COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 29, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9. COMMITMENTS AND CONTINGENCIES

For a description of our litigation and contingencies and additional information about our leases, refer to Note 14 and Note 9, respectively, in our 2023 Annual Report on Form 10-K.

Warranty

We generally accrue estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and, in certain instances, estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known. During the three-month periods ended March 29, 2024 and March 31, 2023, warranty related activity was immaterial.

Leases

Operating lease costs for the three-month periods ended March 29, 2024 and March 31, 2023 was $13 million and $12 million, respectively. During both the three-month periods ended March 29, 2024 and March 31, 2023, cash paid for operating leases included in operating cash flows was $12 million. Right-of-use (“ROU”) assets obtained in exchange for operating lease obligations were $4 million during both the three-month periods ended March 29, 2024 and March 31, 2023, respectively. Operating lease ROU assets were $170 million and $155 million as of March 29, 2024 and December 31, 2023, respectively. Operating lease liabilities were $177 million and $164 million as of March 29, 2024 and December 31, 2023, respectively.

Operating lease ROU assets and operating lease liabilities are recorded in the Consolidated Condensed Balance Sheets within Other assets, Accrued expenses and other current liabilities, and Other long-term liabilities, respectively.

Other Matters

We discovered that a subsidiary of ours made certain incorrect representations regarding status as a small business concern as defined by the Small Business Act for certain contracts that it was awarded by the Defense Logistics Agency (“DLA”). As a result, on January 26, 2024, we voluntarily notified the Department of Defense Office of Inspector General (“OIG”) and the DLA of this matter. While we are continuing to investigate, we currently do not expect this matter to have a material adverse effect on our financial condition or results of operations. However, resolution of this matter could subject us to fines or penalties, and we cannot provide assurance as to the timing or outcome of such resolution.