10-K 0001781335-26-000011 (2026-02-05) vs 10-K 0001781335-25-000010 (2025-02-04)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 9,711 |
10.6% |
| MD&A | Item 7 | 9,126 |
14.8% |
| Legal Proceedings | Item 3, via Note 20 – Contingent Liabilities | 1,156 |
30.5% |
| Accounting Policies | Item 8, Note 2 – Summary of Significant Accounting Policies | 6,587 |
13.2% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 153 words changed in this paragraph; it is 64% similar to last year's version.
Our international sales and operations are subject to risks associated with changes in local government laws, regulations and policies, including those related to investments and limitations on foreign ownership of businesses, taxation, foreign exchange controls, capital controls, local manufacturing, product content or supplier requirements, employment regulations and the repatriation of earnings. Government policies on international trade and investments such as import quotas, capital controls, punitive taxes or tariffs or similar trade barriers, whether imposed by individual governments or regional trade blocs, can affect demand for our products and services, impact the competitive position of our products or services, or encumber our ability to manufacture or sell products in certain countries. The implementation International transactions also involve increased financial and legal risks due to differing legal systems and customs in foreign countries, which could result in increased costs, risk of more restrictive trade policies, including the imposition of further tariffs in connection with the new administration in the U.S. and retaliatory tariffs in response thereto, fines or the renegotiation of existing trade agreements with the U.S. or countries where we sell large quantities of products and services, procure materials incorporated into our products, manufacture products or recruit and employ employees (see discussion on China below), could have a material adverse effect on our business, results of operations and financial condition, including our ability to recruit and retain employees or deploy certain employees to the geographies where their skills are best utilized. penalties as well as reputational harm. Our international sales and operations are also sensitive to changes in foreign nations’ priorities, including government budgets, as well as to political and economic instability. International transactions may involve increased financial and legal risks due to differing legal systems and customs in foreign countries.
Source: Item 1A, 10-K 0001781335-26-000011 vs Item 1A, 10-K 0001781335-25-000010
Legal Proceedings 139 words changed in this paragraph; it is 39% similar to last year's version.
Any The recoveries related to this matter would be are allocated between RTX and the Company pursuant to the terms of the TMA with our former parent, UTC, by way of indemnification payments. Based on its understanding of the facts and contractual provisions as of this date, and taking into account its limited access to information held by RTX to support the calculation, the The Company has estimated the additional established an indemnity payable to RTX, which is intended to cover RTX’s tax and interest payable to be paid the IRS. Interest on RTX’s liability to the IRS will continue to accrue until RTX's tax liability is paid. The Company and RTX as a result of this recovery to be $194 million and has recorded this amount in its financial statements. The parties are still in process of resolving disagree about both the scope of the indemnity obligation payable to RTX and the final indemnity amount. Company’s liability for interest accruing on amounts already paid to RTX. The Company expects this dispute to be resolved pursuant to the dispute resolution procedures of the TMA.
Source: Item 3, via Note 20 – Contingent Liabilities, 10-K 0001781335-26-000011 vs Item 3, via Note 21 – Contingent Liabilities, 10-K 0001781335-25-000010
Accounting Policies 130 words changed in this paragraph; it is 41% similar to last year's version.
In October 2021, May 2025, the FASB issued ASU 2021-08, 2025-03, Business Combinations (Topic 805): 805) and Consolidation (Topic 810): Determining the Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies Acquirer in the Acquisition of a Variable Interest Entity. The amendments in this update require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that an acquirer meets the definition of a business should recognize and measure contract assets and contract liabilities to consider the factors in a business combination the ASU to determine which entity is the accounting acquirer. The amendments in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is 2025-03 are effective for fiscal years beginning after December 15, 2022, with early application 2026. Early adoption is permitted. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption We are currently evaluating the impact of this ASU did standard, however; we do not expect it to have a material impact on our Consolidated Financial Statements.
Source: Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0001781335-26-000011 vs Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0001781335-25-000010
MD&A 116 words changed in this paragraph; it is 33% similar to last year's version.
During 2023, 2024, net cash provided by operating activities was $1.6 billion. The primary driver Net income of the inflow related to $1.5 $1.7 billion includes approximately $185 million of net income tax benefits and an increase in Accounts payable. These were approximately $200 million of interest income, partially offset by an increase $194 million of indemnification expense resulting from the outcome of the German tax litigation during the third quarter of 2024, none of which resulted in cash flow activity during 2024. A decrease in Accounts receivable, net, due to the volume and timing of billings. billings and collections is mostly offset by an increase in Accounts payable due to the timing of payments to suppliers. For additional discussion of the German tax litigation, see "Note 1: Business Overview" and "Note 20: Contingent Liabilities" to the Consolidated Financial Statements in Item 8 of this Form 10-K.
Source: Item 7, 10-K 0001781335-26-000011 vs Item 7, 10-K 0001781335-25-000010
Every change, by type
Sentences and paragraphs of OTIS's Risk Factors and MD&A, 10-K 2026-02-05 against 10-K 2025-02-04.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
Further, as we integrate emerging and rapidly evolving technologies, including AI, into our products and services, we face evolving risks related to safety, data governance, regulatory compliance and intellectual property and may not be able to anticipate or identify vulnerabilities, design flaws or security threats resulting from the use of such technology and develop adequate protection measures, which could lead to unintended consequences and significantly impact our business, reputation, and financial results.
Read it in 10-K 2026-02-05 at sec.gov ↗
AddedRisk Factors
Additionally, we provide products and services to government entities. Government contract laws and regulations impose certain risks. If violations of law are found, they could result in civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business. Each of these factors could negatively impact our business, results of operations, financial condition, and reputation.
Read it in 10-K 2026-02-05 at sec.gov ↗
RemovedRisk Factors
Potential liabilities may arise due to fraudulent transfer considerations, which would adversely affect our financial condition and results of operations.
Read it in 10-K 2025-02-04 at sec.gov ↗
RemovedRisk Factors
In connection with the Separation, our former parent UTC undertook several corporate reorganization transactions involving its subsidiaries, which, including the Separation of Otis, may be subject to various fraudulent conveyance and transfer laws. If, under these laws, a court were to determine that, at the time of the Separation, any entity involved in these reorganization transactions or the Separation: (1) was insolvent, was rendered insolvent by reason of the Separation, or had remaining assets constituting unreasonably small capital, and (2) received less than fair consideration in connection with the reorganization; or intended to incur, or believed it would incur, debts beyond its ability to pay these debts as they matured, then the court could void the Separation, in whole or in part, as a fraudulent conveyance or transfer. The court could then require our shareholders to return to RTX some or all of the shares of the Common Stock issued in the distribution, or require RTX or Otis, as the case may be, to fund liabilities of the other company for the benefit of creditors. The measure of insolvency would vary depending upon the jurisdiction and the applicable law. Generally, however, an entity would be considered insolvent if the fair value of its assets was less than the amount of its liabilities (including the probable amount of contingent liabilities), or if it incurred debt beyond its ability to repay the debt as it matures. No assurance can be given as to what standard a court would apply to determine insolvency or that a court would determine that Otis or any of its subsidiaries were solvent at the time of or after giving effect to the distribution.
Read it in 10-K 2025-02-04 at sec.gov ↗
RewordedRisk Factors
The occurrence of one or more unexpected events, including war (see discussion below regarding ongoing conflicts), acts of terrorism or violence, civil unrest, pandemics, fires, tornadoes, hurricanes, earthquakes, floods and other forms of natural disasters or severe weather, whether as a result of climate change or otherwise, in the United States or in other countries in which we operate or in which our suppliers are located could adversely affect result in physical damage to and complete or partial closure of one or more of our operations manufacturing facilities or temporary or long-term disruption in the supply of component products from some of our suppliers, disruption and financial performance. delay in the transport of our products to customers or limit our access to building sites to install our products or perform our services.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
The implementation of more restrictive trade policies, including the imposition of further tariffs in connection with the new administration in the U.S. and retaliatory tariffs actions in response thereto, or the renegotiation of existing trade agreements with the U.S. or countries where we sell large quantities of products and services, procure materials incorporated into our products, manufacture products or recruit and employ employees (see discussion on China below), could have a material adverse effect on our business, results of operations and financial condition, including our ability to recruit and retain employees or deploy certain employees to the geographies where their skills are best utilized. condition.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Furthermore, as is the case in many countries where we operate, the legal and regulatory changes in China, China could impose significant additional regulatory and legal requirements, including requirements unique to that could increase costs in China in order to maintain and/or restrict access to Chinese markets and markets, which could negatively impact our overall financial performance.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
If we are unable to successfully develop and timely introduce new products, services and technologies, our competitors may develop competing technologies that gain market acceptance in advance of or instead of our products or services. services that might cause our existing technology and offerings to become obsolete, which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Our ability to realize the anticipated benefits of our technological advancements, such as the development and execution of advanced digital technologies technologies, including artificial intelligence ("AI"), for the benefit of our New Equipment or Service segment or the development of new products depends on a variety of factors, including meeting development, production, certification and regulatory approval schedules; execution of internal and external performance plans; availability of supplier and internally produced parts and materials; performance of suppliers and subcontractors; hiring and training of qualified personnel; employee adoption of new technologies; achieving cost and production efficiencies; validation of innovative technologies; our ability to maintain new products at the Service levels and costs anticipated; and customer interest in new technologies and products and acceptance of products we manufacture or that incorporate technologies we develop.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Changes to market and economic conditions in China, including credit conditions for our customers, or an escalation of trade conflicts between the U.S. and China, have recently impacted and may continue to impact our ability to maintain New Equipment net sales in China at rates consistent with prior years. years as well as future growth of our Service segment.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
The ongoing conflicts between Russia and Ukraine and in the Middle East Geopolitical conflicts, including threats related thereto, have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how the conflicts will evolve or the timing thereof.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
We seek to grow through strategic acquisitions acquisitions, including of the interests in certain ventures and entities which we do not already wholly own, in addition to internal growth.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Our ability to achieve any goal or objective, including with respect to ESG initiatives, deliver on our sustainability and responsibility initiatives is subject to numerous risks, many of which are outside of our control.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Our business, financial condition, operating results and cash flows may be adversely affected by changes in global economic conditions, including levels of consumer and business confidence, commodity prices, raw material and energy costs, supply chain issues, trade policies, policies (including tariffs and trade barriers, barriers), foreign currency exchange rates, interest rates, labor costs, levels of government spending and deficits, actual or anticipated default on sovereign debt, political conditions, including in connection with the new administration's policies and priorities conditions in the U.S. or otherwise, regulatory changes and other challenges that could affect the global economy.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Our international sales and operations are subject to risks associated with geopolitical conflicts. conflicts, including the ongoing conflicts between Russia and Ukraine and instability in the Middle East.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedRisk Factors
Uncertainty relating to those laws or regulations may also affect how we operate, structure our investments investments, structure our contracts and comply with the terms of these contracts and/or enforce our rights. rights thereunder.
Read it in 10-K 2026-02-05 at sec.gov ↗
AddedMD&A
Based on additional information received from RTX during the year, which resulted in additional indemnification expense of $67 million, offset by indemnity payments made to RTX of $205 million, the Company now estimates the amount payable to RTX to be $56 million. The indemnification expense is included in Other income (expense), net in the Consolidated Statements of Operations in 2025. This estimate could further change due to the parties' continuing dispute concerning the scope of the final indemnity amount, which will be resolved pursuant to the procedures set forth in the TMA.
Read it in 10-K 2026-02-05 at sec.gov ↗
AddedMD&A
To the extent possible, we continue to operate our business in Ukraine, which represented less than 1% of our 2025, 2024 and 2023 net sales and operating profit.
Read it in 10-K 2026-02-05 at sec.gov ↗
RemovedMD&A
To the extent possible, we continue to operate our business in Ukraine, which represented less than 1% of our 2024, 2023 and 2022 revenue and operating profit. As previously disclosed, we sold our business in Russia, which represented approximately 1% of our revenue and operating profit in 2022, respectively, to a third party in July 2022. The operations were comprised mostly of New Equipment. We recorded losses from the sale and conflict-related charges totaling $28 million, primarily in Other income (expense), net in the Consolidated Statements of Operations in 2022. See "Note 8: Business Acquisitions, Dispositions, Goodwill and Intangible Assets" in Item 8 in this Form 10-K for further details.
Read it in 10-K 2025-02-04 at sec.gov ↗
RemovedMD&A
As previously disclosed, the Company announced the Tender Offer to acquire all issued and outstanding shares of Zardoya Otis not owned by Otis, at an offer price of €7.07 per share in cash, after adjusting for dividends. The results of the Tender Offer were announced on April 7, 2022, with tenders of 45.49% of the shares outstanding accepted. The shares tendered to the Company were settled in cash on April 12, 2022 for approximately €1.5 billion from the Company's restricted cash held in escrow, resulting in the Company owning 95.51% of Zardoya Otis. The acquisition and settlement of the remaining issued and outstanding shares not owned by the Company for approximately €150 million (based on the adjusted tender price of €7.07 per share) and the automatic delisting of Zardoya Otis shares both occurred during the second quarter of 2022. Zardoya Otis was renamed Otis Mobility upon completion of the Tender Offer and delisting.
Read it in 10-K 2025-02-04 at sec.gov ↗
RemovedMD&A
The decrease in Net sales due to Acquisitions and divestitures, net in 2023 is primarily the result of the sale of our Russia business in the third quarter of 2022.
Read it in 10-K 2025-02-04 at sec.gov ↗
RemovedMD&A
The decrease in Total cost of products and services sold due to Acquisitions and divestitures, net and Other in 2023 is primarily the result of the sale of our Russia business in the third quarter of 2022.
Read it in 10-K 2025-02-04 at sec.gov ↗
RemovedMD&A
The 2023 effective tax rate is lower than the 2022 effective tax rate primarily due to the absence of the tax impact related to the sale of our Russia business recorded in 2022, as well as the release of valuation allowances on non-U.S. losses and U.S. foreign tax credits, reduction in the deferred tax liability related to lower withholding tax on repatriation of certain foreign earnings, and reversal of tax reserves related to the U.S. foreign tax credit regulations, all recorded in 2023.
Read it in 10-K 2025-02-04 at sec.gov ↗
RewordedMD&A
The change in Interest expense (income), net of $(181) $227 million in 2024 2025 compared to 2023, 2024, was primarily driven by approximately the absence of $200 million of interest income related to the German favorable ruling received in August 2024 regarding a tax litigation, interest reserve adjustments and litigation in Germany, higher interest income, partially offset by higher interest expense related to the $600 million and €850 million unsecured, unsubordinated debt issued in November 2024 and $750 2024, as well as the $500 million unsecured, unsubordinated debt issued in August 2023. September 2025, partially offset by lower interest expense related to the repayment of the $1.3 billion unsecured, unsubordinated debt in April 2025.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The 2025 effective tax rate is higher than the 2024 effective tax rate is lower than the 2023 effective tax rate and the statutory U.S. rate primarily due to recognition the absence of estimated tax benefits arising as a result of from the resolution of the German tax litigation and the absence of the reduction of in a deferred tax liability related to the mitigation of future repatriation costs. costs, both recorded in 2024, and the tax effect of the increase in our estimated nondeductible TMA indemnity obligation payable to RTX recorded in 2025.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The change in Other income (expense), net of $(257) $130 million in 2024 2025 compared to 2023, 2024, was primarily driven by lower Separation-related adjustments of $177 $107 million, UpLift transformation costs gains on sales of $65 assets of $29 million, $18 million of lower impairment loss related to net assets held for sale, sale of $8 million and favorable foreign currency mark-to market mark-to-market adjustments, and non-recurring litigation-related settlement costs, including $18 million in the second quarter of 2024, partially offset by other reserve adjustments. higher UpLift transformation costs of $4 million.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
General corporate expenses and other increased $22 million and $32 million in 2025 compared to 2024 and $39 million in 2024 compared to 2023 and 2023 compared to 2022, 2023, respectively, primarily due to higher corporate costs including annual wage increases and the impact of other employment-related costs, partially offset by foreign currency mark-to-market adjustments. adjustments and gains on sales of assets of $7 million in 2025.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
(dollars in millions) 2025 2024 2023 2022 General corporate expenses and other $ 180 $ 158 $ 126 $ 87 UpLift restructuring 76 31 25 — Other restructuring 54 40 42 60 UpLift transformation costs 69 65 16 — Separation-related adjustments 70 177 — — Russia operations — — 5 Russia sale and conflict-related charges — — 28 Litigation-related settlement costs 21 18 — — Held for sale impairment 10 18 — — Other, net 1 (1) — — Total Corporate and Unallocated $ 481 $ 506 $ 209 $ 180
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The organic Organic volume increase of 1% in total cost of products and services sold in 2024 and 2023, were was primarily driven by the organic sales changes increases noted above. above and inflationary pressures, including annual wage increases and higher Service-related material costs, partially offset by productivity and lower commodity prices, primarily steel.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The primary drivers of the outflow were the repayments of long-term debt of $1.3 billion, repurchases of our Common Stock of $1.0 billion, $809 million, dividends paid on our Common Stock and to noncontrolling shareholders of $606 $647 million and $94 $69 million, respectively, and acquisitions of noncontrolling interest shares of $75 $217 million, including approximately $70 $215 million for our subsidiary in Japan. purchase of all outstanding shares from the noncontrolling shareholder of Otis Electric.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
(dollars in millions) Issuance Date Description of Debt Aggregate Principal Balance September 4, 2025 5.131% notes due 2035 $ 500 November 19, 2024 2.875% notes due 2027 (€850 million principal value) $ 899 November 19, 2024 5.125% notes due 2031 600 August 16, 2023 5.25% notes due 2028 750 Repayment Date Description of Debt Aggregate Principal Paid April 7, 2025 2.056% notes due 2025 $ 1,300 November 13, 2023 0.000% notes due 2023 (€500 million principal value) $ 534 January 14, 2022 LIBOR plus 45 bps floating rate notes due 2023 500
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
We expect UpLift to generate approximately $200 million in annual run-rate savings by the second half As of 2025, with total restructuring and other incremental costs to complete the transformation ("UpLift transformation costs") of are approximately $300 million, including trailing restructuring costs expected in 2026 of $18 million.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The increase in net cash used in investing activities in 2023 2025 compared to 2022 2024 was primarily driven by the net cash payments from the settlement of derivative instruments in 2023 2025 compared to net cash receipts in 2022, as well as the absence of 2024, partially offset by higher net proceeds from the sale of our business fixed assets in Russia in 2022. 2025 compared to 2024.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
Global market interest rates decreased in 2024 as compared with 2023, and, as a result, the The weighted-average discount rate used to measure pension liabilities was 3.6% in 2025 and 3.3% in 2024 and 3.4% 2024, reflecting changes in 2023. market interest rates.
Read it in 10-K 2026-02-05 at sec.gov ↗
RewordedMD&A
The primary drivers of the outflow related to $126 $204 million of net cash payments from the settlement of derivative instruments, $152 million of capital expenditures and $87 $109 million of acquisitions of businesses and intangible assets, partially offset by $49 $60 million of net cash receipts proceeds from the settlement sale of derivative instruments. fixed assets.
Read it in 10-K 2026-02-05 at sec.gov ↗
