XML 71 R25.htm IDEA: XBRL DOCUMENT
v3.19.3

Fair Value Measurements (Tables) | 9 Months Ended
--- | ---
Sep. 29, 2019
Fair Value Disclosures [Abstract] |
Summary of Derivative Activity |
| September 29, 2019 | September 30, 2018
(Dollars in Millions) | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense
The effects of fair value, net investment and cash flow hedging: |  |  |  |  |  |  |  |  |  |
Gain (Loss) on fair value hedging relationship: |  |  |  |  |  |  |  |  |  |
Interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Hedged items | $ | — |  | — |  | — |  | (3 | ) | — |  | — |  | — |  | — |  | (7 | ) | — |
Derivatives designated as hedging instruments | — |  | — |  | — |  | 3 |  | — |  | — |  | — |  | — |  | 7 |  | — |
Gain (Loss) on net investment hedging relationship: |  |  |  |  |  |  |  |  |  |
Cross currency interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing | — |  | — |  | — |  | 39 |  | — |  | — |  | — |  | — |  | 25 |  | — |
Amount of gain or (loss) recognized in AOCI | — |  | — |  | — |  | 39 |  | — |  | — |  | — |  | — |  | 25 |  | — |
Gain (Loss) on cash flow hedging relationship: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | (8 | ) | (77 | ) | 1,911 |  | — |  | 1 |  | 4 |  | 97 |  | 10 |  | — |  | (3 | )
Amount of gain or (loss) recognized in AOCI | (23 | ) | (197 | ) | 1,939 |  | — |  | 5 |  | 15 |  | 192 |  | (4 | ) | — |  | (1 | )
Cross currency interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | — |  | — |  | — |  | 89 |  | — |  | — |  |  | — |  | 34 |  | — |
Amount of gain or (loss) recognized in AOCI | $ | — |  | — |  | — |  | 159 |  | — |  | — |  | — |  | — |  | 35 |  | — |
The following table is a summary of the activity related to derivatives and hedges for the fiscal nine months ended in 2019 and 2018:
| September 29, 2019 | September 30, 2018
(Dollars in Millions) | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense
The effects of fair value, net investment and cash flow hedging: |  |  |  |  |  |  |  |  |  |
Gain (Loss) on fair value hedging relationship: |  |  |  |  |  |  |  |  |  |
Interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Hedged items | $ | — |  | — |  | — |  | (2 | ) | — |  | — |  | — |  | — |  | 3 |  | — |
Derivatives designated as hedging instruments | — |  | — |  | — |  | 2 |  | — |  | — |  | — |  | — |  | (3 | ) | — |
Gain (Loss) on net investment hedging relationship: |  |  |  |  |  |  |  |  |  |
Cross currency interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing | — |  | — |  | — |  | 117 |  | — |  | — |  | — |  | — |  | 27 |  | — |
Amount of gain or (loss) recognized in AOCI | — |  | — |  | — |  | 117 |  | — |  | — |  | — |  | — |  | 27 |  | — |
Gain (Loss) on cash flow hedging relationship: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | (43 | ) | (213 | ) | 1,808 |  | — |  | 9 |  | 50 |  | 175 |  | (242 | ) | — |  | (24 | )
Amount of gain or (loss) recognized in AOCI | (29 | ) | (543 | ) | 1,847 |  | — |  | 15 |  | (3 | ) | 138 |  | (220 | ) | — |  | (16 | )
Cross currency interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | — |  | — |  | — |  | 207 |  | — |  | — |  | — |  | — |  | 106 |  | — |
Amount of gain or (loss) recognized in AOCI | $ | — |  | — |  | — |  | 299 |  | — |  | — |  | — |  | — |  | 111 |  | — |
|  | Gain/(Loss) Recognized In Accumulated OCI |  | Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income |  | Gain/(Loss) Reclassified From Accumulated OCI Into Income
(Dollars in Millions) |  | September 29, 2019 |  | September 30, 2018 |  |  |  | September 29, 2019 |  | September 30, 2018
Debt |  | $ | 162 |  |  | (50 | ) |  | Other (income) expense |  | — |  |  | — |
Cross Currency interest rate swaps |  | $ | 152 |  |  | (75 | ) |  | Other (income) expense |  | — |  |  | — |
The following table is the effect of net investment hedges for the fiscal nine months ended in 2019 and 2018:
|  | Gain/(Loss) Recognized In Accumulated OCI |  | Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income |  | Gain/(Loss) Reclassified From Accumulated OCI Into Income
(Dollars in Millions) |  | September 29, 2019 |  | September 30, 2018 |  |  |  | September 29, 2019 |  | September 30, 2018
Debt |  | $ | 176 |  |  | 106 |  |  | Other (income) expense |  | — |  |  | — |
Cross Currency interest rate swaps |  | $ | 465 |  |  | (37 | ) |  | Other (income) expense |  | — |  |  | — |
Schedule of Derivatives Recorded in Consolidated Balance Sheet | As of September 29, 2019, and December 30, 2018, the following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges:
Line item in the Consolidated Balance Sheet in which the hedged item is included |  | Carrying Amount of the Hedged Liability |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
(Dollars in Millions) |  | September 29, 2019 |  | December 30, 2018 |  | September 29, 2019 |  | December 30, 2018
Current Portion of Long-term Debt |  | $ | 502 |  |  | 494 |  |  | (2 | ) |  | 5 |
Long-term Debt |  | — |  |  | — |  |  | — |  |  | — |
Schedule of Effect of Derivatives not Designated as Hedging Instruments |
The following table is the effect of derivatives not designated as hedging instrument for the fiscal third quarter and fiscal nine months ended in 2019 and 2018:
|  |  |  | Gain/(Loss) Recognized In Income on Derivative | Gain/(Loss) Recognized In Income on Derivative
(Dollars in Millions) |  | Location of Gain /(Loss) Recognized in Income on Derivative |  | Fiscal Third Quarter Ended | Fiscal Nine Months Ended
Derivatives Not Designated as Hedging Instruments |  |  |  | September 29, 2019 |  | September 30, 2018 | September 29, 2019 |  | September 30, 2018
Foreign Exchange Contracts |  | Other (income) expense |  | $ | (13 | ) |  | 49 |  | (101 | ) |  | (23 | )
Summary of Activity Related to Equity Investments | The following table is a summary of the activity related to equity investments:
(Dollars in Millions) |  | December 30, 2018 |  |  |  |  |  | September 29, 2019 |  |
|  | 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 |  | $ | 511 |  |  | 201 |  |  | 151 |  |  | 863 |  |  | 863 |
Equity Investments without readily determinable value |  | $ | 681 |  |  | (28 | ) |  | 46 |  |  | 699 |  |  | 699 |
(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 September 29, 2019 and December 30, 2018 were as follows:
|  | September 29, 2019 |  |  |  | December 30, 2018
(Dollars in Millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Total(1)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | $ | — |  |  | 498 |  |  | — |  |  | 498 |  |  | 501 |
Interest rate contracts (2)(4) |  | — |  |  | 681 |  |  | — |  |  | 681 |  |  | 161 |
Total |  | — |  |  | 1,179 |  |  | — |  |  | 1,179 |  |  | 662 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 635 |  |  | — |  |  | 635 |  |  | 548 |
Interest rate contracts (3)(4) |  | — |  |  | 410 |  |  | — |  |  | 410 |  |  | 292 |
Total |  | — |  |  | 1,045 |  |  | — |  |  | 1,045 |  |  | 840 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 32 |  |  | — |  |  | 32 |  |  | 32 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 38 |  |  | — |  |  | 38 |  |  | 32 |
Other Investments: |  |  |  |  |  |  |  |  |  |
Equity investments (5) |  | 863 |  |  | — |  |  | — |  |  | 863 |  |  | 511 |
Debt securities(6) |  | $ | — |  |  | 4,327 |  |  | — |  |  | 4,327 |  |  | 9,734 |
Other Liabilities |  |  |  |  |  |  |  |  |  |
Contingent consideration (7) |  |  |  |  |  | 1,596 |  |  | 1,596 |  |  | 335 |
Gross to Net Derivative Reconciliation |  | September 29, 2019 |  | December 30, 2018
(Dollars in Millions) |  |  |  |
Total Gross Assets |  | $ | 1,211 |  |  | 694 |
Credit Support Agreement (CSA) |  | (1,013 | ) |  | (423 | )
Total Net Asset |  | 198 |  |  | 271 |
Total Gross Liabilities |  | 1,083 |  |  | 872 |
Credit Support Agreement (CSA) |  | (945 | ) |  | (605 | )
Total Net Liabilities |  | $ | 138 |  |  | 267 |
Summarized information about changes in liabilities for contingent consideration is as follows:
|  | Nine months ended
|  | September 29, 2019 |  |  | September 30, 2018 |
(Dollars in Millions) |  |  |  |
Beginning Balance |  | $ | 335 |  |  | $ | 600 |
Changes in estimated fair value |  | 129 |  |  | (162 | )
Additions |  | 1,132 |  |  | 125 |
Payments |  | — |  |  | (160 | )
Ending Balance |  | $ | 1,596 |  |  | $ | 403 |
(1) | December 30, 2018 assets and liabilities are all classified as Level 2 with the exception of equity investments of $511 million, which are classified as Level 1 and $335 million, classified as Level 3.
(2) | Includes $1 million and $6 million of non-current other assets as of September 29, 2019 and December 30, 2018, respectively.
(3) | Includes $3 million of non-current other liabilities as of December 30, 2018.
(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 $863 million and $511 million as of September 29, 2019 and December 30, 2018, respectively.
(6) | Classified within cash equivalents and current marketable securities.
(7) Includes $1,453 million (primarily related to Auris Health) and $335 million, classified as non-current other liabilities as of September 29, 2019 and December 30, 2018, respectively. Includes $143 million classified as current liabilities as of
Marketable Securities | The Company's cash, cash equivalents and current marketable securities as of September 29, 2019 comprised:
(Dollars in Millions) | Carrying Amount |  | Unrecognized Gain |  | Estimated Fair Value |  | Cash & Cash Equivalents |  | Current Marketable Securities
Cash | $ | 2,667 |  |  | — |  |  | 2,667 |  |  | 2,667 |  |  |
Other sovereign securities(1) | 709 |  |  | — |  |  | 709 |  |  | 619 |  |  | 90 |
U.S. reverse repurchase agreements | 6,182 |  |  | — |  |  | 6,182 |  |  | 6,182 |  |  |
Other reverse repurchase agreements | 241 |  |  | — |  |  | 241 |  |  | 241 |  |  |
Corporate debt securities(1) | 1,647 |  |  | — |  |  | 1,647 |  |  | 1,159 |  |  | 488 |
Money market funds | 1,481 |  |  | — |  |  | 1,481 |  |  | 1,481 |  |  |
Time deposits(1) | 691 |  |  | — |  |  | 691 |  |  | 691 |  |  |
Subtotal | 13,618 |  |  | — |  |  | 13,618 |  |  | 13,040 |  |  | 578 |
|  |  | Unrealized Gain |  |  |  |  |  |
Government securities | 4,050 |  |  | 1 |  |  | 4,051 |  |  | 3,195 |  |  | 856 |
Other sovereign securities | 4 |  |  | — |  |  | 4 |  |  | — |  |  | 4 |
Corporate debt securities | 272 |  |  | — |  |  | 272 |  |  | 14 |  |  | 258 |
Subtotal available for sale debt(2) | $ | 4,326 |  |  | 1 |  |  | 4,327 |  |  | 3,209 |  |  | 1,118 |
Total cash, cash equivalents and current marketable securities | $ | 17,944 |  |  | 1 |  |  | 17,945 |  |  | 16,249 |  |  | 1,696 |
(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 as of September 29, 2019 are as follows:
(Dollars in Millions) |  | Cost Basis |  | Fair Value
Due within one year |  | $ | 4,267 |  |  | 4,268 |
Due after one year through five years |  | 59 |  |  | 59 |
Due after five years through ten years |  | — |  |  | — |
Total debt securities |  | $ | 4,326 |  |  | 4,327 |
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 September 29, 2019:
(Dollars in Millions) |  | Carrying Amount |  | Estimated Fair Value
Financial Liabilities |  |  |  |
Current Debt |  | $ | 2,299 |  |  | 2,349 |
Non-Current Debt |  |  |  |
1.950% Notes due 2020 |  | 500 |  |  | 501 |
3.55% Notes due 2021 |  | 449 |  |  | 461 |
2.45% Notes due 2021 |  | 349 |  |  | 354 |
1.65% Notes due 2021 |  | 999 |  |  | 997 |
0.250% Notes due 2022 (1B Euro 1.0958) |  | 1,094 |  |  | 1,108 |
2.25% Notes due 2022 |  | 997 |  |  | 1,011 |
6.73% Debentures due 2023 |  | 250 |  |  | 298 |
3.375% Notes due 2023 |  | 804 |  |  | 854 |
2.05% Notes due 2023 |  | 498 |  |  | 502 |
0.650% Notes due 2024 (750MM Euro 1.0958) |  | 819 |  |  | 850 |
5.50% Notes due 2024 (500 MM GBP 1.2353) |  | 613 |  |  | 752 |
2.625% Notes due 2025 |  | 748 |  |  | 771 |
2.45% Notes due 2026 |  | 1,992 |  |  | 2,028 |
2.95% Notes due 2027 |  | 996 |  |  | 1,052 |
2.90% Notes due 2028 |  | 1,494 |  |  | 1,573 |
1.150% Notes due 2028 (750MM Euro 1.0958) |  | 815 |  |  | 887 |
6.95% Notes due 2029 |  | 297 |  |  | 416 |
4.95% Debentures due 2033 |  | 498 |  |  | 627 |
4.375% Notes due 2033 |  | 855 |  |  | 1,021 |
1.650% Notes due 2035 (1.5B Euro 1.0958) |  | 1,628 |  |  | 1,916 |
3.55% Notes due 2036 |  | 989 |  |  | 1,082 |
5.95% Notes due 2037 |  | 992 |  |  | 1,394 |
3.625% Notes due 2037 |  | 1,487 |  |  | 1,656 |
3.40% Notes due 2038 |  | 991 |  |  | 1,073 |
5.85% Debentures due 2038 |  | 696 |  |  | 983 |
4.50% Debentures due 2040 |  | 539 |  |  | 668 |
4.85% Notes due 2041 |  | 297 |  |  | 387 |
4.50% Notes due 2043 |  | 495 |  |  | 629 |
3.70% Notes due 2046 |  | 1,973 |  |  | 2,232 |
3.75% Notes due 2047 |  | 991 |  |  | 1,124 |
3.50% Notes due 2048 |  | 742 |  |  | 817 |
Other |  | 32 |  |  | 33 |
Total Non-Current Debt |  | $ | 26,919 |  |  | 30,057 |

X
- Definition Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale). + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 + Details
Name: | us-gaap_DebtSecuritiesAvailableForSaleTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=109250915&loc=d3e13467-108611 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=99377789&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueByBalanceSheetGroupingTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the reconciliation of available-for-sale securities from cost basis to fair value. + References No definition available. + Details
Name: | us-gaap_ScheduleOfAvailableForSaleSecuritiesReconciliationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the components of cash, cash equivalents, and investments. + References No definition available. + Details
Name: | us-gaap_ScheduleOfCashCashEquivalentsAndShortTermInvestmentsTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624181-113959 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5618551-113959 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959 + Details
Name: | us-gaap_ScheduleOfDerivativeInstrumentsGainLossInStatementOfFinancialPerformanceTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624163-113959 + Details
Name: | us-gaap_ScheduleOfDerivativeInstrumentsInStatementOfFinancialPositionFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of derivative liabilities at fair value. + References No definition available. + Details
Name: | us-gaap_ScheduleOfDerivativeLiabilitiesAtFairValueTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of derivative instrument not designated or qualifying as hedging instrument. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4CC -URI http://asc.fasb.org/extlink&oid=109980867&loc=SL109998890-113959 + Details
Name: | us-gaap_ScheduleOfOtherDerivativesNotDesignatedAsHedgingInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration