Learning Objective: Locate the Statement of Retained Earnings for a corporation within the more complex Statement of Stockholders' Equity. Tie beginning and ending balances in Retained Earnings from this statement to the balance sheet; tie net income reported here to the Income Statement Recreate the Statement of Retained Earnings for the most recent year by using the Retained Earnings* column only from the Statement of Stockholders' Equity. Retained Earnings may have other names, such as Deficit or Accumulated Deficit if it is negative. There may be items other than Net Income (Loss) and Dividends, just list the item and amounts under "Other." These reflect topics beyond the scope of this course, but you will need to include them in order to come to the correct closing balance. Specify what the item is using the name in the financial statement Do the arithmetic to make sure that you have listed all of the changes. Check the opening and closing balances to see if they agree with the balance sheet. Check that the net income number agrees to the income statement. In rare circumstances, the numbers might not agree. If so, just note this under the chart. The reasons why this might happen are beyond the scope of this course. At this point, you should expect to see that the numbers are in agreement. Be sure to note if these dollar amounts are in thousands, or millions. Numbers are right justified. Caution: The most common error here that students make is that they pick up the Total Equity column rather than just the Retained Earnings column. 4a: The Statement of Retained Earnings Item Amount Opening Balance +Net Income (or-Net Loss) -Dividends +/- Other Items in the Retained Earnings column Closing Balance The opening balance in Retained Earnings matches last year's closing RE balance on the Balance Sheet. YES or NO The closing balance in Retained Earnings matches this year's closing RE balance on the Balance Sheet. YES or NO The net income amount matches the net income amount on the company's current income statement. YES or NO JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars and Shares in Millions Except Per Share Amounts) (Note 1) 2020 Sales to customers S 82,584 Cost of products sold 28.427 Gross profit 54,157 Selling, marketing and administrative expenses 22.084 Rescarch and development expense 12.159 In process research and development (Note 5) 181 Interest income (111) Interest expense, net of portion capitalired (Note 4) 201 Other (income) expense, net 2.899 Restructuring (Note 20) 247 Earnings before provision for taxes on income 16,497 Provision for taxes on income (Note 8) 1,783 Net earnings 14,714 2019 82.059 27.556 34,503 22,178 11.155 890 (357) 11 2.524 266 17.328 2.209 15,119 2018 81.581 27,091 54.490 22.540 10,775 1,126 (611) 1,005 1,405 251 17.99 2,702 15.297 5.59 5.51 5.72 5.63 5.70 5.61 Net earnings per share (Notes 1 and 15) Basic Diluted Average shares outstanding (Notes 1 and 15) Basic Diluted 2.632.8 2.670.7 2,645.1 2,684.3 2,681.5 2,728.7 See Notes to Consolidated Financial Statements JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At January 3, 2021 and December 29, 2019 (Dollars in Millions Except Share and Per Share Amounts) (Note 1) 2020 2019 $ 13,985 11.200 13.576 9,344 3.132 51,237 18.766 53,402 36,393 8.534 6,562 174,894 17.305 1.982 14.481 9.020 2,392 94 45.274 17.658 47.643 33,639 7,819 5,695 157,728 $ Assets Current assets Cash and cash equivalents (Notes 1 and 2) Marketable securities (Notes 1 and 2) Accounts receivable trade, less allowances for doubtful accounts $293 (2019.5226) Inventories (Notes 1 and 3) Prepaid expenses and other receivables Assets held for sale (Note 18) Total current assets Property, plant and equipment, net (Notes 1 and 4) Intangible assets, net (Notes 1 and 5) Goodwill (Notes 1 and 5 Deferred taxes on income (Note 8) Other assets Total assets Liabilities and Shareholders' Equity Current liabilities Loans and notes payablc (Note 7) Accounts payable Accrued liabilities Accrued rebates, returns and promotions Accrued compensation and employee related obligations Accrued taxes on income (Note 8) Total current liabilities Long-term debt (Note 7) Deferred taxes on income (Note 8) Employee related obligations (Notes 9 and 10) Long-term taxes payable (Note 1) Other liabilities Total liabilities Conmilments and Contingencies (Note 19) Shareholders' equity Preferred stock without par value (authorized and unissued 2,000,000 shares) Common stock - par value $1.00 per share (Note 12) (authorized 4.320,000,000 shares; issued 3,119.843,000 shares) Accumulated other comprehensive income (loss) (Note 13) Ketained earnings 2.631 9.505 13.968 11,513 3,484 1.392 42,493 32,635 7,214 10,771 6,559 11.944 111,616 1,202 8.544 9,715 10.883 3.354 2,266 35.964 26.494 5.958 10.663 7.444 11.734 98.257 3,120 (15.242) 113,890 101.768 38,490 63,278 174,894 3,120 (15.891) 110.659 97.888 38 417 59,471 Less common stock held in treasury, al cost (Notc 12) (487,331,000 shares and 487,336,000 shares) Total shareholders' equity Total liabilities and shareholders' equity $ 157,728 See Notes to Consolidated Financial Statements JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Collars is Millions) (Note 1) 301 1018 Cash flows from sperating at 5 14714 119 15. TO 971 1.0 1.35 7211 1005 233 (1,148) (111) (114) 0.14 (2.475) (1,212 (1.016) n 714 12652 3.141 (704) 744 23.535 (277) 40 (1.054 1435 23,411 1.1) (644) 5.951 (275) 21,101 03.098) Amets to reconcile tearings to competing we Igraon and an opport and interes Stuck has compensation Assenede Casting comederherever Net n lebih Deferred Creatmevable to Operes and abilities ofeffets om in die Therefore creeable Increase in venn Increase in spuyable and Increase in there andre Increase (Dee) in other contre abilities Net cash flers from operating artivities Cashews from investit activities Add to property, plant and equipment Trocode fruth isposal of business, Acquisitions of cath acquired (1) Purchase Salewa Capport sprements and Other (primarily bones and more Netcash wed by lovestirates Cash flows from financing activities Didendes wherches Hapuch of commock Prals from short term dehi Kepayment of short-term che Proceeds from long-term de warance Repayment of long-term dhe Preces and citeste opierployee withholding on Mackwards.net Cupport agrements davity, Other Nefcathed by fixacing activities Fiffect of endurerate changes and catch and cash equivalent Decrease increase in cash and cash equiva Caband cash valentining of year (Note!) Cash and chequivalents, end of year (Noel) 147) 305 0.323) 21.01) 12,137 1997) (520) (20.825) 0,670 3,700 (899) 3620 4.2 S. 13.920 2.17 338 44 6190 (464) (19917 16,746) (10457 13,221) 3.39 02.463 7,431 11.054) 1.114 (333) (2940 16.120) 19 (3,320) 17.305 13.95 (1001 3 (2.823) 054 100 415 (18.015) 19,494) 15.863) NO 12.4793 5 11.555 919 25 (1733 (K,S101 (241) 283 17:24 18.107 9) 18021 IRO 17.305 Supplemental cash Dew data Cash paid during the year for Inter Imereset of capital Incones 904 541 4619 995 925 4191 WHO 963 4570 Supplemental schedule of new cash investing and financing activities Trar stock if employee compensation and stock option plan of cash peace moyee withholding taxes locked Conversion of 5 17 1,937 29 1 Angeline Per le of an acquired Fair value of new controlling 74756 H02 7.12.3 LAS 510 04 (1450 199 Common Stock Issued Amount L.120 Treasury Stock Amount (31.354) 3,060 15,868) JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (Dollars in Millions) (Note 1) Accumulated Other Retained Comprehensive Total Earnings Income (Loss) 60,160 101.793 (13.199) (486) (254) (212) 15.297 15,297 (9.494) (9.494) 1,949 (1.111) (5.868) (15) (15) (1.791) (1.791) 59.752 106 216 (15,272) 15.119 15.119 (9,917) (9.917) 1.933 (758) (6,746) (D) (1) (669) (669) 52.471 110.659 15.891) 14,714 14,714 (10,481) (10,481) 2,217 (931) (3.221) (71) (71) 649 649 113,890 (15,242) 3.120 Balance, December 31, 2017 Cumulative adjustment Net earnings Cash dividends paid (53 54 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income foss), net of tax Balance, December 30, 2018 Net camings Cash dividends paid (53.75 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income foss), net of tax Balance, December 29, 2019 Net earnings Cash dividends paid (53.98 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income (los), net of tax Balance, January 3, 2021 (J4362) 2.691 46,746) 3.120 48,417) 2.148 (3,221) 63,278 3.120 (38.490) "See Note I to Consolidated Financial Statements for additional details on the effect of cumulative adjustments to retained earnings See Notes to Consolidated Financial Statements Learning Objective: Locate the Statement of Retained Earnings for a corporation within the more complex Statement of Stockholders' Equity. Tie beginning and ending balances in Retained Earnings from this statement to the balance sheet; tie net income reported here to the Income Statement Recreate the Statement of Retained Earnings for the most recent year by using the Retained Earnings* column only from the Statement of Stockholders' Equity. Retained Earnings may have other names, such as Deficit or Accumulated Deficit if it is negative. There may be items other than Net Income (Loss) and Dividends, just list the item and amounts under "Other." These reflect topics beyond the scope of this course, but you will need to include them in order to come to the correct closing balance. Specify what the item is using the name in the financial statement Do the arithmetic to make sure that you have listed all of the changes. Check the opening and closing balances to see if they agree with the balance sheet. Check that the net income number agrees to the income statement. In rare circumstances, the numbers might not agree. If so, just note this under the chart. The reasons why this might happen are beyond the scope of this course. At this point, you should expect to see that the numbers are in agreement. Be sure to note if these dollar amounts are in thousands, or millions. Numbers are right justified. Caution: The most common error here that students make is that they pick up the Total Equity column rather than just the Retained Earnings column. 4a: The Statement of Retained Earnings Item Amount Opening Balance +Net Income (or-Net Loss) -Dividends +/- Other Items in the Retained Earnings column Closing Balance The opening balance in Retained Earnings matches last year's closing RE balance on the Balance Sheet. YES or NO The closing balance in Retained Earnings matches this year's closing RE balance on the Balance Sheet. YES or NO The net income amount matches the net income amount on the company's current income statement. YES or NO JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars and Shares in Millions Except Per Share Amounts) (Note 1) 2020 Sales to customers S 82,584 Cost of products sold 28.427 Gross profit 54,157 Selling, marketing and administrative expenses 22.084 Rescarch and development expense 12.159 In process research and development (Note 5) 181 Interest income (111) Interest expense, net of portion capitalired (Note 4) 201 Other (income) expense, net 2.899 Restructuring (Note 20) 247 Earnings before provision for taxes on income 16,497 Provision for taxes on income (Note 8) 1,783 Net earnings 14,714 2019 82.059 27.556 34,503 22,178 11.155 890 (357) 11 2.524 266 17.328 2.209 15,119 2018 81.581 27,091 54.490 22.540 10,775 1,126 (611) 1,005 1,405 251 17.99 2,702 15.297 5.59 5.51 5.72 5.63 5.70 5.61 Net earnings per share (Notes 1 and 15) Basic Diluted Average shares outstanding (Notes 1 and 15) Basic Diluted 2.632.8 2.670.7 2,645.1 2,684.3 2,681.5 2,728.7 See Notes to Consolidated Financial Statements JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At January 3, 2021 and December 29, 2019 (Dollars in Millions Except Share and Per Share Amounts) (Note 1) 2020 2019 $ 13,985 11.200 13.576 9,344 3.132 51,237 18.766 53,402 36,393 8.534 6,562 174,894 17.305 1.982 14.481 9.020 2,392 94 45.274 17.658 47.643 33,639 7,819 5,695 157,728 $ Assets Current assets Cash and cash equivalents (Notes 1 and 2) Marketable securities (Notes 1 and 2) Accounts receivable trade, less allowances for doubtful accounts $293 (2019.5226) Inventories (Notes 1 and 3) Prepaid expenses and other receivables Assets held for sale (Note 18) Total current assets Property, plant and equipment, net (Notes 1 and 4) Intangible assets, net (Notes 1 and 5) Goodwill (Notes 1 and 5 Deferred taxes on income (Note 8) Other assets Total assets Liabilities and Shareholders' Equity Current liabilities Loans and notes payablc (Note 7) Accounts payable Accrued liabilities Accrued rebates, returns and promotions Accrued compensation and employee related obligations Accrued taxes on income (Note 8) Total current liabilities Long-term debt (Note 7) Deferred taxes on income (Note 8) Employee related obligations (Notes 9 and 10) Long-term taxes payable (Note 1) Other liabilities Total liabilities Conmilments and Contingencies (Note 19) Shareholders' equity Preferred stock without par value (authorized and unissued 2,000,000 shares) Common stock - par value $1.00 per share (Note 12) (authorized 4.320,000,000 shares; issued 3,119.843,000 shares) Accumulated other comprehensive income (loss) (Note 13) Ketained earnings 2.631 9.505 13.968 11,513 3,484 1.392 42,493 32,635 7,214 10,771 6,559 11.944 111,616 1,202 8.544 9,715 10.883 3.354 2,266 35.964 26.494 5.958 10.663 7.444 11.734 98.257 3,120 (15.242) 113,890 101.768 38,490 63,278 174,894 3,120 (15.891) 110.659 97.888 38 417 59,471 Less common stock held in treasury, al cost (Notc 12) (487,331,000 shares and 487,336,000 shares) Total shareholders' equity Total liabilities and shareholders' equity $ 157,728 See Notes to Consolidated Financial Statements JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Collars is Millions) (Note 1) 301 1018 Cash flows from sperating at 5 14714 119 15. TO 971 1.0 1.35 7211 1005 233 (1,148) (111) (114) 0.14 (2.475) (1,212 (1.016) n 714 12652 3.141 (704) 744 23.535 (277) 40 (1.054 1435 23,411 1.1) (644) 5.951 (275) 21,101 03.098) Amets to reconcile tearings to competing we Igraon and an opport and interes Stuck has compensation Assenede Casting comederherever Net n lebih Deferred Creatmevable to Operes and abilities ofeffets om in die Therefore creeable Increase in venn Increase in spuyable and Increase in there andre Increase (Dee) in other contre abilities Net cash flers from operating artivities Cashews from investit activities Add to property, plant and equipment Trocode fruth isposal of business, Acquisitions of cath acquired (1) Purchase Salewa Capport sprements and Other (primarily bones and more Netcash wed by lovestirates Cash flows from financing activities Didendes wherches Hapuch of commock Prals from short term dehi Kepayment of short-term che Proceeds from long-term de warance Repayment of long-term dhe Preces and citeste opierployee withholding on Mackwards.net Cupport agrements davity, Other Nefcathed by fixacing activities Fiffect of endurerate changes and catch and cash equivalent Decrease increase in cash and cash equiva Caband cash valentining of year (Note!) Cash and chequivalents, end of year (Noel) 147) 305 0.323) 21.01) 12,137 1997) (520) (20.825) 0,670 3,700 (899) 3620 4.2 S. 13.920 2.17 338 44 6190 (464) (19917 16,746) (10457 13,221) 3.39 02.463 7,431 11.054) 1.114 (333) (2940 16.120) 19 (3,320) 17.305 13.95 (1001 3 (2.823) 054 100 415 (18.015) 19,494) 15.863) NO 12.4793 5 11.555 919 25 (1733 (K,S101 (241) 283 17:24 18.107 9) 18021 IRO 17.305 Supplemental cash Dew data Cash paid during the year for Inter Imereset of capital Incones 904 541 4619 995 925 4191 WHO 963 4570 Supplemental schedule of new cash investing and financing activities Trar stock if employee compensation and stock option plan of cash peace moyee withholding taxes locked Conversion of 5 17 1,937 29 1 Angeline Per le of an acquired Fair value of new controlling 74756 H02 7.12.3 LAS 510 04 (1450 199 Common Stock Issued Amount L.120 Treasury Stock Amount (31.354) 3,060 15,868) JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (Dollars in Millions) (Note 1) Accumulated Other Retained Comprehensive Total Earnings Income (Loss) 60,160 101.793 (13.199) (486) (254) (212) 15.297 15,297 (9.494) (9.494) 1,949 (1.111) (5.868) (15) (15) (1.791) (1.791) 59.752 106 216 (15,272) 15.119 15.119 (9,917) (9.917) 1.933 (758) (6,746) (D) (1) (669) (669) 52.471 110.659 15.891) 14,714 14,714 (10,481) (10,481) 2,217 (931) (3.221) (71) (71) 649 649 113,890 (15,242) 3.120 Balance, December 31, 2017 Cumulative adjustment Net earnings Cash dividends paid (53 54 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income foss), net of tax Balance, December 30, 2018 Net camings Cash dividends paid (53.75 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income foss), net of tax Balance, December 29, 2019 Net earnings Cash dividends paid (53.98 per share) Employee compensation and stock option plans Repurchase of common stock Other Other comprehensive income (los), net of tax Balance, January 3, 2021 (J4362) 2.691 46,746) 3.120 48,417) 2.148 (3,221) 63,278 3.120 (38.490) "See Note I to Consolidated Financial Statements for additional details on the effect of cumulative adjustments to retained earnings See Notes to Consolidated Financial Statements
