Johnson & Johnson - Index

Johnson & Johnson - report - Index

Reasonably likely changes to assumptions used to calculate
the accruals for rebates, returns and promotions are not anticipated
to have a material effect on the financial statements. The
Company currently discloses the impact of changes to assumptions
in the quarterly or annual filing in which there is a financial
statement impact.
Below are tables which show the progression of accrued
rebates, returns, promotions, reserve for doubtful accounts and
reserve for cash discounts by segment of business for the years
ended December 30, 2007 and December 31, 2006.
CONSUMER SEGMENT
Balance at Balance at
Beginning Payments/ End
(Dollars in Millions) of Period Accruals Other of Period
2007
Accrued rebates (1) $164 492 (439) 217
Accrued returns 92 257 (236) 113
Accrued promotions 211 2,249 (2,163) 297
Subtotal $467 2,998 (2,838) 627
Reserve for doubtful accounts 42 17 12 71
Reserve for cash discounts 15 278 (270) 23
Total $524 3,293 (3,096) 721
2006
Accrued rebates (1) $144 352 (332) 164
Accrued returns 78 117 (103) 92
Accrued promotions 172 1,555 (1,516) 211
Subtotal $394 2,024 (1,951) 467
Reserve for doubtful accounts 35 10 (3) 42
Reserve for cash discounts 13 176 (174) 15
Total $442 2,210 (2,128) 524
(1) Includes reserve for customer rebates of $76 million at December 30, 2007 and
$54 million at December 31, 2006, recorded as a contra asset.
PHARMACEUTICAL SEGMENT
Balance at Balance at
Beginning Payments/ End
(Dollars in Millions) of Period Accruals Other of Period
2007
Accrued rebates (1) $1,233 3,175 (3,159) 1,249
Accrued returns 324 36 (15) 345
Accrued promotions 205 523 (465) 263
Subtotal $1,762 3,734 (3,639) 1,857
Reserve for doubtful accounts 30 — (4) 26
Reserve for cash discounts 29 531 (536) 24
Total $1,821 4,265 (4,179) 1,907
2006
Accrued rebates (1) $1,119 2,857 (2,743) 1,233
Accrued returns 287 67 (30) 324
Accrued promotions 160 625 (580) 205
Subtotal $1,566 3,549 (3,353) 1,762
Reserve for doubtful accounts 36 — (6) 30
Reserve for cash discounts 29 503 (503) 29
Total $1,631 4,052 (3,862) 1,821
(1) Includes reserve for customer rebates of $321 million at December 30, 2007 and
$227 million at December 31, 2006, recorded as a contra asset.
MEDICAL DEVICES AND DIAGNOSTICS SEGMENT
Balance at Balance at
Beginning Payments/ End
(Dollars in Millions) of Period Accruals Other of Period
2007
Accrued rebates (1) $294 1,576 (1,534) 336
Accrued returns 183 102 (95) 190
Accrued promotions 41 136 (159) 18
Subtotal $518 1,814 (1,788) 544
Reserve for doubtful accounts 88 25 (17) 96
Reserve for cash discounts 18 213 (207) 24
Total $624 2,052 (2,012) 664
2006
Accrued rebates (1) $302 1,808 (1,816) 294
Accrued returns 170 26 (13) 183
Accrued promotions 56 104 (119) 41
Subtotal $528 1,938 (1,948) 518
Reserve for doubtful accounts 93 7 (12) 88
Reserve for cash discounts 15 188 (185) 18
Total $636 2,133 (2,145) 624
(1) Includes reserve for customer rebates of $313 million at December 30, 2007 and
$277 million at December 31, 2006, recorded as a contra asset.
The Company also earns service revenue for co-promotion of certain
products. For all years presented, service revenues were less
than 2% of total revenues and are included in sales to customers.
Income Taxes: Income taxes are recorded based on amounts
refundable or payable for the current year and include the results
of any difference between GAAP accounting and tax reporting,
recorded as deferred tax assets or liabilities. The Company estimates
deferred tax assets and liabilities based on current tax
regulations and rates. Changes in tax laws and rates may
affect recorded deferred tax assets and liabilities in the future.
Management believes that changes in these estimates would not
have a material effect on the Company’s results of operations,
cash flows or financial position.
In 2007, the Company adopted FASB Interpretation 48
(FIN48), Accounting for Uncertainty in Income Taxes — an interpretation
of FASB Statement No. 109. This interpretation prescribes
a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. The interpretation
also provides guidance on derecognition, classification
and other matters. See Note 8 for further information regarding
income taxes.
At December 30, 2007 and December 31, 2006, the cumulative
amounts of undistributed international earnings were
approximately $24.2 billion and $17.9 billion, respectively. The
Company intends to continue to reinvest its undistributed
international earnings to expand its international operations;
therefore, no U.S. tax expense has been recorded to cover the
undistributed portion not intended for repatriation.
MANAGEMENT’S DISCUSSION AND ANALY SIS OF RESULT S OF OPERATIONS AND FINANCIAL CONDITION 45