Commitment and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments

The Company’s commitments are primarily related to our lease agreements, purchase obligations, and credit agreements. See Note 11: Leases and Note 13: Debt for additional information on our leases and credit agreements.

Contingencies

From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties, and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable, and the loss is reasonably estimable. The Company reviews the developments in contingencies that could affect the amount of the reserves that have been previously recorded. The Company adjusts provisions and changes to disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount of any potential losses.

In the performance of our contracts, we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests

are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows.

As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement.

Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the Consolidated Financial Statements.

Restructuring costs

We engage in targeted restructuring initiatives in order to rationalize headcount and align our operations in a more strategic and cost-efficient structure. In connection with these restructuring initiatives, we recorded charges totaling $11 million, $3 million and $5 million for the years ended December 31, 2023, 2022 and 2021, respectively. These costs were within our ASC segment for the periods presented. Costs incurred were related to employee termination and severance costs, as well as costs related to discontinuing product lines or closing down of locations. Charges were recorded within other operating expenses, net, on the Consolidated Statements of Earnings. See the table below for a breakout of restructuring costs by nature of cost incurred:


	Year Ended December 31,
(Dollars in millions)	2023		2022		2021

Severance	$	9	$	2	$	5
Facility abandonment	2		1		—












Total	$	11	$	3	$	5

The following is a summary of changes in the restructuring provision balance during the years ended December 31, 2023 and 2022:


(Dollars in millions)
Balance at January 1, 2022	$	4
Additional provision	3
Reversal and utilization	(3)
Balance at December 31, 2022	4
Additional provision	11
Reversal and utilization	(5)
Balance at December 31, 2023	$	10

Product Warranties

Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are

identified and resolved. The following is a summary of changes in the product warranty balances during the years ended December 31, 2022 and 2023:


(Dollars in millions)
Balance at January 1, 2022	$	19
Additional provision	10
Reversal and utilization	(11)
Balance at December 31, 2022	$	18
Additional provision	20
Reversal and utilization	(12)
Balance at December 31, 2023	$	26