Equity

3 Months Ended

Jul. 02, 2022

Equity [Abstract]

Equity

Equity

Earnings per share

Basic earnings per share is determined by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly determined, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Dilutive potential common shares consist principally of employee stock options issued by the Company, restricted stock units, and certain contingently issuable performance shares. There were approximately 4 million and 6 million anti-dilutive potential common shares excluded from the calculation for the quarter and year-to-date periods ended July 2, 2022. There were approximately 7 million and 11 million anti-dilutive potential common shares excluded from the calculation for the quarter and year-to-date periods ended July 3, 2021. Please refer to the Consolidated Statement of Income for basic and diluted earnings per share for the quarter and year-to-date periods ended July 2, 2022 and July 3, 2021.

Share repurchases

In February 2020, the board of directors approved an authorization to repurchase up to $1.5 billion of our common stock through December 2022. During the year-to-date period ended July 2, 2022, the Company repurchased approximately 5 million shares of common stock for a total of $300 million. During the year-to-date period July 3, 2021, the Company repurchased approximately 4 million shares of common stock for a total of $240 million.

Comprehensive income

Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by or distributions to shareholders. Other comprehensive income consists of foreign currency translation adjustments, fair value adjustments associated with cash flow hedges, adjustments for net experience losses and prior service cost related to employee benefit plans, and adjustments for unrealized gains and losses on available-for-sale securities, net of related tax effects.

Reclassifications out of Accumulated other comprehensive income (AOCI) for the quarter and year-to-date periods ended July 2, 2022 and July 3, 2021, consisted of the following:

(millions)
Details about AOCI components	Amount reclassified from AOCI				Line item impacted within Income Statement
	Quarter ended July 2, 2022		Year-to-date period ended July 2, 2022
(Gains) losses on cash flow hedges:
Interest rate contracts (a)	$	4	$	8	Interest expense
	$	4	$	8	Total before tax
	(1)		(2)		Tax expense (benefit)
	$	3	$	6	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience (gain) loss (b)	$	(1)	$	(2)	OIE
	$	(1)	$	(2)	Total before tax
	1		1		Tax expense (benefit)
	$	—	$	(1)	Net of tax
Total reclassifications	$	3	$	5	Net of tax

(millions)
Details about AOCI components	Amount reclassified from AOCI				Line item impacted within Income Statement
	Quarter ended July 3, 2021		Year-to-date period ended July 3, 2021
(Gains) losses on cash flow hedges:
Interest rate contracts (a)	$	10	$	15	Interest expense
	$	10	$	15	Total before tax
	(3)		(4)		Tax expense (benefit)
	$	7	$	11	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience (gain) loss (b)	$	(1)	$	(2)	OIE
	$	(1)	$	(2)	Total before tax
	1		1		Tax expense (benefit)
	$	—	$	(1)	Net of tax
Total reclassifications	$	7	$	10	Net of tax

(a) See Derivative instruments and fair value measurements note

(b) See Employee benefits note

Accumulated other comprehensive income (loss), net of tax, as of July 2, 2022 and January 1, 2022 consisted of the following:

(millions)	July 2, 2022		January 1, 2022
Foreign currency translation adjustments	$	(2,002)	$	(1,748)
Net investment hedges gain (loss)	329		67
Cash flow hedges — unrealized net gain (loss)	104		(13)
Postretirement and postemployment benefits:
Net experience gain (loss)	(2)		(1)
Prior service credit (cost)	(26)		(26)
Available-for-sale securities unrealized net gain (loss)	(4)		—
Total accumulated other comprehensive income (loss)	$	(1,601)	$	(1,721)