Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Currency Risk

We are exposed to foreign currency risks that arise in normal course of our business operations. These risks

include the translation of local currency balances of foreign subsidiaries into U.S. dollars and transactions

denominated in currencies other than a subsidiary’s functional currency. Assets and liabilities of international

subsidiaries that use local currency as the functional currency, are translated at current rates of exchange and

income and expense items are translated at the weighted average exchange rate for the year. In fiscal 2024,

approximately 10% of our business was transacted in local currency environments. At January 3, 2025, the

cumulative impact of translating the assets and liabilities of these operations to U.S. Dollars was a $265 million loss,

which is included as a component of shareholders’ equity.

Our U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are

denominated in currencies other than the functional currencies of such businesses. To manage our exposure to

currency risk and market fluctuation risk associated with anticipated cash flows that are probable of occurring in the

future, we implement foreign currency forward contracts to hedge both balance sheet and off-balance sheet future

foreign currency commitments. At January 3, 2025, we had open foreign currency forward contracts with an

aggregate notional amount of $201 million, hedging certain forecasted transactions denominated in U.S. Dollars,

Canadian Dollars and Australian Dollars. Notional amounts are used to measure the volume of foreign currency

forward contracts and do not represent exposure to foreign currency losses. Factors that could impact the

effectiveness of our hedging programs for foreign currency include accuracy of sales estimates, volatility of currency

markets and the cost and availability of hedging instruments.

At January 3, 2025, a hypothetical 10% change in currency exchange rates for our foreign currency derivatives

held would not have had a material impact on the fair value of such instruments or our results of operations or cash

flows. This quantification of exposure to the market risk associated with foreign currency financial instruments does

not take into account the offsetting impact of changes in the fair value of our foreign denominated assets, liabilities

and firm commitments.

Interest Rate Risk

We have exposure to interest rate risk associated with our financing activities, primarily our long-term debt and

short-term debt borrowings. At January 3, 2025, our long-term debt consisted exclusively of fixed-rate debt with a

carrying value and estimated fair value of $11,530 million and $11,179 million, respectively. The terms of our fixed-

rate debt obligations are not puttable to us (i.e., not required to be redeemed by us prior to maturity) and we

currently have no plans to refinance or repurchase outstanding fixed-rate debt prior to maturity. As such, fluctuation

in market interest rates impact the fair value of our long-term debt but do not impact our statement of operations or

cash flow. At January 3, 2025, a hypothetical 10% change in interest rates on our long-term fixed-rate debt

obligations would not have had a material impact on the fair value of these obligations.

Additionally, at January 3, 2025, we had short-term variable-rate debt outstanding under our CP Program of

$515 million. Due to its short-term nature, the fair value of our short-term debt approximates the carrying value.

Outstanding notes under our CP Program bear interest that is variable based on certain short-term indices, thus

exposing us to interest-rate risk. At January 3, 2025, a hypothetical 10% change in interest rates on our short-term

debt obligations would not have had a material impact on our results of operations or cash flows.

We can give no assurances, however, that interest rates will not change significantly or have a material effect on

the fair value of our debt obligations or our results of operations or cash flows over the next twelve months. See Note

8: Debt and Credit Arrangements in the Notes for information regarding the maturities of our fixed-rate debt

obligations and our CP program.

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