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Fair Value Measurements (Tables) | 9 Months Ended
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Oct. 02, 2016
Fair Value Disclosures [Abstract] |
Summary of Derivative Activity | The following table is a summary of the activity related to derivatives designated as cash flow hedges for the fiscal third quarters in 2016 and 2015:
|  | Gain/(Loss) Recognized In Accumulated OCI(1) |  | Gain/(Loss) Reclassified From Accumulated OCI Into Income(1) |  | Gain/(Loss) Recognized In Other Income/Expense(2)
(Dollars in Millions) |  | Fiscal Third Quarters Ended
Cash Flow Hedges By Income Statement Caption |  | October 2, 2016 |  | September 27, 2015 |  | October 2, 2016 |  | September 27, 2015 |  | October 2, 2016 |  | September 27, 2015
Sales to customers(3) |  | $ | (12 | ) |  | 3 |  |  | (8 | ) |  | (24 | ) |  | (1 | ) |  | (3 | )
Cost of products sold(3) |  | (4 | ) |  | 222 |  |  | 13 |  |  | (34 | ) |  | (4 | ) |  | 1 |
Research and development expense(3) |  | (5 | ) |  | (10 | ) |  | (2 | ) |  | 7 |  |  | 1 |  |  | — |
Interest (income)/Interest expense, net(4) |  | 29 |  |  | (13 | ) |  | 12 |  |  | 1 |  |  | — |  |  | — |
Other (income) expense, net(3) (5) |  | (4 | ) |  | (42 | ) |  | (12 | ) |  | 12 |  |  | — |  |  | (1 | )
Total |  | $ | 4 |  |  | 160 |  |  | 3 |  |  | (38 | ) |  | (4 | ) |  | (3 | )
The following table is a summary of the activity related to derivatives designated as cash flow hedges for the fiscal nine months in 2016 and 2015:
|  | Gain/(Loss) Recognized In Accumulated OCI(1) |  | Gain/(Loss) Reclassified From Accumulated OCI Into Income(1) |  | Gain/(Loss) Recognized In Other Income/Expense(2)
(Dollars in Millions) |  | Fiscal Nine Months Ended
Cash Flow Hedges By Income Statement Caption |  | October 2, 2016 |  | September 27, 2015 |  | October 2, 2016 |  | September 27, 2015 |  | October 2, 2016 |  | September 27, 2015
Sales to customers(3) |  | $ | (39 | ) |  | (52 | ) |  | (29 | ) |  | (95 | ) |  | (1 | ) |  | (5 | )
Cost of products sold(3) |  | (226 | ) |  | 106 |  |  | 5 |  |  | 82 |  |  | (10 | ) |  | 15 |
Research and development expense(3) |  | (100 | ) |  | (13 | ) |  | (98 | ) |  | (2 | ) |  | — |  |  | — |
Interest (income)/Interest expense, net(4) |  | 38 |  |  | (42 | ) |  | 27 |  |  | (2 | ) |  | — |  |  | — |
Other (income) expense, net(3) (5) |  | (110 | ) |  | 27 |  |  | (14 | ) |  | 54 |  |  | (3 | ) |  | — |
Total |  | $ | (437 | ) |  | 26 |  |  | (109 | ) |  | 37 |  |  | (14 | ) |  | 10 |
All amounts shown in the table above are net of tax. (1) Effective portion (2) Ineffective portion (3) Forward foreign exchange contracts (4) Cross currency interest rate swaps (5) Includes equity collar contracts
Financial Assets and Liabilities at Fair Value | The Company’s significant financial assets and liabilities measured at fair value as of October 2, 2016 and January 3, 2016 were as follows:
|  | October 2, 2016 |  |  |  | January 3, 2016
(Dollars in Millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Total(1)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(7) |  | $ | — |  |  | 222 |  |  | — |  |  | 222 |  |  | 452 |
Interest rate contracts (2)(4)(7) |  | — |  |  | 50 |  |  | — |  |  | 50 |  |  | 28 |
Total |  | — |  |  | 272 |  |  | — |  |  | 272 |  |  | 480 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(8) |  | — |  |  | 542 |  |  | — |  |  | 542 |  |  | 358 |
Interest rate contracts (3)(4)(8) |  | — |  |  | 309 |  |  | — |  |  | 309 |  |  | 241 |
Equity collar contracts (8)(9) |  | — |  |  | 95 |  |  | — |  |  | 95 |  |  | — |
Total |  | — |  |  | 946 |  |  | — |  |  | 946 |  |  | 599 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(7) |  | — |  |  | 14 |  |  | — |  |  | 14 |  |  | 33 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(8) |  | — |  |  | 33 |  |  | — |  |  | 33 |  |  | 41 |
Available For Sale Other Investments: |  |  |  |  |  |  |  |  |  |
Equity investments(5) |  | 1,332 |  |  | — |  |  | — |  |  | 1,332 |  |  | 1,494 |
Debt securities(6) |  | $ | — |  |  | 12,237 |  |  | — |  |  | 12,237 |  |  | 8,316 |
(1) | 2015 assets and liabilities are all classified as Level 2 with the exception of equity investments of $1,494 million, which are classified as Level 1.
(2) | Includes $35 million and $20 million of non-current other assets for October 2, 2016 and January 3, 2016, respectively.
(3) | Includes $309 million and $239 million of non-current other liabilities for October 2, 2016 and January 3, 2016, respectively.
(4) | Includes cross currency interest rate swaps and interest rate swaps.
(5) | Classified as non-current other assets with the exception of $345 million of current other assets for October 2, 2016. The carrying amount of the equity investments were $544 million and $528 million as of October 2, 2016 and January 3, 2016, respectively. The unrealized gains were $802 million and $979 million as of October 2, 2016 and January 3, 2016, respectively. The unrealized losses were $14 million and $13 million as of October 2, 2016 and January 3, 2016, respectively.
(6) | Classified as current marketable securities.
(7) | Classified as other current assets.
(8) | Classified as accounts payable.
(9) | Includes $16 million of non-current other liabilities for October 2, 2016.
Marketable Securities | The Company's cash, cash equivalents and current marketable securities as of October 2, 2016 comprised:
| October 2, 2016
(Dollars in Millions) | Carrying Amount |  | Unrecognized Gain |  | Unrecognized Loss |  | Estimated Fair Value |  | Cash & Cash Equivalents |  | Current Marketable Securities
Cash | $ | 1,971 |  |  | — |  |  | — |  |  | 1,971 |  |  | 1,971 |  |  |
U.S. Gov't Securities(1) | 10,498 |  |  | 1 |  |  | — |  |  | 10,499 |  |  | 6,997 |  |  | 3,501 |
Other Sovereign Securities(1) | 3,385 |  |  | — |  |  | — |  |  | 3,385 |  |  | 952 |  |  | 2,433 |
U.S. Reverse repurchase agreements(1) | 5,883 |  |  | — |  |  | — |  |  | 5,883 |  |  | 4,882 |  |  | 1,001 |
Other Reverse repurchase agreements(1) | 96 |  |  | — |  |  | — |  |  | 96 |  |  | 96 |  |  |
Corporate debt securities(1) | 3,501 |  |  | 1 |  |  | — |  |  | 3,502 |  |  | 790 |  |  | 2,711 |
Money market funds | 1,448 |  |  | — |  |  | — |  |  | 1,448 |  |  | 1,448 |  |  |
Time deposits(1) | 1,069 |  |  | — |  |  | — |  |  | 1,069 |  |  | 1,069 |  |  |
Subtotal | 27,851 |  |  | 2 |  |  | — |  |  | 27,853 |  |  | 18,205 |  |  | 9,646 |
|  |  | Unrealized Gain |  | Unrealized Loss |  |  |  |  |  |
Gov't securities | 10,235 |  |  | 120 |  |  | (1 | ) |  | 10,354 |  |  | — |  |  | 10,354 |
Other Sovereign Securities | 91 |  |  | — |  |  | — |  |  | 91 |  |  | — |  |  | 91 |
Corporate debt securities | 1,782 |  |  | 11 |  |  | (1 | ) |  | 1,792 |  |  | — |  |  | 1,792 |
Equity investments | 50 |  |  | 314 |  |  | (19 | ) |  | 345 |  |  | — |  |  | 345 |
Subtotal Available for Sale(2) | $ | 12,158 |  |  | 445 |  |  | (21 | ) |  | 12,582 |  |  | — |  |  | 12,582 |
Total cash, cash equivalents and current marketable securities |  |  |  |  |  |  |  |  |  |  |  |  | 18,205 |  |  | 22,228 |
(1) Held to maturity investments are reported at amortized cost and gains or losses are reported in earnings. (2) Available for sale securities are reported at fair value with unrealized gains and losses reported net of taxes in other comprehensive income.
Schedule of Available for Sale Securities Maturities | The contractual maturities of the available for sale securities at October 2, 2016 are as follows:
(Dollars in Millions) |  | Cost Basis |  | Fair Value
Due within one year |  | $ | 475 |  |  | 475 |
Due after one year through five years |  | 11,445 |  |  | 11,575 |
Due after five years through ten years |  | 188 |  |  | 187 |
Total debt securities |  | $ | 12,108 |  |  | 12,237 |
Financial Liabilities not Measured at Fair Value | Financial Instruments not measured at Fair Value: The following financial liabilities are held at carrying amount on the consolidated balance sheet as of October 2, 2016:
(Dollars in Millions) |  | Carrying Amount |  | Estimated Fair Value
Financial Liabilities |  |  |  |
Current Debt |  | $ | 3,443 |  |  | 3,443 |
Non-Current Debt |  |  |  |
1.125% Notes due 2017 |  | 703 |  |  | 705 |
5.15% Debentures due 2018 |  | 899 |  |  | 958 |
1.65% Notes due 2018 |  | 608 |  |  | 616 |
4.75% Notes due 2019 (1B Euro 1.1198) |  | 1,115 |  |  | 1,287 |
1.875% Notes due 2019 |  | 511 |  |  | 524 |
0.89% Notes due 2019 |  | 299 |  |  | 300 |
1.125% Notes due 2019 |  | 699 |  |  | 700 |
3% Zero Coupon Convertible Subordinated Debentures due in 2020 |  | 94 |  |  | 152 |
2.95% Debentures due 2020 |  | 545 |  |  | 578 |
3.55% Notes due 2021 |  | 447 |  |  | 491 |
2.45% Notes due 2021 |  | 349 |  |  | 367 |
1.65% Notes due 2021 |  | 997 |  |  | 1,013 |
0.250% Notes due 2022 (1B Euro 1.1198) |  | 1,116 |  |  | 1,132 |
6.73% Debentures due 2023 |  | 249 |  |  | 335 |
3.375% Notes due 2023 |  | 807 |  |  | 875 |
2.05% Notes due 2023 |  | 497 |  |  | 507 |
0.650% Notes due 2024 (750MM Euro 1.1198) |  | 834 |  |  | 863 |
5.50% Notes due 2024 (500 MM GBP 1.3000) |  | 643 |  |  | 868 |
2.45% Notes due 2026 |  | 1,989 |  |  | 2,059 |
1.150% Notes due 2028 (750MM Euro 1.1198) |  | 830 |  |  | 886 |
6.95% Notes due 2029 |  | 296 |  |  | 440 |
4.95% Debentures due 2033 |  | 497 |  |  | 635 |
4.375% Notes due 2033 |  | 857 |  |  | 1,026 |
1.650% Notes due 2035 (1.5B Euro 1.1198) |  | 1,660 |  |  | 1,884 |
3.55% Notes due 2036 |  | 987 |  |  | 1,098 |
5.95% Notes due 2037 |  | 991 |  |  | 1,457 |
5.85% Debentures due 2038 |  | 695 |  |  | 1,016 |
4.50% Debentures due 2040 |  | 537 |  |  | 674 |
4.85% Notes due 2041 |  | 296 |  |  | 390 |
4.50% Notes due 2043 |  | 495 |  |  | 624 |
3.70% Notes due 2046 |  | 1,970 |  |  | 2,213 |
Other |  | 34 |  |  | 34 |
Total Non-Current Debt |  | $ | 23,546 |  |  | 26,707 |

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