Derivative Instruments and Fair Value Measurements (Tables)

9 Months Ended

Oct. 03, 2015

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 3, 2015 and January 3, 2015 were as follows:

(millions)	October 3, 2015		January 3, 2015
Foreign currency exchange contracts	$	1,086	$	764
Interest rate contracts	—		2,958
Commodity contracts	571		492
Total	$	1,657	$	4,214

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 October 3, 2015 and January 3, 2015:

Derivatives designated as hedging instruments

	October 3, 2015								January 3, 2015
(millions)	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:
Foreign currency exchange contracts:
Other prepaid assets	$	—	$	33		$	33		$	—	$	29		$	29
Interest rate contracts:
Other assets (a)	—		—			—			—		7			7
Total assets	$	—	$	33		$	33		$	—	$	36		$	36
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—	$	(18	)	$	(18	)	$	—	$	(6	)	$	(6	)
Interest rate contracts:
Other current liabilities	—		—			—			—		(3		)	(3		)
Other liabilities (a)	—		—			—			—		(16		)	(16		)
Commodity contracts:
Other current liabilities	—		(14		)	(14		)	—		(12		)	(12		)
Other liabilities	—		(3		)	(3		)	—		(11		)	(11		)
Total liabilities	$	—	$	(35	)	$	(35	)	$	—	$	(48	)	$	(48	)

(a) The fair value of the related hedged portion of the Company’s long-term debt, a level 2 liability, was $2.5 billion as of January 3, 2015.

Derivatives not designated as hedging instruments

	October 3, 2015									January 3, 2015
(millions)	Level 1			Level 2			Total			Level 1			Level 2		Total
Assets:
Foreign currency exchange contracts:
Other prepaid assets	$	—		$	4		$	4		$	—		$	—	$	—
Other assets	—			1			1			—			—		—
Commodity contracts:
Other prepaid assets	6			—			6			7			—		7
Total assets	$	6		$	5		$	11		$	7		$	—	$	7
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—		$	(5	)	$	(5	)	$	—		$	—	$	—
Commodity contracts:
Other current liabilities	(30		)	—			(30		)	$	(36	)	$	—	$	(36	)
Other liabilities	—			—			—			(4		)	—		(4		)
Total liabilities	$	(30	)	$	(5	)	$	(35	)	$	(40	)	$	—	$	(40	)

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 October 3, 2015 and January 3, 2015 would be adjusted as detailed in the following table:

As of October 3, 2015:
				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	$	44		$	(22	)	$	—	$	22
Total liability derivatives	$	(70	)	$	22		$	48	$	—

As of January 3, 2015:
				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	$	43		$	(29	)	$	—	$	14
Total liability derivatives	$	(88	)	$	29		$	50	$	(9	)

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 October 3, 2015 and January 3, 2015 would be adjusted as detailed in the following table:

As of October 3, 2015:
				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	$	44		$	(22	)	$	—	$	22
Total liability derivatives	$	(70	)	$	22		$	48	$	—

As of January 3, 2015:
				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	$	43		$	(29	)	$	—	$	14
Total liability derivatives	$	(88	)	$	29		$	50	$	(9	)

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 3, 2015 and September 27, 2014 was as follows:

Derivatives in fair value hedging relationships

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income (a)
		October 3, 2015		September 27, 2014
Foreign currency exchange contracts	Other income (expense), net	$	—	$	1
Interest rate contracts	Interest expense	6		4
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)
	October 3, 2015			September 27, 2014				October 3, 2015			September 27, 2014				October 3, 2015		September 27, 2014
Foreign currency  exchange contracts	$	9		$	16		COGS	$	11		$	—		Other income (expense), net	$	—	$	(1	)
Foreign currency exchange contracts	—			3			SGA  expense	—			2			Other income (expense), net	—		—
Interest rate contracts	—			(20		)	Interest  expense	(1		)	—			N/A	—		—
Commodity contracts	(2		)	(1		)	COGS	(3		)	(2		)	Other income (expense), net	—		—
Total	$	7		$	(2	)		$	7		$	—			$	—	$	(1	)

(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
	October 3, 2015			September 27, 2014
Foreign currency denominated long-term debt	$	(13	)	$	42
Total	$	(13	)	$	42

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		October 3, 2015			September 27, 2014
Foreign currency exchange contracts	COGS	$	5		$	—
Foreign currency exchange contracts	Other income (expense), net	(3		)	1
Commodity contracts	COGS	(47		)	(61		)
Commodity contracts	SGA	(2		)	—
Total		$	(47	)	$	(60	)

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended October 3, 2015 and September 27, 2014 was as follows:

Derivatives in fair value hedging relationships

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income (a)
		October 3, 2015			September 27, 2014
Foreign currency exchange contracts	Other income (expense), net	$	(4	)	$	3
Interest rate contracts	Interest expense	13			13
Total		$	9		$	16

(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)
	October 3, 2015			September 27, 2014				October 3, 2015			September 27, 2014				October 3, 2015			September 27, 2014
Foreign currency  exchange contracts	$	28		$	13		COGS	$	27		$	2		Other income (expense), net	$	(2	)	$	(3	)
Foreign currency exchange contracts	(6		)	4			SGA  expense	(2		)	5			Other income (expense), net	—			—
Interest rate contracts	(9		)	(43		)	Interest expense	(2		)	9			N/A	—			—
Commodity contracts	(2		)	—			COGS	(9		)	(5		)	Other income (expense), net	—			—
Total	$	11		$	(26	)		$	14		$	11			$	(2	)	$	(3	)

(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
	October 3, 2015		September 27, 2014
Foreign currency denominated long-term debt	$	30	$	47
Total	$	30	$	47

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		October 3, 2015			September 27, 2014
Foreign currency exchange contracts	COGS	$	6		$	—
Foreign currency exchange contracts	Other income (expense), net	4			(1		)
Interest rate contracts	Interest expense	—			(4		)
Commodity contracts	COGS	(45		)	(66		)
Commodity contracts	SGA	(1		)	—
Total		$	(36	)	$	(71	)

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 October 3, 2015:

(millions)	Fair Value		Carrying Value
Current maturities of long-term debt	$	756	$	756
Long-term debt	6,273		5,830
Total	$	7,029	$	6,586