Financial Instruments and Fair Value Measurements |
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Jun. 27, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments and Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments and Fair Value Measurements | 6. Financial Instruments and Fair Value Measurements
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in foreign currencies and interest rates. These financial instruments are not used for trading or other speculative purposes.
Cross-Currency Swaps The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk. The
swap agreements mature November 2027 (€250 million) and November 2029 (€425 million). The swaps are
designated as a hedge of the Company’s foreign currency investment in its foreign
subsidiaries. The activity on net investment hedges, net of tax, recorded in Accumulated other comprehensive loss for the three quarterly periods ended June 27, 2026 and June 28, 2025 was a loss of $16 million and a gain of $67 million, respectively. When valuing cross-currency swaps, the Company utilizes Level 2 inputs (substantially observable). The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Balances on a gross basis are as follows:
The effect of the Company’s derivative financial instruments on the Consolidated and Combined Statements of Operations is as follows:
Non-recurring Fair Value Measurements
The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an acquisition. The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values. The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. These assets that are subject to our impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our Property, plant and equipment. The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year and more frequently if impairment indicators exist. No impairment indicators were identified in the current quarter, but sustained periods of lower
valuation market multiples or future declines in our expected operating performance could result in impairment charges in the future. The Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, and cross-currency swap agreements. The book value of our marketable long-term indebtedness exceeded fair value by $48 million as of June 27, 2026. The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).
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