Johnson and Johnson 2014 Annual Report Download - page 55

Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency
translation is not adjusted for income taxes where it relates to permanent investments in international subsidiaries. For
additional details on comprehensive income see the Consolidated Statements of Comprehensive Income.
Details on reclassifications out of Accumulated Other Comprehensive Income:
Gain/(Loss) on Securities – reclassifications released to Other (income) expense, net.
Employee Benefit Plans – reclassifications are included in net periodic benefit cost. See Note 10 for additional
details.
Gain/(Loss) on Derivatives & Hedges – reclassifications to earnings are recorded in the same account as the
hedged transaction. See Note 6 for additional details.
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 2014, 2013 and 2012 for foreign currency translation adjustments is included in
Note 13.
Net currency transaction gains and losses included in Other (income) expense were losses of $156 million, $186 million
and $58 million in 2014, 2013 and 2012, 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 28, 2014, December 29, 2013 and December 30, 2012:
(In Millions Except Per Share Amounts) 2014 2013 2012
Basic net earnings per share attributable to Johnson & Johnson $5.80 4.92 3.94
Average shares outstanding – basic 2,815.2 2,809.2 2,753.3
Potential shares exercisable under stock option plans 142.6 148.5 164.6
Less: shares repurchased under treasury stock method (96.5) (103.3) (128.2)
Convertible debt shares 2.6 3.0 3.6
Accelerated share repurchase program – 19.6 19.3
Adjusted average shares outstanding – diluted 2,863.9 2,877.0 2,812.6
Diluted net earnings per share attributable to Johnson & Johnson $5.70 4.81 3.86
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 $3 million after-tax for 2014 and $4 million for years 2013 and 2012.
The diluted earnings per share calculation for 2014 and 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 excluded 0.2 million shares 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.
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