Johnson and Johnson 2013 Annual Report Download - page 55

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 certain balance sheet assets and
liabilities at current exchange rates and some accounts at historical 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 2013, 2012 and 2011 for foreign currency translation adjustments is included in
Note 13.
Net currency transaction gains and losses included in Other (income) expense were losses of $186 million, $58 million
and $10 million in 2013, 2012 and 2011, 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 29, 2013, December 30, 2012 and January 1, 2012:
(In Millions Except Per Share Amounts) 2013 2012 2011
Basic net earnings per share attributable to Johnson & Johnson $4.92 3.94 3.54
Average shares outstanding – basic 2,809.2 2,753.3 2,736.0
Potential shares exercisable under stock option plans 148.5 164.6 158.3
Less: shares repurchased under treasury stock method (103.3) (128.2) (122.6)
Convertible debt shares 3.0 3.6 3.6
Accelerated share repurchase program 19.6 19.3 –
Adjusted average shares outstanding – diluted 2,877.0 2,812.6 2,775.3
Diluted net earnings per share attributable to Johnson & Johnson $4.81 3.86 3.49
The diluted net earnings per share calculation included the dilutive effect of convertible debt that is offset by the related
reduction in interest expense of $4 million after-tax for years 2013, 2012 and 2011.
The diluted earnings per share calculation for 2013 included all shares related to stock options, as the exercise price of all
options was less than the average market value of the Company’s stock. Diluted net earnings per share for 2012 and
2011 excluded 0.2 million and 50.7 million shares, respectively, related to stock options, 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 years ended December 29, 2013 and December 30, 2012
included the dilutive effect of 19.6 million shares and 19.3 million shares, respectively, 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.
16. Rental Expense and Lease Commitments
Rentals of space, vehicles, manufacturing equipment and office and data processing equipment under operating leases
were approximately $363 million, $375 million and $313 million in 2013, 2012 and 2011, 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 29, 2013 are:
(Dollars in Millions)
2014 2015 2016 2017 2018
After
2018 Total
$286 238 186 110 85 87 992
Commitments under capital leases are not significant.
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