Johnson & Johnson - Index

Johnson & Johnson - report - Index

and other resolutions where those are in the best interest of
the Company.
The Company is also involved in a number of other patent,
trademark and other lawsuits incidental to its business. The ultimate
legal and financial liability of the Company in respect to all
claims, lawsuits and proceedings referred to above cannot be
estimated with any certainty. However, 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, although the resolution in any
reporting period of one or more of these matters could have a
significant impact on the Company’s results of operations and
cash flows for that period.
19. 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 30, 2007, December 31, 2006 and January 1, 2006:
(Shares in Millions Except Per Share Data) 2007 2006 2005
Basic net earnings per share $ 3.67 3.76 3.38
Average shares
outstanding — basic 2,882.9 2,936.4 2,973.9
Potential shares exercisable
under stock option plans 178.6 207.0 203.1
Less: shares repurchased
under treasury stock method (154.5) (186.3) (178.6)
Convertible debt shares 3.7 3.9 4.4
Adjusted average shares
outstanding — diluted 2,910.7 2,961.0 3,002.8
Diluted net earnings per share $ 3.63 3.73 3.35
The diluted net earnings per share calculation includes the dilutive
effect of convertible debt: a decrease in interest expense of
$4 million, $4 million and $11 million after tax for years 2007,
2006 and 2005, respectively.
Diluted net earnings per share excludes 64 million, 43 million
and 45 million shares underlying stock options for 2007,
2006 and 2005, respectively, 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.
20. Capital and Treasury Stock
Changes in treasury stock were:
(Amounts in Millions Except Treasury Stock
_______________________
Treasury Stock
Number of Shares in Thousands) Shares Amount
Balance at January 2, 2005 148,819 $ 6,004
Employee compensation and stock option plans (22,708) (1,458)
Conversion of subordinated debentures (7,976) (501)
Repurchase of common stock 27,229 1,920
Balance at January 1, 2006 145,364 5,965
Employee compensation and stock option plans (26,526) (1,677)
Conversion of subordinated debentures (540) (36)
Repurchase of common stock 108,314 6,722
Balance at December 31, 2006 226,612 10,974
Employee compensation and stock option plans (33,296) (2,180)
Conversion of subordinated debentures (194) (13)
Repurchase of common stock 86,498 5,607
Balance at December 30, 2007 279,620 $14,388
Aggregate shares of Common Stock issued were approximately
3,120 million shares at the end of 2007, 2006 and 2005.
Cash dividends paid were $1.620 per share in 2007, compared
with dividends of $1.455 per share in 2006, and $1.275 per
share in 2005.
72 JOHNSON & JOHNSON 2007 ANNUAL REPORT