Financial Instruments (Tables)

3 Months Ended

Apr. 03, 2022

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured At Fair Value On a Recurring Basis

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy, using a Market Approach:

	April 3, 2022						December 31, 2021
(MILLIONS)	Total		Level 1		Level 2		Total		Level 1		Level 2
Financial assets:
Short-term investments
Classified as equity securities with readily determinable fair values:
Money market funds	$	2,759	$	—	$	2,759	$	5,365	$	—	$	5,365
Classified as available-for-sale debt securities:
Government and agency—non-U.S.	14,548		—		14,548		17,318		—		17,318
Government and agency—U.S.	1,830		—		1,830		4,050		—		4,050
Corporate and other	958		—		958		647		—		647
	17,337		—		17,337		22,014		—		22,014
Total short-term investments	20,096		—		20,096		27,379		—		27,379
Other current assets
Derivative assets:
Interest rate contracts	5		—		5		4		—		4
Foreign exchange contracts	832		—		832		704		—		704
Total other current assets	837		—		837		709		—		709
Long-term investments
Classified as equity securities with readily determinable fair values(a)	3,486		3,470		15		3,876		3,849		27
Classified as available-for-sale debt securities:
Government and agency—non-U.S.	519		—		519		465		—		465
Government and agency—U.S.	1		—		1		6		—		6
Corporate and other	49		—		49		50		—		50
	569		—		569		521		—		521
Total long-term investments	4,055		3,470		584		4,397		3,849		548
Other noncurrent assets
Derivative assets:
Interest rate contracts	—		—		—		16		—		16
Foreign exchange contracts	267		—		267		242		—		242
Total derivative assets	267		—		267		259		—		259
Insurance contracts(b)	765		—		765		808		—		808
Total other noncurrent assets	1,032		—		1,032		1,067		—		1,067
Total assets	$	26,020	$	3,470	$	22,550	$	33,552	$	3,849	$	29,703
Financial liabilities:
Other current liabilities
Derivative liabilities:
Foreign exchange contracts	$	330	$	—	$	330	$	476	$	—	$	476
Total other current liabilities	330		—		330		476		—		476
Other noncurrent liabilities
Derivative liabilities:
Interest rate contracts	140		—		140		—		—		—
Foreign exchange contracts	460		—		460		405		—		405
Total other noncurrent liabilities	600		—		600		405		—		405
Total liabilities	$	930	$	—	$	930	$	881	$	—	$	881

(a)Long-term equity securities of $155 million as of April 3, 2022 and $194 million as of December 31, 2021 were held in restricted trusts for U.S. non-qualified employee benefit plans.

(b)Includes life insurance policies held in restricted trusts for U.S. non-qualified employee benefit plans. The underlying invested assets in these contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions—net (see Note 4).

Investments by Classification Type

The following summarizes our investments by classification type:
(MILLIONS)	April 3, 2022		December 31, 2021
Short-term investments
Equity securities with readily determinable fair values(a)	$	2,759	$	5,365
Available-for-sale debt securities	17,337		22,014
Held-to-maturity debt securities	1,331		1,746
Total Short-term investments	$	21,427	$	29,125
Long-term investments
Equity securities with readily determinable fair values	$	3,486	$	3,876
Available-for-sale debt securities	569		521
Held-to-maturity debt securities	41		34
Private equity securities at cost(b)	647		623
Total Long-term investments	$	4,742	$	5,054
Equity-method investments	15,995		16,472
Total long-term investments and equity-method investments	$	20,737	$	21,526
Held-to-maturity cash equivalents	$	458	$	268

(a)As of April 3, 2022 and December 31, 2021, includes money market funds primarily invested in U.S. Treasury and government debt.

(b)Represent investments in the life sciences sector.

Schedule of Held-to-maturity Securities

At April 3, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
	April 3, 2022														December 31, 2021
			Gross Unrealized						Maturities (in Years)								Gross Unrealized
(MILLIONS)	Amortized Cost		Gains		Losses		Fair Value		Within 1		Over 1 to 5		Over 5		Amortized Cost		Gains		Losses		Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	15,217	$	8	$	(158)	$	15,067	$	14,548	$	519	$	—	$	18,032	$	13	$	(263)	$	17,783
Government and agency––U.S.	1,832		—		(1)		1,831		1,830		1		—		4,056		—		(1)		4,055
Corporate and other	1,009		—		(1)		1,008		958		49		—		698		—		(1)		697
Held-to-maturity debt securities
Time deposits and other	1,015		—		—		1,015		979		25		11		947		—		—		947
Government and agency––non-U.S.	814		—		—		814		809		4		1		1,102		—		—		1,102
Total debt securities	$	19,887	$	8	$	(160)	$	19,735	$	19,125	$	598	$	12	$	24,835	$	14	$	(265)	$	24,584

Schedule of Available-for-sale Securities

At April 3, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
	April 3, 2022														December 31, 2021
			Gross Unrealized						Maturities (in Years)								Gross Unrealized
(MILLIONS)	Amortized Cost		Gains		Losses		Fair Value		Within 1		Over 1 to 5		Over 5		Amortized Cost		Gains		Losses		Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	15,217	$	8	$	(158)	$	15,067	$	14,548	$	519	$	—	$	18,032	$	13	$	(263)	$	17,783
Government and agency––U.S.	1,832		—		(1)		1,831		1,830		1		—		4,056		—		(1)		4,055
Corporate and other	1,009		—		(1)		1,008		958		49		—		698		—		(1)		697
Held-to-maturity debt securities
Time deposits and other	1,015		—		—		1,015		979		25		11		947		—		—		947
Government and agency––non-U.S.	814		—		—		814		809		4		1		1,102		—		—		1,102
Total debt securities	$	19,887	$	8	$	(160)	$	19,735	$	19,125	$	598	$	12	$	24,835	$	14	$	(265)	$	24,584

Contractual Maturities of Available-for-sale and Held-to-maturity Debt Securities

At April 3, 2022, our investment portfolio consisted of debt securities issued across diverse governments, corporate and financial institutions, which are investment-grade. The contractual or estimated maturities, are as follows:
	April 3, 2022														December 31, 2021
			Gross Unrealized						Maturities (in Years)								Gross Unrealized
(MILLIONS)	Amortized Cost		Gains		Losses		Fair Value		Within 1		Over 1 to 5		Over 5		Amortized Cost		Gains		Losses		Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	15,217	$	8	$	(158)	$	15,067	$	14,548	$	519	$	—	$	18,032	$	13	$	(263)	$	17,783
Government and agency––U.S.	1,832		—		(1)		1,831		1,830		1		—		4,056		—		(1)		4,055
Corporate and other	1,009		—		(1)		1,008		958		49		—		698		—		(1)		697
Held-to-maturity debt securities
Time deposits and other	1,015		—		—		1,015		979		25		11		947		—		—		947
Government and agency––non-U.S.	814		—		—		814		809		4		1		1,102		—		—		1,102
Total debt securities	$	19,887	$	8	$	(160)	$	19,735	$	19,125	$	598	$	12	$	24,835	$	14	$	(265)	$	24,584

Schedule of Gains and Losses on Investment Securities

The following presents the calculation of the portion of unrealized (gains)/losses that relates to equity securities, excluding equity-method investments, held at the reporting date:
	Three Months Ended
(MILLIONS)	April 3, 2022		April 4, 2021
Net (gains)/losses recognized during the period on equity securities(a)	$	699	$	(401)
Less: Net (gains)/losses recognized during the period on equity securities sold during the period	(11)		(28)
Net unrealized (gains)/losses during the reporting period on equity securities still held at the reporting date(b)	$	710	$	(372)

(a)Reported in Other (income)/deductions––net. See Note 4.

(b)Included in net unrealized (gains)/losses are observable price changes on equity securities without readily determinable fair values. As of April 3, 2022, there were cumulative impairments and downward adjustments of $110 million and upward adjustments of $167 million. Impairments, downward and upward adjustments were not significant in the first quarters of 2022 and 2021.

Schedule of Short-term Borrowings

Short-term borrowings include:
(MILLIONS)	April 3, 2022		December 31, 2021
Current portion of long-term debt, principal amount	$	251	$	1,636
Other short-term borrowings, principal amount(a)	385		605
Total short-term borrowings, principal amount	636		2,241
Net fair value adjustments related to hedging and purchase accounting	9		—
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted	$	645	$	2,241

(a)Primarily includes cash collateral. See Note 7F.

Schedule of Principal Amounts of Senior Unsecured Long-Term Debt and Adjustments

The following summarizes the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:
(MILLIONS)	April 3, 2022		December 31, 2021
Total long-term debt, principal amount	$	34,603	$	34,948
Net fair value adjustments related to hedging and purchase accounting	1,240		1,438
Net unamortized discounts, premiums and debt issuance costs	(190)		(195)
Other long-term debt	3		4
Total long-term debt, carried at historical proceeds, as adjusted	$	35,656	$	36,195
Current portion of long-term debt, carried at historical proceeds, as adjusted (not included above)	$	260	$	1,636

Schedule of Derivative Instruments

The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
	April 3, 2022						December 31, 2021
			Fair Value						Fair Value
(MILLIONS)	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	29,833	$	899	$	647	$	29,576	$	787	$	717
Interest rate contracts	2,250		5		140		2,250		21		—
			904		787				808		717
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	22,009	200		143		$	21,419	160		164
Total			$	1,104	$	930			$	968	$	881

(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.7 billion as of April 3, 2022 and $4.8 billion as of December 31, 2021.

Schedule of Derivative Assets

The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
	April 3, 2022						December 31, 2021
			Fair Value						Fair Value
(MILLIONS)	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	29,833	$	899	$	647	$	29,576	$	787	$	717
Interest rate contracts	2,250		5		140		2,250		21		—
			904		787				808		717
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	22,009	200		143		$	21,419	160		164
Total			$	1,104	$	930			$	968	$	881

(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.7 billion as of April 3, 2022 and $4.8 billion as of December 31, 2021.

Schedule of Derivative Liabilities

The following summarizes the fair value of the derivative financial instruments and notional amounts (including those reported as part of discontinued operations):
	April 3, 2022						December 31, 2021
			Fair Value						Fair Value
(MILLIONS)	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	29,833	$	899	$	647	$	29,576	$	787	$	717
Interest rate contracts	2,250		5		140		2,250		21		—
			904		787				808		717
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	22,009	200		143		$	21,419	160		164
Total			$	1,104	$	930			$	968	$	881

(a)The notional amount of outstanding foreign exchange contracts hedging our intercompany forecasted inventory sales was $4.7 billion as of April 3, 2022 and $4.8 billion as of December 31, 2021.

Information about Gains/(Losses) Incurred to Hedge or Offset Operational Foreign Exchange or Interest Rate Risk

The following summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk exposures (including those reported as part of discontinued operations):
	Gains/(Losses) Recognized in OID(a)				Gains/(Losses) Recognized in OCI(a)				Gains/(Losses) Reclassified from OCI into OID and COS(a)
	Three Months Ended
(MILLIONS)	April 3, 2022		April. 4, 2021		April 3, 2022		April. 4, 2021		April 3, 2022		April. 4, 2021
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts(b)	$	—	$	—	$	187	$	202	$	195	$	(268)
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		16		12		18		9
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts	(156)		(26)		—		—		—		—
Hedged item	156		26		—		—		—		—
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts	—		—		259		154		—		—
Amount excluded from effectiveness testing and amortized into earnings(c)	—		—		(74)		(1)		30		29
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:(d)
Foreign currency short-term borrowings	—		—		26		38		—		—
Foreign currency long-term debt	—		—		23		56		—		—
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts	(19)		42		—		—		—		—
	$	(19)	$	42	$	436	$	460	$	243	$	(230)

(a)OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.

(b)The amounts reclassified from OCI into COS were:

•a net gain of $34 million in the first quarter of 2022; and

•a net loss of $45 million in the first quarter of 2021.

The remaining amounts were reclassified from OCI into OID. Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax gain of $332 million within the next 12 months into income. The maximum length of time over which we are hedging our exposure to the variability in future foreign exchange cash flows is approximately 21 years and relates to foreign currency debt.

(c)The amounts reclassified from OCI were reclassified into OID.

(d)Short-term borrowings and long-term debt include foreign currency borrowings which are used in net investment hedges. The short-term borrowings’ carrying value as of December 31, 2021 was $1.1 billion. The long-term debt carrying values as of April 3, 2022 and December 31, 2021 were $821 million and $844 million, respectively.

Schedule of Total Amount of Each Income and Expense Line in which Results of Fair Value Hedges are Recorded

The following summarizes cumulative basis adjustments to our debt in fair value hedges:
	April 3, 2022						December 31, 2021
			Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount						Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount
(MILLIONS)	Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships		Carrying Amount of Hedged Assets/Liabilities(a)		Active Hedging Relationships		Discontinued Hedging Relationships
Short-term borrowings, including current portion of long-term debt	$	—	$	—	$	4	$	—	$	—	$	—
Long-term debt	$	2,234	$	(140)	$	1,124	$	2,233	$	16	$	1,154

(a)Carrying amounts exclude the cumulative amount of fair value hedging adjustments.