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Hedging Transactions And Derivative Financial Instruments (Notes) | 9 Months Ended
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Oct. 02, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Hedging Transactions and Derivative Financial Instruments | HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTSThe Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. As of October 2, 2020, the Company had $2.0 billion, including $1.0 billion entered into during the three-month period ended October 2, 2020, of cross-currency swap derivative contracts outstanding as hedges of its net investment in foreign operations. These contracts effectively convert U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and partially offset the impact of changes in currency rates on the Company’s foreign currency denominated net investments. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss) in the accompanying Consolidated Condensed Statements of Stockholders’ Equity. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from September 2025 to October 2030. The Company also uses cross-currency swap derivative contracts to hedge U.S. dollar-denominated long-term debt issuances in a foreign subsidiary whose functional currency is the euro against adverse movements in exchange rates between the U.S. dollar and the euro. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in euro. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, with a reclassification from accumulated other comprehensive income (loss) to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2022 to November 2049. The Company has also issued foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen and Swiss franc. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss) in stockholders’ equity in the accompanying Consolidated Condensed Balance Sheets, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. These instruments mature on dates ranging from March 2021 to May 2032. The Company used interest rate swap agreements to hedge the variability in cash flows due to changes in benchmark interest rates related to a portion of the U.S. debt the Company issued to fund the Cytiva Acquisition. These contracts effectively fixed the interest rate for a portion of the Company’s U.S. dollar-denominated debt equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements and were settled in November 2019. The changes in the fair value of these instruments were recorded in accumulated other comprehensive income (loss) in stockholders’ equity prior to the issuance of the debt and are subsequently being reclassified to interest expense over the life of the related debt. The following table summarizes the notional values as of October 2, 2020 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated other comprehensive income (“OCI”) for the three and nine-month periods ended October 2, 2020 and September 27, 2019 ($ in millions):
| Original Notional Amount |  | Notional Amount Outstanding |  | Gain (Loss) Recognized in OCI
For the Three-Month Period Ended October 2, 2020: |  |  |  |  |
Net investment hedges: |  |  |  |  |
Foreign currency contracts | $ | 2,875.0 |  |  | $ | 2,000.0 |  |  | $ | (57.6) |
Foreign currency denominated debt | 6,619.3 |  |  | 6,619.3 |  |  | (208.4) |
Cash flow hedges: |  |  |  |  |
Foreign currency contracts | 4,000.0 |  |  | 4,000.0 |  |  | (304.9) |
Total | $ | 13,494.3 |  |  | $ | 12,619.3 |  |  | $ | (570.9) |
For the Three-Month Period Ended September 27, 2019: |  |  |  |  |
Net investment hedges: |  |  |  |  |
Foreign currency contracts: | $ | 2,525.0 |  |  | $ | 1,650.0 |  |  | $ | 41.5 |
Foreign currency denominated debt | 8,073.6 |  |  | 8,073.6 |  |  | 255.2 |
Cash flow hedges: |  |  |  |  |
Interest rate swaps | 1,500.0 |  |  | 1,500.0 |  |  | (55.1) |
Total | $ | 12,098.6 |  |  | $ | 11,223.6 |  |  | $ | 241.6 |
For the Nine-Month Period Ended October 2, 2020: |  |  |  |  |
Net investment hedges: |  |  |  |  |
Foreign currency contracts: | $ | 2,875.0 |  |  | $ | 2,000.0 |  |  | $ | 10.1 |
Foreign currency denominated debt | 6,619.3 |  |  | 6,619.3 |  |  | (241.5) |
Cash flow hedges: |  |  |  |  |
Foreign currency contracts | 4,000.0 |  |  | 4,000.0 |  |  | (8.4) |
Total | $ | 13,494.3 |  |  | $ | 12,619.3 |  |  | $ | (239.8) |
For the Nine-Month Period Ended September 27, 2019: |  |  |  |  |
Net investment hedges: |  |  |  |  |
Foreign currency contracts | $ | 2,525.0 |  |  | $ | 1,650.0 |  |  | $ | 36.8 |
Foreign currency denominated debt | 8,073.6 |  |  | 8,073.6 |  |  | 263.5 |
Cash flow hedges: |  |  |  |  |
Interest rate swaps | 1,500.0 |  |  | 1,500.0 |  |  | (64.0) |
Total | $ | 12,098.6 |  |  | $ | 11,223.6 |  |  | $ | 236.3 |
Gains or losses related to net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 1, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges and interest rate swaps are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 1. The amount reclassified to earnings for the interest rate swaps in the three and nine-month periods ended October 2, 2020 were $1 million and $2 million, respectively. During the three and nine-month periods ended October 2, 2020, the Company reclassified $167 million and $183 million, respectively, of deferred losses from accumulated other comprehensive income (loss) to net earnings related to the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt. This reclassification was equal to the remeasurement gain recorded in the three and nine-month periods on the hedged debt. The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated other comprehensive income (loss) to earnings during the three and nine-month periods ended October 2, 2020 and September 27, 2019. In addition, the Company did not have any ineffectiveness related to net investment hedges or interest rate swaps during the three and nine-month periods ended October 2, 2020 and September 27, 2019. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Condensed Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Condensed Statements of Cash Flows. The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified in the Company’s Consolidated Condensed Balance Sheets as follows ($ in millions):
| October 2, 2020 |  | December 31, 2019
Derivative assets: |  |  |
Prepaid expenses and other current assets | $ | — |  |  | $ | 25.7 |
Other long-term assets | 35.9 |  |  | — |
Derivative liabilities: |  |  |
Accrued expenses and other liabilities | 120.2 |  |  | 111.7 |
Nonderivative hedging instruments: |  |  |
Long-term debt | 6,619.3 |  |  | 6,275.9 |
Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months if interest rates and foreign exchange rates remain the same are not significant.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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