Derivative Instruments and Fair Value Measurements (Tables)

9 Months Ended

Oct. 02, 2021

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 October 2, 2021 and January 2, 2021 were as follows:

(millions)	October 2, 2021		January 2, 2021
Foreign currency exchange contracts	$	3,104	$	2,856
Cross-currency contracts	1,360		1,411
Interest rate contracts	2,836		2,632
Commodity contracts	393		314
Total	$	7,693	$	7,213

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of October 2, 2021 and January 2, 2021:

Derivatives designated as hedging instruments

	October 2, 2021						January 2, 2021
(millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cross-currency contracts:
Other current assets	$	—	$	27	$	27	$	—	$	14	$	14
Other assets	—		15		15		—		16		16
Interest rate contracts(a):
Other current assets	—		46		46		—		—		—
Other assets	—		51		51		—		60		60
Total assets	$	—	$	139	$	139	$	—	$	90	$	90
Liabilities:
Cross-currency contracts:
Other current liabilities	$	—	$	—	$	—	$	—	$	(13)	$	(13)
Other Liabilities	—		(7)		(7)		—		(21)		(21)
Interest rate contracts:
Other current liabilities	—		—		—		—		(3)		(3)
Total liabilities	$	—	$	(7)	$	(7)	$	—	$	(37)	$	(37)

(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $1.2 billion as of October 2, 2021 and $0.8 billion as of January 2, 2021.

Derivatives not designated as hedging instruments

	October 2, 2021						January 2, 2021
(millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Foreign currency exchange contracts:
Other current assets	$	—	$	30	$	30	$	—	$	48	$	48
Other assets	—		3		3		—		—		—
Interest rate contracts:
Other current assets	—		4		4		—		4		4
Other assets	—		4		4		—		13		13
Commodity contracts:
Other current assets	17		—		17		9		—		9
Total assets	$	17	$	41	$	58	$	9	$	65	$	74
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—	$	(41)	$	(41)	$	—	$	(73)	$	(73)
Other liabilities	—		(5)		(5)		—		(4)		(4)
Interest rate contracts:
Other current liabilities	—		(7)		(7)		—		(6)		(6)
Other liabilities	—		(11)		(11)		—		(22)		(22)
Commodity contracts:
Other current liabilities	(1)		—		(1)		(1)		—		(1)
Total liabilities	$	(1)	$	(64)	$	(65)	$	(1)	$	(105)	$	(106)

Schedule of Derivative Instruments in Statement of Financial Position Fair Value

The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for existing fair value hedges as of October 2, 2021 and January 2, 2021.

(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		October 2, 2021		January 2, 2021		October 2, 2021		January 2, 2021
Interest rate contracts	Long-term debt	$	2,940	$	2,568	$	22	$	25

(a) The hedged long-term debt includes $14 million and $16 million of hedging adjustment on discontinued hedging relationships as of October 2, 2021 and January 2, 2021, respectively.

Schedule of Offsetting Assets

As of October 2, 2021:			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	$	197	$	(59)	$	—	$	138
Total liability derivatives	$	(72)	$	59	$	7	$	(6)

As of January 2, 2021:			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	$	164	$	(116)	$	—	$	48
Total liability derivatives	$	(143)	$	116	$	5	$	(22)

Schedule of Offsetting Liabilities

As of October 2, 2021:			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	$	197	$	(59)	$	—	$	138
Total liability derivatives	$	(72)	$	59	$	7	$	(6)

As of January 2, 2021:			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	$	164	$	(116)	$	—	$	48
Total liability derivatives	$	(143)	$	116	$	5	$	(22)

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 October 2, 2021 and September 26, 2020 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI				Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Foreign currency denominated long-term debt	$	57	$	(94)	$	—	$	—
Cross-currency contracts	30		(61)		5		8		Interest expense
Total	$	87	$	(155)	$	5	$	8

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		October 2, 2021		September 26, 2020
Foreign currency exchange contracts	COGS	$	13	$	(3)
Foreign currency exchange contracts	Other income (expense), net	(1)		(1)
Foreign currency exchange contracts	SG&A	1		(1)
Commodity contracts	COGS	29		17
Total		$	42	$	12

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended October 2, 2021 and September 26, 2020 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI				Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Foreign currency denominated long-term debt	$	128	$	(103)	$	—	$	—
Cross-currency contracts	47		1		15		26		Interest expense
Total	$	175	$	(102)	$	15	$	26

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		October 2, 2021		September 26, 2020
Foreign currency exchange contracts	COGS	$	(13)	$	43
Foreign currency exchange contracts	Other income (expense), net	(2)		5
Foreign currency exchange contracts	SGA	6		3
Interest rate contracts	Interest expense	1		1
Commodity contracts	COGS	96		(33)
Total		$	88	$	19

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended October 2, 2021 and September 26, 2020:

		October 2, 2021		September 26, 2020
(millions)		Interest Expense		Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	55	$	63
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	3		(2)
	Derivatives designated as hedging instruments	(2)		2
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(4)		(4)

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended October 2, 2021 and September 26, 2020:

		October 2, 2021		September 26, 2020
(millions)		Interest Expense		Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	172	$	196
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	3		(5)
	Derivatives designated as hedging instruments	(2)		6
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(19)		(11)

Schedule of Available-for-sale Securities Reconciliation

	October 2, 2021						January 2, 2021
			Unrealized						Unrealized
(millions)	Cost		Gain (Loss)		Market Value		Cost		Gain (Loss)		Market Value
Corporate bonds	$	51	$	—	$	51	$	62	$	3	$	65