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Fair Value Measurements (Tables) | 12 Months Ended
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Jan. 02, 2022
Fair Value Disclosures [Abstract] |
Summary of Derivative Activity | The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended January 2, 2022 and January 3, 2021, net of tax:
| January 2, 2022 | January 3, 2021
(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 | $ | — |  | — |  | — |  | (109) |  | — |  | — |  | — |  | — |  | — |  | — |
Derivatives designated as hedging instruments | — |  | — |  | — |  | 109 |  | — |  | — |  | — |  | — |  | — |  | — |
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 | $ | — |  | — |  | — |  | 174 |  | — |  | — |  | — |  | — |  | 153 |  | — |
Amount of gain or (loss) recognized in AOCI | — |  | — |  | — |  | 174 |  | — |  | — |  | — |  | — |  | 153 |  | — |
Gain (Loss) on cash flow hedging relationship: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | 17 |  | 119 |  | 30 |  | — |  | 47 |  | 12 |  | (329) |  | (137) |  | — |  | (16) |
Amount of gain or (loss) recognized in AOCI | (94) |  | (557) |  | 123 |  | — |  | 146 |  | 44 |  | 298 |  | (91) |  | — |  | (52) |
Cross currency interest rate swaps contracts: |  |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from AOCI into income | — |  | — |  | — |  | 402 |  | — |  | — |  | — |  | — |  | 370 |  | — |
Amount of gain or (loss) recognized in AOCI | $ | — |  | — |  | — |  | 9 |  | — |  | — |  | — |  | — |  | 748 |  | — |
As of January 2, 2022 and January 3, 2021, 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) |  | January 2, 2022 |  | January 3, 2021 |  | January 2, 2022 |  | January 3, 2021
Long-term Debt |  | $ | 9,793 |  |  | $ | — |  |  | $ | (142) |  |  | $ | — |
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 years ended January 2, 2022 and January 3, 2021:
(Dollars in Millions) |  | Location of Gain /(Loss) Recognized in Income on Derivative |  | Gain/(Loss) Recognized In Income on Derivative
Derivatives Not Designated as Hedging Instruments |  |  |  | January 2, 2022 |  | January 3, 2021
Foreign Exchange Contracts |  | Other (income) expense |  | $ | (70) |  |  | 24 |
Schedule of Effect of Net Investment Hedges | The following table is the effect of net investment hedges for the fiscal years ended January 2, 2022 and January 3, 2021:
|  | 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) |  | January 2, 2022 |  | January 3, 2021 |  |  |  | January 2, 2022 |  | January 3, 2021
Debt |  | $ | 387 |  |  | (473) |  |  | Interest (income) expense |  | — |  |  | — |
Cross Currency interest rate swaps |  | $ | 548 |  |  | 65 |  |  | Interest (income) expense |  | — |  |  | — |
Summary of Activity Related to Equity Investments | The following table is a summary of the activity related to equity investments for the fiscal years ended January 2, 2022 and January 3, 2021:
|  | January 3, 2021 |  |  |  |  |  | January 2, 2022
(Dollars in Millions) |  | 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 |  | $ | 1,481 |  |  | 198 |  |  | 205 |  |  | 1,884 |  |  | 1,884 |
Equity Investments without readily determinable value |  | $ | 738 |  |  | 394 |  |  | (632) |  |  | 500 |  |  | 500 |
|  | December 29, 2019 |  |  |  |  |  | January 3, 2021
(Dollars in Millions) |  | 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 |  | $ | 1,148 |  |  | 527 |  |  | (194) |  |  | 1,481 |  |  | 1,481 |
Equity Investments without readily determinable value |  | $ | 712 |  |  | (55) |  |  | 81 |  |  | 738 |  |  | 738 |
(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 the fiscal year ended January 2, 2022 and January 3, 2021 were as follows:
|  | 2021 |  | 2020
(Dollars in Millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Total (1)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | $ | — |  |  | 540 |  |  | — |  |  | 540 |  |  | 849 |
Interest rate contracts (2) |  | — |  |  | 796 |  |  | — |  |  | 796 |  |  | 240 |
Total |  | $ | — |  |  | 1,336 |  |  | — |  |  | 1,336 |  |  | 1,089 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 881 |  |  | — |  |  | 881 |  |  | 702 |
Interest rate contracts (2) |  | — |  |  | 979 |  |  | — |  |  | 979 |  |  | 1,569 |
Total |  | $ | — |  |  | 1,860 |  |  | — |  |  | 1,860 |  |  | 2,271 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | $ | — |  |  | 24 |  |  | — |  |  | 24 |  |  | 49 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts |  | — |  |  | 28 |  |  | — |  |  | 28 |  |  | 38 |
Available For Sale Other Investments: |  |  |  |  |  |  |  |  |  |
Equity investments(3) |  | 1,884 |  |  | — |  |  | — |  |  | 1,884 |  |  | 1,481 |
Debt securities(4) |  | — |  |  | 19,727 |  |  | — |  |  | 19,727 |  |  | 14,042 |
Other Liabilities |  |  |  |  |  |  |  |  |  |
Contingent Consideration(5) |  | $ |  |  |  | 533 |  |  | 533 |  |  | 633 |
Gross to Net Derivative Reconciliation |  | 2021 |  | 2020
(Dollars in Millions) |  |  |  |
Total Gross Assets |  | $ | 1,360 |  |  | 1,138 |
Credit Support Agreement (CSA) |  | (1,285) |  |  | (1,107) |
Total Net Asset |  | 75 |  |  | 31 |
Total Gross Liabilities |  | 1,888 |  |  | 2,309 |
Credit Support Agreement (CSA) |  | (1,855) |  |  | (2,172) |
Total Net Liabilities |  | $ | 33 |  |  | 137 |
Summarized information about changes in liabilities for contingent consideration is as follows:
|  | 2021 | 2020 | 2019
(Dollars in Millions) |  |  |  |
Beginning Balance |  | $ | 633 |  | 1,715 |  | 397 |
Changes in estimated fair value (6) |  | (52) |  | (1,089) |  | 151 |
Additions |  | — |  | 106 |  | 1,246 |
Payments |  | (48) |  | (99) |  | (79) |
Ending Balance |  | $ | 533 |  | 633 |  | 1,715 |
(1)2020 assets and liabilities are all classified as Level 2 with the exception of equity investments of $1,481 million, which are classified as Level 1 and contingent consideration of $633 million, classified as Level 3. (2)Includes cross currency interest rate swaps and interest rate swaps. (3)Classified as non-current other assets. (4)Classified as cash equivalents and current marketable securities. (5)Includes $520 million, $594 million and $1,631 million, classified as non-current other liabilities as of January 2, 2022, January 3, 2021 and December 29, 2019, respectively. Includes $13 million, $39 million and $84 million classified as current liabilities as of January 2, 2022, January 3, 2021 and December 29, 2019, respectively. (6)Ongoing fair value adjustment amounts are recorded primarily in Research and Development expense. The Company recorded a contingent consideration reversal of $1,148 million in 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition. The reversal of the contingent consideration was recorded in Other income and expense.

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