Derivative Instruments and Fair Value Measurements (Tables)

3 Months Ended

Apr. 02, 2016

Derivative Instruments and Fair Value Measurements [Abstract]

Schedule of Total Notional Amounts of Derivative Instruments

Total notional amounts of the Company’s derivative instruments as of April 2, 2016 and January 2, 2016 were as follows:

(millions)	April 2, 2016		January 2, 2016
Foreign currency exchange contracts	$	1,628	$	1,210
Interest rate contracts	683		—
Commodity contracts	398		470
Total	$	2,709	$	1,680

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of April 2, 2016 and January 2, 2016:

Derivatives designated as hedging instruments

	April 2, 2016								January 2, 2016
(millions)	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:
Foreign currency exchange contracts:
Other prepaid assets	$	—	$	21		$	21		$	—	$	11		$	11
Total assets	$	—	$	21		$	21		$	—	$	11		$	11
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—	$	(33	)	$	(33	)	$	—	$	(10	)	$	(10	)
Interest rate contracts:
Other current liabilities	—		(8		)	(8		)	—		—			—
Commodity contracts:
Other current liabilities	—		(11		)	(11		)	—		(14		)	(14		)
Total liabilities	$	—	$	(52	)	$	(52	)	$	—	$	(24	)	$	(24	)

Derivatives not designated as hedging instruments

	April 2, 2016									January 2, 2016
(millions)	Level 1			Level 2			Total			Level 1			Level 2			Total
Assets:
Foreign currency exchange contracts:
Other prepaid assets	$	—		$	6		$	6		$	—		$	18		$	18
Commodity contracts:
Other prepaid assets	10			—			10			4			—			4
Total assets	$	10		$	6		$	16		$	4		$	18		$	22
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—		$	(1	)	$	(1	)	$	—		$	(6	)	$	(6	)
Commodity contracts:
Other current liabilities	(8		)	—			(8		)	$	(33	)	$	—		$	(33	)
Total liabilities	$	(8	)	$	(1	)	$	(9	)	$	(33	)	$	(6	)	$	(39	)

Schedule of Offsetting Assets

The Company has elected not to offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements. However, if the Company were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheet as of April 2, 2016 and January 2, 2016 would be adjusted as detailed in the following table:

As of April 2, 2016:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	37		$	(30	)	$	—	$	7
Total liability derivatives	$	(61	)	$	30		$	13	$	(18	)

As of January 2, 2016:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	33		$	(12	)	$	—	$	21
Total liability derivatives	$	(63	)	$	12		$	51	$	—

Schedule of Offsetting Liabilities

The Company has elected not to offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements. However, if the Company were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheet as of April 2, 2016 and January 2, 2016 would be adjusted as detailed in the following table:

As of April 2, 2016:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	37		$	(30	)	$	—	$	7
Total liability derivatives	$	(61	)	$	30		$	13	$	(18	)

As of January 2, 2016:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	33		$	(12	)	$	—	$	21
Total liability derivatives	$	(63	)	$	12		$	51	$	—

Schedule of the Effect of Derivative Instruments on the Consolidated Statements of Income and Comprehensive Income

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the quarters ended April 2, 2016 and April 4, 2015 was as follows:

Derivatives in fair value hedging relationships

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income (a)
		April 2, 2016		April 4, 2015
Foreign currency exchange contracts	Other income (expense), net	$	—	$	(4	)
Interest rate contracts	Interest expense	6		9
Total		$	6	$	5

(a) Includes the ineffective portion and amount excluded from effectiveness testing.

Derivatives in cash flow hedging relationships

(millions)	Gain (loss) recognized in AOCI						Location of gain (loss) reclassified from AOCI	Gain (loss) reclassified from AOCI into income						Location of gain (loss) recognized in income (a)	Gain (loss) recognized in income (a)
	April 2, 2016			April 4, 2015				April 2, 2016			April 4, 2015				April 2, 2016		April 4, 2015
Foreign currency  exchange contracts	$	10		$	17		COGS	$	7		$	7		Other income (expense), net	$	—	$	—
Interest rate contracts	(66		)	(9		)	Interest  expense	(6		)	—			N/A	—		—
Commodity contracts	(1		)	—			COGS	(3		)	(3		)	Other income (expense), net	—		—
Total	$	(57	)	$	8			$	(2	)	$	4			$	—	$	—

(a) Includes the ineffective portion and amount excluded from effectiveness testing.

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI
	April 2, 2016			April 4, 2015
Foreign currency denominated long-term debt	$	(58	)	$	57
Foreign currency exchange contracts	(22		)	—
Total	$	(80	)	$	57

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		April 2, 2016			April 4, 2015
Foreign currency exchange contracts	COGS	$	(9	)	$	—
Foreign currency exchange contracts	Other income (expense), net	11			2
Commodity contracts	COGS	4			(11		)
Total		$	6		$	(9	)

Schedule of Fair Value of Long-term Debt

The fair value of the Company’s long-term debt, which are level 2 liabilities, is calculated based on broker quotes and was as follows at April 2, 2016:

(millions)	Fair Value		Carrying Value
Current maturities of long-term debt	$	1,264	$	1,264
Long-term debt	6,665		6,256
Total	$	7,929	$	7,520