<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>y46182e10-k405.txt
<DESCRIPTION>JOHNSON & JOHNSON
<TEXT>
<PAGE> 1
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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 DECEMBER 31, 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 27, 2001 was approximately $133.8 billion.
On February 27, 2001 there were 1,397,232,658 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 2000.
Part III: Portions of registrant's proxy statement for its 2001 annual
meeting of shareowners.
</TABLE>
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<PAGE> 2
PART I
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C> <C>
1. Business....................................................
General.....................................................
Segments of Business; Geographic Areas......................
Consumer....................................................
Pharmaceutical..............................................
Professional................................................
International...............................................
Raw Materials...............................................
Patents and Trademarks......................................
Seasonality.................................................
Competition.................................................
Research....................................................
Environment.................................................
Regulation..................................................
2. Properties..................................................
3. Legal Proceedings...........................................
4. Submission of Matters to a Vote of Security Holders.........
Executive Officers of the Registrant........................
PART II
5. Market for the Registrant's Common Equity and Related
Shareowner Matters..........................................
6. Selected Financial Data.....................................
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................
7A. Quantitative and Qualitative Disclosures About Market
Risk........................................................
8. Financial Statements and Supplementary Data.................
9. Changes in and Disagreements on Accounting and Financial
Disclosure..................................................
PART III
10. Directors and Executive Officers of the Registrant..........
11. Executive Compensation......................................
12. Security Ownership of Certain Beneficial Owners and
Management..................................................
13. Certain Relationships and Related Transactions..............
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.........................................................
Signatures..................................................
Report of Independent Accountants...........................
Exhibit Index...............................................
</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.
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL
Johnson & Johnson, employing approximately 98,500 people worldwide, is
engaged in the manufacture and sale of a broad range of products in the health
care field. It conducts business in virtually all countries of the world.
Johnson & Johnson's primary interest, both historically and currently, has been
in products related to human health and well-being. Johnson & Johnson was
organized in the State of New Jersey in 1887.
Johnson & Johnson is organized on the principle of decentralized
management. The Executive Committee of Johnson & Johnson is the principal
management group responsible for the operations and allocation of the resources
of the Company. This Committee oversees and coordinates the activities of
domestic and international companies related to each of the Consumer,
Pharmaceutical and Professional businesses. 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 28 through 31 and 49
of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2000.
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; SPLENDA, a non-caloric sugar substitute; 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, dermatology, gastrointestinal,
hematology, immunology, neurology, oncology, pain management, psychotropic and
women's health 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
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
<PAGE> 4
acute cardiac disease. 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; and REMICADE (infliximab), a novel
monoclonal antibody for treatment of certain Crohn's disease patients. REMICADE
is also indicated for the treatment of rheumatoid arthritis.
Prescription drugs in the hematology field include PROCRIT (epoetin alfa,
sold outside the U.S. as EPREX), 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). Prescription drugs in the women's health 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 and ORTHO-PREFEST (17 (beta)-estradiol/norgestimate) for
hormone replacement therapy.
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 located in 50 countries outside the United States, which are
selling products in more than 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.
2
<PAGE> 5
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 $2,926, $2,600, and
$2,336 million for fiscal years 2000, 1999 and 1998, 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
3
<PAGE> 6
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 and medical device
pricing, appropriate drug and medical device 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 140 manufacturing
facilities occupying approximately 16.4 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.................................................... 5,196
Pharmaceutical.............................................. 4,577
Professional................................................ 6,612
------
Worldwide total................................... 16,385
======
</TABLE>
Within the United States, 10 facilities are used by the Consumer segment, 8
by the Pharmaceutical segment and 44 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............................................... 62 7,388
Europe...................................................... 34 4,730
Western Hemisphere excluding U.S.A.......................... 17 2,442
Africa, Asia and Pacific.................................... 27 1,825
--- ------
Worldwide total................................... 140 16,385
=== ======
</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 38
of Johnson & Johnson's Annual Report to Shareowners for fiscal year 2000.
Segment information on additions to Johnson & Johnson's property, plant and
equipment is contained on page 49 of Johnson & Johnson's Annual Report to
Shareowners for fiscal year 2000. For information regarding plans to close
certain manufacturing facilities, see Note 14 "Restructuring and In-Process
Research and Development Charges" under "Notes to Consolidated Financial
Statements" on page 44 of Johnson & Johnson's Annual Report to Shareowners for
fiscal year 2000.
4
<PAGE> 7
ITEM 3. LEGAL PROCEEDINGS
The information set forth in Note 18 "Legal Proceedings" under "Notes to
Consolidated Financial Statements" on page 46 of Johnson & Johnson's Annual
Report to Shareowners for fiscal year 2000 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
23, 2001, 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 8 of Johnson & Johnson's Proxy Statement dated
March 14, 2001.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert J. Darretta..................... 54 Member, Executive Committee; Vice President,
Finance(a)
Russell C. Deyo........................ 51 Member, Executive Committee; Vice President,
Administration(b)
Michael J. Dormer...................... 49 Member, Executive Committee; Franchise Group
Chairman for Medical Devices(c)
Roger S. Fine.......................... 58 Member, Executive Committee; Vice President, General
Counsel(d)
JoAnn Heffernan Heisen................. 51 Member, Executive Committee; Vice President, Chief
Information Officer(e)
Christian A. Koffmann.................. 60 Member, Executive Committee; Worldwide Chairman,
Consumer & Personal Care Group(f)
Ralph S. Larsen........................ 62 Chairman, Board of Directors and Chief Executive
Officer; Chairman, Executive Committee
James T. Lenehan....................... 52 Vice Chairman, Board of Directors; Member, Executive
Committee; Worldwide Chairman, Medical Devices &
Diagnostics Group
Brian D. Perkins....................... 47 Member, Executive Committee; Worldwide Chairman,
Consumer Pharmaceuticals & Nutritionals Group(g)
Robert G. Savage....................... 47 Member, Executive Committee; Worldwide Chairman,
Pharmaceuticals Group(h)
William C. Weldon...................... 52 Vice Chairman, Board of Directors; Member, Executive
Committee
Robert N. Wilson....................... 60 Senior 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
<PAGE> 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. M. J. Dormer joined the Company in 1998 as Company Group Chairman,
Worldwide Franchise Chairman for DePuy and Codman, when the Company acquired
DePuy, Inc. At the time of that acquisition, he had been Chief Operating
Officer of DePuy, Inc. since 1996. Mr. Dormer served as President of DePuy
International Ltd. from 1992 to 1996. Mr. Dormer became a Member of the
Executive Committee and Franchise Group Chairman for Medical Devices in
February 2001.
(d) 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.
(e) 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.
(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 & Personal Care Group in 1995.
(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 1999.
(h) Mr. Savage joined the Company in 1996 as Vice President, Marketing & Sales,
Ortho-McNeil Pharmaceutical. He was named President of Ortho-McNeil
Pharmaceutical in 1998 and Company Group Chairman -- North America,
Pharmaceuticals Group in 2000. Mr. Savage became a member of the Executive
Committee and Worldwide Chairman, Pharmaceuticals Group in February 2001.
Prior to joining the Company, he served in various management positions at
Hoffmann-La Roche
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 32 of Johnson & Johnson's Annual Report to Shareowners
for fiscal year 2000.
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 1990-2000"
on page 50 of Johnson & Johnson's Annual Report to Shareowners for fiscal year
2000.
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 26 through 32 of Johnson &
Johnson's Annual Report to Shareowners for fiscal year 2000.
On March 27, 2001, the Company announced that it had entered into a
definitive merger agreement with ALZA Corporation, a research-based
pharmaceutical company and a leader in drug delivery technologies. ALZA
shareholders will receive a fixed exchange ratio of .49 shares of Johnson &
Johnson common stock for each share of ALZA in a tax-free transaction. On a
fully diluted basis, Alza has approximately 295 million shares outstanding.
Johnson & Johnson intends to account for the transaction as a pooling of
interests. The boards of directors of the Company and ALZA have given approvals
to the merger. While the transaction is expected to close by the early part of
the third quarter of 2001, the merger is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act and the European Union merger
control regulation, and other customary closing conditions. The agreement will
also require the approval of ALZA's shareholders.
On January 26, 2001, the Company announced that it had entered into a
definitive agreement to acquire Heartport, Inc., a manufacturer of less invasive
cardiac surgery products. The transaction is valued at
6
<PAGE> 9
approximately $81 million. Heartport, Inc. develops, manufactures and sells less
invasive cardiac surgery products that enable surgeons to perform a wide range
of less invasive open-chest and minimally invasive heart operations. The
companies expect the transaction to be completed during the second quarter of
2001, subject to customary conditions, including approval by a majority of the
shareowners of Heartport and Hart-Scott-Rodino clearance.
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 31 of
Johnson & Johnson's Annual Report to Shareowners for fiscal year 2000.
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 33 through 48 of Johnson &
Johnson's Annual Report to Shareowners for fiscal year 2000.
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 8 of Johnson & Johnson's Proxy Statement dated March 14, 2001,
(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 11 of Johnson & Johnson's Proxy
Statement dated March 14, 2001.
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 14,
2001: "Election of Directors -- Directors' Fees, Committees and Meetings" on
pages 9 through 10; "Compensation Committee Report on Executive Compensation" on
pages 12 through 15; "Shareowner Return Performance Graphs" on pages 16 through
17; and "Executive Compensation" on pages 18 through 21.
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
pages 8 through 9 of Johnson & Johnson's Proxy Statement dated March 14, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
7
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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 33 through 48 of Johnson & Johnson's
Annual Report to Shareowners for fiscal year 2000 are incorporated herein by
reference:
Consolidated Balance Sheets at end of Fiscal Years 2000 and 1999
Consolidated Statements of Earnings for Fiscal Years 2000, 1999 and 1998
Consolidated Statements of Equity for Fiscal Years 2000, 1999 and 1998
Consolidated Statements of Cash Flows for Fiscal Years 2000, 1999 and
1998
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 fourth quarter of fiscal year
2000.
8
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JOHNSON & JOHNSON AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS ENDED DECEMBER 31, 2000, JANUARY 2, 2000 AND JANUARY 3, 1999
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DEDUCTIONS FROM RESERVES
ADDITIONS ---------------------------------------------------
BALANCE AT CHARGED BALANCE
BEGINNING TO COSTS AND AT END
OF PERIOD EXPENSES(A) DESCRIPTION AMOUNT OF PERIOD
---------- ------------ ----------- ------ ---------
<S> <C> <C> <C> <C> <C>
2000
Reserves deducted from
accounts receivable, trade
Reserve for doubtful
accounts............... $193 34 Write-offs less recoveries..... 55
Currency adjustments........... 7 165
Reserve for customer
rebates................ 135 1,215 Customer rebates allowed....... 1,170
Currency adjustments........... 2 178
Cash discounts allowed......... 484
Reserve for cash
discounts.............. 61 493 Currency adjustments........... 2 68
---- ----- ----- ---
$389 1,742 1,720 411
==== ===== ===== ===
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
==== ===== ===== ===
</TABLE>
---------------
(A) Charges related to customer rebates and cash discounts are reflected as
reductions of sales to customers.
9
<PAGE> 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 26, 2001 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, 2001
------------------------------------------ Chief Executive Officer, and
R. S. Larsen Director (Principal Executive
Officer)
/s/ R. J. DARRETTA Vice President -- Finance March 21, 2001
------------------------------------------ (Principal Financial Officer)
R. J. Darretta
/s/ C. E. LOCKETT Controller March 22, 2001
------------------------------------------
C. E. Lockett
/s/ G. N. BURROW Director March 20, 2001
------------------------------------------
G. N. Burrow
/s/ J. G. COONEY Director March 19, 2001
------------------------------------------
J. G. Cooney
/s/ J. G. CULLEN Director March 24, 2001
------------------------------------------
J. G. Cullen
/s/ M. J. FOLKMAN Director March 20, 2001
------------------------------------------
M. J. Folkman
/s/ A. D. JORDAN Director March 20, 2001
------------------------------------------
A. D. Jordan
/s/ A. G. LANGBO Director March 20, 2001
------------------------------------------
A. G. Langbo
Vice Chairman, Board of Directors March , 2001
------------------------------------------ and Director
J.T. Lenehan
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ J. S. MAYO Director March 20, 2001
------------------------------------------
J. S. Mayo
/s/ L.F. MULLIN Director March 21, 2001
------------------------------------------
L.F. Mullin
/s/ H. B. SCHACHT Director March 20, 2001
------------------------------------------
H. B. Schacht
/s/ M. F. SINGER Director March 20, 2001
------------------------------------------
M. F. Singer
/s/ J. W. SNOW Director March 21, 2001
------------------------------------------
J. W. Snow
/s/ W.C. WELDON Vice Chairman, Board of Directors March 23, 2001
------------------------------------------ and Director
W.C. Weldon
/s/ R. N. WILSON Senior Vice Chairman, Board of March 23, 2001
------------------------------------------ Directors and Director
R. N. Wilson
</TABLE>
11
<PAGE> 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 22, 2001 appearing in the Johnson &
Johnson 2000 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 22, 2001
12
<PAGE> 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) 2000 Stock Option Plan -- Filed with this document.*
10(c) 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(d) 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(e) 2000 Stock Compensation Plan -- Filed with this document.*
10(f) Executive Incentive Plan (as amended) -- Filed with this
document.*
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) -- Incorporated
herein by reference to Exhibit 10(i) of the Registrant's
Form 10-K Annual Report for the year ended January 2, 2000.*
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 -- Incorporated herein by
reference to Exhibit 10(m) of the Registrant's Form 10-K
Annual Report for the year ended January 2, 2000.*
10(n) Estate Preservation Plan -- Incorporated herein by reference
to Exhibit 10(n) of the Registrant's Form 10-K Annual Report
for the year ended January 2, 2000.*
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
REG. S-K
EXHIBIT TABLE DESCRIPTION
ITEM NO. OF EXHIBIT
------------- -----------
<C> <S>
12 -- Statement of Computation of Ratio of Earnings to Fixed
Charges -- Filed with this document.
13 -- Pages 26 through 50 of the Company's Annual Report to
Shareowners for fiscal year 2000 (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.
99(a) -- Annual Reports on Form 11-K for the Johnson & Johnson
Savings Plans, to be filed on or before June 30, 2001.
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
</TEXT>
</DOCUMENT>