Fair Value Measurements (Tables)

3 Months Ended

Apr. 02, 2016

Summary Of Components Of Available-For-Sale Securities

The following table summarizes the components of the balance of the Company’s available-for-sale securities at April 2, 2016 and January 2, 2016 (in millions):



	April 2, 2016		January 2, 2016
Adjusted cost	$	4	$	5
Gross unrealized gains	5		6
Gross unrealized losses	—		(1		)
Fair value	$	9	$	10

Summary Of Financial Assets and Liabilities Measured At Fair Value On A Recurring Basis

A summary of assets and liabilities measured at fair value on a recurring basis at April 2, 2016 and January 2, 2016 is as follows (in millions):



	Balance Sheet Classification	April 2, 2016		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	55	$	55	$	—	$	—
Available-for-sale securities	Other current assets	9		9		—		—
Trading securities	Other assets	294		294		—		—
Total assets		$	358	$	358	$	—	$	—

Liabilities
Foreign currency forward contracts	Other current liabilities	$	28	$	—	$	28	$	—
Contingent consideration	Other liabilities	36		—		—		36
Foreign currency forward contracts	Other liabilities	8		—		8		—
Total liabilities		$	72	$	—	$	36	$	36



	Balance Sheet Classification	January 2, 2016		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	273	$	273	$	—	$	—
Available-for-sale securities	Other current assets	10		10		—		—
Foreign currency forward contracts	Other current assets	14		—		14		—
Trading securities	Other assets	302		302		—		—
Foreign currency forward contracts	Other assets	2		—		2		—
Total assets		$	601	$	585	$	16	$	—

Liabilities
Contingent consideration	Other current liabilities	$	118	$	—	$	—	$	118
Foreign currency forward contracts	Other current liabilities	6		—		6		—
Contingent consideration	Other liabilities	33		—		—		33
Foreign currency forward contracts	Other liabilities	3		—		3		—
Total liabilities		$	160	$	—	$	9	$	151

Summary of Level 3 Fair Value Measurements of Contingent Consideration Liability

The recurring Level 3 fair value measurements of the Company's contingent consideration liabilities include the following significant unobservable inputs (in millions):



Contingent Consideration Liabilities	Fair Value as of April 2, 2016		Valuation Technique	Unobservable Input	Value or Range

Spinal Modulation revenue-based milestones and earn-outs	$	6	Monte Carlo Simulation	Discount Rates	0.9%	-	16.0%
				Expected Revenue Volatility			25.0%
				Projected Years of Payments	2017, 2018

Nanostim, Inc. (Nanostim) revenue-based milestones	2		Probability Weighted Discounted Cash Flow	Discount Rate			5.0%
				Probability of Payments			10.0%
				Projected Years of Payments	2017, 2018

Assumed from Thoratec regulatory-based and revenue-based milestones	28		Probability Weighted Discounted Cash Flow	Discount Rate			4.9%
				Probabilities of Payments	—%	-	90.0%
				Projected Years of Payments	2017	-	2020
Total contingent consideration liabilities	$	36

Unobservable Input Reconciliation of Contingent Consideration Liability

Additionally, the following table provides a reconciliation of the beginning and ending balances of the Company's recurring Level 3 fair value measurements (in millions):



	Nanostim			Spinal Modulation			Assumed from Thoratec			Total
Balance as of January 3, 2015	$	50		$	—		$	—		$	50
Initial fair value measurement of contingent consideration	—			155			—			155
Liabilities assumed from Thoratec acquisition	—			—			33			33
Change in fair value of contingent consideration	(48		)	(33		)	(6		)	(87		)
Balance as of January 2, 2016	2			122			27			151
Change in fair value of contingent consideration	—			8			1			9
Transfer out of Level 3 fair value measurement due to contractual settlement	—			(124		)	—			(124		)
Balance as of April 2, 2016	$	2		$	6		$	28		$	36