Johnson and Johnson 2008 Annual Report Download - page 74

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72 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Reconciliation of Non-GAAP Financial Measures
The tables below are provided to reconcile certain financial disclosures in the Letter to Shareholders, page 1.
’08 vs. ’07 ’07 vs. ’06
(Dollars in Millions Except Per Share Data) 2008 2007 2006 % Change % Change
Earnings before provision for taxes on income — as reported $16,929 13,283 14,587 27.4%(8.9)
Purchased in-process research & development (IPR&D) 181 807 559
Net gain on fourth quarter litigation (379) ——
Restructuring charges —745 —
NATRECOR® intangible asset write-down —678 —
Guidant acquisition agreement termination fee ——(622)
Earnings before provision for taxes on income — as adjusted $16,731 15,513 14,524 7.9% 6.8
Net Earnings — as reported $12,949 10,576 11,053 22.4%(4.3)
Purchased in-process research & development (IPR&D) 181 807 448
Net gain on fourth quarter litigation (229) ——
Restructuring charges —528 —
NATRECOR® intangible asset write-down —441 —
International tax gain on restructuring —(267) —
Guidant acquisition agreement termination fee ——(368)
Net Earnings — as adjusted $12,901 12,085 11,133 6.8% 8.6
Diluted net earnings per share — as reported $ 4.57 3.63 3.73 25.9%(2.7)
Purchased in-process research & development (IPR&D) 0.06 0.28 0.15
Net gain on fourth quarter litigation (0.08) ——
Restructuring charges —0.18 —
NATRECOR® intangible asset write-down —0.15 —
International tax gain on restructuring —(0.09) —
Guidant acquisition agreement termination fee ——(0.12)
Diluted net earnings per share — as adjusted $ 4.55 4.15 3.76 9.6% 10.4
(Dollars in Millions) 2008 2007 2006
Net cash flows from operating activities $14,972 15,022 14,248
Additions to property, plant and equipment (3,066) (2,942) (2,666)
Free Cash Flow $11,906 12,080 11,582
The Company believes investors gain additional perspective of underlying business trends and results by providing free cash flow, a measure
of earnings before tax, net earnings and diluted net earnings per share that excludes IPR&D charges and other special items in order to eval-
uateongoing businessoperations. These non-GAAP financial measures should not be considered replacements for, and should be read
together with, the most comparable GAAP financial measures.