Johnson and Johnson 2014 Annual Report Download - page 63

The Company recorded acquisition related costs before tax of $754 million, $683 million and $1,028 million in 2014,
2013 and 2012, respectively, which were recorded in Other (income) expense and Cost of products sold.
In connection with the Synthes acquisition, DePuy Orthopaedics, Inc. agreed to divest certain rights and assets related to
its trauma business to Biomet, Inc. and completed the initial closing for this transaction in the fiscal second quarter of
2012, including those countries that represented the majority of sales. As of December 30, 2012, the transaction had
closed worldwide.
With the exception of the Synthes, Inc. acquisition, supplemental pro forma information for 2014, 2013 and 2012 in
accordance with U.S. GAAP standards related to business combinations, and goodwill and other intangible assets, is not
provided, as the impact of the aforementioned acquisitions did not have a material effect on the Company’s results of
operations, cash flows or financial position.
During 2014, the Company divestitures included: The Ortho-Clinical Diagnostics business to The Carlyle Group; the K-Y®
brand to Reckitt Benckiser Group PLC in the U.S. and certain other markets; and the BENECOL®brand to Raisio plc. In
2014, the gains on the divestitures of businesses were approximately $2.4 billion. The Company completed the divestiture
of its Ortho-Clinical Diagnostics business to The Carlyle Group for approximately $4.0 billion and the Company recorded
a pre-tax net gain of approximately $1.9 billion. Ortho-Clinical Diagnostics’ results are included in the Company’s Medical
Devices segment pre-tax profit. As of December 28, 2014, the assets classified as held for sale relating to the Ortho-
Clinical Diagnostics companies in countries that have not completely closed due to local regulatory requirements were
$41 million of inventory, classified as prepaid expenses and other on the Consolidated Balance Sheet and $117 million of
property, plant and equipment, classified as other assets on the Consolidated Balance Sheet.
During 2013, the Company divestitures included: women’s sanitary protection products in the U.S., Canada and the
Caribbean to Energizer Holdings, Inc.; Rolaids®to Chattem, Inc.; DORIBAX®rights to Shionogi; and the sale of certain
consumer brands and certain pharmaceutical products. In 2013, the gains on the divestitures of businesses were $0.1
billion. During 2012, the Company divestitures included: BYSTOLIC®(nebivolol) IP rights to Forest Laboratories, Inc.; the
trauma business of DePuy Orthopaedics, Inc. to Biomet, Inc.; the Therakos business to an affiliate of Gores Capital
Partners III, L.P.; the sale of certain consumer brands; and the RhoGAM®business. In 2012, the gains on the divestitures
of businesses were $0.9 billion.
In January 2015, a definitive agreement was announced to divest the U.S. license rights to NUCYNTA®(tapentadol),
NUCYNTA®ER (tapentadol extended-release tablets), and NUCYNTA®(tapentadol) oral solution for approximately $1.05
billion. The transaction is expected to close in the fiscal second quarter of 2015, subject to customary closing conditions
and completion of financing.
21. Legal Proceedings
Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability,
intellectual property, commercial and other matters; governmental investigations; and other legal proceedings that arise
from time to time in the ordinary course of their business.
The Company records accruals for such contingencies when it is probable that a liability will be incurred and the amount
of the loss can be reasonably estimated. As of December 28, 2014, the Company has determined that the liabilities
associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for
these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on
new information and further developments in accordance with ASC 450-20-25. For these and other litigation and
regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to
determine an estimate of the possible loss or range of loss beyond the amounts already accrued. These matters can be
affected by various factors, including whether damages sought in the proceedings are unsubstantiated or indeterminate;
scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present
legal uncertainties; there are significant facts in dispute; or there are numerous parties involved. Amounts accrued for legal
contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on
estimates and assumptions.
In the Company’s opinion, based on its examination of these matters, its experience to date and discussions with counsel,
the ultimate outcome of legal proceedings, net of liabilities accrued in the Company’s balance sheet, is not expected to
have a material adverse effect on the Company’s financial position. However, the resolution in any reporting period of one
or more of these matters, either alone or in the aggregate, may have a material adverse effect on the Company’s results of
operations and cash flows for that period.
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