Johnson and Johnson 2011 Annual Report Download - page 49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 47
7. Borrowings
The components of long-term debt are as follows:
Effective Effective
(Dollars in Millions) 2011 Rate % 2010 Rate %
5.15% Debentures due 2012 $ 599 5.18% 599 5.18
0.70% Notes due 2013 500 0.75 ——
3.80% Debentures due 2013 500 3.82 500 3.82
3 month LIBOR+0% FRN due 2013 500 0.46 ——
3 month LIBOR+0.09% FRN due 2014 750 0.55 ——
1.20% Notes due 2014 999 1.24 ——
2.15% Notes due 2016 898 2.22 ——
5.55% Debentures due 2017 1,000 5.55 1,000 5.55
5.15% Debentures due 2018 898 5.15 898 5.15
4.75% Notes due 2019
(1B Euro 1.2892) (2)/
(1B Euro 1.3268)(3) 1,282(2) 5.35 1,319(3) 5.35
3% Zero Coupon Convertible
Subordinated Debentures due 2020 199 3.00 194 3.00
2.95% Debentures due 2020 541 3.15 541 3.15
3.55% Notes due 2021 446 3.67 ——
6.73% Debentures due 2023 250 6.73 250 6.73
5.50% Notes due 2024
(500MM GBP 1.5421)(2)/
(500MM GBP 1.5403)(3) 765(2) 5.71 764(3) 5.71
6.95% Notes due 2029 294 7.14 294 7.14
4.95% Debentures due 2033 500 4.95 500 4.95
5.95% Notes due 2037 995 5.99 995 5.99
5.85% Debentures due 2038 700 5.86 700 5.86
4.50% Debentures due 2040 539 4.63 539 4.63
4.85% Notes due 2041 298 4.89 ——
Other 132 76
13,585(4) 4.08(1) 9,169(4) 5.25(1)
Less current portion 616 13
$12,969 9,156
(1) Weighted average effective rate.
(2) Translation rate at January 1, 2012.
(3) Translation rate at January 2, 2011.
(4) The excess of the fair value over the carrying value of debt was $2.0 billion in 2011 and
$1.0 billion in 2010.
Fair value of the non-current debt was estimated using market
prices, which were corroborated by quoted broker prices in
active markets.
The Company has access to substantial sources of funds at
numerous banks worldwide. In September 2011, the Company
secured a new 364-day Credit Facility. Total credit available to the
Company approximates $10 billion, which expires September 20,
2012. Interest charged on borrowings under the credit line agree-
ments is based on either bids provided by banks, the prime rate or
London Interbank Offered Rates (LIBOR), plus applicable margins.
Commitment fees under the agreements are not material.
Throughout 2011, the Company continued to have access to
liquidity through the commercial paper market. Short-term borrow-
ings and the current portion of long-term debt amounted to approxi-
mately $6.7 billion at the end of 2011, of which $5.3 billion was
borrowed under the Commercial Paper Program. The remainder
represents principally local borrowing by international subsidiaries.
The Company has a shelf registration with the U.S. Securities
and Exchange Commission that enables the Company to issue debt
securities and warrants to purchase debt securities on a timely
basis. The Company issued bonds in May 2011 for a total of $4.4 bil-
lion for general corporate purposes.
Aggregate maturities of long-term obligations commencing in
2011 are:
(Dollars in Millions) After
2012 2013 2014 2015 2016 2016
$616 1,545 1,816 —898 8,710
8. Income Taxes
The provision for taxes on income consists of:
(Dollars in Millions) 2011 2010 2009
Currently payable:
U.S. taxes $2,392 2,063 2,410
International taxes 1,133 1,194 1,515
Total currently payable 3,525 3,257 3,925
Deferred:
U.S. taxes (690) (4) 187
International taxes (146) 360 (623)
Total deferred (836) 356 (436)
Provision for taxes on income $2,689 3,613 3,489
A comparison of income tax expense at the U.S. statutory rate of
35% in 2011, 2010 and 2009, to the Company’s effective tax rate is
as follows:
(Dollars in Millions) 2011 2010 2009
U.S. $ 3,634 6,392 7,141
International 8,727 10,555 8,614
Earnings before taxes on income: $12,361 16,947 15,755
Tax rates:
U.S. statutory rate 35.0% 35.0 35.0
International operations excluding Ireland (14.0) (7.5) (6.7)
Ireland and Puerto Rico operations (1.8) (5.1) (5.1)
Research and orphan drug tax credits (0.8) (0.6) (0.6)
U.S. state and local 2.1 1.0 1.8
U.S. manufacturing deduction (0.8) (0.5) (0.4)
U.S. tax on international income (0.4) (0.6) (1.6)
All other(1) 2.5 (0.4) (0.3)
Effective tax rate 21.8% 21.3 22.1
(1) Includes U.S. expenses not fully tax deductible primarily related to litigation expense.
The Company has subsidiaries operating in Puerto Rico under various
tax incentive grants. The increase in the 2011 tax rate was primarily
due to certain U.S. expenses which are not fully tax deductible
and higher U.S. state taxes partially offset by increases in taxable
income in lower tax jurisdictions relative to higher tax jurisdictions.
The decrease in the 2010 tax rate as compared to 2009 was prima-
rily due to decreases in taxable income in higher tax jurisdictions
relative to taxable income in lower tax jurisdictions and certain
U.S. tax adjustments.