RESIDEO TECHNOLOGIES, INC.

Note 1. Nature of Operations and Basis of Presentation

Nature of Operations

Resideo Technologies, Inc. (“Resideo”, the “Company”, “we”, “us”, or “our”) is a global building technologies company and a leading developer and manufacturer of critical control and sensing solutions for residential and commercial markets. We serve professional installers and integrators across diverse product categories, such as heating, ventilation and air conditioning controls, combustion, life safety, security and water. Our comfort and protection solutions are sold under trusted brands, such as BRK, First Alert, and Honeywell Home, and can be found in more than 150 million residential and commercial spaces globally, with tens of millions of new devices sold annually.

Basis of Consolidation and Reporting

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the Unaudited Condensed Consolidated Financial Statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements included herein contain all adjustments necessary to fairly present our financial position, results of operations, and cash flows for the periods indicated. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes to the Unaudited Condensed Consolidated Financial Statements. For the purpose of comparability, certain prior period amounts have been reclassified to conform to current period classification. The reclassifications had no impact on previously reported consolidated revenue and net income. Amounts presented in this Form 10-Q may not sum due to rounding.

For additional information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”), filed with the United States Securities and Exchange Commission (the “SEC”) on February 24, 2026.

ADI Global Distribution Business Separation

On August 3, 2026, we completed the previously announced separation of our ADI Global Distribution business (the “ADI Spin-Off”), which was accomplished through the pro rata distribution of 100% of the outstanding shares of common stock of ADI Global Distribution Inc. (“ADIG”) to holders of Resideo common stock as of the close of business on July 20, 2026 (the “record date”). Resideo stockholders as of the record date received one share of ADIG common stock for every two shares of Resideo stock. Also in connection with the ADI Spin-Off, the Company received shares of ADIG’s Series A Cumulative Convertible Participating Preferred Stock (“ADIG Preferred Stock”) and exchanged them for an equal number of the Company’s Series A Cumulative Convertible Participating Preferred Stock (“Preferred Stock”) held by CD&R Channel Holdings, L.P. (the “CD&R Stockholder”), then immediately retired a portion of its outstanding Preferred Stock, resulting in a reduction in the number of preferred shares outstanding and the related liquidation preference. The transaction also resulted in amendments to the terms of the remaining Preferred Stock, including adjustments to the conversion price designed to preserve the holders' ownership interests immediately following the Spin-Off. Refer to Note 7. Stockholders’ Equity, for additional information.

Following the completion of the ADI Spin-Off, ADIG became an independent public company trading under the symbol “ADIG” on the New York Stock Exchange and Resideo retains no ownership interest in ADIG. The ADI Spin-Off is intended to qualify as a tax-free transaction for U.S. federal income tax purposes.

The ADI Spin-Off represented a strategic shift that had a major effect on Resideo’s operations and financial results. Accordingly, the criteria for reporting ADIG as a discontinued operation were met upon completion of the ADI Spin-Off. As a result, the historical results of ADIG are presented as discontinued operations in the accompanying Unaudited Condensed Consolidated Financial Statements. Prior period amounts have been recast to reflect the discontinued operations presentation. The recast did not affect previously reported consolidated net income or shareholders’ equity. In addition, revenue that was previously accounted for on an intercompany basis has been adjusted to reflect ADIG as an external customer. Refer to Note 3. Discontinued Operationsfor further discussion.

Business separation costs incurred during the three and nine months ended October 3, 2026 and September 27, 2025 include third‑party advisory, consulting, legal, and other incremental separation‑related costs incurred in connection with the ADI Spin-Off. Business separation costs incurred prior to and through the ADI Spin-Off date of August 3, 2026 are included in Income (loss) from discontinued operations, net of taxes, and totaled $9 million and $64 million for the three and nine months ended October 3, 2026, respectively, and $4 million for the three and nine months ended September 27, 2025. Business separation costs incurred subsequent to the ADI Spin-Off date totaled $30 million for the three and nine months ended October 3, 2026 and are presented within Selling, general, and administrative expenses within Income (loss) from continuing operations, net of taxes.

In connection with the ADI Spin-Off, we have entered into a separation and distribution agreement and certain ancillary agreements with ADIG that provide a framework for the relationship between the parties going forward, including, among others, a transition services agreement, a tax matters agreement, a commercial products purchase agreement (“CPPA”), an employee matters agreement and an intellectual property matters agreement. Under the CPPA, we will sell certain security and safety products to ADIG for a period of two years, with ADIG subject to minimum purchase commitments. Sales to ADIG are on an arms-length basis and include a margin guarantee for certain products that is accounted for as a form of variable consideration. Subsequent to the ADI Spin-Off date, sales to ADIG were approximately $30 million in the quarter ended October 3, 2026. For the three and nine months ended October 3, 2026, income related to the transition services agreement with ADIG was not material.

In connection with the ADI Spin-Off, we reassessed the manner in which our Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), assesses performance and allocates resources. Following the ADI Spin-Off, the Company manages its continuing operations as a single operating and reportable segment based on our organizational structure, incentive programs and the information used by our CODM. Refer to Note 4. Segment Financial Data for additional information.

Unless otherwise noted, the accompanying Notes to the Condensed Consolidated Financial Statements refer to the Company’s continuing operations only.

Reporting Period

We report financial information on a fiscal quarter basis using a modified four-four-five week calendar. While our fiscal year begins on January 1 and ends on December 31, we have elected the first, second, and third quarters to end on a Saturday in order to minimize disruption to business processes. The effects of this election are generally not significant to reported results for any quarter and only exist within a reporting year.

Note 2. Summary of Significant Accounting Policies

Our significant accounting policies are detailed in Note 2. Summary of Significant Accounting Policies of the 2025 Annual Report on Form 10-K. There have been no significant changes to these policies that have had a material impact on the Unaudited Condensed Consolidated Financial Statements and the accompanying disclosure notes for the three and nine months ended October 3, 2026. We consider the following policies in the preparation of our Unaudited Condensed Consolidated Financial Statements and the uncertainties that could impact our financial condition, results of operations and cash flows.

Recent Accounting Pronouncements

We consider the applicability and impact of all recent accounting standards updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on our Unaudited Condensed Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires entities to disaggregate operating expenses into specific categories, such as purchases of inventory, employee compensation, depreciation, and amortization to provide enhanced transparency into the nature and function of expenses. The guidance is effective for annual reporting years beginning after December 15, 2026 and interim reporting periods beginning after

December 15, 2027. We are currently assessing the impact of adoption to our Condensed Consolidated Financial Statements and related disclosures.

Note 3. Discontinued Operations

On August 3, 2026, we completed the ADI Spin-Off. As discussed in Note 1. Nature of Operations and Basis of Presentation, the ADI business is presented as a discontinued operation in the Company’s Unaudited Condensed Consolidated Financial Statements for all periods presented.

The following table presents the major line items that comprise assets and liabilities of discontinued operations that are presented on the Unaudited Condensed Consolidated Balance Sheet:

The following table presents the major line items that comprise Income (loss) from discontinued operations, net of taxes presented within the Unaudited Condensed Consolidated Statements of Operations:

(1)Resideo allocated interest expense to discontinued operations associated with debt required to be repaid in connection with the ADI Spin-Off. Refer to Note 12. Long-Term Debt for further discussion.

During the second quarter of 2026, we approved amendments to freeze all future benefit accruals under our U.S. qualified defined benefit pension plan (the “Pension Plan”) and our U.S. non-qualified supplemental pension plan (the “SERP” and, together, the “Plans”). In connection with the plan freeze, participants on June 30, 2026 received a full year of service credit and recognized pay for 2026. The effect of these amendments are reflected within discontinued operations and resulted in an immaterial curtailment for the three and nine months ended October 3, 2026 because active participants will no longer accrue additional benefits for future service and compensation after June 30, 2026, the amendment date.

During the second quarter of 2026, the Company amended its credit agreement, in part, to facilitate the ADI Spin-Off. In addition, ADIG completed a $400 million debt offering and entered into a separate credit agreement, both of which were used as part of the financing of the ADI Spin-Off. The net proceeds from the $400 million debt offering were deposited into a segregated escrow account pending satisfaction of the conditions precedent to the ADI Spin-Off. Upon consummation of the ADI Spin-Off, the funds were released to ADIG and the related debt obligation was conveyed to ADIG upon the Spin-Off date. The debt offering proceeds, together with borrowings under ADIG’s credit agreement upon the Spin-Off date were used in part to fund a one-time cash dividend of $900 million from ADIG to Resideo, which was used by the Company to repay a portion of its outstanding borrowings. Refer to Note 12. Long-Term Debt for further discussion.

Note 4. Segment Financial Data

Operating segments are defined by Accounting Standards Codification 280, Segment Reporting, as components of an entity for which separate financial information is available and regularly reviewed by the CODM for purposes of making operating decisions, allocating resources, and assessing performance. The Company’s Chief Executive Officer is the CODM.

In connection with the ADI Spin-Off completed on August 3, 2026, the Company realigned its organizational reporting structure consistent with the manner in which the CODM assesses performance and allocates resources. Following this realignment, the Company manages its continuing operations asone operating and reportable segment.

The CODM uses Income from continuing operations, net of taxes as the primary measure of segment performance in assessing results, allocating resources, and making operating and investing decisions predominantly through the annual budget and forecasting process and monthly results reviews, which include variance analyses against the forecast, the budget, and the prior year because it reflects the underlying business performance and provides the CODM with a basis for making resource allocation decisions. The CODM also uses income from continuing operations, net of taxes to monitor budget versus actual results, for assessing performance of the segment and as a component in determining management’s compensation.

The significant expenses regularly reviewed by the CODM are consistent with those reported on our condensed consolidated statement of operations and expenses are not regularly reviewed on a more disaggregated basis for assessing segment performance and deciding how to allocate resources. The CODM does not regularly review asset information in allocating resources or assessing performance. Accordingly, no measure of segment assets are disclosed. Capital expenditures for the Company’s reportable segment are reviewed by the CODM.

The accounting policies used to derive segment results are substantially the same as those used in preparing the Unaudited Condensed Consolidated Financial Statements. Since we operate asone segment, segment revenue, cost of goods sold, operating expenses, and cash paid for capital expenditures are the same as presented in the unaudited financial statements.

Note 5. Revenue Recognition

During the third quarter of 2026, as a result of the ADI Spin-Off, the Company revised its disaggregation of revenue disclosures to include revenue by sales channel in addition to revenue by product grouping. The Company determined that the revised presentation better depicts the manner in which economic factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows following the ADI Spin-Off.

Revenue from continuing operations has been recast to reflect previously eliminated intercompany sales that occurred between Resideo and ADIG as third-party sales in the same period. Sales to ADIG included in the Unaudited Condensed Consolidated Statements of Operations were $43 million and $126 million for the three and nine months ended October 3, 2026, and $39 million and $133 million for the three and nine months ended September 27, 2025.

Note 6. Restructuring Expenses

During 2025 and 2026, we initiated restructuring actions including selected site closures and workforce optimization initiatives. These initiatives are intended to better align our cost structure with our strategic objectives, improve operating efficiency, and optimize our manufacturing and operating footprint. These actions include consolidation and rationalization of certain manufacturing and operating sites, as well as other cost reduction actions across our Company. The workforce optimization initiatives include costs associated with workforce reductions to streamline functions, reduce organizational complexity, and align resources with expected business needs. In addition, we executed on our capital strategy initiatives.

We expect to fully execute on our restructuring programs over the next 18 months. The estimated costs associated with the remaining actions are not expected to be material. We may incur additional restructuring expenses associated with these plans or new plans in the future.

For the three and nine months ended October 3, 2026, we incurred restructuring expenses of $7 million and $29 million, respectively, as well as impairment and debt extinguishment costs of $13 million and $14 million, respectively. For the three and nine months ended September 27, 2025, we incurred restructuring expenses of $2 million and $3 million, respectively, as well as $1 million of debt extinguishment costs in each period.

The following table summarizes information concerning recorded obligations for our restructuring programs included within Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets. Impairment and debt extinguishment costs are excluded from the table because they do not represent obligations recorded within Accrued liabilities.

Note 7. Stockholders’ Equity

Share Repurchase Program

On August 3, 2023, we announced that our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of our common stock over an unlimited time period (the “Share Repurchase Program”). During the three and nine months ended October 3, 2026 and September 27, 2025, there wereno common share repurchases. As of October 3, 2026, approximately $108 million remained available for share repurchases under the Share Repurchase Program.

Preferred Stock

On June 14, 2024, we issued 500,000 shares of Preferred Stock to the CD&R Stockholder for an aggregate purchase price of $500 million pursuant to an investment agreement dated April 14, 2024.

On August 3, 2026, in connection with the ADI Spin-Off, we received 150,000 shares of ADIG Preferred Stock as partial consideration for the transfer and contribution of assets and liabilities to ADIG and its subsidiaries. Pursuant to an Exchange Agreement, we concurrently exchanged these shares for an equal number of the Company’s Preferred Stock held by the CD&R Stockholder and one of ADI’s directors, then immediately retired the shares received in the exchange. As a result, immediately following the ADI Spin-Off and as of October 3, 2026,350,000 shares of the Company’s Preferred Stock remained outstanding and the aggregate liquidation preference was reduced from $500 million to $350 million and the conversion price was reduced from $26.92 to $18.84, such that holders have an if-converted ownership that reflects the pre-spin ownership percentage. In connection with the exchange, the Certificate of Designations of the Company’s Preferred Stock was amended and restated to, among other things, reduce the authorized shares to 350,000, adjust the initial conversion price, and modify the timing of our optional conversion and redemption rights by extending the option to exercise through August 3, 2028.

Note 8. Stock-Based Compensation

The following table summarizes awards granted during the relevant periods:

(1) Includes 410 thousand RSUs and 470 thousand RSUs granted at a weighted average grant date fair value of $35.78 and $22.78 to ADI employees during the nine months ended October 3, 2026 and September 27, 2025, respectively, that were exchanged for ADIG awards in connection with the ADI Spin-off on August 3, 2026.

(2)Includes PSUs at target payout. Final common shares issued may be different based upon the actual achievement against the performance measure target. Also includes 79 thousand PSUs and 131 thousand PSUs granted at a weighted average grant date fair value of $43.03 and $25.56 to ADI employees during the nine months ended October 3, 2026 and September 27, 2025, respectively, that were exchanged for ADIG awards in connection with the ADI Spin-off on August 3, 2026.

In connection with the ADI Spin-Off, the Company adjusted the number of stock options, RSUs, PSUs and the aggregate number of reserved common shares pursuant to existing anti-dilution provisions in its 2018 Stock Incentive Plan (as amended and restated), 2018 Stock Plan for Non-Employee Directors, and Employee Stock Purchase Plan, as applicable, to preserve the economic value of such awards immediately before and after the separation. The adjusted number of shares underlying awards (and the exercise price of stock options) was based on the conversion ratio of Resideo’s New York Stock Exchange (“NYSE”) volume weighted-average closing stock price on July 31 (the last trading day before the separation) to the NYSE volume weighted-average stock price on the two trading days following the separation, or 0.765. The outstanding awards will continue to vest over the original vesting period defined at the grant date. The adjustments resulted in an immaterial incremental compensation cost that will be recognized over the remaining requisite service period.

In relation to members of the Board of Directors who left the Resideo Board of Directors and joined the ADIG Board of Directors, their unvested RSUs and other unvested awards of the Company were replaced with equity awards in ADIG following the separation. The exchange of the awards was treated as a modification pursuant to ASC 718 Compensation, Stock Compensation(“ASC 718”). Outstanding and unvested awards held by members of the Board of Directors of Resideo who remained with Resideo were adjusted as set forth above. Outstanding and vested deferred RSUs held by members of the Board of Directors, regardless of which company they provided services to following the ADI Spin-Off date, were treated in the same way as shares of common stock held by our stockholders; namely, for each such award, a director received vested deferred RSUs in ADIG, generally subject to the same terms as the original Resideo vested deferred RSU.

In connection with the ADI Spin-Off, certain employees of the Company transferred to ADIG. On the date of the ADI Spin-Off, all unvested Company equity awards held by those employees were replaced with equity awards in ADIG. The exchange of the awards was treated as a modification pursuant to ASC 718. The Company recognized stock-based compensation expense for these awards through the ADI Spin-Off date.

For the three and nine months ended October 3, 2026, Stock-based compensation expense was $10 million and $30 million, respectively. For the three and nine months ended September 27, 2025, stock-based compensation expense was $10 million and $31 million, respectively. Stock-based compensation expense is included in either Selling, general and administrative expenses or Restructuring expenses in the Unaudited Condensed Consolidated Statements of Operations based on the nature of the expense.

Note 9. Inventory

The following table summarizes the details of our inventory:

Note 10. Goodwill and Intangible Assets, net

Our Goodwill balance and changes in carrying value were as follows:

The following table summarizes the net carrying amount of Intangible assets:

Intangible assets subject to amortization consisted of the following:

For the three and nine months ended October 3, 2026, Intangible asset amortization expense was $6 million and $19 million, respectively. For the three and nine months ended September 27, 2025, Intangible asset amortization expense was $7 million and $21 million, respectively.

Note 11. Leases

The following table summarizes operating lease costs:

(1) Total operating lease costs include variable lease costs of $1 million and $4 million for the three and nine months ended October 3, 2026, respectively, $1 million and $3 million for the three and nine months ended September 27, 2025, respectively.

The following table summarizes the carrying amounts of our operating lease assets and liabilities:

The following table summarizes supplemental cash flow information related to operating leases:

Note 12. Long-Term Debt

Long-term debt is comprised of the following:

(1) Included within Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

A&R Credit Agreement

In 2021, we entered into a credit agreement with JPMorgan Chase Bank N.A. as administrative agent (the “A&R Credit Agreement”), which was most recently amended on June 4, 2026 (as amended, the “Second A&R Credit Agreement”) in order to facilitate the ADI Spin-Off, as well as extend the revolver maturity to 2031. We evaluated the amendment under Accounting Standards Codification 470-50, Debt Modifications and Extinguishments, and accounted for the amendment as a debt modification, except for certain lender positions that were accounted for as debt extinguishments.

Under the Second A&R Credit Agreement and A&R Credit Agreement, the Company had certain senior secured term loans outstanding as of October 3, 2026 and December 31, 2025 (together, the “A&R Term B Facility”). Upon consummation of the ADI Spin-Off on August 3, 2026, a one-time cash dividend of $900 million was made from ADIG to Resideo. The proceeds received from ADIG were used to repay in full $518 million of senior secured term loans that were to mature in February 2028 and to repay in part $382 million of senior secured term loans maturing in June 2031. On October 2, 2026, we made an additional repayment of $200 million of senior secured term loans maturing in June 2031 following the completion of the post-closing cash adjustment contemplated by the separation and distribution agreement. The remaining principal on the A&R Term B Facility includes $6 million of senior secured term loans maturing in June 2031, and $1,212 million of senior secured term loans maturing in August 2032. Voluntary prepayment may be made at any time without premium or penalty, subject to customary breakage costs for certain borrowings indexed to the Secured Overnight Financing Rate (“SOFR”). The Second A&R Credit Agreement also contains customary mandatory prepayment provisions upon the occurrence of specified events.

Borrowings under the Second A&R Credit Agreement are subject to an interest rate, at the Company’s option, of either (a) a base rate equal to the highest of the Prime Rate, the Federal Funds Effective Rate (or the Overnight Bank Funding Rate), plus 0.5%, and the one month SOFR rate, plus 1%, or (b) the SOFR rate plus the applicable margin, which shall not be less than zero.

As of October 3, 2026 and December 31, 2025, the weighted average interest rate on the A&R Term B Facility, excluding the impact of the interest rate swaps, was 6.20% and 5.76%, respectively.

Under the Second A&R Credit Agreement, we entered into a new senior secured revolving credit facility, which refinanced in full the existing senior secured revolving credit facility and provides for commitments in an aggregate principal amount of $500 million and afive-year term ending in June 2031 (the “A&R Revolving Credit Facility”). There wereno outstanding borrowings andno letters of credit issued under the A&R Revolving Credit Facility as of October 3, 2026.

In addition to paying interest on outstanding borrowings under the Second A&R Credit Agreement, the Company is subject to a quarterly commitment fee based on the unused portion of the A&R Revolving Credit Facility, ranging from 0.25% to 0.35% per annum based on the leverage ratio under the Second A&R Credit Agreement.

The Second A&R Credit Agreement includes customary affirmative and negative covenants and reporting requirements, including limitations on indebtedness, liens, investments, and other restricted transactions. As of October 3, 2026, we are in compliance with all covenants.

We have entered into certain interest rate swaps based on the Term Secured Overnight Financing Rate (“Term SOFR”) which effectively converts a portion of our variable-rate debt to fixed-rate debt. Refer to Note 13. Fair Valuefor further discussion.

Senior Unsecured Notes

In August 2021, we issued $300 million in principal amount of 4.000% Senior Notes due 2029 (“Senior Notes due 2029”).

In July 2024, we issued $600 million in aggregate principal of 6.500% Senior Notes due 2032 (“Senior Notes due 2032”).

The Senior Notes due 2029 and Senior Notes due 2032 are senior unsecured obligations of Resideo guaranteed by Resideo’s existing and future domestic subsidiaries.

Interest Paid

For the nine months ended October 3, 2026 and September 27, 2025, cash paid for interest, net of interest rate derivative receipts was $146 million and $102 million, respectively.

Note 13. Fair Value

The estimated fair value of our financial instruments held, and when applicable, issued to finance our operations, is summarized below. Certain estimates and judgments are required to develop fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that we would realize upon disposition, nor do they indicate our intent or ability to dispose of the financial instrument. There were no material changes in the methodologies used in our valuation practices as of October 3, 2026.

The fair values of long-term debt instruments were determined using quoted market prices in inactive markets or discounted cash flows based on current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy.

The following table provides a summary of the carrying amount and fair value of outstanding debt:

Foreign Currency Risk Management—We conduct business on a multinational basis in a wide variety of foreign currencies. We are exposed to market risks from changes in currency exchange rates. These exposures may impact future earnings and/or operating cash flows. The exposure to market risk for changes in foreign currency exchange rates arises from international trade transactions, foreign currency denominated monetary assets and liabilities, and international financing activities between subsidiaries. We rely on natural offsets to address these market risk exposures. As of October 3, 2026 and December 31, 2025, we had no foreign currency forward or option hedging contracts.

Interest Rate Risk—We have exposure to movements in interest rates associated with cash and borrowings. We may enter into various interest rate protection agreements in order to limit the impact of movements in interest rates. As of October 3, 2026 and December 31, 2025, we had interest rate swaps with a combined notional value of $140 million and $280 million, respectively. Our interest rate swaps are designated as cash flow hedges of the variability in interest payments associated with a portion of our variable-rate debt equal to the swap notional amount, effectively converting the hedged debt from a variable interest rate based on Term SOFR (subject to a floor of 0.39%) to a fixed weighted average rate of 2.23% over the remaining term to maturity in February 2027. The carrying amounts of our interest rate swaps equal their fair values since these instruments are recorded at fair value. Our interest rate swaps were assets of $1 million and $3 million at October 3, 2026 and December 31, 2025, respectively, and reported in Other current assets on the Unaudited Condensed Consolidated Balance Sheets. There was no material net activity recognized in the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) related to our interest rate swaps during the three and nine months ended October 3, 2026. Unrealized gains related to derivative instruments designated as cash flow hedges werenot material for the three months ended September 27, 2025 and were $6 million for the nine months ended September 27, 2025.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued liabilities approximate fair value due to their short-term maturity.

Note 14. Accrued Liabilities

Accrued liabilities consist of the following:

(1)Other includes accruals for restructuring, freight payable, product warranty obligations, taxes payable, interest, current portion of long-term debt, legal and professional services, deferred revenue, royalties, dividends payable, litigation, sales incentives and commissions, advertising, and other reserves.

Note 15. Commitments and Contingencies

Environmental Matters

We are subject to various federal, state, local, and foreign government requirements relating to the protection of the environment and accrue costs related to environmental matters when it is probable that we have incurred a liability related to a contaminated site and the amount can be reasonably estimated. We believe that, as a general matter, our policies, practices, and procedures are properly designed to prevent unreasonable risk of environmental damage and personal injury and that our handling, manufacture, use, and disposal of hazardous substances are in accordance with environmental and safety laws and regulations. We have incurred remedial response and voluntary cleanup costs for site contamination. Additional claims and costs involving environmental matters may arise in the future.

Environmental expenses for sites owned and operated by us are presented within Cost of goods sold for operating sites. For the three and nine months ended October 3, 2026 and September 27, 2025, environmental expenses related to these operating sites were not material. Liabilities for environmental costs were $22 million at October 3, 2026 and December 31, 2025.

Obligations Payable Under the Indemnification Agreement and Honeywell Tax Matters Agreement

Indemnification Agreement

We separated from Honeywell International Inc. (“Honeywell”) on October 29, 2018, becoming an independent publicly traded company as a result of a pro rata distribution of our common stock to shareholders of Honeywell (the “Honeywell Spin-Off”). In connection with the Honeywell Spin-Off, we entered into an indemnification and reimbursement agreement, pursuant to which we had an obligation to make cash payments associated with Honeywell’s environmental liabilities which were capped at $140 million annually (the “Indemnification Agreement”). Pursuant to its terms, the Indemnification Agreement extended until the earlier of (1) December 31, 2043; or (2) December 31 of the third consecutive anniversary where the annual reimbursement obligation (including accrued amounts) had been less than $25 million.

On July 30, 2025, we entered into a definitive agreement with Honeywell to terminate the Indemnification Agreement (the “Termination Agreement”). We paid our regularly scheduled payment of $35 million each in the first, second, and third quarters of 2025, and subject to the terms and conditions of the Termination Agreement, we made a pre-tax, one-time cash payment of $1,590 million to Honeywell in August 2025 (the “Closing”). Proceeds from the incremental term loans issued under the A&R Credit Agreement in August 2025, together with a portion of our cash on hand, were utilized to fund the payment required under the Termination Agreement. Upon completion of the pre-tax, one-time cash payment, the Indemnification Agreement was fully terminated. We are no longer required to make any further payments to Honeywell under the Indemnification Agreement, and the associated affirmative and negative covenants no longer apply. As a result, the liability in connection with the Indemnification Agreement was fully repaid and is not presented on the Unaudited Condensed Consolidated Balance Sheets. No expense was incurred or recognized related to the Indemnification Agreement for the three and nine months ended October 3, 2026 or for the three months ended September 27, 2025. For the nine months ended September 27, 2025, expenses related to the Indemnification Agreement were $972 million.

Honeywell Tax Matters Agreement

In connection with the Honeywell Spin-Off, we entered into a tax matters agreement with Honeywell, pursuant to which we were responsible and would indemnify Honeywell for certain taxes, including certain income taxes, sales taxes, VAT, and payroll taxes, relating to the business for all periods, including periods prior to the consummation of the Honeywell Spin-Off (“Honeywell Tax Matters Agreement”).

On June 22, 2026, we entered into a definitive agreement with Honeywell to terminate the Honeywell Tax Matters Agreement. In consideration for the termination of the Honeywell Tax Matters Agreement and mutual releases of claims related to the Honeywell Tax Matters Agreement and certain tax-related liabilities, we made a pre-tax, one-time payment of approximately $12 million to Honeywell in June 2026. As a result, the liability associated with the Honeywell Tax Matters Agreement was settled in June 2026 and therefore is not presented on the Unaudited Condensed Consolidated Balance Sheets at October 3, 2026. The liability associated with the Honeywell Tax Matters Agreement was $88 million at December 31, 2025, on the Unaudited Condensed Consolidated Balance Sheets. No income or expense was recognized or incurred related to the Honeywell Tax Matters Agreement for the three months ended October 3, 2026 or for the three and nine months ended September 27, 2025. For the nine months ended October 3, 2026, we recognized other income of $77 million in Other (income) expense, net, in the Unaudited Condensed Consolidated Statements of Operations related to the termination of the Honeywell Tax Matters Agreement.

In connection with entering into the definitive agreement to terminate the Honeywell Tax Matters Agreement, we reassessed the deferred tax assets associated with the Honeywell Tax Matters Agreement. As a result of the settlement and release of the related obligations, the basis for recognizing $44 million of deferred tax assets was eliminated. Accordingly, during the nine months ended October 3, 2026, we derecognized $44 million of deferred tax assets, which was recorded in Provision for income taxes in the Unaudited Condensed Consolidated Statements of Operations.

IEEPA Tariff Refunds

In February 2026, the United States Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the United States were unauthorized. Following this ruling and effective on April 20, 2026, the United States Customs and Border Protection launched a platform for importers of record to submit IEEPA tariff refund requests.

The Company applied a gain contingency model in accordance with Accounting Standards Codification 450-30, Gain Contingencies. Under this model, a gain contingency is not recognized until the gain is realized or realizable. During the three and nine months ended October 3, 2026, we recognized approximately $6 million and $13 million of IEEPA tariff refunds, which are included in Cost of goods sold.

Note 16. Income Taxes

For interim periods, income tax is equal to the total of (1) year-to-date pretax income multiplied by the forecasted effective tax rate plus (2) tax expense items specific to the period. In situations where we expect to report losses and where we do not expect to receive tax benefits, we apply separate forecasted effective tax rates to those jurisdictions rather than including them in the consolidated forecasted effective tax rate.

For the three and nine months ended October 3, 2026, net tax expense was $7 million and $88 million, respectively. For the three and nine months ended September 27, 2025, net tax benefit was $20 million and $22 million, respectively. Net tax expense or benefit consists primarily of interim period tax expense based on year-to-date pretax income multiplied by our forecasted effective tax rate. In addition to items specific to the period, such as the settlement of the Honeywell Tax Matters Agreement, our income tax rate is impacted by the mix of earnings across the jurisdictions in which we operate, non-deductible expenses, and U.S. taxation of foreign earnings. For the three and nine months ended October 3, 2026, cash paid for taxes, net of refunds was $16 million and $40 million, respectively. For the three and nine months ended September 27, 2025, cash paid for taxes, net of refunds was $11 million and $69 million, respectively.

Note 17. Earnings (Loss) Per Common Share

The reconciliation of the numerator and denominator used for the computation of basic and diluted earnings (loss) per common share follows:

The preferred stock is a participating security; therefore, we apply the two‑class method in the calculation of basic and diluted earnings (loss) per share. Under this method, net income is allocated to common stockholders and participating preferred stockholders based on their respective rights to receive dividends as if all earnings for the period had been distributed. Losses are not allocated to the preferred stockholders given the holders are not contractually obligated to share in losses. Diluted earnings (loss) per common share is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the if-converted method and treasury stock method using the average market price of our common stock for the period, except when the inclusion of such instruments would be antidilutive.

The following potentially dilutive instruments, presented as a weighted-average of the instruments outstanding, were excluded from the calculation of diluted earnings (loss) per common share because their effect would have been antidilutive, and in the case of certain PSUs, the contingency has not been satisfied.