UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-3215
JOHNSON & JOHNSON
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1024240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
New Brunswick, New Jersey 08933
(Address of principal executive offices, including zip code)
732-524-0400
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
On October 24, 1997, 1,343,674,855 shares of Common Stock,
$1.00 par value, were outstanding.
- 1 -
JOHNSON & JOHNSON AND SUBSIDIARIES
TABLE OF CONTENTS
Part I - Financial Information Page No.
Consolidated Balance Sheet -
September 28, 1997 and December 29, 1996 3
Consolidated Statement of Earnings for the
Fiscal Quarter Ended September 28, 1997 and
September 29, 1996 5
Consolidated Statement of Earnings for the
Fiscal Nine Months Ended September 28, 1997 and
September 29, 1996 6
Consolidated Statement of Cash Flows for the
Fiscal Nine Months Ended September 28, 1997 and
September 29, 1996 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14
Signatures 18
Part II - Other Information
Items 1 through 5 are not applicable
Item 6 - Exhibits and Reports on Form 8-K 17
- 2 -
Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited; Dollars in Millions)
ASSETS
September 28, December 29,
1997 1996
Current Assets:
Cash and cash equivalents $ 2,994 2,011
Marketable securities 122 125
Accounts receivable, trade, less
allowances $321 (1996 - $309) 3,628 3,251
Inventories (Note 3) 2,633 2,498
Deferred taxes on income 784 711
Prepaid expenses and other
receivables 978 774
Total current assets 11,139 9,370
Marketable securities, non-current 342 351
Property, plant and equipment, at cost9,242 9,023
Less accumulated depreciation and
amortization 3,758 3,372
5,484 5,651
Intangible assets, net (Note 4) 3,276 3,107
Deferred taxes on income 309 287
Other assets 1,127 1,244
Total assets $ 21,677 20,010
See Notes to Consolidated Financial Statements
- 3 -
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited; Dollars in Millions)
LIABILITIES AND SHAREOWNERS' EQUITY
September 28,
December 29,
Current Liabilities: 1997
1996
Loans and notes payable $ 839 872
Accounts payable 1,412 1,743
Accrued liabilities 2,309 2,010
Accrued salaries, wages and commissions 519 322
Taxes on income 401 237
Total current liabilities 5,480 5,184
Long-term debt 1,257 1,410
Deferred tax liability 174 170
Certificates of extra compensation 113 108
Other liabilities 2,471 2,302
Shareowners' Equity:
Preferred stock - without par value
(authorized and unissued 2,000,000
shares) - -
Common stock - par value $1.00 per share
(authorized 2,160,000,000 shares;
issued 1,534,823,000 shares) 1,535 1,535
Note receivable from employee stock
ownership plan (51) (57)
Cumulative currency translation
adjustments (371) (122)
Retained earnings 12,589 11,012
13,702 12,368
Less common stock held in treasury,
at cost (197,337,000 & 202,340,000
shares) 1,520 1,532
Total shareowners' equity 12,182 10,836
Total liabilities and shareowners'
equity $21,677 20,010
See Notes to Consolidated Financial Statements
- 4 -
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited; dollars & shares in millions
except per share figures)
Fiscal Quarter Ended
Sept. 28, Percent Sept. 29, Percent
1997 to Sales 1996 to
Sales
Sales to customers (Note 5)$5,586 100.0 5,402 100.0
Cost of products sold 1,750 31.3 1,715 31.8
Selling, marketing and
administrative expenses 2,149 38.5 2,092 38.7
Research expense 516 9.2 441 8.2
Interest income (58) (1.0) (36) (.7)
Interest expense, net of
portion capitalized 36 .6 32 .6
Other (income)expense, net (4) - 99 1.8
4,389 78.6 4,343 80.4
Earnings before provision
for taxes on income 1,197 21.4 1,059 19.6
Provision for taxes on
income (Note 2) 342 6.1 309 5.7
NET EARNINGS $ 855 15.3 750 13.9
NET EARNINGS PER SHARE $ .64 .56
CASH DIVIDENDS PER SHARE $ .22 .19
AVG. SHARES OUTSTANDING 1,335.1 1,332.9
See Notes to Consolidated Financial Statements
- 5 -
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited; dollars & shares in millions
except per share figures)
Fiscal Nine Months Ended
Sept. 28, Percent Sept. 29, Percent
1997 to Sales 1996 to
Sales
Sales to customers (Note 5)$16,999 100.0 16,118 100.0
Cost of products sold 5,271 31.0 5,166 32.0
Selling, marketing and
administrative expenses 6,429 37.8 6,115 37.9
Research expense 1,514 8.9 1,317 8.2
Interest income (151) (.8) (99) (.6)
Interest expense, net of
portion capitalized 104 .6 97 .6
Other (income)expense, net 39 .2 220 1.4
13,206 77.7 12,816 79.5
Earnings before provision
for taxes on income 3,793 22.3 3,302 20.5
Provision for taxes on
income (Note 2) 1,120 6.6 971 6.0
NET EARNINGS $ 2,673 15.7 2,331 14.5
NET EARNINGS PER SHARE $ 2.00 1.75
CASH DIVIDENDS PER SHARE$ .63 .545
AVG. SHARES OUTSTANDING 1,333.7 1,332.8
See Notes to Consolidated Financial Statements
- 6 -
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; Dollars in Millions)
Fiscal Nine Months
Ended
Sept. 28, Sept.
29
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $2,673 2,331
Adjustments to reconcile net earnings to
cash flows:
Depreciation and amortization of
property and intangibles 868 758
Increases in accounts receivable, trade,
less allowances (555) (389)
Increase in inventories (272) (362)
Changes in other assets and liabilities 536 610
NET CASH FLOWS FROM OPERATING ACTIVITIES 3,250 2,948
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment(761) (801)
Proceeds from the disposal of assets 46 14
Acquisitions of businesses, net of
cash acquired and other intangible assets(276) (196)
Other, principally marketable securities 29 38
NET CASH USED BY INVESTING ACTIVITIES (962) (945)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to shareowners (841) (720)
Repurchase of common stock (429) (274)
Proceeds from short-term debt 240 185
Retirement of short-term debt (185) (87)
Proceeds from long-term debt 6 7
Retirement of long-term debt (190) (322)
Proceeds from the exercise of stock options 156 114
NET CASH USED BY FINANCING ACTIVITIES (1,243) (1,097)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (62) (19)
INCREASE IN CASH AND CASH EQUIVALENTS 983 887
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 2,011 1,201
CASH AND CASH EQUIVALENTS, END OF PERIOD$ 2,994 2,088
See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - The accompanying interim financial statements and
related notes should be read in conjunction with the Consolidated
Financial Statements of Johnson & Johnson and Subsidiaries (the
"Company") and related notes as contained in the Annual Report on
Form 10-K for the fiscal year ended December 29, 1996. The
interim financial statements include all adjustments (consisting
only of normal recurring adjustments) and accruals necessary in
the judgment of management for a fair presentation of such
statements. Earnings per share were calculated on the basis of
the weighted average number of shares of common stock outstanding
during the applicable period. All share and per share amounts
have been restated to retroactively reflect the prior year stock
split.
NOTE 2 - INCOME TAXES
The effective income tax rates for 1997 and 1996 are as follows:
1997 1996
First Quarter 30.2% 29.7%
First Half 30.0 29.5
Nine Months 29.5 29.4
The effective income tax rates for the first nine months of 1997
and 1996 are 29.5% and 29.4%, respectively, as compared to the
U.S. federal statutory rate of 35%. The difference from the
statutory rate is the result of domestic subsidiaries operating
in Puerto Rico under a grant for tax relief expiring on December
31, 2007 and subsidiaries manufacturing in Ireland under an
incentive tax rate expiring on December 31, 2010.
NOTE 3 - INVENTORIES
(Dollars in Millions) Sept. 28, 1997 Dec. 29, 1996
Raw materials and supplies $ 693 687
Goods in process 491 390
Finished goods 1,449 1,421
$ 2,633 2,498
NOTE 4 - INTANGIBLE ASSETS
(Dollars in Millions) Sept. 28, 1997 Dec. 29, 1996
Intangible assets $ 3,907 3,616
Less accumulated amortization 631 509
$ 3,276 3,107
- 8 -
The excess of the cost over the fair value of net assets of
purchased businesses is recorded as goodwill and is amortized on
a straight-line basis over periods of 40 years or less.
The cost of other acquired intangibles is amortized on a
straight-line basis over their estimated useful lives.
NOTE 5 - SALES TO CUSTOMERS BY SEGMENT OF BUSINESS AND GEOGRAPHIC
AREAS
(Dollars in Millions)
SALES BY SEGMENT OF BUSINESS
Third Quarter Nine Months
Percent Percent
Increase/ Increase/
1997 1996 (Decrease) 1997 1996 (Decrease)
Consumer
Domestic $ 801 800 .1 2,400 2,342 2.5
International 783 783 - 2,481 2,404 3.2
1,584 1,583 .1% 4,881 4,746 2.8%
Pharmaceutical
Domestic 993 864 14.9 2,888 2,479 16.5
International 925 953 (2.9) 2,907 2,908 -
1,918 1,817 5.6% 5,795 5,387 7.6%
Professional
Domestic 1,168 1,126 3.7 3,502 3,258 7.5
International 916 876 4.6 2,821 2,727 3.4
2,084 2,002 4.1% 6,323 5,985 5.6%
Domestic 2,962 2,790 6.2 8,790 8,079 8.8
International 2,624 2,612 .5 8,209 8,039 2.1
Worldwide $5,586 5,402 3.4% 16,999 16,118 5.5%
SALES BY GEOGRAPHIC AREAS
Third Quarter Nine Months
Percent Percent
Increase/ Increase/
1997 1996 (Decrease) 1997 1996 (Decrease)
U.S. $2,962 2,790 6.2 8,790 8,079 8.8
Europe 1,373 1,445 (5.0) 4,478 4,637 (3.4)
Western Hemisphere
excluding U.S. 512 491 4.3 1,518 1,419 7.0
Asia-Pacific,
Africa 739 676 9.3 2,213 1,983 11.6
Total $5,586 5,402 3.4% 16,999 16,118 5.5%
- 9 -
NOTE 6 - ACQUISITIONS
During the first quarter, the Company completed the
acquisitions of Innotech, Inc. and Nitinol Development
Corporation. Innotech, Inc. develops, manufactures and sells
eyeglass lens products, desktop eyeglass lens casting systems and
related consumables that enable eye care professionals and
optical retailers to custom fabricate high quality prescription
eyeglass lenses at the point of sale. Nitinol Development
Corporation is a pioneer in shape memory alloys used in the
development of endovascular medical devices, including stents.
The aggregate purchase price for these acquisitions was $158
million. Pro forma results of the acquisitions, assuming that
the transactions were consummated at the beginning of each year
presented, would not be materially different from the results
reported.
During the second quarter, the Company announced the
acquisition of Pharmacia & Upjohn's Motrin (ibuprofen) brand in a
product exchange involving several smaller consumer brands.
On July 31, 1997, the Company completed the previously
announced merger with Biopsys Medical, Inc. (NASDAQ: BIOP) in a
stock-for-stock transaction. The merger has a total value of
$276 million, net of cash acquired. The merger has been
accounted for as a pooling of interests, however, prior period
financial statements have not been restated as the effect of
reflecting data relating to this merger would not materially
affect previously issued financial statements. The MAMMOTOME
Breast Biopsy System, pioneered and marketed by Biopsys Medical,
Inc., is an innovative, minimally invasive procedure for breast
cancer diagnosis, which requires only a local anesthetic and is
performed on an outpatient basis.
During the quarter, the Company also completed the acquisition
of McFaul & Lyons. McFaul & Lyons is a consulting firm
specializing in hospital operations design and materials
management.
- 10 -
NOTE 7 - SUBSEQUENT EVENTS
During the third quarter, the Company announced the signing of
a merger agreement with Gynecare, Inc. in a stock-for-stock
transaction. Gynecare is a maker of minimally invasive medical
devices for the treatment of uterine disorders.
During the quarter, the Company also announced the signing of a
merger agreement with Biosense, Inc. in a stock-for-stock
transaction. Biosense, a leader in medical sensor technology, is
developing several principal applications of medical sensor
technology that will facilitate a variety of diagnostic and
therapeutic interventional and cardiovascular procedures.
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards Number 128
"Earnings per Share" ("SFAS 128") which changes the method of
calculating earnings per
share. SFAS 128 requires the presentation of "basic" earnings
per share and "diluted" earnings per share on the face of the
income statement. The statement is effective for financial
statements for periods ending after December 15, 1997. The
Company will adopt SFAS 128 in the fourth quarter of 1997, as
early adoption is not permitted. Basic earnings per share, for
the Company, is expected to be the same as reported earnings per
share. Diluted earnings per share is not expected to materially
differ from the fully diluted earnings per share reported in the
Exhibit to the Company's quarterly Form 10-Q and 10-K.
- 11 -
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards Number 129
"Disclosure of Information about Capital Structure" ("SFAS 129")
that established standards for disclosing information about an
entity's capital structure. The statement is effective for
financial statements for periods ending after December 15, 1997.
The Company will adopt SFAS 129 in the fourth quarter of 1997.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 130 "Reporting
Comprehensive Income" ("SFAS 130") that establishes standards for
reporting and display of an alternative income measurement and
its components (revenue, expenses, gains, and losses) in a full
set of general-purpose financial statements. This statement is
effective for fiscal years beginning after December 15, 1997.
The Company will adopt SFAS 130 in fiscal year 1998.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 131
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") that establishes standards for the
reporting of information about operating segments in annual
financial statements. Additionally, it requires that enterprises
report selected information about operating segments in interim
financial reports issued to shareholders. The Company is
currently evaluating the new pronouncement for the impact on its
segment disclosures. This statement is effective for periods
beginning after December 15, 1997. The Company will adopt SFAS
131 in fiscal year 1998.
- 12 -
NOTE 9 - FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments to reduce
exposures to market risks resulting from fluctuations in interest
rates and foreign exchange. The Company does not enter into
financial instruments for trading or speculative purposes.
The Company uses interest rate and currency swaps to manage
interest rate and currency risk primarily related to borrowings.
Interest rate and currency swap agreements which hedge third
party debt mature with these borrowings. Unrealized
gains/(losses) on currency swaps are classified in the balance
sheet as other assets or liabilities. Interest expense under
these agreements, and the respective debt instruments that they
hedge, are recorded at the net effective interest rate of the
hedged transactions.
Gains and losses on foreign currency hedges of existing assets
or liabilities, or hedges of firm commitments are deferred and
are recognized in income as part of the related transaction.
In the event of the early termination of a swap contract, the
gain or loss on the contract is amortized over the remaining life
of the related transaction. If the underlying transaction
associated with a swap or other derivative contract accounted for
as hedge is terminated early, the related derivative contract is
simultaneously terminated and any gains or losses will be
included in income immediately.
NOTE 10 - OTHER
In June the Company resolved a litigation regarding an improper
injunction against certain of its oral contraceptive products by
American Home Products. The after tax gain on the settlement was
utilized for certain business improvement initiatives.
- 13 -
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SALES AND EARNINGS
Consolidated sales for the first nine months of 1997 were
$16,999 million, which exceeded sales of $16,118 million for the
first nine months of 1996 by 5.5%. The strength of the U.S.
dollar relative to the foreign currencies decreased sales for the
first nine months of 1997 by 3.7%. Excluding the effect of the
stronger U.S. dollar relative to foreign currencies, sales
increased 9.2% on an operational basis for the first nine months
of 1997. Consolidated net earnings for the first nine months of
1997 were $2,673 million, compared with net earnings of $2,331
million for the first nine months of 1996. Earnings per share
for the first nine months of 1997 were $2.00, compared with $1.75
for the same period a year ago. Net earnings and earnings per
share rose 14.7% and 14.3%, respectively.
Consolidated sales for the third quarter of 1997 were $5,586
million, an increase of 3.4% over 1996 third quarter sales of
$5,402 million. The effect of the stronger U.S. dollar relative
to foreign currencies decreased third quarter sales by 4.8%.
Consolidated net earnings for the third quarter of 1997 were $855
million, compared with $750 million for the same period a year
ago, an increase of 14.0%. Earnings per share for the third
quarter of 1997 rose 14.3% to $.64, compared with $.56 in the
1996 period.
Domestic sales for the first nine months of 1997 were $8,790
million, an increase of 8.8% over 1996 domestic sales of $8,079
million for the same period a year ago. Sales by international
subsidiaries were $8,209 million for the first nine months of
1997 compared with $8,039 million for the same period a year ago,
an increase of 2.1%. Excluding the impact of the stronger value
of the dollar, international sales increased by 9.5%.
- 14 -
Worldwide Consumer segment sales of $1.6 billion for the third
quarter were essentially unchanged over the same period a year
ago. Solid international sales growth was offset by the negative
impact of a strong U.S. dollar. Sales were led by the excellent
performance of the skin care franchise, including the NEUTROGENA
line of products, as well as the JOHNSON's Baby, First-Aid and
Kid's product lines. During the quarter, the Company announced a
licensing agreement with Raisio Group of Finland for the North
American marketing rights to a patented dietary ingredient,
stanol ester, which reduces the absorption of cholesterol. This
product is currently marketed in Europe as a margarine product
called Benecol. In the area of over-the-counter pharmaceuticals,
the Company also announced an alliance with Takeda Chemical
Industries in Japan for the sale and distribution of OTC
products. Takeda is the second largest OTC company in Japan and
will initially market several forms of TYLENOL.
Worldwide pharmaceutical sales of $1.9 billion for the third
quarter increased by 5.6%, including 14.9% growth in domestic
sales. International sales, which posted gains in local
currency, decreased by 2.9% due to the strength of the U.S.
dollar. Despite the negative currency impact, pharmaceutical
sales continued to show strong growth led by RISPERDAL, an
antipsychotic medication; PROCRIT, for the treatment of anemia;
PROPULSID, a gastrointestinal product; DURAGESIC, a transdermal
patch for chronic pain; ULTRAM, a centrally acting analgesic, and
LEVAQUIN, the new anti-infective agent launched earlier this
year. Also in the quarter, the Company announced an agreement
with NeoRx for their oncology product Avicidin.
- 15 -
Worldwide sales of $2.1 billion for the third quarter in the
Professional segment represented an increase of 4.1% over the
same period in 1996. This included domestic growth at 3.7% and
international growth at 4.6%. Strong double digit international
growth was significantly decreased by the strength of the U.S.
dollar. Professional segment growth was led by the strong
performance of Vistakon's disposable contact lenses, Ethicon Endo-
Surgery's instruments for less invasive surgical procedures,
LifeScan's blood glucose monitoring systems, and new knee and hip
systems from Johnson & Johnson Professional.
During the quarter, the Company announced a merger agreement
with Gynecare in a stock-for-stock transactions. Gynecare is a
maker of minimally invasive medical devices for the treatment of
uterine disorders. This company will represent another excellent
addition to Johnson & Johnson's portfolio of products focused on
improving women's health. The Company also announced a merger
agreement with Biosense, a leader in medical sensor technology.
Biosense is developing several principal applications of medical
sensor technology that will facilitate a variety of diagnostic
and therapeutic interventional and cardiovascular procedures.
Also in the quarter, the Company completed the acquisition of
McFaul & Lyons. McFaul & Lyons is a consulting firm specializing
in hospital operations.
Average shares of common stock outstanding in the first nine
months of 1997 were 1,333.7 million, compared with 1,332.8
million for the same period a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Cash and current marketable securities increased $980 million
during the first nine months of 1997 to $3,116 million at
September 28, 1997.
- 16 -
Total borrowings decreased $186 million during the first nine
months of 1997 to $2,096 million. Total debt represented 14.7%
of total capital (shareowners' equity and total borrowings) at
quarter end compared with 17.4% at the end of 1996.
Additions to property, plant and equipment were $761 million
for the first nine months of 1997, compared with $801 million for
the same period in 1996.
On October 20, 1997, the Board of Directors approved a regular
quarterly dividend of 22 cents per share payable on December 9,
1997 to shareowners of record as of November 18, 1997.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a)
Exhibit Numbers
(1) Exhibit 11 - Calculation of Earnings Per Share
(2) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the three month period ended September 28,
1997.
-17-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JOHNSON & JOHNSON
(Registrant)
Date: November 7, 1997 By /s/ R. J. DARRETTA
R. J. DARRETTA
(Vice President, Finance)
Date: November 7, 1997 By /s/ C. E. LOCKETT
C. E. LOCKETT
(Corporate Controller)
- 18 -
Exhibit 11
JOHNSON & JOHNSON AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Dollars and shares in millions except per share figures)
Fiscal Quarter Ended
Sept. 28, Sept. 29,
1997 1996
1. Net earnings ................ $ 855 750
2. Average number of shares outstanding
during the period............ 1,335.1 1,332.9
3. Earnings per share based upon average
outstanding shares (1 / 2) $ .64 .56
4. Fully diluted earnings per share:
a. Average number of shares out-
standing during the period. 1,335.1 1,332.9
b. Shares issuable under stock
compensation agreements at
quarter-end .............. - -
c. Shares reserved under the stock
option plan for which the
market price at end of quarter
exceeds the option price.. 70.0 73.9
d. Aggregate proceeds to the Company
from the exercise of
options in 4c ............ 2,144 2,265
e. Market price of the Company's
common stock at fiscal
quarter-end............... 57.63 51.50
f. Shares which could be repurchased
under the treasury stock method
(4d / 4e) ................ 37.2 44.0
g. Addition to average outstanding
shares (4b + 4c - 4f)..... 32.8 29.9
h. Shares for fully diluted earnings
per share calculation
(4a + 4g) ................ 1,367.9 1,362.8
i. Fully diluted earnings per share
(1 / 4h) ................. $ .63 .55
- 19 -
Exhibit 11
JOHNSON & JOHNSON AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Dollars and shares in millions except per share figures)
Fiscal
Nine Months Ended
Sept. 28, Sept. 29,
1997 1996
1. Net earnings ................ $ 2,673 2,331
2. Average number of shares outstanding
during the period............ 1,333.7 1,332.8
3. Earnings per share based upon average
outstanding shares (1 / 2) $ 2.00 1.75
4. Fully diluted earnings per share:
a. Average number of shares out-
standing during the period. 1,333.7 1,332.8
b. Shares issuable under stock
compensation agreements at
quarter-end .............. - -
c. Shares reserved under the stock
option plan for which the
market price at end of quarter
exceeds the option price.. 70.0 73.9
d. Aggregate proceeds to the Company
from the exercise of
options in 4c ............ 2,144 2,265
e. Market price of the Company's
common stock at fiscal
quarter-end............... 57.63 51.50
f. Shares which could be repurchased
under the treasury stock method
(4d / 4e) ................ 37.2 44.0
g. Addition to average outstanding
shares (4b + 4c - 4f)..... 32.8 29.9
h. Shares for fully diluted earnings
per share calculation
(4a + 4g) ................ 1,366.5 1,362.7
i. Fully diluted earnings per share
(1 / 4h) ................. $ 1.96 1.71
- 20 -
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