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Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Johnson & Johnson and its subsidiaries (the Company).
Intercompany accounts and transactions are eliminated.
Description of the Company and Business Segments
The Company has approximately 127,100 employees worldwide engaged in the research and development, manufacture
and sale of a broad range of products in the health care field. The Company conducts business in virtually all countries of
the world and its primary focus is on products related to human health and well-being.
The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices. The
Consumer segment includes a broad range of products used in the baby care, oral care, skin care, over-the-counter
pharmaceutical, women’s health and wound care markets. These products are marketed to the general public and sold
both to retail outlets and distributors throughout the world. The Pharmaceutical segment is focused on five therapeutic
areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases.
Products in this segment are distributed directly to retailers, wholesalers, hospitals and health care professionals for
prescription use. The Medical Devices segment includes a broad range of products used in the orthopaedic, surgery,
cardiovascular, diabetes care and vision care fields, which are distributed to wholesalers, hospitals and retailers, and used
principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.
New Accounting Pronouncements
Recently Adopted Accounting Pronouncements
During the fiscal second quarter of 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard
Update 2015-04: Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan
Assets. This update provides a practical expedient option to entities that have defined benefit plans and have a fiscal year-
end that does not coincide with a calendar month-end. This option allows an entity to elect to measure defined benefit
plan assets and obligations using the calendar month-end that is closest to its fiscal year-end. This update will be effective
for the Company for all annual and interim periods beginning after December 15, 2015 and if the practical expedient is
elected by an entity, it is required to be adopted on a prospective basis. Early adoption is permitted. The Company has
elected to adopt the practical expedient to measure its defined benefit plans. This election did not have a material impact
on the Company’s consolidated financial statements.
During the fiscal fourth quarter of 2015, the FASB issued Accounting Standard Update 2015-17 Income Taxes: Balance
Sheet Classification of Deferred Taxes. To simplify the presentation of deferred income taxes, the amendments in this
update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial
position. This update is required to be effective for all public Companies for annual periods beginning after December 15,
2016, and interim periods within those annual periods. Earlier application is permitted. The Company has elected to early
adopt this standard on a retrospective basis. The 2014 Consolidated Balance Sheet reclassification reduced current
assets by $3.6 billion, increased non-current assets by $2.8 billion and reduced liabilities by $0.8 billion.
Recently Issued Accounting Standards
Not Adopted as of January 3, 2016
During the fiscal first quarter of 2016, the FASB issued Accounting Standard Update 2016-01: Recognition and
Measurement of Financial Assets and Financial Liabilities. The amendments in this update supersede the guidance to
classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale)
and require equity securities to be measured at fair value with changes in the fair value recognized through net income.
The standard amends financial reporting by providing relevant information about an entity’s equity investments and
reducing the number of items that are recognized in other comprehensive income. This update will be effective for the
Company for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The
Company is currently assessing the impact of the future adoption of this standard on its financial statements.
36 •Johnson & Johnson 2015 Annual Report