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Hedging Transactions and Derivative Financial Instruments
 6 Months Ended
Jun. 27, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Hedging Transactions and Derivative Financial Instruments HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses cross-currency swap derivative contracts to partially hedge its net investments in non-U.S. operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. These contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency and effectively convert U.S. dollar-denominated bonds to obligations denominated in the hedged currency. 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) (“OCI”) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. 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 December 2031.
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. 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 OCI and are subsequently reclassified to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. 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 2029 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 debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated OCI, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. These instruments mature on dates ranging from July 2025 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 debt the Company issued. These contracts effectively fixed the interest rate for a portion of the Company’s 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 and December 2021. The changes in the fair value of these instruments were recorded in accumulated OCI 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 June 27, 2025 and June 28, 2024 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated OCI for the three and six-month periods ended June 27, 2025 and June 28, 2024 ($ in millions):
Original Notional AmountNotional Amount OutstandingGain (Loss) Recognized in OCIAmounts Reclassified from OCI
For the Three-Month Period Ended June 27, 2025:
Net investment hedges:
Cross-currency contracts$3,875 $3,000 $(202)$— 
Foreign currency denominated debt4,509 4,509 (290)— 
Cash flow hedges:
Cross-currency contracts4,000 2,600 (200)213 
Interest rate swaps1,600 — — — 
Total$13,984 $10,109 $(692)$213 
For the Three-Month Period Ended June 28, 2024:
Net investment hedges:
Cross-currency contracts$3,875 $3,000 $52 $— 
Foreign currency denominated debt3,109 3,109 48 — 
Cash flow hedges:
Cross-currency contracts4,000 3,300 55 (25)
Interest rate swaps1,600 — — 1 
Total$12,584 $9,409 $155 $(24)
For the Six-Month Period Ended June 27, 2025:
Net investment hedges:
Cross-currency contracts$3,875 $3,000 $(256)$— 
Foreign currency denominated debt4,509 4,509 (426)— 
Cash flow hedges:
Cross-currency contracts4,000 2,600 (161)329 
Interest rate swaps1,600 — — 1 
Total$13,984 $10,109 $(843)$330 
For the Six-Month Period Ended June 28, 2024:
Net investment hedges:
Cross-currency contracts$3,875 $3,000 $107 $— 
Foreign currency denominated debt3,109 3,109 182 — 
Cash flow hedges:
Cross-currency contracts4,000 3,300 78 (99)
Interest rate swaps1,600 — — 2 
Total$12,584 $9,409 $367 $(97)
Gains or losses related to the net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 12, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 12. The amount reclassified from OCI for the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt was equal to the remeasurement amount recorded in the three and six-month periods on the hedged debt.
The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated OCI to earnings during the three and six-month periods ended June 27, 2025 and June 28, 2024. In addition, the Company did not have any ineffectiveness related to net investment hedges or cash flow hedges during the three and six-month periods ended June 27, 2025 and June 28, 2024. Should any ineffectiveness arise, any ineffective
portions of the hedges would be reclassified from accumulated OCI into earnings during the period of change. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Condensed Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Condensed Statements of Cash Flows.
The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified in the Company’s Consolidated Condensed Balance Sheets as follows ($ in millions):
June 27, 2025December 31, 2024
Derivative assets:
Other long-term assets$84 $415 
Derivative liabilities:
Accrued expenses and other liabilities86 — 
Nonderivative hedging instruments:
Long-term debt4,509 3,042 
Amounts related to the Company’s derivatives expected to be reclassified from accumulated OCI to net earnings during the next 12 months, if interest rates and foreign exchange rates remain unchanged, were not significant.