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Derivative instruments | 3 Months Ended
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Mar. 29, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative instruments | Derivative instruments The Company is exposed to certain market risks such as changes in interest rates, foreign currency exchange rates, and commodity price fluctuations, which exist as a part of its ongoing business operations. Management uses derivative and nonderivative financial and commodity instruments to manage these risks. Instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged. As a matter of policy, the Company does not engage in trading or speculative hedging transactions. Derivative instruments are classified on the Unaudited Consolidated Balance Sheet based on the contractual maturity of the instrument or the timing of the underlying cash flows of the instrument for derivatives with contractual maturities beyond one year. Any collateral associated with derivative instruments is classified as Other assets or Other current liabilities on the Unaudited Consolidated Balance Sheet depending on whether the counterparty collateral is in an asset or liability position. Margin deposits related to exchange-traded commodities are recorded in accounts receivable, net on the Unaudited Consolidated Balance Sheet. On the Unaudited Consolidated Statement of Cash Flows, cash flows associated with derivative instruments are classified according to the nature of the underlying hedged item. Cash flows associated with collateral and margin deposits on exchange-traded commodities are classified as investing cash flows when the collateral account is in an asset position and as financing cash flows when the collateral account is in a liability position. Total notional amounts of the Company’s derivative instruments as of March 29, 2025 and December 28, 2024 were as follows:
(millions) | March 29, 2025 | December 28, 2024
Foreign currency exchange contracts | $ | 268 |  | $ | 284 |
Commodity contracts | 75 |  | 14 |
Interest rate contracts | 350 |  | 250 |
Total | $ | 693 |  | $ | 548 |
Following is a description of each category in the fair value hierarchy and the financial assets and liabilities of the Company that were included in each category at March 29, 2025 and December 28, 2024, measured on a recurring basis. Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. For the Company, level 1 financial assets and liabilities consist primarily of exchange-traded commodity derivative contracts. Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. For the Company, level 2 financial assets and liabilities consist of interest rate swaps and over-the-counter commodity and currency contracts. The Company's calculation of the fair value of the interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and interest rate curve. Over-the-counter commodity derivatives are valued using an income approach based on the commodity index prices le ss the contract rate multiplied by the notional amount. Foreign currency contracts are valued using an income approach based on forward rates less the contract rate multiplied by the notional amount. The Company’s calculation of the fair value of level 2 financial assets and liabilities takes into consideration the risk of nonperformance, including counterparty credit risk. The following table presents assets and liabilities that were measured at fair value in the Unaudited Consolidated Balance Sheet on a recurring basis as of March 29, 2025 and December 28, 2024: Derivatives designated as hedging instruments
| March 29, 2025 |  | December 28, 2024
(millions) | Level 1 | Level 2 | Total |  | Level 1 | Level 2 | Total
Assets: |  |  |  |  |  |  |
Interest rate contracts: |  |  |  |  |  |  |
Other current assets | $ | — |  | $ | 1 |  | $ | 1 |  |  | $ | — |  | $ | 2 |  | $ | 2 |
Other assets | — |  | — |  | — |  |  | — |  | 3 |  | 3 |
Total assets | $ | — |  | $ | 1 |  | $ | 1 |  |  | $ | — |  | $ | 5 |  | $ | 5 |
Derivatives not designated as hedging instruments
| March 29, 2025 |  | December 28, 2024
(millions) | Level 1 | Level 2 | Total |  | Level 1 | Level 2 | Total
Assets: |  |  |  |  |  |  |
Foreign currency exchange contracts: |  |  |  |  |  |  |
Other current assets | $ | — |  | $ | 3 |  | $ | 3 |  |  | $ | — |  | $ | 4 |  | $ | 4 |
Other assets | — |  | — |  | — |  |  | — |  | 1 |  | 1 |
Commodity contracts: |  |  |  |  |  |  |
Other current assets | 1 |  | — |  | 1 |  |  | — |  | — |  | — |
Total assets | $ | 1 |  | $ | 3 |  | $ | 4 |  |  | $ | — |  | $ | 5 |  | $ | 5 |
Liabilities: |  |  |  |  |  |  |
Foreign currency exchange contracts: |  |  |  |  |  |  |
Other current liabilities | $ | — |  | $ | — |  | $ | — |  |  | $ | — |  | $ | 3 |  | $ | 3 |
Commodity contracts: |  |  |  |  |  |  |
Other current liabilities | 1 |  | — |  | 1 |  |  | — |  | — |  | — |
Total liabilities | $ | 1 |  | $ | — |  | $ | 1 |  |  | $ | — |  | $ | 3 |  | $ | 3 |
The effect of derivative instruments on the Company's Unaudited Consolidated Statement of Income and Unaudited Consolidated Statement of Comprehensive Income for the quarters ended March 29, 2025 and March 30, 2024 was as follows: Derivatives designated as hedging instruments
| Gain (loss) recognized in AOCI | Gain (loss) reclassified from AOCI into income | Location of gain (loss) reclassified from AOCI into income
(millions) | March 29, 2025 | March 30, 2024 | March 29, 2025 | March 30, 2024 |
Interest rate contracts | $ | (4) |  | $ | — |  | $ | 1 |  | $ | — |  | Interest expense
During the next 12 months, the Company expects approximately $1 million of net deferred gains reported in accumulated other comprehensive income (AOCI) at March 29, 2025, to be reclassified to interest expense. Derivatives not designated as hedging instruments The effect of derivative instruments on the Company's Unaudited Consolidated Statement of Income for the quarters ended March 29, 2025 and March 30, 2024 was as follows:
| Gain (loss) recognized in cost of goods sold | Gain (loss) recognized in other income (expense), net
(millions) | March 29, 2025 | March 30, 2024 | March 29, 2025 | March 30, 2024
Commodity contracts | $ | 1 |  | $ | — |  | $ | — |  | $ | — |
Foreign currency derivatives | $ | — |  | $ | — |  | $ | — |  | $ | — |
Counterparty credit risk concentration and collateral requirements The Company could incur losses in the event of nonperformance by counterparties to over-the-counter ("OTC") financial and commodity derivatives contracts. Management believes risk of loss with respect to derivative contracts is limited due to the use of master netting agreements with credit-ratings based collateralization requirements for OTC derivatives and the use of exchange-traded commodity contracts. As of March 29, 2025, the Company was not in a material net asset position with any OTC derivatives counterparties.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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