Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 26, 2020

Accumulated Other Comprehensive Income (Loss)

Stockholders’ equity includes certain items classified as AOCI, including:

•Unrealized (loss) gain on anticipated sales hedging transactions relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 9, Derivative Instruments for more details.

•Unrealized loss on forward interest rate swaps hedging transactions relates to certain interest rate swaps that the Company previously entered into as part of its strategy to mitigate interest rate risk exposure associated with its variable rate debt. These particular interest rate swaps, which were designated as cash flow hedges, were terminated

prior to 2019, with remaining losses being reclassified out of AOCI through the third quarter of 2019. Pre-tax losses were reclassified into Interest expense, net on the Consolidated Statements of Operations.

•Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company is required to translate the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI.

The components of AOCI for the nine months ended September 26, 2020 and September 28, 2019 are as follows (in millions):


	Unrealized (loss) gain on sales hedging		Unrealized gain (loss) on forward interest rate swaps		Foreign currency translation adjustments		Total
Balance at December 31, 2018	$	12	$	—	$	(47)	$	(35)
Other comprehensive income (loss) before reclassifications	41		—		(3)		38
Amounts reclassified from AOCI(1)	(32)		2		—		(30)
Tax effect	(2)		(2)		—		(4)
Other comprehensive income (loss), net of tax	7		—		(3)		4
Balance at September 28, 2019	$	19	$	—	$	(50)	$	(31)

Balance at December 31, 2019	$	2	$	—	$	(46)	$	(44)
Other comprehensive loss before reclassifications	(11)		—		(4)		(15)
Amounts reclassified from AOCI(1)	(6)		—		—		(6)
Tax effect	3		—		—		3
Other comprehensive loss, net of tax	(14)		—		(4)		(18)
Balance at September 26, 2020	$	(12)	$	—	$	(50)	$	(62)

(1) See Note 9, Derivative Instruments regarding timing of reclassifications to operating results.