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Fair Value Measurements (Tables) | 3 Months Ended
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Apr. 01, 2018
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 first quarters in 2018 and 2017:
|  | 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 First Quarters Ended
Cash Flow Hedges By Income Statement Caption |  | April 1, 2018 |  | April 2, 2017 |  | April 1, 2018 |  | April 2, 2017 |  | April 1, 2018 |  | April 2, 2017
Sales to customers (3) |  | $ | 31 |  |  | (13 | ) |  | 29 |  |  | (33 | ) |  | — |  |  | — |
Cost of products sold (3) |  | 3 |  |  | (97 | ) |  | 2 |  |  | (31 | ) |  | 12 |  |  | (17 | )
Research and development expense (3) |  | (237 | ) |  | (109 | ) |  | (238 | ) |  | (102 | ) |  | — |  |  | 5 |
Interest (income)/Interest expense, net (4) |  | 57 |  |  | 28 |  |  | 40 |  |  | 22 |  |  | — |  |  | — |
Other (income) expense, net (3) (5) |  | (18 | ) |  | (33 | ) |  | (11 | ) |  | (35 | ) |  | 5 |  |  | 1 |
Total |  | $ | (164 | ) |  | (224 | ) |  | (178 | ) |  | (179 | ) |  | 17 |  |  | (11 | )
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. The equity collar contracts expired in December of 2017
Summary of Activity Related to Equity Investments | The following table is a summary of the activity related to equity investments for the fiscal first quarter of 2018:
(Dollars in Millions) |  | December 31, 2017 |  |  |  |  |  | April 1, 2018 |  |
|  | Carrying Value |  | Changes in Fair Value Reflected in Net Income (1) |  | Sales/ Purchases/Other (2) |  | Carrying Value |  | Non Current Other Assets
Equity Investments with readily determinable value |  | $ | 751 |  |  | (27 | ) |  | 7 |  |  | 731 |  |  | 731 |
Equity Investments without readily determinable value |  | $ | 510 |  |  | (20 | ) |  | 83 |  |  | 573 |  |  | 573 |
(1) Recorded in Other Income/Expense (2) Other includes impact of currency
Financial Assets and Liabilities at Fair Value | The Company’s significant financial assets and liabilities measured at fair value as of April 1, 2018 and December 31, 2017 were as follows:
|  | April 1, 2018 |  |  |  | December 31, 2017
(Dollars in Millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Total(1)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(7) (8) |  | $ | — |  |  | 351 |  |  | — |  |  | 351 |  |  | 342 |
Interest rate contracts (2)(4) |  | — |  |  | 3 |  |  | — |  |  | 3 |  |  | 7 |
Total |  | — |  |  | 354 |  |  | — |  |  | 354 |  |  | 349 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(7) (9) |  | — |  |  | 269 |  |  | — |  |  | 269 |  |  | 314 |
Interest rate contracts (3)(4)(7) (10) |  | — |  |  | 19 |  |  | — |  |  | 19 |  |  | 15 |
Total |  | — |  |  | 288 |  |  | — |  |  | 288 |  |  | 329 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 25 |  |  | — |  |  | 25 |  |  | 38 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 53 |  |  | — |  |  | 53 |  |  | 38 |
Other Investments: |  |  |  |  |  |  |  |  |  |
Equity investments (5) |  | 731 |  |  | — |  |  | — |  |  | 731 |  |  | 751 |
Debt securities(6) |  | $ | — |  |  | 2,967 |  |  | — |  |  | 2,967 |  |  | 5,310 |
(1) | 2017 assets and liabilities are all classified as Level 2 with the exception of equity investments of $751 million, which are classified as Level 1.
(2) | Includes $2 million and $7 million of non-current other assets for April 1, 2018 and December 31, 2017, respectively.
(3) | Includes $14 million and $9 million of non-current other liabilities for April 1, 2018 and December 31, 2017, respectively.
(4) | Includes cross currency interest rate swaps and interest rate swaps.
(5) | Classified as non-current other assets. The carrying amount of the equity investments were $731 million and $751 million as of April 1, 2018 and December 31, 2017, respectively.
(6) | Classified as cash equivalents and current marketable securities.
(7) | Includes collateral exchanged on the credit support agreements on derivatives
(8) | Forward foreign exchange contracts excluding CSA were $478 million and $418 million for April 1, 2018 and December 31, 2017, respectively.
(9) | Forward foreign exchange contracts excluding CSA were $364 million and $402 million for April 1, 2018 and December 31, 2017, respectively.
(10) | Interest rate contracts excluding CSA were $83 million and $165 million for April 1, 2018 and December 31, 2017, respectively.
Marketable Securities | The Company's cash, cash equivalents and current marketable securities as of April 1, 2018 comprised:
| April 1, 2018
(Dollars in Millions) | Carrying Amount |  | Estimated Fair Value |  | Cash & Cash Equivalents |  | Current Marketable Securities
Cash | $ | 2,656 |  |  | 2,656 |  |  | 2,656 |  |  |
Other Sovereign Securities(1) | 529 |  |  | 529 |  |  | 529 |  |  |  |
U.S. Reverse repurchase agreements | 2,682 |  |  | 2,682 |  |  | 2,682 |  |  |
Other Reverse repurchase agreements | 398 |  |  | 398 |  |  | 398 |  |  |
Corporate debt securities(1) | 1,869 |  |  | 1,869 |  |  | 1,864 |  |  | 5 |
Money market funds | 2,944 |  |  | 2,944 |  |  | 2,944 |  |  |
Time deposits(1) | 1,159 |  |  | 1,159 |  |  | 1,159 |  |  |
Subtotal | 12,237 |  |  | 12,237 |  |  | 12,232 |  |  | 5 |
Gov't securities | 2,705 |  |  | 2,705 |  |  | 2,370 |  |  | 335 |
Other Sovereign Securities | 2 |  |  | 2 |  |  | — |  |  | 2 |
Corporate debt securities | 260 |  |  | 260 |  |  | 37 |  |  | 223 |
Subtotal available for sale debt(2) | $ | 2,967 |  |  | 2,967 |  |  | 2,407 |  |  | 560 |
Total cash, cash equivalents and current marketable securities |  |  |  |  |  |  | 14,639 |  |  | 565 |
(1) Held to maturity investments are reported at amortized cost and gains or losses are reported in earnings. (2) Available for sale debt 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 April 1, 2018 are as follows:
(Dollars in Millions) |  | Cost Basis |  | Fair Value
Due within one year |  | $ | 2,887 |  |  | 2,887 |
Due after one year through five years |  | 80 |  |  | 80 |
Due after five years through ten years |  | — |  |  | — |
Total debt securities |  | $ | 2,967 |  |  | 2,967 |
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 April 1, 2018:
(Dollars in Millions) |  | Carrying Amount |  | Estimated Fair Value
Financial Liabilities |  |  |  |
Current Debt |  | $ | 2,696 |  |  | 2,696 |
Non-Current Debt |  |  |  |
4.75% Notes due 2019 (1B Euro 1.2323) |  | 1,230 |  |  | 1,330 |
1.875% Notes due 2019 |  | 495 |  |  | 492 |
3% Zero Coupon Convertible Subordinated Debentures due in 2020 |  | 52 |  |  | 92 |
1.950% Notes due 2020 |  | 499 |  |  | 492 |
2.95% Debentures due 2020 |  | 547 |  |  | 553 |
3.55% Notes due 2021 |  | 448 |  |  | 461 |
2.45% Notes due 2021 |  | 349 |  |  | 347 |
1.65% Notes due 2021 |  | 998 |  |  | 973 |
0.250% Notes due 2022 (1B Euro 1.2323) |  | 1,229 |  |  | 1,236 |
2.25% Notes due 2022 |  | 995 |  |  | 975 |
6.73% Debentures due 2023 |  | 250 |  |  | 298 |
3.375% Notes due 2023 |  | 806 |  |  | 827 |
2.05% Notes due 2023 |  | 498 |  |  | 478 |
0.650% Notes due 2024 (750MM Euro 1.2323) |  | 920 |  |  | 926 |
5.50% Notes due 2024 (500 MM GBP 1.4063) |  | 697 |  |  | 865 |
2.625% Notes due 2025 |  | 747 |  |  | 722 |
2.45% Notes due 2026 |  | 1,991 |  |  | 1,877 |
2.95% Notes due 2027 |  | 995 |  |  | 968 |
2.90% Notes due 2028 |  | 1,492 |  |  | 1,443 |
1.150% Notes due 2028 (750MM Euro 1.2323) |  | 916 |  |  | 923 |
6.95% Notes due 2029 |  | 296 |  |  | 397 |
4.95% Debentures due 2033 |  | 498 |  |  | 580 |
4.375% Notes due 2033 |  | 856 |  |  | 938 |
1.650% Notes due 2035 (1.5B Euro 1.2323) |  | 1,830 |  |  | 1,907 |
3.55% Notes due 2036 |  | 987 |  |  | 978 |
5.95% Notes due 2037 |  | 991 |  |  | 1,289 |
3.625% Notes due 2037 |  | 1,486 |  |  | 1,479 |
3.40% Notes due 2038 |  | 990 |  |  | 961 |
5.85% Debentures due 2038 |  | 696 |  |  | 908 |
4.50% Debentures due 2040 |  | 538 |  |  | 604 |
4.85% Notes due 2041 |  | 296 |  |  | 340 |
4.50% Notes due 2043 |  | 495 |  |  | 545 |
3.70% Notes due 2046 |  | 1,971 |  |  | 1,966 |
3.75% Notes due 2047 |  | 991 |  |  | 991 |
3.50% Notes due 2048 |  | 742 |  |  | 716 |
Other |  | 20 |  |  | 20 |
Total Non-Current Debt |  | $ | 29,837 |  |  | 30,897 |

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