Fair Value Measurements (Tables)

9 Months Ended

Oct. 02, 2011


	Gain/ (Loss)						Gain/(Loss)						Gain/ (Loss)
	recognized in						reclassified from						recognized in
	Accumulated						Accumulated OCI						other
	OCI⁽¹⁾						into income⁽¹⁾						income/expense⁽²⁾
							Fiscal Third Quarters Ended
(Dollars in Millions)	2011			2010			2011			2010			2011			2010
Cash Flow Hedges
Foreign exchange contracts	$	(57	)		45			4			(12)	(A)		1			18
Foreign exchange contracts		(58	)		(7	)		(21	)		(106)	(B)		(1	)		121
Foreign exchange contracts		6			(46	)		(40	)		20	(C)		1			(11	)
Cross currency interest rate swaps		(67	)		(24	)		(6	)		(1)	(D)		—			—
Foreign exchange contracts		59			(63	)		(4	)		9	(E)		(1	)		(17	)
Total	$	(117	)		(95	)		(67	)		(90	)		—			111

All amounts shown in the table above are net of tax.

The following table is a summary of the activity related to derivatives designated as hedges for the fiscal nine months in 2011 and 2010:


	Gain/ (Loss)						Gain/ (Loss)						Gain/ (Loss)
	recognized in						reclassified from						recognized in
	Accumulated						Accumulated OCI						other
	OCI⁽¹⁾						into income⁽¹⁾						income/expense⁽²⁾
							Fiscal Nine Months Ended
(Dollars in Millions)	2011			2010			2011			2010			2011			2010
Cash Flow Hedges
Foreign exchange contracts	$	(30	)		(39	)		(6	)		(41)	(A)		(1	)		(3	)
Foreign exchange contracts		34			(213	)		(127	)		(204)	(B)		2			(33	)
Foreign exchange contracts		(2	)		27			(21	)		41	(C)		(1	)		5
Cross currency interest rate swaps		(107	)		(73	)		(24	)		10	(D)		—			—
Foreign exchange contracts		—			18			(7	)		8	(E)		1			3
Total	$	(105	)		(280	)		(185	)		(186	)		1			(28	)

All amounts shown in the table above are net of tax.


(1)		Effective portion

(2)		Ineffective portion

(A)		Included in Sales to customers

(B)		Included in Cost of products sold

(C)		Included in Research and development expense

(D)		Included in Interest (income)/Interest expense, net

(E)		Included in Other (income)/expense, net

Financial assets and liabilities at fair value


			October 2, 2011						January 2, 2011
(Dollars in Millions)	Level 1		Level 2		Level 3		Total		Total⁽¹⁾
Derivatives designated as hedging instruments:
Assets:
Foreign exchange contracts	$	—	$	604	$	—	$	604	$	321
Cross currency interest rate swaps⁽²⁾		—		7		—		7		17
Total		—		611		—		611		338
Liabilities:
Foreign exchange contracts		—		425		—		425		586
Cross currency interest rate swaps⁽³⁾		—		599		—		599		502
Total		—		1,024		—		1,024		1,088
Derivatives not designated as hedging instruments:
Assets:
Foreign exchange contracts		—		20		—		20		19
Swiss Franc Option*		—		265		—		265		—
Total		—		285		—		285		19
Liabilities:
Foreign exchange contracts		—		14		—		14		39
Other Investments⁽⁴⁾	$	1,211	$	—	$	—	$	1,211	$	1,165


*		Currency option related to the planned acquisition of Synthes, Inc.

(1)		As of January 2, 2011, these assets and liabilities are classified as Level 2 with the exception of Other Investments of $1,165 which are classified as Level 1.

(2)		Includes $7 million and $14 million of non-current assets for October 2, 2011 and January 2, 2011, respectively.

(3)		Includes $598 million and $502 million of non-current liabilities for October 2, 2011 and January 2, 2011, respectively.

(4)		Classified as non-current other assets.

Financial assets and liabilities not measured at fair value

Financial Instruments not measured at Fair Value:

The following financial assets and liabilities are held at carrying amount on the consolidated balance sheet as of October 2, 2011:


	Carrying		Estimated
(Dollars in Millions)	Amount		Fair Value
Financial Assets
Current Investments
Cash	$	2,314		2,314
Government securities and obligations		25,380		25,381
Corporate debt securities		612		612
Money market funds		1,550		1,550
Time deposits		1,071		1,071
Total cash, cash equivalents and current marketable securities	$	30,927		30,928
Fair value of government securities and obligations and corporate debt securities was estimated using quoted broker prices in active markets.
Financial Liabilities
Current Debt	$	5,326		5,326
Non-Current Debt
0.70% Notes due 2013		500		502
3.80% Debentures due 2013		500		526
3 month LIBOR+0% FRN due 2013		500		500
3 month LIBOR+0.09% FRN due 2014		750		750
1.20% Notes due 2014		999		1,015
2.15% Notes due 2016		898		933
5.55% Debentures due 2017		1,000		1,214
5.15% Debentures due 2018		898		1,081
4.75% Notes due 2019 (1B Euro 1.3634)		1,356		1,560
3% Zero Coupon Convertible Subordinated Debentures due in 2020		199		232
2.95% Debentures due 2020		541		567
3.55% Notes due 2021		446		496
6.73% Debentures due 2023		250		358
5.50% Notes due 2024 (500 GBP1.5672)		778		927
6.95% Notes due 2029		294		426
4.95% Debentures due 2033		500		582
5.95% Notes due 2037		995		1,318
5.86% Debentures due 2038		700		925
4.50% Debentures due 2040		539		601
4.85% Notes due 2041		298		351
Other		90		90
Total Non-Current Debt	$	13,031		14,954

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

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-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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