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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 3, 1999 COMMISSION FILE NUMBER 1-3215
JOHNSON & JOHNSON
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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)
Registrant's telephone number, including area code (732) 524-0400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, Par Value $1.00 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
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 [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant on February 23, 1999 was approximately $117.2 billion.
On February 23, 1999 there were 1,345,589,883 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and Portions of registrant's annual report to shareowners for
II: fiscal year 1998.
Part III: Portions of registrant's proxy statement for its 1999 annual
meeting of shareowners.
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PART I
ITEM PAGE
- ---- ----
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........................................... 4
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........................................................ 6
8. Financial Statements and Supplementary Data................. 6
9. Disagreements on Accounting and Financial Disclosure........ 6
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 Auditors.............................. 12
Exhibit Index............................................... 13
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.
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PART I
ITEM 1. BUSINESS
GENERAL
Johnson & Johnson, employing approximately 93,100 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 27 through 30 and 45
of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1998.
CONSUMER
The Consumer segment's principal products are personal care and hygienic
products, including oral and baby care products, first aid products,
nonprescription drugs, sanitary protection products and adult skin and hair care
products. Major brands include ACT Fluoride Rinse; BAND-AID Brand Adhesive
Bandages; CAREFREE Panty Shields; CLEAN & CLEAR Skin Care Products; IMODIUM A-D,
an antidiarrheal; JOHNSON'S Baby line of products; JOHNSON'S pH 5.5 skin and
hair care products; MONISTAT, a remedy for vaginal yeast infections; adult and
children's MOTRIN analgesic products; MYLANTA gastrointestinal products and
PEPCID AC Acid Controller from Johnson & Johnson - Merck Consumer
Pharmaceuticals Co.; NEUTROGENA skin and hair care products; NICOTROL smoking
cessation 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 and SURE & NATURAL 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
allergy, anti-infective, antifungal, antianemia, central nervous system,
contraceptive, dermatology, gastrointestinal, and pain management fields. These
products are distributed both directly and through wholesalers for use by health
care professionals and the general public. Prescription drugs include DURAGESIC
(fentanyl transdermal system sold abroad as DUROGESIC), a transdermal patch for
chronic pain; EPREX (Epoetin alfa sold in the U.S. as PROCRIT), a biotechnology
derived version of the human hormone erythropoietin that stimulates red blood
cell
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production; ERGAMISOL (levamisole hydrochloride), a colon cancer drug; FLOXIN
(ofloxacin) and LEVAQUIN (levofloxacin), both anti-infectives; IMODIUM
(loperamide HCI), an antidiarrheal;
LEUSTATIN (cladribine), for hairy cell leukemia; MOTILIUM (domperidone), a
gastrointestinal mobilizer; NIZORAL (ketoconazole), SPORANOX (itraconazole) and
TERAZOL (terconazole), antifungals; ORTHOCLONE OKT-3 (muromonab-CD3), for
reversing the rejection of kidney, heart and liver transplants; ORTHO-NOVUM
(norethindrone/mestranol) group of oral contraceptives; PREPULSID (cisapride
sold in the U.S. as PROPULSID), a gastrointestinal prokinetic; RETIN-A
(tretinoin), a dermatological cream for acne; RISPERDAL (risperidone), an
antipsychotic drug; and ULTRAM (tramadol hydrochloride), a centrally acting
prescription analgesic for moderate to moderately severe pain.
PROFESSIONAL
The Professional segment includes suture and mechanical wound closure
products, minimally invasive surgical instruments, diagnostic products,
cardiology products, disposable contact lenses, surgical instruments,
orthopaedic joint replacements and products for wound management and infection
prevention and other medical equipment and devices. 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. In November
1998, Johnson & Johnson completed the acquisition of DePuy, Inc., an orthopaedic
products company with products in reconstructive, spinal, trauma and sports
medicine.
INTERNATIONAL
The international business of Johnson & Johnson is conducted by
subsidiaries manufacturing in 36 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 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.
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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 $2,269, $2,140 and
$1,905 million for fiscal years 1998, 1997 and 1996, 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.
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.
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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 175 manufacturing
facilities occupying approximately 17.8 million square feet of floor space.
The manufacturing facilities are used by the industry segments of Johnson &
Johnson's business approximately as follows:
SQUARE FEET
SEGMENT (IN THOUSANDS)
------- --------------
Consumer.................................................... 5,620
Pharmaceutical.............................................. 4,174
Professional................................................ 8,014
------
Worldwide total................................... 17,808
======
Within the United States, 9 facilities are used by the Consumer segment, 9
by the Pharmaceutical segment and 51 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:
NUMBER
OF SQUARE FEET
GEOGRAPHIC AREA FACILITIES (IN THOUSANDS)
--------------- ---------- --------------
United States............................................... 69 7,999
Europe...................................................... 47 4,979
Western Hemisphere excluding U.S.A.......................... 20 2,483
Africa, Asia and Pacific.................................... 39 2,347
--- ------
Worldwide total................................... 175 17,808
=== ======
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 9 "Rental Expense and
Lease Commitments" under "Notes to Consolidated Financial Statements" on page 38
of Johnson & Johnson's Annual Report to Shareowners for fiscal year 1998.
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 1998. For information regarding plans to close
certain manufacturing facilities, see Note 15 "Restructuring and In-Process
Research and Development Charges" under "Notes to Consolidated Financial
Statements" on page 41 of Johnson & Johnson's Annual Report to Shareowners for
fiscal year 1998.
ITEM 3. LEGAL PROCEEDINGS
The information set forth in Note 18 "Pending Legal Proceedings" under
"Notes to Consolidated Financial Statements" on pages 42 through 43 of Johnson &
Johnson's Annual Report to Shareowners for fiscal year 1998 is incorporated
herein by reference.
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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
26, 1999, 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 3 through 6 of Johnson & Johnson's Proxy Statement dated
March 10, 1999.
NAME AGE POSITION
---- --- --------
Robert J. Darretta..................... 52 Member, Executive Committee; Vice President,
Finance(a)
Russell C. Deyo........................ 49 Member, Executive Committee; Vice President,
Administration(b)
Roger S. Fine.......................... 56 Member, Executive Committee; Vice President, General
Counsel(c)
Ronald G. Gelbman...................... 51 Member, Executive Committee; Worldwide Chairman,
Health Systems and Diagnostics Group(d)
JoAnn Heffernan Heisen................. 49 Member, Executive Committee; Vice President, Chief
Information Officer(e)
Christian A. Koffmann.................. 58 Member, Executive Committee; Worldwide Chairman,
Consumer and Personal Care Group(f)
Ralph S. Larsen........................ 60 Chairman, Board of Directors and Chief Executive
Officer; Chairman, Executive Committee
James T. Lenehan....................... 50 Member, Executive Committee; Worldwide Chairman,
Consumer Pharmaceuticals and Professional Group(g)
William C. Weldon...................... 50 Member, Executive Committee; Worldwide Chairman,
Pharmaceuticals Group(h)
Robert N. Wilson....................... 58 Vice-Chairman, Board of Directors; Vice-Chairman
Executive Committee
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(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.
(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 Assistant General
Counsel in 1978 and Associate General Counsel in 1984. He became a Member of
the Executive Committee and Vice President, Administration in 1991 and
became Vice President, General Counsel in 1996.
(d) Mr. R. G. Gelbman joined the Company in 1972 and became a Company Group
Chairman in 1987 and a Member of the Executive Committee in 1994. He was
named Worldwide Chairman, Pharmaceutical and Diagnostics Group in 1994 and
Worldwide Chairman, Health Systems and Diagnostics Group in June 1998.
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(e) Ms. J. H. Heisen joined the Company in 1989 as Assistant Treasurer and
became Vice President, Investor Relations in 1990, Treasurer in 1991 and
Controller in 1995. She became a Member of the Executive Committee and Vice
President, Chief Information Officer in 1997.
(f) 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 and Personal Care Group in 1995.
(g) Mr. J. T. Lenehan joined the Company in 1976 and became a Company Group
Chairman in 1993. He became a Member of the Executive Committee and
Worldwide Chairman, Consumer Pharmaceuticals and Professional Group in 1994.
(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 June
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 25 of Johnson & Johnson's Annual Report to Shareowners
for fiscal year 1998.
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 1988-1998"
on page 46 of Johnson & Johnson's Annual Report to Shareowners for fiscal year
1998.
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 24 through 30 of Johnson &
Johnson's Annual Report to Shareowners for fiscal year 1998.
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 26 of
Johnson & Johnson's Annual Report to Shareowners for fiscal year 1998.
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 31 through 44 of Johnson &
Johnson's Annual Report to Shareowners for fiscal year 1998.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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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 2 through 6 of Johnson & Johnson's Proxy Statement dated March 10, 1999,
(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 9 of Johnson & Johnson's Proxy Statement
dated March 10, 1999.
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 10,
1999: "Election of Directors -- Directors' Fees, Committees and Meetings" on
pages 7 through 8; "Compensation Committee Report on Executive Compensation" on
pages 9 through 12; "Shareowner Return Performance Graphs" on pages 12 through
13; and "Executive Compensation" on pages 14 through 17.
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 7 of Johnson & Johnson's Proxy Statement dated March 10, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
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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 31 through 44 of Johnson & Johnson's
Annual Report to Shareowners for fiscal year 1998 are incorporated herein by
reference:
Consolidated Balance Sheet at end of Fiscal Years 1998 and 1997
Consolidated Statement of Earnings for Fiscal Years 1998, 1997 and 1996
Consolidated Statement of Equity for Fiscal Years 1998, 1997 and 1996
Consolidated Statement of Cash Flows for Fiscal Years 1998, 1997 and
1996
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
No reports on Form 8-K were filed during the last quarter of 1998.
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JOHNSON & JOHNSON AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS ENDED JANUARY 3, 1999, DECEMBER 28, 1997 AND DECEMBER 29, 1996
(DOLLARS IN MILLIONS)
DEDUCTIONS FROM RESERVES
ADDITIONS ---------------------------------------------------
BALANCE AT CHARGED BALANCE
BEGINNING TO COSTS AND AT END
OF PERIOD EXPENSES(A) DESCRIPTION AMOUNT OF PERIOD
---------- ------------ ----------- ------ ---------
1998
Reserves deducted from
accounts receivable, trade
Reserve for doubtful
accounts............... $152 39 Write-offs less recoveries..... 15
Currency adjustments........... (5) 181
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 1,448 1,421 385
==== ===== ===== ===
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
==== ===== ===== ===
1996
Reserves deducted from
accounts receivable, trade
Reserve for doubtful
accounts............... $109 60 Write-offs less recoveries..... 27
Currency adjustments........... 1 141
Reserve for customer
rebates................ 115 686 Customer rebates allowed....... 671
Currency adjustments........... 1 129
Reserve for cash
discounts.............. 34 388 Cash discounts allowed......... 383 39
---- ----- ----- ---
$258 1,134 1,083 309
==== ===== ===== ===
- ---------------
(A) Charges related to customer rebates and cash discounts are reflected as
reductions of sales to customers.
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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, 1999 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ R. S. LARSEN Chairman, Board of Directors and March 22, 1999
- ------------------------------------------ Chief Executive Officer, and
R. S. Larsen Director (Principal Executive
Officer)
/s/ R. J. DARRETTA Vice President -- Finance March 25, 1999
- ------------------------------------------ (Principal Financial Officer)
R. J. Darretta
/s/ C. E. LOCKETT Controller March 23, 1999
- ------------------------------------------
C. E. Lockett
/s/ G. N. BURROW Director March 24, 1999
- ------------------------------------------
G. N. Burrow
/s/ J. G. COONEY Director March 24, 1999
- ------------------------------------------
J. G. Cooney
/s/ J. G. CULLEN Director March 29, 1999
- ------------------------------------------
J. G. Cullen
/s/ M. J. FOLKMAN Director March 25, 1999
- ------------------------------------------
M. J. Folkman
/s/ A. D. JORDAN Director March 23, 1999
- ------------------------------------------
A. D. Jordan
/s/ A. G. LANGBO Director March 24, 1999
- ------------------------------------------
A. G. Langbo
/s/ J. S. MAYO Director March 22, 1999
- ------------------------------------------
J. S. Mayo
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SIGNATURE TITLE DATE
--------- ----- ----
/s/ P. J. RIZZO Director March 22, 1999
- ------------------------------------------
P. J. Rizzo
/s/ H. B. SCHACHT Director March 24, 1999
- ------------------------------------------
H. B. Schacht
/s/ M. F. SINGER Director March 23, 1999
- ------------------------------------------
M. F. Singer
Director March , 1999
- ------------------------------------------
J. W. Snow
/s/ R. N. WILSON Vice Chairman, Board of Directors March 30, 1999
- ------------------------------------------ and Director
R. N. Wilson
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REPORT OF INDEPENDENT AUDITORS
To the Shareowners and Board of Directors of
Johnson & Johnson:
Our report on the consolidated financial statements of Johnson & Johnson
and subsidiaries has been incorporated by reference in this Form 10-K from the
Johnson & Johnson 1998 Annual Report to Shareowners and appears on page 44
therein. In connection with our audits of such financial statements, we have
also audited the related financial statement schedule listed in the index in
Item 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
New York, New York
January 25, 1999
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15
EXHIBIT INDEX
REG. S-K
EXHIBIT TABLE DESCRIPTION
ITEM NO. OF EXHIBIT
- ------------- -----------
3(a)(i) Restated Certificate of Incorporation dated April 26,
1990 -- Incorporated herein by reference to Exhibit 3(a) of
the Registrant's Form 10-K Annual Report for the year ended
December 30, 1990.
3(a)(ii) Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated May 20,
1992 -- Incorporated herein by reference to Exhibit 3(a) of
the Registrant's Form 10-K Annual Report for the year ended
January 3, 1993.
3(a)(iii) Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated May 21,
1996 -- Incorporated herein by reference to Exhibit
3(a)(iii) of the Registrant's Form 10-K Annual Report for
the year ended December 29, 1996.
3(b) By-Laws of the Company, as amended and currently in
effect -- Incorporated herein by reference to Exhibit 3(b)
of the Registrant's Form 10-K Annual Report for the year
ended December 28, 1997.
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) -- Filed with this
document.*
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 -- Incorporated herein by
reference to Exhibit 10(i) of the Registrant's Form 10-K
Annual Report for the year ended December 28, 1997.*
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.*
12 -- Statement of Computation of Ratio of Earnings to Fixed
Charges -- Filed with this document.
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16
REG. S-K
EXHIBIT TABLE DESCRIPTION
ITEM NO. OF EXHIBIT
- ------------- -----------
13 -- Pages 24 through 46 of the Company's Annual Report to
Shareowners for fiscal year 1998 (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 Auditors -- Filed with this
document.
27 -- Financial Data Schedule for Year Ended January 3,
1999 -- 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, 1999.
99(b) -- Cautionary Statement pursuant to Private Securities
Litigation Reform Act of 1995: "Safe Harbor" for
Forward-Looking Statements -- Filed with this document.
- ---------------
* 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.
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