<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 January 2, 2000
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:
Balance Sheets as of December 31, 1999 and 1998
Statement of Operations and Changes in Plan Equity
for the years ended December 31, 1999 and 1998
Notes to Financial Statements
Supplemental Schedules:
Schedule of Investments at December 31, 1999
Schedule of 5% Reportable Transactions for the year
ended December 31, 1999
Consent of PricewaterhouseCoopers LLP, dated June 23, 2000
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
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
JOHNSON & JOHNSON SAVINGS PLAN
By: /s/ R. J. Darretta
---------------------------------
R. J. Darretta
Chairman, Pension Committee
June 26, 2000
<PAGE> 3
JOHNSON & JOHNSON SAVINGS PLAN
------------------
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
<PAGE> 4
JOHNSON & JOHNSON SAVINGS PLAN
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, 1999 and 1998 3-4
Statements of Changes in Net Assets Available for
Benefits with Fund Information for the Years Ended
December 31, 1999 and 1998 5-6
Notes to Financial Statements 7-18
Supplemental Schedules:
Item 27a - Schedule of Assets Held For Investment Purposes
at December 31, 1999 19-20
Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1999 21
</TABLE>
1
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Pension and Benefits Committees of
Johnson & Johnson
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Johnson & Johnson Savings Plan (the "Plan") as of December 31, 1999 and
1998, and the changes in net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes and schedule of reportable transactions 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 Plan's management. The fund information
in the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for the purposes of
additional analysis rather than to present the net assets available for benefits
and 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.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 12, 2000
2
<PAGE> 6
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1999
<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) $ 619,495,943
Investments at Fair Value (Notes 2 and 6) $1,274,441,036
Investments in Master Trust (Notes 2 and 6) $ 28,246,092 $29,024,706 $ 242,641,025
Accrued Dividends and Interest Receivable 137,293 3,351,875 20,684
Due From Johnson & Johnson
Assets Designated For Transfer (Note 2)
Hardship Loans to Participants
------------- -------------- ------------ ------------- --------------
Total Assets $ 28,383,385 $ 622,847,818 $29,024,706 $ 242,641,025 $1,274,461,720
============= ============== ============ ============= ==============
LIABILITIES:
------------
Accrued Expenses $ 7,875 $ 13,551 $ 560 $ 4,674 $ 24,742
Accrued Interest
Current Portion of Long Term Note
Long-Term Note Payable to J&J
------------- ------------- ------------ ------------- --------------
Total Liabilities 7,875 13,551 560 4,674 24,742
------------- -------------- ------------ ------------- --------------
Net Assets Available for Benefits $ 28,375,510 $ 622,834,267 $29,024,146 $242,636,351 $1,274,436,978
============= ============== ============ ============= ==============
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------
--------------------------------
Diversified International
Equity Fund Equity Fund Loan Fund
----------- ----------- ---------
<S> <C> <C> <C>
ASSETS:
-------
Deposits in Group Annuity Contracts (Note 2)
Investments at Fair Value (Notes 2 and 6)
Investments in Master Trust (Notes 2 and 6) $ 986,602,365 $37,668,554
Accrued Dividends and Interest Receivable 754,221 $ 684,389
Due From Johnson & Johnson
Assets Designated For Transfer (Note 2)
Hardship Loans to Participants 6,657,875
------------- ------------ ------------
Total Assets $ 987,356,586 $37,668,554 $ 7,342,264
============= ============ ============
LIABILITIES:
------------
Accrued Expenses $ 433,361 $ 794
Accrued Interest
Current Portion of Long Term Note
Long-Term Note Payable to J&J
--------------- ------------ ------------
Total Liabilities 433,361 794
------------- ------------ ------------
Net Assets Available for Benefits $ 986,923,225 $37,667,760 $ 7,342,264
============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
Employee Stock Ownership
Plan Trust Fund
------------------------------ Total
Allocated Unallocated Savings Plan
-------------- ----------- --------------
<S> <C> <C> <C>
ASSETS:
-------
Deposits in Group Annuity Contracts (Note 2) $ 619,495,943
Investments at Fair Value (Notes 2 and 6) $ 313,847,547 $209,286,879 1,797,575,462
Investments in Master Trust (Notes 2 and 6) 1,324,182,742
Accrued Dividends and Interest Receivable 18,961 11,205 4,978,628
Due From Johnson & Johnson 5,272,782 5,272,782
Assets Designated For Transfer (Note 2) 30,948,281 (30,948,281)
Hardship Loans to Participants 6,657,875
-------------- ---------------- --------------
Total Assets $ 344,814,789 $ 183,622,585 $3,758,163,432
============== ============== ==============
LIABILITIES:
------------
Accrued Expenses $ 485,557
Accrued Interest $ 3667,289 3,667,289
Current Portion of Long Term Note 7,289,791 7,289,791
Long-Term Note Payable to J&J 39,278,957 39,278,957
-------------- -------------- --------------
Total Liabilities 50,236,037 50,721,594
-------------- -------------- --------------
Net Assets Available for Benefits $ 344,814,789 $ 133,386,548 $3,707,441,838
============== ============== ==============
</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, 1998
<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) $ 632,365,945
Investments at Fair Value (Notes 2 and 6) $1,128,154,493
Investments in Master Trust (Notes 2 and 6) $ 29,463,932 $ 34,191,309 $ 162,347,846
Accrued Dividends and Interest Receivable 129,053 3,277,090 29,633
Due From Johnson & Johnson
Assets Designated For Transfer (Note 2)
Hardship Loans to Participants
-------------- ------------- ------------ ------------- ----------------
Total Assets $ 29,592,985 $ 635,643,035 $34,191,309 $ 162,347,846 $1,128,184,126
-------------- ------------- ------------ ------------- ----------------
LIABILITIES:
------------
Accrued Expenses $ 13,803 $ 91,373 $ 4,664 $ 22,435 $ 157,680
Accrued Interest
Current Portion of Long Term Note
Long-Term Note Payable to J&J
---------------------------------------------------------------------------------
Total Liabilities 13,803 91,373 4,664 22,435 157,680
------------- ------------- ----------- ------------- ----------------
Net Assets Available for Benefits $ 29,579,182 $ 635,551,662 $34,186,645 $ 162,325,411 $ 1,128,026,446
============= ============= ============ ============= ================
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Employee Stock Ownership
-------------
Diversified Plan Trust Fund Total
----------------------------------
Equity Fund Loan Fund Allocated Unallocated Savings Plan
----------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
-------
Deposits in Group Annuity Contracts (Note 2) $ 632,365,945
Investments at Fair Value (Notes 2 and 6) $ 261,654,218 $ 222,956,246 1,612,764,957
Investments in Master Trust (Notes 2 and 6) $ 760,180,137 986,183,224
Accrued Dividends and Interest Receivable 4,153,061 $ 69,415 13,941 10,864 7,683,057
Due From Johnson & Johnson 6,101,554 6,101,554
Assets Designated For Transfer (Note 2) 25,503,960 (25,503,960)
Hardship Loans to Participants 7,082,452 7,082,452
-------------- ----------- -------------- -------------- --------------
Total Assets $ 764,333,198 $ 7,151,867 $ 287,172,119 $ 203,564,704 $3,252,181,189
-------------- ----------- -------------- -------------- ---------------
LIABILITIES:
------------
Accrued Expenses $ 390,223 $ 680,178
Accrued Interest $ 4,215,037 4,215,037
Current Portion of Long Term Note 6,955,528 6,955,528
Long-Term Note Payable to J&J 46,568,748 46,568,748
-------------- ------------ -------------- -------------- -----------
Total Liabilities 390,223 57,739,313 58,419,491
-------------- ------------ -------------- -------------- -----------
Net Assets Available for Benefits $ 763,942,975 $ 7,151,867 $ 287,172,119 $ 245,825,391 $3,193,761,698
============== ============ ============== ============== ==============
</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, 1999
<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) $1,629,429 $19,653,404 $3,180,896 $16,445,043 $61,171,784
Employer Contributions (Note 3 and 9) 428,788 5,601,257 853,262 4,366,018 18,248,831
Interest 1,463,760 40,127,431 2,101,667 4,011,435 151,835
Dividends 14,777,191
----------- ------------- ------------ ------------- --------------
Additions to (Deductions from) Plan Equity: 3,521,977 65,382,092 6,135,825 24,822,496 94,349,641
-------------------------------------------
Innotech Transfer-In (10/99) (Note 1) 43,111 13,522 10,422 83,755 117,543
Payments to Participants (Note 4) (2,470,088) (37,803,734) (2,597,174) (8,257,630) (78,184,356)
Change in Unrealized Net Appreciation of Investments (1,127,037) 26,601,939 61,581,145
Realized Net Gain on Sale of Investments (877,907) 29,675,778 56,460,832
Interest Expense
Administrative Expenses (68,172) (373,775) (88,328) (785,498) (747,072)
Assets Transferred (Note 2) (2,230,500) (39,935,980) (6,618,300) 8,170,100 12,832,799
----------- ------------- ------------ ------------- --------------
Net Increase (Decrease) (1,203,672) (12,717,875) (5,162,499) 80,310,940 146,410,532
Net Assets Available for Benefits,
Beginning of Year 29,579,182 635,551,662 34,186,645 162,325,411 1,128,026,446
----------- ------------- ------------ ------------- --------------
Net Assets Available for Benefits,
End of Year $28,375,510 $622,833,787 $29,024,146 $242,636,351 $1,274,436,978
=========== ============= ============ ============= ==============
<CAPTION>
----------------------------------------
--------------------------
Diversified International
Equity Fund Equity Fund Loan Fund
------------ ------------- -----------
<S> <C> <C> <C>
Employee Contributions (Note 3) $51,881,825 $1,724,853
Employer Contributions (Note 3 and 9) 13,936,300 434,923
Interest 155,320 $615,080
Dividends 10,645,313
------------ ------------- -----------
Additions to (Deductions from) Plan Equity: 76,463,438 2,315,096 615,080
-------------------------------------------
Innotech Transfer-In (10/99) (Note 1) 191,059 6,149
Payments to Participants (Note 4) (41,789,341) (181,611) (424,683)
Change in Unrealized Net Appreciation of Investments 74,704,075 7,674,513
Realized Net Gain on Sale of Investments 113,737,242 1,860,524
Interest Expense
Administrative Expenses (2,815,223) (53,312)
Assets Transferred (Note 2) 2,489,000 26,046,401
------------ ------------- -----------
Net Increase (Decrease) 222,980,250 37,667,760 190,397
Net Assets Available for Benefits,
Beginning of Year 763,942,975 7,151,867
------------ ------------- -----------
Net Assets Available for Benefits,
End of Year $986,923,225 $37,667,760 $7,342,264
============ ============= ===========
<CAPTION>
-------------------------------------------------
Employee Stock Ownership
Plan Trust Fund
------------------------- Total
Allocated Unallocated Savings Plan
------------ ------------- --------------
<S> <C> <C> <C>
Employee Contributions (Note 3) $ 155,687,234
Employer Contributions (Note 3 and 9) $ 5,272,782 49,142,161
Interest $ 117,993 72,360 48,816,881
Dividends 688,982 5,445,531 31,557,017
------------ ------------- --------------
Additions to (Deductions from) Plan Equity: 806,975 10,790,673 285,203,293
-------------------------------------------
Innotech Transfer-In (10/99) (Note 1) 465,561
Payments to Participants (Note 4) (12,333,034) (184,041,651)
Change in Unrealized Net Appreciation of Investments 52,114,532 (9,352,227) 212,196,940
Realized Net Gain on Sale of Investments 8,199,865 209,056,334
Interest Expense (4,269,437) (4,269,437)
Administrative Expenses (4,931,380)
Assets Transferred (Note 2) 8,854,332 (9,607,852)
------------ ------------- --------------
Net Increase (Decrease) 57,642,670 (12,438,843) 513,679,660
Net Assets Available for Benefits,
Beginning of Year 287,172,119 145,825,391 3,193,761,698
------------ ------------- --------------
Net Assets Available for Benefits,
End of Year $344,814,789 $133,386,548 $3,707,441,358
============ ============= ==============
</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, 1998
<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) $ 1,429,359 $ 22,174,292 $ 3,208,058 $ 15,233,773 $ 57,631,178
Employer Contributions (Note 3 and 9) 432,990 6,675,429 862,892 4,085,683 15,930,284
Interest 1,319,347 40,422,516 1,697,138 3,091,407 123,759
Dividends 12,716,300
----------- ------------- ------------ ------------- --------------
Additions to (Deductions from) Net Assets: 3,181,696 69,272,237 5,768,088 22,410,863 86,401,521
------------------------------------------
UltraCision Transfer-In (7/98) (Note 1) 187,001 51,375 17,018 161,539
Clinical Diagnostics Transfer-In (10/98) (Note 1) 6,900,030 8,383,866 2,006,692 6,486,945 7,352,413
Payments to Participants (Note 4) (2,835,340) (33,642,754) (928,359) (6,299,485) (49,520,871)
Change in Unrealized Net Appreciation of Investments (360,448) 11,684,861 176,370,772
Realized Net Gain on Sale of Investments 292,358 9,638,810 50,950,685
Interest Expense
Administrative Expenses (49,351) (438,965) (70,957) (514,817) (704,201)
Assets Transferred (Note 2) (705,695) (29,780,065) 6,241,449 5,189,088 (6,330,091)
----------- ------------- ------------ ------------- --------------
Net Increase (Decrease) 6,678,341 13,845,694 12,948,823 48,613,283 264,681,767
Net Assets Available for Benefits,
Beginning of Year 22,900,841 621,705,968 21,237,822 113,712,128 863,344,679
----------- ------------- ------------ ------------- --------------
Net Assets Available for Benefits,
End of Year $29,579,182 $ 635,551,662 $ 34,186,645 $ 162,325,411 $1,128,026,446
=========== ============= ============ ============= ==============
<CAPTION>
--------------------------------------------------------------------------
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) $ 44,725,916 $ 144,402,576
Employer Contributions (Note 3 and 9) 12,299,744 $ 6,101,554 46,388,576
Interest $ 528,053 $ 101,758 79,368 47,363,346
Dividends 8,829,920 653,065 4,940,274 27,139,559
------------ ----------- ------------ ------------- --------------
Additions to (Deductions from) Net Assets: 65,855,580 528,053 754,823 11,121,196 265,294,057
------------------------------------------
UltraCision Transfer-In (7/98) (Note 1) 227,676 644,609
Clinical Diagnostics Transfer-In (10/98) (Note 1) 12,457,112 59,601 43,646,659
Payments to Participants (Note 4) (23,679,257) (760,745) (7,848,364) (125,515,175)
Change in Unrealized Net Appreciation of Investments 68,650,503 70,761,168 24,853,465 351,960,321
Realized Net Gain on Sale of Investments 64,047,658 6,421,322 131,350,833
Interest Expense (4,892,068) (4,892,068)
Administrative Expenses (1,523,643) (3,301,934)
Assets Transferred (Note 2) 25,844,569 9,331,121 (9,790,376)
------------ ----------- ------------ ------------- --------------
Net Increase (Decrease) 211,880,198 (173,091) 79,420,070 21,292,217 659,187,302
Net Assets Available for Benefits,
Beginning of Year 552,062,777 7,324,958 207,752,049 124,533,174 2,534,574,396
------------ ----------- ------------ ------------- --------------
Net Assets Available for Benefits,
End of Year $763,942,975 $ 7,151,867 $287,172,119 $ 145,825,391 $3,193,761,698
============ =========== ============ ============= ==============
</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") is a defined contribution
plan which was established on June 1, 1982 for eligible salaried and
non-union hourly employees of Johnson & Johnson ("J&J" or 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 a Leveraged 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"). Additionally, the Company
may elect to fund the employer 50% match of employee directed
contributions with ESOP leveraged shares.
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, 2,206,210
(adjusted for stock splits) remain unallocated as of December 31, 1999.
These shares are allocated to Plan participants under a formula set forth
in the note agreement relating to the advance from J&J. Accordingly, the
financial statements of the Plan for the years 1999 and 1998 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. The Company is entitled to
exercise voting rights attributable to unallocated shares.
7
<PAGE> 11
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
1. Organization (Continued):
In the third quarter of 1998, Johnson & Johnson incorporated a "dividend
pass-through" feature into the Plan. This feature allows a participant to
receive cash for dividends paid on certain shares owned through the plan.
To receive a dividend pass-through, it is contingent on the ownership of
shares in the Johnson & Johnson Stock Fund and it does not apply to any
share owned in Employee Stock Ownership Plan Trust Fund. In order to
receive dividend pass-through amounts, participant eligibility is based
on the lesser of (a) 20% of the eligible compensation (annual base pay
rate for the year plus 50% of prior calendar year commissions) and (b)
IRS Pre-tax compensation limit ($10,000 in 1999) reduced by the estimated
pre-tax contribution for the year (current pre-tax percentage multiplied
by the eligible compensation for the year). For the 1999 and 1998 plan
years, the dividend pass-through amounts recorded in the Plan statement
of changes in net assets available for benefits as dividend income and
payments to participants were $8,407,284 and $4,259,619 respectively.
On October 1, 1999, the assets of the Innotech 401(k) Retirement Plan
were transferred into the Plan. On October 1, 1998 and December 1, 1998,
the assets of the Clinical Diagnostics 401(k) Retirement Plan were
transferred into the Plan; and on July 1, 1998, the assets of the
UltraCision 401(k) Retirement Plan were transferred into the Plan.
2. Summary of Significant Accounting Policies:
Valuation of Investments:
Equity investments in the Johnson & Johnson Stock Fund and the ESOP,
administered by 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 US Government Securities (the "USGS Fund"), Fixed
Interest, and Diversified Equity funds represent the Plan's share of
assets in the Johnson & Johnson Savings Plan Trust ("Savings Plan
Trust"). The USGS Fund consists of short-term obligations that are issued
or guaranteed by the US Government. Investments are valued at cost which
approximates market value. 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.
8
<PAGE> 12
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies (Continued):
The average yield of the Fixed Interest Fund was approximately 6.56% for
1999 and 6.71% for 1998. The crediting interest rate of the Fixed
Interest Fund was approximately 6.63% for 1999 and 6.77% for 1998. 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.
In the first quarter of 1999, the Company incorporated an additional fund
to the Plan, the International Equity Fund. The International Equity
Fund, managed by American Express Management and Capital Guardian Trust
Company, invests primarily in equities sold on foreign exchange markets.
These investments are valued at the last reported market sales price on
the last business day of the year. The investment in the fund represents
the Plan's share of the assets in the Pension Trust Fund.
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 in the Statement of Changes in Net
Assets Available for Benefits. With respect to the ESOP, transfers
represent shares allocated to the participants.
9
<PAGE> 13
JOHNSON & JOHNSON 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
accounting principles generally accepted in the United States 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 bases on the quarterly percentage of assets in each of
the six investment funds.
All third party administrative expenses are paid by the Plan, except cost
of entering new investment vehicles which are paid primarily by Johnson &
Johnson.
10
<PAGE> 14
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 20% of their base salary including 50
percent of eligible commissions or $10,000 in 1999 and 16% of their base
salary including 50 percent of eligible commissions or $10,000 in 1998.
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 seven 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, 1999 and
1998 was:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
U.S. Government Securities Fund 3,066 3,063
Fixed Interest Fund 16,310 17,580
Intermediate Bond Fund 4,070 4,091
Balanced Fund 11,695 10,327
Johnson & Johnson Stock Fund 29,507 27,360
Employee Stock Ownership Plan 35,341 33,713
Diversified Equity Fund 24,152 22,180
International Equity Fund 2,697 N/A
</TABLE>
Participants may elect to invest in more than one fund and can change
investment direction once every three months. A total of 38,162 and
36,704 active and former employees had investments in the Plan for 1999
and 1998, respectively.
11
<PAGE> 15
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
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 on 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.
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.
12
<PAGE> 16
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments:
Investments held by the Plan as of December 31, 1999 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 $1,271,834,329 $556,635,747 $516,545,250 $86,999,081 $1,788,379,579 $662,469,734
Temporary Cash Investments 2,606,707 2,606,707 6,589,176 6,589,176 9,195,883 9,195,884
-------------- -------------- --------------- ----------- -------------- -----------
$1,274,441,036 $559,242,454 $523,134,426 $93,588,257 $1,797,575,462 $671,665,618
============== ============== =============== =========== ============== ============
</TABLE>
The investments in the USGS, 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 99.4% 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 $ 29,313,150 $ 29,313,150
Other* 142,201 142,201
Fixed Interest Fund:
Deposits in Group Annuity Contracts 621,653,591 621,653,591
Other* 3,363,553 3,363,553
Diversified Equity Fund:
Common Stocks 992,698,523 700,989,649
Other* 758,881 758,881
-------------- --------------
$1,647,929,899 $1,356,221,025
============== ==============
</TABLE>
* Other consists of interest and/or dividends receivable.
13
<PAGE> 17
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments, (continued):
As of December 31, 1999, the investments in the Intermediate Bond,
Balanced and International Equity Funds reflected in the accompanying
Statement of Net Assets Available for Benefits represent the Plan's
share of investments (approximately 7.9% 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 $ 19,517,115 $ 19,433,889
U.S. Government Securities - Long Term 310,817,373 317,925,206
Corporate Bonds & Notes - Long Term 202,228,167 215,804,216
Common Stocks:
Johnson & Johnson 421,228,900 23,727,279
Other 2,582,214,040 1,799,521,532
Preferred Stocks 21,154,649 13,841,946
Commingled Investment Funds 234,314,860 195,153,996
Temporary Investments 99,507,974 100,313,591
Other 24,206,592 24,231,052
-------------- --------------
$3,915,189,670 $2,709,952,707
============== ==============
</TABLE>
Investments held by the Plan as of December 31, 1998 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 $1,123,468,342 $469,850,905 $478,730,076 $91,946,210 $1,602,198,418 $561,797,115
Temporary Cash Investments 4,686,151 4,686,151 5,880,388 5,880,388 10,566,539 10,566,539
------------------------------ -------------------------- -----------------------------
$1,128,154,493 $474,537,056 $484,610,464 $97,826,598 $1,612,764,957 $572,363,654
============== ============ ============ =========== ============== ============
</TABLE>
14
<PAGE> 18
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments, (continued):
As of December 31, 1998, the investments in the USGS, 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 $ 30,466,695 $ 30,466,695
Other* 138,992 138,992
Fixed Interest Fund:
Deposits in Group Annuity Contracts 634,215,282 634,215,282
Other* 3,286,951 3,286,951
Diversified Equity Fund:
Common Stocks 764,674,566 548,124,829
Other* 4,178,130 4,178,130
-------------- --------------
$1,436,960,616 $1,220,410,879
============== ==============
</TABLE>
* Other consists of interest and/or dividends receivable.
As of December 31, 1998, 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 6.5% 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 $ 88,842,142 $ 86,445,403
Corporate Bonds & Notes - Short Term 120,087,554 120,447,976
U.S. Government Securities - Long Term 109,212,710 108,202,456
Corporate Bonds & Notes - Long Term 118,451,198 124,404,110
Common Stocks:
Johnson & Johnson 420,817,650 26,353,605
Other 1,792,008,039 1,423,899,173
Preferred Stocks 30,757,224 26,973,063
Commingled Investment Funds 204,839,027 195,837,097
Temporary Investments 82,892,180 83,127,335
Other 42,063,434 41,991,873
-------------- --------------
$3,009,971,158 $2,237,682,091
</TABLE>
15
<PAGE> 19
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, 1999 and 1998 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>
1999 $86,129,736 $142,590,568 $56,460,832 $633,256,161 $746,993,403 $113,737,242 $9,126,789 $17,326,654 $8,199,865
1998 54,377,538 105,328,223 50,950,658 537,294,947 601,342,605 64,047,658 5,461,721 11,883,043 6,421,322
</TABLE>
<TABLE>
<CAPTION>
Intermediate Bond Fund Balanced Fund International Equity Fund
------------------------------------- ---------------------------------------- --------------------------------------
Book Value Proceeds Gain/(Loss) Book Value Proceeds Gain Book Value Proceeds Gain
---------- ------------ ------------- ---------- ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $60,324,026 $59,446,119 $(877,907) $270,641,548 $300,317,326 $29,675,778 $17,823,861 $19,684,385 $1,860,524
1998 45,282,372 45,574,730 292,358 174,560,399 184,199,209 9,638,810 N/A N/A N/A
</TABLE>
16
<PAGE> 20
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>
<S> <C>
2000 $ 7,289,791
2001 7,664,462
2002 8,082,746
2003 8,548,156
2004 9,064,538
Thereafter 5,919,055
-----------
$46,568,748
</TABLE>
In the event of Plan termination or of termination of the ESOP 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.
17
<PAGE> 21
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
10. Concentrations of Credit Risk, (Continued):
The Fixed Interest 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,
1999 1998
--------------- ---------------
<S> <C> <C>
Net Assets Available for Benefits
Per the Financial Statements $ 3,707,441,838 $ 3,193,761,698
Amounts Allocated to Withdrawing Participants (6,895,528) (8,151,647)
--------------- ---------------
Net Assets Available for Benefits Per the Form 5500 $ 3,700,546,310 $ 3,185,610,051
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Benefits Paid to Participants Per the Financial Statements $ 184,041,651 $ 125,515,175
Add: Amounts Allocated to Withdrawing Participants at
December 31, 1999 and 1998 6,895,528 8,151,647
Less: Amounts Allocated to Withdrawing Participants
at December 31, 1998 and 1997 (8,151,647) (6,758,039)
------------- -------------
Benefits Paid to Participants Per the Form 5500 $ 182,785,532 $ 126,908,783
============= =============
</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, 1999 and 1998 but not yet paid as of that date.
18
<PAGE> 22
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
FACE AMOUNT
OR SHARES ISSUES COST FAIR VALUE
----------- ------ ----------------- ----------
<S> <C> <C> <C>
J&J STOCK FUND
Common Stock
13,807,910 shs. Johnson & Johnson $556,635,747 $1,271,834,329
Temporary Investments
$2,606,707 BT Pyramid Directed
Account Cash Fund 2,606,707 2,606,707
--------------- ------------------
Total J&J Stock Fund $559,242,454 $1,274,441,036
============== ==============
EMPLOYEE STOCK OWNERSHIP PLAN TRUST FUND
Common Stock
5,909,816 shs. Johnson & Johnson $86,999,081 $516,545,250
Temporary Investment
$6,589,176 BT Pyramid Directed
Account Cash Fund 6,589,176 6,589,176
------------- -------------
Total ESOP Trust Fund $93,588,257 $523,134,426
============= ============
</TABLE>
19
<PAGE> 23
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
FACE AMOUNT ISSUES FAIR VALUE
----------- ------ ----------
<S> <C> <C>
Loan Fund
$6,657,875 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.) $6,657,875
684,389 Interest Receivable 684,389
-------------
Total Loan Fund $7,342,264
=============
</TABLE>
20
<PAGE> 24
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DISPOSED ACQUIRED
------------------------------------------- ----------------------
SECURITY/PARTY GAIN/
DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COST
----- -------- -------- ------ --------- ----
<S> <C> <C> <C> <C> <C>
(# of Transactions) (# of Transactions)
SERIES OF TRANSACTIONS:
BT Pyramid Directed
Account-Cash Fund (a) $98,648,975 $98,648,975 $ - (a) $95,095,030
Johnson & Johnson
Common Stock 158 $72,547,729
</TABLE>
(a) Trustee is unable to provide detailed information on the number of
transactions.
21
<PAGE> 25
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 33-40294) of Johnson & Johnson of our report
dated June 12, 2000 relating to the financial statements and financial statement
schedules of the Johnson & Johnson Savings Plan, which appears in this Form
11-K.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 23, 2000
