-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TPoeAazXmLkqO9o/kkXG6CmjhZCDKaLlziuVErt0y6BEJktelmdhcZRu1s6t4uYA vuM5aZKsHK7G9ELi435Nyw== 0000950123-98-006333.txt : 19980630 0000950123-98-006333.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950123-98-006333 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971228 FILED AS OF DATE: 19980629 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSON & JOHNSON CENTRAL INDEX KEY: 0000200406 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221024240 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-03215 FILM NUMBER: 98656824 BUSINESS ADDRESS: STREET 1: ONE JOHNSON & JOHNSON PLZ CITY: NEW BRUNSWICK STATE: NJ ZIP: 08933 BUSINESS PHONE: 9085240400 10-K405/A 1 AMENDMENT 1 TO FORM 10-K RE: JOHNSON & JOHNSON 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 28, 1997 Commission file number 1-3215 JOHNSON & JOHNSON (Exact name of registrant as specified in its charter) New Jersey 22-l024240 (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 Name of each exchange on Title of each class 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 [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant on February 24, 1998 was approximately $97.4 billion. On February 24, 1998 there were 1,346,454,644 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts I and II: Portions of registrant's annual report to shareowners for fiscal year 1997. Part III: Portions of registrant's proxy statement for its 1998 annual meeting of shareowners. 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 [ X ] 2 SIGNATURES Pursuant to the requirements of Section l3 of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 15, 1998 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 l934, this report has been duly signed 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 R. S. Larsen Chief Executive Officer, and Director (Principal Executive Officer) June 15, 1998 /s/ R. J. Darretta Vice President-Finance - --------------------------- (Principal Financial R. J. Darretta Officer) June 15, 1998 /s/ C. E. Lockett Controller June 15, 1998 - --------------------------- C. E. Lockett /s/ G. N. Burrow Director June 15, 1998 - --------------------------- G. N. Burrow /s/ J. G. Cooney Director June 15, 1998 - --------------------------- J. G. Cooney /s/ J. G. Cullen Director June 15, 1998 - --------------------------- J. G. Cullen Director June , 1998 - --------------------------- M. J. Folkman 1 3 Signature Title Date --------- ----- ---- /s/ A. D. Jordan Director June 15, 1998 - --------------------------- A. D. Jordan /s/ A. G. Langbo Director June 17, 1998 - --------------------------- A. G. Langbo /s/ J. S. Mayo Director June 15, 1998 - --------------------------- J. S. Mayo /s/ P. J. Rizzo Director June 12, 1998 - --------------------------- P. J. Rizzo /s/ R. B. Schact Director June 15, 1998 - --------------------------- R. B. Schact /s/ M. F. Singer Director June 15, 1998 - --------------------------- M. F. Singer /s/ J. W. Snow Director June 12, 1998 - --------------------------- J. W. Snow /s/ R. N. Wilson Vice Chairman June 15, 1998 - --------------------------- Board of Directors R. N. Wilson and Director 2 4 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(b) By-Laws of the Company, as amended October 20, 1997 -- (1). 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) 1995 Stock Option Plan (as amended) -- (1).* 10(c) 1991 Stock Option Plan -- (1).* 10(d) 1986 Stock Option Plan (as amended) -- (1).* 10(e) 1995 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, 1995.* 10(f) Executive Incentive Plan -- Incorporated herein by reference to Exhibit 10(f) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(g) Domestic Deferred Compensation Plan (as amended) -- Incorporated herein by reference to Exhibit 10(g) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 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 -- (1).* 10(j) Excess Savings Plan -- Incorporated herein by reference to Exhibit 10(j) or 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.* 11 -- Calculation of Earnings Per Share -- (1). 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges -- (1). 3 5 13 -- Pages 26-45 of the Company's Annual Report to Shareowners for fiscal year 1997 (only those portions of the Annual Report incorporated by reference in this document are deemed "filed") -- (1). 21 -- Subsidiaries -- (1). 27 -- Financial Data Schedule for Year Ended December 28, 1997- (1). 99(a)(i) -- Form 11-K for the Johnson & Johnson Savings Plan -- Filed with this document. 99(a)(ii) -- Form 11-K for the Johnson & Johnson Retirement Savings Plan -- Filed with this document. 99(a)(iii) -- Form 11-K for the Johnson & Johnson Savings Plan for Union Represented Employees -- Filed with this document. 99(b) -- Cautionary Statement under Private Securities Litigation Reform Act of 1995: "Safe Harbor" for Forward-Looking Statements -- (1). - ------------------ (1) Incorporated herein by reference to the Exhibit bearing the same Exhibit Number in Registrant's Form 10-K Annual Report for the fiscal year ended December 28, 1997. * 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 stockholder submitting a written request specifying the desired exhibit(s) to the Secretary at the principal executive offices of the Company. 4 EX-99.A.I 2 FORM 11-K RE: SAVINGS PLAN 1 Exhibit 99(a)(i) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ------------------------------ [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended December 28, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 1-3215 ------------------------------ JOHNSON & JOHNSON SAVINGS PLAN (Full title of the Plan) JOHNSON & JOHNSON ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) 2 Item 4. Financial Statements and Exhibits Report of Independent Accountants Financial Statements: Statements of Net Assets Available for Benefits, with Fund Information as of December 31, 1997 and 1996 Statements of Changes in Net Assets Available for Benefits, with Fund Information for the years ended December 31, 1997 and 1996 Notes to Financial Statements Supplemental Schedules: Schedule of Assets Held For Investment Purposes at December 31, 1997 Schedule of Reportable Transactions for the year ended December 31, 1997 Schedule of Nonexempt Transactions for the year ended December 31, 1997 Consent of Coopers & Lybrand L.L.P., dated June 25, 1998 The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. JOHNSON & JOHNSON SAVINGS PLAN By: /s/ R.J. Darretta ------------------------------------ R. J. Darretta Chairman, Pension Committee June 25, 1998 3 JOHNSON & JOHNSON SAVINGS PLAN ----------- FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES as of and for the years ended December 31, 1997 and 1996 4 JOHNSON & JOHNSON SAVINGS PLAN INDEX Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Benefits, with Fund Information as of December 31, 1997 and 1996 3-4 Statements of Changes in Net Assets Available for Benefits, with Fund Information for the years ended December 31, 1997 and 1996 5-6 Notes to Financial Statements 7-16 Supplemental Schedules: Item 27a - Schedule of Assets Held For Investment Purposes at December 31, 1997 17-18 Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1997 19 Item 27e - Schedule of Nonexempt Transactions for the year ended December 31, 1997 20 1 5 REPORT OF INDEPENDENT ACCOUNTANTS To the Pension and Benefits Committees of Johnson & Johnson We have audited the accompanying statements of net assets available for benefits of the Johnson & Johnson Savings Plan (the "Savings Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Savings Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Savings Plan as of December 31, 1997 and 1996 and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules as listed in the accompanying index on page 1 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Savings Plan's management. The Fund Information in the statements of net assets available for benefits and the related statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the statements of net assets available for benefits and statements of changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Parsippany, New Jersey June 5, 1998 2 6 JOHNSON & JOHNSON SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION As of December 31, 1997
PARTICIPANT DIRECTED ------------------------------------------------------------------------------ Fixed Intermediate USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund --------- ------------- --------- ------------- -------------- ASSETS: Deposits in Group Annuity Contracts (Note 2) $618,816,847 Investments at Fair Value (Notes 2 and 6) $863,403,779 Investments in Master Trust (Notes 2 and 6) $22,798,607 $21,239,435 $113,720,679 Accrued Dividends and Interest Receivable 109,788 2,936,334 6,689 Due from Johnson & Johnson Assets Designated for Transfer (Note 2) Hardship Loans to Participants ----------- ------------ ----------- ------------ ------------ Total Assets $22,908,395 $621,753,181 $21,239,435 $113,720,679 $863,410,468 ----------- ------------ ----------- ------------ ------------ LIABILITIES Accrued Expenses $7,554 $47,213 $1,613 $8,551 $65,789 Accrued Interest Long-Term Note Payable to J&J ----------- ------------ ----------- ------------ ------------ Total Liabilities $7,554 $47,213 $1,613 $8,551 $65,789 ----------- ------------ ----------- ------------ ------------ Net Assets Available for Benefits $22,900,841 $621,705,968 $21,237,822 $113,712,128 $863,344,679 =========== ============ =========== ============ ============
PARTICIPANT DIRECTED Employee Stock Ownership ------------ Plan Trust Fund Diversified -------------------------- Total Equity Fund Loan Fund Allocated Unallocated Savings Plan ----------- --------- --------- ----------- ------------ ASSETS: Deposits in Group Annuity Contracts (Note 2) $618,816,847 Investments at Fair Value (Notes 2 and 6) $185,020,811 $205,169,746 1,253,594,336 Investments in Master Trust (Notes 2 and 6) $552,371,482 710,130,203 Accrued Dividends and Interest Receivable $39,604 11,490 11,832 3,115,737 Due from Johnson & Johnson 6,993,782 6,993,782 Assets Designated for Transfer (Note 2) 22,719,748 (22,719,748) Hardship Loans to Participants 7,285,354 7,285,354 ------------ ---------- ------------ ------------ -------------- Total Assets $552,371,482 $7,324,958 $207,752,049 $189,455,612 $2,599,936,259 ------------ ---------- ------------ ------------ -------------- LIABILITIES Accrued Expenses 308,705 $439,425 Accrued Interest $4,739,412 4,739,412 Long-Term Note Payable to J&J 60,183,026 60,183,026 ------------ ---------- ------------ ------------ -------------- Total Liabilities $308,705 $ $ $64,922,438 $65,361,863 ------------ ---------- ------------ ------------ -------------- Net Assets Available for Benefits $552,062,777 $7,324,958 $207,752,049 $124,533,174 $2,534,574,396 ============ ========== ============ ============ ==============
See Notes to Financial Statements 3 7 JOHNSON & JOHNSON SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION As of December 31, 1996
PARTICIPANT DIRECTED --------------------------------------------------------------------------------- Fixed Intermediate USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund ASSETS: Deposits in Group Annuity Contracts (Note 2) $610,823,219 Investments at Fair Value (Notes 2 and 6) $607,192,136 Investments in Master Trust (Notes 2 and 6) $17,256,196 $16,738,962 $76,500,266 Accrued Dividends and Interest Receivable 80,446 2,851,698 7,966 Due from Johnson & Johnson Assets Designated for Transfer (Note 2) Hardship Loans to Participants ----------- ------------ ----------- ----------- ------------ Total Assets $17,336,642 $613,674,917 $16,738,962 $76,500,266 $607,200,102 ----------- ------------ ----------- ----------- ------------ LIABILITIES Accrued Expenses $1,997 $72,108 $1,798 $9,188 $71,309 Accrued Interest Long-Term Note Payable to J&J ----------- ------------ ----------- ----------- ------------ Total Liabilities $1,997 $72,108 $1,798 $9,188 $71,309 ----------- ------------ ----------- ----------- ------------ Net Assets Available for Benefits $17,334,645 $613,602,809 $16,737,164 $76,491,078 $607,128,793 =========== ============ =========== =========== ============
PARTICIPANT DIRECTED Employee Stock Ownership ----------- Plan Trust Fund Diversified ------------------------- Total Equity Fund Loan Fund Allocated Unallocated Savings Plan ----------- --------- --------- ----------- ------------ ASSETS: Deposits in Group Annuity Contracts (Note 2) $610,823,219 Investments at Fair Value (Notes 2 and 6) $123,998,633 $180,197,654 911,388,423 Investments in Master Trust (Notes 2 and 6) $368,472,950 478,968,374 Accrued Dividends and Interest Receivable $8,703 8,127 11,127 2,968,067 Due from Johnson & Johnson 7,927,197 7,927,197 Assets Designated for Transfer (Note 2) 17,933,605 (17,933,605) Hardship Loans to Participants 5,254,804 5,254,804 ------------ ---------- ------------ ----------- -------------- Total Assets $368,472,950 $5,263,507 $141,940,365 $170,202,373 $2,017,330,084 ------------ ---------- ------------ ----------- -------------- LIABILITIES Accrued Expenses $243,228 $399,628 Accrued Interest $5,243,161 5,243,161 Long-Term Note Payable to J&J 66,579,822 66,579,822 ------------ ---------- ------------ ----------- -------------- Total Liabilities $243,228 $ $ $71,822,983 $72,222,611 ------------ ---------- ------------ ----------- -------------- Net Assets Available for Benefits $368,229,722 $5,263,507 $141,940,365 $98,379,390 $1,945,107,473 ============ ========== ============ =========== ==============
See Notes to Financial Statements 4 8 JOHNSON & JOHNSON SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Year Ended December 31, 1997
PARTICIPANT DIRECTED ------------------------------------------------------------------------ Fixed Intermediate USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund --------- ------------- --------- ------------- -------------- Employee Contributions (Note 3) $ 1,587,946 $ 24,359,500 $ 2,923,806 $12,382,348 $ 49,870,192 Employer Contributions (Notes 3 and 9) 441,620 7,810,225 756,321 3,424,156 14,560,769 Interest 1,233,400 42,326,583 1,275,752 2,815,794 95,494 Dividends 10,720,471 ----------- ------------ ----------- ------------ ------------ 3,262,966 74,496,308 4,955,879 18,622,298 75,246,926 Additions to (Deductions From) Net Assets: Cordis Transfer-In (Note 1) 7,931,904 1,049,127 693,369 3,045,445 12,418,643 Menlo Care Transfer-In (Note 1) 244,487 70,076 54,188 172,298 180,472 Payments to Participants (Note 4) (3,113,513) (32,375,500) (987,355) (3,699,437) (35,963,105) Change in Unrealized Net Appreciation of Investments 185,025 2,943,813 172,408,761 Realized Net Gain on Sale of Investments 267,240 9,774,931 27,728,168 Interest Expense Administrative Expenses (21,462) (490,367) (57,967) (450,213) (553,079) Assets Transferred (Note 2) (2,738,186) (34,646,485) (609,721) 6,811,915 4,749,100 ----------- ------------ ----------- ------------ ------------ Net Increase 5,566,196 8,103,159 4,500,658 37,221,050 256,215,886 Net Assets Available for Benefits, Beginning of Year 17,334,645 613,602,809 16,737,164 76,491,078 607,128,793 ----------- ------------ ----------- ------------ ------------ Net Assets Available for Benefits, End of Year $22,900,841 $621,705,968 $21,237,822 $113,712,128 $863,344,679 =========== ============ =========== ============ ============
PARTICIPANT DIRECTED Employee Stock Ownership ----------- Plan Trust Fund Diversified ------------------------ Total Equity Fund Loan Fund Allocated Unallocated Savings Plan ----------- --------- --------- ----------- ------------ Employee Contributions (Note 3) $ 32,332,066 $123,455,858 Employer Contributions (Notes 3 and 9) 9,354,640 $6,993,782 43,341,513 Interest $ 721,709 $ 77,543 85,759 48,632,034 Dividends 6,903,774 587,252 4,407,672 22,619,169 ------------ ---------- ------------ ------------ -------------- 48,590,480 721,709 664,795 11,487,213 238,048,574 Additions to (Deductions From) Net Assets: Cordis Transfer-In (Note 1) 9,267,835 2,435,281 36,841,604 Menlo Care Transfer-In (Note 1) 196,912 806 919,239 Payments to Participants (Note 4) (17,964,449) (1,096,345) (5,596,151) (100,795,855) Change in Unrealized Net Appreciation of Investments 47,183,005 54,780,550 32,129,331 309,630,485 Realized Net Gain on Sale of Investments 71,310,358 4,148,349 113,229,046 Interest Expense (5,488,436) (5,488,436) Administrative Expenses (1,344,646) (2,917,734) Assets Transferred (Note 2) 26,593,560 11,814,141 (11,974,324) ------------ ---------- ------------ ------------ -------------- Net Increase 183,833,055 2,061,451 65,811,684 26,153,784 589,466,923 Net Assets Available for Benefits, Beginning of Year 368,229,722 5,263,507 141,940,365 98,379,390 1,945,107,473 ------------ ---------- ------------ ------------ -------------- Net Assets Available for Benefits, End of Year $552,062,777 $7,324,958 $207,752,049 $124,533,174 $2,534,574,396 ============ ========== ============ ============ ==============
See Notes to Financial Statements 5 9 JOHNSON & JOHNSON SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Year Ended December 31, 1996
PARTICIPANT DIRECTED ----------------------------------------------------------------------- Fixed Intermediate USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund --------- ------------- --------- ------------- -------------- Employee Contributions (Note 3) $ 1,279,645 $ 26,445,632 $ 2,140,977 $ 8,866,474 $ 33,954,707 Employer Contributions (Notes 3 and 9) 414,888 8,798,272 659,365 2,659,125 11,433,727 Interest 891,759 39,992,993 1,073,776 1,960,085 84,875 Dividends 8,274,786 ----------- ------------ ----------- ----------- ------------ 2,586,292 75,236,897 3,874,118 13,485,684 53,748,095 Additions to (Deductions From) Net Assets: Neutrogena Transfer-In (Note 1) 8,683,362 2,491,438 1,292,468 3,528,162 7,372,567 Payments to Participants (Note 4) (1,406,944) (28,775,430) (439,889) (1,431,683) (20,755,596) Change in Unrealized Net Appreciation (205,640) 856,938 69,484,774 of Investments Realized Net Gain on Sale of Investments 108,566 5,830,619 14,213,619 Interest Expense Administrative Expenses (11,541) (445,379) (47,884) (387,583) (453,565) Assets Transferred (Note 2) (2,676,000) (45,659,700) 178,000 5,370,200 43,063,776 ----------- ------------ ----------- ----------- ------------ Net Increase 7,175,169 2,847,826 4,759,739 27,252,337 166,673,670 Net Assets Available for Benefits, Beginning of Year 10,159,476 610,754,983 11,977,425 49,238,741 440,455,123 ----------- ------------ ----------- ----------- ------------ Net Assets Available for Benefits, End of Year $17,334,645 $613,602,809 $16,737,164 $76,491,078 $607,128,793 =========== ============ =========== =========== ============
PARTICIPANT DIRECTED Employee Stock Ownership ----------- Plan Trust Fund Diversified ------------------------ Total Equity Fund Loan Fund Allocated Unallocated Savings Plan ----------- --------- --------- ----------- ------------ Employee Contributions (Note 3) $ 23,528,986 $96,216,421 Employer Contributions (Notes 3 and 9) 7,344,508 $ 7,927,197 39,237,082 Interest $ 380,160 $ 53,865 79,114 44,516,627 Dividends 5,815,579 560,967 3,822,612 18,473,944 ------------ ---------- ------------ ----------- -------------- 36,689,073 380,160 614,832 11,828,923 198,444,074 Additions to (Deductions From) Net Assets: Neutrogena Transfer-In (Note 1) 4,133,147 1,714,658 29,215,802 Payments to Participants (Note 4) (9,974,627) 136,711 (3,550,659) (66,198,117) Change in Unrealized Net Appreciation 30,981,029 28,930,038 14,994,135 145,041,274 of Investments Realized Net Gain on Sale of Investments 31,380,998 2,401,469 53,935,271 Interest Expense (6,061,565) (6,061,565) Administrative Expenses (1,120,445) (2,466,397) Assets Transferred (Note 2) (236,900) 7,554,460 (7,593,836) ------------ ---------- ------------ ----------- -------------- Net Increase 91,852,275 2,231,529 35,950,140 13,167,657 351,910,342 Net Assets Available for Benefits, Beginning of Year 276,377,447 3,031,978 105,990,225 85,211,733 1,593,197,131 ------------ ---------- ------------ ----------- -------------- Net Assets Available for Benefits, End of Year $368,229,722 $5,263,507 $141,940,365 $98,379,390 $1,945,107,473 ============ ========== ============ =========== ==============
See Notes to Financial Statements 6 10 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. Organization: The Johnson & Johnson Savings Plan (the "Plan" - a defined contribution plan) was established on June 1, 1982 for eligible salaried and non-union hourly employees of Johnson & Johnson (the "Company") and certain domestic subsidiaries. The Plan was designed to enhance the existing retirement program of eligible employees. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained in two Master Trust accounts ("Johnson & Johnson Savings Plan Trust" and "Johnson & Johnson Pension Trust Fund") and transactions therein are executed by the trustee, Bankers Trust Company. The Johnson & Johnson Savings Plan Trust and the Johnson & Johnson Pension Trust Fund are allocated based upon the total of each individual participant's share of the Johnson & Johnson Savings Plan Trust and the Johnson & Johnson Pension Trust Fund. Effective January 1, 1991, the Company implemented an Employee Stock Ownership Plan ("ESOP") to supplement its existing 401(k) plan. The ESOP is a leveraged employee stock ownership plan and is designed to comply with Section 4975(e)(7) and the regulations thereunder of the Internal Revenue Code of 1986, as amended, and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended. The ESOP is used to fund an additional 25% match of employee contributions ("ESOP contribution"). Initial funding for the ESOP was made through an advance from Johnson & Johnson of $100 million, which was used to purchase 1,554,800 shares of J&J common stock on the open market (which equates to 6,219,200 shares when adjusted for subsequent stock splits). Of these shares which were adjusted for subsequent stock splits, 3,066,758 (adjusted for stock split) remain unallocated. These shares are allocated to Plan participants under a formula set forth in the note agreement. Accordingly, the financial statements of the Plan for the years 1997 and 1996 present separately the assets and liabilities and changes therein pertaining to: (a) the accounts of employees with vested rights in allocated stock (Allocated) and (b) stock not yet allocated to employees (Unallocated). Each participant is entitled to exercise voting rights attributable to the shares allocated to their account. On April 2, 1997 and October 1, 1997 the assets of the Cordis Corp. Tax Sheltered Investment Plan and the Menlo Care 401(k) Retirement Plan, respectively, were transferred into the Johnson & Johnson Savings Plan. On April 1, 1996, the assets of the Neutrogena Corporation 401(k) Profit Sharing Plan were transferred into the Johnson & Johnson Savings Plan. Continued 7 11 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 2. Summary of Significant Accounting Policies: Valuation of Investments: Equity investments in the Johnson & Johnson Stock Fund and the ESOP, administered by the Bankers Trust Company, are valued at the average of the high and low market price on the last business day of the year. The cost of equity investments in the Johnson & Johnson Stock Fund are recorded at the average market price of the stock transactions for the month during which the contribution is made. The investments in the U.S. Government Securities, Fixed Interest, and Diversified Equity funds represent the Plan's share of assets in the Johnson & Johnson Savings Plan Trust ("Savings Plan Trust"). The U.S. Government Securities Fund ("U.S.G.S. Fund") consists of short-term obligations that are issued or guaranteed by the U.S. Government. Investments are valued at cost which approximates the market. Deposits in group annuity contracts in the Fixed Interest Fund are recorded at their contract values which approximates fair value because these investments have fully benefit-responsive features. Contract value represents contributions and reinvested income, less any withdrawals plus accrued interest. Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value. However, withdrawals influenced by employer initiated events such as in connection with the sale of a business, may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issuers or otherwise. The average yield of the Fixed Income Fund was approximately 7.09 percent for 1997 and 6.78 percent for 1996. The crediting interest rate of the Fixed Income Fund was approximately 7.33 percent for 1997 and 7.09 percent for 1996. The difference between the average yield and crediting interest rate is due to administrative charges paid by the Plan. The crediting interest rate for the investment contracts is either agreed-to in advance with the issuer or varies based on an agreed-to formula, but cannot be less than zero. Equity investments and corporate obligations in the Diversified Equity Fund, managed by Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc., are traded on a national securities exchange and are valued at the last reported market sales price on the last business day of the year. Investments in the Diversified Equity Fund are purchased periodically by Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc. based on the prevailing market values of the underlying investments. The Intermediate Bond Fund invests in various kinds of bonds, primarily corporate and U.S. government bonds. The Balanced Fund is invested in a mix of stocks, bonds, and real estate. The investment in these funds represents the Plan's share of the assets in the Johnson & Johnson Pension Trust Fund ("Pension Trust Fund"). These investments are stated at fair value. Generally, they represent securities traded on a national securities exchange which are valued at the last reported sales price on the last business day of the year. 8 12 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 2. Summary of Significant Accounting Policies, (Continued): Participant loans are valued at cost, which approximates fair value. Temporary cash investments are stated at redemption value which approximates fair value. Transfers: Transfers among funds, which are made at the participant's election, have been presented as assets transferred. With respect to the ESOP, transfers represent shares allocated to the participants. Use of Estimates: The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Risks and Uncertainties: The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits. Other: Interest and dividend income is recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method. Administrative charges are allocated monthly based on the quarterly percentage of assets in each of the six investment funds. All third party administrative expenses are paid by the Plan, except costs of entering new investment vehicles which are paid primarily by Johnson & Johnson. 9 13 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 3. Contributions: Participating employees may contribute a minimum of 3% up to a maximum of 20% of their base salary plus 50 percent of eligible commissions in combinations of pre- and post-tax contributions. Pre-tax contributions may not exceed the smaller of 16% of their base salary including 50 percent of eligible commissions or $9,500 in 1997 and 10% of base salary including 50 percent of eligible commissions or $9,500 in 1996. The Company contributes to the Plan an amount equal to 75% of the employee directed contributions of the participants up to a maximum of 6% of the employee's base salary and 50 percent of eligible commissions. Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Such contributions, with the exception of the ESOP contribution, are invested in any of the six investment funds at the direction of the participating employees. The 25% ESOP contribution is invested in J&J stock, except for employees over 55 years of age who may choose the alternative investments. ESOP shares are released from the unallocated portion of the ESOP each February following the payment of the loan (see note 9), in accordance with the ESOP Trust Agreement. Shares released, in accordance with the ESOP note agreement, may be more or less than shares earned by participants. In the accompanying statements of net assets available for benefits, shares earned by participants in excess of those allocated have been reflected in the accompanying financial statements as assets designated for transfer. The number of participants invested in each fund at December 31, 1997 and 1996 was:
1997 1996 ------ ------ U.S. Government Securities Fund 2,600 2,222 Fixed Interest Fund 18,321 19,253 Intermediate Bond Fund 3,404 2,813 Balanced Fund 8,729 6,668 Johnson & Johnson Stock Fund 24,368 20,982 Employee Stock Ownership Plan 31,759 28,829 Diversified Equity Fund 18,895 15,273
Participants may elect to invest in more than one fund and can change investment direction once every three months. A total of 35,136 and 32,064 active and former employees had investments in the Plan for 1997 and 1996, respectively. 4. Participant Accounts and Benefits: All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant earnings or account balance, as defined. 10 14 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED 4. Participant Accounts and Benefits (continued): Participants are allowed to withdraw their after-tax contributions and earnings thereon, at any time. Participants may withdraw before-tax contributions only upon meeting certain hardship conditions. 5. Loans to Participants: Participants may borrow up to a maximum of 50% of their account balance or $50,000, whichever is less. Loans bear a market rate of interest plus 1% and are repayable within five years. Loans are secured by the balance in the participant accounts. 6. Investments: Investments held by the Plan as of December 31, 1997 are summarized as follows:
Johnson & Johnson Employee Stock Ownership Stock Fund Plan Trust Fund Combined Fair Value Cost Fair Value Cost Fair Value Cost ---------- ---- ---------- ---- ---------- ---- Johnson & Johnson Common Stock $863,403,725 $406,920,306 $384,941,911 $93,741,626 $1,248,345,636 $500,661,932 Temporary Cash Investments 54 54 5,248,646 5,248,646 5,248,700 5,248,700 ------------ ------------ ------------ ----------- -------------- ------------ $863,403,779 $406,920,360 $390,190,557 $98,990,272 $1,253,594,336 $505,910,632 ============ ============ ============ =========== ============== ============
The investments in the U.S.G.S., Fixed Interest, and the Diversified Equity Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 99.5% of fair value) held by the Johnson & Johnson Savings Plan Trust. Total investments held by the Savings Plan Trust on behalf of the Plan and the Johnson & Johnson Savings Plan for Union Represented Employees are summarized as follows:
Description Fair Value Cost ----------- ---------- ---- USGS Fund: U.S. Government Securities - Short Term$ 23,731,721 $23,731,721 Other* 114,306 114,306 Fixed Interest Fund: Deposits in Group Annuity Contracts 620,414,165 620,414,165 Other* 2,943,913 2,943,913 Diversified Equity Fund: Common Stocks 554,290,739 406,787,164 Other* 1,156,321 1, 156,321 -------------- -------------- $1,202,651,165 $1,055,147,590 ============== ==============
* Other consists of interest and/or dividends receivable. 11 15 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED 6. Investments, (continued): The investments in the Intermediate Bond and Balanced Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 5.2% of fair value) held by the Johnson & Johnson Pension Trust Fund. Total investments held by the Pension Trust Fund on behalf of the Plan and the various Johnson & Johnson Pension Plans are summarized as follows:
Description Fair Value Cost ----------- ---------- ---- U.S. Government Securities - Short Term$ $ 153,543,208 $ 151,120,429 Corporate Bonds & Notes - Short Term 123,628,255 120,714,183 U.S. Government Securities - Long Term 50,059,407 48,244,801 Corporate Bonds & Notes - Long Term 95,958,893 93,166,648 Common Stocks: Johnson & Johnson 354,881,800 28,297,086 Other 1,513,081,721 1,298,698,029 Preferred Stocks 25,792,091 21,845,779 Commingled Investment Funds 174,986,840 167,925,592 Temporary Investments 107,202,377 105,645,805 Other 15,262,481 15,304,755 -------------- -------------- $2,614,397,073 $2,050,963,107 ============== ==============
Investments held by the Plan as of December 31, 1996 are summarized as follows:
Johnson & Johnson Employee Stock Ownership Stock Fund Plan Trust Fund Combined Fair Value Cost Fair Value Cost Fair Value Cost ---------- ---- ---------- ---- ---------- ---- Johnson & Johnson Common Stock $606,592,091 $322,517,433 $299,640,157 $ 95,349,753 $906,232,248 $417,867,186 Temporary Cash Investments 600,045 600,045 4,556,130 4,556,130 5,156,175 5,156,175 ------------ ------------ ------------ ----------- ------------ ------------ $607,192,136 $323,117,478 $304,196,287 $99,905,883 $911,388,423 $423,023,361 ============ ============ ============ =========== ============ ============
12 16 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED 6. Investments (continued): As of December 31, 1996, the investments in the U.S.G.S., Fixed Interest, and the Diversified Equity Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 99.6% of fair value) held by the Johnson & Johnson Savings Plan Trust. Total investments held by the Savings Plan Trust on behalf of the Plan and the Johnson & Johnson Savings Plan for Union Represented Employees are summarized as follows:
Description Fair Value Cost ----------- ---------- ---- USGS Fund: U.S. Government Securities - Short Term $ 18,055,692 $ 18,055,692 Other* 84,130 84,130 Fixed Interest Fund: Deposits in Group Annuity Contracts 612,131,658 612,131,658 Other* 2,857,861 2,857,861 Diversified Equity Fund: Common Stocks 369,796,552 269,727,282 Other* 623,223 623,223 -------------- -------------- $1,003,549,116 $ 903,479,846 ============== ==============
* Other consists of interest and/or dividends receivable. As of December 31, 1996, the investments in the Intermediate Bond and Balanced Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 4.0% of fair value) held by the Johnson & Johnson Pension Trust Fund. Total investments held by the Pension Trust Fund on behalf of the Plan and the various Johnson & Johnson Pension Plans are summarized as follows:
Description Fair Value Cost ----------- ---------- ---- U.S. Government Securities - Short Term $ 124,077,332 $ 123,558,511 Corporate Bonds & Notes - Short Term 110,805,867 107,215,671 U.S. Government Securities - Long Term 84,840,192 83,710,301 Corporate Bonds & Notes - Long Term 77,639,128 74,595,639 Common Stocks: Johnson & Johnson 268,013,200 28,297,086 Other 1,373,444,680 1,132,227,680 Preferred Stocks 26,114,435 22,892,065 Commingled Investment Funds 144,610,428 147,328,704 Temporary Investments 77,313,091 76,497,143 Other 58,720,153 58,735,628 -------------- -------------- $2,345,578,506 $1,855,058,428 ============== ==============
13 17 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 6. Investments, (continued): Realized gains on investments sold and distributed during the years ended December 31, 1997 and 1996 are summarized as follows:
J&J Stock Fund Diversified Equity Fund Employee Stock Ownership Plan Fund Book Value Proceeds Gain Book Value Proceeds Gain Book Value Proceeds Gain ---------- -------- ---- ---------- -------- ---- ---------- -------- ---- 1997 $33,353,446 $61,081,614 $27,728,168 $435,908,633 $507,218,991 $71,310,358 $3,409,578 $7,557,927 $4,148,349 1996 41,810,530 56,024,149 14,213,619 205,781,943 237,162,941 31,380,998 1,222,499 3,623,968 2,401,469
Intermediate Bond Fund Balanced Fund Book Value Proceeds Gain Book Value Proceeds Gain ---------- -------- ---- ---------- -------- ---- 1997 $15,772,029 $16,039,269 $267,240 $108,450,137 $118,225,068 $9,774,931 1996 18,254,334 18,362,900 108,566 72,418,029 78,248,648 5,830,619
14 18 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 7. Tax Status: The Internal Revenue Service has determined and informed the Company by a letter dated April 25, 1996, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC. 8. Termination Priorities: The Company has the right to terminate the Plan at any time, and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested. 9. Indebtedness In connection with the formation of the Plan's ESOP feature, the Plan borrowed $100 million from Johnson & Johnson for the purpose of purchasing J&J common stock. The note bears interest at 9% and is payable through February 15, 2005. The Company is obligated to make contributions in cash to the ESOP which, when aggregated with the ESOP's dividends and interest earnings, equal the amount necessary to enable the ESOP to make its regularly scheduled payments of principal and interest due on the term loan. Aggregate maturities for the next five years are as follows:
1998 $ 6,658,750 1999 6,955,528 2000 7,289,791 2001 7,664,462 2002 8,082,746 Thereafter 23,531,749 ---------- $60,183,026 ===========
In the event of Plan termination or of termination of the employee stock ownership portion of the Plan, any unallocated shares shall be sold to the Company or on the open market. The proceeds of such sale shall be used to satisfy the outstanding principal and interest. The Company has no rights against shares once they are allocated under the ESOP. 10. Concentrations of Credit Risk Financial instruments which potentially subject the Plan to concentrations of credit risk consist principally of the Fixed Interest Fund holdings in fully benefit-responsive group annuity contracts with insurance and other financial institutions. 15 19 JOHNSON & JOHNSON SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 10. Concentrations of Credit Risk, (Continued): The Fund places its fully benefit-responsive group annuity contracts with high-credit quality institutions and, by policy, limits the amount of credit exposure to any one financial institution. If any of the insurance companies that the group annuity contracts are invested with fail to perform according to the contract, the asset value of the Plan could be impaired. 11. Reconciliation of Financial Statements to Form 5500: The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, December 31, 1997 1996 ---- ---- Net Assets Available for Benefits $ 2,534,574,396 $ 1,945,107,473 Per the Financial Statements Amounts Allocated to Withdrawing Participants (6,758,039) (5,390,992) --------------- --------------- Net Assets Available for Benefits Per the Form 5500 $ 2,527,816,357 $ 1,939,716,481 =============== ===============
Year Ended Year Ended December 31, December 31, 1997 1996 ---- ---- Benefits Paid to Participants Per the Financial Statements $ 100,795,855 $ 66,198,117 Add: Amounts Allocated to Withdrawing Participants at December 31, 1997 and 1996 6,758,039 5,390,992 Less: Amounts Allocated to Withdrawing Participants at December 31, 1996 and 1995 (5,390,992) (4,368,400) ------------- ------------- Benefits Paid to Participants Per the Form 5500 $ 102,162,902 $ 67,220,709 ============= =============
Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1997 and 1996 but not yet paid as of that date. 16 20 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997
FACE AMOUNT OR SHARES ISSUES COST FAIR VALUE J&J STOCK FUND Common Stock 13,075,733 shs. Johnson & Johnson $406,920,306 $863,403,725 Temporary Investments $54 BT Pyramid Directed Account Cash Fund 54 54 ------------- ------------- Total J&J Stock Fund $406,920,360 $863,403,779 ============= ============= EMPLOYEE STOCK OWNERSHIP PLAN TRUST FUND Common Stock 5,829,715 shs. Johnson & Johnson $93,741,817 $384,941,911 Temporary Investment $5,248,646 BT Pyramid Directed Account Cash Fund 5,248,646 5,248,646 ------------- ------------- Total ESOP Trust Fund $98,990,463 $390,190,557 =========== ============
17 21 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997
FACE AMOUNT ISSUES FAIR VALUE Loan Fund $7,285,354 Loans to Participants (Fixed Interest rate based on the prime lending rate plus one percentage point. The repayment period is from one to five years.) $7,285,354 39,604 Interest Receivable 39,604 ---------- Total Loan Fund $7,324,958 ==========
18 22 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
DISPOSED ACQUIRED ------------------------------------------------------- --------------------------------- SECURITY/PARTY GAIN/ DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS ----- ----- -------- ------ --------- ----- (# of Transactions) (# of Transactions) SERIES OF TRANSACTIONS: BT Pyramid Directed Account-Cash Fund (a) $77,178,307 $77,178,307 0 (a) $75,894,546 Johnson & Johnson Common Stock 171 $65,076,286
(a) Trustee is unable to provide detailed information on the number of transactions. 19 23 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
PURCHASES SALES --------- ----- NAME AFFILIATION COST SALES PRICE GAIN - ---- ----------- ---- ----------- ---- Johnson & Johnson Common Stock Plan Administrator $65,076,286 $ - $ -
20 24 COOPERS & LYBRAND L.L.P. LETTERHEAD CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Johnson & Johnson Savings Plan on Form S-8 (File No. 02-77153 and 33-40295) of our report dated June 5, 1998, on our audits of the financial statements and financial statement schedules of Johnson and Johnson Savings Plan as of December 31, 1997 and 1996, and for the years ended December 31, 1997 and 1996, which report is included in the Form 11-K. COOPERS & LYBRAND L.L.P. Parsippany, New Jersey June 26, 1998 EX-99.A.II 3 FORM 11-K RE: RETIREMENT SAVINGS PLAN 1 Exhibit 99(a)(ii) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ------------------------------ [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended December 28, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 1-3215 ------------------------------ JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN (Full title of the Plan) JOHNSON & JOHNSON ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) 2 Item 4. Financial Statements and Exhibits Report of Independent Accountants Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1997 and 1996 Statements of Changes in Net Assets Available for Benefit for the years ended December 31, 1997 and 1996 Notes to Financial Statements Supplemental Schedules: Schedule of Assets Held For Investment Purposes at December 31, 1997 Schedule of Reportable Transactions for the year ended December 31, 1997 Schedule of Nonexempt Transactions for the year ended December 31, 1997 Consent of Coopers & Lybrand L.L.P., dated June 25, 1998 The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN By: /s/ R.J. Darretta ------------------------------------ R. J. Darretta Chairman, Pension Committee June 25, 1998 3 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ----------- FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES as of and for the years ended December 31, 1997 and 1996 4 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN INDEX Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Benefits, with Fund Information as of December 31, 1997 and 1996 3 Statements of Changes in Net Assets Available for Benefits, with Fund Information for the years ended December 31, 1997 and 1996 4 Notes to Financial Statements 5-10 Supplemental Schedules: Item 27a - Schedule of Assets Held For Investment Purposes at December 31, 1997 11 Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1997 12 Item 27e - Schedule of Nonexempt Transactions for the year ended December 31, 1997 13 1 5 REPORT OF INDEPENDENT ACCOUNTANTS To the Pension and Benefits Committees of Johnson & Johnson We have audited the accompanying statements of net assets available for benefits of the Johnson & Johnson Savings Plan (the "Savings Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Savings Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Savings Plan as of December 31, 1997 and 1996 and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules as listed in the accompanying index on page 1 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Savings Plan's management. The Fund Information in the statements of net assets available for benefits and the related statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the statements of net assets available for benefits and statements of changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Parsippany, New Jersey June 5, 1998 2 6 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION as of December 31, 1997 and 1996
PARTICIPANT DIRECTED ---------------------------------------------------------------- 1997 ---------------------------------------------------------------- Short-Term Investment J&J Total Fund Stock Fund Equity Fund Savings Plan --------- ---------- --------- ---------- ASSETS Investments at Fair Value (Notes 2 and 5) $4,471,863 $50,761,081 $3,768,354 $59,001,298 --------- ---------- --------- ---------- Total Assets 4,471,863 50,761,081 3,768,354 59,001,298 --------- ---------- --------- ---------- LIABILITIES Accrued Expenses 2,860 32,601 2,389 37,850 ---------- ----------- ---------- ----------- Net Assets Available for Benefits $4,469,003 $50,728,480 $3,765,965 $58,963,448 ========== =========== ========== ===========
PARTICIPANT DIRECTED ------------------------------------------------------------ 1996 ------------------------------------------------------------ Short-Term Investment J&J Total Fund Stock Fund Equity Fund Savings Plan --------- ---------- --------- ------------ ASSETS Investments at Fair Value (Notes 2 and 5) $4,409,368 $36,146,116 $2,954,537 $43,510,021 --------- ---------- --------- ---------- Total Assets 4,409,368 36,146,116 2,954,537 43,510,021 --------- ---------- --------- ---------- LIABILITIES Accrued Expenses 2,657 22,443 1,746 26,846 ---------- ----------- ---------- ----------- Net Assets Available for Benefits $4,406,711 $36,123,673 $2,952,791 $43,483,175 ========== =========== ========== ===========
See Notes to Financial Statements 3 7 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Years Ended December 31, 1997 and 1996
PARTICIPANT DIRECTED -------------------------------------------------------------- 1997 -------------------------------------------------------------- Short-Term Investment J&J Total Fund Stock Fund Equity Fund Savings Plan ---------- ----------- ---------- ----------- Employee Contributions (Note 3) $898,413 $4,757,028 $663,842 $6,319,283 Employer Contributions (Note 3) 17,940 2,829,851 1,425 2,849,216 Interest Income 236,568 7,124 243,692 Dividend Income 638,704 376,308 1,015,012 ---------- ----------- ---------- ----------- 1,152,921 8,232,707 1,041,575 10,427,203 Additions to (Deductions From) Net Assets: Payments to Participants (Note 4) (568,339) (6,043,143) (605,008) (7,216,490) Change in Unrealized Net Appreciation of Investments 9,730,269 324,143 10,054,412 Realized Gain on Sale of Investments 2,249,648 192,286 2,441,934 Realized Gain on Stock Distributed 22,936 22,936 Administrative Expenses (21,290) (212,210) (16,222) (249,722) Assets Transferred (Note 2) (501,000) 624,600 (123,600) ---------- ----------- ---------- ----------- Net Increase 62,292 14,604,807 813,174 15,480,273 Net Assets Available for Benefits, Beginning of Year 4,406,711 36,123,673 2,952,791 43,483,175 ---------- ----------- ---------- ----------- Net Assets Available for Benefits, End of Year $4,469,003 $50,728,480 $3,765,965 $58,963,448 ========== =========== ========== ===========
PARTICIPANT DIRECTED -------------------------------------------------------------- 1996 -------------------------------------------------------------- Short-Term Investment J&J Total Fund Stock Fund Equity Fund Savings Plan ---------- ----------- ---------- ----------- Employee Contributions (Note 3) $1,046,261 $3,862,023 $ 737,396 $ 5,645,680 Employer Contributions (Note 3) 22,265 2,656,028 1,581 2,679,874 Interest Income 221,373 10,598 231,971 Dividend Income 505,906 178,045 683,951 ---------- ----------- ---------- ----------- 1,289,899 7,034,555 917,022 9,241,476 Additions to (Deductions From) Net Assets Payments to Participants (Note 4) (541,417) (4,160,563) (412,510) (5,114,490) Change in Unrealized Net Appreciation of Investments 3,070,156 164,607 3,234,763 Realized Gain on Sale of Investments 1,504,064 127,421 1,631,485 Realized Gain on Stock Distributed 60,267 60,267 Administrative Expenses (19,104) (171,715) (11,851) (202,670) Assets Transferred (Note 2) (516,600) 843,800 (327,200) ---------- ----------- ---------- ----------- Net Increase 212,778 8,180,564 457,489 8,850,831 Net Assets Available for Benefits, Beginning of Year 4,193,933 27,943,109 2,495,302 34,632,344 ---------- ----------- ---------- ----------- Net Assets Available for Benefits, End of Year $4,406,711 $36,123,673 $2,952,791 $43,483,175 ========== =========== ========== ===========
See Notes to Financial Statements 4 8 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. Organization: The Johnson & Johnson Retirement Savings Plan (the "Plan" - a defined contribution plan) was established on March 1, 1990 for eligible employees of certain subsidiaries of Johnson & Johnson (the "Company") located in Puerto Rico which have adopted the Plan. The Plan was designed to provide eligible employees with an opportunity to strengthen their financial security at retirement by providing an incentive to save and invest regularly. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained and transactions therein are executed by the trustee, Banco Popular de Puerto Rico. 2. Summary of Significant Accounting Policies: Valuation of Investments: Equity investments in the Johnson & Johnson Stock Fund, administered by the Banco Popular de Puerto Rico, are valued at the closing market price on the last business day of the year. Equity investments in the Equity Fund, managed by the Capital Research and Management Company, represent shares of a registered investment company and are valued at quoted market price which represents the net asset value of shares held by the Plan at year-end. The cost of equity investments in the Johnson & Johnson Stock Fund are recorded at the average market price of the stock transactions for the month during which the contribution is made. Units in the Equity Fund are purchased throughout the month at the prevailing quoted market price on those dates. Deposits in short-term investments in the Short-Term Investment Fund are principally purchases of shares of the Prime Portfolio of Vanguard Money Market Reserves, Inc. The Portfolio invests in securities which mature in less than one year. The value of this portfolio is the market value on the last business day of the year. Temporary cash investments are stated at redemption value which approximates fair value. Transfers: Transfers among funds, which are made at the participant's election, have been presented as assets transferred. 5 9 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 2. Summary of Significant Accounting Policies, (continued) Use of Estimates: The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Risks and Uncertainties: The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits. Other: Interest and dividend income are recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method. All third party administrative expenses are paid by the Plan, except costs of entering new investment vehicles which are paid primarily by Johnson & Johnson. 3. Contributions: Participating employees may contribute a minimum of 3% up to a maximum of 6% pre-tax and/or 1% to 10% post-tax of their base salary. Pre-tax contributions may not exceed $7,500 in 1997 and $7,000 in 1996 under Puerto Rico law. The Company contributes to the Plan, out of current or accumulated profits, an amount equal to 66-2/3% of the employee's pre-tax contributions for the Plan year. Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Employee contributions are to be invested in any of the three investment funds at the direction of the participating employees. All Company contributions are made to the J&J Stock Fund, except for participants over the age of 50, who may choose the alternative investments. 6 10 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 3. Contributions, (continued) The number of participants invested in each fund at December 31, 1997 and 1996 was: 1997 1996 ---- ---- Johnson & Johnson Stock Fund 3,142 3,109 Equity Fund 1,119 1,140 Short-term Investments Fund 1,422 1,557 Participants may elect to invest in more than one fund and can change their investment direction twice a year. A total of 3,340 and 3,298 active and former employees had investments in the Plan for 1997 and 1996, respectively. 4. Participant Accounts and Benefits: All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant's earnings or account balance, as defined. Participants are allowed to withdraw their after-tax contributions and earnings thereon, at any time. Participants may withdraw before-tax contributions only upon meeting certain hardship conditions. 7 11 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments held by the Plan as of December 31, 1997 and 1996 are summarized as follows:
1997 ---------------------------------------------------------------------------------------------------------- Short-Term Johnson & Johnson Investment Fund Stock Fund Equity Fund Total ----------------------- --------------------------- ----------------------- ------------------------- Fair Value Cost Fair Value Cost Fair Value Cost Fair Value Cost ---------- ---------- ------------ ----------- ---------- ---------- ----------- ----------- Common Stocks: Johnson & Johnson $50,432,978 $26,170,766 $50,432,978 $26,170,766 Mutual Funds $3,768,354 $2,924,250 3,768,354 2,924,250 Temporary Cash Investments $4,471,863 $4,471,863 328,103 328,103 4,799,966 4,799,966 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- $4,471,863 $4,471,863 $50,761,081 $26,498,869 $3,768,354 $2,924,250 $59,001,298 $33,894,982 ========== ========== =========== =========== ========== ========== =========== ===========
8 12 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments, (continued): 1996
----------------------------------------------------------------------------------------------------- Short-Term Johnson & Johnson Investment Fund Stock Fund Equity Fund Total ---------------------- ------------------------- ---------------------- ------------------------- Fair Value Cost Fair Value Cost Fair Value Cost Fair Value Cost ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Common Stocks: Johnson & Johnson $36,143,972 $21,612,029 $36,143,972 $21,612,029 Mutual Funds $2,954,537 $2,434,576 2,954,537 2,434,576 Temporary Cash Investments $4,409,368 $4,409,368 2,144 2,144 4,411,512 4,411,512 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- $4,409,368 $4,409,368 $36,146,116 $21,614,173 $2,954,537 $2,434,576 $43,510,021 $28,458,117 ========== ========== =========== =========== ========== ========== =========== ===========
Realized gains on investments sold and distributed during the years ended December 31, 1997 and 1996 are summarized as follows:
J&J Stock Fund Equity Fund ----------------------------------------- ------------------------------------- Book Value Proceeds Gain Book Value Proceeds Gain ---------- ---------- ---------- ---------- -------- -------- 1997 $4,183,618 $6,456,202 $2,272,584 $490,614 $682,900 $192,286 1996 3,467,861 5,032,192 1,564,331 630,900 758,321 127,421
9 13 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 6. Tax Status: The Plan constitutes a qualified plan under Section 165(a) of the Puerto Rico Income Tax Act of 1954 as amended, (the "ITA"), and the Plan and related Trust accounts are exempt from Puerto Rico income taxes under Section 165(a) and 165(e) of the ITA. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Puerto Rico tax code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7. Termination Priorities: The Company has the right to terminate the Plan at any time and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested. 8. Reconciliation of Financial Statements to Form 5500: The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, 1997 1996 ----------- ----------- Net Assets Available for Benefits Per the Financial Statements $58,963,448 $43,483,175 Amounts Allocated to Withdrawing Participants (571,341) (267,610) ----------- ----------- Net Assets Available for Benefits Per the Form 5500 $58,392,107 $43,215,565 =========== ===========
Years Ended December 31, 1997 1996 ---------- ----------- Benefits Paid to Participants Per the Financial Statements $7,216,490 $5,114,490 Add: Amounts Allocated to Withdrawing Participants at December 31, 1997 and 1996 571,341 267,610 Less: Amounts Allocated to Withdrawing Participants at December 31, 1996 and 1995 (267,610) (346,911) ---------- ----------- Benefits Paid to Participants Per the Form 5500 $7,520,221 $ 5,035,189 ========== ===========
Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1997 and 1996 but not yet paid as of that date. 10 14 Supplemental Schedule JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997
FACE AMOUNT OR SHARES ISSUES COST FAIR VALUE --------- ------ ---- ---------- J&J STOCK FUND Common Stock 765,586 shs. Johnson & Johnson $26,170,765 $50,432,978 Temporary Investments $328,103 U.S. Treasury Obligations 328,103 328,103 ------------- ----------- Total J&J Stock Fund $26,498,868 $50,761,081 ============= =========== SHORT-TERM INVESTMENT FUND Money Market funds Vanguard Money Market Reserves Prime $4,471,863 Portfolio $4,471,863 $4,471,863 ============= =========== EQUITY FUND Mutual Funds 133,393.078 shs. Investment Company of America $2,924,250 $3,768,354 ============ ===========
11 15 Supplemental Schedule JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
DISPOSED ACQUIRED --------------------------------------------------------- --------------------------------- SECURITY/PARTY GAIN/ DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS (# of Transactions) (# of Transactions) SERIES OF TRANSACTIONS: Johnson & Johnson Common Stock 83 $2,329,047 The Vanguard Group 28 $960,755 $960,755 0 60 $1,023,250
12 16 Supplemental Schedule JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
PURCHASES SALES ------------------------------------ ------------------------ NAME AFFILIATION COST SALES PRICE GAIN - ---- ----------- ---- ----------- ---- Johnson & Johnson Common Stock Plan Administrator $4,163,659 $ - $ -
13 17 COOPERS & LYBRAND L.L.P. LETTERHEAD CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Johnson & Johnson Retirement Savings Plan on Form S-8 (File No. 33-32875) of our report dated June 5, 1998, on our audits of the financial statements and financial statement schedules of Johnson and Johnson Savings Plan as of December 31, 1997 and 1996, and for the years ended December 31, 1997 and 1996, which report is included in the Form 11-K. COOPERS & LYBRAND L.L.P. Parsippany, New Jersey June 26, 1998 EX-99.A.III 4 FORM 11-K RE: SAVINGS PLAN FOR UNION EMPLOYEES 1 Exhibit 99(a)(iii) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ------------------------------ [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended December 28, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 1-3215 ------------------------------ JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES (Full title of the Plan) JOHNSON & JOHNSON ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) 2 Item 4. Financial Statements and Exhibits Report of Independent Accountants Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1997 and 1996 Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 1997 and 1996 Notes to Financial Statements Supplemental Schedules: Schedule of Assets Held For Investment Purposes at December 31, 1996 Schedule of Reportable Transactions for the year ended December 31, 1997 Schedule of Non-exempt Transactions for the year ended December 31, 1997 Consent of Coopers & Lybrand L.L.P., dated June 25, 1998 The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES By: /s/ R.J. Darretta -------------------------------- R. J. Darretta Chairman, Pension Committee June 25, 1998 3 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES ----------- FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES as of and for the years ended December 31, 1997 and 1996 4 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES INDEX Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Benefits, with Fund Information as of December 31, 1997 and 1996 3-4 Statements of Changes in Net Assets Available for Benefits, with Fund Information for the years ended December 31, 1997 and 1996 5-6 Notes to Financial Statements 7-13 Supplemental Schedules: Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1997 14 Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1997 15 Item 27e - Schedule of Nonexempt Transactions for the year ended December 31, 1997 16
1 5 REPORT OF INDEPENDENT ACCOUNTANTS To the Pension and Benefits Committees of Johnson & Johnson We have audited the accompanying statements of net assets available for benefits of the Johnson & Johnson Savings Plan for Union Represented Employees (the "Savings Plan") as of December 31, 1997 and 1996 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Savings Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Savings Plan for Union Represented Employees as of December 31, 1997 and 1996 and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules as listed in the accompanying index on page 1 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Savings Plan's management. The Fund Information in the statements of net assets available for benefits and the related statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the statements of net assets available for benefits and statements of changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Parsippany, New Jersey June 5, 1998 2 6 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION As of December 31, 1997
PARTICIPANT DIRECTED ----------------------------------------------------------------------------------- Fixed J&J Diversified Total USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan --------- ------------- ---------- ----------- ------------ ASSETS: Deposits in Group Annuity Contracts (Note 2) $1,597,318 $ 1,597,318 Investments at Fair Value (Notes 2 and 5) $12,291,567 12,291,567 Investments in Master Trust (Notes 2 and 5) $933,114 $3,075,579 4,008,693 Accrued Dividends and Interest Receivable 4,518 7,579 238 12,335 -------- ---------- ----------- ---------- ----------- Total Assets 937,632 1,604,897 12,291,805 3,075,579 17,909,913 -------- ---------- ----------- ---------- ----------- LIABILITIES Accrued Transfers 17,600 17,500 (37,200) 2,100 -------- ---------- ----------- ---------- ----------- Net Assets Available for Benefits $920,032 $1,587,397 $12,329,005 $3,073,479 $17,909,913 ======== ========== =========== ========== ===========
See Notes to Financial Statements 3 7 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION As of December 31, 1996
PARTICIPANT DIRECTED ------------------------------------------------------------------------------ Fixed J&J Diversified Total USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan -------- ----------- ----------- ---------- ----------- ASSETS: Deposits in Group Annuity Contracts (Note 2) $1,308,439 $1,308,439 Investments at Fair Value (Notes 2 and 5) $7,946,372 7,946,372 Investments in Master Trust (Notes 2 and 5) $799,496 $1,946,825 2,746,321 Accrued Dividends and Interest Receivable 3,684 6,163 295 10,142 -------- ----------- ----------- ---------- ----------- Total Assets 803,180 1,314,602 7,946,667 1,946,825 12,011,274 -------- ----------- ----------- ---------- ----------- LIABILITIES Accrued Transfers 15,200 (37,500) 22,300 -------- ----------- ----------- ---------- ----------- Net Assets Available for Benefits $787,980 $1,314,602 $7,984,167 $1,924,525 $12,011,274 ======== =========== =========== ========== ===========
See Notes to Financial Statements 4 8 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Year Ended December 31, 1997
PARTICIPANT DIRECTED ------------------------------------------------------------------------- Fixed J&J Diversified Total USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan -------- ---------- ----------- ---------- ----------- Employee Contributions (Note 3) $244,456 $443,802 $1,198,488 $697,584 $2,584,330 Employer Contributions (Note 3) 562,673 562,673 Interest 48,796 101,901 3,097 153,794 Dividends 146,281 37,409 183,690 -------- ---------- ----------- ---------- ----------- 293,252 545,703 1,910,539 734,993 3,484,487 Additions to (Deductions From) Net Assets: Payments to Participants (Note 4) (54,700) (113,808) (576,818) (103,459) (848,785) Change in Unrealized Net Appreciation of Investments 2,371,878 251,300 2,623,178 Realized Net Gain on Sale of Investments 194,679 386,920 581,599 Realized Net Gain on Stock Distributed 58,160 58,160 Assets Transferred (Note 2) (106,500) (159,100) 386,400 (120,800) -------- ---------- ----------- ---------- ----------- Net Increase 132,052 272,795 4,344,838 1,148,954 5,898,639 Net Assets Available for Benefits, Beginning of Year 787,980 1,314,602 7,984,167 1,924,525 12,011,274 -------- ---------- ----------- ---------- ----------- Net Assets Available for Benefits, End of Year $920,032 $1,587,397 $12,329,005 $3,073,479 $17,909,913 ======== ========== =========== ========== ===========
See Notes to Financial Statements 5 9 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Year Ended December 31, 1996
PARTICIPANT DIRECTED --------------------------------------------------------------------------- Fixed J&J Diversified Total USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan --------- ------------- ---------- ----------- ------------ Employee Contributions (Note 3) $272,130 $494,004 $1,153,253 $629,503 $2,548,890 Employer Contributions (Note 3) 463,760 463,760 Interest 37,484 75,205 2,550 115,239 Dividends 103,356 27,269 130,625 -------- ---------- ---------- ---------- ----------- 309,614 569,209 1,722,919 656,772 3,258,514 Additions to (Deductions From) Net Assets: Payments to Participants (Note 4) (31,299) (56,251) (347,140) (38,215) (472,905) Change in Unrealized Net Appreciation of Investments 895,736 150,845 1,046,581 Realized Net Gain on Sale of Investments 81,000 148,204 229,204 Realized Net Gain on Stock Distributed 43,644 43,644 Assets Transferred (Note 2) (68,100) (117,500) 273,100 (87,500) -------- ---------- ---------- ---------- ----------- Net Increase 210,215 395,458 2,669,259 830,106 4,105,038 Net Assets Available for Benefits, Beginning of Year 577,765 919,144 5,314,908 1,094,419 7,906,236 -------- ---------- ---------- ---------- ----------- Net Assets Available for Benefits, End of Year $787,980 $1,314,602 $7,984,167 $1,924,525 $12,011,274 ======== ========== ========== ========== ===========
See Notes to Financial Statements 6 10 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS 1. Organization: The Johnson & Johnson Savings Plan for Union Represented Employees (the "Plan" - a defined contribution plan) was established on January 1, 1993 by Johnson & Johnson (the "Company"). The Plan was designed to enhance the existing retirement program of eligible employees covered under collective bargaining agreements with the Company. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained in a Master Trust account ("Johnson & Johnson Savings Plan Trust") and transactions therein are executed by the trustee, Bankers Trust Company. The Johnson & Johnson Savings Plan Trust is allocated based upon the total of each individual participant's share of the Johnson & Johnson Savings Plan Trust. 2. Summary of Significant Accounting Policies: Valuation of Investments: Equity investments in the Johnson & Johnson Stock Fund, administered by the Bankers Trust Company, are valued at the average of the high and low market price on the last business day of the year. The cost of equity investments in the Johnson & Johnson Stock Fund are recorded at the average market price of the stock transactions for the month during which the contribution is made. The investments in the U.S. Government Securities, Fixed Interest and Diversified Equity funds represent the Plan's share of assets in the Johnson & Johnson Savings Plan Trust. The U.S. Government Securities Fund ("USGS Fund") consists of Short-term obligations that are issued or guaranteed by the U.S. Government. Investments are valued at cost which approximates market. Deposits in group annuity contracts in the Fixed Interest Fund are recorded at their contract value, which approximates fair value because these investments have fully benefit-responsive features. Contract value represents contributions and reinvested income, less any withdrawals plus accrued interest. Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value. However, withdrawals influenced by employer initiated events, such as in connection with the sale of a business, may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issuers or otherwise. The average yield and crediting interest rate of the Fixed Income Fund was 7.33 percent for 1997 and 7.09 percent for 1996. The crediting interest rate for the investment contracts is either agreed-to in advance with the issuer or varies based on an agreed-to formula, but cannot be less than zero. Continued 7 11 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 2. Summary of Significant Accounting Policies, (Continued): Equity investments and corporate obligations in the Diversified Equity Fund, managed by the Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc., are traded on a national securities exchange and are valued at the last reported market sales price on the last business day of the year. Investments in the Diversified Equity Fund are purchased periodically by Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc. based on the prevailing market values of the underlying investments. Temporary cash investments are stated at redemption value which approximates fair value. Transfers: Transfers among funds, which are made at the participant's election, have been presented as assets transferred. Use of Estimates: The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Risks and Uncertainties: The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits. Other: Interest and dividend income is recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method. All third party administrative expenses were paid by the Company in 1997 and 1996. Beginning January 1, 1998, third party administrative expenses will be paid through the Plan, except costs of entering new investment vehicles which will be paid primarily by Johnson & Johnson. 8 12 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 3. Contributions: Participating employees may contribute a minimum of $0.16 per hour up to a maximum of $1.60 per hour up, depending on the negotiated contract rate, to the first forty hours worked in each payroll week. All contributions are on a pre-tax basis. Pre-tax contributions may not exceed $9,500 for 1997 and 1996. The Company contributes to the Plan, out of current or accumulated profits, an amount equal to 25% or 40% (depending on the negotiated collective bargaining agreement) of the employee directed contributions on the first $0.40 to $0.80 per hour directly into J&J Stock. Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Employee contributions are to be invested in any of the four investment funds at the direction of the participating employees. All Company contributions are made to the J&J Stock Fund. The number of participants invested in each fund at December 31, 1997 and 1996 was: 1997 1996 ---- ---- U.S. Government Securities Fund 588 601 Fixed Interest Fund 812 820 Johnson & Johnson Stock Fund 1,693 1,569 Diversified Equity Fund 1,059 977 Participants may elect to invest in more than one fund and can change their investment direction twice a year. A total of 2,113 and 2,048 active and former employees had investments in the Plan for 1997 and 1996, respectively. 4. Participant Accounts and Benefits: All participants are fully vested in their contributions and the company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant's earnings or account balances, as defined. Participants are allowed to withdraw their after-tax contributions and earnings thereon, at any time. Participants may withdraw before-tax contributions only upon meeting certain hardship conditions. 9 13 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments: Investments held by the Plan as of December 31, 1997 are summarized as follows: Johnson & Johnson Stock Fund -------------------------------- Fair Value Cost -------------- -------------- Common Stocks: Johnson & Johnson $12,291,539 $7,074,363 Temporary Cash Investments 28 28 -------------- -------------- $12,291,567 $7,074,391 ============== ============== The investments in the U.S.G.S., Fixed Interest, and the Diversified Equity Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 0.5% of fair value) held by the Johnson & Johnson Savings Plan Trust. Total investments held by the Savings Plan Trust on behalf of the Plan and the Johnson & Johnson Savings Plan are summarized as follows:
Description Fair Value Cost -------------- ------------- USGS Fund: U.S. Government Securities - Short Term $23,731,721 $23,731,721 Other* 114,306 114,306 Fixed Interest Fund: Deposits in Group Annuity Contracts 620,414,165 620,414,165 Other* 2,943,913 2,943,913 Diversified Equity Fund: Common Stocks 554,290,739 406,787,164 Other* 1,156,321 1,156,321 -------------- ------------- $1,202,651,165 $1,055,147,590 ============== ==============
* Other consists of interest and/or dividends receivable. 10 14 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments, (continued): Investments held by the plan as of December 31, 1996 are summarized as follows:
Johnson & Johnson Stock Fund ------------------------------- Fair Value Cost -------------- -------------- Common Stocks: Johnson & Johnson $7,946,360 $5,101,062 Temporary Cash Investments 12 12 -------------- -------------- $7,946,372 $5,101,074 ============== ==============
The investments in the U.S.G.S., Fixed Interest, and the Diversified Equity Funds reflected in the accompanying Statement of Net Assets Available for Benefits represent the Plan's share of investments (approximately 0.4% of fair value) held by the Johnson & Johnson Savings Plan Trust. Total investments held by the Trust on behalf of the Plan and the Johnson & Johnson Savings Plan are summarized as follows:
Description Fair Value Cost -------------- ------------ USGS Fund: U.S. Government Securities - Short Term $18,055,692 $18,055,692 Other* 84,130 84,130 Fixed Interest Fund: Deposits in Group Annuity Contracts 612,131,658 612,131,658 Other* 2,857,861 2,857,861 Diversified Equity Fund: Common Stocks 369,796,552 269,727,282 Other* 623,223 623,223 -------------- ------------ $1,003,549,116 $903,479,846 ============== ============
* Other consists of interest and/or dividends receivable. Realized gains on investments sold and distributed during the years ended December 31, 1997 and 1996 are summarized as follows:
J&J Stock Fund Diversified Equity Fund -------------------------------------- -------------------------------------- Book Value Proceeds Gain Book Value Proceeds Gain ---------- -------- ---- ---------- -------- ---- 1997 $293,544 $546,383 $252,839 $2,374,058 $2,760,978 $386,920 1996 162,873 287,517 124,644 963,658 1,111,862 148,204
11 15 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 6. Tax Status: The Internal Revenue Service has determined and informed the Company by a letter dated April 26, 1996, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC. 7. Termination Priorities: The Company has the right to terminate the Plan at any time and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested. 8. Concentrations of Credit Risk Financial instruments which potentially subject the Plan to concentrations of credit risk consist principally of the Fixed Interest Fund holdings in fully benefit-responsive group annuity contracts with insurance and other financial institutions. The Fund places its fully benefit-responsive group annuity contracts with high-credit quality institutions and, by policy, limits the amount of credit exposure to any one financial institution. If any of the insurance companies that the group annuity contracts are invested with fail to perform according to the contract, the asset value of the Plan could be impaired. 9. Reconciliation of Financial Statements to Form 5500: The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, December 31, 1997 1996 ------------ ----------- Net Assets Available for Benefits $ 17,909,913 $12,011,274 Per the Financial Statements Amounts Allocated to Withdrawing Participants (51,617) (39,613) ------------ ----------- Net Assets Available for Benefits Per the Form 5500 $ 17,858,296 $11,971,661 ============ ===========
12 16 JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES NOTES TO FINANCIAL STATEMENTS, Continued 9. Reconciliation of Financial Statements to Form 5500 (continued):
Year Ended Year Ended December 31, December 31, 1997 1996 --------- -------- Benefits Paid to Participants Per the Financial Statements $848,785 $472,905 Add: Amounts Allocated to Withdrawing Participants at December 31, 1997 and 1996 51,617 39,613 Less: Amounts Allocated to Withdrawing Participants at December 31, 1996 and 1995 (39,613) (23,713) --------- -------- Benefits Paid to Participants Per the Form 5500 $ 860,789 $488,805 ========= ========
Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1997 and 1996 but not yet paid as of that date. 13 17 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997 FACE AMOUNT OR SHARES ISSUES COST FAIR VALUE --------- ------ ---- ---------- J&J STOCK FUND Common Stock 186,148 shs. Johnson & Johnson $7,074,363 $12,291,539 Temporary Investments $28 BT Pyramid Directed Account Cash Fund 28 28 ---------- ----------- Total J&J Stock Fund $7,074,391 $12,291,567 ========== =========== 14 18 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
DISPOSED ACQUIRED ------------------------------------------------- -------------------- SECURITY/PARTY GAIN/ DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS ----- ----- -------- ----- --------- ----- # of Transactions # of Transactions SERIES OF TRANSACTIONS: BT Pyramid Directed Account-Cash Fund (a) $1,883,968 $1,883,968 0 (a) $1,854,812 Johnson & Johnson Common Stock 122 $1,831,811
(a) Trustee is unable to provide detailed information on the number of transactions. 15 19 Supplemental Schedule JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
PURCHASES SALES ------------------------------- --------------------- NAME AFFILIATION COST SALES PRICE GAIN - ---- ----------- ---- ----------- ---- Johnson & Johnson Common Stock Plan Administrator $1,831,811 $ - $ -
16 20 COOPERS & LYBRAND L.L.P. LETTERHEAD CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Johnson & Johnson Savings Plan for Union Represented Employees on Form S-8 (File No. 33-52252) of our report dated June 5, 1998 on our audits of the financial statements and financial statement schedules of Johnson and Johnson Savings Plan as of December 31, 1997 and 1996, and for the years ended December 31, 1997 and 1996, which report is included in the Form 11-K. COOPERS & LYBRAND L.L.P. Parsippany, New Jersey June 26, 1998 -----END PRIVACY-ENHANCED MESSAGE-----