Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2023

Accumulated Other Comprehensive Income (Loss)

Stockholders’ equity includes certain items classified as AOCI, including:

•Unrealized gain (loss) on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 8, Derivative Instruments for more details.

•Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company translates the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI.

The changes in each component of AOCI during the nine months ended September 30, 2023 and October 1, 2022 were as follows (in millions):


	Unrealized gain (loss) on sales hedging		Foreign currency translation adjustments		Total
Balance at December 31, 2021	$	18	$	(47)	$	(29)
Other comprehensive income (loss) before reclassifications	86		(16)		70
Amounts reclassified from AOCI(1)	(72)		—		(72)
Tax effect	(3)		—		(3)
Other comprehensive income (loss), net of tax	11		(16)		(5)
Balance at October 1, 2022	$	29	$	(63)	$	(34)

Balance at December 31, 2022	$	(11)	$	(55)	$	(66)
Other comprehensive income (loss) before reclassifications	16		(2)		14
Amounts reclassified from AOCI(1)	16		—		16
Tax effect	(8)		—		(8)
Other comprehensive income (loss), net of tax	24		(2)		22
Balance at September 30, 2023	$	13	$	(57)	$	(44)

(1) See Note 8, Derivative Instruments regarding the timing of reclassifications to operating results.