||
| Long-term receivables, net | $ | 49 | $ | 48 | $ | 47 | $ | 46 | ||||||||||||||||||
| Customer financing notes receivable, net | 16 | 14 | 21 | 19 | ||||||||||||||||||||||
| Short-term borrowings | (214) | (214) | (51) | (51) | ||||||||||||||||||||||
| Long-term debt, including current portion (excluding leases and other) | (7,779) | (7,269) | (8,316) | (7,600) | ||||||||||||||||||||||
| Long-term liabilities, including current portion | (84) | (81) | (132) | (123) | ||||||||||||||||||||||
Long-term liabilities, including current portion, as of December 31, 2025 and 2024 is primarily $80 million and $131 million, respectively, of payables to RTX for reimbursement of tax payments that RTX is responsible to pay after the Separation as a result of the TMA.
The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Consolidated Balance Sheets as of December 31, 2025 and 2024:
| December 31, 2025 | ||||||||||||||||||||||||||
| (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Long-term receivables, net | $ | 48 | $ | — | $ | 48 | $ | — | ||||||||||||||||||
| Customer financing notes receivable, net | 14 | — | 14 | — | ||||||||||||||||||||||
| Short-term borrowings | (214) | — | (214) | — | ||||||||||||||||||||||
| Long-term debt, including current portion (excluding leases and other) | (7,269) | — | (7,269) | — | ||||||||||||||||||||||
| Long-term liabilities, including current portion | (81) | — | (81) | — | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| (dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Long-term receivables, net | $ | 46 | $ | — | $ | 46 | $ | — | ||||||||||||||||||
| Customer financing notes receivable, net | 19 | — | 19 | — | ||||||||||||||||||||||
| Short-term borrowings | (51) | — | (51) | — | ||||||||||||||||||||||
| Long-term debt, including current portion (excluding leases and other) | (7,600) | — | (7,600) | — | ||||||||||||||||||||||
| Long-term liabilities, including current portion | (123) | — | (123) | — | ||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 4, 2025 | |
| 2023 | Feb 2, 2024 | |
| 2022 | Feb 3, 2023 | |
| 2021 | Feb 4, 2022 | |
| 2020 | Feb 5, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.