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14. International Currency Translation
For translation of its subsidiaries operating in non-U.S. Dollar currencies, the Company has determined that the local
currencies of its international subsidiaries are the functional currencies except those in highly inflationary economies, which
are defined as those which have had compound cumulative rates of inflation of 100% or more during the past three years,
or where a substantial portion of its cash flows are not in the local currency.
In consolidating international subsidiaries, balance sheet currency effects are recorded as a component of accumulated
other comprehensive income. This equity account includes the results of translating all balance sheet assets and liabilities
at current exchange rates, except for those located in highly inflationary economies. The translation of balance sheet
accounts for highly inflationary economies are reflected in the operating results.
A rollforward of the changes during 2012, 2011 and 2010 for foreign currency translation adjustments is included in
Note 13.
Net currency transaction gains and losses included in Other (income) expense were losses of $58 million, $10 million and
$130 million in 2012, 2011 and 2010, respectively.
15. 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 30, 2012, January 1, 2012 and January 2, 2011:
(In Millions Except Per Share Amounts) 2012 2011 2010
Basic net earnings per share attributable to Johnson & Johnson $3.94 3.54 4.85
Average shares outstanding – basic 2,753.3 2,736.0 2,751.4
Potential shares exercisable under stock option plans 164.6 158.3 156.1
Less: shares repurchased under treasury stock method (128.2) (122.6) (122.3)
Convertible debt shares 3.6 3.6 3.6
Accelerated share repurchase program 19.3 – –
Adjusted average shares outstanding – diluted 2,812.6 2,775.3 2,788.8
Diluted net earnings per share attributable to Johnson & Johnson $3.86 3.49 4.78
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 2012, 2011 and 2010.
Diluted net earnings per share excludes 0.2 million, 50.7 million and 66.3 million shares underlying stock options for 2012,
2011 and 2010, respectively, as the exercise price of these options was greater than their average market value, which
would result in an anti-dilutive effect on diluted earnings per share.
The diluted earnings per share calculation for the fiscal year ended December 30, 2012 included the dilutive effect of
19.3 million shares related to the accelerated share repurchase program, associated with the acquisition of Synthes, Inc.
See Note 20 to the Consolidated Financial Statements for additional details. A $1 increase/decrease in the volume
weighted average share price would impact this estimate by approximately 2.6 million shares.
16. Rental Expense and Lease Commitments
Rentals of space, vehicles, manufacturing equipment and office and data processing equipment under operating leases
were approximately $375 million, $313 million and $299 million in 2012, 2011 and 2010, respectively.
The approximate minimum rental payments required under operating leases that have initial or remaining non-cancelable
lease terms in excess of one year at December 30, 2012 are:
(Dollars in Millions)
2013 2014 2015 2016 2017
After
2017 Total
$251 192 149 115 90 128 925
Commitments under capital leases are not significant.
Johnson & Johnson 2012 Annual Report •45