Johnson & Johnson Johnson & Johnson and Subsidiaries Consolidated statements of
ID: 2472662 • Letter: J
Question
Johnson & Johnson Johnson & Johnson and Subsidiaries Consolidated statements of cash flows For the years ended 2000 June 30, 1999, and 1998 (USD millions)
Cash flows from operating activities 2000 1999 1998
Net earnings $ 4,800 4,167 3,003
Adjustments to reconcile net earnings to cash flows:
Depreciation and amortization of property and intangibles 1,515 1,444 1,285
Purchased in-process research and development 54 298
Increase in deferred taxes (167) (7) (297)
Accounts receivable reserves 33 11 24
Changes in assets and liabilities, net of effects from acquisition of businesses:
Increase in accounts receivable (451) (671) (163)
Decrease (increase) in inventories 125 (333) (100)
Increase in accounts payable and accrued liabilities 57 242 646
Decrease in other current and non-current assets 143 457 142
Increase in other current and non-current liabilities 454 450 153
Net cash flows from operating activities $ 6,563 $ 5,760 $ 4,991
Cash flows from investing activities
Additions to property, plant and equipment $(1,646) $(1,728) $(1,545)
Proceeds from the disposal of assets 161 35 108
Acquisitions of businesses, net of cash acquired (68) (271) (3,818)
Purchases of investments (5,383) (3,538) (1,005)
Sales of investments 4,670 2,817 400
Other (102) (257) (205)
Net cash used by investing activities $ (2,368) $ (2,942) $ (6,065)
Cash flows from financing activities
Dividends to shareowners $(1,724) $(1,479) $(1,305)
Repurchase of common stock (973) (840) (930)
Proceeds from short-term debt 814 3,208 2,424
Retirement from short-term debt (1,485) (4,063) (226)
Proceeds from long-term debt 4 793 535
Retirement from long-term debt (28) (176) (471)
Proceeds from the exercise of stock options 292 180 178
Net cash (used by) provided by financing activities $(3,100) $(2,377) $205
Effect of exchange rate changes on cash and cash equivalents (47) (72) 24
Increase (decrease) in cash and cash equivalents 1,048 369 (845)
Cash and equivalents, beginning of year 2,363 1,994 2,839
Cash and cash equivalents, end of year $3,411 $2,363 $ 1,994
Refer to "A broader perspective: Johnson & Johnson" and answer the following questions:
a. Over the last three years from which major activities (operations, investing, financing) has Johnson & Johnson received net cash inflows and on which major activities have they spent the funds?
b. What relationship do you see between "Depreciation and amortization of property and intangibles" and "Additions of property, plant, and equipment"?
c. What were the two major sources of cash outflows to stockholders and which was larger?
d. By how much did the investments in marketable securities grow or shrink over the three-year period?
e. By how much did long-term debt grow or shrink over the three-year period?
f. If you were a stockholder, would you feel uncertain or confident that this company will be able to pay future dividends at the same rate as in the past?
g. For what reason or reasons might the company be buying back its own stock?
h. For the latest year, did the current assets (other than cash) and current liabilities go up or down?
i. From the information that is available, does it appear that the company is performing well or poorly?
Explanation / Answer
a) We summarize as follows
We observe that operating activities provided maximum cash inflow in recent three years and investing activities used maximum cash
c) Two major sources of cash outflow to stock holders were
1) dividend paid to stockholders & 2) Repurchase of common stock
We observe that issue of dividend to stock holders was the major source of cash outflow to stockholders
Year 2000 1999 1998 Consolidated Cash inflow Operating 6563 5760 4991 17314 Investing -2368 -2942 -6065 -11375 Financing -3100 -2377 205 -5272Related Questions
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