EX-99.A.II 3 ex99-a_ii.txt FORM 11-K 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 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 RETIREMENT SAVINGS PLAN (Full title of the Plan) JOHNSON & JOHNSON ONE JOHNSON & JOHNSON PLAZA NEW BRUNSWICK, NEW JERSEY 08933 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) 2 Item 4. Financial Statements and Exhibits Report of Independent Accountants Financial Statements: Balance Sheets as of December 31, 1999 and 1998 Statements 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 Schedule of Party-In-Interest 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 RETIREMENT SAVINGS PLAN By: /s/ R. J. Darretta -------------------------------- R. J. Darretta Chairman, Pension Committee June 26, 2000 3 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ------------------ FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 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, 1999 and 1998 3 Statements of Changes in Net Assets Available for Benefits with Fund Information for the Years Ended December 31, 1999 and 1998 4 Notes to Financial Statements 5-10 Supplemental Schedules: Item 27a - Schedule of Assets Held For Investment Purposes at December 31, 1999 11 Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1999 12
1 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 Retirement 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 statement 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 6 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION as of December 31, 1999 and 1998
PARTICIPANT DIRECTED ------------------------------------------------------------------- 1999 ------------------------------------------------------------------- Short-Term J&J Total Investment Fund Stock Fund Equity Fund Savings Plan ---------- ----------- ------------ ASSETS: ------- Investments at Fair Value (Notes 2 and 5) $ 4,323,235 $ 71,651,424 $ 5,314,379 $ 81,289,038 ----------- ------------ ----------- ------------ Total Assets 4,323,235 71,651,424 5,314,379 81,289,038 ----------- ------------ ----------- ------------ LIABILITIES: ------------ Accrued Expenses 1,703 26,855 1,999 30,557 ----------- ------------ ----------- ------------ Net Assets Available for Benefits $ 4,321,532 $ 71,624,569 $ 5,312,380 $ 81,258,481 =========== ============ =========== ============ PARTICIPANT DIRECTED --------------------------------------------------------------------- 1998 --------------------------------------------------------------------- Short-Term J&J Total Investment Fund Stock Fund Equity Fund Savings Plan ---------- ----------- ------------ ASSETS: ------- Investments at Fair Value (Notes 2 and 5) $ 4,391,628 $ 66,829,069 $ 4,630,626 $ 75,851,323 --------- ---------- --------- ---------- Total Assets 4,391,628 66,829,069 4,630,626 75,851,323 --------- ---------- --------- ---------- LIABILITIES: ------------ Accrued Expenses 3,467 51,607 3,542 58,616 ----------- ------------ ----------- ------------ Net Assets Available for Benefits $ 4,388,161 $ 66,777,462 $ 4,627,084 $ 75,792,707 =========== ============ =========== ============
See Notes to Financial Statements 3 7 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION For The Years Ended December 31, 1999 and 1998
PARTICIPANT DIRECTED -------------------------------------------------------------------- 1999 -------------------------------------------------------------------- Short-Term J&J Total Investment Fund Stock Fund Equity Fund Savings Plan ---------- ----------- ------------ Employee Contributions (Note 3) $ 656,872 $ 5,940,740 $ 740,056 $ 7,337,668 Employer Contributions (Note 3) 11,511 3,399,925 684 3,412,120 Interest 34,233 34,233 Dividends 216,639 858,399 533,275 1,608,313 ---------- ----------- ---------- ------------ 885,022 10,233,297 1,274,015 12,392,334 Additions to (Deductions from) Net Assets: ------------------------------------------ Payments to Participants (Note 4) (639,181) (9,704,709) (513,280) (10,857,170) Change in Unrealized Net Appreciation of Investments 752,584 41,134 793,718 REALIZED NET GAIN ON SALE OF INVESTMENTS 3,265,396 198,147 3,463,543 Administrative Expenses (17,970) (288,461) (20,220) (326,651) Assets Transferred (Note 2) (294,500) 589,000 (294,500) ----------- ----------- ----------- ------------- Net Increase (Decrease) (66,629) 4,847,107 685,296 5,465,774 Net Assets Available for Benefits, Beginning of Year 4,388,161 66,777,462 4,627,084 75,792,707 ---------- ----------- ---------- ------------ Net Assets Available for Benefits, End of Year $4,321,532 $71,624,569 $5,312,380 $ 81,258,481 ========== =========== ========== ============ PARTICIPANT DIRECTED ------------------------------------------------------------------- 1998 ------------------------------------------------------------------- Short-Term J&J Total Investment Fund Stock Fund Equity Fund Savings Plan ---------- ----------- Employee Contributions (Note 3) $ 790,528 $ 5,431,705 $ 715,315 $ 6,937,548 Employer Contributions (Note 3) 13,644 2,982,748 890 2,997,282 Interest 177,799 15,534 249,278 Dividends 55,945 758,206 468,148 1,226,354 --------- --------- --------- ---------- 1,037,916 9,188,193 1,184,353 11,410,462 Additions to (Deductions from) Net Assets: ------------------------------------------ Payments to Participants (Note 4) (610,755) (7,562,632) (524,901) (8,698,288) Change in Unrealized Net Appreciation of Investments 8,843,308 176,584 9,019,892 REALIZED NET GAIN ON SALE OF INVESTMENTS 5,179,819 207,209 5,387,028 Administrative Expenses (19,003) (253,106) (17,726) (289,835) Assets Transferred (Note 2) (489,000) 653,400 (164,400) --------- --------- --------- ---------- Net Increase (Decrease) (80,842) 16,048,982 861,119 16,829,259 Net Assets Available for Benefits, Beginning of Year 4,469,003 50,728,480 3,765,965 58,963,448 --------- ---------- --------- ---------- Net Assets Available for Benefits, End of Year $4,388,161 $66,777,462 $4,627,084 $75,792,707 ========== =========== ========== ===========
See Notes to Financial Statements 4 8 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. Organization: The Johnson & Johnson Retirement Savings Plan (the "Plan") is a defined contribution plan which was established on March 1, 1990 for eligible employees of certain subsidiaries of Johnson & Johnson ("J&J" or 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 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 is 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 in the Statement of Changes in Net Assets Available for Benefits. 5 9 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 2. Summary of Significant Accounting Policies (Continued): Use of Estimates: The preparation of the Plan's financial statements in conformity with 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 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 10% pre-tax and/or 1% to 10% post-tax of their base salary. Annual pre-tax contributions may not exceed $8,000 in 1999 or 1998 under Puerto Rico law. The Company contributes to the Plan, out of current or accumulated profits, an amount equal to 66-2/3% of the employee's pre-tax contributions for the Plan year. Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Employee contributions are to be invested in any of the three investment funds at the direction of the participating employees. All Company contributions are made to the J&J Stock Fund, except for participants over the age of 50, who may choose the alternative investments. 6 10 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 3. Contributions (Continued): The number of participants invested in each fund at December 31, 1999 and 1998 was:
1999 1998 ---- ---- Johnson & Johnson Stock Fund 3,206 3,295 Equity Fund 1,024 1,115 Short-Term Investments Fund 1,117 1,285
Participants may elect to invest in more than one fund and can change their investment direction twice a year. A total of 3,223 and 3,316 active and former employees had investments in the Plan for 1999 and 1998, respectively. 4. Participant Accounts and Benefits: All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant's earnings or account balance, as defined. Participants are allowed to withdraw their after-tax contributions and earnings thereon, at any time. Participants may withdraw before-tax contributions only upon meeting certain hardship conditions. 7 11 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments held by the Plan as of December 31, 1999 and 1998 are summarized as follows:
December 31, 1999 ----------------------------------------------------------------- Short-Term Johnson & Johnson Investment Fund Stock Fund --------------------- ---------------------- Fair Value Cost Fair Value Cost Fair Value ---------- -------- ---------- -------- ---------- Common Stocks: Johnson & Johnson $70,955,588 $34,850,484 Mutual Funds Temporary Cash Investments $4,323,235 $4,323,235 695,836 695,836 ---------- ---------- ----------- ----------- $4,323,235 $4,323,235 $71,651,424 $35,546,320 ========== ========== =========== =========== December 31, 1999 ------------------------------------------------------------- Equity Fund Total ------------------- --------------------- Cost Fair Value Cost ------ ---------- ------ Common Stocks: Johnson & Johnson $70,955,588 $35,914,046 Mutual Funds $5,314,379 $4,252,553 5,314,379 4,252,553 Temporary Cash Investments 5,019,071 5,023,226 ---------- ---------- ----------- ----------- $5,314,379 $4,252,553 $81,289,038 $45,189,825 ========== ========== =========== ===========
8 12 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 5. Investments (Continued):
December 31, 1998 ----------------------------------------------------------------------------------------------------- Short-Term Johnson & Johnson Investment Fund Stock Fund ------------------- ----------------------- Fair Value Cost Fair Value Cost Fair Value ---------- ------ ---------- -------- ---------- Common Stocks: Johnson & Johnson $65,972,049 $29,114,361 Mutual Funds Temporary Cash Investments $4,391,628 $4,391,628 857,020 857,020 ---------- ---------- ----------- ----------- $4,391,628 $4,391,628 $66,829,069 $29,971,381 ========== ========== =========== =========== Equity Fund Total --------------------- ------------------- Cost Fair Value Cost -------- ---------- -------- Common Stocks: Johnson & Johnson $65,972,049 $29,114,361 Mutual Funds $4,630,626 $3,609,938 4,630,626 3,609,938 Temporary Cash Investments 5,248,648 5,248,648 ---------- ---------- ----------- ----------- $4,630,626 $3,609,938 $75,851,323 $37,972,947 ========== ========== =========== ===========
Realized gains on investments sold and distributed during the years ended December 31, 1999 and 1998 are summarized as follows:
J&J Stock Fund Equity Fund ------------------------------ -------------------------------- Book Value Proceeds Gain Book Value Proceeds Gain ---------- ---------- ------ ---------- ---------- ------ 1999 $3,494,700 $6,760,096 $3,265,396 $617,668 $815,815 $198,147 1998 3,228,341 8,408,160 5,179,819 613,201 820,410 207,209
9 13 JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, Continued 6. Tax Status: The Plan constitutes as a qualified plan under Section 165(a) of the Puerto Rico Income Tax Act of 1954 as amended, (the "ITA"), and the Plan and related Trust accounts are exempt from Puerto Rico income taxes under Section 165(a) and 165(e) of the ITA. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Puerto Rico tax code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7. Termination Priorities: The Company has the right to terminate the Plan at any time and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested. 8. Reconciliation of Financial Statements to Form 5500: The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, 1999 1998 -------- -------- Net Assets Available for Benefits Per the Financial Statements $ 81,258,481 $ 75,792,707 Amounts Allocated to Withdrawing Participants (601,685) (542,913) ------------ ------------ Net Assets Available for Benefits Per the Form 5500 $ 80,656,796 $ 75,249,794 ============ ============
Years Ended December 31, 1999 1998 ---------- ------- Benefits Paid to Participants Per the Financial Statements $ 10,857,170 $ 8,698,288 Add: Amounts Allocated to Withdrawing Participants at December 31, 1999 and 1998 601,685 542,913 Less: Amounts Allocated to Withdrawing Participants at December 31, 1998 and 1997 (542,913) (571,341) ------------- ------------ Benefits Paid to Participants Per the Form 5500 $ 10,915,942 $ 8,669,860 ============ ===========
Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment priortoDecember 31, 1999 and 1998 but not yet paid as of that date. 10 14 Supplemental Schedule JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1999
FACE AMOUNT OR SHARES ISSUES COST FAIR VALUE --------- ------ ------------ ---------- J&J STOCK FUND -------------- Common Stock ------------ 796,211 shs. Johnson & Johnson $34,850,484 $70,955,588 Temporary Investments --------------------- $695,836 U.S. Treasury Obligations 695,836 695,836 ------------ ------------ Total J&J Stock Fund $35,546,320 $71,651,424 =========== ============ SHORT-TERM INVESTMENT FUND -------------------------- Money Market funds ------------------ Vanguard Money Market Reserves Prime $4,323,235 Portfolio $4,323,235 $4,323,235 ========== ========== EQUITY FUND ----------- Mutual Funds ------------ 163,720.853 shs. Investment Company of America $4,252,553 $5,314,379 ========== ==========
11 15 Supplemental Schedule JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1999
DISPOSED ACQUIRED ------------------------------------------ ---------------------- SECURITY/PARTY GAIN/ DESCRIPTION SALES COSTS PROCEEDS (LOSS) PURCHASES COSTS ----------- ----- ----- -------- ------ --------- ----- (# of Transactions) (# of Transactions) SERIES OF TRANSACTIONS: Johnson & Johnson Common Stock - - - - 7 $990,396 The Vanguard Group 21 $1,035,925 $1,035,925 - 61 $967,532
12 16 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 33-32875) of Johnson & Johnson of our report dated June 12, 2000 relating to the financial statements and financial statement schedules of the Johnson & Johnson Retirement Savings Plan, which appears in this Form 11-K. PricewaterhouseCoopers LLP Florham Park, New Jersey June 23, 2000