Annual report [Section 13 and 15(d), not S-K Item 405]

Derivative Financial Instruments

v3.25.4
Derivative Financial Instruments
 12 Months Ended
Dec. 27, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments [Text Block]
Note 16 : Derivative Financial Instruments
Volume of Derivative Activity
The total gross notional amounts for outstanding derivatives (recorded at fair value) at the end of each period were as follows:
(In Millions)
 Dec 27, 2025 Dec 28, 2024
Foreign currency contracts $ 22,740  $ 25,472 
Interest rate contracts 21,796  17,899 
Equity contracts1
2,689  2,593 
Total $ 47,225  $ 45,964 
1Relates to our deferred compensation program.
The total notional amount of outstanding pay-variable, receive-fixed interest rate swaps was $9.7 billion as of December 27, 2025 and $12.0 billion as of December 28, 2024.
Fair Value of Derivative Instruments in the Consolidated Balance Sheets
December 27, 2025 December 28, 2024
(In Millions)
Assets1
Liabilities2
Assets1
Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3
$ 173  $ 49  $ 40  $ 405 
Interest rate contracts —  266  —  582 
Total derivatives designated as hedging instruments 173  315  40  987 
Derivatives not designated as hedging instruments:
Foreign currency contracts3
351  278  510  100 
Interest rate contracts 86  116  184  25 
Equity contracts4
431  6  348  — 
Escrowed Shares —  2,654  —  — 
Ireland SCIP arrangement —  755  —  755 
Total derivatives not designated as hedging instruments 868  3,809  1,042  880 
Total derivatives 1,041  4,124  1,082  1,867 
Netted cash and non-cash collateral received or pledged (907) (571) (948) (1,014)
Net derivatives $ 134  $ 3,553  $ 134  $ 853 
1Derivative assets are recorded as other assets, current and long-term.
2Derivative liabilities are recorded as other liabilities, current and long-term.
3A substantial majority of these instruments mature within 12 months.
4Relates to our deferred compensation program.
Gross derivative assets and liabilities subject to master netting agreements were $937 million and $654 million, respectively, as of December 27, 2025 and $948 million and $1.1 billion, respectively, as of December 28, 2024. Gross amounts recognized for reverse repurchase agreements are fully offset by cash collateral pledged.
Derivatives in Cash Flow Hedging Relationships
The before-tax net gains or losses attributed to the effective portion of cash flow hedges recognized in other comprehensive income (loss) were $748 million net gains in 2025 ($652 million net losses in 2024 and $3 million net gains in 2023).
Amounts excluded from effectiveness testing were $103 million net losses in 2025 ($205 million net losses in 2024 and $221 million net losses in 2023).
For information on the unrealized holding gains (losses) on derivatives reclassified out of accumulated other comprehensive income (loss) into the Consolidated Statements of Operations, see "Note 15: Accumulated Other Comprehensive Income (Loss)" within Notes to Consolidated Financial Statements.
Derivatives in Fair Value Hedging Relationships
The effects of derivative instruments designated as fair value hedges, recognized in interest and other, net for each period were as follows:
Gains (Losses) on Derivatives Recognized in Consolidated Statements of Operations
Years Ended (In Millions) Dec 27, 2025 Dec 28, 2024 Dec 30, 2023
Interest rate contracts $ 316  $ (4) $ 198 
Hedged items (316) 4  (198)
Total $ —  $ —  $ — 
The amounts recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges for each period were as follows:
Line Items in the Consolidated Balance Sheets in Which the Hedged Item Is Included Carrying Amount of the Hedged Item Assets/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions)
 Dec 27, 2025 Dec 28, 2024 Dec 27, 2025 Dec 28, 2024
Short-term debt $ (993) $ (2,214) $ 7  $ 36 
Long-term debt (8,488) (9,201) 259  546 
Total $ (9,481) $ (11,415) $ 266  $ 582 
Derivatives Not Designated as Hedging Instruments
The effects of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations for each period were as follows:
Years Ended (In Millions) Location of Gains (Losses)
Recognized in Income on Derivatives		 Dec 27, 2025 Dec 28, 2024 Dec 30, 2023
Foreign currency contracts Interest and other, net $ 261  $ 651  $ 106 
Interest rate contracts Interest and other, net (66) 182  50 
Escrowed Shares Interest and other, net (1,796) —  — 
Other Various 266  (411) 325 
Total $ (1,335) $ 422  $ 481 
We incurred $1.8 billion of losses in 2025 related to changes in fair value of the Escrowed Shares released during the year ended December 27, 2025 and still held as of December 27, 2025 (refer to "Note 5: Earnings (Loss) Per Share and Stockholders' Equity" within Notes to Consolidated Financial Statements).
Our Ireland SCIP agreement with Apollo contains construction-related liquidated damage provisions that meet the definition of an embedded derivative that is not clearly and closely related to the relevant host contract, thus requiring bifurcation and separate accounting as a derivative liability.In 2024, we assessed the probability of paying damages to Apollo and recognized a loss of $755 million within interest and other, net from the change in fair value of the liquidated damage provisions recognized within other accrued liabilities for $179 million and other long-term liabilities for $576 million as of December 27, 2025 ($755 million in other long-term liabilities as of December 28, 2024). We periodically reassess the probability of paying such liquidated damages and recognize changes in the fair value of the underlying liability through interest and other, net.