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Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency
translation is not adjusted for income taxes where it relates to permanent investments in international subsidiaries. For
additional details on comprehensive income see the Consolidated Statements of Comprehensive Income.
Details on reclassifications out of Accumulated Other Comprehensive Income:
Gain/(Loss) On Securities – reclassifications released to Other (income) expense, net.
Employee Benefit Plans – reclassifications are included in net periodic benefit cost. See Note 10 for additional
details.
Gain/(Loss) On Derivatives & Hedges – reclassifications to earnings are recorded in the same account as the
hedged transaction. See Note 6 for additional details.
14. International Currency Translation
For translation of its subsidiaries operating in non-U.S. Dollar currencies, the Company has determined that the local
currencies of its international subsidiaries are the functional currencies except those in highly inflationary economies, which
are defined as those which have had compound cumulative rates of inflation of 100% or more during the past three years,
or where a substantial portion of its cash flows are not in the local currency.
In consolidating international subsidiaries, balance sheet currency effects are recorded as a component of accumulated
other comprehensive income. This equity account includes the results of translating certain balance sheet assets and
liabilities at current exchange rates and some accounts at historical rates, except for those located in highly inflationary
economies. The translation of balance sheet accounts for highly inflationary economies are reflected in the operating
results.
A rollforward of the changes during 2015, 2014 and 2013 for foreign currency translation adjustments is included in
Note 13.
Net currency transaction gains and losses included in Other (income) expense were losses of $104 million, $156 million
and $186 million in 2015, 2014 and 2013, respectively.
15. Earnings Per Share
The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended
January 3, 2016, December 28, 2014 and December 29, 2013:
(In Millions Except Per Share Amounts) 2015 2014 2013
Basic net earnings per share $5.56 5.80 4.92
Average shares outstanding – basic 2,771.8 2,815.2 2,809.2
Potential shares exercisable under stock option plans 141.5 142.6 148.5
Less: shares repurchased under treasury stock method (102.6) (96.5) (103.3)
Convertible debt shares 2.2 2.6 3.0
Accelerated share repurchase program – – 19.6
Adjusted average shares outstanding – diluted 2,812.9 2,863.9 2,877.0
Diluted net earnings per share $5.48 5.70 4.81
The diluted net earnings per share calculation included the dilutive effect of convertible debt that is offset by the related
reduction in interest expense of $3 million after-tax for years 2015 and 2014 and $4 million for year 2013.
The diluted net earnings per share calculation for 2015, 2014 and 2013 included all shares related to stock options, as
the exercise price of all options was less than the average market value of the Company’s stock.
The diluted net earnings per share calculation for the fiscal year ended December 29, 2013 included the dilutive effect of
19.6 million shares, related to the accelerated share repurchase program, associated with the acquisition of Synthes, Inc.
in the fiscal year 2012.
16. Rental Expense and Lease Commitments
Rentals of space, vehicles, manufacturing equipment and office and data processing equipment under operating leases
were approximately $316 million, $341 million and $363 million in 2015, 2014 and 2013, respectively.
Johnson & Johnson 2015 Annual Report •57