Johnson & Johnson - Index

Johnson & Johnson - report - Index

21. Selected Quarterly Financial Data (unaudited)
Selected unaudited quarterly financial data for the years 2007 and 2006 are summarized below:
2007 2006
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First Second Third Fourth First Second Third Fourth
(Dollars in Millions Except Per Share Data) Quarter (1) Quarter Quarter (2) Quarter (3) Quarter (4) Quarter (5) Quarter (6) Quarter (7)
Segment sales to customers
Consumer $ 3,496 3,564 3,623 3,810 2,355 2,398 2,456 2,565
Pharmaceutical 6,221 6,149 6,099 6,397 5,626 5,810 5,881 5,950
Med Devices & Diagnostics 5,320 5,418 5,248 5,750 5,011 5,155 4,950 5,167
Total sales $15,037 15,131 14,970 15,957 12,992 13,363 13,287 13,682
Gross profit 10,652 10,773 10,696 11,223 9,380 9,575 9,637 9,675
Earnings before provision
for taxes on income 3,652 4,031 3,268 2,332 4,615 3,603 3,661 2,708
Net earnings 2,573 3,081 2,548 2,374 3,305 2,820 2,760 2,168
Basic net earnings per share $ 0.89 1.06 0.88 0.83 1.11 0.96 0.95 0.75
Diluted net earnings per share $ 0.88 1.05 0.88 0.82 1.10 0.95 0.94 0.74
(1) The first quarter of 2007 includes an after-tax charge of $807 million for IPR&D.
(2) The third quarter of 2007 includes an after-tax charge of $528 million for restructuring.
(3) The fourth quarter of 2007 includes an after-tax charge of $441 million for the NATRECOR® intangible asset write-down and a one-time tax gain of $267 million for restructuring.
The low tax rate is due to increases in taxable income in lower tax jurisdictions relative to taxable income in higher tax jurisdictions.
(4) The first quarter of 2006 includes an after-tax gain of $368 million for the Guidant acquisition termination fee and an after-tax charge of $29 million for IPR&D.
(5) The second quarter of 2006 includes an after-tax charge of $87 million for IPR&D.
(6) The third quarter of 2006 includes an after-tax charge of $115 million for IPR&D.
7) The fourth quarter of 2006 includes an after-tax charge of $217 million for IPR&D.
22. Restructuring
In the third quarter of 2007, the Company announced restructuring
initiatives in an effort to improve its overall cost structure.
This action was taken to offset the anticipated negative impacts
associated with generic competition in the Pharmaceutical
segment and challenges in the drug-eluting stent market. The
Company’s Pharmaceuticals segment will reduce its cost base
by consolidating certain operations, while continuing to invest
in recently launched products and its late-stage pipeline of new
products. The Cordis franchise is moving to a more integrated
business model to address the market changes underway with
drug-eluting stents and to better serve the broad spectrum of
its patients’ cardiovascular needs, while reducing its cost base.
This program will allow the Company to accelerate steps to standardize
and streamline certain aspects of its enterprise-wide
functions such as human resources, finance and information
technology to support growth across the business, while also
leveraging its scale more effectively in areas such as procurement
to benefit its operating companies. Additionally, as part of
this program the Company plans to eliminate approximately
4,400 positions of which approximately 1,400 were eliminated
in 2007.
During the fiscal third quarter of 2007, the Company
recorded $745 million in related pre-tax charges of which,
approximately $500 million of the pre-tax restructuring charges
are expected to require cash payments. The $745 million of
restructuring charges consists of severance costs of $450 million,
asset write-offs of $272 million and $23 million related to
leasehold obligations. The $272 million of asset write-offs relate
to property, plant and equipment of $166 million, intangible
assets of $48 million and other assets of $58 million.
The following table summarizes the severance charges and
the associated spending for the fiscal year ended 2007:
(Dollars in Millions) Severance
2007 severance charge $450
Cash outlays* (46)
Reserve balance, December 30, 2007 $404
* Cash outlays for severance are expected to be paid out over the next 12 to 18 months
in accordance with the Company’s plans and local laws .
For additional information on the restructuring as it relates to the
segments see Note 11.
NOTES TO CONSOLIDA TED FINANCIAL ST A TEMENTS 73