Exhibit 99(a)(i)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-3215
JOHNSON & JOHNSON
SAVINGS PLAN
(Full title of the Plan)
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
Item 4. Financial Statements and Exhibits
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits with
Fund Information as of December 31, 2000 and 1999
Statements of Changes in Net Assets Available for
Benefits with Fund Information for the Years Ended
December 31, 2000 and 1999
Notes to Financial Statements
Supplemental Schedules:
Form 5500 Schedule H -- Part IV -- 4I - Schedule of Assets
(Held at End of Year) at December 31, 2000
Form 5500 Schedule H -- Part IV -- 4J - Schedule of Reportable
Transactions for the Year Ended December 31, 2000
Consent of PricewaterhouseCoopers LLP, dated June 25, 2001
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
JOHNSON & JOHNSON SAVINGS PLAN
By: /s/ R. J. Darretta
____________________________
R. J. Darretta
Chairman, Pension Committee
June 25, 2001
JOHNSON & JOHNSON SAVINGS PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
JOHNSON & JOHNSON SAVINGS PLAN
INDEX
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Benefits with
Fund Information as of December 31, 2000 and 1999 3-4
Statements of Changes in Net Assets Available for
Benefits with Fund Information for the Years Ended
December 31, 2000 and 1999 5-6
Notes to Financial Statements 7-18
Supplemental Schedules:
Form 5500 Schedule H - Part IV - 4I - Schedule of Assets
(Held at End of Year) at December 31, 2000 19-20
Form 5500 Schedule H - Part IV - 4J - Schedule of Reportable
Transactions for the Year Ended December 31, 2000 21
1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Pension and Benefits Committees of
Johnson & Johnson
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Johnson & Johnson Savings Plan (the "Plan") at December 31, 2000 and
1999, 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 of America. 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 of America, 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 our opinion.
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 supplemental
schedules 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.
June 15, 2001
2
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 2000
See Notes to Financial Statements
3
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS with FUND INFORMATION
As of December 31, 1999
See Notes to Financial Statements
4
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
with FUND INFORMATION
For The Year Ended December 31, 2000
See Notes to Financial Statements
5
JOHNSON & JOHNSON SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
with FUND INFORMATION
For The Year Ended December 31, 1999
See Notes to Financial Statements
6
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Organization:
The Johnson & Johnson Savings Plan (the "Plan") is a defined
contribution plan which was established on June 1, 1982 for eligible
salaried and non-union hourly employees of Johnson & Johnson ("J&J"
or the "Company") and certain domestic subsidiaries. The Plan was
designed to enhance the existing retirement program of eligible
employees. The funding of the Plan is made through employee and
Company contributions. The assets of the Plan are maintained in two
Master Trust accounts, the Johnson & Johnson Savings Plan Trust
("Savings Plan Trust") and the Johnson & Johnson Pension Trust Fund
("Pension Trust Fund"), and transactions therein are executed by the
trustee, Bankers Trust Company ("Bankers Trust"). The Savings Plan
Trust and the Pension Trust Fund are allocated based upon the total
of each individual participant's share of the Savings Plan Trust and
the Pension Trust Fund.
Effective January 1, 1991, the Company implemented a Leveraged
Employee Stock Ownership Plan ("ESOP") to supplement its existing
401(k) plan. The ESOP is a leveraged employee stock ownership plan
and is designed to comply with Section 4975(e)(7) and the regulations
thereunder of the Internal Revenue Code of 1986, as amended, and is
subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended. The ESOP is used to fund an
additional 25% match of employee contributions (referred to herein as
the "ESOP contribution"). Additionally, the Company may elect to fund
the employer 50% match of employee directed contributions with ESOP
leveraged shares.
Initial funding for the ESOP was made through an advance from J&J of
$100 million, which was used to purchase 1,554,800 shares of J&J
common stock on the open market (which equates to 12,438,400 shares
when adjusted for subsequent stock splits). Of these shares,
3,583,842 (adjusted for stock splits) remain unallocated as of
December 31, 2000. These shares are allocated to Plan participants
under a formula set forth in the ESOP note agreement (see note 3)
relating to the advance from J&J. Accordingly, the financial
statements of the Plan for the years 2000 and 1999 present separately
the assets and liabilities and changes therein pertaining to:
(a) the accounts of employees with vested rights in allocated
stock (Allocated) and
(b) stock not yet allocated to employees (Unallocated).
Each participant is entitled to exercise voting rights attributable
to the shares allocated to their account. The Company is entitled to
exercise voting rights attributable to unallocated shares.
7
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
1. Organization (Continued):
In the third quarter of 1998, Johnson & Johnson incorporated a
"dividend pass-through" feature into the Plan. This feature allows a
participant to receive cash for dividends paid on certain shares
owned through the plan. To receive a dividend pass-through, it is
contingent on the ownership of shares in the Johnson & Johnson Stock
Fund and it does not apply to any share owned in the Employee Stock
Ownership Plan Trust Fund. In order to receive dividend pass-through
amounts, participant eligibility is based on the lesser of (a) 20% of
the eligible compensation (annual base pay rate for the year plus 50%
of prior calendar year commissions) and (b) IRS Pre-tax compensation
limit ($10,500 in 2000) reduced by the estimated pre-tax contribution
for the year (current pre-tax percentage multiplied by the eligible
compensation for the year). For the 2000 and 1999 plan years, the
dividend pass-through amounts recorded in the Plan statement of
Changes in Net Assets Available for benefits with Fund information as
dividend income and payments to participants were $9,312,968 and
$8,407,284 respectively.
On April 1, 2000, the assets of the McFaul & Lyons 401(k) Profit
Sharing Plan were transferred into the J&J Savings Plan. On July 3,
2000, the assets of the Mitek Products 401(k) Plan, the AcroMed
401(k) Profit Sharing Plan and the Nitinol Devices & Components
401(k) Plan were transferred into the J&J Savings Plan. On August 1,
2000, the assets of the Biopsys Medical Inc. 401(k) Plan were
transferred into the Plan. On October 1, 1999, the assets of the
Innotech 401(k) Retirement Plan were transferred into the Plan.
2. Summary of Significant Accounting Policies:
Valuation of Investments:
Equity investments in the Johnson & Johnson Stock Fund and the ESOP,
administered by Bankers Trust, are valued at the average of the high
and low market price on the last business day of the year. The cost
of equity investments in the Johnson & Johnson Stock Fund are
recorded at the average market price of the stock transactions for
the month during which the contribution is made.
The investments in the U.S. Government Securities (the "USGS Fund"),
Fixed Interest, and Diversified Equity funds represent the Plan's
share of assets in the Savings Plan Trust. The USGS Fund consists of
short-term obligations that are issued or guaranteed by the U.S.
Government. Investments are valued at cost which approximates market
value. Deposits in group annuity contracts in the Fixed Interest Fund
are recorded at their contract values which approximates fair value
because these investments have fully benefit-responsive features.
Contract value represents contributions and reinvested income, less
any withdrawals plus accrued interest. Participants may direct the
withdrawal or transfer of all or a portion of their investment at
contract value. However, withdrawals influenced by employer initiated
events such as in connection with the sale of a business, may result
in a distribution at other than contract value. There are no reserves
against contract values for credit risk of contract issuers or
otherwise.
8
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies (Continued):
The average yield of the Fixed Interest Fund was approximately 6.47%
for 2000 and 6.56% for 1999. The crediting interest rate of the
Fixed Interest Fund was approximately 6.54% for 2000 and 6.63% for
1999. The difference between the average yield and crediting
interest rate is due to administrative charges paid by the Plan. The
crediting interest rate for the investment contracts is either
agreed to in advance with the issuer or varies based on an agreed to
formula, but cannot be less than zero.
Equity investments and corporate obligations in the Diversified
Equity Fund, managed by Capital Guardian Trust Company and J.P.
Morgan Investment Management, Inc., are traded on a national
securities exchange and are valued at the last reported market sales
price on the last business day of the year. Investments in the
Diversified Equity Fund are purchased periodically by Capital
Guardian Trust Company and J.P. Morgan Investment Management, Inc.
based on the prevailing market values of the underlying investments.
The Intermediate Bond Fund invests in various kinds of bonds,
primarily corporate and U.S. government bonds. The Balanced Fund is
invested in a mix of stocks, bonds, and real estate. The investment
in these funds represents the Plan's share of the assets in the
Pension Trust Fund. These investments are stated at fair value.
Generally, they represent securities traded on a national securities
exchange which are valued at the last reported sales price on the
last business day of the year.
In the first quarter of 1999, the Company incorporated an additional
fund to the Plan, the International Equity Fund. The International
Equity Fund, managed by American Express Management and Capital
Guardian Trust Company, invests primarily in equities sold on
foreign exchange markets. These investments are valued at the last
reported market sales price on the last business day of the year.
The investment in the fund represents the Plan's share of the assets
in the Pension Trust Fund.
The Loan Fund, consisting of participant loans, are valued at cost,
which approximates fair value.
Temporary cash investments are stated at redemption value which
approximates fair value.
Transfers:
Transfers among funds, which are made at the participant's election,
have been presented as assets transferred in the Statement of
Changes in Net Assets Available for Benefits with Fund information.
With respect to the ESOP, transfers represent shares allocated to
the participants.
9
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies (Continued):
Use of Estimates:
The preparation of the Plan's financial statements in conformity
with accounting principles generally accepted in the United States
of America 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 with
Fund Information and the Statements of Changes in Net Assets
Available for Benefits with Fund Information.
New Accounting Pronouncement:
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 requires that an entity
recognize all derivatives and measure those instruments at fair
value.
SFAS No. 133 is effective for fiscal years beginning after June 15,
2000. Pursuant to SFAS No. 137, which amended SFAS No. 133, the Plan
is required to adopt SFAS No. 133 effective January 1, 2001.
Management has not yet been able to determine the impact of SFAS No.
133 on the Plan financial statements as a result of the
inconsistency in accounting literature between SFAS No. 133,
requiring derivatives to be measured at fair value, and the AICPA
Audit and Accounting Guide on "Audits of Employee Benefits Plans"
and Statement of Position 94-4, "Reporting of Investment Contracts
Held by Health and Welfare Benefit Plans and Defined Contribution
Pension Plans", requiring benefit responsive investment contracts
(including synthetic GICs) to be measured at contract value. Until
this discrepancy is resolved, management is unable to determine the
impact that SFAS No. 133 will have on the Plan financial statements.
The contract value of those instruments is $619,112,768 at December
31, 2000. The actual impact on the Plan's net asset available for
plan benefits of adopting SFAS No. 133 will be made based on the
derivative positions and hedging relationships at the date of
adoption.
10
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
Other:
Interest and dividend income is recorded as earned on the accrual
basis. Purchases and sales of investment securities are reflected on
a trade-date basis. Gains and losses on sales of investment
securities are determined on the average cost method. Administrative
charges are allocated monthly bases on the quarterly percentage of
assets in each of the six investment funds.
All third party administrative expenses are paid by the Plan, except
cost of entering new investment vehicles which are paid primarily by
the Company.
3. Contributions:
Participating employees may contribute a minimum of 3% up to a
maximum of 20% of their base salary plus 50 percent of eligible
commissions in combinations of pre- and post-tax contributions.
Pre-tax contributions may not exceed the smaller of 20% of their
base salary including 50 percent of eligible commissions or $10,500
in 2000 and $10,000 in 1999. The Company contributes to the Plan an
amount equal to 75% of the employee directed contributions of the
participants up to a maximum of 6% of the employee's base salary and
50 percent of eligible commissions.
Contributions are made to the Plan by participants through payroll
deductions and by the Company on behalf of participants. Such
contributions, with the exception of the ESOP contribution, are
invested in any of the seven investment funds at the direction of
the participating employees. The 25% ESOP contribution is invested
in J&J stock, except for employees over 55 years of age who may
choose the alternative investments. ESOP shares are released from
the unallocated portion of the ESOP each February following the
payment of the loan (see Note 9), in accordance with the ESOP Trust
Agreement. Shares released, in accordance with the ESOP note
agreement, may be more or less than shares earned by participants.
In the accompanying statements of net assets available for benefits,
shares earned by participants in excess of those allocated have been
reflected in the accompanying financial statements as assets
designated for transfer.
11
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
4. Participant Accounts and Benefits:
All participants are fully vested in their contributions and the
Company match. The benefit to which a Plan participant is entitled
is the amount provided by contributions (Company and participant)
and investment earnings thereon (including net realized and
unrealized investment gains and losses) which have been allocated to
such participant's account balance. Allocations are based on
participant earnings on account balance, as defined.
Participants may withdraw before-tax contributions only upon meeting
certain hardship conditions.
5. Loans to Participants:
Participants may borrow up to a maximum of 50% of their account
balance or $50,000, whichever is less. Loans bear a market rate of
interest plus 1% and are repayable within five years. Loans are
secured by the balance in the participant accounts.
12
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments:
Investments held by the Plan as of December 31, 2000 are summarized
as follows:
The investments in the USGS, Fixed Interest, and the Diversified
Equity Funds reflected in the accompanying Statement of Net Assets
Available for Benefits with Fund Information represent the Plan's
share of investments (approximately 99.4% of fair value) held by the
Savings Plan Trust. Total investments held by the Savings Plan Trust
on behalf of the Plan and the Johnson & Johnson Savings Plan for
Union Represented Employees are summarized as follows:
* Other consists of interest and/or dividends receivable.
13
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments, (continued):
As of December 31, 2000, the investments in the Intermediate Bond,
Balanced and International Equity Funds reflected in the accompanying
Statement of Net Assets Available for Benefits with Fund Information
represent the Plan's share of investments (approximately 9.3% of fair
value) held by the Pension Trust Fund. Total investments held by the
Pension Trust Fund on behalf of the Plan and the various J&J Pension
Plans are summarized as follows:
Investments held by the Plan as of December 31, 1999 are summarized
as follows:
14
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6. Investments, (continued):
As of December 31, 1999, the investments in the USGS, Fixed Interest, and
the Diversified Equity Funds reflected in the accompanying Statement of
Net Assets Available for Benefits with Fund Information represent the
Plan's share of investments (approximately 99.5% of fair value) held by
the Savings Plan Trust. Total investments held by the Savings Plan Trust
on behalf of the Plan and the Johnson & Johnson Savings Plan for Union
Represented Employees are summarized as follows:
* Other consists of interest and/or dividends receivable.
As of December 31, 1999, the investments in the Intermediate Bond and
Balanced Funds reflected in the accompanying Statement of Net Assets
Available for Benefits with Fund Information represent the Plan's
share of investments (approximately 6.5% of fair value) held by the
Pension Trust Fund. Total investments held by the Pension Trust Fund
on behalf of the Plan and the various J&J Pension Plans are
summarized as follows:
15
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
7. Tax Status:
The Internal Revenue Service has determined and informed the Company by a
letter dated April 25, 1996, that the Plan and the Savings Plan Trust and
the Pension Trust Fund are designed in accordance with applicable sections
of the Internal Revenue Code (IRC). The Plan has been amended since
receiving the determination letter. However, the Plan administrator
believes that the Plan is designed and is currently being operated in
compliance with applicable requirements of the IRC.
8. Termination Priorities:
The Company has the right to terminate the Plan at any time, and in the
event the Plan is terminated, subject to conditions set forth in ERISA, the
amount of each participant's account balance in the Plan is fully vested.
9. Indebtedness:
In connection with the formation of the Plan's ESOP feature, the Plan
borrowed $100 million from Johnson & Johnson for the purpose of purchasing
J&J common stock. The note bears interest at 9% and is payable through
February 15, 2005. The Company is obligated to make contributions in cash
to the ESOP which, when aggregated with the ESOP's dividends and interest
earnings, equal the amount necessary to enable the ESOP to make its
regularly scheduled payments of principal and interest due on the term
loan.
Aggregate maturities for the next five years are as follows:
In the event of Plan termination or of termination of the ESOP portion of
the Plan, any unallocated shares shall be sold to the Company or on the
open market. The proceeds of such sale shall be used to satisfy the
outstanding principal and interest. The Company has no rights against
shares once they are allocated under the ESOP.
10. Concentrations of Credit Risk:
Financial instruments which potentially subject the Plan to concentrations
of credit risk consist principally of the Fixed Interest Fund holdings in
fully benefit-responsive group annuity contracts with insurance and other
financial institutions.
16
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
10. Concentrations of Credit Risk (Continued):
The Fixed Interest Fund places its fully benefit-responsive group annuity
contracts with high-credit quality institutions and, by policy, limits the
amount of credit exposure to any one financial institution. If any of the
insurance companies that the group annuity contracts are invested with
fail to perform according to the contract, the asset value of the Plan
could be impaired.
11. Subsequent Events:
On January 1, 2001, the trustee for the Plan changed to State Street Bank
from Bankers Trust. This change has no affect on Plan participants or the
Plan's funds.
On April 26, 2001, the Company announced a two-for-one stock split to
holders of record on May 22, 2001 and effective on June 12, 2001. The
stock split does not impact the value of any of the Plan's investment
funds. However, all shares information in these financial statements have
been adjusted to reflect the two-for-one stock split effective June 12,
2001.
17
JOHNSON & JOHNSON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
12. 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:
Amounts allocated to the withdrawing participants are recorded on the
Form 5500 for benefit claims that have been processed and approved for
payment prior to December 31, 2000 and 1999 but not yet paid as of that
date.
18
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
FORM 5500 SCHEDULE H - PART IV - 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AT DECEMBER 31, 2000
EMPLOYEE STOCK OWNERSHIP PLAN TRUST FUND
19
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
FORM 5500 SCHEDULE H - PART IV - 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AT DECEMBER 31, 2000
20
Supplemental Schedule
JOHNSON & JOHNSON SAVINGS PLAN
FORM 550 SCHEDULE H - PART IV - 4J
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(a) Trustee is unable to provide detailed information on the number of
transactions.
21
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 33-40294) of Johnson & Johnson of our report
dated June 15, 2001 relating to the financial statements and financial statement
schedules of the Johnson & Johnson Savings Plan, which appears in this Form
11-K.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 25, 2001