Johnson & Johnson - Index

Johnson & Johnson - report - Index

12. Accumulated Other Comprehensive Income
Components of other comprehensive income/(loss) consist of
the following:
Total
Unrealized Gains/ Accumulated
Foreign Gains/ (Losses) on Other
Currency (Losses) on Employee Derivatives Comprehensive
(Dollars in Millions) Translation Securities Benefit Plans & Hedges Income/(Loss)
Jan. 2, 2005 $(105) 86 (346) (150) (515)
2005 changes
Net change due to
hedging transactions — — — 112
Net amount reclassed
to net earnings — — — 53
Net 2005 changes (415) (16) 26 165 (240)
Jan. 1, 2006 $(520) 70 (320) 15 (755)
2006 changes
Net change due to
hedging transactions — — — 17
Net amount reclassed
to net earnings — — — (23)
Net 2006 changes 362 (9) (1,710) (6) (1,363)
Dec. 31, 2006 $(158) 61 (2,030) 9 (2,118)
2007 changes
Net change due to
hedging transactions — — — (78)
Net amount reclassed
to net earnings — — — 24
Net 2007 changes 786 23 670 (54) 1,425
Dec. 30, 2007 $ 628 84 (1,360) (45) (693)
Total comprehensive income for 2007 includes reclassification
adjustment gains of $7 million realized from the sale of equity
securities and the associated tax expense of $2 million.
Total other comprehensive income for 2006 includes reclassification
adjustment gains of $13 million realized from the sale of
equity securities and the associated tax expense of $4 million.
Total other comprehensive income for 2005 includes reclassification
adjustment gains of $23 million realized from the sale of
equity securities and the associated tax expense of $8 million.
The tax effect on the unrealized gains/(losses) on the equity
securities balance is an expense of $46 million, $33 million and
$38 million in 2007, 2006 and 2005, respectively. The tax effect
related to employee benefit plans was $349 million, $891 million
and $160 million in 2007, 2006 and 2005, respectively. The tax
effect on the gains/(losses) on derivatives and hedges are gains
of $24 million in 2007, and losses of $4 million and $11 million
in 2006 and 2005, respectively. See Note 15 for additional
information relating to derivatives and hedging.
The currency translation adjustments are not currently
adjusted for income taxes as they relate to permanent
investments in international subsidiaries.
13. Pensions and Other Benefit Plans
The Company sponsors various retirement and pension plans,
including defined benefit, defined contribution and termination
indemnity plans, which cover most employees worldwide. The
Company also provides postretirement benefits, primarily health
care, to all U.S. retired employees and their dependents.
Many international employees are covered by governmentsponsored
programs and the cost to the Company is not
significant.
Retirement plan benefits are primarily based on the
employee’s compensation during the last three to five years
before retirement and the number of years of service. International
subsidiaries have plans under which funds are deposited
with trustees, annuities are purchased under group contracts,
or reserves are provided.
The Company does not fund retiree health care benefits in
advance and has the right to modify these plans in the future.
The Company uses the date of its consolidated financial
statements (December 30, 2007 and December 31, 2006,
respectively) as the measurement date for all U.S. and international
retirement and other benefit plans.
In September 2006, Statement of Financial Accounting
Standards (SFAS) No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans was issued and
amends further the disclosure requirements for pensions and
other postretirement benefits. This Statement was an amendment
of FASB Statements No. 87, 88, 106 and 132(R). The
incremental effect of applying FASB No. 158 was a $1.7 billion
reduction in Shareholder’s Equity, net of deferred taxes.
60 JOHNSON & JOHNSON 2007 ANNUAL REPORT