RETIREMENT BENEFITS

12 Months Ended

Jan. 02, 2026

Retirement Benefits [Abstract]

RETIREMENT BENEFITS

NOTE 9: RETIREMENT BENEFITS

Defined Contribution Plans

We sponsor numerous defined contribution savings plans, which allow our eligible employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. The plans include several match contribution formulas which require us to match a percentage of the employee contributions up to certain limits, generally totaling 6.0% of employee eligible pay. Matching contributions, net of forfeitures, charged to expense were $265 million, $276 million and $267 million in fiscal 2025, 2024 and 2023, respectively.

Deferred Compensation Plans

We also sponsor certain non-qualified deferred compensation plans which are measured at fair value on a recurring basis in our Consolidated Balance Sheet. Deferred compensation plan assets represent diversified assets held in rabbi trusts, which include marketable equity and fixed income securities (Level 1) and corporate-owned life insurance (”COLI”) contracts measured at NAV. Liabilities represent participant balances in marketable equity securities (Level 1) and common/collective trusts (“CCTs”) and guaranteed investment contracts (“GICs”) measured at NAV based on participant designed investment options.

The following table summarizes our deferred compensation plan assets and liabilities:

	January 2, 2026				January 3, 2025
(In millions)	Total		Level 1		Total		Level 1
Assets
Equity and fixed income securities	$	255	$	255	$	219	$	219
COLI, measured at NAV	38				41
Deferred compensation plan assets(1)	$	293			$	260
Liabilities
Equity securities	$	15	$	15	$	10	$	10
CCTs and GICs, measured at NAV	431				357
Deferred compensation plan liabilities(2)	$	446			$	367

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(1)Included in the “Other current assets” and “Other non-current assets” line items in our Consolidated Balance Sheet.

(2)Included in the “Compensation and benefits” and “Other non-current liabilities” line items in our Consolidated Balance Sheet. Under the plan, participants designate investment options (including stock and fixed-income funds), which serve as the basis for measurement of the notional value of their accounts.

Defined Benefit Plans

We sponsor various defined benefit pension plans for eligible employees in the U.S., Canada and United Kingdom. Our largest plans are generally closed to new entrants. Benefits for most participants are based on the employee’s years of service and compensation. We fund these plans as required by statutory regulations and through voluntary contributions. Some of our employees also participate in other postretirement defined benefit plans (“Other Benefits”) such as health care and life insurance plans.

Our Consolidated Pension Plan (“CPP”) represents our largest defined benefit plan with 85% of total plan assets and 86% of the PBO as of both January 2, 2026 and January 3, 2025.

Group Annuity Purchases. In execution of our pension risk management strategy, we completed the following group annuity purchase transactions in fiscal 2025 and 2024:

Fiscal 2025. On March 14, 2025, we executed nonparticipating single premium group annuity contracts to transfer $1.2 billion of our CPP benefit obligation, covering approximately 22,000 U.S. retirees and beneficiaries, to an insurance provider. The contracts were funded with $1.2 billion of existing CPP plan assets and did not require any additional cash contributions. This transaction had no impact on the amount, timing or form of the monthly retirement benefit payments to the transferred retirees and beneficiaries. As a result of the transaction, we recognized a pre-tax settlement gain of $14 million, reflecting the pro-rata share of unrealized actuarial gains residing in accumulated other comprehensive income as of the annuity purchase date related to the transferred benefit obligation. This gain is included in the “Non-service FAS pension income and other, net” line item in our Consolidated Statement of Operations.

In connection with the annuity purchases, we performed a remeasurement of the CPP plan benefit obligation and plan assets as of February 28, 2025, the end of the month closest to the annuity purchase date. As a result, we recorded a net actuarial loss of $54 million, reflecting a loss of $148 million associated with the decrease in discount rate from 5.49% at January 3, 2025 to 5.22% at February 28, 2025, partially offset by a gain of $94 million from actual return on plan assets more favorable than expected. The net actuarial loss, net of tax, is included in the “Accumulated other comprehensive income” line item in our Condensed Consolidated Balance Sheet.

On October 28, 2025, we executed nonparticipating single premium group annuity contracts to transfer $155 million of our benefit obligation, covering approximately 1,500 Canadian retirees and beneficiaries, to an insurance provider covered under certain of our Canadian pension plans. The contracts were funded with $155 million of existing Canadian pension plan assets and did not require any additional cash contributions. This transaction had no impact on the amount, timing or form of the monthly retirement benefit payments to the transferred retirees and beneficiaries. As a result of the transaction, we recognized a pre-tax settlement gain of $48 million, reflecting the pro-rata share of unrealized actuarial gains residing in accumulated other comprehensive income as of the annuity purchase date related to the transferred benefit obligation. This gain is included in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations.

In connection with the annuity purchases, we performed a remeasurement of the impacted plans benefit obligation and plan assets as of October 31, 2025, the end of the month closest to the annuity purchase date. As a result, we recorded actuarial gains of $23 million associated with an increase in discount rate and actual return on plan assets more favorable than expected. The actuarial gain, net of tax, is included in the “Accumulated other comprehensive income” line item in our Consolidated Balance Sheet as of January 2, 2026.

Fiscal 2024. In fiscal 2024, we executed nonparticipating single premium group annuity contracts to transfer $333 million of our CPP benefit obligation to the insurance provider. The contracts were funded with $333 million of existing CPP plan assets. There was no gain or loss as a result of this transaction.

Funded Status. The following table summarizes the funded status of our defined benefit plans:

	January 2, 2026						January 3, 2025
(In millions)	Pension		Other Benefits		Total		Pension		Other Benefits		Total
Change in benefit obligation
PBO at beginning of fiscal year	$	7,595	$	215	$	7,810	$	8,563	$	231	$	8,794
Service cost	25		1		26		34		2		36
Interest cost	317		11		328		394		10		404
Actuarial loss (gain)(1)	104		(7)		97		(374)		(4)		(378)
Benefits paid(2)	(506)		(19)		(525)		(967)		(22)		(989)
Settlement	(1,336)		—		(1,336)		—		—		—
Expenses paid	(14)		—		(14)		(19)		—		(19)
Currency translation adjustment	13		1		14		(24)		(1)		(25)
Divestiture	(47)		—		(47)		—		—		—
Other	6		—		6		(12)		(1)		(13)
PBO at end of fiscal year	$	6,157	$	202	$	6,359	$	7,595	$	215	$	7,810
Change in plan assets
Plan assets at beginning of fiscal year	$	8,325	$	274	$	8,599	$	8,595	$	265	$	8,860
Actual return on plan assets	766		29		795		700		22		722
Employer contributions	38		7		45		45		9		54
Benefits paid(2)	(506)		(19)		(525)		(967)		(22)		(989)
Settlement	(1,336)		—		(1,336)		—		—		—
Expenses paid	(14)		—		(14)		(19)		—		(19)
Currency translation adjustment	19		—		19		(31)		—		(31)
Divestiture	(59)		—		(59)		—		—		—
Other	1		1		2		2		—		2
Plan assets at end of fiscal year	$	7,234	$	292	$	7,526	$	8,325	$	274	$	8,599
Funded status at end of fiscal year	$	1,077	$	90	$	1,167	$	730	$	59	$	789

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(1)Actuarial losses impacting the PBO as of January 2, 2026 primarily reflect lower discount rates, whereas actuarial gains impacting the PBO as of January 3, 2025 primarily reflect higher discount rates.

(2)Fiscal 2024 includes $333 million associated with the purchase of group annuity policies and transfer of plan assets to an insurance company. The transaction is reflected in this caption as settlement accounting had not been met.

The following table summarizes amounts recognized in our Consolidated Balance Sheet:

	January 2, 2026						January 3, 2025
(In millions)	Pension		Other Benefits		Total		Pension		Other Benefits		Total
Other non-current assets	$	1,226	$	142	$	1,368	$	873	$	113	$	986
Compensation and benefits	(12)		(6)		(18)		(12)		(6)		(18)
Other non-current liabilities	(137)		(46)		(183)		(139)		(48)		(187)

The following table summarizes pre-tax amounts recognized in the “Accumulated other comprehensive income” line item in our Consolidated Balance Sheet:

	January 2, 2026						January 3, 2025
(In millions)	Pension		Other Benefits		Total		Pension		Other Benefits		Total
Actuarial gain	$	(273)	$	(89)	$	(362)	$	(245)	$	(86)	$	(331)
Net prior service (credit) cost	(110)		1		(109)		(144)		2		(142)
Total recognized in accumulated other comprehensive income (loss), pre-tax	$	(383)	$	(88)	$	(471)	$	(389)	$	(84)	$	(473)

The following table provides information for our defined benefit plans with PBO in excess of plan assets:

	January 2, 2026				January 3, 2025
(In millions)	Pension		Other Benefits		Pension		Other Benefits
PBO	$	152	$	52	$	154	$	55
Fair value of plan assets	3		—		3		—

Accumulated Benefit Obligation (“ABO”): The ABO for all defined benefit pension plans was $6.1 billion and $7.6 billion as of January 2, 2026 and January 3, 2025, respectively. The following table provides information for our defined benefit plans with ABO in excess of plan assets:

	January 2, 2026			January 3, 2025
(In millions)	Pension		Other Benefits	Pension		Other Benefits
ABO	$	152	N/A	$	153	N/A
Fair value of plan assets	3		N/A	3		N/A

Net Periodic Benefit Income. We record the service cost component of net periodic benefit income in the “Cost of revenue” and “General and administrative expenses” line items and the non-service cost components in the “Non-service FAS pension income and other, net” line item in our Consolidated Statement of Operations.

The following table provides the components of net periodic benefit income and other amounts recognized in other comprehensive income:

	Fiscal Year
	2025				2024					2023
(In millions)	Pension		Other Benefits		Pension		Other Benefits		Total	Pension		Other Benefits
Net periodic benefit income
Operating
Service cost	$	25	$	1	$	34	$	2		$	33	$	2
Non-operating
Interest cost	317		11		394		10			386		11
Expected return on plan assets	(557)		(21)		(660)		(20)			(633)		(20)
Amortization of net actuarial gains	(5)		(13)		(4)		(17)			(9)		(20)
Amortization of prior service (credits) costs	(27)		1		(26)		1			(26)		1
Effect of settlements	(62)		—		—		—			—		—
Non-service cost net periodic benefit income	(334)		(22)		(296)		(26)			(282)		(28)
Net periodic benefit income	$	(309)	$	(21)	$	(262)	$	(24)		$	(249)	$	(26)
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial gain	$	(104)	$	(16)	$	(414)	$	(7)		$	(90)	$	(18)
Prior service cost (credit)	5		—		(14)		—			—		—
Amortization of net actuarial gain	6		13		4		17			9		20
Amortization of prior service credit (cost)	27		(1)		26		(1)			26		(1)
Effect of settlements	62		—		—		—			—		—
Effect of divestiture	11		—		—		—			—		—
Currency translation adjustment	(1)		—		4		—			—		—
Total change recognized in other comprehensive income	6		(4)		(394)		9			(55)		1
Total impact from net periodic benefit income and changes in other comprehensive income	$	(303)	$	(25)	$	(656)	$	(15)		$	(304)	$	(25)

Assumptions. The following table presents the weighted-average assumptions used to determine the benefit obligation:

	January 2, 2026				January 3, 2025
	Pension(1)		Other Benefits		Pension		Other Benefits
Discount rate	5.29	%	5.13	%	5.46	%	5.38	%
Rate of future compensation increase	3.01	%	N/A		3.01	%	N/A
Cash balance interest crediting rate	4.50	%	N/A		4.50	%	N/A

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(1)Key assumptions for our Consolidated Pension Plan include a discount rate of 5.30%, cash balance interest crediting rate of 4.50% and a 4.25% interest crediting rate for the frozen pension equity benefit.

The following table presents the weighted-average assumptions used to determine net periodic benefit income:

	Fiscal Year
	2025				2024				2023
	Pension(1)		Other Benefits		Pension		Other Benefits		Pension		Other Benefits
Discount rate to determine service cost	5.30	%	5.43	%	4.92	%	5.00	%	5.18	%	5.26	%
Discount rate to determine interest cost	4.96	%	5.08	%	4.80	%	4.78	%	5.08	%	5.06	%
Expected return on plan assets	7.46	%	7.50	%	7.45	%	7.50	%	7.46	%	7.50	%
Rate of future compensation increase	3.01	%	N/A		3.01	%	N/A		3.01	%	N/A
Cash balance interest crediting rate	4.50	%	N/A		4.50	%	N/A		4.00	%	N/A

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(1)Key assumptions for our Consolidated Pension Plan include expected return on plan assets of 7.50%, which is being maintained at 7.50% for fiscal 2026.

The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plans invest, the weight of each asset class in the strategic allocation, the correlations among asset classes and their expected volatilities. Our expected rate of return on plan assets is estimated by evaluating both historical returns and estimates of future returns. Specifically, the determination of the expected long-term rate of return takes into consideration: (1) the plan’s actual historical annual return on assets over the past 15-, 20- and 25-year time periods, (2) historical broad market returns over long-term timeframes weighted by the plan’s strategic allocation and (3) independent estimates of future long-term asset class returns, weighted by the plan’s strategic allocation. Based on this approach, the long-term expected annual rate of return on assets is estimated at 7.50% for fiscal 2026 for the U.S. defined benefit pension plans. The weighted average long-term expected annual rate of return on assets for all defined benefit pension plans is estimated to be 7.46% for fiscal 2026.

The assumed composite rate of future increases in the per capita healthcare costs (the healthcare trend rate) is 8.91% for fiscal 2026, decreasing ratably to 4.53% by fiscal 2037.

Investment Policy. The investment strategy for managing defined benefit plan assets is to seek an optimal rate of return relative to an appropriate level of risk. We manage substantially all defined benefit plan assets on a commingled basis in a master investment trust. In making these asset allocation decisions, we take into account recent and expected returns and volatility of returns for each asset class, the expected correlation of returns among the different investments, as well as anticipated funding and cash flows. To enhance returns and mitigate risk, we diversify our investments by strategy, asset class, geography and sector and engage a large number of managers to gain broad exposure to the markets.

The following table provides the current strategic target asset allocation ranges by asset category:

	Target Asset Allocation
Equity investments	30	%	—	50%
Fixed income investments	30	%	—	50%
Alternative investments	10	%	—	30%
Cash and cash equivalents	0	%	—	10%

Fair Value of Plan Assets. The following is a description of the valuation techniques and inputs used to measure fair value for major categories of investments as reflected in the table that follows such description:

•Domestic and international equities, which include common and preferred shares, domestic listed and foreign listed equity securities, open-ended and closed-ended mutual funds, real estate investment trusts and exchange traded funds, are generally valued at the closing price reported on the major market exchanges on which the individual securities are traded at the measurement date. Because these assets are traded predominantly on liquid, widely traded public exchanges, equity securities are categorized as Level 1 assets.

•Private equity funds are typically limited partnership investment structures. Private equity funds are valued using a market approach based on NAV calculated by the funds and are not publicly available. Private equity funds generally have liquidity restrictions that extend for ten or more years. As of January 2, 2026 and January 3, 2025, our defined benefit plans had future unfunded commitments totaling $371 million and $539 million, respectively, related to private equity fund investments.

•Real asset funds are typically limited partnership investment structures. Real asset funds are valued using a market approach based on NAV calculated by the funds and are not publicly available. Real asset funds

generally permit redemption on a quarterly basis with 90 or fewer days-notice. At each of January 2, 2026 and January 3, 2025, our defined benefit plans had no future unfunded commitments related to real asset fund investments.

•Hedge funds, which include equity long/short, event-driven, fixed-income arbitrage and global macro strategies, are typically limited partnership investment structures. Limited partnership interests in hedge funds are valued using a market approach based on NAV calculated by the funds and are not publicly available. Hedge funds generally permit redemption on a quarterly or more frequent basis with 90 or fewer days’ notice. At each of January 2, 2026 and January 3, 2025, our defined benefit plans had no future unfunded commitments related to hedge fund investments.

•Fixed income investments, which include U.S. Government securities, investment and non-investment-grade corporate bonds and securitized bonds, are generally valued using pricing models that use verifiable, observable market data such as interest rates, benchmark yield curves and credit spreads, bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Fixed income investments are generally categorized as Level 2 assets. Fixed income funds valued at the closing price reported on the major market exchanges on which the individual fund is traded are categorized as Level 1 assets.

•Cash and cash equivalents are primarily comprised of short-term money market funds valued at cost, which approximates fair value, or valued at quoted market prices of identical instruments. Cash and cash equivalents currency are categorized as Level 1 assets; cash equivalents, such as money market funds or short-term commingled funds, are categorized as Level 2 assets.

•Certain investments that are valued using the NAV per share (or its equivalent) as a practical expedient are not categorized in the fair value hierarchy and are included in the table to permit reconciliation of the fair value hierarchy to the aggregate defined benefit plan assets.

The following tables provide the fair value of plan assets held by our defined benefit plans by asset category and by fair value hierarchy level:

	January 2, 2026
(In millions)	Total		Level 1		Level 2		Level 3
Asset category
Equities:
Domestic equities	$	852	$	852	$	—	$	—
International equities	979		979		—		—
Real estate investment trusts	167		167		—		—
Fixed income:
Corporate bonds	1,574		—		1,522		52
Government securities	861		—		861		—
Securitized assets	27		—		27		—
Fixed income funds	97		5		92		—
Cash and cash equivalents	202		11		191		—
Other	56		—		—		56
Total	$	4,815	$	2,014	$	2,693	$	108
Investments measured at NAV:
Equity funds	1,171
Fixed income funds	142
Hedge funds	151
Private equity funds	894
Real asset funds	322
Other	2
Total investments measured at NAV	2,682
Receivables, net	29
Total fair value of plan assets	$	7,526

	January 3, 2025
(In millions)	Total		Level 1		Level 2		Level 3
Asset category
Equities:
Domestic equities	$	1,048	$	1,048	$	—	$	—
International equities	968		968		—		—
Real estate investment trusts	186		186		—		—
Fixed income:
Corporate bonds	1,685		—		1,642		43
Government securities	698		—		698		—
Securitized assets	79		—		79		—
Fixed income funds	132		4		128		—
Cash and cash equivalents	498		14		484		—
Other	53		—		—		53
Total	$	5,347	$	2,220	$	3,031	$	96
Investments measured at NAV:
Equity funds	1,389
Fixed income funds	106
Hedge funds	219
Private equity funds	1,127
Real asset funds	323
Other	2
Total investments measured at NAV	3,166
Receivables, net	86
Total fair value of plan assets	$	8,599

Contributions. Funding requirements under IRS rules are a major consideration in making contributions to our defined benefit plans. With respect to U.S. qualified pension plans, we intend to contribute annually not less than the required minimum funding thresholds.

The Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006 and further amended by the Worker, Retiree, and Employer Recovery Act of 2008, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”) and applicable Internal Revenue Code regulations mandate minimum funding thresholds. The Highway and Transportation Funding Act of 2014, the Bipartisan Budget Act of 2015, the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act further extended the interest rate stabilization provision of MAP-21. In fiscal 2025, we made approximately $23 million of contributions to our U.S. qualified defined benefit pension plans. As a result of prior voluntary contributions, we made no material contributions to our U.S. qualified defined benefit pension plans in fiscal 2024 or 2023. We expect to make contributions of approximately $18 million to these plans during fiscal 2026, and may consider voluntary contributions thereafter.

Estimated Future Benefit Payments. The following table provides the projected timing of payments for benefits earned to date and benefits expected to be earned for future service by current active employees under our defined benefit plans:

(In millions)	Pension		Other     Benefits(1)		Total
Fiscal Years:
2026	$	484	$	21	$	505
2027	472		20		492
2028	474		19		493
2029	479		18		497
2030	478		18		496
2031 — 2035	2,295		76		2,371

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(1)Projected payments for Other Benefits reflect net payments from the Company, which include subsidies that reduce the gross payments by less than 1%.

Multi-employer Benefit Plans

Certain of our businesses participate in multi-employer defined benefit pension plans. We make cash contributions to these plans under the terms of collective-bargaining agreements that cover union employees based on a fixed rate per hour of service worked by the covered employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects: (1) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers and (3) if we choose to stop participating in some of our multi-employer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Cash contributed and expenses recorded for our multi-employer plans were not material in fiscal 2025, 2024 or 2023.