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Fair Value Measurements (Tables)
 12 Months Ended
Dec. 29, 2019
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 December 29, 2019 and December 30, 2018, net of tax:
 
December 29, 2019
December 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 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
—

—

—

159

—

—

—

—

56

—

   Amount of gain or (loss) recognized in AOCI
—

—

—

159

—

—

—

—

56

—

 
 
 
 
 
 
 
 
 
 
 
Gain (Loss) on cash flow hedging relationship:
 
 
 
 
 
 
 
 
 
 
Forward foreign exchange contracts:
 
 
 
 
 
 
 
 
 
 
   Amount of gain or (loss) reclassified from AOCI into income
(54
)
(321
)
(105
)
—

22

47

200

(220
)
—

(24
)
 
 
 
 
 
 
 
 
 
 
 
   Amount of gain or (loss) recognized in AOCI
(20
)
(606
)
(94
)
—

39

(32
)
(17
)
(193
)
—

(4
)
 
 
 
 
 
 
 
 
 
 
 
Cross currency interest rate swaps contracts:
 
 
 
 
 
 
 
 
 
 
   Amount of gain or (loss) reclassified from AOCI into income
—

—

—

292

—

—

—

—

133

—

   Amount of gain or (loss) recognized in AOCI
$
—

—

—

415

—

—

—

—

117

—



 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule of Derivatives Recorded in Consolidated Balance Sheets
For the fiscal years ended December 29, 2019 and December 30, 2018, the following amounts were recorded on the Consolidated Balance Sheet
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)
 
December 29, 2019
 
December 30, 2018
 
December 29, 2019
 
December 30, 2018
Current Portion of Long-term Debt
 
$
—

 
494

 
—

 
5
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 December 29, 2019 and December 30, 2018:
 
 
 
 
 
(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
 
 
 
December 29, 2019
 
December 30, 2018
Foreign Exchange Contracts
 
Other (income) expense
 
(144
)
 
(68
)
Schedule of Effect of Net Investment Hedges
The following table is the effect of net investment hedges for the fiscal years ended December 29, 2019 and December 30, 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)
 
December 29, 2019
 
December 30, 2018
 
 
 
December 29, 2019
 
December 30, 2018
Debt
 
$
121

 
218

 
Interest (income) expense

 
—

 
—

Cross Currency interest rate swaps
 
$
488

 
150

 
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 December 29, 2019 and December 30, 2018:
 
 
December 30, 2018
 
 
 
 
 
December 29, 2019
 
 
(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
 
$
511

 
533

 
104

 
1,148

 
1,148

 
 
 
 
 
 
 
 
 
 
 
Equity Investments without readily determinable value
 
$
681

 
(38
)
 
69

 
712

 
712



 
 
December 31, 2017

 
 
 
 
 
December 30, 2018

 
 
(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
 
$
751

 
(247
)
 
7

 
511

 
511

 
 
 
 
 
 
 
 
 
 
 
Equity Investments without readily determinable value
 
$
510

 
13

 
158

 
681

 
681



(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 December 29, 2019 and December 30, 2018 were as follows:
 
 
2019
 
2018
(Dollars in Millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Total (1)
Derivatives designated as hedging instruments:
 
 

 
 

 
 

 
 

 
 

Assets:
 
 

 
 

 
 

 
 

 
 

Forward foreign exchange contracts
 
$
—

 
209

 
—

 
209

 
501

Interest rate contracts (2)(4)
 
—

 
693

 
—

 
693

 
161

Total
 
—

 
902

 
—

 
902

 
662

Liabilities:
 
 

 
 

 
 

 
 

 
 

Forward foreign exchange contracts
 
—

 
426

 
—

 
426

 
548

Interest rate contracts (3)(4)
 
—

 
193

 
—

 
193

 
292

Total
 
—

 
619

 
—

 
619

 
840

Derivatives not designated as hedging instruments:
 
 

 
 

 
 

 
 

 
 

Assets:
 
 

 
 

 
 

 
 

 
 

Forward foreign exchange contracts
 
—

 
23

 
—

 
23

 
32

Liabilities:
 
 

 
 

 
 

 
 

 
 

Forward foreign exchange contracts
 
—

 
33

 
—

 
33

 
32

Available For Sale Other Investments:
 
 
 
 
 
 
 
 
 
 
Equity investments(5)
 
1,148

 
—

 
—

 
1,148

 
511

Debt securities(6)
 
$
—

 
4,368

 
—

 
4,368

 
9,734

Other Liabilities
 
 
 
 
 
 
 
 
 
 
Contingent Consideration(7)
 
 
 
 
 
1,715

 
1,715

 
397



Gross to Net Derivative Reconciliation
 
2019
 
2018
(Dollars in Millions)
 
 
 
 
Total Gross Assets
 
$
925

 
694

Credit Support Agreement (CSA)
 
(841
)
 
(423
)
Total Net Asset
 
84

 
271

 
 
 
 
 
Total Gross Liabilities
 
652

 
872

Credit Support Agreement (CSA)
 
(586
)
 
(605
)
Total Net Liabilities
 
$
66

 
267

 
 
 
 
 

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

 
 
2019
2018
2017
(Dollars in Millions)
 
 
 
 
Beginning Balance
 
397

600

378

Changes in estimated fair value (8)
 
151

(156
)
87

Additions
 
1,246

125

160

Payments
 
(79
)
(172
)
(25
)
Ending Balance
 
1,715

397

600

 
 
 
 
 



(1) 
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 contingent consideration of $397 million, classified as Level 3.
(2) 
Includes $1 million and $6 million of non-current assets for the fiscal years ending December 29, 2019 and December 30, 2018, respectively.
(3) 
Includes $3 million of non-current liabilities for the fiscal years ending December 30, 2018.
(4) 
Includes cross currency interest rate swaps and interest rate swaps.
(5) 
Classified as non-current other assets.
(6) 
Classified as cash equivalents and current marketable securities.
(7) 
Includes $1,631 million (primarily related to Auris Health), $397 million and $600 million, classified as non-current other liabilities as of December 29, 2019, December 30, 2018 and December 31, 2017 respectively. Includes $84 million classified as current liabilities as of December 29, 2019.
(8) 
Amounts are recorded primarily in Research and Development expense.