Johnson and Johnson 2012 Annual Report Download - page 38

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Net Earnings Per Share
Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock using the treasury stock method.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates are used when
accounting for sales discounts, rebates, allowances and incentives, product liabilities, income taxes, depreciation,
amortization, employee benefits, contingencies and intangible asset and liability valuations. Actual results may or may not
differ from those estimates.
The Company follows the provisions of U.S. GAAP when recording litigation related contingencies. A liability is recorded
when a loss is probable and can be reasonably estimated. The best estimate of a loss within a range is accrued; however,
if no estimate in the range is better than any other, the minimum amount is accrued.
Annual Closing Date
The Company follows the concept of a fiscal year, which ends on the Sunday nearest to the end of the month of
December. Normally each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks,
as was the case in 2009, and will be the case again in 2015.
Reclassification
Certain prior period amounts have been reclassified to conform to current year presentation.
2. Cash, Cash Equivalents and Current Marketable Securities
At the end of 2012 and 2011, cash, cash equivalents and current marketable securities were comprised of:
(Dollars in Millions) 2012 2011
Cash $3,032 2,709
Government securities and obligations 15,323 27,017
Corporate debt securities 622 489
Money market funds 1,406 1,590
Time deposits 706 456
Total cash, cash equivalents and current marketable securities $21,089 32,261
The estimated fair value was the same as the amortized cost as of December 30, 2012. The estimated fair value was
$32,262 million as of January 1, 2012 reflecting a $1 million unrealized gain in government securities and obligations.
As of December 30, 2012, current marketable securities consisted of $5,726 million and $452 million of government
securities and obligations, and corporate debt securities, respectively.
As of January 1, 2012, current marketable securities consisted of $7,545 million and $174 million of government
securities and obligations, and corporate debt securities, respectively.
Fair value of government securities and obligations and corporate debt securities were estimated using quoted broker
prices and significant other observable inputs.
The Company invests its excess cash in both deposits with major banks throughout the world and other high-quality
money market instruments. The Company has a policy of making investments only with commercial institutions that have at
least an A (or equivalent) credit rating.
30 •Johnson & Johnson 2012 Annual Report