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Fair Value Measurements (Tables)

12 Months Ended

Jan. 01, 2023

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 1, 2023 and January 2, 2022, net of tax:

			January 1, 2023															January 2, 2022
(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			$	—		—			—			(1,098)			—			—			—			—			(109)			—
Derivatives designated as hedging instruments			—			—			—			1,098			—			—			—			—			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			$	—		—			—			140			—			—			—			—			174			—
Amount of gain or (loss) recognized in AOCI			—			—			—			140			—			—			—			—			174			—
Gain (Loss) on cash flow hedging relationship:
Forward foreign exchange contracts:
Amount of gain or (loss) reclassified from AOCI into income			(72)			(271)			149			—			(23)			17			119			30			—			47
Amount of gain or (loss) recognized in AOCI			5			319			61			—			(113)			(94)			(557)			123			—			146
Cross currency interest rate swaps contracts:
Amount of gain or (loss) reclassified from AOCI into income			—			—			—			425			—			—			—			—			402			—
Amount of gain or (loss) recognized in AOCI			$	—		—			—			42			—			—			—			—			9			—

As of January 1, 2023 and January 2, 2022, 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 1, 2023						January 2, 2022						January 1, 2023						January 2, 2022
Long-term Debt						$	8,665					$	9,793					$	(1,435)					$	(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 1, 2023 and January 2, 2022:

(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 1, 2023

January 2, 2022

Foreign Exchange Contracts

Other (income) expense

$

94

(70)

Schedule of Effect of Net Investment Hedges

The following table is the effect of net investment hedges for the fiscal years ended January 1, 2023 and January 2, 2022:

						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 1, 2023						January 2, 2022												January 1, 2023						January 2, 2022
Debt						$	197					387						Interest (income) expense						—						—
Cross Currency interest rate swaps						$	766					548						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 1, 2023 and January 2, 2022:

						January 2, 2022																		January 1, 2023
(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						$	1,884					(538)						(770)						576						576
Equity Investments without readily determinable value						$	500					91						107						698						698

						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

(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 1, 2023 and January 2, 2022 were as follows:

						2022																								2021
(Dollars in Millions)						Level 1						Level 2						Level 3						Total						Total (1)
Derivatives designated as hedging instruments:
Assets:
Forward foreign exchange contracts						$	—					629						—						629						540
Interest rate contracts (2)						—						1,534						—						1,534						796
Total						$	—					2,163						—						2,163						1,336
Liabilities:
Forward foreign exchange contracts						—						511						—						511						881
Interest rate contracts (2)						—						2,778						—						2,778						979
Total						$	—					3,289						—						3,289						1,860
Derivatives not designated as hedging instruments:
Assets:
Forward foreign exchange contracts						$	—					38						—						38						24
Liabilities:
Forward foreign exchange contracts						—						68						—						68						28
Available For Sale Other Investments:
Equity investments(3)						576						—						—						576						1,884
Debt securities(4)						—						10,487						—						10,487						19,727
Other Liabilities
Contingent Consideration(5)						$												1,120						1,120						533

Gross to Net Derivative Reconciliation						2022						2021
(Dollars in Millions)
Total Gross Assets						$	2,201					1,360
Credit Support Agreement (CSA)						(2,176)						(1,285)
Total Net Asset						25						75
Total Gross Liabilities						3,357						1,888
Credit Support Agreement (CSA)						(3,023)						(1,855)
Total Net Liabilities						$	334					33

Summarized information about changes in liabilities for contingent consideration is as follows:

									2022			2021			2020
(Dollars in Millions)
Beginning Balance									$	533		633			1,715
Changes in estimated fair value (6)									(194)			(52)			(1,089)
Additions (7)									792			—			106
Payments									(11)			(48)			(99)
Ending Balance									$	1,120		533			633

(1)2021 assets and liabilities are all classified as Level 2 with the exception of equity investments of $1,884 million, which are classified as Level 1 and contingent consideration of $533 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 $1,116 million, $520 million and $594 million, classified as non-current other liabilities as of January 1, 2023, January 2, 2022 and January 3, 2021, respectively. Includes $4 million, $13 million and $39 million classified as current liabilities as of January 1, 2023, January 2, 2022 and January 3, 2021, 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.

(7)In fiscal year 2022, the Company recorded $704 million of contingent consideration related to Abiomed.

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