Johnson and Johnson 2006 Annual Report Download - page 60

58 JOHNSON & JOHNSON 2006 ANNUAL REPORT
price plus accreted original issue discount. At December 31,
2006 and January 1, 2006 the fair value based on quoted market
value of the 3% Debentures was $250.7 million and $260.6
million respectively.
Short-term borrowings and current portion of long term
debt amounted to $4.6 billion at the end of 2006, of which
$4.2billion was raised under the Commercial Paper Program.
The remainder represents principally local borrowing by
international subsidiaries.
Aggregate maturities of long-term obligations commencing
in 2007 are:
After
(Dollars in Millions) 2007 2008 2009 2010 2011 2011
$9 9 240 9 6 1,750
CERTAIN BUSINESS RELATIONSHIPS
A member of the Company’s Board of Directors is the Chief
Executive Officer of a major bank. This bank has provided ser-
vices to the Company, including providing a line of credit, for
which the payments made were not significant for either the
Company or the bank in 2006, 2005 or 2004.
7. Intangible Assets and Goodwill
At the end of 2006 and 2005, the gross and net amounts of
intangible assets and goodwill were:
(Dollars in Millions) 2006 2005
Trademarks (non-amortizable)—gross $6,609 1,400
Less accumulated amortization 134 134
Trademarks (non-amortizable)—net$6,475 1,266
Patents and trademarks — gross $5,282 4,128
Less accumulated amortization 1,695 1,370
Patents and trademarks — net$3,587 2,758
Other intangibles —gross $6,923 3,544
Less accumulated amortization 1,637 1,383
Other intangibles —net$5,286 2,161
Subtotal intangible assets— gross $18,814 9,072
Less accumulated amortization 3,466 2,887
Subtotal intangible assets— net$15,348 6,185
Goodwill —gross $14,075 6,703
Less accumulated amortization 735 713
Goodwill —net$13,340 5,990
Total intangible assets and goodwill —gross $32,889 15,775
Less accumulated amortization 4,201 3,600
Total intangible assets and goodwill —net$28,688 12,175
Goodwill as of December 31, 2006 and January 1, 2006, as allo-
cated by segment of business is as follows:
Med Dev
(Dollars in Millions) Consumer Pharm and Diag Total
Goodwill at
January 2, 2005 $1,160 832 3,871 5,863
Acquisitions —71 194 265
Translation/other (70) (29) (39) (138)
Goodwill at
January 1, 2006 $1,090 874 4,026 5,990
Acquisitions $6,720 —533 7,253
Translation/other 56 28 13 97
Goodwill at
December 31, 2006 $7,866 902 4,572 13,340
The weighted average amortization periods for patents and
trademarks and other intangible assets are 15 years and 27 years,
respectively. The amortization expense of amortizable intangible
assets for the fiscal years ended December 31, 2006, January 1,
2006 and January 2, 2005 was $594 million, $521 million and
$603 million before tax, respectively. Certain patents and intan-
gibles were written down to fair value during fiscal years 2006,
2005, and 2004, with the resulting charge included in amortiza-
tion expense. The estimated amortization expense for the five
succeeding years approximates $720 million before tax, per year.
Substantially all of the amortization expense is included in cost
of products sold.
8. Income Taxes
The provision for taxes on income consists of:
(Dollars in Millions)2006 2005 2004
Currently payable:
U.S. taxes $3,625 2,181 3,654
International taxes 1,077 1,110 1,173
4,702 3,291 4,827
Deferred:
U.S. taxes (726) 77 (212)
International taxes (442) (312) (464)
(1,168) (235) (676)
$3,534 3,056 4,151