v3.20.4
Fair Value Measurements (Tables)
 12 Months Ended
Jan. 03, 2021
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 January 3, 2021 and December 29, 2019, net of tax:
January 3, 2021December 29, 2019
(Dollars in Millions)SalesCost of Products SoldR&D ExpenseInterest (Income) ExpenseOther (Income) ExpenseSalesCost of Products SoldR&D ExpenseInterest (Income) ExpenseOther (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$— — — 153 — — — — 159 — 
   Amount of gain or (loss) recognized in AOCI— — — 153 — — — — 159 — 
Gain (Loss) on cash flow hedging relationship:
Forward foreign exchange contracts:
   Amount of gain or (loss) reclassified from AOCI into income12 (329)(137)— (16)(54)(321)(105)— 22 
   Amount of gain or (loss) recognized in AOCI44 298 (191)— (52)(20)(606)(94)— 39 
Cross currency interest rate swaps contracts:
   Amount of gain or (loss) reclassified from AOCI into income— — — 370 — — — — 292 — 
   Amount of gain or (loss) recognized in AOCI$— — — 748 — — — — 417 — 
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 January 3, 2021 and December 29, 2019:
(Dollars in Millions)Location of Gain /(Loss) Recognized in Income on DerivativeGain/(Loss)
Recognized In
Income on Derivative
Derivatives Not Designated as Hedging InstrumentsJanuary 3, 2021December 29, 2019
Foreign Exchange ContractsOther (income) expense$24 (144)
Schedule of Effect of Net Investment Hedges
The following table is the effect of net investment hedges for the fiscal years ended January 3, 2021 and December 29, 2019:
Gain/(Loss)
Recognized In
Accumulated OCI		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into IncomeGain/(Loss) Reclassified From
Accumulated OCI
Into Income
(Dollars in Millions)January 3, 2021December 29, 2019January 3, 2021December 29, 2019
Debt$(473)121 Interest (income) expense
— — 
Cross Currency interest rate swaps$65 488 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 January 3, 2021 and December 29, 2019:
December 29, 2019January 3, 2021
(Dollars in Millions)Carrying Value
Changes in Fair Value Reflected in Net Income (1)
Sales/ Purchases/Other(2)
Carrying ValueNon Current Other Assets
Equity Investments with readily determinable value$1,148 527 (194)1,481 1,481 
Equity Investments without readily determinable value$712 (55)81 738 738 


December 30, 2018December 29, 2019
(Dollars in Millions)Carrying Value
Changes in Fair Value Reflected in Net Income (1)
Sales/ Purchases/Other(2)
Carrying ValueNon 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 

(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 January 3, 2021 and December 29, 2019 were as follows:
20202019
(Dollars in Millions)Level 1Level 2Level 3Total
Total (1)
Derivatives designated as hedging instruments:     
Assets:     
Forward foreign exchange contracts $— 849 — 849 209 
Interest rate contracts (2)(3)
— 240 — 240 693 
Total$— 1,089 — 1,089 902 
Liabilities:     
Forward foreign exchange contracts— 702 — 702 426 
Interest rate contracts (3)
— 1,569 — 1,569 193 
Total$— 2,271 — 2,271 619 
Derivatives not designated as hedging instruments:     
Assets:     
Forward foreign exchange contracts $— 49 — 49 23 
Liabilities:     
Forward foreign exchange contracts— 38 — 38 33 
Available For Sale Other Investments:
Equity investments(4)
1,481 — — 1,481 1,148 
Debt securities(5)
— 14,042 — 14,042 4,368 
Other Liabilities
Contingent Consideration(6)
$633 633 1,715 


Gross to Net Derivative Reconciliation20202019
(Dollars in Millions)
Total Gross Assets$1,138 925 
Credit Support Agreement (CSA)(1,107)(841)
Total Net Asset31 84 
Total Gross Liabilities2,309 652 
Credit Support Agreement (CSA)(2,172)(586)
Total Net Liabilities$137 66 
Summarized information about changes in liabilities for contingent consideration is as follows:

202020192018
(Dollars in Millions)
Beginning Balance$1,715 397 600 
Changes in estimated fair value (7)
(1,089)151 (156)
Additions106 1,246 125 
Payments(99)(79)(172)
Ending Balance$633 1,715 397 

(1)2019 assets and liabilities are all classified as Level 2 with the exception of equity investments of $1,148 million, which are classified as Level 1 and contingent consideration of $1,715 million, classified as Level 3.
(2)Includes $1 million of non-current assets as of December 29, 2019.
(3)Includes cross currency interest rate swaps and interest rate swaps.
(4)Classified as non-current other assets.
(5)Classified as cash equivalents and current marketable securities.
(6)Includes $594 million, $1,631 million (primarily related to Auris Health) and $397 million, classified as non-current other liabilities as of January 3, 2021, December 29, 2019 and December 30, 2018, respectively. Includes $39 million and $84 million classified as current liabilities as of January 3, 2021 and December 29, 2019, respectively.
(7)Ongoing fair value adjustment amounts are recorded primarily in Research and Development expense. The Company recorded a contingent consideration reversal of $1,148 million in 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition. The reversal of the contingent consideration was recorded in Other income and expense