v3.26.1
Financial Instruments (Notes)
 3 Months Ended
Mar. 28, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Financial Instruments
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 27, 2025 for additional information on our overall risk management strategies, our use of derivatives, and our related accounting policies.
Derivative Volume:
The notional values of our outstanding derivative instruments were (in millions):
Notional Amount
March 28, 2026December 27, 2025
Commodity contracts$980 $976 
Foreign exchange contracts3,647 4,229 
Cross-currency contracts3,083 3,083 
Fair Value of Derivative Instruments:
The fair values and the levels within the fair value hierarchy of derivative instruments recorded on the condensed consolidated balance sheets were (in millions):
March 28, 2026
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$— $— $18 $37 $18 $37 
Cross-currency contracts(b)
— — 49 143 49 143 
Derivatives not designated as hedging instruments:
Commodity contracts(c)
69 17 71 5 140 22 
Foreign exchange contracts(a)
— — 8 14 8 14 
Total fair value$69 $17 $146 $199 $215 $216 
(a)    At March 28, 2026, the fair value of our derivative assets was recorded in other current assets ($20 million) and other non-current assets ($6 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($40 million) and other non-current liabilities ($11 million).
(b)    At March 28, 2026, the fair value of our derivative assets was recorded in other current assets ($39 million) and other non-current assets ($10 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($2 million) and other non-current liabilities ($141 million).
(c)     At March 28, 2026, the fair value of our derivative assets was recorded in other current assets ($132 million) and other non-current assets ($8 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($21 million) and other non-current liabilities ($1 million).
December 27, 2025
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$— $— $7 $30 $7 $30 
Cross-currency contracts(b)
— — 46 210 46 210 
Derivatives not designated as hedging instruments:
Commodity contracts(c)
11 53 2 20 13 73 
Foreign exchange contracts(a)
— — 14 13 14 13 
Total fair value$11 $53 $69 $273 $80 $326 
(a)    At December 27, 2025, the fair value of our derivative assets was recorded in other current assets and the fair value of our derivative liabilities was recorded in other current liabilities ($42 million) and other non-current liabilities ($1 million).
(b)    At December 27, 2025, the fair value of our derivative assets was recorded in other current assets ($38 million) and other non-current assets ($8 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($2 million) and other non-current liabilities ($208 million).
(c)    At December 27, 2025, the fair value of our derivative assets was recorded in other current assets and the fair value of our derivative liabilities was recorded in other current liabilities ($70 million) and other non-current liabilities ($3 million).
Our derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. We elect to record the gross assets and liabilities of our derivative financial instruments on the condensed consolidated balance sheets. If the derivative financial instruments had been netted on the condensed consolidated balance sheets, the asset and liability positions each would have been reduced by $65 million at March 28, 2026 and $45 million at December 27, 2025. We had collected collateral related to commodity derivative margin requirements of $38 million at March 28, 2026, which was included in other current liabilities on our condensed consolidated balance sheet, and posted collateral related to commodity derivative margin requirements of $52 million at December 27, 2025, which was included in prepaid expenses on our condensed consolidated balance sheet.
Level 1 derivative financial assets and liabilities consist of commodity future and options contracts and are valued using quoted prices in active markets for identical assets and liabilities.
Level 2 derivative financial assets and liabilities consist of commodity swaps, foreign exchange forwards, options, and cross-currency contracts. Commodity swaps are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount. Foreign exchange forwards and swaps are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notional amount. Foreign exchange options are valued using an income approach based on a Black-Scholes-Merton formula. This formula uses present value techniques and reflects the time value and intrinsic value based on observable market rates. Cross-currency contracts are valued based on observable market spot and swap rates.
We did not have any Level 3 derivative financial assets or liabilities in any period presented.
Our calculation of the fair value of derivative financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.
Net Investment Hedging:
At March 28, 2026, we had the following items designated as net investment hedges:
•Non-derivative foreign-currency denominated debt with principal amounts of €2.4 billion;
•Cross-currency contracts with notional amounts of €954 million ($1.0 billion), C$1.3 billion ($900 million), and JPY9.6 billion ($68 million); and
•Foreign exchange contracts with notional amounts of CNY4.0 billion ($579 million).
The components of the gains and losses on our net investment in these designated foreign operations, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency contracts and foreign exchange contracts.
Cash Flow Hedge Coverage:
At March 28, 2026, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 2 years.
Fair Value Hedge Coverage:
At March 28, 2026, we had fair value hedges of the foreign currency exposure of both intercompany and external foreign currency denominated loans:
•Foreign exchange contracts with notional amounts of £400 million ($530 million) and the carrying value of the hedged item of $530 million is included in the long-term debt on the condensed consolidated balance sheets; and
•Cross-currency contracts with notional amounts of £683 million ($864 million) and MXN4.8 billion ($251 million) and the carrying value of intercompany hedged items of $1.2 billion.
The gains/(losses) on the hedged item, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency and foreign exchange contracts, which are reported in the same income statement line item in the same period. The amounts excluded from the assessment of effectiveness are recognized in earnings over the life of the hedge on a systematic and rational basis in the same line item as the hedged items.
Deferred Hedging Gains and Losses on Fair Value and Cash Flow Hedges:
Based on our valuation at March 28, 2026 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of the existing losses reported in accumulated other comprehensive income/(losses) on interest rate cash flow hedges, cross-currency fair value hedges, and foreign exchange fair value hedges during the next 12 months to be insignificant. Additionally, we expect transfers to net income/(loss) of the existing gains reported in accumulated other comprehensive income/(losses) during the next 12 months on foreign exchange cash flow hedges and cross-currency cash flow hedges to be insignificant.
Derivative Impact on the Statements of Comprehensive Income:
The following table presents the pre-tax amounts of derivative gains/(losses) deferred into accumulated other comprehensive income/(losses) and the income statement line item that will be affected when reclassified to net income/(loss) (in millions):
Accumulated Other Comprehensive Income/(Losses) ComponentGains/(Losses) Recognized in Other Comprehensive Income/(Losses) Related to Derivatives Designated as Hedging InstrumentsLocation of Gains/(Losses) When Reclassified to Net Income/(Loss)
For the Three Months Ended
March 28, 2026March 29, 2025
Cash flow hedges:
Foreign exchange contracts12 (10)Cost of products sold
Foreign exchange contracts (excluded component)(1)(1)Cost of products sold
Foreign exchange contracts 1 (1)SG&A
Cross-currency contracts— 43 Other expense/(income)
Cross-currency contracts— (6)Interest expense
Net investment hedges:
Foreign exchange contracts(16)— Other expense/(income)
Foreign exchange contracts (excluded component)(3)— Interest expense
Cross-currency contracts41 (30)Other expense/(income)
Cross-currency contracts (excluded component)7 9 Interest expense
Fair value hedges:
Foreign exchange contracts (excluded component)(1)(3)Other expense/(income)
Cross-currency contracts (excluded component)9 29 Other expense/(income)
Total gains/(losses) recognized in statements of comprehensive income$49 $30 
Derivative Impact on the Statements of Income:
The following tables present the pre-tax amounts of derivative gains/(losses) recorded to net income/(loss) and the affected income statement line items (in millions):
For the Three Months Ended
March 28, 2026March 29, 2025
Cost of products soldInterest expenseOther expense/(income)Cost of products soldInterest expenseOther expense/(income)
Total amounts presented in the condensed consolidated statements of income in which the following effects were recorded$3,828 $236 $(101)$3,935 $229 $(51)
Gains/(losses) related to derivatives designated as hedging instruments:
Cash flow hedges:(a)
Foreign exchange contracts$(3)$— $— $10 $— $— 
Foreign exchange contracts (excluded component)— — — (1)— — 
Cross-currency contracts— — 1 — (6)74 
Net investment hedges:(a)
Foreign exchange contracts (excluded component)— 1 — — — — 
Cross-currency contracts (excluded component)— 7 — — 9 — 
Fair Value hedges:(b)
Foreign exchange contracts— — (9)— — — 
Cross-currency contracts — — 19 — — (34)
Cross-currency contracts (excluded component)(a)
— — 4 — — 3 
Hedged items
— — (10)— — 34 
Gains/(losses) related to derivatives not designated as hedging instruments:
Commodity contracts145 — — (11)— — 
Foreign exchange contracts— — (7)— — 9 
Cross-currency contracts— — — — — 1 
Total gains/(losses) recognized in statements of income$142 $8 $(2)$(2)$3 $87 
(a)    Represents the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss).
(b)    Represents the pre-tax amounts of the hedge and hedged items gains/(losses) in fair value hedges.
Non-Derivative Impact on Statements of Comprehensive Income:
Related to our non-derivative foreign currency denominated debt instruments designated as net investment hedges, we recognized pre-tax losses of $64 million for the three months ended March 28, 2026 and pre-tax losses of $49 million for the three months ended March 29, 2025. These amounts were recognized in other comprehensive income/(loss).
Available-for-sale securities:
We invest in certain marketable fixed-income debt securities that are classified as available-for-sale.
We classify our investments in commercial paper, corporate bonds, and U.S. treasury and agency securities as Level 2 as these investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data. We classify our investments in money market funds as Level 1 as the fair values of these investments are based on quoted (unadjusted) prices in active markets for identical assets.
The following table presents our available-for-sale debt securities’ amortized cost basis, fair value and unrealized gains and losses by significant investment category (in millions):
March 28, 2026
December 27, 2025
Amortized Cost Basis(a)
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Amortized Cost Basis(a)
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Debt securities:
Corporate bonds
$348 $— $— $348 $456 $— $— $456 
Commercial paper
1,086 — — 1,086 752 — — 752 
U.S. treasury and agency60 — — 60 72 — — 72 
Money market funds— — — — 1 — — 1 
Total
$1,494 $— $— $1,494 $1,281 $— $— $1,281 
(a)    Amortized cost basis excludes approximately $3 million of accrued interest at March 28, 2026 and $4 million at December 27, 2025.
We purchased approximately $935 million in corporate bonds, commercial paper, and U.S. treasury and agency securities and received approximately $729 million in proceeds from maturity of corporate bonds, commercial paper, and U.S. treasury and agency securities for the three months ended March 28, 2026. We purchased approximately $1.2 billion in corporate bonds and commercial paper and received approximately $156 million in proceeds from maturity of corporate bonds and commercial paper for the three months ended March 29, 2025. No investments in corporate bonds, commercial paper, and U.S. treasury and agency securities were sold prior to maturity during the three months ended March 28, 2026 or March 29, 2025. We recognized no direct write-offs or allowances for credit losses in earnings for the three months ended March 28, 2026 or March 29, 2025. Cash flows related to the purchases and sale/maturity of these marketable securities are classified in the condensed consolidated statements of cash flows within investing activities.
The carrying values of our available-for-sale debt securities were included in the following line items in our condensed consolidated balance sheet (in millions):
March 28, 2026December 27, 2025
Cash and cash equivalents
$711 $221 
Marketable securities
783 1,060 
Total
$1,494 $1,281 
The contractual maturities of these available-for-sale debt securities are all within one-year as of March 28, 2026 and December 27, 2025.