Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jul. 01, 2023

Accumulated Other Comprehensive Income (Loss)

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

•Unrealized gain (loss) 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.

•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 translates 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 changes in each component of AOCI during the six months ended July 1, 2023 and July 2, 2022 were as follows (in millions):


	Unrealized gain (loss) on sales hedging		Foreign currency translation adjustments		Total
Balance at December 31, 2021	$	18	$	(47)	$	(29)
Other comprehensive income (loss) before reclassifications	57		(11)		46
Amounts reclassified from AOCI(1)	(43)		—		(43)
Tax effect	(2)		—		(2)
Other comprehensive income (loss), net of tax	12		(11)		1
Balance at July 2, 2022	$	30	$	(58)	$	(28)

Balance at December 31, 2022	$	(11)	$	(55)	$	(66)
Other comprehensive (loss) income before reclassifications	(9)		5		(4)
Amounts reclassified from AOCI(1)	10		—		10

Other comprehensive income, net of tax	1		5		6
Balance at July 1, 2023	$	(10)	$	(50)	$	(60)

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