Johnson and Johnson 2015 Annual Report Download - page 34

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The Company does not enter into financial instruments for trading or speculative purposes. Further, the Company has a
policy of only entering into contracts with parties that have at least an investment grade credit rating. The counter-parties
to these contracts are major financial institutions and there is no significant concentration of exposure with any one
counter-party. Management believes the risk of loss is remote.
The Company invests in both fixed rate and floating rate interest earning securities which carry a degree of interest rate
risk. The fair market value of fixed rate securities may be adversely impacted due to a rise in interest rates, while floating
rate securities may produce less income than predicted if interest rates fall. A 1% (100 basis points) change in spread on
the Company’s interest rate sensitive investments would either increase or decrease the unrealized value of cash
equivalents and current marketable securities by approximately $314 million.
The Company has access to substantial sources of funds at numerous banks worldwide. In September 2015, the
Company secured a new 364-day Credit Facility. Total credit available to the Company approximates $10 billion, which
expires on September 15, 2016. Interest charged on borrowings under the credit line agreement is based on either bids
provided by banks, the prime rate or London Interbank Offered Rates (LIBOR), plus applicable margins. Commitment fees
under the agreement are not material.
Total borrowings at the end of 2015 and 2014 were $19.9 billion and $18.8 billion, respectively. The increase in borrowings
between 2015 and 2014 was a result of financing for the Company’s share repurchase program. In 2015, net cash (cash and
current marketable securities, net of debt) was $18.5 billion compared to net cash of $14.3 billion in 2014. Total debt
represented 21.8% of total capital (shareholders’ equity and total debt) in 2015 and 21.2% of total capital in 2014.
Shareholders’ equity per share at the end of 2015 was $25.82 compared to $25.06 at year-end 2014, an increase of 3.0%.
A summary of borrowings can be found in Note 7 to the Consolidated Financial Statements.
Contractual Obligations and Commitments
The Company’s contractual obligations are primarily for leases, debt and unfunded retirement plans. There are no other
significant obligations. To satisfy these obligations, the Company will use cash from operations. The following table
summarizes the Company’s contractual obligations and their aggregate maturities as of January 3, 2016 (see Notes 7, 10
and 16 to the Consolidated Financial Statements for further details):
(Dollars in Millions)
Debt
Obligations
Interest on
Debt
Obligations
Unfunded
Retirement
Plans
Operating
Leases Total
2016 $2,104 586 76 224 2,990
2017 1,790 554 77 194 2,615
2018 1,501 490 82 136 2,209
2019 1,587 446 88 90 2,211
2020 683 373 93 74 1,223
After 2020 7,296 4,303 559 109 12,267
Total $14,961 6,752 975 827 23,515
For tax matters, see Note 8 to the Consolidated Financial Statements.
Dividends
The Company increased its dividend in 2015 for the 53rd consecutive year. Cash dividends paid were $2.95 per share in
2015 compared with dividends of $2.76 per share in 2014, and $2.59 per share in 2013. The dividends were distributed
as follows:
2015 2014 2013
First quarter $0.70 0.66 0.61
Second quarter 0.75 0.70 0.66
Third quarter 0.75 0.70 0.66
Fourth quarter 0.75 0.70 0.66
Total $2.95 2.76 2.59
22 •Johnson & Johnson 2015 Annual Report