Johnson & Johnson is a global American pharmaceutical and consumer goods company with headquarters in New Brunswick, New Jersey. The company is listed in the Dow Jones Industrial Average.
1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 2, 2000 COMMISSION FILE NUMBER 1-3215 JOHNSON & JOHNSON (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) <TABLE> <S> <C> NEW JERSEY 22-1024240 (State of (I.R.S. Employer Incorporation) Identification No.) ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Address of principal executive offices) (Zip Code) </TABLE> Registrant's telephone number, including area code (732) 524-0400 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT <TABLE> <CAPTION> TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- <S> <C> Common Stock, Par Value $1.00 New York Stock Exchange </TABLE> Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X] The aggregate market value of the voting stock held by non-affiliates of the registrant on February 22, 2000 was approximately $108.1 billion. On February 22, 2000 there were 1,389,935,650 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE <TABLE> <S> <C> Parts I and Portions of registrant's annual report to shareowners for II: fiscal year 1999. Part III: Portions of registrant's proxy statement for its 2000 annual meeting of shareowners. </TABLE> - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
2 PART I <TABLE> <CAPTION> ITEM PAGE - ---- ---- <S> <C> <C> 1. Business.................................................... 1 General..................................................... 1 Segments of Business; Geographic Areas...................... 1 Consumer.................................................... 1 Pharmaceutical.............................................. 1 Professional................................................ 2 International............................................... 2 Raw Materials............................................... 2 Patents and Trademarks...................................... 2 Seasonality................................................. 3 Competition................................................. 3 Research.................................................... 3 Environment................................................. 3 Regulation.................................................. 3 2. Properties.................................................. 4 3. Legal Proceedings........................................... 5 4. Submission of Matters to a Vote of Security Holders......... 5 Executive Officers of the Registrant........................ 5 PART II 5. Market for the Registrant's Common Equity and Related Shareowner Matters.......................................... 6 6. Selected Financial Data..................................... 6 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 6 7A. Quantitative and Qualitative Disclosures About Market Risk........................................................ 7 8. Financial Statements and Supplementary Data................. 7 9. Changes in and Disagreements on Accounting and Financial Disclosure.................................................. 7 PART III 10. Directors and Executive Officers of the Registrant.......... 7 11. Executive Compensation...................................... 7 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 7 13. Certain Relationships and Related Transactions.............. 7 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................................... 8 Signatures.................................................. 10 Report of Independent Accountants........................... 12 Exhibit Index............................................... 13 </TABLE> Form 10-Q Quarterly Reports Available. A copy of Johnson & Johnson's Quarterly Report on Form 10-Q for any of the first three quarters of the current fiscal year, without exhibits, will be provided without charge to any shareowner submitting a written request to the Secretary at the principal executive offices of the Company or by calling 800-328-9033. Each report will be available about 45 days after the end of the quarter to which it relates.
3 PART I ITEM 1. BUSINESS GENERAL Johnson & Johnson, employing approximately 97,800 people worldwide, is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson & Johnson's primary interest, both historically and currently, has been in products related to health and well-being. Johnson & Johnson was organized in the State of New Jersey in 1887. Johnson & Johnson is organized on the principles of decentralized management. The Executive Committee of Johnson & Johnson is the principal management group responsible for the operations of Johnson & Johnson. In addition, certain Executive Committee members serve as Worldwide Chairmen of Group Operating Committees, which are comprised of managers who represent key operations within the group, as well as management expertise in other specialized functions. These Committees oversee and coordinate the activities of domestic and international companies related to each of the Consumer, Pharmaceutical and Professional segments of business. Operating management of each company is headed by a Chairman, President, General Manager or Managing Director who reports directly to, or through a line executive to, a Group Operating Committee. In line with this policy of decentralization, each international subsidiary is, with some exceptions, managed by citizens of the country where it is located. SEGMENTS OF BUSINESS; GEOGRAPHIC AREAS Johnson & Johnson's worldwide business is divided into three segments: Consumer, Pharmaceutical and Professional. Johnson & Johnson further categorizes its sales and operating profit by major geographic areas of the world. Additional information required by this item is incorporated herein by reference to the narrative and tabular (but not the graphic) descriptions of segments and geographic areas captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Segments of Business, Consumer, Pharmaceutical, Professional and Geographic Areas" on pages 26 through 29 and 45 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. CONSUMER The Consumer segment's principal products are personal care and hygienic products, including nonprescription drugs, adult skin and hair care products, baby care products, oral care products, first aid products and sanitary protection products. Major brands include AVEENO skin care products; BAND-AID Brand Adhesive Bandages; BENECOL food products; CAREFREE Panty Shields; CLEAN & CLEAR teen skin care products; IMODIUM A-D, an antidiarrheal; JOHNSON'S Baby line of products; JOHNSON'S pH 5.5 skin and hair care products; LACTAID lactose-intolerance products; MONISTAT, a remedy for vaginal yeast infections; adult and children's MOTRIN IB ibuprofen products; MYLANTA gastrointestinal products and PEPCID AC Acid Controller from the Johnson & Johnson - Merck Consumer Pharmaceuticals Co.; NEUTROGENA skin and hair care products; o.b. Tampons; PENATEN and NATUSAN baby care products; PIZ BUIN and SUNDOWN sun care products; REACH toothbrushes; RoC skin care products; SHOWER TO SHOWER personal care products; STAYFREE sanitary protection products; and the broad family of TYLENOL acetaminophen products. These products are marketed principally to the general public and distributed both to wholesalers and directly to independent and chain retail outlets. PHARMACEUTICAL The Pharmaceutical segment's principal worldwide franchises are in the antifungal, anti-infective, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management and psychotropic fields. These products are distributed both directly and through wholesalers for use by health care professionals and the general public. Prescription drugs in the antifungal field include NIZORAL (ketoconazole), SPORANOX (itraconazole), TERAZOL (terconazole) and DAKTARIN (miconazole nitrate) antifungal products. Prescription drugs in the anti-infective field include
4 FLOXIN (ofloxacin) and LEVAQUIN (levofloxacin). Prescription drugs in the cardiovascular field include RETAVASE (reteplase), a recombinant biologic cardiology care product for the treatment of acute myocardial infarction to improve blood flow to the heart, and REOPRO (abciximab) for the treatment of acute cardiac disease. Prescription drugs in the contraceptive field include ORTHO-NOVUM (norethindrone/ethinyl estradiol) and TRICILEST (norgestimate/ethinyl estradiol, sold in the U.S. as ORTHO TRI-CYCLEN) group of oral contraceptives. Prescriptions drugs in the dermatology field include RETIN-A MICRO (tretinoin), a dermatological cream for acne. Prescription drugs in the gastrointestinal field include ACIPHEX (rabeprazole sodium), a proton pump inhibitor for treating erosive gastroesophageal reflux disease (GERD) and duodenal ulcers; IMODIUM (loperamide HCl), an antidiarrheal; MOTILIUM (domperidone), a gastrointestinal mobilizer; PREPULSID (cisapride, sold in the U.S. as PROPULSID), a gastrointestinal prokinetic; and REMICADE (infliximab), a novel monoclonal antibody for treatment of certain Crohn's disease patients. Prescription drugs in the hematology field include EPREX (epoetin alfa, sold in the U.S. as PROCRIT), a biotechnology derived version of the human hormone erythropoietin that stimulates red blood cell production. Prescription drugs in the immunology field include ORTHOCLONE OKT-3 (muromonab-CD3), for reversing the rejection of kidney, heart and liver transplants. Prescription drugs in the neurology field include REMINYL (galantamine), TOPAMAX (topiramate) and STUGERON (cinnarizine). Prescription drugs in the oncology field include ERGAMISOL (levamisole hydrochloride), a colon cancer drug, and LEUSTATIN (cladribine), for hairy cell leukemia. Prescription drugs in the pain management field include DURAGESIC (fentanyl transdermal system, sold abroad as DUROGESIC), a transdermal patch for chronic pain; and ULTRAM (tramadol hydrochloride), an analgesic for moderate to moderately severe pain. Prescription drugs in the psychotropics field include RISPERDAL (risperidone), an antipsychotic drug, and HALDOL (haloperidol). PROFESSIONAL The Professional segment includes a broad range of products used by or under the direction of health care professionals, including, suture and mechanical wound closure products, surgical equipment and devices, wound management and infection prevention products, interventional and diagnostic cardiology products, diagnostic equipment and supplies, joint replacements and disposable contact lenses. These products are used principally in the professional fields by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. Distribution to these markets is done both directly and through surgical supply and other dealers. INTERNATIONAL The international business of Johnson & Johnson is conducted by subsidiaries manufacturing in 35 countries outside the United States and selling in over 175 countries throughout the world. The products made and sold in the international business include many of those described above under "Business -- Consumer, Pharmaceutical and Professional." However, the principal markets, products and methods of distribution in the international business vary with the country and the culture. The products sold in the international business include not only those which were developed in the United States but also those which were developed by subsidiaries abroad. Investments and activities in some countries outside the United States are subject to higher risks than comparable domestic activities because the investment and commercial climate is influenced by restrictive economic policies and political uncertainties. RAW MATERIALS Raw materials essential to Johnson & Johnson's business are generally readily available from multiple sources. PATENTS AND TRADEMARKS Johnson & Johnson has made a practice of obtaining patent protection on its products and processes where possible. Johnson & Johnson owns or is licensed under a number of patents relating to its products and manufacturing processes, which in the aggregate are believed to be of material importance in the operation of 2
5 its business. However, it is believed that no single patent or related group of patents is material in relation to Johnson & Johnson as a whole. Johnson & Johnson has made a practice of selling its products under trademarks and of obtaining protection for these trademarks by all available means. Johnson & Johnson's trademarks are protected by registration in the United States and other countries where its products are marketed. Johnson & Johnson considers these trademarks in the aggregate to be of material importance in the operation of its business. SEASONALITY Worldwide sales do not reflect any significant degree of seasonality; however spending has been heavier in the fourth quarter of each year than in other quarters. This reflects increased spending decisions, principally for advertising and research grants. COMPETITION In all its product lines, Johnson & Johnson companies compete with companies both large and small, located in the United States and abroad. Competition is strong in all lines without regard to the number and size of the competing companies involved. Competition in research, involving the development of new products and processes and the improvement of existing products and processes, is particularly significant and results from time to time in product and process obsolescence. The development of new and improved products is important to Johnson & Johnson's success in all areas of its business. This competitive environment requires substantial investments in continuing research and in multiple sales forces. In addition, the winning and retention of customer acceptance of Johnson & Johnson's consumer products involve heavy expenditures for advertising, promotion and selling. RESEARCH Research activities are important to all segments of Johnson & Johnson's business. Major research facilities are located not only in the United States but also in Australia, Belgium, Brazil, Canada, Germany, Switzerland and the United Kingdom. The costs of Johnson & Johnson's worldwide research activities relating to the development of new products, the improvement of existing products, technical support of products and compliance with governmental regulations for the protection of the consumer amounted to $2,600, $2,336 and $2,209 million for fiscal years 1999, 1998 and 1997, respectively. These costs are charged directly to income in the year in which incurred. All research was sponsored by Johnson & Johnson. ENVIRONMENT During the past year Johnson & Johnson was subject to a variety of federal, state and local environmental protection measures. Johnson & Johnson believes that its operations comply in all material respects with applicable environmental laws and regulations. Johnson & Johnson's compliance with these requirements did not and is not expected to have a material effect upon its capital expenditures, earnings or competitive position. REGULATION Most of Johnson & Johnson's business is subject to varying degrees of governmental regulation in the countries in which operations are conducted, and the general trend is toward regulation of increasing stringency. In the United States, the drug, device, diagnostics and cosmetic industries have long been subject to regulation by various federal, state and local agencies, primarily as to product safety, efficacy, advertising and labeling. The exercise of broad regulatory powers by the Food and Drug Administration (the "FDA") continues to result in increases in the amounts of testing and documentation required for FDA clearance of new drugs and devices and a corresponding increase in the expense of product introduction. Similar trends toward product and process regulation are also evident in a number of major countries outside of the United States, especially in the European Economic Community where efforts are continuing to harmonize the internal regulatory systems. 3
6 The costs of human health care have been and continue to be a subject of study, investigation and regulation by governmental agencies and legislative bodies in the United States and other countries. In the United States, attention has been focused on drug prices and profits and programs that encourage doctors to write prescriptions for particular drugs or recommend particular medical devices. Even in the absence of new government regulation, managed care has become a more potent force in the market place and it is likely that increased attention will be paid to drug pricing, appropriate drug utilization and the quality of health care. The regulatory agencies under whose purview Johnson & Johnson operates have administrative powers that may subject Johnson & Johnson to such actions as product recalls, seizure of products and other civil and criminal sanctions. In some cases Johnson & Johnson may deem it advisable to initiate product recalls voluntarily. ITEM 2. PROPERTIES Johnson & Johnson and its worldwide subsidiaries operate 169 manufacturing facilities occupying approximately 17.6 million square feet of floor space. The manufacturing facilities are used by the industry segments of Johnson & Johnson's business approximately as follows: <TABLE> <CAPTION> SQUARE FEET SEGMENT (IN THOUSANDS) ------- -------------- <S> <C> Consumer.................................................... 5,744 Pharmaceutical.............................................. 4,506 Professional................................................ 7,344 ------ Worldwide total................................... 17,594 ====== </TABLE> Within the United States, 11 facilities are used by the Consumer segment, 8 by the Pharmaceutical segment and 45 by the Professional segment. Johnson & Johnson's manufacturing operations outside the United States are often conducted in facilities which serve more than one segment of the business. The locations of the manufacturing facilities by major geographic areas of the world are as follows: <TABLE> <CAPTION> NUMBER OF SQUARE FEET GEOGRAPHIC AREA FACILITIES (IN THOUSANDS) --------------- ---------- -------------- <S> <C> <C> United States............................................... 64 7,515 Europe...................................................... 47 5,420 Western Hemisphere excluding U.S.A.......................... 19 2,373 Africa, Asia and Pacific.................................... 39 2,286 --- ------ Worldwide total................................... 169 17,594 === ====== </TABLE> In addition to the manufacturing facilities discussed above, Johnson & Johnson maintains numerous office and warehouse facilities throughout the world. Research facilities are also discussed in Item 1 under "Business -- Research." Johnson & Johnson generally seeks to own its manufacturing facilities, although some, principally in locations abroad, are leased. Office and warehouse facilities are often leased. Johnson & Johnson's properties are maintained in good operating condition and repair and are well utilized. For information regarding lease obligations see Note 4 "Rental Expense and Lease Commitments" under "Notes to Consolidated Financial Statements" on page 35 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. Segment information on additions to Johnson & Johnson's property, plant and equipment is contained on page 45 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. For information regarding plans to close certain manufacturing facilities, see Note 14 "Restructuring 4
7 and In-Process Research and Development Charges" under "Notes to Consolidated Financial Statements" on page 40 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. ITEM 3. LEGAL PROCEEDINGS The information set forth in Note 18 "Legal Proceedings" under "Notes to Consolidated Financial Statements" on page 42 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999 is incorporated herein by reference. The Company or its subsidiaries are parties to a number of proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state laws, in which the primary relief sought is the cost of past and future remediation. While it is not feasible to predict or determine the outcome of these proceedings, in the opinion of the Company, such proceedings would not have a material adverse effect on the results of operations, cash flows or financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT Listed below are the executive officers of Johnson & Johnson as of March 24, 2000, each of whom, unless otherwise indicated below, has been an employee of the Company or its affiliates and held the position indicated during the past five years. There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected. At the annual meeting of the Board of Directors which follows the Annual Meeting of Shareowners executive officers are elected by the Board to hold office for one year and until their respective successors are elected and qualified, or until earlier resignation or removal. Information with regard to the directors of the Company, including those of the following executive officers who are directors, is incorporated herein by reference to pages 4 through 7 of Johnson & Johnson's Proxy Statement dated March 8, 2000. <TABLE> <CAPTION> NAME AGE POSITION ---- --- -------- <S> <C> <C> Robert J. Darretta..................... 53 Member, Executive Committee; Vice President, Finance(a) Russell C. Deyo........................ 50 Member, Executive Committee; Vice President, Administration(b) Roger S. Fine.......................... 57 Member, Executive Committee; Vice President, General Counsel(c) JoAnn Heffernan Heisen................. 50 Member, Executive Committee; Vice President, Chief Information Officer(d) Christian A. Koffmann.................. 59 Member, Executive Committee; Worldwide Chairman, Consumer & Personal Care Group(e) Ralph S. Larsen........................ 61 Chairman, Board of Directors and Chief Executive Officer; Chairman, Executive Committee James T. Lenehan....................... 51 Member, Executive Committee; Worldwide Chairman, Medical Devices & Diagnostics Group(f) Brian D. Perkins....................... 46 Member, Executive Committee; Worldwide Chairman, Consumer Pharmaceuticals & Nutritionals Group(g) William C. Weldon...................... 51 Member, Executive Committee; Worldwide Chairman, Pharmaceuticals Group(h) Robert N. Wilson....................... 59 Vice-Chairman, Board of Directors; Vice-Chairman Executive Committee </TABLE> - --------------- (a) Mr. R. J. Darretta joined the Company in 1968 and held various positions before becoming President of Iolab Corporation in 1988 and Treasurer of the Company in 1995. He became a Member of the Executive Committee and Vice President, Finance in 1997. 5
8 (b) Mr. R. C. Deyo joined the Company in 1985 and became Associate General Counsel in 1991. He became a Member of the Executive Committee and Vice President, Administration in 1996. (c) Mr. R. S. Fine joined the Company in 1974 and became a Member of the Executive Committee and Vice President, Administration in 1991 and Vice President, General Counsel in 1996. (d) Ms. J. H. Heisen joined the Company in 1989 and became Treasurer in 1991 and Controller in 1995. She became a Member of the Executive Committee and Vice President, Chief Information Officer in 1997. (e) Mr. C. A. Koffmann joined the Company in 1989 as a Company Group Chairman. He became a Member of the Executive Committee and Worldwide Chairman, Consumer & Personal Care Group in 1995. (f) Mr. J. T. Lenehan joined the Company in 1976 and became a Company Group Chairman in 1993. He has been a Member of the Executive Committee since 1994 and became Worldwide Chairman, Consumer Pharmaceuticals and Professional Group in 1994 and Worldwide Chairman, Medical Devices & Diagnostics Group in September 1999. (g) Mr. B. D. Perkins joined the Company in 1980 and held various positions before becoming President of McNeil Consumer Products Company in 1994 and Company Group Chairman for OTC Pharmaceuticals in 1999. He became a Member of the Executive Committee and Worldwide Chairman, Consumer Pharmaceuticals & Nutritionals Group in September 1999. (h) Mr. W. C. Weldon joined the Company in 1971 and held various positions before becoming President of Ethicon Endo-Surgery in 1992 and Company Group Chairman of Ethicon Endo-Surgery in 1995. He became a Member of the Executive Committee and Worldwide Chairman, Pharmaceuticals Group in 1998. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREOWNER MATTERS The information called for by this item is incorporated herein by reference to the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Common Stock Market Prices and Cash Dividends Paid" on page 23 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. ITEM 6. SELECTED FINANCIAL DATA The information called for by this item is incorporated herein by reference to the material captioned "Summary of Operations and Statistical Data 1989-1999" on page 46 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information called for by this item is incorporated herein by reference to the narrative and tabular (but not the graphic) material included in the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 22 through 29 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. On March 23, 2000, the Company's Janssen Pharmaceutica U.S. subsidiary announced that a limited-access program would be initiated in the U.S. for PROPULSID (cisapride) tablets and suspension, a medication for the treatment of adults with nighttime heartburn due to gastroesophageal reflux disease, and the medication would no longer be marketed in the United States. Under the new program, the medication will remain available to appropriate patients for whom other therapies are not effective and who meet clearly defined eligibility criteria. These criteria are being established in close collaboration with the FDA. Enrollment in the limited access program is expected to begin May 1. To assure that the medication is available to patients during the transition, distribution will continue until July 14, and the product is scheduled to remain in pharmacies until mid-August. 6
9 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information called for by this item is incorporated herein by reference to the material captioned "Management's Discussion and Analysis of Results of Operations and Financial Condition -- Financial Instruments" on page 24 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this item is incorporated herein by reference to the Consolidated Financial Statements and the Notes thereto and the material captioned "Independent Auditor's Report" on pages 30 through 44 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information called for by this item is incorporated herein by reference to (a) the material under the caption "Election of Directors -- Nominees" on pages 3 through 7 of Johnson & Johnson's Proxy Statement dated March 8, 2000, (b) the material in Part I hereof under the caption "Executive Officers of the Registrant" and (c) the material under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" on page 10 of Johnson & Johnson's Proxy Statement dated March 8, 2000. ITEM 11. EXECUTIVE COMPENSATION The information called for by this item is incorporated herein by reference to the following sections of Johnson & Johnson's Proxy Statement dated March 8, 2000: "Election of Directors -- Directors' Fees, Committees and Meetings" on pages 9 through 10; "Compensation Committee Report on Executive Compensation" on pages 10 through 13; "Shareowner Return Performance Graphs" on pages 14 through 15; and "Executive Compensation" on pages 16 through 19. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information called for by this item is incorporated herein by reference to the material captioned "Election of Directors--Stock Ownership/Control" on page 8 of Johnson & Johnson's Proxy Statement dated March 8, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. 7
10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report 1. Financial Statements The following Consolidated Financial Statements and the Notes thereto and the Independent Auditor's Report on pages 30 through 44 of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1999 are incorporated herein by reference: Consolidated Balance Sheets at end of Fiscal Years 1999 and 1998 Consolidated Statements of Earnings for Fiscal Years 1999, 1998 and 1997 Consolidated Statements of Equity for Fiscal Years 1999, 1998 and 1997 Consolidated Statements of Cash Flows for Fiscal Years 1999, 1998 and 1997 Notes to Consolidated Financial Statements Independent Auditor's Report 2. Financial Statement Schedules Schedule II -- Valuation and Qualifying Accounts Schedules other than those listed above are omitted because they are not required or are not applicable. 3. Exhibits Required to be Filed by Item 60l of Regulation S-K The information called for by this item is incorporated herein by reference to the Exhibit Index in this report. (b) Reports on Form 8-K A Report on Form 8-K was filed on December 14, 1999, which included supplemental combined financial statements prepared to reflect the merger of Johnson & Johnson with Centocor, Inc., which was accounted for by the pooling-of-interests method of accounting. The Report included Form 10-K for the period ended January 3, 1999; Financial Data Schedule as of January 3, 1999; Form 10-Q for the period ended October 3, 1999; and Financial Data Schedule as of October 3, 1999. 8
11 JOHNSON & JOHNSON AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS FISCAL YEARS ENDED JANUARY 2, 2000, JANUARY 3, 1999 AND DECEMBER 28, 1997(A) (DOLLARS IN MILLIONS) <TABLE> <CAPTION> DEDUCTIONS FROM RESERVES ADDITIONS --------------------------------------------------- BALANCE AT CHARGED BALANCE BEGINNING TO COSTS AND AT END OF PERIOD EXPENSES(B) DESCRIPTION AMOUNT OF PERIOD ---------- ------------ ----------- ------ --------- <S> <C> <C> <C> <C> <C> 1999 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $184 53 Write-offs less recoveries..... 63 Currency adjustments........... (19) 193 Reserve for customer rebates................ 157 1,028 Customer rebates allowed....... 1,056 Currency adjustments........... (6) 135 Reserve for cash discounts.............. 47 520 Cash discounts allowed......... 506 61 ---- ----- ----- --- $388 1,601 1,600 389 ==== ===== ===== === 1998 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $152 42 Write-offs less recoveries..... 15 Currency adjustments........... (5) 184 Reserve for customer rebates................ 164 978 Customer rebates allowed....... 993 Currency adjustments........... (8) 157 Cash discounts allowed......... 429 Reserve for cash discounts.............. 42 431 Currency adjustments........... (3) 47 ---- ----- ----- --- $358 1,451 1,421 388 ==== ===== ===== === 1997 Reserves deducted from accounts receivable, trade Reserve for doubtful accounts............... $141 49 Write-offs less recoveries..... 29 Currency adjustments........... 9 152 Reserve for customer rebates................ 129 855 Customer rebates allowed....... 813 Currency adjustments........... 7 164 Cash discounts allowed......... 341 Reserve for cash discounts.............. 39 352 Currency adjustments........... 8 42 ---- ----- ----- --- $309 1,256 1,207 358 ==== ===== ===== === </TABLE> - --------------- (A) This Schedule has been prepared to give retroactive effect to the merger between Johnson & Johnson and Centocor on October 6, 1999. (B) Charges related to customer rebates and cash discounts are reflected as reductions of sales to customers. 9
12 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 22, 2000 JOHNSON & JOHNSON -------------------------------------- (Registrant) By /s/ R. S. LARSEN ------------------------------------ R. S. Larsen, Chairman, Board of Directors and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> SIGNATURE TITLE DATE --------- ----- ---- <C> <S> <C> /s/ R. S. LARSEN Chairman, Board of Directors and March 26, 2000 - ------------------------------------------ Chief Executive Officer, and R. S. Larsen Director (Principal Executive Officer) /s/ R. J. DARRETTA Vice President -- Finance March 22, 2000 - ------------------------------------------ (Principal Financial Officer) R. J. Darretta /s/ C. E. LOCKETT Controller March 24, 2000 - ------------------------------------------ C. E. Lockett /s/ G. N. BURROW Director March 22, 2000 - ------------------------------------------ G. N. Burrow /s/ J. G. COONEY Director March 22, 2000 - ------------------------------------------ J. G. Cooney /s/ J. G. CULLEN Director March 23, 2000 - ------------------------------------------ J. G. Cullen /s/ M. J. FOLKMAN Director March 24, 2000 - ------------------------------------------ M. J. Folkman /s/ A. D. JORDAN Director March 23, 2000 - ------------------------------------------ A. D. Jordan /s/ A. G. LANGBO Director March 24, 2000 - ------------------------------------------ A. G. Langbo /s/ J. S. MAYO Director March 22, 2000 - ------------------------------------------ J. S. Mayo </TABLE> 10
13 <TABLE> <CAPTION> SIGNATURE TITLE DATE --------- ----- ---- <C> <S> <C> /s/ L.F. MULLIN Director March 23, 2000 - ------------------------------------------ L.F. Mullin Director March , 2000 - ------------------------------------------ P. J. Rizzo /s/ H. B. SCHACHT Director March 24, 2000 - ------------------------------------------ H. B. Schacht /s/ M. F. SINGER Director March 22, 2000 - ------------------------------------------ M. F. Singer /s/ J. W. SNOW Director March 23, 2000 - ------------------------------------------ J. W. Snow /s/ R. N. WILSON Vice Chairman, Board of Directors March 23, 2000 - ------------------------------------------ and Director R. N. Wilson </TABLE> 11
14 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Shareowners and Board of Directors of Johnson & Johnson: Our audits of the consolidated financial statements of Johnson & Johnson referred to in our report dated January 24, 2000 appearing in the Johnson & Johnson 1999 Annual Report to Shareowners (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP New York, New York January 24, 2000 12
15 EXHIBIT INDEX <TABLE> <CAPTION> REG. S-K EXHIBIT TABLE DESCRIPTION ITEM NO. OF EXHIBIT - ------------- ----------- <C> <S> 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 effective April 23, 1999 -- Incorporated herein by reference to Exhibit 3 of the Registrant's Form 10-Q Quarterly Report for the quarter ended July 4, 1999. 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) -- Incorporated herein by reference to Exhibit 10(b) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1999.* 10(c) 1991 Stock Option Plan (as amended) -- Incorporated herein by reference to Exhibit 10(c) of the Registrant's Form 10-K Annual Report for the year ended December 28, 1997.* 10(d) 1986 Stock Option Plan (as amended) -- Incorporated herein by reference to Exhibit 10(d) of the Registrant's Form 10-K Annual Report for the year ended December 28, 1997.* 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 (as amended) -- Filed with this document.* 10(j) Excess Savings Plan -- Incorporated herein by reference to Exhibit 10(j) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(k) Supplemental Retirement Plan -- Incorporated herein by reference to Exhibit 10(h) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.* 10(l) Executive Life Insurance Plan -- Incorporated herein by reference to Exhibit 10(i) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.* 10(m) Stock Option Gain Deferral Plan -- Filed with this document.* 10(n) Estate Preservation Plan -- Filed with this document.* 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges -- Filed with this document. </TABLE> 13
16 <TABLE> <CAPTION> REG. S-K EXHIBIT TABLE DESCRIPTION ITEM NO. OF EXHIBIT - ------------- ----------- <C> <S> 13 -- Pages 22 through 46 of the Company's Annual Report to Shareowners for fiscal year 1999 (only those portions of the Annual Report incorporated by reference in this report are deemed "filed") -- Filed with this document. 21 -- Subsidiaries -- Filed with this document. 23 -- Consent of Independent Accountants -- Filed with this document. 27 -- Financial Data Schedule for Year Ended January 2, 2000 -- Filed with this document. 99(a) -- Annual Reports on Form 11-K for the Johnson & Johnson Savings Plans, to be filed on or before June 30, 2000. 99(b) -- Cautionary Statement pursuant to Private Securities Litigation Reform Act of 1995: "Safe Harbor" for Forward-Looking Statements -- Filed with this document. </TABLE> - --------------- * Management contracts and compensatory plans and arrangements required to be filed as Exhibits to this form pursuant to Item 14(c) of the report. A copy of any of the Exhibits listed above will be provided without charge to any shareowner submitting a written request specifying the desired exhibit(s) to the Secretary at the principal executive offices of the Company. 14