RESIDEO TECHNOLOGIES, INC.REZI
RESIDEO TECHNOLOGIES, INC. Commitments Disclosure
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 for operating sites. For the years ended December 31, 2025, 2024, and 2023, environmental expenses related to these operating sites were not material. Liabilities for environmental costs were $22 million for the years ended December 31, 2025 and 2024.
Obligations Payable Under the Indemnification Agreement and Tax Matters Agreement
Indemnification Agreement
We separated from 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. 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 payments of $35 million each in the first quarter, second quarter, and third quarter 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. Refer to Note 11. Long-Term Debt of the Notes to Consolidated Financial Statements for further discussion. Upon the Closing, the Indemnification Agreement terminated. As a result, 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.
Tax Matters Agreement
In connection with the Honeywell Spin-Off, we entered into the Tax Matters Agreement with Honeywell, pursuant to which we are responsible and will 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. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes that are incurred as a result of restructuring activities undertaken to effectuate the Honeywell Spin-Off.
We are required to indemnify Honeywell for any taxes resulting from the failure of the Honeywell Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law, where such taxes result from our action or omission not permitted by the Separation and Distribution Agreement between Honeywell and Resideo dated as of October 19, 2018 or the Tax Matters Agreement.
The following table summarizes information concerning the Indemnification Agreement and Tax Matters Agreement liabilities:
| (in millions) | Indemnification Agreement | Tax Matters Agreement | Total | ||||||||||||||
| Beginning balance, January 1, 2024 | $ | 652 | $ | 97 | $ | 749 | |||||||||||
| Accruals for liabilities deemed probable and reasonably estimable | 211 | (2) | 209 | ||||||||||||||
| Payments to Honeywell | (140) | (4) | (144) | ||||||||||||||
| Balance as of January 1, 2025 | 723 | 91 | 814 | ||||||||||||||
| Accruals for liabilities deemed probable and reasonably estimable | 972 | (3) | 969 | ||||||||||||||
| Payments to Honeywell | (1,695) | — | (1,695) | ||||||||||||||
| Balance as of December 31, 2025 | $ | — | $ | 88 | $ | 88 | |||||||||||
The liabilities related to the Indemnification Agreement and Tax Matters Agreement are included in the following balance sheet accounts:
| December 31, | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Accrued liabilities | $ | — | $ | 140 | |||||||
| Non-current obligations payable under the Indemnification Agreement | — | 583 | |||||||||
| Other liabilities | 88 | 91 | |||||||||
| Total indemnification liabilities | $ | 88 | $ | 814 | |||||||
Neither the timing nor the amount of the ultimate costs associated with such Tax Matters Agreement liability payments can be determined although they could be material to our consolidated results of operations and operating cash flows in the periods recognized or paid.
Trademark Agreement
We entered into a 40-year Trademark Agreement with Honeywell that authorizes our use of the Honeywell Home trademark in the operation of our business for the advertising, sale and distribution of certain licensed products. In exchange, we pay Honeywell a royalty fee of 1.5% based on net revenue related to such licensed products, which is recorded in selling, general and administrative expense in the Consolidated Statements of Operations. For the year ended December 31, 2025 royalty fees were $16 million and $18 million each for the years ended December 31, 2024 and 2023.
Other Matters
We are subject to lawsuits, investigations and disputes arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, acquisitions and divestitures, employee matters, intellectual property, trade and tax compliance, compliance with laws and environmental, health, and safety matters. We
recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses, based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. No such matters are material to our financial statements.
Warranties and Guarantees
In the normal course of business, we issue product warranties and product performance guarantees. We accrue for the estimated cost of product warranties and product performance guarantees based on contract terms and historical experience at the time of sale. Adjustments to initial obligations for warranties and guarantees are made as changes to the obligations become reasonably estimable. Product warranties and product performance guarantees are included in accrued liabilities and other liabilities on the Consolidated Balance Sheets. The following table summarizes information concerning recorded obligations for product warranties and product performance guarantees:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning balance | $ | 35 | $ | 34 | $ | 48 | |||||||||||
| Accruals for warranties/guarantees issued during the year | 30 | 31 | 24 | ||||||||||||||
| Settlement/adjustment of warranty/guarantee claims | (29) | (30) | (38) | ||||||||||||||
| Ending balance | $ | 36 | $ | 35 | $ | 34 | |||||||||||
Purchase Commitments
Our unconditional purchase obligations include purchase commitments with suppliers and other obligations entered into during the normal course of business regarding the purchase of goods and services. For the years ended December 31, 2025, 2024, and 2023, purchases related to these obligations were $220 million, $276 million, and $91 million, respectively.
The following table summarizes the future aggregate payments on these obligations as of December 31, 2025:
| (in millions) | Payments | ||||
| 2026 | $ | 130 | |||
| 2027 | 31 | ||||
| 2028 | 9 | ||||
| 2029 | 8 | ||||
| 2030 and thereafter | — | ||||
| Total | $ | 178 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 15, 2022 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.