LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jan. 03, 2025

Legal Proceedings And Contingencies [Abstract]

LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

NOTE 15: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

From time to time, as a normal incident of the nature and kind of businesses in which we are or were engaged,

various claims or charges are asserted and litigation or arbitration is commenced by or against us arising from or

related to matters, including but not limited to: product liability; personal injury; patents, trademarks, trade secrets

or other intellectual property; labor and employment disputes; commercial or contractual disputes; strategic

acquisitions or divestitures; the prior sale or use of former products allegedly containing asbestos or other restricted

materials; breach of warranty; or environmental matters. Claimed amounts against us may be substantial, but may

not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral

awards. We record accruals for losses related to those matters against us that we consider to be probable and that

can be reasonably estimated. Gain contingencies, if any, are recognized when they are realized and legal costs

generally are expensed when incurred. At January 3, 2025, our accrual for the potential resolution of lawsuits,

claims or proceedings that we consider probable of being decided unfavorably to us was not material. We cannot at

this time estimate the reasonably possible loss or range of loss in excess of our accrual due to the inherent

uncertainties and speculative nature of contested proceedings. Although it is not feasible to predict the outcome of

these matters with certainty, based on available information, in the opinion of management, settlements, arbitration

awards and final judgments, if any, that are considered probable of being rendered against us in litigation or

arbitration in existence at January 3, 2025 were reserved against or would not have a material adverse effect on our

financial condition, results of operations, cash flows or equity.

Tax Audits

Our tax filings are subject to audit by taxing authorities in jurisdictions where we conduct or conducted business.

These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or

ultimately through legal proceedings. We believe we have adequately accrued for any ultimate amounts that are

likely to result from these audits; however, final assessments, if any, could be different from the amounts recorded

in our Consolidated Financial Statements. Additional information regarding audits and examinations by taxing

authorities of our tax filings is set forth in Note 7: Income Taxes in these Notes.

U.S. Government Business

We are engaged in supplying products and services to various departments and agencies of the

U.S. Government. We are therefore dependent on Congressional appropriations and administrative allotment of

funds and may be affected by changes in U.S. Government policies. U.S. Government development and production

contracts typically involve long lead times for design and development, are subject to significant changes in contract

scheduling and may be unilaterally modified or canceled by the U.S. Government. Often these contracts call for

successful design and production of complex and technologically advanced products or systems. We may

participate in supplying products and services to the U.S. Government as either a prime contractor or as a

subcontractor to a prime contractor. Disputes may arise between the prime contractor and the U.S. Government or

between the prime contractor and its subcontractors and may result in litigation or arbitration between the

contracting parties.

Generally, U.S. Government contracts are subject to procurement laws and regulations, including the FAR, which

outline uniform policies and procedures for acquiring products and services by the U.S. Government, and specific

agency acquisition regulations that implement or supplement the FAR, such as the Defense Federal Acquisition

Regulation Supplement. As a U.S. Government contractor, our contract costs are audited and reviewed on a

continuing basis by the Defense Contract Audit Agency (“DCAA”). The DCAA also reviews the adequacy of, and a

U.S. Government contractor’s compliance with, the contractor’s business systems and policies, including the

contractor’s property, estimating, compensation and management information systems. In addition to these routine

audits, from time to time, we may, either individually or in conjunction with other U.S. Government contractors, be

the subject of audits and investigations by other agencies of the U.S. Government. These audits and investigations

are conducted to determine if our performance and administration of our U.S. Government contracts are compliant

with applicable contractual requirements and procurement and other applicable federal laws and regulations,

including ITAR and FCPA. These investigations may be conducted with or without our knowledge or cooperation. We

are unable to predict the outcome of such investigations or to estimate the amounts of resulting claims or other

actions that could be instituted against us or our officers or employees. Under present U.S. Government

procurement laws and regulations, if indicted or adjudged in violation of procurement or other federal laws, a

contractor, such as us, or one or more of our operating divisions or subdivisions, could be subject to fines, penalties,

repayments, or compensatory or treble damages. U.S. Government regulations also provide that certain findings

against a contractor may lead to suspension or debarment from eligibility for awards of new U.S. Government

contracts for a period of time to be determined by the U.S. Government. Suspension or debarment would have a

material adverse effect on us because of our reliance on U.S. Government contracts. In addition, our export

privileges could be suspended or revoked, which also would have a material adverse effect on us. For further

discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors” of this Report.

International

 As an international company, we are, from time to time, the subject of investigations relating to our international

operations, including under U.S. export control laws (such as ITAR), the FCPA and other similar U.S. and

international laws.

Commercial Commitments

In the normal course of business, we have entered into commercial commitments primarily relating to the

guarantee of future performance on certain contracts to provide products and services to customers or to obtain

insurance policies with our insurance carriers.

At January 3, 2025, we had the following commercial commitments outstanding:

(In millions)	Commercial Commitment Total	Commitments expiring within 1 Year
Surety bonds used for performance	$506	$386
Standby letters of credit used for:
Advance payments	312	211
Performance	327	198
Financial	62	61
Warranty	1	1
Total standby letters of credit	702	471
Total commitments	$1,208	$857

The surety bonds and standby letters of credit used for performance are primarily related to our Public Safety

business sector. As is customary in bidding for and completing network infrastructure projects for public safety

systems, contractors are required to procure surety bonds and/or standby letters of credit for bids, performance,

warranty and other purposes (collectively, “Performance Bonds”). Such Performance Bonds normally have

maturities of up to three years and are standard in the industry as a way to provide customers a mechanism to seek

redress if a contractor does not satisfy performance requirements under a contract.

Typically, a customer is permitted to draw on a Performance Bond if we do not fulfill all terms of a project

contract. In such an event, we would be obligated to reimburse the financial institution that issued the Performance

Bond for the amounts paid.

Environmental Matters

We are subject to numerous U.S. federal, state, local and international environmental laws and regulatory

requirements and are involved from time to time in investigations or litigation of various potential environmental

issues. We or companies we have acquired are responsible, or alleged to be responsible, for environmental

investigation and/or remediation of multiple sites, including sites owned by us and third party sites. These sites are

in various stages of investigation and/or remediation, and in some cases our liability is considered de minimis.

Notices from the U.S. Environmental Protection Agency or equivalent state or international environmental agencies

allege that several sites formerly or currently owned and/or operated by us or companies we have acquired, and

other properties or water supplies that may be or have been impacted from those operations, contain disposed or

recycled materials or wastes and require environmental investigation and/or remediation. These sites include

instances of being identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental

Response, Compensation and Liability Act (commonly known as the “Superfund Act”), the Resource Conservation

Recovery Act and/or equivalent state and international laws, and in some instances, our liability and proportionate

share of costs that may be shared among other PRPs have not been determined largely due to uncertainties as to

the nature and extent of site conditions and our involvement.

As of January 3, 2025, we were named, and continue to be named, as a potentially responsible party at 111

sites where future liabilities could exist. These sites included 13 sites owned by us, 71 sites associated with our

former and current locations or operations and 27 hazardous waste treatment, storage or disposal facility sites not

owned by us that contain hazardous substances allegedly attributable to us from past operations.

Based on an assessment of relevant factors, we estimated that our liability under applicable environmental

statutes and regulations for identified sites was $637 million and $613 million, respectively, as of January 3, 2025

and December 29, 2023. The current portion of our estimated environmental liability is included in the “Other

current liabilities” line item and the non-current portion is included in the “Other long-term liabilities” line item in

our Consolidated Balance Sheet. Some of these environmental costs are eligible for future recovery in the pricing of

our products and services to the U.S. Government. We consider the recovery probable based on U.S. Government

contracting regulations. As of January 3, 2025 and December 29, 2023, we had an asset for the recoverable portion

of these reserves of $462 million and $432 million, respectively. The current and non-current portion of the

recoverable costs are included as a component of the “Other current assets” and “Other non-current assets” line

items, respectively, in our Consolidated Balance Sheet.