8-KOther Events

JOHNSON & JOHNSON 8-K Report, Corporate Update (Dec 21, 2006)

Filed December 21, 2006For Securities:JNJ

Summary

Johnson & Johnson (JNJ) announced on December 20, 2006, the successful closing of its acquisition of Pfizer Consumer Healthcare for a substantial $16.6 billion in cash. This significant strategic move is expected to impact the company's financial performance in the short term. Investors should note that the acquisition is projected to reduce JNJ's 2006 earnings per share by an estimated $0.02. However, this reduction will be partially mitigated by a gain stemming from the Tax Relief and Health Care Act of 2006. Additionally, JNJ will recognize a one-time, after-tax in-process research and development (IPR&D) charge in the fiscal fourth quarter of 2006, estimated to be between $175 million and $250 million, which is a common accounting treatment for acquired R&D assets.

Key Highlights

  • 1Johnson & Johnson completed the acquisition of Pfizer Consumer Healthcare for $16.6 billion in cash.
  • 2The transaction closed on December 20, 2006.
  • 3The acquisition is expected to reduce 2006 earnings per share (EPS) by approximately $0.02.
  • 4A gain related to the Tax Relief and Health Care Act of 2006 will partially offset the EPS reduction.
  • 5An estimated one-time after-tax in-process research and development (IPR&D) charge of $175 million to $250 million will be recorded in Q4 2006.
  • 6The acquisition represents a significant strategic expansion for Johnson & Johnson's consumer healthcare business.

Frequently Asked Questions

The primary purpose of this Form 8-K filing was to announce the closing of Johnson & Johnson's acquisition of Pfizer Consumer Healthcare.

The acquisition is projected to reduce Johnson & Johnson's 2006 earnings per share by approximately $0.02. This reduction will be partially offset by a gain related to the Tax Relief and Health Care Act of 2006.

An in-process research and development (IPR&D) charge is an accounting entry recognized when acquiring another company. It represents the estimated fair value of research and development projects that are in progress at the time of acquisition and have not yet reached technological feasibility. JNJ is recording this charge, estimated between $175 million and $250 million after-tax, in the fourth quarter of 2006 as part of the acquisition accounting.

Johnson & Johnson acquired Pfizer Consumer Healthcare for $16.6 billion in cash.