XML 26 R14.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Risk Management
 3 Months Ended
Mar. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Risk Management Risk Management
Foreign Currency Risk
The Company had outstanding foreign exchange contracts with notional amounts totaling $1.0 billion and $1.3 billion for periods ended March 30, 2024 and December 31, 2023, respectively. The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions.
The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of March 30, 2024, and the corresponding positions as of December 31, 2023: 
 Notional Amount
Net Buy (Sell) by CurrencyMarch 30, 2024December 31, 2023
Euro$248 $322 
British pound147 252 
Australian dollar(105)(140)
Chinese renminbi(65)(66)
Brazilian real(27)(34)
Counterparty Risk
The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of March 30, 2024, all of the counterparties had investment grade credit ratings. As of March 30, 2024, the Company had $1 million of exposure to aggregate credit risk with all counterparties.
Derivative Financial Instruments
The following tables summarize the fair values and locations in the Condensed Consolidated Balance Sheets of all derivative financial instruments held by the Company as of March 30, 2024 and December 31, 2023:
 Fair Values of Derivative Instruments
March 30, 2024Other Current AssetsAccrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts$1 $— 
Derivatives not designated as hedging instruments:
Foreign exchange contracts— 2 
Equity swap contracts— — 
Total derivatives$1 $2 
 Fair Values of Derivative Instruments
December 31, 2023Other Current AssetsAccrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts$1 $3 
Treasury rate lock— 12 
Derivatives not designated as hedging instruments:
Foreign exchange contracts12 1 
Equity swap contracts1 — 
Total derivatives$14 $16 
The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three months ended March 30, 2024 and April 1, 2023:
 Financial Statement LocationThree Months Ended
March 30, 2024April 1, 2023
Derivatives designated as hedging instruments:
Foreign exchange contractsAccumulated other
comprehensive income (loss)		$4 $(2)
Forward points recognizedOther income (expense)1 1 
Treasury rate lockAccumulated other comprehensive income (loss)4 — 
Derivatives not designated as hedging instruments:
Foreign exchange contractsOther income (expense)$(10)$7 
Equity swap contractsSelling, general and administrative expenses1 — 
Net Investment Hedges
The Company uses foreign exchange forward contracts to hedge against the effect of the British pound and the Euro exchange rate fluctuations against the U.S. dollar on a portion of its net investments in certain European operations. The Company recognizes changes in the fair value of the net investment hedges as a component of foreign currency translation adjustments within other comprehensive income to offset a portion of the change in translated value of the net investments being hedged, until the investments are sold or liquidated. As of March 30, 2024, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £60 million of net investment hedges in a British pound functional subsidiary.
The Company excludes the difference between the spot rate and the forward rate of the forward contract from its assessment of hedge effectiveness. The effect of the forward points recognized will be amortized on a straight line basis and recognized through interest expense within Other income (expense) in the Condensed Consolidated Statement of Operations.
Equity Swap Contracts
The Company uses equity swap contracts which serve as economic hedges against volatility within the equity markets, impacting the Company's deferred compensation plan obligations. These contracts are not designated as hedges for accounting purposes. Unrealized gains and losses on these contracts are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The notional amount of these contracts as of March 30, 2024 was $15 million.
Treasury Rate Lock
In 2023, the Company entered into treasury rate agreements which locked in the interest rate for $200 million in future debt issuances. The treasury rate lock agreements were designated and qualified as a cash flow hedges. During the three months ended March 30, 2024, the Company issued $900 million of 5.4% senior notes due 2034. The treasury rate lock agreements were terminated upon the issuance of the 2034 notes for a net settlement loss of $8 million. The accumulated loss recorded in Accumulated Other Comprehensive Income (AOCI) will be reclassified to interest expense on a straight-line basis over the 10-year term of such senior notes.