Johnson and Johnson 2008 Annual Report Download - page 69

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19. 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 December
28, 2008, December 30, 2007 and December 31, 2006:
(Shares in Millions Except Per Share Data) 2008 2007 2006
Basic net earnings per share $ 4.62 3.67 3.76
Average shares
outstanding — basic 2,802.5 2,882.9 2,936.4
Potential shares exercisable
under stock option plans 179.0 178.6 207.0
Less: shares repurchased
under treasury stock method (149.6) (154.5) (186.3)
Convertible debt shares 3.7 3.7 3.9
Adjusted average shares
outstanding — diluted 2,835.6 2,910.7 2,961.0
Diluted net earnings per share $ 4.57 3.63 3.73
The diluted net earnings per share calculation includes the dilutive
effect of convertible debt that is offset by the related reduction in
interest expense of $4 million after tax for years 2008, 2007
and 2006.
Diluted net earnings per share excludes 59 million, 64 million
and 43 million shares underlying stock options for 2008, 2007 and
2006, respectively, as the exercise price of these options was
greater than their average market value, which would result in an
anti-dilutiveeffect on diluted earnings per share.
20. Capital and Treasury Stock
Changes in treasury stock were:
(Amounts in Millions Except Treasury Stock Treasury Stock
_______________________
Number of Shares in Thousands) Shares Amount
Balance at January 1, 2006 145,364 $ 5,965
Employee compensation and stock option plans (26,526) (1,677)
Conversion of subordinated debentures (540) (36)
Repurchase of common stock 108,314 6,722
Balance at December 31, 2006 226,612 10,974
Employee compensation and stock option plans (33,296) (2,180)
Conversion of subordinated debentures (194) (13)
Repurchase of common stock 86,498 5,607
Balance at December 30, 2007 279,620 14,388
Employee compensation and stock option plans (29,906) (2,005)
Conversion of subordinated debentures (19) (1)
Repurchase of common stock 100,970 6,651
Balance at December 28, 2008 350,665 $19,033
Aggregate shares of Common Stock issued were approximately
3,120 million shares at the end of 2008, 2007 and 2006.
Cash dividends paid were $1.795 per share in 2008, compared
with dividends of $1.620 per share in 2007 and $1.455 per share
in 2006.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 67
21. Selected Quarterly Financial Data (unaudited)
Selected unaudited quarterly financial data for the years 2008 and 2007 are summarized below:
2008 2007
_________________________________________________ ________________________________________________
First Second Third Fourth First Second Third Fourth
(Dollars in Millions Except Per Share Data) Quarter Quarter(1) Quarter Quarter(2) Quarter(3) Quarter Quarter(4) Quarter(5)
Segment sales to customers
Consumer $ 4,064 4,036 4,099 3,855 3,496 3,564 3,623 3,810
Pharmaceutical 6,429 6,340 6,113 5,685 6,221 6,149 6,099 6,397
Med Devices & Diagnostics 5,701 6,074 5,709 5,642 5,320 5,418 5,248 5,750
Total sales $16,194 16,450 15,921 15,182 15,037 15,131 14,970 15,957
Gross profit 11,580 11,699 11,147 10,810 10,652 10,773 10,696 11,223
Earnings before provision for taxes on income 4,747 4,375 4,290 3,517 3,652 4,031 3,268 2,332
Net earnings 3,598 3,327 3,310 2,714 2,573 3,081 2,548 2,374
Basic net earnings per share $ 1.27 1.18 1.19 0.98 0.89 1.06 0.88 0.83
Diluted net earnings per share $ 1.26 1.17 1.17 0.97 0.88 1.05 0.88 0.82
(1) The second quarter of 2008 includes an after-tax charge of $40 million for IPR&D.
(2) The fourth quarter of 2008 includes an after-tax charge of $141 million for IPR&D, $229 million after-tax of income from net litigation and $331 million after-tax gain on the divestiture of
the Professional Wound Carebusiness of Ethicon, Inc. The gain from the divestiture of the Professional Wound Care business of Ethicon, Inc. was reinvested in the business.
(3) The first quarter of 2007 includes an after-tax charge of $807 million for IPR&D.
(4) The third quarter of 2007 includes an after-tax charge of $528 million for restructuring.
(5) The fourth quarter of 2007 includes an after-tax charge of $441 million for the NATRECOR® intangible asset write-down and a one-time tax gain of $267 million for restructuring.
The lower tax rate is due to increases in taxable income in lower tax jurisdictions relative to taxable income in higher tax jurisdictions.