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DERIVATIVES AND HEDGING ACTIVITIES RISK MANAGEMENT
 6 Months Ended
Jun. 27, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING ACTIVITIES RISK MANAGEMENT DERIVATIVES AND HEDGING ACTIVITIES RISK MANAGEMENT
Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, credit risk and foreign currency exchange risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates or foreign currency exchange rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings and acquisitions.
Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. The Company designates certain of its interest rate derivatives as hedging instruments in cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for a premium. During the six months ended June 27, 2026 and June 28, 2025, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
Amounts reported in Accumulated other comprehensive (loss) income (“AOCI”) related to derivatives will be reclassified to Interest expense, net, as interest payments are made on the Company’s variable-rate debt. The Company estimates that $22 million will be reclassified as a decrease to interest expense within one year after June 27, 2026.
The notional amounts of outstanding interest rate derivatives are summarized as follows:

June 27, 2026December 31, 2025
Currency
Notional amount
(in millions)
Maturity date
Notional amount
(in millions)
Maturity date
Designated cash flow hedges:
Interest rate swaps
USD
1,000 Dec'20261,000 Dec'2026
Interest rate caps
USD
1,500 Dec'20262,000 Dec'2026
Undesignated derivative instruments:
Interest rate cap
USD
500 Dec'2026— — 
The Company entered into interest rate caps with notional value of $1,000 million in 2023, which took effect on December 31, 2025 and mature on December 31, 2026.

Based on contractual terms, the notional amounts of interest rate swaps and interest rate caps each decreased in increments of $500 million on December 31, 2025 and 2024 respectively.

Upon the financing activities in May 2026, the Company de-designated an interest rate cap contract with a notional value of $500 million and maturity date of December 31, 2026. See Note 5—Credit Agreements and Borrowings for additional information regarding financing activities in May 2026.

Gains and Losses on Hedging Instruments

The table below presents the effect of cash flow hedge accounting on AOCI for each reporting period:

Three months ended
Six months ended
(in millions)
June 27, 2026June 28, 2025June 27, 2026June 28, 2025
Gain (loss) recognized in AOCI Included in effectiveness testingInterest rate swaps$1 $3 $5 $— 
Interest rate caps— 1 3 (2)
Excluded from effectiveness testingInterest rate caps— (1)— (3)
1 3 8 (5)
Gain (loss) reclassified from AOCI into earningsIncluded in effectiveness testingInterest rate swaps5 14 11 27 
Interest rate caps6 11 11 22 
Excluded from effectiveness testingInterest rate caps(1)(2)(2)(4)
10 23 20 45 
Total change in AOCI$(9)$(20)$(12)$(50)

The gain (loss) reclassed from AOCI into earnings on designated derivatives is recorded to Interest expense, net in unaudited Condensed Consolidated Statements of Comprehensive Income. The gains and losses on the undesignated derivatives were immaterial for the three and six months ended June 27, 2026.

Cash flows from derivatives designated as hedges are classified in the same line item as the cash flows of the hedged transaction within operating activities. Cash flows from undesignated derivatives are classified within investing activities.
Derivative Assets and Liabilities

The Company records both the designated and undesignated interest rate derivatives at fair value in the unaudited Condensed Consolidated Balance Sheets. The respective assets and liabilities are generally classified as short-term or long-term based on the maturity dates of the derivatives.

The table below summarizes the classification and fair value of the designated derivatives for each reporting period:

(in millions)
Designated cash flow hedgesLocationJune 27, 2026December 31, 2025
Interest rate swapsOther current assets$13 $21 
Interest rate capsOther current assets10 15 
Total designated cash flow hedges$23 $36 

The fair value of the undesignated derivatives was immaterial and was recorded in other current assets as of June 27, 2026. There were no undesignated derivatives as of December 31, 2025.