<PAGE> 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 ]
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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)
<PAGE> 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
<PAGE> 3
JOHNSON & JOHNSON SAVINGS PLAN
-----------
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
as of and for the years ended
December 31, 1997 and 1996
<PAGE> 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
<PAGE> 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
<PAGE> 6
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
------------------------------------------------------------------------------
Fixed Intermediate
USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund
--------- ------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
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
=========== ============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
DIRECTED Employee Stock Ownership
------------ Plan Trust Fund
Diversified -------------------------- Total
Equity Fund Loan Fund Allocated Unallocated Savings Plan
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
============ ========== ============ ============ ==============
</TABLE>
See Notes to Financial Statements
3
<PAGE> 7
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------
Fixed Intermediate
USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund
<S> <C> <C> <C> <C> <C>
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
=========== ============ =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
DIRECTED Employee Stock Ownership
----------- Plan Trust Fund
Diversified ------------------------- Total
Equity Fund Loan Fund Allocated Unallocated Savings Plan
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
============ ========== ============ =========== ==============
</TABLE>
See Notes to Financial Statements
4
<PAGE> 8
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
------------------------------------------------------------------------
Fixed Intermediate
USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund
--------- ------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
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
=========== ============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
DIRECTED Employee Stock Ownership
----------- Plan Trust Fund
Diversified ------------------------ Total
Equity Fund Loan Fund Allocated Unallocated Savings Plan
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
============ ========== ============ ============ ==============
</TABLE>
See Notes to Financial Statements
5
<PAGE> 9
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------
Fixed Intermediate
USGS Fund Interest Fund Bond Fund Balanced Fund J&J Stock Fund
--------- ------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
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
=========== ============ =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
DIRECTED Employee Stock Ownership
----------- Plan Trust Fund
Diversified ------------------------ Total
Equity Fund Loan Fund Allocated Unallocated Savings Plan
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
============ ========== ============ =========== ==============
</TABLE>
See Notes to Financial Statements
6
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
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
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
Johnson & Johnson Employee Stock Ownership
Stock Fund Plan Trust Fund Combined
Fair Value Cost Fair Value Cost Fair Value Cost
---------- ---- ---------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
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 $505,910,632
============ ============ ============ =========== ============== ============
</TABLE>
The investments in the U.S.G.S., Fixed Interest, and the Diversified
Equity Funds reflected in the accompanying Statement of Net Assets
Available for Benefits represent the Plan's share of investments
(approximately 99.5% of fair value) held by the Johnson & Johnson
Savings Plan Trust. Total investments held by the Savings Plan Trust on
behalf of the Plan and the Johnson & Johnson Savings Plan for Union
Represented Employees are summarized as follows:
<TABLE>
<CAPTION>
Description Fair Value Cost
----------- ---------- ----
<S> <C> <C>
USGS Fund:
U.S. Government Securities - Short Term$ 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 $1,055,147,590
============== ==============
</TABLE>
* Other consists of interest and/or dividends receivable.
11
<PAGE> 15
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. Investments, (continued):
The investments in the Intermediate Bond and Balanced Funds reflected
in the accompanying Statement of Net Assets Available for Benefits
represent the Plan's share of investments (approximately 5.2% of fair
value) held by the Johnson & Johnson Pension Trust Fund. Total
investments held by the Pension Trust Fund on behalf of the Plan and
the various Johnson & Johnson Pension Plans are summarized as follows:
<TABLE>
<CAPTION>
Description Fair Value Cost
----------- ---------- ----
<S> <C> <C>
U.S. Government Securities - Short Term$ $ 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
============== ==============
</TABLE>
Investments held by the Plan as of December 31, 1996 are summarized as
follows:
<TABLE>
<CAPTION>
Johnson & Johnson Employee Stock Ownership
Stock Fund Plan Trust Fund Combined
Fair Value Cost Fair Value Cost Fair Value Cost
---------- ---- ---------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
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
============ ============ ============ =========== ============ ============
</TABLE>
12
<PAGE> 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:
<TABLE>
<CAPTION>
Description Fair Value Cost
----------- ---------- ----
<S> <C> <C>
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
============== ==============
</TABLE>
* 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:
<TABLE>
<CAPTION>
Description Fair Value Cost
----------- ---------- ----
<S> <C> <C>
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
============== ==============
</TABLE>
13
<PAGE> 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:
<TABLE>
<CAPTION>
J&J Stock Fund Diversified Equity Fund Employee Stock Ownership Plan Fund
Book Value Proceeds Gain Book Value Proceeds Gain Book Value Proceeds Gain
---------- -------- ---- ---------- -------- ---- ---------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Intermediate Bond Fund Balanced Fund
Book Value Proceeds Gain Book Value Proceeds Gain
---------- -------- ---- ---------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
14
<PAGE> 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:
<TABLE>
<CAPTION>
<S> <C> <C>
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
===========
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
---- ----
<S> <C> <C>
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
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1997 1996
---- ----
<S> <C> <C>
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
============= =============
</TABLE>
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
<PAGE> 20
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE AMOUNT
OR SHARES ISSUES COST FAIR VALUE
<S> <C> <C> <C>
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
=========== ============
</TABLE>
17
<PAGE> 21
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE AMOUNT ISSUES FAIR VALUE
<S> <C> <C>
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
==========
</TABLE>
18
<PAGE> 22
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DISPOSED ACQUIRED
------------------------------------------------------- ---------------------------------
SECURITY/PARTY GAIN/
DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS
----- ----- -------- ------ --------- -----
(# of Transactions) (# of Transactions)
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
(a) Trustee is unable to provide detailed information on the number of
transactions.
19
<PAGE> 23
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
NAME AFFILIATION COST SALES PRICE GAIN
- ---- ----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Johnson & Johnson
Common Stock Plan Administrator $65,076,286 $ - $ -
</TABLE>
20
<PAGE> 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
<PAGE> 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)
<PAGE> 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
<PAGE> 3
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
-----------
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
as of and for the years ended
December 31, 1997 and 1996
<PAGE> 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
<PAGE> 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
<PAGE> 6
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
as of December 31, 1997 and 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
----------------------------------------------------------------
1997
----------------------------------------------------------------
Short-Term
Investment J&J Total
Fund Stock Fund Equity Fund Savings Plan
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
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
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
------------------------------------------------------------
1996
------------------------------------------------------------
Short-Term
Investment J&J Total
Fund Stock Fund Equity Fund Savings Plan
--------- ---------- --------- ------------
<S> <C> <C> <C> <C>
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
========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 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
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------
1997
--------------------------------------------------------------
Short-Term
Investment J&J Total
Fund Stock Fund Equity Fund Savings Plan
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
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
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------
1996
--------------------------------------------------------------
Short-Term
Investment J&J Total
Fund Stock Fund Equity Fund Savings Plan
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
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
========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
1997
----------------------------------------------------------------------------------------------------------
Short-Term Johnson & Johnson
Investment Fund Stock Fund Equity Fund Total
----------------------- --------------------------- ----------------------- -------------------------
Fair Value Cost Fair Value Cost Fair Value Cost Fair Value Cost
---------- ---------- ------------ ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
========== ========== =========== =========== ========== ========== =========== ===========
</TABLE>
8
<PAGE> 12
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
5. Investments, (continued):
1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Short-Term Johnson & Johnson
Investment Fund Stock Fund Equity Fund Total
---------------------- ------------------------- ---------------------- -------------------------
Fair Value Cost Fair Value Cost Fair Value Cost Fair Value Cost
---------- ---------- ----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
========== ========== =========== =========== ========== ========== =========== ===========
</TABLE>
Realized gains on investments sold and distributed during the years ended
December 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
J&J Stock Fund Equity Fund
----------------------------------------- -------------------------------------
Book Value Proceeds Gain Book Value Proceeds Gain
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
9
<PAGE> 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:
<TABLE>
<CAPTION>
December 31,
1997 1996
----------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Years Ended
December 31,
1997 1996
---------- -----------
<S> <C> <C>
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
========== ===========
</TABLE>
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
<PAGE> 14
Supplemental Schedule
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
FACE AMOUNT
OR SHARES ISSUES COST FAIR VALUE
--------- ------ ---- ----------
<S> <C> <C> <C>
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
============ ===========
</TABLE>
11
<PAGE> 15
Supplemental Schedule
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DISPOSED ACQUIRED
--------------------------------------------------------- ---------------------------------
SECURITY/PARTY GAIN/
DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS
(# of Transactions) (# of Transactions)
<S> <C> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS:
Johnson & Johnson
Common Stock 83 $2,329,047
The Vanguard Group 28 $960,755 $960,755 0 60 $1,023,250
</TABLE>
12
<PAGE> 16
Supplemental Schedule
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------------ ------------------------
NAME AFFILIATION COST SALES PRICE GAIN
- ---- ----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Johnson & Johnson
Common Stock Plan Administrator $4,163,659 $ - $ -
</TABLE>
13
<PAGE> 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
<PAGE> 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)
<PAGE> 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
<PAGE> 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
<PAGE> 4
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
INDEX
<TABLE>
<S> <C>
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
</TABLE>
1
<PAGE> 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
<PAGE> 6
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------------------
Fixed J&J Diversified Total
USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan
--------- ------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
======== ========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE> 7
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
------------------------------------------------------------------------------
Fixed J&J Diversified Total
USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan
-------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
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
======== =========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE> 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
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------------------------
Fixed J&J Diversified Total
USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan
-------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
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
======== ========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
5
<PAGE> 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
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
---------------------------------------------------------------------------
Fixed J&J Diversified Total
USGS Fund Interest Fund Stock Fund Equity Fund Savings Plan
--------- ------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
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
======== ========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
Description Fair Value Cost
-------------- -------------
<S> <C> <C>
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
============== ==============
</TABLE>
* Other consists of interest and/or dividends receivable.
10
<PAGE> 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:
<TABLE>
<CAPTION>
Johnson & Johnson
Stock Fund
-------------------------------
Fair Value Cost
-------------- --------------
<S> <C> <C>
Common Stocks:
Johnson & Johnson $7,946,360 $5,101,062
Temporary Cash Investments 12 12
-------------- --------------
$7,946,372 $5,101,074
============== ==============
</TABLE>
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:
<TABLE>
<CAPTION>
Description Fair Value Cost
-------------- ------------
<S> <C> <C>
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
============== ============
</TABLE>
* 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:
<TABLE>
<CAPTION>
J&J Stock Fund Diversified Equity Fund
-------------------------------------- --------------------------------------
Book Value Proceeds Gain Book Value Proceeds Gain
---------- -------- ---- ---------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
11
<PAGE> 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:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ -----------
<S> <C> <C>
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
============ ===========
</TABLE>
12
<PAGE> 16
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, Continued
9. Reconciliation of Financial Statements to Form 5500 (continued):
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1997 1996
--------- --------
<S> <C> <C>
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
========= ========
</TABLE>
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
<PAGE> 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
<PAGE> 18
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DISPOSED ACQUIRED
------------------------------------------------- --------------------
SECURITY/PARTY GAIN/
DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS
----- ----- -------- ----- --------- -----
# of Transactions # of Transactions
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
(a) Trustee is unable to provide detailed information on the number of
transactions.
15
<PAGE> 19
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
ITEM 27e - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------- ---------------------
NAME AFFILIATION COST SALES PRICE GAIN
- ---- ----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Johnson & Johnson
Common Stock Plan Administrator $1,831,811 $ - $ -
</TABLE>
16
<PAGE> 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
