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Fair Value Measurements (Tables)

6 Months Ended

Jul. 03, 2011

Fair Value Measurements [Abstract]

Summary of designated derivatives

The following table is a summary of the activity related to derivatives designated as hedges for the fiscal second quarters in 2011 and 2010:

										Gain/ (Loss)
		Gain/ (Loss)								reclassified								Gain/ (Loss)
		recognized in								from								recognized in
		Accumulated								Accumulated OCI								other
		OCI(1)								into income(1)								income/expense(2)
		Fiscal				Fiscal				Fiscal				Fiscal				Fiscal				Fiscal
		second				second				second				second				second				second
(Dollars in Millions)		quarter				quarter				quarter				quarter				quarter				quarter
Cash Flow Hedges		2011				2010				2011				2010				2011				2010
Foreign exchange contracts		$	—			$	(53	)		$	—			$	(9	)(A)		$	—			$	(20	)
Foreign exchange contracts			12				(102	)			(44	)			(76	)(B)			6				(149	)
Foreign exchange contracts			28				44				18				20	(C)			(2	)			16
Cross currency interest rate swaps			(31	)			(82	)			(16	)			11	(D)			—				—
Foreign exchange contracts			(7	)			35				2				—	(E)			—				20
Total		$	2			$	(158	)		$	(40	)		$	(54	)		$	4			$	(133	)

All amounts shown in the table above are net of tax.

The following table is a summary of the activity related to derivatives designated as hedges for the first fiscal six months in 2011 and 2010:

										Gain/ (Loss)
		Gain/ (Loss)								reclassified								Gain/ (Loss)
		recognized in								from								recognized in
		Accumulated								Accumulated OCI								other
		OCI(1)								into income(1)								income/expense(2)
		Fiscal				Fiscal				Fiscal				Fiscal				Fiscal				Fiscal
		six				six				six				six				six				six
(Dollars in Millions)		months				months				months				months				months				months
Cash Flow Hedges		2011				2010				2011				2010				2011				2010
Foreign exchange contracts		$	27			$	(84	)		$	(10	)		$	(29	)(A)		$	(2	)		$	(21	)
Foreign exchange contracts			92				(206	)			(106	)			(98	)(B)			3				(154	)
Foreign exchange contracts			(8	)			73				19				21	(C)			(2	)			16
Cross currency interest rate swaps			(40	)			(49	)			(18	)			11	(D)			—				—
Foreign exchange contracts			(59	)			81				(3	)			(1	)(E)			2				20
Total		$	12			$	(185	)		$	(118	)		$	(96	)		$	1			$	(139	)

All amounts shown in the table above are net of tax.

(1)		Effective portion
(2)		Ineffective portion
(A)		Included in Sales to customers
(B)		Included in Cost of products sold
(C)		Included in Research and development expense
(D)		Included in Interest (income)/Interest expense, net
(E)		Included in Other (income)/expense, net

Financial assets and liabilities at fair value

The Company’s significant financial assets and liabilities measured at fair value as of July 3, 2011 and January 2, 2011 were as follows:

						July 3, 2011												January 2, 2011
(Dollars in Millions)		Level 1				Level 2				Level 3				Total				Total(1)
Derivatives designated as hedging instruments:
Assets:
Foreign exchange contracts			—			$	487				—			$	487			$	321
Cross currency interest rate swaps(2)			—				2				—				2				17
Total			—				489				—				489				338
Liabilities:
Foreign exchange contracts			—				646				—				646				586
Cross currency interest rate swaps(3)			—				404				—				404				502
Total			—				1,050				—				1,050				1,088
Derivatives not designated as hedging instruments:
Assets:
Foreign exchange contracts			—				28				—				28				19
Swiss Franc Option*			—				569				—				569				—
Total			—				597				—				597				19
Liabilities:
Foreign exchange contracts			—				27				—				27				39
Other Investments(4)		$	1,371				—				—			$	1,371			$	1,165

*		Currency option related to the planned acquisition of Synthes, Inc.
(1)		As of January 2, 2011, these assets and liabilities are classified as Level 2 with the exception of Other Investments of $1,165 which are classified as Level 1.
(2)		Includes $2 million and $14 million of non-current assets for July 3, 2011 and January 2, 2011, respectively.
(3)		Includes $404 million and $502 million of non-current liabilities for July 3, 2011 and January 2, 2011, respectively.
(4)		Classified as non-current other assets.

Financial assets and liabilities not measured at fair value

Financial Instruments not measured at Fair Value:

The following financial assets and liabilities are held at carrying amount on the consolidated balance sheet as of July 3, 2011:

		Carrying				Estimated
(Dollars in Millions)		Amount				Fair Value
Financial Assets
Current Investments
Cash		$	2,299				2,299
Government securities and obligations			23,951				23,951
Corporate debt securities			515				515
Money market funds			1,820				1,820
Time deposits			1,097				1,097
Total cash, cash equivalents and current marketable securities		$	29,682				29,682
Fair value of government securities and obligations and non-current marketable securities was estimated using quoted broker prices in active markets.
Financial Liabilities
Current Debt		$	5,046				5,046
Non-Current Debt
5.15% Debentures due 2012			599				632
0.70% Notes due 2013			500				503
3.80% Debentures due 2013			500				527
3 month LIBOR+0% FRN due 2013			500				500
3 month LIBOR+0.09% FRN due 2014			750				750
1.20% Notes due 2014			999				1,006
2.15% Notes due 2016			898				903
5.55% Debentures due 2017			1,000				1,161
5.15% Debentures due 2018			898				1,015
4.75% Notes due 2019 (1B Euro 1.4476)			1,440				1,569
3% Zero Coupon Convertible Subordinated Debentures due in 2020			197				246
2.95% Debentures due 2020			541				522
3.55% Notes due 2021			446				456
6.73% Debentures due 2023			250				323
5.50% Notes due 2024 (500 GBP1.6025)			795				856
6.95% Notes due 2029			294				375
4.95% Debentures due 2033			500				523
5.95% Notes due 2037			995				1,120
5.86% Debentures due 2038			700				773
4.50% Debentures due 2040			539				489
4.85% Notes due 2041			298				291
Other (Includes Industrial Revenue Bonds)			41				41
Total Non-Current Debt		$	13,680				14,581

X

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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