10-K 1 y58008e10-k.txt JOHNSON & JOHNSON -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001 COMMISSION FILE NUMBER 1-3215 JOHNSON & JOHNSON (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW JERSEY 22-1024240 (State of (I.R.S. Employer Incorporation) Identification No.) ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (732) 524-0400 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common Stock, Par Value $1.00 New York Stock Exchange

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant on February 26, 2002 was approximately $181 billion. On February 26, 2002 there were 3,047,147,480 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts I and Portions of registrant's annual report to shareowners for II: fiscal year 2001. Part III: Portions of registrant's proxy statement for its 2002 annual meeting of shareowners. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART I

ITEM PAGE ---- ---- 1. Business.................................................... 1 General..................................................... 1 Segments of Business; Geographic Areas...................... 1 Consumer.................................................... 1 Pharmaceutical.............................................. 1 Medical Devices & Diagnostics............................... 2 International............................................... 2 Raw Materials............................................... 2 Patents and Trademarks...................................... 3 Seasonality................................................. 3 Competition................................................. 3 Research.................................................... 3 Environment................................................. 3 Regulation.................................................. 3 2. Properties.................................................. 4 3. Legal Proceedings........................................... 5 4. Submission of Matters to a Vote of Security Holders......... 5 Executive Officers of the Registrant........................ 5 PART II 5. Market for the Registrant's Common Equity and Related Shareowner Matters.......................................... 7 6. Selected Financial Data..................................... 7 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 7 7A. Quantitative and Qualitative Disclosures About Market Risk........................................................ 7 8. Financial Statements and Supplementary Data................. 7 9. Changes in and Disagreements on Accounting and Financial Disclosure.................................................. 7 PART III 10. Directors and Executive Officers of the Registrant.......... 8 11. Executive Compensation...................................... 8 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 8 13. Certain Relationships and Related Transactions.............. 8 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................................... 8 Signatures.................................................. 11 Report of Independent Accountants........................... 13 Exhibit Index............................................... 14

Form 10-Q Quarterly Reports Available. A copy of Johnson & Johnson's Quarterly Report on Form 10-Q for any of the first three quarters of the current fiscal year, without exhibits, will be provided without charge to any shareowner submitting a written request to the Secretary at the principal executive offices of the Company or by calling 800-328-9033. Each report will be available about 45 days after the end of the quarter to which it relates. PART I ITEM 1. BUSINESS GENERAL Johnson & Johnson, employing approximately 101,800 people worldwide, is engaged in the manufacture and sale of a broad range of products in the health care field. With over 190 operating companies, it conducts business in virtually all countries of the world. Johnson & Johnson's primary interest, both historically and currently, has been in products related to human health and well-being. Johnson & Johnson was organized in the State of New Jersey in 1887. Johnson & Johnson is organized on the principle of decentralized management. The Executive Committee of Johnson & Johnson is the principal management group responsible for the allocation of the resources of the Company. This Committee oversees and coordinates the activities of U.S. and international companies related to each of the Consumer, Pharmaceutical and Medical Devices & Diagnostics businesses. Each international subsidiary is, with some exceptions, managed by citizens of the country where it is located. SEGMENTS OF BUSINESS; GEOGRAPHIC AREAS Johnson & Johnson's worldwide business is divided into three segments: Consumer, Pharmaceutical and Medical Devices & Diagnostics. Additional information required by this item is incorporated herein by reference to the narrative and tabular (but not the graphic) descriptions of segments and geographic areas captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Segments of Business, Consumer, Pharmaceutical, Medical Devices & Diagnostics and Geographic Areas" on pages 27 through 29 and 49 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. CONSUMER The Consumer segment's principal products are personal care and hygienic products, including nonprescription drugs, adult skin and hair care products, baby care products, oral care products, first aid products and sanitary protection products. Major brands include AVEENO skin care products; BAND-AID Brand Adhesive Bandages; BENECOL food products; CAREFREE Panty Shields; CLEAN & CLEAR teen skin care products; IMODIUM A-D, an antidiarrheal; JOHNSON'S Baby line of products; JOHNSON'S pH 5.5 skin and hair care products; LACTAID lactose-intolerance products; MONISTAT, a remedy for vaginal yeast infections; adult and children's MOTRIN IB ibuprofen products; MYLANTA gastrointestinal products and PEPCID AC Acid Controller from the Johnson & Johnson - Merck Consumer Pharmaceuticals Co.; NEUTROGENA skin and hair care products; o.b. Tampons; PENATEN and NATUSAN baby care products; PIZ BUIN and SUNDOWN sun care products; REACH toothbrushes; RoC skin care products; SHOWER TO SHOWER personal care products; SPLENDA, a non-caloric sugar substitute; STAYFREE sanitary protection products; the broad family of TYLENOL acetaminophen products; and VIACTIV calcium supplements. These products are marketed principally to the general public and distributed both to wholesalers and directly to independent and chain retail outlets. PHARMACEUTICAL The Pharmaceutical segment's principal worldwide franchises are in the antifungal, anti-infective, cardiovascular, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, psychotropic, urology and women's health fields. These products are distributed both directly and through wholesalers for use by health care professionals and the general public. Prescription drugs in the antifungal field include NIZORAL (ketoconazole), SPORANOX (itraconazole), TERAZOL (terconazole) and DAKTARIN (miconazole nitrate) antifungal products. Prescription drugs in the anti-infective field include FLOXIN (ofloxacin) and LEVAQUIN (levofloxacin). Prescription drugs in the cardiovascular field include RETAVASE (reteplase), a recombinant biologic cardiology care product for the treatment of acute myocardial infarction to improve blood flow to the heart, and REOPRO (abciximab) for the treatment of acute cardiac disease. Prescription drugs in the dermatology field include RETIN-A MICRO (tretinoin), a dermatological cream for acne. Prescription drugs in the gastrointestinal field include ACIPHEX (rabeprazole sodium, sold outside the U.S. as PARIET), a proton pump inhibitor for treating erosive gastroesophageal reflux disease (GERD), symptomatic GERD and duodenal ulcers; IMODIUM (loperamide HCl), an antidiarrheal; MOTILIUM (domperidone), a gastrointestinal mobilizer; and REMICADE (infliximab), a novel monoclonal antibody for treatment of certain Crohn's disease patients. REMICADE is also indicated for the treatment of rheumatoid arthritis. Prescription drugs in the hematology field include PROCRIT (epoetin alfa, sold outside the U.S. as EPREX), a biotechnology derived version of the human hormone erythropoietin that stimulates red blood cell production, which accounted for 10.4% of the Company's total revenues in 2001. Prescription drugs in the immunology field include ORTHOCLONE OKT-3 (muromonab-CD3), for reversing the rejection of kidney, heart and liver transplants. Prescription drugs in the neurology field include REMINYL (galantamine), TOPAMAX (topiramate) and STUGERON (cinnarizine). Prescription drugs in the oncology field include DOXIL (doxorubicin), an anti-cancer treatment, ERGAMISOL (levamisole hydrochloride), a colon cancer drug, and LEUSTATIN (cladribine), for hairy cell leukemia. Prescription drugs in the pain management field include DURAGESIC (fentanyl transdermal system, sold abroad as DUROGESIC), a transdermal patch for chronic pain; ULTRACET (tramadol hydrochloride/acetaminophen) for the short-term management of acute pain; and ULTRAM (tramadol hydrochloride), an analgesic for moderate to moderately severe pain. Prescription drugs in the psychotropics (central nervous system) field include RISPERDAL (risperidone) and HALDOL (haloperidol), antipsychotic drugs, and CONCERTA (methylphenidate) for Attention Deficit/Hyperactivity Disorder. Prescription drugs in the urology field include DITROPAN XL (oxybutynin) for treatment of overactive bladder. Prescription drugs in the women's health field include ORTHO-NOVUM (norethindrone/ethinyl estradiol) and TRICILEST (norgestimate/ethinyl estradiol, sold in the U.S. as ORTHO TRI-CYCLEN) group of oral contraceptives and ORTHO-PREFEST (17 (beta)- estradiol/norgestimate) for hormone replacement therapy. In 2001, sales to three distributors, McKesson HBOC, Cardinal Distribution and AmerisourceBergen Corp. accounted for 10.4%, 10.3% and 10.2%, respectively, of total revenues. These sales were concentrated in the Pharmaceutical segment. MEDICAL DEVICES & DIAGNOSTICS The Medical Devices & Diagnostics segment includes a broad range of products used by or under the direction of health care professionals, including, suture and mechanical wound closure products, surgical equipment and devices, wound management and infection prevention products, interventional and diagnostic cardiology products, diagnostic equipment and supplies, joint replacements and disposable contact lenses. These products are used principally in the professional fields by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. Distribution to these markets is done both directly and through surgical supply and other dealers. INTERNATIONAL The international business of Johnson & Johnson is conducted by subsidiaries located in 54 countries outside the United States, which are selling products in more than 175 countries throughout the world. The products made and sold in the international business include many of those described above under "Business -- Consumer, Pharmaceutical and Medical Devices & Diagnostics." However, the principal markets, products and methods of distribution in the international business vary with the country and the culture. The products sold in the international business include not only those which were developed in the United States but also those which were developed by subsidiaries abroad. Investments and activities in some countries outside the United States are subject to higher risks than comparable domestic activities because the investment and commercial climate is influenced by restrictive economic policies and political uncertainties. RAW MATERIALS Raw materials essential to Johnson & Johnson's business are generally readily available from multiple sources. 2 PATENTS AND TRADEMARKS Johnson & Johnson has made a practice of obtaining patent protection on its products and processes where possible. Johnson & Johnson owns or is licensed under a number of patents relating to its products and manufacturing processes, which in the aggregate are believed to be of material importance in the operation of its business. However, it is believed that except for the patents related to PROCRIT/EXPREX, no single patent or related group of patents is material in relation to Johnson & Johnson as a whole. Johnson & Johnson has made a practice of selling its products under trademarks and of obtaining protection for these trademarks by all available means. Johnson & Johnson's trademarks are protected by registration in the United States and other countries where its products are marketed. Johnson & Johnson considers these trademarks in the aggregate to be of material importance in the operation of its business. SEASONALITY Worldwide sales do not reflect any significant degree of seasonality; however spending has been heavier in the fourth quarter of each year than in other quarters. This reflects increased spending decisions, principally for advertising and research grants. COMPETITION In all its product lines, Johnson & Johnson companies compete with companies both large and small, located in the United States and abroad. Competition is strong in all lines without regard to the number and size of the competing companies involved. Competition in research, involving the development of new products and processes and the improvement of existing products and processes, is particularly significant and results from time to time in product and process obsolescence. The development of new and improved products is important to Johnson & Johnson's success in all areas of its business. This competitive environment requires substantial investments in continuing research and in multiple sales forces. In addition, the winning and retention of customer acceptance of Johnson & Johnson's consumer products involve heavy expenditures for advertising, promotion and selling. RESEARCH Research activities are important to all segments of Johnson & Johnson's business. Major research facilities are located not only in the United States but also in Australia, Belgium, Brazil, Canada, Germany, Switzerland and the United Kingdom. The costs of Johnson & Johnson's worldwide research activities relating to the development of new products, the improvement of existing products, technical support of products and compliance with governmental regulations for the protection of the consumer amounted to $3,591, $3,105, and $2,768 million for fiscal years 2001, 2000 and 1999, respectively. These costs are charged directly to income in the year in which incurred. All research was sponsored by Johnson & Johnson. ENVIRONMENT During the past year Johnson & Johnson was subject to a variety of federal, state and local environmental protection measures. Johnson & Johnson believes that its operations comply in all material respects with applicable environmental laws and regulations. Johnson & Johnson's compliance with these requirements did not and is not expected to have a material effect upon its capital expenditures, earnings or competitive position. REGULATION Most of Johnson & Johnson's business is subject to varying degrees of governmental regulation in the countries in which operations are conducted, and the general trend is toward regulation of increasing stringency. In the United States, the drug, device, diagnostics and cosmetic industries have long been subject to regulation by various federal, state and local agencies, primarily as to product safety, efficacy, advertising and labeling. The exercise of broad regulatory powers by the Food and Drug Administration (the "FDA") 3 continues to result in increases in the amounts of testing and documentation required for FDA clearance of new drugs and devices and a corresponding increase in the expense of product introduction. Similar trends toward product and process regulation are also evident in a number of major countries outside of the United States, especially in the European Economic Community where efforts are continuing to harmonize the internal regulatory systems. The costs of human health care have been and continue to be a subject of study, investigation and regulation by governmental agencies and legislative bodies in the United States and other countries. In the United States, attention has been focused on drug prices and profits and programs that encourage doctors to write prescriptions for particular drugs or recommend particular medical devices. Even in the absence of new government regulation, managed care has become a more potent force in the market place and it is likely that increased attention will be paid to drug and medical device pricing, appropriate drug and medical device utilization and the quality of health care. The regulatory agencies under whose purview Johnson & Johnson operates have administrative powers that may subject Johnson & Johnson to such actions as product recalls, seizure of products and other civil and criminal sanctions. In some cases Johnson & Johnson may deem it advisable to initiate product recalls voluntarily. ITEM 2. PROPERTIES Johnson & Johnson and its worldwide subsidiaries operate 148 manufacturing facilities occupying approximately 17 million square feet of floor space. The manufacturing facilities are used by the industry segments of Johnson & Johnson's business approximately as follows:

SQUARE FEET SEGMENT (IN THOUSANDS) ------- -------------- Consumer.................................................... 5,144 Pharmaceutical.............................................. 5,008 Medical Devices & Diagnostics............................... 6,848 ------ Worldwide total................................... 17,000 ======

Within the United States, 10 facilities are used by the Consumer segment, 13 by the Pharmaceutical segment and 46 by the Medical Devices & Diagnostics segment. Johnson & Johnson's manufacturing operations outside the United States are often conducted in facilities which serve more than one segment of the business. The locations of the manufacturing facilities by major geographic areas of the world are as follows:

NUMBER OF SQUARE FEET GEOGRAPHIC AREA FACILITIES (IN THOUSANDS) --------------- ---------- -------------- United States............................................... 69 7,426 Europe...................................................... 34 5,296 Western Hemisphere excluding U.S.A.......................... 17 2,606 Africa, Asia and Pacific.................................... 28 1,672 --- ------ Worldwide total................................... 148 17,000 === ======

In addition to the manufacturing facilities discussed above, Johnson & Johnson maintains numerous office and warehouse facilities throughout the world. Research facilities are also discussed in Item 1 under "Business -- Research." Johnson & Johnson generally seeks to own its manufacturing facilities, although some, principally in locations abroad, are leased. Office and warehouse facilities are often leased. 4 Johnson & Johnson's properties are maintained in good operating condition and repair and are well utilized. For information regarding lease obligations see Note 4 "Rental Expense and Lease Commitments" under "Notes to Consolidated Financial Statements" on page 37 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. Segment information on additions to Johnson & Johnson's property, plant and equipment is contained on page 49 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. ITEM 3. LEGAL PROCEEDINGS The information set forth in Note 18 "Legal Proceedings" under "Notes to Consolidated Financial Statements" on page 46 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001 is incorporated herein by reference. The Company or its subsidiaries are parties to a number of proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state laws, in which the primary relief sought is the cost of past and future remediation. While it is not feasible to predict or determine the outcome of these proceedings, in the opinion of the Company, such proceedings would not have a material adverse effect on the results of operations, cash flows or financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT Listed below are the executive officers of Johnson & Johnson as of March 18, 2002, each of whom, unless otherwise indicated below, has been an employee of the Company or its affiliates and held the position indicated during the past five years. There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected. At the annual meeting of the Board of Directors which follows the Annual Meeting of Shareowners executive officers are elected by the Board to hold office for one year and until their respective successors are elected and qualified, or until earlier resignation or removal. Information with regard to the directors of the Company, including those of the following executive officers who are directors, is incorporated herein by reference to pages 4 through 8 of Johnson & Johnson's Proxy Statement dated March 13, 2002.

NAME AGE POSITION ---- --- -------- Robert J. Darretta..................... 55 Member, Board of Directors; Member, Executive Committee; Vice President, Finance Russell C. Deyo........................ 52 Member, Executive Committee; Vice President, Administration(a) Michael J. Dormer...................... 50 Member, Executive Committee; Franchise Group Chairman for Medical Devices(b) Roger S. Fine.......................... 59 Member, Executive Committee; Vice President, General Counsel(c) Colleen A. Goggins..................... 47 Member, Executive Committee; Worldwide Chairman, Consumer & Personal Care Group(d) JoAnn Heffernan Heisen................. 52 Member, Executive Committee; Vice President, Chief Information Officer(e) Ralph S. Larsen........................ 63 Chairman, Board of Directors and Chief Executive Officer; Chairman, Executive Committee(f)

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NAME AGE POSITION ---- --- -------- James T. Lenehan....................... 53 Vice Chairman, Board of Directors; Member, Executive Committee; Worldwide Chairman, Medical Devices & Diagnostics Group Brian D. Perkins....................... 48 Member, Executive Committee; Worldwide Chairman, Consumer Pharmaceuticals & Nutritionals Group(g) Per A. Peterson, M.D., Ph.D. .......... 57 Member, Executive Committee; Chairman, Research & Development, Pharmaceuticals Group(h) Christine A. Poon...................... 49 Member, Executive Committee; Worldwide Chairman, Pharmaceuticals Group(i) William C. Weldon...................... 53 Vice Chairman, Board of Directors; Member, Executive Committee Robert N. Wilson....................... 61 Senior Vice Chairman, Board of Directors; Vice Chairman Executive Committee

--------------- (a) Mr. R. C. Deyo joined the Company in 1985 and became Associate General Counsel in 1991. He became a Member of the Executive Committee and Vice President, Administration in 1996. (b) Mr. M. J. Dormer joined the Company in 1998 as Company Group Chairman, Worldwide Franchise Chairman for DePuy and Codman, when the Company acquired DePuy, Inc. At the time of that acquisition, he had been Chief Operating Officer of DePuy, Inc. since 1996. Mr. Dormer served as President of DePuy International Ltd. from 1992 to 1996. Mr. Dormer became a Member of the Executive Committee and Franchise Group Chairman for Medical Devices in February 2001. Mr. Dormer is expected to be named Worldwide Chairman, Medical Devices & Diagnostics Group, at the annual meeting of the Board of Directors. (c) Mr. R. S. Fine joined the Company in 1974 and became a Member of the Executive Committee and Vice President, Administration in 1991 and Vice President, General Counsel in 1996. (d) Ms. Goggins joined the Company in 1981 and held various positions before becoming President of Personal Products Company in 1994. She was named President of Johnson & Johnson Consumer Products Company in 1995 and Company Group Chairman, North America, Johnson & Johnson Consumer Products in 1998. Ms. Goggins became a Member of the Executive Committee and Worldwide Chairman, Consumer & Personal Care Group in June 2001. (e) Ms. J. H. Heisen joined the Company in 1989 and became Treasurer in 1991 and Controller in 1995. She became a Member of the Executive Committee and Vice President, Chief Information Officer in 1997. (f) Mr. Larsen assumed his present responsibilities as Chairman, Board of Directors, and Chief Executive Officer in 1989. Mr. Larsen has announced his decision to retire from the Company as of July 1, 2002, and is not seeking re-election to the Board of Directors at the Annual Meeting of Shareowners. He joined the Company in 1962 as a manufacturing trainee with Johnson & Johnson Products, Inc. and has held numerous positions in the Company. Mr. Larsen was appointed Company Group Chairman in 1986 before being appointed Vice Chairman of the Executive Committee and Chairman of a Sector Operating Committee later in 1986. Mr. Larsen was elected to the Board of Directors in 1987. (g) Mr. B. D. Perkins joined the Company in 1980 and held various positions before becoming President of McNeil Consumer Products Company in 1994 and Company Group Chairman for OTC Pharmaceuticals in 1999. He became a Member of the Executive Committee and Worldwide Chairman, Consumer Pharmaceuticals & Nutritionals Group in 1999. (h) Dr. P. A. Peterson joined the Company in 1994 as Vice President, Drug Discovery, of The R.W. Johnson Pharmaceutical Research Institute. He was named Group Vice President of The Pharmaceutical Research Institute in April 1998 and its President in November 1998. In 2000, Dr. Peterson was named Chairman, Research & Development, Pharmaceuticals Group. Dr. Peterson became a Member of the Executive Committee in August 2001 and serves as President of Johnson & Johnson Pharmaceutical Research & Development, L.L.C. 6 (i) Ms. Poon joined the Company in November 2000 as a Company Group Chairman in the Pharmaceuticals Group. Ms. Poon became a Member of the Executive Committee and Worldwide Chairman, Pharmaceuticals Group in August 2001. Prior to joining the Company, she served in various management positions at Bristol-Myers Squibb for 15 years, most recently as President of International Medicines (1998 - 2000) and President of Medical Devices (1997 - 1998). PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREOWNER MATTERS The information called for by this item is incorporated herein by reference to the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Common Stock Market Prices and Cash Dividends Paid" on page 31 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. ITEM 6. SELECTED FINANCIAL DATA The information called for by this item is incorporated herein by reference to the material captioned "Summary of Operations and Statistical Data 1991-2001" on page 50 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information called for by this item is incorporated herein by reference to the narrative and tabular (but not the graphic) material included in the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 25 through 31 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. In February 2002, the Board of Directors approved a stock repurchase program, authorizing the Company to buy back up to $5 billion of its common stock on the open market. As of March 15, 2002, 13,387,800 shares had been repurchased pursuant to the program, with an average per share price of $60.83. The repurchase program has no time limit and may be suspended for periods or discontinued. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information called for by this item is incorporated herein by reference to the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Financial Instruments" on page 30 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this item is incorporated herein by reference to the Consolidated Financial Statements and the Notes thereto and the material captioned "Independent Auditor's Report" on pages 32 through 48 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 7 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information called for by this item is incorporated herein by reference to (a) the material under the caption "Election of Directors -- Nominees" on pages 3 through 8 of Johnson & Johnson's Proxy Statement dated March 13, 2002, (b) the material in Part I hereof under the caption "Executive Officers of the Registrant" and (c) the material under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" on page 10 of Johnson & Johnson's Proxy Statement dated March 13, 2002. ITEM 11. EXECUTIVE COMPENSATION The information called for by this item is incorporated herein by reference to the following sections of Johnson & Johnson's Proxy Statement dated March 13, 2002: "Election of Directors -- Directors' Fees, Committees and Meetings" on pages 9 through 10; "Compensation Committee Report on Executive Compensation" on pages 11 through 15; "Shareowner Return Performance Graph" on page 16; and "Executive Compensation" on pages 17 through 21. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information called for by this item is incorporated herein by reference to the material captioned "Election of Directors -- Stock Ownership/Control" on pages 8 through 9 of Johnson & Johnson's Proxy Statement dated March 13, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report 1. Financial Statements The following Consolidated Financial Statements and the Notes thereto and the Independent Auditor's Report on pages 32 through 48 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2001 are incorporated herein by reference: Consolidated Balance Sheets at end of Fiscal Years 2001 and 2000 Consolidated Statements of Earnings for Fiscal Years 2001, 2000 and 1999 Consolidated Statements of Equity for Fiscal Years 2001, 2000 and 1999 Consolidated Statements of Cash Flows for Fiscal Years 2001, 2000 and 1999 Notes to Consolidated Financial Statements Independent Auditor's Report 2. Financial Statement Schedules Schedule II -- Valuation and Qualifying Accounts Schedules other than those listed above are omitted because they are not required or are not applicable. 8 3. Exhibits Required to be Filed by Item 60l of Regulation S-K The information called for by this item is incorporated herein by reference to the Exhibit Index in this report. (b) Reports on Form 8-K A Report on Form 8-K was filed on October 22, 2001, which included the press release announcing the Company's sales and earnings for the fiscal quarter ended September 30, 2001. A Report on Form 8-K was filed on November 27, 2001, which included a press release announcing the completion of the Company's acquisition of Inverness Medical Technology, Inc.'s diabetes care products business. A Report on Form 8-K/A was filed on November 30, 2001, amending the Form 8-K filed on November 27. 9 JOHNSON & JOHNSON AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS FISCAL YEARS ENDED DECEMBER 30, 2001, DECEMBER 31, 2000 AND JANUARY 2, 2000(A) (DOLLARS IN MILLIONS)

ADDITIONS BALANCE AT CHARGED DEDUCTIONS FROM RESERVES BALANCE BEGINNING TO COSTS AND --------------------------------------- AT END OF PERIOD EXPENSES(B) DESCRIPTION AMOUNT OF PERIOD ---------- ------------ ----------- ------ --------- 2001 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $182 66 Write-offs less recoveries..... 43 Currency adjustments........... 8 197 Reserve for customer rebates................ 188 1,543 Customer rebates allowed....... 1,475 Currency adjustments........... 4 252 Reserve for cash discounts.............. 69 557 Cash discounts allowed......... 550 Currency adjustments........... 2 74 ---- ----- ----- --- $439 2,166 2,082 523 ==== ===== ===== === 2000 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $206 89 Write-offs less recoveries..... 106 Currency adjustments........... 7 182 Reserve for customer rebates................ 140 1,220 Customer rebates allowed....... 1,170 Currency adjustments........... 2 188 Reserve for cash discounts.............. 61 494 Cash discounts allowed......... 484 Currency adjustments........... 2 69 ---- ----- ----- --- $407 1,803 1,771 439 ==== ===== ===== === 1999 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $188 90 Write-offs less recoveries..... 91 Currency adjustments........... (19) 206 Reserve for customer rebates................ 157 1,033 Customer rebates allowed....... 1,056 Currency adjustments........... (6) 140 Reserve for cash discounts.............. 47 520 Cash discounts allowed......... 506 61 ---- ----- ----- --- $392 1,643 1,628 407 ==== ===== ===== ===

--------------- (A) This schedule has been prepared to give retroactive effect to the merger between Johnson & Johnson and ALZA on June 22, 2001. (B) Charges related to customer rebates and cash discounts are reflected as reductions of sales to customers. 10 SIGNATURES Pursuant to the requirements of Section 13 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. Date: March 19, 2002 JOHNSON & JOHNSON -------------------------------------- (Registrant) By /s/ R. S. LARSEN ------------------------------------ R. S. Larsen, Chairman, Board of Directors and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE --------- ----- ---- /s/ R. S. LARSEN Chairman, Board of Directors and March 19, 2002 ------------------------------------------ Chief Executive Officer, and R. S. Larsen Director (Principal Executive Officer) /s/ R. J. DARRETTA Vice President -- Finance March 12, 2002 ------------------------------------------ and Director (Principal Financial R. J. Darretta Officer) /s/ S. J. COSGROVE Controller March 19, 2002 ------------------------------------------ S. J. Cosgrove /s/ G. N. BURROW Director March 19, 2002 ------------------------------------------ G. N. Burrow /s/ J. G. COONEY Director March 15, 2002 ------------------------------------------ J. G. Cooney /s/ J. G. CULLEN Director March 17, 2002 ------------------------------------------ J. G. Cullen /s/ M. J. FOLKMAN Director March 16, 2002 ------------------------------------------ M. J. Folkman /s/ A. D. JORDAN Director March 15, 2002 ------------------------------------------ A. D. Jordan /s/ A. G. LANGBO Director March 13, 2002 ------------------------------------------ A. G. Langbo

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SIGNATURE TITLE DATE --------- ----- ---- /s/ J.T. LENEHAN Vice Chairman, Board of Directors March 19, 2002 ------------------------------------------ and Director J.T. Lenehan /s/ J. S. MAYO Director March 14, 2002 ------------------------------------------ J. S. Mayo /s/ L.F. MULLIN Director March 18, 2002 ------------------------------------------ L.F. Mullin /s/ H. B. SCHACHT Director March 12, 2002 ------------------------------------------ H. B. Schacht /s/ M. F. SINGER Director March 12, 2002 ------------------------------------------ M. F. Singer /s/ J. W. SNOW Director March 19, 2002 ------------------------------------------ J. W. Snow /s/ W.C. WELDON Vice Chairman, Board of Directors March 19, 2002 ------------------------------------------ and Director W.C. Weldon /s/ R. N. WILSON Senior Vice Chairman, Board of March 19, 2002 ------------------------------------------ Directors and Director R. N. Wilson

12 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Shareowners and Board of Directors of Johnson & Johnson: Our audits of the consolidated financial statements referred to in our report dated January 21, 2002 appearing in the Johnson & Johnson Annual Report to Shareowners for the fiscal year ended December 30, 2001 (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP New York, New York January 21, 2002 13 EXHIBIT INDEX

REG. S-K EXHIBIT TABLE DESCRIPTION ITEM NO. OF EXHIBIT ------------- ----------- 3(a)(i) Restated Certificate of Incorporation dated April 26, 1990 -- Incorporated herein by reference to Exhibit 3(a) of the Registrant's Form 10-K Annual Report for the year ended December 30, 1990. 3(a)(ii) Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated May 20, 1992 -- Incorporated herein by reference to Exhibit 3(a) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993. 3(a)(iii) Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated May 21, 1996 -- Incorporated herein by reference to Exhibit 3(a)(iii) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996. 3(a)(iv) Certificate of Amendment to the Restated Certificate of Incorporation of the Company effective May 22, 2001 -- Incorporated herein by reference to Exhibit 3 of the Registrant's Form 10-Q Quarterly Report for the quarter ended July 1, 2001. 3(b) By-Laws of the Company, as amended effective June 11, 2001 -- Incorporated herein by reference to Exhibit 99.2 of the Registrant's Form 10-Q Quarterly Report for the quarter ended July 1, 2001. 4(a) Upon the request of the Securities and Exchange Commission, the Registrant will furnish a copy of all instruments defining the rights of holders of long term debt of the Registrant. 10(a) Stock Option Plan for Non-Employee Directors -- Incorporated herein by reference to Exhibit 10(a) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(b) 2000 Stock Option Plan -- Incorporated herein by reference to Exhibit 10(b) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(c) 1995 Stock Option Plan (as amended) -- Incorporated herein by reference to Exhibit 10(b) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1999.* 10(d) 1991 Stock Option Plan (as amended) -- Incorporated herein by reference to Exhibit 10(c) of the Registrant's Form 10-K Annual Report for the year ended December 28, 1997.* 10(e) 2000 Stock Compensation Plan -- Incorporated herein by reference to Exhibit 10(e) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(f) Executive Incentive Plan (as amended) -- Incorporated herein by reference to Exhibit 10(f) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(g) Domestic Deferred Compensation (Certificate of Extra Compensation) Plan (as amended) -- Filed with this document.* 10(h) Deferred Fee Plan for Directors (as amended) -- Incorporated herein by reference to Exhibit 10(h) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(i) Executive Income Deferral Plan (as amended) -- Incorporated herein by reference to Exhibit 10(i) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 10(j) Excess Savings Plan -- Incorporated herein by reference to Exhibit 10(j) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(k) Supplemental Retirement Plan -- Incorporated herein by reference to Exhibit 10(h) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.* 10(l) Executive Life Insurance Plan -- Incorporated herein by reference to Exhibit 10(i) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.*

14

REG. S-K EXHIBIT TABLE DESCRIPTION ITEM NO. OF EXHIBIT ------------- ----------- 10(m) Stock Option Gain Deferral Plan -- Incorporated herein by reference to Exhibit 10(m) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 10(n) Estate Preservation Plan -- Incorporated herein by reference to Exhibit 10(n) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges -- Filed with this document. 13 -- Pages 25 through 50 of the Company's Annual Report to Shareowners for fiscal year 2001 (only those portions of the Annual Report incorporated by reference in this report are deemed "filed") -- Filed with this document. 21 -- Subsidiaries -- Filed with this document. 23 -- Consent of Independent Accountants -- Filed with this document. 99(a) -- Annual Reports on Form 11-K for the Johnson & Johnson Savings Plans, to be filed on or before June 30, 2002. 99(b) -- Cautionary Statement pursuant to Private Securities Litigation Reform Act of 1995: "Safe Harbor" for Forward-Looking Statements -- Filed with this document.

--------------- * Management contracts and compensatory plans and arrangements required to be filed as Exhibits to this form pursuant to Item 14(c) of the report. A copy of any of the Exhibits listed above will be provided without charge to any shareowner submitting a written request specifying the desired exhibit(s) to the Secretary at the principal executive offices of the Company. 15