Related Party Transactions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | Related Party Transactions Allocations of Corporate Costs The Unaudited Condensed Combined Financial Statements reflect allocations of certain expenses from Parent, including, but not limited to, costs related to corporate executives, finance, legal, audit, mergers and acquisitions, human resources, information technology, insurance, employee benefits, costs associated with the Spin-Off and other expenses that are either specifically identifiable or clearly applicable to the Company. The allocation methods used include relative percentage of segment operating income, headcount and other methods that considered the relative time spent based on internal resources. Management believes that the allocation methodologies used to allocate expenses to the Company are reasonable; however, the allocations may not be indicative of actual expenses that would have been incurred had we operated as an independent, publicly traded company for the periods presented. Actual costs the Company may have incurred had it been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by our employees and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Amounts recorded in Selling, general and administrative expenses were $18 million and $31 million for the three and six months ended July 4, 2026, respectively, and $13 million and $23 million for the three and six months ended June 28, 2025, respectively. Amounts recorded in Transaction related expenses were $18 million and $26 million for the three and six months ended July 4, 2026, respectively, and relate to costs incurred by our Parent associated with the Spin-Off. There were no allocated transaction related expenses for the three and six months ended June 28, 2025. Transactions with Parent Our intercompany arrangements between the Company and Parent are included within these Unaudited Condensed Combined Financial Statements and consist of receivables and payables arising from trade transactions as well as related party loan balances associated with the participation of certain of our subsidiaries in the Parent’s centralized cash management programs. Additionally, we have intercompany loans with the Parent and certain of its subsidiaries. Activity related to loans receivables and payables is presented on the Unaudited Condensed Combined Statement of Cash Flows in investing activities and financing activities, respectively. During the normal course of operations, the Company makes inventory purchases from Parent. During the three and six months ended July 4, 2026 the Company purchased $41 million and $83 million of inventory from Parent, respectively. During the three and six months ended June 28, 2025, the Company purchased $48 million and $94 million of inventory from Parent, respectively. Certain purchases are cash settled and presented net as Due to related parties - current on the Unaudited Condensed Combined Balance Sheets in the amount of $1 million as of both July 4, 2026 and December 31, 2025. Our receivable balance pursuant to cash pooling arrangements, presented as Due from related parties - current on the Unaudited Condensed Combined Balance Sheets, was $14 million as of July 4, 2026. Our payable balance pursuant to the cash pooling arrangements, presented net as Due to related parties - current on the Unaudited Condensed Combined Balance Sheets, was $67 million as of December 31, 2025. Cash pooling arrangements between the Company and Parent that are not anticipated to be cash settled are presented in Net parent investment on the Unaudited Condensed Combined Balance Sheets and totaled $62 million and $71 million as of July 4, 2026 and December 31, 2025, respectively. Our payable balance pursuant to the intercompany loans, presented net within Due to related parties - non-current on the Unaudited Condensed Combined Balance Sheets, was $20 million as of July 4, 2026. Our receivable balance pursuant to the intercompany loans, presented net within Due from related parties - non-current on the Unaudited Condensed Combined Balance Sheets, was $13 million as of December 31, 2025. The Company recognized related party interest expense and interest income from financing transactions with Parent. During the three and six months ended July 4, 2026 the Company recognized an immaterial amount and $1 million of related party interest expense, respectively. During the three and six months ended June 28, 2025 the Company recognized $1 million and $3 million of related party interest expense, respectively. During the three and six months ended July 4, 2026 the Company recognized an immaterial amount and $1 million of related party interest income, respectively. During the three and six months ended June 28, 2025 the Company recognized $1 million and $2 million of related party interest income, respectively. Net Transfers From Parent Net transfers from Parent are included within financing activities in the Unaudited Condensed Combined Statements of Cash Flows and within Net Parent Investment on the Unaudited Condensed Combined Statements of Changes in Equity. This activity represents the net effect of transactions between the Company and Resideo. The components of net transfers from parent are as follows:
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