Consolidated Statements of Cash Flows See Notes to Consolidated Financial Statements JOHNSON & JOHNSON 2010 ANNUAL REPORT 44 (Dollars in Millions) (Note 1) 2010 2009 2008 Cash flows from operating activities Net earnings $13,334 12,266 12,949 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization of property and intangibles 2,939 2,774 2,832 Stock based compensation 614 628 627 Purchased in-process research and development — — 181 Deferred tax provision 356 (436) 22 Accounts receivable allowances 12 58 86 Changes in assets and liabilities, net of effects from acquisitions: (Increase)/decrease in accounts receivable (207) 453 (736) (Increase)/decrease in inventories (196) 95 (101) Increase/(decrease) in accounts payable and accrued liabilities 20 (507) (272) (Increase)/decrease in other current and non-current assets (574) 1,209 (1,600) Increase in other current and non-current liabilities 87 31 984 Net cash flows from operating activities 16,385 16,571 14,972 Cash flows from investing activities Additions to property, plant and equipment (2,384) (2,365) (3,066) Proceeds from the disposal of assets 524 154 785 Acquisitions, net of cash acquired (Note 20) (1,269) (2,470) (1,214) Purchases of investments (15,788) (10,040) (3,668) Sales of investments 11,101 7,232 3,059 Other (primarily intangibles) (38) (109) (83) Net cash used by investing activities (7,854) (7,598) (4,187) Cash flows from financing activities Dividends to shareholders (5,804) (5,327) (5,024) Repurchase of common stock (2,797) (2,130) (6,651) Proceeds from short-term debt 7,874 9,484 8,430 Retirement of short-term debt (6,565) (6,791) (7,319) Proceeds from long-term debt 1,118 9 1,638 Retirement of long-term debt (32) (219) (24) Proceeds from the exercise of stock options/excess tax benefits 1,226 882 1,486 Net cash used by financing activities (4,980) (4,092) (7,464) Effect of exchange rate changes on cash and cash equivalents (6) 161 (323) Increase in cash and cash equivalents 3,545 5,042 2,998 Cash and cash equivalents, beginning of year (Note 1) 15,810 10,768 7,770 Cash and cash equivalents, end of year (Note 1) $19,355 15,810 10,768 Supplemental cash flow data Cash paid during the year for: Interest $ 491 533 525 Income taxes 2,442 2,363 4,068 Supplemental schedule of noncash investing and financing activities Treasury stock issued for employee compensation and stock option plans, net of cash proceeds $ 673 541 593 Conversion of debt 1 2 — Acquisitions Fair value of assets acquired $ 1,321 3,345 1,328 Fair value of liabilities assumed and non-controlling interests (52) (875) (114) Net cash paid for acquisitions $ 1,269 2,470 1,214 Johnson & Johnson and Subsidiaries